Pegasus Hava Tasimaciligi Anonim Sirketi : Q2 2022 Financial Results

CONVENIENCE TRANSLATION OF

THE REPORT AND FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH

PEGASUS HAVA TAŞIMACILIĞI

ANONİM ŞİRKETİ AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH INTERIM PERIOD ENDED 30 JUNE 2022

Güney Bağımsız Denetim ve SMMM A.Ş.	Tel: [phone]
Maslak Mah. Eski Büyükdere Cad.	Fax: [phone]
Orjin Maslak İş Merkezi No: 27	ey.com
Daire: 57 34485 Sarıyer	Ticaret Sicil No : 479920
İstanbul - Türkiye	Mersis No: 0-4350-3032-6000017

(Convenience translation of a report and condensed consolidated financial statements originally

issued in Turkish)

Report on Review of Interim Condensed Consolidated Financial Statements

To the Board of Directors of Pegasus Hava Taşımacılığı Anonim Şirketi

Introduction

We have reviewed the accompanying interim condensed consolidated statement of financial position of Pegasus Hava Taşımacılığı Anonim Şirketi (the Company) and its subsidiaries ("the Group") as of 30 June 2022 and the interim condensed consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and the consolidated statement cash flows for the six-months period then ended, and explanatory notes. Group management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with Turkish Accounting Standard 34, Interim Financial Reporting ("TAS 34"). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review in accordance with the Standard on Review Engagements ("SRE") 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review of interim financial information is substantially less in scope than an audit conducted in accordance with Independent Auditing Standards and the objective of which is to express an opinion on the financial statements. Consequently, a review of the interim financial information does not provide assurance that the audit firm will be aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Emphasis of Matter

As mentioned in Note 1 to the condensed consolidated financial statements, the COVID-19 pandemic had a major impact on the airline industry and the operations of the Group in 2020 and 2021, affecting the operation of the flights and, consequently significantly reduced the amount of revenues. This had significant impacts on operating results and cash generation. Although the effects of the COVID-19 pandemic have decreased in the six-month period of 2022, given the unprecedented nature of the pandemic, the impact and duration of this impact on the airline industry is difficult to predict, but may include a prolonged global recession and changes to consumer behavior which may impact passenger numbers in both the short term and longer term. Our opinion is not qualified in respect of these matters.

A member firm of Ernst & Young Global Limited

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with TAS 34.

Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A member firm of Ernst & Young Global Limited

Sinem Arı Öz, SMMM

Partner

15 August 2022 İstanbul, Turkey

(2)

A member firm of Ernst & Young Global Limited

INDEX		PAGE
CONDENSED CONSOLIDATED BALANCE SHEET....................................................................................	1-2
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER ...........................
COMPREHENSIVE INCOME ...........................................................................................................................	3-4
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ...........................................	5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS...........................................................	6
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ....................................	7-46
NOTE 1	ORGANISATION AND OPERATIONS OF THE GROUP ...................................................................	7
NOTE 2	BASIS OF PRESENTATION OF FINANCIAL STATEMENTS...........................................................	8-14
NOTE 3	INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD ............................................	15-16
NOTE 4	SEGMENT REPORTING .......................................................................................................................	16
NOTE 5	RELATED PARTY DISCLOSURES......................................................................................................	16-19
NOTE 6	TRADE RECEIVABLES AND PAYABLES OTHER RECEIVABLES ...............................................	19-20
NOTE 7	PREPAID EXPENSES, DEFERRED INCOME AND PASSENGER FLIGHT LIABILITIES .............	20-21
NOTE 8	PROPERTY AND EQUIPMENT............................................................................................................	22-23
NOTE 9	INTANGIBLE ASSETS ..........................................................................................................................	24
NOTE 10	RIGHT OF USE ASSETS .......................................................................................................................	24
NOTE 11	PROVISIONS, CONTINGENT ASSETS AND LIABILITIES ..............................................................	25
NOTE 12	COMMITMENTS..................................... ...............................................................................................	25-27
NOTE 13	EXPENSES BY NATURE ......................................................................................................................	28
NOTE 14	SHAREHOLDERS' EQUITY .................................................................................................................	28
NOTE 15	SALES AND COST OF SALES .............................................................................................................	29
NOTE 16	GENERAL ADMINISTRATIVE EXPENSES AND MARKETING EXPENSES.................................	30
NOTE 17	OTHER OPERATING INCOME AND EXPENSES ..............................................................................	31
NOTE 18	INCOME AND EXPENSES FROM INVESTING ACTIVITIES...........................................................	31
NOTE 19	FINANCIAL INCOME AND EXPENSES .............................................................................................	32
NOTE 20	EARNINGS / LOSS PER SHARE ..........................................................................................................	32
NOTE 21	DERIVATIVE FINANCIAL INSTRUMENTS ......................................................................................	32
NOTE 22	FINANCIAL INSTRUMENTS ...............................................................................................................	33-36
NOTE 23	NATURE AND LEVEL OF RISKS DERIVING FROM FINANCIAL INSTRUMENTS ....................	37-39
NOTE 24	FINANCIAL INSTRUMENTS (FAIR VALUE AND HEDGE ACCOUNTING DISCLOSURES)......	40-43
NOTE 25	EVENTS AFTER REPORTING PERIOD ..............................................................................................	43
NOTE 26	INCOME TAX EXPENSE ......................................................................................................................	43
NOTE 27	EXPLANATIONS RELATED TO STATEMENT OF CASH FLOW....................................................	44
NOTE 28	NON-CURRENT ASSETS HELD FOR SALE AND DİSCONTİNUED...............................................	45
APPENDIX - EURO SELECTED NOTES........................................................................................................	46

(Convenience Translation of The Report and Financial Statements Originally Issued in Turkish)

PEGASUS HAVA TAŞIMACILIĞI A.Ş. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2022

(Amounts are expressed in TL unless otherwise stated.)

		Current period	Prior period	(*)	(*)
		(Reviewed)	(Audited)	EUR	EUR
		30 June	31 December	30 June	31 December
	Notes	2022	2021	2022	2021
ASSETS
Current assets		18.719.523.080	12.687.114.838	1.068.337.872	864.109.491
Cash and cash equivalents	27	9.722.621.899	6.976.779.772	554.877.663	475.183.028
Financial assets	22	537.263.138	565.472.751	30.662.029	38.513.908
Trade receivables	6	1.354.130.001	337.172.794	77.281.262	22.964.576
Trade receivables from third parties		1.354.130.001	337.172.794	77.281.262	22.964.576
Other receivables	6	202.060.652	127.250.026	11.531.760	8.666.900
Other receivables from third parties		202.060.652	127.250.026	11.531.760	8.666.900
Derivative financial instruments	21	844.184.675	118.364.973	48.178.282	8.061.746
Inventories		437.991.155	141.338.089	24.996.499	9.626.427
Prepaid expenses	7	4.682.568.384	4.044.857.895	267.237.850	275.492.112
Current income tax assets		2.340.252	5.030.039	133.560	342.592
Other current assets		44.363.539	62.757.524	2.531.862	4.274.366
SUBTOTAL		17.827.523.695	12.379.023.863	1.017.430.767	843.125.655
Non-current assets held for sale		891.999.385	308.090.975	50.907.105	20.983.836
Non-Current assets		54.980.075.145	40.275.936.529	3.136.723.890	2.742.130.261
Financial assets	22	3.565.256.871	2.173.986.740	203.472.008	148.068.541
Other receivables	6	521.419.253	385.733.767	29.757.806	26.272.026
Other receivables from third parties		521.419.253	385.733.767	29.757.806	26.272.026
Derivative financial instruments	21	265.543.763	45.204.115	15.154.791	3.078.817
Investments accounted by using the equity method	3	309.635.958	165.913.947	17.671.167	11.300.269
Property and equipment	8	2.075.504.590	1.854.850.887	118.450.171	126.331.736
Intangible assets	9	219.156.947	183.945.727	12.507.459	12.528.400
Right of use assets	10	43.794.215.860	32.695.303.761	2.498.338.626	2.225.819.988
Prepaid expenses	7	4.229.341.903	2.770.997.585	241.371.862	188.730.484
TOTAL ASSETS		73.699.598.225	52.963.051.367	4.205.061.762	3.606.239.752

(*)The functional currency of the Company is Euro. However, the presentation currency is determined as Turkish Lira. See Note 2.1 for the conversion of Euro and Turkish Lira amounts.

The accompanying notes form an integral part of these condensed consolidated financial statements.

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