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Message from the Chairman ……………………………………….........................................................................
1. Company ………………………………………………………………………........................................................
1.1 Highlights
1.2 Capital and Shareholding Structure
1.3 Board of Directors, Auditing Board and Auditing Committee
1.4 Organisation Chart
1.5 Board of Directors
1.6 Historical Background
2. Sector of Operation ………………………………………..………………….………………………………….....
2.1 IT Sector
2.2 Sub-segments of the IT Sector
2.3 Growth of the IT Sector
3. Subsidiaries ………………………………………………………………………………………………………..….
3.1 Datagate Bilgisayar Malzemeleri Tic. A.fi
3.2 Neteks ‹letiflim Ürünleri Da¤›t›m A.fi.
3.3 Neotech Teknolojik Ürünler Da¤›t›m A.fi.
3.4 Art›m Biliflim Çözüm ve Da¤›t›m A.fi.
3.5 ‹nfin Bilgisayar Ticaret A.fi.
3.6 Teklos Teknoloji Lojistik A.fi.
4. Operation ……………………………………………………………………………………………………………...
4.1 Structure of Product Supply and Distribution
4.2 Logistics
4.3 Invoicing and Collection
4.4 Technical Support and Customer Service
4.5 Marketing and Sales
5. Corporate Governance Principles Compliance Report ………………………………………………………....
6. Auditing Board’s Report ………………..……………………………………..……………………………………..
7. Independent Auditor’s Report ………………………………………………..……………………………….........
8. Financial Statements and Notes ………………………………………………..………………………………......
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ANNUAL REPORT 2011
Dear Shareholders;
Before reviewing our companies’ activities performed in 2011, andthe relevant balance sheet and profit & loss account reflecting theresults of these activities, I would like to talk briefly about the latestdevelopments in the global economy and Turkish economy, and thedevelopments of the IT sector.
The world faced with many economic and politic changes in 2011.Except the reflection of Arab Spring in the Middle East and North AfricaRegion, with the increasing financial risks and negative situationbecoming in public finance of EU Countries, the world economyachieved growth rate of 4%. Positive improvements regarding workpower markets in US economy left worries and suspects behind. Viceversa countries around Turkey, firstly Euro Zone, our country hadconsiderably successful year in both economic and political arena,became the second fastest growing country with 8,5% growth rateafter China. Turkey with the achieved growth in the last two years,turned global crises to advantage while the risks increased in the worldeconomy.
We estimate our country to grow between 4% and 5% in 2012although political instability in countries in close regions and non-solveddebt crises firstly Euro Zone and Europe. Current Account Deficit willstill continue to be a threat for the economy of our country as used tobe during many years besides the effect of money cost of financeregarding the growth depending on external savings.
IT Sector achieved 8,1% growth in 2011 compared to 2010 andreached 5,8 billion USD. While the rate of software reached 13% withincreasing R&D activities in 2011, this rate is over 20% in developedcountries. Unfortunately, our country should move forward more insoftware category. Service category progresses in parallel to softwarein Turkey. While the service portion is over 40% in developed countries,this rate is only 19% in our country. The lever of sector in 2011 hasbeen mobile product as it was in 2010. In the next terms, the demandwill continue with increase for ultra mobile computers besides mobileand tablet products. We estimate IT sector to grow 10% and reach6,3 billion USD business volume in 2012.
1
Nevres Erol B‹LEC‹KChairman
ANNUAL REPORT 2011
In 2011, our Company’s turnover reached 1,5 billion TRL with growth of 23%, net profit reached 18,4 million TRL with growth of40% comparing to the previous year. Our investment activities in IT Sector will continue in 2012 as used to be in the last years. Weare targeting growth over sector growth in 2012 with adding new products to our portfolio, investments which we will make in serviceand logistic side.
In 2012, as the company management, we will continue our business understanding, which is focused on profitability, making cost-effective analyses, aiming at the realization of the sales budget figures, producing sales policies with a target of customer satisfactionusing mobile channel sales teams and prioritizing productivity.
Under the skin of Turkey’s 2023 vision project, bringing up new generation that succeed new applications in science and technologyby turning the achieved improvements in society and economy sections to advantage. We will our best for our responsibility in thecontext of this project because, we know that one of the conditions to develop in economic and society sense is to move forward ininformatics and technology.
I would like to express my gratitude to all who contributed to our success, to our employees, business partners, suppliers and ourshareholders.
Yours Faithfully,
Erol B‹LEC‹K
Chairman
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ANNUAL REPORT 2011
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ANNUAL REPORT 2011
1. Company
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ANNUAL REPORT 2011
1. Company1.1 Highlights• ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi., which was founded in 1989 to operate in the computer field, hasbecame a company distributing about 200 worldwide brands, employing 289 people and cooperating with over 7.500 businesspartners, holding the leadership position of the sector for a long time.
• In the Turkey Top 500 ICT Companies Ranking performed every year by Interpro Medya A.fi., our company ranked 7th (seventh)in the general ranking based on turnover achieved in 2010 among the companies including telephone operators and mobile phonesellers. Our company ranked first in the hardware category among the companies including those above. On the other hand, ourCompany ranked 1st (first) with a sales revenue of USD 813 (Million USD), like the previous years, in the category of companies sellingonly computers. Further, it ranked first in six IT categories.
• ‹ndeks acting as a holding company has 6 affiliates and subsidiaries, each of which operates in different fields of technology products.The following companies are included in the consolidated financial statements of ‹ndeks. The product groups of such companies areshown in the following table:
Product Groups by Company
INDEX • PC • Notebooks • Printers • Servers • Peripherals • Software
Major distributorships undertaken by main product groups are shown below:
PCProducts OEM Printer &
PeripheralsNetworkProducts
SoftwareProducts
HouseholdElectronics
Memory &Medium
SizedSystems
APPLEASUSFSCHP
LENOVOLGMSI
SONY VAIOTOSHIBA
ALPSINTEL
KINGSTONLITE-ON
NECPHILIPS
SEAGATEVIEWSONIC
WDBELKIN
SAMSUNGFSJ
APCCANONEPSON
HPIBMOKI
PANASONICXEROX
3COMALIED TLCHECKP.
CISCOHCSHP
NEWBRIDGENORTELLTREND M.PANDUITAVAYAIBM ISS
IBMLOTUS
MICROSOFTNOVELL
SYMANTECTIVOLI
AIRTIESAPPLE
HITACHILG
PANASONICSAMSUNG
SONYVIEWSONIC
CANONHTC
HPIBM
LACIESEAGATE
WD
DATAGATE • Microprocessor • Hard Disk • Main board • Display Card • Monitor • Optical Products • Server Products • Memory Products • Notebooks • Desktops • Backup Units • Network Products • Accessories • Security Products • Network (Modem-USB-Adaptor) products • Laser Printers
NETEKS • Corporate Network Systems • Network Equipment • Structured Cabling • Private Exchange Systems • Network Security Solutions • ADSL and SME Communication Solutions
NEOTECH • Consumer Electronics • Communication Equipment • Alternative Electronic Products
TEKLOS• Logistic and
Transportation
ARTIM• Software
• Computer Spare Parts
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ANNUAL REPORT 2011
a) Breakdown of Sales:64% of the Company’s income is derived from the sales of PC and OEM (Original Equipment Manufacturer – computer parts).Breakdown of the Company’s sales is as follows:
Breakdown of Sales on Product Category Based
c) Changes in the Share Price throughout the Year:‹NDEKS in ISE: Having held an IPO in June 2004, our company’s shares are traded in Istanbul Stock Exchange (ISE) national marketunder the code of “INDES”. The ISE-100 index opened at 66.363 in 2011, closed at 52.112 on 31.12.2011 with the decrease of 21%.The lowest level was 48.600 on 11.08.2011 and the highest level was 70.366 on 04.05.2011.
The TRL/USD exchange rate opened at 1.5450 at the beginning of the year, had some fluctuations during the year and closed theyear at 1.8980 USD valued by 23% within the year.
The year-end value of 1 share was TRL 2,30, whereas its value was 2,63 at the beginning of the year. According to the closing valueon the last transaction day of the year, the value of our Company is TRL 128.800.000.
b) Major Manufacturers of our Company‹ndeks Bilgisayar has a wide range of product line, which allows it to reach more number of dealers, with this advantage, to increaseits sales above the sector average. Breakdown of the major distributorships undertaken by our Company are shown below:
(*) Trademarks are listed in alphabetic order.
3 COM
ACER
AIR TIES
AOC
APC
APPLE
ASUS
AVAYA
AVOCENT
BELKIN
CABINET
CANON
CHECKPOINT
CISCO SYSTEM
CORNING
DELL
EPSON
FUJITSU SIEMENS
GENIUS
GIGABYTE
HCS
HOMEND
HP
IBM
IMATION
INTEL
IOMEGA
ISS
JUNIPER
KINGMAX
KINGSTON
LENOVO
LEXMARK
LG
LINKSYS
LITE – ON
MAXTOR
MICROSOFT
MSI
NEC
NOKIA
NORTEL NETWORKS
NOVEL
OKI
PANDUIT
PANASONIC
POWERSONIC
SAMSUNG
SAPPHIRE
SEAGATE
SERVER i SERIES
SERVER p SERIES
SIEMENS
SONY
SONY VAIO
SYMANTEC
TARGUS
TIPPING POINT
TOSHIBA
TREND MICRO
TRUST
VERITAS
VERITECH
VESTEL
WACOM
WESTERN DIGITAL
XEROX
Computer50,05 %
Other3,68 %
Medium SizedSystems1,79 % Household Electronic
0,58 %
Peripherals2,57 %
Software4,94
Printer12,57 %
Communication9,97 %
OEM13,85 %
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ANNUAL REPORT 2011
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d) Awards achieved & Distributorships Undertaken in 2011
Company Date Description
Alk›m-BusinessRelation
Canon Eurasia Ltd.
Art›m-BusinessRelation
IBM-Prize
20.01.2011
25.01.2011
03.02.2011
04.02.2011
Our subsidiary Neotech Teknolojik Ürünler Da¤›t›m A.fi. signed an agreement withCanon Eurasia Ltd to distribute Canon branded cameras & video cameras andaccessories in Turkey.
Canon that operates in business solutions, consumer products, media andcommunication, medical systems and industrial products…etc was established in1937. It is net revenue is 3.209 billipon Yen in 2009 as it operates globally. The headoffice is located in Japan and it has 118.000 employees globally. Our companyNeotech aims to increase its sales with cameras & video cameras and accessoriesin Turkey.
In parallel to our business plans and targets, Our company started for negotiationsof acquiring majority shares of Art›m Biliflim Çözüm ve Da¤›t›m A.fi. that providesdistribution of value added solutions and supplies spare parts in IT sector.
Art›m Biliflim was established in 2003 and distributes oracle sun server, database,and storage products, Hewlett Packard, Fujitsu and Dell branded spare parts. In2010, it achieved revenue of 10,5 million USD with its 24 employees.
In the meeting (business partners of the year) held on 02.02.2011 and organized byIBM, the year of 2010 was reviewed. Our company has been awarded as the“Distributor of 2010”.
In parallel to our business plans and targets, our company acquired % 51 of Art›mBiliflim Çözüm ve Da¤›t›m A.fi. that provides distribution of value added solutionsand supplies spare parts in IT sector. For this transaction, 780.000 USD was invested.
Art›m Biliflim was established in 2003 and distributes oracle sun server, database,and storage products, Hewlett Packard, Fujitsu and Dell branded spare parts. In2010, it achieved revenue of 10,5 million USD with its 24 employees.
Alk›m-BusinessRelation
07.02.2011
In parallel to our business plans and targets, Our company started for negotiationsof acquiring majority shares of Alk›m Bilgisayar Sanayi ve Ticaret A.fi that providesafter sales services of IT products.
Alk›m Bilgisayar was established in 1996. It provides value added service andmaintenance of firstly HP and other many brands. This company provides warrantyand void of warranty solutions with its service locations in Istanbul, Ankara and ‹zmir.
ANNUAL REPORT 2011
Company Date Description
HP-Prize
Interpromedya A.fi.-Prize
HTC Corporation-Dsitribution
Alk›m-BusinessRelation
28.03.2011
28.06.2011
29.06.2011
06.07.2011
Microsoft Office 365-Distribution
20.12.2011
In the meeting organized by Hewlett Packard Turkey in Istanbul, our company hasbeen awarded as having the biggest business volume in PSG (personal systemsgroup) product group in Distributor Category between 4 distributors by consideringparameters such as revenue made in this product group, superior logistic servicesgiven, creating success in the sales of all HP branded products in Turkey.
‹ndeks Bilgisayar ranked 7th among the Turkey Top 500 ICT Companies in turnover-based regarding the year of 2010 general ranking as determined by InterpromedyaA.fi. Prize was given to our company on 27.06.2011, Monday evening in ‹stanbulTechnical University’s Maslak Campus.
Our subsidiary Neotech Teknolojik Ürünler Da¤›t›m A.fi. signed an agreement withHTC Corporation to distribute HTC branded smart phones, Tablet PC and accessoriesin Turkey.
HTC was established in 1997 in Taiwan. It is one of the fastest growing companiesIT sector. HTC Corporation achieved approximately 5 billion USD (144,5 billion TaiwanDollar) in 2009, 9.6 billion USD (278,8 billion Taiwan Dollar) net sales. The head officeof HTC Corporation is located in Taiwan and has 13.000 employees globally.
Our company has been unable to achieve any result for negotiations with Alk›mBilgisayar Sanayi ve Ticaret A.fi.
Our company was appointed as the only distributor of Office 365 products byMicrosoft Turkey and Europe together. These products include specifications of e-mail, Microsoft Office, combined messaging and file sharing…etc.
With said product groups, Microsoft office solutions will be open to usage of mediumsized firms in easier way. These products covers easy installation, e-mail, calendar,instant messaging, video conference, working on the documents together, word,excel, powerpoint and online products of onenote facilities that without need of helpfrom people specialized in IT.
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ANNUAL REPORT 2011
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e) Data on Financial Structure:
1.2 Capital and Shareholding StructureAs of 31.12.2011, the shareholding structure of our Company is as follows:
Shareholder's Name Country Shares % Number of Shares Amount of Shares
Nevres Erol Bilecik Turkey %33,77 18.909.441 18.909.441
Ayfle ‹nci Bilecik Turkey %2,37 1.325.558 1.325.558
Pouliadis and Associates S.A.(*) Greece %35,56 19.911.119 19.911.119
Public Turkey %28,30 15.851.986 15.851.986
Other Turkey %0,00 1.896 1.896
TOTAL 56.000.000 56.000.000
(*) Voting rights of the shares of Pouliadis and Associates S.A. is given to 5 Greek banks.
LIQUIDITY RATIOS 31.12.2011 31.12.2010
Current Ratio 1,25 1,24Liquidity Ratio 1,03 0,93
OPERATING RATIOS (*) 31.12.2011 31.12.2010
Receivables Turnover 78 69Payables Turnover 90 86Inventory Turnover 34 37
PROFITABILITY RATIOS 31.12.2011 31.12.2010
Gross Profit Margin %6,13 %6,08Operating Profit Margin %3,69 %3,76Net Profit Margin %1,22 %1,07Profit Before Tax Margin %1,88 %1,51
FINANCIAL STRUCTURE RATIOS 31.12.2011 31.12.2010
(*) The figures in quarterly financial accountshave been taken into consideration in thecalculation of the averages.
%22
%76
%2%9
%22
%76
%2%5
Shareholders' Equity / Total Liabilities &Shareholders' EquityShort Term Liabilities / Total Liabilities &Shareholders' EquityLong Term Liabilities / Total Liabilities &Shareholders' EquityFinancial Debts / Total Liabilities
ANNUAL REPORT 2011
Capital Increase throughout the Year:
The upper limit of authorized capital of our Company was determined as TRL 75.000.000 and its share capital issued as of 31.12.2009is TRL 56.000.000. Covering the all maximum authorized capital, i.e. TRL 75.000.000, from the profit of 2006, an application is madeto Capital Markets Board (CBM) of Turkey for issuing shares with nominal value of TRL 1.000.000 for the capital increase from TRL55.000.000 to TRL 56.000.000 and the application was approved with the resolution of CBM with no. 25/699 of 28.06.2007. Thecapital increase was registered on 10.07.2007 and announced on the Turkish Trade Register Gazette with no. 6852 of 16 July 2007.
Our company’s capital of TRL 56.000.000 is composed of Group A registered shares in value of TRL 318,18 and Group B bearershares TRL 55.999.681,82.
Group A shareholders are authorised to determine half plus one of the board members and to receive 5% of the remaining profit afterthe first issue reserve funds and first dividend.
1.3 Board of Directors, Auditing Board, Auditing Committee and Corporate Governance Committee
Board Members
In the General Assembly held on 25.05.2009, Members of the Board of Directors were elected for duration of three years, and theirduties and powers were determined pursuant to the Company's Articles of Association and the relevant provisions of the TurkishCommercial Code. Resolutions of the General Assembly were published in the Turkish Trade Register Gazette with no. 7336 of 19June 2009.
Name & Surname Title Term of Office
Nevres Erol Bilecik Chairman 3 years
Salih Bafl Vice Chairman 3 years
Atilla Kayal›o¤lu Board Member 3 years
Ayfle ‹nci Bilecik Board Member 3 years
Halil Duman Board Member 3 years
Members of the Auditing Board
Name & Surname Title Term of Office
Veli Tan Kirtifl Auditor 1 years
H. Ça¤atay Özdo¤ru Auditor 1 years
Corporate Governance Committee
Name & Surname Title
Salih Bafl Chairman of the Committee
Ayfle ‹nci Bilecik Committee Member
Halil Duman Committee Member
Members of the Auditing Committee
Name & Surname Title
Salih Bafl Committee Member
Ayfle ‹nci Bilecik Committee Member
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ANNUAL REPORT 2011
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1.4 Organisation Chart:Organisation chart of the company is given below:
Tayfun YİĞİTTechnology Development
Manager
Erol BİLECİKChairman of the
Board
Naim SARAÇInternal Audit
Manager
Halil DUMANDeputy General
Manager
BusinessUnit
Management
Sales Management
ProductManagement
Product Management
Retail
Software
Electronic Sales
Medium-SizedSystems
Ankara
İzmir
Accounting
Finance
Logistics
Customer Services
Import
Human Resources
Atilla KAYALIOĞLUGeneral Manager
Non-Retail
Özen BOZÇAĞA BEZİRCİMarketing Communication
Manager
Timur TİRYAKİHuman Resource
Coordinator
Orkun DİZDARElectronic Sales &Marketing Director
Risk Management
ANNUAL REPORT 2011
1.5. Board of Directors
The Board of Directors of the company consists of five members. Curriculum Vitae of the board members are given below.
Nevres Erol Bilecik, Chairman:Erol Bilecik was born in 1962 and graduated from Istanbul Technical University, Department of Computer Engineering. Erol Bilecik,who established ‹ndeks A.fi. in 1989, acts as the chairman of the following subsidiaries of Index, besides our company: DespecBilgisayar Pazarlama ve Ticaret A.fi., Datagate Bilgisayar Malzemeleri Ticaret A.fi., Neteks ‹letiflim Ürünleri Da¤›t›m A.fi., NeotechTeknolojik Ürünler Da¤›t›m A.fi., Desbil Teknolojik Ürünler Ticaret Afi., Homend Elektrikli Cihazlar San. Ve Ticaret Afi., ‹nfin BilgisayarTicaret A.fi. and Teklos Teknoloji Lojistik Hizmetleri Afi. Moreover, between the years 2002 and 2005, he presided TUBISAD (TurkishInformatics Industry Association) established in 1974, the oldest civil society organisation in the ICT sector, members of which arecompanies realising 95% of the total transaction volume of the Turkish ICT sector. Erol Bilecik is married with two children and speaksEnglish.
Salih Bafl, Vice Chairman:Salih Bafl was born in 1965, and graduated from Anadolu University, Department of Business Administration. He has been workingfor Index Group since 1990. In 2003, while he was acting as the Assistant General Manager - Finance & Accounting for ‹ndeks BilgisayarSistemleri Mühendislik Sanayi ve Ticaret A.fi., he was appointed as the General Manager and Vice Chairman of the Board of Directorsof Datagate Bilgisayar Malzemeleri Ticaret A.fi.. He curren acts as the Deputy Chairman for the companies, ‹ndeks Bilgisayar SistemleriMühendislik Sanayi ve Ticaret Afi., Teklos Teknoloji Lojistik Hizmetleri Afi., Homend Elektrikli Cihazlar San. Ve Ticaret Afi., ‹nfin BilgisayarTicaret A.fi. and Desbil Teknolojik Ürünler Ticaret A.fi., and as one of the members of the Board of Directors for the companies DespecBilgisayar Pazarlama ve Ticaret Afi., Neotech Teknolojik Ürünler Da¤›t›m A.fi. and Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. Salih Bafl ismarried with one child and speaks English.
Atilla Kayal›o¤lu, Board Member:Atilla Kayal›o¤lu was born in 1952, and graduated from Bo¤aziçi University, Department of Mechanical Engineering in 1974; followingthat he received a masters degree from Syracuse University, Department of Industrial Engineering. He carried out several duties inIBM Turk between the years 1980-1999; and in 1999, when he was the Global Services Manager he left IBM Turk and joined Index.Kayal›o¤lu acts as a Board Member and General Manager of ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi.; he alsoacts as a Board Member of the companies of Neteks ‹letiflim Ürünleri Da¤›t›m A.fi., Datagate Bilgisayar Malzemeleri Ticaret Afi., ‹nfinBilgisayar Ticaret A.fi. and Teklos Teknoloji Lojistik Hizmetleri Afi.. Atilla Kayal›o¤lu is married with two children and speaks English.
Ayfle ‹nci Bilecik, Board Member:Ayfle ‹nci Bilecik was born in 1964 and graduated from Istanbul Technical University, Department of Computer Engineering. She alsoacts as a Board Member of Desbil Teknolojik Ürünler Ticaret A.fi., being a subsidiary of Index. Being one of the founding partners of‹ndeks Bilgisayar founded in 1989, Ayfle ‹nci Bilecik used to work as an engineer specialized in software in the ICT sector for long years.Ayfle ‹nci Bilecik is married with two children and speaks English.
Halil Duman, Board Member:Halil Duman was born in 1965, and graduated from Marmara University, Department of Business Administration. He carried out severalduties in Yücelen ‹nflaat A.fi. between the years 1987 and 2000; and in 2000, when he was the Manager of Finance, he left Yücelen‹nflaat and joined Index as Finance Director. Duman acts as a member of the Board of Directors of ‹ndeks Bilgisayar SistemleriMühendislik Sanayi ve Ticaret A.fi., and also acts as a Board Member of Datagate Bilgisayar Malzemeleri Ticaret Afi., Neteks ‹letiflimÜrünleri Da¤›t›m Afi., Teklos Teknoloji Lojistik Hizmetleri Afi., Neotech Teknolojik Ürünler Da¤›t›m Afi., Despec Bilgisayar Pazarlamave Ticaret Afi., Desbil Teknolojik Ürünler Ticaret A.fi. Homend Elektrikli Cihazlar San. ve Ticaret Afi., ‹nfin Bilgisayar Ticaret A.fi. veAlk›m Bilgisayar Afi, and acts as Assistant General Manager - Finance of ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve TicaretA.fi. Halil Duman is married with two children.
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ANNUAL REPORT 2011
Board Member - General Manager
Board Member - Dep. General Manager
Internal Audit Manager
Electronic Sales and Marketing Director
Human Resource Director
Technology Development Manager
Finance Manager
Accounting Manager
Customer Services and Logistics Dept. Manager
IT Manager
Import Manager
Administrative Affairs Manager
Ankara District Manager
‹zmir District Manager
Marketing Communication Manager
Group Sales Manager
Retail Channel Sales Manager
IBM e server Software Manager
OEM Sales Manager
HP Business Unit Manager
Microsoft IBM and Lenovo Sales Manager
Asus, Dell, Toshiba, Canon Business Unit Manager
Atilla KAYALIO⁄LU
Halil DUMAN
Naim SARAÇ
Orkun D‹ZDAR
Timur T‹RYAK‹
Tayfun Y‹⁄‹T
Birgül ÖZTÜRK
Halim ÇA⁄LAYAN
Çetin EK‹NC‹
Erkan BERBER
Canan Koç RANA
Selahattin GÜL
Özcan AKDEN‹Z
Osman fiAH‹N
Özen BOZÇA⁄A BEZ‹RC‹
Mahmut ÖLÇER
Atilla ALKAfi
‹lker SALTO⁄LU
Elif fiEN
Ebru KOÇO⁄LU
Sedat AZ‹ZO⁄LU
Yeliz ÖZCAN
Names and titles of executives are as follows:
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ANNUAL REPORT 2011
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1.6 Historical Background
1990
2002
1998
1996 PCDistribütör AS400
1994
1995
NIXDORF1992
2005 563 Million $ Revenue
1999 IBM POS111 Million $ Revenue
Business Partner1997 59 Million $ Revenue
1993Consumables
4 Million $Revenue
Halka Arz2004 431 Million $ Revenue
2000 163 Million $ Revenue
2003
2001
2006 630 Million $ Revenue
2008
2007 787 Million $ Revenue
2009
Kingston
2010
2011Foto & Video
ANNUAL REPORT 2011
1991
‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi. was founded on 10.07.1989 to operate in the computer sector. TheCompany was transformed into a joint stock company in April 2000. The headquarters of the Company, in which Greece-basedPouliadis Group participated in August 2000, is in Istanbul. The Company operates in the Information Technologies (“IT”) sector anddeals with the purchase, sales, technical and software support of computers, computer supplies and data transmission equipment.
The Company made a distributorship agreement with 3M, being an American company operating in Turkey, for 3M magnetic mediumproducts in 1989. The Company increased its market share in the 3M magnetic products market from 1,2% to 55% in one year. Itachieved a turnover of 875 thousand USD with only a staff of 6 in 1989. In the next year, in 1990, it made a turnover of 1.380 thousandUSD with a staff of 19. It ranked 82nd among the Turkish IT companies in 1990.
In 1991 it made a contract with the Italian company named Olivetti to act as the “Authorised Seller” of Olivetti PC products. In thesame year, it increased the number of staff to 36 and made a turnover of 2.188 thousand USD in 1991. It ranked 45th, rising 37 stepsin the ranking of the Turkish IT companies.
The Company set up Ankara branch as its first branch in 1992 and started more permanent activities in the Central Anatolia Region.In 1992 the number of its staff increased to 49 and its turnover to 3.7 million USD. It ranked 30th, rising 15 steps in the ranking ofthe Turkish IT companies, in 1992.
It climbed to the rank of 20th among the Turkish IT companies with its turnover of 9.2 million USD and staff of 56 in 1993.
In 1994, it has become the Turkish Distributor of HP consumables, APC Uninterrupted Power Supplies and Siemens Nixdorf PCproducts. Then, it became the 19th biggest IT company of the Turkish market. In 1994 it achieved a turnover of 11.3 million USDwith its staff of 61.
It founded its ‹zmir branch in April 1995 and signed “Business Partner” contract with IBM in May. Just in the second half of the sameyear, i.e. at the end of 1995, it was granted “IBM PC Business Partner Award” by IBM due to its achievements as a business partner.With its significant ‘channel’ activities in the same year, ‹ndeks won “The Most Active Distributor Award” of INTERPRO, which isconsidered valuable by the sector. It achieved a turnover of 15.9 million USD with its staff of 62 in 1995. Thereafter, it has becomethe 16th biggest IT Company in the sector.
In 1996, IBM changed the distribution model in PC sales organization and adopted the “distributorship” model. Thus, ‹NDEKS hasbecome the first Turkish company that made a distributorship contract with IBM. It made 4.127 units of IBM PC in 8 days in April ofthe same year, which was first in the market. By the end of year, ‹ndeks reached the turnover of 38.7 million USD with a staff of 70and ranked 9th by climbing 7 steps more in the ranking of the Turkish IT companies. It was deserved to receive the tiTRLe of “TheMost Active Computer Company” once more in 1996, just like in 1995.
In 1997, ‹ndeks has become the 8th biggest IT Company in Turkey, with a turnover of 58.6 million USD and a staff of 75. The Companymade a distributorship agreement for Lotus & IBM Software products, thereby starting distribution of software in 1998. In the sameyear, it made a distributorship agreement with HP A.fi. for distribution of hardware products. In the same year, it made a new agreementwith IBM and became the distributor of AS/400, being one of the most important value-added products of Turkey. Towards the endof that year, ‹ndeks made a distributorship agreement with Kingston. In 1998, the Company won “The Most Active IT Company Award”again after 1995 and 1996 and became the only IT company that achieved to win the same award third times. In November 1998,the “Supplies Department” of ‹ndeks Bilgisayar was reorganised as an independent company and became “DESPEC Türkiye” with ajoint investment with Von Dorp Despec Group, which was the “Number 1” in its field in Europe. With its turnover of 89.4 million USDwith a staff of 131 in 1998, ‹ndeks climbed another 2 steps in the ranking of Turkish IT ranking and became the 6th Biggest TurkishIT Company.
In 1999, ‹ndeks made distributorship agreements with many significant products such as Cisco, Microsoft, Xerox, IBM Pos and Escort;and its “logistics centre” started operations in June of the same year. “‹ndeks Logistics Centre”, which is situated on an area of 2,500sqm and equipped with highly functional technology, was one of the most important investments of ‹ndeks in canal. The Companyreached the turnover of 111 million USD with a staff of 155 in 1999.
On 12 April 2000, the company transformed from a Limited Liability Company into a Joint Stock Company. In August 2000, Pouliadisand Associate Societe Anonyme Industrial and Commercial of High Technology Systems S.A. ('Pouliadis S.A.') acquired 50% of‹NDEKS Bilgisayar which thereby became a company with foreign shareholder. In the same year, ‹ndeks made an agreement fordistributorship of Epson products and added Epson products to its increasingly growing range of products. ‹ndeks Bilgisayar achieveda turnover of 163 million USD by the end of 2000.
16
ANNUAL REPORT 2011
17
In 2001, the Company made a distributorship agreement with COMPAQ. With this agreement, ‹NDEKS blazed a trail being the onlydistributor dealing with IBM, HP and COMPAQ PC products. In the same year, ‹ndeks also made distributorship agreements for Novel,Sony and Microsoft OEM products. The Company continued its investments in spite of the economic crisis in 2001 and in March ofthe same year, it acquired 50,5% of Datagate Bilgisayar Malzemeleri Ticaret Afi. (DATAGATE), which is a leading company in Computerparts/OEM sector, there by boosting the morale of the sector. In the same period, it acquired 70% of Neteks ‹letiflim Ürünleri Da¤›t›mA.fi. (NETEKS) , which is one of the highly experienced distribution companies in network, and continued its growth in spite of thecrisis. In the Turkey Top 500 ICT Companies Ranking performed by Interpro Medya A.fi. in 2001, our company ranked 1st in thecategory of “IT Hardware Incomes”, 2nd in the category of “Turkish IT Companies” and 11th in the general ranging of the ICT Sector.
In 2002, Oki printers and Toshiba notebook and server products were included in the ‹ndeks range of products.
In July 2002, all companies of the group relocated to its current three-storey building with an indoor area of 10.000 sqm in the addressof Cendere Yolu, No: 23 Ka¤›thane. The turnover of the Company in 2002 was 189 million USD.
Products with Fujitsu Siemens and Nec brands were added to the product portfolio of the Company in 2003. Further, the share of‹ndeks in DATAGATE, of which 50,5% shares were acquired by ‹ndeks in 2001, thereby being an affiliate of the Company, was increasedto 85%. The consolidated turnover of the Company was realized as 323 million USD as of the end of 2003.
15,34% of the ‹ndeks Bilgisayar shares was offered to public on ISE via a capital increase through rights issue after restricting theexecution of pre-emptive rights of existing shareholders, on 24.06.2004. The Company made distributorship contracts with Kingmaxand Asus for memory and barebone products, respectively, in 2004 and started to distribute such products. In the same year, ‹ndeksBilgisayar A.fi. was awarded ISO 9001:2000 certificate.
On 02.02.2005, in accordance with the resolution of the Board of Directors dated 02.02.2005, ‹ndeks acquired 80% of NeotechTeknolojik Ürünler Da¤›t›m Anonim fiirketi for wholesale trade of consumer electronics and communication products as a new field ofoperation of the Company. In March 2005, the Registered Capital System was adopted, and its maximum registered capital wasapproved as TRL 75.000.000. In May 2005, the issued capital of ‹ndeks was increased from TRL 17.600.000 to 45.000.000. InSeptember 2005, the Company made an exclusive distributorship agreement with TPV Technology Limited, which manufactures 19,5%of the monitors in the global market and has realised a turnover of 4 billion USD in 2004, for distribution of AOC branded LCD, CRTMonitor, Plasma Monitor and LCD TV products in Turkey. According to the Top 500 Turkish ICT Companies report issued by Interproon 27.05.2005 for 2004, our Company ranked 1st in the categories of Notebooks, Desktop PCs, Print Systems, Servers, Data Backupand Storage Units, Office Software and OEM and 8th in the turnover-based general ranking of Turkey, in which Turk Telekom ranked1st. With these results, ‹ndeks Bilgisayar achieved to be the only local computer company in the Top Ten.
In February 2006, 30,30% of the shares of the second biggest company of the group and a subsidiary of ‹ndeks Bilgisayar, namelyDatagate Bilgisayar Malzemeleri Ticaret A.fi., was offered to public in February 2006. of was offered to public on ISE via a capitalincrease through rights issue after restricting the execution of pre-emptive rights of existing shareholders. Began to be traded on ISEon 10.02.2006 Thus, 2 companies of the group have been offered to public and begun to be traded on ISE. Partnership share of‹ndeks Bilgisayar decreased from 85% to 59,2% with the public offering of Datagate. The issued capital of ‹ndeks Bilgisayar wasincreased from TRL 45.000.000 to TRL 55.000.000 in May 2006. TRL 8.718.703 out of the amount of increase, i.e. TRL 10.000.000,is covered from the profit of the period of 2005 and the remaining TRL 1.281.297 from extraordinary reserves. ‹ndeks has executedone of the most important and greatest investments in ICT sector by purchasing Karadeniz Orme A.S., which is founded on a 39.761m2 land and having 18.969 m2 indoor area, in order to be used as a logistics centre. The trade name of Karadeniz Orme AS has beenchanged into Teklos Teknoloji Lojistik Hizmetler A.fi. and its field of activity has been customized to be able to work on the logisticsservices. The head office of the company moved to its new location on 26.10.2006. EVOS (Effective Efficient Operational Result-Oriented) ERP System developed by ‹ndeks A.fi. in 2006 was started to be used by ‹ndeks Group Companies on 01.01.2007. EVOSProject was developed by the Software Engineers Group of ‹ndeks A.fi. within a period of 9 months. Our Company and its subsidiariesincluded in the consolidated financial statements made distributorship agreements with Canon for printer, fax and scanner products,with Western Digital Corporation for hard disk products, with Panasonic for consumer electronics, with Viewsonic for monitor productsand with Sony Vaio for notebook products. According to the 2005 Turkey Top 500 ICT Companies report issued Interpro
In 2006, ‹ndeks Bilgisayar, with its turnover of 758.634 (thousand TRL), again ranked 1st in the category of companies selling onlycomputers, like in 2004. With this result, the Company kept its special place as the only local computer company in the Top Ten.Moreover, it was ranked the biggest company in the category of markets with respect to the incomes from Server, Print Systems,OEM, Operating System, Office Software and E-Trade sales.
‹ndeks Bilgisayar and its subsidiaries made distributorship contracts with Philips for monitors and PC peripherals, Asus for notebookproducts, Apple IMC for Apple brand products, Trend Micro for software products for internet security and viruses, Nokia for E-seriesproducts, LG Electronics for notebook products in 2007. The issued capital of the Company was increased from TRL 55.000.000 toTRL 56.000.000 in July 2007. The amount of increase, i.e. TRL 1.000.000, is covered from the profit of the period of 2006.
ANNUAL REPORT 2011
On 24.07.2007, ‹ndeks Bilgisayar and its subsidiary Datagate Bilgisayar A.fi sold 50% of their shares in Neteks ‹letiflim Ürünleri Da¤›t›mA.fi., an affiliate of ‹ndeks Bilgisayar, to Westcon Group Eurepean Operation Limited, one of the leading global companies in its field.Of the 50% shares sold, 26% and 24% were provided by ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi and DatagateBilgisayar Malzemeleri Ticaret A.fi., respectively. Following such sale, Neteks become a JV of which shares are held by ‹ndeks BilgisayarA.fi. and Westcon Group on 50%-50% basis. It was the first time that with this agreement, Westcon Group made an investment inTurkey under a partnership; until then, it was operating only with its fully owned subsidiaries in 19 countries around the world.According to the 2007 Turkey Top 500 ICT Companies Ranking performed by Interpro Medya A.fi., our company ranked seventh,one step higher than the previous year, in the general ranking based on turnover achieved in 2006 among the companies includingtelephone operators and mobile phone sellers. On the other hand, it ranked first with its sales income of 901.778 (thousand TRL),like the previous years, in the category of companies selling only computers. Further, it ranked first in nine ICT categories. The categoriesin which ‹ndeks Bilgisayar ranked first are the Portable computer wholesale trader and distributor, Data backup and storage hardware,Server, Print systems wholesale trader and distributor, Data communication hardware, OEM products, Operating system, Officesoftware wholesale trader and distributor and E-trade.
In 2008, ‹ndeks Bilgisayar made a distributorship agreement with LG, which is one of the most valuable brands of the world, fornotebooks, consumer products and monitors and with Asustek for Asus branded server products. In the same year, Neotech, beinga subsidiary of ‹ndeks Bilgisayar, and Datagate were appointed as the distributors of Wacom and Belkin products, respectively. OurCompany ranked sixth, one step higher than the previous year, in the general ranking based on sales made in 2007 among the first500 ICT companies including telephone operators and mobile phone sellers in Turkey. On the other hand, our Company ranked 1stwith a sales revenue of TRL 1.022.919 thousand TRL, like the previous years, in the category of companies selling only computers.Further, it ranked first in eight ICT categories.
In 2009, ‹ndeks Bilgisayar made distributorship agreements with Iomega and Dell and a supply contract with Best Buy. The contractsmade by Neotech A.fi., a subsidiary of ‹ndeks Bilgisayar, for Apple and Airties products were transferred to ‹ndeks Bilgisayar as a resultof the segment adjustments in this year. In the same period, Neteks, a 50% affiliate of ‹ndeks Bilgisayar, made distributorship agreementswith Juniper, IBM ISS and Avaya. On the other hand, Datagate A.fi. made a distributorship agreement with Fujitsu Siemens. ‹ndeksBilgisayar ranked 7th among the Turkey Top 500 ICT Companies with its sales income of 927.893 thousand TRL in the turnover-basedgeneral ranking as determined by Interpromedya A.fi. In the analysis of the general ranking results, ‹ndeks Bilgisayar ranked 1st, asthe previous years, among the companies dealing with computer trade only. Further, it ranked first in six ICT categories. Further,Datagate Bilgisayar Malzemeleri Tic. A.fi., which is a 59% subsidiary of ‹ndeks Bilgisayar, ranked first in the category of “OEM (computerparts)” incomes and Neteks ‹letiflim Da¤›t›m Ürünleri A.fi., which is a 50% subsidiary of ‹ndeks Bilgisayar, ranked first in the categoryof “Data Communication Hardware”.
In 2010, our logistic company called Teklos A.fi. achieved the contract of Turkish Telecom for storage and distribution of the productswhich will be provided to the customers of Turkish Telecom. ‹ndeks Bilgisayar ranked 7th among the Turkey Top 500 ICT Companieswith its sales income of TRL 1.087.422 in the turnover-based general ranking as determined by Interpromedya A.fi. In the analysis ofthe general ranking results, ‹ndeks Bilgisayar ranked 1st, as the previous years, among the companies dealing with computer tradeonly. Further, it ranked first in six different ICT categories. These are Personal computer, Mobile, Printing systems, data back up andstorage, monitor, operating systems and B2B E-Trade. Further, Datagate Bilgisayar Malzemeleri Tic. A.fi., which is a 59% subsidiaryof ‹ndeks Bilgisayar, ranked first in the category of “OEM (computer parts)” incomes and Neteks ‹letiflim Da¤›t›m Ürünleri A.fi., whichis a 50% subsidiary of ‹ndeks Bilgisayar, ranked first in the category of “Data Communication Hardware”. Furthermore, Indeks hasstarted negotiations with Canon Eurasia Ltd for the distribution of cameras, video camcorders products and their accessories in Turkeyas Canon is one of the biggest producer of these types of products in the world. Our subsidiary, Neteks A.fi achieved the distributorof the year award organized by Cisco Systems in 2009. Indeks achieved the most efficient business partner award which was organizedby Lenovo in China in 2009. In addition, Indeks has been awarded the distributor of the year organized by IBM Turk Ltd in Istanbul.
In 2011, in parallel to our business plans and targets, our company acquired %51 of Art›m Biliflim Çözüm ve Da¤›t›m A.fi. that providesdistribution of value added solutions and supplies spare parts in IT sector. For this transaction, 780.000 USD was invested.
Our subsidiary Neotech Teknolojik Ürünler Da¤›t›m A.fi. signed an agreement with Canon Eurasia Ltd to distribute Canon brandedcameras & video cameras and accessories in Turkey.
In the meeting (business partners of the year) held on 02.02.2011 and organized by IBM, the year of 2010 was reviewed. Our companyhas been awarded as the “Distributor of 2010”.
In the meeting organized by Hewlett Packard Turkey in Istanbul, our company has been awarded as having the biggest businessvolume in PSG (personal systems group) product group in Distributor Category between 4 distributors by considering parameters suchas revenue made in this product group, superior logistic services given, creating success in the sales of all HP branded products inTurkey.
‹ndeks Bilgisayar ranked 7th among the Turkey Top 500 ICT Companies in the turnover-based general ranking as determined byInterpromedya A.fi. Prize was given to our company on 27.06.2011, Monday evening in ‹stanbul Technical University’s Maslak Campus.
18
ANNUAL REPORT 2011
Our subsidiary Neotech Teknolojik Ürünler Da¤›t›m A.fi. signed an agreement with HTC Corporation to distribute HTC branded smartphones, Tablet PC and accessories in Turkey.
Our company was appointed as the only distributor of Office 365 products by Microsoft Turkey and Europe together. These productsinclude specifications of e-mail, Microsoft Office, combined messaging and file sharing…etc.
19
ANNUAL REPORT 2011
2. Sector of Operation
21
ANNUAL REPORT 2011
22
2. Sector of Operation2.1 IT Sector
2.1.1 Turkish IT SectorThe usage of computers in Turkey started in the end of the 1980’s. Although there was a very rapid development in the sector betweenthe years of 1990 and 1995, usage of computers were limited to mostly financial sector, governmental units, big businesses anduniversities. In the second half of the 1990’s, the increase in the usage of computers made the IT sector one of the most rapidlygrowing sectors in Turkey. According to the data issued by International Data Corporation (“IDC”), the Turkish Information andCommunication Technologies (“IT”) sector achieved a compound annual growth rate (“CAGR”) of 20% between 1997 and 2000. In2000, the Turkish IT sector has reached its greatest business volume thus far with 2,3 billion USD, whereas that figure reduced to1,2 billion USD with 49% recession in 2001 because of the economical crisis that was encountered in the end of 2000 and thepostponement of the demand of IT investments by public and private sectors. The figures achieved in 2000 were again caught onlyin 2004, with a business volume of 2.4 million USD. In other words, it took 4 years to eliminate the effects of the crises. However,one should also consider that one of the causes of the shrinkage of the business volume was the continuously price reduction ofproducts, which is the structural feature of the IT Industry.
As a consequence of the realization of the postponed IT investments especially in the private sector in parallel with the improvementin the macroeconomic indicators after 2001, the IT sector continued its growth with a compound annual growth rate (“CAGR”) of27,9% between 2001 and 2007, which is higher than the growth rates in the period before the crisis. Particularly the increasing usageof internet in the recent years has made a great contribution to this development. However, in despite of the negative pressure of theglobal economic shrinkage on the consumption tendency and the appreciation of USD against TRL, contrary to the previous crisisperiods, the Turkish IT Sector did not shrink, but has reached 4,9 billion USD in 2009. The contribution of tax stimulus packages ofthe government during 6 months cannot be underestimated for this growth. According to IDC’s research, IT market achieved growthfrom 2009 to 2010 with 10,4%, from 2010 to 2011 with 8,1%.
According to the 2012 Turkey IT Expenditures Research conducted by IDC, the Turkish IT market is expected to have a 12% compoundannual growth rate (CAGR) in the period between 2011 and 2015, reaching 9,1 billion USD in 2015. IT investment demands deferredin the 2001 crisis period have been started to be realized with the appearance of the increasing stable outlook of the economy andthese investment expenditures have been one of the most powerful dynamics of the market in the first 5 years following 2001.
Turkish IT Market Business Volume (Mio $)
Source: IDC 2012
8.038
2010 2011 2012F 2013F
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
(mn
US
D)
IT Sector Business Volume % Growth
CAGR(11-15T): %12
2009 2014F
10000
7.161
6.503
5.897
5.453
4.941
0%
4%
10%
2%
6%
8%
12%
14%
16%
9.124
2015F
ANNUAL REPORT 2011
23
New investments that increased after merger and acquisition operations in all sectors, beginning in the finance and telecommunicationsectors and spread to other sectors from 2005 on, technology replacement investments, increased IT investment made by thegovernment as part of e-government projects, increase in the internet usage rates and finally, in the number of the users who followup the rapidly developing technology became the driving forces of the market between 2005 and 2008. Although the first quarter of2008 started very favourably, the sector started to lose its strength due to the suit brought to close AKP, a slowdown was experiencedin the third quarter when not so many negative results were observed. However, with the last quarter, the sector was affected by theglobal financial crisis that started at the beginning of October, and thus, the quarter was closed with a double-digit shrinkage. 2009was experienced as a year when the wounds of the crisis were bandaged; the effects of the crisis in the first quarter diminished withthe effect of the VAT cut applied for 6 months, including the second and third quarters, and positive growth was recorded in the fourthquarter. In 2010, IT sector achieved quite gradual growth after constitutional referendum particularly static summer season. In 2011,particularly in the second half of the year, IT sector was affected negatively by currency fluctuations sourced by debt crisis of EuropeanCountries.
Turkey has been one of the major developing countries due to the improving general economic conditions, increased per capita incomeand steps taken for globalization. In addition to highly qualified and cost effective human resources, majority of the young populationis contributing to the attractiveness of our country. When the pressure of the diminished consumption tendency on the IT Market dueto the crisis in 2008-2009 decreased, IT sector achieved growth of 8,1% in 2011 comparing to 2010. In 2012, it is expected IT togrow 10,3% and reach 6,3 billion USD business volume. In particular, positive movements are expected especially in the second halfof the year.
On the other hand, if the share of the end-users in the market is monitored in the period between 1995 and 2009, it would be clearlyseen that the market structure has changed considerably. Accordingly, the IT market comprised governmental and public bodies(38%), finance sector companies (30%), private sector companies (20%), individual users (7%) and SMEs (5%) in 1995. However, theshares of government and public sector companies, finance sector companies and private sector companies in the market decreasedwhile those of individual users and SMEs increased in the period between 1995 and 2009. As a result, as of 2011, the Turkish ITmarket comprises 42% individual users, 18% government and public sector companies, 15% private sector companies, 11% financesector companies and 14% SMEs.
Changes in the Market Share of End Users
2009
1995
2000
2005
2008
18% 14% 16% 14% 38%
20% 15% 18% 12% 35%
22% 25% 25% 10% 18%
25% 35% 23% 7% 10%
38% 30% 20% 5% 7%
2011
2010
18% 11% 15% 14% 42%
17% 13% 16% 14% 40%
2012F 18% 11% 15% 14% 42%
2010
17%
13%
16%
14%
40%
2011
18%
11%
15%
14%
42%
Public Institutions
Financial Sector
Private Sector (Corporate)
SME’s
Indvidual Users
1995
38%
30%
20%
5%
7%
2000
25%
35%
23%
7%
10%
2005
22%
25%
25%
10%
18%
2008
20%
15%
18%
12%
35%
2009
18%
14%
16%
14%
38%
2012F
18%
11%
15%
14%
42%
Source: IDC 2012
ANNUAL REPORT 2011
24
According to the 2009 report of ITU (International Telecommunication Union) on the basis of 2007 data, the rate of PC ownershipper household is 70% in the USA, 75% in England, 79% in Germany, 40% in Greece, 53% in Italy, 21% in Brazil and 29% in Turkey.The rate of internet users is 62% in the USA, 67% in England, 71% in Germany, 25% in Greece, 43% in Italy, 15% in Brazil and 19%in Turkey.
It is estimated that the rate of the number of PC in operating status to the total population has increased from 8% to 27% in the periodbetween 1995 and end of 2010, and that the rate of the internet users to the total population has increased from 10% to 37% in thesame period. This indicates that PC ownership and internet usage rates increased over 3 times in the last 15 years. PC ownershipand internet usage rates have increased by 67% and 40%, respectively in the last 5 years. Comparing to the country data publishedby ITU above, it is clear that Turkey is far below the developed countries with respect to the PC ownership and internet users rateand that there is a long distance to be covered in this field. The PC and internet penetration in Turkey between 2000 and 2013F hasdeveloped as shown in the following graphics.
According to the results of “Households IT Usage Research” published by the Turkish Statistical Institute (TÜ‹K) in April 2010, the PCand internet usage rates of individuals are 40,1% and 45%, respectively. The survey indicates that computer and internet usage ratesof people between 16 and 74 ages are 56,1% and 54,9% for men and 36,9% and 35,3% for women, respectively.
The age group in which the rate of computer and internet usage is highest is 16-24.These rates are higher in men than women in allage groups. By educational level, the population who use the computer and internet most are graduates of first degree and highereducation levels. 11,8% of people place order for or purchase goods or service for personal use via internet.
According to the report results, PC and internet usage rates have increased by 7% and 8%, respectively in the period between 2010and 2011. Another interesting feature of the report is that although the computer and internet usage rate of the rural population islower than the urban population, the computer and internet usage rates increased by 5% and 9%, respectively, in the rural areas.Although the increasing rate is pleasing, it is clear that the computer and internet usage rate in the urban areas is over 2 times higherthan the rural areas.
ANNUAL REPORT 2011
Trends in Internet & PC Penetrations
32%
27%
15%12%
2011201020052000
PC Penetration
36%
40%
2012F 2013F
42%
37%
25%
15%
2011201020052000
Internet Penetration
50%
55%
2012F 2013F
Source: IDC 2012
60%
50%
40%
30%
20%
10%
0%
60%
50%
40%
30%
20%
10%
0%
25
Yearly IT Investment by Government seen below chart with contribution of e-transformation Turkey Project conducted in the contextof Information Society Strategic Action plan structured by Premiership of Turkish Republic. Thus, Incremental tendency is seen yearon year. While the allocated budget was approximately 526 million TRL with 2011 prices, this value exceeded the value of 2 billionTRL in 2011. Public Information Communication Technology investment increased 4 times since 2002 by routinely increasing except2008. Particularly, project in education in 2011 contributed to this increase.
Computer and internet usage in the separation of urban and rural
0
10
20
30
40
5046,37
54,70
26,88
44,96
53,19
25,72
Computer Usage Internet Usage
Turkey Urban Rural
60
Source: TUIK 2011
Comparison of computer and internet usage on area based (rural & urban) (%) (2010-2011)
Computer Usage Rate Internet Usage Rate
In the lastthere months
Computer andinternet users
Between three monthsand one year
Over 1 year
Never used
2010
43,2
50,6
25,6
39,1
46,3
22,0
1,9
2,1
1,5
2,2
2,2
2,1
56,8
49,4
74,4
2011
46,4
54,7
26,9
42,1
50,2
23,3
2,1
2,3
1,9
2,1
2,3
1,8
53,6
45,3
73,1
Change
%
7%
8%
5%
8%
8%
6%
10%
7%
24%
-3%
2%
-14%
-6%
-8%
-2%
2010
41,6
49,2
23,7
37,6
44,7
20,7
2,2
2,6
1,5
1,8
1,9
1,6
58,4
50,8
76,3
2011
45,0
53,2
25,7
40,5
48,4
22,0
2,6
2,7
2,2
1,9
2,1
1,4
55,0
46,8
74,3
Change
%
8%
8%
9%
8%
8%
7%
16%
7%
53%
4%
8%
-8%
-6%
-8%
-3%
Source: TUIK 2010, 2011
Turkey
Urban
Rural
Turkey
Urban
Rural
Turkey
Urban
Rural
Turkey
Urban
Rural
Turkey
Urban
Rural
ANNUAL REPORT 2011
26
When looked at Public Information Technology Investments on sector based in 2011, education, other public services and transportationhave the biggest portions. Ministry of Internal Affairs, Social Security Department and Real Estate Certification & Planning Agency…etcInstitutions are considered under Other Public Services.
Health2,52%
Education42,92%
Other Public Services40,61%
Transportation &Communication
8,84%
Agriculture1,67%
Energy1,22%
Mining1,17%
Production1,01% Tourism
0,04%
Public Information Communication Technology Investment on Sector Based Breakdowns 2011
First 10 Public Institutions and Ministries who will make the highest InformationCommunication Technology Investment in 2011
100 200 300 400 500 600 700 8000 Million TRL
Source: State Planning Agency, Information Society Department
Source: State Planning Agency, Information Society Department
Public Information Communication Technology Investment (2002-2011)
Source: State Planning Agency, Information Society Department
500
1.000
1.500
2002 2003 2004 2005 2006 2007 2008 2009
2.000
2010 20110
2.500
526 591645
887988 1.014
900 913
1.147
2.061
With 2011 Prices (Million TRL)
NATIONAL EDUCATION MINISTRY
SOCIAL SECURITY DEPARTMENT
MINISTRY OF INTERNAL AFFAIRS
REAL ESTATE CERTIFICATION & PLANNING AGENCY
UNIVERSITIES
CULTURE AND TOURISM MINISTRY
UB COMMUNICATION INSTITUTION
POLICE HEAD QUARTERS
MINISTRY OF JUSTICE
PTT INSTITUTION (STATE DELIVERY SERVICE)
ANNUAL REPORT 2011
27
Considering Public Information Technology Investments of State on project based in 2011, respectively “increasing opportunities &technology amendment movement (FAT‹H) project”, “e-Signature & Mobile Signature Supported Electronic Documents & ArchiveManagement System setting and structuring Project”, “Secondary Education Project”, “Primary Schools Computer Classes SettingProject”, “Real Estate Certification & Planning Project” and “Hardware and Modernization Project”. With “increasing opportunities &technology amendment movement (FAT‹H) project”, “Secondary Education Project” and “Primary Schools Computer Classes SettingProject”, it is seen that National Education Ministry has the biggest portion on Ministry based.
Social Security Department follows this with “Hardware and Modernization Project”, “e-Signature & Mobile Signature SupportedElectronic Documents & Archive Management System setting and structuring Project”.
Ministry of Internal Affairs with “population services IT project” and “e-internal affairs project”, Real Estate Certification & PlanningAgency with “TAKB‹S” project are the third and fourth institutions respectively.
When looked at Public Information Technology Investments on allocated budget based, these are “FAT‹H Project” with 496 millionTRL, “e-Signature & Mobile Signature Supported Electronic Documents & Archive Management System setting and structuring Project”with 110,4 million TRL, “Secondary Education Project” with 102 million TRL, “Primary Schools Computer Classes Setting Project”with 90 million TRL” and “Real Estate Certification & Planning Project” with 71,8 million TRL.
Top 10 Information Communication Technology Projects who have the highest budget in 2011
100 200 300 400 500 6000 Million TRL
Source: State Planning Agency, Information Society Department
FAT‹H PROJECT (NATIONAL EDUCATION MINISTRY)
ELEC. DOCUMENT AND ARCHIVE MANAGEMENT PROJECT (SOCIAL SECURITY DEPARTMENT)
SECONDARY EDUCATION PROJECT (NATIONAL EDUCATION MINISTRY)
PRIMARY SCHOOLS COMPUTER CLASSES SET UP (NATIONAL EDUCATION MINISTRY)
TAKB‹S PROJECT (REAL ESTATE CERTIFICATION & PLANNING AGENCY)
HARDWARE AND MODERNIZATION (SOCIAL SECURITY DEPARTMENT)
ICT INVESTMENTS (UNIVERSITIES)
POPULATION SERVICES (CULTURE AND TOURISM MINISTRY)
INFORMATION TECHNOLOGIES PROJECT (POLICE HEAD QUARTERS)
GENERAL TOTAL 210 1.623.683837.678 4.957.637 204.797 52.986 2.061.121283.135 78.139
Sector External
Amount of Projects Cumulative Expenditure
7
8
10
8
24
1
28
5
119
51.215
1.182
0
52.311
513.831
0
330.894
37.410
636.840
Numbersof
Projects Total Loan Equity Total
2011 Investments
0
6.595
15.000
0
220.410
0
403.000
115.159
77.514
277.848
25.214
20.821
105.312
833.135
882
1.381.909
171.046
2.141.470
0
0
0
0
0
0
176.000
24.910
3.887
0
0
0
0
52.986
0
0
0
0
34.380
24.032
20.821
25.098
182.302
882
884.594
51.949
837.063
Loan Equity Total
0
6.595
0
0
0
0
192.000
39.999
44.541
0
0
15.000
0
63.139
0
0
0
0
000 US Dollars 210 1.043.565538.368 3.186.347 131.626 34.055 1.324.713181.975 50.211
2011 Public Information Communication Technology Investment Summarized Table
Source: State Planning Agency, Information Society Department
(*) In high education sector, university investments are shown under only one project.
000 TRL
Agriculture
Mining
Production
Energy
Transportation&Communication
Tourism
Education
Health
Other Public Services
ANNUAL REPORT 2011
28
World IT Market – Country Based PC Market Growth Analysis 2010-2011 (Quantity)
0
2.000
4.000
6.000
8.000
10.000
12.000
Russia Turkey Poland SaudiArabia UAE Ukraine
11.167 3,579 3,304 2,323 2,283 2,393
12,699 3,340 3,199 2,597 2,582 2,574
13,7% -6,7% -3,2% 11,8% 13,1% 6,5%Growth
2011
2010
SouthAfrica
2,069
2,283
10,3%
Israel Romania
1,306 1,100 613
1,149 974 678
-12,0% -11,5% 10,6%
Egypt
835
590
-29.4%
Czech Rep.
14.000
Source: IDC 2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Service
Software
Hardware
119,760 $ 25,571 $ 10,995 $ 21,747 $ 29,925 $ 12,652 $ 3,993 $
6,598 $ 3,710 $ 4,754 $ 3,377 $ 6,177 $ 2,247 $ 784 $
13,977 $ 8,020 $ 7,338 $ 5,788 $ 13,233 $ 3,726 $ 1,121 $
140,335 $ 37,300 $ 23,087 $ 30,913 $ 49,334 $ 18,626 $ 5,897 $
World IT Market – Developing Countries Based IT Sector Analysis 2011 (Quantity)
Source: IDC 2012
85%
10%
5%
68%
22%
10%
32%
21%
48%
70%
19%
11%
61%
27%
13%
68%
20%
12%
68%
19%
13%
Hardware
Software
Service
Total
China India Indonesia Russia Brazil Mexico Turkey
ANNUAL REPORT 2011
Looking at the table above prepared by Information Society Department of State Planning Agency, it can seen that state madeinvestment in Public Information Communication Technologies with 210 projects, the value of the projects was 2,061 billion TRL in2011, the US Dollar amount of this was 1,324 billion.
2.1.2 IT Market Comparison in the World and TurkeyAccording to IDC’s report regarding growth rates between countries, the highest growth rate from 2010 to 2011 was seen in Russiawith 13,7% and respectively UAE with 13,1%, Saudi Arabia with 11,8%, Romania with 10,6%, South Africa with 10,3%. Other countriesfaced with shrinkage, Egypt had highest shrinkage with -29,4%. Turkey has -6,7% shrinkage in 2011 unfortunately.
According to the report published by IDC, as understood by above chart, China has the highest rate of hardware market with %85.Others are Russia with 70%, India with 69%, Mexico & Turkey with 68%, Brazil with 61% and Indonesia with 48% respectively. Onthe other hand, Indonesia has the highest rate of service market with %32. Others are Brazil with 27%, India with 22%, Mexico with20%, Turkey & Russia with 19% and China with 10% respectively. When looked at software segment, these are Indonesia with 21%,Brazil & Turkey with 13%, Mexico with 12%, Russia with 11%, India with 10% and China with 5%.
Looking at the same report on developed countries based, Japan 45%, Italy with 42%, Canada with 31, USA with 36, France with35%, Germany with 34% and the UK with 32% on hardware based. On service based, the UK with 49%, France with 46%, Canadawith 44%, Germany with 41%, Italy with 39% and USA & Japan with 38%. On service based, USD with 26%, Germany with 24%,the UK, France & Italy with 19%, Japan with 17%, Canada with 15%. Distribution in segments on developed countries is morehomogeny comparing to developing countries.
2.2 Sub-segments of the ICT SectorTurkish IT sector is essentially separated into three main groups, namely hardware, software and IT services. According to the Turkeyresults published by IDC in 2012, the business volume of the Turkish Information and Communication Technologies (IT) market reached4,9 billion USD in 2009, 5,5 billion USD in 2010. The same report shows that the share of the “Hardware”, “Software” and “IT Services”sub-segments in the total market are 67,7%, 13,3% and 19%, respectively. This indicates that the Turkish IT sector has got a structurewhere “hardware” is predominant with respect to income created.
29
45%
38%
17%
41%
44%
15%
38%
26%
36% 32%
49%
19%
35%
46%
19%
34%
41%
24%
42%
39%
19%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Service
Software
Hardware
World IT Market – Developed Countries Based IT Sector Analysis 2011 (Quantity)
65,141 $ 17,444 $ 215,871 $ 32,441 $ 24,159 $ 30,352 $ 14,781 $
25,195 $ 6,566 $ 158,335 $ 18,533 $ 13,297 $ 21,768 $ 6,562 $
55,071 $ 18,935 $ 226,773 $ 49,094 $ 31,890 $ 36,827 $ 13,697 $
145,408 $ 42,944 $ 600,979 $ 100,068 $ 69,346 $ 88,947 $ 35,040 $
Source: IDC 2012
Hardware
Software
Service
Total
Japan Canada USA The UK France Germany Italy
29
ANNUAL REPORT 2011
30
According to the 2011 Turkey IT Expenditures Survey conducted by IDC, the Turkish IT market is expected to have a 12% compoundannual growth rate (CAGR) in the period between 2011 and 2015F, reaching 9,1 billion USD in 2015. These estimates are based onthe anticipated growth rates, investments anticipated to be made by companies rapidly as they were deferred due to the crises of2001 and 2008, effects of IT expenditures incurred by the public sector for e-transformation projects on IT consumption, increaseduse of IT in education, anticipated increased rate of the use of internet and mobile technologies and replacement investments to becaused by new technologies.
Growth on Segments
Hardware
Software
Service
6,7%
12,6%
10,5%
9,8%
11,6%
11,1%
9,2%
12,8%
11,5%
12,1%
13,5%
11,7%
14,1%
13,1%
11,8%
Turkish IT Market 2010-2015F (Mio US$)
2010 2011 2012 F 2013 F 2014 F 2015 FIT Sector Contents(x m $)
Hardware
Software
Service
Total IT
Growth %
3.743 $
696 $
1.014 $
5.453 $
3.993 $
784 $
1.121 $
5.897 $
8,1%
4.383 $
874 $
1.245 $
6.503 $
10,3%
4.787 $
986 $
1.388 $
7.161 $
10,1%
5.368 $
1.120 $
1.551 $
8.038 $
12,2%
6.124 $
1.266 $
1.734 $
9.124 $
13,5%
2011 2012 F 2013 F 2014 F 2015 F2010
Distribution in Segments
Hardware
Software
Service
67,7%
13,3%
19,0%
67,4%
13,4%
19,1%
66,8%
13,8%
19,4%
66,8%
13,9%
19,3%
67,1%
13,9%
19,0%
68,6%
12,8%
18,6%
Source: IDC 2012 (Telecom, Network tools are not included for the calculation)
2011 2012 F 2013 F 2014 F 2015 F2010
Source: IDC 2012
0,0 $
1.000,0 $
2.000,0 $
3.000,0 $
4.000,0 $
5.000,0 $
6.000,0 $
7.000,0 $
2009 2010 2011 2012F 2013F 2014F
$3.426 $3.743 $3.993 $4.383 $4.787 $5.368
$635 $696 $784 $874 $986 $1.120
$881 $1.014 $1.121 $1.245 $1.388 $1.551
2015F
$6.124
$1.266
$1.734
IT Sector Expenditures, 2009-2015F (mio US$)
Hardware
Software
Service
ANNUAL REPORT 2011
31
0.0%
15.0%
30.0%
45.0%
90.0%
75.0%
60.0%
Hardware Software Service
2009 2010 2011 2012F 2013F 2014F 2015F
Total IT
Growth Rates in Turkish IT Market Between 2009-2015F (%) on Sub-Group Based
2.2.1 Hardware MarketHardware market in Turkish IT sector is the sub-segment having the biggest share regarding the sales amounts of 1999 – 2009, withthe ratios changing between 57% and 74%. With tax stimulus packages of the government for only 6 months in 2009 and constitutionalreferendum at the end of third quarter were both supported the growth in the sector. The hardware sector achieved growth from 2010to 2011 as 6,7%.
IDC expects Hardware sector capacity will be reaching 6,124 million USD in 2015.
Source: IDC 2012, (Telecom Network Tools not included)
Source: IDC 2012
0
1000
2000
3000
4000
5000
6000
2009 2010
% GrowthHardware
2011
(m n
US
D)
2012F
3.426
0%
2%
4%
6%
8%
10%
12%
14%
16%
2014F2013F
3.7433.993
4.3834.787
5.368
7000 CAGR(11-15T):%116.124
2015F
Growth Rates & Targets of Hardware Expenditures in IT Sector, 2009-2015 (Mio USD,%)
ANNUAL REPORT 2011
32
Turkish IT Market on Main Form Based 2010 – 2011
Total PC Market: 3.340.326Total PC Market: 3.579.406
20112010
Mobile PC68.0%
Desktop PC32.0%Mobile PC
66.0%
Desktop PC34.0%
Source: IDC 2012
2.2.1.1 PC Market:The hardware sub-group consisting of Desktop PCs, portable PCs (“Laptop PCs”, “Notebooks”), Servers and Peripherals is monitoredvia the sales data in PC market which represent a very significant portion of the total sales. Accordingly, total sales of the PC marketwere realized as 3.579.406 in 2010, whereas such total number (both notebook and desktop) rose to 3.340.326 units with an decreaseof -6,7% in 2011.
However, when the sales in the PC market are considered by quantity excluding the server market, it is noticed that portable PCshave gained majority in this market for the first time in 2009. Beginning from the year 2004, supplying portable PCs with high performance,increased mobility possibility with their lighter structure and affordable prices to the consumers has enabled significant increases intheir sales, and finally, sales of portable PCs have surpassed those of desktop PCs in 2009.
When the market share of mobile PC was 35,7% in 2005, it reached 63% in 2009, 66,1% in 2010 and 68% in 2011. In this paralel,when the market share of desktop PC was 64,3% in 2005, it decreased to 37% in 2009, 33,9% in 2010 and 32% in 2011.
The developments at PC market are closely related with the ongoing projects in public and educational sectors. The stable growth indemand of the consumers is also considered as another significant factor on this issue. The growing retail chains and financialopportunities offered to the consumers by these chains have been the most important driving forces for the PC sales. Besides, noticingthe benefits of mobile computing systems by the corporate companies is seen as another important reason for the growth. At thispoint, one may clearly see from then market sales figures that the demand by the small and large enterprises seeking productivity forportable PCs as an important part of mobile data systems has increased.
-6,7%
-10,0%
-5,0%Mobile PC Market Growth
Desktop Market Growth
PC Market Growth
Besides the producers which have international brands, a considerable part of hardware production both inside and outside the countryis performed with the main components that are obtained from the global computer parts suppliers by big and small-sized companies.Over time, these factors have transformed the hardware product market and the especially PC market into a low added value structurein which the competition is highly sensitive to the price.
26.0020.0025.0029%
35.0024.0020.0021.00
1Q
2Q
3Q
4Q
Q1 Q2 Q3 Q4 Total
748.839 721.617 847.215 1.261.735 3.579.406
953.214 827.890 682.117 877.105 3.340.326
27,3% 14,7% -19,5% -30,5% -6,7%Growth
2011
2010
Source: IDC 2012
Year
2010
2011
Turkish PC Market Quarter Based Changes 2010-2011
ANNUAL REPORT 2011
33
Suppliers Based Distribution of Turkish Desktop and Notebook Market, 2011
Desktop
Source: IDC 2012
Laptop
InternationalProducers36,43%
Local Producers32,69%
Local Producers20,19%
InternationalProducers79,81%
Others30,88%
According to IDC’s Turkish PC Market Report, PC Market achieved growth rate of 27,3% and reached 953 thousand on quantitybased when a comparison made between the 1st quarters of 2010 and 2011. When the 2nd quarters compared for the same years,14,7% is seen. Unfortunately, consumer tended to be more conservative with the currency shock markets faced in the second halfof 2011. Therefore, this affected market grow negatively in the second half. Furthermore, IT Sector faced with -19,52% shrinkage inthe third quarter of 2011 when compared to 3rd quarter of 2010. This shrinkage increased more and reached -30,5% in the lastquarter. In general, 30-35% business volume of IT Sector realized in the fourth quarter, other quarter are usually between 20-25%.This general rule has changed and PC Sector business volume became 29% in the 1st Quarter, 25% in the 2nd Quarter, 20% in the3rd Quarter, 26% in the 4th Quarter.
According to IDC’s 2012 report, 32,69% of Desktop PCs were sold by local producers, 36,43% International Producers and the restconsists of processor selling amount to local market. When look at the Notebook amounts, local producers have market share of20,19% and International producers have market share of 79,81%.
2.2.1.1.1 Desktop PCsPC Desktop products have represented the most important product category within the sub-group of hardware in terms of the unitand sale volumes until 2009. Total sales of Desktop PCs decreased from 594 thousand in 2000 to 251 thousand in 2001 due to the2001 economic crisis. PC sales increased with the rate 41% CAGR between 2002 and 2005, well above the economical development,with the influence of the decrease in the year 2001 and reached 1 million units in 2005. Desktop PC sales rose to 1,33 million unitsand 1,4 million units with an increase of 30% and 6% in 2006 and 2007, respectively.
Such sales again increased by 10-15% in the first three quarters of 2008 and by 2,8% in the last quarter due to the global crises,and closed the year with a sales quantity of 1,45 million units, which was the highest historical level. However, as a consequence ofthe development of the mobile technology, the share of the desktop PC sales in the total PC market decreased to 37%, and the salesquantity was realized as 1,19 million units with a decrease of 18,4% in 2009.
PC Desktop market exhibits much segmented structure where the domestic producers are dominated. While international producersget a market share of 28%, the remaining part of the market is under the control of the big or small sized domestic producers. Theseare Hewlett-Packard 17,7%, Casper 16,2%, Exper 11,1%, Fujitsu 4,8%, Dell 4,2%, Arçelik 3,8%, Pro2000 3,2%, Lenovo 2,7%, AcerGroup 1,5%, Vestel 1,5%, Apple 1,2%, Asus 0,9% and Others 30,9%.
ANNUAL REPORT 2011
34
2.2.1.1.2 NotebooksSince 2004, a significant consumption activity has started all over the world in Portable PCs (notebook, netbook) market when theinternational big producers decreased the prices with increasing competition in this market and the developing technology. As aconsequence of affordable price policies of producers and retailers, notebook prices for end users decreased to 400 - 1000 USD onaverage in Turkey, which eventually made these products affordable for home users and increased the widespread usage of thenotebooks in the offices. Accordingly, the share of Portable PCs (except for server) in the total PC sales by quantity has increasedfrom 5% to 23,8% between 1998 and 2004 and then to 45,9% in 2008. Supplying portable PCs with high performance, increasedmobility possibility with their lighter structure and affordable prices to the consumers has enabled significant increases in their sales,and finally, sales of portable PCs have reached 63,03%, well above those of desktop PCs in 2009. In 2010, it reached 66,1%.
Sales of Portable PCs in 2000 increased from 51 thousand units to 221 thousand units in 2004 and then rose to 1.236 thousand unitsin 2008, 2.023 thousand units in 2009 and 2.385 thousand units in 2010. According to the 2011 results of the IDC report on TurkishIT Expenditures, the Turkish mobile PC Market is estimated to reach 3 million units in 2011, and the share of the mobile PC sharesin the total PC sales shall reached 66,1% in 2010 and 68% in 2011.
It seems that international brands are more dominant in the Notebook PC market than the Desktop PC market. According to the 2012data obtained from IDC, the most important leading brands in the Portable PC market, namely Acer, Hewlett Packard, Toshiba, Casper,Lenovo and Dell, control 68% of the market in terms of quantity. As a consequence of the fact that just like in the desktop productsin previous periods, the structure of notebook products tends to be standardised, it is observed that some part of the market sharesof international brands are left to the domestic producers. The market share of the domestic producers which was 10% at the endof the year 2003 increased to 16,8% in 2008, 19% in 2010 and 20% in 2011. According to the 2011 results, the shares of Casperand Exper, which are the two big domestic market of the Turkish market, were realized as 16,4% and 11,1%, respectively.
Hewlett-Packard17.7%
Casper16.2%
Exper11.1%
Fujitsu4.8%
Dell4.2%
Arçelik3.8%
Pro20003.2%
Lenovo2.9%
Acer Group1.5%
Vestel1.5%
Apple1.2%
Asus0.9%
Other30.9%
Source: IDC 2012
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
Desktop PC 398,6 593,5 251,4 344,8 516,4 710,1 1,027 1,331
1999 2000 2001 2002 2003 2004 2005 2006
1.600,0
1,415
2007
1.455
2008
1.186
0,02009 2010
1.203
2011
1.083
Quantity Based Distribution of Desktop Sales (000), 2011
ANNUAL REPORT 2011
35
2.2.2 Software MarketThe size of the software sub-group increased from USD 276 million in 1999 to USD 377,3 million in 2000. However, in the 2001 crisis,just like in hardware sector, software sector decreased to USD 172,3 million with shrinkage of about 54% and volume became 215million USD in 2002. In 2009 it reached 635 million USD. Although, the pressure of the crises that has deepened in the last quarterof 2008 on the consumption tendencies, the sales of the Turkish Software Market reached 635 million USD with growth of 19% in2009, contrary to the dramatic shrinkage of the 2001 crisis. IT sector software market achieved growth of 5,3% from 2007 to 2008.The volume of IT Sector software market reached 696 million USD in 2010 and 784 million USD in 2011. According to IDC’s, it isexpected IT Sector software market to achieve Compound Annual Growth Rate of 13% between 2011 and 2015F and reach 1,226billion USD.
As of the end of 2010, the share of the software sub-group in the entire IT market in terms of the total turnover is at very low levels incomparison with Europe and America with 13,3% share, mainly because of pirated usages. Microsoft Office, being a commonly usedprogram, is the most pirated program. The laws which were enacted by the Turkish Parliament in 1995 for purpose of ensuring theprotection of the registration rights decreased the pirated usage rate. According to the estimations of our company, while 70% of thesoftware is illegally used in Turkey, this rate is around 35% in the USA.
Because the operating system software is purchased as incorporated into the computer, its pirated usage is less than other software.The registration right laws had influence on the custom suppliers using pirated products most frequently. Most of the custom suppliersuse the licensed operating system software at present.
Exper5.3%
Hewlett-Packard15.0%
Asus13.5%
Samsung12.6%
Casper10.2%
Toshiba8.4%
Dell8.3%
Acer Group7.9%
Lenovo6.7%
Sony4.4%
Arçelik3.5%
Apple1.3%
Fujitsu1.1%
LG Electronics0.8%
Vestel0.6%
Di¤er0.7%
Kaynak: IDC 2012
150,0
400,0
650,0
900,0
1.150,0
1.400,0
1.650,0
1.900,0
-100,0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Notebook 23,9 51,1 33,2 68,9 138,1 221,5 570,4 757,2 1.191, 1.236, 2.375, 2.257,2.023,
Desktop PC Sales (000) and Supplier Based Distribution of Sales, 2011
2.150,0
2.400,0
ANNUAL REPORT 2011
36
2.2.3 IT Services MarketContrary to the hardware and software sub-sectors, IT Services sub-sector s the constant and necessary services relating to theexisting IT investments periodically and leasing services. In the 2001 crisis, the Turkish IT Services Market decreased to 288.2 millionUSD with a decrease of 39% comparing to the previous year. The volume of the Turkish IT Services Market grew faster than the totalmarket in 2002, reaching 403.5 million USD, and the share of the IT Services in the total market increased to a record level of 28,1%in the same year. However, in spite of the pressure of the crisis that deepened in the last quarter of 2008 on the consumption tendencies,the market was realized at 881 million USD in 2009 and achieved 18,6% growth rate when compared to 2008.
The share of the IT Services in the total market was 17,8% in 2009, which increased to 18,6 in 2010. In 2011, this rate became 19%.However, it is expected that this share will increase due to the needs that may arise during the integration of newer technology systemson the existing systems and outsourcing of IT operations by big companies - banks in particular. IT Sector Service Market reached1.014 billion USD in 2010 and 1.121 billion USD in 2011. The Compound Annual Growth Rate between 2011 and 2015F is expectedto be 12% and reach 1.734 billion USD.
Source: IDC 2012
0
200
400
600
800
2009 2010
Software % Growth
635
874
986
2011
(m n
US
D) 1000
1200
1400
1.120
2012F 2014F2013F
696
784
0%
2%
6%
10%
4%
8%
12%
14%
16%1.266
2015F
IT Sector Software Expenditures Growth Figures and Growth Targets, 2009-2015 (Mio USD,%)
Source: IDC 2012
0
200
400
600
800
2009 2010
Service % Growth
881
1.245
872
1.388
2011
(m n
US
D) 1000
1200
1400
1.551
2012F 2014F2013F
1.0141.121
0%
2%
6%
10%
4%
8%
12%
14%
16%
1600
1800
2000
1.734
2015F
IT Sector IT Services Growth Figures and Growth Targets, 2009-2015F (Mio USD,%)
ANNUAL REPORT 2011
37
Company
2010 Top ICT Companies Revenue Range(Sales Revenue)
2010Range
1
2
3
4
5
6
7
8
9
10
Turkish Telecom
Turkcell
Vodafone
Avea
KVK
Gen-pa
Indeks Computer
Teknosa
Hewlett-Packard
Digitürk
USD Dollar (million)
7.187
5.962
2.460
1.752
1.339
1.131
813
785
650
551
Indeks Computer in the ICT Sector:In Turkey, Top 500 ICT Companies Ranking performed every year by Interpro Medya A.fi., our company ranked seventh in the generalranking based on turnover achieved in 2010 among the companies including telephone operators and mobile phone sellers. On theother hand, it ranked first, like the previous years, in the category of companies selling only computers. Further, it ranked first in sevenIT categories.
Important Events in the IT Sector in 2011:
Important events that occurred in the Turkish IT Sector in 2011 are listed below:
1- Announcement of smart devices and tablet products.2- Demand for internet connection increased in important level in any places of Turkey.3- Incremental leadership of individual consumers continue in technology world.4- Telecom campaigns affected sector positively and in considerably important level.5- Prevalence of Social Networking websites increased in especially Anatolia. Turkey became 4th country with 24 million subscribersin numbers of subscribers in social networking websites. This number increased in 2011.6- With the implementation of FAT‹H Project, which will make huge contribution to education, in selected schools, the bullet pointsof the project started appearing.7- Demand shrinkage was faced in disk sector by reason of flooding in Far East countries.8- Despite of demand shrinkage in IT Sector with currency shock faced in markets in the second half of the year especially, it closedthe year with 8,1 % growth from 2010 to 2011. 9- In PC Market, Ultra-books were introduced to market and sales of these products started.10- The usage of IT products became widespread with the improvements in new Turkish Trade Code.
2.3 Growth of the Turkish IT Sector:
Factors Inciting the Growth of the Turkish IT Sector:
• Invetsment to Natioanl Education: Government started making huge investment to education in the context of “Fatih Project”.The implementation of this project started in 2011 in selected 52 schools. This project is considered not only 2011, it will also covernext few years and will contribute to growth of IT Sector.• Rapidly Increasing Usage of Technology: All business and public companies recognise the value of the increasing control oversources, development of productivity, expanding the business volume and analysing the customer requirements by using thetechnological devices.• Economic Performance: The development of the IT market was struck down by the economic crises of 2001 and 2008. After theeconomic crisis, Turkey entered a recovery period with strict economic policies. Economic stability makes a direct positive effect onIT investments.• Changing Economic Structure: The importance of service sector increased, with a decrease of agriculture in the economy in Turkeyin the last ten years. The increasing operations in the service sector instigate the IT investments especially in retail, wholesale, logistics,financial services, professional and personal services markets.• Import and Export: According to the statistics published by TUIK, the import volume reached 241 billion USD, export volumereached 135 billion USD and total foreign trade volume reached 376 billion USD in 2011.
ANNUAL REPORT 2011
38
International Index’s of Turkey:
INDEXRANGE OF TURKEY ON YEARLY BASIS
World Bank BusinessConvenience Index
2003
-
52
24
65
48
77
2004
-
37
-
66
46
77
2005
-
22
13
66
39
65
2006
84
17
-
58
43
60
2007
91
25
20
53
48
64
2008
60
20
-
61
47
61
2009
63
30
-
61
47
61
2010
60
27
23
61
48
56
2011
73
-
-
59
39
-
2012
71
-
13
-
-
61
DIRECTION OF MOVEMENT
UNCTAD World InvestmentReport IDI Flow Range
AT Kearney UDYSafety Index
WEF GlobalCompetitiveness Index
IMD GlobalCompetitiveness Index
Transparency InternationalCorruption Perception Index
Source: YASED-International Investors Association
Direct Foreign Investment Inflow: Direct foreign capital investments in developing countries such as Turkey, make importantcontribution to the development of the country economy. It makes direct contribution to the improvement of IT investments.
The economic reforms implemented by Turkey just after the 2001 crisis and the macroeconomic stability, together with the politicalstability, contributed to the improvement of the business and investment environment and broadened the horizon of the companiesin their investment decisions. With the economic and political stability environment, Turkey utilized foreign resources in considerableamounts. The amount of the direct foreign investment flowed into Turkey was 1,2 bn USD between 1994 and 2003, 1.8 bn USD in2003, 2,8 bn USD in 2004, 10 bn USD in 2005, 20,2 bn USD in 2006, 22 bn USD in 2007 and 19,5 bn in 2008. With the effect ofthe global crisis towards the end of 2008, the foreign capital investments decreased with 56% in 2009 and went down to 8,4 bn USD.In 2010, it remained as 9 bn USD level with 7% increase. In 2011, this number increased 77% and reached 15,9 bn USD. ForeignDirect Investment Flow can be seen below according to the research of YASED- International Investors Association sourced by TurkishRepublic Central Bank.
According to the research done by YASED-International Investors Association, improvements are seen in the international index’s ofTurkey.
Privatization: Income obtained from privatization has increased considerably in the last 5-6 years. According to the data obtainedfrom the Turkish Privatization Administration, the income obtained from privatization was 187 million USD in 2003, 1,3 billion USD in2004, 8,2 billion USD in 2005, 4,3 bn USD in 2007, 6,3 billion USD in 2008 and 2,3 billion USD in 2009. 1.225 million USD, 600 millionUSD and 440 million USD out of 2,3 bn USD obtained in 2009 was resulted from the privatization of Baflkent Elektrik, Sakarya Elektrikand Meram Elektrik, respectively. In 2010, 3,1 billion USD privatisation was made. In 2011, this number became 1,4 billion USD.
ANNUAL REPORT 2011
Source: YASED-International Investors Association:TRCB Sources ResearchInternational Direct Forign Investment Flow to Turkey
5
10
15
1994-2003
(Average)2004 2005 2006 2007 2008 2009
20
2010 2011
0
25
1.2
2.8
10.0
20.2
8.4 9.0
15.9
(Billi
on D
olla
r)
22
19.5
International Direct Foreign Investment Flow to Turkey
39
Investments made following the privatizations by the new owners of the privatized companies in new infrastructure and technologicaloptimization efforts supported the growth in the IT sector.
Telecommunication Sector: Turkey made major progress in the telecommunication sector with respect to the compliance with theEU and catching up with the global changes in the recent years. As part of the process of the accession of Turkey to the EuropeanUnion, the chapter “Information Society and Media” was opened and the negotiations have started on 19 December 2008 becauseTurkey has met the criteria for the chapter to be opened. On the other hand, the chapter “Information Society and Media” in the ThirdNational Program, which was adopted on 31 December 2008 to schedule the commitments of Turkey for harmonisation with the EUacquisition, commits to complete necessary arrangements in 2009 and 2010.This commitment aims at the liberalization of the electroniccommunication sector, creation of good working competition atmosphere, catching up with the development in information andcommunication fields and establishment of infrastructure and legal foundations for the related fields. Accordingly, it is estimated thata resource of about 8 million Euros will be needed for the institutional structuring for purpose of the harmonization with and implementationof the EU acquits.
The enforcement of the Electronic Communication Law, which had been on the agenda of the telecommunication sector for five yearsfrom 2003, on 10 November 2008 and the enforcement of the Authorisation Regulation on Electronic Communication on 28 May 2009are some of the favourable events that occurred in the recent years. In addition to the foregoing, the -enforcement of the NumberPorting Regulation at the beginning of July may be considered one of the most important steps taken for introduction of the thirdgeneration electronic communication service.
Rapid progress of technological developments makes impact on every part of our lives and creates some concepts such as informationeconomy and internet economy. Extraordinary developments in the IT sector go beyond the country borders of the goods and financemarkets and take the world into an economic globalization. Besides such progress in the IT technology, telecommunication sectoralso experiences many developments. As a consequence, it is inevitable that the countries that cannot keep up with such developmentswill remain behind the technologically advanced countries.
Retail Sector: Competition in the Turkish retail sector is intensifying. Investments made by international actors in the Turkish marketincreasingly continue. Media Markt, Dixons, Darty, Electro World and Best Buy have also been included in the chain stores in Turkeyin the recent years. Entrance of the international actors into the Turkish market has made a favourable effect on the growth rate ofthe sector. It is the first time Best Buy and Media Markt has met in the Turkish market in 2009. However, Best Buy announced thatthey decided to leave Turkish Market in 2011. One of the biggest local retailers, Bimeks was offered to public in 2011
Growing Individual Consumer Market: It is obvious that consumers use the IT more than before. Opportunity of payment by instalmentwith credit cards and growth of retail markets rapidly support the growth of the individual consumer market. PC usage of end usersand their demand for peripherals have increased from 7% to 38% of the market between 1995 and 2009. Accordingly, the structureof the market has changed, and individual consumers have represented the biggest share in the end user market since 2007. In 2010,individual user portion became 40% and 42% in 2011. Individual users became dominant player in BT Sector.
Internet Technology and Portals: Corporate usage of internet technology is still improving. Data portals become common via internetbanking. The public sector is the main factor instigating the portal turnovers due to the e-government projects. Telecommunication,production, insurance and distribution sectors use portals for developing business with partners and suppliers, enhance communicationand cooperation with customers and develop the management of the internal business processes. Internet usage will increase withthe new Turkish Trade Code coming into power.
ANNUAL REPORT 2011
3. Subsidiaries
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ANNUAL REPORT 2011
3. Subsidiaries
Name of Subsidiary Percentage of Share Issued Capital
(*) Neteks D›fl Ticaret Ltd. fiti is a 99% owned subsidiary of Neteks ‹letiflim Ürünleri Da¤›t›m A.fi.
The financial statements of Datagate Bilgisayar Malzemeleri A.fi., Neotech Teknolojik Ürünler Da¤. A.fi., Art›m Biliflim Çözüm ve Da¤it›mA.fi. and Teklos Teknoloji Lojistik Hizmetleri A.fi. are consolidated by full consolidation method and those of Neteks ‹letiflim ÜrünleriDa¤›t›m A.fi. by proportional consolidation method. The financial statements of ‹nfin Bilgisayar Ticaret A.fi. and Neteks D›fl TicaretLtd fiti are not included in the consolidation because their low volumes of operation are not likely to be of significance for the financialstatements.
3.1. Datagate Bilgisayar Malzemeleri Tic. A. fi.
Datagate Bilgisayar Malzemeleri A.fi % 51,74 10.000.000 TL
Neteks ‹letiflim Ürünleri Da¤. A.fi. % 50,00 1.100.000 TL
Neotech Teknolojik Ürünler Da¤›t›m A.fi. % 80,00 1.000.000 TL
Neteks D›fl Ticaret Ltd. fiti. (*) %49,50 5.000 TL
Art›m Biliflim Çözüm ve Da¤›t›m A.fi. % 51,00 1.210.000 TL
‹nfin Bilgisayar Ticaret A.fi. % 99,80 50.000 TL
Teklos Teknoloji Lojistik A.fi % 99,99 5.000.000 TL
Datagate is engaging in the representation, sales, distributorship, marketing, logistics and aftersales services of many IT producer supplying IT components such as microprocessors, hard discs,memory units, optical units, motherboards, tapes, video accelerator cards, monitors, various typesof hardware supporting software in PC Market, besides, parallel to the development of sector and
technology firstly mobile devices (Notebook, Netbook, tablet), IT peripherals, monitor, modem-router, external hard disk, IT accessories(Mouse, Keyboard, Speaker, laptop bags, Phone & Tablet cases, computer & image related cables & plugs), corporate computerproducts (Server & Data Storage Products, Notebook, Tablet, PC and Work Stations, mini PC), IT and IT spare parts & accessories.
The company was founded in Istanbul in 1992. Head office and logistic operations of the Company are carried out in Ayaza¤a MahallesiCendere Yolu No: 9/2 fiiflli /ISTANBUL. Ankara and ‹zmir offices provide service for Anatolia.
The partnership started with the acquisition of 50.5% shares of Datagate Bilgisayar Malzemeleri A.fi by ‹ndeks Bilgisayar A.fi. in 2001reached 85.00% with an additional acquisition of 34.5% by the same company in November 2003. Partnership share of ‹ndeksBilgisayar decreased to 59.24% with the public offering of Datagate in February 2006.
In February 2006, the shares of Datagate Bilgisayar Malzemeleri Tic. A.fi. were offered to public successfully, restricting the preferentialrights of the existing shareholders, and begun to be traded in the New Economy Market of Istanbul Stock Exchange. Its capital, whichwas TRL 1,550,000 before public offering, has increased to TRL 6,600,000 following the public offering. With the public offering, thecapital of Datagate Bilgisayar Malzemeleri Tic. A.fi. was increased from TRL 6.600.000 to TRL 10.000.000 in 2007, covering TRL1.910.004 from the profit of the period in 2006 and TRL 1.489.996 from the Share Premiums. The maximum registered capital ofthe company is TRL 20.000.000.
Datagate was subject to an Independent Audit and it achieved sales revenue of TRL 308.712.274 in 2011 according to its audit reportwhich is prepared in accordance with International Financial Reporting Standards as required by the Capital Market Regulations. Thefinancial statements show that the company earned an operating profit of TRL 11.760.429 and net profit of TRL 5.483.343 in 2011.
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ANNUAL REPORT 2011
The main product groups and brands distributed by Datagate are listed below:
Group Brands
Seagate
Intel
Intel
Sapphire
AOC, Fujitsu, Acer
Acer, Fujitsu
Fujitsu, Acer
Veritech, Samsung, Transcend
Intel, Fujitsu
Intel
Fujitsu, Seagate
Belkin, Genius
Avermedia, LG
Belkin, Cisco/Linksys
Acer, Optoma
Hard Disk
Microprocessor
Main board
Display Card
Monitor
Laptops
Desktops
Memory Products
Server Products
Network Products
Backup Units
Accessories
Security products
Network (Modem-USB-Adaptor) products
Projector
3.2. Neteks ‹letiflim Ürünleri Da¤›t›m A.fi.
Neteks was established to provide network and communication products to the market through itsretailers and business partners as a distributor company in 1996. Neteks has tried to providecomplete network solutions to business partners by accommodating the most experienced namesin their fields in Turkey. Besides the corporate networks systems and its components of the companies
such as Cisco, Nortel Networks, 3Com, HP, Juniper and Avocent, Neteks A.S. also distributes corporate telephone switchboardsystems of Nortel Networks and Avaya, structural cable products of HSC, Corning, Panduit and Günko, network security solutionsof Check Point, Trend Micro and IBM ISS.
Neteks was subject to an Independent Audit and it achieved sales revenue of TRL 168.156.805 in 2011 according to its audit reportwhich is prepared in accordance with International Financial Reporting Standards as required by the Capital Market Regulations. Thefinancial statements show that the company earned an operating profit of TRL 5,562,743 and net profit of TRL 2.801.107 in 2011.
70% and 24% of the share of Neteks were acquired by ‹ndeks and Datagate A.fi., respectively, in 2001. In 2007, 6% of Neteks A.fi.’sshares which are held by other shareholders were acquired by Indeks A.fi. at US$ 374.000. Our company kept 50% of shares foritself and sold 26% to Westcon Group European Operation Limited at US$ 1.820.000. According to the agreement signed betweenthe parties, 24% of the shares of Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. held by Datagate Bilgisayar A.fi, as a 59,24% affiliate of ‹ndeksBilgisayar A.fi. and listed in Istanbul Stock Exchange, were sold to Westcon Group European Operation Limited at US$ 1.680.000.
43
The main product groups and brands distributed by Neteks are listed below:
Product Group
Corporate Network Systems
Corporate Telephone Switchboard Systems
Structured Cabling Solutions
Network Security Solutions
Brands
Cisco System, Nortel Networks
3Com, HP, Avocent
Nortel Networks, Avaya
Corning, HCS, Panduit, Günko
Check Point, Trend Micro,
IBM, ISS
ANNUAL REPORT 2011
Of the 50% shares sold, 26% and 24% were provided by ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi and DatagateBilgisayar Malzemeleri Ticaret A.fi., respectively. ‹ndeks Bilgisayar A.fi. and Westcon Group have had 50-50% of the shares of NeteksA.fi after the sale of shares.
3.3. Neotech Teknolojik Ürünler Da¤›t›m A.fi.
Neotech Teknolojik Ürünler Da¤›t›m A.S. was established with a capital of 100.000 TRL on04.02.2005. The company, being an 80% affiliate of ‹ndeks A.S., operates in wholesale marketingof consumer electronics and communication devices. The company increased its capital fromTRL 100.000 to TRL 1.000.000 in 2007.
The main product groups and brands distributed by Neotech are listed below:
The contracts made between our company and Apple and Airties, respectively, have been transferred to ‹ndeks Bilgisayar A.fi., whichis our main shareholder, within the year.
Neotech was subject to an Independent Audit and it achieved sales revenue of TRL 221.448.520 in 2011 according to its audit reportwhich is prepared in accordance with International Financial Reporting Standards as required by the Capital Market Regulations. TheCompany earned an operating profit of TRL 4.985.569 in 2011 according to the financial statements.
3.4. Art›m Biliflim Çözüm ve Da¤›t›m A.fi
Art›m Biliflim A.fi. was established in 2003 in Istanbul to be value added distributor for channel businesspartners. It intends to be the leader firm in the category that it operates for products and services. It continuesproviding needs of IT world with its 27 employees by having 2 branches in Ankara and ‹zmir. Since 2011, it
will continue delivering its all solutions to its customer under the excellence of Index Group. �
Art›m was subject to an Independent Audit and it achieved sales revenue of TRL 30.384.271 in 2011. According to its audit reportwhich is prepared in accordance with International Financial Reporting Standards required by the Capital Market Regulations. Thestatements show that the company earned an operating profit of TRL 1.286.519 and net profit of TRL 1.044.938 in 2011.
44
Product Group
Household Electronics Product
Home Electronics Product
Projectors
Mobile Phones
Photo & Video
Brands
Homend
Sony, Toshiba, Viewsonic, NEC, LG, Panasonic
NEC, Canon, Viewsonic
Blackberry, Samsung, iphone
Canon
Product Group
Oracle Solutions
Security & Printing Solutions
Document Management Solutions
Special Solutions
Service Spare Parts Solutions
OTVT Solutions
Brands
Oracle
Sentinel, Pcounter, Safecom, Follow Me, Troy
Form Port, Smart Printer, Welp, XPress,
Nuance Smart Office Scan,
Nuance Scan Flow Store,
Nuance eCopy PDF Pro Office
TowerTray, Stick and go, P2M, Winsert,
Cluster Que, Bardimm, Fax Manager, Troy
Hp, Sun Oracle, Dell, Fujitsu, Lenovo
Intermec
ANNUAL REPORT 2011
3.5. Infin Bilgisayar Ticaret A.fi.‹nfin Bilgisayar Ticaret Anonim fiirketi was established in 2001 to help the retailers with their sales and exportoperations within the framework of investment operations under incentive certificates.
Due to the fact that its biggest part of purchase and sales of the company was arisen out of the companiesincluded in the financial statements, and its business volume was so low that does not make any impact on the financial statements,this company is left out of the said statements
3.6. Teklos Teknoloji Lojistik A. fi
This company was founded under the name of Karadeniz Örme Sanayi A.fi. to operate in textile sector on03.01.1973. In March 2006, ‹ndeks has executed an important and greatest investment in IT sector bypurchasing Karadeniz Orme A.S., which is founded on a 39,761 square meters land and having 18,969square meters indoor area, in order to be used as a logistics headquarters. The trade name of Karadeniz
Orme AS has been changed into Teklos Teknoloji Lojistik Hizmetler A.fi. and its field of activity has been changed to as logisticsservices.
Teklos Teknoloji Lojistik Hizmetler A.fi. is providing logistic services to the companies operating in the IT sector. Teklos was subjectto an Independent Audit and it achieved sales revenue of TRL 8.117.401 TRL in 2011. According to its audit report which is preparedin accordance with International Financial Reporting Standards required by the Capital Market Regulations. The statements show thatthe company earned an operating profit of TRL 4.063.601 and net profit of TRL 4.224.077 in 2011.
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ANNUAL REPORT 2011
4. Operation
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ANNUAL REPORT 2011
4. Operation
Supplier
‹NDEKS B‹LG‹SAYAR A.fi.
SystemIntegrators
Value AddedDealers Channel
Regular Dealers Retail Channel
RetailChannel
RegularShops E-Commerce
END USER
Supplier Supplier Supplier Supplier Supplier
The supply and distribution structure of Indeks Bilgisayar A.fi. is shown as follows:
4.1 Structure of Product Supply and Distribution:Indeks operates as a main distributor (“broadline distributor”) in IT industry. It buys IT products from suppliers at certain prices andmaturity periods and subsequently sells the products to the sales channels that will sell them to the end user. The company doesnot plan to develop a sales structure that will include direct sales to the end user in the near future.
4.1.1 Suppliers:The hardware and software suppliers of the company are grouped into two categories.
i) Global brands that operate in Turkey: (IBM, HP, LENOVO, INTEL, SEAGATE, CANON, OKI, SYMANTEC, MICROSOFT,APC, FUJITSU SIEMENS, EPSON, TOSHIBA, SONY, ASUS): As this is the nature of the business, these global companies preferworking with distributors which are less in numbers instead of handling distribution,
ii) Global brands that do not operate in Turkey: (KINGSTON, NEC, VIEWSONIC, WESTERN DIGITAL) These companieshave not set up offices in Turkey yet. However, these companies conduct their imports, sales and marketing activities through thedealership of distributors.
4.1.2 Distribution Channel:As a distribution company, Indeks buys the products from suppliers. Furthermore, it resells them to the sales channels which sell tothe end user. The structure of distribution channels which Indeks sells to and which sell IT products to the end user in Turkey issummarised below:
4.1.2.1 Solution Provider Dealers Channel (System Integrators)With respect to the number of people they employ, companies in this channel have at least 100 employees. They are among therelatively old companies in the industry. The end user these companies target is solely the big corporate customers. They haveexperience in the industry and have especially high service, sales and product recognition capabilities. The main target of the companiesin this channel is to adapt new technologies to corporate customers.
The numbers of these companies are not more than 100 all over Turkey at the moment.
4.1.2.2 Value Added Dealers:With respect to the number of people they employ, companies in this channel have 25-100 employees. These companies are morelimited with respect to capital but thanks to their young and dynamic structures, they are able to make quick decisions and operateon low margins by keeping costs down. Their target group is multinational companies and corporate customers with generally onelocation.
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ANNUAL REPORT 2011
Distributors support these companies with respect to finance, logistics, and product information. These companies do not have anintensive relationship with the manufacturers. The numbers of these companies are more than 500 all over Turkey.
4.1.2.3 Regular Dealers (Classic):These are pretty small companies with a staff of 5 to 25. They do not have their own unique solutions. Their target is SMEs and thehome market. They number at least 4.000 to 5.000 and are the biggest group in the IT industry.
These companies carry out their operations fully with distributor company resources. Their sales are more directed towards OEMproducts and peripherals than branded products.
4.1.2.4 Retail ChannelIn the recent years, Retail Chains diversified and reached huge transaction volume with the reason of investments made by local chainsshops and the investment also made by international chains in this category. Furthermore, Food Chain Shops and Dowry Shopsincreased their business volume. Majority of home market needs is provided by above mentioned chain shops in Turkey. For Indeks,there are 3 types of retail groups:
• Retail Chains:The retail chains are big groups having more than one store under the same brand such as Teknosa, Bimeks, Vatan, Gold, MediaMarkt , Darty, Electro world, Best Buy Teknolojiks, NT, Yalç›nlar, Evkur, Metro, Migros, Real, Carrefour, Tesco/ Kipa. The main functionof some groups of this category is computer, while some of them such food markets and dowry shops are chains dealing withcomputer as a secondary business.
• Regular Computer Stores (Classic):These stores are small companies where the owner of the store and a few sales representatives work and they operate with limitedresources. They are totally focused on computers.
• E-Retail:This channel is based on virtual markets which open virtual stores and operate in the internet medium. Due to the widespread usageof the internet in the recent years, the number of the companies operating in this channel is increasingly growing. The companiessuch as Hepsiburada, e-store are the examples of this type of channel.
4.2 LogisticIndeks makes sales and distribution via its 323 employees and more than 7000 dealers with companies included into consolidationin its financial statements to 81 provinces of Turkey from its logistic centres in Istanbul, Ankara and Izmir.
The branch offices in Ankara and ‹zmir established in 1992 and 1995, respectively, operate as “district offices”. Having their ownlogistic, sales, accounting, finance, current accounts and customer services departments, they are responsible for sales to the dealersand development of the sales channels in their cities. Ankara office is responsible for the district Ankara, Central Anatolia and EasternAnatolia Regions, ‹zmir Office for the District Izmir, Western Anatolia and Aegean Regions. The areas not included the foregoing shallbe under the responsibility of the headquarters in Istanbul.
Indeks has executed one of the most important and greatest investments in IT sector by purchasing Karadeniz Orme A.fi., which isfounded on a 39,761 square meters land and having 18,969 square meters closed area, in order to be used as a logistics headquarters.The trade name of Karadeniz Orme A.fi. has been changed into Teklos Tekn oloji Lojistik Hizmetler A.fi. and its field of activity hasbeen customized to be able to work on the logistics services. Teklos Teknoloji Lojistik Hizmetler A.fi. is providing logistic services tothe group companies and other companies in IT sector as well. The head office of the company moved to its new location on26.10.2006.
Indeks has also district warehouses in Ankara and Izmir.
4.3 Invoicing and CollectionIndeks makes sales to almost all companies dealing with computer and IT products. This kind of dealers, which are estimated asnumber about 5,000 in total in Turkey, are considered Regular Dealer (Classic Dealers).
Credit Committee:Credit claims of the dealers are submitted to the Credit committee that does meetings every week on a regular basis for this purpose.These meeting are organized with headed of CFO (Assistant General Manager responsible for Financial and Operational Affairs),Assistant CFO, Finance Manager, Credit & Risk Manager and Sales Managers of related customers.
4.4 Technical Support and Customer ServiceThe Company does not provide after sale service. Instead, it directs its customers to the companies of each product authorised toprovide service. It is because the suppliers prefer their own solution partner to provide service to the end user.
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ANNUAL REPORT 2011
4.5 Marketing and SalesDue to the structure of the IT industry, the technologies and prices of the products that Indeks distributes are subject to frequentchanges and improvements. Therefore, an efficient and effective inventory management and rate of inventory turnover may makesignificant impact on the operational performance of companies.
Considering the dynamic structure of the industry, Indeks assigns one product manager for each group of product. The productmanagers have the mission of understanding the requirements of the sales groups with differing targets and objectives are comprehendedbetter and therefore, the Company provides better service to such groups, following up the market and technology trends, executingthe marketing activites.
Exchange of information with customers are provided via web, e-mail and fax.
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5. Corporate Governance Principles Compliance Report
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ANNUAL REPORT 2011
5. Corporate Governance Principles ComplianceReport 2011:
Name & Surname Title E-mail address Telephone No.
Halil Duman Assistant General Manager [email protected] 0-212-312 21 09
Naim Saraç Internal Audit Manager [email protected] 0-212-331 21 15
Halim Ça¤layan Accounting Manager [email protected] 0-212-331 23 70
Emre Ba¤c› Internal Auditor [email protected] 0-212-331 21 17
1. Corporate Governance Principles Compliance StatementOur Company complies with and applies the Corporate Governance Principles published by the Capital Markets Board within theoperating period between 01.01.2011 and 31.12.2011. These principles are adopted by the company management. Some of theseprinciples were adopted immediately, and works continue to fulfil the deficiencies.
SECTION I - SHAREHOLDERS
2. Shareholders Relations Department:We have established an Investor Relations Department in order to facilitate the relations with the shareholders. The Department carriesout it activities reporting to Asst. General Manager-Finance Halil Duman, and contact information of the responsible people are asfollows.
During the period, Investor Relations Department has provided information to the shareholders and intermediary institution analysts,and to this end, questions asked via telephone, fax or e-mail were answered. Questions asked by the shareholders and intermediaryinstitutions during the period were answered pursuant to CMB's "Communiqué on the Disclosure of Special Events to the Public"Series VIII, No. 39. Besides, our Company makes a press conference each year, evaluates the previous year, publishes the targetsfor the relevant year, thus informs the investors. Recently, a press conference was made on 05.04.2011 for the group companies,and information was provided on the activities.
3. Use of Shareholders' Rights to Obtain Information:Shareholders direct their requests to our Company to obtain information via telephone, fax or e-mail. A great part of the questionsasked by the investors are on the subsidiaries of the Company, contents of the concluded distributorship contracts, capital increase,and share certificate activities. No distinction is made among shareholders as regards the exercise of the right to obtain information.Aside from the annual press conferences, disclosure of special events submitted to ISE is another method for providing generalinformation. Our special event disclosures are also published on our web-site simultaneously. In order to help shareholders to usetheir rights to obtain information in an efficient way, detailed information is given www.index.com.tr, in the investors. Assignment of aspecial auditor is not arranged as an individual right in the Articles of Association. In order to ensure shareholders to use their rightsto obtain information, the principle has been adopted allowing minority shareholders to notify any subjects, they are doubtful of andrequest inspection of, to the Auditing Committee, and thus, investigation of such subjects. During the period no request was madefor assignment of a special auditor.
Moreover, in order to help foreign investors to use their rights to obtain information, an English version of the investors section of ourwebsite has been prepared, and company information, financial statements and notes, operation reports, and research reports wereuploaded to this section.
4. Information on General Assembly:2010 General Assembly of our Company was held on 06.05.2011. The General Assembly resolved the followings unanimously :- acceptance of the accounts of the 2010 Balance Sheet and Income Statement,- acquittal and discharge of the Board Members and Auditors with respect to the accounts in 2010, and - hiring AGD Ba_ımsız Denetim ve Danı_manlık SMMM A._. for Independent Audit Services to be provided for the 2011 financialstatements,- Distributing % 30 of 2010 net profitable amount as the first dividend.- Profit distribution regarding 2010 is as follows,
The Company has a net profit after tax amounting to TRL 13.171.469 given in its financial statements for the year 2010, which wereprepared pursuant to Communiqué of the Capital Markets Board Series XI, No. 29.
- TL 413.959,12, which composes 5% of the net profit, i.e. TL 8.279.182,39 according to the legal records will be retained as the1st Issue Reserve Fund,
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ANNUAL REPORT 2011
- The First Dividend will be distributed in amount of gross TL 3.830.021,96 (TL 0,0683936 for 1 share with a nominal value of TL 1 inthe rate of 6,83936 %) and net TL 3.255.518,67 (TL 0,0581346 for 1 share with a nominal value of TL 1 in the rate of 5,81346 %),corresponding 30% of the net distributable profit, i.e. TL 12.766.739,88 found by adding donation of 9.230 TRL and deducting the1st Issue Reserve Fund in amount of TL 413.959,12 from TL 13.171.469, which is the net profit after tax.- The Second Dividend will be distributed to the Preferred Group A Shareholders in amount of gross TL 446.835,90 (TL 1.404,35 for1 share with a nominal value of TL 1) and net TL 379.810,51 (TL 1.193,70 for 1 share with a nominal value of TL 1), corresponding5% of TL 8.936.717,92 remaining after deducting the first dividend, i.e. TL 3.830.021,96 from TL 12.766.739,88, which is the netdistributable profit of the period,- Allocation of 147.685,79 TRL as the second reserve funds,- Starting for profit distribution on 17 May 2011,- Allocation of the remaining amount as extraordinary reserve funds,- Election of Mr. Veli Tan Kirtifl and Mr. H. Ça¤atay Özdo¤ru as the Members of the Auditing Board for a term of office of one year,unanimously.
5. Voting Rights and Minority Rights:In general, there is no privilege concerning voting rights. However,
• Pursuant to the Article 9 “Board of Directors and its Term of Office” of the Company's Articles of Association, "Half plus one ofthe members of the Board of Directors are elected from the candidates nominated by the Group A shareholders."• Pursuant to Article 12 "General Assembly" of the Articles of Association, the rights given to the shareholders who represent atleast one-tenth of the principal capital by the Articles 341, 348, 356, 359, 366, 367 and 377 of the Turkish Code of Commerce,shall be used by shareholders who represent at least one-twentieth of the principal capital.• There is no company, holding shares in cross-ownership. Pursuant to the above explained provision of the Articles of Association,the method of minority shares' representation in the board of directors and use of accumulated votes is not applicable.
6. Dividend Distribution Policy and Deadline for Dividend Distribution:Our Company's Dividend Distribution Policy is to distribute in cash or in bonus share, or partly in cash and partly in bonus share,provided that it is no less than the minimum amounts stipulated by the Capital Market legislation, considering long-term growth andstrategies, investments and fund requirements, profitability and the expectations of shareholders, excluding the special conditionsrequired by extraordinary conditions in the economic conditions.
Profit distribution for 2010 was done on time on 17 May 2011 as stated.
7. Transfer of Shares:The Articles of Association of the Company does not contain any articles limiting the transfer of shares.
SECTION 2 - PUBLIC DISCLOSURE AND TRANSPARENCY
8. Company Information Disclosure PolicyThe company information disclosure policy was formed in accordance with Article 20 of the articles of association regulating "PublicDisclosure and Transparency".
Disclosure of information to the public is made pursuant to the relevant provisions of the capital markets legislation. An informationpolicy for public disclosure is prepared and announced to the public. Information to be disclosed to the public are submitted to theuse of public in a timely, accurate, complete, understandable, interpretable, accessible and equal manner. Ethical rules of the Companyshall be determined by the Board of Directors and submitted to the information of the General Assembly. Implementations of ethicalrules are announced to the public. Company's principles on social responsibility are also included within these rules.
In use of shareholder's rights, it is complied with the relevant legislation, to which the Company is subject to, this Articles of Association,and other In-Company regulations. The Board of Directors takes the necessary measures to ensure use of shareholder's rights. Forthe purpose of extending the shareholders' right to get information, submission of any information which may affect the use of rightsto the shareholders in electronic media is considered with great care.
Annual operation report, financial statements and reports, dividend distribution suggestion, articles of association amendment proposals,organisation changes, and other important information regarding the activities of the Company to be kept accessible to shareholders'inspection in the head office and branches of the Company and in electronic format at the Company website considered with greatcare.
Commercial relations with the Group companies and other partners are performed within the scope of market prices.
Due care shall be given in preparation of the periodical financial statements and statement footnotes to reflect actual financial conditionof the Company, and to ensure that Company Operation Report provides detailed information on the activities of company. Consultancyactivities and Independent Audit Companies are separated. Independent Audit Company is elected for maximum 5 periods. Independenceof such companies is strictly protected.
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ANNUAL REPORT 2011
Our Company's website at www.index.com.tr is used as a communication channel pursuant to the points determined in CMB'sCorporate Governance Principles, for the use of shareholders, investors, intermediary institution analysts, and other stakeholders.
9. Disclosure of Special Events:The Company has made 14 Disclosures of Special Events in the period between 01.01.2011 - 31.12.2011, and no additional clarificationwas asked by CMB or ISE. The Company has duly fulfilled all its liabilities regarding disclosure of special events.
10. Company Website and Contents:Our Company has a website at the address of www.index.com.tr. Our website includes commercial register information, final statusof partnership and management structure, members of the Board of Directors, Auditing Board, Auditing Committee, information ongeneral assembly, Company's Articles of Association, periodical financial statements and reports, independent auditor's report, annualreports, information on public offering, and disclosure of special events made by the Company.
11. Disclosure of the Company's Ultimate Controlling Individual Shareholder/ Shareholders:Following public offering, our Company's ultimate controlling individual shareholders are given below.
Shareholder's Name Country Shares %
Nevres Erol Bilecik T.C. 33,77 %
12. Disclosure of Insiders:The list of individuals who can be classified as an insider are as follows.
Board of Directors Auditors assigned pursuant to theTurkish Code of Commerce
Veli Tan Kirtifl
H. Ça¤atay Özdo¤ru
Name & Surrname Title
N.Erol Bilecik Chairman of the Board
Atilla Kayal›o¤lu General Manager - ‹ndeks
Salih Bafl General Manager - Datagate
Erhan Do¤an General Manager - Neteks
Erol Çetin General Manager - Neotech
56
Accordingly, new distributorship agreements were disclosed to the public by the Chairman of the Board and General Managers viadisclosure of special events. Names and duties of people responsible as regards the information policy are given below.
General Manager of the Company and other Managers
Atilla Kayal›o¤lu General Manager
Halil Duman Deputy General Manager - Finance
Naim Saraç Internal Audit Manager
Halim Ça¤layan Accounting Manager
Birgül Öztürk Finance Manager
Other Related Company Managers
Tayfun Atefl Datagate A.fi. Board Member
O¤uz Gülmen Despec A.fi. General Manager
Erhan Do¤an Neteks A.fi. General Manager
Erol Çetin Neotech A.fi. General Manager
Yi¤it Deniz Neteks A.fi. Accounting Manager
Chartered Accountant
Hakk› Dede
ANNUAL REPORT 2011
Nevres Erol Bilecik
Salih Bafl
Atilla Kayal›o¤lu
Ayfle ‹nci Bilecik
Halil Duman
SECTION III – STAKEHOLDERS
13. Informing Stakeholders:Stakeholders are regularly informed by the Company concerning any issues related to themselves. E-mail and the company's websiteare essential means of information. Each year at least one meeting is held with the suppliers separately. Regional informational meetingsare made with the vendor channel throughout Turkey. Informational meetings with dinner are made for the employees and theirspouses at least once each year to notify the developments related to the Company.
14. Participation of the Stakeholders in the Management:There is no special arrangement for participation of the stakeholders in the management. However, within the scope of vendor directedspecial channel programs, product supply and sales policies of suppliers are performed in conjunction.
15. Human Resources Policy:The human resources policy of our Company, which is also published on is as following:
Our personnel policy is based on the target of becoming a company admired and appreciated by all our employees.
Essential criteria composing our personnel policy are;
• Ensuring that our employees do not worry about their future,• Ensuring that the employees have confidence in the managers and the company,• Measuring the performance of all employees, and managing the success criteria in line with these measurements,• Displaying a transparent management,• Ensuring easy access to management,• Ensuring that employees have freedom and convenience of expression,• Caring about work discipline,• Ensuring that all personnel work not individually but with a team spirit,• Caring about career planning,• Organizing social activities,• Providing efficient working environment and conditions.
The satisfaction of the personnel of our Company is measured via “Personnel Satisfaction Survey” conducted each year, the areasthat need to be improved are determined and corrective steps are taken.
There is no discrimination, under no circumstances, based on ethnic origin, sex, colour, race, religion or other faiths in our Company.No complaints of discrimination have been filed to the management.
16. Information on Relations with the Clients and Suppliers:Achieving customer satisfaction in marketing and sale of products and services is one of our important and indispensable targets.To achieve it, in-company procedures were prepared and are currently applied. Visits are made to customers and suppliers, andoccasionally customer satisfaction surveys are made to learn their expectations and find solutions. As a result of such works, it wasawarded ISO 9001:2000 in 2004.
Product Supply and Distribution Structure;The company operates as a main distributor (“broadliner distributor”) in IT industry. It buys IT products from suppliers at certain pricesand maturity periods and subsequently sells the products to the sales channels that will sell them to the end user. The company doesnot plan to develop a sales structure that will include direct sales to the end user in the near future.
Suppliers;The hardware and software suppliers of the company are grouped into two categories. 90% of the business volume of the Companyis achieved with the products of such international companies.
17. Social Responsibility:We show respect to the society, nature and environment, national values, customs and traditions; in the light of our transparencyprinciple, we provide reliable information to shareholders and stakeholders, also considering the rights and benefits of our Company,in a timely, accurate, full, understandable, analysable and easily accessible condition, on the company management, financial andlegal status; we comply with the laws of the Republic of Turkey; we act in accordance with the legislation in force in all our operationsand decisions. During the year, no lawsuits were filed against the Company for environmental issues.
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ANNUAL REPORT 2011
Board of Directors Title Executive/Non-Executive
Nevres Erol Bilecik Chairman Executive
Salih Bafl Vice Chairman Non-Executive
Atilla Kayal›o¤lu Member/General Manager Executive
Ayfle ‹nci Bilecik Member Non-Executive
Halil Duman Member Executive
There are no independent members in the Board of Directors, and election of independent members was not provided in the Articlesof Association. Each year, in the Ordinary General Assembly meetings, permission is given to the Chairman and Members of the Boardof Directors, pursuant to Articles 334 and 335 of the Turkish Code of Commerce, to perform the works, in person or on behalf of otherpeople, included in the subject of the Company, and to become partners in companies performing these types of activities, and toperform other relevant operations. Other affiliates of the Company are represented in the Board of Directors. As these companiesoperate in the IT sector but have different specialization areas, it is permitted to the Members of the Board of Directors to performtasks in other companies.
19. Qualifications of Board Members:Minimum and essential qualifications required in the Members of the Board of Directors are regulated in Article 9 "Board of Directorsand Its Term of Office" of the Company's Articles of Association. All Members of the Board of Directors meet the qualifications listedin CMB's Corporate Governance Principles, Section IV, Articles 3.1.1, 3.1.2 and 3.1.3.
20. Mission, Vision and Strategic Goals of the Company:Our Company’s mission is to “Continue its leadership by providing service as a main supply centre of IT products for all companiesin the computer channel considering their changing requirements”. This definition has been determined by the Board of Directors andannounced to the general public through the website of the Company.
Our Company’s vision is to “Be an IT Distributor capable of meeting all requirements of the computer channel from one single point.”Managers each year prepare a business plan and submit to the Board of Directors, which upon approval becomes effective as of thefirst week of January. Strategic business plan, income and expenditure budgets, which are prepared at the beginning of December,are evaluated by the Board of Directors which convenes regularly each month.
21. Risk Management Mechanism and Internal Control:Risk management has an important place within the constant activities of our Company. Main starting point of risk management isidentification and follow-up of all risks, which our Company has confronted with or it is probable to confront. Our managers target toensure that applications which improve and develop risk management are constantly implemented in the Company. Current andprobable risks of our Company are categorized as follows:
a- Payment Risk: Dealer channel, which is described as regular dealers within the distribution structure, has low capital structure.This group of dealers, which is considered to have a number of approx. 5,000, is transferred frequently, therefore, their opening andclosing ratio is rather high. The Company makes sales to almost all companies dealing with the trading of computer.
b- Constant Renewal of Product Technologies: The most important feature of the sector we operate in is that technology and pricesof the products are constantly changed and renewed. Companies who fail to adjust their inventory turnover to this change may facewith the risk of loss.
c- High Competition in the Sector and Profit Margins: Manufacturer companies in the sector have a high competition worldwideas brands. The competition of manufacturer companies reflects to the prices in the national market. For companies which have weakfinancing and cost structure, this situation causes an important risk.
d- Exchange Rate Risk: A great part of the IT products are imported from foreign countries or purchased from domestic sources inforeign currency. When buying products the Company is often credited in foreign currency, and then payments are made in thesecurrencies. Companies, which do not formulate their sales policy based on product-in-currency, are faced with loss risk when foreignexchange rate increases.
58
SECTION IV - BOARD OF DIRECTORS
18. The Structure and Composition of the Board of Directors and Independent Members:
ANNUAL REPORT 2011
e- No exclusivity clause in appointing of distributors by the manufacturer companies: In distributorship contracts made withmanufacturer companies there is no reciprocal exclusivity relation. Manufacturer companies, when appointing distributors, may appointother distributors as well according to the conditions of the market, and distributor companies may sign distributorship contracts withother manufacturer companies.
f- Changes made in importation regimes: Changes occasionally made by the Governments in importation regimes effect theimportation positively, but such changes may sometimes have negative effects as well.
Due to the foregoing risks and for controlling all assets and liabilities of the Company, an Internal Audit Department reporting directlyto the Chairman of the Board is established. Further, our current accounts and risk management department investigates our dealers.These inquiries are intended to reveal current account relations of the dealers with other suppliers, their relations with banks and otherfinancial institutions and whether they issue any bad cheques or not. Credit Committee: The reports on the computer companies whichcompleted their first year in the industry and those whose credit line has been extended are drawn up by the risk control analysts andpresented to the credit committee that meets in certain days each week. The credit committee determines credit lines for each companyaccording to the data from their investigation, past payment data and sales performance. The credit committee determines the workingmethod, and if required, asks dealers to submit a cheque endorsed by a third party or give a further security in mortgage form. Creditlines exceeding a certain amount are evaluated at the weekly meetings of the executive committee, and any excess of credit lines issubject to the approval of the executive committee.
22. Authority and Responsibilities of the Members of the Board of Directors and Managers:Authority and Responsibilities of the Members of the Board of Directors and Managers are defined in the Articles of Association withreference to the relevant provisions of the Turkish Code of Commerce.
23. Principles of Activity of the Board of Directors:The Board of Directors has convened 9 times within the period between 01.01.2010 and 31.12.2010. The agenda and statementsrelating to the meeting are passed to the Members of the Board of Directors in advance. Such communication is handled by thesecretary of the Chairman of the Board.
While no resolutions are made in some of the discussed topics, the minutes of the topics which were resolved are not disclosed tothe public. On the other hand, important subjects resolved in the meeting of the Board of Directors are announced to the generalpublic through Disclosure of Special Events.
24. Prohibitions Concerning Transactions and Competition with the Company:The required permission was granted by the General Assembly to the Members of the Board of Directors to carry out transactionsand competition with the Company as specified in Articles 334 and 335 of the Turkish Commercial Code.
25. Ethical Rules:The Board of Directors of the Company has formulated the ethical rules for the employees. These rules are included in the prospectuswhich was published during the public offering of the company, and can be found in the investors section of the company websiteat the address of www.index.com.tr.
26. Number, Structure and Independence of Committees Established by the Board of Directors:Auditing Committee of our Company is composed of Mr. Salih Bafl and Mrs. Ayfle ‹nci Bilecik. The committee met 3 times in 2009.Auditing Committee audited and inspected the accounting system and financial data of the Company, controlled whether the financialstatements reflected the actual financial status, and found out compliance to generally accepted accounting principles and financiallegislation.
There are not independent members in the Board of Directors, therefore, the members of the committee are not independent, either.Executive members of the Board of Directors do not take office in any committee. At the meeting of the Board of Directors of theCompany held on 29.04.2009, it was resolved to establish a Corporate Governance Committee, and to elect Salih BAfi, who is aBoard Member, as the Chairman of the Committee, and Ayfle ‹nci BILECIK and Halil Duman, who are Board Members, as the membersof the Committee.
27. Remuneration of the Board of Directors:Members of the Board of Directors do not get any remuneration. The Chairman and Deputy Chairman of the Board of Directors andPresident of the Executive Board, also the General Manager and Deputy General Manager get monthly salaries related to their tasks.The Company did not lend any money, extend any credit, extend a personal credit through a third party, nor provided any guaranteesto or in favour of any Member of the Board of Directors or any Manager of the Company.
59
ANNUAL REPORT 2011
6. Auditing Board’s Report
61
ANNUAL REPORT 2011
62
6. Auditing Board’s Report
Title :
Head Office :
Capital :
Fields of Activity :
The auditors' names, terms of office, whether :they are partners or personnel of the company,or not
Number of the Board of Directors meetings :attended or Auditing Board meetings held
Scope, dates and consequence of examinations :performed on the company's accounts, booksand documents
Numbers and conclusions of the counting made :in the shareholding cash office in accordancewith the sub-paragraph 3, paragraph 1, article353 of the Turkish Code of Commerce
Dates and conclusions of the examinations :performed in accordance with thesub-paragraph 4, paragraph 1, article 353 ofthe Turkish Code of Commerce
Complaints and irregularities reported and :measures taken in respect of the same
We have examined the accounts and transactions of ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret Anonim fiirketi for theaccounting period between 01.01.2011 to 31.12.2011 for compliance with the requirements of the Turkish Code of Commerce, thecompany's Articles of Association, other relevant legislation, and generally accepted accounting principles and standards.
In our opinion the enclosed balance sheet issued as of 31.12.2011, the contents of which we certify, accurately reflects the truefinancial standing of the company as of the same date; and the profit & loss statement for the period between 01.01.2011 and31.12.2011 accurately and truly reflects the results of business activities during the same period, and the suggestion of profit allocationis in compliance with the legislation in force and the articles of association of the company.
We kindly submit for your approval the balance sheet and the profit & loss statement and acquittal of the Board of Directors.
‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi.
Ayza¤a Mah. Cendere Yolu No: 9/1 fiiflli – ISTANBUL
TRL 56.000.000
Purchase and sale of computers of any kind, providing technical and softwaresupport and their sales, purchase and sale of computer parts, accessoriesand consumables of any kind.
Veli Tan K‹RT‹fi, H. Ça¤atay ÖZDO⁄RU: Term of office is 1 year, and theyare not partners or personnel of the company.
Attended the Board of Directors Meetings for 3 times.
The legal book records and the documents concerning the semi-annual andannual balance sheets of the company have been examined. We confirmthat the mentioned book records and documents reflect the actual situation.
The company cash office was counted 4 times within the period, and as aresult of the counting, it was seen that the actual cash assets comply withthe corresponding records.
The presence of the guarantees and valuable papers listed in the company'srecords was checked, and it was seen that they comply with the correspondingrecords.
No complaints or irregularities have been reported to us.
AUDITING BOARD'S REPORT
To the General Assembly of‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi.
Auditors
ANNUAL REPORT 2011
63
ANNUAL REPORT 2011
7. Independent Audit Report
65
ANNUAL REPORT 2011
66
7. Independent Audit Report
INDEPENDENT AUDIT REPORT
To The Board of Directors of‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret Anonim fiirketi
IntroductionWe have audited the accompanying consolidated financial statements of ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret Anonimfiirketi, its subsidiaries (together with “Group”) which comprise the consolidated balance sheet as of December 31, 2011 and the consolidated incomestatement, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for the years then ended, and asummary of significant accounting policies and other explanatory notes. (Note:2.03)
Responsibility of Management in Accordance with Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with financial reporting standardspublished by Capital Market Board (CMB). This responsibility includes designing, implementing and maintaining internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriateaccounting policies and making accounting estimates that are reasonable in the circumstances.
Responsibility of Independent Auditing CompanyOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with InternationalStandards on Auditing published by Capital Market Board. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance whether the financial statements are free from material misstatement. Our audit involves performing proceduresto obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly the consolidated financial position of ‹ndeks Bilgisayar Sistemleri MühendislikSanayi ve Ticaret Anonim fiirketi as of December 31, 2011 and of its consolidated financial performance and its consolidated cash flows for theyear then ended in accordance with financial reporting standards published by Capital Market Board (CMB).
ÇA⁄DAfi BA⁄IMSIZ DENET‹M S.M.M.M. A.fi.An Independent member of IAPA International
ÖZCAN AKSUCertified Public Accountant( Istanbul, 3 Nisan 2012 )
ANNUAL REPORT 2011
67
ANNUAL REPORT 2011
8. Financial Statements and Notes
69
ANNUAL REPORT 2011
70
8. Financial Statements and NotesNotes to consolidated financial statements for the periods ended 01.01.2011 and 31.12.2011 prepared in accordance with internationalfinancial repording standards
‹NDEKS B‹LG‹SAYAR S‹S. MÜH. SAN. T‹C. Afi.BALANCE SHEET(XI-29 CONSOLIDATED)(Turkish Lira)
CURRENT ASSETS
TOTAL ASSETS
NON-CURRENT ASSETS 31.871.237
Cash and Cash Equivalents
Financial Investments
Trade Receivables
- Receivables from Related Parties
- Other
Other Receivables
- Receivables from Related Parties
- Other
Inventories
Other Current Assets
6
7
10
10-37
10
11
11-37
11
13
26
65.358.568
444.263
403.174.146
2.859.230
400.314.916
327.731
162.812
164.919
104.450.889
25.539.507
26.415.870
100.875
315.185.436
4.619.012
310.566.424
246.748
96.013
150.735
127.325.894
36.985.711
599.295.104 506.260.534
Other Receivables
Financial Investments
Investment Property
Tangible Fixed Assets
Intangible Fixed Assets
Goodwill
Deferred Tax Assets
11
7
17
18
19
20
35
49.241
64.894
-
29.127.228
214.850
2.467.577
1.060.690
56.440
64.894
124.871
28.430.858
59.139
2.467.577
667.458
32.984.480
632.279.584 538.131.771
The accompanying policies and explanatory notes are an integral part of the consolidated financial statements.
ASSETS NotesAudited
31.12.2011
Audited
31.12.2010
ANNUAL REPORT 2011
71
480.634.053
-
9.301.841
8
24
11.732.883
1.466.963
8.285.360
1.016.481
138.445.685 120.437.244
11.424.383
-
365.962.360
624.144
365.338.216
13.468.858
4.834.616
8.634.242
1.098.634
5.176.795
11.261.656
632.279.584 538.131.771
27
27
8
10
10-37
10
11
11-37
11
35
22
26
-
34.590.274
-
395.944.108
3.960.356
391.983.752
15.325.840
4.385.413
10.940.427
2.958.982
23.027.029
8.787.820
13.199.846
124.758.384
56.000.000
241.113
-
9.895
5.671.482
44.388.033
18.447.861
13.687.301
110.656.770
56.000.000
241.113
-
79.284
5.109.837
36.055.067
13.171.469
9.780.474
‹NDEKS B‹LG‹SAYAR S‹S. MÜH. SAN. T‹C. Afi.BALANCE SHEET(XI-29 CONSOLIDATED)(Turkish Lira)
LIABILITIES NotesAudited
31.12.2011
Audited
31.12.2010
Financial Liabilities
Other Financial Liabilities
Trade Payables
- Due to Related Parties
- Other
Other Payables
- Due to Related Parties
- Other
Provision for Tax
Provision For Liabilities
Other Short-Term Liabilities
408.392.686
Parent Company Shareholders' Equity
Paid-in Capital
Capital Inflation Adjustment Differences
Value Increase Funds
Hedging Funds
Restricted Reserves
Previous Years' Profit / (Loss)
Net Profit / (Loss) for the Period
Minority Shares
SHORT -TERM LIABILITIES
LONG - TERM LIABILITIES
Financial Liabilities
Provision For Employment Termination Indemnities
SHAREHOLDERS EQUITY
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
The accompanying policies and explanatory notes are an integral part of the consolidated financial statements.
ANNUAL REPORT 2011
72
OPERATING INCOME
28
28
29
29
31
31
32
33
35
35
27
27
27
27
36
1.513.546.064
(1.420.802.797)
92.743.267
(16.789.949)
(19.258.023)
395.771
(1.191.240)
55.899.826
59.350.774
(86.869.690)
28.380.910
(7.265.906)
(7.605.354)
339.448
21.115.004
(69.389)
(69.389)
-
21.045.615
-
2.667.143
18.447.861
-
2.660.804
18.384.811
0,329426
1.228.175.766
(1.153.557.084)
74.618.682
(13.493.798)
(14.612.412)
60.687
(374.948)
46.198.211
40.029.703
(67.681.475)
18.546.439
(4.347.057)
(4.626.551)
279.494
14.199.382
79.284
79.284
-
14.278.666
-
1.027.913
13.171.469
-
1.027.913
13.250.753
0,235205
Sales Revenue
Cost of Sales (-)
GROSS PROFIT
Marketing, Sales and Distribution Expenses (-)
General Administrative Expenses (-)
Other Operating Income
Other Operating Expense (-)
OPERATING PROFIT/(LOSS)
Financial Income
Financial Expenses (-)
CONTINUED OPERATIONS PROFIT BEFORE TAXATION
Tax Income / (Expense)
- Tax Expense for the Period
- Deferred Tax Income
PROFIT FOR THE PERIOD
Other Comprehensive Income
Change in Hedge Funds
OTHER COMPREHENSIVE INCOME (AFTER TAX)
TOTAL COMPREHENSIVE INCOME
Distribution of Period Profit / (Loss)
Minority Share
Main Partnership Share
Distribution of Total Comprehensive Income
Minority Share
Main Partnership Share
Net Earnings Per Share
‹NDEKS B‹LG‹SAYAR S‹S. MÜH. SAN. T‹C. Afi.BALANCE SHEET(XI-29 CONSOLIDATED)(Turkish Lira)
The accompanying policies and explanatory notes are an integral part of the consolidated financial statements.
NotesAudited
31.12.2011
Audited
31.12.2010
ANNUAL REPORT 2011
73
COMPREHENSIVE INCOME STATEMENT (TL)(IX-29 CONSOLIDATED)
18-19
24
10
18-19
22
10
10
13
10
3
33
32
10-11
13
10-11
26
26
24
35
3
17
18-19
18-19
8
8
27
32-33
7
6
6
28.380.910
1.125.760
643.301
2.355.440
39.045
17.850.235
1.112.429
(245.616)
253.717
(2.796.835)
-
(60.752)
24.279.734
(19.649.907)
-
53.287.461
(90.048.141)
23.484.116
-
33.391.927
12.650.830
1.291.909
(2.798.992)
(1.381.538)
29.877.572
(250.053)
(5.745.006)
23.882.513
(1.229.531)
-
(1.876.669)
252.995
(2.853.205)
-
-
22.403.413
3.447.523
(4.276.858)
(3.673.960)
9.895
17.910.013
38.939.321
26.415.870
65.355.191
18.546.439
840.617
521.509
489.818
(16.309)
1.793.875
438.975
(242.705)
284.547
(626.494)
-
-
13.146.389
(8.367.322)
-
26.809.339
(85.515.205)
11.274.863
-
106.737.658
(3.388.036)
-
(1.356.481)
286.070
54.848.208
(154.297)
(5.058.573)
49.635.338
-
(125.500)
(1.265.890)
52.206
(1.339.184)
-
-
(10.731.473)
(2.027.702)
(6.617.827)
(4.903.594)
79.284
(24.201.312)
24.094.842
2.320.888
26.415.730
A) CASH FLOW PROVIDED FROM OPERATIONS
CONTINUED OPERATIONS PROFIT BEFORE TAXATION
Adjustments:
Depreciation (+)
Increase in Provision For Termination Indemnities (+)
Rediscount on Notes Receivable (+)
Profit (+) / Loss from Sale of Fixed Assets
Increase (+) / Decrease (-) in Provision for Debt s
Provision for Doubtful Receivables for Current Period (+)
Provision for Nullified Doubtful Receivables (-)
Provision for Decrease in Value of Inventories (+)
Rediscount on Notes Payable (-)
Provision for Decrease in Value of Affiliates (-)
Negative Goodwill Income
Interest Expenses (+)
Interest Income (-)
Income from Marketable Securities or Long-term Investments(-)
Operational Income Before Changes in Working Capital:
Increase in Trade Receivables /Other Receivables (-)
Decrease in Inventories (+)
Increase in Marketable Securities with Purchase/Sale Purposes (-)
Decrease in Trade Receivables /Other Receivables (-)
Increase (-) / Decrease (+) in Other Current Assets
Cash Assets from Art›m A.fi.
Increase (+) / Decrease (-) in other Liabilities
Other Cash Flows (+) / (-)
Cash Inflow Provided/(Used) From Operating Activities:
Termination Indemnities Payment (-)
Tax Payment (-)
Net Cash Inflow Provided/(Used) From Operating Activities:
B) NET CASH USED IN INVESTMENT OPERATIONS
Net Tangible Assets Purchases (-)
Investment property (-)
Tangible Assets Purchases (-)
Cash provided from sale of Tangible and Intangible Assets
NET CASH RELATING TO INVESTMENT OPERATIONS
C) CASH FLOW RELATING TO FINANCIAL ACTIVITIES
Capital Increase
Change in Cash with Issue Premiums (+)
Change in Short Term Financial Liabilities (+)
Change in Long Term Financial Liabilities (+)
Dividends Payments (-)
Net Interest Income / (Expense)
Hedge Funds
NET CASH RELATING TO FINANCIAL ACTIVITIES
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
‹NDEKS B‹LG‹SAYAR S‹S. MÜH. SAN. T‹C. Afi.BALANCE SHEET(XI-29 CONSOLIDATED)(Turkish Lira)
NotesAudited
01.01.201131.12.2011
The accompanying policies and explanatory notes are an integral part of the consolidated financial statements.
Audited01.01.201031.12.2010
ANNUAL REPORT 2011
74
‹NDEKS B‹LG‹SAYAR S‹S. MÜH. SAN. T‹C. Afi.BA⁄IMSIZ DENET‹MDEN GEÇM‹fiKONSOL‹DE ÖZSERMAYE DA⁄ITIM TABLOSU(Aksi belirtilmedikçe Türk Liras›) 31.12.2010 31.12.2008
Not
esCa
pita
lCa
pita
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just
men
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iffer
ence
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Prem
ium
sH
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eser
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Prev
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iod
Prof
it /
(Los
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inor
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ares
Tota
lSh
areh
olde
rs'
Equi
ty
AUTI
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Not
-27
Not
-27
56.0
00.0
00
- - - - - - -
56.0
00.0
00
56.0
00.0
00
- - - - - -
56.0
00.0
00
241.
113 - - - - - - -
241.
113
241.
113 - - - - - -
241.
113
- - - - - - - - - - - - - - - - -
4.18
3.40
6 - -
926.
431 - - -
5.10
9.83
7
5.10
9.83
7 - -
561.
645 - - - -
5.67
1.48
2
36.0
55.0
67
-
13.1
71.4
69
(561
.645
)
(4.2
76.8
58) - - -
44.3
88.0
33
27.6
64.3
83
-
15.9
34.9
42
(926
.431
)
(6.6
17.8
27) - -
27.6
64.3
83
13.1
71.4
69
-
(13.
171.
469) - - - -
18.4
47.8
61
18.4
47.8
61
15.9
34.9
42
-
(15.
934.
942) - - -
13.1
71.4
69
13.1
71.4
69
9.87
0.47
4 - - - - -
1.23
9.68
4
2.66
7.14
3
13.6
87.3
01
8.75
2.56
1 - - - - -
1.02
7.91
3
9.78
0.47
4
120.
437.
244 - -
(4.2
76.8
58)
(69.
389)
1.23
9.68
4
21.1
15.0
04
138.
445.
685
112.
776.
405 - - -
(6.6
17.8
27)
79.2
84
14.1
99.3
82
120.
437.
244
79.2
84
- - - -
(69.
389) - -
9.89
5
Not
-27 7
Not
-27
AUTI
DED
- - - - - -
79.2
84
79.2
84
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.
Net P
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2.20
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1.20
10
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ase
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2.20
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Prev
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Pro
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Per
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Prof
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(Los
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ares
Tota
lSh
areh
olde
rs'
Equi
ty
ANNUAL REPORT 2011
75
1. ORGANIZATION AND BUSINESS SEGMENT‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret Anonim fiirketi was established in 1989 and the activities of the Companyare comprised of trade of all kinds of “Information Technology” products for the purpose of wholesale trading. The Company isregistered to the Capital Markets Board of Turkey since June 2004 and 15,34% of the Company's shares are traded on Istanbul StockExchange.
As of December 31, 2011 and December 31, 2010, details regarding to Company's subsidiaries, which are subject to consolidation,are as follows:
(*) % 51 of the Art›m Biliflim Çözüm ve Da¤. A.fi. has been acquired on February 7, 2011.
As of December 31, 2011 and December 31, 2010, details regarding to Company's joint ventures, which are subject to consolidation,are as follows:
Purchasing and Selling of Computer and Equipment
Purchasing and Selling of Home Electronic Products
Logistics
Purchasing and Selling of Spare Parts of IT Products
Datagate Bilgisayar Malzemeleri A.fi.
Neotech Teknolojik Ürünler Da¤. A.fi.
Teklos Teknoloji Lojistik Hizmetleri A.fi.
Art›m Biliflim Çözüm ve Da¤›t›m A.fi.*
10.000.000
1.000.000
5.000.000
1.210.000
59,24
80,00
99,99
51,00
59,24
80,00
99,99
51,00
Company Name Field Of Operations Capital% of
DirectOwnership
% ofIndirect
Ownership
Company Name Field Of Operations Capital% of
DirectOwnership
% ofIndirect
Ownership
Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. Purchasing and Selling Network Products 1.100.00 50.00 50.00
The financial statements of Datagate Bilgisayar Malzemeleri A.fi., Neotech Teknolojik Ürünler Da¤. A.fi., Teklos Teknoloji LojistikHizmetleri A.fi. and Art›m Biliflim Çözüm ve Da¤›t›m A.fi. are consolidated according to “the full consolidation method”. The financialstatements of Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. is consolidated according to “the proportionate consolidation method”.
The main shareholders of the Company are Nevres Erol Bilecik (%33,77) and Pouliadis and Associates S.A. (%35,56) located in Greece.
The average number of employees for the year 2011 is 369. (December 31, 2010: 316). All personnel are administrative staff.
The Company’s official address registered in Trade Registry is Ayaza¤a District, Cendere Yolu No: 9/1 fiiflli, ‹stanbul. The Company’shead office is in Istanbul and it has branches in Ankara, ‹zmir, Diyarbak›r and ‹stanbul Atatürk Airport Free Zone.
The Group’s’ subsidiaries as of December 31, 2011 and December 31, 2010 are as follows:
(*) % 51 of the Art›m Biliflim Çözüm ve Da¤. A.fi. has been acquired on February 7, 2011.
Company Name Field Of Operations Capital% of
DirectOwnership
% ofIndirect
Ownership
10.000.000
1.000.000
5.000.000
50.000
1.210.000
59,24
80,00
99,99
99.80
51,00
59,24
80,00
99,99
99.80
51,00
Datagate Bilgisayar Malzemeleri A.fi.
Neotech Teknolojik Ürünler Da¤. A.fi.
Teklos Teknoloji Lojistik Hizmetleri A.fi.
‹nfin Bilgisayar Ticaret A.fi.
Art›m Biliflim Çözüm ve Da¤›t›m A.fi.*
Purchasing and Selling of Computer and Equipment
Purchasing and Selling of Home Electronic Products
Logistics
Purchasing and Selling of Spare Parts of IT Products
Purchasing and Selling Computer and equipment(Export-Import)
ANNUAL REPORT 2011
76
As of December 31, 2011 and December 31, 2010, details regarding to Company's joint ventures are as follows:
Company Name Field Of Operations Capital% of
DirectOwnership
% ofIndirect
Ownership
Neteks ‹letiflim Ürünleri Da¤›t›m A.fi.
Neteks D›fl Ticaret Ltd. fiti. (*)
Purchasing and Selling Network Products
Purchasing and Selling Network Products
1.100.00
5.000
50.00
-
50.00
49.50
(*)Neteks D›fl Ticaret Ltd.fiti is the subsidiary of Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. with a rate of 99%.Hereafter, the Company and the subsidiaries will be referred as (‘The Group’) in the consolidated financial statements and notes to the financial statements.
2. PRINCIPLES RELATED TO THE PRESENTATION OF THE FINANCIAL STATEMENTS
2.01 Basic Principles for the PresentationThe Group maintains its books of account and prepares its statutory financial statements in accordance with the regulations of CapitalMarket Board (CMB) Law, Turkish Commercial Code, Tax Procedural Law and Uniform Chart of Accountants published by Ministryof Finance.
The accompanying consolidated financial statements of the Group were prepared in accordance with the communiqué Serie XI, No:29 “Communiqué on Financial Reporting at Capital Markets” which was declared by the CMB dated April 9, 2008 with No: 26842.
This communiqué has become valid for the first interim financial statements after January 01, 2008. Based on 5th clause of thiscommuniqué, companies applying International Accounting / Financial Reporting Standards (IAS/ IFRS) , which were accepted byEuropean Union and financial statements are disclosed in s appropriate to IAS/ IFRS.Turkish Accounting/Financial Reporting Standardswhich were published by Turkish Accounting Standards Board, are based and consistent with IAS/ IFRS. Group’s consolidatedfinancial statements were prepared in accordance with the communiqué Serie XI, No: 29 and s to the consolidated financial statementswere presented according to the format obliged by the CMB with the declaration dated April 14, 2008.
As of April 3, 2012 the Group’s financial statements were approved and signed by its Board of Directors for the period January 1-December 31, 2011. General Assembly has a right to change financial statements.
2.02 Dealing with the Inflation Effects in Hyper-Inflationary PeriodsAccording to the decision, dated March 17, 2005 with No: 11/367, made by the Capital Market Board, the inflation accounting hasbeen no longer effective as of 2005 and the accompanying consolidated financial statements have not been adjusted since January1, 2005. Nonmonetary values, which are in the accompanying consolidated financial statements, exist with valued as of December31, 2004 in accordance with International Accounting Standards No. 29 “Financial Reporting on Hyper-Inflationist Economies”.
2.03 Consolidation PrinciplesSubsidiaries are the companies, whose shares are held by the Company directly or indirectly through shares of other companies. Asa result, the Group with or without over 50% of voting right, has the power and authority to direct and control the management andpolicies of the subsidiary companies whether through the ownership of voting securities, by contract or otherwise.
Balance Sheet and Income statements of the subsidiaries are consolidated according to “full consolidation method” and book valueand capital of the Group’s subsidiary are adjusted accordingly. Transactions and balances between the Company and Subsidiariesare eliminated during consolidation.
Minority interests show minority shareholders’ share in the subsidiaries’ assets and result of operations for the related period. Thesedetails are to be expressed separately in consolidated Balance Sheet and Income Statement. If losses related to minority interest areover benefits from shares of a subsidiary and if there is no bounding liability to the minorities, in general, these losses related withthe minorities result against to benefits of the minorities.
Companies under common control of the Group are described as Joint Managing Companies. The Group has significant impact onfinancial and operating policies of these companies.
ANNUAL REPORT 2011
77
*Neteks D›fl Ticaret Ltd.fiti is the subsidiary of Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. with a rate of 99%.
SubsidiaryParticipation
Rate %ParticipationAmount in TL
‹nfin Bilgisayar Ticaret A.fi.
Neteks D›fl Ticaret Ltd. fiti.(*)
99,80
49,50
62.419
2.475
Total 64.894
‹nfin Bilgisayar Ticaret A.fi. and Neteks D›fl Ticaret Limited fiirketi were not consolidated to the fact that they are both insignificantand do not have material effect on the Group’s consolidated financial statements.These subsidiaries are classified as financial assetsavailable for sale in consolidated financial statements. The summary financial information of mentioned companies is disclosesin Note: 7.
As of December 31, 2011 and December 31, 2010, details regarding to Company’s joint ventures are as follows:
Company Name Field Of Operations Capital% of
DirectOwnership
% ofIndirect
Ownership
Neteks ‹letiflim Ürünleri Da¤›t›m A.fi.
Neteks D›fl Ticaret Ltd. fiti. (*)
Purchasing and Selling Network Products
Purchasing and Selling Network Products
1.100.00
5.000
50.00
-
50.00
49.50
Hereafter, the Company and the subsidiaries will be referred as (‘The Group’) in the consolidated financial statements and notes tothe financial statements.
The financial statements of Datagate Bilgisayar Malzemeleri A.fi., Neotech Teknolojik Ürünler Da¤. A.fi., Teklos Teknoloji LojistikHizmetleri A.fi. and Art›m Biliflim Çözüm ve Da¤›t›m A.fi. are consolidated for using direct consolidation method, the financial statementsof Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. is consolidated by using partial consolidation method.
Balance Sheets and Income statements of the subsidiaries are consolidated according to “full consolidation method” and “partialconsolidation method”, and book value and capital of the Company’s subsidiaries are adjusted accordingly. Transactions and balancesbetween the Company and subsidiaries are eliminated during consolidation.
Minority interests show minority shareholders’ equity in the subsidiaries’ assets and result of operations for the related period. Thesedetails are expressed separately in consolidated balance sheet and Profit/Loss Statement. If losses related to minority interest areover benefits from shares of a subsidiary and if there is no bounding liability to the minorities, in general, these losses related withthe minorities can result against to benefits of the main shareholders.
Financial Information of Companies which are subjected to Partial Consolidation Method
Parent and subsidiary companies which are not subjected to consolidation and the subsidiary related with management, auditing,and capital are as follows:
*)Neteks D›fl Ticaret Ltd.fiti is the subsidiary of Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. with a rate of 99%.
The current shares in the subsidiaries as of December 31, 2011 and December 31, 2010 are as follows:
(*) % 51 of the Art›m Biliflim Çözüm ve Da¤. A.fi. has been acquired on February 7, 2011.
Company Name Field Of Operations Capital% of
DirectOwnership
% ofIndirect
Ownership
10.000.000
1.000.000
5.000.000
50.000
1.210.000
59,24
80,00
99,99
99.80
51,00
59,24
80,00
99,99
99.80
51,00
Datagate Bilgisayar Malzemeleri A.fi.
Neotech Teknolojik Ürünler Da¤. A.fi.
Teklos Teknoloji Lojistik Hizmetleri A.fi.
‹nfin Bilgisayar Ticaret A.fi.
Art›m Biliflim Çözüm ve Da¤›t›m A.fi.*
Purchasing and Selling of Computer and Equipment
Purchasing and Selling of Home Electronic Products
Logistics
Purchasing and Selling of Spare Parts of IT Products
Purchasing and Selling Computer and equipment(Export-Import)
ANNUAL REPORT 2011
78
10.093.670
632.279.584
1,60%
213.995
138.445.685
0,15%
22.294.579
1.513.546.064
1,47%
(211.073)
18.447.861
(1,14)%
Financial Outcomes of 2011 Total Asset Total Equity Net Sales Period Income
Companies which are not subjected to consolidation
Consolidated Financial Statements
%
7.158.065
538.131.771
1,33%
425.158
120.437.244
0,35%
28.165.752
1.228.175.766
2,29%
78.690
13.171.469
0,60%
Comparison between financial outcomes of companies which are not subjected to consolidation and financialoutcomes of consolidated financial statements as of December 31, 2010 is as follows;
Comparison between financial outcomes of companies which are not subjected to consolidation and financialoutcomes of consolidated financial statements as of December 31, 2011 is as follows;
Financial Outcomes of 2011 Total Asset Total Equity Net Sales Period Income
Companies which are not subjected to consolidation
Consolidated Financial Statements
%
Significant part of items, which are located in total asset and sales, are eliminated during the consolidation even though these companiesare subjected to consolidation. Considered other matters when mentioned companies are excluded from the consolidation, are asfollows;
These companies have not got significant assets and liabilities which are out of balance sheet. Moreover these companies have notgot significant assets such as fixed assets etc.
On the lights of above given data all these companies were not subjected to consolidation due to all quantitative and qualitativeevaluations and on the lights of above given data indicate that these companies do not effect to financial outcomes significantly.
2.04 Comparative Information and Adjustment of the Previous Consolidated Financial StatementsThe comparative financial statements have been presented to enable to perform the financial position and the performance trendanalysis. All necessary adjustments have been made in prior financial statements to present consistent and comparative financialstatements.
The adjustment transactions which have been made in prior period’s income statement are as follows.
Income StatementThe provision expense for value decrease in inventories amounted 284.547 TL which is presented under the operational expensesin the income statement for the period January 1, 2010 - December 31, 2010 is classified under the cost of sales in the current period.As a result of this classification the operational expenses are decreased by 284.547 TL and cost of sales are increased by 284.547TL. The classifications do not have any effect on the prior period’s profit / loss, shareholders’ equity, total assets, etc.
2.05 OffsettingThe financial assets and liabilities in the financial statements are offset and the net amount reported in the balance sheet, where thereis a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis or realize the assetand settle the liability simultaneously.
2.06 Changes in Accounting PoliciesThe changes to the current accounting policies can be performed if it is necessary or the changes will provide more appropriate andreliable presentation of the transactions and to the events related financial position, performance and the cash flow of the Group thataffect the financial statements of the Group. If the changes in accounting policies affects the prior periods, policy is applied to theprior period financial statements as if it is applied before.
2.07 Changes in Accounting Estimates and ErrorsAccounting estimates are made based on reliable information and using appropriate estimation methods. However, if new or additionalinformation becomes available or the circumstances, which the initial estimates based on, change, then the estimates are reviewedand revised, if necessary. If the change in the accounting estimates is only related to a sole period, then only that period’s financialstatements are adjusted. On the other hand, if the amendments are related to the current as well as the forthcoming periods, thenboth current and forthcoming periods’ financial statements are adjusted.
ANNUAL REPORT 2011
79
In instances where the accounting estimates affect both current and forthcoming periods, then description and monetary value ofthe estimate is disclosed in the notes to the financial statements. However; if the effect of the accounting estimate to the financialstatement cannot be determined, then it is not disclosed in the notes to the financial statements. The Group is applying the accountingestimates to determine the doubtful receivables, the value decrease in fixed assets and inventory, the useful lives of the fixed assets,contingent liabilities, actuarial assumptions for the termination indemnities, etc. There is no change in accounting estimates in thecurrent period. Accounting estimates applied by the Group are disclosed below in the related parts of the footnotes.
2.08 Summary of Significant Accounting Policies
2.08.01 IncomeThe Group recognizes income according to the accrual basis, when the Group reasonably determines the income and economicbenefit is probable. Group’s income mainly consists of sales of computer and computer equipments as PC, laptop, electronic homeproducts, networking products, etc. All the sales are operated via dealers and there are not any direct sales to end customers. Netsales are calculated by deducting sales return and sales discounts from total sales.
Revenue from the sale of goods is recognized when all the following conditions are gratified:• The significant risks and the ownership of the goods are transferred to the buyer;• The Group refrains the managerial control over the goods and the effective control over the goods sold;• The revenue can be measured reasonably;• It is probable that the the economic benefits related to transaction will flow to the entitiy;• The costs incurred or will be incurred in conjuction with the transaction can be measured reliably.
The most of the products sold by the Group has foreign origin. The purchases are made from foreign companies, offices of foreigncompanies in Turkey or domestic companies in Turkey. Depending upon the realization of the targets given by the domestic or foreigncompanies; a set of payments are received or offsetting the accounts under the name of “rebate”, “risturn”, “sell out”, or “bonus”.The mentioned amounts are recognised as credit note income accruals in the balance sheet depending upon the realization of thetargets and conditions given by the sellers. The documents prepared by sellers under the name of “rebate”, “risturn”, “sell out”, “bonus”,and “credit note” (or Invoices prepared by the Group) is collected or offsetted. Credit notes obtained from inventories are discountedfrom cost of inventories. The remaining balance is recognised as “Other Sales” in the sales of the Group.
Interest revenue is accured on a time basis, by reference to the principal outstanding and at the effective interest rate applicaple, whichis the rate that discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carryingamount.
When there is significant amount of cost of financing included in the sales, the fair value is determined by discouting all probable futurecash flows with the yield rate, which is embedded in the cost of financing. The differences between the fair value and the nominalvalue is recorded as interest income according to the accrual basis.
2.08.02 InventoriesInventories are stated either at the lower of acquisition cost or net realizable value. Group’s inventories consist of computer andcomputer equipments like PC, laptop, electronical home products, network products, etc.
The inventory costing method used by the Group is “First in First out (FIFO)”. Net realizable value is the estimated selling price in theordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
2.08.03 Tangible Fixed AssetsFor Assets acquired in and after 2005, the tangible assets are reflected to the consolidated financial statements by deducting theiraccumulated depreciation from their cost. For assets that were acquired before January 01, 2005, the tangible fixed assets arepresented on the consolidated financial statements based on their cost value, which is adjusted according to the inflationary effectsas of December 31, 2004. Depreciation is calculated using the straight-line method based on their economic lives. The following rates,determined in accordance with the economic lives of the fixed assets, are used in calculation of depreciation.
TYPE 31.12.2011 RATE (%) 31.12.2010 RATE (%)
10
2
10-20
10-25
10-33
10-33
Land Improvements
Buildings
Machinery, Plant and Equipment
Motor Vehicles
Furniture and Fixtures
Leasehold Improvements
10
2
10-20
10-25
10-33
10-33
ANNUAL REPORT 2011
80
Lands are not subject to depreciation since they have unlimited useful lives.
Tangible fixed assets are rewieved in terms of impairment for each balance sheet period. If the carrying value of a tangible fixed assetis more than its expected net realizable value, then the carrying value is reduced to its net realizable value by making the necessaryprovisions. There is no provision for decrease in value of tangible fixed assets.
The profit and loss arisen from fixed asset sales are determined by comparing the net book value with the sales price and the resultis added to the operating profit or loss.
Maintenance and repair expenses are accounted as expense at their realization date. If the maintenance and repair expenses clearlyimprove the economic value or performance of the related asset then they are capitalized.
2.08.04 Intangible AssetsIntangible Assets contains acquired assets by sales such as computer software programs and computer software licences. There isno intangible asset created within the structure of business.
Intangible assets acquired before January 1, 2005 are carried at acquisition costs adjusted for inflation; whereas those purchased inthe year 2005 and purchased after 2005 are carried forward at their acquisition cost less accumulated amortization.
Amortization is calculated using the straight-line method between 5 and 10 years period. Art objects are not subjected to depreciationdue to their indefinite useful life.
Intangible fixed assets are rewieved in terms of impairment for each balance sheet period. If the carrying value of a tangible fixed assetis more than its expected net realizable value, then the carrying value is reduced to its net realizable value by making the necessaryprovisions. There is no provision for decrease in value of tangible fixed assets.
2.08.05 Impairment of AssetsAssets such as goodwill which has infinite life are not subjected to amortization. Impairment test is applied for these assets for eachyear. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate thatthe carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amountexceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Forthe purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.Non-financial assets except goodwill that suffered impairment are reviewed for possible reversal of impairment at each reporting date.
According to the Group Management’s assessment; There is no such a situation that may cause impairment for tangible, intangibleassets and investment properties. These assets’ net book value as of December 31, 2011 is 29.342.078 TL and this amount consistof real estates for 25.894.007 TL and art objects for 128.372 TL. It has been predicted that the mentioned assets’ market valuesare over their net book values. The remaining assets except from mentioned assets consist of vehicles and furniture&fixtures foradministrative purposes. These assets’ insurance values and replacement values are over their book values.
2.08.06 Research and Development ExpensesNone.
2.08.07 Borrowings CostsThe borrowing costs are recognized as expense when they are incurred. Borrowing costs that are directly attributable to the acquisition,construction or production of a qualifying asset shall be capitalized as part of the cost of that asset. The capitalization of borrowingcosts as part of the cost of a qualifying asset shall commence, when expenditures and borrowing costs for the asset are incurred,continues until that asset becomes available for sale. Expenditures on a qualifying asset include only those expenditures that haveresulted in payments of cash, transfers of other assets or the assumption of interest-bearing liabilities. There are no capitalized borrowingcosts in current period related to qualifying assets.
2.08.08 Financial Instruments
(i) Financial Assets
Investments are recognized and derecognized on transaction date where the purchase and sales of an investment is under a contract,terms of which require delivery of the investment within the timeframe established by the market concerned and are initially measuredat fair value, net of transaction costs except for those financial assets classified as fair value through profit or loss which are initiallymeasured at fair value.
Financial assets are classified as “financial assets, whose fair value differences are reflected to the profit or loss”, “financial assetsheld to the maturity”, “financial assets available for-sale” and “loans and receivables.”
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Prevailing Interest Method;Prevailing interest method is the assessment of financial asset with their amortized cost and allocation of interest income to the relevantperiod. Prevailing interest rate is a rate that discounts the estimated cash flow of the financial instruments for the expected life or whereappropriates a shorter period. Income related to financial assets, except the “financial assets, whose fair value differences are reflectedto the profit or loss”, is calculated by using the prevailing interest rate.
a) Financial Assets Whose Fair Value Differences Are Reflected to the Profit or Loss“Financial assets whose fair value differences are reflected to the profit or loss”, are the financial assets that are held for tradingpurposes. If a financial asset is acquired for trading purposes, it is classified in this category. Also, derivative instruments, which arenot exempt from financial risk, are also classified as “Financial assets whose fair value differences are reflected to the profit or loss”.These financial assets are classified as current assets.
b) Financial Assets Which Will Be Held to the MaturityDebt instruments, which the Group has the intention and capability to hold to maturity, and/or have fixed or determinable paymentarrangement, are classified as “Investments Held to the Maturity”. Financial asset that will be held to the maturity, are recorded afterdeducting the impairment from the cost basis, which has been amortized with prevailing interest method. All relevant income iscalculated using the prevailing interest method.
c) Financial Assets Available-For-SaleFinancial assets, which are “Available-for-Sale”, are either financial assets, which will not be held to maturity or financial assets, whichare not held for trading purposes. Financial assets Available-for-Sale are recorded with their fair value if their fair value can be determinedreliably. Marketable securities are shown at their cost basis unless their fair value can be reliably measured or have an active tradingmarket. Profit or loss pertaining to the financial assets Available-for-Sale is not recorded on the income statement. The fluctuation inthe fair value of these assets is shown in the statement of shareholders’ equity. Where the investment is disposed of or is determinedto be impaired, the cumulative gain or loss previously recognized is included in profit or loss for the period. Provisions recorded inthe income statement pertaining to the impairment of financial asset Available-for-Sale cannot be reversed from the income statementin future periods.
Except equity instruments classified as available-for-sale, if impairment loss decreases in next period and if therein decreasing canbe related to an event occurred after the accounting of impairment loss, impairment loss accounted before can be cancelled in incomestatement.
d) Loans and ReceivablesTrade receivables, other receivables, and loans are initially recognized at their fair value. Subsequently, receivables and loans aremeasured at amortized cost using the effective interest method. In the case of interest on loans and receivables negligible, registeredvalue of loan and receivables is accepted as fair value.
Impairment of financial assetsFinancial assets, other than those at fair value through profit or loss, are assessed for indication of impairment at each balance sheetdate. Financial assets are impaired, where there is objective evidence that, as a result of one or more events that occurred after theinitial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assetscarried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present valueof estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced with the impairment loss directly for all financial assets with the exception oftrade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable isuncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are reversedagainst the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.
With the exception of available for sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreasesand the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognizedimpairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairmentis reversed does not exceed what the amortized cost would have been had the impairment not been recognized.
With respect to available-for-sale equity securities, any increase in fair value subsequent to an impairment loss is recognized directlyin equity.
Cash and Cash EquivalentsCash and cash equivalents are cash, demand deposit and other short-term highly liquid investments, which their maturities are threemonths or less from the date as of acquisition, that are readily convertible to a known amount of cash and are subject to an insignificantrisk of changes in value.
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(ii) Financial Liabilities
Financial liabilities and equity instruments are classified according to the contractual agreements entered into and the definition offinancial liability and equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of theCompany after deducting all the liabilities. Accounting policies determined for the financial liabilities and the financial instruments basedon equity are explained below.
Financial liabilities are classified as either “financial liabilities whose fair value differences are reflected to the profit /loss” or other financialliabilities.
a) Financial Liabilities Whose Fair Value Differences Are Reflected to the Profit /Loss“Financial liabilities whose fair value differences are reflected to the profit /loss” are recorded with their fair value and are re-evaluatedat the end of each balance sheet date. Changes in fair values are recorded on the income statement. Net earnings and/or lossesrecorded on the income statement also include interest payments made for this financial liability.
b) Other Financial LiabilitiesOther financial liabilities are initially recognised with their fair values free from transaction costs.
Other financial liabilities are recognised over their amortized costs using the effective interest method and with interest costs calculatedover effective interest rate in subsequent periods. The effective interest method is the calculation of the amortized costs of the financialliabilities and the distribution of the related interest expenses to related periods.
(iii) Derivative Financial InstrumentsThe Group has agreement in foreign currency futures markets. Derivative financial instruments are recognised with its market valueon the date of derivative contracts signed and re-assessed with its market value.
The difference between the fair value as of December 31, 2011 and the cost value of the forward contracts as of December 31, 2011is recognised under the shareholders’ equity within the scope of “IAS 39 Hedge Accounting.”
The gain or loss realized from the increase or decrease in the fair value of the derivative instruments which do not meet the conditionsfor hedge accounting is recognised in profit or loss.
The fair value is determined by the appropriate one of possible valid market values, otherwise discounted cash flows and option pricingmodels. The derivatives with positive fair value is recognised as an asset and with negative fair value is recognised as a liability underthe balance sheet. (Note: 7)
2.08.09 Effects of Currency FluctuationsAll transactions, denominated in foreign currencies, are converted into TL by the exchange rate ruling at the transaction date. All foreigncurrency denominated monetary assets and liabilities stated at the balance sheet are converted into TL by the exchange rate rulingat the balance sheet date. Foreign exchange gains and/or losses as a result of the conversions are recorded in the income statement.Group uses same foreign currency in their sales and purchase transaction. Therefore Group does not contain important currency risk.
2.08.10 Earnings per ShareEarnings per share in the income statement are calculated by dividing net income by the weighted average number of common sharesoutstanding for the period.
In Turkey, companies are allowed to increase their share capital by distributing “bonus shares” from retained earnings. These bonusshares are deemed as issued shares while calculating the net earnings per share. Accordingly, the retrospective effect for those sharedistributions is taken into consideration in determining the weighted-average number of shares outstanding used in this computation.
2.08.11 Subsequent EventsSubsequent events cover all events that occur between the balance sheet date and the publication date of the financial statements.If there is substantial evidence that the subsequent events existed or arise after the balance sheet date, these events are disclosedand explained in the notes to the financial statements.
2.08.12 Provisions, Contingent Liabilities and AssetsA provision is recognized when an entity has a present obligation (legal or constructive) as a result of a past event; it is probable thatan outflow of resources embodying economic benefits will be required to settle the obligation; and reliable estimate can be made ofthe amount of the obligation Where the effect of the time value of money is material, the amount of a provision is the present valueof the expenditures expected to be required to settle the obligation. The discount rate (or rates) is a pre-tax rate (or rates) that reflect(s)current market assessments of the time value of money and the risks specific to the liability. The increase in provisions arisen fromtime differences is recorded as interest expense in case of discounting.
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Future events that may affect the amount required to settle an obligation shall be reflected in the amount of a provision where thereis sufficient objective evidence that they will occur. The amount recognized as a provision is the best estimate of the considerationrequired to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding theobligation.
Contingent liabilities and assets are not reflected to consolidated financial statements but disclosed in the notes to the consolidatedfinancial statements. The entity recognizes a provision for the part of the obligation, for which an outflow of resources embodyingeconomic benefits is probable, except in the extremely rare circumstances where no reliable estimate can be made.
2.08.13 Leasing Operations
The Group as Lessee
Financial LeasesFinancial leases are described which the lessor retains all the risks and benefits pertaining to the goods. Financial leases are takeninto the accounts according to lower current market value or minimum lease payments.
The liability arising from a financial leasing transaction is separated into interest payable and principal debt in order to determine afixed interest rate on the remaining balance. The costs and expenses incurred at the initial acquisition of the fixed asset subject tofinancial leasing are added to the cost. The fixed assets obtained through financial leasing are subject to depreciation over theirestimated useful lives.
Information of net book value of Group’s assets, which are subject to lease, stated on Note: 18. Information related with Group’sfinancial leasing debt stated on Note: 8.
Operating LeasesLease agreements in which the lessor retains all the risks and benefits relating to the good are described as operational leasing. Leasepayments made for an operational leasing are recorded as expense according to normal method throughout the lease term.
The Group as Lessor
Operating LeasesThe Group presents assets subject to operating leases in their balance sheet according to the nature of the asset. Lease income fromoperating leases is recognized as income according to the normal method. The initial direct costs incurred during operational leasingare reflected to income statement as expense. Group’s Lease agreements as a lessor, are related with leasing to small part of themain building where Group’s operating, to other non-consolidated companies and to another company which is not include theGroup, as a office and store.
2.08.14 Related Party DisclosuresThe partners’ of the Company, Company’s Board of Directors, Company’s management personnel, Company’s other directors, closefamily members in the charge of the Company, and other companies directly or indirectly controlled by the Company are consideredas related parties. The transactions with related parties are disclosed in the Note: 37.
2.08.15 Government Grants and AssistanceNone.
2.08.16 Investment PropertyThere is no investment property of Group as of December 31, 2011. Investment properties which are held as of December 31, 2010are sold in 2011. Until the sale date, Investment properties are recognised according to the following principles.
Real Estates held to earn rentals or for capital appreciation are classified as Investment Properties and they are recognised at theircost value less accumulated depreciation and accumulated impairments. The cost of the change of a part of real estate is added ifthe generally accepted conditions are meet. But daily maintenance expenses are not added to mentioned amount.
Intangible assets are depreciated on a straight-line basis over their expected useful lives and the depreciation rate is % 2 per annum.
If the investment property is out of use or sold, they are removed from the balance sheet and the gain or loss from sale of investmentproperty is recognised under the income statement.
2.08.17 Taxation and Deferred TaxIncome tax expense represents the sum of the tax currently payable and deferred tax.
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Current taxThe tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statementbecause it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that arenever taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantivelyenacted by the balance sheet date.
Deferred taxDeferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and thecorresponding tax bases which is used in the computation of taxable profit, and is accounted for using the balance sheet liabilitymethod. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognizedfor all deductible temporary differences to the extent that it is probable that taxable profits will be available against which thosedeductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises fromgoodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affectsneither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates,and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probablethat the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differencesassociated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxableprofits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longerprobable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settledor the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which theGroup expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current taxliabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current taxassets and liabilities on a net basis.
Current and deferred tax for the periodCurrent and deferred tax are recognized as an expense or income to the income statement, except when they relate to items creditedor debited directly to equity, in which case the tax is also recognized directly in the equity, or where they arise from the initial accountingfor a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill ordetermining the excess of the acquirer’s interest in the net fair value of the acquirer’s identifiable assets, liabilities and contingentliabilities over cost.
Taxes stated in financial statements contain changes in current and deferred taxes for the period. The Group calculates current periodtax and deferred tax over the period results.
Offsetting Tax Income and LiabilitiesCorporate tax amounts are offset with prepaid corporate tax as they are related. Deferred tax assets and liabilities are also offset.
2.08.18 Retirement PayAccording to Turkish Labor Law, employee termination benefit is reflected in the financial statements, when the termination indemnitiesare deserved. Such payments are considered as being part of defined retirement benefit plan as per IAS No.19 “Employee Benefits”.
Termination indemnity liability is reflected to the financial statements with the amount calculated for value at balance sheet date oflump pension in the next years by discounting by adequate interest rate. Interest cost added to the lump pension expense is shownas interest expense in the results of operations.
2.08.19 Statement of Cash FlowCash and cash equivalents are stated at their fair values in the balance sheet. The cash and cash equivalents comprises cash in hand,bank deposits and highly liquid investments.
On cash flow statement, the Group classifies period’s cash flows as investment and financing activities. Cash inflow provided fromoperating activities denotes cash inflow provided from main activities of the Group.
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Cash flow concerned with investment activities shows cash used and provided from investment activities (asset investments andfinancial investments).
Cash flow concerned with financial activities represents sources used from financial activities and pay-back of these funds.
2.08.20 Income AccrualsThe most of the products sold by the Group has foreign origin. The purchases are made from foreign companies, offices of foreigncompanies in Turkey or domestic companies in Turkey. Depending upon the realization of the targets given by the domestic or foreigncompanies; a set of payments are received or offsetting the accounts under the name of “rebate”, “risturn”, “sell out”, or “bonus”.The mentioned amounts are recognised as credit note income accruals in the balance sheet depending upon the realization of thetargets and conditions given by the sellers. The documents prepared by sellers under the name of “rebate”, “risturn”, “sell out”, “bonus”,and “credit note” (or Invoices prepared by the Group) is collected or offsetted.
2.08.21 Provisions for WarrantyThe Group is a distributor of the information technologies in Turkey. The warranties of the products sold are provided by the companiesassigned by the producers. The products submitted to Company from dealers and these products are sent to producers or companiesassigned by the producers for repair and maintenance. After the repair and maintenance, if there is a need to change or give a newproduct to customers within the scope of the warranty, the amount of the products are invoiced to producer companies. The Grouphas no liability of provisions for warranty.
2.09 New and Revised International Financial Reporting Standards
i) Amendments and interpretations that have become effective after January 1, 2011 are as follows:
• IAS 24 (Revised) “Related-Party Disclosures” (The amendment is effective for financial period beginning on and after January 1,2011.) Revision on the related party disclosures related to entities with significant state ownership.• IAS 32 (Amendment) “Financial Instruments Presentation” (The amendment is effective for financial period beginning on and afterFebruary 1, 2011.) Proposals related with the issue of rights which are in exchange for certain foreign currency amounts and accountedas a derivative instruments.• IAS 1 (Amendment) “Presentations of Financial Statements” (The amendment is effective for financial period beginning on and afterJanuary 1, 2011) the analysis of comprehensive income statement are allowed to be disclosed in footnotes or the statement of changesin shareholders’ equity.• IFRS 1 (Amendment) (The amendment is effective for financial period beginning on and after July 1, 2010) Limited exemptions forcomparative IFRS 7 notes• IFRIC 14 (Amendment) “Minimum Funding Requirements” (The amendment is effective for financial period beginning on and afterJanuary 1, 2011) The amendment permits such an entity to treat the benefit of such an early payment as an asset• IFRIC 19 “Extinguishing Financial Liabilities with Equity Instruments” (The amendment is effective for financial period beginning onand after July 1, 2011) Explanations related with the circumstances that when entities are renegotiating the terms of financial liabilitieswith their creditors and the creditors agree to accept entities shares or other equity instruments to settle the financial liability.
May 2010, Annual Improvements
IASB has published explanations related with the below mentioned 6 standards / comments in May 2010 in addition to above mentionedamendments and revised standards.
IFRS1, “First-time Adoption of International Financial Reporting Standards”IFRS 3, “Business Combinations”IFRS 7, “Financial Instruments: Disclosures”IAS 27 “Consolidated and Separate Financial Statements”IAS 34, “Interim Financial Reporting”IFRIC 13, “Customer Loyalty Programs”
These changes do not have impact on the financial statements of the Group.
ii) Amendments and interpretations that are not effective or an early adoption is not used by the Group as of December 31,2011 are as follows;
• IFRS 9 “Financial Instruments” (The new standard is effective for annual periods beginning on or after January 1, 2013. Early adoptionis permitted.) This standard requires that the financial assets must be classified based on the characteristic of cash-flows based onthe models and agreements which are used to manage the financial assets and also standard requires that financial assets must beevaluated with their fair value or their amortized costs. This standard has not yet been endorsed by the EU.
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86
• IFRS 7 (Amendment) “Financial Instruments: Disclosures” (The amendment is effective for annual periods beginning on or after July1, 2011). Explanations related with examination of the off-balance sheet transactions have been made. Regulations have been madeto allow the users of financial information to improve their understanding of transfer transactions and possible effects of any risks thatmay remain with the entity which transferred the assets.
• IAS 12 (Amendment) “Income Taxes:” (The amendment is effective for annual periods beginning on or after January 1, 2012. Earlyadoption is permitted) Updates related with the calculation of deferred tax on investment properties according to the carrying valueof real estate sales basis. This standard has not yet been endorsed by the EU.
• IFRS 10 “Consolidated Financial Statements” (Standard is effective for annual periods beginning on or after January 1, 2013 andare applied on a modified retrospective basis) The standard replaces the IAS 27 Consolidated and Separate Financial Statementsthat addresses the accounting for consolidated financial statements. A new definition of control is introduced, which is used to determinewhich entities are consolidated. This standard has not yet been endorsed by the EU.
• IFRS 11 “Joint Arrangements:” (Standard is effective for annual periods beginning on or after January 1, 2013 and is applied on amodified retrospective basis. This new standard may be early adopted, requiring that IFRS 10 Consolidated Financial Statements andIFRS 12 Disclosure of Interests in Other Entities are also early adopted.) The standard is with regard to the accounting for joint venturesand joint operations with joint control. Among other changes introduced, under the new standard, proportionate consolidation is notpermitted to account for joint ventures. This standard has not yet been endorsed by the EU.
• IFRS 12 “Disclosure of Interests in Other Entities” (Standard is effective for annual periods beginning on or after January 1, 2013and are applied on a modified retrospective basis. This new Standard may be early adopted, requiring that IFRS 10 ConsolidatedFinancial Statements and IFRS 11 Joint Arrangements are also early adopted.) Footnote disclosures related with the affiliates havebeen determined. This standard has not yet been endorsed by the EU.
• IFRS 13 “Disclosure of Interests in Other Entities” (Standard is effective for annual periods beginning on or after January 1, 2013and are applied on a modified retrospective basis. This new Standard may be early adopted, requiring that IFRS 10 ConsolidatedFinancial Statements and IFRS 11 Joint Arrangements are also early adopted.) Advance level of explanations has been made relatedwith the consolidated and separate financial statements in which Company has participation. This standard has not yet been endorsedby the EU.
• IAS 27 (Amendment) “Separate Financial Statements” As a consequential to IFRS 10 some amendments have been made. IAS 27only consists of accounting for subsidiaries, jointly controlled entities and affiliates in separate financial statements. This standard hasnot yet been endorsed by the EU.
• IAS 28 (Amendment) “Investments in Associates and Joint Ventures:” As a consequential to IFRS 11 some amendments have beenmade. With this amendment IAS 28 consists of associates and joint ventures. After amendment IAS 28 only consist of accounting ofsubsidiaries, joint ventures and affiliates separate financial statements. This standard has not yet been endorsed by the EU.
• IAS 1 (Amendment) “Presentation of Financial Statements:” (Standard is effective for annual periods beginning on or after July 1,2012 The amendments to IAS 1 change only the grouping of items presented in other comprehensive income. This standard has notyet been endorsed by the EU.
• IFRIC 20 “Costs associated with waste removal in surface mining:” (The amendment is effective for annual periods beginning on orafter January 1, 2011. Early adoption is permitted) An interpretation clarifying the requirements for accounting for stripping costs inthe phase of a surface mine.
Management of the Group has the opinion that the implementations of the standards stated above does not have an important effectof the Group’s financial statements at subsequent periods.
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Current Assets
Non-Current Assets
Total Assets
Short-term Liabilities
Long-term Liabilities
Shareholders' Equity
Total Shareholders' Equity
Financial Statement Item December 31 2010
4.840.349
171.844
5.012.193
2.424.992
57.234
2.529.967
5.012.193
Acquisition Amount
Shareholders' Equity (% 51)
Negative Goodwill
1.229.531
1.290.283
60.752
4. BUSINESS PARTNERSHIPSThe Company’s joint managing company Neteks ‹letiflim Ürünleri Da¤›t›m A.fi. is recognised according to the proportionate consolidationmethod. The summary financial information of mentioned company is as follows.
42.657.724
197.745
42.855.469
38.003.364
16.960
4.835.145
42.855.469
January 1 2010
December 31 2010
107.884.168
5.752.937
2.675.971
1.547.921
Financial Statement Item December 31 2011 December 31 2010
74.497.310
215.897
74.713.207
67.045.655
31.299
7.636.253
74.713.207
January 1 2011
December 31 2011
168.156.805
10.009.912
5.562.743
2.801.107
3. BUSINESS COMBINATIONS
The Company has acquired % 51 of Art›m Biliflim Çözüm ve Da¤. A.fi. on February 7, 2011. The financial statements of Art›m BiliflimÇözüm ve Da¤. A.fi. is included into the consolidation process from beginning of 2011. The summary financial statements and thecalculation of goodwill are as follows;
All of the negative goodwill is recognised under other income.
Current Assets
Non-current Assets
Total Assets
Short-term Liabilities
Long-term Liabilities
Shareholders' Equity
Total Shareholders' Equity
Financial
Statement Item
Sales
Gross Profit
Operating Profit
Net Profit
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88
5. REPORTING FINANCIAL INFORMATION BY SEGMENTS AND GEOGRAPHIC AREASGroup has reported its financial information by information technologies and logistics. Information technologies consist of sale ofcomputer and its components such as PC, notebook, electronical home products, networking products, etc. The gross profit / lossinformation of operations as of periods ends are as follows;
01.01.2011 - 31.12.2011
Income Statement Information Technologies
1.509.187.050
(1.420.054.200)
89.132.850
(36.547.858)
350.005
(1.098.771)
51.836.225
59.067.939
(87.824.550)
23.079.615
606.158.957
500.353.747
Logistics Total Elimination Consolidated
8.117.401
(748.597)
7.368.805
(3.258.501)
45.766
(92.469)
4.063.601
1.449.881
(212.186)
5.301.295
33.721.095
1.080.619
1.517.304.451
(1.420.802.797)
96.501.655
(39.806.359)
395.771
(1.191.240)
55.899.826
60.517.820
(88.036.736)
28.380.910
639.880.052
501.434.367
(3.758.387)
-
-
3.758.387
-
-
-
(1.167.046)
1.167.046
�-
7.600.468
7.600.468
1.513.546.064
(1.420.802.797)
92.743.267
(36.047.972)
395.771
(1.191.240)
55.899.826
59.350.774
(86.869.690)
28.380.910
632.279.584
493.833.899
Sales Income
Cost of Sales (-)
Gross Profit / Loss
Operating Expenses (-)
Other Income
Other Expense (-)
Operating Profit / (Loss)
Financial Income
Financial Expense(-)
Profit / Loss Before Tax
Total Assets
Total Liabilities
01.01.2010 - 31.12.2010
1.225.310.157
(1.152.856.037)
72.454.120
(29.323.147)
49.773
(370.968)
42.809.778
40.084.082
(67.776.265)
15.117.595
510.238.515
418.217.671
6.160.060
(701.047)
5.459.013
(2.077.514)
10.914
(3.980)
3.388.433
314.829
(274.418)
3.428.844
29.396.505
980.105
1.231.470.217
(1.153.557.084)
77.913.133
(31.400.661)
60.687
(374.948)
46.198.211
40.398.911
(68.050.683)
18.546.439
539.635.020
419.197.776
(3.294.451)
-
-
3.294.451
-
-
-
(369.208)
369.208
-
1.503.249
1.503.249
1.228.175.766
(1.153.557.084)
74.618.682
(28.106.210)
60.687
(374.948)
46.198.211
40.029.703
(67.681.475)
18.546.439
538.131.771
417.694.527
Income Statement Information Technologies Logistics Total Elimination Consolidated
Sales Income
Cost of Sales (-)
Gross Profit / Loss
Operating Expenses (-)
Other Income
Other Expense (-)
Operating Profit / (Loss)
Financial Income
Financial Expense(-)
Profit / Loss Before Tax
Total Assets
Total Liabilities
ANNUAL REPORT 2011
89
December 31 2011
56.598
38.755.250
1.796
26.308.719
236.205
65.358.568
December 31 2010
32.821
24.326.634
-
1.000.140
1.056.275
26.415.870
Account Name December 31 2011 December 31 2010
Cash and Equivalents
Accrued Interest Income (-)
Total
65.358.568
(3.377)
65.355.191
26.415.870
(140)
26.415.730
Account Name December 31 2011 December 31 2010
Shares
Derivative Instruments
Total
109
444.154
444.263
214
100.661
100.875
6. CASH AND CASH EQUIVALENTSCash and Cash Equivalents for the periods December 31, 2011 and December 31, 20010 are as follows:
Account Name
Cash
Bank (Demand Deposits)
Liquid Funds
Financial Assets held until Maturity (Reverse Repo)
Credit card slips
Total
Maturities of credit card slips are 1 or 3 days for the current and prior period.
Maturity of Reverse Repo transactions are 3 day and interest income of TL 3.377 is accrued. Reverse repo transaction currency ismade in TL and USD and interest rate of reverse repo transaction for USD is %0,21 - %2,22 and for TL is %6,27- %8,38.
Maturity of Reverse Repo transactions are 1 day and interest income of TL 140 is accrued. Reverse repo transaction currency is madein TL and Interest rate of reverse repo transaction is %5,10.
There is no lien and blocked amounts on cash and cash equivalents as of December 31, 2011 (December 31, 2010: None.)
Cash and cash equivalents have been indicated as accrued interest income deducted from cash and equivalents in Group’s cashflow statements.
7. FINANCIAL ASSETS & INVESTMENTS
Short-Term Financial Assets & Investments
All short term financial investments consist of stock investments and they are classified as financial assets whose fair value differencesare reflected to profit or loss and derivative financial instruments which are recognized with their fair value. Details are shown below;
Group’s Stock investments consist of shares which are traded in Istanbul Stock and Exchange Market (ISEM).
As of December 31, 2011 Group has made a contract amounted 13.921.635 USD for forward purchase commitments. 12.069.470USD has 0-3 months maturity while 1.852.165 USD has 3-12 months maturity. The fair value of these contracts is 25.852.423 TLas of December 31, 2011 and the revaluation surplus 12.370 TL is recognized as “hedging funds” under the shareholders’ equitywhile revaluation surplus 431.784 TL is recognized as an income in financial statements . The deferred tax liability related with therevaluation surplus is 2.474 TL is offsetted from hedging funds.
Group has been made a forward foreign exchange purchase commitments amounted USD 21.126.341 as of December 31, 2010.The fair value of this contract is 3.186.663 TL as of December 31, 2010. 1.556 TL of revaluation surplus is considered as incomeand amount of 99.105 TL considered as ‘’hedging fund’’ under the shareholder’s equity. Amount of 19.821 TL Deferred Tax Liabilitieswhich is related with revaluation surplus, has been offsetting from hedging fund.
ANNUAL REPORT 2011
90
Summary of financial information related to unlisted stock investments;
Company NameTotalAsset
8.116.654
1.977.016
10.093.670
‹nfin A.fi.
Neteks D›fl Tic. Ltd.fiti.
Total
8.068.468
1.811.207
9.879.675
48.186
165.809
213.995
12.542.157
9.752.422
22.294.579
(293.151)
82.078
(211.073)
TotalLiabilities
TotalEquity
NetSales
ProfitFor ThePeriod
December 31 2011
December 31 2010
Long –Term Financial Assets & Investments
All long term financial investments are consist of Financial Assets Ready for Sale.
Details of Financial Assets Available for Sale are as follows:
Shares
- Listed stocks
-Unlisted stocks
Total
64.894
-
64.894
64.894
64.894
-
64.894
64.894
December 31 2011 December 31 2010
Share Amount Rate (%)
‹nfin A.fi.
Neteks D›fl Tic. Ltd.fiti.
Total
99,80
49,50
Share Amount Rate (%)
99,80
49,50
Company Name
62.419
2.475
64.894
62.419
2.475
64.894
Unlisted stock investments are as follows;
December 31 2011 December 31 2010
Company Name
‹nfin A.fi.
Neteks D›fl Tic. Ltd.fiti.
Total
5.488.926
1.669.139
7.158.065
5.147.499
1.585.408
6.732.907
341.427
83.731
425.158
14.786.251
13.379.501
28.165.752
48.714
29.976
78.690
TotalAsset
TotalLiabilities
TotalEquity
NetSales
ProfitFor ThePeriod
8. FINANCIAL LIABILITIESShort-Term financial liabilities for the years ended are as follows:
34.590.274
-
-
34.590.274
Account Name
11.424.242
156
(15)
11.424.383
December 31 2011 December 31 2010
Bank Loans
Payables of Financial Leases
Deferred Financial Leasing Borrowing Cost (-)
Total
ANNUAL REPORT 2011
91
31.12.2011
Annual InterestRate (%)
-
-
13.116.221
-
239.061
9.575.984
24.775.229
34.590.274
interest Free -12,89
13,17-18,96
3,85-8,10
�
Type Foreign CurrencyAmount
Amountin TL
Account Name
Bank Loans
Total
December 31 2011
11.732.883
11.732.883
December 31 2010
8.285.360
8.285.360
The details of the Long Term Bank Loans for the years ended are as follows:
The details of the Long Term Bank Loans are as follows:
31.12.2011
-
-
-
4.121.159
-�
-
57.509
3.890.917
7.784.457
11.732.883
-
12,23-12,89
13,17-13,36
8,1
�-
31.12.2010
-
-
5.190.241
-
-
261.247
8.024.113
8.285.360
-
12-13
8
-
The details of the Short Term Bank Loans are as follows:
Short Term Loans
TL Loans
Factoring Loans (TL ) (*)
USD Loans
Total Loans
31.12.2010
-
-
7.110.514
-
-
431.388
10.992.854
11.424.242
-
interest Free - 13
3 – 8
-
Type Annual InterestRate (%)
Foreign CurrencyAmount
Amountin TL
Short Term Loans
TL Loans
USD Loans
Total Loans
(*) 2.507.927 TL of the short-term factoring loans are the funds used from factoring company before the assignment in order to finance long-term receivables within thescope of TTNet computer campaign. %80 of the invoices of TTNet is assigned to factoring company during the campaign period.
Short Term Loans
TL Loans
Factoring Loans (TL ) (*)
USD Loans
Total Loans
Annual InterestRate (%)
Foreign CurrencyAmount
Amountin TL
Type
Type
Annual InterestRate (%)
Foreign CurrencyAmount
Amountin TL
(*) All of the long-term factoring loans are the funds used from factoring company before the assignment in order to finance long-term receivables within the scope of TTNetcomputer campaign. %80 of the invoices of TTNet is assigned to factoring company during the campaign period.
Short Term Loans
TL Loans
USD Loans
Total Loans
ANNUAL REPORT 2011
92
Maturity Information of Bank Loans Liabilities is as follows;
December 31 2011
25.637.628
8.952.647
11.732.882
-
46.323.157
December 31 2010
5.594.772
5.829.471
7.884.224
401.135
19.709.602
0-3 Months
3-12 Months
Total
December 31 2011
-
-
-
December 31 2010
156
-
156
Account Name
Trade Receivables
Due from Related Parties (Note:37)
Other Receivables
Notes Receivables
Rediscount on s Receivables (-)
Doubtful Receivables
Provision for Doubtful Receivables (-)
Total
271.809.144
2.859.230
268.949.914
135.051.446
(3.686.444)
5.942.549
(5.942.549)
403.174.146
217.070.240
4.619.012
212.451.228
99.446.201
(1.331.005)
5.082.748
(5.082.748)
315.185.436
December 31 2011 December 31 2010
Maturity Information of Financial Lease Liabilities is as follows
0-3 Months
3-12 Months
12-60 Months
60 Months and above
Total
9. OTHER FINANCIAL LIABILITIESNone.
10. TRADE RECEIVABLES AND PAYABLESShort-Term trade receivables for the years ended December 31, 2011 and December 31, 2010 are as follows:
The Group has no Long-Term Trade Receivables for the years ended December 31, 2011 and December 31, 2010.
A part of 30.810.485TL of Total 403.174.146TL trade receivables are in the scope of guarantee as of December 31, 2011. As ofDecember 31.2010, A part of 21.166.698TL of total 315.185.436TL trade receivables were in the scope of guarantee.
Provision for Doubtful Receivables summarize table is below:
(5.082.748)
245.616
7.012
(1.112.429)
(5.942.549)
(4.888.556)
242.705
2.078
(438.975)
(5.082.748)
January 1-December 31 2011
January 1-December 31 2010Account Name
Opening Balance
Received amount in current period (+)
Exchange Difference
Period Expenses (-)
Period-end Balance
ANNUAL REPORT 2011
93
Up to 3 Months
Between 3- 12 Months
Between 1-5 Years
Total
December 31 2011
685.557
26.975
-
712.532
December 31 2010
744.859
75.791
-
820.650
Account Name
387.160.069
383.199.713
3.960.356
13.201.095
(4.417.056)
395.944.108
339.132.873
338.508.729
624.144
28.449.708
(1.620.221)
365.962.360
Long-term other receivables for the years ended are as follows:
18.399
146.520
162.812
327.731
1.526
149.209
96.013
246.748
Account Name
49.241
49.241
56.440
56.440
Explanations concerning the nature risk and level of risk of trade receivables are disclosed in Note: 38
Maturity analysis of trade receivable overdue that is not assessed for impairment is as follows:
Explanations concerning the nature risk and level of risk of trade receivables are disclosed in Note: 38
Details of Trade payables for the year ended are as follows:
December 31 2011 December 31 2010
Suppliers
Other Suppliers
Due to Related Suppliers (Note:37)
Notes Payable
Rediscount on Payable (-)
Total
There are not any long-term trade payables for the years ended December 31, 2011 and December 31, 2010.
Average Maturity of Trade receivables and payables are under two months. The trade receivables and payables in TL were discountedusing the compound interest rate specified in Government Bonds. Receivables and payables in USD and EURO are discounted usingLibor and Euro Libor rates respectively TL %11, USD %1,13 and EURO %1,91. (December 31, 2010 Rates: TL %7, USD %0,78 andEURO %1,47)
11. OTHER RECEIVABLES AND PAYABLESShort-term other receivables for the years ended are as follows;
Account Name December 31 2011 December 31 2010
Other Receivables
Due From Personnel
Non-commercial Receivables Due From Related Parties (Note:37)
Total
December 31 2011 December 31 2010
Deposits and Guarantees Given
Total
ANNUAL REPORT 2011
94
Account Name
7.870.771
377.058
2.524.794
154.516
4.385.413
13.288
15.325.840
4.177.693
311.604
4.012.373
132.572
4.834.616
-
13.468.858
Short-term other payables for the years ended are as follows:
December 31 2011 December 31 2010
Taxes, Duties Payable and Other Fiscal Liabilities
Social Security Premiums Payable
Advances Received
Due to Personnel
Non-commercial Payables Due to Related Parties (Note:37)
Other
Total
12. RECEIVABLES AND PAYABLES FROM / TO FINANCE SECTOR OPERATIONSNone.
13. INVENTORIESInventories for the periods ended are as follows:
102.066.755
4.242.690
(1.858.556)
104.450.889
125.235.533
3.695.200
(1.604.839)
127.325.894
Account Name December 31 2011 December 31 2010
Commercial Goods
Goods in Transportation
Decrease in Value of Inventory (-)
Total
Products which are invoiced but not actually transferred to inventories are recognised under the “Goods in Transit”.
Provision for Impairment of Inventory:
(1.604.839)
291.680
(155.352)
(390.045)
(1.858.556)
(1.320.293)
118.899
-
(403.445)
(1.604.839)
January 1-December 31 2011
January 1-December 31 2010
Opening Balance (-)
Cancellation of Provision Due to Increase in Net Realizable Value Net(+)
Transfer from Art›m A.fi. (Note:3)
Provision for the Period(-)
Balance at the end of year (-)
Explanation
Cost
Provision for Decrease in value of Inventories
Net Realizable Value (a)
Inventory presented with its cost value (b)
Total Inventories (a+b)
10.284.769
1.858.556
8.426.213
96.024.676
104.450.889
7.537.113
1.604.839
5.932.274
121.393.620
127.325.894
December 31 2011 December 31 2010
The provision for decrease in value of stocks is calculated with increasing percentages for the goods waiting in the inventory morethan 3 months depending upon increase in the inventory turnover rate. As of December 31, 2011, 8.426.213 TL of the inventories ispresented with their net realizable value and the remaining balance is presented with their cost in the financial statements. (As ofDecember 31, 2010, 5.932.274 TL of the inventories is presented with their net realizable value and the remaining balance is presentedwith their cost in the financial statements.)
ANNUAL REPORT 2011
95
Accumulated Depreciation
December 31 2011
Cost Value
Buildings
Total
125.500
125.500
(125.500)
(125.500)
-
-
-
-
Buildings
Total
Net Value
(629)
(629)
124.871
(1.882)
(1.882)
-
2.511
2.511
-
-
-
-
-
-
-
-
125.500
125.500
125.500
125.500
-
-
-
(629)
(629)
-
-
-
-
(629)
(629)
124.871
Accumulated Depreciation
31.12.2010
Cost Value
There is no inventory given as a guarantee for a liability.
Total Amount of Insurances on Assets is disclosed in Note: 22.
The information related to inventories recognised as expense in the current period is disclosed in Note: 28.
14. BIOLOGICAL ASSETSNone.
15. CONSTRUCTION CONTRACTS IN PROGRESSNone.
16. INVESTMENTS EVALUATED BY EQUITY METHODNone.
17. INVESTMENT PROPERTIESThe investment property of the Group consists of a house placed in Çankaya, Ankara. The mentioned property is acquired from apledge for a receivable. The mentioned investment property has been sold in the current period.
AccountName
January 12011
December 312011Additions Sales (-)
AccountName
January 12011
December 312011Additions Sales (-)
Buildings
Total
Buildings
Total
Net Value
AccountName
AccountName
January 12010
December 312010Additions Sales (-)
January 12010
December 312010Additions Sales (-)
ANNUAL REPORT 2011
96
18. TANGIBLE FIXED ASSETSThe Fixed Assets details for the years ended are as follows:
PeriodDespreciation Sales (-) Transfers
Accumulated Depreciation
(39.204)
(3.543.699)
(1.318.528)
(697.094)
(3.224.787)
(134.765)
(8.958.077)
-
-
(291.944)
(20.237)
(340.005)
(398.654)
(33.315)
(1.084.155)
-
-
-
-
175.706
335.563
33.300
544.569
-
-
-
-
-
-
-
-
-
(39.204)
(3.835.643)
(1.338.765)
(872.141)
(3.379.551)
(168.080)
(9.633.384)
Art›m (*)
17.320.543
39.204
12.063.895
1.413.477
1.650.628
4.496.751
276.065
128.372
37.388.935
-
-
345.211
-
978.006
668.129
5.232
-
1.996.578
-
-
-
-
(269.507)
(393.660)
(50.452)
-
(713.619)
17.320.543
39.204
12.409.106
1.413.477
2.390.832
4.906.153
281.297
-
38.760.612
Account Name January 1 2011 Additions Disposals(-) Transfers December 31 2011Art›m (*)
-
-
-
-
-
-
-
(128.372)
(128.372)
-
-
-
-
31.705
134.933
50.452
-
217.090
28.430.858 29.127.228Net Value
-
-
-
(10.748)
( 91.673)
(33.300)
(135.721)
(*) Fixed assets of Art›m A.fi. which is included into consolidation process in the current period. (Note: 3)
Other tangible assets consist of art objects and according to the Group Management’s assessment, it has been decided that theseassets are recognised under intangible assets. They are not subject to depreciation due to their indefinite useful life.
Other Information
The depreciation and amortization expenses are recognised under the operational expenses.
The Amount of mortgage on buildings which are stated in assets is USD 5.628.647.
Total Amount of Insurances on Assets is disclosed in Note: 22.
Cost Value
December 31, 2011
Lands and parcels
Land Improvements
Buildings
Machinery, Plants&Equipments
Motor Vehicles
Furniture & Fixtures
Leasehold improvements
Other tangible fixed assets
Total
Lands and parcels
Land Improvements
Buildings
Machinery, Plants&Equipments
Motor Vehicles
Furniture & Fixtures
Leasehold improvements
Total
Account Name December 31 2011January 1 2011
ANNUAL REPORT 2011
97
December 31, 2010
Cost Value
Lands and parcels
Land Improvements
Buildings
Machinery, Plants&Equipments
Motor Vehicles
Furniture & Fixtures
Leasehold improvements
Other tangible fixed assets
Total
17.320.543
39.204
11.786.858
1.372.927
1.231.892
4.094.611
274.115
128.372
36.248.522
17.320.543
39.204
12.063.895
1.413.477
1.650.628
4.496.751
276.065
128.372
37.388.935
-
-
277.037
40.550
517.682
415.110
1.950
-
1.252.329
-
-
-
-
(98.946)
(12.970)
-
-
(111.916)
Accumulated Depreciation
(39.204)
(3.305.121)
(1.307.261)
(531.971)
(2.931.370)
(102.469)
(8.217.396)
-
(238.578)
(11.267)
(237.251)
(297.308)
(32.296)
(816.700)
-
-
-
72.128
3.891
-
76.019
(39.204)
(3.543.699)
(1.318.528)
(697.094)
(3.224.787)
(134.765)
(8.958.077)
28.031.126 28.430.858Net Value
Other tangible assets consist of art objects and according to the Group Management’s assessment, it has been decided that theseassets are recognised under intangible assets. They are not subject to depreciation due to their indefinite useful life.
Other Information
The depreciation and amortization expenses are recognised under the operational expenses.
The Amount of mortgage on buildings which are stated in assets is USD 6.686.756.
Total Amount of Insurances on Assets is disclosed in Note: 22.
Account Name January 1 2010 December 31 2011Additions Disposals(-)
PeriodDespreciation Sales (-)Account Name January 1 2010 December 31 2011
Land Improvements
Buildings
Machinery, Plants&Equipments
Motor Vehicles
Furniture & Fixtures
Leasehold improvements
Total
ANNUAL REPORT 2011
98
19. INTANGIBLE FIXED ASSETS
Rights
Total
(476.840)
(476.840)
(39.723)
(39.723)
-
-
(47.577)
(47.577)
(564.140)
(564.140)
Net Value 59.139 214.850
Accumulated Depreciation
Rights
Other intangible fixed assets
Total
535.979
-
535.979
14.259
-
14.259
-
-
-
650.618
128.372
778.990
-
128.372
128.372
100.380
-
100.380
December 31, 2011
Cost Value
January 1 2011 Additions Disposals(-) Transfers December 31 2011Art›m (*)Account Name
PeriodDespreciation Sales (-) Art›m (*)Account Name December 31 2011January 1 2011
Opening Balance
Additions
Disposals/ Sales
Provisions for the value decrease
Closing balance
Goodwill 31.12.2011 31.12.2010
2.467.577
-
-
-
2.467.577
2.467.577
-
-
-
2.467.577
Other intangible assets consist of art objects and according to the Group Management’s assessment, it has been decided that theseassets, which were recognised under tangible assets before, are recognised under intangible assets. They are not subject to depreciationdue to their indefinite useful life.
December 31, 2010
Cost Value
Rights
Total
(453.554)
(453.554)
(23.286)
(23.286)
-
-
(476.840)
(476.840)
Net Value 68.865 59.139
Rights
Total
522.419
522.419
13.560
13.560
-
-
535.979
535.979
The depreciation and amortization expenses are recognised under the operational expenses.
20. GOODWILL
Accumulated Depreciation
Account Name January 1 2010 December 31 2010Additions Disposals(-)
Account Name January 1 2010 December 31 2010PeriodDespreciation Sales (-)
ANNUAL REPORT 2011
99
There are no provisions for the value decrease in Goodwill. Group’s goodwill arisen from Datagate Bilgisayar A.fi. which is the subsidiaryof the Group and Neteks Bilgisayar A.fi. which is group’s joint managing company. Calculated amount of goodwill is revised eachbalance sheet period. Mentioned companies’ cash amounts are subjected to calculated present discounted value during to revising.According to evaluation made, discount rate is %12, and rate of growth is %5 which is used for determining the future cash flows topresent value, as of December 2011.
21. GOVERNMENT GRANT AND ASSISTANCENone.
22. PROVISIONS, CONTINGENT LIABILITIES AND ASSETS
Account Name
8.653.806
12.412.995
1.960.228
23.027.029
3.552.295
-
1.624.500
5.176.795
December 31 2011 December 31 2010
As of January 1
Additions
Payments / Offsetting
Terminated Provisions
As of December 31, 2011
December 31 2011 Provision forLitigations
Provision for PriceDifferences and TT Net
CampaignTotal
1.624.500
463.857
(22.462)
(105.667)
1.960.228
3.552.295
21.066.801
(3.552.295)
-
21.066.801
5.176.795
21.530.658
(3.574.757)
(105.667)
23.027.029
December 31 2011 Provision forLitigations
Provision for PriceDifferences Total
As of January 1
Additions
Payments / Offsetting
Terminated Provisions
As of December 31, 2011
895.362
1.222.790
(493.652)
-
1.624.500
2.487.557
3.552.295
-
(2.487.557)
3.552.295
3.382.919
4.775.085
(493.652)
(2.487.557)
5.176.795
Provisions for Price Differences
Provisions for TT Net Campaign
Provision for Litigations
Total
Almost all of the provisions for litigations consist of custom lawsuits.
Price difference invoices are taken from customers for the products sold in different prices from previous period and provisions aremade for them. Also targets have been given to customers in order to increase the sales and turnover premium, credit note, pricedifference, etc. invoices are taken from customers in the event of targets achieved by the customers and provisions are made forthem.
ii) Contingent Assets and Liabilities;
December 31, 2011As of December 31, 2011, for the lawsuits initiated against Group, provision amount 1.960.228 TL is reflected to the financial statements.
December 31, 2010As of December 31, 2010, for the lawsuits initiated against Group, provision amount 1.624.500 TL is reflected to the financial statements.
ANNUAL REPORT 2011
100
iii) Contingent Liabilities and Commitments:
Bailment Given
Guarantee Cheques and Notes Given
Mortgage
Guarantee Letters given
Total
8.537.802
�
-
2.507.933
11.045.735
3.875.000
-
5.628.648
18.115.000
27.618.648
1.000.000
-
-
7.350.000
8.350.000
December 31 2011 TL USD EUR
Bailment Given
Guarantee Cheques and Notes Given
Mortgage
Guarantee Letters given
Total
December 31 2010 TL USD EUR
1.462.250
1.586.506
-
3.096.000
6.144.756
3.685.500
-
6.686.756
11.515.000
21.887.256
1.000.000
-
-
7.500.000
8.500.000
Type of Insured Assets USD EUR TL
December 31, 2011
Trade goods
Vehicles
Plants machinery and equipment
Other
Total
68.792.500
-
6.927.908
1.030.000
76.750.408
-
-
63.500
-
63.500
-
2.198.892
-
-
2.198.892
Type of Insured Assets USD EUR TL
December 31, 2010
Trade goods
Vehicles
Plants machinery and equipment
Other
Total
104.285.000
-
8.818.571
610.000
113.713.571
-
-
57.545
-
57.545
-
1.376.200
-
-
1.376.200
Guarantee letters are given to some public institutions, domestic and foreign sellers which Group purchase from. They are the guaranteeof liabilities obtained from purchase of goods. There is no cash out-flow related with the guarantee letters due to the liabilities are paidon their maturity.
iv) Total Guarantees and Mortgages on AssetsNone.
v) Total Insurance Coverage on Assets
ANNUAL REPORT 2011
101
vi ) The ratio of Mortgages and Guarantees Given to Shareholders’ Equity is as follows;
A. Total amount of M&G Given on behalf of the Group
Guarantee Letter (USD)
Guarantee Letter (EUR)
Guarantee Letter (TL)
Guarantee notes and cheques(TL)
Lien
Mortgage
B. Total amount of M&G Given on behalf of the Subsidiaries
and Affiliated Companies subject to full consolidation
Bailment (USD)
Bailment (EURO)
Bailment (TL)
C. Total Amount of M&G Given on behalf of the third
person liability in order to sustain usual business activities.
D. Total Amount of other M&G Given
i. Total Amount of M&G Given on behalf of main shareholder
ii. Total Amount of M&G Given on behalf of other affiliated
companies which cannot be classified under section B and C.
iii. Total Amount of M&G Given on behalf of the third person
that cannot be classified under section C. Total
-
18.115.000
7.350.000
�
�
�
5.628.648
-
3.875.000
1.000.000
-
-
-
-
-
-
65.319.238
34.217.424
17.961.930
2.507.933
�
�
10.631.952
18.301.090
7.319.488
2.443.800
8.537.802
-
-
-
83.620.328
-
11.515.000
7.500.000
6.686.756
-
3.685.500
1.000.000
-
-
-
-
-
-
48.190.671
17.802.190
15.368.250
3.096.000
1.586.506
10.337.725
9.209.133
5.697.783
2.049.100
1.462.250
-
-
-
-
57.399.804
Mortgages & Guarantees Given by the Group
TOTAL
Account Name
Provision for Employment Termination Indemnity
Total
December 31 2011
1.466.963
1.466.963
December 31 2011
1.016.481
1.016.481
December31 2011Foreign
CurrancyAmount
December31 2011
TLAmount
December31 2010Foreign
CurrancyAmount
December31 2010
TLAmount
Amounts stated in the above table are the amounts in TL at the end of the period.
The ratio of Mortgages and Guarantees Given to Shareholders’ Equity is 0%. (0% as of December 31, 2010)
23. COMMITMENTSNone.
24. EMPLOYEE TERMINATION BENEFITS
ANNUAL REPORT 2011
102
January 1
Service Cost
Actuarial Loss / (Profit)
Interest Cost
Transferred From Artım
Payments (-)
Closing Balance
1.016.481
137.003
212.001
294.297
57.234
(250.053)
1.466.963
649.270
109.748
202.293
209.468
-
(154.298)
1.016.481
January 1-December 31 2011
January 1-December 31 2010
Prepaid Expenses for the Following Months
Credit Note Income Accrual
Deferred VAT
VAT Return
Job Advances
Advances Given
Prepaid Taxes
Total
1.419.440
16.727.008
4.284.340
-
859.911
2.194.432
54.376
25.539.507
1.076.036
17.176.193
11.016.348
1.213.692
681.336
5.822.106
-
36.985.711
December 31 2011 December 31 2010Account Name
Under the Turkish Labor Law, the Group is required to pay employee termination benefits to each employee, who has entitled toreceive provisions for employee termination benefits in accordance with the effective laws. Additionally the Group is required to payemployee who has the right of severance with termination indemnity.
The maximum employee termination benefit payable as of December 31, 2011 is 2.731,85 TL. (December 31, 2010: 2.517,01 TL)The maximum employee termination benefit payable as of January 1, 2012 is 2.805,04 TL (December 31, 2010: 2.623,23 TL) andtaken into consideration in the calculations of the Group’s provision for termination indemnities.
Termination indemnity payable is not subject to any legal funding.
Termination indemnity payable is calculated by forecasting the present value of currently working employee’s possible future liabilities.IAS 19 (“Employee Termination Benefits”) predicts to build up Company’s liabilities with using actuarial valuation techniques in contextof defined benefit plans. According to these predictions, actuarial assumptions used in calculation of total liabilities are as follows.
The principal assumption is that the maximum liability for each year of service will increase in line with the inflation. Therefore, thediscount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently, inthe financial statements dated as of December 31, 2011, the provision was calculated by estimating the present value of the futureprobable obligation of the Group arising from the retirement of the employees. The provisions at the balance sheet dates have beencalculated assuming an annual inflation rate of 5,10% and a discount rate of 10%. With that the real discount rate of 4,66% (December31, 2010: 4,66%) was used in the computation. The estimate of inflation and discount rate reflects the Group Management’s long-term expectations. These expectations are reviewed every balance sheet period and revised if required. The Group Management hasdecided that there is no need to revise the estimations in 2011.
Provision expense for termination indemnities is recognised under the operational expenses.
25. RETIREMENT BENEFIT PLANSNone.
26. OTHER ASSETS AND LIABILITIESOther Current Assets for the years ended, are as follows:
ANNUAL REPORT 2011
103
Short-term other liabilities for the years ended, are as follows;
Account Name
Income Relating to Future Months
Total
December 31 2011
8.787.820
8.787.820
December 31 2010
11.261.656
11.261.656
Income recognised from invoiced but not delivered products are recognised under the “Income Relating to Future Months“due to thecriteria related with IAS 18 (delivery, transfer of risks, etc.) are not met.
Credit Note Income Accrual transactions are as follows:
Account Name
Minority Shares
Total
December 31 2011
13.687.301
13.687.301
December 31 2010
9.780.474
9.780.474
January 1-December 31 2011
January 1-December 31 2010Account Name
Opening
Current period accrual
Transferred From Artım (Note: 3)
Collection / Current account transfer
Balance at the end of year
17.176.193
97.571.931
28.527
(98.049.643)
16.727.008
15.506.860
91.020.591
-
(89.351.258)
17.176.193
27. SHAREHOLDERS’ EQUITY
i) Minority Shares / Minority Shares Profit / (Loss)
Account Name
Minority Shares Profit - (Loss)
Minority Share from Art›m A.fi.
Total
2.667.143
1.239.684
3.906.827
1.027.913
-
1.027.913
January 1-December 31 2011
January 1-December 31 2010
ii) Capital / Share Capital / Elimination Adjustments
The share capital of the Group is 56.000.000 TL and the share capital consist of 56.000.000 per-shares which each of 1 nominalvalue. The paid in capital of the Group, which is 56.000.000 TL, consists of A Group shares issued to the name as paid-in capital is318,18 TL, B Group shares issued to the bear as paid-in capital is 55.999.682,82 TL. A Group of shareholders have the rights toappoint one more of the half member of the Executive Board. After the initial dividend is given from the distribution of profit, A groupShareholders has also the rights to get %5 of the remaining part.
The Group accepts the Registered Share capital System with the March 17, 2005 dated and 11/327 numbered permission of CapitalMarket Board and determined the Registered Share Capital ceiling 75.000.000 TL. The decision accepted at 2004 Regular MeetingShareholders of the Group dated April 27, 2005.
The Group’s registered capital is 75.000.000 TL. The Group’s application to raise capital from 55.000.000 TL to 56.000.000 TL byimplementing 1.000.000 TL from share of profit of 2006 is approved by committee ruling numbered 25/699 and dated June 28, 2007.The public offering of shares to be issued has been accepted in the Board’s meeting dated June 28, 2007 and with the number of25/699. As of July 10, 2007, the increase of the capital is registered and published in the Official Gazette numbered 6852 and datedJuly 16, 2007.
The share capital shown in the consolidated balance sheet is the share capital of the Group. The amounts of share capital of thesubsidiaries and the subsidiary account are eliminated mutually.
ANNUAL REPORT 2011
104
ShareholderShare
Percentage %
Nevres Erol Bilecik
Pouliadis and Associates S.A.
Public Shares
Other
Total
% 33,77
% 35,56
% 28,30
% 2,37
% 100
18.909.441
19.911.119
15.851.986
1.327.454
56.000.000
% 38,63
% 35,56
% 23,44
% 2,37
% 100
21.634.440
19.911.119
13.126.987
1.327.454
56.000.000
Share Amount
December 31 2011 December 31 2010
The ultimate controlling party of the Group is Nevres Erol Bilecik and his family members.
SharePercentage % Share Amount
There are liens of 5 Greece Banks on the shares of the Company which belongs to the Company’s partner Pouliadis and AssociatesS.A. according to the EFGEurobank Ergasias S.A.’s material event disclosure sent to ISEM on June 24, 2007. Material event disclosureof EFGEurobank Ergasias S.A. related with the mentioned matter are as follows.
“According to the share pledge and voting agreement(s) on August 31, 2005 between Pouliadis and Associates Commercial andIndustrial Societe Anonyme of High Technology Systems (Pledger) and Bank EFGEurobank Ergasias S.A. (Pledgee) as a guaranteeassignee on behalf of EFG Eurobank Ergasias S.A., National Bank of Greece S.A., Emporiki Bank S.A., Alpha Bank S.A. and LaikiBank (Hellas) S.A.; The pledger has put a lien on the % 35,5 own shares of ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve TicaretA.fi. According to the agreements, vote rights related with the shares are part of the lien; According to the Common Bond Loan datedAugust 31, 2005, the pledger has a right to use their vote rights until the delinquency. The pledgee has determined a delinquencyand accordingly the vote rights related with the shares will be used by pledgee.”
iii) Capital Reserves
None.
iv) Restricted Reserves Assorted from Profit
Restricted reserves from profits consist of legal reserves.
The legal reserves consist of first and second legal reserves, appropriated in accordance with the Turkish Commercial Code (TCC).The TCC stipulates that the first legal reserve is appropriated out of historical statutory profits at the rate of 5% per annum, until thetotal reserve reaches 20% of the Group’s historical paid-in share capital. The second legal reserve is appropriated at the rate of 10%per annum of all cash distributions in excess of 5% of the historical paid-in share capital. Under TCC, the legal reserves are not availablefor distribution unless they exceed 50% of the historical paid-in share capital but may be used to offset losses in the event that historicalgeneral reserve is exhausted.
vi) Previous Years’ Profits / (Losses)
Profits of previous years consist of extraordinary reserves, miscellaneous inflation differences and profits of other previous years.
In accordance with the CMB’s decision numbered 7/242 dated on February 25, 2005; if the amount of net distributable profit basedon the CMB’s requirement on the minimum profit distribution arrangements, which is computed over the net profit determined basedon the CMB’s regulations, does not exceed the net distributable profit in the statutory accounts, the whole amount should be distributed,otherwise; all distributable amount in the statutory accounts are distributed. However, no profit distribution would be made if anyfinancial statements prepared in accordance with the CMB or any statutory accounts carrying net loss for the period.
In accordance with CMB’s decision dated January 27, 2010; it is decided not to bring any obligation for any minimum profit distributionabout dividend distribution which will be made for public corporations. The Group management decided to distribute dividendsaccording to the regulations specified in articles of association of the Group and dividend distribution policies declared to public.
ANNUAL REPORT 2011
105
Shareholders’ Equity as of periods ended is as follows:
Account Name December 31 2010
Share capital
Capital Adjustment Differences
Hedging Funds
Restricted Reserves Assorted From Profit
- Legal Reserves
- Profit from sale of affiliates except from Corporate Tax
Previous Years' Profits
Net Period Loss/ Profit
Parent Company Shareholders' Equity
Minority Shares
Total Shareholders' Equity
December 31 2011
56.000.000
241.113
9.895
5.671.482
4.524.432
1.147.050
44.388.033
18.447.861
124.758.384
13.687.301
138.445.685
56.000.000
241.113
79.284
5.109.837
3.962.787
1.147.050
36.055.067
13.171.469
110.656.770
9.780.474
120.437.244
In the financial statements prepared according to the standards of the CMB, the Group’s current profits amounted to 18.447.861TL. The Group’s distributable profit for current period is 9.778.366 TL. In the financial statements prepared according to the standardsof the CMB, the Group’s accumulated profits amounted to 62.835.894 TL. The Group’s distributable profit amount is 36.642.967TL. Group’s dividend which is related previous period profits is limited with this amount. Inflation adjustments on equity, real estatessales profits which are held in fund for adding the share capital are not taken into consideration to total distributable profit.
Results of General board dated on May 6, 2011 are as follows;
- Acceptance of the Balance Sheet and Income Statement of 2010,
- Granting the board of management and auditors for the accounts of 2010,
- Selecting Ça¤dafl Ba¤›ms›z Denetim S.M.M.M. A.fi. as an auditor for the audit of financial statements of 2011,
- Distributing the % 30 of the distributable profit of 2010 as a 1st dividend,
- Determining the amounts of profit distribution of 2010 as follows;
- Net Profit after tax is 13.171.469 TL in the consolidated financial statements of 2010 prepared according to the Capital MarketsBoard’s Communiqué Serie:XI, No:29.
- Appropriating 413.959,12 TL 1st Legal Reserve which is the %5 of the 8.279.182, 39 TL profit according to the legal records.
- Appropriating 413.959,12 TL 1st Legal Reserve from 13.171.469 TL profit after tax, distributing 1st dividend gross 3.830.021,96TL (0, 0683936 TL for per share with 1 TL nominal value with the rate of %6,83936) net 3.255.518,67 TL dividends (0,0581346TL for per share with 1 TL nominal value with the rate of %5,81346) which is the %30 of the 12.766.739,88 net distributableprofit which is attained by adding 9.230 TL donations,
- Distributing 2nd dividend to A Group Privileged Shareholders gross 446.835,90 TL (1.404, 35 TL for per share with 1 TL nominalvalue) net 379.810,51 TL (1.193,70 TL for per share with 1 TL nominal value) which is the %5 of the 8.936.717,92 TL attained by subtracting 3.830.021,96 TL 1st dividend from 12.766.739,88 TL net distributable profit,
- Appropriating 147.685,79 TL 2nd legal reserve,
- Starting dividend distribution on May 17, 2011,
- Adding the remaining balance to extraordinary reserves,
- Selecting Veli Tan Kirtifl and H. Ça¤atay Özdo¤ru as a member of supervisory board for 1 year,
ANNUAL REPORT 2011
106
1.473.926.639
16.180.209
59.162.673
(30.006.122)
(5.468.549)
(248.786)
1.513.546.064
(1.420.802.797)
92.743.267
1.220.214.680
13.816.010
46.717.733
(45.676.817)
(6.117.768)
(778.072)
1.228.175.766
(1.153.557.084)
74.618.682
Account Name
29. RESEARCH AND DEVELOPMENT, MARKETING, SALES & DISTRIBUTION EXPENSESOther operating expenses which belong twelve months accounting period of the Group as of December 31, 2011 and December 31,2010 are as follows:
January 1-December 31 2011
January 1-December 31 2010Account Name
Marketing, Selling and Distribution Expenses (-)
General Administrative Expenses (-)
Total Operating Expenses
(16.789.949)
(19.258.023)
(36.047.972)
(13.493.798)
(14.612.412)
(28.106.210)
30. EXPENSES RELATED TO THEIR NATUREExpenses Related to Their Nature of the Group as of December 31, 2011 and December 31, 2010 are as follows:
January 1-December 31 2011
January 1-December 31 2010Account Name
Marketing, Selling and Distribution Expenses (-)
- Personnel Expenses
- Logistic and storage expenses
- Depreciation expenses
- Rental Expense
- Communication Expense
- Travelling Expenses
- Transportation Expenses
- Consultancy and Audit Expenses
- Insurance Expenses
- Maintenance and repair expenses
- Advertisement Expense
- Taxes, Duties, Charges Expenses
- Provisions for termination indemnities expenses
- Provisions for doubtful trade receivables
- Provision for litigation expenses
- Sales and foreign trade expenses
- Other Expenses
Total Operating Expenses
(28.106.210)
(16.270.464)
(3.327.649)
(840.615)
(479.728)
(334.662)
(359.739)
(632.137)
(462.234)
(619.926)
(96.728)
(1.024.701)
(423.101)
(521.508)
(196.270)
(1.222.790)
(718.041)
(575.917)
(28.106.210)
(36.047.972)
(20.774.477)
(3.982.027)
(1.125.760)
(836.460)
(321.242)
(582.230)
(762.241)
(686.844)
(703.903)
(201.552)
(1.270.461)
(655.656)
(393.247)
(866.813)
(358.190)
(746.984)
(1.779.885)
(36.047.972)
Depreciation and amortisation expenses and personnel expenses are recognised in operational expenses.
28. SALES AND COST OF SALESSales and cost of sales details which belong twelve months accounting period of the Group as of December 31,2011 and December 31, 2010 are as follows:
January 1-December 31 2011
January 1-December 31 2010
Domestic Sales
Foreign Sales
Other Sales
Sales Returns (-)
Sales Discounts (-)
Other Discounts (-)
Net Sales
Cost of Sales (-)
Gross Profit / (Loss)
ANNUAL REPORT 2011
107
Banking Charges and Interest Expense (-)
Foreign Exchange Loss (-)
Eliminated Interest From Purchases(-)
Rediscount Expense (-)
Cancellation of Previous Period's Rediscount
Total Financial Expense
(9.024.861)
(57.280.533)
(15.254.873)
(3.686.444)
(1.622.979)
(86.869.690)
(7.284.186)
(52.193.769)
(5.878.789)
(1.331.006)
(993.725)
(67.681.475)
31. OTHER OPERATING INCOME / EXPENSEOther operating Income / Expense which belong twelve months accounting period, of the Group as of December 31, 2011 andDecember 31, 2010 are as follows:
January 1-December 31 2011
January 1-December 31 2010Account Name
Negative Goodwill Income (Note: 3)
Terminated Provisions for Litigations
Other Income
Total Other Income
Total Other Expense (-) (*)
Other Income / Expense (Net)
60.752
-
335.019
395.771
(1.191.240)
(795.469)
-
-
60.687
60.687
(374.948)
(314.261)
(*)Other expenses consist from non-deductible expenses such as tax, penalty, motor vehicle taxes and special communication taxes, etc.
32. FINANCIAL INCOMESFinancial Income which belongs twelve months accounting period, of the Group as of December 31, 2011 and December 31, 2010are as follows:
January 1-December 31 2011
January 1-December 31 2010Account Name
Interest Income
Foreign Exchange Gains
Interest Eliminated From Sales
Rediscount Income
Previous Period Rediscount Cancellation
Total Financial Income
1.850.375
33.496.401
18.252.921
4.417.056
1.334.021
59.350.774
730.701
29.200.793
7.636.802
1.620.220
841.187
40.029.703
33. FINANCIAL EXPENSESFinancial Expense which belongs twelve months accounting period, of the Group as of December 31, 2011 and December 31, 2010are as follows:
There is no capitalized financial expense of Group for current period.
34. FIXED ASSETS HELD FOR SALE PURPOSES AND DISCONTINUED OPERATIONSNone.
Account Name January 1-December 31 2011
January 1-December 31 2010
ANNUAL REPORT 2011
108
35. TAX ASSETS AND LIABILITIES (Deferred Tax Assets and Liabilities)The Group’s tax income / (expense) is composed of current period’s corporate tax expense and deferred tax income / (expense)
The tax assets and liabilities of the Group as of December 31, 2011 and December 31, 2010 are as follows:
Account Name
Provision for Current Period Tax
Prepaid Taxes (-)
Total Net Tax Payable
7.605.354
(4.646.372)
2.958.982
4.626.551
(3.527.917)
1.098.634
January 1-December 31 2011
January 1-December 31 2010Account Name
(7.605.354)
339.448
(7.265.906)
(4.626.551)
279.494
(4.347.057)
Provision for Current Period Tax (-)
Deferred Tax Income / (Expense)
Total Tax Income / (Expense)
i) Provision for Current Period Tax
Group calculate their temporary taxes on their quarterly financial profits in Turkey. Corporate income as of the temporary tax periods,temporary tax rate of 20% over the corporate income was calculated and prepaid taxes deducted from taxation on income.
According to Turkish Corporate Tax Law, losses can be carried forward to offset the future taxable income for a maximum period of5 years. On the other hand, such losses cannot be carried back to offset prior years’ profits.
According to Corporate Tax Law’s Article: 24, the corporate tax is imposed by the taxpayer’s tax returns. There is no procedure fora final and definitive agreement on tax assessments. Annual corporate tax returns are submitted until the 25th of April following theclosing of the accounting year. Moreover, the tax authorities have the right to examine the tax returns and the related accountingrecords within five years.
Effective Corporate Tax Rate:According to the corporate tax law numbered 5520, which was published in the official gazette dated June 21, 2006, the effectivecorporate tax rate was set as 20%.
According to Turkish Corporate Tax Law, losses can be carried forward to offset the future taxable income for a maximum period of5 years. On the other hand, such losses cannot be carried back to offset prior years’ profits.
According to Corporate Tax Law’s Article: 20, the corporate tax is imposed by the taxpayer’s tax returns. There is no procedure fora final and definitive agreement on tax assessments. Annual corporate tax returns are submitted until the 25th of April following theclosing of the accounting year. Moreover, the tax authorities have the right to examine the tax returns and the related accountingrecords within five years.
Income Withholding Tax:In addition to corporate tax, Group should also calculate income withholding tax on any dividends and income distributed, exceptfor resident companies in Turkey receiving dividends from resident companies in Turkey and Turkish branches of foreign companies.The rate of withholding tax has been increased from 10% to 15% upon the Cabinet decision No: 2006/10731, which was publishedin Official Gazette on July 23, 2006.
ii) Deferred Tax
The deferred tax asset and tax liability is based on the temporary differences, which arise between the financial statements preparedaccording to CMB’s accounting standards and statutory tax financial statements. These differences usually due to the recognition ofrevenue and expenses in different reporting periods for the CMB standards and tax purposes.
December 31 2011 December 31 2010
ANNUAL REPORT 2011
109
January 1-December 31 2011
January 1-December 31 2010Reconciliation of Tax Provision:
Profits obtained from continuing operations
Income tax rate %20
Tax effect:
-Non-deductible Expenses
Deferred Tax Expense
28.380.910
5.676.182)
(1.589.724)
(7.265.906)
18.546.439
(3.709.287)
(637.770)
(4.347.057)
610.823
1.184.825
3.686.444
1.466.963
1.858.556
(4.417.056)
(431.785)
(12.369)
2.578.691
(122.165)
236.965
737.289
293.393
371.711
(883.411)
(86.357)
(2.474)
515.739
1.060.690
(673.700)
-
1.331.005
1.016.480
1.604.840
(1.620.220)
-
(99.105)
1.777.987
�
(134.740)
-
266.201
203.296
320.968
(324.044)
-
(19.821)
355.598
667.458
Deferred Tax Asset / Liability at the beginning of the period
Transferred From Artım A._.
Deferred Tax Income / (Expense)
Hedging Funds (Note:7)
Deferred Tax Asset / Liability at the end of the period
667.458
36.437
339.448
17.348
1.060.690
407.785
-
279.494
(19.821)
667.458
Explanation of Used / Unused Tax Advantages:
Financial Loss1.184.825 TL (December 31, 2010: None) which comprise of the deferred financial loss as of December 31, 2011 was included indeferred tax calculation based on the decisions of the Group management, which evaluates that this loss can be used against thetaxable profit in the following years.
The details of the financial losses taken into calculation of deferred tax asset are as follows;
2011
Total
2011 2010
1.184.825
1.184.825
-
-
Period Last Year for Validity
2016
The Group does not have any financial loss which was not included in deferred tax calculation as of December 31, 2011 and 2010.
Reconciliation of tax provision as of December 31, 2011 and December 31, 2010 are as follows:
Account NameDec 31, 2011AccumulatedTemporaryDifferences
Dec 31, 2011Deferred
Tax Assets /(Liabilities)
Dec 31, 2010AccumulatedTemporaryDifferences
Dec 31, 2010Deferred
Tax Assets /(Liabilities)
Fixed Assets
Financial Loss
Rediscount Expense
Provision for Termination Indemnity
Provision for Value Decrease in Inventories
Rediscount Income
Derivative Income Accruals
Hedging Funds
Other
Deferred Tax Asset / Liability
December 31 2011 December 31 2010
ANNUAL REPORT 2011
110
36. NET EARNINGS PER SHAREEarnings per share in the income statement are calculated by dividing net income by the weighted average number of common sharesoutstanding for the period. Group’s earnings per share are calculated for the periods are as follows:
37. EXPLANATIONS OF RELATED PARTIES
a) Receivables and Payables of Related Parties:
Non-trade payables to shareholders almost consist of dividend payments.
There are no guarantees or mortgages for the related party receivables or payables. There is no provision made for doubtful receivablesfor the related party receivables. ‹nfin A.fi. is the subsidiary which is not included in the consolidation, Neteks D›fl Ticaret A.fi. is theaffiliate evaluated by equity method, Desbil, Desbec and Homend are other related parties.
The related party balances generally consist from trade transactions. But in some conditions there are cash usages between the relatedparties. The balances consist from non-trade transactions are classified as non-trade receivables or payables in the financial statements.Interest is calculated for the balances and invoiced quarterly. The interest rate for USD is between %3 and %7,50 in 2011, %3 and%4,50 in 2010.
18.447.861
56.000.000
0,329426
2.898,97
0,312957
13.171.469
56.000.000
0,235205
2.070
0,223446
Period Profit/ (Loss)
Average Number of Shares
Earnings / (Loss) per Share
Profit for preferred shares
Profit for ordinary shares
January 1-December 31 2011
January 1-December 31 2010
December 31 2011Trade
ReceivablesNon-Trade
ReceivablesTrade
PayablesNon-TradePayables
Receivables Payables
Shareholders
Homend A.fi.
Desbil A.fi.
‹nfin A.fi.
Neteks D›fl Tic.
Despec A.fi.
Total
-
1.035.245
11.986
1.461.335
310.317
40.347
2.859.230
-
-
162.812
-
-
-
162.812
-
-
-
2.269.576
1.682.856
7.924
3.960.356
4.201.814
-
-
-
-
183.599
4.385.413
December 31 2011
Shareholders
Homend A.fi.
Desbil A.fi.
‹nfin A.fi.
Neteks D›fl Tic.
Despec A.fi.
Total
-
1.783.661
5.957
2.399.123
292.827
137.444
4.619.012
-
-
96.013
-
-
-
96.013
-
-
-
624.144
-
-
624.144
3.043.727
112.199
-
-
-
1.678.690
4.834.616
TradeReceivables
Non-TradeReceivables
TradePayables
Non-TradePayables
Receivables Payables
ANNUAL REPORT 2011
111
January 1, 2011 – December 31, 2011
Shareholders current accounts are generally arisen from dividend debt, and interest is not calculated for this debt.
b) Purchases from Related Parties and Purchases from Related Parties:
January 1, 2011 – December 31, 2011
-
15.013.735
7.565.849
8.320.268
3.491.658
34.391.510
Desbil A.fi.
Despec A.fi.
Homend A.fi.
‹nfin A.fi.
Neteks D›fl Ltd.fiti.
Total
3.048
1.646.574
1.460.623
4.800
-
3.115.045
31.091
361.747
2.334.321
653.270
25.384
3.405.813
34.139
17.022.056
11.360.793
8.978.338
3.517.042
40.912.368
Sales to RelatedParties
Goods andService Sales
Common CostParticipation
Interest andForeign
ExchangeIncome
Total Income/Income
Desbil A.fi.
Despec A.fi.
Homend A.fi.
‹nfin A.fi.
Neteks D›fl Ltd.fiti.
Total
-
14.278.665
8.014.832
4.539.768
3.608.395
30.441.660
-
18.253
134
-
-
18.387
1.793
1.305.470
72.556
62.148
71.340
1.513.307
1.793
15.602.388
8.087.522
4.601.916
3.679.735
31.973.354
Sales to RelatedParties
Goods andService Sales
Purchases
Common CostParticipation
Interest andForeign
ExchangeExpense
Total Expense/Purchases
Desbil A.fi.
Despec A.fi.
Homend A.fi.
‹nfin A.fi.
Neteks D›fl Ltd.fiti.
Total
-
6.672.779
270.992
9.683.293
3.648.161
20.275.225
2.994
1.498.753
217.816
5.070
-
1.724.633
10.363
295.300
226.804
617.698
3.550
1.153.715
13.357
8.466.832
715.612
10.306.061
3.651.711
23.153.573
Sales to RelatedParties
Goods andService Sales
Common CostParticipation
Interest andForeign
ExchangeIncome
Total Income/Income
Desbil A.fi.
Despec A.fi.
Homend A.fi.
‹nfin A.fi.
Neteks D›fl Ltd.fiti.
Total
-
5.869.015
4.834.305
5.431.286
4.611.145
20.745.751
-
-
-
-
-
-
20.713
389.459
309.094
461.823
10.397
1.191.486
20.713
6.258.474
5.143.399
5.893.109
4.621.542
21.937.237
Sales to RelatedParties
Goods andService Sales
Purchases
Common CostParticipation
Interest andForeign
ExchangeExpense
Total Expense/Purchases
ANNUAL REPORT 2011
112
c) Benefits and Services Provided for Senior Management
Short-Term Benefits provided to Employees
Employment Termination Benefits
Other long term benefits
Total
3.040.756
-
-
3.040.756
2.384.466
-
-
2.384.466
The Group does not have any speculative financial instruments (including derivative financial instruments) and any operating activityof trade of these financial instruments.
(b) Important Accounting Policies
The Company’s important accounting policies relating to financial instruments are presented in the Note 2.
(c) Risks Exposed
Because of its operations, the Group is exposed to financial risks related to exchange rates and interest rates.
The Group as it holds the financial instruments also carry the risk of other party not meeting the requirements of the agreement.
Market risks seen at the level of Group are measured according to the sensitivity analysis principle. Market risks faced by the Companyin current period or the process of undertaking the faced risks or the process of the measure of faced risks was not changed accordingto previous year.
Account Name January 1-December 31 2011
January 1-December 31 2010
Benefits and wages provided to Management Staff consist of general manager wages, assistant general manager wages.
38. NATURE AND LEVEL OF RISKS ARISING OUT OF FINANCIAL INSTRUMENTS
(a) Capital risk management
The Group, while trying to maintain the continuity of its activities in capital management on one hand, aims to increase its profitabilityby using the balance between debts and resources on the other hand.
The capital structure of the Group consists of debts containing the credits explained in note 8, cash and cash equivalents explainedin note 6 and resource items containing respectively issued capital, capital reserves, profit reserves and profits of previous yearsexplained in Note 27.
Risks, associated with each capital class, and the capital cost are evaluated by the senior management. It is aimed that the capitalstructure will be stabilized by means of new borrowings or repaying the existing debts as well as dividend payments and new shareissuances based on the senior management evaluations.
The Group follows the capital by using debt/total capital rate. This rate is found by dividing the net debt by total capital. The net debtis calculated by excluding the cash and cash equivalent amounts from the total debt amount (including credits, leasing and commercialdebts as indicated in the balance sheet). Total capital is calculated as resources plus net debt as indicated in the balance sheet.
General strategy of the Group based on resources is not different from the previous years.
Account Name
Total Debt
Minus (-) Cash and Equivalent
Net Debt
Total Shareholder's Equity
Total Share capital
Rate % (Net Debt / Total Share Capital)
493.883.899
(65.358.568)
428.525.331
138.445.685
566.971.016
75.58%
417.694.527
(26.415.870)
391.278.657
120.437.244
511.715.901
76,46%
December 31 2011 December 31 2010
ANNUAL REPORT 2011
113
Current Period
Profit / Loss
Appreciation ofForeign Exchange
Devaluation ofForeign Exchange
Previous Period
Profit / Loss
1- USD Net Asset/ Liability
2- The part, hedged from USD Risk (-)
3- USD Net Effect (1+2)
(2.323.951)
(2.323.951)
4- EUR Net Asset/ Liability
5- The part, hedged from EUR Risk (-)
6- EUR Net Effect (4+5)
TOTAL
512.758
512.758
(1.811.194)
In the event of 10% value change of USD against TL
In the event of 10% value change of EUR against TL;
2.323.951
2.323.951
(5.376.668)
(5.376.668)
5.376.668
5.376.668
(512.758)
(512.758)
1.811.194
(40.779)
(40.779)
(5.417.447)
40.779
40.779
5.417.447
(c1) Foreign currency risk management
Transactions in foreign currencies expose the Group to foreign currency risk. This risk mainly arises from fluctuation of foreign currencyused in conversion of foreign assets and liabilities into Turkish Lira. Foreign currency risk arises as a result of trading transactions inthe future and the difference between the assets and liabilities recognized.
The Company is mainly exposed to foreign currency risk due to deposits, receivables and payables
FOREIGN EXCHANGE RATE SENSITIVITY ANALYSIS TABLE
Appreciation ofForeign Exchange
Devaluation ofForeign Exchange
As of December 31, 2011 total amount of the commercial good inventories is 100.208.199 TL. A significant part of inventories arepurchased or imported in USD. As of December 31, 2010 total amount of the commercial good inventories is 123.630.694 TL. Asignificant part of inventories are purchased or imported in USD.
ANNUAL REPORT 2011
114
TL Value USD EUR GBP
Current Period
Account Name
1. Trade Receivables
2a. Monetary Financial Assets
2b. Non-Monetary Financial Assets
3. Other
4. Current Assets Total (1+2+3)
5. Trade Receivables
6a. Monetary Financial Assets
6b. Non-Monetary Financial Assets
7. Other
8. Fixed Assets Total (5+6+7)
9. Total Assets (4+8)
10. Trade Payables
11. Financial Liabilities
12a. Other Monetary Liabilities
12b. Other Non-Monetary Liabilities
13. Total Short Term Liabilities (10+11+12)
14. Trade Payables
15. Financial Liabilities
16a. Other Monetary Liabilities
16b. Other Non-Monetary Liabilities
17. Total Long Term Liabilities (14+15+16)
18. Total Liabilities (13+17)
19. Net Asset/ (Liability) Position of Derivative
Instruments off the Balance Sheet (19a-19b)
19a. Total Amount of Hedged Assets
19b. Total Amount of Hedged Liabilities
20. Net Foreign Exchange Asset / (Liability) Position (9-18+19)
21. Monetary Items Net Foreign Exchange Asset /
(liability) position (1+2a+5+6a-10-11-12a-14-15-16a)
22. Total Fair Value of Financial Instruments Used
for the Foreign Exchange Hedge
23. The Amount of Hedged part of Foreign Exchange Assets
23. The Amount of Hedged part of Foreign Exchange Liabilities
23. Export
24. Import
242.104.679
64.639.072
-
-
306.743.751
-
2.414
-
-
2.414
306.746.165
(278.065.966)
(24.775.230)
(14.232.446)
-
(317.073.642)
-
(7.784.458)
-
-
(7.784.458)
(324.858.101)
26.296.577
26.296.577
-
8.184.641
(18.111.936)
-
25.852.423
-
16.180.209
492.022.828
125.353.353
32.138.079
-
-
157.491.432
1.278
-
-
1.278
157.492.710
(145.027.688)
(13.116.221)
(7.530.840)
(165.674.750)
-
(4.121.160)
-
-
(4.121.160)
(169.795.909)
13.921.635
13.921.635
-
1.618.436
(12.303.199)
13.921.635
-
-
-
-
2.178.873
1.609.565
-
-
3.788.438
-
-
-
-
-
3.788.438
(1.687.194)
-
(3.046)
-
(1.690.240)
-
-
-
-
-
(1.690.240)
-
-
-
2.098.199
2.098.199
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
c2 ) Credit Risk and Management
TABLE OF FOREIGN EXCHANGE POSITION
ANNUAL REPORT 2011
115
TL Value USD EUR GBP
Previous Period
Account Name
1. Trade Receivables
2a. Monetary Financial Assets
2b. Non-Monetary Financial Assets
3. Other
4. Current Assets Total (1+2+3)
5. Trade Receivables
6a. Monetary Financial Assets
6b. Non-Monetary Financial Assets
7. Other
8. Fixed Assets Total (5+6+7)
9. Total Assets (4+8)
10. Trade Payables
11. Financial Liabilities
12a. Other Monetary Liabilities
12b. Other Non-Monetary Liabilities
13. Total Short Term Liabilities (10+11+12)
14. Trade Payables
15. Financial Liabilities
16a. Other Monetary Liabilities
16b. Other Non-Monetary Liabilities
17. Total Long Term Liabilities (14+15+16)
18. Total Liabilities (13+17)
19. Net Asset/ (Liability) Position of Derivative
Instruments off the Balance Sheet (19a-19b)
19a. Total Amount of Hedged Assets
19b. Total Amount of Hedged Liabilities
20. Net Foreign Exchange Asset / (Liability) Position (9-18+19)
21. Monetary Items Net Foreign Exchange Asset /
(liability) position (1+2a+5+6a-10-11-12a-14-15-16a)
22. Total Fair Value of Financial Instruments Used
for the Foreign Exchange Hedge
23. The Amount of Hedged part of Foreign Exchange Assets
23. The Amount of Hedged part of Foreign Exchange Liabilities
23. Export
24. Import
226.257.352
43.237.733
-
-
269.495.085
-
373
-
-
373
269.495.457
(291.405.123)
(10.992.996)
(13.247.695)
-
(315.645.814)
-
(8.024.113)
-
-
(8.024.113)
(323.669.927)
3.287.323
3.287.323
-
(50.887.147)
(54.174.470)
-
3.186.663
-
13.816.010
472.875.309
142.650.727
26.926.709
-
-
169.577.436
-
241
-
-
241
169.577.677
(183.490.699)
(7.110.605)
(8.564.059)
-
(199.165.363)
-
(5.190.242)
-
-
(5.190.242)
(204.355.605)
2.126.341
2.126.341
(32.651.587)
(34.777.928)
-
2.126.341
-
-
-
2.791.142
785.243
-
-
3.576.384
-
-
-
-
-
3.576.384
(3.771.657)
-
(3.738)
-
(3.775.395)
-
-
-
-
-
(3.775.395)
-
-
-
(199.011)
(199.011)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TABLE OF FOREIGN EXCHANGE POSITION
ANNUAL REPORT 2011
116
Maximum credit risk incurred as of the date of reporting (A+B+C+D+E) (1)
- The part of maximum risk secured by guarantee etc.
A. Net book value of financial assets which are undue or which did not decline
in value (2)
B. Book value of financial assets which conditions are renegotiated, and which
otherwise would be counted as overdue or declined in value (3)
C. Net book value of assets, overdue but did not decline in value. (6)
- The part secured by guarantee etc.
D. Net book values of assets declined in value (4)
- Overdue (gross book value)
- Decline in value (-)
- The part of net value secured by guarantee etc.
- Undue (gross book value)
- Decline in value (-)
- The part of net value secured by guarantee etc.
E. Elements containing credit risk off the balance sheet (5)
2.859.230
-
2.859.230
-
-
-
-
-
-
-
-
-
-
-
400.314.916
30.810.485
399.602.383
537.009
175.523
175.523
-
5.942.549
(5.942.549)
-
-
-
-
-
162.812
-
162.812
-
-
-
-
-
-
-
-
-
-
-
214.160
-
214.160
-
-
-
-
-
-
-
-
-
-
-
-
-
10-11
10-11
-
10-11
-
10-11
10-11
10-11
10-11
10-11
10-11
-
65.063.969
-�
65.063.969
-
-
-
-
-
-
-
-
-
-
-
6
6
-
6
-
6
6
6
6
6
6
6
CURRENT PERIOD Trade Receivables FootNote
BankDeposits
and Repos
Receivables
Other Receivables
Related Party Other Related Party Other
FootNote
CREDIT TYPES INCURRED IN RESPECT OFFINANCIAL INSTRUMENT TYPES
Maximum credit risk incurred as of the date of reporting (A+B+C+D+E) (1)
- The part of maximum risk secured by guarantee etc.
A. Net book value of financial assets which are undue or which did not decline
in value (2)
B. Book value of financial assets which conditions are renegotiated, and which
otherwise would be counted as overdue or declined in value (3)
C. Net book value of assets, overdue but did not decline in value. (6)
- The part secured by guarantee etc.
D. Net book values of assets declined in value (4)
- Overdue (gross book value)
- Decline in value (-)
- The part of net value secured by guarantee etc.
- Undue (gross book value)
- Decline in value (-)
- The part of net value secured by guarantee etc.
E. Elements containing credit risk off the balance sheet (5)
4.619.012
-
4.619.012
-
-
-
-
-
-
-
-
-
-
-
310.566.424
21.166.698
309.745.773
296.209
524.442
524.442
-
5.082.748
(5.082.748)
-
-
-
-
-
96.013
-
96.013
-
-
-
-
-
-
-
-
-
-
-
207.175
-
207.175
-
-
-
-
-
-
-
-
-
-
-
-
-
10-11
10-11
-
10-11
-
10-11
10-11
10-11
10-11
10-11
10-11
10-11
25.326.774
-�
25.326.774
-
-
-
-
-
-
-
-
-
-
-
-
-
6
6
-
6
-
6
6
6
6
6
6
6
PREVIOUS PERIOD
(*) During the assessment, the elements such as guarantees received which can increase the credibility are not taken into consideration.
Trade Receivables FootNote
BankDeposits
and Repos
Receivables
Other Receivables
Related Party Other Related Party Other
FootNote
ANNUAL REPORT 2011
117
Current Period December 31 2011
1-30 Days Overdue
1-3 Months Overdue
More than 3 Months Overdue
The part of net value secured by guarantee etc.
Trade Receivables Other Receivables
626.919
58.638
26.975
175.523
-
-
-
-
Previous Period December 31 2010
1-30 Days Overdue
1-3 Months Overdue
More than 3 Months Overdue
The part of net value secured by guarantee etc.
-
-
-
-
641.987
102.873
75.791
524.442
Guarantees received and other elements, which increase the credibility, mortgages received, bill sureties and guarantee letters aretaken into consideration.
The Group’s credit risk management exposed from trade receivables. Trade receivables mostly consist from receivables from dealers.The Group has set up an effective control system over its dealers and the risk is monitorized by credit risk management team andGroup Management. The Group has set limits for every dealer and these limits are revised if it is necessary. The taking adequateguarantees from dealers are another method for the risk management. There is no significant trade receivable risk for the Group,because the Group has receivables from a wide range of customers instead of a small number customers and significant amounts.Trade receivables are evaluated by taking into consideration of Group’s past experience and current economic situation and thesereceivables are presented with their net values in the balance sheet after the proper provisions for doubtful receivables are made. Thelow profit margin by force of the sectoral conditions makes collection and credit risk management policies important and the Groupmanagement show sensivity in these situations. The detailed information about the collection and risk management policies are asfollows;
The Group starts executive proceedings and / or litigate for the receivables overdue for a few months. The Group can configure termsfor dealers in difficult situations. The low profit margin by force of the sectoral conditions makes collection of receivables important.There is a risk management team to minimize the risk of collections and the sales are realized by making credibility evaluations. Thesales to new or risky dealers are made in cash collection.
The Group is selling products to a wide range of institutions which are selling or buying computer and its equipments. The capitalstructure of the dealers classified as “classic dealers” in the distribution channel is low. It is estimated that there are about 5.000 dealersin this group in Turkey and in terms of risk management to minimize the receivable risk of Datagate by taking steps and establishingits own organisation and working system. The steps taken by the Group is as follows;
The sales to new customers which have no experience more than 1 year: The sales to new customers which have no experience morethan 1 year are made in cash collection.
The information team involved in receivable and risk management department is monitoring the dealers continuously.
Credit Committee: The information about the customers which has experience more than 1 year in the sector and the customers whichare demanding an increase for the credit limit are prepared by the information team and presented to credit committee every week.Credit committee consist of Senior Vice President of Finance, Finance Manager, Accounting Manager, information team staff and theSale Manager of related Customer. Credit Committee establish credit limits to related customers by taking into consideration theinformation gained from the information team, past payments and sale performances. The Credit Committee determines the conditionsand if it is needed they demand for guarantees, mortgages, etc.
Group sales are widespread on Turkey; therefore it is reduce the concentration risk.
Trade receivables are evaluated by taking into consideration the Group policies and procedures and the trade receivables are shownwith their net value after the provisions for doubtful receivables are made in the financial statements. (Note: 10)
Trade Receivables Other Receivables
ANNUAL REPORT 2011
118
Table of Interest Position
Fixed Interest Financial Instruments
Financial Assets
Financial Liabilities
Current Period
26.308.719
46.321.406
Previous Period
1.000.140
19.525.078
Floating Rate Financial Instruments
Financial Assets
Financial Liabilities
Current Period
-
-
Previous Period
-
-
(c3) Management of interest rate risk
Group’s fixed interest financial instruments liabilities are stated in Note: 8. Group’s fixed interest assets (deposit etc.) are stated inNote: 6.
If there is a %1 increase on TL interest rate and other variables are fixed as of December 31, 2011, profit before tax will be less withthe amount of 200.126 TL. (December 31, 2010: 185.249 TL) Important part of Group’s financial assets and liabilities with fixed interestrate are short-term. Consequently the financial assets and liabilities with fixed interest rate are taken into consideration. There is nointerest rate risk if only financial assets and liabilities with floating rate are taken into consideration.
(c4) Liquidity risk management
The Group tries to manage the liquidity risk by maintaining the continuation of sufficient funds and loan reserves by means of matchingthe financial instruments and terms of liabilities by following the cash flow regularly.
Liquidity Risk TablesPrudent liquidity risk management signifies maintaining sufficient cash, the utility of fund sources by sufficient credit transactions andthe ability to close out market positions.
Risk of existing or future possible debt requirements being fundable is managed by maintaining the continuation of availability ofsufficient numbers and high quality credit providers.
The table below indicates the term divisions of derivative and non-derivative financial liabilities of the Group in TL currency.
Cash Outflows TotalAs Per the Agreemen
Less than 3Months 3-12 Months 1-5 YearsBook ValueContract Terms
More than5 Years
December 31, 2011
457.593.105
46.323.157
-
-
395.944.108
15.325.840
-
463.346.131
47.659.127
-
-
400.361.164
15.325.840
-
441.292.565
25.605.561
-
-
400.361.164
15.325.840
-
8.734.507
8.734.507
-
-
-
-�-
DerivativeFinancial Liabilities
13.319.059
13.319.059
-
-
-
-
-
-
-
-
-�-�-�-
444.154
26.296.577
(25.852.423)
235.764
26.296.577
(26.060.812)
233.554
22.798.021
(22.564.468)
2.211
3.498.555
(3.496.344)
-
-
-
-
-
-
Cash Outflows TotalAs Per the Agreemen
Less than 3Months 3-12 Months 1-5 YearsBook ValueContract Terms
More than5 Years
Non-derivativeFinancial Liabilities
Bank Loans
Debt Instrument Issue
Financial Lease Liabilities
Trade Payables
Other Payables
Other
Derivative Cash Inflows
Derivative Cash Outflows
ANNUAL REPORT 2011
119
December 31, 2010
399.140.961
19.709.602
-
141
365.962.360
13.468.858
-
403.267.461
22.215.866
-
156
367.582.581
13.468.858
-
386.681.130
5.629.535
-
156
367.582.581
13.468.858
-
6.012.865
6.012.865
-
-�-�-�-
9.970.175
9.970.175
-
-�-�-�-
603.291
603.291
-
-�-�-�-
100.660
3.287.323
(3.186.663)
89.471
3.287.323
(3.197.852)
89.471
3.287.323
(3.197.852)
-
-
-
-
-
-
-
-
-
(*)The amount of forward transactions consists of 2.126.341 USD. In liability calculation, derivative cash outflow is calculated using exchange rates valid at the end ofterm. Derivative cash inflow is calculated using the exchange rate valid on December 31, 2010. Actual profit or loss will arise at the end of term.
(c5) Analyses of other Risks
Risks Related to Financial Instruments, Stocks Etc.
Group has no stocks or similar marketable securities evaluated by fair value in the current period.
39. FINANCIAL INSTRUMENTS (DECLARATIONS WITHIN THE CONTEXT OF FAIR VALUE AND HEDGING)
Aims at financial risk managementThe finance department of the Group is responsible for maintaining the access to financial markets regularly and observing andmanaging the financial risks incurred in relation with the activities of the Group. The said risks include market risk (including foreignexchange risk, fair interest rate risk and price risk), credit risk, liquidity risk and cash receiving risk.
Fair Value of Financial InstrumentsFair value is the amount for which a financial instrument could be exchanged except compulsory sale or liquidation process betweenwilling parties and it is determined with its market value if there is a quoted price.
The Group has determined the estimated values of financial instruments by taking into consideration the present market informationand proper valuation methods. But determination of market information and estimation of fair value require interpretation and discernment.Consequently the estimations presented are not always the indicators of the values could be realized from a current market transaction.
The methods and assumptions used for the determination of the fair value of the financial instruments are as follows;
Monetary Assets
Balances denominated in foreign currencies are converted into Turkish Lira by the exchange rate ruling at the balance sheet date. Itis predicted that these balances are considered to approximate to their net book value.
Financial instruments in which cash and cash equivalents are included are carried by their cost value and it is predicted that their netbook value are considered to approximate to their fair values due to their short-term maturity.
It is predicted that the net book value of trade receivables with provisions made for doubtful receivables present their fair values.
Cash Outflows TotalAs Per the Agreemen
Less than 3Months 3-12 Months 1-5 YearsBook ValueContract Terms
More than5 Years
Cash Outflows TotalAs Per the Agreemen
Less than 3Months 3-12 Months 1-5 YearsBook ValueContract Terms
More than5 Years
Non-derivativeFinancial Liabilities
Bank Loans
Debt Instrument Issue
Financial Lease Liabilities
Trade Payables
Other Payables
Other
DerivativeFinancial Liabilities
Derivative Cash Inflows
Derivative Cash Outflows
ANNUAL REPORT 2011
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Monetary Liabilities
Balances denominated in foreign currencies are converted into Turkish Lira by the exchange rate ruling at the balance sheet date. Itis predicted that these balances are considered to approximate to their net book value.
It is predicted that net book value of bank loans and other monetary liabilities are considered to approximate their fair values due totheir short-term maturity.
It is predicted that the net book value of trade payables present their fair values due to their short-term maturity.
Fair Value Assessment:
The Group has applied the amendments in IFRS 7 related with the financial instruments evaluated by fair value in the balance sheeteffective from the date of January 1, 2009. The amendment in fair value calculations is disclosed in accordance with the steps ofhierarchy for fair value mentioned below;
Level 1: Quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that is not based on observable market data.
It is predicted that net book value of foreign currency balances which are converted to TL at the end of the year are considered toapproximate to their fair values.
The Group presents its financial investments with their fair values in the financial statements as of December 31, 2011. (Level 2) (Note:7)
It is accepted that the discounted net book value of financial assets such as cash and cash equivalents present their fair values dueto their short-term maturity.
Trade receivables and payables are measured at their discounted cost using the effective interest method and it is accepted that thenet book value of these balances are considered to approximate their fair values.
40. SUBSEQUENT EVENTSAccording to the Group’s main partnership ‹ndeks Bilgisayar Sistemleri Mühendislik Sanayi ve Ticaret A.fi.’s Board of Director’s meetingon January 3, 2012, it has been decided to establish a new company with the title of “Indeks International FZE” or a title stipulatedby the competent authorities in Sharjah Airport International Free Zone, United Arab Emirates in order to operate in internationalinformation technologies in the area of initially Middle East and Africa. Also it has been decided that the mentioned company’s %100of the capital will be owned by the Company, the capital will be 150.000 United Arab Emirates Dirham and it has been decided tostart legal proceedings, the mentioned situation has been explained by Public Disclosure Platform on January 3, 2012.
According to the Group’s subsidiary Datagate Bilgisayar Malzemeleri Ticaret Anonim fiirketi’s Board of Director’s meeting on January11, 2012, it has been decided to establish a new company with the title of “Datagate International FZE” or a title stipulated by thecompetent authorities in Sharjah Airport International Free Zone, United Arab Emirates in order to operate in international informationtechnologies in the area of initially Middle East and Africa. Also it has been decided that the mentioned company’s %100 of the capitalwill be owned by the Company, the capital will be 150.000 United Arab Emirates Dirham and it has been decided to start legalproceedings, the mentioned situation has been explained by Public Disclosure Platform on January 11, 2012.
41. OTHER ISSUESNone.
ANNUAL REPORT 2011
ANNUAL REPORT 2011
ANNUAL REPORT 2011
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