PETKIM PETROKIMYA HOLDING ANONIM SIRKETI CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH
PETKİM PETROKİMYA HOLDİNG ANONİM ŞİRKETİ AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2023
TOGETHER WITH INDEPENDENT AUDITORS' REPORT
CONVENIENCE TRANSLATION INTO ENGLISH OF
INDEPENDENT AUDITOR'S REPORT ORIGINALLY ISSUED IN TURKISH
INDEPENDENT AUDITOR'S REPORT
To the General Assembly of Petkim Petrokimya Holding A.Ş.
A. Audit of the consolidated financial statements
1. Our opinion
We have audited the accompanying consolidated financial statements of Petkim Petrokimya Holding A.Ş. (the "Company") and its subsidiaries (collectively referred to as the "Group") which comprise the consolidated statement of financial position as at 31 December 2023, the consolidated statement of profit or loss, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended and notes to the consolidated financial statements comprising a summary of significant accounting policies.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2023, and its financial performance and its cash flows for the year then ended in accordance with Turkish Financial Reporting Standards ("TFRS").
2.
Basis for opinion
Our audit was conducted in accordance with the Standards on Independent Auditing (the "SIA") that are part of Turkish Standards on Auditing issued by the Public Oversight Accounting and Auditing Standards
Authority (the "POA"). Our responsibilities under these standards are further described in the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements" section of our report. We hereby declare that we are independent of the Group in accordance with the Ethical Rules for Independent
Auditors (including Independence Standards) (the "Ethical Rules") and the ethical requirements regarding independent audit in regulations issued by POA that are relevant to our audit of the financial statements.
We have also fulfilled our other ethical responsibilities in accordance with the Ethical Rules and regulations. We believe that the audit evidence we have obtained during the independent audit provides a sufficient and appropriate basis for our opinion.
PwC Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.
Kılıçali Paşa Mah. Meclis-i Mebusan Cad. No:8 İç Kapı No:301 Beyoğlu/İstanbul
T: +90 212 326 6060, F: +90 212 326 6050,www.pwc.com.tr Mersis Numaramız: 0-1460-0224-0500015
3.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. Key audit matters were addressed in the context of our independent audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter | How the key audit matter was addressed in the audit |
Acquisition of shares of Rafineri Holding A.Ş. | |
The Group acquired 20% of the shares of Rafineri Holding A.Ş. ("Rafineri Holding") with a purchase consideration of USD 480 million, based on share sale and transfer agreement signed with Socar Turkey Enerji A.Ş. on 9 January 2018. The Group recognized this acquisition according to provisions of TAS 28 "Investments in associates and joint ventures" and the carrying value of the aforementioned equity method valued investment is amounting to TRY 24 billion as of 31 December 2023. As of 31 December 2023, Rafineri Holding share acquisition and negative goodwill resulting from the acquisition amounting to TRY 6,7 billion are significant to the consolidated financial statements of the Group. Furthermore, the cost method applied in the valuation studies for the purchase price allocation includes significant estimates and assumptions such as useful lives, technologic conditions, actual depreciation, commercial attributes and industrial conditions of the assets. Therefore, we considered aforementioned share acquisition as a key audit matter. Please refer to note 33 to for the relevant disclosures regarding the acquisition of shares of Rafineri Holding. | The following audit procedures were addressed in our audit work on the acquisition of shares of Rafineri Holding:
|
Key Audit Matters | How the key audit matter was addressed in the audit |
Application of TAS 29, "Financial Reporting in Hyperinflationary Economies" | |
The Group applied TAS 29 "Financial reporting in hyperinflationary economies" ("TAS 29") in its consolidated financial statements as of and for the year ending 31 December 2023. According to TAS 29, the consolidated financial statements as of 31 December 2023 should be restated in accordance with 31 December 2023 purchasing power. Applying TAS 29 results in significant changes to financial statement items included in the Group's consolidated financial statements as of and for the year ending 31 December 2023, which have been restated for comparative purposes. The application of TAS 29 has a pervasive and material impact on the consolidated financial statements. In addition, considering the additional effort required to perform the audit of the application of TAS 29, we identified the application of TAS 29 as a key audit matter. The Group's accounting policies and related explanations regarding the application of TAS 29 are disclosed in Note 2.1. | We performed the following audit procedures in relation to the application of TAS 29:
|
in calculations correspond with the coefficients
Key Audit Matter | How the key audit matter was addressed in the audit |
Fair value measurement of investment properties | |
At 31 December 2023, the Group's consolidated financial statements include investment properties measured at fair value, amounting TRY 16,8 billion. Changes in fair values of investment properties amounting TRY 7,6 billion are recognized in the consolidated statement of profit or loss, as part of "income from investing activities". We considered the fair value determination of investment properties as a key audit matter since the total amount of those assets has a significant share in the Group's assets as of 31 December 2023 and due to the significant assumptions and judgements, such as determination of benchmark m2 sales prices, made in the market comparison valuation method applied and the susceptibility of the fair value directly to market conditions, specifications of each land, their physical conditions and geographic locations. Please refer to notes 2.5, 2.6 and 10 to the accompanying consolidated financial statements for the accounting policies and relevant disclosures regarding the investment properties. | The following audit procedures were addressed in our audit work on the fair value measurement of investment properties:
|
o Evaluating the appropriateness of the benchmarking analysis method used in valuation of the relevant land,
o Determining whether the land that was the subject of calculations using the benchmark comparison method have qualifications similar to the Group's lands.
• The reconciliation of the fair values of the lands determined by the valuation reports with the values recognized in the consolidated financial statements was performed.
• The appropriateness and adequacy of disclosures in the notes to the consolidated financial statements related to fair value determination of investment properties was assessed in accordance with the related accounting standards.
4.
Responsibilities of management and those charged with governance for the consolidated financial statements
The Group management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with TFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's financial reporting process.
5.
Auditor's responsibilities for the audit of the consolidated financial statements
Responsibilities of independent auditors in an independent audit are as follows:
Our aim is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an independent auditor's report that includes our opinion. Reasonable assurance expressed as a result of an independent audit conducted in accordance with SIA is a high level of assurance but does not guarantee that a material misstatement will always be detected. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an independent audit conducted in accordance with SIA, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Assess the internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our independent auditor's report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence. We also communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
B. Other responsibilities arising from regulatory requirements
1. No matter has come to our attention that is significant according to subparagraph 4 of Article 402 of Turkish Commercial Code ("TCC") No. 6102 and that causes us to believe that the Company's bookkeeping activities concerning the period from 1 January to 31 December 2023 period are not in compliance with the TCC and provisions of the Company's articles of association related to financial reporting.
2. In accordance with subparagraph 4 of Article 402 of the TCC, the Board of Directors submitted the necessary explanations to us and provided the documents required within the context of our audit.
3. In accordance with subparagraph 4 of Article 398 of the TCC, the auditor's report on the early risk identification system and committee was submitted to the Company's Board of Directors on
26 March 2024.
PwC Bağımsız Denetim ve
Serbest Muhasebeci Mali Müşavirlik A.Ş.
Selma Canbul Çorum, SMMM Independent Auditor
Istanbul, 26 March 2024
CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH
PETKİM PETROKİMYA HOLDİNG ANONİM ŞİRKETİ AND ITS SUBSIDIARIES
CONTENTS | PAGE |
CONSOLIDATED BALANCE SHEETS ................................................................................... | 1-3 |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS ..................................................... | 4 |
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME .................. | 5 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................. | 6 |
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................ | 7 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................... 8-87
NOTE 1 | GROUP'S ORGANISATION AND NATURE OF OPERATIONS ...................................................... | 8-10 |
NOTE 2 | BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS ......................... | 10-34 |
NOTE 3 | SEGMENT REPORTING ....................................................................................................................... | 34-36 |
NOTE 4 | CASH AND CASH EQUIVALENTS .................................................................................................... | 36 |
NOTE 5 | INVENTORIES ...................................................................................................................................... | 37 |
NOTE 6 | FINANCIAL INVESTMENT ................................................................................................................. | 37-38 |
NOTE 7 | TRADE RECEIVABLES AND PAYABLES ......................................................................................... | 38-39 |
NOTE 8 | OTHER RECEIVABLES AND PAYABLES ......................................................................................... | 39 |
NOTE 9 | BORROWINGS AND BORROWING COSTS ...................................................................................... | 40-43 |
NOTE 10 | INVESTMENT PROPERTIES ............................................................................................................... | 43 |
NOTE 11 | PROPERTY, PLANT AND EQUIPMENT ............................................................................................ | 44-46 |
NOTE 12 | INTANGIBLE ASSETS ......................................................................................................................... | 47 |
NOTE 13 | GOVERNMENT GRANTS .................................................................................................................... | 48 |
NOTE 14 | DEFERRED REVENUE ......................................................................................................................... | 48 |
NOTE 15 | PREPAID EXPENSES ........................................................................................................................... | 48 |
NOTE 16 | EMPLOYEE BENEFITS ........................................................................................................................ | 49-52 |
NOTE 17 | OTHER ASSETS AND LIABILITIES ................................................................................................... | 52 |
NOTE 18 | DERIVATIVE FINANCIAL INSTRUMENTS ...................................................................................... | 53 |
NOTE 19 | EQUITY .................................................................................................................................................. | 53-56 |
NOTE 20 | TAX ASSETS AND LIABILITIES ........................................................................................................ | 56-60 |
NOTE 21 | REVENUE AND COST OF SALES ...................................................................................................... | 61 |
NOTE 22 | GENERAL ADMINISTRATIVE EXPENSES ....................................................................................... | 61-62 |
NOTE 23 | MARKETING, SELLING AND DISTRIBUTION EXPENSES ............................................................ | 62 |
NOTE 24 | OTHER INCOME/EXPENSES FROM OPERATING ACTIVITIES .................................................... | 62-63 |
NOTE 25 | INCOME AND EXPENSES FROM INVESTMENT ACTIVITIES ...................................................... | 63 |
NOTE 26 | FINANCIAL INCOME/EXPENSES ...................................................................................................... | 64 |
NOTE 27 | EARNINGS PER SHARE ...................................................................................................................... | 64 |
NOTE 28 | TRANSACTIONS AND BALANCES WITH RELATED PARTIES .................................................... | 65-70 |
NOTE 29 | COMMITMENTS ................................................................................................................................... | 71 |
NOTE 30 | PROVISIONS, CONTINGENT ASSETS AND LIABILITIES ............................................................. | 71-72 |
NOTE 31 | NATURE AND LEVEL OF RISK DERIVING FROM FINANCIAL | |
INSTRUMENTS ..................................................................................................................................... | 73-83 | |
NOTE 32 | FINANCIAL INSTRUMENTS (FAIR VALUE FINANCIAL AND | |
RISK MANAGEMENT DISCLOSURES) ............................................................................................. | 83-84 | |
NOTE 33 | INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD .................................................... | 85-87 |
NOTE 34 | EVENTS AFTER BALANCE SHEET DATE ....................................................................................... | 87 |
CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH
PETKİM PETROKİMYA HOLDİNG ANONİM ŞİRKETİ AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2023
(Amounts expressed in thousands of Turkish Lira ("TL") in terms of the purchasing power of the TL at 31 December 2023, unless
otherwise indicated.)
Audited | Audited | ||
31 December | 31 December | ||
Notes | 2023 | 2022 | |
ASSETS | |||
CURRENT ASSETS | |||
Cash and cash equivalents | 4 | 4,039,655 | 21,835,172 |
Financial investments | 6 | 298,952 | 1,938,608 |
Trade receivables | 7,545,990 | 7,801,897 | |
- Trade receivables from related parties | 28 | 1,595,549 | 1,959,229 |
- Trade receivables from third parties | 7 | 5,950,441 | 5,842,668 |
Other receivables | 122,724 | 40,608 | |
- Other receivables from related parties | 4,149 | - | |
- Other receivables from third parties | 8 | 118,575 | 40,608 |
Inventories | 5 | 6,140,873 | 7,627,461 |
Prepaid expenses | 772,721 | 15,838,762 | |
- Prepaid expenses to third parties | 15 | 636,179 | 942,165 |
- Prepaid expenses to related parties | 28 | 136,542 | 14,896,597 |
Derivative financial instruments | 18 | 60,183 | 57,781 |
Other current assets | 1,312,085 | 1,536,071 | |
- Other current assets to third parties | 17 | 1,312,085 | 1,536,071 |
Current tax assets | 20 | 40,854 | 454,444 |
TOTAL CURRENT ASSETS | 20,334,037 | 57,130,804 | |
NON-CURRENT ASSETS | |||
Financial investments | 6 | 66,149 | 66,149 |
Derivative financial assets | 18 | 41,127 | 52,167 |
Investments accounted for using the equity method | 33 | 24,027,748 | - |
Other receivables | 18,704 | 21,844 | |
- Other receivables from related parties | 28 | 18,637 | 21,734 |
- Other receivables from third parties | 67 | 110 | |
Investment properties | 10 | 16,829,018 | 9,270,520 |
Property, plant and equipment | 11 | 32,339,179 | 34,992,060 |
Right of use assets | 11 | 876,996 | 749,288 |
Intangible assets | 12 | 312,771 | 359,511 |
Prepaid expenses | 379,622 | 266,981 | |
- Prepaid expenses to related parties | 28 | 34,278 | 45,461 |
- Prepaid expenses to third parties | 15 | 345,344 | 221,520 |
Deferred tax assets | 20 | 485,806 | 264,484 |
Other non-current assets | 79,427 | 63,033 | |
- Other non-current assets related to third parties | 17 | 79,427 | 63,033 |
TOTAL NON-CURRENT ASSETS | 75,456,547 | 46,106,037 | |
TOTAL ASSETS | 95,790,584 | 103,236,841 |
The accompanying notes are an integral part of these consolidated financial statements.
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Petkim Petrokimya Holding AS published this content on 29 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 March 2024 15:05:01 UTC.
