ÇHS AR21-ENG-030622

44 Çelebi Ground Handling Inc. 2021 Annual Report Key Audit Matter How the Matter was Addressed in the Audit Accounting of Right-of-Use Assets and Lease Liabilities and Presentation in the Consolidated Financial Statements TFRS 16 provides a tenant accounting model based on specific measurement methods. Accordingly, it requires the accounting of assets and liabilities. The lessee recognises a right-of-use assets that represents the right to use of the leased assets and a lease obligation that represents the obligation to pay for the leased asstes. The Group has lease agreements for land and buildings, machinery, plant and equipments and vehicles. As of 31 December 2021, TL 1.063.607.040 of right-of-use assets is recognized in the consolidated statement of financial position. The share of the right-of-use assets in non-current assets is 30%. As of 31 December 2021, the Group has recognized TL 1.262.208.003 of lease liabilities for the lease agreements. The amounts recognized as a result of the application of TFRS 16 are significant for the consolidated financial statements. In addition, the calculation of the right-to-use assets and lease obligations includes significant estimates and assumptions of the management. The substantial part of these estimates are interest rates used to discount cash flows and assessment of options to extend or terminate lease contracts. Considering these reasons, the impacts of the accounting of TFRS 16 on the consolidated financial statements and the notes to the consolidated financial statements are determined as a key audit matter for our audit. Please refer to Notes 2, 7 and 12 to the consolidated financial statements for the amounts and disclosures, including the related accounting policies. The audit procedures applied including but not limited to the following are: Understanding and evaluating the significant processes affecting financial reporting related to the calculation of TFRS 16, Evaluating the completeness of the contract lists obtained from the Group management, assessment of selected contracts whether they are a service or lease contract and evaluating whether the contracts defined by the Group as leases are in scope of TFRS 16, Recalculation of the right-of-use assets and related financial lease liabilities recognised in the consolidated financial statements by using rates such as interest rate, rent increase rate etc. for the selected lease contracts that are in scope of TFRS 16, Evaluating the compliance of inputs used in the calculation like rent increase rate, interest rate etc, Selecting the lease contracts used in the calculation of right-of-use assets and financial lease liabilities on a sample basis and testing the compliance of the term of the lease contacts and the assessment of the extension options applied if such options exist with the provision of the contract, Evaluating the adequacy of the disclosures in the consolidated financial statements in relation to the application of TFRS 16. INDEPENDENT AUDIT REPORT