Halk Gayrimenkul Yatirim Ortakligi : 31.03.2022 - Independent Auditor’s Report

HALK GAYRİMENKUL YATIRIM ORTAKLIĞI A.Ş. AND ITS SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS AS OF 31 MARCH 2022 AND INDEPENDENT AUDITOR'S REPORT

(CONVENIENCE TRANSLATION OF THE REPORT AND THE FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH)

(CONVENIENCE TRANSLATION OF THE INDEPENDENT AUDITOR'S REPORT

ORIGINALLY ISSUED IN TURKISH)

INDEPENDENT AUDITOR'S REPORT ON REVIEW OF

INTERIM FINANCIAL INFORMATION

To the General Assembly of Halk Gayrimenkul Yatırım Ortaklığı A.Ş.

Introduction

We have reviewed the accompanying consolidated statement of financial position of Halk Gayrimenkul Yatırım Ortaklığı A.Ş ("the Company") and its consolidated subsidiaries (collectively referred to as "the Group") as at 31 March 2022 and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in shareholders' equity, consolidated statement of cash flows for the three-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Group management is responsible for the preparation and fair presentation of this interim consolidated financial information in accordance with the Turkish Financial Reporting Standards ("TFRS"). Our responsibility is to express a conclusion on this interim consolidated financial information based on our review.

Scope of Review

We conducted our review in accordance with Independent Auditing Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim consolidated financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Independent Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial information is not prepared, in all material respects, in accordance with Turkish Financial Reporting Standards (TFRS).

Other Matters

As detailed in Note 28, we draw attention to the following which might affect the Parent Bank ("the Bank"):

On 15 October 2019, a lawsuit was filed against the Bank by the New York Southern District Attorney General of the United States ("US") Department of Justice for violation of Iranian sanctions and in the New York Southern District Court ("District Court"). The criminal case in the District Court is pending due to an appeal by the Bank within the scope of the "Foreign State Immunity Act (FSIA)". The Bank's appeal process to the US Supreme Court is ongoing.

In addition, a civil lawsuit was filed against the Parent Bank on 27 March 2020 with a claim for compensation by some plaintiffs in the U.S. New York Southern District Court "on the grounds that they could not satisfy their judgments from Iran due to violations of sanctions". The District Court dismissed the case. The complainants appealed the court decision before the Second Appeal. The appeal process is ongoing.

At this stage, the Bank's Management stated that there were no penalty, compensation, sanction or measure arising from the ongoing criminal and civil lawsuits against the Bank. There is an uncertainty with respect to any decisions by the US authorities that may adversely affect the financial position of the Bank. No provision has been made regarding these matters in the financial statements of the Bank. However, our opinion is not modified in respect of these matters.

DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş.

Member of DELOITTE TOUCHE TOHMATSU LIMITED

Zere Gaye Şentürk

Partner

İstanbul, 12 May 2022

INDEX		PAGE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	1-2
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME	3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	4
CONSOLIDATED STATEMENT OF CASH FLOWS	5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	6-74
NOTE 1	ORGANIZATION AND OPERATIONS OF THE COMPANY	6-7
NOTE 2	BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS	7-29
NOTE 3	INTERESTS IN OTHER ENTITIES	29-31
NOTE 4	RELATED PARTY DISCLOSURES	32-34
NOTE 5	TRADE RECEIVABLES AND TRADE PAYABLES	35-36
NOTE 6	INVENTORIES	36-38
NOTE 7	PREPAID EXPENSES AND DEFERRED INCOME	39
NOTE 8	LIABILITIES ARISING FROM CUSTOMER CONTRACTS ……………………	39
NOTE 9	INVESTMENT PROPERTIES	40-43
NOTE 10	PROPERTY, PLANT AND EQUIPMENT	44
NOTE 11	INTANGIBLE ASSETS	45
NOTE 12	PROVISIONS, CONTINGENT ASSETS AND LIABILITIES	45-51
NOTE 13	EMPLOYEE BENEFITS	52-53
NOTE 14	OTHER ASSETS AND LIABILITIES	54
NOTE 15	SHARE CAPITAL, RESERVES AND OTHER EQUITY ITEMS	54-56
NOTE 16	REVENUE AND COST OF SALES	57
NOTE 17	EXPENSES BY NATURE	57
NOTE 18	GENERAL ADMINISTRATIVE EXPENSES, MARKETING AND SALES EXPENSES	58
NOTE 19	OTHER INCOME AND EXPENSES FROM OPERATING ACTIVITIES	59
NOTE 20	FINANCE EXPENSES	59
NOTE 21	INCOME TAXES	59
NOTE 22	EARNINGS PER SHARE	59
NOTE 23	FINANCIAL INSTRUMENTS…………………………………………………………… .	60-61
NOTE 24	NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS	62-69
NOTE 25	FINANCIAL INSTRUMENTS (FAIR VALUE DISCLOSURES)	69-70
NOTE 26	EVENTS AFTER THE REPORTING PERIOD	70
NOTE 27	NOTES ON THE STATEMENT OF CASH FLOWS	71
NOTE 28 OTHER MATTERS THAT MAY HAVE A MATERIAL EFFECT ON, OR BE
	EXPLAINED FOR THE CLEAR UNDERSTANDING OF THE FINANCIAL
	STATEMENTS	71-72
NOTE 29 FEES FOR SERVICES RECEIVED FROM INDEPENDENT AUDIT FIRM	72
APPENDIX 1- CONTROL OF COMPLIANCE WITH RESTRICTIONS ON
	THE INVESTMENT PORTFOLIO	72-74

HALK GAYRİMENKUL YATIRIM ORTAKLIĞI A.Ş. AND ITS SUBSIDIARY

REVIEWED STATEMENT OF CONSOLIDATED FINANCIAL POSITION

AS AT 31 MARCH 2022

(All amounts expressed in Turkish Lira (TL))
			Reviewed		Audited
			31 March		31 December
	Notes	2022	2021
ASSETS
Current Assets		801,408,272	283,193,921
Cash and Cash Equivalents	27	487,850,001	53,109,547
Trade Receivables	5	3,535,824	2,284,370
Trade Receivables from Related Parties	4	60	60
Trade Receivables from Third Parties		3,535,764	2,284,310
Inventories	6	231,180,474	184,061,628
Prepaid Expenses	7	1,212,568	260,880
Prepaid Expenses to Third Parties		1,212,568	260,880
Current Tax Assets		898,601	734,045
Other Current Assets	14	76,730,804	42,743,451
Other Current Assets from Third Parties		76,730,804	42,743,451
Non-Current Assets		4,593,210,872	4,295,027,366
Trade Receivables	5	106,571	244,980
Trade Receivables From Third Parties		106,571	244,980
Investment Properties	9	4,449,393,228	4,142,257,500
Property, Plant and Equipment	10	5,016,515	4,181,825
Intangible Assets	11	796,448	787,395
Other Intangible Assets		796,448	787,395
Prepaid Expenses	7	73,812,362	83,469,918
Prepaid Expenses to Related Parties		812,717	561,536
Prepaid Expenses to Third Parties		72,999,645	82,908,382
Other Non-Current Assets	14	64,085,748	64,085,748
Other Non-Current Assets to Third Parties			64,085,748		64,085,748
TOTAL ASSETS			5,394,619,144		4,578,221,287

The accompanying notes form an integral part of these consolidated financial statements.

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