CONTENTS INTRODUCTION

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FROM EDİRNE TO KARS, FROM RİZE TO

OSMANİYE, WE GENERATE TURKEY’S ENERGY.

WE DERIVE OUR ENERGY FROM THE PEOPLE

OF THIS COUNTRY AND WE USE IT FOR THEM

IN RETURN. OUR COUNTRY NEEDS MORE

ENERGY TO DEVELOP AND TO MAINTAIN

ITS GROWTH. IN ORDER TO GENERATE

THE ENERGY TURKEY REQUIRES, WE

CONTINUOUSLY WORK TO DEVELOP A WIDE

RANGE OF PROJECTS AND MAKE SIGNIFICANT

INVESTMENTS.

FOR A SUSTAINABLE FUTURE, WE AIM TO

BECOME THE LEADER AND THE ROLE MODEL

OF THE ENERGY SECTOR BY FOCUSING ON

LOCAL AND RENEWABLE ENERGY AS WELL

AS ON THE RICH ENERGY RESOURCES OF

THIS LAND.

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About Zorlu EnErji

Zorlu EnErji in BriEf

Zorlu EnErji’s total installEd

capacity in turkEy has rEachEd

771 MW.

Zorlu Enerji Elektrik Üretim A.Ş. (“Zorlu Enerji”), Zorlu Group’s first company in the energy sector, was founded in 1993 as an auto producer under the Zorlu Group in order to provide electricity and steam to the Group’s textile factories. Subsequently, the Company began to sell electricity and steam to non-group customers as well. Zorlu Enerji makes its investments today in line with its production strategy based on local and renewable resources.

On December 28, 2012, Zorlu Enerji took over 100% of the shares of Zorlu Doğal Elektrik Üretim A.Ş. (Zorlu Doğal), which has a total electricity generation capacity of 142.6 MW. Of this total capacity, 127.6 MW is renewable energy (one geothermal, seven hydroelectric plants) and 15 MW is thermal energy. Additionally, in order to further strengthen the Company’s consolidated financial structure, the Tereshkovo Natural Gas Power Plant in Russia, which has 170 MW electricity and 150 gcal heat production capacity, was transferred to Zorlu Holding A.Ş., together with the Kojukhovo Natural Gas Power Plant, which has 170 MW electricity and 270 gcal heat production capacity, and is currently under construction. Zorlu Enerji had 100% stakes in both the Tereshkovo and Kojukhovo power plants.

After the aforementioned share transfers, as of 2012 year-end, Zorlu Enerji’s investments in Turkey reached a total of 15 power plants:

five thermal, seven hydroelectric, one geothermal, one wind and one diesel, with a total installed capacity of 771 MW of electricity and 269 tons/hour of steam. As one of the major players in the local market, Zorlu Enerji holds licenses for 110 MW wind power, 30 MW geothermal power and 124 MW hydroelectric power plants. The Company won the tender for Tirebolu HEPP, which will have an installed capacity of 30 MW; the Environmental Impact Assessment and licensing processes for this power plant are ongoing. In addition, Zorlu Enerji plans to complete the ongoing construction of Denizli Kızıldere Geothermal Power Plant, with an installed capacity of 80 MW, within the next year. Denizli Kızıldere facility is owned by Zorlu Doğal, and 100% of its shares are held by the Company. In order to capitalize on market opportunities, Zorlu Enerji continues to make investments abroad, in Israel and Pakistan, where there is rapidly growing demand for energy and market liberalization efforts are gaining momentum.

Zorlu Enerji is among the first private sector companies to enter Israel’s electricity generation market. Through its partnerships in Israel, the Company plans to set up four natural gas-fired cogeneration power plants (Dorad, Ashdod, Ramat and Solad) that will have a total installed capacity exceeding 1,000 MW.

Zorlu Energy Pakistan Ltd. was founded on September 13, 2007 to set up wind power plants and to sell the electricity generated at these plants. The first phase of the wind power plant, which was commissioned in Pakistan in 2010 with a capacity of 6 MW, is actively operating. After the completion of the second phase, consisting of 28 turbines, the total capacity of the plant will reach 56.4 MW. In 2000, Zorlu Enerji undertook an initial public offering for 20% of its shares. Today, 32% of the Company’s shares are listed on Borsa Istanbul. Zorlu Enerji was the first publicly listed energy company in Turkey and it is the only publicly listed energy company of the Zorlu Energy Group.

As an environmentally aware and socially responsible corporate citizen in every respect, Zorlu Enerji has equipped all of its power plants with water injection systems that guarantee NOx emission under the limits set by the World Bank. With this system, waste heat is used to produce steam; as a result, environmentally friendly energy generation is made possible and heat is not released to the atmosphere.

Zorlu Enerji is the first auto producer in Turkey to have received TS/EN ISO 9001-2000, OHSAS 18001 and ISO 14001 certifications. The Company has implemented the Integrated Management System and it is the only energy company in Turkey to hold ISO 14064-1 Greenhouse

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3

lülEBurgaZ natural gas PowEr Plant

148.2 Mw Electricity

239 t/h Steam Yalova natural gas PowEr Plant

Natural Gas Cogeneration Power Plant

15.9 Mw Electricity 30 t/h Steam

Bursa natural gas PowEr Plant 90 Mw Electricity

ankara natural gas PowEr Plant Natural Gas Combined-Cycle Power Plant 50.3 Mw Electricity

Zorlu EnErji’s fiElds of activitY

Natural Gas power plants

hydroelectricity Geothermal Wind

EskişEhir BEYköY hYdroElEctric PowEr Plant 16.8 Mw Electricity dEniZli kiZildErE gEothErMal PowEr Plant 15 Mw Electricity 80 Mw(*) construction underway in operation

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EXEMPlarY ProjEcts in local stakEholdEr coMMunication

Gökçedağ Wind power plant Zorlu Energy Group implemented its first carbon emission project in Turkey with the Gökçedağ Wind Power Plant (WPP). In January 2008, a Carbon Emissions Trading Agreement was signed with the EcoSecurities Group. In 2009, Gökçedağ WPP, the largest project of its kind in the world, registered with the Gold Standard,

van Engil diEsEl PowEr Plant(**)

15 Mw Electricity tokat hYdroElEctric PowEr Plant 5.5 Mw Electricity riZE ikiZdErE hYdroElEctric PowEr Plant 18.6 Mw Electricity ErZuruM kuZgun hYdroElEctric PowEr Plant 20.9 Mw Electricity kars Çildir hYdroElEctric PowEr Plant 15.4 Mw Electricity ErZincan tErcan hYdroElEctric PowEr Plant 15 Mw Electricity tuncEli MErcan hYdroElEctric PowEr Plant 20.4 Mw Electricity

kaYsEri natural gas PowEr Plant 188.5 Mw Electricity gökÇEdağ wind PowEr Plant 135 Mw Electricity (*) Scheduled to be operational in 2013. (**) Not in active operation.

a certification standard that requires certain criteria including sustainable development, environmental awareness, acknowledgement by local stakeholders and approval by independent bodies. Gökçedağ WPP is expected to reduce emissions equivalent to 302,675 tons of CO2 per annum.

Zorlu Energy Group also initiated an ornithological study at the Gökçedağ WPP construction site in 2008. During the preliminary stages of the study, the potential

impacts of the plant on the flight and migration patterns of wild birds were observed. During these observations, which lasted for 242.5 hours over the course of 30 days, migratory bird species, their flight heights and flight routes, which change according to wind, were tracked. As a result, it was determined that Gökçedağ WPP project did not have an adverse impact on natural bird life, on the basis of key criteria related to bird habitats.

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ZORLU ENERJİ IN BRIEF

Zorlu EnErji’s opErAtions And

invEstmEnts AbroAd

Pakistan wind PowEr Plant

Renewable Power Plant

6 Mw

In Operation

50.4 Mw

Construction Underway

solad PowEr Plant

Natural Gas Combined-Cycle Power Plant

100 Mw

Electricity 70 tons/hour

Steam

dorad, ashdod and raMat PowEr Plants

Natural Gas Combined-Cycle Power Plants

975 Mw

Electricity 110 tons/hour

Steam

Zorlu EnErji’s fiElds of activitY

natural Gas power plants

hydroelectricity Geothermal Wind construction underway

in operation in project financing stage

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construction undErwaY

Geothermal 100 Denizli 80

-ZORLU ENERJİ IN BRIEF

PowEr Plants in oPEration

Natural Gas 100 Bursa 90

-100 Ankara 50.3 -100 Kayseri 188.5 -100 Lüleburgaz 148.2 239 100 Yalova 15.9 30 Diesel 100 Van(*) ₁₅ Hydroelectricity 100 Erzincan 15 -100 Erzurum 20.9 -100 Eskişehir 16.8 -100 Kars 15.4 -100 Rize 18.6 -100 Tokat 5.5 -100 Tunceli 20.4 -Geothermal 100 Denizli 15 -Wind 96.73 Osmaniye 135 -PlannEd invEstMEnts

Hydroelectricity 100 Giresun Tirebolu(**) ₃₀

-Renewable energy licenses total 264 Mw currEnt licEnsEs Hydroelectricity 99.9 Dalaman 124 Geothermal 73 Alaşehir 30

Wind 85 Sarıtepe, Demirciler 110

Zorlu EnErji’s opErAtions And plAnnEd

invEstmEnts in turkEy

(*) Not in active operation.

(**) Licensing and pre-investment stages of the project, won by tender, are still in progress.

stake (%) region Electricity Generation Capacity (mW) steam Generation Capacity (tons/hour) stake (%) region Electricity Generation Capacity (mW) steam Generation Capacity (tons/hour)

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7

onGoinG And plAnnEd invEstmEnts AbroAd

Israel Dorad Natural Gas Power Plant

Natural Gas Combined-Cycle Power Plant

800 MW 25 Construction of the power plant started in 2011 and is

still in progress. Israel Ashdod Natural Gas Power Plant Natural Gas Combined-Cycle Power Plant 55 MW+ 40 tons/hour steam

42.15(*) _{Construction of the power} plant started in September 2012 and is still in progress.

Israel Ramat Negev Natural Gas Power Plant Natural Gas Combined-Cycle Power Plant 120 MW+ 70 tons/hour steam

42.15(*) _{Construction of the power} plant started in September 2012 and is still in progress.

Israel Solad Natural Gas Power Plant Natural Gas Combined-Cycle Power Plant 100 MW+ 70 tons/hour steam 42.15(**) _{Project is in} the financing stage.

Pakistan Jhimpir Wind Power Plant

Renewable energy power plant

56.4 MW 100 The first phase of the project, consisting of five turbines with a capacity of 6 MW, was commissioned in 2011. Construction of the second phase, which has an installed capacity of 50.4 MW, is almost completed and will be commissioned in 2013. Country power plant type of power plant Generation Capacity stake (%) Current status

(*) All shares of Ashdod Energy Ltd. and Ramat Negev Energy Ltd. have been transferred to Ezotech Electric Ltd., in which Zorlu Enerji holds a 42.15% stake. After this change in shareholding structure, Zorlu Enerji became an indirect partner in both projects.

(**) Zorlu Enerji increased its stake in Solad Energy Ltd. from 26.24% to 42.15%, following the completion of the share transfer with Edeltech Ltd., the other partner in Solad Energy Ltd.

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financial highlights (US$ thousand)

31.12.2012 31.12.2011

Revenues 293,014 266,432

Operating Profit (Loss) 419,765 (30,501)

EBITDA 39,254 10,832

Net Profit (Loss) 328,699 (243,929)

Total Assets 2,796,108 1,805,132 Gross Profit/Revenues (%) 1.7 2.4 EBITDA Margin (%)(**) _13.4 _4.1 Shareholders’ Equity 324,482 (69,569) Gross Debt(*) _2,212,804 _1,534,989 Net Debt(*) _811,121 _1,268,699

(*) Including other payables to related parties and other short &long term receivables from related parties (excluding Dorad).

(**) Excluding one-off US$ 421,766 th. (TL 756,016 th.) profit from participation sale reflected in the other operational income.

sharE PricE suMMarY (TL)(*)

Number of Shares 500,000,000

Number of Shares (Free Float) 159,905,814 Highest Share Price During the Year 1.50 Lowest Share Price During the Year 1.00

Year-End Price 1.15

Market Capitalization(**) _575,000,000

(*) On June 29, 2012, the Company undertook a cash capital increase of TL 218,335,000 through a 77.5% rights issue. Accordingly the Company’s paid-in capital reached TL 500,000,000. (**) As of December 31, 2012. gEnEration december 2012 december 2011 Electricity (kWh) 1,816,233,751 2,220,678,441 Steam (tons) 604,710 583,046 salEs Electricity (generation) (kWh)(*) _{1,739,732,691} _{2,137,122,785} Electricity (commercial) (kWh) 1,065,319,003 644,249,510 Steam (tons) 604,710 583,046

(*) Excluding Rosmiks LLC’s electricity sales of 718,294,536 kWh and heat sales of 53,973 gcal in 2012 within the scope of discontinued operations.

in 2012, thE dEcrEasE in nEt dEbt

and thE incrEasE in sharEholdErs’

Equity pavEd thE Way for nEW

invEstmEnts.

sharEholdEr structurE

Zorlu Holding A.Ş.

korteks mensucat san. ve tic. A.Ş. other Zorlu Group

publicly Held

45.7%

32%

4.8%

17.5%

financial highlights

811,121

2012 2011 net debt (US$ thousand) shareholders’ Equity (US$ thousand)

1,268,699

2012 2011

324,482

(69,569)

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oPErations of Zorlu EnErgY grouP

in Addition to tHE ElECtriCity And stEAm GEnErAtion opErAtions CArriEd out by Zorlu EnErji ElEktrik ÜrEtim A.Ş., tHE Group’s only publiCly listEd CompAny, Zorlu EnErGy Group is Also ACtivEly EnGAGEd in ElECtriCity And nAturAl GAs trAdinG, nAturAl GAs distribution, turnkEy dElivEry of poWEr plAnts inCludinG tHE projECt dEvElopmEnt proCEss, And lonG-tErm mAintEnAnCE And opErAtion sErviCEs, tHrouGH its intEGrAtEd projECts.

ElEctricitY salEs and trading

Zorlu Elektrik Enerjisi İthalat İhracat ve Toptan Ticaret A.Ş. was established in 2000 to conduct the trade and sales of electricity generated by the Zorlu Enerji, Zorlu Doğal and Rotor companies of Zorlu Energy Group. Zorlu Elektrik’s fields of activity include forecasting demand and price, production planning, pricing, conducting sales, providing risk and portfolio management, carrying out reconciliation and billing. The Company makes direct sales to individuals and corporations that are considered to be eligible customers.

natural gas distriBution and trading

Through its two companies, Trakya Bölgesi Doğal Gaz Dağıtım A.Ş. and Gazdaş Gaziantep Doğal Gaz Dağıtım A.Ş., Zorlu Energy Group undertakes the designing projects of mains and infrastructure investments, commissioning of completed infrastructure investments and distribution of natural gas to customers in the Thrace region and in Gaziantep. The Group is committed to providing customers with uninterrupted service and a safe gas supply. On the trading side, in addition to the natural gas purchases from importers, Zorlu Doğal Gaz İthalat İhracat ve Toptan Ticaret A.Ş exports and sells in the domestic market the compressed natural gas (CNG) and liquefied natural gas (LNG) purchased from domestic and foreign markets.

dErivinG strEnGth from its

intEGratEd structurE, Zorlu EnErGy

Group plans to GroW With local and

rEnEWablE EnErGy rEsourcEs.

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11

PowEr Plant construction

Through the operations of Zorlu Endüstriyel ve Enerji Tesisleri İnşaat Ticaret A.Ş. in Turkey and abroad, Zorlu Energy Group is engaged in the turnkey delivery of power plants by providing feasibility, engineering, construction and installation services. Established in 2000 with the aim of developing and carrying out projects for industrial and energy plants, the Company has undertaken the EPC (Engineering, Procurement, Construction) works of Zorlu Enerji’s power plants. Having delivered the turnkey installation of Gökçedağ Wind Power Plant, the Company is also the EPC contractor of the natural gas power plants in Russia and Lüleburgaz. Through Zorlu Industrial Pakistan Ltd., of which it owns 100% shares, the Company is currently carrying out the installation of the wind power plant in the Jhimpir region of Pakistan.

MaintEnancE, rEPair and oPEration sErvicEs

Zorlu O&M, another Group company, provides operation and maintenance services for many cogeneration and combined-cycle thermal power plants located in Turkey and abroad, as well as for hydroelectric, wind and geothermal power plants. The Company has undertaken several important projects abroad, and it carries out the maintenance of all public LM series gas turbines in Greece.

invEstMEnts in russia

Under the restructuring efforts initiated in 2012, Tereshkovo Natural Gas Power Plant in Russia, which has 170 MW electricity and 150 gcal heat production capacity, was transferred to Zorlu Holding A.Ş., together with Kojukhovo Natural Gas Power Plant, which has 170 MW electricity and 270 gcal heat production capacity, and is currently under construction. Zorlu Enerji had 100% stakes in both the Tereshkovo and Kojukhovo power plants. The purpose of this transfer was to further strengthen the consolidated financial structure of the Company.

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Zorlu grouP

hoME tEXtilEs, PolYEstEr Yarn

kortEks-ZorlutEks

• The largest integrated manufacturer and exporter of polyester yarn in Europe and the Middle East.

• Europe’s leading home textiles company.

• One of the leading ODM providers of TVs, white goods, and digital products for the European Market.

• One of the major players in the European LCD TV market with a growing market share.

• Production facilities in Manisa.

• One of the top three players in the domestic LCD TV and white goods market through its well-known Vestel brand.

vEstEl

ElEctronics, inforMation tEchnologiEs and consuMEr duraBlEs

• One of the leading players in the domestic market with 771 MW of installed capacity.

• Ongoing investments in Pakistan and Israel as well as in Turkey.

• Active in electricity and natural gas trade, natural gas distribution, “turnkey installation” of power plants including the project development process, and long term maintenance and operations services.

Zorlu EnErgY grouP EnErgY sales revenue(*) (US$ million)

728

sales revenue(*) (US$ million)

4,192

sales revenue(*) (US$ million)

590

(*) _{2012 figures.}

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13

• Zorlu Real Estate Group was established in 2006 to develop, sell, lease and operate high quality residential and office complexes, business centers, shopping centers, hospitals, hotels or mixed-use real estate projects at prime locations in Turkey and abroad.

• The Group’s ongoing projects: Zorlu Center and Zorlu Levent Office.

• Turkey’s first mixed-use real estate development project with five different functions, Zorlu Center, consists of performing arts center, hotel, offices, shopping center and residences. Located on Istanbul’s Büyükdere Caddesi, Zorlu Levent Office is a 40-storey, 161-meter high A+ office building.

• Objective: To become a major regional supplier in nickel and cobalt.

• Nickel-cobalt investment projects in Gördes, Eskişehir and Uşak.

• The Gördes project has 300 thousand tons of proven reserves, with total planned investment of about US$ 300 million.

• Established in Istanbul in November 2012 to offer domestic and factoring services abroad. Zorlu Factoring plans to provide services all across the country by expanding its branch network all over Turkey in the coming period.

• Zorlu Factoring targets medium and large size firms, as well as leading companies with a wide supplier and dealer network.

Zorlu rEal EstatE and

dEvEloPMEnt MEta nikEl koBalt Zorlu factoring

rEal EstatE Mining factoring

total planned investment for the Zorlu Center and Zorlu levent office projects (US$ million)

2,800

investments to date (US$ million)

100

target total Asset size(**) (US$ million)

140

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our EnErgY is turkEY’s EnErgY

Gökçedağ Wpp, commissioned in 2010

with a capacity of 135 mW, continues

to generate electricity. in addition, the

Company has licenses for two more wind

power plants, one in osmaniye-sarıtepe

with a capacity of 50 mW, and the other

in demirciler with a capacity of 60 mW.

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15 b

ahçe and Hasanbeyli,

o

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chairMan’s MEssagE

companiEs that aim to sEcurE

a pErmanEnt placE in thE EnErGy

sEctor should havE a robust

corporatE and financial

structurE and thEy should

also adopt thE sustainability

of rEsourcEs as a businEss

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17

turkEY is growing dEsPitE thE gloBal crisis.

The global crisis, which has gripped the world since 2008, began to ease in 2010. Meanwhile, the year 2012 witnessed

major political and economic developments triggered by a number of issues, including the sovereign debt concerns in the Euro zone and the “Arab Spring” rapidly spreading in North Africa and the Middle East.

The IMF’s World Economic Outlook report estimates that global economic growth will be 3.6% in 2013, while 1.5% growth is forecasted for advanced economies. In addition to the projected economic slowdown for developed countries, the fluctuating oil and commodity prices due to ongoing political tensions in the Middle East emerge as another risk for developing countries.

Despite these adverse conditions in the surrounding region, the Turkish economy maintained its stable growth, even though it lost some momentum during the last year. The fact that exports hit a record high in 2012 obviously proved that our economy has remained on solid footing. The strong performance in foreign trade coupled with fiscal improvements led to a decrease in the current account

deficit and a decline in the inflation rate. As a result of these positive developments, Turkey recorded 2.2% economic growth in 2012. Furthermore, Fitch, an international rating agency, raised Turkey’s sovereign credit rating to “investment grade.”

whilE gloBal EnErgY dEMand incrEasEs, dEvEloPing countriEs arE BEcoMing EvEn MorE iMPortant.

Factors such as population growth, industrialization, urbanization and globalization all help enhance trade opportunities, and thus increase the demand for energy. International Energy Agency (IEA) projections indicate that global energy consumption will increase 60% in the coming 25 years. In that respect, developing countries, whose energy consumption is rising faster than the world average, are becoming increasingly important.

As a bridge transporting the rich hydrocarbon resources of the east to the western countries by major pipeline projects such as Nabucco, South Stream and Trans-Anatolian, Turkey assumes a strategic role in the world’s energy market. In 2012 our country developed new projects to increase its competitive edge in the global arena, and seized a critical opportunity to become a global power in the natural gas trade.

for a strongEr EnErgY sEctor in turkEY, thE liBEraliZation of thE MarkEt is EssEntial.

With the liberalization of the energy market, Turkey’s energy potential will most likely be reflected in the economy more rapidly. For the private sector to play a more active role in all areas of the energy business, the market must be liberalized; development of a transparent, predictable, uniform, unbiased market with cost-based pricing, and without cross-subsidies, is essential. Nevertheless, we should also point out that some steps taken in 2012 helped to invigorate our sector. One of these developments, which positively affected us and all other players in the market, was the lowered eligibility limit in electricity trading. Additionally, the Energy Exchange initiative is of key importance for the for tHE privAtE sECtor

to plAy A morE ACtivE rolE in All ArEAs of businEss, tHE mArkEt must bE libErAliZEd; A trAnspArEnt mArkEt struCturE tHAt AlloWs for priCinG bAsEd on prEdiCtAblE Costs And EliminAtEs Cross-subsidiZAtion must bE formEd.

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CHAIRMAN’S MESSAGE

liberalization of the energy sector in Turkey; in terms of ensuring energy supply security, increasing the competitive advantage in the global arena and enabling the specialization of both producers and suppliers.

Another exciting development for the energy sector was the new Electricity Market Law enacted by the Turkish Grand National Assembly in March 2013 which not only protects existing investors but also encourages new investors to enter the market. The government’s announcements regarding the adoption of the EU’s Climate Change Program and the amendments in the Natural Gas Market Law are creating positive expectations for the future of our sector.

PrivatE sEctor invEstMEnts in EnErgY arE incrEasing.

Thanks to its growth over the last five years, Turkey’s energy sector has begun to play an important role in shaping domestic and international policies; hence, investors’ interest in energy sector increased. However, it should be remembered that energy investments are long term investments and require patience. Companies that aim to secure a permanent place in the energy sector must have a robust corporate and financial structure; additionally they should also adopt

the sustainability of resources as a business approach. And this means that energy companies must prioritize the public interest above all else.

wE ProducE fair EnErgY froM corrEct rEsourcEs.

As one of the leading energy companies in Turkey, we base our corporate strategy on public interest and environmental protection. We are working to provide eco-friendly, local and renewable energy sources for Turkey’s economy and energy sector. As we plan our investments in a rational and environmentally friendly manner to meet the increasing energy demand both in our country and across the world, we always strive to address the issues of global warming, climate change and carbon emissions, and believe that other energy producers in the country should also set their economic and social development targets at the same level of awareness.

Zorlu Enerji conducts its activities with the understanding that creating a clean world while producing energy is possible by using renewable and local resources. In 2012, 34% of our total installed capacity in Turkey consisted of renewable energy investments. In order to increase this percentage, we continuously devise new corporate strategies

Zorlu EnErji ConduCts its ACtivitiEs WitH tHE undErstAndinG tHAt CrEAtinG A ClEAn World is possiblE by usinG rEnEWAblE And loCAl rEsourCEs.

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19 and make geothermal, wind and

hydroelectric energy investments, which we consider very important in terms of renewability.

Zorlu EnErji MaintainEd its stEadY growth in 2012 as wEll.

2012 was an investment intensive year for Zorlu Enerji in preparation for 2013. We made significant progress in the construction of the Kızıldere Geothermal Power Plant, Pakistan Wind Power Plant and Dorad Natural Gas Power Plant in Israel, all of which we plan to commission in 2013. In 2012, our capital expenditures totaled US$ 111 million, and we reported revenues of US$ 293 million.

In all our activities, we never compromised our environmentally friendly initiatives. Zorlu Enerji was the only energy company in Turkey to participate in the Carbon Disclosure Project in 2010; the Company received the “Carbon Disclosure Leadership Award” which was given for the first time under this important initiative in 2011. Zorlu Enerji ranked among the top five Carbon Disclosure Leaders in 2012 as well.

as a rEsPonsiBlE corPoratE citiZEn, wE crEatE valuE addEd for our sEctor.

At Zorlu Enerji we strive to add value to the sector through our corporate responsibility projects, and implement various initiatives to contribute to the sustainability of our world. We feel it is our primary duty to share our know-how and awareness with other players in the sector, our stakeholders and with every segment of society. Therefore, pursuing carbon free activities and educating the country’s children, who are the future of our world, on environmental issues and energy form the foundation of our corporate social responsibility efforts.

As an aware, responsible and sector leading company, Zorlu Enerji plans to continue actively contributing to the development of our country and the sustainability of life in 2013. I would like to take this opportunity to thank all our employees for their efforts in helping us implement our strategies, our shareholders and all our stakeholders for their support.

ZEki Zorlu

Chairman of the Board of Directors

WE bEAmEd WitH tHE WEll-dEsErvEd pridE At rAnkinG fourtH AmonG top CArbon disClosurE lEAdErs in 2012, And WE stood out WitH our HiGH disClosurE sCorE.

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Board of dirEctors

(*)

(*) The Board of Directors of Zorlu Enerji Elektrik Üretim A.Ş. comprises seven members, three of whom are non-executive members, two are independent members, and two are executive members. Board Members Mr. Elmas Melih Araz and Mr. Aziz Can Tuncay meet the independent member criteria in accordance with the Capital Markets Board’s Corporate Governance Principles.

ZEki Zorlu

sElEn Zorlu MElik

Board Member

Burak i. okaY

Board Member

E. MElih araZ

Vice Chairman of the Board of Directors

BEkir cEM köksal

Board Member

olgun Zorlu

Board Member

Prof. dr. a. can tuncaY

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21 ZEki Zorlu

(1939 - Denizli) Zeki Zorlu began his professional career in a family owned textiles company in Babadağ, Denizli, and opened his first textiles store in Trabzon. In 1976, he established Korteks Mensucat Sanayi ve Ticaret A.Ş., laying the foundation of Zorlu Holding. In addition to its textiles sector investments, Zorlu Group entered the electronics and white goods sector with Vestel, which the Group acquired in 1994; subsequently, the Group also entered the energy sector in 1996 and the real estate sector in 2006. Today, Zorlu Group has 25,000 employees and 60 companies under its roof. Mr. Zorlu serves as the Co-Chairman of the Board of Directors at Zorlu Holding as well as the Chairman of the Group companies operating in the textiles and energy sectors.

E. MElih araZ

Vice Chairman

(1948 - Istanbul) E. Melih Araz graduated from Robert College in 1967 and from Ankara University, Faculty of Political Sciences in 1972. After completing his MBA at the Kelley School of Business at the University of Indiana in 1975, he continued his education at Harvard Business School in Executive Management. Mr. Araz began his professional career at Citibank N.A. Turkey and assumed executive positions at the bank’s branches in Istanbul, Izmir, Bahrain, Athens and New York. He also undertook key responsibilities in the founding and expansion of Citibank Turkey. Subsequently, he continued his banking career as General Manager at Interbank A.Ş. and played a leading role in elevating the bank to a highly reputable position in corporate and investment banking in Turkey. Mr. Araz now serves as a consultant for various companies in finance and strategic management. Additionally, he is the Vice Chairman of the Board of Directors at Zorlu Enerji Elektrik Üretim A.Ş.; Executive Board Member at Ata Yatırım A.Ş.; and Board Member at İzmir Enternasyonel Otelcilik A.Ş., Entegre A.Ş., Ata Gayrimenkul Yatırım Ortaklığı A.Ş., Ata Portföy Yönetimi A.Ş., Burger King China Corporation, and Enka İnşaat A.Ş.

olgun Zorlu

BoardMember

(1965 - Trabzon) After completing his higher education in the United Kingdom, Olgun Zorlu began his professional career in 1986, gaining management experience in the textiles companies of the Zorlu Group. In 1998, he began serving as Board Member at Zorlu Holding. In addition to his current responsibilities as Board Member at Zorlu Enerji Elektrik Üretim A.Ş., Mr. Zorlu also serves as Board Member at Zorlu Holding and its subsidiaries. sElEn Zorlu MElik

Board Member

(1975 - Trabzon) Selen Zorlu Melik graduated from Uludağ University, Faculty of Economics and Administrative Sciences, Department of Business Administration. She began her professional career at Denizbank in 1998. Following her internship at Denizbank Bursa Branch, she joined the Management Trainee Program at the same bank in 1999. After working in a number of positions at Denizbank headquarters, Mrs. Zorlu Melik attended a Marketing Certificate Program at the University of California, Berkeley (USA) in 2001. Subsequently, she started to work at Korteks Yarn Plant in 2002, and became a Board Member at the same Company in 2004. She has been serving as Vice President at Zorlu Energy Group, Board Member at Zorlu Enerji Elektrik Üretim A.Ş., and also as Board Member at several Zorlu Group companies since 2005. As of April 2012, Mrs. Zorlu Melik acts as Deputy President of Zorlu Energy Group.

BEkir cEM köksal

Board Member

(1967 - Ankara) Bekir Cem Köksal graduated from Boğaziçi University, Department of Mechanical

Engineering in 1988, and received his master’s degree from Bilkent University in 1990. Subsequently, he worked in the banking industry from 1990 to 2001. In 1997, he was appointed Assistant General Manager at Denizbank, and in 2002 he joined Vestel as Chief Financial Officer. Mr. Köksal currently serves as Executive Board Member in charge of Finance

at Vestel. He was elected Board Member at the 2011 Ordinary General Meeting of Zorlu Enerji Elektrik Üretim A.Ş., held on May 31, 2012. Prof. dr. a. can tuncaY

Board Member

(1944 - Ankara) A. Can Tuncay graduated from the Faculty of Law at Ankara University in 1966. He started his academic career as an assistant in the Faculty of Law at Istanbul University in 1968. During his academic career, Dr. Tuncay received his PhD in law in 1975, became an associate professor in 1980 and professor of law in 1988; his area of expertise is Occupational Law and Social Security. He retired from Istanbul University in 2000, but continued to lecture at Yeditepe University’s Faculty of Law. Appointed Board Member at Zorlu Enerji Elektrik Üretim A.Ş. in 2006, Dr. Tuncay continues to lecture at Bahçeşehir University, Department of Law on Occupational Law and Social Security. In addition to his lecturing duties, Dr. Tuncay has also worked for many years as an independent lawyer and served as legal advisor for numerous companies. He has also served as member of the Legal Council of the National Olympic Committee of Turkey and of the Arbitration Board of the Turkish Football Federation.

Burak i. okaY

Board Member

(1967 - Ankara) Burak İ. Okay graduated from the Faculty of Law at Ankara University in 1990. After completing an International Law Certificate Program in New York, he embarked on his professional career at Türkiye İş Bankası, Department of Legal Consultancy. He later worked at Garanti Bankası, MNG Bank and Nortel Networks Netaş, respectively, before joining Bener Law Firm as an executive. Mr. Okay joined Zorlu Group in 2006 and played an active role in the structuring of the legal department that serves all Group companies. He continues to work as the Legal Coordinator for Zorlu Group and has been a Board Member at Zorlu Enerji Elektrik Üretim A.Ş. since 2007.

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gEnEral ManagEr’s MEssagE

in 2012, WE continuEd to GroW in

linE With our stratEGic Goals

and objEctivEs by furthEr

strEnGthEninG our corporatE

structurE and culturE.

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23

thE EnErgY sEctor in turkEY is growing.

The financial indicators in 2012 showed that the dissipation of the global financial crisis has actually been misleading, and the optimism in the world economy gave way to worries once again. The almost chronic vulnerability in Europe coupled with the slowdown in China’s economy, compared to the high rates of growth in recent years, and also the inability of the developed countries to achieve the expected rates of economic growth, have inevitably impacted the energy sector. While the world’s advanced economies failed to realize their full potential during the tough crisis period, private sector companies in Turkey managed to achieve a 57% share in Turkey’s total installed capacity of 57,000 MW as of year-end 2012, thanks to the growing momentum in the energy sector.

Given our country’s growth performance, a significant increase in energy demand is forecast for the coming years. Ministry of Energy and Natural Resources data indicates that the energy sector must invest over US$ 125 billion by the end of 2023, so that future energy demand can be fully met. According to the 2013 Program announced by the government, private sector investments will amount to US$ 23 billion in the next year while public

sector investment will increase 50% to US$ 4.6 billion; as a result, 80% of Turkey’s total energy investments will be made by the private sector.

currEnt MarkEt conditions havE a nEgativE EffEct on thE dEvEloPMEnt of thE sEctor.

Over the last 30 years, the energy sector in Turkey has made significant progress and continues to grow steadily. The total installed capacity of 57,000 MW as of year-end 2012 is expected to double in the next 10 years. However, current market conditions hinder private sector investment which is necessary for the sector’s development. The formation of a predictable, liberalized and competitive energy market structure will enable investments to gain momentum. Unfortunately, the privatization processes in 2012 did not meet the expectations and needs of the sector. High tender prices led to an unnecessary delay or even cancellation of privatizations, and this situation especially afflicted investors. These ambiguities impacted all players in the sector negatively, especially in terms of the continuity of their investments.

Market liberalization will only be achieved when privatizations are complete, relevant laws and bureaucratic regulations are revised to encourage competition,

and when a market structure allowing energy derivatives to be freely traded is formed. The criteria for privatization tenders should not be solely price proposals. As one of the influential players in the energy sector, we hope that privatizations, which are essential for a truly liberalized market, will be completed as fast as possible in 2013.

invEstMEnt in local and rEnEwaBlE EnErgY rEsourcEs should BE PrioritiZEd.

A secure and sustainable energy supply, a must for development, should be maintained in a way to protect environmental and cultural assets. The use of local and renewable energy resources is becoming a worldwide trend in terms of preventing issues related to energy supply and sustainability. This trend has finally found its place atop Turkey’s energy agenda too. The target of the Ministry of Energy and Natural Resources to increase the share of renewable energy resources in total electricity generation to 30% by 2023 is very important in terms of guiding the sector.

ovEr tHE lAst 30 yEArs, tHE EnErGy sECtor in turkEy HAs mAdE siGnifiCAnt proGrEss And HAs mAintAinEd its stEAdy GroWtH.

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GENERAL MANAGER’S MESSAGE

At Zorlu Enerji, we shape our investment plans, corporate responsibility initiatives and sustainability approach with a point of view parallel to domestic and international energy strategies, and integrate them into the way we do business. In determining our investment areas, our priority is to meet the increasing energy demand with local and renewable energy resources. In 2012, the share of renewable energy resources in our total installed capacity reached 34%. Our goal for the next three years is to increase this percentage further through additional investments in this key area. Our goal for the next five years is to undertake approximately 50% of Turkey’s geothermal target of 600 MW by the year 2023.

To this end, on December 28, 2012, we took over 100% of the shares of Zorlu Doğal Elektrik Üretim A.Ş. (Zorlu Doğal), which has a total installed energy capacity of 142.6 MW. Of this total, 127.6 MW is renewable energy (one geothermal, seven hydroelectric plants), and 15 MW is thermal energy. As a result of this share transfer, our total capacity in Turkey reached 771 MW of electricity and 269 tons/hour of steam at year-end 2012 through six thermal, seven hydroelectric, one wind, one diesel, and one geothermal power plants.

Zorlu EnErji in 2012

Growing stronger thanks to Zorlu Group’s know-how spanning 60 years, Zorlu Enerji further strengthened its corporate structure and culture in 2012, and continued to grow in line with its strategic goals and objectives. In 2012, our capital expenditures totaled US$ 111 million, and we reported revenues of US$ 293 million.

In order to strengthen our financial structure and to pave the way for planned investments, we undertook a cash capital increase of TL 218,334,650 through a 77.5% rights issue. Accordingly, the Company’s paid-in capital reached TL 500,000,000.

Additionally, under our

restructuring efforts, Tereshkovo Natural Gas Power Plant in Russia (with 170 MW electricity and 150 gcal heat production capacity), and Kojukhovo Natural Gas Power Plant (with 170 MW electricity and 270 gcal heat production capacity), which is currently under construction, were transferred to Zorlu Holding A.Ş. Our Company held a 100% stakes in both the Tereshkovo and Kojukhovo power plants.

We also transferred all the shares of Ashdod Energy Ltd. and Ramat Negev Energy Ltd., which undertake the investments in

Israel, to Ezotech Electric Ltd., in which Zorlu Enerji holds a 42.15% stake. Subsequent to this share transfer, we became an indirect partner in both projects. Zorlu Enerji increased its stake in Solad Energy Ltd. from 26.24% to 42.15%, following the completion of the share transfer with Edeltech Ltd., the other partner in Solad Energy Ltd.

in rEnEwaBlE EnErgY, wE arE growing with gEothErMal invEstMEnts in turkEY.

At Zorlu Enerji, we have based our growth strategy on investing in local and renewable energy resources. We are confident that we will have a more livable world as the concept of sustainability spreads across the globe and more projects are developed in this area. Therefore, in 2012, we continued to invest in the Aegean region where 87% of Turkey’s geothermal resources are located. Last year, we started the construction of our geothermal project in Kızıldere-Denizli; when completed, it will be Turkey’s largest geothermal power plant. With a 600 million kWh/year capacity, this power plant is expected to replace 79 million tons/year of oil, equivalent to US$ 86 million in annual energy imports.

in 2012, our capital ExpEnditurEs

totalEd us$ 111 million.

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25 In addition to Kızıldere, we also

made significant progress on our geothermal site in Alaşehir-Manisa in 2012. Geothermal drilling continues on the Alaşehir site, which we hold the production license for until 2040. This plant will have a total installed capacity of 30 MW; we plan to start construction in 2013, once we complete the project financing phase.

In addition to our geothermal investments, we aim to make new investments in hydropower and wind power in 2013. We plan to start construction on the Sami Soydam Hydroelectric Power Plant in Dalaman, with a capacity of 124 MW, once we finalize the project financing.

Licensing and pre-investment studies for Tirebolu HEPP (with 30 MW capacity), which we won by tender, are ongoing. Additionally, we plan to make significant progress on our two wind power plant projects, one in Osmaniye-Sarıtepe with a capacity of 50 MW, and the other in Demirciler with a capacity of 60 MW, thus increasing our total wind capacity to 245 MW.

our forEign invEstMEnts continuE with full forcE.

Construction of the Dorad Natural Gas Combined-Cycle Power Plant (with 800 MW capacity) in Israel, in which our Company is a partner, commenced in 2011. The

construction is progressing rapidly so as to complete the power plant by the end of 2013. Construction of Ashdod and Ramat Negev power plants (also in Israel), of which our Company has become an indirect partner after the restructuring and share transfers, began in September 2012 and is still underway. These two power plants will have a total installed capacity of 175 MW. Meanwhile, the Solad project is currently in the financing stage.

Regarding the construction of the second phase of the wind power plant in Jhimpir, Pakistan, with a capacity of 50.4 MW, the installation of 28 turbines is complete. The power plant is planned to be commissioned with full capacity in 2013.

wE MakE sustainaBlE and ProductivE invEstMEnts.

While we improve the production efficiency at our plants, we also aim to reduce emissions, which result from the consumption of resources and production. To this end, the Lüleburgaz Natural Gas Power Plant Development Project, which we initiated in 2009, serves as a good model for the sector in terms of energy efficiency. Following the commissioning of all units in 2012, this facility reached a level far more advanced than similar plants, in terms of energy generation with minimal environmental impact. In order to

increase its capacity, we integrated combined-cycle technology into the plant’s configuration portfolio, significantly improving its steam and electricity production flexibility. In the end, the power plant reached a capacity of 148.2 MW electricity and 239 tons/hour of steam. With the improvements carried out in line with the capacity increase, the plant’s electricity production efficiency increased 5%, leading to natural gas savings of 61.35 m3_{/year. In addition,}

carbon emissions decreased 100,000 tons/year, and energy used also dropped by 30%. A special recycling system was set up at Lüleburgaz Power Plant. This system, a first of its kind in the energy sector in Turkey, provides the cooling water for the plant from the wastewater of surrounding facilities. Thanks to this system, the cooling water is obtained from the wastewater of Zorluteks factory, thus resulting in 950,400 tons of underground water savings per year. With the wastewater tank, which is part of this new investment, water from the steam turbine can also be reused, and approximately 500,000 tons of water can be recycled annually. Thus, the power plant’s fresh water needs can be kept at a minimum level.

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GENERAL MANAGER’S MESSAGE

wE conduct our

activitiEs with a sEnsE of rEsPonsiBilitY for naturE.

As Zorlu Enerji, we are fully aware of our responsibility to conserve natural resources and safeguard our world, the source of our energy; and we act accordingly in all of our domestic and foreign activities, both as individuals and as a corporate entity. We embrace the concept of sustainability as the basis of our business approach and we believe in the importance of integrating sustainability into all of our business processes. To this end, we define energy efficiency as reducing energy consumption without disrupting quality of life, achieving maximum performance in processes with minimum energy consumption, and using the waste heat at our natural gas power plants. In our investments to improve our power plants and facilities, we always focus on determining the suitable areas to implement these three steps and choose our machinery and equipment accordingly. Furthermore, we support our efforts for a sustainable environment with corporate social responsibility initiatives that we implement in the area of education.

wE work to raisE awarEnEss aMong thE Young gEnEration aBout carBon nEutralitY, or “ZEro carBon,” and EnErgY.

Youth have an important role to play in the use, protection and management of the world’s existing energy resources. Keenly aware of this fact, we have educated children about the future of energy resources and energy conservation since 2009 through the website www.enerjisitemiz. com and various publications such as Zorlu ile Rüzgâr Enerjisi (Wind Power with Zorlu), Zorlu ile Doğal Gaz (Natural Gas with Zorlu), Zorlu ile Jeotermal Enerji (Geothermal Energy with Zorlu), and Zorlu ile Su Enerjisi (Hydro Energy with Zorlu). In addition, we have implemented the “Our Energy is For Children” project since 2010 which is the first educational initiative with a focus on energy to be conducted by an energy company on a national scale in Turkey. Under this project, we reached 104,000 children in Istanbul, Edirne, Kırklareli, Tekirdağ, Lüleburgaz, Gaziantep, Nizip, Osmaniye, Denizli, Rize, Erzincan, Kars, Çerkezköy and Kayseri, over the course of two and a half years. During this period, we also collaborated with several NGOs including the Educational Volunteers Foundation of Turkey (TEGV) and the Children’s Leukemia Foundation (LÖSEV).

WE support our Efforts for A sustAinAblE EnvironmEnt WitH CorporAtE soCiAl

rEsponsibility initiAtivEs tHAt WE implEmEnt in tHE ArEA of EduCAtion.

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27 At this time, I would like to extend

my gratitude to Gazdaş volunteers who have actively participated in “Our Energy is For Children” and helped us reach out to more children. In addition to these successful projects, in 2012, we conducted Turkey’s first energy related drama activity for children, in collaboration with TOÇEV, and initiated “The Future Is Yours, Don’t Consume Your Energy” educational initiative together with Şişli Municipality Science Center. Zorlu Energy Group was the first energy company in Turkey to prepare a sustainability report in 2011. The second Sustainability Report, issued in 2012, earned a ‘Level A’ rating from GRI (Global Reporting Initiative), a first in our sector. Our report was one of the 24 ‘Level A’ reports prepared by energy companies around the world.

We have been monitoring our carbon footprint since 2009. In this context, with our technical units and other teams, who implement our sustainability strategy, we conduct studies on how to translate the risks and the opportunities of moving toward a low-carbon economy into strategies for the future. In order to offset the carbon footprint left by Zorlu Enerji’s operations in 2012, we started to plant trees all across Turkey. Our first young forest in Denizli consists of 8,250 saplings which will be followed by new forests in Arpaçay and Tunceli.

With the responsibility of the first energy company in Turkey to have earned ISO 14064-1 Greenhouse Gases Emission Standard certification, we continue to carry out activities that set the standard in our sector. As a result of our monitoring efforts since 2011, we have also been able to reduce direct and indirect CO2 emissions

from Zorlu Enerji’s operations by 11% and 3%, respectively. In addition, we reduced our water consumption by 9% in 2012 by using natural resources frugally.

wE will Maintain our stEadY growth in 2013.

Following a year of intensive capital investments in 2012, we are confident that we will achieve significant financial growth in 2013, once the new projects that are currently under construction become fully operational. Zorlu Enerji is committed to supporting Turkey’s objective of diversifying renewable energy resources. With this commitment, we plan to continue developing projects that create value added, contribute to employment, and support sustainability by focusing our vision on local and renewable energy resources. Our goal is to maintain sustainable growth by investing in local and renewable energy in Turkey.

Zorlu Enerji’s roadmap is not based on rapid growth but rather on the strategy of becoming the sector leader and increasing its competitive power in the global arena. Taking this opportunity, I would like to express my gratitude to all our employees who have greatly contributed to Zorlu Enerji’s achievements to date, to our Board of Directors, shareholders, and all other stakeholders whose support we always feel.

iBrahiM sinan ak

General Manager of Zorlu Enerji Zorlu EnErGy

Group WAs tHE first EnErGy CompAny in turkEy to prEpArE A sustAinAbility rEport in 2011. tHE sECond sustAinAbility rEport, issuEd in 2012, EArnEd A ‘lEvEl A’ rAtinG from Gri (GlobAl rEportinG initiAtivE), A first in our sECtor.

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sEnior ManagEMEnt

i. sinan ak

General Manager

(1971 - Ankara) İ. Sinan Ak graduated from the Department of Management Engineering at Istanbul Technical University in 1995. He began his professional career as an investment specialist at Evgin Securities. He later completed his MBA at Old Dominion University in the US. After working as a Finance Supervisor at Vestel Communications from 2000 to 2002, and as a Finance Manager at Vestel White Goods between 2002 and 2006, Mr. Ak joined Zorlu Energy Group in 2006. He served as Assistant General Manager responsible for Financial Affairs at Zorlu Enerji Elektrik Üretim A.Ş. until 2012; in January 2012, he was appointed General Manager of Zorlu Enerji.

hüsEYin MorkoYun

Director, Financial Affairs

(1962 - Istanbul) Hüseyin Morkoyun began his professional career in the Finance Department of Halis Toprak Holding. From 1987 to 1996, he assumed various positions in the Financial Affairs Department at Hürriyet Ofset Gazetecilik ve Matbaa A.Ş. and subsequently was promoted to Accounting Manager at the same company. Mr. Morkoyun served as Finance Manager at Vestel Marketing between 1996 and 2006 and

later worked as Assistant General Manager responsible for Financial Affairs at Zorlu Energy Natural Gas Group. On March 15, 2012, he was appointed Director of Financial Affairs at Zorlu Enerji Elektrik Üretim A.Ş.

ali kindaP

Assistant General Manager (1968 - Çankırı) Ali Kındap graduated from the Department of Mechanical Engineering at Middle East Technical University in 1990. He began his professional career at Gama and later worked at Meteksan A.Ş. and Güriş İnşaat ve Mühendislik A.Ş. In 2008, he joined Zorlu Energy Group as Assistant General Manager of Zorlu Endüstriyel ve Enerji Tesisleri İnşaat Ticaret A.Ş. Mr. Kındap has served as Assistant General Manager responsible for Implementations at Zorlu Enerji Elektrik Üretim A.Ş. since 2011.

aYdin akat

Assistant General Manager (1970 - Erzincan) Aydın Akat received his associate degree from Middle East Technical University, Construction Department in 1990, and graduated from Istanbul University, Department of Civil Engineering in 1996. He began his professional career at Cevahirler İnşaat in 1990, and from 1996 to 2005 he worked on various projects of Tekfen İnşaat. Mr. Akat

joined Zorlu Energy Group in 2005, working as Project Manager at Zorlu Endüstriyel ve Enerji Tesisleri İnşaat Ticaret A.Ş. Between 2008 and 2011, he held the position of Engineering Manager at the same company. Mr. Akat has served as Assistant General Manager responsible for Projects at Zorlu Enerji Elektrik Üretim A.Ş. since October 2011.

a. YağMur öZdEMir

Assistant General Manager (1978 - Ankara) A. Yağmur Özdemir graduated from Eastern Mediterranean University,

Department of Economics in 2000. He then received his master’s degree in Business Law from Bilgi University, and completed the Executive MBA and British Law post graduate programs at the University of Karachi. Mr. Özdemir began his professional career as Auditor at Arthur Andersen in 2000. From 2002 to 2004, he worked at Ernst&Young, and between 2004 and 2007 he served as Financial Controller at Vestel Electronics. He joined Zorlu Enerji Elektrik Üretim A.Ş. in 2007 as Project Finance Manager; in 2012, he was promoted to Manager of Investments and Project Finance at the same company. Mr. Özdemir has served as Assistant General Manager responsible for Investments and Project Finance at Zorlu Enerji Elektrik Üretim A.Ş. since October 2012.

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our EnErgY is turkEY’s EnErgY

As part of our hydropower investment

strategies, we have concentrated our

efforts on dalaman and Harşit creeks.

pre-investment studies are underway for

sami soydam Hydroelectric power plant,

which will be built on dalaman Creek,

with a capacity of 124 mW, and tirebolu

Hydroelectric power plant, which will be

built on Harşit Creek, with a capacity of

30 mW.

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31 d

alaman,

d

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Erosion control and vegetation initiatives were carried out at Kızıldere Power Plant.

2012 in BriEf...

Zorlu Enerji signed a procurement agreement for 28 turbines with Vestas, one of the world’s leading turbine manufacturers, for the wind power plant in Pakistan.

All the shares of Ashdod Energy Ltd. and Ramat Negev Energy Ltd. were transferred to Ezotech Electric Ltd., in which Zorlu Enerji holds a 42.15% stake.

Zorlu Enerji took over 100% of the shares of Zorlu Doğal Elektrik Üretim A.Ş.

Zorlu Enerji ranked among the top five Carbon Disclosure Leaders in 2012.

Zorlu Enerji’s 2011 Annual Report received the “Gold Award” in the “Energy” category at the MerComm Galaxy Awards.

The financial closing of the Pakistan Wind Power Plant project took place with a ceremony in Islamabad on May 29, 2012.

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33 All the shares of Rosmiks

International BV (“Rosmiks BV”), which were previously held by ICFS International LLC (“ICFS”), a wholly owned subsidiary of Zorlu Enerji, were transferred to Zorlu Holding A.Ş.

In March 2012, the Company’s Pakistan Wind Power Plant received the “Middle East Renewable Deal of the Year Award” presented by Project Finance magazine.

Zorlu Enerji increased its stake in Solad Energy Ltd. from 26.24% to 42.15%, following the share transfer completed with Edeltech Ltd., the other partner in Solad Energy Ltd.

The Company undertook a cash capital increase of TL 218,334,650 through a 77.5% rights issue. Accordingly, the Company’s paid-in capital reached TL 500,000,000.

Zorlu Enerji obtained a total loan of about 1.1 billion shekels (US$ 300 million) from financial institutions for the Ashdod and Ramat Power Plants.

Zorlu Enerji participated in ICCI 2012 (International Energy & Environment Fair and Conference), which took place in April 2012.

Zorlu Energy Group’s HR Department received the “Respect to Humanity Award” in the “Energy Companies” category from Kariyer.net, a job placement firm, for the second year in a row, for responding to all job applicants in the most rapid way.

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thE EnErgY sEctor in turkEY in 2012

turkEy’s ElEctricity dEmand has

GroWn at an annual compound

ratE of 7.3% sincE 1985.

In 2010 and 2011, the country’s electricity demand increased 7.9% and 9%, YoY respectively; this strong demand growth continued in 2012 as electricity demand totaled 241,946.6 GWh, up 5.1% YoY.

In 2012, the share of natural gas power plants and coal power plants in Turkey’s total electricity generation had dropped to 43% (2011: 45%) and 27% (2011: 28%), respectively. Meanwhile, the share of renewable energy power plants (hydroelectric, wind and geothermal) in total electricity generation increased to 29%, up from 27% in 2011.

During first quarter 2012, electricity prices in the Balancing and Settlement market remained high as a result of the substantial increase in demand due to cold weather conditions, and also because of shortages in natural gas supply, the main source of electricity generation in Turkey. Compared to the previous quarter, in the second quarter of the year, prices remained lower due to low demand/high supply (especially from hydroelectric power plants) conditions resulting from seasonality.

During the third quarter,

electricity consumption increased due to seasonality and in July, consumption recorded a historical peak level; peak load demand reached 39,045 MW on July 27. As a result, electricity prices in the Balancing and Settlement

market remained higher in the third quarter compared to the second quarter. In terms of price regulation, the Energy Market Regulatory Authority (EMRA) raised electricity tariffs between 4.03% and 9.81% effective as of October 1. This price rise came on top of the 8.1% increase imposed on April 1, 2012. The Petroleum Pipeline Corporation (BOTAŞ) also increased natural gas prices by 9.8% on average, as of October 1, and again on top of the previous price rise of 18.72% made on April 1. As a result of these price increases, electricity prices in the Balancing and Settlement market remained at third quarter’s levels during the fourth quarter, despite the slowdown in demand.

Turkey’s electricity demand has grown at an annual compound rate of 7.3% since 1985, in line with economic development, industrialization and urbanization. According to Turkish Electricity Transmission Company (TEİAŞ) data, Turkey has total installed capacity of approximately 57,058 MW as of year-end 2012. Taking into account the estimated increase in electricity demand, Turkey will have to at least double its existing capacity over the next 10 years.

Within this framework, according to a report published by the Turkish Electricity Transmission Company (TEİAŞ) titled “Turkish Electrical Energy 10-Year Generation Capacity Projection,” Turkey is expected to face

electricity shortages by 2017. Taking into account the minimum three or four-year investment period required for energy investment projects, measures must be taken beforehand and investments must start immediately in order to stave off a supply shortage in the coming years.

The “Electricity Energy Market and Supply Security Strategy Paper” published by the Undersecretariat of the State Planning Organization stated that the primary target was to increase the share of local energy resources in new investments, and also to raise the share of renewable resources to at least 30%. This report indicates that by 2023, Turkey is targeting to:

• Fully utilize current domestic lignite and hard coal resources; • Raise the share of nuclear power

to at least 5%;

• Fully exploit hydroelectric power potential;

• Increase installed wind power capacity to 20,000 MW; and • Commission the entire 600 MW

in geothermal potential. Within this framework, the amendment to the Law on the Utilization of Renewable Energy Resources for Electrical Energy Generation, which aims to promote the generation of electricity from renewable resources, was enacted on January 4, 2011. The law provides a price guarantee for a period of 10

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35 years to the generation license

holders subject to the renewable energy resource (RES) support mechanism. In addition, the law also aims to encourage the use of local technology by providing additional incentives for the use of local equipment at the renewable energy facilities.

Pursuant to the efforts to increase the share of local resources in total electricity generation, power plants that use local coal and lignite were also included in the incentive package as per the Resolution of the Council of Ministers,

promulgated in the Official Gazette on February 15, 2013.

In line with the ongoing liberalization in the market, the “Electricity Market Law” was enacted in March 2013. The purpose of this law is to establish a financially robust, stable and transparent market structure that will operate in accordance with special legal provisions in a competitive environment, so that consumers can be supplied with adequate, high quality, uninterrupted, low cost and environmentally friendly electricity. The law also aims to ensure that the market is independently regulated and audited. The legal infrastructure required to establish the Energy Exchange has also been formed. The Energy

Exchange is critical in terms of creating a market structure that will assure investors of transparent reference prices while also securing the energy supply. Enabling a competitive

environment in the energy sector; establishing financially strong, transparent and stable energy markets; and regulating and supervising these markets are crucial to the development of the energy sector in Turkey and to the improvement of its competitive advantages on a global level. To this end, the developments in privatization are as follows:

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tHE ConsumEr EliGibility limit WAs loWErEd to

5,000 kWh in linE WitH EmrA’s dECision mAdE At its mEEtinG on jAnuAry 24, 2013.

Production:

The privatization process of the production facilities owned by the Turkish Electricity Generation Company (EÜAŞ), which started in 2009, is ongoing. According to the 2011 EÜAŞ annual report, privatization of 52 small scale hydroelectric power plants owned by EÜAŞ and arranged in 19 portfolio groups was completed; out of these 19 groups, the share transfer processes of 10 groups (total of 28 HEPPs) were finalized. For the remaining five groups (total of 12 HEPPs), the Privatization Administration is currently conducting the transfer of shares. Meanwhile, the tenders for four groups (total of 12 HEPPs) were cancelled.

Additionally, the privatization process for power plants with a total installed capacity of approximately 16,000 MW, which are owned by Turkish Electricity Generation Company (EÜAŞ), was initiated. The target is to start the privatization of the four thermal power plants (Hamitabat, Soma A-B, Kangal and Seyitömer) in the first stage, and then of the nine portfolio groups that comprise hydroelectric and thermal power plants, and to complete the entire privatization process within the next two to three years. Within this context, the privatization tenders for the Seyitömer and Kangal power plants were completed

through a “Grant of Operation Right” on December 28, 2012 and February 8, 2013, respectively. The bidding deadline for the privatization of the Hamitabat Power Plant through a “Block Sale” was set as February 28, 2013.

distriBution:

By the publication date of this report, privatization of 13 distribution grids have already been completed. The privatization of 100% of the shares of the remaining eight grids have also been completed through a block sale, and the share transfer processes are ongoing. Pursuant to the privatization of distribution grids as set out in the “Medium Term Program (2010-2012)” prepared by the Undersecretariat of the State Planning Organization, it was stated that in order to improve the degree of market transparency, the eligibility limit would be continuously lowered, and by 2015, all consumers will be eligible. Within this framework, the eligibility limit was lowered to 5,000 kWh in line with EMRA’s decision made at its meeting on January 24, 2013.

(39)

37 In 2012, Zorlu Enerji’s capital

expenditures amounted to US$ 111.2 million, including US$ 85.4 million invested in the wind power plant in Pakistan. The Company’s domestic production capacity reached 771 MW, and renewable energy generation

Zorlu EnErji ElEktrik ürEtiM a.ş. in 2012

ElECtriCity GEnErAtion And sAlEs

Production december 2012 december 2011 Electricity (kWh) 1,816,233,751 2,220,678,441 Steam (tons) 604,710 583,046 salEs Electricity (Production) (kWh)(*) _{1,739,732,691} _{2,137,122,785} Electricity (Commercial) (kWh) 1,065,319,003 644,249,510 Steam (tons) 604,710 583,046

(*) Excluding Rosmiks LLC’s electricity sales of 718,294,536 kWh and heat sales of 53,973 gcal in 2012 within the scope of discontinued operations.

capacity reached 262.6 MW, making up a 34% share in total installed capacity. Zorlu Enerji aims to further increase its installed capacity in Turkey mainly through geothermal, wind and hydroelectric investments. WHilE tHE CompAny’s

rEnEWAblE EnErGy GEnErAtion CApACity rEACHEd 262.6 mW, its sHArE in totAl instAllEd CApACity rosE to 34%.