TÜRK HAVA YOLLARI ANONİM
ORTAKLIĞI AND ITS SUBSIDIARIES
Consolidated Financial Statements
for The Year Ended 31 December 2023
with Independent Auditor's Report
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Türk Hava Yolları Anonim Ortaklığı
Our opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Türk Hava Yolları Anonim Ortaklığı (the "Company") and its subsidiaries (together the "Group") as at 31 December 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards ("IFRS").
What we have audited
The Group's consolidated financial statements comprise:
- the consolidated statement of financial position as at 31 December 2023;
- the consolidated statement of comprehensive income for the year then ended;
- the consolidated statement of changes in equity for the year then ended;
- the consolidated statement of cash flows for the year then ended and
- the notes to the consolidated financial statements, comprising material accounting policy information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing ("ISA"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (including International Independence Standards) ("IESBA Code"). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
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 |
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 matters | How our audit addressed the key audit | ||
matter | |||
The recognition of the revenue, passenger | |||
flight liabilities and the frequent flyer | |||
program liabilities | |||
Revenue and passenger flight liabilities | The following procedures were performed to audit | ||
(Please refer to Note 2.3.1, 13 and 25) | of the revenue and passenger flight liabilities: | ||
The major part of the Group's revenue consists of the | - | Through involvement of our IT experts, we | |
passenger revenue. The passenger revenue is | have tested the effectiveness of internal | ||
recognized when the transportation service is | controls on IT systems that are designed to | ||
completed. Total passenger revenue recognized in | account passenger revenue. Additionally, we | ||
the consolidated financial statements of the Group | have tested accuracy and completeness of | ||
amounted to USD17,727 million for the year ended 31 | the reconciliations among IT systems which | ||
December 2023. Unused tickets are recognized as | have been determined as key systems by us. | ||
passenger flight liabilities, until the flights are | |||
completed. Total passenger flight liability for ticked | - | We have understood the business processes | |
sales amounted to USD2,420 million as of 31 | and controls over accounting of the | ||
December 2023. | passenger revenue. | ||
We focused on this area in our audit due to the | - | We have tested key controls over accounting | |
following reasons: | of the passenger revenue processes. | ||
- | Significant estimates and judgments based on | - | We have tested unredeemed tickets through |
historical data and trends are used in | sampling method. | ||
calculation of revenue from unused tickets | |||
which are accounted for passenger revenue in | - | We have tested consistency and | |
the consolidated financial statements, | mathematical accuracy of the methods used | ||
in calculation of unused ticket revenue | |||
- | Recognition of passenger revenue upon | which are estimated based on historical | |
completion of the services includes complex | data. | ||
and different integrated information | |||
technology ("IT") systems which processes | |||
high volume of transactions and data, |
- The necessity for our IT experts to be involved in the audit process due to the complexity of the systems.
Key audit matters | How our audit addressed the key audit | ||
matter | |||
The recognition of the revenue, passenger | |||
flight liabilities and the frequent flyer | |||
program liabilities | |||
Frequent flyer program liabilities | The following procedures were performed to audit | ||
(Please refer to Note 2.3.1 and 13) | of the frequent flyer program liabilities: | ||
The Group provides a frequent flyer program named | - | We have understood the business processes | |
"Miles and Smiles" in the form of free travel award to | and controls over accounting of the frequent | ||
its members on accumulated mileage earned from | flyer program liabilities. | ||
flights. Miles are recognized as a separately | |||
identifiable component of each sales transactions. | - | Through involvement of our IT experts, we | |
Frequent flyer program liabilities amounted to | have tested the effectiveness of internal | ||
USD236 million in the consolidated financial | controls on IT systems and internal controls | ||
statements as of | that are designed to account frequent flyer | ||
31 December 2023. | program liabilities. | ||
The amount deferred as a liability is measured based | - | We have tested consistency and | |
on the fair value of the awarded miles. The fair value | mathematical accuracy of the methods used | ||
is measured on the basis of the value of the awards | in calculation of frequent flyer liabilities | ||
for which they could be redeemed. The amount | which are estimated based on historical | ||
deferred is recognized as revenue when Miles and | data. | ||
Smiles members fly using their miles or when the | |||
Group does not expect that the miles to be redeemed | - | We have controlled consistency of frequent | |
by its customers ("breakage"). | flyer program liabilities calculated at the end | ||
of the reporting period with frequent flyer | |||
We focused on this area in our audit due to the | program. | ||
following reasons: | |||
- | We have controlled breakage estimates | ||
- | Breakage estimate ("the estimate of miles | through comparing the ratio with the | |
earned that will not be redeemed") are | historical usage data. | ||
complex and highly judgmental due to the | |||
significant assumptions used in the estimate, |
- Complex calculations are performed in determination of the value of the awards for which they could be redeemed,
- The necessity for our IT experts to be involved in the audit process due to the complexity of the systems.
Key audit matters | How our audit addressed the key audit | ||
matter | |||
The Component accounting of aircrafts | |||
(Please refer to Note 2.3.3, 2.3.4 and 15) | |||
The carrying values of aircrafts' components | - | The following procedures were performed to | |
accounted for property, plant and equipment and | audit of the component accounting of | ||
right of use assets amounted to USD19,260 million in | aircrafts: | ||
the consolidated financial statements as of | |||
31 December 2023. | - | We have inquired with the management to | |
understand the accounting policies applied | |||
The Group accounts for the cost of aircrafts which | and how they meet the provisions of IAS 16, | ||
are acquired directly or through leases separating | "Property, plant and equipment". | ||
into the components (fuselage, engine, fuselage | |||
overhaul and engine overhaul). Useful lives of these | - | The useful life and residual value estimates | |
components are determined separately and each | were controlled by comparing the fleet plan | ||
components are amortized during their useful lives. | of the Group and the contracts of the aircraft | ||
purchases and leasing transactions recently | |||
We focused on this area in our audit due to the | made. | ||
following reasons: | |||
- | We have compared the consistency of the | ||
- | The impacts to the consolidated financial | components and their useful lives with the | |
statements as of 31 December 2023 is | sectoral applications. | ||
significant, | |||
- | We have recalculated current year's | ||
- | The assessment of determination of | depreciation expenses. | |
components involves significant level of | |||
management's estimates, |
- The assessment of determination of useful lives of each components and residual values involves managements' significant estimates.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, 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.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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 audit in accordance with ISA, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of 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.
- Obtain an understanding of 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 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 also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to 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 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.
PwC Bağımsız Denetim ve
Serbest Muhasebeci Mali Müşavirlik A.Ş.
Baki Erdal, SMMM
Independent Auditor
Istanbul, 3 April 2024
TÜRK HAVA YOLLARI ANONİM ORTAKLIĞI AND ITS SUBSIDIARIES
Consolidated Statement of Financial Position as at 31 December 2023
(All amounts are expressed in Million US Dollars (USD) unless otherwise stated.)
ASSETS | Notes | 31 December 2023 | 31 December 2022 | ||
Non-Current Assets | |||||
Financial Investments | 6 | 398 | 165 | ||
Other Receivables | |||||
-Third Parties | 11 | 1,395 | 957 | ||
Investments Accounted for Using Equity Method | 3 | 497 | 277 | ||
Investment Property | 14 | 43 | 69 | ||
Property and Equipment | 15 | 6,075 | 4,654 | ||
Right of Use Assets | 15 | 16,928 | 16,577 | ||
Intangible Assets | |||||
- Other Intangible Assets | 16 | 87 | 77 | ||
- Goodwill | 27 | 27 | |||
Prepaid Expenses | 13 | 1,294 | 914 | ||
Deferred Tax Asset | 31 | 332 | 2 | ||
TOTAL NON-CURRENT ASSETS | 27,076 | 23,719 | |||
Current Assets | |||||
Cash and Cash Equivalents | 5 | 683 | 4,075 | ||
Financial Investments | 6 | 5,344 | 626 | ||
Trade Receivables | |||||
-Related Parties | 8 | 50 | 31 | ||
-Third Parties | 9 | 806 | 964 | ||
Other Receivables | |||||
-Related Parties | 8 | 9 | 13 | ||
-Third Parties | 11 | 880 | 864 | ||
Derivative Financial Instruments | 33 | 18 | 44 | ||
Inventories | 12 | 418 | 331 | ||
Prepaid Expenses | 13 | 237 | 176 | ||
Current Income Tax Assets | 31 | 41 | 35 | ||
Other Current Assets | 23 | 109 | 66 | ||
TOTAL CURRENT ASSETS | 8,595 | 7,225 | |||
TOTAL ASSETS | |||||
35,671 | 30,944 |
The accompanying notes are an integral part of these consolidated financial statements.
1
TÜRK HAVA YOLLARI ANONİM ORTAKLIĞI AND ITS SUBSIDIARIES
Consolidated Statement of Financial Position as at 31 December 2023
(All amounts are expressed in Million US Dollars (USD) unless otherwise stated.)
LIABILITIES AND EQUITY | Notes | 31 December 2023 | 31 December 2022 | |||
Equity | ||||||
Share Capital | 24 | 1,597 | 1,597 | |||
Treasury Shares | 24 | (33) | - | |||
Items That Will Not Be Reclassified to | ||||||
Profit or Loss | ||||||
-Actuarial Losses on Retirement Pay Obligation | 24 | (274) | (228) | |||
Items That Are or May Be Reclassified to | ||||||
Profit or Loss | ||||||
-Foreign Currency Translation Differences | 24 | (221) | (294) | |||
-Fair Value Gains on Hedging Instruments | 24 | |||||
Entered into for Cash Flow Hedges | 281 | 515 | ||||
-Losses on Remeasuring FVOCI | 21 | (14) | ||||
Restricted Profit Reserves | 24 | 69 | 36 | |||
Previous Years Profit | 8,097 | 5,405 | ||||
Net Profit for the Year | 6,021 | 2,725 | ||||
Equity of the Parent | 15,558 | 9,742 | ||||
Non-Controlling Interests | 5 | - | ||||
TOTAL EQUITY | 15,563 | 9,742 | ||||
Non-Current Liabilities | ||||||
Long-Term Borrowings | 7 | 472 | 1,115 | |||
Long-Term Lease Liabilities | 7 and 17 | 10,052 | 9,177 | |||
Other Payables | ||||||
-Third Parties | 11 | 25 | 24 | |||
Deferred Income | 13 | 108 | 108 | |||
Long-Term Provisions | ||||||
-Provisions for Employee Termination Benefits | 21 | 229 | 273 | |||
-Other Provisions | 19 | 85 | 61 | |||
Deferred Tax Liability | 31 | 50 | 2,220 | |||
TOTAL NON-CURRENT LIABILITIES | 11,021 | 12,978 | ||||
Current Liabilities | ||||||
Short-Term Borrowings | 7 | 1,345 | 1,058 | |||
Short-Term Portion of Long-Term Borrowings | 7 | 618 | 1,100 | |||
Short-Term Portion of Lease Liabilities | 7 and 17 | 1,760 | 1,589 | |||
Trade Payables | ||||||
-Related Parties | 8 | 285 | 270 | |||
-Third Parties | 9 | 1,006 | 930 | |||
Payables Related to Employee Benefits | 10 | 418 | 183 | |||
Other Payables | ||||||
-Related Parties | 8 | 4 | 13 | |||
-Third Parties | 11 | 238 | 112 | |||
Derivative Financial Instruments | 33 | 101 | 211 | |||
Deferred Income | 13 | 2,705 | 2,394 | |||
Current Tax Provision | 31 | 39 | 3 | |||
Short-Term Provisions | ||||||
-Provisions for Employee Benefits | 19 | 50 | 39 | |||
-Other Provisions | 19 | 6 | 6 | |||
Other Current Liabilities | 23 | 512 | 316 | |||
TOTAL CURRENT LIABILITIES | 9,087 | 8,224 | ||||
TOTAL LIABILITIES AND EQUITY | 35,671 | 30,944 |
The accompanying notes are an integral part of these consolidated financial statements.
2
TÜRK HAVA YOLLARI ANONİM ORTAKLIĞI AND ITS SUBSIDIARIES
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 31 December 2023
(All amounts are expressed in Million US Dollars (USD) unless otherwise stated.)
1 January - | 1 January - | |||||||
PROFIT OR LOSS | Notes | 31 December 2023 | 31 December 2022 | |||||
Revenue | 25 | 20,942 | 18,426 | |||||
Cost of Sales (-) | 26 | (16,060) | (14,036) | |||||
GROSS PROFIT | 4,882 | 4,390 | ||||||
General Administrative Expenses (-) | 27 | (449) | (284) | |||||
Selling and Marketing Expenses (-) | 27 | (1,760) | (1,390) | |||||
Other Operating Income | 28 | 509 | 230 | |||||
Other Operating Expenses (-) | 28 | (323) | (167) | |||||
OPERATING PROFIT BEFORE | ||||||||
INVESTMENT ACTIVITIES | 2,859 | 2,779 | ||||||
Income from Investment Activities | 29 | 933 | 316 | |||||
Expenses for Investment Activities | 29 | (65) | (23) | |||||
Share of Investments' Profit Accounted | ||||||||
for Using The Equity Method | 3 | 232 | 121 | |||||
OPERATING PROFIT | 3,959 | 3,193 | ||||||
Financial Income | 30 | 611 | 745 | |||||
Financial Expenses (-) | 30 | (931) | (999) | |||||
Monetary Gain | 2 | - | ||||||
PROFIT BEFORE TAX | 3,641 | 2,939 | ||||||
Tax Expense | 2,380 | (214) | ||||||
Current Tax (Expense) / Income | 31 | (66) | (35) | |||||
Deferred Tax Income / (Expense) | 31 | 2,446 | (179) | |||||
Deferred Tax Expense | (597) | (179) | ||||||
Effect of Deferred Tax Income From Inflation Adjustment | 3,043 | - | ||||||
NET PROFIT FOR THE YEAR | 6,021 | 2,725 | ||||||
OTHER COMPREHENSIVE INCOME | ||||||||
Items That May Be Reclassified Subsequently To | ||||||||
Profit or Loss | (126) | 338 | ||||||
Currency Translation Adjustment | 73 | (19) | ||||||
Gains / (Losses) on Investments Remeasured FVOCI | 35 | (8) | ||||||
Fair Value Gains on Hedging Instruments | ||||||||
Entered into for Cash Flow Hedges | (278) | 462 | ||||||
Fair Value Gains Hedging Instruments of | ||||||||
Investment Accounted by Using the Equity Method | ||||||||
Entered into for Cash Flow Hedges | (9) | (7) | ||||||
Related Tax of Other Comprehensive Income | 53 | (90) | ||||||
Items That Will Not Be Reclassified Subsequently | ||||||||
To Profit or Loss | (46) | (157) | ||||||
Actuarial Losses on Retirement Pay | ||||||||
Obligation | (56) | (196) | ||||||
Related Tax of Other Comprehensive Income | 10 | 39 | ||||||
OTHER COMPREHENSIVE INCOME | ||||||||
FOR THE YEAR | (172) | 181 | ||||||
TOTAL COMPREHENSIVE INCOME | ||||||||
FOR THE YEAR | 5,849 | 2,906 | ||||||
Basic Earnings Per Share (Full US Cents) | 32 | 4.36 | 1.97 | |||||
Diluted Earnings Per Share (Full US Cents) | 32 | 4.36 | 1.97 |
The accompanying notes are an integral part of these consolidated financial statements
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Turkish Airlines AO published this content on 03 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 April 2024 16:41:01 UTC.