Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • Investegate.co.uk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com
  • FETransmission.com
  • Trustnet.hk
  • FEAnalytics.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

KT Turkey Sukuk Ltd (94UA)

  Print      Mail a friend

Monday 26 September, 2011

KT Turkey Sukuk Ltd

Half Yearly Report

RNS Number : 9502O
KT Turkey Sukuk Limited
26 September 2011
 

Kuveyt Tür k Katılım Bankası

Anonim Şirketi

 

Interim condensed consolidated financial statements together with independent auditors' review report as at June 30, 2011


 

 

 

 

 

 

 

 

 

 

 

Table of contents

 

 

 

                                                                                                                                                Page

 

Report on review of interim condensed consolidated financial statements                                              1

Interim consolidated statement of financial position                                                                             2

Interim consolidated statement of comprehensive income                                                                    3

Interim consolidated statement of changes in equity                                                                           4

Interim consolidated statement of cash flows                                                                                     5

Selected notes to interim condensed consolidated financial statements                                         6 - 21

 

 

 

 

 

 

 

Report on review of interim condensed consolidated financial statements

to the board of directors of Kuveyt Türk Katılım Bankası Anonim Şirketi

 

 

Introduction

 

We have reviewed the accompanying interim condensed consolidated financial statements of Kuveyt Türk Katılım Bankası A.Ş. and its subsidiaries ("the Group") as at June 30, 2011 comprising of the interim consolidated statement of financial position as at June 30, 2011 and the related interim consolidated statements of comprehensive income, changes in equity and cash flows for the six months period then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 "Interim Financial Reporting" ("IAS 34"). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

 

Scope of review

 

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing. Consequently, it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

 

 

 

 

 

 

September 19, 2011

Istanbul, Turkey

 



Notes

June 30,

2011

(Unaudited)

December 31,

2010

(Audited)

Assets








Cash and balances with the Central Bank of Turkey

3

780,691

415,764

Balances with other banks and financial institutions

3

730,847

933,913

Reserve deposits at the Central Bank of Turkey


420,850

329,844

Financial assets - held for trading


78,073

32,738

Derivative financial instruments


74,440

28,480

Share certificates


27

27

Gold fund


3,606

4,231

Financial assets - available-for-sale


5,515

4,520

Due from financing activities, net

4

8,212,757

6,868,937

Minimum finance lease payments receivable, net

5

105,539

87,473

Precious metals


632,062

507,311

Other assets

7

248,717

165,004

Construction projects, net


35,156

25,538

Investment properties, net


52,168

55,975

Property and equipment, net

6

116,251

114,675

Intangible assets, net


19,351

13,158

Deferred tax assets

9

7,840

13,400







11,445,817

9,568,250





Assets and a disposal group held for sale


30,279

26,015





Total assets


11,476,096

9,594,265





Liabilities and equity








Due to other financial institutions and banks


841,632

482,972

Sukuk securities issued


165,987

156,433

Current and profit / loss sharing investors' accounts

8

8,799,119

7,479,284

Derivative financial instruments


37,478

14,300

Other liabilities


235,344

171,938

Provisions


21,415

7,909

Income taxes payable

9

14,608

5,663







10,115,583

8,318,499





Liabilities directly associated with assets classified as held for sale


-

-





Total liabilities


10,115,583

8,318,499





Share capital

10

950,000

850,000

Share premium


23,250

23,250

Legal reserves and retained earnings


408,600

402,208

Currency translation differences


1,252

308

Other reserves

10

(22,589)

-





Total equity attributable to equity holders of the parent


1,360,513

1,275,766





Total liabilities and equity


11,476,096

9,594,265

 


 


Notes

June 30, 2011

(Unaudited)

June 30, 2010

(Unaudited)





Continuing operations




Income from financing activities:




Profit on originated loans from profit / loss sharing accounts


206,673

146,022

Profit on originated loans from current accounts and equity


168,365

141,443

Profit on deposits with other banks and financial institutions


9,419

10,048

Profit on finance leases


3,135

2,433





Total income from financing activities


387,592

299,946





Profit shares distributed to participation accounts


(173,924)

(122,537)

Profit shares distributed to banks and financial institutions


(15,305)

(5,769)





Net financing income


198,363

171,640





Provision for impairment in due from financing activities and lease receivables, net

4, 5

(33,301)

(30,255)





Net financing income after reserve for impairment in due from financing activities and lease receivables


165,062

141,385





Foreign exchange gain, net


38,144

18,524





Net financing income after net foreign exchange gain


203,206

159,909





Fee and commission income


97,107

75,862

Income from construction projects, net


585

422

Net trading income


8,099

13,196

Other income


21,235

29,744





Total other operating income


127,026

119,224





Fees and commission expense


(14,190)

(11,401)

Staff costs


(90,339)

(66,256)

Depreciation and amortization expense


(12,445)

(10,575)

Withholdings and other taxes


(9,694)

(5,493)

Rent expense


(14,184)

(11,217)

Other expenses


(40,843)

(46,613)

Share of  loss of an associate


-

(489)





Total other operating expense


(181,695)

(152,044)





Profit before income tax


148,537

127,089





Current tax charge

9

(22,836)

(26,999)

Deferred tax (charge) / credit

9

(5,560)

292





Net income for the period


120,141

100,382





Exchange differences on translation of the foreign subsidiary


944

-





Other comprehensive income for the period


944

-





Total comprehensive income for the period


121,085

100,382





Earnings per share (basic and diluted) for net income attributable to the ordinary equity holders of the Group during the period (in full TL per share)

 

12

  0.126

0.106

 

Basic and diluted earnings per share for net income attributable to the ordinary equity holders of the Group during the period (in full TL per share) from continuing operations

 

 

 

 

12

0.126

0.106


 


 

Notes

Share

capital

Share

premium

Legal

reserves

Retained

earnings

Currency

translation differences

 

Other

reserves

 

Total










Balances at January 1, 2010


500,000

23,250

18,066

276,165

-


817,481










Share capital increase from reserves


50,000

-

-

(50,000)

-

-

-

Transfer from retained earnings to legal reserves


-

-

7,498

(7,498)

-

-

-

Dividends paid


-

-

-

(10,275)

-

-

(10,275)

Total comprehensive income for the period


-

-

-

100,382

-

-

100,382










Balances at June 30, 2010, (Unaudited)


550,000

23,250

25,564

308,774


-

907,588










Balances at January 1, 2011


850,000

23,250

25,564

376,644

308

-

1,275,766










Share capital increase from reserves


100,000

-

-

(100,000)

-

-

-

Transfer from retained earnings to legal reserves


-

-

9,358

(9,358)

-

-

-

Dividends paid

11

-

-

-

(13,749)

-

-

(13,749)

Total comprehensive income for the period


-

-

-

120,141

944

-

121,085

Acquisition of non-controlling interest

10

-

-

-

-

-

(22,589)

(22,589)










Balances at June 30, 2011, (Unaudited)


950,000

23,250

34,922

373,678

1,252

(22,589)

1,360,513

 

 

 

 


 


 

Notes

June 30, 2011

(Unaudited)

June 30, 2010

(Unaudited)





Cash flows from operating activities:




Net profit before income tax


148,537

127,089

Adjustments to reconcile net income to net cash used in operating activities:




Gain on sale of property and equipment, intangible assets, investment properties and assets held for sale


(4,875)

(3,224)

Depreciation and amortization expense


12,445

10,575

Reserve for employee termination benefits and personnel bonus accrual


(24,396)

(15,944)

Reserve for impairment in due from financing activities

4, 5

33,301

30,255

Expense accrual of participation accounts

8

(8,097)

(2,272)

Income accrual from deposits at the Central Bank of Turkey


-

(200)

Reversal of impairment in construction projects and other assets


(6,239)

-

Impairment for property and equipment


3,500

-

Income accrual of funds invested


(127,029)

4,267

Expense accrual of funds borrowed


11,495

(3,423)

Net change in derivative financial instruments


(22,782)

(2,298)

Income taxes paid


(13,891)

(14,882)





Operating profit before changes in operating assets and liabilities


1,969

129,943





Net changes in :




Reserve deposits at the Central Bank of Turkey


(91,006)

(23,325)

Due from financing activities


(1,273,763)

(1,114,561)

Minimum financial lease payment receivables


(18,793)

(16,917)

Other assets and construction projects


(93,168)

7,973

Current accounts and profit/loss sharing investors' accounts and other liabilities


1,420,884

688,852

Payment for employee termination benefits


(952)

(644)

Precious metals


(124,751)

(10,202)





Net cash used in operating activities


(179,580)

(338,881)





Cash flows from investing activities:




(Purchase) / Proceeds from the sale of held-to-maturity securities


(994)

7,529

Purchase of  property and equipment, intangible assets and investment properties


(33,979)

(28,618)

Proceeds from sale of property and equipment, intangible assets and investment properties


15,872

2,579

Additions to assets and liabilities held for sale


-

(1,891)

Proceeds from sale of asset and liabilities held for sale


7,321

-

Purchase of investments in associate


-

(15,999)





Net cash used in  investing activities


(11,780)

(36,400)





Cash flows from financing activities:




Dividends paid

11

(13,749)

(10,275)

Increase in due to financial institutions and banks


356,719

55,594





Net cash provided by financing activities


342,970

45,319





Net increase / (decrease) in cash and cash equivalents


151,610

(329,962)





Net foreign exchange difference on cash and cash equivalents


10,251

(1,576)

Cash and cash equivalents at the beginning of the period

3

1,349,677

1,142,409





Cash and cash equivalents at the end of the period

3

1,511,538

810,871





Profit share received


391,859

304,213

Profit share paid


205,470

144,547

 

 


1.       Corporate information

 

General

 

Kuveyt Türk Katılım Bankası A.Ş., formerly Kuveyt Türk Evkaf Finans Kurumu A.Ş., (a Turkish joint-stock company-the "Bank") was formed in accordance with the provisions of Decree No. 83/7506, issued on December 16, 1983 relating to the establishment of Special Finance Houses in Turkey. The Bank obtained permission from the Central Bank of Turkey (CBT) on February 28, 1989 and commenced its operations on March 31, 1989. Currently, the Bank is continuing its operations under the purview of the Banking Regulation and Supervision Agency ("BRSA") and the Banking Law No. 5411, dated November 1, 2005. The Bank's head office is located at Büyükdere Caddesi No: 129, 34394 Esentepe Şişli/İstanbul/Turkey. The parent and the ultimate controlling party of the Bank is Kuwait Finance House (KFH) incorporated in Kuwait.  Effective from April 8, 2006, the Bank's commercial title was changed from Kuveyt Türk Evkaf Finans Kurumu A.Ş. to Kuveyt Türk Katılım Bankası A.Ş. to comply with the Banking Law No. 5411, dated November 1, 2005.

 

The interim condensed consolidated financial statements were approved by the Board of Directors of the Bank on September 19, 2011. The General Assembly and certain regulatory bodies have the power to amend the statutory financial statements after issue.

 

Nature of activities of the bank and its subsidiaries

 

At June 30, 2011, the Bank's core business is operating in accordance with the principles of interest-free banking as a participation bank by collecting funds through current and profit/loss sharing accounts, and disbursing funds to its customers.

 

The Bank's subsidiary, Körfez Gayrimenkul İnşaat Taahhüt Turizm San. ve Tic. A.Ş. ("Körfez"), in which the Bank has 100% shareholding was incorporated in June 1996 in Turkey. The Bank had signed an agreement with Hayat Investment Company (resident in Kuwait) on November 23, 2009 to transfer 51% of the shares of Körfez in exchange for USD 10,613,000 and TL 2,450. Subsequently, on June 6, 2010, the Group bought back 51% of the outstanding ordinary shares of Körfez, and obtained full control of Körfez by having 100 percent shareholding. Körfez's registered address is Büyükdere Caddesi, No: 129/1, 34394 Esentepe Şişli/İstanbul. Körfez is engaged in development and marketing of real estate projects in Turkey. Körfez's main sources of revenue are from the sales of these projects and expert valuations carried out on behalf of third parties.

 

The Bank's other subsidiary, Körfez Tatil Beldesi A.Ş. ("Körfez Tatil Beldesi"), in which the Bank has a 100% shareholding was incorporated in 2001 in Edremit, Turkey. Körfez Tatil Beldesi is engaged in Güre Project, which comprises the construction, selling and operating of 199 "time-sharing" houses in Edremit-Balıkesir.

 

The Bank's subsidiary, Kuveyt Türk Sukuk Ltd. has been established on August 24, 2010 in United Kingdom as a special purpose vehicle (SPV) in order to issue Sukuk Securities amounting to USD 100,000,000.

 

The Bank's other subsidiary, Kuveyt Turkish Participation Bank Dubai Limited. ("Dubai Limited"), in which the Bank has a 100% shareholding was incorporated in 2009 in Dubai, UAE. Dubai Limited is engaged in interest-free banking as a participation bank.


1.       Corporate information (continued)

 

The Bank has bought 25% share of the joint venture called Körfez İnşaat İş Ortaklığı, which was established by Körfez and a third party company who had 75% and 25% stakes, respectively.  The Bank has bought the 25% stake of the third party company in Körfez İnşaat İş Ortaklığı for a total consideration of TL 22,589 in exchange of releasing the debt of the third party company to the Bank amounting to TL 15,888 and taking over the debt of the third party company to Körfez İnşaat İş Ortaklığı amounting to TL 6,701. The purchase price has been determined based on the expected discounted future cash flows of Körfez İnşaat İş Ortaklığı. Afterwards, the Bank has transferred 8% of the joint venture shares, amounting to TL 7,229, to Körfez in exchange of release of its debt to Körfez İnşaat İş Ortaklığı amounting to TL 6,701 and for a cash consideration amounting to TL 528.

 

 

2.       Basis of presentation and accounting policies

 

2.1     Basis of preparation

 

The interim condensed consolidated financial statements of the Bank and its subsidiaries (collectively - the Group) have been prepared in accordance with International Financial Reporting Standard IAS 34  "Interim Financial Reporting" ("IAS 34").

 

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at December 31, 2010.

 

2.2     Significant Accounting Policies and adoption of new standards

 

The accounting policies adopted are consistent with those of the annual consolidated financial statements for the year ended December 31, 2010, except for the adoption of the new standards and interpretations as of January 1, 2011 noted below:

 

•        IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

•        IFRIC 14 Prepayments of a Minimum Funding Requirement (Amended)

•        IAS 32 Classifications on Rights Issues (Amended)

•        IAS 24 Related Party Disclosures (Revised)

 

The adoption of these standards, amendments, and interpretations did not have any effect on the financial performance or position of the Group.

 

In May 2010 the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The amendments that are effective as at January 1, 2011 are as follows:

 

•        IFRS 3 Business Combinations

•        IFRS 7 Financial Instruments: Disclosures

•        IAS 1 Presentation of Financial Statements

•        IAS 27 Consolidated and Separate Financial Statements

•        IAS 34 Interim Financial Reporting

•        IFRIC 13 Customer Loyalty Programs



 

2.       Basis of presentation and accounting policies (continued)

 

The above changes do not have any impact on financial position and performance of the Group.

 

New standards and interpretations not yet adopted

 

Up to the date of approval of the interim condensed consolidated financial statements, certain new standards, interpretations and amendments to existing standards have been published but are not yet

effective for the current reporting period and which the Group has not early adopted, as follows. The Group will make the necessary changes if not indicated otherwise, which will be affecting the interim condensed consolidated financial statements and disclosures, after the new standards and interpretations become in effect.

 

•        IFRS 9 Financial Instruments - Phase 1 financial instruments, classification and measurement

•        IAS 12 Deferred Taxes: Recovery of Underlying Assets (Amendment)

•        IFRS 7 Financial Instruments: Disclosures as part of its comprehensive review of off balance sheet activities (Amended)

•        IFRS 10 Consolidated Financial Statements

•        IFRS 11 Joint Arrangements

•        IFRS 12 Disclosure of Interests in Other Entities

•        IFRS 13 Fair Value Measurement

•        IAS 27 Separate Financial Statements (Amended)

•        IAS 28 Investments in Associates and Joint Ventures (Amended)

•        IAS 19 Employee Benefits (Amended)

•        IAS 1 Presentation of Financial Statements (Amended)

 

Except for IFRS 9 the above changes are either not relevant to the Group or not expected to have an impact on financial position and performance of the Group. Phase I of IFRS 9, the new accounting standard that will eventually replace IAS 39, issued in November 2009, establishes a new classification and measurement framework for financial assets. The new standard uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The standard will be applied retrospectively with certain transition provisions. The Group is assessing the impact of the new standard.

 

2.3     Functional and presentation currency

 

The functional currency of the Bank and its Subsidiaries located in Turkey is Turkish Lira (TL). The functional currency of Dubai Limited is US Dollar. The presentation currency of the Group is TL.

 

2.4     Foreign currency translation

 

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date announced by the Central Bank of Turkey (CBT). All differences are taken to the income statement as foreign exchange gain / (loss).



 

2.       Basis of presentation and accounting policies (continued)

 

Foreign currency exchange rates used by the Group as of respective period-ends are as follows :

 

Dates

USD / TL

EUR / TL



1.5747

1.9217

1.5460

2.0491

1.6302

2.3492

 

As at the reporting date, the assets and liabilities of the Bank's foreign subsidiary are translated into the Bank's presentation currency at the rate of exchange at the balance sheet date, and its income statement is translated at the USD/TL 1.5950 average exchange rate for the period. Exchange differences arising on translation are taken directly to a separate component of equity.

 

2.5     Reclassifications

 

Lands located in Kartal and Kilyos which are owned by Körfez amounting to TL 21,371 as of December 31, 2010 which were classified as property and equipment in the statement of financial position as of December 31, 2010 have been classified as construction projects to be consistent with the current period presentation.

 

 

3.       Cash and balances with banks

 

For the purpose of the consolidated cash flows statement, cash and cash equivalents comprise the following at June 30, 2011 and December 31, 2010:

 


June 30,

2011

December 31,

2010




Cash on hand

155,183

121,619

Balances with the Central Bank of Turkey

625,508

294,145




Cash and balances with the Central Bank of Turkey

780,691

415,764




Balances with banks and other financial institutions

730,847

933,913




Total

1,511,538

1,349,677

 

As of June 30, 2011 and December 31, 2010, "balances with other banks and financial institutions" are made up of demand and time deposits. The time deposits, all of which have original maturities less than three months, can be analyzed as follows:

 


June 30, 2011

December 31, 2010


Amount

Effective profit rate

Amount

Effective profit rate


 

 

 

TL

Foreign currency

 (TL equivalent)

 

 

 

TL

 

 

Foreign currency

 

 

 

TL

Foreign currency

 (TL equivalent)

 

 

 

TL

 

 

Foreign currency










Deposits with other banks and financial institutions

225,000

72,280

7.9%

0.44%

302,531

150,488

6.90%

0.63%










Total

225,000

72,280



302,531

150,488





 

4.         Due from financing activities, net

 


June 30,

2011

December 31,

2010




Performing



Funds invested from profit/loss sharing accounts

4,234,506

3,896,841

Funds invested from current accounts and equity

3,683,428

2,789,516

Income accruals on due from financing activities (*)

266,009

127,189





8,183,943

6,813,546




Funds in arrears



Funds invested from profit / loss sharing accounts

122,455

141,148

Funds invested from current accounts and equity

106,247

116,455





228,702

257,603




Total

8,412,645

7,071,149




Impairment allowance



Funds invested from profit / loss sharing accounts

(93,363)

(111,102)

Funds invested from current accounts and equity

(106,525)

(91,110)





(199,888)

(202,212)




Total due from financing activities

8,212,757

6,868,937

 

(*)      Includes also foreign currency evaluation differences of foreign currency indexed loans.

 

As of June 30, 2011, the Bank took possession of collateral (lands and buildings) from customers amounting to TL 35,923 (December 31, 2010 - TL 35,247), which are classified as investment properties in the balance sheet as it is held for either rental income or capital appreciation through selling of those properties.

 

Movement in impairment allowance for funds disbursed is as follows :

 


June 30,

2011

June 30,

2010




Balance at January 1,

202,212

182,150

Provisions - Bank

32,574

28,912

Provisions - participation accounts

8,698

14,787

Recoveries of amounts previously provided for

(25,249)

(41,771)

Reserves written off in current period

(18,347)

-




Balance at the end of period

199,888

184,078

 

The Bank's share in total recoveries from allowances previously provided for due from financing activities and minimum finance lease payments receivable is TL 16,818 (June 30, 2010 - TL 41,771) and this amount is included in other income.

 

The impairment allowance of TL 199,888 (December 31, 2010 - TL 202,212) is made up of a specific and collective allowance.

5.       Minimum financial lease payment receivable, net

 

Minimum finance lease payments receivable (net) is as follows:

 


June 30,

2011

December 31,

2010




Gross investment in finance leases

123,803

98,725

Unearned finance income

(21,453)

(14,964)

Total impaired receivables

8,693

8,111

Impairment allowance

(5,504)

(4,399)




Minimum lease payments receivable, net

105,539

87,473

 

Movements in the impairment allowance for leasing receivables is as follows:

 


June 30,

2011

June 30,

2010




Balance at January 1

4,399

1,283




Provisions - Bank

727

1,343

Provisions - participation accounts

429

3,283

Recoveries of amounts previously provided for

(51)

(1,043)

Impairment allowance written off in current period

-

-




Balance at the end of the period

5,504

4,866

 

Gross investment in finance leases as to their maturity:

 


June 30,

2011

December 31,

2010




Not later than 1 year (*)

54,647

56,663

Later than 1 year and not later than 5 years

63,518

48,432

Later than 5 years

14,331

1,741




Minimum lease payments receivable, gross

132,496

106,836




Less : Unearned finance income

(21,453)

(14,964)




Net investment in finance leases

111,043

91,872

Less : Allowance for impairment

(5,504)

(4,399)




Minimum lease payments receivable, net

105,539

87,473

 

(*)      includes total impaired receivables amounting to TL 8,693 (December 31, 2010 - TL 8,111).

 

As of June 30, 2011, TL 107,912 (December 31, 2010 - TL 57,264) of gross lease receivables is denominated in foreign currency (USD and EUR).



 

5.       Minimum financial lease payment receivable, net (continued)

 

Net investment in finance leases as to their maturity:

 


June

30, 2011

December

31, 2010




Not later than 1 year (*)

46,794

50,745

Later than 1 year and not later than 5 years

50,889

39,684

Later than 5 years

13,360

1,443




Net investment in finance leases

111,043

91,872

 

(*)      Includes total impaired receivables amounting to TL 8,693 (December 31, 2010 - TL 8,111).

 

Material leasing arrangements of the Group includes several machinery and equipment with a contractual maturity of up to 4-5 years.

 

 

6.       Property and equipment

 

Acquisitions and disposals

 

During the six months ended June 30, 2011, the Group acquired assets with a cost of TL 15,153 (June 30, 2010 - TL 10,224).

 

Assets with a net book value of TL 2,290 were disposed of by the Group during six months ended  June 30, 2011 (June 30, 2010 - TL 968), resulting in a net loss on disposal TL 268 (June 30, 2010 - TL 444).

 

 

7.       Other assets

 

Other assets comprise the following:

 


June 30,

2011

December 31,

2010




Clearing accounts

145,219

80,904

Receivables from precious metals transactions

68,750

40,596

Blockage for letter of guarantee

2,198

17,443

Prepaid expenses

13,906

5,744

Value added tax (VAT) receivable

3,379

2,964

Receivable from assets sold

-

1,890

Receivables from banking operations

3,408

1,543

Other

11,857

13,920





248,717

165,004

 

 



 

8.       Current and profit loss sharing investors' accounts

 


June 30,

2011

December 31,

2010




Current accounts:



Turkish Lira

1,266,234

1,066,562

Foreign currency

853,188

685,119





2,119,422

1,751,681




Profit/loss sharing investors' accounts:



Turkish Lira

3,980,911

3,412,531

Foreign currency

2,604,955

2,242,936





6,585,866

5,655,467




Blocked accounts:



Turkish Lira

26,469

20,632

Foreign currency

33,716

9,761





60,185

30,393




Total current accounts and profit/loss investors' accounts

8,765,473

7,437,541




Expense accrual on current accounts and profit/loss sharing investors' accounts

33,646

41,743




Total current accounts and profit/loss sharing investors' accounts

8,799,119

7,479,284

 

 

9.       Income taxes

 

The Bank and its subsidiaries are subject to taxation in accordance with the tax rules and the legislation effective in the countries in which the Group companies operate.

 

In Turkey, the corporation tax rate for the fiscal period/year ending June 30, 2011 and December 31, 2010 was 20%. Corporate tax returns are required to be filed by the twenty fifth day of the fourth month following the balance sheet date and taxes must be paid in one installment by the end of the fourth month. The tax legislation provides for a temporary tax of 20% to be calculated and paid based on earnings generated for each quarter. The amounts thus calculated and paid are offset against the final corporate tax liability for the year.

 

Dividends paid to non-resident corporations, which have a place of business in Turkey, or resident corporations are not subject to withholding tax. Otherwise, dividends paid are subject to withholding tax at the rate of 15%. An increase in capital via issuing bonus shares is not considered as a profit distribution and thus does not incur withholding tax.

 

A 75% portion of the capital gains derived from the sale of equity investments and immovable properties held for at least two years is tax exempt subject to meeting of other conditions mentioned in the New Corporate Tax Law, if such gains are not distributed within 5 years.



 

9.       Income taxes (continued)

 

Corporate tax losses can be carried forward for a maximum period of five years following the year in which the losses were incurred. The tax authorities can inspect tax returns and the related accounting records for a retrospective maximum period of five years. The Group has not recorded a provision for any additional taxes for the fiscal years that remain unaudited (2006 - 2010), as the amount, if any, cannot be estimated with any degree of certainty.

 

In Turkey, the tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provision for taxes, as reflected in the consolidated financial statements, has been calculated on a separate-entity basis.

 


June 30,

2011

December 31,

2010




Current tax expense

22,836

42,227

Prepaid tax (-)

(8,228)

(36,564)




Income taxes payable

14,608

5,663

 

 


June 30,

2011

June 30,

2010




Current tax expense

22,836

26,999

Deferred tax charge / (credit)

5,560

(292)




Total income tax charge

28,396

26,707

 

A reconciliation of income tax expense applicable to profit from operating activities before income tax at the statutory income tax rate to income tax expense at the Bank's effective income tax rate for the periods June 30, 2011 and 2010 are as follows :

 


June 30, 2011

June 30, 2010




Net profit before income tax

148,537

127,089




At Turkish statutory income tax rate of 20%

29,707

25,418

Effect of income not subject to tax

(1,720)

(1,216)

Effect of expenditure not allowable for income tax purposes

796

1,777

Effect of restatement pursuant to IAS 29 and other permanent differences

(387)

728




Income tax charge

28,396

26,707

 



 

9.       Income taxes (continued)

 

Deferred income tax as of June 30, 2011 and December 31, 2010 are attributable to the following items :

 


Deferred tax assets/(liabilities)


June 30,

 2011

December 31,

2010




Due from financing activities

8,010

5,555

Reserve for employee termination benefits

2,127

1,416

Deferred income

13,870

12,283

Bonus accrual of personnel

-

602

Effect of precious metals valuation

1,564

-

Effect of other temporary differences

625

398




Deferred tax assets

26,196

20,254




Restatement of property and equipment, intangible assets and other non-monetary items

(3,740)

(3,033)

Accounting for finance leases 

(574)

(574)

Derivative accrual

(7,384)

(2,836)

Effect of precious metals valuation

-

(411)

Provision for non cash loans and check commitments

(6,658)

-




Deferred tax liabilities

(18,356)

(6,854)




Deferred tax asset - net

7,840

13,400

 

Movement of net deferred tax (liability) / asset is:

 


June 30,

2011

June 30,

2010




Balance at the beginning of the period

13,400

12,749

Deferred income tax recognized in income statement

(5,560)

292




Balance at the end of the period

7,840

13,041

 

 

10.     Share capital and other reserves

 

Share capital

 


June 30,

2011

December 31,

2010




Number of common shares, 1 TL, par value. Authorized,

   issued and outstanding.

950.00 million

850.00 million

 



 

10.     Share capital and other reserves (continued)

 

The movement of the share capital of the Group (in number and in historical TL) is as follows :

 


June 30, 2011

June 30, 2010


Number

TL

Number

TL






At January 1

850,000,000

850,000

500,000,000

500,000

Shares issued in





- bonus shares from retained earnings

100,000,000

100,000

50,000,000

50,000






At June 30

950,000,000

950,000

550,000,000

550,000

 

The Group does not have any share type other than common shares. There is no differentiation in the rights, preferences and restriction of the common shares.

 

As of June 30, 2011 and December 31, 2010, the composition of shareholders and their respective % of ownership can be summarized  as follows :

 


June 30, 2011

December 31, 2010


Amount

%

Amount

%






Kuwait Finance House

591,228

62.2

528,993

62.2

Vakıflar Genel Müdürlüğü Mazbut Vakıfları

177,833

18.7

159,113

18.7

The Public Institution for Social Security, Kuwait

85,500

9

76,500

9.0

Islamic Development Bank

85,500

9

76,500

9.0

Other

9,939

1.1

8,894

1.1






Total share capital

950,000

100%

850.000

100%

 

Other reserves

 

The Bank has bought 25% share of the joint venture called Körfez İnşaat İş Ortaklığı, which was established by Körfez and a third party company who had 75% and 25% stakes, respectively.  The Bank has bought the 25% stake of the third party company in Körfez İnşaat İş Ortaklığı for a total consideration of TL 22,589 in exchange of releasing the debt of the third party company to the Bank amounting to TL 15,888 and taking over the debt of the third party company to Körfez İnşaat İş Ortaklığı amounting to TL 6,701. The purchase price has been determined based on the expected discounted future cash flows of Körfez İnşaat İş Ortaklığı. Since the amount of the non-controlling interest in Körfez İnşaat İş Ortaklığı is negligible, the total consideration amounting to TL 22,589 recognized as a separate component of equity as being the difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid.

 

 

 

 



 

11.      Dividends paid and proposed

 

Dividends paid and proposed

 

During the current period, the Bank has paid a dividend of TL 13,749 (June 30, 2010 - TL 10,275) from the profit of the year 2010.

 


June 30,

2011

June 30,

2010




Ordinary shares



Amount

13,749

10,275

TL (full) per share

0.014

0,011

 

 

12.      Earnings per share

 

Basic earnings per share (EPS) amounts are calculated by dividing the net profit for the period attributable to ordinary equity holders of the Bank by the weighted average number of ordinary shares outstanding during the period.

 

In Turkey, companies can increase their share capital by making a pro rata distribution of shares ("Bonus Shares") to existing shareholders without consideration for amounts resolved to be transferred to share capital from retained earnings and revaluation surplus. For the purpose of the EPS calculation such Bonus Share issues are regarded as stock dividends. Dividend payments, which are immediately reinvested in the shares of the Bank are similarly treated. Accordingly the weighted average number of shares used in EPS calculation is derived by giving retroactive effect to the issue of such shares.

 

The following reflects the income and per share data used in the basic earnings per share computations:

 


January 1 -

June 30, 2011

January 1 -

June 30, 2010




Net profit attributable to continuing operations of the Bank for

   basic earnings per share

120,141

100,382

Net profit/(loss) attributable to discontinued operations for

   basic earnings per share

-

-

Net profit attributable to ordinary equity holders of the Bank for basic earnings per share

120,141

100,382

Weighted average number of ordinary shares for basic

   earnings per share (thousands)

950,000

950,000

Basic earnings per share (expressed in full TL per share)

0.126

0.106

Basic earnings per share from continuing operations

0.126

0.106

 

There are no dilutive potential ordinary share and accordingly there are no diluted earnings per share for any class of shares.

 



 

13.     Commitments and contingencies

 

In the normal course of its banking activities, the Group undertakes various commitments and incurs certain contingent liabilities that are not presented in the financial statements. Such commitments include mainly letters of guarantee, letters of credit and acceptance credits.

 

a)       The following is a brief summary of significant contingencies and commitments as of June 30, 2011 and December 31, 2010 :

 


June 30,

2011

December 31,

2010




Letters of guarantee issued by the Bank

3,457,353

3,150,355

Letters of credits

533,909

535,890

Commitments

1,251,706

1,284,671

Acceptance credits

60,741

39,285

Other guarantees

63,098

4,678




Total

5,366,807

5,014,879

 

Except for the Head-Office, and three branch buildings, all branch premises of the Group are leased under operational leases. The lease periods vary between 2-10 years and lease arrangements are cancelable. There are no restrictions placed upon the lessee by entering into these leases.

 

Future minimum rental payables under operating leases are as follows :

 


June 30,

2011

December 31,

2010




Within one year

26,280

20,573

After one year but not more than five years

73,520

57,763

More than five years

22,896

19,479




Total

122,696

97,815

 

Fiduciary activities

 

Other than checks and notes received for collections in favor of the customers, and which are not included in the accompanying financial statements, the Group holds fiduciary assets of TL 1,940 as of June 30, 2011 (December 31, 2010 - TL 1,428).  As of June 30, 2011, the amount of the checks and bonds in collection are TL 1,760,221 (December 31, 2010 - TL 1,257,619) and TL 368,841 (December 31, 2010 - TL 271,256), respectively.

 

 

14.     Related party disclosures

 

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making the financial and operating decisions. For the purpose of these financial statements, shareholders and parties associated with them are referred to as related parties. A number of transactions were entered into with related parties in the normal course of business. The related parties also include individuals who are principal owners, management and members of the Group's Board of Director's and their families.



 

14.      Related party disclosures (continued)

 

The following tables provides the total amount of balances due from and due to related parties as of June 30, 2011 and December 31, 2010 and also transactions which have been entered into with related parties during the six months period ended June 30, 2011 and 2010.

 

i)        Balances with financial institutions and due from financing activities:

 



June 30, 2011

December 31, 2010



Foreign

currency (full)

TL equivalent

Foreign

currency (full)

TL equivalent







KFH - Bahrain (*)

Kuwaiti Dinar

-

-

1,260

7


USD

30,174,331

49,190

35,076,197

54,228


BHD

19,768

93

15,580

64

Autoland Otomotiv San. ve Tic. A.Ş. (*)

TL

-

26,295

-

20,163

Other related parties


-

43,472

-

36,083










119,050


110,545

 

(*)        determined as related party as these companies are under the common control of the ultimate parent

 

ii)       Due to other financial institutions:

 



June 30, 2011

December 31, 2010



Foreign currency (full)

TL

 equivalent

Foreign

currency (full)

TL

Equivalent







The Public Institute for Social Securities KW (1)

USD

133,101,587

216,982

182,629,366

282,345










216,982


282,345

 

(1)      Shareholders

 

iii)         Profit/loss sharing investors' and current accounts:

 



June 30, 2011

December 31, 2010



Foreign currency (full)

TL equivalent

Foreign currency (full)

TL

 equivalent







Kuwait Finance House (1)

USD

101,628,805

165,675

51,488,984

79,602

Kuwait Finance House (1)

TL


11,856


2,632

Kuwait Finance House (1)

XAU

-

-

181,090

12,719

Islamic Development Bank (1)

USD

39,163,578

63,844

41,005,617

63,395

Vakıflar Genel Müdürlüğü Mazbut Vakıfları (1)

TL


4,917


2,621

Neova Sigorta AS (*)

USD

62,247

101

666,070

1,030


EUR

3,015

7

-

-


TL

-

6,456

-

5,687

Other related parties

TL

-

57,253

-

30,783










310,109


198,469

 

(1)        Shareholders 

(*)        determined as related party as these companies are under the common control of the ultimate parent.



 

14.      Related party disclosures (continued)

 

iv)      Profit on loans:

 



June 30, 2011

June 30, 2010



Foreign

currency (full)

TL equivalent

Foreign

currency (full)

TL equivalent







Autoland Otomotiv San. ve Tic. A.Ş. (*)

TL

-

458

-

838

Other related parties

USD

685,570

1,118

-

-


TL

-

202

-

573










1,778


1,411

 

(*)        determined as related party as these companies are under the common control of the ultimate parent.

 

v)       Profit on deposits with other banks and financial institutions

 



June 30, 2011

June 30, 2010



Foreign

currency (full)

TL equivalent

Foreign

currency (full)

TL equivalent







KFH - Bahrain (*)

Kuwaiti Dinar






USD

121,257

183

-

-










183


-

 

(*)        determined as related party as these companies are under the common control of the ultimate parent.

 

vi)      Profit shares distributed :

 



June 30, 2011

June 30, 2010



Foreign

currency (full)

TL

equivalent

Foreign

currency (full)

TL

equivalent







Kuwait Finance House (1)

USD

1,480,482

2,426

358,729

587

Islamic Development Bank (1)

EUR

-

-

11,101

8

Islamic Development Bank (1)

USD

561,290

932

384,669

606

Vakıflar Genel Müdürlüğü Mazbut Vakıfları (1)

TL

-

68

-

-

Neova Sigorta (*)

TL

-

275

-

192

Auto Land Otomotiv San. ve Tic. A.Ş. (*)

TL

-

-

-

177

Kredi Garanti Fonu

TL

-

4

-

54

Other

TL

-

63

-

26










2,382


1,073

 

(1)        Shareholders

(*)        determined as related party as these companies are under the common control of the ultimate parent.



 

14.      Related party disclosures (continued)

 

vii)     Profit shares distributed to banks and financial institutions:

 



June 30, 2011

June 30, 2010



Foreign currency (full)

TL

 equivalent

Foreign

currency (full)

TL

Equivalent







The Public Institute for Social Securities KW (1)

USD

2,289,997

3,682

924,619

1,402










3,553


1,402

 

(1)        Shareholders

 

viii)    Non-cash credits issued :

 



June 30, 2011

December 31, 2010



Foreign

currency (full)

TL

equivalent

Foreign

currency (full)

TL equivalent







Kuwait Finance House (1)

USD

-

-

 203,316

 314   

Other related parties

TL


2,919


5,158   










2,919


5,472

 

(1)        Shareholders

 

Directors' remuneration

 

The executive members of the Board of Directors and key management of the Bank received remuneration totaling TL 5,644 during the six months period ended June 30, 2011 (For the six months ended June 30, 2010 - TL 4,276). During the six months ended June 30, 2011 the key management personnel did not receive any termination benefits (During the six months ended June 30, 2010 - nil).

 

15.     Subsequent events

 

a)  In accordance with the "Communiqué in respect to the changes in the Communiqué Regarding the Reserve Requirements" published on July 26, 2011 and August 8, 2011 the reserve requirement rates on foreign currency liabilities have been changed as it is stated below.

 

Foreign currency liabilities

Required reserve

 ratios (%)



FC demand deposits, notice deposits, FC private current accounts, deposits/ participation accounts up to 1- month, 3-month, 6-month, 1 Year maturities

11.5

FC deposits/FC participation accounts with 1-year or longer maturity, cumulative FC deposits/FC participation accounts

9.5

Other liabilities up to 1-years (including 1-years)

11.5



Other liabilities up to 3-year (including 3-years)

9.5



Other liabilities with 3-year and longer maturity

8.5

 

b)  On July 25, 2011, Board of Directors of the Bank authorized the Bank management to acquire tier II capital loan from KFH for an amount of USD 200 million.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR ZMGZLKVFGMZM