CELEBI GROUND HANDLING ANNUAL REPORT 2018

44 Çelebi Ground Handling 2018 Annual Report INDEPENDENT AUDITORS’ REPORT “Service Concession Arrangements”recognised within the scope of Turkish Financial Reporting Interpretations Committee 12 (“TFRIC”) and “Build Operate Transfer Investments” As explained in Note 2 in the accompanying consolidated financial statements as of December 31, 2018, the Group has “Service Concession Arrangements” and “Build Operate Transfer Investments” in the countries where its subsidiaries continue their operations. A service concession arrangement is an arrangement whereby a government or other public sector body contracts with a private operator to develop/upgrade, operate and maintain the grantor’s infrastructure. During the arrangement period, the operator receives income from the services provided. The party that recognizes the concession, controls the infrastructure investment and the contractor will eventually be transferred to the party that recognizes the operator’s infrastructure investment. The Group has applied the intangible asset model within the scope of TFRIC 12 “Service Concession Agreements” in the related agreements because the Group has the right to demand compensation from the users for the infrastructure investment subject to the service concession agreement, and intangible assets arising from “Concession Rights” is recognised at the account of intangible assets. In addition, contracted maintenance or modernization obligations in the framework of service concession contracts are recognized in accordance with the Turkish Accounting Standard (“TAS”) 37 “Provisions, Contingent Liabilities and Contingent Assets”. In addition, the intangible assets from build-operate-transfer investments have been accounted under “Build-Operate-Transfer Investments” account. As presented in Note 12, the net book value of “Concession Rights” accounted under intangible assets as of December 31, 2018 is TL 120.503.524 and net book value of “Build-operate-transfer investments” is TL 86.909.569, and as presented in Note 14, “Maintenance obligation liability” accounted under other current and non-current liabilities is TL 45.309.747. “Concession rights”, “Build-operate-transfer investments” and “Maintenance obligation liability” which are recognized within the scope of such agreements have been determined as key audit matter due to the complexity of judgements and assumptions included in such transactions. The audit procedures we have performed includes examination of terms and conditions of the contracts, testing of expenditures made within the scope of the agreements in terms of appropriateness and timely accounting, evaluation of the useful lives and residual values,examination of the assumptions included in the calculations, testing of the amortization amounts, review of the renewal investments estimated to be made in the following years and evaluation of the discount rates applied for discounting these liabilities, comparison of estimated amounts with the actual amounts, verification of the deposits paid under the contract through related documents. In addition to above, we questioned and evaluated the appropriateness of the disclosures and explanatory notes provided in the consolidated financial statements. 4) Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with TFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Güney Bağımsız Denetim ve SMMM A.Ş. Eski Büyükdere Cad. Orjin Maslak No.27 Maslak, Sarıyer 34398 İstanbul-Turkey Tel: +90 212 315 3000 Fax: +90 212 230 8291 ey.com Ticaret Sicil No: 479920 Mersis No: 0-4350-3032-6000017