CELEBI GROUND HANDLING ANNUAL REPORT 2018

ÇELEBİ HAVA SERVİSİ A.Ş. 68 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 2.3.2 Changes in Significant Accounting Estimations If changes in accounting estimates are related to only one period, they are recognised in the period when the changes are applied; if changes in estimates are related to future periods, they are recognised both in the period where the change is applied and in future periods prospectively. The useful life of some part of equipments used in operations in Turkey by the Group has been reassessed and the increased estimation of useful life by changing. As a result of increase in useful life, TL 3.642.332 less depreciation expense is calculated and the effect is reflected in the current period. In May 2013, a tender was made for the construction of the third airport in Istanbul. Following the aforementioned tender, Istanbul Airport investment was commenced by the Joint Venture Group and the commercial flights made from Istanbul Atatürk Airport as of March 2019 were announced by the General Directorate of State Airports Authority after the start of the activities of Istanbul Airport. Under the assumption that the Group’s cargo warehouse and general aviation activities at the Atatürk Airport will be terminated as of 1 March 2019, the Group has reviewed the useful lives of the property, plant and equipment classified as leasehold improvements in the related station and decided to amortize the remaining net book value in accordance with their estimations. The effect of change in the economic life estimate on depreciation and net profit for the period is 21.130.026 TL as an expense. 2.4 Summary of significant accounting policies 2.4.1 Accounting of income Revenue is recognized on an accrual basis at the fair value of the consideration received or receivable from the sale of goods and services. Net sales represent the invoiced value of goods delivered and services rendered free of sales discounts and returns. In the event that there is an important financing element in the sales, the fair value is determined by deducting the future collections from the interest rate within the financing element. The difference is recognized as other income from operating activities on an accrual basis. According to the ratios determined in the concession agreements for Celebi Delhi Cargo and CASI, the concession amounts paid over the revenues obtained from the operation of the cargo terminal and the ground handling services provided at the relevant airports are netted off with the sales revenue and are shown in the consolidated financial statements. Since the gross revenue of CGHH is not subjected to concession fee payment to authorities, revenue of CGHH has not been net-off in the consolidated financial statements. Dividend Income Dividend income is recognized as income at the time of collection. 2.4.2 Financial Assets Classification Group classifies its financial assets in three categories of financial assets measured at amortized cost, financial assets measured at fair value through other comprehensive income and financial assets measured at fair value through profit of loss. The classification of financial assets is determined considering the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. The appropriate classification of financial assets is determined at the time of the purchase. Financial assets are not reclassified after initial recognition except when the Group’s business model for managing financial assets changes; in the case of a business model change, subsequent to the amendment, the financial assets are reclassified on the first day of the following reporting period. Recognition and Measurement “ Financial assets measured at amortized cost “ are non-derivative financial assets held within the scope of a business model aimed at collecting contractual cash flows and with cash flows including interest payments arising solely on principal and principal balance at specific dates under contractual terms. Group’s financial assets are accounted at the amortized cost include items such as “cash and cash equivalents”, “trade receivables”, “other receivables” and “financial investments”. Related assets are initially recognized at fair value in the financial statements; in subsequent accounting, measured at amortized cost using the effective interest rate method. Gains and losses resulting from the valuation of non-derivative financial assets measured at amortized cost are recognized in the consolidated income statement.