CELEBI GROUND HANDLING ANNUAL REPORT 2018

ÇELEBİ HAVA SERVİSİ A.Ş. 103 Çelebi Ground Handling 2018 Annual Report Convenience Translation into English of Consolidated Financial Statements Originally Issued in Turkish NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2018 (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.) For the periods ended on December 31, 2018 and December 31, 2017, tax expenses of the Group are as follows: January 1- January 1- December 31, December 31, 2018 2017 - Current period corporate tax (34.366.471) (25.914.945) - Deferred tax income/(expense) 28.004.641 4.932.650 (6.361.830) (20.982.295) Reconciliation of tax expenses presented in consolidated statements of income for the periods ended at December 31, 2018 and December 31, 2017 are as follows: 2018 2017 Profit before tax in the financial statements 214.812.101 107.383.470 Expected tax expense according to parent company tax rate (20%) (47.258.664) (21.476.694) Differences in tax rates of subsidiaries (2.449.658) (3.967.272) Expected tax expense of the Group (49.708.322) (25.443.966) Non-deductible expenses (2.686.122) (496.748) Reductions 11.929.539 637.494 Retained earnings offset 8.041.890 1.347.218 Other tax payables liabilities (*) (4.449.869) (1.340.781) Tax incentive effect (**) 24.224.796 - Investments accounted using the equity method effect 7.972.687 3.924.720 Other (1.686.429) 389.768 Current period tax expense of the Group (6.361.830) (20.982.295) (*) Consists of innovation and other local taxes calculated over the period profit which companies are obliged to pay in accordance with the tax system in Hungary. (**) The Company was entitled to receive a corporate income tax incentive from the Ministry of Economy for its investments in Istanbul Airport. At present, TL 36.548.740 of the total investment amounting to TL 146.194.959 has been granted and TRY 12.323.944 of this amount has been deducted from the temporary tax amount calculated. The remaining amount of TL 24.224.796 has been recognized as deferred tax asset in the current period. Deferred Taxes The Group calculates deferred tax assets and liabilities on temporary differences on statement of financial position items arising from different evaluation of financial statements prepared in accordance with CMB and statutory accounting standards. In general, such temporary differences are resulted from accounting of income and expenses in different reporting periods in accordance with Tax laws and CMB accounting standards. Rates for deferred tax assets and liabilities calculated by liability method over temporary differences to be realized in future periods are 20% or 22%, 9% or 10%, 31,925% and 34,94% for Turkey, Hungary, Germany and India respectively.