Independent Auditor s Report

32- Viking Kağıt Annual Report Independent Auditor s Report (Convenience translation into English the Turkish text is authoritative) To the Board of Directors of Report on the Financial Statements We have audited the accompanying financial statements of (the Company ) which comprise the statement of financial position at, and the statement of comprehensive income, statement of changes in equity and cash flow statement for the year ended, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with financial reporting standards published by the Turkish Capital Markets Board. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards published by Turkish Capital Markets Board. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements give a true and fair view of the financial position of as of, and its financial performance and its cash flows for the year then ended in accordance with the financial reporting standards issued by the Turkish Capital Markets Board. Emphasis of Matter Without qualifying our opinion, we draw your attention to the following matter; The Company s current liabilities exceed its total current assets by TL 56.031.362 in the accompanying financial statements as of 31 December and the Company s accumulated losses are TL 35.037.808. The Company incurred an operating loss of TL 4.169.176 and a net loss of TL 12.827.562 net loss for the twelve month period ending. These conditions indicate an uncertainty regarding the Company s ability to continue as a going concern and the Company management has plans to continue to take precautions as it is disclosed in Note 41, to strengthen the financial structure of the company. Other Matter The financial statements of the Company for the year ended were audited by another auditor who expressed an unmodified opinion on those statements on 11 March. İzmir 10 March 2011 DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED ORIGINAL COPY ISSUED AND SIGNED IN TURKISH Ali Çiçekli Partner

33- Viking Kağıt Annual Report Chairperson s Message Management In Environment and Sustainability About Viking Kağıt CONTENTS PAGE BALANCE SHEET 34 STATEMENTS OF COMPREHENSIVE INCOME 36 STATEMENTS OF CHANGES IN EQUITY 37 STATEMENTS OF CASH FLOWS 38 Corporate Governance and Financial Information NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION 39 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 39 3. BUSINESS COMBINATIONS 52 4. JOINT VENTURES 52 5. SEGMENT REPORTING 52 6. CASH AND CASH EQUIVALENTS 53 7. FINANCIAL ASSETS 53 8. FINANCIAL LIABILITIES 53 9. OTHER FINANCIAL LIABILITIES 55 10. TRADE RECEIVABLES AND PAYABLES 55 11. OTHER RECEIVABLES AND PAYABLES 56 12. RECEIVABLES AND PAYABLES FROM FINANCE SECTOR OPERATIONS 56 13. INVENTORIES 56 14. BIOLOGICAL ASSETS 57 15. CONSTRUCTION CONTRACT ASSETS 57 16. INVESTMENT IN ASSOCIATES ACCOUNTED BY EQUITY METHOD 57 17. INVESTMENT PROPERTY 57 18. PROPERTY, PLANT AND EQUIPMENT 57 19. INTANGIBLE ASSETS 59 20. GOODWILL 59 21. GOVERNMENT GRANTS 59 22. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES 59 23. COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES 60 24. EMPLOYEE BENEFITS 62 25. PENSION PLANS 62 26. OTHER ASSETS AND LIABILITIES 63 27. EQUITY 63 28. SALES AND COST OF SALES 66 29. RESEARCH AND DEVELOPMENT EXPENSES, MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERAL ADMINISTRATIVE EXPENSES 66 30. EXPENSES BY NATURE 67 31. OTHER OPERATING INCOME/(EXPENSES) 67 32. FINANCE INCOME 68 33. FINANCE EXPENSE 68 34. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS 68 35. TAX ASSETS AND LIABILITIES 68 36. LOSS PER SHARE 70 37. TRANSACTIONS AND BALANCES WITH RELATED PARTIES 71 38. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT 73 39. FINANCIAL INSTRUMENTS (FAIR VALUE AND FINANCIAL RISK MANAGEMENT DISCLOSURES) 81 40. SUBSEQUENT EVENTS 82 41. MANAGEMENT PLANS 82

34- Viking Kağıt Annual Report Audited Balance Sheet at Notes ASSETS Current Assets 27.102.476 31.185.012 Cash and Cash Equivalent 6 946.960 516.015 Trade Receivables 13.874.869 17.636.689 -Other Trade Receivables 10 12.099.338 16.355.177 -Due from Related Parties 37 1.775.531 1.281.512 Other Receivables 25.363 382.585 -Other Receivables 11-352.482 -Other Receivables due from related parties 37 25.363 30.103 Inventories 13 11.500.219 8.911.418 Financial Assets 8-3.699.803 Other Current Assets 26 755.065 38.502 Non-Current Assets 77.523.634 84.916.131 Other Receivables 11 12.400 6.999 Financial Assets 7 103.327 - Property, Plant and Equipment 18 77.159.477 84.683.641 Intangible Assets 19 248.430 225.491 TOTAL ASSETS 104.626.110 116.101.143 The accompanying notes are an integral part of these financial statements.

35- Viking Kağıt Annual Report Audited Balance Sheet at About Viking Kağıt Notes LIABILITIES Current Liabilities 83.133.838 36.649.569 Financial Liabilities 8 5.359.958 6.398.206 Trade Payables 12.931.191 13.691.827 -Other Trade Payables 10 12.816.769 13.373.761 -Due to Related Parties 37 114.422 318.066 Other Payables 62.661.587 14.876.585 -Due to Related Parties 37 62.652.577 14.876.585 -Other Payables 11 9.010 - Provisions 22 1.343.477 1.089.851 Other Current Liabilities 26 837.625 593.100 Chairperson s Message Non-Current Liabilities 4.137.545 52.959.240 Financial Liabilities 8 85.629 47.526.600 Trade Payables 10 550.362 1.735.096 Provisions 22 100.011 87.789 Provision for Employment Benefits 24 1.673.357 1.346.249 Deferred Tax Liabilities 35 1.728.186 2.263.506 Management EQUITY 17.354.727 26.492.334 Share capital 27 40.000.000 36.468.043 Share premium 27 229.144 71.146 Revaluation Reserves 18 24.990.953 27.889.321 Accumulated Losses 27 (35.037.808) (33.643.141) Net Loss for the Year (12.827.562) (4.293.035) TOTAL LIABILITIES AND EQUITY 104.626.110 116.101.143 In The accompanying notes are an integral part of these financial statements. Corporate Governance and Financial Information Environment and Sustainability

36- Viking Kağıt Annual Report Audited Statement of Comprehensive Income for the Year Ended Notes Sales Revenue 28 96.149.112 97.539.834 Cost of Sales (-) 28 (78.779.830) (66.291.949) GROSS PROFIT 17.369.282 31.247.885 Marketing, Sales & Distribution Expenses (-) 29 (16.059.607) (17.078.055) General Administrative Expenses (-) 29 (6.048.679) (5.694.685) Other Income 31 1.022.583 734.990 Other Expenses (-) 31 (452.755) (2.807.291) OPERATING PROFIT/(LOSS) (4.169.176) 6.402.844 Finance Income 32 4.552.435 4.911.522 Finance Expense 33 (13.746.141) (16.620.865) Loss Before Tax (13.362.882) (5.306.499) Tax income 535.320 1.013.464 -Deferred Tax Income 35 535.320 1.013.464 NET LOSS FOR THE YEAR (12.827.562) (4.293.035) OTHER COMPREHENSIVE LOSS - - TOTAL COMPREHENSIVE LOSS (12.827.562) (4.293.035) Loss Per Share 36 (0,3207) (0,0710) The accompanying notes are an integral part of these financial statements.

37- Viking Kağıt Annual Report Audited Statements of Changes in Equity for the Year Ended at About Viking Kağıt Not Share Capital Share Premium Revaluation Reserves Accumulated Deficit Net Loss for the Year Total Equity Balance at 1 January 50.000.000 71.146 30.492.010 (41.992.597) (31.253.233) 7.317.326 - Increase in share capital 27 23.468.043 - - - - 23.468.043 Transfers - - - (31.253.233) 31.253.233 - Decrease in share capital 27 (37.000.000) 37.000.000 Depreciation transfer 18 - - (2.602.689) 2.602.689 - - Total comprehensive loss - - - - (4.293.035) (4.293.035) Chairperson s Message Balance at 36.468.043 71.146 27.889.321 (33.643.141) (4.293.035) 26.492.334 Balance at 1 January 36.468.043 71.146 27.889.321 (33.643.141) (4.293.035) 26.492.334 Increase in share capital 27 3.531.957 157.998 - - - 3.689.955 Transfers - - - (4.293.035) 4.293.035 - Depreciation transfer 18 - - (2.898.368) 2.898.368 - - Total comprehensive loss - - - - (12.827.562) (12.827.562) Management Balance at 40.000.000 229.144 24.990.953 (35.037.808) (12.827.562) 17.354.727 The accompanying notes are an integral part of these financial statements. Corporate Governance and Financial Information Environment and Sustainability In

38- Viking Kağıt Annual Report Audited Statements of Cash Flow for the Year Ended at Notes Cash flows from operating activities Loss before taxation on income (13.362.882) (5.306.499) Adjustments to reconcile loss before taxation on income to net cash generated from/(used in) operating activities -Depreciation & amortisation expenses 18-19 8.194.197 8.611.787 -Provisions for expense accruals 22 228.446 451.000 -Provision for employment termination benefits 24 525.409 395.240 -Provision for legal cases 22 44.276 137.755 -Provision for doubtful receivables 10 45.740 1.756.005 -Gain on sales or disposal of property, plant and equipment 31 (184.395) (117.055) -Interest expense 33 6.538.790 10.206.247 -Interest income 32 (107.443) (73.795) -Fair value gain on financial assets 7 (103.327) - -Foreign exchange gain loss on borrowings - (16.844) 1.818.811 16.043.841 Changes in assets and liabilities: -Increase/(decrease) in trade receivables 10 3.716.081 (4.104.215) -Increase in other receivables due from related parties 37 4.740 300.092 -Increase in inventory 13 (2.588.801) (2.894.335) -Decrease in other current assets 26 (364.081) 424.033 -Decrease in non-current receivables 11 (5.401) 1.000 -Increase/(decrease) in short-term trade payables 10 (760.636) (2.663.204) -Increase/(decrease) in provisions 22 25.179 65.106 -Increase/(decrease) in other current liabilities 26 221.482 (1.753.238) -Decrease in long-term liabilities 10 (1.184.734) (1.108.391) -Employment termination benefits paid 24 (198.301) (156.211) Net cash generated from operating activities 684.339 4.154.478 Cash flows from investing activities: -Purchases of property, plant and equipment 18-19 (709.352) (603.217) and intangible assets -Proceeds from sale of property, plant and equipment 18-31 200.774 141.825 -Interest received 107.443 73.794 Net cash used in investing activities (401.135) (387.598) Cash flows from financing activities: -Capital increase 27 3.689.955 23.115.559 -(Redemption of)/increase in financial borrowings due to related parties 37 47.775.992 (12.376.608) -Redemption of borrowings 8 (43.043.005) (3.844.886) -Interest paid (8.275.201) (11.281.629) Net cash (used in)/generated from financing activities 147.741 (4.387.564) Net (decrease)/increase in cash and cash equivalents 430.945 (620.684) Cash and cash equivalents, at start of year 6 516.015 1.136.699 Cash and cash equivalents, at end of year 6 946.960 516.015 The accompanying notes are an integral part of these financial statements.

39- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended About Viking Kağıt 1. GENERAL INFORMATION (the Company ) is engaged in the production, sales and marketing of semi-finished and finished sanitary paper for the domestic and foreign markets. A major part of the exporting activities of the Company is performed by Yaşar Dış Ticaret A.Ş., which is a Yaşar Group Company (Note 37). The Company is subject to the regulations of Turkish Capital Markets Board ( CMB ) and its shares are quoted on the Istanbul Stock Exchange ( ISE ) since October 1994. As at, the shares traded on ISE are 35,12% (2008: 29,37%) of its total shares. The ultimate shareholder of the Company is Yaşar Holding A.Ş. (Note 27). The number of personnel employed for the year then ended by the Company is 260 ( : 256). Chairperson s Message The address of the registered office is as follows: Şehit Fethi Bey Caddesi No: 120 Alsancak - İzmir/Turkey Head Quarter: Yalı Mah. Hürriyet Cad. No:474 Aliağa/İzmir Financial statements were approved by the Board of Directors, and authorized for issue on 10 March 2011. The general assembly is authorized to change the financial statements. Management 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2.1 Basis of Presentation of Financial Statements Basis of Presentation of Financial Statements and Significant Accounting Policies The Company maintains its books of account and prepares its statutory financial statements in accordance with accounting principles in the Turkish Commercial Code and tax legislation. CMB regulated the principles and procedures of preparation, presentation and announcement of financial statements prepared by the entities with the Communiqué XI, No: 29, Principles of Financial Reporting in Capital Markets ( the Communiqué ). The Communiqué is effective for the annual periods starting from 1 January 2008 and supersedes Communiqué XI, No: 25, The Accounting Standards in the Capital Markets. According to the Communiqué, entities shall prepare their financial statements in accordance with International Financial Reporting Standards ( IAS/IFRS ) endorsed by the European Union. Until the differences of the IAS/IFRS as endorsed by the European Union from the ones issued by the International Accounting Standards Board ( IASB ) are announced by 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 do not contradict with the aforementioned standards shall be applied. Financial statements are being prepared according to IAS/IFRS in line with the CMB s notification: XI, No. 29, until the differences between the IAS/IFRS adopted by the European Union and those issued by the IASB are announced by the TASB. The following financial statements and the accompanying notes have been presented in accordance with the Turkish CMB announcements dated 17 April 2008 and 9 January, adhering to the formats advised and including the information mandated by the CMB of Turkey. In Environment and Sustainability Presentation Currency Items included in the financial statements of each of the Company is measured using the currency of the primary economic environment in which the Company operates ( the functional currency ).The financial statements are presented in TL, which is the Company s functional and presentation currency. Corporate Governance and Financial Information

40- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) Adjustment of financial statements in hyperinflationary economies 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 companies operating in Turkey and preparing their financial statements in accordance with the financial reporting standards issued by CMB ( 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 starting from 1 January 2005. Going Concern The accompanying financial statements have been prepared on the basis of the Company s ability to continue as a going concern. The Company s current liabilities exceeded its current assets by TL 56.031.362 as at and the Company s net loss, operating loss and accumulated losses for the year then ended amounts to TL 12.827.562, TL 4.169.176 and TL 35.037.808, respectively. These conditions indicate the existence of an uncertainty, that may cast doubt on the Company s ability to continue as a going concern. In this respect, the Company management has made a considered assessment of the Company s ability to continue as a going concern and has taken certain measures as further explained in Note 41 to the financial statements. Accordingly, the Company management believes that the Company has the ability to continue its operations in the foreseeable future. 2.2 Changes in Accounting Policies Any significant changes in the accounting policies are retrospectively applied and the financial statements of the preceding terms are restated. There has been no change in the accounting policies of the Company in the current year. 2.3 Changes in accounting estimates and errors Any significant changes in accounting estimates are prospectively applied in financial statements and accounted for in the current and preceding periods. There has been no significant change in the accounting estimates of the Company in the current year. In relation to errors identified in financial reporting, they are accounted for retrospectively and prior year financial statements are restated. 2.4 Comparative Information Numerical data on the financial statement are presented in a comparative manner to provide comparability of the financial statements with the prior period financial statements, reclassifications are also posted on a retrospective manner. The Company s financial statements are being prepared in a way that provides comparability of the financial statements with the prior period financial statements in order to enable the reader to identify the financial position as well as financial trends. The Company prepared its balance sheets as at and, as well as its statements of comprehensive income, cash flow and changes in equity for the period between 1 January, in accordance with the Series XI, No. 29 Communiqué on Principles Regarding Financial Reporting in Capital Markets issued by the CMB on 9 April 2008.

41- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended About Viking Kağıt 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) The Company s financial statements are being prepared in a way that provides comparability of the financial statements with the prior period financial statements in order to enable the reader to identify the financial position as well as financial trends. In the current year, the Company had reclassified certain comparative balances in order to conform to current year s presentation. The nature, amount and reasons for each of the reclassifications are described below: The Company had presented the fair value of Derivative financial instruments amounting to TL 4.648.600 and TL 948.797 in Non-current Financial Assets and Other Current Financial Liabilities on its balance sheet dated. In the current period, these balances are offset and is presented within Financial Assets. Chairperson s Message 2.5 New and Revised International Financial Reporting Standards The following new and revised Standards and Interpretations have been adopted in the current period and have affected the amounts reported and disclosures in these financial statements. Details of other standards and interpretations adopted in these financial statements but that have had no material impact on the financial statements are set out below. a) New and Revised IFRSs affecting presentation and disclosure IAS 1 Presentation of Financial Statements (as part of Improvements to IFRSs issued in ) The amendments to IAS 1 clarify that an entity may choose to present the required analysis of items of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. The Company has opted to early adopt the amendment. The changes will be applied retrospectively. Management b) All amendments and new standards and interpretations issued and effective as of but not relevant to the Company. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (as part of Improvements to IFRSs issued in ) The amendments to IFRS 5 clarify that the disclosure requirements in IFRSs other than IFRS 5 do not apply to non-current assets (or disposal groups) classified as held for sale or discontinued operations unless those IFRSs require: (a) specific disclosures in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations, or In (b) disclosures about measurement of assets and liabilities within a disposal group that are not within the scope of the measurement requirement of IFRS 5 and the disclosures are not already provided in the consolidated financial statements. IAS 7 Statement of Cash Flows (as part of Improvements to IFRSs issued in ) The amendments to IAS 7 specify that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in the statement of cash flows. The application of the amendments to IAS 7 has resulted in a change in the presentation of cash outflows in respect of development costs that do not meet the criteria in IAS 38 Intangible Assets for capitalisation as part of an internally generated intangible asset. Environment and Sustainability Corporate Governance and Financial Information

42- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) IFRS 3 (revised in 2008) Business Combinations IFRS 3 (revised), Business Combinations and consequential amendments to IAS 27, Consolidated and separate financial statements, IAS 28, Investments in associates, and IAS 31, Interests in joint ventures, are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July. The main impact of the adoption is as follows: a) to allow a choice on a transaction-by-transaction basis for the measurement of non-controlling interests (previously referred to as minority interests) either at fair value or at the non-controlling interests share of the fair value of the identifiable net assets of the acquire. b) to change the recognition and subsequent accounting requirements for contingent consideration. c) to require that acquisition-related costs be accounted for separately from the business combination, generally leading to those costs being recognized as an expense in profit or loss as incurred. d) in step acquisitions, previously held interests are to be remeasured to fair value at the date of the subsequent acquisition with the value included in goodwill calculation. Gain or loss arising from the re-measurement shall be recognized as part of profit or loss. e) IFRS 3 (2008) requires the recognition of a settlement gain or loss when the business combination in effect settles a preexisting relationship between the Company and the acquiree. IAS 27 (revised in 2008) Consolidated and Separate Financial Statements The application of IAS 27(2008) has resulted in changes in the Company s accounting policies for changes in ownership interests in subsidiaries. Specifically, the revised Standard has affected the Company s accounting policies regarding changes in ownership interests in its subsidiaries that do not result in loss of control. In prior years, in the absence of specific requirements in IFRSs, increases in interests in existing subsidiaries were treated in the same manner as the acquisition of subsidiaries, with goodwill or a bargain purchase gain being recognised, when appropriate; for decreases in interests in existing subsidiaries that did not involve a loss of control, the difference between the consideration received and the adjustment to the non-controlling interests was recognised in profit or loss. Under IAS 27(2008), all such increases or decreases are dealt with in equity, with no impact on goodwill or profit or loss. When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the revised Standard requires the Company to derecognise all assets, liabilities and non-controlling interests at their carrying amount and to recognise the fair value of the consideration received. Any retained interest in the former subsidiary is recognised at its fair value at the date control is lost. The resulting difference is recognised as a gain or loss in profit or loss. IAS 28 (revised in 2008) Investments in Associates As part of Improvements to IFRSs issued in, IAS 28(2008) has been amended to clarify that the amendments to IAS 28 regarding transactions where the investor loses significant influence over an associate should be applied prospectively. The Company has applied the amendments to IAS 28 (2008) as part of Improvements to IFRSs issued in in advance of their effective dates (annual periods beginning on or after 1 July ). IFRIC 17, Distributions of non-cash assets to owners, effective for annual periods beginning on or after 1 July. This is not currently applicable to the Company, as it has not made any non-cash distributions. IFRIC 18, Transfers of assets from customers, effective for transfer of assets received on or after 1 July. This is not relevant to the Company, as it has not received any assets from customers. Additional exemptions for first-time adopters (Amendment to IFRS 1) was issued in July. The amendments are required to be applied for annual periods beginning on or after 1 January. This is not relevant to the Company, as it is an existing IFRS preparer.

43- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended About Viking Kağıt 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) IFRS 2, Share-based Payments Group Cash-settled Share Payment Arrangements is effective for annual periods beginning on or after 1 January. This is not currently applicable to the Company, as the Company does not have share-based payment plans. Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (as part of Improvements to IFRSs issued in 2008) clarify that all the assets and liabilities of a subsidiary should be classified as held for sale when the Company is committed to a sale plan involving loss of control of that subsidiary, regardless of whether the Company will retain a noncontrolling interest in the subsidiary after the sale. Chairperson s Message Improvements to International Financial Reporting Standards were issued in April. The improvements cover 12 main standards/interpretations as follows: IFRS 2 Share-based Payments, IFRS 8 Operating Segments, IAS 1 Presentation of Financial Statements, IAS 17 Leases, IAS 18 Revenue, IAS 36 Impairment of Assets, IAS 38 Intangible Assets, IAS 39 Financial Instruments: Recognition and Measurement, IFRIC 9 Reassessment of Embedded Derivatives, IFRIC 16 Hedges of Net Investment in a Foreign Operation. The effective dates vary standard by standard but most are effective 1 January. a) New and Revised IFRSs in issue but not yet effective IFRS 1 (amendments) First-time Adoption of IFRS Additional Exemptions and Two Other Amendments Amendments to IFRS 1 which are effective for annual periods on or after 1 July provide limited exemption for first time adopters to present comparative IFRS 7 fair value disclosures. Management On 20 December, IFRS 1 is amended to; provide relief for first-time adopters of IFRSs from having to reconstruct transactions that occurred before their date of transition to IFRSs. provide guidance for entities emerging from severe hyperinflation either to resume presenting IFRS financial statements or to present IFRS financial statements for the first time. The amendment above will be effective for annual periods beginning on or after 1 July 2011. These amendments are not relevant to the Company, as it is an existing IFRS preparer. In IFRS 7 Financial Instruments: Disclosures In October, IFRS 7 Financial Instruments: Disclosures is amended by IASB as part of its comprehensive review of off balance sheet activities. The amendments will allow users of financial statements to improve their understanding of transfer transactions of financial assets (for example, securitizations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. The amendment will be effective for annual periods beginning on or after 1 July 2011. The Company has not yet had an opportunity to consider the potential impact of the adoption of this revised standard. IFRS 9 Financial Instruments: Classification and Measurement In November, the first part of IFRS 9 relating to the classification and measurement of financial assets was issued. IFRS 9 will ultimately replace IAS 39 Financial Instruments: Recognition and Measurement. The standard requires an entity to classify its financial assets on the basis of the entity s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, and subsequently measure the financial assets as either at amortized cost or at fair value. The new standard is mandatory for annual periods beginning on or after 1 January 2013. The Company has not had an opportunity to consider the potential impact of the adoption of this standard. Environment and Sustainability Corporate Governance and Financial Information

44- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) IAS 12 Income Taxes In December, IAS 12 is amended. IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 Investment Property. The amendment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will, normally be, be through sale. The amendment will be effective for annual periods beginning on or after 1 January 2012. The Company has not yet had an opportunity to consider the potential impact of the adoption of this revised standard. IAS 24 (Revised ) Related Party Disclosures In November, IAS 24 Related Party Disclosures was revised. The revision to the standard provides government-related entities with a partial exemption from the disclosure requirements of IAS 24. The revised standard is mandatory for annual periods beginning on or after 1 January 2011. The Company has not yet had an opportunity to consider the potential impact of the adoption of this revised standard. IAS 32 (Amendments) Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements The amendments to IAS 32 and IAS 1 are effective for annual periods beginning on or after 1 February. The amendments address the accounting for rights issues (rights, options or warrants) that are denominated in a currency other than the functional currency of the issuer. Previously, such rights issues were accounted for as derivative liabilities. However, the amendment requires that, provided certain conditions are met, such rights issues are classified as equity regardless of the currency in which the exercise price is denominated. The Company has not yet had an opportunity to consider the potential impact of the adoption of this amendment to the standard. IFRIC 14 (Amendments) Pre-payment of a Minimum Funding Requirement Amendments to IFRIC 14 are effective for annual periods beginning on or after 1 January 2011. The amendments affect entities that are required to make minimum funding contributions to a defined benefit pension plan and choose to pre-pay those contributions. The amendment requires an asset to be recognized for any surplus arising from voluntary pre-payments made. The Company does not expect any impact of the adoption of this amendment on the financial statements. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 19 is effective for annual periods beginning on or after 1 July. IFRIC 19 addresses only the accounting by the entity that issues equity instruments in order to settle, in full or part, a financial liability. The Company has not yet had an opportunity to consider the potential impact of the adoption of this amendment to the standard. Annual Improvements May Further to the above amendments and revised standards, the IASB has issued Annual Improvements to IFRSs in May that cover 7 main standards/interpretations as follow: IFRS 1 First-time Adoption of International Financial Reporting Standards; IFRS 3 Business Combinations; IFRS 7 Financial Instruments: Disclosures; IAS 27 Consolidated and Separate Financial Statements; IAS 34 Interim Financial Reporting and IFRIC 13 Customer Loyalty Programmes. With the exception of amendments to IFRS 3 and IAS 27 which are effective on or after 1 July, all other amendments are effective on or after 1 January 2011. Early adoption of these amendments are allowed. The Company has not yet had an opportunity to consider the potential impact of the adoption of these amendments to the standards.

45- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended About Viking Kağıt 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) 2.6 Summary of Significant Accounting Policies Revenue Recognition Sales of goods: Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Company s activities. Revenue is shown net of value-added tax, returns, rebates and discounts (Note 28). At each balance sheet date any expenditure incurred but not yet invoiced is estimated and accrued. Revenue is recognised as follows: Chairperson s Message Sales of goods are recognised when the Company has delivered or sold products to the customer, the customer has accepted the products and collectibility of the related receivables is reasonably assured. It is the Company s policy to sell its products to the customers with a right of return. Accumulated experience is used to estimate and provide for such returns at the time of sale. Dividend and interest revenue: Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated cash receipts through the expected life of the financial asset to that asset s net carrying amount. Dividend revenue from investments is recognized when the shareholders rights to receive payment have been established. Management Inventories Inventories are stated at the lower of cost and net realizable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories held by the method most appropriate to the particular class of inventory, with the majority being valued on a weighted average cost basis. Net realizable value represents the estimated selling price less all estimated costs of completion and costs necessary to make a sale. When the net realizable value of inventory is less than cost, the inventory is written down to the net realizable value and the expense is included in statement of income/(loss) in the period the write-down or loss occurred. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed. The reversal amount is limited to the amount of the original writedown. In Tangible Assets Fair Value Method Land, buildings and machinery held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value at the date of revaluation is the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm s length transaction. Fair value determination is based on the market and cost approaches using quoted market prices for similar items when available and in some cases, using replacement cost when appropriate. (for the preceding sentence, please tailor if the entity has specific fair value estimation approaches. Disclosure of Fair Value Determination is mandatory.) Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date. Any revaluation increase arising on the revaluation of such land, buildings and machinery is credited in equity to the properties revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognized in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset. Depreciation on revalued buildings is charged to profit or loss. Environment and Sustainability Corporate Governance and Financial Information

46- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) On the subsequent sale or retirement of a revalued property, the related revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings. No transfer is made from the revaluation reserve to retained earnings except when an asset is derecognized. Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognized impairment loss. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Intangible Assets Intangible assets are mainly composed of computer software and other related intangible assets none of which were internally generated. All other items of intangible assets acquired before 1 January 2005 are carried at cost in the equivalent purchasing power of TL as at 2004 and items acquired after 1 January 2005 are carried at cost, less the subsequent depreciation and impairment loss, if any, at the financial statements. Amortization is charged on a straight-line basis over their estimated useful lives of three years. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Residual values of intangible assets are deemed as negligible. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Borrowing Costs Borrowings are recognised initially at the proceeds received, net of any transaction costs incurred. In subsequent periods, borrowings are measured at amortised cost using the effective yield method; any difference between the proceeds (net of transaction costs) and the redemption value is recognised at the consolidated comprehensive income statement as finance cost over the period of the borrowings. Loans with a maturity of less than 12 months are included in current liabilities and in non-current liabilities with a maturity of longer than 12 months. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. In, the Company does not have any qualified assets, and borrowing costs are recognised in the consolidated comprehensive income statement in the period in which they are incurred.

47- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended About Viking Kağıt 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) Financial Instruments Financial Assets Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this category are classified as current assets, if they are either held for trading or are expected to be realized within 12 months of the balance sheet date. The Company has no financial assets in this category. Chairperson s Message The Company classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, available-for-sale financial assets and held-to-maturity financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The effective interest method The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Management Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. Available-for-sale financial assets Quoted equity investments and quoted certain debt securities held by the Group that are traded in an active market are classified as being available- for-sale financial assets and are stated at fair value. The Group also has investments in unquoted equity investments that are not traded in an active market but are also classified as available-for-sale financial assets and stated at cost since their value can t be reliably measured. Gains and losses arising from changes in fair value are recognized in other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are recognized in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group s right to receive the dividends is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognized in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are recognized in other comprehensive income. Loans and receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method less any impairment. In Environment and Sustainability Corporate Governance and Financial Information

48- Viking Kağıt Annual Report Notes to the Audited Financial Statements for the Year Ended 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED) Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. The Group s cash and cash equivalents are classified under the category of Loans and Receivables. Financial Liabilities Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.