fulya pekcan - ir.tav.aeroir.tav.aero/uploads/documents/28402016054002_661_tavairportshol… ·...

TABLE OF CONTENTS

TAV AT A GLANCE 02 Who We Are 10 What We Do 12 How 2011 Unfolded 14 Where We Operate 16 Highlights of 2011 22 Outlook for 2012

Yeşim Çınar TAV Security Security Officer

Selda Adalı Tunçel TAV Security Security Officer

Merih Taraktaş TAV Istanbul Terminal Operations Officer

Mustafa Çankaya TAV Airport Hotel Reservation Officer

Mesut Zerman BTA Software Specialist

Nursemin İşçimen TAV Airport Hotel Reservation Officer

Serdar Pektezol TAV IT Car Park System and Application Administrator

Sibel Tatlısu TAV Airports Financial Reporting Senior Specialist

Uğur Çolak TGS VIP/CIP Passenger Services Officer

Songül Aydın BTA Food Safety Chief

Uğur Konyar TAV Security Security Officer

Begüm Ay TGS Passenger Services Officer

Fulya Pekcan TAV Istanbul Ramp Tower Officer

Esen Sefer BTA Accounting Officer

Arzu Güzelaydın Ömür TAV Istanbul TOC Officer

M. Cengiz Yücel ATÜ ATU Bazaar Shop Supervisor

ASSESSMENTS 24 Board of Directors’ Message 26 CEO’s Message

TAV Airports Employees whose Paintings are Featured in the 2011 Annual Report

OPERATIONS 28 Airport Operations 64 Service Companies 78 Investor Relations and Stock Performance 80 Glossary

* This project was carried out under the supervision of artist Köksal Çiftçi.

2 TAV Airports 2011 Annual Report

Shareholding Structure Strong, institutional shareholder base

ShareholderNumber of

Shares (1) Share ( %)

Tepe İnşaat Sanayi A.Ş. 94,664,477 26.1

Akfen Holding A.Ş. 94,886,071 26.1

Sera Yapı Endüstrisi ve Ticaret A.Ş. 14,644,716 4.0

Non-floating (Other) 12,775,048 3.5

Free-float (Other) 146,310,939 40.3

Total 363,281,250 100.0 (1) As of December 31, 2011

Shareholders ( %)

Non-floating (Other) 3.5%

Akfen Holding A.Ş. 26.1%

Tepe İnşaat Sanayi A.Ş. 26.1%

Sera Yapı Endüstrisi ve Ticaret A.Ş. 4.0% Free-float (Other) 40.3%

Who we are?

Tepe İnşaat Sanayi A.Ş. Operating since 1969, Tepe İnşaat is among the leading companies in construction.

26.1%

Akfen Holding A.Ş. Akfen Holding is active primarily in infrastructure investments as well as in maritime investments (e.g. port operations), energy, real estate and construction.

26.1%

Sera Yapı Endüstrisi ve Ticaret A.Ş. Sera Yapı Endüstrisi ve Ticaret A.Ş. focuses on infrastructure and superstructure construction projects.

4.0%

OTHer SHAreHOlderS

Free-float (other)

40.3%Non-floating (other)

3.5%

FOuNdING SHAreHOlderS

3TAV at a Glance Assessments Operations

Organizational Structure

AIrpOrT OperATIONS SerVIce cOmpANIeS

Atatürk Airport (100%)

Esenboğa Airport (100%)

Adnan menderes Airport (100%)

Gazipaşa Airport (100%)

TAV Operation Services (100%)

TAV IT (99%)

TAV Security (100%)

* Only Commercial Areas

BTA (67%)Bilintur (33%)

ATÜ (50%)unifree (Heinemann)

TAV Airports served 451 thousand flights and 53 million passengers in 2011, bolstering its presence further in Europe and the Middle East. The Company undertook an ambitious investment program in 2011 whereby it took over the operation of the commercial areas of the Riga Airport in Latvia and won the tenders for Izmir and Medina Airports. The Company enhanced its recognition, reputation and brand value on a global scale through these investments.

Havaş (65%)HSBc (28.3%)İş Private Equity (6.7%) TGS (50%)

Havaş europe (67%)

Skopje and Ohrid Airports (100%)

riga* Airport (100%)

Batumi and Tbilisi Airports (76%)

monastir and enfidha Hammamet Airports (67%)

madinah Airport (33%)


milestones A global brand in airport operations

1997 • TAV was founded and it was awarded

the tender for the Istanbul Atatürk Airport.

1999 • ATÜ, which was established as a TAV

Airports venture to provide duty free shopping services, was incorporated into the TAV corporate structure; BTA, which provides food and beverage services, was established.

2000 • TAV began operating the Istanbul

Atatürk Airport International Terminal.

2001 • ”primeclass” CIP Service was launched.

2004 • BTA began operating the Istanbul

International Airport Hotel.

• Tepe - Akfen assumed construction and operation of the Esenboğa Airport Domestic and International Terminal.

• TAV İşletme Hizmetleri A.Ş. (TAV Operation Services) was founded.

2005 • TAV Airports was awarded the tender to

operate the Atatürk Airport International and Domestic Terminal Buildings, Parking Garage and General Aviation Terminal for 15.5 years.

• 60% of Havaş shares were acquired.

• Construction and operation of the Izmir Adnan Menderes International Terminal was assumed by TAV. TAV Bilişim Hizmetleri A.Ş. (TAV IT) was founded and the information technology services developed during the course of construction and operation of airport terminals were consolidated under this company.

• TAV was awarded the tender for the Tbilisi Airport in Georgia.

2006 • Operation and construction services

were restructured under “TAV Havalimanları Holding A.Ş.” (TAV Airports) and “TAV İnşaat” (TAV Construction) as two separate holding companies.

• Izmir Adnan Menderes Airport International terminals commenced service.

• Esenboğa Airport Domestic and International Terminal commenced operation.

• TAV Özel Güvenlik Hizmetleri A.Ş. (TAV Security) was founded and the private security services developed during the course of the construction and operation of the airport terminals were consolidated under this company.

2007 • TAV Airports Holding shares were

floated.

• Tbilisi Airport’s new passenger terminal commenced service.

• Batumi Airport commenced operation.

• TAV Airports was awarded the tender for the Monastir and Enfidha Hammamet Airports in Tunisia.

• 40% minority shares of Havaş were acquired. Havaş became a wholly-owned subsidiary of TAV Airports.

• TAV Airports became 100% owner of TAV Izmir and TAV Esenboğa.

• TAV Airports was awarded the tender for the operation of the Antalya Gazipaşa Airport.

• The Hopa Terminal operated by Havaş commenced service.

2008 • TAV Airports assumed operation of

Tunisia’s Monastir Airport.

• TAV Gazipaşa Yatırım-Yapım ve İşletme A.Ş. (TAV Gazipaşa) was founded to operate the Antalya Gazipaşa Airport.

• TAV Airports was awarded the tender for the operation of the airports in Macedonia’s capital Skopje and in Ohrid, as well as the construction of the Shtip Cargo Airport, of which TAV Airports also retains optional rights to operate. The related concession contracts were signed.

• Havaş was awarded the tender for a 50%-shareholding partnership in TGS (Turkish Ground Services Co.), a subsidiary of Turkish Airlines.

Who we are?


2009 • TAV Airports increased its issued capital

by TL 121 million.

• TAV Gazipaşa commenced operation at the Antalya Gazipaşa Airport.

• The Enfidha Hammamet Airport investment was completed.

• Agreement was reached for the sale of Havaş shares to HSBC (28%) and İş Private Equity (7%).

• Havaş acquired a 50% equity stake in TGS.

• IFC (International Finance Corporation), a World Bank institution, acquired a 15% equity stake in TAV Tunisie.

2010 • TAV Airports assumed the operation of

Macedonia’s Skopje and Ohrid airports for 20 years.

• The sale of the minority shares of Havaş to HSBC and İş Private Equity was completed.

• TAV signed a “Global Training Center” agreement with Airports Council International (ACI), whose membership includes more than 1,600 airports from around the world.

• TAV Operation Services launched the TAV Passport Card, which offers many services and privileges at airports operated by TAV.

• The operation of five service points (Kantin, Beerport, Kokpit Cafe, Kokpit Brasserie and İç Hatlar Botanik Cafe) at the Istanbul Atatürk Airport Domestic Terminal was assumed by BTA as of July 1, 2010.

• TAV Airports sold 18% of the shares of TAV Tunisie SA to the Pan African Infrastructure Development Fund.

• Havaş acquired a 50% equity stake in North Hub Services (NHS, Havaş Europe), a provider of ground handling services at Latvia’s Riga Airport.

• TAV Airports was awarded the tender for the operation of duty free, catering and other commercial areas at Latvia’s Riga Airport.

• TAV Airports Holding raised its ownership stake in TAV IT from 97% to 99%.

2011 • TAV commenced service at Latvia’s Riga

Airport after assuming the operation of the commercial areas of this airport.

• TAV Airports Holding raised its ownership stake in TAV Security’s share capital from 66.67% to 100%.

• TAV Airports Holding’s ownership stake in TAV Urban Georgia’s share capital increased from 66% to 76%.

• TAV Airports Holding raised its ownership stake in TAV Batumi Operations LLC’s share capital from 60% to 76%.

• BTA Denizyolları (BTA Sea Lines) was founded as a 50%-50% joint venture of BTA and TASS; BTA commenced service at İDO (Istanbul Fast Ferries Co.) locations.

• Skopje Airport’s new terminal commenced operation after the completion of its construction.

• TAV Airports, jointly with its partners Al Rajhi and Saudi Oger, signed a contract with Saudi Arabia’s Civil Aviation Authority GACA for the build-operate-transfer project of the Madinah Airport, the first airport privatization in Saudi Arabia.

• TAV Mobile, the mobile phone app that provides access to real time information at the airports operated by TAV Airports, was launched.

• TAV Airports Holding was awarded the tender for the leasing of the operation rights of Izmir Adnan Menderes Airport’s existing International Terminal, CIP, Domestic Terminal and auxiliary structures as the highest bidder on November 17, 2011.

• Havaş, a 65%-owned subsidiary company of TAV Airports Holding, increased its ownership stake in North Hub Services (“NHS”), a company providing ground handling services at Latvia’s Riga, Sweden’s Stockholm and Finland’s Helsinki airports, from 50% to 66.7% as of December 20, 2011. NHS will continue to operate at these airports under the “Havaş Europe” commercial brand.


Service companies

Business model and Strategy High level of integration and customer satisfaction achieved through a unique business model

Duty Free

Ground Handling

Food & Beverage

Information Technology

Security

Operation Services

Airport Operations

Atatürk Airport

Esenboğa Airport

Adnan Menderes Airport

Gazipaşa Airport

Madinah Airport

Monastir and Enfidha

Hammamet Airports

Batumi and Tbilisi Airports

Skopje and Ohrid Airports

Riga Airport

TAV Airports Holding

Who we are?


Inorganic Growth New investments in new

regions: Inorganic growth, on the other hand, is accomplished with investments in airport and service companies. The Holding continues to enrich its existing

portfolio by adding new airports and service companies

to it in the target region of Europe, Russia and the

Commonwealth of Independent States, Baltic Nations and

Georgia, Middle East, Africa and India.

Generating Value

TAV Airports is increasing its total value generation by

strengthening the integration between its business lines.

Organic Growth Soaring passenger traffic: Organic growth is achieved through an increase in the

passenger traffic of the airports currently operated by TAV. While the Holding’s revenues grow in parallel

with the soaring passenger traffic, costs increase less than income since the majority of the Company’s expenditures consists of fixed costs. Thus

the Holding takes advantage of an operational leverage effect and generates higher EBITDA.


Investment priorities At the center of the world’s attention

The fastest growing aviation market in Europe

17% Compound Annual Growth Rate in passenger traffic between 2003 and 2011

11%Projected Compound Annual Growth Rate* in passenger traffic from 2009 to 2023

* Compound Annual Growth Rate (CAGR) calculated based on the Turkish Ministry of Transport’s total airline passenger traffic projection for Turkey of 350 million in 2023

Easy Access to the Rapidly Developing Middle East and North Africa Regions

Diversified portfolio composition

1st

Turkey’s leading airport operator

12Number of airports operated in Turkey, Georgia, Tunisia and Macedonia*

* The commercial areas of Riga Airport are operated by TAV Airports.

TAV plans to begin operating the airport in Madinah, Saudi Arabia in the first half of 2012.

Strong growth momentum (2006-2011 period)

55%Compound Annual Growth Rate (CAGR) in EBITDA

17%Compound Annual Growth Rate (CAGR) in Revenues

18%Compound Annual Growth Rate (CAGR) in Passenger Traffic

19%Compound Annual Growth Rate (CAGR) in Employment

TAV Airports: A leading airport operator with a balanced portfolio structure

€ 53 million net profit: Steady financial performance and cash generation capability

Turkey: An alluring market with strong growth potential

Who we are?


Source: Determining Hub Efficiency in Europe, Middle East and North Africa: A Comparative Study; E. Nur Günay, Şükrü Nenem

Transportation Hubs Lowest cost in transfer flight connections ( %)

33

23

16

13

13

3

1

Istanbul Atatürk

Frankfurt

Cairo

London

Dubai

Paris

Madrid

Istanbul: The Region’s Most Efficient Transfer Hub

Istanbul stands out as the most efficient hub when compared with the other seven active and developing air transit hubs.


Turkey

€ 422 million

Istanbul Atatürk Airport (100%)

revenue: € 344 million

Share of Total Revenues

33%

Share of EBITDA

53%

Number of Employees

2,413

Ankara Esenboğa Airport (100%)



4%Share of EBITDA

8%Number of Employees

840

Georgia€ 25 million

Batumi and Tbilisi Airports (76%)



2%

Share of EBITDA

5%

Number of Employees

747

Macedonia € 17 million

Skopje and Ohrid Airports (100%)



2%

Share of EBITDA

1%

Number of Employees

664

Izmir Adnan Menderes Airport (100%)



3%

Share of EBITDA

9%

Number of Employees

559

Gazipaşa Airport (100%) Number of Employees

19

Tunisia Monastir and Enfidha Hammamet Airports (67%)



3%Share of EBITDA


693

Latvia Riga Airport (commercial activities) (100%)

Number of Employees

2

Saudi ArabiaSaudi Arabia Madinah Airport (33%)

Overview12 airports on three continents

revenue

€ 498 million


47%Share of EBITDA

77%Number of Employees*

5,937

Airport Operations

* As of December 31, 2011

What We do?


duTy Free FOOd & BeVerAGe

GrOuNd HANdlING OTHer

BTA (67%)



8%Share of EBITDA


2,323

Has a total seating capacity of 12,500 at 146 points.

Supplies bakery products to various chains in Turkey.

Operates the 131-room Istanbul Airport Hotel.

Operates in Turkey, Georgia, Tunisia and Macedonia.

Commenced service at İDO (Istanbul Fast Ferries Co.) locations via BTA Denizyolları (BTA Sea Lines).

Havaş (65%)



19%Share of EBITDA


9,928

Operates at 22 airports in Turkey including Istanbul, Ankara, Izmir and Antalya with a market share of approximately 65%.

TGS (50%) operates in Istanbul, Ankara, Izmir, Antalya and Adana.

Has a 67% ownership stake in Havaş Europe.

Operation Services, Information Technology (IT) and Security



6%

Number of Employees

661

TAV Operation Services (100%)

Provides commercial space allocation and tourism services.

TAV IT (99%) Provides airport IT services.

TAV Security (100%) Provides security services at the Istanbul, Ankara, Izmir and Gazipaşa airports.

ATÜ (50%)



20%Share of EBITDA


1,420

Operates Turkey’s largest duty free shops.

Established a partnership with Unifree, a subsidiary of the leading German travel retailer Heinemann.

Operates in Turkey, Georgia, Tunisia, Macedonia and Latvia.

revenue

€ 552 million


53%Share of EBITDA

23%Number of Employees*

14,332

Service Companies

* As of December 31, 2011


TAV in Figures TAV’s rapid and steady ascent continues.

How 2011 unfolded?

Consolidated revenues increased by 12% in 2011. Aviation income (including ground handling) constituted 46% of total income, while non-aviation income made up the remaining 54% of revenues. A large portion of the revenues is denominated in foreign currency.

Revenues grew by 12% while EBITDA was up by 21% in 2011 thanks to operational leverage.

* Revenues and EBITDA were adjusted to include guaranteed passenger revenues but exclude construction revenues and expenditures.

Consolidated Revenues* (€ million)

Consolidated EBITDA* (€ million)

785

640

627

2011

2010

2009

2008

5082007

4022006

881

212

167

141

2011

2010

2009

2008

772007

292006

257

12%

21%

17% compound annual growth rate

(CAGR) between 2006 and 2011




Passenger traffic at the airports operated by TAV Airports increased by 11% compared to the previous year and reached 53 million in 2011.

TAV Airports provides services at 12 airports in five countries on three continents with nearly 20 thousand employees.

Average Number of Employees

17,535

12,194

11,289

9,473

2011

2010

2009

2008

2007

8,1462006

19,838

13%

Passengers (million)

232006

48

42

41

2011

2010

2009

2008

302007

53

11%






Operations map expanding operations in Turkey and abroad

Where We Operate?

MACEDONIA

TAV’s 2011 commercial Flight Traffic 11.9 thousand

TAV’s 2011 passenger Traffic 838 thousand

revenue by country 2%

Skopje

Ohrid

TUNISIA


TAV’s 2011 passenger Traffic 2.3 million


enfidha

monastir

Passenger Fees

Ground Handling

Landing

Parking

Fueling

Duty Free

Food and Beverage

Car Park


TURKEY

TAV’s 2011 commercial Flight Traffic 396 thousand

TAV’s 2011 passenger Traffic 48 million


Istanbul Atatürk

Ankara Esenboğa

Izmir Adnan menderes

Antalya Gazipaşa

GEORGIA


TAV’s 2011 passenger Traffic 1.2 million


Tbilisi

Batumi

LATVIAriga Airport (Commercial Activities)

SAUDI ARABIA madinah Airport Operations are to be taken over in the first half of 2012.


Operational Summaryrapid uninterrupted growth in every line of business

Highlights of 2011

International passenger traffic at the airports operated by TAV Airports increased by 9% to reach 31.9 million.

International Passengers (million)

29.3

2011

2010

31.9

9%

In line with the expanding operations map, the Company’s average number of employees increased by 13% in 2011.

TAV Airports Average Number of Employees

17,535

2011

2010

19,838

13%

Domestic passenger traffic at the airports operated by TAV Airports increased by 14% to reach 20.8 million.

Domestic Passengers (million)

18.3

2011

2010

20.8

14%

International commercial flights at the airports operated by TAV Airports were up by 5% in 2011.

International Commercial Flights

266,991

2011

2010

281,123

5%

Domestic commercial flights at the airports operated by TAV Airports were up by 14% in 2011.

Domestic Commercial Flights

148,759

2011

2010

170,030

14%


Financial Summaryrecord-breaking financial success

TAV Airports’ revenues increased 12% and reached € 881 million in 2011 as a result of organic and inorganic growth.

Operating Revenues* (€ million)

785

2011

2010

881

12%

EBITDA soared by 21% in 2011 thanks to the operational leverage effect.

EBITDA* (€ million)

212

2011

2010

257

21%

TAV Airports generated net profit of € 53 million in 2011 thanks in part to the 11% growth in passenger traffic at the airports operated by the Company.

Net Profit (€ million)

50

2011

2010

53

6%

Summary Income Statement* (€ million) 2010 2011

Operating Revenues 785 881

Operating Expenses 632 689

Net Operating Profit 153 192

Net Financial Expenses (57) (67)

Profit/(Loss) Before Tax 64 92

Income Tax Benefit/(Expense) (12) (40)

Net Profit/(Loss) 50 53

Profit/(Loss) Attributable to Minority Interests 2 (1)

EBITDA 212 257

EBITDAR 342 387

* Includes guaranteed passenger revenues but excludes construction revenues and expenditures. (Total guaranteed passenger income at Izmir and Ankara was € 33 million for 2011.)


Summary Balance Sheet (€ million) 2010 2011

Cash, Cash Equivalents and Securities 32 76

Restricted Bank Balances 382 356

Total Assets 2,039 2,081

Financial Liabilities 1,236 1,224

Total Liabilities 1,499 1,519

Shareholders’ Equity 540 562

Net Debt 821 792

Total Assets (€ million)

2,039

2011

2010

2,081

2%

Shareholders’ Equity (€ million)

540

2011

2010

562

4%

Free cash flow (net cash generated from operations - cash used in investments) in 2011 was € 250 million, up from € 217 million in 2010.

(€ million) 2010 2011

Net Cash Generated from Operations 336 355

Acquisition of Property and Equipment (80) (43)

Addition to Airport Operation Rights (38) (61)

Acquisition of Intangible Assets (1) (1)

Free cash Flow (FcF) 217 250

Free Cash Flow

Financial Summary

Highlights of 2011


Consolidated Net Debt (€ million)

821

2011

2010

792

-4%

Composition of Debt (€ million)

1 year

500

400

300

200

100

0

2 year 3 year 4 year 5 year 5+year

Other

TAV Holding-standalone

Havaş

TGS

TAV Gazipaşa

TAV Macedonia

ATÜ

TAV Georgia

TAV Izmir

TAV Esenboğa

TAV Tunisie

TAV Istanbul

Capital Expenditures (€ million)

Property and Equipment Airport Operation Rights Intangible Assets

The consolidated net debt of TAV Airports Holding was down by 4% to € 792 million.

2011

2010

2009

2008

2007

120

215

312

119

106


Highlights A productive and successful year when major investments were undertaken

TAV Airports Holding was awarded the tender held by the Turkish State Airports Authority (DHMİ) for the leasing of the operation rights of Izmir Adnan Menderes Airport’s existing International Terminal, CIP, Domestic Terminal and auxiliary structures as the highest bidder on November 17, 2011.

Skopje Airport, annual passenger capacity of which was increased to 4 million by TAV Airports, commenced service.

TAV Airports, through the consortium it has formed jointly with its partners Al Rajhi and Saudi Oger, was awarded the tender for the operation of the Madinah Airport for 25 years.

TAV Airports, jointly with its partners Al Rajhi and Saudi Oger, signed a contract with Saudi Arabia’s Civil Aviation Authority GACA for the build-operate-transfer project of the Madinah Airport, the first airport privatization of Saudi Arabia.

Adding Istanbul Fast Ferries Co. (İDO) to its service network, BTA acquired the operation right for 33 food and beverage sales points in terminals, fast ferries and ferryboats operated by İDO.

TAV Mobile, the app developed for smart phones and tablet PCs that provides passengers access to real time information, was launched.

A wine store featuring mostly Georgian wines was opened in the duty free section of the Tbilisi Airport.

Izmir Adnan Menderes Airport was granted Level 1 Carbon Accreditation Certification by the ACI in 2011.

The “open gate” policy was initiated at the Ankara Esenboğa Airport.

An MoU (Memorandum of Understanding) was signed between the Turkish State Airports Authority (DHMİ), TAV and Turkish Airlines for the CDM (Collaborative Decision Making) project in order to enhance passenger, airline and sector satisfaction and optimize capacity at the Istanbul Atatürk Airport.

The trigen facility at the Istanbul Atatürk Airport resumed operation, resulting in major energy cost savings.

TAV assumed the operation of 1,300 square meters of commercial area at Latvia’s Riga Airport at the beginning of 2011 and commenced operations. Total area taken over by TAV Airports reached 2,295 square meters during the year.

TAV received the “Best Partner” award from the Riga Airport management.

TAV Airports Holding raised its ownership stake in TAV Security’s share capital from 66.67% to 100%.

TAV Airports Holding’s ownership stake in TAV Urban Georgia’s share capital increased from 66% to 76%.

TAV Airports Holding raised its ownership stake in TAV Batumi Operations LLC’s share capital from 60% to 76%.

Havaş, a 65%-owned subsidiary company of TAV Airports Holding, increased its ownership stake in North Hub Services (“NHS”), a company providing ground handling services at Latvia’s Riga, Sweden’s Stockholm and Finland’s Helsinki International Airports, from 50% to 66.7% as of December 20, 2011.

Skopje Airport’s new terminal commenced operation after the completion of its construction.

TAV Macedonia was deemed worthy of the best project award in the Public Investment category at the International Real Estate and Investment Fair that was organized for the first time in 2011.

Istanbul Atatürk Airport International and Domestic Terminal Food Court area was renovated.

TAV Operation Services and the Bank of Georgia inked the partnership agreement allowing exclusive clients of the Bank of Georgia to use the “prime class” Lounge.

Highlights of 2011


AwardsInternational awards won as a result of diligent and dedicated efforts

The 2010 Annual Report of TAV Airports was deemed the “Best of Show” (Best in the World) at the International Annual Report Competition held in New York City, USA.

The 2010 Annual Report was recognized with the Gold Award in the “Airport Management” category at the “Galaxy Awards” competition organized by MerComm in the United States.

TAV Airports Holding’s 2010 Annual Report received the Gold Award in the “Transportation and Logistics” category from the League of American Communications Professionals (LACP) while ranking in the top 50 reports in the Europe-Middle East-Africa (EMEA) region and among top 10 reports in Turkey.

At the “Turkey Investor Relations Awards” organized for the third time in 2011 by Thomson Reuters Extel Surveys and Acclaro, TAV Airports won awards in six categories, “Best Investor Relations CEO,” “Best Investor Relations CFO,” “Best Investor Relations Officer,” “Best Investor Relations Website,” “Best Investor Relations Unit” and “Best Disclosure of Financial Results,” including a first-place finish in the “Best Investor Relations CEO” category.

ISS Corporate Services (ICS), one of the world’s most prestigious independent corporate governance rating organizations, increased TAV Airports’ corporate governance rating score to 9.09. As a result of this score, TAV Airports Holding became the holder of the second highest rating in the Istanbul Stock Exchange Corporate Governance Index.

The Emerging Markets Airport Awards recognized TAV Airports in three categories. At the award ceremony held in Dubai, United Arab Emirates, TAV Airports was chosen as the “Best Emerging Market Airport Management Company.” Izmir Adnan Menderes Airport International Terminal captured the “Best Emerging Market Achievement Airport for Eco Innovation” title while Georgia’s Tbilisi Airport was deemed the “best” in its region (Russia/CIS); both of these airports are operated by TAV Airports.

As a result of its leadership in internal audit, TAV Airports was deemed worthy of the “Internal Audit Awareness” award by the Internal Audit Institute of Turkey (TİDE) Board of Directors.

TAV Georgia won the “Golden Brand Award Best Brand” in the “Public Transport and Service” category at the Golden Brand 2010 organized by Global Idea, a leading market research firm in Georgia, and The Financial, a news portal.

TAV Airports was recognized with the 2011 Corporate Governance Award 2011 by the World Finance Magazine.

Moodie awarded Cakes & Bakes, a subsidiary company of BTA Catering, with the “Best Supplier” award.

Istanbul Atatürk Airport was named “Best Airport Operator of the Year” at the Skalite 2011 Awards, known as the “Tourism Oscars” in the industry and organized by Skal International Istanbul Club to raise the bar for quality in tourism.

W3 Awards gave the “Silver Award” to the Istanbul Atatürk Airport website in the “Transportation” and “Travel” categories and to the TAV Investor Relations website in the “Financial Services” category.

TAV Passport was deemed worthy of the “Best Service” Award by gecce.com.

ICT Summit Eurasia - Bilişim Zirvesi’11 designed as a platform to encourage cooperation within the Eurasia region, recognized the communication technology projects undertaken between the countries of the region. Leaving many established information technology companies behind with its Enfidha - Hammamet Airport information technology infrastructure project, TAV IT was awarded the first place at the award ceremony.

TAV Macedonia, won the best project award at the Real Estate and Investment Exhibition organized for the first time in Macedonia in 2011.


Outlook for 2012 New projects undertaken on the path to becoming a world renowned company

pASSeNGer ANd cOmmercIAl FlIGHT TrAFFIc IN THe WOrld

passenger Traffic Growth in Selected Airports (%) (2011)

TAV Airports 11

Schiphol 10

Europe 7

Frankfurt 7

Aena 6

Aéroport de Paris 6

World 5

BAA 4

TAV Airports surpassed the passenger traffic growth rates in the world and in Europe and continued its trend of outperforming the industry in 2011. TAV Airports, the leading brand in the rapidly developing Turkish aviation industry, also continues to expand its business geographically by assuming operation of new foreign airports.

Turkey’s number 1 airport operator with strong regional growth performance

Holding the concession rights to operate the airports of Turkey’s largest three metropolitan areas (Istanbul Atatürk, Ankara Esenboğa, Izmir Adnan Menderes), TAV Airports expanded its operations map overseas to include Tunisia, Georgia, Macedonia, Latvia and Saudi Arabia. TAV continues to grow by seizing on regional infrastructure development opportunities.

2011 Passenger Traffic (million)

Ankara* 8.5 Antalya 25.1

Istanbul SAW 12.7 Izmir* 8.5 Istanbul Atatürk* 37.5

* Airports operated by TAV

Outlook for 2012


Turkish Aviation Industry and TAV Airports

Turkish Market Total Passenger Traffic (million)

TAV Airports Total Passenger Traffic (million)

2011 117

2003 34

2007 70

2009 86

2005 57

2010 103

2006 65

2008 79

2004 45

2011 53

2003 9

2007 30

2009 42

2005 17

2010 48

2006 23

2008 41

2004 10


between 2003 and 2011



Source: DHMİ (State Airports Authority, excluding transit passengers)


Board of directors’ message 2011 has been another stellar year when TAV Airports’ concrete accomplishments were recognized with a large number of awards.

Sibe

l Tat

lısu,

TAV

Air

port

sBoard of directors’ message


The gigantic turbulences experienced in the world economy and in the financial markets that serve to price in the economic expectations have left a number of destructive and permanent marks on the global scale since 2007. As many industries go through difficult times during this period, undoubtedly the aviation sector that TAV operates in is also significantly impacted by these adverse circumstances.

TAV Airports has overcome many crises in its relatively short history, from the September 11 attacks and the avian flu to the volcano eruption in Iceland and the Russia-Georgia war in Georgia, the last such crisis being the popular uprising in Tunisia. From this perspective, we can say that crises have become a part of the natural flow of life for TAV Airports Holding.

When we look back and analyze the operational and financial performance of and the giant strides made by TAV Airports, which operates in the aviation industry that is highly sensitive to the business cycle and economic developments, over the last five years that was a period of major economic turbulence, we see a bastion of stability operating in an unstable background. Growing its passenger traffic, revenues and EBITDA by an average of 18 %*, 17 %* and 55 %*, respectively, over the last five years, the Company is realizing its policy of being a center of stability in Turkey’s region in its own economic sphere of influence thanks to its strong and steady growth. Continuing to grow at an accelerating pace, TAV Airports has become a leading company that steers its industry in all regions in which it operates.

This journey that began 15 years ago with a single airport in our own backyard led to today’s regional powerhouse that serves at 12 airports on three continents. We always stood out with our values and work ethic throughout this journey. Leveraging the opportunities presented by the culture we all grew up as part of, we worked in utmost harmony with many partners from many different faiths and speaking many different languages on three continents. As one of the most effective practitioners of the matrix-style organizational structure that has been gaining prominence in the contemporary management literature, TAV Airports steered its operations that now span a vast geography in the most efficient manner.

TAV Airports owes its current success to its employees, each of whom is among the best professionals in his or her field. We created a corporate culture at the Company, which makes the best of the opportunities offered by our unprecedented organizational structure, where the best is achieved in the shortest amount of time irrespective of external circumstances. This comes about as a result of engaging collective intelligence in decision-making processes as well as each employee being equally responsible as all other employees with regard to the Company’s future.

As affirmed by independent rating agencies, we continued to be a “best practice” example of corporate governance by thorough implementation of corporate

governance standards in the most comprehensive manner in Turkey. While conducting our business, we aimed to attract billions of dollars of foreign capital into Turkey while maintaining the sensitive balance between professional discipline and creative freedom. We deployed the foreign capital that we have secured for growth, but we also managed to maintain the distinction of being an organization that makes decisions expeditiously and shares information effectively while growing.

One of the most important elements of TAV Airports Holding’s corporate culture is its focus on diversity and its understanding that sees diversity as wealth. Approaching our employees in accordance with this philosophy, we managed to add the personal knowledge and know-how of each employee to the Company’s shared intellectual capital pool. Consequently, TAV Airports became an exemplary company in working in harmony with different cultures in a very diverse set of regions.

We anticipate the volatility to continue in every segment of the economy for a little longer in the period ahead. TAV Airports Holding will continue to represent Turkey successfully on the global stage thanks to the impetus stemming from its values that brought the Company to this day as well as its invaluable experience. We would like to express our deepest gratitude to our employees who made TAV Airports what it is today.

Ali Haydar KurtdarcanVice Chairman of the

Board of Directors

Hamdi AkınChairman of the

Board of Directors

Dr. M. Sani ŞenerMember of the Board of

Directors, President & CEO * CAGR: Compound Annual Growth Rate


ceO’s message TAV Airports continued to grow faster than the industry despite the global economic uncertainties and the instabilities created by the radical transformations taking place in the regions where the company operates.

Sibe

l Tat

lısu,

TAV

Air

port

s ceO’s message


Esteemed Shareholders,

Founded in 1997, TAV Airports has become a respected regional brand in the Eurasia/Africa axis in merely 15 years, which would be considered as short as the blink of an eye as far as the history of corporations is concerned. The most important factor we owe this accomplishment to is the diversity-oriented perspective that we have acquired from Turkey, which is among the few major centers of diversity on the planet.

Thanks to this perspective that allows TAV Airports to act together in harmony with cultures that are very different from each other, the Company is able to create value by finding a common denominator among a diverse array of cultures spanning a vast geography from northern European Union countries such as Latvia, Finland and Sweden to Georgia, Macedonia, Tunisia and Saudi Arabia. As the open and friendly foreign policies pursued by Turkey strengthen our ties with our neighbors with each passing day, they also help TAV Airports extend its journey that began in its own homeland toward the greater region in leaps and bounds.

In this regard, we have recorded a major landmark in the Company’s history in 2011. TAV Airports Holding, as part of the TIBAH consortium that it established jointly with Al Rajhi and Saudi Oger, two leading groups in the Middle East was awarded the tender for the capacity expansion and operation until 2037 of the Madinah International airport, which holds a very special place in our hearts for being one of the holy cities of Islam. We are all very excited and proud to have the privilege of designing and operating the gate of entry to the city of Madinah with the investment we will make there.

During the year, TAV Airports was also awarded the tender for the operation, until year-end 2032, of the domestic and international terminals of the Izmir Adnan Menderes Airport, which is the entrance gate to the Aegean coast, one of the major tourism and culture hubs in Turkey. We are also glad to contribute to the faster growth of the region through the € 250 million investment TAV will undertake in Izmir as a result of this tender.

As a company that earns 54 % of its income from non-aviation businesses, TAV Airports takes special heed of the development of its service companies. ATÜ, which has become an admired market leader in the region in the duty free retailing business line, commenced operation at the Riga airport, an airport that is not operated by TAV; thereby demonstrating the flexibility of the Company’s business model once again. In a similar vein, TAV’s food & beverage firm BTA established a joint venture with TASS which took over the operation of Istanbul Fast Ferries Co (İDO), under the name of BTA İDO, and began catering to 50 million customers of İDO with the BTA quality. In addition, Havaş, Turkey’s largest ground handling company, now also serves airline passengers in Riga, Helsinki and Stockholm under the Havaş Europe brand.

In 2011, a year marked by new investments, TAV Airports continued to operate its existing portfolio of airports most effectively. Istanbul Atatürk Airport, always one of the major focal points of the global aviation industry that also holds the distinction of being TAV Airports Holding’s crown jewel as well as the number one entry point to Turkey, registered an impressive growth rate of 17 % in 2011. Corresponding to an additional 3 million passengers, this increase alone is equivalent to the passenger traffic of a mid-size airport.

Aside from Tunisia, all airports in our portfolio achieved very strong, double-digit growth rates in 2011. The political turmoil in Tunisia disrupted the Company’s growth in this country in 2011. However, as a company that has invested in the next 35 years of Tunisia alongside respected multilateral partners such as IFC and PIADF, we are aware that economic liberalization will increase this country’s tourism potential and enhance the value of our assets; therefore, we are more optimistic than ever about Tunisia’s future.

In a year when global airline passenger traffic grew by 4.9 % according to ACI data, TAV Airports increased its total passenger traffic by 11 % to 53 million. As a result, the Company’s total revenue was up by 12 % to € 881 million and EBITDA increased by 21 % to € 257 million while EBITDA margin ticked up by 2.2 percentage points to reach 29.2 %. The Company increased its cash generation capability at an accelerating pace and generated € 250 million in free

cash flow during this period when it also recorded the strongest financial results in its history. Consequently, TAV Airports managed to reduce its net debt to € 792 million as of December 2011 even after making investments amounting to € 106 million during the year. Increasing our headcount by 8 %, we ended 2011 as a larger and stronger company with 20,269 employees and continued to be among the largest job creators in Turkey in 2011.

2011 went in the books as a major milestone in the Company’s history as the year where TAV’s “Smart Growth” strategy began to bear fruit. TAV Airports Holding’s Board of Directors crowned the Company’s successful financial results in 2011 by resolving to recommend to the General Assembly that a dividend of TL 0.25 per share be paid to the shareholders.

Our commitment to creating value for the society we belong to in every area during the course of our operations reveals itself in every activity we conduct. As one of the most important indicators of this commitment, TAV Airports published its first sustainability report in accordance with the GRI reporting standards in 2011. The Company will continue to conduct its business along the lines of sustainability in the coming years.

What has transformed TAV Airports, whose success in corporate governance and strategic communication is affirmed by independent sources each and every year, into an exemplary and admired company in the region is our ability to keep polar opposites in balance and turn our differences into strength, qualities that are embedded in the DNA of the Company and all of its employees. These skills that helped TAV Airports get to where it is today are also the principal assurance of the achievements that the Company will continue chalk up in the coming years. I would like to take this opportunity to express my sincere gratitude to our employees, the most valuable assets of TAV Airports, to our passengers, and to our esteemed shareholders whose support we always feel on our side.

Dr. M. Sani Şener Member of the Board of Directors and President & CEO

28 TAV Airports 2011 Annual Report Airport Operations

Airport Operations Turkey: Fastest growing aviation market in europe

Center of attention Thanks to its rich history, culture , beautiful nature, developing economy, trade volume and strategic position, Turkey is becoming a powerful center of attraction in Europe as well as in the Middle East.

Second largest population With 75 million people, Turkey has the youngest, the most rapidly growing and the second largest population in Europe.

Source: IMF

Steady growth momentum Turkey is the sixth largest economy in Europe and the 16th largest in the world.

Turkey’s steady growth momentum in recent years and the potential it offers attract investors.

Turkey ranks close to the bottom in Europe in terms of GDP per capita despite its high growth rates, indicating ample room for growth.

GDP per Capita in 2011 (US$ thousand)

Source: IMF, International Monetary Fund, World Economic Outlook Database, September 2011

Hungary 14,808

Turkey 10,576

Czech Republic 20,925

Slovenia 25,939

Poland 13,966

Croatia 14,529

Slovakia 17,888

Latvia 12,226

Greece 27,875

Spain 33,297

Romania 8,665

6,266Serbia

Bosnia and Herzegovina

3,574

4,714

Ukraine

Nominal GDP 48

3 615

943 1,

083

1,01

2

877

730

531

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

(10.0%)

(5.0%)

0.0%

5.0%

10.0%

647 74

2

798

Turkey’s Growth Trend (US$ million)

Real GDP Growth ( %)


Source: Ministry of Culture and Tourism of the Republic of Turkey

The number of tourists visiting Turkey increases with each passing year.

Increasing Tourist Arrivals

countries 2011 change 2010 2009

Germany 4.8 10 % 4.4 4.5

Russia 3.5 12 % 3.1 2.7

United Kingdom 2.6 -3 % 2.7 2.4

Iran 1.9 0 % 1.9 1.4

Bulgaria 1.5 4 % 1.4 1.4

Georgia 1.2 14 % 1.1 1.0

The Netherlands 1.2 4 % 1.1 1.1

France 1.1 23 % 0.9 0.9

Syria 1.0 8 % 0.9 0.5

USA 0.8 18 % 0.6 0.7

Other 12.0 14 % 10.5 10.5

Total 31.5 10% 28.6 27.1

Growth in the Number of Aircraft

The number of aircraft grew at a compound annual growth rate of 14% between 2002 and 2011.

In 2011, the number of companies active in the Turkish civil aviation industry rose to 155 and the total turnover of the sector reached US$ 12 billion. The Turkish aviation industry aims to continue with its accomplishments and raise the number of aircraft to 750 and passenger traffic to 350 million by 2023, when we will be celebrating the 100th anniversary of the Republic.

Total Number of Aircraft in Turkey*

2011 349

2003 162

2007 250

2009 299

2005 240

2010 332

2002 110

2006 259

2008 270

2004 202



Source: Directorate General of Civil Aviation (SHGM)

Turkish Aviation Industry 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Domestic 9 9 14 21 31 32 36 41 51 58

International 25 25 31 36 34 38 44 44 53 59

Total 34 34 45 57 65 70 79 86 103 117

Tourist Arrivals 13 14 18 21 20 23 26 27 29 31

The global civil aviation industry continues to grow with a capacity of approximately 20 thousand commercial aircraft, nearly 5.4 billion passengers, 2,000 commercial airline companies and airports as of 2011. The forecasts call for the commercial aircraft capacity to rise to 40 thousand and the number of passengers to reach 9 billion by 2027.

Source: ICAO

Seld

a Ad

alı T

unçe

l, TA

V Se

curi

ty /

Ista

nbul

Ata

türk

Airp

ort


Istanbul Atatürk Airport One of world’s most preferred airports

In addition to being the largest and busiest airport in the region, Istanbul Atatürk Airport is also europe’s fastest growing and the world’s 29th busiest airport according to 2011 statistics. Also an attractive hub for transit flights, Atatürk Airport receives an increasing number of passengers each day thanks to the large population and high tourism and commerce potential of Istanbul, one of world’s largest metropolitan areas.

• The trigeneration plant that has 10 MW electricity, 10,786 kW hot water and 5,781 kW cold water production capacity resumed operation, resulting in major energy cost savings.

• The “Rota” program that was developed by TAV IT to better manage the aircraft parking space need arising from increased air traffic began to be used by the Turkish State Airports Authority (DHMİ).

• Landings and takeoffs that were previously monitored only via frequency using the data received from flight and ground radars began to be monitored over the internet.

• Atatürk Airport hosted flights of 116 airline companies at the international terminal and eight airlines at the domestic terminal in 2011.

• 34 new airline companies began scheduling flights from the Atatürk Airport including Asiana Airlines, Ata Airlines (Iran), Air Bishkek, Iran Aseman Airlines, Kuwait Airways, Carpat Air, China Southern Airlines, Yakutia Airlines, Hainan Airlines and Tailwind Airlines.

• Istanbul Atatürk Airport was named the “Best Airport Operator of the Year” at the Skalite 2011 Awards, known as the “Tourism Oscars” in the industry.

Major Developments

What is Open Gate? Initiated in 2011 and expected to be completed in 2012, the Open Gate system encompasses moving the security control points at the entrances of the waiting areas of gates to more central locations; redrawing air-land boundaries through these points; and subjecting all passengers, transit passengers, personnel and materials that move to the airside (isolated areas) to a security check in accordance with “pre-boarding control standards.”

In addition, as part of the Open Gate policy: • Passport control and pre-boarding security checks and scans of passengers will be performed at a single checkpoint. • Land-Air boundary will be drawn clearly as requested by ICAO and ECAC. • The liquid limitation policy will be fully implementable since the duty free and food & beverage areas will be inside the Isolated Lounge. • Passenger discomfort due to the existing gate lounges being small and insufficient to accommodate large aircraft will be eliminated. • Flight delays due to security concerns will be prevented. • The airside will be safe and secure at all times since entrance to all waiting lounges will be kept under surveillance.

Airport Operations

TAV at a Glance 33Assessments Operations

Indoor Car Park Area 180,000 m²

Indoor Car Park Capacity 7,076 vehicles

Outdoor Car Park Area 28,300 m²

Outdoor Car Park Capacity 1,034 vehicles

Duty Free Area 6,100 m²

Number of Duty Free Stores 25

Number of Bus Gates Domestic: 9 International: 16

Runways 17R/35L 3,000x45 M 05/23 2,600x60 M 17/35R 3,000X45 M

Number of Destinations International: 236 Domestic: 33

Catering Area 15,744 m²

Number of Check-in Counters International: 224 Domestic: 96

Passport Counters Departures Floor: 48 Arrivals Floor: 42

Number of Bridges International: 26 Domestic: 12

Flight Traffic by Airline ( %)

Other 27

Turkish Airlines 68.4

Turkish Airlines 75.4

International

domestic

Atlas Jet 2.3

Onur Air 14

Atlas Jet 7.7

Other 2.8

Lufthansa 2.3

Key Indicators

37.5

32.1

29.8

23.9

20.3

18.4

11.8

11.4


2011

Domestic

Domestic

International

International

2010

2009

13.6

306

274

266

200

179

170

95

96

Commercial Flights (thousand)

2011

2010

2009

106

Seld

a Ad

alı T

unçe

l, TA

V Se

curi

ty /

Ista

nbul

Ata

türk

Airp

ort


Ankara Esenboğa Airport Service quality worthy of Turkey’s capital

reflecting Turkey’s modern face as the region’s newest airport and shortening the distances covered by its passengers thanks to its unprecedented design that combines the international and domestic terminals under a single roof, Ankara Esenboğa Airport offers a pleasant customer experience both before and after the flight.

Major Developments • Catering areas and shopping centers were expanded to best meet customer

needs within the terminal.

• The lounge located in the International Terminal began to be operated by “primeclass.”

• Ankara Esenboğa Airport hosted scheduled and charter flights of 24 airline companies in 2011.

• International Terminal hosted flights to 29 destinations in 18 countries while the Domestic Terminal served flights to 38 destinations.

• NAS Air launched flights from Ankara Esenboğa Airport in 2011.

• Beginning to generate its own electricity with a cogeneration plant in 2008, TAV Esenboğa met 70% of its energy consumption needs from this energy production facility in 2011.

Key Indicators


Other 33

Turkish Airlines 41

Turkish Airlines 77

International

domestic

Lufthansa 12

Pegasus 12

Pegasus 14

Other 11


8.5

7.8

6.1

1.4

1.3

1.1

6.4

5.0

2011

2010

2009

7.1

Domestic Domestic International International


72

63

51

12

12

10

51

41

2011

2010

2009

60

Airport Operations

Expiration of Operation May 2023

Car Park Area 108,000 m²

Car Park Capacity 4,053 vehicles




Number of Check-in Counters International: 78 Domestic: 80


Number of Bridges 18

Number of Bus Gates 10

Runways 2 2RWY 03/21 runways 3,750x45, 3,750x60 m

Begü

m A

y, T

GS

/ Ank

ara

Esen

boğa

Airp

ort

Serd

ar P

ekte

zol,

TAV

ITe

/ İzm

ir Ad

nan

Men

dere

s Ai

rpor

t


Izmir Adnan menderes Airport The airport growing with Izmir’s potential

Turkey’s third largest city, Izmir also boasts the second most important commercial port in the country. Serving 49 airline companies in 2011, the Izmir Adnan menderes Airport International Terminal hosted flights to 87 destinations during the year. TAV Airports was awarded the tender that was held in 2011 for the operation rights of the domestic and international terminals until year-end 2032.

Major Developments

• The Domestic Terminal commenced operation under the management of TAV Airports on January 2, 2012.

• The CIP and General Aviation segmentation project was completed and commenced service as of the end of the year for the use of CIP and other privileged passengers.

• Number of passengers, flying particularly to Germany, France, Ireland, Poland and Austria, registered increases in 2011.

• TAV Izmir hosted flights of 49 airline companies in 2011.

• The number of international destinations reached 87.

• Eight new airlines including Easy Jet, Aer Lingus and Azerbaijan Airlines launched seasonal scheduled flights.

• TAV Izmir renewed its verification for the Level 1 of the Carbon Accreditation Program.

• 11% reduction in electricity consumption and 1% reduction in water consumption were achieved as part of the sustainability initiatives in 2011.

Airport Operations


Expiration of Operation December 2032




Number of Bridges 9


Runways 34R - 16L 3,240x45 m 34L - 16R 3,240x45 m



Number of Check-in Counters 66


Key Indicators


Onur Air 7

International

Other 36Pegasus 15

Lufthansa 8Sun Ekspres 31 Atlas Jet 4

2.1

1.7

International Passengers (million)

2011

2010

2009

2.5

16

13

International Commercial Flights (thousand)

2011

2010

2009

17

42 TAV Airports 2011 Annual ReportAr

zu G

üzel

aydı

n Ö

mür

, TAV

Ista

nbul

/ An

taly

a G

azip

aşa

Airp

ort

Antalya Gazipaşa Airport New gateway to the eastern mediterranean

Serving as an international boutique airport in Antalya, one of the major destinations of Turkish tourism, Gazipaşa Airport stands out as the most convenient access point to Alanya. Gazipaşa Airport served three airlines and hosted 106 domestic and 90 international flights in 2011.

Airport Operations




Car Park Capacity 150 vehicles

Duty Free Area 94 m²

Passport Counters Departures Terminal: 2 Arrivals Terminal: 3 Departures Gate: 1 Arrivals Gate: 1

Runway PCN 77/R/X/T 2,000x45 m


Catering Area 57 m²


Key Indicators

13,9129,924

4,648

Passengers

2011

2010

3,988

19690

212

Commercial Flights

2011

2010

106

Major Developments

• After beginning to host scheduled domestic flights in July 2010, Antalya Gazipaşa Airport started hosting scheduled international charter flights in 2011.

• Runway extension and expansion investments were made.

• Transavia Airlines conducted Gazipaşa Airport’s first international flight in 2011.

Domestic

Domestic

International

International

• 30% conservation in electricity consumption was achieved in 2011 by reducing the airport and immediate vicinity lighting levels by one-third as part of the sustainability initiatives.

44 Airport OperationsTAV Airports 2011 Annual Report

Georgia Gateway of commerce to the caucasus

Demographic Composition

Ages 15 to 64 years Ages 65 years and older

18.7 % 65.8 % 15.5 %

Ages 0 to 14 years

Strategic position The completed oil pipelines in the region such as the Baku-Tbilisi-Ceyhan pipeline support the strategic position of Georgia, which is located at the crossroads of Europe and Asia.

Trade routes Located on the eastern end of the Black Sea, Georgia controls the trade route that passes through the Caucasus Mountains.

Growth potential With a population of 4.3 million, Georgia was among the fastest growing economies in the region until the tensions with Russia over Abkhazia and South Ossetia.

Georgia’s Growth Trend (US$ billion)

Nominal GDP Real GDP Growth ( %)

200.0 200

0 0

400.0 400

600.0 600

800.0 800

1,000.0 1,000

1,200.0 1,200

1,400.0 1,400

1,600.0 1,600

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Travel and Tourism Indicators

Foreign Tourist Arrivals (thousand) Tourism Revenues (US$ billion)

( 5.0 %)

0.0 %

5.0 %

10.0 %

15.0 %

12.9

10.8

11.7 12

.9

13.3

13.7

14.2

14.9

10.2

20.0

15.0

10.0

5.0

0.0

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: IMF

Source: World Economic Forum


Tbilisi International Airport modern flight base linking Georgia to the world

Tbilisi International Airport is the first international project of TAV Airports Holding. The airport serves nearly all air traffic of Tbilisi and Georgia which offer new business and trade opportunities. Tbilisi Airport registered 29% growth in passenger traffic and 19% increase in commercial flight traffic in 2011.

Song

ül A

ydın

, BTA

/ Tb

ilisi

Inte

rnat

iona

l Airp

ort



Turkish Airlines 7 Pegasus 4

International

Other 49Aerovit 9

Azerbaijan Airlines 6 Georgian A/W 19 Lufthansa 5

Major Developments

• Tbilisi Airport hosted flights of 24 airline companies in 2011.

• Six new airlines launched flights in 2011: Ata Airline, Air Astana, China Southern, Ural Airlines, Fly Dubai and Air Cairo.

• Tbilisi Airport hosted flights to 26 international and two domestic destinations, serving a total of 28 destinations.

• TAV Georgia won the “Golden Brand Award Best Brand” in the “Public Transport and Service” category at the Golden Brand 2010 organized

by Global Idea, a leading market research firm in Georgia, and The Financial, a news portal.

• Tbilisi Airport was honored by the EMAA with the Best Emerging Airport Award in the region of the Commonwealth of Independent States and Russia.

Key Indicators

822

703

Passengers (thousand)

2011

2010

2009

1,058

16.5

13.8


2011

2010

2009

19.6

Expiration of Operation February 2027

Car Park Area 750 m²



Number of Bridges 3


CIP Area488 m²

Runway 13R / 31L 3,000x45 m





Airport Operations


Nur

sem

in İş

çim

en, T

AV A

irpo

rt H

otel

/ Ba

tum

i Int

erna

tiona

l Airp

ort


Batumi International Airport Symbol of exemplary international cooperation

As an airport used jointly by Georgia and Turkey, the Batumi Airport has become the symbol of a major regional cooperation. This crucial cooperation plays a significant role in the development of the region and reinforces strong ties between the two countries.

Expiration of Operation August 2027





Runway 13 / 31 3,000x45 m




Key Indicators

88.6

69.3


2011

2010

2009

133.9

2.3

1.8


2011

2010

2009

3.5


Turkish Airlines 17

International

Other 35Georgian A/W 41 Belavia 7

Major Developments

• Under the partnership of Anadolujet and Borajet, Ankara-Batumi flights as well as Batumi-Moscow direct flights commenced.

• The number of international flights soared by 54% while passenger traffic was up by 51%.

• 90% of the commercial areas inside the terminal were leased and new advertising areas were created.

• The Batumi Airport hosted scheduled flights of five airline companies in 2011: Turkish Airlines,

Georgian Airlines, Belavia, Anadolu Jet and Kenn Borek.

• The Batumi Airport hosted flights to two domestic and 12 international destinations, serving a total of 14 destinations.

Airport Operations


Tunisia On its way to becoming Africa’s flight hub…

Tourism-oriented growth Tunisia, one of the important countries of the Mediterranean, stands out with its sea trade routes and unparalleled tourism potential. Ninety percent of the visitors of Tunisia, a country whose popularity is rising by the day, prefer air transit to get there.

Passenger traffic, which declined because of the “Arab Spring” that began in December 2010, is expected to rise again as stability is restored in Tunisia.

Effective privatization policies Tunisia, a country of 10 million, enjoyed strong economic growth momentum over the last decade thanks to the privatization policies pursued by its government. Hosting approximately 10 million passengers annually, Tunisia is on its way to becoming a major tourism hub.

Advanced infrastructure Standing out with its advanced air and rail transport infrastructure in particular, Tunisia ranks 37th in the international infrastructure development survey conducted by the “World Economic Forum Competitiveness.”

-

2.0 %

4.0 %

6.0 %

8.0 %

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Tunisia’s Growth Trend (US$ billion)

Tunisia North Africa Africa

-

2,0002,000

1,000

4,0003,000

6,000

4,000

5,000

8,0006,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011


Tourist Arrivals (thousand) Tourism Revenues (US$ million)

Source: IMF, African Economic Outlook.org

Source: World Economic Forum Report


Ages 15 to 64 Ages 65 years and older

26.0 % 67.5 % 6.5 %

Ages 0 to 14 years


monastir International Airport Where the world meets Tunisia

located in Tunisia, one of the leading tourism destinations in North Africa, and positioned merely two hours away from many european capitals, the monastir Airport has been operated by TAV since January 2008. except for air traffic control, all operations at the monastir Airport are administered by TAV Tunisie SA, a 67%-owned subsidiary of TAV Airports Holding.

Yeşi

m Ç

ınar

, TAV

Sec

urit

y / M

onas

tir In

tern

atio

nal A

irpor

t Airport Operations







Runway PCN: 45 2,950x45 m; asphalt




Key Indicators

3.9

3.8

Passengers (Monastir + Enfidha) (million)*

2011

2010

2009

* More than 90 % of the passengers are international flight passengers.

2.3

31.8

30.4

Commercial Flights (Monastir + Enfidha) (thousand)

2011

2010

2009

20.8


enfidha Hammamet International Airport One of the fastest growing airports in North Africa

The enfidha Hammamet International Airport, which has the potential to become one of the major air travel hubs in North Africa, is the second airport in Tunisia operated by TAV Tunisie SA after the monastir International Airport, which is located 65 kilometers from the enfidha Hammamet Airport.

Constructed by TAV with a € 500 million investment and having commenced operations at the end of 2009, the Enfidha Hammamet Airport plays a key role in Tunisian tourism because of its proximity to key tourist attractions.

Mes

ut Z

erm

an, B

TA /

Enfid

ha In

tern

atio

nal A

irpor

t

Conducting intensive marketing efforts in an attempt to increase the air traffic of the Enfidha Hammamet Airport, TAV Tunisie SA reached agreements with numerous major airline companies and tourism agencies in the region. Agreements were made with nearly 30 airline companies.

Airport Operations


Major Developments • ICT Summit Eurasia - Bilişim

Zirvesi ’11, a platform to encourage cooperation within the Eurasia region, presented awards to the communication technology projects

undertaken between the countries of the region. Leaving many established information technology companies behind with its Enfidha - Hammamet Airport information technology

infrastructure project, TAV IT received the first place prize at the award ceremony.


Car Park Area and Capacity 130,000



Number of Bridges 18


Runway PCN: 104 3,330x60 m; asphalt





Thomas Cook UK 5

International

Other 33Nouvelair Tunisia 22

Transavia France 6Tunis Air 32 Air Berlin GMBH 2

54 Airport OperationsTAV Airports 2011 Annual Report

macedonia crossroads of commerce in the Balkans

Soaring passenger and air traffic Located at the heart of the Balkans and attracting many tourists thanks to its history as well as cultural structure diversity, Macedonia is also a major crossroads of commerce in the Balkan region due to its location. After the visa exception that took effect in 2009, passenger traffic between Macedonia and the 500-million strong European Union took off. Macedonia completed the negotiations to join the European common airspace and its air traffic is expected to rise rapidly after being admitted to the common airspace.

Growth expectation* Macedonia, a country of 2.1 million people, is expected to record an annual average GDP growth rate of 7.4% between 2010 and 2015. The constantly growing tourist arrivals also support the country’s tourism potential.

--

5050

100100

150150

200200

250250

300300

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011


Tourist Arrivals (thousand)

Macedonia’s Growth Trend (US$ billion)

Nominal GDP

(2.0 %)

0.0 %

2.0 %

4.0 %

6.0 %

8.0 %

8.7 9.

7

9.1 10

.1

10.8

11.4 12

.2

13.0

2007

2008

2009

2010

2011

2012

2013

2014

2015

9.2

Real GDP Growth ( %)

Tourism Revenues (US$ million)


Ages 15 to 64 years Ages 65 years and older

21.5 % 67.8 % 10.7 %

Ages 0 to 14 years

* Source: IMF


Esen

Sef

er, B

TA /

Skop

je A

irpor

t


Skopje Airport TAV’s pride in the Balkans

making its first move into europe, TAV Airports assumed the operation of the Alexander the Great Airport in macedonia’s capital Skopje as of march 2010. In 2011 passenger traffic was up by 12% while flights of 18 airlines to 16 international destinations were served.

Major Developments

• The Skopje Airport began to be used exclusively as a civilian airport in 2011.

• As part of the approximately € 100 million investment, the new passenger terminal, car park and the cargo hangar were renovated and the runway was extended.

• A BMS (Building Management System) was installed at the new

terminal building that commenced operations, achieving energy efficiency and savings.

• TAV Macedonia became a sponsor of the Macedonia Men’s Basketball team.

• TAV Macedonia received the best project award in the Public Investment category at the International Real Estate and Investment Fair.

• Passenger traffic at the Skopje Airport was up by 11% in 2011.

• In 2011 the number of airline companies served rose to 18 after Wizz Air, the largest low-cost carrier in Eastern Europe, as well as Pegasus, Air Berlin and Belle Air Europe launched flights at the Skopje Airport.

• The Skopje Airport hosted flights to 16 destinations.

Airport Operations


Expiration of Operation March 2030




Catering Area1,000 m²



Key Indicators

685

603


2011

2010

2009

764

11.1

12.1


2011

2010

2009

10.9

Number of Bridges 6


Runway Code E / ILS CAT I 2,980 m


Ohrid Airport macedonia’s tourism paradise

declared a world heritage site by uNeScO and famous for its history and natural beauty as well as the lake it is named after, Ohrid is among macedonia’s major tourism destinations. The Ohrid Airport served 25 different airlines and hosted flights to 24 destinations.

Fuly

a Pe

kcan

, TAV

Ista

nbul

/ O

hrid

Airp

ort

Airport Operations


Major Developments

• As part of the investments undertaken, the VIP building, aircraft hangar and new car park was built and the terminal building was renovated.

• Corendon, Finn Air and Arke Fly were airlines that launched flights in 2011.

• The Ohrid Airport recorded the highest passenger growth rate in the world with an increase of 169% in January 2011 and 189% in September 2011.

Expiration of Operation March 2030









Runway Code E / ILS CAT I 2,250 m

Key Indicators

45

37


2011

2010

2009

74

627

676

Commercial Flights

2011

2010

2009

904


latvia The rapidly growing country of Northern europe

located in Northern europe on the shores of the Baltic Sea, latvia stands out with its capital riga. Forestry and forestry products, the machinery industry and textiles are the major sources of income and economic activity in latvia, a country of 2.2 million people. The latvian economy regained stability after the 2008 crisis and grew by 5.5% in 2011.

Uğu

r Ko

nyar

, TAV

Sec

urit

y / R

iga

Airp

ort

Airport Operations


riga Airport rapid transformation that began with TAV

The operation right of the 4,650 square-meter commercial space encompassing the duty free, food & beverage services and other commercial areas of the riga International Airport, the second service link of TAV Airports in europe after macedonia, was awarded to TAV latvia for a period of 10 years on January 1, 2011. riga Airport’s passenger traffic in 2011 was 5.1 million, up by 9.5% compared to 2010.

Expiration of Operation December 2021

Major Developments • TAV Latvia assumed the operation

of the commercial spaces of the Riga Airport totaling 2,295 square meters.

• The duty free shops taken over by ATÜ commenced service after being renovated.

• The investments made increased the brand recognition of TAV in Latvia.

• The Riga Airport’s passenger traffic in 2011 was 5.1 million.

• TAV Latvia received the “Best Partner” award from the Riga Airport management thanks to its excellent performance.

Total Commercial Area* 2,295 m²

* Area in operation as of year-end 2011


3.72008

3.22007

2.52006

1.92005

1.12004

0.72003

2009 4.1

2010 4.7

2011 5.1

28% compound annual growth rate of passenger traffic between 2003

and 2011

M. C

engi

z Yü

cel,

ATÜ

/ M

adin

ah A

irpor

t

64 TAV Airports 2011 Annual ReportSe

lda

Adal

ı Tun

çel,

TAV

Secu

rity

/ H

avaş

Service companies


Ground Handling Services: Havaşcomplete ground handling services executed with precision

In 2011, Havaş handled 116,120 flights, both scheduled and charter, of 200 airlines in a total of 22 airports. Havaş continued to expand its client base by adding two more airlines, Air Transat and Hainan, to its portfolio in 2011. The consolidated revenues of Havaş reached € 197 million in 2011, up by 21% on the previous year.

Major Developments

• More than 200 airlines were served at 22 airports under the Havaş brand, six airports under the TGS brand, one under the CAS brand and three under the Havaş Europe brand.

• The Company commenced service at the Sinop and Amasya - Merzifon airports in Turkey.

• 15 new airline companies, including Air Transat (Canada) and Hainan Airlines (China) that have charter flights from the Istanbul Atatürk Airport, joined the client portfolio of Havaş.

• NHS, which served 30,591 flights in 2011, was renamed “Havaş Europe” as part of its strategy to grow with the Havaş brand.

• Havaş Europe served 20 airline companies with an average of 415 employees.

• The apron traffic at the Istanbul Atatürk and Antalya airports began to be controlled and directed using the aircraft monitoring system developed by Proveo.

• The verification project in accordance with the ISO 14064-1 greenhouse gas standard continued at Havaş stations.

• Warehouse cargo volume increased by 43% to 21,798 tons.

• The Company’s Esenboğa Airport station was recognized by Qatar Airways with the Best Performance for 100% OTP Award.

• Havaş was awarded a Certificate of Appreciation by the Ministry of Labor and Social Security, General Directorate of Public Employment of Turkey.

• All charter stations were awarded a Certificate of Appreciation by SAS Scandinavian Airlines.

• The Company received the Turkish State Airports Authority (DHMİ)’s Certificate of Appreciation as part of the Libya humanitarian aid operation.

• The Antalya Airport station of Havaş received Pegasus Airlines’ AGCS Audit Certificate of Achievement.

• The Company’s Antalya Airport station was recognized with the 2011 winter season Letter of Achievement of the Aeroflot - Russian Airlines.


Products and Services Passenger Services Ramp Services Cargo and Mail Services Load Control, Communications and

Flight Operation Services Representation and Management Services Transportation Services Warehouse Services

Subsidiaries Turkish Ground Services (TGS) Havaş Europe Cyprus Airport Services (CAS) TAV Gözen

Key Financial Results

163.5

125.9

Total Revenues (€ million)

2011

2010

2009

197.4

25.5

24.2

EBITDA (€ million)

2011

2010

2009

34.3

269

183

Number of Aircraft Served (thousand)*

2011

2010

2009

308

* Excluding CAS

Service companies


Uğu

r Ço

lak,

TG

S / T

GS

68 TAV Airports 2011 Annual ReportSe

rdar

Pek

tezo

l, TA

V IT

/ AT

Ü


duty Free: ATÜThe world’s best brands in unrivalled duty free shops

Founded as a joint venture of TAV Airports Holding and unifree duty Free A.Ş., ATÜ is the unrivalled operator of Turkey’s duty free shops, offering more than 50 thousand products of the world’s best-known brands with attractive prices in 64 stores covering an area of 14,460 square meters.

Major Developments

• Duty free operations commenced at the Riga Airport in 2011.

• Four new stores covering a total sales area of 420 square meters commenced service at the new terminal in Macedonia.

• The number of passengers served and the sales revenues recorded major increases due in part to the “open gate” policy that was launched at the Ankara Esenboğa Airport.

• ATÜ Retail Institute was established in order to increase customer satisfaction and employee productivity.

• Customer complaints were reduced to an extremely low ratio of 0.05%.

• The accessory category product portfolio was expanded. Agreements were made with new brands such as Apple.


340.0

290.3


2011

2010

2009

415.4

30.8

27.7


2011

2010

2009

42.4

9.0

9.5

EBITDA Margin ( %)

2011

2010

2009

10.2

Products and Services Arrival duty free Product portfolio enhanced with local culture Increasing concept diversity

Arzu

Güz

elay

dın

Öm

ür, T

AV Is

tanb

ul /

BTA


Food & Beverage Services: BTAUnique world flavors that enhance the airport experience

BTA offers passengers a diverse selection of foods ranging from traditional Turkish cuisine to major international cuisines at world class standards with a service approach based on comfort and quality.

Major Developments

• Istanbul Airport’s domestic and international terminal food court areas were renovated and the restaurant selection was enriched with the addition of world-renowned chain brands.

• By offering a variety of price alternatives to passengers, the number of guests served by BTA in its Turkish airport operations increased by 15%.

• BTA established a partnership with TASS to manage the food & beverage operations of İDO (Istanbul Fast Ferries Co.) and founded BTA Denizyolları ve Limanları Yiyecek ve İçecek Hizmetleri Turizm Sanayi ve Ticaret A.Ş. (BTA Sea Lines).

• BTA Sea Lines commenced service at 38 food & beverage sales points on 17 ferryboats and at 12 terminals of İDO.

• Occupancy rate exceeded 100% at the 131-room TAV Airport Hotel.

• Cakes & Bakes raised its total production and storage area to 6,100 square meters.

Service companies


Products and Services Airports Food and Beverage Operations Sea Lines Food and Beverage Operations Hotel Management (TAV Airport Hotel) Bakery and Pastry Production (Cakes & Bakes)

Subsidiaries and Affiliates BTA Havalimanları (BTA Airports) BTA Georgia BTA Tunisie BTA Macedonia BTA Denizyolları (BTA Sea Lines) BTA Unlu Mamuller (BTA Bakery Products)


75.0

59.1


2011

2010

2009

81.1

7.2

6.5


2011

2010

2009

6.0

9.6

11.0

EBITDA Margin (%)

2011

2010

2009

7.4


Other Services Innovation in operations, security and information technology

Having adopted the ongoing goal of increasing service diversification and quality, TAV undertook new investments in these areas in 2011. developing new applications for terminal operations, TAV also broke major new ground by launching the mobile platforms for these applications.

TAV IT

TAV Security Civil aviation security Cargo security Aircraft private security, service and surveillance Loss prevention Training services Physical security (store, facility, company) Authorized arms transportation

Major Developments

Products and Services Awards

TAV IT

• TAV Mobile, the most comprehensive airport terminal related application in the world, and the iPhone, iPad, Android and Blackberry apps related to TAV Airports were developed.

• As a result of the initiatives undertaken with the Turkish State Airports Authority (DHMİ) and Turkish Airlines, infrastructure work for the information sharing platform was completed.

• The Macedonia Branch of TAV IT was established.

• Thanks to the strategic partnership it has established in India, TAV IT took the first step for the renovation of more than 30 airports.

TAV OPERATION SERVICES

• An agreement was entered into with Emirates Airlines for lounge operations and the construction of the lounge was completed as of the end of December.

• Construction of the Turkish Airlines Domestic and International Flights CIP lounge at the Izmir International Terminal was completed; the lounge commenced operation.

• The number of TAV Passport card members reached 6,816.

• As a result of the cooperation with Anadolu Jet, the Anadolu Jet “primeclass” lounge commenced service at the Ankara Domestic Terminal.

• Lounge agreements as well as collaborations for special passenger services, the equivalent of the services provided by “primeclass” CIP, were executed with 43 airports acros the world.

• Comfort Lounge commenced service at the Ankara International Terminal.

TAV SECURITY

• Aircraft Private Security Service and Supervision C certification was obtained from the Directorate General of Civil Aviation (SHGM).

• Contracts were signed with Turkmenistan Airlines and Algeria Airlines.

• K-9 dogs began to be deployed for Delta Airlines.

• The scope of service provided to LSG catering services as part of C License expanded.

• EAGLE computerized training certification was launched for surveillance officers.

The CIO Turkey Magazine’s CIO 2011 Award was presendet to the TAV IT General Manager and TAV Airports CIO.

The Enfidha - Hammamet Airport Information Technology Infrastructure Project was awarded the first-place prize at the ICT Summit Eurasia Awards 2011.

TAV Passport Card received the “Best Service” Award by gecce.com.

TAV Operation Services Commercial area allocation

Leasing of advertisement and promotion areas

“primeclass” CIP services

CIP Lounge operation

TAV Passport Card Membership Program

The Gate Magazine

Service companies


Mus

tafa

Çan

kaya

, TAV

Air

port

Ote

l / T

AV B

ilişi

m

Mer

ih T

arak

taş,

TAV

Ista

nbul

/ TA

V Se

curit

y


Investor relations and Stock performance A profitable company with high investment value

embracing transparency and accountability as fundamental operating principles, TAV attended a number of road shows and conferences in 2011 in order to inform capital markets participants. The Holding’s operations, performance and other developments were discussed and detailed information was shared with attendees at these events.

TAV Airports increases shareholder value through its award winning investor relations program. Since the public offering in February 2007, the Investor Relations Department of TAV Airports has assumed the function of a transparent, two-way bridge between investors and the Company while facilitating the public disclosure of all information about the Holding in an accurate, impartial and timely manner. Within this framework, the Department shares information about TAV Airports in the most transparent and prompt manner on the Public Disclosure Platform (PDP).

In 2011, TAV Investor Relations attended a total of 17 road shows and conferences and conducted face-to-face meetings with more than 600 investors, shareholders and analysts in regards to the Holding’s operations, performance and other developments. In addition, pursuant to the Capital Markets Law, 24 Material Disclosures were issued in 2011 to the Public Disclosure Platform (PDP) in order to inform shareholders and the public; these disclosures were also posted on the Company’s website.

Stock Performance The Company’s shares, listed on the Istanbul Stock Exchange under the ticker “TAVHL,” traded between a low of TL 6.08 and a high of TL 8.78 in 2011.

0

2

4

6

8

10

12

23.0

2.20

07

29.0

5.20

07

29.0

8.20

07

04.1

2.20

07

10.0

3.20

08

12.0

6.20

08

12.0

9.20

08

25.1

2.20

08

30.0

3.20

09

03.0

7.20

09

07.1

0.20

09

13.0

1.20

10

15.0

4.20

10

20.0

7.20

10

25.1

0.20

10

01.0

2.20

11

04.0

5.20

11

05.0

8.20

11

15.1

1.20

11

0.30

0.50

0.70

0.90

1.10

1.30

1.50

0

1

2

3

4

5

6

7

8

9

22.0

2.20

07

18.0

5.20

07

10.0

8.20

07

07.1

1.20

07

04.0

2.20

08

29.0

4.20

08

23.0

7.20

08

20.1

0.20

08

20.0

1.20

09

14.0

4.20

09

10.0

7.20

09

06.1

0.20

09

04.0

1.20

10

30.0

3.20

10

02.0

7.20

10

29.0

9.20

10

29.1

2.20

10

23.0

3.20

11

16.0

6.20

11

13.0

9.20

11

09.1

2.20

11

TL

TAVHL ($) Relative to ISE-100($)

Investor relations and Stock performance


cOrpOrATe GOVerNANce rATING According to the “Periodic Revision Corporate Governance Rating Report” issued by RiskMetrics Group (ISS), an international corporate governance rating agency that is also licensed to conduct corporate governing rating activities in Turkey in accordance with the Capital Markets Boards (CMB) Corporate Governance Principles, the Company’s Corporate Governance Rating Score was revised upwards from 90.35 (9.03 out of 10) as of August 31, 2010 to 90.96 (9.09 out of 10) on August 26, 2011 thanks to our focus on corporate governance and commitment to its implementation.

The Company’s Corporate Governance Ratings by subcategory are presented below.

Subcategories Weight Score

Shareholders 0.25 90.63

Public Disclosure and Transparency 0.35 93.41

Stakeholders 0.15 96.82

Board of Directors 0.25 84.36

Total 1.00 90.96

prOFIT dISTrIBuTION pOlIcy There are no privileges with respect to participation in the Company’s profit.

The Company takes its dividend distribution decisions in compliance with the Turkish Commercial Code, Capital Markets Law, Capital Markets Board Communiqués and Resolutions, the tax laws and the provisions of other related laws and regulations, as well as the Company’s Articles of Association.

It is among the Company’s primary goals to adhere to this profit distribution policy, except for special circumstances when investments and other funds are required for the long-term growth prospects of the Company or its subsidiaries and affiliates, as well as for extraordinarily unfavorable developments in the economy.

All information and data about TAV Airports Holding can be accessed through the Company’s Investor Relations website. In addition, information related to shares, financial reports, the General Assembly and other similar matters can be obtained from the Department through the contact information provided below.

Phone: +90 212 463 30 00 / 2120-2122-2123-2124 Fax: +90 212 465 31 00 Website: http://ir.tav.aero twitter.com/irTAV


Glossary

ACI Airports Council International

Aircraft Loading Loading an airplane in accordance with its technical specifications and operational information

Airport A large area, on land or water, with buildings, facilities and equipment that is constructed for the purpose of featuring facilities that facilitate landing, takeoff and ground movement of aircraft, serve the maintenance and other needs of aircraft, as well as boarding, loading and unloading aircraft

Airside Area (Flight Line Facilities) Isolated areas beyond the passport control points (waiting lounges, duty free area, boarding gates); the runways, apron areas and taxi routes of the airport as well as zones adjacent to them; buildings and structures, or parts of these buildings and structures, that are directly used for flight operations under certain circumstances; as well as areas that have controlled access to all of these sections

Apron Apron is a designated area at an airport where aircraft are parked, refueled, loaded, unloaded, boarded and maintenance is performed.

Aviation Income Income earned from services provided to passengers and aircraft at the airports

Baggage Handling System (BHS) A conveyor belt system that transports checked baggage to areas where the bags are loaded onto airplanes

Build-Operate-Transfer Process in which a private company provides the financing for a public infrastructure investment or service, undertakes the project, operates it for a period determined by the public authorities and transfers the facility at the end of the designated period to the related public authority in an intact, operating and well-maintained condition

Carry-on Baggage Handcarts Mechanical, portable transporters used at airports to carry passenger property

Charter Flight Charter flight is a non-scheduled flight service offered in certain periods, mostly in summer months, in which departure time is determined based on airport traffic and passenger demand.

Charter Terminal Terminal building reserved for passengers who travel with flights other than the scheduled or regular flights

Check-in Check-in is the process in which ticket and baggage transactions and passenger controls are conducted at airport terminals by airline or ground handling company representatives.

Check-in Counter Equipped tables at terminals used for passenger check-in procedures

Check-in Lounges Sections at terminals hosting groups of check-in counters

CIP Passenger Commercially important person

Civil Aviation Civil Aviation in general refers to all activities related to air transportation. More specifically, it is also the generic term for all air transport-related operational activities performed by airports, airlines and handling companies in accordance with national and international rules and security principles.

Composite Cover A mixture of concrete and asphalt used for covering runways

Conveyor A mechanical apparatus with a moving belt that carries the passengers’ baggage from check-in counters to the aircraft and back to the baggage-claim area

Customs Enforcement The organization that inspects or confiscates the baggage or other freight, cargo or postal belongings of passengers pursuant to customs regulations at airports that are open to international flights, and that enforces customs regulations provisions in the process of sending or receiving all kinds of commodities and materials that will go-come abroad

Duty Free Shop Shops at airports where passengers can make purchases without paying customs tax

Duty-Paid Lounge Isolated lounges at airports that are open to international flights, where passengers are taken for the declaration and control process pursuant to the customs regulations before making entry or exit

Glossary


Earnings per Share (EPS) An indicator calculated by dividing a company’s net (after-tax) profit by its number of outstanding shares

EBITDA Acronym for “Earnings before Interest, Taxes, Depreciation and Amortization”

EBITDAR Acronym for “Earnings before Interest, Taxes, Depreciation, Amortization and Rent”

EUROCONTROL European Organization for the Safety of Air Navigation

FIDS (Flight Information Display System) FIDS is the system that displays the latest data via flight information screens, monitors, flight gate indicators, baggage claim indicators and employee monitors.

Flight Limits Loading-related limits determined for each type of aircraft

Guaranteed Passenger Income Guaranteed passenger income is the passenger revenue guaranteed by the related entity, based on the expected number of passengers per year, pursuant to the concession contract signed with the authorized entity. It can vary based on the contract as well as the period covered by the contract.

Hangar Mostly large structures at airports that are used for sheltering or conducting maintenance and repair activities on aircraft

Havaş Havaş, or Havaalanları Yer Hizmetleri A.Ş. (Ground Handling Services Co.), is the company that performs ground handling services at the airports.

HUB Main Center

Isolated Areas Isolated lounges are zones at airports that are open to international flights, where passengers are taken before making entry or exit and after declaration and control process pursuant to the customs regulations, as well as lounges where passengers, who come from abroad without entering into customs and will go to another airport of the same country or to another country, are hosted.

ICAA International Civil Airports Association

ICAN International Commission for Air Navigation

ICAO International Civil Aviation Organization

Inorganic Growth Inorganic growth is revenue growth achieved by a company’s acquiring another firm or making a new investment, and consolidating the production and revenue of the acquired firm.

Liquidity Liquidity is the degree of speed and ease to which an asset can be exchanged for cash.

Non-Aviation Income Income derived from activities other than services provided to passengers and aircraft at the airports, such as duty free

Organic Growth Organic growth is the growth achieved via a company’s own activities. It includes production increase, as well as the increase in revenue attained by selling this output.

Overflight An aircraft flight passing over the air space of a foreign jurisdiction without landing

Passenger All individuals traveling on the aircraft who are not part of the flight personnel or cabin crew are referred to as passengers

Peak Day, Peak Hour Maximum amount of passenger, aircraft, cargo, et al. movement at an airport handled during one day or one hour within a given period (generally a calendar year)

Prime Class Service As part of this exclusive service, passengers are greeted at the Terminal Departures gate by a transportation representative and their security check and scan, check-in and passport transactions are performed with the assistance of a service representative.


Glossary

Project Finance Project finance is a method of securing the financing needed for long-term infrastructure and industrial investments at the maximum possible level and with the minimum possible impact on the company’s balance sheets. Posting the project’s income stream or the asset itself as collateral may be needed as a condition of financing.

Ramp Ramp is the area at airports where aircraft are parked and attended to.

RAT Fields / Areas Runway, Apron and Taxiway areas as well as other fields reserved on the airside of the airport for vehicles and equipment to move and park

Runway Designated rectangular areas on a tract of land on which aircraft take off and land

Scheduled Flight Scheduled flight is the flight service with a pre-determined departure-arrival time and route.

Slot It is a method of using airport capacity optimally by spreading the air traffic at busy airports to each hour of the day and each hour of the week as equally as possible. In other words, it is the right of use of airport facilities at the landing-takeoff time slots allocated to the aircraft.

Subsidiary A direct or indirect capital and management relationship that creates a permanent tie between a corporation and another in terms of participation in the management of the corporation and the formulation of the corporation’s policies

Taxi The movements of an aircraft on the ground

Taxi Route (Taxiway) Standard-sized paths at airports along which the aircraft taxi to or from a runway, apron, and the like

Terminal Group of buildings featuring air transport service-related companies and facilities where pre-flight and post-flight transactions of passengers are performed

Terminal Operation This term refers to the Airport General Directorate or Directorate that operates the terminal on behalf of the Turkish State Airports Authority (DHMİ) at the airports operated by DHMİ, and/or state enterprises, public agencies, real and private legal entities that engage in terminal operations pursuant to the Build-Operate-Transfer Model or as part of another arrangement.

TOC Terminal Operations Center

Glossary

Transfer Passenger Transfer passengers are those who continue their travel with a different aircraft or in the same aircraft but with a different flight number after arriving at an airport on an airplane. These passengers are allowed to take advantage of duty free, catering and accommodation services at the airport.

Transit Passenger Transit passengers are those who continue their travel in the same aircraft or with the same flight number shortly after arriving at an airport on an airplane. These passengers are not allowed to take advantage of duty free, catering and accommodation services at the airport.

VIP A very important person. VIPs are mostly the senior managers of public entities whose titles are listed by the Prime Ministry.

VIP Lounge Places reserved at airports for VIP Passengers

TAV AIRPORTS HOLDING Istanbul Atatürk Airport International Terminal (Gate A - Next to VIP) 34149 Yeşilköy, Istanbul, Turkey Phone: +90 212 463 30 00 Fax: +90 212 465 50 50 www.tavairports.com http://ir.tav.aero

CONTENTS

SUSTAINABILITY 02 Reporting Period and Purpose 02 Scope of the Report 03 Report Content 04 Sustainability Vision and Strategy06 Our Economic Impacts 07 Our Environmental Impacts 10 Our Social Impacts 16 2011 Awards 17 2011 Certifications

CORPORATE GOVERNANCE 18 Risk Management 21 Internal Audit 22 Corporate Governance Principles Compliance Report 37 Board of Directors and Senior Management 47 Committees

We are moving ahead while maintaining our values…

TAV Airports is a company that has been looked up to in the aviation industry since its establishment thanks to its business approach that respects the environment and society.

Always acting in light of these core values while accelerating growth and venturing into new investments, TAV Airports has demonstrated its responsible approach once again in 2011 by taking many concrete steps in the area of sustainability.

Publishing its first sustainability report in accordance with GRI standards in 2011, TAV Airports implemented a series of conservation measures in major areas and began using its resources much more efficiently.

Continuously improving its efficiency in resource utilization, TAV Airports aims to raise the bar much higher in the years ahead in this area.


Reporting Period and Purpose

By reporting on its sustainability performance, TAV aims to assess, monitor, measure and manage its potential impacts on its stakeholders as well as on the environment in the course of conducting its daily operations. In addition, we see this report as a vehicle to raise awareness regarding sustainability among our stakeholders.

Within this framework, this report serves to update, with data from January 1, 2011 to December 31, 2011, the 2010 Sustainability Report that was prepared in accordance with the globally-accepted Global Reporting Initiative (GRI) Sustainability Reporting Guideline (G3.1) requirements and the GRI Airport Operators Sector Supplement (AOSS.)

Scope of the Report

Our 2011 Sustainability Report update addresses TAV’s economic, environmental and social performance and outlook, the Company’s efforts for improvement as well as the related objectives regarding airports operated by TAV in Turkey. TAV has set the scope of the report as the airports located in Turkey in which TAV has majority ownership; these airports represent 92 % of TAV’s operations in terms of passenger traffic. This definition encompasses the Istanbul Atatürk Airport, Ankara Esenboğa Airport, Izmir Adnan Menderes International Terminal and Antalya Gazipaşa Airport.

TAV Airports’ Sustainability Report for the upcoming operating periods is intended to also include the international airports operated by the Company.

3Sustainability Corporate Governance

Report Content

The scope of this report comprises the update, with 2011 data, of the 2010 sustainability report that was designed and generated based on the materiality, stakeholder inclusiveness, completeness and sustainability principles of the GRI; this report should be taken into consideration in conjunction with the 2010 report.

The topics discussed and the information presented in this report were determined by way of a materiality analysis workshop held with the participation of managers from various departments of TAV Airports Holding, as well as its subsidiaries, who have knowledge of and experience in sustainability issues.


Sustainability Vision and Strategy

2011-2014

• Assigning a permanent delegate to the ACI task force and environment committee

• Organizing Sustainability Orientation Trainings via TAV Academy and thereby cultivating greater awareness among employees

• Launching waste management training

• Attending conferences related to the future of the aviation industry and environmental sustainability

• Continuing to measure and manage noise levels at the terminals

GOalS

2015-2017

• Continuing Sustainability Orientation Programs within TAV Airports and reaching an average of approximately 2,000 employees annually

• Mapping carbon emissions and continuing optimization efforts to expand this into international operations

• Making further progress in the water and recyclable waste management projects

• Taking a more active part in social sustainability projects


2018-2020

• Continuing Sustainability Orientation Programs within TAV Airports

• Optimizing carbon emissions in operations in Turkey

• Further developing recyclable waste management programs by leveraging the latest advances in technology


• Encouraging business partners, stakeholders and suppliers to adopt sustainability practices


The following activities were carried out in 2011 as part of the three-year road map stipulated in the 2010 Sustainability Report:

Assigning a permanent delegate to ACI task force and environment committee

TAV Academy became a Global Training Center for ACI last year. Established in 1991 with the mission of organizing programs and conferences worldwide in accordance with the principles that contribute to excellence in airport management and operation, the Airports Council International (ACI) Global Training Center launched its 11th Global Training Center at the Istanbul Atatürk Airport. The cooperation between TAV Academy and the ACI began in March 2008 and TAV Academy became a Global Training Center in 2011. In 2011 the TAV/ACI Training Center focused on the strategically-designed Global Strategic Network (GSN) courses and the Airport Service Quality course in cooperation with the staff of the ACI World Global Training Center located in Montreal, Canada. TAV Academy hosted 56 airport executives from 15 countries at three courses conducted in Istanbul. As part of its strategic partnership with the ACI, TAV Academy aims to be the information sharing center of the region in airport operations management.

A subgroup of the members of the Sustainability Committee that was formed within TAV Airports Holding will attend the conference to be held in Milan for the ACI Environment Committee on April 12-13.

Organizing Sustainability Orientation Trainings via TAV Academy and thereby cultivating greater awareness among employees

TAV Academy’s Environmental Training Program commenced as of 2011 at all TAV terminals. Launched with 250 employees in 2011, the Sustainability Orientation Program is intended to be expanded to train 450 employees in 2012. This training covers all aspects of sustainability including ethics, transparency and employee relations in addition to the environment and the economy. The need for integrating sustainability into daily tasks and decision-making processes is strongly emphasized throughout the training program. In addition, presentation of the 2010 Sustainability Report will also be an area of focus.

Launching waste management training

Waste management training sessions commenced at TAV Izmir in 2011 and 246 people attended these training sessions. The Company plans to continue conducting these trainings in Izmir and at other airports in 2012 at an accelerating pace.

Attending conferences related to the future of the aviation industry and environmental sustainability

The following events were supported or attended at the company level in 2011:

• Global Warming Conference organized under the “Reclaim Your Life” slogan by the Association of Economy Journalists of Turkey on November 22, 2011

• “Sustainable Future” conference organized by the Sustainability Academy on October 26, 2011

• “Environment Summit” held on September 15-17, 2011 as part of the Izmir International Fair

Continuing to measure and manage noise levels at the terminals

TAV continued to conduct noise measurements at the Istanbul Atatürk and Izmir Adnan Menderes airports under two categories: environmental noise and occupational health & safety (OHS.)

The measurements continued to demonstrate that environmental noise levels linger below the threshold values. As part of OHS measurements, potential harmful impacts were prevented by equipping employees with personal protective gear in cases where measures cannot be taken at the source.


Our Economic Impacts

TAV Airports Holding’s investments from 2007 to date on three continents amounts to € 872 million. The investments made for the airports operated in Georgia, Tunisia and Macedonia are among the most important and largest foreign investments in these countries.

Serving approximately 420 thousand flights of 300 airline companies and 53 million passengers via its subsidiary operating companies in 2011, TAV Airports Holding undertakes projects for and about the people in line with its uncompromising goals and principles with more than 20 thousand employees on three continents.

TAV Airports Holding generated € 912* million in net revenues during 2011, distributing 57 % of it to suppliers in operating expenses and 26 % to employees. The adjacent chart shows the proportions of direct spending that went to TAV’s major stakeholders in 2011.

TAV Airports is Turkey’s leading airport operator with a 46 % market share, according to 2011 passenger statistics from the Turkish State Airports Authority (DHMİ.) TAV Airports, which serves millions of passengers annually in Istanbul, Ankara, Izmir and Gazipaşa in Turkey. Internationally manages airport operations in Georgia, Tunisia and Macedonia and holds the operating rights to the Madinah International Airport jointly with its partners Al Rajhi Holding Group and

Saudi Oger Ltd. In addition, TAV Airports, which earns 54 % of its total consolidated income from non-aviation businesses, is organized to meet every need that might be expected of an airport from ground handling services and duty free shops

to customized services and security and information services. Total income and EBITDA generated at the four airports covered by this report during the reporting period are as follows.

Value Distributed to Suppliers 56.73 % Value Distributed to Shareholders 5.68 %

Value Distributed to Employees 25.88 %

Value Distributed to Creditors 7.34 %

Value Distributed to the State 4.36 %

Value Distributed to Suppliers

Value Distributed to the State

Value Distributed to Creditors

Value Distributed to Employees

Value Distributed to Shareholders

2011 (€ million) Income EBITDA EBITDA Margin

Airports in Turkey 422 177 42 %

Istanbul 344 136 39 %

Ankara 42 20 47 %

Izmir 35 22 62 %

Gazipaşa - (1) N/A

Note: Calculations in the table include guaranteed passenger revenue from the airports operated in Ankara and Izmir.

* Total IFRS revenues including construction revenue


Our Environmental Impacts

As part of its environmental vision, TAV Airports Holding aims to identify the impacts of its operations on the environment and eliminate or minimize such impacts. The Company’s Environmental Policy encompasses mindful and efficient use of scarce natural resources. Striving to improve quality of life in addition to preserving nature and natural resources, the Company aims to leave a more habitable world behind for future generations. Prioritizing respect for the environment in accordance with its corporate principles, TAV Airports conducts its activities in compliance with international environmental standards. TAV Airports Holding acts with a shared sense of responsibility together with all of its employees in order to comply with the requirements of the national and international environmental laws and regulations. All units within the Holding are liable for fulfilling their responsibilities within their areas of activity.

Istanbul Atatürk Airport

Environmental investments continued at the Istanbul Atatürk Airport, Turkey’s first “Green Airport,” in 2011. TAV aimed for a 45 % reduction in electricity consumption by using LED lighting products throughout the terminal and for 45,000 cubic meters of water conservation by using rainwater to irrigate the landscaping and gardens. In addition, water conservation of more than 40,000 cubic meters was achieved through backwashing. Energy losses on the transmission and distribution systems were eliminated with the trigeneration system that generates the electric, heating and air conditioning energy from a single unit within the terminal. Measuring its carbon footprint since 2010, the Airport participated in the

Carbon Disclosure Project for awareness purposes and identified the sources of its carbon emissions and calculated and reported on them on an annual basis.

AnkaraEsenboğaAirport

Setting an example in energy conservation with its architectural features, Esenboğa Airport generates its electricity from natural gas using the cogeneration plant that it installed, a first in Turkey, while using the heat captured by a waste heat recapture boiler for terminal air conditioning. These measures provide a 25 % reduction in energy costs. Managing to keep its carbon emission constant despite the increase in passenger traffic in 2011, the Airport also reduced its water consumption per 1,000 passengers by 3 %. 18 % of the waste at the terminals was recycled.

Izmir Adnan Menderes International Terminal

Participating in the Carbon Accreditation Program administered by the Airports Council International (ACI,) the Airport attained Level 1 accreditation and received the Airport Accreditation Certification. Completing the Level 1 renewal verification as part of the carbon accreditation efforts, the Airport’s carbon dioxide emission was calculated to be 6,744 tons. In addition, the Airport’s electricity and water consumption decreased by 11 % and 14 %, respectively, despite the increase in passenger traffic in 2011 while natural gas consumption was up by just 13 % despite the colder than normal winter. 8.8 tons of hazardous waste was disposed of and 129 tons of waste was recycled in 2011. Additionally, training sessions were conducted for stakeholders at the Airport as part of the terminal’s waste management efforts.

AntalyaGazipaşaAirport

Antalya Gazipaşa Airport, a boutique airport, achieved 30 % conservation in electricity consumption in 2011 by reducing the lighting levels by one-third during times when no flights are scheduled at the Airport. In addition, LED products are installed in the 378 projectors that are used for lighting the Airport and the surrounding area.

According to measurements performed as part of the Airports Council International’s (ACI) Airport Carbon Accreditation (ACA) Program, carbon emissions remained unchanged at the Ankara and Izmir airports while they increased by 20 % at the Istanbul Airport. The increase in TAV Istanbul’s carbon emissions was due in large part to the 20 additional shuttle buses deployed for TAV employees. In addition, the malfunction of the trigeneration system in January and February of 2011 also contributed to the uptick in carbon emissions.

TAV has openly and publicly declared all of its activities in a transparent manner and disclosed all actions completed in 2010 in accordance with the Carbon Disclosure Project. Information on 2011 activities will be announced to the public in the first half of 2012.

airport Carbon accreditation (1,000 tons of CO2/year)

Istanbul Ankara Izmir

2011 2010120

100

80

60

40

20

0


Our Environmental Impacts

The amount of natural gas used by the trigeneration plant at the Istanbul Atatürk Airport increased as a result of the repair of the malfunction in February. In a similar fashion, the amount of natural gas consumed by TAV Esenboğa ticked up as a result of the repair of the malfunction in the cogeneration plant. Natural gas consumption at the Izmir Adnan Menderes Airport rose by 14 % as a result of the winter months being colder than those of 2010.

Primary Energy Resources (1,000 GJ/year)

Natural Gas Diesel Fuel Oil

Istanbul

2011 2010 2011 2010 2011 2010 2011 2010

Ankara Izmir Gazipaşa

1.000

800

600

400

200

0

2011 2010

Water Consumption (1,000 cubic meters/year)

Istanbul Ankara Izmir Gazipaşa

1.000

800

600

400

200

0

The new system that collects rainwater from parking areas and service and accommodation roads to be used in irrigation commenced operation in early 2011. The adjacent chart shows annual total water consumption (1,000 cubic meters / year.)

Water consumption per 1,000 passengers went up by 4.2 % at the Istanbul Atatürk Airport while declining by 2.7 % at the Ankara Esenboğa Airport and falling by 23.6 % at the Izmir Adnan Menderes Airport. The reason for the increase in Istanbul is the resumption of operation of the trigeneration plant. The cooling systems where water is lost as a result of evaporation, such as the cooling towers, were used at a higher rate at the Izmir Adnan Menderes Airport while the amount of water used for landscaping also increased.

Information about the Carbon Disclosure Project is available at http://cgft.sabanciuniv.edu.

The trigeneration plant at the Istanbul Airport resumed operation in February 2011, which led to a decline in electricity purchased. In addition, the airport began supplying electricity to the Turkish State Airports Authority (DHMİ.) The table above shows the electricity purchased for the terminal.

Similarly, as a result of TAV Esenboğa’s utilization of its trigeneration plant at full capacity, the amount of electricity purchased declined significantly.

TAV Izmir’s electricity purchases in 2011 declined by 11 % compared to 2010 while electricity consumption per passenger dropped 22 %.

The consumption per passenger comparison was not performed for the Istanbul Atatürk and Ankara Esenboğa airports due to the resumption of operation of the trigeneration plant.

Electricity Purchases (1,000 GJ/year)

2011 2010


400

300

200

100

0


2011 2010

Waste Management (1,000 tons/year)

Istanbul Ankara Izmir Gazipaşa

8

6

4

2

0

Wastewater created at the terminals is collected via a closed-loop sewage system and transferred to wastewater treatment facilities inside the airport premises. All terminals feature state-of-the-art wastewater treatment facilities that use biological methods of treatment. In accordance with related environmental laws, wastewater at TAV Airports is discharged to the closest collecting system or receiving environment. The amounts of wastewater generated in 2011 are shown in the chart above in 1,000 cubic meters / year.

The treated wastewater discharged by TAV Istanbul increased by 36.7 % in 2011 while the increase per passenger was 17.1 %. Water leakages were reduced in 2011 as a result of the retrofits and renovations carried out in the wastewater treatment facility infrastructure. At the same time, the amount of wastewater reaching the facility increased due to the rise in total water consumption.

The treated wastewater discharged by TAV Esenboğa declined by 59.3 % in 2011 while the decrease per passenger was 62.9 %.

The treated wastewater discharged by TAV Izmir ticked up by 4.7 % in 2011 while the corresponding figure went down by 5 % on a per-passenger basis.

As a result of the efforts to increase the share of recyclable wastes, the combined annual recycling volume at the three terminals increased by 3 % in 2011 compared to the previous year. While the amount of waste at the terminals registered a year-over-year increase in 2011, the share of the waste recycled was 13 % at the Istanbul Atatürk Airport, 18 % at the Ankara Esenboğa Airport and 35 % at the Izmir Adnan Menderes Airport.

Wastewater Management (1,000 cubic meters/year)

2011 2010


800

600

400

200

0


TAV Airports embraces the principle of managing its human capital, the cornerstone of its success, in accordance with an equal opportunity principle at international standards; becoming a company preferred by its employees; and being a pioneer in its industry, in Turkey and in the world with its integrated human resources practices. At TAV Group, the Human Resources Department plans its operations with a human resources management approach coherent with the Holding’s business strategies so as to be a strategic partner to all companies and departments of the Holding to improve business results, nourish and promote a high performance culture and create value for all stakeholders.

TAV’s human capital strategy is structured in accordance with a corporate learning approach. As a pioneer and leader in airport operations in Turkey, TAV Airports institutionalizes the acquired information, experience and know-how, and embeds this across all levels of the Company. TAV Airports shares its corporate vision, mission, values and ethical principles with employees through classroom trainings as part of the orientation process, as well as other development programs, the corporate portal and other internal publications.

Performance Management

In the performance management process, annual strategic objectives and business plans of the Company and its departments are shared with employees. Employee views on the objectives and business plans are considered as valuable feedback by the management and are integrated into

the system. Managers are responsible for tracking employee performance, assessing competencies, identifying strong traits and areas for improvement, improving the staff via training, applications, transfer of know-how and on-the-job training, as well as guiding and monitoring their development plans. In this respect, each department of TAV functions as a training and development center. The managers, who are in a sense development and training officers, are expected to set an example for their staff with their personality and knowledge, are supported via managerial skills trainings.

Following the performance evaluation meetings, both the managers and the employees fill out a survey where they can share their views on the process. The developmental project that was launched to enhance the integration of the Performance Management process with the Career and Talent Management processes was completed in 2011 to commence service in 2012.

Focus on Employee Satisfaction

At TAV, in addition to quality of service, the relationship between the managers and their staff, as well as the strong interaction between employee satisfaction and engagement have a crucial effect on customer loyalty and sustained profitability. With the understanding that competitive edge and success stem largely from human resources, TAV Airports takes heed of employees’ viewpoints. Employee satisfaction and engagement, one of the major factors that affect employee motivation and performance, is measured and reported regularly on an annual basis.

In an attempt to conduct these measurements even more effectively, an employee satisfaction and engagement survey was carried out by an international independent consulting company in 2011.

The employee satisfaction score was 67.7 in 2011, 26 % above the industry average for the same survey. The same survey revealed an employee loyalty score of 74.4, 31 % higher than the industry average. The results were presented to senior management in the form of detailed and comparative reports and were also shared with the employees via the corporate intranet. The “opinion-sharing meetings,” which were rolled out in 2010 in order to conduct face-to-face conversations with employees and learn about their satisfaction levels, career and development plans, opinions about and expectations from the Company and human resources practices, and to get to know them better, were continued in 2011 with a wider scope.

A Future Projection Meeting was organized in December 2011 that brought together all TAV Airports Human Resources and Personnel Management staff, including the TAV Airports companies abroad. More than 130 subject matter expert Human Resources and Personnel Management employees from various countries and industries enjoyed the opportunity to discuss how to contribute to the goal of moving TAV Airports forward into the future with greater accomplishments and what can be done to advance the Company’s vision of “Becoming the Best Company to Work for,” as well as getting acquainted with each other and the human resources practices and systems in various countries, for two days.

Our Social Impacts


STRaTEGiC COllabORaTiON WiTh UNivERSiTiES

TAV Academy established strong strategic collaboration programs with such universities as Kocaeli University, University of Turkish Aeronautical Association (THK University,) and TOBB (Union of Chambers and the Commodity Exchanges of Turkey) University of Economics and Technology; industry-specific programs and R&D projects were carried out thanks to the knowledge and know-how transfer from TAV Academy. In addition, as a result of the other collaboration programs established with universities and İŞKUR (Employment Agency of Turkey,) internship, part-time and full-time employment opportunities were created.

TAV Group places particular emphasis on the effective management of internships for development of students as well as the Company’s talent management and recruiting strategies; the internship process is structured to yield the optimal benefits for both parties.

Functional Category Administrative 283Operational 3,077Technical 471

Marital Status Single 2,166Married 1,665

Disability Yes 48No 3,783

SexFemale 1,142Male 2,689

Male & Female Female Level 5 (Administrative Staff) 3,393 1,037Level 4 (Specialist/Engineer) 221 60Level 3 (Supervisory Level Employees) 149 31Level 2 (Middle Management) 65 13Level 1 (Senior Management) 3 1Total 3,831 1,136

Age Under 30 1,65530-50 2,02150+ 155

TypeWhite Collar 651Blue Collar 3,180Total 3,831


OCCUPaTiONal hEalTh aNd SafETy

TAV Airports administered health and safety training programs for 983 employees in 2010 and for 721 employees at the four airports in Turkey in 2011.

COMMUNiCaTiON WiTh CUSTOMERS

4,322 domestic and international passengers were surveyed via external customer satisfaction forms at the Atatürk, Esenboğa and Izmir terminals in 2011.

The survey consisted of questions in seven distinct categories and participants were asked to assign a grade between one and five for each category. The question categories are as follows:

• Assessment of entry into the airport

• Assessment of check-in services

• Assessment of passport control

• Assessment of security services

• Assessment of ease of finding directions

• Assessment of common areas inside the airport

• Assessment of the airport in general

The results affirmed the importance TAV places on external customer satisfaction, as the rates of customer satisfaction were 97 % at TAV Istanbul, 99 % at TAV Esenboğa and 96 % at TAV Izmir.

Our Social Impacts

* Work-related accidents where more than 3 days of absence is involved

ISTANBUL ANKARA IZMIR ANTALYAHealth and Safety Trainings 2010 2011 2010 2011 2010 2011 2010 2011

H&S Training Hours per Employee

Hours/Year 3.3 1.4 15.1 1.3 5.1 0.6 24.0 54.3

Accidents 2010 2011 2010 2011 2010 2011 2010 2011

All except first aid level minor injuries Number 5.0 4.0 5.0 4.0 6.0 5.0 0.0 0.0

With fatality Number 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Reportable Number 3.0 0.0 3.0 0.0 0.0 3.0 0.0 0.0

Accident frequency % 2.49 2.99 3.50 3.00 15.00 14.80 0.0 0.0

Days of Absence 2010 2011 2010 2011 2010 2011 2010 2011

Lost Days Caused by Work-Related Accidents

% in absence 0.02 % 0.0 % 0.1 % 0.1 % 0.0 % 0.0 % 0.0 % 0.0 %

Reportable*:% in

absence 0.7 % 0.0 % 0.3 % 0.2 % 1.8 % 0.0 % 0.0 % 0.0 %


The most frequently cited source of dissatisfaction in Istanbul is the passport control on the departures side. Aware of this situation, TAV Istanbul applied for authorization to implement the Open Gate Project that required a € 2 million investment in 2010.

OPEN GATE Project: In 2011, TAV Istanbul started the investment for its Open Gate application that encompasses moving the security control points at the entrances of the waiting areas of gates to more central locations; redrawing air-land boundaries through these points; and subjecting all passengers, transit passengers, personnel and materials that move to the air side (isolated lounge) to a security check in accordance with the “pre-boarding control standard.”

This will prevent flight delays stemming from passenger security checks, allow more efficient utilization of gate capacities, and help relaxed passengers to have a higher quality experience.

Contribution to Employment In 2011, TAV Group provided employment opportunities to a total of 20,269 people (average number of employees in 2011: 19,838) and offered 1,069 interns the chance to learn about work life and gain professional experience. TAV also offers rich internship opportunities to ensure that successful students, who are the workforce of the future, learn about professional life and the aviation sector, assess themselves and their skills. To support cooperation between academic and business circles and to increase employment in the sector, priority is given to students from civil aviation departments of universities. The performance of interns is evaluated by the managers of the related departments and Human Resources Department.The interms who are deemed successful are offered positions at the Company. To this end, the interns who successfully completed the “Professionals of the Future Internship Program” that was implemented in 2010 and who embraced the corporate culture were recruited for appropriate positions in 2011.

The number of interns at TAV Airports in 2011 was as follows:

Holding 45

TAV Istanbul 181

TAV Ankara 48

TAV Izmir 37

TAV Gazipaşa 2


CORPORaTE SOCial RESPONSibiliTyTAV Airports defines its corporate social responsibility approach as its voluntary contribution to create a better and more developed society. Within this framework, the Company aims to develop and support sustainable and transparent projects that are open to diversity and development, that create value for society and encourage voluntary participation, and that are carried out in accordance with internationally-accepted standards. To that end, TAV conducted the following activities in 2011.

• Established to form a culture and art platform at the airports operated by TAV, TAV Gallery was launched at the Izmir Adnan Menderes Airport International Terminal in 2011 after Istanbul and Ankara. TAV Gallery Izmir presented the “SunExpress Izmir from the Sky,” “Blue,” “Caretta Caretta” and “Sultans of Poetry” exhibitions to tens of thousands of passengers throughout the year. Events at TAV Gallery Ankara continued with “Lösev (Foundation for Children with Leukemia),” Spirit of the Sea,” “Lufthansa” and “News Photographers Association of Turkey” exhibitions while events organized at TAV Gallery Istanbul include “Istanbul Maps,” “Firsts of Automobiles,” “Ladies and Kaftans,” “Pamukkale,” “Tassa Cabin Attendants” and “This City of Istanbul” exhibitions. As one of Turkey’s largest employers, TAV chose the “Istanbul is Photography” exhibition that was

put together from the works of the TAV Workshop Photography Club participants as the final activity of the year.

• Displaying great awareness toward multiculturalism and preservation of cultural values, TAV Airports conducted a number of activities for passengers in celebration of March 8 International Working Women’s Day, April 23 National Sovereignty and Children’s Holiday and the Month of Ramadan in 2011.

• The magnitude 7.2 earthquake that took place in Van, Turkey, on October 23, 2011 left many people dead, injured and homeless. In an attempt to support the aid efforts and to meet the most urgent needs, such as heating and food, of the earthquake victims, TAV Airports launched an intra-company aid campaign immediately after the earthquake. Using the funds collected in a very short period of time by the campaign, TAV purchased urgently needed supplies such as tents, blankets, baby formula and diapers and delivered these to the disaster zone immediately. In addition to the campaign organized in conjunction with employees, the Company also donated 10 homes as part of the Mevlana Homes effort.

• TAV sponsored a series of events in 2011 in order to support sector development and progress in international relations. The Turkish-Arab Economic Forum (TAF) that brought together business people and decision-makers from 22 countries in the region; the International Cooperation Platform (ICP) that brought together representatives from the countries in the region to establish economic, political, scientific and cultural collaboration; and the Leaders of Change Summit where global and regional alliances were discussed were among the events supported by TAV. Continuing to support culture and art, TAV established cooperation with Istanbul Modern, Turkey’s first modern art museum.

• Taking part in the “Stars of Istanbul” campaign of UNICEF that works to advance children’s rights, TAV Airports also gave support to the launch of Curioz, the new children’s club of Turkish Airlines. A joint photography project was undertaken as part of the collaboration with Darüşşafaka Schools where talented but financially needy students are enrolled.

• The Corporate Communication Certification Program, administered in cooperation with Istanbul Bilgi University, produced its first graduates in 2011.

Our Social Impacts


• Providing support for projects that benefit people with disabilities, TAV Istanbul and BTA supported the “Collecting plastic bottle caps for a life without disabilities project” launched by the Spinal Cord Paralytics Association of Turkey (TOFD) this year. TAV Istanbul and BTA, which collected approximately 390 kilograms of caps for the “Collecting plastic bottle caps for a life without disabilities” campaign of TOFD, were acknowledged for their support of the campaign with a certificate by the Spinal Cord Paralytics Association of Turkey, the campaign administrator. At the certificate ceremony that was held with the participation of all project sponsors, power and manual wheelchairs were delivered to people in need of them. TAV Istanbul and BTA also supported the “Ataşehir is collecting caps one by one, overcoming the barriers step by step” campaign organized by the Ataşehir Municipality. Collecting plastic soda bottle caps at designated areas within the catering areas and airport personnel offices at the Istanbul Atatürk Airport operated by the Company, TAV handed over nearly 250 kilograms of caps to the Ataşehir Municipality, which resulted in delivery of wheelchairs to people in need in cooperation with the Association of Persons with Disabilities of Turkey.

Intra-Company Activities Additionally, two major projects that bring TAV Group employees together and contribute to their social life as well as their personal development are TAV Cup and TAV Workshop.

TAV Cup is comprised of sports tournaments organized simultaneously in Istanbul, Ankara and Izmir. Carried out for the third time this year, TAV Cup tournaments are organized for soccer, basketball, volleyball, table tennis, chess, bowling and backgammon. More than 1,600 sports enthusiasts participated in all TAV Cup tournaments in its second year while more than 600 people joined the soccer tournament alone in 2011. Every contest in the TAV Cup is overseen by scouts. The athletes chosen by these scouts compete on behalf of TAV in Corporate Games, Turkey’s largest inter-company tournament. In 2011, the second year the Company participated in the Corporate Games with 120 players, TAV won the title in chess, soccer and volleyball branches.

The Company diversified its internal communication offerings for its employees with the addition of TAV Workshop in 2011. Workshop activities that contribute to the personal development of TAV Group employees were held in dance, photography, music and painting, reaching more than 400 participants. Employees who participated in Workshop activities got the opportunity to exhibit their hobbies. The Photography Workshop participants were featured in TAV Gallery with the “Istanbul is Photography” exhibition while Painting Workshop participants produced the TAV Star as part of UNICEF’s “Stars of Istanbul” project. TAV Airports Holding’s “2010 Annual Report” that was prepared with the assistance of Dance Workshop participants won the world’s best annual report award.

Embracing corporate social responsibility as an internal piece of its management processes, TAV Airports intends to focus on environmental, education and arts & culture projects in 2012. Striving to be the market leader in the sectors in which it operates, TAV also aims to contribute to the sector development processes, to adopt and improve on the best practices, and to advance the industry by deploying its know-how in this segment to its overseas operations.


2011 Awards International awards won as a result of diligent and dedicated efforts

The 2010 Annual Report of TAV Airports was deemed the “Best of Show” (Best in the World) at the International Annual Report Competition held in New York City, USA.

The 2010 Annual Report was recognized with the Gold Award in the “Airport Management” category at the “Galaxy Awards” competition organized by MerComm in the United States.

TAV Airports Holding’s 2010 Annual Report received the Gold Award in the “Transportation and Logistics” category from the League of American Communications Professionals (LACP) while ranking in the top 50 reports in the Europe-Middle East-Africa (EMEA) region and among top 10 reports in Turkey.

At the “Turkey Investor Relations Awards” organized for the third time in 2011 by Thomson Reuters Extel Surveys and Acclaro, TAV Airports won awards in six categories, “Best Investor Relations CEO,” “Best Investor Relations CFO,” “Best Investor Relations Officer,” “Best Investor Relations Website,” “Best Investor Relations Unit” and “Best Disclosure of Financial Results,” including a first-place finish in the “Best Investor Relations CEO” category.

ISS Corporate Services (ICS), one of the world’s most prestigious independent corporate governance rating organizations, increased TAV Airports’ corporate governance rating score to 9.09. As a result of this score, TAV Airports Holding became the holder of the second highest rating in the Istanbul Stock Exchange Corporate Governance Index.

The Emerging Markets Airport Awards recognized TAV Airports in three categories. At the award ceremony held in Dubai, United Arab Emirates, TAV Airports was chosen as the “Best Emerging Market Airport Management Company.” Izmir Adnan Menderes Airport International Terminal captured the “Best Emerging Market Achievement Airport for Eco Innovation” title while Georgia’s Tbilisi Airport was deemed the “best” in its region (Russia/CIS); both of these airports are operated by TAV Airports.

As a result of its leadership in internal audit, TAV Airports was deemed worthy of the “Internal Audit Awareness” award by the Internal Audit Institute of Turkey (TİDE) Board of Directors.

TAV Georgia won the “Golden Brand Award Best Brand” in the “Public Transport and Service” category at the Golden Brand 2010 organized by Global Idea, a leading market research firm in Georgia, and The Financial, a news portal.

TAV Airports was recognized with the 2011 Corporate Governance Award 2011 by the World Finance Magazine.

Moodie awarded Cakes & Bakes, a subsidiary company of BTA Catering, with the “Best Supplier” award.

Istanbul Atatürk Airport was named “Best Airport Operator of the Year” at the Skalite 2011 Awards, known as the “Tourism Oscars” in the industry and organized by Skal International Istanbul Club to raise the bar for quality in tourism.

W3 Awards gave the “Silver Award” to the Istanbul Atatürk Airport website in the “Transportation” and “Travel” categories and to the TAV Investor Relations website in the “Financial Services” category.

TAV Passport was deemed worthy of the “Best Service” Award by gecce.com.

ICT Summit Eurasia - Bilişim Zirvesi’11 designed as a platform to encourage cooperation within the Eurasia region, recognized the communication technology projects undertaken between the countries of the region. Leaving many established information technology companies behind with its Enfidha - Hammamet Airport information technology infrastructure project, TAV IT was awarded the first place at the award ceremony.

TAV Macedonia, won the best project award at the Real Estate and Investment Exhibition organized for the first time in Macedonia in 2011.


In addition to the certifications and accreditations listed in the 2010 report:

• TAV Istanbul initiated the ISO 14001 certification process.

• TAV Istanbul initiated the ISO 10002 certification process.

• TAV Istanbul initiated the OHSAS 18001 certification process.

• TAV Istanbul initiated the BREEAM In Use certification process.

• The certification process for the barrier-free airport project is ongoing.

• TAV Izmir renewed its verification for the level 1 of ACI-Carbon Accreditation Program through an independent organization.

2011 Certifications


Risk Management An active risk assessment system that aims to anticipate and minimize risks

Enterprise Risk Management Function In 2010, TAV Airports completed the initiative to form its Enterprise Risk Management (ERM) structure, which was launched in December 2009. Under this structure, ERM commenced operation under the supervision of the Risk Management and Research Coordination Department, which in turn reports directly to the Finance Director, as of 2009.

Pursuant to the new Turkish Commercial Code that will take effect as of July 2012, publicly-traded companies whose shares are listed on the Istanbul Stock Exchange are required to report their major risks to their senior managements regularly once every two months via a “Risk Committee” that they will form. The new law gives the duty of identification of existence and operation of this function to independent audit companies. TAV implemented this structure during its public offering based purely on its foresight well ahead of the enactment of this law, thereby demonstrating the importance of its shareholders and the share value for the Company.

Risk Management Initiatives in 2011 TAV Airports Holding’s 2010 risk inventory was revised by the managers of the Holding’s main processes under the coordination of the Risk Management and Research Department and the impacts of the action plans determined in 2010 were reflected in the risk levels. The 2011 risk inventory formed in this manner was reported to the senior management.

As a result of the revision efforts, the number of risks that was determined to be 269 in 2010 rose only to 273 in 2011 with new risks added to the list. The number of risks that fall within the focus of the senior management per the levels of the risks fell from 61 to 46 while the number of risks deemed necessary for monitoring by the Internal Audit Department rose from 112 to 128.

leve

l of

Rem

aini

ng R

isk

level of Natural Risk

There are 46 risks that fall within the focus of the Senior Management.

There are 128 risks that are deemed necessary for monitoring by the Internal Audit Department.

27

50 61

7

15

very high

very high

high

high

Medium

Medium

low

low

22

53

24

7

7


TAV Airports Holding classifies risks under the categories of strategic, financial, operational and legal/compliance and assesses the impact of the risk not only in financial terms, but also along the dimensions of service continuity, reputation, loss of customers and legal/regulatory effect.

The breakdown of the number of risks by category is presented below.

Operational 124 45 %

Strategic 80 29 %

Legal/Regulatory 36 13 %

Financial 33 12 %

Total 273 100%

As a result of the ERM initiatives, TAV directed its focus on such matters as reviewing contract management, data and information ownership, collateral tracking and insurance coverage and defining operations and management principles between companies more clearly; the Company commenced efforts for improvement in these areas.

Additionally, in keeping with the plans, TAV launched ERM structuring efforts at the group companies in 2011. A total of 1,816 risks were identified at the five service companies and three airport/terminal operators that participated in these initiatives throughout the year and company management began evaluating these risks. The objective of this effort is to create a common ERM awareness throughout the entire group and to plant the seeds for increasing ERM maturity level on a going forward basis.

Enterprise Risk Management Approach and Risk Assessment Method: TAV Airports Holding’s risk management approach is structured along the lines of “integrated risk management.” Under the coordination of TAV Airports Holding’s Risk Management Department, all service companies and airport operations under TAV Holding are encompassed by this risk management approach. In contrast to the conventional risk management method which evaluates the risks in various business units separately, the Holding aims to operationalize a risk management function that can oversee the general risks of the entire Company, puts the general interest of the Company before that of the business unit the risk is stemming from, and that functions in a continuous manner.

In addition, in accordance with its sustainability principles, the Holding adopted an approach that encompasses adverse impacts stemming from social and environmental conditions, in addition to economic circumstances, in the regions in which TAV operates and that embraces the concept of managing risks proactively.

Identification & Measurement SUSTAINABILITY Identification & Measurement

Action

Prioritization

HOLDING ERM TERMINAL OPERATIONS & SERVICE COMPANIES

Efficient Utilization of Resources Monitoring & Reporting Monitoring & Reporting

Action

Prioritization


Risk Management

TAV Airports Holding defines risk management as the analysis of the opportunities and threats it encounters as it works to achieve its corporate goals and the correct pricing of the risks it takes in relation to its risk appetite.

At the same time, the Holding sees it as a prerequisite for the success of risk management that the manager/business unit where the risk stems from takes the responsibility for the risk and such manager/business unit is assessed from an impartial and objective perspective in accordance with a predetermined methodology. As part of this process, if the assessment reveals that the manager in question cannot mitigate the risks down to the targeted levels despite the resources at his/her disposal and managerial skills and there are action plans that can achieve this, then the manager presents a recommendation to the senior management of the Company accordingly.

The risks that are deemed highly important according to the ranking generated based on the assessment and that fall within the authority of the senior management are assigned a larger and prioritized share of the resources. The goal at this point, first and foremost, is to prevent the materialization of these risks and then to stand prepared to best

manage the resulting crises should such risks materialize. In addition, since it is impossible to entirely and accurately measure some political, social and environmental risks (such as natural disasters and wars,) risks that are included within this scope are closely monitored on an ongoing and continuous basis.

Elements that Differentiate TAV Airports Holding Enterprise Risk Management The ERM structure of TAV Airports Holding, one of the first companies in Turkey to adopt the ERM practice, has the backing and support of its senior management. This support undoubtedly hinges on the importance the Company places on shareholder value.

The characteristics of TAV Airports Holding that allow its risk management to be conducted successfully are listed below:

• Existence of an Internal Audit function to monitor the activities determined to address the areas of improvement revealed by the ERM efforts

• Existence of an information technology company within the Group that can generate “company-specific” systems-based solutions

• With respect to the management of financial risks, accumulated knowledge and experience of TAV’s finance, structured finance and project finance staff with extensive experience from the volume and diversity of the ventures they have managed

• The importance given to the budget preparation, approval and controlling principles within the Company since its inception

An agenda item for the Company in the coming years is to have reached the maturity level within TAV Airports Holding to be measured by an independent organization with respect to ERM, which has completed its first year cycle in 2011 after its establishment and the first-year assessments.


Internal Audit Meticulously conducted internal audits and team assesments

TAV Holding Internal Audit Directorate conducts periodic internal audits to monitor compliance with the Group Risk Policy at TAV Airports and its subsidiaries. The Internal Audit Directorate identifies and reports the deficiencies in risk management and governance processes, and the practices that are causing inefficiencies and waste of resources through independent audits and/or recommendations. Additionally, efforts are carried out to enhance organizational functionality and service quality.

TAV Holding Internal Audit Directorate has successfully completed the Internal Audit Quality Assurance Review carried out by PwC. The audit report, dated December 14, 2009, verified the Unit’s compliance with the International Internal Audit Standards and Ethical Principles. Thus, TAV Holding Internal Audit Directorate became the youngest unit to qualify for this title.

To enhance their knowledge, skills and competences, members of the audit team hold various certifications such as CISA, CIA, CFE, SMMM, CCSA, CFSA, CEH, ITIL V3 Foundation and initiatives in this area are carried out on an ongoing basis.

The Internal Audit Directorate identifies the business units to be audited and conducts structural risk analyses for the Holding and its subsidiaries.

Activities in 2011 Along with the process audits conducted in Turkey, the Internal Audit Directorate conducted branch audits in 2011 for locations outside of Turkey and for companies with a low value of financial scope/turnover. A total of 13 process audits and three company audits were conducted while two special investigation reports and three consulting service reports were drafted.

No amendments were effected in 2011 concerning the internal regulations on TAV Airports Holding’s areas of business. Audit activities that were conducted with three sub-units (Finance, Operations and Information Technology) began to be administered through two sub-units as of this year (Operations and Finance.) This change is aimed at auditing the processes with a more integrated methodology, improving effectiveness and expanding the know-how and knowledge base of the employees. The scope of the audit activities expanded as the operation rights were obtained for the Izmir Adnan Menderes Airport Domestic and International terminals and for the Madinah International Airport. The expansion in scope in turn brought with it additional legal and regulatory risks.

As part of its consulting services, the Directorate made recommendations regarding the configuration of newly installed systems and information technology infrastructure in accordance with generally-accepted standards at the airports TAV began to operate. In addition, process improvement activities were conducted as part of the initiative for TAV IT to obtain the ISO 27001 Information Security Management System certification.

In addition to these activities, the Directorate conducted efforts related to MIS (Management Information Systems) for generating the management reports summarizing major financial and operational information on TAV Airports Holding and its subsidiaries to be presented to the CEO and the senior management. As a result, the senior management was provided with fast accurate and up-to-date information on the companies.

As a result of the audits conducted, the Directorate identified the following areas of improvement:

• Increasing the effectiveness of the controls that are embedded in the processes

• Maintaining policies and procedures in written form and updated

• Improving system-security controls

The Internal Audit Directorate worked with the related units within the scope of these areas of improvement and supported the enhancement of the effectiveness of controls. In addition to these efforts, the Directorate worked together with the business units on conducting the content controls of new policies and procedures and supported management for the comprehension and implementation of uniform rules by employees.

As a result of its leadership in internal audit, TAV Airports Holding was recognized with the “Internal Audit Awareness” award by the Internal Audit Institute of Turkey (TİDE) Board of Directors on May 24, 2011.


Corporate Governance Principles Compliance Report

TAV Airports Holding (“the Company”) makes every effort to comply with the Capital Markets Board’s (CMB) Corporate Governance Principles (“Corporate Governance Principles”.) To this end, the Company continually strives to achieve the highest corporate governance standards and is working diligently to implement some of the stipulations specified as recommendations in the Corporate Governance Principles. TAV Airports Holding considers ethics rules, as well as the principles of transparency, fairness, responsibility and accountability, to be part of the Company’s culture.

The Company’s efforts with respect to the Corporate Governance Principles were evaluated in 2011 in the “Corporate Governance Rating Report,” prepared by RiskMetrics Group (ISS,) an international corporate governance rating agency that is also licensed to conduct corporate governing rating activities in Turkey in accordance with the Capital Markets Boards Corporate Governance Principles. As a result of this report, the Company’s Corporate Governance Rating Score, which was 90.35 (9.03) as of 2010 was revised upwards to 90.96 (9.09) in 2011, taking into consideration the continual development and improvement of Company’s activities since the previous rating, as well as the Company’s great awareness of and determination about corporate commitment to its implementation.

Raising its corporate governance score from 9.03 to 9.09 out of 10 in its third year of rating, TAV Airports had the second highest score this year after boasting the top score in the index last year. The final rating score was calculated based on the respective weight coefficients of the four subcategories stipulated in the Capital Markets Board’s related principle resolution: shareholders, public disclosure and transparency, stakeholders and board of directors. Within this scope, the Company’s Corporate Governance Ratings by subcategory are presented in the table below.

Subcategories Weight Score

Shareholders 0.25 90.63

Public Disclosure and Transparency 0.35 93.41

Stakeholders 0.15 96.82

Board of Directors 0.25 84.36

Total 1.00 90.96

The Company’s information disclosure policy, which was created pursuant to the Capital Markets Board’s Corporate Governance Principles was documented in writing and announced through the ir.tav.aero web site.

An amendment was approved at the General Assembly Meeting held on May 24, 2010 changing the required number of members of the Board of Directors from 15 to “at least 9.” The requirement of incorporating at least two independent members on the Board of Directors, which is stipulated by the Corporate Governance Principles, has already been fulfilled by the Company since the initial public offering.

As of the reporting period ending December 31, 2011, the Company complies with and implements the Corporate Governance Principles, with the exception of matters stipulated in sections 18.3.4 (“Using a cumulative voting system in the election of members of the Board of Directors”) and 26.5.2 (“The number, structure and independence of the Board committees” - “committee chairmen are elected from among independent members of the Board of Directors”) of the Report. These aforementioned issues are not believed to cause any significant conflict of interest as of the present time. While the exercise of minority rights is made possible via the two independent members on the Company’s Board of Directors, the Company is currently assessing the advantages and disadvantages of using the cumulative voting system in the election of the members of the Board of Directors. The two independent members of the Board of Directors of the Company, Mehmet Cem Kozlu and Pierre de Champfleury, also serve as Corporate Governance Committee Chairman and Audit Committee Member, respectively.

The Board of Directors, Senior Management and all employees of TAV Airports Holding support the adoption of the Corporate Governance Principles within the Company at every stage of the process. Following the adoption of the Corporate Governance Principles, the Corporate Governance Principles Compliance Report was announced to the public, in which the Company declares that all activities shall be undertaken in line with the principles of equality, transparency, accountability and responsibility.


SECTION I - SHAREHOLDERS

1. Shareholder Relations Unit The Company complies with the legislation, Articles of Association and other Company regulations on the matter of exercise of shareholder rights and takes necessary measures to facilitate the exercise of these rights.

In order to oversee all relations with shareholders and establish channels of communication between the Company and its shareholders, the Investor Relations Department was established within the Company in September 2006, prior to the initial public offering in February 2007. The Investors Relations Department operates for the purpose of presenting accurate, timely and coherent information to existing and potential investors about TAV Airports Holding, increasing the recognition and credibility of the Company, positioning the Company among the publicly-traded airport operation companies in the world, lowering the Company’s cost of capital by implementing the Corporate Governance Principles and establishing communication between the Board of Directors and capital markets participants. In line with these objectives, the Company strives to maintain close communication with its shareholders and investors and conducts an active investor relations program.

At the “Turkey Investor Relations Awards” organized for the third time in 2011 by Thomson Reuters Extel Surveys and Acclaro, TAV Airports won awards in six categories, “Best Investor Relations CEO,” “Best Investor Relations CFO,” “Best Investor Relations Officer,” “Best Investor Relations Website,” “Best Investor Relations Unit” and “Best company in sharing financial results,” including a first-place finish in the “Best Investor Relations CEO” category.

At the “Turkey Investor Relations Awards” that was organized for the first time in 2009, TAV Airports Holding CEO M. Sani Şener, TAV Airports Holding Head of Investor Relations Nursel İlgen and TAV Airports Investor Relations Website won awards in the “Best Investor Relations CEO,” “Best Investor Relations Officer” and “Best Investor

Relations Website” categories, respectively. At the 2010 awards TAV Airports’ Chief Executive M. Sani Şener, Finance Director Murat Uluğ and Investor Relations Coordinator Nursel İlgen won the first-place prizes in the “Best Investor Relations CEO,” “Best Investor Relations CFO” and “Best Investor Relations Officer” categories, respectively, while the Company also won awards in the “Best Investor Relations Website” and “Best Investor Relations Unit” categories, bringing TAV Airports Holding’s IR award total to five in 2010.

Per the organization of the Company, the Investor Relations Department reports directly to the Chief Executive Officer (CEO,) who is also an executive member of the Board of Directors. The Head of the Investor Relations Department attends the Board of Directors meetings in order to establish two-way communication between the Board of Directors and shareholders.

Primary responsibilities of the Investor Relations Department, which serves as the communication bridge between the Board of Directors and the financial world, consist of:

• Ensuring that shareholder records are kept accurately, reliably and up-to-date;

• Furnishing the coordination within the Company regarding shareholder-related matters;

• Responding to written or verbal information requests from shareholders, potential investors, equity analysts, legal bodies (Capital Markets Board, Istanbul Stock Exchange, Central Registry Agency and the like) and financial publication houses about the Company, unless the requested information is publicly unavailable, confidential or a trade secret; ensuring that accurate information is made available to everyone simultaneously in a consistent manner and updating existing information;

• Preparing and sending out material disclosures to the Public Disclosure Platform (PDP) in both Turkish and English simultaneously;

• Reviewing all Company announcements and preparing and releasing the announcements about financial results in both Turkish and English simultaneously;

• Updating the Investor Relations website, company presentations, annual reports and other communication vehicles in order to provide accurate and complete information to shareholders and potential investors, and using electronic communication means;

• Creating a database of domestic and foreign institutional investors and equity and industry analysts;

• Representing the Company in investor relations meetings with existing and potential investors and analysts in Turkey and abroad;

• Examining and monitoring analyst reports;

• Responding to the information requests of the Corporate Governance Rating Agency;

• Monitoring significant developments and statistics about the sector;

• Taking necessary measures to ensure that the General Assembly meetings are held in compliance with legislation in force, the Company’s Articles of Association and other Company regulations;

• Preparing the documents that will be beneficial to shareholders for the General Assembly meetings;

• Providing shareholders access to meeting minutes;

• Monitoring and overseeing every aspect of the public disclosure process for compliance with legislation.

The Investor Relations Department makes every effort to use electronic communication means and the Company website in all of its endeavors. Contact information for the Investor Relations Department is posted on the website at ir.tav.aero and published in the annual reports. The Investor Relations Department can be reached at [email protected] for all requests and questions. Further enhancing its design and content in 2011, the TAV Investor Relations website has been renewed to provide an interactive experience, and many new features were adapted into the website facilitating easier user access to information and data. In addition, major financial and operational information about the Company is shared on social media platforms such as Facebook and Twitter.



The operations of the Investor Relations Department are conducted by Nursel İlgen, CFA who also holds CMB Advanced Level and the Corporate Governance Rating Licenses; by Ali Özgü Caneri, who has passed the CMB Advanced Level, Derivatives and Corporate Governance Rating proficiency exams; and by Besim Meriç, who holds CMB Advanced Level, Derivatives and Corporate Governance Rating Licenses.

Within this scope, the persons in charge of the Investor Relations Department are listed below:

TAV Investor Relations Department

Name Surname Title Phone E-mail

Nursel İlgen Head of IR +90 212 463 3000 / 2122 [email protected]

Ali Özgü Caneri IR Assistant Manager +90 212 463 3000 / 2124 [email protected]

Besim Meriç IR Assistant Manager +90 212 463 3000 / 2123 [email protected]

As of April 2012, 44 % of the Company’s outstanding shares are publicly held (40 % of shares are actually circulating,) approximately 85 % of which reside in the portfolios of foreign investors. In 2011, the Investor Relations Department attended 17 conferences in Turkey and abroad that were organized to provide information to shareholders and investors. More than 600 face-to-face meetings were held with investors, shareholders and analysts about the Company’s operating results, performance and other developments. In addition, pursuant to the Capital Markets Law, 24 material event disclosures were made in 2011 and these material disclosures were also posted on the Company website. The Department responded to inquiries from many investors and analysts via telephone and e-mail during 2011, while detailed presentations were prepared about the Company’s financial results during financial reporting periods (quarterly.) 2. Exercise of Shareholders’ Right to Obtain Information Pursuant to its Information Disclosure Policy, it is the Company’s principle to treat all shareholders, potential investors and analysts equally with respect to exercise of the right to obtain and analyze information, as well as to make all information disclosures to everyone simultaneously and with identical content. All information sharing is undertaken within the scope of information that has previously been disclosed to the public. As part of the information sharing effort, all information of interest to shareholders and market participants is announced via material disclosures; the English translations of these disclosures are transmitted electronically to all people and entities who give their e-mail addresses to the Company and past material disclosures are posted on the Company’s website in both Turkish and English.

Many written and verbal information requests from shareholders are responded to on an expedited basis under the supervision of the Investor Relations Department and in compliance with the provisions of the Capital Markets Law. In an effort to enhance shareholders’ rights to obtain information, all necessary information that is stipulated in the Corporate Governance Principles and that can impact the exercise of shareholder rights is presented to shareholders in an up-to-date manner on the Company website. All information on the Company website is presented in Turkish, as well as in English, in order to treat all shareholders, domestic and foreign, equally.

The activities of the Company are audited regularly on a periodic basis by an independent external auditor and auditors assigned by the General Assembly. In the fiscal year 2011, the independent audit activities were conducted by KPMG under the legal entity Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.

The Articles of Association currently do not recognize requests for assignment of a special auditor as a shareholder right. The Company did not receive any requests for the appointment of special auditors. However, Article 20.1 of the Company’s Articles of Association authorizes shareholders to direct the attention of auditors to doubtful matters and request necessary explanations.

3. Information on the General Assembly The Ordinary General Assembly Meeting of shareholders regarding the Company’s 2010 activities was held on Friday May 13, 2011, at 10 a.m. at the TAV Academy (A) Hall, located at the Atatürk Airport International Terminal Gate A – Next to VIP, TAV Administration Center, Yeşilköy-Istanbul. The announcement for the Ordinary General Assembly, including the necessary information about the meeting date and time, meeting location, agenda items, procedures for the attendance of shareholders at the meeting, proxy forms and arrangement procedures were published on page 863 of the Turkish Trade Registry Gazette, issue no. 7798, dated April 20, 2011. The announcement was also published in the daily Radikal and Akşam Newspapers, dated April 16, 2011. Of the 363,281,250 shares representing the Company’s share capital as of the date of the meeting, 208,335,406 shares, or 57.3 % of the total, were represented at the Ordinary General Assembly meeting. In addition to the procedures stipulated by the legislation, the General Assembly meeting


announcement was also made available at the Company Headquarters and on the Company website (ir.tav.aero) 28 days prior to the meeting in an attempt to reach the maximum number of shareholders possible.

The General Assembly Information Document and the General Assembly meeting announcements posted on the Company website included the meeting date and time, meeting location, agenda, the fact that the invitation was being extended by the Board of Directors and the procedures for the shareholders to attend the General Assembly. Since the Company does not have any registered shares, no accommodations were made to facilitate the participation of this class of shareholders at the General Assembly meetings. As of the date of the announcement inviting shareholders to the General Assembly meeting, financial statements and reports and the General Assembly agenda items were made available for examination at locations easily accessible by shareholders as well as on the Company website.

There have been no major changes in the management or operational organization of the Company during the previous reporting period, nor are any such changes planned for subsequent periods. If such a change were to take place, it will be shared with the public within the scope of legal and regulatory requirements. The Company did not receive any requests from shareholders for adding items to the agenda of the General Assembly meetings held during the year. The meeting procedure of the General Assembly facilitates maximum participation by shareholders. General Assembly meetings are carried out with the simplest possible procedures, at the lowest possible cost for the shareholders and in a manner that does not create any inequality among them. The TAV Academy (A) Hall, where the General Assembly meetings take place, is located at the Company’s Head Office and it can accommodate all shareholders. The Company’s General Assembly meetings are open to the public and are held under the supervision of a Ministry of Industry and Commerce Government Official. During the General Assembly meeting, agenda items were presented in an objective, detailed,

clear and comprehensible manner and the language and expressions used did not allow for misinterpretations. Shareholders were given equal opportunity to voice their opinions and ask questions, thus creating a healthy environment for discussion; however, shareholders did not exercise this right during the General Assembly meeting regarding 2010 activities. Minutes of the General Assembly meeting are available on the Company website (http://ir.tav.aero.)

4. Voting Rights and Minority Rights

Voting Rights The Company avoids practices that make it difficult to exercise voting rights. All shareholders are given the opportunity to exercise their voting rights in the easiest and most convenient manner possible. Each share is entitled to one vote in the Company. According to the Company’s Articles of Association, there are no privileges associated with voting rights. Therefore, there are no preferred stocks or different classes of shares in the Company. There is no Company regulation that restricts the exercise of shareholders’ voting rights for a certain time period following the acquisition date of the shares. The Company’s Articles of Association do not contain any provision that prevents non-shareholders from voting in proxy as a representative of a shareholder. The share capital of the Company does not involve any cross-shareholdings.

Minority Rights The Company’s Articles of Association contain a provision which stipulates that minority rights shall be exercised by shareholders collectively holding at least 5 % of the share capital. Exercise of minority rights in the Company is subject to the Turkish Commercial Code, the Capital Markets Law and related regulations, and the communiqués and resolutions of the Capital Markets Board. The Company’s Articles of Association do not contain any provisions in addition to the provisions mentioned above. The Company facilitates the exercise of minority rights in accordance with the related laws and regulations and, if necessary, by the independent members of the Board of Directors. As the cumulative voting

right is left to the discretion of Publicly Listed Joint Stock Companies pursuant to Communiqué Series: IV, No. 29 of the CMB; the Company’s Articles of Association do not (yet) provide for cumulative voting. However, within the scope of legal and regulatory developments, the Company will assess the advantages and disadvantages of this method.

Principle of Equal Treatment of Shareholders As it is included in Company’s Disclosure Policy, all shareholders, including minority and foreign shareholders, are treated equally.

5. Dividend Policy and Timing of Distribution There are no privileges with respect to participation in the Company’s profit. The Company makes its dividend distribution decisions taking into account the Turkish Commercial Code, Capital Markets Law, Capital Markets Board Communiqués and Resolutions, the Tax Laws and the provisions of other related laws and regulations, as well as the Company’s Articles of Association. Accordingly, pursuant to CMB’s resolution No. 02/51 dated January 27, 2010, publicly-listed joint stock companies are not obligated to pay any dividends from the profits they made from their activities in and after 2009 (there was a 20 % minimum threshold for 2008.) The corporations that resolve to distribute profits may make dividend payments based on the resolution of their general assemblies, either in cash or as gratis shares issued by adding that amount to the Company’s paid-in capital, or a combination of the two.

This dividend policy adopted by the Company’s Board of Directors can also be found in the annual report and on the Investor Relations website. It is among the Company’s primary goals to adhere to this dividend policy, except for special circumstances when investments and other funds are required for the long-term growth prospects of the Company or its subsidiaries and affiliates, as well as for extraordinarily unfavorable developments in the economy.


As stipulated in item 5 of the Agenda of the Company’s Ordinary General Assembly Meeting held on May 13, 2011, since the Company had no distributable profit when the losses from previous years are netted out with the profit that accrued at year-end 2010 based on the Company’s legal records, the General Assembly unanimously resolved that no dividend should be distributed to the shareholders for the 2010 fiscal year and that the consolidated net profit shall be set aside as extraordinary reserve pursuant to the Capital Markets Board’s principle resolution regarding the issue and related regulations.

The Board of Directors will present its resolution that the Company make a dividend payment to shareholders in the amount of TL 0.25 (TL 0.2125 net) per share from the Company’s 2011 profit for the approval of the General Assembly at its meeting to be held in 2012. 6. Transfer of Shares The Company’s Articles of Association do not contain any provisions that make it difficult for the shareholders to freely transfer their shares.

SECTION II - PUBLIC DISCLOSURE aNd TRaNSPaRENCy

1.The Disclosure Policy of the Company The Disclosure Policy of the Company, prepared pursuant to the Capital Markets Board Corporate Governance Principles, was produced as a written declaration and is posted on the http://ir.tav.aero website. TAV Airports Holding’s New Information Disclosure Policy will be presented for the approval of the General Assembly at its meeting in 2012.

The Board of Directors is responsible for overseeing, reviewing and improving the Information Disclosure Policy. The Investor Relations Department is charged with

overseeing and monitoring all matters regarding public disclosures. The Disclosure Policy aims to establish active and transparent communication by sharing the past performance and future outlook of the Company with shareholders, investors and capital markets experts (capital markets participants) equally within the framework of generally-accepted accounting principles and the provisions of the Capital Markets Law, in a complete, fair, accurate, timely and comprehensible manner.

Public Disclosure Principles and Tools The information to be disclosed to the public is disseminated in a prompt, accurate, complete, comprehensible and easy to interpret manner. Attention is also focused on easy and equal access to information, with little cost, that will assist persons and companies who will benefit from the disclosure in their decision making. TAV Airports Holding complies with the Capital Markets legislation and Istanbul Stock Exchange regulations in all of its public disclosure practices. Information about the public disclosure principles and tools adopted by the Company are presented below:

• The Investor Relations Department is responsible for overseeing and monitoring all matters related to public disclosures. Questions received from outside the Company are responded to in the shortest amount of time possible by the Chief Executive Officer (CEO,) the Finance Director (CFO,) or within the knowledge of and authorization limits set by the CEO and the CFO, by the Investor Relations Department. The Company keeps a record of all questions received in writing and the responses provided by the Company. All correspondence and meetings with capital markets participants are carried out by the Investor Relations Department.

• In addition to the channels stipulated by legislation, other public disclosure tools and methods such as press releases, electronic data distribution channels, e-mail messages, meetings with shareholders and potential investors, social media platforms, as well as announcements posted on the Company website, are also used actively in the Company’s public disclosures.

• The Code of Ethics stipulated within TAV Airports spells out the principles and rules that all managers and employees are required to comply with. These rules of conduct are posted on the Company website as public information.

• Without prejudice to any of the provisions in the related regulations, the Company informs the public when a material change occurs, or is expected to occur in the near future, in the financial position and/or activities of the Company.

• The Company continually updates and publicly announces any changes or developments that arise regarding public announcements made by the Company.

• With the assistance of companies retained for monitoring the media, TAV Airports Holding follows all the news reported by the prominent national media outlets. Within this framework, TAV Airports Holding’s senior management team, Investor Relations Department and Corporate Communications Department are informed each morning of the related news published or broadcast. If non-factual news reports are identified, the Investor Relations Department assesses the situation and makes the necessary announcements in accordance with the TAV Airports Information Disclosure Policy, in response to an announcement request from the Istanbul Stock Exchange or from the CMB, or in some cases, without waiting for such a request for information.



Periodic Financial Statements and Reports and Independent Audit in Public Disclosures The Company’s financial statements and accompanying notes are prepared on a consolidated basis in accordance with CMB Communiqué Series: XI, No. 29, as well as the International Financial Reporting Standards (IFRS); independently audited in accordance with the International Audit Standards (IAS); and are announced to the public.

2. Material Disclosures Developments that have the potential to impact the value of the Company’s capital markets instruments are announced to the public on an expedited basis within the timeframe stipulated in laws and regulations. The Company made 24 material event disclosures during 2011, none of which were additional disclosures requested by the CMB or the Istanbul Stock Exchange. The Company has no additional disclosure obligations since the Company does not have any capital markets instruments listed on foreign exchanges.

3. The Company Website and its Contents As stipulated by CMB Corporate Governance Principles, the Company website is actively used in public disclosures. All matters related to the Investors Relations Department are posted on the http://ir.tav.aero website. In addition to Turkish, all information on the Company website is also presented in English for the benefit of foreign investors. The website won the first place in the “Best Website” category at the Investor Relations Awards organized jointly by Thomson Reuters and Acclaro for the first time in 2009 and it won the second-place prize twice, in 2010 and 2011.

All publicly disclosed information by the Company is also available on the Company website. The Company letterhead clearly indicates the address of its website. The Investor Relations section of the Company’s website can be reached directly at http://ir.tav.aero. Of the information stipulated in the Capital Markets Board Corporate Governance Principles, all items applicable to the Company are posted and updated on the website. With the activities conducted throughout 2010 and 2011, the content of the Investor Relations website has been enhanced, the website was redesigned to provide an interactive experience that enables easy access to information and data, the mobile site application was launched and it was made compatible with the iPad. Organized to address four different groups of users, General Users, Institutional Investors, Individual Investors, and Analysts, the content of the Company’s website differs depending on the choice the user makes among the categories appearing on the main page.

Thanks to the new features added to the Company’s website, investors can submit all types of questions to the TAV Investor Relations Department and establish active communication with the Company’s management by sending messages to the Company’s Board of Directors. By joining the Company’s e-mail distribution list, users can have regular access to the reports and information related to the Company; institutional investors can send meeting requests through the related section of the website. In addition, analysts issuing reports on the Company can also access the website and post their reports, major financial and operational forecasts regarding the Company, and their expectations of the macroeconomic outlook for the coming years by using the personal user IDs and passwords provided to them.

The website includes the contents below:

• Company history • Current management and shareholding

structure • Summary balance sheet, income

statement and cash flow statement • Summary operational data • Company’s Corporate Governance

Guidelines • Company’s Code of Ethics • Board of Directors and Board

Committees • Most recent version of the Articles of

Association and the dates and issue numbers of the Trade Registry Gazette in which the amendments were published

• Prospectuses and public offering circulars • Trade registry information • General Assembly meeting agenda,

General Assembly information document, proxy voting form, meeting minutes

• Corporate Governance Principles Compliance Report

• List of people who have access to insider information

• Information disclosure policy • Annual reports • Periodic financial statements and reports • Financial calendar • Material disclosures • Presentations • Data and charts on stock price and

performance • News updated by the data provider

company • Frequently asked questions • Analyst contact information • Company contact information • Communication with the Board of

Directors • Distribution list registration • Meeting requests • Report requests • Investor feedback form


Pursuant to the provisions of relevant laws and regulations, as well as the employment contracts entered into with Company employees, persons who hold key positions and fall within this category are listed below:

Abdullah Atalar Member of the Board of Directors

Ali Haydar Kurtdarcan Vice Chairman of the Board of Directors, Chairman of the Audit Committee

Ali Özgü Caneri Investor Relations Assistant Manager

Alkan Özyayla Strategy Senior Specialist

Alper Topçu Corporate Communications Design Manager

Altuğ Koraltan Internal Audit Director

Asaf Kirazoğlu Budget and Planning Assistant Manager

Aslıhan Çörtük Marketing Coordinator

4. Disclosure of Ultimate Controlling Shareholders There is no individual in the Company with ultimate controlling shares.

The shareholding structure of the Company as of December 31, 2011 is presented below.

Shareholder Paid-in Capital (TL) Share (%)

Tepe İnşaat Sanayi A.Ş. 94,664,477 26.1

Akfen Holding A.Ş. 94,886,071 26.1

Sera Yapı Endüstrisi ve Ticaret A.Ş. 14,644,716 4.0

Other Non-Floating 12,775,048 3.5

Other Free-Floating 146,310,939 40.3

TOTAL 363,281,250 100.0

5. Public Disclosure of People who have Access to Insider Information

Aslıhan Manas Executive Assistant of the Board of Directors

Ayşe Kefli Project and Structured Finance Specialist

Aytekin Bektaş Accounting Manager, TAV Istanbul

Aziz Murat Uluğ Finance Director, Member of the Corporate Management Committee

Banu Pektaş* General Counsel

Barışcan İl Marketing Specialist

Begüm Özbey Bayol Legal Counsel

Bengi Vargül Corporate Communications Coordinator

Berk Kayserli Corporate Communications Specialist

Besim Meriç Investor Relations Assistant Manager

Bilde Bilen Legal Counsel

Binnur Onaran General Manager, TAV IT

Burak Birhekimoğlu Management Systems Coordinator

Burcu Geriş Project and Structured Finance Coordinator

Burcu Sarıoğlu Media Relations Manager

Burcu Yar Gürhan Internal Audit Manager (Financial and Operational)

Bülent Özütürk Investments Coordinator

Ceyda Akbal Legal Counsel

Defne Bahar Project and Structured Finance Assistant Specialist

Defne Sertel Translator

Demet Sözmen Tax Manager

Deniz Aydın Financial Affairs Director

Doruk Karabulut Project and Structured Finance Assistant Manager

Eda Bildiricioğlu General Manager, TAV Operations Services

Ensar Yürükçü Budget and Planning Senior Specialist

Ersagun Yücel Member of the Board of Directors, General Secretary


*Ms. Banu Pektaş resigned from her position as the General Counsel in TAV Airports Holding’s Legal Coordination Department as of April 1, 2012; she was replaced by Ms. Ceyda Akbal.


Kemal Ünlü General Manager, TAV Istanbul

Levent Tunakan Project and Structured Finance Specialist

Mahmut Miraç Pekmezci Financial Reporting Manager

Mehmet Cem Kozlu Member of the Board of Directors, Chairman of the Corporate Governance Committee

Mehmet Erdoğan External Relations Coordinator

Mehmet Sina Avşar Research and Development Coordinator

Melek Tan Executive Board Office Manager

Melis Erkun Legal Counsel

Meryem Kuduzoğlu Cost Control Senior Specialist, TAV Istanbul

Mete Erkal General Manager, TAV Georgia

Muharrem Selçuk Çöğen Legal Counsel, Strategy Directorate

Müjdat Yücel General Manager, Havaş

Murat Cevher Tax Manager

Murat Örnekol Operations Director

Mustafa Sani Şener Member of the Board of Directors and President & CEO

Nazım Yaprak Finance Coordinator

Nazmi Hügül Strategy Coordinator

Nihat Akkaya Administrative Bureau Chief

Noyan Alp Ozdemir Budget and Planning Specialist

Nuray Demirer General Manager, TAV Esenboğa

Nursel İlgen Investor Relations Coordinator

Onur Aygüneş Marketing Senior Specialist

Önder Sezgi Member of the Board of Directors, Member of the Audit Committee

Pierre de Champfleury Member of the Board of Directors, Member of the Audit Committee

Sadettin Cesur General Manager, BTA

Serkan Karahatay Marketing Senior Specialist

Sıla Usta Corporate Event Management Manager

Sibel Arı Financial Reporting Senior Specialist

Şafak Özbay Financial Reporting Senior Specialist

Şaziye Çevik Administrative Bureau Manager

Turgay Şahan General Manager, TAV Security

Umut Ercevahir Financial Reporting Coordinator

Vehbi Serkan Kaptan Business Development and Strategy Director

Waleed Ahmed Youssef GCC Director & ACI Representative

Yaşar Kerem Gökyer Tax Assistant Manager

Yiğit Oğuz Duman Human Resources Director, Member of the Corporate Governance Committee

Zoran Krstevski General Manager, TAV Macedonia

Ersan Arcan General Manager, ATÜ

Esin Rodoplu Risk Management and Research Assistant Manager

Esin Gözpınar Risk Management and Research Senior Specialist

Fatih Ömür Business Development Senior Specialist

Fırat Erkan Balcı General Manager, TAV Izmir

Fırat Ocak Strategy Specialist

Gamze Şen Financial Reporting Senior Specialist

Giray Çolpan Business Development Senior Specialist (Country Representative – Latvia)

Gökçe Atasoy Project and Structured Finance Specialist

Göker Köse Project and Structured Finance Manager

Gökhan Aygör Budget and Planning Manager

Gökhan Doğan Research and Development Coordinator

Güçlü Batkın Business Development Coordinator

Gülçin Bulan Tax Senior Specialist

Hakan Erbek Financial Reporting Assistant Specialist

Haluk Bilgi North Africa Director

Hamdi Akın Chairman of the Board of Directors

Hasan Yeşilyurt Corporate Event Management Senior Specialist

Hilal Doğru Administrative Bureau Staff

İbrahim Süha Güçsav Member of the Board of Directors


All employment contracts contain the following clause: “The employee understands that ‘insider trading’ transactions are prohibited. (“Insider trading” means stock trading in violation of competition and honesty, using information on the financial position of a publicly traded company or any other information that can affect the share price of the company before other investors can learn of it.) Therefore, the employee accepts and commits to not using any information or documents on the Company’s financial position, or any other information that can affect the value of the Company’s publicly traded shares, acquired as a result of managerial position, or any other position in the Company, or through other means in or outside of stock market trading for the purpose of making a profit on his/her own behalf or on behalf of another person.”

Pursuant to the Corporate Governance Principles, whenever the list of people who have access to insider information is revised, the latest version of the list is disclosed on the Company website.

SECTION III - STAKEHOLDERS

1. Informing Stakeholders The Company’s corporate governance practices and code of ethics safeguard the rights of stakeholders as stipulated in laws and regulations as well as in mutual agreements. Stakeholders are continually kept informed within the framework of the Company’s Information Disclosure Policy, established with respect to governing legislation and the Company’s code of ethics. In addition, the Company strives to provide information to all stakeholders via press releases, annual reports, the Company website and other practices within the framework of the Company’s transparency-oriented Information Disclosure Policy. For the Company’s employees, the intranet, which is the intra-Company information sharing platform, is used actively and the “NEWSPORT” magazine is published quarterly and “Gate” magazine is published monthly. The Company’s employees are expected to fulfill their responsibilities and hold the Company’s interests above their own interests and the interests of their families or acquaintances while performing their jobs. Employees shall avoid any conduct that may be construed as pursuing their own or acquaintances’ interests. Foreseeable conflict of interest situations as well as situations defined by the Company management in such manner are shared with the employees and Company management takes necessary measures when required.

2. Participation of Stakeholders in Management The Company does not have a formal model or mechanism for the participation of stakeholders in management. However, the independent members of the Board of Directors allow the representation of all stakeholders, as well as the Company and the shareholders, in management.

3. Human Resources Policy • Organizational structures are developed,

human resources requirements are identified and workforce plans are formed in accordance with the strategic plans, areas of business and needs of TAV Holding.

• All operations within TAV Airports are conducted on the basis of achieving personal and professional development through customer-oriented and innovative approaches. All managers and employees are expected to create and support an environment that is conducive to making a difference and creating value.

• Producing high quality products and services, managing the processes on the basis of data, ensuring the satisfaction of internal and external customers, and establishing interactions to enhance the productivity of the processes are adopted as the main principles in all activities.

• It is necessary to implement the systems and processes that relate the Company’s objectives to business results by means of measurable and observable parameters. Achieving business excellence and sustained success is only possible by conducting effective efforts toward attaining the Company’s objectives.



• It is essential to manage and evaluate corporate and individual performance. Employees are evaluated on the basis of their responsibilities, qualifications, work development and contribution to the Company’s objectives. Outstanding performance is differentiated from all others and rewarded by various benefits.

• The Company does not discriminate on any basis in the recruitment and placement processes and employees suitable for the requirements of the job are recruited from local and international sources.

• Employees are expected to improve themselves and their jobs. The Company’s objective in this regard is to provide the basic means needed in the development process. All employees are provided with equal opportunities in terms of personal development.

• The salary for a given position is determined by evaluating the description and responsibilities of and the necessary qualifications required for the job as well as the prevailing market wages.

• Corporate Governance Principles are embraced by all employees. Respect for the people and the job, open and honest communication, and business ethics principles constitute the basic management principles.

• As of December 31, 2011, TAV Airports, including all of its subsidiaries, has a total of 20,269 employees. No complaints related to discrimination were received from employees.

4. Information about Relations with Customers and Suppliers Since the Company is a holding company, it is not directly involved in any operation. Therefore, it does not have any direct relationships with customers or suppliers. As a holding company, TAV Airports

Holding determines the general policies for arrangements and practices to achieve the satisfaction of customers of its subsidiaries. It provides maximum support to its subsidiaries and, in some circumstances, enters into contracts with third parties in these matters, continually striving to enhance customer satisfaction. In this respect, surveys are conducted for quality control and enhanced customer satisfaction. Customers are provided with opportunities to easily communicate their needs and complaints are responded to and resolved as quickly as possible.

Call CenterTAV Airports has established a call center to handle passenger demands and complaints efficiently. The common call center that serves all airports inside Turkey can be easily accessed by dialing 444 9 TAV.

5. Corporate Social Responsibility The Company expends maximum effort to be sensitive to its social responsibilities in its operations. It complies with all regulations regarding the environment, consumers and public health, as well as ethics rules, and directs and supports its subsidiaries to behave in the same manner. The Company’s terminal operating subsidiaries conduct their operations in compliance with environmental regulations and the directives and guidelines of international aviation organizations such as the ICAO, ECAC, EUROCONTROL and IATA, as well as the Equator Principles of the World Bank.

Due to the nature of their operations, the Company and its subsidiaries are not legally required, within the scope of Environment Law and its related regulations, to produce environmental impact assessment reports. Nevertheless, the Company’s related subsidiaries have prepared environmental reports and environmental management plans during both the construction and operation phases of terminals and they comply with updated environmental management plans.

TAV Airports Holding’s 2010 Sustainability Report that was issued in 2011 assesses the Company’s economic, environmental and social performance and outlook. The report includes TAV’s improvement efforts and the objectives set for the airports operated by TAV in Turkey. By reporting on its sustainability performance, TAV aims to assess, monitor, measure and manage its potential impacts on its stakeholders as well as on the environment in the course of conducting its daily operations. Furthermore, the Company’s subsidiaries have international quality control plans for their operation areas and quality control audits are conducted in compliance with international standards.

SECTION IV – BOARD OF DIRECTORS

1. The Structure and Formation of the Board of Directors and Independent Members The formation and election of the Board of Directors conform to the Corporate Governance Principles and the principles governing this issue are set forth in the Company’s Articles of Association. Accordingly:

Following the resolution of the General Assembly Meeting dated May 24, 2010, the article stipulating that the Company is governed by a Board of Directors comprised of at least 15 members elected by the General Assembly from among shareholders has been amended to state that the Company is governed by a Board of Directors comprised of at least nine members. As stipulated in the Company’s Articles of Association, two of the members of the Board of Directors are required to be independent members as defined by the Capital Markets Board’s Corporate Governance Principles.



The names of the members of the Board of Directors who were appointed in accordance with the Company’s Articles of Association are presented below:

Board of Directors

Hamdi Akın Chairman of the Board of Directors (Non-executive)

Ali Haydar Kurtdarcan Vice Chairman of the Board of Directors (Non-executive)

Mustafa Sani Şener Member of the Board of Directors and President & CEO

Mehmet Cem Kozlu Member of the Board of Directors, Independent

Pierre de Champfleury Member of the Board of Directors, Independent

Ahmet Ersagun Yücel Member of the Board of Directors, General Secretary

Abdullah Atalar Member of the Board of Directors (Non-executive)

İbrahim Süha Güçsav Member of the Board of Directors (Non-executive)

Önder Sezgi Member of the Board of Directors (Non-executive)

governing the Company’s transactions and business, are qualified and experienced in corporate management, possess the capability of examining financial statements and reports, and preferably have a postgraduate degree. Background information for the members of the Company’s Board of Directors is presented in the annual report and on the Company website.

3. Mission, Vision and Strategic Goals of the Company

Our Mission To create the highest value for all stakeholders in airport operations with a customer-oriented management approach.

Our Vision To become the leader and the pioneer airport operating company in our target regions (Europe, Russia and the Commonwealth of Independent States, the Middle East, Africa and India.)

Our Strategic Goals The Company’s general strategic goals are specified below:

• To achieve long-term, sustainable and profitable growth

• To maintain and solidify our leadership in the domestic market and to become the leader, or one of the leaders, at the international level in the near future

The Board of Directors sets strategic goals for relevant periods through discussions with the executive member (CEO) and the Group Directors.

Non-executive members comprise seven of the nine members of the Board of Directors (more than half of the Board of Directors,) while the remaining two are executive members. The Chairman of the Board of Directors is not the same person as the President and CEO. Six Board members are empowered to represent and bind the Company.

Of the members of the Board of Directors, Mr. Mehmet Cem Kozlu and Mr. Pierre de Champfleury qualify as independent members according to the independence criteria stipulated in the CMB Corporate Governance Principles. No situation arose in the reporting period that would cease the independent status of the independent members of the Company’s Board of Directors.

Independent members of the Board of Directors are required to submit a written statement of independence to the Board of Directors and immediately inform the Board of Directors when their independent status ceases. An individual who serves a total of seven years on the Company’s

Board of Directors cannot be appointed as an independent member of the Board of Directors.

The Company does not impose any rules or restrictions on the members of its Board of Directors for assuming additional duties outside of the Company. However, pursuant to the new Corporate Governance Principles published by the Capital Markets Board, this clause will be revised as “restricted or subject to certain rules or limitations.”

2. Qualifications of Board Members All of the nominated and appointed members of the Company’s Board of Directors possess the qualifications stipulated in the CMB’s Corporate Governance Principles.

The Board of Directors is structured to ensure maximum influence and effectiveness. Article 13 of the Company’s Articles of Association stipulates the principles regarding this matter. It is the Company’s principal aim to appoint Board members who possess the fundamental knowledge regarding the legal principles


4. Risk Management and Internal Audit Mechanism

Internal Audit TAV Airports Internal Audit Directorate that is audited by the Institute of Internal Auditors (IIA) provides assistance to the Audit Committee in the Committee’s supervision role. The mission of the Internal Audit Directorate is to assist the Board of Directors and the senior management in their oversight, management and operational responsibilities by identifying and reporting deficiencies in internal audit, risk management and governance processes, as well as practices that are causing inefficiencies and waste of resources.

Per the Company’s organizational chart, the Internal Audit Director reports directly to the CEO. Internal audit plans are formulated by taking into account risk analyses, as well as the matters highlighted by the Audit Committee and the management. Risk analyses are conducted regularly to identify both existing and newly emerging risks. Officially, risk analyses are performed annually; however, they may be performed more frequently if deemed necessary.

Studies have been conducted in the critical processes at locations in Turkey and abroad and the results have been reported to the senior management. The Internal Audit Directorate continuously reviews its systems and methods of operation in order to identify all risks in a precise and timely fashion, and implements new approaches and methodologies to conduct more effective and efficient audits. In this regard, the Directorate implemented two new methods, “Control Self-Assessment and Continuous Audit,” in 2010.

Risk Management Along with Internal Audit, the Risk Management and Research Coordination Department is also a part of the Finance Directorate and it is responsible for identifying the risk factors that may have an impact on the processes carried out to attain TAV’s corporate objectives, determining the risk-taking appetite compatible with this goal, and assessing these risks.

The Holding’s risk management approach can be defined as “integrated risk management.” Under the coordination of TAV Airports Enterprise Risk Management (ERM) Department, all Group companies and operations are included in this risk management approach. In contrast to the conventional risk management method that evaluates the risks in various business units separately, the Holding aims to operationalize a risk management function that can oversee the general risks of the entire Company, puts the general interest of the Company before that of the business unit the risk is stemming from, and functions in a continuous manner.

5. The powers and Responsibilities of the Members of the Board of Directors and Executives The powers and responsibilities of the Board of Directors are defined in the Company’s Articles of Association in a manner that is consistent with the Board’s functions that does not leave room for any doubt and that is clearly distinguishable and identifiable from the authorities and responsibilities of the General Assembly.

All shareholders are obliged to keep confidential Company secrets forever, regardless of how they learned those secrets, even after losing their shareholding rights. Shareholders who fail to meet this obligation are liable to the Company for the damages this may cause. However, the provisions of this article are not applicable for information that needs to be disclosed pursuant to the Capital Markets Law.

6. Operating Principles of the Board of Directors Board members are provided with timely access to any information they need to fully execute their duties. The Board of Directors issues a separate resolution for the approval of financial statements and accompanying notes, the independent audit report, the “Corporate Governance Principles Compliance Report” and the annual report. According to the Company’s Articles of Association, a quorum for the meetings is a simple majority (half the number of directors plus one) of the Board of

Directors. A Board of Directors Secretariat, which serves all Board members and reports to the Chairman, has been formed to properly maintain documents related to Board of Directors meetings.

• The Board of Directors meetings are planned and held in an effective and efficient manner. As stipulated in the Company’s Articles of Association.

• The Board of Directors shall meet as the business and transactions of the Company require. However, the Board of Directors makes every effort to meet at least once every three months. Four Board of Directors meetings were held during 2011.

• The Chairman, Vice Chairman or any member of the Board of Directors has the right to call the Board of Directors for a meeting and/or include any item on the agenda that he/she wants discussed by inviting all members of the Board of Directors at least seven days in advance.

• Such meeting invitations shall be made via e-mail or facsimile. However, Board members may waive these meeting formalities in writing.

• All meetings of the Board of Directors in 2011 were held at the Company’s Head Office, as it was not decided otherwise by the Board of Directors.

• Alternative opinions expressed, opposing votes cast (with their reasons) and deliberate questions posed by members of the Board of Directors at the Board meetings are also recorded in the resolution book. However, since no such opposition or alternative opinion has been expressed in any meeting of the Board of Directors, no announcement to this effect has been made to the public.

• Every member of the Board of Directors is entitled to one vote. Board members do not have weighted voting rights or affirmative/negative veto rights.

The Board of Directors executes the duties that the Articles of Association and the related legislation assign to it.



7. Prohibited Transactions and Non-Competition with the Company At the General Assembly meeting that took place on May 24, 2010, the proposal that was presented for shareholder approval to authorize the Chairman and the members of the Board of Directors to perform the transactions stipulated in articles 334 and 335 of the Turkish Commercial Code regarding the prohibition on doing business and competing with the Company was approved by the General Assembly.

8. Code of Ethics TAV Airports Holding’s Code of Ethics sets out the rules and principles that all executives and employees are required to comply with in order to add financial value to shareholders and to enhance the Company’s corporate value. The Company has publicly announced the Code of Ethics on the Company website within the framework of its information disclosure policy, published it on the Company’s intranet and shared it with its employees through workplace programs and performance evaluation forms. The Code of Ethics is designed to ensure that the conduct of TAV executives and employees is of the highest standard and that they are aware of the impact of their conduct and attitudes on the Company. Furthermore, the Code ensures that ethics of the highest standards are upheld and the best methods are employed regarding Company activities and shareholders.

Conflict of interest A conflict of interest arises when there is an existing or potential conflict between the personal interests of an employee and those of the Company. TAV Airports Holding’s employees are expected to fulfill their responsibilities and hold the Company’s interests above their own interests and the interests of their families or acquaintances while performing their

jobs. Employees shall avoid any conduct that may be construed as pursuing their own or acquaintances’ interests.

Conflict of interest situations It is essential that employees prioritize the interests of the Company in all of the business activities.

The situations described below are regarded as situations that constitute a conflict of interest:

• A family member or a relative within third degree of consanguinity has a business relationship with the Company;

• A family member or a relative within third degree of consanguinity has an ownership in or relationship of interest with the competitors of the Company;

• An employee contracts work to a company where a family member or a relative within third degree of consanguinity is employed;

• An employee borrows money from or establishes private business relationship with firms working with the Company.

Prevention of conflicts of interest Foreseeable potential conflict of interest situations and others defined by the Company management are communicated to the employees and necessary measures are taken by the Company’s management. The Company’s executives and employees are obliged to report the conflict of interest situations they come across to the management. Once a conflict of interest comes about, the Corporate Governance Committee takes the necessary actions after evaluating the matter. Responsibility of diligence on duty Employees are obliged to perform the jobs they assume by the employment contract diligently and to make efforts to acquire and develop the competencies

and to obtain the information required by their jobs. Employees are responsible for the damages they inflict on the Company as result of misconduct, recklessness or negligence. Employees are responsible for completing their jobs in a timely manner by delegating work to subordinates when necessary and for making every effort to comply with the instructions of their seniors and supervisors. As representatives of the Company, all employees are responsible for protecting the Company’s reputation against third parties. Employees are obliged to avoid all conduct and actions that may put the Company in a difficult position. All employees are obligated to conduct their professional relationships with colleagues, business partners and stakeholders within the framework of business ethics and codes of conduct. Employees are strictly prohibited from receiving benefits from third parties regarding their jobs, establishing private business relationships with them, and demanding or making payments.

Responsibility for compliance with workplace principles and rules Employees are obliged to comply with the Company’s rules regarding management, harmony, discipline, occupational health and safety, as well as the instructions, regulations and procedures that are published to implement these rules.

Responsibility of being mindful in conduct and relationships Employees are obligated to work in harmony with their colleagues and managers, to form good personal relationships with private or official persons or entities associated with the workplace, and to perform their duties quickly and honestly. Employees have the responsibility of reporting the persons acting in breach of the principles of business ethics to the management together with the supporting documentation.


Obligation of confidentiality and keeping secrets Employees are obligated to keep the information and secrets regarding their jobs or the Company confidential, whether they are related to the position of the employee or not. Employees cannot disclose the secrets, information and related documents to unauthorized persons or entities. This obligation continues even after the job agreement between the employee and the Company is terminated.

Responsibility of protecting the interests of the Company Employees are obliged to protect the Company’s interests related to the business and the workplace run by the Company and to avoid all conduct that may harm these interests. Employees cannot use the Company’s resources for their personal interests. Prohibition of working in another job Employees cannot accept another job -public or private, permanent or temporary, paid or unpaid- or engage in commerce, without the consent of the Company.

Responsibility of reporting the changes in personal information Employees are obligated to provide the Personnel Department with prompt information and supporting documents regarding all changes in their family status, marital status and address; as well as all changes in the information regarding the employee, his/her family or relatives that form the basis for the rights and obligations stipulated in the agreements and/or regulations.

9. The Number, Structure and Independence of Board Committees In keeping with the Capital Markets Board Corporate Governance Principles, a Corporate Governance Committee and an Audit Committee, which report to the Board of Directors, were formed within the Company. General principles regarding the Corporate Governance Committee and the Audit Committee were stipulated in Article 34.A of the Company’s Articles of Association that was published in the Turkish Trade Registry Gazette, dated December 17, 2008.

Corporate Governance Committee Reporting directly to the Board of Directors, the Corporate Governance Committee’s function is to assist the Board of Directors in creating and improving the structure and practices necessary for the governance of the Company in accordance with the internationally-accepted Corporate Governance Principles, as well as remuneration, professional development and career planning of the senior management team. The duties and responsibilities of the Corporate Governance Committee are stipulated in the Company’s Articles of Association.

The Corporate Governance Committee is responsible for overseeing the Company’s compliance with corporate governance principles, and its primary duties include:

• Overseeing the implementation of corporate governance principles by the Company, identifying the reasons if they are not being fully implemented and the consequences of inadequate implementation, and recommending measures for improvement,

• Determining methods that ensure transparency in the process of identifying candidates for the Board of Directors membership,

• Conducting studies on the number of the members of the Board of Directors and the senior management team and developing recommendations,

• Developing recommendations for the principles and practices for the performance evaluation and remuneration of the members of the Board of Directors and the senior management team; and overseeing the implementations.

Mehmet Cem Kozlu is the Chairman of the Corporate Governance Committee and was elected from among the independent members of the Board of Directors.

Members of the Corporate Governance Committee are listed below:

Corporate Governance Committee

Chairman

Mehmet Cem Kozlu Member of the Board of Directors, TAV Airports Holding (Independent)

Members

Murat Uluğ Chief Financial Officer, TAV Airports Holding

Yiğit Oğuz Duman Human Resources Director, TAV Airports Holding

Audit Committee Reporting directly to the Board of Directors, the Audit Committee assists the Board of Directors in coordinating the efforts that are undertaken to ensure that Company practices comply with domestic and international laws and regulations, contribute to the improvement of business processes through their audits, and ensure information transparency.

• The Audit Committee is responsible for taking all measures to ensure the adequacy and transparency of all internal and independent external audit activities and executing the duties stipulated in the Capital Markets Law. Its primary duties include:

• Auditing and approving the compliance of financial statements and accompanying notes to be publicly reported with relevant laws and regulations and international accounting standards,

• Overseeing the operation and effectiveness of the Company’s accounting system, public disclosure of financial information, independent audit, and the internal control and risk management system,

• Investigating and resolving complaints about the Company’s accounting, internal control system and independent audit,

• Preventing conflicts of interest that may arise among the members of the Board of Directors, managers and other employees, and identifying regulations that may prevent the abuse of the Company’s trade secrets.



The Company’s Articles of Association stipulate that the Audit Committee shall meet at least once every three months upon the invitation of the Committee Chairman. Senior executives responsible for financial affairs are not allowed to be Audit Committee members. Pierre de Champfleury, one of the members of the Audit Committee, is also an independent member of the Board of Directors.

Members of the Audit Committee are listed below:

Audit Committee

Chairman

A. Haydar Kurtdarcan Vice Chairman of the Board of Directors, TAV Airports Holding

Members

Önder Sezgi Member of the Board of Directors, TAV Airports Holding

H. Kadri Samsunlu Executive Vice President of Financial Affairs, Akfen Holding A.Ş.

Pierre de Champfleury Member of the Board of Directors, TAV Airports Holding (Independent)

10. Remuneration of the Board of Directors Within the framework of the Capital Markets Board’s Corporate Governance Principles, the Company pays a salary of USD 50,000 per year to each independent member of the Board of Directors commensurate with the time investment and efforts necessary for executing the duties of serving on the Board of Directors. However, it was resolved by the General Assembly that the Company shall not pay any salary or attendance fee to the other members of the Board of Directors or the statutory auditors.


Board of Directors and Senior Management

HamdiAkın,ChairmanoftheBoardofDirectors (57) Hamdi Akın assumed his current position as the Chairman of the Board of Directors of TAV Airports Holding in 2005. One of the founders and shareholders of TAV Airports, Mr. Akın is also the founder and the Chairman of the Board of Directors of Akfen Holding. After graduating from Gazi University, Department of Mechanical Engineering, he founded Akfen Holding in 1975, a company that operates in construction, port operation, energy, tourism and service industries. Undertaking infrastructure, energy and port operation projects within the scope of privatization efforts, in addition to private entrepreneurial activities, Mr. Akın served as a founder and executive in many associations, foundations and non-governmental organizations. He served as the Vice President of Fenerbahçe Sports Club from 2000 to 2002, the President of Ankara Region Representative Council of the Turkish Metal Industrialists’ Union (MESS) from 1992 to 2004, the Chairman of the Board of Directors of Turkish Young Businessmen’s Association (TÜGİAD) from 1998 to 2000, member of the Board of Directors of Turkish Confederation of Employer Associations (TİSK) from 1995 to 2001, member of the Board of Directors of the Turkish Industrialists’ and Businessmen’s Association (TÜSİAD) and the President of the Information Society and New Technologies Committee from 2008 to 2009. He is one of the founders of the Chair in Contemporary Turkish Studies at the London School of Economics and he currently serves as the founding member and the Honorary Chairman of the Human Resources Foundation of Turkey (TİKAV,) which has been active since 1999 in order to provide well-educated human resources for Turkey. Mr. Akın was appointed Vice Chairman of the Board of Trustees of Abdullah Gül University Support Foundation in 2011.

Ali Haydar Kurtdarcan, Vice Chairman of the Board of Directors (60) Ali Haydar Kurtdarcan assumed his current position as Vice Chairman of the Board of Directors of TAV Airports Holding in 2000 and he is also the Chairman of the Audit Committee. Mr. Kurtdarcan, who is the Chairman of the Board of Directors of Tepe İnşaat (Tepe Construction,) which is a shareholder of TAV Airports Holding, graduated from Middle East Technical University, Department of Civil Engineering in 1973. He has served in various managerial positions, including Assistant General Manager and General Manager, at Tepe İnşaat for the last 24 years.

MustafaSaniŞener,MemberoftheBoard of Directors and President & CEO (57) Mustafa Sani Şener was appointed member of the Board of Directors, President and CEO of TAV Airports Holding in 1997. After graduating from Black Sea Technical University (KTÜ,) Department of Mechanical Engineering in 1977, Mr. Şener earned his Master’s degree in fluid mechanics in 1979 from University of Sussex, Department of Applied Sciences in the UK. He has been awarded an Honorary Doctorate from KTÜ for his invaluable contributions to the development of Turkish engineering at the international level. Prior to his career at TAV Airports Holding, Mr. Şener served in various positions, from project manager to general manager, in many national and international projects. Mr. Şener attended training on management of complex systems at the Massachusetts Institute of Technology (MIT.) He is currently the chief executive of the TAV Group, a conglomerate with 24 subsidiary companies and 40 thousand employees. Mr. Şener is also a member of the Board of Directors of the Airports Council International (ACI) Europe.

İbrahimSühaGüçsav,MemberoftheBoard of Directors (43) İbrahim Süha Güçsav was appointed a member of the Board of Directors of TAV Airports Holding in 2000 and CEO of

Akfen Holding in March 2010. Mr. Güçsav graduated from Istanbul University, Department of Economics in 1992 and earned his Master’s degree from Gazi University, Institute of Social Sciences, Department of Business Administration. Beginning his career at Alexander & Alexander Insurance Brokerage Co. in 1992, Mr. Güçsav joined Akfen Group in 1994. Serving at Akfen Holding as Finance Group President and then as President of the Executive Board, he was the Vice Chairman of the Board of Directors of Akfen Holding between 2003 and March 2010. Mr. Güçsav also serves as a member of the Board of Directors at various subsidiaries including TAV Airports Holding, as executive member of the Board of Directors at Akfen GYO (Akfen Real Estate Investment Partnership) and the CEO of IBS Insurance Brokerage Services.

Abdullah Atalar, Member of the Board of Directors (57) Abdullah Atalar was appointed member of the Board of Directors of TAV Airports Holding in 2009. After graduating from Middle East Technical University, Department of Electrical Engineering in 1974, Mr. Atalar received his Master’s and PhD degrees from Stanford University, Department of Electrical Engineering in the United States, respectively in 1976 and 1978. Beginning his career at the Hewlett Packard Research Labs in 1979, Mr. Atalar returned to Turkey as an Assistant Professor at Middle East Technical University in 1980. In 1982 he led the project to develop the first commercial acoustic microscope at Ernst Leitz Wetzlar in Germany. In 1986, he served as the Chair of the Department of Electrical and Electronics Engineering and as Associate Professor at the newly established Bilkent University and he was promoted to Full Professorship in 1990. Mr. Atalar worked as Visiting Professor at Stanford University in 1996. He received the Scientific Encouragement and Science Awards of TÜBİTAK in 1982 and 1994, respectively. He was also elected as a full-member of the Turkish Academy of


Board of Directors and Senior Management

Sciences in 1997 and has been awarded a Fellow Degree by the IEEE in 2007. Mr. Atalar led research projects for such companies as ASELSAN, Teletaş and Hitachi. Mr. Atalar has 17 international patents, 78 academic articles and 114 conference proceedings and there are more than 1,600 citations referring to his papers. He is currently the President of Bilkent University, member of the Science Board of TÜBİTAK, and Vice Chairman and Executive Director of Bilkent Holding.

Önder Sezgi, Member of the Board of Directors (44) Önder Sezgi was appointed a member of the Board of Directors of TAV Airports Holding in 2009. After graduating from Ankara University, Faculty of Political Sciences, Department of Public Administration in 1988, Mr. Sezgi served as a Tax Inspector on the Board of Tax Inspectors at the Ministry of Finance until 1998. Joining Tepe Group the same year, Mr. Sezgi currently serves as the Financial Affairs Coordinator (CFO) at Bilkent Holding as well as Vice Chairman and executive member of the Board of Directors at İstanbul Deniz Otobüsleri A.Ş. (Istanbul Fast Ferries Inc..) Having more than 35 articles about economics, tax, law and finance published in various newspapers and journals, Mr. Sezgi participated as a speaker in more than 20 conferences and panels on these topics. Holding the title of Sworn-in Certified Public Accountant, he served in various positions and operations in the Tax Council, Turkish Industrialists’ and Businessmen’s Association (TÜSİAD,) International Investors Association (YASED,) Foundation of Tax Inspectors, and Union of Chambers of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkey (TÜRMOB.)

Mehmet Cem Kozlu, Member of the Board of Directors (65) Mehmet Cem Kozlu was appointed an independent member of the Board of Directors of TAV Airports Holding in 2006 and is also the Chairman of the Corporate Governance Committee. Mr. Kozlu graduated from Denison University, Department of Economics in 1969 and received his MBA from Stanford University and PhD from Boğaziçi University in Administrative Sciences. He has also been awarded an Honorary Doctorate Degree by Denison University. Mr. Kozlu held various positions at National Cash Register Co. in Ohio, Procter&Gamble in Switzerland and Komili, and served as a member of the Parliament between 1991 and 1995. Mr. Kozlu served as the CEO and Chairman of the Board of Directors of Turkish Airlines, and President of Central Europe, Eurasia and Middle East Group in The Coca-Cola Company. He currently serves as Consultant to Coca-Cola Eurasia and Africa Group as well as the Chairman of the Board of Directors of Noktacom Medya İnternet Hizmetleri A.Ş. (Noktacom Media Internet Services) and a member of the Board of Directors of CCBCSA (The Coca-Cola Bottling Company of Saudi Arabia.) Mr. Kozlu is a member of the Board of Directors at Istanbul-based Coca-Cola İçecek A.Ş. (Coca-Cola Bottling); Evyap Sabun, Yağ ve Gliserin Sanayii ve Ticaret A.Ş. (Evyap Soap, Oil and Glycerine); Anadolu Endüstri Holding (Anadolu Industry Holding); Efes Biracılık ve Malt Sanayii A.Ş. (Efes Brewery and Malt); Kamil Yazıcı Yönetim ve Danışmanlık A.Ş. (Kamil Yazıcı Management and Consulting); The Marmara Hotels & Residences; and the Council of Foreign Economic Relations. Mr. Kozlu is also a member of the Board of Trustees of Anadolu-Johns Hopkins Health Center and Istanbul Modern Arts Foundation.

Ersagun Yücel, Member of the Board of Directors and General Secretary (39) Ersagun Yücel was appointed General Secretary of TAV Airports Holding in 2002 and as member of the Board of Directors of TAV Airports Holding in 2009. Mr. Yücel graduated from California Newport University, Department of Business Administration in 1999 and is currently pursuing his MBA degree at the same university. He also graduated from Yıldız Technical University, Department of Serigraphy in 1994 and attended the New York University Advertising and Marketing Program in 1997. Beginning his career as a graphic artist in MR Com Graphics in 1993, Mr. Yücel worked as manager in Rifle Jeans and Calvin Klein Jeans between 1995 and 1998. Mr. Yücel joined TAV Airports in 1999 as the Assistant to the President & CEO. In addition to his responsibilities as the General Secretary of TAV Holding, he also oversees the activities of the Corporate Communications, External Relations, Management Systems, and Board of Directors Administrative Affairs Departments.

Pierre de Champfleury, Member of the Board of Directors (66) Pierre de Champfleury was appointed an independent member of the Board of Directors of TAV Airports Holding in 2007 and is also a member of the Audit Committee. After graduating from Paris École des Hautes Études Commerciales in Paris in 1967, Mr. Champfleury earned his MBA degree from Stanford University in 1971. Beginning his 30-year career in luxury goods at Elizabeth Arden and Parfums Lagerfeld, an Eli Lilly company, he served as the chief executive of the operations in France and the UK. Subsequently moving to New York, Pierre de Champfleury took over as the CEO of Austin Nichols and Co., the producer of the exclusive bourbon whiskey brand Wild Turkey. Returning to Paris after his term there, Mr. Champfleury served as the CEO of Yves Saint Laurent Parfums and then as the CEO of Manuel Canovas SA, a manufacturer of luxury upholstery fabrics.


Senior Management

MustafaSaniŞener,MemberoftheBoard of Directors and President & CEO (57) Mustafa Sani Şener was appointed member of the Board of Directors, President and CEO of TAV Airports Holding in 1997. After graduating from Black Sea Technical University (KTÜ,) Department of Mechanical Engineering in 1977, Mr. Şener earned his Master’s degree in fluid mechanics in 1979 from University of Sussex, Department of Applied Sciences in the UK. He has been awarded an Honorary Doctorate from KTÜ for his invaluable contributions to the development of Turkish engineering at the international level. Prior to his career at TAV Airports Holding, Mr. Şener served in various positions, from project manager to general manager, in many national and international projects. Mr. Şener attended training on management of complex systems at the Massachusetts Institute of Technology (MIT.) He is currently the chief executive of the TAV Group, a conglomerate with 24 subsidiary companies and 40 thousand employees. Mr. Şener is also a member of the Board of Directors of the Airports Council International (ACI) Europe.

MuratUluğ,FinanceDirector(CFO)(41)Murat Uluğ was appointed the Finance Director (CFO) of TAV Airports Holding in 2006 and he is also a member of the Corporate Governance Committee. Mr. Uluğ has been serving as a member of the Board of Directors at Havaş Yer Hizmetleri A.Ş. (Havaş Ground Handling) since 2007, at CAS Cyprus Airport Services since 2009, and at BTA Denizyolları Yiyecek ve İçecek Hizmetleri A.Ş. (BTA Sea Lines Food and Beverage Services) since its inception in 2011, all of which are TAV Airports Holding subsidiaries. He graduated from Istanbul Technical University, Faculty of Electrical and Electronic Engineering, Department of Electronic and Communication Engineering in 1992. Mr. Uluğ received his Executive MBA degree from the joint program of Istanbul Bilgi University and Manchester Business School in 2003. After 11 years of banking experience at Garanti Bank, HSBC and ABN Amro, Mr. Uluğ served as the Finance Coordinator at Akfen Holding before joining TAV Airports. He is a member of the Turkish Institutional Investment Managers’ Association (TKYD) and Finance and IT Executives Association of Turkey (TÜBİYAD) as well as a member of the Board of Directors of the Investor Relations Association of Turkey (TÜYİD.)

Serkan Kaptan, Business Development & Strategy Director (41) Serkan Kaptan was appointed Business Development & Investments Director of TAV Airports Holding in 2003, managing TAV Airports’ business development, aviation marketing, research & development and investments activities. Mr. Kaptan is also Chairman of the Board of Directors of Havaş Europe (formerly known as North Hub Services) as well as an Executive Committee Member for TAV Georgia and TAV Latvia. He graduated from Istanbul University, Department of Business Administration in 1995 and received his MBA degree from Marmara University in 2002. Before joining TAV Airports in 1998, Mr. Kaptan worked at Birgenair Charter Group as dispatcher and operations supervisor. Mr. Kaptan served as an airport operations consultant at Airport Consulting Vienna from 1998 to 2001. Having 19 years of experience in airport and airline operations and public-private partnership projects, he served as the country director in managing TAV Airports’ operations in Iran and Georgia. Mr. Kaptan formerly served as a member of the Board of Directors at TAV Airports Holding, Havaş, and TGS; as Vice Chairman of the Board of Directors at Cyprus Airport Services; and as an Executive Committee Member for TAV Macedonia. Mr. Kaptan has also been the Chairman of the Turkish-Latvian Business Council and a member of the Board of Directors of the Turkish-Czech Business Council in the Foreign Economic Relations Board of Turkey (DEİK) since 2010.


Senior Management

AltuğKoraltan,InternalAuditDirector(48) Altuğ Koraltan was appointed Internal Audit Director of TAV Airports in 2007. After graduating from Istanbul University, Department of Business Administration in 1986, Mr. Koraltan began his career as an External Auditor at Peat Marwick&Mitchell between 1986 and 1988. He served as a Sales Representative at the Baghdad office of ENKA Marketing. Working at Effemex-Mars as a Finance Manager in 1990, Mr. Koraltan served as Internal Auditor, Securities Department Assistant Manager and Dealer at the foreign exchange desk of the Treasury Department at Ottoman Bank during the following five years. Serving as the Chairman of the Internal Audit Board of OYAK Bank for a one-year term in 1997, Mr. Koraltan was the head of Internal Audit in charge of Turkey and Greece at ABN Amro Bank for ten years, from 1997 to 2007, before joining TAV Airports.

Murat Örnekol, Operations Director (53) Murat Örnekol graduated from Middle East Technical University, Department of Industrial Engineering in 1980. From 1990 until 2000, Mr. Örnekol served as Logistics & Business Development Coordinator, Head of the Healthcare Group, Telecom Project Director and Vice Chairman of the Holding’s Executive Board at Bayındır Group companies. In his early career, he worked as General Manager at Bordata, an IT company, and as Planning Engineer, IT Manager and Commerce Manager at Kutlutaş Holding. Before joining TAV Airports, Mr. Örnekol served as Beretta Holding’s General Manager between 2000 and 2006. Mr. Örnekol served as the General Manager of TAV Esenboğa between 2006 and 2008. He was appointed Operations Director of TAV Airports Holding in 2008.

YiğitOğuzDuman,HumanResourcesDirector (38) Yiğit Oğuz Duman was appointed TAV Airports Holding’s Human Resources Director as of October 2011. Mr. Duman graduated from Boğaziçi University, Department of Industrial Engineering in 1996 and received his MBA from Koç University in 2001. Mr. Duman began his career in 1995 at Kibar Holding A.Ş., a conglomerate active in foreign trade, automotive, metals and food industries, and assumed active responsibilities in such major areas as change management, human resources management, industrial relations, quality assurance applications and corporate law. He served as Human Resources Manager at Assan Aluminum and as Human Resources and Administrative Affairs Director at Kibar Holding. In 2008 Mr. Duman joined Turkcell Superonline, where he continues to serve. Assuming responsibilities in Human Resources, Purchasing Administrative Affairs and Customer Experience Management areas at Turkcell Superonline, Yiğit Oğuz Duman also held the positions of Executive Vice President of Business Support and Executive Vice President of Customer Experience Management in this company. Since 2001 Mr. Duman has been assuming various managerial positions on the Board of Directors of Personnel Management Association of Turkey (PERYÖN,) Turkey’s largest NGO in the Human Resources Management field that he has been a member of since 1995. Yiğit Oğuz Duman served as the President of PERYÖN from 2005 until 2010. Mr. Duman currently is the Vice President of this association.


Dr. Waleed Youssef, Gulf Arab Countries Director & ACI Representative (46) Dr. Waleed Youssef joined TAV Airports Holding as the Strategy Director in 2008. A graduate of the University of California at Berkeley, Department of Civil Engineering, he subsequently earned his Master’s degree in transportation economics and PhD in air transport finance from the same university. Prior to joining TAV Airports, Dr. Youssef served as Director at Abu Dhabi Airports Company, and as Aviation Specialist at the International Finance Corporation (IFC,) the private sector arm of the World Bank Group. Having vast experience in airport privatizations, Dr. Waleed Youssef executed successful operations at the JFK Terminal 4 (the US,) Brisbane (Australia) and Bangalore International Airport (India.) He served as privatization advisor to the governments of Jordan (Amman,) Saudi Arabia (Hajj Terminal,) Madagascar (Antananarivo,) Nigeria (Abuja) and Panama (Howard Air Force Base) during his tenure at the IFC. Dr. Youssef led the incorporation and certification process of two airport companies in Abu Dhabi (Abu Dhabi and Al Ain.) Dr. Waleed Youssef is also a member of the World Economics Standing Committee at Airports Council International (ACI) and a member of the Committee on Airfield and Airspace Capacity and Delay at the US National Academy of Sciences’ Transportation Research Board.

DenizAydın,FinancialAffairsDirector(46) Appointed TAV Airports Holding’s Financial Affairs Director in July 2010, Deniz Aydın had joined TAV Airports Holding in 2006 as Financial Affairs Coordinator. Ms. Aydın graduated from Middle East Technical University, Department of Economics in 1988. Prior to joining TAV Airports, she served in the financial affairs departments of such companies as Ernst & Young, Akfen Holding, Bobcock & Wilcox Gama Kazan and FMC Nurol Savunma San. A.Ş. in areas encompassing cost systems, management and international reporting and the establishment of other similar systems. Obtaining her CPA certification in 2004, Deniz Aydın is also a member of TÜRMOB (Union of Chambers of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkey) Istanbul SMMM (Chamber of Independent Accountants and Financial Advisors.)

Haluk Bilgi, North Africa Director (42) Haluk Bilgi was appointed TAV Airports Holding’s Business Development Director responsible for Subsidiaries in 2008 and also serves as TAV Tunisie Country Director. Mr. Bilgi graduated from Istanbul University, Department of Economics in 1992. He received his MBA degree from Middle East Technical University in 1999, and attended the Structuring Effective Private Equity Partnership Program of Harvard Business School. Haluk Bilgi began his career as Foreign Relations Specialist at BBBAG in 1991. Assuming his first position abroad in 1993 with Sibkon Siberia, Mr. Bilgi joined Tepe Group in 1995, and served in senior management posts in the Russian Federation, the UK, United States and Iraq at Tepe Group and its subsidiaries for 10 years. Before joining TAV Airports as Business Development Group Manager in 2005, he served as the Business Development Coordinator at Tepe İnşaat (Tepe Construction) and has also served as a member of the American Management Association, Foreign Economic Relations Board (DEİK)’s Turkish American Business Council International Contracting Committee, Central Anatolia Exporters Union’s Board of Directors, Global Ethics, Tunisia Businessmen’s Association, and Tunisian American Chamber of Commerce.


Ersagun Yücel, Member of the Board of Directors and General Secretary (39) Ersagun Yücel was appointed General Secretary of TAV Airports Holding in 2002 and as a member of the Board of Directors of TAV Airports Holding in 2009. Mr. Yücel graduated from California Newport University, Department of Business Administration in 1999 and is currently pursuing his MBA degree at the same university. He also graduated from Yıldız Technical University, Department of Serigraphy in 1994 and attended the New York University Advertising and Marketing Program in 1997. Beginning his career as a graphic artist in MR Com Graphics in 1993, Mr. Yücel worked as manager in Rifle Jeans and Calvin Klein Jeans between 1995 and 1998. Mr. Yücel joined TAV Airports in 1999 as the Assistant to the President & CEO. In addition to his responsibilities as the General Secretary of TAV Holding, he also oversees the activities of the Corporate Communication, External Relations, Management Systems, and Board of Directors Administrative Affairs Departments.

BanuPektaş*,GeneralCounsel(69)Banu Pektaş was appointed General Counsel of TAV Airports in 2007. Ms. Pektaş graduated from Istanbul University, Faculty of Law in 1964. She worked as a freelance attorney between 1965 and 1987 while serving as a lecturer at Istanbul University, School of Foreign Languages during the same period. Ms. Pektaş was the General Counsel of Coca-Cola Turkey between 1987 and 2006 with her responsibilities increasing to cover 36 countries in the Eurasia and the Middle East Group of the company over these years.


Kemal Ünlü, General Manager, TAV Istanbul (52) Kemal Ünlü was appointed General Manager of TAV Istanbul in 2005. Mr. Ünlü graduated from Gazi University, Department of Electrical Engineering in 1983. Mr. Ünlü joined TAV Airports in 2004 after leaving his post as the Principal in Charge of Atatürk Airport at the Turkish State Airports Authority (DHMİ.) He held various positions at the Turkish State Airports Authority’s Esenboğa, Antalya and Atatürk Airports between 1978 and 2004.

Senior Management



Nuray Demirer, General Manager, TAV Esenboğa(45)Nuray Demirer was appointed General Manager of TAV Esenboğa in 2008. Ms. Demirer graduated from Istanbul Technical University, Department of Architecture in 1988. She joined TAV Airports for the construction of the Atatürk Airport International Terminal in 1999. Ms. Demirer served as the Project Manager of TAV Esenboğa Domestic and International Terminal. Ms. Demirer served as the Assistant General Manager of TAV Esenboğa between 2006 and 2008. Beginning her career at Atölye T Architecture in 1988, she served in both the construction and the operation of Eczacıbaşı Pharmaceuticals Factory, as well as site manager, construction manager and project manager at Tepe İnşaat (Tepe Construction.)

FıratErkanBalcı,GeneralManager,TAVIzmir (38) Fırat Erkan Balcı was appointed General Manager of TAV Izmir in 2009. Mr. Balcı was appointed as Assistant General Manager of TAV Izmir in 2006 and served as the Acting General Manager from March 2008 until January 2009. He graduated from Middle East Technical University, Department of Civil Engineering in 1996. Mr. Balcı served as the Assistant General Manager of TAV Izmir between 2006 and 2008. Before joining TAV Airports, Mr. Balcı worked as the Operations Manager at the Antalya Airport International Terminal I, Information Technology Project Manager at Fraport, and Information Technology Chief at the Bayındır Antalya Airport.

K. Mete ERKAL, General Manager, TAV Georgia (46) K. Mete Erkal was appointed General Manager of TAV Georgia in June 2010. Mr. Erkal graduated from Southern Illinois University, Department of Finance in 1993. He served as the Operations Coordination Manager of TAV Airports Holding from 2008 to 2009, and as Assistant General Manager (Acting Manager) of TAV Georgia between September 2009 and June 2010. Mr. Erkal was a Management Trainee at the Blinder&Robinson Co., in St. Louis, United States and served as the New York and Paris Lines Manager at Turkish Airlines prior to 1995. Mr. Erkal served as the Assistant General Manager of Sales and Services in the privatization of Havaş Yer Hizmetleri A.Ş. (Havaş Ground Handling) and in its partnership with Swissport from 1995 until 1999, and as the Commerce Director at Çelebi Hava Servisi A.Ş. (Çelebi Air Services) between 1999 and 2002. Working as the Marketing Director of ATA Holding for three years prior to joining TAV Airports, he is also a member of the American Marketing Association.


Zoran Krstevski, General Manager, TAV Macedonia (50) Zoran Krstevski was appointed General Manager of TAV Macedonia in January 2011. Mr. Krstevski graduated from the University St. “Cyril & Methodius,” Faculty of Law in 1985. He served as the General Director of the Civil Aviation Agency of the Republic of Macedonia from 2008 to 2010 before joining TAV Airports. During his tenure he was a member of the Provisional Council of the Eurocontrol Management Board, member of the Enlarged Committee, member of ECAC, and EASA Management Board Observer. Zoran Krstevski worked as the General Director of JSC Airports Macedonia between 2006 and 2008, where he was also a member of the ACI Policy Committee. Mr. Krstevski was a member of Parliament of the Republic of Macedonia from 2002 to 2006 and served as the Deputy Prime Minister for European Affairs from 2000 until 2002. Working as the Vice President and Assistant General Director of JSC Makpetrol earlier in his career, he was the General Director of PEAS Airport Services for three years, and an Aviation Law Senior Specialist between 1986 and 1990.

Binnur Güleryüz Onaran, General Manager, TAV IT (42) Binnur Güleryüz Onaran was appointed General Manager of TAV IT in July 2010. After she was appointed as the Assistant General Manager of System Support and Application at TAV IT in 2006, Ms. Onaran served as the Acting General Manager from October 2009 until July 2010. After completing the Computer Programmer/Analyst Program at Conestoga College from 1990 to 1993, she administered trainings on computer programming and network administration as the Training Manager at Vancouver, CDI College between 1993 and 1995. Binnur Güleryüz Onaran worked as manager in the Information Technology and Organization Department of Mercedes Benz Turkey from 1995 to 2002. After completing the Executive Training program at Daimler Chrysler University, Ms. Onaran was appointed the Manager of Organization & Information Technology Administration of Mercedes Benz Turkey in 2002. Working as Information Technology Director of TÜVTURK before joining TAV Airports, she managed various network, telecommunication, software, ERP and infrastructure system projects, and served in organizational structuring, process optimization and system development initiatives.

EdaBildiricioğlu,GeneralManager,TAVOperations Services (42) Eda Bildiricioğlu was appointed General Manager of TAV Operations Services in 2006. Ms. Bildiricioğlu graduated from the Eastern Mediterranean University, Department of Business Administration and Economics in 1991. She served as marketing manager in various companies before joining TAV Airports in 1997 as the Commercial Affairs Manager.

Senior Management


Ersan Arcan, General Manager, ATÜ (44) Ersan Arcan was appointed General Manager of ATÜ in August 2007. Mr. Arcan assumed the responsibility of the financial and operational management of ATÜ’s Duty Free operations. He has more than 19 years of experience in the retail sector as an entrepreneur and a professional. Ersan Arcan graduated from Warnborough College Oxford in the UK (BBA) in 1989 and from Schiller University in Heidelberg, Germany, Department of Business Administration in 1991. Before joining ATÜ, Mr. Arcan worked as Northern Europe brand and sales representative at A.T.A s.a.r.l in Switzerland. He served as Operations Manager between 1999 and 2005, and as Assistant General Manager responsible for financial and operational management of Istanbul, Ankara and Izmir operations from 2005 until 2007 at ATÜ.

TurgayŞahan,GeneralManager,TAVSecurity (43) Turgay Şahan was appointed General Manager of TAV Security in April 2011. Joining TAV Security in 2006 as the Esenboğa Airport Security Manager, Mr. Şahan served as the Assistant General Manager from January 2010 to April 2011 and the Esenboğa Airport Private Security Coordinator between 2007 and 2010. He graduated from the Police Academy in 1989. Turgay Şahan attended the Scotland Yard Police Department Occupational Collaboration Program between 1989 and 1990 and the Ankara University European Union Basic Training program between 1999 and 2000. Mr. Şahan served in various capacities in different units of Izmir, Tunceli, Ankara Police Departments. He executed ECAC duties in Haiti, Bosnia, Kosovo, United Nations Peacekeeping Force and Belgium. Turgay Şahan also served as the Airports Security Branch Manager at Security General Directorate of National Police Protection Department and the Chairman of Training, Inspection and Investigation Experts Committee (EADUK.)

MüjdatYücel,GeneralManager,Havaş(60) Müjdat Yücel was appointed General Manager of Havaş in 2005 after joining Havaş as Assistant General Manager in 2004. Mr. Yücel worked for Turkish Airlines from 1972 to 2003. During his tenure at Turkish Airlines, Yücel served in Singapore, Iran, United States, and the UK internationally, as well as serving as the Head of Ground Operations for two years and as Assistant General Manager of Ground Operations for four years in Turkey.


Sadettin Cesur, General Manager, BTA (39) Sadettin Cesur was appointed General Manager of BTA in 2000. Mr. Cesur graduated from Sheffield Hallam University in London, Department of Tourism, Hospitality & Events Management. He attended the Managing Successfully program in the US. Before joining TAV Airports, Sadettin Cesur also worked for five-star hotels including Çınar Hotel, Parksa Hilton, Conrad Istanbul and the Four Seasons Hotel as well as at Bilintur Catering Center. In addition to his current duty, Mr. Cesur was also appointed Chief Executive of BTA Airports Operations, Cakes & Bakes Operation, and BTA Denizyolları Yiyecek ve İçecek Hizmetleri A.Ş. (BTA Sea Lines Food and Beverage Services) as of July 2011.

Senior Management


Committees

Audit Committee Chairman of the Audit Committee

Ali Haydar KurtdarcanVice Chairman of the Board of Directors TAV Airports Holding

Members of the Audit Committee Önder Sezgi Member of the Board of DirectorsTAV Airports Holding

Hüseyin Kadri Samsunlu Executive Vice President of Financial Affairs Akfen Holding

Pierre de Champfleury Member of the Board of Directors (Independent) TAV Airports Holding

Corporate Governance Committee Chairman of the Corporate Governance Committee

Mehmet Cem Kozlu Member of the Board of Directors (Independent) TAV Airports Holding

Members of the Corporate Governance Committee MuratUluğFinance Director (CFO)TAV Airports Holding

YiğitOğuzDumanHuman Resources Director TAV Airports Holding

Tav aiRPORTS hOldiNG Istanbul Atatürk Airport International Terminal (Gate A - Next to VIP) 34149 Yeşilköy, Istanbul, Turkey Phone: +90 212 463 30 00 Fax: +90 212 465 50 50 www.tavairports.com http://ir.tav.aero

CONTENTS

01 The Agenda of 2011 Ordinary General Shareholders’ Meeting 02 Auditors’ Report 03 Statement Of Responsibility04 Consolidated Financial Statements

1Financial Information

The Agenda of 2011 Ordinary General Shareholders’ Meeting of TAV HAVALİMANLARI HOLDİNG ANONİM ŞİRKETİto be held on 11th May 2012 Friday

1. Opening and forming of the Presiding Board

2. Granting authorization to the Presiding Board on signing of the Ordinary General Shareholders’ Meeting Minutes.

3. Review, discussion, and approval of the Annual Report of the Board of Directors and the Auditors’ Report of the fiscal year 2011.

4. Review, discussion, and approval of the Balance Sheet and the Profit and Loss Statements for the fiscal year 2011.

5. Accepting, accepting by amendment or declining the proposition of distribution of the consolidated net profit of 2011 and the date of profit distribution.

6. Releasing the Members of the Board and the Auditors for their activities for the fiscal year 2011.

7. Submitting the election of Board Members, appointment of Independent Board Members for the approval of the General Assembly.

8. Nomination of the Independent Audit Company for the approval of the General Assembly.

9. Amendment of the clauses no. 4., 13.1., 13.2., 13.4., 21.2., 22., 23., 27.2., 28., 29., 30.2., 34A, 34A.1., 34A.2., 34B of the Articles of Association (AoA) as per Attachment/1 to comply with the Corporate Governance Principles of the Capital Markets Board (CMB) and resolutions of the Capital Market Legislation regarding guarantees, securities, and pledges and enable the Company buy back its shares as approved by the CMB Presidency and permitted by Ministry of Customs and Trade.

10. SubmittingtheRemunerationPolicydraftedaspertheCapitalMarketsBoardregulationsfortheinformationoftheGeneralAssembly.

11. SubmittingtheDisclosurePolicydraftedaspertheCapitalMarketsBoardregulationsfortheinformationoftheGeneralAssembly.

12. Submitting the Share Buy Back Program of the Company for the approval of the General Assembly.

13. Giving information to the General Assembly regarding the transactions of the “Related Parties” within the framework of the provision of Article 5 of the Communique of the Capital Markets Board Series: IV No. 41.

14. Giving information to the shareholders about the donations made by the Company during 2011.

15. Giving information regarding pledges, collaterals, and mortgages to the shareholders as per the decision no. 28/780 of the Capital Markets Board dated 09/09/2009.

16. Granting authorization to the Chairman and the Members of the Board pursuant to Article 334 and 335 of the Turkish Commercial Code.

17. Wishes and requests.

18. Closing.


AUDITORS’ REPORT

To the Ordinary General Assembly of TAV Airports Holding Co.:

Title : TAV Airports Holding Co.

Headquarters :İstanbul

Capital : TL 363,281,250 (as of December 31, 2011)

Area of Operation : Airports, Investment and Operation Activities regarding Airport Terminal Construction and Operation, participation in companies engaged in such activities and provision of management and financing services.

Name and Duration of Duty of the Auditors, Partnership or Duties in the Company

:MuratAŞKAR,MeralALTINOKandBelginBERKER.Ourdurationofdutyistwoyears. We are not partners of the Company. We have no duties in the Company.

Number of Board of Directors Meetings Attended and Audit Board Meetings held

: The Auditors held six Audit Board Meetings.

TheScopeoftheExaminationPerformedonthe Company Accounts, Books and Documents,

:DatesofsuchExaminations,andConclusionReached:Weperformedexaminations and audits during the first weeks of the 3rd, 6th, 9th and 12th months, in accordance with the Tax Laws and the Turkish Commercial Code; we have not encountered any issue to critique.

Number and Conclusions of the Counts Performed in the Company’s Treasury Pursuant to Article 353, Section 1.3 of the Turkish Commercial Code

: Inventory counts were performed and count reports were created during the audit; as a result of the counts, we determined that actual inventories agree with the records.

Number and Dates of the Audits Pursuant to Article 353, Section 1.4 of the Turkish Commercial Code

: As a result of the examinations we performed on the first day of each month, we determined that securities present agree with the records.

Complaints and Frauds Submitted and Transactions Performed in Response

: No complaint was submitted to the auditors

We have audited the transactions and accounts of TAV Airports Holding Co. for the fiscal year from January 1, 2011, to December 31, 2011, in accordance with the Turkish Commercial Code, the Company’s Articles of Association, other laws and applicable legislation and generally accepted Accounting Principles and Standards.

In our opinion, the balance-sheet prepared as of December 31, 2011 factually and accurately reflects the Company’s true financial position as of this date; and the income statement prepared for the period from January 1, 2011, to December 31, 2011 factually and accurately reflects the Company’s operations results for this period; the profit allocation proposal is in accord with the laws and the Company’s Articles of Association.

We recommend the approval of the balance-sheet and the income statement and discharge of the Board of Directors.

BOARD OF STATUTORY AUDITORS

MuratAŞKAR MeralALTINOK BelginBERKER


STATEMENT OF RESPONSIBILITY

STATEMENT OF RESPONSIBILITY PURSUANT TO ARTICLE 9 OF SECTION THREE OF THE COMMUNIQUÉ SERIAL: XI NO: 29 OF THE CAPITAL MARKETS BOARD

Approved by the Board of Directors and the Audit Committee, the consolidated financial statements of the Company regarding the period of January-December 2011, which were prepared in accordance with the mandatory format stipulated by the Capital Markets Board (CMB) on December 20, 2004, to comply with the CMB resolution 11/367, dated March 17, 2005 and the International Financial Reporting Standards stipulated by the Communiqué Serial: XI No: 29 of the CMB on “Principles of Financial Reporting in Capital Markets” are enclosed herewith.

We hereby declare that;

a) We have reviewed the consolidated financial statements dated December 31, 2011,

b) To the best of our knowledge, the consolidated financial statements do not contain any untrue statement or any omission of material facts that may result in misleading conclusion as of the date of issuance,

c)Preparedinaccordancewiththefinancialreportingstandardsineffect,thefinancialstatementsgiveatrueandfairviewoftheassets,liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and the annual report includes a fair review of the development and performance of the business and the financial position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties faced.

WithKindRegards,

Sani ŞENER Deniz AYDIN CEO FinancialAffairsDirector

TAV Havalimanları Holding A.Ş. and its Subsidiaries

Consolidated Financial Statements As at and for the Year Ended 31 December 2011

24 February 2012This report contains the “Independent Auditors’ Report” comprising 1 page and “Consolidated Financial Statements and their explanatory notes” comprising 103 pages

Independent Auditors’ Report

To the Board of Directors of TAVHavalimanlarıHoldingAnonimŞirketi

WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofTAVHavalimanlarıHoldingAnonimŞirketianditssubsidiaries(“the Group”), which comprise the consolidated statement of financial position as at 31 December 2011, the consolidated statements ofcomprehensiveincome,changesinequityandcashflowsfortheyearthenended,andnotes,comprisingasummaryofsignificantaccounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anaudit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion. Opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December2011,andofitsconsolidatedfinancialperformanceanditsconsolidatedcashflowsfortheyearthenendedinaccordancewithInternational Financial Reporting Standards.

İstanbul,Turkey24 February 2012

İsmailÖnderÜnal,SMMMSorumluOrtak,Başdenetçi


Notes 31 December

2011 31 December

2010

ASSETS

Property and equipment 17 178,963,452 169,534,780

Intangible assets 18 35,918,255 37,877,865

Airport operation right 19 766,392,280 734,271,656

Other investments 20 24,238 24,238

Goodwill 18 152,128,602 154,019,707

Prepaid rent expenses 21 65,472,265 82,283,714

Trade receivables 25 94,299,205 113,810,957

Other non-current assets 24 556,510 601,680

Deferred tax assets 22 81,718,487 79,492,563

Total non-current assets 1,375,473,294 1,371,917,160

Inventories 23 18,676,471 13,966,730

Prepaid rent expenses 21 123,449,770 122,592,025

Trade receivables 25 73,823,017 77,681,614

Due from related parties 40 7,944,503 5,124,375

Derivative financial instruments 36 4,206,768 -

Other receivables and current assets 24 45,582,640 33,305,357

Cash and cash equivalents 26 76,346,757 32,442,373

Restricted bank balances 27 355,745,501 382,444,797

Total current assets 705,775,427 667,557,271

TOTAL ASSETS 2,081,248,721 2,039,474,431

TAV Havalimanları Holding A.Ş. and its SubsidiariesConsolidated Statement of Financial PositionAs at 31 December 2011(Amounts expressed in Euro unless otherwise stated)

The accompanying notes form an integral part of these consolidated financial statements.


Notes 31 December

2011 31 December

2010

EQUITY

Share capital 28 162,383,978 162,383,978

Share premium 220,286,470 220,286,470

Legal reserves 36,349,627 21,655,917

Other reserves 8,282,721 14,622,932

Revaluation surplus 1,641,111 1,982,718

Purchase of shares of entities under common control 40,063,860 40,063,860

Cashflowhedgereserve (67,855,317) (61,729,366)

Translation reserves (1,481,436) 849,301

Retained earnings 75,542,281 37,209,526

Total equity attributable to equity holders of the Company 475,213,295 437,325,336

Non-controlling interests 87,210,276 103,060,117

Total Equity 562,423,571 540,385,453

LIABILITIES

Loans and borrowings 30 1,021,043,251 1,008,094,394

Reserve for employee severance indemnity 31 10,258,618 7,451,972

Due to related parties 40 7,718,535 14,130,564

Deferred income 33 19,926,008 21,688,366

Other payables 32 15,943,257 -

Deferred tax liabilities 22 6,077,185 6,281,310

Total non-current liabilities 1,080,966,854 1,057,646,606

Bankoverdraft 26 - 2,865,313

Loans and borrowings 30 203,251,209 225,363,062

Trade payables 35 40,404,338 34,158,389

Due to related parties 40 10,422,167 14,021,181

Derivative financial instruments 36 126,736,082 104,968,109

Current tax liabilities 16 11,782,208 9,920,571

Other payables 32 28,535,999 38,074,621

Provisions 34 5,613,238 4,832,799

Deferred income 33 11,113,055 7,238,327

Total current liabilities 437,858,296 441,442,372

Total Liabilities 1,518,825,150 1,499,088,978

TOTAL EQUITY AND LIABILITIES 2,081,248,721 2,039,474,431

TAV Havalimanları Holding A.Ş. and its SubsidiariesConsolidated Statement of Financial PositionAs at 31 December 2011(Amounts expressed in Euro unless otherwise stated)



Notes 2011 2010Construction revenue 8 64,737,429 41,627,967Operating revenue 9 811,863,601 713,278,533Other operating income 10 35,849,793 39,627,856Construction expenditure 8 (64,737,429) (41,410,646)Cost of catering inventory sold (17,697,061) (16,466,156)Cost of duty free inventory sold (77,331,969) (64,892,061)Cost of services rendered (59,707,623) (42,097,025)Personnel expenses 11 (236,147,580) (219,294,927)Concession and rent expenses 12 (129,439,623) (129,638,846)Depreciation and amortisation expenses 14 (65,141,068) (59,544,585)Other operating expenses 13 (103,633,872) (100,439,595)

Operating profit 158,614,598 120,750,515

Finance income 29,103,554 31,885,484Finance costs (96,113,454) (89,169,954)

Net finance costs 15 (67,009,900) (57,284,470)

Profit before tax 91,604,698 63,466,045

Tax expense 16 (39,762,744) (11,826,115)Profit for the year 51,841,954 51,639,930

Other comprehensive income Revaluation of property and equipment 68,320 68,320Effectiveportionofchangesinfairvalueofcashflowhedges (16,117,193) (13,594,103)Foreigncurrencytranslationdifferencesforforeignoperations (3,267,058) 3,237,686Taxoncashflowhedgereserves 6,276,998 4,868,363

Other comprehensive income for the year, net of tax (13,038,933) (5,419,734)

Total comprehensive income for the year 38,803,021 46,220,196

Profit attributable to:Owners of the Company 52,761,556 49,780,525Non-controlling interest (919,602) 1,859,405

Profit for the year 51,841,954 51,639,930

Total comprehensive income attributable to:Owners of the Company 44,373,188 50,801,954Non-controlling interest (5,570,167) (4,581,758)

Total comprehensive income for the year 38,803,021 46,220,196

Weighted average number of shares outstanding 363,281,250 363,281,250

Basic earnings per share 29 0.15 0.14

TAV Havalimanları Holding A.Ş. and its SubsidiariesConsolidated Statement of Comprehensive IncomeFor the Year Ended 31 December 2011(Amounts expressed in Euro unless otherwise stated)



TAV

Hav

alim

anla

rı H

oldi

ng A

.Ş. a

nd it

s Su

bsid

iarie

sCo

nsol

idat

ed S

tate

men

t of

Cha

nges

in E

quity

For

the

Year

End

ed 3

1 D

ecem

ber

2011

(Am

ount

s ex

pres

sed

in E

uro

unle

ss o

ther

wis

e st

ated

)

v

Attr

ibut

able

to

owne

rs o

f th

e Co

mpa

ny

Not

eSh

are

Capi

tal

Shar

e P

rem

ium

Lega

l Re

serv

es

Oth

erRe

serv

esRe

valu

atio

n Su

rplu

s

Purc

hase

of

Shar

es o

f En

titie

s U

nder

Co

mm

on

Cont

rol

Cash

Flo

w

Hed

ge R

eser

ve T

rans

latio

n Re

serv

esRe

tain

ed

Earn

ings

To

tal

Non

-Co

ntro

lling

Inte

rest

s To

tal

Equi

ty

Bala

nce

at 1

Jan

uary

201

016

2,38

3,97

822

0,28

6,47

018

,385

,795

-2,

324,

325

40,0

63,8

60(5

9,77

6,65

7)(2

,056

,517

)(9

,168

,016

)37

2,44

3,23

840

,555

,777

412,

999,

015

Tota

l com

preh

ensi

ve in

com

e fo

r th

e ye

arPr

ofit

for t

he y

ear

--

--

--

--

49,7

80,5

2549

,780

,525

1,85

9,40

551

,639

,930

Oth

er c

ompr

ehen

sive

inco

me

Reva

luat

ion

of p

rope

rty

and

equi

pmen

t16

--

--

(341

,607

)-

--

409,

927

68,3

20-

68,3

20Effectiveportionofchangesinfairvalueofcashhedges,netoftax

15-

--

--

-(1

,952

,709

)-

-(1

,952

,709

)(6

,773

,031

)(8

,725

,740

)Foreigncurrencytranslationdifferencesforforeignoperations

15-

--

--

--

2,90

5,81

8-

2,90

5,81

833

1,86

83,

237,

686

Tota

l oth

er c

ompr

ehen

sive

inco

me

--

--

(341

,607

)-

(1,9

52,7

09)

2,90

5,81

840

9,92

71,

021,

429

(6,4

41,1

63)

(5,4

19,7

34)

Tota

l com

preh

ensi

ve in

com

e fo

r th

e ye

ar-

--

-(3

41,6

07)

-(1

,952

,709

)2,

905,

818

50,1

90,4

5250

,801

,954

(4,5

81,7

58)

46,2

20,1

96Tr

ansa

ctio

ns w

ith o

wne

rs o

f th

e Co

mpa

ny, r

ecog

nize

d di

rect

ly in

equ

ityCo

ntrib

utio

ns b

y an

d di

strib

utio

ns t

o ow

ners

of

the

Com

pany

Issu

e of

sha

re c

apita

l-

--

--

--

--

-20

2,80

820

2,80

8D

ivid

end

dist

ribut

ions

--

--

--

--

--

(640

,545

)(6

40,5

45)

Chan

ges

in o

wne

rshi

p in

tere

sts

in s

ubsi

diar

ies

Sale

of

non-

cont

rolli

ng in

tere

st-

--

14,6

22,9

32-

--

--

14,6

22,9

3266

,981

,047

81,6

03,9

79To

tal t

rans

actio

ns w

ith o

wne

rs o

f th

e Co

mpa

ny-

--

14,6

22,9

32-

--

--

14,6

22,9

3266

,543

,310

81,1

66,2

42Tr

ansf

ers

--

3,27

0,12

2-

--

--

(3,8

12,9

10)

(542

,788

)54

2,78

8-

Bala

nce

at 3

1 D

ecem

ber

2010

162,

383,

978

220,

286,

470

21,6

55,9

1714

,622

,932

1,98

2,71

840

,063

,860

(61,

729,

366)

849,

301

37,2

09,5

2643

7,32

5,33

610

3,06

0,11

754

0,38

5,45

3

Bala

nce

at 1

Jan

uary

201

116

2,38

3,97

822

0,28

6,47

021

,655

,917

14,6

22,9

321,

982,

718

40,0

63,8

60(6

1,72

9,36

6)84

9,30

137

,209

,526

437,

325,

336

103,

060,

117

540,

385,

453

Tota

l com

preh

ensi

ve in

com

e fo

r th

e ye

arPr

ofit

for t

he y

ear

--

--

--

--

52,7

61,5

5652

,761

,556

(919

,602

)51

,841

,954

Oth

er c

ompr

ehen

sive

inco

me

Reva

luat

ion

of in

tang

ible

ass

ets

16-

--

-(3

41,6

07)

--

-40

9,92

768

,320

-68

,320

Effectiveportionofchangesinfairvalueofcashhedges,netoftax

15-

--

--

-(6

,125

,951

)-

-(6

,125

,951

)(3

,714

,244

)(9

,840

,195

)Foreigncurrencytranslationdifferencesforforeignoperations

15-

--

--

--

(2,3

30,7

37)

-(2

,330

,737

)(9

36,3

21)

(3,2

67,0

58)

Tota

l oth

er c

ompr

ehen

sive

inco

me

--

--

(341

,607

)-

(6,1

25,9

51)

(2,3

30,7

37)

409,

927

(8,3

88,3

68)

(4,6

50,5

65)

(13,

038,

933)

Tota

l com

preh

ensi

ve in

com

e fo

r th

e ye

ar-

--

-(3

41,6

07)

-(6

,125

,951

)(2

,330

,737

)53

,171

,483

44,3

73,1

88(5

,570

,167

)38

,803

,021

Tran

sact

ions

with

ow

ners

of

the

Com

pany

, rec

ogni

zed

dire

ctly

in e

quity

Cont

ribut

ions

by

and

dist

ribut

ions

to

owne

rs o

f th

e Co

mpa

nyD

ecre

ase

in c

apita

l of

subs

idia

ry-

--

--

--

--

-(6

,448

,860

)(6

,448

,860

)D

ivid

end

dist

ribut

ions

--

--

--

--

--

(2,0

15,2

95)

(2,0

15,2

95)

Chan

ges

in o

wne

rshi

p in

tere

sts

in s

ubsi

diar

ies

Purc

hase

of

non-

cont

rolli

ng in

tere

st, n

et-

--

(6,3

40,2

11)

--

--

-(6

,340

,211

)(2

,841

,686

)(9

,181

,897

)Effectofchangeingroupstructure

--

--

--

--

--

881,

149

881,

149

Tota

l tra

nsac

tions

with

ow

ners

of

the

Com

pany

--

-(6

,340

,211

)-

--

--

(6,3

40,2

11)

(10,

424,

692)

(16,

764,

903)

Tran

sfer

s-

-14

,693

,710

--

--

-(1

4,83

8,72

8)(1

45,0

18)

145,

018

-Ba

lanc

e at

31

Dec

embe

r 20

1116

2,38

3,97

822

0,28

6,47

036

,349

,627

8,28

2,72

11,

641,

111

40,0

63,8

60(6

7,85

5,31

7)(1

,481

,436

)75

,542

,281

475,

213,

295

87,2

10,2

7656

2,42

3,57

1

The

acco

mpa

nyin

g no

tes

form

an

inte

gral

par

t of

thes

e co

nsol

idat

ed f

inan

cial

sta

tem

ents

.


Notes 2011 2010CASH FLOWS FROM OPERATING ACTIVITIES Profit for the year 51,841,954 51,639,930Adjustments for:

Amortisation of airport operation right 14-19 36,729,520 32,765,582Depreciation of property and equipment 14-17 23,034,317 21,218,211Amortisation of intangible assets 14-18 5,377,231 5,560,792Concession and rent expenses 12 129,439,623 129,638,846Provision for employment termination benefits 11 5,950,613 4,393,388Provision for doubtful receivables 38 7,327,641 1,336,568Other provisions (released) / set (102,926) 204,048Discount on receivables and payables, net (30,542) (22,078)Impairment of property and equipment 17 - 6,638,910Gain on sale of property and equipment 10 (1,844,005) (386,413)Provision for unused vacation 34 1,314,910 1,802,934Provision for slow moving inventory (5,361) 53,749Reversal of / (accrued) insurance income 752,350 (6,924,254)Interest income 15 (16,300,766) (14,619,447)Interest expense on financial liabilities 15 83,452,333 81,804,039Tax expense 16 39,762,744 11,826,115Unwinding of discount on concession receivable 15 (12,722,651) (10,242,300)Unrealisedforeignexchangedifferencesonstatementoffinancialpositionitems (6,499,680) 23,649,535

Cash flows from operating activities 347,477,305 340,338,155Change in trade receivables (3,474,069) (16,948,645)Change in non-current trade receivables 32,234,227 30,888,845Change in inventories (4,704,375) (2,617,149)Change in due from related parties (2,820,129) 5,358,004Change in restricted bank balances 213,415,123 159,245,338Change in other receivables and current assets 3,271,133 17,525,665Change in trade payables (565,906) (7,513,802)Change in due to related parties (10,011,043) (3,216,358)Change in other payables and provisions 8,517,005 7,691,195Change in other long term assets 45,170 8,328,918Additions to prepaid rent expenses 21 (106,638,321) (97,461,768)

Cash provided from operations 476,746,120 441,618,398Income taxes paid (34,234,346) (24,797,818)Interest paid (85,025,198) (78,695,629)Retirement benefits paid 31 (1,989,595) (1,834,364)

Net cash provided from operating activities 355,496,981 336,290,587

TAV Havalimanları Holding A.Ş. and its SubsidiariesConsolidated Statement of Cash Flows For the Year Ended 31 December 2011 (Amounts expressed in Euro unless otherwise stated)



Notes 2011 2010

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 15,424,151 14,509,566

Proceeds from sale of property, equipment and intangible assets 5,895,650 1,863,704

Proceeds from sales of non-controlling interest in subsidiaries - 141,668,682

Acquisition of property and equipment 17 (43,469,631) (79,841,910)

Additions to airport operation right 19 (61,067,735) (38,015,639)

Acquisition of non-controlling interest (9,181,897) -

Acquisition of joint venture net of cash acquired - (3,241,766)

Acquisition of intangible assets 18 (1,185,637) (1,046,598)

Net cash (used in) / provided from investing activities (93,585,099) 35,896,039

CASH FLOWS FROM FINANCING ACTIVITIES

New borrowings raised 179,456,890 140,991,003

Repayment of borrowings (191,350,629) (215,050,661)

Change in restricted bank balances (202,139,978) (242,350,100)

Non-controlling interest change (3,758,568) (59,633,892)

Change in finance lease liabilities 2,650,100 1,803,095

Net cash used in financing activities (215,142,185) (374,240,555)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 46,769,697 (2,053,929)

CASH AND CASH EQUIVALENTS AT 1 JANUARY 26 29,577,060 31,630,989

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 26 76,346,757 29,577,060

TAV Havalimanları Holding A.Ş. and its SubsidiariesConsolidated Statement of Cash Flows For the Year Ended 31 December 2011 (Amounts expressed in Euro unless otherwise stated)


12

TAV Havalimanları Holding A.Ş. and its SubsidiariesNotes to the Consolidated Financial Statements As at and for the year ended 31 December 2011(Amounts expressed in Euro unless otherwise stated)

TAV Airports 2011 Annual Report

1. REPORTING ENTITY

TAVHavalimanlarıHoldingA.Ş.(“TAV”,“TAVHolding”or“theCompany”)wasestablishedin1997underthenameofTepeAkfenVieYatırımYapımveİşletmeA.Ş.inTurkeyforthepurposeofreconstructingtheİstanbulAtatürkAirport(InternationalLinesBuilding)andoperatingitforalimitedperiodof66months.On7August2006,theCompany’snamehasbeenchangedtoTAVHavalimanlarıHoldingA.Ş..TheaddressoftheCompany’sregisteredofficeisİstanbulAtatürkHavalimanıDışHatlarTerminali34149Yeşilköy,İstanbul,Turkey.

TheCompanyislistedinİstanbulStockExchangesince23February2007andtheCompany’ssharesaretradedas“TAVHL”.

The immediate parents and ultimate controlling parties of TAV and its subsidiaries are Tepe Group and Akfen Group. As explained in Note 3, Significant accounting policies, in years 2005, 2006 and 2007, the ultimate shareholders of the Company transferred their shares in certain companies and joint ventures to the Company. As a result of these share transfers, the Company became the parent company of these subsidiaries.

TAV, its subsidiaries and its joint ventures are collectively referred to as “the Group” in this report. The Company’s subsidiaries as at 31 December 2011 and 2010 are as follows:

31 December 2011 31 December 2010

Name of Subsidiary Principal ActivityPlace of

operationOwnership interest %

Voting power held %

Ownership interest %

Voting power held %

TAVİstanbulTerminalİşletmeciliğiA.Ş.(“TAVİstanbul”) İstanbulAirportTerminalServices Turkey 100.00 100.00 100.00 100.00

TAVEsenboğaYatırımYapımveİşletmeA.Ş.(“TAVEsenboğa”) Ankara Airport Terminal Services Turkey 100.00 100.00 100.00 100.00

TAVİzmirTerminalİşletmeciliğiA.Ş.(“TAVİzmir”) İzmirAirportTerminalServices Turkey 100.00 100.00 100.00 100.00

TAVEgeTerminalYatırımYapımveİşletmeA.Ş.(“TAVEge”) İzmirAirportTerminalServices Turkey 100.00 100.00 - -

TAV Tunisie SA (“ TAV Tunisia”) Airport Operator Tunisia 67.00 67.00 67.00 67.00

TAV Urban Georgia LLC (“TAV Tbilisi”) Airport Operator Georgia 76.00 76.00 66.00 66.00

TAV Batumi Operations LLC (“TAV Batumi”)Airport Management Service Provider Georgia 76.00 100.00 60.00 100.00

Batumi Airport LLC Airport Operator Georgia - 100.00 - 100.00

TAV Macedonia Dooel Petrovec (“TAV Macedonia”) Airport Operator Macedonia 100.00 100.00 100.00 100.00

TAVGazipaşaYapım,YatırımveİşletmeA.Ş.(“TAVGazipaşa”) Airport Operator Turkey 100.00 100.00 100.00 100.00

SIA TAV Latvia (“TAV Latvia”) Commercial Area Operator Latvia 100.00 100.00 100.00 100.00

HAVAŞHavaalanlarıYerHizmetleriA.Ş.(“HAVAŞ”) Ground Handling Services Turkey 65.00 65.00 65.00 65.00

BTAHavalimanlarıYiyecekve

İçecekHizmetleriA.Ş.(“BTA”) Food and Beverage Services Turkey 66.66 66.66 66.66 66.66

BTA Georgia LLC (“BTA Georgia”) Food and Beverage Services Georgia 66.66 66.66 66.66 66.66

BTA Tunisie SARL (“BTA Tunisia”) Food and Beverage Services Tunisia 66.66 66.66 66.66 66.66

BTA Macedonia Dooel Petrovec

(“BTA Macedonia”) Food and Beverage Services Macedonia 66.66 66.66 66.66 66.66

BTAUnluMamülleriPastaÜretimTurizmGıdaYiyecekİçecekHizmetleriSan.veTic.A.Ş.(“Cakes&Bakes”)Foodand Beverage Services Turkey 66.66 66.66 66.66 66.66




Name of Subsidiary Principal ActivityPlace of


Voting power held %

Ownership interest %

Voting power held %

TAVİşletmeHizmetleriA.Ş.(“TAVİşletme”)

Operations&Maintenance(“O&M”),

Lounge Services Turkey 100.00 100.00 100.00 100.00

TAVGeorgiaOperationServicesLLC(“TAVİşletmeGeorgia”) Lounge Services Georgia 99.99 99.99 99.99 99.99

TAVTunisieOperationServicesSARL(“TAVİşletmeTunisia”) Lounge Services Tunisia 99.99 99.99 99.99 99.99

TAV Tunisie Operation Services Plus SARL (“TAV İşletmeTunisiaPlus”) Lounge Services Tunisia 99.99 99.99 99.99 99.99

TAV Macedonia Operation Services Dooel (“TAV İşletmeMacedonia”) Lounge Services Macedonia 99.99 99.99 - -

TAVBilişimHizmetleriA.Ş.(“TAVBilişim”) SoftwareandSystemServices Turkey 98.53 98.53 98.53 98.53

TAVÖzelGüvenlikHizmetleriA.Ş.(“TAVGüvenlik”) Security Services Turkey 100.00 100.00 66.67 66.67

NorthHubServicesSIA(“HAVAŞEurope”)(*) Ground Handling Latvia 66.67 66.67 50.00 50.00

NorthHubServicesFinlandOY(“HAVAŞEuropeHelsinki”) Ground Handling Finland 66.67 66.67 - -

NorthHubServicesStockholmAb(“HAVAŞEuropeStockholm”) Ground Handling Sweden 66.67 66.67 - -

(*)Proportionatelyconsolidatedasjointventureasat31December2010.SeeNote3(a).

14



The entities that are jointly controlled by the Company as at 31 December 2011 and 2010 are as follows:


Name of joint venture Principal activityPlace of


Voting power

held %Ownership interest %

Voting power

held %

ATÜTurizmİşletmeciliğiA.Ş.(“ATÜ”) Duty Free Services Turkey 49.98 50.00 49.98 50.00

ATÜGeorgiaOperationServicesLLC(“ATÜGeorgia”) Duty Free Services Georgia 49.98 50.00 49.98 50.00

ATÜTunisieSARL(“ATÜTunisia”) Duty Free Services Tunisia 49.98 50.00 49.98 50.00

ATÜMacedoniaDooel(“ATÜMacedonia“) Duty Free Services Macedonia 49.98 50.00 49.98 50.00

AS Riga Airport Commercial Development (“ATÜLatvia”) Duty Free Services Latvia 49.98 50.00 49.98 50.00

TAVGözenHavacılıkİşletmeveTicaretA.Ş.(“TAVGözen”)

Operating Special Hangar Turkey 32.40 32.40 32.40 32.40

Cyprus Airport Services Ltd. (“CAS”) Ground Handling KKTC 50.00 50.00 50.00 50.00

TGSYerHizmetleriA.Ş.(“TGS”) Ground Handling Turkey 50.00 50.00 50.00 50.00

BTADenizyollarıveLimanlarıYiyecekveİçecekHizmetleriTic.A.Ş.(“BTADenizyolları”)

Food and Beverage Services Turkey 50.00 50.00 - -

On12April2010,HAVAŞsignedtheagreementregardingthepurchaseof50%sharesofHAVAŞEurope.FortheacquisitionofHAVAŞEurope,seenote7.On21December2011,anadditional16.67%sharesofHAVAŞEuropewaspurchasedbyHAVAŞandHAVAŞEuropeisconsolidatedwiththenon-controllinginterest’sownershipreflectedasanon-controllinginterestasat31December2011.

BTAandTASSDenizcilikveUlaş.Hizm.Tur.San.veTic.A.Ş.formedajointventureunderthenameofBTADenizyollarıon8August2011.BTAhas50.00%ownershipinBTADenizyollarıasat31December2011.BTADenizyollarıisengagedinsalesoffoodandbeverageinferries and ferry piers.

TAVİşletmeformedasubsidiaryunderthenameofTAVİşletmeMacedoniaon10August2011.TAVİşletmehas99.99%ownershipinTAVİşletmeMacedoniaasat31December2011.TAVİşletmeMacedoniaisengagedinloungeservicesinterminals.

TAVHoldingformedasubsidiaryunderthenameofTAVEgeon8December2011.TAVHoldinghas100.00%ownershipinTAVEgeasat31December2011.TAVEgeisengagedinconstructionandoperationofİzmirAdnanMenderesInternationalAirport’sdomesticterminalstartingfrom2012andoperationofİzmirAdnanMenderesInternationalAirport’sinternationalterminalstartingfrom2015.



Description of Operations

The Group’s core businesses are related to the construction of terminal buildings, management and operation of terminals or airports. TAV Esenboğa,TAVİzmirandTAVGazipaşaenterintoBuild–Operate–Transfer(“BOT”)AgreementswithDevletHavaMeydanlarıİşletmesiGenelMüdürlüğü(GeneralDirectorateofStateAirportsAuthority)(“DHMİ”),TAVTbilisiwithJSCTbilisiInternationalAirport(“JSC”),TAVBatumiwithGeorgianMinistryofEconomicDevelopment(“GMED”),TAVTunisiawithTunisianAirportAuthority(OfficeDeL’AviationCivilEtDesAeroports)(“OACA”)andTAVMacedoniawithMacedonianMinistryofTransportationandCommunication(“MOTC”).Undertheseagreements, the Group agrees to build or renovate or manage an airport or terminal within a specified period of time and in exchange receives the right to operate the airport and terminal for a preestablished period of time. At the end of the contracts, the Group will transfer theownershipoftheterminalbuildingsorairportsbacktotherelatedpublicauthority,DHMİ,JSC,GMED,OACAorMOTCaccordingly.Groupalso signs separate contracts related with the airport operations.

BOT Agreements

The airport terminals operated by the Group are as follows:

İstanbul Atatürk International Airport

ABOTagreementwasexecutedbetweenTAVandDHMİregulatingthereconstruction,investmentandoperationsofAtatürkInternationalAirportInternationalLinesBuilding(referredtoas“AtatürkInternationalAirportTerminal”or“AIAT”)inyear1998.TAVwasrequiredtocomplete the construction by August 2000 and then had the right to operate the facilities of the International Lines Building for 3 years, 8 months and 20 days. TAV completed the reconstruction of the International Lines Building in January 2000 and started the operation seven monthsearlier,aftercompletionofasignificantportionoftheconstruction.ConstructionoftheremainingpartsoftheprojectwasfinalizedinAugust2000.DHMİandtheUndersecretariatofTreasurygavetheiracceptanceoftheprojectinAugust2000whentheinvestmentperiod was formally completed. An addendum to the agreement was made in June 2000. Under the terms of the addendum, TAV committed to enlarge the International LinesBuildingby30%byyear2004.InreturnforextendingtheInternationalLinesBuilding,theoperationperiodofTAVwasextendedby13 months 12 days (approximately 66 months in total) through June 2005. The contract expired in June 2005 and TAV transferred ADAT toDHMİ.On3June2005,TAVİstanbulsignedarentagreementtooperateAIATandAtatürkDomesticAirportTerminal(referredtoas“ADAT”)for15.5yearsuntilyear2021.TherentagreementrequiresTAVİstanbultomakeannualrentpaymentstotalingUSDollar(“USD”)2,543,000,000plusValueAddedTax(“VAT”)(18%)overthelifeoftherentagreement,ofwhichUSD584,890,000plusVAThasbeenprepaidatthebeginningoftherentperiodunderthetermsoftherentagreement.Inaddition,TAVİstanbulisrequiredtomaintainthefacilities throughout the rent period.

Anaddendumhasbeensignedon4November2008,namelyAtatürkAirportDevelopmentProject,coveringinstallationofnewpassengerboardingbridgesandconstructionofnewcommercialareas.ThroughthisaddendumTAVhasundertakenEUR36millionofinvestmentinexchange of the operation right of newly created commercial areas.

Ankara Esenboğa International Airport

ABOTagreementwasexecutedbetweenTAVEsenboğaandDHMİon18August2004regulatingthereconstruction,investmentandoperationsoftheAnkaraEsenboğaInternationalAirport(internationalanddomesticterminals)fortheperioduntilMay2023.AccordingtotheAgreement,TAVEsenboğawasrequiredtocompletetheconstructionwithin36monthsaftertheagreementdateandwouldthenhavetherighttooperatethefacilitiesoftheAnkaraEsenboğaInternationalAirportTerminalforaperiodof15yearsand8months.TAVEsenboğaisprovidingterminal,carparkandpassengerboardingservicessincethebeginningofoperationson16October2006.

16



İzmir Adnan Menderes International Airport

ABOTagreementwasexecutedbetweenTAVİzmirandDHMİon20May2005regulatingthereconstruction,investmentandoperationsofİzmirAdnanMenderesAirportInternationalTerminal.AccordingtotheAgreement,TAVİzmirwasrequiredtocompletetheconstructionwithin24monthsaftertheagreementdateandwouldthenhavetherighttooperatethefacilitiesofİzmirAdnanMenderesAirportInternationalTerminalforaperiodof 6 years, 7 months and 29 days. An addendum to the Agreement was signed on 21 August 2006. Under the terms of the addendum, in return foradditionalworks,theoperationperiodofTAVİzmirwasextendedby11months17daysthroughJanuary2015.TAVİzmirhasbeenprovidingterminal, car park and passenger boarding services since the beginning of operations on 13 September 2006.

AleaseagreementwasexecutedbetweenTAVEgeandDHMİwithaneffectivedateof16December2011regulatingtheoperationofthedomesticterminalofİzmirAdnanMenderesAirportuntil31December2032andtaking-overtheinternationalterminalonJanuary2015andoperatingituntil31December2032.TAVEgeisobligedtoconstructanewdomesticterminalwithitsancillarybuildingsandtopayEUR610,000,000plusVATtoDHMI in yearly equal installments.

Tbilisi International Airport

A BOT agreement was executed between TAV Tbilisi and JSC on 6 September 2005 for the operations of Tblisi International Airport (both international, domestic terminals and parking-apron-taxi ways). The BOT agreement undertakes the design, engineering, financing, construction, testing, commissioning and maintenance of the new terminal for Tbilisi International Airport, for an initially agreed term of 10 years and 6 months from the commencement date of the new terminal operations. Subsequently, this period was extended by another 9.5 years until August 2027, in exchange for an obligation by TAV Tbilisi to invest an additional amount for the construction of the terminal (including construction of additional runways, extension of apron etc.) for Batumi airport. TAV Tbilisi is providing a wide range of airport activities such as terminal, car-park, cargo, groundhandling,aircraftparking,apronandrunwayservices–excludingairtrafficcontrol–inNewTbilisiInternationalAirportsincethebeginningofoperations on 8 February 2007.

Batumi International Airport

On9August2007,TAVBatumiOperationssignedanagreementwiththeGeorgianMinistryofEconomicDevelopmenttotransferthemanagementrights of all shares of the Batumi Airport LLC to TAV Batumi for 20 years. According to such share management agreement, all airport operations (excludingonlytheairtrafficcontrolandaviationsecurityservices)oftheBatumiInternationalAirportwillbecarriedoutbyTAVBatumiuntilAugust2027.GeorgianGovernmentisresponsibleforprovidingairtrafficcontrolandsecurityservices.

Tunisia Monastir and Enfidha International Airports

A BOT agreement was executed between TAV Tunisia and OACA on 18 May 2007, for the operation of existing Monastir Habib Bourguiba Airport andnewEnfidhaAirport(International,domesticterminalsandparking-apron-taxi-ways).ThroughtheBOTagreementTAVTunisiaundertakestheoperation of the existing Monastir Habib Bourguiba Airport and design, engineering, financing, construction, testing, commissioning and maintenance ofthenewEnfidhaAirport.TheoperationsofMonastirHabibBourguibaAirportandEnfidhaAirportwereundertakeninJanuary2008andDecember2009,respectively.TheconcessionperiodsofbothairportswillendinMay2047.TheoperationsoftheMonastirandEnfidhaAirportscoverawiderangeofairportactivitiessuchasterminal,car-park,cargo,groundhandling,aircraftparking,apronandrunwayservicesexcludingairtrafficcontrolservices.

Gazipaşa Airport

RelatingtothetransferoftheoperationalrightsofAntalya-GazipaşaAirportviaalease,theconcessionagreementbetweenTAVGazipaşaandDHMİwassignedon4January2008.TheoperationperiodofAntalya-GazipaşaAirport,whichcurrentlyhas500,000annualpassengercapacity,is 25 years until May 2034, and the operation of the airport covers activities within airside and landside facilities and area of runway, apron and taxiway.TAVGazipaşashallmakeanannualrentpaymentofUSD50,000plusVATasafixedamount,untiltheendoftheoperationperiod;aswellasashareof65%ofthenetprofittoDHMİ.



Macedonia Skopje, Ohrid and Shtip Airports

On 24 September 2008, the 20-year BOT for the construction and operation of Alexander the Great Airport in Skopje, renovation and operation of the St. Paul the Apostle Airport in Ohrid, and the construction and optional operation of the New Cargo Airport in Shtip airports was signed between TAVMacedoniaandMOTC.Theoperationoftheairportsshallcoverallairportactivitieswiththeexceptionofairtrafficcontrol,andmodernisationactivitiesarecontemplatedtoincludethetechnicalinfrastructure.TheeffectivedateoftheconcessioncontractforAlexandertheGreatAirportandSt.PaultheApostleAirportis1March2010andfinaldateofConcessionAgreementis1March2030.TheeffectivedateforinitiatingconstructionofNewCargoAirportinShtipwillbedecidedaftermeteorologicalandtechnicalmeasurementswhichwilllastforatleast10yearsaftertheeffectivedate. The renovation of the St. Paul the Apostle Airport in Ohrid and the construction of Alexander the Great Airport in Skopje were completed and the airports started their operations in March 2011 and September 2011, respectively.

Operations Contracts

BOT operations and management contracts include the following:

Terminal and airport services – The Group has the right to operate the terminals and airports as mentioned in the preceding paragraphs. This includes passenger, ramp and check-in counter services and services for parking-apron-taxi ways (for airport operations). A fee is charged to each airlinebasedonthenumberofpassengersthatutilisetheairport,basedonthenumberofaircraftsthatutilizerampsandrunwaysandbasedonthenumber of check-in counters utilised by the airlines.

Duty free goods – The Group has the right to manage duty free operations within the terminals which the Group operates. Duty free shopping is available to both arriving and departing passengers. The duty free shops are either operated by the Group or, in certain circumstances, subcontracted to other companies in exchange for a commission based on sales.

Catering and airport hotel services – The Group has the right to manage all food and beverage operations within the terminals both for the passengers and the terminal personnel. The Group subcontracts certain food and beverage operations in exchange for a commission based on sales.

Area allocation services –Asalessor,theGroupleasesofficespaceintheairportterminalincludingtheofficesleasedtotheairlinesforticketofficeand banks.

Ground handling –TheGrouphastherighttoprovideallgroundhandlingoperations.Groundhandlinginvolvesprovidingtraffic,ramp,flightoperation,cargoandallothergroundhandlingservicesfordomesticandinternationalflightsundertheCivilAviationLegislationLicense(“SHY22”).Additional activities include shuttle bus and car parking.

Lounge services – The Group has the right to operate or rent the lounges to provide CIP services to the passengers who have the membership.

Bus and car parking services – The Group has the right to operate the car park and render valet parking services. Revenues from bus operations include shuttle services running from airports to city centers.

Software and system services –TheGroupdevelopssoftwareandsystemsonoperationalandfinancialoptimizationinaviation,particularlyterminal,flightmanagementsystemandsoftwareprogramsandtomeettheinformationsystemsrequirementsofgroupcompaniesandcertainthird parties.

Security services – The Group operates the security services within the domestic terminals.

The Group employs approximately 20,269 (average: 19,838) people as at 31 December 2011 (31 December 2010: 18,768 (average: 17,535) people).

18



2. BASIS OF PREPARATION

a) Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”).

The Group’s consolidated financial statements were authorized for issue by the Board of Directors on 24 February 2012. The power to changetheconsolidatedfinancialstatementsaftertheissuingoftheconsolidatedfinancialstatementsisheldbytheGeneralAssembly.

b) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for derivative financial instruments which are measured at fair value.

The methods used to measure fair values are discussed further in note 4.

c) Functional and presentation currency

TAV Holding and its subsidiaries operating in Turkey maintain their books of account and prepare their statutory financial statements in Turkish Lira (“TRL”) in accordance with the accounting principles as promulgated by the Turkish Commercial Code and tax legislation. The foreign subsidiaries and jointly controlled entities maintain their books of account in accordance with the laws and regulations in force in the countriesinwhichtheyareregistered.TheaccompanyingconsolidatedfinancialstatementsarepresentedinEUR,whichisthefunctionalcurrency of TAV Group.

Although the currency of the country in which the majority of the Group entities are domiciled is TRL, most of the Group entities’ functional currenciesareEUR.



The table below summarizes the functional currencies of the Group entities:

Company Functional CurrencyTAV Holding EURTAVİstanbul EURTAVEsenboğa EURTAVİzmir EURTAVEge EURTAV Tunisia EURTAV Tbilisi GeorgianLari(“GEL”)TAV Batumi GELBatumi Airport LLC GELTAV Macedonia EURTAVGazipaşa EURTAV Latvia EURHAVAŞ EURHAVAŞEurope EURHAVAŞEuropeHelsinki EURHAVAŞEuropeStockholm SwedishKrona(“SEK”)BTA TRLBTA Georgia GELBTA Tunisia Tunisian Dinar (“TND”)BTA Macedonia MacedonianDenar(“MKD”)Cakes&Bakes TRLTAVİşletme TRLTAVİşletmeGeorgia GELTAVİşletmeTunisia TNDTAVİşletmeTunisiaPlus TNDTAVİşletmeMacedonia MKDTAVBilişim EURTAVGüvenlik TRLATÜ EURATÜGeorgia GELATÜTunisia EURATÜMacedonia EURATÜLatvia EURTAVGözen USDCAS USDTGS TRLBTADenizyolları TRL

20



d) Use of estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgements, estimates andassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpenses.Actualresultsmaydifferfromtheseestimates.

Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.

Informationaboutcriticaljudgementsinapplyingaccountingpoliciesthathavethemostsignificanteffectontheamountsrecognisedintheconsolidated financial statements is included in the following notes:

Note3(e)–mark-upappliedtoconstructioncostincurredunderIFRIC12“ServiceConcessionArrangements”.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

Note17and18–usefullivesofpropertyandequipmentandintangibleassetsNote18–keyassumptionsusedindiscountedcashflowprojectionsNote22–utilisationoftaxlossesandtaxincentivesNote31–measurementofreserveforemployeeseveranceindemnityNotes34and39–provisionsandcontingenciesNote36and38–valuationoffinancialinstruments

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

a) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and entities controlled or jointly controlled by the Company (its subsidiaries and jointly controlled entities). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Eachentityisconsolidatedbasedonthefollowingmethods:

•TAVİstanbul,TAVEsenboğa,TAVİzmir,TAVEge,TAVMacedonia,TAVGazipaşa,TAVLatvia,TAVİşletmeandTAVGüvenlikarefullyconsolidated without non-controlling interest’s ownership.

•TAVTunisia,TAVTbilisi,TAVBatumi,BatumiAirportLLC,HAVAŞ,BTA,BTAGeorgia,BTATunisia,BTAMacedonia,Cakes&Bakes,TAVİşletmeGeorgia,TAVİşletmeTunisia,TAVİşletmeTunisiaPlus,TAVİşletmeMacedonia,HAVAŞEurope,HAVAŞEuropeHelsinki,HAVAŞEuropeStockholmandTAVBilişimarefullyconsolidatedwiththenon-controllinginterest’sownershipreflectedasanon-controllinginterest.ThesharecapitalofBatumiAirportLLCisfullyreflectedasnon-controllinginterestduetothetransferofrightonsharestoJSCattheendofshare management agreement period.

•ATÜ,ATÜGeorgia,ATÜTunisia,ATÜMacedonia,ATÜLatvia,TAVGözen,CAS,TGSandBTADenizyollarıareproportionatelyconsolidated.



i) Business combinations:

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

The Group measures goodwill at the acquisition date as:•thefairvalueoftheconsiderationtransferred;plus•therecognisedamountofanynon-controllinginterestsintheacquiree;plus•ifthebusinesscombinationisachievedinstages,thefairvalueofthepre-existingequityinterestintheacquiree;less•thenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilitiesassumed.When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss.

Transactions costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

ii) Subsidiaries:

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

iii) Acquisitions of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary.

In2011,TAVHoldingacquired16%ofTAVBatumi’ssharesfromAkfenİnşaatTurizmveTicaretA.Ş.(“Akfenİnşaat”)inreturnforUSD667,200(EUR467,061).Asaresult,TAVHolding’sshareinTAVBatumiincreasedto76%andTAVBatumiisconsolidatedwithnon-controllinginterest’sownershipreflectedasanon-controllinginterest.Theeffectofthistransactionisrecognisedasanequitytransactionasotherreservesintheconsolidatedfinancial statements.

In2011,TAVHoldingacquired33.33%ofTAVGüvenlik’ssharesfromTepeSavunmaveGüvenlikSistemleriSanayiA.Ş.inreturnforTRL6,000,000(EUR2,760,779).Asaresult,TAVHolding’sshareinTAVGüvenlikincreasedto100%andTAVGüvenlikisfullyconsolidatedwithoutanynon-controllinginterestownership.Theeffectofthistransactionisrecognisedasanequitytransactionasotherreservesintheconsolidatedfinancialstatements.

In2011,TAVHoldingacquired10%ofTAVTbilisi’ssharesfromSeraYapıEndüstrisiveTic.A.Ş.(“SeraYapı”)andAkfenİnşaatinreturnforUSD8,583,000(EUR5,954,057).Asaresult,TAVHolding’sshareinTAVTbilisiincreasedto76%andTAVTbilisiisconsolidatedwithnon-controllinginterest’sownershipreflectedasanon-controllinginterest.Theeffectofthistransactionisrecognisedasanequitytransactionasotherreservesinthe consolidated financial statements.

On12April2010,50%ofHAVAŞEuropewasacquiredbyHAVAŞ.HAVAŞEuropewasjointlycontrolledbyHAVAŞandBalticAviationServicesandwasproportionatelyconsolidateduntilDecember2011(Note7).Effectofthistransactionispresentedas“acquisitionsthroughbusinesscombinations”intheconsolidatedfinancialstatements.On21December2011,anadditional16.67%ofHAVAŞEuropeshareswasacquiredinreturnforEUR1,001,418byHAVAŞ.AfterthisacquisitionHAVAŞobtainedthecontrolofHAVAŞEuropeandHAVAŞEuropeisconsolidatedwiththenon-controllinginterest’sownershipreflectedasanon-controllinginterestasat31December2011.Effectofthischangeispresentedas“effectofchange in group structure” in the consolidated financial statements.

22



iv) Acquisitions from entities under common control:

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative year presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within the Group equity and any gain/loss arising is recognised directly in equity.

v) Loss of control:

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accountedforasanequity-accountedinvesteeorasanavailable-for-salefinancialassetdependingonthelevelofinfluenceretained.

vi) Jointly controlled entities:

Jointly controlled entities are those entities over whose activities the Group has joint control established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. The Group reports its interests in jointly controlled entities using proportionate consolidation. The Group’s share of the assets, liabilities, income and expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line-by-line basis.

vii) Transactions eliminated on consolidation:

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with jointly controlled entities are eliminated to the extent of the Group’s interest in the jointly controlled entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

b) Foreign currency

i) Foreign currency transactions:

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currencyattheexchangerateatthatdate.Theforeigncurrencygainorlossonmonetaryitemsisthedifferencebetweenamortisedcostinthefunctionalcurrencyatthebeginningoftheyear,adjustedforeffectiveinterestandpaymentsduringtheyear,andtheamortisedcostinforeign currency translated at the exchange rate at the end of the year.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured basedonhistoricalcostaretranslatedusingtheexchangerateatthedateofthetransaction.Foreigncurrencydifferencesarisingonretranslationarerecognisedinprofitorloss,exceptfordifferencesarisingonqualifyingcashflowhedgestotheextentthehedgeiseffective,whicharerecognisedinothercomprehensiveincome.



ii) Foreign operations:

Theassetsandliabilitiesofforeignoperations,includinggoodwillandfairvalueadjustmentsarisingonacquisition,aretranslatedtoEuroatexchangeratesatthereportingdate.TheincomeandexpensesofforeignoperationsaretranslatedtoEuroatmonthlyaverageexchangerates.

Foreigncurrencydifferencesarerecognisedinothercomprehensiveincome,andpresentedintheforeigncurrencytranslationreserve(translation reserve) in equity. However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant proportionate share of thetranslationdifferenceisallocatedtothenon-controllinginterests.Whenaforeignoperationisdisposedofsuchthatcontrol,significantinfluenceorjointcontrolislost,thecumulativeamountinthetranslationreserverelatedtothatforeignoperationisreclassifiedtoprofitor loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influenceorjointcontrol,therelevantproportionofthecumulativeamountisreclassifiedtoprofitorloss.

TheGroupentitiesuseeitherEUR,TRL,USD,TND,MKD,SEKorGELasfunctionalcurrenciessincethesecurrenciesareusedtoasignificantextentin,orhaveasignificantimpacton,theoperationsoftherelatedGroupentitiesandreflecttheeconomicsubstanceoftheunderlyingevents and circumstances relevant to these entities. All currencies other than the currency selected for measuring items in the financial statements are treated as foreign currencies. Accordingly, transactions and balances not already measured in the functional currency have beenre-measuredtotherelatedfunctionalcurrenciesinaccordancewiththerelevantprovisionsofIAS21(“TheEffectsofChangesinForeignExchangeRates”).TheGroupusesEURasthereportingcurrency.

Thefinancialstatementsofsubsidiariesthatreportinthecurrencyofahyperinflationaryeconomy(Turkey)arerestatedintermsofthemeasuringunitcurrentatthereportingdatesuntil31December2005beforetheyaretranslatedintoEURasthereportingcurrency.Turkeycameoffhighlyinflationarystatusfortheperiodbeginningafter15December2005,thereforerestatementforIAS29(“FinancialReportinginHyperinflationaryEconomies”)hasnotbeenappliedsince1January2006.

Thefinancialstatementsofsubsidiaries,namelyBTA,TAVİşletmeandTAVGüvenlik,whichhavetheTRLastheirfunctionalcurrency,wererestatedtocompensatefortheeffectofchangesinthegeneralpurchasingpoweroftheTRLuntil31December2005,inaccordancewithIAS29asTRLwasthecurrencyofahyperinflationaryeconomy.FinancialstatementsofsuchsubsidiariesarethentranslatedintoEuro,themain reporting currency of the Group, by the exchange rate ruling at reporting date.

TheEUR/TRL,EUR/GEL,EUR/TND,EUR/MKD,EUR/SEKandEUR/USDexchangeratesasoftherelatedperiodsareasfollows:


EUR/TRL 2.4438 2.0491

EUR/GEL 2.1614 2.3500

EUR/TND 1.9383 1.9221

EUR/MKD 61.5050 61.5050

EUR/SEK 8.9447 9.0020

EUR/USD 1.2938 1.3254

24



c) Financial instruments

i) Non-derivative financial assets:

The Group initially recognises loans, receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

TheGroupderecognisesafinancialassetwhenthecontractualrightstothecashflowsfromtheassetexpire,orittransferstherightstoreceivethecontractualcashflowsonthefinancialassetinatransactioninwhichsubstantiallyalltherisksandrewardsofownershipofthe financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

Financialassetsandliabilitiesareoffsetandthenetamountpresentedinthestatementoffinancialpositionwhen,andonlywhen,theGrouphasalegalrighttooffsettheamountsandintendseithertosettleonanetbasisortorealisetheassetandsettletheliabilitysimultaneously.

Non-derivative financial assets of the Group comprise loans and receivables.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measuredatamortisedcostusingtheeffectiveinterestmethod,lessanyimpairmentlosses.

Loans and receivables comprise cash and cash equivalents, restricted bank balances, trade receivables, due from related parties, guaranteedpassengerfeereceivablefromDHMİ(Concessionreceivables)(seeNote25).

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.

The Group’s use of Project Accounts Reserve Accounts or Funding Accounts is based on certain conditions as defined in respective loan agreements. Therefore, bank balances included in these accounts are presented as restricted bank balances in the consolidated statement of financial position.

Service concession arrangements

The Group recognises a financial asset arising from a service concession arrangement when it has an unconditional contractual right to receive cash or another financial asset from or at the direction of the grantor for the construction or upgrade services provided. Such financial assets are measured at fair value upon initial recognition. Subsequent to initial recognition, the financial assets are measured at amortised cost.

If the Group is paid for the construction services partly by a financial asset and partly by an intangible asset, then each component of the consideration is accounted for separately and is recognised initially at the fair value of the consideration (see also accounting policy note on intangible assets below).



ii) Non-derivative financial liabilities:

The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured atamortisedcostusingtheeffectiveinterestmethod.

TheGrouphasthefollowingotherfinancialliabilities:loansandborrowings,bankoverdrafts,tradepayablesandduetorelatedparties.

BankoverdraftsthatarerepayableondemandandformanintegralpartoftheGroup’scashmanagementareincludedasacomponentofcashandcashequivalentsforthepurposeofthestatementofcashflows.

iii) Share capital:

Ordinary shares are classified as equity.

iv) Derivative financial instruments, including hedge accounting:

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.

On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together withthemethodsthatwillbeusedtoassesstheeffectivenessofthehedgingrelationship.TheGroupmakesanassessment,bothattheinceptionofthehedgerelationshipaswellasonanongoingbasis,whetherthehedginginstrumentsareexpectedtobe“highlyeffective”inoffsettingthechangesinthefairvalueorcashflowsoftherespectivehedgeditemsattributabletothehedgedrisk,andwhethertheactualresultsofeachhedgearewithinarangeof80-125percent.Foracashflowhedgeofaforecasttransaction,thetransactionshouldbehighlyprobabletooccurandshouldpresentanexposuretovariationsincashflowsthatcouldultimatelyaffectreportedprofitorloss.Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

Cash flow hedges

Whenaderivativeisdesignatedasthehedginginstrumentinahedgeofthevariabilityincashflowsattributabletoaparticularriskassociatedwitharecognisedassetorliabilityorahighlyprobableforecasttransactionthatcouldaffectprofitorloss,theeffectiveportionof changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in other comprehensive income is removed and included in profit or loss in the same period as the hedged cash flowsaffectprofitorlossunderthesamelineiteminthestatementofcomprehensiveincomeasthehedgeditem.Anyineffectiveportionofchanges in the fair value of the derivative is recognised immediately in profit or loss.

In other cases, when the hedged item is not a non-financial asset, the amount accumulated in equity is reclassified to profit or loss in thesameperiodthatthehedgeditemaffectsprofitorloss.Ifthehedginginstrumentnolongermeetsthecriteriaforhedgeaccounting,expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified in profit or loss.

26



d) Property and equipment

i) Recognition and measurement:

Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased softwarethatisintegraltothefunctionalityoftherelatedequipmentiscapitalisedaspartofthatequipment.

Whenpartsofanitemofpropertyandequipmenthavedifferentusefullives,theyareaccountedforasseparateitems(majorcomponents)of property and equipment.

Gainsandlossesondisposalofanitemofpropertyandequipmentarecalculatedasthedifferencebetweenthenetproceedsfromdisposal and the carrying amount of the item and are recognised net within “other operating income / (expense)” in profit or loss.

ii) Subsequent costs:

Subsequentexpenditureiscapitalisedonlywhenitisprobablethatthefutureeconomicbenefitsassociatedwiththeexpenditurewillflowto the Group. Ongoing repairs and maintenance is expensed as incurred.

iii) Depreciation:

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.

Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.

The estimated useful lives for the current and comparative periods are as follows:

Buildings 50 years

Machinery and equipment 4-19 years

Vehicles 5-18 years

Furniture and fixtures 2-19 years

Leasehold improvements 1-15 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. The useful lives of certainmachinery,equipments,vehicles,furnitureandfixturesofHAVAŞarerevisedasof31December2011.



e) Intangible assets

i) Goodwill:

Goodwill that arises upon the acquisition of subsidiaries and joint ventures is included in intangible assets. For the measurement of goodwill at initial recognition, see Note 3(a)(i).

Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses.

ii) Intangible assets recognised in a business combination:

CustomerrelationshipsaretheintangibleassetsrecognisedduringthepurchaseofHAVAŞsharesinyears2005and2007,purchaseofTGSsharesin2009andpurchaseofHAVAŞEuropesharesin2010and2011.DHMİlicenseistheintangibleassetrecognisedduringthepurchaseofHAVAŞsharesinyears2005and2007andpurchaseofTGSsharesin2009.Inabusinesscombinationoracquisition,theacquirer recognises separately an intangible asset of the acquiree at the acquisition date only if it meets the definition of an intangible asset in IAS 38 Intangible Assets and its fair value can be measured reliably.

ThefairvaluesofDHMİlicenceandcustomerrelationshiparedeterminedbyanindependentexternalthirdpartyexpert.

TheGroupappliedproportionateconsolidationmethodtoaccountforits60%ownershipinterestinHAVAŞuntil30September2007.Therefore,intangibleassetsarisingfromtheinitialacquisitionofHAVAŞwerereflectedby60%,beingtheshareholdingoftheGroup,inthe consolidated financial statements. In accordance with IFRS 3 Business Combinations, the Group applied step acquisition during the purchaseoftheremaining40%shareholdinginHAVAŞ.CustomerrelationshipandDHMİlicencewereremeasuredtotheirfairvalues.Thefairvaluechangeattributableto60%portionwasrecordedtotherevaluationreserveunderequity.Thisfigurereflectedthechangeinfairvalueofintangibleassetswhichwerealreadycarriedintheconsolidatedfinancialstatementspriortotheacquisitionoftheadditional40%shareholding.

50%sharepurchaseofTGS,50%and16.67%sharepurchasesofHAVAŞEuropeareaccountedbyapplyingIFRS3in2009,2010,and2011,respectively.DHMİlicenseandcustomerrelationsarisingfromthesharepurchasearerevaluedattheirfairvalueswhicharedetermined by the independent valuation experts.

iii) Internally generated software:

InternallygeneratedsoftwareconsistsofairportsoftwaredevelopedbyTAVBilişim.Internallygeneratedsoftwarewithfiniteusefullivesismeasured at cost less accumulated amortisation and impairment losses.

iv) Other intangible assets:

Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses.

v) Subsequent expenditure:

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

28



vi) Amortisation:

Exceptforgoodwill,intangibleassetsareamortisedonastraight-linebasisinprofitorlossovertheirestimatedusefullives,fromthedatethat they are available for use.

Purchasedsoftwareisamortisedoverestimatedusefullives,whichisbetween3-5years.IntangibleassetsrecognizedduringacquisitionsofHAVAŞ,TGSandHAVAŞEuropearecustomerrelationshipsandDHMİlicence.Customerrelationshipshave5-10yearsusefullifeandDHMİlicencehasindefiniteusefullifesincethedurationofnetcashinflowarisingfromDHMİlicencetotheCompanydoesnothaveanyforeseeablelimit.DHMİlicenceistestedforimpairmentannually.

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Amortisation of the airport operation right is calculated on a straight line basis over the BOT periods of each project from the date of commencement of physical construction of the terminal.

vii) Service concession arrangements

TAVEsenboğaandTAVİzmirareboundbythetermsoftheBOTAgreementsmadewithDHMİ.AccordingtotheBOTagreements,TAVEsenboğaandTAVİzmirhaveguaranteedpassengerfeetobereceivedfromDHMİ.TheagreementscoveraperioduptoJanuary2015forTAVİzmirandMay2023forTAVEsenboğa.

A BOT agreement was executed between TAV Tbilisi and JSC on 6 September 2005 for the operations of airport (both international, domestic terminals and parking-apron-taxi ways). The agreement covers a period up to August 2027.

A BOT agreement was executed between TAV Tunisia and OACA on 18 May 2007, for the operation of existing Monastir Habib Bourguiba AirportandnewEnfidhaAirport(International,domesticterminalsandparking-apron-taxi-ways).Theconcessionperiodsofbothairportswillend in May 2047.

AconcessionagreementwasexecutedbetweenTAVGazipaşaandDHMİon4January2008fortheoperationofAntalyaGazipaşaAirport(air side, land side, parking-apron-taxi ways). The agreement covers a period up to May 2034.

On 24 September 2008, the 20-year BOT for the construction and operation of Alexander the Great Airport in Skopje, renovation and operation of the St. Paul the Apostle Airport in Ohrid, and the construction and optional operation of the New Cargo Airport in Shtip airports was signed between TAV Macedonia and the Ministry of Transport and Communication of Macedonia. The agreement covers a period up to March 2030.

i) Intangible assets:

The Group recognizes an intangible asset arising from a service concession agreement when it has a right to charge for usage of concession infrastructure. Intangible assets received as consideration for providing construction or upgrade services in a service concession agreement are measured at fair value upon initial recognition. Subsequent to initial recognition the intangible asset is measured at cost less accumulated amortisation and accumulated impairment losses.

The Group recognises an intangible asset arising from a service concession arrangement when it has a right to charge for usage of the concession infrastructure. An intangible asset received as consideration for providing construction or upgrade services in a service concession arrangement is measured at fair value on initial recognition. Subsequent to initial recognition, the intangible asset is measured at cost, which includes capitalised borrowing costs, less accumulated amortisation and accumulated impairment losses.



The fair value of the consideration received or receivable for the construction services delivered includes a mark-up on the actual costs incurredtoreflectamarginconsistentwithothersimilarconstructionwork.Mark-upratesforTAVİzmir,TAVEsenboğa,TAVTbilisi,TAVTunisia,TAVGazipaşaandTAVMacedoniaare0%,0%,15%,5%,0%and0%,respectively.

The estimated useful life of an intangible asset in a service concession arrangement is the period from when the Group is able to charge the public for the use of the infrastructure to the end of the concession period.

ii) Financial assets:

TheGrouprecognizestheguaranteedpassengerfeeamountduefromDHMİasfinancialassetwhichisdeterminedbytheagreementswithTAVEsenboğaandTAVİzmir.Financialassetsareinitiallyrecognisedatfairvalue.Fairvalueoffinancialassetsisestimatedasthepresentvalue of all future cash receipts discounted using the prevailing market rate of instrument. (see Note c)i)).

iii) Accounting for operations contract (TAV İstanbul):

The costs associated with the operations contract primarily include rental payments and payments made to enhance and improve ADAT.TAVİstanbulprepaidcertainrentalamountsandtheprepaymentisdeferredasprepaidrentandisrecognisedoverthelifeoftheprepaymentperiod.TheexpendituresTAVİstanbulincurstoenhanceandimprovethedomesticterminalarerecordedasprepaiddevelopment expenditures and are being amortised over the life of the associated contract. Any other costs associated with regular maintenance are expensed in the period in which they are incurred.

Under IFRIC 12 an operator recognizes an intangible asset or financial asset received as consideration for providing construction or upgrade servicesorotheritems.InTAVİstanbulthereisneitherconstructionnorsignificantupgradeserviceprovidedandthecontractisinoperatingphase.Therefore,nointangibleassetorfinancialassetisrecognisedinTAVİstanbul’sfinancialstatementsandtherevenueandcostsrelating to the operation services are recognised in accordance with IAS 18.

f) Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognised on the Group’s consolidated statement of financial position.

g) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out (FIFO) principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

30



h) Impairment

i) Non-derivative financial assets:

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is any objectiveevidencethatitisimpaired.Afinancialassetisimpairedifobjectiveevidenceindicatesthatalosseventhasoccurredaftertheinitialrecognitionoftheasset,andthelosseventhadanegativeeffectontheestimatedfuturecashflowsofthatassetthatcanbeestimated reliably.

Objective evidence that financial assets are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active market for a security.

Financial assets measured at amortised cost

The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified.

Animpairmentlossinrespectofafinancialassetmeasuredatamortisedcostiscalculatedasthedifferencebetweenitscarryingamount,andthepresentvalueoftheestimatedfuturecashflowsdiscountedattheasset’soriginaleffectiveinterestrate.Lossesarerecognisedinprofitorlossandreflectedinanallowanceaccountagainstloansandreceivables.Interestontheimpairedassetcontinuestoberecognised. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

ii) Non-financial assets:

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that one not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (“CGU”) exceeds its estimated recoverable amount.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapost-taxdiscountratethatreflectscurrentmarketassessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannotbetestedindividuallyaregroupedtogetherintothesmallestgroupofassetsthatgeneratescashinflowsfromcontinuingusethatarelargelyindependentofthecashinflowsofotherassets(the“CGU”).GoodwillacquiredinabusinesscombinationsallocatedtogroupsofCGU’s that are expected to benefit from the synergies of the combination.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.



i) Reserve for employee severance indemnity

In accordance with the existing labour law in Turkey, the Group entities operating in Turkey are required to make lump-sum payments to employees who have completed one year of service and whose employment is terminated without cause or who retire, are called up for military service or die. Such payments are calculated on the basis of 30 days’ pay maximum TRL 2,732 as at 31 December 2011 (equivalenttoEUR1,118asat31December2011)(31December2010:TRL2,517(equivalenttoEUR1,228asat31December2010))per year of employment at the rate of pay applicable at the date of retirement or termination. Reserve for retirement pay is computed and reflectedintheaccompanyingconsolidatedfinancialstatementsonacurrentbasis.ThemanagementoftheGroupusedsomeassumptions(detailed in Note 31) in the calculation of the retirement pay provision. The calculation was based upon the retirement pay ceiling announced by the Government.

Allactuarialdifferencesarerecognizedimmediatelyinprofitorloss.

j) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably,anditisprobablethatanoutflowofeconomicbenefitswillberequiredtosettletheobligation.Provisionsaredeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneywhereappropriate and the risks specific to the liability.

k) Revenue

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

Construction revenue and expenditure: Construction revenue and expenditure are recognised by reference to the stage of completion of the contract activity at the reporting date, as measured by the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Service concession agreements: Revenue relating to construction services under a service concession arrangement is recognised based on the stage of completion of the work performed, consistent with the Group’s accounting policy on recognising revenue on construction contracts. Operation or service revenue is recognised in the period in which the services are provided by the Group. When the Group provides more than one service in a service concession arrangement the consideration received is allocated by reference to the relative fair values of the services delivered.

Aviation income: Aviation income is recognised based on the daily reports obtained from related airline companies for terminal service incomechargedtopassengers,aswellasforrampsutilisedbyaircraftandcheck-incountersutilisedbytheairlines.

32



Area allocation income: Area allocation income is recognised by the issuance of monthly invoices based on the contracts made for allocated areas in the terminal.

Sales of duty free goods: Sales of goods are recognised when goods are delivered and title passes.

Catering services income: Catering services income is recognised when services are provided. The Group defers revenue for collections from long-term contracts until the services are provided. There are no deferred costs related to these revenues since these are related with the selling rights given to food and beverage companies to sell their products at domestic and international lines terminals as well as third parties out of the terminals where the subsidiaries operate.

Ground handling income: Ground handling income is recognised when the services are provided.

Commission: The Group subcontracts the right to operate certain duty free operations and the catering services to third parties. The third parties pay the Group a specified percentage of their sales for the right to operate these concessions. The commission revenue is recognised based on the sales reports provided from the subcontractor entities in every 2 to 3 days.

Software and system sales:Softwareandsystemsalesarerecognisedwhengoodsaredeliveredandtitlehaspassedorwhenservicesareprovided.

Income from lounge services: Income from lounge services is recognised when services are provided.

Bus and car parking operations: Income from bus and car parking operations is recognised when services are provided.

l) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

m) Finance income and finance costs

FinanceincomecomprisesinterestincomeonfundsinvestedandunwindingofdiscountonguaranteedpassengerfeereceivablefromDHMİarising from the application of IFRIC 12 and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised asitaccruesinprofitorloss,usingtheeffectiveinterestmethod.DividendincomeisrecognisedinprofitorlossonthedatethattheGroup’sright to receive payment is established.

Finance costs comprise interest expense on borrowings, impairment losses recognised on financial assets, (other than trade receivables) and ineffectiveportionofhedginginstruments.Borrowingcoststhatarenotdirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarerecognisedinprofitorlossusingtheeffectiveinterestmethod.

Foreign currency gains and losses are reported on a net basis as either finance income or finance cost.



n) Tax

Tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferredtaxisrecognisedinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedfortaxationpurposes.Deferredtaxisnotrecognisedforthefollowingtemporarydifferences:theinitialrecognitionofassetsorliabilitiesinatransactionthatisnotabusinesscombinationandthataffectsneitheraccountingnortaxableprofit,anddifferencesrelatingtoinvestmentsinsubsidiariesandjointlycontrolledentitiestotheextentthatitisprobablethattheywillnotreverseintheforeseeablefuture.Inaddition,deferredtaxisnotrecognisedfortaxabletemporarydifferencesarisingontheinitialrecognition of goodwill.

Deferredtaxismeasuredatthetaxratesthatareexpectedtobeappliedtothetemporarydifferenceswhentheyreverse,basedonthelaws that have been enacted or substantively enacted by the reporting date.

In determining the amount of current and deferred tax the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a deter¬mination is made.

Deferredtaxassetsandliabilitiesareoffsetifthereisalegallyenforceablerighttooffsetcurrenttaxliabilitiesandassets,andtheyrelateto income taxes levied by the same tax authority on the same taxable entity.

Adeferredtaxassetisrecognisedforunusedtaxlosses,taxcreditsanddeductibletemporarydifferences,totheextentthatitisprobablethat future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

The Turkish tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provisions for taxes,asreflectedintheaccompanyingconsolidatedfinancialstatements,havebeencalculatedonaseparate-entitybasis.

o) Earnings per share

TheGrouppresentsbasicEPSdataforitsordinaryshares.BasicEPSiscalculatedbydividingtheprofitorlossattributabletoordinaryshareholders of the Company by the weighted average number of ordinary shares outstanding during the year. There are no dilutive potential shares.

34



p) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are regularly reviewed by the Group Management to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the Group management include items directly attributable to a segment as well as those that can be allocatedonareasonablebasis.Unallocateditemscomprisemainlycorporateassets(primarilytheCompany’sheadquarters),headofficeexpenses, and income tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

q) New standards and interpretations not yet adopted

Anumberofnewstandards,amendmentstostandardsandinterpretationsarenotyeteffectiveasat31December2011,andhavenotbeenappliedinpreparingtheseconsolidatedfinancialstatements.Amongthosenewstandards,thefollowingareexpectedtohaveeffecton the consolidated financial statements of the Group:

•AmendmentstoIAS1 Presentation of Items of Other Comprehensive Income require that an entity present separately the items of other comprehensive income that would be reclassified to profit or loss in the future if certain conditions are met from those that would never be reclassifiedtoprofitorloss.Theamendmentsareeffectiveforannualperiodsbeginningonorafter1July2012.

•IFRS10 Consolidated Financial Statements supersedes IAS 27 (2008) and SIC-12 Consolidation—Special Purpose Entities and becomeseffectiveforannualperiodsbeginningonorafter1January2013.

•IFRS11 Joint Arrangements supersedes IAS 31 and SIC-13 Jointly Controlled Entities—Non-Monetary Contributions by Venturers and becomeseffectiveforannualperiodsbeginningonorafter1January2013.

•IFRS12 Disclosure of Interests in Other Entities contains the disclosure requirements for entities that have interests in subsidiaries, jointarrangements,associatesand/orunconsolidatedstructuredentitiesandbecomeseffectiveforannualperiodsbeginningonorafter1January 2013.

•IFRS13 Fair Value Measurement replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair valuemeasurementguidanceandbecomeseffectiveforannualperiodsbeginningonorafter1January2013.

•IAS27 Separate Financial Statements (2011) supersedes IAS 27 Consolidated and Separate Financial Statements (2008) and becomeseffectiveforannualperiodsbeginningonorafter1January2013.

•IAS28Investments in Associates and Joint Ventures (2011) supersedes IAS 28 Investments in Associates (2008) and becomes effectiveforannualperiodsbeginningonorafter1January2013.

•IFRS9 Financial Instruments couldchangetheclassificationandmeasurementoffinancialassetsandbecomeseffectiveforannualperiodsbeginningonorafter1January2015.

The Group does not plan to adopt these standards early and the extent of the impact has not been determined yet.



4. DETERMINATION OF FAIR VALUES

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

i) Property and equipment:

The fair value of property and equipment recognised as a result of a business combination is the estimated amount for which a property couldbeexchangedonthedateofacquisitionbetweenawillingbuyerandawillingsellerinanarm’slengthtransactionafterpropermarketing wherein the parties had each acted knowledgeably and willingly. The fair value of items of equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and replacement cost when appropriate.

ii) Intangible assets:

Thefairvalueofintangibleassetsisbasedonthediscountedcashflowsexpectedtobederivedfromtheuseandeventualsaleoftheassets.

ThefairvaluesofcustomerrelationshipandDHMİlicenceacquiredinabusinesscombinationaredeterminedaccordingtotheexcessearnings method and replacement cost approach, respectively.

The airport operation right as an intangible asset is initially recognised at cost, being the fair value of consideration transferred to acquire the asset, which is the fair value of the consideration received or receivable for the construction services delivered less any financial asset recognised. The fair value of the consideration received or receivable for the construction services delivered includes a mark-up on the actualcostsincurredtoreflectamarginconsistentwithothersimilarconstructionwork.Mark-upratesforTAVİzmir,TAVEsenboğa,TAVTbilisi,TAVTunisia,TAVGazipaşaandTAVMacedoniaare0%,0%,15%,5%,0%and0%,respectively.

iii) Trade and other receivables:

Thefairvalueoftradeandotherreceivablesisestimatedasthepresentvalueoffuturecashflowsdiscountedatthemarketrateofinterest at the reporting date. This fair value is determined for disclosure purposes or when acquired in a business combination.

iv) Derivatives:

Thefairvalueisestimatedbydiscountingthedifferencebetweenthecontractualforwardpriceandthecurrentforwardpricefortheresidualmaturity of the contract using a risk-free interest rate (based on government bonds) or option pricing models.

The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cashflowsbasedonthetermsandmaturityofeachcontractandusingmarketinterestratesforasimilarinstrumentatthemeasurementdate.

FairvaluesreflectthecreditriskoftheinstrumentandincludeadjustmentstotakeaccountofthecreditriskoftheGroupentityandcounterparty when appropriate.

36



v) Other non-derivative financial liabilities:

Fairvalue,whichisdeterminedfordisclosurepurposes,iscalculatedbasedonthepresentvalueoffutureprincipalandinterestcashflows,discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements. 5. FINANCIAL RISK MANAGEMENT

Overview

The Group has exposure to the following risks from its use of financial instruments:

•creditrisk•liquidityrisk•marketrisk•operationalrisk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

TheGrouphasestablishedaRiskManagementDepartmentwhoisresponsiblefortheEnterpriseRiskManagementfunctionwithintheGroup, and aims to develop a disciplined and constructive risk management and control environment in which all employees know and understand their roles and responsibilities.

Alldirectorsacttoensureaneffectiveriskmanagementandinternalcontrolprocess,providingassuranceinrelationtocontinuousidentification and evaluation of the risks that exist in all main process areas.

The Group Audit Committee is assisted in its oversight role by Internal Audit. The mission of the Internal Audit Directorate of the Group is to assist TAV Holding Board of Directors and Management (including subsidiaries) in their oversight, management and operating responsibilitiesbyidentifying;ineffectivenessesofinternalcontrol,riskmanagementandgovernanceprocessesinefficienciesthatcausewaste of its resources and making professional recommendations through independent audits (reports) and / or advisory services.

Internal audit plans are based on risk assessments as well as the issues highlighted by the Audit Committee and the management. Risk assessment is conducted and coordinated by Risk Management Department on continuous basis so as to identify and evaluate not only existingrisksbutalsoemergingrisks.Formally,riskassessmentismadeannuallybutmoreoftenifrequired.



Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers and bank balances.

The Group’s principal financial assets are cash and cash equivalents and trade and other receivables.

Credit risk on liquid funds is limited because the counterparties are banks with high credit ratings.

The Group has procedures in place to ensure that services are provided to customers with an appropriate credit history. The carrying amount of trade and other receivables, net of provision for impairment of receivables, and the total of cash and cash equivalents, representsthemaximumamountexposedtocreditrisk.ThemaincustomerisTHY.Basedonpasthistorywiththiscustomer,theGroupmanagementbelievesthereisnosignificantcreditriskforthiscustomer.Althoughcollectionofreceivablescouldbeinfluencedbyeconomicfactors, management believes that there is no significant risk of loss to the Group beyond the provisions already recorded due to reputation andtypeofcustomersfortheairlines(well-knownreputable,internationalandflagcarriercompanies),methodofsaleswhichiscashorcredit card basis for duty free sales.

In addition, the Group receives letters of guarantee, and notes from some customers whose credibility is low.

Liquidity risk

LiquidityriskistheriskthattheGroupwillencounterdifficultyinmeetingtheobligationsassociatedwithitsfinancialliabilitiesthataresettled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will alwayshavesufficientliquiditytomeetitsliabilitieswhendue,underbothnormalandstressedconditions,withoutincurringunacceptablelosses or risking damage to the Group’s reputation.

TheGroupusesactivity-basedcostingtocostitsproductsandservices,whichassistsitinmonitoringcashflowrequirementsandoptimizingitscashreturnoninvestments.TypicallytheGroupensuresthatithassufficientcashondemandtomeetexpectedoperationalandfinancial expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

Market risk

Marketriskistheriskthatchangesinmarketprices,suchasforeignexchangerates,interestratesandequitypriceswillaffecttheGroup’sincome or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by lenders and executives of the Group as mentioned in Note 36.

The Group applies hedge accounting in order to manage volatility in profit or loss.

38



i) Currency risk:

Currencyriskistheriskthatthevalueoffinancialinstrumentswillfluctuateduetochangesinforeignexchangerates.TheGrouphasexposuretotheeffectsoffluctuationsintheprevailingforeigncurrencyexchangeratesonitsfinancialpositionandcashflows.Asat31December 2011, the Group had balances that are denominated in a currency other than the respective functional currencies of Group entities,primarilyEUR,butalsoUSD,GEL,TND,MKD,SEKandTRLwhicharedisclosedwithintherelevantnotestotheseconsolidatedfinancial statements. The currencies in which these transactions primariliy denominated are USD and TRL. The Group manages this currency risk by maintaining foreign currency cash balances and using some financial instruments as mentioned in Note 38.

ii) Interest rate risk:

The Group adopts a policy of ensuring that between 50 and 100 percent of its exposure to changes in interest rates on borrowings is on a fixed rate basis. This is achieved by entering into interest rate swaps as mentioned in Note 38. Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group’s operations.

The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group’s reputationwithoverallcosteffectivenessandtoavoidcontrolproceduresthatrestrictinitiativeandcreativity.

The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior management within each business unit. This responsibility is supported by the development of overall Group standards for the management of operational risk in the following areas:

•requirementsforappropriatesegregationofduties,includingtheindependentauthorisationoftransactions•requirementsforthereconciliationandmonitoringoftransactions•compliancewithregulatoryandotherlegalrequirements•documentationofcontrolsandprocedures•requirementsfortheperiodicassessmentofoperationalrisksfaced,andtheadequacyofcontrolsandprocedurestoaddresstherisksidentified •requirementsforthereportingofoperationallossesandproposedremedialaction•developmentofcontingencyplans•trainingandprofessionaldevelopment•ethicalandbusinessstandards•riskmitigation,includinginsurancewherethisiseffective.

Compliance with Group standards is supported by a programme of periodic reviews undertaken by Internal Audit. The results of Internal Audit reviews are discussed with the management of the business unit to which they relate, with summaries submitted to the Audit Committee and senior management of the Group.

Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence; to sustain future development of the business and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.



6. SEGMENT REPORTING

Operating Segments:

For management purposes, the Group is currently organised into four reportable segment; Terminal Operations, Catering Operations, Duty Free Operations, Ground Handling and Bus Operations. These reportable segments are the basis on which the Group reports its primary segment information, the principal activities of each are as follows:

• Terminal operations: Operating terminal buildings, the car park and the general aviation terminal, the Group companies included in this segmentareTAVİstanbul,TAVEsenboğa,TAVİzmir,TAVEge,TAVGazipaşa,TAVTunisia,TAVBatumi,TAVTbilisi,BatumiAirportLLCandTAVMacedonia.TAVTbilisi,TAVBatumi,TAVTunisia,TAVGazipaşaandTAVMacedoniaalsoincludethegroundhandlingoperations,andparking-apron-taxi ways as they are not outsourced and are run by the airport.

• Catering operations: Managing all food and beverage operations of the terminal, both for the passengers and the terminal personnel, whichisrunbyBTA,BTAGeorgia,BTATunisia,BTAMacedonia,Cakes&BakesandBTADenizyolları.

• Duty free operations: Sales of duty free goods for the international arriving and departing passengers. The Group operates its duty free servicesthroughATÜ,ATÜGeorgia,ATÜTunisia,ATÜMacedoniaandATÜLatvia.

• Ground handling and bus operations:Providingtraffic,ramp,flightoperation,cargoandallothergroundhandlingservicesfordomesticandinternationalflightsundertheCivilAviationLegislationLicense.TheGroupoperatesthegroundhandlingservicesthroughHAVAŞ,CAS,TAVGözen,TGS,HAVAŞEurope,HAVAŞEuropeHelsinkiandHAVAŞEuropeStockholm.HAVAŞalsoprovidesbusoperations.

• Other:Providingloungeservices,ITandSecurityservices,theGroupcompaniesincludedinthissegmentareTAVHolding,TAVİşletme,TAVİşletmeGeorgia,TAVİşletmeTunisia,TAVİşletmeTunisiaPlus,TAVİşletmeMacedonia,TAVBilişim,TAVGüvenlikandTAVLatvia.

Information regarding the results of each reportable segment is included below. Performance is measured based on segment operating profit, as included in the internal management reports that are reviewed by the Group’s Management. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on arm’s length basis.


TAV

Hav

alim

anla

rı H

oldi

ng A

.Ş. a

nd it

s Su

bsid

iarie

sN

otes

to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

As a

t an

d fo

r th

e ye

ar e

nded

31

Dec

embe

r 20

11(A

mou

nts

expr

esse

d in

Eur

o un

less

oth

erw

ise

stat

ed)

Ope

ratin

g Se

gmen

ts

Term

inal

Ope

ratio

nsCa

terin

g O

pera

tions

Dut

y Fr

ee O

pera

tions

Gro

und

Han

dlin

g an

d Bu

s O

pera

tions

Oth

er O

pera

tions

Tota

l20

1120

1020

1120

1020

1120

1020

1120

1020

1120

1020

1120

10To

tal e

xter

nal

reve

nues

330,

736,

943

304,

794,

346

59,5

42,7

9953

,218

,141

202,

669,

820

165,

835,

658

195,

848,

653

161,

894,

686

23,0

65,3

8627

,535

,702

811,

863,

601

713,

278,

533

Inte

r-se

gmen

t re

venu

e11

8,43

5,53

310

1,63

0,92

611

,293

,619

13,3

77,8

67-

-21

1,79

725

5,26

618

,342

,311

19,0

51,2

8814

8,28

3,26

013

4,31

5,34

7Co

nstr

uctio

n re

venu

e64

,737

,429

41,6

27,9

67-

--

--

--

-64

,737

,429

41,6

27,9

67Co

nstr

uctio

n ex

pend

iture

(64,

737,

429)

(41,

410,

646)

--

--

--

--

-(64

,737

,429

)(4

1,41

0,64

6)In

tere

st in

com

e12

,869

,206

15,2

05,4

8841

6,10

243

1,67

291

6,93

086

7,56

165

6,46

959

3,16

25,

922,

879

2,95

9,62

420

,781

,586

20,0

57,5

07In

tere

st e

xpen

se(7

3,40

8,94

4)(7

0,45

8,91

9)(2

03,0

89)

(257

,860

)(1

,455

,415

)(1

,330

,650

)(7

,073

,864

)(6

,454

,905

)(5

,831

,351

)(8

,762

,614

)(8

7,97

2,66

3)(8

7,26

4,94

8)D

epre

ciat

ion

and

amor

tisat

ion

(49,

154,

923)

(41,

945,

246)

(1,9

31,9

38)

(2,3

67,4

77)

(1,0

14,4

43)

(936

,237

)(1

1,78

7,36

2)(1

2,96

4,91

2)(1

,252

,402

)(1

,330

,713

)(6

5,14

1,06

8)(5

9,54

4,58

5)Re

port

able

se

gmen

t op

erat

ing

prof

it / (

loss

)11

4,54

0,27

496

,399

,806

4,09

3,50

54,

847,

132

20,1

59,9

4714

,434

,623

22,5

24,3

2912

,573

,364

(2,1

72,2

91)

(5,9

68,2

98)

159,

145,

764

122,

286,

627

Capi

tal

expe

nditu

re82

,913

,649

87,5

89,8

024,

976,

894

2,81

7,95

62,

398,

984

927,

064

13,4

03,3

2230

,788

,076

4,87

8,34

01,

538,

257

108,

571,

189

123,

661,

155

Term

inal

Ope

ratio

nsCa

terin

g O

pera

tions

Dut

y Fr

ee O

pera

tions

Gro

und

Han

dlin

g an

d Bu

s O

pera

tions

Oth

er O

pera

tions

Tota

l31

Dec

embe

r 20

1131

Dec

embe

r 20

1031

Dec

embe

r 20

1131

Dec

embe

r 20

1031

Dec

embe

r 20

1131

Dec

embe

r 20

1031

Dec

embe

r 20

1131

Dec

embe

r 20

1031

Dec

embe

r 20

1131

Dec

embe

r 20

1031

Dec

embe

r 20

1131

Dec

embe

r 20

10Re

port

able

se

gmen

t ass

ets

1,67

0,27

2,81

11,

663,

658,

919

22,3

77,9

3621

,120

,961

31,8

52,4

8824

,174

,029

144,

205,

207

147,

782,

385

212,

540,

279

182,

738,

137

2,08

1,24

8,72

12,

039,

474,

431

Oth

er

inve

stm

ents

--

--

--

--

24,2

3824

,238

24,2

3824

,238

Repo

rtab

le

segm

ent

liabi

litie

s1,

206,

338,

151

1,23

8,13

1,23

415

,836

,332

13,1

53,0

6238

,377

,316

37,7

27,0

6912

0,79

3,52

413

3,05

3,54

013

7,47

9,82

777

,024

,073

1,51

8,82

5,15

01,

499,

088,

978



Reconciliations of reportable segment revenues, profit before tax, assets and liabilities and other material items

Revenues 2011 2010

Total revenue for reportable segments 983,476,593 842,634,857

Other revenue 41,407,697 46,586,990

Eliminationofinter-segmentrevenue (148,283,260) (134,315,347)

Consolidated revenue 876,601,030 754,906,500

Operating profit 2011 2010

Segment operating profit 161,318,055 128,254,925

Other operating loss (2,172,291) (5,968,298)

Eliminationofinter-segmentoperatingprofit (531,166) (1,536,112)

Consolidated operating profit 158,614,598 120,750,515

Finance income 29,103,554 31,885,484

Finance expense (96,113,454) (89,169,954)

Consolidated profit before tax 91,604,698 63,466,045

Assets 31 December 2011 31 December 2010

Total assets for reportable segments 1,868,708,442 1,856,736,294

Other assets 212,540,279 182,738,137

Consolidated total assets 2,081,248,721 2,039,474,431

Liabilities 31 December 2011 31 December 2010

Total liabilities for reportable segments 1,381,345,323 1,422,064,905

Other liabilities 137,479,827 77,024,073

Consolidated total liabilities 1,518,825,150 1,499,088,978

Interest income 2011 2010

Total interest income for reportable segments 14,858,707 17,097,883

Other interest income 5,922,879 2,959,624

Eliminationofinter-segmentinterestincome (4,480,820) (5,438,060)

Consolidated interest income 16,300,766 14,619,447

Interest expense 2011 2010

Total interest expense for reportable segments (82,141,312) (78,502,334)

Other interest expense (5,831,351) (8,762,614)

Eliminationofinter-segmentinterestexpense 4,520,330 5,460,909

Consolidated interest expense (83,452,333) (81,804,039)

42



Geographical information

The main geographical segments of the Group are comprised of Turkey, Tunisia, Georgia and Macedonia.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of revenue. Segment assets are based on the geographical location of the assets.

Revenue 2011 2010

Turkey 735,306,026 644,092,838

Macedonia 74,318,587 41,291,630

Tunisia 37,548,985 47,998,041

Georgia 23,309,383 19,945,184

Other 6,118,049 1,578,807

Consolidated revenue 876,601,030 754,906,500

Non-current assets 31 December 2011 31 December 2010

Turkey 696,374,548 749,020,034

Tunisia 514,239,122 511,310,316

Macedonia 85,759,252 28,301,813

Georgia 78,411,367 82,944,828

Other 689,005 340,169

Consolidated non-current assets 1,375,473,294 1,371,917,160



7. ACQUISITIONS OF JOINTLY CONTROLLED ENTITIES AND ADDITIONAL INTERESTS Acquisitions of jointly controlled entities

Acquisitionof50%sharesofHAVAŞEurope:

On12April2010,HAVAŞacquired50%shareholdingofHAVAŞEuropeforaconsiderationofEUR3,250,000fromBalticAviation.Afterthetransferof50%ofshares,HAVAŞEurope,whichprovidesgroundservicesatLatviaRigaInternationalAirportandHelsinkiInternationalAirport is proportionately consolidated in the Group’s consolidated financial statements.

Pre-acquisition carrying amounts were determined based on the applicable IFRSs immediately before the acquisition. The values of assets, liabilities and contingent liabilities recognized on acquisition are their estimated fair values.

The fair value of the customer relationship acquired is based on the excess earnings method.

UnderIFRS3,customerrelationshipsattheamountofEUR637,000havebeenrecognizedasintangibleassetsarisingfromtheacquisitionof50%shareofHAVAŞEurope.

Identifiable assets acquired and liabilities assumedRecognized values on

acquisition

Property and equipment 89,068

Intangible assets 637,483

Other investments 713

Other non-current assets 131,434

Deferred tax liabilities (95,550)

Inventories 22,177

Trade receivables 83,662

Cash and cash equivalents 8,234

Other assets 64,622

Loans and borrowings (53,223)

Trade payables (141,341)

Other liabilities and tax payables (114,151)

Total identifiable net assets 633,128

Goodwill 2,616,872

Total consideration, satisfied by cash 3,250,000

Cash consideration paid 3,250,000

Cash and cash equivalents acquired (8,234)

Net cash outflow arising on acquisition 3,241,766

44



Acquisitions of additional interest

Acquisition of 16.67% shares of HAVAŞ Europe:

On21December2011,HAVAŞacquired16.67%shareholdingofHAVAŞEuropeinreturnforEUR1,001,418,increasingitstotalsharefrom50%to66.67%.Afterthetransferof16.67%shares,HAVAŞEuropeisfullyconsolidatedwiththenon-controllinginterest’sownershipreflectedasanon-controllinginterest.

Identifiable assets acquired and liabilities assumedRecognized values on

acquisition

Property and equipment 5,590,821

Intangible assets 2,444,556

Other non-current assets 64,714

Deferred tax assets 48,822

Inventories 89,735

Trade receivables 883,864

Due from related parties 1,004

Cash and cash equivalents 67,640

Other assets 389,350

Loans and borrowings (3,909,331)

Trade payables (1,450,381)

Due to related parties (34,419)

Other liabilities (1,666,605)

Provisions (536,162)

Deferred tax liabilities (329,700)

Total identifiable net assets 1,653,907


Total net identifiable assets (1,653,907)

Fair value of non-controlling interest 551,302

Fair value of previously held interest 826,954

Goodwill 725,767


Cash and cash equivalents acquired (33,820)

Net cash outflow arising on acquisition 967,598



8. CONSTRUCTION REVENUE AND EXPENDITURE

An analysis of the Group’s construction revenue and expenditure for the years ended 31 December is as follows:

2011 2010

Construction expenditure 64,737,429 41,410,646

Mark-up on construction expenditure - 217,321

Construction revenue 64,737,429 41,627,967

Construction revenue and expenditure for the years ended 31 December 2011 and 2010 relate to the construction of Skopje International Airport,OhridInternationalAirport,EnfidhaInternationalAirportandGazipaşaAirport.

9. OPERATING REVENUE

An analysis of the Group’s operating revenue for the years ended 31 December is as follows:

2011 2010

Sales of duty free goods 202,669,820 165,835,658

Ground handling income 191,868,004 152,044,794

Aviation income 177,511,683 169,691,514

Commission from sales of duty free goods 87,217,851 77,824,570

Catering services income 51,622,007 47,753,898

Area allocation income 26,463,109 21,308,147

Income from car parking operations and valet service income 23,656,57 25,028,222

Bus services income 20,330,105 21,373,448

Income from lounge services 16,609,929 21,649,152

Other operating revenue 13,914,522 10,769,130

Total operating revenue 811,863,601 713,278,533

46



10. OTHER OPERATING INCOME

An analysis of the Group’s other operating income for the years ended 31 December is as follows:

2011 2010Advertising income 13,671,974 13,045,190

Rent income from sublease 11,539,567 9,678,898

Insuranceincome(*) - 9,672,529

Gain on sale of property and equipment 1,844,005 386,413

Other income 8,794,247 6,844,826

Total other operating income 35,849,793 39,627,856

(*)ForthedamageoccurredonthegeneratorsoftheTrigenerationProjectofTAVİstanbulin2010,insuranceincomewasaccruedforthereceivables from insurance companies (see note 17).

11. PERSONNEL EXPENSES

An analysis of the Group’s personnel expenses for the years ended 31 December is as follows:

2011 2010Wages and salaries 182,393,865 173,096,264

Compulsory social security contributions 27,838,508 25,642,117

Employmentterminationbenefitexpenses 5,950,613 4,393,388

Other personnel expenses 19,964,594 16,163,158

Total personnel expenses 236,147,580 219,294,927

12. CONCESSION AND RENT EXPENSES

An analysis of the Group’s concession and rent expenses for the years ended 31 December is as follows:

2011 2010TAVİstanbul 122,592,025 117,275,560

TAVTunisia(*) 4,331,798 10,250,799

TAVMacedonia(**) 2,515,800 2,112,487

Total concession rent expenses 129,439,623 129,638,846 RentexpenseisrelatedwithTAVİstanbul,concessionrentexpenseisrelatedwithTAVTunisiaandTAVMacedonia.

(*)TAVTunisiahasaconcessionperiodof40yearsandannualconcessionfeeispaidbasedontheannualrevenueofMonastirandEnfidhaAirports.Theconcessionfeeiscomputedatanincreasingratebetween11%and26%oftheannualrevenues.BasedonthenegotiationswithOACA,theconcessionfeepayablefor2011isreducedbyEUR4.6millionandconcessionfeepayablesfor2011,2012,and2013aredeferred by 3 years to 2014, 2015 and 2016.(**)TheconcessionfeeofTAVMacedoniais15%ofthegrossannualturnoveruntilthenumberofpassengersusingthetwoairportsreachesto1million,andwhenthenumberofpassengersexceeds1million,thispercentageshallchangebetween4%and2%dependingon the number of passengers.



13. OTHER OPERATING EXPENSES

An analysis of the Group’s other operating expenses for the years ended 31 December is as follows:

2011 2010

VAT non-recoverable 12,333,155 12,349,059

Utility cost 11,126,319 13,366,931

Maintenance expenditures 10,907,002 9,785,423

Insurance expense 10,187,116 11,105,294

Cleaning expense 8,761,161 8,982,899

Consultancy expense 7,383,364 10,707,134

Provision expenses 7,327,641 1,336,568

Advertisement and marketing expenses 5,762,392 2,984,281

Rent expense 4,907,863 3,168,748

Taxes 4,819,371 3,431,711

Traveling and transportation expenses 3,929,676 3,674,701

Communication and stationary expenses 3,547,963 3,893,859

Representation expenses 2,065,056 1,612,240

Security cost 1,475,636 937,438

Impairmentlossonpropertyandequipment(*) - 6,638,910

Other operating expenses 9,100,157 6,464,399

Total other operating expenses 103,633,872 100,439,595

(*)ImpairmentlossrecognisedisrelatedwiththefireintheTrigenerationProjectofTAVİstanbul(seeNote17).

48



14. DEPRECIATION AND AMORTISATION

An analysis of the Group’s accumulated depreciation and amortisation for the year ended 31 December is as follows:

Airport operation rightProperty and

equipmentOther intangible

assets Total

Balance at 1 January 2010 68,808,174 78,156,329 14,522,282 161,486,785

Effectofmovementsinexchangerates 481,595 474,441 43,156 999,192

Charge for the period 32,765,582 21,218,211 5,560,792 59,544,585

Disposals - (2,354,352) (75,063) (2,429,415)

Balance at 31 December 2010 102,055,351 97,494,629 20,051,167 219,601,147

Balance at 1 January 2011 102,055,351 97,494,629 20,051,167 219,601,147

Effectofmovementsinexchangerates 2,077,414 (1,377,386) (201,754) 498,274

Charge for the period 36,729,520 23,034,317 5,377,231 65,141,068

Disposals - (1,898,409) (186,075) (2,084,484)

Effectofchangeingroupstructure(*) - 519,711 32,687 552,398

Balance at 31 December 2011 140,862,285 117,772,862 25,073,256 283,708,403

(*)Effectofacquisitionof16.67%sharesofHAVAŞEuropein2011.



15. FINANCE INCOME AND FINANCE COSTS

Recognised in profit or loss

An analysis of the Group’s finance income and finance costs for the years ended 31 December is as follows:

2011 2010

Interest income on bank deposits and intercompany loans 16,300,766 14,619,447

Discountincome(*) 12,753,193 10,264,378

Foreign exchange gain, net - 6,179,665

Other finance income 49,595 821,994

Finance income 29,103,554 31,885,484

Interest expense on financial liabilities and intercompany loans (83,452,333) (81,804,039)

Foreign exchange loss, net (4,960,181) -

Commission expense (1,829,309) (1,979,851)

Otherfinancecosts(**) (5,871,631) (5,386,064)

Finance costs (96,113,454) (89,169,954)

Net finance costs (67,009,900) (57,284,470)

(*)DiscountincomeofEUR12,722,651includesunwindingofdiscountonguaranteedpassengerfeereceivablesfromDHMİ(concessionreceivables).(2010:EUR10,242,300)(**)Otherfinancecostsincludebankchargesandconsultancyexpenseschargedinaccordancewiththerequirementsofprojectfinancingfacilities.

Recognised in other comprehensive income

2011 2010

Effectiveportionofchangesinfairvalueofcashflowhedges (16,117,193) (13,594,103)

Foreigncurrencytranslationdifferencesforforeignoperations (3,267,058) 3,237,686

Taxoncashflowhedgereserves 6,276,998 4,868,363

Finance costs recognised in other comprehensive income, net of tax (13,107,253) (5,488,054)

50



16. TAX EXPENSE

An analysis of the Group’s tax expense for the years ended 31 December is as follows:

Tax recognised in profit or loss

2011 2010

Current tax expense

Current period tax expense 33,147,025 33,632,939

Adjustmentsforprioryears(*) 2,948,958 (306,225)

36,095,983 33,326,714

Deferred tax expense / (income)

Originationandreversaloftemporarydifferences 4,503,072 (18,047,173)

Changeinpreviouslyrecognisedinvestmentincentives(**) (13,345,563) 6,383,194

Change in previously recognised tax losses 12,509,252 (9,836,620)

3,666,761 11,826,115

Total tax expense 39,762,744 (21,500,599)

(*)AdjustmentsforpriorperiodsamountingtoEUR2,930,708consistoftaxexpensesthatGrouphasincurredfromtaxamnestywithinthecontext of The Law Concerning the Restructuring of Certain Receivables, and the Amendment of the Social Security Law and the General Health Law and Certain Other Laws and Decrees with the Force of Law (The Law numbered 6111). (**)SeeNote22.

Tax recognised in other comprehensive income

2011 2010

Before tax Tax benefit Net of tax Before tax Tax benefit Net of tax

Revaluation of property and equipment 68,320 - 68,320 68,320 - 68,320

Effectiveportionofchangesinfairvalueofcashflowhedges (16,117,193) 6,276,998 (9,840,195) (13,594,103) 4,868,363 (8,725,740)

Foreigncurrencytranslationdifferencesfor foreign operations (3,267,058) - (3,267,058) - 3,237,686

(19,315,931) 6,276,998 (13,038,933) (10,288,097) 4,868,363 (5,419,734)



Reconciliation of effective tax rate

Thereportedtaxexpensesfortheyearsended31December2011and2010aredifferentthantheamountscomputedbyapplyingthestatutory tax rate to profit before tax of the Group, as shown in the following reconciliation:

% 2011 % 2010


Total tax expense 39,762,744 11,826,115

Profit before tax 91,604,698 63,466,045

Tax using the Company’s domestic tax rate 20 18,320,940 20 12,693,209

Taxeffectsof:

- not deductible expenses 4 3,447,212 2 1,298,371

- translation of non-monetary items according to IAS 21 5 4,995,011 14 8,510,047

- change in previously recognised investment incentives (15) (13,345,563) 10 6,383,194

- change in previously recognised tax losses 19 17,065,507 - -

- tax exempt income (1) (892,943) (1) (405,953)

-translationeffectontaxlosses 2 2,196,850 (2) (1,117,220)

- recognition of previously unrecognised tax losses - - (16) (9,836,620)

- current year losses for which no deferred tax asset is recognized 7 6,166,148 3 2,062,178

-effectofdifferenttaxratesforforeignjurisdictions (4) (3,461,044) (4) (2,284,108)

- adjustments for prior periods 3 2,948,958 - (306,225)

-changeinunrecognizedtemporarydifferences - 365,134 1 411,902

- utilization of previously not recognised carry forward losses - - (5) (3,047,108)

-taxeffectofsaleofinvestmentsrecognisedinequity - - (7) (4,416,944)

- other consolidation adjustments 2 1,956,534 2 1,881,392

Tax expense 43 39,762,744 19 11,826,115

52



Corporate tax:

2011 2010

Corporate tax provision 33,147,025 33,632,939

Adjustments for prior periods 2,948,958 (306,225)

Add: taxes payable from previous period 9,920,571 1,391,675

Less: corporation taxes paid during the period (34,234,346) (24,797,818)

Current tax liabilities 11,782,208 9,920,571 The Turkish entities within the Group are subject to Turkish corporate taxes. Provision is made in the accompanying consolidated financial statements for the estimated charge based on the each of the Group entities’ results for the year.

Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses, and by deducting dividends received from resident companies, other exempt income and investment incentives utilised.

InTurkey,advancetaxreturnsarefiledonaquarterlybasis.Theadvancecorporateincometaxrateat31December2011is20%(31December2010:20%).

Lossescanbecarriedforwardforoffsettingagainstfuturetaxableincomeforupto5years.Lossescannotbecarriedback. Georgiancorporateincometaxisleviedatarateof15%onincomelessdeductibleexpenses.

Tunisiancorporateincometaxisleviedatarateof30%onincomelessdeductibleexpenses.Accordingtoconcessionagreement,TAVTunisia is exempt from corporate tax for a period of 5 years starting from the concession agreement date.

Macedoniancorporateincometaxisleviedatarateof10%onincomelessdeductibleexpenses.Unlessthereisadividenddistribution,no corporate tax is levied. Losses cannot be carried forward in determining corporate tax base. Corporate taxpayers should pay tax on their non-deductibleexpensesatarateof%10.However,indeterminingthebaseofthetaxovernon-deductibleexpenses,lossescanbecarriedforward for five years according to the amendment on tax legislation.

Latviancorporateincomeisleviedatarateof15%onincomelessdeductibleexpenses.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns between 1-25 April following the close of the accounting year to which they relate. Tax authorities may, however, examine such returns and the underlying accounting records and may revise assessments within five years.

Investment allowance:

TheTemporaryArticle69addedtotheIncomeTaxLawno.193withtheLawno.5479,whichbecameeffectivestartingfrom1January2006,uponbeingpromulgatedintheOfficialGazetteno.26133dated8April2006,statingthattaxpayerscandeducttheamountoftheinvestmentallowanceexemptionwhichtheyareentitledtoaccordingtolegislativeprovisionseffectiveat31December2005(includingrulings on the tax rate) only from the taxable income of 2006, 2007 and 2008. Accordingly, the investment incentive allowance practice was ended as of 1 January 2006. At this perspective, an investment allowance which cannot be deducted partially or fully in three years time was not allowed to be carried forward to the following years and became unavailable as of 31 December 2008. On the other hand, the Article19oftheIncomeTaxLawwasannulledandtheinvestmentallowancepracticewasendedasof1January2006witheffectivenessof the Article 2 and the Article 15 of the Law no. 5479 and the investment allowance rights on the investment expenditures incurred during the period of 1 January 2006 and 8 April 2006 became unavailable.



However, at 15 October 2009, the Turkish Constitutional Court decided to cancel the clause no. 2 of the Article 15 of the Law no. 5479 and the expressionsof“2006,2007,2008”intheTemporaryArticle69relatedtoinvestmentallowancementionedabovethatenableseffectivenessof the Law as of 1 January 2006 rather than 8 April 2006, since it is against the Constitution. Accordingly, the time limitations for the carried forward investment allowances that were entitled to in the previous period of mentioned date and the limitations related with the investments expenditures incurred between the issuance date of the Law promulgated and 1 January 2006 were eliminated. According to the decision of Turkish ConstitutionalCourt,cancellationrelatedwiththeinvestmentallowancebecameeffectivewithpromulgationofthedecisionontheOfficialGazetteandthedecisionoftheTurkishConstitutionalCourtwaspromulgatedintheOfficialGazetteno.27456dated8January2010.

According to the decision mentioned above, the investment allowances carried forward to the year 2006 due to the lack of taxable income and the investmentallowancesearnedthroughtheinvestmentsstartedbefore1January2006andcontinuedafterthatdateconstitutingeconomicandtechnicalintegritywillbeusednotonlyin2006,2007and2008,butalsointhefollowingyears.Inaddition,40%ofinvestmentexpendituresthatare realized between 1 January 2006 and 8 April 2006, within the context of the Article 19 of the Income Tax Law will have the right for investment allowance exemption.

The Article 5 of the Law no. 6009 “Law on the Amendment of the Income Tax Law and Certain Laws and Decree Laws” which was promulgated in theOfficialGazetteon1August2010regulatedtheamountofinvestmentincentivetobebenefitedincomputingthecorporatetaxbaseafterthecancellation of the Article no.2 of the Law no. 5479. According to the Law no. 6009, the taxpayers were allowed to benefit from the investment incentivestemmingfromtheperiodsbeforethepromulgationoftheLawno.5479,upto25%ofthetaxableincomeoftherespectivetaxperiod.Suchchangeiseffectiveincludingthefiscalyearendingon31December2011.

However, on 17 February 2012, the Turkish Constitutional Court decided to cancel the Article 5 of the Law no. 6009 and the cancelation of the article waspromulgatedintheOfficialGazetteno.28208dated18February2012.Accordingly,taxpayersareallowedtobenefitfromtheinvestmentincentive without any limitation

Income withholding tax:

AccordingtoCorporateTaxLawcodenumbered5520article15,companieswhoareresidentinTurkey,shouldcalculate15%incomewithholdingtax on dividends distributed to non-resident companies, individuals and resident individuals. Undistributed dividends incorporated in share capital are not subject to income withholding taxes.

Transfer pricing regulations:

In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated 18 November 2007 sets details about implementation.

If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not set in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for corporate income tax purposes.

The Law numbered 6111

TheLawnumbered6111hasbeenputintoeffectfollowingitspromulgationintheOfficialGazetteon25February2011.Accordingtothelaw,apartfrom the VAT refundable or/and already refunded in cash, no tax investigation or tax assessment regarding corporate and value added taxes will be made for the tax-payers who increase their tax bases for the years between 2006 and 2009.

Some of the subsidiaries of the Group have benefited from the aforementioned law for the fiscal years 2006-2009 for corporate and value addedtaxesbyincreasingtheirtaxbases,whichresultedinadditionalandcorporatetaxesamountingtoEUR2,930,708andVATamountingtoEUR1,269,232.Therelatedcorporatetaxexpenseisincludedinthecurrenttaxexpensefortheperiodasanadjustmentforpriorperiodsintheaccompanying consolidated financial statements.


TAV

Hav

alim

anla

rı H

oldi

ng A

.Ş. a

nd it

s Su

bsid

iarie

sN

otes

to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

As a

t an

d fo

r th

e ye

ar e

nded

31

Dec

embe

r 20

11(A

mou

nts

expr

esse

d in

Eur

o un

less

oth

erw

ise

stat

ed)

17. P

ROPE

RTY

AND

EQ

UIP

MEN

T

Land

Build

ings

Mac

hine

ry a

nd

equi

pmen

tVe

hicl

esFu

rnitu

re a

nd

fixtu

res

Leas

ehol

ds

impr

ovem

ents

Cons

truc

tion

in

prog

ress

Tota

lCo

st

Bala

nce

at 1

Jan

uary

201

014

,026

,022

380,

627

56,3

14,3

7819

,373

,671

18

,853

,278

35,3

45,7

0051

,390

,219

195,

683,

895

Effectofmovem

entsinexchangerates

397,

489

6,07

614

3,41

015

3,92

439

8,89

248

8,23

5(3

,417

)1,

584,

609

Additions(*)

--

25,4

58,5

413,

479,

288

5,17

0,04

93,

932,

187

42,5

03,0

0880

,543

,073

Dis

posa

ls-

-(1

79,0

52)

(438

,239

)(6

20,0

19)

(2,5

88,4

75)

-(3

,825

,785

)

Acquisitionsthroughbusinesscom

binations(**)

--

87,5

54-

-1,

514

-89

,068

Impairm

entlosses(***)

--

--

--

(6,6

38,9

10)

(6,6

38,9

10)

Transfers(****)

--

1,00

325

,157

6,19

554

,091

,069

(54,

529,

965)

(406

,541

)

Bala

nce

at 3

1 D

ecem

ber

2010

14,4

23,5

1138

6,70

381

,825

,834

22,5

93,8

0123

,808

,395

91,2

70,2

3032

,720

,935

267,

029,

409

Bala

nce

at 1

Jan

uary

201

114

,423

,511

386,

703

81,8

25,8

3422

,593

,801

23,8

08,3

9591

,270

,230

32,7

20,9

3526

7,02

9,40

9Effectofmovem

entsinexchangerates

1,20

7,46

118

,761

(2,8

11,8

90)

303,

868

(1,1

81,3

03)

(1,4

72,4

55)

(20,

951)

(3,9

56,5

09)

Additions(*)

--

7,47

9,76

94,

725,

843

4,89

3,09

64,

257,

508

22,4

11,5

5443

,767

,770

Dis

posa

ls(7

,663

,815

)(8

0,50

9)(7

25,2

17)

(678

,583

)(5

08,4

17)

(754

,637

)(2

,601

,766

)(1

3,01

2,94

4)

Transfers(****)

--

52,6

87(5

2,68

7)39

,554

43,3

10,0

95(4

3,75

8,14

9)(4

08,5

00)

Effectofchangeingroupstructure(*****)

--

3,00

3,44

313

5,25

675

,871

102,

518

-3,

317,

088

Bala

nce

at 3

1 D

ecem

ber

2011

7,96

7,15

732

4,95

588

,824

,626

27,0

27,4

9827

,127

,196

136,

713,

259

8,75

1,62

329

6,73

6,31

4

(*)Borrowingcostsam

ountingtoEUR298,139arecapitalisedonpropertyandequipmentin2011(2010:EUR701,163).Thecapitalisationrateusedtodeterminetheam

ountofborrowingcosts

eligibleforcapitalisationis100%(2010:100%).

(**)Effectofacquisitionof50%sharesofHAVAŞEuropein2010(seeNote3(a)).

(***)TherewasafireintheTrigenerationProjectofTAVİstanbulinMarch2010whichiscoveredbyaninsurancepolicy.Im

pairm

entlossam

ountingtoEUR6,638,910hasbeenrecognisedin

the

cons

olid

ated

fin

anci

al s

tate

men

ts fo

r the

dam

age

occu

rred

on th

e ge

nera

tors

. Add

ition

ally

, an

inco

me

accr

ual i

s bo

oked

for t

he a

mou

nt th

at w

ill b

e co

mpe

nsat

ed b

y th

e in

sura

nce

com

pany

for t

he d

amag

e an

d lo

ss o

f op

erat

ions

.(****)TheremainingportionoftransferamountingtoEUR408,500(2010:EUR406,541)com

prisestransfertointangibleassets.

(*****)Effectofacquisitionofadditional16.67%sharesofHAVAŞEuropein2011(seeNote3(a)).


TAV

Hav

alim

anla

rı H

oldi

ng A

.Ş. a

nd it

s Su

bsid

iarie

sN

otes

to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

As a

t an

d fo

r th

e ye

ar e

nded

31

Dec

embe

r 20

11(A

mou

nts

expr

esse

d in

Eur

o un

less

oth

erw

ise

stat

ed)

Accu

mul

ated

dep

reci

atio

nLa

ndBu

ildin

gsM

achi

nery

and

eq

uipm

ent

Vehi

cles

Furn

iture

and

fix

ture

sLe

aseh

olds

im

prov

emen

tsCo

nstr

uctio

n in

pr

ogre

ssTo

tal

Bala

nce

at 1

Jan

uary

201

0-

81,5

8142

,625

,987

10,2

93,0

5912

,180

,527

12,9

75,1

75-

78,1

56,3

29Effectofmovem

entsinexchangerates

-2,

037

42,4

5650

,611

251,

295

128,

042

-47

4,44

1

Dep

reci

atio

n fo

r the

per

iod

-37

,143

4,70

2,93

63,

518,

019

3,20

0,98

29,

759,

131

-21

,218

,211

Dis

posa

ls-

-(6

2,91

2)(3

40,2

70)

(296

,201

)(1

,654

,969

)-

(2,3

54,3

52)

Bala

nce

at 3

1 D

ecem

ber

2010

-12

0,76

147

,308

,467

13,5

21,4

1915

,336

,603

21,2

07,3

79-

97,4

94,6

29Ba

lanc

e at

1 J

anua

ry 2

011

-12

0,76

147

,308

,467

13,5

21,4

1915

,336

,603

21,2

07,3

79-

97,4

94,6

29Effectofmovem

entsinexchangerates

-11

,663

(210

,128

)22

3,55

7(7

81,5

62)

(620

,915

)-

(1,3

77,3

85)

Dep

reci

atio

n fo

r the

per

iod

-35

,696

5,06

8,86

62,

941,

396

3,07

1,71

511

,916

,644

-23

,034

,317

Dis

posa

ls-

(10,

936)

(373

,658

)(4

94,0

42)

(439

,194

)(5

80,5

80)

-(1

,898

,410

)

Effectofchangeingroupstructure(*)

-44

5,60

235

,413

17,0

8921

,607

-51

9,71

1

Bala

nce

at 3

1 D

ecem

ber

2011

-15

7,18

452

,239

,149

16,2

27,7

4317

,204

,651

31,9

44,1

35-

117,

772,

862

Carr

ying

am

ount

sAt

31

Dec

embe

r 20

1014

,423

,511

265,

942

34,5

17,3

679,

072,

382

8,47

1,79

270

,062

,851

32,7

20,9

3516

9,53

4,78

0At

31

Dec

embe

r 20

117,

967,

157

167,

771

36,5

85,4

7710

,799

,755

9,92

2,54

510

4,76

9,12

48,

751,

623

178,

963,

452

(*)Effectofacquisitionofadditional16.67%sharesofHAVAŞEuropein2011(seeNote3(a)).

ThereisapledgeonvehiclesofHAVAŞamountingtoEUR3,148,200(31Decem

ber2010:EUR2,037,126)fortheoutstandingnotespayableamountingtoEUR1,049,400(31Decem

ber

2010:EUR633,560).

Thereisapledgeonpropertyandequipm

entofTAVTunisiaam

ountingtoEUR2,999,037asat3

1Decem

ber2011(31Decem

ber2010:EUR3,389,113)withrespecttotheborrowings

obta

ined

fro

m f

inan

cial

inst

itutio

ns.

56



18. INTANGIBLE ASSETS

Purchased software and brandmarks

Internally generated

softwareCustomer

relationships DHMİ license Total

CostBalance at 1 January 2010 11,636,075 3,754,038 32,708,550 7,743,771 55,842,434Effectofmovementsinexchangerates 76,896 - - - 76,896Additions 1,046,598 - - - 1,046,598Disposals (80,921) - - - (80,921)Acquisitionsthroughbusinesscombinations(*) 483 - 637,00 - 637,484Transfersfromconstructioninprogress(**) 69,090 337,451 - - 406,541Balance at 31 December 2010 12,748,221 4,091,489 33,345,551 7,743,771 57,929,032

Balance at 1 January 2011 12,748,221 4,091,489 33,345,551 7,743,771 57,929,032Effectofmovementsinexchangerates (270,298) - - - (270,298)Additions 1,185,637 - - - 1,185,637Disposals (201,277) - - - (201,277)Transfersfromconstructioninprogress(**) 408,500 - - - 408,500Effectofchangeingroupstructure(***) 155,967 - 1,783,950 - 1,939,917Balance at 31 December 2011 14,026,750 4,091,489 35,129,501 7,743,771 60,991,511

Amortisation

Balance at 1 January 2010 6,125,859 809,035 7,587,388 - 14,522,282Effectofmovementsinexchangerates 43,156 - - - 43,156Amortisation for the period 2,226,294 272,766 3,061,732 - 5,560,792Disposals (75,063) - - - (75,063)Balance at 31 December 2010 8,320,246 1,081,801 10,649,120 - 20,051,167

Balance at 1 January 2011 8,320,246 1,081,801 10,649,120 - 20,051,167Effectofmovementsinexchangerates (201,754) - - - (201,754)Amortisation for the period 2,010,883 272,766 3,093,582 - 5,377,231Disposals (186,075) - - - (186,075)Effectofchangeingroupstructure(***) 32,687 - - - 32,687Balance at 31 December 2011 9,975,987 1,354,567 13,742,702 - 25,073,256

Carrying amounts

At 31 December 2010 4,427,975 3,009,688 22,696,431 7,743,771 37,877,865

At 31 December 2011 4,050,763 2,736,922 21,386,799 7,743,771 35,918,255

(*)Effectofacquisitionof50%sharesofHAVAŞEuropein2010(seeNote3(a)).(**)TransfersamountingtoEUR408,500(31December2010:EUR406,541)arerelatedwiththeinternallygeneratedsoftwareinprogress.(***)Effectofacquisitionofadditional16.67%sharesofHAVAŞEuropein2011(SeeNote3(a)).



ThereisapledgeonintangibleassetsofTAVTunisiaamountingtoEUR1,709(31December2010:EUR27,663)withrespecttotheborrowings from financial institutions.

DHMİlicensesthroughthepurchaseofHAVAŞsharesinyears2005and2007andpurchaseofTGSsharesintheyear2009wererecognised with indefinite useful lives since there is no foreseeable limit to the period over which they are expected to generate net cash inflows.TheDHMİlicenseassociatedwiththeacquisitionsofHAVAŞandTGSweredeemedindefinitelivedintangibleassetssince;

•withouttheselicensesgroundhandlingcompaniescouldnotoperate,•it’sdifficulttoobtainthelicence,whichrequireshighpre-operationalcostsandprocurementofworkforceandequipmentrequiredtodeliver ground handling services•thecontinuityofthelicenserequireslowannualpaymentscomparedtoinitiallicensecost.

The replacement cost method was used in order to determine the fair value of the DHMI licences for impairment testing. As a result of the impairment testing no impairment was recognized.

Goodwill An analysis of goodwill as at 31 December 2011 and 2010 is as follows:

2011 2010

Balance at 1 January 154,019,707 151,402,835

Effectofchangeingroupstructure(*) (1,891,105) -

Additionduringtheperiod(**) - 2,616,872

Balance at the end of the year 152,128,602 154,019,707

GoodwillisrelatedwiththeCGU’sHAVAŞ,TGS,HAVAŞEuropeandTAVTbilisiasat31December2011and2010.

(*)Afterthestepacquisitionofadditional16.67%sharesofHAVAŞEuropeinDecember2011,HAVAŞhasobtainedcontrolofHAVAŞEurope.AsaresultofobtainingcontroloverHAVAŞEurope,identifiableassetsacquiredandtheliabilitiesassumedarereassessedandpreviousgoodwillamountingtoEUR2,616,872arisingfromtheacquisitionof50%sharesofHAVAŞEuropein2010wasrecomputedasEUR725,767intheconsolidatedfinancialstatementsasat31December2011(seeNote7).(**)Additionamountin2010consistsofthegoodwillamountarisingonacquisitionof50%sharesofHAVAŞEurope(seeNote7).

58



Impairment testing for CGU’s

For the purpose of impairment testing, goodwill is allocated to CGU’s. The aggregate carrying amounts of goodwill allocated to each CGU are as follows:

2011 2010HAVAŞ 131,564,539 131,564,539TGS 15,979,972 15,979,972TAV Tbilisi 3,858,324 3,858,324HAVAŞEurope 725,767 2,616,872

152,128,602 154,019,707

AvaluationforthefairvaluesofHAVAŞ,TGSandTAVTbilisiasthreeseperateCGU’swasperformedbyanindependentvaluationexpert.TheincomeandmarketapproacheswereusedtodeterminethefairvaluesofHAVAŞandTAVTbilisi.Intheanalysis,incomeapproach(discountedcashflowmethod)wasmostlyused,withlowerweightingswereappliedtothevalueofHAVAŞandTAVTbilisiresultingfromthe Guideline Transaction and Company methods. For the valuation of TGS, solely income approach method was used since TGS became fully operational during 2010.

5-yearbusinessplanpreparedbythemanagementforHAVAŞ,and10-yearbusinessplanspreparedbythemanagementforTGSandTAVTbilisiwereusedinthevaluationofcompanies.ThegrowthinbusinessplanofHAVAŞandTGSisdrivenbytheopportunitiesincompanies’businesses and addition of new customers. Furthermore, since TAV Tbilisi has a limited life, the forecast of TAV Tbilisi was extended until the end of the BOT period assuming a lower growth rate and maintaining the margins estimated by the management.

As a result of the impairment testing performed on CGU basis, no impairment loss was recognised as at 31 December 2011.

Key assumptions used in discounted cash flow projections

Keyassumptionsusedincalculationofrecoverableamountsarediscountratesandterminalgrowthrates.Theseassumptionsareasfollows:

Discount rate Terminal growth rate

HAVAŞ 14% 2%

TGS 13% 2%

TAV Tbilisi 16% n.a

Discount rate

Thediscountratesusedindiscountedcashflowsaretheweightedaveragecostofcapitals(“WACC”)ofthecompanies.

TerminalgrowthratesforHAVAŞandTGSaredeterminedas2%.SinceTAVTbilisihasalimitedlife,terminalgrowthrateisnotusedinthevaluation.

Market Approach

The Guideline Transaction Method utilises valuation multiples based on actual transactions that have occurred in the subject company’s industry. These derived multiples are then applied to the appropriate operating data of the subject company to arrive at an indication of fair market value. Guideline Company Method focuses on comparing the subject company to guideline publicly-traded companies.


TAV

Hav

alim

anla

rı H

oldi

ng A

.Ş. a

nd it

s Su

bsid

iarie

sN

otes

to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

As a

t an

d fo

r th

e ye

ar e

nded

31

Dec

embe

r 20

11(A

mou

nts

expr

esse

d in

Eur

o un

less

oth

erw

ise

stat

ed)

19. A

IRPO

RT O

PERA

TIO

N R

IGH

T

Anka

ra E

senb

oğa

Inte

rnat

iona

l Ai

rpor

t

İzm

ir Ad

nan

Men

dere

s In

tern

atio

nal

Airp

ort

Tbili

si

Inte

rnat

iona

l Ai

rpor

t

Enfid

ha

Inte

rnat

iona

l Ai

rpor

tAn

taly

a G

azip

aşa

Airp

ort

Skop

je

Inte

rnat

iona

l Ai

rpor

tTo

tal

Cost

Bala

nce

at 1

Jan

uary

201

011

1,50

0,21

280

,469

,270

81,3

61,0

9450

6,68

8,47

111

,830

,138

-79

1,84

9,18

5

Effectofmovem

entsinexchangerates

--

2,40

6,33

8-

--

2,40

6,33

8

Additions(*)

--

-4,

973,

614

8,97

4,24

828

,123

,622

42,0

71,4

84

Bala

nce

at 3

1 D

ecem

ber

2010

111,

500,

212

80,4

69,2

7083

,767

,432

511,

662,

085

20,8

04,3

8628

,123

,622

836,

327,

007

Bala

nce

at 1

Jan

uary

201

111

1,50

0,21

280

,469

,270

83,7

67,4

3251

1,66

2,08

520

,804

,386

28,1

23,6

2283

6,32

7,00

7

Effectofmovem

entsinexchangerates

--

7,30

9,77

6-

--

7,30

9,77

6

Additions(*)

--

-4,

309,

350

720,

659

58,5

87,7

7363

,617

,782

Bala

nce

at 3

1 D

ecem

ber

2011

111,

500,

212

80,4

69,2

7091

,077

,208

515,

971,

435

21,5

25,0

4586

,711

,395

907,

254,

565

(*)Borrowingcostsam

ountingtoEUR2,550,047wascapitalisedonairportoperationrightduring2011(2010:EUR4,055,845).Thecapitalisationrateusedtodeterminetheam

ountof

borrowingcostseligibleforcapitalisationis100%(31Decem

ber2010:100%).


TAV

Hav

alim

anla

rı H

oldi

ng A

.Ş. a

nd it

s Su

bsid

iarie

sN

otes

to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

As a

t an

d fo

r th

e ye

ar e

nded

31

Dec

embe

r 20

11(A

mou

nts

expr

esse

d in

Eur

o un

less

oth

erw

ise

stat

ed)

Anka

ra E

senb

oğa

Inte

rnat

iona

l Airp

ort

İzm

ir Ad

nan

Men

dere

s In

tern

atio

nal A

irpor

tTb

ilisi

Inte

rnat

iona

l Ai

rpor

tEn

fidha

Inte

rnat

iona

l Ai

rpor

tAn

taly

a G

azip

aşa

Airp

ort

Skop

je In

tern

atio

nal

Airp

ort

Tota

l

Accu

mul

ated

am

ortiz

atio

n

Bala

nce

at 1

Jan

uary

201

021

,532

,473

31,8

60,1

9915

,415

,502

--

68,8

08,1

74

Effectofmovem

entsin

exch

ange

rate

s-

-48

1,59

5-

--

481,

595

Amor

tisat

ion

for t

he p

erio

d6,

715,

383

9,75

9,31

33,

968,

425

11,9

55,8

3236

6,62

9-

32,7

65,5

82

Bala

nce

at 3

1 D

ecem

ber

2010

28,2

47,8

5641

,619

,512

19,8

65,5

2211

,955

,832

366,

629

-10

2,05

5,35

1

Bala

nce

at 1

Jan

uary

201

128

,247

,856

41,6

19,5

1219

,865

,522

11,9

55,8

3236

6,62

9-

102,

055,

351

Effectofmovem

entsin

exch

ange

rate

s-

-2,

077,

414

--

-2,

077,

414

Amor

tisat

ion

for t

he p

erio

d6,

715,

383

9,75

9,31

33,

998,

688

13,7

22,8

9391

8,19

21,

615,

051

36,7

29,5

20

Bala

nce

at 3

1 D

ecem

ber

2011

34,9

63,2

3951

,378

,825

25,9

41,6

2425

,678

,725

1,28

4,82

11,

615,

051

140,

862,

285

Carr

ying

am

ount

s

At 3

1 D

ecem

ber

2010

83,2

52,3

5638

,849

,758

63,9

01,9

1049

9,70

6,25

320

,437

,757

28,1

23,6

2273

4,27

1,65

6

At 3

1 D

ecem

ber

2011

76,5

36,9

7329

,090

,445

65,1

35,5

8449

0,29

2,71

020

,240

,224

85,0

96,3

4476

6,39

2,28

0



20.OTHER INVESTMENTS

Non-current investments

At 31 December 2011 and 2010, non-current investments comprised the following:

Ownership%

31 December 2011

31 December 2010

Unlisted entities

TAVHavacılıkA.Ş.(“TAVHavacılık”) 1.00 24,238 24,238

24,238 24,238

21. PREPAID RENT EXPENSES

An analysis of the Group’s prepaid rent expenses as at 31 December 2011 and 2010 is as follows:

31 December 2011 RentPrepaiddevelopment

expenditures Total

Balance at 31 December 2010 174,042,177 30,833,562 204,875,739

Rent payments 106,638,321 - 106,638,321

Currentperiodrentexpense–TAVİstanbul (119,513,730) (3,078,295) (122,592,025)


Represented as current prepaid rent expense 120,363,039 3,086,731 123,449,770

Represented as non-current prepaid rent expense 40,803,729 24,668,536 65,472,265

31 December 2010 RentPrepaiddevelopment

expenditures Total


Rent payments 97,461,768 - 97,461,768

Currentperiodrentexpense–TAVİstanbul (114,197,265) (3,078,295) (117,275,560)


Represented as current prepaid rent expense 119,513,728 3,078,297 122,592,025

Represented as non-current prepaid rent expense 54,528,449 27,755,265 82,283,714

62



Rent:

ThetotalrentassociatedwiththerentagreementisUSD2,543,000,000plusVAT(equivalenttoEUR1,965,575,211asat31December2011).TAVİstanbulpaidinadvance23%ofthetotalamountplusVATasrequiredbytheRentAgreement.Apaymentrepresenting5.5%of the total rent amount will be made within the first five workdays of each rental year following the first rental year. Below is the payment schedule per the Rent Agreement, excluding VAT, as at 31 December 2011:

Year Amount (US Dollar) Amount (Euro)

2012 139,865,000 108,106,637

2013 139,865,000 108,106,637

2014 139,865,000 108,106,637

2015 139,865,000 108,106,637

After2016to2020 699,325,000 540,533,183

1,258,785,000 972,959,731

Prepaid development expenditures:

PrepaiddevelopmentexpendituresrepresentcostsincurredbyTAVİstanbulrelatedtotheinstallationofEDSSecuritySystems(“EDS”)forthe International and Domestic Lines Terminals, and various re-design at the exterior of the Domestic Lines Terminal as required by the Rent Agreement. 22. DEFERRED TAX ASSETS AND LIABILITIES

TheGrouprecognizesdeferredtaxassetsandliabilitiesinrespectoftemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedfortaxationpurposes.ThesedifferencesusuallyresultintherecognitionofrevenueandexpensesindifferentreportingperiodsforIFRSandtaxpurposesandtheyaregivenbelow.

Forcalculationofdeferredtaxassetandliabilities,therateof20%forsubsidiariesandjointventuresinTurkey(31December2010:20%),therateof15%forsubsidiariesandjointventuresinGeorgiaandLatvia(31December2010:15%),therateof30%forsubsidiariesinTunisia(31December2010:30%)andtherateof10%forsubsidiariesinMacedonia(31December2010:10%)areused.

In Turkey, companies cannot declare a consolidated tax return, therefore subsidiaries and joint ventures that have deferred tax assets positionwerenotnettedoffagainstsubsidiariesandjointventuresthathavedeferredtaxliabilitiespositionanddisclosedseparately.



Recognised deferred tax assets and liabilities

As at 31 December 2011 and 2010, deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

31 December 2011

31 December 2010

31 December 2011

31 December2010

31 December 2011

31 December 2010

Property and equipment, airport operation right, and other intangible assets 7,420,630 13,613,639 (15,334,340) (14,484,033) (7,913,710) (870,394)

Prepaid rent expenses - - (4,029,880) (4,383,534) (4,029,880) (4,383,534)

Trade and other receivables and payables 41,716 38,280 (441,078) (1,465,460) (399,362) (1,427,180)

Derivatives 26,314,909 19,749,109 - - 26,314,909 19,749,109

Loans and borrowings 3,638,583 3,437,327 (985,658) (924,698) 2,652,925 2,512,629

Reserve for employee severance indemnity 1,968,446 1,400,546 - - 1,968,446 1,400,546

Provisions 915,929 833,383 - - 915,929 833,383

Tax loss carry-forwards 24,605,830 37,115,082 - - 24,605,830 37,115,082

Investment incentives 29,790,448 16,444,885 - - 29,790,448 16,444,885

Other items 2,699,904 2,896,494 (964,137) (1,059,767) 1,735,767 1,836,727

Deferred tax assets / (liabilities) 97,396,395 95,528,745 (21,755,093) (22,317,492) 75,641,302 73,211,253

Set-offoftax (15,677,908) (16,036,182) 15,677,908 16,036,182 - -

Net deferred tax assets / (liabilities) 81,718,487 79,492,563 (6,077,185) (6,281,310) 75,641,302 73,211,253


TAV

Hav

alim

anla

rı H

oldi

ng A

.Ş. a

nd it

s Su

bsid

iarie

sN

otes

to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

As a

t an

d fo

r th

e ye

ar e

nded

31

Dec

embe

r 20

11(A

mou

nts

expr

esse

d in

Eur

o un

less

oth

erw

ise

stat

ed)

Mov

emen

ts in

tem

pora

ry d

iffer

ence

s du

ring

the

per

iod

Bala

nce

at

1 Ja

nuar

y 20

10

Reco

gnis

ed

in p

rofit

or

loss

Reco

gnis

ed

in o

ther

co

mpr

ehen

sive

in

com

e

Effec

t of

ch

ange

s in

for

eign

ex

chan

ge

rate

Acqu

isiti

on

thro

ugh

busi

ness

com

bina

tions

Bala

nce

at

31 D

ecem

ber

2010

Reco

gnis

ed

in p

rofit

or

loss

Reco

gnis

edin

ot

her

com

preh

ensi

vein

com

e

Effec

t of

ch

ange

s in

for

eign

ex

chan

ge

rate

Effec

t of

ch

ange

in

gro

up

stru

ctur

e

Bala

nce

at

31 D

ecem

ber

2011

Prop

erty

and

equ

ipm

ent,

airp

ort o

pera

tion

right

an

d

othe

r int

angi

ble

asse

ts(9

,022

,312

)8,

227,

704

-19

,764

(95,

550)

(870

,394

)6(

6,86

3,12

8)-

62,9

93(2

43,1

81)

(7,9

13,7

10)

Prep

aid

rent

exp

ense

s(7

,769

,016

)3,

385,

482

--

-(4

,383

,534

)35

3,65

4-

--

(4,0

29,8

80)

Oth

er in

vest

men

ts(3

,061

,313

)3,

061,

313

--

--

--

--

-

Trad

e an

d ot

her r

ecei

vabl

es a

nd p

ayab

les

17,9

45(1

,445

,125

)-

--

(1,4

27,1

80)

1,02

7,81

8-

--

(399

,362

)

Der

ivat

ives

12,4

07,9

502,

472,

796

4,86

8,36

3-

-19

,749

,109

288,

802

6,27

6,99

8-

-26

,314

,909

Loan

s an

d bo

rrow

ings

1,97

7,06

653

5,56

3-

--

2,51

2,62

914

0,29

6-

--

2,65

2,92

5

Rese

rve

for e

mpl

oyee

sev

eran

ce in

dem

nity

893,

095

507,

451

--

-1,

400,

546

567,

900

--

-1,

968,

446

Prov

isio

ns48

4,30

634

9,07

7-

--

833,

383

82,5

46-

--

915,

929

Tax

loss

car

ry-f

orw

ards

27,2

78,4

629,

836,

620

--

-37

,115

,082

(12,

509,

252)

--

-24

,605

,830

Inve

stm

ent i

ncen

tives

22,8

28,0

79(6

,383

,194

)-

--

16,4

44,8

8513

,345

,563

--

-29

,790

,448

Oth

er it

ems

883,

815

952,

912

--

-1,

836,

727

(100

,960

)-

--

1,73

5,76

7

Tax

asse

ts /

(liab

ilitie

s)

46,9

18,0

7721

,500

,599

4,86

8,36

319,

764

(95,

550)

73,2

11,2

53(3

,666

,761

)6,

276,

998

62,9

93(2

43,1

81)

75,6

41,3

02



Atthereportingdate,theGrouphasunusedtaxlossesofEUR148,034,971(31December2010:EUR165,002,376)availableforoffsetagainstfutureprofits.Taxlossescanbecarriedforwardforfiveyearsunderthecurrenttaxlegislation.DeferredtaxassetamountingtoEUR24,605,830(31December2010:EUR37,115,082)whichtheGroupcanutilizeforoffsettingtheagainsttaxlossesinthefollowingyears,isrecognised as at 31 December 2011. Unutilised tax losses will expire as follows:

31 December 2011 31 December 2010Expireinyear2012 9,073,254 5,331,234Expireinyear2013 92,529,090 122,995,706Expireinyear2014 21,863,785 25,998,230Expireinyear2015 52,163 10,677,206Expireinyear2016andafter 24,516,679 -Total 148,034,971 165,002,376

TaxlosscarryforwardsamountingtoEUR28,937,927arisefromTAVTunisia’slosses,andcanbecarriedforwardwithoutanytimerestriction.

TheGrouprecogniseddeferredtaxassetsrelatedwiththeunusedtaxlosses,sinceitisassessedasprobablethatsufficientfuturetaxableprofits will be available, through increase in passenger numbers and improved operational performance in the following years, against which the unused tax losses can be utilised before they expire.

AspertheannulmentdecisionoftheTurkishConstitutionalCourt(seeNote16),TAVEsenboğaandTAVİzmir,consolidatedsubsidiariesofthe Company, are subject to investment allowance ruling and can use their available allowances to reduce their taxable corporate income withoutanytimelimitations.Accordingly,deferredtaxassetamountingtoEUR29,790,448(31December2010:EUR16,444,885)onsuchinvestmentallowanceofTAVEsenboğaandTAVİzmirisrecordedintheaccompanyingconsolidatedfinancialstatementsasat31December2011sinceitisassessedasprobablethatTAVEsenboğaandTAVİzmirwillusetheirrightofdeductinginvestmentallowancesfromtheircorporateincomeafterdeductingcarryforwardtaxlossestotheextentthatsufficientfuturetaxableprofitswillbeavailabletillthe end of their concession periods.

Unrecognised deferred tax assets and liabilities

Unrecognised deferred tax assets as at 31 December 2011 and 2010 are as follows:

31 December 2011 31 December2010Tax loss carry-forwards 13,917,690 789,228Investment incentives 7,531,688 22,830,830

21,449,378 23,620,058

The tax incentives do not expire under current tax legislation. Deferred tax assets have not been recognized in respect of the investment incentives because it is not probable that future taxable profit will be available against which the Group can utilize the benefits therefrom till the end of concession periods.

InaccordancewithIAS12“IncomeTaxes”,at31December2011,adeferredtaxliabilityofEUR35,584,026(31December2010:EUR20,925,379) related to investments in subsidiaries and joint ventures was not recognized since it is not assessed as probable that the temporarydifferencewillreverseintheforeseeablefuture.

66



Movements of net deferred tax assets are as follows:

2011 2010


Recognised in profit or loss for the period (3,666,761) 21,500,599

Recognised in other comprehensive income 6,276,998 4,868,363

Effectofmovementsinexchangerates 62,993 19,764

Acquired in business combinations (243,181) (95,550)

Balance at 31 December 75,641,302 73,211,253

23. INVENTORIES

At 31 December 2011 and 2010, inventories comprised the following:

31 December2011 31 December 2010Duty free inventories 10,819,492 6,792,669

Spare parts and other inventories 6,190,364 5,802,862

Catering inventories 1,666,615 1,371,199

18,676,471 13,966,730

At31December2011,thewrite-downofinventoriestonetrealizablevalueamountedtoEUR216,141(31December2010:EUR221,502).

24.OTHER RECEIVABLES, CURRENT AND NON-CURRENT ASSETS

At 31 December 2011 and 2010, other receivables and current assets comprised the following:

Other receivables and current assets 31 December2011 31 December 2010Advancestosuppliers(*) 13,600,612 698,478

Incomeaccruals(**) 9,576,061 9,910,349

VATdeductible(***) 8,221,743 6,026,244

Business advances given 4,419,326 2,178,747

Prepaid insurance 3,503,852 6,156,491

Other prepaid expense 2,473,249 4,123,586

Prepaid taxes and funds 1,231,448 1,918,552

Other receivables 2,556,349 2,292,910

45,582,640 33,305,357

(*)AdvancestosuppliersmainlycomprisesadvancegiventoDHMİbyTAVEge.(**)IncomeaccrualsincludetheaccruedinsuranceincomefrominsurancecompaniesamountingtoEUR6,171,904relatedwiththefireinTrigenerationProjectofTAVİstanbul(31December2010:EUR6,924,254).(***)VATdeductibleismainlyattributabletotheVATofTAVMacedoniaaccordingtolocallegislations.



At 31 December 2011 and 2010, non-current assets comprised the following:

Other non-current assets: 31 December2011 31 December 2010

Advances to suppliers 137,333 239,385

Non-current prepaid insurance expenses 22,686 34,616

Other non-current receivables 396,491 327,679

556,510 601,680

25. TRADE RECEIVABLES

At 31 December 2011 and 2010, trade receivables comprised the following:

Trade receivables: 31 December 2011 31 December 2010

Tradereceivables(*) 52,851,752 54,812,599

GuaranteedpassengerfeereceivablefromDHMİ(**) 19,511,750 20,646,543

Doubtful receivables 10,251,271 3,111,507

Allowance for doubtful receivables (-) (10,251,271) (3,111,507)

Notes receivable 1,398,469 2,212,288

Other 61,046 10,184

73,823,017 77,681,614

Non-current trade receivables:

GuaranteedpassengerfeereceivablefromDHMİ(**) 94,299,205 113,810,957

94,299,205 113,810,957

Allowance for doubtful receivables has been determined by reference to past default experience.

The Group’s exposure to credit and market risks and impairment losses on trade receivables are disclosed in Note 38.

(*)PledgesontradereceivablesaredisclosedinNote39.(**)GuaranteedpassengerfeereceivablerepresentstheremainingdiscountedguaranteedpassengerfeetobereceivedfromDHMİaccordingtotheagreementsmadefortheoperationsofAnkaraEsenboğaAirportandİzmirAdnanMenderesAirportasaresultofIFRIC12application.

68



26. CASH AND CASH EQUIVALENTS

At 31 December 2011 and 2010, cash and cash equivalents comprised the following:

31 December 2011 31 December2010

Cash on hand 912,768 591,338

Cash at banks

- Demand deposit 14,812,615 7,431,550

- Time deposits 59,732,453 23,830,600

Other liquid assets 888,921 588,885

Cash and cash equivalents 76,346,757 32,442,373

Bankoverdraftsusedforcashmanagementpurposes - (2,865,313)

Cash and cash equivalents in the statement of cash flows 76,346,757 29,577,060

The details of the Group’s time deposits, maturities and interest rates as at 31 December 2011 and 2010 are as follows:

31 December 2011Original Currency Maturity Interest rate % Balance

TRL January 2012 8.00 - 12.05 30,514,432

EUR January 2012 1.00 - 5.67 24,563,532

USD January 2012 0.50 - 5.74 4,654,489

59,732,453

31 December 2010 Original Currency Maturity Interest rate % Balance

TRL January 2011 6.00 - 9.00 17,899,934

EUR January 2011 0.15 - 0.50 5,261,075

USD January 2011 0.50 603,219

MKD January 2011 0.50 66,372

23,830,600

The Group’s exposure interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in Note 38.

There is no blockage or restriction on the use of cash and cash equivalents as at 31 December 2011 and 2010.



27. RESTRICTED BANK BALANCES

At 31 December 2011 and 2010, restricted bank balances comprised the following:


Projectreserveandfundingaccounts(*) 341,582,638 369,914,807

Cashcollaterals(**) 14,162,863 12,529,990

355,745,501 382,444,797

(*)Certainsubsidiaries,namelyTAVİstanbul,TAVEsenboğa,TAVİzmir,TAVTunisia,TAVTbilisi,TAVMacedoniaandATÜ(“theBorrowers”)openedProjectAccountsdesignatedmainlyinordertoreserverequiredamountofdebtservices,leasepaymenttoDHMİbasedonagreements with their lenders. As a result of pledges regarding the project bank loans as explained in Note 30, all cash except for cash on handareclassifiedintheseaccountsforTAVİstanbul,TAVEsenboğa,TAVİzmir,TAVTunisia,TAVTbilisiandTAVMacedonia.Basedontheseagreements, the Group can access and use such restricted cash as per the conditions and cascade defined in respective loan agreements. The project accounts should be used for predetermined purposes, such as, operational expenses, loan repayments or rent payments to airport administrations, tax payments, debt service, etc.

(**)CashcollateralsincludethetimedepositprovidedbyHAVAŞasguaranteeforitsbankloan.

Interestratesareintherangeof0.08%-4.50%(31December2010:0.10%-3.70%)forEURreserves,intherangeof0.10%-9.00%(31December2010:0.24%-3.00%)forUSDreserves,andintherangeof3.50%-12.10%(31December2010:1.50%-9.00%)forTRL reserves.

28. CAPITAL AND RESERVES

At 31 December 2011 and 2010, the shareholding structure of the Company was as follows:

Shareholders (%) 31 December 2011

AkfenHoldingA.Ş.(“AkfenHolding”) 26.12 94,886,071

TepeİnşaatSanayiA.Ş.(“Tepeİnşaat”) 26.06 94,664,477

SeraYapı 4.03 14,644,716

Othernon-floated 3.52 12,775,047

Otherfreefloat 40.27 146,310,939

Paid in capital in TRL (nominal) 100.00 363,281,250

PaidincapitalinEUR(nominal)asat31December2011 148,654,247

Effectofnon-cashincreasesandexchangerates 13,729,731

Paid in capital EUR 162,383,978

70



Shareholders (%) 31 December 2010

Akfen Holding 26.12 94,886,071

Tepeİnşaat 26.06 94,664,477

SeraYapı 4.17 15,139,046

Othernon-floated 3.52 12,775,048

Otherfreefloat 40.13 145,816,608

Paid in capital in TRL (nominal) 100.00 363,281,250

PaidincapitalinEUR(nominal)asat31December2010 177,288,200

Effectofnon-cashincreasesandexchangerates (14,904,222)

Paid in capital EUR 162,383,978

The Company’s share capital consists of 363,281,250 shares amounting to TRL 363,281,250 as at 31 December 2011 (31 December 2010: 363,281,250 shares amounting to TRL 363,281,250).

Legal reserves

According to the Turkish Commercial Code (“TCC”), legal reserves are comprised of first and legal reserves. The first legal reserves are generated by annual appropriations amounting to 5 percent of income disclosed in the Company’s statutory accounts until it reaches 20 percent of paid-in share capital. If the dividend distribution is made in accordance with Communiqué XI-29, a further 1/10 of dividend distributions, in excess of 5 percent of paid-in capital is to be appropriated to increase second legal reserves. If the dividend distribution is made in accordance with statutory records, a further 1/11 of dividend distributions, in excess of 5 percent of paid-in capitals are to be appropriatedtoincreasesecondlegalreserves.UndertheTCC,thelegalreservescanbeusedonlytooffsetlossesandarenotavailableforanyotherusageunlesstheyexceed50percentofpaid-incapital.At31December2011,legalreservesoftheGroupamounttoEUR36,349,627(31December2010:EUR21,655,917).

Non-controlling interests

Equityinasubsidiarythatisnotattributable,directlyorindirectly,toaparentisclassifiedunderthe“Non-controllinginterests”intheconsolidated financial statements.

As at 31 December 2011 and 2010 the related amounts in the “Non-controlling interests” in the consolidated statement of financial positionarerespectivelyEUR87,210,276andEUR103,060,117.Inaddion,netprofitorlossinasubsidiarythatisnotattributable,directlyor indirectly, to a parent is also classified under the “Non-controlling interests” in the consolidated financial statements. As at 31 December 2011 and 2010 loss amounts attributable to non-controlling interests in the consolidated statement of comprehensive income are respectivelyEUR5,570,167andEUR4,581,758.



Dividend distribution

Publicly held companies distribute dividends based on the Capital Market Board (“CMB”) regulations explained below:

According to CMB’s decision on 27 January 2010 numbered 02/51, corporations traded on the stock exchange market are not obliged to distribute a specified amount of dividends. For corporations that will distribute dividends, in relation to the resolutions in their general meeting the dividends may be in cash, may be free by adding the profit into equity, or may be partially from both, it is also permitted not to distribute determined first party dividends falling below 5 percent of the paid-in capital of the company but, corporations that increased capital before distributing the previous year’s dividends and as a result their shares are separated as “old” and “new” are obliged to distribute 1st party dividends in cash. In the Ordinary General Shareholders’ Meeting for the year 2010, it was resolved that there would not be distribution of profit for 2010 fiscal year, mainly due to accumulated losses.

Share premium

Excessamountofsellingpriceandnominalvalueforeachsharewasrecordedassharepremiuminequity.

Revaluation surplus

The revaluation surplus comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognised or impaired.

Purchase of shares of entities under common control

The purchase of the shares of entities that are under common control are accounted for at book values. The net amount of consideration paid over the book value of the net assets acquired is recognized directly in equity.

Cash flow hedge reserve

Thehedgingreservecomprisestheeffectiveportionofthecumulativenetchangeinthefairvalueofcashflowhedginginstrumentsrelatedto hedged transactions that have not yet occurred.

Translation reserve

Thetranslationreservecomprisesallforeigncurrencydifferencesarisingfromthetranslationofthefinancialstatementsofforeignoperations.

72



Other reserves

Other reserve comprises all gain or loss realized on sale or purchase of non-controlling interest in a subsidiary.

In2011,TAVHoldingacquired16%ofTAVBatumi’ssharesfromAkfenİnşaatinreturnforUSD667,200(EUR467,061).Asaresult,TAVHolding’sshareinTAVBatumiincreasedto76%andtheeffectofthistransactionisrecognisedasanequitytransactionasotherreservesintheconsolidatedfinancial statements.

In2011,TAVHoldingacquired33.33%ofTAVGüvenlik’ssharesfromTepeSavunmaveGüvenlikSistemleriSanayiA.Ş.inreturnforTRL6,000,000(EUR2,760,779).Asaresult,TAVHolding’sshareinTAVGüvenlikincreasedto100%andTAVGüvenlikisfullyconsolidatedwithoutanynon-controllinginterestownershipandtheeffectofthistransactionisrecognisedasanequitytransactionasotherreservesintheconsolidatedfinancialstatements.

In2011,TAVHoldingacquired10%ofTAVTbilisi’ssharesfromSeraYapıandAkfenİnşaatinreturnforUSD8,583,000(EUR5,954,057).Asaresult,TAVHolding’sshareinTAVTbilisiincreasedto76%andtheeffectofthistransactionisrecognisedasanequitytransactionasotherreservesintheconsolidated financial statements.

In2010,HAVAŞHoldinghasbeenestablishedasperthelawsoftheRepublicofTurkeyinwhichTAVhas65%,HSBCInvestmentBankHoldingsPlc(“HSBC”)has28.33%andİşGirişimSermayesiYatırımOrtaklığıA.Ş.(“İşGirişim”)has6.67%ownershipinterest.HAVAŞHoldinghastakenoverwholesharesofHAVAŞbypayingEUR180millionandinaccordancewithitsownershipinHAVAŞHolding,TAVhadtransferredcapitalofEUR78milliontoHAVAŞHolding,asHSBCandİşGirişiminjectedEUR34millionandEUR8million,respectivelyintoHAVAŞHolding,totalingtoacapitalofEUR120million.On28December2010,sharecapitalofHAVAŞincreasedfromTRL45,000,000toTRL182,632,711asaresultoftheacquisitionofHAVAŞHoldingbyHAVAŞasawholewithallassetsandliabilities.Asaresult,theGroup’sshareinHAVAŞdecreasedto65%andHAVAŞisfullyconsolidatedwiththenon-controllinginterest’sownershipreflectedasanon-controllinginterestandtheeffectofthistransactionisrecognisedasanequity transaction as other reserves in the consolidated financial statements.

In2010,anagreementregardingthesaleof18%ofsharesofTAVTunisiatoPanAfricanInfrastructureDevelopmentFund(“PAIDF”)wassignedbytheparties.Fore-mentionedshareshavebeentransferredtoPAIDFinJune2010andPAIDFhasgainedthecontrolofthesesharesafterwards.Asaresultofthistransfer,TAVHolding’sshareinTAVTunisiahasdecreasedto67%andtheeffectofthistransactionwasrecognisedasanequitytransaction as other reserves in the consolidated financial statements as at 31 December 2010.

29. EARNINGS PER SHARE

ThecalculationofbasicEPSat31December2011wasbasedontheprofitattributabletoordinaryshareholdersofEUR52,761,556(31December2010:EUR49,780,525)andaweightedaveragenumberofordinarysharesoutstandingof363,281,250(31December2010:363,281,250),asfollows:

2011 2010Numerator:Profit for the period 52,761,556 49,780,525

Denominator:Weighted average number of shares 363,281,250 363,281,250

Basic profit per share 0.15 0.14

2011 2010

Issued ordinary shares at 1 January 363,281,250 363,281,250Effectofsharesissuedduringtheperiod - -Weighted average number of ordinary shares 363,281,250 363,281,250



30. LOANS AND BORROWINGS

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group’s exposure to interest rate, foreign currency and liquidity risk, see Note 38.

31 December 2011 31 December 2010Non-current liabilitiesSecuredbankloans(*) 964,511,878 1,005,945,828Unsecured bank loans 55,896,379 592,092Finance lease liabilities 634,994 1,556,474

1,021,043,251 1,008,094,394Current liabilitiesCurrentportionoflongtermsecuredbankloans(*) 135,891,850 133,213,503Short term unsecured bank loans 29,210,740 47,986,157Short term secured bank loans 16,997,625 42,813,809Current portion of long term unsecured bank loans 16,858,498 628,677Current portion of finance lease liabilities 4,292,496 720,916

203,251,209 225,363,062

(*)Securedbankloansmainlyconsistofprojectfinanceloansthathavebeensecuredbypledges.

The Group’s total bank loans and finance lease liabilities as at 31 December 2011 and 2010 are as follows:

31 December2011 31 December 2010Bank loans 1,219,366,970 1,231,180,066Finance lease liabilities 4,927,490 2,277,390Total 1,224,294,460 1,233,457,456

The Group’s bank loans as at 31 December 2011 are as follows:

Presented asCurrent liabilities Non-current liabilities Total

TAVİstanbul 48,828,649 328,157,620 376,986,269TAV Tunisia 21,666,051 346,252,111 367,918,162TAVEsenboğa 11,154,039 112,107,460 123,261,499TAV Holding 44,948,159 55,038,998 99,987,157HAVAŞ 15,090,234 62,405,914 77,496,148TAV Macedonia 6,099,932 60,458,341 66,558,273TAVİzmir 20,169,182 21,605,422 41,774,604ATÜ 6,776,132 17,369,537 24,145,669TAV Tbilisi 6,006,027 16,155,476 22,161,503TAVGazipaşa 16,997,624 - 16,997,624Others 1,222,684 857,378 2,080,062

198,958,713 1,020,408,257 1,219,366,970

74



The Group’s bank loans as at 31 December 2010 are as follows:

Presented as

Current liabilities Non-current liabilities Total

TAVİstanbul 66,454,425 363,819,937 430,274,362

TAV Tunisia 17,751,562 354,455,367 372,206,929

TAVEsenboğa 10,220,401 130,334,402 140,554,803

HAVAŞ 7,432,837 72,588,717 80,021,554

TAVİzmir 19,236,918 40,437,681 59,674,599

TAV Holding 42,223,876 - 42,223,876

ATÜ 6,194,360 22,074,317 28,268,677

TAV Tbilisi 5,909,002 22,216,129 28,125,131

TAV Macedonia 19,834,878 - 19,834,878

TAVGazipaşa 16,958,210 - 16,958,210

TGS 11,783,002 - 11,783,002

Others 642,675 611,370 1,254,045

224,642,146 1,006,537,920 1,231,180,066

Redemption schedules of the Group’s bank loans according to original maturities as at 31 December 2011 and 2010 are as follows:


On demand or within one year 198,958,714 224,642,146

In the second year 181,404,952 125,322,194

In the third year 126,408,005 129,332,278

In the fourth year 126,878,492 116,588,371

Inthefifthyear 123,417,435 120,675,484

Afterfiveyears 462,299,373 514,619,593

1,219,366,971 1,231,180,066

Themajorityoftheborrowingsarearrangedatfloatingrates,thusexposingtheGrouptocashflowinterestraterisk.SpreadforEURandUSDdenominatedloansasat31December2011isbetween1.26%–5.75%and4.50%,respectively(31December2010:1.50%–5.75%and4.50%,respectively).

100%,49%,100%,50%,100%and85%offloatingbankloansforTAVİstanbul,TAVİzmir,TAVEsenboğa,HAVAŞ,TAVMacedoniaandTAV Tunisia respectively are fixed with interest rate swaps as explained in Note 36.

TheGrouphasobtainedprojectloanstofinanceconstructionofitsBOTconcessionprojects,namelyTAVEsenboğa,TAVİzmir,TAVTbilisi,TAVMacedoniaandTAVTunisia;andtobeabletofinanceadvancepaymentstoDHMİrelatedtoconcessionleasingproject,TAVİstanbul.



Details of the loans are summarised for each project below:

TAV İstanbul

The breakdown of bank loans as at 31 December 2011 is as follows:

Original Currency Year of MaturityNominal Interest

Rate Face Value Carrying Amount

Securedbankloans(*) EUR 2018 Euribor+2.50% 378,080,000 376,986,269

378,080,000 376,986,269

TAVİstanbulhasbankloanintheamountofEUR376,986,269underthefacilityagreement.Thetermsoftheloanrequiresemi-annualprincipal and interest payments on 4 July and 4 January of each year according to the loan agreements.

(*)InterestrateisEuribor+2.50%until4January2013,Euribor+2.65%betweentheperiodof4January2013and4January2016andEuribor+2.75%betweentheperiodof4January2016and4July2018.




Securedbankloans(*) EUR 2018 Euribor+2.50% 431,220,000 430,274,362

431,220,000 430,274,362

(*)InterestrateisEuribor+2.50%until4January2013,Euribor+2.65%betweentheperiodof4January2013and4January2016andEuribor+2.75%betweentheperiodof4January2016and4July2018.

RedemptionschedulesofbankloansofTAVİstanbulaccordingtotheoriginalmaturitiesasat31December2011and2010areasfollows:




In the third year 57,366,957 51,273,849


Inthefifthyear 62,640,026 60,155,520

Afterfiveyears 93,978,919 150,189,399

376,986,269 430,274,362

76



TAV Tunisia




Secured bank loan EUR 2028 Euribor+2.28% 165,804,190 163,873,100




372,183,944 367,918,162








376,771,934 372,206,929

Redemption schedules of bank loans of TAV Tunisia as at 31 December 2011 and 2010 are as follows:

31 December2011 31 December 2010



In the third year 21,755,730 21,125,801


Inthefifthyear 28,337,761 27,721,040

Afterfiveyears 251,737,371 260,121,631

367,918,162 372,206,929



TAV Esenboğa




Secured bank loans EUR 2021 Euribor+2.35% 125,700,113 123,261,499

125,700,113 123,261,499

TAVEsenboğahasabankloanintheamountofEUR123,261,499underloanagreement.Thetermsoftheloanrequiresemi-annualprincipal and interest payments on 30 June and 31 December according to the loan agreement starting from 31 December 2007 for interest and 30 June 2008 for principal.



Rate Face Value Carrying AmountSecured bank loans EUR 2021 Euribor+2.35% 143,250,000 140,554,803

143,250,000 140,554,803

RedemptionschedulesofTAVEsenboğaborrowingsaccordingtooriginalmaturitiesasat31December2011and2010areasfollows:

31 December 2011 31 December 2010 On demand or within one year 11,154,039 10,220,401


In the third year 12,889,659 12,886,545


Inthefifthyear 13,944,362 15,134,935

Afterfiveyears 59,582,241 76,518,807

123,261,499 140,554,803

TAV Holding




Unsecured bank loan EUR 2012 - 2014 4.25%-6.95% 85,000,000 85,800,320

Unsecured bank loan USD 2012 3.75%-4.25% 13,912,841 14,186,837

98,912,841 99,987,157

78






Unsecured bank loan USD 2011 5.50% 18,861,939 19,189,843

Unsecured bank loan EUR 2011 4.10%-8.00% 17,000,000 17,013,312

Secured bank loan EUR 2011 6.00% 6,000,000 6,020,721

41,861,939 42,223,876

Redemption schedules of TAV Holding bank loans as at 31 December 2011 and 2010 are as follows:



In the second year 49,447,989 -

In the third year 5,591,009 -

99,987,157 42,223,876

HAVAŞ






77,340,000 77,496,148






80,000,000 80,021,554



RedemptionschedulesoftheHAVAŞbankloansasat31December2011and2010areasfollows:

31 December 2011 31 December 2010 On demand or within one year 15,090,234 7,432,837 In the second year 13,285,694 14,017,548 In the third year 11,825,764 12,605,833 In the fourth year 10,529,470 11,250,238Inthefifthyear 9,365,496 9,959,514Afterfiveyears 17,399,490 24,755,584

77,496,148 80,021,554

On24March2010,HAVAŞutilizedabankloanamountingtoEUR60,000,000withaninterestrateofEuribor+4.75%andamaturityofMarch2018fromTürkiyeİşBankasıA.Ş..Followingsecuritiesareprovidedinfavorofthelender:

•TAVHoldinghasprovidedsuretyofEUR10,000,000.•Secondrankingpledgewasestablishedon50%ofthesharesinTGS.•DividendreceivablesarisingfromsubsidiariesandjointventuresofHAVAŞareassignedtorepaymentoftheoutstandingloan.•SecondrankingpledgewasestablishedonthesharesofHAVAŞ.

Inaccordancewiththeloanagreement,HAVAŞwillhavetherightforthedistributionofdividendsonlyifthereisanetcashbalanceintherelatedbank’saccountsatleastEUR5million,thefirstthreerepaymentinstalmentshavebeenfullypaid,allotherpaymentsrelatedtofinancial liabilities are made till the maturity date and no event of default has occurred.

Theloanagreementincludescovenants,includingrestrictionsontheabilityofHAVAŞtoincuradditionalindebtedness;tomakecertainotherrestricted payments, loans; to create liens; to give guarantees; to dispose of assets, and to acquire a business or an undertaking.

On9December2009,HAVAŞutilizedabankloanamountingtoEUR20,000,000withaninterestrateofEuribor+5.75%andmaturityofDecember2017fromTürkiyeİşBankasıA.Ş..Followingsecuritiesareprovidedinfavorofthelender:

•Firstdegreeandfirstrankingpledgewasestablishedon50%ofthesharesinTGS.•TimeanddemanddepositamountingtoEUR14,162,863isprovidedasguarantee.•TAVHoldingwasprovidedsuretyforthetotaloutstandingloanamount.•Dividendreceivablesarisingfromsubsidiariesandjointventuresareassignedtorepaymentoftheoutstandingloan.•Pledgehasbeenregisteredwithfirstpriorityagainstbutnotlimitedtobusinessentityandentitynameregisteredintraderegister,machineryandequipment,furnituresandfixturesandvehiclesofHAVAŞ.•FirstrankingpledgewasestablishedonthesharesofHAVAŞ.

Theloanagreementincludescovenants,includingrestrictionsontheabilityofHAVAŞtoincuradditionalindebtedness;tomakecertainotherrestricted payments, loans; to create liens; to give guarantees; to dispose of assets, and to acquire a business or an undertaking.

RelatedwiththebankloansamountingtoEUR60,000,000withaninterestrateofEuribor+4.75%andamaturityofMarch2018andthebankloanamountingtoEUR20,000,000withaninterestrateofEuribor+5.75%andamaturityofDecember2017fromTürkiyeİşBankasıA.Ş.,65%sharesofHAVAŞwithanominalamountofTRL118,711,263havebeenpledgedinfavourofTürkiyeİşBankasıA.Ş.byTAV Holding. However, the voting right for these shares remains at TAV Holding.

80



TAV Macedonia



Rate Face Value Carrying AmountSecured bank loan EUR 2020 Euribor+5.50% 70,000,000 66,558,273

70,000,000 66,558,273




20,000,000 19,834,878

Redemption schedules of TAV Macedonia bank loans as at 31 December 2011 and 2010 are as follows:

31 December 2011 31 December 2010 On demand or within one year 6,099,932 19,834,878 In the second year 2,432,668 - In the third year 6,052,439 - In the fourth year 6,672,941 -Inthefifthyear 7,772,915 -Afterfiveyears 37,527,378 -

66,558,273 19,834,878

Pledges regarding the project bank loan of TAV Macedonia:

TAVMacedoniahasgrantedsharepledgeinfavorofthelenders.Inaddition,receivablesofTAVMacedoniaamountingto1,486,234EUR(31December2010:1,889,427EUR)havebeenpledgedandallthecommercialcontractsandinsurancepolicieshavebeenassignedtothe lenders.

TAV İzmir




41,350,600 41,774,604

TAVİzmirhasbankloansintheamountofEUR41,774,604underloanagreements.Thetermsoftheloanrequiresemi-annualprincipalandinterestpaymentsateach23Januaryand23Julyaccordingtotheloanagreements.TAVİzmirhasfullyrepaidthebankloansubsequentlyon 23 January 2012.







58,522,448 59,674,599

RedemptionschedulesofTAVİzmirbankloansaccordingtooriginalmaturitiesasat31December2011and2010areasfollows:




In the third year - 20,604,355

41,774,604 59,674,599

Pledges regarding the project bank loans of TAV İstanbul, TAV İzmir and TAV Esenboğa: a)Sharepledge:TAVİstanbul,TAVİzmirandTAVEsenboğahavepledgesoversharesamountingtoTRL180,000,000,TRL150,000,000,and TRL 241,650,000, respectively. In case of an event of default, the banks have the right to take control of the shares. Upon the occurrence of any event of default, the banks can demand the sale of shares by way of public auction in accordance with the applicable provisionsoftheBankruptcyandExecutionLawoftheRepublicofTurkeyorbywayofprivateauctionamongthenominees.Sharepledgeswillexpireafterbankloansarepaidoronthedatesofmaturity.

b) Receivable pledge: In case of an event of default, the banks have the right to take control of the receivables of project companies (disclosed as the Borrowers in Note 27) in order to perform its obligations under the loan documents. Immediately upon the occurrence of default, and all payments relating to assigned receivables shall be made to the banks which shall be entitled to collect the assigned receivables and exercise all rights with respect to assigned receivables.

TAVİstanbul,TAVİzmirandTAVEsenboğahavepledgedtheirreceivablesamountingtoEUR26,600,239,EUR1,125,448,andEUR3,208,140,respectivelyasat31December2011(31December2010:EUR19,543,667,EUR1,376,218,andEUR3,077,029,respectively).

c) Pledge over bank accounts: In case of an event of default, the banks have the right to control the bank accounts of project companies in order to perform its obligations under the loan documents. Upon the occurrence of event of default project companies shall be entitled to set-offandapplythewholeoranypartofthecashstandingtothecreditoftheaccountsandanyinterests,proceedsandotherincomethatmay accrue or arise from the accounts. TAVİstanbul,TAVİzmirandTAVEsenboğahavepledgesoverbankaccountsamountingtoEUR262,507,724,EUR38,547,273,andEUR19,755,667,respectivelyasat31December2011(31December2010:EUR271,216,672,EUR33,426,426,andEUR30,759,515,respectively).

82



Withtheconsentofthefacilityagent,TAVİstanbul,TAVİzmirandTAVEsenboğahavearighttohaveanadditional;

•subordinateddebtapprovedinadvancebytheFacilityAgent,•indebtednessuptoUSD0.5millionfortheacquisitioncostofanyassetsorleasesofassets,•indebtednessuptoUSD3millionforthepaymentoftaxandsocialsecurityliabilities.

Distributionlock-uptestsforTAVİstanbul,TAVEsenboğa,TAVİzmir,TAVTunisia,TAVTbilisiandTAVMacedoniamustsatisfyfollowingconditions before making any distribution:

•nodefaulthasoccurredandiscontinuing,•nodefaultwouldresultfromsuchdeclaration,makingorpayment,•thereserveaccountsareeachfullyfunded,•allmandatoryprepaymentsrequiredtohavebeenmade,•debtservicecoverratioisnotlessthan1.30forTAVİstanbul,1.25forTAVEsenboğa,1.30forTAVİzmir,1.20forTunisia,1.30forTAVTbilisi and 1.20 for TAV Macedonia,•thefirstrepaymenthasbeenmade,•allfinancingcostshavebeenpaidinfull,•anytaxpayableinconnectionwiththeproposeddistributionhasbeenpaidfromamountsavailableforpayingsuchdistribution.

Pledges regarding the project bank loan of TAV Tunisia:

Similar to above, TAV Tunisia has granted share pledge, account pledge and pledge of rights from the Concession Agreement to the lenders. TAVTunisiahaspledgeoversharesamountingtoTND245,000,000.Sharepledgewillexpireafterbankloanispaidoronthedateofmaturity. TAV Tunisia has a right to have additional indebtedness;

•withamaturityoflessthanoneyearforanaggregateamountnotexceedingEUR3,000,000(upto1January2020)andnotexceedingEUR5,000,000(thereafter),•underfinanceorcapitalleasesofequipmentiftheaggregatecapitalvalueoftheequipmentleaseddoesnotexceedEUR5,000,000,•incurredby,orcommittedinfavourof,TAVTunisiaunderanEquitySubordinatedLoanAgreement,•disclosedinwritingbyTAVTunisiatotheIntercreditorAgentandinrespectofwhichithasgivenitspriorwrittenconsent.

ATÜ


Original Currency Year of MaturityNominalInterest


Secured bank loan EUR 2012 - 2018 4.80%-6.00% 15,201,528 15,458,338


Secured bank loan TND 2013 5.93% 297,117 298,895

23,916,541 24,145,669






Secured bank loan EUR 2012 - 2018 5.00%-6.00% 16,887,264 17,184,633


Secured bank loan TND 2013 5.93% 630,601 607,900

28,040,233 28,268,677

RedemptionschedulesoftheATÜbankloansasat31December2011and2010areasfollows:




In the third year 4,542,525 4,694,988


Inthefifthyear 1,284,586 3,848,187

Afterfiveyears 2,022,443 3,034,174

24,145,669 28,268,677

TAV Tbilisi

The breakdown of bank loan as at 31 December 2011 is as follows:

Original Currency Year of MaturityNominalInterest


Secured bank loan USD 2015 Libor+4.50% 21,920,000 22,161,503

21,920,000 22,161,503

The breakdown of bank loan as at 31 December 2010 is as follows:



Secured bank loan USD 2015 Libor+4.50% 27,813,520 28,125,131

27,813,520 28,125,131

84



Redemption schedules of the TAV Tbilisi bank loans as at 31 December 2011 and 2010 are as follows:




In the third year 6,186,550 6,136,087


Inthefifthyear - 3,851,466

22,161,503 28,125,131

Pledges regarding the bank loans:

a) Share pledge - to take control of 75 percent plus one share of the charter capital of TAV Tbilisi;

b) Revenue pledge - to take control of the revenues derived from Tbilisi International Airport operations as stipulated in the BOT Agreement;

c)Pledgeoverbankaccounts–totakecontrolofTAVTbilisi’sbankaccountsinJSCBankofGeorgia,JSCBankRepublicandJSCTBCBankandbeentitledtoset-offandapplythewholeoranypartofthecashstandingtothecreditoftheaccountsandanyinterests,proceedsandother income that may accrue or arise from the accounts;

d)Pledgeoverinsuranceproceeds–toreceiveallinsurancecompensationandanyotheramountspayableundertheinsurancepoliciesofTAV Tbilisi;

e)PledgeoverBOTrights–tocontrolallinterestsandbenefitsofTAVTbilisipursuanttotheBOTAgreement;

f)Pledgeoverrightsundertheconstructionguarantees–tocontrolallright,titleandinterestundereachconstructionguarantee;

g)Pledgeoverprojectreserveaccount–tocontroltheprojectreserveaccount.

TheshareholdersofTAVTbilisi,TAVHolding,UrbanİnşaatSanayiveTicaretA.Ş.,andAeroserInternationalHolding(UK)LimitedconcludedGuarantee,ShareRetention,SupportandSubordinationDeedwithEBRDandIFCinrespectoftheloansextendedtoTAVTbilisi.Accordingly,all shareholders irrevocably and unconditionally guarantee, on joint and several basis:•topaytoEBRDandIFCondemand,andinthecurrencyinwhichthesamefallsdueforpaymentbyTAVTbilisi,allmoniesandliabilitieswhichshallhavebeenadvancedto,becomedue,owingorincurredbyTAVTbilisitoorinfavourofEBRDandIFC;•toindemnifyEBRDandIFCinfullondemandagainstalllosses,costsandexpensessufferedorincurredbyEBRDandIFCarisingfromorinconnectionwithanyoneormoreofthepurportedliabilitiesorobligationsofTAVTbilisitoEBRDandIFCundertheloanandrelatedagreements.



TAV Gazipaşa



Rate Face Value Carrying Amount Secured bank loan EUR 2012 5.40%-6.75% 10,450,000 10,748,799

Secured bank loan TRL 2012 11.00% 6,137,982 6,248,825

16,587,982 16,997,624



Rate Face Value Carrying AmountSecured bank loan EUR 2011 4.00%-7.00% 10,450,000 10,755,767

Secured bank loan TRL 2011 8.50% 6,100,239 6,202,443

16,550,239 16,958,210

RedemptionschedulesofTAVGazipaşabankloansasat31December2011and2010areasfollows:

31 December2011 31 December 2010 On demand or within one year 16,997,624 16,958,210

16,997,624 16,958,210

TGS



Rate Face Value Carrying AmountUnsecured bank loan TRL 2011 6.95%-7.95% 11,712,460 11,783,002

11,712,460 11,783,002

Redemption schedules of TGS bank loans as at 31 December 2011 and 31 December 2010 are as follows:


On demand or within one year - 11,783,002

- 11,783,002

86



Finance lease liabilities


Future minimum lease payments Interest

Present value of minimum lease payments

Future minimum lease payments Interest

Present value of minimum lease payments

1 year 4,354,998 62,502 4,292,496 1 year 748,758 27,842 720,916

1-5 year 678,195 43,201 634,994 1-5 year 1,572,058 15,584 1,556,474

Total 5,033,193 105,703 4,927,490 Total 2,320,816 43,426 2,277,390

It is the Group’s policy to lease certain of its fixtures and equipment under finance leases. The average remaining lease term is five years as at31December2011.Fortheyearended31December2011,theaverageeffectiveborrowingratewas6.32%(31December2010:6.60%).Interestratesarefixedatthecontractdate,andthusexposetheGrouptofairvalueinterestraterisk.Allleasesareonafixedrepaymentbasis and no arrangements have been entered into for contingent rental payments.

31. RESERVE FOR EMPLOYEE SEVERANCE INDEMNITY

Under the Turkish Labour Law, the Company and its Turkish subsidiaries and joint ventures are required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, is called up for military service, diesorwhoretiresaftercompleting25yearsofservice(20yearsforwomen)andreachestheretirementage(58forwomenand60formen). Since the legislation was changed on 8 September 1999, there are certain transitional provisions relating to length of service prior to retirement.

Suchpaymentsarecalculatedonthebasisof30days’paymaximumfullTRL2,732asat31December2011(equivalenttoEUR1,118asat31December2011)(31December2010:TRL2,517(equivalenttoEUR1,228asat31December2010))peryearofemploymentattherateofpayapplicableatthedateofretirementortermination.Reserveforretirementpayiscomputedandreflectedinthefinancialstatements on a current basis. The reserve has been calculated by estimating the present value of future probable obligation of the Company and its Turkish subsidiaries and joint ventures arising from the retirement of the employees. The calculation was based upon the retirement pay ceiling announced by the government.

The provision has been calculated by estimating the present value of the future probable obligation of the Company and its subsidiaries and joint venture registered in Turkey arising from the retirement of employees. IFRSs require actuarial valuation methods to be developed to estimate the enterprise’s obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability:

Theprincipalassumptionisthatthemaximumliabilityforeachyearofservicewillincreaseinlinewithinflation.Thus,thediscountrateappliedrepresentstheexpectedrealrateafteradjustingfortheanticipatedeffectsoffutureinflation.Consequently,intheaccompanyingconsolidated financial statements as at 31 December 2011, the provision has been calculated by estimating the present value of the future probable obligation of the Group arising from the retirement of the employees. The provision at 31 December 2011 has been calculated assuminganannualinflationrateof5.00%andadiscountrateof9.08%resultinginarealdiscountrateofapproximately3.89%(31December2010:annualinflationrateof5.10%andadiscountrateof10.00%resultinginarealdiscountrateofapproximately4.66%).It is planned that retirement rights will be paid to employees at the end of concession periods. Accordingly, present value of the future probable obligation has been calculated based on the concession periods.



2011 2010


Interest cost 1,601,449 699,279

Service cost 1,600,502 2,106,677

Payments made during the period (1,989,595) (1,834,364)

Effectsofchangesinforeignexchangerate (1,154,372) 247,465

Actuarialdifference 2,748,662 1,587,432

Balance at 31 December 10,258,618 7,451,972

32. OTHER PAYABLES

At 31 December 2011 and 2010, other payables comprised the following:

Other short term payables 31 December 2011 31 December 2010Social security premiums payable 8,494,770 4,516,272

Due to personnel 6,711,429 6,626,054

Taxesanddutiespayable(*) 6,294,375 4,574,775

Expenseaccruals 2,721,949 2,137,509

Concessionpayable(**) 1,991,016 18,706,708

Advances received 1,190,971 678,847

Other accruals and liabilities 1,131,489 834,456

28,535,999 38,074,621

Other long term payables 31 December 2011 31 December 2010Concessionpayable(**) 14,487,214 -

Taxesanddutiespayable(*) 1,272,811 -

Other accruals and liabilities 183,232 -

15,943,257 -

(*)TheGrouphasobtainedbenefitsfromtaxamnestywithinthecontextofLawno.6111.Inthiscontext,theGrouphaspayablesamountingtoEUR2,128,065inothershorttermpayablesandEUR1,272,811inotherlongtermpayablesasof31December2011.(**)TAVTunisiahasaconcessionperiodof40yearsandannualconcessionfeeispaidbasedontheannualrevenueofMonastirandEnfidhaAirports.Theconcessionfeeiscomputedatanincreasingratebetween11%and26%oftheannualrevenues.BasedonthenegotiationswithOACA,theconcessionfeepayablefor2011isreducedbyEUR4.6millionandconcessionfeepayablesfor2011,2012,and2013aredeferredby3yearsto2014,2015and2016.TheconcessionfeeofTAVMacedoniais15%ofthegrossannualturnoveruntil the number of passengers using the two airports reaches to 1 million, and when the number of passengers exceeds 1 million, this percentageshallchangebetween4%and2%dependingonthenumberofpassengers.

The Group’s exposure to currency and liquidity risk is related to other payables is disclosed in Note 38.

88



33. DEFERRED INCOME

The breakdown of deferred income as at 31 December 2011 and 2010 is as follows:

31 December 2011 31 December 2010Deferred incomeShort-term deferred income 11,113,055 7,238,327Long-term deferred income 19,926,008 21,688,366

31,039,063 28,926,693

EUR17,283,411(31December2010:EUR19,275,195)ofdeferredincomeisrelatedwiththeunearnedportionofconcessionrentincomefromATÜ.

34. PROVISIONS

At 31 December 2011 and 2010, provisions comprised the following:

31 December 2011 31 December 2010Unused vacation provision 5,286,392 4,401,279Other provisions 326,846 431,520

5,613,238 4,832,799

Unused vacation 2011 2010Balance at 1 January 4,401,279 2,468,446Provision set during the period, net 1,314,910 1,802,934Effectsofchangeinforeignexchangerate (537,765) 129,899Effectofchangeingroupstructure(*) 107,968 -Balance at 31 December 5,286,392 4,401,279

(*)Effectofacquisitionofadditional16.67%sharesofHAVAŞEuropein2011(seeNote3(a)).

35. TRADE PAYABLES

At 31 December 2011 and 2010, trade payables comprised the following:


Trade payables 39,311,950 33,260,277

Deposits and guarantees received 1,028,426 818,738

Other 63,962 79,374

40,404,338 34,158,389

Trade payables mainly comprise payables outstanding for trade purchases and ongoing costs. The Group’s exposure to currency and liquidity risk related to trade payables is disclosed in Note 38.



36. DERIVATIVE FINANCIAL INSTRUMENTS

At 31 December 2011 and 2010, derivative financial instruments comprised the following:

31 December 2011

Assets Liabilities Net Amount

Interest rate swap - (126,736,082) (126,736,082)

Cross currency swap 4,206,768 - 4,206,768

4,206,768 (126,736,082) (122,529,314)

31 December 2010

Assets Liabilities Net Amount

Interest rate swap - (99,485,643) (99,485,643)

Cross currency swap - (5,482,466) (5,482,466)

- (104,968,109) (104,968,109)

Interest rate swap:

TAVEsenboğausesinterestrateswaptomanageitsexposuretointerestratefluctuationsonitsbankborrowings.Asat31December2011,100%ofprojectfinanceloanishedgedthroughInterestRateSwap(“IRS”)contractduringthelifeoftheloanwithanamortisingscheduledependingonrepaymentoftheloan(31December2010:100%).

TAVTunisiausesinterestrateswapstomanageitsexposuretointerestratefluctuationsonitsbankborrowings.Asat31December2011,85%offloatingseniorbankloanishedgedthroughIRScontractduringthelifeoftheloanwithanamortisingscheduledependingonrepaymentoftheloan(31December2010:85%).

TAVİstanbulusesinterestrateswapstomanageitsexposuretointerestratefluctuationsonitsbankborrowings.Asat31December2011,100%ofprojectfinanceloanishedgedthroughIRScontractduringthelifeoftheloanwithanamortisingscheduledependingonrepaymentoftheloan(31December2010:100%).

TAVİzmirusesinterestrateswaptomanageitsexposuretointerestratefluctuationsonitsbankborrowings.Asat31December2011,49%oftotalprojectfinanceloanishedgedthroughIRScontract(31December2010:65%).

HAVAŞusesinterestrateswaptomanageitsexposuretointerestratefluctuationsonitsbankborrowings.Asat31December2011,50%oftotalloanishedgedthroughIRScontract(31December2010:50%).

TAVMacedoniausesinterestrateswaptomanageitsexposuretointerestratefluctuationsonitsbankborrowings.Asat31December2011,100%oftotalloanishedgedthroughIRScontract(31December2010:None).

90



Cross currency swap:

TAVİstanbulusescrosscurrencyswapstomanageitsexposuretoforeigncurrencyexchangeratefluctuationsonitsrentinstallmentsthatwillbepaidtoDHMİintermsofUSD.

TAVİstanbulhadsignedaderivativecontractwithDexiaCreditLocal(“DCL”)on12March2008tomanageandfixitsexposureonforeigncurrencyexchangeratefluctuationsbetweenUSDandEURontherentinstallmentsthatwillbepaidtoDHMİtill2018.TAVİstanbulterminatedthehedgerelationshipin2010andtwonewcrosscurrencyswapcontractsweresignedbyandbetweenTAVİstanbul,DCL,andINGBankN.V.on16December2010.ThetotalnotionalamountofthecontractisEUR275,309,357(inexchangeofUSD362,857,733)asat31December2011(31December2010:EUR316,004,183(inexchangeofUSD416,493,513)).

Thefairvalueofderivativesat31December2011isestimatedatEUR122,529,314(31December2010:EUR104,968,109).Thisamountis based on market values of equivalent instruments at the reporting date. Since the Group applied hedge accounting as at 31 December 2011,changesinthefairvalueoftheseinterestrateswapsandcrosscurrencyswapsarereflectedtoothercomprehensiveincomeresultingtoalossofEUR9,840,195(31December2010:EUR8,725,740),netoftax.

Fair value disclosures:

The Group has determined the estimated fair values of the financial instruments by using current market information and appropriate valuation methods.

Since the book values of the foreign exchange denominated monetary items are estimated to approximate their fair values, these monetary itemsaretranslatedtoEURbyusingtheforeignexchangeratesasatthereportingdate.Sincethefinancialassetsandliabilitiesareshortterm in nature, it is accepted that their fair values approximate to their carrying amounts.

37. OPERATING LEASES

TheGroupenteredintovariousoperatingleaseagreements(excludingrentagreementforTAVİstanbul,andconcessionagreementforTAVMacedoniaandTAVTunisia).Fortheyearended31December2011,totalrentexpensesforoperatingleasesamountedtoEUR4,907,863recognisedinprofitorloss(31December2010:EUR3,168,748).



38. FINANCIAL INSTRUMENTS

Exposuretocredit,interestrateandcurrencyrisksarisesinthenormalcourseoftheGroup’sbusiness.However,mostoftheGroup’srevenues are denominated in hard currency. The gap between hard currency assets and liabilities are hedged by derivative financial instrumentssuchascrosscurrencyswaps.Inadditiontohedgingofthecurrencyrisk,TAVİstanbul,TAVİzmir,TAVEsenboğa,TAVTunisia,HAVAŞandTAVMacedoniauseinterestrateswapstohedgethefluctuationsinEuriborandLiborrates(i.e.100%,49%,100%,85%,50%and100%offloatingloansofTAVİstanbul,TAVİzmir,TAVEsenboğa,TAVTunisia,HAVAŞandTAVMacedonia,respectivelyarefixed).

Credit risk

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is:

Note 31 December 2011 31 December 2010Trade receivables - non-current 25 94,299,205 113,810,957

Trade receivables - current 25 73,823,017 77,681,614

Due from related parties 40 7,944,503 5,124,375

Otherreceivablesandcurrentassets(*) 24 7,303,771 7,112,588

Restricted bank balances 27 355,745,501 382,444,797

Cashandcashequivalents(**) 26 75,433,989 31,851,035

Derivative financial instruments 36 4,206,768 -

618,756,754 618,025,366

(*)Non-financialinstrumentssuchasVATdeductibleandcarriedforward,prepaidexpensesandadvancesgivenareexcludedfromothercurrent assets and other non-current assets.(**)Cashonhandisexcludedfromcashandcashequivalents. Impairment losses

The movements in the allowance for impairment in respect of trade receivables during the years ended 31 December were as follows:

2011 2010Balance at 1 January (3,111,507) (2,046,447)Collections during the period 57,295 414,944

Impairment loss recognized (7,327,641) (1,336,568)

Effectofchangesinforeignexchangerates 130,582 (143,436)

Balance at 31 December (10,251,271) (3,111,507)

Allowance for doubtful receivables is determined by reference to past default experience. The allowance account in respect of trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible; at that point theamountconsideredirrecoverableiswrittenoffagainstthetradereceivabledirectly.

92



Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

31 December 2011 Carrying Contractual 3 months 3 -12 1-5 More than

Amount cash flows or less months years five yearsNon-derivative financial liabilitiesSecured bank loans 1,117,401,353 (1,447,538,794) (58,098,910) (99,030,745) (568,336,499) (722,072,640)Unsecured bank loans 101,965,617 (110,274,282) (6,943,096) (40,803,231) (62,527,955) -Financial lease liabilities 4,927,490 (4,936,432) (294,887) (4,004,255) (637,290) -Tradepayables(*) 39,375,912 (39,482,652) (39,482,652) - - -Due to related parties 18,140,702 (20,207,701) (7,563,093) (3,057,792) (6,715,962) (2,870,854)Otherpayables(*) 43,288,285 (43,288,285) (26,511,067) (833,961) (15,943,257) -

Derivative financial liabilitiesInterest rate swaps used for hedging 126,736,082 (140,577,272) (5,271,410) (20,002,710) (83,202,554) (32,100,598)

CurrencyswapsOutflow - (275,349,357) - (40,165,436) (166,373,904) (68,810,017)Inflow (4,206,768) 280,506,405 - 40,917,699 169,489,939 70,098,767

1,447,628,673 (1,801,148,370) (144,165,115) (166,980,431) (734,247,482) (755,755,342)

(*)Non-financialinstrumentssuchasdepositsonguaranteesandadvancesreceivedareexcludedfromtradepayablesandotherpayables.


Amount cash flows or less months years five yearsNon-derivative financial liabilitiesSecured bank loans 1,181,973,140 (1,568,760,956) (81,465,237) (86,820,043) (575,295,078) (825,180,598)Unsecured bank loans 49,206,926 (50,821,104) (12,577,209) (37,592,813) (651,082) -Financial lease liabilities 2,277,390 (2,277,390) (180,036) (540,882) (1,556,472) -Bankoverdraft 2,865,313 (2,865,313) (2,865,313) - - -Tradepayables(*) 33,339,651 (33,410,648) (33,410,648) - - -Due to related parties 28,151,745 (28,602,597) (9,007,087) (3,001,342) (12,165,619) (4,428,549)Otherpayables(*) 37,395,774 (37,395,774) (20,801,555) (16,594,219) - -

Derivative financial liabilitiesInterest rate swaps used for hedging 99,485,643 (128,396,091) (7,771,973) (22,535,602) (74,547,906) (23,540,610)

CurrencyswapsOutflow 5,482,466 (316,044,183) - (40,694,826) (163,343,650) (112,005,707)Inflow - 309,982,153 - 40,633,167 161,594,590 107,754,396

1,440,178,048 (1,858,591,903) (168,079,058) (167,146,560) (665,965,217) (857,401,068)

(*)Non-financialinstrumentssuchasdepositsonguaranteesandadvancesreceivedareexcludedfromtradepayablesandotherpayables.



Thefollowingtableindicatestheperiodsinwhichthecashflowsassociatedwiththederivativesthatarecashflowhedgesexpectedtooccur.


Amount cash flows or less months years five yearsInterest rate swapsAssets - - - - - -Liabilities (126,736,082) (140,577,272) (5,271,410) (20,002,710) (83,202,554) (32,100,598)

Cross currency swapsAssets 4,206,768 5,157,048 - 752,263 3,116,035 1,288,750Liabilities - - - - - -


Amount cash flows or less months years five yearsInterest rate swapsAssets - - - - - -Liabilities (99,485,643) (128,396,091) (7,771,973) (22,535,602) (74,547,906) (23,540,610)

Cross currency swapsAssets - - - - - -Liabilities (5,482,466) (6,062,030) - (61,659) (1,749,060) (4,251,311)

Currency risk

Exposure to currency risk:

TheGroup’sexposuretoforeigncurrencyriskinEuroequivalentoftheiroriginalcurrencieswasasfollows:

31 December 2011

Foreign currencydenominated financial assets USD EUR (*) TRL Other TotalOther non-current assets 6,647 - 11,717 31,950 50,314Trade receivables 11,703,621 721,517 3,504,540 7,753,044 23,682,722Due from related parties 1,270,876 120,217 1,173,949 88,055 2,653,097Derivative financial instruments 4,206,768 - - - 4,206,768Other receivables and current assets 64,898 - 15,492,694 7,788,292 23,345,884Restricted bank balances 11,484,284 7,254 88,121,114 2,507,185 102,119,837Cash and cash equivalents 5,046,933 532,859 17,533,796 4,050,763 27,164,351

33,784,027 1,381,847 125,837,810 22,219,289 183,222,973Foreign currencydenominated financial liabilitiesLoans and borrowings (36,992,989) (300,000) (6,248,828) (1,373,427) (44,915,244)Trade payables (2,029,390) (122,346) (7,090,307) (6,021,287) (15,263,330)Due to related parties (680,925) (48,325) (3,796,935) (3,949) (4,530,134)Other payables (1,109,190) (30,142) (13,318,486) (3,939,809) (18,397,627)

(40,812,494) (500,813) (30,454,556) (11,338,472) (83,106,335)Net exposure (7,028,467) 881,034 95,383,254 10,880,817 100,116,638

(*)ThefiguresinthiscolumnreflecttheEuropositionofsubsidiariesandjointventuresthathavefunctionalcurrenciesotherthanEuro.

94



31 December 2010Foreign currencydenominated financial assets USD EUR (*) TRL Other TotalOther non-current assets 6,262 - 46,073 11,411 63,746Trade receivables 13,540,569 575,824 3,350,067 5,806,226 23,272,686Due from related parties 924,730 - 1,510,813 - 2,435,543Other receivables and current assets 48,008 1,797 8,095,835 5,083,236 13,228,876Restricted bank balances 11,857,494 44,739 101,838,200 2,081,289 115,821,722Cash and cash equivalents 1,547,022 81,651 7,515,141 1,857,146 11,000,960

27,924,085 704,011 122,356,129 14,839,308 165,823,533

Foreign currency denominated financial liabilitiesLoans and borrowings (48,652,286) - (6,143,968) (913,676) (55,709,930)Bankoverdraft - - (1,738,590) (4,870) (1,743,460)Trade payables (2,684,766) (22,344) (6,768,971) (7,461,918) (16,937,999)Due to related parties (4,609,180) (52,928) (10,193,770) - (14,855,878)Derivative financial instruments (5,482,466) - - - (5,482,466)Other payables (1,049,707) (30,478) (10,118,087) (2,784,677) (13,982,949)

(62,478,405) (105,750) (34,963,386) (11,165,141) (108,712,682)Net exposure (34,554,320) 598,261 87,392,743 3,674,167 57,110,851

(*)ThefiguresinthiscolumnreflecttheEuropositionofsubsidiariesandjointventuresthathavefunctionalcurrenciesotherthanEuro. ThefollowingsignificantexchangeratesagainstEuroappliedduringtheyear:

Average Rate Reporting Date Closing Rate

31 December2011 31 December 2010 31 December 2011 31 December 2010

USD 0.7188 0.7538 0.7729 0.7545

TRL 0.4302 0.5029 0.4092 0.4880

GEL 0.4260 0.4228 0.4627 0.4255

MKD 0.0163 0.0163 0.0163 0.0163

TND 0.5107 0.5285 0.5159 0.5203

SEK 0.1107 0.1047 0.1118 0.1111

Sensitivity analysis:

TheGroup’sprincipalcurrencyrateriskrelatestochangesinthevalueoftheEurorelativetoTRLandtheUSD.TheGroupmanagesitsexposure to foreign currency risk by entering into derivative contracts and, where possible, seeks to incur expenses with respect to each contract in the currency in which the contract is denominated and attempt to maintain its cash and cash equivalents in currencies consistent with its obligations.



The basis for the sensitivity analysis to measure foreign exchange risk is an aggregate corporate-level currency exposure. The aggregate foreign exchange exposure is composed of all assets and liabilities denominated in foreign currencies, both short-term and long-term purchase contracts. The analysis excludes net foreign currency investments.

A10percentstrengthening/(weakening)ofEURagainstthefollowingcurrenciesat31December2011and2010wouldhaveincreased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Equity Profit or loss

StrengtheningofEUR WeakeningofEUR StrengtheningofEUR WeakeningofEUR

31 December 2011

USD (24,408,884) 29,836,997 1,123,524 (1,123,524)

TRL - - (9,538,325) 9,538,325

Other - - (1,088,082) 1,088,082

Total (24,408,884) 29,836,997 (9,502,883) 9,502,883

31 December 2010

USD (25,972,195) 31,744,226 2,907,185 (2,907,185)

TRL - - (8,739,274) 8,739,274

Other - - (367,417) 367,417

Total (25,972,195) 31,744,226 (6,199,506) 6,199,506

Interest rate risk

The Group has used material amounts of bank borrowings from foreign financial institutions and banks. Although most of these borrowings havefloatinginterestrates,theGroupmanagementandbanksfixedinterestratesbyusingderivativefinancialinstruments.TAVİstanbul,TAVİzmir,TAVEsenboğa,TAVTunisia,HAVAŞandTAVMacedoniauseinterestrateswapstohedgethefluctuationsinEuriborandLiborrates(i.e.100%,49%,100%,85%,50%and100%offloatingloansofTAVİstanbul,TAVİzmir,TAVEsenboğa,TAVTunisia,HAVAŞ,andTAVMacedonia, respectively are fixed).

96



Profile:

At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:

Carrying amount


Fixed rate instruments

Financial assets 371,757,008 345,054,870

Financial liabilities (281,655,629) (209,071,088)

90,101,379 135,983,782

Carrying amount

31 December2011 31 December2010

Variable rate instruments

Financial assets 15,196,517 14,380,772

Financial liabilities (1,084,646,501) (1,130,956,789)

(1,069,449,984) (1,116,576,017)

Fair value sensitivity analysis for fixed rate instruments:

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interestratesatthereportingdatewouldnotaffectprofitorloss.

Cash flow sensitivity analysis for variable rate instruments:

BasedontheGroup’scurrentborrowingprofile,a50basispointsincreaseinEuribororLiborwouldhaveresultedinadditionalinterestexpenseofapproximatelyEUR1.0millionontheGroup’svariableratedebtwhenignoringeffectofderivativefinancialinstruments.EUR0.9million of the exposure is hedged through interest rate swap contracts. Therefore, the net exposure on statement of comprehensive income wouldbeEUR0.1million.A50basispointsincreaseinEuribororLiborwouldhaveresultedanincreaseincashflowhedgereserveinequityapproximatelybyEUR27.9millionanda50basispointsdecreaseinEuribororLiborwouldhaveresultedadecreaseincashflowhedgereserveinequityapproximatelybyEUR24.4million.



Fair values

Fair values versus carrying amounts:

The fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated statement of financial position, are as follows:

31 December 2011

31 December 2010

Carrying Fair Carrying Fair

Note Amount Value Amount Value

Financial assets

Trade receivables - non current 25 94,299,205 159,501,551 113,810,957 194,669,072

Trade receivables - current 25 73,823,017 83,446,071 77,681,614 84,000,402

Due from related parties 40 7,944,503 7,944,503 5,124,375 5,124,375

Derivative financial instruments 36 4,206,768 4,206,768 - -

Otherreceivablesandcurrentassets(*) 24 7,303,771 7,303,771 7,112,588 7,112,588

Restricted bank balances 27 355,745,501 355,745,501 382,444,797 382,444,797

Cash and cash equivalents 26 76,346,757 76,346,757 32,442,373 32,442,373

Financial liabilities

Bankoverdraft 26 - - (2,865,313) (2,865,313)

Loans and borrowings 30 (1,224,294,460) (1,224,294,460) (1,233,457,456) (1,233,457,456)

Tradepayables(**) 35 (39,375,912) (39,375,912) (33,339,651) (33,339,651)

Due to related parties 40 (18,140,702) (18,140,702) (28,151,745) (28,151,745)

Derivative financial instruments 36 (126,736,082) (126,736,082) (104,968,109) (104,968,109)

Otherpayables(**) 32 (43,288,285) (43,288,285) (37,395,774) (37,395,774)

(832,165,919) (757,340,519) (821,561,344) (734,384,441)

(*)Non-financialinstrumentssuchasprepaidexpenses,prepaidtaxesandduesandadvancesgivenareexcludedfromothernon-currentassets and other receivables and current assets.(**)Non-financialinstrumentssuchasadvancesreceivedareexcludedfromtradepayablesandotherpayables.

The methods used in determining the fair values of financial instruments are discussed in Note 4.

98



Fair value hierarchy:

Thetablebelowanalysesfinancialinstrumentscarriedatfairvalue,byvaluationmethod.Thedifferentlevelshavebeendefinedasfollows:

•Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities•Level2:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.,asprices)orindirectly (i.e., derived from prices).•Level3:inputfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).

31 December 2011 Level 1 Level 2 Level 3

Interest rate swap - (126,736,082) -

Cross currency swap - 4,206,768 -

- (122,529,314) -

31 December 2010 Level 1 Level 2 Level 3

Interest rate swap - (99,485,643) -

Cross currency swap - (5,482,466) -

- (104,968,109) -

39. COMMITMENTS, CONTINGENCIES AND CONTRACTUAL OBLIGATIONS

Commitments and contingencies


LettersofguaranteegiventoDHMİ 161,435,188 122,819,761

Letters of guarantee given to third parties 88,230,962 54,776,983

Letters of guarantee given to Macedonian Government 20,250,000 20,250,000

Letters of guarantee given to Tunisian Government 11,941,338 8,421,230

281,857,488 206,267,974

TheGroupisobligedtogive6%ofthetotalrentamountofUSD152,580,000ofTAVİstanbulasaletterofguaranteeaccordingtotherentagreementmadewithDHMİ.ThetotalobligationhasbeenprovidedbytheGroup. TheGroupisobligedtogivealetterofguaranteeatanamountequivalentofEUR7,520,469(31December2010:EUR7,971,230)totheMinistryofTransportandEUR4,420,869(31December2010:EUR450,000)toOACAaccordingtotheBOTagreementsignedwithOACAinTunisia. The total obligation has been provided by the Group.

Majority of letters of guarantee given to third parties includes the guarantees given to customs, lenders and some customers.



Contractual obligations

TAV İstanbul

TAVİstanbulisboundbythetermsoftheRentAgreementmadewithDHMİ.IfTAVİstanbuldoesnotcomplywiththerulesandregulationssetforthintheRentAgreement,thismightleadtotheforcedcessationofTAVİstanbul’soperation.

Attheendofthecontractperiod,TAVİstanbulwillberesponsibleforoneyearforthemaintenanceandrepairofthedevices,systemandequipmentsuppliedforthecontractualfacilities.Incasethenecessarymaintenanceandrepairsarenotmade,DHMİwillhavethismaintenanceandrepairmade,andthecostwillbechargedtoTAVİstanbul.

Pursuanttotheprovisionsofthisagreement,thecontractualobligationsofTAVİstanbulincludetherentaloftheabovementionedfacilitiesforaperiodoffifteenandahalfyearsbeginningon3July2005;theoperationofthefacilitiesincompliancewithinternationalnormsand standards within the rental (operation) period; the performance of periodic repair and maintenance activities on the facilities and the transfer of the facilities in question including the supporting systems, equipment, furniture and fixtures in a proper and usable condition to DHMİupontheexpiryoftherentalperiod.

InthecasewhereTAVİstanbulasthelesseeperformsadelayedand/orincompleterentpaymenttoDHMİ,TAVİstanbulischargedapenaltyof10%oftherentamounttobepaid.TAVİstanbulisthenobligedtoperformthepaymentlatestwithinfivedays.Otherwise,DHMİshallbeentitledtoterminatetherentagreement.TAVİstanbulisnotentitledtoclaimtherentpaymentsperformedtoDHMİpriortothetermination of the contract.

TAV Esenboğa and TAV İzmir

TAVEsenboğaandTAVİzmirareboundbythetermsoftheBOTAgreementsmadewithDHMİ.Ifthesecompaniesdonotfollowtherulesand regulations set forth in the concession agreement, this might lead to the forced cessation of these companies’ operations according to the BOT Agreements. According to the BOT agreements:

•Thesharecapitalofthecompaniescannotbelessthan20%offixedinvestmentamount.

•Thecompanieshaveacommitmenttomakeadditionalinvestmentupto20%oftheinitialBOTinvestmentuponrequestofDHMİ.

DHMİhasrequestedanextensionofEUR13,900,000(13%oftheinitialinvestment)fromTAVİzmiron21August2006whichextendedtheconstructionperiodby2monthsand20days,andoperationperiodby8monthsand27days.TAVİzmircompletedtheconstructionforsuchextensionon10May2007.AftergrantingoftemporaryacceptancebyDHMİinyear2007,finalacceptancewasgrantedbyDHMİon21 March 2008.

AftergrantingoftemporaryacceptancebyDHMİinyear2007,finalacceptanceforBOTinvestmentsofTAVEsenboğawasgrantedbyDHMİon 5 June 2008.

At the end of the contract period, the companies will be responsible for one year for the maintenance and repair of the devices, system andequipmentsuppliedforthecontractualfacilities.Incasethenecessarymaintenanceandrepairsarenotmade,DHMİwillhavethismaintenanceandrepairmadeandthecostwillbechargedtoTAVİzmirandTAVEsenboğa.

100



AllequipmentusedbyTAVEsenboğaandTAVİzmirmustbeinagoodconditionandunderwarrantyandneedtomeettheinternationalstandards and Turkish Standards as well.

If the need shall arise to replace fixed assets subject to depreciation, which become unusable within the rent period and the depreciation rates of which are not delineated in the Tax Application Law, the operator is obliged to perform the replacement.

AllfixedassetscoveredbytheimplementationcontractwillbetransferredtoDHMİfreeofcharge.Transferreditemsmustbeinworkingconditionsandshouldnotbedamaged.TAVEsenboğaandTAVİzmirhavetheresponsibilityofrepairandmaintenanceofallfixedassetsunder the investment period.

HAVAŞ and TGS

In accordance with the general ground handling agreement (an integral part of the ground handling operation A Group license) signed withDHMİ,HAVAŞandTGSundertaketheliabilityofalllossesincurredbytheirpersonneltoDHMİortothirdparties.Inthisframework,HavaşandTGScoverthoselossesbyaninsurancepolicyamountingtoUSD50million.Theyalsotaketheresponsibilityofthetrainingfacilities given to the personnel and the quality of the service provided by its personnel together with the repair and maintenance of the groundhandlingvehiclesandequipment.HAVAŞandTGSarerequiredtoprovideDHMİwithlettersofguaranteeeachamountingtoUSD1,000,000. Fines received from losses incurred by the ground handling personnel or fines arising from the violation of the related agreement willbechargedtoHAVAŞandTGS.Fineswhichareoverdueinaccordancewiththeappointedagreement/perioddeclaredbyDHMİwillbesettledbytheliquidationoftheletterofguarantee.IfDHMİliquidatesthecollateral,HAVAŞandTGSareobligedtocompletethecollateralat its original amount which is USD 1,000,000 within 15 days.

InaccordancewiththerentalagreementssignedwithDHMİregardingseveralparkingareas,land,buildings,officesattheAtatürk,Esenboğa,AdnanMenderes,Dalaman,Adana,Trabzon,Milas,Nevşehir,Antalya,Gaziantep,Kayseri,Urfa,Batman,Adıyaman,Elazığ,Muş,SivasandKonyaairports;whentherentperiodends,DHMİwillhavetherighttoretaintheimmovableintheareafreeofcharge.

TAV Tbilisi

TAV Tbilisi is bound by the terms of the BOT Agreement. In case TAV Tbilisi fails to comply with the rules and regulations set forth in the agreement, it may be forced to cease its operations.

With regards to the BOT Agreement, TAV Tbilisi is required to;

•complywithallapplicablesafetystandardsandensurethattheairportandallotherancillaryequipmentareoperatedinamannersafetopassengers, workers and general public, as well as to comply with the technical and operational requirements of Tbilisi International Airport and environmental standards of Georgia;

•maintainandoperatethenewterminalandinfrastructureatTbilisiInternationalAirportinaccordancewiththeapplicablerequirementsoftheBOTAgreementandInternationalAirTransportationAssociation,InternationalCivilAviationOrganizationorEuropeanCivilAviationConference;

•ensurethatitssubcontractorsandTAVTbilisiitselfobtainandmaintainrelevantinsurancepoliciesfromfinanciallystrongandinternationally reputable insurance companies;

•remedyaccidentsthatmightoccuruponmechanicaldamageinflictedbyTAVTbilisitoexistingcommunicationnetworksorinappropriateuse or operation thereof.

The Final Acceptance Protocol was concluded in May 2011.



Tax legislation and contingencies

Georgian commercial legislation and tax legislation in particular may give rise to varying interpretations and amendments. In addition, asmanagement’sinterpretationoftaxlegislationmaydifferfromthatofthetaxauthorities,transactionsmaybechallengedbythetaxauthorities, and as a result TAV Tbilisi may be assessed additional taxes, penalties and interest. Tax periods remain open to review by the tax authorities for five years. Management believes that their interpretation of the relevant legislation is appropriate and TAV Tbilisi’s profit, currency and customs positions will be sustained.

TAV Batumi

TAV Batumi is obliged to perform the terms agreed under the Agreement for Management of 100 percent of Shares in “Batumi Airport LLC” (the “Agreement”) together with its Schedules annexed to the Agreement. In the event that TAV Batumi fails to fulfill its material obligations under the Agreement and its Schedules, it may be forced to cease the management of the Batumi International Airport and all operation rights generated at the Airport.

With regards to the Agreement, TAV Batumi is required to;

•complywithallrequirementsoftherelevantstatutesandtheApplicableLawsofGeorgia;

•preventrepatriationandtransferofthedividendsdistributablebyBatumiAirportLLCfromGeorgia;

•complywiththetermsofPermitsthatmateriallyadverselyaffecttheperformanceofTAVBatumi’sobligationsundertheAgreementorachievement of the Revenues by Batumi Airport LLC and/or achievement of dividends by the TAV Batumi from Batumi Airport LLC;

•protect,promote,developandextendthebusinessinterestsandreputationofBatumiAirportinconnectionwiththeServices(reasonableeffortbasis);

•maintainandoperateBatumiAirportinaccordancewiththeinternationalstandardsapplicabletosimilarinternationalairports,andanyother local standards that will be applicable to the operations of an international airport;

•recruitandtrainsufficientnumberofstafffortheoperationofBatumiAirportinaccordancewithstandard,acceptedoperationalstandards;

•performregular,periodicandemergencymaintenanceandrepairworksofallthefixedassets,aswellastheannexationsandaccessoriesrelated thereto located on the territory of Batumi Airport; and

•procureandmaintaininsurancepolicieslistedundertheAgreementduringthetermoftheoperation. TAV Tunisia

TAVTunisiaisboundbythetermsoftheConcessionAgreementsrelatedtothebuildingandoperationofEnfidhaAirportandtotheoperation of Monastir Airport. In case TAV Tunisia fails to comply with the provisions of these Concession Agreements as well as the Terms and Specifications annexed thereto, it may be forced to cease the operation of the said airports.

AccordingtoEnfidhaConcessionAgreement,TAVTunisiaisrequiredto:

•design,construct,maintain,repair,renew,operateandimproveatitsowncostsandrisksandunderitsliabilities,thelandmadeavailabletoit,infrastructures,buildings,facilities,equipments,networksandservicesnecessaryfortheoperationofEnfidhaAirport;

102



•completetheconstructionoftheAirportandstartoperatingitatthelateston1October2009whichisthenextendedto1December2009 through a notice from the Authority, unless the requirements by the Terms and Specifications of the Agreement fails. The operation of the Airport was started in the specified date in 2009.

•financeupto30%oftheProjectbyEquity.

According to Monastir Concession Agreement, TAV Tunisia is required to maintain, repair, renew, operate and improve at its own costs and risks and under its liabilities, the land made available to it, infrastructures, buildings, facilities, equipments, networks and services necessary for the operation of Monastir Airport.

Pursuant to both Concession Agreements, TAV Tunisia is required to:

•marketandpromotetheactivitiesoperatedintheAirportsandperformthepublicservicerelatedwiththeseactivities;

•providewithandmaintainthebankguaranteesinaccordancewiththeAgreements;

•paytheConcessionRoyaltiestotheConcedingAuthorities(TunisianStateandOACA);

•complyparticularlywithprovisionsofAppendix2totheTermsandSpecificationsannexedtotheAgreementsrelatedtotheownershipofthe shares by TAV Tunisia’s shareholders;

•requiretheapprovaloftheConcedingAuthoritypriortothetransferofitsrightsundertheConcessionAgreementstoanythirdpartyortothe conclusion of any sub-contract during the operation phase of the Airports;

•complywithitsobligationsundertheAgreementsandwithallapplicableTunisianLawsandInternationalrulesrelatedparticularlybutnotlimited to safety, security, technical, operational and environmental requirements;

•complywithitsobligationsrelatedtoinsuranceasprovidedforbytheAgreements.

TAV Tunisia may also be obliged to cease the operation of the said airports if (i) it is declared insolvent or is subject to judicial liquidation proceedings or (ii) it is forced to cease the operation of one of the Airports. The Conceding Authority and TAV Tunisia shall, seven years prior to the expiry of the Concession Agreement, negotiate and agree on a repair, maintenance and renewal program, with the assistance of specialists if applicable, which program includes the detailed pricing of the works for the final five years of the concession which are necessary in order to ensure that the movable and immovable concession property is transferred in good condition to the Conceding Authority, as well as the schedule of the tasks to be completed prior to the transfer. In this context, TAV Tunisia annually performs repair and maintenance procedures for the operation of the concession property according to the requirements set in the Concession Agreement.



TAV Gazipaşa

TAVGazipaşaisboundbythetermsoftheConcessionAgreementmadewithDHMİforAntalyaGazipaşaAirport.

IfTAVGazipaşaviolatestheagreementanddoesnotremedytheviolationwithintheperiodgrantedbyDHMİ,DHMİmayterminatetheAgreement.

ThesharetransfersoftheshareholdersofTAVGazipaşaaresubjecttotheapprovalofDHMİ.

TheAgreementismadeforaperiodoftwenty-fiveyearseffectivefromthedateTAVGazipaşaobtainstheoperationauthorisationfromtheMinistryofTransportation.ThecontractualobligationsofTAVGazipaşaincludetheoperationofthefacilitiesincompliancewiththeinternationalnormsandstandardssubjecttothesupervisionoftheMinistryofTransportationCivilAviationGeneralDirectorateandDHMİ;obtaining maintenance and periodic maintenance and repairs of all systems and equipment requisite for the operation and the transfer ofthefacilitiestogetherwiththesystems,equipment,furnitureandfixturesinaproperandusableconditiontoDHMİ,withoutanydebtorliabilities, upon the expiry of the Agreement (if the economic lives of the systems, equipment, furniture and fixtures have come to an end, theyshouldberenewedbeforethetransfertoDHMİ).UpontheexpiryoftheAgreement,TAVGazipaşawillberesponsibleforoneyearforthe maintenance and repair of the systems and equipment in the facilities. In case the necessary maintenance and repairs are not made, DHMİwillhavethismaintenanceandrepairsmadeandthecostwillbechargedtoTAVGazipaşa.

IfexpropriationoflandisrequiredforconstructionofadditionalfacilitiesorsystemsduringthetermoftheAgreement,TAVGazipaşawillberesponsibleforthecompensationforexpropriationandwillnotdemandanycompensationand/oradditionalrentperiodfromDHMİandtheownerofthesubjectlandwillbeDHMİ.

IntheeventthatTAVGazipaşaisdelayedinpayingtherentand/ortherentisnotfullypaidtoDHMİ,TAVGazipaşawillbechargedamonthlypenaltyintheamountof10%oftheoutstandingamount.

Facility usage amount represents the 50,000 USD fixed payment that is paid as a usage amount of the airport facility, subsequent to rent period starting, within the last month of each rent payment year.

TAV Macedonia

TAV Macedonia is bound by the terms of the Concession Agreement made with Macedonian Ministry of Transport and Communication (“MOTC”).

If TAV Macedonia violates the agreement and does not remedy the violation within the period granted by MOTC, MOTC may terminate the Agreement.

All equipment used by TAV Macedonia must need to meet the Concession Agreement’s standards.

All fixed assets covered by the implementation contract will be transferred to MOTC free of charge. Transferred items must be in working conditions and should not be damaged. TAV Macedonia has the responsibility of repair and maintenance of all fixed assets under the investment period.

Management believes that as at 31 December 2011, the Group has complied with the terms of the contingencies mentioned above.

104



40. RELATED PARTIES

The major immediate parents and ultimate controlling parties of the Group are Tepe and Akfen Groups.

All other transactions not described in this footnote between the Company and its subsidiaries and joint ventures, which are related parties of the Company, have been eliminated on consolidation. Details of balances between the Group and other related parties are disclosed below.

Key management personnel compensation:

The remuneration of directors and other members of key management during the year comprised the following:

2011 2010

Short-term benefits (salaries, bonuses etc.) 12,746,578 7,786,951

12,746,578 7,786,951

Asat31December2011and2010,noneoftheGroup’sdirectorsandexecutiveofficershasoutstandingpersonnelloansfromtheGroup.

The details of the transactions between the Group and any other related parties are disclosed below:

Other related party transactions:


Due from related parties 7,418,090 4,628,730

Current loan to related parties 526,413 495,645

7,944,503 5,124,375

Due from related parties 31 December 2011 31 December 2010

TAVTepeAkfenYat.İnşveİşl.A.Ş.(“TAVİnşaat”) 4,275,584 1,111,065

ATÜ(*) 2,324,337 1,603,588

TAVGOtoparkYapımYatırımveİşletmeA.Ş.(“TAVG”) 266,579 1,139,341

Other related parties 551,590 774,736

7,418,090 4,628,730 (*)ReceivablesfromATÜcomprisenon-eliminatedportionofconcessionfeeduty-freereceivablesperproportionateconsolidation.



Loan to related parties 31 December 2011 31 December 2010

CAS 521,366 487,088


526,413 495,645


Due to related parties 2,869,114 6,059,656

Current loan from related parties 7,553,053 7,961,525

10,422,167 14,021,181

Non-current loan from related parties 7,718,535 14,130,564

7,718,535 14,130,564

Due to related parties 31 December 2011 31 December2010

IBSBrokerlikveSigortaHizmetleriA.Ş.(IBSSigorta)(*) 2,628,202 5,480,173


2,869,114 6,059,656

106



(*)IBSSigortaprovidesinsuranceintermediatoryservicestotheGroup.

Current loan from related parties 31 December 2011 31 December 2010TGS(*) 4,363,017 5,120,686

ATÜ(**) 1,843,929 1,242,469

TAVİnşaat 933,295 1,185,494


7,553,053 7,961,525

Non-current loan from related parties 31 December 2011 31 December 2010ATÜ(**) 7,718,535 9,006,363

TGS(*) - 5,124,201

7,718,535 14,130,564

(*)LoanfromTGSisrelatedwithHAVAŞ’sshareofunpaidportionofthecapitalincreaseofTGS.(**)LoanreceivedfromATÜforfinancingpurposes.


Short term deferred income from related parties

ATÜ(*) 2,002,689 2,001,602


2,005,506 2,002,928


Long term deferred income from related parties

ATÜ(*) 15,280,722 17,273,593

Other related parties 487 487

15,281,209 17,274,080



(*)DeferredincomefromrelatedpartiesisrelatedwiththeunearnedportionofconcessionrentincomefromATÜ.

Services rendered to related parties 2011 2010

ATÜ(*) 91,939,885 75,328,545

Other related parties 8,898,002 4,540,943

100,837,887 79,869,488

(*)ServicesrenderedtoATÜcomprisenon-eliminatedportionofconcessionfeeduty-freeperproportionateconsolidation.

Services rendered by related parties 2011 2010

IBSSigorta(*) 3,703,401 7,849,041

TAVİnşaat(**) 2,867,540 448,327

Tepe Servis 1,783,932 609,758

TAVHavacılıkA.Ş. 507,015 516,136


9,416,497 9,859,625

(*)IBSSigortaprovidesinsurancebrokerageservicestotheGroup.(**)TAVİnşaatprovidesconstructionservicestotheGroup.

108



Interest (expense) / income from related parties (net) 2011 2010

TGS (700,878) (1,488,049)

ATÜ (579,002) (657,496)

TAVİnşaat 42,960 (150,324)


(1,195,246) (2,273,670)

TheaverageinterestrateusedwithintheGroupis4.43%perannum(31December2010:3.82%).TheGroupconvertsrelatedpartyTRLloan receivable and payable balances to USD at month end using the Central Bank’s announced exchange rates and then charges interest on the USD balances.

Construction work rendered by related parties 2011 2010

TAVİnşaat(*) 71,456,236 59,201,400

TAV G 5,428,997 -

76,885,233 59,201,400 (*)TAVİnşaatmainlyprovidedservicesrelatingtotheconstructionofSkopjeandOhridAirportsin2011.In2010,TAVİnşaatprovidedservicestorenovationofMonastir,GazipaşaandİstanbulAtatürkAirportsandconstructionofSkopje,OhridandEnfidhaAirports.



41. JOINT VENTURES

The Group has the following significant interests in joint ventures:

•49.98%equityshareholdingwith50%votingpowerinATÜ,ajointlycontrolledentityestablishedinTurkey.SummaryoffinancialinformationofATÜanditssubsidiaries,notadjustedforthepercentageownershipheldbytheGroupisasfollows:

Statement of Financial Position 31 December2011 31 December 2010

Current assets 56,084,664 42,713,446

Non-current assets 61,456,087 64,682,272

Current liabilities (42,964,046) (33,372,318)

Non-current liabilities (38,589,337) (45,315,704)

Statement of Comprehensive Income 2011 2010

Total revenues 415,412,600 340,167,492

Total expenses (389,569,378) (319,368,809)


•50%equityshareholdingwith50%votingpower,inCAS,ajointventureestablishedinKKTC.SummaryoffinancialinformationofCAS,not adjusted for the percentage ownership held by the Group is as follows:

Statement of Financial Position 31 December2011 31 December2010Current assets 362,007 760,987Non-current assets 624,608 674,211Current liabilities (3,351,990) (3,491,808)

Statement of Comprehensive Income 2011 2010Total revenues 2,381,269 3,199,746Total expenses (2,621,702)(4,268,521)Loss for the year (240,433) (1,068,775)

110



•32.40%equityshareholdingwith32.40%votingpower,inTAVGözen,ajointventureestablishedinTurkey.SummaryoffinancialinformationofTAVGözen,notadjustedforthepercentageownershipheldbytheGroupisasfollows:

Statement of Financial Position 31 December2011 31 December 2010Current assets 408,336 259,138Non-current assets 471,469 893,197Current liabilities (23,155) (27,216)

Statement of Comprehensive Income 2011 2010Total revenues 557,896 1,370,675Total expenses (833,126) (1,014,870)(Loss) / profit for the year (275,230) 355,805

•50%equityshareholdingwith50%votingpower,inTGS,ajointventureestablishedinTurkey.SummaryoffinancialinformationofTGS,not adjusted for the percentage ownership held by the Group is as follows:

Statement of Financial Position 31 December 2011 31 December 2010

Current assets 41,763,182 46,524,398

Non-current assets 39,363,878 47,707,553

Current liabilities (14,366,112) (38,172,947)

Non-current liabilities (3,020,100) (947,188)


Total revenues 139,292,606 79,575,316

Total expenses (125,147,352) (86,583,575)

Profit / (loss) for the year 14,145,254 (7,008,259)



•50%equityshareholdingwith50%votingpowerinHAVAŞEurope,ajointventureestablishedinLatvia.HAVAŞacquired50%ofsharesofHAVAŞEuropein2010.In2011,theGroupobtained16.67%ofHAVAŞEurope’ssharesandconsequentlyacquired66.67%equityshareholdingwith66.67%votingpower.HAVAŞEuropewasfullyconsolidatedwiththeminority’sownershipreflectedasaminorityinterest.SummaryoffinancialinformationofHAVAŞEurope,notadjustedforthepercentageownershipheldbytheGroupisasfollows:

Statement of Financial Position 31 December 2011 31 December 2010Current assets - 1,264,056

Non-current assets - 5,981,050

Current liabilities - (4,300,495)

Non-current liabilities - (2,543,048)


Total revenues - 5,666,644

Total expenses - (6,265,338)

Loss for the year - (598,694)

•49.98%equityshareholdingwith49.98%votingpowerinBTADenizyolları,ajointventureestablishedinTurkey.SummaryoffinancialinformationofBTADenizyolları,notadjustedforthepercentageownershipheldbytheGroupisasfollows:

Statement of Financial Position 31 December 2011 31 December 2010Current assets 4,857,456 -

Non-current assets 1,624,814 -

Current liabilities (2,461,976) -

Non-current liabilities (3,199,218) -


Total revenues 4,261,239 -

Total expenses (4,258,424 -

Profit for the year 2,815 -

42. SUBSEQUENT EVENTS

HAVAŞ’sbusoperationsinİstanbulandAntalyaaretemporarilysuspendedbythedecisionsofİstanbulandAntalyaMunicipalitiesinJanuary2012andFebruary2012,respectively.HAVAŞhasopenedlawsuitsagainstİstanbulandAntalyaMunicipalitiesinordertoresumetheoperations.GroupmanagementbelievesthattheselawsuitswillbefinalisedinfavorofHAVAŞ.

TAV AIRPORTS HOLDING Istanbul Atatürk Airport International Terminal (Gate A - Next to VIP) 34149 Yeşilköy, Istanbul, Turkey Phone: +90 212 463 30 00 Fax: +90 212 465 50 50 www.tavairports.com http://ir.tav.aero