CELEBI GROUND HANDLING ANNUAL REPORT 2018

ÇELEBİ HAVA SERVİSİ A.Ş. 58 Çelebi Ground Handling 2018 Annual Report 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.) Convenience Translation into English of Consolidated Financial Statements Originally Issued in Turkish NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS OF THE GROUP Çelebi Hava Servisi Anonim Şirketi (referred as the “Company” or “Çelebi Hava”) established in 1958 as the first private ground handling service company in the Turkish aviation sector. The Company provides ground handling services (representation, traffic, ramp, cargo, flight operations and aircraft maintenance etc), fuel supplies to domestic and foreign airlines and private cargo companies, cargo services and warehouse operations. The Company operates in İstanbul Atatürk, İzmir, Ankara, Adana, Antalya, Dalaman, Bodrum, Çorlu, Bursa Yenişehir, Diyarbakır, Erzurum, Kayseri, Samsun, Trabzon, Van, Malatya, Kars, Mardin, Denizli, Hatay, Kahramanmaraş, Isparta, Erzincan, Çanakkale, Balıkesir Edremit, Iğdır, Kocaeli, Bingöl, Hakkari, Uşak airports, which are under the control of the State Airports Administration (“DHMI”) and Istanbul Sabiha Gokcen airport which is under the control of the Airport Administration and Aviation Industries A.Ş. (“HEAŞ”). The company is controlled by Çelebi Havacılık Holding Anonim Şirketi, the parent company which is jointly controlled by Çelebioğlu Family and Zeus Aviation Services Investments B.V. The company is registered in Capital Markets Board “CMB” and has been listed in Borsa Istanbul “BIST” since November 18, 1996. As of December 31, 2018, the Company’s free float rate is 12,61% (December 31, 2017: 21,64%). The address of the Company is as follows: Anel İş Merkezi Saray Mahallesi Site Yolu Sokak No:5 Kat:9 34768 Ümraniye/İstanbul The Group consists of the Company and its subsidiaries, joint ventures and associate. The average number of employees employed by the Group for the year ended December 31, 2018 is 13.031 (December 31, 2017: 12.278). Information on Subsidiaries, Joint Ventures, and Associate: The nature of the business, their respective geographical segments, and the registered country of the subsidiaries, joint venture and associate of the Group are as follows. Subsidiaries of the Group are as below: Subsidiary Registered Country Geographical region Nature of business CGHH Hungary Hungary Ground handling services Celebi Delhi Cargo India India Warehouse and cargo services CASI India India Ground handling services Çelebi Kargo Turkey Turkey Warehouse and cargo services Celebi Cargo Germany Germany Warehouse and cargo services Celebi Spain (*) Spain Spain Ground handling services Tasfiye halinde Aviation and Çelebi Güvenlik Turkey Turkey other security services (*) As of December 31, 2018 Celebi Spain has no operational activity. The Company won the tender offer on acquisition of Budapest Airport Handling Kereskedelmi es Szolgaltato Korlatolt Felelössegü Tarsasag (“BAGH”) which provides ground handling service in Budapest Airport, and participated in the Celebi Tanacsado Korlatolt Felelossegu Tarsasag” (“Celebi Kft”) that was founded on September 22, 2006 as founding shareholder for the realization of the above mentioned share transfer. Celebi Kft acquired all the shares of BAGH on October 26, 2006 and the trade name of BAGH has been changed to Celebi Ground Handling Hungary Foldi Kiszolgalo Korlatolt Felelossegu Tarsasag (“CGHH”). Celebi Kft was been taken over by CGHH with all assets and liabilities and merger transactions have been completed at October 31, 2007 in accordance with the legal framework effective in Hungary. Since Celebi Kft owned 100% of CGHH shares before the merger, the Company’s share has remained 70% in CGHH share capital. At 2011, shares representing 30% of CGHH were purchased from Çelebi Havacılık Holding Anonim Şirketi for a consideration of TL 33.712.020.As of December 31, 2018, total paid in capital of CGHH is 200.000.000 Hungarian forint. The Company participated as a co-founder in the company with capital of 100.000 Indian Rupee under the title Celebi Delhi Cargo Terminal Management India Private Limited (“Celebi Delhi Cargo”) to carry out activities relating to the development, modernization and 25-year operation of the existing cargo terminal in the airport (“Brownfield”) in New Delhi in India on May 6, 2009 with a shareholding rate of 74%. The paid capital of the Celebi Delhi Cargo is 1.120.000.000 Indian Rupee. As a result of the winning the tender for providing ground handling services at Delhi International Airport for a 10 years period in order to fulfill the requirements to meet the obligations and make the planned investments outlined in the Concession Agreement signed between Celebi GH Delhi and the tender to authority, the Company has made a premium capital increase