Consolidated Financial Statements
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Air France-KLM Group CONSOLIDATED FINANCIAL STATEMENTS Prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Commission for use in the European Union January 1, 2020 – December 31, 2020 - 1 - 17/02/2021 Air France-KLM Group Table of contents CONSOLIDATED INCOME STATEMENT..................................................................................................... - 4 - CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSES ...................................... - 5 - CONSOLIDATED BALANCE SHEET ............................................................................................................. - 6 - CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY ..................................... - 8 - CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................................................... - 9 - 1. BUSINESS DESCRIPTION ......................................................................................................................... - 12 - 2. SIGNIFICANT EVENTS ............................................................................................................................. - 12 - 2.1. Covid-19 and going concern ................................................................................................................. - 12 - 2.2. Events occurring during the period ....................................................................................................... - 14 - 2.3. Subsequent events ................................................................................................................................. - 17 - 3. ACCOUNTING POLICIES .......................................................................................................................... - 18 - 3.1. Accounting principles............................................................................................................................ - 18 - 3.2. Use of estimates .................................................................................................................................... - 20 - 3.3. Consolidation principles ........................................................................................................................ - 21 - 3.4. Translation of foreign companies’ financial statements and transactions in foreign currencies ........... - 22 - 3.5. Business combinations .......................................................................................................................... - 22 - 3.6. Sales ...................................................................................................................................................... - 23 - 3.7. Loyalty programs .................................................................................................................................. - 25 - 3.8. Distinction between income from current operations and income from operating activities ................ - 25 - 3.9. Aggregates used within the framework of financial communication .................................................... - 25 - 3.10. Earnings per share ............................................................................................................................... - 26 - 3.11. Financial instruments .......................................................................................................................... - 26 - 3.12. Goodwill .............................................................................................................................................. - 28 - 3.13. Intangible assets .................................................................................................................................. - 28 - 3.14. Property, plant and equipment ............................................................................................................. - 29 - 3.15. Lease contracts .................................................................................................................................... - 30 - 3.16. Impairment test .................................................................................................................................... - 32 - 3.17. Inventories ........................................................................................................................................... - 32 - 3.18. Treasury shares .................................................................................................................................... - 33 - 3.19. Employee benefits ............................................................................................................................... - 33 - 3.20. Return obligation liability and provision on leased aircraft ................................................................ - 33 - 3.21. Other provisions .................................................................................................................................. - 34 - 3.22. Emission Trading Scheme ................................................................................................................... - 34 - 3.23. Capital increase costs .......................................................................................................................... - 34 - 3.24. Current and deferred taxes................................................................................................................... - 34 - 3.25. Non-current assets held for sale and discontinued operations ............................................................. - 35 - 4. CHANGE IN THE CONSOLIDATION SCOPE ......................................................................................... - 36 - 5. INFORMATION BY ACTIVITY AND GEOGRAPHICAL AREA ........................................................... - 36 - 5.1. Information by business segment .......................................................................................................... - 37 - 5.2. Information by geographical area .......................................................................................................... - 39 - 6. EXTERNAL EXPENSES ............................................................................................................................. - 40 - 7. SALARIES AND NUMBER OF EMPLOYEES ......................................................................................... - 41 - 8. AMORTIZATION, DEPRECIATION AND PROVISIONS ....................................................................... - 42 - 9. OTHER INCOME AND EXPENSES .......................................................................................................... - 42 - 10. OTHER NON-CURRENT INCOME AND EXPENSES ........................................................................... - 43 - 11. NET COST OF FINANCIAL DEBT AND OTHER FINANCIAL INCOME AND EXPENSES ............. - 45 - 12. INCOME TAXES ....................................................................................................................................... - 46 - 12.1. Income tax charge ............................................................................................................................... - 46 - 12.2. Deferred tax recorded in equity (equity holders of Air France-KLM) ................................................ - 47 - 12.3. Effective tax rate ................................................................................................................................. - 47 - 12.4. Variation in deferred tax recorded during the period .......................................................................... - 48 - 12.5. Unrecognized deferred tax assets ........................................................................................................ - 49 - 13. EARNINGS PER SHARE .......................................................................................................................... - 50 - 13.1 Income for the period – Equity holders of Air France-KLM per share ................................................ - 50 - 13.2 Non-dilutive instruments ...................................................................................................................... - 51 - 13.3 Instruments issued after the closing date .............................................................................................. - 51 - 14.1 Detail of consolidated goodwill............................................................................................................ - 51 - 14.2 Movement in net book value of goodwill ............................................................................................. - 51 - 15. INTANGIBLE ASSETS ............................................................................................................................. - 52 - 16. IMPAIRMENT ........................................................................................................................................... - 53 - - 2 - 17/02/2021 Air France-KLM Group 17. TANGIBLE ASSETS ................................................................................................................................. - 54 - 18. CAPITAL EXPENDITURES ..................................................................................................................... - 55 - 19. RIGHT-OF-USE ASSETS .......................................................................................................................... - 55 - 20.