ZORLU ENERJİ ELEKTRİK ÜRETİM A.Ş. CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2010 TOGETHER WITH AUDITOR S REPORT

ZORLU ENERJİ ELEKTRİK ÜRETİM A.Ş. CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2010 TOGETHER WITH AUDITOR S REPORT

INDEPENDENT AUDITOR S REPORT To The Shareholders and Board of Directors of Zorlu Enerji Elektrik Üretim A.Ş. We have audited the accompanying statement of consolidated financial position of Zorlu Enerji Elektrik Üretim A.Ş. (the Company ) and its subsidiaries listed under note 1 (the Group ), as at 31 December 2010, and the statements of consolidated income, comprehensive income, changes in equity and cash flow for the year then ended and a summary of significant accounting policies and other explanatory notes. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion the consolidated financial statements present fairly in all material respects, the consolidated financial position of Zorlu Enerji Elektrik Üretim A.Ş. as at 31 December 2010 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards. EREN Bağımsız Denetim ve Yeminli Mali Müşavirlik A.Ş. Member Firm of GRANT THORNTON International Aykut Halit Partner Istanbul, 08.04.2011

1 STATEMENTS OF CONSOLIDATED FINANCIAL POSITION AT 31 DECEMBER 2010 AND 2009 Assets Note 2010 2009 Current assets Cash and cash equivalents 6 131.396 43.191 Trade receivables 7 29.048 192.562 Inventories 8 2.598 6.948 Derivative financial instruments 9 1.883 -- Other assets 10 218.232 103.236 Total current assets 383.157 345.937 Non-current assets Financial assets 11 764 830 Exploration and evaluation assets 12 -- 27.981 Property, plant and equipment 13 2.181.955 1.977.641 Intangible assets 14 15.613 36.523 Other assets 705 167 Deferred tax asset 19 22.343 18.803 Total non-current assets 2.221.380 2.061.945 Total assets 2.604.537 2.407.882 The accompanying notes are an integral part of these consolidated financial statements.

2 STATEMENTS OF CONSOLIDATED FINANCIAL POSITION AT 31 DECEMBER 2010 AND 2009 Liabilities and equity Note 2010 2009 Current liabilities Borrowings 15 663.243 532.087 Trade payables 16 119.203 176.512 Taxation on income 19 875 990 Provision for expenses 17 821 1.175 Other liabilities 18 1.357 10.712 Total current liabilities 785.499 721.476 Non-current liabilities Borrowings 15 832.554 849.352 Trade payables 16 215.978 126.181 Employee termination benefits 20 1.455 1.251 Other liabilities 18 553.363 428.554 Deferred tax liability 19 63.668 57.446 Total non-current liabilities 1.667.018 1.462.784 Equity Share capital 21 392.613 392.613 Translation reserve (17.609) (18.988) General reserves (228.894) (163.432) Equity attributable to owners of the parent 146.110 210.193 Minority interest 5.910 13.429 Total equity 152.020 223.622 Commitments and contingencies 22 -- -- Total liabilities and equity 2.604.537 2.407.882 The accompanying notes are an integral part of these consolidated financial statements.

3 STATEMENTS OF CONSOLIDATED INCOME FOR THE YEARS ENDED 31 DECEMBER 2010 AND 2009 Note 2010 2009 Continuing operations Revenue 433.996 486.327 Cost of sales (423.809) (390.367) Gross profit 10.187 95.960 Selling expenses (-) (10.809) (6.570) General and administrative expenses (-) (33.543) (19.508) Other income 24 63.735 186.044 Other expense (-) 24 (1.077) (12.374) Operating profit 28.493 243.552 Financing income 25 494.133 390.925 Financing expense (-) 25 (609.163) (506.966) Profit (loss) before taxation (86.537) 127.511 Taxation on income (-) 19 (5.757) (1.682) Profit (loss) from continuing operations for the year (92.294) 125.829 Discontinued operations Profit (loss) from discontinued operations (net of income tax) 17.278 (29.003) Net profit (loss) for the year (75.016) 96.826 Net profit (loss) attributable to: Equity holders of the Company (66.074) 89.595 Minority interest (8.942) 7.231 Earnings (loss) per share (TL, full) 5 (0,00) 0,01 The accompanying notes are an integral part of these consolidated financial statements.

4 STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME FOR THE YEARS ENDED 31.12.2010 AND 2009 2010 2009 Profit (loss) for the year (75.016) 96.826 Translation differences 750 12.470 Other comprehensive income 750 12.470 Total comprehensive income (loss) for the year (74.266) 109.296 Attributable to: Equity holders of the Company (64.695) 99.261 Minority interest (9.571) 10.035 The accompanying notes are an integral part of these consolidated financial statements.

5 STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY FOR THE YEARS ENDED 31.12.2010 AND 2009 Share capital Translation reserve General reserves Total attributable to owners of parent Minority interest Total equity Balance at 01 January 2009 192.613 (28.654) (247.491) (83.532) 83.434 (98) Cash increase in share capital 200.000 -- -- 200.000 -- 200.000 Changes in minority interest -- -- (1.894) (1.894) 1.894 -- Cash increase in subsidiaries share capital -- -- -- -- 1.346 1.346 Disposal of subsidiaries -- -- -- -- (83.318) (83.318) Consolidated subsidiary as from 01 January -- -- (3.642) (3.642) 38 (3.604) Transactions with owners 392.613 (28.654) (253.027) 110.932 3.394 114.326 Net profit for the year -- -- 89.595 89.595 7.231 96.826 Other comprehensive income: Translation differences -- 9.666 -- 9.666 2.804 12.470 Total comprehensive income for the year -- 9.666 89.595 99.261 10.035 109.296 Balance at 01January 2010 392.613 (18.988) (163.432) 210.193 13.429 223.622 Cash increase in subsidiaries share capital -- -- -- -- 1.313 1.313 Changes in minority interest -- -- 612 612 (612) -- Disposal of subsidiaries -- -- -- -- 1.351 1.351 392.613 (18.988) (162.820) 210.805 15.481 226.286 Net loss for the year -- -- (66.074) (66.074) (8.942) (75.016) Other comprehensive income: Translation differences -- 1.379 -- 1.379 (629) 750 Total comprehensive income (loss) for the year -- 1.379 (66.074) (64.695) (9.571) (74.266) Balance at 31 December 2010 392.613 (17.609) (228.894) 146.110 5.910 152.020 The accompanying notes are an integral part of these consolidated financial statements.

6 STATEMENTS OF CONSOLIDATED CASH FLOW FOR THE YEARS ENDED 31.12.2010 AND 2009 Note 2010 2009 Profit (loss) before taxation from continuing operations (86.537) 127.511 Profit (loss) before taxation from discontinued operations 19.537 (23.075) Adjustment to reconcile profit (loss) before taxation to net cash provided from operating activities: 29 135.598 706 Operating profit before changes in working capital 68.598 105.142 Changes in operating assets and liabilities Trade receivables 146.406 (220.562) Inventories 1.846 (3.751) Other assets (83.050) (2.761) Trade payables 43.400 288.311 Other liabilities 115.577 109.014 Payments of employee termination benefits (51) (1.144) Net cash provided by operating activities 292.726 274.249 Cash flows from investing activities Purchases of property, plant and equipment 13 (282.256) (717.602) Proceeds from sale of property, plant and equipments 112 1.391 Purchases of intangible assets 14 (284) (1.644) Purchases of exploration and evaluation assets 12 (6.877) (9.884) Natural gas drilling expenses 12 -- 1.356 Net cash used in investing activities (289.305) (726.383) Cash flows from financing activities Cash increase in share capital -- 200.000 Changes in financial assets (69.056) (12.060) Proceeds from sale of subsidiaries 146.886 85.281 Cash increase in subsidiaries share capital 1.313 1.346 Proceeds from borrowings 652.779 530.174 Repayments of borrowings (559.280) (265.187) Interest paid (82.158) (123.590) Interest received 11.746 33.111 Net cash provided by financing activities 102.230 449.075 Translation differences (23.604) 39.189 Net increase in cash and cash equivalents 82.047 36.130 Cash and cash equivalents at beginning of year 43.191 7.061 Cash and cash equivalents at end of year 6 125.238 43.191 The accompanying notes are an integral part of these consolidated financial statements.

7 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 is under the control of the Zorlu Family. The Company and its subsidiaries were established to meet the energy requirements of Zorlu Group and other industrial companies. The Company is registered with Capital Market Board and its shares have been quoted at the Istanbul Stock Exchange ( ISE ) since 2000. As of 31.12.2010, the composition of shareholders and their respective percentage ownership are summarized as follows: Shareholding % Zorlu Holding A.Ş. 45,3 Korteks Mensucat Sanayi ve Ticaret A.Ş. 17,5 Shares open to the public (ISE) 32,0 Other shareholders 5,2 The registered office address of the Company is Nilüfer Organize Sanayi Bölgesi, Pembe Caddesi, No:13 Bursa /Turkey. Zorlu Enerji Group of companies; their field of activities and countries of operation are listed below: 100,0 Company Field of activity Country Electricity, steam production and maintenance services Zorlu Enerji Elektrik Üretim A.Ş. Production of electricity and steam Turkey Rosmiks International B.V. Financial services Holland Rosmiks LLC Production of electricity Russia ICFS International LLC Financial services USA Rotor Elektrik Üretim A.Ş. Production of electricity Turkey Zorlu Hidroelektrik Enerji Üretim A.Ş. Production of electricity Turkey Zorlu Jeotermal Elektrik Üretim A.Ş. Production of electricity Turkey Zorlu Enerji Pakistan Ltd. Production of electricity Pakistan Bundoran Financial Corporation Financial services BVI Zorlu Rüzgar Enerjisi Elektrik Üretim A.Ş. Production of electricity Turkey As of 31 December 2010, the number of personnel employed was 419 (31.12.2009: 328). The financial statements for the year ended 31 December 2010 (including comparatives) were approved by the board of directors on 07.04.2011.

8 ELECTRICITY SEGMENT Zorlu Enerji Elektrik Üretim A.Ş. (Bursa / Turkey) Zorlu Energy was established in 1993 for the purpose of generating electricity and steam. The total capacity of the Company s four natural gas combined cycle plants and two cogeneration plants are as follows: Field of Activity Type of power plant License start date Validity of license Steam production capacity Electricity production / power Production capacity per year KW/Hour Bursa Natural gas 07.09.2004 25 years -- 90,0 MW 733.012.841 Ankara Natural gas 07.09.2004 25 years -- 50,3 MW 423.086.976 Kayseri Natural gas 07.09.2004 25 years -- 188,5 MW 1.381.066.560 Kırklareli Natural gas 07.09.2004 25 years 162 t/s 122,5 MW 916.000.000 Yalova Natural gas 21.07.2005 15 years 30 t/s 15,9 MW 122.290.000 Total 192 t/s 467,2 MW 3.575.456.377 The Company sells 26% of its products to Türkiye Elektrik Dağıtım A.Ş.'nin ( TEDAŞ ), 61% to group companies (note 26) and remaining 13% to third parties. On 20 June 2007, The Company acquired two hydroelectric power plant licenses from EPDK, construction of these two plants has not yet started, in Denizli and Muğla regions with capacities of 127,8 MW and 82,5 MW respectively for 49 years. The production capacity increase from 122,5 MW to 148,2 MW of Lüleburgaz power plant in Kırklareli field was approved by EPDK date on 14.03.2011. 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 with a capacity of 340 MW and 2.500.00 Gcal/year and owns 100% of Rosmiks LLC. 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 340 MW and 2.500.000 Gcal/year each. Rosmiks LLC started these projects around mid 2007 and plans to complete them in year 2011 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. Rotor has obtained Wind Energy Power Plant License from EMRA for the construction of a wind power plant (54 wind turbines) with a 135 MW capacity in Osmaniye and commenced its construction in July 2008. As of the balance sheet date, 54 wind turbines with a capacity of 135 MW have started electricity production. The provisional acceptances of all 54 wind energy turbines was given as of the report date and 54 turbines was connected to national electricity network with a capacity of 135 MW. In accordance with the Board of Directors decision dated 16.11.2009 and numbered 2009/9 Rotor has transferred to Zorlu Rüzgar Enerjisi Elektrik Üretim A.Ş. its license which was obtained for 25 years for the construction of two wind energy power plants in different regions of Osmaniye with a capacity of 50 MW and 60 MW. 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.

9 Zorlu Jeotermal Elektrik Üretim A.Ş. ( Istanbul/Turkey ) Zorlu Jeotermal was established in 2008 to develop projects for energy power plants, especially hydroelectric and thermal power plants based on all forms of renewable energy sources to produce energy, steam and heat. Zorlu Jeotermal has taken over of Zorlu Petrogas Alaşehir Geothermal license on 30 July 2009. Zorlu Enerji Pakistan Ltd. ( Karachi/Pakistan ) Zorlu Enerji Pakistan Limited was incorporated on 13 September 2007 as an unlisted public limited company. The sole object for establishment of the company is to set up a project for electric power generation through wind. The principal activity of the company is to generate and sell electric power. Power generation plant is situated at Nooriabad Jhimpir Link Road, near HESCO Grid Station, Jhimpir, with a total capacity of 56,4 MW. Three wind energy power plants of the first phase have started production. Zorlu Rüzgar Enerjisi Elektrik Üretim A.Ş., ( Zorlu Rüzgar ) Zorlu Rüzgar was established in 2009 to develop projects for energy power plants, based especially on wind power and other forms of renewable energy sources to produce electricity, steam and heat.

10 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 at 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 Turkish Lira (TL) by closing rate method. The consolidated financial statements have been prepared from statutory financial statements of the Company and its subsidiaries and presented in Turkish Lira (TL) 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. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Company At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company. a) Standards, amendments and interpretations effective in 2010: Annual Amendments to IFRS in 2009 IFRS 1 First Time Adoption of International Financial Reporting Standards IFRS 2 Share Based Payment IAS 39 Financial Instruments: Recognition and Measurement IFRS 3 Business Combinations and IAS 27 Consolidated and Separate Financial Statements IFRIC 17, Distributions of Non-cash Assets to Owners IFRIC 18, Transfers of Assets from Customers b) Standards, amendments and interpretations effective in 2011 but not early adopted by the Company: IAS 24, Related party disclosure IFRIC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC Interpretation 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction IAS 32 Financial Instruments: Presentation IFRS 9, Financial Instruments: Measurement and reclassification IFRS 1 First Time Adoption of International Financial Reporting Standards IFRIC 9 Reassessments of Embedded Derivatives IAS 12 Income Taxes Annual Amendments to IFRS in May 2010 Management of the Group anticipates that all of the pronouncements detailed in (a) and (b) above will be adopted in the Group s accounting policy for the first period beginning after the effective date of the pronouncement. Management of the Group has decided that these new standards and interpretations have been issued but are not expected to have a material impact on the Company s financial statements.

11 Comparable financial information and reclassification of prior period financial statements The financial positions with the accompanying notes as of 31.12.2010 and 31.12.2009 and statement of income, cash flow and changes in equity with the accompanying notes for the year ended 31.12.2010 and 31.12.2009 are presented as comparatively. As of 25.08.2010, the Group sold Amity Oil International Pty Ltd. and Zorlu Petrogas Petrol Gaz ve Petrokimya Ürünleri Sanayi ve Ticaret A.Ş. s shares. Therefore, IFRS 5 has been applied in the presentation of these companies as of the dates on which the effective control ceased (note 27). In accordance with the Board of Directors decision dated on 23.06.2009 and numbered 2009/15, the management of Group had decided to sell its shares of Zorlu O/M Enerji Tesisleri İşletme ve Bakım Hizmetleri A.Ş., Zorlu Doğal Elektrik Enerji Üretim A.Ş., Zorlu Endüstriyel ve Enerji Tesisleri İnşaat Ticaret A.Ş., 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.. Therefore, IFRS 5 had been applied in the presentation of these companies as of 31.12.2009 report issued on 28.08.2009 on which the effective control ceased. Critical accounting estimates, assumptions and judgments 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. The key assumption concerning the future and other key sources of estimation uncertainty at the balance sheet date and the significant judgments are set out below: - Allowance for doubtful debts reflect the amount set aside for the losses in the future related to receivables which exist the balance sheet date but which, in the opinion of the management carry the risk of collection due to current economic conditions. When evaluating whether receivables has suffered a loss in value the past performance of the debtors, their credibility in the market and their performance between the balance sheet date and report date together with changed circumstances are taken in the considerations. In addition the collaterals existing at balance sheet date together with new collaterals obtained between the balance date and report date are also taken into consideration. The allowance for doubtful receivables as of the balance sheet dates are explained under note 7. -When setting aside the provision for legal claims the probability of loosing the related case and the results expected to be suffered in the event that the legal counsel of the Group and management of the Group make their best estimates to calculate the provision required. - Property, plant and equipment and intangible assets held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The Group estimates that the useful lives of tangible and intangible assets. Depreciation is charged using the straight line basis over the useful lives which depend on the best estimation of the management. Useful lives of property, plant and equipment and intangible assets are reviewed at each balance sheet dates and make changes if necessary. - Deferred tax assets are accounted for only where it is likely that related temporary differences and accumulated losses will be recovered through expected future profits. When accounting for deferred tax losses it is necessary to make important estimations and evaluations with regard to taxable profits in the future periods. As mentioned under note 19, the related companies of the Group included in the consolidated statements have taxable losses of TL 98.709 (2009: TL 74.796) carried forward to future periods and deferred tax assets have been calculated on basis of the expectation that taxable profits will be created in future periods. 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.

12 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. 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. For the purpose of consolidated financial statements Zorlu Enerji and its subsidiaries will be referred to collectively as the Group. Ownership interest (%) 2010 2009 Economic interest (%) Ownership interest (%) Economic interest (%) Consolidated companies Zorlu Petrogas, Petrol, Gaz, Petrokimya Ürünleri İnşaat Sanayi ve Ticaret A.Ş. -- -- 73,0 73,0 Amity Oil International Pty. Ltd. -- -- 100,0 100,0 Rosmiks International B.V. 100,0 51,0 100,0 51,0 Rosmiks LLC 100,0 51,0 100,0 51,0 ICFS International LLC 51,0 51,0 51,0 51,0 Rotor Elektrik Üretim A.Ş. 85,0 85,0 85,0 83,7 Zorlu Hidroelektrik Enerji Üretim A.Ş. 80,0 80,0 85,0 83,7 Zorlu Jeotermal Elektrik Üretim A.Ş. 73,0 73,0 73,0 73,0 Bundoran Financial Corporation 100,0 100,0 100,0 100,0 Zorlu Enerji Pakistan Ltd. 100,0 100,0 100,0 100,0 Zorlu Rüzgar Enerjisi Elektrik Üretim A.Ş. 85,0 85,0 85,0 83,7 The balance sheet and income statement of the subsidiaries are consolidated on a line by line basis, and the carrying value of the investment held by the Company is eliminated against related equity and reserves accounts. 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.

13 Foreign currency translations Foreign currency transactions and translation - Transactions in foreign currencies during the period have been translated into TL 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: 2010 2009 US Dollar 1,5460 1,5057 EUR 2,0491 2,1603 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 Land improvements 25 30 Buildings 25 30 Leasehold improvements 3 5 Plant and machinery 17 25 Motor vehicles 3 5 Furniture and fixtures 3 10

14 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 Purchased intangible assets - Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment loss. Amortisation is charged on as straight line basis over their useful live. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The useful lives of intangible assets are as follows: Useful life Wind energy production rights 25 Hydroelectric energy production rights 30 Thermal energy production rights 29 Other intangible assets- Other intangible assets including information systems, development expense of information systems and other determinable rights, are capitalized and amortized on a straight line basis over their estimated useful lives, not exceeding a period of 5 years. Impairment of intangible assets Where an indication of impairment exists, the carrying amount of any intangible asset is assessed and written down immediately to its recoverable amount. Inventories Inventories are stated at the lower of cost and net realizable value. Costs comprise direct materials and, where applicable, direct labour 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. Impairment The carrying amounts of the Group s assets are reviewed at each balance sheet date to determine whether any indication of impairment exists. If any such indication exists, the asset s recoverable amount is estimated and an impairment loss is recognised in the income statement whenever the carrying amount of the asset exceeds its recoverable amount. 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.

15 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. Borrowing costs of qualifying assets are not added to the cost of those assets for the period during which construction to get them ready for their intended use or sale is suspended. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the cost of those assets. Other borrowing costs are expensed in the period in which they are incurred and reported in financing expense. 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. Discontinued operations and non current assets held for sale Discontinued operation is a major line of business or geographical area of operations that is part of a single co-ordinated plan to dispose of or is held for sale. Net assets related to the discontinued operations are measured at fair value less cost to sell. A single amount on the face of the income statements comprising the total of the post-tax profit or loss of discontinued operations and post-tax gain or loss recognised on the disposal of the assets constituting the discontinued operation is disclosed. Also, the net cash flows of the discontinued operations associated with the operating, investment and financing activities are disclosed in note 27. Group of assets and liabilities are classified as held for sale if their carrying amount will be recovered principally through a sale transaction, not through continuing use. Liabilities directly associated with those assets are also classified similarly. Disposal group assets are measured at the lower of its carrying amount after deduction of the liabilities directly associated with those assets and its fair value less costs to sell.

16 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. Employee termination benefits Under Turkish labour 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. 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.

17 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. Derivative financial instruments The Group holds derivative financial instruments to hedge its foreign currency risk exposures. The Group engages in currency forward contracts. Derivatives are recognized initially at fair value; attributable transaction costs are recognised in statement of consolidated income when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes in the fair value of such derivatives are recognised in the statement of consolidated income as part of finance income and costs. 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 derecognition 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. Commitments and contingencies Transactions that may give rise to contingencies and commitments are those where the outcome and the performance of which will be ultimately confirmed only on the occurrence or non-occurrence of certain future events, unless the expected performance is not very likely. Accordingly, contingent losses are recognised in the financial statements if a reasonable estimate of the amount of the resulting loss can be made. Contingent gains are reflected only if it is probable that the gain will be realized. 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.

18 4. SEGMENT INFORMATION The Group is currently organized into two major product divisions. The basis on which the group reports its primary and secondary segment information is as follows: Electricity, steam production and maintenance services (Electricity segment): Production and sales by Zorlu Enerji - Turkey Production and sales by Rosmiks LLC (under construction) - Russia Production and sales by Rotor - Turkey Production and sales by Zorlu Enerji Pakistan Ltd - Pakistan Production and sales by Zorlu Hidroelektrik (under construction) - Turkey Production and sales by Zorlu Jeotermal - Turkey Financial services to energy segment by ICFS, Rosmiks International and Bundoran USA, Holland and BVI Production and sales by Zorlu Rüzgar - Turkey A. Business segments 2010 2009 Revenue Electricity 433.996 486.327 Natural gas -- -- 433.996 486.327 Gross profit Electricity 10.187 95.960 Natural gas -- -- 10.187 95.960 Operating profit Electricity 28.493 243.552 Natural gas -- -- 28.493 243.552 Capital expenditure Electricity 282.275 672.851 Natural gas -- -- 282.275 672.851

19 2010 2009 Segment assets Electricity 2.604.537 2.274.042 Natural gas -- 133.840 2.604.537 2.407.882 Depreciation and amortisation charge Continuing operations Electricity and steam 83.024 39.606 Natural gas -- -- 83.024 39.606 Discontinued operations Electricity and steam -- 9.488 Natural gas 1.788 5.900 1.788 15.388 84.812 54.994 B. Geographical segments Segment assets Turkey 1.055.538 1.173.364 Russia 1.509.133 1.205.814 Rest of the world 39.866 28.704 2.604.537 2.407.882 Capital expenditure Turkey 107.395 362.358 Russia (construction in progress) 172.788 281.816 Other 2.092 28.677 Revenue 100 % (2009: 98%) of sales are generated in Turkey. 282.275 672.851

20 5. EARNINGS PER SHARE 2010 2009 Earnings (loss) per share from continuing operations: Profit (loss) from continuing operations (92.294) 125.829 Profit from continuing operations attributable to minority interest 11.661 7.704 Profit (loss) from continuing operations attributable to equity holders of the parent (80.633) 133.533 Weighted average number of shares 28.166.535.000 12.440.507.603 Earnings (loss) per share from continuing operations (TL, full) (0,00) 0,01 Earnings (loss) per share from discontinued operations: Profit (loss) from discontinued operations 17.278 (29.003) Loss from discontinued operations attributable to minority interest (2.719) (14.935) Profit (loss) from discontinued operations attributable to equity holders of the parent 14.559 (43.938) Weighted average number of shares 28.166.535.000 12.440.507.603 Earnings (loss) per share from continuing operations (TL, full) 0,00 (0,00) Earnings (loss) per share: Profit (loss) for the year (75.016) 96.826 Profit (loss) attributable to minority interest 8.942 (7.231) Profit (loss) from attributable to equity holders of the parent (66.074) 89.595 Weighted average number of ordinary shares in issue 28.166.535.000 12.440.507.603 Earnings (loss) per share, - (TL, full) (0,00) 0,01

21 6. CASH AND CASH EQUIVALENTS 2010 2009 Cash in hand 66 56 Demand deposit at banks 128.547 9.414 Time deposit at banks 2.783 33.721 Cash and cash equivalents 131.396 43.191 Bank overdrafts (-) (6.158) -- Cash and cash equivalents presented in cash flow statement 125.238 43.191 As of 31.12.2010, the maturity of time deposits was 03.01.201 (2009: 04.01.2010 11.01.2010). 7. TRADE RECEIVABLES Current accounts - Third parties 15.237 105.526 - Related parties, note 26 23.008 96.856 Notes receivable - Third parties 1.234 874 39.479 203.256 Unearned interest on receivables (-) (133) (348) Allowance for doubtful receivables (-) (10.298) (10.346) 29.048 192.562 Movement in the allowance for doubtful receivables is as follows: Opening balance, 01.01 10.346 10.108 Charge for the year -- 238 Disposals (-) (48) -- Ending balance, 31.12 10.298 10.346 The allowance for doubtful trade receivables were set against the receivables aged as follows: 0-3 months 849 1.301 3-6 months 533 1.265 Over 6 months 8.916 7.780 10.298 10.346

22 8. INVENTORIES 2010 2009 Raw materials 2.237 2.529 Spare parts -- 4.032 Merchandise 361 1.509 2.598 8.070 Allowance for diminution in value (-) -- (1.122) Allowance for diminution in value of inventories is as follows: 2.598 6.948 Raw materials -- 1.122 Movement of allowance for diminution in value of inventories is as follows: Opening balance, 01.01 1.122 1.286 Charge for the year -- -- Disposal (-) (1.122) (164) Ending balance, 31.12 -- 1.122