ZORLU ENERJİ ELEKTRİK ÜRETİM A.Ş. CONSOLIDATED FINANCIAL STATEMENTS AT 30 SEPTEMBER 2008 TOGETHER WITH AUDITOR S REPORT

ZORLU ENERJİ ELEKTRİK ÜRETİM A.Ş. CONSOLIDATED FINANCIAL STATEMENTS AT 30 SEPTEMBER 2008 TOGETHER WITH AUDITOR S REPORT

INDEPENDENT AUDITOR S REPORT To The Shareholders and Board of Directors of Zorlu Enerji Elektrik Üretim A.Ş. Introduction We have reviewed the accompanying consolidated interim balance sheet of Zorlu Enerji Elektrik Üretim A.Ş. (the Company ) and its subsidiaries listed under note 1 as of 30 September 2008, and the related consolidated interim statements of income, changes in equity and cash flows for the nine-month period then ended. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with International Financial Reporting Standards. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. During 2006, there have been changes in the regulations related to investment allowances. According to these changes investment allowances have been discontinued as from 01 January 2006. However investment allowances unused and carried forward as of 31 December 2005 and investment allowances on projects approved as of 31 December 2005 on which expenditure continues to be incurred after 31 December 2005 may be deducted from the profits for the years 2006, 2007 and 2008. However, the profit remaining after deduction of investment allowances for the said three years will be subject to 30% corporation tax. The Company has become entitled to investment allowances of YTL 357.279.813 as of 30 September 2008 and the Company has exercised the option of using investment allowances and pay corporation tax at 30%. The deferred tax asset related to investment allowances as of 30 September 2008 was calculated as YTL 54.009.033 The realization of this deferred tax asset is dependent upon generation of sufficient profits until and including 2008.

Conclusion Based on our review, with the exception of the adjustments that may be required as a result of the matters described in the preceding paragraphs, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial information is not prepared, in all material respects, in accordance with International Financial Reporting Standards. EREN Bağımsız Denetim ve Yeminli Mali Müşavirlik A.Ş. Member Firm of Grant Thornton International Nazım Hikmet Partner Istanbul, 26.11.2008

1 CONSOLIDATED BALANCE SHEETS AT 30.09.2008 AND 31.12.2007 Note 30.09.2008 31.12.2007 ASSETS Current assets Cash and cash equivalents 5 65.296.605 10.467.920 Financial assets held-to-maturity 9 87.321.503 16.305.800 Trade receivables 6 49.786.043 26.622.514 Inventories 7 35.903.216 33.998.103 Other assets 8 125.736.806 59.595.220 Total current assets 364.044.173 146.989.557 Non-current assets Financial assets available-for-sale 9 634.621.817 5.782.621 Property, plant and equipment 10 1.285.022.770 879.290.107 Intangible assets 11 640.163.079 41.905.045 Other assets -- 108.428 Deferred tax asset 16 60.188.135 55.701.097 Total non-current assets 2.619.995.801 982.787.298 TOTAL ASSETS 2.984.039.974 1.129.776.855 The accompanying notes are an integral part of these consolidated financial statements.

LIABILITIES AND EQUITY 2 CONSOLIDATED BALANCE SHEETS AT 30.09.2008 AND 31.12.2007 Note 30.09.2008 31.12.2007 Current liabilities Borrowings 12 235.273.036 248.320.274 Trade payables 13 115.871.768 70.369.621 Taxation on income 16 2.010.763 916.416 Provision for expenses 14 2.105.334 248.711 Due to related parties 24 -- 285.683.524 Other liabilities 15 7.702.279 5.387.881 Total current liabilities 362.963.180 610.926.427 Non-current liabilities Borrowings 12 2.000.263.484 137.297.075 Trade payables 13 1.644.123 668.879 Provision for expenses 14 -- 7.114.416 Reserve for retirement pay 17 2.676.971 1.366.011 Deferred tax liability 16 61.684.094 56.587.640 Due to related parties 24 288.532.075 -- Total non-current liabilities 2.354.800.747 203.034.021 Equity Share capital 18 192.613.350 192.613.350 Minority interest 89.021.437 47.487.126 Translation reserve (6.253.092) (794.760) General reserves (9.105.648) 76.510.691 Total equity 266.276.047 315.816.407 Commitments and contingencies 19 TOTAL LIABILITIES AND EQUITY 2.984.039.974 1.129.776.855 The accompanying notes are an integral part of these consolidated financial statements.

3 CONSOLIDATED INCOME STATEMENTS FOR THE NINE MONTH PERIODS ENDED 30.09.2008 AND 2007 Note 30.09.2008 30.09.2007 Revenue 20 483.631.977 341.178.690 Cost of sales (389.982.370) (293.602.633) Gross profit 93.649.607 47.576.057 Selling expenses (9.166.302) (10.565.980) General and administrative expenses (38.596.700) (28.534.672) Other income 22 2.213.070 3.610.632 Other expense 22 (10.932.349) (18.672.577) Operating profit (loss) 37.167.326 (6.586.540) Financing income 23 221.817.205 69.197.197 Financing expense (-) 23 (296.619.483) (50.030.057) Profit (loss) before taxation (37.634.952) 12.580.600 Taxation charge Current 16 (12.523.927) (8.237.984) Deferred 16 (1.006.684) (699.202) Taxation on income (-) (13.530.611) (8.937.186) NET PROFIT (LOSS) FOR THE PERIOD (51.165.563) 3.643.414 Net profit (loss) attributable to: Equity holders of the Company (84.388.460) (7.048.986) Minority interest 33.222.897 10.692.400 (51.165.563) 3.643.414 Basic and fully diluted earnings per share 4 (0,01) 0,00 The accompanying notes are an integral part of these consolidated financial statements.

4 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE NINE MONTH PERIODS ENDED 30.09.2008 AND 2007 Share capital Minority interest Translation reserve General reserves Total equity Balance at 01 January 2007 192.613.350 20.731.161 -- 88.952.489 302.297.000 Consolidated subsidiaries as from 01 January -- 6.631.538 -- (2.116.332) 4.515.206 Cash increase in subsidiaries share capital -- 13.300.000 -- -- 13.300.000 Translation differences -- -- 11.356.048 -- 11.356.048 Net profit for the period -- 10.692.400 -- (7.048.986) 3.643.414 Balance at 30 September 2007 192.613.350 51.355.099 11.356.048 79.787.171 335.111.668 Balance at 01 January 2008 192.613.350 47.487.126 (794.760) 76.510.691 315.816.407 Changes in minority interest -- 1.227.879 -- (1.227.879) -- Cash increase in subsidiaries share capital -- 913.124 -- -- 913.124 Translation differences -- 6.170.411 (5.458.332) -- 712.079 Net loss for the period -- 33.222.897 -- (84.388.460) (51.165.563) Balance at 30 September 2008 192.613.350 89.021.437 (6.253.092) (9.105.648) 266.276.047 The accompanying notes are an integral part of these consolidated financial statements.

5 CONSOLIDATED CASH FLOW STATEMENTS FOR THE NINE MONTH PERIODS ENDED 30.09.2008 AND 2007 Note 30.09.2008 30.09.2007 Profit (loss) before tax (37.634.952) 12.580.600 Adjustment to reconcile net income to net cash provided from operating activities: Depreciation of property plant and equipment 10 27.327.923 25.651.069 Amortization of intangible assets 11 4.651.948 1.403.291 Increase in provisions (5.257.793) 4.228.181 Provision for retirement pay 1.658.473 464.277 Profit on sale of fixed assets (111.140) (22.463) Interest expense 23 76.203.311 26.838.422 Interest income 23 (19.400.644) (1.395.490) Unearned interest on receivables 76.090 (70.549) Unearned interest on payables (375.913) (112.486) Provision for diminution in value of inventories 270.503 679.861 Provision for doubtful receivables 2.845.094 241.113 Operating profit before changes in working capital 50.252.900 70.485.826 Changes in operating assets and liabilities Trade receivables (26.084.713) 1.863.950 Inventories (2.175.616) (13.593.265) Other assets (66.033.158) (25.508.678) Trade payables 46.853.304 13.091.248 Due to related parties 2.848.551 69.407.980 Other liabilities 1.898.104 (264.976) Taxes paid (11.429.580) (7.187.608) Net cash provided by (used in) operating activities (3.870.208) 108.294.477 Cash flows from investing activities Acquisition of investments -- (4.867.611) Consolidated subsidiaries as from 01 January -- 6.631.538 Purchases of property, plant and equipment 10 (428.755.248) (139.223.812) Purchases of intangible assets 11 (602.909.982) (16.904.407) Natural gas drilling expenses 10 824.414 14.217.587 Proceeds from sale of property, plant and equipments 361.499 120.040 Net cash used in investing activities (1.030.479.317) (140.026.665) Cash flows from financing activities Purchases of financial assets (699.854.899) -- Cash increase in subsidiaries share capital 913.124 13.300.000 Proceeds from borrowings 1.913.356.514 244.241.502 Repayments of borrowings (101.508.576) (194.412.970) Interest received 19.400.644 1.395.490 Interest paid (39.573.759) (21.820.576) Net cash provided by financing activities 1.092.733.048 42.703.446 Translation differences (4.668.032) 11.306.510 Net increase in cash and cash equivalents 58.383.523 10.971.258 Cash and cash equivalents at beginning of year 5 10.139.433 305.099 Cash and cash equivalents at end of period 5 63.854.924 22.582.867 The accompanying notes are an integral part of these consolidated financial statements.

6 1. ORGANISATION AND NATURE OF ACTIVITIES Zorlu Enerji Elektrik Üretim A.Ş. (the Company or Zorlu Enerji ) is a member of the Zorlu Group of Companies which are under the control of the Zorlu Family. The Company and its subsidiaries were established to meet the power requirements of Zorlu Group establishments and other industrial companies. The registered office address of the Company is Nilüfer Organize Sanayi Bölgesi, Pembe Caddesi, Bursa /Turkey. For the purpose of consolidated financial statements Zorlu Enerji and its subsidiaries will be referred to collectively as the Group. Consolidated company Operating Location Ownership interest (%) Economic interest (%) Zorlu O/M Enerji Tesisleri İşletme ve Bakım Hizmetleri A.Ş. Turkey 40 24 Zorlu Doğal Elektrik Enerji Üretim A.Ş. Turkey 99 97 Zorlu Endüstriyel ve Enerji Tesisleri İnşaat Ticaret A.Ş. Turkey 20 20 Zorlu Petrogas, Petrol, Gaz, Petrokimya Ürünleri İnşaat Sanayii ve Ticaret A.Ş. Turkey 100 78 Zorlu Elektrik Enerjisi İthalat İhracat ve Toptan Ticaret A.Ş. Turkey 3 2 Zorlu Doğalgaz İthalat İhracat ve Toptan Ticaret A.Ş. Turkey 3 2 Trakya Bölgesi Doğalgaz Dağıtım A.Ş. Turkey 30 10 Gazdaş Gaziantep Doğalgaz Dağıtım A.Ş. Turkey 30 10 Amity Oil International Pty. Ltd. Turkey 100 78 Rosmiks International B.V. Holland 100 51 Rosmiks LLC Russia 100 51 ICFS International LLC USA 51 51 Rotor Elektrik Üretim A.Ş. Turkey 95 86 Zorlu Hidroelektrik Enerji Üretim A.Ş. Turkey 95 86 Zorlu Jeotermal Elektrik Üretim A.Ş. Turkey 100 78 Zorlu Elektrik Enerji İthalat İhracat A.Ş., Zorlu Doğalgaz İthalat İhracat A.Ş., Trakya Bölgesi Doğalgaz Dağıtım A.Ş. and Gazdaş Gaziantep Doğalgaz Dağıtım A.Ş. are consolidated because they are under the effective control and management of the Group. Nature of activities of the Group Zorlu Enerji Elektrik Üretim A.Ş. (Bursa / Turkey) Zorlu Energy was established in 1993 for the purpose of generating electricity and steam mainly for Zorlu Holding Group Companies. Zorlu Enerji Elektrik Üretim A.Ş. supplies uninterrupted power to around some industrial users and mainly DUY system, by its natural gas combined cycle plants in Bursa (90 MW), in Ankara (50,3 MW), in Kayseri (189 MW) and by its cogeneration plants in Lüleburgaz (66 MW), in Kayseri (7MW) and Yalova (16MW). Zorlu Doğal Elektrik Üretimi A.Ş. (Istanbul/Turkey) - Zorlu Doğal Elektrik was established in 2008 to build hydroelectric power plants as well as power stations based on all forms of renewable energy, and to sell the electricity produced at these facilities. On 05 March 2008 the Group has won the tender for the operating license of Tercan, Kuzgun, Mercan, İkizdere, Çıldır, Beyköy and Ataköy Hidroelectric power plants and the thermal power plant in Denizli for a period of 30 years and for acquisition of the ownership of natural gas power plant located in Van all owned by Ankara Doğal Elektrik Üretim ve Ticaret

7 A.Ş. for USD 510 million. The tender was organized by the Turkish Privatization Administration and approved on 07.05.2008. In accordance with the agreement signed on 01.09.2008, the consideration of the tender was wholly paid in cash. Region Type of power plants Date of license obtained License period Production of electric / Power Production capacity per year KW hour Van Fuel oil 21.08.2008 49 year 15,0 MW 2.300.000 Denizli Thermal 21.08.2008 29 year 15,0 MW 83.000.000 Tokat Hydroelectric 21.08.2008 30 year 5,5 MW 8.000.000 Eskişehir Hydroelectric 21.08.2008 30 year 16,8 MW 59.000.000 Kars Hydroelectric 21.08.2008 30 year 15,4 MW 46.800.000 Rize Hydroelectric 21.08.2008 30 year 18,6 MW 109.000.000 Erzurum Hydroelectric 21.08.2008 30 year 20,9 MW 24.000.000 Tunceli Hydroelectric 21.08.2008 30 year 20,4 MW 85.000.000 Erzincan Hydroelectric 21.08.2008 30 year 15,0 MW 45.000.000 Total 142,6 MW 462.100.000 In accordance with the decision of the Energy Market Regulatory Authority (EMRA) dated on 21 August 2008, the license period of the thermal power plant in Denizli/Sarayköy is 29 years 3 months and 17 days to be valid on 01 September 2008. Zorlu O&M Enerji Tesisleri İşletme ve Bakım Hizmetleri A.Ş. (Istanbul / Turkey) Zorlu O&M Power plant Operation and Maintenance Services was established 2000 to provide operational and maintenance services to power plants. Zorlu Endüstriyel ve Enerji Tesisleri İnşaat Ticaret A.Ş. (Istanbul / Turkey) - This company became operational in 2000 for the purpose of developing, implementing and providing financial support to industrial and energy plant projects. Zorlu Petrogas, Petrol, Gaz ve Petrokimya Ürünleri İnşaat Sanayi ve Ticaret A.Ş. (Istanbul / Turkey) Zorlu Petrogas, Petroleum, Gas and Petrochemical Products, Construction was established 2000 to engage in natural gas distribution projects, petroleum and petrochemical production facilities, as well as marketing of petroleum and natural gas. Zorlu Elektrik Enerji İthalat İhracat A.Ş. (Istanbul / Turkey) - Zorlu Elektrik was established in 2003 for the purpose of procurement of wholesale electricity from domestic sources, free trade zones and international grid-connected countries for resale; on wholesale and retail basis. Zorlu Doğalgaz İthalat İhracat A.Ş. (Istanbul / Turkey) Zorlu Doğalgaz was established in 2003 for the purpose of wholesale procurement of compressed natural gas and/or liquefied natural gas to other wholesale companies, free trade zones and countries abroad; owns license for wholesale and retail sales and direct sales to free consumers. Trakya Bölgesi Doğalgaz Dağıtım A.Ş. (Istanbul / Turkey) This company was established in 2005 for the purpose of city gas distribution in Edirne-Kırklareli-Trakya, Turkey. Gazdaş Gaziantep Doğalgaz Dağıtım A.Ş. (Istanbul / Turkey) This company was established in 2005 for the purpose city gas distribution in Gaziantep-Kilis region, Turkey. Amity Oil International Pty. Ltd. - Zorlu Petrogas acquired the 100% shares in Amity Oil in 2005. Amity Oil is engaged in petroleum and natural gas exploration and production in Turkey. Rosmiks International B.V. (Holland) - This Company was established in 2006 for the purpose of providing financial support to two energy plant projects in Russia and owns 100% of Romiks LLC.

8 Rosmiks LLC ( Russia ) - Rosmiks LLC was established for the purpose of building and operating two energy plants respectively in Kozukhovo and Tereskhova regions in Russia with a capacity of 170MW each. Rosmiks LLC started these projects around mid 2007 and plans to complete them by the end in 4 th quarter of 2008 and operate them thereafter. ICFS International LLC ( The United States of America ) - ICFS was established in the USA in 2005 and owns 100% of Rosmiks International BV established in Holland. Rotor Elektrik Üretim A.Ş. (Istanbul/Turkey) - Rotor was established for the purpose of building wind power plants and was acquired by Zorlu Energy Group in 2007. Zorlu Hidroelektrik Enerji Üretim A.Ş. (Istanbul/Turkey) - Zorlu Hidroelektrik was established in 2007 for the purpose of building hydroelectric power plants and other power plants based on renewable energy sources. Zorlu Jeotermal Elektrik Üretim A.Ş. (Istanbul/Turkey) Zorlu Jeotermal was established in 2008 in order to develop projects and feasibility of the energy power plants, especially hydroelectric and thermal power plants based on all forms of renewable energy source for supplying the needs about energy, steam and heat.

9 2. BASIS OF PRESENTATION OF THE FINANCIAL STATEMENTS The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ( IFRS ) as developed and published by the International Accounting Standards Board ( IASB ). The Company, which is quoted on the Istanbul Stock Exchange, maintains its books of account and prepares its statutory financial statements in accordance with the Turkish Commercial Code, accounting policies prescribed by the Turkish Capital Markets Board and tax legislation and since 1994 has adopted the Uniform Chart of Accounts issued by the Ministry of Finance (collectively Turkish Practices ). Its subsidiaries which are incorporated in Turkey maintain their books of account and prepare their statutory financial statements in accordance with the Turkish Commercial Code and Tax Legislation and the Uniform Chart of Accounts issued by the Ministry of Finance. The foreign subsidiaries maintain their books of account and prepare their statutory financial statements in their local currencies and in accordance with the regulations of the countries in which they operate. The financial statements of overseas subsidiaries are converted into New Turkish Lira (YTL) by closing rate method. The consolidated financial statements have been prepared from statutory financial statements of the Company and its subsidiaries and presented in New Turkish Lira (YTL) with adjustments and reclassifications for the purpose of fair presentation in accordance with IFRS. Such adjustments mainly comprise deferred taxation, employee termination benefits, fixed assets and borrowing costs, receivables, interest expense accruals on bank loans. Measurement currency and reporting currency The financial statements have been prepared under the historical cost convention, other than financial assets which are stated at fair value. The restatement for the changes in the general purchasing power of YTL as of 31 December 2005 is based on IAS 29 ( Financial Reporting in Hyperinflationary Economies ). IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit current at the balance sheet date and the corresponding figures for previous periods be restated in the same terms. One characteristic (but not limited to) that necessitates the application of IAS 29 is a cumulative three year inflation rate approaching or exceeding 100%. As of 31 December 2005, the three year cumulative rate has been 36% (31 December 2004: 70% - 31 December 2003: 181%) based on the Turkish countrywide wholesale price index published by the State Institute of Statistics. As of 1 January 2006, it has been decided to discontinue the adjustment of financial statements for inflation after taking into account that hyperinflation period has come to an end as indicated by existing objective criteria and, that other signs indicating the continuance of hyperinflation have largely disappeared the financial statement as of 31 December 2006 have therefore, not been subjected to any adjustment for inflation. The effects of ending the adjustments for inflation on financial statements are summarized as follows: The financial statements as of 31 December 2006 have not been subjected to any inflation adjustment whereas the financial statements for previous periods have been adjusted for inflation on basis of the measuring unit current at the last preceding balance sheet date namely 31 December 2005. Together with the ending of the hyperinflationary period the balances adjusted for inflation as of the last preceding balance sheet date form the opening balances of the assets, liabilities and equity accounts as of 1 January 2006. Offsetting Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

10 Comparable financial information and reclassification of prior period financial statements The balance sheets with the accompanying notes as of 30.09.2008 and 31.12.2007 and statement of income, cash flow and changes in equity with the accompanying notes for the nine month period ended 30.09.2008 and 30.09.2007 are presented as comparatively. For the compatibility of the current financial statements these financial statements are reclassified if necessary. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies followed in the preparation of the accompanying financial statements are summarized below: Basis of consolidation The consolidated financial statements incorporate the financial statements of Zorlu Enerji and entities controlled by Zorlu Enerji (listed under note 1). 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. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority s interest in the subsidiary s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. The Company has always exercised effective control over the management of each of the companies included in the group consolidation. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquire, plus any costs directly attributable to the business combination. The acquirer s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair values at the acquisition date. Goodwill arising on acquisition is recognized as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized. If, after reassessment, the Group s interest in the net fair value of the acquirer s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognized immediately in profit or loss. The interest of minority shareholders in the acquire is initially measured at the minority s proportion of the net fair value of the assets, liabilities and contingent liabilities recognized.

11 Foreign currency translations Foreign currency transactions and translation - Transactions in foreign currencies during the period have been translated into YTL at the exchange rates prevailing at dates of these transactions. Balance sheet items denominated in foreign currencies have been translated at the exchange rates prevailing at the balance sheet dates. Exchange gains or losses arising from settlement and translation of foreign currency items have been included in the income or expense accounts as appropriate. The foreign exchange rates used by the Company are as follows: 30.09.2008 31.12.2007 US Dollar 1,2316 1,1647 EUR 1,7978 1,7102 Foreign entities - Foreign consolidated subsidiaries are regarded as foreign entities since they are financially, economically and organizationally autonomous. Their reporting currencies are the respective local currencies. Financial statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect to the balance sheet and at exchange rates at the dates of the transactions with respect to the income statement. All resulting translation differences between the closing balances and opening balances due to the difference in inflation and devaluation are included in currency translation adjustment in equity. Property, plant and equipment Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, restated in equivalent purchasing power at 31 December 2005 less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. The recoverable amount of property, plant and equipment is the greater of net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Property, plant and equipment in the course of construction for production, rental or administrative purposes, or for purposes not yet determined, are carried at cost, less any identified impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Company 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, other than land and properties under construction, over their estimated useful lives, using the straight line basis over the following years stated below: Useful life in years Land improvements 25-30 Buildings 25-30 Leasehold improvements 3-5 Machinery and equipment 17-25 Furniture and fixtures 5-10 Motor vehicles 5

12 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 asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in income. Leases Finance lease - Assets held under finance leases are recognized as assets of the Company at their fair value at the date of acquisition. The corresponding liability to the Company is included in the balance sheet as a finance lease obligation. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of interest on the remaining balance of the liability for each accounting period. Operating lease - Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments on operating lease are recognized as an expense on a straight-line basis over the lease term. Intangible assets Rights and other intangible assets are capitalized and amortized on a straight line basis over their estimated useful lives, not exceeding a period of 5 years. Natural gas exploration expenses Costs directly associated with an exploration well, and exploration and property leasehold acquisition costs are capitalized until the determination of reserves is evaluated. If it is determined that commercial discovery has not been achieved, these costs are charged to expense. Capitalization is made within property, plant and equipment or intangible assets according to the nature of the expenditure. Once commercial reserves are found, exploration and evaluation assets are tested for impairment and transferred to development tangible and intangible assets and depreciation and/or amortization is charged during the exploration and evaluation phase. Development tangible and intangible assets Expenditure on the construction, installation or completion of infrastructure facilities, such as platforms, pipelines and the drilling of commercially proven development wells, is capitalized within tangible and intangible assets according to nature. When development is completed on a specific field, it is transferred to production assets. Depreciation and/or amortization are charged during the exploration and evaluation phase. Depreciation/amortization Natural gas properties/intangible assets are depreciated/amortized using the unit-of-production method. Unit-of-production rates are based on proved developed reserves, which are oil, gas and other mineral reserves estimated to be recovered from existing facilities using current operating methods. Impairment exploration and evaluation assets An impairment loss is recognized for the amount by which the exploration and evaluation assets carrying amount exceeds their recoverable amount. The recoverable amount is the higher of the exploration and evaluation assets fair value less costs to sell and their value in use. Inventories Inventories are stated at the lower of cost and net realizable value. Costs comprise direct materials and, where applicable, direct labor costs and those overheads that have been incurred in bringing the inventories to their present location and condition but excludes borrowing cost. Cost is calculated by using the weighted average method. Net realizable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution.

13 Related parties Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making the financial and operating decisions. For the purpose of these financial statements shareholders are referred to as related parties. Related parties also include individuals that are principle owners, management and members of the Group's Board of Directors and their families. Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is shown net of value added and sales taxes, discounts and returns. Revenue from the rendering of services is recognized by reference to the stage of completion of the transaction when the following conditions are met: the amount of revenue can be measured reliably, the flow of economic benefits to the entity is probable, the stage of completion at the period end can be measured reliably and the costs incurred to date can be measured reliably. Revenue for services provided initially is measured at the fair value of the consideration receivable. Expenses is included in operating expenses at cost unless the expense was permitted or required to be included in the financial statements on another basis. Cost is the fair value of the consideration given for the materials or services used in the production of goods or provision of services. Cost of sales is presented as a separate line item on the face of the income statement for the functional analysis of expenditures is chosen for the format of the income statement. Other revenues earned by the Group are recognized on the following bases: Rental income on an accrual basis. Interest income on an effective yield basis. Borrowing cost Borrowing cost directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the cost of those assets. All other borrowing costs are recognized in net profit or loss in the period in which they are incurred. Bank borrowings Interest-bearing bank loans and overdrafts are recognized at fair value at initial recognition which equate to the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accruals basis and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Income taxes Tax expense (income) is the aggregate amount included in the determination of net profit or loss for the period in respect of current and deferred tax. Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognized for all taxable temporary differences. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

14 Use of estimates The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are reviewed periodically, and as adjustments become necessary, they are reported in earnings in the periods in which they become known. Estimation have been used mainly for provision for possible losses due to lawsuits, warranty provision, provision for retirement pay, doubtful receivables and deferred taxation. Estimations have been made on basis previous experience and other appropriate data supplied by the management. Provisions Employee benefits - Under Turkish labor law, the Group and its Turkish subsidiaries are required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, or who retires in accordance with social insurance regulations or is called up for military service or dies. Other provisions - Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. Financial assets Financial assets other than hedging instruments are divided into the following categories: available-for-sale financial assets held-to-maturity investments. Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument's category is relevant for the way it is measured and whether any resulting income and expenses is recognized in profit or loss or directly in equity. Generally, the Group recognizes all financial assets using settlement day accounting. An assessment of whether a financial asset is impaired is made at least at each reporting date. All income and expense relating to financial assets are recognized in the income statement line item "finance costs" or "finance income", respectively. Available-for-sale financial assets are non-derivative financial assets that do not qualify for inclusion in any of the other categories of financial assets. The Group s available-for-sale financial assets include unconsolidated investments. Unconsolidated investments which are not quoted at any stock exchange are reported at cost less any impairment charges, as its fair value can currently not be reliably estimated. Gains and losses arising from financial instruments classified as available-for-sale are only recognized in profit or loss when they are sold or when the investment is impaired. In the case of impairment, any loss previously recognized in equity is transferred to the income statement. Losses recognized in the income statement on equity instruments are not reversed through the income statement but charged to equity. Losses recognized in prior period consolidated income statements resulting from the impairment of debt securities are reversed through the income statement; if the subsequent increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss. Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity. Investments are classified as held-to-maturity if it is the intention of the Group's management to hold them until maturity. The Group currently holds time deposits that fall into this category. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. In addition, if there is objective evidence that the investment has been impaired, the financial asset is measured at the present value of estimated cash flows. Any changes to the carrying amount of the investment are recognized in profit or loss.

15 Trade receivables Trade receivables are measured at initial recognition at fair value and are subsequently measured at amortized cost using the effective interest rate method to set an allowance for unearned interest. Appropriate allowances for estimated irrecoverable amounts are recognized in profit or loss when there is objective evidence that the asset is impaired. The allowance recognized is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Trade payables Trade payables are initially measured at fair value and are subsequently measured at amortized cost using the effective interest rate method to set an allowance for unearned interest. Recognition and derecognizing of financial instruments The Company recognizes a financial asset or financial liability in its balance sheet when and only when it becomes a party to the contractual provisions of the instrument. The Company derecognizes a financial asset or a portion of a financial asset when and only when it loses control of the contractual rights that comprise the financial asset or a portion of a financial asset or when a financial asset or a portion of a financial asset expires. The Company derecognizes a financial liability when and only when a liability is extinguished and that is when the obligation specified in the contract is discharged, cancelled and expires. Earnings per share Earnings per share ( EPS ) disclosed in the income statements are determined by dividing net income by the weighted average number of shares that have been outstanding during the related year or period and taking into account bonus issues and right issues. There is no difference between basic and diluted earnings per share for any class of shares for any of the years. Cash and cash equivalents For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand; deposits with banks and other financial institutions with the original maturity of three months or less.

16 4. EARNINGS PER SHARE 30.09.2008 30.09.2007 Net profit attributable to shareholders (51.165.563) 3.643.414 Weighted average number of ordinary shares in issue 8.166.535.000 8.166.535.000 Basic and fully diluted earnings per share (0,01) 0,00 5. CASH AND CASH EQUIVALENTS 30.09.2008 31.12.2007 Cash in hand 87.299 62.026 Demand deposit at banks 18.817.458 2.538.724 Time deposit at banks 46.391.848 7.867.170 Cash and cash equivalents 65.296.605 10.467.920 Bank overdrafts (-) (1.441.681) (328.487) Cash and cash equivalents presented in cash flow statement 63.854.924 10.139.433 As of 30.09.2008, the interest rate varied between 4,8% and 5,7% (31.12.2007: 3,75% and 4,5%) per year for foreign currency and 17,4% (31.12.2007: 16,5% - 16,75%) per year for YTL. 6. TRADE RECEIVABLES Current accounts - Third parties 30.799.159 22.629.213 - Related parties, note 24 23.924.716 5.394.750 Notes receivable - Third parties 1.653.817 2.274.064 Others 40.366 35.318 56.418.058 30.333.345 Unearned interest on receivables (-) (197.554) (121.464) Allowance for doubtful receivables (-) (6.434.461) (3.589.367) 49.786.043 26.622.514 Movement of doubtful receivables is as follows: 30.09.2008 30.09.2007 Opening balance, 01 January 3.589.367 580.264 Charge for the period 2.845.094 241.113 Ending balance, 30 September 6.434.461 821.377

17 In addition, doubtful trade receivables were aged as follows: 30.09.2008 31.12.2007 0-3 months 1.027.068 31.197 3-6 months 865.041 48.107 Over 6 months 4.542.352 3.510.063 6.434.461 3.589.367 7. INVENTORIES Raw materials 2.931.242 6.420.101 Spare parts 31.751.168 27.996.234 Merchandise 2.581.442 671.901 37.263.852 35.088.236 Allowance for diminution in value (-) (1.360.636) (1.090.133) 35.903.216 33.998.103 Allowance for diminution in value of inventories is as follows: Raw materials 1.196.264 925.761 Merchandise 164.372 164.372 1.360.636 1.090.133 Movement of allowance for diminution in value of inventories is as follows: 30.09.2008 30.09.2007 Opening balance, 01 January 1.090.133 -- Charge for the period 270.503 679.861 Ending balance, 30 September 1.360.636 679.861

18 8. OTHER ASSETS 30.09.2008 31.12.2007 Current Prepaid expenses 4.692.681 1.717.457 Income accruals 38.760.863 23.287.273 VAT receivable 25.719.180 22.322.548 Work advances 283.631 186.733 Due from personnel 50.727 35.765 Prepaid taxes 33.520.232 1.362.064 Advances given 2.427.468 9.265.200 Due from related parties (note 24) 10.672.207 -- Other 9.609.817 1.418.180 125.736.806 59.595.220 Income accruals relate to natural gas provided to customers up to the balance sheet date but invoiced in following month. 9. FINANCIAL ASSETS Short term financial assets Financial assets held-to-maturity 87.321.503 16.305.800 As of 30.09.2008, short and long term financial assets include Financial asset held-to-maturity consist of USD time deposits at HSBC Bank London. The annual effective interest rates are 4,1% and 7,3% (31.12.2007: 10%) for short and long term financial assets held-to-maturity with maturity dates 23.01.2009 and 09.06.2011 (31.12.2007: 13.06.2008), respectively. Unquoted investments whose fair value cannot be measured reliably are carried at cost and classified as available-for-sale financial assets. Long term financial assets Financial assets held-to-maturity 628.540.870 -- Equity investments 800.284 800.284 Unconsolidated investments 5.280.663 4.982.337 634.621.817 5.782.621

19 Share % Amount Entity Country 30.09.2008 31.12.2007 30.09.2008 31.12.2007 Solbar Energy Ltd. Israel 27% 27% 764.235 764.235 Dorad Enerji Ltd. Israel 25% 25% 36.049 36.049 Unconsolidated subsidiaries 800.284 800.284 Zorlu Enerji LLC Ukraine 100% 100% -- 13.604 Ramat Negev Energy Ltd. Israel 51% 51% 1.412.600 1.412.600 Ashdod Energy Ltd. Israel 51% 51% 3.387.500 3.387.500 Zorlu Intergas GMBH Austria 80% 80% 51.472 51.472 Zorlu Enerji Pakistan Ltd. Pakistan 100% 100% 429.091 117.161 Zorlu Enerji ve İnşaat Sanayi ve Ticaret A.Ş. Turkey 95% -- 950.000 -- Yeni Gürsöğüt Enerji Elektrik Üretim A.Ş. Turkey 90% -- 45.000 -- Capital commitments (-) Zorlu Enerji ve İnşaat Sanayi ve Ticaret A.Ş. Turkey (950.000) -- Yeni Gürsöğüt Enerji Elektrik Üretim A.Ş. Turkey (45.000) -- 5.280.663 4.982.337 6.080.947 5.782.621 As of the balance sheet dates, the companies listed under equity investments and unconsolidated investments in which the Company has controlling interest or significant influence are not consolidated or equity accounted as they are immaterial individually and in aggregate to the results and financial position of the Group. The movement of equity investment is given below: 30.09.2008 30.09.2007 Opening balance, 01 January 800.284 932.618 Increase (decrease) in fair value, net -- 411.310 Acquisition -- -- Ending balance, 30 September 800.284 1.343.928 The movement of unconsolidated investments is given below: Opening balance, 01 January 4.982.337 408.875 Increase (decrease) in fair value, net 311.930 4.858.481 Disposals (13.604) -- Consolidated subsidiaries (-) -- (402.180) Ending balance, 30 September 5.280.663 4.865.176

20 10. PROPERTY, PLANT AND EQUIPMENT 01.01.2008 Additions Disposals Translation reserve Transfers 30.09.2008 Cost Land 5.955.245 25.834 -- -- 77.498 6.058.577 Land improvements 23.960.042 4.238.663 (247.025) -- 22.636.234 50.587.914 Buildings 23.780.843 -- -- 29.158 160.877 23.970.878 Leasehold improvements 48.957 32.262 -- -- 979 82.198 Plant and machinery 529.729.195 84.001 -- -- 286.820 530.100.016 Motor vehicles 961.196 38.089 (18.830) 14.402 -- 994.857 Furniture and fixtures 7.055.264 1.622.881 (6.165) 16.307 117.202 8.805.489 Natural gas drilling cost 12.189.942 -- -- -- 1.057.906 13.247.848 603.680.684 6.041.730 (272.020) 59.867 24.337.516 633.847.777 Construction in progress - Natural gas drilling expenses 24.688.604 46.631 (824.414) -- (1.479.598) 22.431.223 - Energy power plants 387.737.986 412.026.651 -- 5.330.512 -- 805.095.149 - Other 38.539.890 10.640.236 -- -- (22.857.918) 26.322.208 1.054.647.164 428.755.248 (1.096.434) 5.390.379 -- 1.487.696.357 Accumulated depreciation Land improvements 8.230.029 1.523.183 (3.743) -- -- 9.749.469 Buildings 3.424.186 597.217 -- 3.964 -- 4.025.367 Leasehold improvements 20.683 9.955 -- -- -- 30.638 Plant and machinery 153.983.579 23.486.410 -- 2.554 -- 177.472.543 Motor vehicles 308.993 117.625 (17.546) 3.750 -- 412.822 Furniture and fixtures 3.105.312 662.645 (372) -- -- 3.767.585 Natural gas drilling cost 6.284.275 930.888 -- -- -- 7.215.163 175.357.057 27.327.923 (21.661) 10.268 -- 202.673.587 Net book value 879.290.107 1.285.022.770 The Group s policy is to trace all material and significant fixed asset additions under construction in progress and transfer to the related fixed asset accounts when the construction process is completed. Significant portion of the construction-in-progress balance represented the investment made in; - natural gas exploration in Thrace region, - construction of two energy power plants in Russia and - laying down natural gas pipeline infrastructure in Lüleburgaz, Edirne, Çerkezköy, Kırklareli and Tekirdağ. The guarantees given to secure bank loans are set out in note 19.

21 11. INTANGIBLE ASSETS 01.01.2008 Additions Transfer 30.09.2008 Cost Wind energy production rights 16.709.054 -- -- 16.709.054 Natural gas drilling rights 24.595.565 -- -- 24.595.565 Hydroelectric energy production rights -- 493.919.406 -- 493.919.406 Thermal energy production rights -- 108.798.595 -- 108.798.595 Other intangible assets 7.233.773 191.981 -- 7.425.754 48.538.392 602.909.982 -- 651.448.374 Accumulated amortization Wind energy production rights 501.272 501.272 -- 1.002.544 Natural gas drilling rights 2.809.348 922.334 -- 3.731.682 Hydroelectric energy production rights -- 1.371.998 -- 1.371.998 Thermal energy production rights -- 313.265 -- 313.265 Other intangible assets 3.322.727 1.543.079 -- 4.865.806 6.633.347 4.651.948 -- 11.285.295 Net book value 41.905.045 640.163.079 During 2008 the Group has won the tender for the operating license of Tercan, Kuzgun, Mercan, İkizdere, Çıldır, Beyköy and Ataköy Hydroelectric power plants and the thermal power plant in Denizli for a period of 30 years and for acquisition of the ownership of natural gas power plant located in Van for total of USD 510 million equivalent to YTL 602.718.001 which has been reflected to intangible assets as Hydroelectric energy rights and Thermal energy rights.