12 Months Financial Report - Turkish Airlines

TÜRK HAVA YOLLARI ANONİM ORTAKLIĞINOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD ENDED 31 DECEMBER, 200927 SHAREHOLDERS’ EQUITY (cont’d)Restricted Reserves Assorted from ProfitThe legal reserves consist of first and second reserves, appropriated in accordance with the TurkishCommercial Code (TCC). The TCC stipulates that the first legal reserve is appropriated out of statutoryprofits at the rate of 5% per annum, until the total reserve reaches 20% of the company’s paid-in sharecapital. The second legal reserve is appropriated at the rate of 10% per annum of all cash distributions inexcess of 5% of the paid-in share capital. Under the TCC, the legal reserves can only be used to offsetlosses and are not available for any other usage unless they exceed 50% of paid-in share capital.Foreign Currency Translation DifferencesForeign currency translation differences are the changes due to foreign exchange rate changes in theshareholders’ equity Sun Express which is a subsidiary accounted for equity method.Distribution of DividendsCompanies whose shares are traded at Istanbul Stock Exchange (ISE) are subject to the followingdividend rules determined by Capital Markets Board:According to the Serial:XI No:29 communiqué of Capital Markets Board, depending on the decisionmade in shareholders' meeting, the profit distribution can be made either by giving bonus shares toshareholders which are issued either in cash or by adding dividend to capital or giving some amount ofcash and some amount of bonus shares to shareholders. If the primary dividend amount determined is lessthan 5% of the paid-in capital, the decision gives the option of not to distribute the related amount as tokeep within the equity. However, for companies that have not made any dividend distributions in the priorperiod and therefore has classified their shares as “old shares” and “new shares” and those that willdistribute dividends from the profit for the year obtained from their activities, primary dividend amountshall be distributed in cash.According to the CMB’s decision on 9 January 2009, in calculation of distributable profit, the companiesare required to prepare consolidated financial statements, those companies enabled to calculatedistributable profit by taking into consideration the profit in the financial statements prepared andannounced to the public in accordance with Serial:XI No:29. Regarding the same decision, retainedearnings of the companies in legitimate records, profit for the period and total amount of the assetsgenerating profit are to be stated in the accompanying notes of financial statements in accordance withSerial:XI No:29 communiqué.In accordance with the Capital Markets Board’s (the “Board”) Decree issued as of 27 January 2010, inrelation to the profit distribution of earnings derived from the operations in 2009, minimum profitdistribution is not required for listed companies (December 31, 2008: 20%), and accordingly, profitdistribution should be made based on the requirements set out in the Board’s Communiqué Serial:IV,No:27 “Principles of Dividend Advance Distribution of Companies That Are Subject To The Capital MarketsBoard Regulations”, terms of articles of corporations and profit distribution policies publicly disclosed bythe companies;48