VESTEL BEYAZ EŞYA SANAYİ VE TİCARET ANONİM ŞİRKETİ CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2012 TOGETHER WITH AUDITOR S

Transcription

1 VESTEL BEYAZ EŞYA SANAYİ VE TİCARET ANONİM ŞİRKETİ CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2012 TOGETHER WITH AUDITOR S REVIEW REPORT

2 CONDENSED INTERIM FINANCIAL STATEMENTS TOGETHER WITH AUDITOR S REVIEW REPORT Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. To the Shareholders and Board of Directors of We have reviewed the accompanying statement of condensed interim financial position of Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. (the Company ) as at 30 June 2012, and the statements of condensed interim comprehensive income, changes in equity and cash flows for the six-month period then ended. Management is responsible for the preparation and fair presentation of this condensed interim financial information in accordance with financial reporting standards published by the Capital Markets Board. Our responsibility is to express a conclusion on this condensed interim financial information based on our review. Scope of review We conducted our review in accordance with auditing standards published by the Capital Markets Board, Communiqué: X No: 22. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards published by the Capital Markets Board and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information of Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. is not prepared, in all material respects, in accordance with financial reporting standards published by the Capital Market Board. EREN Bağımsız Denetim ve Yeminli Mali Müşavirlik A.Ş. Member Firm of Grant Thornton International Istanbul, Nazım Hikmet Partner Abide-i Hürriyet Caddesi Bolkan Center No:211-C Kat: Şişli İstanbul

3 AS OF 30 JUNE 2012 CONTENTS PAGE CONDENSED INTERIM BALANCE SHEETS CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE INCOME... 3 CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY... 4 CONDENSED INTERIM STATEMENTS OF CASH FLOWS... 5 NOTE 1 ORGANIZATION AND NATURE OF ACTIVITIES... 6 NOTE 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS NOTE 3 SEASONALITY NOTE 4 SEGMENT INFORMATION NOTE 5 CASH AND CASH EQUIVALENTS NOTE 6 DERIVATIVE FINANCIAL INSTRUMENTS NOTE 7 FINANCIAL LIABILITIES NOTE 8 PROPERTY, PLANT AND EQUIPMENT NOTE 9 INTANGIBLE ASSETS NOTE 10 PROVISIONS, COMMITMENTS AND CONTINGENT LIABILITIES NOTE 11 OTHER INCOME NOTE 12 FINANCIAL INCOME NOTE 13 FINANCIAL EXPENSE NOTE 14 EARNING PER SHARE NOTE 15 RELATED PARTY DISCLOSURE NOTE 16 FOREIGN CURRENCY POSITION NOTE 17 SUPPLEMENTARY CASH FLOW INFORMATION... 24

4 1 CONDENSED INTERIM BALANCE SHEETS AS OF 30 JUNE 2012 AND 31 DECEMBER 2011 Reviewed Audited Note Assets Current assets Cash and cash equivalents Trade receivables -Related parties Third parties Other receivables Inventories Derivative financial instruments Other assets Total current assets Non-current assets Property, plant and equipment Intangible assets Other assets Total non-current assets Total assets The accompanying notes are an integral part of these condensed interim financial statements.

5 2 CONDENSED INTERIM BALANCE SHEETS AS OF 30 JUNE 2012 AND 31 DECEMBER 2011 Liabilities and equity Reviewed Audited Note Current liabilities Financial liabilities Trade payables -Related parties Third parties Provisions Other liabilities Total current liabilities Non-current liabilities Financial liabilities Provision for employment termination benefits Deferred tax liability Total non-current liabilities Equity Paid in capital Adjustments to share capital Share premium Restricted reserve Retained earnings Net profit for the period Total equity Total liabilities and equity The accompanying notes are an integral part of these condensed interim financial statements.

6 3 CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE INCOME AND 30 JUNE 2011 Note Reviewed Audited Continuing operations Revenue Cost of sales (-) ( ) ( ) ( ) ( ) Gross profit Marketing, selling and distribution expenses (-) (15.229) (31.562) (9.026) (17.294) General administrative expenses (-) (12.481) (11.081) (6.686) (5.947) Research and development expenses (-) (9.163) (11.332) (4.816) (6.630) Other income Other expense (-) (767) (853) 96 (656) Operating profit Financial income Financial expense (-) 13 (82.978) ( ) (36.074) (59.687) Income /(loss) before tax (939) Tax (expense) / benefit Current tax expense (-) (916) (5.216) (1.715) Deferred tax benefit (1.779) (1.285) 34 Net income /(loss) from continuing operations (189) Other comprehensive income Total comprehensive income/ (loss) (189) Earnings per share (TL, full) 14 0,10 0,09 (0,00) 0,05 The accompanying notes are an integral part of these condensed interim financial statements.

7 4 CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY AND 30 JUNE 2011 Paid in capital Adjustments to share capital Share premium Restricted reserve Retained earnings Net income for the period Total equity Balances at Transfer to retained earnings (25.258) -- Transfer to restricted reserve (2.854) Dividend paid (22.404) -- (22.404) Net income for the period Balances at Balances at Transfer to retained earnings (20.145) -- Transfer to restricted reserve (965) Net income for the period Balances at The accompanying notes are an integral part of these condensed interim financial statements.

8 5 CONDENSED INTERIM STATEMENTS OF CASH FLOWS AND 30 JUNE 2011 Note Reviewed Audited Income before tax Adjustments to reconcile net cash provided from operating activities to income before taxes Net cash flow from operating activities before changes in operating assets and liabilities Changes in operating assets and liabilities 17 (81.230) ( ) Corporate taxes paid (2.896) (3.510) Net cash flows used in operating activities (28.230) (64.489) Cash flows from investing activities Changes in financial assets held for trading Acquisitions of property, plant and equipment 8 (42.758) (29.022) Cash provided from sale of property, plant and equipment and intangible assets Acquisitions of intangible assets 9 (9.035) (5.621) Net cash used in investing activities (51.456) (18.968) Cash flows from financing activities Proceeds from bank borrowings Repayment of bank borrowings (98.981) ( ) Dividend paid -- (22.404) Interest paid (4.783) (2.331) Interest received Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents (1.573) Cash and cash equivalent as of 01 January Cash and cash equivalent as of 30 June The accompanying notes are an integral part of these condensed interim financial statements.

9 6 NOTE 1 ORGANISATION AND NATURE OF ACTIVITIES Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. (the Company or Vestel Beyaz Eşya ) was incorporated in 1997 under the Turkish Commercial Code and its head office is located at Zorlu Plaza, Avcılar / Istanbul. The Company started its operations in 1999 and produces refrigerators, room air conditioning units, washing machines, cookers, dishwashers and water heaters. The Company s production facilities occupy square meters of enclosed area located in Manisa Organized Industrial Zone on total area of square meters. The Company is a member of Vestel Group of Companies which are under the control of the Ahmet Nazif Zorlu family. The Company performs its foreign sales and domestic sales via Vestel Dış Ticaret A.Ş. and Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş., respectively, which are also members of Vestel Group of Companies. The Company is registered to Capital Market Board and its shares have been quoted to Istanbul Stock Exchange since 21 April As of, the composition of shareholders and their respective percentage ownership are summarized as follows: Shareholding % Vestel Elektronik Sanayi ve Ticaret A.Ş. 68,5 Shares held by public (ISE) Vestel Elektronik Sanayi ve Ticaret A.Ş. 5,9 Other shareholders 25,6 As of 30 June 2012, the number of personnel employed was ( : 4.860). The financial statements for the period ended 30 June 2012 (including comparatives) were approved by the Board of Directors on ,0

10 7 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 accounting and reporting principles issued by the CMB, namely CMB Financial Reporting Standards. CMB regulated the principles and procedures of preparation, presentation and announcement of financial statements prepared by the entities with Communiqué XI, No. 29, Principles of Financial Reporting in Capital Markets. The Communiqué is effective for the annual periods starting from 1 January According to the Communiqué, the entities shall prepare their financial statements in accordance with the International Financial Reporting Standards ( IAS / IFRS ) endorsed by the European Union ( EU ). Until the differences of the IAS / IFRS as endorsed by EU from the ones issued by the International Accounting Standards Board ( IASB ) are announced by the Turkish Accounting Standards Board ( TASB ), IAS / IFRS issued by the IASB shall be applied. Accordingly, Turkish Accounting Standards / Turkish Financial Reporting Standards ( TAS / TFRS ) issued by the TASB which are in line with the aforementioned standards shall be considered. With the decision taken on 17 March 2005, the CMB announced that, effective from 1 January 2005, the application of inflation accounting is no longer required for the companies operating in Turkey and preparing their financial statements in accordance with CMB Financial Reporting Standards. Accordingly, IAS 29, Financial Reporting in Hyperinflationary Economies issued by the IASB, has not been applied in the financial statements for the accounting year commencing from 1 January In accordance with the Communiqué No: XI-29, entities are allowed to prepare a complete or condensed set of interim financial statements in accordance with IAS 34, Interim Financial Reporting. In this respect, the Company has preferred to prepare condensed financial statements in the interim periods and prepared the aforementioned condensed financial statements in compliance with CMB Financial Reporting Standards. As the differences of the IAS / IFRS endorsed by EU from the ones issued by the IASB have not been announced by TASB as of the date of the preparation of these financial statements, the financial statements have been prepared within the framework of Communiqué XI, No. 29 and related promulgations to this Communiqué as issued by the CMB, in accordance with the CMB Financial Reporting Standards which are based on IAS / IFRS. The financial statements and the related notes to them are presented in accordance with the formats recommended by the CMB with the announcements dated 14 April 2008 and 9 January 2009 including the compulsory disclosures Going Concern Company prepared financial statements in accordance with the going concern assumption Functional and presentation currency The accompanying financial statements have been presented in Turkish Lira which is also the functional currency of the Company.

11 Offsetting Financial assets and liabilities are offset and the net amount 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 asset and settle the liabilities simultaneously Comparatives and restatement of prior periods financial statements The financial statements of the Company include comparative financial information to enable the determination of the balance sheet and performance. Comparative figures are reclassified, where necessary, to conform to changes in presentation in the current year financial statements and the significant changes are explained. For the comparability of the current financial statements, these financial statements are reclassified if necessary. As of , Deferred tax asset amounting to TL was netted off with Deferred tax liability. As of , Unearned interest on payables amounting to TL netted off with Unearned interest on receivables Restatement and Errors in the Accounting Policies and Estimates Material changes in accounting policies or material errors are corrected, retrospectively; by restating the prior periods financial statements. The effect of changes in accounting estimates affecting the current period is recognised in the current period; the effect of changes in accounting estimates affecting current and future periods is recognised in the current and future periods Critical accounting estimates, assumptions and judgments The preparation of financial statements requires management to make estimates and assumptions that may affect the amount of assets and liabilities recognized as of the balance sheet date, explanations for the contingent assets and liabilities and the amounts of revenues and expenses realized in the reporting period. Actual results may differ from these estimates. The estimates are reviewed on an ongoing basis, revisions to accounting estimates are recognized in the period in which the revision is made. The estimates and assumptions that may cause a material adjustment to the carrying amounts of assets and liabilities within the following financial reporting periods are set out below: Physical inventory verifications are performed periodically and allowance for diminution in value is provided for items which are determined to be unsellable by the technical personnel. All stocks are subjected to review and their usage possibility ascertained on basis of the opinion of the technical personnel; provisions are set aside for items expected not to have usage possibility. Net realizable value of the inventory is determined based on the estimated selling prices, and estimated expenses to be incurred to make the sale. When the net realizable value of inventory is less than its cost, the inventory is written-down to the net realizable value and the expense is included in the statement of income in the period the write-down occurred. In accordance with the accounting policies stated in note 2.8, property, plant and equipment and intangible assets are carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to write off the cost of assets over their useful lives, using the straight line method. The estimated useful lives are reviewed at each balance sheet date with the effect of any changes in the estimate accounted for on a prospective basis.

12 Summary of significant accounting policies The condensed interim financial information for the period ended 30 June 2012 has been prepared in accordance with IAS 34 Interim Financial Reporting. The condensed interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with financial reporting standards published by the Capital Market Board Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company. At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company Standards, amendments and interpretations effective in 2012: IAS 12 (Amendment) Income Taxes: Recovery of Underlying Assets IFRS 7 (Amendment) Financial Instruments-Disclosures Transfer of Financial Assets Standards, amendments and interpretations in issue but not yet effective and not early adopted by the Company: IAS 1 (Amendment) Presentation of Financial Statements Presentation of Items of Other Comprehensive Income IAS 19 (Amendment) Employee Benefits IAS 27 (Amendment) Separate Financial Statements IAS 28 (Amendment) Investments in Associates and Joint Ventures IAS 32 (Amendment) Financial Instruments: Presentation- Offsetting of Financial Assets and Financial Liabilities IFRS 7 (Amendment) Financial Instruments-Disclosures-Offsetting of Financial Assets and Financial Liabilities IFRS 9 Financial Instruments- Classification and measurement IFRS 10 Consolidated Financial Statements IFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities IFRS 13 Fair Value Measurement IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Management of the Company anticipates that all of the pronouncements detailed in above will be adopted in the Company s accounting policy for the first period beginning after the effective date of the pronouncement. Management of the Company has decided that these new standards and interpretations have been issued but are not expected to have a material impact on the Company s financial statements.

13 10 NOTE 3 - SEASONALITY The Company produces washing machines, dishwashers, refrigerators, air conditioning units, water heaters and cookers. White goods sales generated by washing machines, cookers and dishwashers are not affected by seasonal fluctuations. However refrigerators and air conditioning units which have cooling characteristics are seasonally affected; during the summer months may exceed the sales in winter months by 2 to 3 times. NOTE 4 - SEGMENT INFORMATION The Management has decided to include the industrial sections in the first phase of the reporting as risks and returns of the Company are affected by developments in the white goods sector. The Management believes that the Company operates in a single industry sector as the risks and returns for the activities do not show any material difference because the scope of activity covers only the production of white goods and the production processes and classes of customers are similar. As a result all information related to the first stage reporting has been fully presented in the attached financial statements The Management has decided to use the geographical sections in the second stage of the reporting taking into account that risks and returns are affected by the differences in each region. Geographical segments Turkey Europe Other Gross sales Sales discount (-) (367) (878) (236) (451) Net sales The amount of export is TL for the period.export sales are denominated in EURO, USD and RUR as 88,8%,7,8% and 3,4% of total export respectively. The carrying value of segment assets and costs incurred in order to obtain these assets are not separately disclosed because all assets of the Company are located in Turkey.

14 11 NOTE 5- CASH AND CASH EQUIVALENTS Cash Bank deposits - Demand deposit Time deposit Bank overdrafts (-) -- (105) Cash and cash equivalents presented in cash flow statement As of balance sheet dates, the maturity date of time deposit account was July 2012 ( : January 2012) and the interest rates are given below: - TL -- %9,5 - USD -- %1,5 - EUR %1,0 %1,5 NOTE 6 DERIVATIVE FINANCIAL INSTRUMENTS Fair Value Fair Value Contract Amount Assets Liabilities Contract Amount Assets Liabilities Held for trading Forward foreign exchange contracts

15 12 NOTE 7 FINANCIAL LIABILITIES Current financial liabilities Bank borrowings - TL USD EUR Non-current financial liabilities Bank borrowings - TL USD EUR Maturity schedule of Company s total current and non-current financial liabilities is as follows: Due in one year One to two years Two to three years Three to four years Four to five years Over five years The Company obtained various loans denominated in EUR from non-turkish financial institutions with a maturity of 5 years in years between for financing investments in production machinery and equipment. As of, short term payable of TL (EUR thousand) ( : TL (EUR thousand)) and long term payable of these loans amounted to TL (EUR thousand) ( : TL (EUR thousand)). The principal amounts of these loans are repayable at six months intervals and the last repayment date is December The annual interest rate is between Euribor + 0,3% and 0,75%. As of, The Company also obtained various Turkish Lira and foreign currency bank loans for operational purposes which included a short term payable of TL (TL , EUR thousand, USD thousand), ( : TL (TL 9.147, EUR thousand, USD thousand)), and long term payable of TL ( : TL , (EUR thousand and USD thousand)). The annual interest rate is 12,00% - 13,51 % for TL, 1,71 % - 4,63 % for EUR and 2,27% - 5,50 % for USD. The Company has given various letters of guarantees to financial institutions for obtained bank loans (note 10).

16 13 NOTE 8 PROPERTY, PLANT AND EQUIPMENT The amount of property, plant and equipment purchased during the six month period ended amounts to TL ( : TL ). The cost of property, plant and equipment sold during the six month period ended amounts to TL 612 ( : TL 3.815). Leased assets included in the table above comprise plant and machinery amounting to TL net of accumulated depreciation ( : TL 5.205). As of, property, plant and equipment were insured for TL ( : TL ). NOTE 9 INTANGIBLE ASSETS The amount of intangible assets purchased during the six month period ended amounts to TL ( : TL 5.621). The cost of intangible assets sold during the six month period ended amounts to TL 58 ( :Nil).

17 14 NOTE 10 PROVISIONS, COMMITMENTS AND CONTINGENT LIABILITIES a) Provision for expenses Current Warranty provision Provision for legal claims Movement of provision for expenses is as follows: Warranty provision Legal claims Total Opening balance, Additions Disposals(-) (19.627) -- (19.627) Ending balance, In accordance with the Board of Directors Decision of Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş. ( Vestel Dayanıklı ), warranty provisions which arises from the sales of Vestel Dayanıklı, has been released and accounted under other income due to the transfer of warranty expenses to Vestel Dayanıklı. b) Contingent asset As of the balance sheets date s letters of guarantee obtained from customers and suppliers is shown below: Letters of guarantee Cheques and notes Guarantees received from related companies Vestel Elektronik Sanayi ve Ticaret A.S. has guarantee to Royal Bank of Scotland PLC and HSBC Bank A.S. in favour of Vestel White for derivative operations.

18 15 c) Commitments and contingencies Collaterals, Pledges, Mortgages ( CPM ) given by the Company are as follows: CPM s given by the Company USD ('000) EUR ('000) TL ('000) Total TL equivalent A. On behalf of its own legal entity B. On behalf of fully consolidated subsidiaries C. CPM's given on behalf of third parties for ordinary course of business D. Other contingent liabilities i. Total amount of CPM's given on behalf of the parent company ii. Total amount of CPM's given to on behalf of other group companies which are not in scope of B and C iii. Total amount of CPM's given on behalf of third parties which are not in scope of C Total A. On behalf of its own legal entity B. On behalf of fully consolidated subsidiaries C. CPM's given on behalf of third parties for ordinary course of business D. Other contingent liabilities i. Total amount of CPM's given on behalf of the parent company ii. Total amount of CPM's given to on behalf of other group companies which are not in scope of B and C iii. Total amount of CPM's given on behalf of third parties which are not in scope of C Total As of, the Company s CPM to equity ratio is 704% ( : 538%).

19 16 Due to the export and investment incentive certificates obtained for tax purposes, the Company has committed to realize exports amounting to USD thousand ( : USD thousand) as of. The Company is the guarantor for the bank loans which have been borrowed by Vestel CIS Ltd and OOO Vestel Trade Ltd. from Citibank. The Company has given guarantee to Royal Bank of Scotland PLC in favour of Vestel Germany GMBH, Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş., Vestel Dış Ticaret A.Ş. and Vestel Elektronik Sanayi ve Ticaret A.Ş. for forward contracts. The Company has given guarantee to HSBC Bank A.Ş. in favour of Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş. and Vestel Elektronik Sanayi ve Ticaret A.Ş. for forward contracts. The payment of VAT on certain export sales may be postponed and later cancelled by the tax office subject to clearance of certain routine formalities in due course. Responsibility of the Company continues until such clearance however no liability has arisen in the past and no liability is reasonably expected for the future. As of, the amount of VAT is TL ( : TL ). The value of ongoing consumer lawsuits TL ( : TL 226) and there are no any lawsuits which have been finalized in favour of the Company as of ( : TL 252). As of the balance sheet dates operational lease commitments are as follows: Less than one year More than one year and less than four years d) Derivatives As of, the Company has entered in forward exchange contracts amounting to USD thousand, EUR thousand and TL , on a fixed amount USD thousand, EUR thousand, RUR thousand, CHF 603 thousand and TL

20 17 NOTE 11 OTHER INCOME Grant income Profit on sale of property, plant and equipment Income on insurance claims Provisions released (*) Other (*) In accordance with the Board of Directors Decision of Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş. ( Vestel Dayanıklı ), warranty provisions which arises from the sales of Vestel Dayanıklı, has been released and accounted under other income due to the transfer of warranty expenses to Vestel Dayanıklı.

21 18 NOTE 12 FINANCIAL INCOME Foreign exchange gain Gains on financial assets held for trading Unearned interest on payables (71) -- Interest income from term sales Interest income from bank deposits Gains on forward exchange contracts NOTE 13 FINANCIAL EXPENSE Foreign exchange loss Losses on financial assets held for trading Unearned interest on receivables Bank loans interest expense Letters of credit expenses Losses on forward exchange contracts Interest expense from term purchases Bank commission expenses Other financial expenses NOTE 14 EARNING PER SHARE Net profit attributable to shareholders (189) Weighted average number of ordinary shares in issue Earnings per share TL, full 0,10 0,09 (0,00) 0,05

22 19 NOTE 15 RELATED PARTY DISCLOSURE a) Trade receivables- current Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş Vestel CIS Limited Vestel Dış Ticaret A.Ş Other related parties Unearned interest on receivables (-) (5.894) (4.966) b) Trade payables- current Vestel Elektronik Sanayi ve Ticaret A.Ş Vestel Holland B.V Other related parties Unearned interest on payables (-) (6) (19) The company performs its foreign and domestic sales via Vestel Dış Ticaret A.Ş. and Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş. respectively which are Vestel Group companies.

23 20 c) Transactions carried out with related parties are given below: Sales Vestel Elektronik Sanayi ve Ticaret A.Ş Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş Vestel Dış Ticaret A.Ş Other Purchases and operating income Vestel Elektronik Sanayi ve Ticaret A.Ş Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş Vestel Dış Ticaret A.Ş Other Financial income Vestel Elektronik Sanayi ve Ticaret A.Ş Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş Vestel Dış Ticaret A.Ş Other Financial expenses Vestel Elektronik Sanayi ve Ticaret A.Ş Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş Vestel Dış Ticaret A.Ş Other The company performs its foreign and domestic sales via Vestel Dış Ticaret A.Ş. and Vestel Dayanıklı Tüketim Malları Pazarlama A.Ş. respectively which are Vestel Group companies.

24 21 d) Key management compensation Total compensation provided management personnel by the Company during the period ended amount to TL 957 ( : TL 978). e) Operational lease The Company has operational lease commitment from Deniz Destek Oto Kiralama A.Ş., a subsidiary of Zorlu Holding A.Ş.. As of the balance sheet date the amount of operational lease commitments to be paid is TL 177. e) Guarantees and commitments The Company had taken various letters of guarantees for Vestel Elektronik Sanayi ve Ticaret A.Ş. and other subsidiaries (note 10).

25 22 NOTE 16 FOREIGN CURRENCY RISK The net currency position of the Company as of the balance sheet dates are shown below: USD ('000) EUR ('000) GBP ('000) CHF ('000) RUR ('000) Other TL equivalent 1. Trade receivables a. Monetary financial assets b. Non-monetary financial assets Other Current assets (1+2+3) Trade receivables a. Monetary financial assets b. Non-monetary financial assets Other Non-current assets (5+6+7) Total assets (4+8) Trade payables Financial liabilities a. Other monetary liabilities b. Other non-monetary liabilities Current liabilities ( ) Trade payables Financial liabilities a. Other monetary liabilities b. Other non-monetary liabilities Non-current liabilities ( ) Total liabilities (13+17) Off-balance sheet derivative instruments/ net asset (liability) position (19a-19b) ( ) -- (603) ( ) -- ( ) 19a. Hedged total assets b. Hedged total liabilities (50.767) ( ) -- (603) ( ) -- ( ) 20. Net foreign currency asset/ (liability) (position ( ) (36.662) (66.037) 11 (562) ( ) 21. Net foreign currency monetary asset/ (liability) Position (=1+2a+5+6a a a) ( ) (1) (55.254) 22. Fair value of financial instruments used in foreign currency hedging ( ) -- (603) ( ) -- ( ) 23. Export Import

26 USD ('000) EUR ('000) GBP ('000) CHF ('000) RUR ('000) TL Equivalent 1. Trade receivables a. Monetary financial assets b. Non-monetary financial assets Other Current assets (1+2+3) Trade receivables a. Monetary financial assets b. Non-monetary financial assets Other Non-current assets (5+6+7) Total assets (4+8) Trade payables Financial liabilities a. Other monetary liabilities b. Other non-monetary liabilities Current liabilities ( ) Trade payables Financial liabilities a. Other monetary liabilities b. Other non-monetary liabilities Non-current liabilities ( ) Total liabilities (13+17) Off-balance sheet derivative instruments net asset (liability) position (19a-19b) (77.607) -- (1.459) a. Hedged total assets b. Hedged total liabilities (25.300) ( ) -- (1.605) -- ( ) 20. Net foreign currency asset / (liability) position ( ) (38.931) (33.791) 1 (1.298) ( ) 21. Net foreign currency monetary asset / (liability) Position (=1+2a+5+6a a a) ( ) ( ) 22. Fair value of financial instruments used in foreign currency hedging (77.607) -- (1.459) Export Import In accordance with Turkish financial reporting standards, inventories are accounted for in Turkish Lira even if they obtained are through import, hence are not subject to foreign currency valuation. If the stocks were valuated as foreign currency asset, the net open foreign currency position of the Company would have been lower.

27 24 NOTE 17 SUPPLEMENTARY CASH FLOW INFORMATION Depreciation and amortisation expense Provision for employment termination benefits Provision for diminution in value of inventories, net Profit / (loss) on sale of property, plant and equipment, net (159) 467 Warranty provision (released) (19.627) Provision for legal claims Forward expense accruals Interest income, note 12 (538) (262) Interest expense, note Trade receivables ( ) Inventories (74.386) ( ) Other assets (19.033) (3.187) Trade payables (16.500) Other liabilities (7.292) (7.032) Payments of employee termination benefits (657) (838) Depreciation expense and amortization charged to: (81.230) ( ) Cost of sales Marketing and selling expenses General and administrative expenses Development expenses