SİNPAŞ GAYRİMENKUL YATIRIM ORTAKLIĞI A.Ş. AND ITS SUBSIDIARIES

SİNPAŞ GAYRİMENKUL YATIRIM ORTAKLIĞI A.Ş. AND ITS SUBSIDIARIES CONVENIENCE TRANSLATION INTO ENGLISH OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 Originally Issued in Turkish

CONVENIENCE TRANSLATION INTO ENGLISH OF ORIGINALLY ISSUED IN TURKISH INDEPENDENT AUDITOR S REPORT To the Board of Directors of Sinpaş Gayrimenkul Yatırım Ortaklığı A.Ş 1. We have audited the accompanying consolidated financial statements of Sinpaş Gayrimenkul Yatırım Ortaklığı A.Ş. ( Company ) and its subsidiaries (together the Group ), which comprise the consolidated balance sheet as at 31 December 2012, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flow for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management s Responsibility for the Financial Statements 2. Management is responsible for the preparation and fair presentation of these financial statements that have been prepared in accordance with financial reporting standards published by the Turkish Capital Markets Board. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility 3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing principles issued by the Turkish Capital Markets Board. Those principles require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. a member of PricewaterhouseCoopers BJK Plaza, Süleyman Seba Caddesi No:48 B Blok Kat 9 Akaretler Beşiktaş 34357 İstanbul-Turkey www.pwc.com/tr Telephone: +90 (212) 326 6060 Facsimile: +90 (212) 326 6050

Opinion 4. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Sinpaş Gayrimenkul Yatırım Ortaklığı A.Ş. and its subsidiaries as of 31 December 2012, and of its financial performance and its cash flows for the year then ended in financial reporting standards (see Note 2) published by the Turkish Capital Markets Board. Additional paragraph for convenience translation into English 5. The financial reporting standards adopted by the Turkish Capital Markets Board as described in Note 2 to the accompanying financial statements differ from International Financial Reporting Standards ( IFRS ) issued by the International Accounting Standards Board with respect to the application of inflation accounting for the period between 1 January - 31 December 2005. Accordingly, the accompanying financial statements are not intended to present the financial position, financial performance and cash flows of the Company in accordance with IFRS. Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. a member of PricewaterhouseCoopers Burak Özpoyraz, SMMM Partner Istanbul, 10 April 2013

AS AT 31 DECEMBER 2012 CONTENTS PAGE CONSOLIDATED BALANCE SHEETS... 1-2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME...... 3 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY... 4 CONSOLIDATED STATEMENT OF CASH FLOWS... 5-6 NOTES TO THE... 7-65 NOTE 1 ORGANIZATION AND OPERATIONS OF THE COMPANY... 7 NOTE 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS... 7-22 NOTE 3 CASH AND CASH EQUIVALENTS... 22 NOTE 4 FINANCIAL INVESTMENTS... 23-26 NOTE 5 FINANCIAL BORROWINGS... 26-28 NOTE 6 TRADE RECEIVABLES AND PAYABLES... 28-29 NOTE 7 OTHER RECEIVABLES AND PAYABLES... 29-30 NOTE 8 INVENTORIES...... 30-31 NOTE 9 INVESTMENT IN ASSOCIATES... 32-33 NOTE 10 INVESTMENT PROPERTIES... 33 NOTE 11 PROPERTY, PLANT AND EQUIPMENT... 34 NOTE 12 INTANGIBLE ASSETS... 35 NOTE 13 PROVISIONS AND CONTINGENT LIABILITIES... 36-39 NOTE 14 EMPLOYMENT TERMINATION BENEFITS... 39-40 NOTE 15 OTHER CURRENT/ NON-CURRENT ASSETS... 41 NOTE 16 ADVANCES RECEIVED... 42 NOTE 17 EQUITY... 43-47 NOTE 18 SALES AND COST OF SALES... 47 NOTE 19 MARKETING, SELLING AND DISTRUBITION, GENERAL ADMINISTRATIVE EXPENSES... 48 NOTE 20 EXPENSES BY NATURE... 49 NOTE 21 INCOME/ EXPENSE FROM OTHER OPERATIONS... 49 NOTE 22 FINANCIAL INCOME... 50 NOTE 23 FINANCIAL EXPENSES... 50 NOTE 24 TAXATION... 51 NOTE 25 EARNINGS PER SHARE... 51 NOTE 26 TRANSACTIONS WITH RELATED PARTIES... 52-56 NOTE 27 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES... 56-64 NOTE 28 FINANCIAL INSTRUMENTS... 65-67 NOTE 29 EVENTS AFTER THE BALANCE SHEET DATE... 67 APPENDIX DISCLOSURE-COMPLIANCE CONTROL OF THE PORTFOLIO RESTRICTIONS... 68-69

CONVENIENCE TRANSLATION OF CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012 (Amounts are expressed in TL unlesss othervise stated.) Curre nt Pe riod Prior Pe riod 31 De ce mbe r 31 De ce mbe r Note s 2012 2011 ASSETS Curre nt As s e ts 1.083.342.272 937.755.365 Cash and Cash Equivalent 3 51.071.329 27.861.145 Financial Investments 4-17.687.850 Trade Receivables 6 238.225.609 153.170.794 -Due from related parties 26 480.628 10.952.625 -Trade Receivables 6 237.744.981 142.218.169 Other Receivables 7 19.994.420 11.191.522 -Due from related parties 26-6.351.104 -Other Receivables 7 19.994.420 4.840.418 Inventories 8 540.556.082 557.722.725 Other Current Assets 15 233.494.832 170.121.329 -Other Current Assets f rom Related Parties 26-13.910.164 -Other Current Assets 15 233.494.832 156.211.165 Non-Curre nt As s e ts 1.010.424.450 1.055.761.045 Trade Receivables 6 151.408.760 128.858.267 Inventories 8 600.374.941 691.749.790 Financial Investments 4 60.212.666 81.717.189 Investments in Associates 9 16.133.947 15.750.868 Investment P roperty 10 6.676.660 6.520.000 P roperty, P lant and Equipment 11 24.535.821 13.826.937 Intangible Assets 12 688.727 776.371 Other Non-Current Assets 15 150.392.928 116.561.623 TOTAL ASSETS 2.093.766.722 1.993.516.410 The accompanying notes form an integral part of these financial statements. 1

CONVENIENCE TRANSLATION OF CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012 (Amounts are expressed in TL unlesss othervise stated.) Curre nt Pe riod Prior Pe riod 31 De ce mbe r 31 De ce mbe r LIAB ILITIES Note s 2012 2011 Curre nt Liabilitie s 606.847.833 558.760.770 Financial Borrowings 5 188.556.153 95.975.790 Trade P ayables 6 130.437.625 111.249.571 - Due to Related Parties 26 8.029.678 14.013.991 -Other Trade Payables 6 122.407.947 97.235.580 Advances received 16 264.252.415 327.605.713 Other P ayables 7 22.012.773 22.918.959 P rovision for Employee Benefits 14 1.588.867 1.010.737 Non-Curre nt Liabilitie s 412.094.042 384.212.502 Financial Liabilities 5 221.415.708 186.342.810 Trade P ayables 6 3.391.397 37.660 Advances received 16 186.894.904 197.647.612 P rovision for Employment Benefits 14 392.033 184.420 EQUITY 1.074.824.847 1.050.543.138 Share holde r's Equity Attributable to Equity Share holde rs of the Pare nt 1.074.824.847 1.050.543.138 P aid in Capital 17 600.000.000 600.000.000 Capital Reserves 17 212.888.864 212.888.864 Treasuty Shares 17 (5.664.156) (5.664.156) Share Issue P remium 17 62.419.923 62.419.923 Revaluation Funds 17 589.544 22.094.067 Restricted Profit Reserves 17 20.419.369 9.673.982 Retained Earnings 17 108.385.071 9.119.540 P rofit for the Year 75.786.232 140.010.918 TOTAL EQUITY AND LIAB ILITIES 2.093.766.722 1.993.516.410 The accompanying notes form an integral part of these financial statements. 2

CONVENIENCE TRANSLATION OF CONSOLIDATED STATEMENT OF COMPHRENSIVE INCOME (Amounts are expressed in TL unlesss othervise stated.) Curre nt Pe riod Prior Pe riod 31 De ce mbe r 31 De ce mbe r OPERATING INCOM E Note 2012 2011 Sales Revenue 18 603.909.733 655.372.231 Cost of Sales (-) 18 (484.547.984) (448.176.660) GROSS PROFIT 119.361.749 207.195.571 Marketing, Selling and Distribution Expenses (-) 19 (47.119.020) (51.176.034) General Administrative Expenses (-) 19 (33.138.274) (18.573.648) Other Operating Income / (Loss), net 21 9.179.707 9.301.379 OPERATING PROFIT 48.284.162 146.747.268 Profit / (Loss) from investments accounted for using equity method 9 383.079 (11.141.132) (Non Operating) Financial Income 22 96.529.330 65.889.135 (Non Operating) Financial Expenses (-) 23 (69.410.339) (61.484.353) INCOM E BEFORE TAXATION 75.786.232 140.010.918 PROFIT FOR THE YEAR 75.786.232 140.010.918 Othe r Compre he nsive Income : (Decrease ) / Increase in value of avaiable for sale assets 4-17 (21.504.523) 3.190.945 Othe r Compre he ns ive Income (21.504.523) 3.190.945 TOTAL COM PHREHENSIVE PROFIT 54.281.709 143.201.863 Earning Pe r Share 25 0,126 0,269 The accompanying notes form an integral part of these financial statements. 3

CONVENIENCE TRANSLATION OF CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Amounts are expressed in TL unlesss othervise stated.) Opening Balance as of 1 January 2011 Capital Share Issue Treasury Notes Paid in Capital Reserves Premium Shares 500.000.000 300.388.864 74.919.923 (5.664.156) 18.903.122 3.935.637 61.014.128 (16.156.243) 937.341.275 - - - - - - - - - Transfer to reserves from prior year profit 17 - - - - - 5.738.345 (61.014.128) 55.275.783 - Transfer to paid in capital from capital reserves 17 100.000.000 (87.500.000) (12.500.000) - - - - - - Dividend payment 17 (30.000.000) (30.000.000) Total comprehensive increase - - - - 3.190.945-140.010.918-143.201.863 Opening Balance as of 1 January 2012 Revaluation Fund Restricted Profit Reserves Profit / (Loss) for the year 600.000.000 212.888.864 62.419.923 (5.664.156) 22.094.067 9.673.982 140.010.918 9.119.540 1.050.543.138 Transfer to reserves from prior year profit 17 (140.010.918) 140.010.918 - Transfer to restricted profit reserves from retained earnings 17 10.745.387 (10.745.387) - Dividend payment 17 - - - - - - - (30.000.000) (30.000.000) Total comprehensive income - - - - (21.504.523) - 75.786.232-54.281.709 Retained Earnings Total Balance as of 31 December 2012 600.000.000 212.888.864 62.419.923 (5.664.156) 589.544 20.419.369 (64.224.686) 248.395.989 1.074.824.847 The accompanying notes form and integral part of these financial statements. 4

CONVENIENCE TRANSLATION OF CONSOLIDATED STATEMENT OF CASH FLOWS Current Pe riod Prior Period 1 January- 1 January- Notes 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the period 75.786.232 140.010.918 Adjustments to reconcile net income to net cash flow provided by operating activities: - Depreciation of property, plant and equipment 11 6.614.050 4.229.748 - Amortization of intangible assets 12 350.915 214.894 - Impairment provision for inventories 8 - (9.666.901) - Rediscount on trade receivables / trade payables 6-22-23 6.961.571 17.195.047 - Dividend income on available for sale securities 22 (172.888) (1.426.958) - Financial investments fair value adjustments 22-23 (1.720.472) (630.486) - Loss on property and equipment sale 21 (740) (38.186) - Dividend income on availbale for sale securities (12.669.909) - - Group's share on associates's loss for the year 9 (383.079) 11.141.132 - Provision for Unused vacation liability 14 278.354 52.306 - Provision for employment termination benefits 14 337.998 182.115 Operating cash flows before changes in working capital - Dividends received from available for sale securities 4 12.669.909 - - Participation in capital increase of subsidiaries 9 - (26.892.000) Net cash used in investing activities (4.915.556) (31.905.505) The accompanying notes form and integral part of these financial statements 5 75.382.032 161.263.629 - Decrease in due from related parties 6-26 30.733.265 3.970.285 - Increase in trade receivables 6 (118.077.305) (155.441.282) - (Decrease)/increase in inventories 8 108.541.492 (137.936.560) - Increase in investment property 10 (156.660) (6.520.000) - Increase in other trade receivables 7-15 (126.193.606) (34.884.503) - Increase in trade payables 6 21.564.533 13.214.995 - (Decrease)/increase in financial investments 4 19.408.322 (3.735.481) - Increase in advances received 16 (74.106.006) (65.407.546) - (Decrease)/increase in the due to related parties 6-26 (5.984.313) 13.657.332 - (Decrease)/increase in other trade payables 7-14 (606.410) 7.034.179 Change in working capital (69.494.656) (204.784.952) - Taxes paid 15 (75.368) (232.436) - Employment termination benefits 14 (130.385) (131.580) - Dividends received 22 172.888 1.426.958 Cash used in operating activities (69.527.521) (203.722.010) - CASH FLOWS FROM FINANCING ACTIVITIES 0 #REF! - - Acquisition of property and equipment 11 (20.270.966) (5.034.979) - Cash provided from sale of tangible fixed assets 11 2.948.772 247.438 - Acquisition of intagible fixed assets 12 (263.271) (240.571) - Cash provided from sale of intangible assets 12-14.607

CONVENIENCE TRANSLATION OF CONSOLIDATED STATEMENT OF CASH FLOWS CASH FLOW FROM FINANCING ACTIVITIES Curre nt Pe riod Prior Pe riod 1 January- 1 January- Note s 2012 2011 - Dividends paid 17 (30.000.000) (30.000.000) - Loans received 5 229.724.324 256.922.443 - Loans paid 5 (102.071.063) (14.641.229) - Financial leasing payments 5 - (97.031) Net cash provided / (used in) from financing activities 97.653.261 212.184.183 NET CHANGES CASH EQUIVALENTS NET CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR NET CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 23.210.184 (23.443.332) 27.861.145 51.304.477 51.071.329 27.861.145 The accompanying notes form and integral part of these financial statements 6

1. ORGANIZATION AND OPERATION OF THE COMPANY Sinpaş İnşaat A.Ş. (the Company ), was established on 22 December 2006 so as to be converted into a Real Estate Investment Company ( GYO ), has applied to the Capital Markets Board ( CMB ) and following its approval, it has been registered to the trade registry as from 3 May 2007 and the title of the Company has been changed to Sinpaş Gayrimenkul Yatırım Ortaklığı Anonim Şirketi ( Sinpaş GYO ). The Group s main operation is to develop residential real estate projects primarily for sale. The Group is part of the Sinpaş Group, one of the leading real estate investment and development groups in Turkey. The Group is incorporated and operates in Turkey. Major shareholders of the Group are Sinpaş Yapı Endüstrisi A.Ş. ( Sinpaş Yapı ) and Avni Çelik. As of 31 December 2012, the Group employed 249 people (31 December 2011: 159). The registered address of the group is Sinpaş Plaza, Dikilitaş Mahallesi Yenidoğan Sokak. No: 36 34349 Beşiktaş, Istanbul. Approval of Financial Statements: Financial statements have been approved by the board of directors and have been granted authorization to be published on 10 April 2013. Board reserves the right to make changes to these financials. 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2.1 The Basis of presentation The Basis for Preparation of the Financial Statements and Significant Accounting Policies The Company maintains its books of account and prepares its statutory financial statements ( Statutory Financial Statements ) in accordance with accounting principles in the Turkish Commercial Code and tax legislation. These consolidated financial statements are based on the statutory financial statements prepared under the historical cost basis which are then adjusted and reclassified for the purpose of fair presentation in accordance with CMB Financial Reporting Standards. The Capital Markets Board ( CMB ) has established principles, procedures and basis on the preparation of financial reports by enterprises and the representation of the reports with Communiqué No: XI/29 Communiqué on Capital Market Financial Reporting Standards. This Communiqué is applicable for the first interim financial statements to be prepared after 1 January 2008, and with this Communiqué, the Communiqué No: XI/25 Communiqué on Capital Market Accounting Standards has been repealed. In accordance with this Communiqué, the companies are supposed to prepare their financial statements in accordance with the International Financial Reporting Standards ( IAS/IFRS ) accepted by the European Union. Until the Public Oversight Accounting and Auditing Standards Authority ( POAASA ) announces the differences between IAS/IFRS as adopted by the European Union and those issued by the International Accounting Standards Board ( IASB ), Turkish Accounting Standards/Turkish Financial Reporting Standards ( TAS/TFRS ) issued by the POAASA will continue to be in line with standards issued by the IASB. 7

2. BASIS OF PRESANTATION OF FINANCIAL STATEMENTS (Continued) 2.1 Basis of presentation (Continued) Until the discrepancies between the IAS/IFRS accepted by the European Union, and the IAS/IFRS declared by IASB are announced by the POAASA, the accompanying financial statements have been prepared in accordance with IFRS and comply with CMB s Communiqué No: XI/29 announce on 17 April 2008 and 9 January 2009 regarding to the format of the financial statements and footnotes. The financial statements have been prepared on the historical cost basis apart from the financial investments and investment properties. Historical cost is generally based on the fair value of the consideration given in exchange for assets. Currency in Use Accompanying financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in TL, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. Comparative information and reclassifications to the prior period financial statements: Consolidated financial statements of the Group have been prepared comparatively with the prior period in order to give information about financial position and performance. The prior year consolidated financial statements are reclassified, where necessary in order to main consistency with the current year consolidated financial statements and the significant differences are explained. Consolidation Principles The details of the Company s subsidiaries as of 31 December 2012 are as follows: Proportion of Share in voting power Country of Equity held Principal Subsidiaries Origin % % Activity Eviya Gayrimenkul Gelisştirme ve Yatırım A.Ş. Turkey 99.99 99.99 Real estate and investing in real estate rights The consolidated financial statements incorporate the financial statements of the Company and entities controlled or jointly controlled by the Company (its subsidiaries). 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. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to be in compliance with the accounting policies used by other members of the Group. All significant transactions and balances between the Group and its consolidated subsidiaries have been eliminated during the consolidation. 8

2. BASIS OF PRESANTATION OF FINANCIAL STATEMENTS (Continued) 2.1 Basis of presentation (Continued) Changes in the Group s ownership interests in existing subsidiaries Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the total of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognized in other comprehensive income and accumulated in equity, the amounts previously recognized in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity. Associates: An associate is an enterprise other than a subsidiary or a joint venture over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The detail of the associates of the Group as of 31 December 2012 and 2011 are shown below: Place of incorporation and operation Ownership interest (%) 31 December 2012 31 December 2011 Voting power held Principal Activity Associates Ottoman Real estate acquisitions Gayrimenkul to add value by projects Yatırım İnş.Tic. and to generate İnş. Tic. A.Ş. ("Ottoman") İstanbul % 24,9 % 24,9 % 24,9 earnings by their sale The results related to assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group s interest in that associate (which includes any long-term interests that, in substance, form part of the Group s net investment in the associate) are not recognized. Unrealized profit and losses derived from the transactions between the Group and its associates are eliminated at the rate of Group s share in that associate. 9

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.2 Changes in Accounting Policies Material changes in accounting policies are corrected, retrospectively; by restating the prior periods consolidated financial statements. The Group applies same accounting policies on the financial statements as of 31 December 2011. 2.3 Changes and Errors in Accounting Estimates If estimated changes in accounting policies are for only one period, changes are applied in the current year but if the estimated changes effect the following periods, changes are applied both in the current and following years prospectively. There are not any significant changes in accounting estimates of the Group in the current period. Material changes in accounting estimates or material errors are corrected, retrospectively by restating the prior period consolidated financial statements 2.4 Adoption of New and Revised International Financial Reporting Standards The Company has applied all standards and interpretations published by the IASB and International Financial Reporting Interpretation Committee ( IFRIC ) effective for annual accounting periods beginning on or after 1 January 2012, that are relevant to its operations. The standards listed below and the changes and comments introduced to the prior standards have been enforced as of 1 January 2012: - IFRS 7 (amendment), Financial instruments: Disclosures on transfers of assets, is effective for annual periods beginning on or after 1 July 2011. This amendment will promote transparency in the reporting of transfer transactions and improve users understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity s financial position, particularly those involving securitisation of financial assets. - IFRS 1 (amendment), First-time adoption of IFRS, is effective for annual periods beginning on or after 1 July 2011. The amendment provides guidance on how an entity when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. - IAS 12 (amendment), Income taxes on deferred tax, is effective for annual periods beginning on or after 1 January 2012. This amendment introduces an exception to the existing principle for the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. 10

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.4 Adoption of New and Revised International Financial Reporting Standards (Continued) Standards, amendments and interpretations not yet effective as of 1 January 2012 and not early adopted by the Group: - IAS 19 (amendment), Employee benefits, is effective for annual periods beginning on or after 1 January 2013. These amendments eliminate the corridor approach and calculate finance costs on a net funding basis. Early adoption is permitted. - IAS 1 (amendment), Presentation of financial statements, regarding other comprehensive income is effective for annual periods beginning on or after 1 July 2012. The main change resulting from these amendments is a requirement for entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in other comprehensive income. Early adoption is permitted. - IFRS 10, Consolidated financial statements, is effective for annual periods beginning on or after 1 January 2013. The standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. This new standard might impact the entities that a group consolidates as its subsidiaries. - IFRS 11, Joint arrangements, is effective for annual periods beginning on or after 1 January 2013. IFRS 11 is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Proportional consolidation of joint ventures is no longer allowed. - IFRS 12, Disclosures of interests in other entities, is effective for annual periods beginning on or after 1 January 2013. The standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. - IFRS 10, 11 and 12 on transition guidance (amendment), is effective for annual periods beginning on or after 1 January 2012. The amendment also provides additional transition relief in IFRSs 10, 11 and 12, limiting the requirement to provide adjusted comparative information to only the preceding comparative period. For disclosure related to unconsolidated structured entities, the amendments will remove the requirement to present comparative information for the periods before IFRS 12 is applied. - IFRS 13, Fair value measurement, is effective for annual periods beginning on or after 1 January 2013. The standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. - IAS 27 (revised), Separate financial statements, is effective for annual periods beginning on or after 1 January 2013. The standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10. 11

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) Standards, amendments and interpretations not yet effective as of 1 January 2012 and not early adopted by the Group (Continued): - IAS 28 (revised), Associates and joint ventures, is effective for annual periods beginning on or after 1 January 2013. The standard includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11. - IFRS 7 (amendment), Financial instruments: Disclosures, on offsetting financial assets and financial liabilities, is effective for annual periods beginning on or after 1 January 2013. The amendment reflects the joint IASB and FASB requirements to enhance current offsetting disclosures. These new disclosures are intended to facilitate comparison between those entities that prepare IFRS financial statements and those that prepare US GAAP financial statements. - IAS 32 (amendment), Financial instruments: Presentation, on offsetting financial assets and financial liabilities, is effective for annual periods beginning on or after 1 January 2014. The amendment updates the application guidance in IAS 32, Financial instruments: Presentation, to clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. - IFRS 1 (amendment), First time adoption, on government loans, is effective for annual periods beginning on or after 1 January 2013. The amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRS. - Annual Improvements to IFRSs 2011 is effective for annual periods beginning on or after 1 January 2013. Amendments effect five standards: IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34. - IFRS 9, Financial instruments: Classification and Measurement, is effective for annual periods beginning on or after 1 January 2015. The standard addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. - IFRS 10, (amendment) Consolidated Financial Statements, IFRS 12 and IAS 27 for investment entities is effective for annual periods beginning on or after 1 January 2013. These amendments mean that many funds and similar entities will be exempt from consolidating most of their subsidiaries. Instead, they will measure them at fair value through profit or loss. The amendments give an exception to entities that meet an investment entity definition and which display particular characteristics. Changes have also been made IFRS 12 to introduce disclosures that an investment entity needs to make. - IFRIC 20, Stripping costs in the production phase of a surface mine is effective for annual periods beginning on or of 1 January 2013. The impact of abovementioned amendments to the standards on financial statements are currently being evaluated by the Group. 12

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.5 Summary of Significant Accounting Policies Revenue Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for rebates and other similar allowances. Revenue generated from Buyers Revenue generated from the residency construction projects are accounted for when the Group fulfils its requirements defined in the contracts and all the legal rights and those risks that may legally exist from the ownership of the completed goods are transferred to the buyer. Procedures related to the Landowner In accordance with the landownership ( LOA ) and revenue sharing agreements ( RSA ), the Group commits to develop real estate projects on lands that are owned by other individuals and transfers the corresponding revenue portion obtained from the assets to be build in consideration of the land received based on the LOA and the corresponding sale profit obtained from the premises to be built under the RSA to the respective landowners. For landownership agreements, the value of land transferred to the Group is carried at fair value at the date of agreement and when the Group meets all of its contractual liabilities and all risks and awards of the ownership of the assets are transferred to the landowner following the approval of the delivery notice by the landowner, revenue is recognized as the sale profit obtained from the landowner. For RSA agreements, sale profit is transferred to the landowners at the date when the Group receives the related revenue and the transferred amount is recognized under the advances given to landowners account. When the Group meets its liabilities specified in the Revenue from buyers paragraph, fair value of the corresponding land portion of the Group is recognized as sale profit obtained from the landowner. Inventories Construction of housing project works in progress consists of direct, indirect and overhead costs. These work in progress inventories are stated at their lower of cost and net realizable value. Lands to be developed for projects consist of lands which their constructions have not started yet and are stated at their lower of cost and net realizable value. Finished goods are completed and ready to sell housing projects and are stated at their lower of cost and net realizable value. Net realizable value represents the estimated selling price less all estimated costs of completion and costs necessary to make a sale. Group classified inventories at short term and long term. The Group classifies the vacant land and uncompleted residences and commercial units which are expected to be completed over 12 months as long term assets while the remaining inventories are classified within short term assets. 13

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.5 Summary of Significant Accounting Policies (Continued) Property, Plant and Equipment Property plant & equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet determined are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Group s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset, and is recognized in the statement of income. Estimated useful lives are summarized below: Useful Life Buildings 50 years Motor and vehicles 5 years Furniture and fixtures 4-5 years Leasehold improvements 5 years Financial Lease Operations Leasing classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases treated as operational leases. Assets held under finance leases are recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are capitalized in accordance with the Group s general policy on borrowing costs and recognized in the income statement, unless they are directly attributable to qualifying assets. Rental income from operating leases (initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term), is recognized on a straight-line basis over the term of the relevant. 14

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.5 Summary of Significant Accounting Policies (Continued) Intangible Assets Intangible assets are reported at cost less accumulated amortization and accumulated impairment losses. Amortization is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Impairment of Assets Assets with indefinite useful lives such as goodwill are not subject to amortization. Such assets are subject to impairment test each year. Assets that are subject to amortization and depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Investment Property The Group s investment properties are lands and leisure centre which are held either for rental income or capital appreciation, or both and carried at fair value in the accompanying consolidated financial statements. Gains or losses arising from changes in the fair values of investment properties are included in the comprehensive income statement of the year which they arise. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in comprehensive income statement in the year of retirement or disposal as fair value increase of investment property (Note 21). Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets which are assets that necessarily take a substantial period to get ready for their intended use or sale (qualifying assets), are added to the cost of those assets, until the assets are substantially ready for their intended use or sale. Investment income earned on temporary investment of specific borrowings with their pending expenditure on qualifying assets, deducted from the borrowing costs eligible for capitalization. All other borrowing costs recognized in the income statement in the period during which they incurred. 15

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.5 Summary of Significant Accounting Policies (Continued) Financial Instruments Financial assets Investments excluding FVTPL are recognized and derecognized on a trade date, where the purchase or sale of an investment under a contract whose terms require delivery of the investment within the period established by the market concerned, and initially measured at fair value. Net of transaction costs except for those financial assets classified as at fair value through profit or loss are initially measured at fair value. Financial assets classified into the following specified categories: financial assets as at fair value through profit or loss (FVTPL), held-to-maturity investments, available-for-sale (AFS) financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective interest method The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognized on an effective interest basis for debt instruments other than those financial assets designated as at fair value through profit or loss. Financial assets at FVTPL Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Held-to-maturity investments Investments in debt securities with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortized cost using the effective interest method less impairment, with revenue recognized on an effective yield basis. Held-to-maturity investments are accounted by the escalation of amortized cost based on effective interest method and the amount of impairment, and related income is calculated via effective interest method. Loans and receivables Trade receivables, other receivables and loans that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortized cost using the effective interest method less any impairment. 16

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.5 Summary of Significant Accounting Policies (Continued) Financial Instruments (Continued) Available-for-sale financial assets Available-for-sale financial assets are consisted of financial assets, which are not held-to-maturity investments, not loans and receivables, or not financial assets held for trading. After initial recognition available for sale financial assets are subsequently measured at fair value as long as the fair value of the available-for-sale financial assets can be reliably measured. The Group classifies its investment that is trading in an active market as available-for-sale financial assets and determined its fair value based on the purchasing price published in Istanbul Stock Exchange as of balance sheet date. Gains and losses are recognized in the income statement. Gains and losses arising from changes in fair value are recognized in equity. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss - is removed from equity and recognized in the statement of income. Impairment losses recognized in the statement of income on equity instruments are not reversed through the statement of income. Impairment of trade receivable has been disclosed in trade receivable accounting policy. Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group s right to receive the dividends is established. Impairment of financial assets Financial assets, other than those at fair value through profit or loss are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. 17

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.5 Summary of Significant Accounting Policies (Continued) Financial Instruments (Continued) Impairment of financial assets (Continued) The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of available for sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. In respect of available for sale equity securities, any increase in fair value subsequent to an impairment loss is recognized directly in equity. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Financial liabilities Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. Financial Liabilities at FVTPL Financial liabilities at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. Every reporting period, FVTPL is revalued. Change in the fair value is recognized in the income statement. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability. Group does not have any financial liabilities at FVTPL. 18

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2.5 Summary of Significant Accounting Policies (Continued) Financial Instruments (Continued) Other financial liabilities Other financial liabilities including borrowings are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Foreign Currency Transactions The financial statements of the Group are presented in the currency of the primary economic environment in which the entity operates (its functional currency). In preparing the financial statements of the Group, transactions in currencies other than TL (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Gains and losses arising on settlement and translation of foreign currency items are included in the profit or loss with the exception of: Assets under construction for future productive use, which are included in the cost of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings and translation difference, Translation differences arising from hedging operations (accounting policies regarding hedge accounting described below). Earnings per Share Earnings per share disclosed in the consolidated statement of income are determined by dividing net income by the weighted average number of shares in existence during the year concerned. In Turkey, companies can raise their share capital by distributing bonus shares to shareholders from retained earnings. In computing earnings per share, such bonus share distributions are assessed as issued shares. Accordingly, the retrospective effect for those share distributions is taken into consideration in determining the weighted-average number of shares outstanding used in this computation. 19