Dear Shareholders, Welcome to our General Assembly Meeting

Transkript

M. Reha KORA - Chairman of the board of Directors
Dear Shareholders,
Welcome to our General Assembly Meeting where our operations of the year 2006 will be discussed.
As you will see in detail when you examine the Alkim Alkali Kimya A.S annual report that within the 1st January-31st
December 2006 (with approximate quantities) 220.090 tons of Refined Sodium Sulphate, 29.394 tons of Light Type of
Sodium Sulphate and 109.661 tons of Raw Salt production and sales have been achieved.
While our operations run continuously at Afyon Dazk›r›, our company decided to take over the first and oldest sodium
sulphate plant at Konya Cihanbeyli and renovated the buildings, machinery and all technical aspects in a very short time
period. This modernized premise which is active as of January 2007 is now producing 80.000 tons of high quality Sodium
Sulphate annually. This plant is completely computerized and integrated facility which creates its own energy. Daily production
capacity is around 240 tons. Thus, our high quality refined sodium sulphate production capacity: in our Ac›göl Koralkim
plant is daily 700 ton, in our Cihanbeyli Bolluk plant is daily 240 ton, therefore in total our daily production capacity is 940
Tons/day.
After the completion of the new investment of 80.00 tons, our company reached a yearly production capacity of 320.000
tons of refined Sodium Sulphate, 30.000 tons of light type Sodium Sulphate. Therefore our company has strengthened its
position within the World's biggest Sodium Sulphate producers.
Alkim is a privileged company with 50 years of experience and knowledge on lake and mining operations. Alkim has a
superior status in Turkey as well as the other countries in the world as an old and reliable chemical production company. I
would like to also mention to our shareholders that we are aware that the success of the company relies on the team work
of Alkim employees. Our company's “real value” is its successful, ambitious and loyal Alkim staff.
I am greeting you with all my regards and thank you for your participation in our meeting.
M. Reha KORA
Chairman of the board of Directors
ALK‹M ALKAL‹ K‹MYA A.fi.
HEAD OFFICE
Adress : ‹nönü Caddesi No: 13
Taksim - ‹STANBUL
Tel
: (0212) 292 22 66
Fax
: (0212) 252 76 60
e-mail : [email protected]
Web Site : www.alkim.com
I - INTRODUCTION
1-1
ANNUAL REPORT PERIOD : 01.01.2006 - 31.12.2006
1-2
CORPORATE TITLE
1-3
BOARD OF DIRECTORS
: ALKIM ALKALI CHEMICAL COMPANY
a ) Please find below the names, surnames and titles of the members of the Board of Directors and
the Board of Auditors appointed in compliance with articles 9 and 13 of the Contract of Incorporation:
Name & Surname
Position
Occupation
Term
M. Reha KORA
A. Haluk KORA
Ferit KORA
Hüseyin A. KORA
Mithat KORA
Özay KORA
Tülay ÖNEL
Hüseyin ÜNER
Nihat ERKAN
Yüksel KADIO⁄LU
Chairman
Vice Chairman
Vice Chairman
Member
Member
Member
Member
Member
Member - General Director
Auditor
M.Sc. Mechanical Engineer
M.Sc. Mechanical Engineer
Economist
Physics Engineer
Attorney
Economist
Public Relations
Retired Financial Expert
Political Sciences
Financial Advisor on Oath
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2008
30.03.2006 - 30.03.2007
b ) Limits of Authority
As stipulated in the Turkish Commercial Code and the Contract of Incorporation.
1 - 4 - AMENDMENTS OF THE CONTRACT OF INCORPORATION
There are no amendments.
1 - 5 - CAPITAL AND SHAREHOLDING STRUCTURE
a) The Company's totally paid capital is YTL 24.725.000.
b) Number of Shareholders:
* Our Company went public at the end of February 2000, and had its shares subjected to operations
in the Istanbul Stock Exchange. After the Company went public, 66.357 individual participants, 362
Alkim employees, 74 domestic corporate investors and 8 foreign corporate investors joined ranks
with the 11 previous shareholders of our Company.
c) The daily prices of our shares can be tracked by means of the ALKIM code on the ISE bulletins.
d) During the last 3 years, the dividends were distributed as follows:
* Out of the net distributable profit of YTL 8.005.877 for the year 2003, YTL 1.721.556 was distributed
as first dividend while YTL 6.284.321 was distributed as second dividend.
as first dividend while YTL 4.889.469 was distributed as second dividend and YTL 3.031.112 was
distributed from the extraordinary stocks.
as first dividend while YTL 4.244.319 was distributed as second dividend and YTL 2.853.116 was
distributed from the extraordinary stocks.
f) Our shareholders holding more than 10% of the capital are as follows;
Cihat KORA
YTL 3.677.843,75
14,88 %
M.Reha KORA
YTL 2.905.187,50
11,75 %
Hüseyin A. KORA
YTL 6.611.111,79
26,74 %
1
1 - 6 - INFORMATION ABOUT ISSUED SECURITIES
Our Company has not issued any securities.
1 - 7 - SECTOR WITHIN WHICH THE PARTNERSHIP IS OPERATIONAL AND THE CORPORATE'S POSITION
WITHIN THIS SECTOR
Our Company's main field of activity is the production of sodium sulphate, and also Sodium Chloride in
lakes and underground mines for which we hold long-term concession rights within the framework of
the Mining Codes and Laws.
SODIUM SULPHATE PRODUCTION
•
Our company operates Sodium Sulphate plants in Konya Cihanbeyli, Afyon Dazk›r› and Ankara Çay›rhan. The
mines have extremely large reserves. These are long-term mine management franchises covering very large
surface areas.
Today, Alkim ranks 6th among the top sodium sulphate manufacturers throughout the world and is also a
member of the European Chemical Industry Council ( CEFIC ) and Sodium Sulphate Producers Association ( SSPA).
Sodium Sulphate is one of the basic raw materials, which is used in detergent, pulp & paper, textile and chemical
industries and in powder detergents ( except the liquid ones ) its usage percentage are between 16 % - 40 %
and in glass industry it is constituting 3 % of glass melt. Sodium Sulphate is used In paper industry,
in cellulose production, in textile dyeing, and in productions of various chemicals as well.
•
Our production in Konya Cihanbeyli and Denizli Dazk›r› is composed of pumping the lake water into several
concentration ponds at where the water evaporates and the concentration increases. At a certain temperature
and concentration salt starts to precipitate; after when the salt is harvested and sent to the sodium sulfate plant.
On the other hand, some reserve research studies have been done and a trial production of sodium sulphate
in Çay›rhan was applied by means of underground gallery-type mining methods. In the year 2005, a new method
of the underground solution mining research works have been started together with Polish Chemkop firm in
order to find much more efficient process to use in this area and continued in 2006.
•
Our Company owns production ponds with a total capacity of 18-kilometer squares, numerous heavy work
machines and excavations machines of all kinds in mine managements as well as general and special service type
machinery such as nearly 120 trucks, loaders, dozers, excavators, heavy tractors, marsh-type excavators etc. Apart
from these, numerous and very precious mining equipment, devices and tools, facilities, warehouses, silos, various
service workshops, administrative buildings, dormitories provided for employees etc. in lake operations and
underground mines are also the property of the Company.
•
Alkim's total finished Refined Sodium Sulphate production capacity amounts to 240.000 tons / year, and in 2007
it will be 320.000 tons.
Alkim's total Crystal Sodium Sulphate production capacity amounts to 900.000 tons / year.
Alkim's total Light Type Sodium Sulphate production capacity amounts to 25.000 tons/year.
Sodium Chloride is obtained from the lakes as 2nd mineral. 2.8 million m2 of sodium chloride production ponds
have been constructed in 2005 at Dazk›r› - Ac›göl under the given authority by General Management of Mining
Operations enabling a production of 150.000 tons / year. As the ponds are constructed in 2006, first production
is harvested to be in November 2006.
After being awarded with the ISO - 9002 Quality Assurance Certificate in 1996, our plants converted to the TS
- EN - ISO 9001 : 2000 Quality Management System comprising the highest standard in quality system in 2003.
In Turkey, Turkish glass factories (Türkiye fiifle ve Cam Fabrikalar›) as well as the entire detergent factories are
regular customers of Alkim. On the international scene, the glass, paper and detergent factories in Romania,
Bulgaria, Greece, Syria, Lebanon, Egypt, Saudi Arabia, Algeria, Tunisia and Israel are direct regular customers.
In addition, spot sales are also realized several times a year to countries such as Southern Africa, Ivory Coast.
In order to offer its customers the best quality possible, Alkim has always researched in and applied the most
efficient and productive methods. As of today, the Ac›göl Sodium Sulphate Plant by the “Ac›göl” Alkali Lake in
Southeast, Turkey which is equipped with the Recompression Evaporation Technology and DCS Automation
System and which is also Alkim's largest and most advanced plant has an annual capacity of 240.000 tons.
•
•
•
•
•
•
As a mining and chemistry company, Alkim has been exporting its products since 1960's, and based nearly 25%
of its turnover on exportation during the last few years in particular.
Our sodium sulphate production plants are operational on full capacity and have their products completely sold
out in domestic and foreign markets. The entire domestic and international sales are conducted by Alkim itself
and there exists no separate sales - marketing affiliate.
2
SALT PRODUCTION
-
With the abrogation of Code no. 4683 overruling the Salt Code, our company filed the necessary applications
and obtained the required salt production permits for the mining fields. Following the acquisition of the Salt
production permits, the Salt Investment efforts and the construction of the planned salt production plants,
which were started in 2002. The constructions were finished in 2004 at our Konya-Cihanbeyli plants and in
2005-2006 at Afyon-Ac›göl plants.
-
In 2006, after this investment, our pre-concentration ponds reached a size of 1.3 million square meters and
our total production pond reached a size of 2.8 million square meters. Therefore our capacity is approximately
150.000 tons/ year. Also in 2006, refined salt production investment has begun. Starting form May, 2007
in Afyon-Ac›göl, 50.000 tons/year of refined salt is planned to be produced.
-
We obtain around 40.000 tons of raw salt at our Konya-Cihanbeyli plants which has 750.000 square meters
of salt production ponds.
-
This year, our raw salt sales are 57.200 tons in Afyon-Ac›göl and 52.500 tons in Konya-Cihanbeyli
PAPER INDUSTRY
-
By considering that Turkey is a developing country where paper production is increasing and production in
the printing-writing paper sector is insufficient, and that the sector's exportation rates increased in the last
few years, Alkim decided to invest in the paper sector in 1995. At the end of the rapidly realized investment,
ALKIM PAPER which is Turkey's largest white - glossy paper production plant was built in the ‹zmir Kemalpafla
Organized Industrial Estate on a surface area of 50.000 square meters and was commissioned in March 1998.
The paper plant that was made into a separate company - entity as ALKIM PAPER Co. on 30.06.1999, is a
79.9% participation of Alkim Alkali Chemical Co. In 2000, ALKIM PAPER Co. increased its capital from YTL
11.200.000 to YTL 14.000.000, offered the amount of increase of 20% to public, and started to have its
shares operated on in the Istanbul Stock Exchange on November 2, 2000.
With the capital increase realized on 19.10.2004, YTL 41.962.500 out of the increased capital of YTL
52.500.000 is belonging to Alkim Alkali Chemical Co.
INSURANCE SERVICES
The plants, production and stocking areas, administrative buildings, premises, stable and movable qualified
heavy machinery, furniture and fixtures, raw - semi finished and finished product inventories, transportation
and motor vehicles, domestic and international freight and other operations of Alkim Alkali Chemical Co.
and ALKIM PAPER Co. constitute a large insurance portfolio. The Board of Directors adopted a decision on
September 24, 2002 to establish an insurance company to conduct Corporate Agencyship procedures for
the company's own insurance operations. As of November 4, 2002, “ALKIM Insurance Agency Inc “ owned
equally by Alkim Alkali Chemical Co. and ALKIM PAPER CO. and based in Istanbul was commissioned with
an initial capital of YTL 20.000.
3
2 - OPERATIONS
2 - A - INVESTMENTS
2 - A - 1 - DEVELOPMENTS IN INVESTMENTS
Our plants are the first Refined Sodium Sulphate plants worldwide to be awarded with the ISO
9001:2000 Quality Management System Certificate.
Alkim Alkali Chemical Co. ranks 6th among the top sodium sulphate producers throughout the
world.
Very high quality anhydrous sodium sulphate is being produced in our Refined Sodium Sulphate
plants. Although the company used to export 40% of the produced anhydrous sodium sulphate
and to make use of the remaining 60% to fulfill the domestic demand in previous years, the
share of domestic sales increased and the share of exportation by weight of sodium sulphate was
reduced to 25% in 2006 in order to fulfill the domestic sodium sulphate demand increasing as
a result of the rising detergent production rate.
Alkim Alkali Chemical Co. fulfills the demand for refined sodium sulphate of various specters and
qualities of both the domestic and international Glass Industry, Paper Industry, Textile Industry
and, in particular, the detergent sector. The sodium sulphate demands of various sectors could
vary in specter and property on the basis of the intended use and conditions of use. Investments
anticipated to ensure that continuous sodium sulphate of the desired quality is produced were
made in 2006.
I. Dazk›r› - Ac›gol Operations
1. Open area operations
Raw Salt Production Ponds and Roads through the Ponds
In 2005, a 2,700 meter long road has been built in the 4th raw salt production pond. These
roads which are made of stony, stabilized material are necessary for trucks and heavy operational
machines to enter the ponds.
The construction of a 2,600 meter long road which is necessary for the 3rd raw salt production
pond is expected to be finished in summer 2007.
2 nd main pumping station
Pumping of the brine from the lake to the concentration ponds, transferring solution from one
pond to another and finally transferring the Sodium Chloride rich solution above the “precipitated
Glauber Salt” to salt ponds is one of main lake operations that is why pumping stations are of
vital importance. Our SEC-600 type propeller pumps are locally manufactured, working with high
efficiency and easily maintained systems. This year the whole system has worked properly.
Crystal Purification - Flotation and Ore Enrichment Facility
Flotation Unit works to purify the Glauber Salt from insoluble and also to reduce the magnesium
and sodium chloride remaining by centrifuge washing.
In 2006, the capacity of the unit was increased up to 2300 tons/day
5
2. Koralkim Sodium Sulphate Plants
1 K (crystallization 1)
Some technical improvements have been made to work on slurry system.
2K (crystallization 2)
The triple effect evaporation was modified to a four effect unit by adding an Oslo type evaporator
in year 2002. In 2006, with a further modification (also in order to make use of the positive energy
balance resulting Oslo operation) a fifth evaporator has been built. This last evaporator is made
from chloride resistant special stainless steel and also new thickener and centrifuge has been added
to the system. With this new design, 3 evaporators can work together and the last 2 evaporators
can work together. Or, all 5 can act as a whole fivefold system. This gives the total elasticity for
the capacity of the 2K unit. We are planning to work with 1st 3 effect for sodium sulphate while
last 2 effects will produce refined table salt.
6
Cihanbeyli-Bolluk Plant
7
II. Cihanbeyli - Bolluk and Tersakan Operations
1. Bolluk Sodium Sulphate Plant
It has been a necessity to revise the Bolluk Sodium Sulphate Plant not only because of the high production costs
but also the lower quality than the refined sodium sulfate. As planned, this plant is using evaporation technology
and reaches to 99.8 % sodium sulphate purity. The manufacturing of the equipments and parts that are needed
to build a 4 multi-effect evaporation system and the construction of the process building has been completed.
With our own engineering group and their developed design, we have modernized the plant to a 4 multi-effect
Evaporation Process. All the project details and the technical plans about the energy efficient thermo compression
and vacuum adjusting system have been established by Alkim and no other project or technical outsource has been
used. Except the vacuum ejectors and the thermo compressors, all the machines and equipment are manufactured
in Turkey
It has been decided to construct the same cogeneration system that is in use in Koralkim Sodium Sulphate plant
that enables to produce cheap electricity and steam in order to supply the needs of the 4 multi effect evaporation
system. In this respect, it has been built a fluidized bed boiler ( burning lignite coal ), a water demineralization unit,
a steam turbine, and electricity systems.
Lignite is supplied from the convenient Ilg›n Coal Mines. It is planned to produce 1-1.2 MWh of electricity by passing
the steam ( 30 Bar, 380 °C, 15 Tons / Hour ) that is be created by the fluidized bed boiler. The exhaust steam of
the steam turbine ( 3 Bar, 200 °C ) is used as the evaporation steam.
As lignite is burned in the fluidized bed boiler, taking the environment into consideration, electrostatic filter is
installed.
All the steps of the process and the steam production are controlled by computer equipped automation system.
Maximum capacity of the plant is around 80.000 Tons / Year and the plant is operating between 60.000 and 90.000
Tons / Year depending on the market demand.
There has been a construction of a 2.400 m2 storage building between the Cihanbeyli and the depot area to store
the daily refined sodium sulfate surplus under protective environment. In addition to the storage depot the old truck
scale is renewed and an electronic, 60 ton scale is installed. Furthermore, the other truck scales in Bolluk plant and
in Tersakan Lake settlements are renewed. In all product depots, 3 new (2006 model) forklift has been bought in
order to carry packaged products.
Rehabilitation of the A, B and C ponds in lake Bolluk has been started to supply the crystal sodium sulfate needs
of the new sodium sulfate plant. It has been started to repair the roads, clean the ponds and enforce the pond walls.
In order to pump brine from Bolluk Lake to those three ponds, 2 SEC - 600 centrifuge pump with the capacity of
3600 m3 / hour is installed.
For all the heavy work around the lakes, during and after production, Alkim has bought 3 (2006 model) Hitachi 2X250 excavator and 3 Kawasaki-70-Z-V loader.
In Bolluk Sodium Sulphate plant, all other buildings such as social service areas, workshops etc have been renovated.
Gardening and other area developments are still in progress around the plant.
2. Cihanbeyli Alkim Central Storage Facilities
Our company owns a 15.000 square meter land on the side of the Ankara-Konya highway. On this land we have
a 3.000 square meter stock room (storage) with high ceilings.
8
R & D at Cay›rhan
III. Ankara Cay›rhan Operations
Solution Mining Process
It has been not as productive as lake operations to produce sodium sulphate from the Europe's biggest underground
Thenardite embedded Glauberite mine located in Ankara - Çay›rhan using underground gallery mining methods.
In order to bring economical benefits from these reserves, technological techniques, like solution mining, had to
be applied. It is known that water dissolves the natural sodium sulfate minerals and depending on contact time,
temperature and the contact area, brines with different concentrations can be obtained. Çay›rhan mining site will
be drilled and the boreholes will be piped. Furthermore, by applying pressurized water and air, the Glauberite will
be dissolved and the concentrated brine will be taken from the top of the boreholes. It is planned
to get economical benefits without polluting the environment with using this technique.
There is no other country that dissolves underground sodium sulphate mines using this method. Therefore, by
applying this project Alkim Alkali Co. will be the first in the world.
If this project comes to life then it would mean that Alkim Alkali Co. brought a new understanding to mining in
Turkey. In this important project we have a partnership and share all the information with The Scientific & Technological
Research Council of Turkey, TUB‹TAK.
9
2 - A - 2 UTILIZATION AND REALIZATION OF INCENTIVE MEASURES
The total amount of the investments realized within the year 2006 is 11.736.838 YTL.
2 - B - ACTIVITIES CONCERNING THE PRODUCTION OF GOODS AND SERVICES:
1 - QUALITIES OF THE PRODUCTION UNIT
a ) Explanations Concerning the Production Unit
Afyon - Dazk›r› Koralkim Plant
In this plant operating on the graded evaporation process principle, the Glauber's salt which is caused to settle by means
of the cold in winter months in the ponds within the lake is processed and 99,5% pure refined anhydrous sodium
sulphate is produced. Our plant in Dazk›r› - Koralkim features 2 units, namely K1 (crystallization unit no.1) and K2 (
crystallization unit no. 2 ). The only raw material input of this plant is the Glauber's salt obtained from the nearby
Ac›göl ( 2 km away ). The plant is equipped with the energy power plant capable of producing steam and electricity
energy as well as all kinds of technical, administrative and social substructure facilities, side units and auxiliary system
required in such a chemistry plant.
The high pressure steam generated by the plant's energy power plant is passed through the turbine to fulfill the
entire steam and electricity requirement of the plant. Our electricity generation amounts to 3.5 MWh.
As the K2 unit is capable of producing products with particle sizes ranging from 250 to 750 microns thanks to its special
technology, our ability to produce granular sodium sulphate, demanded by some international detergent manufacturers,
has gained us big advantages.
Sodium Sulphate is sold in 1 - 1,5 tons Big Bags or 50 kg sacks or as bulk depending upon the customer's demand.
All systems of Alkim are entirely computer-controlled.
The daily average production capacity of Koralkim Sodium Sulphate production plant amounts to 700 tons.
During the 01.01.2006 - 31.12.2006 period;
The number of net working days in the K1 unit ( excluding idle periods ) is
The number of net working days in the K2 unit ( excluding idle periods ) is
In those units, the total amount of production is
342
341,6
days
days
220.010
tons
630.381
2.747
380
46.544
tons
tons
tons
tons
23.035.190
19.154.460
3.880.730
kwh
kwh
kwh
While realizing this production ;
Crystal consumption
Dust coal consumption ( old boiler )
Fuel-oil consumption ( FM boiler )
Dust coal consumption ( AFBB boiler )
Electricity consumption in the entire facility
Amount generated by the Turbine
Amount purchased from TEDAfi
Cihanbeyli Premises
With the experience and knowledge of Alkim, the completely renovated Bolluk Plant has been active as of 2007
at the shores of the Tersakan and Bolluk Lakes. At this new plant, a high quality %99.5 pure Sodium Sulphate
is being produced.
In compliance with the provisions of the “Regulations on the Application of Code no. 4683 About the Amendment
of the Mining Code and the Overruling of the Salt Code”, our company is permitted to produce salt ( NaCl ) in
its mining fields. After obtaining the Operating Permit, our company continued its salt production operations
and attained the planned production levels.
10
b) Production Operations
CIHANBEYLI PREMISES
Sodium Sulphate Production Operations:
Tersakan - Bolluk Operation:
Ordinary pond operation activities are being performed in twelve production ponds with a total surface area
of 6.167.000 square meters.
Production:
Sodium Sulphate ( Na2SO4 )
Light Type Sodium Sulphate
26.688
Tons
Tuvenan Sodium Sulphate
21.347
Tons
Crystal Sodium Sulphate
26.589
Tons
Salt Production Activities:
In 2006, 23.475 tons of raw salt are produced in the Tersakan plant.
ACIGÖL Premises
In terms of Na2SO4 production and capacity, quality, sales and exportation in particular, Ac›göl Premises represent
our Company's most important investment.
The Ac›göl Operations
In our Ac›göl operation, Sodium Sulphate production ponds cover a total surface area of 5.880.000 m2 whereas
the pre-evaporation ponds cover a total surface area of 7.600.000 m2. The total surface area of the salt production
ponds amount to 2.800.000 m2 , and the total surface area of the salt pre-evaporation fields amount to
approximately 1.325.000 m2.
In 2006, 635.566 tons of Crystal Sodium Sulphate ( Na2SO410H2O ) are produced in Ac›göl.
In 2006, 84.461 tons of raw salt are produced in Ac›göl salt ponds.
KORALKIM PREMISES
The Koralkim Premises, featuring the most advanced technology worldwide in Premium Grade Refined Sodium
Sulphate production, continued its normal operations in 2005.
Production:
Granular Sodium Sulphate
Standard Sodium Sulphate
Total
29.209
190.881
220.090
tons
tons
tons
In 2006, the total Refined Sodium Sulphate sales of our Koralkim Sodium Sulphate plant amounted to 223.690
tons including 29.204 tons sold to abroad.
c) Overall Operating Rates of our Company
Sodium Sulphate
The Company's Sodium Sulphate production capacity amounts to 275.000 tons comprising of 230.000 tons of
refined ( including Granular ) and 45.000 tons of light type products.
(Tons)
Capacity
Production
Operating Rate
11
2004
275.000
244.310
89%
2005
275.000
244.388
89%
2006
275.000
249.484
91%
Tersakan Lake (Cihanbeyli-Konya)
Bolluk Lake (Cihanbeyli-Konya)
12
13
Alkim Paper Co. Premises in ‹ZM‹R - Kemalpasa
Alkim Paper Company
Alkim Paper company was established in 1998 and commissioned as a subsidiary of Alkim Alkali Chemical Co.
was included as capital in kind in ALKIM PAPER CO. founded on 30.06.1999.
ALKIM PAPER CO. was made into a separate entity as a 99.9% participation of Alkim Alkali Chemical Co.,
offered 20% of its shares to public on November 2, 2000, and started to have its shares operated on in the
Istanbul Stock Exchange.
With a capacity of 55.000 Tons/year of the First Quality Writing, Printing and Glossy Paper production Plant
reached the biggest paper manufacturers of Europe in 6 years time.
Our cogeneration investment which was initiated in 2000, has been completed with the successful commissioning
of the 5 MW Gas Turbine. In addition to the new type paste case, product wrapper and steam box systems,
our third size cutting machine, our new large capacity and fully automatic photocopy line, new pulpers were
purchased, the ready-made units building was extended in order to fulfill the increasing demand and the
neighboring land was acquired. Today, all these investments brought our paper plant to its high capacity of
90.000 tons/ year.
Nevertheless, from the beginning specially after the second half of 2004 and 2005, the paper market in Europe
has gone down due to high prices in cellulose and end product paper's market price. Some paper mills in
Europe decided to close down.
Alkim Paper also felt these disadvantegous circumstances, however our new general manager Mr. Halil Sonmez
who started to work at Alkim Paper on april 2006, took over the mangement with his high quality experience
and knowledge.This years paper sales are 57.000 tons with a 74 million YTL indorsements.
14
ALKIM Insurance Agency Inc.
(01.01.2006 - 31.12.2006)
Activity Report
ALKIM Insurance Agency Inc. was established on 04.11.2002 with a capital of YTL 20.000 subscribed equally by
Alkim Alkali Chemical Co. and ALKIM Paper CO. and Mr. Nihat ERKAN was appointed as the Company Director
to deal with the company's operations by the General Assembly. As of December 2002, the company became
the authorized agency of Anadolu Sigorta and Koc Allianz Insurance CO.
The company started to issue policies for damages to the existing buildings, machinery, fire, goods, transportation,
motor vehicle, traffic - automobile insurance as well as to renew group individual accident and health insurances
and to cause the general directorate and regional directorates of insurance companies to produce policies.
The portfolio information of ALKIM Insurance Agency Inc. could be summed up as follows; The company acts
as a “large corporate agency” in the insurance sector with a portfolio worth YTL 121,5 million.
Distribution of Portfolio,
ALKIM CHEMICAL CO.
ALKIM PAPER CO.
OTHER COMPANIES AND CLIENTS
TOTAL
15
YTL 28,5 Million
YTL 73,2 M‹llion
YTL 19,8 Million
YTL 121,5 Million
2-B-2
ACTIVITIES CONCERNING THE PRODUCTION OF GOODS AND SERVICES
a) Developments in Sodium Sulphate Production
All around the world, mainly in the Middle East, the life standards begun to get better, and the usage
of the washing machines become much more common in the area. Consequently, as the raw material,
sodium sulphate usage is getting higher and higher because of the increase in detergent usage. The
sodium sulphate percentage of the powder detergents has been increased by the detergent producers
in order to decrease the production costs of the detergents. Usage ratio of the sodium sulphate has
increased from 15 - 20 % to 45 - 50 % levels, and this reason caused an increase in the consumption
of sodium sulphate. Besides, in order to cover the rising demand, and to keep the market in our hand
and to reach the new markets, we have reached large capacities in anhydrous sodium sulphate and in
refined sodium sulphate.
b) Comparative Table Concerning Production Activities
The Sodium Sulphate and salt production rates as compared to the previous period are as follows:
c)
Dazk›r›
Crystal
Refined Sodium Sulphate
Light Type
Raw salt
Tuvenan
Amount (Tons)
2005
661.276
226.005
468
52.379
3.385
2006
635.566
220.090
2.694
84.461
-------
Cihanbeyli
Tuvenan
Light type
Raw salt
Amount (Tons)
2005
27.416
17.914
54.396
2006
21.347
26.688
23.475
Average Sales Prices of Sodium Sulphate and Salt in Years
Depending upon a supply - demand balance in a narrow channel, sodium sulphate prices are subjected to limited
fluctuation in years.
The salt prices are determined according to the market conditions.
2 - B - 3 - SALES ACTIVITIES
a) Our sodium sulphate sales activities as compared to the previous period are as follows:
Dazk›r›
Total Refined and Granular
Light Type
Raw salt
Cihanbeyli
Light type
Raw salt
2005
Tons
226.787
468
26.548
2006
Tons
223.690
2.694
57.213
2005
Tons
17.914
23.956
2006
Tons
26.700
52.448
T. fiifle Cam and all detergent factories have their sodium sulphate demands fulfilled by ALKIM and our
sales are made through annual connections. Contractual sales comprise 90% of domestic sales while
detergent is the leader among sectors. In the textile sector where the demand tends to swiftly increase;
our sales are made through dealers throughout Turkey.
Our sales are made against the presentation of goods or documentation or by opening a letter of credit
in advance. Detergent manufacturers comprise the majority of our foreign customers. Moreover, we
also sell our products to the paper, glass and textile production sectors. Although our international
sales are generally made directly to the customers themselves, agencies are utilized for sales to some
countries such as Greece, Israel, Syria, Lebanon and Egypt, depending upon the condition of the
particular country and customer.
16
Alkim - Ac›göl Integrated Sodium Sulphate Plant
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER
(Amounts expressed in New Turkish lira (YTL) unless otherwise indicated)
Notes
2006
2005
58.712.245
59.077.826
4
5
7
8
9
10
11
12
6.973.394
384.836
24.108.996
371.881
2.957.218
23.260.394
10.021.317
248.180
18.842.461
1.378.590
2.265.968
25.478.857
13
14
15
655.526
842.453
103.740.799
98.920.690
23.247
14.313
102.180.851
789.688
732.393
307
22.493
14.313
97.068.044
964.155
851.443
242
162.453.044
157.998.516
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Marketable securities- net
Trade receivables- net
Leasing receivables- net
Due from related parties- net
Other receivables- net
Biological assets- net
Inventories- net
Receivables from construction
contracts in progress- net
Deferred tax assets
Other current assets
NON-CURRENT ASSETS
Trade receivables- net
Leasing receivables- net
Due from related parties- net
Other receivables- net
Financial assets- net
Positive/ negative goodwill- net
Investment property- net
Property, plant and equipment- net
Intangible assets- net
Deferred tax assets
Other non-current assets
TOTAL ASSETS
7
8
9
10
16
17
18
19
20
14
15
The consolidated financial statements prepared as at and for the year ended 31 December 2006 and have been
approved and signed by the Board of Directors on 9 March 2007.
*The accompanying notes form an integral part of these consolidated financial statements.
19
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER
Notes
2006
2005
CURRENT LIABILITIES
Financial liabilities - net
Short-term portion of long-term financial liabilities - net
Lease liabilities - net
Other financial liabilities- net
Trade payables- net
Due to related parties- net
Advances received
Construction progress billings- net
Provisions
Deferred tax liabilities
Other liabilities- net
6
6
8
10
7
9
21
13
23
14
15
27.204.347
2.138.552
13.527.226
225.020
8.782.771
392.665
227.046
928.374
982.693
25.345.408
3.048.997
8.831.809
908.737
10.179.702
545.778
185.843
672.791
971.751
NON-CURRENT LIABILITIES
Financial liabilities - net
Lease obligations- net
Other financial liabilities- net
Trade payables- net
Due to related parties- net
Advances received
Provisions
Other liabilities- net
6
8
10
7
9
21
23
14
15
10.058.217
6.198.048
681.718
664.064
2.514.876
-
8.399.301
5.312.691
643.363
2.323.859
119.388
-
MINORITY INTEREST
24
16.626.613
17.053.406
108.563.378
24.725.000
38.594.844
38.594.844
107.200.401
24.725.000
38.594.844
38.594.844
12.355.311
8.323.364
4.031.947
-
11.398.071
6.832.832
4.565.239
-
-
-
11.170.067
21.718.156
7.930.893
24.551.593
162.453.044
157.998.516
LIABILITIES
SHAREHOLDERS' EQUITY
Share Capital
Treasury shares
Capital Reserves
Share premiums
Profit from share cancellations
Revaluation fund
Revaluation fund for financial assets
Inflation adjustment to shareholders' equity
Profit Reserves
Legal reserves
Statutory reserves
Extraordinary reserves
Special reserves
Property sales gains and investments shares
To be added to capital
Cumulative translation adjustment
Net profit for the year
Retained earnings
25
26
27
28
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
Commitments and contingent assets and liabilities
31
The accompanying notes form an integral part of these consolidated financial statements.
20
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR THEN ENDED 31 DECEMBER 2006 and 2005
Notes
1 January 31 December 2006
Net sales
Cost of sales
Service income- net
Other income
36
36
36
36
119.244.537
(88.136.734)
-
100.728.457
(75.169.312)
-
GROSS PROFIT
36
31.107.803
25.559.145
Operating expenses
37
(14.682.760)
(15.012.818)
16.425.043
10.546.327
8.324.837
(1.527.377)
(9.086.428)
6.151.200
(1.719.700)
(5.403.755)
14.136.075
9.574.072
NET OPERATING PROFIT
Other income and profits
Other expenses and losses
Financial expenses
38
38
39
OPERATING INCOME
Gain/ (loss) on net monetary position
40
-
-
Loss attributable to minor_ty interest
24
426.793
613.032
14.562.868
10.187.104
(3.392.801)
(2.256.211)
11.170.067
7.930.893
0,45177
0,32076
INCOME BEFORE TAX
Taxes on income
41
NET PROFIT FOR THE YEAR
EARNINGS PER SHARE (YTL)
42
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR THEN ENDED 31 DECEMBER 2006 and 2005
Capital Reserves
Profit Reserves
Share
capital
Inflation
adjustment of
shareholders'
equity
Legal
reserves
Extraordinary
reserves
Retained
earnings
24.725.000
38.594.844
5.219.320
4.546.733
Dividend payments
Transfer to reserves
-
-
1.613.512
-
31 December 2005
24.725.000
38.594.844
Dividend payments
Transfer to reserves
-
31 December 2006
24.725.000
1 January 2005
Net income
for the year
Total
shareholder's
equity
36.544.619
-
109.630.516
(3.367.902)
3.386.408
-
(6.993.106)
(4.999.920)
-
7.930.893
(10.361.008)
7.930.893
6.832.832
4.565.239
24.551.593
7.930.893
107.200.401
-
1.490.532
-
(3.386.408)
2.853.116
-
(6.420.682)
3.587.245
-
(7.930.893)
11.170.067
(9.807.090)
11.170.067
38.594.844
8.323.364
4.031.947
21.718.156
11.170.067
108.563.378
The accompanying notes form an integral part of these consolidated financial statements.
21
Retained Earnings
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS THEN ENDED 31 DECEMBER 2006 AND 2005
Notes
2006
2005
Cash flows from operating activities:
Net profit before taxation on income
14.562.868
10.187.104
Adjustments to reconcile net income to net cash
used in operating activities
Depreciation and amortisation
Provision for employment termination benefits
Interest income
Interest expense
Provision for obsolete inventories
Fixed asset sales loss- net
Provision for doubtful receivable
Loss attributable to minority interest
18,19,20
23
38
39
38
38
7
24
8.552.918
668.857
(467.853)
1.362.886
69.191
244.228
(426.330)
8.245.772
569.114
(718.447)
686.113
600.000
352.527
700.045
(613.032)
24.566.302
20.009.196
(136.656)
(5.267.289)
1.006.709
(691.250)
2.149.272
186.927
(65)
(1.376.230)
(153.113)
41.203
10.942
(3.137.556)
(477.840)
(152.445)
(4.261.700)
(1.210.752)
(618.086)
(5.883.204)
(298.010)
55
3.401.814
(260.221)
(404.229)
(89.461)
(4.272.087)
(404.880)
Net cash flows generated from operating activities
16.721.356
5.555.990
Cash flows used in investing activities
Interest received
Purchase of property, plant and equipment
Revenue from sales of property, plant and equipment
467.853
(14.598.078)
862.592
718.447
(6.662.036)
218.822
(13.267.633)
(5.724.767)
3.744.349
906.738
(1.345.643)
(9.807.090)
6.751.643
(686.115)
(10.361.008)
Net cash used in financing activities
(6.501.646)
(4.295.480)
Net decrease in cash and cash equivalents
(3.047.923)
(4.464.257)
Net cash before changes in assets and liabilities
Changes in assets and liabilities
Change in marketable securities
Change in trade receivables
Change in due from related parties
Change in other receivables
Change in inventories
Change in other current assets
Change in other non-current assets
Change in trade receivables
Changes in payables to shareholders
Changes in advances received
Changes in other current liabilities
Taxes paid
Employment termination benefits paid
5
7
9
10
12
15
15
7
9
21
15
23
19-20
19-20-38
Net cash used in investing activities
Cash flows from financing activities
Increase in financial liabilites-net
Increase in lease obligations-net
Interest paid
Dividend paid
6-10
8
Cash and cash equivalents at beginning of the year
4
10.021.317
14.485.574
Cash and cash equivalents at end of the year
4
6.973.394
10.021.317
The accompanying notes form an integral part of these consolidated financial statements
22
1 OCAK - 31 ARALIK 2006 VE 2005 HESAP DÖNEMLER‹NE A‹T
KONSOL‹DE MAL‹ TABLOLARA ‹L‹fiK‹N AÇIKLAYICI NOTLAR
(Tutarlar aksi belirtilmedikçe Yeni Türk Liras› (“YTL”) olarak ifade edilmifltir.)
NOTE 1 - ORGANISATION AND NATURE OF OPERATIONS
Alkim Alkali Kimya A.fi. (the “Company”) was established in 1948 as Alkali Madencilik Limited _irketi. Since
1963, the Company has continued its operations as Alkim Alkali Kimya A.fi.
The nature of the operations of the Company is the mining of ores and the production and distribution of all
kinds of chemical materials in domestic and foreign markets as disclosed in the articles of association.
The Company is registered with the Turkish Capital Market Board (“CMB”) and 22,00% (2005: 22,00%) of its
shares are quoted on the Istanbul Stock Exchange (“ISE”) (Note 17).
The number of people employed by Company at 31 December 2006 is 326 (2005:364).
The address of the registered office is as follows:
‹nönü Caddesi No.15
34437 Taksim- ‹stanbul
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS
a) Accounting Standards
The Company maintains its books of account and prepares its statutory financial statements in accordance with
the Turkish Commercial Code, Communiqués issued by the CMB and Turkish tax legislation. These financial
statements are based on the statutory records, which are maintained under the historical cost convention with
adjustments and reclassifications for the purpose of fair presentation in accordance with CMB Communiqué
XI/25 “Communiqué Regarding Accounting Standards in Capital Markets” (“Communiqué”) dated 15 November
2003. Financial statements and notes to the financial statements are prepared in compliance with the formats
required by the CMB announcement dated 20 December 2004.
Other than the financial assets and liabilities carried at their fair values, consolidated financial statements are
based on historical cost convention and prepared in terms of New Turkish Lira (“YTL”).
b) Financial reporting in hyperinflationary periods
Consolidated financial statements are not adjusted for the effects of the inflation for the years then ended 31
December 2006 and 2005.
c) Group Accounting
Subsidiaries are companies which Alkim Alkali Kimya A.fi. owns, directly or over other subsidiaries, in terms of
capital and management relations, over 50% of the shares, voting power or the majority in management or
electing the majority of the management.
The table below sets out all Subsidiaries included in the scope of consolidation and shows their shareholding
structure at 31 December 2006:
Nominal
capital
Direct
shares owned
by parent
company (%)
Indirect
shares owned
by parent
company (%)
Shares
not owned
by parent
company (%)
Alkim Ka¤›t Sanayi ve Ticaret A.fi.
52.500.000
Alkim Sigorta Arac›l›k Hizmetleri Ltd. fiti.
20.000
79,93 (*)
50,00
39,96
20,07 (*)
10,04
Subsidiaries
(*) According to the decision of Board of Directors dated 15 April 2004, the Company has applied to the CMB
for the sale of the 12,51% share in its Subsidiary Alkim Ka¤›t Sanayi ve Ticaret A.fi and has submitted the related
shares to IMKB Takas ve Saklama Bankas› A.fi. However, the sale of shares has not been realised as of 31
December 2006.
23
Balance sheet items of the parent Alkim Alkali Kimya A._. and its Subsidiaries (“the Group”) excluding paid-in
capitals and shareholders' equity at the purchase date, were summed and the receivables and liabilities of
subsidiaries partners were bilaterally left out.
Paid-in capital of the consolidated balance sheet is, in principle, the paid-in capital of the parent company. Paidin capital of the consolidated Subsidiaries were not included.
The minority shareholders' share in the net assets and results for the year for Subsidiaries are separately classified
in the consolidated balance sheets and statements of income as minority interest.
Income statement items of the parent company and Subsidiaries have been summed separately. Figures of sales
of goods and services between consolidated subsidiaries have been discounted from figures of total sales and
cost of goods sold. Income and expense items incurred as a result of operations between consolidated subsidiaries
have been offset.
The minority shareholders' share in the results for the year of Subsidiaries is separately classified as minority
interest in the consolidated statements of income.
d) Comparatives and Restatement of Prior Year Financial Statements
Where necessary reclassifications in prior year comparative figures have been made in order to make them
comparable with the presentation of current year consolidated financial statements.
e) Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise
the asset and settle the liability simultaneously.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of the consolidated financial statements are
summarized below:
i. Revenue recognition
Revenues are recognised on an accrual basis at the time deliveries are made, services are given and significant
risks and rewards are transferred to the buyer, the amount of revenue can be measured reliably and it is probable
that the economic benefits associated with the transaction will flow to the Company at the fair value of
considerations received or receivable. Net sales represent the invoiced value of goods shipped less sales returns,
sales discounts and commissions (Note 36). Rent income are recognized on an accrual basis, interest income
are recognized on an accrual basis with effective yield basis calculation. Dividend income are recognized when
the right to receive is possessed.
ii. Inventories
Inventories are valued at the lower of cost or net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less the costs of completion and selling expenses. Cost elements included
in inventories comprise total purchase costs and other costs incurred in bringing the inventories to their present
location and condition. The cost of inventories is determined on the monthly moving weighted average basis
(Note 12).
iii. Property, plant and equipment
Property, plant and equipment acquired before 1 January 2005 are carried at cost in purchasing power of YTL
as at 31 December 2004; less accumulated depreciation and impairment losses. Property, plant and equipment
acquired after 1 January 2005 are carried at cost less accumulated depreciation and impairment losses. Depreciation
is provided using the straight-line method based on the estimated useful lives of the assets. Land is not depreciated
as it is deemed to have an indefinite life.
24
The estimated useful lives for property, plant and equipment are as follows (Note 19):
Land improvements
Buildings 25-50
Machinery and equipment
Motor vehicles
Furniture and fixtures
Years
7-50
5-30
4-10
3-20
Property, plant and equipment are reviewed for impairment losses whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the carrying amount of the asset exceeds its recoverable amount, which is the higher of asset net selling
price or value in use. Gain or losses on disposals of property, plant and equipment with respect to their restated
net book values are included in the related income and expense accounts (Note 38).
Repair and maintenance expenditures are charged to the income statement as they are incurred. Repair and
maintenance expenditures are capitalised if they result in an enlargement or substantial improvement of the
respective assets and depreciated over remaining useful life of related asset.
iv. Intangible assets
Intangible assets comprise of computer software programmes and development costs. The acquired before 1
January 2005 are carried at cost in the purchasing power of YTL as at 31 December 2004; less accumulated
depreciation and impairment losses. Those acquired after 1 January 2005 are carried at cost less accumulated
depreciation and impairment losses and are depreciated using the straight-line method over 3-10 years following
the acquisition date (Note 20).
v. Development expense
Development expenditures are recognised as an expense as incurred. Development costs that have been capitalised
are amortised from the commencement of the commercial production of the product on a straight-line basis
over five years.
vi. Impairment of assets
Except for deferred tax assets each class of assets are reviewed for impairment losses at each balance sheet date
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the carrying amount of the asset or any cash generating
unit of that asset exceeds its recoverable amount which is the higher of an asset's net selling price and value
in use. Impairment losses are accounted for in the statement of income.
Impairment loss on an assets can be reversed, to the extent of previously recorded impairment losses, in cases
where increases in the recoverable value of the asset can be associated with events that occur subsequent to
the period when the impairment loss was recorded.
vii. Borrowing cost
Borrowings are recognised initially at the proceeds received, net of any transaction costs incurred in subsequent
periods (Note 6). Borrowings are stated at amortised cost using the effective yield method. Any proceeds and
the redemption value is recognised in the statement of income as borrowing cost over the period of the
borrowings. Borrowing costs are expensed as incurred (Note 39).
viii. Financial assets
Loans and receivables constitute non-derivative financial instruments, which are not quoted in active markets
and have fixed or scheduled payments. Loans and receivables arise, without held-for-sale intention, from the
Company's supply of goods, service or direct fund to any debtor. They are classified as current assets when they
have a maturity less than 12 months, and non-current assets when they have a maturity more than 12 months
as of balance sheet date. Loans and receivables are recognised initially at their fair value plus transaction costs
directly attributable to the acquisition or issue of the financial asset. These loans and receivables are included
in trade receivables and other receivables in the balance sheet (Note 3.xxvii). Loans are recorded at the proceeds
received, net of any transaction costs incurred. In subsequent periods, loans are stated at amortised cost using
the effective yield method.
25
ix. Business combinations
None (2005: None).
x. Foreign currency transactions and balances
Transactions in foreign currencies during the year have been translated at the exchange rates prevailing at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies have been translated
into YTL 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 recognised
in the statement of income. Non-monetary assets and liabilities, which are recognised at fair value have been
translated into YTL at the exchange rates prevailing at the dates of fair value determined.
xi. Earnings per share
Earnings per share disclosed in the consolidated statements of income are determined by dividing consolidated
net income for the year by the weighted average number of shares that have been outstanding during the year
concerned (Note 42).
In Turkey, companies can increase their share capital by making a pro-rata distribution of shares ("bonus shares")
to existing shareholders from retained earnings and revaluation surplus. For the purpose of earnings per share
computations, the weighted average number of shares outstanding during the year has been adjusted in respect
of bonus shares issues without a corresponding change in resources, by giving them retroactive effect for the
year in which they were issued and for each earlier year.
xii. Subsequent events
Subsequent events, announcements related to net profit or even declared after other selective financial information
has been publicly announced, include all events that take place between the balance sheet date and the date
when balance sheet was authorised for issue (Note 34).
In case the events require a correction subsequent to the balance sheet date, the Group makes the necessary
corrections to the financial statements. Moreover, the events that occur subsequent to the balance sheet date
and not require a correction to be made are disclosed in accompanying notes, when they may affect decision
of making of users of financial statements.
xiii. Provisions, contingent assets and contingent liabilities
Possible assets or obligations that arise from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group
are treated as contingent assets or liabilities. The Group does not recognize contingent assets and liabilities. A
contingent liability is disclosed, unless the possibility of an outflow of resources embodying economic benefits
is remote. A contingent asset is disclosed, where an inflow of economic benefits is probable (Note 31).
xiii. Provisions, contingent assets and contingent liabilities
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events;
it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount
has been reliably estimated. Where there is a number of similar obligations, the likelihood that an outflow will
be required in settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small. Provisions are not recognised for future operating losses.
In cases where the time value of money is material, provisions are determined as the present value of expenses
required to be made to honor the liability. The rate used to discount provisions to their present values is
determined taking into account the interest rate in the related markets and the risk associated with the liability.
This discount rate does not consider risks associated with future cash flow estimates.
xiv. Accounting policies, errors and changes in accounting estimates
Important changes in accounting policies and accounting errors are applied on a retrospective basis and reflected
upon previous periods' financial statements. Changes in accounting estimates involving single periods are
reflected upon the current period when the change occurs; changes involving future periods are reflected both
upon the current period when the change occurs and the future period, on a prospective basis.
26
xv. Leases
Finance leases
Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property
or the present value of the minimum lease payments. Each lease payment is allocated between the liability and
finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental
obligations, net of finance charges, are included in other liabilities and reduced as they are paid (Notes 8). The
interest element of the finance cost is charged to the consolidated statement of income over the lease period.
The property, plant and equipment acquired under finance leases are depreciated over the useful life of the
asset.
xvi. Related parties
For the purpose of these consolidated financial statements, Group personnel, major shareholders, key management
personnel and board members, family members and companies, Subsidiaries and associated managed or controlled
by them are considered and referred to as related parties (Note 9).
xvii. Segment reporting
The Group's primary reporting format is business segment. A business segment is a group of assets and operations
engaged in providing products or services that are subject to risk and return that are different from those of
other business segments.
As the Group is engaged in providing products or services mainly within the same economic environment that
are subject to the same risks and returns, no geographical segment information is presented in these consolidated
financial statements on the grounds of materiality.
xviii. Construction contracts
None (2005: None).
xix. Discontinued operations
None (2005: None).
xx. Government grants and incentives
None (2005: None).
xxi. Investment Property
None (2005: None).
xxii. Taxes on income
Taxation on income includes current period tax liability and deferred income taxes. Current period tax liability
includes the taxes payable calculated on the taxable portion of period income with tax rates enacted on the
balance sheet date and the correction adjustments related to prior period tax liabilities (Note 41).
Deferred tax assets and liabilities are provided, using the liability method, for all temporary differences arising
between the tax bases of assets and liabilities and their carrying values for financial reporting purposes with the
enacted tax rates as of the balance sheet date (Note 14).Deferred tax assets or liabilities are reflected to the
financial statements to the extent that they will provide an increase or decrease in the taxes payable for the
future periods where the temporary differences will reverse. Deferred tax liabilities are recognized for all taxable
temporary differences, where deferred income tax assets resulting from deductible temporary differences are
recognized to the extent that it is probable that future taxable profit will be available against which the deductible
temporary difference can be utilised. To the extent that deferred tax assets will not be utilised, the related
amounts have been deducted accordingly.
Deferred tax assets and deferred tax liabilities related to income taxes levied by the same taxation authority are
offset accordingly, at individual entity level. Consequently, the net deferred tax positions of the parent company
and the individual subsidiaries and joint venture are not offset in the consolidated financial statements (Note
14).
27
xxiii. Provision for employment termination benefits
According to the enacted law, the Group is liable to make a lump sum payment to employees when employment
is terminated for reasons other than retirement, resignation and others disclosed in the Labour Law. Provisions
for employment termination benefits have been calculated for the net present value of future employment
termination benefits and reflected in the consolidated financial statements (Note 23).
xxiv. Pension plans
None (2005: None).
xxv. Agricultural operations
None (2005: None).
xxvi. Statement of cash flows
In the statement of cash flows, cash flows are classified into three categories as operating, investment and
financing activities. Cash flows from operating activities are those resulting from the Group's production and
sales of sodium sulphate and paper. Cash flows from investment activities indicate cash inflows and outflows
resulting from fixed and financial investments. Cash flows from financing activities indicate the resources used
in financing activities and the repayment of these resources. For the purposes of the cash flow statement, cash
and cash equivalents comprise of cash in hand accounts, bank deposits, mutual funds and loans originated by
the Group by providing money directly to a bank under reverse repurchase agreements with a predetermined
sale price at fixed future dates of less than or equal to 3 months.
xxvii. Re-purchase agreements
None (2005: None).
xxviii. Trade receivables and provision for impairment of receivables
Trade receivables that are created by the Group by way of providing goods or services directly to a debtor are
carried at amortised cost, using the effective interest rate method, less the unearned financial income. Short
duration receivables with no stated interest rate are measured at original invoice amount unless the effect of
imputing interest is significant.
A credit risk provision for trade receivables is established if there is objective evidence that the Group will not
be able to collect all amounts due. The amount of the provision is the difference between the carrying amount
and the recoverable amount, being the present value of all cash flows, including amounts recoverable from
guarantees and collateral, discounted based on the original effective interest rate of the originated receivables
at inception.
If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the
release of the provision is credited to other income in the consolidated statement of income (Note 38).
xxix. Share Capital and dividends
Share capital are classified as capital and dividends distributed from common stocks are deducted at the period
of the declaration from the retained earnings.
xxx. Financial instruments and financial risk management
The Group's activities expose it to a variety of financial risks, including the effects of changes in debt and equity
market prices, foreign currency exchange rates and interest rates. The Group's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the Group.
Risk management has been applied in line with the decisions that have been approved by the Board of Directors.
Interest rate risk
The Group is exposed to interest rate risk through the impact of rate changes on interest bearing liabilities and
assets. The interest rate risk is managed through the balancing of assets and liabilities that are responsive to
the fluctuations in interest rates.
28
Liquidity risk
The ability to fund existing and prospective debt requirements is managed as necessary by maintaning the
availability of adequate committed funding lines from high quality lenders.
Credit risk
Ownership of financial assets involves the risk that counterparties may be unable to meet the terms of their
agreements. The Group has established an effective control system over its dealer network and risks arising from
transactions with dealers are followed by obtaining sufficient amounts of guarantees from the dealers for dealing
with credit risk.
Foreign exchange risk
The Group is exposed to foreign exchange risks through the impact of rate changes on translation into YTL of
foreign currency denominated assets and liabilities. These risks are monitored and limited by analyses of the
foreign currency position (Note 29).
Fair value of financial instruments
Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing
parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.
The estimated fair values of financial instruments have been determined by the Group using available market
information and appropriate valuation methodologies. However, judgement is necessarily required to interpret
market data to estimate the fair value. Accordingly, the estimates presented herein are not necessarily indicative
of the amounts the Group could realise in a current market exchange.
The following methods and assumptions were used to estimate the fair value of the financial instruments for
which it is practical to estimate fair value:
Financial assets
The fair values of balances denominated in foreign currencies, which are translated to YTL using year-end
exchange rates, are considered to approximate their carrying value. The fair values of cash and amounts due
from banks are considered to approximate their respective carrying values due to their short-term nature. The
carrying values of trade receivables and due from related parties are estimated to approximate their fair values
due to their short-term nature. The carrying values of trade receivables and due from related parties are estimated
to approximate their fair values due to their short-term nature. When financial assets through profit or loss has
not been available on a quoted market, their carrying value is estimated to approximate their fair value.
Financial liabilities
The fair values of monetary liabilities including short-term borrowings, trade payables, due to related parties
and other financial liabilities are considered to approximate their respective carrying values due to their shortterm nature. Foreign currency denominated long term borrowings are translated to YTL using year-end exchange
rates, are considered to approximate their carrying value.
xxxi. Significant accounting estimates and decisions
Preparation of financial statements requires disclosure of reported assets and liabilities, contingent assets and
liabilities as at balance sheet date and utilization of estimates and assumptions that can effect income and
expense balances of the reporting period. Estimations and assumptions can differ from actual results in spite
of these estimations and assumptions are based on Group management's best knowledge.
Income taxes
There are many transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business and significant judgment is required in determining the provision for income taxes.
The Group recognizes tax liabilities for anticipated tax issues based on estimates of whether additional taxes
will be due and recognizes tax assets for the tax losses carried forward and unused investment tax credits to
the extent that the realisation of the related tax benefit through the future taxable profits is probable. The Group
did not recognise some of the deferred income tax assets arising from tax losses carried forward and deferred
income tax assets on unused tax credits relating to certain subsidiaries amounting as their future utilisation is
not probable (Note 20). Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which
such determination is made.
29
NOTE 4 - CASH AND CASH EQUIVALENTS
Cash on hand
Banks
- Foreign currency denominated time deposits
- YTL denominated time deposits
- Foreign currency denominated demand deposits
- YTL denominated demand deposits
2006
2005
4.905
6.968.489
3.798.532
2.675.951
319.539
174.467
5.781
10.015.536
4.320.240
5.233.336
223.175
238.785
6.973.394
10.021.317
Maturity for time deposits is between 6 days and 29 days (2005:between 3 days and 3 months). The interest rate is
20% per annum (p.a.) for YTL time deposits (2005: %17 p.a.) and 4.05% p.a. for foreign currency time deposits (2005:
%3,97 p.a.).
Foreign currency time deposits' details are as follows (in terms of YTL):
Euro
USD
2006
2005
2.214.410
1.584.122
1.905.000
2.415.240
3.798.532
4.320.240
313.242
5.754
543
89.094
134.054
27
319.539
223.175
Demand deposits details by currency are as follows (in terms of YTL):
USD
Euro
Other
NOTE 5 - MARKETABLE SECURITIES
The details of the short-term securities classified by the Group in marketable securities, held for trading purposes, are
as follows;
2006
2005
B type mutual funds
Other
380.359
4.477
244.233
3.947
384.836
248.180
NOTE 6 - FINANCIAL LIABILITIES
2006
Effective weighted
average interest
rate (%)
a) Short-term financial liabilities:
Short-term borrowings (Euro)
Short-term borrowings (YTL)
3,90
-
2005
YTL
Effective weighted
average interest
rate (%)
2.111.446
27.106
2,66
-
2.138.552
b) Short-term portion of
long-term financial liabilities
Short-term borrowings (USD) (*)
5,56
5,53
3.042.053
6.944
3.048.997
13.527.226
3,75
13.527.226
c) Long-term financial liabilities
Long-term borrowings (USD) (*)
YTL
8.831.809
8.831.809
6.198.048
3,91
6.198.048
5.312.691
5.312.691
(*) The interest rates of the USD denominated bank borrowings vary between Libor+0,02 and Libor+0,12 with six-month
contractual repricing dates.
The redemption schedule of long-term borrowings as of 31 December is as follows:
2006
2007
2008
2005
6.198.048
5.312.691
-
6.198.048
5.312.691
30
NOTE 7 - TRADE RECEIVABLES AND PAYABLES
2006
2005
19.452.179
5.861.773
10.311
14.554.424
5.313.637
2.756
25.324.263
19.870.817
(433.340)
(781.927)
(246.429)
(781.927)
24.108.996
18.842.461
a) Short-term trade receivables
Customer current accounts
Cheques and notes receivables
Deposits and guarantees given
Less: Unearned financial income
Provision for doubtful receivables
As of 31 December 2006, effective weighted average interest rate for short-term YTL trade receivables is 18,59% p.a
(2005: 13,96% p.a), for USD and EUR denominated trade receivables are 5,35% p.a. and 3,71% p.a (2005: 4,46%
p.a. and 2,44% p.a.) respectively.
b) Long-term trade receivables:
Deposits and guarantees given
23.247
22.493
23.247
22.493
8.813.825
(31.054)
10.255.695
(75.993)
8.782.771
10.179.702
c) Short-term trade payables:
Supplier current accounts
Less: Unincurred financial cost
As of 31 December 2006, effective weighted average interest rate for short-term YTL trade payables 18,51% p.a. (2005:
14,36% p.a.), for USD and EUR denominated trade payables are 5,32% p.a. and 3,63% p.a. (2005: 3,75% p.a ve
2,46% p.a.) respectively.
d) Long-term trade payables:
Supplier current accounts
Less: Unincurred financial cost
701.447
(37.383)
696.188
(52.825)
664.064
643.363
Effective weighted average interest rate of USD denominated long-term trade payables, that are mainly related with
raw material purchases, is 5,33% p.a. (2005: 4,80% p.a.) and their maturity is 2 years on average (2005: 2 years).
NOTE 8 - LEASE OBLIGATIONS
Principle
2006
Unaccrued
interest
Total
obligations
2005
Unaccrued
Total
interest obligations
Principle
Short -term lease
obligations
225.020
71.056
296.076
-
-
-
2008
2009
2010
245.699
268.279
167.740
50.377
27.797
5.321
296.076
296.076
173.061
-
-
-
Long-term lease
obligations
681.718
83.495
765.213
-
-
-
As of 31 December 2006, lease obligations amounting to USD 645.090 (2005: None) with an effective average interest
rate of 8,5% p.a. (2005: none) are related with the purchase of gas turbine.
31
NOTE 9 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
Due from related parties and due to related parties' balances and transactions held with related parties during the
current period are as follows:
2006
2005
279.102
92.779
225.340
1.153.250
371.881
1.378.590
392.062
603
545.266
512
392.665
545.778
1 January31 December 2006
1.225.976
2.529.853
a) Due from related parties:
Receivables from personnel
Sodafl Sodyum A.fi. (“Sodafl”)
b) Due to related parties:
Payables to personnel
Payables to shareholders
c) Sales to related parties:
Sodafl
The Company has transferred a region of its privileged area in Afyon Dazk›r› Ac›göl to Sodafl for which the Company
collects the 6% of the gross sales of Sodafl as “Rödavans” income (Note 38). As at 31 December 2006, “Rödavans”
income is amounting to YTL 733.829 (2005: YTL 523.290) (Note 38). Moreover, Company's sales to Sodafl is amounting
to YTL 492.147 (2005:YTL 2.006.563).
d) Purchases from related parties:
Sodafl
451.196
350.253
1.693.965
1.473.168
2006
2005
2.182.270
611.854
163.094
2.211.460
45.276
9.232
2.957.218
2.265.968
-
908.737
-
908.737
2006
2005
7.329.846
2.132.638
5.024.420
10.609
250.212
8.581.860
7.510.007
5.254.393
4.675.086
37.314
1.913.581
6.688.476
23.329.585
26.078.857
(69.191)
(600.000)
23.260.394
25.478.857
e) Remuneration of key management personnel:
Benefits provided to top management
NOTE 10 - OTHER RECEIVABLES AND PAYABLES
a) Other Receivables:
Value Added Tax transferred (“VAT”)
VAT receivable
Other
b) Other Financial Liabilities:
Payables to factoring companies
NOTE 11 - BIOLOGICAL ASSETS
None (2005: None).
NOTE 12 - INVENTORIES
Raw materials
Semi finished goods- net
Finished goods
Trade goods
Other inventories
Order advances given
Less: Obsolescence provision (Note 38)
The cost of inventories recognised as expense and included in cost of goods sold amounted to YTL 49.535.099. (2005:
YTL 44.454.272).
32
Movements of obsolescence provision in current period are as follows:
2006
2005
(600.000)
-
Charged to cost of sales
Provision for the year (Note 38)
600.000
(69.191)
(600.000)
31 December
(69.191)
(600.000)
1 January
NOTE 13 - BALANCES RELATED TO CONSTRUCTION CONTRACTS IN PROGRESS
None (2005:None).
NOTE 14 - DEFERRED TAX ASSETS AND LIABILITIES
Deferred Tax
The Group calculates deferred tax assets and liabilities based on temporary differences between the financials prepared
in accordance with the Communiqué and financial statements prepared according to the Turkish tax legislation.
As stated in note 41, in accordance with temporary article 69 amended to Income Tax Law, corporate taxpayers that
utilise unused investment tax credits, could not offset their investment incentive allowances against 2005 taxable income,
can offset their existing investment incentive allowances at 31 December 2005 against taxable income of the years
2006, 2007 and 2008. In this respect, as the Company's subsidiary Alkim Ka__t has prefered to utilise unused investment
tax credits, the Company has calculated deffered tax asset and liabilities for all temporary differences that are expected
to be realised or settled until 31 December 2008 under liability method using 30% and 20% thereafter .
The breakdown of cumulative temporary differences and the resulting deferred tax assets/ (liabilities) provided at 31
December using the enacted tax rates is as follows:
Taxable
temporary differences
Restatement and useful life difference
on property, plant and equipment
and intangible assets
Carry-forward tax losses and unutilised
investment tax credits
Provision for employment termination
Benefits (Note 23)
Unincurred financial cost- net
Useful life difference on inventories
Obsolescence provision
Provision for volume rebates
Other
Deferred income tax
assets/(liabilities)
2006
2005
2006
(12.115.545)
(10.670.920)
(2.423.109)
(3.201.276)
14.189.415
9.568.861
2.658.601
2.767.435
2.514.876
6.612
(102.050)
65.070
2.323.859
117.611
424.527
600.000
350.693
69.631
502.975
1.322
(20.410)
13.014
697.158
35.283
127.358
180.000
105.208
20.889
3.175.912
(2.443.519)
732.393
3.933.331
(3.201.276)
732.055
Deferred tax assets
Deferred tax assets - net
2005
Turkish tax legislation does not allow the parent company and its subsidiaries to be presented on the consolidated tax
declaration. Therefore, deferred tax assets and liabilities presented in these financial statements are calculated separately
for each company:
2006
Deferred tax
Assets
Liabilities
2005
Deferred tax
Net
Assets
Liabilities
Net
- Alkim Alkali Kimya A.fi.
726.513
- Alkim Ka¤›t
2.819.737
(20.409)
(2.793.448)
706.104
26.289
901.217
3.473.067
(49.774)
(3.592.455)
851.443
(119.388)
3.546.250
(2.813.857)
732.393
4.374.284
(3.642.229)
732.055
Movement for deferred tax is as follows :
1 January
Charge to statement of income (Note 41)
31 December
33
2006
2005
732.055
(1.152.603)
338
1.884.658
732.393
732.055
NOTE 15 - OTHER CURRENT/NON-CURRENT ASSETS AND CURRENT/ NONCURRENT LIABILITIES
2006
2005
566.454
34.530
54.542
599.707
174.456
68.290
655.526
842.453
a) Other current assets:
Prepaid expenses
Income accrual for customer overdue charges
Other
Prepaid expenses amounting to YTL 566.454 (2005:YTL 599.707) are mainly related with the insurance premiums paid
for tangible assets.
b) Other non-current assets:
Other
307
242
307
242
941.765
40.928
970.540
1.211
982.693
971.751
c) Other current liabilities:
Taxes and funds payable
Other
NOTE 16 - FINANCIAL ASSETS
2006
‹tafl ‹zmir Teknopark Tic. A.fi.
Kristal Rafine Tuz A.fi.
2005
Share
Registered
value
Share
Registered
value
0,12
less than 0,1
14.285
28
0,12
less than 0,1
14.313
14.285
28
14.313
NOTE 17 - NEGATIVE/ POSITIVE GOODWILL
None (2005:None).
NOTE 18 - INVESTMENT PROPERTY
None (2005:None).
NOTE 19 - PROPERTY, PLANT AND EQUIPMENT
1 January 2006
Additions
Disposals
Transfers
2.003.211
8.471.603
21.811.784
115.764.131
7.713.979
6.035.515
96.739
181.627
2.142.482
16.135
1.360.243
177.541
153.608
1.225
880.307
11.971.679
(192.811)
(737.640)
(1.986.060)
(33.093)
-
964.968
1.216.811
957.793
1.677.552
88.720
(4.921.935)
2.003.211
9.452.706
22.835.784
117.344.527
7.583.012
6.244.750
97.964
1.061.934
9.192.226
164.221.071
14.560.738
(2.949.604)
(*) (16.091)
175.816.114
Less: Accumulated depreciation:
Land improvements
(3.014.330)
Buildings
(6.882.709)
(48.580.684)
Motor vehicles
(4.601.334)
(3.966.365)
Leasehold improvements
(107.605)
(405.461)
(809.307)
(5.964.745)
(638.828)
(491.816)
(14.863)
84.548
130.653
1.606.906
20.677
-
-
(3.419.791)
(7.607.468)
(54.414.776)
(3.633.256)
(4.437.504)
(122.468)
(67.153.027)
(8.325.020)
1.842.784
-
(73.635.263)
Cost:
Land
Land improvements
Buildings
Motor vehicles
Furniture and fixture
Other tangible assets
Advances given
Construction in progress
Net book value
97.068.044
31 December 2006
102.180.851
34
1 January 2005
Additions
Disposals
1.982.711
7.114.830
21.612.873
113.505.152
8.112.038
5.764.890
96.739
1.146.056
20.500
18.835
644.976
446.571
249.642
181.627
5.033.405
(177.802)
(873.753)
-
1.337.938
198.911
1.791.805
29.123
20.983
(4.036.979)
2.003.211
8.471.603
21.811.784
115.764.131
7.713.979
6.035.515
96.739
181.627
2.142.482
159.335.289
6.595.556
(1.051.555)
(*) (658.219)
164.221.071
(2.678.630)
(6.082.802)
(42.908.139)
(4.431.279)
(3.494.690)
(91.504)
(335.700)
(799.907)
(5.689.576)
(634.369)
(471.675)
(16.101)
17.031
464.314
-
-
(3.014.330)
(6.882.709)
(48.580.684)
(4.601.334)
(3.966.365)
(107.605)
(59.687.044)
(7.947.328)
481.345
-
(67.153.027)
Cost:
Land
Land improvements
Buildings
Motor vehicles
Furniture and fixture
Other tangible assets
Advances given
Construction in progress
Less: Accumulated depreciation
Land improvements
Buildings
Motor vehicles
Leasehold improvements
Net book value
Transfers
31 December 2005
99.648.245
97.068.044
(*) See Note 20.
Construction in progress and advances given is mainly related with the investments of Sodium Sulphate facility in Konya
Cihanbeyli.
YTL 7.514.147 (2005: YTL 6.889.756) of the current year's depreciation charge has been allocated to cost of sales, YTL
514.622 (2005: YTL606.342) to general and administrative expenses , YTL 116.335 (2005: 109.378) to research and
development expenses, YTL 12.801 (2005: YTL 18.113) to sales and marketing expenses and YTL 395.013 (2005: YTL
622.183) to inventories.
There is a first degree mortgage of YTL 5.000.000 (2005: YTL 5.000.000) on the Group's production plant in Kemalpafla,
settled on behalf of Türkiye ‹fl Bankas› due to the funds borrowed from the ‹zmir Branch (Note 31).
NOTE 20 - INTANGIBLE ASSETS
1 January 2006
Additions
Disposals
3.288.659
650.699
37.340
-
16.091
3.288.659
704.130
3.939.358
37.340
-
(*) 16.091
3.992.789
Less: Accumulated amortisation (2.975.203)
(227.898)
-
-
(3.203.101)
-
16.091
789.688
Development costs
Rights- software
Net book value
964.155
Transfers 31 December 2006
1 January 2005
Additions
Disposals
2.639.011
577.402
66.480
(1.754)
649.648
8.571
3.288.659
650.699
3.216.413
66.480
(1.754)
(*) 658.219
3.939.358
Less: Accumulated amortisation (2.677.374)
(298.444)
615
-
(2.975.203)
(1.139)
658.219
964.155
Development costs
Rights- software
Net book value
539.039
Transfers 31 December 2005
(*) See Note 19.
NOTE 21 - ADVANCES RECEIVED
Order advances received
2006
2005
227.046
185.843
227.046
185.843
NOTE 22 - PENSION PLANS
There are no pension plans other than the provision for employment termination benefits explained in Note 23 - Provisions
for Costs and Expenses.
35
NOTE 23 - PROVISIONS
2006
2005
3.393.139
(2.464.765)
4.140.869
(3.468.078)
928.374
672.791
2.514.876
2.323.859
2.514.876
2.323.859
a) Short-term provisions:
Tax provisions
Less: Prepaid taxes
b) Long-term provisions:
Provision for employment termination benefits
Provision for employment termination benefits has been calculated in accordance with explanations below.
Under the Turkish Labour Law, the Company 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 is called up for military service,
dies or retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women
and 60 for men).
The amount payable consists of one month's salary limited to a maximum of YTL 1.857,44 for each year of service as
of 31 December 2006 (2005: YTL 1.727,15).
The liability is not funded, as there is no funding requirement. The provision has been calculated by estimating the
present value of the future probable obligation of the Company arising from the retirement of the employees.
The Communiqué requires actuarial valuation methods to be developed to estimate the enterprises' obligation under
defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability.
Discount rate (%)
Turnover rate to estimate the probability of retirement (%)
2006
2005
5,71
98
5,49
98
The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus,
the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation.
The maximum amount of YTL 1.960,69 which is effective from 1 January 2007 (1 January 2006: YTL 1.770,62) has
been taken into consideration in calculating the provision for employment termination benefits of the Company.
Movements of the provision for employment termination benefits during the year are as follows:
2006
2005
1 January
2.323.859
2.159.625
Paid during the year
Increase during the year
(477.840)
668.857
(404.880)
569.114
31 December
2.514.876
2.323.859
YTL 481.769 (2005: YTL 353.593) of the period expense of provision for employment termination benefits has been
charged to cost of sales, YTL 29.670 (2005:YTL 36.172) to sales and marketing expenses and YTL 157.418 (2005: YTL
179.349) to general and administrative expenses.
NOTE 24 - MINORITY INTEREST
Movement of the minority interest during the year is as follows:
1 January
Current year minority interest loss
31 December
2006
17.053.406
2005
17.666.438
(426.793)
(613.032)
16.626.613
17.053.406
36
NOTE 25 - SHARE CAPITAL/ TREASURY SHARES
At 31 December 2006 and 2005, the Company's capital held was as follows:
2006
Participation
Participation
(%)
Amount (YTL)
Shareholder:
Hüseyin A. Kora
Cihat Kora
M. Reha Kora
A.Haluk Kora
Publicly held
Other
Participation
Amount (%)
2005
Participation
Amount (YTL)
27
15
12
10
22
14
6.611.112
3.677.844
2.905.188
2.423.050
5.547.886
3.559.920
27
15
12
10
22
14
6.611.112
3.677.844
2.905.188
2.423.050
5.547.886
3.559.920
100
24.725.000
100
24.725.000
Adjustment to share capital (*) (Note 27)
26.909.044
26.909.044
Total adjusted equity
51.634.044
51.634.044
(*) The amount includes inflation adjustment applied in accordance with article number 14 of CMB Serial:XI, Number:25
“Communiqué about Financial Reporting Methods during Hyperinflation Periods.”
The Company's authorised and issued capital consists of YTL 24.725.000(2005: YTL24.725.000) shares of 1 YTL each
paid in full. The Company is not subject to the registered capital system.
NOTE 26 - CAPITAL RESERVES
The retained earnings in statutory books other than the clause as mentioned below.
The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code
(“TCC”). The TCC stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per
annum, until the total reserve reaches 20% of the company's paid-in capital. The second legal reserve is appropriated
at the rate of 10% per annum of all cash distributions in excess of 5% of the paid-in capital. Under the TCC, the legal
reserves can be used only to offset losses and are not available for any other usage unless they exceed 50% of paid-in
capital.
NOTE 27 - PROFIT RESERVES
Quoted companies are subject to dividend requirements regulated by the CMB as follows:
Applicable from 1 January 2006, net income computed in accordance with Communiqué XI/25 must be distributed in
the ratio of a minimum of 20% of total distributable profit (2005:30%). Based on the decision of the General Assembly,
the distribution of a minimum of 20% of the distributable profit can be made as cash or as bonus shares or as a
combination of a certain percentage of cash and bonus shares.
In accordance with the related CMB regulations, items in statutory shareholders' equity such as share capital, share
premium, legal reserves, other reserves, special reserves and extraordinary reserves, are presented at their historical
amounts. The difference between the amounts adjusted for the effect of inflation and historical amounts for these items
is presented in shareholders' equity in total as restatement difference.
Inflation adjustment of shareholders' equity can only be netted-off against prior years' losses and used as an internal
source in capital increase where extraordinary reserves can be netted-off against prior years' losses, and used in the
distribution of bonus shares and distributions of dividends to shareholders.
In accordance with the above explanation, adjustment to share capital as of 31 December 2006 and 2005 is as follows:
Share capital
Legal reserves (*)
Extraordinary reserves (*)
Share capital
Legal reserves (*)
Extraordinary reserves (*)
Nominal values
2006
Restated
values
Inflation adjustment
of shareholders' equity
24.725.000
8.323.364
4.031.947
51.634.044
15.903.574
8.137.537
26.909.044
7.580.210
4.105.590
37.080.311
75.675.155
38.594.844
Nominal values
2005
Restated
values
Inflation adjustment
of shareholders' equity
24.725.000
6.832.832
4.565.239
51.634.044
14.413.042
8.670.829
26.909.044
7.580.210
4.105.590
36.123.071
74.717.915
38.594.844
(*) Amounts have been calculated by taking into consideration the restated share capital of Alkim Alkali Kimya A.fi.
and the shares of the subsidiaries over the share owned by parent. Shares outside of the parent company are shown
under the “Minority interests” account.
37
NOTE 28 - RETAINED EARNINGS
The Group accounted for retained earnings amounting to YTL 21.718.156 in the balance sheet as at 31 December
2006 in accordance with the CMB Communiqué Serial:XI No. 25 (in 2005: YTL 21.718.156).
NOTE 29 - FOREIGN CURRENCY POSITION
The table below summarises the Group's exposure to foreign currency position risk as of periods ending 31 December. The
carrying amounts of the Group's assets and liabilities denominated in foreign currencies are as follows, categorised by currency:
Euro
31 December 2006
Original
currency
USD
YTL
Original
currency
YTL
Original
currency
GBP
Other
Total
YTL
YTL
YTL
Assets:
Cash and cash equivalents 1.199.122
Trade receivables
584.649
Due from related parties
4.390
Inventories
61.136
2.220.177
1.082.479
8.128
113.608
1.349.859
2.885.543
10.055
5.610.131
1.897.364
4.055.918
14.133
8.173.666
197
115
-
543
317
-
-
1.849.297
3.424.392
9.855.588
14.141.081
312
860
- 17.566.333
(2.111.446)
(331.720)
-
(2.945.246)
(107.886)
(4.139.838)
(151.645)
-
(9.623.809)
(4.409.539)
(645.090)
(13.527.226)
(6.198.048)
(906.738)
Liabilities:
Borrowings
(1.140.398)
Trade payables (net)
(179.163)
Advances taken
Short-term portion of
long-term borrowings (net)
Long-term borrowings
Lease obligations
(1.319.561)
(2.443.166) (17.731.570) (24.923.495)
Net foreign currency position 529.736
981.226
(7.875.982)
Euro
31 December 2006
Original
currency
(10.782.414)
- (2.111.446)
(3.402) (9.379) (1.004.180) (5.485.117)
(151.645)
-
Original
currency
YTL
-
(3.090) (8.519) (1.004.180) (10.813.887)
Original
currency
GBP
Other
Total
YTL
YTL
YTL
Assets:
Cash and cash equivalents 1.284.443
Trade receivables
1.733.354
Due from related parties
14.894
Inventories
Other receivables
103.435
2.039.054
2.751.699
23.644
164.204
1.866.399
973.149
4.737.276
6.263
2.504.334
1.305.772
6.356.477
8.403
1
3
16.612 38.409
3.136.126
4.978.601
7.583.087
10.174.986
16.613 38.412
(3.042.053)
(469.252)
(22.939)
(4.588.155)
(14.929)
(6.156.387)
(20.031)
(5.075) (11.734)
-
(582.984)
(6.582.061)
(3.959.376)
(242.772)
(8.831.809)
(5.312.691)
(325.753)
Liabilities:
Borrowings
(1.916.254)
Trade payables
(295.591)
Order advances received
(14.450)
Short-term portion of
long-term financial liabilities
Long-term financial liabilities
Other financial liabilities
(367.234)
(2.593.529)
(4.117.228) (15.387.293) (20.646.671)
Net foreign currency position 542.597
861.373
(7.804.206)
(10.471.685)
- (13.527.226)
- (6.198.048)
(906.738)
(3.402) (9.379) (1.004.180) (28.380.220)
USD
YTL
4.118.084
5.138.714
22.261
8.287.274
-
24
24
4.543.415
4.057.471
23.644
6.356.477
211.016
15.192.023
- (3.042.053)
(15.440) (6.652.813)
(42.970)
-
- (8.831.809)
- (5.312.691)
(908.737)
(5.075) (11.734)
(15.440) (24.791.073)
11.538 26.678
(15.416) (9.599.050)
NOTE 30 - GOVERNMENT GRANTS
None (2005: None).
38
NOTE 31 - PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
2006
2005
5.993.014
2.000.000
812.612
783.966
4.229.970
252.770
643.904
9.589.592
5.126.644
7.931.298
5.000.000
5.323.195
5.000.000
12.931.298
10.323.195
a) Guarantees received:
Guarantee letters received
Bails received
Guarantee cheques received
Guarantee notes received
b) Guarentees given:
Guarantee letters given
Mortgages given (Note 19)
c) Contingent assets:
As of 31 December 2006 , the Company's subsidiary Aklim Ka¤›t has engaged in a lawsuit against J and A International
Resources Inc. amounting to USD 124.786 related to quality problems in raw material purchased. Court does not come
to a conclusion as of reporting date.
d) Registered mining fields of the Company as of 31 December 2006 are as follows:
Place
Register No
Hectare
Duration
Licence
start
date
2197
19
2355
1712
2188
3260
1944
1945
1.111
5.483
6.383
1.031
1.307
283
1.048
1.944
60
60
30
30
30
60
30
30
09/03/1987
03/06/1987
05/03/2004
05/03/2004
08/03/2004
07/08/1991
05/03/2004
03/03/1987
2047
2047
2034
2034
2034
2051
2034
2017
3927
9.487
30
23/08/1993
2023
Licence No
Licence
end
date
i) Sodium Sulphate and Sodium Chlorine Fields:
Konya - Cihanbeyli
Konya - Cihanbeyli
Afyon - Dinar
Afyon - Dazk›r›
Afyon - Dazk›r›
Afyon - Dazk›r›
Afyon - Dazk›r›
Afyon - Dazk›r›
231
159
2.144
1.014
1.015
7.422
363
73
ii) Sodium Sulphate Fields:
Ankara - B. Pazar›
17.951
NOTE 32 - BUSINESS COMBINATIONS
None (2005: None).
NOTE 33 - SEGMENT REPORTING
The Group is organised mainly into three main business segments.
- Chemical products: Production and sales of Sodium Sulphate and derivatives
- Paper: Production and sales of paper products
- Other operation segment
Other operations of the Group mainly comprise insurance which is not significant enough to qualify as an individual
reportable segment under consideration of IAS 14.
Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and
operating cash. They exclude deferred income tax assets. Segment liabilities comprise operating liabilities. They exclude
items such as bank borrowings, taxation on income and deferred income tax liabilities. Capital expenditure comprises
additions to property, plant and equipment and intangible assets.
39
The segment results for the year ended 31 December 2006 are as follows:
Chemical
Products
Paper
Other
operations Unallocated
Total gross segment sales
Inter-segment sales
45.337.158
(120.435)
74.082.673
(73.632)
100.839
(82.066)
-
119.520.670
(276.133)
Revenue (Note 36)
45.216.723
74.009.041
18.773
-
119.244.537
Operating profit/ (loss) segment result
14.574.952
Other incomes-net (Note 38)
2.359.494
Financial expense (Note 39)
(590.509)
Loss attirbutable to minority interest (Note 24)
1.832.223
4.378.041
(8.436.352)
(1.624)
59.925
(59.567)
19.492
-
16.425.043
6.797.460
(9.086.428)
426.793
Profit before taxation on income
Group
14.562.868
Income tax expense (Note 41)
(3.538.478)
145.677
-
-
Profit for the year
(3.392.801)
11.170.067
The segment results for the year ended 31 December 2005 are as follows:
Chemical
Products
Paper
Other
operations Unallocated
Total gross segment sales
Inter-segment sales
40.302.250
(128.733)
60.622.204
(79.984)
127.129
(114.409)
-
101.051.583
(323.126)
Revenue
40.173.517
60.542.220
12.720
-
100.728.457
Operating profit/ (loss) segment result
14.131.001
Other incomes-net (Note 38)
1.353.131
Financial expense (Note 39)
(1.234.861)
Loss attirbutable to minority interest (Note 24)
(3.504.904)
3.035.386
(4.128.814)
(88.037)
42.983
(40.080)
8.267
-
10.546.327
4.431.500
(5.403.755)
613.032
Profit before taxation on income
Group
10.187.104
Income tax expense (Note 20)
(3.949.674)
1.699.560
(6.097)
-
Profit for the year
(2.256.211)
7.930.893
The segment assets and liabilities at 31 December 2006 and capital expenditure for the year then ended are as follows:
Chemical Products
Paper
49.158.367
706.104
112.490.772
26.289
Assets
Deferred income tax assets (Note 14)
Other operations
71.512
-
Group
161.720.651
732.393
162.453.044
Liabilities
Bank borrowings
Taxation on income (Note 23)
6.455.952
928.374
6.592.497
22.770.564
-
515.666
-
13.564.115
22.770.564
928.374
37.263.053
Capital expenditures (Notes 19 and 20)
12.730.336
1.867.742
-
14.598.078
The segment assets and liabilities at 31 December 2005 and capital expenditure for the year then ended are as follows:
Chemical Products
Paper
43.789.896
851.443
113.264.875
-
Assets
Deferred income tax assets (Note 14)
Other operations
92.302
-
Group
157.147.073
851.443
157.998.516
Liabilities
Bank borrowings
Taxation on income (Note 23)
Deferred income tax liabilities (Note 14)
4.583.311
666.693
-
10.669.994
17.193.497
119.388
505.728
6.098
-
15.759.033
17.193.497
672.791
119.388
33.744.709
Capital expenditures (Notes 19 and 20)
4.498.333
2.163.703
-
6.662.036
40
NOTE 34 - SUBSEQUENT EVENTS
The Company's registered office address is changed as Gümüflsuyu Mahallesi ‹nönü Caddesi No:13 Taksim/ ‹stanbul
and neccesary applications to commercial register related to the revision of address for the registry and declaration
of the address is made.
NOTE 35 - DISCONTINUED OPERATIONS
None (2005: None).
NOTE 36 - OPERATING INCOME
The breakdown of sales income for the periods then ended 31 December is as follows.
Domestic sales
Export sales
Other sales
110.447.800
10.951.710
52.842
80.787.228
23.171.014
33.082
Less: Returns
Less: Discounts
(166.127)
(2.041.688)
(608.028)
(2.654.839)
Net Sales
119.244.537
100.728.457
Cost of sales
(88.136.734)
(75.169.312)
Gross Profit
31.107.803
25.559.145
116.335
66.561
32.824
215.720
109.378
75.317
13.982
198.677
5.435.794
905.756
854.194
335.218
270.850
502.829
5.679.758
1.054.165
791.778
329.005
474.852
775.711
8.304.641
9.105.269
3.667.675
869.658
514.622
191.091
162.094
157.418
599.841
3.152.735
785.017
606.342
219.348
208.738
179.349
557.343
6.162.399
5.708.872
14.682.760
15.012.818
NOTE 37 - OPERATING EXPENSES
Research and Development Expenses:
Depreciation and amortisation
Personnel
Other
Selling and Distribution Expenses:
Transportation
Personnel
Packaging labour expense
Advertisement
Commission expenses
Other
General Administrative Expenses:
Personnel
Outsourced benefits
Depreciation
Travel expenses
Rent
Emloyment termination benefits
Other
Total operating expenses
41
NOTE 38 - OTHER INCOME/EXPENSES AND PROFITS/ LOSSES
5.518.503
733.829
467.853
343.850
314.866
312.075
222.571
411.290
3.670.624
523.290
718.447
248.625
490.146
334.300
165.768
8.324.837
6.151.200
(556.303)
(449.770)
(358.244)
(69.191)
(93.869)
(352.527)
(600.000)
(700.045)
(67.128)
(1.527.377)
(1.719.700)
6.797.460
4.431.500
6.818.847
1.362.886
562.158
342.537
4.065.334
686.113
276.962
375.346
9.086.428
5.403.755
Other operating income:
Foreign exchange gains
Rödavans income
Interest income
Compansation income from insurance companies
Interest income on credit sales
Property, plant and equipment sales gain
Income from overdue charges
Other
Other expenses:
Property, plant and equipment sales loss
Indemnity expense
Tax penalty
Obsolescence provision (Note 21)
Provision for doubtful receivables
Other
Other operating income - net
NOTE 39 - FINANCIAL EXPENSES
Foreign exchange loss
Interest expenses
Interest expense on credit purchases
Bank commission expenses
NOTE 40 - GAIN/ (LOSS) ON NET MONETARY POSITION
None (2005: None).
NOTE 41 - TAXES ON INCOME
Taxes on income for the years then ended 31 December 2006 and 2005 are summarised as follows:
2006
2005
- Corporate tax payable
- Deferred tax income (Note 14)
(3.393.139)
338
(4.140.869)
1.884.658
Total tax expenses
(3.392.801)
(2.256.211)
42
In Corporate Tax Law, there has been settled a number of exemptions for companies, of which the Group may benefit are
explained as follows:
Corporation tax is payable at a rate of 20% for 2006 (2005: 30%) on the total income of the Group after adjusting for certain
disallowable expenses, exempt income and investment and other allowances. No further tax is payable unless the profit is
distributed.
Dividends paid to non-resident corporations having a place of business in Turkey or resident corporations are not subject to
withholding tax. Otherwise, dividends paid are subject to withholding tax at the rate of 10%. Addition of profit to capital is
not considered as a profit distribution.
In accordance with Tax Law No. 5479 “Law Related to Changes in Income Tax Law, Law for Collection of Public Revenue,
Special Consumption Tax Law and Tax Procedural Law” that was published in the Official Gazette on 8 April 2006, income
and corporate taxpayers that could not offset their investment incentive allowances against 2005 taxable income, can offset
their existing investment incentive allowances at 31 December 2005 against taxable income of the years 2006, 2007 and
2008. In addition to this, the capital expenditures after 1 January 2006 related to the investments that begin prior to 1
January 2006 within the scope of repealed 19th article of Income Tax Law No. 193 and the capital expenditures related to
the investment certificates granted prior to 24 April 2003, can also be offset against taxable income of the years 2006, 2007
and 2008. In this respect, Group's subsidiary Alkim Ka¤›t Sanayi ve Ticaret A.fi. has prefered to offset its unused investment
tax credits at 31 December 2005 against taxable income of the years 2007 and 2008.
Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable income for up
to 5 years. However, Tax losses cannot be carried back to offset profits from previous periods.
In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns
within the 25th of the fourth month following the close of the financial year to which they relate. Tax returns are open for
5 years from the beginning of the year that follows the date of filing during which time the tax authorities have the right to
audit tax returns, and the related accounting records on which they are based, and may issue re-assessments based on their
findings.
Reconciliation of the current year's taxation on income is as follows:
2006
2005
Profit before tax
14.562.868
10.187.104
Tax expense calculated over profit before tax
Expenses not deductible for tax purposes
Income not subject to tax
Tax effect of unused investment tax credits
Temporary differences not subject to deferred tax calculation
Other
(2.912.574)
(285.898)
89.595
(278.699)
(157.280)
152.055
(3.056.131)
(206.770)
237.177
470.244
299.269
Taxes on income
(3.392.801)
(2.256.211)
NOTE 42 - EARNINGS PER SHARE
Earnings per share stated in the Income Statement is calculated by dividing the net income to weighted average number of
shares in the current period.
In order for profit distribution, a reserve over the statutory records is allocated in accordance with the provisions of TCC,
the total amount that will be distributed over the net distributable profit calculated over the financial statements prepared
in accordance with the Communiqué is first distributed over statutory net distributable profit if that covers the amount, if
statutory net distributable profit does not cover the amount, the total net distributable amount in statutory records is distributed.
Earnings per share is calculated by dividing net income for the period to weighted average number of shares during that
period.
1 January1 January31 December 2006
31 December 2005
Net income for the year (YTL)
A
11.170.067
7.930.893
Weighted average number of the
shares with face value of YTL 1 each
B
24.725.000
24.725.000
A/B
0,45177
0,32076
Earning per share (YTL)
NOTE 43 - OTHER MATTERS THAT MAY HAVE A MATERIAL EFFECT ON, OR BE EXPLAINED FOR THE CLEAR
UNDERSTANDING OF THE FINANCIAL STATEMENTS
None.
NOTE 44 - EXPLANATION ADDED FOR CONVENIENCE TRANSLATION INTO ENGLISH
As of 31December 2006, the accounting principles described in Note 2 (defined as 'CMB Accounting Standards') to the
financial statements differ from International Financial Reporting Standards (''IFRS'') issued by the International Accounting
Standards Board with respect to the application of inflation accounting and presentation of the basic financial statements
and the notes to them. Accordingly, the financial statements are not intended to present the financial position and results
of operations in accordance with IFRS.
............................................
43
ALKIM ALKALI KIMYA A.S.
PROFIT DISTRIBUTION STATEMENT
A.
1.
2.
3.
DISTRIBUTION OF THE PROFIT FOR THE PERIOD
Profit for the Period
Loss from Previous Periods
Taxes Payable
-Corporations Tax
-Income Tax Deduction
-Other Taxes and Similar
16,855,048.83
3,393,139.04
3,393,139.04
NET PROFIT
13,461,909.79
4. First Legal Reserve
673,095.49
NET DISTRIBUTABLE PROFIT FOR THE PERIOD
5. First Dividend to the Shareholders
-To the holders of ordinary shares
-To the holders of privileged shares
6. Dividend to employees and workers
7. Dividend to the Board of Directors
8. Second dividend to the shareholders
9. Second Legal Reserve
10. Status Reserve
11. Special Reserves
12,788,814.30
2.099.397,97
2.099.397,97
240,301.57
7.231.199,82
7.231.199,82
926,072.15
-
EXTRAORDINARY RESERVE
B. DISTRIBUTION FROM EXTRAORDINARY RESERVE
1. To the shareholders
2.291,842.79
2,567,804.00
2,567,804.00
C. PROFIT PER SHARE ( YTL % )
1 To the holders of ordinary shares ( YTL % )
2 To the holders of privileged shares ( YTL % )
0,54446 YTL - 54,446%
0,54446 YTL - 54,446%
D. DIVIDEND PER SHARE ( YTL % )
1 To the holders of ordinary shares ( YTL % )
2 To the holders of privileged shares ( YTL % )
0,48123 YTL - 48,123%
0,48123 YTL - 48,123%
BASIC RATIOS
1.
a)
b)
c)
LIQUIDITY RATIOS
Current Rate
Liquidity Rate
Rate of Cash
2005
2,33
1,29
0,41
2006
2,16
1,28
0,27
2. ACTIVITY RATIOS
a) Asset Transfer Rate
b) Receivable Transfer Rate
c) Receivable Collection Period ( days )
d) Inventory Transfer Rate
0,64
5,35
67
3,29
0,73
4,95
74
3,62
3. FINANCIAL STRUCTURE RATIOS
a) Total Debt / Equity Capital
b) Short-term Payables / Total of Assets
c) Long-Term Payables / Total of Assets
d) Tangible Fixed Assets / Equity Capital Long-Term Payables
0,31
0,16
0,05
0,91
0,34
0,17
0,06
0,94
4.
a)
b)
c)
0,05
0,07
0,25
0,07
0,10
0,26
24.725.000
4,07
0,44
0,40
4,336
24.725.000
4,82
0,54
0,48
4,391
PROFITABILITY RATIOS
Net Profit for the Period / Total of Assets
Net Profit for the Period / Equity Capital
Gross Profit Margin
5.INFORMATION PER SHARE
a) Number of Shares
b) Net Sales Per Share
c) Net Profit Per Share
d) Dividend Per Share
e) Book Value of One Share
44
Baflaran Nas Ba¤›ms›z Denetim
ve Serbest Muhasebeci
Mali Müflavirlik A.fi.
a member of
PricewaterhouseCoopers
BJK Plaza, Süleyman Seba Caddesi
No: 48 B Blok Kat 9 Akaretler
Befliktafl 34357 _stanbul-Turkey
www.pwc.com/tr
Telephone +90 (212) 326 6060
Facsimile +90 (212) 326 6050
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Alkim Alkali Kimya A.fi.
1. We have audited the accompanying consolidated financial statements of Alkim Alkali Kimya A.fi. and its subsidiaries
(together, the “Group”) which comprise the consolidated balance sheet as of 31 December 2006 and the consolidated
income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then
ended and a summary of significant accounting policies and other explanatory notes.
Group Management's responsibility for the financial statements
2. Management is responsible for the preparation and fair presentation of these consolidated financial statements that have
been prepared in accordance with financial reporting standards published by the Turkish Capital Market Board. This
responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair
presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
Group Auditor's responsibility
3. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with generally accepted auditing principles issued by Capital Market Board. Those principles
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether
the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
4. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial
position of Aklim Alkali Kimya A.fi. as of 31 December 2006, and of its consolidated financial performance and its cash
flows for the year then ended in financial reporting standards published by Capital Market Board.
A
dditional paragraph for convenience translation into English
5. As of 31 December 2006 the accounting principles described in Note 2 (defined as 'CMB Accounting Standards') to the
accompanying consolidated financial statements differ from International Financial Reporting Standards (''IFRS'') issued
by the International Accounting Standards Board with respect to the application of inflation accounting and presentation
of the basic financial statements and the notes to them. Accordingly, the accompanying consolidated financial statements
are not intended to present the financial position and results of operations in accordance with IFRS.
Baflaran Nas Ba¤›ms›z Denetim
ve Serbest Muhasebeci
Mali Müflavirlik Anonim fiirketi
a member of
PricewaterhouseCoopers
ORIGINAL COPY ISSUED AND SIGNED IN TURKISH
Murat Sancar, SMMM
Partner
Istanbul, 9 March 2007
45
M.YÜKSEL KADIO⁄LU
Yeminli Mali Müflavir
Ortaklar Cad. Bilal Apt. No:49 Kat 1 Daire 5
80290 Mecidiyeköy – ‹STANBUL
Tel. : (0212) 216 13 88 – (0212) 216 28 30
(0212) 275 78 97
Fax: (0212) 216 28 31
Corporate Name
Headquarter
Capital
Nature of Activities
: Alkim Alkali Kimya A.fi.
: ‹nönü Cad. No:15 Gümüflsuyu Taksim / ‹STANBUL
: 24.725.000 YTL
: Production of Sodium Sulphate ( vitriol )
Name of the Auditor and Term of Office, weather a
partner or a staff
: M.Yüksel KADIO⁄LU ( for 1 year ) is not a partner or a staff.
Number of Board of Directors' meetings contributed : Contributed to the Board of Directors' meeting 4 times.
Scope of the audit on Partners Accounts, Books and
Documents, Date of the Audit and the Conclusion : In accordance with Tax Legislations and Turkish Commercial Code, revision is
made for the end of the 3, 6, 9 and 12. months and there are no matters to
criticise.
In accordance with Turkish Commercial Code Article
No.353 1st Paragraph 3rd clause, number of cash
counts made and the results
: Company's cash counted 2 times and the amounts matches to the company
records.
Audit dates and results in accordance with Turkish
Commercial Code Article No.353 1st Paragraph 4th
clause
: In audits made by the last day of each month, current letter of guarantees and
securities' congruencies to the records tested.
Complainants and corruptions perceived
and procedures
: No complainants perceived.
We have audited the accounts and transactions of ALK‹M ALKAL‹ K‹MYA A.fi. for the period January 01, 2006 -December 31, 2006
in accordance with Turkish Commercial Code, main agreement of the partnership, Generally Accepted Principles of Accounting and
other legislations.
Balance Sheet referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2006
and the Income Statement for the period January 01, 2006 - December 31,2006 present the results of its operations.
Earnings before tax for the period January 01, 2006 - December 31, 2006 is 16.855.048,83 YTL as can be seen in the enclosed Balance
Sheet and Income Statements.
We request the confirmation of the Balance Sheet and Income Statements and acquittal of Board of Directors to be voted in the General
Board of Directors.
Auditor
M.Yüksel KADIO⁄LU
46
ENVIRONMENT
In terms of environment sensitivity, Alkim is a leader not only in Turkey but also in the world. There has never been
any toxic disposal discharges. This has been proven by the awards given us for Aegean Region Environment Protection.
The productions in all premises of Alkim are being done within a harmony with nature. As you may see in the picture
flamingos have chosen this area as their habitat, this also proves Alkim's care and responsibility regarding the
environment manners.
Flamingos at lake Acigol
47
CONFORMITY WITH CORPORATE MANAGEMENT PRINCIPLES REPORT
1. Conformity with Corporate Management Principles Announcement
Our company has taken the necessary measures to ensure that the principles included in the Corporate
Management Principles issued by the Capital Markez Board are applied. Please find the relevant explanations
below.
CHAPTER 1 - SHAREHOLDERS
2. Shareholder Relations Unit
A shareholder relations service unit was established by our company in order to manage shareholder relations,
to provide accurate and timely answers, to manage investor relations and to provide information to numerous
investors.
The unit is managed by : Z. Banu Gökçen - [email protected]
Unit personnel
: Bekir Akyol
- [email protected]
Telephone
: + 90 212 292 22 66
3. Exertion of the Shareholders' Right to be Informed
In our company, shareholders, investors and the public are informed by the shareholders relations unit by means
of the Istanbul Stock Exchange Special Circumstance Statements. Apart from this, the said unit also provides
answers to all questions about the company (investments, turnover, capital increase, dividend payments etc.)
as long as the information is not classified as commercially confidential. The company's web site at (www.alkim.com)
features all illuminating information needed by the shareholders and the public alike.
4. General Assembly Information
Within the framework of the Capital Market Code, the General Assembly's Annual Activity Report, the Financial
Statements, the Profit Distribution Proposal, the Agenda of the General Assembly, the Power of Attorney Form
and other documentation required by the agenda are sent to all shareholders filing a request before the Annual
General Assembly meeting; published in a minimum of two newspapers circulated nationwide and issued in our
Internet site.
During General Assembly meetings, questions posed by all shareholders are separately answered on the basis
of the equality principle. At the end of the assembly meeting, the minutes of the meeting are reported to the
Istanbul Stock Exchange and issued in the Internet site. Shareholders are allowed to vote by proxy during General
Assembly meetings. All kinds of decisions pertaining to the amendment of the company's Contract of Incorporation
are adopted by the General Assembly.
The Contract of Incorporation features no provisions about the adoption of decisions pertaining to division,
selling, purchasing and renting of the company's assets by the General Assembly.
5. Voting Rights Minority Rights
In compliance with article 14 of the company's Contract of Incorporation (titled the “General Assembly of
Shareholders”), shareholders holding group A, B, C, D shares are entitled to 100 votes for each of the shares
they are holding whereas shareholders holding group E shares are entitled to only 1 vote for each of their shares.
According to article 9 of the Contract of Incorporation, a quota is established for shareholders holding group
A, B, C and D shares during the formation of the Board of Directors. The company's Contract of Incorporation
could be viewed in the company's web site. The accumulated voting method is not applicable.
6. Profit Distribution Policy and Time of Profit Distribution
The profit of our company is distributed within the framework of legal periods established by the Turkish
Commercial Code. Each shareholder is entitled to receive a dividend in direct proportion to the distributed profit.
No privileges are applicable for profit distribution. The profit to be distributed is determined by the General
Assembly by taking into account the company's liquidity and investments to be made.
7. Assignment of Shares
Please refer to article 20 of the Contract of Incorporation for provisions about the assignment and sale of shares
registered to name and legal transfers.
CHAPTER 2 - ILLUMINATING THE PUBLIC AND TRANSPARENCY
8. The Company's Information Provision Policy
Within the framework of related legal provisions, our company provides the necessary information on the basis
of the special circumstance announcements format and in a timely manner. Furthermore, the Shareholder
Relations Directorate is liable to manage all issues concerning the illumination of the public and to provide
answers to questions posed. This unit answers all written and oral questions received by the public all year round
and transfers all the information to related authorities.
General Director Nihat Erkan and the Shareholder Relations Unit Manager Z. Banu Gökçen are responsible from
the implementation of the company's information provision policy.
48
9. Special Circumstance Announcements
4 special circumstance announcements were made in 2006. The Capital Market Board or the Istanbul Stock
Exchange did not request any additional explanations for those special circumstance announcements made by
our company.
10. The Company's Internet Site and Its Content
Alkim's Internet site is at www.alkim.com. The necessary measures are taken on the basis of Corporate
Management Principles and conditions stipulated in the Capital Market Board's decision dated 10.12.2004 with
no.48/1588 are fulfilled.
•
•
•
•
•
•
•
•
•
•
•
•
Trade Registration Information
Current Shareholding Structure
Current Members of the Board of Directors
Current Content of the Contract of Incorporation
Activity Reports for the Last Two Years
Special Circumstance Announcements
Conformity with Corporate Management Report
The List of Participants and Minutes of the General Assembly Meetings Held in the Last Two Years
Voting by Proxy Form
Periodic Financial Statement and Independent Auditors' Report
Explanatory Report and Going to Public Circular (including information as of 1999)
Minutes of General Assembly meetings
Could be found in our Internet site.
11. Announcement of Real Person Final Sovereign Shareholder(s)
The company's real person final sovereign shareholders are announced on request.
12. Announcement to the Public of People Capable of Reaching Information from the Inside
Alkim Alkali Kimya Anonim fiirketi is using its best efforts to ensure that all measures necessary for full conformity
with legal provisions concerning people capable of reaching information from the inside. For this purpose, the
Chairman of the Board of Directors banned the members of the Board of Directors, Auditors and all other
personnel from making use of information directly or indirectly acquired during the course of their duties with
the purpose of providing benefit for themselves or third persons.
CHAPTER 3 - BENEFICIARIES
13. Informing the Beneficiaries
Shareholders
Within the framework of the provisions of article 8 titled “The Company's Information Provision Policy”, the
shareholders are informed about related issues by means of legal announcements and our Internet site.
Customers
Our customers are informed about issues concerning both the company and themselves. Furthermore, all news
and information about the company are issued in our Internet site.
Employees
All practices concerning our employees are implemented in line with the Labour Code and other related legislation.
The hiring, promotion and firing policies and other issues concerning the personnel are handled by our human
resources unit.
14. Participation of Beneficiaries to the Company's Management
Our company has not formed a special model for the participation of beneficiaries to the management. The
rights of the beneficiaries are protected by related legislation.
15. Human Resources Policy
Our Human Resources Policy is to ensure the productivity of our employees in line with the company's objectives
and strategies and to enhance human resources means such as performance appraisal, training etc. through
application. Combining the skilled and experienced management of over a 50-year old company and the
company's personnel capable of attaching the necessary importance to the future and working on the basis of
discipline, human relations and a prestigious working environment, a highly motivated and successful team is
formed. Our company has a Human Resources Department managed by Bülent Eser.
49
16. Information about Customers and Suppliers
Our company's main field of activity is the production of sodium sulphate which is one of the main raw materials of
fundamental sectors such as detergent, glass, cellulose and textile dyeing etc. As Alkim has been operational in this sector
for more than fifty years, it is well-known and famous in Turkey, in the neighbouring countries, in Europe and even throughout
the world (where it ranks 6th among the top sodium sulphate manufacturers). The company has long-standing relations
with the technical and supplying personnel and managers working in the sector as well as the executive managers of the
companies operating in the sector. As publications of the international chemistry sector include articles and interpretations
about the company's activities, customer relations are maintained with other chemistry companies manufacturing raw
materials for basic sector just like Alkim.
17. Social Obligations
Our company produces sodium sulphate and salt from natural resources. Thanks to our sensitivity in this field, Alkim does
not only diligently conforms to all legislation and regulations on the health and safety of the environment and its employees,
but also goes way beyond environmental standards currently applicable in Turkey as it is proven by the facts that rare species
of birds begun to make the surroundings of our Ac›göl (Afyon) plant their habitats and to reproduce; that exceedingly
sensitive animals such as flamingos etc. living in the area had their numbers multiplied and are featured in that scientific
and serious TV series.
Our Social Obligation understanding compels us to show much more respect to humans than to the environment. Within
this context, Alkim caused 5 Primary Schools with 5 classes, 2 village clinics, 1 library, 2 kindergartens, 1 conference and
show hall to be built, furnished and handed over to the public in the regions where its plants and premises are situated.
The company also continues to pay for the annual general maintenance and repair of those buildings. As all of those activities
were conducted with a real social obligation understanding, Alkim has not found it necessary to inform the media about
them.
CHAPTER 4 - BOARD OF DIRECTORS
18. Formation, Structure and Independent Members of the Board of Directors
M.Reha KORA
M.Reha KORA
A. Haluk KORA
Ferit KORA
Hüseyin A. KORA
Mithat KORA
Özay KORA
Tülay ÖNEL
Hüseyin ÜNER
Nihat ERKAN
-
Chairman of the Board of Directors
Chairman of the Board of Directors
Vice Chairman of the Board of Directors
Vice Chairman of the Board of Directors
Member of the Board of Directors
Member of the Board of Directors - General Director
General Director Nihat Erkan is also a Member of the Board of Directors. The General Director, the Financial Affairs Director
act as enforcers in our company.
The Board of Directors has no Independent Members. The authority of the members of the Board of Directors to be engaged
in other duties outside the company is not limited or constrained by pre-determined rules.
19. Qualities of the Members of the Board of Directors
The minimum qualities upon which the selection of the members of the Board of Directors are based are the equivalent of
qualities stipulated in the Corporate Management Principles of the Capital Market Board. The Contract of Incorporation
does not contain any relevant provisions as the necessary care is taken during the appointment of the members of the Board
of Directors in line with related principles.
20. The Mission, Vision and Strategical Objectives of the Company
Alkim's main objective is to ensure maximum production efficiency in its sodium sulphate and salt mines and to market the
products in our country as well as our immediate neighbours and throughout the world. Ranking the 6th sodium sulphate
producer worldwide as of 2006, Alkim uses efforts to maintain this position and to take it even further. Strategical objectives
are issued by the General Director and his assistants, and submitted to the Board of Directors for approval. The Board is
then informed about the realization rates of approved objectives by means of monthly reports and the said rates are evaluated
during periodic executive committee meetings.
21. Risk Management and In-House Control Mechanism
Our company's Risk Management and In-House Control Mechanism is implemented by a committee formed by the members
o fthe Board of Directors for supervision purposes. The said committee has appointed the Supervisory Group to oversee
the establishment of the in-house control mechanism and to inspect its efficiency. The Supervisory Group regularly inspects
the in-house control mechanism on the basis of approved annual supervision plans and informs the executive management
about its opinions on the subject. The Supervisory Committee examines the said issues and submits proposals to the Board
of Directors. The said committee and the Board of Directors then inform the company's managers about measures to be
taken through the agency of the General Director.
50
22. Duties and Obligations of the Members of the Board of Directors and Managers
Please refer to articles 8, 9, 10 and 11 of the company's Contract of Incorporation for a detailed description
of the duties and obligations of the members of the Board of Directors and managers.
23.Fundamental Activities of the Board of Directors
Please refer to article 10 of the company's Contract of Incorporation for the fundamental activities of the Board
of Directors. In 2006, the Board of Directors held 19 meetings. The Board adopts decisions by the majority of
votes. Up to now, nearly all of the decisions are taken by the unanimity of votes. The members of the Board of
Directors are not granted with a weighted right to vote or a negative veto right.
24. Ban on Doing Business and Competing with the Company
This issue is still under discussion as an item in the agenda of the company's General Assembly. Up until now,
the General Assembly authorized the members of the Board of Directors to be engaged in activities stipulazed
in articles 334 and 335 of the Turkish Commercial code.
25. Ethical Rules
The Ethical Rules applied and supervised by Alkim and its entire
personnel are constituted during Alkim's more than 50 years of existence.
Those ethical rules are integrated with Alkim's working principles, our national legislation, internationally
established practices and general honesty - truth principles. Apart from the said general perspective, the entire
Alkim personnel are also liable:
- To take national benefits into account in all activities, to take heed of national insight as the company exploits
the country's natural sources and is operational in this field,
- To protect the nature and the environment,
- To always attach primary importance to quality,
- To give preference to team work as a corporation.
Ethical rules are followed hierarchically by chiefs of departments.
In cases when an employee is found to be violating ethical rules, the necessary actions will be caused to be taken
respectively by the related superior, the chief of the related department, the unit manager, assistant general
director and the general director in compliance with the human resources and personnel regulations.
26. Numbers, Structures and Independency of Committees formed by the Board of Directors
Our company's supervisory committee is formed within the legally permitted period and is engaged in duties
stipulated by the Capital Market Board. The members of this committee are Özay Kora and A. Haluk Kora who
are also members of the Board of Directors .
27. Financial Rights Granted to the Board of Directors
The members of the Board of Directors are entitled to a monthly fixed remuneration. In 2006, the members of
the Board received a monthly net remuneration of YTL 1.000.
No loans are granted and no credits are extended to, and no encumbrances are established on behalf of any
members of the Board of Directors and managers of the company.
51
Not :

Dear Shareholders, Welcome to our General Assembly Meeting

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