(Convenience Translation of Financial Statements and Footnotes Originally Issued in Turkish) Coca-Cola İçecek Anonim Şirketi - PDF

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(Convenience Translation of Financial Statements and Footnotes Originally Issued in Turkish) Coca-Cola İçecek Anonim Şirketi Interim Condensed Consolidated Financial Statements as of March 31, 2016 Interim

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(Convenience Translation of Financial Statements and Footnotes Originally Issued in Turkish) Coca-Cola İçecek Anonim Şirketi Interim Condensed Consolidated Financial Statements as of March 31, 2016 Interim Condensed Consolidated Financial Statements as of March 31, 2016 Page Condensed Consolidated Interim Balance Sheet 1 Condensed Consolidated Interim Income Statement 2 Condensed Consolidated Interim Comprehensive Income Statement 3 Condensed Consolidated Interim Statement of Change in Shareholders Equity 4 Condensed Consolidated Interim Statement of Cash Flow 5 Condensed Notes to Consolidated Interim Financial Statements 6-31 Consolidated Interim Balance Sheet as at March 31, 2016 Unaudited Audited Notes ASSETS Current Assets Cash and Cash Equivalents Investments in Securities Derivative Financial Instruments Trade Receivables - Due from Related Parties Other trade receivables Other Receivables Inventories Prepaid Expenses Tax Related Current Assets Other Current Assets Non-Current Assets Other Receivables Property, Plant and Equipment Intangible Assets - Goodwill Other Intangible Assets Prepaid Expenses Deferred Tax Assets Total Assets LIABILITIES Current Liabilities Short-term Borrowings Current Portion of Long-term Borrowings Derivative Financial Instruments Trade Payables - Due to Related Parties Other trade payables Payables Related to Employee Benefits Other Payables Provision for Corporate Tax Provision for Employee Benefits Other Current Liabilities Non-Current Liabilities Long-term Borrowings Trade Payables - Due to Related Parties Other Trade payables Derivative Financial Instruments 6-98 Provision for Employee Benefits Deferred Tax Liability Other Non-Current Liabilities EQUITY Equity of the Parent Share Capital Share Capital Inflation Adjustment Differences (8.559) (8.559) Share Premium Value Increase Funds Cash Flow Hedge Reserve 6 (8.382) (8.894) Non-Controlling Interest Put Option Liability Reserve (6.702) (6.453) Actuarial Losses (16.506) (16.506) Currency Translation Adjustment Restricted Reserves Allocated from Net Profit Accumulated Profit Net Income Non-Controlling Interest Total Liabilities The explanatory notes form an integral part of these condensed consolidated financial statements (1) Consolidated Statement of Income for three months period ended March 31, 2016 Unaudited Notes March 31, 2016 March 31, 2015 Net Revenue Cost of Sales (-) ( ) ( ) Gross Profit from Operations Distribution, Selling and Marketing Expenses (-) ( ) ( ) General and Administration Expenses (-) (79.520) (76.716) Other Operating Income Other Operating Expense (-) 19 (29.262) (37.042) Profit From Operations Gain from Investing Activities Loss from Investing Activities (-) 19 (517) - Gain / (Loss) from Associates 10 (303) (338) Profit Before Financial Income / (Expense) Financial Income Financial Expenses (-) 21 ( ) ( ) Profit Before Tax from Continuing Operations ( ) Tax Expense of Continuing Operations Deferred Tax Income / Expense (-) 22 (5.771) Current Period Tax Expense (-) (12.403) (10.351) Net Income ( ) Attributable to: Non-controlling interest (24.283) (23.637) Equity holders of the parent (90.657) ( ) Equity Holders Earnings Per Share from Continuing Operations (full TL) Equity Holders Earnings Per Diluted Share from Continuing Operations (full TL) 23 0,0012 (0,0036) 23 0,0012 (0,0036) The explanatory notes form an integral part of these condensed consolidated financial statements. (2) Consolidated Statement of Comprehensive Income For the three months period ended March 31, 2016 Unaudited March 31, 2016 March 31, 2015 Net Income / (Loss) ( ) Cash flow hedge reserve Deferred tax effect (129) (733) Currency translation adjustment ( ) Other comprehensive income items to be reclassified to profit or loss subsequently ( ) Total of Other Comprehensive Income After Tax (95.642) Attributable to: Non-controlling interest (47.568) Equity holders of the parent (48.074) The explanatory notes form an integral part of these condensed consolidated financial statements. (3) Consolidated Statement of Change in Shareholders Equity for the three months period ended March 31, 2016 Other comprehensive income items Consolidated Statement of Changes in Shareholders Equity Share Capital Share Capital Inflation Adjustment Differences Share Premium Value Increase Funds Subsequently not to be reclassified to profit or loss Actuarial Gains / (Losses) Subsequently to be reclassified to profit or loss Cash Flow Hedge Reserve Option Liability Reserve for Non- Controlling Interest Currency Translation Adjustment Restricted Reserves Accumulated Profit and Current Period Net Income / (Loss) Total Equity of the Parent Non- Controlling Interest Total Equity Balance at January 1, (8.559) (13.354) (442) Other comprehensive gain / (loss) Net income / (loss) for the period (90.657) (90.657) (23.637) ( ) Total Comprehensive Income / (loss) (90.657) Non-controlling interest share put option liability (41) (41) 41 - Balance at March 31, (8.559) (13.354) (483) Balance at January 1, (8.559) (16.506) (8.894) (6.453) Other comprehensive gain / (loss) (78.013) - - (77.501) (23.285) ( ) Net income / (loss) for the period (24.283) Total Comprehensive Income / (loss) (78.013) (48.074) (47.568) (95.642) Non-controlling interest share put option liability (249) (249) Balance at March 31, (8.559) (16.506) (8.382) (6.702) The explanatory notes form an integral part of these condensed consolidated financial statements. (4) Consolidated Statement of Cash Flows for the three months period ended March 31, 2016 Unaudited Notes March 31, 2016 March 31, 2015 Cash flows from operating activities: Profit / (loss) before tax ( ) Adjustments to reconcile net profit to net cash provided by operating activities Depreciation and amortization Loss / (gain) on sale of property, plant and equipment (649) Impairment loss / (reversal) in property, plant and equipment, net 11, Provision for employee termination benefits, management bonus and other accruals Provision / (reversal) for inventories, net Provision for doubtful receivable, net (Gain) / loss from associates Interest expense Interest income 20 (11.081) (10.707) Foreign exchange loss / (gain), net (17.859) Net income adjusted for non-cash items Trade, other receivables and due from related parties ( ) ( ) Inventories (51.414) ( ) Other current assets (24.026) (626) Other non-current assets (5.052) Trade, other payables and due to related parties Interest paid (11.328) (10.871) Interest received Employee termination benefits, vacation pay, management bonus payments (17.765) (24.658) Taxes paid (18.391) (9.832) Provision for employee benefits Other liabilities Net cash generated from operating activities (19.301) Cash flows from investing activities: Purchase of property, plant and equipment and intangibles 11,12 ( ) ( ) Proceeds from sale of property, plant and equipment Investments in securities (8.576) Net cash generated / (used) in investing activities ( ) ( ) Cash flows from financing activities: Proceeds from borrowings Repayments of borrowings ( ) (15.583) Cash flow hedge reserve (4.727) Net cash (used) / generated from financing activities (81.891) (13.840) Effects of currency translation on cash and cash equivalents (11.468) Effects of currency translation intercompany borrowings (14.249) Currency translation adjustment (1.359) Net increase / (decrease) in cash and cash equivalents ( ) ( ) Cash and cash equivalents at beginning of year Cash and cash equivalents, period end The explanatory notes form an integral part of these condensed consolidated financial statements. (5) 1. CORPORATE INFORMATION and NATURE OF ACTIVITIES General ( CCI - the Company ), is the bottler and distributor of alcohol-free beverages in Turkey, Pakistan, Central Asia and the Middle East. The operations of the Company consist of production, sales and distribution of sparkling and still beverages with The Coca-Cola Company ( TCCC ) trademarks. The Company has 9 (2015-9) production facilities in different regions of Turkey and operates 16 ( ) production facilities in countries other than Turkey. The registered office address of CCI is Esenkent Mah. Deniz Feneri Sok. No:4 Ümraniye İstanbul, Turkey. CCI is a listed company on the Borsa Istanbul A.Ş. ( BIST ), which is the new registered official title of Istanbul Stock Exchange ( ISE ), starting from April The American Depositary receipt issued under the Level I ADR program are traded over the counter in the United States, starting from July The sale of Capital Markets Board Tranche Issuance Certificated bonds to investors outside of Turkey has been completed as of October 1, 2013, and these bonds were admitted to Irish Stock Exchange. The Group consists of the Company, its subsidiaries and joint ventures. The consolidated financial statements of the Group were approved for issue by the Board of Directors on May 3, 2016, which were signed by the Audit Committee and Chief Financial Officer Nusret Orhun Köstem. The General Assembly and the regulatory bodies have the right to make amendments on the financial statements after their issuance. Shareholders of the Company Anadolu Efes Biracılık ve Malt Sanayi A.Ş. is the ultimate controlling party of the Company. As of March 31, 2016 and December 31, 2015 the composition of shareholders and their respective percentage of ownership can be summarized as follows: Nominal Nominal Amount Percentage Amount Percentage Anadolu Efes Biracılık ve Malt Sanayi A.Ş. ( Anadolu Efes ) ,12% ,12% The Coca-Cola Export Corporation ( TCCEC ) ,09% ,09% Efes Pazarlama ve Dağıtım Ticaret A.Ş. ( Efpa ) ,14% ,14% Özgörkey Holding A.Ş ,69% ,69% Publicly Traded ,96% ,96% ,00% ,00% Restatement Effect (8.559) - (8.559) Özgörkey Holding A.Ş. shares with a nominal value of TL has been listed to Central Registry Agency, with a sale purpose. Nature of Activities of the Group CCI and its subsidiary Coca-Cola Satış ve Dağıtım A.Ş. ( CCSD ) are among the leading bottlers and distributors of alcohol-free beverages, operating in Turkey. The sole operation area of the Company is production, sales and distribution of sparkling and still beverages. The Company has exclusive rights to produce, sell and distribute TCCC branded beverages including Coca-Cola, Coca-Cola Zero, Coca-Cola Light, Fanta, Sprite, Cappy, Sen Sun, Powerade and Fuse Tea in TCCC authorized packages throughout Turkey provided with Bottler s and Distribution Agreements signed between the Group with TCCEC and TCCC. Renewal periods of the signed Bottler s and Distribution Agreements varies between 2016 and The Company has the exclusive right to produce, sell and distribute Burn and Gladiator branded energy drinks in authorized packages throughout Turkey according to the Bottlers Agreement signed between the Company and Monster Energy Company ( MEC ) which has taken over TCCC s global energy drink portfolio and is partially owned by TCCC as well. According to Sales and Distribution Agreement signed with Doğadan Gıda Ürünleri Sanayi ve Pazarlama A.Ş. ( Doğadan ), a subsidiary of TCCC, it s approved that sales and distribution of Doğadan products will be realized by CCSD throughout Turkey starting from September (6) 1. CORPORATE INFORMATION and NATURE OF ACTIVITIES (continued) The Company s international subsidiaries and joint ventures operating outside of Turkey are also engaged in the production, sales and distribution of sparkling and still beverages with TCCC trademarks. Company s subsidiary Mahmudiye Kaynak Suyu Limited Şirketi ( Mahmudiye ), which was acquired by CCI on March 16, 2006, is engaged in the production and filling of natural spring water Damla, a registered trademark of CCI, with TCCC approved packages, in Turkey. Group has the exclusive bottling and distribution rights in Turkey for Schweppes branded beverages under Bottler s and Distribution Agreement signed with Schweppes Holdings Limited. Special authorization for the Group operating countries, other than Turkey, may be granted from time to time. Subsidiaries and Joint Ventures As of March 31, 2016 and December 31, 2015 the list of CCI s subsidiaries and joint ventures and its effective participation percentages are as follows: Subsidiaries 1) Coca-Cola Satış ve Dağıtım Anonim Şirketi ( CCSD ) Place of Incorporation Turkey Principal Activities Distribution and sales of Coca-Cola, Doğadan and Mahmudiye products Effective Shareholding and Voting Rights % March 31, December 31, ,97% 99,97% 2) Mahmudiye Kaynak Suyu Limited Şirketi ( Mahmudiye ) Turkey Filling of natural spring water 100,00% 100,00% 3) J.V. Coca-Cola Almaty Bottlers Limited Liability Partnership ( Almaty CC ) Kazakhstan Production, distribution and sales of Coca-Cola products 100,00% 100,00% 4) Azerbaijan Coca-Cola Bottlers Limited Liability Company ( Azerbaijan CC ) Azerbaijan Production, distribution and sales of Coca-Cola products 99,87% 99,87% 5) Coca-Cola Bishkek Bottlers Closed Joint Stock Company ( Bishkek CC ) Kyrgyzstan Production, distribution and sales of Coca-Cola products 100,00% 100,00% 6) 7) CCI International Holland B.V. ( CCI Holland ) Tonus Turkish-Kazakh Joint Venture Limited Liability Partnership ( Tonus ) Holland Holding company 100,00% 100,00% Kazakhstan Holding company 100,00% 100,00% 8) The Coca-Cola Bottling Company of Jordan Limited ( TCCBCJ ) Jordan Production, distribution and sales of Coca-Cola products 90,00% 90,00% 9) Turkmenistan Coca-Cola Bottlers ( Turkmenistan CC ) Turkmenistan Production, distribution and sales of Coca-Cola products 59,50% 59,50% 10) (CC) Company for Beverages Industry/Ltd. ( CCBIL ) Iraq Production, distribution and sales of Coca-Cola products 100,00% 100,00% 11) Waha Beverages B.V. ( Waha B.V. ) Holland Holding Company 80,03% 80,03% 12) Coca-Cola Beverages Tajikistan Limited Liability Company ( Tajikistan CC ) Tajikistan Production, distribution and sales of Coca-Cola products 100,00% 100,00% 13) Al Waha for Soft Drinks, Juices, Mineral Water, Plastics, and Plastic Caps Production LLC ( Al Waha ) Iraq Production, distribution and sales of Coca-Cola products 80,03% 80,03% 14) Coca-Cola Beverages Pakistan Limited ( CCBPL ) Pakistan Production, distribution and sales of Coca-Cola products 49,67% 49,67% (7) 1. CORPORATE INFORMATION and NATURE OF ACTIVITIES (continued) Joint Venture Syrian Soft Drink Sales and Distribution L.L.C. ( SSDSD ) Place of Incorporation Syria Principal Activities Distribution and sales of Coca- Cola products Effective Shareholding and Voting Rights % March 31, December 31, ,00% 50,00% Economic Conditions and Risk Factors of Subsidiaries and Joint Ventures in Foreign Countries The countries, in which certain subsidiaries and joint ventures operate, have undergone substantial political and economic changes in recent years. Uncertainties regarding the political, legal, tax and/or regulatory environment, including the potential for adverse changes in any of these factors, could significantly affect the subsidiaries and joint ventures ability to operate commercially. Group Management closely monitors uncertainties and adverse changes to minimize the probable effects of such changes. In this context, Risk Detection Committee; which was established under the arrangements, terms and principles of Turkish Commercial Code, Capital Market Legislation and Capital Markets Board s Corporate Governance Principles assess, manage and report Group risks. Some of the Group priority risks are defined as consumer shift to alternative beverages, security and safety of employees, volatile tax and regulatory environment, economic slowdown and exchange rate volatility and management of environmental effects and reputation. Group does not expect any adverse effect on the business related to any significant regulatory changes and/or legal arrangements by the authorities. All compliance efforts are in place and there is no legal dispute that may adversely affect the business. Seasonality of Operations Sparkling beverages consumption is seasonal, typically resulting in higher demand during the summer season and accordingly the seasonality effects are reflected in the figures. Therefore the results of operations for the three months period ended March 31, 2016 do not automatically constitute an indicator for the results to be expected for the overall fiscal year. Average Number of Employees Category-based average number of employees working during the period is as follows (joint ventures are considered with full numbers for March 31, 2016 and 2015). March 31, 2016 March 31, 2015 Blue-collar White-collar Average number of employees (8) 2. BASIS OF PRESENTATION Basis of Preparation CCI and its subsidiaries that are incorporated in Turkey maintain their books of account and prepare their statutory financial statements in Turkish Lira ( TL ) in accordance with the regulations on accounting and reporting framework and accounting standards promulgated by the Capital Markets Board of Turkey ( CMB ), Turkish Commercial Code ( TCC ) and Tax Legislation and the Uniform Chart of Accounts which is issued by the Ministry of Finance. The subsidiaries incorporated outside of Turkey maintain their books of account and prepare their statutory financial statements in accordance with the regulations of the countries in which they operate. The condensed consolidated interim financial statements have been prepared from the statutory financial statements of Group s subsidiaries and joint ventures and presented in TL in accordance with CMB Accounting Standards with certain adjustments and reclassifications for the purpose of fair presentation. Such adjustments are primarily related to application of consolidation accounting, accounting for business combinations, accounting for deferred taxes on temporary differences, accounting for employee termination benefits on an actuarial basis and accruals for various expenses. Except for the financial assets carried from their fair values and assets and liabilities included in Business Combination application, financial statements are prepared on a historical cost basis. The condensed consolidated interim financial statements and disclosures have been prepared in accordance with the communiqué numbered II-14,1 Communiqué on the Principles of Financial Reporting In Capital Markets ( the Communiqué ) announced by the CMB (hereinafter will be referred to as the CMB Accounting Standards ) on June 13, 2013 which is published on Official Gazette numbered In accordance with article 5 of the CMB Accounting Standards, companies should apply Turkish Accounting Standards / Turkish Financial Reporting Standards ( TAS / TFRS ) and interpretations regarding these standards as adopted by the Public Oversight Accounting and Auditing Standards Authority ( POA ). For the period ended March 31, 2016, the Group prepared its condensed consolidated interim financial statements in accordance with the Turkish Accounting Standard No.34 Interim Financial Reporting. Interim condensed consolidated financial statements of the Group do not include all the information and disclosures required in the annual financial statements, therefore should be read in conjunction with the Group s annual consolidated financial statements as of December 31, The condensed consolidated interim financial statements are based on the statutory records, with adjustments and reclassifications for the purpose of fair presentation in accordance with the Accounting Standards of the POA and are presented in TL. Summary of Significant Accounting Policies The interim condensed consolidated financial statements of the Group for the three months period ended March 31, 2016 have been prepared in accordance with the accounting policies used in the preparation of annual consolidated financial statements for the year ended December 31, 2015, except for the adoption of new and amended standards. Interim condensed consolidated financial statements do no
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