OTOKAR OTOMOTİV VE SAVUNMA SANAYİ ANONİM ŞİRKETİ

Transcription

1 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS AT 30 JUNE (ORIGINALLY ISSUED IN TURKISH)

2 CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 30 JUNE CONTENTS PAGES CONDENSED INTERIM BALANCE SHEET CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME... 3 CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY... 4 CONDENSED INTERIM STATEMENT OF CASH FLOWS

3 BALANCE SHEET AS OF 30 JUNE (Amounts expressed in Turkish Lira ( TL unless otherwise indicated.) ASSETS (Reviewed) (Audited) Notes 31 December Current assets Cash and cash equivalents Trade receivables Due from related parties 7, Due from other parties Other receivables Inventories Derivative financial instruments Prepaid expenses Current income tax assets Other current assets Total current assets Non-current assets Trade receivables, third parties Other receivables, third parties Due from customers on contract works Financial investments Property, plant and equipment Intangibles Deferred tax asset Total non-current assets Total assets The accompanying notes form an integral part of these condensed interim financial statements. 1

4 BALANCE SHEET AS OF 30 JUNE (Amounts expressed in Turkish Lira ( TL unless otherwise indicated.) LIABILITIES (Reviewed) (Audited) Notes 31 December Current liabilities Short term financial liabilities Short term portion of long term financial liabilities Trade payables Due to related parties 7, Due to others Employee benefit obligations Other payables, third parties Deferred income Government grants Short term provisions Provisions for employee benefits Other provisions Other current liabilities Total current liabilities Non-current liabilities Financial liabilities Government grants Long term provisions Provision for employee benefits Other provisions Deferred income Total non-current liabilities EQUTIY Equity attributable to equity holders of the parent Paid-in share capital Inflation adjustment on share capital Restricted reserves Accumulated other comprehensive income and expense that will not be classified to statement of profit or loss ( ) ( ) Retained earnings Net income for the year Total Equity Total Liabilities and Equity The accompanying notes form an integral part of these condensed interim financial statements. 2

5 CONDENSED INTERIM STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD 1 JANUARY - 30 JUNE Notes Reviewed 1 January - 1 April - Reviewed 1 January - 1 April - Net Sales Cost of Sales (-) 14 ( ) ( ) ( ) ( ) GROSS PROFIT Marketing expenses (-) ( ) ( ) ( ) ( ) General administrative expenses (-) ( ) ( ) ( ) ( ) Research and development expenses (-) ( ) ( ) ( ) ( ) Other operating income Other operating expenses (-) 16 ( ) ( ) ( ) ( ) OPERATING PROFIT Income from investing activities Expenses from investing activities (-) (3.110) OPERATING INCOME BEFORE FINANCIAL EXPENSES Financial income Financial expense (-) 18 ( ) ( ) ( ) ( ) (LOSS) / INCOME BEFORE TAX ( ) Tax income/expense from continued operations Current tax (expense) / income 19 ( ) ( ) ( ) Deferred tax income / (expense) ( ) ( ) PROFIT FOR THE PERIOD Remeasurement (losses) / gains on defined benefit plans ( ) ( ) Deferred tax income (43.549) (4.481) Other comprehensive (expense) / income ( ) ( ) TOTAL COMPREHENSIVE (EXPENSE) / INCOME ( ) Earnings per share 20 0,000 0,009 0,194 0,155 The accompanying notes form an integral part of these condensed interim financial statements. 3

6 CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE INTERIM PERIOD 1 JANUARY - 30 JUNE Accumulated other comprehensive income and expense that will not be reclassified to statement of profit or loss Paid in share capital Inflation adjustments Restricted reserves Remeasurement losses on defined benefit plans Retained earnings Net income for the period Total equity 1 January ( ) Transfers ( ) - Dividends paid ( ) - ( ) Total comprehensive income ( ) ( ) January ( ) Transfers ( ) - Dividends paid ( ) - ( ) Total comprehensive income ( ) ( ) ( ) The accompanying notes form an integral part of these condensed interim financial statements.. 4

7 CONDENSED STATEMENT OF CASH FLOWS FOR THE INTERIM PERIOD 1 JANUARY - 30 JUNE Cash flows from operating activities (Reviewed) (Reviewed) Notes (Loss)/income before taxes ( ) Adjustments to reconcile income before taxes to net cash flows from operating activities: Depreciation and amortization 10, Provision for employee termination benefits Provision for inventories Warranty provision expenses Gain on sale of property,plant and equipments ( ) (32.194) Interest expense on borrowings Unrealised foreign exchange (losses/gain) on borrowings ( ) Interest income on time deposits 17 ( ) ( ) Provision for doubtful receivables (19.634) Financial derivative transactions, net ( ) ( ) Changes in net working capital Trade and other receivables ( ) Due from customers on contract works ( ) ( ) Inventories ( ) ( ) Other current assets ( ) Trade payables ( ) Other liabilities ( ) Realized gains on derivative contracts (60.334) Income taxes paid ( ) ( ) Warranties paid 12 ( ) ( ) Employee termination benefits paid 12 ( ) ( ) Cash flows from investing activities ( ) Investing activities Purchase of tangible assets 10 ( ) ( ) Purchase of intangible assets 11 ( ) ( ) Proceeds from sale of property, plant and equipment Net cash used in investing activities ( ) ( ) Financial activites Proceeds from bank borrowings Repayments of bank borrowings ( ) ( ) Interest paid ( ) ( ) Interest received Dividends paid ( ) ( ) Net cash used in financing activities ( ) Decrease in cash and cash equivalents ( ) ( ) Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the period The accompanying notes form an integral part of these condensed interim financial statements. 5

8 AT 30 JUNE NOTE 1 - COMPANY S ORGANIZATION AND NATURE OF OPERATIONS Otokar Otomotiv ve Savunma Sanayi A.Ş. ( Otokar or the Company ) was established in 1963 and is registered in Istanbul, Turkey and operating under the Turkish Commercial Code. The Company operates in the automotive industry and off road vehicles, armored vehicles, minibuses, midibuses and autobuses, trailers, semi-trailers, light truck and cross-country comprises the majority of its production. The number of the personnel in the Company is (31 December : 2.054). The registered adresses of the Company are as follows: Headquarters: Aydınevler Mahallesi. Dumlupınar Cad. No: 58 A Bl Küçükyalı / İstanbul Factory: Atatürk Cad. No: Arifiye / Sakarya The Company has a subsidiary named "Otokar Europe SAS" with a capital of Euro , established on 18 August 2011 for the purpose of organizing export activities and increasing export sales. Since Otokar Europe SAS operations does not materially affect the financial statements, it has not been subject to consolidation and has been presented at historical cost value (Note 4). Condensed interim financial statements for the six-month period ended were authorized for issue and signed with the approval of the Internal Audit Committee by the Board of Directors of the Company on 29 July. The accompanying condensed interim financial statements could be amended by the Board of Directors. The Company conducts part of its business transactions with the Koç Holding A.Ş. and related parties. There are certain related parties which are both customers and vendors of the Company. The Company is registered to the Capital Market Board ( CMB ) and its shares are listed on the Borsa Istanbul ( BIST ), previously Istanbul Stock Exchange ( ISE ) since As of the shares listed on the BIST are 26,80% of the total shares. As of, the principal shareholders and their respective shareholding percentages are as follows: % Koç Holding A.Ş. 44,68 Ünver Holding A.Ş. 24,81 Other 30, ,00 The Parent Company (Koç Holding A.Ş.), is controlled by Koç Family and the companies owned by Koç Family. The shareholder, Ünver Holding A.Ş., is controlled by Ünver Family.

9 AT 30 JUNE NOT 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2.1 Basis of Presentation The financial statements of the Company have been prepared in accordance with the Turkish Accounting Standards/Turkish Financial Reporting Standards, ( TAS/TFRS ) and interpretations as adopted in line with international standards by the Public Oversight Accounting and Auditing Standards Authority of Turkey ( POA ) in line with the communiqué numbered II-14.1 Communiqué on the Principles of Financial Reporting In Capital Markets ( the Communiqué ) announced by the Capital Markets Board of Turkey ( CMB ) on June 13, 2013 which is published on Official Gazette numbered The condensed interim financial statements for the six-month period ended were prepared in accordance with TAS 34 Interim Financial Reporting. The condensed interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company s annual financial statements at 31 December. The Company maintains its books of account and prepares its statutory financial statements in Turkish Lira (TL) in accordance with regulations on accounting and reporting framework and the Uniform Chart of Accounts issued by the Ministry of Finance. The condensed interim financial statements are based on the statutory records, with adjustments and reclassifications for the purpose of fair presentation in accordance with TAS/TFRS and interpretations regarding these POA. Functional and presentation currency Functional and presentation currency of the Company is TL. In accordance with the CMB's resolution dated 17 March 2005 and numbered 11/367, the financial statements were restated in accordance with International Accounting Standards (IAS) 29 (Financial Reporting in Hyperinflationary Economies) for the last time as of 31 December 2004, since the objective conditions which require the application of restatement of financial statements have not been realized and that based on the existing data CMB has foreseen that the indications whether such conditions are going to be realized in the future is no longer probable. Therefore, non-monetary assets, liabilities and equity items including the share capital as of and 31 December have been restated by applying the relevant conversion factors through 31 December 2004 and carrying additions after 31 December 2004 at their nominal values. 2.2 Significant Changes in the Accounting Policies As at, the accounting policies adopted in preparation of the financial statements as at 31 December are consistent with those of the previous financial year, except for the adoption of new and amended TFRS and TFRIC interpretations effective as of 1 January. The effects of these standards and interpretations on the Company s financial position and performance have been disclosed in the related paragraphs. 7

10 AT 30 JUNE NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.2 Significant Changes in the Accounting Policies (Continued) i) New standards, amendments and interpretations effective as of : IAS 19, Employee benefits, effective annual periods on or after 1 July. These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary. Annual improvements 2012, effective annual periods on or after 1 July. These amendments include changes from the cycle of the annual improvements project, that affect 7 standards: IFRS 2, Share-based payment IFRS 3, Business Combinations IFRS 8, Operating segments IFRS 13, Fair value measurement IAS 16, Property, plant and equipment and IAS 38, Intangible assets Consequential amendments to IFRS 9, Financial instruments, IAS 37, Provisions, contingent liabilities and contingent assets, and IAS 39, Financial instruments Recognition and measurement. Annual improvements 2013, effective annual periods on or after 1 July. The amendments include changes from the cycle of the annual improvements project that affect 4 standards: IFRS 1, First time adoption IFRS 3, Business combinations IFRS 13, Fair value measurement and IAS 40, Investment property ii) Standards and amendments issued but not yet effective as of : Amendment to IFRS 11, 'Joint arrangements, effective annual periods beginning on or after 1 January It is about acquisition of an interest in a joint operation. This amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions. Amendments to IAS 16, Property, plant and equipment, and IAS 41, Agriculture, effective annual periods beginning on or after 1 January These amendments change the financial reporting for bearer plants, such as grape vines, rubber trees and oil palms. bearer plants should be accounted for in the same way as property, plant and equipment because their operation is similar to that of manufacturing. Consequently, the amendments include them within the scope of IAS 16, instead of IAS 41. The produce growing on bearer plants will remain within the scope of IAS 41. Amendment to IAS 16, 'Property, plant and equipment' and IAS 38,'Intangible assets, effective annual periods beginning on or after 1 January In this amendment has clarified that the use of revenue based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The amendment has also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. 8

11 AT 30 JUNE NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.2 Significant Changes in the Accounting Policies (Continued) ii) Standards and amendments issued but not yet effective as of (Continued): IFRS 14 Regulatory deferral accounts, effective annual periods beginning on or after 1 January This standard permits first time adopters to continue to recognise amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that already apply IFRS and do not recognise such amounts, the standard requires that the effect of rate regulation must be presented separately from other items. Amendments to IAS 27, Separate financial statements, effective annual periods beginning on or after 1 January These amendments allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Amendments to IFRS 10, Consolidated financial statements and IAS 28, Investments in associates and joint ventures, effective annual periods beginning on or after 1 January These amendments address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. Annual improvements, effective annual periods beginning on or after 1 January These set of amendments impacts 4 standards: IFRS 5, Non-current assets held for sale and discontinued IFRS 7, Financial instruments: Disclosures, (with consequential amendments to IFRS 1) regarding servicing contracts. IAS 19, Employee benefits regarding discount rates. IAS 34, Interim financial reporting regarding disclosure of information. Amendment to IAS 1, Presentation of financial statements, effective annual periods beginning on or after 1 January These amendments are to improve presentation and disclosure in financial reports. Amendment to IFRS 10 and IAS 28 on investment entities applying the consolidation exception, effective annual periods beginning on or after 1 January These amendments clarify the application of the consolidation exception for investment entities and their subsidiaries. IFRS 15 Revenue from contracts with customers, effective annual periods beginning on or after 1 January This standard is a converged standard from the IASB and FASB on revenue recognition which will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally. IFRS 9 Financial instruments ; effective annual periods beginning on or after 1 January This standard replaces the guidance in IAS 39. It includes requirements on the classification and measurement of financial assets and liabilities; it also includes an expected credit losses model that replaces the current incurred loss impairment model. 9

12 AT 30 JUNE NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS(Continued) 2.3 Summary of significant accounting policies The accounting policies used in the preparation of these condensed interim financial statements are consistent with those used in the preparation of annual financial statements for the year ended 31 December. 2.4 Segment reporting As stated in Note 4, Otokar Europe SAS operations does not materially affect the financial statements, it has not been subject to consolidation and has been presented at historical cost value. Since the Company does not have different geographical and operational units, the Company does not make segment reporting and follows financial statements by one segment. NOTE - CASH AND CASH EQUIVALENTS 31 December Cash at banks - demand deposits time deposits Cheques and notes receivable Other Total As of,tl time deposits amounting to TL is in foreign currency and annual effective interest rate is 0,25% and has the maturity of 1 day. Remaining balance is TL and annual effective interest rate is 12% and has the maturiy of 1 day. (As of 31 December, TL of total time deposits amounting to TL is in foreign currency and effective interest rate of time deposits amounting to TL that are in foreign currency is annually 0,5% and the maturity is 2 days. Effective interest rate of remaining time deposits which are originally amounting to TL is annually 10,98% and the maturity is 2 day.) Checks and notes received consist of checks and notes which are due as of balance sheet date and are given to banks for collections. As of, the Company has restricted bank deposit amounting to TL 796 (31 December : TL 862). NOTE 4 - FINANCIAL INVESTMENTS The Company has a subsidiary named "Otokar Europe SAS" with paid in capital of Euro (TL ), established on 18 August 2011, in France for the purpose of organizing export activities and increasing export sales. Since Otokar Europe SAS operations do not materially affect the financial statements, it has not been subject to consolidation and has been presented at historical cost value. 10

13 AT 30 JUNE NOTE 5 - FINANCIAL LIABILITIES Maturities Interest rate(%) TL Short term bank borrowings (*) Denominated in TL 1 July 0,00-5, Denominated in EUR 1 July 4, Total Principals and interest accruals on the short-term portion of long-term borrowings (*) Denominated in TL 3 April June ,22-12, Denominated in EUR 29 June , Total Maturities Interest rate(%) TL Long term bank borrowings (*)(**) Denominated in TL 17 October May ,55-12, Denominated in EUR 10 February , Total (*) Bearing fixed interest rate (**) Weighted average maturity days of long-term borrowings are 806 days. 31 December Maturities Interest rate(%) TL Short term bank borrowings (*) Denominated in TL (***) 2 January - 5 January 0, Denominated in EUR 2 January 3,11-3, Total Principals and interest accruals on the short-term portion of long-term borrowings (*) Denominated in TL 11 March October ,05-11, Denominated in EUR 9 February 2, Total

14 AT 30 JUNE NOTE 5 - FINANCIAL LIABILITIES (Continued) 31 December Maturities Interest rate(%) TL Long term bank borrowings (*)(**) Denominated in TL 11 March September ,82-11, Denominated in EUR 29 June2016 3, Total (*) Bearing fixed interest rate (**) Weighted average maturity days of long-term borrowings are 828. (***) Interest free loan for the Social Security Instution payments As of, the Company has not provided any guarantees for the borrowings. (31 December : None). NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments consist of the forward contracts which are entered in order to hedge foreign currency risk arising from Company's foreign currency sales. Current period Fair value Contract amount Contract maturity Assets : Forward transactions July- 13 Agust Short-term derivative financial instruments Total derivative financial instruments Perior period Fair value Contract amount Contract maturity Assets 31 December : Forward transactions January - 5 February Short-term derivative financial instruments Total derivative financial instruments

15 AT 30 JUNE NOTE 7 - TRADE RECEIVABLES AND PAYABLES Trade receivables 31 December Trade receivables, net Notes receivables, net Less: provision for doubtful receivables ( ) ( ) Short term trade receivables Trade receivables from related parties Short-term trade receivables Long-term trade receivables, net Long-term notes receivable, net Long-term trade receivables Guarantees received for trade receivables Receivables of the Company are mainly composed of minibus and bus sales to dealers and trailer sales made in notes. As of, the total trade receivable from dealers amounting to TL (31 December : TL ), after provision reserved for doubtful receivables, has been secured by mortgages and guarantees at the amount of TL (31 December : TL ). Aging analysis of trade receivables The aging of the past due but not impaired receivables is as follows: Trade receivables 1-30 day past due month past due month past due year past due Over 5 year past due - Total Amount secured with guarantee (1) December Trade receivables 1-30 day past due month past due month past due year past due Over 5 year past due - Total Amount secured with guarantee (1) (1) Pledges trailer vehicles.

16 AT 30 JUNE NOTE 7 - TRADE RECEIVABLES AND PAYABLES (Continued) The movement of the provision for doubtful receivables for the six-month period ended and are as follows: 1 January - 1 January - 1 January Collection ( ) (189) Additional provisions (19.634) Total As of, average collection term for trade receivables is days (31 December : days). Trade payables 31 December Trade payables, net Notes payables, net Short-term other trade payables Trade payables to related parties Short-term trade payables As of, average payment term for trade payables is days (31 December : days). NOTE 8 - INVENTORIES 31 December Raw material Semi-finished goods Finished goods Merchandise Goods in transit Impairment for inventories (*) ( ) ( ) Total (*) TL of impairment is related to finished goods (31 December : TL ) and TL is related to merchandises (31 December : TL ). The impairment has been accounted for under cost of sales. 14

17 AT 30 JUNE NOTE 9 - DUE FROM CUSTOMERS ON CONTRACTS WORKS Receivable from uncompleted contracts is to TL as of (31 December : TL ) after offsetting with short term advance taken. As of, the short term advances taken by the Company related with ongoing projects which amounts to TL was included in deferred revenues in the financial statements (31 December : TL ). Rest of the amount TL which is included in deferred income is composed of other advance taken from customer (31 December : TL ) and other payables as amounting to TL (31 December : TL ). NOTE 10 - PROPERTY, PLANT AND EQUIPMENT For the six-month periods ended and, the movement of property, plant and equipment and the accumulated depreciation is as follows: 1 January Additions Disposals Transfers Cost: Land Land improvements Buildings Machinery and equipment ( ) Motor vehicles ( ) Furniture and fixtures ( ) Leasehold improvements Construction in process ( ) ( ) ( ) Accumulated depreciation: Land improvements Buildings Machinery and equipment ( ) Motor vehicles ( ) Furniture and fixtures ( ) Leasehold improvements ( ) Net book value

18 AT 30 JUNE NOTE 10 - PROPERTY, PLANT AND EQUIPMENT (Continued) 1 January Additions Disposals Transfers Cost: Land Land improvements Buildings Machinery and equipment ( ) Motor vehicles ( ) Furniture and fixtures (23.060) Leasehold improvements Construction in process ( ) ( ) Accumulated depreciation: Land improvements Buildings Machinery and equipment ( ) Motor vehicles (86.379) Furniture and fixtures (6.572) Leasehold improvements ( ) Net book value For the six month periods ended and, the allocation of depreciation and amortization expenses of property, plant and equipment and intangibles has been as follows: 1 January - 1 January - Research and development expenses Costs related to uncompleted contracts Cost of goods sold Development projects in process Depreciation on outstanding inventories General administrative expenses Selling and marketing expenses Total

19 AT 30 JUNE NOTE 11 - INTANGIBLE ASSETS For the six month period ended and, the movement of intangible assets and the accumulated amortisation is as follows:, 1 January Additions Disposals Transfers Cost: Other intangible assets Development costs ( ) Developments projects in progress ( ) ( ) Accumulated amortization: Other intangible assets Development costs (13.653) (13.653) Net book value January Additions Disposals Transfers Cost: Other intangible assets Development costs Development projects in process ( ) Accumulated amortization: Other intangible assets Development costs Net book value

20 AT 30 JUNE NOTE 12 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES Provisions short term 31 December Provision for other costs (*) Warranty provision Provisions for employee benefits Foundation employer s share of social security premium Provision for license costs Provision for legal cases Other Total (*) Includes costs incurred by the Company in relation to tank project, which were not charged yet, and costs incurred by the subcontractors that will be invoiced to the Company at the end of the project, which were computed according to the estimated percentage of completion by the subcontractors. Provisions - long term 31 December Warranty provision Total Warranty provision The movement of the warranty expense provision is as follows: 1 January - 1 January - 1 January Additional provision Payments ( ) ( ) Provision for employee benefits 31 December Provision for employement termination benefits Provision for unused vacation Total

21 AT 30 JUNE NOTE 12 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (Continued) Employment termination benefits The amount payable consists of one month s salary limited to a maximum of TL for each year of service as of (31 December : TL 3.438). There are no agreements for pension commitments other than the legal requirements as explained below. Under the Turkish Labour Law, the Company is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, or who is called up for military service, dies or retires after completing 25 years of service (20 years for women) and achieves the retirement age. The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. Turkish Accounting Standards promulgated by POA require actuarial valuation methods to be developed to estimate the enterprises obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability: 31 December Net discount rate (%) 3,50 3,50 Turnover rate to estimate the probability of retirement (%) 2,25 2,59 The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. The movements of provision for employment termination benefits are as follows: 1 January Interest expense Current year charge Remeasurement losses Payments ( ) ( ) Provision for unused vacation The movements of reserve for vacation pay are as follows: 1 January Current year charge

22 AT 30 JUNE NOTE 12 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (Continued) Commitments and contingencies As of and 31 December, the tables which represent the position of guarantees, pledges and mortgages are as follows: Guarantees given by the Company 31 December a. Total amount of guarantees, pledges and mortgages given the name of legal entity b. Total amount of guarantees, pledges and mortgages given in favour of the parties which are included in the scope of full consolidation - - c. Total amount of guarantees, pledges and mortgages given to third parties for their liabilities in the purpose of conducting the ordinary operations - - d. Total amount of other guarantees, pledges and mortgages - - Total The details of guarantees, pledges and mortgages in terms of currency are as follows: 31 December Original TL Original TL currency equivalent currency equivalent USD EUR TL The details of guarantees, pledges and mortgages in terms of company/institution are as follows: 31 December Verilen teminat mektupları Under secretariat of Ministry of Defense Other Total Guarantee Letters a) Guarantees given as of and 31 December are as follows: 31 December Bank letters of guarantee (*) (*) Bank letters of guarantee amounting to TL are given to Secretariat of Ministry of Defense for Altay Project (31 December : TL ). 20

23 AT 30 JUNE NOTE 12 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (Continued) b) Guarantees received as of and 31 December are as follows: 31 December Bank letters of guarantee (**) Guarantee notes Mortgages received Guarantee bills (**) Bank letters of guarantee amounting to TL are obtained from the sub-contractors for Altay Project (31 December : TL ). Contingent asset The legal case related to tax deduction for the R&D activities in 2010 was concluded in favor of the Company and TL has been refunded to the Company. The same case for is still in progress at appeal phase. The Company has appealed for the same case of and it is still in progress.the expected refund amount for 2011 is TL Also cases have been filed for the years 2012 and 2013 and the expected refunds are TL and TL , respectively.total amount of appealed case of is TL NOTE 13 - PREPAID EXPENSES, DEFERRED REVENUE, OTHER ASSETS AND LIABILITIES a) Prepaid expenses: 31 December Advances given Prepaid expenses Total b) Other current assets: 31 December Value added tax receivables Other Total

24 AT 30 JUNE NOTE 13 - PREPAID EXPENSES, DEFERRED REVENUE, OTHER ASSETS AND LIABILITIES (Continued) c) Deferred revenues: Deferred revenues short term 31 December Deferred maintenance revenues(*) Other deferred revenues (**) Advances received Total Deferred revenues - long term 31 December Deferred maintenance revenues (*) Total (*) Deferred repair maintenance income for vehicles sold via agreements signed. (**) Deferred revenues regarding the pendent invoices as of reporting date by matching principles. d) Employee benefits obligation: 31 December Payables to employees Social security payables Taxes and funds payable Total e) Other current liabilities: 31 December Payable to personnel Deferred speacial consumption tax Other Total

25 AT 30 JUNE NOTE SALES AND COST OF SALES Net sales 1January- 1 April - 1 January- 1 April - Domestic sales Export sales Gross sales Less: sales discounts and sales returns ( ) ( ) ( ) ( ) Net sales Sales of the Company for the period 1 January - and in terms of the products are as follows: 1 January - 1 April- 1 January - 1 April- Commercial vehicle Armored vehicle Other (*) (*) TL of this amount is related to revenues of uncompleted contracts ( : TL ). Cost of sales 1 January - 1 April- 1 January - 1 April- Cost of finished goods sold Cost of merchandise goods sold

26 AT 30 JUNE NOTE 15 - OTHER OPERATING INCOME Other operating income 1 January 1 April 1 January 1 April Foreign exchange gains on trade receivable/ payables Forward transaction income Maturity difference income Incentive income Other Total NOTE OTHER OPERATING EXPENSES Other operating expense 1 January 1 April 1 January 1 April Foreign exchange loss on trade receivable/ payables ( ) ( ) ( ) Forward transaction expenses ( ) ( ) ( ) ( ) Provision for doubtful receivables ( ) ( ) Other (58.390) (9.592) ( ) (98.351) Total ( ) ( ) ( ) ( ) NOTE 17 - FINANCIAL INCOME 1 January 1 April 1 January 1 April Interest income from time deposits Foreign exchange gains on deposits Foreign exchange gains on bank borrowings Total

27 AT 30 JUNE NOTE 18 - FINANCIAL EXPENSE 1 January 1 April 1 January 1 April Interest expense on bank borrowings ( ) ( ) ( ) ( ) Foreign exchange losses on deposits ( ) ( ) ( ) ( ) Foreign exchange losses on bank borrowings ( ) ( ) ( ) ( ) Total ( ) ( ) ( ) ( ) NOTE 19 - TAX ASSETS AND LIABILITIES The Company is subject to taxation in accordance with the tax regulation and the legislation effective in Turkey. Otokar SAS Europe is subject to taxation in accordance with the tax regulation and the legislation effective in France. In Turkey, the corporation tax rate is 20% (: 20%). Corporate tax returns are required to be filed by the twenty-fifth day of the fourth month following the balance sheet date and taxes must be paid in one installment by the end of the fourth month. The tax legislation provides for a temporary tax of 20% to be calculated and paid based on earnings generated for each quarter. The amounts thus calculated and paid are offset against the final corporate tax liability for the year. As of and 31 December, income tax payables are presented net of prepaid taxes in the balance sheet as follows: 31 December Income tax payable Less-prepaid tax ( ) ( ) Income tax asset - ( ) The breakdown of total tax expense for the six-month period ended and are as follows: 1 January 1 January Current tax charge ( ) ( ) Deferred tax income charged to other comprehensive income - Tax charged to profit for the period ( ) - Tax charged to other comprehensive income/expense Total tax income/(expense) ( ) 25

28 AT 30 JUNE NOTE 19 - TAX ASSETS AND LIABILITIES (Continued) As of and 31 December, the breakdown of deferred tax bases and deferred tax liability computed using the current effective tax rates are as follows: Cumulative temporary differences 31 December Deferred tax assets / (liabilities) 31 December Property, plant and equipment ( ) ( ) Intangible assets ( ) ( ) ( ) ( ) Deferred financial expense ( ) ( ) ( ) (96.775) Inventories Warranty provision Provision for employment termination benefits Deferred financial income Other provisions Deferred maintenance income Due from customers on contract works Other Deferred tax asset The movement of deferred tax asset for the six-month period ended and are as follows: 1 January Deferred tax income charged to other comprehensive income - Tax charged to profit for the period ( ) - Tax charged to other comprehensive income/expense NOTE 20 - EARNINGS PER SHARE Earnings per share are calculated by dividing net profit by the weighted average number of shares that have been outstanding during the period concerned. Companies can increase their share capital by making a pro rata distribution of shares to existing shareholders without consideration for amounts resolved to be transferred to share capital from retained earnings. For the purpose of the earnings per share calculation such Bonus Share issues are regarded as stock dividends. Dividend payments, which are immediately reinvested in the shares of the Company, are regarded similarly. 26

29 AT 30 JUNE NOTE 20 - EARNINGS PER SHARE (Continued) Earnings per main share are determined by dividing net income of the shareholders by the weighted average number of shares that have been outstanding during the related year concerned. Net income attributable to shareholders (TL) Weighted average number of issued shares Earnings per share (Piaster) 0,000 0,194 NOTE 21 - RELATED PARTY DISCLOSURES Due from and due to the related parties at the period end and transactions with related parties during the periods are as follows: Due from and due to related party balances as of and 31 December : Due from related parties 31 December Ram Dış Ticaret A.Ş. (1) (*) Otokar Europe SAS (3) Aygaz A.Ş.(1) Ford Otosan A.Ş. (2) Other (1) Total (*) The export registered sales to Ram Dış Ticaret A.Ş., comprise export sales made to third party customers. Due to related parties 31 December Ram Dış Ticaret A.Ş. (1) Zer Merkezi Hizmetler A.Ş. (1) ( Zer ) Setur Servis Turistik A.Ş. (1) Eltek Elektrik Enerji İth. İhr. Top.Tic. A.Ş.(1) Opet Fuchs Madeni Yağ A.Ş. (1) Akpa Dayanıklı Tük. Paz. A.Ş. (1) Koç Holding A.Ş. (2) Koç Sistem Bilgi ve İletişim Hiz. A.Ş. (1) ( Koç Sistem ) Opet Petrolcülük A.Ş. (1) Ram Sigorta Aracılık Hz. A.Ş. (1) Other (1) Total (1) Related parties of parent company (2) Shareholder (3) The Company s subsidiary not in scope of consolidation 27

30 AT 30 JUNE NOTE 21 - RELATED PARTY DISCLOSURES (Continued) i) Major sales and purchase transactions with related parties as of and 31 December is as follows: Product sales and service revenue 1 January 1 April 1 January 1 April Ram Dış Ticaret A.Ş. (1) (*) Otokar Europe SAS (3) Türk Traktör ve Ziraat Makineleri A.Ş. (1) Aygaz A.Ş. (1) Otokoç (1) Ford Otosan (2) RMK Marine Gemi Yap. San. İşl. A.Ş. (1) Total (*) Certain portion of export sales are realized through Ram Dış Ticaret A.Ş. as export registered sales, accordingly the amount composed of accounts receivables arising on these transactions. 1 January - 1 April - 1 January - 1 April - Purchase of property, plant and equipment Koç Sistem (1) Otokoç (1) Zer (1) Arçelik A.Ş. (1) Koçtaş Yapı Marketleri A.Ş. (1) Total Inventories purchased 1 January - 1 April - 1 January - 1 April - Zer Merkezi Hizmetler A.Ş. (1) Ram Dış Ticaret A.Ş. (1) Opet Fuchs Madeni Yağ A.Ş.(1) Akpa Dayanıklı Tük.Paz. A.Ş. (1) Opet Petrolcülük A.Ş.(1) Koçtaş Yapı Marketleri A.Ş.(1) Ford Otosan A.Ş.(2) Arçelik A.Ş. (1) Türk Traktör ve Ziraat Makineleri A.Ş. (1) Total (1) Related parties of parent company (2) Shareholder (3) The Company s subsidiary not in scope of consolidation 28

31 AT 30 JUNE NOTE 21 - RELATED PARTY DISCLOSURES (Continued) Services purchased 1 January - 1 April - 1 January - 1 April - Ram Dış Ticaret A.Ş.(1) Otokar Europe SAS (3) Eltek Elektrik Enerji İth.İhr.Top.Tic. A.Ş.(1) Setur Servis Turistik A.Ş. (1) Koç Holding A.Ş. (2) Otokoç Otomotiv Tic. ve San. A.Ş.(1) Koç Sistem Bilgi ve İlt. Hizm. A.Ş. (1) Other (1) Total Banks deposits 31 December Yapı ve Kredi Bankası A.Ş. (1) - Vadesiz mevduatlar Vadeli mevduatlar Total Checks and notes in collection 31 December Yapı ve Kredi Bankası A.Ş. (1) Total Borrowings 31 December Yapı ve Kredi Bankası A.Ş. (1) Total (1) Related parties of parent company (2) Shareholder (3) The Company s subsidiary not in scope of consolidation 29