4.What is the reason behind the increase in other sales income ?

Other sales revenues increased by 97% in the first six months of the year 2007 and 2008. The increase is mainly due to rise in raw materials sales and by-product sales. Raw material sales are composed of coal, pellet, lump iron ore and other miscellaneous. On the other hand, sales of by-product include coke, coke fine, slag, argon gas and other miscellaneous.

Raw materials sales account for 34 % of total other sales income. The most important item is the metallurgic coke sales to Erdemir under by-product sales. The main reason behind the increase is the start-up of No.5 & No.6 Coke Batteries in Isdemir.

5.What is the breakdown of “other” cost of goods sold?

Inventory effect is the additional amount given to the inventory after subtracting total sales from total production in a period. Inventory effect increases when total production is more than total sales. Accordingly, the inventory effect in June 2007 was TRY 112 million while it has been realized as TRY 206 million in June 2008. Flat steel inventory tonnage in Erdemir has been increased from 249 thousand tons in June 2007 to 400 thousand tons in June 2008. At the same time, the increase in unit costs in 2008 has caused an increase in the inventory. Therefore, since the beginning of 2008 the production higher than sales caused a higher inventory that lowers cost of goods sold. In the start-up period of the new blast furnace in Erdemir, the import slab consumption has been increased due to the loss that has been occurred in slab production. Consumption of low-cost import slab has a positive effect on profitability which delays the reflection of ascending raw material costs on cost of goods sold.                

6.How much is the inventory effect in cost of goods sold (COGS)?

Erdemir and İsdemir account for 87 % of the cost of goods sold.

While the total cost of goods sold including inventory effect is TRY 2.506.449.495, without (Erdemir and İsdemir) inventory effect, it is TRY 2.759.337.260, which is 10 % ( USD: 7 % ).