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.) 63 Çelebi Ground Handling Inc. 2021 Annual Report Functional and Reporting Currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates. The consolidated financial statements are presented in TL, which are the functional currency of the Çelebi Hava and the presentation currency of the Group. As of 31 December 2021, the currency of Group’s entities are as below. Company Currency Çelebi Hava Euro (EUR) CGHH Hungarian Forint (HUF) Celebi Delhi Cargo Indian Rupee (INR) CASI Indian Rupee (INR) Celebi Nas Indian Rupee (INR) Çelebi Kargo Turkish Lira (TL) Celebi Cargo Euro (EUR) DASPL Indian Rupee (INR) Celebi GH India Private Limited Indian Rupee (INR) KSU Indian Rupee (INR) Celebi Tanzania Tanzanian Shilling (TZS) The Company operates in the fields of airport ground handling services, cargo and warehouse services, and due to the nature of the service provided, the aviation sector is a sector open to international competition. For this reason, activities in the sector are constantly carried out using multiple currencies. 83% of the Company’s service income in Turkey originate from foreign airlines and overseas service income (2020: 73%). The prices in the Company’s field of activity are mostly determined in foreign currency in accordance with the contracts concluded with the airlines, taking into account the relative competition and market conditions. The Company’s operating income and operating expenses are mainly in EUR, and also US Dollar. Similarly, a significant portion of the Company’s financial assets and debts consists of EUR and US Dollar items. A significant portion of the right-of-use assets, which are the most important asset item in the Company’s statement of financial position, are evaluated in EUR and US Dollars. As of 31 December 2021, the ratio of these assets of the Company to total intangible assets and total assets is as high as 97% and 20%, respectively. The ratio of debts to total liabilities from lease transactions of the same date is 40%. The ratio of total liabilities in foreign currency to total liabilities is 77%. Due to the increase in the share of the services provided to foreign airlines in the airport ground handling activities of the Company, the effect of TL in reflecting the basic economic environment in terms of competition/operation factors has decreased. In other words, the impact of the Euro on the Company’s current operations has increased. Based on the above developments, it has been decided by the Company Management to change the functional currency of the Company from Turkish Lira to Euro. The aforementioned functional currency change was implemented by Çelebi Hava Servis A.Ş., which operates only in Turkey. There is no change in the functional currencies of the Company’s associates and subsidiaries located abroad. Conversion to presentation currency The presentation currency of the Group is TL. The financial statements prepared in EUR within the scope of TAS 21 (“Effects of Exchange Changes”) have been translated into TL using the following method: (a) Assets and liabilities in the balance sheet are translated into TL using the Euro buying and selling rate announced by the Central Bank of the Republic of Turkey on the balance sheet date. (b) The profit or loss and other comprehensive income statement has been translated into TL using the average or, where possible, daily EUR buying and selling rates announced by the Central Bank of the Republic of Turkey. (c) All the resulting exchange differences are presented as a separate component of equity under the name of translation differences.