COMPONENTA DÖKÜMCÜLÜK TİCARET VE SANAYİ A.Ş. - PDF

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CONVENIENCE TRANSLATION INTO ENGLISH OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 JANUARY - 31 MARCH 2011 (ORIGINALLY ISSUED IN TURKISH) CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

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CONVENIENCE TRANSLATION INTO ENGLISH OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 JANUARY - 31 MARCH 2011 (ORIGINALLY ISSUED IN TURKISH) CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 JANUARY - 31 MARCH 2011 CONTENTS PAGE CONDENSED CONSOLIDATED BALANCE SHEETS CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME... 3 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY... 4 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW... 5 STATEMENTS FOR THE PERIOD 1 JANUARY-31 MARCH NOTE 1 ORGANIZATION AND NATURE OF OPERATIONS... 6 NOTE 2 BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND ACCOUNTING POLICIES APPLIED NOTE 3 SEGMENT REPORTING NOTE 4 CASH AND CASH EQUIVALENTS NOTE 5 FINANCIAL LIABILITIES NOTE 6 TRADE RECEIVABLES AND PAYABLES NOTE 7 OTHER RECEIVABLES AND PAYABLES NOTE 8 INVENTORIES NOTE 9 INVESTMENTS VALUED AT EQUITY METHOD NOTE 10 PROPERTY, PLANT AND EQUIPMENT NOTE 11 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES NOTE 12 BENEFITS TO PERSONNEL NOTE 13 OTHER ASSET AND LIABILITIES NOTE 14 EQUITY NOTE 15 SALES AND COST OF SALES NOTE 16 RESARCH AND DEVELOPMENT EXPENSES, MARKETING, SALES AND DISTRIBUTION EXPENSES, GENERAL ADMINISTRATIVE EXPENSES NOTE 17 OTHER INCOME AND EXPENSES NOTE 18 FINANCIAL INCOME NOTE 19 FINANCIAL EXPENSES NOTE 20 TAX ASSETS AND LIABILITIES (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) NOTE 21 RELATED PARTY DISCLOSURES NOTE 22 CHARACTERISTICS AND LEVEL OF RISKS RESULTING FROM FINANCIAL INSTRUMENTS 31-38 CONDENSED CONSOLIDATED BALANCE SHEETS AT 31 MARCH 2011 AND 31 DECEMBER 2010 (Amounts expressed in Turkish Lira ( TL ) unless otherwise indicated.) ASSETS Not reviewed Audited Notes Current Assets Cash and cash equivalents Trade receivables - Trade receivables from related parties 21, Other trade receivables Other receivables - Financial receivables from related parties 21, Other receivables Inventories Other current assets Non-current assets Other trade receivables Financial investments Property, plant and equipment Intangible assets Goodwill Other non-current assets TOTAL ASSETS The condensed consolidated interim financial statements as at and for the period ended 31 March 2011 were approved and signed for issue by the Board of Directors on 13 May The accompanying notes form an integral part of these condensed consolidated interim financial statements. 1 CONDENSED CONSOLIDATED BALANCE SHEETS AT 31 MARCH 2011 AND 31 DECEMBER 2010 (Amounts expressed in Turkish Lira ( TL ) unless otherwise indicated.) LIABILITIES Not reviewed Audited Note Current liabilities Short-term borrowings Trade payables - Trade payables to related parties 21, Other trade payables Other payables - Payables to related parties 21, Other payables Taxes on income Provisions Other current liabilities Non-current liabilities Long-term borrowings Provisions for benefits to personnel Deferred tax liabilities EQUITY Equity of Parent Company Paid in capital Paid in capital inflation adjustment differences Share premium Restricted reserves Foreign currency translation differences ( ) ( ) Retained earnings Net profit/(loss) for the period TOTAL LIABILITIES AND EQUITY The accompanying notes form an integral part of these condensed consolidated interim financial statements. 2 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2011 AND 2010 CONTINUING OPERATIONS: Not reviewed Not reviewed 1 January - 1 January - Notes 31 March March 2010 Sales Income Cost of Sales (-) 15 ( ) ( ) GROSS PROFIT Marketing, Sales and Distribution Expenses (-) 16 ( ) ( ) General Administrative Expenses (-) 16 ( ) ( ) Research and Development Expenses (-) 16 ( ) ( ) Other Operating Income Other Operating Expenses (-) 17 ( ) ( ) OPERATING PROFIT Profit/(loss) from investments valued at equity method (Non-Operating) financial income (Non-Operating) financial expenses (-) 19 ( ) ( ) PROFIT FROM CONTINUING OPERATIONS BEFORE TAXES Taxation on loss - Taxes on income 20 ( ) ( ) - Deferred tax loss 20 ( ) ( ) NET INCOME OTHER COMPREHENSIVE INCOME/(LOSS) Changes in foreign currency translation differences ( ) OTHER COMPREHENSIVE INCOME/(LOSS) (AFTER TAX) ( ) TOTAL COMPREHENSIVE INCOME Earnings per share with a nominal value of Kr 0.1 (Kr) 0,0187 0,0043 The accompanying notes form an integral part of these condensed consolidated interim financial statements 3 INTERIM FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2011 AND 2010 Statement of changes in equity for the three-month period ended 31 March 2010: Inflation Foreign adjustment currency Paid in to share Share Restricted translation Retained Current period Total capital capital premium reserves difference earnings (loss)/profit equity 1 January ( ) ( ) Transfers ( ) Comprehensive (loss)/income for the period ( ) March ( ) Statement of changes in equity for the three-month period ended 31 March 2011: Inflation Foreign adjustment currency Paid in to share Share Restricted translation Retained Current period Total capital capital premium reserves difference earnings profit equity 1 January ( ) Transfers ( ) - Comprehensive income for the period March ( ) The accompanying notes form an integral part of these condensed consolidated interim financial statements. 4 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW FOR THE THREE-MONTH PERIOD ENDED 31 MARCH 2011 AND 2010 (Tutarlar, aksi belirtilmedikçe, Türk Lirası ( TL ) olarak ifade edilmiştir.) Operating activities: 1 January - 1 January - Notes 31 March March 2010 Net income before tax Adjustments to reconcile income before tax to net cash provided by operating activities: Depreciation Amortization Provision release income for diminution in value of inventories 8 ( ) ( ) Provision (income)/expense for employment termination benefit 12 ( ) Share in results of associates 9 ( ) ( ) Profit on sales of property, plant and equipment 17 (6.019) - Allowances for doubtful receivables- net Interest and rediscount income 18 ( ) ( ) Interest and factoring expenses Foreign currency translation differences (93.906) Cash flows from operating activities before changes in operating assets and liabilities Change in trade receivables 6 ( ) ( ) Change in related party balances 21 ( ) Change in inventories 8 ( ) ( ) Change in other assets 13 ( ) Change in trade payables and tax charges Change in other liabilities Employment termination benefits paid 12 ( ) ( ) Net cash provided by operating activities Investing activities: Interest and due date charge income Purchase of property, plant and equipment 10 ( ) ( ) Purchase of intangible assets ( ) (8.440) Proceeds from sale of property, plant and equipment and intangible assets Loans lended to related parties Net cash (used in)/provided by investing activities Financial activities: Change in bank borrowings-(net) ( ) Interest and factoring expenses paid ( ) ( ) Net cash provided by/(used in) financing activities ( ) Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period The accompanying notes form an integral part of these condensed consolidated interim financial statements. 5 NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS Componenta Dökümcülük Ticaret ve Sanayi A.Ş. (the Company ) was established in 1973 in Orhangazi, Bursa and operated as a subsidiary of Koç Holding A.Ş until 12 December Koç Holding has transferred its shares to Componenta Oyj located in Finland, at 12 December Accordingly the Company is a subsidiary of Componenta Oyj since then. The main operation of the Company is production and trade of gray cast iron, spheroidal cast iron and aluminium castings for the automotive industry. The Company s production and trading operations are conducted in its premises based in Bursa - Orhangazi and in its aluminium casting factory in Manisa Industrial Area, which was acquired in The Company is registered with the Capital Markets Board of Turkey and its shares are currently quoted in the Istanbul Stock Exchange. The main shareholder of the Company is Componenta Oyj (Note 14). The commercial name of the Company which was Componenta Döktaş Dökümcülük Ticaret ve Sanayi A.Ş. has been changed to Componenta Dökümcülük Ticaret ve Sanayi A.Ş.on 28 April The average number of employees during the period ended 1 January-31 March 2011 was (1 January - 31 December 2010: 1.714). The registered office addresses of Orhangazi and Manisa plants are as follows: Gölyolu no: 26 P.K. (18) Orhangazi Bursa. Organize Sanayi Bölgesi Sakarya Cad. No: 14, Manisa. Componenta UK is the wholly owned subsidiary of the Company. Componenta UK operates in England and conducts the trade and marketing activities of gray cast iron, wheel and aluminium casting. The Company and its subsidiary (together will be referred to as the Group ) considers gray cast iron, wheel and aluminium casting as three separate business segments and performs segment reporting for management reporting purposes (Note 3). There is no geographical segmentation as the production activities, being the principal area of activity for the Group, are conducted in Turkey. The associate of the Group is Kumsan Döküm Malzemeleri San. ve Ticaret A.Ş. ( Kumsan ) as of 31 March 2011 (Note 9). 6 NOTE 2 - BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND ACCOUNTING POLICIES APPLIED 2.1 Basis of Presentation Accounting standards The consolidated financial statements of the Group have been prepared in accordance with the accounting and reporting principles published by the CMB, namely CMB Financial Reporting Standards. CMB regulated the principles and procedures of preparation, presentation and announcement of financial statements prepared by the entities with the Communiqué No: XI-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 the Communiqué No: XI 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 are in line with the aforementioned standards shall be considered. 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 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 commencing from 1 January In accordance with the Communiqué No: XI 29, the entities are allowed to prepare a complete or condensed set of interim financial statements in accordance with IAS 34, Interim Financial Reporting. In this respect, the Group has preferred to prepare condensed consolidated interim financial statements in the interim periods and prepared the mentioned condensed consolidated financial statements in compliance with CMB Financial Reporting Standards. As the differences of the IAS/IFRS endorsed by the European Union from the ones issued by the IASB have not been announced by TASB as of the date of preparation of these condensed consolidated interim financial statements have been prepared within the framework of Communiqué XI, No: 29 and related promulgations to this Communiqué as issued by the CMB, in accordance with the CMB Financial Reporting Standards which are based on IAS/IFRS. The condensed consolidated interim financial statements and the related notes to them are presented in accordance with the formats recommended by the CMB, with the announcement dated 2008/16, 2008/18, 2009/40, 2009/02 and 2009/04 including the compulsory disclosures. Accordingly, necessary reclassifications have been made in the comparative financial statements. Condensed consolidated iterim financial statements are prepared according the functional and reporting currency of the Group, Turkish lira ( TL ), based on historical cost except for the financial assets and liabilities measured at their fair values. 7 NOTE 2 - BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND ACCOUNTING POLICIES APPLIED (Continued) Consolidation principles (i) Subsidiaries Subsidiaries are the enterprises which the Group has direct or indirect control over. The Group has interest in the results of its subsidiaries due to its power to govern the financial and operational policies of the enterprises. In determining the control power, actual and realizable voting rights are taken into consideration. The results of operations of a subsidiary are included in the condensed consolidated interim financial statements as from the date of acquisition, which is the date on which control of the acquired subsidiary is effectively transferred to the buyer, until the date of disposal which is the date on which the parent ceases to have the control of the subsidiary. All the subsidiaries of the Group and the percentage of shares in them are given below: Ownership interest Ownership interest Componenta UK Ltd. %100 %100 All assets and liabilities of Componenta UK Ltd., which is operating in England, are translated into TL using foreign exchange rate as of balance sheet date whereas income statement accounts are translated into TL using yearly average foreign exchange rate. Exchange differences arising from the translation of opening net assets and current period income statement of Componenta UK Ltd. are included in translation reserves under equity. (ii) Investments in associates Investments in associates, on which the Group has significant influence but does not have control over, are accounted using the equity method during the period that significant influence exists. Condensed consolidated interim financial statements involve the income and expenses of associates to the extent of Group s share as associates are accounted for using the equity method. The table below sets out investments in associates and the ownership interests of the Group: Ownership interest Ownership interest Kumsan Döküm Malzemeleri Sanayi ve Ticaret A.Ş.( Kumsan ) %25,10 %25,10 8 NOTE 2 - BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND ACCOUNTING POLICIES APPLIED (Continued) 2.1 Basis of Presentation (Continued) (iii) Elimination of transactions in consolidation All the balances and transactions due to intercompany transactions and unrealized gains are eliminated during the consolidation. Unrealized losses resulting from intercompany transactions, in the absence of evidence for impairment, are eliminated using the same method as unrealized gains. The cost of, and dividends arising from, shares held by the Group are eliminated from the related equity and income statement line items respectively. 2.2 Changes in Accounting Policies There is not any accounting policy changed and there is not any plan to change the accounting policies applied and all accounting policies applied are consistent with the prior periods policies. 2.3 Comparative information and restatement of prior period financial statements The condensed consolidated interim financial statements of the Group include comparative financial information to enable determination of the trends in the financial position and performance. The Group has prepared the consolidated balance sheet as of 31 March 2011 comparatively with the balance sheet at 31 December 2010, and consolidated statement of comprehensive income, consolidated statement of cash flow and consolidated statement of change in equity for the period between 1 January and 31 March 2011 comparative to the period between 1 January and 31 March Changes in accounting estimates and errors Material changes in accounting policies or material errors are corrected, retrospectively; restating the prior period financial statements. Effects of changes in accounting estimates are recognized prospectively; i.e. the effects of such changes on current and future periods are recognized in the current and future periods. 2.5 Summary of significant accounting policies The accounting policies used in the preparation of these condensed consolidated interim financial statements are consistent with those used in the preparation of annual consolidated financial statements for the year ended 31 December These condensed consolidated interim financial statements should be considered together with annual consolidated financial statements for the year ended 31 December In accordance with the Communiqué No: XI 29, there is no accounting policies applied at these condensed consolidated interim financial statements different from accounting policies applied at annual consolidated financial statements in compliance with CMB Financial Reporting Standards based on IFRS. The Group has accounted depreciation expense for plant, property and equipment for the period between 1 January - 31 March 2011 in condensed consolidated interim financial statements by taking into consideration the capacity utilization rates. Capacity utilization rates for the period between 1 January - 31 March 2011 for gray cast iron, aluminium casting and wheel plants are respectively 67%, 67% and 85%. As a result, depreciation expense of machinery and equipment for the period between 1 January - 31 March 2011 was realized as TL (1 January - 31 March 2010: TL ). 9 NOTE 2 - BASIS OF PRESENTATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND ACCOUNTING POLICIES APPLIED (Continued) 2.5 Summary of significant accounting policies (Continued) Tax provisions at interim periods are calculated according to tax rates expected to be applied for the year end financial results. 2.6 Significant accounting estimates and assumptions Preparation of condensed consolidated interim financial statements requires use of estimates and assumptions that may affect the amount of assets and liabilities recognized as of balance sheet date, contingent assets and liabilities disclosed and amount of revenue and expenses reported. Although, these estimates and assumptions rely on the Group management s best knowledge about the current events and transactions, actual outcome may vary from those estimates and assumptions. NOTE 3 - SEGMENT REPORTING The Group considers aluminium casting, gray cast iron and wheel division as three separate business segments and provides segmental information in accordance with the requirements of the accounting framework used. Segment assets Gray cast iron Aluminium casting Wheel Unallocated assets (*) Total assets per consolidated financial statements (*) Unallocated assets consist of financial investments in Kumsan amounting to TL (31 December 2010: TL ) and loans lended to Componenta Oyj amounting to TL (31 December 2010: TL ) as at 31 March Segment liabilities Gray cast iron Aluminium casting Wheel Unallocated liabilities (**) Total liabilities per consolidated financial statements (**) Unallocated liabilities consist of bank borrowings amounting to TL (31 December 2010: TL ), tax provisions amounting to TL (31 December 2010: TL ) and due to related parties amounting to TL (31 December 2010: TL ) as at 31 March NOTE 3 - SEGMENT REPORTING (Continued) Segmental analysis for the
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