ARCELIK-AR-05-MATBAA ING.fh9

Transcription

CONTENTS
01 Milestones
28 Brands
02 Financial Ratios
30 Awards in 2005
03 Breakdown of Sales Revenue
31 Production Facilities
03 Production and Distribution
35 Corporate Social Responsibility Report
04 Five-Year Consolidated Financial Review
56 Board of Directors 2005
05 Shareholders and Dividends Paid
58 Management 2005
06 Report of the Board of Directors and
60 Agenda
Message from the Chairman
61 Proposal for Profit Distribution
10 2005 Review of Activities and Message
from the General Manager
61 Amendments to the Articles of Association
62 Consolidated Financial Statements and Independent Auditor’s Report
100 Compliance with International Systems and Product Standards
MILESTONES
1955...
1975...
1991...
1998...
Foundation
Single Product Single Plant
Quality - Technology
Restructuring
1991:
1998:
1955:
Arçelik A.fi. started its operations
in Sütlüce.
1975:
Consumer Information Service was
Eskiflehir Refrigerator Plant started
1959:
First ever washing machine
produced in Turkey.
production.
Sanayi A.fi. was founded in partnership
commenced production.
1979:
1968:
Production plant moved to
Çay›rova.
‹zmir Vacuum Cleaner Plant started
production.
1999:
Ardem Piflirici ve Is›t›c› Cihazlar
Sanayi A.fi. merged into Arçelik A.fi.
1996:
with Türk Demir Döküm Fabrikalar› A.fi.
Turkey.
Decision to implement the Six
Sigma methodology was taken.
1993:
Ankara Dishwasher Plant
Ardem Piflirici ve Is›t›c› Cihazlar
The three-year warranty program
was introduced.
launched.
1977:
1960:
First ever refrigerator produced in
R&D Center was established.
Çay›rova Air-Conditioner Plant was
Arçelik A.fi., Türk Elektrik Endüstrisi
inaugurated.
A.fi., At›l›m A.fi., and Geliflim A.fi. were
1997:
united to become a single legal entity.
Arçelik A.fi. received the National
Quality Award.
ARÇEL‹K A.fi. 2005 ANNUAL REPORT
01
2000...
2002...
2004...
2005...
Productivity
Globalization
2002:
International
Achievements
Today
2000:
Arçelik A.fi. received the European
Quality Prize (EFQM).
Beko became the leader of the
British refrigerator market.
Arçelik - LG Klima Sanayi ve Ticaret
Digital Life Project was introduced
A.fi. started production.
for the very first time during the Berlin
2001:
Hometech Fair.
The domestic marketing and sale
Arçelik A.fi. purchased German
2004:
The decision was taken to begin
investments in Russia.
At the outset of the TPM (Total
Productive Maintenance) Awards bestowed
by the Japanese state organization JIPM,
2005:
Arçelik A.fi. celebrated its 50th
anniversary.
Foundation of the Russian plant
was laid.
First production line for the Arctic
chest freezer launched at the Gaesti plant.
of products bearing the Beko brand was
household appliances company Blomberg,
the Eskiflehir Refrigerator Plant received the
taken over by Arçelik A.fi. from Beko Ticaret
and Austrian household appliances
“Excellence Award” and the Çay›rova Plant
its product range through investments in
A.fi.
technology and R&D and broke new ground
company Elektra Bregenz, as well as their
received the “Continuous Excellence Award”.
In order to increase productivity,
brand names Elektra Bregenz and Tirolia.
The Beko dishwasher was
the ‹zmir Vacuum Cleaner Plant, and the
Arçelik A.fi. also acquired British household
Topkap› Motor and Pump Plant were united
appliances brands Leisure and Flavel, and
and relocated to their new site in Çerkezköy.
Romanian household appliances company
Arctic.
recommended by the British state
organization Energy Saving Trust for
exhibiting superior performance in efficient
energy consumption.
Blomberg’s CT1300A refrigerator
The new logo reflecting innovation
named “The Most Energy-Efficient
and dynamism was introduced.
Refrigerator” within the European Energy
2003:
Commission’s Energy+ contest.
Sale of smart products started.
Arçelik A.fi. was mentioned in the
training manual of Six Sigma trainers.
Arçelik A.fi. was chosen “The Best
Turkish Company in 2003” by The Banker,
a publication of the Financial Times.
Beko dishwashers were included
among the best buys in the German market
by Stiftung Warentest, the most prestigious
consumer magazine of Germany.
Blomberg washing machine received
the “Design Award in Plus X”, the most
important technology contest in Germany.
Arçelik A.fi. continued to expand
producing the first tumble dryer of Turkey.
Blomberg product range completed,
blending advanced technology with German
design; the product line received several
awards in the environment, design,
efficiency and technology categories.
In furniture sector, Arstil reached
80 stores nationwide and the first
distributors’ meeting was held.
Ankara Dishwasher Plant and
Çerkezköy Electric Motors Plant received
the “TPM Excellence Award” of Japanese
state organization JIPM.
Financial Ratios
Rapid and profitable growth,
strong financial results
2,500
1,250
750
2005
2004
2003
2002
INVENTORY TURNOVER RATE
1.84
7.50
-15
5.67
4.50
0.75
0.80
3.00
0.50
0.40
1.50
0.25
0.00
0.00
0.00
2005
1.20
2004
6.00
2005
1.60
2004
1,170
2005
2004
6.1
2005
TOTAL LIABILITIES /
SHAREHOLDERS’ EQUITY
1.25
6.12
5.9
-10
1.06
1.06
2005
1.73
0
2004
CURRENT RATIO
2.00
-5
2005
2004
2003
2002
2001
0
75
2001
2
2004
0
4.5
150
2002
4
2001
5
96
225
1.1
6
2.3
10
2003
334
15
(14.9)
245
300
231
7.6
8
375
294
(%)
8.0
NET MARGIN
(EUR million)
8.0
EBITDA
(%)
7.7
OPERATING MARGIN
10
1,000
2002
2001
2005
2004
2003
2002
2002
0
2001
0
2005
0
2004
250
2003
500
2003
500
750
2001
956
1,000
472
1,000
1,082
2,082
1,500
944
1,500
2,000
823
1,295
2,250
1,900
3,000
2,686
3,750
1,199
(EUR million)
1,858
NET SALES - INTERNATIONAL
(EUR million)
1,516
NET SALES - DOMESTIC
(EUR million)
3,056
NET SALES - WORLDWIDE
1.00
02
03
TOTAL CONSOLIDATED NET SALES BY REGION
TOTAL CONSOLIDATED NET SALES OF WHITE GOODS BY PRODUCT
Other 5%
Dishwashers 9%
Europe 34%
Ovens 15%
Turkey 61%
Refrigerators 46%
Washing Machines 30%
Production and Distribution
Head Office
Turkey / ‹stanbul
Headquarters
Sales and Marketing
Production and Marketing
Germany
Beko Deutschland GmbH
Romania
SC Arctic S.A.
Austria
Elektra Bregenz AG
Russia
Beko Llc.
Czech Republic
Beko S.A. Czech Republic
China (Hong Kong)
Archin Limited
France
Beko France S.A.
United Kingdom
Beko Plc.
Production
Local Plants
Spain
Beko Electronics Espana S.L.
Italy
Arcelitalia S.r.l.
Eskiflehir
Hungary
Beko S.A. Hungary
‹stanbul, Tuzla
Washing Machine Plant
Beko Polska S.A.
Bolu
Cooking Appliances Plant
Poland
Refrigerator Plant
Ankara
Dishwasher Plant
Tekirda¤, Çerkezköy
Electric Motors Plant
Eskiflehir
Compressor Plant
‹stanbul, Tafldelen
Multi-purpose Motor Plant
Five-Year Consolidated Financial Review
(EUR million)
2005
2004
2003
2002
2001
1. Net Sales - Worldwide
3,056
2,686
2,082
1,900
1,295
2. Net Sales - International
1,199
1,170
1,000
956
472
3. Gross Profit
772
672
542
505
334
4. Income from Operations
244
214
161
145
14
5. Income before Provision for Taxes and Minority Interest
248
228
134
100
(160)
6. Net Income
187
159
95
44
(193)
7. EBIT
244
214
161
145
14
8. EBITDA
334
294
245
231
96
1,676
1,372
1,110
1,001
687
9. Total Current Assets
10. Total Current Liabilities
913
791
605
532
260
11. Working Capital
763
581
505
469
427
12. Property, Plant and Equipment - Net
434
352
342
354
325
13. Total Assets
2,597
1,908
1,606
1,518
1,181
14. Total Liabilities
1,331
976
830
785
502
14
12
11
13
3
1,252
919
764
721
676
15. Minority Interest
16. Shareholders’ Equity
17. Net Cash Provided by Operating Activities
164
108
202
15
158
(231)
(120)
(64)
(69)
0
19. Pre-financing Cash Flow
(66)
(12)
138
(54)
158
20. Dividends Paid
146
1
47
0
45
21. Cash and Cash Equivalents at the End of the Year
168
155
189
140
170
22. Capital Expenditures
150
105
78
43
38
90
80
84
86
82
18. Net Cash Used in Investment Activities
23. Depreciation and Amortization
24. Year-end Number of Employees
11,079
10,841
9,725
9,349
5,717
Hourly
8,866
8,437
7,185
6,476
3,892
Salaried
2,213
2,404
2,540
2,873
1,825
2,364
1,803
1,788
1,110
1,093
25. Year-end Market Capitalization (ISE)
* Excluding 2005, the above figures have been restated in terms of the purchasing power of the Turkish Lira at 31 December 2004, and converted to Euro at 2004 year-end exchange rate. In 2005, income
statement items were converted to Euro at the average Euro rate, whereas balance sheet items were converted to Euro at year-end exchange rate (this procedure does not apply to Item 25).
Shareholders and
Dividends Paid
04
05
Shareholders
Paid-in Capital (TRY thousand)
Share (%)
KOÇ HOLD‹NG A.fi.
156,546
39.1
KOÇ GROUP OTHER
68,911
17.2
TOTAL KOÇ GROUP
225,457
56.3
TEKNOSAN A.fi.
58,709
14.7
BURLA T‹CARET VE YATIRIM A.fi.
OTHER SHAREHOLDERS
TOTAL
30,649
7.7
85,145
21.3
399,960
100.0
Dividends Paid
Dividends distributed from the 2000, 2001, 2002, 2003 and 2004 profits and their share in paid-in capital:
Dividends Distributed
Paid-in Capital
Dividend Ratio
Year
(TRY thousand)
(TRY thousand)
(%)
2000
36,360
60,600
60.0
2001
20,000
90,900
22.0
2002
145,440
145,440
100.0
2003
0
399,960
0
2004
229,177
399,960
57.3
Report of the Board of Directors and Message from the Chairman
The well-deserved pride
of half a century
Distinguished Members of Arçelik A.fi. Family,
Despite these positive developments, the poor performance of the Euro zone,
Dear Shareholders,
economic and political problems, ever-increasing budget deficits and rising
unemployment levels hindered the expected recovery in 2005. The rejection of
We have witnessed major national and global developments this past year. The
the EU Constitution by founding members France and the Netherlands deepened
year 2005 had a special meaning for Arçelik A.fi. as well. We celebrated our
concerns about the future of the European Union and led to a serious confidence
50th anniversary and we all shared the well-deserved enthusiasm and pride of
crisis. The negative outcomes of the referendums caused the Euro to decline.
half a century full of achievements.
High oil prices, which have a considerable influence on the global economy,
Before evaluating the year 2005, I would like to take a brief look at major
have been a major factor behind increased inflationary pressures worldwide.
developments that marked last year.
Crude oil prices climbed to a record 40% in 2005 and continued to adversely
affect raw material, other material and energy prices.
Although global economic performance was not significantly better than 2004,
it was generally in line with expectations. For 2005, it was predicted that
Meanwhile, exchange rate fluctuations in world markets became even more
economic growth and the expansion in trade volumes would slow down, inflation
unpredictable. The US current account deficit and its influence on the dollar
rates would rise slightly, and interest rates would increase significantly compared
started to threaten the global economy. The primary interest rate, repeatedly
to previous years.
increased by the Federal Reserve, finally reached 4.25% by the end of 2005,
while the European Central Bank closed the year with 2.25%. The US deficit,
The global economy, which grew 5.1% in 2004, was estimated to have grown
4.3% in 2005. However, this involved major intercontinental and international
differences as in previous years. Growth was once again led by emerging
substantial differences between the growth rates of world economies, and the
potential inflationary pressure exerted by the rise in crude oil prices resulted
in mounting concerns for the future.
markets, mainly China and India. Growth rates in the US and China, which have
become the engines of the global economy, were 3.5% and 9%, respectively,
Unfortunately, we will remember 2005 not only for its political, economic and
while the rate of growth remained at 2% in Japan and a mere 1.3% in the Euro
social events, but also for its wars and natural disasters. While the world was
zone, thus further increasing imbalances in global growth dynamics. The positive
trying to heal the wounds of the tsunami disaster, which ruined great swathes
effect of the abolishment of the textile quota accelerated capital inflow to
of Asia, the US was greatly shaken by hurricane Katrina and numerous other
developing Asian countries such as China and India, thanks to the increase in
powerful hurricanes, which left hundreds of thousands of people homeless. In
foreign direct investments and exports.
October, the earthquake in Pakistan cost many lives and caused huge damage.
In the face of this catastrophe, the Koç Group started a campaign to help
Pakistanis in pain. We offered our wholehearted support to the victims of the
earthquake in Pakistan and sent the donations of our employees, of Koçbank
and of the Vehbi Koç Foundation.
We continue to grow,
relying on our confidence
in the future of our country
In 2005, the world also faced the risk of a disastrous pandemic of avian influenza.
debates recently. The risk imposed by the current account deficit may be avoided
This disease, which has long been terrorizing Asia, spread to Turkey and Europe
by Turkey becoming more competitive in international markets and by increasing
in the last months of 2005 and caused quarantines and the mass destruction
foreign direct investment in the country. Improvement of the investment and
of tens of thousands of birds.
employment environment and facilitation of foreign capital inflow will offer a
permanent solution for unemployment. The Koç Group and Arçelik A.fi. are
While the world was witnessing these developments, 2005 has been a very
committed to fulfill their responsibilities and create new jobs.
bright and promising year for Turkey. Growing for the last four years since the
economic crisis of 2001, Turkey became the 19th largest economy of the world.
The year 2005 has been a turning point in Turkish foreign policy as well. There
Thanks to the consistent economic program of the government, growth rate
is no doubt that the most important and positive event was the start of full
reached 5-6% in 2005.
membership negotiations with the European Union after the long, hectic hours
we spent on 3rd October. The start of negotiations has also been the starting
In January, the New Turkish Lira (TRY) was introduced by removing six zeroes
from the Turkish Lira. Inflation, which fell to single-digit levels after so many
years, remained even below the 8% target by the end of 2005. Tight fiscal and
monetary policies proved to be effective anti-inflationary measures and resulted
in stable growth supported by increases in productivity. The positive effects of
these policies were immediately felt in portfolio investments and foreign capital
inflows, and lucrative outcomes were obtained in privatization projects. Total
point of a long and arduous journey into the future of our nation. Both parties
have certain responsibilities in this journey. What is expected of us is to create
and maintain a stable political atmosphere and a strong economy, to perform
the necessary structural reforms and move forward with determination. In our
EU membership venture, which started 43 years ago, Europe is aware what
benefits Turkey’s membership will offer and it must keep its promise and support
this process which is crucial for Europe’s future and global peace.
privatization revenue reached USD 26.7 billion with such giant privatization
projects as Turkish Telecom, Tüprafl and Erdemir.
The Turkish economy has already gained significant momentum with the start
of EU accession talks. Foreign direct investment soared as a result of the boost
Turkey’s foreign trade volume grew 16% over 2004, and by the end of the year,
the highest export figures in Turkish history were reached. Today, Turkey is the
22nd largest exporter worldwide with an export volume of over USD 73 billion,
and the 14th largest importer worldwide with an import volume of USD 116
billion.
All national economic indicators are positive, except for the current account
deficit and the high unemployment rate, which have been subject to heated
in confidence and optimistic expectations. In the next couple of years, Turkey
is expected to attract almost USD 4-5 billion in foreign investment annually.
The economic support of two major anchors, the EU and the IMF, the
implementation of political, legal and economic reforms, and continuing fiscal
discipline are very important for the maintenance of sustainable growth in Turkey.
In parallel with the positive economic developments in Turkey, 2005 has also
been a dynamic and successful year for Arçelik A.fi. The success and strength
08
09
of Arçelik A.fi., which has aimed to make life easier and more fulfilling for
Today, Arçelik A.fi. is a global company, exporting its products to 106 countries
consumers since its inception, were also translated into financial results. By
with its 9 brands, 12 foreign operations and a total of 11,000 employees. It is
the end of 2005, which was very successful in terms of growth, profitability and
one of the five largest household appliances producers in Europe. We are all
plant efficiency, profits reached a new record high: EUR 187 million. In 2005,
proud of the success of Arçelik A.fi.
the Company’s consolidated sales revenue increased 14% over 2004, from EUR
2.7 billion to EUR 3.1 billion. Its net international sales were EUR 1.2 billion.
Almost 20% of the total consolidated revenue of the Koç Group in 2005 came
from Arçelik A.fi. alone.
Arçelik A.fi. has become an important player in the global arena by increasing
its profitability, while growing rapidly. Arçelik A.fi. set off on this journey in
reliance of its founder Vehbi Koç’s motto, “I shall exist as long as my state and
country exist.” Having full confidence in the future of the Company, we will be
Arçelik A.fi. strengthened its leadership in the domestic market with a market
committed to our mission in the future, as we always have been in the past.
share over 50%, and also invested abroad, in accordance with its strategy to
expand in foreign markets. In June, construction of a washing machine and
refrigerator plant started in Russia. When the plant in Russia starts production
in the second half of 2006, the Company will have a very strong presence in
the Russian market, which will be much bigger than the Romanian market where
I would like to express my gratitude to all members of our Group for their
contribution to our Company, to our business partners, authorized dealers,
authorized services and suppliers, with whom we share our success, and to our
valuable shareholders and distinguished employees for their unfailing support.
we already have a presence. This will bring Arçelik A.fi. closer to its target of
I hope that 2006 will be a healthy, joyful, peaceful, and successful year for all
making half of its sales in foreign markets. In November, Arçelik A.fi. started
of you.
a new chest freezer production line at its production facility Arctic in Romania.
Attributing great importance to technology and R&D, Arçelik A.fi. produced the
Sincerely yours,
first tumble dryer of Turkey. The Company has a 50-year history full of
achievements, and will continue to grow in the coming years through new
investments.
In the last 50 years, Arçelik A.fi. carried Turkish people from hand dishwashing
to dishwashers, from wood stoves to electric ovens, from screened kitchen
cupboards to refrigerators, from cloth sticks to washing machines. Today, with
the comfort and convenience Arçelik A.fi. offers Turkish people in their homes,
there is no household, which does not have at least one Arçelik A.fi. product.
Rahmi M. Koç
Chairman
Arçelik A.fi.
2005 Review of Activities and Message from the General Manager
Knowledge, skill, courage,
“plus 50 years”
Our Esteemed Shareholders and Business Partners,
Arçelik A.fi. has always pioneered its industry with determination, discipline,
accurate strategies and a consistent vision. The Company’s reliance in its skilled
In 2005, we realized significant accomplishments as a result of self-sacrificing
efforts. We continued to grow rapidly and strengthened our position with
people and its customer-focused services and solutions empower it to achieve
its targets.
successful operations in both domestic and foreign markets. We are proud of
carrying to world markets the synergy created by Koç Holding, a private company
It is our greatest ambition and dedication to carry our Founder’s valuable flag
pioneering industrial development in Turkey.
further, and to achieve even more in many 50 years to come. While carrying
“Plus 50 Years”
this flag our Founder has handed over to us, we will always remember his
legacy: “The customer is our boss.” We will always apply the formula he taught
Founded by Vehbi Koç in 1955, Arçelik A.fi. celebrated its 50th anniversary last
us: “High-quality products, a strong sales organization and effective after-sales
year. Today, everything we do, is a product of our knowledge, skill and courage
services”.
of a 50-year-experience and “Plus 50 Years”. Why “Plus 50 Years”? Because
we are eager to add new “plusses”, and we want our successful history to reflect
our confidence in the future.
Arçelik A.fi. has always pioneered its industry with
determination, discipline, accurate strategies
and a consistent vision.
Sustainable growth
Leader in Turkey with a
market share over 50%
2005 has been a difficult year for the global economy due to record-high oil
The volume of the global household appliances market is estimated to be EUR
prices, which reached USD 70 per barrel. The household appliances sector has
100 billion. About 60% of this market belongs to developed countries in Western
always been vulnerable against the cost of inputs such as metals, oil-based
Europe, North America and Japan. Turkey’s share in the global market is around
plastics, fuel and transportation, which have all rocketed last year. Despite these
2%. In recent years, increased economic stability and prosperity had positive
developments, we achieved profitability and increased our net income by 18%.
effects on the domestic household appliances industry. In 2004, the record
We are continuing to grow rapidly and profitably.
growth of 66% in the domestic market fueled by postponed demand was followed
by 3% growth in domestic household appliances in 2005. In the domestic
Despite the depreciation of the dollar, the global inflationary pressure of
household appliances market, Arçelik A.fi. grew 11.8% over 2004.
skyrocketing oil prices resulting from strong increases in demand and concerns
over supply, Turkey managed to keep inflation even below its target of 8%,
In 2006, we expect the domestic market to grow by 5% and export markets by
which was only 7.7% at the end of the year. In 2005, the budget deficit to GNP
more than 15%. Positive steps towards macroeconomic stability will also be
ratio was for the first time lower than the 3% limit specified in the EU’s Maastricht
reflected positively on sales volumes.
criteria, and fell to 2%. The opening of accession talks with the EU on 3rd
October, the implementation of political and economic stability programs, the
appreciation of the national currency with the transition to the New Turkish Lira,
and an economy growing at the rate of 5-6% were only a few of the positive
The Company’s household appliances sales volume increased 9%, and its total
international sales revenue reached EUR 1.2 billion. Total household appliances
production grew 6% over 2004, reaching 7.9 million units.
developments which filled the nation as a whole with optimism. Turkey will
Human resources are among Arçelik A.fi.’s most vital assets. In 2005, the
move forward if it can benefit from this period of opportunities properly. Increased
number of its employees exceeded 11,000. Of these, 9,203 employees work
competition will attract new investments, which in turn will be translated into
locally and 1,876 work in our subsidiaries abroad.
employment and efficiency.
Arçelik A.fi. continues stressing the domestic marketplace while becoming an
Arçelik A.fi. has been remarkably successful in achieving sustainable growth.
important global player. It has almost 4,600 Arçelik and Beko dealers and 920
Despite all the difficulties we had to endure, the Company neither delayed its
after-sales services (household appliances and electronics) in Turkey.
investments, nor revised its targets. In 2005, consolidated sales revenue
increased 14% over the previous year, reaching EUR 3.1 billion, well above the
target. With a market share over 50%, Arçelik A.fi. strengthened its position in
the domestic market despite intense competition, and became one of the five
largest household appliances producers of Europe.
12
13
3,000
2,250
1,500
6,000
4,000
CONSOLIDATED SALES
REVENUE DISTRIBUTION
2002
2005
2004
2003
0
Arçelik A.fi.’s target is to
increase the share of its
international sales in total
sales from 40% to 50%.
(EUR million)
2,000
CONSOLIDATED SALES
REVENUE DISTRIBUTION
(%)
100
1,600
80
1,200
60
800
40
20
CAPITAL EXPENDITURES
(EUR million)
200
160
120
80
40
2005
2004
0
0
2005
International
2004
2005
2004
2003
2002
0
2003
Domestic
2003
Arçelik A.fi.’s investments
for capacity increase and
new product development
reached EUR 150 million
in 2005.
8,000
0
2002
International
10,000
2,000
400
Domestic
(Thousand units)
750
2002
International household
appliances sales volume
increased 9%, while
international sales revenue
reached EUR 1.2 billion.
PRODUCTION
2005
3,750
Annual household
appliances production
reached 7.9 million units
in four main product
groups. Production
volume increased 6%
compared to 2004.
2004
(EUR million)
2003
CONSOLIDATED SALES REVENUE
2002
In 2005, the Company’s
consolidated sales revenue
increased 14% over the
previous year and reached
EUR 3.1 billion, well over
the target.
Competencies and competitive advantages
High product standards,
customer-focused services
Arçelik A.fi. is one of the five largest household appliances producers in Europe.
The Company has become a global player carefully followed and monitored by
the international business community, along with its other major rivals. Arçelik
A.fi.’s strengths, which carried it to its current position in the domestic market
and abroad, include the following:
Total commitment to product quality
Investments not only aimed at superior products
and services but also at superior technology
An appropriate product range and a
consistent brand strategy
Flexible management in accordance with
the dynamics of the relevant market
A strong distribution network
An effective and extensive service network
Continuous monitoring of changing
customer expectations
Arçelik’s wide washing machine range, offering capacities between 3.5 kg to 10 kg, meets the needs of any customer.
14
Financial results
A company that delivers
“value” to shareholders
15
In 2005, our gross margin was 25.3%. Our operating profit increased 14%
In 2005, an important development took place, which confirmed the confidence
compared to 2004 and reached EUR 244 million. EBITDA reached EUR 334
of global markets in the Company. Arçelik A.fi. obtained a high-denominated,
million, increasing 14%, and the margin was 11%. The net profit increased by
long-term syndicated loan from international finance organizations led by IFC
18% and reached EUR 187 million. In the last two years, the net profit increased
(International Finance Corporation). The Company used this loan facility to
two times more than sales revenue.
finance the construction of its production plant in Russia, to realize capacity
increases, acquire new technology and develop new products.
The profitable growth of Arçelik A.fi. delivers considerable value to shareholders,
business partners and employees.
Almost half of the Company’s balance sheet, which reached EUR 2.6 billion, is
composed of shareholders’ equity worth EUR 1.3 billion, which is the total
The Company’s ever-rising market capitalization, which has consistently increased
in recent years, is an indication of the confidence of domestic and foreign
investors in Arçelik A.fi. By the end of 2005, Arçelik A.fi.’s market capitalization
amount of the capital provided by shareholders and the funds generated by
operations. This shows the strength of the Company and the support of its
shareholders.
reached USD 2.8 billion, increasing 14% over 2004. Analysts recommend
investors to buy Arçelik A.fi. shares, since the Company is capable of responding
Robust cash flow and risk management guarantee current ratio and liquidity
to growing domestic demand, maintaining a stable increase in its sales to
ratio to be better than industry averages. Strong subsidiary and fixed assets
foreign markets, investing in the Russian market and implementing a competitive
portfolio also strengthen the Company’s balance sheet.
pricing policy against products of Far Eastern origin.
In 2005, our gross margin was 25.3%. Our operating
profit increased 14% compared to 2004 and reached
EUR 244 million.
2005 Review of Activities and
Message from the General Manager
16
Product portfolio and new businesses
New targets,
new products
Arçelik A.fi. is committed to developing and offering products and services,
which enrich quality of life at homes.
Thus, in addition to its core business of household appliances, the Company
is expanding its activities to embrace new business areas.
Arçelik A.fi. offers a very wide product range to consumers, from furniture
to computers, home textiles to small household appliances. All products in
line with Arçelik A.fi.’s mission will be included in its product range.
Arçelik A.fi. is also focused on the fitted-kitchen and built-in product segments,
which are growing fast in Europe. The Company’s product range, which
included 100 models in 2005, will be increased to 110 models soon.
Arçelik A.fi. made an aggressive entry to the furniture industry in 2004 with
the Arstil brand and the number of stores reached the target of 80. In 2005,
the Company held its first Arstil Dealers’ meeting.
Through cooperation with Sony in the domestic market, Arçelik and Beko
dealers started to offer Sony products that complement Arçelik A.fi.’s product
range.
17
18
International competition
A rising
star in the
global arena
Arçelik A.fi.’s aim is to replicate its domestic success in foreign markets. In
the period 2000 - 2005, the Company’s annual international household
appliances sales increased 34% per annum on average, and a 19% increase
is targeted for 2006.
Arçelik A.fi. offers products and services to more than 100 countries worldwide.
It carries out sales and marketing activities in several foreign countries
through 12 subsidiaries. In 2005, the Company established sales companies
in the Czech Republic, Hungary and Italy. Arçelik A.fi. continues to invest in
global markets, capitalizing on the synergies generated by being a member
of the Koç Group, Turkey’s largest group of companies with a vision to become
a global player that grows steadily and profitably.
Our New Target Markets: China and the US
Chinese and Far Eastern influences on our industry are clearly visible.
Worldwide, many producers are concerned that Far Eastern countries will
offer more competitive prices by obtaining cost advantages through high
production volumes. Arçelik A.fi. management is closely monitoring China,
one of the fastest growing markets of the world. In terms of our strategic
plan, China is an attractive country with a rapidly growing market, a logistic
advantage that allows Arçelik A.fi. to reach remote areas and inexpensive
production opportunities. As a first step, Arçelik A.fi. established a sales and
marketing company in Shanghai. Against the tide of ever-increasing imports
from China, Arçelik A.fi. will for the first time be exporting dishwashers and
washing machines from Turkey to China.
With the start of European Union accession talks on 3rd October 2005, Turkey
reached the pre-accession stage to full EU membership. Turkey has actually
been integrated into Europe since it became a member of the Customs Union
in 1995. Similarly, Arçelik A.fi. had become a major player in European
markets years ago. While investing in brands and technology to keep up with
the competition in these markets, the Company also consolidated its position
by adopting effective sales and marketing policies and will continue to do
so in the future to further capitalize on growing closeness with the EU.
19
20
Brands
Strong global
brands
To be successful in international markets a company has to cultivate its own
brands. In the long term, OEM-based growth is a price-oriented strategy and
does not result in profitability and sustainability.
In addition to Arçelik, the leading brand in the domestic market, and Beko,
the second largest brand, the Company also offers economical products to
consumers under the Altus brand in Turkey.
In parallel with its strategy to expand in international markets, Arçelik A.fi.
acquired several companies. Following the acquisition of the Blomberg
Company and brand in Germany, Arçelik A.fi. acquired Leisure and Flavel
in the UK, and the Elektra Bregenz Company and brand in Austria. Arçelik
A.fi. also acquired the renowned Romanian refrigerator brand Arctic and
became the largest refrigerator producer of the Middle East and Eastern
Europe. By positioning its brands in accordance with the unique local
conditions of each country, the Company aims to reach all consumer segments.
The Beko brand transformed Arçelik A.fi. into a major player in international
markets. Statistics show that 250 million people worldwide prefer the Beko
technology today.
The ratio of Arçelik A.fi.’s own branded sales to its net international sales
revenue is 80%.
According to a survey conducted by independent research company GFK in
27 countries including 13 Western European countries, 12 Eastern European
countries, Russia and Turkey, Arçelik A.fi. brands have a cumulative market
share of 9%.
Arçelik A.fi. made several additions to its brands, in parallel with its
globalization strategy. The “Diffusion” series of the Beko brand has been
simultaneously offered for sale in both domestic and international markets,
from Madrid to Mardin. The Company completely renewed the product range
of its Blomberg brand and launched it in European markets.
21
Targets and strategies
2006 sales revenue target is
EUR 3.5 billion
The economic crisis Turkey experienced in 2001 illustrated to Arçelik A.fi. that
In 2006, Arçelik A.fi. plans for EUR 3.5 billion in sales revenues, a 14% increase
strategies focused solely on the domestic market were insufficient. The Company
in total sales volume (6% domestic and 19% international), and a capital
thus adopted an expansion strategy focused on maintaining a balance between
investment of EUR 125 million. In parallel with its growth policy, the Company
the domestic market and export markets.
will continue to acquire brands and companies appropriate for its strategies
and targets.
By exporting a substantial portion of its output, Arçelik A.fi. aims to expand its
sales volume and become a stronger player internationally. The share of the
Company’s international sales in total sales is around 40%. The target is to
increase this share to over 50%.
Beko’s Diffusion line creates a new concept in household appliances.
22
Our vision
To possess one of the ten most
preferred global brands in our
sector by the year 2010
Arçelik A.fi.’s new vision is to possess one of the ten most preferred global brands in its
sector by the year 2010.
A consistent vision and well-defined strategies have both ensured 50 years of
accomplishments and at the same time constituted the basis for continued success in
the future.
Arçelik A.fi.’s corporate culture and values, which it has embraced for 50 years, are the
strongest pillars on which the future of the Company is going to rise. The principles,
to which the Company owes its success in the past, have always guided it in
becoming a global company.
In this context, I would like to underline Arçelik A.fi.’s most important assets:
These are;
A highly competent workforce,
Services and solutions that meet consumer expectations, and
The Company’s determination to produce its own technology.
23
24
25
Technology
Arçelik means
innovation
Arçelik A.fi. is a leading generator of technology and patents in Turkey. In
the last three years, 13% of the patents issued in Turkey and 45% of the
international patent applications filed with the World Intellectual Property
Organization by Turkish organizations belonged to Arçelik A.fi.
Producing its own technology without using any license and protecting its
products under more than 300 patents have become part and parcel of Arçelik
A.fi.’s corporate culture.
Breaking new ground
Pioneering and innovative
at global standards
To meet domestic and foreign demand for no-frost refrigerators, Arçelik A.fi.
winning technologies. Arçelik A.fi. has always been a pioneer and innovator in
designed at its Eskiflehir Refrigerator Plant the Super No-Frost refrigerator,
its industry; it has developed Turkey’s first “water jet” technology for washing
which is the highest-volume refrigerator produced in Turkey in its category. The
machines, which improves washing performance by wetting the laundry quickly
refrigerator is unrivaled in Turkey with the many accessories it offers, “Double
through additional water inflow and spraying detergent water on the laundry.
Power” cooling system and “Full Protection Triangle” hygiene application.
Thanks to its superior features, it achieved a remarkable market position.
Arçelik A.fi. developed the world’s first dishwasher, which is driven by a brushless
DC motor and has the lowest water consumption level. The “Ecologist” dishwasher,
Arçelik A.fi. has always made efforts to expand its product range by investing
produced entirely by Turkish engineers, proved its success by qualifying for
in technology and R&D. The Company once again broke new ground in 2005
the finals of the 6th Technology Awards. The “Ecologist” set the new world
and offered its consumers a washing machine with a capacity of 10 kilograms.
standard for dishwashers with its low water and energy consumption, high
The new 10 kg washing machine complemented the washing machine range of
washing performance and silent operation.
Arçelik A.fi., which already includes patented 3.5 - 7 kg washing machines
launched in 2004. Thus, the washing machine range of Arçelik A.fi. is ready to
meet all possible needs of consumers. The 10 kg washing machine is one of
the highest capacity washing machines in the market and saves energy and time
by washing more clothes.
With its “Direct Drive” technology, Arçelik A.fi. produced Turkey’s first washing
machine to win a technology award. The new technology, which attracted attention
worldwide, provides for a uniquely silent and steady operation and superior
performance. In 2005, the Company continued to offer consumers new award-
In 2005, Arçelik A.fi. broke new ground when it produced the first domesticallyproduced tumble dryer. The dryer, which is the most efficient one in Europe
and, which offers Class A energy performance was launched in November and
won the “Innovation Award” in Plus X Awards 2005.
At the beginning of 2005, Arçelik A.fi. launched the household appliances and
consumer electronics rental service, a unique service offered to Turkish
consumers. With this service, which is quite popular in developed countries,
the Company offers consumers the possibility to rent products ranging from
plasma TV sets to mobile phones, laptops and refrigerators for short or long
terms.
In 2005, Arçelik A.fi. broke new ground when
it produced the first tumble dryer in Turkey.
26
Investments continuing
EUR 150 million invested in
capacity increase and
product development
27
In 2005, Arçelik A.fi. invested a total of EUR 150 million in capital expenditures,
One of the most important principles, which brought us to this day is “promising
to increase its production capacity and develop new products.
what we can do and doing what we have promised.” I am confident that, with
the knowledge, experience, team spirit and result-oriented mindset of our
In June 2005, Arçelik A.fi. started the construction of a new production facility
in Russia. With its market size, growth potential, geographical proximity, low
white goods penetration rates and purchasing power, entering the Russian
market supports the Company’s strategy to expand in international markets. The
employees, we will make our vision come true by 2010. The values of the Koç
Group, which have been acquired over the years, our corporate reputation,
robust financial structure and international business skills will guide us to
achieve our vision.
plant, which will cost EUR 58 million, will start production in the second half
of 2006. The planned annual production capacity is 900,000 units.
The important thing is not to grow and win only but to develop strategies, which
will result in sustainable competitiveness through sustainable development and
In November, Arçelik A.fi. started producing chest freezers in its Arctic plant in
Romania. The Company invested EUR 5 million in the production line, which
to secure our future. This philosophy underlies Arçelik A.fi.’s success, and will
continue to do so in the next 50 years.
is planned to produce 400,000 units annually. The total production capacity of
the plant has thus been increased to 1.5 million units.
I would like to express my gratitude to the entire Arçelik A.fi. family for their
contribution to the success of our Company.
Arçelik A.fi. produced the first tumble dryer in its Çay›rova plant, with an
investment worth EUR 6.6 million. The dryer production capacity will be 200,000
Sincerely yours,
in the first year, and 170,000 units will be exported.
Arçelik A.fi. will continue to seize investment opportunities and maintain its
sustainable growth.
Arçelik A.fi. was built with the faith, vision and targets of a few men in 1955.
Today, it is a powerful, 50-year-old company, which is committed to its founder’s
principle of “giving back what you have taken from the society,” not only from
A. Gündüz Özdemir
a business perspective but also in terms of corporate social responsibilities.
General Manager
Brands
Arçelik
Leading brand of the Turkish household appliances industry
Innovativeness and technological superiority
Wide product range including household appliances, small household
appliances, consumer electronics products, air conditioners, built-in products,
fitted-kitchen sets
The strongest sales and service network in Turkey
Blomberg
Free-standing and built-in household appliances combining hi-tech with
German design
Product range launched in 2004 and designed by Frog Design, a famous
design office
Offered to consumers in Western and Eastern Europe in 2005, especially
in Germany, Denmark, Belgium, the Netherlands, France, Greece, Switzerland,
Portugal, Russia, Estonia and Lithuania
Beko
Arctic
Wide product range in international markets, including free-standing
and built-in household appliances and consumer electronics products
High-performance electronic washing machines, dryers and dishwashers
Romania’s largest and oldest local brand and market leader
Romania’s strongest local brand in the sector with a 96% brand recognition
rate in 2005
Turkey’s second largest brand in household appliances and electronic
Romania’s largest cooling equipment producer with a wide product range
goods
expanded with washing machines, ovens, dishwashers, combination boilers,
“World Brand” motto that associates Beko with the Turkish people in the
vacuum cleaners and TV sets
domestic market
Recently in 2005, start of chest freezer production for Beko users in
Altus
For consumers seeking economical durable goods
Product range including refrigerators, washing machines, dishwashers,
ovens, vacuum cleaners, TV sets and small household appliances
Ability to reach consumers through stores and wholesalers selling various
brands, in addition to supermarkets and hypermarkets
Europe and rest of the world
28
29
Elektra Bregenz
Austria’s strong and reputable brand in cooking appliances and builtin products
Product range consisting of free-standing products, built-in household
appliances and water heaters
Leisure
Leading brand in free-standing cooking appliances segment in the UK
Arstil
Furniture, kitchen and household accessories brand launched in 2005
in the domestic market
More than 1,000 models of furniture and home textile products, produced
at world standards
High-quality, elegant, modern and affordable products
Keeps its brand promise of setting “New Standards at Your Home,” by
offering new service, design, health and security standards in accordance with
market
Arçelik values
Wide product range including gas cookers, electric cookers, 100 cm
wide cookers, built-in cookers and dishwashers
Flavel
One of the leading household appliances brands in the UK and Ireland
Free-standing household appliances range meeting the needs of
consumers in the most economical way
Awards in 2005
Awards that confirm Arçelik A.fi.’s
superiority in technology
and design
Leaving behind world-famous brands, Arçelik’s Telve Turkish-coffee
machine won the “Design Award” in the IF Design competition, one of the most
prestigious design awards.
Beko refrigerator, washing machine and dishwasher have been chosen
the best products by consumers in the “Trophee de la Maison 2005” organization
held in France.
Dutch consumer magazine Consumentengids has chosen Beko deep
freezer among the best three products.
Blomberg dishwasher won the “Red Dot Design Award”.
Beko built-in dishwasher was chosen “Best Buy” by the Belgian Consumer
Association.
Blomberg and Elektra Bregenz dishwashers and dryers won a total of six
awards in two categories at the Plus X competition in 2005. Blomberg and
Elektra Bregenz heat-pump dryers won the “Innovation” Award, and dishwashers
with AC motors won both the “Innovation” and the “Design” Awards.
Beko D 8879 FD dishwasher was the most recommended product in the
April issue of the Test-Achats/Test Aankoop Magazine published by the Belgian
Consumer Association.
It was the first time for a Turkish company to run in the Brand of the Year
competition held in Belarus, and Beko washing machines won first prize in the
relevant product group.
Awards won by the Company’s production process in 2005
Blomberg heat-pump dryer won the “Eco Top Ten” Energy Award.
The Ankara Dishwasher Plant won the “TPM Excellence Award” of Japanese
state organization JIPM.
The design methodology for the most energy efficient refrigerator of its
class study won the “Award of Excellence” at the “International Appliance
Technical Conference (IATC)”.
The Çerkezköy Electric Motors Plant won the “TPM Excellence Award”
of Japanese state organization JIPM.
Production facilities
30
Pioneering production plants
in Europe with their advanced
technology, international
management standards and capacity
31
Refrigerator Plant - Eskiflehir
The plant started dryer production in the second half of 2004 and won the “Eco
In 2005, the plant attained 92% capacity utilization and thanks to its high output,
Top Ten Energy” and “Plus X Innovation” Awards in 2005.
it continued to rank first among other plants producing from a single campus in
Europe.
The plant supports its hi-tech equipment and well-established production processes
through effective use of advanced techniques such as Six Sigma. In 2004, the plant
designed and produced the most energy-efficient refrigerator in Europe. In 2005,
by making 28 additional patent applications, it increased the number of its cooling
patents to 136. Capitalizing on its unique know-how, it designed the Super
No-Frost refrigerator, which is the highest-volume refrigerator produced in
Turkey, and has a “Double Power” cooling system and a “Full Protection Triangle”
hygiene application. The new refrigerator has an unrivaled position in the market.
Washing Machine Plant - Tuzla, ‹stanbul
The plant added significant value to its brands in domestic and foreign markets
and strengthened its market position with its new product range which features
advanced control systems. In the last three years, the plant’s exports increased
significantly, and with its high production capacity exceeding 3 million units, it
is the largest front-loading automatic washing machine producer in Europe operating
under a single roof.
It is the only plant to win TPM’s Continuous Excellence Award.
Cooking Appliances Plant - Bolu
The Cooking Appliances Plant has the highest production volume among other
plants in Europe operating from a single campus. It increased its production
capacity by 25% through investments in 2005, and reached an annual production
capacity of 2 million units. The plant which contributed substantially to customer
satisfaction by investing in the rapidly growing built-in oven and stove markets,
started the production of electronic and self-cleaning ovens. In 2005, it exported
70% of its production.
Dishwasher Plant - Ankara
In 2005, the plant produced the “Class-A Ecologist” dishwasher, which offers the
lowest water consumption in the world. The plant complemented its product range
composed of 60 cm standard, free-standing and built-in products, with 45 cm
standard free-standing and built-in products. In 2005, the plant confirmed its
competitiveness by winning the “TPM Excellence Award” of JIPM. The plant owes
its competitiveness to its flexible production structure. In 2005, it attained 84%
capacity utilization and further increased its capacity. In 2005, the plant also won
the “Red Dot Design Award” and the “Plus X Innovation and Design” Awards. Every
year, new and easy-to-use features are added to the products, which are being
continuously improved aesthetically and technologically.
Refrigerator and Compressor Plants
Washing Machine Plant
Production facilities
Vacuum Cleaner and Motor Plant* - Çerkezköy, Tekirda¤
Multi-purpose Motor Plant - Tafldelen, ‹stanbul
The Çerkezköy Vacuum Cleaner and Motor Plant, which added a Turkish-
The plant produced 560,000 motors of various sizes in 2005. About 59% of its
coffee machine to its product line, produced more than 7.1 million motors
production is exported to 17 countries including Germany, France, United
and 460,000 vacuum cleaners. Its motor production increased 5% over 2004.
Kingdom, Spain, Taiwan and China.
In 2005, the plant won the “TPM Excellence Award” of JIPM. The Turkishcoffee machine won the “IF Design Award”, the most prestigious design award
in the world.
Cooling Appliances Plant / Arctic - Gaesti, Romania
With investment projects undertaken following its acquisition by Arçelik A.fi.,
Arctic became a market leader with a 30% market share. It exports 65% of its
Compressor Plant - Eskiflehir
production to European countries. Today, Arctic is the largest household
The plant produces compressors for Arçelik A.fi.’s Eskiflehir and Arctic
appliances producer in Romania, and also the strongest local brand with a
(Romania) Refrigerator Plants. Its total output exceeded 31 million units in
recognition rate of 96%.
2005. The plant, which produces high-quality products at international
standards, has a significant competitive edge. Cost reduction, quality and
process improvement projects are carried out using the Total Production
Maintenance and Six Sigma methodologies. In 2005, development efforts
continued to produce new models, which will improve competitiveness of the
plant.
Arctic celebrated its 35th anniversary and sold its 12,000,000th refrigerator in
2005. While it strengthened its leadership in the refrigerator segment with a
50% market share, it also started chest freezer production at the Gaesti plant
with an investment of EUR 5 million. Arctic is a giant household appliances
producer with a wide product range, strong technology transfer, new investments,
and an annual production capacity of over 1.5 million units.
*The plant was renamed Electric Motors Plant in January 2006.
Cooking Appliances Plant
Dishwasher Plant
Blomberg’s product range has received several awards in environment, design, technology and efficiency categories.
32
33
Production Capacities
1,000
1,000
0
0
600
1,500
400
1,000
200
500
0
0
2005
2,000
2004
800
2003
2,500
2002
1,000
2003
OVENS (Thousand Units)
2002
DISHWASHERS (Thousand Units)
2005
2,000
2005
2,000
2004
3,000
2002
3,000
2005
4,000
2004
4,000
2003
5,000
2002
5,000
2004
WASHING MACHINES (Thousand Units)
2003
REFRIGERATORS (Thousand Units)
34
35
Corporate
Social
Responsibility
Report
Arçelik A.fi. believes
that Corporate Social
Responsibility is an
integral part of its
core business, and is
committed to its
principles and values.
Corporate Social Responsibility Approach
Responsible management,
sustainable development
Global resources are limited and we are aware that not only individuals, governments and non-governmental organizations, but also companies must assume important
responsibilities in using and developing such resources carefully, while improving and sustaining living standards.
Within the framework of its corporate social responsibility policy, Arçelik A.fi. is committed to sustainable development. The Company is aware of and sensitive to
environmental and social issues and fully complies with applicable laws, ethical codes, its corporate governance principles and human rights in all its operations.
“Our Most Valuable Asset is Our People”. This is one of the main principles set by the Company’s founder Vehbi Koç, and based on this principle, Arçelik A.fi.
employees and business partners do their best to fulfill their responsibilities. Guided by these corporate values, we believe it is our duty to meet the needs of the
society in line with our mission.
Corporate Governance
Arçelik A.fi.’s corporate values and culture, ethical values, good governance
policies and code of professional conduct guide the Company in fulfilling its
responsibilities.
In line with international business standards, the Company has adopted four
principles of corporate governance, which builds confidence between the
stakeholders and organizations: accountability, responsibility, openness and
transparency, and fair treatment. These principles are indispensable for the
productivity and success of the Company in the long run.
Arçelik A.fi. is aware that keeping its promises, gaining the confidence of its
stakeholders and investors and maintaining its stability depend on proper
corporate governance. The benefits of implementing good corporate governance
principles are clearly visible in the Company’s meetings with institutional
investors.
With a view to attaining its profit targets, Arçelik A.fi. not only capitalizes on its
business results and strong financial structure, but also manages its longstanding
corporate reputation as a core value.
36
Corporate Governance Compliance Report
37
The proper implementation of the “Corporate Governance Principles” that were
adopted by the Capital Markets Board (CMB) under Resolution No. 35/835 of 4 July
2003 and announced in July 2003 is essential for the reliability and creditworthiness
of companies, particularly those that are publicly traded. Arçelik A.fi. has adopted
and fully implements these Corporate Governance Principles, which demonstrates
the quality of the Company’s corporate governance system.
Monitoring all amendments to the Capital Market Law and applicable legislation
and reporting them to the Company’s relevant departments,
Pursuant to Resolution No. 48/1588 of the CMB adopted on 10 December 2004, all
companies listed on the ‹stanbul Stock Exchange (ISE) are encouraged to disclose
their compliance with the CMB’s Corporate Governance Principles in their annual
reports and on their websites beginning with their 2004 annual reports. Accordingly,
Arçelik A.fi. has set up a committee to study what it could do to ensure compliance
with these principles and, as a result of these studies, has disclosed additional
information in its 2005 Annual Report and on its website, for the purpose of ensuring
compliance with the principles mentioned below. The “OECD Corporate Governance
Principles” published in 1999 were revised in 2004, and upon this revision, the CMB
revised its “Corporate Governance Principles” for harmonization with the “OECD’s
2004 Corporate Governance Principles”. Arçelik A.fi. prepared its 2005 Corporate
Governance Compliance Report in accordance with the revised Corporate Governance
Principles.
Fatih Kemal Ebiçlio¤lu Assistant General Manager, Finance and Accounting
+90 212 314 34 01
fatih.ebiclioglu@arcelik.com
CHAPTER I - SHAREHOLDERS
In 2005, with a view to providing existing and potential investors with detailed
1. Investor Relations Department
information on the Company:
Relations with shareholders at Arçelik A.fi. are handled by a department reporting
to the Assistant General Manager in charge of Financial and Fiscal Affairs. This
department is mainly responsible for:
Maintaining and updating shareholders data in a safe and reliable manner,
Responding to written inquiries of shareholders, excluding confidential and
secret information of the Company, which are not disclosed to the public,
Ensuring that the general meeting of the Company is conducted in conformity
with applicable legislation, the Company’s Articles of Association, and other internal
regulations,
Preparing documents for shareholders attending the general meeting,
Registering voting results and sending reports to requesting shareholders,
Monitoring any issue related to public announcements within the context of
applicable legislation and the Company’s disclosure policy,
Promoting the Company to individual and institutional investors both in
Turkey and abroad,
Providing information to analysts evaluating the Company,
Attending conferences held abroad by various organizations for informing
investors,
Attending road shows held by investment companies in various countries for
informing investors,
Providing corporate information to undergraduates, graduates and academics
studying the Company and the industry,
Sending all required Material Disclosures to the ISE and the CMB in accordance
with Communiqué Serial No. VIII, No. 39,
Representing the Company vis-à-vis the Capital Markets Board, the ‹stanbul
Stock Exchange and the Central Registry Agency.
Staff members in charge of investor relations:
Türkay Tatar
Finance Director
+90 212 314 31 84
turkay.tatar@arcelik.com
Çi¤dem Ergüven
Investor Relations and Subsidiaries Manager
+90 212 314 31 13
cigdem.erguven@arcelik.com
Turhan Sar›
Investor Relations Specialist
+90 212 314 31 15
turhan.sari@arcelik.com
Baran Bülbül
Investor Relations Specialist
+90 212 314 31 17
baran.bulbul@arcelik.com
Fax: +90 212 314 34 90
Seven investor meetings were held abroad,
Interviews were conducted with more than 300 investors, both in Turkey and
abroad and their questions about the Company were answered,
Three press conferences were held in Turkey to inform the public and investors.
2. Shareholders’ Exercise of Their Rights to Obtain Information
Arçelik A.fi. treats its shareholders equally in terms of their rights to obtain and
analyze information.
In addition to the above-mentioned 300 interviews in 2005, the Company makes
available on its website (www.arcelikas.com.tr) its financial statements, as well as
updated information that could affect shareholders’ exercise of their rights with a view
to further improving their right to obtain information.
Information requests from shareholders were handled either verbally or in writing
throughout 2005, without making any discrimination between shareholders. During
the year, 80 shareholders who failed to collect their dividends and participate in the
capital increase last year were provided with necessary assistance and their dividends
were paid.
Arçelik A.fi. has completed its efforts to send the necessary electronic data to the
CMB and the ISE with electronic signatures, within the framework of the Public
Announcement Project carried out by Tübitak-Bilten under the supervision and control
of the Capital Markets Board. When it is completed, the Public Announcement Project
will allow the Company to inform shareholders quickly and reliably.
Arçelik A.fi. became a member of the Turkish Central Registry Agency established
for the dematerialization of capital market instruments. In 2005, the Company’s stocks
traded on the ISE were dematerialized. Thus, no physical share certificates will be
issued and costs will be reduced. Also, an agreement has been made with Koç Yat›r›m
Menkul De¤erler A.fi. for the performance of shareholder transactions with the Central
Registry Agency. With this agreement, shareholders will be able to collect their
dividends, participate in capital increases and open accounts at Koçbank branches.
Arçelik A.fi.’s operations and accounts are periodically audited by independent auditor
PricewaterhouseCoopers, and by in-house auditors, both elected by the General
Meeting. The Articles of Association do not contain any provision requiring the
appointment of special auditors. During the reporting period, no request has been
made to the Company for the appointment of a special auditor.
3. General Meeting
Ordinary General Meeting was held in 2005 and majority of the shareholders attended
the meeting. The Company’s shareholders (by proxy), stakeholders and the media
were present at this meeting. The audience included media representatives, various
brokerage houses’ and banks’ representatives.
The General Meeting is announced at least three months in advance, as
required by applicable legislation. The announcement is also published on the
Company’s website to maximize shareholders participation.
All announcements comply with the Corporate Governance Principles.
The financial statements and reports, including the Annual Report, the proposal
for the distribution of profit, an informative document on the agenda of the General
Meeting, other supplementary documents, the latest version of the Articles of
Association, and the text and justification of any amendment to be made to the Articles
of Association are made available to shareholders at the Company’s headquarters,
branches and on the website, after the invitation for the General Meeting is announced.
Agenda of the General Meeting is determined clearly, avoiding any
misunderstanding.
Proxy statement forms to be used by shareholders who will be represented
at the General Meeting by proxy are made available in the invitation, and are also
posted on the Company’s website.
The voting procedure is announced to shareholders electronically before the
General Meeting.
In 2005, the Company received no request from shareholders for the addition
of an item to the agenda.
No significant changes in the management and operational organization of the
Company took place in the previous financial period, and to our knowledge, no such
change is planned for future periods. In the event any such change occurs, public
announcements will be made in accordance with applicable legislation.
When holding General Meetings, the aim is to avoid any inequality among shareholders
and to ensure that the simplest procedures possible are implemented at minimum
cost to shareholders. In order to make it easier for shareholders living in Turkey and
abroad to attend the General Meeting, the one-week period specified in the invitation
can be shortened. Also, all required documents are translated into English with a
view to informing foreign shareholders of the General Meeting and of agenda items,
and these translations are sent via banks performing the custody and settlement
transactions of such shareholders.
General Meetings are held at a central location in the city to ensure better and easier
participation by shareholders. The number of participants is monitored annually and
the location of the meeting is determined according to the number of attending
shareholders. The venue of the meeting can accommodate all shareholders. Notices
inviting shareholders to attend a general meeting are made by the Board of Directors
in accordance with the Turkish Commercial Code (TCC), the Capital Market Law and
the Company’s Articles of Association. The Board of Directors’ decision to convene
a General Meeting is notified immediately to the ISE and the CMB, and thereby to
the public.
Pursuant to the regulations of the CMB and the ISE, financial statements must be
disclosed to the public within 14 weeks of the end of the financial reporting period.
However, the Company discloses its financial statements before this deadline. Financial
statements as of 2005 year end were disclosed at the end of the ninth week. Following
disclosure of the results, preparations are made for the General Meeting, and upon
completion of relevant legal formalities, the General Meeting convenes. However,
due to the time required for completion of this process, the General Meeting cannot
convene within three months following the end of the financial reporting period. The
General Meeting for the 2004 operations of the Company took place on 12 April
2005, and the General Meeting for 2005 operations is planned to be held on 5 April
2006.
At any General Meeting, agenda items are explained in detail to shareholders, in an
objective and comprehensible manner, and the items are discussed by giving
shareholders equal opportunity to voice their opinion and ask questions. Shareholders
are also given the opportunity to make comments and recommendations on the
remuneration to be paid to the directors and officers of the Company.
Any shareholder who has an access card to the General Meeting is authorized to
voice his/her opinion on the operations of the Company, ask questions to Company
management and get answers to his/her questions. The minutes of the General
Meeting include voting results. Each agenda item is voted individually. General
Meetings are held under the supervision of a representative of the Ministry of Industry
and Trade.
The Board of Directors has been authorized by the General Meeting to purchase, sell
and lease material assets, and to make donations and give grants. The Articles of
Association of the Company allow such authorization.
Minutes of the General Meeting are made available to shareholders on the Company’s
website and at the Company’s headquarters. They are also provided upon request.
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4. Voting Rights and Minority Rights
Shareholders attending a General Meeting are informed of the voting procedure at
the beginning of the meeting. The Company refrains from any practice, which would
make it difficult to exercise voting rights, and ensures that each shareholder is able
to exercise his/her voting rights in the most convenient manner.
The Company’s Articles of Association do not grant any privilege regarding voting
rights. Each share is entitled to one vote. Among the shareholders of the Company,
there is no corporate body, which is one of Arçelik’s subsidiaries. The Company’s
Articles of Association do not contain any provision preventing a non-shareholder
from voting by proxy.
With their attendance at the General Meeting, holders of minority shares constitute
the Company’s management together with the holders of majority shares. The Articles
of Association do not provide for a cumulative voting procedure.
Any development, which may influence the capital market instruments of the Company
are disclosed to the public without delay, as required in applicable legislation. The
public is kept up to date about any consequent changes and developments regarding
such disclosures.
In public disclosures, in addition to those required by applicable legislation, data
distribution companies, media and the Company’s website are used effectively.
Board members and managers of the Company, managers of subsidiaries abroad and
appointments and resignations disclosed under Material Disclosures in 2005 were
as follows:
Board of Directors 2005*
Rahmi M. Koç
Chairman
5. Dividend Distribution Policy and Time
Dr. Bülent Bulgurlu**
Vice Chairman
The dividend policy of the Company maintains a balance between the interests of the
shareholders and the interests of the Company in accordance with corporate governance
principles.
Robert Sonman
Member
Under the conditions of no legal arrangement changes or no major exceptional
investments take place other than the regular capital expenditures; the long-term
average of the dividend distributed will not be less than 50% of the yearly distributable
income.
Profit distribution takes place in accordance with the Turkish Commercial Code and
the Capital Market Law, and within statutory time limits. At the General Meeting dated
12 April 2005, it was decided to distribute gross 57.3% (net 54.76%) dividend based
on 2004 operating results and distribution started on 16 May 2005. The Articles of
Association do not contain any privilege regarding participation in Company profit.
The Articles of Association allow for the distribution of advance dividends, and the
authorization of shareholders is sought for such a distribution, provided that such
dividends are limited to the relevant year.
6. Transfer of Shares
Mustafa V. Koç
Member
Cengiz Solako¤lu
Member
F. Bülend Özayd›nl›
Member
Temel K. Atay**
Member
M. Ömer Koç
Member
Member
Board of Auditors
Serkan Özyurt
Mert fi. Bayram***
The Articles of Association do not contain any procedure or provision, which impedes
or restricts the free transfer of shares by shareholders.
* In accordance with the Company’s Articles of Association, Board members are
re-elected every year during the Ordinary General Meeting. Accordingly, all members’
terms started on 12 April 2005.
CHAPTER II - DISCLOSURES AND TRANSPARENCY
** Dr. Bülent Bulgurlu and Temel K. Atay are also members of the Audit Committee.
7. Public Announcement Policy
*** Since Fatih Kemal Ebiçlio¤lu, who was appointed auditor at the Ordinary General
Meeting of 12 April 2005, was assigned to the vacant position of Assistant General
Manager in charge of Finance and Accounting, Mert fi. Bayram was appointed auditor
by the other auditor Serkan Özyurt on 18 April 2005, to serve until the next General
Meeting in accordance with the Turkish Commercial Code.
All material events are disclosed to the public pursuant to Communiqué Serial No.
VIII, No. 39 issued by the CMB. Information desired or required to be disclosed is
disclosed by the office of the Assistant General Manager in charge of Financial and
Fiscal Affairs at required intervals. Individuals who are responsible for disclosing
such information are indicated in the Annual Report.
Management 2005 (31 December 2005)
Management, Subsidiaries (31 December 2005)
Aka Gündüz Özdemir
General Manager
Brigitte Petit
Country Manager - France / Beko France General Manager
Atilla ‹lbafl*
Assistant General Manager Production and Technology
Clayton Witter
Country Manager - United Kingdom / Beko PLC
Fatih Kemal Ebiçlio¤lu*
Assistant General Manager - Finance and Accounting
Mustafa Nadir Yalç›nalp*
Assistant General Manager International Marketing and Sales
fiirzat Subafl›
Assistant General Manager Turkey Marketing and Sales
Ahmet ‹hsan Ceylan
Information Technologies Director
Ahmet Sak›zl›
Product Planning and Coordination Director
Ali Tayyar
Accounting Director - Headquarters / Plants
Cemal Can Dinçer*
International Sales Director - Non-European Markets
General Manager
‹smail Kürflat Coflkun*
Country Manager - Italy / Arcelitalia SRL General Manager
Kamil U¤ur Kayal›*
Country Manager - Romania / Arctic S.A. General Manager
Nam›k Koçer
Country Manager - Spain / Beko Espana General Manager
Orhan Sayman
Country Manager - Poland / Hungary, Czech Republic,
Slovakia / Beko Polska General Manager
Osman Diyarbekirli*
Country Manager - Germany, Austria / Elektra Bregenz AG
General Manager, Blomberg GmbH General Manager,
Beko Deutschland General Manager
Tevfik Adnan Tüfekçi*
Country Manager - Russia / Beko LLC General Manager
Cemal fieref O¤uzhan Öztürk* Product Director - Washing Machine
*Appointments in 2005
Dilek Temel
Corporate Relations Coordinator
Purchasing Director - Ferhat Erçetin (as of 28 February 2005)
Ferhat Erçetin*
Purchasing Director
Product Director - Washing Machine - C. fi. O¤uzhan Öztürk (as of 28 February 2005)
Hilmi Cem Akant*
International Sales Director Europe and Business Development
Assistant General Manager - Production and Technology - Atilla ‹lbafl (as of 4 March
2005)
‹hsan Somay
Accounting Director - Sales and Marketing
Marketing Director - Murad fiahin (as of 4 March 2005)
‹smail Hakk› Sa¤›r
Product Director - Refrigerator
Koral Boro
Beko Sales Director
Human Resources and Strategic Planning Director - fierife Füsun Ömür (as of 4
March 2005)
Mehmet Savafl*
Product Director - Cooking Appliances
Melis Mutufl fiahinler*
Corporate Communications Coordinator
Murad fiahin*
Marketing Director
Mustafa Türkay Tatar*
Finance Director
Oktay Sokullu
Arçelik Sales Director
Salih Arslantafl
Product Director - Dishwasher
Serdar Sözeri
Consumer Services and Logistics Director
Sibel Kesler*
Budget, Reporting and Analysis Director
fiemsettin Eksert
Research and Development Director
fierife Füsun Ömür*
Human Resources and Strategic Planning Director
Assistant General Manager - Finance and Accounting - Fatih K. Ebiçlio¤lu (as of 18
April 2005)
Assistant General Manager - International Marketing and Sales - M. Nadir Yalç›nalp
(as of 18 May 2005)
International Sales Director - Non - European Markets - C. Can Dinçer (as of 1 June
2005)
International Sales Director - Europe and Business Development - H. Cem Akant (as
of 1 June 2005)
Product Director - Cooking Appliances - Mehmet Savafl (as of 1 June 2005)
Country Manager - Germany, Austria / Elektra Bregenz AG General Manager, Blomberg
GmbH General Manager, Beko Deutschland General Manager - Osman Diyarbekirli
(as of 1 June 2005)
Country Manager - Russia / Beko LLC General Manager - T. Adnan Tüfekçi (as of 1
June 2005)
Country Manager - Romania / Arctic S.A. General Manager - K. U¤ur Kayal› (as of
1 June 2005)
Finance Director - M. Türkay Tatar (as of 15 August 2005)
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Country Manager - Italy / Arcelitalia SRL General Manager - ‹. Kürflat Coflkun
(as of 1 September 2005)
Budget, Reporting and Analysis Director - Sibel Kesler (as of 15 October 2005)
Corporate Communications Coordinator - Melis Mutufl fiahinler (as of 1 November
2005)
Resignations in 2005
Assistant General Manager - Finance and Accounting - Ya¤›z Eyübo¤lu (appointed
General Manager of Beko Elektronik A.fi. on 18 April 2005)
Finance Director - Tamer Soyupak (appointed Assistant General Manager - Finance
and Accounting, Beko Elektronik A.fi. on 10 June 2005)
Financial Analysis, Budget and Planning Director - Mehmet Yaz›r (retired on 28
February 2005)
Purchasing Director - Zülfikar Bekar (retired on 28 February 2005)
Production and Technology Group Director - Turgut Soysal (retired on 4 March 2005)
International Marketing and Sales Group Director - ‹brahim Yaz›c› (retired on 6
January 2005)
8. Material Disclosures
Arçelik A.fi. made 29 material disclosures in 2005. The CMB and the ISE did not
request any additional explanations. Since the Company is not listed on any stock
exchange abroad, it is not required to disclose material events to any party other than
the CMB or the ISE. Arçelik A.fi. made all material disclosures within the statutory
time limits and therefore no sanctions were imposed by the CMB.
9. The Company's Website and its Contents
In order to ensure efficient and rapid interaction with investors and have continuous
communication with shareholders, the financial statements of the Company which
are filed with the CMB are also made available in Turkish and English on the Company’s
official website at www.arcelikas.com.tr. The website contains the following:
Breakdown of shares purchased and acquired, during the previous year and
through capital market instruments issued by the Company, by board members,
executives and shareholders directly or indirectly holding more than 5% of the capital
stock of the Company.
10. Ultimate Controlling Shareholder(s) who are Natural Persons
There is no material circumstance with regard to individual controlling shareholders,
which might influence investors’ decisions if disclosed to the public. Since the public
knows that members of the Koç Family are the ultimate controlling shareholders of
the Company, it was considered unnecessary to perform and disclose a separate
calculation in this regard.
11. Individuals Who Have Access to Insider Information
In order to maintain a balance between transparency and the protection of the
Company’s interests, the Company requires its personnel to strictly observe the rules
regarding the use of any insider information.
Any information which directors and other staff members have access to while working
for the Company, which the Company does not prefer to be known by anyone other
than certain individuals inside the Company, and which can be classified as trade
secrets, constitutes “proprietary information” and must be kept confidential. All
employees are required to keep confidential such proprietary information during and
after their employment, and are not allowed to use such information directly or
indirectly to their benefit. No Arçelik A.fi. employee is allowed to engage in any
activity intended to obtain a gain by using such proprietary information for trading
the shares of Arçelik A.fi. or any Koç Group company.
If any manager of the Company who has access to information that could affect the
prices of the Company’s capital market instruments purchases and/or sells such
instruments issued by the Company, he/she is required to disclose such transactions
immediately.
The Company’s Annual Report contains a list of the individuals who constitute its
senior management and may have access to insider information.
CHAPTER III - STAKEHOLDERS
Trade registry information
12. Announcements to Stakeholders
Shareholders structure
The stakeholders of the Company are third parties, which have a direct relation with
the Company. Stakeholders are informed of the relevant issues through meetings
when necessary, or through other communication means. Considering that cooperation
between the Company and stakeholders is in the interest of the Company in the long
run, Arçelik A.fi. respects and protects the rights of its stakeholders through mutual
understanding and agreement, as defined in applicable legislation. The corporate
governance structure of the Company allows all stakeholders, including employees
and representatives, to report to the management their concerns about any illegal or
unethical transaction.
Board members
Latest version of the Articles of Association
Annual reports of the last four years
Material Disclosures
List of shareholders attending the General Meeting and minutes of these
meetings
Proxy Statement Form
Periodical financial statements and independent auditors’ reports
Agenda of the General Meeting
Frequently asked questions
13. Stakeholder Participation in Management
The mechanisms and models, which support the participation of stakeholders, and
especially employees, in management are developed in a manner that would not
hinder the Company’s operations.
Arçelik A.fi. supports the participation of its stakeholders in its management by using
various means such as “proposals” or “questionnaires”, provided that the Company’s
operations are not hindered.
Arçelik A.fi. cooperates with and obtains the consent of the labor union with regard
to changes in working conditions, the working environment and employee rights.
15. Relations with Customers and Suppliers
Additionally, by organizing annual Dealer Meetings, the Company ensures that its
authorized dealers participate in management.
The satisfaction of customers and suppliers is a major Company objective. Customer
satisfaction is regularly reported and monitored. The Company is committed to
maintaining the confidentiality of the trade secrets of its customers and suppliers.
14. Human Resources Policy
16. Social Responsibility
The principle “Our Most Valuable Asset is Our Human Resources” is the core value
of the Company’s human resources policy. Within the framework of its HR policy,
Arçelik A.fi. employs a set of written criteria regarding recruitment and promotion.
The Company is aware of its social responsibilities and complies with regulations
on the environment, consumers, public health, as well as ethical rules, and announces
its relevant policies to the public. The Company also monitors its corporate social
responsibility efforts. This issue has been explained in detail in the Annual Report.
When developing its recruitment policies and undertaking career planning activities,
the Company ensures that equal opportunity is given to individuals with equal
qualifications.
The goal of the Company’s human resources policy is to continuously improve the
competencies of its people and maintain its permanent superiority in the global
competitive environment by adhering to the following principles:
The right individual for the right job
Equal pay for equal work
Performance-based merit
Equal opportunity for every employee.
The human resources procedures of the Company are prepared accordingly, and
announced to employees. In order to create a participative management environment,
informational meetings are held for employees concerning the financial capabilities
of the Company, remuneration, career, education and healthcare, and other information
is exchanged at such meetings. The Company does not discriminate against any
individual based on religion, language, race or sex, treats its employees equally
regarding training and promotion, makes training plans and develops training policies
to improve the knowledge, skills and attitude of its employees.
The Company offers excellent working conditions in terms of safety and efficiency.
Roles and responsibilities of employees, as well as performance and award criteria
are determined and announced by management.
Employee relations at Arçelik A.fi. are conducted by the Company’s Human Resources
Department on the basis of programs entitled “Proposals”, “Rewards” and “Satisfaction
Surveys”. Relations with employees covered by a collective agreement are conducted
through labor union representatives, in addition to the programs mentioned above.
Representatives of labor unions have the right to represent their member employees
under the Trade Union Act and are entitled and obliged to:
CHAPTER IV – BOARD OF DIRECTORS
17. Structure and Election of the Board of Directors
The Board of Directors of the Company is comprised of nine members and, pursuant
to its Articles of Association, the General Manager may also be elected to the Board.
Currently, Mr. A. Gündüz Özdemir acts as an Executive Member. Following each
General Meeting where board members are elected, the Board of Directors elects a
Chairman and a Vice-Chairman from among its members. In case of any vacancy
during the term of the board, the relevant provisions of Article 315 of the Turkish
Commercial Code apply.
Articles 334 and 335 of the Turkish Commercial Code require the Chairman and the
Members of the Board of Directors to seek the approval of the General Meeting to
directly or indirectly engage or hold an interest in any business, which is identical
or similar to the business of the Company.
The Board of Directors does not have any independent member, since such a need
has not arisen.
18. Qualifications of Board Members
Board members possess the qualifications contemplated in Paragraphs 3.1.1, 3.1.2
and 3.1.3 of Part 4 of the Corporate Governance Principles issued by the Capital
Markets Board. However, the Company’s Articles of Association do not contain these
principles separately.
19. Mission, Vision and Strategic Goals
Arçelik A.fi.’s vision is “to possess one of the ten most preferred global brands in
its sector by the year 2010”.
The vision, mission, values and strategies of the Company are shared with the public
through annual reports, the Company’s website (www.arcelikas.com), informational
meetings and various other statements made by appropriate communication means.
Ensure constant cooperation, harmony and peace between the employer and
the employees at the workplace;
The strategies and goals defined in line with the Company’s vision and mission are
periodically assessed by the Board of Directors.
Assist settlement of any labor dispute in accordance with the relevant
procedures, applicable legislation and collective labor agreement;
The Board of Directors meets to compare the Company’s objectives and actual
operations, taking into account the performance of previous years. Such meetings
are held as frequently as specified in the Articles of Association.
Ensure the proper implementation of the collective agreement;
Prevent illegal acts and possible disputes.
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20. Risk Management and Internal Control Mechanism
The Board of Directors has established Risk Management and Internal Audit Departments
to minimize the risks, which may affect stakeholders. These departments, reporting
to the Assistant General Manager in Charge of Financial and Fiscal Affairs, are
responsible for determining and reporting financial and operational risks and
establishing an implementation and control mechanism.
21. Powers and Duties of Directors and Officers
The powers and duties of directors are clearly described in the Articles of Association.
Signatory powers are specified in detail in the list of authorized signatures of the
Company. These documents are available on the website and are also filed with
competent authorities as required by applicable laws.
22. Principles Regarding Board Meetings
The agenda of each board meeting is based on the issues, which are reported by the
relevant departments to the Company’s Senior Management and Board and which
require the Board’s decision according to the Articles of Association. Any Board
member may, by reporting to the Company’s Senior Management, call for a Board
meeting to discuss and decide a specific issue. Issues that are required to be discussed
by the Board are collected and compiled at the office of the Assistant General Manager
in charge of Financial and Fiscal Affairs with a view to developing the agenda of the
next meeting.
Arçelik A.fi. has authorized its Assistant General Manager in charge of Financial and
Fiscal Affairs to set the agenda of Board meetings, file Board decisions adopted in
accordance with Article 330/II of the TCC, provide information to Board members
and ensure communication among them.
The Board of Directors adopts decisions as the Company’s business requires. The
minimum number of members required to be present for a decision to be deemed
valid is specified in the Articles of Association. In exceptional cases, the Board may
adopt a decision unanimously by agreeing to a proposal made by a Board member.
The reasons of all dissenting opinions expressed and votes cast at Board meetings
are written in the minutes of the meeting. However, since no dissenting opinion has
been expressed in recent Board meetings, no disclosure has been made in this regard.
23. Transactions with the Company; Non-competition
Although the Company does not restrict any Board member to compete with or do
business with the Company, no Board member currently competes or does business
with the Company.
24. Code of Ethics
To attain its profit targets, Arçelik A.fi., does not merely rely on its business results
and strong financial structure, but also manages its corporate reputation as a core
value, which it has earned over so many years. Operations are carried out within the
framework of the Code of Professional Conduct, which was developed by the Board
of Directors, submitted to the General Meeting and disclosed to the public. The Code
of Professional Conduct is one the essential components of Arçelik A.fi.’s corporate
culture. This Code, which should be followed when performing any task within the
Company, was formed in accordance with the common values adopted by both the
Koç Group and Arçelik A.fi. The goal here is to define and communicate Arçelik A.fi.’s
common values, and thus achieve uniformity of conduct within the Company.
Arçelik A.fi. is at one with its employees, shareholders, dealers and other partners
and is fully aware of its responsibilities towards the society and the environment, as
well as towards its customers and shareholders. These responsibilities form the basis
of business life at Arçelik A.fi.
Integrity and good conduct are among the basic principles that guide all Arçelik A.fi.
employees. When doing their jobs, employees ask themselves the following questions
and, if the answer is “No”, they refrain from that act:
Am I acting in compliance with Arçelik A.fi.’s Code of Ethics?
Does my behavior promote Arçelik A.fi.’s reputation?
Is my behavior acceptable to the public?
In decision-making and implementation, it is essential to act in accordance with
applicable laws, the Code of Ethics and common values. “Arçelik A.fi.’s Common
Values and Code of Business Ethics” issued in 2003 is an essential guide regarding
all corporate processes and activities.
Arçelik A.fi. adopts an open, transparent, accountable and ethical management style
and its common values include reliability, integrity, self-confidence, customer-focus,
team spirit, solidarity, continuous improvement, quality-focus and social awareness.
Arçelik A.fi.’s code of professional ethics contains a set of principles providing
guidance to Arçelik A.fi. employees in their business lives. Among these principles
are the protection of corporate data that are considered trade secrets, the creation of
a work environment based on respect, discipline and trust, the existence of equal
rights to employees regardless of their race, language, religion or sex, and ensuring
that all employees show respect for intellectual property rights.
25. Number, Structure and Independence of the Committees Set Up by the Board
To ensure that the Board of Directors performs its duties and responsibilities properly,
an “Audit Committee” has been set up. The “Audit Committee” has two members.
In 2005, the Board of Directors elected Dr. Bülent Bulgurlu and Temel Kamil Atay as
members of the Audit Committee. The Audit Committee operates regularly in accordance
with the Capital Market Law and the CMB’s Corporate Governance Principles. Members
on committees are not independent members. Arçelik A.fi. is also planning to set up
a “Corporate Governance Committee” in accordance with the applicable legislation
and CMB’s regulations.
26. Remuneration of Board Members
Financial benefits to be offered to Board members are determined by the General
Meeting. The General Meeting of 12 April 2005 agreed to pay a monthly fee to
members of the Board of Directors. Members acting as executive officers are paid
fees on a performance basis. Except for any advance payment made in accordance
with the relevant procedures of the Company, the Company does not extend any
personal loans to directors and officers or grant any security in favor of them, such
as sureties.
For the environment…
Environment-friendly technology,
environment-friendly products
Environmental protection is an integral part of Arçelik A.fi.’s corporate culture.
Arçelik A.fi. believes that the environment is entrusted to us by future generations
and protection of the environment and natural resources is a vital part of the
Company’s management philosophy, which rests on the total quality principle.
In this respect, on all Arçelik A.fi. campuses, we:
Use energy and natural resources efficiently,
Design systems that prevent pollution at the source,
Comply with domestic and international environmental laws and
regulations,
Train all employees and subcontractors to raise environmental awareness,
Starting at the design stage, prefer materials and technologies, which
minimize environmental impact during production and use,
Perform environmental impact analyses for new investments.
Arçelik A.fi.’s environmental management system is based on continuous
development. This system allows the Company to produce environmentally
friendly products.
Arçelik A.fi. strives to minimize environmental impact by reducing the amount
of natural resources consumed during the production and use of its products,
increasing the recycling rate of materials, building cogeneration plants and
liquid waste treatment facilities in line with its sustainable development concept
and within the framework of its environmental management system.
Arçelik A.fi. both reaches its own environmental targets and also conveys its
successful sustainability approach to its stakeholders.
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Production in Compliance with
International Standards and Directives
For Sustainable Development…
Arçelik A.fi. considers international standards an integral part of its operations.
The Company’s environment-friendly production plants operate at world standards
and comply with all international product and management standards, especially
ISO 9001:2000 and ISO 14001:2004.
Arçelik A.fi. controls the environmental impact of its products throughout their
lifecycle, starting in the design stage. With this aim, the Research and Development
Center, responsible for product technology, works together with the Product
Development Unit, responsible for product development and improvement, and
the Industrial Design Unit, responsible for product design. The successful
results of these efforts can be seen in the A+ series, which reflects an
environmentally-sensitive product identity.
To protect the steadily worsening ecological balance of the world, Arçelik A.fi.
complies with all regulations throughout the lifecycle of its products, from
design to disposal. In addition to legal regulations, it also complies with
European Community directives aimed at harmonizing the national systems of
EU members.
Arçelik A.fi. is making efforts to achieve harmonization with the following
directives:
Low energy consumption
According to EU standards, Arçelik A.fi. products provide 20% energy savings
in Class A products compared to Class B products.
WEEE - Waste of Electrical and Electronic Equipment
Had all the country’s durable consumer goods been produced in accordance
with Class A standards, Turkey would have obtained a 3% energy savings. This
translates into 5.2 billion kWh permanent and sustainable savings annually.
RoHS - Restriction of the Use of Certain Hazardous Substances
Technology with less resources
EuP - Eco Design Requirements for Energy Using Products
The relevant EC directive requires an 80% recovery rate for large electric and
electronic household appliances. Thanks to improvements in raw materials and
supplies, the recovery rate of all Arçelik A.fi. products is over 90% as of 2005.
Arçelik A.fi. closely monitors regulations and developments related to its industry
and is a member of the European Committee of Domestic Equipment
Manufacturers (CECED). In line with the EC directives for electrical and electronic
household appliances, Arçelik A.fi. started to use energy labels to indicate the
low energy consumption of its products, long before the use of such labels
became mandatory in Turkey. Arçelik A.fi. also was the first household appliances
producer to produce refrigerators without ozone-depleting CFC gases, long
before 2006 which was the deadline set for Turkey in the Montreal Protocol.
Use of
Use of
Use of
CFC12
R134a
R600a
discontinued.
started.
started.
1995
1995
1997
R134a and
R600a
are still being
used.
2005
There are ongoing efforts to improve the recovery rate of products. To this end,
non-recyclable thermoset waste, which is produced during rubber production,
is being incorporated into the products in certain proportions. Using production
waste in washing machine bellows is an innovation in the household appliances
industry. This improvement reduced the quantity of waste disposed into the
environment and reduced the environmental impact of rubber waste disposal.
Environmental Development
and Awards
‹stanbul Chamber of
Industry, Grand
Environment Award Compressor Plant
Industry, Nationwide
Environment Award Refrigerator Plant
1995
1996
1997
1998
1999
2000
Non-CFC
Refrigerator Production
Establishment of
Çay›rova and Eskiflehir
Cogeneration Plants
Industry, Grand
Environment Award Washing Machine Plant
Electrical Research
Administration (EIEI)
Energy Saving Project
Award - Refrigerator
Plant
Golden Package
Award - Dishwasher
Plant
Energy Saving in
Industry Award of the
Ministry of Energy Refrigerator Plant
Ankara Chamber of
Industry, Environment
Badge and Plaque
Industry, Environmental
Incentive Award Washing Machine Plant
Bolu Chamber of
Industry and Commerce,
Environment Award Cooking Appliances Plant
Industry, Environment
Success Award - Cooking
Appliances Plant
American Society
for Quality (ASQ),
Environment-Friendly
Industry Award Compressor Plant
Environmental Training
Every year, regular training is provided to raise environmental awareness. Total
time of environmental training increased from 3,083 hours in 2004 to 6,096
hours in 2005.
Occupational health and safety training increased from 8,407 hours in 2004 to
22,896 hours in 2005.
ENVIRONMENTAL TRAINING HOURS
7,500
6,000
4,500
3,000
1,500
0
2003
2004
2005
OCCUPATIONAL HEALTH AND SAFETY TRAINING HOURS
25,000
20,000
15,000
10,000
5,000
0
2003
2004
2005
46
2001
2002
2003
2004
2005
Production of
refrigerators with
VCC compressors
and A+ energy labels
starts
Turkish
Cogeneration
Association, Best
Cogeneration Plant
Award - Washing
Machine Plant
Products bearing
energy labels
compatible with EC
norms
European Energy
Commission, Energy+
Award - The Most
Energy-Efficient
Refrigerator
Total Productive
Maintenance, TPM
Excellence Award Dishwasher Plant
47
Total Productive
First and only Turkish Maintenance, TPM
company to be invited to Excellence Award the 10th Global Climate Electric Motors Plant
Change Conference of
the United Nations
Orbital Products
Turkish Cogeneration
Association, Best
Cogeneration Plant
Award - Refrigerator
Plant
Total Productive
Maintenance, TPM
Excellence Award Refrigerator Plant
Direct Drive
Technology
Total Productive
Maintenance, TPM
Excellence Award Washing Machine
Plant
Total Productive
Maintenance, TPM
Continuous Excellence
Award - Washing
Machine Plant
Environmental Impact
Production
Product
ENERGY CONSUMPTION (kWh/product)
2001
2002
2003
2004
2005
50
ENERGY CONSUMPTION TREND (kWh/24h)
2
30
1.5
20
1
10
0.5
Refrigerators
Dishwashers
0
Washing Machines
2001
2002
WATER CONSUMPTION (m3/unit)
2003
2004
2005
125
0.60
100
0.45
75
0.30
50
0.15
25
Refrigerators
Dishwashers
Washing Machines
Refrigerators
Dishwashers
2005
0
Refrigerators
Washing Machines
2002
2003
RECOVERY RATE (%)
0.75
0
2003
2004
2.5
40
0
2001
2002
Dishwashers
Washing Machines
2004
2005
Products
REFRIGERATOR
DISHWASHER
The Super No-Frost refrigerator was designed at the Eskiflehir Refrigerator Plant in order to meet the
considerable demand for no-frost refrigerators in domestic and foreign markets. The Super No-Frost
refrigerator with Class A energy performance is the highest-volume refrigerator produced in Turkey
in its category. The refrigerator is unrivaled in Turkey with its accessories as well. These include the
“Double Power” cooling system and the “Full Protection Triangle” hygiene application. This product
has been quite successful in the market with its superior features.
The “Ecologist™” dishwasher offers Class A washing performance, and with water consumption at
9.6 liters, it is the most efficient dishwasher in the world.
The product is equipped with patented accessories providing ease of use. While a single evaporator
is used for cooling in no-frost refrigerators, Super No-Frost refrigerators use a Double Power technology
where cooling is quicker, more effective and efficient thanks to the double evaporators and double
fans.
The full protection triangle keeps food fresh for a long time.
The Protection Triangle: The Protection Triangle is composed of the Silver Ion, Photocatalyst Odor
Filter and Ionizer components used in the body and vegetable compartments. This patented application
very effectively eliminates odor inside the refrigerator and completely prevents odor transition between
the freezer and cooler sections.
The Double Evaporator System: The system, developed in Turkey, provides three times faster
and more uniform cooling.
Additional features include:
A quick icemaker for the first time in Turkey
Double freezer capacity (10 kg / 24 hours)
During washing, various pressures are applied depending on the characteristics of the dishes. The
dishwasher applies 60% higher spraying pressure when cleaning very dirty pots and pans. It helps
the protection of natural resources by saving energy, water and detergents.
Technological advances have resulted in new programs and functions such as Mixed Dishes, ExtraQuick and Extra-Silent. With the Mixed Dishes program, it is possible to apply lower spraying pressure
for glassware on the top shelf, and higher spraying pressure for the greasy pots and pans on the
bottom shelf. The Extra-Quick option reduces washing time and water consumption, while the ExtraSilent option ensures more delicate and silent, but still effective, dishwashing.
The dishwasher’s brushless DC motor is not influenced by fluctuations in the mains voltage and avoids
any performance loss. Thus, any potential consumer problems due to low voltage are prevented.
Lower Energy Consumption: With an energy consumption level of 1.10 kWh, this dishwasher
belongs to Class A according to EU energy label specifications. According to the Household Appliances
Industrialists Society, there are almost 4 million dishwashers in Turkey. This means that, had all
dishwashers in Turkey been replaced with Ecologist™, 330 GWh of energy would have been saved.
This corresponds to 80% of the annual power generation of the Ankara Sar›yer Dam according to State
Water Works (DS‹) data, and provides for TRY 53 million in savings.
Low Water Consumption: The dishwasher’s water consumption is 9.6 liters, which is the lowest
figure in the world among Class A dishwashers. Had every dishwasher in Turkey been an Ecologist™,
Turkey’s national water consumption would have been reduced by 5.9 million m3. According to DS‹
data, this equals 10% of the Kurtbo¤az› Dam or 80% of the Bay›nd›r Dam.
Class A energy performance, low energy consumption, economical no-frost
LCD electronic display
Quick-Freeze, Quick-Fridge, Quick-Ice, Eco-Fuzzy, Vacation modes adjustable on an electronic
display on the door
Easy-to-pull sliding shelves, storage containers under the shelves, wire drawer in the freezer
section, easy-to-fill cartridge icemaker
Advanced Sensor Technology: Water intake is controlled by sensors, which sense the quantity
of the dishes inside the machine. Thus, unnecessary water consumption is avoided. Any condition
which may affect cleaning performance or create safety problems such as filter build-ups, drainage
pump and circulation pump blockages, too much dirt and too much foam, are sensed and corrective
algorithms are activated.
New Washing Programs and Functions:
Extra Hygiene: This is a hygiene program of the Ecologist™ Dishwasher specially developed for
patients and babies. Design data for the Extra Hygiene program was gathered in a study carried out
with TÜB‹TAK-MAM called Hygienic Cleaning in Dishwashers, and hygiene labels were obtained from
LGA (Landesgewerbeanstalt Bayern - Germany) laboratories.
Extra Quick: This function, designed for users with a limited time, shortens the time and boosts the
energy and sound of the selected program.
Extra Silent: An extra sensitive and extra silent program for washing dishes at night in areas where
power prices are lower at night time.
48
49
OVEN
WASHING MACHINE
DRYER
The Bolu Cooking Appliances Plant designed a hi-tech electronic
oven to meet demand in the rapidly growing Turkish and European
built-in markets.
Washing machine, which allows easy adjustment through interactive
LCD displays, washes laundry at Performance Level A even at
40°C with the ACTIVE 40 program. This machine washes laundry
perfectly, while saving energy thanks to its A+ energy label.
In 2005, Arçelik launched the first and only Class A dryer of Turkey.
With Class A energy performance, the product is among the few
of its kind in the world and offers up to 45% energy saving
compared to conventional dryers.
The soaking feature allows better cleaning and the SENSORINSE
feature performs automatic measurements to start additional rinsing
only when this is necessary. Thus, the machine rinses effectively
and does not waste a single drop of water. It saves both time and
energy.
The dryer uses a heat-pump technology developed with the support
of TÜB‹TAK’s Technology Monitoring and Evaluation Agency.
This is the only oven in the world, which, with its “Staged Cooking"
feature, allows adjusting the temperature and time of two different
cooking programs at once.
The multifunctional product offers several advanced features such
as electronic control, Class A energy performance, single-button
control, wide functions display, and directions for the positioning
of trays. Thus, everything is cooked optimally, at the most appropriate
temperature and in the most appropriate position.
Wide Display: Displays the functions to guide the user.
Staged Cooking Feature: Allows adjusting the temperature and
time of two different cooking programs at the same time.
3D Cooking Feature: Allows cooking three meals simultaneously.
Other features include:
Class A+: Although Class A products are energy-efficient,
Class A+ products save a further 10% energy compared to Class
A products.
HYGIENE Plus Program: Ensures very hygienic cleaning
for those who suffer from allergies and infants by washing the
laundry at high temperatures and rinsing it four times.
Water Jet: The water jet system of the machine ensures
quick wetting of the laundry and improves washing performance
by spraying detergent water on the laundry.
Class A energy savings
12 functions
Rapid heating
Telescopic shelf (single)
36 ready-meal menus plus two supplementary programs
Easy-to-clean
Unbalanced Load Control System: The machine
works silently and without any vibration thanks to this system.
Electronic Water Intake System: This system
automatically calculates and adjusts water intake according to the
type and quantity of the laundry. It does not waste a single drop
of water and saves both time and energy. This feature allows
economical washing of smaller quantities, without waiting for the
machine to be fully loaded.
Electronic Tracking Display: The display allows the
user to track progress while the machine is working.
Other features include:
Class A Energy Saving: Class-A products are energyefficient. The heat pump allows drying without a heater and ensures
Class A energy performance.
Intelligent Humidity Sensor: The sensor accurately
calculates and automatically adjusts drying time according to the
type of the laundry and the desired dryness level.
Remaining Time Display: The length of the program
and the remaining drying time are indicated on the display.
Time Programming: The machine can be programmed
to start within 19 hours, in 30-minute intervals.
Ventilation Program: This program eliminates bad
odors such as cigarette smoke from woolen, silk, cotton and
synthetic cloth.
For the community...
300 schools, 200,000 students,
6,000 teachers in eight years
Arçelik A.fi. believes that developing and implementing projects to improve social
standards and find solutions to social problems in order to achieve sustainable
development is an integral part of its core responsibilities. Arçelik A.fi. perceives
corporate social responsibility as assuming responsibilities and making
commitments in light of its corporate values and culture.
To promote social development, the Company has assumed a leading role by
implementing projects with clearly measurable outcomes.
Arçelik A.fi. believes that raising society’s awareness of the importance of education
is crucial for reaching the desired development level in Turkey.
Education is the key to many social problems and also makes an important
contribution to the nation’s economy in terms of resource utilization. In the future,
a key factor that will determine the roles of states in the international arena will
be their knowledge base. Therefore, any investment we make in educating young
people and any step we take towards becoming an information society would
contribute to the future of our country.
Being aware that any contribution to self-development must be made at early
ages, Arçelik A.fi. started a corporate social responsibility program called
“Standing United for Education with Arçelik A.fi.” for primary school
students.
To find permanent and effective solutions to social problems, Arçelik A.fi. adopted
a model based on volunteerism and collaboration between NGOs and public and
private entities.
In this context, involving community issues Arçelik A.fi. aims to raise public
awareness and sensitivity with regard to Regional Primary Boarding Schools.
STANDING
UNITED FOR
EDUCATION
50
51
The Standing United for Education Program with Arçelik A.fi.
With its Standing United for Education program, Arçelik A.fi., acting in cooperation
with the Ministry of National Education, aims to improve the education and
development standards of children of disadvantaged families studying in Regional
Primary Boarding Schools and ensure that these children become valuable
members of the society. Regional Primary Boarding Schools offer children equal
opportunity in education and are regarded as one of the most critical tools for
social change.
Focusing on self-development of the students, the program is composed of five
major sub-projects: Our Rooms, They Were Children Too, Support and
Education to Teachers, Education Scholarship and Voluntary Family
Association. At the end of the program what is now the eight year, the target
is to improve the qualifications of 6,000 teachers working in almost 300 Regional
Primary Boarding Schools and help the education of 200,000 students as the
modern and self-confident new generation of Turkey.
NGOs contributing to the program and their specializations include:
Vehbi Koç Foundation (VKV) - Education Scholarship
Turkish Mothers Association (TAD) - Voluntary Family Association and
Voluntary Works
Turkish Educational Volunteers Foundation (TEGV) - Teachers Training
for the Use of Our Rooms
Mother-Child and Educational Foundation (AÇEV) - Teacher Support and
Personal Development Seminar
Private Sector Volunteers Society (ÖSGD) - Volunteer Authorized Dealers
and Employees.
Collaboration Model of the Standing United for Education Program
Arçelik
Family
Ministry of
National
Education
NonGovernmental
Organizations
STANDING UNITED FOR
EDUCATION WITH
ARÇEL‹K A.fi.
Volunteers
Local
Administrations
International
Organizations
Public and
Private
Sectors
Universities
Projects carried out with great
enthusiasm and a strong sense
of responsibility while touching
all segments of the society
Sub-projects of the Standing United for Education Program with
Arçelik A.fi.
Guiding teachers are given special training for activities to be carried out as part
of the Our Rooms project. These training sessions help teachers to plan the
activities to be performed in the rooms and their timing.
Our Rooms
Our Rooms designed for the Regional Primary Boarding Schools students are
home like environments that are equipped with interactive educational and
recreational tools and materials, where the students can spend their free time
creatively, participate in culture and arts activities, relax and have fun while
learning all the while feeling very much at home.
The main objective of the program is to create a better environment for children
who study away from their parents and to support their education by providing
the necessary educational materials. Various social skills are also developed in
these facilities where children interact with each other under supervision.
Our Rooms is implemented under the supervision of guiding teachers, who follow
activity programs aiming to support the personal and social development of
students.
before
Our Rooms are being built in all Regional Primary Boarding Schools participating
in the program. Our Rooms are not merely physical spaces; they are a positive
contribution to teachers’ and students’ vision of the future.
Education Scholarship
It is well known that most graduates of Regional Primary Boarding Schools cannot
continue their studies in high schools due to a lack of financial resources. The
Education Scholarship project provides financial support to graduates of Regional
Primary Boarding Schools who finish their schools with the highest scores and
do not have the financial means to attend a high school. With the scholarship
program, these students are offered equal opportunity to become modern individuals
with an analytical mind, open for universal values and keen on research.
The scholarship encourages students to continue their education depends the
continuation of the academic success of the student. The project covers all schools
and eligible graduates of 300 Regional Primary Boarding Schools are given
scholarships.
after
52
53
Support and Education to Teachers
The responsibilities of teachers working at Regional Primary Boarding Schools
are not identical to those of teachers working at other primary schools. In
accordance with the concept of social learning, learning by imitation and observation
are common teaching methods. The teachers set models for the children with
their behavior and the communication methods they use. Improvement of the
school as a whole also requires school managers to become an active part of this
education process.
In an era where lifelong learning has become indispensable, it is necessary to
continuously update the knowledge and skills of teachers and managers and
provide them professional support. Under the Support and Education to Teachers
project, a series of seminars and workshops are held to support the personal and
professional development of teachers and managers of Regional Primary Boarding
Schools. The content of these seminars are developed with the Ministry of National
Education considering the needs of the teachers and managers of these schools.
Voluntary Family Association
Voluntary Family Association is a group of volunteers coming from every segment
of society, including representatives of local administrations, the private sector,
military officers, academics and prominent members of the community. These
people work together with NGOs to act as observation and assistant units for
Regional Primary Boarding Schools.
One of the principal values of the Standing United for Education Program with
Arçelik A.fi. is the “volunteerism”, which has rapidly gained popularity both in
Turkey and in the world recently. The contribution and commitment of volunteers
is vital for the sustainability of the project. Regional Primary Boarding Schools
are different from regular primary schools in several aspects. Most students
studying at Regional Primary Boarding Schools come from low-income families
living in rural areas and these schools are responsible for their care. However,
since these children have several problems because of being separated from their
families at a very young age, they face difficulties in having a high-quality education
that offers equal opportunity.
They Were Children Too
As part of their natural development process, children follow the example of the
individuals around them. These role models have significant influences on the
personality and future goals of adolescents especially. Therefore, teachers are
very important role models for boarding school students during their development
and education. It is crucial for boarding school students, whose role models are
limited in number, to meet and talk with different role models with whom they can
associate themselves.
This project gives students the opportunity to meet renowned members of various
professions: artists, athletes, public leaders, prominent individuals living nearby,
and successful graduates of their schools.
Children are given the message that each one of them is a precious individual
and can be successful if they pursue their dreams and life goals. This helps them
believe in themselves and become self-confident individuals.
It is crucial for our children to be in a safe and peaceful education environment,
where they do not acutely feel the absence of their families and where they are
taken care of and feel happy. Set up in areas where Regional Primary Boarding
Schools are operating, Voluntary Family Associations help supporting the children,
motivating them, giving them the affection they need and offering them a warm
family atmosphere. Arçelik A.fi. is a big, extended family with its employees,
extensive authorized dealer and technical service network and suppliers and every
member of this family is a potential volunteer of this program.
A project aimed at promoting
self-development of the students
Efforts and Accomplishments in the 2004 - 2005 Academic Year
Following the pilot project that started in March 2004 in Van, Hakkari and I¤d›r,
the program was expanded in the 2004-2005 academic year, to cover 55 schools
in 10 provinces including Erzurum, Ordu, Bal›kesir, Çank›r›, Gaziantep, Rize and
Kars. A detailed time line and list of accomplishments the program achieved
follows.
21 - 25 April 2005: Ordu Voluntary Family Association joined the 23rd
April celebrations and visited schools. Van Voluntary Family Association members
join the 23rd April celebrations. I¤d›r Voluntary Family Association visited schools.
Prof. Füsun Akkök gave a seminar to parents.
22 - 30 April 2005: Hakkari Regional Primary Boarding School visited
together with the Voluntary Family Association.
6 January 2005: Arçelik A.fi. General Manager A. Gündüz Özdemir gave
brief information summation about the program to representatives of the Ministry
of National Education and NGOs at a meeting in Ankara. The Minister of National
Education was also present at the meeting.
23 April 2005: TÜB‹TAK books were donated to Regional Primary Boarding
Schools in Van, Hakkari, I¤d›r, Erzurum and Ordu.
26 January - 2 February 2005: Construction of Our Room completed in
Ordu Gülyal› Turnasuyu Regional Primary Boarding School.
9 - 13 May 2005: Project measurement and evaluation work completed
in pilot provinces.
February 2005: Van Voluntary Family Association developed solutions for
the health problems of students who need help.
12 - 15 May 2005: Education Equipment and Technologies Fair in ‹stanbul
attended.
7 February 2005: Construction of Our Room completed in Erzurum Il›ca
Yavuz Selim Regional Primary Boarding School. Representatives of local
administrations and authorities were present at the opening ceremony.
May 2005: Arçelik Education Scholarship Application Forms sent to 300
7 February - 12 February 2005: Stage I training of the “Support and
Education to Teachers” project repeated in Erzurum, for teachers of the Regional
Primary Boarding Schools in Erzurum and Ordu.
May 2005: Our Rooms completed in Ordu.
24 - 28 May 2005: Erzurum Horasan, Tekman, Karayaz› and ‹spir Regional
Primary Boarding Schools visited by the Voluntary Family Association. The
Voluntary Family Association held a drawing contest at these schools.
2 - 4 June 2005: The project was introduced at Antalya Rotary meeting.
17 - 24 March 2005: Students of Vehbi Koç Foundation’s Koç Primary
School performed a play at the Van Gürp›nar Regional Primary Boarding School.
The Ordu Voluntary Family Association in cooperation with authorized dealers
and technical services visited the schools and offered information on various
professions.
2 - 7 June 2005: Private Sector Volunteers Society and Ordu Voluntary
Family Association opened Our Rooms at the Ünye, Akkufl, Mesudiye, Gölköy
19 - 29 March 2005: The project was announced at Arçelik A.fi.’s 50th
Year Authorized Dealers and Technical Services Meeting.
26 - 29 June 2005: Under the Support and Education to Teachers project,
Stage II on-the-job-training given to the teachers of Van, I¤d›r, Hakkari, Erzurum
and Ordu Regional Primary Boarding Schools; a training seminar was held for
the headmasters of Rize, Çank›r›, Kars, Bal›kesir, Gaziantep Regional Primary
Boarding Schools.
13 - 16 April 2005: Erzurum Voluntary Family Association members offered
information on various professions.
June 2005: Standing United for Education Program’s annual report prepared.
54
55
KOCAEL‹
R‹ZE
KARS
G‹RESUN
ÇANAKKALE
ERZURUM
I⁄DIR
BALIKES‹R
KAYSER‹
VAN
AKSARAY
KONYA
K. MARAfi
HAKKAR‹
ADANA
fi.URFA
G. ANTEP
K‹L‹S
ÇANKIRI
BOLU
TRABZON
ORDU
HATAY
July 2005: Our Rooms completed in Erzurum.
August 2005: Preliminary work for Our Rooms finished in Çank›r›, Bal›kesir
and Rize.
September 2005: Our Rooms completed in Kars and Rize.
26 September - 2 October 2005: Under the Support and Education to
Teachers project, Stage I on-the-job-training given to teachers of Rize, Çank›r›,
Kars, Bal›kesir and Gaziantep Regional Primary Boarding Schools.
27 September 2005: Our Rooms completed in Çayeli, Rize.
October 2005: Scholarships became effective.
10 November 2005: Our Rooms completed in Bal›kesir.
18 November 2005: Prizes given to winners of the drawing and essay
contests held by the Bal›kesir Voluntary Family Association at the Bal›kesir Bigadiç
Regional Primary Boarding School; Our Room opened.
23 November 2005: Prizes given to winners of the drawing and essay
contest held by the I¤d›r Voluntary Family Association at the Il›ca and Karakoyunlu
November 2005: Our Rooms completed in Çank›r›.
24 November 2005: Our Rooms completed at the Erzurum Çat Regional
Primary Boarding School. Erzurum Voluntary Family Association members joined
Teachers’ Day events together with members of the sales organization and
authorized dealers.
December 2005: Our Rooms completed in Gaziantep.
December 2005: Pictures of students who had won prizes in the drawing
contest held by the Erzurum and Ordu Voluntary Family Associations on 23 April
used on New Year’s postcards and calendars for 2006.
Provinces Covered by the Program
Pilot Provinces in 2004 - 2005 Academic Year: Van, Hakkari, I¤d›r
Provinces Added Subsequently: Erzurum, Ordu
2004 - 2005 Academic Year: Gaziantep, Kars, Rize, Çank›r›, Bal›kesir
2005 - 2006 Academic Year: Çanakkale, Kocaeli, Bolu, Konya, Aksaray,
Kahramanmarafl, Kayseri, Adana, Trabzon, fianl›urfa, Hatay, Giresun, Kilis
2004 - 2005 Academic Year
Total number of schools included in the program: 55 schools in 10
provinces
Total number of students included in the program: 40,000
Total number of teachers included in the program:
Number of directly trained teachers: 165
Number of teachers included in the program through the multiplier
effect: 1,200
Targets for 2005-2006 Academic Year
The Standing United for Education Program with Arçelik A.fi. targets to reach
80,000 students at 100 schools in 23 provinces, and 45 Regional Primary Boarding
Schools in 13 provinces including Çanakkale, Kocaeli, Bolu, Konya, Aksaray,
Kahramanmarafl, Kayseri, Adana, Trabzon, fianl›urfa, Hatay, Giresun and Kilis.
Board of Directors 2005 *
Board of Auditors
Rahmi M. Koç
Chairman
Serkan Özyurt
Dr. Bülent Bulgurlu**
Vice Chairman
Mert fi. Bayram***
Robert Sonman
Member
*
Mustafa V. Koç
Member
In accordance with the Company’s Articles of Association, Board members
are re-elected every year during the Ordinary General Meeting. Accordingly,
all members’ terms started on 12 April 2005.
Cengiz Solako¤lu
Member
**
Dr. Bülent Bulgurlu and Temel K. Atay are also members of the Audit Committee.
F. Bülend Özayd›nl›
Member
Temel K. Atay**
Member
M. Ömer Koç
Member
Member
*** Since Fatih Kemal Ebiçlio¤lu, who was appointed auditor at the Ordinary
General Meeting of 12 April 2005, was assigned to the vacant position of
Assistant General Manager in charge of Finance and Accounting, Mert fi.
Bayram was appointed auditor by the other auditor Serkan Özyurt on 18 April
2005, to serve until the next General Meeting in accordance with the Turkish
Commercial Code.
Management 2005
Fatih Kemal Ebiçlio¤lu
Assistant General Manager,
Finance and Accounting
Atilla ‹lbafl
Production and Technology
56
57
General Manager
fiirzat Subafl›
Turkey Marketing and Sales
Mustafa Nadir Yalç›nalp
International Marketing and Sales
Management 2005 (31 December 2005)
General Manager
Atilla ‹lbafl
Assistant General Manager-Production and Technology
Assistant General Manager-Finance and Accounting
Assistant General Manager-International Marketing and Sales
fiirzat Subafl›
Assistant General Manager-Turkey Marketing and Sales
Information Technologies Director
Ahmet Sak›zl›
Product Planning and Coordination Director
Ali Tayyar
Accounting Director-Headquarters / Plants
Cemal Can Dinçer
International Sales Director-Non-European Markets
Cemal fieref O¤uzhan Öztürk
Product Director-Washing Machine
Ferhat Erçetin
Purchasing Director
Hilmi Cem Akant
International Sales Director-Europe and Business Development
‹hsan Somay
Accounting Director-Sales and Marketing
Product Director-Refrigerator
Koral Boro
Beko Sales Director
Mehmet Savafl
Product Director-Cooking Appliances
Murad fiahin
Marketing Director
Mustafa Türkay Tatar
Finance Director
Oktay Sokullu
Arçelik Sales Director
Salih Arslantafl
Product Director-Dishwasher
Serdar Sözeri
Consumer Services and Logistics Director
Sibel Kesler
Budget, Reporting and Analysis Director
fiemsettin Eksert
Research and Development Director
fierife Füsun Ömür
Human Resources and Strategic Planning Director
Mr. Özdemir started his professional career in 1972 as a Sales Representative
at Beko Ticaret A.fi. He has been the General Manager of Arçelik A.fi. since
2003.
58
59
Atilla ‹lbafl
Mr. ‹lbafl started his career in 1979 as a Project Engineer at Arçelik A.fi.
Headquarters. He has been Arçelik A.fi. Assistant General Manager for
Production and Technology since 2005.
Mr. Ebiçlio¤lu started his career in 1989 as an Assistant Account Specialist
at the Ministry of Finance. He has been Arçelik A.fi. Assistant General Manager
for Finance and Accounting since 2005.
Mr. Yalç›nalp started his career in 1977 as a Finance Officer at Demirdöküm
A.fi. He has been Arçelik A.fi. Assistant General Manager for International
Marketing and Sales since 2005.
fiirzat Subafl›
Mr. Subafl› started his career in 1986 as a Sales Representative at Beko
Ticaret A.fi. He has been Arçelik A.fi. Assistant General Manager for Turkey
Marketing and Sales since 2003.
Mr. Ceylan started his career in 1989 as a Programmer at Döktafl A.fi. He
has been working as Information Technologies Director at Arçelik A.fi. since
1999.
Ahmet Sak›zl›
Mr. Sak›zl› started his career in 1980 as Chief of Maintenance and Production
at Hisar Çelik Döküm A.fi. He has been working as Product Planning and
Coordination Director at Arçelik A.fi. since 2003.
Ali Tayyar
Mr. Tayyar started his career in 1981 as Assessment Officer at Arçelik A.fi.
He has been working as Accounting Director, Headquarters / Plants at Arçelik
A.fi. since 2000.
Cemal Can Dinçer
Mr. Dinçer started his career as a Trainee at Arçelik A.fi. Finance Department.
He has been working as International Sales Director, Non-European Markets
at Arçelik A.fi. since 2005.
Cemal fieref O¤uzhan Öztürk
Mr. Öztürk started his career in 1987 as Quality Control Engineer at Arçelik
A.fi. He has been working as Product Director, Washing Machine at Arçelik
A.fi. since 2005.
Ferhat Erçetin
Mr. Erçetin started his career in 1976 as Energy and Maintenance Manager
at Elka Elyafl› Plaka T.A.fi. He has been working as Purchasing Director at
Arçelik A.fi. since 2005.
Hilmi Cem Akant
Mr. Akant started his career in 1987 as Project Manager at Tioxide, France.
He has been working as International Sales Director, Europe and Business
Development at Arçelik A.fi. since 2005.
‹hsan Somay
Mr. Somay started his career in 1979 as Accounting Officer at At›l›m A.fi. He
has been working as Accounting Director, Sales and Marketing at Arçelik
A.fi. since 2000.
Mr. Sa¤›r started his career in 1980 as Project Engineer at Arçelik A.fi.
He has been working as Product Director, Refrigerator at Arçelik A.fi.
since 2002.
Koral Boro
Mr. Boro started his career in 1983 as Sales Representative at Beko Ticaret
A.fi. He has been working as Beko Sales Director at Arçelik A.fi. since 2003.
Mehmet Savafl
Mr. Savafl started his career in 1987 as Product Engineer at Arçelik A.fi. He
has been working as Product Director, Cooking Appliances at Arçelik A.fi.
since 2005.
Murad fiahin
Mr. fiahin started his career in 1993 as Market Research Officer at Arçelik
A.fi. He has been working as Marketing Director at Arçelik A.fi. since 2005.
Mustafa Türkay Tatar
Mr. Tatar started his career in 1991 as Treasury Specialist at Eximbank’s
Treasury. He has been working as Finance Director at Arçelik A.fi. since 2005.
Oktay Sokullu
Mr. Sokullu started his career in 1974 as a Sales Representative at Beko
Ticaret A.fi. He has been working as Arçelik Sales Director since 2000.
Salih Arslantafl
Mr. Arslantafl started his career in 1987 as Project Engineer and Sheet
Production Chief at Arçelik A.fi. He has been working as Product Director,
Dishwasher at Arçelik A.fi. since 2003.
Serdar Sözeri
Mr. Sözeri started his career in 1984 as Product Planning Engineer at Arçelik
A.fi. He has been working as Consumer Services and Logistics Director at
Arçelik A.fi. since 2005.
Sibel Kesler
Ms. Kesler started her career in 1989 as Project Officer at Tüyap A.fi. She
has been working as Budget, Reporting and Analysis Director at Arçelik A.fi.
since 2005.
fiemsettin Eksert
Mr. Eksert started his career in 1988 as Project Engineer at Arçelik A.fi.
He has been working as Resarch and Development Director at Arçelik A.fi.
since 2003.
fierife Füsun Ömür
Ms. Ömür started her career in 1987 as Project Engineer at the R & D
Department of Koç Holding. She has been working as Human Resources
and Strategic Planning Director at Arçelik A.fi. since 2005.
Arçelik A.fi.
Ordinary General Meeting
5 April 2006
Agenda
1. Opening and election of the Presidential Board.
2. Reading and discussing the Board of Directors’ Report, the Board of Auditors’ Report and the Independent Auditors’ Report on 2005 operations and accounts,
discussing the balance sheet and income statement and submitting the same to the approval of the General Meeting.
3. Releasing the members of the Board of Directors and the Board of Auditors from liability regarding the 2005 accounts and operations of the Company.
4. Approving, amending and voting the proposal of the Board of Directors for profit distribution.
5. Determining the number of Board Members who shall continue to serve on the Board until the next Ordinary General Meeting to be held to review 2006 operations
and accounts, and electing new members.
6. Electing the auditors who shall continue to serve until the next Ordinary General Meeting to be held to review 2006 operations and accounts.
7. Determining monthly remuneration to be paid to the Chairman and Members of the Board of Directors and the Members of the Board of Auditors.
8. Informing the General Meeting of donations and contributions made by the Company to foundations and societies in 2005 under social responsibility projects.
9. Deciding on the amendment of Article 5 (Head Office and Branches) of the Articles of Association.
10. Authorizing the Independent Auditors selected by the Board of Directors to audit 2006 and 2007 operations and accounts pursuant to the Regulations on
Independent External Auditing in Capital Markets issued by the Capital Markets Board.
11. Within the context of Article 15 of the Capital Markets Law and the provisions of Communiqué Series IV, No. 27 of the Capital Markets Board, authorizing
the Board of Directors with regard to distribution of a dividend to shareholders out of the interim profit, provided that such distribution remains limited to 2006,
and deciding that the advance dividend to be distributed in 2006 shall be offset against extraordinary reserves of the previous balance sheet in the event of a loss
or insufficient profit at the end of the relevant financial period.
12. Pursuant to Articles 334 and 335 of the Turkish Commercial Code, authorizing the members of the Board of Directors to directly or indirectly engage or hold
an interest in any business, which is identical or similar to the business of the Company, and to perform certain other procedures.
13. Signing the minutes of the General Meeting by the Presidential Board and authorizing the Presidential Board in this regard.
14. Bestowing salutary wishes.
Proposal for Profit Distribution
60
61
The financial statements of our Company are prepared in accordance with the IFRS pursuant to Communiqué Series XI, No. 25 of the Capital Markets
Board.
The balance sheet and income statement containing the results of 2005 operations, which have been made available for your examination for the
last fifteen days demonstrate that;
by the end of 2005, our Company realized a consolidated net profit of TRY (New Turkish Lira) 312,153,251.53.
Upon keeping a 5% legal reserve worth TRY 12,402,071.29 according to Article 466 of the Turkish Commercial Code, the distributable profit of
our Company is calculated to be TRY 282,126,729.37 in line with the Capital Market Law and the regulations of the CMB, and TRY 509,483,937.01
in the statutory records.
We hereby propose the allocation of the following sums from the IFRS profit for the reporting period;
TRY 12,402,071.29
as 5% Primary legal reserve,
TRY 199,980,000.00
as Dividend to shareholders,
TRY 17,998,200.00
Esteemed Shareholders,
as 10% Secondary legal reserve, and
the balance as to be added to extraordinary reserves.
Based on our statutory records, we ask for the approval of the General Assembly for:
• Funding the TRY 199,980,000.00 cash dividend as follows:
TRY 197,873,109.57
TRY 2,106,890.43
from extraordinary reserves kept between 1999 and 2003
from current period’s exceptional earnings.
• Paying a cash dividend at the rate of 50%, which corresponds to TRY 0.50 gross and net cash dividend for one share certificate with a nominal
value of TRY 1.00, to institutional shareholders who are full taxpayers or limited taxpayers and obtain dividends through a business or a permanent
representative in Turkey.
• Paying a cash dividend at the rate of 50%, which corresponds to TRY 0.50 gross and TRY 0.45053 net cash dividend for one share certificate
with a nominal value of TRY 1.00 to other shareholders,
• Starting dividend payments on 15 May 2006.
We wish that 2006 will be a prosperous year for Turkey and our Company,
Sincerely yours,
Rahmi M. Koç
Chairman
Amendments to the Articles of Association
The Board of Directors decided to amend “Article 5 (Head Office and Branches)” of the Articles of Association of the Company as follows. The necessary permissions
have been obtained from the Capital Markets Board and the Ministry of Industry and Trade.
FORMER TEXT
AMENDED TEXT
HEAD OFFICE AND BRANCHES
HEAD OFFICE AND BRANCHES
ARTICLE 5: The head office of the Company is located in Tuzla, ‹stanbul. Its
registered address is Ankara Asfalt›, 81719, Tuzla - ‹stanbul.
ARTICLE 5: The head office of the Company is located in Beyo¤lu, ‹stanbul. Its
registered address is Karaa¤aç Caddesi, No. 2-6, 34445 Sütlüce, Beyo¤lu,
‹stanbul.
In case of any change in address, the new address shall be registered with the
Trade Registry and announced in the Turkish Commercial Registration Gazette,
and also notified to the Ministry of Industry and Trade. Any notice served to the
registered and announced address shall be binding on the Company. In the
event the Company evacuates its registered and announced address and fails
to register its new address within the statutory time limits, this shall constitute
a reason for termination.
Based on the decision of its Board of Directors, the Company may open branches
in Turkey and abroad, provided that the Ministry of Industry and Trade is notified.
In case of any change in address, the new address shall be registered with the
Trade Registry and announced in the Turkish Commercial Registration Gazette,
and notification made to the Ministry of Industry and Trade and Capital Markets
Board. Any notice served to the registered and announced address shall be
binding on the Company. In the event the Company evacuates its registered
and announced address and fails to register its new address within the statutory
time limit, this shall constitute a reason for termination.
Based on the decision of its Board of Directors, the Company may open branches
in Turkey and abroad, provided that the Ministry of Industry and Trade and the
Capital Markets Board are notified.
Convenience Translation
into English of Consolidated
Financial Statements
at 31 December 2005
Together with Auditor’s Report
62
63
Arçelik Anonim fiirketi
CONVENIENCE TRANSLATION INTO ENGLISH OF
AUDITOR’S REPORT ORIGINALLY ISSUED IN TURKISH
ARÇEL‹K A.fi.
AUDITOR’S REPORT
FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2005
1.
We have audited the accompanying consolidated balance sheet of Arçelik A.fi. ("the Company") at 31 December 2005 and the related consolidated statement of income
for the year then ended. Our examination was made in accordance with the auditing principles issued by the Capital Market Board ("CMB") and accordingly included
such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
2.
In our opinion, the consolidated financial statements, present fairly, in all material respects, the consolidated financial position of Arçelik A.fi. at 31 December 2005 and
the results of its operations for the year then ended in accordance with the accounting principles issued by the CMB (Note 2).
Additional paragraph for convenience translation into English:
3.
As of 31 December 2005, the accounting principles described in Note 2 (defined as ‘CMB Accounting Standards’) to the accompanying consolidated financial
statements differ from International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board with respect to the application of
inflation accounting and presentation of the basic financial statements and the notes to them. Accordingly, the accompanying consolidated financial statements are not
intended to present the financial position and results of operations in accordance with IFRS.
Baflaran Nas Serbest Muhasebeci
Mali Müflavirlik Anonim fiirketi
a member of
PricewaterhouseCoopers
Haluk Yalç›n, SMMM
Partner
Istanbul, 3 March 2006
CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH
ARÇEL‹K ANON‹M fi‹RKET‹
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER
(Amounts expressed in thousands of New Turkish lira [TRY] unless otherwise indicated)
Notes
2005
Restated
2004
4
5
7
8
9
10
11
12
13
14
15
267,191
1,600,089
121,268
619,274
53,031
258,953
38,305
1,310,900
83
102,238
727,195
68,859
2,660,853
2,506,533
18,777
658,613
39,268
688,292
56,573
210
-
2,127
276,062
43,312
642,298
13,645
780
-
Total non-current assets
1,461,733
978,224
Total assets
4,122,586
3,484,757
ASSETS
Current assets
Cash and cash equivalents
Marketable securities (net)
Trade receivables (net)
Lease receivables (net)
Due from related parties (net)
Other receivables (net)
Biological assets (net)
Inventories (net)
Construction contract receivables (net)
Deferred tax assets
Other current assets
Total current assets
Non-current assets
Lease receivables (net)
Financial assets (net)
Goodwill/negative goodwill (net)
Investment properties (net)
Property, plant and equipment (net)
Intangible assets (net)
Deferred tax assets
Other non-current assets
7
8
9
10
16
17
18
19
20
14
15
The accompanying notes form an integral part of these consolidated financial statements.
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER
66
67
Notes
2005
Restated
2004
6
6
8
10
7
9
21
13
23
14
15
35,861
87,086
208
55,694
352,432
554,456
195,429
3,809
164,730
16,158
96,221
2,128
51,374
407,319
517,946
192,634
162,103
1,449,705
1,445,883
543,647
140
10,676
43,849
12,033
53,643
209,820
6,217
12,196
39,502
33,622
36,333
663,988
337,690
2,113,693
1,783,573
24
21,837
22,019
25
25
26
399,960
1,251,364
256,707
245,673
748,984
4,478
31,359
(26,881)
312,153
19,101
399,960
1,018,241
256,707
12,550
748,984
(14,198)
(14,198)
290,207
(15,045)
1,987,056
1,679,165
4,122,586
3,484,757
LIABILITIES
Current liabilities
Short-term bank borrowings
Current maturities of long-term bank borrowings
Lease payables (net)
Other financial liabilities (net)
Trade payables (net)
Due to related parties (net)
Advances received
Construction contracts progress billings (net)
Provisions
Deferred tax liabilities
Other current liabilities (net)
Total current liabilities
Non-current liabilities
Long-term bank borrowings (net)
Advances received
Provisions
Other non-current liabilities (net)
6
8
10
7
9
21
23
14
15
Total non-current liabilities
Total liabilities
MINORITY INTEREST
SHAREHOLDERS’ EQUITY
Share capital
Treasury shares
Capital reserves
Share premium
Share cancellation gains
Revaluation fund
Financial assets fair value reserve
Inflation adjustment to shareholders’ equity
Profit reserves
Legal reserves
Statutory reserves
Extraordinary reserves
Special reserves
Investment and property sales income to be added to the capital
Translation reserve
Current year profit
Retained earnings/(Accumulated deficits)
27
28
Total shareholders’ equity
Total shareholders’ equity and liabilities
Commitments and contingent liabilities
31
CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED 31 DECEMBER
Notes
2005
Restated
2004
36
5,102,907
(3,814,291)
4,906,835
(3,679,973)
1,288,616
1,226,862
(880,483)
(836,647)
408,133
390,215
27,232
(17,389)
8,733
(13,066)
65,349
(45,664)
68,122
5,922
413,643
483,944
-
(68,223)
413,643
415,721
(6,541)
(5,601)
407,102
410,120
(94,949)
(119,913)
312,153
290,207
0,780
0,726
Operating revenue
Net sales
Cost of sales (-)
Gross operating profit
Operating expenses (-)
37
Net operating profit
Other income and profit
Other expenses and losses
Financial income/(expenses), net
(Loss)/income from associates, net
38
38
39
9
Income before monetary loss, taxes and minority interests
Monetary loss
40
Income before tax and minority interest
Minority interest
24
Income before tax
Taxes on income
41
Net income
Earnings per share (TRY)
42
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER
68
69
2005
Restated
2004
312,153
290,207
(33,948)
149,809
(23,195)
44,697
13,066
892
6,541
94,949
33,426
143,557
2,839
(53,419)
21,985
(5,922)
(36,305)
13,392
5,156
5,601
119,913
564,964
540,430
(220,503)
(83,408)
(189,520)
(153,333)
261,053
197,577
8,559
(261,858)
(113,290)
9,673
(197,039)
(31,893)
Net cash used in investing activities
(366,589)
(219,259)
Financing activities:
Interest received
Interest paid
Dividends paid
Increase/(decrease) in bank borrowings, net
28,092
(41,992)
(231,389)
342,039
48,720
(22,796)
(2,454)
(63,365)
96,750
(7,983)
(39,895)
208
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
(16,769)
283,960
(61,369)
345,329
Cash and cash equivalents at the end of the period
267,191
283,960
Notes
Operating activities:
Net income
Adjustments for:
Increases and decreases in accruals and provisions
Depreciation and amortisation
Amortisation of goodwill, net
Interest income
Interest expense
(Loss)/income from investment in associated companies, net
Excess of negative goodwill in the fair value of identifiable non-monetary assets acquired
Impairment losses of fixed assets
Net loss from sales of property, plant and equipment, and intangible assets
Minority interest
Taxation expenses
43
19,20
38
39
39
38
38
24
41
Net cash provided by operating activities before changes in operating assets and liabilities
Changes in operating assets and liabilities, net
Income and corporate taxes paid
43
41
Net cash provided by operating activities
Investing activities:
Cash provided from sale of tangible and intangible assets
Acquisition of tangible and intangible assets
Capital increases of associates
19,20
Net cash used in financing activities
Effect of exchange rate changes
399,960
-
Net income
Balance at 31 December 2005
-
-
Dividend paid
-
-
Transfers
Financial assets net fair value increases
-
Change in accounting policy - IFRS 3 (Note 2)
Cumulative translation differences
399,960
-
Effect of correction in associates (Note 2)
Balance at 1 January 2005 - as restated
-
Change in accounting policy - IAS 39 (Note 2)
399,960
Net income
Balance at 31 December 2004 - previously reported
Financial assets net fair value increases
399,960
-
Cumulative translation differences
Balance at 31 December 2004 - as restated
-
Transfers
399,960
-
Balance at 1 January 2004 - as restated
-
Effect of correction in associates (Note 2)
399,960
Change in accounting policy - IAS 39 (Note 2)
Balance at 31 December 2003 - previously reported
capital
Share
256,707
-
-
-
-
-
-
256,707
-
-
256,707
256,707
-
-
-
(95)
256,802
-
-
256,802
premium
748,984
-
-
-
-
-
-
748,984
-
-
748,984
748,984
-
-
-
(952,407)
1,701,391
-
-
1,701,391
equity
245,673
-
233,123
-
-
-
-
12,550
-
12,550
-
12,550
-
1,800
-
-
10,750
-
10,750
-
reserve
fair value
assets
Share shareholders’
Financial
Inflation
adjustment to
Capital reserves
31,359
-
-
-
31,359
-
-
-
-
-
-
-
-
-
-
(33,762)
33,762
-
-
33,762
reserves
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(98,994)
98,994
-
-
98,994
reserves
Legal Extraordinary
Profit reserves
(26,881)
-
-
(12,683)
-
-
-
(14,198)
-
-
(14,198)
(14,198)
-
-
(4,337)
-
(9,861)
-
-
(9,861)
reserve
Translation
19,101
-
-
-
(260,536)
290,207
4,475
(15,045)
(4,295)
(10,750)
-
(15,045)
-
-
-
1,258,153
(1,273,198)
(4,295)
(10,750)
(1,258,153)
earnings
Retained
Total
(4,295)
(10,750)
312,153
312,153
-
-
-
(290,207)
-
290,207
(1,194)
(1,800)
293,201
290,207
209,207
-
-
(172,895)
331,254
312,153
-
-
(260,536)
-
4,475
275,162
(5,489)
(12,550)
293,201
275,162
290,207
-
-
1,085,258
172,895 (1,100,303)
-
-
172,895 (1,085,258)
the period
income for
Net
Retained earnings
1,987,056
312,153
233,123
(12,683)
(229,177)
-
4,475
1,679,165
(5,489)
-
1,684,654
1,679,165
290,207
1,800
(4,337)
-
1,391,495
(4,295)
-
1,395,790
equity
Shareholders’
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED 31 DECEMBER
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2005
70
71
NOTE 1 - ORGANISATION AND PRINCIPAL ACTIVITIES
Arçelik Anonim fiirketi (a Turkish corporation - "Arçelik" or "the Company") and its subsidiaries and associates (collectively, "the Group") undertake all commercial and
industrial activities in respect of the production, sales and marketing including e-commerce, leasing, exportation and importation of electrical and non-electrical household
appliances, their main and supplementary materials, mobile phones, electronic appliances and their spare parts. The Group operates eight manufacturing plants in Turkey
and Romania. The Company is a member of the Koç Group of companies, which holds a majority stake in the Company. The Company’s head office is located at Tuzla,
34950 Istanbul, Turkey.
The Company is registered with the Capital Markets Board ("CMB") and its shares have been quoted on the Istanbul Stock Exchange since 1986. At 31 December 2005 the
shares quoted on the Istanbul Stock Exchange are approximately 21.29% of the total shares. At 31 December 2005, the principal shareholders and their respective
shareholdings in the Company are as follows (Note 25):
Koç Holding A.fi.
Teknosan A.fi.
Koç Family
Burla Ticaret ve Yat›r›m A.fi.
Koç Holding Emekli ve Yard›m Sand›¤› Vakf›
Other
%
39.14
14.68
9.81
7.66
4.50
24.21
100.00
The Company’s subsidiaries ("Subsidiaries") and investments in associated undertakings ("Associates") are explained in Note 2.
Starting from January 2001, the Company obtained the right to use the Beko brand from Beko Ticaret A.fi. and to undertake the marketing, sales and distribution activities of
Beko branded products for twenty years. The rights to use the Beko brand will be transferred to the Company at the termination of the contract.
The Company performs export sales either directly or through Ram D›fl Ticaret A.fi.
The number of employees of the Group is 10,827 (31 December 2004: 10,283).
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
2.1 Accounting policies
The consolidated financial statements of Arçelik have been prepared in accordance with the accounting and reporting principles published by the Capital Market Board
("CMB"), namely "CMB Accounting Standards". The CMB published a comprehensive set of accounting principles in Communiqué No: XI-25 "The Accounting Standards in
the Capital Markets". In the aforementioned communiqué, it has been stated that applying the International Financial Reporting Standards ("IFRS") issued by the
International Accounting Standards Board ("IASB") is accepted as an alternative to conform with the CMB Accounting Standards.
With the decision taken on 17 March 2005, the CMB has 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 CMB Accounting Standards. Accordingly, International Accounting Standard
("IAS") 29 ("Financial Reporting in Hyperinflationary Economies") issued by IASB, has not been applied in consolidated financial statements for the accounting periods
commencing from 1 January 2005. The consolidated financial statements presented for comparison purposes are expressed in the purchasing power of TRY at 31 December
2004. These consolidated financial statements and the related notes have been prepared under the alternative application defined by the CMB as explained above and
presented in accordance with the formats required by the CMB with the announcement dated 20 December 2004.
The Company and its Turkish Associates maintain their books of account and prepare their statutory financial statements in New Turkish lira ("TRY") in accordance with the
Turkish Commercial Code and Tax Procedure Law. The consolidated financial statements, which are in accordance with CMB Accounting Standards, are prepared in New
Turkish lira ("TRY") based on the historical cost conversion except for the financial assets and liabilities which are expressed with their fair values.
2.2 Financial reporting in hyperinflationary periods
The consolidated financial statements at 31 December 2004 are expressed in terms of the purchasing power of TRY at 31 December 2004. As disclosed in the "accounting
policies" note, the CMB has 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 CMB Accounting Standards. Therefore, inflation accounting was not applied commencing from
1 January 2005.
IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date,
and that corresponding figures for previous periods be restated in the same terms. The restatement of the comparative amounts was calculated by means of conversion
factors derived from the Turkish nationwide wholesale price index ("WPI") published by the State Institute of Statistics ("SIS"). Indices and conversion factors used to restate
the comparative amounts in the consolidated financial statements until 31 December 2004 are given below:
Cumulative
three-year
Dates
Index
Conversion factors
inflation rates (%)
31 December 2004
8,403.8
1,000
69.7
31 December 2003
7,382.1
1,138
181.1
2.3 New Turkish lira
Through the enactment of the Law numbered 5083 concerning the "Currency of the Republic of Turkey" in the Official Gazette dated 30 January 2004, the New Turkish lira
("TRY") and the New Kurufl ("YKr") have been introduced as the new currency of the Republic of Turkey, effective from 1 January 2005. The hundredth part of the TRY is the
YKr (1 TRY=100YKr). When the prior currency, Turkish lira ("TL"), values are converted into the TRY, one million TL is equivalent to one TRY (1 TRY). Accordingly, the
currency of the Republic of Turkey is simplified by removing 6 zeroes from the TL.
All references made to Turkish lira or lira in laws, other legislation, administrative transactions, court decisions, legal transactions, negotiable instruments and other
documents that produce legal effects as well as payment and exchange instruments shall be considered to have been made to TRY at the conversion rate indicated as above.
Consequently, effective from 1 January 2005, the TRY replaces the TL as a unit of account in keeping and presenting of the books, accounts and financial statements.
2.4 Translation of foreign subsidiary financial statements
The assets and liabilities of the Group’s foreign undertakings are translated into New Turkish lira at the closing rate and the income and expenses are translated into New
Turkish lira at the average rate for the period. Exchange differences arising on retranslation of the opening net assets of foreign undertakings and differences between the
average and period-end rates are included in the translation reserve under shareholders’ equity.
2.5 Group accounting
(a) The consolidated financial statements include the accounts of the parent company, Arçelik, and its Subsidiaries and Associates on the basis set out in sections (b), (c)
and (d) below. The financial statements of the companies included in the consolidation have been prepared as of the date of the consolidated financial statements and are
based on the statutory records, which are maintained under the historical cost convention, with adjustments and reclassifications for the purpose of presentation in
conformity with IFRS and applying uniform accounting policies and presentations.
(b) Subsidiaries are companies over which Arçelik has the power to control the financial and operating policies for the benefit of Arçelik, either (a) through the power to
exercise more than 50% of the voting rights relating to shares in the companies owned directly and indirectly by itself; or (b) although not having the power to exercise
more than 50% of the voting rights, otherwise has the power to exercise control over the financial and operating policies.
The balance sheets and statements of income of the Subsidiaries are consolidated on a line-by-line basis and the carrying value of the investment held by Arçelik and its
Subsidiaries is eliminated against the related shareholders' equity. Intercompany transactions and balances between Arçelik and its Subsidiaries are eliminated on
consolidation. The cost of, and the dividends arising from, shares held by Arçelik in its Subsidiaries are eliminated from shareholders' equity and income for the period,
respectively.
The table below sets out all Subsidiaries included in the scope of consolidation and shows their shareholding structure at 31 December:
Ardutch B.V. ("Ardutch")
Artesis Teknoloji Sistemleri A.fi. ("Artesis") (*)
Beko Deutschland GmbH ("Beko Deutschland")
Beko Electronics Espana S.L ("Beko Espana")
Beko France S.A. ("Beko France")
Beko Llc.
Beko Plc.
Beko Polska S.A. ("Beko Polska")
Blomberg Vertriebsgesellschaft GmbH ("Blomberg Vertrieb")
Blomberg Werke GmbH ("Blomberg Werke")
Elektra Bregenz ("Elektra Bregenz")
Raupach Wollert GmbH ("Raupach")
SC Arctic SA ("Arctic") (**)
Sherbrook International Limited ("Sherbrook")
Direct and indirect
control by Arçelik
and its Subsidiaries (%)
2005
100.00
100.00
99.97
99.94
100.00
50.00
100.00
100.00
100.00
100.00
100.00
96.69
55.00
Direct and indirect
control by Arçelik
2004
100.00
65.00
100.00
99.97
99.94
100.00
50.00
100.00
100.00
100.00
100.00
100.00
94.85
55.00
(*) Artesis, a Subsidiary of the Group, has been sold at 16 June 2005 and is excluded from the scope of consolidation at the date that the Group’s control ceased.
Following the sales transaction, the Group has recognised the subsidiary sales loss in the consolidated income statements for the year ended 31 December 2005.
(**) On 1 November 2005, Ardutch, a Subsidiary of the Group, has acquired 1.83% of the shares of Arctic. Excess of the interest in the net fair value of identifiable net
assets acquired over the cost of the acquisition is recognised in the consolidated income statement.
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Ardutch, incorporated in the Netherlands, acts as a holding and finance company.
Beko Deutschland, incorporated in Germany, is engaged in import, export and marketing of durable consumer goods, electromotors and raw materials/investment goods.
Beko Espana, incorporated in Spain, primarily engages in the sales of electrical appliances purchased from the Group.
Beko France, incorporated in France, deals with the import, distribution and marketing of durable consumer goods.
Beko Llc. (previously known as Arus), incorporated in Russia, deals with the production of durable consumer goods and import, export, sales and marketing of white goods.
Beko Plc., incorporated in the United Kingdom, deals with the import, distribution and marketing of durable consumer goods.
Beko Polska, incorporated in Poland, is engaged in sales and marketing of durable consumer goods.
Blomberg Vertrieb, is engaged in the trading and marketing of washing machines, tumble driers and other kitchen equipment for fitted kitchens, heat pumps and storage
heaters in Germany.
Blomberg Werke, incorporated in Germany, is in the liquidation process. The production lines of washing machines, tumble driers, heat pumps, wall-mounted and floorstanding storage heaters of Blomberg Werke have been moved to Turkey.
Elektra Bregenz, incorporated in Austria in 1992, is engaged in trading white goods and household products such as cookers, hobs, hoods, ovens, refrigerators and other
household products.
Raupach is a holding company dealing with the purchase of holdings of other companies.
Arctic, incorporated in Romania, is engaged in the production of refrigerator and import, export, sales and marketing of white goods.
Sherbrook, incorporated in United Kingdom, deals with export, import and logistic warehousing of original accessories and spare parts related with the automotive industry.
(c) Associates are companies in which the Company and its Subsidiaries have an attributable interest of 20% or more of the ordinary share capital held for the long-term
and over which a significant influence is exercised. Associates are accounted for using the equity method. The Group’s share of the Associates’ profits or losses for the
period is recognised in the income statement and its share of Associates’ movements in shareholders’ equity such as changes in financial assets fair value reserve and
cumulative translation difference are recognised in the statement of shareholders’ equity. The Group’s interest in the Associates is carried in the consolidated balance sheet at
an amount that reflects its share in the net assets of the Associates. Provisions is provided in the case of long-term impairment in value identified (Note 16).
The table below sets out the Associates and shows their shareholding ratio at 31 December:
Arçelik-LG Klima Sanayi ve Ticaret A.fi. ("Arçelik - LG")
Beko Elektronik A.fi. ("Beko Elektronik")
Koç Tüketici Finansman› ve Kart Hizmetleri A.fi. ("Koç Tüketici Finans")
Ram D›fl Ticaret A.fi. ("Ram D›fl Ticaret")
Ram Pacific Ltd. ("Ram Pacific")
Tan› Pazarlama ve ‹letiflim Hizmetleri A.fi. ("Tan› Pazarlama")
Direct and indirect
control by Arçelik
2005
45.00
22.36
41.18
28.26
25.00
32.00
Direct and indirect
control by Arçelik
2004
45.00
22.36
41.18
28.26
25.00
32.00
Beko Elektronik, incorporated in Turkey, was founded in 1966 for the manufacture and sale of colour televisions, household electronic appliances and electronic cash
registers and the provision of related services. Its shares have been quoted on the Istanbul Stock Exchange since 1992.
Ram D›fl Ticaret was founded as an export trading company of the Koç Group and became an international trading company in 1984. It exports merchandise and the
products of affiliated companies and renders intermediary export and import services.
Koç Tüketici Finans, incorporated in Turkey, was established in 1995 to finance the purchase of goods and services by customers and to provide consumer credit.
Arçelik-LG, incorporated in Turkey in 1999, was established to engage in the production, sale and export of air conditioning units.
Tan› Pazarlama, incorporated in Turkey in 2002, was established to serve consultancy services related with marketing and communication.
Ram Pacific, incorporated in China in 1995, is a foreign trading company.
(d) Available-for-sale investments, in which the Group have controlling interests equal to 20% or, which are either immaterial or where a significant influence is not
exercised by the Group, that do not have quoted market prices in active markets and whose fair values cannot be reliably measured are carried at cost less any provision for
impairment.
Available-for-sale investments in which the Group have attributable interests of more than 50%, which are immaterial for the Group’s consolidated financial position,
operation results and net assets, are not included in the scope of consolidation.
(e) The results of operations of Subsidiaries and Associates are either included or excluded from their effective dates of acquisition or disposal, respectively.
(f) The minority shareholders’ share in the net assets and results for the year of Subsidiaries are separately classified as minority interest in the consolidated balance sheets
and statements of income.
2.6 Comparatives
Where necessary, comparative figures are reclassified to conform to changes in presentation of the current period consolidated financial statements.
2.7 Changes in accounting policies and restatement of prior periods’ financial statements
IAS 39 ("Financial Instruments: Recognition and Measurement") has been revised effective from the annual period beginning on or after 1 January 2005. In accordance with
the revised standard, gains and losses on available-for-sale financial assets shall be directly recognised in equity until the financial assets are derecognised.
The Group recognised such gains and losses on available-for-sale financial assets in the consolidated statements of income until 31 December 2004. As a result of the
revision in IAS 39, the Group applied the accounting policy change retrospectively, and accordingly, adjusted comparative financial information.
Furthermore; according to IFRS 3 ("Business Combinations"), the carrying value of previously recognised negative goodwill is derecognised at the beginning of the period,
with a corresponding adjustment to the opening balance of retained earnings (Note 3 - Goodwill and amortisation of goodwill).
The Group’s share of the corrections as a result of accounting policy changes in the financial statements of Koç Tüketici Finans, an Associate of the Group, is recognised in
the consolidated financial statements.
2.8 Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and
there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
2.9 Convenience translation into English of consolidated financial statements originally issued in Turkish
As of 31 December 2005, the accounting principles described in Note 2.1 (defined as CMB Accounting Standards) differ from IFRS issued by the International Accounting
Standards Board with respect to the application of inflation accounting, presentation of the basic financial statements and the notes to them. Accordingly, these financial
statements are not intended to present the financial position and results of operations in accordance with IFRS.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of these consolidated financial statements are summarised below:
3.1 Related parties
For the purpose of these consolidated financial statements, shareholders, key management personnel and Board members, in each case together with their families and
companies controlled by/or affiliated with them, associated companies and other companies within the Koç Holding group are considered and referred to as related parties.
Transactions with related parties are priced predominantly at market rates (Note 9).
3.2 Trade receivables
Trade receivables that are created by the Group by way of providing goods or services directly to a debtor are carried at amortised cost. Short-term receivables with no stated
interest rate are measured at the original invoice amount unless the effect of imputing interest is significant.
A credit risk provision for trade receivables is provided if there is objective evidence that the Group will not be able to collect all amounts due. The amount of provision is
the difference between the carrying amount and the recoverable amount, being the present value of all cash flows, including amounts recoverable from guarantees and
collateral, discounted based on the original effective interest rate of the originated receivables at inception.
If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the release of the provision is credited to other income (Note 7).
3.3 Credit finance income/charges
Credit finance income/charges represent imputed finance income/charges on credit sales and purchases. Such income/charges calculated by using the effective interest
method are recognised as financial income or expenses over the period of credit sale and purchases, and included under financial income and expenses (Note 39).
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3.4 Loans and provisions for loan impairment
When the loan is originated by the Group by providing money directly to a bank, the loan is secured with marketable securities, Turkish government bonds and treasury
bills, acquired under reverse repurchase agreements with banks with a predetermined sale price at fixed future dates and is stated at amortised cost. The accrued interest
represents the apportionment to the current period of the difference between future sale prices and the amount provided by the Group. Such originated loans where original
maturity at the time the money is directly transferred to the bank is less than three months, are considered and classified as cash equivalents for the purposes of statement of
cash flows (Note 5).
A credit risk provision for loan impairment is established if there is objective evidence that the Group will not be able to collect all amounts due. The amount of the provision
is the difference between the carrying amount and the recoverable amount, being the present value of all cash flows, including amounts recoverable from guarantees and
collateral, discounted based on the original effective interest rate of the originated loan at inception.
If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the release of the provision is credited to current period’s income
statement.
3.5 Financial assets
Investment securities with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity. Investment securities intended
to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale. These are
included in non-current assets unless management has the intention of holding the investment securities for less than 12 months from the balance sheet date, or unless they
will need to be sold to raise working capital, in which case they are included in current assets. Management determines the appropriate classification of its investment
securities at the time of the purchase and re-evaluates such designations on a regular basis. The unrealised gains and losses arising from changes in the fair value of
available-for-sale securities are directly recognised in the equity without being related to net results of the period (Note 16).
All financial assets are initially recognised at the cost of the purchase including the transaction costs. Investments, in which the Group has ownership interest under 20%,
do not have a quoted market prices in active markets, and whose fair values cannot be reliably measured, are carried at cost, less any provision for impairment.
3.6 Inventories
Inventories are valued at the lower of cost or net realisable value. Cost elements included in inventories are materials, labour and an appropriate amount for factory
overheads. The cost of inventories is determined on the moving average basis for each purchase. Net realisable value is the estimated selling price in the ordinary course of
business, less the costs of completion and selling expenses (Note 12).
3.7 Property, plant, equipment and depreciation
Property, plant and equipment are carried at cost less accumulated depreciation (Note 19). Depreciation is provided on restated amounts of property, plant and equipment
using the straight-line method based on the estimated useful lives of the assets, except for land. The depreciation periods for property and equipment, which approximate
the economic useful lives of assets concerned, are as follows:
Land
Land improvement
Buildings
Machinery and equipment
Vehicles and other
Moulds
25 years
25-50 years
10 years
4-6 years
4-10 years
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.
Gains or losses on disposals of property, plant and equipment are included in the related income or expense accounts, as appropriate.
3.8 Intangible assets
Intangible assets comprise acquired information systems, trademarks, software, licenses and other identified rights. They are recorded at acquisition cost and amortised on a
straight-line basis over their estimated useful lives for a period not exceeding 10 years from the date of acquisition. Amortisation is not provided for trademarks and service
organisation since they have an indefinite life. Where an indication of impairment exists, the carrying amount of any intangible assets is assessed and written down
immediately to its recoverable amount (Note 20).
3.9 Goodwill and amortisation of goodwill
Effective from 1 January 2005, in accordance with IFRS 3 - "Business Combinations", goodwill is accounted for the excess of the cost of business combination over the
Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities. Goodwill recognised in a business combination is tested for impairment
annually (as of 31 December) or more frequently if events or changes in circumstances indicates an impairment, instead of amortisation.
The excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities acquired over the cost of business combination is
accounted for as income in the related period.
Previously recognised goodwill and negative goodwill, had been amortised over their estimated useful lives using the straight-line method in consolidated financial
statements until 31 December 2004. The carrying value of negative goodwill from the acquisitions is derecognised in the financial statements in accordance with IFRS 3 with
a corresponding adjustment to the opening balance of retained earnings (Note 17).
3.10 Finance leases
(1) The Group as the lessee
Finance leases
Assets acquired under finance lease agreements are capitalised at the inception of the lease lower of the fair value of the leased asset, net of grants and tax credits
receivable, or the present value of the lease payment. Lease payments are treated as comprising capital and interest elements, the capital element is treated as reducing the
capitalised obligation under the lease and the interest element is charged to the statement of income. Depreciation on the relevant asset is also charged to the statement of
income over its useful life.
Operating leases
Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases
are charged to the income statement on a straight-line basis over the period of the lease.
(2) The Group as the lessor
Finance leases
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the
present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method, which
reflects a constant periodic rate of return.
Operating leases
Assets leased out under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over their expected useful lives on a basis
consistent with similar owned property, plant and equipment. Rental income is recognised on a straight-line basis over the lease term.
3.11 Borrowing cost
Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. They are stated at amortised cost using the effective yield method; any
difference between proceeds and the redemption value is recognised in the income statement over the period of borrowings (Note 6).
3.12 Deferred income taxes
Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying
values in the consolidated financial statements. Currently enacted tax rates at the balance sheet date are used to determine deferred income tax.
The principal temporary differences arise from the restatement of property, plant and equipment and over their historical cost, unused tax credits, the portion of allowance for
unearned credit finance income and expense, warranty provision, provision for employment termination benefits.
Deferred tax liabilities are recognised for all taxable temporary differences, where deferred tax assets resulting from deductible temporary differences are recognised to the
extent that it is probable that future taxable profit will be available against which the deductible temporary difference can be utilised.
Deferred tax assets and deferred tax liabilities related to income taxes levied by the same taxation authority are offset accordingly.
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3.13 Employment termination benefits
Employment termination benefits represent the present value of the estimated total reserve of the future probable obligation of the Company arising from the retirement of the
employees calculated in accordance with the Turkish Labour Law (Note 23).
3.14 Foreign currency transactions
Transactions in foreign currencies during the year have been translated at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies have been translated into New Turkish lira at the exchange rates prevailing at the balance sheet dates. Exchange gains or losses arising
from the settlement and translation of foreign currency items have been included in the consolidated statements of income.
3.15 Revenue recognition
Revenues are recognised on an accrual basis at the time deliveries or acceptances are made, at the invoiced values. Net sales represent the invoiced value of goods shipped
less sales returns and commission. When the arrangement effectively constitutes a financing transaction, the fair value of the consideration is determined by discounting all
future receipts using an imputed rate of interest. The difference between the fair value and the nominal amount of the consideration is recognised as interest income in the
period on an accrual basis as financial income.
3.16 Interest income
Interest income is recognised on a time proportion basis that takes into account the effective yield on the asset.
3.17 Repair and maintenance expenditure, research and development costs and borrowing costs
Repair and maintenance expenditure, research and development costs and borrowing costs are charged to the statement of income as they are incurred.
3.18 Dividends
Dividends receivable are recognised as income in the period when they are declared and dividends payables are recognised as an appropriation of profit in the period in
which they are declared (Note 9).
3.19 Warranties
Warranty expenses are recorded as a result of repair and maintenance expenses for products produced and sold, authorised services’ labour and material costs for products
under the scope of the warranty terms without any charge to the customers, initial maintenance costs and estimated costs based on statistical information for possible future
warranty services and returns of products with respect to the products sold during the period (Note 15).
3.20 Investment, research and development incentives
Grants arising from investment, research and development are recognised when the Company's incentive claims are approved by the related incentive authorities.
3.21 Share premium
Share premium represents (a) differences resulted from the sale of the Company’s Subsidiaries and Associates’ shares at a price exceeding the face value of those shares (b)
differences between the face value and the fair value of shares issued for acquired companies.
3.22 Financial instruments and financial risk management
The Group’s activities expose to a variety of financial risks, including the effects of changes in debt and equity market prices, foreign currency exchange rates and interest
rates. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Group.
Interest rate risk
The Group is exposed to interest rate risk through the impact of rate changes on interest bearing liabilities and assets. These exposures are managed by using natural
hedges that arise from offsetting interest rate sensitive assets and liabilities.
Funding risk
The ability to fund the existing and prospective debt requirements is managed by maintaining the availability of adequate committed funding lines from high quality lenders.
Credit risk
Ownership of financial assets involves the risk that counter parties may be unable to meet the terms of their agreements. Majority of the receivables are from authorised
dealers and related parties. The Group has in place effective credit evaluation, disbursement and monitoring procedures and those control procedures are supported by
senior management. The credit risk is generally highly diversified due to the large number of entities comprising the customer bases. Another method in managing credit
risk is the collaterals adequately received from authorised dealers.
Foreign currency risk
The Group is exposed to foreign currency risk through the impact of rate changes on the translation of TRY pertaining to foreign currency denominated assets and liabilities.
These risks are monitored and limited by the analysis of the foreign currency position.
Fair value of financial instruments
Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is
best evidenced by a quoted market price, if one exists.
The estimated fair values of financial instruments have been determined by the Group using available market information and appropriate valuation methodologies to the
extent that relevant and reliable information is available from the financial markets. However, judgement is necessarily required to interpret market data to estimate the fair
value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Group could realise in a current market exchange.
The following methods and assumptions are used in the estimation of the fair value of the financial instruments for which it is practicable to estimate fair value:
Monetary assets
The fair values of balances denominated in foreign currencies, which are translated at period-end exchange rates, are considered to approximate carrying values.
The fair values of certain financial assets carried at cost, including cash and cash equivalents and held to maturity investments plus the respective accrued interest are
considered to approximate their respective carrying values due to their short-term nature and negligible credit losses.
The carrying values of trade receivables along with the related allowances for uncollectibility are estimated to be their fair values.
The fair values of investment securities, which have been determined by reference to market values, approximate their carrying values.
Monetary liabilities
The fair values of bank borrowings and other monetary liabilities are considered to approximate their respective carrying values due to their short-term nature.
Trading liabilities, derivatives and foreign exchange instruments have been estimated at their fair values.
Borrowings that are denominated in foreign currencies are translated at period-end exchange rates and accordingly their fair values approximate their carrying values. The
carrying values of borrowings along with the related accrued interest are estimated to be their fair values.
3.23 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation at the balance sheet date as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate of the amount can be made.
3.24 Contingent assets and liabilities
Possible assets or obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future
events not wholly within the control of the Group are not included in consolidated balance sheets and disclosed as contingent assets or liabilities (Note 31).
3.25 Earnings per share
Earnings per share disclosed in the consolidated statement of income are determined by dividing net income attributable to that class of shares by the weighted average
number of such shares outstanding during the period concerned.
In Turkey, companies can increase their share capital by making a pro-rata distribution of shares ("bonus shares") to existing shareholders from retained earnings and
inflation adjustment to shareholders’ equity. For the purpose of earnings per share computations, the weighted average number of shares outstanding during the period has
been adjusted in respect of bonus shares issued without a corresponding change in resources by giving them retroactive effect for the period in which they were issued and
each earlier period.
There are no bonus shares issued during the period.
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3.26 Reporting of cash flows
For the purposes of the statement of cash flows, cash and cash equivalents include cash and amounts due from banks and marketable securities with maturity periods of
less than three months.
The analysis of cash and cash equivalents included in the consolidated statements of cash flows for the year ended 31 December is as follows:
Cash, cheques on hand, bank deposits and other liquid assets (Note 4)
Government bonds, where remaining original maturities are less than three months (Note 5)
2005
267,191
-
2004
258,953
25,007
267,191
283,960
2005
72
2004
122
54,459
160,097
52,086
477
70,194
161,124
26,526
987
267,191
258,953
2005
246,719
20,472
2004
192,709
66,244
267,191
258,953
2005
%
12.75-15.00
1.00-4.75
2004
%
21.60-25.00
1.00-6.00
NOTE 4 - CASH AND CASH EQUIVALENTS
Cash in hand
Cash at banks
- demand deposits
- time deposits
Cheques and notes
Other
As of 31 December, maturities of cash and cash equivalents are as follows:
Up to 30 days
30 - 90 days
As of 31 December, interest rates of time deposits are as follows:
TRY time deposits
Foreign currency time deposits
NOTE 5 - MARKETABLE SECURITIES
There are no short term marketable securities at 31 December 2005. As of 31 December 2004 all short-term marketable securities are held-to-maturity and the breakdown of
such investments is as follows:
Government bonds
2005
-
2004
38,305
-
38,305
2005
-
2004
25,007
10,000
3,298
-
38,305
As of 31 December 2004 maturities of short-term marketable securities are as follows:
Up to 90 days
90-180 days
Accrued interest income
All marketable securities held at 31 December 2004 are in TRY and interest rates range from 23.00% to 23.90%.
NOTE 6 - BORROWINGS
(a) Short-term bank borrowings
Eximbank loans
Foreign currency loans
2005
32,682
3,179
2004
9,161
6,997
35,861
16,158
Interest rates for short-term TRY loans for the year ended 31 December 2005 range from 12.00% to 13.00% (31 December 2004: 17.00%). Interest rates for short-term
foreign currency loans for the year ended 31 December 2005 range from 3.89% to 6,00% (31 December 2004: 3.25-7.00%).
(b) Long-term bank borrowings
As of 31 December 2005, long-term bank borrowings are as follows:
Currency
USD
GBP
EUR
TRY
Interest rate
per annum (%)
Libor+0.95-3.25 and 8%
Libor+1.38-3.75
Euro Libor+1.85-3.25
14.85
Original foreign
currency
64,834,551
34,279,659
212,643,780
126,906,641
Balance
outstanding
TRY
86,995
79,258
337,573
126,907
630,733
Less: Current maturities
(87,086)
543,647
As of 31 December 2004, long-term bank borrowings are as follows:
Currency
USD
GBP
EUR
Interest rate
per annum (%)
Libor+0-3.25
Libor+2.75-3.75
Euro Libor+2.60-3.25
Original foreign
currency
55,461,043
28,486,862
86,605,320
Balance
outstanding
TRY
74,434
73,396
158,211
306,041
Less: Current maturities
(96,221)
209,820
The Company has syndication loans from the International Finance Corporation ("IFC") in the amount of USD 9,857,143, EUR 172,702,134, GBP17,769,231 and from the
Netherlands Development Finance Company ("FMO") in the amount of EUR 20,000,000 as at 31 December 2005. Loans obtained for general usage purposes consist of the
purchase of equipment and other fixed assets for production and modernisation purposes, research and development and new product development, as well as acquisitions
and increased working capital requirements.
The redemption schedules of the long-term bank borrowings are as follows:
2006
2007
2008
2009
2010
2011 and over
2005
243,200
104,142
85,238
65,009
46,058
2004
93,673
51,361
38,313
13,987
8,324
4,162
543,647
209,820
80
81
NOTE 7 - TRADE RECEIVABLES AND PAYABLES
Short-term trade receivables:
Trade receivables
Notes receivables
Cheques receivables
Doubtful receivables
Less: Provision for doubtful receivables
Less: Unearned credit income
2005
439,722
1,070,872
174,462
16,437
2004
451,511
781,984
146,364
26,061
1,701,493
1,405,920
(9,598)
(91,806)
(25,390)
(69,630)
1,600,089
1,310,900
17,973
804
1,141
986
18,777
2,127
356,005
1,687
(5,260)
410,917
1,929
(5,527)
352,432
407,319
2005
2004
-
83
2005
2004
208
140
2,128
6,217
348
8,345
2005
118
22
-
2004
2,250
2,221
1,746
140
6,217
Long-term trade receivables:
Trade receivables
Deposits and guarantees given
Short-term trade payables:
Trade payables
Deposits and guarantees received
Unearned credit finance charges
NOTE 8 - LEASE RECEIVABLES AND PAYABLES
(a) Finance lease receivables
Short-term finance lease receivables
(b) Finance lease payables
Short-term finance lease payables
Long-term finance lease payables
The redemption schedules of long-term finance lease payables are as follows:
2007
2008
2009
NOTE 9 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
Amounts due from and due to related parties at year-ends and a summary of major transactions with related parties during the year are as follows:
(i) Balances with related parties
(a) Due from related parties
Ram D›fl Ticaret A.fi.
Akpa Dayan›kl› Tüketim (*)
Türk Demir Döküm Fabrikalar› A.fi.
Other
Due from personnel
2005
65,933
19,014
16,829
19,136
120,912
2004
53,578
7,744
26,007
14,403
101,732
356
121,268
506
102,238
(*) Bursa Gaz ve Tic. A.fi. continues its operations in the name of Akpa Dayan›kl› Tüketim LPG ve Akaryak›t Ürünleri Pazarlama A.fi. ("Akpa Dayan›kl› Tüketim").
(b) Due to related parties
Beko Elektronik A.fi.
Arçelik LG Klima Sanayi ve Ticaret A.fi.
Koç Faktoring Hizmetleri A.fi.
Beko Ticaret A.fi.
Döktafl A.fi.
Kofisa S.A.
Ram Pasific Ltd.
Other
Due to personnel
Less: Unearned credit finance charged to related parties
2005
308,629
82,558
79,653
23,536
14,607
10,877
9,180
8,936
6,269
20,250
564,495
2004
232,602
36,968
151,368
20,769
10,838
6,718
29,719
694
1,183
17,340
508,199
14,060
(24,099)
554,456
16,124
(6,377)
517,946
2005
2004
54,736
666
75,927
4,959
124
55,526
80,886
2005
156,719
68,558
27,631
25,864
278,772
2004
167,564
43,616
6,298
17,458
234,936
(c) Deposits
Koçbank A.fi.
- time deposits
- demand deposits
Yap› ve Kredi Bankas› A.fi.
- demand deposits
(ii) Transactions with related parties
(a) Sales
Akpa Dayan›kl› Tüketim
Kofisa S.A.
Other
82
83
(b) Purchases
Kofisa S.A.
Beko Ticaret A.fi.
Döktafl A.fi.
Ram Pacific Ltd.
Ram Sigorta Arac›l›k Hizmetleri A.fi.
‹zocam Ticaret ve Sanayi A.fi.
Palmira Turizm Ticaret A.fi.
Other
Less: Credit finance charges to related parties (Note 39)
2005
717,014
380,413
194,255
86,579
65,721
54,090
53,373
20,169
13,930
12,391
10,022
52,153
2004
681,009
571,318
142,367
116,955
55,512
51,410
48,984
15,122
13,257
54,467
1,660,110
1,750,401
(26,647)
(31,091)
1,633,463
1,719,310
2005
(30,681)
7,165
9,457
391
(42)
644
2004
2,308
3,738
3,442
(2,232)
(1,334)
-
(13,066)
5,922
2005
231,389
13,873
2,726
411
158
2,421
2004
2,454
20,226
1,669
1,033
115
4,699
2005
43,397
12,297
2004
40,281
11,093
55,694
51,374
2005
10,676
2004
12,196
10,676
12,196
(c) Income/(loss) from investments in associated companies, net
Koç Tüketici Finansman› ve Kart Hizmetleri A.fi.
Tan› Pazarlama ve ‹letiflim Hizmetleri A.fi.
Ram Pacific Ltd
(d) Other transactions with related parties
Dividends paid
Interest income
Technical service assistance income
Dividends income
Rent income
Other income
NOTE 10 - OTHER RECEIVABLES AND PAYABLES
Other short-term financial liabilities
Taxes and duties payable
Rescheduled taxes payable
Other long-term financial liabilities
Rescheduled taxes payable
NOTE 11 - BIOLOGICAL ASSETS
There is no biological asset in the operations of the Group.
NOTE 12 - INVENTORIES
Raw materials and supplies
Semi-finished goods
Finished goods
Merchandises
Goods-in-transit
Less: Provision for slow-moving and obsolete inventories
2005
202,433
20,728
127,703
146,998
127,064
2004
186,445
24,420
165,300
161,877
194,628
624,926
732,670
(5,652)
(5,475)
619,274
727,195
2005
210
(12,033)
(11,823)
2004
780
(33,622)
(32,842)
NOTE 13 - CONSTRUCTION CONTRACT RECEIVABLES AND PROGRESS BILLINGS
The Group has no construction contract receivables or progress billings.
NOTE 14 - DEFERRED TAX ASSETS AND LIABILITIES
Deferred taxes
Deferred tax assets
Deferred tax liabilities - net
The Company recognises deferred tax assets and liabilities based upon temporary differences arising between their financial statements prepared in accordance with CMB
Accounting Standards and their statutory financial statements.
Tax rates used for calculation of deferred tax assets and liabilities based on temporary differences expected to be realised or settled based on the taxable income in coming
years under the liability method are 30%, 16%, 30% and 19% for Turkey, Romania, the United Kingdom and Poland, respectively.
The breakdowns of cumulative temporary differences and the resulting deferred tax assets/(liabilities) provided at 31 December using the enacted tax rates are as follows:
Cumulative temporary
differences
2005
2004
Net difference between the tax base and carrying amount of property
plant and equipment and intangible assets
Provision for warranties and assembly
Portion of allowance for unearned credit finance income and
expense that is currently non-tax deductible/taxable
Provision for employment termination benefits
Unused tax credits
Other provisions
Deferred tax liabilities - net
Deferred tax
assets/(liabilities)
2005
2004
274,933
(119,394)
302,379
(79,185)
(79,313)
34,956
(86,736)
23,608
(60,955)
(42,966)
(4,053)
(5,279)
(57,338)
(38,439)
(7,125)
(910)
18,287
12,889
649
709
17,201
11,532
1,261
292
(11,823)
(32,842)
84
85
NOTE 15 - OTHER CURRENT/NON CURRENT ASSETS AND LIABILITIES
Value Added Tax (VAT) receivable
Taxes and funds deductible
Prepaid expenses
Assets held for sale
Other
2005
22,739
20,288
5,481
3,175
1,348
2004
24,323
28,439
6,191
8,354
1,552
53,031
68,859
2005
81,130
22,782
14,220
12,995
8,319
3,112
22,172
2004
81,348
14,661
14,841
18,021
10,029
6,503
16,700
164,730
162,103
2005
50,962
1,889
792
2004
32,009
1,908
2,416
53,643
36,333
2005
464,853
55,802
137,958
2004
123,586
17,524
134,952
658,613
276,062
Other current liabilities
Warranty provision
Assembly provision
Deferred income
Accrual for marketing and sales expenses
Transportation expenses provision
Accrual for bonuses and premiums
Other
Other non- current liabilities
Warranty provision
Deferred income
Other
NOTE 16 - FINANCIAL ASSETS
Available-for-sale investments
Held-to-maturity investments
Investments in associated companies
i. Available-for-sale investments:
2005
Koç Finansal Hizmetler A.fi.
Entek Elektrik A.fi.
Beko S.A. Hungarian (*)
Arcelitalia (*)
Beko S.A. Czech Republic (*)
Tat Konserve Sanayii A.fi.
Eco Systems
ArticPro SRL
Çerkezköy Enerji A.fi.
Arctic Service (*)
Archin Limited (*)
Basic International Investment Ltd. (**)
Srccb SA
Idea A.fi.
Banca Internationala a Religiflor
Ubicom Inc.
%
6.96
6.86
100.00
100.00
100.00
0.34
2.00
0.99
0.00
100.00
99.99
20.00
8.30
2.67
0.80
0.02
2004
TRY
448,270
15,782
410
191
95
71
32
1
1
-
%
6.96
6.86
100.00
0.34
0.99
0.04
100.00
99.99
20.00
8.30
2.67
0.80
0.02
TRY
102,752
20,040
191
192
1
1
23
386
-
464,853
123,586
(*) Available-for-sale investments, in which Arçelik and its Subsidiaries have ownership interests over 20% and which are immaterial, are carried at cost, less any
provision for impairment.
(**) Available-for-sale investments, in which Arçelik and its Subsidiaries have ownership interest of 20% and which the Group does not exercise a significant influence over,
are carried at cost, less any provision for impairment.
Impairment loss provision for available-for-sale investments amount to TRY 70,942 (31 December 2004: TRY 70,923 ) at 31 December 2005.
The unrealised gains (net) arising from changes in the fair value of investments in Koç Finansal Hizmetler A.fi., Entek Elektrik A.fi. and Tat Konserve Sanayi A.fi. amounting
to TRY 227,849 are recognised in equity under "financial assets fair value reserve".
ii. Held-to-maturity investments:
Time deposits
Eurobonds
Government bonds
2005
39,025
16,777
-
2004
16,780
744
55,802
17,524
Interest rate for time deposits held at 31 December 2005 is 8.00%. Interest rate for Eurobonds held at 31 December 2005 is 9.88% (31 December 2004: 9.88%). Interest
rate for government bonds held at 31 December 2004 is 21.20%- 24.25%.
iii. Investments in associated companies
The respective shares of the Company and its Subsidiaries in investments in associated companies at 31 December are as follows:
2005
Koç Tüketici Finansman› ve Kart Hizmetleri A.fi.
Tan› Pazarlama ve ‹letiflim Hizmetleri A.fi.
Ram Pacific Ltd.
%
22.36
45.00
39.50
32.00
26.75
25.00
2004
TRY
60,857
38,964
31,892
3,011
1,862
1,372
137,958
%
22.36
45.00
39.50
32.00
26.75
25.00
TRY
75,265
31,799
22,435
3,053
1,471
929
134,952
Portion of current year change in associates amounting to TRY 5,274 is accounted in financial assets fair value reserve in consolidated statement of shareholders’ equity.
86
87
NOTE 17 - GOODWILL/NEGATIVE GOODWILL
Transfers
(11,530)
3,180
Currency
translation
difference
(250)
81
31 December
2005
79,010
(39,742)
-
(8,350)
(169)
39,268
-
7,783
(3,308)
-
-
-
(4,475)
-
4,475
-
-
-
43,312
-
1 January
2005
90,790
(43,003)
Additions
-
Disposals
-
Net book value
47,787
-
Negative goodwill
Accumulated amortisation
(7,783)
3,308
Net book value
Total net book value
Goodwill
39,268
Previously recognised negative goodwill with carrying value of TRY 4,475 as of 1 January 2005 resulting from acquisition of Blomberg Vertrieb has been derecognised from
financial statements at the beginning of the period in accordance with IFRS 3 with a corresponding adjustment to the opening balance of retained earnings (Note 3).
Assets with a carrying value of TRY 8,350 were transferred from "Goodwill/Negative Goodwill" to "Intangible Assets" (Note 20).
NOTE 18 - INVESTMENT PROPERTY
The Group has no investment property.
NOTE 19 - PROPERTY, PLANT AND EQUIPMENT
Cost
Land
Land improvement
Buildings
Motor vehicles, furniture and fixtures
Leasehold improvements
Accumulated Depreciation
Land improvement
Buildings
Motor vehicles, furniture and fixtures
Leasehold improvements
Construction in progress
Advances given
Net book value
Transfers
Currency
translation
difference
Disposal from
scope of
consolidation
31 December
2005
(213)
(19)
(1,445)
(39,852)
(10,525)
-
(2,826)
17
(15,216)
(16,663)
31,921
20
(257)
(24)
(4,933)
(5,314)
(3,348)
(71)
(188)
(66)
-
13,813
17,205
235,445
1,667,988
154,304
31,798
143,332
(52,054)
(2,747)
(13,947)
(254)
2,120,553
(6,925)
(109,919)
(1,193,272)
(96,850)
(6,950)
(639)
(9,335)
(121,759)
(11,462)
(2,686)
11
916
37,857
10,164
-
200
15,357
28,224
(23,990)
(20)
44
3,143
3,141
2,545
13
77
41
-
(7,309)
(99,838)
(1,245,732)
(119,552)
(9,643)
(1,413,916)
(145,881)
48,948
19,771
8,886
118
(1,482,074)
9,609
382
59,376
7,853
(2,966)
(3,930)
(20,199)
-
(146)
-
(166)
-
45,508
4,305
642,298
64,680
(10,002)
(3,175)
(5,207)
(302)
688,292
1 January
2005
Additions
Disposals
16,817
16,479
253,522
1,614,812
127,360
17,233
292
752
3,517
115,193
8,962
14,616
2,046,223
Mortgages on property, plant and equipment amount to TRY 15,874 at 31 December 2005 (31 December 2004: TRY 18,317).
A building with the cost of TRY 18,731 and accumulated depreciation of TRY 15,556 was transferred to "Other Current Assets" from buildings under the property, plant,
equipment with a net value of TRY 3,175.
Disposal from scope of consolidation is due to the sale of Artesis.
NOTE 20 - INTANGIBLE ASSETS
Cost
Rights
Other intangible assets
Rights
Other intangible assets
Net book value
Transfers
Currency
translation
difference
Disposal from
scope of
consolidation
31 December
2005
(2,740)
(125)
11,873
(343)
(2,621)
(175)
(3,168)
-
88,473
1,036
40,316
(2,865)
11,530
(2,796)
(3,168)
89,509
(31,333)
(1,514)
(3,793)
(135)
2,749
106
(3,307)
127
1,088
182
2,894
-
(31,702)
(1,234)
(32,847)
(3,928)
2,855
(3,180)
1,270
2,894
(32,936)
13,645
36,388
(10)
8,350
(1,526)
(274)
56,573
1 January
2005
Additions
Disposals
44,813
1,679
40,316
-
46,492
TRY 38,210 of additions results from the acquisition of Beko After Sales Service Organisation.
Transfers to rights at a cost of TRY 11,530 and accumulated amortisation of TRY 3,180 are from "Goodwill" (Note 17).
Disposal from scope of consolidation is due to the sale of Artesis.
NOTE 21 - ADVANCES RECEIVED
Order advances received
Other advances received
2005
195,148
281
2004
192,402
232
195,429
192,634
2005
3,809
2004
-
2005
43,849
2004
39,502
NOTE 22 - RETIREMENT PLANS
There is no liability for retirement plans in the consolidated balance sheet.
NOTE 23 - PROVISIONS
a) Short-term provisions
Tax provision (Note 41)
b) Long-term provisions
Provision for employment termination benefits
There are no agreements for pension commitments other than the legal requirement as explained below.
Under the Turkish Labour Law, the Company and its Turkish Subsidiaries and Associates are required to pay termination benefits to each employee who has completed one
year of service and whose employment is terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service and reaches
the retirement age (58 for women and 60 for men). Since the legislation was changed on 8 September 1999, there are certain transitional provisions relating to length of
service prior to retirement.
The amount payable consists of one month’s salary limited to a maximum of TRY 1,72715 (31 December 2004: TRY 1,57474) for each period of service at 31 December
2005.
The liability is not funded, as there is no funding requirement.
The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of employees.
88
89
IAS 19 ("Employee Benefits") requires actuarial valuation methods to be developed to estimate the enterprise’s obligation under defined benefit plans. Accordingly the
following actuarial assumptions were used in the calculation of the total liability:
2005
5.49
99
Discount rate (%)
Turnover rate to estimate the probability of retirement (%)
2004
5.45
99
The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus, the discount rate applied represents the expected real
rate after adjusting for the anticipated effects of future inflation. As the maximum liability is revised semi-annually, the maximum amount of TRY 1,77062 (1 January 2005:
TRY 1,64890) which is effective from 1 January 2006 has been taken into consideration in calculating the reserve for employment termination benefit of the Company and its
Turkish Subsidiaries and Associates.
Movements in the provision for employment termination benefits are as follows:
Balance at the beginning of the year
Increase in the year
Payments during the year
Disposal from scope of consolidation (Artesis)
Monetary gain
2005
39,502
11,771
(7,357)
(67)
-
2004
39,179
10,370
(5,287)
(4,760)
Balance at the end of the year
43,849
39,502
Balance at the beginning of the year
2005
22,019
2004
20,367
Dividend payments
Decrease in minority interest due to sale of Subsidiary (Artesis)
Decrease in minority interest due to acquisition of Subsidiary (Arctic)
Currency translation differences
Net income attributable to minority interest
(2,213)
(547)
(1,579)
(2,384)
6,541
(2,454)
(1,495)
5,601
Balance at the end of the year
21,837
22,019
2005
500,000
399,960
2004
500,000
399,960
NOTE 24 - MINORITY INTEREST
Changes in minority interest during the year are as follows:
NOTE 25 - SHARE CAPITAL/ADJUSTMENT TO SHARE CAPITAL
The Company adopted the registered share capital system available to companies registered with the CMB.
The Company’s historical registered and authorised and paid-in share capital at 31 December are as follows:
Limit on registered share capital
Authorised and paid-in share capital
At 31 December the shareholding structure can be summarised as follows:
2005
Shareholders
Koç Holding
Teknosan A.fi.
Koç Family
Burla Ticaret ve Yat›r›m A.fi.
Koç Holding Emekli ve Yard›m Sand›¤› Vakf›
Other
Total
Adjustment to share capital
Total paid-in share capital
2004
% Share
39.14
14.68
9.81
7.66
4.50
24.21
Amount
156,546
58,709
39,252
30,649
17,982
96,822
% Share
39.14
14.68
10.25
7.66
4.50
23.77
Amount
156,546
58,709
41,001
30,649
17,982
95,073
100.00
399,960
100.00
399,960
468,811
468,811
868,771
868,771
NOTE 26 - 27 - 28 CAPITAL RESERVES, PROFIT RESERVES, RETAINED EARNINGS
Retained earnings as per the statutory financial statements, other than legal reserve requirements, are available for distribution subject to the legal reserve requirement
referred to below.
The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code ("TCC"). The TCC stipulates that the first legal reserve
is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the Group’s paid-in share capital. The second legal reserve is
appropriated at the rate of 10% per annum of all cash distributions in excess of 5% of the paid-in share capital. Under the TCC, the legal reserves can only be used to offset
losses and are not available for any other usage unless they exceed 50% of paid-in share capital.
Quoted companies are subject to dividend requirements regulated by the CMB as follows:
In accordance with the Communiqué No: XI-25 Section 15 paragraph 399, the accumulated deficit amounts arising from the first application of inflation adjustment, in line
with CMB’s profit distribution regulations, are considered to be deductive when computing the distributable profit. The amounts presented as accumulated deficit shall be
netted-off first from net income and retained earnings, if possible and then the remaining amount of deficit shall be netted-off from extraordinary reserves, legal reserves and
inflation adjustment to shareholders’ equity.
Effective from 1 January 2004, the IFRS net income computed in accordance with Communiqué No: XI-25 must be distributed in the ratio of a minimum of 30% of total
distributable profit. This distribution may be made either as cash, as pro-rata shares or as a combination of both, in accordance with the decisions taken in general
assemblies.
The Company distributed dividends of TRY 229,177 from prior periods income and extraordinary reserves during the year 2005.
For the purposes of profit distribution in accordance with related CMB regulations, items of statutory shareholders’ equity such as share capital, share premium, legal
reserves, other reserves, special reserves and extraordinary reserves, are presented at their historical amounts. The difference between the inflated and historical amounts of
these items is presented as inflation adjustment to shareholders’ equity.
Inflation adjustment to shareholders’ equity shall only be netted-off against prior years’ losses and used as an internal source in capital increase where extraordinary
reserves can be netted-off against prior years’ losses or used in distribution of bonus shares and distributions of dividends to shareholders. In accordance with the
Communiqué No: XI-25, at 31 December the shareholders’ equity schedule, is as follows:
2005
399,960
31,359
748,984
245,673
312,153
19,101
256,707
(26,881)
2004
399,960
748,984
12,550
290,207
(15,045)
256,707
(14,198)
1,987,056
1,679,165
Nominal value
399,960
-
Restated
amounts
868,771
280,173
Inflation Adjustment
to Shareholders’
Equity
468,811
280,173
399,960
1,148,944
748,984
Paid-up capital
Legal reserves
Extraordinary reserves
Share premium
Inflation adjustment to shareholders’ equity
Financial assets fair value reserve
Net income
Prior years’ income/(losses)
Share premium arising from the fair value of the acquired assets and liabilities
Translation reserve
Total shareholders’ equity
Details of the inflation adjustment to shareholders’ equity as of 31 December are as follows:
Share capital
Offsetting difference (*)
(*) Inflation adjustment to shareholders’ equity amounting to TRY 280,173 which is the remaining balance of equity accounts have been zeroed by offsetting as shown in
the inflation adjustment to shareholders’ equity account.
90
91
NOTE 29 - FOREIGN CURRENCY POSITION
Assets and liabilities denominated in foreign currency at 31 December are as follows:
Assets
Liabilities
Off-balance sheet liabilities
2005
873,507
(900,551)
-
2004
813,610
(779,100)
(38,096)
Net foreign currency position
(27,044)
(3,586)
TRY equivalents of assets and liabilities denominated in foreign currency at 31 December 2005 are as follows:
31 December 2005
Current assets:
Inventories (net)
EUR
USD
GBP
Other
Total
118,871
206,588
78,710
53,399
12,807
15,645
26,198
1,716
24
39,816
67,247
16,106
67,233
27
10,978
57,611
418
36,862
6,460
185,310
357,644
96,950
157,494
19,318
779
-
55,802
-
-
210
-
779
55,802
210
-
471,154
99,385
190,429
112,539
873,507
Current liabilities:
Advances received
Provisions
3,175
37,483
2,205
78,486
126,564
623
36,923
34,422
13,445
8
2,206
4
13,274
138
6,244
3,601
39,470
9
503
42,815
70
811
7,520
5,858
1
158
10,973
3,179
85,179
208
9,260
103,052
171,900
10
1,284
92,917
Non-current liabilities:
Provisions
300,090
884
792
52,573
-
65,984
126
256
-
14
4,546
8
1,123
7,166
418,647
140
4,546
892
1,379
7,958
587,225
102,654
172,424
38,248
900,551
-
-
-
-
-
(116,071)
(3,269)
18,005
74,291
(27,044)
Non-current assets:
Deferred tax assets
Total assets
Total liabilities
Net position
The net foreign currency position of the Group as of 31 December 2005 is negative TRY 27,044 equivalent to EUR 17,035,591.
TRY equivalents of assets and liabilities denominated in foreign currency at 31 December 2004 are as follows:
31 December 2004
Current assets:
Inventories (net)
EUR
USD
GBP
Other
Total
82,743
313,865
901
126
58,186
7,905
9,099
20,724
2,709
8
25,859
85,509
29,492
76
57,326
696
9,326
58,424
5
168
30,537
992
127,027
478,522
33,107
370
146,049
9,601
1,646
-
16,508
-
323
-
457
-
1,646
16,508
780
-
465,372
49,048
199,281
99,909
813,610
Current liabilities:
Advances received
Provisions
3,657
43,414
1,867
2,010
114,147
154,462
87
2,054
37,459
41,073
17,219
2
941
3,343
11,734
146
11,281
4,944
22,061
2,260
50,702
115
1,018
6,476
336
4
1,914
9,414
7,000
96,221
2,128
14,309
142,786
176,861
91
6,228
98,516
Non-current liabilities:
Provisions
114,797
5,923
995
1,758
33,361
-
61,662
294
1
6,050
3,518
6,601
209,820
6,217
6,050
995
3,518
8,360
Total liabilities
482,630
92,596
168,428
35,446
779,100
(37,750)
-
-
(346)
(38,096)
Net position
(55,008)
(43,548)
30,853
64,117
(3,586)
Non-current assets:
Deferred tax assets
Total assets
The net foreign currency position of the Company as of 31 December 2004 is negative TRY 3,586 equivalent to EUR 1,962,390.
92
93
NOTE 30 - GOVERNMENT GRANTS
The Company has obtained investment incentive certificates from the Turkish government authorities in connection with certain major capital expenditures, which entitle the
Company, among other things to:
a) 100% exemption from customs duty on machinery and equipment to be imported;
b) Value Added Tax exemption with respect to purchases of investment goods both from domestic and export markets;
c) Exemption of tax and funds (for the incentives 67302, 67303, 72396);
d) A 100% investment allowance for purchases of assets and construction costs for investments; 67302 and 67303; 40% investment allowance for investments; 72396,
74349, 74387, 74408, 74840, 75810, 75864, 76568;
e) Investment incentive amounting to 40% of the investment expenditures related to tangible and intangible assets for the year 2005 exceeding TRY 10 made after 24 April
2003 (Note 41),
f) 40% of the research and development expenditures (Note 41).
The 100% investment allowance indicated in (d) above is deductible from current or future taxable profits for the purposes of corporation tax. However, such investment
allowances are subject to withholding tax. For 40% investment allowances there is no such withholding taxation.
Total investments subject to investment allowances amount to TRY 107,114 in 2005. Total research and development expenditures subject to allowances amount to TRY
32,764 in 2005.
NOTE 31 - PROVISIONS, COMMITMENTS AND CONTINGENT LIABILITIES
Provisions
Provisions in consolidated financial statements are disclosed in Notes 15 and 23.
Commitments and contingent liabilities
a) Guarantees and commitments given are as follows at 31 December
Collateral obtained
Guarantee notes given
Pledges given
Forward commitments
Other guarantees
Capital commitments
2005
1,074,657
41,657
13,137
4,280
185
-
2004
846,275
16,935
17,962
4,436
1,000
17
b) In connection with the Inward Processing Permission Certificates, the Company committed to realise export sales amounting to USD 1,414,925,057 (31 December 2004:
USD 718,147,580) at 31 December 2005.
c) The export commitments in scope of the Investment Incentive Certificates at 31 December 2005 amount to USD 21,000 (31 December 2004: USD 21,000).
d) In connection with the Investment Incentives Certificates, the Company committed to realise a capital increase amounting to TRY 102,103 at 31 December 2005
(31 December 2004: TRY 113,006) at 31 December 2005.
NOTE 32 - BUSINESS COMBINATIONS
There are no business combinations in 2005 and 2004.
NOTE 33- SEGMENT REPORTING
Primary reporting format - Business segment
The Group is engaged in the production and sale of electrical and manual household appliances. Since the products that the Group produces are not subject to different
risks and returns, no distinguishable business segment is identified.
Secondary reporting format - Geographical segment
The Group’s geographical segments are organised as Turkey and Europe. Turkey, where the domestic activities are performed, is the home country of the parent company,
Arçelik, which is also the main operating company.
Segment sales
Turkey
Europe
Other
Segment assets
Turkey
Europe
Other
Segment capital expenditures
Turkey
Europe
Other
2005
3,101,751
1,744,266
256,890
2004
2,770,173
1,876,314
260,348
5,102,907
4,906,835
2005
3,565,009
511,323
46,254
2004
2,901,706
583,051
-
4,122,586
3,484,757
2005
188,536
23,646
38,695
2004
169,290
22,815
-
250,877
192,105
Segment revenue from external customers by geographical area is reported based on the geographical location of its customers. The total carrying amount of segment assets
is reported based on the location of assets.
94
95
NOTE 34 - SUBSEQUENT EVENTS
In the Board of Directors meeting held dated 21 January 2006, it has been resolved to register the share pledges in favour of J.P. Morgan Europe Limited on shares with
nominal value TRY 156,546 by shareholder, Koç Holding A.fi., within the framework of the Secured Term Facility Agreement dated 21 January 2006 executed between Koç
Holding A.fi. as borrower and J.P. Morgan Europe Limited as Agent, Security Trustee and Calculation Agent and J.P. Morgan Chase Bank N.A. as Original Bank and as per
the share pledge agreement dated 21 January 2006 entered into between shareholder Koç Holding A.fi. as pledgor and J.P. Morgan Europe Limited as pledgee, with the
shareholders’ ledger of the Company.
NOTE 35 - DISCONTINUED OPERATIONS
The Group has no discontinuing operations as of 31 December 2005.
NOTE 36 - OPERATING INCOME
2005
3,243,902
2,188,853
2004
2,893,382
2,314,409
5,432,755
5,207,791
(329,848)
(300,956)
5,102,907
4,906,835
2005
(48,039)
(607,541)
(224,903)
2004
(46,336)
(549,236)
(241,075)
(880,483)
(836,647)
2005
2004
10,255
6,324
2,810
982
411
334
6,116
6,980
1,779
1,517
1,201
1,033
915
36,305
5,834
9,785
Other income and profit
27,232
65,349
Other expenses
Provision expenses
Restructuring expenses
Loss from fixed asset sales
Amortisation of goodwill
Other
(10,603)
(2,301)
(1,226)
(3,259)
(18,972)
(3,299)
(6,071)
(8,673)
(8,649)
(17,389)
(45,664)
Domestic sales
Foreign sales
Gross sales
Less: Discounts
Net sales
NOTE 37 - OPERATING EXPENSES
Research and development expenses
Selling and marketing expenses
General administrative expenses
Operating expenses
NOTE 38 - OTHER INCOME/EXPENSES AND PROFIT / LOSSES
The other income and expenses for the periods ended 31 December are as follows:
Other income
Reversal of provisions
Indemnities and incentives
Service income
Rent income
Dividend income
Income from fixed asset sales
Excess of negative goodwill in the fair value of identified non-monetary assets acquired
Amortisation of negative goodwill
Other
Other expenses and losses
NOTE 39 - FINANCIAL INCOME/EXPENSES
The financial income and expenses for the periods ended 31 December are as follows:
Credit finance income
Foreign exchange gains
Interest income from bank deposits and loan to banks secured
with government bonds and treasury bills
Other
Financial income
Foreign exchange losses
Credit finance charges
Interest on borrowings
Cash discounts expenses
Other
Financial expenses
Financial income/(expenses), net
2005
110,747
83,065
2004
104,362
51,923
23,195
2,427
53,419
5,139
219,434
214,843
(79,252)
(67,036)
(44,697)
(18,448)
(1,268)
(47,770)
(53,316)
(21,985)
(18,599)
(5,051)
(210,701)
(146,721)
8,733
68,122
NOTE 40 - NET MONETARY POSITION GAIN/LOSSES
On 17 March 2005, the CMB has announced that the application of inflation accounting is no longer required for the companies operating in Turkey effective from 1 January
2005 (Note 2).
Consequently, inflation accounting was not applied for the period beginning on or after 1 January 2005, therefore there is no gain/loss on net monetary position for the year
ended 2005.
NOTE 41 - TAXES ON INCOME
Corporation and income taxes
Less: prepaid tax
2005
108,229
(104,420)
2004
107,902
(128,914)
Taxes payable/(receivable), net
3,809
(21,012)
11,823
32,842
15,632
11,830
Deferred tax liabilities, net
Turkish tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provisions for taxes, as reflected in the consolidated
financial statements, have been calculated on a separate-entity basis.
Corporation tax rate of the fiscal year 2005 is 30%. Corporation tax is payable at a rate of 30% on the total income of the Company after adjusting for certain disallowable
expenses, exempt income (like participation exemption) and allowances (like investment allowance, research and development expenditures deduction). No further tax is
payable unless the profit is distributed.
96
97
In accordance with Tax Law No.5024 "Law Related to Changes in Tax Procedure Law, Income Tax Law and Corporate Tax Law" published in the Official Gazette on 30
December 2003 to amend the tax base for non-monetary assets and liabilities, effective from 1 January 2004, income and corporate taxpayers will prepare the statutory
financial statements by adjusting the non-monetary assets and liabilities for the changes in the general purchasing power of the Turkish lira. Corporate taxpayers are obliged
to prepare the opening balance sheets restated for inflation at 31 December 2003. Corporate taxpayers, who are required to follow the inflation accounting principles in
accordance with the aforementioned Communiqué, are obliged only to restate their balance sheets for the periods ended after 1 January 2004. The Company has not applied
restatement for inflation in its statutory financial statements as of 31 December 2005 in accordance with Tax Procedure Law since the due requirements of restatement for
inflation have not been materialised.
Dividends paid to non-resident corporations, which have a place of business in Turkey, or resident corporations are not subject to withholding tax. Otherwise, dividends paid
are subject to withholding tax at the rate of 10%. An increase in capital via issuing bonus shares is not considered as a profit distribution and thus does not incur
withholding tax.
Corporations are required to pay advance corporation tax quarterly at the rate of 30% on their corporate income. Advance tax is declared by 10th and payable by the 17th of
the second month following each calendar quarter end. Advance tax paid by corporations is credited against the annual corporation tax liability. The balance of the advance
tax paid may be refunded or offset against other liabilities to the government.
The exception for participation share and property sales profit which took part in Corporation Tax Law temporary articles 28 and 29 has been ended as of 31 December
2004. However, this arrangement has been added to Corporation Tax Law article 8 as permanent exception with Law No. 5281 dating from 1 January 2005. Calculated
investment allowance deduction right is transferred to the future periods in case that corporate income is not sufficient to use this right in the current period.
According to this, profit of corporations’ participation shares and property sales which have taken part in assets at least for two years -dependent on corporation capital
addition commitment in definite conditions- will be exempted from corporation tax. The two year commitment will not be required when debtors of the banks and their
guarantors transfer their property and participation shares as a compensation for debt.
On the other hand, in parallel with the change in Corporation Tax Law, Value Added Tax exception previously regulated in Value Added Tax Law temporary article 10 and
applied in parallel with the exemption in Corporation Tax Law has been amended and the property sale and Value Added Tax exemption application has become permanent.
Furthermore, title deed and cadastral fees exception was applied in transactions that are subject to property sales profit exception in Corporation Tax Law temporary article
28 and 29/6 but ended in 31 December 2004. However since there is no regulation on this subject, property sales will be subject to a title deed fee in general.
Capital expenditures, with some exceptions, over TRY 10 are eligible for investment incentive allowance of 40%, which is deductible from taxable income prior to
calculation of the corporate income tax, without the requirement of an investment incentive certificate, and the amount of allowance is not subject to withholding tax.
Investment allowances utilised within the scope of investment incentive certificates granted prior to 24 April 2003 are subject to withholding tax at the rate of 19.8%,
irrespective of profit distribution.
In accordance with the Tax Law 5228 item 28.9 dated 16 July 2004, 40% of the research and development expenditures on technology and knowledge research made by the
Company itself with effect from 31 July 2004 are exempted from corporate tax. Such exemptions are not subject to withholding taxes.
For the properties that are depreciated more than normal because of forcedly usage, "Extraordinary Economical and Technical Depreciation Ratios" are used. For the
properties that are demanded for extraordinary depreciation, which are used for between 3001 hours and 4800 hours in a year, addition to the ratio of declining balances
method is the 25% of the normal depreciation. For the assets used for more than 4800 hours, the addition to the ratio of declining balances method is 30% of the normal
depreciation.
Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable income for up to 5 years. Tax losses cannot be carried back to offset
profits from previous periods.
In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within the 15th of the fourth month following the
close of the financial year to which they relate. Tax returns are open for 5 years from the beginning of the year that follows the date of filing, during which time the tax
authorities have the right to audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based on their findings.
The taxes on income for the periods ended 31 December, are summarised as follows:
2005
2004
Taxes on income
- Current
- Deferred
(115,945)
20,996
(114,446)
(5,467)
Taxes on income
(94,949)
(119,913)
2005
312,153
2004
290,207
399,960,000
399,960,000
0.780
0.726
NOTE 42 - EARNINGS PER SHARE
The earnings per share for each year are as follows:
Net profit for the year
Weighted average number of ordinary
shares with nominal value of TRY 1 each
Earnings per share (TRY)
NOT 43 - SUPPLEMENTARY OF CASH FLOW INFORMATION
"Changes in reserves and provisions" and "changes in operating assets and liabilities" shown in consolidated statements of cash flows for the year ended 31 December are
detailed as follows:
Changes in reserves and provisions
Deferred taxation
Warranty provision
Assembly provision and transportation expenses provision
Provision for employment termination benefit
Provision for redundancy
Accrual for bonuses and premiums
Accrual for marketing and sales expenses
Changes in operating assets and liabilities
Marketable securities
Trade receivables and due from related parties
Inventories
Financial assets
Other current assets and liabilities
Other non-current assets and liabilities
Trade payables and due to related parties
2005
2004
(21,019)
(18,735)
(6,411)
4,347
(547)
3,391
5,026
5,467
28,555
14,002
323
(14,595)
(1,851)
1,525
(33,948)
33,426
7,643
(325,072)
107,570
(38,406)
36,275
9,786
(18,299)
(8,599)
(235,448)
(252,746)
4,480
75,466
835
226,492
(220,503)
(189,520)
98
99
NOTE 44 - DISCLOSURE OF OTHER MATTERS
None.
NOTE 45 - DATE OF AUTHORISATION FOR ISSUE
The consolidated financial statements as at and for the year ended 31 December 2005 have been approved for issue by the Board of Directors on 3 March 2006 and signed
by Fatih Kemal Ebiçlio¤lu, Finance and Accounting Assistant General Manager and by Ali Tayyar, Accounting Director.
INTERNATIONAL SYSTEM STANDARDS
COMPLIANCE CERTIFICATES
ISO 9001:2000 TSE
ISO 14001:2004 SGS
ISO 17025:2000 TÜV-Mikes
PRODUCT STANDARD
COMPLIANCE CERTIFICATES
TSE - Turkey
CE - European Union
TÜV, VDE - Germany
BEAB - United Kingdom
ROSTEST - Russia
UL - USA
SEMKO - Sweden
IRAM - Argentina
KSS - Kuwait
SASO - Saudi Arabia
ISCIR, ICPE - Romania
CCIB - China
KETI - South Korea
PKN, PREDOM - Poland
AFNOR - France
AGA, AS - Australia
ÖVGW - Austria
CSA - Canada
UkrSEPRO - Ukraine
Finar Corporate Communications © 2006 + 90 0212 259 43 11
ARÇEL‹K A.fi.
Karaa¤aç Caddesi, No. 2-6, Sütlüce, Beyo¤lu, 34445 ‹stanbul, Turkey
Phone: +90 212 314 34 34 Fax: +90 212 314 34 63
www.arcelikas.com

ARCELIK-AR-05-MATBAA ING.fh9

Transcription

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