ÇHS AR21-ENG-030622

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2021 ÇELEBİ HAVA SERVİSİ ANONİM ŞİRKETİ AND ITS SUBSIDIARIES (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.) 103 Çelebi Ground Handling Inc. 2021 Annual Report Restricted reserves appropriated from profit (legal reserves) The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code. The Turkish Commercial Code stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the Company’s paid-in capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash distributions in excess of 5% of the paid-in capital. Under the Turkish Commercial Code, the legal reserves can be used only to offset losses and are not available for any other usage unless they exceed 50% of paid-in capital. In accordance with the communique numbered II-14,1 “Communiqué on the Principles of Financial Reporting In Capital Markets” published in Official Gazette dated 13 June 2013 numbered 28676, the “Paid-in capital”, “Restricted reserves appropriated from profit” and “Share premiums” should be stated at their amounts in the legal records. The differences arising in the valuations during the application of the communiqué (such as differences arising from inflation adjustment): - If the difference is arising from the valuation of “Paid-in capital” and not yet been transferred to capital should be classified under the “Inflation adjustment to share capital”; - If the difference is arising from valuation of “Restricted reserves appropriated from profit” and “Share premium” and the amount has not been subject to dividend distribution or capital increase, it shall be classified under “Prior years’ profit/loss”, Other equity items shall be carried at the amounts calculated based on TAS. Inflation adjustment to share capital have no other use other than being transferred to share capital. As of 31 December 2021, the amount of restricted reserves is TL 74.387.905 (31 December 2020: TL 74.387.905). Listed companies distribute dividend in accordance with the Communique No. II-19.1 issued by the CMB which is effective from 1 February 2015. Companies distribute dividends in accordance with their dividend payment policies settled and dividend payment decision taken in general assembly and also in conformity with relevant legislations. The communique does not constitute a minimum dividend rate. Companies distribute dividend in accordance with the method defined in their dividend policy or articles of incorporation. In addition, dividend can be distributed by fixed or variable instalments and advance dividend can be paid in accordance with profit on interim financial statement of the Company. Partnerships distribute their profits within the framework of profit distribution policies to be determined by their general assemblies and in accordance with the provisions of the relevant legislation, by the decision of the general assembly. Companies pay dividends as specified in their articles of association or profit distribution policies. The profit distribution of capital companies was adjsuted with the temporary article added to the Turkish Commercial Code, the Article 12 of the “Law on Reducing the Effects of the New Coronavirus (Covid-19) Pandemic on Economic and Social Life and Amending Some Laws” dated 17 April 2020 and numbered 7244 until 31 December 2020. The implementation period regarding the regulation has been extended until 31 December 2020 with the Presidential Decree No. 2948. According to this regulation, capital companies may decide to distribute only up to twenty-five percent of the net profit for 2019, prior years’ profits and free reserves cannot be distributed, and the board of directors cannot be authorized to distribute dividends in advance. Capital inflation adjustment differences and carrying values of extraordinary reserves can be used for free capital increase, cash dividend distribution or loss deduction. However, capital inflation adjustment differences will be subject to corporate tax if used in cash profit distribution. In accordance with the Turkish Commercial Code, unless the required reserves and the dividend for shareholders as determined in the article of association or in the dividend distribution policy of the Company are set aside, no decision may be made to set aside other reserves, to transfer profits to the subsequent year or to distribute dividends to the holders of usufruct right certificates, to the members of the board of directors or to the employees; and no dividend can be distributed to these persons unless the determined dividend for shareholders is paid in cash.