2011 / 06
Transkript
2011 / 06
Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Convenience Translation into English of Condensed Consolidated Financial Statements as at and for the Six-Month Period Ended 30 June 2011 With Independent Auditors’ Review Report Thereon Convenience Translation of the Independent Auditor’s Review Report As at 30 June 2011 Originally Prepared and Issued in Turkish To the Board of Directors of Ac badem Sa k Hizmetleri ve Ticaret A. . and its subsidiaries, Introduction We have reviewed the accompanying condensed consolidated statement of financial position of Ac badem Sa k Hizmetleri ve Ticaret A. . and its subsidiaries (“the Group”) as at 30 June 2011, and the condensed comprehensive income statement, condensed consolidated statement of changes in shareholders’ equity, condensed consolidated statement of cash flows for the six month period ended, and a summary of significant accounting policies and other explanatory notes. The Group’s management is responsible for the preparation and the fair presentation of these condensed consolidated interim financial statements in accordance with the financial reporting standards of Capital Market Board of Turkey. Our responsibility is to express a conclusion on these consolidated interim financial statements based on our review. Scope of Review We conducted our review in accordance with the auditing standards promulgated by Capital Market Board of Turkey. A review of condensed consolidated interim financial statements 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 the auditing standards promulgated by Capital Market Board of Turkey and consequently 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 condensed consolidated interim financial statements do not give a true and fair view of the financial position of Ac badem Sa k Hizmetleri ve Ticaret A. . and its subsidiaries as at 30 June 2011, and of its financial performance and its cash flows for the six month period then ended in accordance with the financial reporting standards of Capital Market Board of Turkey. stanbul, 25 August 2011 Akis Ba ms z Denetim ve Serbest Muhasebeci Mali Mü avirlik A Özkan Genç stanbul, Turkey Additional paragraph for convenience translation to English: The accompanying financial statements are not intended to present the financial position and results of its operations in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Turkey. Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Table of Contents Independent Auditors Review Report Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Comprehensive Income Condensed Consoldiated Statement of Changes in Equity Condensed Consolidated Statement of Cash Flows Notes to Condensed Consolidated Financial Statements TABLE OF CONTENTS CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENT CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 1 2 3 4 5-55 PAGE Organization and nature of business 5 Basis of presentation of the condensed consolidated financial statements 7 Business combination 12 Segment reporting 12 Tangible assets 15 Intangible assets 17 Goodwill 18 Financial liabilities 19 Provisions, contingent assets and liabilities 27 Commitments 28 Equity 30 Financial income 33 Financial expenses 34 Related parties 34 Earnings per share 40 Nature and level of risks arising from financial instruments 40 Financial Instruments fair value disclosures 52 Subsequent events 54 Other matters that significantly affect the financial statements or make the financial statements clear, interpretable, and understandable 54 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 1 Organization and Nature of Business Ac badem Sa k Hizmetleri ve Ticaret A. . (“the Company”) was incorporated in 1991 in stanbul, The Company provides health services in thirteen general hospitals (Kad köy, Bak rköy, Kozyata , Fulya, Eski ehir, Bursa, Kocaeli, Maslak, Kayseri, Adana, International Hospital, John F. Kennedy and Göztepe afak) and eight medical centers (Ata ehir, Beylikdüzü, Ba dat, International Etiler, Ac badem Etiler, Uluda Poliklini i, Konur Sa k and Gemt p), center laboratories (Labmed Klinik laboratuarlar , Merkez Patoloji laboratuar , Genetik Tan ve Hücre Tedavi Merkezi, Labvital G da Kontrol Laboratuvar ). In addition to its core business in health care, the Company organizes courses and seminars about first aid, diabetics, smokeless living and infant care. The Company also applies “Joint Commission International” accredition standards and ISO 9001 Quality Management System standards in its services in order to provide better quality care and security for the patients. Ac badem Sa k Hizmetleri ve Ticaret A. . is subject to Capital Market Board (“CMB”) regulations and its shares have been traded on the stanbul Stock Exchange (“ISE”) since 15 June 2000. The head office is located at Fahrettin Kerim Gökay Caddesi, Altunizade Mahallesi, No: 49, Üsküdar- stanbul. As at 30 June 2011 and 31 December 2010 shareholder structure of the Company is as follows: 30 June 2011 Share(%) 0.40 0.00 57.90 34.07 1.00 1.00 0.00 3.52 2.11 100.00 Shareholder’s Name Mehmet Ali Ayd nlar Hatice Seher Ayd nlar Almond Holding Anonim irketi Almond Holding Anonim irketi (Publicly traded) Arma an Özel Yunus Ergüz Osman Morgül Other Individuals Other Public Shares 5 31 December 2010 Share(%) 0.40 0.00 57.90 34.07 1.00 1.00 0.00 3.52 2.11 100.00 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 1 Organization and Nature of Business (continued) As at 30 June 2011 consolidated subsidiaries comprised the following: - Ac badem Poliklinikleri Anonim irketi (“Ac badem Poliklinikleri”) - Ac badem Labmed Sa k Hizmetleri Anonim irketi (“Ac badem Labmed”) - International Hospital stanbul Anonim irketi (“International Hospital”) - International Hospital Sa k Yat mlar Anonim irketi (“International Hospital Sa - Ac badem Kayseri Hastanesi Anonim irketi (“Ac badem Kayseri”) - Yeni Sa k Hizmetleri ve Ticaret Anonim irketi (“Yeni Sa k”) - Konur Sa k Hizmetleri Anonim irketi (“Konur Sa k”) - Gemt p Özel Sa k Hizmetleri Sanayi ve Ticaret Limited irketi (“Gemt p”) - Ac badem Mobil Sa k Hizmetleri Anonim irketi (“Ac badem Mobil”) k Yat mlar ”) Aç klama [o1]: Yeni Sa k n buraya eklenmesi gerekiyor As at 31 December 2010 consolidated subsidiaries comprised the following: - Ac badem Poliklinikleri Anonim irketi (“Ac badem Poliklinikleri”) - Ac badem Labmed Sa k Hizmetleri Anonim irketi (“Ac badem Labmed”) - International Hospital stanbul Anonim irketi (“International Hospital”) - International Hospital Sa k Yat mlar Anonim irketi (“International Hospital Sa - Ac badem Kayseri Hastanesi Anonim irketi (“Ac badem Kayseri”) - Konur Sa k Hizmetleri Anonim irketi (“Konur Sa k”) - Ac badem Mobil Sa k Hizmetleri Anonim irketi (“Ac badem Mobil”) k Yat mlar ”) Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and consolidated subsidiaries are collectively named as “Group”. Related parties of the Group are listed as following: - Ac badem Holding Anonim irketi (“Ac badem Holding”) - Ac badem Sa k ve Hayat Sigorta Anonim irketi (“Ac badem Sigorta”) - Ac badem Proje Yönetimi Anonim irketi (“Ac badem Proje”) - Aplus Hastane ve Otelcilik Hizmetleri Anonim irketi (“Aplus Otelcilik”) - Ac badem Sa k Yat mlar Holding Anonim irketi (“Ac badem Yat m”) - Almond Holding Anonim irketi (“Almond Holding”) - Abraaj Capital Limited (“Abraaj Capital”) - Akademia Sa k Hizmet ve Sistemleri Yönetim ve Dan manl k Anonim irketi (“Akademia”) - Çaml ca Turizm ve Yatç k Anonim irketi (“Çaml ca Turizm”) - Ac badem Di Sa Hizmetleri Anonim irketi (“Ac badem Di ”) - Ac badem E itim ve Sa k Vakf (“Ac badem Vakf ”) - Telepati Tan m Hizmetleri Anonim irketi (“Telepati Tan m”) - Çukurova Bilim Laboratuarlar Anonim irketi (“Çukurova Bilim”) - Ac badem Üniversitesi (“Ac badem Üniversite”) - Kerem Ayd nlar Vakf (“Kerem Ayd nlar”) - Ayd nlar Sa k Hizmetleri Limited irketi (“Ayd nlar Sa k”) - BLAB Laboratuvar Hizmetleri Anonim irketi (“BLAB”) Since these organizations are not in relation with the capital of Group, they are not consolidated. 6 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 2 Basis of presentation of the condensed consolidated financial statements 2.1 Basis of presentation 2.1.1 Statement of compliance The Group maintains its book of accounts and prepares its statutory financial statements in TL in accordance with the Turkish Uniform Chart of Accounts promulgated by Capital Markets Board of Turkey (“CMB”), Turkish Commercial Code and Turkish Tax Code. Subsidiaries maintain their records and prepare their statutory financial statements in accordance with the generally accepted accounting principles and the related legislation applicable in the countries they operate The accompanying condensed consolidated financial statements of the Group have been prepared in accordance with the accounting and reporting principles issued by CMB (“CMB Financial Reporting Standards”). CMB published Communiqué No: XI-29 “Basis for Financial Reporting in the Capital Markets” (“Communiqué No: XI-29”). In Communiqué No: XI-29, CMB determines the principles, procedures and basis for composing financial reports. Communiqué No: XI-29 is effective from the first interim period reporting after 1 January 2008 which supersedes Communiqué No: XI-25 “The Accounting Standards in Capital Markets” (“Communiqué No: XI-25”). In accordance with Communiqué No: XI-29, the companies are required to prepare their financial statements in accordance with the International Financial Reporting Standards as accepted the European Union (“EU GAAP”). However, until Turkish Accounting Standards Board (“TASB”) publishes the differences between the European Union accepted International Accounting Standards (“IAS”) and International Financial Reporting Standards (“IFRS”) issued by International Accounting Standards Board (“IASB”), IAS/IFRS has to be applied by the companies. Within the above mentioned scope, Turkish Financial Reporting Standards (“TFRS”) issued by TASB will be applied if there is not inconsistency in the standards applied. As at the date of this report, the differences between EUGAAP and IFRS issued by IASB have not been issued by TASB, the accompanying financial statements have been prepared in accordance with TFRS which are identical to IAS/IFRS to conform with Communiqué No: XI-29. The financial statements and notes to the financial statements have been presented in accordance with the amendments to Communiqué XI- 29 issued by CMB on 17 April 2008 and 9 January 2010, which advises the templates to be used for financial statements and notes to the financial statements. CMB allows the companies to present their interim financial statements in accordance with IAS 34 “Interim Financial Statements”. As at 30 June 2011, the interim condensed consolidated financial statements of the Group are prepared and presented as condensed financial statements. Notes to financial statements to be prepared in accordance with Communiqué No: XI-29 are summarized or not presented in accordance with IAS 34. The accompanying condensed consolidated financial statements should be taken into consideration together with the consolidated financial statements and accompanying notes for the year ended 31 December 2010. Interim financial results do not solely represent the year end financial results. The Group continued to apply the accounting policies and accounting estimates presented in the consolidated financial statements as at 31 December 2010, except reclassifications stated below: Changes presented under the debt provision section in the cash flow statement dated 30 June 2010 related to the forward transaction amounted TL 688,617 and swap transaction amounted TL 246,452 have been classified to other financial liabilities. Swap expense accrual amounting to 4,299,190 as at 30 June 2010 has been classified to other financial liabilities in the financial position table. The accompanying condensed consolidated financial statements of the Group have been approved by the board of directors of the Group on 25 August 2011. The general assembly of the shareholders and legal authorities have authority to change the accompanying condensed consolidated financial statements. 7 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 2 Basis of presentation of the condensed consolidated financial statements (continued) 2.1 Basis of presentation (continued) 2.1.2 Basis of consolidation As at 30 June 2011, the condensed consolidated financial statements comprised the accounts of Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and its subsidiaries. (i) Subsidiaries The condensed consolidated financial statements include the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities by. (a) having a power over 50% of the voting rights acquired through shareholding interest held either directly or indirectly; (b) or having a power and authority to govern the financial and operating policies of the entity, so as to obtain benefits from its activities, although not having more than 50% of the voting rights. This power to control is evidenced when the Group is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. As at 30 June 2011 and 31 December 2010, the subsidiaries in which the Group owns direct or indirect controls their operations and the shareholding interests are given below: Subsidiary Ac badem Polyclinics Ac badem Labmed International Hospital International Hospital Sa Ac badem Kayseri Yeni Sa k Konur Sa k Gemt p Ac badem Mobil Capital share ratio (%) 30 June 2011 31 December 2010 99.99 99.99 49.99 49.99 90.00 90.00 99.99 99.99 99.99 99.99 99.90 -85.00 50.00 58.00 -99.99 99.99 k Yat mlar As at 30 June 2011 and 31 December 2010, ‘‘full consolidation method’’ is used to consolidate the financial statements of these subsidiaries. (ii) Transaction eliminated on consolidation The balance sheets and income statements of subsidiaries are consolidated by using the full consolidation method and investments in subsidiaries and related share capital reflected in the equity are eliminated. Net assets of the subsidiaries which are not directly and /or indirect under the control of the parent company are reflected as "Non-controlling interest" line of the balance sheet, and the net profit or loss which is not under the control of the parent company, is reflected as ‘Non-controlling interests’ line in the income statement. Transactions and balances between consolidated companies are eliminated during consolidation. Profit and loss occurred transactions of participation, main partnership and consolidated subsidiaries, were classified/ arranged in accordance with share of main partnership in participation. However, if losses after all these transactions showed the decline of value, then classification/arrangement did not exercise. 8 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 2 Basis of presentation of the condensed consolidated financial statements (continued) 2.1 Basis of presentation (continued) 2.1.3 New standards and interpretations adopted in 2011 that have no effect on the Group’s financial statements As of June 30, 2011, IASB ("International Accounting Standards Committee") of IAS1 "Presentation of Financial Statements" published in the two changes. The first change is related to change fixed date of 1 January 2004 and first transition date to IFRS. It eliminates the necessity of implementing derecognition of transactions for the companies that apply IFRS for the first time, before the date of transition to IFRS. Amendment will be effective for financial statements prepared after 1 January 2011 and will have no effect on the Group's financial statements. The second change is described in “standards and interpretations were not in effect in 2011section .” IFRS 7 “Financial Instruments” is amended to add an explicit statement that the interaction between qualitative and quantitative disclosures better enables users to evaluate an entity’s exposure to risks arising from financial instruments. The amendment is effective for annual periods beginning on or after 1 January 2011 and it is not expected impact on the financial statements. IFRIC 13 “Customer Loyalty Programmes - Fair Value of Award Credit” amended to state that the fair value of award credits takes into account the amount of discounts or incentives that otherwise would be offered to customers that have not earned the award credits. The amendment is effective for annual periods beginning on or after 1 January 2011 and it is not expected to impact on the financial statements. IAS 34 “Interim Financial Reporting - Significant Events and Transactions” A number of examples have been added to the list of events or transactions that require disclosure under IAS 34. The amendment is effective for annual periods beginning on or after 1 January 2011 and it is not expected impact on the financial statements. The revised IAS 24 “Related Party Disclosures” amends the definition of a related party and modifies certain related party disclosure requirements government-related entities. The main changes to IAS 24 are: A partial exemption from the disclosure requirements for transactions between a governmentcontrolled reporting entity and that government or other entities controlled by that government; and Amendments to the definition of a related party. IASB agreed that the partial exemption from the disclosure requirements should be required to be made retrospectively, because this should result in a reduction of 'clutter' in the footnotes and an identification of better information about the nature and extent of significant transactions with the government. In addition, IASB agreed that the definition of a related party should also be applied retrospectively from the effective date. In addition, the Board agreed that an entity should be permitted to adopt the partial exemption for government-controlled entities before the effective date even if it does not adopt the amended definition of related party until a later date. IAS 27 “Consolidated and Separate Financial Statements – Transition requirements for amendments made as a result of IAS 27 (2008) to IAS 21, IAS 28 and IAS 31” Consequential amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures (as a result of prior amendments to IAS 27) to be applied prospectively, except for the amendments to IAS 28 and IAS 31 that solely are the result of renumbering in IAS 27 (2008). The amendment is effective for annual periods beginning on or after 1 January 2011 and it is not expected to have any impact on the financial statements. 9 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 2 Basis of presentation of the condensed consolidated financial statements (continued) 2.1 Basis of presentation (continued) 2.1.4 New standards and interpretations not yet adopted as at 30 June 2011 The Company has applied all the standards issued by IASB and all the interpretations issued by IASB’s International Financial Reporting Interpretation Committee (“IFRIC”) which are effective as at 30 June 2011. Some new standards, amendments to standards and interpretations which are not effective as at 30 June 2011 have not been applied during the preparation of the accompanying condensed consolidated financial statements. As at 20 December 2010, the International Accounting Standards Board (IASB) issued two narrow amendments to IFRS 1. The first amendment is disclosed in “New standards and interpretations adopted in 2011 that have no effect on the Company’s financials”. The second amendment provides guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. The amendment is effective for annual periods beginning on or after 1 July 2011 and it is not expected to have any impact on the financial statements. IFRS 7 “Financial Instruments” is amended to will allow users of financial statements to improve their understanding of transfer transactions of financial assets (for example, securitisations), including understanding the possible effects of any risks that may remain with the entity that transferred the assets. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period. The amendment is effective for annual periods beginning on or after 1 July 2011 and it is not expected to have any impact on the financial statements. The amendment is effective for annual periods beginning on or after 1 July 2011 and it is not expected to have any impact on the financial statements. IFRS 9 “Financial Instruments” has been issued on November 2009, by the IASB as the first step in its project to replace IAS 39 “Financial Instruments: Recognition and Measurement”. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The guidance in IAS 39 on impairment of financial assets and hedge accounting continues to apply. The amendment is effective for annual periods beginning on or after 1 January 2013 although entities are permitted to adopt them earlier prior periods need not be restated if an entity adopts the standard for reporting periods beginning before 1 January 2013. The International Accounting Standards Board (IASB) has issued amendments to IAS 12 “Income Taxes” as at 31 December 2010. The amendments set out in Deferred Tax: Recovery of Underlying Assets, result from proposals published for public comment in an exposure draft in September. IAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in IAS 40 “Investment Property”. The amendment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will, normally be through sale. As a result of the amendments, SIC-21 Income Taxes—Recovery of Revalued Non-Depreciable Assets would no longer apply to investment properties carried at fair value. The amendments also incorporate into IAS 12 the remaining guidance previously contained in SIC-21, which is accordingly withdrawn. The amendment is effective for annual periods beginning on or after 1 January 2012 and it is not expected to have any impact on the financial statements. IFRS 10 “Consolidated Financial Statements” standard is effective for annual periods beginning on or after 1 January 2013 and are applied on a modified retrospective basis. This new Standard may be adopted early, but IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities should be also adopted early. IFRS 11 “Joint Arrangements” standard is effective for annual periods beginning on or after 1 January 2013 and are applied on a modified retrospective basis. This new Standard may be adopted early, but IFRS 10 10 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 2 Basis of presentation of the condensed consolidated financial statements (continued) 2.1 2.1.4 Basis of presentation (continued) New standards and interpretations not yet adopted as at 30 June 2011 (continued) “Consolidated Financial Statements” and IFRS 12 “Disclosure of Interests in Other Entities” should be also adopted early. The standard describes the accounting for joint ventures and joint operations with joint control. Among other changes introduced, under the new standard, proportionate consolidation is not permitted for joint ventures. The Company does not expect that this standard will have a significant impact on the financial position or performance of the Company. IFRS 12 “Disclosure of Interests in Other Entities” standard is effective for annual periods beginning on or after 1 January 2013 and are applied on a modified retrospective basis. This new Standard may be adopted early, but IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements should be also adopted early. IFRS 12 includes all of the disclosures that were previously in IAS 27 “Consolidated and Separate Financial Statements” related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 “Interests in Joint Ventures” and IAS 28 “Investment in Associates”. These disclosures relate to an entity‘s interests in subsidiaries, joint arrangements, associates and structured entities. Under the new standard it is expected that more comprehensive disclosures will be given for interests in other entities. Revised IFRS 13 “Fair Value Measurement” provides guidance on how to measure fair value under IFRS but does not change when an entity is required to use fair value. It is a single source of guidance under IFRS for all fair value measurements. The new standard also brings new disclosure requirements for fair value measurements. IFRS 13 is effective for annual periods beginning on or after 1 January 2013 and will be adopted prospectively. Early application is permitted. The new disclosures are only required for periods beginning after IFRS 13 is adopted — that is, comparative disclosures for prior periods are not required. The Company is in the process of assessing the impact of the new standard on the financial position or performance of the Company. IFRS 10 replaces the portion of IAS 27 “Consolidated and Separate Financial Statements” that addresses the accounting for consolidated financial statements. A new definition of control is introduced, which is used to determine which entities are consolidated. This is a principle based standard and require preparers of financial statements to exercise significant judgment. The Company does not expect that this standard will have a significant impact on the financial position or performance of the Company. It will be effective from 1 January 2013 or for annual periods beginning after that date. Amended IAS 19 “Employee Benefits” standard is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. With very few exceptions retrospective application is required. Numerous changes or clarifications are made under the amended standard. Among there numerous amendments, the most important changes are removing the corridor mechanism and making the distinction between short-term and other long-term employee benefits based on expected timing of settlement rather than employee entitlement. The Company is in the process of assessing the impact of the new standard on the financial position or performance of the Company. The amendments to IAS 1 “Presentation of Financial Statements” are effective for annual periods beginning on or after 1 July 2012. The amendments to IAS 1 change only the grouping of items presented in other comprehensive income. Items that could be reclassified to profit or loss at a future point in time would be presented separately from items which will never be reclassified. IAS 28 Investments in Associates and Joint Ventures (2011) has taken place of IAS 28 (2008) and it will be effective on 1 January 2013 or for annual periods beginningafter that date. 11 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 3 Business combinations Konur Sa k One of the Group’s subsidiaries Ac badem Poliklinikleri acquired over 35% of the shares of Konur Sa k from other third party shareholders based on the board of directors decision dated 9 March 2011 and has increased its shares to 85%. The agreed amount to be paid for this acquisition is amounting to USD 945,000. Goodwill arising on the acquisition of shares is presented in the retained earnings/ (accumulated loss) in accordance with revised IFRS 3. (Note:7) Yeni Sa k Based on the board of directors decision taken at 28 April 2011, 99.90% of the shares of Yeni Sa k, which owns and operates Göztepe afak Hospital in Göztepe ditrict of stanbul John F. Kennedy Hospital (“JFK”) in Bahçelievler district of stanbul has been acquired. The agreed amount for the acquisition of these shares is amounting to USD 28,239,250 and the payments will be done from the end of the 11st month following the the actual share transfer with the installments of USD 1,000,000. The price has been determined with the mutual discussions and negotiations. Goodwill arising from the acquisition of shares are shown in the note 7. Gemt p Konur Sa k, which is subsidiary of Ac badem Poliklinikleri has acquired 58% shares of Gemt p Özel Sa k Hizmetleri which operates in Gemlik/Bursa district for outpatient. The amount paid for the acquisition is amounting to TL 14,500. Since the amount is negligible for the condensed consolidated financial statements, no goodwill amount has been booked. The condensed consolidated financial statements of Ac badem Poliklinikleri as at 30 June 2011, which are consolidated to accompanying condensed consolidated financial statements of the Group, include the condensed consolidated financial statements of Konur Sa k and Gemt p. 4 Segment reporting The Group’s main business activity consists of inpatient, outpatient and emergency care services. The Group sales are allocated as inpatients, outpatients and hospital branches. All Group sales have been realized in domestic basis; accordingly no geographical classification has been presented. As at 30 June 2011, composition of sales and cost of sales of the Group is as follows: According to the type of treatment 1 January - 30 June 2011 Type of Treatment Inpatients Outpatients Number of Patient Net Revenue Revenue Ratio (%) Cost of Revenue Gross Profit 87,482 1,249,390 1,336,872 289,658,257 203,970,104 493,628,361 59 41 100 (227,374,407) (155,275,353) (382,649,760) 62,283,850 48,694,751 110,978,601 Number of Patient Net Revenue Revenue Ratio (%) Cost of Revenue Gross Profit 45,090 616,838 661,928 150,611,862 97,670,644 248,282,506 61 39 100 (120,359,638) (74,378,124) (194,737,762) 30,252,224 23,292,520 53,544,744 1 April - 30 June 2011 Type of Treatment Inpatients Outpatients 12 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 4 Segment Reporting (continued) According to the type of treatment (continued) 1 January - 30 June 2010 Type of Treatment Number of Patient Revenue Revenue Ratio (%) Cost of Revenue Gross Profit 46,727 1,011,665 1,058,392 205,342,773 158,446,775 363,789,548 56 44 100 (162,453,016) (121,615,061) (284,068,077) 42,889,757 36,831,714 79,721,471 Number of Patient Revenue Revenue Ratio (%) Cost of Revenue Gross Profit 24,265 542,950 567,215 105,358,434 80,401,743 185,760,177 57 43 100 (84,768,927) (62,076,996) (146,845,923) 20,589,507 18,324,747 38,914,254 Inpatients Outpatients 1 April - 30 June 2010 Type of Treatment Inpatients Outpatients According to the hospital locations 1 January - 30 June 2011 Revenues Cost of revenue (-) Gross Profit / (Loss) Operating expenses Other operating income/expense (net) Financial income/expense (net) Tax expense Net profit / (Loss) for the period stanbul Other than Istanbul 365,058,123 (261,150,727) 103,907,396 128,570,238 (121,499,033) 7,071,205 13 Total 493,628,361 (382,649,760) 110,978,601 (46,419,621) 1,102,788 (46,808,581) (6,116,018) 12,737,169 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 4 Segment Reporting (continued) According to the hospital location (continued) 1 April - 30 June 2011 Revenues Cost of revenue (-) Gross Profit / (Loss) Operating expenses Other operating income/expense (net) Financial income/expense (net) Tax expense Net profit / (Loss) for the period Istanbul Other than Istanbul 182,041,241 (131,645,585) 50,395,656 66,241,265 (63,092,177) 3,149,088 Istanbul Other than Istanbul 280,857,006 (200,129,817) 80,727,189 82,932,542 (83,938,260) (1,005,718) Istanbul Other than Istanbul 141,612,257 (102,014,667) 39,597,590 44,147,920 (44,831,256) (683,336) Total 248,282,506 (194,737,762) 53,544,744 (27,167,301) (1,673,904) (39,678,562) 1,784,362 (13,190,661) 1 January - 30 June 2010 Revenues Cost of revenue (-) Gross Profit / (Loss) Operating expenses Other operating income/expense (net) Financial income/expense (net) Tax expense Net profit / (Loss) for the period Total 363,789,548 (284,068,077) 79,721,471 (41,449,264) 1,754,847 (24,764,580) (3,546,635) 11,715,839 1 April - 30 June 2010 Revenues Cost of revenue (-) Gross Profit / (Loss) Operating expenses Other operating income/expense (net) Financial income/expense (net) Tax expense Net profit/ (Loss) for the period 14 Total 185,760,177 (146,845,923) 38,914,254 (25,579,041) 1,321,909 (18,242,644) (1,968,711) (5,554,233) Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 5 Tangible assets For the six months perioed ended 30 June 2011, movement in the tangible assets is as follows: Cost Balances at 1 January 2011 Additions Additions from acquisition of a new subsidiary Disposals As at 30 June 2011 Land Buildings Machinery and equipment Motor vehicles Furniture and fixtures Financial leased tangible assets Leasehold improvements Other tangible assets Construction in progress Total 31,645,702 2,134,795 181,523,816 541,692 294,741,728 8,014,022 4,388,225 197,561 77,213,252 3,073,585 117,483,640 3,181,935 202,253,250 6,199,773 563,536 -- 2,249,366 5,646,424 912,062,515 28,989,787 --- --- 7,462,493 (676,516) -(293,536) --- 2,276,109 (15,896,639) --- -(26,746) 12,173,032 (17,380,377) 33,780,497 182,065,508 309,541,727 4,292,250 82,234,327 120,665,575 194,832,493 563,536 7,869,044 935,844,957 --- 20,841,603 2,084,465 215,476,593 12,058,901 2,373,310 366,007 48,112,446 4,083,056 36,076,951 10,702,101 62,016,019 8,707,076 78,917 10,181 --- 384,975,839 38,011,787 --- --- 107,103 (489,760) -(209,854) 30,403 (482,684) --- 9,494 (3,097,903) --- --- 147,000 (4,280,201) -- 22,926,068 227,152,837 2,529,463 51,743,221 46,779,052 67,634,686 89,098 -- 418,854,425 2,434,430 (486,940) Accumulated depreciation 1 January 2011 Charge for the period Additions from acquisition of a new subsidiary Disposals Closing balance as at 30 June 2011 Net book value as at 30 June 2011 516,990,532 As at 30 June 2011, tangible assets have been insured to the extent of TL 873,789,468 (31 December 2010: TL 848,276,863). As at 30 June 2011, tangible assets are pledged to the extent of TL 268,762,923 (31 December 2010: TL 254,881,290). As at 30 June 2011 and 31 December 2010, the Company utilizes tangible assets which have nil net book value on its accounts. (30 June 2011 Cost: TL 206,253,587 , Accumulated Depreciation: TL 206,253,587; 31 December 2010 Cost: TL 184,658,966; Accumulated Depreciation: TL 184,658,966). 15 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to the Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts expressed in Turkish Lira (“TL”) unless otherwise stated 5 Tangible assets (continued) For the year ended 31 December 2010, the movement in tangible assets is as follows: Land Buildings Machinery and equipment 19,766,070 179,814,683 284,811,244 3,118,203 68,284,501 81,499,234 161,167,019 563,536 25,930,838 824,955,328 Transfer (*) -11,879,632 --- -1,709,133 --- 339,368 6,344,514 (2,463,145) 5,709,747 77,301 1,238,025 (98,432) 53,128 705,917 4,717,402 (99,266) 3,604,697 -17,771,669 (627,478) 18,840,215 543,244 14,897,262 (2,291,552) 27,937,277 ----- -32,845,645 (280,630) (56,246,487) 1,665,830 91,403,282 (5,860,503) (101,423) As at 31 December 2010 31,645,702 181,523,816 294,741,728 4,388,225 77,213,252 117,483,640 202,253,250 563,536 2,249,366 912,062,514 -- 16,687,419 192,580,106 1,797,643 39,861,937 19,165,151 45,861,195 57,881 -- 316,011,332 ---- -4,154,184 -- 12,548 25,273,572 (2,389,633) 25,683 572,295 (22,311) 443,838 7,887,346 (80,675) -17,392,554 (480,754) 223,214 15,977,811 (46,201) -21,036 -- ---- 705,283 71,278,798 (3,019,574) -- 20,841,603 215,476,593 2,373,310 48,112,446 36,076,951 62,016,019 78,917 -- 384,975,839 Cost Balances at 1 January 2010 Additions from acquisition of a new subsidiary Additions Disposals Motor vehicles Furniture and fixtures Financial leased tangible assets Leasehold improvements Other tangible assets Construction in progress Total Accumulated depreciation Balances at 1 Jan ary 2010 Additions from acquisition of a new subsidiary Charge for the period Disposals Closing balance as at 31 December 2010 Net book value as at 31 December 2010 527,086,675 (*)Tangible assets amounting to TL 101,423 has been transferred to other intangible assets. 16 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 5 Tangible assets (continued) Construction in progress 30 June 2011 Project Ac badem Ankara Hospital Ac badem Bodrum Hospital Expenditure Amount 3,559,126 4,309,918 7,869,044 Total Cost of Project 20,000,000 20,000,000 40,000,000 Ac badem Ankara Hospital According to the agreement dated July 23, 2010, Group has a project located in Ankara, Cankaya, Dikmen district which is an hospital project on approximately 10,000 m2 covered area with 16 floors. The Company will acquire medical device and equipment and the construction of the building will be completed by subcontractor firms. The hospital is expected to accept its patients in 2012. Ac badem Bodrum Hospital Group has a hospital project on 11,500 m 2 closed area in Ortakent district located in Bodrum, Mu la. This hospital is expected to accept its patients in 2012. 6 Intangible assets For the six-months period ended 30 June 2011, movement in the intangible assets is as follows: Cost 1 January 2011 Additions from acquisition of a new subsidiary Additions Disposals As at 30 June 2011 Accumulated Amortization 1 January 2011 Additions from acquisition of a new subsidiary Charge for the period Disposals Rights Other intangible assets Total 2,428,831 5,424,893 7,853,724 199,411 2,610,200 (800) 5,237,642 208,696 158,200 -5,791,789 408,107 2,768,400 (800) 11,029,431 1,353,963 3,455,903 4,809,866 10,876 108,847 (44) 1,473,642 879 148,737 11,755 257,584 (44) 5,079,161 5,950,270 Net book value as at 30 June 2011 17 3,605,519 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 6 Intangible Assets (continued) For the year ended 31 December 2010, movement in the intangible assets is as follows: Cost 1 January 2010 Additions Additions from acquisition of a new subsidiary Transfer Closing balance as at 31 December 2010 Accumulated Amortization 1 January 2010 Charge for the period Additions from acquisition of a new subsidiary Net book value as at 31 December 2010 Rights Other intangible fixed assets Total 2,041,462 315,502 4,737,282 594,752 6,778,744 910,254 61,058 10,809 2,245 90,614 63,303 101,423 2,428,831 5,424,893 7,853,724 1,173,011 146,654 3,146,573 308,867 4,319,584 455,521 34,298 1,353,963 1,074,868 463 3,455,903 1,968,990 34,761 4,809,866 3,043,858 At 30 June 2011 and 31 December 2010, the Company has intangible assets in use which have nil net book value on its accounts. (30 June 2011 Cost: TL 4,027,103, Accumulated Amortization: TL 4,027,103, 31 December 2010 Cost: TL 3,900,693, Accumulated Amortization: TL 3,900,693). 7 Goodwill As at 30 June 2011 and 31 December 2010 the goodwill comprised the acquisitions shown below: 30 June 2011 46,417,257 39,292,955 6,234,605 1,547,107 93,491,924 Yeni Sa k International Hospital Ac badem Policlinics Konur Sa k 18 31 December 2010 -39,292,955 6,234,605 1,547,107 47,074,667 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 7 Goodwill (continued) Konur Sa k One of the Group’s subsidiaries Ac badem Poliklinikleri has acquired 35% of the shares of Konur Sa k from other third party shareholders based on the board of directors decision dated 9 March 2011 and has increased its shares to 85%. The agreed amount to be paid for this acquisition is amounting to USD 945,000. Goodwill arising on the acquisition of shares is presented in the retained earnings/ (accumulated loss) in accordance with revised IFRS 3. 30 June 2011 1,493,100 (534,782) 958,318 958,318 Acquisition cost Subsidiaries equity (additional 35.00%) Goodwill (9 March 2011) Goodwill net book value Yeni Sa k Based on the board of directors decision taken at 28 April 2011, 99.90% of the shares of Yeni Sa k which owns and operates Göztepe afak Hospital in Göztepe district of stanbul and John F. Kennedy Hospital (“JFK”) in Bahçelievler district of stanbul has been acquired. The agreed amount for the acquisition of these shares is amounting to USD 28,239,250 and the payments will be done from the end of the 11st month following the the actual share transfer with the installments of USD 1,000,000. The price has been determined with the mutual discussions and negotiations. Goodwill arising from the acquisition of shares are shown in the following table. 30 June 2011 47,823,972 (1,406,715) 46,417,257 46,417,257 Acquisition cost Subsidiaries equity ( 99,90%) Goodwill (31 May 2011) Goodwill net book value Gemt p Konur Sa k which is a subsidiary of Ac badem Poliklinikleri has acquired 58% shares of Gemt p Özel Sa k Hizmetleri which operates in Gemlik/Bursa district for outpatient. The amount paid for the acquisition is amounting to TL 14,500. Since the amount is negligible for the condensed consolidated financial statements, no goodwill amount had been booked . The condensed consolidated financial statements of Ac badem Poliklinikleri as at 30 June 2011, which are consolidated to accompanying condensed consolidated financial statements of the Group, include the condensed consolidated financial statements of Konur Sa k and Gemt p. 8 Financial liabilities As at 30 June 2011 and 31 December 2010, short term financial liabilities comprised the following: Short term bank borrowings and short term portion of long term bank borrowings Financial lease liabilities (net) 19 30 June 2011 31 December 2010 78,582,848 18,758,817 97,341,665 77,722,338 14,080,748 91,803,086 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 8 Financial liabilities (continued) As at 30 June 2011 and 31 December 2010, long term financial liabilities comprised the following: 30 June 2011 285,914,769 89,703,941 375,618,710 Long term bank borrowings Financial lease liabilities (net) 31 December 2010 296,198,560 83,729,844 379,928,404 Bank borrowings As at 30 June 2011, the details of short term bank borrowings comprised the following: Type Curreny type Original currency Interest rate (%) 30 June 2011 Garanti Bankas Garanti Bankas Bankas Bankas Operations Tax Operations Operations TL TL TL TL 16,636,000 3,033,805 3,000,000 344,850 13.00 -10.00 10.00 16,636,000 3,033,805 3,000,000 344,850 Garanti Bankas Garanti Bankas Tax Operations TL TL 327,610 320,000 -10.00 327,610 320,000 Garanti Bankas Tax TL 292,311 -- 292,311 Garanti Bankas Vak fbank Garanti Bankas Garanti Bankas Garanti Bankas Bankas Denizbank TEB Bankas Operations Tax Tax Tax Tax Operations Operations Vehicle Loan Investment TL TL TL TL TL TL TL TL USD 280,000 242,607 231,279 182,395 159,185 90,171 7,820 6,027 2,043,233 13.00 ----10.00 10.00 11.50 3.30 280,000 242,607 231,279 182,395 159,185 90,171 7,820 6,028 3,330,879 28,484,940 Bank name Short term portion of long term bank borrowings Original currency amount Interest rate(%) 30 June 2011 Bank name Currency type Collateral Garanti Bankas USD Yes 25,943,351 Libor + 3.9 42,292,851 Bayerische Hypovereinsbank AG EURO Yes 1,577,063 Euribor+ 0.625 3,704,838 Vak fbank USD Yes 2,515,163 Libor +4.25 20 4,100,219 50,097,908 78,582,848 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 8 Financial liabilities (continued) As at 30 June 2011 the details of long term bank borrowings comprised the following: Bank name Type Currency type Collateral Original currency amount Interest rate(%) 30 June 2011 273,873,600 Garanti Bankas Investment Yes USD 168,000,000 Vak fbank Investment Yes USD 6,250,000 Libor + 3.9 Libor +4.25 Bayerische Hypovereinsbank AG Hermes Yes EURO 788,532 Euribor +0.625 As at 30 June 2011, the long term bank borrowings repayment schedule of the Group is as follows: Years 2012 2013 2014 2015 2016 2017 2018 2012 Currency Type USD Dolar USD USD USD USD USD USD EURO Original Currency Amount 15,250,000 30,500,000 30,500,000 28,000,000 28,000,000 28,000,000 14,000,000 788,532 TL Amount 24,860,550 49,721,100 49,721,100 45,645,600 45,645,600 45,645,600 22,822,800 1,852,419 285,914,769 As at 30 June 2011, the maturities of bank borrowings are as follows: 30 June 2011 0 - 3 months 3 months – 1 year 1 - 5 years 5 years and more 25,063,890 53,518,958 194,623,569 91,291,200 364,497,617 21 10,188,750 1,852,419 285,914,769 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 8 Financial liabilities (continued) As at 30 June 2011, the guarantees given related to the bank borrowings are as follows: Type of Guarantee Mortgage Commercial Pledge Blocked Deposit (*) 30 June 2011 Original Currency Amount 164,865,000 --164,865,000 Currency Type USD TL TL TL Amount 268,762,923 600,000,000 19,648,834 888,411,757 (*) 30 June 2010: TL 10,431,229 Reserve Deposit As explained in detail in Note 10, as of 30 June 2011 and 31 December 2010, Garanti Bankas has 1st and 2nd degree of pledges on the shares of the Company owned by Almond Holding A. . and the 1st degree of pledges on the Company’s shares at the subsidiaries. As at 31 December 2010, short term bank borrowings comprised the following: Bank name Garanti Bankas A. . Denizbank Türkiye Bankas Anonim irketi (“ Bankas ”) Garanti Bankas A. . Garanti Bankas A. . Garanti Bankas A. . Garanti Bankas A. . Türkiye Bankas Anonim irketi (“ Bankas ”) T. Vak flar Bankas A. . Garanti Bankas A. . Garanti Bankas A. . Garanti Bankas A. . TEB Denizbank Yap ve Kredi Bankas Anonim irketi Bankas Bahreyn Type Operating Operating Currency type TL TL Original currency amount 18,676,000 10,700,000 Interest rate(%) 7.50 7.35 31 December 2010 18,676,000 10,700,000 Operating Tax Operating Tax Operating TL TL TL TL TL 3,000,000 2,882,686 2,400,534 285,219 250,053 7.60 -7.60 -7.50 3,000,000 2,882,686 2,400,534 285,219 250,053 Operating Tax Tax Tax Operating Vehicle Loan Operating Tax Operating TL TL TL TL TL 210,996 200,442 191,778 153,989 79,300 7.50 ---7.50 210,996 200,442 191,778 153,989 79,300 TL TL TL USD 40,908 29,368 6,705 2,011,183 11.50 7.60 -3.30 40,908 29,368 6,705 3,109,289 42,217,267 As at 31 December 2010, the details of short term portion of long term bank borrowings are as follows: Bank Name Garanti Bankas Türkiye Vak flar Bankas T.A.O (“Vak fbank”) Bayerische Hypovereinsbank AG Currency type Original Currency Amount Interest Rate(%) 31 December 2010 USD 18,339,657 Libor + 3.9 28,353,109 USD 2,518,917 Libor +4.25 3,894,246 EURO 1,589,828 Euribor 0.625 3,257,716 35,505,071 77,722,338 22 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 8 Financial liabilities (continued) As at 31 December 2010, long term bank borrowings comprised the following: Currency type Original Currency Amount Interest Rate(%) 31 December 2010 Bank Name Type Garanti Bankas Investment USD 182,000,000 Libor + 3.9 281,372,000 Vak fbank Bayerische Hypovereinsbank AG Investment USD 7,500,000 Libor +4.25 11,595,000 EURO 1,577,063 Euribor +0.625 3,231,560 296,198,560 Hermes As at 31 December 2010, the long term bank borrowings repayment schedule of the Group is as follows: Years 2012 2013 2014 2015 2016 2017 2018 2012 Currency type USD USD USD USD USD USD USD EURO Original currency amount 30,500,000 30,500,000 30,500,000 28,000,000 28,000,000 28,000,000 14,000,000 1,577,063 TL Amount 47,153,000 47,153,000 47,153,000 43,288,000 43,288,000 43,288,000 21,644,000 3,231,560 296,198,560 As at 31 December 2010, the maturities of bank borrowings are as follows: 0 – 3 months 3 months – 1 year 1 - 5 years 5 years and more 31 December 2010 38,826,706 38,895,632 187,978,560 108,220,000 373,920,898 23 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 8 Financial liabilities (continued) As at 31 December 2010, the guarantees given related to the bank borrowings are as follows: Type of guarantee Mortgage Commercial Pledge Blocked Deposit 31 December 2010 Original currency amount 164,865,000 --164,865,000 Currency type USD TL TL TL Amount 254,881,290 600,000,000 16,512,214 871,393,504 According to the agreement signed with the Garanti Bank upon the USD 200,000,000 loan limit, the Group has to comply with certain ratios. As at 30 June 2011 and 31 December 2011, the Group provides all of the requirements of these ratios. Finance lease liabilities: As at 30 June 2011 and 31 December 2010, short term finance lease liabilities are as follows: 30 June 2011 24,545,995 (5,787,178) 18,758,817 Financial lease liabilities Deferred financial lease liabilities (-) 31 December 2010 21,763,748 (7,683,000) 14,080,748 As at 30 June 2011 and 31 December 2010, long term finance lease liabilities are as follows: 30 June 2011 102,738,227 (13,034,286) 89,703,941 Financial lease liabilities Deferred financial lease liabilities(-) 24 31 December 2010 107,639,335 (23,909,491) 83,729,844 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 8 Financial liabilities (continued) As at 30 June 2011, long term financial lease liabilities repayment schedule of the Group is as follows: Original currency Years Currency type TL Amount amount EURO 2012 1,611,010 3,784,586 EURO 2013 3,222,022 7,569,173 EURO 2014 2,888,162 6,784,871 2015 EURO 2,516,481 5,911,717 2016 EURO 2,077,671 4,880,864 2017 EURO 569,179 1,337,115 2018 EURO 3 6 2012 USD 1,507,405 2,457,372 2013 USD 1,696,070 2,764,933 USD 2014 914,685 1,491,120 2015 USD 887,612 1,446,985 2016 USD 836,894 1,364,305 USD 2017 175,767 286,536 USD 2018 1,003 1,635 CHF 2012 2,817,212 5,507,367 CHF 2013 5,572,349 10,893,385 CHF 2014 5,572,349 10,893,385 CHF 2015 5,572,349 10,893,385 CHF 2016 5,572,349 10,893,385 CHF 2017 5,876,363 11,487,702 TL 2012 -370,077 TL 2013 758,567 -TL 2014 758,567 -TL 2015 201,189 -102,738,227 25 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 8 Financial liabilities (continued) As at 31 December 2010, long term financial lease liabilities repayment schedule of the Group is as follows: Original currency Years amount Currency type TL Amount EURO 2012 3,241,915 6,643,008 EURO 2013 3,198,677 6,554,410 EURO 2014 2,864,818 5,870,298 EURO 2015 2,493,137 5,108,686 EURO 2016 2,054,326 4,209,520 EURO 2017 563,332 1,154,324 EURO 2018 3 5 2012 USD 2,964,635 4,583,326 2013 USD 1,646,673 2,545,756 2014 USD 867,403 1,341,005 USD 2015 856,057 1,323,464 USD 2016 805,439 1,245,208 2017 USD 144,310 223,103 2018 USD 4 6 CHF 2012 6,721,862 11,049,397 CHF 2013 6,721,862 11,049,397 CHF 2014 6,721,862 11,049,397 CHF 2015 6,721,862 11,049,397 CHF 2016 6,721,862 11,049,397 CHF 2017 7,050,876 11,590,231 107,639,335 As at 30 June 2011 and 31 December 2010, the maturities of finance lease liabilities are as follows: 30 June 2011 4,242,129 20,303,866 81,556,014 21,182,213 127,284,222 0 – 3 months 3 months - 1 year 1 – 5 years 5 years and more 26 31 December 2010 2,934,926 18,828,820 94,671,664 12,967,673 129,403,083 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 9 Provisions, contingent assets and liabilities As at 30 June 2011 and 31 December 2010, short-term provisions comprised the following: 30 June 2011 15,875,472 4,065,015 519,501 183,777 --215,421 20,859,186 Doctor payments expense provisions Lawsuit provisions Provisions for invoices returned from related institutions Provision for deductions from SSI receivables Provisions for unbilled miscellaneous expenses Advisory commission expense Others 31 December 2010 13,564,343 3,677,494 326,491 286,608 264,311 669,953 1,042,134 19,831,334 There are 78 lawsuits (31 December 2010: 72) against the Group totally amounting to TL 16,097,129 (31 December 2010: TL 15,132,129 TL). In addition there are 78 lawsuits related with termination and notification indemnities by former employees (31 December 2010: 118) against the Group and the provision amounting to TL 853,934 (31 December 2010: TL 706,034) is provided for these lawsuits in the accompanying condensed consolidated financial statements. The movement of provisions for the six month period 30 June 2011 is as follows: Doctor payments expense provisions Lawsuit provisions Provisions for invoices returned from related institutions Provision for deductions from SSI receivables Provisions for unbilled miscellaneous expenses Provision for advisory commission expense Others 1 January 2011 Additions Payments Reversals 30 June 2011 13,564,343 3,677,494 15,875,472 387,780 (13,564,343) (259) --- 15,875,472 4,065,015 326,491 193,010 -- -- 519,501 286,608 183,777 (286,608) -- 183,777 264,311 -- (264,311) -- -- 669,953 837,982 19,831,334 -48,928 (669,953) (837,982) --- -48,928 20,859,186 27 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 10 Commitments According to the decision of CMB on 29 September 2009 related to the commitments of publicly owned companies given to the guarantee third party’s debts; The commitments given; i) For their own corporate identities, ii) In favor of consolidated subsidiaries, iii) In favor of third parties to continue their operations will not be limited. After the decision is published at the Platform of Public Enlightenment, publicly owned companies will not give commitments to real people or corporations other than mentioned at the bullets (i) and (ii) above or to third parties other than mentioned at the bullet (iii). If any commitments are already given it will be reduced to nil until 31 December 2014. At 30 June 2011 and 31 December 2010, commitments given are as follows: 30 June 2011 A Commitments given in the name of own corporate identities B Commitments given in favor of consolidated subsidiaries C Commitments given in favor of third parties to continue its operations D Other commitments given - in favor of parent company - in favor of group companies other than mentioned in bullets B and C - in favor of third parties other than mentioned in bullet iii) Total TL Equivalent TL USD 804,045,821 606,098,786 121,425,000 62,385,555 38,542,250 14,626,000 -1,551,510 -- -1,470,000 -- -50,000 -- 1,551,510 1,470,000 50,000 -867,982,886 -646,111,036 -136,101,000 At 30 June 2011, the percentage of other Commitments to Company’s equity is 1.09%. (31 December 2010: 2.38%) A Commitments given in the name of own corporate identities B Commitments given in favor of consolidated subsidiaries C Commitments given in favor of third parties to continue its operations D Other commitments given - in favor of parent company - in favor of group companies other than mentioned in bullets B and C - in favor of third parties other than mentioned in bullet iii) Total TL Equivalent 31 December 2010 TL USD 792,036,316 606,725,026 119,865,000 46,919,316 22,769,250 15,621,000 -3,120,000 -- -3,120,000 -- 3,120,000 3,120,000 ------ -842,075,632 -632,614,276 -135,486,000 28 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 10 Commitments (continued) Pledges The Group has ceded 80% of account receivable and blockage on the bank deposit amounting to TL 19,648,834 related with the bank borrowing from Garanti Bankas . The shares of the Company owned by Almond Holding, which constitute 91.79% of the Company’s capital has been pledged at first and second degrees. 90% share of the Company in International Hospital, 72.42% share of the Company in Ac badem Kayseri, 49.99% share of the Company in Ac badem Labmed and 99.99% share of the Company in Ac badem Poliklinikleri has been pledged at first degree. Annotations There is a decision which was given by the Bak rköy Municipality to demolish the supplement of International Hospital building. On the same property there are two annotations of 99 yearly rent statements in favour of Turkish Electricity Administration (“TEK”) and in favour of Turkish Electricity Distribution Administration (“TEDA ”). Additionally, there are two annotations of 99 yearly rent statements in favour of Istanbul Public Transportation Administration (“IETT”) and also two annotations in favour of Avc lar Municipality on the Avc lar land. Mortgages Collateral Type Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Duration Mortgage 1st degree Mortgage 1st degree Reason for granting collateral / Bank Name VUL* Loan Collateral – Garanti Bankas VUL Loan Collateral – Garanti Bankas VUL Mortgage Location 30 June 2011 (USD) 77,000,000 Loan Collateral – Garanti Bankas Ac badem Bursa Hospital Ac badem Küçükyal building Ac badem Kozyata warehouse VUL Loan Collateral – Garanti Bankas Ac badem Adana Hospital 24,000,000 VUL Loan Collateral – Garanti Bankas Cumhuriyetköy Ac badem 1,350,000 VUL Loan Collateral – Garanti Bankas VUL Loan Collateral – Garanti Bankas International Hospital Erkan Apt. miscelaneus flats and apartment buildings VUL Loan Collateral – Garanti Bankas Manolya Apt. No: 2-3 VUL Loan Collateral – Türkiye Vak flar Bankas Ac badem Kayseri Hospital 12,000,000 2,000,000 32,000,000 1,820,000 1,695,000 13,000,000 164,865,000 *VUL: Valid until lifted 29 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 10 Commitments (continued) Collateral Type Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Mortgage 1st degree Duration Reason for granting collateral / Bank Name VUL Loan Collateral – Garanti Bankas VUL Loan Collateral – Garanti Bankas VUL 31 December 2010 (USD) Mortgage Location 77,000,000 Loan Collateral – Garanti Bankas Ac badem Bursa Hospital Ac badem Küçükyal building Ac badem Kozyata warehouse VUL Loan Collateral – Garanti Bankas Ac badem Adana Hospital 24,000,000 VUL Loan Collateral – Garanti Bankas Cumhuriyetköy Ac badem 1,350,000 VUL Loan Collateral – Garanti Bankas VUL Loan Collateral – Garanti Bankas International Hospital Erkan Apt. miscelaneus flats and apartment buildings VUL Loan Collateral – Garanti Bankas Manolya Apt. No: 2-3 VUL Loan Collateral – Türkiye Vak flar Bankas Ac badem Kayseri Hospital 12,000,000 2,000,000 32,000,000 1,820,000 1,695,000 13,000,000 164,865,000 11 Equity Paid in capital As at 30 June 2011 paid-in capital of the Group is TL 100,000,000 (31 December 2010: TL 100,000,000), made up of 100.000.000 shares with a par value of TL 1,00 each. As at 30 June 2011 and 31 December 2010, the composition of shareholders and their respective percentage of ownership are summarized as follows: Shareholder’s name Mehmet Ali Ayd nlar Hatice Seher Ayd nlar Almond Holding A. . Almond Holding A. .- (publicly traded) Arma an Özel Yunus Ergüz Osman Morgül Other individuals Other publicly traded shares 30 June 2011 Share (%) Amount 0.40 0.00 57.90 31 December 2010 Share (%) Amount 395,826 1 57,897,946 0.40 0.00 57.90 395,826 1 57,897,946 34.07 34,071,176 1.00 998,314 1.00 1,000,000 0.00 1 3,522,958 3.52 2.11 2,113,778 100.00 100,000,000 34.07 1.00 1.00 0.00 3.52 2.11 100.00 34,071,176 998,314 1,000,000 1 3,522,958 2,113,778 100,000,0000 Mehmet Ali Ayd nlar and Hatice Seher Ayd nlar are also the 50% shareholders of Almond Holding, indirectly. Abraaj Capital Limited is the 50% shareholders of Almond Holding indirectly. Furthermore, Mehmet Ali Ayd nlar is executive director and the chairman of the board of directors of Almond Holding. 30 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 11 Equity (continued) 30 June 2011 Series Type Registered/Bearer 3. 4. 5 3. 4. 5 A B Registered (Almond Holding A. .) Bearer Nominal Value (TL) 4,249,973 95,750,027 Privilege Right to nominate boardmembers, right to vote 31 December 2010 Series Type 3. 4. 5 3. 4. 5 A B Registered/Bearer Registered (Almond Holding A. .) Bearer Nominal Value (TL) 4,249,973 95,750,027 Privilege Right to nominate boardmembers, right to vote The favorable vote of Group A shares is required in order to decide an increase in share capital. Group A shareholder has the right to nominate four out of five board members, and Group B shareholders has the right to nominate one out of five board members. Each Group A share has 100 votes against one vote of Group B shareholders. The registered share capital of the Company is TL 250,000,000. Capital Market Board approved the registered share capital system with the permission dated 9 August 2001 and numbered 37/1033. Pledges on shares: According to the Share Pledge Agreements which is signed on10 January 2008 and additional amendments of the agreement which are signed on 6 February 2008 and 6 August 2008, Almond Holding Inc. has 1st and 2nd degree of pledge shares on the parent Company’s capital on behalf of T. Garanti Bankas as the guarantee of the loan, that used by the Group amounted as USD 200,000,000 and taken from the T. Garanti Bank, Restricted reserves Legal reserves: According to the Turkish Commercial Code (“TCC”), legal reserves are comprised first and legal reserves. The first legal reserves are generated by annual appropriations amounting to 5 percent of income disclosed in the Company’s statutory accounts until it reaches 20 percent of paid-in share capital. If the dividend distribution is made in accordance with Communiqué XI-29, a further 1/10 of dividend distributions, in excess of 5 percent of paid-in capital is to be appropriated to increase second legal reserves. If the dividend distribution is made in accordance with statutory records, a further 1/11 of dividend distributions, in excess of 5 percent of paid-in capitals are to be appropriated to increase second legal reserves. Under the TCC, the legal reserves can be used only to offset losses and are not available for any other usage unless they exceed 50 percent of paid-in capital. At 30 June 2011, legal reserves of the Company amount to TL 7,079,766 (31 December 2010: TL 7,079,766). 31 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 11 Equity (continued) Dividend Based on the annual general assembly held on 29 July 2011 it was decided not to distribute any dividend from the net profit of the year 2010. That amount is decided to be transferred to retained earnings. Retained Earnings / (Accumulated Losses) 30 June 2011 49,302,822 (31,630,259) 17,672,563 Extraordinary Reserves Prior years’ profit / (loss) 31 December 2010 49,302,324 (42,125,717) 7,176,607 In accordance with IAS 29, while calculating the influation correction, it is essential to take into account the amount emerged after offsetting the financial statements and recorded in the ‘ retained losses’ as a deductable discount factor while computing the profit distribution after influation correction of financial statements. Furthermore, the amount which is traced under ‘retained losses’, if exists ‘net profit’ and the remaining loss amount can be set off as extraordinary reserves, legal reserves and shareholders’ equity inflation adjustment respectively. The movement of retained earnings / (accumulated losses) is as follows: 30 June 2011 7,176,607 (957,443) 11,453,399 17,672,563 Beginning balance Change in non-controlling interests Transfer of period profit to retained earnings 31 December 2010 (4,411,276) (5,511,742) 17,099,625 7,176,607 Non-Controlling Interests For the six-months period ended 30 June 2011, the movement in non-controlling interest is as follows: Share Capital Legal reserves Extraordinary reserves Inflation restatement difference Retained Earnings / (Accumulated Losses) Net profit/(loss) for the period Transfer ---- Acquisition of a new subsidiary (548,456) (3,500) -- 30 June 2011 1,984,732 151,729 11,839 -- -- -- 2,130,837 123,334 (875) 660,670 26,532 809,661 660,670 5,613,910 302,818 303,130 (660,670) -- 31,405 (494,019) 334,223 5,423,021 31 December 2010 2,532,001 155,229 11,839 Change in minority 1,187 --- 2,130,837 32 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 11 Equity (continued) For the year ended 31 December 2010, the movement in non-controlling interest is as follows: Share Capital Premium in access of par Legal reserves Extraordinary reserves Inflation restatement difference Retained Earnings / (Accumulated Losses) Net profit/(loss) for the period 12 Transfer ----- Acquisition of a new subsidiary 798,507 -5,000 -- 31 December 2010 2,532,001 -155,229 11,839 (1,437) -- -- 2,130,837 (977,974) 3,177,429 (1,909,800) (166,321) 123,334 (1,909,800) 9,032,217 533,883 (4,182,280) 1,909,800 -- 126,787 763,973 660,670 5,613,910 31 December 2009 7,970,444 1,660,868 143,713 12,692 Change in minority (6,236,950) (1,660,868) 6,516 (853) 2,132,274 Financial income For the six and three-month periods ended 30 June, financial income is as follows: Foreign exchange gain Finance income related to credit purchases Income accrual related to forward transaction Interest income on time deposit Income accrual related to swap transaction Other financial income 1 January - 30 June 2011 3,525,806 1 April - 30 June 2011 600,501 1 January - 30 June 2010 8,623,155 1 April- 30 June 2010 3,819,350 3,171,580 959,822 2,711,060 1,017,275 1,573,966 1,073,944 460,300 1,573,966 1,073,944 332,678 688,617 -114,144 688,617 -(31,943) -3,827 9,809,423 -2,249 4,543,160 246,452 5,592 12,389,020 246,452 2,861 5,742,612 33 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 13 Financial expenses For the six and three- month periods ended 30 June, financial expenses are as follows: Foreign exchange loss Interest expense on bank loans Finance lease interest expense Credit card comission Expense accrual related to swap transaction Interest expense on credit sales Expense accrual related to forward transaction Letter of credit and other bank commission expenses Other 14 1 January - 30 June 2011 38,459,783 9,314,977 3,687,759 2,653,612 1 April - 30 June 2011 31,725,709 8,360,392 2,829,908 1,339,423 1 January -30 June 2009 20,661,233 8,977,815 2,937,658 2,810,354 1 April- 30 June 2010 16,027,797 3,224,822 2,225,077 1,427,290 1,131,588 910,767 614,243 (518,010) -1,373,697 761,604 296,011 -- (400,893) -- (603,369) 358,844 100,674 56,618,004 209,459 61,491 44,221,722 314,372 78,471 37,153,600 154,019 472,005 23,985,256 Related parties As at 30 June 2011 and 31 December 2010, short-term trade receivables from related parties as follow: 30 June 2011 8,790,263 (59,176) 918,599 9,649,686 Trade receivables Finance expense accrual Other non-trade receivables 31 December 2010 8,724,460 (68,717) 36,867 8,692,610 As at 30 June 2011 and 31 December 2010, short-term trade payables from related parties as follow: 30 June 2011 14,525,965 (57,326) 311,475 14,780,114 Trade payables Financing income accrual Other non-trade payables 34 31 December 2010 9,658,830 (86,937) 503,601 10,075,494 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 14 Related parties (continued) Due from related parties 30 June 2011 Trade Other Receivable Receivable Shareholders Mehmet Ali Ayd nlar Group Companies Ac badem Sigorta Ac badem Di Ac badem Proje Ac badem Holding Akademia Çukurova Bilim Ayd nlar Sa k Hizmetleri A plus Telepati Tan m Ac badem Üniversitesi Other 31 December 2010 Trade Other Receivable Receivable -- 149 -- 149 8,521,749 131,088 64,751 52,515 6,773 6,501 3,905 1,494 --1,487 8,790,263 877,140 2,913 -15 517 1,033 -34,025 2,315 -492 918,599 7,527,102 185,569 -24,988 17,342 939,510 24,637 --5,312 -8,724,460 735 13,068 1,668 -882 17,692 2,141 -532 36,867 Due to related parties 30 June 2011 Trade Other Receivable Receivable Shareholders Mehmet Ali Ayd nlar Hatice Seher Ayd nlar Said Haifawi Other Group Companies Aplus Ac badem Proje Ac badem Sigorta Ac badem Di Telepati Tan m Ac badem Holding Akademia Ac badem Üniversitesi Ac badem Vakf 31 December 2010 Trade Other Receivable Receivable ----- 16,302 1,630 17,513 197,429 ----- 15,461 1,546 36,070 1,755 8,312,586 2,931,585 2,868,240 303,024 74,917 33,253 2,360 --14,525,965 -54,546 529 20,165 -438 -1,958 965 311,475 6,454,852 1,460,349 278,768 440,519 912,545 111,737 -60 -9,658,830 -38,277 332,536 77,503 -437 --16 503,601 35 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 14 Related parties (continued) Related party transactions (Sales) For the six and three-month periods ended 30 June, sales to related parties are as follows: 1 January-30 June 2011 Service Other 32,571,263 252,525 18,881 2,346,921 16,279 65,100 348 18,712 -132,501 -32,400 -3,240 -3,240 -1,800 32,606,771 2,856,439 2,856,439 Ac badem Sigorta Aplus Ac badem Proje Ac badem Di Ac badem Holding Telepati Tan m Hizmetleri Ac badem Yat m Almond Holding Çukurova Bilim 1 April-30 June 2011 Service Other 16,287,998 124,762 9,720 1,176,597 5,221 31,935 307 9,356 -66,694 -900 16,303,246 1,410,244 Ac badem Sigorta Aplus Ac badem Proje Ac badem Di Ac badem Holding Çukurova Bilim 1 January-30 June 2010 Sevice 26,681,813 99,228 39,262 24,157 2,739 128 ----26,847,327 Ac badem Sigorta Ac badem Holding Aplus Ac badem Di Ac badem Proje Akademia Telepati Tan m Ac badem Yat m Almond Holding Çukurova Bilim 36 Other 248,102 -281,175 -103,459 -30,000 2,904 2,904 1,800 670,344 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 14 Related parties (continued) Related party transactions (Sales) 1 April-30 June 2010 Sevice 14,085,423 39,443 31,096 10,491 2,648 128 --14,169,229 Ac badem Sigorta Ac badem Holding Aplus Ac badem Di Ac badem Proje Akademia Telepati Tan m Çukurova Bilim Other 124,475 -148,966 -54,689 -15,000 900 344,030 Related party transactions (Purchases) For the six and three-month periods ended 30 June, purchases from related parties are as follows: Aplus Ac badem Sigorta Ac badem Proje Ac badem Üniversitesi Telepati Tan m Ac badem Di Akademia Service 21,699,753 10,180,511 9,496,895 3,000,000 599,175 244,527 2,500 45,223,361 1 January-30 June 2011 Fixed Asset Other -117,785 -36,011 654,988 ---------654,988 153,796 Aplus Ac badem Proje Ac badem Sigorta Ac badem Üniversitesi Ac badem Di Telepati Tan m Service 11,818,214 5,909,694 4,098,024 3,000,000 143,807 96,272 25,066,011 1 April-30 June 2011 Fixed Asset Other -117,785 654,988 --36,011 ------654,988 153,796 37 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 14 Related parties (continued) Related party transactions (Purchases) Aplus Ac badem Proje Ac badem Sigorta Telepati Tan m Ac badem Üniversitesi Ac badem Di Almond Holding Ac badem Holding Aplus Ac badem Proje Telepati Tan m Ac badem Sigorta Ac badem Üniversitesi Ac badem Di Almond Holding Ac badem Holding 1 January-30 June 2010 Fixed Asset Service 16,113,880 -13,535,832 5,405 5,343,651 -2,954,665 -385,315 -284,080 -1,379 ---38,618,802 5,405 Other -------61,676 61,676 1 April-30 June 2010 Service Fixed Asset 9,094,238 -6,488,484 5,405 1,525,820 -400,020 -385,315 -113,565 -1,379 ---18,008,821 5,405 Other -------61,676 61,676 Guarantees and similar obligations given on behalf of related parties As at 30 June 2011, the details of the guarantees given as security for the credits used by the subsidiaries which are included in consolidation and by the other related parties are shown in Note 10. As at 30 June 2011, Ac badem Polyclinics, consolidated subsidary has given guarantees on behalf of Ac badem Holding A. , one of the other related parties, regarding to cash credit line up to TL 2,850,000 from Bankas , on behalf of International Hospital regarding to cash credit line up to TL 4,089,858 and cash credit line up to USD 2,000,000 from Bankas and on behalf of Ac badem Kayseri to cash credit line up to TL 3,024,000 from Vak flar Bankas , which are available for use in the future. As at 30 June 2011, Mehmet Ali Ayd nlar, shareholder of the Company and Ac badem Polyclinics, consolidated subsidiary gave guarantees on behalf of the Company regarding to the cash credit line up to TL 1,760,181 and non-cash credit line up to USD 7,887,794 (Letter of credit) from Bankas which are available for use in the future. 38 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 14 Related parties (continued) Guarantees and similar obligations given on behalf of related parties (continued) Date Bank Name Currency Type Original Amount 15.03.2008 28.04.2008 18.09.2008 22.10.2009 14.07.2009 11.11.2009 18.01.2005 04.08.2005 26.12.2006 10.12.2010 27.01.2011 09.10.2008 21.01.2009 03.06.2009 14.07.2009 02.06.2010 25.11.2010 08.02.2010 10.06.2011 27.06.2011 31.05.2005 15.10.2007 04.11.2004 05.10.2006 09.03.2011 20.09.2006 06.09.2007 05.10.2007 12.02.2008 14.04.2006 31.08.2009 22.10.2009 27.01.2005 28.12.2005 12.07.2011 Garanti Bankas Garanti Bankas Garanti Bankas Tekstilbank Bankas Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Bankas Garanti Bankas Garanti Bankas Tekstilbank Garanti Bankas Garanti Bankas Bankas Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas Garanti Bankas USD USD USD ---USD USD ---------------------USD -USD USD --- 200,000 421,000 5,000,000 ---5,000 1,000,000 ---------------------6,000,000 -2,000,000 50,000 --- Guarantees Given on Behalf of Ac badem Kayseri Ac badem Kayseri Ac badem Kayseri Ac badem Kayseri Ac badem Kayseri Ac badem Kayseri Ac badem Labmed Ac badem Labmed Ac badem Labmed Ac badem Labmed Ac badem Labmed Ac badem Mobil Ac badem Mobil Ac badem Mobil Ac badem Mobil Ac badem Mobil Ac badem Mobil Ac badem Mobil Ac badem Mobil Ac badem Mobil Ac badem Poliklinikleri Ac badem Poliklinikleri Ac badem Poliklinikleri Ac badem Poliklinikleri Ac badem Poliklinikleri Aplus Aplus Aplus Aplus Internat onal Hosp tal International Hospital International Hospital Ac badem Proje Ac badem Proje Yeni Sa k TL Amount 326,040 686,314 8,151,000 10,000,000 3,024,000 3,024,000 8,151 1,630,200 995,000 850,000 350,000 70,000 215,000 15,000 400,000 300,000 500,000 5,000,000 300,000 750,000 2,000,000 869,250 950,000 500,000 710,000 150,000 420,000 200,000 500,000 9,781,200 6,100,000 3,260,400 81,510 200,000 1,620,000 63,937,065 Key management compensation For the six and three month- periods ended 30 June 2011, sum of the compensation to key management is TL 3,967,566 (30 June 2010: TL 3,475,565) and TL 1,881,339 ( for the last three months TL 1,823,279). 39 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 15 Earnings per share The calculation of basic earnings per share was calculated by dividing the the income attributable to ordinary shareholders in consolidated statement of comprehensive income of this report to the weighted average number of ordinary shares outstanding:. Net income/ (loss)for the period Weighted average number of shares 1 January – 30 June 2011 12,392,400 1 April – 30 June 2011 (13,124,264) 1 January – 30 June 2010 12,946,901 1 April – 30 June 2010 (4,760,912) 100,000,000 100,000,000 100,000,000 100,000,000 123.92 (131.24) 129.47 (47.61) Earnings per 1.000 shares 16 Nature and level of risks arising from financial instruments Financial Risk Management Policies The main financial instruments of the Group are bank loans, cash and short term bank deposit. The main reason for the usage of these financial instruments is providing funds for the Group’s activities. The Group also has trade receivables and trade payables that directly occur during the main activities. The financial risks are currency risk, interest risk, credit risk and liquidity risk. The Group management manages these risks as explained below: Capital Risk Management The primary objective of the Group is ensuring the continuity of operations while increasing profitability by using the balance between liabilities and equity in a most effective way. The capital structure of the Group is consists of the items which include the liabilities, cash and cash equivalents, paid-in capital, capital reserves and profit reserves. The cost of capital and the risks associated with each share capital component are evaluated by the key management of the Group. During these evaluations, if the acceptance of Board of Directors is needed, the key management represents the evaluation to the Board of Directors for their evaluation. The general policy and procedure of the Group is not different from the previous periods. Credit Risk Credit risk is the risk of handling a financial loss which is caused by counter party by not fulfilling the obligations regarding to a financial instrument. Having the financial instruments gives the risk of not fulfilling the requirements of the agreement by the other parties. The collection risk of the Group is mainly caused from its trade receivables. Trade receivables are evaluated by management according to the Group’s procedure and policies and are carried in the balance sheet as the net of impairment provision. 40 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Credit risk (continued) As at 30 June 2011 and 31 December 2010, credit risk details are as below: Receivables Trade receivables Related Other party party 30 June 2011 Maximum exposure to credit risk at the reporting date (A+B+C+D+E) - Secured portion of maximum credit risk with collateral A. Carrying amount of financial assets that are not overdue and not impaired B. Carrying amount of financial assets whose terms were renegotiated, otherwise are overdue and impaired C. Carrying amount of assets that are overdue but not impaired 8,731,087 93,130,178 Other receivables Related Other party party Bank deposits Other 918,599 1,218,661 27,001,923 -- -- -- -- -- -- 8,491,711 85,043,659 918,599 1,218,661 27,001,923 -- -- -- -- -- -- -- 239,376 8,086,519 -- -- -- -- - Carrying amount secured with collateral -- -- -- -- -- -- D. Carrying amount of assets that are impaired -- -- -- -- -- -- - Overdue (gross carrying amount) -- 7,429,507 -- -- -- -- - Impairment (-) - Carrying amount secured with collateral -- (7,429,507) -- -- -- -- -- -- -- -- -- -- - Not overdue (gross carrying amount -- -- -- -- -- -- - Impairment (-) - Carrying amount secured with collateral E. Factors that include off balance sheet credit risks -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 41 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Credit risk (continued) Receivables Trade receivables Related Other party party 31 December 2010 Maximum exposure to credit risk at the reporting date (A+B+C+D+E) - Secured portion of maximum credit risk with collateral A. Carrying amount of financial assets that are not overdue and not impaired B. Carrying amount of financial assets whose terms were renegotiated, otherwise are overdue and impaired 8,655,743 69,570,714 Other receivables Related Other party party Bank deposits Other 36,867 455,601 23,235,328 -- -- -- -- -- -- 8,655,743 60,015,507 36,867 455,601 23,235,328 -- -- -- -- -- -- -- -- C. Carrying amount of assets that are overdue but not impaired -- 9,555,207 -- -- -- -- - Carrying amount secured with collateral -- -- -- -- -- -- D. Carrying amount of assets that are impaired -- -- -- -- -- -- - Overdue (gross carrying amount) -- 5,473,602 -- -- -- -- - Impairment (-) - Carrying amount secured with collateral -- (5,473,602) -- -- -- -- -- -- - Not overdue (gross carrying amount -- -- -- -- -- -- - Impairment (-) - Carrying amount secured with collateral E. Factors that include off balance sheet credit risks -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Liquidity Risk The Group manages its liquidity needs by regularly planning its cash flows or by maintaining sufficient funds and borrowing sources by matching the maturities of liabilities and assets. Liquidity risk is probability of not fullfill fund obligations of the Group. Prudent liquidity risk management implies maintaining sufficient cash, securing availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Group manages its present and future funding risk by maintaining a balance between continuity and availability of funding through the use of bank loans and other borrowing sources from high quality lenders. 42 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Liquidity risk (continued) The tables listed below are representing the maturities of non-derivative financial liabilities. As at 30 June 2011, maturities of non-derivative financial liabilities are as follows: Contractual maturities Non-derivative financial liabilities Financial liabilities Financial lease liabilities Expected maturities Non-derivative financial liabilities Trade payables Other payables Carrying value 364,497,617 108,462,758 Carrying value 105,005,749 78,872,214 Total cash outflow per agreement (=I+II+III+IV) 423,989,351 127,284,222 Expected total cash out flow (=I+II+III+IV) 105,005,749 78,872,214 Less than 3 months(I) 31,545,412 4,242,129 Less than 3 months (I) 93,545,842 69,091,014 43 Between 3-12 months (II) 61,894,492 20,303,867 Between 3-12 months (II) 11,459,907 9,781,200 Between 1-5 years (III) 235,049,862 81,556,014 Between 1-5 years (III) --- Over 5 years (IV) On demand 95,499,585 21,182,212 Over 5 years (IV) --- --- On demand --- Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Liquidity risk (continued) As at 31 December 2010, maturities of non-derivative financial liabilities are as follows: Contractual maturities Non-derivative financial liabilities Financial liabilities Financial lease liabilities Expected maturities Non-derivative financial liabilities Trade payables Other payables Carrying value 373,920,898 97,810,592 Carrying value 88,639,626 21,030,901 Total cash outflow per agreement (=I+II+III+IV) 443,382,126 129,403,083 Expected total cash out flow (=I+II+III+IV) 89,327,745 21,030,901 Less than 3 months (I) 46,029,958 2,934,928 Less than 3 months (I) 70,679,528 21,030,901 44 Between 3-12 months (II) 47,167,258 18,828,820 Between 3-12 months (II) 11,922,326 -- Between 1-5 years (III) 238,740,015 94,671,662 Between 1-5 years (III) 6,725,891 -- Over 5 years (IV) On demand 111,444,895 12,967,673 Over 5 years (IV) --- --- On demand --- Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Market risk The Group is exposed to market risk arising from changes in interest rates, foreign currency or in the fair value of financial assets and other financial contracts that may affect the Group adversely. The major risks for the Group are currency risk and interest rate risk, which result from operating activities. Foreign currency risk and related sensitivity analysis Foreign exchange risk of Group mainly results from that the Group has liabilities denominated in USD and Euro. Additionally, the Group has foreign exchange risk resulting from the transactions it makes. These risks are derived from purchases and sales and use of credit in foreign currency which is different from the Group’s functional currency. As at 30 June 2011 and 31 December 2010, the net foreign currency position of the Group is TL 441,195,200 (short) and TL 451,099,396 (short) position, respectively 30 June 2011 Foreign currency denominated assets 31 December 2010 2,977,991 3,642,949 Foreign currency denominated liabilities (524,052,991) (521,075,000) (471,122,122) (467,479,173) Hedged foreign currency denominated liabilities Net foreign currency position- (short) 79,879,800 (441,195,200) 16,379,777 (451,099,396) 45 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Market risk (continued) FOREIGN CURRENCY POSITION 30 June 2011 TL Equivalent (Functional currency) USD Euro JPY GBP CHF Other -- -- -- -- -- -- -- 2,977,991 --- 466,629 --- 939,646 -- ---- 3,782 --- ---- ---- 2,977,991 -----2,977,991 466,629 -----466,629 939,646 -----939,646 -------- 3,782 -----3,782 -------- -------- 10. Trade payables 11,922,418 2,639,597 3,242,772 -- 547 -- -- 11. Financial liabilities 71,775,005 33,005,704 4,296,576 -- -- 4,028,640 -- 12a. Other monetary liabilities 11,411,400 7,000,000 -- -- -- -- -- CONSOLIDATED 1. Trade receivables 2a.Monetary financial assets (include cash and bank deposit) 2b. Non-monetary financial assets 3. Other 4. Current Assets (1+2+3) 5. Trade receivables 6a. Monetary financial assets 6b. Non-monetary financial assets 7. Other 8. Non Current Assets (5+6+7) 9. Total Assets (4+8) 12b. Other non-monetary liabilities 13. Current Liabilities (10+11+12) 14. Trade payables 15. Financial liabilities 16a. Other monetary liabilities 16b. Other non-monetary liabilities -- -- -- -- -- -- -- 95,108,823 42,645,301 7,539,348 -- 547 4,028,640 -- 9,308,021 3,376,000 1,619,473 -- -- -- -- 375,230,720 179,876,726 12,144,820 -- -- 27,349,260 -- 44,405,427 27,239,251 -- -- -- -- -- -- -- -- -- -- -- -- 46 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Market risk (continued) 17. Non-Current Liabilities (14+15+16) 428,944,168 210,491,977 13,764,294 -- -- 27,349,260 -- 18. Total Liabilities (13+17) 524,052,991 253,137,278 21,303,641 -- 547 31,377,900 -- 79,879,800 49,000,000 -- -- -- -- -- 79,879,800 49,000,000 -- -- -- -- -- -- -- -- -- -- -- -- 20. Net foreign currency denominated assets /(liabilities) position (9-18+19) (441,195,200) (203,670,649) (20,363,996) -- 3,235 (31,377,900) -- 21. Monetary accounts net foreign currency denominated assets /(liabilities) position (=1+2a+5+6a-10-11-12a-14-15-16a) (521,075,000) (252,670,649) (20,363,996) -- 3,235 (31,377,900) -- 19. Off balance sheet foreign currency denominated derivatives net assets/liabilities position (19a-19b) 19a. Off balance sheet foreign currency denominated derivatives assets amount 19b. Off balance sheet foreign currency denominated derivatives liabilities amount -- -- -- -- -- -- -- -- -- -- -- -- -- -- liabilities -- -- -- -- -- -- -- 25. Export -- -- -- -- -- -- -- 26. Import -- -- -- -- -- -- -- 22. Fair value of hedging financial instruments 23. Hedged foreign currency denominated assets 24. Hedged foreign currency denominated 47 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Market risk (continued) FOREIGN CURRENCY POSITION 31 December 2010 CONSOLIDATED 1. Trade receivables 2a.Monetary financial assets (include cash and bank deposit) 2b. Non-monetary financial assets 3. Other 4. Current Assets (1+2+3) TL Equivalent (Functional currency) USD Euro JPY GBP CHF Other 287 186 -- 2,904,708 774,977 829,344 -- 2,673 487 -- -- -- -- -- -- -- -- 1,218 -- 829,344 -- 2,673 1,705 -- 2,002 -- 2,906,997 775,163 -- -- -- -- -- -- 737,954 -- 360,136 -- -- -- -- 6b. Non-monetary financial assets -- -- -- -- -- -- -- 7. Other -- -- -- -- -- -- -- 5. Trade receivables 6a. Monetary financial assets 8. Non Current Assets (5+6+7) 9. Total Assets (4+8) 737,954 -- 360,136 -- -- -- -- 3,644,951 775,163 1,189,480 -- 2,673 1,705 -- 10. Trade payables 10,452,615 3,077,757 2,778,340 -- 547 -- -- 11. Financial liabilities 55,830,853 25,546,360 4,144,047 -- -- 4,772,243 -- 12a. Other monetary liabilities 18,552,000 12,000,000 -- -- -- -- -- -- -- -- -- -- -- -- 84,835,468 40,624,117 6,922,387 -- 547 4,772,243 -- 6,310,079 3,500,000 438,767 -- -- -- -- 379,928,405 195,992,096 14,072,921 -- -- 29,254,048 -- 12b. Other non-monetary liabilities 13. Current Liabilities (10+11+12) 14. Trade payables 15. Financial liabilities 48 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Market risk (continued) 16b. Other non-monetary liabilities -- -- -- -- -- -- -- -- -- -- -- -- -- -- 17. Long term liabilities (14+15+16) 386,238,484 199,492,096 14,511,688 -- -- 29,254,048 -- 18. Total Liabilities (13+17) 471,073,952 240,116,213 21,434,075 -- 547 34,026,291 -- 16,379,777 10,594,940 -- -- -- -- -- 152,736,977 98,794,940 -- -- -- -- -- 136,357,200 88,200,000 -- -- -- -- -- 20. Net foreign currency denominated assets /(liabilities) position (9-18+19) (451,049,224) (228,746,110) (20,244,595) -- 2,126 (34,024,586) -- 21. Monetary accounts net foreign currency denominated assets /(liabilities) position (=1+2a+5+6a10-11-12a-14-15-16a) (467,431,003) (239,341,050) (20,244,596) -- 2,126 (34,025,804) -- 16a. Other monetary liabilities 19. Off balance sheet foreign currency denominated derivatives net assets/liabilities position (19a-19b) 19a. Off balance sheet foreign currency denominated derivatives assets amount 19b. Off balance sheet foreign currency denominated derivatives liabilities amount -- -- -- -- -- -- -- -- -- -- -- -- -- -- Liabilities -- -- -- -- -- -- -- 25. Export -- -- -- -- -- -- -- 26. Import -- -- -- -- -- -- -- 22. Fair value of hedging financial instruments 23. Hedged foreign currency denominated assets 24. Hedged foreign currency denominated 49 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Market risk (continued) The foreign currency risk of the Group is related to the bank loans borrowed and financial lease obligations. The Group has a pricing policy that changes according to the deviations in the long term borrowings and volatility of foreign exchange rates for minimizing this risk. Furthermore, the Company economically hedges 18 months portion of principles and the related interest payments related to the long term bank loans used from Garanti Bankas ”. As a result of this forward transaction Group has the purchase right of USD 18,000,000 in total at the maturity dates in July 2011 at a rate of 1.6946, USD 18,500,000 in total at the maturity dates in January 2012 at a rate of 1.6710 and USD 12,500,000 in total at the maturity dates in July 2012 at a rate of 1.6125. The changes in foreign currency position of the Group as of the balance sheet date are as follows: Foreign currency sensitivity analysis 30 June 2011 Profit/Loss Equity Increase of Decrease of Increase of foreign foreign foreign currency currency currency Change of USD exchange rate against TL by 10%: Decrease of foreign currency 1- USD denominated net assets/liabilities (33,202,389) 33,202,389 2- Hedged amount against USD Dollar risk (-) --3- Net effect of USD (1+2) (33,202,389) 33,202,389 Change of Euro exchange rate against TL by 10%: -- -- --- --- 4- Euro denominated net assets/liabilities (4,783,910) 4,783,910 5- Hedged amount against Euro risk (-) --6- Net effect of Euro (4+5) (4,783,910) 4,783,910 Change of other currencies against TL by 10%: -- -- --- --- 7- Other foreign currency denominated net assets/liabilities 8- Hedged amount against other foreign risk (-) 9- Net effect of other foreign currency (7+8) TOTAL (3+6+9) (6,133,221) 6,133,221 -- -- -- -- -- -- (6,133,221) (44,119,520) 6,133,221 44,119,520 --- --- 50 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Market risk(continued) Foreign currency sensitivity table 31 December 2010 Profit/Loss Increase of foreign currency Equity Decrease of foreign currency Increase of foreign currency Decrease of foreign currency Change of USD exchange rate against TL by 10%: 1- USD denominated net assets/liabilities 2- Hedged amount against USD Dollar risk (-) 3- Net effect of USD (1+2) (37,002,126) 37,002,126 -- -- -(37,002,126) -37,002,126 --- --- Change of Euro exchange rate against TL by 10%: 4- Euro denominated net assets/liabilities 5- Hedged amount against Euro risk (-) 6- Net effect of Euro (4+5) (4,148,320) 4,148,320 -- -- (4,148,320) -4,148,320 --- --- 5,592,654 -- -- -- -- -- 5,592,654 46,742,900 --- --- Change of other currencies against TL by 10%: 7- Other foreign currency denominated net assets/liabilities 8- Hedged amount against other foreign risk (-) 9- Net effect of other foreign currency (7+8) TOTAL (3+6+9) (5,592,454) (5,592,454) (46,742,900) 51 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 16 Nature and level of risks arising from financial instruments (continued) Interest rate risk The Group is exposed to interest rate risk arising from interest rate sensitive financial liabilities. As part of its fund management policy, the interest risk of interest bearing assets is calculated by performing sensitivity analysis. The sensitivity of interest sensitive assets in response to changes in market interest rates is computed based on the average maturities and average interest sensitive assets; the interest rate risk arising from the securities portfolio held as part of fund management function is monitored within expectations of market rates by closely following the financial markets. Additionally, as at 30 June 2011, the Company made swap transactions which are hedging USD 85,500,000 portion of outstanding USD 190,000,000 credit used from Garanti Bankas from the risk of interest rate changes. The interest rate position table is as follows: Interest rate position Fixed interest bearing financial instruments Financial assets Time deposits Financial liabilities Variable interest bearing financial instruments Financial assets Financial liabilities 30 June 2011 31 December 2010 23,956,068 136,947,698 18,249,666 140,027,859 -336,012,677 -331,703,631 As at 30 June 2011, the 1% of increase in the interest rates will affect the net profit, which is presented in the condensed consolidated comprehensive income statement, to decrease TL 1,547,804 after deduction of the effect of the swap of interest (31 December 2010: TL 2,181,351). 1% of decrease in the interest rates will cause TL 604,721 increase of net profit which is presented in condansed consolidated comprehensive income statement. ( 31 December 2010: TL 1,610,897) 17 Financial Instruments Fair Value Disclosures As of 30 June 2011 and 31 December 2010 the fair values of financials assets and liabilities are as follows: Note Financial Assets Cash and cash equivalents Other trade receivables Trade receivables from related parties Due from related parties Other receivables Financial investments 14 14 30 June 2011 Carrying Market Value Value 31 December 2010 Carriying Market Value Value 32,455,333 93,130,718 32,455,333 93,130,718 25,985,237 69,570,714 25,985,237 69,570,714 8,731,087 918,599 1,118,851 1,573,966 137,928,554 8,731,087 918,599 1,118,851 1,573,966 137,928,554 8,655,743 36,867 455,601 -104,704,162 8,655,743 36,867 455,601 -104,704,162 52 Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 17 Financial Instruments Fair Value Disclosures (continued) Financial Liabilities Financial Liabilities Other trade payables Trade payables to related parties Other payables to related parties Other payables Other Liabililities Other financial liabilities Note 8 14 14 30 June 2011 Registered Market Value Value 472,960,375 472,960,375 79,934,189 79,934,189 14,468,639 14,468,639 311,475 311,475 33,909,383 33,909,383 12,261,105 12,261,105 5,430,778 5,430,778 619,275,944 619,275,944 31 December 2010 Registered Market Value Value 471,731,490 471,731,490 79,067,733 79,067,733 9,571,893 9,571,893 503,601 503,601 18,590,729 18,590,729 12,925,746 12,925,746 4,299,190 4,299,190 596,690,382 596,690,382 Fair value is the amount for which an asset could be exchanged, or liability settled, between knowledgeable, willing parties in an arm’s length transaction on the measurement date. When available, the Group measures the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm’s length basis. The carrying value of cash, banks and other monetary assets, other payables, other trade payables, and other liabilities are accepted as fair value due to the their short term nature. Trade receivables and the provision amouts for the unreceived parts of the trade receivables have been also accepted as fair value. Due to the adopting the changes in market interest rates, the book value of Group’s financial liabilities with variable interest rate is equal to the fair value carrying amount of the obligations. Classification of the measurement of fair value: The valuation method for the financial instruments carried at fair value are given in the table below. Valuation methods according to the levels defined as follows: Level 1: The quoted (or unadjusted) prices for the identical assets or liabilities in the active markets. Level 2: The financial assets or liabilities other than quoted prices included in level 1 and the related data which can be observed whether directly (in prices) or indirectly (derived from prices) Level 3: The data related to assets or liabilities which are not based on observable market data (data is not observable in market) 30 June 2011 Trading derivative financial assets Total assets valued at fair value Trading derivative financial liabilities Total liabilities valued at fair value 31 December 2010 Financial investments Level 1 --- Level 2 1,573,966 1,573,966 Level 3 --- --- (5,430,778) (5,430,778) (5.430.778) Level 2 (4,299,190) (4,299,190) --- Level 1 --- 53 Level 3 --- Ac badem Sa k Hizmetleri ve Ticaret Anonim irketi and Its Subsidiaries Notes to Condensed Consolidated Financial Statements As at and for the Six Month Period Ended 30 June 2011 Amounts are expressed in Turkish Lira(“TL”) unless otherwise stated 18 Subsequent events On the annual general assembly of the shareholders’ meeting which is held on July 29, 2011, based on the current investments being done and the Group’s dividend payment policy, it is decided not to pay any dividend to its shareholders by taking into consideration continuning investment and previously declared dividend policy. In this respect, it has been decided to transfer profit for the year to retained earnings after allocation to legal reserves. Additionally, it has been resolved that the Group’s dividend policy for the next three year starting from 2011 is to distiribute cash dividends by taking Group’s profitability and growth intention into consideration. On the same meeting referred above, it has been decided to approve merger treaty which stating that the Company will merge its subsidiary namely Ac badem kayseri Hospital by acquiring all of its subsidiaries’ assets and liabilities, rights and duties in accordance with 146th, 151st and 451st articles of Turkish Commerce Code, 19th and 20th articles of Corporate Tax Law and Serial 1 No:31 and No:41 Decrees of Capital Markets Board. In the extraordinary general assembly of shareholders’ meeting of International Hospital Health Investments which is held on July 6, 2011, it has been decided to approve the merger treaty about unification by completely transferring of the Company’s all rights and duties in accordance with 18th and following articles of Corporate Tax Law and 451st and following articles of Turkish Commerce Code, and the balance sheet as of 31 March 2011 which is based on unification and they have decided unification of company by transferring all assets and liabilities to International Hospital Istanbul in accordance with related rules of Turkish Commerce Code and Corporate Tax Law. 19 Other matters that significantly affect the financial statements or make the financial statements clear, interpretable, and understandable The Law numbered 6111 “Concerning the Restructuring of Certain Receivables, Social Security and the Amendment of the General Health Law and Certain Other Laws and Decrees with the Force of Law” has been put into effect following its promulgation in the Official Gazette on 25 February 2011. The Group management has benefited and utilized the possibilities stated in the scope of the law within the application period for some of its subsidiaries included in the consolidation with respect to the base increase of corporate tax and VAT tax as well as the contentious issues. According to the law, no assessment will be made related to the taxes and periods for which the tax bases will be increased, between the years of 2006 and 2009. 54