Halk Gayrimenkul Yatirim Ortakligi : 30.06.2022 - Independent Auditor’s Report

HALK GAYRİMENKUL YATIRIM ORTAKLIĞI A.Ş. AND ITS SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 JUNE 2022 AND INDEPENDENT AUDITOR'S REVIEW REPORT

(CONVENIENCE TRANSLATION OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH)

(CONVENIENCE TRANSLATION OF THE REVIEW REPORT ON

INTERIM FINANCIAL INFORMATION ORIGINALLY ISSUED IN TURKISH)

REPORT ON REVIEW OF INTERIM

FINANCIAL STATEMENTS

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

Introduction

We have reviewed the accompanying consolidated financial statements of Halk Gayrimenkul Yatırım Ortaklığı A.Ş. ("the Company") and its subsidiary (together will be referred as "the Group"), which comprise the consolidated statement of financial position as at 30 June 2022, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows for the six-months period then ended and a summary of significant accounting policies and other explanatory notes. The Group management is responsible for the preparation and presentation of this consolidated interim financial information in accordance with Turkish Financial Reporting Standards (TFRS). Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.

Scope of Review

We conducted our review in accordance with Independent Auditing Standard on Review Engagements (ISRE) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of consolidated interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters and applying analytical and other review procedures. A review of interim consolidated financial information is substantially less in scope than an audit conducted in accordance with Independent Auditing Standards and consequently the review of consolidated interim financial information 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, has come to our attention that causes us to believe that the accompanying consolidated interim 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 matters from which the Parent Bank can be affected:

On 15 October 2019, the United States ("USA") New York Southern District Attorney's Office filed a lawsuit against the Bank in the Southern District Court of New York ("District Court") for violation of Iran sanctions. The criminal case pending in the District Court is pending due to an appeal by the Bank of the appeal under the "Foreign State Immunity Act (FSIA)". The bank's appeals process to the US Supreme Court continues.

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

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

Additional paragraph for convenience translation to English

In the accompanying interim consolidated financial statements, the accounting principles described in Note 2 (defined as Turkish Accounting Standards/Turkish Financial Reporting Standards) differ from International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board with respect to the application of inflation accounting. Accordingly, the accompanying interim consolidated financial statements are not intended to present the financial position and results of operations in accordance with IFRS.

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

Member of DELOITTE TOUCHE TOHMATSU LIMITED

Zere Gaye Şentürk

Partner

İstanbul, 12 August 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	6-77
NOTE 1	ORGANIZATION AND OPERATIONS OF THE GROUP	6-7
NOTE 2	BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS	8-29
NOTE 3	INTERESTS IN OTHER ENTITIES	30-32
NOTE 4	RELATED PARTY DISCLOSURES	32-36
NOTE 5	TRADE RECEIVABLES AND TRADE PAYABLES	36-38
NOTE 6	INVENTORIES	38-39
NOTE 7	PREPAID EXPENSES AND DEFERRED INCOME	39-40
NOTE 8	LIABILITIES ARISING FROM CUSTOMER CONTRACTS ……………………	40
NOTE 9	INVESTMENT PROPERTIES	41-45
NOTE 10	PROPERTY, PLANT AND EQUIPMENT	46
NOTE 11	INTANGIBLE ASSETS	47
NOTE 12	PROVISIONS, CONTINGENT ASSETS AND LIABILITIES	47-52
NOTE 13	EMPLOYEE BENEFITS	53-54
NOTE 14	OTHER ASSETS AND LIABILITIES	54
NOTE 15	SHARE CAPITAL, RESERVES VE OTHER EQUITY ITEMS	55-57
NOTE 16	REVENUE AND COST OF SALES	58
NOTE 17	EXPENSES BY NATURE	58
NOTE 18	GENERAL ADMINISTRATIVE EXPENSES, MARKETING AND SALES EXPENSES	59
NOTE 19	OTHER INCOME AND EXPENSES FROM OPERATING ACTIVITIES	60
NOTE 20	FINANCE EXPENSES	60
NOTE 21	INCOME TAXES	60
NOTE 22	EARNINGS PER SHARE	61
NOTE 23	FINANCIAL INSTRUMENTS…………………………………………………………… .	61-63
NOTE 24	NATURE AND LEVEL OF RISKS ARISING FROM FINANCIAL INSTRUMENTS ….. 64-71
NOTE 25	FINANCIAL INSTRUMENTS (FAIR VALUE DISCLOSURES)	71-72
NOTE 26	EVENTS AFTER THE REPORTING PERIOD	72
NOTE 27	NOTES ON THE STATEMENT OF CASH FLOWS	72-73
NOTE 28	DISCLOSURE OF OTHER MATTERS THAT MAY AFFECT FINANCIAL
	STATEMENTS SIGNIFICANTLY OR IS NECESSARY FOR FINANCIAL
	STATEMENTS TO BE CLEAR, INTERPRETABLE AND COMPREHENSIBLE	73-75
NOTE 29	FEES FOR SERVICES RECEIVED FROM THE INDEPENDENT AUDIT FIRM…………. 75
NOTE 30	FINANCIAL INVESTMENTS	75
APPENDIX 1 CONTROL OF COMPLIANCE WITH RESTRICTIONS ON THE PORTFOLIO	76-77

HALK GAYRİMENKUL YATIRIM ORTAKLIĞI A.Ş. AND ITS SUBSIDIARIES

REVIEWED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2022

(Amounts expressed in Turkish Lira (TL).)
			Reviewed		Audited
			30 June		31 December
	Notes	2022	2021
ASSETS
Current Assets		724,069,349	283,193,921
Cash and Cash Equivalents	27	359,492,234	53,109,547
Trade Receivables	5	3,323,861	2,284,370
Trade Receivables from Related Parties	4	-	60
Trade Receivables from Third Parties		3,323,861	2,284,310
Inventories	6	295,185,988	184,061,628
Prepaid Expenses	7	1,862,180	260,880
Prepaid Expenses to Related Parties	4	1,317,964	-
Prepaid Expenses to Third Parties		544,216	260,880
Current Tax Assets		748,804	734,045
Other Current Assets	14	63,456,282	42,743,451
Other Current Assets from Third Parties		63,456,282	42,743,451
Non-Current Assets		8,576,700,022	4,295,027,366
Trade Receivables	5	6,570	244,980
Trade Receivables From Third Parties		6,570	244,980
Investment Properties	9	8,503,510,007	4,142,257,500
Property, Plant and Equipment	10	5,220,127	4,181,825
Intangible Assets	11	1,381,480	787,395
Other Intangible Assets		1,381,480	787,395
Prepaid Expenses	7	66,581,838	83,469,918
Prepaid Expenses to Related Parties		-	561,536
Prepaid Expenses to Third Parties		66,581,838	82,908,382
Other Non-Current Assets	14	-	64,085,748
Other Non-Current Assets to Third Parties			-		64,085,748
TOTAL ASSETS			9,300,769,371		4,578,221,287

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

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