GSD Denizcilik Gayrimenkul aat Sanayi ve Ticaret Anonim irketi January 1 condensed interim consolidated financial statements together with review report of independent auditors
Index Page Review report on the interim consolidated financial statements 1-2 Interim consolidated statements of financial position (balance sheet) 3-4 Interim consolidated statements of profit or loss statement 5 Interim consolidated statements of other comprehensive income statement 6 Interim consolidated statements of changes in shareholders equity 7 Interim consolidated statements of cash flows 8 Notes to the condensed interim consolidated financial statements 9-55 Convenience conversion of financials 56-60
Review report on the interim consolidated financial statements For the period January 1 To Board of Directors of GSD Denizcilik Gayrimenkul aat Sanayi ve Ticaret Anonim irketi Introduction We have reviewed the accompanying interim condensed financial statements of GSD Denizcilik Gayrimenkul aat Sanayi ve Ticaret A.. ( the Company ) as at, comprising of the interim statement of financial position as at and the related interim statements of income, comprehensive income, changes in equity and cash flows for the six-month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed financial statements in accordance with International Financial Reporting Standard IAS 34, Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed financial statements based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. 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 International Standards on Auditing. Consequently, it 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 interim condensed financial statements are not prepared, in all material respects, in accordance with IAS 34.
Interim consolidated statements of financial position as of Notes Current period (Reviewed) Prior period (Audited) Assets Current assets 10,080 25,696 Cash and cash equivalents 3 3,157 16,834 Financial investments 4 738 482 - Financial assets available for sale 4.1 738 465 - Derivative financial assets held for trading 4.2-17 Trade receivables 6 645 - Receivables from finance sector activities 7.1 4,319 7,118 Other receivables 8 289 323 Inventories (net) 9 232 - Prepaid expenses 10 222 172 Current income tax assets 11 124 357 Other current assets 20 27 23 Assets held for sale 12 327 387 Non-current assets 108,086 38,750 Financial investments 4 850 850 Receivables from finance sector activities 7.1 532 1,294 Property, plant and equipment 13 99,455 6 Intangible assets 14 - - Prepaid expenses 10 36 723 Deferred tax asset 29 7,213 8,203 Other non-current assets 20-27,674 Total assets 118,166 64,446 The accompanying accounting policies and notes are an integral part of these consolidated financial statements (3)
Interim consolidated statements of financial position as of Notes Current period (Reviewed) Prior period (Audited) Liabilities Current liabilities 9,622 852 Financial liabilities 15 3,695 11 Short term portion of long term financial liabilities 15 4,839 - Other financial liabilities 4 12 23 - Derivative financial liabilities held for trading 4.3 12 23 Trade payables 6 41 56 Payables from finance sector activities 7.2 555 546 Other payables 8.2 142 152 Deferred income 18 229 - Provisions 19 109 64 Non-current liabilities 44,810 185 Financial liabilities 15 44,582 - Provisions 19 228 185 Equity 63,734 63,409 Share capital 21.1 30,000 30,000 Adjustment to share capital 21.2 16,341 16,341 Share premium 21.3 1 1 Other comprehensive income or expenses t to be reclassified to profit or loss 21.4 2,107 (42) - Currency translation differences 1,875 - - Financial assets revaluation fund 232 (42) Restricted reserves 21.5 1,183 1,117 Retained earnings 21.6 15,926 14,698 Net profit for the period 21.6 (1,824) 1,294 Total equity and liabilities 118,166 64,446 The accompanying accounting policies and notes are an integral part of these consolidated financial statements (4)
Interim consolidated statements of profit and loss statement for the periods ended and Notes Reviewed January 1 - Reviewed January 1 - Continuing operations Marine sector revenues 22 1,360 - Marine sector expenses (-) 22 (2,595) - Gross profit of marine sector activities (1,235) - Interest income 23 305 717 Finance sector operating income 305 717 Cost of finance sector activities (-) - - Provision of finance sector operating income/(expenses) net 23 (75) (176) Foreign exchange gain/(loss), net 23 293 (1,060) Other finance sector operating income/(expense), net 23 57 - Gross profit of finance sector activities 580 (519) Gross profit/(loss) (655) (519) General administrative expenses (-) 24 (1,790) (1,387) Other operating income 25 457 3,684 Other operating expenses (-) 26 (345) (1,412) Operating profit/loss (2,333) 366 Income from investment activities 27 99 331 Operating profit before financial expense (2,234) 697 Financial income 28 4,323 1,502 Financial expense (-) 28 (3,416) (724) Profit/loss before tax from continued operations (1.327) 1,475 Tax income/expense of continued operations (497) (306) - Taxation on income 29-525 - Deferred tax income / (expense) 29 (497) (831) Profit for the period (1.824) 1,169 Earnings per share (TL) 30 (0,061) 0,039 The accompanying accounting policies and notes are an integral part of these consolidated financial statements (5)
Interim consolidated statements of other comprehensive income for the periods ended and Notes Reviewed January 1 - Reviewed January 1 - Profit for the period (1,824) 1,169 Other comprehensive income/(expense) To be reclassified as profit or loss 2,149 104 Fair value increase on financial assets 21 274 104 Currency translation differences 21 1,875 - Other comprehensive income / (loss) (net of tax) 2,149 104 Total comprehensive income 325 1,273 Non-controlling interest - - Equity holders of the parent 325 1,273 The accompanying accounting policies and notes are an integral part of these consolidated financial statements (6)
Interim consolidated statements of changes in shareholders equity for the period ended and Notes Adjustmen Share t to share capital capital Share Premium/ discount Other comprehensive income or expenses no to be reclassified to profit or loss Gains/losses from the revaluation and reclassification Other gains /losses Other comprehensive income or expenses to be reclassified to profit or loss Gains/losses from the revaluation and Foreign currency translation adjustment Hedging gains/ losses reclassification of marketable securities Other gains /losses Restricted reserves Accumulated profits Retained earnings Net profit for the period Equity attributable to equity holders of the parent Noncontrolling interest Total equity Prior period 1 January - previously reported 30,000 16,341 1 - - - - (183) - 943 11,389 3,483 61,974-61,974 Transfers - - - - - - - - - 174 3,309 (3,483) - - - Transfers from retained earnings - - - - - - - - - 174 3,309 (3,483) - - - Total comprehensive income - - - - - - - 104 - - - 1,169 1,273-1,273 Net profit for the period - - - - - - - - - - - 1,169 1,169-1,169 Other comprehensive income - - - - - - - 104 - - - - 104-104 Balance as of 30,000 16,341 1 - - - - (79) - 1,117 14,698 1,169 63,247-63,247 Current period Balance as of January 1, previously reported 21 30,000 16,341 1 - - - - (42) - 1,117 14,698 1,294 63,409-63,409 Transfers - - - - - - - - - 66 1,228 (1,294) - - - Transfers from retained earnings - - - - - - - - - 66 1,228 (1,294) - - - Total comprehensive income - - - - - 1,875-274 - - - (1,824) 325-325 Net profit for the period - - - - - - - - - - - (1,824) (1,824) - (1,824) Other comprehensive income - - - - - 1,875-274 - - - - 2,149-2,149 Balance as of 21 30,000 16,341 1 - - 1,875-232 - 1,183 15,926 (1,824) 63,734-63,734 The accompanying accounting policies and notes are an integral part of these consolidated financial statements (7)
Interim consolidated statements of cash flows for the periods ended and Notes Reviewed Reviewed Cash Flows From Operating Activities: Profit/loss for the period (1,824) 1,169 Adjustments related with the reconciliation of net profit/ loss for the period 270 (966) Depreciation and amortization 13 932 1 Reversal of doubtful receivables 23 75 176 Provision for employee termination benefits 19.2 27 13 Provision for vacation payment liability 19.2 16 18 Provisions for employee bonus 19.2 45 30 Unrealized foreign currency translation difference 21 (1,875) - Derivative financial instruments rediscounts 4.2, 4.3 6 (105) Tax income/(expenses) 29 497 306 Gain on sale of investment securities - (86) Interest expense on bank borrowings 28 563 68 Interest income on time deposits 25 (16) (1,387) Realized change in working capital 34,889 (11,008) Change in stocks (232) - Change in trade receivables (645) - Change in finance sector receivables 3,486 7,624 Change in other receivables 34 - Change in other current and non-current assets 32,586 (18,185) Change in trade payables (15) 18 Change in finance sector payables 9 (161) Change in other payables 208 (54) Tax paid (542) (238) Vacation paid 19 - (10) Employee termination benefits paid 19 - (2) Cash flows from investing activities (100,665) 4,537 Change in financial investments 12 2,834 Change in assets held for sale 60 (60) Purchase of property, plant and equipment 13 (100,381) - Dividends received 27 99 245 Interest received 108 1,586 Interest paid (563) (68) Cash flows from financing activities 53,105 (13,867) Cash inflows due to borrowings 53,105 - Repayment of financial borrowings - (13,867) Effect of change in foreign exchange rate on cash and cash equivalents 639 (54) Net (decrease)/increase in cash and cash equivalents (14,225) (20,135) Cash and cash equivalents at 1 January 16,743 42,048 Cash and cash equivalents at 30 June 2 (p) 3,157 21,859 The accompanying accounting policies and notes are an integral part of these consolidated financial statements (8)
1. Organization and operations of the Company GSD Denizcilik, Gayrimenkul, aat Sanayi ve Ticaret Anonim irketi (the former legal title; Tekstil Finansal Kiralama Anonim irketi ) ( the Company ) was established in 1992, in order to operate in Turkey pursuant to the license obtained from the Undersecreteriat of Treasury to the Prime Ministry ( Undersecretariat of Treasury ) for the purpose of finance leasing as permitted by the law numbered 3226. %45,54 percantage of certain shares of the Company are listed on the Borsa stanbul (B ST) since 20 February 1995. According to the Board of Directors resolution dated 25 May 2011, the Company decided to initiate the process regarding the amendment of the articles of association to change the operating activity, due to the sectoral contraction. According to the amendment of articles of association, the title and name of the Company have been changed as GSD Denizcilik Gayrimenkul aat Sanayi ve Ticaret Anonim irketi and GSD Marin, respectively. Based on the amendment of articles of association, the Company's purpose and activity is decided as purchasing and selling, operating, renting, building and trading of ships, yachts, sea vessels, and relevant instruments, equipment and spare parts; and the purchasing and selling, renting and building real estate properties. The Company's amendment of articles of association was submitted to and approved by the shareholders in the Extraordinary General Meeting held on 24 August 2011 subsequent to the approvals of Banking Regulation and Supervision Agency ( BRSA ), Capital Markets Board of Turkey ( CMB ) and the other relevant authorities. The Company's new title was registered on 26 August 2011 as GSD Denizcilik Gayrimenkul aat Sanayi ve Ticaret Anonim irketi. The Company will be able to prosecute its rights and claims resulting from the leasing agreements signed with its former title until its former operating activity is completely ended; on the condition that no new leasing activity or agreement is taken upon, to carry out legal operations for the execution of supplemental agreements, amendment contracts such as change of lessee, term extension and reduction, and similar amendments, annulment of contract, legally follow up of lease receivables to get the underlying leased assets back and collection of receivables; and to partially or completely transfer and assign. The Company mainly works with the customers from construction, textile, metal, machine, chemistry and mining industries. The subsidiary companies Cano Maritime Limited and Dodo Maritime Limited have been registered in Malta on March 26, with 100% shareholding of the Company. The subsidiaries took the delivery of vessels of which the constructions were completed as of the date of May 7,, and begun their operations through rental of vessels. The address of the Company s registered office is Ayd nevler Mahallesi, Kaptan R fat Sokak, No: 3 Küçükyal -Maltepe- stanbul. As at 30 June and the Company has 9 employees (31 December : 8 employees). (9)
1. Organization and operations of the Company (continued) As at and information about shareholders and their percentages are as follow: Amount % Amount % GSD Holding A.. ( GSD Holding ) 16,336 54.45 16,336 54.45 Listed 13,662 45.54 13,662 45.54 Other 2 0.01 2 0.01 Historical amount 30,000 100.00 30,000 100.00 Share capital inflation adjustment difference 16,341 16,341 Adjusted for inflation amount 46,341 46,341 As at and the distribution of the Company s shares on the basis of group is as following: Group A 8,976 8,976 Group B 3,741 3,741 Group C 15,038 15,038 Group D 2,245 2,245 30,000 30,000 Every shareholder has voting right in proportion to the shares. However Group A, B and D shareholders are priviledged in the selection of the Board of Directors, and group A and B shareholders are priviledged in electing auditors. There are no priviledges given to shareholders in the process of profit distribution. GSD Holding holds the entire group A, B and D shares and it holds group C shares that amount to TL 1,375. The Company s and the Consolidated Group Companies Activities In the consolidated financial statements, the Company and the subsidiaries that are subject to consolidation are described as The Group. The subsidiaries that are included in the consolidation as of the date of, the activity areas and the Group s shares in these subsidiaries are as follows: Country of Subsidiary Establishment Area of Activity Final Rate % December 31, Dodo Maritime Ltd. (*) Malta Marine 100,00 - Cano Maritime Ltd. (*) Malta Marine 100,00 - (*) Dodo Maritime Ltd. and Cano Maritime Ltd. were established with Euro 5.000 share capital by GSD Denizcilik Gayrimenkul aat Sanayi ve Ticaret Anonim irketi on March 26, in Malta. Within the scope of the contract that GSD Maritime Real Estate Construction Industry and Trade Joint Stock Company signed by reference to building two dry cargo ships of 39,000 DWT, the two ships were delivered in South Korea upon completion of construction on May 7,. The ships will be registered under the name of the subsidiaries Dodo Maritime Ltd. and Cano Maritime Ltd. (10)
2. Basis of presentation of financial statements 2.1 Basis of presentation 2.1.1 Principles of financial statement preparation and Declaration of Conformity These interim condensed financial statements as of and for the six-month period ended have been prepared in accordance with IAS 34 (Interim Financial Reporting). The interim condensed 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 prepared in accordance with international Financial Reporting Standards (IFRS) for the year ended. The financial statements of the Company have been prepared in a consolidated basis effective June 30, in consequence of Dodo Maritime Ltd. and Cano Maritime Ltd. establishment. The financial statements of the Company dated are approved by the Company s Board of Directors dated August 26,. The General Assembly and the legal institutions have the right to adjust the financial statements after the financial statements are published. The interim condensed financial statements are presented in the national currency of the Republic of Turkey, the Turkish lira ( TL ). The functional currency of the Company is TL whereas the functional currency of subsidiaries is U.S. Dollars. The Company keeps its financial statements in accordance with Turkish commercial code and tax regulations and the uniform chart of accounts as announced by the Ministry of Finance. The foreign subsidiaries keep their accounting records in accordance with the laws and regulations in their respective countries. The consolidated financial statements are derived from the statutary accounts of the Company and the subsidiaries and adjusted to comply with IFRS. The financial statements are prepared on historical cost basis other than the available for sale financial assets and assets held for sale, which are carried at their fair values. (11)
2. Basis of presentation of financial statements (continued) 2.1.2 Basis of consolidation In the preparation of the consolidated financial statements, the subsidiaries for which the Company has control power over their financial and activity policies are identified as follows: (a) If the Company has the authority to use more than 50% of the voting right in the due to its direct and/or indirect shareholding in those companies. (b) Although the Company does not have the authority to use more than 50% of voting rights but has the authority and power to control the financial and operational policies control then the Company is included in the consolidation. Control power expresses the fact that the Company manages directly or indirectly the financial and operational policies of companies and receives benefit from this. The financial statements of the subsidiaries are included in the consolidation from the date that the management control begins to the date that the control ends. The consolidated financial statements consist of the financial statements of the Company and its subsidiaries as of and were prepared according to the principles below: i) The statements of financial position and income statements were subjected to consolidation by using full consolidation method, and the registered values of the subsidiaries in the Company books and the equity capitals of the subsidiaries in the financial statements were reciprocally clarified. The consolidated financial statements were cleared of all the balances and transactions that resulted from the transactions between the subsidiaries and the Company and of all kinds of unearned income. ii) In the preparation of the financial statements of the subsidiaries that are included in the consolidation, the necessary corrections and classifications were applied to the records which were kept based on historical costs with regards to conformity to IFRS and to the accounting principles and policies and presentation of the Company. iii) The operating results of the subsidiaries were included in the consolidation being effective as of the date the control in the aforementioned companies was transferred to the Company 2.1.3 Offsetting Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to set-off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously. 2.1.4 Going concern The Company prepared its financial statements according to the going concern assumption. (12)
2.2 Changes and mistakes in accounting policies 2.2.1 Reclassification applied to financial statements as of and Based on these new illustrative financial statements, a number of changes made at the Company s balance sheets, profit and lose statement and other comprehensive income statement. The reclassifications that are made at the Company s balance sheet as at 31 December and profit and lose statement at 30 June and other comprehensive income statement; a) In the financial statements published as of, the other receivables that were classified into the current assets that amount to TL 4 are classified into the other receivables account in the financial statements that were prepared again. b) In the financial statements published as of, the marketable financial assets that amount to TL 465 and that were exhibited in the fixed assets are classified into the financial investments account in the current assets of the financial statements that were prepared again. c) In the financial statements published as of, the amount TL 172 of the amount TL 529 that was exhibited in the other current assets was classified into the prepaid expenses account of the financial statements that were prepared again. The rest of amount TL 357 is classified into the assets account that is about the current period tax. d) In the financial statements that were published, the other fixed assets amounting to TL 723 are classified into the prepaid expenses account. e) In the financial statements published as of the date of, the debts from the finance sector activities that amount to TL 56 are classified into the trade debts account of the financial statements that were prepared again. f) In the financial statements published as of the date of, the reserves that amount to TL 103 concerning the benefits provided to short term employees are classified into the reserves account concerning the benefits provided to long term employees in the financial statements that were prepared again. (13)
2. Basis of presentation of financial statements (continued) g) In the financial statements belong to the interim accounting period that ended on, the exchange differences expense arose from financial leasing in the foreign exchange losses, net that amount to TL 53 is classified into the interest incomes account of the financial statements that were prepared again. h) In the financial statements belong to the interim accounting period that ended on, interest commission and other expenses that amount to TL 11 are classified into financial expenses account of the financial statements that were prepared again. i) In the financial statements belong to the interim accounting period that ended on, dividends and marketable securities sales profits in other incomes that amount to TL 331 are classified into incomes from investment activities account of the financial statements that were prepared again. j) In the financial statements belong to the interim accounting period that ended on, exchange difference incomes that stem from the borrowing in the foreign exchange losses, net and that amount to TL 714 are classified into financial incomes account of the financial statements that were prepared again. k) In the financial statements belong to the interim accounting period that ended on, interest expenses in the Interest expense on loans and borrowings that amount to TL 68 are classified into financial expenses account of the financial statements that were prepared again. l) In the financial statements belong to the interim accounting period that ended on, interest expenses in the net gains from derivative instruments carried at fair value that amount to TL 68 are classified into financial expenses account of the financial statements that were prepared again. 2.2.2 New and amended standards and interpretations: The accounting policies adopted in preparation of the interim consolidated financial statements as at 30 June are consistent with those of the previous financial year, except for the adoption of new and amended IFRS and IFRIC interpretations effective as of 1 January and consolidation as explained in Note 2.1.2. The effects of these standards and interpretations on the Company s financial position and performance have been disclosed in the related paragraphs. The new standards, amendments and interpretations which are effective as at January 1, are as follows: (14)
2. Basis of presentation of financial statements (continued) IFRS 7 Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities (Amendment) The amendment requires the disclosure of the rights of the entity relating to the offsetting of the financial instruments and some information about the related regulations (egg, collateral agreements). New disclosures would provide users of financial statements with information that is useful in; i) Evaluating the effect or potential effect of netting arrangements on an entity s financial position and ii) Analyzing and comparing financial statements prepared in accordance with IFRSs and other generally accepted accounting standards. New disclosures have to be provided for all the financial instruments in the statement of financial position that have been offset according to IAS 32. Such disclosures are applicable to financial instruments in the statement of financial position that have not been offset according to IAS 32 but are available for offsetting according to main applicable offsetting regulations or other financial instruments that are subject to a similar agreement. The amendment affects disclosures only and did not have any impact on the interim condensed consolidated financial statements of the Company. (15)
2. Basis of presentation of financial statements (continued) IAS 19 Employee Benefits (Amended) Numerous changes or clarifications are made under the amended standard. Among these numerous amendments, the most important changes are removing the corridor mechanism, for determined benefit plans recognizing actuarial gain/(loss) under other comprehensive income and making the distinction between short-term and other long-term employee benefits based on expected timing of settlement rather than employee entitlement. The Company used to recognize the actuarial gain and loss in profit and loss statement before this amendment. The Company disclosed the retrospective effect of the changes in Note 2.2. Additionally, based on the amendment in the presentation of short and long- term employee benefits, vacation pay liability has been reclassified to short-term provision for employee benefits retrospectively IAS 27 Separate Financial Statements (Amended) As a consequential amendment to IFRS 10 and IFRS 12, the POA also amended IAS 27, which is now limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. This amendment did not have an impact on the financial position or performance of the Company. IAS 28 Investments in Associates and Joint Ventures (Amended) As a consequential amendment to IFRS 11 and IFRS 12, the POA also amended IAS 28, which has been renamed IAS 28 Investments in Associates and Joint Ventures, to describe the application of the equity method to investments in joint ventures in addition to associates. This amendment did not have an impact on the financial position or performance of the Company. IFRS 10 Consolidated Financial Statements IFRS 10 replaces the parts of previously existing IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. A new definition of control is introduced, which is used to determine which entities are consolidated. This is a principle based standard and require preparers of financial statements to exercise significant judgment. This amendment did not have an impact on the financial position or performance of the Company. IFRS 11 Joint Arrangements The standard describes the accounting for joint ventures and joint operations with joint control. Among other changes introduced, under the new standard, proportionate consolidation is not permitted for joint ventures. This amendment did not have an impact on the financial position or performance of the Company. IFRS 12 Disclosure of Interests in Other Entities IFRS 12 includes all of the requirements that are related to disclosures of an entity s interests in subsidiaries, joint arrangements, associates and structured entities. This Standard did not have an impact on the financial statements of the Company. (16)
2. Basis of presentation of financial statements (continued) IFRS 13 Fair Value Measurement The new Standard provides guidance on how to measure fair value under IFRS but does not change when an entity is required to use fair value. It is a single source of guidance under IFRS for all fair value measurements. The new standard also brings new disclosure requirements for fair value measurements. The new disclosures are only required for periods beginning after IFRS 13 is adopted. Some of the disclosures about the financial instruments mentioned above, have to be provided in the interim condensed consolidated financial statements according to IAS 34.16 A (j). IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine The Interpretation clarifies when production stripping should lead to the recognition of an asset and how that asset should be measured, both initially and in subsequent periods. The interpretation is not applicable for the Company and did not have any impact on the financial position or performance of the Company. Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) The amendments change the transition guidance to provide further relief from full retrospective application. The date of initial application is defined as the beginning of the annual reporting period in which IFRS 10 is applied for the first time. The assessment of whether control exists is made at the date of initial application rather than at the beginning of the comparative period. If the control assessment is different between IFRS 10 and IAS 27/SIC-12, retrospective adjustments should be determined. However, if the control assessment is the same, no retrospective application is required. If more than one comparative period is presented, additional relief is given to require only one period to be restated. For the same reasons POA has also amended application guidance of IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities to provide transition relief. This amendment did not have an impact on the financial position or performance of the Company. Improvements to IFRSs Annual Improvements to IFRSs 2009 2011 Cycle, which contains amendments to its standards, is effective for annual periods beginning on or after 1 January. This project did not have an impact on the financial position or performance of the Company. IAS 1 Financial Statement Presentation: Clarifies the difference between voluntary additional comparative information and the minimum required comparative information. IAS 16 Property, Plant and Equipment: Clarifies that major spare parts and servicing equipment that meet the definition of property, plant and equipment are not inventory IAS 32 Financial Instruments: Presentation: Clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes. The amendment removes existing income tax requirements from IAS 32 and requires entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders. (17)
2. Basis of presentation of financial statements (continued) IAS 34 Interim Financial Reporting: Clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment. Total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity s previous annual financial statements for that reportable segment. Standards issued but not yet effective and not early adopted Standards, interpretations and amendments to existing standards that are issued but not yet effective up to the date of issuance of the interim condensed consolidated financial statements and not early adopted by the Company are as follows. The Company will make the necessary changes if not indicated otherwise, which will be affecting the interim condensed consolidated financial statements and disclosures, after the new standards and interpretations become in effect IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (Amended) The amendments clarify the meaning of currently has a legally enforceable right to set-off and also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments are to be retrospectively applied for annual periods beginning on or after 1 January 2014. The Company / the Company do not expect that these amendments will have significant impact on the financial position or performance of the Company. IFRS 9 Financial Instruments Classification and Measurement As amended in December 2011, the new standard is effective for annual periods beginning on or after 1 January 2015. Phase 1 of IFRS 9 introduces new requirements for classifying and measuring financial instruments. The amendments made to IFRS 9 will mainly affect the classification and measurement of financial assets and measurement of fair value option (FVO) liabilities and requires that the change in fair value of a FVO financial liability attributable to credit risk is presented under other comprehensive income. Early adoption is permitted. The Company is in the process of assessing the impact of the new standard on the financial position or performance of the Company. The new standards, amendments and interpretations that are issued by the International Accounting Standards Board (IASB) but not issued by POA The following standards, interpretations and amendments to existing IFRS standards are issued by the IASB but not yet effective up to the date of issuance of the interim financial statements. However, these standards, interpretations and amendments to existing IFRS standards are not yet adapted/issued by the POA, thus they do not constitute part of IFRS. The Company will make the necessary changes to its consolidated financial statements after the new standards and interpretations are issued and become effective under IFRS. (18)
2. Basis of presentation of financial statements (continued) IFRS 10 Consolidated Financial Statements (Amendment) IFRS 10 is amended to provide an exception to the consolidation requirement for entities that meet the definition of an investment entity. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments. The amendment is not expected to have an effect on the financial position and performance of the Company. IFRIC Interpretation 21 Levies The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be recognized before the specified minimum threshold is reached. The interpretation is effective for annual periods beginning on or after 1 January 2014, with early application permitted. Retrospective application of this interpretation is required. The interpretation is not applicable for the Company and accordingly it does not have any impact on the financial position or performance of the Company. IAS 36 Impairment of Assets - Recoverable Amount Disclosures for Non-Financial assets (Amendment) The IASB, as a consequential amendment to IFRS 13 Fair Value Measurement, modified some of the disclosure requirements in IAS 36 Impairment of Assets regarding measurement of the recoverable amount of impaired assets. The amendments require additional disclosures about the measurement of impaired assets (or a group of assets) with a recoverable amount based on fair value less costs of disposal. The amendments are to be applied retrospectively for annual periods beginning on or after 1 January 2014. Earlier application is permitted for periods when the entity has already applied IFRS 13. The Company does not expect that this amendment will have any impact on the financial position or performance of the Company. IAS 39 Financial Instruments: Recognition and Measurement - Novation of Derivatives and Continuation of Hedge Accounting (Amendment) In June, the IASB issued amendments to IAS 39 Financial Instruments: Recognition and Measurement that provides a narrow exception to the requirement for the discontinuation of hedge accounting in circumstances when a hedging instrument is required to be novated to a central counterparty as a result of laws or regulations. The amendments are to be applied retrospectively for annual periods beginning on or after 1 January 2014. The Company does not expect that this amendment will have any impact on the financial position or performance of the Company. (19)
2. Basis of presentation of financial statements (continued) Property, plant and equipment and related depreciation Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided for property, plant and equipment on a straight-line basis over their estimated useful lives. Land is not depreciated as it is deemed to have an indefinite useful life. Useful life and the depreciation method are constantly reviewed, and accordingly, parallels are sought between the depreciation method and the period and the useful life to be derived from the related asset. Property, plant and equipment are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the asset s net selling price or value in use. Recoverable amount of the property, plant and equipment is the higher of future net cash flows from the utilisation of this property, plant and equipment or its fair value less cost to sell. Repairs and maintenance are charged to the income statements during the period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Machinery and equipment are capitalised and amortised when their capacity is fully available for use and their physical situations meet the determined production capacities. Gains or losses on disposals of property, plant and equipment are determined by comparing proceeds with their restated carrying amounts and are included in the related income and expense accounts, as appropriate. The estimated useful lives for the current and comparative periods are as follows: Motor vehicles 5 Furniture and fixtures 5 Ships 18 Financial liabilities and borrowing costs Years Borrowings are recognized initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method; any difference between proceeds, net of transaction costs, and the redemption value is recognized in the income statement over the period. Borrowing costs are charged to the income statement when they are incurred. (20)
3. Cash and cash equivalents As of and cash and cash equivalents comprised the following: 30 June 31 December Cash at banks 3,156 16,832 Demand deposit 2,139 163 Time deposit 1,017 16,669 Cash on hands 1 2 Total cash and cash equivalents 3,157 16,834 As of, the time deposits comprised TL, EUR and USD bank placements.as of interest rates are between %3.50-%3.75 for TL, %0.05 for EUR and %0.1 for USD (31 December : %5-%8,75 for TL, %0,25-%0.1 for USD) denominated bank accounts with an original maturity up to three months. As at 30 June, there is no restriction on bank deposits (31 December : None). 4. Financial investments 4.1 Financial assets available for sale As of and financial assets (available for sale) are comprised of shares that are traded on the stock exchange. As of and details of financial assets available for sale are as follows; % of shares Carrying value % of shares Carrying value Listed GSD Holding 0.17 516 0.17 331 Tekstilbank A. 0.04 222 0.04 134 738 465 Company s financial investments are exposed to the credit, liquidity and market risk exposures are disclosed in Note 31. 4.2 Derivative financial assets held for trading As of and, derivative financial assets held for trading which are comprised of currency swap agreements are as follows; Derivative financial assets held for trading - 17-17 (21)
4. Financial investments (continued) 4.3 Derivative financial liabilities held for trading As of and, derivative financial liabilities held for trading which are comprised of currency swap agreements are as follows; Derivative financial liabilities held for trading 12 23 12 23 4.4 Other financial investments As of and financial investments (other financial investments) which are disclosed under non-current assets comprised the shares that are not traded on the stock exchange As of 30 June and 31 December, details of other financial investments are as follows; % of shares Carrying value % of shares Carrying value Not listed Tekstil Faktoring Hizmetleri A. 1.98 813 1.98 813 Other - 37-37 850 850 5. Related party disclosures A company is defined as a related party of the Company, if one of the companies has control power on the other company or has a significant impact on financial and administrative decisions of the other company. The Company is ultimately controlled by GSD Holding that owns the 54.45% ( : 54.45%) of its shares and that is the principal shareholder of the Company. The ultimate owner of the Company is GSD Holding and in the accompanying financial statements GSD Holding and its related companies are disclosed as related parties.in addition, related parties include the Company s principal owners, management, Board of Directors and their families. (a) Banks Cash at banks 1,049 16,689 Tekstil Bankas A.. (Other related party) 344 16,040 GSD Bank (Other related party) 705 649 Bank borrowings 3,695 11 Tekstil Bankas A.. (Other related parties) 3,695 11 (22)
5. Related party disclosures (continued) At 30 June, letters of guarantee obtained from related party banks are amounting to TL 28 (31 December : TL 125). Out of such amount, letter of guarantee amounting to TL 2 (31 December : TL 21) of these letters of guarantee is obtained from Tekstil Bankas A and TL 26 (31 December : TL 104) is obtained from GSD Yat m Bankas A and are submitted to various public authorities and banks. (b) Other balances and transactions with related parties As of and trade receivables with related parties are as follows: (23) Trade receivables 10 - Total 10 - As of and, trade payables with related parties are as follows: Trade payables 41 56 Total 41 56 Transactions with related parties that belong to the 6-month and 3-month interim accounting periods that ended on June 30 are as follows: January 1,- April 1, - June 30 January 1,- April 1, - June 30 Tekstil Bankas A..- interest income 10 2 396 190 GSD Bank interest income 6 3 991 282 Tekstil Faktoring Hizmetleri A.. dividend income 99-218 - Tekstil Bankas A..- income /(Expense) from derivative transactions - - 227 117 GSD Bank - income /(Expense) from derivative transactions (35) (103) 530 515 Gsd Reklam ve Halkla li kiler Hizmetleri A.. dividend income - - 27 27 Gsd D Ticaret A.. charge reflecting income 10 10 - - Tekstil Bankas A.. interest expenses (185) (162) (3) (3) GSD Bank interest expenses - - - - Tekstil Bankas A.. banking commision expenses - - (1) (1) Tekstil Bankas A.. service fee paid archive (1) (1) - - GSD Bank banking commision expenses (1) - (1) - GSD Bank representation expenses (20) (10) (21) (12) GSD Holding - attorneys fees paid (6) - (19) (5) M. Turgut Y lmaz rent expenses (96) (49) (95) (48) GSD Holding representation expenses (169) (88) (179) (85) (c) Derivative financial transactions The Company has realized currency swap transactions with GSD Bank amounting to TL 895 nominal amount (31 December : TL 4,238 nominal amount).
5. Related party disclosures (continued) (d) Key management benefits Total benefit of key management for the period ended 30 June, amounting to TL 317 (30 June : TL 303) respectively. (e) Other As of 30 June, GSD Holding, as a guarantee against its open lines of credit, has provided surety amounting to TL 132.547 to credit institutions. ( : TL 95.448) 6. Trade receivables and payables 6.1 Trade receivables As of and, details of trade receivables are as follows: Trade receivables from marine activities 635 - Other trade receivables 10-6.2 Trade payables As of and, details of trade payables are as follows: 645 - Other trade payables 41 56 Trade payables comprised representation services that are provided by GSD Holding and GSD Yat m Bankas. 7. Receivables and payables from finance sector activities 7.1 Receivables from finance sector activities As of and, details of short-term receivables from finance sector operations are as follows; Finance lease receivables 4,319 7,118 Doubtful receivables 3,080 3,005 Provision for doubtful receivables (3,080) (3,005) (24) 4,319 7,118
7. Receivables and payables from finance sector activities (continued) As of and details of long-term receivables from finance sector operations are as follows; Long-term finance lease receivables 532 1,294 532 1,294 The Company s credit, liquidity and market risk exposures resulting from financial sector liabilities are disclosed in Note 31. 7.1.1 Finance lease receivables As of and details of finance lease receivables are as follows; Short-term finance lease receivables Finance lease receivables, due 377 441 Finance lease receivables, not due 4,370 7,296 Unearned interest income (428) (619) Short-term finance lease receivables, net 4,319 7,118 Long-term finance lease receivables Finance lease receivables, not due 551 1,347 Unearned interest income (19) (53) Long-term finance lease receivables, net 532 1,294 Total finance lease receivables, net 4,851 8,412 As of and the maturity profile of finance lease receivables not due yet are as follows: Up to 1 year 1-2 years 2-3 years 3-4 years 4 years and over Total Finance lease receivables, net 3,942 329 203 - - 4,474 Unearned income 428 16 3 - - 447 4,370 345 206 - - 4,921 (25)
7. Receivables and payables from finance sector activities (continued) Up to 1 year 1-2 years 2-3 years 3-4 years 4 years and over Total Finance lease receivables, net 6,677 1,100 194 - - 7,971 Unearned income 619 49 4 - - 672 7,296 1,149 198 - - 8,643 As of and the currency distribution of finance lease receivables not due yet are as follows: Currency Foreign currency principal amount Principal amount in TL Unearned income in foreign currency Unearned income amount in TL TL 540 540 145 145 Euro 1,409 3,543 85 212 USD 203 391 47 90 4,474 447 TL 935 935 222 222 Euro 2,625 6,173 146 343 USD 484 863 60 107 7,971 672 The interest rates of the finance lease contracts are fixed at. As of, the average interest rate of finance lease receivables denominated in USD is %6.31, for Euro is %5.80, and for TL is %10.41. The interest rates of the finance lease contracts are fixed at. At, the average interest rate of finance lease receivables denominated in USD is %6.35, for Euro is %5.75, and for TL is %10.58. (26)
7. Receivables and payables from finance sector activities (continued) As of, a certain portion of finance lease receivables of the Company amounted to TL 377 (31 December : TL 441) is past due but not considered as impaired since these receivables either have been considered as collectible by the Company management based on their past experience with the customers and since they have been secured with collaterals. The maturity profile of such receivables is as follows: Finance lease receivables Due but not impaired 0-30 days 177 184 30-60 days 34 87 60-90 days 37 63 90-180 days 45 77 180 days and over 84 30 Total value 377 441 7.1.2 Doubtful receivables The allowance for doubtful receivables is established through a provision charged to expenses. A credit risk provision for trade receivables is established if there is objective evidence that the Company will not be able to collect all such receivables. The allowance is an estimated amount that management believes to be adequate to absorb possible future losses on existing receivables that may become uncollectible due to current economic conditions and inherent risks in the receivables. The activities of the provisions which are reserved for doubtful receivables are as follows Balance at January 1 3,005 2,812 Current period provisions 124 193 Current period collections for provision (49) - Balance at June 30 3,080 3,005 The doubtful receivables provision expenses that are reserved within the period are accounted in the other operating expenses. (27)