AK-AL TEKSTİL SANAYİİ A.Ş. AND ITS SUBSIDIARIES - PDF

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AK-AL TEKSTİL SANAYİİ A.Ş. AND ITS SUBSIDIARIES Consolidated Financial Statements for the years ended 31 December 2004 and 2003 (expressed in terms of the purchasing power of the Turkish Lira as of 31

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AK-AL TEKSTİL SANAYİİ A.Ş. AND ITS SUBSIDIARIES Consolidated Financial Statements for the years ended 31 December 2004 and 2003 (expressed in terms of the purchasing power of the Turkish Lira as of 31 December 2004) (Including the Independent Auditors' Report) AK-AL TEKSTİL SANAYİİ A.Ş. AND ITS SUBSIDIARIES Consolidated Financial Statements for the years ended 31 December 2004 and 2003 (expressed in terms of the purchasing power of the Turkish Lira as of 31 December 2004) TABLE OF CONTENTS Page Independent Auditors Report - Summarised Consolidated Balance Sheets 1-2 Summarised Consolidated Statements of Income for the years ended 31 December 2004 and Detailed Consolidated Balance Sheets 4-5 Detailed Consolidated Statements of Income for the years ended 31 December 2004 and Consolidated Statement of Funds Flow for the year ended 31 December Consolidated Statement of Cash Flows for the year ended 31 December Consolidated Statements of Cost of Sales for the years ended 31 December 2004 and Statements of Proposed Profit Distribution for the years ended 31 December 2004 and Notes to the Detailed Consolidated Statements of Income Supplementary Notes to the Consolidated Financial Statements Auditing Techniques and Procedures Applied 70-71 AK-AL TEKSTİL SANAYİİ A.Ş. AND ITS SUBSIDIARIES INDEPENDENT AUDITORS' REPORT RELATED TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE 2004 ACCOUNTING PERIOD We have examined the consolidated balance sheets of Ak-Al Tekstil Sanayii A.Ş. (Parent Company) and its Subsidiaries and the related consolidated statements of income and cost of sales for the years then ended, and the consolidated statements of funds flow and cash flows for the year ended 31 December 2004, all expressed in the equivalent purchasing power of the Turkish Lira as at 31 December Our examinations were made in accordance with generally accepted auditing standards in Turkey issued by the Capital Markets Board and, accordingly, included such tests of the accounting records and such other auditing procedures, as we considered necessary in the circumstances. As the 18th clause of the Communiqué Related to the Consolidated Financial Statements and the Accounting of Affiliates Nr XI/21 issued by the Capital Markets Board does not necessitate the preparation and the issuance of the comparative consolidated financial statements for the parent companies at their first year application, Ak-Al Tekstil Sanayii A.Ş. and its Subsidiaries has not prepared its consolidated financial statements as of 31 December 2002, hence the consolidated statements of cash flows and funds flow for the year ended 31 December 2003 are not included in the accompanying financial statements. For the years ended 31 December 2004 and 2003 the subsidiary Bozüyük Orman Ürünleri Sanayi Tesisleri A.Ş. and the affiliates Ak Havacılık ve Ulaştırma Hizmetleri A.Ş. and Ak-Han Bakım Yönetim Servis Hizmetleri Güvenlik Malzemeleri Ticaret A.Ş. in which the Parent Company has 99,46%, 6,64%, and 33% interest respectively, do not materially affect the consolidated financial statements, hence the subsidiary and the affiliates referred to above are stated in the consolidated financial statements at cost (Supplementary Note 5 to the consolidated financial statements). The indirect subsidiary Akenerji Elektrik Enerjisi İthalat, İhracat ve Toptan Ticaret A.Ş. has been included in the consolidated financial statements as of 31 December As indicated in the Note 14 to the Statements of Income, the Company Management has declared that the Company has incurred losses in the accompanying financial statements, thus no profit distribution will be made. In our opinion, the consolidated financial statements referred to above present fairly the financial position of Ak-Al Tekstil Sanayii A.Ş. (the Parent Company) and its Subsidiaries as at 31 December 2004 and 2003 and the results of its operations for the years then ended, in conformity with the accounting principles as per the Communiqués Nr. XI/1, XI/20 and XI/21 issued by the Capital Markets Board. Istanbul, 25 February 2005 Denet Yeminli Mali Müşavirlik A.Ş. Ömür Günel Partner in charge 1. Principal Activities Ak-Al Tekstil Sanayii A.Ş. (the Parent Company) and its Subsidiaries, except for Akrom Akal Textile Romania S.R.L. and Aken BV is incorporated in Turkey and Akrom Akal Textile Romania S.R.L. operates in Romania and Aken BV operates in the Netherlands. The principal activities of the Parent Company are weaving based on acrylic and the production, dyeing and trading of woolen knitting yarn. The Subsidiaries and Affiliates are mainly focused on the textile sector while they also operate in other sectors like energy, foreign trade, service and transportation. The Parent Company s Affiliates and Subsidiaries comprise of the following companies: Parent Company: Ak-Al Tekstil Sanayii A.Ş. Subsidiaries: Akrom Akal Textile Romania S.R.L.* Bozüyük Orman Ürünleri Sanayi Tesisleri A.Ş.** Ak-Al Tekstil Pazarlama A.Ş.* Ak-Al Dış Ticaret A.Ş.* Akenerji Elektrik Üretim A.Ş.*** Ak-Pa Tekstil İhracat Pazarlama A.Ş.* Ak-Tops Tekstil Sanayi A.Ş.* Ak-El Yalova Elektrik Üretim A.Ş.* Akenerji Elektrik Enerjisi İthalat-İhracat ve Toptan Ticaret A.Ş. * Aken BV ** Affiliates : Atak Garn-und Textilhandel GMBH ** Ak Havacılık ve Ulaştırma Hizmetleri A.Ş.** Ak-Han Bakım Yönt. Serv. Hizm. Güven. Malz. A.Ş.** Aksa Egypt Acrylic Fiber Industry SAE** * Included in the consolidated financial statement in accordance with the full consolidation method. ** Stated in the consolidated financial statements at cost. *** A public company quoted at Istanbul Stock Exchange. It is included in the consolidation by full consolidation method. Ak Enerji Elektrik Üretimi Otoprodüktör Grubu A.Ş. has changed its company name as Akenerji Elektrik Üretim A.Ş. upon draft amendment registered at 29 December 2. Share Capital As of 31 December 2004 and 2003 shareholdings of 10% and more are as follows (TRY): Total 31 December 2004 Capital Adjusted Name Shareholding Book Value Adjustment Capital Akkök Sanayi Yatırım ve Geliştirme A.Ş. 30, Aksa Akrilik Kimya Sanayi A.Ş. 22, Other* 47, , Total 31 December 2003 Capital Adjusted Name Shareholding Book Value Adjustment Capital Akkök Sanayi Yatırım ve Geliştirme A.Ş. 30, Aksa Akrilik Kimya Sanayi A.Ş. 22, Other* 47, , * Represents the total of shareholdings less than 10%. 3. Privileges Accorded to Shares Representing the Capital As of 31 December 2004 and 2003 no preferences are accorded to any classes of the Company s shares. 4. Registered Share Capital Limit As of 31 December 2004 and 2003 the registered share capital limit of the Parent Company is TRY Capital Increases and Sources Within the Period There is no capital increase between 1 January 2003 and 31 December 6. Issued Marketable Securities Other Than Shares As of 31 December 2004 and 2003 there are no issued marketable securities other than shares. 7. Issued Marketable Securities Representing Indebtedness As of 31 December 2004 and 2003 there are no issued marketable securities representing indebtedness. 8. Movements in Fixed Assets As of 31 December 2004 and 2003 movements in fixed assets are as follows (TRY) : 31 December December 2003 (a) Cost of fixed assets purchased, produced or constructed (b) Cost of fixed assets sold or written off ( ) ( ) (c) Type, total amounts in historic terms, dates of commencement and completion, and the degree of completion of investments in progress (TRY): Parent Company Ak-Al Tekstil Sanayii A.Ş. 31 December 2004 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Yalova Bottleneck Elimination % Yalova Fantezi Investment % Yalova Dye Quality Plant Development % Yalova Plant % İstanbul Building Modernisation % 13 8. Movements in Fixed Assets (continued) (c) Type, total amounts in historic terms, dates of commencement and completion, and the degree of completion of investments in progress (TRY) (continued): Parent Company (continued) Ak-Al Tekstil Sanayii A.Ş. (continued) 31 December 2003 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Yalova Bottleneck Elimination % Yalova Fantezi Investment % Yalova Dye Quality Plant Development % Yalova Plant % İstanbul Building Modernisation % Subsidiaries Akenerji Elektrik Üretim A.Ş. 31 December 2004 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Autoproducer power plants utilising inter-energy steam in production, cogeneration Incentive Document No: % Autoproducer power plants utilising inter-energy steam in production, cogeneration, modernisation Incentive Document No: % 14 8. Movements in Fixed Assets (continued) (d) Type, total amounts in historic terms, dates of commencement and completion, and the degree of completion of investments in progress (TRY) (continued): Subsidiaries (continued) Akenerji Elektrik Üretim A.Ş. 31 December 2004 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Autoproducer power plants utilising inter-energy steam in production, cogeneration, modernisation Incentive Document No: % Autoproducer power plants utilising inter-energy steam in production, cogeneration, modernisation Incentive Document No: % Other * December 2003 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Autoproducer power plants utilising inter-energy steam in production, cogeneration Incentive Document No: % Autoproducer power plants utilising inter-energy steam in production, cogeneration Incentive Document No: % * Total expenditure as of 31 December 8. Movements in Fixed Assets (continued) (c) Type, total amounts in historic terms, dates of commencement and completion, and the degree of completion of investments in progress (TRY) (continued): Subsidiaries (continued) Akenerji Elektrik Üretim A.Ş. 31 December 2003 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Autoproducer power plants utilising inter-energy steam in production, cogeneration, modernisation Incentive Document No: % Other * * Total expenditure as of 31 December Aktops Tekstil San. A.Ş. 31 December 2004 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Plant Modernisation Incentive Document No: % Quality Development Incentive Document No: * % Production Increase * * Total expenditure as of 31 December 8. Movements in Fixed Assets (continued) (c) Type, total amounts in historic terms, dates of commencement and completion, and the degree of completion of investments in progress (TRY) (continued): Subsidiaries (continued) Aktops Tekstil San. A.Ş. 31 December 2003 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion Plant Modernisation Incentive Document No: % Production increase * * Total expenditure as of 31 December Akrom Akal Textile Romania S.R.L. 31 December 2004 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion General Investment in Plant December % 31 December 2003 Total Project Amount Date of Date of Percentage of Type (in historic terms) Commencement Completion Completion General Investment in Plant January % Dye Center Recipe Follow Up System January % 9. Investment Allowance for Current and Future Periods Except for the subsidiary Akenerji Elektrik Üretim A.Ş., investment allowance utilised during the current period is TRY and the investment allowance available for future periods amounts to TRY The total investment allowance for the subsidiary Akenerji Elektrik Üretim A.Ş. utilised in the current period amounts to TRY and there is an investment allowance of TRY which is already realized but not yet utilized in relation to the Company s ongoing investments. 17 9. Investment Allowance for Current and Future Periods (continued) As of , except for the subsidiary Akenerji Elektrik Üretim A.Ş., the investment allowance utilized during the current period is TRY (TRY in historic terms) and the investment allowance available for future periods amounts to TRY (TRY in historic terms). As of 31 December 2003, the total investment allowance for the subsidiary Akenerji Elektrik Üretim A.Ş. utilised in the current period amounts to TRY (TRY in historic terms) and out of this total, a portion of TRY (TRY in historic terms) is used from the investment expenditures made in 2003 and the remaining portion is made from the total of TRY (TRY in historic terms) anticipated for the investment expenditures to be made in 2004 due to the investments in progress of the Parent Company. 10. Balances With Shareholders, Subsidiaries and Affiliates Balances of Ak-Al Tekstil Sanayii A.Ş. and its Subsidiaries with shareholders, affiliates and subsidiaries are as follows (TRY): a) Shareholders ; 31 December 2004 RECEIVABLES PAYABLES Non Non Trade Trade Trade Trade Aksa Akrilik Kimya Sanayi A.Ş Akkök Sanayi Yatırım Geliştirme A.Ş Akkim Kimya San. ve Tic. A.Ş Aksu İplik Dokuma ve Boya Apre Fab. A.Ş Kartopu Tekstil Mam. Paz. Tic. A.Ş Dinarsu İmalat ve Tic. A.Ş Üçgen Bakım ve Yönetim Hiz. A.Ş Other * ** 2.184*** * According to the legal status of the subsidiary Akenerji Elektrik Üretim A.Ş., sales can only be made to shareholders. There are 290 shareholding companies that are not included in the Akkök Group and these companies are recognized as Other. ** As of 31 December 2004, TRY of the trade payables of the subsidiary Akenerji Elektrik Üretim A.Ş to its shareholders comprise of deposits and guarantees received from its shareholders. *** Represents dividends payable. 18 10. Balances With Shareholders, Subsidiaries and Affiliates (continued) Balances of Ak-Al Tekstil Sanayii A.Ş. and its Subsidiaries with shareholders, affiliates and subsidiaries are as follows (TRY)(continued): b) Affiliates ; 31 December 2004 RECEIVABLES PAYABLES Non Non Trade Trade Trade Trade Akhan Servis Hizmetleri A.Ş c) Subsidiaries; Aken BV Bozüyük Orman Ürünleri Sanayi Tesisleri A.Ş a) Shareholders ; December 2003 RECEIVABLES PAYABLES Non Non Trade Trade Trade Trade Aksa Akrilik Kimya Sanayi A.Ş Akkök Sanayi Yatırım Geliştirme A.Ş Akkim Kimya San. ve Tic. A.Ş Aksu İplik Dokuma ve Boya Apre Fab. A.Ş Kartopu Tekstil Mam. Paz. Tic. A.Ş Dinarsu İmalat ve Tic. A.Ş Üçgen Bakım ve Yönetim Hiz. A.Ş Other * ** 3.947*** * According to the legal status of the subsidiary Akenerji Elektrik Üretim A.Ş., sales can only be made to shareholders. There are 334 shareholding companies that are not included in the Akkök Group and these companies are recognized as Other. ** As of 31 December 2003, TRY of the trade payables of the subsidiary Akenerji Elektrik Üretim A.Ş to its shareholders comprise of deposits and guarantees received from its shareholders. *** Represents dividends payable. 19 10. Balances With Shareholders, Subsidiaries and Affiliates (continued) Balances of Ak-Al Tekstil Sanayii A.Ş. and its Subsidiaries with shareholders, affiliates and subsidiaries are as follows (TRY) (continued): b) Affiliates ; 31 December 2003 RECEIVABLES PAYABLES Non Non Trade Trade Trade Trade Akhan Servis Hizmetleri A.Ş Ak Havacılık ve Ulaştırma Hiz. A.Ş c) Subsidiaries; Aken BV Bozüyük Orman Ürünleri Sanayi Tesisleri A.Ş Accounting Techniques and Valuation Procedures Applied (a) Basis of Presentation : The accounting records and statutory books of Ak-Al Tekstil Sanayii A.Ş. and its Subsidiaries have been prepared based upon current commercial and financial legislation and the directives of the Capital Markets Board (CMB). The accompanying consolidated financial statements have been based on the Inflation Accounting Communiqué (Serial XI Nr.20) and the Consolidation Communiqué (Serial XI Nr.21). 20 11. Accounting Techniques and Valuation Procedures Applied (continued) (a) Basis of Presentation (continued): The CMB Communiqué (Serial XI; nr.20) requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date and that the corresponding figures for the previous periods be restated in the same terms. With respect to the same directive, in case where the price index at the balance sheet date is 100% or more than the index valid at the beginning of the third previous accounting period, and where the price index at the balance sheet date is 10% or more than the index at the beginning of the current period, hyperinflationary period starts from the current period onwards. As of 31 December 2004, although the three-year cumulative inflation rate in Turkey is below 100% (69,7%), as the annual rate for the year then ended has not decreased to a level below 10% (13,8%), the accompanying financial statements have been restated in terms of the equivalent purchasing power of the Turkish Lira at 31 December The restatement is calculated by means of conversion factors derived from the Turkish countrywide wholesale price index determined by the State Institute of Statistics and published by the Capital Markets Board. Such indices and conversion factors as of 31 December 2004 are set out below : Date Index Conversion Factor 31 December ,7 1, December ,8 1, December ,1 1, December ,8 1,000 The following principles have been applied in the preparation of the restated financial statements: - Financial statements are stated in terms of the measuring unit current at 31 December 2004 and the corresponding figures for the previous periods are restated in the same terms. - Monetary assets and liabilities are not restated because they are already expressed in terms of the monetary unit current at that balance sheet date. - Non-monetary assets and liabilities denominated in Turkish Liras are restated by applying the relevant conversion factors. - Non-monetary assets and liabilities denominated in foreign currency are translated into Turkish Liras by applying the exchange rate of the relevant date and restated by applying the relevant conversion factors. Additions to long term investments in the month of acquisition are restated using the relevant conversion factors 21 11. Accounting Techniques and Valuation Procedures Applied (continued) (a) Basis of Presentation (continued) : - All items in the statement of income denominated in Turkish Liras are restated by applying the relevant monthly conversion factors. - All items in the statement of income denominated in foreign currency are translated into Turkish Liras by applying the average monthly exchange rate of the relevant month and restated by applying the relevant monthly conversion factors. - As the hiper-inflationary period in Romania has ended, the financial statements as of 31 December 2004 of the subsidiary Akrom Akal Textile Romania S.R.L. prepared in accordance with the International Accounting Standard 21 (Effects of Changes in Foreign Exchange) in USD have been translated to Turkish Liras at the foreign exchange rate prevailing at the balance sheet date. - The effect of general inflation is included in the consolidated statement of income as Net Monetary Gain/(Loss). (b) Consolidation Principles : Consolidation is realized within the Parent Company, Ak-Al Tekstil Sanayii A.Ş. and the direct and indirect shareholdings of the Parent Company within its affiliates and subsidiaries are as follows: Subsidiaries Akrom Akal Textile Romania S.R.L.* 100,00 % 100,00 % Bozüyük Orman Ürünleri Sanayi Tesisleri A.Ş.** 99,46 % 99,46 % Ak-Al Tekstil Pazarlama A.Ş.* 99,50 % 99,50 % Ak-Al Dış Ticaret A.Ş.* 99,50 % 99,50 % Akenerji Elektrik Üretim A.Ş. * 7,96 % 7,96 % Ak-Pa Tekstil İhracat Paz
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