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To the Management of “QARDAŞLAR MEBEL-3” Limited Liability Company

Opinion

I have audited the financial statements of “QARDAŞLAR MEBEL-3” LLC, which comprise the statement of financial position as of December 31, 2020, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

I conducted my audit in accordance with International Standards on Auditing (ISA). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Company in accordance with the ethical requirements that are relevant to my audit of the financial statements in Azerbaijan, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Significant Uncertainty Related to Going Concern

I draw attention to the explanatory notes in the financial statements of “QARDAŞLAR MEBEL-3” LLC, which describe the factors of uncertainty related to the Company's ability to continue as a going concern due to the spread of the coronavirus infection and its economic consequences. The explanatory notes indicate that there is significant uncertainty as to whether “QARDAŞLAR MEBEL-3” LLC can continue as a going concern under the current circumstances. My opinion is not modified in respect of this matter.

Key Audit Matters

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

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

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

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

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

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

Independent Auditor

Ilham Isfandiyar oglu Haji-Azizov

Baku, Azerbaijan Republic

March 9, 2021

"QARDAŞLAR MEBEL-3" Limited Liability Company Cash Flow Statement

December 31, 2020
(In Azerbaijani Manat)

With exports to the country of opportunities, the “Gardashlar” furniture company supports the Armed Forces Assistance Fund given the situation in the country.

Ali Mirzayev, the director, expressed the company’s support to the state in the current situation: “Azerbaijan is a homeland for all of us. We must unite and stand with our state. We, as "Gardashlar" furniture company, support our Mr. President and army, and believe in the earliest liberation of the occupied territories.”

Ali Mirzayev has called on all entrepreneurs to join this initiative.

“Today we must mobilize all our forces and stand with the state and the army.

We, as entrepreneurs, must do whatever possible during these challenging times. "Gardashlar" furniture company has called on all entrepreneurs of the country to join this initiative. We always stand with Ilham Aliyev, the Commander-in-Chief, and our strong army, and we are ready to do everything in our power to liberate our lands.”

"Gardashlar" furniture company is Azerbaijan’s largest producer of military furniture. The company fully complies with regulations adopted by the head of the state and the relevant authorities over the current martial law.

Despite the pandemic in Azerbaijan, the Qardaşlar Furniture Company analyzed the current situation in the sector and implemented a pre-defined crisis communication plan to increase its sales.

The head of the company, Ali Mirzayev, said that unlike many companies during the pandemic, his company gained additional orders through transparent operations.

“It has always been important for Qardaşlar Furniture Company to work transparently. As the pandemic spread through many countries, we could foresee its arrival to our country as well. Our analysis showed that companies and individuals operating in the furniture sector of Azerbaijan would not be able to overcome this situation. As a result, many companies and individuals will face difficulties when fulfilling their orders. This, in turn, will severely impact the existing relations between counterparts.

Ali Mirzayev provided information about the company's activities, and also noted that the company had received the financial support for transparent operations from the state had prevented its current situation from further deterioration.

"We know there are advantages to working openly, and the state will certainly support such companies, when necessary. On the other hand, the pandemic has once again shown that companies operating in a non-transparent way find themselves in a difficult situation by hiding their income and expenses. Companies that order furniture should also focus on such cases. If customer companies want their orders completed, they should give preference to cooperation with sound companies in the market. Despite the ongoing quarantine period, our company currently fulfills new orders under the rules set by the Task Force.”

It should be noted that the Qardaşlar Furniture Company has recently decided to produce a simplified version of its smart office furniture. One of the main functions retained in the simplified version will allow for the adjustment of the desk's height according to the user's preference. Companies or individuals interested in the smart office desks can contact us at (077) 486-24-22.

Gardashlar furniture company, which manufactures furniture based on the needs of individual and corporate clients, has announced the launch of smart furniture.

According to the head of the company, Ali Mirzaev, the production of smart furniture was a long-planned step.

“I think that technology should not bypass the furniture industry. Just as different devices can simplify people's work, we need to make their lives more comfortable by adding functionality to our own furniture. That is why, being Gardashlar Furniture Company, we decided to produce smart furniture based on human behavior. At the initial stage, we plan to apply this trend to office furniture. Our study shows that most private and public sector employees spend most of their time in a sitting position. In many cases, this seriously affects both health and quality of work. Since the office desks we provide are adjustable, people can work behind them, both sitting and standing. It will also help prevent overweight and spinal problems.”

The head of the company talked on the technological advantages that they added to office desks, noting that these additions are necessary elements in a person’s daily life.

“Previously, office furniture had limited functionality, but now you can create more opportunities through a combination of furniture and technology. At the initial stage, we intend to install a cooling system for laptops on office tables with adjustable height, heating to maintain the warmth of the liquid in the cup, a wireless charger for the phone, and 2 USB access points. The prototype of smart furniture has already been made by us. We are ready to increase production depending on the number of orders. This is the first step among local furniture companies, and we plan to expand our activities in the future and will try to apply the integration of furniture and technology into other types of furniture. "

Note that the company also plans to sell furniture in the US market by 2020. The furniture company Gardashlar has already begun negotiations with several companies in this area in America. Currently, Gardashlar Furniture Company is represented in 16 furniture categories throughout Azerbaijan.

“Gardashlar Mebel”, a gold member of the “Caspian European Club” in Azerbaijan, took part in the “Second Republican Forum of Foreign Trade Participants” in Baku.

Ali Mirzayev, director of the “Gardashlar Mebel” company, who attended the forum, said the event was important for foreign trade participants.

"We support the reforms implemented by the State Customs Committee and the Ministry of Taxes over the past two years to ensure transparency. I am very glad that the name of the company "Gardashlar Mebel" is among the participants of the "Green Corridor". As a company, we estimate becoming 505 of the number of “Green Corridor” participants in a short period of time and exceeding the turnover to $ 8 billion as part of the attention paid to the development of entrepreneurship in the country. As “Gardashlar Mebel”, other advantages, such as the creation of a favorable business environment within the “Green Corridor” system, the provision of a rapid transition in customs and increased transparency in customs control, will further increase the export potential of local market participants”.

It is worth to point out that “Gardashlar Mebel” is working to introduce private furniture concepts to its customers in 2020. The company plans to produce more practical and functional furniture based on customers’ behaviors.

“Gardashlar Mebel”, which produces furniture in more than 15 categories in Azerbaijan, has become a gold member of the Caspian European Club.

The director of "Gardashlar Mebel" Ali Mirzayev remarked about the development of local production while speaking at the event.

“I am very glad that the attention paid to the development of local production in Azerbaijan is increasing day by day. Accelerating this process will create opportunities to open additional workplaces in the furniture industry, as in every sector. We believe that increasing customs duties which applied to ready furniture imported into the country will contribute to the development of local production. In addition, appropriate exemptions will be applied to customs duties on the import of raw materials and equipment for local producers. It is true that today a 20 million decrease is observed in the volume of 12 billion pieces of ready furniture imported into the country. We evaluate it as a result of support for increasing local production, and we believe that the figures for local furniture production will be higher in the future. "

Sharing his experience in foreign countries, the director of the company said that many foreign countries offer companies to invest in their country. Therefore they are interested in providing any support to foreign furniture manufacturers who want to export furniture to their country. "We have submitted our proposals to the Ministry of Economy and we assume that they will take the right steps to improve the country's economy in this aspect."

We want to point out that “Gardashlar Mebel” company has supported the progress of the design field by acting as the general sponsor of the recent 5th design forum.

“Gardashlar Mebel”, one of the largest and most modern furniture manufacturers in Azerbaijan, has announced plans for 2020.

The director of the company Ali Mirzayev said that 2019 was a successful year for Gardashlar Mebel.

“The focus on the development of the non-oil sector in 2019 affected the growth of our domestic production. As in previous years, our customer satisfaction continued with a positive tendency last year. Also, as a company, we were awarded the nomination "Furniture Manufacturer of the Year" in 2019. We estimate all these and other innovations as a continuation of our plans for next year. "

Announcing his plans for 2020, the director of the company noted that the strategic development map is broad. "This year, as in previous years, we will continue to invest in human capital. We plan to organize training in relevant fields to make factory employees more professional. Starting in 2020, we aim to do a lot of work to enlighten customers. As “Gardashlar Mebel”, we plan to add more practicality to the furniture we produce by focusing on learning customer skills”.

"OUR FURNITURE DESERVES TO STAND SIDE BY SIDE WITH WORLD BRANDS "

Giving information about the export of their products to foreign markets, Ali Mirzayev said that this issue is a priority for them. “We are interested in exporting our furniture under the "Made in Azerbaijan" brand.

Although we have achieved certain outcomes in this course, we do not want to be satisfied with it. We know that the furniture we produce deserves to stand side by side with other world brands.

We will use all possible marketing tools to achieve this goal faster. “We want to mention that “Gardashlar Mebel” currently has two exhibition shops all over the country. One of them is located at 12A Hasan Aliyev Street, Baku, and the other is located at 8F Binagadi Highway, Bilajari settlement.

“Gardashlar Mebel” which specializes in its special concepts in the furniture sector, has introduced a new concept as part of a domestic market research program. This time, the company offered a unique solution to protect books in libraries operating in the country from external influences. According to the director of the company Ali Mirzayev, the protection of books in libraries from external influences has always been a priority for them:

“We started working on this course by analyzing the current situation in libraries. Then, based on the information we received we found such a unique solution that would serve to protect books from external influences for a long time. The proposed concept can be made in any size, depending on the width of the space. The structure can move comfortably along the lines to be installed on the floor. Moreover, the boards on the structure allow you to divide the books into categories. Installation and dismantling of the structure are carried out in a short time. To protect the books during the repair of the place, it is possible to assemble the shelves in one line by moving the steering wheel on the structure in the appropriate direction. We believe that the unique solution we offer will serve to preserve our cultural heritage”.

We want to mention that the “Gardashlar Mebel” company, which operates under the slogan "Just wish", is engaged in the production of furniture in more than 15 areas. The company is also a participant in many large and small projects in the country.

The Qardaşlar mebel which started in 2015, is one of the largest furniture manufacturers in Azerbaijan. The factory participated in several international exhibitions and collaborates with many well-known brands. The founder of Qardaşlar mebel, a young businessman Ali Mirzoev, answered AZERTAC questions about the production, goals, and successes of the factory.

- How does the development of the non-oil sector affect your business?

- The emphasis on the non-oil sector developing, diversifying the economy, increasing local production and export turnover, as well as independence from imports – are part of successful reforms in the country.

Purposeful steps taken to develop all sectors of the economy encourage entrepreneurs to invest in new projects and create new jobs. I would like to emphasize that the furniture industry in our country is well developed and produces high-quality furniture products.

Q: What can you say about the activities of “Qardaşlar mebel”, that you’re the founder of?

- Furniture factory “Qardaşlar mebel” has been operating since 2015. The factory has an area of ​​two hectares and is currently considered one of the largest in Azerbaijan. The company includes more than 100 employees and focus on their professionalism. Participating in exhibitions held in leading countries of the world, factory employees get acquainted with the latest technologies, modern equipment in the furniture industry, and also gain new customers and partners.

- The quality and warranty on the furniture are one of the problems that interest customers most of all. What importance is given to this matter in Qardaşlar mebel?

“Qardaşlar mebel” was able, in the very short time, to raise the quality of production and customer service to a level that meets international standards. Thus, product quality and management system have been awarded international certificates ISO 9001: 2008 and ISO 9001: 2015.

All furniture equipment in “Qardaşlar mebel” meets modern European standards. So, 80% of the equipment was purchased from the famous Italian company GRIGGIO Woodworking Machinery and Turkish companies Duresslar Machine, Reha Machina, Texan Machine, Healthy Machine, Tempoaksesuar, Label Workshop, and FetaEğitimMerke. It is worth noting that, Reha Machina company works closely with such major automotive brands as RangeRover and Jaguar.

In the manufacture of furniture sets, high-quality materials from wood, metal parts, paints, and leather and fabric coatings, mattresses are used. The factory includes several large industrial buildings. In addition to the office, home, and garden furniture, the factory also produces school, military, and medical furniture.

We guarantee high-quality furniture sets, timely delivery and complete installation of furniture.

I would also like to note that many state-owned enterprises in our country contact us when updating the material and technical base.

At Qardaşlar mebel, we always strive to please our customers by offering them quality and affordable products.

- The sphere of furniture production requires a creative approach and aesthetic taste. Can “Qardaşlar mebel” please customers from this perspective?

- We work with a team of experienced designers to meet the expectations of our customers. For the same purpose, a lot of work has been done to automate the production process and manage the factory. Recently “Qardaşlar mebel” has updated its brand book, logo, and website (www.gardashlar.com). A corporate character was also created - the Grand Master.

- Your success and future goals are of interest to us ...

- This year, the Buta Palace hosted the National Award “AzeriBusinessAward”, which was attended by about 350 businessmen, representatives of many government agencies, up to 20 foreign ambassadors in Azerbaijan, as well as a group of businessmen from Germany, Georgia, Saudi Arabia, and Uzbekistan. “Qardaşlar mebel” won an award in the “Furniture Manufacturer of the Year” category at this event. At the preliminary exhibition “Exhibition of Achievements of Laureates”, the stand belonging to the factory aroused great interest among the participants.

The purpose of Qardaşlar mebel is to enter the world market and supply Azerbaijani furniture to world markets under the Made in Azerbaijan brand. At present, a lot of work is being done in this direction, and we can confidently declare that we will achieve this goal soon.

- How do customers better get to know your products?

- At present, there are two factory exhibition halls, both of which are located in Baku. We invite everyone interested in our brand to our showrooms to become more familiar with our products.

Qardaşlar Mebel has gained customer's popularity since its inception. Qardaşlar Mebel, both people and private companies and government agencies, At the end of 2018 and at the beginning of 2019 offers a list of tenderers won:

27.11.2018 - Azerbaijan University of Languages

20.12.2018 - Azerbaijan Railways CJSC

26.12.2018 - Advanced Industrial Solutions LLC

17.01.2019 - Rafad LLC

18.01.2019 - "Azeri Med" LLC

25.01.2019 - Ministry of Defense of the Republic of Azerbaijan

26.01.2019 - General Prosecutor's Office of the Republic of Azerbaijan

28.01.2019 - Agrarian Credit CJSC Non-Bank Credit Organization

28.01.2019 - Çinar Construction LLC

28.01.2019 - Azerbaijan University of Architecture and Construction

29.01.2019 - Ultra Lab LLC

30.01.2019 - State Examination Center

30.01.2019 - Baku Mechanical and Electronics LLC

05.02.2019 - "Imdad Konsalting" LLC

07.02.2019 - Azerbaijan Labor and Social Relations Academy

07.02.2019 - Central District Hospital of Gabala 

08.02.2019 - MEGA PARK -1 U / B

18.02.2019 - Caspian Marine Services

22.02.2019 - The Central Bank of the Republic of Azerbaijan

25.02.2019 - Naiqin K Tovuz - Baltiya LLC

05.03.2019 - ADU-Confucius Institute

05.03.2019 - Central District Hospital of Astara 

14.03.2019 - Central District Hospital of  Quba 

15.03.2019 - Central District Hospital of Lankaran

28.03.2019 - Central District Hospital of Khachmaz

29.03.2019 - Headquarters of the Internal Troops of the Ministry of Internal Affairs of the Republic of Azerbaijan

08.04.2019 - Ganja State University

10.04.2019 - Food Safety Agency of the Republic of Azerbaijan

19.04.2019 - Mortgage and Credit Guarantee Fund of the Republic of Azerbaijan

17.05.2019 - Azerbaijan State Customs Committee

As a continuation of our success, we were awarded the ISO 9001: 2015 certificate. When our competitors advertised themselves, we worked for customer satisfaction, because of the best advertising customer satisfaction.

On February 23th, Buta Palace hosted the presentation of a representative of several government agencies, including businessmen from Germany, Georgia, Saudi Arabia, and Uzbekistan, 300-350 businessmen, ambassadors of 20 foreign countries of Azerbaijan. National Award "Qardaşlar Mebel MMC", "Furniture Manufacturer of the Year" award. The Brothers Furniture LLC exhibition, which was held before the event, also attracted great interest from the participants. At the event, President of Qardaşlar Mebel LLC Ali Mirzayev said that our company is not only wooden furniture but also iron furniture

All equipment of our factory complies with Modern European Standards. All production processes in the factory are governed by the ISO 9001: 2015 Quality Management System and the entity has the above-mentioned certificate. We guarantee that any goods are delivered to high quality, a wide range of products, as well as to timely and fully responsive address delivery.