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Viking Kağıt
Annual Report 2010
Content
1
About Viking Kağıt
2 Viking Kağıt in Brief
4 Viking Kağıt by Numbers
6
Chairperson’s Message
8Management
8 Board of Directors
9 Senior Management and Board of Auditors
10 In 2010
10 Macroeconomic and Sectoral Overview
12 Assessment of 2010 Activities
20 Environment and Sustainability
22
Corporate Governance and Financial Information
23 Agenda of the Annual General Assembly Meeting
24 Corporate Governance Principles Compliance Report
31 Statutory Auditors’ Report
32 Independent Auditor’s Report
84 Information for Investors
In both categories, Viking Kağıt seeks to maximize its
fulfillment of consumers’ and customers’ expectations
with differentiated products that exactly satisfy their
needs.
Management
In 2010
In the tissue paper sector, Viking Kağıt supplies
• “Consumer Products” under the Lily and Senso brand names
• “Away From Home” (AFH) products under the Select brand name.
Environment and Sustainability
Viking Kağıt was Turkey’s first privately-owned paper
mill. Originally founded in 1969 in İzmir’s Aliağa
township, Viking Kağıt today is the third biggest
company in the tissue paper sector, in which it controls
an average 7.7% market share.
Corporate Governance and
Financial Information
preferred brands
strong market share
1- Viking Kağıt Annual Report 2010
Viking Kağıt in Brief
Viking Kağıt was Turkey’s first privately-owned paper mill.
Originally founded in 1969 in İzmir’s Aliağa township, Viking
Kağıt commenced production in 1971 with a variety of
wrapping, printing, and laminating paper for industrial uses.
In 1982 Viking Kağıt joined the Yaşar Group and thereafter
began taking strategic steps to achieve growth within the
framework of that group’s fundamental business principles of
innovation, leadership, and enterprise. As a result of an
expansion investment undertaken in 1984, Viking Kağıt
increased its production capacity to 20,250 tons a year. With
a second paper machine investment in 1999, Viking Kağıt
increased its production capacity to 43,000 tons a year. The
company further bolstered its strong position in the sector
with the complete renewal of its tissue paper converting
plant in 2003.
One of the leading players in the tissue paper sector
Having undertaken a public offering in 1994, Viking Kağıt
completed modernization investments after which it made
its first venture into the tissue paper sector in 1996. In that
sector, Viking Kağıt is active primarily today in two product
lines:
• “Consumer Products” under the Lily and Senso brand names
• “Away From Home” (AFH) products under the Select brand
name.
In both categories, Viking Kağıt seeks to maximize its
fulfillment of consumers’ and customers’ expectations with
differentiated products that exactly satisfy their needs.
Viking Kağıt was the first member of the Turkish tissue paper
industry to be awarded internationally recognized ISO 9001
Quality Management System certification, which it received
in 1997. The company’s certification was upgraded to ISO
9001:2008 Quality Management System standards as of 2009.
An environmentally aware company
Viking Kağıt is an environmentally aware company and its
actions in this respect are guided by the mission and vision
of the Yaşar Group, of which it is a member. Viking Kağıt
has its own, on-premises waste paper processing, chemical
treatment, and biological treatment plants. The company
was also the first in the Turkish tissue paper industry to
commission a de-inking plant.
In a world such as today’s in which concepts like recycling,
recovery, global warming, and environmental protection
are spreading rapidly, social acceptance of environmental
sensitivity is increasing, and the demand for recycled goods is
growing steadily stronger, Viking Kağıt is strongly positioned
by virtue of its own internalized competitive advantages.
A fine example of Viking Kağıt’s environmental awareness
is to be seen in the environment-friendly toilet papers and
paper towels that it manufactures and offers to consumers
under the “Lily Bio” brand. These products prevent the
harvesting of an average of 200,000 trees a year.
A strong and competitive production, marketing, and sales
cycle
Taking a proactive approach in the fulfillment of the
investment requirements resulting from market demand, the
company commissioned its second roll product converting
line in 2007. With this investment, Viking Kağıt increased
its production capacity in the roll group by 120% and also
significantly enhanced its manufacturing capabilities and
continues to successfully satisfy consumers’ higher quality
expectations.
Viking Kağıt’s products are delivered to customers and
consumers through more than 60,000 points of sale that
are kept supplied by a distribution network consisting of
four regional departments, 50 dealerships, a chain store
department, and national chain delivery channels.
With its rapidly increasing export volumes, Viking Kağıt
exports goods to 23 countries, principally to Europe and the
Turkic Republics.
In terms of average market share, Viking Kağıt is the third
biggest tissue paper manufacturer in Turkey today.
In its capacity as both a pioneer and innovator in its sector,
Viking Kağıt will continue to strengthen its position in the
sector and to be a model of sustainability for others.
Issued Capital: TL 40,000,000
Registered Capital: TL 80,000,000
Viking Kağıt’s Shareholder Structure
Shareholder
Others 4.30%
Yaşar Holding A.Ş. 60.58%
Share (%)
Share Amount (TL)
Yaşar Holding A.Ş.
60.58
24,231,369.82
Publicly held
35.12
14,049,855,30
Others
Total
4.30
1,718,774.88
100.00
40,000,000.00
Publicly held 35.12%
Viking Kağıt shares are listed on the Istanbul Stock Exchange with
the ticker symbol VKING.
Viking Kağıt
firsts
In 2010
• Privately-owned paper mill
• 3-ply toilet paper
• Cotton pulp-added toilet paper
• Aloe vera-enriched toilet papers
and paper towels
• Biological treatment plant
• High-density PE packaging
• “Selected sheets” paper towels
• De-inking plant
• Packaged napkins and
packaged tissues
• Paper & cardboard
manufacturer to be awarded
Forest Stewardship Council
Chain of Custody (FSC
CoC) management system
certification.
Management
Turkey’s first
Viking Kağıt by Numbers
Production Facilities
Paper Machines
41,097 m²
Covered space
1st Machine:
Production area
27,362 m²
ER-WE-PA (1971) (17,000 tons/year)
Office, warehouse, etc.:
13,735 m²
Production range: 17-50 gr/m² tissue paper
Grounds
213,926 m²
Total
255,023 m²
2nd Machine:
VALMET, Crescent Former Technology (1999) (26,000 tons/year)
Production range: 15-40 gr/m² tissue paper
innovative, high
quality, and
hygienic products
made in modern
facilities
36
11
thousand tons
total sales in 2010
thousand tons
total exports in 2010
De-inking Plant
(2000) (27,000 tons/year)
Converting Plant
Roll and Folded Product Lines:
Capacity: 41,200 tons/year
Production Capacity
(tons/year)
Production Amount
(tons/year)
Capacity Utilization
Rate (%)
Semi-finished paper
43,000
38,117
88.64
Finished tissue paper products
41,200
25,131
61.00
Electricity
Recycled paper
27,130 ton
Natural gas
Raw material efficiency
94.3%
47,587,256 Kw/h
9,561,256 sm³
In 2010
23,110 ton
Virgin pulp
Management
Energy Consumption Highlights in 2010
Raw Material Consumption Highlights in 2010
2010 Production Capacities
Viking Kağıt is engaged in the tissue paper manufacturing
business, one of the fastest-growing sectors in Turkey. In
2010 it continued to develop and to create value for its
stakeholders through its deep-rooted corporate identity,
superior production abilities, strong market position, and
high quality standards.
Constrained by the global economic climate in 2009, the
Turkish economy suffered a contraction that year but was
nevertheless one of the first national economies to emerge
from crisis. In 2010 Turkey made a strong recovery and
resumed growing once again. With employment numbers
showing improvement, the principal driving force of economic
recovery was strong domestic demand although policy
interest rates also supported the revival of economic activity
by falling to historically low levels. In 2010 the Turkish
economy registered an 8.9% rate of year-on growth, which
ranked it first among all European countries. Our country’s
growth performance in 2010 was the fastest witnessed since
2004.
The tissue paper sector is distinguished by its high growth
potential and strongly promising future. Its development in
2010 paralleled that of the macroeconomic context and it
continued to grow. Growth in the discount outlet segment
remained strong all year long while “private-label brand”
tissue paper products offered to customers made a positive
contribution to the market’s overall expansion.
İdil Yiğitbaşı
Chairperson of the Board of Directors
environmentfriendly production
and sustainable
growth
The supply-side surplus in our sector continues to trigger
price competition and this situation is what frustrates
increases in the sector’s overall turnover. Our industry’s
turnover, which might have been expected to expand more
in light of high growth in terms of sales, was unable to do so
due to the pressures exerted by intense competition on price.
Last year the sector registered an overall rate of 3.4% year-on
growth with the paper towels ranking as the fastest-growing
category at 11%.
In 2010 Viking Kağıt booked USD 15.5 million as export
revenues. This corresponds to a year-on rise of 29.7% on a
USD basis.
In 2010 Viking Kağıt shipped 10,783 tons of products,
consisting largely of semi-finished goods, to 23 countries on
which it earned export proceeds in the amount of TL 23.3
million. Sales to the domestic market amounted to 24,973
tons, on which the company generated a turnover worth more
than TL 101 million.
Raw material prices continued to rise steadily all year
long. This had a significant impact on the cost of the goods
produced by Viking Kağıt while also exerting pressures on
its profitability. Increasingly intensified competition in our
sector as its players contend for market share was the most
important constraint on our company’s ability to adhere to a
rational price policy based entirely on its costs. This was the
Esteemed shareholders,
We are continuing our intensive efforts to ensure the
sustainability of Viking Kağıt’s competitive strength and
customer satisfaction.
We are aware that ensuring the sustainability of our
company’s competitive strength, that further enhancing its
market position, and that increasing its profitability are all
dependent on speeding up efforts to improve its costs. In line
with this, in 2010 the company continued to work intensively
on its Operational Cost Improvement and its Lean Six Sigma
projects.
The Lean Six Sigma projects that were completed in 2010
resulted in significant savings at the company while
contributing favorably to its cost base. Under the Operational
Cost Improvement System, employees are continuously
encouraged to take part by contributing valuable views and
suggestions that are then transformed into added value
for Viking Kağıt. The company achieved savings amounting
to more than a million liras by means of suggestions made
through the Operational Cost Improvement System. Another
development in 2010 that made Viking Kağıt both proud and
excited was the special award that it received for its project
entry in the Yaşar Group Productivity Competition.
I wish to take this opportunity to extend my sincerest thanks
personally and on behalf of the Board of Directors to all my
colleagues for demonstrating such exemplary participation by
sharing their valuable suggestions with us.
Viking Kağıt possesses a deep-rooted sense of environmental
awareness and seeks to achieve full compliance with all
aspects of the legal framework governing environmental
issues. The exemplary performance which we have achieved
on numerous fronts ranging from waste water discharge to
using a high proportion of waste paper in its production is an
indication of Viking Kağıt’s sensitivity towards the future of
people and the environment.
Like the tissue paper sector as a whole, Viking Kağıt is
focused on growth.
As Turkey undergoes its process of rapid growth and
development, we foresee that the tissue paper sector will also
be experiencing strong growth in the years ahead as well. In
line with this view, Viking Kağıt is unwaveringly committed to
the fulfillment of its corporate strategies in order to achieve
these goals:
• Increase market share by registering growth in all segments
• Improve profitability without sacrificing quality in the valuecreation chain
• Develop consumer communication and increase customer
satisfaction by maintaining the highest level of product
quality
• Engage in efforts to develop a more effective and
productive sales organization as a part of the company’s
channel management strategy
• Invest in human resource for the sake of sustainable success
• Make optimum use of energy and all other natural resources.
As one of the most seasoned veterans of Turkey’s tissue paper
industry, Viking Kağıt is committed to offering its customers
only the very best. With the support of you, our esteemed
shareholders, Viking Kağıt will remain firmly on the path of
sustainable growth. In closing, I extend my sincerest thanks to
our customers for preferring Viking Kağıt quality as well as to
all of our other stakeholders.
İdil Yiğitbaşı
Chairperson of the Board of Directors
Management
Viking Kağıt was one of the first group of ten concerns
selected by the Electrical Power Resources Administration for
inclusion in the determination of energy conservation targets.
This project, which is based on the principle of voluntary
participation, will play a big role in internalizing the concept
of energy efficiency while also increasing the company’s
contributions to the national economy.
In 2010
In 2010 Viking Kağıt remained the sector’s third biggest
supplier with an average market share of 7.7%. An important
development that took place last year was the introduction
of direct sales to the market, a decision which contributed
significantly to the company’s market penetration as well
as to its profitability. At the same time, Viking Kağıt’s brand
architecture was reviewed in light of changing market
conditions and consumer demand. The result was a decision
to move away from a single-brand strategy in favor of a
multibrand, market-driven strategy. This changeover was
completed in 2010 with the positioning of three separate
brands for three separate target segments. Concurrent with
this, greater attention was given to brand communication and
the packaging on all of Viking Kağıt’s products was renewed
taking new global trends into account.
Making effective and productive use of natural resources is
our most fundamental responsibility as a good corporate
citizen.
Energy efficiency is an essential issue and objective at
Viking Kağıt and one to which the company gives the utmost
attention.
principal reason why Viking Kağıt closed its books for 2010
showing an operating loss. Nevertheless effective collections
management and a focus on making direct sales last year
played a key role in improving the company’s average
collection times, which in turn allowed its cash flow to be
managed much more effectively.
İdil Yiğitbaşı
Chairperson
Yılmaz Gökoğlu
Deputy Chairperson
Mehmet Aktaş
Director
Hakkı Hikmet Altan
Director
Ekrem Erdemli
Director
Hasan Girenes
Director
Levent Rıza Dağhan
Director
Senior Management and Board of Auditors
Ekrem Erdemli
General Manager
Ahmet Şenyaşa
Factory Director
Ahmet Oymacı
Financial Affairs and Finance Director
Barış Yeşil
Sales Director
Management
Senior Management
Name
Title Appointment Dates and Terms of Office
İdil Yiğitbaşı
Yılmaz Gökoğlu
Mehmet Aktaş
Hakkı Hikmet Altan
Ekrem Erdemli
Hasan Girenes
Levent Rıza Dağhan (*)
Chairperson
Deputy Chairperson
Director
Director
Director
Director
Director
31.03.2010 – 31.03.2013
31.03.2010 – 31.03.2013
31.03.2010 – 31.03.2013
31.03.2010 – 31.03.2013
31.03.2010 – 31.03.2013
31.03.2010 – 31.03.2013
10.05.2010 – 31.03.2013
In 2010
Terms of Office of the Company’s Directors
(*) Levent Rıza Dağhan was elected to a seat on the board to replace Özge Engin, who resigned as of 10 May 2010.
Terms of Office of the Company’s Statutory Auditors
Name
Appointment Dates and
Terms of Office
Gözde Kınlı
Erdem Çakırokkalı (*)
31.03.2010 - 31.03.2011
11.10.2010 - 31.03.2011
(*) At the company’s annual general meeting held on 31 March 2010, Erdem
Çakırokkalı was elected to replace K. Coşkun Keskiner as a statutory auditor.
Limits of Authority:
Under article 13 of the company’s articles of incorporation,
the duties, authorities, and responsibilities of the statutory
auditors are governed by the principles set forth in the
relevant articles of the Turkish Commercial Code.
Limits of Authority:
Both the chairperson and the members of the Board of
Directors possess the authorities set forth in the Turkish
Commercial Code and in articles 10 and 11 of the company’s
articles of incorporation.
Macroeconomic and Sectoral Overview
strong growth
performance in the
economy
GDP Growth Rates – Fixed Prices (%)
8.9
0.7
08
09
10
In 2010, the Turkish economy grew
by 8.9% which made it the bestperforming economy among all
European countries.
(4.8)
International and national economic review
The global economy began to recover in 2010, with
both the world and the Turkish economies growing and
performing more strongly than expected.
Global growth, which is thought to have been on the order
of 5% in 2010, is expected to slow down somewhat in
2011 but still be around 4.4%. Although economic growth
remained slow in the USA and most European countries
last year, overall economic activity was lively in Germany, in
Asian countries other than Japan, and in developing market
economies such as Turkey.
In 2010 the developed countries continued to inject liquidity
into their markets through economic support programs while
simultaneously seeking to keep their policy interest rates at
low levels.
The Turkish economy grew by 8.9% in 2010.
Having registered year-on rates of growth averaging 6%
in 2002-2008, the Turkish economy shrank by some 4.8%
in 2009 as a result of the sharp contraction experienced in
domestic and foreign demand brought on by the global crisis
of 2009. The recovery that got under way in the last quarter
of that year however reversed the growth trend to positive
and this situation continued into 2010.
Due both to strong economic recovery and to base year
effects, the Turkish economy registered quarter-to-quarter
growth rates of 12% in the first quarter of 2010 and of
10.3% and 5.2% respectively in the second and third.
A hefty 9.2% rate in the last quarter brought the overall
performance for the year to 8.9%, which made Turkey’s
economy the best-performing among all European countries
in 2010. This was also the fastest rate of economic growth
witnessed in Turkey since 2004.
With its relatively (compared with other countries) strong
financial structure, healthy banking system, and the potential
of a youthful population, Turkey promises to be a strong
growth performer in 2011 as well.
CPI performance was within targets.
Due to the effects of tax increases and continuing high food
prices, one-month inflation rates surged in the first two
months of 2010. Thereafter they tended to subside for the
rest of the year with the 12-month rise in consumer prices
ending up at the 6.4% level. The 12-month rate of inflation
in the first quarter of 2011 was 4%. For the second half of
the year, it is expected that the inflationary outlook will begin
to worsen, especially as base effects are eliminated in April,
and that it will start to rise again due to the effects of loose
monetary and fiscal policies. By the end of the year, it is likely
that the 12-month rise in inflation will be around 5.5% or so.
CBT: Using interest rate and other market tools to achieve
stability
In November 2010 the Turkish Central Bank (CBT) lowered
its overnight borrowing rate to 1.75% while still holding the
line on its policy interest rate. Taking this action to stem a
tide of capital inflows, the bank lowered the overnight rate
another 25 basis points to 1.50% on 23 March 2011. These
tweakings had the effect of driving short-term lending rates
down as well with the result that the Turkish lira lost a great
deal of its attractiveness for the many international investors
who were taking a short-term view.
In the last quarter of 2010, CBT launched another round of
policy interest rate cuts while simultaneously speeding up
its hikes in the banks’ reserve requirement rates in order
to impose some order on the expansion in credit that was
resulting from lower interest rates.
Total Imports (USD billion)
09
10
Turkey’s total exports increased
by 11.6% in 2010 and reached
USD 114 billion.
Short-term capital inflows into Turkey nevertheless remained
strong in 2010, with a total of USD 10.7 billion worth of
foreign liquidity entering the bond & bill market during the
12 months to year-end. Nevertheless, CBT’s loose-money
policy worked to keep the interest rates on such instruments
low. Indeed the benchmark interest rate on bonds, which was
around 9% at the beginning of the year, slipped almost two
whole points to 7.1% in December.
Turning now to currency markets, the USD/TL exchange rate,
which was around 1.45 at the beginning of 2010, rose as high
as 1.60 in parallel with a weakened global appetite for risk
brought on by concerns about Eurozone countries’ problems
with debt. The rate began to fall again when Greece and
Ireland were included in the IMF and EU rescue packages. By
November, the rate fell below the 1.40 level, only to rebound
to 1.55 or so by year-end in response to CBT’s relaxation of
its monetary policy.
Strong economic growth in 2010 nourished strong demand
for imported goods, which pushed the ratio of the current
account deficit to GDP up from 2.3% in 2009 to 6.4% in
2010. It is expected that the current account deficit will
continue to widen in 2010 and that it will approach the 7%
of GDP level.
08
09
10
The rise in total imports that
reached USD 186 billion in 2010
was 31.7%.
The global economic crisis of 2008-2009 had a huge
impact on consumers’ buying decisions and preferences in
Turkey–as indeed it did throughout the world. In this process,
hypermarkets’ growth languished while development was to
be observed in the discount-outlet segment. The “privatelabel brand” tissue paper products offered to customers
by discount retailers made a positive contribution to the
market’s overall growth. In Turkey, convenience stores and
medium-sized groceries are gaining increasing importance
for the tissue paper sector, often at the expense of largescale hypermarkets. Among these retailers however,
competition is dictated by more traditional conditions and
sellers have relatively little maneuvering room insofar as
pricing is concerned.
In recent years total supply in the tissue paper sector has
been greater than demand. This situation is what triggers
price competition and what adversely affects the sector’s
overall turnover. The tissue paper industry’s turnover, which
might have been expected to expand more in light of high
growth in terms of sales, was unable to do so in 2010 due
to the pressures created by intense competition on price.
In 2009-2010, the Turkish tissue paper sector registered an
overall growth rate of 3.4%. The fastest-growing category was
paper towels (11%) and was followed by toilet paper (2.5%).
The paper napkin segment by comparison shrank by 1.2%.
The tissue paper sector in Turkey
The outlook for the tissue paper sector in Turkey may be
summed up as one of high growth potential deriving from
presently low consumption.
With a tissue paper consumption level of only around 4.3
kgs a person a year, the Turkish market ranks considerably
far behind more developed ones. This situation points to
significant potential for the sector’s future growth.
Price levels in 2010 generally were lower than those of
2009.
Despite mounting raw material prices in 2010, the general
level of product prices in the Turkish tissue paper market
regressed to 2009 values. Price competition between the
market’s top two brands contributed significantly to the huge
price competition pressures to which the market’s other
players were subjected. Such conditions naturally had an
adverse impact on the sector’s profitability performance as
well. A striking and noteworthy development was the efforts
that all of the market’s players began to make from September
onwards to boost the general level of prices once again.
Management
08
141
In 2010
102
186
114
202
132
Total Exports (USD billion)
Assessment of 2010 Activities
the sector’s third biggest
supplier
A manufacturer with a strong production, marketing, and
sales network
In 2010 Viking Kağıt:
• Focused on proper brand and product management
• Renovated its brand architecture
• Achieved a new delivery channel structure with the
launching of direct sales
• Continued to introduce new products to the market.
Given a business climate characterized by the unfavorable
conditions resulting from unrelenting and intense price
competition and from high raw material price levels, Viking
Kağıt nevertheless performed reasonably well.
To increase the effectiveness of our market presence
Viking Kağıt defined its underlying strategy for 2010 as
one of making its market presence more effective by
strengthening its financial structure. It achieved this by
creating more suitable competitive conditions for itself.
The company also took important steps in the direction of
increasing the distribution and sales of its branded products.
In 2010 Viking Kağıt maintained its position as the sector’s
third biggest supplier with an average market share of 7.7%.
In order to raise its numerical distribution performance
to even higher levels, Viking Kağıt inaugurated its direct
sales channel last year. Direct sales not only have greater
profitability overall but are also recognized as offering
greater opportunities for further market penetration.
Management
In 2010
In 2010 Viking Kağıt maintained
its position as the sector’s third
biggest supplier with an average
market share of 7.7%.
In 2010 Viking Kağıt revamped
its brand architecture in line with
its decision to move away from
a single-brand strategy in favor
of a multibrand, market-driven
strategy.
3
different brands
different segments
Lily, Senso, Select
In Viking Kağıt’s new branding strategy,
“Lily” is the main brand and “Senso” is
positioned as the second-tier, economical
brand. “Select” continues to supply
professional products to the “away-fromhome” market.
Lily, Senso and Select
Viking Kağıt supplies the market with toilet paper, paper
towel, napkin, and facial tissue products in separate
categories under the Lily, Senso, and Select brand names. In
the case of Lily, the company adheres to a branding strategy
not otherwise used in the sector in which it supplies subbranded products specifically targeted at the premium,
upper-middle, and lower-middle market segments.
In 2010 Viking Kağıt maintained its position as the sector’s
third biggest supplier, in terms of average market share.
Bolstering its presence in a market made more competitive
with the entry of new rivals, the Lily brand was particularly
important to Viking Kağıt’s efforts to solidify its position.
Viking Kağıt’s goal is to strengthen brand perceptions
in consumers’ minds with Lily as its leading label. In the
company’s branding strategy, Lily is the main brand and
Senso is positioned as the second-tier, economical brand.
Product categories and sub-brands created under both of
these make it possible for the company to reach a much
broader target audience. In contrast with this, the Select
brand focuses on supplying professional products to the
away-from-home market.
In 2010 the company controlled market shares (in terms of
sales volume) of 6.6% in toilet paper, 4.3% in paper towels,
and 7.9% in paper napkins. Viking Kağıt’s share of the private
label (also known as “house brand”) segment continued to
grow faster than the sector’s average last year.
In 2010 Viking Kağıt booked sales amounting to 35,756 tons.
The tissue paper group accounted for a 70% share of the
company’s total sales last year.
In 2007 Viking Kağıt began manufacturing private-label
products on a contractual basis. Since then, the company has
been offering optimized price, quality, and service solutions
as a supplier of house brand products to some of the leading
players in Turkey’s retailing sector.
The “Senso Pufla” line that was introduced to the market in
2010 gave Viking Kağıt a big advantage from the standpoint
of increasing its numeric distribution of goods especially to
traditional small retailers. Similarly the “Lily Dolgun” subbrand launched in late 2010 is introducing to the market
a new product whose thicker-ply composition of virgin +
de-inked (recycled) pulp provides greater absorbency and
durability than standard two-ply products.
R&D and design work on the “Lily Dolgun” line of toilet
papers and paper towels was completed in 2010. In the
creation of these products, which we plan to put on the
market in 2011, attention was focused on the issues of
durability and absorbency, two qualities which consumers
say they give the most attention to.
With demand in the AFH segment continuing to grow all
year long, manufacturers sought to strengthen their market
positions with a variety of products and accessories. The
aim in this was to make turnover and profit gains by offering
goods that went beyond standard ones.
Under the heading of portfolio optimization, in 2010 Viking
Kağıt redesigned the packaging of all of its products.
Higher raw materials prices
Significant rises in raw materials prices that began in early
2010 continued all year long. This had a serious impact on
the cost of goods manufactured by the sector. At the same
time however, heightened competition and efforts on the part
of the sector’s players to increase market share prevented
the implementation of policies that might have kept prices at
levels capable of covering costs.
This situation was the principal reason why Viking Kağıt
closed its books for 2010 showing an operating loss.
Nevertheless effective collections management and a
focus on making direct sales last year played a key role in
Under the heading of channel management strategies,
Viking Kağıt engaged in efforts to improve the effectiveness
and productivity of its sales organization. To this end, it
sought to achieve greater order by strengthening discount
management in the retail channel while also grouping points
of sale into functional categories.
For neighborhood grocery and convenience stores, which
account for the biggest share of tissue paper sector sales
in Turkey, the company successfully implemented a policy
of increasing sales turnover by means of regularly-supplied
house-brand products to such outlets during the year in
order to build up long-term business relationships with them
and create a closer working environment.
Goods whose sales were low and underachieving were
removed from the product line while attention was focused
on making sales that contributed towards manufacturing
productivity. The ratio of direct sales to total sales was
increased and this contributed significantly towards
profitability.
Management
Viking Kağıt’s channel management strategy and sales
performance
In 2010 Viking Kağıt focused on a strategy of profitable
channel management and made efforts to prevent possible
losses in the face of competition. Consideration was given
to a variety of strategic options such as reducing the volume
of private-label output and giving more attention to the
company’s own (branded) products. New additions were also
made to the latter category of goods last year.
In 2010
In the restructuring, which took place in the last quarter of
2010, three separate brand positions were adopted in three
different segments of the tissue paper products market.
In this new, segment-based brand architecture, products
incorporating features specific to target audiences were
supplied to the market with appropriate price structures and
brand communication and marketing plans.
improving the company’s average collection times, which
in turn allowed its cash flow to be managed much more
effectively. This greater effectiveness in cash management
played an important role in reducing Viking Kağıt’s borrowing
requirements.
Changes in Viking Kağıt’s brand architecture and new
products
In 2010 Viking Kağıt revamped its brand architecture in line
with its decision to move away from a single-brand strategy
in favor of a multibrand, market-driven strategy.
Despite shrinking foreign
demand due to global economic
crisis conditions in 2010, Viking
Kağıt nevertheless succeeded in
increasing the quantities of its
sales.
Leading indicators concerning Viking Kağıt’s sales
performance are presented below.
30%
The most noticeable year-on change in Viking Kağıt’s sales
took place in the private label segment. In 2009 sales to
this segment accounted for a 37% share of the company’s
net sales; in 2010, this was down to 27%. The reduction of
the share of private-label sales in total sales helped support
Viking Kağıt’s AFH and direct sales.
in 2010
share of turnover
provided by exports
Toilet paper products’ share in total: 37.8%
In 2010 toilet paper products accounted for
a 37.8% share of the company’s total gross
sales. These were followed in second place
by semifinished tissue paper products at
30.1%.
2010 sales
Quantity (tons)
Gross sales (TL)
Domestic sales
24,973
101,541,630
Foreign sales
10,783
23,332,845
Total
35,756
124,874,475
In the consumer products segment, which accounts for a
70% share of the Turkish market on a quantitative basis,
Viking Kağıt-branded products commanded a 7.7% market
share. For 2011, the company intends to raise its market
share in this segment to 8.5%.
In 2011 Viking Kağıt will continue to focus its attentions
on further developing its brand image through new brand
architecture, new packaging, and intensive communication
activities. In addition, the company will also be following
strategies to increase market share, to the degree that its
manufacturing capacity permits, through communication
in the “at home” segment while also seeking to bolster its
market share in the medium term.
Breakdown of Sales in 2010 (by volume)
Paper Towels 15.5%
Semi-Finished Tissue Paper
30.1%
Napkins 16.6%
Toilet Paper 37.8%
The company’s biggest export market is the UK, which takes a
60% share of the goods that Viking Kağıt ships abroad. These
consist largely of semifinished products. In keeping with
the requirements of the company’s international customers,
at least half of its exports are manufactured from recycled
paper. With a 21% share, Viking Kağıt’s second biggest
export market is Azerbaijan.
Viking Kağıt deploys the Lean Six Sigma method in its
ongoing efforts to:
• Achieve excellence in all of its business processes
• Raise operational productivity
• Increase customer satisfaction
• Sustain its competitive edge
• Strengthen its market position
• Increase its profitability.
Management
Exporting to 23 countries
Despite shrinking foreign demand due to global economic
crisis conditions in 2010, Viking Kağıt nevertheless
succeeded in increasing the quantities of its sales. The
USD 15.5 million worth of export sales which the company
booked not only accounted for 30% of its total sales but also
maintained its standing as the member of the Yaşar Group
with the highest export turnover.
Developments in Operational Cost Improvement and Lean
Six Sigma projects
Accelerating its efforts to maintain its competitive strength,
to achieve a stronger market presence, and to increase the
company’s profitability, in 2010 Viking Kağıt continued with
the process improvement activities that it is carrying out
under the “Lean Six Sigma” projects that it first launched
in 2008. Lean Six Sigma is the most comprehensive and
powerful methodology available today to design and improve
processes and products that are best capable of satisfying
customer expectations in the most effective way possible.
Under the heading of Lean Six Sigma, in 2010 Viking Kağıt
completed a total of eight “2nd wave” projects as a result
of which it gained three Black Belt and five Green Belt
qualifications.
In 2010
Developments in distribution channels
Viking Kağıt supplies its products to final consumers through
two primary distribution channels: dealerships and national
chains. Taking the highly competitive nature of the dealership
channel into account, attention there was focused on sales
targets while a growth strategy was adhered to particularly
in the case of away-from-home consumption. The guarantee
structure in the dealership system was strengthened while
noteworthy improvements were made in Viking Kağıt dealers’
infrastructures. In the national chains channel, the company
adhered to a strategy that took profitability into account
while also being mindful of competition.
In 2010 Viking Kağıt once again was recognized by the
Aegean Region Chamber of Industry for its contributions to
the regional economy through its export sales. This is the
eleventh year in a row that the company has been awarded
this distinction.
In December 2010 Viking Kağıt
was granted Forest Stewardship
Council Chain of Custody (FSC CoC)
management system certification.
Viking Kağıt is the only paper &
cardboard manufacturer in Turkey
to have received this award.
During the company’s “OCI Suggestion Weeks” in 2010, a
total of 117 operational cost improvements (OCI) were made,
of which 22 were deemed to be worthy of recognition and
reward. The more than 150 suggestions registered in the OCI
system so far generated savings worth more than TL 1 million
for Viking Kağıt in 2010.
As it does every year, Viking Kağıt took part in the Yaşar
Group’s “Productivity Competition” in 2010. The company’s
“Paper Production Process Cost Improvement Project”, which
achieves savings of more than TL 1.25 million, was awarded a
special prize.
Human resources who are active participants and are open
to development
As a member of the Yaşar Group of Companies, Viking Kağıt
believes that the human element is the factor that binds
together its success. The company bases its human resources
policies and practices on its awareness of the value that is to
be given to the human element and it applies and maintains
them in such a way as to further develop its competitive
strength.
Seeking to enhance process effectiveness and productivity
by combining advanced technology with appropriate human
resources, Viking Kağıt believes that training, knowledge, and
experience are the best possible guides.
Viking Kağıt’s human resources policy is based on the
principles of supporting and developing employees through
in-house training that focuses on the company’s goals and
organization and of improving employment conditions in new
positions that are to be created in line with this.
In keeping with this policy, a total of 3,930 hours of
professional, personal development, and leadership training
was provided to company employees at Viking Kağıt during
2010. Average training time per person was 16 hours. In
addition to this training, newly-recruited company personnel
were provided with a total of 4,500 hours of orientation and
on-the-job training.
Attention is continuously given to the educational
backgrounds of new hires. One result of this is that 91% of
the company’s blue-collar workers were in the “qualified
labor” category in 2010, a one-point improvement over the
90% level that existed in 2009.
The final stage was reached in the project to incorporate
dealerships into the SAP system that was begun in 2010. This
project, which will become operational in 2011, will make it
possible to perform company dealership stock and customer
analyses and to keep better track of market developments.
Another industry first: Forest Stewardship Council Chain of
Custody Management System certification
Viking Kağıt shapes its quality policy on the foundations of
continuously improving processes and product and service
quality and of protecting the environment in all of its activities.
Viking Kağıt was the first privately-owned concern in its
sector to be audited and awarded internationally recognized
ISO 9001:2000 Quality Management System certification.
The ISO 9001:1994 Quality Management System certificate
originally granted by BVQI in 1997 was updated in 2003 to
a ISO 9001:2000 Quality Management System certificate,
which is process-based and which also takes into account
“decisions based on achieving continuous development and
quantification.” Viking Kağıt gives priority to management by
The company’s quality and process target performance is
continuously recorded and monitored. Such data undergo
management reviews at meetings which are held every
six months and during which any measures are taken as
necessary to deal with any deviations.
Management
In December 2010 Viking Kağıt was granted Forest
Stewardship Council Chain of Custody (FSC CoC)
management system certification, thereby becoming the first
paper and cardboard manufacturer in Turkey to have received
this award. FSC CoC is a management system that focuses
on all aspects of the processing, conversion, manufacturing,
distribution, and other activities involving raw materials
originating in forests as they move from well-managed
forests to the consumer.
In 2010
Developments in information technologies
During 2010 Viking Kağıt took part intensively in the
information technology activities being conducted
throughout the Yaşar Group, during which it worked on
projects to make improvements both in the management
information system and in systems processes in general.
objectives, to ongoing development and improvement, and
to customer satisfaction by ensuring that such issues also
serve as input for its ISO 9001 Quality Management System
processes.
A variety of social and cultural activities are conducted
among employees with the aims of increasing motivation
and communication and of achieving more productive work
results.
exemplary
performance for the
future of people and
the environment
Viking Kağıt has been a member of the Environmental
Protection and Packaging Waste Recovery and Recycling Trust
(ÇEVKO) since 2005. In collaboration with that organization,
the company had packaging materials (polyethylene, paper,
cardboard) corresponding to 37% of those on the goods it
supplied to market collected and returned to economic use.
The company has set itself packaging material recycling/
recovery performance targets of 38% and 40% for 2011 and
2012 respectively.
Viking Kağıt takes great pains to remain in the strictest
compliance with all current Environment and Forestry
Ministry regulations as they pertain to such matters as
packaging waste control and hazardous waste control.
Viking Kağıt energy policy and developments in 2010
As a member of an industry whose manufacturing operations
are quite energy-intensive, Viking Kağıt engages in an ongoing
effort to reduce the amount of energy that it must use.
Social responsibility activity highlights at Viking Kağıt
• In 2010 the company provided study scholarships to
four students through the Yaşar Education and Culture
Foundation.
Management
Under the heading of energy efficiency activities carried out
at Viking Kağıt in 2010, energy conservation work on its PM1
paper machine reduced the amount of energy consumed per
ton of output by 12%. Valve jackets that were also installed
on all the steam transport lines at the factory are expected to
prevent heat losses on the order of 347,000 kcal/hour.
In 2010
Between 2007 and 2010, Viking Kağıt reduced the amount of
water that it needed to produce a ton of paper by about 30%.
Viking Kağıt is the only company in its sector to sign such
an agreement, which it did as soon as the law was passed.
The company was also one of the first ten industrial
concerns to do so as well.
In 2009 Viking Kağıt applied to join the Electrical Power
Resources Survey and Development Administration’s project
to voluntarily reduce energy-intensive activities and an
agreement was signed with that administration. Under this
agreement, Viking Kağıt will attempt to reduce its overall
energy density by 11% by the end of 2012.
• Professional education traineeship positions were provided
for 26 high school and university students.
• Field trips to factories were organized for primary and
middle-school pupils, who were also provided with
information about the use and recycling of tissue paper.
Support was provided for recycling-related projects
created by students at private schools.
Viking Kağıt first added a biological treatment plant to its
existing waste paper processing and chemical treatment
plants back in 1997. Thanks to the microorganisms in the
biological treatment unit, the chemical oxygen demand (COD)
of the company’s discharged wastewater is reduced by as
much as 75% to bring it within legally required limits.
Viking Kağıt volunteered to take part in a statutorily created
“National Project To Reduce The Level Of Energy Use In
Industry Through Voluntary Agreements” and throughout
2008, the company was involved in pilot studies conducted
by a group of private sector, government, and international
consultants.
To reduce environmental impact and make efficient use of
resources
Viking Kağıt seeks to dispose or recycle waste in the
most appropriate way possible through effective waste
management and waste classification. By taking the approach
of simultaneously engaging in a number of dialogues, the
company examines and assesses the compliance of its
own suppliers with the requirements of environmental
safety systems. The company awards additional points to
suppliers who are themselves in possession of ISO 14001
Environmental Management System certification.
Corporate Governance and Financial Information
23 24 31
32
84
Agenda of the Annual General Assembly Meeting
Corporate Governance Principles Compliance Report
Statutory Auditors’ Report
Independent Auditor’s Report
Information for Investors
Agenda of the Annual General Assembly Meeting
1. Electing the Presiding Committee.
3. Reading and deliberating the Board of Directors’ annual report, the statutory auditors’ report, and the independent auditor’s
report.
4. Approving the balance sheet and profit & loss statement for 2010 that was sent to the Capital Markets Board and to the
İstanbul Stock Exchange; acquitting the company’s directors and statutory auditors of their fiduciary responsibilities.
5. Approving the independent auditors chosen by the Board of Directors and their term of duty.
2. Authorizing the Presiding Committee to sign the minutes of the meeting.
6. Approving the director chosen to fill vacancy on the Board of Directors and determining his terms of office.
7. Deliberating and voting on the salaries to be paid to members of the Board of Directors.
9. Deliberating and voting on the salaries to be paid to the statutory auditors.
10. Submitting, pursuant to article 324 of the Turkish Commercial Code (TTK:324) and as required by Capital Markets Board
resolution 31/876 dated 9 October 2009, for the information of the general assembly a matter pertaining to our balance
sheet dated 31 December 2010 that was prepared in accordance with formats specified in CMB communique XI:29 concerning
financial reporting standards in capital markets and international financial reporting standards (SPK Communique XI:29 IAS/
IFRS) and by the Capital Markets Board.
Management
8. Determining the number of statutory auditors pursuant to article 13 of the company’s articles of incorporation; electing
statutory auditors to replace those whose terms of office have expired and determining their terms of office.
11. Informing shareholders, pursuant to Capital Markets Board ruling 28/780 dated 9 September 2009, about guarantees,
pledges, or mortgages that have been granted by the company in favor of outside parties as well as about any income and
benefits that may have been acquired on account of such guarantees, pledges, or mortgages.
13. Deliberating and voting on matters pertaining to the year’s profits.
14. Authorizing the Board of Directors pursuant to articles 334 and 335 of the Turkish Commercial Code.
In 2010
12. Informing shareholders about any donations that were made during the year.
15. Petitions.
1) Statement of compliance with corporate governance principles
During the reporting period ending 31 December 2010, Viking Kağıt ve Selüloz A.Ş. (“the company”) complied with and
implemented the corporate governance principles published by the by Capital Markets Board (“CMB”) except for the matters
indicated immediately below:
a) Cumulative voting method
b) Independent directors
c) Representation of minority shareholding interests on the Board of Directors
The details of and justifications for such partial or total non-compliance are indicated in the appropriate sections of this report.
Assessments and studies are being conducted as necessary in areas in which the company is not in full compliance with CMB
corporate governance principles. As matters currently stand, the company is of the opinion that such non-compliance does not
lead to any material conflicts of interest.
Part I: Shareholders
2) Investor Relations Department
The duties (1) of managing the exercise of shareholders’ rights and maintaining communication between shareholders and
the Board of Directors and (2) of conducting procedures pertaining thereto in compliance with CMB corporate governance
principles are fulfilled by the Office of the Capital Markets Coordinator.
Information about the Shareholder Relations Unit is provided below.
Capital Markets Coordinator: Senem Demirkan
Tel: (0 232) 482 2200
Fax: (0 232) 489 1562
Email: yatirimciiliskileri@viking.com.tr
Capital Markets Coordinator Senem Demirkan is in possession of all certifications issued by CMB and is also responsible for
coordinating matters involved (1) in the fulfillment of company obligations arising from capital markets laws and regulations
and (2) in corporate governance practices.
The duties of the Investor Relations Department are listed below.
• Ensure that records pertaining to shareholders are maintained in a reliable, secure, and up-to-date manner.
• Respond to shareholders’ written requests for all information about the company except that which has not been publicly
disclosed or is confidential and/or in the nature of a trade secret.
• Ensure that General Assembly meetings are conducted in accordance with the requirements of current laws and regulations
and of the company’s articles of incorporation and other bylaws.
• Communicate with other units of the company and ensure that documents which shareholders may find useful at General
Assembly meetings are prepared.
• Ensure that records are kept of the results of voting at General Assembly meetings.
• Supervise all issues related to public disclosures as required by law and the company’s public disclosure policy.
• Ensure that investor relations activities are properly conducted.
Having obtained the views of other units when necessary and in coordination with such units, the Investor Relations
Department is responsible for providing shareholders and potential investors with information about the company’s activities,
financial standing, and strategies, with the stipulations that it may not divulge any information which is confidential and/or in
the nature of a trade secret and that it must not do so in any way that might lead to information asymmetry and for managing
communication moving on both directions between shareholders and company managers.
Within the framework of these duties, during 2010 the unit responded to more than 100 questions that were received from
shareholders by telephone and email.
The fundamental principle in shareholders exercising their right to obtain information is that there should be no discrimination
among shareholders. All information and documents that shareholders may need to exercise their shareholders’ rights in a
sound manner are made equally available to all shareholders on the company’s corporate website. During 2010 every possible
effort was made, under the supervision of the Investor Relations Department, to respond to requests for information received
from shareholders within the framework of the requirements of capital market laws and regulations and without delay.
Such requests for information are generally about such issues as General Assembly meeting dates, interim financial results
and developments in the sector. All requests for information, except in the case of information that was in the nature of a trade
secret and information that it was deemed to be in the company’s interest to keep confidential, were responded to without
making any distinctions among shareholders and in line with any statements that may previously have been made within the
framework of capital market laws and regulations. Developments that might affect the exercise of shareholder rights dictated
by the Turkish Commercial Code and by CMB regulations were publicly disclosed through material disclosures, “Investor
Relations” section of the company’s website, newspaper advertisements, and mailings.
3) Shareholders’ exercise of their right to obtain information
The 2009 annual General Assembly meeting took place during 2009 on 31 March 2009. At ordinary and extraordinary General
Assembly meetings, shareholders (or their proxies) representing at least a simple majority of the company’s capital must
be present and decisions must be passed by a simple majority of those present at the meeting. If the quorum required for
meeting quorum does not exist, a second meeting is held at which decisions are taken according to the quorum and majority
requirements stipulated by the Turkish Commercial Code. At the 2009 annual General Assembly meeting, 64.88% of the
company’s capital was represented and voted. During these meetings, no attending shareholders or their proxies advanced any
motions and all questions that were raised were responded to by the Presiding Committee during the meeting.
No other stakeholders or media representatives attended these meetings. Invitations to the meetings were made by the Board
of Directors. In addition to shareholders, representatives of the independent auditors were also sent written invitations to
attend the meetings. Company General Assembly meeting announcements were published in Türkiye Ticaret Sicili Gazetesi
fifteen days (not including the announcement and meeting dates) prior to the meeting date. They were also published in
the corporate website and in local newspapers. Shareholders whose addresses were on record with the company were sent
letters in which they were informed about the meeting date, location, and agenda. Profit distribution proposals that the Board
of Directors intends to submit to General Assembly meetings as well as the identity of independent auditors selected by the
Board of Directors are publicly disclosed in material disclosures.
In 2010
4) Information about General Assembly meetings
Management
A request to have a special auditor appointed is not an individual right provided for under the company’s articles of
incorporation. No request for the appointment of a special auditor was received during 2010.
The company’s articles of incorporation contain no provisions requiring that decisions concerning such matters as demergers
or acquiring, selling, or leasing significant assets be taken at a General Assembly meeting. Such decisions are made by the
Board of Directors, on which 64.12% of the company’s shareholders are represented, in the board’s ordinary conduct of the
company’s business and taking into account CMB regulations and the requirements of commercial and tax law. Such decisions
are publicly disclosed as material disclosures. In addition to the effective use of the communication channels referred to above
in order to facilitate shareholders’ participation in General Assembly meetings, a variety of conveniences are provided to make
it possible for shareholders to reach the places where General Assembly meetings are held. General Assembly meeting minutes
are always kept available for shareholders’ inspection at the company’s headquarters. In addition, the minutes of General
Assembly meetings held during the most recent five years are accessible from the “Investor Relations” section of the company’s
corporate website located at www.viking.com.tr.
The company’s annual report is made available to shareholders at the company’s headquarters and on its corporate website
as of fifteen days before a meeting date. During General Assembly meetings, issues on the agenda are explained impartially
and in detail so as to be clear and intelligible. Shareholders are given equal opportunities to express their thoughts and to ask
questions and a healthy climate of debate is created.
There are no special rights involved in nominating candidates for seats on the Board of Directors. The company’s articles of
incorporation contain no provisions preventing non-shareholders to vote by proxy as an appointed representative. Without
prejudice to the special provisions of the relevant legislation and articles of incorporation, voting is conducted through open
ballot and by raising hands during the General Assembly meeting. Upon request by shareholders, the voting procedure will be
determined by the General Assembly meeting.
There are no other companies in which the company has a cross-ownership. There are no independent directors. (Refer to
article 18 concerning board of directors membership.) Minority rights are not represented on the Board of Directors. Minority
5) Voting rights and minority rights
rights and their exercise within the company are subject to the governance of article 11 of the Capital Markets Law, as is the
case with all publicly-held companies. The company’s articles of incorporation currently contain no provisions allowing the use
of the cumulative voting method.
6) Dividend payment policy and timing
Shareholders of preferred stock do not have any privileges applicable to dividends. The company’s general policy with respect
to dividends is to distribute its net profit having taken into account the company’s financial position, investments that are to be
made and other funding requirements, the sector’s current circumstances, the economic environment, and the requirements of
capital market and tax laws and regulations. However the actual amounts of profit to be distributed are determined every year
taking all of the issues cited above into consideration. The company has formulated a Dividend Policy in line with the CMB’s
resolution of 27 January 2006 and it has publicly disclosed this policy by announcing it at a General Assembly meeting.
According to the company’s articles of incorporation, advances on dividends may be paid provided that they are authorized by
the Board of Directors and a general assembly of shareholders and on condition that they comply with article 15 of the Capital
Markets Law and pertinent CMB regulations.
The methods and processes whereby profits are distributed are governed by Capital Markets Board regulations and by the
relevant provisions of the company’s articles of incorporation. In line with the dividend policy determined for each business
year, a Board of Directors resolution is passed and then publicly disclosed by means of a material disclosure.
Decisions that the Board of Directors makes concerning profit distributions are presented to the General Assembly for approval.
The amounts of dividends so approved are paid out to shareholders within the period of time determined at the General
Assembly meeting subject to the provisions of CMB communique IV:27. No dividends were paid in 2010 as the company did
not show a profit in 2009.
7) Transfer of shares
The company’s articles of incorporation contain no provisions restricting the transfer of shares.
Part II: Public disclosures and transparency
8) Company disclosure policy
In all matters pertaining to its public disclosures the company complies with the requirements of the Capital Markets Law and
of İstanbul Stock Exchange regulations.
The “Disclosure Policy” prepared for the purpose of keeping the public informed and approved by the Board of Directors is
publicly disclosed on the company’s corporate website located at www.viking.com.tr. The Board of Directors has both the
authority and the responsibility for formulating, supervising, reviewing, and developing the company’s disclosure policy. The
Corporate Governance Committee and the Investor Relations Department provide information and make recommendations to
the Board of Directors concerning the company’s disclosure policy.
The chairperson of the Board of Directors and the general manager as well as other officers whom the board or the general
manager deem to be appropriate may make public statements to the written and visual media and to data distributors.
Questions which those involved in capital markets ask the company are responded to in writing or verbally by the Investor
Relations Department.
Principles governing the disclosure of forward looking information are defined in the company’s disclosure policy.
9) Material disclosures
Fourteen material disclosures were made during 2010. One of these disclosures was sent in response to requests for
information made by the İstanbul Stock Exchange. The company was not involved in any violations of public disclosure
requirements. The company’s material disclosures are prepared by the Investor Relations Department and are publicly
disclosed after having been signed by those who are authorized to do so in the company’s disclosure policy. Pursuant to CMB
regulations, all of our special circumstance announcements have been published exclusively in electronic format via our Public
Disclosure Platform since 2010.
The company’s shares are not listed on any foreign exchange and for that reason the company is not encumbered by any other
additional public disclosure obligations.
10) The company’s corporate website and its content
The company’s corporate website is located at the address of www.viking.com.tr. It is structured in the format and content as
required in the section titled “Principles and Means of Public Disclosure” article 1.11.5 of the Corporate Governance Principles.
The company’s website is available in both Turkish and English and it is actively used. The company continuously improves and
upgrades the services provided by its website.
11) Disclosure of ultimate controlling shareholder(s)
Shareholder
Yaşar Dış Ticaret A.Ş.
Pınar Su Sanayi ve Tic. A.Ş.
Others
Total
Share Amount (TL)
24,231,369.82
738,461.64
676,923.17
14,353,245.37
40,000,000.00
Share (%)
60.58
1.85
1.69
35.88
100.00
The company’s shareholder structure as of 31 December 2010 is shown below.
As may be seen from the above, Yaşar Holding A.Ş. controls a 60.58% stake in the company’s capital. Yaşar Holding A.Ş. is
subject to the direct and indirect control of members of the Yaşar family.
12) People in access to insider information
• All company board members and statutory auditors
• Ekrem Erdemli (General Manager)
• Ahmet Oymacı (Director of Financial Affairs and Finance)
Management
The individuals who were in a position to have access to insider information as of the date of this report are indicated below.
Such individuals are publicly disclosed in every annual report and on the company’s corporate website.
• Ahmet Öncel (Accounting Manager)
• Özgür Çalımcıoğlu (Accounting Team Leader)
• Ali Çiçekli (Chief Independent Auditor (Responsible Partner))
• Independent auditing firm personnel
Part III: Stakeholders
Stakeholders are kept informed about all matters concerning the company other than those which are in the nature of a trade
secret through CMB material disclosures within the framework of CMB regulations, commercial law, competition law, tax law,
and contract law.
In 2010
13) Disclosure to stakeholders
Stakeholders’ involvement in company management is achieved by allowing motions to be advanced at General Assembly
meetings. Company employees may submit suggestions to senior management through normal communication channels.
Additionally and under a program that was introduced in 2004, free discussion meetings are held which personnel from every
level may take part in and share their views and suggestions with management.
15) Human resources policy
The fundamental mission of the company’s human resources policy is to ensure the management of human resources who
are innovative, who are committed to the principle of total quality, and who contribute towards the company’s competitive
advantage by easily adapting to change and development. The company’s basic human resources policies are clearly in the
company’s Personnel Regulations, which are issued to all employees against their individual signature. In addition to basic
policies, these regulations also contain information about working hours, hiring principles and processes, termination, and
discipline.
Basic human resources policies
a) Staffing at the company is determined according to the criteria of business economics. All employees agree that honorable
employment is only possible through productive work.
14) Stakeholder participation in management
Meetings are conducted at which company employees are provided with information about the company’s current
circumstances. Semiannual management review meetings are also held in which the company’s team leaders, engineers, and
key personnel take part. In other situations when it is necessary to provide additional information, announcements are made by
means of employee bulletin boards set up within the company. Meetings are also held with customers and suppliers at which
information is provided concerning material disclosures made about the company.
b) The company conducts intramural and extramural training programs within the framework of plans that are devised for each
level in order to ensure the progression of its employees.
c) The company is mindful of equality of opportunity in all promotions and appointments throughout its organization. As a
matter of principle, appointments are made from among the company’s own personnel.
d) By means of a career planning system in which progression plans are implemented, employees who have potential are
provided with the broadest possible opportunities for advancement.
e) Employees’ performance is evaluated on the basis of their fulfillment of targets and their competencies.
f) Job descriptions and performance standards are documented for positions at every level from the highest to the lowest and
these serve as the basis for employee evaluations.
g) Employee opinion surveys are conducted regularly every year, at which time employees are asked for their views about such
issues as working conditions, management, social activities, compensation, training, performance evaluation, career planning,
participatory management, and company satisfaction. Improvements are made in line with the feedback that is received in this
way.
h) A safe workplace and safe working conditions are a matter to which the company gives great importance. Under the
company’s occupational health and safety regulations, all legally mandated measures are taken to prevent occupational risks,
ensure health and safety, and eliminate risk and accident factors. An ongoing effort to make improvements is carried out
through regularly conducted safety meetings.
i) An essential principle at the company is that all employees will be treated equally and without making any distinctions
among them with respect to language, race, color, sex, political beliefs, philosophy, creed, religion, sect, or similar reasons. Due
measures have been taken to protect these basic employee rights.
There are no employee representatives at the company. All employees are kept informed about company procedures,
organizational changes, changes in rights and benefits, and other practices and decisions that may affect them by means of
regulations and announcements prepared within the framework of the company’s prescribed announcement regulations as
well as via the company intranet and bulletin boards. Neither Viking Kağıt’s management nor its human resources department
has ever received any complaint from employees about discrimination.
16) Information about relations with customers and suppliers
As a requirement of its ISO 9001:2008 Quality Management System certification, a “customer satisfaction walkthrough
procedure” has been formulated at the company. Under this procedure, whenever a customer complaint is received it is
forwarded to the Quality Assurance Department. The complaint is investigated and, if need be, visits are made to the customer’s
premises to deal with the issue and to provide technical service in an attempt to resolve the problem. If the customer’s
complaint is justified, goods are taken back or the customer’s losses are compensated for by means of commercial benefits. A
“customer satisfaction poll” is conducted once a year to determine how customers perceive the company. In dealing with its
suppliers, Viking Kağıt’s approach is that of a “business partnership”. Suppliers are notified whenever there are any deviations
in input quality control. Joint meetings are held when necessary and corrective measures are planned as may be required.
17) Social responsibility
In 2010 scholarships for four students were provided through the Yaşar Education and Culture Foundation; professionalcapacity traineeship positions were provided for 26 high school and university students; factory field trips were organized for
primary and middle school pupils during which participants were given information about tissue paper use and recycling; and
students attending private schools were given support for their projects concerning paper recycling/deinking.
Part IV: Board of Directors
18) Structure and formation of the Board of Directors; independent directors
Within the framework of the requirements of laws and regulations and of the company’s own articles of incorporation, internal
regulations, and policies, the Board of Directors represents the company and exercises such authorities and fulfills such
responsibilities as have been given to it by shareholders assembled in a General Assembly meeting. The members of the
company’s board of directors are identified below:
İdil Yiğitbaşı
Yılmaz Gökoğlu
Mehmet Aktaş
Hakkı Hikmet Altan
Ekrem Erdemli Hasan Girenes
Levent Rıza Dağhan
Chairperson
Deputy Chairperson
Director
Director
Director
Director
Director
• The company’s general manager is Ekrem Erdemli.
• The ability of company directors to engage in the activities set forth in articles 334 and 335 of the Turkish Commercial Code
are subject to the approval of the general assembly of shareholders. With the exception of those activities, there are no other
limitations imposed on what board members may do.
19) Qualifications of company directors
In the selection of company directors, attention is given to structuring the board in such a way as to maximize its influence and
effectiveness. While there are no specific qualifications spelled out in the company’s articles of incorporation to accomplish
this, in principle attention is given to electing directors who satisfy the criteria spelled out in articles 3.1.1, 3.1.2, and 3.1.3 in
section IV of Corporate Governance Principles published by the Capital Markets Board. A Corporate Governance Committee
that was formed at a meeting of the company’s board held on 13 March 2006. Board members are provided with guidance and
compliance review in line with changes and developments that take place.
• There are no independent members of the Board of Directors.
The company’s mission is to “supply tissue paper products which enhance the quality of life of society through the hygiene and
practicality that they provide and which make everyday living more convenient.” The company’s mission is to “rank among the
country’s leading concerns as an organization which continuously develops and keeps pace with change in the tissue paper
products sector, which give importance to environment and health awareness, and which creates value for its customers and
employees.” The activities and results pertaining to the basic strategies that make it possible to achieve this mission and vision
are regularly monitored and assessed by the Board of Directors.
Management
20) Mission, vision, and strategic goals of the company
21) Risk management and internal control mechanisms
The Board of Directors essentially supervises activities related to risk management through the committee that is responsible
for audit. In its fulfillment of these functions, this committee makes use of the findings of the department of financial affairs
and finance and of the organizations that are responsible for independent auditing and for certified accountancy.
23) Operating principles of the Board of Directors
The operating principles of the Board of Directors are spelled out as follows in article 12 of the company’s articles of
incorporation:
The Board of Directors shall convene as the company’s affairs may require. Board of Directors meetings shall be held at the
company’s headquarters; however they may, with the unanimous written consent of board members, also be held at some
other location in Turkey or abroad. The Board of Directors shall convene upon a summons in the form of a written request
made by its chairperson, by its deputy chairperson, or by any member. Notifications of meetings shall be sent out by registered
airmail at least one week in advance and these announcements shall contain an agenda indicating the individual matters that
are to be discussed. Board of Directors resolutions require an absolute majority of all board members’ votes. Even if a meeting
is convened with a majority of the members, decisions must still be approved by the unanimous consent of votes representing
a majority of the board’s full membership.
At least the chairperson or a managing director must be present at board meetings. So long as no member demands that
a meeting be held, decisions pertaining to some specific issue may, upon a written proposal by one or more members, be
approved with the unanimous written consent of the board’s full membership. The provisions of article 330 of the Turkish
Commercial Code shall apply with respect to matters not otherwise dealt with in this clause.
The power to administer the company and to represent and bind it with respect to outside parties resides with the Board of
Directors. The Board of Directors may appoint one or more managing directors from among its membership. The Board of
Directors may delegate its own powers of administration and representation to one or more managing directors or to managers
who need not be shareholders themselves. In order for any documents issued or contracts entered into by the company to
be valid, they must bear the signatures, placed below the company’s legal name, by a board chairperson or managing director
individually authorized to bind the company or else by two board members jointly so authorized, or else by such individuals as
may be designated and determined by the Board of Directors in such a manner as shall be designated and determined by the
Board of Directors.
The company’s directors and executives perform their duties in a manner that is equitable, transparent, accountable, and
responsible. The principles governing the authorities and responsibilities of the Board of Directors that are adhered to in
order to achieve this are spelled out as follows in article 10 of the company’s articles of incorporation, subject always to the
imperatives of the Turkish Commercial Code:
In 2010
22) Authorities and responsibilities of company directors and executives
Details about the Board of Directors’ operating principles and its activities during the 2009 reporting period are given below.
During the reporting period, the Board of Directors convened twenty-nine times. The Board of Directors does not have a
secretariat. All members are usually present at meetings. There were no unresolved disputes over issues during the 2010
reporting period. Board members were actually present at board meetings during which matters governed by the rules of
Corporate Governance Principles section IV.2.17.4 were discussed. Questions raised during meetings are not entered into the
record. No board members have preferential voting or veto rights.
24) Prohibition on doing business or competing with the company
Although members of the Board of Directors were granted authority with respect to the issues governed by articles 334 and
335 of the Turkish Commercial Code at the company’s annual General Assembly meeting for 2009 held during 2010, no
company director was involved in any business transaction falling within the company’s object and scope either directly or
indirectly on his own behalf or on behalf of someone else, during the reporting period.
25) Rules of ethics
The company conducts its activities within the framework of values which are adhered to by Yaşar Group companies and whose
approach to the production of goods and services involves compliance with laws and the rules of ethics, concerns itself with
national problems without becoming involved in politics, and values the environment and nature. These values are known to
all company employees. In addition, while the Guide to the Rules of Business Ethics handbook published by the Yaşar Group in
2009 applies to all of the company’s employees, work is also being carried out to formulate the company’s own rules of ethics
within the framework of its corporate governance approach.
26) Number, structure, and independence of committees established by the Board of Directors
Two committees, consisting of a committee responsible for audit and a committee responsible for corporate governance,
have been formed within the company. The Audit Committee convened four times during 2010 in meetings at which it was
informed by company managers about the company’s activities and internal control systems and also about the findings of
the independent auditors during the most recent quarter. The Audit Committee is responsible for the company’s bookkeeping
system, for the public disclosure of financial information, and for supervising the operation and effectiveness of independent
auditing and of the internal control system; for selecting the independent auditors, initiating the independent auditing process,
and supervising the independent auditors’ activities; for reporting to the Board of Directors about the authenticity and veracity
of publicly disclosed yearly and intermediary financial statements. The members of the Audit Committee are Hasan Girenes
and Hakkı Hikmet Altan. As there are no independent directors, the Audit Committee consists of non-executive directors. No
company director is a member of more than one committee. The company’s Corporate Governance Committee was created
under a Board of Directors resolution dated 13 March 2006. The Corporate Governance Committee is headed by Mehmet Aktaş
and its other member is Özge Yılmaz Gökoğlu. The Corporate Governance Committee is responsible for identifying whether or
not corporate governance principles are being complied with at the company as well as for identifying any problems arising
from less than full compliance with those principles; for making recommendations to the Board of Directors on taking measures
to achieve improvements; for coordinating activities pertaining to relations with shareholders; for undertaking activities related
to creating a transparent system to deal with the matters of identifying, evaluating, training, and rewarding candidates suitable
for board membership and to identifying policies and strategies applicable to that system; for developing recommendations
concerning the number of company directors and executives.
27) Financial benefits provided to the Board of Directors
As is stipulated in article 11 of the company’s articles of incorporation, members of the company’s board receive remuneration
whose amount is determined by a general assembly of shareholders. The remuneration so determined for 2010 was TL 650 a
month. There is no separate performance-based remuneration mechanism for directors at the company. The company does not
make lendings or extend credit, whether directly or indirectly, to any of its directors or executives.
Statutory Auditors’ Report
Viking Kağıt ve Selüloz A.Ş.
Şehit Fethi Bey Caddesi No.120 İZMİR
TL 40,000,000
Production and sales of tissue paper
Statutory auditors’ names, surnames, terms of office and
whether they have a shareholding interest in the company
Number of Board of Directors meetings participated in and
of Board of Auditors meetings held
Scope, dates and conclusions of the examination made on
the accounts, books and documents of the company
Gözde Kınlı (31.03.2010 – one year) not a shareholder
Erdem Çakırokkalı (11.10.2010 – 31.03.2011) not a shareholder
Board of Directors meetings: 29
Board of Auditors meetings: 12
At the end of each month, cash, cheques, bonds and receipts
were counted, and the records and documents were screened on
the basis of sampling method and no irregularities were found.
The cashier’s office of the company was checked and counted 12
times and no irregularities were found.
Examination was performed at the end of each month, comments
were provided for matters of uncertainty, and no irregularities
were established.
None
We have examined the accounts and transactions of Viking Kağıt ve Selüloz Anonim Şirketi for the period 01 January 2010 31 December 2010 with respect to their compliance with the Turkish Commercial Code, the company’s articles of incorporation,
and other applicable legislation, as well as generally accepted accounting principles and standards.
In our opinion, the attached balance sheet prepared on 31 December 2010, the contents of which we acknowledge, fairly and
accurately presents the company’s financial status on the date, and the income statement for the period 01 January 2010 31 December 2010 fairly and accurately presents the operating results for the period.
In 2010
Dates and results of the examinations made pursuant to
Article 353 paragraph 1, subparagraph 4 of the Turkish
Commercial Code
Number and results of the cash counts performed in
the company’s cashier’s office pursuant to Article 353,
paragraph 1, subparagraph 3 of the Turkish Commercial
Code
Complaints and charges of fraud of which the company
was advised and actions taken against them
Management
Company name
Head office
Capital
Field of activity
TO THE GENERAL ASSEMBLY OF VİKİNG KAĞIT VE SELÜLOZ A.Ş.
Statutory Auditor
Erdem Çakırokkalı
Statutory Auditor
Gözde Kınlı Environment and Sustainability
We hereby submit the balance sheet and income statement for your approval and the acquittal of the Board of Directors for
your voting.
Independent Auditor’s Report
(Convenience translation into English – the Turkish text is authoritative)
To the Board of Directors of
Report on the Financial Statements
We have audited the accompanying financial statements of Viking Kağıt ve Selüloz A.Ş. (the “Company”) which comprise the statement
of financial position at 31 December 2010, and the statement of comprehensive income, statement of changes in equity and cash flow
statement for the year ended, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with financial
reporting standards published by the Turkish Capital Markets Board. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with auditing standards published by Turkish Capital Markets Board. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the accompanying financial statements give a true and fair view of the financial position of Viking Kağıt ve Selüloz A.Ş.
as of 31 December 2010, and its financial performance and its cash flows for the year then ended in accordance with the financial
reporting standards issued by the Turkish Capital Markets Board.
Emphasis of Matter
Without qualifying our opinion, we draw your attention to the following matter;
The Company’s current liabilities exceed its total current assets by TL 56.031.362 in the accompanying financial statements as of 31
December 2010 and the Company’s accumulated losses are TL 35.037.808. The Company incurred an operating loss of TL 4.169.176
and a net loss of TL 12.827.562 net loss for the twelve month period ending 31 December 2010. These conditions indicate an
uncertainty regarding the Company’s ability to continue as a going concern and the Company management has plans to continue to
take precautions as it is disclosed in Note 41, to strengthen the financial structure of the company.
Other Matter
The financial statements of the Company for the year ended 31 December 2009 were audited by another auditor who expressed an
unmodified opinion on those statements on 11 March 2010.
İzmir 10 March 2011
DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş.
Member of DELOITTE TOUCHE TOHMATSU LIMITED
ORIGINAL COPY ISSUED AND SIGNED IN TURKISH
Ali Çiçekli
Partner
Management
In 2010
BALANCE SHEET 34
STATEMENTS OF COMPREHENSIVE INCOME 36
STATEMENTS OF CHANGES IN EQUITY 37
STATEMENTS OF CASH FLOWS
38
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
39
2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
39
3. BUSINESS COMBINATIONS
52
4. JOINT VENTURES
52
5. SEGMENT REPORTING
52
6. CASH AND CASH EQUIVALENTS
53
7. FINANCIAL ASSETS
53
8. FINANCIAL LIABILITIES
53
9. OTHER FINANCIAL LIABILITIES
55
10. TRADE RECEIVABLES AND PAYABLES
55
11. OTHER RECEIVABLES AND PAYABLES
56
12. RECEIVABLES AND PAYABLES FROM FINANCE SECTOR OPERATIONS
56
13. INVENTORIES
56
14. BIOLOGICAL ASSETS
57
15. CONSTRUCTION CONTRACT ASSETS
57
16. INVESTMENT IN ASSOCIATES ACCOUNTED BY EQUITY METHOD
57
17. INVESTMENT PROPERTY
57
18. PROPERTY, PLANT AND EQUIPMENT 57
19. INTANGIBLE ASSETS
59
20. GOODWILL
59
21. GOVERNMENT GRANTS
59
22. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES
59
23. COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES
60
24. EMPLOYEE BENEFITS
62
25. PENSION PLANS
62
26. OTHER ASSETS AND LIABILITIES
63
27. EQUITY
63
28. SALES AND COST OF SALES
66
29. RESEARCH AND DEVELOPMENT EXPENSES, MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERAL
ADMINISTRATIVE EXPENSES
66
30. EXPENSES BY NATURE
67
31. OTHER OPERATING INCOME/(EXPENSES)
67
32. FINANCE INCOME
68
33. FINANCE EXPENSE
68
34. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
68
35. TAX ASSETS AND LIABILITIES
68
36. LOSS PER SHARE
70
37. TRANSACTIONS AND BALANCES WITH RELATED PARTIES
71
38. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
73
39. FINANCIAL INSTRUMENTS (FAIR VALUE AND FINANCIAL RISK MANAGEMENT DISCLOSURES)
81
40. SUBSEQUENT EVENTS
82
41. MANAGEMENT PLANS
82
PAGE
CONTENTS
Audited Balance Sheet at 31 December 2010
(Amounts expressed in Turkish Lira (TL) unless otherwise indicated.)
ASSETS
Current Assets
Cash and Cash Equivalent
Trade Receivables
-Other Trade Receivables
-Due from Related Parties
Other Receivables
-Other Receivables
-Other Receivables due from related parties
Inventories
Financial Assets
Other Current Assets
Non-Current Assets
Other Receivables
Financial Assets
Property, Plant and Equipment
Intangible Assets
Notes
31 December 2010 31 December
2009
11
37
13
8
26
27.102.476
946.960
13.874.869
12.099.338
1.775.531
25.363
25.363
11.500.219
755.065
31.185.012
516.015
17.636.689
16.355.177
1.281.512
382.585
352.482
30.103
8.911.418
3.699.803
38.502
11
7
18
19
77.523.634
12.400
103.327
77.159.477
248.430
84.916.131
6.999
84.683.641
225.491
104.626.110
116.101.143
6
10
37
TOTAL ASSETS
The accompanying notes are an integral part of these financial statements.
Audited Balance Sheet at 31 December 2010
EQUITY
Share capital
Share premium
Revaluation Reserves
Accumulated Losses
Net Loss for the Year
TOTAL LIABILITIES AND EQUITY
31 December 2010 31 December
2009
83.133.838
5.359.958
12.931.191
12.816.769
114.422
62.661.587
62.652.577
9.010
1.343.477
837.625
36.649.569
6.398.206
13.691.827
13.373.761
318.066
14.876.585
14.876.585
1.089.851
593.100
4.137.545
85.629
550.362
100.011
1.673.357
1.728.186
52.959.240
47.526.600
1.735.096
87.789
1.346.249
2.263.506
17.354.727
40.000.000
229.144
24.990.953
(35.037.808)
(12.827.562)
26.492.334
36.468.043
71.146
27.889.321
(33.643.141)
(4.293.035)
104.626.110
116.101.143
Management
Non-Current Liabilities
Financial Liabilities
Trade Payables
Provisions
Provision for Employment Benefits
Deferred Tax Liabilities
Notes
8
10
37
37
11
22
26
8
10
22
24
35
27
27
18
27
In 2010
LIABILITIES
Current Liabilities
Trade Payables
-Other Trade Payables
-Due to Related Parties
Other Payables
-Due to Related Parties
-Other Payables
Provisions
Other Current Liabilities
Audited Statement of Comprehensive Income
for the Year Ended 31 December 2010
Sales Revenue
Cost of Sales (-)
GROSS PROFIT
Marketing, Sales & Distribution Expenses (-)
General Administrative Expenses (-)
Other Income
Other Expenses (-)
OPERATING PROFIT/(LOSS)
Finance Income
Finance Expense
Loss Before Tax
Tax income
-Deferred Tax Income
NET LOSS FOR THE YEAR
OTHER COMPREHENSIVE LOSS
TOTAL COMPREHENSIVE LOSS
Loss Per Share
Notes
28
28
29
29
31
31
32
33
35
36
1 January31 December 2010
96.149.112
(78.779.830)
17.369.282
(16.059.607)
(6.048.679)
1.022.583
(452.755)
(4.169.176)
4.552.435
(13.746.141)
(13.362.882)
535.320
535.320
(12.827.562)
(12.827.562)
(0,3207)
1 January31 December 2009
97.539.834
(66.291.949)
31.247.885
(17.078.055)
(5.694.685)
734.990
(2.807.291)
6.402.844
4.911.522
(16.620.865)
(5.306.499)
1.013.464
1.013.464
(4.293.035)
(4.293.035)
(0,0710)
Balance at 1 January 2009
Increase in share capital
Transfers
Decrease in share capital
Depreciation transfer
Total comprehensive loss
Balance at 31 December
2009
Balance at 1 January 2010
Increase in share capital
Transfers
Depreciation transfer
Total comprehensive loss
Balance at 31 December
2010
Not Share Capital 50.000.000
27
27
18
27
18
23.468.043
(37.000.000)
-
Share
Revaluation
Accumulated
Net Loss for
Premium Reserves Deficit the Year Total Equity
71.146
30.492.010
(41.992.597)
(31.253.233)
7.317.326
23.468.043
(31.253.233)
31.253.233
37.000.000
(2.602.689)
2.602.689
(4.293.035)
(4.293.035)
36.468.043
71.146
27.889.321
(33.643.141)
(4.293.035)
26.492.334
36.468.043
71.146
27.889.321
(33.643.141)
(4.293.035)
26.492.334
3.531.957
-
157.998
-
(2.898.368)
-
(4.293.035)
2.898.368
-
4.293.035
(12.827.562)
3.689.955
(12.827.562)
40.000.000
229.144
24.990.953
(35.037.808)
(12.827.562)
17.354.727
Management
Audited Statements of Changes in Equity for the Year Ended at 31 December 2010
In 2010
Audited Statements of Cash Flow for the Year Ended at 31 December 2010
Cash flows from operating activities
Loss before taxation on income
Adjustments to reconcile loss before
taxation on income to net cash generated from/(used in)
operating activities
-Depreciation & amortisation expenses
-Provisions for expense accruals
-Provision for employment termination benefits
-Provision for legal cases
-Provision for doubtful receivables
-Gain on sales or disposal of property, plant and equipment
-Interest expense
-Interest income
-Fair value gain on financial assets
-Foreign exchange gain loss on borrowings
Changes in assets and liabilities:
-Increase/(decrease) in trade receivables
-Increase in other receivables due from related parties
-Increase in inventory
-Decrease in other current assets
-Decrease in non-current receivables
-Increase/(decrease) in short-term trade payables
-Increase/(decrease) in provisions
-Increase/(decrease) in other current liabilities
-Decrease in long-term liabilities
-Employment termination benefits paid
Net cash generated from operating activities
Cash flows from investing activities:
-Purchases of property, plant and equipment
and intangible assets
-Proceeds from sale of property, plant and equipment
-Interest received
Net cash used in investing activities
Cash flows from financing activities:
-Capital increase
-(Redemption of)/increase in financial borrowings due to related parties -Redemption of borrowings
-Interest paid
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents, at start of year
Cash and cash equivalents, at end of year
Notes
1 January31 December
2010 1 January31 December
2009
(13.362.882)
(5.306.499)
18-19
22
24
22
10
31
33
32
7
8.194.197
228.446
525.409
44.276
45.740
(184.395)
6.538.790
(107.443)
(103.327)
1.818.811
8.611.787
451.000
395.240
137.755
1.756.005
(117.055)
10.206.247
(73.795)
(16.844)
16.043.841
10
37
13
26
11
10
22
26
10
24
3.716.081
4.740
(2.588.801)
(364.081)
(5.401)
(760.636)
25.179
221.482
(1.184.734)
(198.301)
684.339
(4.104.215)
300.092
(2.894.335)
424.033
1.000
(2.663.204)
65.106
(1.753.238)
(1.108.391)
(156.211)
4.154.478
18-19
(709.352)
(603.217)
18-31
200.774
107.443
(401.135)
141.825
73.794
(387.598)
3.689.955
47.775.992
(43.043.005)
(8.275.201)
147.741
23.115.559
(12.376.608)
(3.844.886)
(11.281.629)
(4.387.564)
430.945
(620.684)
6
516.015
1.136.699
6
946.960
516.015
27
37
8
Notes to the Audited Financial Statements for the Year Ended 31 December 2010
Viking Kağıt ve Selüloz A.Ş. (the “Company”) is engaged in the production, sales and marketing of semi-finished and finished
sanitary paper for the domestic and foreign markets. A major part of the exporting activities of the Company is performed by
Yaşar Dış Ticaret A.Ş., which is a Yaşar Group Company (Note 37).
The Company is subject to the regulations of Turkish Capital Markets Board (“CMB”) and its shares are quoted on the Istanbul
Stock Exchange (“ISE”) since October 1994. As at 31 December 2010, the shares traded on ISE are 35,12% (2008: 29,37%) of
its total shares. The ultimate shareholder of the Company is Yaşar Holding A.Ş. (Note 27).
1. GENERAL INFORMATION
The number of personnel employed for the year then ended 31 December 2010 by the Company is 260 (31 December 2009:
256).
The address of the registered office is as follows:
Alsancak - İzmir/Turkey
Head Quarter:
Yalı Mah. Hürriyet Cad. No:474 Aliağa/İzmir
Management
Şehit Fethi Bey Caddesi No: 120
Financial statements were approved by the Board of Directors, and authorized for issue on 10 March 2011. The general
assembly is authorized to change the financial statements.
2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
2.1 Basis of Presentation of Financial Statements
CMB regulated the principles and procedures of preparation, presentation and announcement of financial statements prepared
by the entities with the Communiqué XI, No: 29, “Principles of Financial Reporting in Capital Markets” (“the Communiqué”). The
Communiqué is effective for the annual periods starting from 1 January 2008 and supersedes Communiqué XI, No: 25, “The
Accounting Standards in the Capital Markets”. According to the Communiqué, entities shall prepare their financial statements
in accordance with International Financial Reporting Standards (“IAS/IFRS”) endorsed by the European Union. Until the
differences of the IAS/IFRS as endorsed by the European Union from the ones issued by the International Accounting Standards
Board (“IASB”) are announced by Turkish Accounting Standards Board (“TASB”), IAS/IFRS issued by the IASB shall be applied.
Accordingly, Turkish Accounting Standards/Turkish Financial Reporting Standards (“TAS/TFRS”) issued by the TASB, which do not
contradict with the aforementioned standards shall be applied.
Financial statements are being prepared according to IAS/IFRS in line with the CMB’s notification: XI, No. 29, until the
differences between the IAS/IFRS adopted by the European Union and those issued by the IASB are announced by the TASB.
The following financial statements and the accompanying notes have been presented in accordance with the Turkish CMB
announcements dated 17 April 2008 and 9 January 2009, adhering to the formats advised and including the information
mandated by the CMB of Turkey.
The Company maintains its books of account and prepares its statutory financial statements in accordance with accounting
principles in the Turkish Commercial Code and tax legislation.
In 2010
Basis of Presentation of Financial Statements and Significant Accounting Policies
Items included in the financial statements of each of the Company is measured using the currency of the primary economic
environment in which the Company operates (“the functional currency”).The financial statements are presented in TL, which is
the Company’s functional and presentation currency.
Presentation Currency
2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (CONTINUED)
Adjustment of financial statements in hyperinflationary economies
With the decision taken on 17 March 2005, the CMB announced that, effective from 1 January 2005, the application of inflation
accounting is no longer required for companies operating in Turkey and preparing their financial statements in accordance with
the financial reporting standards issued by CMB (“CMB Financial Reporting Standards”). Accordingly, IAS 29, “Financial Reporting
in Hyperinflationary Economies”, issued by the IASB, has not been applied in the financial statements for the accounting year
starting from 1 January 2005.
Going Concern
The accompanying financial statements have been prepared on the basis of the Company’s ability to continue as a going
concern. The Company’s current liabilities exceeded its current assets by TL 56.031.362 as at 31 December 2010 and
the Company’s net loss, operating loss and accumulated losses for the year then ended amounts to TL 12.827.562, TL
4.169.176 and TL 35.037.808, respectively. These conditions indicate the existence of an uncertainty, that may cast doubt
on the Company’s ability to continue as a going concern. In this respect, the Company management has made a considered
assessment of the Company’s ability to continue as a going concern and has taken certain measures as further explained in
Note 41 to the financial statements.
Accordingly, the Company management believes that the Company has the ability to continue its operations in the foreseeable
future.
2.2 Changes in Accounting Policies
Any significant changes in the accounting policies are retrospectively applied and the financial statements of the preceding
terms are restated. There has been no change in the accounting policies of the Company in the current year.
2.3 Changes in accounting estimates and errors
Any significant changes in accounting estimates are prospectively applied in financial statements and accounted for in the
current and preceding periods. There has been no significant change in the accounting estimates of the Company in the current
year.
In relation to errors identified in financial reporting, they are accounted for retrospectively and prior year financial statements
are restated.
2.4 Comparative Information
Numerical data on the financial statement are presented in a comparative manner to provide comparability of the financial
statements with the prior period financial statements, reclassifications are also posted on a retrospective manner.
The Company’s financial statements are being prepared in a way that provides comparability of the financial statements with
the prior period financial statements in order to enable the reader to identify the financial position as well as financial trends.
The Company prepared its balance sheets as at 31 December 2010 and 31 December 2009, as well as its statements of
comprehensive income, cash flow and changes in equity for the period between 1 January – 31 December 2010, in accordance
with the Series XI, No. 29 “Communiqué on Principles Regarding Financial Reporting in Capital Markets” issued by the CMB on 9
April 2008.
The Company’s financial statements are being prepared in a way that provides comparability of the financial statements
with the prior period financial statements in order to enable the reader to identify the financial position as well as financial
trends. In the current year, the Company had reclassified certain comparative balances in order to conform to current year’s
presentation. The nature, amount and reasons for each of the reclassifications are described below:
• The Company had presented the fair value of ‘Derivative financial instruments’ amounting to TL 4.648.600 and TL 948.797 in
“Non-current Financial Assets” and “Other Current Financial Liabilities” on its balance sheet dated 31 December 2009. In the
current period, these balances are offset and is presented within “Financial Assets”.
2.5 New and Revised International Financial Reporting Standards
a) New and Revised IFRSs affecting presentation and disclosure
IAS 1 Presentation of Financial Statements (as part of Improvements to IFRSs issued in 2010)
The amendments to IAS 1 clarify that an entity may choose to present the required analysis of items of other comprehensive
income either in the statement of changes in equity or in the notes to the financial statements. The Company has opted to early
adopt the amendment. The changes will be applied retrospectively.
Management
The following new and revised Standards and Interpretations have been adopted in the current period and have affected the
amounts reported and disclosures in these financial statements. Details of other standards and interpretations adopted in
these financial statements but that have had no material impact on the financial statements are set out below.
b) All amendments and new standards and interpretations issued and effective as of 2010 but not relevant to the Company.
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (as part of Improvements to IFRSs issued in 2009)
(a) specific disclosures in respect of non-current assets (or disposal groups) classified as held for sale or discontinued
operations, or
In 2010
The amendments to IFRS 5 clarify that the disclosure requirements in IFRSs other than IFRS 5 do not apply to non-current
assets (or disposal groups) classified as held for sale or discontinued operations unless those IFRSs require:
(b) disclosures about measurement of assets and liabilities within a disposal group that are not within the scope of the
measurement requirement of IFRS 5 and the disclosures are not already provided in the consolidated financial statements.
The amendments to IAS 7 specify that only expenditures that result in a recognised asset in the statement of financial position
can be classified as investing activities in the statement of cash flows. The application of the amendments to IAS 7 has resulted
in a change in the presentation of cash outflows in respect of development costs that do not meet the criteria in IAS 38
Intangible Assets for capitalisation as part of an internally generated intangible asset.
IAS 7 Statement of Cash Flows (as part of Improvements to IFRSs issued in 2009)
IFRS 3 (revised in 2008) Business Combinations
IFRS 3 (revised), “Business Combinations” and consequential amendments to IAS 27, “Consolidated and separate financial
statements”, IAS 28, “Investments in associates”, and IAS 31, “Interests in joint ventures”, are effective prospectively to
business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning
on or after 1 July 2009. The main impact of the adoption is as follows:
a) to allow a choice on a transaction-by-transaction basis for the measurement of non-controlling interests (previously referred
to as ‘minority’ interests) either at fair value or at the non-controlling interests’ share of the fair value of the identifiable net
assets of the acquire.
b) to change the recognition and subsequent accounting requirements for contingent consideration.
c) to require that acquisition-related costs be accounted for separately from the business combination, generally leading to
those costs being recognized as an expense in profit or loss as incurred.
d) in step acquisitions, previously held interests are to be remeasured to fair value at the date of the subsequent acquisition
with the value included in goodwill calculation. Gain or loss arising from the re-measurement shall be recognized as part of
profit or loss.
e) IFRS 3 (2008) requires the recognition of a settlement gain or loss when the business combination in effect settles a preexisting relationship between the Company and the acquiree.
IAS 27 (revised in 2008) Consolidated and Separate Financial Statements
The application of IAS 27(2008) has resulted in changes in the Company’s accounting policies for changes in ownership
interests in subsidiaries.
Specifically, the revised Standard has affected the Company’s accounting policies regarding changes in ownership interests in
its subsidiaries that do not result in loss of control. In prior years, in the absence of specific requirements in IFRSs, increases in
interests in existing subsidiaries were treated in the same manner as the acquisition of subsidiaries, with goodwill or a bargain
purchase gain being recognised, when appropriate; for decreases in interests in existing subsidiaries that did not involve a
loss of control, the difference between the consideration received and the adjustment to the non-controlling interests was
recognised in profit or loss. Under IAS 27(2008), all such increases or decreases are dealt with in equity, with no impact on
goodwill or profit or loss.
When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the revised Standard requires the
Company to derecognise all assets, liabilities and non-controlling interests at their carrying amount and to recognise the fair
value of the consideration received. Any retained interest in the former subsidiary is recognised at its fair value at the date
control is lost. The resulting difference is recognised as a gain or loss in profit or loss.
IAS 28 (revised in 2008) Investments in Associates
As part of Improvements to IFRSs issued in 2010, IAS 28(2008) has been amended to clarify that the amendments to IAS 28
regarding transactions where the investor loses significant influence over an associate should be applied prospectively. The
Company has applied the amendments to IAS 28 (2008) as part of Improvements to IFRSs issued in 2010 in advance of their
effective dates (annual periods beginning on or after 1 July 2010).
IFRIC 17, “Distributions of non-cash assets to owners”, effective for annual periods beginning on or after 1 July 2009. This is not
currently applicable to the Company, as it has not made any non-cash distributions.
IFRIC 18, “Transfers of assets from customers”, effective for transfer of assets received on or after 1 July 2009. This is not
relevant to the Company, as it has not received any assets from customers.
“Additional exemptions for first-time adopters” (Amendment to IFRS 1) was issued in July 2009. The amendments are required
to be applied for annual periods beginning on or after 1 January 2010. This is not relevant to the Company, as it is an existing
IFRS preparer.
IFRS 2, “Share-based Payments – Group Cash-settled Share Payment Arrangements” is effective for annual periods beginning on
or after 1 January 2010. This is not currently applicable to the Company, as the Company does not have share-based payment
plans.
Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (as part of Improvements to IFRSs
issued in 2008) clarify that all the assets and liabilities of a subsidiary should be classified as held for sale when the Company
is committed to a sale plan involving loss of control of that subsidiary, regardless of whether the Company will retain a noncontrolling interest in the subsidiary after the sale.
a) New and Revised IFRSs in issue but not yet effective
IFRS 1 (amendments) First-time Adoption of IFRS – Additional Exemptions and Two Other Amendments
Management
Improvements to International Financial Reporting Standards 2009 were issued in April 2009. The improvements cover 12 main
standards/interpretations as follows: IFRS 2 Share-based Payments, IFRS 8 Operating Segments, IAS 1 Presentation of Financial
Statements, IAS 17 Leases, IAS 18 Revenue, IAS 36 Impairment of Assets, IAS 38 Intangible Assets, IAS 39 Financial Instruments:
Recognition and Measurement, IFRIC 9 Reassessment of Embedded Derivatives, IFRIC 16 Hedges of Net Investment in a Foreign
Operation. The effective dates vary standard by standard but most are effective 1 January 2010.
Amendments to IFRS 1 which are effective for annual periods on or after 1 July 2010 provide limited exemption for first time
adopters to present comparative IFRS 7 fair value disclosures.
On 20 December, IFRS 1 is amended to;
• provide guidance for entities emerging from severe hyperinflation either to resume presenting IFRS financial statements or to
present IFRS financial statements for the first time.
The amendment above will be effective for annual periods beginning on or after 1 July 2011. These amendments are not
relevant to the Company, as it is an existing IFRS preparer.
In 2010
• provide relief for first-time adopters of IFRSs from having to reconstruct transactions that occurred before their date of
transition to IFRSs.
IFRS 9 Financial Instruments: Classification and Measurement
In November 2009, the first part of IFRS 9 relating to the classification and measurement of financial assets was issued. IFRS 9
will ultimately replace IAS 39 Financial Instruments: Recognition and Measurement. The standard requires an entity to classify
its financial assets on the basis of the entity’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial asset, and subsequently measure the financial assets as either at amortized cost or at fair value.
The new standard is mandatory for annual periods beginning on or after 1 January 2013. The Company has not had an
opportunity to consider the potential impact of the adoption of this standard.
In October 2010, IFRS 7 Financial Instruments: Disclosures is amended by IASB as part of its comprehensive review of off
balance sheet activities. The amendments will allow users of financial statements to improve their understanding of transfer
transactions of financial assets (for example, securitizations), including understanding the possible effects of any risks that may
remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate
amount of transfer transactions are undertaken around the end of a reporting period. The amendment will be effective for
annual periods beginning on or after 1 July 2011. The Company has not yet had an opportunity to consider the potential
impact of the adoption of this revised standard.
IFRS 7 Financial Instruments: Disclosures
IAS 12 Income Taxes
In December 2010, IAS 12 is amended. IAS 12 requires an entity to measure the deferred tax relating to an asset depending on
whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to
assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40
Investment Property. The amendment provides a practical solution to the problem by introducing a presumption that recovery
of the carrying amount will, normally be, be through sale. The amendment will be effective for annual periods beginning on
or after 1 January 2012. The Company has not yet had an opportunity to consider the potential impact of the adoption of this
revised standard.
IAS 24 (Revised 2009) Related Party Disclosures
In November 2009, IAS 24 Related Party Disclosures was revised. The revision to the standard provides government-related
entities with a partial exemption from the disclosure requirements of IAS 24. The revised standard is mandatory for annual
periods beginning on or after 1 January 2011. The Company has not yet had an opportunity to consider the potential impact of
the adoption of this revised standard.
IAS 32 (Amendments) Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements
The amendments to IAS 32 and IAS 1 are effective for annual periods beginning on or after 1 February 2010. The amendments
address the accounting for rights issues (rights, options or warrants) that are denominated in a currency other than the
functional currency of the issuer. Previously, such rights issues were accounted for as derivative liabilities. However, the
amendment requires that, provided certain conditions are met, such rights issues are classified as equity regardless of the
currency in which the exercise price is denominated. The Company has not yet had an opportunity to consider the potential
impact of the adoption of this amendment to the standard.
IFRIC 14 (Amendments) Pre-payment of a Minimum Funding Requirement
Amendments to IFRIC 14 are effective for annual periods beginning on or after 1 January 2011. The amendments affect entities
that are required to make minimum funding contributions to a defined benefit pension plan and choose to pre-pay those
contributions. The amendment requires an asset to be recognized for any surplus arising from voluntary pre-payments made.
The Company does not expect any impact of the adoption of this amendment on the financial statements.
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. IFRIC 19 addresses only the accounting by the entity
that issues equity instruments in order to settle, in full or part, a financial liability. The Company has not yet had an opportunity
to consider the potential impact of the adoption of this amendment to the standard.
Annual Improvements May 2010
Further to the above amendments and revised standards, the IASB has issued Annual Improvements to IFRSs in May 2010 that
cover 7 main standards/interpretations as follow: IFRS 1 First-time Adoption of International Financial Reporting Standards; IFRS
3 Business Combinations; IFRS 7 Financial Instruments: Disclosures; IAS 27 Consolidated and Separate Financial Statements;
IAS 34 Interim Financial Reporting and IFRIC 13 Customer Loyalty Programmes. With the exception of amendments to IFRS 3
and IAS 27 which are effective on or after 1 July 2010, all other amendments are effective on or after 1 January 2011.
Early adoption of these amendments are allowed. The Company has not yet had an opportunity to consider the potential
impact of the adoption of these amendments to the standards.
Revenue Recognition
Sales of goods:
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary
course of the Company’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts (Note 28). At each
balance sheet date any expenditure incurred but not yet invoiced is estimated and accrued. Revenue is recognised as follows:
2.6 Summary of Significant Accounting Policies
Sales of goods are recognised when the Company has delivered or sold products to the customer, the customer has accepted the
products and collectibility of the related receivables is reasonably assured. It is the Company’s policy to sell its products to the
customers with a right of return. Accumulated experience is used to estimate and provide for such returns at the time of sale.
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated cash receipts through the expected life of the financial asset to
that asset’s net carrying amount.
Management
Dividend and interest revenue:
Dividend revenue from investments is recognized when the shareholders’ rights to receive payment have been established.
Inventories are stated at the lower of cost and net realizable value. Costs, including an appropriate portion of fixed and variable
overhead expenses, are assigned to inventories held by the method most appropriate to the particular class of inventory, with
the majority being valued on a weighted average cost basis. Net realizable value represents the estimated selling price less
all estimated costs of completion and costs necessary to make a sale. When the net realizable value of inventory is less than
cost, the inventory is written down to the net realizable value and the expense is included in statement of income/(loss) in
the period the write-down or loss occurred. When the circumstances that previously caused inventories to be written down
below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic
circumstances, the amount of the write-down is reversed. The reversal amount is limited to the amount of the original writedown.
In 2010
Inventories
Tangible Assets
Any revaluation increase arising on the revaluation of such land, buildings and machinery is credited in equity to the properties
revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognized
in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A
decrease in carrying amount arising on the revaluation of such land and buildings is charged to profit or loss to the extent
that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset.
Depreciation on revalued buildings is charged to profit or loss.
Land, buildings and machinery held for use in the production or supply of goods or services, or for administrative purposes,
are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent
accumulated depreciation and subsequent accumulated impairment losses. The fair value at the date of revaluation is the
estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing
seller in an arm’s length transaction. Fair value determination is based on the market and cost approaches using quoted
market prices for similar items when available and in some cases, using replacement cost when appropriate. (for the preceding
sentence, please tailor if the entity has specific fair value estimation approaches. Disclosure of Fair Value Determination is
mandatory.) Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from
that which would be determined using fair values at the balance sheet date.
Fair Value Method
On the subsequent sale or retirement of a revalued property, the related revaluation surplus remaining in the properties
revaluation reserve is transferred directly to retained earnings. No transfer is made from the revaluation reserve to retained
earnings except when an asset is derecognized.
Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined,
are carried at cost, less any recognized impairment loss. Depreciation of these assets, on the same basis as other property
assets, commences when the assets are ready for their intended use.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where
shorter, the term of the relevant lease.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
Intangible Assets
Intangible assets are mainly composed of computer software and other related intangible assets none of which were internally
generated. All other items of intangible assets acquired before 1 January 2005 are carried at cost in the equivalent purchasing
power of TL as at 31 December 2004 and items acquired after 1 January 2005 are carried at cost, less the subsequent
depreciation and impairment loss, if any, at the financial statements. Amortization is charged on a straight-line basis over their
estimated useful lives of three years.
The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect
of any changes in estimate being accounted for on a prospective basis. Residual values of intangible assets are deemed as
negligible. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable
amount.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested annually for
impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to
sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are
reviewed for possible reversal of the impairment at each reporting date.
Borrowing Costs
Borrowings are recognised initially at the proceeds received, net of any transaction costs incurred. In subsequent periods,
borrowings are measured at amortised cost using the effective yield method; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised at the consolidated comprehensive income statement as finance
cost over the period of the borrowings. Loans with a maturity of less than 12 months are included in current liabilities and
in non-current liabilities with a maturity of longer than 12 months. Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for
their intended use or sale. In 2010, the Company does not have any qualified assets, and borrowing costs are recognised in the
consolidated comprehensive income statement in the period in which they are incurred.
Financial Assets
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term or if so designated by management. Assets in this
category are classified as current assets, if they are either held for trading or are expected to be realized within 12 months of the
balance sheet date. The Company has no financial assets in this category.
Financial Instruments
The Company classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and
receivables, available-for-sale financial assets and held-to-maturity financial assets. The classification depends on the purpose for
which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset, or, where appropriate, a shorter period. Financial assets at fair value through profit or
loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of
selling in the short term or if so designated by management.
Management
The effective interest method
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading
unless they are designated as hedges.
The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognized in
profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are
recognized in other comprehensive income.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as ‘loans and receivables’. Loans and receivables are measured at amortized cost using the effective
interest method less any impairment.
Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the
dividends is established.
Quoted equity investments and quoted certain debt securities held by the Group that are traded in an active market are
classified as being available- for-sale financial assets and are stated at fair value. The Group also has investments in unquoted
equity investments that are not traded in an active market but are also classified as available-for-sale financial assets and
stated at cost since their value can’t be reliably measured. Gains and losses arising from changes in fair value are recognized in
other comprehensive income and accumulated in the investments revaluation reserve with the exception of impairment losses,
interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are
recognized in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss
previously accumulated in the investments revaluation reserve is reclassified to profit or loss.
In 2010
Available-for-sale financial assets
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial
assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets
carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present
value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception
of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable
is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or
loss.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other
comprehensive income are reclassified to profit or loss in the period.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments which
their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash
and are subject to an insignificant risk of changes in value. The Group’s cash and cash equivalents are classified under the
category of ‘Loans and Receivables’.
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting
policies adopted for specific financial liabilities and equity instruments are set out below.
Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest
expense recognized on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability, or, where appropriate, a shorter period.
For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in TL.
In preparing the financial statements of the individual entities, transactions in currencies other than TL (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items
denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit
or loss in the period in which they arise.
Foreign Currency Transactions
Loss per share
Companies can increase their share capital by making a pro-rata distribution of shares (“bonus shares”) to existing shareholders
from retained earnings. For the purpose of losses per share computations, the weighted average number of shares outstanding
during the year has been adjusted in respect of bonus shares issues without a corresponding change in resources, by giving
them retroactive effect for the year in which they were issued and for each earlier year.
Management
Loss per share disclosed in the comprehensive statement of income are determined by dividing net loss for the year by the
weighted average number of shares that have been outstanding during the year.
Events after the balance sheet date
In the case that events require a correction to be made occur subsequent to the balance sheet date, the Company makes
the necessary corrections to the financial statements. Moreover, the events that occur subsequent to the balance sheet date
and not require a correction to be made are disclosed in accompanying notes, where the decisions of the users of financial
statements are affected.
Provisions, contingent assets and contingent liabilities
In 2010
Subsequent events, announcements related to net profit or even declared after other selective financial information has been
publicly announced, include all events that take place between the balance sheet date and the date when balance sheet was
authorised for issue.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
Related Parties
For the purpose of the financial statements, shareholders having control, joint control or significant influence over the
Company, fellow subsidiaries and key management personnel together with companies controlled, jointly controlled or
significantly influenced by them are considered as and referred to as related parties. (Note 37).
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the
balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured
using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
Provisions are recognized when the Company has a present obligation as a result of a past event, and it is probable that the
Company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.
Operating Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors that takes strategic decisions.
The Board of Directors makes strategic decisions as a whole over the operations of the Company as the Company operates
in a single industry and operations outside Turkey do not present an important portion in overall operations. Based on
those reasons, there is a single reportable segment in accordance with the provisions in IFRS 8 and segment reporting is not
applicable.
Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be
received and the Company will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in the comprehensive income statement over the period
necessary to match them with the costs that they are intended to compensate.
Government grants relating to property, plant and equipment are included in non-current liabilities as deferred government
grants and are credited to the comprehensive income statement on a straight-line basis over the expected lives of the related
assets.
Taxation and deferred income taxes
Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore,
provisions for taxes, as reflected in the accompanying consolidated financial statements, have been calculated on a separateentity basis.
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
consolidated comprehensive income statement because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only recognized to the extent that it is
probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they
are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability
is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the
balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its
current tax assets and liabilities on a net basis.
Employee Benefits
Under Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily leaving the
Company. Such payments are considered as being part of defined retirement benefit plan as per International Accounting
Standard No. 19 (revised) “Employee Benefits” (“IAS 19”).
The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit
obligation.
Management
Termination and retirement benefits:
Statement of cash flows
In the cash flow statement, the cash flows for the term are classified and reported basing upon the operations, investment and
financing activities.
Cash flows related with the investment activities indicate the cash flows which the Company uses and acquires in its
investment activities.
Cash flows related with the financing activities indicate the resources which the Company uses in its financing activities and
the repayments of such resources.
In 2010
Cash flows from operating activities indicate the cash flow from the Company’s activities.
Cash and cash-like assets include the cash and bank deposits as well as short-term high-liquidity investments with certain
amounts and with maturities equal to or less than 3 months, which may be easily liquidated.
Ordinary shares are classified as capital. As approved, the proportionate capital increases as applied to existing shareholders
are reported at their nominal values. Dividend payments of ordinary shares are entered in the records in the term when they
are described in the capital. And stock issuance premiums represent the difference between the face values of the publicly
traded stocks and their sales prices.
Capital and dividends
2.7 Critical accounting estimates and judgements
Significant estimates of the Company management
As described on Note 2.5. management during the implementation of the accounting policies, with a significant impact on the
amounts recognized in financial statements (other than the estimates discussed below) has made the following comments:
Impairment of available-for-sale financial assets
The Company reviews its portfolio of available-for-sale financial assets for potential impairment. The determination of impairment
requires management to use significant judgment especially in AFS financial assets that do not have independent market valuation
benchmarks. In making its assessment, the Company evaluates various factors including the financial health of and outlook of the
investee, the significance in the decline in the fair value of the investment and whether the decline is prolonged or temporary.
Deferred taxes
Deferred tax assets and liabilities are recorded using substantially enacted tax rates for the effect of temporary differences
between book and tax bases of assets and liabilities. Currently, there are deferred tax assets resulting from operating loss carryforwards and deductible temporary differences, all of which could reduce taxable income in the future. Based on available
evidence, both positive and negative, it is determined whether it is probable that all or a portion of the deferred tax assets will
be realized. The main factors which are considered include future earnings potential; cumulative losses in recent years; history of
loss carry-forwards and other tax assets expiring; the carry-forward period associated with the deferred tax assets; future reversals
of existing taxable temporary differences; tax-planning strategies that would, if necessary, be implemented, and the nature of the
income that can be used to realize the deferred tax asset. If based on the weight of all available evidence, it is the Company’s belief
that taxable profit will not be available sufficient to utilize some portion of these deferred tax assets, then some portion of or all of
the deferred tax assets are not recognized.
The Company has not recognized deferred tax assets because it is in the development stage and it is not apparent that taxable
profit will be available sufficient to recognize deferred tax assets. If future results of operations exceed the Company’s current
expectations, the existing unrecognized deferred tax assets may be recognized, resulting in future tax benefits.
Provision for doubtful receivables
Impairment loss in the trade receivables and other receivables are based upon the Company management’s evaluation about
the volume of the amount of trade, past experiences and overall economic conditions.
Useful lives of the assets
The Company reviews the estimated useful lives of its property, plant and equipment at the end of each reporting period. The
Company takes into consideration the intended use of the property, plant and equipment, the advancement in technology related
to the particular type of property, plant and equipment as well as other factors that may require management to extend or shorten
the useful lives and the assets’ related depreciation.
3. BUSINESS COMBINATIONS
None. (31 December 2009: None).
4. JOINT VENTURES
5. SEGMENT REPORTING
Cash in hand
Banks
- TL denominated time deposits
- TL denominated demand deposits
- Foreign currency denominated demand deposits
Other
31 December 2010 6.265 831.261 600.000 231.261 - 109.434 946.960 31 December
2009
5.645
510.370
350.000
97.754
62.616
516.015
6. CASH AND CASH EQUIVALENTS
Time deposits mature within one month with effective interest rate of 6.50% per annum (“p.a.”) (2009: 6.50% p.a.). Based on the
independent data with respect to the credit risk assessment of the banks at which the Company has deposits, the credit quality
of the banks is sufficient. The market values of cash and cash equivalents approximate carrying values, including accrued income
at the respective balance sheet date.
Management
Information on the nature and level of cash and cash equivalents risks are disclosed in Note 38.
Available-for-sale investments:
Shares not traded on stock markets
Desa Enerji Elektrik Üretimi Otoprodüktör
Grubu A.Ş. (“Desa Enerji”)
Provision for impairment
Shareholding
Rate %
0,51
31 December
2010
Shareholding
Rate %
503.940
(400.613) 103.327 31 December
2009
0,51
503.940
(503.940)
-
In 2010
7. FINANCIAL ASSETS
Available-for-sale investment (Desa Enerji) has been stated at fair value which are determined based on the discounted cash
flows as of 31 December 2010.
31 December
2010
31 December
2009
Short term bank borrowings
Short term finance lease liabilities
5.303.399
56.559
6.388.644
9.562
Short-term financial borrowings
5.359.958
6.398.206
-
(3.699.803)
85.629
85.629
47.526.600
47.526.600
5.445.587
53.924.806
Fair value of derivative financial instruments
Long term bank borrowings
Long term finance lease liabilities
Long-term financial borrowings
Total financial borrowings
Guarantees given related to the Company’s borrowings and other financial obligations are disclosed in Note 23.
8. FINANCIAL LIABILITIES
8. FINANCIAL LIABILITIES (CONTINUED)
Based on the loan agreement undersigned on 27 September 2006 between the Company and Morgan Stanley International
Limited, the Company received a borrowing amounting to EUR 22.000.000 with maturity date of 27 September 2013 and
with interest rate of Euribor + 5.60% p.a. Yaşar Holding A.Ş., Çamlı Yem Besicilik San. ve Tic. A.Ş., Dyo Boya Fabrikaları San. ve
Tic. A.Ş., Pınar Süt Mamülleri Sanayii A.Ş., Pınar Su San. ve Tic. A.Ş., Pınar Entegre Et ve Un San. A.Ş. and Yaşar Birleşik Pazarlama
Dağıtım Turizm ve Tic. A.Ş. have undersigned this loan agreement as the guarantors of this borrowing obtained. With respect to
the long term borrowing of EUR 22,000,000, the Company signed a cross currency swap agreement with Morgan Stanley & Co.
International Limited together with the undersigned International Swaps and Derivatives Association (“ISDA”) master agreements,
related appendices and corresponding swap confirmation documents. In line with this agreement, the Company swapped the
borrowing amounting to EUR 22,000,000 with the interest rate of Euribor + 5.60% p.a., with a currency swap amounting to TL
42,878,000, using the interest rate of TL swap curve +8.50% p.a..
The borrowing amounting to EUR 22.000.000 is closed via the payment to the financial institution as of 8 October 2010. The
related payment has been realized by the financing from Yaşar Holding (Note 37).
As at 31 December 2010 and 31 December 2009, The Company’s variable and fixed interest rate loans and other financial
liabilities prepared in accordance with the interest rate maturity breakdown of the date of renewal as of 31 December 2010 and
2009 is as follows:
Short-term bank borrowings:
USD borrowings (*)
TL borrowings
Finance lease liabilities EUR
Effective weighted average
interest rate (%)
31 December 31 December
2010
2009
3,03
5,05
Original foreign currency
2010
2009
3.430.400
27.602
3.675.911
32.177
4.426
TL
2010
2009
5.303.399
56.559
5.359.958
5.534.819
32.177
9.562
5.576.558
Short-term portion of long-term
bank borrowings:
EUR borrowings
-
6,62
-
380.340
-
821.648
Total short-term bank borrowings
5.359.958
6.398.206
Fair value of derivative financial
instruments
Foreign currency swap transactions
-
-
-
-
-
(3.699.803)
Long-term bank borrowings:
EUR borrowings
Finance lease liabilities EUR
Total long-term bank borrowings
6,62
41.789
22.000.000
85.629
85.629
47.526.600
47.526.600
(*) At 31 December 2010, USD denominated bank borrowings consist of spot borrowings with fixed interest rates between
2,5% p.a. and 3,85% p.a. (31 December 2009: 4,5%-5,5%).
b) Finance Lease Liabilities
Finance Lease Liabilities are as follows:
Finance Lease Liabilities:
Current
Non-Current
31 December 2010
Euro TL
27.602 56.559
41.789 85.629
69.391 142.188
31 December 2009
Euro TL
4.426 9.562
- 4.426 9.562
Finance lease liabilities are related to purchases of machinery and equipment and have an effective interest rate of 0,08% p.a.
(2009: 4,34% p.a.).
9. OTHER FINANCIAL LIABILITIES
a) Trade Receivables:
The Company’s trade receivables at the balance sheet date are as follows:
31 December 2009
18.030.820
1.754.359
(3.430.002)
16.355.177
The effective weighted average interest rates applied to TL, EUR, USD and GBP denominated receivables are 6,80% p.a., 0,77%
p.a., 0,26% p.a. and 0,59% p.a. (2009: TL and EUR denominated receivables are 7,30% and 0,41% p.a. respectively), respectively
as of 31 December 2010. Trade receivables are all short term and mature within two months (2009: two months).
The aging of overdue receivable that are not impaired is below:
31 December 2010
1.723.737
1.250
429.273
2.154.260
31 December 2009
1.551.854
62.992
280.210
1.895.056
Movements in the provision for impairment of receivables is below:
Movement of allowance for doubtful receivables
Opening balance
Charged to the statement of comprehensive income
Collected during the year
Closing balance
2010
(3.430.002)
(45.740)
106.327
(3.369.415)
2009
(1.677.448)
(1.756.005)
3.451
(3.430.002)
Trade receivables result from sales of semi-finished and finished sanitary paper which are performed via dealers and chain stores
in the domestic market and through Yaşar Dış Ticaret A.Ş., its related party, through the export market. In addition, a significant
portion of net sales of the Company in 2010 was conducted through a single chain store which operates abroad as well as
throughout the country.
Guarantees received for trade receivables
As of 31 December 2010, TL 1.744.990 of guarantees were held for receivables worth TL 13.874.869 (31 December 2009: TL
3.666.534). TL 5.460 (31 December 2009: TL 55.000) of guarantees were held for non-impaired but overdue receivables worth TL
2.154.260 (31 December 2009: TL 1.614.846).
In 2010
Up to 3 months
3-6 months
Over 6 months
31 December 2010
12.598.950
2.869.803
(3.369.415)
12.099.338
Short term trade receivables
Trade receivables
Notes receivable
Provision for impairment of receivables
Management
10. TRADE RECEIVABLES AND PAYABLES
None. (31 December 2009:None).
10. TRADE RECEIVABLES AND PAYABLES (CONTINUED)
b) Trade Payables
As at the balance sheet of the Company’s trade payables are as follows:
Short term trade payables
Trade payables
Notes payable
31 December 2010
5.050.774
7.765.995
12.816.769
31 December 2009
6.443.996
6.929.765
13.373.761
The effective weighted average interest rates on TL, USD and EUR denominated short-term trade payables are 6,69% p.a., 0,37%
p.a. and 1,23% p.a., respectively as of 31 December 2010 (2009: 7,28% p.a., 0,31% p.a. and 0,58% p.a.). Short-term payables
mature within two months (2009: two months).
Long term trade payables
Notes payable
31 December 2010 31 December 2009
550.362 1.735.096
As of 31 December 2010, long-term trade payables are mainly resulted from property, plant and equipment investments of
the Company and mature within two years (2009: three years). The effective weighted average interest rate on long-term trade
payables is 1,47% p.a. (2009: 1,22% p.a.).
11. OTHER RECEIVABLES AND PAYABLES
a) Other Receivables
Short-term other receivables
Receivables from Central Registry Agency
Long-term other receivables
Deposits and guarantees given
Other Payables
Other Payables
31 December 2010
-
31 December 2009
352.482
352.482
31 December 2010 12.400 31 December 2009
6.999
31 December 2010 9.010 31 December 2009
-
31 December 2010
5.502.458
1.837.886
2.007.413
92.098
2.060.364
11.500.219
31 December 2009
4.729.248
844.598
1.072.931
104.436
2.160.205
8.911.418
12. RECEIVABLES AND PAYABLES FROM FINANCE SECTOR OPERATIONS
13. INVENTORIES
Raw materials
Work in progress
Finished goods
Trade goods
Spare parts and supplies
13. INVENTORIES (CONTINUED)
Inventories are carried at their cost. TL 2.543.921 of raw materials consists of goods in transit as of 31 December 2010 (2009:
TL 2.098.224).
Cost of materials recognised as expense and included in cost of goods sold is worth TL 47.352.271 as of 31 December 2010
(2009: TL 35.397.770) (Note 30).
14. BIOLOGICAL ASSETS
None (31 December 2009: None).
15. CONSTRUCTION CONTRACT ASSETS
16. INVESTMENT IN ASSOCIATES ACCOUNTED BY EQUITY METHOD
Management
17. INVESTMENT PROPERTY
18. PROPERTY, PLANT AND EQUIPMENT
Opening balance,
1 January 2010
12.275.000
26.282.625
110.966.626
767.722
3.122.644
9.558.084
60.944
Total
163.033.645
Additions
-
32.889
216.387
-
86.994
35.901
223.507
595.678
Disposals
-
-
(108.028)
(652.399)
(102.364)
(13.703)
-
(876.494)
Transfers
-
-
284.451
-
-
-
(284.451)
-
Closing balance,
31 December 2010
12.275.000
26.315.514
111.359.436
115.323
3.107.274
9.580.282
-
162.752.829
Less: Accumulated
depreciation:
Opening balance,
1 January 2010
-
(10.364.716)
(59.789.744)
(767.722)
(2.745.991)
(4.681.831)
-
(78.350.004)
Charge for the year
-
(1.306.720)
(6.304.661)
-
(88.724)
(403.358)
-
(8.103.463)
Disposals
-
-
108.028
652.399
98.826
862
-
860.115
Transfers
-
-
-
-
-
-
-
-
Closing balance,
31 December 2010
-
(11.671.436)
(65.986.377)
(115.323)
(2.735.889)
(5.084.327)
-
(85.593.352)
Net book value as at
31 December 2010
12.275.000
14.644.078
45.373.059
-
371.385
4.495.955
-
77.159.477
In 2010
Other
tangible
Construction
assets in progress Motor
Furniture
vehicles and fixtures Environment and Sustainability
Cost
Machinery
and
equipment Corporate Governance and
Buildings
and land
Land improvements 58- Viking Kağıt Annual Report 2010
18. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Cost
Land Opening balance, 1 January 2009
12.275.000
Buildings
and land
improvements Machinery
and
equipment Motor
vehicles 27.205.144
110.567.843
1.071.801
Other
tangible
assets Furniture
and fixtures 3.333.271
Construction
in progress 9.558.084
63.397
Total
164.074.540
Additions
-
71.802
118.893
-
50.054
-
277.438
518.187
Disposals
-
(994.321)
-
(304.080)
(260.682)
-
-
(1.559.083)
Transfers
-
-
279.890
-
-
-
(279.890)
-
Closing balance,
31 December
2009
12.275.000
26.282.625
110.966.626
767.721
3.122.643
9.558.084
60.945
163.033.644
Less:
Accumulated
depreciation:
Opening balance, 1 January 2009
-
(10.033.255)
(53.111.546)
(1.043.830)
(2.915.812)
(4.281.058)
-
(71.385.501)
Charge for the
year
-
(1.313.707)
(6.678.198)
(17.377)
(88.760)
(400.773)
-
(8.498.815)
Disposals
-
982.246
-
293.486
258.581
-
-
1.534.313
Closing balance,
31 December
2009
-
(10.364.716)
(59.789.744)
(767.721)
(2.745.991)
(4.681.831)
-
(78.350.003)
Net book
value as at 31
December 2009
12.275.000
15.917.909
51.176.882
-
376.652
4.876.253
60.945
84.683.641
Market Valuations
Land, buildings and land improvements, machinery and equipments are stated at their fair values based on the valuations
performed by the external independent valuers at 31 December 2008, less the subsequent depreciation, based on the
Company’s assumption that those values do not significantly differ from their fair values at 31 December 2010. As there were not
any recent similar buying/selling transactions nearby, revaluations of land were based on the method of reference comparison
whereas revaluations of buildings and land improvements were derived from the present situations of the construction and
market values.
Movements in revaluation reserve related to land, buildings, land improvements, machinery and equipment in 2010 and 2009
were as follows:
Movements in revaluation reserves
Opening balance, January 1
Depreciation transferred from revaluation reserve to accumulated losses
Closing balance, December 31
31 December
2010
31 December
2009
27.889.321
(2.898.368)
24.990.953
30.492.010
(2.602.689)
27.889.321
Current year depreciation and amortization charges of TL 7.954.748 (2009: TL 8.430.915) have been allocated to cost of sales,
TL 60.765 (2009: TL 73.639) to marketing, selling and distribution expenses and TL 178.684 (2009:TL 197.233) to general and
administrative expenses.
Rights
2010 1.264.242 113.674 1.377.916 (1.038.751) (90.735) (1.129.486) 248.430 2009
1.179.212
85.030
1.264.242
(925.779)
(112.972)
(1.038.751)
225.491
Management
Cost:
Additions
Less: Accumulated amortization:
Charge for the year
Net book value as at 31 December
19. INTANGIBLE ASSETS
20. GOODWILL
21. GOVERNMENT GRANTS
None. (2009: None).
Short-term provisions
Provision for expenses (*)
Provision for litigation
Other
31 December 2010
979.446
341.883
22.148
1.343.477
31 December 2009
751.000
337.755
1.096
1.089.851
In 2010
22. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES
Seniority incentive bonus
31 December 2010
100.011
31 December 2009
87.789
Movement of provision as of 31 December 2010 and 2009 is as follows:
1 January
Provision for expenses
Provision for contingent expenditures
Seniority incentive bonus
Reversal of provisions
Other provisions
31 December
2010
2009
1.177.640
523.779
228.446
44.276
12.222
(40.148)
21.052
1.443.488
451.000
137.755
87.789
(23.779)
1.096
1.177.640
Long-term provisions
(*) Provision for disposal of garbage is related to destruction cost of scrap output from Deink facility and is charged to cost of
sales.
22. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (CONTINUED)
Contingent Liabilities:
There are certain legal proceedings against the Company amounting to TL 341.883 (2009: TL 337,755); for all of which full
provisions have been recognized in the statement of comprehensive income. Moreover, with the claim of keeping certain
information secret during the share sales process, there is a legal proceeding against the Company to compensate for the
investors’ loss; amounting to TL 972.761 (2009: TL 972.761) and also a legal proceedings against the Company TL 259.342
(2009: TL 259.342) related with the disagreement with one of the dealers of the Company. TL 450.745 of the lawsuits filed
by the investors was finalized on 4 May 2009, and the remaining TL 522.016 was finalized on 12 June 2009 in favor of the
Company. This decision was appealed by the investors and the ruling of the Court of Appeal is pending. The management and
legal counselor of the Company believe that these proceedings will result in the Company’s favor; due to the content and the
outcomes of similar case laws; therefore no provision has been allocated for these cases in the financial statements.
23. COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES
Guarantees received
Guarantees received
Letters of guarantee
Mortgages
Other
Guarantees given
Guarantees given
Letters of guarantee
Other
31 December 2010 48.580.478
7.393.000
2.331.370
189.110
58.493.958
31 December 2010 593.759.802
2.185.740
595.945.542
31 December 2009
51.542.754
6.604.000
2.812.990
60.959.744
31 December 2009
571.026.690
2.518.951
214.779
573.760.420
23. COMMITMENTS, CONTINGENT ASSETS AND LIABILITIES (CONTINUED)
TL Equivalent
A. Total amount of CPMs given for
the Company’s own legal personality
2.365.545
B. Total amount of CPMs given
on behalf of fully consolidated
companies
C. Total amount of CPMs given
for continuation of its economic
activities on behalf of third parties
D. Total amount of other CPMS
593.579.997
i. Total amount of CPMs given
on behalf of the majority
shareholder
542.352.497
ii. Total amount of CPMs given
to on behalf of other group
companies which are not in
scope of B and C.
51.227.500
iii. Total amount of CPMs given
on behalf of third parties which
are not in scope of C.
Total
595.945.542
CPM/Equity:
3434%
USD
31 December 2009
EUR
TL Equivalent
USD
EUR
-
87.748
2.733.730
-
-
-
-
-
-
-
250.000.000 101.059.000
571.026.690
- 264.327.496
250.000.000
76.059.000
391.721.790
- 181.327.496
-
25.000.000
179.304.900
-
250.000.000 101.146.748
573.760.420
- 264.327.496
Management
31 December 2010
83.000.000
2155%
In 2010
Collaterals, Pledges and Mortgages
(‘CPM’) provided by the Company:
Collaterals, Pledges and Mortgages (“CPM”) positions of the Company as of 31 December 2010 and 2009 are summarized as
follows;
Commitments:
As of 31 December 2010 the Company has no sales commitment (2009: 47.683 TL). The Company’s commitment for raw
material purchases amounted to TL 2,543,921 as at 31 December 2010, equivalent of USD 1,562,636, EUR57,875 and
GBP3,975 (2009: TL 6,939,646, equivalent of USD 1,272,579, TL 4,855,437 and EUR 73,642).
As the guarantees received and given are obtained for the borrowings of the Company, the maturity of those contingent assets
and liabilities are limited to the redemption schedule of borrowings.
Guarantees given are mainly related with joint guarantees provided by the Company with Yaşar Holding, Dyo Boya, Pınar Süt,
Pınar Su, Pınar Et, YBP and Çamlı Yem for repayment of borrowings obtained by Yaşar Group companies from international
capital markets and financial institutions amounting to EUR 101,059,000 and USD 250,000,000, equivalent of TL595,945,542
(2009: EUR264,289,000, equivalent of TL 570,943,527).
24. EMPLOYEE BENEFITS
Provision for employment termination benefits
31 December 2010 1.673.357 31 December
2009
1.346.249
Provision for employment termination benefit
Under Turkish Labor Law, the Company is required to pay employment termination benefits to each employee who has qualified.
Also, employees are required to be paid their retirement pay provisions who retired by gaining right to receive retirement pay
provisions according to current 506 numbered Social Insurance Law’s 6 March 1981 dated, 2422 numbered, 25 August 1999
dated and 4447 numbered with 60th article that has been changed. Some transition provisions related to the pre-retirement
service term was excluded from the law since the related law was changed as of 23 May 2002.
The amount payable consists of one month’s salary limited to a maximum of TL 2.517,01 TL for each year of service as of 31
December 2010 (2009: TL 2.365,16).
The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from
the retirement of employees. IAS 19 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:
The principal assumption is that the maximum liability for each year of service will increase parallel with inflation. Thus, the
discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently,
in the accompanying financial statements as at 31 December 2010, the provision has been calculated by estimating the present
value of the future probable obligation of the Company arising from the retirement of the employees. The provisions at the
respective balance sheet dates have been calculated assuming an annual inflation rate of 5,10% and a discount rate of 10%,
resulting in a real discount rate of approximately 4,66% (2009: 5,92%).
The anticipated rate of forfeitures is considered as 95,80% (2009: 96,85%). As the maximum liability is revised semi annually, the
maximum amount of TL 2.623,23 effective from 1 January 2011 has been taken into consideration in calculation of provision from
employment termination benefits.
Movements of provision for employment termination benefits
Provision at 1 January
Service costs
Interest costs
Termination benefits paid
Provision at 31 December
25. PENSION PLANS
2010
1.346.249
462.674
62.735
(198.301)
1.673.357
2009
1.107.220
329.693
65.547
(156.211)
1.346.249
Value added tax (VAT) receivables
Prepaid taxes and funds
Order advances given
Due from personnel
Prepaid expenses
Other current liabilities
Order advances received
Withholding taxes and funds payable
Overdue taxes payables
Other
31 December
2010
478.092
133.383
85.742
35.864
21.984
755.065
31 December
2009
8.041
11.129
10.423
8.165
744
38.502
31 December
2010
516.686
317.941
2.998
837.625
31 December
2009
35.757
310.593
246.606
144
593.100
Management
Other Current Assets
26. OTHER ASSETS AND LIABILITIES
27. EQUITY
a) Equity
The compositions of the Company’s statutory paid-in share capital at 31 December 2010 and 2009 were as follows:
31 December
2010 % 31 December
2009
60,58%
35,12%
4,3%
24.231.370
14.049.855
1.718.775
65,92%
29,37%
4,71%
24.038.460
10.710.808
1.718.775
100%
40.000.000
100%
36.468.043
Based on the decision of Board of Directors dated 27 October 2008, the capital increase by TL 15.000.000 in cash from TL
50.000.000 to TL 65.000.000 was registered at İzmir Trade Registry Office on 18 June 2009.
Based on the Board of Directors resolutions dated 30 July 2009 and 2 September 2009, the Company’s share capital has
been decreased from TL 65.000.000 to TL 28.000.000 and at the same time increased to TL 40.000.000. Based on the CMB
announcement “Principles and Guidelines on Capital Decreases by Publicly Held Corporations not Requiring Fund Outflow”
promulgated in CMB Weekly Bulletin No.2009/18, share capital amounting to TL 65.000.000 and accumulated losses
amounting to TL 71.921.825 as reported 30 June 2009 financial statements which were subjected to limited review, were
decreased by TL 37.000.000 both. The General Assembly decision on decrease of capital was registered at İzmir Registry Office
on 22 December 2009.
There are 40.000.000 (2009: 36.468.043) units of shares with a face value of TL 1 each. There are no different types of share
and no privileges were given to specific shareholders.
Based on the Board of Directors decisions dated 2 September 2009, during the reduction of the issued capital from TL
65.000.000 to TL 28.000.000 and the simultaneous increase of issued capital to TL 40.000.000 on 22 December 2009 was
paid as of 22 January 2010 and the issued capital increased by TL 40.000.000. The TL 40.000.000 increase of capital was
registered on 12 February 2010.
In 2010
% Environment and Sustainability
Public quotation
Other
Shareholders
27. EQUITY (CONTINUED)
Share premium amounting to TL 229.144 (2009: 71.146) represents the difference between face value and selling price of
common stocks offered to the public.
The legal reserves consist of first and second reserves, appropriated in accordance with the 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
Company’s paid-in 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 capital.
In accordance with the CMB regulations effective until 1 January 2008, inflation adjustment differences arising at the initial
application inflation accounting, which were recorded under “accumulated losses,” could be net off from the profit to be
distributed based on the CMB regulations. In addition, the aforementioned amount recorded under “accumulated losses” could
be net off against the reserves arising from the inflation adjustment of net off profit for the period and undistributed retained
earnings. Remaining amount, if any, could be net off against the reserves arising from the inflation adjustment of extraordinary
reserves, legal reserves and share capital, respectively.
In addition, in accordance with the CMB regulations effective until 1 January 2008, “Capital, Share Premiums, Legal Reserves,
Special Reserves and Extraordinary Reserves” were recorded at their statutory carrying amounts and the inflation adjustment
differences related to such accounts were recorded under “Inflation adjustment to shareholders’ equity” in equity at the initial
application of inflation accounting. “Inflation adjustment to shareholders’ equity” could have been utilised in issuing bonus
shares and offsetting accumulated losses, carrying amount of extraordinary reserves could have been utilised in issuing bonus
shares, cash dividend distribution and offsetting accumulated losses.
In accordance with the Communiqué No: XI-29 and related announcements of CMB, effective from 1 January 2008, “Share
capital”, “Restricted Reserves” and “Share Premium” shall be carried at their statutory amounts. The valuation differences (such
as inflation adjustments) shall be classified as follows:
- the difference arising from the “Paid-in Capital” and have not been transferred to capital yet, shall be classified under the
“Adjustment to Share Capital”,
- the difference due to the inflation adjustment of “Restricted Reserves” and “Share Premium” and the amount has not been
utilised in dividend distribution or capital increase yet, shall be classified under “Retained earnings”. Other equity items shall
be carried at the amounts in accordance with the CMB Financial Reporting Standards.
In addition, based on the CMB Decree 7/242, dated 25 February 2005, if the amount of profit distributions calculated in
accordance with the net distributable profit requirements of the CMB does not exceed the statutory net distributable profit, the
whole amount of distributable profit should be distributed. If it exceeds the statutory net distributable profit, the whole amount
of the statutory net distributable profit should be distributed It is stated that dividend distributions should not be made if there
is a loss in either the financial statements prepared in accordance with CMB regulations or in the statutory financial statements.
Based on CMB Decree No. 02/51, dated 27 January 2010, there is no mandatory minimum profit distribution requirement for the
quoted entities at the stock exchange for profits arising from operations effective from 1 January 2009. Regarding the dividend
distribution for the current and following years, the entities are to distribute their profits for the current and following years under
the scope of CMB Communiqué No. IV-27, their articles of association and their previously publicly declared profit distribution
policies.
Moreover, for the determination of the distribution principles of the profits acquired by publicly held corporations according to
the CMB decision in question, it is resolved that:
The total amount of the profit for the period which remains after the deduction of the previous year’s losses registered in the
legal books of companies and other sources which can be distributed in the scope of profit distribution, shall be indicated in the
footnotes of the financial statements to be prepared and announced to the public in accordance with the Communiqué XI, No: 29,
In the application of the dividend distribution period stated in Article 6 of the CMB Communiqué IV, No: 27, the following
conditions apply:
i. If the whole dividend is to be distributed in cash, the distribution shall continue to be made until the end of the fifth month
following the accounting period,
ii. If the dividend is to be distributed as shares, an application shall be made to the Board before the end of the fifth month
following the accounting period, so that the shares to be issued for the distribution are registered by the Board and the share
distribution shall be completed until the end of the sixth month following the accounting period,
27. EQUITY (CONTINUED)
iii. If both of the options mentioned in (i) and (ii) are preferred, the above-mentioned transactions shall be carried out separately
but within the periods stated in the related paragraphs.
i. In accordance with Decree 19/42 dated 6 May 2004, the Company has increased its capital from TL 9.733.500 to TL 33.093.900
(TL 23.360.400) through the utilization of the Revaluation Fund. This capital increase was conducted in accordance with CMB’s
Decree 7/134 and dated 20 February 2004,
ii. On the basis of a decision made on the Company’s general assembly meeting dated 7 April 2004 which provided the relevant
authorization to the Board of Directors, the Board of Directors have decided on 7 April 2005 to offset TL 38.569.530 from the
Company’s accumulated deficit from its 2003 equity,
Management
On the other hand, according to CMB’s Decree numbered 2/24 and dated 15 January 2009:
iii. Based on the transactions disclosed in (i) and (ii), the deficit balance of TL 22.004.609 on the Capital Inflation Adjustment
Difference which is presented after Paid Capital balance on the balance sheet has been offset with the Accumulated Deficit
balance in order to avoid any confusion regarding the existing payment of the capital balance.
70.911
4.818
(44.770.175)
(12.522.402)
(57.216.848)
70.911
4.818
(41.368.505)
(3.401.670)
(44.694.446)
b) Revaluation Reserves
Revaluation of property, plant and equipment occurs as a result of revaluation of buildings and land. In case of a disposal of
property, plant and equipment, revaluation fund of the asset is transferred to the accumulated losses. (Note 18).
31 December
2009
Legal reserves and special funds
Extraordinary reserves
Accumulated losses
Net loss for the year
31 December
2010 In 2010
According to legal records of the company’s profit distribution based on equity indices are as follows:
28. SALES AND COST OF SALES
Domestic Sales
Export Sales
Sales discounts (-)
Sales returns (-)
Net Sales
Cost of Sales
Gross Profit
1 January- 31 December 2010 101.541.630 23.332.845 (28.354.046) (371.317) 96.149.112 (78.779.830) 17.369.282 1 January31 December
2009
116.691.532
18.493.557
(36.491.035)
(1.154.220)
97.539.834
(66.291.949)
31.247.885
29. RESEARCH AND DEVELOPMENT EXPENSES, MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERAL
ADMINISTRATIVE EXPENSES
Marketing, selling and distribution expenses (-)
General administrative expenses (-)
1 January- 31 December 2010 (16.059.607) (6.048.679) (22.108.286) 1 January31 December
2009
(17.078.055)
(5.694.685)
(22.772.740)
Marketing, selling and distribution expenses details
Transportation expenses
Advertisement expenses
Personnel expenses
Energy expenses
Depreciation and amortization expenses
Other
2010
(5.830.570)
(5.487.989)
(2.175.555)
(303.661)
(60.765)
(2.201.067)
(16.059.607)
2009
(6.397.906)
(6.626.985)
(1.855.177)
(268.392)
(73.639)
(1.855.956)
(17.078.055)
General administrative expenses details
Personnel expenses
Consultancy expenses
Employment termination benefits (Note 24)
Depreciation and amortization expenses (Note 18)
Tax expense (other than corporate taxes)
Energy expenses
Representation and hosting expenses
Communication expenses
Insurance expenses
Other
2010
(2.165.804)
(1.549.105)
(525.409)
(178.684)
(131.137)
(112.703)
(89.992)
(85.200)
(44.314)
(1.214.645)
(6.048.679)
2009
(1.899.454)
(1.597.151)
(395.240)
(197.233)
(216.587)
(126.374)
(70.423)
(121.989)
(40.178)
(1.030.056)
(5.694.685)
2009
(35.397.770)
(12.334.904)
(7.403.360)
(8.611.787)
(6.397.906)
(6.626.985)
(3.226.911)
(1.597.151)
(7.467.915)
(89.064.689)
31. OTHER OPERATING INCOME/(EXPENSES)
Other operating income for the years ended 31 December 2010 and 31 December 2009 are as follows:
Gain on sales of property, plant and equipment
Scrap sales income
Reversal of provision for impairment of receivables (Note 10)
Fair value gain on financial assets
Rent income
Reversal of provision for legal cases
Income from insurance claims
Other
1 January- 31 December 2010 184.395 109.657 106.327 103.327 100.087 40.148 39.523 339.119 1.022.583 Management
2010
(47.352.271)
(12.173.247)
(8.571.274)
(8.194.197)
(5.830.570)
(5.487.989)
(3.253.410)
(1.549.105)
(8.476.053)
(100.888.116)
2009
117.055
96.997
3.451
196.855
32.161
288.471
734.990
In 2010
Direct material cost
Energy and utilities expenses
Personnel expenses
Depreciation and amortisation (Note 18-19)
Transportation expenses
Advertisement expenses
Repair and maintenance expenses
Consultancy expenses
Other
30. EXPENSES BY NATURE
2010
(88.139)
(87.981)
(44.276)
(51.844)
(45.740)
(18.886)
(115.889)
(452.755)
2009
(436.797)
(177.990)
(137.755)
(1.756.005)
(25.113)
(273.631)
(2.807.291)
Paid-up penalties
Vehicle rent expenses
Provision for litigations
Losses on inventories
Provision for doubtful receivables (Note 10)
Special communication tax expenses
Other
Other operating expense for the years ended 31 December 2010 and 31 December 2009 are as follows:
32. FINANCE INCOME
Foreign exchange gain
Bail income
Income from early payment of borrowings
Interest income on credit sales
Interest income
Foreign exchange gain from swap transaction
1 January 31 December
2010
2.929.340 732.416
657.040
126.196
107.443
4.552.435
2009
2.773.187
1.345.309
290.231
73.795
429.000
4.911.522
2010
2009
33. FINANCE EXPENSE
Interest expense on borrowings
Interest expense from swap transaction
Interest expense on credit purchases
Foreign exchange loss
Bail expenses and bank commissions
Other
(6.538.790)
(1.344.790)
(4.939.389)
(840.046)
(83.126)
(13.746.141)
(5.627.143)
(4.579.103)
(2.009.034)
(3.200.798)
(1.204.787)
(16.620.865)
31 December
2010
535.320 535.320 31 December
2009
1.013.464
1.013.464
34. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
35. TAX ASSETS AND LIABILITIES
Tax income comprises:
Deferred income taxes
35. TAX ASSETS AND LIABILITIES (CONTINUED)
2010
(13.362.882)
2.672.576
(375.135)
85.155
579.674
(2.298.926)
(128.024)
535.320
2009
(5.306.499)
1.061.300
(776.809)
103.674
371.813
253.486
1.013.464
Management
Loss before taxation on income
Tax at the domestic income tax rate of 20% (2009: 20%)
Tax efficiency:
-Expenses not deductible for tax purposes
-Income not subject to tax
-Effect of the transfer of depreciation
-Tax losses for which no deferred income tax asset was recognized
-Other
Income tax for the statement of comprehensive income
Reconciliation of taxation income:
Corporate Tax
The Company is subject to Turkish corporate taxes. Provision is made in the accompanying financial statements for the
estimated charge based on the Company’s results for the years and periods.
The effective tax rate in 2010 is 20% (2009: 20%) for the Company.
In Turkey, advance tax returns are filed on a quarterly basis. Advance corporate income tax rate applied in 2010 is 20%. (2009:
20%). Losses can be carried forward for offset against future taxable income for up to 5 years. However, losses cannot be
carried back for offset against profits from previous periods.
In 2010
Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back
non-deductible expenses, and by deducting dividends received from resident companies, other exempt income and investment
incentives utilized.
Income tax witholding
In addition to corporate taxes, companies should also calculate income withholding taxes and funds surcharge on any
dividends distributed, except for companies receiving dividends who are Turkish residents and Turkish branches of foreign
companies. Income withholding tax applied in between 24 April 2003 – 22 July 2006 is 10% and commencing from 23 July
2006, this rate has been changed to 15% upon the Council of Ministers’ Resolution No: 2006/10731. Undistributed dividends
incorporated in share capital are not subject to income withholding tax.
Furthermore, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns
between 1-25 April following the close of the accounting year to which they relate. Tax authorities may, however, examine such
returns and the underlying accounting records and may revise assessments within five years.
Deferred taxes
The Company recognizes deferred tax assets and liabilities based upon temporary differences arising between its financial
statements as reported for IFRS purposes and its statutory tax financial statements. These differences usually result in the
recognition of revenue and expenses in different reporting periods for IFRS and tax purposes and they are given below.
For calculation of deferred tax asset and liabilities, the rate of 20% (2009: 20%) is used.
Withholding tax at the rate of 19.8% is still applied to investment allowances relating to investment incentive certificates
obtained prior to 24 April 2003. Subsequent to this date, the investments without investment incentive certificates do not
qualify for tax allowance.
35. TAX ASSETS AND LIABILITIES (CONTINUED)
In Turkey, the companies cannot declare a consolidated tax return, therefore subsidiaries that have deferred tax assets position
were not netted off against subsidiaries that have deferred tax liabilities position and disclosed separately.
Deferred tax (asset)/liabilities:
Revaluation on land, land improvements, buildings and machinery and
equipment
Net difference between the tax base and carrying value of property plant
equipment and intangible assets
Provision for employment termination benefits
31 December
2010
31 December
2009
4.636.479 5.361.070
(2.568.745)
(339.548)
1.728.186
(2.828.316)
(269.248)
2.263.506
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit
through the future taxable profits is probable, this amount is TL 72.090.577 (2009: TL 64.658.728) at the balance sheet date.
On the other hand, the Company did not recognise deferred income tax assets of TL 14.418.115 (2009: TL 12.931.746) arising
from tax losses carried forward, certain temporary differences between the tax base and the carrying value of property, plant,
equipment and intangible assets and impairment on financial assets as their future utilisation is not virtually certain.
Years of expiration of tax losses carried forward which are not recognized as of 31 December are as follows:
Expiration schedule of carryforward tax losses is as follows:
Expiring in 2010
Expiring in 2011
Expiring in 2012
Expiring in 2013
Expiring in 2015
31 December 2010 - 11.490.829 17.482.020 31.623.099 11.494.629 72.090.577 31 December
2009
4.062.780
11.490.829
17.482.020
31.623.099
64.658.728
2010
(2.263.506)
535.320
(1.728.186)
2009
(3.276.970)
1.013.464
(2.263.506)
2010 (12.827.562) 40.000.000 (0,3207) 1 January31 December
2009
(4.293.035)
60.496.807
(0,0710)
Movements in deferred income tax liabilities can be analysed as follows:
Movement of deferred tax (asset)/liabilities:
Opening balance
Recorded on the income statement
Closing balance at
36. LOSS PER SHARE
- Loss for the year
- Weighted number of share with a TL1 face value
- Loss per share with a TL 1 face value
Receivables from Yaşar Dış Ticaret A.Ş. arise from the exporting activities performed by this related party.
Due from Related Parties
Other Receivables due from related parties
Dyo Boya Fabrikaları Sanayi ve Ticaret A.Ş. (“Dyo Boya”)
Due to Related Parties
Yaşar Birleşik Pazarlama Dağıtım Turizm ve Ticaret A.Ş.
Other
31 December
2010 31 December
2009
1.775.531 1.775.531 1.281.512
1.281.512
31 December 2010
31 December
2009
25.363
25.363 30.103
30.103
31 December
2010 31 December
2009
89.068
25.354
- 114.422 315.361
2.705
318.066
Management
Summary of the due from and due to related parties balances as of 31 December 2010 and 2009 and significant intercompany
transactions were as follows:
37. TRANSACTIONS AND BALANCES WITH RELATED PARTIES
31 December
2009
14.154.111
48.486.661
11.805
62.652.577 13.720.552
948.363
207.670
14.876.585
As of 31 December 2010, payables to YBP and Yaşar Holding A.Ş. are resulted from non-trade payables and related interest
charges calculated. The effective interest rate applied to due to related parties is 10% p.a. as of 31 December 2010 (2009:
11% p.a.).
Product sales to related parties
Other
2010
18.697.214
25.227
223
18.722.664
2009
14.160.033
34.216
42.071
14.236.320
1 January- 31 December 2010 72.279
66.678
30.717
169.674
2009
65.442
152.743
38.198
256.383
Services given to related parties
Other
Other
31 December
2010 Corporate Governance and
Other Payables due to related parties
In 2010
The payables to Yaşar Dış Ticaret A.Ş. as of 31 December 2010 consist of raw materials purchases from abroad through this
company.
37. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (CONTINUED)
Product purchases from related parties
Other
2010
2.168.362
29.470
2.197.832
2009
1.277.028
296.338
1.573.366
2009
1.642.037
333.073
104.700
41.130
2.120.940
The Company makes purchases of raw materials from abroad through Yaşar Dış Ticaret A.Ş.
Services received from related parties
Other
2010
1.708.153
409.655
85.634
108.855
2.312.297
The services received from Yaşar Holding A.Ş. are composed of consultancy services.
Key management compensation
Salaries and other short-term benefits
Other long-term benefits
2010
761.930
30.881
792.811
2009
628.232
21.097
649.329
Fixed asset purchases from related parties
Other
2010
75.765
17.548
93.313
2009
70.995
70.995
Finance income from related parties
Dyo Boya
Other
2010
573.109
64.479
99.416
737.004
2009
970.212
230.674
244.365
1.445.251
Finance income included above amounting to TL 732.416 (2009: TL 1.345.309) (Note 32) is composed of bail commission
charges for the loans obtained by Yaşar Group companies from international capital markets and a financial institution with the
guarantee of the Company. The bail commission rate used in the intercompany charges is 0,5% p.a. (2009: 0,75% p.a.).
Finance expenses from related parties
Çamlı Yem
Other
2010
1.335.980
252.243
46.745
47.564
190.772
1.873.304
2009
869.174
1.899.336
103.547
139.675
495.219
3.506.951
The finance expense consists of bail commission charge amounting to TL 215.557 (2009: TL 287.113), which is related with the
loans obtained by the Company from various financial institutions with the guarantee of Yaşar Holding A.Ş., and overdue charges
of TL 36.686 (2009: TL 1.612.223). Finance expenses from YBP consists of bail commission charge amounting to TL 46.745 (2009:
TL 102.457), which is related with the loans obtained by the Company from international capital markets and various financial
institutions with the guarantee of the related parties (Note 22), and overdue charges of TL 1.289.235 (2009: TL 766.717). The bail
commission rate used in the associated intercompany charges is 0,5% p.a. (2009: 0,75% p.a.).
38. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
37. TRANSACTIONS AND BALANCES WITH RELATED PARTIES (CONTINUED)
a) Capital Risk
In order to maintain the Company’s capital structure, the Company may adjust the dividend balances, capital return to
shareholders and sell assets in order to pay off its debt.
The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net
debt is calculated as total borrowings, including derivative financial instruments, less cash and cash equivalents. Total capital is
calculated as “equity” as shown in the balance sheet plus net debt.
Total debt
Less: Cash and Cash Equivalents
Net debt
Total Equity
Debt/Equity Ratio
68.107.174
(946.960)
67.160.214
17.354.727
387%
31 December
2009
68.801.391
(516.015)
68.285.376
26.492.334
258%
In 2010
31 December
2010
Management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, price risk, cash flow and
fair value interest rate risk), capital risk and liquidity risk. The Company’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the
Company.
Risk management is carried out under policies approved by the Board of Directors of the Company (“the Board”). The Board
provides principles for over-all risk management as well as policies covering specific areas, such as foreign exchange risk,
interest rate risk and capital risk.
b) Financial Risk Factors
• safeguarding the Company’s core earnings stream from its major assets through the effective control and management of
foreign exchange risk and interest rate risk;
• effective and efficient usage of credit facilities in both the short and long term through the adoption of reliable liquidity
management planning and procedures;
• ensuring that all contracts and agreements related to risk management activities are coordinated and consistent throughout
the Company and that they comply where necessary with all relevant regulatory and statutory requirements.
The financial risk management objectives of the Company are defined as follows:
38. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (CONTINUED)
a) Credit Risk:
Ownership of financial assets involves the risk that counterparties may be unable to meet the terms of their agreements and in
turn credit risk arises from cash and cash equivalents, deposits in banks and financial institutions, as well as credit exposures
to customers, including outstanding receivables and committed transactions. Risk control assesses the credit quality of the
customer, taking into account its financial position, past experience and other factors. These risks are monitored by credit
ratings and limiting the aggregate risk to any individual counter party and receiving guarantees when required. The credit risk
is generally highly diversified due to the large number of entities comprising the ultimate customer bases and their dispersion
across different industries.
The following table analyses the Company’s credit risk as of 31 December 2010 and 2009:
Company’s credit risks
31 December 2010
Maximum amount of credit risk exposed as of
reporting date (*)
- The part of maximum credit risk covered with
guarantees (**)
A. Net book value of financial assets not due or not
impaired
B. Net book value of financial assets whose conditions
are renegotiated, otherwise will be classified as past
due or impaired
C. Net book value of assets past due but not impaired
- The part covered by guarantees
D. Net book value of financial assets impaired
- Past due (gross book value)
- Impairment (-)
- The part covered with guarantees
- Not due (gross book value)
- Impairment (-)
E. Off- balance sheet items exposed to credit risk
Receivables
Trade Receivables
Other Receivables
Related
Third
Related
Third
Parties
Parties
Parties
Parties
1.775.531 12.099.339
Bank
Deposits
Total
25.363
35.865
831.261
14.767.359
-
1.744.990
-
-
-
1.744.990
1.478.165
9.945.079
25.363
35.865
831.261
12.315.733
297.366 1.724.988
5.460
429.273
- 3.798.685
- (3.369.412)
429.273
-
-
-
-
2.022.354
5.460
429.273
3.798.685
(3.369.412)
429.273
-
-
16.355.177
30.103
-
516.015
18.182.807
-
3.666.534
-
-
-
3.666.534
1.272.598
14.460.121
-
-
516.015
16.248.734
-
-
-
-
-
-
8.914
-
1.614.846
55.000
280.210
3.710.212
(3.430.002)
280.210
-
30.103
-
-
-
1.653.863
55.000
280.210
3.710.212
(3.430.002)
280.210
-
(*) Factors increasing credit reliability such as guarantees received are not taken into consideration while determination of
aforementioned amounts.
(**) Considering the past experiences, the Company management believes that there are no additional credit risk for the collection
of these receivables.
Management
1.281.512
In 2010
Total
Maximum amount of credit risk exposed as of
reporting date (*)
- The part of maximum credit risk covered with
guarantees (**)
A. Net book value of financial assets not due or not
impaired
B. Net book value of financial assets whose
conditions are renegotiated, otherwise will be
classified as past due or impaired
C. Net book value of assets past due but not
impaired
- The part covered by guarantees
D. Net book value of financial assets impaired
- Past due (gross book value)
- Impairment (-)
- Not due (gross book value)
- Impairment (-)
E. Off- balance sheet items exposed to credit risk
Bank
Deposits
31 December 2010
Receivables
Trade Receivables
Other Receivables
Related
Third
Related
Third
Parties
Parties
Parties
Parties
Considering the past experience of management, the Company has no significant problems with the collection of past-due
financial assets and the aging of relevant balances are as follows:
31 December 2010
1-30 days overdue
1-3 months overdue
3-12 months overdue
1-5 years overdue
The amount covered with guarantees
31 December 2009
1-30 days overdue
1-3 months overdue
3-12 months overdue
1-5 years overdue
The amount covered with guarantees
Trade Receivables
Related Parties
Third Parties
289.736
7.630
297.366
-
Total
1.698.912
24.825
1.250
429.273
2.154.260
434.733
1.988.648
24.825
8.880
429.273
2.451.626
434.733
Trade Receivables
Related Parties
Third Parties
Total
8.914
-
1.551.854
62.992
280.210
1.560.768
62.992
280.210
8.914
1.895.056
1.903.970
-
335.210
335.210
As of the balance sheet date, no collaterals are received for non-impaired, but overdue trade receivables.
b) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through
an adequate amount of credit facilities and the ability to close out market positions. 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. In order to maintain liquidity, the Company management closely monitors the collection of trade receivables on
time in order to prevent any financial burden that may result from late collections, and the Company treasury aims to maintain
flexibility in funding by keeping committed credit lines available.
The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at
the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash
flows.
31 December 2010
Contractual maturity date:
Carrying value
Total Cash
Outflows
(I+II+III+IV)
Less than 3
months (I)
3-12
months (II)
1-5 years
(III)
More than
5 years
(IV)
31 December 2009
Contractual maturity date:
Non-derivative financial liability
Borrowings
Other trade payables
Other payables
5.445.587
13.367.131
62.661.587
81.474.305
5.582.870
5.440.682
13.425.546
6.455.462
62.665.692
420.145
81.674.108 12.316.288
Carrying value
53.924.806
15.426.923
14.876.585
84.228.314
Total Cash
Outflows
(I+II+III+IV)
56.559
6.408.266
62.245.547
68.710.372
-
1-5 years
(III)
More
than 5
years (IV)
Less than 3 3-12 months
months (I)
(II)
76.098.626
6.495.568
15.563.621
8.617.718
14.876.585
106.538.832 15.113.286
85.629
561.818
647.447
7.452.187 62.150.871
5.118.684 1.827.219
14.876.585
27.447.456 63.978.090
-
The Company has no derivative financial liabilities as of 31 December 2010.
In 2010
Borrowings
Other trade payables
Other payables
Management
Non-derivative financial liability
c) Market Risk
The Company is exposed to foreign exchange risk through the impact of rate changes on translation into TL of foreign currency
denominated assets and liabilities. These risks are monitored by analysis of the foreign currency position. Existing risks are
monitored by the Company’s Audit Committee and Board of Directors.
i) Foreign Exchange Risk
Foreign currency position as 31 December 2010 and 31 December 2009 is as follows:
1. Trade Receivables
2a. Monetary Financial Assets
2b. Non-Monetary Financial Assets
3. Other
3. CURRENT ASSETS
4. Other
5. NON- CURRENT ASSETS
6. TOTAL ASSETS
7. Trade Payables
8. Financial Liabilities
9a. Other Monetary Liabilities
10. SHORT-TERM LIABILITIES
11. Trade Payables
13a. Monetary Other Liabilities
14. LONG-TERM LIABILITIES
15. TOTAL LIABILITIES
16. Net Asset/Liability Position of Off-Balance Sheet Derivative
Instruments
17.a Amount of Asset Nature Off-Balance Sheet Derivative Instruments
18 b. Amount of Liability Nature Off-Balance Sheet Derivative
Instruments
19. Net foreign liability/asset position
20. Net Foreign Currency Asset/Liability Position of Monetary Items
21. Total Fair Value of Financial Instruments Used for Foreign Currency
Hedging
22. Export
23. Import
TL equivalent
2.009.155
52.942
2.062.097
2.062.097
31 December 2010
USD
EUR
218.806
173.527
33.250
750
252.056
174.277
252.056
174.277
Other
1.315.306
1.315.306
1.315.306
8.047.807
5.312.959
45.731.540
59.092.306
647.447
59.739.753
4.383.156
3.400.000
36.978
7.820.134
7.820.134
614.406
27.602
22.289.967
22.931.975
315.967
23.247.942
12.469
-
-
-
-
(57.677.656)
(7.568.077) (23.073.664)
1.302.837
(57.677.656)
(7.568.077) (23.073.664)
1.302.837
23.254.940
29.738.875
15.499.532
19.821.107
-
12.469
12.469
-
-
1.291.224
62.616
1.084
1.354.924
1.354.924
-
47.416
28.985
502
76.903
76.903
1.188.791
1.188.791
1.188.791
7.513.783
6.366.029
13.879.812
1.827.218
47.526.600
49.353.818
63.233.630
4.083.033
3.675.911
7.758.944
7.758.944
632.301
384.766
1.017.067
845.817
22.000.000
22.845.817
23.862.884
-
-
-
-
-
3.699.803
-
1.712.634
-
(58.178.903) (7.758.944) (22.073.347)
1.188.791
(58.178.903) (7.758.944) (22.073.347)
1.188.791
48.348.249
18.529.641 11.948.766
24.934.606 16.024.382
22.380.340
-
Management
Other
-
-
In 2010
31 December 2009
USD
EUR
TL equivalent
1. Trade Receivables
2a. Monetary Financial Assets
2b. Non-Monetary Financial Assets
3. Other
3. CURRENT ASSETS
4. Other
5. NON- CURRENT ASSETS
6. TOTAL ASSETS
7. Trade Payables
9a. Other Monetary Liabilities
10. SHORT-TERM LIABILITIES
11. Trade Payables
13a. Monetary Other Liabilities
14. LONG-TERM LIABILITIES
15. TOTAL LIABILITIES
16. Net Asset/Liability Position of Off-Balance Sheet Derivative
Instruments
17.a Amount of Asset Nature Off-Balance Sheet Derivative
Instruments
18 b. Amount of Liability Nature Off-Balance Sheet Derivative
Instruments
19. Net foreign liability/asset position
20. Net Foreign Currency Asset/Liability Position of Monetary
Items
21. Total Fair Value of Financial Instruments Used for Foreign
Currency Hedging
22. Export
23. Import
31 December 2010
1 - Asset/Liability denominated in USD-net
2- The part hedged for USD risk (-)
3- USD Effect Net (1 +2)
4 - Asset/Liability denominated in EUR net
5 - The part hedged for EUR risk (-)
6- EUR Effect Net (4+5)
7 - Assets/Liabilities denominated in other foreign currencies net
8 - The part hedged for other foreign currency risk (-)
9- Other Foreign Currency Effect (7+8)
Total (3 + 6 + 9)
31 December 2009
1 - Asset/Liability denominated in USD-net
2- The part hedged for USD risk (-)
3- USD Effect Net (1 +2)
4 - Asset/Liability denominated in EUR net
5 - The part hedged for EUR risk (-)
6- EUR Effect Net (4+5)
7 - Assets/Liabilities denominated in other foreign currencies net
8 - The part hedged for other foreign currency risk (-)
9- Other Foreign Currency Effect (7+8)
Total (3 + 6 + 9)
Profit/Loss Before Tax
Appreciation of Depreciation of
foreign currency foreign currency
Change of USD by 10% against TL
(1.170.025) 1.170.025
- (1.170.025) 1.170.025
Change of EUR by 10% against TL
(4.728.025) 4.728.025
- (4.728.025) 4.728.025
Change of other currencies by 10% against TL
130.284 (130.284)
- 130.284 (130.284)
(5.767.766) 5.767.766
Profit/Loss Before Tax
Appreciation of Depreciation of
foreign currency foreign currency
Change of USD by 10% against TL
(1.168.264) 1.168.264
- (1.168.264) 1.168.264
Change of EUR by 10% against TL
(5.138.485) 5.138.485
4.834.825 (4.834.825)
(303.660) 303.660
Change of other currencies by 10% against TL
284.026 (284.026)
- 284.026 (284.026)
(1.187.898) 1.187.898
ii) Interest rate risk
The Company is exposed to interest rate risk through the impact of rate changes on interest bearing assets and liabilities.
The Company’s interest rate risk arises mainly from borrowings (Note 37). Borrowings issued at variable rates and other interest
bearing liabilities expose the Company to cash flow interest rate risk which is partially offset by interest bearing assets. The
interest rate risk is monitored by analysis of the assets and liabilities that are responsive to the fluctuations in interest rates.
Interest rate position table
31 December 2010
Financial instruments with fixed interest rates
Financial assets 600.000
Financial liabilities 5.445.587
Financial instruments with floating interest rates
Financial assets
13.900.232
Financial liabilities
75.592.778
31 December 2009
350.000
5.576.558
17.666.792
79.244.857
According to the interest rate sensitivity analysis performed as at 31 December 2010, if interest rates had been 1% higher
while all other variables being constant, net loss for the current year would be TL 5,846 (2009: TL187,589) higher as a result of
additional interest expense that would be incurred on financial instruments with floating rates.
iii) Price risk
The operational profitability of the Company and the cash flows provided from the operations are affected by the sanitary paper
sector which are changing according to the competition in the relevant market and the changes in the raw material prices. These
relevant prices are closely followed up by the Company management and Audit Committee to reduce the pressure of the costs
on selling prices and necessary precautions for cost reductions are taken accordingly. The Company has not used derivative
instruments or entered into a similar agreement. Price risk is monitored by Board of Directors and Audit Committee via regular
meetings.
39. FINANCIAL INSTRUMENTS (FAIR VALUE AND FINANCIAL RISK MANAGEMENT DISCLOSURES)
31 December 2009
Financial assets
Trade receivables
Due from related parties
Financial Investments
Financial assets
Borrowings
Trade payables
Due to related parties
Available
for sale
946.960
12.099.338
1.800.894
-
103.327
-
-
946.960
12.099.338
1.800.894
103.327
6
10
37
7
-
-
5.359.958
13.367.131
62.766.999
-
5.359.958
13.367.131
62.766.999
8
10
37
Financial
liabilities
at amortized
cost
Carrying
value
Derivative
financial
instruments
Carrying
value
Note
Loans and
receivables
Available
for sale
516.015
16.355.177
1.311.615
-
-
-
3.699.803
516.015
16.355.177
1.311.615
3.699.803
6
10
37
7
8
-
-
53.924.806
15.108.857
15.194.651
-
53.924.806
15.108.857
15.194.651
8
10
37
Note
In 2010
Derivative
financial
instruments
Borrowings
Trade payables
Due to related parties
Loans and
receivables
Financial
liabilities
at amortized
cost
31 December 2010
Financial assets
Trade receivables
Due from related parties
Financial Investments
Management
Categories of financial instruments and fair values
39. FINANCIAL INSTRUMENTS (FAIR VALUE AND FINANCIAL RISK MANAGEMENT DISCLOSURES) (CONTINUED)
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 Company using available market information
and appropriate valuation methodologies. However, judgment 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 Company could realize in a
current market exchange.
The following methodologies and assumptions have been used in the estimation of the fair value of financial instruments.
Financial Assets
The fair values of balances denominated in foreign currencies, which are translated at year-end exchange rates, are considered
to approximate to their carrying values. Cash and cash equivalents are carried at their fair values. The fair values of trade
receivables and due from related parties are considered to approximate their respective carrying values due to their shortterm nature. The cost of available-for-sale investments not traded in active markets, less, if any, impairments are considered to
approximate their fair values.
Trade payables, payables to related parties and other monetary liabilities are estimated to be presented with their discounted
carrying amounts and they are considered to approximate to their fair values and the fair values of balances denominated in
foreign currencies.
40. SUBSEQUENT EVENTS
41. MANAGEMENT PLANS
The Company’s current liabilities exceed its current assets by TL 56.031.362 as at 31 December 2010, and the Company’s net
loss and accumulated losses for the year 2010 amount to TL 12.827.562 and TL 35.037.808, respectively. In this respect, the
Company management developed a considered plan in order to cast doubt on the Company’s ability to continue as a going
concern. Accordingly, the following plan has been developed:
i. The Company will continue its cost improvement efforts in 2011, as it did during the previous years. New 6 Sigma projects
will be implemented during 2011, following the 6 Sigma project finalized in 2010. Sales activities at profitable locations will
be resumed, which will necessitate the efficient and effective utilization of the human resources of the entity’s sales and
marketing as well as production departments. The entity plans to enrich its current export channel, as its profitability is high
and its sales terms of relatively shorter maturities are expedient. The Entity aims to increase its operational profitability even
further, through the expenditure of the efforts listed above.
ii. The entity had reviewed its sales strategy in 2009, and had revised it to only focus on those sales points that were highlyprofitable. Moreover, production resources were re-allocated away from products with low profit margins toward those with
higher profit margins. This resulted in the attainment of higher revenues, and thereby, higher profits.
The increase in the sector’s raw material prices to the highest price level of the last 15 years, however, decreased the entity’s
profits for the year 2010. As a result, the entity made its plans with the aim of increasing profitability during 2011, which began
with relatively lower raw material prices.
In line with these strategic objectives, the percentage of paper napkins— the least profitable—in the Entity’s product line, were
significantly reduced. Additionally, the market was segregated into sales channels and productive sales points were identified.
iii. The Entity’s dealers are continuously being improved, based on considerations of their risk structures. The Entity will
continue to revise its distribution network in the future, aiming to work with distributors that are able to enhance the position
of its products within the market.
iv. The Entity will continue the implementation of its “channel profitability” strategy in 2011, as it did in 2010 and 2009.
Having segregated the market into numerous channels considered individually as well as collectively, the Entity has
determined the specific cost-cutting efforts it will implement in each channel, which has enabled it to gain greater control over
cost contributors.
v. The Entity has a deink facility, which provides it a competitive edge in its sector, with regards to cost-cutting. In 2010, this
plant was more effectively utilized and the associated variable costs were successfully trimmed. The Entity will concentrate
on the sale of those products that can be produced from the raw material obtained through de-inking recycled paper, which is
considerably cheaper than cellulose.
41. MANAGEMENT PLANS (CONTINUED)
x. The capacity deficiency that occurred in the second half of 2010 as a result of a decrease in the supply-chain channel was
managed in part, by supplementing with finished goods, exports, and domestic WIP products. The entity plans to focus on
domestic sales of WIP products with an eye for increasing profitability.
The main shareholder of the Company, Yaşar Holding A.Ş., has also committed to provide the necessary financial support for the
strengthening of the financial structure of the Company and for the timely payment of the Company’s existing trade and nontrade payables. Accordingly, the Company management and the main shareholder of the Company believe that the Company
has the ability to continue its operations in the foreseeable future.
In 2010
ix. Fundamental changes to the sales system were implemented in 2009. The distribution channels used by the entity’s dealers
were ranked according to revenue, which enabled the entity to get a deeper understanding of both its dealers and the overall
market. The transition to the SAP application by dealers in the second half of 2010 is expected to tighten the entity’s control
over its dealers, in addition to increasing the efficiency with which it transacts with its dealers. SAP will enable the entity to
monitor dealers’ inventory levels and sales, and intervene where necessary. The system will also be revamped with regards to
tighter control over granting sales discounts, and monitoring of shelf prices at each dealer individually, in an effort to increase
profitability. The new system, which focuses on after sales management will continue to be improved throughout 2011. The
system aims to discipline and implement a more realistic pricing policy throughout the entire country. Quantitative distribution
is a priority for the entity. Therefore, the entity provides guidance to all of its dealers in increasing their distribution quantity.
viii. According to the results of the research studies conducted in 2009 to identify and understand consumer needs and
expectations, the entity decided to review its brand structure. The entity increased the pace of marketing efforts aiming to
simplify its image, as market research revealed that its current brand image was perceived to be too complex to effectively
communicate the intended message to targeted consumers. Segments incorporated under the Lily brand were analyzed
thoroughly, in an effort to understand the way in which the brand was perceived and positioned within the consumers’ mind.
In light of the findings obtained through this analysis, it was decided that the Lily brand would be positioned as the “flagship”
brand, and concurrent efforts to improve both the brand’s image and product quality would be made. These developments led
to the emergence of a new brand structure in 2011, departing from the hitherto implemented umbrella approach.
vii. The entity volunteered as a pilot facility for the implementation of various energy conservation practices under the energy
efficiency initiative launched by the Ministry of Energy and Natural Resources on 18.04.2007, and completed its application to
the program which involved reducing its energy consumption by 11% within the next three years. The entity’s application for
entry into the initiative was successful; the program began in January of 2010 and will last for the subsequent three years.
Management
vi. The entity is going to implement numerous activities geared towards decreasing production costs in the face of increasing
input costs, in line with its operational cost-cutting objective.
Information for Investors
Stock Exchange
Viking Kağıt ve Selüloz A.Ş. shares are traded on the national market of the İstanbul Stock Exchange (ISE) under the symbol
“VKING”.
Initial public offering date: 13 October 1994
Annual General Meeting
Pursuant to a resolution passed by the Board of Directors of Viking Kağıt ve Selüloz A.Ş., the company’s annual General
Assembly meeting for 2010 will take place on 10 May 2011 at 14:00 hours at the following address: Hürriyet Cad. No: 474
Aliağa/İzmir.
Dividend Policy
Viking Kağıt ve Selüloz A.Ş.’s general policy concerning the distribution of its profits has been publicly disclosed and is
accessible in the Turkish and English languages from the “Investor Relations” page of the company’s corporate website located
at www.viking.com.tr. At a meeting of the company’s board held on 20 April 2011, the board voted to recommend to the
general assembly of shareholders that no dividends be paid inasmuch as the company showed a loss as a result of its 2010
operations.
Investor Relations
Investor Relations Department
Şehit Fethi Bey Caddesi No: 120 35210 İzmir
Tel : (90 232) 482 22 00
Fax : (90 232) 489 15 62
yatirimciiliskileri@viking.com.tr
Viking Kağıt Share Performance in 2010 (in comparison with the ISE General Index)
140
2,5
120
100
2
80
1,5
60
1
40
0,5
20
0
0
01/01/2010
ISE General (left axis)
* Adjusted share prices
31/12/2010
30/06/2010
VKING (right axis)
In the production of this report; Freelife
paper, which is made of waste paper and
has internationally acclaimed certificate
of recycling, was used.
Produced by Tayburn Kurumsal
Tel: (90 212) 227 04 36 Fax: (90 212) 227 88 57
www.tayburnkurumsal.com
Şehit Fethi Bey Cad. No: 120 35210 İzmir / Turkey
Tel: +90 232 482 22 00 (10 lines)
Fax: +90 232 484 17 89 - 483 46 59
www.viking.com.tr

full PDF - Viking Kağıt ve Selüloz A.Ş.

Transcription

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