Eregli Demir ve Çelik Fabrikalari T : 2024 3 Months Interim Report

EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş.

For the Period 1 January - 31 March 2024 Condensed Board of Directors' Activity Report

EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş.

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BOARD OF DIRECTORS' ACTIVITY REPORT PREPARED IN ACCORDANCE

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A - GENERAL INFORMATION

1. Period of the Report
   1 January - 31 March 2024
2. Information About the Association
   - Title: EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş.
   - Trade Registry Number: 863637
   - Address: Barbaros Mah. Ardıç Sok. No: 6 Ataşehir/İSTANBUL
   - Website:www.erdemir.com.tr
3. Shareholding and Capital Structure

Authorized Capital	: TRY 7.000.000 thousand
Paid-in Capital	: TRY 3.500.000 thousand
Shareholders	Shares (Thousand TRY)	%
ATAER Holding A.Ş.		1.724.982	49,29
Publicly Held		1.635.956	46,74
Erdemir's Own Shares	139.062	3,97
Total		3.500.000	100,00

Share Buy-back, within the scope of the "Share Buyback Program", which was approved at Company's Ordinary General Assembly Meeting dated 31 March 2023, 14.820.000 shares were repurchased in exchange for TRY 674.518 thousand. After the Company's share purchase, the shares held by the Company increased to 3,97%.

4. Board of Directors, Executive Management and Number of Personnel

According to the Turkish Commercial Code and related regulations, the election of the Member of Board of Directors is executed by the General Assembly within the framework of the Articles of Association. Should there be a vacant position in the Board of Directors Membership within the respective period; an election is held for the vacant positions according to the provisions of Turkish Commercial Code and Company's

Articles of Association and submitted to the next general assembly to be approved. The

Company's 2023 Ordinary General Assembly has been executed on 28 March 2024.

Within the framework of the provisions of the Turkish Commercial Code and the Capital Market Law, pursuant to Articles 10th and 11th of the Company's Articles of Association, at the Ordinary General Assembly Meeting held on March 28, 2024, elections were held for Independent Board Members due to the expiration of their terms of office and 3 Independent Board Members were elected to serve for 1 year.

EREĞLİ DEMİR VE ÇELİK FABRİKALARI T.A.Ş.

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BOARD OF DIRECTORS' ACTIVITY REPORT PREPARED IN ACCORDANCE

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The active members of the Board of Directors as of reporting period:

Board of Directors	Title	Effective from
OYTAŞ İç ve Dış Ticaret A.Ş.	Chairman	27.05.2013 (*)
(Represented by: Süleyman Savaş ERDEM)
	Deputy Chairman
OMSAN Lojistik A.Ş.	and Executive	11.09.2012 (*)
(Represented by: Baran ÇELİK)	Director
OYAK Pazarlama Hizmet ve Turizm A.Ş.	Board Member and	13.09.2012 (*)
Executive Director
(Represented by: Gürtan DAMAR)
Republic of Türkiye Ministry of Treasury and	Board Member	20.09.2012 (*)
Finance Privatization Administration
(Represented by: Bekir Emre HAYKIR)
OYKA Kağıt Ambalaj Sanayii ve Ticaret A.Ş.	Board Member	12.09.2012 (*)
(Represented by: Eren Ziya DİK)
OYAK Denizcilik ve Liman İşletmeleri A.Ş.	Board Member	12.09.2012 (*)
(Represented by: Güliz KAYA)
Emre GÖLTEPE	Independent	17.03.2022
Board Member
Kadri ÖZGÜNEŞ	Independent	31.03.2023
Board Member
Sezai Afif ENSARİ	Independent	28.03.2024
Board Member

(*) Inauguration date of the legal entity.

Changes in the Executive Board within the Period

• At the Ordinary General Assembly Meeting held on March 28, 2024, Emre
  GÖLTEPE, Kadri ÖZGÜNEŞ and Sezai Afif ENSARİ have been elected as independent board members for serving 1 year period.
• In the distribution of duties among the members of the Board of Directors, with the resolution of Board of Directors numbered 9953, Board Member OYTAŞ İç ve Dış Ticaret A.Ş. (represented by Süleyman Savaş ERDEM) has been elected as the Chairman and Board Member OMSAN Lojistik A.Ş. (represented by Baran ÇELİK) has been elected as the Deputy Chairman for serving 1 year period and Deputy Chairman OMSAN Lojistik A.Ş. (represented by Baran ÇELİK) and Board Member OYAK Pazarlama Hizmet ve Turizm A.Ş. (represented by Gürtan DAMAR) have been authorized as "Executive Director".

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Powers and Duties of the Members of the Board of Directors'

The Chairman and the members of the Board of Directors possess duties and authorities set out in the Turkish Commercial Code's relevant clauses and in the Articles of Association.

Executive Management

Executive	Title	Effective	Education	Experience
Management	from
	Deputy
Baran ÇELİK	Chairman and	14.02.2023	Boğaziçi University -	20 Years
	Executive		International Trade
	Director
	Board		Yıldız Technical University
	Member and
Gürtan DAMAR	23.02.2021	-	29 Years
Executive
		Mechanical Engineering
	Director
	Financial		Bülent Ecevit University
		- Business Administration
	Management
Mustafa Serdar		(Master's Degree)
and Financial	24.09.2020	20 Years
BAŞOĞLU	Karadeniz Technical
Affairs Group
		University - Finance
	Vice President
		(Bachelor's Degree)
			Middle East Technical
			University - Sociology
	Marketing and		(Master's Degree)
Sercan		Middle East Technical
Sales Group	19.06.2023	24 Years
BÜYÜKBAYRAM	University- Political
Vice President
			Science and Public
			Administration (Bachelor's
			Degree)
Şevket Selim	Procurement		Atatürk University -
Group Vice	22.02.2024	20 Years
YILMAZ	Business Administration
President
	Enterprise		Selçuk University
	Architecture		- Economics (Doctor's
Ercan KAYA	and Human	21.07.2020	Degree)	36 Years
Resources	Hacettepe University -
	Group Vice		Economics (Master's
	President		Degree)
Niyazi Aşkın	General	12.09.2022	Yıldız Technical University	30 Years
PEKER	Manager	- Metallurgy Engineering
	Operations		Middle East Technical
	Deputy
Sinan BOZKURT	27.09.2021	University - Metallurgy and	27 Years
General
		Materials Engineering
	Manager

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1. The Transactions of Board Members Made on its Behalf or on Behalf of Other and the Activities as Part of Prohibition of Competition
   At the Ordinary General Assembly held on 28 March 2024, it is consented to give the authority for transactions for 2024 according to article 395 and 396 of Turkish Commercial Code to the Members of the Board.
   No transaction had been realized in this context.
2. Personnel and Worker Movements and Collective Bargaining Practices and Rights and Benefits Provided to Personnel and Workers
   29th Period Collective Labor Agreement, which will be valid between September 1, 2022 and August 31, 2024, has been signed on January 06, 2023 between Turkish
   Employers' Association of Metal Industries (MESS) on behalf of our company and
   Turkish Metal Union as the collective bargaining agency.
   28th Period Collective Labor Agreement, which will be valid between January 1, 2023 and December 31, 2024 has been signed on June 06, 2023 between Özçelik-İş Union and İskenderun Demir ve Çelik A.Ş.
   Vacations are; paid annual leaves, accompaniment leaves for medical purposes, accompaniment leaves excused absences, unpaid leaves, and other paid leaves consisting marital leaves, bereavement leaves, pregnancy leaves, maternity leaves, nursing leaves, adoption leaves, part-time work leaves, transport leaves, be with your child leaves and leaves in case of a natural catastrophe.
   Complementary health insurance for our hourly paid staff; individual annuity insurance, private health insurance and life insurance are provided to our monthly paid personnel.
   Bereavement allowance, transportation and meal allowance, derived from the social benefits, are given to all employees; the rest is given only to blue-collar workers. Paid annual leaves, leaves of absence with excuse, marital leaves, bereavement leaves, maternity leaves, and pregnancy leave, accompaniment leaves, adoption leaves, part- time work leaves, transport leaves, unpaid leaves and nursing leaves can be taken by all employees; the rest is taken only by blue-collar workers.
   The number of the personnel employed by the Group as of reporting date:

	31 March		31 December
	2024	2023
	Personnel		Personnel
Hourly paid	8.205	8.460
Monthly paid	4.026		4.027
	12.231		12.487

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7. Compliance with The Corporate Governance Principles

The "Corporate Governance Principles" published by the Capital Markets Board (CMB) which were declared in our Annual Activity Report for the year ending 2023 were met during the period 1 January 2024 - 31 March 2024.

8. Amendments in The Articles of Association

None.

B - Financial Rights Given to Board Members and Executive Management

1. Total Amount of Financial Rights Like Attendance Fee, Wages, Bonus, Premium and Dividend Payments
   The relevant section of the minutes of the General Assembly dated 28 March 2024 is as follows:
   In the 9th article of the agenda related to the Rate Setting of the Board Members', the proposal was read by the representative of ATAER Holding A.Ş. Baran ERDEM, it was submitted to the General Assembly's approval and in accordance with the proposal;
   It was decided by the majority of votes that; no wages will be paid to the Board members representing Group B shares, the monthly net wage that will be paid to the members representing Group A shares will be net TRY 22.700 (monthly, in cash), the wages of independent Board members will be net TRY 38.000 (monthly, in cash) and the new wages valid from the date of 1 April 2024.
   Wages of the Executive Management is determined by the Board. Performance based additional payment is given to paid monthly personnel including Executive Management.
   No payables were given, no loans were issued directly or through a third party and no indemnity was given (like sureties) to Board Members or Executive Management during the period.
   No payment of performance was made to Board Members.
2. Allowances Given, Travel, Housing and Representation Expenses and Real and Cash Advances, Insurance and Other Pledges

A total of TRY 21.746 thousand is recorded as expense related to Company Board Members and Executive Management for the period 1 January - 31 March 2024.

C - Research and Development Activities

OYAK Mining Metallurgy conducts its research and development activities at "Erdemir R&D Center" certified by the Republic of Turkey Ministry of Industry and Technology in 2014. Erdemir R&D Center performs activities in five main areas: raw materials and iron making, steel making and casting technologies, hot rolled products and process, cold rolled products and process, energy and environment.

Erdemir R&D Center serving OYAK Mining Metallurgy has well-equipped laboratory facilities, such as material characterization, thermomechanical simulation, metal forming, welding, corrosion, fatigue, enameling, rheology, spectral analysis, inclusion analysis and X-ray diffraction, etc., and also simulators for pilot scale trials on raw material and product development, such as agglomeration systems, coking, sintering, melting, rolling and coating processes.

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The number of flat products has reached 583 with the addition of 1 new flat steel grades that was developed in the first quarter of 2024. As in the scope of R&D activities, 8 projects have been completed and 55 projects have been going further during that period. Erdemir's R&D team has contributed to the intellectual capital of our company by presenting 90 papers and posters at various national/international iron and steel conferences to date.

D - Activities and Important Developments Regarding the Activities

1. Investment Activities

Operating within the modern plants and by modern production technology, OYAK Mining Metallurgy produces competitive products globally and continues its investments aligned for continuous development strategy. In this scope;

In Erdemir Plants:

The Energy Distribution System Additional Investments Project has been commissioned. Equipment procurement, transportation and 1st and 2nd Phase construction and assembly works are ongoing in the 4. Coke Oven Battery Project. Site works are ongoing in the No.6 Turbo Blower Project, Various Fire Detection and Extinguishing Systems Project, Structural Improvement of Erdemir Port Docks Project, Steelshop Charging Hall New Charging Cranes Investment Project and the Project of Slitting Line Transfer to ERSEM. The second phase studies continue in the Surface Inspection Systems Project. Equipment manufacturing, procurement and engineering studies continue in the 1. Galvanizing Line Level-1 Automation System Modernization Project and the No.5 Coke Oven Battery Project. Detailed engineering studies are ongoing in the Erdemir Domestic Waste Water Treatment Plant Modernization Project. Procurement and engineering studies continue in the scope of Erdemir Robotic Applications and Automation Projects.

Procurement activities continue for the New Sinter Plant Project, the Continous Annealing Line (CAL) Drives System and Level 2 Automation Modernization and the 2. Hot Strip Mill Investment Projects.

In Isdemir Plants:

The first heat has been vacuumed in the Vacuum Degassing Plant Project and tests are ongoing. Equipment procurement, manufacturing and site activities continue within the scope of the 1. New Blast Furnace Project and the Boiler No.3 Retubing and Burner Modification Project. Equipment shipments have been completed and construction and site activities are going on in the scope of the 1. Blast Furnace Top Recovery Turbine (TRT) Project. Engineering, equipment procurement works and field activities continue for the Port-1 New Grab Ship Unloader Cranes Project. Engineering studies are ongoing within the scope of the Upgrade of HSM Level 1 System Project and the İsdemir Port

Capacity Increase Investment Project. Equipment procurement and site activities continue in the Seawater Pumping Station Sustainability Investment and the Repair, Renovation and Strengthening Projects of Port Facility Damaged by the Earthquake.

Procurement and engineering studies continue in the scope of İsdemir Robotic

Applications and Automation Projects.

Procurement activities continue for the New Sinter Plant, the New 1. and 2. Turbo Generator and the Electricity Generation from The Steam Produced in Coke Dry Quenching Projects.

As of 31 March 2024, the Group's total investment expenditures amount to USD 167 million (31 March 2023: USD 161 million).

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2. Internal Control System and Internal Auditing Activities

Group Internal Audit Department carries out audit activities in order to evaluate and improve the effectiveness of risk management, control and governance processes of Group companies and reports directly to the Deputy Chairman and Executive Director of the Board. In accordance with Capital Markets Board regulations, the effectiveness of internal control system is evaluated by the Board of Directors at least once in a year. In this context, the Internal Audit Department regularly reports to Audit Committee, which consists of Independent Members of the Board of Directors, and provides information on internal audit activities as requested.

Besides periodic audit activities, continuous audits are performed with the Integrated Audit System. Critical controls, master data and transaction data in the SAP system are continuously evaluated by the automatic controls and business rules installed in the system.

3. Direct and Indirect Subsidiaries

The Information about Affiliates Subject to Consolidation

The main scope of business and the participation in their shareholding of the affiliates subject to consolidation are as follows:

			2024	2023
	Country of		Effective	Effective
Name of the Company	Operation	Operation	Share %	Share %
İskenderun Demir ve		Integrated Iron
Türkiye	and Steel
Çelik A.Ş.	94,87	94,87
	Manufacturing
Erdemir Madencilik	Türkiye	Iron Ore and
San. ve Tic. A.Ş.	Pellet	90	90
Erdemir Çelik Servis Merkezi	Türkiye	Steel Service
San. ve Tic. A.Ş.	Center	100	100
Erdemir Mühendislik	Türkiye	Management
Yön. ve Dan. Hiz. A.Ş.	and Consultancy	100	100
Erdemir Romania S.R.L.	Romania	Silica Steel
Production	100	100
Erdemir Asia Pacific	Singapore	Trading
Private Limited	100	100
Erdemir Enerji		Renewable
Türkiye	Energy
Üretim A.Ş.	100	100
	Production
İsdemir Linde Gaz		Industrial Gas
Türkiye	Production and
Ortaklığı A.Ş.	47	47
	Sales
Kümaş Manyezit	Türkiye	Magnesite Ore,
Sanayi A.Ş.	Refractor	100	100
Yenilikçi Yapı Malzemeleri ve		Recycling,
Türkiye	Special Purpose
Üretim San. Tic. A.Ş.	100	100
	Entity

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E - Financial Position

1. Consolidated Summary of Financial Statements

Financial statements are prepared in accordance with the CMB's Communiqué Serial:II, 14.1 and have been unaudited as of 31 March 2024.

Summary of Consolidated Financial Position

		(Unaudited)	(Audited)
		Current Period	Previous Period
	(Thousand TRY)	31 March 2024	31 December 2023
	Current Assets	152.185.324	134.518.116
	Non-current Assets	197.694.900	175.515.133
	Total Assets	349.880.224	310.033.249
	Current Liabilities	101.824.534	89.291.663
	Non-current Liabilities	33.943.052	29.212.704
	Shareholders' Equity	214.112.638	191.528.882
	Total Liabilities	349.880.224	310.033.249
Summary of Consolidated Profit or Loss
		(Unaudited)	(Unaudited)
		Current Period	Previous Period
		1 January -	1 January -
	(Thousand TRY)	31 March 2024	31 March 2023
	Sales Revenue	49.747.633	26.273.984
	Gross Profit	7.029.293	1.125.583
	Operating Profit	8.810.833	435.987
	Operating Profit Before Finance	8.933.440	378.979
	Income (Expenses)
	Profit Before Tax	6.362.668	(14.077)
	Profit (Loss) for the Period	5.846.938	65.919
	Shareholder's share in the Profit (Loss)	5.600.923	90.311
	for the Period
	EBITDA	7.419.758	414.178
	Earnings (Loss) Per Share	167%	2,58%

The Entity prepares its budgets within the frame of its strategic goals that is approved by the Board of Directors. In the regular meetings of the Board of Directors is reviewing the current position of the Entity and activities are compared with the previous period and budget targets.

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2. Key Ratios

	1 January -	1 January -
(%)	31 March 2024	31 March 2023
Gross Profit Margin	%14,1	%4,3
Operating Profit Before Finance Income (Expenses) Margin	%18,0	%1,4
EBITDA Margin	%14,9	%1,6
Profit (Loss) Margin	%11,8	%0,3
Shareholder's Share in the Profit (Loss) Margin	%11,3	%0,3

1. The Availability of Financial Sources and The Policies the Group Applies in This Framework
   Group has full access to all national and international financial sources with its market making power based on high trading volume in money markets. New funding alternatives according to changing market conditions are continuously analyzed and offers are evaluated. The debt policy of Group is developed based on the capability of cash generation and the strong equity structure. Hedging methods and amounts used against financial risks are developed based on a frame of systematic models. Within the risk tolerances, forward, futures, swap and options reflecting market conditions are implemented, if necessary.
2. Dividend Distribution Policy
   Group's Dividend Distribution Policy is as follows:
   As a principle, Company implements the policy of distributing all of its distributable profit in cash within the provision of forecasted free cash flow generation by considering financial leverage ratios, investment/financing needs and anticipation of the market under the scope of effective regulations and clauses of Company's Articles of Association. The dividend distribution policy is reviewed annually by the Board of Directors every year considering to national and global economic conditions, the projects on the company's agenda and the state of its funds.
   Dividend is paid by fixed or variable installments in accordance with the legislation by giving authority to the Board of Directors at the General Assembly Meeting, where dividend distribution is decided, until 15 December of the relevant calendar year.
   General Assembly is authorized for the "distribution of dividend advance" in accordance with relevant legislations.
   At Annual General Assembly dated 28 March 2024, dividend distribution gross dividend per share: TRY 0,50 amounting to TRY 1.750.000 thousand from 2023 net profit was approved by majority of votes. As of 28 March 2024, which is the dividend distribution decision date of the Company, dividend pertaining to the shares owned by the Company due to the ownership of 3,97% of its own shares with a nominal value of 1 TRY, is shown by netting off the amount of dividends to be distributed. Dividend distribution started on 16 April 2024. The Group approved TRY 74.337 thousand dividend to non-controlling shares on Isdemir, which is subsidiary of the Group.