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ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE
TİCARET ANONİM ŞİRKETİ AND ITS SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR’S REPORT
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
CONTENTS
Independent Auditors’ Opinion
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes In Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS AS OF
30 SEPTEMBER 2013, 31 DECEMBER 2012 AND 2011 (Currency - Turkish Lira ‘TRY’ unless expressed otherwise.)
Restated (*) Restated (*)
Current
Period Prior Period Prior Period
Reviewed Audited Audited
Footnote
References 30.09.2013 31.12.2012 31.12.2011
ASSETS
Current Assets
167,169,399 109,403,695 133,232,492
Cash and Cash Equivalents 8 1,072,170 1,662,350 881,903
Trade Receivables 10 91,873,150 58,750,401 73,855,282
- Due from related parties
8,169,083 9,529,594 810,274
- Due from other parties 83,704,067 49,220,807 73,045,008
Other Receivables 11 12,575,775 9,957,455 19,704,628
- Due from related parties
5,994,397 833,101 -
- Due from other parties
6,581,378 9,124,354 19,704,628
Inventories 13 49,645,368 31,571,879 31,527,036
Prepaid Expenses 14 3,646,534 1,412,032 1,609,542
Assets Relevant to Current Period Taxes 30 3,442,062 4,708,498 489,467
Other Current Assets 21 1,618,090 1,341,080 5,164,634
Non-Current Assets Classified Held For Sale 29 3,296,250 - -
Non - Current Assets
133,127,822 120,915,467 141,582,029
Trade Receivables 10 1,365,244 348,725 166,100
- Due from related parties
- - -
- Due from other parties 1,365,244 348,725 166,100
Other Receivables 11 1,572,415 1,337,501 1,804,738
- Due from related parties
- - -
- Due from other parties
1,572,415 1,337,501 1,804,738
Tangible Fixed Assets 15 115,349,297 105,355,002 125,785,583
Intangible Fixed Assets
- Other intangible fixed assets 16 5,638,769 6,594,689 8,487,381
Prepaid Expenses 14 2,330,047 1,826,108 2,055,867
Defferred Tax Assets 30 6,872,050 5,453,442 3,282,360
TOTAL ASSETS 300,297,221 230,319,162 274,814,521
The accompanying notes are an integral part of these financial statements.
(*) Causes and effects of restatement are explained in Note 2.a.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS AS OF
30 SEPTEMBER 2013, 31 DECEMBER 2012 AND 2011 (Currency - Turkish Lira ‘TRY’ unless expressed otherwise.)
Restated (*) Restated (*)
Current
Period Prior Period Prior Period
Reviewed Audited Audited
Footnote
References 30.09.2013 31.12.2012 31.12.2011
LIABILITIES
Current Liabilities 55,115,109 68,375,073 143,247,992
Financial Borrowings 9 3,086,055 10,370,232 6,924,435
Current Installment of Long Term Financial
Borrowings 9 8,283,953 9,658,807 52,747,738
Trade Payables 10 28,447,051 29,116,523 60,839,187
- Due to related parties - 161,643 3,289,585
- Due to other parties 28,447,051 28,954,880 57,549,602
Employee Benefit Liabilities 12 1,489,166 638,428 448,948
Other Payables 11 654,553 135,622 41,869
Defferred Incomes 14 8,423,790 10,388,841 22,178,199
Current Tax Liabilities 30 3,995,812 7,287,514 -
Provision for Short Term Payables
- Provision for employee benefits 20 4,847 - -
- Provision for other short-term payables 18 729,882 779,106 67,616
Non-Current Liabilities 57,530,666 25,191,500 24,539,082
Financial Borrowings 9 40,727,008 8,194,127 4,751,025
Trade Payables 10 4,559,821 4,930,606 7,999,467
- Due to related parties - - -
- Due to other parties 4,559,821 4,930,606 7,999,467
Deferred Incomes 14 1,327,801 1,281,250 1,746,313
Provision for Long Term Payables
- Provision for employee benefits 20 1,387,831 837,992 514,781
Deferred tax Liabilities 30 9,528,205 9,947,525 9,527,496
SHAREHOLDERS' EQUITY 187,651,446 136,752,589 107,027,447
Parent Company’s Equity 187,688,293 136,752,589 107,027,447
Paid In Capital 22.1 60,000,000 50,000,000 46,878,214
Inflation Adjustments of Shareholder's Equity 22.2 746,913 746,913 746,913
Share Premiums/Discounts 22.3 31,399,971 - -
Accumulated Other Comprehensive
Income/(Expenses) Not to Be Reclassified
On Profit or Loss
- Actuarial gain /(loss) from retirement pay
Provision 22.4 (481,661) (178,940) (154,357)
- Changes in revaluation of tangible
fixed assets 22.6 37,507,599 39,380,414 54,717,554
Effect of Business Mergers Subject to Joint
Control and Joint Ventures 22.5 (2,390,557) - -
Restricted Reserves 22.7 2,972,851 1,116,622 436,059
Retained Earnings / Losses 43,831,351 3,722,501 1,930,919
Net Profit / Loss For The Period 14,101,826 41,965,079 2,472,145
Minority Interests 22.9 (36,847) - -
TOTAL EQUITY 300,297,221 230,319,162 274,814,521
The accompanying notes are an integral part of these financial statements.
(*) Causes and effects of restatement are explained in Note 2.a.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED AT 30 SEPTEMBER 2013 AND 2012 (Currency - Turkish Lira ‘TRY’ unless expressed otherwise.)
Restated (*)
Restated (*)
Current
Period Prior period
Current
Period Prior period
Reviewed Reviewed Reviewed Reviewed
Footnote
References
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
OPERATING ACTIVITIES
Sales 23.1 181,224,005 160,290,227 64,329,233 49,593,715
Cost of Sales (-) 23.2 (129,534,373) (114,492,014) (48,288,263) (35,176,850)
GROSS PROFIT / (LOSS)
51,689,632 45,798,213 16,040,970 14,416,865
General Administrative Expenses (-) 25.1 (5,332,958) (4,300,947) (1,421,569) (607,725)
Marketing , Sales and Distribution
Expenses (-) 25.2 (21,936,100) (16,298,792) (7,023,205) (3,836,680)
Research and Development Expenses(-) 25.3 (154,788) (184,663) (75,262) (131,173)
Other Operating Incomes 26 8,520,807 12,706,594 4,105,857 1,782,475
Other Operating Expenses (-) 26 (8,683,214) (10,937,501) (3,165,391) (913,755)
OPERATING PROFIT / (LOSS)
24,103,379 26,782,904 8,461,400 10,710,007
Investment Activities Incomes 27 160,901 6,129,375 102,675 5,727,997
Investment Activities Expenses (-) 27 (308,618) (331,918) (184,435) (195,638)
OPERATING PROFIT / (LOSS) BEFORE
FINANCE INCOME / (EXPENSE) 23,955,662 32,580,361 8,379,640 16,242,366
Finance Incomes 28 2,894,767 10,228,451 2,127,115 1,083,989
Finance Expenses(-) 28 (9,100,543) (6,258,428) (5,701,904) (1,401,645)
OPERATING ACTIVITY PROFIT/
(LOSS) BEFORE TAXATION
17,749,886 36,550,384 4,804,851 15,924,710
Operating Activity Tax Income /
(Expense)
(3,836,222) (3,466,567) (713,180) 318,390
Current Tax (Expense) / Income 30 (3,995,812) (5,258,715) (553,750) (1,637,329)
Deferred Tax (Expense) / Income 30 159,590 1,792,148 (159,430) 1,955,719
NET PROFIT / (LOSS) FOR THE
PERİOD
13,913,664 33,083,817 4,091,671 16,243,100
Distribution of Profit / (Loss) For The
Period
Minority Interest 22.9 (188,162) - 60,949 -
Parent Company's Share 31 14,101,826 33,083,817 4,030,722 16,243,100
Earnings Per Share 31 0.23 0.66 0.07 0.32
The accompanying notes are an integral part of these financial statements.
(*) Causes and effects of restatement are explained in Note 2.a.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE PERIODS ENDED AT 30 SEPTEMBER 2013 AND 2012 (Currency - Turkish Lira ‘TRY’ unless expressed otherwise.)
Restated (*) Restated (*)
Current
Period Prior Period
Current
Period Prior Period
Reviewed Reviewed Reviewed Reviewed
Footnote
References
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
PROFIT / (LOSS) FOR THE PERIOD 13,913,664 33,083,817 4,091,671 16,243,100
OTHER COMPREHENSIVE INCOME / (LOSS)
Not to Be Reclassified to Profit or Loss (2,177,411) (18,808,191) (916,513) (18,155,807)
Changes in Revaluation of Tangible Fixed
Assets 15 - 30 (2,311,039) (19,922,122) (770,255) (19,123,508)
Actuarial Gain / (Loss) from Retirement
Pay Provision 20 (380,745) (57,488) (365,393) (70,625)
Taxes in Other Comprehensive Income Not to Be
Reclassified on Profit or Loss
- Deferred Tax Expense / Income 30 514,373 1,171,419 219,135 1,038,326
OTHER COMPREHENSIVE
INCOME / (EXPENSE) (2,177,411) (18,808,191) (916,513) (18,155,807)
TOTAL COMPREHENSIVE
INCOME / (EXPENSE) 11,736,253 14,275,626 3,175,158 (1,912,707)
Distribution of Total Comprehensive
Income / (Expense)
Minority Interest (190,037) - 236,387 -
Parent Company's Share 11,926,290 14,275,626 7,664,977 2,948,220
The accompanying notes are an integral part of these financial statements.
(*) Causes and effects of restatement are explained in Note 2.a. .
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE PERIODS ENDED AT 30 SEPTEMBER 2013 AND 2012 (Currency - Turkish Lira ‘TRY’ unless expressed otherwise,)
Accumulated Other
Comprehensive Income Not to
Be Reclassified on Profit or Loss
Accumulated Profit
/(Losses)
Footnote
References
Paid in
Capital
Inflation
Adjust
ments of
Share
holders'
Equity
Share
Premiums/
Discounts
Actuarial Gain/
(Loss) from
Retirement Pay
Provision
Changes
in
Revaluation
of Tangible
Fixed Assets
Effect of
Business
Mergers
Subject to
Joint Control
And Joint
Ventures
Restricted
Reserves
Retained
Earning /
(Losses)
Net Profit/
(Loss) For
The Period
Parent
Company's
Equity
Minority
Interest
Total
Shareholder's
Equity
Balance at 31 December 2011 46,878,214 746,913 - (154,357) 54,717,554 - 436,059 1,930,919 2,472,145 107,027,447 - 107,027,447
Transfer from retained profit - - - - - - 680,563 1,791,582 (2,472,145) - - -
Capital increase
- Cash 3,121,786 - - - - - - - - 3,121,786 - 3,121,786
Actuarial gain / (loss) from retirement pay provision,
includes deferred tax effect - - - (45,990) - - - - - (45,990) - (45,990)
Total comprehensive income / (expense) , net - - - - (18,762,201) - - - 33,083,817 14,321,616 - 14,321,616
Balance at 30 September 2012 50,000,000 746,913 - (200,347) 35,955,353 1,116,622 3,722,501 33,083,817 124,424,859 - 124,424,859
Balance at 31 December 2012 50,000,000 746,913 - (178,940) 39,380,414 1,116,622 3,722,501 41,965,079 136,752,589 - 136,752,589
Capital increase
- Capital increase by public offering
in cash
22.1 10,000,000 - - - - - - - 10,000,000 - 10,000,000
Premium in excess of par 22.3 - - 31,399,971
- - - - - 31,399,971 - 31,399,971
Transfer from retained profit - - - - - 1,856,229 40,108,850 (41,965,079) - - -
Effect of business mergers subject to joint control and joint ventures
22.5 - - - - (2,390,557) - - - (2,390,557) 153,190 (2,237,367)
Actuarial gain / (loss) from retirement pay provision,
includes deferred tax effect - - - (302,721) - - - - - (302,721) (1,875) (304,596)
Total comprehensive income / (expense) , net - - - - (1,872,815) - - - 14,101,826 12,229,011 (188,162) 12,040,849
Balance at 30 September 2013 60,000,000 746,913 31,399,971 (481,661) 37,507,599 (2,390,557) 2,972,851 43,831,351 14,101,826 187,688,293 (36,847) 187,651,446
The accompanying notes are an integral part of these financial statements.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED AT 30 SEPTEMBER 2013 AND 2012 (Currency - Turkish Lira (TRY) unless expressed otherwise.)
Current
Period Prior Period
Reviewed Reviewed
Footnote
References
01.01.-
30.09.2013
01.01.-
30.09.2012
A. CASH FLOW FROM OPERATING ACTIVITIES (39,917,856) 22,955,309
Parent Company’s Profit / (Loss) of the period, net
14,101,826 33,083,817
Adjustments to Reconcile Net Profit / (Loss) for the Period:
Tangible Fixed Assets Amortization 15 6,381,050 5,503,148
İntagible Fixed Assets Depreciation 16 1,576,231 1,513,591
Adjustment to retirement pay provision 20 247,118 65,702
Adjustment to Interest Accruals of Bank Borrowings 9 479,551 627,712
Unrealized Exchange Difference Incomes / (Expenses), net 6,495,056 1,531,869
Adjustment to Provision for Lawsuits 18 (49,224) 4,124,120
Adjustment to Provision for Doubtful Receivables 10 - 25.1 182,153 1,892,513
Adjustment to Unearned Interest on Receivables 10 - 26 2,736,771 1,773,783
Adjustment to Unearned Interest on Notes Payables 10 - 26 (1,755,269) (3,089,548)
Deferred Tax Effect of Business Merger Subject to Joint Control 30 (1,163,965) -
Adjustment to Deferred Tax 30 (159,590) (1,792,148)
Deffered Taxes Accounted For Under Equity 30 (76,149) -
Changes in Operating Assets and Liabilities
Changes in Trade Receivables 10 (36,523,075) 2,831,303
Changes in Other Receivables 11 (2,853,234) 14,617,321
Changes in Inventories 13 (18,073,489) (7,561,754)
Changes in Other Current Assets 21 (475,774) 3,940,772
Changes in Trade Payables 10 (1,372,170) (20,507,933)
Changes in Other Payables 11 (3,840,533) (12,527,791)
Changes in Short Term Provisions 18 4,847 -
Changes in Other Liabilities 21 958,325
Changes in Non-Current Assets Held for Sale 29 (3,296,250) -
Cash Flow From Operating Activities
Taxes Paid 30 (3,442,062) (3,071,168)
B.CASH FLOW FROM İNVESTİNG ACTİVİTİES (21,734,099) (1,300,397)
Cash from Purchases of Tangible and İntangible Non-Current Assets 15 - 16 (18,791,868) (3,294,869)
Cash from Sales of Tangible and İntangible Non-Current Assets 15 - 16 320,682 1,994,472
Effect of Business Mergers Subject to Joint Control and Joint
Ventures 22.5 (2,390,557) -
Changes in minority interests 22.9 (36,847) -
Additions from Acquisition of Subsidiary 15 - 16 (835,509) -
C.CASH FLOW FROM FİNANCE ACTİVİTİES 61,061,775 (21,873,754)
Capital Increase 22.1 10,000,000 3,121,786
Premiums/Discounts in Excess of Par 22.3 31,399,971 -
Changes in borrowings 9 19,661,804 (24,995,540)
NET INCREASE/DECREASE OF CASH AND CASH EQUIVALENTS (A+B+C) (590,180) (218,842) D. CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD 1,662,350 881,903
CASH AND CASH EQUIVALENT AT THE END OF THE PERIOD (A+B+C) 1,072,170 663,061
The accompanying notes are an integral part of these financial statements.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-1-
NOTE 1 – ORGANIZATION AND NATURE OF ACTIVITIES
For the purpose of the consolidated financial statements Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret
Anonim Şirketi (―Parent Company‖) and its subsidiary are referred as ―Group‖.
The summarized information of entities which are consolidated with ―complete consolidation method‖ is
comprised of the following;
Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret Anonim Şirketi
Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret Anonim Şirketi (―Parent Company‖ or ―Company‖) was
established in the year of 2000 in Gaziantep, Turkey with the title of Naksan Kimya Sanayi ve Ticaret A.Ş.
which was changed and registered to current name at 31 December 2007. The Company began its activities with
production of fabric canvas, fabric irrigation hoses, polyester canvas, woven sacks, and lamination and
veneering, then changed its area of activities to production of carpets (PP, acrylic, wool) and yarn with BCF
technology in the year 2005 and in the same year, the Company started the investment to establish a new factory
to produce machine carpet. The Company registered ―Royal Halı‖ as a carpet trademark from Turkish Patent
Institute and entered into the domestic and foreign market. As of 2007 Company obtained the rights to use
trademark ―Pierre Cardin‖ in carpet sector and started carpet production activities under this trade mark. In
2010, company rented Pierre Cardin‘s trademark rights to use in the carpet industry for 10 years. In addition to
these two brands, as of 31 December 2010, the Company acquired ―Atlas Halı‖ brand.
As of 30 September 2013 there are 18 main dealers of the Company, the majority of domestic carpet sales are
realized through these dealers. Also, as of 30 September 2013, the Company has 9 showrooms, 4 located in
Gaziantep, 2 located in Hatay, 1 located in Şanlıurfa, 1 located in Diyarbakır and 1 in İkitelli/Istanbul, owned
and operated by the Company itself. No dealer system exists in BCF yarn sale.
For the period ended at 30 September 2013, 662 average personnel were employed by the company (01
January - 31 December 2012: 570).
The company is registered to the Capital Market Board (―CMB‖) and on the date of 03 May 2013, whose
shares are offered to the public at the Borsa İstanbul Anonim Şirketi (by the old name ―ISE‖), in the primary
market. As of 30 September 2013, 28.75% of shares, which represent the company‘s capital, are traded at the
Borsa İstanbul Anonim Şirketi (by the old name ―ISE‖). (31 December 2012: none) As of 30 September 2013
and 31 December 2012, the company‘s partnership structure, as was presented in Note 22.1. The company‘s
main shareholder is Naksan Holding A.Ş. and ultimate shareholders are Nakıboğlu family.
As of report date, registered addresses of the Company are as follows;
Carpet Factory
4. Organize Sanayi Bölgesi
83402 No‘lu Cadde No:3
Başpınar / Gaziantep / Turkey
BCF Yarn Factory
1. Organize Sanayi Bölgesi
83118 No‘lu Cadde No:3
Başpınar / Gaziantep / Turkey
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-2-
Atlas Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi
Atlas Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi (‗The company‘ or ‗Atlas Halı‘) was
established on 14 September 2011 in Istanbul / Turkey. The Company is engaged in producing and selling of
machine carpets.
Atlas Halı makes its sales to final consumer by direct dealers channel without using regional dealers.
For the period ended in 30 September 2013, 29 average personnel were employed by the company (01
January - 31 December 2012: 29).
As of 30 September 2013 and 31 December 2012, Company‘s capital structure is as following;
30 September 2013 31 December 2012
Shareholders Ratio
Amount
(TRY) Ratio
Amount
(TRY)
Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret
Anonim Şirketi 51.00% 2,550,000 - -
Naksan Holding Anonim Şirketi 19.00% 950,000 70.00% 3,500,000
Osman Nakıboğlu 11.40% 570,000 11.40% 570,000
Cahit Nakıboğlu 10.80% 540,000 10.80% 540,000
Bahaeddin Nakıboğlu 3.60% 180,000 3.60% 180,000
Cihan Dağcı 2.50% 125,000 2.50% 125,000
Mehmet Hilmi Nakıboğlu 1.20% 60,000 1.20% 60,000
Taner Nakıboğlu 0.50% 25,000 0.50% 25,000
Total 100.00% 5,000,000 100.00% 5,000,000
Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret Anonim Şirketi has bought 51% of the shares of Atlas
Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi from the company‘s main partner Naksan Holding
Anonim Şirketi in 29 January 2013.
As of report date, registered address of the Company is as follows;
Dünya Ticaret Merkezi
A1 Blok 17.Kat
Yeşilköy / İstanbul / Turkey
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-3-
NOTE 2 – BASIS OF THE CONSOLIDATED FINANCIAL STATEMENTS
2. a Basis of Presentation
Compatibility Statement
Consolidated companies prepare their statutory financial statements in accordance with the principles of CMB,
Turkish Commercial Code and Tax Legislation and the Uniform Chart of Accounts issued by the Ministry of
Finance and presents in Turkish Liras (TRY). The financial statements of the Company have been prepared in
accordance with Communiqué XI, No: 29 ―Accounting Standards in Capital Markets‖ published by the Capital
Markets Board (―CMB‖), the necessary adjustments and reclassifications made for the fair presentation in
accordance with Accounting Standards by CMB.
The Preparation of Financial Statements
The interim condensed consolidated financial statements and disclosures have been prepared in accordance
with the communiqué numbered II-14.1 ―Communique on the Principles of Financial Reporting In Capital
Markets‖ announced by the Capital Markets Board on 13 June 2013 which is published on Official Gazette
numbered 28676, in accordance with article fifth of the ―Related Communique‖, companies should apply
Turkish Accounting Standards/Turkish Financial Reporting Standards and interpretations regarding these
standards as adopted by the Public Oversight Accounting and Auditing Standards Authority of Turkey
(―POA‖).
Financial Statements Correction in High Inflation Period
The CMB has announced that, effective from 1 January 2005, the application of inflation accounting is no longer
required for companies operating in Turkey and preparing their financial statements in accordance with CMB
Accounting Standards. Therefore Group was abolished inflation accounting application for 1 January 2005.
Currency
The financial statements and the prior period financial statements for comparison purpose, in the
accompanying statements are prepared in terms of Turkish Lira (TRY).
Approval of Consolidated Financial Statements
Consolidated financial statements of the Group are approved by the Board of Directors and granted authority
to publish on 25 November 2013. With no intention, the Board of Directors and some regulative agencies have
the right to change the financial statements that were prepared according to legal regulations after they have
been published.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-4-
Basis of Consolidation
The companies are subject to ―Complete Consolidation Method‖ if directly or indirectly 50% or more than
50% of their shares or over 50% of their voting rights or the controlling rights regarding companies‘
operations are belonging to the Parent Company. Parent Company has controlling rights if it is able to govern
the financial and operating policies of an enterprise so as to benefit from its activities. The companies which
have continuous relationship on management and power to govern Parent Company‘s policies and/or which
have direct or indirect capital and management relationship or which have voting share of Parent Company
between the rates 20-50% are accounted by using equity pick-up method.
Complete Consolidation Method
The principles of consolidation followed in the preparation of the accompanying financial statements are as
follows:
- The financial statements of the consolidated subsidiaries have been equipped according to the accounting
principles of the Parent Company.
- The share of the Parent Company in the shareholders equity of subsidiaries is eliminated from the financial
of subsidiaries these are adjusted according to the accounting principles of financials of the Parent
Company.
- All significant intercompany transactions and balances between the Parent Company and the subsidiaries
have been comparatively eliminated.
- The minority part of shareholders‘ equity including paid capital of the companies subject to consolidation
is classified as ―Minority Interest‖ in accompanying financial statement.
- The balance sheet and income statement of the subsidiaries are consolidated on a line by line basis, and the
carrying value of the investment held by the Parent Company is eliminated against the related
shareholders‘ equity accounts.
- The income statements of the Parent Company and the subsidiaries are consolidated a line by line basis
and the transaction between companies are eliminated mutually. Consolidation of income statements of
subsidiaries held in an audit period are based on the investment date and the items after the holding date
are included.
The portion of the third parties other than consolidated companies in the net profit or losses of the subsidiaries
are classified as ―Minority Interest‖ in the income statements.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-5-
As of 30 September 2013, the company that are subject to ―Complete Consolidation Method‖ if directly or
indirectly 50% or more than 50% of their shares or over 50% of their voting rights or the controlling rights
regarding companies‘ operations are belonging to the Parent Company are as below;
30 September 2013
Ownership of the Parent
Company through the
Subsidiary Minority
Interest
Subsidiaries (Direct)
(Direct+
Indirect) (Ratio)
Atlas Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi 51.00% 51.00% 49.00%
As of 31 December 2012, Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret Anonim Şirketi did not have any
subsidiaries, as a result of this, accompanying financial statements which are dated 31 December 2012 are not
consolidated.
Adoption of New and Revised International Financing Reporting Standards
Group has applied the new and revised standards and interpretations of the International Accounting Standards
Committee (IASC) published by International Financial Reporting Interpretations Committee (IFRIC) of
IASC for the interim financial statements dated 30 September 2013 and 31 December 2012, for the related to
its business activities, in the current fiscal period.
New standards, amendments and explanations for the dated 1 January 2013 year ended financial statements:
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.
IFRS 9 – “Financial Instruments, Classification and Disclosure”; as amended in December 2011, the new
standard is effective for annual periods beginning on or after January 1, 2015. Phase 1 of this new IFRS
introduces new requirements for classifying and measuring financial instruments. The amendments made to
IFRS 9 will mainly affect the classification and measurement of financial assets and measurement of fair value
option (FVO) liabilities and requires that the change in fair value of a FVO financial liability attributable to
credit risk is presented under other comprehensive income. Early adoption is permitted. This standard has not
yet been endorsed by the EU.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-6-
IFRS 10 – “Consolidated Financial Statements” standard is effective for annual periods beginning on or after
1 January 2013 and is applied on a modified retrospective basis. This new Standard may be adopted early, but
IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities should be also adopted
early. IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses
the accounting for consolidated financial statements. A new definition of control is introduced, which is used
to determine which entities are consolidated. This is a principle based standard and require preparers of
financial statements to exercise significant judgment. This standard has not yet been endorsed by the EU.
IFRS 11 - ―Joint Arrangements‖ standard is effective for annual periods beginning on or after 1 January 2013
and is applied on a modified retrospective basis. This new Standard may be adopted early, but IFRS 10
Consolidated Financial Statements and IFRS 12 Disclosure of Interests in Other Entities should be also
adopted early. The standard describes the accounting for joint ventures and joint operations with joint control.
Among other changes introduced, under the new standard, proportionate consolidation is not permitted for
joint ventures.
IFRS 12 - ―Disclosure of Interests in Other Entities‖ standard is effective for annual periods beginning on or
after 1 January 2013 and is applied on a modified retrospective basis. This new Standard may be adopted
early, but IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements should be also adopted
early. IFRS 12 includes all of the disclosures that were previously in IAS 27 Consolidated and Separate
Financial Statements related to consolidated financial statements, as well as all of the disclosures that were
previously included in IAS 31 Interests in Joint Ventures and IAS 28 Investment in Associates. These
disclosures relate to an entity‗s interests in subsidiaries, joint arrangements, associates and structured entities.
Under the new standard the Group will provide more comprehensive disclosures for interests in other entities.
Revised IFRS 13 - ―Fair Value Measurement‖ standard provides guidance on how to measure fair value under
IFRS but does not change when an entity is required to use fair value. It is a single source of guidance under
IFRS for all fair value measurements. The new standard also brings new disclosure requirements for fair value
measurements. IFRS 13 is effective for annual periods beginning on or after 1 January 2013 and will be
adopted prospectively. Early application is permitted. The new disclosures are only required for periods
beginning after IFRS 13 is adopted — that is, comparative disclosures for prior periods are not required.
IAS 27 - ―Consolidated and Separate Financial Statements‖ As a consequential amendment to IFRS 10, the
IASB also amended IAS 27, which is now limited to accounting for subsidiaries, jointly controlled entities,
and associates in separate financial statements. Transitional requirement of this amendment is similar to IFRS
10. On or after January 1, 2013 shall apply to annual periods beginning on or after that date.
IAS 28 – “Investments in Associates and Joint Ventures (Amended)” - As a consequential amendment to IFRS
11, the IASB also amended IAS 28, which has been renamed IAS 28 Investments in Associates and Joint
Ventures, to describe the application of the equity method to investments in joint ventures in addition to
associates. Transitional requirement of this amendment is similar to IFRS 11. This standard has not yet been
endorsed by the EU.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-7-
IAS 19 - ―Employee Benefits‖ Amended standard is effective for annual periods beginning on or after January
1, 2013, with earlier application permitted. With very few exceptions retrospective application is required.
Numerous changes or clarifications are made under the amended standard. Among there numerous
amendments, the most important changes are removing the corridor mechanism and making the distinction
between short-term and other long-term employee benefits based on expected timing of settlement rather than
employee entitlement.
IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities (Amended)
The amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues
and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro
rata to all of the existing owners of the same class of an entity‗s non-derivative equity instruments, to acquire a
fixed number of the entity‗s own equity instruments for a fixed amount in any currency. The amendments are
effective for annual periods beginning on or after 1 January 2014 and will be adopted retrospectively.
IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (Amended)
New disclosures would provide users of financial statements with information that is useful in i) evaluating the
effect or potential effect of netting arrangements on an entity‗s financial position and ii) analyzing and
comparing financial statements prepared in accordance with IFRS and other generally accepted accounting
standards. This standard has not yet been endorsed by the EU. The amendments are to be retrospectively
applied for annual periods beginning on or after 1 January 2013 and interim periods within those annual
periods. The amendment affects disclosures only.
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine -The Interpretation is effective for annual
periods beginning on or after 1 January 2013 with earlier application permitted. Entities will be required to
apply its requirements for production phase stripping costs incurred from the start of the earliest comparative
period presented. The Interpretation clarifies when production stripping should lead to the recognition of an
asset and how that asset should be measured, both initially and in subsequent periods. This standard has not
yet been endorsed by the EU.
The Group evaluates possible effects of above standards and changes on their financial position and
performance.
Offsetting
Financial assets and liabilities are offset and the net amount is reported in the consolidated balance sheet when
there is a legally enforceable right to set-off the recognized amounts and there is an intention to settle on a basis,
or realize the asset and settle the liability simultaneously.
Going Concern
The accompanying consolidated financial statements prepared on the principle that the Group will be
obtaining benefits from their assets and meet their liabilities within usual scales for the next year.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-8-
Comparative Information and Previous Period Financial Statements Adjustments
The condensed interim consolidated financial statements of the Group include comparative financial
information to enable the determination of the financial position and performance. Comparative figures are
reclassified, where necessary, to confirm to changes in presentation in the current period.
As part of the amendment effective as of 1 January 2013 in ―Employee Benefits‖ of the IAS 19, regarding the
severance pay liability which is recognized under employee termination benefits of the Group, the total
actuarial gain/(loss) (includes deferred tax effect), is shown in statements of changes in equity ―actuarial gain
/ (loss) from retirement pay provision‖. With the changes in the standard, the Group, for the periods ended at
31 December 2012 and 30 September 2012, prepared their financial statements same way and profit / (loss)
from the period ended at 30 September 2012 amounting to TRY 45,990 was classified under equity
―Accumulated profit and losses‖ in the balance sheet for the period ended at 31 December 2012 amounting to
TRY 24,583 in ―Net profit / (loss) for the period‖ classified to ―Accumulated profit and loss‖ in equity.
Pursuant to the decree taken in the CMB‘s meeting dated 07 June 2013 and numbered 20/670, for capital
market board institutions within the scope of the Communique on Principles Regarding Financial Reporting in
the Capital Market, financial statement models and user guide have been published, effective as of the interim
periods ended after 31 March 2013.Various classifications were made in the Group‘s statement of financial
position pursuant to these formats which have taken effect.
The classifications made in the statement of consolidated financial position of the Group as of 31 December
2012 and 2011 are as follows;
- As of 31 December 2012 and 2011, TRY 4,708,498 TL and TRY 489,467, which are ―Prepaid taxes
and funds‖, as shown in the other current assets, are classified in balance sheet as a separate account
within the scope of the ‗Assets relevant to current period taxes account ‘.
- As of 31 December 2012 and 2011, TRY 1,302,803 and TRY 1,339,586 which are ―Prepaid expenses –
short term‖, as shown in the other current assets, are classified in balance sheet as a separate account
within the scope of the ‗Prepaid expenses account‘.
- As of 31 December 2012 and 2011, TRY 108,504 and TRY 269,956 which are ―Order advances given‖,
as shown in the other current assets, are classified in balance sheet in ‗Prepaid expenses accounts‘.
- As of 31 December 2012 and 2011, TRY 983,083 and TRY 769,765 which are ―Advances given for the
purchases of tangible fixed assets‖, as shown in the other non-current assets, are classified in balance
sheet in ―Prepaid expenses-long term account‖.
- As of 31 December 2012 , TRY 725 which is ―Advances given for the business purposes‖, as shown in
the other current assets, is classified in balance sheet in ―Prepaid expenses account‖.
- As of 31 December 2012 and 2011, TRY 843,025 and TRY 1,286,102 which are ― Prepaid expenses –
long term‖ as shown in the other non-current assets, are classified in balance sheet as a seperate account
whihin the scope of the ‗Prepaid expenses long term account‘.
- As of 31 December 2012 and 2011, TRY 9,619,443 and TRY 52,747,738 which are ―Current
installement of long term financial‖, as shown in the current liabilities, are classified in balance sheet as
a separate account within the scope of the ‗Current installement of long term financial‘.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-9-
- As of 31 December 2012, TRY 39,364 which is ― Current financial lease payables‖ as shown on the
current liabilities, is classified in balance sheet as a separate account within the scope of the ‖Current
installments and interests of long term loans‖ .
- As of 31 December 2012 and 2011, TRY 413,876 and TRY 286,177 which are ―Due to personnel‖, as
shown in the other payables, are classified in balance sheet in ―Employee termination benefits account‖.
- As of 31 December 2012 and 2011, TRY 224,552 and TRY 162,771 which are ―Social security
premiums payable‖, as shown in the other payables, are classified in balance sheet in ―Employee
termination benefits account‖.
- As of 31 December 2012 and 2011, TRY 361,642 and TRY 172,730 which are ―Expense accruals due
to contracts‖, as shown in the provision for payable, are classified in balance sheet in ‗Trade payables
account‘.
- As of 31 December 2012 and 2011, TRY 10,388,841 and TRY 22,178,199 which are ―Advances
received‖, as shown in the other current liabilities account, are classified in balance sheet as a separate
account within the scope of the ‗Deferred incomes‘.
- As of 31 December 2012 and 2011, TRY 1,281,250 and TRY 1,746,313 which are ―Advances
received‖ as shown on the other non-current liabilities, are classified in balance sheet as a separate
account within the scope of ―Deffered incomes- long term account‖.
Reclassifications to Group's income statement at 30 September 2012 are as follows and reclassifications has
no effect on income / (loss);
- In the income statement for the period ended at 30 September 2012, TRY 9,140,382 which are ―Foreign
exchange incomes from commercial activities‖, as shown in the finance incomes, are classified in
income statement in ‗Other operating incomes‘.
- In the income statement for the period ended at 30 September 2012, TRY 9,157,390 which are ―Foreign
exchange expenses from commercial activities‖, as shown in the finance expenses, are classified in
income statement in ―Other operating expenses‖.
- In the income statement for the period ended at 30 September 2012, TRY 3,089,548 which
are"Rediscount incomes‖, as shown in the finance incomes, are classified in income statement in ―Other
operating incomes‖.
- In the income statement for the period ended at 30 September 2012, TRY 1,773,783 which are
―Rediscount expenses‖, as shown in the finance expenses, are classified in income statement in ―Other
operating expenses‖.
- In the income statement for the period ended at 30 September 2012, TRY 417,205 which are ―Interest
incomes from other receivables‖, as shown in the finance incomes, are classified in income statement in
―Investment activities incomes‖.
- In the income statement for the period ended at 30 September 2012, TRY 331,918 which are ―Interest
expenses from other payables‖, as shown in the finance expenses, are classified in income statement in
―Investment activities expenses‖.
- In the income statement for the period ended at 30 September 2012, TRY 40,171 which are ―Due date
difference incomes from trade receivables‖, as shown in the finance incomes, are classified in income
statement in ―Other operating incomes‖.
- In the income statement for the period ended at 30 September 2012, TRY 5,712,170 which are ―Profit
on sale of fixed assets‖, as shown in the other operating incomes, are classified in income statement in
―Investment activities incomes‖.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-10-
2. b Changes in Accounting Policies
A company only could change it s accounting policy under following circumstances;
If a standard or interpretation makes it necessary or
If the change make effect of operations or incidents on financial position and performance or cash flows more
appropriate and reliable.
Financial statements have to be comparable to see trends in financial position of companies, performance and
cash flows for user of financial statements. This is why, if the change is not granting one of above conditions,
each interim and fiscal periods has to be applied same accounting policy.
Changes in Accounting Estimates and Errors
The accompanying consolidated financial statements necessitate that some predictions about income and
expenses regarding possible assets and liabilities in the financial statements prepared by the Group management
to be compatible with statements required by Capital Market Board. Realized amounts can differ from the
predictions. These predictions are observed regularly and reported periodically in income statements. Changes in
accounting estimates and errors explained in title of ―Comparative Information and Previous Periods Financial
Statements Adjustments‖ which is explained below.
Comments those would have significant effect on balances reflected in the consolidated financial statements
and important expectations and valuations considering present or future expectation as of report date, are as
following:
Provision for doubtful receivables
Provision for doubtful receivables reflect the future loss that the Group anticipates to incur from the trade
receivables as of the balance sheet date which is subject to collection risk considering the current economical
conditions. During the impairment test for the receivables, the debtors are assessed with their prior year
performances, their credit risk in the current market, their performance after the balance sheet date up to the
issuing date of the financial statements; and also the renegotiation conditions with these debtors are considered.
The provision for doubtful receivables is presented in Note 10.
Provision for the diminution in value of inventory
During the assessment of the provision for the diminution in value of inventory the following are considered;
analyzing the inventories physically and historically, considering the employment and usefulness of the
inventories respecting to the technical personnel view. Sales prices listed, average discount rates given for sale
and expected cost incurred to sell are used to determine the net realizable value of the inventories. As a result of
this, the provision for inventories with the net realizable values below the costs and the slow moving inventories
are presented. The provision for the diminution in value of inventory is presented in Note 13.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-11-
Useful lifetime of tangible and intangible assets
Group reserves provision for depreciation regarding to footnote 2.c that refers to useful lifetime on fixed
assets. Information about useful lifetime is described in footnote 2.c.
Provision for lawsuits
While setting provision for lawsuits, it has considered probability to lose lawsuit, then the consequences of
loosing case by the legal advisor of the Group. Details of the lawsuits provisions are in Note 18 based on the
estimation by utilizing information given by Group Management.
Severance pay provision
Severance Pay Provision is calculated with actuarial expectation based on assumptions like discount rates, salary
increase in the future and probability to quit the job. This planning covers long term concerns. Hence
assumptions involve vital uncertainty. Provisions for employee benefits are given in detail in Note 20.
Deferred Tax
The Group recognizes deferred tax on the temporary timing differences between the carrying amounts of assets
and liabilities in the financial statements prepared in accordance with IFRS and statutory financial statements
which is used in the computation of taxable profit. The related differences are generally due to the timing
difference of the tax base of some income and expense items between statutory and IFRS financial statements.
The Group has deferred tax assets resulting from tax loss carry-forwards and deductible temporary differences,
which could reduce taxable income in the future periods. All or partial amounts of the realizable deferred tax
assets are estimated in current circumstances. 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 that would, if necessary, be implemented, and the nature of the income that can be used to realize the
deferred tax asset. As a result of the revaluation, as of 30 September 2013, temporary differences due to tax
incentives can be foreseen and the fraction falls in continuity of tax incentives within the context of tax
legislations, can be benefited from and is to be tax assets and accounted. As of balance sheet date, the details
regarding deferred tax calculations are stated in Note 30.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-12-
2. c Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalent values contain cash on hand, bank deposits and high liquidity investments. Cash and
cash equivalents are showed with obtaining costs and the total of accrued interests.
Financial Investments
Initial measurements of financial asset and financial liabilities
When a financial asset or financial liability is recognized initially, an entity shall measure it at its fair value
plus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.
When an entity uses settlement date accounting for an asset that is subsequently measured at cost or amortized
cost, the asset is recognized initially at its fair value on the trade date.
Subsequent measurement of financial assets
After initial recognition, an entity shall measure financial assets, including derivatives that are assets, at their
fair values, without any deduction for transaction cost it may incur on sale or other disposal, except for the
following financial assets:
(a) Loan and receivables which shall be measured at amortized cost using the effective interest method,
(b) Held-to-maturity investments which shall be measured at amortized cost using the effective interest
method, and
(c) Investments in equity instruments that do not have a quoted market price in an active market and whose
fair value cannot be reliably measured and derivatives that is linked to and must be settled by delivery of
such unquoted equity instruments which shall be measured at cost.
A financial asset of financial liability at fair value difference through profit or loss:
It is classified as tangible assets hold for future sale. A financial asset or financial liability is classified as
tangible assets hold for future sale if it is:
(a) Acquired or incurred principally for the purpose of selling or repurchasing it in the near term,
(b) Part of a portfolio of identified financial instruments that are managed together and for which there is
evidence of a recent actual pattern of short-term profit making; or
(c) A derivative (except for a derivative that is a financial guarantee contract or a designated and effective
hedging instrument).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-13-
Held-to maturity investments
Non derivative financial assets with fixed or determinable payments and fixed maturity that an entity has the
positive intention and ability to hold to maturity.
(a) Those that the entity upon initial recognition designates as at fair value through profit or loss,
(b) Those that the entity designates as available for sale, and
(c) Those that meet the definition of loans and receivables.
Available-for-sale financial assets
Non-derivative financial assets that are designated as available for sale or are not classified as loans and
receivables, held-to-maturity investments or financial assets at fair value through profit or loss.
Derivative Financial Assets Held for Cash Flow Hedges
Derivative financial instruments of the group consists of the contracts of forward exchange, (that is forward
and option). The group, reflects fair value difference of derivative financial instruments its consolidated
income statements.
Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that
is not carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is
linked to and must be settled by delivery of such unquoted equity instrument, the amount of the impairment
loss is measured as the difference between the carrying amount of the financial asset and the present value of
estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such
impairment losses shall not be reversed.
Shares
If shares are quoted in Borsa İstanbul, then these shares are revalued with closing price as of balance sheet
date. If shares are not quoted, then these shares are revalued with acquirement price as of balance sheet date.
Funds given against financial assets reverse repo are reflected as reverse repo receivables under marketable
securities in the accompanying consolidated financial statements. The portion of the difference between
purchase and sale back price by these reverse repo agreements for the interim period is calculated by ―internal
discount rate‖ as discounted income and it is accounted by adding to cost of reverse repo.
Marketable securities
Financial assets in which Parent Company has voting right below 20%, or over 20% which Parent Company
does not exercise a significant influence, and subsidiaries or joint venture, which are not included in
consolidation that they are immaterial or which are immaterial, that do not have a quoted market price in
active markets and whose fair value cannot be measured reliably are carried at cost less any provision for
diminution in value.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-14-
Financial Borrowings
Financial borrowings are recognized initially at the proceeds received, net of transaction costs incurred.
Borrowings are subsequently stated at amortized cost using the effective yield method; any difference between
proceeds, net of transaction costs, and the redemption value is recognized in the income statement over the
borrowing period. Borrowing costs are charged to income statement when they incur and reclassed to bank
loans.
Trade Receivables and Payables
The trade receivables and payables derived from providing services or selling goods by Group and purchasing
goods or receiving services are clarified with deferred financial income and expense in the accompanying
financial statements. Post clarification, trade receivables and trade payables are calculated from the values of
following the record of the original invoice values, by rediscounting with effective interest rate method. Short
term receivables without designated interest rate are reflected the invoice values in case the effective interest
rate effect is insignificant.
Provision for Doubtful Receivables
Group sets provisions for doubtful receivable when it is realized uncollectible due to objective findings. Amount
of this provision is the difference of registered and collectible amounts. All cash flow including the collectible
sum amount from guarantee and assurance is discounted on the base of the effective interest rate of trade
receivable occurred.
In case of collecting doubtful receivable that is provided, the collected amount is deducted from the provision for
doubtful receivable and in case of a remaining balance; the balance is added to other operating income.
Inventories
Inventories, valued at the lower of cost or net realizable value. Cost of inventories involves all of the
purchasing cost, conversion cost and other cost for the inventories to make it present. Cost is determined by
the weighted average cost method. Net realizable value is obtained, according to the subscription of estimated
completion cost and estimated costs which are installed in order to realize the sale from estimated selling
price, in ordinary trade activity.The net realizable value is an amount which is got with the reduction of total
estimated necessary sales cost to sell and estimated complementation cost from estimated sales price which
consist of ussual commercial activity.
The allowance for decrease in value of inventories degrade inventories to net realizable value and losses about
the inventories are recognized as expense during the formation of degrade and losses. Allowance for decrease
in value of inventories reversed because of the increase of realizable value, recognized to reduce the accrued
selling cost in the reverse period. As of every financial statement period, net realizable value is reviewed once
again. The provision for losses is reversed in the case of either the conditions causing to degrade the
inventories‘ net realizable value lose validity or changing economic conditions forming an increase in net
realizable value is proved (reversed amount is limited with the previous impairment amount).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-15-
Tangible Fixed Assets
Tangible fixed assets (except lands, buildings, machineries, plants and equipments) are carried at cost, restated
by deduction of the yearly accumulated depreciation. Depreciation is provided on the acquired values of
property, plant and equipment on a straight-line method starting from the acquirement date. Land is considered
as limitless useful life, so it is not subject to depreciation.
As of 31 December 2012, lands, buildings and machineries, plants and equipments of the Group are revalued
at fair value and reflected in the consolidated financial statements according to the Expert Appraisal Reports
which are prepared by Elit Gayrimenkul Değerleme A.Ş. that is approved by the Capital Market Board. As of
30 September 2013, there is not a new Expert Appraisal Report for Group‘s lands, buildings and machineries,
plants and equipment. For this reason, lands, buildings and machineries, plants and equipments mentioned in
the Expert Appraisal Report are shown in the accompanying consolidated financial statements by reducing
impairment between balance sheet date and appraisal report date. Impairment was calculated with
consideration of mentioned fixed asset‘s remaining useful life.
The revaluation frequency depends on the differences of the realistic values of tangible fixed assets.
If a net book value of an asset increases during the revaluation, this increase will be recognized at other
comprehensive income and allocated under revaluation value increase directly in the owners' equity account.
However a revaluation value increase can only be recognized as the same amount of value decrease occurred
from profit or loss for the same asset.
If a net book value of an asset decreases during the revaluation, this decrease recognized as expense. However
this decrease can only be recognized as much as all kinds of credit balance about this asset in the revaluation
surplus. The subjected decrease recognized in other comprehensive income, decreases the amount
accumulated in owners‘ equity under revaluation surplus.
The depreciation rates for tangible fixed assets, which approximate the useful economic lives of these assets,
are as follows:
Useful life
Infrastructure and land improvements 25 years
Buildings 50 years
Machinery, plants and equipments 12 years
Motor vehicles 6 years
Furniture and fixtures 10 years
Leasehold improvements Rent period Intangible Fixed Assets Intangible fixed assets comprise of rights and they are recorded at acquisition cost. Intangible fixed assets are
amortized on a straight-line method with prorate basis over period of maximum 10 years from the date of
acquisition.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-16-
Financial Leases
Group acquired assets under finance lease agreements and capitalized at the inception of the lease starting from
acquired date. Payables to lease are pursued under financial leasing liability in balance sheet (It was included in
the related tangible fixed assets in the financial statements). Calculation of minimum leasing payment is to find
out current market value as the valid proportion is calculated practically in financial leasing process then it is,
otherwise proportion of interest rate of loan is used as discount factor. Expenses of asset acquisition through
financial leasing are included in costs. The liability from financial leasing is decomposed into interest rate and
the main loan. Expenses of interest rate are calculated with the fixed interest rate and are issued in related
periods.
Assets Held for Sale
The Group measures assets held for sale at the lower of its carrying amount and fair value less costs to sell.
Assets held for sale are not depreciated. Just before the first classification of related asset (or the group of
assets held for sale) as asset held for sale, the book value of the asset is measured within the context of related
IFRS.
The Group classifies a non-current asset (or the group of assets held for sale) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or the group of assets held for sale) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and its sale must be highly probable. For the sale to be highly probable management must be committed to a plan to sell the asset (or the group of assets held for sale) and an active program to locate a buyer and complete the plan must have been initiated. Furthermore, the asset (or the group of assets held for sale) must be actively marketed for sale at a price that is reasonable in relation to its fair value. In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Impairment of Assets Tangible and intangible assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an
asset exceeds its recoverable amount, an impairment loss is recognized in income for items of tangibles and
intangibles carried at cost. Borrowing Costs
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.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization. All of the other borrowing
costs are recorded in the income statement in the period in which they are incurred. For the periods ended at 30
September 2013 and 31 December 2012 there is no capitalized borrowing cost.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-17-
Effects of Change in Currency Rate
Assets and liabilities in foreign currency and purchase and sale commitments create exchange risk. Foreign
exchange risk stemming from depreciation or appreciation of Turkish Lira managed by top management by
following the currency position of Group and taking position according to approved limits.
Taxes on Income
Taxes on income for the period comprise current tax and the change in the deferred taxes.
Current Tax Provision
The charge for current tax is based on the results for the period as adjusted for items which are non-assessable
or disallowed. Taxable profit differs from profit as reported in the income statement because it excludes tems
of income or expense that taxable or deductible in other years and it further excludes items that are never
taxable or deductible.
Deferred tax
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases use in the computation of taxable profit, and are accounted for
using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable
temporary differences and deferred tax assets are recognized for all deductable temporary differences to the
extent that it is probable that taxable profits will be available against which those deductible temporary
differences can be utilized. Such assets and liabilities are not recognized if the temporary differences arisen
from goodwill or from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit not the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associates with investments in
subsidiaries and associates and interests in joint ventures, except where the group is able to control the reversal
of the temporary differences and it is probable that the 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 amounts of deferred tax assets is reviewed at each balance sheet date and reduce to extent that is
no longer probable that sufficient taxable profits will be available to allow all part of the assets 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 the 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 Group 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 Group intends to settle its current tax assets and liabilities on a net basis.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-18-
Current and deferred tax are recognized as an expense or income in profit or loss, except when they relate to
items credited or debited directly to equity, in which case the tax is also recognized directly in equity, or where
they arise from the initial accounting for a business combination. In the case of a business combination, the tax
affect is taken into account in calculating goodwill or determining the excess of the acquirer‘s interest in the
net fair value of the acquire‘s identifiable assets liabilities and contingent liabilities over cost.
Mergers and Goodwill
Business merger and acquisition is combining of two separate legal entities or organizations into an entity that makes reporting. Business merger is accounted based on acquisition method within the context of IFRS 3.
Acquisition cost contains the fair value of assets given in purchase date; issued capital instruments, assumed and realized payables due to change, the costs that can be associated with additional acquisition. If the business merger agreement includes articles that foresees that cost can be adjusted according to the future actions, this adjustment is probable, and this adjustment is include into merger cost that formed on the day of acquisition when the value is detected. Related the aquired company‘s assets, which are determined according to IFRS 3, liabilities and conditioned liabilities are reflected from fair value at acquisition date, to account. The aquired company is involved in income statement as of acquisition date.
The difference between the acquisition cost coming from purchase of an organization and fair value of identifiable asset, liability and conditioned liabilities is accounted as goodwill in consolidated financial statements.
Goodwill occurred during business merger is not subject to depreciation, instead of this, impairment test is used once in a year or frequently when the conditions indicate impairment. Impairment losses calculated over goodwill is not associated with income statement even in case when impairment disappears in following periods. Goodwill is associated with cash generating units at the time of impairment test.
If real value of acquired assets, liability and contingency liabilities exceeds the business merger cost, then the
difference is accounted in the consolidated income statements as goodwill.
Business Mergers Subject to Joint Control
Business mergers including joint ventures or joint control means all ventures or businesses, before and after the merge, being controlled by the same person or group and their control is not temporary. Business mergers subject to joint control should be recognized using the pooling of interest method, and thus goodwill should not be included in the financial statements. While using the pooling of interest method, the financial statements should be prepared as if the combination has taken place as of the beginning of the reporting period in which the common control occurs and should be presented comparatively from the beginning of the reporting period in which the common control occured. It‘s admissible to look at the business mergers subject to joint control from parent company‘s point of view, from beginning of the consolidation date and after Group‘s parent company obtained the common control, accounting of combined financial statements regulated in regard of the UMS standards as if the financial statements prepared with IAS standards. To fix the inconsistency between assets – liabilities, as a result of the business mergers subject to joint control, ―Effect of the Mergers Subject to Joint Control‖ account classified under equity is used.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-19-
Provisions, Contingent Liabilities and Assets
Provisions
Provisions are recognized when an enterprise has a present obligation (legal or constructive) as a result of a
past event and it is probable that an outflow of resources will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimate.
Contingent liabilities and assets
Transactions that may give rise to contingencies and commitments are those where the outcome and the
performance of which will be ultimately confirmed only on the occurrence or non occurrence of certain future
events, unless the expected performance is not very likely. Accordingly, contingent losses are recognized in
the financial statements of Group if a reasonable estimate of the amount of the resulting loss can be made.
Contingent gains are reflected only if it is probable that the gain will be realized. Renting Transactions Group – As renter Financial leasing Group acquired assets under finance lease agreements and capitalized at the inception of the lease starting from acquired date. Payables to lease are pursued under financial leasing liability in balance sheet. Calculation of minimum leasing payment is to find out current market value as the valid proportion is calculated practically in financial leasing process then it is, otherwise proportion of interest rate of loan is used as discount factor. Expenses of asset acquisition through financial leasing are included in costs. The liability from financial leasing is decomposed into interest rate and the main loan. Expenses of interest rate are calculated with the fixed interest rate and are issued in related periods.
Operating Leases
Leases where a significant portion of the risks and rewards of ownership a retained by the lesser a classified as
operating leases. Payments made under operating leases are charged to the income statement on a straight-line
basis over the period of lease.
Income Accruals
Revenue is recognized on the accrual basis at the time deliveries are made, at the invoiced values. Net sales reflect gross sales, net of sales discounts and returns.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-20-
Related Parties In the presence of one of the following criteria, parties are considered as related to Group,
(a) Directly, or indirectly through one or more intermediaries, the party,
(i) Controls, is controlled by, or is under common control with, Group (this includes parents, subsidiaries and
fellow subsidiaries);
(ii) Has an interest in Group that gives it significant influence over the Company; or
(iii) Has joint control over Group;
(b) The party is an associate of Group,
(c) The party is a joint venture, in which Group is a venture,
(d) The party is member of the key management personnel of Group or its parent,
(e) The party is a close member of the family of any individual referred to in (a) or (d),
(f) The party is an entity that is controlled, jointly controlled or significantly influenced by, or for which
significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e)
(g) The party has a defined benefit plan for the employees of the Company or a related party of the Company.
Transactions with related parties are transfer of resources or obligations between related parties, regardless of
whether a price is charged. Group interacts with its related parties within the frame of ordinary business
activities (Note 7).
Summarized info about related parties of Group is as follows:
Naksan Holding A.Ş. (Naksan Holding): Naksan Holding Anonim Şirketi was established in Gaziantep,
Turkey in 2007 and moved to its‘ head office to Istanbul, Turkey in the year of 2009. Naksan Holding was
established as a corporation taking part in the management and auditing of the companies operating in
production of plastic, packaging, carpets, production plant of electricity, building mining concerns and other
sectors and providing consultancy about financing, investment, organization, marketing and selling.
Naksan Plastik Sanayi ve Ticaret A.Ş. (Naksan Plastik): The Company was established in 1980 in Gaziantep
and it is mainly engaged with production of plastic packaging materials such as Shrink films, stretch films,
plastic bags, carrier bags, garbage bags, refuse sacks, plain PP films, PE bubble films and also printed flexible
packaging products.
Nakpilsa Dokuma Sanayi ve Ticaret A.Ş. (Nakpilsa Dokuma): The Company was established in 2005 and the
activities of the Company are primarily concentrated on production of PE-PP coated and uncoated woven
tarpaulin, big bag fabric and big bag (FIBC), PVC coated polyester tarpaulin, Packaging Products and the sale
of these products in domestic markets. Company merged with Naksan Plastik ve Enerji Sanayi ve Ticaret
Anonim Şirketi with complete transfer of all assets and liabilities in accordance with article 451 of the 6762
numbered Turkish commercial law and Corporate Tax Law no: 19 and 20 of 5520 dated 18 August 2010 on 31
March 2012
Adularya Enerji Elektrik Üretimi ve Madencilik A.Ş. (Adularya Enerji): The Company was established in
2007 in Ankara and it is mainly engaged with establishing production plant of electricity, building mining
concerns, searching for subsurface and surface mines and selling and marketing of these goods.
Naksan Kollektif Şti. (Naksan Kollektif): The Company was incorporated on 30 May 2000 in Gaziantep free
trade zone and engages in trading of raw materials to the Company.
Cahit ve Osman Nakıboğlu: It is an ordinary partnership and engages in sales and marketing on behalf of
Company.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-21-
Bilim Plastik Kimya Nakliyat Turizm Sanayi Ticaret Anonim Şirketi (Bilim Plastik): The Company was
incorporated in Aliağa, Izmir in 1997 and engages in chemical and transportation.
Akkoza Mensucat Sanayi ve Ticaret A.Ş. (Akkoza Mensucat): The Company was incorporated in 1973 in
Gaziantep and engages in production of yarn.
Elmacı Pazarı Bilgisayar Yazılım ve İletişim Sanayi ve Ticaret A.Ş. (Elmacı Pazarı): The Company was
incorporated on 01 September 2008 in Gaziantep and is engaged in production, sales, marketing and after
sales services of any kind of computer, hardware, and software and computer spare parts.
Naksan Elektrik Enerjisi Toptan Satış A.Ş.: The Company was established on 23 July 2010 in Gaziantep,
Turkey. The activities of the Company are primarily concentrated on wholesale activity of the electrical
energy to the direct consumers.
Naksan Enerji Elektrik Üretimi A.Ş.: The Company was established on 23 July 2010 in Gaziantep, Turkey.
The Company engages in constructing production facility of electrical energy, processing of the facility and
producing the electrical energy.
Naksan Teknoloji ve İletişim Sistemleri Sanayi ve Ticaret A.Ş.: The Company was established on 25 June
1988 with the title of Naksan Sigorta Aracılık Hizmetleri Ltd. Şti. The name of the Company was changed and
registered to the current name on 21 July 2010. The activities of the Company are primarily concentrated on
production and marketing of the computer equipments.
Bakım Elektrik Plastik Tekstil Sanayi ve Ticaret A.Ş: The Company was originally incorporated on 9 May
2006 in Gaziantep. The Company primarily engages in production and repairing activities of the electrical
equipments. The Company also concentrated on converting plastic raw materials to the semi-finished goods
and trading these goods.
Naksan Gıda ve Tarımsal İşletmeleri Sanayi ve Ticaret A.Ş.: The Company was established on 13 September
2004 with the title of Naksan Kimya Sanayi ve Ticaret Ltd. Şti. The name of the Company was changed and
registered to the current name on 29 December 2010. The activities of the Company are primarily
concentrated on producing and trading of the agricultural goods.
Gülnak Elektrik Üretim A.Ş.: Gülnak Elektrik Üretim A.Ş. was established in 2011 in Ankara, Turkey. It is
engaged in building of electricity production plant from natural gas. As of 31 December 2012, the Company
has not started its‘ operational activities yet and there is no personnel employed by the Company.
Foreign Currency Assets and Liabilities
Foreign currency transactions are entered in the accounts with current rates in transaction date. Foreign
currency assets and liabilities in the balance sheet are converted to the TRY as the rates in the balance sheet
date. Foreign exchange profit and loss are reflected to the income statements.
Foreign currency rates that are used at the end of the periods are as follows;
30.09.2013 31.12.2012
USD 2.0342 1.7826
EUR 2.7484 2.3517
GBP 3.2665 2.8708
CHF 2.2370 1.9430
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-22-
Segment Reporting of Operation Results A business segment is distinguishable component of an enterprise that is engaged in providing an individual
product or service or a group of related products or services and that is subject to risks and returns that are
different from those of other business segments. A geographical segment is a distinguishable component of an
enterprise that is engaged in providing products or services within a particular economic environment and that is
subject to risks and returns that are different from those of components operating in other economic
environments.
A reportable segment is business segment or a geographical segment identified based on the foregoing
definitions for which segment information is required to be disclosed. A business segment or geographical
segment should be identified as a reportable segment if a majority of its revenue is earned from sales to external
customers and its revenue from sales to external customers and from transactions with other segments is 10% or
more of the total revenue, external and internal, of all segments; or its segment result, whether profit or loss, is
10% or more of the combined result of all segments in profit or the combined result of all segments in loss,
whichever is the greater in absolute amount; or its assets are 10% or more of the total assets of all segments.
Group operates in same geographical area and operates in yarn and carpet sector. Because of this reason,
segment reporting of yarn and carpet are described in Note 6.
Severance Pay Provision / Employee Benefits
Severance Pay
Under Turkish Labor Law, Group is required to pay termination benefits to each employee who has completed
one year of service and whose employment is terminated without due cause, or who retires in accordance with
social insurance regulations or is called up for military service or dies. As of 30 September 2013 payments are
calculated on the basis of 30 days‘ pay limited to a maximum of TRY 3,129 (31 December 2012: TRY 3,034 )
per year of employment at the rate of pay applicable at the date of retirement.
Group calculates provisions for severance pay in the attached consolidated financial statements in
consideration of previous years experiences on deserving severance pay and also, discount rate generated from
effective interest rate and inflation on balance sheet period was included in calculations. All of profits and
losses except calculated actuarial profit / (loss) was shown in consolidated statements of income, actuarial profit
/ (loss) was shown in consolidated statements of changes in equity.
The rates of basic assumptions used at balance sheet date are as follows;
30 September 2013 31 December 2012
Rediscount rate 8.50% 10.00%
Inflation rate 5.00% 6.07%
Real discount rate 3.33% 3.71%
Social Insurance Premium
Group pays social security contribution to social security organization compulsorily. So long as Group pays
these premiums, it has no liability. These premiums are reflected as personnel expenses in the period in which
they are paid.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-23-
Dividends
Dividends receivable are recognized as income in the period when they are declared and dividends payables
are recognized as an appropriation of profit in the period in which they are declared.
Paid in Capital
Common stocks are classified to equity. Costs related to new shares and option issued, are shown in equity by
deducting the collected amounts whose tax effect was deducted. Share Premiums / Discounts Share premium represents differences resulting from the sale of the Group‘s subsidiaries and associates‘ shares
at a price exceeding the face value of those shares and differences between the face value and fair value of
shares issued for acquired Companies.
Government Incentive and Grants
It is a procedure to assist the companies that are unable to achieve certain businesses. It is to stimulate the
businesses with the incentives. Government incentives, including those followed at their fair values will be
included in the financial statements only if there is reasonable assurance that the Company will fulfill all
required conditions and acquire the incentive.
Government incentives, including non-monetary grants at fair value, are included in the financial statements
only if there is reasonable assurance that the Company will fulfill all required conditions and acquire the
incentive.
Post Balance Sheet Events
Although post balance sheet events arise after the explanation of the financial information to the public or any
announcement related to profitability, it encloses all the events with balance sheet date and authorization date
for the diffusion of the balance sheet.
Group adjusts the amounts in the consolidated financial statements if there exists any events necessitates
adjustment. Subsequent events are stated in the consolidated notes to financial statements, if they do not need
adjustments.
Earnings Per Share
Earnings per share in the consolidated income statements are calculated by dividing the net profit for the year
by the weighted average number of ordinary shares outstanding during the year.
In Turkey, companies can increase their share capital by making distribution of ―bonus shares‖ to existing
shareholders from inflation adjustment difference in shareholder‘s equity. For the purpose of the earnings per
share computations, the weighted average number of shares outstanding during the year has been adjusted in
respect of ―bonus shares‖ issued without corresponding change in resources by giving them retroactive effect
for the period in which they were issued and each earlier period.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-24-
Revenue
Revenues are recognized on an accrual basis at the time deliveries or acceptances are made, the amount of the
revenue can be measured reliably and it is probable that the economic benefits associated with the transaction
will flow to Group, at the fair value of consideration received or receivable. Net sales represent the invoiced
value of goods shipped less sales returns, commission and sales taxes. The Group‘s sales are comprised of
machine carpet, BCF yarn and other sales of merchandises.
Sales of goods
Revenue from sales of coal is recognized when all the following conditions are satisfied:
- Company has transferred to the buyer the significant risks and rewards of ownership of the goods,
- Company retains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold,
- The amount of revenue can be measured reliably,
- It is probable that the economic benefits associated with the transaction will flow to the entity,
- The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
When the outcome of a transaction of transportation incomes and license fee involving the rendering of
services can be estimated reliably, revenue associated with the transaction shall be recognized by reference to
the stage of completion of the transaction at the balance sheet date. The outcome of a transaction can be
estimated reliably when all the following conditions are satisfied:
- The amount of revenue can be measured reliably;
- It is probable that the economic benefits associated with the transaction will flow to the company;
- The stage of completion of the transaction at the balance sheet date can be measured reliably; and
- The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
Interest income
Interest income is accrued in proportion as effective interest rate which reduces estimated cash addition to
recorded value of the asset in corresponding period.
Dividend and other incomes
Dividend income which obtained from share investments, is recorded when shareholders‘ have the right to get
dividend.
Other incomes are recorded with the possibility of having the worth giving service or accrual of the facts
related with income, making the transfer of risk and benefit, determination of income amount and enrollment
of economic benefits related with the procedure.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-25-
Cash Flow Statement
The Group prepares statement of cash flows to inform users of financial statements about changes in net assets
and ability to direct financial structure, amounts and timing of cash flows according to changing situations. In the
statement of cash flows, current period cash flows are grouped according to operating, financing, and investing
activities. Operating cash flows resulting from activities in scope of Group's main operating scope. Cash flows
related to investing activities are cash flows resulting from investing activities (fixed investments and financial
investments) of the company. Cash flows related to financing activities comprise of funds used in financing
activities of the Group and their repayments. 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 change in value.
NOTE 3 – BUSINESS MERGERS
None (31 December 2012 - None).
NOTE 4 – BUSINESS MERGERS SUBJECT TO JOINT CONTROL
Business mergers including joint ventures or joint control means all ventures or businesses, before and after the merge, being controlled by the same person or group and their control is not temporary.
For the period ended at 30 September 2013 details of business mergers subject to joint control is as follows;
Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret Anonim Şirketi (―Royal Halı‖) acquired 2,550 shares
corresponding to 51% of Atlas Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi (―Atlas Halı‖)‘s
shares from its main shareholder company Naksan Holding Anonim Şirketi with a price amounting to TRY
2,550,000 at 29 January 2013.
As a result of these acquisition details of acquired net assets and negotiated purchase shown in equity as
―Merger Effect of Businesses Subject to Joint Control or Joint Ventures‖ is as follows;
Book value before
merger
Fair value
Adjustment Fair value
Short term assets 7,134,123 779 7,134,902
Long term assets 636,621 1,430,093 2,066,714
Short term liabilities 8,873,902 (83,225) 8,790,677
Long term liabilities 7,062 91,244 98,306
Net assets / (liabilities) 312,633
The ratio of Royal Halı‘s partnership 51.00%
Net assets / (liabilities) acquired from the company 159,443
Acquisition cost 2,550,000
Merger Effect of Businesses Subject to Joint Control or Joint Ventures (Note 22.5) 2,390,557 1
For the period ended 31 December 2012, there are no any business mergers subject to joint control.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-26-
NOTE 5 – SHARES IN OTHER COMPANIES
As of 30 September 2013, the detail of Parent Company‘s direct or indirect shares in other companies and
datas of these companies is as follows;
Ownership of the Parent
Company through the
Subsidiary
Minority
Interest
Subsidiaries (Direct)
(Direct+
Indirect) Ratio
Atlas Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi %51.00 %51.00 %49.00
For the period ended at 30 September 2013, summaries of financial information about Parent Company‘s
subsidiary are as follows;
Subsidiaries Nature of
Activities
Total
Assets
Total
equity
Revenue,
net
Period
profit /
(loss)
Atlas Halı Carpet Sector 15,220,814 (75,198) 8,717,966 (384,005)
Detailed information about subsidiary is presented in Note 1.
As of 31 December 2012, Parent Company does not have any shares in other companies.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-27-
NOTE 6 – SEGMENT REPORTING
Group operates in same geographical area and operates in yarn and carpet sector. For this reason, segment
reporting is based on the yarn and carpet sectors.
As of 30 September 2013 and 31 December 2012, segment reporting of balance sheet is as following;
30 September 2013 Carpet Sector Yarn Sector Other (*) Total
Trade receivables 82,572,959 1,907,144 8,758,291 93,238,394
Inventories 40,935,116 8,054,049 656,203 49,645,368
Tangible fixed assets 80,410,949 34,938,348 - 115,349,297
Intangible fixed assets 5,638,769 - - 5,638,769
Other assets 36,425,393
Total assets
300,297,221
Trade payables 27,421,035 5,585,837 - 33,006,872
Other payables and liabilities
79,638,903
Total liabilities 112,645,775
31 December 2012 Carpet Sector Yarn Sector Other (*) Total
Trade receivables 50,973,911 5,148,288 2,976,927 59,099,126
Inventories 28,869,198 2,664,809 37,872 31,571,879
Tangible fixed assets 72,309,992 33,045,010 - 105,355,002
Intangible fixed assets 6,594,689 - - 6,594,689
Other assets 27,698,466
Total assets 230,319,162
Trade payables 30,066,366 3,980,763 - 34,047,129
Other payables and liabilities 59,519,444
Total liabilities 93,566,573
(*) Related amounts consist of operations excluding carpet and yarn operations.
As of 30 September 2013 and 31 December 2012, segment reporting of provision for doubtful receivables is as
following;
30 September 2013 Carpet Sector Yarn Sector Total
Provision for doubtful trade receivables 1,209,814 21,920,189 23,130,003
Total 23,130,003
31 December 2012 Carpet Sector Yarn Sector Total
Provision for doubtful trade receivables 1,059,460 21,920,189 22,979,649
Total 22,979,649
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-28-
For the periods ended at 30 September 2013 and 2012 segment reporting of consolidated income statement is
as follows;
01 January - 30 September 2013 Carpet Sector Yarn Sector Other (*) Total
Sales 96,040,790 71,249,233 13,933,982 181,224,005
Cost of sales (57,532,029) (58,406,266) (13,596,078) (129,534,373)
General administrative expenses (4,609,475) (723,483) - (5,332,958)
Marketing, sales and distribution
expenses (21,092,388) (527,475) (316,237) (21,936,100)
Research and development expenses (154,788) - - (154,788)
Other operating income / (expenses), net
(162,407)
Investment activities income / (expenses), net
(147,717)
Financial income / (expenses), net
(6,205,776)
Tax expenses for the period
(3,995,812)
Deferred tax income / (expense)
159,590
Profit / (loss) for the period, net 13,913,664
01 January - 30 September 2012 Carpet Sector Yarn Sector Other (*) Total
Sales 83,225,339 63,064,617 14,000,271 160,290,227
Cost of sales (51,521,734) (49,192,436) (13,777,844) (114,492,014)
General administrative expenses (3,915,054) (385,893) - (4,300,947)
Marketing, sales and distribution
expenses (15,584,084) (386,281) (328,427) (16,298,792)
Research and development expenses (184,663) - - (184,663)
Other operating income / (expenses), net
1,769,093
Investment activities income / (expenses), net
5,797,457
Financial income / (expenses), net
3,970,023
Tax expenses for the period
(5,258,715)
Deferred tax income / (expense)
1,792,148
Profit / (loss) for the period, net 33,083,817
(*)Related amounts consist of operations excluding carpet and yarn operations.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-29-
The distribution of depreciation of tangible fixed assets and amortization of intangible fixed assets by
segments for the periods ended at 30 September 2013 and 2012 are as below,
01 January - 30 September 2013 Carpet Sector Yarn Sector Total
Depreciation of tangible fixed assets 3,608,871 2,772,179 6,381,050
Amortization of intangible fixed assets 1,547,328 28,903 1,576,231
Total 5,156,199 2,801,082 7,957,281
01 January - 30 September 2013 Carpet Sector Yarn Sector Total
Depreciation of tangible fixed assets 3,165,133 2,338,015 5,503,148
Amortization of intangible fixed assets 1,513,591 - 1,513,591
Total 4,678,724 2,338,015 7,016,739
NOTE 7 – RELATED PARTY TRANSACTIONS
i) Due from/to related parties:
a) Due from related parties in trade receivables are as following (Note 10):
30.09.2013 31.12.2012
Naksan Plastik (**) 7,736,637 4,906,228
Elmacı Pazarı Bilgisayar Yazılım 261,892 -
Paralel Gayrimenkul 150,586 -
Zirve Üniversitesi 19,392 -
Cahit ve Osman Nakıboğlu 576 -
Elma Sepeti - 4,645
Atlas Halı (*) - 4,618,721
8,169,083 9,529,594
(*) This amount is composed of carpet sales to the Company. For the period ended at 30 September 2013,
Royal Halı acquired 51% of Atlas Halı‘ shares, as a result Atlas Halı is included in complete
consolidation.
(**) This amount is composed of BCF yam and carpet sales to the Company.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-30-
b) Due to related parties in trade payables are as following (Note 10):
30.09.2013 31.12.2012
Cahit ve Osman Nakıboğlu - -
Elmacı Pazarı - 197
Naksan Elektrik Enerji Üretim - 161,446
- 161,643
c) Due from shareholders in other short term receivables is as following (Note 11):
30.09.2013 31.12.2012
Naksan Holding 5,994,397 833,101
5,994,397 833,101
ii) Sales, purchases and operations to related parties:
a) Net sales to related parties classified under sales revenue is as following:
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Plastik (*) 68,603,786 51,555,052
Paralel Gayrimenkul 146,376 -
Elmacı Pazarı 133,880 -
Zirve Üniversitesi 17,956 -
Naksan Holding 7,514 -
Cahit ve Osman Nakıboğlu 1,904 96,862
Adularya Enerji 942 -
Atlas Halı (**) - 2,937,570
Elma Sepeti - 4,361
68,912,358 54,593,845
(*) These amounts are composed of BCF yam and carpet sales to the Company. For the period ended at 30
September 2013 TRY 53,627,571 of sales consists of export registered sales (01 January - 30 September
2012: TRY: 35,363,051).
(**) These amounts are composed of carpet sales to the Company. For the period ended at 30 September 2013,
Royal Halı acquired 51% of Atlas Halı‘ shares, as a result Atlas Halı is included in complete
consolidation.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-31-
b) Purchases from related parties classified under cost of sales are as follows:
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Plastik 25,010,048 25,691,689
Elmacı Pazarı 73,915 52,147
Atlas Halı - 36,789
25,083,963 25,780,625
For the period ended at 30 September 2013 and 2012 details of purchases from the Group companies under
cost of sales are as follows;
01 January - 30 September 2013
Raw material
purchases
Merchandise
purchases
Energy
purchases
Rent
expenses
Other
purchases Total
Naksan Plastik 3,503,881 14,164,526 6,668,599 217,440 455,602 25,010,048
Elmacı Pazarı - 73,915 - - - 73,915
3,503,881 14,238,441 6,668,599 217,440 455,602 25,083,963
01 January - 30 September 2012
Raw material
purchases
Merchandise
purchases
Energy
purchases
Rent
expenses
Other
purchases Total
Naksan Plastik 6,054,245 13,349,306 5,833,473 207,000 247,665 25,691,689
Elmacı Pazarı - 52,147 - - - 52,147
Atlas Halı - 36,789 - - - 36,789
6,054,245 13,438,242 5,833,473 207,000 247,665 25,780,625
c) Purchases from related parties classified under marketing, selling and distribution expenses are as follows:
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding 53,886 28,588
Naksan Plastik 15,770 -
Adularya Enerji 4,000 -
Elmacı Pazarı - 69
Atlas Halı - 2,700
73,656 31,357
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-32-
d) Purchases from related parties classified under general administrative expenses are as follows:
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding 155,789 37,775
Zirve Üniversitesi 88,000 -
Naksan Plastik 11,081 -
Elmacı Pazarı 152 923
255,022 38,698
e) Rent and other incomes from related parties classified under other operating incomes are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Plastik 44,000 4,500
Atlas Halı - 4,754
44,000 9,254
f) Foreign exchance gains from related parties classified under other operating incomes are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Plastik 1,049,408 190,960
Elmacı Pazarı 1,519 5,821
1,050,927 196,781
g) Foreign exchance losses from related parties classified under other operating incomes are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Plastik 498,078 9,774
Elmacı Pazarı - 143
498,078 9,917
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-33-
h) Interest incomes from related parties classified under investment activities incomes are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding 123,091 172,190
Naksan Plastik - 245,015
123,091 417,205
i) Interest expenses to related parties classified under investment activities expenses are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding 157,727 326,357
Nakpilsa Dokuma - 5,561
157,727 331,918
j) Profit on sales of fixed assets from related parties classified under investment activities incomes are as
follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Plastik 37,810 5,710,190
37,810 5,710,190
k) Foreign exchange gains from related parties classified under financial incomes are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding 174,161 62,219
174,161 62,219
l) Interest expenses to related parties classified under financial expenses are as follows:
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding 211,239 326,357
211,239 326,357
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-34-
m) Purchases of tangible and intangible fixed assets from related parties are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding 56,620 -
Elmacı Pazarı - 13,796
56,620 13,796
n) Details of share purchases from shareholders are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding (*) 2,550,000 -
2,550,000 -
(*) In 29 January 2013 Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret Anonim Şirketi, acquired 2,550 of
Atlas Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi‘s shares amounting to TRY 2,550,000 from
Naksan Holding Anonim Şirketi.
o) Incomes from shareholders classified under share premiums / discounts are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Naksan Holding (**) 1,110,362 -
1,110,362 -
(**) The parent company reflected parts of expenses related to public offering to its main partner, Naksan
Holding. The incomes that consist of reflection of these expenses were clarified in the same account
because of expenses that directly related with public offering shown on Premiums in excess of par
account.
p) Wage and benefits provided for the board members and managers are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Short term employee benefits 668,714 198,834
Benefits provided after leaving - -
Other long term benefits - -
Benefits provided due to termination - -
Share based payments - -
668,714 198,834
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-35-
NOTE 8 – CASH AND CASH EQUIVALENTS
As of 30 September 2013 and 31 December 2012, the details of cash and cash equivalents are as follows;
30.09.2013 31.12.2012
Cash 46,314 82,028
Banks 728,296 1,487,435
Other Liquid Assets 297,560 92,887
1,072,170 1,662,350
As of 30 September 2013 and 31 December 2012 Group‘s bank deposits are composed of demand deposits. As
of 30 September 2013, there are no blokage over the demand deposits. (31 December 2012: TRY 133,695
blocked account). Other liquid assets are composed of the receivables from banks due to credit card transaction
in the Group.
NOTE 9 – FINANCIAL BORROWINGS
As of 30 September 2013 and 31 December 2012 the details of short and long term financial borrowings are as
follows;
30.09.2013 31.12.2012
Short term bank borrowings 2,606,504 9,893,900
Short term lease payables, net 1,485,477 39,364
Current installments of long term bank borrowings 6,798,476 9,619,443
Accrued interest of bank borrowings and financial leases 479,551 476,332
Total short term financial payables 11,370,008 20,029,039
Long term bank borrowings 25,998,405 7,716,516
Long term lease payables, net 14,728,603 477,611
Total long term financial borrowings 40,727,008 8,194,127
Total financial borrowings 52,097,016 28,223,166
As of 30 September 2013 the average effective interest rates of USD, EUR and TRY bank borrowings are
3,25%, 3,92% and 9,25%. (31 December 2012: USD - 3,66%, EUR - 5,20%, TRY - 7.15%).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-36-
As of 30 September 2013 and 31 December 2012 maturity analysis of bank borrowings (except accrued
interest on borrowings) is as follows::
30.09.2013 31.12.2012
Due in 0 - 1 years 9,404,980 19,513,343
Due in 1 - 2 years 8,207,440 2,204,719
Due in 2 - 3 years 5,134,482 2,204,719
Due in 3 - 4 years 4,528,217 2,204,719
Due in 4 - 5 years 2,709,422 1,102,359
Due in 5 - 6 years 2,709,422 -
Due in 6 - 7 years 2,709,422 -
35,403,385 27,229,859
As of 30 September 2013, the details of the bank borrowings (except accrued interest on borrowings) based on
currency are as follows:
Currency Amount Currency rate TRY Equivalent
TRY 1,080,855 1.0000 1,080,855
USD 2,651,480 2.0342 5,393,641
EUR 10,525,720 2.7484 28,928,889
Total 35,403,385
As of 31 December 2012, the details of bank borrowings (except accrued interest on borrowings) based on
currency is as follows:
Currency Amount Currency rate TRY Equivalent
TRY 3,977,000 1.0000 3,977,000
USD 2,833,334 1.7826 5,050,701
EUR 7,740,000 2.3517 18,202,158
Total 27,229,859
As of 30 September 2013 and 31 December 2012 maturity analysis of financial lease payables (except accrued
interest) are as below:
30.09.2013 31.12.2012
Due in 0 - 1 years 1,485,477 39,364
Due in 1 - 2 years 3,964,369 125,173
Due in 2 - 3 years 4,198,715 145,467
Due in 3 - 4 years 4,401,890 131,657
Due in 4 - 5 years 2,163,629 75,314
16,214,080 516,975
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-37-
As of 30 September 2013, the details of financial lease payables (except accrued interest) based on currency are
as below:
Currency Amount Currency Rate TRY Equivalent
EUR 5,899,462 2.7484 16,214,080
Total 16,214,080
As of 31 December 2012, the details of financial lease payables (except accrued interest) based on currency are
as below:
Currency Amount Currency Rate TRY Equivalent
EUR 219,830 2.3517 516,975
Total 516,975
As of 30 September 2013, the Group, guaranteed to export with the amounting to TRY 16,276,021 to the
banks as provision of the group‘s borrowings, (31 December 2012: TRY 4,134,300) and given letter of
guarantees with the amounting to TRY 19,863,236 to Türkiye İhracat Kredi Bankası Anonim Şirketi. In
addition, there is warranty of the related parties and shareholders for the borrowings.
NOTE 10 – TRADE RECEIVABLES AND PAYABLES
As of 30 September 2013 and 31 December 2012 the details of trade receivables are as follows;
Short term trade receivables
30.09.2013 31.12.2012
Trade receivables 23,051,702 12,818,949
Unearned interest on trade receivables (-) (1,741,476) (1,169,495)
Notes receivables 55,921,533 37,235,911
Income accruals in accordance with the aggrements 15,000 -
Trade receivables from related parties (Note 7) 8,169,083 9,529,594
Doubtful trade receivables 29,587,311 23,315,091
Provision for doubtful trade receivables (-) (23,130,003) (22,979,649)
91,873,150 58,750,401
As of 30 September 2013 average maturity of trade receivables is 102 days (31 December 2012: 66 days).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-38-
As of 30 September 2013 and 31 December 2012 maturity schedule of notes receivables is as follows:
30.09.2013 31.12.2012
Overdue 1,286,236 783,889
1-30 days 7,327,477 4,145,939
31-60 days 2,639,106 3,832,152
61-90 days 8,124,012 4,033,608
91-120 days 7,097,220 4,985,408
121-150 days 9,798,801 5,165,711
151-180 days 3,940,669 4,410,978
181-210 days 6,339,603 3,587,867
211-240 days 3,652,160 2,549,644
241-270 days 1,956,600 1,725,560
271-300 days 1,805,331 1,060,755
301-330 days 659,500 612,100
331-360 days 1,294,818 342,300
55,921,533 37,235,911
As of 30 September 2013 and 31 December 2012 aging of overdue receivables that are not impaired are as
following;
30.09.2013 31.12.2012
Within 30 days 1,286,236 748,237
31 - 60 days - 35,652
1,286,236 783,889
The management of Group do not estimate a collection risk for these receivables as the significant portion of
these receivables is due from significant customers where sales are made regularly and maturity period of
overdue receivables is at a reasonable level (Note 32 Credit Risk).
For the periods ended at 30 September 2013 and 31 December 2012 the movement schedule of provision for
doubtful receivables is as follows:
01.01.-
30.09.2013
01.01.-
31.12.2012
Opening balance 22,979,649 21,071,572
Collections - (7,003)
Provisions for the period 150,354 1,915,080
Closing balance 23,130,003 22,979,649
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-39-
Long term trade receivables
30.09.2013 31.12.2012
Notes receivables 1,469,895 378,200
Unearned interest on notes receivables (-) (104,651) (29,475)
1,365,244 348,725
Maturities of long term notes receivables are between one and two years.
As of 30 September 2013, Group has received mortgages amounting to TRY 8,390,000 security bonds
amounting to TRY 8,000,000 and letters at guarantees amounting to TRY 7,334,000 (Note 18) (31 December
2012 : TRY 7,300,000 letters of guarantee, TRY 10,940,000 mortgages and TRY 3,556,685 security bonds).
As of 30 September 2013, Group‘s trade receivables amounting to TRY 883,526 are insured by the finance
and insurance companies.
As of 30 September 2013 and 31 December 2012 the details of trade payables are as follows;
Short term trade payables
30.09.2013 31.12.2012
Trade payables 13,269,682 9,362,556
Due to related parties (Note 7) - 161,643
Accrued expenses in accordance with aggrements 2,297,909 361,642
Notes payables 13,101,742 19,414,274
Unearned interest on payables (-) (222,282) (183,592)
28,447,051 29,116,523
As of 30 September 2013, average maturity of trade payables is 76 days (31 December 2012: 53 days).
As of 30 September 2013, notes payables do not consist of bill surety payables (31 December 2012: TRY
10,256,496).
As of 30 September 2013, amounting to TRY 949,534 of trade payables consists of letters or credits. (31
December 2012: None).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-40-
Maturity schedule of notes payables as of 30 September 2013 and 31 December 2012 are as following:
30.09.2013 31.12.2012
Overdue
1-30 days 4,938,419 6,334,965
31-60 days 3,303,432 4,405,742
61-90 days 1,771,003 1,255,675
91-120 days 1,495,558 4,312,680
151-180 days 13,000 1,000,000
181-210 days - 1,105,212
241-270 days 1,580,330 -
331-360 days - 1,000,000
13,101,742 19,414,274
Long term trade payables
30.09.2013 31.12.2012
Notes payables 4,878,410 5,526,495
Unearned interest on payables (-) (318,589) (595,889)
4,559,821 4,930,606
Maturity schedule of notes payables as of 30 September 2013 and 31 December 2012 are as follows:
30.09.2013 31.12.2012
1 - 2 years 3,229,370 2,704,455
2 - 3 years 1,649,040 1,411,020
3 - 4 years - 1,411,020
4,878,410 5,526,495
Long term notes payable are given to Pls Marka Ticaret Ltd. Şti. For the usage right of ―Pierre Cardin‖ trade
mark (Note 16).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-41-
NOTE 11 – OTHER RECEIVABLES AND PAYABLES
As of 30 September 2013 and 31 December 2012 the details of other receivables are as follows;
Other current receivables
30.09.2013 31.12.2012
Deposits and guarantees given 112,295 116,316
Due from shareholders (Note 7) 5,994,397 833,101
Due from personnels 409 -
Notes receivables which are received as advance 4,573,417 8,286,842
VAT receivables from the tax office (*) 1,895,257 721,196
12,575,775 9,957,455
(*) VAT receivables, consist of VAT receivables from exports and VAT receivables from reduced VAT rates.
As of 30 September 2013 and 31 December 2012 the details of non trade receivables from related parties are indicated in Note 7. For these non trade receivables, Group had calculated interest and reflected the amounts to the consolidated financial statements (Note 7 and 27).
Other non-current receivables
30.09.2013 31.12.2012
Deposits and guarantees given 246,379 56,251
Notes receivables which are received as advance 1,326,036 1,281,250
1,572,415 1,337,501
As of 30 September 2013 and 31 December 2012 the details of other payables are as follows;
Other current payables
30.09.2013 31.12.2012
Taxes and funds payable 654,347 135,622
Other payables 206 -
654,553 135,622
Other non-current payables
None (31 December 2012 - None).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-42-
NOTE 12 – PAYABLES FROM EMPLOYEE BENEFITS
As of 30 September 2013 and 31 December 2012, payables from employee benefits are as follows;
30.09.2013 31.12.2012
Social security premiums payable 437,004 224,552
Due to personnel 1,052,162 413,876
1,489,166 638,428
NOTE 13 – INVENTORIES
As of 30 September 2013 and 31 December 2012 the details of inventories are as follows;
30.09.2013 31.12.2012
Raw materials 31,458,037 22,200,379
Finished goods 16,033,326 7,901,918
Merchandises 995,065 495,727
Other inventories 1,159,005 1,126,834
Provision for diminution in value of inventories (-) (65) (152,979)
49,645,368 31,571,879
As of 30 September 2013, the insurance on inventories is amounting to TRY 53,438,960.
For the periods ended at 30 September 2013 and 31 December 2012, the movement schedule of diminution in
value of inventories is as follows;
01.01.-
30.09.2013
01.01.-
31.12.2012
Beginning balance 152,979 -
Reversal of unnecessary provision (-) (152,914) -
Provision set within the period - 152,979
65 152,979
As of 30 September 2013 and 31 December 2012 provision for diminution in value of inventories based on
inventory type is as follows;
30.09.2013 31.12.2012
Finished goods 65 152,979
65 152,979
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-43-
NOTE 14 – PREPAID EXPENSES AND DEFERRED INCOME
As of 30 September 2013, and 31 December 2012, the details of prepaid expenses are as follows;
Prepaid expenses short term
30.09.2013 31.12.2012
Order advances given 1,684,012 108,504
Prepaid expenses - short term 1,782,323 1,302,803
Advances given for business purposes 180,199 725
3,646,534 1,412,032
Prepaid expenses long term
30.09.2013 31.12.2012
Advances given for tangible fixed assets 1,706,416 983,083
Prepaid expenses - Long Term 623,631 843,025
2,330,047 1,826,108
As of 30 September 2013 and 31 December 2012, the details of deferred income is as following;
Deferred income short term
30.09.2013 31.12.2012
Advances received (*) 8,416,727 10,388,841
Deferred income short term 7,063 -
8,423,790 10,388,841
(*) As of 30 September 2013, TRY 4,573,417 of advances received (31 December 2012: TRY 8,286,842)
consists of notes receivables qualified as sale advances.
Deferred income long term
30.09.2013 31.12.2012
Advances received (**) 1,326,036 1,281,250
Deferred income long term 1,765 -
1,327,801 1,281,250
(**) All of the advances received consist of notes receivables qualified as sale advances.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-44-
NOTE 15 – TANGIBLE FIXED ASSETS
Movements in tangible fixed assets for the periods ended at the date of 30 September 2013 and 31 December 2012 are as follows:
Costs
31
December
2011 Addition Disposal
Revaluation
funds(*) Transfer
31
December
2012 Addition Disposal
Revaluation
funds
Additions due
to acquisition
of subsidiary Transfer
30
September
2013
Land 34,670,000 127,507 (1,990,452) (15,877,055) - 16,930,000 151,950 - - - - 17,081,950
Land improvements 483,586 - - 6,225 - 489,811 29,070 - - - - 518,881
Buildings 23,411,280 158,184 - (5,174,823) 1,695 18,396,336 26,561 - - - - 18,422,897
Plants, machinery and
equipment 89,721,217 2,923,228 (213,353) 5,820,288 808,150 99,059,530 15,784,615 (1,058,242) - - 5,906 113,791,809
Vehicles 91,949 44,845 - - - 136,794 56,621 (50,292) - - - 143,123
Fixtures and fittings 7,886,818 1,467,115 (916,497) - (824,792) 7,612,644 2,236,674 (2,090) - 593,392 (5,906) 10,434,714
Leasehold improvements 661,551 103,393 - - 14,947 779,891 199,854 - - 136,213 - 1,115,958
Total 156,926,401 4,824,272 (3,120,302) (15,225,365) - 143,405,006 18,485,345 (1,110,624) - 729,605 - 161,509,332
Accumulated Depreciation (-)
Land improvements 38,586 1,225 - - - 39,811 1,278 - 14,257 - - 55,346
Buildings 996,280 184,407 - - 649 1,181,336 139,152 - 145,636 - - 1,466,124
Plants, machinery and
equipment 27,073,042 6,261,180 (81,461) - 441,769 33,694,530 5,344,428 (747,824) 2,151,146 - 835 40,443,115
Vehicles 38,593 16,595 - - - 55,188 15,944 (41,491) - - - 29,641
Fixtures and fittings 2,717,898 779,510 (392,528) - (445,283) 2,659,597 740,266 (627) - 102,957 (835) 3,501,358
Leasehold improvements 276,419 140,258 - - 2,865 419,542 139,982 - - 104,927 - 664,451
Total 31,140,818 7,383,175 (473,989) - - 38,050,004 6,381,050 (789,942) 2,311,039 207,884 - 46,160,035
Net Book Value 125,785,583 105,355,002 115,349,297
(*) For the periods ended at 31 December 2012, negative valuation effect is due to sale of lands which had fair value increase in previous periods.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-45-
As of 30 September 2013, the total amount of insurance on tangible fixed assets is amounting to TRY
212,956,525.
Additions due to acquisition of subsidiary contain acquired subsidiary‘s tangible fixed assets for the period
ended at 30 September 2013.
As of 31 December 2012, lands, buildings and machineries, plants and equipments of the Group are revalued
at fair value and reflected in the consolidated financial statements according to the Expert Appraisal Reports
which are prepared by Elit Gayrimenkul Değerleme A.Ş. that is approved by the Capital Market Board. As of
30 September 2013, there is not a new Expert Appraisal Report for Group‘s lands, buildings and machineries,
plants and equipment. For this reason, lands, buildings and machineries, plants and equipments mentioned in
the Expert Appraisal Report are shown in the accompanying consolidated financial statements by reducing
impairment between balance sheet date and appraisal report date. Impairment was calculated with
consideration of mentioned fixed asset‘s remaining useful life.
As of 30 September 2013 there is a mortgage amounting to EUR 41,250,000 in favor of Türkiye Vakıflar
Bankası T.A.O. over Group‘s lands located in Gaziantep/Turkey against the borrowings of the Naksan
Holding Anonim Şirketi which is the shareholder of Group (Note 18) (31 December 2012: EUR 41,250,000).
As of 30 September 2013, amounting to TRY 15,235,653 of plants, machineries and devices of the Group are
acquired with financial leasing method and as of 30 September 2013, net book value of leased fixed assets
is TRY 14,665,193 (31 December 2012: acquired to TRY 506,424 – Net book value: TRY 499,672).
For the periods ended at 30 September 2013 and 2012, details of fixed asset purchases from related parties are
stated in Note 7.
NOTE 16 – INTANGIBLE FIXED ASSETS
Movements in intangible fixed assets for the period ended at the date of 30 September 2013 and 31 December
2012 are as follows:
Cost
31 December
2011 Addition Disposal
31 December
2012 Addition
Additions due
to acquisition
of subsidiary
30 September
2013
Rights (*) 10,729,765 3,814 - 10,733,579 107,546 388,133 11,229,258
Other tangible fixed assets 1,599,659 119,171 (6,000) 1,712,830 198,977 - 1,911,807
Total 12,329,424 122,985 (6,000) 12,446,409 306,523 388,133 13,141,065
Accumulated Depreciation (-)
Rights 3,136,075 1,923,831 - 5,059,906 1,505,114 74,345 6,639,365
Other tangible fixed assets 705,968 87,826 (1,980) 791,814 71,117 - 862,931
Total 3,842,043 2,011,657 (1,980) 5,851,720 1,576,231 74,345 7,502,296
Net Book Value 8,487,381 6,594,689 5,638,769
(*) In the year of 2010, Group has made an agreement with Pls Marka Pazarlama Ticaret Ltd.Şti. For usage
rights of ―Pierre Cardin‖ trademark for ten years and the amount of first five years is TRY 10,592,805
(exclude VAT). As of 30 September 2013, amounting to TRY 6,320,966 (exclude VAT) is classified in notes
payables (Note 10) (31 December 2012: TRY 6,378,386). Remaining balances paid as cash.
Additions due to acquisition of subsidiary contain acquired subsidiary‘s intangible fixed assets for the period
ended at 30 September 2013.
As of 30 September 2013, there is no internally created tangible and intangible fixed assets within Group
(31 December 2012: None).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-46-
NOTE 17 – GOVERNMENT INCENTIVE AND GRANTS
Parent Company made investment valued at TRY 9,547,924 between 01 January 2010 - 31 December 2012.
According to the incentive from Turkish Ministry of Economy, Parent Company was exempted from value-
added tax on investment made. In addition, it has exemption of corporation tax in proportion 40% of related
investment amounts. In addition, Group‘s required by law social security institution 4857 and 5510 for the
period ended 30 September 2013 amounting to TRY 611,242 has received incentive income. (31 December
2012: TRY 206,573 ).
NOTE 18 – PROVISIONS, CONTINGENT ASSETS AND LIABILITIES
As of 30 September 2013 and 31 December 2012 provisions, commitments and contingent liabilities are as
follows;
Short term provisions
30.09.2013 31.12.2012
Provision for the lawsuits 729,882 779,106
729,882 779,106
For the periods ended at 30 September 2013 and 31 December 2012, movement schedule of provision for the
lawsuits are as follows;
01.01.-
30.09.2013
01.01.-
31.12.2012
Opening balance 779,106 67,616
Provision for the period 44,616 711,490
Payments done in the period (93,840) -
Closing balance 729,882 779,106
Long term provisions
None (31 December 2012 - None).
Contingent Assets
Contingent assets of Group are as follows;
Letters of guarantee - As of 30 September 2013, Group has received letters of guarantee amounting to TRY
7,334,000 for its long and short term trade receivables from customers (Note 10) (31 December 2012: TRY
7,300,000 ). The details of the letters of guarantee based on currency is as below;
Currency
Currency
Amount
TRY
Equivalent
Letters of guarantees TRY 7,334,000 7,334,000
7,334,000
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-47-
Mortgages - As of 30 September 2013, Group has received mortgages amounting to TRY 8,390,000 from the
customers for the short and long term trade receivables (Note 10) (31 December 2012 : TRY 10,940,000). The
details of the mortgages based on currency are as following;
Currency
Currency
Amount
TRY
Equivalent
Mortgages TRY 8,390,000 8,390,000
8,390,000
Security bonds - As of 30 September 2013, the Group has received security bonds amounting to TRY
8,000,000 from the customers for the short and long term trade receivables (Note 10) (31 December 2012:
TRY 3,556,685 ). The details of the security bonds based on currency are as following;
Currency
Currency
Amount
TRY
Equivalent
Security bonds TRY 8,000,000 8,000,000
8,000,000
Contingent Liabilities
As of 30 September 2013 and 31 December 2012 guarantee / security / mortgage (―GSM‖) of the Parent
Company are as follows:
Given GSM (Guarantee-Security-Mortgage) by Parent Company 30.09.2013 31.12.2012
A. Total Amount of GSM given on behalf of legal entity 22,203,515 1,361,378
B. Total Amount of GSM given for partnerships which are included in
full consolidation None None
C. Total Amount of GSM given for the purpose of guaranteeing third
party loans to carry the regular trade activities None None
D. Total Amount of other GSM given 113,371,500 97,007,625
I. Total Amount of GSM given for the Parent Company 113,371,500 97,007,625
ii. Total Amount of GSM given for Other Group Companies not
included in B and C clauses None None
iii. Total Amount of GSM given for third parties not included in C
clause None None
135,575,015 98,369,003
Ratio of other GSM given by the Parent Company to Shareholders‘ Equity as of 30 September 2013 is 60%
(31 December 2012: 71%).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-48-
The details of the Group‘s contingent liabilities are as follows;
Letters of guarantees – As of 30 September 2013, Group has given letters of guarantee amounting to TRY
22,203,515 to various parties (31 December 2012: TRY 1,361,378). The details of the letter of guarantees are
as follows;
30.09.2013 31.12.2012
Türkiye İhracat Kredi Bankası A.Ş. 19,863,236 -
Custom authorities 1,253,449 1,172,635
Tax offices 846,000 -
Other corporations 240,830 188,743
22,203,515 1,361,378
As of 30 September 2013, the details of the letter of guarantees based on banks and currencies are as follows;
Currency
Currency
Amount
Currency
Rate
TRY
Equivalent
T. Vakıflar Bankası T.A.O. EUR 4,417,200 2.7484 12,140,232
ING Bank A.Ş. EUR 2,810,000 2.7484 7,723,004
T. İş Bankası A.Ş. EUR 17,325 2.7484 47,616
Alternatif Bank A.Ş. EUR 26,639 2.7484 73,214
Kuveytürk Katılım Bankası A.Ş. TRY 306,757 1.0000 306,757
T.C. Ziraat Bankası A.Ş. TRY 414,646 1.0000 414,646
Halkbank A.Ş. TRY 67,123 1.0000 67,123
Alternatif Bank A.Ş. TRY 1,430,923 1.0000 1,430,923
22,203,515
As of 31 December 2012, the details of the letter of guarantees based on banks and currencies are as follows;
Currency
Currency
Amount
Currency
Rate
TRY
Equivalent
Alternatif Bank A.Ş. TRY 910,434 1.0000 910,434
Türkiye İş Bankası A.Ş. EUR 17,325 2.3517 40,743
T.C. Ziraat Bankası A.Ş. TRY 148,000 1.0000 148,000
HSBC Bank A.Ş. EUR 111,494 2.3517 262,201
1,361,378
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-49-
Mortgages – As of 30 September 2013, there is mortgage over Group‘s lands with the amount of EUR
41,250,000, TRY equivalent of related amount is TRY 113,371,500 against the borrowings of the Naksan
Holding Anonim Şirketi which is the main shareholder of Group (31 December 2012: TRY 97,007,625). The
detail of the mortgages is as follows;
Mortgage given to: Location of land Degree EUR
Türkiye Vakıflar Bankası T.A.O. Gaziantep 1/0 41,250,000
41,250,000
Indorsed notes receivables – As of 30 September 2013, note receivables which are received from customers
are indorsed to Naksan Holding Anonim Şirketi; who is a shareholder of Group with the amount of
TRY 2,241,250 Naksan Holding Anonim Şirketi and to various suppliers with the amount of TRY 2,322,481
adding up to an amount of TRY 4,563,731 (31 December 2012: Naksan Holding Anonim Şirketi: TRY
22,273,882, Naksan Plastik ve Enerji Sanayi ve Ticaret Anonim Şirketi: TRY 243,000 and various suppliers:
TRY 1,785,663; in total: TRY 24,302,545).
Litigations – Group, from time to time is defendant in law suits related business issues. As of 30 September
2013 all the lawsuits brought against Group are about personnel. Related risks have been analyzed as to
likelihood of occurrence. As a result of these analyses, as of 30 September 2013, Group management made
provision for cases at an amount of TRY 729,882 (31 December 2012: TRY 779,106).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-50-
NOTE 19 – COMMITMENTS
As of 30 September 2013, Group has amounting to TRY 16,276,021 export commitments to the banks for the
export borrowings (Note 9) (31 December 2012: TRY 4,134,000).
Bank name
Maturity
of commitments
Currency
type
Currency
Amount
TRY
Equivalent
Türkiye İş Bankası A.Ş. In the year of 2015 EUR 500,000 1,374,200
Türkiye İhracat Kredi Bankası A.Ş. In the year of 2020 EUR 5,421,999 14,901,821
16,276,021
As of 31 December 2012, the details of the export commitments are as follows;
Bank name
Maturity
of commitments
Currency
Type
Currency
Amount
TRY
Equivalent
Türkiye Garanti Bankası A.Ş. In the year of 2013 USD 1,000,000 1,782,600
Türkiye İş Bankası A.Ş. In the year of 2013 EUR 1,000,000 2,351,700
4,134,300
The Parent Company's Board of Directors, with the decree of 25 on 3 April 2013 in Borsa İstanbul A.Ş.
shares of Royal Halı at the start of trading on 3 May 2013 from the date of the 180 (one hundred eighty) days,
- Not to any paid capital increase and thereby not to increase the amount of shares in circulation,
- Not to make any other decisions which would result to make a new sale and public offering or to increase
the amount of shares in circulation during this time,
- They made a commitment not to make any other statements which would result to make a new sale and
public offering or to increase the amount of shares in circulation dring this time.
NOTE 20 – PROVISIONS FOR EMPLOYEE BENEFITS
As of 30 September 2013 and 31 December 2012, the short and long-term provisions for employee benefits
are as follows;
Short term provisions for employee benefits
As of 30 September 2013 and 31 December 2012, the Group have been recognized for the employees who
have earned as of the date of the balance sheet but have not used it yet for the annual permits in the
accompanying consolidated financial statements .
30.09.2013 31.12.2012
Accumulated leave 4,847 -
4,847 -
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-51-
Long term provisions for employee benefits
The severance pay provision has been calculated as expressed in Note 2. As of 30 September 2013, the
liability is calculated on a thirty day wage base with a maximum of TRY 3,254 for each year of service,
utilizing the rates on date of retirement or departure (31 December 2012: TRY 3,034).
For the period ended at 30 September 2013 and 31 December 2012, based on mentioned principles above,
Group reflected severance pay liabilities which was reduced to the date of balance sheet by the using expected
inflation rate and real discount rate to consolidated financial statements. All gain and losses other than
calculated actuarial gain / (losses) in the consolidated income statement, Actuarial gain / (losses) are shown in
the consolidated statement of changes in equity.
30.09.2013 31.12.2012
Discount rate 8.50% 10.00%
Inflation rate 5.00% 6.07%
Real discount rate 3.33% 3.71%
Group does not provide any other employee benefit other than the reserve for retirement pay described above.
The movement schedule of severance pay provision is as follows:
01.01.-
30.09.2013
01.01.-
31.12.2012
Balance of 01 January 837,992 637,971
Additions due to business merger 29,572 -
Severance pay paid in the period (138,815) (8,197)
Cost of services 200,362 193,467
Interest cost 77,975 45,480
Actuarial profit / (loss) 380,745 (30,729)
Closing Balance 1,387,831 837,992
NOTE 21 – OTHER ASSETS AND LIABILITIES
As of 30 September 2013 and 31 December 2012, the details of other assets and liabilities are as follows;
Other Current Assets
30.09.2013 31.12.2012
Income Accruals 147,550 -
VAT carried forward 1,470,540 1,341,080
1,618,090 1,341,080
Other Non-Current Assets
None (31 December 2012 - None).
Other Current and Non-Current Liabilities
None (31 December 2012 - None).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-52-
NOTE 22 – SHAREHOLDERS’ EQUITY, RESERVES AND OTHER EQUITY COMPONENTS
22.1 Paid in Capital
As of 30 September 2013, Parent Company‘s share capital consists of 60,000,000 unit shares each valued at
TRY 1.
As of 30 September 2013 and 31 December 2012 the capital structure is as follows:
30 September 2013 31 December 2012
Shareholders Ratio
Amount
(TRY) Ratio
Amount
(TRY)
Naksan Holding Anonim Şirketi %46.25 27,750,000 %70.00 35,000,000
Public Shares %28.75 17,250,000 - -
Osman Nakıboğlu %9.00 5,400,000 %10.80 5,400,000
Cahit Nakıboğlu %6.25 3,750,000 %7.50 3,750,000
Bahaeddin Nakıboğlu %3.00 1,800,000 %3.60 1,800,000
Cihan Dağcı %2.08 1,250,000 %2.50 1,250,000
Emre Nakıboğlu %2.00 1,200,000 %2.40 1,200,000
Ferhan Nakıboğlu %1.25 750,000 %1.50 750,000
Mehmet Hilmi Nakıboğlu %1.00 600,000 %1.20 600,000
Taner Nakıboğlu %0.42 250,000 %0.50 250,000
Total %100.00 60,000,000 %100.00 50,000,000
The Parent Company, the Capital Markets Board dated 19 March 2013 and in 2758 was with the permission
of the registered capital system. The Parent Company's registered capital ceiling of TRY 200,000,000, TRY
60,000,000 of the Company's issued share capital is fully paid share capital committed by the shareholders.
Naksan Holding A.Ş and Nakıboğlu family who owned Group A shares a nominal value of TRY 5,000,000
have a privilege to determine members of the boards of directors and use the group‘s voting rights under the 8
and 11 of the articles of association. Group B shares offered to the public, does not have a privilege.
According to the 8 of the articles of Association that Board of Directors consist of six members and three
members elected by the General Assembly from among the candidates nominated by Group A shareholders.
According to the 11 of the articles of Association in the Ordinary and Extraordinary General Assemblies of
the Company, each Group A shareholders has 15 (fifteen) and each group B shareholders has 1(one) voting
rights. However, according to the Turkish Commercial Law numbered 6102 479/3 of the articles, Privilege
right does not use to make decisions in the General Assembly regarding to file acquittance and obligation
cases with the change of the articles of association.
22.2 Inflation Adjustment of Shareholders’ Equity
As of 30 September 2013 and 31 December 2012, the details of inflation adjustment to shareholders‘ equity
are as follows;
30.09.2013 31.12.2012
Inflation adjustments of shareholder‘s equity 746,913 746,913
746,913 746,913
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-53-
22.3 Share Premiums / Discounts
Share premiums account, which express to be obtained by cash inflow as a result of sale of Parent Company‘s
shares within market prices.These premiums are shown under equity and not to be subject to dividend
distribution but can be used in capital increases in the future.
The parent company comprised premium related to the shares with the amounting to TRY 34,500,000 by
selling 10.000.000 shares, one of whose has the TRY 1 value, with the unit price of TRY 4.45 in the Borsa
İstanbul A.Ş. by providing capital increase. TRY 3,100,029 which is the Company‘s total cost of public
offerings, is accounted for the condition of reduction on share premium amount related to the shares. The
detail related to the account is as follows;
30.09.2013 31.12.2012
Premiums from the sale of shares in Borsa İstanbul A.Ş. 34,500,000 -
Expenses relevant to the public offering process (4,210,391) -
Part of the amount of reflected to shareholders which expenses relevant to
the public offering process (Note 7) 1,110,362 -
31,399,971 -
22.4 Actuarial Profit / (Loss) of the Calculation Severance Pay Provision
The Group, for the period ended at 30 September 2013 and 31 December 2012, reflected severance pay
liabilities which was calculated by reducing financial statements date and using expected inflation rate which
details relying on basis explained in Note 20 to consolidated financial statement. All of profits and losses
except calculated actuarial profit / (loss) was shown in consolidated statements of income, actuarial profit /
(loss) was shown in consolidated statements of changes in equity.
30.09.2013 31.12.2012
Actuarial profit / (loss) of the calculation severance pay provision (481,661) (178,940)
(481,661) (178,940)
22.5 Effect of Business Mergers Subject to Joint Control and Joint Ventures
As of 30 September 2013 and 31 December 2012, the details of relevant account are as following;
30.09.2013 31.12.2012
Effect of business mergers subject to joint control and joint ventures 2,390,557 -
2,390,557 -
Royal Halı İplik Tekstil Mobilya Sanayi ve Ticaret Anonim Şirketi (―Royal Halı‖) acquired 51% of shares of
Atlas Halı Aksesuar ve Mobilya Sanayi Ticaret Anonim Şirketi with the amount of TRY 2,550,000 in 29
January 2013. The acquisition value of acquired company was accounted as a separate item in consolidated
financial statements within equity since the related amount is more than TRY 2,390,557 from the fair value of
the company‘s share of identifiable assets, liabilities and contingent liabilities. The details for the calculation
of relevant amount is in Note 4.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-54-
22.6 Revaluation Funds
Revaluation funds are comprised from the buildings, lands, facilities, devices and machineries over indexed
value and the deferred tax calculated from the value exceeding indexed value. Buildings, lands and
machineries are stated in the financial statements at expertise value determined by Elit Gayrimenkul
Değerleme Anonim Şirketi, which is accredited by Capital Market Board as of 31 December 2012. As of 30
September 2013, there is not a new Expert Appraisal Report for Group‘s lands, buildings and machineries,
plants and equipment. For this reason, lands, buildings and machineries, plants and equipments mentioned in
the Expert Appraisal Report are shown in the accompanying consolidated financial statements by reducing
impairment between statement date and appraisal report date. Impairment was calculated with consideration
of mentioned fixed asset‘s remaining useful life.
The details of the revaluation funds are as following:
30.09.2013 31.12.2012
Expertise values over indexed value 42,309,900 44,620,939
Deferred tax liabilities (4,802,301) (5,240,525)
Total revaluation fund 37,507,599 39,380,414
22.7 Restricted Reserves
In the legal book, the accumulated profits can be distributed except the claim related legal reserves stated below.
According to the Turkish Commercial Code, legal reserves consist of first and second legal reserves. The first
legal reserve is appropriated out of the statutory profits at the rate of 5%, until the total reserve reaches a
maximum of 20% of the Company‘s share capital. The second legal reserve is appropriated at the rate of 10%
of all distributions in excess of 5% of the Company‘s share capital. The first and second legal reserves are not
available for distribution unless they exceed 50% of the share capital, but may be used to absorb losses in the
event that the general reserve is exhausted. The statutory accumulated profits and statutory current year profit
are available for distribution, subject to the reserve requirements referred to above.
As of 30 September 2013 and 31 December 2012, the details of restricted reserves are as following;
30.09.2013 31.12.2012
Restricted Reserves 2,972,851 1,116,622
2,972,851 1,116,622
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-55-
22.8 Retained Earnings / Losses
In accordance with the communiqué Serial: XI No: 29, effective from 1 January 2008, and its related
announcements, ―Paid-in Share Capital‖, ―Restricted Reserves Appropriated from Profit‖ and ―Share
Premium‖ should be presented with statutory amounts. The restatement differences arise during the
application of the communiqué should be presented in ―Adjustment to Share Capital‖, if the difference is
resulted from paid-in share capital and has not added to capital yet; should be presented in ―Retained Earnings
/ Losses‖, if the difference is resulted from ―Restricted Reserves Appropriated from Profit‖ and ―Share
Premium‖ and has not been subject to profit distribution or has not added to capital yet.
According to the decision dated 30 December 2003 and numbered 66/1630 of Capital Market Board,
―Previous Year‘s Losses‖ account which arises from first time application of inflation adjustment on financial
statements is taken into consideration as deductible item, during the calculation of distributable profit for the
inflation adjusted financial statements under the profit distribution principles of the Capital Market Board.
Nonetheless, it is also possible to set off ―Previous Year‘s Losses‖ with the Company‘s current profit and
accumulated profit. The remaining part of prior year‘ loss is possibly set off extraordinary reserves, legal
reserves and inflation effect on shareholder‘s equity account, respectively.
In accordance with Turkish Commercial Code, legal reserves consist of first and second legal reserves. Until
the Company‘s legal reserve reaches 20% of the nominal paid-up share capital, legal reserves are set aside as
the first 5% of net income. The second legal reserve, on 5% of the Company‘s share capital is divided into
10% of all profits from the distribution. According to the Turkish Commercial Code, legal reserves for
distribution unless they exceed 50%, but can be used to offset losses at the point of profit reserves have been
exhausted.
Listed companies are subject to dividend requirements regulated by the CMB as follows:
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 consolidated financial statements.
In accordance with CMB decision No:1/6 dated January 9, 2009; with regard to the determination of
principles to be followed regarding distribution of profits obtained from 2008 activities by the publicly held
incorporated companies, the shares of which are traded on the exchange market, the minimum profit
distribution rate of 20% shall be applied as indicated in Article 5 of the Communiqué No:27 Series: IV; this
distribution shall be performed by distributing the shares to be exported by means of adding cash or dividend
to the capital in accordance with the decision of general assemblies, to the shareholders free of charge or by
distributing certain amount in cash and certain amount in free shares. Again, in accordance with the decision
mentioned above, as long as in the calculation of profit distributable by the enterprises obliged to prepare
consolidated financial table, the profit amounts appearing in the profit in the consolidated financial tables and
transferred from subsidiaries, enterprises and associates under joint management to consolidated financial
tables of the parent company are met from the resources in the legal records of the companies, the profit
amount to be distributed shall be calculated considering the net current profits in the financial tables to be
prepared and disclosed in the frame of CMB‘s ―Communiqué on Principles regarding Financial Reporting in
Capital Market‖ No: 29 Series: XI, regardless of the profit distribution decision made by general assemblies.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-56-
In accordance with the CMB decision dated 27 January 2010, it‘s decided to remove the obligation related
with the minimum dividend distribution rate for publicly traded companies.
Inflation adjustment to shareholders' equity and book value of extraordinary reserves can be used as an
internal source in capital, dividend distribution in cash or net-off against prior years‘ loss. In case the inflation
adjustment to shareholders‘ equity is used for dividend distribution in cash, the distribution is subject to
corporate tax
22.9 Minority Interest
As of 30 September 2013 and 31 December 2012 details of minority interests are as follows;
30.09.2013 31.12.2012
Capital 2,450,000 -
Retained earnings/(losses) (2,298,685) -
Profit / (loss) for the period, net (188,162) -
(36,847) -
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-57-
NOTE 23 – SALES AND COST OF SALES
23.1 Sales revenue
Details of sales for the periods ended at 30 September 2013 and 2012 are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012 Domestic Sales
BCF yarn sales 2,624,374 7,528,713 698,289 25,375,680
Machine carpet sales 83,358,798 68,441,145 29,154,223 19,515,423
Raw material sales (PP and Yarn) 1,813,736 4,665,363 432,143 985,248
Merchandise sales 3,376,748 1,673,624 9,936 302,184
Other sales 132,375 281,379 30,458 9,957
91,306,031 82,590,224 30,325,049 46,188,492
Export Sales
BCF yarn sales 67,817,722 53,204,582 24,285,468 (5,330,277)
Machine carpet sales 16,680,377 14,890,887 5,832,802 4,496,637
Merchandise sales 14,062,306 13,573,388 6,566,963 5,144,461
Other sales - 268,766 - 74,615
98,560,405 81,937,623 36,685,233 4,385,436
Sales returns and discounts (8,642,431) (4,237,620) (2,681,049) (980,213)
181,224,005 160,290,227 64,329,233 49,593,715
For the periods ended at 30 September 2013 and 2012, the details of amount of sales are as following;
01.01. - 30.09.2013 01.01. - 30.09.2012
Type of product Unit Amount Unit Amount
Machine Carpet m² 1,688,068 m² 1,430,244
Commercial Carpet m² 47,576 m² 57,049
BCF Yam kg 13,035,992 Kg 11,963,841
For the period ended at 30 September 2013, amounting to TRY 56,047,047 of export registered sales is
classified to export sales (01 January – 30 September 2012: TRY 29,509,125).
Sales to related parties which are classified under sales account are indicated in Note 7.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-58-
23.2 Cost of Sales
Details of cost of sales for the periods ended at 30 September 2013 and 2012 are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Direct material expenses 82,784,191 77,485,839 29,130,302 21,558,867
Direct labor expenses 8,631,173 4,669,889 3,327,171 1,689,274
General production overheads expenses 13,657,741 10,593,711 4,605,652 3,586,169
Depreciation and amortization expenses 7,085,046 6,406,374 2,498,259 2,139,326
Cost of Finished Goods Produced 112,158,151 99,155,813 39,561,384 28,973,636
Changes in finished goods inventory
1. Beginning inventory (+) 7,901,918 10,240,557 7,901,918 10,240,557
2. Ending inventory (-) (16,033,326) (15,887,795) (7,060,947) (11,177,454)
Cost of finished goods sold 104,026,743 93,508,575 40,402,355 28,036,739
Cost of merchandise
1. Beginning merchandise inventory (+) 495,727 590,881 495,727 590,881
2. Additions due to business merger(+) 4,916,325 - - -
3. Purchases during the period (+ ) 21,090,643 21,879,819 7,223,015 6,331,176
4. Ending merchandise inventory (- ) (995,065) (1,487,261) 167,166 218,054
Cost of merchandise sold 25,507,630 20,983,439 7,885,908 7,140,111
Cost of sales, net 129,534,373 114,492,014 48,288,263 35,176,850
For the periods ended at 30 September 2013 and 2012, the details of amount of production are as following;
01.01. - 30.09.2013 01.01. - 30.09.2012
Type of product Unit Amount Unit Amount
Machine Carpet m² 1,735,155 m² 1,557,864
BCF Yarn kg 13,239,255 kg 12,441,799
Purchases from related parties which are classified under cost of sales account indicated in Note 7.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-59-
NOTE 24 – GENERAL ADMINISTRATIVE EXPENSES, MARKETING, SELLING AND
DISTRIBUTION EXPENSES AND RESEARCH AND DEVELOPMENT EXPENSES
For the periods ended at 30 September 2013 and 2012, marketing, selling and distribution, general
administrative and research and development expenses are mentioned below;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
General administrative expenses 5,332,958 4,300,947 1,421,569 607,725
Marketing, sale and distribution expenses 21,936,100 16,298,792 7,023,205 3,836,680
Research and Development Expenses 154,788 184,663 75,262 131,173
27,423,846 20,784,402 8,520,036 4,575,578
NOTE 25 – EXPENSES ACCORDING TO QUALIFICATIONS
25.1 General administrative expenses
Details of general administrative expenses for the periods ended at 30 September 2013 and 2012 are as
following;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Representation and accomodation expenses 144,363 37,437 38,834 10,272
Personnel expenses 2,683,067 1,201,498 978,677 428,411
Communication expenses 84,065 18,959 22,438 9,705
Provision for law suits 44,616 335,650 44,616 47,594
Travel expenses 73,260 24,939 22,233 5,276
Depreciation and amortization expenses 180,252 48,025 57,780 17,467
Provision for diminution in value of
inventories - - (250,313) -
Provision for doubtful expenses 182,153 1,892,513 (18,163) 225
Provision for severance pay 139,522 65,702 63,122 (1,687)
Consultancy fee 252,898 161,294 100,255 49,643
Donation expenses 433,403 454,679 145,515 22,098
Taxes and duties 596,534 33,149 22,060 17,903
Other expenses 518,825 27,102 194,515 818
5,332,958 4,300,947 1,421,569 607,725
Details of expenses from related parties classified in general administrative expenses account for the periods
ended at 30 September 2013 and 2012 indicated in Note 7.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-60-
25.2 Marketing, selling and distribution expenses
For the periods ended at 30 September 2013 and 2012, the details of marketing, selling and distribution
expenses are as following;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Fair expenses 1,097,998 460,888 312,510 113,193
Personnel expenses 1,520,291 147,535 554,855 66,775
Transportation expenses 1,155,905 725,714 391,581 189,407
Insurance expenses 900,456 1,016,648 235,669 325,609
Export and custom expenses 265,276 281,481 119,150 92,932
Advertising expenses 4,419,979 2,819,261 1,487,869 1,413,624
Depreciation and amortization expenses 647,652 542,748 255,055 189,124
Sales premium expenses 10,004,604 8,805,157 3,295,743 966,766
Travel expenses 267,849 108,010 71,630 47,819
Representation and accomodation expenses 480,426 380,319 120,275 131,048
Rent expenses 617,539 345,847 157,603 117,651
Other expenses 558,125 665,184 21,265 182,732
21,936,100 16,298,792 7,023,205 3,836,680
Details of expenses from related parties classifies in marketing, selling and distribution expenses account for
the periods ended at 30 September 2013 and 2012 indicated in Note 7.
25.3 Research and development expenses
For the periods ended at 30 September 2013 and 2012, the details of research and development expenses are
as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Personnel expenses 99,581 40,228 44,528 16,575
Travel expenses 8,336 7,530 563 7,530
Consultancy fee - 80,942 - 69,692
Analysis – Laboratory expenses - 33,341 - 23,341
Depreciation and amortization expenses 44,331 19,592 30,071 9,592
Other expenses 2,540 3,030 100 4,443
154,788 184,663 75,262 131,173
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-61-
NOTE 26 – OTHER OPERATING INCOME / ( EXPENSES)
Details of other operating income for the periods ended at 30 September 2013 and 2012 are as following;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Foreign exchange income from commercial
operations 6,120,319 9,140,382 3,914,166 1,785,981
Rediscount income 1,755,269 3,089,548 (72,104) (161,872)
Due date differences income from trade
receivables 37,146 40,171 8,408 20,730
Insurance income 499,808 133,041 222,655 43,182
Rent income 93,435 4,500 31,435 1,500
Other incomes 14,830 298,952 1,297 92,954
8,520,807 12,706,594 4,105,857 1,782,475
Details of other operating expenses for the periods ended at 30 September 2013 and 2012 is as following;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Rediscount expense (2,736,771) (1,773,783) (116,595) 1,003,485
Foreign exchange expense from commercial
operations (5,940,834) (9,157,390) (3,048,618) (1,911,154)
Other expenses (5,609) (6,328) (178) (6,086)
(8,683,214) (10,937,501) (3,165,391) (913,755)
Details of expenses from related parties classifies in other operating income / (expenses) account for the
periods ended at 30 September 2013 and 2012 indicated in Note 7.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-62-
NOTE 27 - INVESTMENT ACTIVITIES INCOME / (EXPENSES)
Details of investment activities income for the periods ended at 30 September 2013 and 2012 are as following;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Profit on sale of fixed assets 37,810 5,712,170 - 5,712,170
Interest income from other receivables 123,091 417,205 102,675 15,827
160,901 6,129,375 102,675 5,727,997
For the periods ended at 30 September 2013 and 2012 details of interest incomes from related parties are
indicated in Note 7.
Details of investment activities expense for the periods ended at 30 September 2013 and 2012 are as
following;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Loss on sale of fixed assets (150,891) - (150,716) -
Interest expense to other payables (157,727) (331,918) (33,719) (195,638)
(308,618) (331,918) (184,435) (195,638)
For the periods ended at 30 September 2013 and 2012 details of interest incomes to related parties are
indicated in Note 7.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-63-
NOTE 28 – FINANCE INCOME / (EXPENSES)
For the periods ended at 30 September 2013 and 2012 finance incomes are as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Foreign exchange gains 2,747,217 10,228,451 1,979,565 1,083,989
Foreign exchange income from forward
exchange 147,550 - 147,550 -
2,894,767 10,228,451 2,127,115 1,083,989
Foreign exchange income from forward exchange consists of forward exchange agrgrement difference from
the fair value on 30 September 2013. (Note 32 – Derivative Financial Assets).
For the periods ended at 30 September 2013 and 2012 finance expenses are as follows:
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Interest paid on loans (1,052,236) (2,966,683) (96,607) (877,137)
Foreign exchange losses (7,354,466) (3,175,415) (5,034,527) (516,728)
Letter of guarantees commission expenses (76,279) (99,966) (34,804) (3,794)
Other finance expenses (617,562) (16,364) (535,966) (3,986)
(9,100,543) (6,258,428) (5,701,904) (1,401,645)
For the periods ended at 30 September 2013 and 2012 the details of finance expenses to related parties are
indicated in Note 7.
NOTE 29 – NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
Parent Company acquired two lands for the trade receivables from its customer with the amount of
TRY 3,296,250. The Group has not calculated provision for impairment for the lands, because the fair value of
the lands, which is calculated by TSKB Gayrimenkul Değerleme A.Ş. that is approved by CMB, are higher than
the cost amounts of the lands.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-64-
NOTE 30 –TAX ASSETS AND LIABILITIES
Deferred Taxes
The potential deferred tax assets / (liabilities) of the Company represents the tax effects of temporary
differences, arising between the financial statements reported for IFRS purposes and the statutory tax financial
statements. Such differences arise due to the different treatment of certain items of income and expense
included in the IFRS financial statements compared to the local tax return, in accordance with applicable tax
laws.
As of balance sheet date, accrued temporary differences and deferred tax assets and liabilities prepared by
using current tax rates are as following:
30 September 2013 31 December 2012
Total
Temporary
Differences
Deferred Tax
Assets /
(Liabilities)
Total
Temporary
Differences
Deferred Tax
Assets /
(Liabilities)
Deferred Tax Assets:
Tax incentive
-discounted tax rate 17,754,708 2,840,753 20,143,330 3,222,933
Taxable losses 7,107,848 1,421,570 - -
Severance pay provision 1,387,831 277,566 837,992 167,598
Unearned interests on receivables 1,847,816 369,563 1,199,496 239,899
Provision for doubtful receivables 6,809,054 1,361,811 6,626,901 1,325,380
Accrued interest expenses on loans 5,138 1,028 14,031 2,806
Provision for diminution in value of inventories 65 13 152,979 30,596
Provision for lawsuit 729,882 145,976 779,106 155,821
Expense accruals 216,334 43,266 - -
Reversal of research expenses capitalization 301,131 60,226 189,655 37,931
Foreign exchange losses 1,751,388 350,278 1,352,388 270,478
Deferred tax assets 6,872,050 5,453,442
Deferred Tax Liabilities:
Capitalization of expenses (461,935) (92,387) (567,639) (113,528)
Depreciation and indexation differences of lands and buildings (163,719) (8,186) (138,529) (6,926)
Depreciation and indexation differences of tangible and intangible
fixed assets (Except land, land improvements and buildings) (21,540,133) (4,308,027) (22,146,419) (4,429,284)
Unearned interest on payables (540,871) (108,174) (779,481) (155,896)
Fair value adjustment for lands and buildings (24,397,861) (1,219,893) (24,557,754) (1,227,888)
Fair value adjustment for machinery and plants (17,912,039) (3,582,408) (20,063,185) (4,012,637)
Foreign exchange gains (26,875) (5,375) (6,830) (1,366)
Income accruals (1,018,773) (203,755) - -
Deferred Tax Liabilities (9,528,205) (9,947,525)
Deferred tax assets / (liabilities), net (2,656,155) (4,494,083)
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-65-
For the periods ended at 30 September 2013 and 2012 tax income / (expense) on income statement are as
follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
01.07.-
30.09.2013
01.07.-
30.09.2012
Net Income / (Expense) for the Period (3,995,812) (5,258,715) (553,750) (1,637,329)
Deferred Tax Income / (Expense) 159,590 1,792,148 (159,430) 1,955,719
Tax income / (expense), net (3,836,222) (3,466,567) (713,180) 318,390
As of 30 September 2013 and 2012, the movements of deferred tax assets and liabilities are as follows:
01.01.-
30.09.2013
01.01.-
30.09.2012
Opening balance 4,494,083 6,245,136
Deferred tax recognized in equity (514,373) (1,171,419)
Deffered tax effect of business mergers subject to joint control (1,163,965) -
Deferred tax assets / (liabilities), net (2,656,155) (3,281,569)
Deferred tax income / (expense), net 159,590 1,792,148
As of 30 September 2013, the carry forward taxables losses of Net Group‘s related parties and the last periods
of that this losses could be used are as below;
The last period of using taxable losses
Period financial
loss occurred
Deferred
taxable losses
2016 2011 1,449,553
2017 2012 4,660,667
2018 2013 997,628
Total 7,107,848
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-66-
Tax provision reconciliation shown in Group‘s income statement is as follows;
01.01.-
30.09.2013
01.01.-
30.09.2012
Unaudited profit / (loss) before tax 21,658,126 33,061,636
Total additions to tax base 935,958 550,441
Total deductions from tax base 730,399 10,069,589
Discounted corporate tax base 2,388,623 -
Unaudited financial profit / (loss) 21,863,685 23,542,488
Corporate tax rate 20% 20%
Calculated tax 3,995,812 4,708,498
Stoppage tax effect of tax incentive - 550,217
Corporate tax provision in the income statement 3,995,812 5,258,715
(*) Companies covered by the full consolidation calculated on the basis of the tax provision. For the
companies that tax for the period do not occur, reconciliation of the tax provision is not presented.
As of 30 September 2013 and 31 December 2012, Group‘s assets relevant current period tax is as following;
30.09.2013 31.12.2012
Prepaid Taxes 3,442,062 4,708,498
3,442,062 4,708,498
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-67-
Corporation Tax
Company is liable to corporation tax valid in Turkey. The necessary provisions are made on the attached
financial statements for expected tax liabilities related to the Company‘s current period activity results.
Corporation tax rate that will be accrued over corporation tax base is calculated over the tax base that remains
after adding expenses recorded as expense in determination of commercial earnings that are nondeductible
from tax base and subtracting tax-exempt profit, tax- free income and other deductions (if there are losses
from previous years and used investment allowances if preferred).
The applied effective interest rate in 2013 is 20% (2012: 20%).
Permanent tax is calculated and accrued quarterly in Turkey. As of temporary tax periods, the effective
corporation tax rate is 20% in 2013 (2012: %20).
There is no absolute and certain confirmation procedure related to tax evaluation in Turkey. Companies
prepare their tax return between 1-25 Aprils coming after the related year‘s balancing period (for the
companies having special account period, between 1st and 25th of fourth month following the closing of
period). These tax returns and related accounting records may be inspected and changed by tax department in
five years.
There are some exceptions on Corporation Tax Law. These exceptions that company will possibly utilize are
explained as below;
Taxable losses
According to Turkish Tax Legislation, deduction of financial losses which are decelerated on financial
statements, are possible to deduct from profit of the company with the condition not exceeding 5 years.
However, financial losses are not possible to be set-off from previous year profits.
Issue Premium Exception
The Premium income provided by the disposing of stocks, formed whiles the establishments of Incorporated
Companies or while increasing their capital, below their nominal values is an exemption from Corporation
tax.
The Real Estate and Subsidiary Share Sales Gain Exemption
The 75 % of income of corporations composed of subsidiary shares, real estates, privilege, and promoter‘s
stock and perpetual bonds are exemptions of Corporation tax. In order to benefit from exemption, the
questioned income should be kept in a fund account in liabilities and should not be removed of operation
during 5 years. The sale price should be received at the end of the following 2nd calendar year. Corporations
getting income from the sale of such kind of values they own, like Stocks and bonds and real estate trading
and renting are beyond the scope of exemption.
Investment Allowance Exemptions
Post abolishment of the law numbered 5479, temporary 69th article is added to Income Tax Legislation
related investment allowance.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-68-
According to this execution, Income and Corporation Taxpayers;
a. As of 31 December 2005, its existence is subject and the investment allowance amount that was not able to
be deducted from 2005 earnings,
b. In the extent of investment incentive certificate which were issued and based on the application before 24
April 2003, ante abolishment of Income Tax Legislation numbered 193 and dated 09 April 2003 and law
numbered 4842, in the extent of certificate the commenced investment projects relying on 1, 2, 3, 4, 5 and 6th
the article of appendix and the ones commenced after 01 January 2006,
c. In the extent of abolished 19th article of Income Tax Legislation numbered 193, they started investments
prior to 01 January 2006, in terms of economical and technical completeness the ones started post the date,
In terms of regulatory provisions effective on 31 December 2005, calculated amounts of exemptions from
investment allowances, again in the extent of legal provisions valid on 31 December 2005 (including tax rate
related legal provisions) was deducted merely from earnings of 2006, 2007 and 2008. However, with the
decision numbered 2006/95, which was taken during the meeting of the Constitutional Court on 15 October
2009, the phrase ― ... only related to the years 2006, 2007 and 2008…‖ which was a part of the Temporary
Article 69 of the Income Tax Law was cancelled and the cancellation became effective from the date the
decision has been published in the Official Gazette on 8 January.2010. According to the decision, the
investment incentive amount outstanding that cannot be deducted from 2008 taxable income previously will
be deducted from taxable income of the subsequent profitable years.
Regarding the cancellation decision taken by the Constitutional Court, an amendment was made in the 69th
article in Income Tax Regulation using the regulation numbered 6009 and dated 23/07/2010. Consequently, in
compliance with the cancellation decision of the Constitutional Court, the year limitation has been abolished
and investment allowance has been limited to 25% of the profit. Corporate tax ratio of 30% in the previous
regulation for the ones who benefit from investment allowance has been decreased to the effective corporate
tax with the amendment made (2010: 20%).
Within the frame of the Communiqué ―Decision regarding Government Incentive Assistance in Investment‖
dated 16 July 2009 and numbered 2009/01, newly investing companies are held subject to investment
incentives based on the some regions.
Investment incentives and grants are; discount in corporation and income taxes (differs from region to region),
provision for the investment, interest support.
Royal Halı İplik Tekstil ve Mobilya Sanayi ve Ticaret Anonim Şirketi is qualified for the investment
incentives stated above due to the current and future investment expenditures. The investment area is within
the 3rd Region according to the communiqué numbered 2009/01; so the Company is qualified for 80%
discount on corporation tax rate, which reduces corporation tax rate to 4% in accordance with Communiqué,
40% of total investment expenditures will be deducted from accrued corporation tax amount in the coming
periods.
Withholding Tax
In addition to Corporation tax, it is required to calculate withholding tax from the dividends distributed by full
pledge taxpayer enterprise and include in its income tax base and except dividends distributed by foreign
companies to its subsidiary in Turkey. As of 23 July 2006 income tax stoppage rate was altered to 15%.
Dividends that are added to capital without distribution are not subject to income tax stoppage. It is necessary
to make tax withholding at 19.8% over investment allowance balance utilized based on investment incentive
certificate received prior to 24 April 2003. 40% of company activities directly related to production investment
certificate. Investment expenses made after this date can be deducted. Tax withholding cannot be made on
investment expenses without incentive certificate.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-69-
NOTE 31 – EARNINGS PER SHARE
For the periods ended at 30 September 2013 and 2012 profit / (loss) per share whose nominal value is TRY 1
is as follows:
01.01.-
30.09.2013
01.01.-
30.09.2012
Net profit / (loss) for the period 13,913,664 33,083,817
Net Profit/(loss) relevant to minority interests 188,162 -
Net profit (loss) relevant to Parent company 14,101,826 33,083,817
Total number of shares outstanding 60,000,000 50,000,000
Profit/ (loss) per share (TRY ) 0.23 0.66
NOTE 32 – EXPOSURE TO FINANCIAL RISKS DUE TO FINANCIAL INSTRUMENTS
Financial Instruments
Credit Risk
The company is subject to credit risk arising from trade receivables related to credit sales and deposits at
banks. These risks are managed by limiting the aggregate risk from any individual counterparty and obtaining
sufficient collateral where necessary and making only cash based sales to customer considered as having a
higher risk. Collect ability of trade receivables are evaluated by management depending on their past
experiences and current economic condition, and presented in the financial statements net of adequate
doubtfulprovision.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-70-
As of 30 September 2013 and 31 December 2012 credit risk of Company in terms of financial instruments is as
follows:
30 September 2013
Trade receivables Other receivables Bank
Related
party Other
Related
party Other Deposits Other
Maximum net credit risk as of balance
sheet date (A+B+C+D+E) (*) 8,169,083 85,069,311 5,994,397 8,153,793 728,296 297,560
The part of maximum risk under guarantee
with collateral - 24,607,526 - - - -
A. Net book value of financial assets that are
neither overdue nor impaired 8,169,083 77,325,767 5,994,397 8,153,793 728,296 297,560
B. Net book values of financial assets that
are renegotiated, if not that will be accepted
as overdue or impaired - - - - - -
C. Book value of financial assets that are
overdue but not impaired (**) - 1,286,236 - - - -
- The part under guarantee with collateral
etc - - - - - -
D. Net book value of impaired assets - 6,457,308 - - - -
- Overdue (gross book value amount) - 29,587,311 - - - -
- Impairment (-) - (23,130,003) - - - -
The part of net value under guarantee with
collateral etc - - - - - -
Non overdue (gross book value amount) - - - - - -
Impairment (-) - - - - - -
- The part of net value under guarantee
with collateral - - - - - -
E. Factors Including Off-Balance Sheet Risk - - - - - -
(*) This line represents the total of the rows A, B, C, D and E. Factors mitigating credit risk such as
guarantees received have not been taken into consideration.
(**) As of 30 September 2013 explanations related to the aging of overdue but not impaired receivables are
mentioned in Note 10.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-71-
31 December 2012
Trade receivables Other receivables Bank
Related
Party Other
Related
Party Other Deposits Other
Maximum net credit risk as of balance
sheet date (A+B+C+D+E) (*) 9,529,594 49,569,532 833,101 10,461,855 1,487,435 92,887
The part of maximum risk under guarantee
with collateral - 18,240,000 - - - -
A. Net book value of financial assets that are
neither overdue nor impaired 9,529,594 48,450,201 833,101 10,461,855 1,487,435 92,887
B. Net book values of financial assets that
are renegotiated, if not that will be accepted
as overdue or impaired - - - - - -
C. Book value of financial assets that are
overdue but not impaired (**) - 783,889 - - - -
- The part under guarantee with collateral
etc - - - - - -
D. Net book value of impaired assets - 335,442 - - - -
- Overdue (gross book value amount) - 23,315,091 - - - -
- Impairment (-) - (22,979,649) - - - -
The part of net value under guarantee with
collateral etc - - - - - -
Non overdue (gross book value amount) - - - - - -
Impairment (-) - - - - - -
- The part of net value under guarantee
with collateral - - - - - -
E. Factors Including Off-Balance Sheet Risk - - - - - -
(*) This line represents the total of the rows A, B, C, D and E. Factors mitigating credit risk such as
guarantees received have not been taken into consideration.
(**) As of 31 December 2012 explanations related to the aging of overdue but not impaired receivables are
mentioned in Note 10.
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-72-
Derivative Financial Instrument
Forward Exchange
The Group's activities, mainly due to changes in foreign exchange rates and interest rates, which is exposed to
financial risks. Group, which is used derivative financial instruments (primarily foreign currency forward
contracts) for the purposes of avoiding fair value risk.
Derivative financial instruments which is calculated with the fair value on the aggrement date, is calculated
again with the fair value on the financial statements date. When changes in fair value of derivative financial
instruments occur, they are accounted for income statement.
As of 30 September 2013, foreign currency purchase / sale agreement details are given below;
Foreign
exchange range
TRY equivalent as of
the balance sheet date of
foreign currency which
will be given to the bank
According to the
contract , TRY
equivalent for the
foreign currency
which will be
taken from the
bank
Fair Value
Difference
(TRY)
EUR Purchases - TL Sales
1- 4 months 2.7516 - 2.8160 17,860,552 18,008,102 147,550
As of 30 September 2013, foreign exchange income with the amount of TRY 147,550 which was consist of
the related future contruct is accounted in the consolidated income statements. (Note 28).
Interest Rate Risk
The value of a financial instrument will fluctuate as a result of changes in market prices whether those changes
are caused by factors specific to the individual security or its issuer or factors affecting all securities traded in the
market. The Group‘s interest rate risk is primarily attributable to its borrowings.
Although interest rates of financial borrowings with interest may change, financial assets with interest have fixed
interest rate and cash flows in future do not change with the extent of these assets. Risk exposure to changing
market interest rate of the Group, is mostly based on the borrowing liabilities with variable interest rate of the
Group. The policy of the Group is managing interest cost by using borrowings with fixed and variable interest.
Interest rate sensitivity
If the interest rates of variable interest-bearing USD and EUR denominated borrowings were 100 basis points
(1%) higher / lower with all other variables held constant, profit before tax for the year would have been
lower/higher by TRY 272,315 at 30 September 2013, due to higher / lower interest expense ( 01 January-31
December 2012 TRY 146,587).
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-73-
Liquidity risk
Fair liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities and the ability to close out market
positions. Due to the dynamic nature of the underlying business the Group aims at maintaining flexibility in
funding by keeping committed credit lines. The Group management manages liquidity risk by distributing the
funds and by keeping sufficient cash and cash equivalents resources to cover the current and possible
liabilities. As of 30 September 2013 and 31 December 2012 liquidity risk table of the Group is as following;
30 September 2013 Book value
Cash outflow
according to
agreement
(=I+II+III+IV)
Less than 3
months (I)
Between 3-
12 months
(II)
Between 1-
5 years
(III)
More
than 5
years
(IV)
Non-derivative financial liabilities
Financial liabilities 52,097,016 62,032,272 4,253,956 9,580,253 41,388,199 6,809,864
Trade payables
Third party 33,006,872 34,238,084 23,182,800 6,176,874 4,878,410 -
Other payables
Third party 2,143,719 2,143,719 1,091,352 1,052,367 - -
Provisions 734,729 729,882 - 729,882 - -
87,982,336 99,143,957 28,528,108 17,539,376 46,266,609 6,809,864
31 December 2012 Book value
Cash outflow
according to
agreement
(=I+II+III+IV)
Less than 3
months (I)
Between 3-
12 months
(II)
Between 1- 5
years (III)
More
than 5
years
(IV)
Non-derivative financial liabilities
Financial liabilities 28,223,166 29,578,072 5,521,790 15,416,078 8,640,204 -
Trade payables
Related party 161,643 161,643 - 161,643 - -
Third party 33,885,486 34,664,967 19,499,070 9,639,402 5,526,495
Other payables
Related party - - - - - -
Third party 135,622 135,622 135,622 - - -
Provisions and other liabilities 20,375,139 20,375,139 638,428 18,455,461 1,281,250 -
82,781,056 84,915,443 25,794,910 43,672,584 15,447,949 -
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-74-
Foreign Currency Risk
The effects occurring from exchange rate fluctuation, in case of having foreign currency assets, liabilities, off-
balance sheet liabilities, are foreign currency risk. Transactions in foreign currencies during the year have
been translated at the exchange rate prevailing at dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are translated at the exchange rates prevailing at the balance sheet dates.
Foreign exchange gains or losses arising from the settlement of such transactions and from the translation of
monetary assets and liabilities are recognized in the statement of profit/loss. Monetary liabilities of the
Company exceed monetary assets of the Group; in case of exchange rate rise, the Group is exposed to foreign
currency risk.
As of 30 September 2013 and 31 December 2012 exchange rates are as following;
30.09.2013 31.12.2012
USD 2.0342 1.7826
EUR 2.7484 2.3517
GBP 3.2665 2.8708
CHF 2.2370 1.9430
RUB 0.06238 0.05782
Foreign Currency Risk Sensitivity
As of 30 September 2013, if TRY evaluates / devaluates against foreign currency by 10% and all other variables
remains the same, profit before tax which occurs as a result of the foreign exchange loss / gain arising from net
foreign exchange exposure would have been TRY 2,369,979 more / less.
FX Sensitivity Analysis by Fx Type
As of 01.01. - 30.09.2013
Profit / (Loss)
Appreciation of foreign
currency
Appreciation of foreign
currency
against TRY against TRY
In case of appreciation / depreciation of USD against TRY by 10%
1-USD net asset / liability (401,631) 401,631
2- Hedged amount against USD risk (-) - -
3-USD net effect (1+2) (401,631) 401,631
In case of appreciation / depreciation of EUR against TRY by 10%
4- EUR net asset / liability (1,968,388) 1,968,388
5- Hedged amount against EUR risk (-) - -
6- EUR net effect (4+5) (1,968,388) 1,968,388
In case of appreciation / depreciation of GBP against TRY by 10%
7- GBP net asset / liability 30 (30)
8- Hedged amount against GBP risk (-) - -
9- GBP net effect (7+8) 30 (30)
In case of appreciation / depreciation of CHF against TRY by 10%
10- CHF net asset / liability 11 (11)
11- Hedged amount against CHF risk (-) - -
12- CHF net effect (10+11) 11 (11)
TOTAL (3+6+9+12) (2,369,979) 2,369,979
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-75-
As of 31 December 2012, if TRY evaluates / devaluates against foreign currency by 10% and all other variables
remains the same, profit before tax which occurs as a result of the foreign exchange loss / gain arising from net
foreign exchange exposure would have been TRY 4,204,767 more / less.
FX Sensitivity Analysis by Fx Type
As of 01.01. - 31.12.2012
Profit / (Loss)
Appreciation of foreign currency Appreciation of foreign currency
against TRY against TRY
In case of appreciation / depreciation of USD against TRY by 10%
1-USD net asset / liability (1,753,410) 1,753,410
2- Hedged amount against USD risk (-) - -
3-USD net effect (1+2) (1,753,410) 1,753,410
In case of appreciation / depreciation of EUR against TRY by 10%
4- EUR net asset / liability (2,451,386) (2,451,386)
5- Hedged amount against EUR risk (-) - -
6- EUR net effect (4+5) (2,451,386) 2,451,386
In case of appreciation / depreciation of GBP against TRY by 10%
7- GBP net asset / liability 26 (26)
8- Hedged amount against GBP risk (-) - -
9- GBP net effect (7+8) 26 (26)
In case of appreciation / depreciation of GHF against TRY by 10%
10- CHF net asset / liability 3 (3)
11- Hedged amount against CHF risk (-) - -
12- CHF net effect (10+11) 3 (3)
TOTAL (3+6+9+12) (4,204,767) 4,204,767
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-76-
As of 30 September 2013, amounts of assets and liabilities of the Group in foreign currency are as follows:
30 September 2013
TRY
equivalent
functional
currency
USD EUR GBP RUB
1. Trade Receivables 23,839,955 5,102,321 4,897,691 - -
2a. Monetary Financial Assets (including cash, banks) 27,566,314 4,754,848 6,510,550 91 1,749
2b. Non-monetary financial assets - - - - -
3. Other 924,103 70,618 283,966 - -
4. Current Assets (1+2+3) 52,330,372 9,927,787 11,692,207 91 1,749
5. Trade Receivables - - - - -
6a. Monetary financial assets - - - - -
6b. Non-monetary financial assets - - - - -
7. Other 1,754,018 - 638,196 - -
8. Non-Current Assets (5+6+7) 1,754,018 - 638,196 - -
9. Total Assets (4+8) 54,084,390 9,927,787 12,330,403 91 1,749
10. Trade Payables 20,461,243 8,312,815 1,292,139 - -
11. Financial Liabilities 9,809,604 1,685,984 2,321,342 - -
12a. Other monetary financial liabilities 1,907,916 937,887 24 - -
12b. Other non-monetary financial liabilities - - - - -
13. Current Liabilities (10+11+12) 32,178,763 10,936,686 3,613,505 - -
14. Trade Payables 4,878,410 - 1,775,000 - -
15. Financial Liabilities 40,727,006 965,496 14,103,840 - -
16a. Other monetary financial liabilities - - - - -
16b. Other non-monetary financial liabilities - - - - -
17. Non-Current Liabilities (14+15+16) 45,605,416 965,496 15,878,840 - -
18. Total Liabilities (13+17) 77,784,179 11,902,182 19,492,345 - -
19. Net asset / liability position of off- balance sheet
derivative instruments (19a-19b) - - - - -
19a. Hedged amount of assets - - - - -
19b. Hedged amount of liabilities position - - - - -
20. Net foreign currency position asset / liabilities (9-18+19) (23,699,789) (1,974,395) (7,161,942) 91 1,749
21. Net foreign currency asset / liability position of monetary
items (IFRS 7.B23) (=1+2a+5+6a-10-11-12a-14-15-16a) (23,699,789) (1,974,395) (7,161,942) 91 1,749
22. Fair value of derivative instruments used in foreign
currency hedge - - - - -
23. Exports 29,666,219 12,522,652 1,926,673 - -
24. Imports 43,987,992 21,167,752 1,653,350 - -
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-77-
As of 31 December 2012, amounts of assets and liabilities of the Group in foreign currency are as follows:
31 December 2012
TRY
equivalent
functional
currency
USD EUR GBP RUB
1. Trade Receivables 13,015,296 6,909,108 297,283 - -
2a. Monetary Financial Assets (including cash, banks) 775,714 270,013 125,058 91 15
2b. Non-monetary financial assets - - - - -
3. Other 833,827 467,759 - - -
4. Current Assets (1+2+3) 14,624,837 7,646,880 422,341 91 15
5. Trade Receivables 58,078 - 24,696 - -
6a. Monetary financial assets - - - - -
6b. Non-monetary financial assets 938,284 38,335 369,923 - -
7. Other - - - - -
8. Non-Current Assets (5+6+7) 996,362 38,335 394,619 - -
9. Total Assets (4+8) 15,621,199 7,685,215 816,960 91 15
10. Trade Payables 26,701,574 13,762,424 922,174 - -
11. Financial Liabilities 15,575,706 2,833,334 4,475,488 - -
12a. Other monetary financial liabilities - - - - -
12b. Other non-monetary financial liabilities 1,670,963 925,708 8,843 - -
13. Current Liabilities (10+11+12) 43,948,243 17,521,466 5,406,505 - -
14. Trade Payables 5,526,495 - 2,350,000 - -
15. Financial Liabilities 8,194,127 - 3,484,342 - -
16a. Other monetary financial liabilities - - - - -
16b. Other non-monetary financial liabilities - - - - -
17. Non-Current Liabilities (14+15+16) 13,720,622 - 5,834,342 - -
18. Total Liabilities (13+17) 57,668,865 17,521,466 11,240,847 - -
19. Net asset / liability position of off- balance sheet
derivative instruments (19a-19b) - - - - -
19a. Hedged amount of assets - - - - -
19b. Hedged amount of liabilities position - - - - -
20. Net foreign currency position asset / liabilities (9-18+19) (42,047,666) (9,836,251) (10,423,887) 91 15
21. Net foreign currency asset / liability position of monetary
items (IFRS 7.B23) (=1+2a+5+6a-10-11-12a-14-15-16a) (42,148,814) (9,416,637) (10,784,967) 91 15
22. Fair value of derivative instruments used in foreign
currency hedge - - - - -
23. Exports 39,413,684 21,988,142 - - -
24. Imports 47,996,576 26,776,374 - - -
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-78-
Capital Risk Management
In capital management, the Group‘s aims at enhancing profitability while keeping a reasonable leverage, on
the other hand rendering sustainability in its operations.
The Group follows capital by using debt to equity ratio. This rate is found by dividing net debt to total equity.
Net debt is calculated by deducting cash and cash equivalents from total payable amount (as shown in balance
sheet, trade and other payables and loans). Total capital, as shown in balance sheet, is calculated by adding up
equity and net debt.
As of 30 September 2013, 31 December 2012 net debt / total equity ratio is as follows;
30.09.2013 31.12.2012
Total debts 112,645,775 93,566,573
Less: Liquid assets 1,072,170 1,662,350
Net debt 111,573,605 91,904,223
Total equity 187,651,446 136,752,589
Total capital 299,225,051 228,656,812
Net Debt/Total Equity ratio 37% 40%
ROYAL HALI İPLİK TEKSTİL MOBİLYA SANAYİ VE TİCARET ANONİM ŞİRKETİ
AND ITS SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED AT 30 SEPTEMBER 2013 (Currency - Turkish Lira ‗TRY‘ unless expressed otherwise.)
-79-
NOTE 33 – FINANCIAL INSTRUMENTS (FAIR VALUE DISCLOSURES AND HEDGE
ACCOUNTING DISCLOSURES)
Fair value is the amount at which a financial instrument could be exchanged in a current transaction between
willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if
one exists. The estimated fair values of financial instruments have been determined by the Group using
available markets information in Turkey 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 Group could realize in a current market exchange.
The following methods and assumptions are utilized for the current values of financial instruments which are
predictable in practice:
Financial Assets
Monetary assets for which fair value approximates carrying value:
-Balances denominated in foreign currencies are converted at period exchange rates.
-The fair value of certain financial assets carried at cost, including cash and cash equivalents are considered
to approximate their respective carrying amounts in the financial statements.
-The carrying value of trade receivables, net of allowances for possible non-recovery of uncollectible are
considered to approximate their fair values.
Financial Liabilities
Monetary liabilities for which fair value approximates carrying value:
-The fair value of short-term bank loans and other monetary liabilities are considered to approximate their
respective carrying values due to their short-term nature.
-The fair values of long-term bank borrowings, which are denominated in foreign currencies and converted at
period exchange rates, are considered to approximate their carrying values.
-The carrying amount of accounts payable and accrued expenses reported in the financial statements for
estimated third party payer settlements approximates its fair values.
NOTE 34 – POST BALANCE SHEET EVENTS
None.
NOTE 35 – OTHER ISSUES AFFECTING THE CONSOLIDATED FINANCIAL STATEMENTS
SIGNIFICANTLY OR REQUIRED TO BE DISCLOSED FOR CLEAR, UNDERSTANDABLE AND
INTERPRETABLE PRESENTATION
None (31 December 2012 - None).