Financial - Turkish Airlines

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(Convenience Translation of Report and Financial Statements Originally Issued in Turkish)TÜRK HAVA YOLLARI ANONİM ORTAKLIĞI AND ITS SUBSIDIARIESNotes to the Audited Consolidated Financial StatementsFor the Year Ended 31 December 2012(All amounts are expressed in Turkish Lira (TL) unless otherwise stated.)38. NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS(a) Capital risk managementThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern whilemaximizing the return to stakeholders through the optimization of the debt and equity balance.The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 8, cash and cashequivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retainedearnings.The Board of Directors of the Group periodically reviews the capital structure. During these analyses, the Board assessesthe risks associated with each class of capital along with cost of capital. Based on the review of the Board of Directors,the Group aims to balance its overall capital structure through the issue of new debt or the redemption of existing debt.The overall strategy of the Group remains the same since the year 2011.31 December 2012 31 December 2011Total debts 9.772.018.570 8.941.681.848Less: Cash and cash equivalents and time depositswith maturity of more than three months (1.832.501.330) (1.683.057.811)Net debt 7.939.517.240 7.258.624.037Total shareholders’ equity 5.405.043.589 4.498.927.641Total capital stock 13.344.560.829 11.757.551.678Net debt/total capital stock ratio 0,59 0,62(b) Financial Risk FactorsThe risks of the Group, resulting from operations, include market risk (including currency risk, fair value interest raterisk and price risk), credit risk and liquidity risk. The Group’s risk management program generally seeks to minimize thepotential negative effects of uncertainty in financial markets on financial performance of the Group. The Group uses asmall portion of derivative financial instruments in order to safeguard itself from different financial risks.Risk management, in line with policies approved by the Board of Directors, is carried out. According to risk policy,financial risk is identified and assessed. By working together with Group’s operational units, relevant instruments areused to reduce the risk.60 TÜRK HAVA YOLLARI ANNUAL REPORT 2012
(Convenience Translation of Report and Financial Statements Originally Issued in Turkish)TÜRK HAVA YOLLARI ANONİM ORTAKLIĞI AND ITS SUBSIDIARIESNotes to the Audited Consolidated Financial StatementsFor the Year Ended 31 December 2012(All amounts are expressed in Turkish Lira (TL) unless otherwise stated.)b.1) Credit Risk ManagementCredit risk of financial instrumentsReceivablesTrade receivables Other receivables31 December 2012 Related Party Third Party Related PartyDeposits inThird PartyDerivativeBanks InstrumentsMaximum credit risk as of balance sheet date (*) 18.975.259 758.427.363 8.531 2.307.948.323 1.821.162.590 74.861.649-The part of maximum risk under guarantee with collateral etc. (**) - 9.844.132 - - - -A. Net book value of financial assets that areneither past due nor impaired 18.975.259 442.712.030 8.531 2.307.948.323 1.821.162.590 74.861.649B. Net book value of financial assets that are renegotiated, - - - - - -if not that will be accepted as past due or impairedC. Net book value of financial assets that are past due butnot impaired - 315.715.333 - - - --The part under guarantee with collateral etc. - 3.574.589 - - - -D. Net book value of impaired assets-Past due (gross carrying amount) - 73.380.910 - - - --Impairment(-) - (73.380.910) - - - --The part of net value under guarantee with collateral etc. - - - - - --Not past due (gross carrying amount) - - - - - --Impairment (-) - - - - - --The part of net value under guarantee with collateral etc. - - - - - -E.Off-balance sheet items with credit risk - - - - - -(*)The factors that increase in credit reliability such as guarantees received are not considered in the balance.(**)Guarantees consist of the guarantees in cash and letters of guarantee obtained from the customers.61
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