SİLVERLİNE ENDÜSTRİ VE TİCARET A.Ş. - Annual Report 2022

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022 TOGETHER WITH INDEPENDENT AUDITOR’S REPORT

(CONVENIENCE TRANSLATION OF THE INDEPENDENT AUDITORS’ REPORT AND FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH)

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

CONTENTS OF FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

CONTENTS PAGE	CONTENTS PAGE	CONTENTS PAGE
STATEMENTS OF FINANCIAL POSITION...........................................................................		1-2
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .....		3-4
STATEMENTS OF CHANGES IN EQUITY............................................................................		6
STATEMENTS OF CASH FLOWS ...........................................................................................		6
NOTES TO THE FINANCIAL STATEMENTS .......................................................................		7-48
NOTE 1	ORGANISATION AND NATURE OF OPERATIONS ........................................................................	7
NOTE 2	BASIS OF PRESENTATION OF FINANCIAL STATEMENTS..........................................................	7-19
NOTE 3	SEGMENT REPORTING.......................................................................................................................	20
NOTE 4	CASH AND CASH EQUIVALENTS ...................................................................................................	20
NOTE 5	TRANSACTIONS AND BALANCES WITH RELATED PARTIES....................................................	20-23
NOTE 6	TRADE RECEIVABLES AND PAYABLES ........................................................................................	23-24
NOTE 7	INVENTORIES .....................................................................................................................................	24
NOTE 8	PREPAID EXPENSES AND DEFERRED REVENUE.........................................................................	25
NOTE 9	PROPERTY, PLANT AND EQUIPMENT ............................................................................................	25-26
NOTE 10	INTANGIBLE ASSETS .........................................................................................................................	27
NOTE 11	BORROWINGS......................................................................................................................................	28
NOTE 12	PROVISIONS, CONTINGENT ASSETS AND LIABILITIES .............................................................	28-29
NOTE 13	EMPLOYEE BENEFITS........................................................................................................................	30-31
NOTE 14	OTHER ASSETS AND LIABILITIES ..................................................................................................	31
NOTE 15	CAPITAL, RESERVES AND OTHER EQUITY COMPONENTS.......................................................	32-33
NOTE 16	REVENUE AND COST OF SALES ......................................................................................................	33
NOTE 17	GENERAL ADMINISTRATIVE EXPENSES, SELLING, MARKETING,
	DISTRIBUTION EXPENSES AND RESOURCE AND DEVELEOPMENT EXPENSES ..................	34
NOTE 18	OTHER OPERATING INCOME AND EXPENSE ...............................................................................	35
NOTE 19	EXPENSES BY NATURE ....................................................................................................................	35
NOTE 20	FINANCIAL INCOME AND EXPENSE...............................................................................................	36
NOTE 21	INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES)...........................	36-39
NOTE 22	EARNINGS PER SHARE ......................................................................................................................	40
NOTE 23	FINANCIAL INSTRUMENTS (FAIR VALUE AND FINANCIAL RISK MANAGEMENT
	DISCLOSURES) ....................................................................................................................................	40-47
NOTE 24	SUBSEQUENT EVENTS.......................................................................................................................	48

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

STATEMENTS OF FINANCIAL POSITION (BALANCE SHEETS) AT 31 DECEMBER 2022 AND 2021

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

		Audited	Audited
	Notes	31 December 2022	31 December 2021
Assets
Current Assets
Cash and cash equivalents	4	30,574,073	8,301,273
Trade receivables		280,874,142	182,064,101
- Trade receivables from related parties	5	279,123,908	181,857,424
- Trade receivables from third parties	6	1,750,234	206,677
Other receivables		1,187,660	247,489
- Other receivables from third parties		1,187,660	247,489
Inventories	7	198,285,293	147,593,728
Prepaid expenses	8	45,688,269	11,698,761
- Prepaid expenses to related parties	5	14,734,771	-
- Prepaid expenses to third parties		30,953,498	11,698,761
Current period tax assets		-	626
Other current assets	14	12,660,431	1,398,987
Total Current Assets		569,269,868	351,304,965
Non-Current Assets
Other receivables		4,964	4,964
- Other receivables from third parties		4,964	4,964
Property, plant and equipment	9	100,923,385	78,721,240
Prepaid expenses	8	395,360	-
Intangible assets	10	43,661,768	27,162,172
Deferred tax assets	21	84,227,622	9,928,193
Total Non-Current Assets		229,213,099	115,816,569
Total Assets		798,482,967	467,121,534

Financial statements for the period 1 January - 31 December 2022 have been approved for issue by the Board of Directors on 27 February 2023. The General Assembly has the power to amend and reissue the financial statements.

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

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

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STATEMENTS OF FINANCIAL POSITION (BALANCE SHEETS) AT 31 DECEMBER 2022 AND 2021

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

		Audited	Audited
	Notes	31 December 2022	31 December 2021
LIABILITIES
Current Liabilities
Short-term borrowings	11	17,318,317	12,361,913
Short-term portion of long-term borrowings	11	15,354,969	9,688,315
Trade payables		558,413,653	371,173,047
- Trade payables to related parties	5	2,714,355	13,844,716
- Trade payables to third parties	6	555,699,298	357,328,331
Payables related to employee benefits	13	9,523,848	5,940,755
Other payables		263,490	159,028
- Other payables to third parties		263,490	159,028
Short-term provisions		3,998,128	3,408,539
- Short-term provisions for employee benefits	13	2,831,128	2,588,539
- Other short-term provisions	12	1,167,000	820,000
Other current liabilities	14	2,634,457	4,041,645
Total Current Liabilities		607,506,862	406,773,242
Non-Current Liabilities
Long-term borrowings	11	33,370,960	8,133,955
Deferred revenue	8	9,228,768
Long-term provisions		38,033,038	10,189,734
- Long-termprovisions for employee benefits	13	38,033,038	10,189,734
Total Non-Current Liabilities		80,632,766	18,323,689
Equity
Share capital	15	45,000,000	45,000,000
Restricted reserves	15	513,737	513,737
Share premium/discount		52,503	52,503
Accumulated other comprehensive expense		(26,923,873)	(5,678,412)
- Items that will not be reclassified
to profit or loss		(26,923,873)	(5,678,412)
Retained earnings/(accumulated deficit)		2,136,775	10,178,350)
Net profit/(loss) for the period		89,564,197	(8,041,575)
Total Equity		110,343,339	42,024,603
Total Liabilities and Equity		798,482,967	467,121,534

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

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

		Audited	Audited
	Notes	31 December 2022	31 December 2021
Profit for the Period
Revenue	16	1,648,366,490	977,447,499
Cost of sales(-)	16	(1,523,350,662)	(887,619,992)
GROSS PROFIT		125,015,828	89,827,507
General administrative expenses (-)	17	(36,068,137)	(21,579,588)
Selling, distribution and marketing expenses (-)	17	(1,863,310)	(3,625,377)
Research and development expenses (-)	17	(16,187,540)	(9,705,214)
Other operating income	18	255,641,190	151,766,465
Other operatingexpenses(-)	18	(297,221,963)	(208,387,195)
OPERATING PROFIT/(LOSS)		29,316,068	(1,703,402)
Income from investment activities		11,933	-
Expense from investment activities(-)		-	(77,910)
OPERATING PROFIT/(LOSS) BEFORE
FINANCE INCOME /(EXPENSE)		29,328,001	(1,781,312)
Financial income	20	1,556,498	896,438
Financial expenses(-)	20	(10,308,369)	(12,839,364)
PROFIT/(LOSS) BEFORE TAX
FROM CONTINUING OPERATIONS		20,576,130	(13,724,238)
Taxes on income		68,988,067	5,682,663
- Current tax expense	21	-	-
- Deferred tax income	21	68,988,067	5,682,663
PROFIT/(LOSS) FOR YEAR
CONTINUING OPERATIONS		89,564,197	(8,041,575)
NET PROFIT/(LOSS) FOR YEAR		89,564,197	(8,041,575)
Earnings/(Loss) Per Ordinary Share	22	1.990	(0.179)

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

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

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STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

	Audited	Audited
Notes	31 December 2022	31 December 2021
OTHER COMPREHENSIVE
INCOME/(EXPENSE)
Items that will not be reclassified to profit or loss
before tax	(21,245,461)	(2,764,642)
Defined benefit plans remeasurement
(losses)/gains, before tax	(26,556,826)	(3,455,803)
Total taxes on other comprehensive expenses
that will not be reclassified to profit or loss
Deferred tax income /expense	5,311,365	691,161
OTHER TOTAL COMPREHENSIVE INCOME/(EXPENSE)	(21,245,461)	(2,764,642)
TOTAL COMPREHENSIVE INCOME/(EXPENSE)	68,318,736	(10,806,217)

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

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

STATEMENTS OF CHANGE IN EQUITY FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

Share Treasury capital shares	Other comprehensive income and expenses not to be reclassified to profit/(loss) Accumulated profit/(losses) Actuarial loss arising from Share Net defined benefit premium/ Restricted Retained profit Total plans discount reserves earnings for theyear equity
1January 2021 45,000,000 -	(2,913,770) 52,503 - (237,268) 10,929,355 52,830,820
Transfers - - Total comprehensive expense - - - Net loss for the period - - - Other comprehensive expense - -	- - 513,737 10,415,618 (10,929,355) - (2,764,642) - - - (8,041,575) (10,806,217) - - - - (8,041,575) (8,041,575) (2,764,642) - - - - (2,764,642)
31 December 2021 45,000,000 -	(5,678,412) 52,503 513,737 10,178,350 (8,041,575) 42,024,603
1 January 2022 45,000,000 -	(5,678,412) 52,503 513,737 10,178,350 (8,041,575) 42,024,603
Transfers - - Total comprehensive expense - - - Net loss for the period - - - Other comprehensive expense - -	- - - (8,041,575) 8,041,575 - (21,245,461) - - - 89,564,197 68,318,736 - - - - 89,564,197 89,564,197 (21,245,461) - - - - (21,245,461)
31 December 2022 45,000,000 -	(26,923,873) 52,503 513,737 2,136,775 89,564,197 110,343,339

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

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

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STATEMENTS OF CASH FLOWS FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

		Audited	Audited
		1 January -	1 January -
	Note	31 December 2022	31 December 2021
Cash Flows from Operating Activities:
Net Profit/(Loss) for the Period		89,564,197	(8,041,575)
Adjustments Related to Reconciliation of
Net Profit/(Loss) for the Year		22,521,911	48,053,177
Adjustments for depreciation and amortisation	19	20,902,464	15,814,412
Adjustments for impairment loss of receivables		7,195,632	418,797
Adjustments for provisions		3,924,757	2,653,757
Adjustments for interest incomes	20	(66,463)	(12,526)
Adjustments for interest expenses	20	6,683,588	6,030,703
Adjustments for unrealised foreign exchange losses (gains)		52,870,000	28,830,697
Adjustments for tax expense/income	21	(68,988,067)	(5,682,663)
Changes in Working Capital
Adjustments for trade receivables	5-6	(93,010,153)	(52,406,435)
Adjustments for trade payables	5-6	128,499,276	161,336,534
Adjustments for inventories	7	(57,887,197)	(88,480,988)
Adjustments for other asset and receivables		(12,200,989)	(8,122,393)
Adjustments for otherpayables and liabilities		11509,135	2,864,730
Cashgenerated from operations		88,996,180	55,203,050
Other cash inflow/(outflow)	13	(2,048,689)	(449,809)
Net Cash Provided by Operating Activities		86,947,491	54,753,241
Cash Flow from Investing Activities:
Cash inflows from sale of property and equipment	9	15,678	230,516
Cash outflows from purchase of property and equipment (-)	9	(38,334,895)	(22,828,688)
Cash outflows from purchase of intangible assets (-)	10	(21,284,988)	(13,445,908)
Interest income		66,463	12,526
Cash advances and payables given to related parties (-)		(14,734,771)	-
Cash advances and payables given to other parties (-)		(19,650,097)	-
Net Cash Used In Investment Activities		(93,922,610)	(36,031,554)
Cash Flows from Financing Activities:
Proceeds from borrowings		58,198,698	8,229,782
Repayments of borrowings		(22,338,635)	(20,597,545)
Interestpaid		(6,683,588)	(5,673,522)
Net Cash Provided By/(Used In) Financing Activities		29,176,475	(18,041,285)
Net increase in cash and cash equivalents
before currency translation differences		22,201,356	680,402
Unrealized Foreign Exchange Differences
on Cash and Cash Equivalents		71,444	3,464,093
Net Increase in Cash and Cash Equivalents		22,272,800	4,144,495
Cash and Cash Equivalents at the Beginning of the Year	4	8,301,273	4,156,778
Cash and Cash Equivalents at the End of the Year	4	30,574,073	8,301,273

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

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 1 - ORGANISATION AND NATURE OF OPERATIONS

Silverline Endüstri ve Ticaret A.Ş. (the “Company”) was established on 16 November 1994. The main operations of the Company are production and sales of aspirator, hood, oven and built-in kitchen utensils and machine molds.

The Company's production facilities and headquarters are in Merzifon Amasya. The Company continues its activities in Amasya Merzifon Organize Sanayi Bölgesi in a total area of 76,500 m2, of which 28,500 m2 is closed.

The Company has a branch in Istanbul, which started operating in 1999. Address of the Istanbul Branch is Orta Mahalle Topkapı Maltepe Caddesi No: 6 Floor: 3-5 Sincar Plaza Bayrampaşa- Istanbul.

The Company is registered with the Capital Markets Board (“CMB”) and its shares have been quoted on Borsa Istanbul (“BIST”) since 2006. As of 31 December 2022, the percentage of publicly listed shares is 46.55% (31 December 2021: 46.55%).

In the accounting period of 1 January - 31 December 2022, 96% of the sales made by the Company were made to its related party, Silverline Ev Gereçleri Satış ve Pazarlama A.Ş. (31 December 2021: 96%).

The average number of employees of the Company in 2022 is 1,217 (31 December 2021: 1,105).

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

2.1 Basis of presentation

The financial statements of the Company have been prepared in accordance with the Turkish Financial Reporting Standards (“TFRS”) and interpretations as adopted in line with international standards by the Public Oversight Accounting and Auditing Standards Authority of Turkey (“POA”) in line with the communiqué numbered II-14.1 “Communiqué on the Principles of Financial Reporting In Capital Markets” (“the Communiqué”) announced by the Capital Markets Board of Turkey (“CMB”) on June 13, 2013 which is published on Official Gazette numbered 28676. TFRS are updated in harmony with the changes and updates in International Financial and Accounting Standards (“IFRS”) by the communiqués announced by the POA. The financial statements are presented in accordance with “Announcement regarding with TAS Taxonomy” which was published on April 15, 2019 by POA and the format and mandatory information recommended by CMB.

The Company and its subsidiary maintains its accounting records and prepares its statutory financial statements in accordance with the Turkish Commercial Code (“TCC”), tax legislation and the uniform chart of accounts issued by the Ministry of Finance. Financial statements are measured and presented in Turkish Lira (“TRY”), which is the functional currency of the Company, based on historical cost.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.1 Basis of presentation (Continued)

POA made a statement on 20 January 2022, in order to eliminate the hesitations about whether the companies that apply Turkish Financial Reporting Standards (TFRS) will apply TAS 29 Financial Reporting in High Inflation Economies in the 2021 financial reporting period. Accordingly, it has been stated that businesses applying TFRS do not need to make any adjustments within the scope of TAS 29 Financial Reporting in High Inflation Economies (''TAS 29''), and no new explanation has been made by the KGK about the application of TAS 29. Considering that no new disclosure has been made as of the date these financial statements were prepared, no inflation adjustment was made in accordance with TAS 29 while preparing the financial statements as of 31 December 2022.

2.2 Amendments in Turkish Financial Reporting Standards

a) Standards, amendments, and interpretations applicable as of 31 December 2022:

Amendment to TFRS 16, ‘Leases’ – Covid-19 related rent concessions Extension of the practical expedient (effective 1 April 2021); As a result of the coronavirus (COVID-19) pandemic, rent concessions have been granted to lessees. In May 2020, the IASB published an amendment to IFRS 16 that provided an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification. On 31 March 2021, the IASB published an additional amendment to extend the date of the practical expedient from 30 June 2021 to 30 June 2022. Lessees can elect to account for such rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as variable lease payments in the period(s) in which the event or condition that triggers the reduced payment occurs.
A number of narrow-scope amendments to TFRS 3, TAS 16, TAS 37 and some annual improvements on TFRS 1, TFRS 9, TAS 41 and TFRS 16; effective from annual periods beginning on or after 1 January 2022.
Amendments to TFRS 3 , ‘Business combinations’ update a reference in TFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations.
Amendments to TAS 16 , ‘Property, plant and equipment’ prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
Amendments to TAS 37 , ‘Provisions, contingent liabilities and contingent assets’ specify which costs a company includes when assessing whether a contract will be lossmaking.

Annual improvements make minor amendments to TFRS 1, ‘First-time Adoption of TFRS’, TFRS 9, ‘Financial Instruments’, TAS 41, ‘Agriculture’ and the Illustrative Examples accompanying TFRS 16, ‘Leases’.

These amendements do not have a significant impact on the financial statements of the Company

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.2 Amendments in Turkish Financial Reporting Standards (Continued)

b) Standards, amendments, and interpretations that are issued but not effective as of 31 December 2022:
Narrow scope amendments to TAS 1, Practice statement 2 and TAS 8; effective from annual periods beginning on or after 1 January 2023. The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies.
Amendment to TAS 12 – Deferred tax related to assets and liabilities arising from a single transaction; effective from annual periods beginning on or after 1 January 2023. These amendments require companies to recognise deferred tax on transactions that, on initial recognition give rise to equal amounts of taxable and deductible temporary differences.
Amendment to TFRS 16 – Leases on sale and leaseback; effective from annual periods beginning on or after 1 January 2024. These amendments include requirements for sale and leaseback transactions in IFRS 16 to explain how an entity accounts for a sale and leaseback after the date of the transaction. Sale and leaseback transactions where some or all the lease payments are variable lease payments that do not depend on an index or rate are most likely to be impacted.
Amendment to TAS 1 – Non current liabilities with covenants; effective from annual periods beginning on or after 1 January 2024. These amendments clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability.

The Company will evaluate the effects of amendments mentioned above on its operations and apply them from the effective date. New standards and amendments which are not relevant to the operations of the Company issued but not effective as of 31 December 2022 have not been presented above.

2.3 Changes in Accounting Policies

Any change in the accounting policies resulted from the first-time adoption of a new standard is made either retrospectively or prospectively in accordance with the transition requirements. Changes without any transition requirement, material changes in accounting policies or material errors are corrected, retrospectively by restating the prior period financial statements. If changes in accounting estimates are related to only one period, they are recognised in the period when changes are applied; if changes in estimates are related to future periods, they are recognized both in the period where the change is applied and future periods prospectively. The Company has applied consistent accounting policies in its financial statements for the periods presented, and there are no significant changes in accounting policies and estimates in the current period.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.4 Foreign Currency Translation

i) Functional and Presentation Currency

Items included in the financial statements of Company are measured using the currency of the primary economic environment, Turkish Lira, in which the entity operates (“the functional currency”). The financial statements are presented in TRY, which is the Company’s functional and presentation currency.

ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit or loss.

2.5 Offsetting

Financial assets and liabilities are offset and reported in the net amount when there is a legally enforceable right or when there is an intention to settle the assets and liabilities on a net basis or realize the assets and settle the liabilities simultaneously.

2.6 Comparative Information

The Company prepared its financial statements on a comparative basis with the preceding financial period, which enables determination of trends in financial position and performance. The Company prepared its balance sheet at 31 December 2022 on a comparative basis with balance sheet at 31 December 2021; and profit or loss statements, cash flows and changes in equity for the period of 1 January - 31 December 2022 on a comparative basis with financial statements for the period of 1 January - 31 December 2021.

2.7 Summary of Significant Accounting Policies

Significant accounting policies followed in the preparation of the financial statements are summarized below:

a) Revenue from Contracts with Customers

The Company recognizes revenue when the goods or services are transferred to the customer and when performance obligation is fulfilled.

The Company recognizes revenue based on the following main principles:

a) Identification of customer contracts,
b) Identification of performance obligations,
c) Determination of transaction price in the contract,
d) Allocation of price to performance obligations,
e) Recognition of revenue when the performance obligations are fulfilled.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

According to this model, the goods or services undertaken in each contract with the customers are evaluated and each commitment to transfer the goods or services is determined as a separate performance obligation. Then, it is determined whether the performance obligations are fulfilled over time or at a point in time. If the Company transfers the control of a good or service over time and thus fulfills the performance obligations related to the related sales over time, it measures the progress of the fulfillment of the performance obligations and recognise the revenue to the financial statements. Sales are recognised when control of the products are delivered to customers.

Revenue from product sales

The Company recognizes revenue from the production and sale hood, oven and kitchenware. Sales are recognised when control of the products have transferred to the customer. Delivery occurs when the products are shipped to the customer's location, the risk of aging and damage is transferred to the customers, and if the customers accept the products in accordance with the sales contract, the acceptance conditions expire or the Company has objective evidence that all acceptance criteria are met.

The Company considers the following indicators of the transfer of control,

Present right to payment for the good or service,
The customer has legal title to the asset,
Transfer physical possession of the asset,
The customer has the significant risks and rewards of ownership of the good,
The customer has accepted the asset.

For each performance obligation, the Company determines whether it has fulfilled its performance obligation at the beginning of the contract or whether the performance obligation fulfils the obligation at a certain point in time. The Company records revenue from product sales in the financial statements following the transfer of control to the customer.

In the event that the completed transaction is entitled to collect a price directly corresponding to the value of the customer from its customers (delivery of products), the Company recognise the revenue to the financial statements for the amount it has the right to invoice.

The Company recognizes a refund liability in the financial statements if the entity receives consideration from a customer and expects to refund some or all of that consideration to the customer. A refund liability is measured at the amount of consideration received for which the entity does not expect to be entitled and recognised as advances received on the financial position. The return liability is updated at the end of each reporting period for changes in circumstances.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

Interest Income

Interest income is accrued in the relevant period based on the effective interest method, which brings the remaining principal balance and the estimated cash inflows to be obtained from the related financial asset over its expected life to the net book value of the asset.

Dividend Income

Dividends receivable are recognized as income in the period when they are declared. Dividends payable are recognized as an appropriation of profit in the period in which they are declared.

Brand and License Agreement Revenues

These revenues are generated by use of the Company’s registered trademarks (Silverline and Esty) by its related party, Silverline Ev Gereçleri Satış ve Pazarlama A.Ş. (Licensee).

b) Financial Assets and Liabilities

Classification and measurement

The Company classified its financial assets in three categories; financial assets carried at amortized cost, financial assets carried at fair value through other comprehensive income and financial assets carried at fair value through profit or loss. Classification is performed in accordance with the business model determined based on the purpose of benefits from financial assets and expected cash flows.

(a) Financial assets carried at amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest, whose payments are fixed or predetermined, which are not actively traded and which are not derivative instruments are measured at amortized cost. They are included in current assets, except for maturities more than 12 months after the balance sheet date. Those with maturities more than 12 months are classified as non-current assets. The Company’s financial assets carried at amortized cost comprise “trade receivables”, “other receivables” and “cash and cash equivalents” in the financial statements.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

Impairment

The Company has applied simplified approach and used impairment matrix for the calculation of impairment on its receivables carried at amortized cost, since they do not comprise of any significant finance component. In accordance with this method, if any provision provided to the trade receivables as a result of a specific events, Company measures expected credit loss from these receivables by the life-time expected credit loss. The calculation of expected credit loss is performed based on the past experience of the Company and its expectations for the future indications.

c) Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand accounts, deposits held at call with banks other short-term highly liquid investments less than 3 months. Cash and cash equivalents, except for loans originated by the Company that are stated at amortized cost, are stated at their fair values.

In the statement of cash flows, cash flows are classified into three categories as operating, investing and financing activities. Cash flows from operating activities are those resulting from the Company’s production and sales activities. Cash flows from investing activities indicate cash flows associated with the Company’s investing activities (such as purchase of or proceed from sale of property, plant and equipment) from property, plant and equipment and financial investments. Cash flows from financing activities indicate the resources used in financing activities and the repayment of these resources.

d) Trade receivables

Trade receivables that are created by the Company by way of providing goods or services directly to a debtor are carried at amortized cost. Receivables with short-term maturities which have no predefined interest rate are measured at the original invoice amount unless the effect of imputed interest is significant. Company has applied simplified approach and used impairment matrix for the calculation of impairment on its receivables carried at amortized cost, since they do not comprise of any significant finance component. In accordance with this method, if any provision provided to the trade receivables as a result of a specific events, Company measures expected credit loss from these receivables by the lifetime expected credit loss. The calculation of expected credit loss is performed based on the past experience of the Group and its expectations for the future indications.

e) Inventories

Inventories are stated at the lower of cost and net realizable value. The cost of inventories is determined on the monthly weighted average basis. Cost elements included in inventories comprise all costs of purchase of material and other costs incurred in bringing the inventories to their present location and condition such as labor and appropriate amount of factory overheads (based on normal operating capacities). Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and estimated costs necessary to make the sale. When the net realizable value of inventory is less than cost, the inventory is written down to the net realizable value and the expense is included in the statement of profit or loss in the period the write-down or loss occurred.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

f) Property plant and equipment

Property, plant and equipment apart from the lands, land improvements, buildings and machinery and equipment are recognized at their costs in the financial statements by deducting the accumulated depreciation and impairment provisions, if any.

The cost value of the property, plant and equipment; The purchase price consists of import duties and non-refundable taxes, and costs incurred to prepare the tangible asset for use. Expenditure after capitalization is added to the cost of the related asset or recognized as a separate asset if it is highly probable that future economic benefits recognized, and the cost of the related expenditure can be measured reliably.

Tangible fixed assets reviewed for impairment in circumstances that indicate that the carrying amount may be greater than its recoverable value. For the determination of impairment, assets are classified at the cash-generating units (cash-generating unit). If the value of a property, plant and equipment is more than its recoverable value, it is reduced to its recoverable value by making a provision. The recoverable amount is the higher of the asset's value in use or the net selling price less expenses to sell the asset.

Repairs and maintenance are charged to the statements of comprehensive income during the financial period in which they are incurred. Subsequent costs are included in the asset’s carrying value or recognised as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The Company derecognises the carrying amounts of the replaced parts related to renovations regardless of whether the replaced parts were depreciated separately. Subsequent costs included in the asset’s carrying value or recognised as separate asset, are depreciated based on their useful lives.

Depreciation is provided on the cost or revalued amounts of property, plant and equipment on a straight-line basis less any impairment. The depreciation periods for property, plant and equipment, which approximate the economic useful lives of such assets, are as follows:

	*Useful Life*
Buildings	25 - 50 years
Property, machinery and equipment	3 - 25 years
Motor vehicles	5 years
Furniture and fixtures	4 - 15 years

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

g) Intangible assets

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

h) Research and development expenses

Research expenditure is recognised as expense as incurred. Costs incurred on development projects (relating to the design and testing of developed products) is recognised as intangible assets when it is probable that;

The technical feasibility of completing the intangible asset so that it will be available for use or sale.
Its intention to complete the intangible asset and use or sell it,
Its ability to use or sell the intangible asset.
How the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
Its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Other development expenditures are recognised as expense as incurred. If it is difficult to disaggregate the research and development stage of the project, the projects are presumed to be in the research phase which are expensed as they are incurred.

i) Current and deferred income taxes

The tax expense for the period comprises current and deferred income tax. The current income tax liability includes the taxes payable calculated on the taxable portion of the period income with tax rates enacted on the balance sheet date. The adjustments related to prior period tax liabilities are recognised in other operating income and expenses.

There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business and significant judgment is required in determining the provision for income taxes. The Company recognizes tax liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. In this respect, the Company recognised deferred income tax assets arising from tax losses carried forward and other deductible differences as their future utilisation is virtually certain. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

Deferred income tax income or expense is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised directly in equity. In case, when the tax is related to items recognized directly in equity and other comprehensive income, the tax is also recognized in equity and other comprehensive income.

Deferred income tax assets or liabilities are reflected to the financial statements to the extent that they will provide an increase or decrease in the taxes payable for the future periods where the temporary differences will be reversed, using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled as of the balance sheet date.

Deferred income tax assets or liabilities are reflected to the financial statements to the extent that they will provide an increase or decrease in the taxes payable for the future periods where the temporary differences will be reversed. Deferred income tax liabilities are recognized for all taxable temporary differences, where deferred income tax assets resulting from deductible temporary differences are recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary difference can be utilized. To the extent that deferred income tax assets will not be utilized, the related amounts have been deducted accordingly.

j) Impairment of non-financial assets

At each reporting date, the Company assesses whether there is an impairment indication for the assets, except for the deferred income tax asset. When an indication of impairment exists, the Company estimates the recoverable amounts of such assets. The recoverable amounts of intangible assets not yet available for use to be measured annually. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Assets are allocated to cash generating units for the purpose of impairment testing, which is undertaken on the lowest level. An impairment loss is recognized for the amount by which the carrying amount of the asset or any cash-generating unit of that asset exceeds its recoverable amount, which is the higher of an asset’s net selling price or value in use. Impairment losses are accounted for in the statement of comprehensive income. Impairment losses can be reversed to the extent that increased carrying amount of an asset shall not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years provided that increases in the recoverable amount of the asset can be associated with events that occur subsequent to the period in which the impairment loss was recognized.

k) Provisions, contingent asset and liabilities

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation, When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

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

Termination and retirement benefits

Provision for termination benefits means present value of estimated total provision of future potential obligations which will arise from the retirement of personnel as per Turkish Labour Law. In line with the social legislation and Turkish Labour Law which are effective in Turkey, the Company is obliged to collectively pay the termination benefits to each personnel who completed their one-year service period at minimum and is laid off because of the reasons other than resigning voluntarily or acting improperly or to those who retire. The provision for termination benefits has been reduced to the net present value of the obligation amounts which will arise in the future due to the retirement of all personnel in line with the actuarial assumptions determined by the Company management and reflected to the financial statements. Actuarial gains and losses arising from changes in actuarial assumptions used for measuring the related provision are reflected to the financial statements in association with the other statement of comprehensive income.

l) Share capital and dividends

Common shares are classified as equity. Dividends on common shares are recognized in equity in the period in which they are approved and declared.

m) Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to equity holders of the parent company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased and held as treasury shares.

n) Borrowing costs and borrowings

Borrowings are recognized initially at the proceeds received, net of any transaction costs incurred. In subsequent periods, borrowings are restated at amortized cost using the effective interest method. Any difference between proceeds (net of transaction costs) and the redemption value is recognized in the statement of comprehensive income over the period of the borrowings. Borrowing costs are expensed as incurred. If the borrowings mature within 12 months, then they are classified in current liabilities, otherwise they are classified in non-current liabilities.

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which (at least a period of one year) are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

o) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

p) Related parties

A related party is a person or entity that is related to the entity that is preparing its financial statements (referred to as the 'reporting entity'),

a) A person or a close member of that person’s family is related to a reporting entity if that person:
i) Has control or joint control over the reporting entity,
ii) Has significant influence over the reporting entity,
iii) Is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
b) An entity is related to a reporting entity if any of the following conditions applies:
i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others),
ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member),
iii) Both entities are joint ventures of the same third party,
iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity,
v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity,
vi) The entity is controlled or jointly controlled by a person identified in (a),
vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). A related party transaction is a transfer of resources, services, or obligations between related parties, regardless of whether a price is charged.

r) Government incentives and grants

A government grant is recognised only when there is reasonable assurance that the entity will comply with any conditions attached to the grant and the grant will be received.

The grant is recognised as income over the period necessary to match them with the related costs, for which they are intended to compensate, on a systematic basis.

Government grants related to property, plant and equipment are classified under non-current liabilities as deferred government grants and are credited to the profit or loss statement by applying straight-line depreciation over their useful lives.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

s) Subsequent events

Events after the reporting period are those events that occur between the balance sheet date and the date when the financial statements are authorized for issue, even if they occur after an announcement related with the profit for the year or public disclosure of other selected financial information.

The Company adjusts the amounts recognized in its financial statements if adjusting events occur after the balance sheet date.

2.8 Going Concern

The Company prepared financial statements in accordance with the going concern assumption.

2.9 Critical accounting estimates, judgments, and assumptions

Preparation of financial statements requires the use of estimates and assumptions that may affect the amount of assets and liabilities recognized as of the balance sheet date, disclosures of contingent assets and liabilities and the amount of revenue and expenses reported. Although these estimates and assumptions rely on the Company management’s best knowledge about current events and transactions, actual outcomes may differ from those estimates and assumptions. Significant estimates of the Company management are as follows:

Provision for inventories

As explained in Note 2.7, inventories are valued at the lower of cost or net realizable value less costs to sell. The Company reviews their inventories annually whether any impairment exists. The selling prices of inventories in the subsequent period are estimated by the management considering the cost of inventories. The management determines the estimated selling price considering current market conditions and fluctuations in current prices.

In a case of unexpected changes in market conditions, impairment estimations are subject to change as they are calculated based on the estimation and assumptions of the Company (Note 7).

2.10 Declaration of Conformity to Resolutions Published by TAS/TFRS and POA

The Company’s management is responsible for the preparation and fair presentation of financial statements published by TAS/TFRS’s and POA according to the resolution of POA. The Company management declares that the current and prior periods’ financial statements and summary of significant accounting policies and disclosures have been prepared and presented in accordance with TAS/TFRS.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 3 - SEGMENTS REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that takes strategic decisions.

NOTE 4 - CASH AND CASH EQUIVALENTS

	31 December 2022	31 December 2021
Cash on hand	5,356	1,358
Cash at banks
Demand deposits	30,568,717	8,299,915
- Turkish Lira	30,300,774	101,863
- Foreign currency	267,943	8,198,052
Total	30,574,073	8,301,273

As of 31 December 2022 and 2021, there is no blocked cash and cash equivalents.

Based on the independent data with respect to the credit risk assessment of the banks, at which the Company has deposits, the credit quality of the banks is sufficient. The market values of cash and cash equivalents approximate carrying values, including accrued income at the respective balance sheet date.

NOTE 5 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES

i) Balances of Related Parties:

a) Trade receivables due from related parties - current:

31 December 2022	31 December 2022	31 December 2021
Silverline Ev Gereçleri Satış ve
Pazarlama A.Ş. (“Silverline Ev Gereçleri”)	282,734,930	186,594,480
SSH Satış Sonrası Hizmetler A.Ş. (“SSH”)	2,324,003	2,257,722
Tempo Metal Aksesuar Sanayi ve Ticaret A.Ş. (“Tempo Metal”)	590	956,823
Timay Çit Çit Rivet ve Perçin
Sanayi ve Ticaret A.Ş. (“Timay Çıtçıt)	-	1,235,360
Other	109,757	182
	285,169,280	191,044,567
Less: Unearned finance income	(6,045,372)	(9,187,143)
	279,123,908	181,857,424

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SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 5 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)

The Company management believes that no credit risk for collection losses is inherent in the Company’s receivables from the related parties. The maximum exposure to credit risk is limited to the carrying amount of the receivables from related parties. The average maturity of these short-term trade receivables is 90 days (31 December 2021: 90 days). As of 31 December 2022, the effective weighted average interest rate applied to non-trade receivables from related parties is 10.79% per annum (31 December 2021: 21.50%).

b) Prepaid expenses to related parties - current:

	31 December 2022	31 December 2021
TIM Plastik ve Kalıp Teknolojileri
Endüstri ve Ticaret A.Ş (“Tim Plastik”)	12,935,042	-
GM Teknik Cam ve Endüstri
Ticaret A.Ş.(“GM Teknik”)	1,799,728	-
	14,734,771	-

c) Trade payables due to related parties - current:

	31 December 2022	31 December 2021
Gümüş Grup Yatırım ve Danışmanlık
ve Destek Hizmetleri A.Ş. (“Gümüş Grup”)	2,953,268	994,256
Timay Çıtçıt	219,913	-
GM Teknik Cam ve Endüstri
Ticaret A.Ş.	-	12,326,022
Other	-	786,208
	3,173,181	14,106,486
Less: Unearned finance income	(458,826)	(261,770)
	2,714,355	13,844,716

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 5 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)

ii) Transactions with Related Parties:

a) Product sales to Related Parties:

a) Product sales to Related Parties:
	1 January -	1 January -
	31 December 2022	31 December 2021
Silverline Ev Gereçleri	1,590,475,005	942,185,070
SSH Satış Sonrası	13,982,030	8,256,535
Tim Plastik ve Kalıp Teknolojileri
Endüstri ve Tic. A.Ş.	1,420,013	93,180
Timay Çıtçıt	429,600	1,361,715
Tempo Metal	-	4,852,247
	1,606,306,648	956,748,747
b) Service sales from Related Parties:
Silverline Ev Gereçleri	1,997,646	1,537
Timay Çıtçıt	156,843	223,261
Other	517,403	218,834
	2,671,892	443,632
c) Product purchases from Related Parties:
GM Teknik	92,537,751	49,352,566
TİM Plastik	7,855,534	3,192,508
Timay Çıtçıt	1,778,772	19,651,209
Silverline Ev Gereçleri	418,970	21,152
MKS Endüstriyel	-	17,000
	102,591,027	72,234,435
d) Service purchases from Related Parties:
	1 January -	1 January -
	31 December 2022	30 December 2021
Gümüş Grup	23,019,841	12,514,369
Timay Çıt Çıt	2,995,952	2,522,396
Silverline Ev Gereçleri	2,424,351	1,750,436
GM Teknik	2,085,568	-
Other	249,420	441,441
	30,775,132	17,228,642

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 5 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Continued)

e) Fixed asset purchases from Related Parties:

	1 January -	1 January -
	31 December 2022	30 December 2021
TİM Plastik	2,115,296	710,646
GM Teknik	22,355	1,687,139
Timay Çıt Çıt	10,443	2,457,076
Other	92,369	21,566
	2,240,463	4,876,427

f) Key management compensation:

Key management includes members of Board of Managers. Key management compensation consists of salaries, bonus, health insurance and transportation. The compensation paid or payable to key management is shown below:

Salaries and other short-term employee benefits	4,527,238	2,802,445
	4,527,238	2,802,445

NOTE 6 - TRADE RECEIVABLES AND TRADE PAYABLES

a) Short-term trade receivables from third parties:

	31 December 2022	31 December 2021
Trade receivables	1,974,238	486,210
Notes receivable	-	66,000
Unearned finance expense (-)	(239)	(121,768)
Less: Allowance for doubtful receivables	(223,765)	(223,765)
	1,750,234	206,677

Movements of provision for doubtful receivables are as follows:

	2022	2021
1 January	223,765	223,765
Reversals	-	-
31 December	223,765	223,765

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 6 - TRADE RECEIVABLES AND TRADE PAYABLES (Continued)

b) Short-term trade payables to third parties:

	31 December 2022	31 December 2021
Trade payables	368,709,600	339,862,716
Notespayables	191,979,653	21,255,128
	560,689,253	361,117,844
Unearned finance expense(-)	(4,989,955)	(3,789,513)
	555,699,298	357,328,331

The average maturity of short-term trade payables to third parties is 92 days (31 December 2021: 90 days). As of 31 December 2022, the effective weighted average interest rate applied to non-trade receivables from related parties is 10,79% per annual (31 December 2021: 21,50%).

NOTE 7 - INVENTORIES

	31 December 2022	31 December 2021
Raw materials	151,328,317	103,929,020
Work in progress	11,563,092	6,317,960
Finished goods	2,525,621	2,125,544
Trade goods	216,487	132,435
Goods in transit	35,149,132	35,434,655
Other inventories	6,211,148	1,166,986
Provision for inventoryimpairment(-)	(8,708,504)	(1,512,872)
	198,285,293	147,593,728

The cost of inventories recognized as expense and included in cost of sales as of 31 December 2022 is amounting to TRY1,324,823,816 (31 December 2021: TRY767,220,643) (Note 19).

NOTE 8 - PREPAID EXPENSES AND DEFERRED INCOME

	31	December 2022	31 December 2021
Advancesgiven		30,953,498	11,698,761
		30,953,498	11,698,761

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 8 - PREPAID EXPENSES AND DEFERRED INCOME (Continued)

b) Prepaid expenses:

	31	December 2022	31 December 2021
Prepaid expenses long-term		395,360	-
		395,360	-

b) Long term deferred revenue:

Prepaid expenses long-term	9,228,768	-
	9,228,768	-

NOTE 9 - PROPERTY, PLANT AND EQUIPMENT

The movement table of tangible fixed assets and accumulated depreciation for the accounting period ending on 1 January - 31 December 2022 and 2021 is as follows:

	1 January				31 December
	2022	Additions	Disposals	Transfers	2022
Cost:
Land and land improvements	337,950	-	-	-	337,950
Buildings	25,625,681	356,174	-	2,533,153	28,515,008
Machinery and equipment	114,618,689	28,611,962	-	4,454,134	147,684,785
Motor vehicles	1,808,347	38,093	-	-	1,846,440
Furniture and fixtures	5,452,630	526,905	(35,757)	-	5,943,778
Construction inprogress	5,519,902	8,801,760	-	(6,987,287)	7.334.375
	153,363,199	38,334,894	(35,757)	-	191.662.336
Less: Accumulated depreciation
Buildings	(6,277,884)	(747,217)	-	-	(7,025,101)
Machinery and equipment	(64,236,527)	(14,412,341)	-	-	(78,648,868)
Motor vehicles	(1,353,048)	(193,313)	-	-	(1,546,361)
Furniture and fixtures	(2,774,500)	(764,200)	20,079	-	(3,518,621)
	(74,641,959)	(16,117,071)	20,079	-	(90.738.951)
Net book value	78,721,240				100.923.385

Main additions to machinery and equipment as of 31 December 2022 were related with investments in oven manufacturing facilities in production.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 9 - PROPERTY, PLANT AND EQUIPMENT (Continued)

As of 31 December 2022, the Company does not have any pledges or mortgages (31 December 2021: None).

The distribution of depreciation and amortization expenses of tangible and intangible assets as of 31 December 2022 and 2021 is as follows:

				2022	2021
Cost of sales			12,765,903		12,123,397
Research and development	expenses (Note	17)	7,749,290		3,259,995
General administrative expenses (Note 17)				386,914	430,625
Sales and marketingexpenses(Note 17)				357	395
			20,902,464		15,814,412
	1 January				31 December
	2021	Additions	Disposals	Transfers	2021
Cost:
Land and land improvements	337,950	-	-	-	337,950
Buildings	25,478,522	147,159	-	-	25,625,681
Machinery and equipment	96,554,737	17,716,750	(1,136,813)	1,484,015	114,618,689
Motor vehicles	1,805,760	20,153	(17,566)	-	1,808,347
Furniture and fixtures	4,802,708	1,680,629	(1,030,707)	-	5,452,630
Construction inprogress	3,739,920	3,263,997	-	(1,484,015)	5,519,902
	132,719,597	22,828,688	(2,185,086)	-	153,363,199
Less: Accumulated depreciation
Buildings	(5,594,174)	(683,710)	-	-	(6,277,884)
Machinery and equipment	(53,664,064)	(11,551,387)	978,924	-	(64,236,527)
Motor vehicles	(1,161,905)	(208,540)	17,397	-	(1,353,048)
Furniture and fixtures	(3,080,050)	(652,699)	958,249	-	(2,774,500)
	(63,500,193)	(13,096,336)	1,954,570	-	(74,641,959)
Net book value	69,219,404				78,721,240

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 10 - INTANGIBLE ASSETS

Movements in intangible assets for the period ended 1 January - 31 December 2022 are as follows:

	1 January			31 December
	2022	Additions	Transfers	2022
Cost:
Rights	2,999,217	159,064	-	3,158,281
Computer software	1,098,652	-	-	1,098,652
Development costs	16,671,274	-	28,783,273	45,454,547
OngoingR&Dprojects	12,602,211	21,125,924	(28,783,273)	4,944,862
	33,371,354	21,284,988	-	54,656,342
Less: Accumulated depreciation
Rights	(1,648,926)	(149,432)	-	(1,798,358)
Computer software	(581,442)	(57,185)	-	(638,627)
Development costs	(3,978,814)	(4,578,774)	-	(8,557,590)
	(6,209,182)	(4,785,391)	-	(10,994,573)
Net book value	27,162,172			43.661.768
	1 January			31 December
	2021	Additions	Transfers	2021
Cost:
Rights	2,822,517	176,700	-	2,999,217
Computer software	1,095,721	2,931	-	1,098,652
Development costs	12,046,519	-	4,624,755	16,671,274
OngoingR&Dprojects	3,960,689	13,266,277	(4,624,755)	12,602,211
	19,925,446	13,445,908	-	33,371,354
Less: Accumulated depreciation
Rights	(1,485,255)	(163,671)	-	(1,648,926)
Computer software	(524,355)	(57,087)	-	(581,442)
Development costs	(1,481,496)	(2,497,318)	-	(3,978,814)
	(3,491,106)	(2,718,076)	-	(6,209,182)
Net book value	16,434,340			27,162,172

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 11 - BORROWINGS AND BORROWING COSTS

	31 December 2022	31 December 2021
Short term borrowings	17,318,317	12,361,913
Short termportions of longterm borrowings	10,246,649	9,688,315
Total short term borrowings	27,564,966	22,050,228
Longterm borrowings	33,370,960	8,133,955
Total long term borrowings	33,370,960	8,133,955
Total borrowings	60,935,926	30,184,183

As of 31 December 2022, all borrowings are TRY denominated and the annual average effective interest rate of borrowings are between %12 to %18.75 (2021: %12 to %22.58).

The maturities of bank loans are as follows:

	31 December 2022	31 December 2021
Within 1 year	27,564,966	22,050,228
1 - 3years	33,370,960	8,133,955
	60,935,926	30,184,183

The fair value of short-term and long-term borrowings is equal to its carrying amount as the effect of discounting is immaterial.

NOTE 12 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES

a) Guarantees given:

	31	December 2022	31 December 2021
Letters ofguarantee		7,666,985	1,393,012
		7,666,985	1,393,012

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 12 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (Continued)

Colleterals, pledges and mortgages (“CPM”) as of 31 December 2022 and 2021 are as follows;

	31 December 2022 TRY TRY equivalent	31 December 2021
		TRY TRY equivalent
The CPM’s given by the Company A. Total amount of CPM given for the Company’s business 7,666,985 7,666,985 B. CPMs given on behalf of the fully consolidated companies - - C. CPMs given for continuation of its economic activities on behalf of third parties - - D) Other CPMs - - E) Total amount of other CPMs given on behalf of; - - i. the majority shareholder - - ii. the other Group companies which are not in scope of B and C - - iii. thirdparties which are not in scope of C - -		1,393,012 1,393,012 - - - - - - - - - - - - - -
7,666,985 7,666,985		1,393,012 1,393,012
CPM's given/the Company’s equity %0 %0 b) Provisions: Short Term Provisions 31 December 2022 31 December 2021 Provisions for litigations(*) 1,167,000 820,000
Total 1,167,000 820,000

(*) Provisions for litigations are related to the employee lawsuits.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 13 - EMPLOYMENT TERMINATION BENEFITS

a) Short term provisions for employment termination benefits:

		31 December 2022	31 December 2021
Provision for unused vacation		2,831,128	2,588,539
		2,831,128	2,588,539
b)	Payables for employee benefits:
Payables to employees		6,935,172	4,491,016
Social	security premiums	2,588,677	1,449,739
		9,523,848	5,940,755
c)	Long term provisions for employment termination benefits
Provisions for employment termination benefits		38,033,038	10,189,734
		38,033,038	10,189,734

Under the Turkish Labour Law, the Company is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, or who is called up for military service, dies or retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men).

The amount payable consists of one month’s salary limited to a maximum of TRY15,371,40 for each year of service as of 31 December 2022 (2021: TRY8,284.51). The liability is not funded, as there is no funding requirement. The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees with certain actuarial assumptions.

The basic assumption is that the ceiling set for each year of service will increase in line with inflation. Thus, the discount rate applied represents the expected rate of actual inflation. As the provision for employment termination benefits has been issued every six months, the full ceiling amounting to TRY19,982,83 effective from 1 January 2023 (1 January 2022: TRY10,848,59) is calculated.

	31 December 2022	31 December 2021
Discount rate (%)	0.49	4.35
Probability of retirement (%)	93.63	94.22

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 13 - EMPLOYMENT TERMINATION BENEFITS (Continued)

Movements of the provision for employment termination benefits during the years are as follows:

	2022	2021
1 January	10,189,734	5,615,417
Service cost	1,297,219	750,327
Interest cost	2,037,947	817,996
Actuarial loss	26,556,827	3,455,802
Paid duringtheyear	(2,048,689)	(449,809)
31 December	38,033,038	10,189,734
NOTE 14 - OTHER ASSETS AND LIABILITIES
a) Other current assets:
	31 December 2022	31 December 2021
Other VAT	12,360,870	-
Personnel advances	212,444	118,015
Deferred VAT	-	1,279,871
Other	87,117	1,101
	12,660,431	1,398,987
b) Other current liabilities:
Taxes and charges payable	2,296,623	3,414,465
Other	337,834	627,180
	2,634,457	4,041,645

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 15 - SHARE CAPITAL, RESERVES AND OTHER EQUITY ITEMS

The Company's paid-in capital as at 31 December 2022 and 31 December 2021 is as follows:

a) Capital

	31 December 2022	31 December 2022	31 December 2021	31 December 2021
	Share(%)	TRY	Share(%)	TRY
İbrahim ATAY	23.31%	10,488,861	24.00	10,800,865
Mustafa LAÇİN	7.13%	3,206,306	6.53	2,936,200
Mehmet İlhan ATAY	5.85%	2,633,720	6.67	3,000,000
Hüseyin ALIŞ	5.00%	2,250,183	5.00	2,250,183
Ali Rıza ÖZGÜR	4.26%	1,915,461	4.26	1,915,461
Anıl ÖZGÜR	2.87%	1,290,846	3.11	1,398,790
Çınar ALIŞ	2.12%	956,123	1.24	560,000
Ceren ATAY	0.75%	337,858	0.62	277,858
Eren ATAY	0.74%	331,221	0.60	271,221
Mehmet Namık ATAY	0.64%	286,293	0.63	286,293
Mert ATAY	0.64%	286,293	0.64	286,293
Bora OYMAK	0.11%	50,407	0.11	50,407
Ceyhan AYGÜL	0.04%	15,878	0.04	15,878
Publiclylisted shares(*)	46.56%	20,910,551	46.56	20,950,551
Paid in capital	100	45,000,000	100	45,000,000

(*) The publicly listed shares are traded on Borsa Istanbul A.Ş. (BIST).

Registered capital of the Company is TRY45,000,000 (31 December 2021: TRY45,000,000). Total 45,000,000 shares are divided into 7,661,843 units of Group A shares and 7,661,843 units of Group B shares, each share at nominal value of TRY 1.

The privileges provided to the owner of the privileged shares are as follows:

The Board of Directors consists of at least 5 (five) persons to be elected by the general assembly among the candidates nominated by A Group shareholder or A Group shareholder.
At the general assembly meetings, Group A shareholders have 15 (fifteen) votes for one share, and other shareholders have 1 (one) vote for one share.

Listed companies distribute dividend in accordance with the Communiqué No. II-19.1 issued by the CMB which is effective from 1 February 2014.

Companies distribute dividends in accordance with their dividend payment policies settled and dividend payment decision taken in general assembly and also in conformity with relevant legislations. The communiqué does not constitute a minimum dividend rate. Companies distribute dividend in accordance with the method defined in their dividend policy or articles of incorporation. In addition, dividend can be distributed by fixed or variable instalments and advance dividend can be paid in accordance with profit on year end financial statements of the Company.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 15 - SHARE CAPITAL, RESERVES AND OTHER EQUITY ITEMS (Continued)

In accordance with the Turkish Commercial Code (TCC), unless the required reserves and the dividend for shareholders as determined in the article of association or in the dividend distribution policy of the company are set aside, no decision may be made to set aside other reserves, to transfer profits to the subsequent year or to distribute dividends to the holders of usufruct right certificates, to the members of the board of directors or to the employees; and no dividend can be distributed to these persons unless the determined dividend for shareholders is paid in cash.

Restricted reserves

The Turkish Commercial Code (“TCC”) stipulates that the legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the Group’s paid-in share capital. Other legal reserve is appropriated out of 10% of the distributable income after 5% dividend is paid to shareholders. Under the TCC, legal reserves can only be used for compensating losses, continuing operations in severe conditions or preventing unemployment and taking actions for relieving its effects in case general legal reserves does not exceed half of paid-in capital or issued capital.

NOTE 16 - REVENUE AND COST OF SALES

a) Revenue

	1 January -	1 January -
Sales Revenues (net)	31 December 2022	31 December 2021
Domestic sales revenues	1,645,549,059	971,559,310
License revenues	3,290,249	6,991,170
Foreign sales revenues	1,284,663	305,692
Other sales	731,008	292,220
Gross sales	1,650,854,979	979,148,392
Sales returns(-)	(2,488,489)	(1,700,893)
Net sales	1,648,366,490	977,447,499
Cost of sales	(1,523,350,662)	(887,619,992)
Gross Profit/(Loss)	125,015,828	89,827,507

In 2022, the Company has recognised 96% of its revenues through sales to its related party, Silverline Ev Gereçleri Satış ve Pazarlama A.Ş. (2021: 96%).

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 17 - GENERAL ADMINISTRATIVE EXPENSES, MARKETING EXPENSES AND RESEARCH AND DEVELOPMENT EXPENSES

i. General administration expenses:

i. General administration expenses:
	1 January -	1 January -
	31 December 2022	31 December 2021
Outsourcing expenses	18,444,516	9,389,142
Personnel expenses	6,883,808	4,512,008
Cleaning expenses	2,671,174	1,366,738
Consulting expenses	1,859,149	2,142,022
Security expenses	1,566,863	1,068,552
Electricity and natural gas expenses	904,652	318,217
Representation expenses	812,553	518,681
Depreciation and amortization expenses	386,914	430,625
Maintenance and repair expenses	207,368	101,822
IT expenses	158,760	66,323
Other	2,172,380	1,665,457
	36,068,137	21,579,588
ii. Marketing expenses:
Customer service expenses	1,781,912	3,583,889
Outsourcing expenses	64,309	12,514
Advertising and promotion expenses	16,732	28,579
Depreciation and amortization expenses	357	395
	1,863,310	3,625,377
iii. Research and development expenses:
Depreciation and amortization expenses	7,749,290	3,259,995
Analysis expenses	2,785,777	882,830
Sampling expenses	1,919,692	3,672,300
Personnel expenses	1,873,220	1,087,469
Travel expenses	363,098	51,893
Other	1,496,464	750,727
	16,187,540	9,705,214

Fees for Services Obtained from Independent Auditor/Independent Audit Firm

The Company's explanation regarding the fees for services rendered by independent audit firms, which is prepared by the KGK pursuant to the Board Decision published in the Official Gazette on March 30, 2022, and the preparation principles of which are based on the KGK letter dated August 19, 2022 are as follows:

	31 December 2022	31 December 2021
Independent audit fee for the reporting period	280,000	320,000
Other assurance services	32,000	-
	312,000	320,000

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 18 - OTHER OPERATING INCOME AND EXPENSES

i. Other operating income:

		1 January -	1 January -
		31 December 2022	31 December 2021
Foreign exchange gain		191,600,072	89,857,725
Unearned financial income		54,611,582	58,783,277
Other		9,429,536	3,125,463
		255,641,190	151,766,465
ii.	Other operating expenses:
Foreign exchange loss		256,485,488	153,983,738
Unearned financial expenses		39,899,260	54,288,714
Other		837,215	114,743
		297,221,963	208,387,195

NOTE 19 - EXPENSES BY NATURE

	1 January -	1 January -
	31 December 2022	31 December 2021
Raw materials expenses	1,288,124,172	744,574,153
Personnel expenses	132,707,392	81,003,735
Trade goods expenses	36,699,644	22,646,490
Outsourcing expenses	35,010,209	21,195,251
Electricity and natural gas expenses	25,569,873	6,602,225
Depreciation and amortization expenses	20,902,464	15,814,412
Maintenance and repair expenses	3,576,459	3,573,695
Analysis expenses	2,785,777	1,068,552
Cleaning expenses	2,671,174	1,366,738
Consulting expenses	2,424,295	2,648,473
Pattern expenses	1,919,692	3,672,300
Customer service expenses	1,781,912	3,583,889
Security expenses	1,566,863	882,830
Representation expenses	850,199	610,687
Travel expenses	514,457	84,317
IT expenses	158,760	66,323
Advertising and promotion expenses	16,732	28,579
Other	20,189,575	13,107,522
	1,577,469,649	922,530,171

NOTE 20 - FINANCIAL INCOME AND EXPENSES

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

i. Financial income:

	1 January -	1 January -
	31 December 2022	31 December 2021
Foreign exchange gain	1,490,035	883,912
Interest income	66,463	12,526
	1,556,498	896,438
ii. Financial expenses:
Interest expense	6,683,588	6,030,703
Foreign exchange loss	2,769,020	6,517,065
Other	855,761	291,596
	10,308,369	12,839,364

NOTE 21 - INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES)

Tax Expense

Tax Expense
	1 January -	1 January-
	31 December 2022	31 December 2021
Current income tax	-	-
Deferred income tax	68,988,067	5,682,663
Total	68,988,067	5,682,663

Corporation tax is payable at a rate of 23% for 2022. (2021: 25%) on the total income of the Company after adjusting for certain disallowable expenses, exempt income (exemption for participation in subsidiaries, exemption for investment incentive allowance etc.) and allowances (e.g. research and development allowance). No further tax is payable unless the profit is distributed.

Dividends paid to non-resident corporations, which have a place of business in Turkey, or resident corporations are not subject to withholding tax. Otherwise, dividends paid are subject to withholding tax at the rate of 10% (31 December 2021: 15%). An increase in capital via issuing bonus shares is not considered as a profit distribution and thus does not incur withholding tax.

Corporations are required to pay advance corporation tax quarterly at the rate of 23% (2021: 25%) on their corporate income. Advance tax is declared by 14th and payable by the 17th of the second month following each calendar quarter end (2021: 17th). Advance tax paid by corporations is credited against the annual corporation tax liability. If, despite offsetting, there remains an amount for advance tax amount paid, it may be refunded or offset against other liabilities to the government.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 21 - INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (Continued)

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within the 25th of the fourth month following the close of the financial year to which they relate. Tax returns are open for 5 years from the beginning of the year that follows the date of filing, during which time the tax authorities have the right to examine tax returns, and the related accounting records on which they are based and may issue re-assessments based on their findings.

Tax returns are open for 5 years from the beginning of the year that follows the date of filing, during when the tax authorities have the right to examine tax returns, and the related accounting records on which they are based and may issue re-assessments based on their findings.

Transfer pricing

Corporations should set the prices in accordance with the arm’s length principle while entering into transactions regarding the sale or purchase of goods and services with related parties. Under the arm’s length principle within the new legislation related parties must set the transfer prices for purchase and sale of goods and services as if they would have been agreed between third parties. Depending on the circumstances, a choice of accepted methods in aforementioned law of arm’s length transaction has to be made by corporations for transactions with related parties. Corporations should keep the documentary evidence within the company representing how arm’s length price has been determined and the methodology that has been chosen by use of any fiscal records and calculations in case of any request by tax authorities. Besides, corporations must report transactions with related parties in a fiscal period.

If a taxpayer enters into transactions regarding the sale or purchase of goods and services with related parties, where the prices are not set in accordance with the arm’s length principle, then related profits are considered to be distributed in a disguised manner through transfer pricing. The profit distributed in a disguised manner through transfer pricing completely or partially in the last day of the fiscal period when the circumstances defined in the 13th article occurred , will be assessed as distributed profit share or transferred amount to headquarter for limited taxpayers. After the distributed profit share is considered as net profit share and complemented to gross amount, deemed profit will be subject to corporate tax. Previous taxation processes will be revised accordingly by taxpayer who distributes disguised profit. In order to adjust in this respect, the taxes assessed in the name of the company distributing dividends in a disguised manner must be finalized and paid.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 21 - INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (Continued)

In addition to the above exceptions, exceptions in Article 40 of the Income Tax Law and Articles 8 and 10 of the Corporate Tax Law are also taken into account in determination of the income for current tax calculation.

Reconciliation of tax expense using the current year tax expense in the statement of income for the year ended 31 December 2022 and 2021 are as follows:

	31 December 2022	31 December 2021
Profit before tax	20,576,130	(13,724,238)
Tax rate	%23	%25
Expected tax expense:	(4,732,510)	3,431,060
Expenses not deductible for tax purposes	(298,682)	(242,180)
Limitation on financial expenses deductibility	(763,473)	(1,605,572)
R&D incentives	10,934,328	4,353,698
Impact related to revaluation of real estate and
other economic assets subject to depreciation (*)	64,969,627	-
Other	(1,121,224)	(254,343)
Toplam	68,988,067	5,682,663

(*) In accordance with the regulation numbered 7326, published in Official Gazette on 9 June 2021, the opportunity to revalue the immovables registered in assets and the economic assets subject to depreciation on the effective date of the law. The covered assets will be valued with the D-PPI (“Domestic producer price index”) rate and tax will be paid in 3 installments (at two-month intervals) at the rate of 2% over the amount of valuation increase. For the revalued assets, the valuation differences can be depreciated and recognized as taxable expense. Within the scope of the amendment, deferred income tax assets has been recognized in the statement of financial position based on the revaluation records for property, plant, equipment in the tax books, and the derred income tax related to this asset has been recognized in the statement of profit or loss.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 21 - INCOME TAXES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (Continued)

Deferred tax assets	Taxable temporary Deferred tax assets/ differences (liabilities) 31 December 2022 31 December 2021 31 December 2022 31 December 2021	Deferred tax assets/ (liabilities)
Difference between the tax bases and carrying values of tangible and intangible assets (310,668,109) 7,886,477 62,133,622 (1,577,295) Unused R&D incentives (47,540,556) (14,821,082) 10,934,328 3,705,271 Provision for employment termination benefits (38,033,038) (10,189,734) 7,606,608 2,729,107 Unearned financial income (6,045,611) (9,308,912) 1,390,491 2,327,228 Inventories (8,708,504) (6,128,969) 2,002,956 1,532,242 Provision for unused vacation rights (2,831,128) (2,588,539) 651,159 647,135 Provision for litigation (1,167,000) (820,000) 268,410 205,000 Other (3,361,440) (5,529,898) 493,268 1,372,326
Total (418,355,386) (41,500,657) 85,480,842 10,941,014
Deferred tax liabilities
Unearned financial expense 5,448,781 4,051,284 (1,253,220) (1,012,821)
Total 5,448,781 4,051,284 (1,253,220) (1,012,821)
Deferred income tax assets- net (412,906,605) (37,449,373) 84,227,622 9,928,193

The movements of deferred tax assets as of 2022 and 2021 are as follow:

	2022	2021
1 January	9,928,193	3,554,371
Charge to statement of income	68,988,067	5,682,663
Defined benefitplans remeasurementgains/losses	5,311,365	691,161
31 December	84,227,622	9,928,193

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 22 - EARNINGS PER SHARE

	1 January -	1 January -
	31 December 2022	31 December 2021
Net profit/(loss) for the year	89,564,197	(8,041,575)
Weighted average number of shares	45,000,000	45,000,000
Earnings/(loss) per share calculated from
distributableprofit of the Company	1,990	(0,179)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS

a) Capital risk management

In managing capital, The Company’s objective is to safeguard the Company’s ability to continue providing returns for shareholders and benefits for other stakeholders and maintaining an optimal capital structure to reduce the cost of capital. In order to maintain or reorganize the capital structure, the Company may change the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, and sell assets to reduce borrowing.

Consistent with others in the industry, the Company monitors capital on the basis of the debt/capital ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings, as shown in the balance sheet, less cash and cash equivalents.

The net debt/total equity ratio as of 31 December 2022 and 2021 is as follows:

	31 December 2022	31 December 2021
Total liabilities	634,245,237	407,457,013
Less: cash and cash equivalents	(30,574,073)	(8,301,273)
Net debt	603,671,164	399,155,740
Total equity	110,343,339	42,024,603
Net debt/equity ratio	%5.47	%9.50

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS (Continued)

b) Financial Risk Factors

Company activities are exposed to the risk of liquidity risk (credit risk, interest rate risk, cash flow risk and interest rate risk), credit risk and liquidity risk. The company’s risk management program is broadly focused on minimizing uncertainty in financial markets, potentially minimizing the Company’s financial performance.

Credit risk management

Ownership of financial assets involves the risk that counterparties may be unable to meet the terms of their agreements and in turn credit risk arises from cash and cash equivalents, deposits in banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. Risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. These risks are monitored by credit ratings and limiting the aggregate risk to any individual counter party and receiving guarantees when required. The credit risk is generally highly diversified due to the large number of entities comprising the ultimate customer bases and their dispersion across different industries.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS (Continued)

31 December 2022	Receivables Trade receivables Other receivables Related Other Related Other Banks Parties Parties Parties Parties deposits	Receivables Trade receivables Other receivables Related Other Related Other Banks Parties Parties Parties Parties deposits
	Trade receivables Related Other Parties Parties
Maximum amount of credit risk exposed as of reporting date (A+B+C+D) - The part of maximum credit risk covered with guarantees A.Net book value of financial assets not due or not impaired B.Net book value of financial assets whose conditions are renegotiated, otherwise will be classified as past due or impaired C.Net book value of assets past due but not impaired - The part covered by guarantees etc. D.Net book value of assets impaired Past due (gross book value) Impairment (-) E.Off-balance items exposed to credit risk	279,123,908 1,750,234 - - 279,123,908 1,750,234 - - - - - - - - - 223,765 - (223,765) - -	- 1,192,624 30,568,717 - - - - 1,192,624 30,568,717 - - - - - - - - - - - - - - - - - - -

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS (Continued)

31 December 2021	Receivables Trade receivables Other receivables Related Other Related Other Banks Parties Parties Parties Parties deposits	Receivables Trade receivables Other receivables Related Other Related Other Banks Parties Parties Parties Parties deposits
	Trade receivables Related Other Parties Parties
Maximum amount of credit risk exposed as of reporting date (A+B+C+D) - The part of maximum credit risk covered with guarantees A.Net book value of financial assets not due or not impaired B.Net book value of financial assets whose conditions are renegotiated, otherwise will be classified as past due or impaired C.Net book value of assets past due but not impaired - The part covered by guarantees etc. D.Net book value of assets impaired Past due (gross book value) Impairment (-) E.Off-balance items exposed to credit risk	181,857,424 206,677 - - 181,857,424 206,677 - - - - - - - - - 223,765 - (223,765) - -	- 252,453 8,299,915 - - - - 252,453 8,299,915 - - - - - - - - - - - - - - - - - - - - -

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS (Continued)

Market risk management

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices that may adversely affect a business. These are foreign currency risk, interest rate risk, and price change risk of financial instruments or commodities.

Foreign currency risk management

The Company is exposed to exchange rate risk due to its foreign currency denominated transactions. The main principle of foreign currency risk management is to maintain foreign exchange position at the level that minimizes the impact of foreign exchange fluctuations.

The TRY equivalent of the foreign currency risk the Company is exposed to as of 31 December 2022 and 2021 is summarized in the table below:

31 December 2022

TRY Equivalent	TRY Equivalent	USD	EUR	Other
1. Trade receivables	773,174	41,350	-	-
2.a. Monetary financial assets	267,943	7,641	6,274	-
2.b. Non-monetary	-	-	-	-
financial assets
3. Other	19,765,164	938,072	117,878	-
4. Current assets (1+2+3)	20,806,281	987,063	117,878	-
5. Other non-monetary
financial assets	-	-	-	-
6. Other	-	-	-	-
7. Non-current assets (5+6)	-	-	-	-
8. Total assets (4+7)	20,806,281	987,063	117,878	-
9. Trade payables	(218,819,642)	(6,709,421)	(4,663,748)	-
10. Financial liabilities	-	-	-	-
11. Other non-monetary
liabilities	-	-	-	-
12. Short-term liabilities	(218,819,642)	(6,709,421)	(4,663,748)	-
13. Financial liabilities	-	-	-	-
14. Long-term liabilities	-	-	-	-
15. Total liabilities (12+14)	(218,819,642)	(6,709,421)	(4,663,748)	-
16. Net foreign currency
asset/(liability) position (8-15)	(198,013,361)	(5,722,358)	(4,545,870)	-
17. Monetary items net foreign
currency asset/(liability) position	(198,013,361)	(5,722,358)	(4,545,870)	-

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS (Continued)

31 December 2021

TRY Equivalent	TRY Equivalent	USD	EUR	Other
1. Trade receivables	45,992	641	2,482	-
2.a. Monetary financial assets	8,198,052	260,385	313,347	-
2.b. Non-monetary
financial assets	-	-	-	-
3. Other	7,808,118	263,379	281,490	50,787
4. Current assets (1+2+3)	16,052,162	524,405	597,319	50,787
5. Other non-monetary
financial assets	-	-	-	-
6. Other	-	-	-	-
7. Non-current assets (5+6)	-	-	-	-
8. Total assets (4+7)	16,052,162	524,405	597,319	50,787
9. Trade payables	(203,386,191)	(9,228,992)	(5,303,162)	-
10. Financial liabilities	-	-	-	-
11. Other non-monetary
liabilities	-	-	-	-
12. Short-term liabilities	(203,386,191)	(9,228,992)	(5,303,162)	-
13. Financial liabilities	-	-	-	-
14. Long-term liabilities	-	-	-	-
15. Total liabilities (12+14)	(203,386,191)	(9,228,992)	(5,303,162)	-
16. Net foreign currency
asset/(liability) position (8-15)	(187,334,029)	(8,704,587)	(4,705,843)	50,787
17. Monetary items net foreign
currency asset/(liability) position	(187,334,029)	(8,704,587)	(4,705,843)	50,787

The Company is exposed to foreign exchange risk both USD and EUR.

The table below shows the Company's sensitivity to a 20% increase and decrease in the US Dollar and Euro currencies.

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS (Continued)

	31 December 2022	31 December 2022
	Profit/(Loss) Appreciation of Depreciation of foreign currency foreign currency	Equity
		Appreciation of Depreciation of foreign currency foreign currency
Change of USD by 20% against TRY 1- Asset/liability denominated in USD 2- Thepart of USD risk hedged (-)	(21,438,242) 21,438,242 - -	(21,438,242) 21,438,242 - -
3- USD Effect - net (1+2)	(21,438,242) 21,438,242	(21,438,242) 21,438,242
Change of EUR by 20% against TRY 4- Asset/liability denominated in EUR 5- Thepart of EUR risk hedged(-)	(18,156,932) 18,156,932 - -	(18,156,932) 18,156,932 - -
6- EUR Effect - net(3+4)	(18,156,932) 18,156,932	(18,156,932) 18,156,932
Change of other by 20% against TRY 7- Asset/liability denominated in other 8- Thepart of other risk hedged(-)	- - - -	- - - -
Total(3+6+9)	(39,595,174) 39,595,174	(39,595,174) 39,595,174
	31 December 2021
	Profit/(Loss) Appreciation of Depreciation of foreign currency foreign currency	Equity
		Appreciation of Depreciation of foreign currency foreign currency
Change of USD by 20% against TRY 1- Asset/liability denominated in USD 2- Thepart of USD risk hedged (-)	(23,204,688) 23,204,688 - -	(23,204,688) 23,204,688 - -
3- USD Effect - net (1+2)	(23,204,688) 23,204,688	(23,204,688) 23,204,688
Change of EUR by 20% against TRY 4- Asset/liability denominated in EUR 5- Thepart of EUR risk hedged(-)	(14,199,125) 14,199,125 - -	(14,199,125) 14,199,125 - -
6- EUR Effect - net(3+4)	(14,199,125) 14,199,125	(14,199,125) 14,199,125
Change of other by 20% against TRY 7- Asset/liability denominated in other 8- Thepart of other risk hedged(-)	10,157 (10,157) - -	10,157 (10,157) - -
Total(3+6+9)	(37,393,656) 37,393,656	(37,393,656) 37,393,656

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 23 - NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS (Continued)

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, existing and prospective debt requirements, Company treasury aims to maintain flexibility in funding by keeping available bank lines. The ability to fund the existing and prospective debt requirements is managed by maintaining the availability of adequate committed funding lines from high quality lenders. In addition, the Company’s liquidity management policy involves projecting cash flows, considering the level of liquid asset, monitoring balance sheet liquidity ratios against the budgets, maintaining debt financing plans.

The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

	31 December 2022 Total cash Carrying outflows Less than 3 - 12 1 - 5 years value (=I+II+III) 3 months(I) months(II) (III)
Contractual maturity dates: Bank borrowings 60,935,926 67,456,652 17,226,458 31,405,983 18,824,212 Tradepayables 558,413,653 563,862,433 463,297,292 100,565,141 -
619,349,579 631,319,085 480,523,750 131,971,12418,824,212
	31 December 2021 Total cash Carrying outflows Less than 3 - 12 1 - 5 years value (=I+II+III) 3 months(I) months(II) (III)
Contractual maturity dates: Bank borrowings 30,184,183 33,414,179 8,533,005 15,556,733 9,324,441 Tradepayables 371,173,047 375,224,330 308,302,887 66,921,443 -
401,357,230 408,638,509 316,835,892 82,478,176 9,324,441

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

(Amount expressed in Turkish Lira (“TRY”) unless otherwise indicated.)

NOTE 24 - SUBSEQUENT EVENTS

The earthquake that took place in Kahramanmaraş on February 6, 2023 and which affected many provinces of Turkey, left sad and deep pains, did not have a significant impact on the Company's operations.

………………….

AI assistant

SİLVERLİNE ENDÜSTRİ VE TİCARET A.Ş. — Annual Report 2022

8882_rns_2023-02-27_baef5bcf-1e74-4665-b44b-17c7677764e6.pdf

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CONTENTS OF FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

STATEMENTS OF FINANCIAL POSITION (BALANCE SHEETS) AT 31 DECEMBER 2022 AND 2021

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

STATEMENTS OF FINANCIAL POSITION (BALANCE SHEETS) AT 31 DECEMBER 2022 AND 2021

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

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STATEMENTS OF CHANGE IN EQUITY FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

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STATEMENTS OF CASH FLOWS FOR THE PERIODS 1 JANUARY - 31 DECEMBER 2022 AND 2021

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 1 - ORGANISATION AND NATURE OF OPERATIONS

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

2.1 Basis of presentation

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.1 Basis of presentation (Continued)

2.2 Amendments in Turkish Financial Reporting Standards

a) Standards, amendments, and interpretations applicable as of 31 December 2022:

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.2 Amendments in Turkish Financial Reporting Standards (Continued)

2.3 Changes in Accounting Policies

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.4 Foreign Currency Translation

i) Functional and Presentation Currency

ii) Transactions and balances

2.5 Offsetting

2.6 Comparative Information

2.7 Summary of Significant Accounting Policies

a) Revenue from Contracts with Customers

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

Revenue from product sales

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

Interest Income

Dividend Income

Brand and License Agreement Revenues

b) Financial Assets and Liabilities

Classification and measurement

(a) Financial assets carried at amortized cost

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

Impairment

c) Cash and cash equivalents

d) Trade receivables

e) Inventories

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

f) Property plant and equipment

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

g) Intangible assets

h) Research and development expenses

i) Current and deferred income taxes

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NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2022

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.7 Summary of Significant Accounting Policies (Continued)

j) Impairment of non-financial assets

k) Provisions, contingent asset and liabilities

SİLVERLİNE ENDÜSTRİ VE TİCARET ANONİM ŞİRKETİ

NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

SİLVERLİNE ENDÜSTRİ VE TİCARET A.Ş. Annual Report 2022