CELEBI GROUND HANDLING ANNUAL REPORT 2018

ÇELEBİ HAVA SERVİSİ A.Ş. 59 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.) amounting to 1.380.897.000 Indian Rupee on its subsidiary of Çelebi Ground Handling Delhi Private Limited (“Celebi GH Delhi”), which is established on November 18, 2009 with a shareholding rate of 74%. On May 22, 2017, the Company acquired 25,9% share of Çelebi GH Delhi and reached to an ownership rate of 99,9% and share capital of 23.890.000 Indian Rupee. The Company currently operates ground handling services in New Delhi, Ahmedabad, Cochin and Bangalore Airports in India as part of the ongoing concession agreements. As a result of the tender concluded on 14 December 2018, the concession agreement signing process at Hyderabad Airport, which has been granted a concession for a period of 10 years, continues. On 15 March 2018, the company’s title was changed to Celebi Airport Services India Private Limited (“CASI”). Çelebi Kargo Depolama ve Dağıtım Hizmetleri A.Ş. (“Çelebi Kargo”) was established on November 20, 2008 to carry out transportation, cargo storage and distribution activities. Celebi Cargo GmbH (“Celebi Cargo”), the subsidiary of Çelebi Kargo with a 100% ownership, was established on November 2009 and has share capital amounting to EUR 32.100.000, rented storage and warehouse facilities at International Frankfurt Airport Cargo (Frankfurt Cargo City Süd) and carry out flight cargo storage and handling services. As of December 31, 2018, the paid share capital of Çelebi Kargo is TL 114.000.000. On March 25, 2010, the Company participated as a founding partner to the Celebi Ground Handling Spain S.L.U (“Celebi Spain”) with a capital of EUR 10.000 and an ownership rate of 100% as a founding partner for the purpose of entrepreneurship in abroad including European Union. Celebi Spain is a non-operatig company. Joint venture: The joint venture of the Group accounted using the equity method is as below: Joint Venture Registered Country Geographical region Nature of business Celebi Nas India India Ground handling services In the sequel of winning the tender of rendering ground handling services for a 10 years period in Mumbai Chhatrapati Shivaji International Airport (CSIA) in Mumbai, India by the consortium in which the Company takes part, a joint venture of the Company has been established on December 12, 2008 with the trade name of “Celebi Nas Airport Services India Private Limited (“Celebi Nas”) resident in Maharashtra, Mumbai, India. The Company has particiapated as the founding partner in Çelebi Nas and has 57% shareholding where the share capital of Çelebi Nas is 552.000.000 Indian Rupee. A premium capital increase of 228.000.000 Indian Rupee has been paid by the shareholders of Çelebi Nas in previous years. Although the Company has 57% shareholding, in accordance with the conditions in Articles of Association signed between the Company and the counterpary shareholder, Çelebi Nas is accounted using the equity method and treated as a joint venture. On April 8, 2015, Çelebi Nas has signed a “concession agreement” with Mumbai International Airport Private Limited (“MIAL”), the operator of the CSIA International Airport, for rendering services of air conditioners and generators mounted on passenger boarding bridges in the passenger terminal. With this agreement, Celebi Nas has been granted the concession rights until May, 2036. In addition, the ten (10) year ground handling privilege of Celebi NAS, which has been in place since 2009 to carry out ground handling services at the CSIA international airport, expires in December 2019. Celebi Nas participated in the tender by CSIA international airport operator MIAL for the extension of its concession from January 1, 2020 to December 31, 2029 for 10 (ten) years. The proposal was submitted to MIAL on 29 January 2018. The concession agreement between Celebi Nas and the contracting authority MIAL was signed on 19 May 2018. Thus, Celebi Nas, a subsidiary of Celebi, will continue to provide ground services for additional 10 (ten) years from January 1, 2020 to December 31, 2029 after the expiry of the current concession period at CSIA airport in Mumbai, India. Associate: The associate of the Group accounted using the equity method is as below: Associate Registered Country Geographical region Nature of business DASPL India India Ground handling services Çelebi GH Delhi, a subisidiary of the Group, has participated in establishment of Delhi Aviation Services Private Limited (“DASPL”) with a shareholding of 16,66%, DASPL is resident in New Delhi, India and operating in rendering services of air conditioners, water providing systems and generators mounted on passenger boarding bridges with international standards established with a share capital is 250.000.000 Indian Rupee. On November 14, 2017, Çelebi GH Delhi, has acquired 8,33% of additional shares of DASPL and reached to a shareholding rate of 24,99%. The Group accounts DASPL by using the equity method in its consolidated financial statements.