Polisan Holding AsBIST: POLHO

1Q 2024 Interim Report

Nov 14, 2024 at 4:31 PM UTC · MarketScreener

Interim Report

(January 1 - March 31, 2024)

General Information

A. About Polisan Holding

Polisan Holding A.Ş., a long-established Turkish conglomerate, traces its roots back to 1956. Starting in textiles, the Bitlis Family's ventures have branched out over time, encompassing chemicals, port management, paint, and real estate. In 2000, the family's investments consolidated under the banner of Polisan Holding A.Ş., streamlining operations and fostering cross-company collaboration.

Today, Polisan Holding employs 1,127 across its paint, port, and chemical businesses, boasts global partnerships with giants like Dow Chemical and Kansai Paint, six international investments including Greece, and a strategic real estate portfolio. For more information about Polisan Holding, a publicly traded company on Borsa Istanbul, visit www.polisanholding.com.

As of March 31, 2024, the Group's proportion of ownership interests of subsidiaries has been shown in the following table:

Title of the subsidiary	Nature of business	Shares owned by the	Effective ownership
Group	rate

Polisan Kimya Sanayii A.Ş.	Production and sale of	100%	100%
("Polisan Kimya")	chemical products
Poliport Kimya Sanayi ve	Port, storage and	100%	100%
Ticaret A.Ş. ("Poliport")	warehousing services
Polisan Hellas S.A.	Polyethylene	100%	100%
("Hellas")	Terephthalate (PET)
	granule and preform
Polisan Yapıkim Yapı	Construction chemicals	100%	100%
Kimyasalları San. ve Tic.
A.Ş. ("Polisan Yapıkim")

The table below shows the partnership ratios of the Group's Business Partnerships and Affiliates as of March 31, 2024. Investments in Business Partnerships and Affiliates are accounted for using the equity method.

Title	Nature of business	Partnership	Shares owned by	Effective
		Type	the Group	ownership rate

Polisan Kansai Boya Sanayi ve	Boya İmalatı ve	Joint Venture	%50	%50
Ticaret A.Ş. ("Polisan Kansai	Satışı
Boya")
Tintomix Pigment Pasta	Pasta Pigment	Joint Venture	%51	%25,50
Sanayi A.Ş. ("Tintomix")	Üretim ve Satışı
Rohm and Haas Kimyasal	Kimyevi maddeler	Subsidiary	%40	%40
Ürünler Üretim Dağıtım ve	üretimi ve satışı
Ticaret. A.Ş. ("Rohm and
Haas"

This statement has been translated into English for informational purposes. In case of a discrepancy between the Turkish and the English versions of this disclosure statement, the Turkish version shall prevail.

2 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

B. Company Information:

Accounting Period Relevant to the Report	01.01.2024 - 31.03.2024
Business Name	Polisan Holding A.Ş.
Affiliated Trade Registry Office and	5769 Gebze
Number
Headquarters Addess	Dilovası Organize Sanayi Bölgesi 1. Kısım Liman Caddesi No:7
	Dilovası-KOCAELİ
Telephone / Fax	0 262 754 8000 / 0 262 754 8056
Headquarters Address- branch	Hilltown Ofis, Aydınevler Mah. Siteler Yolu Cad. 28 No:1/A
	Küçükyalı-Maltepe, İSTANBUL
Telephone / Fax	0 216 578 5600 / 0 216 573 7792
Website	www.polisanholding.com

C. Shareholder Structure

The company's registered capital ceiling is 1,000,000,000 Turkish Lira, and its paid-in capital is 758,500,000 Turkish Lira, with no changes in the first quarter of 2024.

As of March 31, 2024 and December 31, 2023 the Group's shareholder structure is as follows:

	March 31, 2024	December 31, 2023
	Share (%)	Amount	Share (%)	Amount
Mehmet Emin Bitlis	22,72	172.354.218	22,72	172.354.218
Ahmet Ertuğrul Bitlis	22,72	172.354.465	22,72	172.354.465
A.Melike Bitlis (Bush)	8,56	64.916.770	8,56	64.916.770
Ahmet Faik Bitlis	8,41	63.768.770	8,41	63.768.770
Fatma Nilgün Kasrat	8,41	63.768.770	8,41	63.768.770
Melis Bitlis	1,71	12.974.553	1,71	12.974.553
Mehmet Haluk Akşit	0,63	4.790.542	0,63	4.790.542
Serdar Demirel	1,86	14.129.867	1,86	14.129.867
Burcu Bitlis	0,91	6.894.284	0,91	6.894.284
Banu Bitlis	0,91	6.894.284	0,91	6.894.284
Alaattin Bitlis	0,82	6.187.618	0,82	6.187.618
Melda Bitlis	0,70	5.314.204	0,70	5.314.204
Publicly Traded	21,64	164.151.655	21,64	164.151.655

	100	758.500.000	100	758.500.000

There has been no change in the company's ownership structure during the period.

D. Amendments in the Articles of Association during the Period and the Reasons:

There is no change in the Articles of Association in this period.

E. Board of Directors

At the Ordinary General Assembly meeting held on 26.04.2024, it was decided, in accordance with Article 10 of the Articles of Association, to set the total number of Board of Directors members at 6. The following Board Members, who are to serve for a period of one year, were elected at the relevant general assembly meeting:

3 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

		Whether an Executive/
Name/Surname	Position	Independent Board
		Member
Tayfun Bayazıt, who is currently the natural person	Chairperson	Non-executive member
representative on behalf of Emin Bitlis Yönetim Danışmanlığı

Esra Yazıcı, who is the natural person representative on	Vice chairperson	Non-executive member
behalf of Ertuğrul Bitlis Yönetim Danışmanlığı Limited Şirketi

Ali Tuğrul Alpacar, who is the natural person representative	Member	non-executive member
on behalf of AFB Yönetim Danışmanlığı Limited Şirketi

Bilal Cantekin Dinçerler, who is the natural person	CEO	Executive member
representative on behalf of FNK Yönetim Danışmanlığı
Limited Şirketi

Onur Kipri	Member	Independen member

Hamit Sedat Eratalar	Member	Independent member

By the decision of the Board of Directors dated 26.04.2024; Emin Bitlis Management Consulting Limited Company and its individual representative Tayfun Bayazıt have been appointed as the Chairman of the Board, and Ertuğrul Bitlis Management Consulting Limited Company and its individual representative Esra Yazıcı have been appointed as the Vice Chairman of the Board1.

F. Board Committees

By the decision of the Company's Board of Directors dated 29.04.2024 and within the framework of the provisions in the Capital Markets Board's Corporate Governance Communiqué, it has been decided to establish the committee structure as follows.

	Audit Committee	Corporate Governance	Early Assessment
		Committee*	of Risks Committee
Chairperson	Hamit Sedat Eratalar	Hamit Sedat Eratalar	Onur Kipri
Member	Onur Kipri	Ali Tuğrul Alpacar	Esra Yazıcı
Member		Banu Çamlıtepe	Tolga Üzümcü

It has been decided not to establish the Nomination Committee and the Remuneration Committee, and that their duties will be performed by the Corporate Governance Committee.

1 The biographies of the Board of Directors are available on the company's corporate website (www.polisanholding.com).

4 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

G. Senior Management

The information regarding senior executives who have resigned and those who are currently in office during the year is as follows.:

POLİSAN HOLDİNG SENIOR MANAGEMENT2

NAME & SURNAME	POSITION
Bilal Cantekin Dinçerler	CEO

Tolga Üzümcü	CFO

Mahmut Temiz	Human Resources Director

Cumhur Aksoy	Information Technologies Director

Mete Öztürk	Project and Procurement Director

POLİSAN HOLDİNG GROUP COMPANIES SENIOR MANAGEMENT

NAME & SURNAME	POSITION

E. Burak Ekmekçioğlu	Polisan Kansai Boya General Manager

Selçuk Denizhan	Poliport Genel Müdürü

M.Serkan Metan	Polisan Kimya & Polisan Yapıkim Genel Müdürü

Cenk Bitlis	Polisan Hellas Ülke Müdürü

Number of Personnel, Collective Bargaining Practices, and Rights and Benefits Provided to Personnel and Workers

As of March 31, 2024, the average number of employees for the company, its subsidiaries, and business partnership is 1,127 (December 31, 2023: 1,101). In calculating the average numbers, the number of employees from Polisan Kansai Paint and Rohm and Haas were not weighted according to the Group's shareholding ratio but were taken as full numbers.

The provision for severance pay has been calculated as 54.306.117 Turkish Lira as of March 31, 2024.

Collective Labor Agreement

According to the notification from Polisan Kimya Sanayii A.Ş. and Polisan Yapıkim Yapı Kimyasalları San. ve Tic. A.Ş., an agreement was reached in the collective labor agreement negotiations with the Lastik-İş Union, of which they are members, for the Dilovası, Adana, and Samsun facilities on April 2, 2024. A 2-year Collective Labor Agreement covering the period from January 1, 2024, to December 31, 2025, was signed.

2 The biographies of the Senior Executives are available on the company's corporate website (www.polisanholding.com).

5 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

Financial Rights Provided to Members of the Management Body and Senior Executives

At the Ordinary General Assembly meeting held on April 26, 2024, it was decided that each Independent Board Member would be paid a monthly gross remuneration of 95.000 Turkish Lira for the 2024 fiscal year and until the subsequent Ordinary General Assembly meeting, while other Board Members would not receive any remuneration.

The total amount of compensation and similar benefits paid to senior management from January 1 to March 31, 2024, amounted to 13.545.,219 Turkish Lira (January 1 - March 31, 2023: 5.195.986 Turkish Lira). The Group has designated the board members, the general manager, and the deputy general managers as senior management.

Significant Developments Related to Company Activities

A. Significant Developments in the First Quarter of 2024

Investor Relations Unit

As of February 19, 2024, Banu Çamlıtepe has started working full-time in our company as the Investor Relations and Corporate Communications Manager.

Investor Relations Contact Information

Tel: +90 216 578 56 00

Email:yatirimciiliskileri@polisanholding.com.tr

Flood Disaster in Greece

According to the disclosure from our subsidiary Polisan Hellas, the damage assessment related to the flood disaster, which we announced on the Public Disclosure Platform (KAP) on September 6, 2023, has been completed. The process has been finalized with a total payment of 7,700,000 Euros received from the insurance company, including the advance payment announced on KAP on October 20, 2023.

B. Subsequent Events

Resumption of Operations at Polisan Hellas (April 22, 2024)

According to the notification made by Polisan Hellas S.A. on April 22, 2024, the damage and repair works related to the flood disaster announced on the Public Disclosure Platform (KAP) on September 6, 2023, have been completed. It was reported that Polisan Hellas resumed production activities at its Volos factory as of April 19, 2024.

Collective Labor Agreement (April 2, 2024)

6 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

of which they are members, for the Dilovası, Adana, and Samsun facilities on April 2, 2024. A 2-year Collective Labor Agreement covering the period from January 1, 2024, to December 31, 2025, was signed.

Statements Regarding the General Assembly Meeting (April 26, 2024)

The Ordinary General Assembly Meeting of the Company for the year 2023 was held on April 26, 2024, at 11:00 AM at the company's headquarters located at Dilovası Organize Sanayi Bölgesi, 1.Kısım, Liman Cad., No:7, Dilovası - Kocaeli. The meeting was conducted under the supervision of the Ministry Representative Sultan Kurbanoğlu, who was appointed by the Kocaeli Provincial Directorate of Commerce with their letter dated April 18, 2024, numbered 95967693. The Minutes of the General Assembly Meeting and the List of Attendees are available on the company's corporate website at www.polisanholding.com. The General Assembly was registered on May 3, 2024.

Dividend Distribution:

At the Ordinary General Assembly meeting held on April 26, 2024, Polisan Holding approved the Board of Directors' decision regarding dividend distribution, which was taken on April 1, 2024, and previously announced to the shareholders. It was decided to distribute a gross dividend of 90,000,000 TL on April 30, 2024. The cash dividend distribution was carried out between April 30 and May 3, 2024.

C. Information on Investments and Incentives

Total investment expenditures were TL 61,642,867 in 1Q2024 (1Q2023: TL 27,723,106).

The incentive certificates obtained for the ongoing renewal projects are as follows:

		Incentive			Incentive		Incentive Amount		Amount of Incentivized	Incentive Certificate

								Date
Company									Expenditure (as of

					No		(TL)		31.03.2024 - in TL)	(incl. renewal)

Poliport(*)	Crane Incentive		B/104761	15,092,285	15,092,285		29.03.2013
Poliport(*)	Tank Incentive		D/112076	148,770,416	148,770,416		17.08.2018
Poliport(*)	Tank Incentive		C/137652	167,959,754	167,959,754		03.12.2021
Polisan Kansai Boya(*)	Gebkim Plant Constr,		E/122296	351,850,411	351,850,411		07.07.2020

Polisan Kimya (*)	Samsun Plant		B/131376	2,570	2,569,653		12.04.2023
Polisan Kimya (*)	Oxide Plant		D/112337	16,259,209	16,259,209		21.07.2016
Polisan Kimya	New Resin Plant	515368	89,240,000	102,870,555		29.09.2020

Poliport	Tank Incentive	528259	465,000,000	322,253,451		06.10.2021

Polisan Kimya	Novalak Resin Plant	556036	52,467,238	0		17.07.2023

Polisan Kansai Boya	Gebkim Solvent Plant	541914	42,951,200	54,712,545		07.09.2022

* Completed Investments

7 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

D. Analysis Related to Operations

The Company's summary consolidated financial information for 1Q2024, prepared in accordance with inflation accounting (IAS 29 "Financial Reporting in Hyperinflationary Economies"), is provided below3:

CONSOLIDATED INCOME STATEMENT SUMMARY
			Change
TL million	1Q2023	1Q2024	YoY
Sales	1.786	1.236	-31%
Gross Profit	117	303	159%
Operating Expenses	-169	-197	17%
EBITDA	60	214	255%
Other operating income/expense, net	16	38	135%
Profit/(loss) from investments acc, using the equity
method	-45	33	-
Operating Profit	-81	176	-
Income/Expense from investment activities, net	10	3	-64%
Financial income/Expense, net	-5	-12	141%
Monetary Loss	-28	-32	15%
Tax Expense/Income	47	52	9%
Profit for the Period	-57	187	-

Gross Margin	6,5%	24,5%	18,0 p,p,
EBITDA Margin	3,4%	17,3%	14,0 p,p,
Net Profit Margin	-3,2%	15,1%	18,3 p,p,

3 Unless otherwise indicated, the amounts in the tables are expressed in millions of Turkish Lira ('TL') in terms of the purchasing power of the Turkish Lira as of March 31, 2024.

8 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

Consolidated revenues decreased from TL 1,79 billion last year to TL 1,24 billion this year. Despite the increase in revenues from Polisan Yapıkim and Poliport, there was a decline in consolidated revenues due to the flood disaster that affected Polisan Hellas. Polisan Hellas halted its operations on September 6, 2023, due to the flood and resumed production activities on April 19, 2024. Polisan Hellas' revenues were TL 92 million in the first quarter of 2024, compared to TL 711 million in the first quarter of 2023.
The positive performance and improvement in profit margins since the 3Q2023 continued into the first quarter of 2024. Consolidated Gross Profit increased by 159% yoy, reaching TL 303 million. The Gross Profit margin rose from 6,5% in 1Q2023 to 24,5% in 1Q2024. The main reasons for the favorable trend in the Gross Profit margin were the more favorable inflation-exchange rate dynamics, the increase in value-added products in port and chemical activities, and the price increases in port operations.
EBITDA increased by 255% in 1Q2024 compared to the same period last year, reaching TL 214 million.
With the positive profitability trend of Poliport, Polisan Kimya, and Polisan Yapıkim since 3Q2023, combined with the recovery in losses at Polisan Hellas, consolidated EBITDA increased by TL 154 million to TL 214 million. Polisan Hellas' EBITDA loss decreased from TL 118 million in the previous year to TL 39 million this year. The Holding's consolidated EBITDA margin rose from 3,4% in 1Q2023 to 17,3% in 1Q2024.
Net Other Income from Main Operations increased by TL 22 million, reaching TL 38 million this quarter. This increase was primarily driven by the cancellation of provisions for inventory impairment and doubtful receivables, as well as Insurance indemnity income.
Profit/(loss) from investments accounted using the equity method were a loss of TL 45 million in 1Q2023 (Polisan Kansai Boya -TL 52 million, Rohm & Haas TL 7 million). In this quarter, however, there was a profit of TL 33 million (Polisan Kansai Boya TL 29 million, Rohm & Haas TL 4 million),
Despite the fluctuations in financial markets and the slowdown in the real estate sector, Operating Profit was maintained. This resulted in a Net Loss of TL 57 million in 1Q2023 turning into a Profit of TL 187 million in the first quarter of this year.

CONSOLIDATED CASH FLOW SUMMARY

			Change
TL million	1Q2023	1Q2024	YoY
Cash flows from operating activities	483	450	-7%
Cash flows from investing activities	59	-41	-
Cash flows from financing activities	-157	-248	58%

Net increase/decrease in cash and cash equivalents	384	161	-58%

Cash and cash equivalents at the beginning of period	901	484	-46%
Cash and cash equivalents at the end of period	859	581	-32%

With the increase in operational profitability of domestic subsidiaries and the continuation of effective working capital management, TL 450 million in cash was generated from operations,
With the slowdown in the real estate sector, cash inflows from the sales of the Z Office Project amounted to TL 4 million (1Q2023: TL 25 million), Due to investment expenditures being TL 62 million in the first quarter of this year (1Q2023: TL 28 million) and the decrease in real estate sales compared to the previous year, cash outflows from investment activities amounted to TL 41 million (1Q2023: TL 59 million cash inflow),

9 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

In 1Q2024, a net repayment of TL 226 million in loans and TL 21 million in interest payments were made, Excluding the impact of inflation adjustments on financing activities, there was a net cash outflow of TL 158 million,

CONSOLIDATED BALANCE SHEET SUMMARY

TL Million	31,12,2023	31,03,2024
Current Assets	2,397	2,573
Fixed Assets	13,640	13,456
Total Assets	16,037	16,029
Short Term Liabilities	2,160	2,180
Long Term Liabilities	920	742
Shareholders' Equit	12,957	13,107
Total Liabilities & Equity	16,037	16,029

Net Financial Debt	661	471
Short Term Financial Debt	820	749
Long Term Financial Debt	325	304
Cash and cash equivalents (-)	484	581
Financial Investments (-)	0	0

Ratios
Current Ratio	1,1	1,2
Acid-Test Ratio	1,0	0,9
Cash Ratio	0,2	0,3
Return on Equity	7%	8%
Return on Assets	5%	7%
Net Financial Debt/EBITDA	0,6	0,4
Total Debt/Total Assets	19%	18%
Debt/Equity	24%	22%

Current Assets: Due to the impact of the operational halt at Polisan Hellas and improvements in the accounts receivable turnover days, trade receivables decreased by TL 202 million. Additionally, cash and cash equivalents increased by TL 98 million, supported by high operating profit. The minimum inventory level increased compared to last year due to the Suez Canal crisis and the entry into the high season, resulting in a total inventory increase of TL 290 million,
Non-CurrentAssets: Due to the reclassification of the Aydın Karacasu land and the impact of depreciation expenses, non-current assets decreased, while deferred tax assets decreased by TL 85 million,

10 | Polisan Holding, Interim Report for the period January 1 - March 31 2024

Earlier from Polisan Holding As

Polisan: 2Q 2024 Financial ReportSep 26, 2024

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