2003 Annual Report - Turkish Airlines

INDEPENDENT AUDITORS' REVIEW REPORTTo the Board of Directors ofTürk Hava Yollar› Anonim Ortakl›¤›1. We have audited the accompanying balance sheet of Türk Hava Yollar› Anonim Ortakl›¤› ("the Company") as at 31 December2003, and the related statements of income, shareholders' equity and cash flows for the year then ended, all expressed inthe equivalent purchasing power of the Turkish Lira as at 31 December 2003. These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.2. We conducted our audits in accordance with International Standards on Auditing. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.3. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of theCompany as of 31 December 2003 the results of its operations and its cash flows for the year then ended, in accordancewith International Financial Reporting Standards ("IFRS").4. Without qualifying our opinion, we would like to draw attention to following matter:a) As it is explained in detail in Footnote 2, the Company has decided to announce to the public its financial statementsprepared in accordance with IFRS as of 31 December 2003. Consequently, the Companies which choose to apply TurkishCapital Markets Board ("CMB") Bulletin XI No: 25 or IFRS, are not required to report in accordance with CMB Bulletins XINo:1, XI No: 20 and XI No: 21.b) In our report dated May 7, 2003 for the financial statements as of 31 December 2002, it was mentioned that theCompany did not apply International Accounting Standard No: 36 "Impairment of Assets" for some of its aircrafts, since itwas not yet certain as of 2001 report date, whether the decline in market prices of some of the Company’s aircrafts, whichoccurred as a result of the terrorist attack in the United States on 11 September 2001, was permanent or temporary.Because market prices of used aircraft had not recovered as of 31 December 2002 and the Company’s management wasof the opinion that the decline in market prices was permanent, the Company has recorded the total impairment in 2002,including the amount that should be recorded in 2001 as an expense. While preparing its 2003 financial statements, inorder to make statements of income for the year ended 31 December 2003 and 2002 comparable, the Management ofthe Company has restated its 2002 financial statements by adjusting its 2002 opening balance sheet.DENET‹M SERBEST MAL‹ MÜfiAV‹RL‹K A.fi.Member Firm of DELOITTE TOUCHE TOHMATSUSelçuk Ürkmez, PartnerIstanbul, 9 April 2004