Annual Report 2013

ANNUAL REPORT

2013

ENKA İNŞAAT VE SANAYİ A.Ş.

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DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Sun Plaza Bilim Sok. No. 5 Maslak, Şişli 34398 İstanbul, Türkiye

Tel: (212) 366 60 00 Faks: (212) 366 60 10 www.deloitte.com.tr

AUDITOR’S REPORT ON ANNUAL REPORT

To the Board of Directors of Enka İnşaat ve Sanayi Anonim Şirketi

As part of our audit, we have assessed whether the financial information and the assessment and explanations of the Board of Directors presented in the annual report of Enka İnşaat ve Sanayi Anonim Şirketi (“the Company”) prepared as of 31 December 2013 are consistent with the audited consolidated financial statements as of the same date.

Management is responsible for the preparation of the annual report in accordance with “the Communique related to the Determination of the Minimum Content of the Companies’ Annual Report”.

Our responsibility is to express an opinion on whether the financial information provided in the annual report is consistent with the audited financial statements on which we have expressed our opinion dated 3 March 2014.

Our assessment is made in accordance with the principles and procedures for the preparation and issuing of annual reports in accordance with Turkish Commercial Code No. 6102 (“TCC”). Those principles and procedures require that audit is planned and performed to obtain reasonable assurance whether the financial information provided in the annual report are free from material misstatement regarding the consistency of such information with the audited financial statements and the information obtained during the audit.

We believe that the assessment we have made is sufficient and appropriate to provide a basis for our opinion.

Based on our opinion, the financial information and the assessment and explanations of the Board of Directors in the accompanying annual report of Enka İnşaat ve Sanayi Anonim Şirketi are consistent with the audited consolidated financial statements as at 31 December 2013.

İstanbul, 3 March 2014

DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED

Burç Seven, SMMM Partner

Member of Deloitte Touche Tohmatsu Limited

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TABLE OF CONTENTS

COMPANIES 6 AGENDA OF THE GENERAL ASSEMBLY MEETING 7 THE BOARD OF DIRECTORS 8 THE EXECUTIVE COMMITTEE 9 CHAIRMAN’S MESSAGE 10 ENGINEERING AND CONSTRUCTION 12 ENERGY 36 REAL ESTATE 40 TRADING & MANUFACTURING 46 FOUNDATION 52 CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT 64

BASIC RATIOS 80 INDEPENDENT AUDITOR’S REPORT 82

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Enka İnşaat ve Sanayi A.Ş. The Board of Directors’ Annual Report for the Period 01.01.2013 - 31.12.2013

Registered Company Name: Enka

İnşaat ve Sanayi A.Ş. Date of Registration or Incorporation: 1957

Country of Registration:

İstanbul / Turkey Registration Number of Chamber of Commerce: 68194

Paid-Up Capital: 3 2 2 040 35 778 . 00.000.000 TL

. . 1. U.S. Dollars (equivalent) BS EN ISO 9001 Registered 2008 Certificate No: 57544

FS BS EN ISO 14001 Registered 2004 Certificate No:

EMS 71388 OHSAS 18001 Registered 2007 Certificate No:

OHS 71389

Registered Head Office Address:

Balmumcu Mah. Zincirlikuyu Yolu No:10, 34349 Beşiktaş / İstanbul Tel: +90 212 376 10 00 Fax: +90 212 272 88 69 (pbx) Official Internet Site E-mail: http://www.enka.com [email protected]

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COMPANIES

ENGINEERING AND CONSTRUCTION

Enka İnşaat ve Sanayi A.Ş. Çimtaş Çelik İmalat Montaj ve Tesisat A.Ş. Çimtaş Gemi İnşa Sanayi ve Ticaret A.Ş. Çimtaş Boru İmalatları ve Ticaret Ltd. Şti. Çimtaş Borulama Sanayi ve Ticaret Ltd. Şti. Cimtas (Ningbo) Steel Processing Co. Ltd. IBH Engineering GmbH Capital City Investment B.V. Kasktaş Kayar Kalıp Altyapı Sondaj Kazık ve Tecrit A.Ş. Kasktas Arabia Ltd. Esta Construction B.V. Enka Teknik Genel Müteahhitlik Bakım İşletme Sevk ve İdare A.Ş. Titaş Toprak İnşaat ve Taahhüt A.Ş. Enet Proje Araştırma ve Müşavirlik A.Ş. Limited Liability Company Enmar Enka Holding B.V. Enka Construction and Development B.V. AECO Development L.L.C. Far East Development B.V. Covet B.V. ENERGYEnka Power Systems B.V.

Adapazarı Elektrik Üretim Ltd. Şti. Gebze Elektrik Üretim Ltd. Şti. Enkaİzmir Elektrik Üretim Ltd. Şti. Enka Enerji Üretim A.Ş. Elektrik Üretim A.Ş. REALEnka ESTATE Santral Hizmetleri A.Ş.

JSC Mosenka JSC Moskva Krasnye Holmy Enka Holding Investment S.A. Rumos S.A. City Center Investment B.V. TRADINGLimited Liability AND CompanyMANUFACTURING Enka TC

Enka Pazarlama İhracat İthalat A.Ş. Pimaş Plastik İnşaat Malzemeleri A.Ş. Pimapen Logistic Center S.R.L. Entaş Nakliyat ve Turizm A.Ş. Airenka Hava Taşımacılığı A.Ş. Enka Finansal Kiralama A.Ş.

(The full list of the companies can be found in the Consolidated Financial Statements as of December 31, 2013)

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THE GENERAL ASSEMBLY MEETING

Date : 2014

Time : March 27, Venue : 14:00 6 Balmumcu Mahallesi, Zincirlikuyu Yolu No: Enka III. Binası,- Konferans Salonu, Beşiktaş İstanbul

AGENDA

Election of the General Assembly Presidential Board and authorization of the Presidential Board 2- for signing the Minutes of the General Assembly Meeting;

Reading and discussing the Annual Report of the Board of Directors and the Balance Sheet and 3- Income Statement for the fiscal year 2013;

4- Reading and discussing the Report of Independent Auditors;

5- Informing the shareholders about the donations made within the fiscal year 2013;

6- Approval of Balance Sheet and Income Statement Accounts of 2013;

7- Acquittal and release of the Board Members;

Informing the shareholders about the Remuneration Policy applicable to Board Members and Managers who have an administrative responsibility which is revised regarding the regulations 8- of Capital Markets Board;

9- Election of the Board Members;

10- Determining the attendance fee payable to Board Members;

11- Approval of the selection of the Independent Auditors;

12- Making decision on distribution of the Balance Sheet profit of 2013;

Approval of the Profit Distribution Policy which is revised regarding the regulations of Capital 13- Markets Board;

Approval of the Donation and Aid Policy which is revised regarding the regulations of Capital 14- Markets Board;

Informing the shareholders that there are no guarantees, pledges, mortgages and encumbrances given to the benefit of third parties regarding the regulations of Capital Markets 15- Board;

Authorization of the Board Members to engage in businesses mentioned in Articles 395 and 396 of the Turkish Code of Commerce and, in compliance with the Corporate Governance Principles, informing the General Assembly on any businesses engaged in and performed by the same 16- within such framework during the fiscal year of 2013;

Requests and recommendations.

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THE BOARD OF DIRECTORS

Sinan Tara Chairman of the Board (Executive Member)

Haluk Gerçek Vice Chairman of the Board (Executive Member)

Erdoğan Turgut E. Melih Araz V. Ergin İmre

Member of the Board Member of the Board Member of the Board (Non-Executive) (Non-Executive & Independent) (Non-Executive & Independent)

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THE EXECUTIVE COMMITTEE

A. Mehmet Tara

M. Gökhan Sağnaklar Alp Doğuoğlu B. Burak Özdoğan

. Şan Gürdamar Özger İnal S. Oğuz Kırkgöz

Zafer Gür Asaf Yener

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CHAIRMAN’S MESSAGE

Dear Shareholders,

On behalf of the Board of Directors of Enka İnşaat ve Sanayi A.Ş. we wish to extend our deepest respect to all of our shareholders and thank you for attending our General Assembly’s annual meeting which has

convened to share the activities of our Company in

2013, as well as our expectations for 2014.

As of the end of 2013, Enka İnşaat ve Sanayi A.Ş. realized an equity of 5,6 billion USD, a consolidated

turnover of 6,5 billion USD and a consolidated net

profit of 656 million USD.

Enka is concentrating on the segments of engineering and construction, power production, real estate

investment and management, and trading and

manufacturing.

Thanks to the healthy measures taken by our company as well as the increasing weight of the ongoing profitable big scale construction projects the turnover of engineering and construction segment was increased by 84% in USD terms and reached 2,55 billion USD. -

Our completed or ongoing projects in 2013 are Morine Merdare motorway project in Kosovo; Kuntsevo

Shopping Center and Khabarovsk Refinery structural steel and mechanical erection works, - - Berezovskaya Coal Fired Power Plant boiler mechanical erection works and additional contract of a electro mechanical works for multi purpose office and residential complex on plot 12 within the Moscow City project in Russi ; maintenance works in Kazakhstan, Tengiz Region; Presidential Palace Project for Gabonese Republic; US Embassy buildings in Afghanistan, Dominican Republic, Equatorial Guinea, and Papua New Guinea; Muscat International Airport in Oman; combined cycle power plant project in Iraq, Erbil Region; mechanical, electrical and instrumentation works in Majnoon Oil Field and 126 MW Power Plant Project in Iraq, Basra Region; Çimtaş’s contracts about steel works for İzmit Bay - Crossing Suspension Bridge Project in Turkey and gas turbine piping systems on a repeat order basis to

GE Energy and other projects and contracts. 500 MW Gas Turbine Power Plant Project in Al Najybia and

Crude Oil Pumping Station Project in Rumaila, Iraq were signed by Enka Teknik as well as Obari 640 MW

Gas Turbine Power Plant Project in Libya. In - addition to ongoing projects, newly undertaken projects in 2013 are; combined cycle power plant projects in the cities of Dohuk and Sulaymaniyah of Iraq; US Embassy buildings in Moscow Russia,

Holland, Mauritania and Djibuti; Sergiev Posad Shopping Center and Ufa Perinatal Medical Center - Projects in Russia; TANAP Contract together with Bechtel in Turkey; finishing works for Esentai Park

Project in Kazakhstan; conference center project and a multi purpose project which consists of mausoleum, mosque, library and a museum. With contribution of affiliated companies’ contracts, Enka shares of the additions in the last year have reached a level of 1,9 billion USD.

In 2013 we are continuing to work in full force to undertake new projects, particularly in the field of energy and oil related projects, as before without compromising our criteria in the construction segment.

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- - In the energy production field, with the natural gas combined cycle power plants that are operated through the Build Own Operate model with a 100% ownership, and total installed capacity of 3.854 MW 1 4 in Gebze, Adapazarı and İzmir, Enka stands as the largest electricity producer of the private sector in 3 3 Turkey and met approximately 1 , % of the Turkey’s energy need. The contribution of the energy segment to the consolidated turnover has approached 3, billion USD in 201 .

- With the increase of occupancy in the real estate segment, we had 478 million USD revenue last year, and we continue our activities to develop and manage class A office buildings and shopping centers through our companies established in Russia. 44% shares of MKH and 20% shares of Mosenka were I purchased with 198 million USD and 21 million USD respectively and Enka became the sole owner of - the mentioned companies. n this segment, as of the year end, we own 330.000 square meters of rentable class A office space and 215.000 square meters of rentable space in shopping centers and a hotel which are all located in Moscow except one shopping center. We host leading international companies in all office buildings that we manage. Our success in real estate development and management increases, as Enka’s name is associated with quality together with the ability to deliver our promises with perfection. The fact that our investments in this segment were not realized by debt, but with the income generated from the segment itself is the main difference which separates Enka from other real estate development 3 companies. The firstly built and owned Kuntsevo Shopping Center by Enka TC, which had a small rentable space, was demolished and the construction of a modern shopping center continued in 201 , which will be fully operational in the mid 2014. With about 425 million USD of planned investment, the construction area will be 245.000 square meters and the shopping center will have a larger rentable space together with office and residential areas. Besides, the Sergiev Posad project which will have a total investment of approximately 50 million USD was started last year and will be fully operational in n the second quarter of 2014. Construction of office space and car park which will be next to the

Ver adskovo Shopping Center and demolition and reconstruction of Kashirskaya Shopping Center will be the following investment steps in this segment.

The turnover of the trading and manufacturing activities has been realized as 447 million USD in 2013.

With our strong financial structure, the awareness of responsibilities of being a global company and together with your trust and support as our valuable shareholders, we are continuing to work hard with heavy orientation on growth.

We wish health and success to all of our shareholders.

SİNAN TARA

28 2014 Chairman of the Board

February ,

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ENGINEERING AND CONSTRUCTION Enka İnşaat ve Sanayi A.Ş.

- 8 The total sum of overseas projects undertaken by Enka İnşaat ve Sanayi A.Ş., either single handedly or in partnerships, has reached a level of 3 billion USD. 3 175 In the engineering and construction segment, as of end of 201 , total backlog has a level of 3,2 billion USD. 454 309 220 The distribution of backlog per countries is as follows; Iraq 1 billion million USD; US Embassy Projects 98 million USD; Russia 329 million USD; Sultanate of Oman million USD; Gabonese Republic million 116 USD; Turkey 213 million USD; United States 194 million USD; Libya million USD; Kazakhstan 60 million USD and others million USD. 3 2 55

On a consolidated basis, Enka's turnover in 201 in the engineering and construction segment is , billion USD.

During our work in this segment, our lost time accident rate has reached the level of the leading companies

in the world as a result of the activities we have been maintaining parallel to our company’s ‘zero accident’ policy and in line with the OHSAS 18001 and ISO 14001 certificates which3 were obtained in 2002.

Information about the projects that were completed or continued in 201 has been presented in this annual report.Erbil Combined Cycle Power Plant Project Erbil, Iraq

C Enka has been awarded a contract by Mass Group Holding Ltd. to convert Independent Power Project (IPP) from simple cycle to combined cycle technology in Northern Iraq, 20 kilometers south of the ity of Erbil. - - The existing simple cycle Erbil Gas Power Station has been developed by MGH Mass Group Holding Ltd. with a capacity of 1,000 MW with eight GE 9E gas turbines. By using two steam turbines manufactured by GE, it will be converted into the combined cycle power plant and there will be additional capacity- of 500 MW.

The major works under the contract are design, procurement, installation and start up of the eight HRSG's, two nominally rated 250 MW STG's, two GSUs and all other equipment to convert the simple cycle plant into a 4x4x1, two block configuration combined cycle project, including all civil and erection works. In addition to mentioned works above, demonstration of parallel operation with the grid at the required net output, performance tests, class room trainings of the operating and maintenance personnel, and preparation of integrated operation and maintenance manuals are in Enka’s scope. The facility will be designed for a working principle of 7 days per week and 24 hours per day with an efficient operating life of 30 years.

The existing simple cycle power plant is designed to work with natural gas as the primary and diesel as a secondary fuel source. In the framework of converting this plant into combined cycle technology, the necessary arrangements are being done accordingly. -

The Erbil Combined Cycle Power Plant shall be capable of being dispatched for any combination of base load operation throughout its design service life. A direct Air Cooled Condenser (ACC) system will be used for the - cooling system which will consist of two blocks each with approximately 40 cells. The scope of works under the contract also includes a 400kV switchyard for which the interconnection point will be a dead end structure to be erected by the Ministry of Electricity.

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Erbil Combined Cycle Power Plant Project – Erbil, Iraq

The contractual completion of the project which was started in April 2012 is set as January 2015. By the end of 2013, completion rate of 76% is reached and after construction/installation stage, testing and commissioning stage has been started. 1 - As of end of 2013, Erbil Combined Cycle Power Plant has reached a number of ,926 personnel with 4,352,036 man hours without lost time accident. Sulaymaniyah Combined Cycle Power Plant Project Sulaymaniyah, Iraq

40 k Enka has been awarded a contract by Mass Group Holding Ltd. to convert Independent Power Project (IPP) from simple cycle to combined cycle technology in Northern Iraq, ilometers south of the City of

Sulaymaniyah. - - The existing simple cycle Sulaymaniyah Gas Power Station has been developed by MGH Mass Group Holding

Ltd. with a capacity of 1,000 MW with eight GE 9E gas turbines. By using two steam turbines manufactured by GE, it will be converted into the combined cycle power plant and there will be additional capacity of 500

MW. -

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Sulaymaniyah Combined Cycle Power Plant Project – Sulaymaniyah, Iraq

- The Sulaymaniyah Combined Cycle Power Plant shall be capable of being dispatched for any combination of base load operation throughout its design service life. A direct Air Cooled Condenser (ACC) system will be used for the cooling system which will consist of two blocks each with approximately 40 cells. The scope of - works under the contract also includes a 400kV switchyard for which the interconnection point will be a dead end structure to be erected by the Ministry of Electricity. C In The project started on 15 July 2013 and the first structural concrete of the project was poured on 14

September 2013. ompletion date for the plant is targeted as 15 March 2016. 2013, 10% of the construction and erection works have been completed. - As of end of 2013, Sulaymaniyah Combined Cycle Power Plant has reached a number of 577 personnel with 582,760 man hours without lost time accident. Dohuk Combined Cycle Power Plant Project Dohuk, Iraq

40 k k Enka has been awarded a contract by Mass Group Holding Ltd. to convert Independent Power Project (IPP) from simple cycle to combined cycle technology in Northern Iraq, ilometers north- of the City of Dohu . - The existing simple cycle Dohuk Gas Power Station has been developed by MGH Mass Group Holding Ltd. with a capacity of 1,000 MW with eight GE 9E gas turbines. By using two steam turbines manufactured by GE, it will be converted into the combined cycle power plant and there will be additional- capacity of 500 MW.

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In addition to mentioned works above, demonstration of parallel operation with the grid at the required net output, performance tests, class room trainings of the operating and maintenance personnel, and preparation of integrated operation and maintenance manuals are in Enka’s scope. The facility will be designed for a working principle of 7 days per week and 24 hours per day with an efficient operating life of 30 years.

The existing simple cycle power plant is designed to work with natural gas as the primary and diesel as a

secondary fuel source. In the framework of converting this plant into combined cycle technology, the necessary arrangements will be done accordingly.

Dohuk Combined Cycle Power Plant Project – Dohuk, Iraq

The Dohuk Combined Cycle Power Plant shall be capable of being dispatched for any combination of base load operation throughout its design service life. A direct Air Cooled Condenser (ACC) system will be used for - the cooling system which will consist of two blocks each with approximately 40 cells. The scope of works under the contract also includes a 400kV switchyard for which the interconnection point will be a dead end structure to be erected by the Ministry20 of Electricity. 2013 20 Ma 2013 The project which was started on October has a targeted completion date of y 2016. Mobilization activities had been started by December . - As of end of 2013, Dohuk Combined Cycle Power Plant has reached a number of 128 personnel with 14,418 Lukoilman hours Power without Plant lost time Project accide nt. Basra, Iraq

The project is in Basra region, West Qurna 2 Oil Field, comprising of a 126 MW gas fired power plant, gas treatment system, power distribution systems and associated utilities, which is the first power plant project - 60 that Enka has undertaken to build in Iraq on a turnkey EPC basis. The contract was signed in December 2011 between Enka and Lukoil Mid East Limited (LMEL) with a contract price of 2 million USD and scheduled as having a completion date of March 2014.

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Lukoil Power Plant Project – Basra, Iraq

- - The full scope of work, including FEED (Front End Engineering Design), detailed engineering, procurement, construction, pre commissioning and performance tests are being self performed by Enka. The project utilizes three GE MS6001B heavy duty API class dual fuel gas turbine generators each with 42 MW nominal electricity generating capacity on simple cycle process.

Main activities of the project in 2013 had been taken place in the fields of procurement, construction, 806 - mechanical works, electrical works and instrumentation works. The total number of personnel has been realized as in 2013 and by starting pre commissioning and commissioning activities on September 2013, project completion rate has reached to 98,5%. Project has attained one of its major milestones of firing the first gas turbine on 28 December 2013. M an-

ore than 3 million m hours spent without lost time accident, which is an outstanding achievement in harsh conditions of Southern Iraq. Mechanical, Electrical & Instrumentation Works, First Commercial Production Project Basra, Iraq

The Majnoon Oil Field, located approximately 70 kilometers north of Basra City, is one of the world's richest oil fields with proven reserves of 12,8 billion barrels of oil, although the estimate of potential reserve is F 1 significantly higher than this. In December 2009, Iraqi Government awarded a licence to Royal Dutch Shell and Petronas to take over operations at Majnoon Oil ield and increase the production to a peak of ,8 million barrels of oil per day.

The objective of the project is to achieve earliest first commercial production by debottlenecking the existing - facilities and providing new facilities which were designed for 100 kBpd. Crude export from the processing facilities will be through a pipeline to be tied in to the existing crude export. Gas associated with first commercial production will initially be flared pending maturation of a gas export option.

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In July 2011, for the early phase of the project, aiming the first commercial production, Enka has been awarded by Shell Iraq Petroleum Development B.V. (SIPD), the mechanical, electrical and instrumentation

(MEI) works contract of 70 million USD value for the construction of a new Central Processing Facility (CPF) with the production capacity of 100 kBpd and three well pads.

The Majnoon Oil Field – Iraq

Under the signed contract, Enka performed structural steel erection, aboveground & underground piping erection; electrical, instrument, telecom cabling and terminations; installation of static and rotating equipment; installation of transformers and electrical equipment; installation of packaged/containerized - substations, UPS and control rooms; erection of storage tanks; installation of cathodic protection system; insulation and painting, testing and pre commissioning of all installed systems.

In addition to mechanical, electrical and instrumentation (ME&I) works, on August 2012, as part of the first - commercial production, Enka has signed another contract with SIPD to overtake the rehabilitation brown field works at existing degassing station DS 2, in order to restore current capacity of 65 kBpd to the original design inlet of 100 kBpd and further debottleneck the process to increase the production capacity to 120 kBpd. (KBpd: Thousands barrels per day) - nka - B - After achieving mechanical completion and pre commissioning of the systems, E supported the client for the flawless start up of the plant. y spending 6,5 million man hours and reaching a total number of 1,650 site personnel at peak with a total contract price of 247,4 million USD, the project had been successfully completed on November 2013.

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Engineering Contract for Trans Anatolian Natural Gas Pipeline (TANAP)

- Enka Bechtel Enka Joint Venture has been awarded an engineering contract with a value of 44 million USD where

Bechtel and have equal shares.

- The TANAP will be a buried natural gas pipeline system including all above and sub ground facilities and have - a total length of 1,950 kilometers. The project consists of the pipeline which will be starting from Turkish - Georgian border and travel across 21 providences of Turkey then ended at the Turkish Greek border and facilities such as compressor stations, metering stations, off take stations, block valve stations, SCADA, telecom and control systems, and other related equipment and installations in Turkey. In case of high flow the pipeline system will be transporting 31 billion cubic meters of natural gas annually which will meet required specification and qualification. “ ”

The client has been already awarded the Work Order No. 1 including FEED (Front End Engineering Design) works for the TANAP Project. The scope of order includes endorsement of basis of design, FEED surveys, permits, land acquisition activities and providing support for procurement of long lead items and construction contractors’ tenders.

TANAP - Planned Pipeline Route

In this context, Enka has a strategic contribution for the project as a local partner of the engineering contractor Bechtel. Enka

has been continuing to operate activities together with Bechtel in the main office provided by TANAP in

Ankara. Bechtel’s London and Houston Offices have also been supporting the engineering activities for the project.

The endorsement of basis of design, FEED survey works, final route decision, Level III work schedule, project execution plan and cost estimation studies which will be a basis for final investment decision of the client are finalized. By the end of 2013, 56% of the works in the scope of Work Order No. 1 has been completed where the completion date for remaining works have been planned as April 2014 and the total number of work force for the project has been realized as 185 by the end of 2013.

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Berezovskaya Coal Fired Power Plant, Boiler Mechanical Erection Works Krasnoyarsk Region, Russia

Enka

has been awarded the subcontract for the boiler mechanical erection works of the Berezovskaya Coal

Fired Power Plant in June 2012. -

Berezovskaya Power Plant is located in the territory of Krasnoyarsk, 10 kilometers to the north west of the

City of Sharypovo.

The Berezovskaya coal fired power plant which is owned by E.ON Russia, has 2 units in operation, each at 800 MW for a total of 1.600 MW installed capacity. The project is to construct the third unit which will also have 800 MW installed capacity next to the existing ones. The subcontract for mechanical erection works of the boiler has been signed between Enka and the EPC Contractor Energo Proekt from Russia.

Berezovskaya Coal Fired Power Plant, Boiler Mechanical Erection Works – Russia

The boiler mechanical erection works which is the scope of Enka’s contract, is the major part of the project. The scope is limited with erection works, without any engineering or material supply. The estimated total scope is 25 thousand tons of erection which consist of duct works, steel structure works, equipment erections, pressure part erections and piping erection together with hydro tests of the boiler. 2012

The contract which was signed in June has been changed to cost+fee type contract in December 2013. -

From the beginning of the project until the end of 2013, 3.847.112 man hours of work has been done without any lost time accident in 539 days. The project reached 48% completion progress by the end of 2013. The work force of the project as of the end of 2013 was at a total of 1.626 people including both white collar and blue collar personnel. The project is ongoing in full speed during tough winter conditions.

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Khabarovsk Refinery Structural Steel and Mechanical Erection Works Khabarovsk, Russia

Enka is the subcontractor of the EPC contractor of the project Technicas Reunidas from Spain, for the

mechanical erection works of the Khabarovsk Refinery Modernization Project, which is owned by Alliance Oil from Russia.

The aim of the project is to expand the existing refinery which was built during the 1930’s. The initial capacity was 8.000 barrels of oil per day, and was intended to supply oil products to the Soviet Union's Pacific Ocean fleet and the developing economy of the Russian far east and eastern Siberia. The Khabarovsk Refinery is one

of the two oil refineries currently located in the far east of Russia. 23,7 million barrels of oil which is on the average 65.000 barrels per day were refined in 2010.

The Khabarovsk Oil Refinery has undergone various stages of modernization to increase its primary processing capacities and comply with applicable regulations. After the completion of the planned modernization, it is planned to increase the capacity up to 90.000 barrels per day.

Khabarovsk Refinery Structural Steel and Mechanical Erection Works – Russia

The scope of erection works includes the erection of several main units which are a new combined hydrocracking and hydrotreating unit (HDC/HDT), a hydrogen manufacturing unit (HMU), and as an optional scope, interconnecting piping works which will be executed off plot areas. The subcontract price for the total

work scope for HDT, HDC and HMU areas including new units’ interconnection, electrical and instrumentation works has reached 117 million USD. 3 728 - 824 96 From the beginning of the project, until the end of 201 ; 7.623. man hour of work has been carried out 2013 750 without any lost time accident in days. The project has reached % completion progress by the end of C 4 . With personnel including blue and white collar, the project is ongoing in full speed during the severe winter period. ompletion of the project has been scheduled as the first quarter of 201 .

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Development of Muscat International Airport Project, Main Contract 3 Muscat, Sultanate of Oman

The Development of Muscat International Airport Project is the largest construction project in the Sultanate of Oman. The development works have been divided into eleven by main contracts and standard national contracts. Main Contract 3 (MC3), the design development and construction of the passenger terminal building, is the largest scope in the development project. When the project is completed, Muscat International Airport will have an annual capacity of 12 million passengers which can be extended to 24 and 36 million passengers later.

Muscat International Airport – Sultanate of Oman

The Ministry of Transport and Communication (Owner) awarded the MC3 to the consortium composed of Bechtel, Enka and Bahwan Engineering- Company on February 23, 2011 with a contract value of 706 million Omani Rials which equals 1,8 billion USD. Bechtel Enka Joint Venture has a 77% share in the consortium, where Bechtel & Enka shares are 50% 50% in the joint venture. Bahwan Engineering Company is one of the largest construction companies of Oman and specializes in mechanical and electrical works. 500

Total gross closed building area is 647.480 square meters and the scope covers approximately .000 cubic meters of concrete works, 80.000 tons of rebar works, 4 million cubic meter of earthworks, 30.000 tons of structural steel works, 135.000 square meter of façade, 175.000 square meter of roofing, 225.000 square meter of block works and 600.000 square meters of floor and 600.000 square meters of wall covering works.

By the end of 2012, the total of main machinery and equipment is 1.141, of which 443 are heavy duty vehicles. Couple of mega project type crawler cranes having a capacity of 1.600 tons each, have been transported on site in 2013. Construction works have also3 been24 continued, curtain wall works, roofing44 works and stone cladding works of North Pier, South Pier, PTB 18and725 Forecourt buildings have been started and continued as well as architectural works.- As of end of 201 , .000 cubic meters of blinding concrete, 0.000 cubic meters of structural concrete have been poured and . tons structural steel have been erected. The project reached 21.587.600 man hours without a lost time accident and an overall completion of 62,5 % by the end of 2013.

The total number of work force in April 2013 reached to maximum as 15.136 where 1.551 of the employees are technical and administrative personnel and 13.585 are labour force. The MC3 Project reached a total headcount of 8.413 by the end of 2013.

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Morine-Merdare Motorway Project Kosovo

- - The contract was signed in April 2010 between the Bechtel Enka General Partnership and the Ministry of Transport and Communications, Kosovo.- The 75,5 kilometer long motorway project is part of the corridor starting from Vermice on the Albanian border and reaching Merdare on the Serbian border and connecting the southwest of Kosovo to the north eastern part passing from Prizren, Suhareke, Malisheva, Leban and Merdare. The contract has a value of 824 million EUR, having equal share with Bechtel.

Morine-Merdare Motorway Project - Kosovo

- - Including mobilization works, in a short period of time such as 18- months, the first 38 kilometer part of the motorway has been completed and opened for transportation. In July 2012,- the 4.2 kilometer part of the motorway till Duhel Junction, and in November 2012, the 18.1 kilometer part of the motorway till end of section 5 have been completed and opened for transportation. Finally 15.2 kilometer part of the motorway which consists of sections 7, 8 and 9 has been completed and opened for transportation in November 2013. - The project is a 2x2 lane motorway with a total platform width of 27,5 meters. The motorway is designed in conjunction with the Trans European Motorway criteria. The project contains 9 interchanges with overpasses and underpasses, 4 resting and service areas and 4 maintenance areas.

Production quantities of major items performed during the execution of construction works stand at; 30,5 million cubic meters of excavation, 13,9- million- cubic meters of filling, 375.000 cubic meters of concrete casting, 984.000 cubic meters of subbase and cement mixture base, 760.000 tons of asphalt, 166.000 meters of drainage piping and 516 pieces of pre stressed U beam with lengths of 40 meters each.

There are 15 viaducts or underpasses/overpasses with heights changing between 10 to 48 meters. The longest bridge has a length of 750 meters.

A total number of 3.829 personnel was reached at peak, which contained 13 different country citizens such as Kosovo, Turkey, Albania, Romania, 1Macedonia, United States etc. in which Kosovo citizens are 80% of total.

The total number of machinery was 1. 50 pieces and 3 camp sites were operating with a total hosting capacity of 1.400 people.

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The project is not only connecting Kosovo from one side to another, but also connecting Kosovo and Albania. - After the motorway, Kosovo has an ease of transportation to Durres Port in Albania. The completion of Morine Merdare Motorway and shortening the duration between Pristina and Tirana, has an importance for Kosovo, which used to do all trading activities via Macedonia. With these investments, a higher level of productivity in economy will be achieved in the region. After openings of motorways, the number of vehicles passing per day is expected to increase from 1.500 to the level of approximately 20.000, especially in summer season. The mentioned motorways are the safest, fastest, most modern, comfortable and economical transportation options between Serbia, Macedonia, Albania and Montenegro. - Kosovan and Albanian companies had an opportunity to increase their- experience by working with large scale works in the project. All personnel working for the project were trained by Bechtel Enka General Partnership in the field of Health, Safety & Environment. Over 3,84 million of man hours without lost time accident were achieved by focusing on trainings. In 2013, 12.986 people has been trained on 52 different types of HSE trainings within a total of 29.715 hours.

During the project, maximum daily production reached up to 135.000 cubic meters for excavation works,

51.000 cubic meters of filling works, 1.100 cubic meters of concrete, 23.000 tons of all layers of paving, 8.000 tons of asphalt, 1.700 meters of drainage pipe and 2.215 meters of guard rail installation. nka

With Kosovo Motorway Project E was honored with "the Best Global Project Award" in the category of

"Roads and Highways" in the Engineering News Records (ENR) magazine's “Global Best Competition 2013”; "Program Management" award in International Road Federation (IRF)’s “Global Road Achievement” in 2012; and Green Footprint Awards in 2011, with reduce/recycle/reuse campaign and environmental awareness and sustainability applications pioneered across Kosovo. US Embassy Projects Equatorial Guinea, Afghanistan, Dominican Republic, Papua New Guinea, Russia, The Netherlands, Djibouti and Mauritania.

Following the collaboration between Enka and Caddell Construction Co. of USA during the new US Consulate

building project in İstinye İstanbul, which was completed in 2003, two companies agreed to jointly carry out the construction of the US embassy buildings in other countries.

The employer for all these projects is the Bureau of Overseas Construction Operations of the US State Department. The construction of the US embassy building in Cameroon was completed in 2005, and the embassy buildings in Guinea, Mali and Sierra Leone in 2006. The embassy buildings in Algeria and Nepal in

2007, Sarajan evo in 2010, Djibouti in 2011, Burundi in 2012 and Equatorial Guinea were completed in 2013.

Dominic Republic, Equatorial Guinea and Afghanistan contracts were added in 2010 and Papua New

Guinea in 2011. These 4 projects have a total value of over 931 million USD. As of end of 2013 at two continents; in Africa and Europe, 4 projects have been undertaken in Russia, Mauritania, the Netherlands and 95 an Djibouti with total contract value of 427 million USD. The overall completion rates by the end of 2013 are as follows; % for Dominic Republic, 37% for Papua New Guinea and 20% for Afghanistan. At the fourth quarter of 2013, preparation activities for mobilization have been initiated in Mauritania, the Netherlands and Russia. an

Planned completions are as follows; for Dominic Republic in March 2014, for Papua New Guinea due to M n n design changes and additional client requests in the last quarter of 2015, for Afghanistan Phase 1 in 2014 and n Phase 2 in the first quarter of 2017, for auritania i December 2016, for Russia i January 2017, for the

Netherlands i January 2017 and for Djibouti Military Project in the third quarter of 2016. As of end of 2013 there were 1.997 employees working on these projects in total.

YILLIK FANNUAL REPORT (23)

US Embassy Building – Dominican Republic

Conference Center, Presidential Palace and Mausoleum Projects – Gabon

The total price of three projects awarded by the Government of Gabon is 260 million USD. ausoleum Project is located in the city of Franceville where other two projects are located in Libreville, capital of Gabon. Mausoleum Project

Enka’s scope of works for the ausoleum Project are partial design works, procurement and construction activities of the mausoleum, mosque, museum, library and other supporting building and structures. The Mausoleum Project is dedicated to the previous president El Hadj Omar Bongo Ondimba and architectural design works are in the scope of the Tunisian company, Atelier 6. The project which was signed in the last quarter of 2012 had a completion rate of 18,6% as of December 2013. Presidential Palace Project

The project with a total of 17.934 square meters construction area consists of presidential palace where the president will live, the building where the president will meet with his guests and Porte Cochere (main entrance to the palace). In addition to these 3 buildings, a music studio, pool Cabana, guest house and mechanical room are taking place in the project. It is expected that Presidential Palace will become one of the most prestigious projects of Africa in the forthcoming years. The project with a planned construction period of 24 months is expected to be completed in the first half of 2015. The completion rate of 14% had been realized as of December 2013.

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Conference Center

The project has been designed by leading engineering and architectural companies of United States. It is planned that the project will not only be one of the most prestigious projects of Gabon but Africa. The design of the structure can be described as a circular structural steel building with the harmony of different 5 geometric shapes. By the sloping roof, a clean panoramic view of Libreville will be seen. Meeting rooms and

auditoriums will take place in the project. With the help of gardening arrangements and sprinkler systems features, rain forests and natural habitat of Gabon will be emphasized.

Recycling of water, using natural ventilation, solar light and taking advantage of shadow are main priorities will be used in the project which was designed with the principle of using green technology. Another target of the project is to be certified with LEED GOLD (Leadership in Energy and Environmental Design). For hostingMoscow the- Citnexty AfricanPlot 12 Summit, Multi project-Purpose has to Office be completed and Residential until 30 June 2015.Complex Project Moscow, Russia

It is located in “Moscow City” region which can be described as the prestige center of Moscow’s business life in the recent years. The job owner is Techinvest and the project consists of 5 phases which are; raft foundation works; stylobat piles and foundation works; steel & concrete, limited architectural and façade works; 40 mechanical & electrical works, remaining architectural, installation of lift and escalator works with a total contract price of 4 million USD. 2013 20 26 2013 Project was completed in December and the guarantee period of months started on December

During the project 2.518 people has been trained within a total of- 7.554 hours of HSE, 15.955 hours of technical trainings and 43.265 hours of toolbox activities held where the cumulative attendance realized as 173.061 people. By the help of these trainings, 3 million of man hours without lost time accident were achieved in 2013.

YILLIK FANNUAL REPORT (25)

Moscow City, Plot 12 Multi-Purpose Office and Residential Project – Moscow, Russia

Ufa Perinatal Medical Center Project Ufa, Republic of Bashkortostan, Russia

a 33 7 The project is maternity hospital comprising .300 square meters of construction area with basement and 2 floor where the job owner is MD Projekt 2010. The total contract price of project which will be located in

Ufa Region, Oktyabrsky District is 7 million USD.

In the project, which was awarded in March 2013, Enka’s scope of works includes detailed design, structural works, lift installations, mechanical, electrical, plumbing, façade, architectural and finishing works. Project completion is planned as the end of 2014. a - -

Ufa Perinatal Medical Center is designed as modern complex providing family oriented alternative to in patient technologies for health rehabilitation at all stages.

The hospital has a total of 95 beds where 51 of them are in physiology, pregnancy pathology, observation - units of obstetrics center and the remaining 44 beds are in rehabilitation, neonatal pathology, gynecology, in vitro fertilization (IVF) and in patient units of neonatal center.

150 Hospital has outpatient diagnostic center, laboratory and physiotherapy center with a capacity of 100 patient visits per day for children and patient visits for adults. The land where the hospital will be built has an area of 4,22 hectares and located in Oktyabrsky District in the city center of Ufa, between Oktyabrskaya and

Salavat Yulaev Mendeleev streets.

The hospital is being constructed in to main blocks where Block A will be the main medical center and Block - - B will consist of the management and kitchen facility. These two blocks will be connected to each other and have been designed with fire resistance classification of Level 2.

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Esentai Park Residences B and C Almaty, Kazakhstan

Enka was awarded a contract of Esentai Park in 2005. The scope of works were; construction of the Esentai Tower, the highest building of Almaty with a height of 162 meters and in addition to tower, construction of 25 storey residences A, B and C including car park areas; fitness center and the shopping center.

Between 2005 and 2008, Enka completed a total of 265.000 square meters of construction. Regarding financial difficulties of the client, construction activities of residences B and C had been stopped.

Esentai Park Residences B and C – Almaty, Kazakhstan

The new job owner Kusa KKB 2 subsidiary of Kazkommertsbank and Enka negotiated on completing - the construction of residences B and C. mobilization works started in June 2013 and completion is planned as the t hird quarter of 2014. Total number of work force has been reached to 1.300 and 930.000 of man hours without lost time accident were achieved by the end of 2013. Offshore Civil Construction Works and Artificial Islands Project Bautino, Caspian Sea – Kazakhstan

- Kashagan Field, the world’s largest oil field discovered in the last 30 years, is an offshore oil field that is situated in the harsh environment of the North Caspian Sea. Bechtel Enka Joint Venture undertook many projects together for the development of the Kashagan Oil Field since 1998. 4

The offshore civil construction works contract which was signed between Enka and Agip KCO in April 200 for building artificial islands and miscellaneous offshore civil structures at Kashagan Oil Field reached the end of its primary period in October 2008. However, the contract was extended till October 2012 with the mutual understanding of both parties. - On 16 October 2012, after 8 years the contract has been completed. Until completion of the project, the team has worked over 11 million of man hours without lost time accident in the last 3 years. Acceptance certificate of works was taken from the job owner in 2013.

YILLIK FANNUAL REPORT (27)

Offshore Civil Construction Works and Artificial Islands Project – Kazakhstan

In NovemberEnka- 2012, Enka has been invited to sign a man power and equipment supply contract to support Agip KCO’s commissioning activities and completed the mentioned scope of works in May 2013. The marine fleet of Bechtel Joint Venture has been working under charter contracts for other projects in the Caspian Sea. Çimtaş Çelik İmalat Montaj ve Tesisat A.Ş.

Çimtaş engineers and fabricates pressure vessels and heat exchangers, reactors, steel structures, steel 3 bridges, steel wind towers, storage tanks, heat recovery steam generators and boilers, power, process and 63 OEM piping systems, process skids and modules, oil and chemical tankers and powerships. In 201 , Çimtaş fabricated .000 tons of welded products at its manufacturing facilities including two shops one in Gemlik,

Turkey and the other one in China and the module and shipyard in Gölcük, Turkey.

Çimtaş is the nominated subcontractor of IHI of Japan on the İzmit Bay Crossing Suspension Bridge Project, th which includes the longest suspension bridge in Turkey and 4 longest in the world with its 1.550 meters span. In July 2013, Çimtaş commenced fabrication for the İzmit Bay Crossing Suspension Bridge Project and completed 7.000 tons of fabrication by the end of the year.

Çimtaş's scope covers 18.000 tons of tower blocks and 34.000 tons of suspended girder panels to be IHI- fabricated at Gemlik Works as well as the assembly of these girder panels into 300 tons girder blocks at Çimtaş

Module and Shipyard. The blocks will be loaded out in the Shipyard’s quay on to provided barges for transportation for offshore installation.

In 2013, Çimtaş fabricated and delivered the remaining 12.000 tons of structural steel for the Muscat -Enka J International Airport (MC3) Project, where fabrication was started in 2012, based on the supply agreement signed with Bechtel oint Venture for the detail engineering, supply and fabrication of various sructures of the airport. The total fabricated and delivered steel quantity on site is 34.000 tons. The project has unique engineering solutions, which go beyond conventional structural steel applications including details and features such as cast items, cold formed welded profiles and 3D trusses with 90 meters span.

The total structural steel fabrication of 4.500 tons for the Kuntsevo Shopping Center in Moscow was completed with the remaining part of 2.000 tons in 2013.

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İzmit Bay Crossing Suspension Bridge Project, Abutment Block

In 2013, Çimtaş fabricated and delivered 7.000 tons of wind towers for wind turbine manufacturers, German

Nordex and Enercon.

Fabrication of the propane/propylene spherical tank which was started in 2011, having a volume of 5.000 cubic meters for Tüpraş has been completed and handed over to the client in 2013. The scope of the project - includes design, fabrication and installation works of the first spherical tank with a weight of 820 tons which is CE certified and having design control and approval by TUV NORD from Germany. na- -

For Lukoil Middle East Limited West Qur 2 Gas Turbine Power Plant Stage 1 project, detail engineering, 750 procurement, fabrication and testing activities of 3 buffer tanks having a diameter of 3.500 millimeters, length of 9. millimeters and weight of 43 tons per piece were completed in May 2013.

Valuation of vent gases of aromatics plant in the ethylene processing plant and converting the fuel gas system to natural gas of Petkim İzmir Refinery was successfully completed and commissioned in 2013. Enka

The order of , supply for piping works for Erbil Combined Cycle Power Plant Project has been completed and delivered. The similar capacity of spool fabrications for Sulaymaniyah and Dohuk Combined Cycle Power

Plant Projects which will be delivered within 2014 has been ordered by Enka.

The fabrication of alloy piping systems for 10 sets of boilers for NEM of Holland for a 2.200 MW CCPP of Saudi

Electric Co. has been completed in 2013.

For the order of UOP of USA, first 3 sets of 7 PSA skids have been delivered to Rosneft Petrochemical Plant and remaining 4 sets will be delivered within the first half of 2014. 25

Fabrication for the new product for GE, combustion chambers of gas turbines have been accelerated and 2014 sets were delivered in 2013. It is targeted that the delivery of 68 sets will be completed in 2014 with the new capacityIn investment to be completed in the first quarter000 of .

2013, Cimtas Pipe completed fabrication of 12. tons of pipe spools for Queensland LNG Project

(Australia) under construction by Bechtel. Fabrication activities for Gladstone, Australia Pacific (Australia) and Sabine Pass LNG (USA) under construction by Bechtel have been continued with 3 shifts and level of

21.000 tons of fabrication and delivery have been reached in 2013. The planned completion date for all three projects is set as the beginning of 2014.

YILLIK FANNUAL REPORT (29)

- A total of 24.000 tons of production has been planned for 2014. With the new fabrication orders of the Sabine

Pass Stage 2 and Baytown LNG projects from the consortium of Linde Bechtel which will be started in the first quarter of 2014.

On the other hand, Cimtas Pipe continued to deliver piping systems for gas turbines to GE Energy as one of its main suppliers for the last twelve years. Orders for 2014 have also been taken without any delays.

Cimtas Ningbo – Peoples Republic of China

In 2013 -

, Cimtas Ningbo provided gas and steam turbine piping systems, turbine auxiliary units and skid mounted modular process assemblies to worldwide customers including GE Energy, GE Energy Services, Aker

Process Systems, Mitsubishi Heavy Industries and Harbin Electric. In addition to this, in 2013 Cimtas Ningbo certified with GC1 which is necessary for fabrication and installation of pressure piping activities in China. - 93- - In the year 2013, Çimtaş Module and Shipyard commenced shipbuilding of the 1.200 tons Dynamic - Positioning Vessel “GMK 1” with meter length and 22 meter width, providing design, engineering, and - procurement services as well as fabrication. GMK 1 was successfully launched in November 2013 and will be delivered in early 2014. GMK 1 will primarily be used for transporting the tower blocks of the ‘İzmit Bay

Crossing Suspension Bridge Project’.

Çimtaş Module and Shipyard completed the fabrication of 11.000 tons of structural steel works with the delivery of 5.800 tons for 1.500 MW Erbil Combined Cycle Power Plant Project in 2013.

Çimtaş Module and Shipyard in 2013 has also successfully completed the infrastructure works for the İzmit

Bay Crossing Suspension Bridge Project steel girder block ground assembly works comprising the assembly of the girder panels into 113 girder blocks with weight of 300 tons per piece and dimensions of 36m x 25m x

4,75m. The ground assembly of the first steel girder block was started in December, 2013. The project is scheduled to be completed in 2015. Çimtaş Module and Shipyard was also qualified to receive ASME “S”, “U” and “U2” certificates in 2013 for power boilers and pressure vessels’ fabrication.

The consolidated annual turnover of Çimtaş and its subsidiaries was 483 million USD in the fiscal year 2013.

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Kasktaş Kayar Kalıp Altyapı Sondaj Kazık ve Tecrit A.Ş.

29 7 8 Kasktaş began soil engineering and foundation works in 1957 as an internal department of Enka and was - transformed into an individual company in 1975. With a total of 5 personnel including 5 technical and 4 administrative personnel, Kasktaş offers high quality and economical solutions through its personnel experienced in geotechnical design and all types of soil engineering, and its special geotechnical machinery

and equipment. In addition to having a large and modern machinery park, it continues to add new machinery and equipment to its fleet in order to meet the current requirements in the area of soil engineering.

İzmit Bay Crossing Suspension Bridge Project - South Anchor Block

Moreover, having successfully completed third party inspection of the ISO 9001:2008 Quality Management System, administered by BSI in 2013, Kasktaş maintains its activities without compromising on quality. The Environmental and Occupational Health and Safety System, which had been established in the company headquarters and the main workshop earlier in 2007, have been extended within the first half of 2009 in order to include all construction sites both in Turkey and abroad. Its affiliate located in Saudi Arabia has also

implemented the ISO 14001 Environmental and OHSAS 18001 Occupational Health & Safety Management Systems, which have been also certified by BSI in 2009.

TheTurkey principal: projects completed by Kasktaş in 2013 listed according to their regions are stated below:

− -

Diaphragm wall works of South Anchor Block and sheet pile driving and extracting for Dry Dock at STFA − - İzmit Bay Crossing Suspension Bridge Project, − Improvement works by means of barrette piling works for Varyap Gap Ataşehir Metropol Project, Shoring works by means bored piling, soil nail, anchor and shotcrete works of Ford Otosan Kartal Building − - Project, Diaphragm wall installation and jet grouting works at South Approach Viaducts, İstanbul İzmir Motorway − B – Project , − ored piling works for İstanbul Strait Crossing Road Project Eyüp Aksoy Tunnel , Shoring and excavation works by means bored pile, secant pile, permanent anchors, rock bolt, fiber rock − bolt and shotcrete for İstanbul Strait Crossing Road Project Asia Transition Box, S oil improvement works by means of jet grouting works for İzmit Bay Crsossing Suspension Bridge Project − – North Side Span Pier, Shoring works by means of micro piling, bored piling, anchors, shotcreting and soil nailing for Eroğlu Skyland Project.

YILLIK FANNUAL REPORT (31)

Russian Federation:

−

SBMA type ground anchorages with up to 90 tons of maximum load in mixed clayey and granular soil − - conditions installed for retaining of a 25 meters deep shoring system at Kuntsevo Plaza Project in Moscow,

Anchor works for semi top down temporary column piles installation for Mozhayski Val. Metrobank − O Project in Moscow,

nshore and offshore bored piling and diaphragm wall of Western High Speed Diameter Ring Road − F - Project, Bay Area Overpass and Claimed Land Areas in St Petersburg,

ull top down permanent and temporary column piles installation for Lumeriance Project in − H a Ekaterinburg,

ydrofr ise diaphragm wall installation for Highrise Office Tower in Plot 17/18 of Moscow City Business SaudiCenter Arab Areaia: .

−

− B - - Rock bolt installation works at Abu Tabanjah Project in Makkah, − ored cast in situ piling works at Monumental Flagpole Project in Jeddah, − - Piling works at Ayn Shams Ancillary Building in Makkah, − Piling and temporary anchor installation works at King Abdullah Sport City KAIA in Jeddah, − Piling works at Haramain High Speed Rail Project in Jeddah, − R Piling works at Jabal Omar Project in Makkah, − ock anchor installation works at Water Transmission Project in Jeddah, − R Secant piling at First Ring Road Project in Makkah, − ock bolt, rock anchors & shotcrete installation works at Abraj Kudai Project in Makkah, − W Secant piling, temporary anchors, rock bolt & rock anchor at Haram Utility Services in Makkah,

OtherSecant Countries piling and: grout curtain installation works at Jeddah Storm ater Drainage Project in Jeddah.

− q

Ira : Soil improvement works by means of bored piling works for Najybia Gas Turbine Power Plant − Project. Afghanistan: Bored pile, secant pile and anchor installation works for Kabul U.S. Embassy Building. Enka Teknik Genel Müteahhitlik Bakım İşletme Sevk ve İdare A.Ş.

Since its establishment in 1981, Enka Teknik has successfully completed various turnkey projects using its project management and implementation expertise, covering a full range of basic and detailed engineering,

fabrication, procurement, construction, erection, commissioning, and operation phases to the full satisfaction Enkaof its clients.

Teknik is a preferred partner for turnkey projects, as its expert project management teams proficiently undertake technical consultancy, spare parts sales operations, management and maintenance services. Enka Teknik serves investors in Turkey, North Africa, the Middle East, and Central Asia, either as the main contractor or as a consortium partner in supplies transportation and warehouse systems, support facilities, water treatment and environmental engineering, infrastructure and construction, electrical, control systems

and instrumentation engineering. The primary objective of Enka Teknik is customer satisfaction achieved by effectively implementing the principles of the ISO 9001:2008 Quality Management System.

Enka Teknik offers services by means of its employees in İstanbul Head Office, Libya Tripoli and Iraq Basra offices and all relevant sites. Apart from mentioned offices, Enka Teknik İstanbul Atatürk Airport Free Zone

Branch also carries on its operations since 2004.

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The company had initiated- the project works for Obari 4x160 MW Gas Turbine Power Plant prior to the Libyan Revolution based on the agreement executed by and between General Electric- Company of Libya (GECOL) and GESCO Enka Teknik consortium according to which the site mobilization had been completed to offer services to 260 people by the end of 2010. Procurement- and site activities were re initiated in October 2012 after being suspended due to civil commotion in February 2011. Furthermore, mobilization activities planned to serve totally 750 people on site were re initiated and procurement, construction and assembly efforts gained momentum in 2013. Assembly of turbine and generator sets was undertaken along with the supporting equipment and facilities and manufacturing of tanks, auxiliary buildings and- construction works are undertaken currently. As of the end of 2013, 520 people are employed. Commissioning activities are planned to be undertaken in May 2014 in order to perform the first launching in July August. The aim is to complete the project by the end of December 2014, 8 months prior to the contractual completion date. Of the total project cost which is 378 million EUR, the cost of engineering, material supply, construction and assembly works, commissioning- and training contracted to Enka Teknik amounts to 170 million EUR in total. This scope is expected to be extended with the additional proposals such as crude oil pipeline of 25 kilometers for 9 million EUR and plant non process buildings for 23 million EUR.

Obari 4x160 MW Gas Turbine Project – Obari, Libya

n Zawia, Derna, Soussa and Zuvara desalination plant projects which were undertaken for General Electric Company of Libya (GECOL) and transferred to Libya Water Treatment Administration and Zawia Potable Water Pipeline Project has been completed by the consortium of French Sidem company and Enka Teknik prior to the revolutionary acts and acceptance activities had been initiated accordingly. After being suspended due to revolutionary acts in Libya, Derna and Soussa project sites were remobilized and final acceptance activities were initiated in March 2013. Acceptance and delivery activities are planned to be initiated for Zawia and Zuara projects in 2014.

Focusing on business development activities in other countries as a result of the suspension of works in Libya, Enka Teknik began to reap the rewards of its efforts in the last quarter of 2011. Firstly, Complete Engineering services were supplied to the main contractor of Iraq Al Haydaria Simple Cycle 4x125 MW Gas Turbine plant, which is probably the first engineering services agreement exported from Turkey. Engineering services of the plant were completed and delivered in 2013.

YILLIK FANNUAL REPORT (33)

At the beginning of 2012, Enka Teknik signed a contract for Al Najybia 4x125 MW Gas Turbine Plant in Basra, Iraq with a total value of 237 Million USD under “Mega Deal Projects” undertaken by Ministry of Electricity of Iraq. It took 16 months for the employer to perform the financial obligations provided in the contract and making an agreement for piling works, as the additional works amounting to approximately 35 million, - making the effective date of the contract 2 May 2013. Engineering and mobilization works and placing orders for equipment and package systems for long lead procurement activities were initiated in fall 2012. 95% of piling works were completed as well as 20% of construction works including the base and turbines were placed and the assembly works have been carried on. The plant is planned to be commissioned by the end of

2014. - - In addition to the abovementioned projects, Enka Teknik signed a contract with Iraqi state owned oil company SOC (South Oil Company) for turnkey project of PS 1 Crude Oil Pumping Station in Rumaila, Basra - - Region at the end of 2012. The contract was rendered effective on 22 December 2013 after the employer - performed its financial obligations in the following 12 month period. Order was given for turbine pump group, with a long lead time and the basic engineering activities were initiated for the project. Approximately

60% of mobilization activities were completed at the end of December 2013. The project shall be completed within 18 months in June 2015. Titaş Toprak İnşaat ve Taahhüt A.Ş.

Founded in 1974, Titaş with its experience of 40 years proceeds to complete any kind of works undertaken by integrating modern construction machinery with the contemporary technology with a team spirit demonstrating high quality.

Titaş has been successfully carrying out municipal domestic water -distribution networks and housing waste- water networks as well as infrastructure- works in university campuses, industrial and public housing complexes; and also energy, communication, natural gas, heating cooling networks; drainage, excavation backfilling works and quarrying crushing operations of highway projects under construction within work schedules.

Morine-Merdare Motorway Project - Kosovo

- 3 77- 6 3 Works started in 2010 for the Morine Merdare Motorway Project in Kosovo and continued in 201 . - The kilometer part of the motorway was completed and opened for transportation on November 2 , 201 . 3 Excavation backfilling works with 6 million cubic meters earthmoving, construction of various size reinforced concrete vents and culverts were completed in 201 by Titaş.

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As of the end of 2013, Titaş had 100 employees and achieved ‘zero accident’ during the year. By the additional investments, Titaş is planning to further renew its machinery park and together with its specialized personnel would be offering services in 2014 for 57 kilometers of the Route 6 Motorway Project, from Prishtine towards

Macedonian border and other projects in 2014.

Enet Proje Araştırma ve Müşavirlik A.Ş.

Since its foundation in 1980, Enet has provided design and engineering services for Enka's domestic and - international construction projects. Additionally, industrial complexes; power facilities; transportation systems such as motorways, highways, railways and the maintenance management facilities, bridges, viaducts, tunnels, and minor structures thereon; military airports; housing complexes; education and health service centers; public and commercial buildings; water supply, drainage and treatment projects; as well as hydraulic structures are included in Enet's main fields of expertise as consultants for public and private companies.

In this context, Enet provides complete engineering services including planning and program monitoring, preliminary and execution designs, estimation, survey, specification and technical control, construction control engineering services, consultancy services, and survey services at top quality levels.

To date Enet has completed the preliminary and execution design of 550 kilometers of motorways, 350 kilometers of highways, 150 kilometers of railways, more than 200 viaducts and bridges, 30 factories, 25 water supply and treatment plants, 10 airport facilities, 50 educational and administrative buildings and four sports centers and stadiums.

Enet has prepared revisions of quantity estimation calculations of roads, car parks and civil structures for Muscat International Airport during Enka’s tender preparation process. Enet has also prepared presentations for roads, carparks, road accessories and storm water drainage systems. After the contract award decision of Muscat International Airport MC3 project,- Enet has started the design works of roads, car parks and engineering structures within the scope of the project in 2013. Detailed design works have been completed and approved as well as most of the as built projects. Enet has completed the design of 9.500 meters of road, 7 bridges, 3 underpasses, various sizes of diaphragm walls and storm water drainage system culverts. In addition to these, storm water drainage and sewage systems have also been prepared by Enet. Besides mentioned works, Enet has been continuing to provide construction support for these projects. -R

During 2013, Enet has involved in tender preparations for Kosovo oute 6 Motorway Project and by several site visits prepared alternative solutions for optimizing the route. The preliminary designs for these different routes have also been prepared by Enet.

YILLIK FANNUAL REPORT (35)

ENERGY

Following the decision of the Turkish Government in the 1970’s to utilize the lignite coal reserves in south eastern Turkey, Enka began to take part in energy projects, realizing the fabrication and erection of steel structures of the thermal power plants 1x150 MW Tunçbilek, 3x210 MW Yatağan, 2x210 MW Yeniköy, and 3x210 MW Kemerköy respectively.

The experience gained through these projects enabled Enka to extend the scope of its responsibility in subsequent turnkey power projects, either as a consortium member or a joint venture partner. Consequently, Enka participated in the building and commissioning of the 1.200 MW Hamitabat and 1.400 MW Bursa natural-B gas combined cycle power plants; 3.854 MW Gebze, Adapazarı and İzmir natural gas combined cycle plants; 790 MW Rijnmond (the Netherlands) natural gas combined cycle plant and the 4x360 MW Afşin Elbistan thermal power plant.

The contract for the turnkey engineering, procurement, erection and commissioning services of the 400 MW combined cycle power plant in Yajva (Russia) was signed in 2008 and the project was completed in 2011. 570 MW simple cycle power plant project which is located in Benghazi, Libya is completed in 2011 and works of Obari 640- MW gas turbine project have been ongoing. The effective beginning of Al Najybia 500 MW Gas Turbine Project is realized as October 2012 and mobilization works have started. A project in Basra region, West Qurna 2 Oil Field, comprising of a 126 MW gas fired power plant project was signed in December 2011 and scheduled as having a completion date of March 2014. Besides these, Erbil Combined Cycle Power Plant2012 anProject will be the first combined cycle power plant when constructed in Iraq. The 1.000 MW plant when converted into a combined cycle, will have a total capacity of 1.500 MW. The proj ect was started in April d will be completed in January 2015. Similar projects to Erbil were awarded in 2013 in Sulaymaniyah and Dohuk and scheduled to be completed in March and May of 2016 respectively. Gebze Elektrik Üretim Ltd. Şti. Adapazarı Elektrik Üretim Ltd. Şti. İzmir Elektrik Üretim Ltd. Şti.

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Established in 1997 as a 40% 60% partnership of Enka and InterGen respectively, InterGen Enka was awarded by the General Directorate of TEAŞ and the Ministry of Energy- - and Natural Resources the turnkey construction and operation of the Gebze, Adapazarı and İzmir natural gas combined cycle power plants with a total installed capacity of 3.854 MW in accordance with the Build Own Operate model.

Financed 25% by equity and 75% by project finance, the total investment amount for three plants was 2,04 billion USD. In this scope, the individual amounts committed by international financial institutions totalling 1,53 billion USD are as follows: 860 million USD by US Exim (USA), 185 million USD by Hermes (Germany), 125 million USD by OND (Belgium), 300 million USD by OPIC (USA), and 60 million USD by various commercial banks.

The Environmental Impact Assessment Report completed in accordance with the format of the Ministry of Environment has received the official approval of the Ministry. In addition, an Environmental Impact Assessment Report for these plants, which are financed through the contribution of foreign project loans, was prepared for the exclusive review of the export credit agencies in accordance with the World Bank environmental guidelines and duly approved as it indicated minimum levels. Similar to today's prevalent technology employed at natural gas combined cycle power plants around the world, the Adapazarı, Gebze and İzmir plants operate below the minimum criteria regarding air quality protection, water pollution and noise control regulations, and they are an exemplary array of investments in the field of energy in Turkey. -En The turnkey construction of the Gebze, Adapazarı and İzmir natural gas combined cycle power plants were awarded to the Bechtel ka Joint Venture, where Enka had a 50% share. Of these projects launched in 2000, the Gebze and Adapazarı plants were commissioned in 2002 and the İzmir plant in 2003. Together with its partner InterGen, Enka has thus become the largest electricity producer in the private sector in Turkey after the plants began to operate.

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Bursa 1.400 MW Natural Gas Combined Cycle Power Plant - Turkey

YILLIK FANNUAL REPORT (37)

- a 20- - The electricity production companies have signed a 20 year Natural Gas Sales Contract with BOTAŞ and year Electricity Sales Agreement with Turkish Electricity Trading Corporation (TETAŞ). As this 20 year period includes the project development and construction phases, the contract period is essentially 16 years, starting -with the commissioning of the plants. The electricity generated in the plants is sold to TETAŞ, as pronounced by the Electricity Sales Agreement, in accordance with an average tariff of 4,2 US cents per kilowatt hour. This makes it the cheapest electricity sold to public authorities by a private producer. Through the use of advanced technology employed in the plants as well as the low financing costs, the electricity sales price, which consists of four components, namely investment costs, fuel costs, fixed operating costs, and variable operating costs, is set at this level.

Adapazarı and Gebze Natural Gas Combined Cycle Power Plants - Turkey

Among these, the fuel costs item is a pass through item, and the changes in natural gas prices are proportionally reflected on the sales price. Thus, Enka does not take any price risks with regard to natural gas.

Enka's shares that were 40% at the completion of the plants increased following the commercial operation of the plants, with the acquisition of all shares owned by its partner InterGen. Thus, Enka became the sole owner of the electricity production companies. 5 - - A report conducted by TEİAŞ stated that Turkey's energy demand for 2013 was a total of 24 billion kilowatt hours. Accordingly, our plants with their collective annual generation capacity of 32 billion kilowatt hours are capable of meeting 13% of Turkey's aggregate energy demand. Enka Enerji Üretim A.Ş.

Enka Enerji Üretim A.Ş. was established in order to investigate the investment potentials to cover the rising energy demand of Turkey and to make investments in this field.

In accordance with this, an imported coal fired power plant with 800 MW installed power capacity at İzmir, Aliağa has been planned to be built and the application for the production license of such was made to the Energy Market Regulatory Authority (EMRA) in June 2007 with a Production License demand for 49 years.

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On March 6, 2008, the EMRA has deemed it appropriate to issue a production license and prepared such a license in the name of Enka Enerji. Most of the necessary land has been purchased and application to the municipality for the development plan amendment has been made accordingly. Furthermore, the Environmental Impact Assessment Report has been completed and the Environmental Impact Assessment

Affirmative Certificate has been issued by the Ministry of Environment and Forestry on May 5, 2010. In order

to evaluate alternative energy investments, the current production license issued by EMRA has been cancelled upon our application.

İzmir Natural Gas Combined Cycle Power Plant - Turkey

Enka Elektrik Üretim A.Ş.

The company established for the purpose of making new investments in the energy field regarding Turkey’s increasing energy demand and continuing its activities for the land plot located within in the borders of Gebze

Organized Industrial Zone.

YILLIK FANNUAL REPORT (39)

REAL ESTATE

78 3 The rent revenue of Enka, generated from the hotel, shopping centers and office area in Moscow has been - realized as 4 million USD in 201 . As of the year end, Enka owns 330.000 square meters of net rentable class A office area, a hotel with 235 keys and 215.000 square meters of net retail rentable area after demolishing the Kuntsevo Shopping Center for rebuilding purpose.

Enka Invest

- Enka Invest started its business activity in 1994, as a part of real estate investments of Enka in Moscow since - the early 1990’s. It continues to operate with 85 in house personnel in the sphere of leasing office and residential premises, including facility management of the buildings and acting as a contractor for fit out works. The total of four buildings, all located in Moscow city center, has a rentable area of 76.000 square meters. In 2003, Enka established City Center Investment B.V. for realization of “Naberezhnaya Tower” - complex which is one of the most prestigious business centers in Moscow International Business Center with its inspiring architecture and hi tech innovative design. The complex consists of three blocks with a total rentable area of 163.000 square meters.

Approximately 70% of Enka’s portfolio of office is composed of buildings 91 which belong to 3Enka Invest. 3 The occupancy rate in the buildings of Enka Invest increased to % as of end 201 . Apart from the occupancy, with the finalized leases during 201 , the average rental rates of the buildings were also increased.

Enka premium office buildings have become the compelling choice for any leading international or Russian business. 8-19

Some of the leases with international tenants, with business relations more than 1 years, were prolonged for additional periods. The current tenants of Enka include reputable corporations such as Statoil, HSBC,

Linklaters, Linde Gas, Medtronic, Fortum, Universal Pictures, UBS, General Electric, Eli Lilly, Polycom, IBM, Chanel, La Prairie, Symantec, Tommy Hilfiger, Oracle, LG Electronics, E.On, IATA, Mitsui & Co., Citibank, - Renaissance Capital, BASF, Cleary Gottlieb Steen & Hamilton, Richemont, Pfizer, National Oilwell Varco,

KPMG, Les Laboratoires Servier, Accenture, BP Castrol, Qualcomm SKF, Colliers International and Nestle. Enka TC

Enka TC, formerly Ramenka, was established in Moscow having an equal partnership of Enka and Migros in 1997 to establish shopping centers and supermarket chains in Russia and in November of the same year launched its first Ramstore hypermarket and shopping center in the Kuntsevo district of Moscow, which was constructed by Enka on a total area of 19.400 square meters. The company continued its growth and opened its second hypermarket and shopping center Marina Rosha despite the economic crisis in Russia in 1998.

Adhering to high quality standards, Enka completed the construction of the 32.500 square meters Marino

Rosha shopping center in a short time.

Later on, between 1999 and 2003, 23 new stores were opened increasing the number of stores to 25 and the number of shopping centers to 6 by the end of 2003. Regions out of Moscow started to be covered the same year by the opening of stores at Krasnoyarsk, Kazan and Nizhiy Novgorod. Despite some of them closing between 2004 and 2007 the number of stores was increased to 53 and the shopping centers to 10.

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Naberezhnaya Tower, Moscow – Russia

YILLIK FANNUAL REPORT (41)

The company used its own sources as well as International Finance Corporation (IFC) or commercial bank

loans for its investments. A total of 170,5 million USD loans have been used between 1998 and 2006 from IFC. All of these facilities have been repaid in 2008 before their maturity dates.

Apart from the stores in shopping centers, the company started renting large scale offices in 2007 by renting offices at the Vernadskovo complex.

By purchasing the 50% share of Migros in 2007, Enka became the sole owner of the company and consequently renamed it as Enka TC. In line with concentrating on rental as the main line of business, it has been decided to transfer the hypermarkets operated at the Moscow and St. Petersburg shopping centers to

Auchan by renting them. Upon completion of this operation the rentable space of Enka TC increased from

167.000 square meters to 227.000 square meters.

Shopping malls owned by Enka TC and which were operated under the “Ramstore” brand name started to be operated under the “Kapitoliy” brand name in 2009. Also, the supermarket brand name “Ramstore” was renamed as “Citystore” starting from January 2010. OO 147 3 According to the decision to concentrate on rental income only, selling of the retail assets of Enka TC to O

BILLA and OOO BILLA REALTY was realized in April 2012. The rent income is million USD in 201 .

Two of the most significant shopping mall developments of Enka TC won the “Best Shopping Center” awards - of the Commercial Real Estate Committee in Russia. Kapitoliy Shopping Mall in St. Petersburg was honored - - with the “Best Shopping Center of St. Petersburg” award in 2006, and Kapitoliy Vernadskovo Shopping Mall in Moscow received the “Best Large Scale Shopping Mall of Moscow” award of CRE in 2007. Besides, Kapitoliy - Sevastopolsky Shopping Mall in Moscow has been awarded by the Moscow Municipality as “The Most

Convenient Shopping Center in the South West Administrative District of Moscow”. -

Enka TC has recently completed the project development process for re developing its existing shopping center in Kuntsevo which was opened in 1997. In the project, for which approximately 425 million USD investment is planned, the existing shopping center with a total of 19.400 square meters is planned to be demolished and rebuild as a modern shopping center with a net leasable area of 63.500 square meters, an office space with a net leasable area of 2.800 square meters, a residential complex with a net saleable area of

16.900 square meters and a car park of 1.950 spaces, with a building area of approximately 245.000 square meters in total. “ The shopping center is planned to be operative in the second quarter of 2014. Enka TC’s project has won the Cityscape Awards for Emerging Markets, 2012 Category Best Retail Project Future” prize between 36 projects from 13 different countries in the International Cityscape Global Real Estate Conference held in – Dubai, 2012. Besides, Kuntsevo Plaza became one of the 37 green investment projects in Russia after receiving the green building certificate (Green Standard GOLD) in April 2013.

Construction activities started for the new shopping center at Sergiev Posad of Moscow district in the second quarter of 2013 and planned that construction will be finished and the shopping center will be fully 7 000 a operational in the second quarter of 2014. The Sergiev Posad Shopping Center will have a net leasable area 50 of 25.000 square meters (total area of 3 . square meters) and car park of 734 spaces. Total investment of the project is expected to be approximately million USD.

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Kuntsevo Shopping Center, Moscow – Russia

an - 22 000 36 7 - Project development activities started for A class office building having a net leasable area of . 12 0 square meters (total area of . 00 square meters) and multi storey car park which will have total area of

. 00 square meters at Prospekt Vernadskovo, Moscow which is in front of Kapitoly Shopping Center and also belongs to Enka TC.

Within the scope of redevelopment of Kashirskaya Shopping Center, construction and land plot plan approvals have been recently received from the Moscow Municipality and project development and further approval processes are ongoing. Existing building is planned to be demolished in the beginning of 2015 and when completed will have an area of approximately 180.000 square meters.

Besides, project development activities of renewing the Marina Rosha Shopping Center are continuing. JSC Moskva Krasnye Holmy

Having signed an investment agreement with a number of Russian partners that include the Municipality of Moscow, Enka has established a company called Moskva Krasnye Holmy (MKH) with the specific aim to develop, in five progressive stages, the Russian Cultural Center that includes office buildings, trade, cultural Enka and sports centers on a land plot of seven hectares which was leased for 49 years. In 2013, after buying the remaining shares, became the sole owner of the company which begun its operations in the summer of

1995 and so far has completed construction of 163.000 square meters of different buildings, including 63.000 square meters of rentable office area which is almost fully rented out. ® - 5

The complex, known as Riverside Towers , accommodates a five star hotel with 23 rooms, managed under the name “Swissôtel Krasnye Holmy” by the Swissôtel group, which began to operate in June 2005. The roof bar of the hotel, “City Space” is highly popular and was listed in the chart of World's 50 Best Bars 2011, according to Drinks International, the No1. magazine for global Drinks Buyers. Also the new Conference

Center, managed by Swissôtel, came a point of attraction as soon as it opened its doors and is hosting many conferences, seminars with high ranked participants.

YILLIK FANNUAL REPORT (43)

Riverside Towers, Moscow – Russia

The corporate policy of the company emphasizes institutionalization and dictates that productivity and

profitability excel by employing the finest local staff and the best local companies to work with a core team Iof Turkish administrators. 3 1 3 ncluding the hotel, JSC Moskva Krasnye Holmy employees have reached 4 9 people, 1 of whom are Turkish,

in addition to an outsourced workforce of 150 employees. The company's 201 turnover was realised as 88 million USD. JSC Mosenka

Enka capitalized on its good business relations in Russia as well as the steady economic progress of the nka country and founded Mosenka in 1991 in Moscow with Russian partners as the first real estate investment company, which introduced western quality real estate services to the country. Mose which is fully owned by Enka, operating on development and renting of office spaces, aiming to meet the increasing demand in Moscow. Mosenka has reconstructed six historic buildings with a total construction area of 46.500 square meters and a total rentable area of approximately 31.000 square meters, converting them to modern office buildings, all of which are almost fully rented out. Tenants of Mosenka include various international companies such as Lego, Air Liquide, Saipem, Roquette and Claas. 7

Except outsourced workforce, the company has 6 employees and its turnover was realised as 22 million USD in 2013.

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YILLIK FANNUAL REPORT (45)

TRADING AND MANUFACTURING

In 2013 447 347 , the contribution of the trading and manufacturing segment to Enka’s consolidated turnover was

million USD. In the trading segment the major portion was achieved by Enka Pazarlama with million USDEnkaturnover. Pazarlama İhracat İthalat A.Ş.

Established in 1972, Enka Pazarlama began its activities with the sales and servicing of Hitachi excavators and Kawasaki wheel loaders and has become the representative of numerous well known international brands of machinery and equipment. Focusing on heavy construction equipment and machinery, heavy 58 vehicles and industrial products, Enka Pazarlama is providing service all around Turkey through its 4 regional

branches, 2 sales offices and 1 dealers and also providing support and after sales service to all of its customers with 4 service centers all TSE approved and holding ISO 9001:2008 quality certificates.

Enka Pazarlama’s primary center is in Tuzla and owns regional offices and provides services in İstanbul on a total area of 15.200 square meters of which 7.500 square meters is covered area; in Ankara, on a total area of 12.000 square meters of which 4.800 square meters is covered area; in İzmir, on a total area of 13.450 square 3 970 meters of which 4.882 square meters is covered area; in Adana, on a total area of 8.400 square meters of which 1.800 square meters is covered area; and in Mersin Free Zone, on a total area of . square meters.

In 2010, an ISO quality certificate was received in regards to its technical knowledge and customer oriented approach of its human resources, being a nationwide known institutional company, which provides high

quality service and offers economical solutions to customers, by continuously following the latest technologies and having a vision and mission.

Enka Finansal Kiralama A.Ş., a subsidiary of Enka Pazarlama, with its experienced staff that closely follows the market conditions, supports the customers of Enka Pazarlama for all products by providing finance opportunities through leasing.

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As a distributor of the world’s leading manufacturers, Enka Pazarlama supplies the following products and Machinery Group: brands: • • Hitachi : Hydraulic excavators, rigid dump trucks, wheel loaders • Hitachi Sumitomo : Crawler cranes • - Kawasaki : Wheel loaders • Tadano, Tadano Faun : All kinds of mobile cranes • Bell : Articulated dump trucks • - Atlas Copco : Mobile crushers and screeners Atlas Copco Dynapac : Soil compactors, asphalt rollers and pavers Recycling Equipment:

• • Hammel Recyclingtech : Primary & secondary shredders, screeners • Vecoplan AG : Rotary shears, granulators, complete plant solutions • Ing. Bonfiglioli S.p.A. : Metal shears, hammer mills • Tana OY : Landfill compactors, waste shredders • Neuson Ecotec GmbH : Wood chippers, green waste recycling, screeners

WRS Italy SRL : Rotary shears, granulators, complete plant solutions Truck and Trailer Group:

• • Schmitz : Trailers • KCP : Concrete pumps

Feldbinder : Tankers (bulk, food, chemical) Industrial Products:

• • FPT (Iveco Motors) : Marine engines, generators and industrial engines • Mitsubishi : Marine engines and industrial engines • Hanshin : Marine engines for vessels • Sole Diesel : Marine engines and generators • - SDMO : Generators and lighting systems • NK Power : Generators

Twin Disc SRL : Marine transmissions Material Handling and Lifting Equipment:

• • TCM : Forklifts • Tailift : Forklifts • CESAB : Forklifts • CT Power : Forklifts

Snorkel : Aerial platforms Agricultural Machinery Group:

• • Claas : Combine harvesters, forage harvesters, balers and tractors • Argo Tractors Spa : McCormick brand tractors • Mahindra & Mahindra : Tractors • Orkel : Compactors and balers Lemken : Agricultural equipment

YILLIK FANNUAL REPORT (47)

Enka Pazarlama has presented to Turkey for the first time in 2013, electric driven ultra large hydraulic excavator and trolley assist dump trucks of Hitachi which is one of the biggest construction machinery manufacturer of the world.347 This project, in Kışladağ Gold Mine which has the largest gold production volume in Turkey was not only the biggest project of Turkey but also in the Middle East region as well. Besides, Enka Pazarlama has performed million USD in 2013. Enka Pazarlama aims to continue its trustworthy and high Pimaşquality service Plastik concept İnşaat by itsMalzemeleri experience of overA.Ş. 40 years and future investments.

Established in 1963 with the purpose of manufacturing construction materials, Pimaş has been doing worldwide business since then and has always been the pioneer in manufacturing high quality product ranges in the scope of its business. With its experienced and specialized staff, Pimaş has been contributing to the development of better products and better production applications and standards in our country for the benefit of our much esteemed customers. Having a name identified with quality in all product ranges, Pimaş is a specialized and institutionalized corporation.

The brand “Pimapen”,- Turkey’s first PVC window, has been- started to be produced in 1982 and has become the general- description- of both PVC windows and the sector itself in Turkey. Thus, Pimaş has grown rapidly with its sub industries,- all the countrywide suppliers, co producers, retail dealers and distributor networks. The so called “Pen Sector” in Turkey has been- born- -out of emulating the brand name ‘Pimapen’. Today, the mentioned “Pen Sector” has turned out to be a giant business sector providing more than 100.000 people with a job countrywide. A modern and state of the art laboratory where Research & Development (R&D) works as well as all the product specific tests are performed in accordance with the Turkish Standards (TSE), the European Norms (EN) as well as the German Industry Norms (DIN), is available at Pimaş’s main premises in Gebze, Turkey.

Pimaş Factory, Gebze – Turkey

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Pimapen is the first TSE quality certified brand in the PVC made window sector in Turkey. the brand has also the most comprehensive ISO 9001 (ABS Quality Evaluations) Certificate including certification of quality management of the design development, production, facilities and services, having also been duly certified by the German RAL Quality Alliance- For Plastic Window Profiles, Pimapen is also a member of the Federation of European Plastic Windows Manufactures Associations. Pimapen profiles are tested by the German SKZ (Süddeutsches Kunststoff Zentrum).

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- Pimapen also has all the necessary certificates of conformity as requested by all those countries to which Pimaş products are exported.– The other quality certificates that Pimapen has are: INCERC The quality standards certificate by the Romanian Ministry of Public Works, Commission of Construction, Economy and Research (MLPAT); EMI The quality certificate by the Hungarian Standards Institute; and the Certificate of Conformity- with Standards by Ukrainian Technical Standards Institute. Pimapen is also certified by the Spanish Association for Standardization and Certification (AENOR) pursuant to the European standard UNE EN 12608:2003 in terms of product and system quality, and the tests thereof are made by the Spanish testing institution Technalia.

- Pimapen is the first and the only brand that is certified by TURQUALITY which is a supporting platform established for the creation of strong brands and for providing much more added value and market share to companies intending to appear in the international market.

Moreover, Pimaş started in 2004 the manufacture of DWT Door & Window Systems, Pimaş Vinyl Siding Facade Systems, Maestro PVC Door & Window Systems, in 2007 the manufacture of Pimaş Camoda Glazing Systems, in 2010 Pimawood Wood Plastic Composite Decking products and in 2011, Pimawood Cephe Wood - - Plastic Composite Facade Systems. And in 2013, Pimaş enlarged its product range by adding the Pimapen Infinity Lift Slide (Hebe Schiebe) System to its production and sales program. All the retail dealers and distributors of the Pimaş brands: Pimapen, Pimaş Siding, Pimaş Camoda, Pimawood, DWT and Maestro with their more than 1.400 sales points spread out throughout the country, bear the responsibility for being in leading position in the market thanks to and by their good productions and good constructive applications always in compliance with Pimaş standards. 5 -

As 1 % of its goods are exported, Pimaş decided to make investments in the main export countries in order to stay permanently and become much more effective in these countries. Pursuant to this investment decision, the company Enwinrus, a subsidiary of Pimaş, has completed its investment in 2007 in Russia with 10 1 almost 15 million USD. At the end of the same year Enwinrus has started to manufacture PVC window profile 4 49 in Rostov with an annual production capacity of 10 thousand tons thanks to its extruders and lamination line. By the end of 2013, Enwinrus employs 9 employees of which of them are technical and administrative staff.

Besides, Pimaş exports to Romania, Russia, Iran, Azerbaijan, Serbia, Bosnia and Herzegovina, Spain, Iraq,

Kosovo, Belarus, Macedonia, Montenegro, Algeria, Georgia, Italy, Honduras, Tajikistan, Kyrgyzstan,

Kazakhstan, South Korea and Mongolia. Totally Pimapen has more than 600 producing dealers in 30 countries. Operating in a widespread geographical area, Pimaş employs, as of end of 2013, a total of 191 90 n 15 n 8 employees of which 106 are technical and administrative staff. The annual turnover of the company reached

millio USD in 2013, of which a total of millio USD being its export volume. Today, with its 4 extrusion lines consisting of 58 extruders at its 72.000 square meter premises in Gebze, Turkey. Pimaş is in possession of the necessary advanced technology to produce annually a total of 55.000 tons window profiles, 3.500 tons siding profiles and 1.900 tons wood plastic composite decking profiles as well as any and all complementary materials thereof.

Thanks to all the successful achievements and the innovations in the past 50 years, Pimaş is beyond its targets th in the 50 anniversary of its establishment. Pimaş is targeting to contribute much more value to its brands by implementing new strategies, new technologies and innovative and creative solutions.

YILLIK FANNUAL REPORT (49)

Entaş Nakliyat ve Turizm A.Ş.

Entaş was established in 1976 and became a member of IATA (International Air Transport Association) in 1982. Entaş is also a member of ASTA (American Society of Travel Agents) and UFTAA (Universal Federation of Travel Agents Associations) as well as national organizations such as TÜRSAB (Association of Turkish Travel Agents) and İSAD (Association- of İstanbul Travel Agents).

Entaş, with its excellent and high quality approach to offering services, has secured a lasting position in the sector and offers diverse cultural and business travel alternatives according to individual and group requirements of national and international customers.

The mission of Entaş is to accurately comprehend customers’ requests, improve the quality of services, closely follow the latest developments all over the world and have them implemented also in Turkey, strive to contribute to the development of the occupation- and the sector, and most importantly, to maintain its extensive service approach and a lasting collaboration through creating customer satisfaction. Entaş pioneered the utilization in Turkey of the-a- latest on line international reservation systems such as Amadeus, Galileo and Troya, and can offer customers a wide range of services, which includes providing worldwide airline tickets; hotel reservations; rent car services; private or business trips and holiday organizations; city tours with or without a professional tour guide; transfers; private plane rental services and VIP services; organization of congresses, seminars, fairs, and symposia; dealer conventions and motivational trips and cruises; catering services; internal organizations for corporate clients such as personnel dinners, award ceremonies, special days, and launch organizations; procuring singers/artists and technical equipment, decoration, stage design services; boat cruise organizations, Blue Voyage and special rail and cruise packages; special packages concerning cultural, religious, sports, health, adventure, and nature tourism; special programs for educational and language schools; private luxury packages for individuals and groups, visa services, and travel insurance services.

In addition to giving call center services, Entaş is able to provide detailed purchasing reports in accordance with its corporate customers’ demands and to automatically forward such reports to the related people in the requested period of time.

Entaş has sustained its leading status over the years, consistently ranking among the top five national agencies in airline ticket sales for more than ten years and has the highest turnover among the agencies serving at a single location without any branch offices.

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Airenka Hava Taşımacılığı A.Ş.

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Airenka Hava Taşımacılığı A.Ş. was established following the issue of its Operation License, no. 2002 HT 04, dated April 22, 2002, by the General Directorate of Civil Aviation, and as of that date was authorized as an air taxi operator in domestic and international routes.

Hawker 900XP Type Corporate Jet

Airenka operates a Hawker 900XP aircraft manufactured with the latest on board flight technology in 2009. 3 The highly experienced flight crew regularly advance and refresh their training in the United States in 586 40 compliance with international aviation rules and regulations. In 201 , the company has completed a total of flight hours to different cities located on 3 continents.

YILLIK FANNUAL REPORT (51)

FOUNDATION

Enka Foundation

The intellectual basis of the Enka Foundation, which was founded in 1983, is premised on upholding the foundation tradition at the core of our culture with an ideal to advance the intellectual, physical and spiritual development of human civilization. Accordingly, elevating Turkish youth to modern levels in athletics, fostering education and social structure constitutes the foundation’s natural mission. Sadi Gülçelik Sports Complex, as a concrete fulfillment of this mission, was founded in 1983 on the gentle slopes of İstinye in İstanbul on 30 acres of land.

Sadi Gülçelik Sports Complex – İstanbul

Enka Foundation, which brings together firstly founded Enka Sports Club, later followed by Enka Schools in İstinye in 1996, Enka Schools in Adapazarı launched just after the 1999 earthquake and the Private Enka Technical and Industrial Vocational High School in Gebze launched in 2008 and Enka Culture and Arts, work with all its branches and members towards disseminating and sharing the wealth of its heritage with the societyEnka Sporat large.ts Club

Enka Sports Club, which is involved in its sports events as of 201 , has trained and participated in national 2and international competitions with 965 licensed athletes and 58 trainers, whom are experts in their field. With 370 athletes in track and field, 264 in swimming, 159 players in tennis, 65 in water polo, 51 in volleyball, 4 in basketball, 21 in skiing and snowboarding, 11 in triathlon, all of whom are actively licensed, the goal oriented sports club adds new successes to its achievements each season.

Enka Sports Club recruits talented young people in national athletes every year. Enka Sports Club is built on a solid infrastructure initially consisting of our sports schools as well as the students of the Enka Schools and talented young people who come from a wide social background.

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Track and Field

In track and field, ENKA Sports Club has 559 active athletes in total, including 51 athletes competing in the national teams, 370 athletes with active licenses, and 189 athletes who are at formative stages. Every year ENKA Sports Club selects candidates to train out of thousands of students from Sarıyer and the surrounding school districts. In our club, which is pointed out as a model in Turkey with its modern facilities, athletes not In the 2013 Season; only from İstanbul but from all over Turkey are being trained.

nd Our athlete İlham Tanui Özbilen, competed in the finale of 1.500 meters at the 32 European Indoor nd Championship, th came in the 2 in Europe with his time of 3.37.22. Dudu Karakaya and Polat Kemboi Arıkan became the 10 in the finale of 3.000 meters women and men categories. - nd Our women’s team was successful coming in the 2 once again in Europe at the European Championship Clubs Cup, held on May 25 26 in the group of A with a score of 124,5.

Juniors European Championship - Emine Hatun Tuna

nd th Our national team has achieved the 2 place in the medal ranking with a total of 19 medals at the 17 Mediterranean500 Games in the track and field competitions and our club athletes won 12 medals; 3 gold, 5 silver, and 4 bronze medals. While our athlete İlham Tanui Özbilen, won the gold medal in the 800nd meters and 1. meters categories, he added two Mediterranean Championships titles to his titles as the 2 athlete at the World and European Indoor Championships, and also İlham broke the games record, which had not been broken for 34 years. Furthermore, İlham ran his best personal time in the 800 mndeters event with a time of 1:44.00 and improved his own Turkish Record. Meanwhile, he achieved the best 2 ranking in Europe. 5 000 000 000 In5 000 the Juniors European Championship held in Rieti, while our athletes Ali Kaya won000 2 gold medals in . m eters and 10. meters, Emine Hatun Tuna and Süleyman Bekmezci got silver medals in 3. meters and . meters respectively, Ali Kaya broke the European Championship Record in 10. meters.

Our athletes successfullyrd represented our club winning 19 medals in total, 6 gold, 7 silver, and 6 bronze medals in the 3 Islamic Solidarity Games held in Palembang, Indonesia and our national team got 24 medals. 2 Elvan nd Abeylegesse run Vodafone İstanbul Marathon that is her first marathon in her career and became the with a time of 2:29,30.

Our players broke 28 national records, 1 European Juniors Championship and 1 Balkan Indoor Championship records in the year of 2013.

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Renewed National Records by our athletes in 2013

EVENT MARK WIND ROUND RANK DATE COMPETITION-VENUE RECORD Sevim Sinmez - 20.04.1987 F 1 F 1 Triple Jump 13,64 m 09.02.2013 Indoor Federation Trial Meetings / Ataköy STR TriplePınar AdayJump - 07.10.199313,95 m 1,1 15.06.2013 Senior Olympic Players Competition / ENKA TR F 1

HeptatNimet hKarakuşlon - 01.01.19935.048 01.06.2013 Multiple Events Turkish Championship / İzmir U23TR 1 67 - F 3 17th 100m 11,62 P 08.06.2013 Cezmi Or Cup / ENKA U23TR -1 F 1 th 200m 23,4 1,8 26.06.2013 Mediterranean Games / Mersin U23TR 200mBuse Arıkazan - 08.07.199423.63 01.06.2013 Senior Individual Turkish Championship / İzmir U23TR F 1 F 1 10 - Pole Vault 4,10 m 12.06.2013 Junior Turkish Championships / Denizli GTR th PoleElmas Vault S. Fırtına - 29.05.19944,05 m 08.05.2013 Koç Fest University Championship / Adana ÜTR GTR F 2

PoleAslı ArıkVault - 01.02.19954,10 m 12.06.2013 Junior Turkish Championship / Denizli GTR F 1 F 1 800m 2:07.87 02.02.2013 Junior Indoor Turkish Championships / Ataköy GSTR Ecem Akçakara - 20.01.1996 800m 02:09,2 19.01.2013 Federation Trial Competition / Ataköy GSTR F 1 Hüseyin Atıcı - 03.05.1986 Hammer Throw 68,75 m 16.02.2013 Seyfi Alanya Winter Throws / Mersin YTR F 11 32 F 4 nd Hammer Throw 19,59 m 01.03.2013 European Indoor Champ. / Switzerland STR İlham Özbilen - 05.03.1990 Hammer Throw 19,50 m 23.02.2013 Balkan Indoor Championship / İstanbul STR F 1 17 F 1 th CR 800 m 01:44,0 26.06.2013 Mediterranean Games / Mersin TR F 5 1.500 m 03:37,5 23.02.2013 Balkan Indoor Championship/ İstanbul F 4 1.500 m 03:31,3 19.07.2013 Dimond League / Monaco TR Volkan Çakan - 11.06.1991 1 Mile 03:52,3 13.06.2013 Exxon Mobil Bislett Games / Oslo TR F 1 Halit Kılıç - 01.03.1992 60 m 6,76 02.02.2013 Senior Indoor Turkish Championship /Ataköy U23YSTR F 2 Ali Kaya - 20.04.1994 400 m 47,51 09.02.2013 Indoor Federation Trial Competition / Ataköy U23STR F 1 CR- F 1 10.000 m 28:31,2 18.07.2013 European Junior Championship / Italy GTR F 1 3.000 m 07:58,8 07.09.2013 Super League Final / Mersin GTR F 3 st 3.000 m 7:58.88 24.08.2013 Super League 1 Meet / Ankara GTR Süleyman Bekmezci - 15.11.1995 5.000 m 13:33,7 21.06.2013 XIII Reunio International De Atletismo/ Spain GTR F 3 67 F 5 th 1.500 m 3:43.05 08.06.2013 Cezmi Or Cup / ENKA GTR Muammer Demir - 17.02.1995 3.000 m 08:19,7 23.02.2013 Balkan Indoor Championship/ İstanbul GSTR F 1 10 4x100 m 41.47 06.07.2013 Balkan Juniors Championship / Denizli GTR 4x100 m 40.92 S 18.07.2013 European Junior Championship / Italy GTR U23TR STR TR GSTR – CR YTR : Under 23 Years Turkish Record : Indoor Turkish Record : Turkish Record U23STR GTR : Youth Indoor Turkish Record : Championship Record : Juniors Turkish Record : Under 23 Years Indoor Turkish Record : Youth Turkish Record

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Team Achievements in the season of 2013:

- - 16 European Championship Clubs Cup Women Group A Second in Europe

Under Women’s Champion in Turkey

Youth Women’s Second in Turkey

Youth Men’s Champion in Turkey

Junior Women’s Second in Turkey

Junior Men’s Second in Turkey

Senior Women’s Champion in Turkey

Senior Men’s Champion in Turkey Tennis

WeIn 2013 have total of 319 active players, including 159 players with active licenses and 160 at formative stages.

at the end -of the age group tournaments (in the 10, 12, 14, 16, 18 and over age groups), which were organized by the Turkish- Tennis Federation (TTF), our tennis players won 50 championships, played in 42 finals and 65 semi finals in singles. Additionally, in doubles’ tournaments 52 championships were won and 146 finals and 81 semi finals were played. At the age category of 14, 16, 18 and senior, our 13 players took placst e in national teams with success in 2013. Our senior women’s team got the national title at the Touring League. th Our player Çağla Büyükakçay became the champion in singles and doubles at the 17 Mediterranean Games and these two gold medals were the first in the history of Turkey that were won in tennis branch by our country at the Mediterranean Games.

Çağla Büyükakçay

I 158 th 664 th th n the year of 2013, our players Çağla Büyükakçay ranked , Başak Eraydın 290 , Melis Sezer 347 and 1039 th th our junior player İpek Soylu 509 on the WTA list; Tuna Altuna has ranked and our junior player Cem th İlkel ranked on the ATP list. In the ranking of ITF Junior in 2013, our junior players’ rankings were: th th th, th İp ek Soylu 17 , Berfu Cengiz 280 , Cem İlkel 98 and Mert Adanalı 249 .

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Swimming

We have a total of 457 athletes, including 264 athletes with active licenses and 193 young trainees in our swimming branch in 2013 and 17 of our swimmers were admitted to the National Swimming Team. nka In 2013, Yasemin Çeltikçi won the gold medal with a time of 2:19.50 in 200m butterfly in the Multinations Junior Swimming Championships hold in Ukraine. Our club and E Schools swimmers Ömer Tara, Alp Mete Çetinkol and Barışan Ege Fırıldak played a role in our National Team at the World High Schools Swimming Championships held in Israel and brought 2 World Championships, 5 second place, 2 third place, and 1 fourth place, thus our swimmers’ great success helped our National Team to get the world championship. 500

İlayda Kaya won silver medal in 800 meters, Ömer Tara won the bronze medal in 1. meters , Ömer Tara and Can Yılmaz won the bronze medal in 4x200 meters freestyle and Barışan Ege Fırıldak won the bronze medal in 4x100 meters freestyle in Balkan Junior Swimming Championships held in Greece.

rd 4x200m Freestyle Relay Team, which our swimmer Ediz Yıldırımer has participated, came 3 at the Mediterranean Games held in Mersin.

500 15In -Spor Toto Turkish Summer Swimming Championship, organized in our sports club, Ediz Yıldırımer broke the age 19+ Turkish Record in 1. meters with a time of 15:25.51 and Yasemin Çeltikçi broke the age 16 Turkish Record in 200 meters butterfly with a time of 2:17.52. At this event our teams completed the 2013 swimming season with success in women and men categories in total and in junior, senior, and open rd age categories came the 3 in Turkey. 12 15 - - - - th th-16 At the Merve Terzioglu Youth Turkey Short Lane- Championship, which took place between and of December, our 13 years old men team became the champion and 13 14 age group women’s team and 15 rd rd 19 22 age group men’s team became the 3 . As open age men team became the 3 in Turkey, junior men’s team 2013 th nd became the national champion at the Turkish Short Lane Swimming Championship between and of December . In this championship our swimmers achieved 7 national records.

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Renewed National Records by our swimmers in 2013:

Name-Surname Event Mark Pool Competition Age 15-16 05 15-16 Alp Mete Çetinkol 50 m Butterfly 25.31 50 m National Team Qualification Competitions 19+ Alp Mete Çetinkol 50 m Butterfly 25. 25 m *Ü.F. Junior & Open Aged TR Short Lane S. Champ. 17+ Ediz Yıldırımer 1.500 m Freestyle 15:25.51 50 m Spor Toto Turkish Summer Swimming Champ. 15-16 Ediz Yıldırımer 1.500 m Freestyle 14:53.84 25 m National Team Qualification Competitions 15-16 Eyüp Taşpınar 200 m Medley 02:10.03 50 m National Team Qualification Competitions 15-16 Eyüp Taşpınar 200 m Medley 02:09.78 50 m Gymnasiade 2013 15-16 Eyüp Taşpınar 100 m Medley 57.26 25 m *Ü.F. Junior & Open Aged TR Short Lane S. Champ. 15-16 Eyüp Taşpınar 100 m Medley 57.06 25 m *Ü.F. Junior & Open Aged TR Short Lane S. Champ. 15-16 Eyüp Taşpınar 200 m Medley 02:03.06 25 m *Ü.F. Junior & Open Aged TR Short Lane S. Champ. 17+ Eyüp Taşpınar 200 m Medley 02:03.96 25 m *Ü.F. Junior & Open Aged TR Short Lane S. Champ. 15-16 Merve Eroğlu 800 m Freestyle 08:53.42 50 m National Team Qualification Competitions Yasemin Çeltikçi 200 m Medley 02:17.52 50 m Spor Toto Turkish Summer Swimming Champ. 0 17-18 Barışan Ege Fırıldak Berkay Hopalı 4x50m Medley 1:41.63 25 m *Ü.F. Junior & Open Aged TR Short Lane S. Champ. Alp Mete Çetinkol Eyüp Taşpınar 0 17-18 Barışan Ege Fırıldak Berkay Hopalı 4x50m Medley 1:42.02 25 m *Ü.F. Junior & Open Aged TR Short Lane S. Champ. Alp Mete Çetinkol Eyüp Taşpınar

* Ünsal Fikirci Junior and Open Aged Turkey Short Lane Swimming Championship

Water Polo

In our water polo branch, we have total 129 players, including 65 players with active licenses and 64 at 2000 rd 1996 formative stages . In 2013 our waterI polo senior team finished its serial as the 3 in Turkey. The team with the birth years 1998, 1999 and groups became the champion and the team with the birth year of nd was the 2 in the National League. n 2013, 15 of our water polo players were admitted to the National Water Polo Team.

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Scholarships and Awards

- -

233 talented and hard working athletes in need of financial support received scholarships during the 2013 2014 academic year. Furthermore, 67 trainers and 162 athletes who were successful in four of our categories received achievement awards in 2013. Summer and Winter Sports Schools

nka th As every year, we had a successful summer and winter sports- schools terms in 2013. In our 29 Summer Sports School programs of E Sports Club, delivered- by an experienced professional staff, a total of 1183 students were trained in two semesters in part or full time programs of swimming, tennis, volleyball, basketball, athletics and football branches. In the 2012 2013 Winter Sports Schools programs a total of 1578 students were trained in four semesters. Social Members Activities

Enka 50-

Sports Club also offers a fitness center, outdoor and indoor tennis courts, a meter outdoor pool which can be covered in winters, two indoor swimming pools of 25 meters and 25x33 meters respectively, outdoor sports grounds- and an indoor sports hall, international synthetic track and field ring, and a health center that cater for our 5.988 members. After the restructuring, the recreational center of our club provides inexpensive and high quality service primarily to our athletes and our members in a friendly atmosphere.

Enka Schools

E More than 2.000 students studying at our schools or in various universities are receiving scholarships from nka Group. Enka Schools – İstanbul

nka

Founded in 1994, E Schools, educates a total of 1.242 students in preschool, primary, middle school and Ehighnka school with a student centered, progressive approach to teaching and learning.

Schools aims to lay the intellectual and behavioral foundations that will prepare and motivate students to develop to the full extent of their capacities, to employ the mental and moral habits that foster freedom of thought and action, and to seek to be leading citizens of Turkey or their country of origin. nka Established with the aim of becoming a reputed school and a model school recognized not only in Turkey but also in the world for its educational practices, E Schools İstanbul has taken its place in the Turkish educational system and is progressing decidedly towards this mission. Currently the school employs 165 Eteachers,nka 35 of whom are international and a total of 260 academic and administrative staff. nka Schools boasts world class facilities. The schools occupy an area of more than 33.684 square meters within the E Sadi Gülçelik Sports Complex with the school buildings providing 21.450- square meters of usage area in total. The school facilities are housed- in two main buildings. Primary School and High School abuildings consist of four floors and four blocks. There is also an auditorium and a multi purpose area with cafeteria attached to the main building. The pre school is housed in a separate specially designed building nd has its own separate play area.

The classrooms provide bright, modern learning spaces equipped with good IT resources. Fully equipped chemistry, biology and physics laboratories are in service of the students. The curriculum is supported by technology at all levels.

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Enka Schools - İstanbul

nka

In line with its mission and philosophy, E Schools implement the Turkish Ministry of Education Program and also the International Baccalaureate Primary Years Program in preschool and primary school, as well as the International Baccalaureate -Diploma Program as an optional program for Grade 11 and 12 students.

Clubs, community service, after school, and school team activities play a role as important- as the academic pursuits in the educational program. These activities emphasize the development of leadership and communication skills,nka and promote responsibility as well as the sense of discovery and self confidence. They improve the personal aptitude and interest of students, and help them prepare for real life of the future. They help ensure that E students become responsible citizens who are sensitive towards the less affluent in the society. Through 85 clubs, 25 afterschool activities, and school teams in 8 different categories foundednka to achieve this end, such as the Model United Nations, Drama, Musical Drama, European Youth Parliament, English Drama, Community Volunteers, and International Chain of Awareness, students represent the E Schools in various organizations both in Turkey and abroad in the best way possible.

Students have achieved both national and international rankings and records in basketball, volleyball, football, tennis, swimming, skiing, gymnastics, chess, and equestrian. The third place at the 2007 World High School Tennis Championship and the World Champion title in 200 meters freestyle category in the 2011 World High School Swimming Championship and in the same Championships in 2013 achieving World Champion title in 4x100 meters freestyle with our two students which are the examples of our international achievements.

During the process of university preparation, students’ study skills, performance, levels of motivation and anxiety and course selections are monitored in a systematic way. As part of the university introduction program, field trips to universities are organized and representatives of universities visit the school and meet the students. This provides our students with the opportunity to learn about different university environments. An annual event called “Career Day” is organized for students in order to help them become more familiar with the professions they are interested in. Various aptitude tests are offered which aim to increase students’ awareness regarding their interests and abilities and help them make appropriate choices.

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Enka Schools – İstanbul

Enka

İstanbul Schools graduatednka its first high school cohort in 2008. Graduates continue to study at top universities in Turkey such as Boğaziçi University, Bilkent University, Koç University and Sabancı University, as well as abroad. To date, E students have studied a wide range of disciplines in leading universities such as Harvard, Stanford, Northwestern, Columbia, Brown, Duke, John Hopkins, McGill andnka Imperial College. Having completed their under graduatenka degrees, many of our first graduates are now pursuing gra duate studies both in Turkey and abroad and taking their first steps towards their careers. E graduates also Enkacontinue Schools to play - Adapazarıa role through the E Schools Alumni Association which was established in 2010.

1999

Enka Schools Adapazarı 179 was established in a very short time after the Marmara Earthquake in , for students who were effected by this disaster. The schools have been providing developed education service for 665 students with teachers in our schools and besides national and international academic curriculums, there are also sport, artistic and cultural programs to support students to be healthy and Primarysuccessful Schoolindividuals.: I 33 4 s continuing developing inquiry based learning as an authorised IB PYP school with 2

students and 3 teachers. In 2013, 8 of our teachers attended PYP regional workshops that were held in MiddleTurkey and School in different: C European cities. 92 39 1 ontinues its education towards being an IB MYP candidate school with 1 students and

teachers in its new building. of our students got degrees on swimming in Turkey and 76 of our students Highattended School English: C summer camp that was second time in the school . 6 45 - 40 ontinues its education towards being an IB DP candidate school with 23 students and teachers. At the end of 2012 2013 academic year, of our students passed the university exam and they 15 all got scholarship from Enka Foundation. One of our student attended AFS student exchange programme and stayed in the Letonia for a year. of our students have been abroad to participate in various tournaments 80 and projects. High school basketball team became the champion of the city. One of our students achieved top placements in different swimming categories in Turkey. of our students attended the summer English camp that has been organised for the second time in our school.

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Enka Schools - Adapazarı

In our schools, technology education starts in pre school age and continuous to the end of high school. Classrooms with smart boards and laboratories are provided for students to practice.

Technological programs have been applied for our students’ and teachers’ development such as; Microsoft IT Academy (computer use, licence and certification programs), Microsoft SharePoint (teacher file exchange, planning, survey and blog portal software), Moodle (distance learning), DynEd (English Learning Software),

K12 Net (Parent, student and school portal), Adobe (Graphic designing), AutoCAD (drawing software) and Britannica School Edition (online library software).

Our parent bulletins are shared as applications on digital platforms such as Apple Store and Google Play.

Our students are certified about basic computer skills, computer assisted graphic design, web design, programming and technical drawing areas.

All our staff is trained according to the developing technology based on our needs.

Besides, our school has organised and hosted a teacher seminar for the second time, with teachers participating from different cities of Turkey.

Private Enka Technical and Industrial Vocational High School - Kocaeli

Being the first and unique in providing all the students with a scholarship in Turkey, Private Enka Technical a and Industrial Vocational High School was founded and started its education in 2008 in a temporary building 2 415 and later moved to its main building in 2010. It holds educational activities in fields of industrial utomation, machinery technologies and chemistry technologies with its 5 teachers and students.

YILLIK FANNUAL REPORT (61)

Enka Technical Schools were founded to carry out the following missions: to provide professional education in fields that are demanded by the market, with the contemporary models of machinery and equipment and modern methods; to bring in awareness for integrity, responsibility, professional ethics, standards of morals and sensitivity by satisfying our students’ social and cultural requirements; to raise students who have enough competence to satisfy the need in industrial sectors and technical/vocational educational institutions;

to contribute to Turkish industry and to the solution of a social problem by giving courses to the technical employees in the industry and to the unqualified youth. ”

Our vision is to provide education with a quality which will be worthy of the esteem and reputation of “ENKA and to fulfill our responsibility in establishing the first example in its field in Turkey for the institutions that will come after us. Also we aim to have a voice in the field of vocational/technical education in the world.

Private Enka Technical and Industrial Vocational High School - Kocaeli

With its unique education program, technical opportunities and competent education staff, our school is the first example in Turkey. The school building serves with the capacity of 750 students. The school resides in

30.750 square meters of green area, situated next to a large organized industrial zone, which was donated by İstanbul Machinery Manufacturers Industry Cooperation. In this building, which has 15.000 square meters of covered area, there are 16 workshops belonging to machinery CNC, industrial automation and electrical and electronics departments, 20 classrooms, 5 laboratories and a dining hall. School layout, equipment and program have been developed in cooperation with similar foreign schools especially in Germany. This mutual relationship is being supported with the project of “sister school”. Within those sister school activities, every year 10 of our students are given the chance of involving in vocational internship studies abroad for a month and the guest students from our sister schools are hosted in our school. Moreover, every year 10 of our students are awarded with the opportunity of a full scholarship for a month long foreign language education in England.

Our school which has been the first and the unique one in Turkey keeps its position as the leader in every area. ISO 9001:2008 Quality Management System was received in June 2011 and accreditation studies are being carried out. Active participation of our students in European Union Leonardo da Vinci Projects, other field related domestic projects and TUBITAK science contests is fulfilled by our school.

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45 2013 2

students were graduated from our school in June and 8 % of them qualified for university programmes. nka F All of our students have full scholarship in the school. Education, lunch and the private course fees of our senior students getting prepared for the university entrance exam are met by E oundation. Adults are able to benefit from the same opportunities that the students have during the day. Adult students/trainees are able to increase their skills in their professions or acquire new professions in the evening courses which are provided completely free of charge. Culture and the Arts

F 5 E or 2 years, Enka Culture and Arts events have been taking place for art lovers with a prestigious and distinguished program performed throughout the year. vents are held at the Enka Eşref Denizhan Open Air Theatre with a capacity for an audience of 1.000 people during the summer and are held in the Enka İbrahim 2010 Betil Auditorium with a capacity for an audience of 600 people during the winter and spring. These venues had an important role among the art venues of İstanbul European Capital of Culture.

Enka Eşref Denizhan Open Air Theatre – MFÖ Concert

- These activities reach a very wide audience including employees of the Enka Group, the Enka Foundation and

Enka Sports Club, the athletes and students of the Enka Schools and their parents as well as various non governmental organizations, associations and scholarship students.

With its professional technical equipment, modern design stage facilities and personnel, Enka Culture and

Arts hosts a large number of local and international groups and artists. Enka Culture and Arts also cooperates

with local and international arts institutions, thus contributing to bring a variety of activities to Turkish art lovers. 5 3 th In our 2 year, a comprehensive program reached an audience of 11. 00 people in events spreading throughout the year, ranging from concerts of jazz to classical and pop to ethnic music, modern and classical ballet and dance performances, theatrical performances and exhibitions which took place in the Enka Dr. Clinton Vickers Art Gallery from various disciplines.

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CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT

1. STATEMENT OF COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES

E.Melih Araz and Erdoğan Turgut are selected as the Company's Corporate Governance Committee members by the resolution of the Board of Directors dated 12.04.2013. According to the resolution dated 18.04.2013, it is decided that scope of activities of Nominating and Compensation Committee will be carried out by the Corporate Governance Committee. Principles and responsibilities of the committees are approved by the Board of Directors on 28.05.2012 and with the approval of the Board they have been announced to the public and declared on company’s official website.

Corporate Governance Committee’s main objectives are; to present the proposals for the corporate governance policies of the company, enhance the quality of the corporate governance applications and inform the Board of Directors about the effective pursuit of the legislation of the Capital Markets Board related to the corporate governance principles and the generally accepted corporate governance principles of the international capital markets, and about implementing those principles which it deems applicable. The corporate Governance Principles Compliance Report of the Corporate Governance Committee has been presented below to the review of our stakeholders.

CORPORATE GOVERNANCE COMMITTEE Chairman Member E. Melih ARAZ Erdoğan TURGUT

(signature) (signature) SECTION I- SHAREHOLDERS

2. INVESTOR RELATIONS UNIT

The Investor Relations Management was established in 2002 within the structure of Enka İnşaat ve Sanayi A.Ş., for the purpose of arranging the relations with the shareholders.

The main activities conducted by the unit can be summarized as answering the questions on financial statements, activities of the company, conditions to participate in the company's General Assemblies, announcements to public, capital increases, information on issuance of new share certificates and preparation of the company's annual reports. The numerous applications to the unit and the responses to the investors are generally made through telephone. The members are; Sinan Yavuz Akturk, Leyla Yüksel, Ali Aslan and Gizem Özsoy of the Investor Relations Unit. The Investor Relations Unit can easily be accessed through3. EXERCISEthe general telephoneOF THE SHAREHOLDERS’ numbers of our company, RIGHTS which TO isOBTAIN +90 212 INFORMA376 10 00. TION

Any kind of information about the company in relation to the developments that would possibly affect exercising of the shareholder rights is presented to the consideration of the shareholders on the internet environment (www.enka.com). The Investor Relations Unit provides guidance to those shareholders who prefer to use internet facilities for their requests for information. The shareholders, who cannot use internet facilities, are informed either by fax or mail. Within the period, there are no complaints made to the company by any shareholders regarding the usage of their shareholding rights. There is no regulation about right to request appointment of special auditor in the Articles of Association of the firm. Within the period, there has been no special auditor appointment request pursuant to the Turkish Code of Commerce.

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4. GENERAL ASSEMBLY MEETINGS

Any shareholders of our company who are entitled to attend or take part in the General Assembly Meetings thereof and the shares of whom are being traced by the "Central Securities Depository Institution" (MKK = Merkezi Kayıt Kuruluşu) on the basis of the records thereof are authorized to attend physically or to take part in person or by proxy in such General Assembly meetings. Any shareholders intending to attend physically such General Assembly Meetings are entitled, by submitting their identity cards, to exercise their rights arising out of their shares recorded in the "Shareholders List" kept by the "Central Securities Depository Institution" (MKK). However, any shareholders who have previously provided to their stock brokers any restrictions for the provisioning and communication to our company of any information on their identities and on the shares kept in their accounts, are required to apply to their relevant stock brokers for the abolishment of such restrictions and provisioning and communication by such stock brokers to our company of the information on their identities and on the shares kept in their accounts, until at the latest one day before the General Assembly Meetings, should they intend and request to be enlisted in the "General Assembly Shareholders List". Taking part online in such General Assembly Meetings by the shareholders themselves in person or by virtues of their proxies is allowed only by secure electronic signatures. Any shareholders are allowed to authorize their proxies by whom they will be represented in the General Assembly, either online in electronic- environment by virtue of the Electronic General Assembly System or by providing them an authenticated Official Power of Attorney as provided in related legislation of the Capital Market Board, or a non authenticated Formal Power of Attorney bearing their duly signatures in the accompaniment of their authenticated Official- Signature Sample Statement as an integral part. Information about date, agenda- and location of General Assembly meetings are announced to the public via Public Disclosure Platform (KAP), on our website and by e mail sent to the people who have selected the option on our website to receive e mails. The minutes of the General Assembly meetings are disclosed to the public by Public Disclosure Platform, in accordance with the provisions of the Communiqué about special conditions in force of the Capital Markets Board, and further announced in the Turkish Trade Registry Journal. The minutes of the General Assembly meetings are disclosed on our website and always made available to the shareholders at the company’s head office. Our company does not have any practice to make the usage of the voting rights of the shares difficult.

Further to the Communiqué of the- Capital Markets Board on the Principals Regarding Determination and Application of Corporate Governance Principles, there are provisions in the Articles of Association related to important decisions such as spin off, sale, purchase and lease of significant amount of assets to be resolved by the General Assembly.

Within related period the Ordinary General Assembly Meeting has been held on 12.04.2013 and the Internal Regulations Regarding the Working Principles and Procedures of the General Assembly as prepared by the Board of Directors has been discussed and approved as well as the amendments to the Articles 4, 6, 17, 18, 23, 24, 26, 32, 33, 37, 39 and 41 of the Articles of Association of the Company as prepared in compliance with the Turkish Code of Commerce and the abolishment of the Provisional Article 1 has been made. Shareholders did not give any agenda item proposals to the General Assembly.

Type of the meeting Ordinary Date of the meeting 12.04.2013 Participation Rate 87% Participation of stakeholders Yes Participation of media No Was right of asking questions by shareholders used? Used Were questions answered? Answered Did shareholders make any proposals? No- proposals made

Result of proposal

The minutes of meetings of the General Assembly are disclosed to the public by Public Disclosure Platform as well as on our website and always made available at the company’s head office upon any request.

All questions asked by shareholders at Ordinary General Assembly meeting were answered directly at the event. Therefore, there were no questions that had to be answered by Investor Relations Unit in written format.

YILLIK FANNUAL REPORT (65)

Donations made in 2013 and which will be submitted to the shareholders’ information at the General Assembly in 2014 are detailed below as Turkish Liras:

Enka Foundation 12.289.308 TL

Turkey Higher Education Youth Foundation 176.010. TL

Vehbi Koç Foundation 15.000 TL

Turkey Education Foundation 8.425 TL TOTAL 12.490.993 TL Others 2.250 TL

Our Company’s Donation & Aid Policy which was submitted to our shareholders at the General Assembly Donationdated 12.04.2012 & Aid is Policy as follows;

Any donations and aids to be granted by our Company are determined by it pursuant to the below given basic criteria,

provided, however, that such donations and aids are always in compliance with the provisions of the applicable Capital Markets Legislation. Main Purposes:

Our Company's main purpose in making donations and aids to various organizations is not only to fulfill our social responsibility towards the society but also to create a corporate social responsibility for the shareholders, employees and

partners thereof, provided, however, that all such donations and aids meet a certain social need and provide public benefit. Organizations which donations/aids could be granted:

• Enka Spor ve Eğitim Vakfı (Enka Sports and Education Foundation): Major part of the donations and aids of our Company are granted to Enka Spor ve Eğitim Vakfı. Making donations and aids to this Foundation, the main purpose of which is to contribute to the Turkish youth to reach the contemporary sports level and to strengthen its educational and social structure in international standards, has been adopted by our Company as a principle.

• Relief accounts to be formed by the Prime Ministry upon occurrence of natural disasters.

• Foundations listed in the Schedule of Recognized Foundations. Types• Any o ofther Donations/Aids: foundations and organizations in case of need.

- - • In cash aids/donations. •The In kindInternal aids/donations. Decision-Making Procedure for providing donations/aids:

• Any donation/aid of which the amount exceeds TL 10,000 is allowed to be made only upon approval thereof - by at least one member of the Board of Directors or of the Executive Committee.

• Any internal committees, departments and workshop groups may make proposals to the members of the Board5. ofVOTING Directors RIGHTS or of the ExecutiveAND MINORITY Committee RIGHTS regarding any donations/aids.

- - The shareholders or their representatives participating in the General Assembly meetings of Enka İnşaat ve Sanayi A.Ş. have the right of 10 votes for each Group A share and 1 vote for each Group B share that they hold. - However, even if it is considered cumulatively, it will not have any influence on changing the result on any decision and therefore it will not have any negative impact to any Group B shareholders due to the immaterial amount of shares.

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The share amount- of each group with a nominal value of 1 Kr (One Kurus) as of the year end is stated below: -B Group A 1.167 shares Group 319.999.998.833 shares TOTAL 320.000.000.000 shares

The list of legal person ultimate controlling shareholders as of June 30, 2013 is as follows: LEGAL GROUP ACTUAL PERSON SHAREHOLDER OF SHARE AMOUNT SHARE- ULTIMATE EXPLANATION SHARES HOLDING SHARE- HOLDER 459 B A 0,00% TARA HOLDİNG A.Ş. 0,00% 157.673.924.738 - 49,27% B A 0,00% Tara Holding A.Ş. 66,49% + ŞARIK TARA 33,56% 2.544.119.042 - 0,80% 0,80% B A 0,00% Tara Holding A.Ş. 33,51% + SİNAN TARA 16,52% 28.801.274 - 0,01% 0,01% B A 0,00% VİLDAN GÜLÇELİK 7,99% 25.553.942.167 - 7,99% B A 0,00% SEVDA GÜLÇELİK 6,43% 20.565.121.539 - 6,43% B ENKA SPOR EĞİTİM VE A 0,00% 0,00% SOSYAL YARDIM VAKFI 19.031.946.190 28 5,95% B A 0,00% Alternatif Aksesuar San. ve AYŞE VERDA GÜLÇELİK 5,02% 2.101.451.457 - 0,66% Tic. Ltd. Şti 99,90% + 0,66% B ALTERNATİF AKSESUAR A 0,00% 0,00% SAN. VE TİC. LTD. ŞTİ. 13.978.622.392 75 4,37% B A 0,00% ALİ GÜLÇELİK 4,72% 15.111.140.583 11 4,72% B A 0,00% BİLGİ GÜLÇELİK 4,31% 13.790.588.476 - 4,31% B A 0,00% NURDAN GÜLÇELİK 1,62% 5.173.621.109 160 1,62% B A 0,00% SELİM GÜLÇELİK 1,55% 4.968.269.274 434 1,55%

AB 0,00% Free Float 12,34% + Enka FREE FLOAT & OTHER 18,29% Foundation 5,95% 320.000.000.00039.478.450.593 100,00%12,34% 100,00%

The shareholder structure of Enka İnşaat ve Sanayi A.Ş. does not involve any legal person engaged in cross shareholding relation. There is no provision for representation of the minority shares in the management, and cumulative voting is not allowed. Our company does not have any practice to make the usage of the voting rights of the shares difficult.

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6. DIVIDEND RIGHT

The Profit Distribution Policy which has been approved to comply with the Capital Markets Legislation and which will be presented to the approval of the shareholders at the General Assembly held dated 12.04.2013 isFor as the follows: distribution of the previous years' profit and annual dividends the Board of Directors presents a profit distribution proposal to the General Assembly by considering the performance of the company, the economic conditions, finalized projects, investments and cash flow of the company in the current year.

The principal policy adopted and applied by the company in aspect of profit distribution is to act always in compliance with the applicable criteria as provided in the Capital Markets Legislation while considering a fair balance between the interests of the company and that of the shareholders thereof.

Pursuant to the provisions of Article 36 of the Articles of Association,

1. The 1st Dividend is reserved from the Net Distributable Period Profit at the rate designated by the Capital Markets Board. (The donations made during the year are presented to the review of the General Assembly and added to the base of the Net Distributable Period Profit that constitutes the basis of the 1st Dividend calculation.) 2. And 5% of the remaining profit is paid to the Enka İnşaat ve Sanayi A.Ş. Founder Bonus Certificate holders. 3. And 2.5% of the remaining profit is paid to Bonus Certificate holders of Enka Holding in proportion to their shares. 4. The decision whether to distribute the 2nd Dividend from the remaining profit and the relevant rate is determined according to the majority voting of the existing shareholders in the General Assembly. 5. So long as no allocation is made to the legal reserve fund as provided in the applicable laws and no 1st Dividend is paid out to the shareholders as provided in the Articles of Association of the company in cash or in bonus shares, it cannot be decided to allocate and set apart other reserves or to distribute any dividend to any shareholders being concessionaires in distribution of dividends or to holders of any participant, founder and other dividend right certificates or to the members of the board of directors, to any top managers or to any employees, officials and workmen or to any foundations formed for various purposes or to any similar persons and entities or corporations.

The place and date of the profit distribution, agreed upon during the General Assembly in accordance with the relevant legislation provisions, is announced to the shareholders through the adverts put in the two national newspapers, the special condition disclosure sent by the Public Disclosure Platform and the website of the company.

The distribution of profit is made within the period required by the provisions of the Capital Market Law, as

set forth in the Profit Distribution Policy. Within 2013, the cash dividend payments have been done starting from May 8, 2013. Until this day, profit distributions have been done without any delays.

As per provisions of the Ordinary General Assembly Meeting held on 12.04.2013, regarding the distribution of the year 2012 profit, it has been resolved to distribute to shareholders for each TL 1 (one) nominal valued share TL 0,0800 gross / TL 0,0680 net (as being 8% gross, 6,8% net from issued share capital) in total TL

224.000.000 cash dividend and as TL 243.500.000 from 1st dividend and as TL 156.500.000 from 2nd dividend in total TL 400.000.000 bonus share increase (at a rate 14,29%). 7. TRANSFER OF SHARES

Pursuant to Article 8 of the company's Articles of Association which is related to the transfer of share certificates, the share certificates can be freely transferred in accordance with the provisions of Turkish Code of Commerce. The transfer of shares requires full compliance with Turkish Code of Commerce and Capital Market Law.

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SECTION II- INFORMING THE PUBLIC AND TRANSPARENCY

8. DISCLOSURE POLICY

The disclosure policy on the internet site of the company is as follows: Enka İnşaat ve Sanayi A.Ş. is the largest internationally renowned construction company of Turkey that provides engineering, construction and contracting business services in and outside the country. The company makes public all the disclosures required by the legislation in relation to public clarification and transparency, which is a corporate governance principle, taking into account all the information which is of trade secret nature or which hinders the competitive power of the company under the international competition conditions.

In this context;

Any special condition disclosure, which might affect the market price or investment decisions, will be made public by Public Disclosure Platform as soon as possible. 1. 2. The information contained in the special condition disclosure will not be shared with any person who is not listed on the Insider Information Access List until the special condition disclosure is made public by Public Disclosure Platform.

3. The special condition disclosure will be uploaded to the company’s internet site on the same day or latest on the next business day and this disclosure will be kept on the site for at least five years.

4. The financial reports sent by Public Disclosure Platform, within the time period stated by the legislation, is uploaded to the internet site on the same day after the disclosure is done.

5. News and rumors about the company which figures in the press or internet sites are monitored daily by the Investor Relations Unit with a media monitoring system.

6. No disclosure will be made by the company for the news and rumors which figures in the press and which does not create any disclosure obligation.

7. For the access of small investors, the internet site is used for presentations or reports that are used in investor group meetings, in information meetings or press meetings.

8. The company’s internet site is arranged to contain any necessary information that shareholders would attain and it is updated periodically.

9. In case of disclosure of any future-related information to public, any assumptions related thereto as well as any data upon which such assumptions base on are to be released as well. No information may be baseless, contain any magniloquent and overdone providence, or be deceptive. Moreover, any assumptions must be in conformity with the financial position and business results of the company.

10. In case any estimations related to or any bases of such future-related information fail or divulge to fail to be duly implemented, all updated information are to be disclosed to public including the reasons thereof.

11. At least once a year Investor Relations Unit and/or the top management will participate in group meetings or one-on-one meetings with capital market actors at conferences.

12. If the contrary is not necessary questions raised to Investor Relations Unit will be answered in writing.

13. As often as it is deemed necessary, interviews and press releases which will take place in the press and publications will be done by the Executive Members of the Board of Directors, unless the authority is delegated.

14. The material legal and commercial relationships between the company and the real or legal persons which it is directly or indirectly related by capital, by management or by control will be disclosed in the financial reports.

Execution of the company's disclosure policy is governed by the Corporate Governance Committee, and the Investor Relations Unit is responsible for the relations with shareholders.

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9. WEBSITE OF THE COMPANY AND ITS CONTENT

The internet address of Enka İnşaat ve Sanayi A.Ş. is www.enka.com. This site contains all the information listed in the legislation as well as in theC Corporate Governance Principles of the Capital Markets Board both in Turkish and in English and this info rmation is updated periodically. Special condition disclosures done by our company can be followed from ompany’s or Public Disclosure Platform’s (www.kap.gov.tr) internet sites. Special condition disclosures announced in the related reporting period are listed on company’s internet10. ANNUALsite with chronological REPORT order.

SECTIONAll the information III- STAKEHOLDERSlisted in Corporate Governance Principles is provided in our company’s Annual Report.

11. INFORMING THE STAKEHOLDERS

Our company uses circulated announcements and the electronic media to inform the stakeholders about the matters that concern them and the company.

Provided information is governed by the agreement concluded between the employee and the company on the rights, tasks and liabilities of the personnel.

The execution procedures for the administrative and social works of the personnel at the local construction sites have been established by the regulations. In case of update, the relevant persons are notified.

Our company provides efficient and expeditious compensation to the employees in violation of the rights protected by their contracts. At the same time compensation payments are made by the company to the employees as stipulated by the law.

Stakeholders may submit the transactions of the Company which are unethical and contrary to the legislation through Investor Relations Unit to the Corporate Governance or Audit Committees. 12. STAKEHOLDERS’ PARTICIPATION IN MANAGEMENT

The Corporate Governance Committee established within the structure of Enka İnşaat ve Sanayi A.Ş. performs, in addition to its other assignments, the necessary coordination in relation to beneficiaries' participation in the management.

Stakeholders who have an access to Enka Portal have an opportunity for presenting ideas and submitting proposals13. HUMAN about any RESOURCES topic. POLICY

Aiming to support Enka İnşaat ve Sanayi A.Ş., to accomplish its vision & values, Human Resources Management Policies are to:

1. Advance the strategic goals and interests of our company,

2. Be responsive to the changing needs of employees, management & government related entities,

3. Establish and sustain Enka’s reputation as a preferred employer,

4. Maintain a workplace culture in which there is mutual trust and respect, where all employees feel valued, are

listened to and are able to contribute their best efforts to achieve our mission,

5. Hire the individual who is best qualified for the position. Provide an equal opportunity to all qualified candidates

regardless of race, language, religion, sex, ethnical group, national origin, color or physical disabilities.

6. Consider external sources after ascertaining that the open position cannot be filled by an employee of Enka.

7. Know and comply with the laws and guidelines relevant to the functions performed,

8. Commit to ensuring that all employees know what is expected of them in their jobs and are helped to develop their capabilities through constructive performance evaluations, training and career planning.

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Ceyhun Tutkun (Human Resources and Administrative Affairs Manager) has been working as a representative of Enka, for coordination and relation between the employer and employees of the company. HUMANThe company RESOURCES did not receive / SAFETY any complaint / QUALITY about any kind of discrimination.

As an organization committed to the effectiveness and compliance of its services with the specifications and the agreements that are contingent upon its employees, Enka provides the necessary working environment and resources to meet the needs of its employees.

To ensure effective management of the activities by the qualified employees, "work flexibility and

enhancement" is focused on in each stage of the organization. The• basic criteria of the Human Resources Policy of Enka can be listed as follows: • • Achievement of the “zero accident” target, Achievement of the company's quality targets, Encouragement of the employees for achievement and creativity. The personnel of Enka, cannot disclose any confidential information obtained during their employment in the company, in relation to the operating structure and technical matters of the company. Unless a legal sanction applies, the personnel can under no circumstances make any disclosure to any authority, institution or person.

The entire personnel of the company can access the quality handbook which also consists job descriptions

TOPthrough MANAGEMENT the electronic media and obtain information about the relevant arrangements.

NAME SURNAME POSITION PROFESSION MEHMET SİNAN TARA Chairman of the Board (Executive Member) Civil Engineer M.Sc. HALUK GERÇEK Vice Chairman of the Board (Executive Member) Industrial Engineer ERDOĞAN TURGUT Member of the Board (Non-Executive Member) Civil Engineer M.Sc. (1) ELMAS MELİH ARAZ Member of the Board (Non-Executive, Independent Member) Economist (2) VELİ ERGİN İMRE Member of the Board (Non-Executive, Independent Member) Chemical Engineer M.Sc. AGAH MEHMET TARA President and Chairman of the Executive Committee Civil Engineer MUSTAFA GÖKHAN SAĞNAKLAR Vice President of the Executive Committee Civil Engineer ALP DOĞUOĞLU Member of the Executive Committee Mechanical Engineer BEKİR BURAK ÖZDOĞAN Member of the Executive Committee Civil Engineer CEMİL ŞAN GÜRDAMAR Member of the Executive Committee Civil Engineer M.Sc. ÖZGER İNAL Member of the Executive Committee Civil Engineer M.Sc. ZAFER GÜR Member of the Executive Committee Civil Engineer SALİM OĞUZ KIRKGÖZ Member of the Executive Committee Civil Engineer ASAF YENER Member of the Executive Committee Mechanical Engineer M.Sc. MEHMET SERA İNCE Vice President Civil Engineer M.Sc. ALPARSLAN TANSUĞ Vice President Economist ALİ SİNAN BORA Vice President Economist NURDAN GÜLÇELİK Vice President Economist MUSTAFA GEÇEK Vice President Electrical Engineer M. Sc. İBRAHİM KARAAĞAÇ Vice President Electrical Engineer SEZGİN OĞUL Vice President Civil Engineer TAMER PERK Vice President Civil Engineer SADİ ÜNAL NAKİPLER Vice President Mechanical Engineer GÜRSEL YILMAZ Vice President Civil Engineer MEHMET GÖZEN Vice President Civil Engineer TAYFUN TANLAK Vice President Chemical Engineer HÜSEYİN ÇALIN Vice President Architect HASAN FEHMİ BAYRAMOĞLU Vice President Mechanical Engineer ASİL SELMAN GÜMRÜKÇÜ Vice President Civil Engineer İLHAN GÜCÜYENER Vice President Certified Public Accountant VASIF SAYIL Vice President Mechanical Engineer FATMA OLCAY ERTÜRK Vice President Architect M.Sc. CEM ÇELİKER Vice President Lawyer HAKAN KOZAN Vice President Civil Engineer HÜSEYİN NECDET BAYRAM Vice President Architect

YILLIK FANNUAL REPORT (71)

Duties at Non-Group Companies

Member of the Board of Directors of Ata Yatırım A.Ş., Zorlu Enerji A.Ş., İzmir Ent. Otelcilik A.Ş., Entegre Harç San. A.Ş., Ata Portföy Yönetim A.Ş.

Chairman of the Board of Directors of Ahmet Veli Menger Holding A.Ş and Mengerler Ticaret Türk A.Ş

14. ETHICS AND SOCIAL RESPONSIBILITY

•As also stated at Company’s website, the employees of Enka İnşaat ve Sanayi A.Ş.; • Do not compromise the general and professional ethic rules;

Act honestly, reliably and transparently and in accordance with the principles and strategies of the • corporation in the course of execution of their tasks;

Pay utmost attention to behave honestly toward the employer, government, dealers (suppliers), • shareholders, and subcontractors and treat quality as a priority in each and every work they perform;

Do not only fulfill our contractual obligations but also have a constructive attitude towards our • employers, customers and partners at all times;

Use their best endeavor to comply with all the relevant laws and regulations regarding the environment • in the countries where we operate; • Make economical use of the natural sources and avoid wastefulness; • Keep the wastes under control and minimize their adverse environmental effects;

Fulfill the requirements of ISO 14001 Environmental Management System and provide the necessary • resources; and

Constantly improve the work security and employee health applications and ensure avoidance of work accidents.

•In each project it undertakes, Enka uses its best endeavors to: • Protect human beings and the environment, • Complete its tasks at the highest quality standards, • - Complete each work contracted by the client before the end of the specified completion period, • Establish long term collaboration with clients, and Treat client satisfaction as a priority matter.

In order to effectively fulfill its obligations towards suppliers and subcontractors as a natural part of its •services, Enka uses- its best endeavors to: • Establish long term collaboration with reliable suppliers/subcontractors,

Fulfill its agreement obligations towards the reliable suppliers/subcontractors who fulfill their responsibilities.

Enka Sports, Education and Social Aid Foundation is one of the leading platforms of Turkey where Enka İnşaat ve Sanayi A.Ş. fulfills its social responsibility. The activities carried out by Enka Foundation throughout the year are included in the annual reports of Enka İnşaat ve Sanayi A.Ş., and such information is accessible through the company's website at www.enka.com.-

In order to continue its environment friendly and responsible attitude and minimize the risk of pollution that could affect the construction works, Enka uses all the available and expedient information in each and every country where it operates.

All the activities starting from the business development stage, including proposals, design, establishing the construction site, construction and closing the construction site, are performed by taking into account the environmental dimensions and effects.

By delegating power and responsibility to the necessary persons for operating the Environment Management System, the top management of Enka enables the entire personnel to become conscious of the environment policy and objectives and provides all the necessary resources.

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Enka plans to increase the degree of diligence it exercises for the environment and the economical use of natural sources. In order to carry out this plan, enabling the entire personnel to commit themselves to continuously improving the Environmental Management Implementation Program constitutes the basis of this policy.

All employees are responsible of protecting the environment and establishing the Environmental Management System, providing support and assistance in the implementation stage and of continuously developing the system. During the period, no action has been brought against the company for damages to the environment. SECTION IV- THE BOARD OF DIRECTORS

15. STRUCTURE AND FORMATION OF THE BOARD OF DIRECTORS

The target in determining the company's board members is to create a structure which will enable the members to make productive and constructive activities, to take decisions quickly and rationally, and to form committees in order to organize their activities in an effective way. Although the aim is to have one female - member at the Board of Directors, the proposal of the Board Members submitted to the General Assembly - has been formed in line with the above mentioned targets. The Board of Directors which is approved by - Gen eral Assembly consists of 5 members; as two executive members, one non executive member and two independent non executive members.

Regarding the independent members, 2 nominees were submitted to Corporate Governance Committee,

which undertook authority of Nominating Committee, on 31.01.2013 and were approved by the Board of Directors on 04.02.2013.

InDeclaration the context of of Independent my nomination Members being “Independent of the Board Member of Directors of the Board about of their Directors” independency at Enka İnşaat is as follows:ve Sanayi A.Ş.’s ("Enka") Ordinary General Assembly Meeting of 2012: a) No relationship was formed in employment, in capital or in important trading activities, neither by me nor by my spouse, nor by my blood or affinity relatives up to the 3rd degree within last five years did not have any direct or indirect relationship with Enka, 3rd parties in relation with Enka or legal entities who have relation with shareholders of Enka having a share of 10% or more, b) I have not been employed in a company, primarily serving as auditing, consulting and rating, which undertakes full or partial activities or organization of Enka under an agreement and as a managing position or as a member of the board of directors within the last five years, c) I have not been employed, been a partner or been a member of the board of directors in a company, which is providing significant amounts of services and products to Enka within the last five years,

d) I am not a shareholder as being a member of the board of directors of Enka,

e) As being an independent member of the board of directors, I have the required professional training, knowledge and experience for undertaking the duties of the position,

f) I am a resident in Turkey in accordance with the Income Tax Law, g) I have strong standards of ethics, professional reputation and experience for adding positive contribution in activities of Enka, for securing my independency about subjects in relation with the conflicts of shareholders and for making independent decisions with taking into account of stakeholders’ rights,

h) I will be able to spend necessary time for fulfilling the requirements of the position and monitoring processes of the activities of the company.

I hereby declare my independency within the framework of Capital Markets Board Legislation in force, articles of Association of Enka İnşaat ve Sanayi A.Ş. (Enka) and criteria mentioned above.

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In the period, no situation occurred that may remove the independency of members. For the Members of the Board of Directors, there is no restriction for undertaking responsibilities outside of our company.

Besides his membership in the Board of Directors of our company, E. Melih Araz is also member of the Board of Directors of Ata Yatırım A.Ş., Zorlu Enerji A.Ş., İzmir Ent. Otelcilik A.Ş., Entegre Harç San. A.Ş., Ata Portföy Yönetim A.Ş., Ata GYO A.Ş. and Burger King China JV. E. Melih Araz has no relation with our group companies. Besides his membership in the Board of Directors of our company, V. Ergin İmre is the Chairman of the Board of Directors of Ahmet Veli Menger Holding A.Ş and Mengerler Ticaret Türk A.Ş. V. Ergin İmre has no relation with our group companies.

In accordance with the Articles of Association of the company, the Board of Directors is responsible for the management of Enka İnşaat ve Sanayi A.Ş. and its representation. Validity of all documents to be given by Enka İnşaat ve Sanayi A.Ş. and all the agreements to be concluded require the names of two persons authorized to represent the company under the official heading and per the signature circular of Enka İnşaat ve Sanayi A.Ş. The Board of Directors assembles at the beginning of each fiscal year and divides up the tasks as well as the management and representation authorizations between the board members. With Ordinary General Assembly resolution dated April 12, 2013 The Board of Directors resolved to have a task division as below: BOARD OF DIRECTORS Name Surname Profession Position Duty Term

M.Sinan Tara Civil Engineer M.Sc. Chairman of the Board (Executive Member) 1 Year Haluk Gerçek Industrial Engineer Vice Chairman of Board (Executive Member) 1 Year Erdoğan Turgut Civil Engineer M.Sc. Member of Board (Non-Executive Member) 1 Year

E.Melih Araz Economist Member of Board (Non-Executive, Independent Member) 1 Year V.Ergin İmre Chemical Eng. M.Sc. Member of Board (Non-executive Member) 1 Year EXECUTIVE BOARD OurName Company’s Surname ExecutiveProfession Board is as follows:Position Duty Term

A.Mehmet Tara Civil Engineer Chairman of the Executive Board and General Manager Not Set (Engineering and Architechtural Project Offices; Personnel and Human Resources; Health, Safety and Environment;

Legal Matters; Quality Assurance; Machinery Supply; Moscow Projects and Investments) M.Gökhan Sağnaklar Civil Engineer Vice Chairman of the Executive Board Not Set Alp Doğuoğlu Mechanical Engineer Member of the Executive Board (Energy Projects) Not Set B.Burak Özdoğan Civil Engineer Member of the Executive Board (Moscow Projects) Not Set C.Şan Gürdamar Civil Engineer M.Sc. Member of the Executive Board (Oman) Not Set Özger İnal Civil Engineer M.Sc. Member of the Executive Board (Infrastructure Projects) Not Set S.Oğuz Kırkgöz Civil Engineer Member of the Executive Board (Oil & Gas Projects) Not Set Zafer Gür Civil Engineer Member of the Executive Board (Special Projects) Not Set Asaf Yener Mechanical Engineer M.Sc. Member of the Executive Board Not Set

Curricula Vitae of Board of Directors and the Chairman of the Executive Board and General Manager, which M.were SİNAN also announcedTARA – Chairman at the official of the internet Board (Executivesite are as follows: Member)

Sinan Tara, born in 1958 at İstanbul, graduated in 1980 from the ETH Zürich, Department of Civil Engineering with Bachelor of Science Degree (B.Sc.) and completed thereafter in 1983 his Master of Business Administration (MBA) Degree Program at the University of Stanford. He is fluent in English and German.

Having joined Enka in 1980 when he was assigned to Enka’s jobsite in Saudi Arabia as field engineer, Sinan Tara worked thereafter actively in various departments, units and projects of the company in the fields of finance, energy investments, construction projects, project financing and other investment areas. Since 1984, he acted as General Manager, Board Member and Managing Director and Executive of Enka İnşaat ve Sanayi A.Ş., and since 1994, he acts as the Chairman of the Board of Directors of Enka İnşaat ve Sanayi A.Ş.

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83 Moreover, in the fields of social activity and social responsibility projects of the company, he acted actively in the organization and operation of the Enka Foundation and Sadi Gülçelik Sports Center established in 19 and the Enka Sports Club under the umbrella of the Enka Foundation as well as of the Enka Schools İstinye, founded in 1996, the Enka Schools Adapazarı, founded in 1999, and the Private Enka Technical and Industrial Vocational High School Gebze, founded in 2008 as well as of the Enka Culture and Arts Unit. Besides these, Sinan Tara is a member of the High Advisory Council of the Turkish Industry & Business Association (TÜSİAD) and of the Turkish Contractors Association.

Sinan Tara, being an Executive Board Member within the scope of the Corporate Governance Principles as applied by the Capital Markets Board, is not an Independent Member of the Board of Directors of Enka İnşaat ve Sanayi A.Ş. He was within the last ten years and is currently director in charge in the Board of Directors of EnkaHALUK İnşaat GERÇEK ve Sanayi – Vice A.Ş. Chairman and of the of affiliated the Board group (Executive companies Member) thereof.

Haluk Gerçek, born in 1956 at İstanbul, graduated in 1979 from the Middle East Technical University, Department of Industrial Engineering. He joined Enka in 1980 when he started to work in the group company Enka Pazarlama İhracat İthalat A.Ş. in the position of Deputy General Manager. After having worked as Logistic Manager in Tripoli, Libya between 1981 and 1982, he continued to act as Deputy General Manager of Enka Pazarlama İhracat İthalat A.Ş. until 1983. Between 1983 and 1987 he was assigned as the Deputy General Manager in charge of Enka İnşaat ve Sanayi A.Ş., and acted between 1986 and 1987 as Project Manager of the Bombah Water Supply Pipeline Project in Libya. After having acted as Management- Committee Member in the investment and construction projects in Russia between 1987 and 1991, and as Board Member of Enka İnşaat ve Sanayi A.Ş. between 1991 and 2001, Haluk Gerçek acts since 2001 as the Vice Chairman of the Board of Directors, and since 2006 as the General Manager of Enka İnşaat ve Sanayi A.Ş., and he is fluent in English. Haluk Gerçek, being an Executive Board Member within the scope of the Corporate Governance Principles of the Capital Markets Board, is not an Independent Member of the Board of Directors of Enka İnşaat ve Sanayi A.Ş. He was within the last ten years and is currently director in charge in the Board of Directors of Enka ERDOĞANİnşaat ve Sanayi TURGUT A.Ş. and(Non of- Executivethe affiliated Member) group companies thereof.

Erdoğan Turgut, born in 1953, graduated in 1977 from the Aegean University, Department of Civil Engineering, and completed thereafter in 1979 his Master of Science (M.Sc.) Degree Program in Soil Mechanics at the London University Kings College, so that he is fluent in English.- After having worked as Deputy Project Manager in the company Koray– Al Mutamidoon İnşaat A.Ş. in Saudi Arabia between 1981 and 1986 during the construction of the Intercontinental Hotel, Erdoğan Turgut acted between 1986 and 1991 as General Manager in the company Koray Turser A.Ş. when the latter constructed the 5 Stars Sheraton Hotel & Karum Shopping Center in Ankara, and between 1991 and 1993 as Board Member of the Kavala Group of Companies, and as the partner in the company PMS A.Ş. between 1993 and 1995. Between 1995 and 2010 he acted as Foreign Relations Manager, Deputy Chairman of the Executive Board and Group Coordinator in- and of the company Koray Yapı Endüstrisi ve Ticaret A.Ş.

Erdoğan Turgut, being a Non Executive- Board Member within the scope of the Corporate Governance Principles of the Capital Markets Board, is not an Independent Member of the Board of Enka İnşaat ve Sanayi E. MELİH ARAZ (Non-Executive Independent Member) A.Ş. and acted in 2012 and 2013 as a Non Executive Board Member.

Melih Araz, born in 1948, graduated in 1967 from the Robert College of İstanbul and in 1972 from the University of Ankara, Faculty of Political Sciences, Department of Economy and Public Finance. He completed in 1975 his Master of Business Administration (MBA) Degree Program at the University of Indiana, and took part in 1988 in the Executive Management Program at the Harvard Business School, so that he is fluent in English.

Having started his professional working life in 1977 at Citibank N.A., Melih Araz built a career in the fields of international corporate banking and investment banking during his employment of 12 years in various global organizations of Citibank, and acted as senior official in various units of the bank. After having acted as CEO of Interbank A.Ş. between 1988 and 1996, he provided independent consulting services to various firms and groups in the fields of initial public offering, acquisition of companies, venture capital, formalizing of family constitution, institutionalization, restructuring of debts to banks, NPL tenders of the Savings Deposit

YILLIK FANNUAL REPORT (75)

Insurance Fund (TMSF), and strategic management. Melih Araz acted as Board Member of Medya Holding A.Ş. between 1990 and 1996, of Klimasan A.Ş. between 2000 and 2011, and of Şenocak Holding A.Ş. between 1998 and 2011 and also he acted as an Independent Member of Board of Zorlu Energy A.Ş. between 2008 and 2013. He currently acts as a Member of Board of Directors of Ata Portföy Yönetim A.Ş., of Entegre Harç Sanayi A.Ş., of İzmir Enternasyonel Otelcilik A.Ş., of Ata Gayrimenkul Yatırım Ortaklığı A.Ş, and of Burger King China JV. Since 2006 Melih Araz, as Board Member of Ata Yatırım A.Ş., is active as the responsible official thereof in the fields of corporate finance, investment banking, company mergers- and venture capital. Moreover, Melih Araz acts also as active member of various non governmental organizations, associations, and institutions, and is one of the charter members of the Turkish Economic and Social Studies Foundation (TESEV). He acted between 1989 and 2007 as the President of the Education & Training Committee, the Social Affairs Committee and the Social Security Reform Project of the Turkish Industry & Business Association (TÜSİAD), and is since 1989 Honorary Member of the Board of Trustees of the Robert College of İstanbul. - Melih Araz meets the criteria applicable to Independent Board Members within the scope of the Corporate Governance Principles of the Capital Markets Board, and acted in 2012 and 2013 as a Non Executive V.Independent ERGİN İMRE Board (Non Member-Executive of Enka Independent İnşaat ve Sanayi Member) A.Ş.

Ergin İmre, born in 1958, graduated in 1981 from the Polytechnic School in Zurich, Department of Chemistry Engineering. He is fluent in German and English. Having started his professional career in 1982 in the company Ahmet Veli Menger Holding A.Ş. and its subsidiary Mengerler Ticaret Türk A.Ş., Ergin İmre acted until 2010 in the company Ahmet Veli Menger Holding A.Ş. as Board Member and General Manager thereof, and as Board Member of Mengerler Ticaret Türk A.Ş., and after 2010 he started to act as the Chairman of the Board of Directors of both companies. Moreover, Ergin İmre acted also as Board Member of the company Mercedes Benz Türk A.Ş. between 1994 and 1999 and of the company Robert Bosch Türk A.Ş. between 1987 and 1994, and upon expiry of the partnership between these companies, resigned from both positions. - Ergin İmre meets the criteria applicable to Independent Board Members within the scope of the Corporate Governance Principles of the Capital Markets Board, and acted in 2012 and 2013 as a Non Executive Independent Board Member of Enka İnşaat ve Sanayi A.Ş. A. MEHMET TARA (President and Chairman of Executive Board – General Manager)

Mehmet Tara, born in 1983, graduated in 2002 from the Cushing Academy and in 2006 from Wentworth Instıtute of Technology, Department of Civil Engineering. Having started his professional working life in 2006 as a construction site engineer, on the forthcoming years he achieved titles, Deputy Project Manager, Vice President and Executive Board Member responsible for Moscow Projects and Investments. Board of Directors’ appointmen t dated May 02, 2012, he entitled as The President and The Chairman of Executive Board and also General Manager of Enka. Mehmet Tara is fluent in English, member of Turkish Industry & Business Association (TUSİAD), married and has a son. 16. OPERATIONAL PRINCIPLES OF THE BOARD OF DIRECTORS

The Board of Directors of Enka İnşaat ve Sanayi A.Ş. was approved at the Ordinary General Assembly dated April 12, 2013 and after election convened 11 meetings until the end of report period and the average of attendance rate is 93%. Prior to each meeting, the secretariat of Board Directors personally informs board members about the meeting agenda. Since the IPO of Enka İnşaat ve Sanayi A.Ş., no divergent views have been suggested by board members. There is no privileged voting rights for any member of the Board of Directors.

The Board of Directors are authorized for execution written transactions listed in articles No. 395 and 396 of the Turkish Commercial Code at the Ordinary General Assembly held dated 12.04.2013. - There were no material or related transactions neither which was submitted for the approval of the Independent Board Members nor submitted for the approval of the General Assembly with non approval of Independent Board Members.

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The Board of Directors of the ompany had discussed about the Affiliated Company Report and the declaration is as follows:

“On such date on which the relevant legal steps as mentioned in the report have been taken, always a proper counteract has been undertaken for/towards each of such legal stepsC in accordance with such terms and conditions and circumstances as being to our knowledge. In this aspect, there is neither any measure to be taken or to be avoided to be taken nor any loss to be suffered by the ompany.” 17. NUMBER, STRUCTURE AND INDEPENCE OF THE COMMITTEES ESTABLISHED WITHINTHE BOARD OF DIRECTORS

Three committees officiate in affiliation with the Board of Directors of Enka İnşaat ve Sanayi A.Ş. The committees assemble as often as it is necessary. Board of Directors’ resolution dated April 18, 2013 about these committees is as follows:

For the Audit Committee to elect for a tenor of one year: E. Melih Araz (Chairman) and V. Ergin İmre (Member)

For the Corporate Governance Committee to elect for a tenor of one year: E. Melih Araz (Chairman) and Erdoğan Turgut (Member)

To establish the Early Identification of Risks Committee and to elect for a tenor of one year: V. Ergin İmre (Chairman) and Erdoğan Turgut (Member)

Also, it has been resolved that according to the structure of the Board, the issues falling within the scope of activities of the Nominating Committee and the Remuneration Committee to be carried out by the Corporate Governance Committee and for the working principles of the committees and task fields to be identified by the committee members and to be submitted to the Board of Directors. Purposes of committees as established Purposethereof, have of the been Audit stated Commi below:ttee:

The purpose of the Committee reporting to the Board of Directors is to ensure the duly supervision of the independent audit of the accounting system and financial data of the Company and the disclosure to the public thereof,Purpose as of well the Corporateas of the functioning Governance and Committee: efficiency of the internal control system.

The purpose of the Committee is to propose suggestions regarding the corporate governance of the Company; to ensure the increase in quality of the corporate governance applications; to pursuit efficiently the legislation of the Capital Markets Board regarding the corporate governance principles and any other corporate governance principles generally accepted on the international capital markets as well as to advise the Board of Directors on the implementation of any applicable ones thereof; to make the necessary workings for the nomination, assessment and training of the proper candidates for the Board of Directors of the Company, and for the determination of the principles of remuneration of the Members of the Board of Directors and top managersPurpose of of the the Early Company Identification and to propose of Risks suggestions Committee: to the Board in this aspect.

The purpose of the Committee is to early identify any potential risks that might jeopardize the existence, development and continuation of the Company, and to take and implement the necessary measures and preventive actions for the elimination of such detected potential risks as well as to perform any workings related to risk management and to review at least once a year any applied risks management systems.

Due to the formation of the Board of Directors being as total of 5 people, some of the members of the Board of Directors are assigned in more than one committee.

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18. RISK MANAGEMENT AND INTERNAL CONTROL MECHANISM

The Financial Control Unit within the structure of Enka İnşaat ve Sanayi A.Ş., which periodically inspects the projects and the group companies in advance and proposes the necessary solutions for any deviations from the objectives, as well as all of the potential risk factors to the management.

The internal control systems and its structure is organized in a way that can eliminate all risks to be encountered by the company, especially the ones which could adversely affect the activities and proactively wo rks for the solution without encountering any problems even in the crisis period. Increasing strength of the company's financial position is an indication of this system working effectively. 19. MISSION, VISION AND OBJECTIVES OF THE COMPANY

Our Mission:

Continuously increase our contribution to the economies of the countries where we work while preserving our feature of being an enterprise which implements the tasks it undertakes with outstanding success in quality and execution time; to be a company whose involvement is desired by its clients; to be a company that retains a reasonable profit margin from its undertakings; and to be a company with which its employees are proudOur Performance to be associated. Objectives:

• • • To be open to innovations, using advanced technologies and always seeking the better, To be prudent and sensitive about work security and environment protection, - To train our young employees in accordance with our culture as creative, hardworking and honest • employees and to ensure that our employees work as individuals who have self confidence, are able to communicate and use discretionary power and take responsibility, and To seek our competitive power and profit in perfecting our management and technical skills. Pursuit of the Objectives and Achievement of Goals:

The objectives that reflect of our sensitivity about completing the works before the end of the planned time frame and delivering to the client are pursued very diligently at the highest and most detailed level. The members of the Executive Board pursue the objectives and the degree of their achievement in relation to the projects carried out in those countries where they are responsible and periodically resolve in the Executive Board to find out the leading motives of the deviations, whether the deviations affect the result of the project and if it is necessary to create new targets and to take the necessary measures about the personnel who have responsibility in such delay. 20. FINANCIAL BENEFITS PROVIDED TO THE BOARD OF DIRECTORS

For stand alone Enka İnşaat ve Sanayi A.Ş.; total wages paid for the members of the Board of Directors is TL 3.088.282, the social security payments is TL 34.382 and the accrued retirement pay provisions as of December 31, 2013 are TL 204.759. The total amount of the fees and similar benefits provided to the top managers such as the general manager, general coordinator and vice general managers is TL 24.468.937, the social security payments is TL 593.144 and the accrued retirement pay provisions as of December 31, 2013 are TL 1.586.665. There are no payments made to the members of the Board of Directors and top managers in the way of shares, derivative products originating from shares, share buying options or payments not made in cash such as house or car whose proprietorship bestowed and/or allocated for their use. Enka İnşaat ve Sanayi A.Ş. is not in any sort of debt relation whatsoever with any of the members of the Board or any Top Managers.

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The Remuneration Policy Applicable to the Board Members and the Top Managers was submitted to the shareholders at the General Assembly dated 18.04.2012 which was published on our internet site is as 1.follows: Objective and Scope

The purpose of the policy described hereunder is to determine, in compliance with and under consideration of such regulations, obligations and principles as specified in the Capital Markets Legislation and the Capital Markets Board's Corporate Governance Principles, any rules, requirements, principles and modus of implementation applicable to the remuneration of the Board Members and Top Managers of Enka İnşaat ve Sanayi A.Ş. as approved by the Board of Directors thereof. Any rights, benefits and remunerations to which the Board Members of the company are entitled to, and any modus of and requirements applicable to the payment thereof are defined in the Articles of Association of the company, and such rights, benefits and remunerations are concluded and fixed each year by the General Assembly thereof in its annual meeting under a separate item of agenda and the same are published thereafter in the website of the company. The Remuneration Policy hereunder aims the sustainability and enhancement of the performances of the Board Members2. Principles and ApplicableTop Managers to Remunerationof the company.

Remunerations Payable to the Members of the Board of Directors

Independent Members:

The Independent Members of the Board of Directors are entitled to a monthly attendance fee as honorarium in such amount as to be determined each year by the General Assembly. The amount of such monthly attendance fee is not fixed on the basis of the performance of the Company so that Executivethe independency Board Membersthereof is notand impacted Non-executive thereby. Board Members: -

- The executive and non executive Board Members are paid a monthly attendance fee in the same amount as payable to the Independent Members as aforesaid, besides such below mentioned bonuses as payable to the same on the basis of their performances Remunerationsand contributions Payable to the company to Top Managers as well as their level of reaching the targets as set.

Remunerations payable to top managers include bonuses besides the fixed pays to be determined and calculate d in accordance with the scope of duties and responsibilities thereof under consideration of the requirements3. Performance and and the Remuneration experiences designated Methods for each position.

Fixed Pays

: In the determination of the attendance fees payable to the Members of the Board of Directors as well as of the fixed pays to the Top Managers as aforesaid, the preservation of the company's internal balances and the compliance thereof with strategic targets and the ethical values of the company are always considered. The amount of the fixed pays are determined and calculated- for each position in accordance with the scope of duties and responsibilities of the relevant payee under consideration of various factors such as economic conditions in the market, the size of the company, any long term targets and the level of realization- thereof as well as the position and the level of experience of the relevant payee. In the determination and calculation of the remunerations payable to the Board Members and Top Managers of the Company, no short Performanceterm performance Pays based (Bonus payment Payments): plans such as Company's profit or income shall be applicable.

Also in the determination and calculation of the performance based bonus payments, various factors such as bonus policies applicable in the market to any staff in similar or equivalent position, the level of reaching and realization of the company targets and the individual performances are taken into account, and they are determined and calculated so that the equity of the company is not impacted thereby. Within the scope of this policy, no Board Member or top manager of our company is lent any money or granted any loan or any personal credit by virtue of any third parties or provided any securities or guarantees. Any remunerations and benefits paid to Board Members and top managers of our company are disclosed to public in the Annual Report thereof.

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BASIC RATIOS

(Thousand US Dollars)

31.12.2013 31.12.2012 Current Ratio

= 232,2% = 218,8% Current Assets 3.175.750 3.187.170 Current Liabilities 1.367.770 1.456.644 Cash ratio

= 201,2% = 185,9% Cash & Equivalents + Investments in Securities 2.752.250 2.707.215 Current Liabilities 1.367.770 1.456.644 Leverage Ratio

= 33,2% = 34,9% Total Liabilities 2.810.362 2.878.003 Total Assets 8.471.431 8.237.506 Equity to Total Assets Ratio

= 66,8% = 65,1% Equity 5.661.069 5.359.503 Total Assets 8.471.431 8.237.506 Current Assets to Total Assets Ratio

= 37,5% = 38,7% Current Assets 3.175.750 3.187.170 Total Assets 8.471.431 8.237.506 Non-Current Assets to Total Assets Ratio

= 62,5% = 61,3% Non-Current Assets 5.295.681 5.050.336 Total Assets 8.471.431 8.237.506 Return on Assets (ROA) Ratio

= 7,7% = 7,7% Net Income 655.983 630.406 Total Assets 8.471.431 8.237.506 Net Income to Revenue Ratio

= 10,0% = 11,0% Net Income 655.983 630.406

Revenue 6.546.741 5.745.762

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ENKA İNŞAAT VE SANAYİ ANONİM ŞİRKETİ AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(82) ANNUAL REPORT

DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Sun Plaza Bilim Sok. No. 5 Maslak, Şişli 34398 İstanbul, Türkiye

Tel : +90 (212) 366 6000 Faks : +90 (212) 366 6010 www.deloitte.com.tr

INDEPENDENT AUDITOR’S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

To the Board of Directors of Enka İnşaat ve Sanayi Anonim Şirketi

We have audited the accompanying consolidated financial statements of Enka İnşaat ve Sanayi A.Ş. (Enka İnşaat), its subsidiaries and joint operations (together the “Group”) which comprise the consolidated balance sheet as of 31 December 2013, the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Member Of Deloitte Touche Tohmatsu Limited

YILLIK FANNUAL REPORT (83)

Opinion

In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial positions of the Group as of 31 December 2013, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED

İstanbul, 03 March 2014

(84) ANNUAL REPORT

TABLE OF CONTENTS PAGE

CONSOLIDATED BALANCE SHEET...... 1-2 CONSOLIDATED STATEMENT OF INCOME ...... 3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME...... 4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY...... 5 CONSOLIDATED STATEMENT OF CASH FLOWS...... 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS...... 7-79

NOTE 1 ORGANIZATIONS AND OPERATIONS OF THE GROUP...... 7-9 NOTE 2 BASIS OF PRESENTATION OF FINANCIAL STATEMENTS...... 9-31 NOTE 3 DIVIDENDS PAID...... 32 NOTE 4 INTEREST IN JOINT OPERATIONS...... 33 NOTE 5 SEGMENTAL INFORMATION...... 34-36 NOTE 6 CASH AND CASH EQUIVALENTS...... 37 NOTE 7 FINANCIAL INVESTMENTS...... 37-38 NOTE 8 FINANCIAL LIABILITIES...... 39-42 NOTE 9 TRADE RECEIVABLES AND PAYABLES...... 43-44 NOTE 10 OTHER RECEIVABLES AND PAYABLES...... 44 NOTE 11 INVENTORIES...... 45 NOTE 12 CONSTRUCTION CONTRACTS...... 45 NOTE 13 INVESTMENT PROPERTIES...... 46 NOTE 14 PROPERTY, PLANT AND EQUIPMENTS...... 47-49 NOTE 15 INTANGIBLE ASSETS...... 49 NOTE 16 GOODWILL...... 49-50 NOTE 17 PREPAID EXPENSES AND DEFERRED INCOME...... 50 NOTE 18 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES...... 51 NOTE 19 COMMITMENTS...... 52-53 NOTE 20 PROVISIONS FOR EMPLOYEE BENEFITS...... 54 NOTE 21 OTHER ASSETS AND LIABILITIES...... 55 NOTE 22 SHARE CAPITAL...... 56-58 NOTE 23 SALES AND COST OF SALES...... 59 NOTE 24 MARKETING, SALES, DISTRIBUTION AND ADMINISTRATIVE EXPENSES...... 59 NOTE 25 EXPENSES BY NATURE...... 60 NOTE 26 OTHER OPERATING INCOME / EXPENSES...... 60-61 NOTE 27 INVESTMENT INCOME / EXPENSES...... 61-62 NOTE 28 FINANCIAL INCOME...... 62 NOTE 29 FINANCIAL EXPENSES...... 62 NOTE 30 ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS...... 63 NOTE 31 TAXATION ON INCOME...... 64-67 NOTE 32 EARNINGS PER SHARE ...... 68 NOTE 33 RELATED PARTY BALANCES AND TRANSACTIONS ...... 68-69 NOTE 34 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES ...... 69-77 NOTE 35 FINANCIAL INSTRUMENTS – FAIR VALUE EXPLANATIONS AND ACCOUNTING POLICY FOR HEDGING FINANCIAL RISK ...... 78-79 NOTE 36 SUBSEQUENT EVENTS ...... 79

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEET FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

Reclassified (Note 2.1) 31 December 31 December ASSETS Notes 2013 2012

Current Assets 3,175,750 3,187,170 Cash and cash equivalents 6 1,272,136 1,014,878 Financial investments 7 481,656 722,252 Trade receivables 9 797,562 878,720 Other receivables Other receivables from related parties 10 43 233 Other receivables from third parties 10 693 9,864 Inventories 11 344,406 337,592 Prepaid expenses 17 112,214 72,591 Costs and estimated earnings in excess of billings on uncompleted contracts 12 108,938 68,573 Other current assets 21 56,906 78,551 3,174,554 3,183,254 Assets held for sale and discontinued operations 30 1,196 3,916 Non-Current Assets 5,295,681 5,050,336 Financial investments 7 998,458 970,085 Trade receivables 9 13,517 21,918 Investment properties 13 2,346,532 2,133,921 Property, plant and equipments 14 1,832,530 1,816,885 Intangible assets Goodwill 16 64,092 63,725 Other intangible assets 15 31,973 29,965 Deferred tax assets 31 450 84 Prepaid expenses 17 1,779 3,159 Other non-current assets 21 6,350 10,594 TOTAL ASSETS 8,471,431 8,237,506

The accompanying notes form an integral part of these consolidated financial statements. 1

(86) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEET FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

Reclassified (Note 2.1) 31 December 31 December LIABILITIES Notes 2013 2012

Current Liabilities 1,367,770 1,456,644 Short-term borrowings 8 35,776 20,053 Current portion of long-term borrowings 8 66,162 137,458 Trade payables 9 533,729 621,556 Payables to employees 20 30,307 22,026 Other payables Payables to related parties 10 1,198 1,457 Payables to third parties 10 28,791 26,576 Billings in excess of costs and estimated earnings on uncompleted contracts 12 171,337 182,021 Deferred income 17 340,722 317,229 Taxation on income 31 54,503 38,415 Provisions Provisions for employee benefits 20 19,937 23,819 Other provisions 18 40,793 36,466 Other current liabilities 21 44,515 29,568

Non-Current Liabilities 1,442,592 1,421,359 Long-term borrowings 8 280,474 219,041 Trade payables 9 5,503 5,277 Other payables 10 30,127 25,862 Deferred income 17 711,411 790,629 Provisions for employee benefits 20 15,707 17,038 Deferred tax liabilities 31 399,370 363,512

EQUITY 5,661,069 5,359,503 Equity Attributable to Equity Holders of the Parent 5,597,343 5,099,441 Share capital 22 2,040,352 1,829,192 Revaluation surplus 22 232,143 186,592 Currency translation difference (206,697) (129,870) Other reserves 1,986 1,974 Legal reserves and accumulated profit 3,529,559 3,211,553

Non-Controlling Interests 63,726 260,062

TOTAL LIABILITIES AND EQUITY 8,471,431 8,237,506

The accompanying notes form an integral part of these consolidated financial statements. 2

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

Reclassified (Note 2.1) 1 January - 1 January - 31 December 31 December Notes 2013 2012

CONTINUING OPERATIONS Revenue 5,23 6,546,741 5,745,762 Cost of revenues (-) 5,23 (5,461,416) (4,945,710) GROS S PROFIT 1,085,325 800,052

Marketing, selling and distribution expenses (-) 5.24 (38,954) (41,553) Administrative expenses (-) 5.24 (124,731) (121,445) Other operating income 5,26 60,504 28,723 Other operating expenses (-) 5,26 (48,149) (64,043) PROFIT FROM OPERATIONS 933,995 601,734

Income from investing activities 5,27 111,898 218,824 Expenses from investing activities 5,27 (115,222) (40,939) OPERATING PROFIT BEFO RE FINANCE EXPENS ES 930,671 779,619

Financial income 5,28 24,864 27,780 Financial expenses (-) 5,29 (45,049) (29,111) PROFIT BEFORE TAX FROM CONTINUING OPERATIONS 910,486 778,288

Current tax expense (-) 31 (170,981) (122,031) Deferred tax expense 31 (46,502) (28,397) PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 693,003 627,860

DISCONTINUED OPERATIONS Profit for the year from discontinued operations, net of tax 30 - 30,901

NET PROFIT FOR THE YEAR 693,003 658,761

Attributable to: Non-controlling interest 37,020 28,355 Equity holders of the parent 655,983 630,406 693,003 658,761

Earnings per share from discontinued operations - ordinary share certificate (full cent) - 0.01

Earning per share from continuing operations - ordinary share certificate (full cent) 32 0.20 0.19

Weighted average number of shares (1 cent weighted average shares) 320,000,000,000 320,000,000,000

The accompanying notes form an integral part of these consolidated financial statements. 3

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

Reclassified (Note 2.1) 1 January - 1 January - 31 December 31 December Notes 2013 2012

NET PROFIT FOR THE YEAR 693,003 658,761 Other Comprehensive Income / (Expense): Items that will not be reclassified subsequently to profit or loss 52,270 8,617

Loss on remeasurement of defined benefit plans 20 (1,294) (1,045) Changes in revaluation fund of property 53,564 9,662 Gain arising during the year 22 58,666 10,333 Tax effect 22 (4,249) (2,010) Changes in translation difference in property valuation increase 22 (853) 1,339

Items that may be reclassified subsequently to profit or loss (77,726) 114,290 Changes in currency translation difference (77,738) 114,154

Changes in cash flow hedge 12 136 Gain arising during the period 15 170 Tax effect (3) (34) -

O THER CO MPREHENS IVE (LO S S ) / INCO ME (25,456) 122,907

TO TAL CO MPREHENS IVE INCO ME 667,547 781,668

Attributable to: Non-controlling interest 41,143 43,612 Equity holders of the parent 626,404 738,056 667,547 781,668

The accompanying notes form an integral part of these consolidated financial statements. 4

YILLIK FANNUAL REPORT (89)

(90) ANNUAL ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.) R

EPORT Currency Legal reserves Non- Revaluation translation and accumulated controlling Notes Share capital surplus difference Other reserves profit Total interests T ot al equit y

Balance at 1 January 2012 1,666,060 201,631 (232,357) 1,838 2,895,335 4,532,507 242,106 4,774,613 Total other comprehensive income - 6,072 102,487 136 (1,045) 107,650 15,257 122,907 Profit for the year - - - - 630,406 630,406 28,355 658,761 Total comprehensive income - 6,072 102,487 136 629,361 738,056 43,612 781,668 Transfer of depreciation difference (net of deferred tax) of revaluation effect - (3,493) - - 3,493 - - - Share capital increase 22 163,132 - - - (163,132) - - -

Dividends paid 3 - - - - (171,122) (171,122) (25,656) (196,778)

T ransfer of revaluat ion surplus of sold buildings - (17,618) - - 17,618 - - -

Balance at 31 December 2012 22 1,829,192 186,592 (129,870) 1,974 3,211,553 5,099,441 260,062 5,359,503

Balance at 1 January 2013 1,829,192 186,592 (129,870) 1,974 3,211,553 5,099,441 260,062 5,359,503

Total other comprehensive income - 48,530 (76,827) 12 (1,294) (29,579) 4,123 (25,456) Profit for the year - - - - 655,983 655,983 37,020 693,003 Total comprehensive income - 48,530 (76,827) 12 654,689 626,404 41,143 667,547

Transfer of depreciation difference - (net of deferred tax) of revaluation effect - (2,979) - - 2,979 - - - Share capital increase 22 211,160 - - - (211,160) - 1,614 1,614 Dividends paid 3 - - - - (135,244) (135,244) (12,584) (147,828) Effect of acquisiton of non-controlling interest - - - - 6,742 6,742 (226,509) (219,767)

Balance at 31 December 2013 22 2,040,352 232,143 (206,697) 1,986 3,529,559 5,597,343 63,726 5,661,069

The accompanying notes form an integral part of these consolidated financial statements. 5

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

1 January - 31 1 January - 31 December December Cash flows from operating activities Notes 2013 2012 Profit for the year 693,003 658,761 Adjustments to reconcile net income to net cash used in operating activities: - Depreciation and amortization of non-current assets 25 97,706 106,748 - Provision for employment termination benefits 395 4,412 - Allowance for doubtful receivables 26 4,337 5,489 - Provision for litigations 26 7,572 6,267 Cost of contracts accrual - 65,929 - Adjustments to deferred income from electricity sale (79,732) (70,018) - Gain on sale of discontinued operations 30 - (38,358) - Loss from fair value of forward transactions 28,29 (923) (1,886) - Interest expense 29 9,273 13,072 - Interest income (64,115) (47,942) - Dividend income 27 (7,739) (5,276) - Provision for inventory impairment, net (1,753) 991 - Gain on sale or disposal of property, plant and equipment, net 14,30 (1,575) (1,778) - Fair value increase in investment properties 13 (4,778) (20,554) - Valuation of investment securities 62,336 (107,428) Interest accrual 221 279 - Tax expense 30,31 217,483 156,707 931,711 725,415 Movements in working capital Decrease in trade and other receivables 84,916 (133,298) Decrease in cost and estimated earnings in excess of billings on uncompleted contracts (40,365) (14,663) Increase in inventory (3,838) (61,494) Increase in other current assets and other non current assets (2,710) (40,579) Decrease in trade and other payables (87,601) 143,927 Increase/(decrease) in billings in excess of cost and estimated earnings on uncompleted contracts (10,684) 2,246 Increase in provision for liabilities and other liabilities 47,926 82,422 (12,356) (21,439)

Income taxes paid 31 (154,893) (134,613) Employee termination benefits paid 20 (1,256) (1,918) Net cash generated from operating activities 763,206 567,445 Cash flows from investing activities Financial investments 150,043 (176,370) Proceeds on disposal or sale of property, plant and equipment 14 24,743 29,434 Purchases of property, plant and equipment, intangible assets and investment properties 5 (258,905) (141,569) Interest received 63,894 47,662 Acquisition of non-controlling interest (219,767) - Proceeds from sale of discontinued operations 30 - 168,993 Dividend income 27 7,739 5,276 Net cash used in investing activities (232,253) (66,574) Cash flows from financing activities Short-term borrowings, net 13,554 (6,258) Addition to long-term borrowings 27,437 71,114 Repayments of long-term borrowings (172,415) (185,997) Interest paid (7,110) (10,794) Non-controlling interest of share capital increase 1,614 - Dividend paid to non-controlling interests (12,584) (25,656) Dividend paid (135,244) (171,122) Net cash used in financing activities (284,748) (328,713) Translation reserve 11,053 28,052 Net increase in cash and cash equivalents 257,258 200,210 Cash and cash equivalents at beginning of the period 6 1,013,878 813,668 Cash and cash equivalents at end of the period 6 1,271,136 1,013,878

The accompanying notes form an integral part of these consolidated financial statements. 6

YILLIK FANNUAL REPORT (91)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

1. ORGANIZATIONS AND OPERATIONS OF THE GROUP Enka İnşaat ve Sanayi Anonim Şirketi (“Enka İnşaat”) was established on 4 December 1967 and registered in İstanbul, Turkey, under the Turkish Commercial Code. The address of the headquarters and registered office of Enka İnşaat is Balmumcu, Zincirlikuyu Yolu No:10, 34349 Enka Binası Beşiktaş, İstanbul, Turkey.

As of 28 June 2002, Enka İnşaat merged legally with its publicly traded shareholder company, Enka Holding Yatırım Anonim Şirketi (Enka Holding), which were under the common control of Tara Holding Anonim Şirketi and Tara and Gülçelik families. As of 31 December 2013, 12.34% of the shares of Enka İnşaat and 15.95% of the shares of Pimaş Plastik Malzemeleri Anonim Şirketi (Pimaş), subsidiary of Enka İnşaat, are traded publicly in İstanbul Stock Exchange (ISE).

As of 31 December 2013, the average numbers of white and blue-collar personnel are respectively 5.299 and 21.435 (31 December 2012 – 4.612 and 16.678).

For the purpose of the consolidated financial statements, Enka İnşaat, its consolidated subsidiaries and its joint operations are hereinafter referred to as “the Group”.

The Group operates in geographical areas below:

i. Turkey: engaged in diverse types of construction activities including construction of industrial and social buildings, motorways and construction and operation of natural gas fired electrical energy generation facilities.

ii. Russian Federation and Kazakhstan: engaged in construction activities and also in investment and development of real estate properties and shopping malls in Moscow, Russia.

iii. Engaged in construction activities in Gabon, Burundi, Libya, Djibouti, Mauritania and Equatorial Guinea in Africa; Saudi Arabia, Oman, Iraq and Afganistan in Asia and also in Dominican Republic and Papua New Guinea.

iv. Europe: engaged in construction and trading activities in Romania, the Netherlands, Switzerland, Germany and Kosovo.

(92) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

1. ORGANIZATIONS AND OPERATIONS OF THE GROUP (cont’d) As of 31 December 2013 Enka İnşaat has the following subsidiaries, whose business and country of incorporation are provided below: Country of Year of Name of Subsidiary Nature of business activities incorporation establishment

Pimaş Engaged in manufacturing and marketing of PVC Turkey 1963 door and window profiles.

Enka Pazarlama İhracat İthalat Anonim Engaged in marketing and after-sales service of Turkey 1972 Şirketi (Enka Pazarlama) construction machineries, trucks, industrial products and spare parts.

Çimtaş Çelik İmalat Montaj ve Tesisat Engaged in manufacturing of structural steel Turkey 1973 Anonim Şirketi (Çimtaş) works, installation and establishing of the technical equipment.

Titaş Toprak İnşaat ve Taahhüt Anonim Engaged in all kinds of exacavation activities, Turkey 1974 Şirketi (Titaş) excavation backfilling works and quarrying- crushing operation of highway projects.

Kasktaş Kayar Kalıp Altyapı Sondaj Engaged in pile dwelling work, any kind of base Turkey 1975 Kazık ve Tecrit Anonim Şirketi (Kasktaş) and superstructure construction, slip form and construction of drilling and ground surveys.

Entaş Nakliyat ve Turizm Anonim Şirketi The firm operates in organization of domestic and Turkey 1976 (Entaş) international conventions and seminars and also engaged in tour reservations and ticket sales.

Enet Proje Araştırma ve Müşavirlik A.Ş. Performs architectural design services. Turkey 1980 (Enet)

Enka Teknik Genel Müteahhitlik Bakım Operates in the business of material handling and Turkey 1981 İşletme Sevk ve İdare Anonim Şirketi storage systems, auxilary facilities, water (Enka Teknik) treatment and environmental engineering, infrastructure and construction, control systems and instrumentation engineering.

Entrade GmbH (Entrade) Manages foreign investments of the Company. Germany 1984

Limited Liability Company Enmar Engaged in ready-mixed concrete production and Russia 1994 (Enmar) various construction works.

Airenka Hava Taşımacılığı A.Ş. Engaged in all kinds of air transportation. Turkey 2001 (Air Enka)

Enka Holding B.V. Manages foreign investments of the Company. Netherlands 2001

Enka Müteahhitlik Hizmetleri A.Ş. (Enka Engaged in construction activities. Turkey 2002 Müteahhitlik)

Adapazarı Elektrik Üretim Limited Performs production and selling of electricity. Turkey 2004 Şirketi (Adapazarı Elektrik) (*)

İzmir Elektrik Üretim Limited Şirketi Performs production and selling of electricity. Turkey 2004 (İzmir Elektrik) (*)

Gebze Elektrik Üretim Limited Şirketi Performs production and selling of electricity. Turkey 2004 (Gebze Elektrik) (*)

Enka Limited Liability Company (Enka Manages the company’s construction, engineering Ukraine 2006 LLC) and design jobs.

Enka Enerji Üretim A.Ş. Will perform production and sale of electricity. Turkey 2006

Enka & Co LLC Engaged in construction activities. Oman 2010

Enka Elektrik Üretim A.Ş Will perform production and sale of electricity Turkey 2011

Enka International Construction Ltd Engaged in construction activities. Saudi Arabia 2011

(*) İzmir Elektrik, Adapazarı Elektrik and Gebze Elektrik here and after are also referred to as “the Power Companies”.

YILLIK FANNUAL REPORT (93)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

1. ORGANIZATIONS AND OPERATIONS OF THE GROUP (cont’d)

The construction contracts are undertaken by Enka İnşaat alone or together with its affiliated companies or, in partnerships with other contractors through joint operations. As of 31 December 2013, Enka İnşaat has the following joint operations:

Bechtel-Enka Joint Venture (Kazakhstan) – Senimdy Kurylys Bechtel-Enka Joint Venture Bautino (Kazakhstan) Bechtel-Enka Joint Venture (Romania) Bechtel-Enka Joint Venture (Kosovo) Caddell Construction Company Inc. (Caddell Global) AECO Development Limited Liability Company (Oman) Bechtel-Enka Joint Venture (Albania) Bechtel-Enka Joint Venture (Oman)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS

2.1 Basis of presentation

The Basis for Preparation of the Financial Statements and Significant Accounting Policies

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared on the historical cost convention, except for investment properties, buildings, financial assets at fair value through profit or loss and derivative financial instruments which are measured at fair values. The consolidated financial statements are presented in U.S. Dollars (USD) and all values are rounded to the nearest thousand (‘000) except when otherwise indicated.

The Group adopted all standards, which were mandatory as of 31 December 2013. The consolidated financial statements of Enka İnşaat were authorized for issue by the management on 3 March 2014. Although there is no such intention, the General Assembly and certain regulatory bodies have the power to amend the statutory financial statements after issue.

Enka İnşaat and its subsidiaries which are incorporated in Turkey, maintain their books of accounts and prepare their statutory financial statements in Turkish Lira (TL) in accordance with the regulations on accounting and reporting framework and accounting standards promulgated by the Turkish Capital Market Board (CMB), (for publicly traded companies) and 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 accounts in accordance with the laws and regulations in force in the countries where they are registered. The consolidated financial statements are based on the statutory records with adjustments and reclassifications for the purpose of fair presentation in accordance with IFRS.

The Group also reported separately for the consolidated financial statements for the same period prepared in accordance with accounting principles promulgated by CMB.

There are no differences between the consolidated financial statements prepared in accordance with the accounting policies promulgated by CMB and consolidated IFRS financial statements except for the use of TL and USD as the presentation currency, respectively.

Functional and presentation currency

As significant amount of construction, energy and real estate operations of Enka İnşaat and its consolidated subsidiaries and its joint operations which form main part of the operations of the Group are carried out in U.S. Dollar or indexed to U.S. Dollar, this currency has been determined as the functional and the presentation currency of the Group in line with IAS 21 - The Effects of Changes in Foreign Exchange Rates. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies (i.e. any currency other than the functional currency) are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non- monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

(94) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.1 Basis of presentation (cont’d)

Functional and presentation currency (cont’d)

Until 31 December 2005, the financial statements of the subsidiaries, functional currency of which was TL, were restated for the changes in the general purchasing power of TL based on IAS 29 (“Financial Reporting in Hyperinflationary Economies”). Since the objective conditions for the restatement in hyperinflationary economies were no longer applicable at that time, Turkey came off hyperinflationary status effective from 1 January 2006. After the Turkish economy ceased to be hyperinflationary, such subsidiaries no longer restate their financial statements in accordance with IAS 29, and use as the historical costs for translation into the presentation currency the amounts restated to the price level at the date these subsidiaries ceased restating their financial statements. Therefore, the non-monetary assets and liabilities and components of shareholders’ equity of such subsidiaries including share capital reported in the balance sheet as of 31 December 2011 and 2010 are derived by indexing the additions occurred until 31 December 2005 and carrying the additions after this date with their nominal amounts.

The assets and liabilities of the subsidiaries whose functional currency is other than U.S. Dollars are translated into U.S. Dollars at the rate of exchange ruling at the balance sheet date and their income statements are translated at the average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity as currency translation difference.

Within Turkey, official exchange rates of the Turkish Lira (TL) are determined by the Central Bank of Turkey (CBT) and are generally considered to be a reasonable approximation of market rates. Within the Russian Federation, official exchange rates are determined daily by the Central Bank of the Russian Federation (CBRF), which is also a reasonable approximation of market rates.

The year-end and average Turkish Lira (TL) rates for 2013 and 2012 for one U.S. Dollar can be summarized as below:

2013 2012

U.S. Dollars /TL – as of balance sheet date 2,1343 1,7826 U.S. Dollars /TL – yearly average 1,9032 1,7922

Comparative information and reclassification of prior year financial statements

The Group prepares comparative consolidated financial statements, to enable readers to determine financial position and performance trends. For the purposes of effective comparison, comparative consolidated financial statements can be reclassified when deemed necessary by the Group, where descriptions on significant differences are disclosed. In the current year, the Group had made the reclassifications below in order to confront current year’s presentation:

a) IAS 19 (“Employee Benefits”) has been revised effective from the annual period beginning on of after 1 January 2013, In accordance with the revised standart, actuarial gain/loss related to employee shall be recognised in the statement of comprehensive income. The Group used to recognize the actuarial gain/loss related to employee benefits in consolidated income statement until 31 December 2012, As a result of the revision in IAS 19, the Group applied the accounting policy change retrospectively, and actuarial gain/loss priorly recognized in statement of income, have been restated as a change in the opening balance of the retained earnings.

As a revision of IAS 19, the Group directly recognized USD 1.045 in statement of comprehensive income. Consequently, “General administrative expense” at an amount of USD 1.045 decreased and “Profit for the period” at an amount of USD 1.045 increased in the consolidated statement of income for the period ended as of 31 December 2012.

YILLIK FANNUAL REPORT (95)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.1 Basis of presentation (cont’d)

Comparative information and reclassification of prior year financial statements (cont’d)

b) The Group made reclassification to prior year financial statements in order to be consistent with CMB regulations announced as of 7 June 2013. The detail of reclassifications are explained below:

• “Advances given” and “Prepaid expenses” at an amount of USD 72.591 presented in “Other current assets” in the consolidated balance sheet as of 31 December 2012 are reclassified to “Prepaid expenses”.

• “Advances given” and “Prepaid expenses” at an amount of USD 3.159 presented in “Other non-current assets” in the consolidated balance sheet as of 31 December 2012 are reclassified to “Prepaid expenses”.

• Financial borrowings presented as “Bank loans” and “Obligations under finance leases” in the consolidated balance sheet as of 31 December 2012, is now presented as “Short term borrowings”, “Current portion of long term borrowings” and “Long term borrowings”.

• “Payroll payables” at an amount of USD 22.026 presented in “Provisions for employee benefits” in the consolidated balance sheet as of 31 December 2012 are reclassified to “ Payables to employees”.

• “Advances received” at an amount of USD 251.066 and “Deferred rent revenue” at an amount of USD 66.163 presented in “Other current liabilities” in the consolidated sheet as of 31 December 2012 are reclassified to “Deferred income”.

• “Deferred revenue” at an amount of USD 790.629 presented in “Other non-current liabilities” in the consolidated sheet as of 31 December 2012 are reclassified to “Deferred income”.

• Foreign exchange difference gains and losses and interest income/expenses from trade payables and receivables at an amount of USD 12.465 presented in “Financial income” and “Financial expense” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Other operating income” and “Other operating expenses”.

• Gain on disposal of property,plant and equipment at an amount of USD 2.134 presented in “Other operating income” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Investment income”.

• Fair value increase in investment properties at an amount of USD 20.554 presented in “Other operating income” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Investment income”.

• Foreign exchange difference gains and losses and interest income/expenses from trade payables and receivables at an amount of USD 12.007 presented in “Financial income” and “Financial expense” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Other operating expenses”.

• Loss from sales of property, plant and equipment at amount of USD 357 presented in “Other operating expense” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Investment expense”.

• Interest revenue from financial assets held for sale at an amount of USD 38.463 presented in “Financial income” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Investment income”.

• Divident income at an amount of USD 5.276 presented in “Financial income” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Investment income”.

(96) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.1 Basis of presentation (cont’d)

Comparative information and reclassification of prior year financial statements (cont’d)

• Income from investment activities at an amount of USD 120.641 presented in “Financial income” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Investment income” and “Investment expenses”.

• Foreign exhange diference gains and losses from investment activities at amount of USD 8.826 presented in “Financial income” and “Financial expenses” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Investment income and “Investment expenses”.

• Currency translation difference from tangible assets at an amount of USD 1.341 presented in “Changes in currency translation difference” in the consolidated statement of income for the period ended 31 December 2012, is now presented in “Currency translation difference of tangible assets’ fair value increase ”.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the parent company, its joint operations and its subsidiaries as at 31 December each year. The financial statements of the joint operations and the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies.

Subsidiaries are all entities over which the Group has power to govern the financial and operating policies so as to benefit from its activities. Subsidiaries in which the Group owns directly or indirectly more than 50% of the voting rights, or has power to govern the financial and operating policies under a statute or agreement are consolidated. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. All significant intra-group transactions and balances between Enka İnşaat and its consolidated subsidiaries and joint operations are eliminated.

Under the equity method, an investment in associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Non-controlling interests represent the portion of income statement and net assets not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from parent shareholders’ equity.

YILLIK FANNUAL REPORT (97)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.1 Basis of presentation (cont’d)

Basis of consolidation (cont’d) The subsidiaries included in consolidation and their shareholding percentages at 31 December 2013 and 31 December 2012 are as follows: Direct / Indirect ownership 31 December 31 December Company name Segment 2013 2012 Enka Holding B.V. Construction %100,00 %100,00 Enka Holding Investment S.A. Construction %100,00 %100,00 Edco Investment B.V. Rental %100,00 %100,00 Enru Development B.V. Rental %100,00 %100,00 Enka Power Systems B.V. Construction %100,00 %100,00 Covet B.V. Construction %100,00 %100,00 Enka Construction & Development B.V. Construction %100,00 %100,00 Far East Development B.V. Construction %100,00 %100,00 Enmar Construction %100,00 %100,00 Entrade Construction %100,00 %100,00 Capital City Investment B.V. Construction %100,00 %100,00 City Center Investment B.V. Rental %100,00 %100,00 Enka Adapazarı Power Investment B.V. Energy %100,00 %100,00 Enka Gebze Power Investment B.V. Energy %100,00 %100,00 Enka İzmir Power Investment B.V. Energy %100,00 %100,00 Enka Power Investment B.V. Energy %100,00 %100,00 İzmir Elektrik Energy %100,00 %100,00 Adapazarı Elektrik Energy %100,00 %100,00 Gebze Elektrik Energy %100,00 %100,00 Enka LLC Construction %100,00 %100,00 Rumos S.A. Rental %100,00 %100,00 MCC Investment S.A. Construction %100,00 %100,00 Enka TC LLC Trade and manufacturing %100,00 %100,00 Retmos Investment Ltd. Construction %100,00 %100,00 Emos LLC Trade and manufacturing %100,00 %100,00 Bmos B.V. Trade and manufacturing %100,00 %100,00 Cmos B.V. Trade and manufacturing %100,00 %100,00 OOO Victoria Construction %100,00 %100,00 Enka Santral Hizmetleri A.Ş. Energy %100,00 %100,00 M aken Construction %100,00 %100,00 Enka Elektrik Üretim A.Ş. Energy %100,00 %100,00 Enka International Construction Ltd. Construction %100,00 %100,00 Enka & Co LLC Construction %100,00 %100,00 Enka Müteahhitlik Construction %100,00 %100,00 Mosenka (*) Rental %100,00 %80,00 MKH (*) Rental %100,00 %56,00 Pavmos B.V. Construction %100,00 - Enka Pazarlama Trade and manufacturing %99,99 %99,99 Enka Finansal Kiralama A.Ş. Trade and manufacturing %99,99 %99,99 Airenka Trade and manufacturing %99,97 %99,97 Metra Akdeniz Dış Ticaret A.Ş. Trade and manufacturing %99,93 %99,93 Entaş Trade and manufacturing %99,93 %99,93 Enka Enerji Üretim A.Ş. Energy %99,47 %99,47 Çimtaş Gemi İnşa Sanayi ve Ticaret A.Ş. Trade and manufacturing %97,31 %97,31 Kasktaş Construction %97,25 %97,25 Burkas Ltd. Şti. Construction %97,25 %97,25 Kasktaş Arabia Ltd. Construction %97,25 %97,25 Çimtaş Borulama Sanayi ve Ticaret Ltd. Şti. (Çimtaş Borulama) Construction %96,97 %96,97 Çimtaş Çelik Construction %96,94 %96,94

(98) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.1 Basis of presentation (cont’d)

Basis of consolidation (cont’d) Direct / Indirect ownership 31 December 31 December Company name (continuing) Segment 2013 2012 Cimtas Mechanical Contracting B.V. Construction %96,94 %96,94 Cimtas (Ningbo) Steel Processing Company Ltd. Construction %96,94 %96,94 Cimtas Buildings Systems Ltd. (CBSL) Construction %96,94 %96,94 Cimtas Investment B.V. Construction %96,94 %96,94 Cimtas Caspian Development B.V.(**) Construction - %96,64 Gemlik Deniz Taşımacılık Ltd.Şti. Construction %96,64 - IBH Engineering GmbH Construction %96,64 %96,64 Enet Construction %95,00 %95,00 Titaş (*) Construction %93,11 %91,91 Pimaş Trade and manufacturing %81,65 %81,65 S.C Pimapen Logistic Center SRL Trade and manufacturing %81,65 %81,65 Enwin Window Systems B.V.(**) Trade and manufacturing - %81,65 Enwin Rus Ltd. Trade and manufacturing %81,65 %81,65 Enka Teknik Construction %79,91 %79,91 OOO R-Avtam Rental %60,00 %60,00 Cimtas Boru İmalatları ve Ticaret Ltd. Şti. (Cimtas Boru) Construction %50,00 %50,00

(*)All non-controlling interests of MKH and Mosenka were purchased in the current year. The difference between purchasing price and net asset is accounted under equity. Total amount paid including %1,2 share of Titaş is USD 219.767. (**) These companies have been dissolved during the year.

The Group has interests in joint operations which are jointly controlled entities. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The Group recognizes its interest in the joint operations using proportionate consolidation. The breakdown of the controlling interests of the joint operations as of 31 December 2013 and 2012 is as follows:

31 December 2013 31 December 2012 Bechtel-Enka Joint Venture (Kazakhstan) – Senimdy Kurylys %50,00 %50,00 Bechtel-Enka Joint Venture Bautino (Kazakhstan) %50,00 %50,00 Caddell Construction Company Inc. (Caddell Europe, Africa, America) %50,00 %50,00 Bechtel-Enka Joint Venture (Romania) %50,00 %50,00 Bechtel-Enka Joint Venture (Albania) %50,00 %50,00 Bechtel-Enka Joint Venture (Kosovo) %50,00 %50,00 AECO Development Limited Liability Company (Oman) %50,00 %50,00 Bechtel-Enka Joint Venture (Oman) %50,00 %50,00 Poyraz Shipping B.V. %50,00 %50,00 Bogazici Shipping B.V. %50,00 %50,00 Doga Shipping B.V. %50,00 %50,00 Imbat Shipping B.V. %50,00 %50,00 TNY Shipping B.V. %50,00 %50,00 Alacante Shipping B.V. %50,00 %50,00 BRK Overseas Shipping B.V. %50,00 %50,00 MML Merchant Shipping B.V. %50,00 %50,00 Esta Construction B.V. %50,00 %50,00

YILLIK FANNUAL REPORT (99)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.2 Changes in the accounting policies

Significant changes in accounting policies are applied retroactively and prior year financial statements are restated when necessary. Significant changes applied during the year are detailed in Note 2.4.

2.3 Changes and Errors in Accounting Estimates

Changes in accounting policies or accounting errors are applied retroactively and the financial statements of the previous periods are restated. If estimated changes in accounting policies are for only one period, changes are applied on the current year but if the estimated changes effect the following periods, changes are applied both on the current and following years prospectively. There is no material change in accounting estimates of the Group in the current year.

2.4 Adoption of New and Revised International Financial Reporting Standards

The following amendments to IASs have been applied in the current year and have affected the amounts reported in these consolidated financial statements.

(a) Amendments to IFRSs affecting amounts reported in the financial statements

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income

The amendments to IAS 1 Presentation of Items of Other Comprehensive Income is effective for the annual periods beginning on or after 1 July 2012. The amendments introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the ‘statement of comprehensive income’ is renamed the ‘statement of profit or loss and other comprehensive income’ and the ‘income statement’ is renamed the ‘statement of profit or loss’. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis - the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments can be applied retrospectively. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

IAS 19 Employee Benefits

The amendments to IAS 19 change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the 'corridor approach' permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognized immediately through other comprehensive income in order for the net pension asset or liability recognized in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a ‘net- interest’ amount, which is calculated by applying the discount rate to the net defined benefit liability or asset. The amendments to IAS 19 require retrospective application.

(100) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.4 Adoption of New and Revised International Financial Reporting Standards (cont’d)

(b) New and Revised IFRSs affecting the reported financial performance and / or financial position

IFRS 9 Financial Instruments: Classification and Measurement

In November 2009, the first part of IFRS 9 relating to the classification and measurement of financial assets was issued. IFRS 9 will ultimately replace IAS 39 Financial Instruments: Recognition and Measurement. The standard requires an entity to classify its financial assets on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, and subsequently measure the financial assets as either at amortized cost or at fair value. The new standard is mandatory for annual periods beginning on or after 1 January 2017; earlier adoption is permitted.

The Group has adopted IFRS 9 and the related consequential amendments to other IFRSs at 31 December 2011.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy required for financial instruments only under IFRS 7 Financial Instruments: Disclosures are extended by IFRS 13 to cover all assets and liabilities within its scope.

IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.

The Group management anticipates that IFRS 13 will be adopted in the Group's consolidated financial statements for the annual period beginning 1 January 2013 and that the application of the new Standard may affect the amounts reported in the financial statements and result in more extensive disclosures in the financial statements.

Amendments to IAS 1 Presentation of Financial Statements (as part of the Annual Improvements to IFRSs 2009-2011 Cycle issued in May 2012)

The amendments to IAS 1 as part of the Annual Improvements to IFRSs 2009-2011 Cycle are effective for the annual periods beginning on or after 1 January 2013.

IAS 1 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement or reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of financial position). The amendments to IAS 1 clarify that an entity is required to present a third statement of financial position only when the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position and that related notes are not required to accompany the third statement of financial position.

YILLIK FANNUAL REPORT (101)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.4 Adoption of New and Revised International Financial Reporting Standards (cont’d)

(b) New and Revised IFRSs applied with no material effect on the consolidated financial statements (cont’d)

New and revised Standards on consolidation, joint arrangements, associates and disclosures

In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued, including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011).

Key requirements of these five Standards are described below.

IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financial statements. SIC-12 Consolidation - Special Purpose Entities will be withdrawn upon the effective date of IFRS 10. Under IFRS 10, there is only one basis for consolidation, that is, control. In addition, IFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s return Extensive guidance has been added in IFRS 10 to deal with complex scenarios.

IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. SIC-13 Jointly Controlled Entities - Non-monetary Contributions by Venturers will be withdrawn upon the effective date of IFRS 11. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportional consolidation.

IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than those in the current standards.

In June 2012, the amendments to IFRS 10, IFRS 11 and IFRS 12 were issued to clarify certain transitional guidance on the application of these IFRSs for the first time.

These five standards together with the amendments regarding the transition guidance are effective for annual periods beginning on or after 1 January 2013, with earlier application permitted provided all of these standards are applied at the same time. The Group management anticipates that the application of these five standards will not have a significant impact on amounts reported in the consolidated financial statements

Amendments to IFRS 7 Offsetting Financial Assets and Financial Liabilities and the related disclosures

The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.

Annual Improvements to IFRSs 2009 - 2011 Cycle issued in May 2012

• Amendments to IAS 16 Property, Plant and Equipment • Amendments to IAS 32 Financial Instruments: Presentation; and • IAS 34 (Amendments) Interim Financial Reporting

Amendments to IAS 16

The amendments to IAS 16 clarify that spare parts, stand-by equipment and servicing equipment should be classified as property, plant and equipment when they meet the definition of property, plant and equipment in IAS 16 and as inventory otherwise. The Group management does not anticipate that the amendments to IAS 16 will have a significant effect on the Group’s consolidated financial statements.

(102) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.4 Adoption of New and Revised International Financial Reporting Standards (cont’d)

(b) New and Revised IFRSs applied with no material effect on the consolidated financial statements (cont’d)

Annual Improvements to IFRSs 2009 - 2011 Cycle issued in May 2012 (cont’d)

Amendments to IAS 32

The amendments to IAS 32 clarify that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction should be accounted for in accordance with IAS 12 Income Taxes. The Group management does not anticipate that the amendments to IAS 32 will have a significant effect on the Group’s consolidated financial statements.

Amendments to IAS 34

The amendments to IAS 34 clarify that disclosure of the total assets and total liabilities for a particular reportable segment is only required if a measure of total assets or total liabilities (or both) is regularly provided to the chief operating decision maker and there has been a material change in those measures since the last annual financial statements. The amendments to IAS 34 did not have an effect on the Group’s consolidated financial statements.

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine applies to waste removal costs that are incurred in surface mining activity during the production phase of the mine (production stripping costs). Under the Interpretation, the costs from this waste removal activity (stripping) which provide improved access to ore is recognized as a non-current asset (stripping activity asset) when certain criteria are met, whereas the costs of normal on-going operational stripping activities are accounted for in accordance with IAS 2 Inventories. The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset and classified as tangible or intangible according to the nature of the existing asset of which it forms part.

IFRIC 20 is effective for annual periods beginning on or after 1 January 2013. Specific transitional provisions are provided to entities that apply IFRIC 20 for the first time. However, IFRIC 20 must be applied to production stripping costs incurred on or after the beginning of the earliest period presented. The Group management anticipates that IFRIC 20 will have no effect to the Group’s financial statements as the Group does not engage in such activities.

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

IFRS 9 Financial Instruments Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosures Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities 1 Amendments to IFRS 10, IFRS 11 and Investment Companies1 IFRS 12 Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets 1 Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting 1 IFRIC 21 Levies 1

1 Effective for annual periods beginning on or after 1 January 2014.

YILLIK FANNUAL REPORT (103)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.4 Adoption of New and Revised International Financial Reporting Standards (cont’d)

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

The amendments to IAS 32 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realization and settlement’.

Amendments to IFRS 10, 11, IAS 27 Investment Entities

This amendment with the additional provisions of IFRS 10 provide 'investment entities' (as defined) an exemption from the consolidation of particular subsidiaries and instead require that an investment entity measure the investment in each eligible subsidiary at fair value through profit or loss.

Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets

As a consequence of IFRS 13 Fair Value Measurements, there are amendments in the explanations about the measurement of the recoverable amount of an impaired asset. This amendment is limited to non-financial assets and paragraphs 130 and 134 of IAS 36 has been changed.

Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting

This amendment to IAS 39 makes it clear that there is no need to discontinue hedge accounting if a hedging derivative is novated, provided certain criteria are met.

IFRIC 21 Levies

IFRIC 21 identifies the obligating event for the recognition of a liability as the activity that triggers the payment of the levy in accordance with the relevant legislation.

2.5 Summary of significant accounting policies

Revenue

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. Revenues are stated net of discounts, returns and value added taxes. The following specific recognition criteria must also be met before revenue is recognized:

Construction contract activities

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognized by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs.

Revenue arising from cost plus fee contracts is recognized on the basis of costs incurred plus a percentage of the contract fee earned during the year.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. Selling, general and administrative expenses are charged to the consolidated income statement as incurred. Provisions for estimated losses on uncompleted contracts are made in full, in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Profit incentives are included in revenues when their realization is reasonably assured.

Costs and estimated earnings in excess of billings on uncompleted contracts represent revenues recognized in excess of amounts billed. Billings in excess of costs and estimated earnings on uncompleted contracts represent billings in excess of revenues recognized. 19

(104) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Revenue (cont’d)

Energy activities

The Power Companies have signed an “Electric Sales Agreement” (ESA) with Türkiye Elektrik Ticaret ve Taahhüt A.Ş. (TETAŞ) for the establishment, management and sale of electricity that will be produced for a period of 20 years in accordance with the Build-Own-Operate Law numbered 4283 and Build-Own-Operate regulation. As the period includes project development and construction phases, the contract dates of power plants are 16 years after the beginning of the operation. The sales price and quantity in terms of Kwh during the 16 years period are determined in the ESA. Average energy sales price is determined by dividing yearly sales revenues calculated over yearly sales amounts and unit prices by the 16 year-sales quantities. At the end of each year, the average price is recalculated over the realized amounts. Therefore, revenues from the sale of electricity under long-term contracts are recognized on the average charge per Kwh over the life of the contract. Both the ‘investment’ and the ‘fuel cost’ item revenues in the scope of the contract are levelised accordingly. Revenues in excess of the average are recorded as deferred revenue in the consolidated balance sheet and are recognized over the life of the project.

Sale of goods

Revenue is recognized when significant risks and rewards of ownership of the goods have been transferred to the buyer.

Rental income

Rental income arising on investment properties is accounted for on a straight-line basis over the lease terms on ongoing leases. Rental income collected in advance is treated as deferred income and is amortised on a monthly basis during the lease period.

Rendering of services

Revenue is recognized by reference to the stage of completion.

Interest income

Interest income and expenses are recognized in the consolidated income statement on an accrual basis taking into account the effective yield on the asset. When loans provided by the Group are considered doubtful by the management of the Group, the interest accrual is not recognized in the consolidated income statement.

Dividends

Revenue is recognized when the Group’s right to receive the payment is established.

Inventories

Inventories are valued at the lower of cost or net realizable value. Costs incurred in bringing each product to its present location and condition, are accounted for as follows:

Raw materials, spare parts, merchandise and construction materials - purchase cost on moving weighted average basis.

Goods for resale - purchase cost on moving weighted average basis.

Finished goods - cost of direct materials and labor and a proportion of manufacturing overheads based on moving weighted average basis.

The Group also provides an allowance for the slow moving and obsolete items.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

YILLIK FANNUAL REPORT (105)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Property, plant and equipments

With the exception of land and buildings, items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment in value. Land is not depreciated. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Land and buildings are carried at revalued amounts, which is the fair value at the date of the valuation less accumulated depreciation and impairment losses charged subsequent to the date of the revaluation. Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount.

Repairs and maintenance are charged to the statements of income during the financial period in which they are incurred. The costs of major renovations are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group.

Depreciation is provided on all property, plant and equipment using the straight-line method at rates which approximate estimated useful lives of the related assets as follows:

Useful life Land improvements 5-50 years Buildings 10-50 years Power plant equipment 35 years Pipelines 16 years Electrical interconnection lines 16 years Machinery and equipment 4-10 years Motor vehicles 3-10 years Furniture and fixtures 5-10 years Barracks, scaffolding and formworks 5 years Aircrafts 10-15 years Others 5-10 years

Power plant equipment is recorded at its original cost of construction. Significant additions or improvements are capitalized when they extend the life, improve the efficiency or increase the earnings capacity of the asset. Expenditures for maintenance, repairs and minor renewals to maintain facilities in operating condition are expensed as incurred.

The asset’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year end.

Intangible assets

Intangible assets mainly includes software rights, they are initially recognized at acquisition cost that are amortized over 3 to 10 years on straight-line basis.

Trademarks

Acquired trademarks are shown at historical cost. Trademarks have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of trademarks and licenses over their estimated useful lives (9 years).

Contractual customer relationships

Contractual customer relationships acquired in a business combination are recognized at fair value at the acquisition date. The contractual customer relations have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method over the 23 years of life of the customer relationship.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the income statement when the asset is derecognized. 21

(106) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Investment properties

Land and buildings that are held in the production of supply of goods or services of for administrative purposes or for long term rental yields or for capital appreciation or both rather than for the sale in the ordinary course of business are classified as “investment property”. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise.

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognized in the consolidated income statement in the year of retirement or disposal.

Transfers are made to investment property when, and only when, there is a change in use, evidenced by ending of owner-occupation, commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner-occupation or commencement of development with a view to sale.

Investment property also includes long-term leasehold land held under an operating lease, which is accounted for as a finance lease in accordance with IAS 40 “Investment Property” and IAS 17 “Leases”. Each lease payment on the long-term leasehold land is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current and non-current lease liability on leasehold land. The interest element of the finance cost is charged to income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Business combinations

The acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition- date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition date, except that:

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; • liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at the acquisition date; and • assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

YILLIK FANNUAL REPORT (107)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Business combinations (cont’d)

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss.

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquire prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.

Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.

Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statement of income statement. An impairment loss recognized for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(108) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Non-current assets held for sale

The Group measures a non-current asset (or disposal group) classified as held for sale at the lower of its carrying amount and fair value less costs to sell, and depreciation on such assets are ceased.

The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable.

For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset (or disposal group), and an active programme to locate a buyer and complete the plan must have been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification, and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Discontinued operations

A discontinued operation is a component of an entity that either has been disposed of, or that is classified as held for sale, and: represents a separate major line of business or geographical area of operations; is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations. The Group measured assets and liabilities related to the disposal group at the lower of their previous carrying amount and fair value less costs to sell.

Impairment of non-financial assets

The carrying values of non-financial assets, other than goodwill which is reviewed for impairment at least annually, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognized in the consolidated income statement for items carried at cost and treated as a revaluation decrease for items carried at revalued amount to the extent that impairment loss does not exceed the amount held in the revaluation surplus.

The recoverable amount of property, plant and equipment is the greater of net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets no longer exist or has decreased. The reversal is recognized in income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.

Borrowing costs

Borrowing costs 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. All other borrowing costs are recognized in the statement of income / (loss) in the period in which they are incurred.

YILLIK FANNUAL REPORT (109)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

According to IFRS 9 as from 1 January 2010, the group classifies its financial assets in the following categories: those to be measured subsequently at fair value, and those to be measured at amortised cost. This classification depends on whether the financial asset is a debt or equity investment.

(a) Financial assets at amortised cost

A debt investment is classified as ‘amortised cost’ only if both of the following criteria are met: the objective of the group’s business model is to hold the asset to collect the contractual cash flows; and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in the debt investment are considered in determining whether the cash flows of the investment are solely payment of principal and interest on the principal outstanding and are not accounted for separately.

A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the financial asset is derecognised or impaired and through the amortisation process using the effective interest rate method.

(b) Financial assets at fair value

If either of the two criteria above are not met, the debt instrument is classified as ‘fair value through profit or loss. The Group has classified their financial assets as financial assets to be measured at fair value.

Regular purchases and sales of financial assets are recognised on the trade-date — the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.

At initial recognition, the group measures a financial asset at its fair value. A gain or loss on a debt investment that is subsequently measured at fair value and is not part of a hedging relationship is recognised in profit or loss and presented in the income statement within ‘other (losses) / gains — net in the period in which they arise.

The Group is required to reclassify all affected debt investments when and only when its business model for managing those assets changes.

Impairment of financial assets

Financial assets at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets measured at amortised cost is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

(110) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Financial instruments (cont’d)

Impairment of financial assets (cont’d)

Financial assets at amortised cost (cont’d)

The criteria that the group uses to determine that there is objective evidence of an impairment loss include:

• significant financial difficulty of the issuer or obligor; • a breach of contract, such as a default or delinquency in interest or principal payments; • the group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider; • it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; • the disappearance of an active market for that financial asset because of financial difficulties; or • observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:

i. adverse changes in the payment status of borrowers in the portfolio; and ii. national or local economic conditions that correlate with defaults on the assets in the portfolio.

The group first assesses whether objective evidence of impairment exists.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or heldto- maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments which their maturities are three months or less from date of acquisition and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

YILLIK FANNUAL REPORT (111)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Financial instruments (cont’d)

Financial liabilities (cont’d)

Financial liabilities are classified as either financial liabilities at fair value through profit and loss or other financial liabilities.

a) Financial liabilities at fair value through profit and loss

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability.

b) Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derivative financial instruments and hedging

The Group uses derivative financial instruments such as forward currency purchase and sale contracts and also interest rate cap transactions, to hedge its risks associated with foreign currency and interest rate fluctuations. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to the consolidated income statement. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate cap contracts is determined based on quoted market prices in active markets.

For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability. At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Hedges which meet the strict criteria for hedge accounting are accounted for as follows:

(112) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Financial instruments (cont’d)

Derivative financial instruments and hedging (cont’d)

Cash flow hedges

Cash flow hedges are a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability and could affect income statement. The Power Companies have borrowings with variable interest rates and the Group uses interest rate caps to hedge the exposure to variability in cash flows due to the change in interest rates. The effective portion of the gain or loss on the hedging instrument is recognized directly in equity, while the ineffective portion is recognized in income statement.

Amounts taken to equity are transferred to the income statement when the hedged transaction affects income statement.

The Group has classified these cash flow hedge derivative assets under “Other Non-current Assets” and classified the fair value changes in these instruments directly in equity under “Other Reserves” as net gain/loss on cash flow hedges.

Accounting at the date of transaction

All financial assets are recognized and derecognized on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned.

Offsetting

Financial assets and liabilities are offset and the net amount is reported in the consolidated 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 realise the asset and settle the liability simultaneously.

Derecognition of financial liabilities

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

Effects of Changes in Foreign Exchange Rates

Transactions in currencies other than functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. Foreign currency indexed monetary assets and liabilities are recorded at the rates of exchange prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non- monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognized in profit or loss in the period in which they arise.

Earnings per share

Basic earnings per share (EPS) disclosed in the consolidated income statement are determined by dividing net profit by the weighted average number of shares that have been outstanding during the related year concerned.

In Turkey, companies can increase their share capital by making a pro-rata distribution of shares (Bonus Shares) to existing shareholders without a consideration for amounts resolved to be transferred to share capital from retained earnings. For the purpose of the EPS calculation, such bonus share distributions are regarded as stock dividends. If the number of ordinary shares outstanding increases as a result of a capitalization, bonus issue or share split, or decreases as a result of a reverse share split, the calculation of basic EPS for all periods presented is adjusted retrospectively. If these changes occur after the balance sheet date but before the financial statements are authorized for issue, the EPS calculations for those and any prior period financial statements presented is based on the new number of shares.

YILLIK FANNUAL REPORT (113)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Provisions, contingent liabilities, contingent assets

Provisions

Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense.

Contingent liabilities and assets

If contingent liabilities does not carry a high probability of resource allocation (cash outlow), they are not recognized in the consolidated financial statements but disclosed in the footnotes. However, contingent assets are not recognized in consolidated financial statements but disclosed in the footnotes when an inflow of economic benefits is probable.

Leases - The Group as lessee

Finance leases

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income statement. Leased assets are depreciated over the useful life of the asset. However, if there is no reasonably certainty that the Group will obtain ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease

Leases of assets under which substantially all the risks and rewards of ownership are effectively retained by the lessor, are classified as operating leases, except long-term leasehold land classified as investment property. Lease payments under an operating lease are recognized as an expense on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognized as a reduction of rental expense over the lease term on a straight-line basis.

Leases - The Group as lessor

Operating lease

The Group has entered into commercial and residential property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the contracts as operating leases. Lease income from operating leases is recognized in income statement on a straight-line basis over the lease term. Costs, including depreciation, incurred in earning the lease income are recognized as an expense. Initial direct costs incurred by the Group in negotiating and arranging an operating lease is added to the carrying amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income.

(114) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Related parties

Parties are considered related to the Group if;

(a) directly, or indirectly through one or more intermediaries, the party:

(i) controls, is controlled by, or is under common control with, the Group (this includes parents, subsidiaries and fellow subsidiaries); (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Company;

(b) the party is an associate of the Company; (c) the party is a joint venture in which the Group is a venturer; (d) the party is member of the key management personnel of the Company or its parent; (e) the party is a close member of the family of any individual referred to in (a) or (d); (f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); (g) the party is a post-employment benefit plan for the benefit of employees of the Group, or of any entity that is a related party of the Group.

Related party transaction is the transfer of resources, services or liabilities regardless of whether a price is charged or not.

Income tax Tax expense / (income) is the aggregate amount included in the determination of net income statement for the period in respect of current and deferred tax.

The Group is subject to income taxes in various jurisdictions. Where there are matters the final tax outcome of which is different from the amounts initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted by the balance sheet date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the income statement.

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. Deferred income tax liabilities are recognized for all taxable temporary differences.

Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilized.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that, in the management’s judgment, 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. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred 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 dates.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities, and deferred taxes relate to the same taxable entity and the same taxation authority. Deferred tax relating to items recognized directly in equity is recognized in equity and not in the consolidated income statement.

YILLIK FANNUAL REPORT (115)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d)

2.5 Summary of significant accounting policies (cont’d)

Employee termination benefits

The Group has both defined benefit and defined contribution plans as described below:

Defined benefit plans

In accordance with existing social legislation in Turkey, the Company and its subsidiaries in Turkey are required to make lump-sum termination indemnities to each employee who has completed one year of service and whose employment is terminated due to retirement or for reasons other than resignation or misconduct. These benefits are unfounded. The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit actuarial valuation method. All actuarial gains and losses are recognized in other comprehensive income. Personnel working in branches operating in foreign countries and joint-operations do not have any employee termination benefit as there is no legal obligation in these countries. Defined contribution plans

The Company and its subsidiaries in Turkey pay contributions to publicly administered Social Security Fund on a mandatory basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due.

Foreign subsidiaries and joint operations contribute to the related government body for the pension scheme of its employees in the country they are domiciled. Mandatory contributions to the governmental pension scheme are expensed when incurred.

Statement of cash flows

Cash flows are classified according to operating, investment and finance activities in the statement of cash flows

For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, excluding short term deposits with an original maturity of more than three months and deposits blocked in bank accounts as collateral.

Subsequent events

Events following the balance sheet date, also known as ‘subsequent events’ include any favorable or unfavorable event that took place between the balance sheet date and the publication date of the balance sheet, despite any possible event that might arise after the publicization of any information regarding profits or other financial figures.

The Company adjusts its financial statements if such adjusting subsequent events arise.

(116) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

3. DIVIDENDS PAID

Based on the Group’s Ordinary General Assembly; it has been resolved to distribute dividend to its shareholders for each TL 1 (full TL) nominal valued share, 0,08 gross / 0,068 net (as being 8,00% gross, 6,80% net of the issued share capital) in total TL 224.000 (2012: TL 290.000) and TL 19.317 (2012: TL 18.105) as cash dividend to founder shares. The distribution is completed on 8 May 2013.

In 2013 and 2012, the Group distributed dividends as detailed below:

2013 2012 Dividends per Dividends per Dividend share Dividend share

Ordinary share owners (1 Full TL nominal 224,000 TL 0,07 Full TL 290,000 TL 0,091 Full TL value) Founder share owners 19,317 TL 19.32 TL 18,105 TL 18.11 TL

243,317 TL 308,105 TL

YILLIK FANNUAL REPORT (117)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

4. INTEREST IN JOINT OPERATIONS

The Group's share in the assets and liabilities and the profit/loss of the of the joint operations using the proportionate consolidation method on a line by line basis is as follows: 31 December 31 December 2013 2012 ASSETS Current Assets Cash and cash equivalents 45,945 51,948 Trade receivables 30,614 152,386 Other receivables 85 45 Inventories 8,901 20,777 Costs and estimated earnings in excess of billings on uncompleted contracts 6,285 1,817 Other current assets 14,549 17,702

Group's share in current assets of joint operations 106,379 244,675 Non-Current Assets Cost 119,804 164,063 Accumulated depreciation (83,437) (109,757) Group's share in joint operations in property, plant and equipment 36,367 54,306 Trade receivables - 7,612 Other non-current assets 906 1,292

Group's share in non-current assets of joint operations 906 8,904

LIABILITIES Current Liabilities Trade payables 47,626 40,309 Billings in excess of costs and estimated earnings on uncompleted contracts 109,217 144,510 Taxation on income 1,037 456 Provisions 3,729 8,048 Provisions for employee benefits 5,913 7,983 Other current liabilities 612 39,576

Group's share in current liabilities of joint operations 168,134 240,882

The Group’s share in the profit/loss of the joint operations using the proportionate consolidation method on a line by line basis is as follows:

(118) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

5. SEGMENTAL INFORMATION

The Group’s operating businesses are organized and managed separately according to the nature of services and products provided and has four reportable segments as follows: construction, rental, energy and trading and manufacturing. a) Business segments: 1 January - 31 December 2013 Construction Trade and contracts Rental manufacturing Energy Eliminations Consolidated

Revenues 2,367,514 477,090 438,923 3,263,214 - 6,546,741 Inter-segment revenues 182,584 729 7,736 20,782 (211,831) - Cost of revenues (1,946,286) (114,656) (354,032) (3,046,442) - (5,461,416) Inter-segment cost of revenues (189,592) - (7,736) (20,721) 218,049 - Gross profit 414,220 363,163 84,891 216,833 6,218 1,085,325

Marketing, selling and (38,954) distribution expenses (9,870) (6,850) (22,188) (46) - Administrative expenses (70,714) (20,091) (21,057) (13,598) 729 (124,731) Other operating income 20,057 7,597 13,492 19,358 - 60,504 Other operating expenses (-) (34,760) (2,233) (10,801) (355) - (48,149) Profit from operations 318,933 341,586 44,337 222,192 6,947 933,995

Invesment income 102,795 9,031 72 - - 111,898 Investment expenses (-) (114,844) - (378) - - (115,222) Profit from operations Before Financial Income/(Expenses) 306,884 350,617 44,031 222,192 6,947 930,671

Financial income 27,403 1,969 3,258 12,603 (20,369) 24,864 Financial expenses (-) (30,059) (7,948) (20,271) (7,169) 20,398 (45,049) Profit before tax 304,228 344,638 27,018 227,626 6,976 910,486

Taxation charge current (-) (65,802) (62,838) (9,029) (33,312) - (170,981) Deferred taxation income/ (expenses) (12,575) (7,527) 1,512 (27,912) - (46,502) Profit for the year from continuing operations 225,851 274,273 19,501 166,402 6,976 693,003

31 December 2013 Construction Trade and contracts Rental manufacturing Energy Consolidated Segment assets 3,640,206 2,590,708 364,131 1,874,909 8,469,954 Unallocated assets 1,477 Total assets 3,640,206 2,590,708 364,131 1,874,909 8,471,431 Segment liabilities 976,393 570,386 178,790 1,083,597 2,809,166 Unallocated liabilities 1,196 Total liabilities 976,393 570,386 178,790 1,083,597 2,810,362

1 January - 31 December 2013 Construction Trade and Other segment information contracts Rental manufacturing Energy Consolidated Capital expenditures Property, plant and equipment & investment property 85,552 161,978 1,339 7,011 255,880 Intangible assets 1,261 37 737 990 3,025 Total capital expenditures 86,813 162,015 2,076 8,001 258,905 Depreciation expense 37,984 4,822 3,284 51,103 97,193 Amortisation 76 73 255 109 513

YILLIK FANNUAL REPORT (119)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

5. SEGMENTAL INFORMATION (cont’d) a) Business segments (cont’d) 1 January - 31 December 2012 Construction Trade and contracts Rental manufacturing Energy Eliminations Consolidated

Revenues 1,282,401 441,234 387,570 3,634,557 - 5,745,762 Inter-segment revenues 101,166 1,076 7,784 18,582 (128,608) - Cost of revenues (1,093,696) (115,679) (326,756) (3,409,579) - (4,945,710) Inter-segment cost of revenues (109,786) - (7,783) (18,582) 136,151 - Gross profit 180,085 326,631 60,815 224,978 7,543 800,052

Marketing, selling and (12,739) (7,072) (21,117) (625) - (41,553) Administrative expenses (75,204) (17,501) (18,521) (12,042) 1,823 (121,445) Other operating income 20,585 3,549 3,406 2,401 (1,218) 28,723 Other operating expenses (-) (27,875) (24,189) (10,950) (1,029) - (64,043) Profit from operations 84,852 281,418 13,633 213,683 8,148 601,734

Invesment income 194,626 26,399 331 291 (2,823) 218,824 Investment expenses (-) (37,340) (2,997) (449) (153) - (40,939) Profit from operations Before Financial Income/(Expenses) 242,138 304,820 13,515 213,821 5,325 779,619

Financial income 16,866 1,434 13,351 6,071 (9,942) 27,780 Financial expenses (-) (18,777) (2,223) (6,984) (11,482) 10,355 (29,111) Profit before tax 240,227 304,031 19,882 208,410 5,738 778,288

Taxation charge current (-) (42,733) (55,987) (5,335) (17,976) - (122,031) Deferred taxation income/ (expenses) 267 (3,968) 1,702 (26,398) - (28,397) Profit for the year from continuing operations 197,761 244,076 16,249 164,036 5,738 627,860

31 December 2012 Construction Trade and contracts Rental manufacturing Energy Consolidated

Segment assets 3,556,743 2,390,683 393,521 1,896,272 8,237,219 Unallocated assets 287 Total assets 3,556,743 2,390,683 393,521 1,896,272 8,237,506

Segment liabilities 765,934 438,234 248,542 1,423,836 2,876,546 Unallocated liabilities 1,457 Total liabilities 765,934 438,234 248,542 1,423,836 2,878,003

1 January - 31 December 2012 Construction Trade and Other segment information contracts Rental manufacturing Energy Consolidated Capital expenditures Property, plant and equipment & investment property 67,192 59,759 4,801 6,378 138,130 Intangible assets 2,009 81 720 629 3,439 Total capital expenditures 69,201 59,840 5,521 7,007 141,569

Depreciation expense 39,879 6,206 5,230 53,731 105,046 Amortisation 1,208 82 253 159 1,702

(120) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

5. SEGMENTAL INFORMATION (cont’d) a) Business segments (cont’d)

Transfer prices between business segments are set out on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, segment expense and segment result include transfers between business segments. Those transfers are eliminated in consolidation.

For the year ended 31 December 2013, revenues amounting to USD 3.263.214 (31 December 2012: USD 3.634.557) is from Türkiye Elektrik Ticaret ve Taahhüt A.Ş. (TETAŞ), the share of which in consolidated revenue exceeds 10%. For the year ended 31 December 2013, cost of sales of the above mentioned revenues from TETAŞ, amounting to USD 2.879.913 (31 December 2012: USD 3.249.722) is related with the purchases from Boru Hatları ile Petrol Taşıma A.Ş. (BOTAŞ), the share of which in consolidated cost of revenues exceeds %10. b) Geographical segments 1 January - 31 December 2013 Russian Federation, Turkey Kazakhstan Europe Iraq & Other Eliminations Consolidated Net sales 4,419,178 870,130 178,849 1,078,584 - 6,546,741 Inter-segment sales 75,934 135,897 - - (211,831) - Capital expenditures 72,409 168,359 5,436 12,701 - 258,905

31 December 2013 Russian Federation, Turkey Kazakhstan Europe Iraq & Other Eliminations Consolidated Segmental assets 4,490,514 2,976,350 570,050 433,040 - 8,469,954

1 January - 31 December 2012 Russian Federation, Turkey Kazakhstan Europe Iraq & Other Eliminations Consolidated Net sales 4,374,847 711,318 166,338 493,259 - 5,745,762 Inter-segment sales 83,259 45,349 - - (128,608) -

Capital expenditures 39,315 67,128 14,187 20,939 - 141,569

31 December 2012

Russian Federation, Turkey Kazakhstan Europe Iraq & Other Eliminations Consolidated Segmental assets 4,420,403 2,766,515 749,757 300,544 - 8,237,219

YILLIK FANNUAL REPORT (121)

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

6. CASH AND CASH EQUIVALENTS

31 December 31 December 2013 2012 Cash on hand 2,111 1,987 Cash in bank Demand deposits 801,951 615,614 Time Deposits 464,173 392,150 Other 3,901 5,127 1,272,136 1,014,878 Less: restricted time deposits with maturity over three months and (1,000) (1,000) less than one year Cash and cash equivalents at consolidated statement of cash flows 1,271,136 1,013,878

Explanations about the nature and level of risks related to cash and cash equivalents are provided in Note 34.

7. FINANCIAL INVESTMENTS

Current financial investments

Short-term financial investments of the Group classified as financial assets at fair value through profit or loss as of 31 December 2013 and 31 December 2012 are detailed below:

31 December 31 December Financial assets at fair value through profit or loss 2013 2012 Private sector bonds - International markets 3,669 78,453 Foreign Government bonds - International markets 234,442 390,829 Equity securities - International markets 176,417 166,323 - Domestic market 923 1,646 Turkish Government bonds - Domestic market 16,744 - Mutual funds - International markets 47,388 52,941 - Domestic market 2,073 32,060

481,656 722,252

(122) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

7. FINANCIAL INVESTMENTS (cont’d)

Non-current financial investments

Long-term financial investments of the Group classified as financial assets at fair value through profit or loss as of 31 December 2013 and 31 December 2012 are detailed below: 31 December 31 December Financial assets at fair value through profit or loss 2013 2012 Private sector bonds - International markets 851,658 762,526 Foreign Government bonds - International markets 73,669 155,326 Turkish Government bonds - Domestic market 13,607 6,426 - International markets 59,004 45,361 Equity securities 520 446 998,458 970,085

Maximum maturity dates of financial assets in the nature of borrowings are as follows:

31 December 2013 31 December 2012

Private Sector Bonds - International markets 31 December 2049 31 December 2049 Foreign Government Bonds - International markets 07 March 2022 29 March 2049 Turkish Government Bonds - Domestic market 07 October 2015 15 January 2020 - International markets 14 January 2041 14 January 2041

YILLIK FANNUAL REPORT (123)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

8. FINANCIAL LIABILITIES

a) Bank loans

31 December 2013 Short-term borrowings: Weighted Average Currency Original USD Interest rate Type Currency Equivalent Short-term bank borrowings 3.18% EUR 12,876 17,716 3.78% USD 12,405 12,405 13.20% TL 12,069 5,655 Total short-term borrowings 35,776

Long-term borrowings: Hermes loan 0.93% EUR 14,327 19,712

Other long-term bank borrowings 4.59% USD 6,087 6,087 1.80% EUR 5,088 7,000 2.26% JPY 7,633,377 72,246 13.34% TL 1,379 646

Finance lease obligations 240,945

346,636 Less: Current portion of long-term borrowings (66,162) Total long-term borrowings 280,474

31 December 2012 Short-term borrowings: Weighted Average Currency Original USD Interest rate Type Currency Equivalent Short-term bank borrowings 4.16% EUR 7,159 9,445 5.25% USD 9,494 9,494 8.30% TL 1,406 789 9.00% RUB 10,000 325 Total short-term borrowings 20,053

(124) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

8. FINANCIAL LIABILITIES (cont’d)

a) Bank loans (cont’d) Long -term borrowings: 31 December 2012 Weighted Average Currency Original USD

Interest rate Type Currency Equivalent

Eximbank loans 2,29% USD 54.985 54.985 OPIC loan 7,75% USD 36.563 36.563

Hermes loan 1,19% USD 1.511 1.511

OND loan 1,28% USD 5.745 5.745 Hermes loan 0,54% EUR 24.731 32.628

Other long-term bank borrowings 5,16% USD 9.014 9.014 3,93% EUR 14.270 18.826

2,31% JPY 9.150.657 106.033

13,31% TL 3.468 1.945

Finance lease obligations 89.249

356.499

Less: Current portion of long-term borrowings (137.458)

Total long-term borrowings 219.041

Repayment schedule of long-term bank borrowings are as follows:

31 December 2013 31 December 2012 Less than 1 year 58,705 134,768 1 - 2 years 19,645 91,743 2 - 3 years 15,207 19,457 3 - 4 years 12,135 12,114 4 - 5 years - 9,168

Less : Current portion of long-term borrowings (58,705) (134,768)

46,987 132,482

YILLIK FANNUAL REPORT (125)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

8. FINANCIAL LIABILITIES (cont’d)

a) Bank loans (cont’d)

Power companies Bank loans

The long-term borrowings of the Power Companies have been obtained under a project financing structure. Enka İnşaat has given a letter of credit to support each Power Company’s Debt Service Reserve up to a maximum amount of 6 months’ senior debt service under these facilities. The letter of credit can only be called to meet senior debt service to the extent 6 months senior debt service is not met from operating cash flow.Total amount of these loans are paid in 2013 before the maturity dates.

Eximbank loans

A syndicate of commercial banks named as Eximbank Facility Lenders provides the funding. The interest is currently payable to the lender in 6 months’ period and the applicable rate is determined as the 6-month LIBOR Rate plus 0,1% for Gebze Elektrik and İzmir Elektrik. Adapazarı Elektrik Exim loan bears 4,26% fixed rate for the entire life of the loan. Interest is paid semi-annually. Total amount of these loans are paid in 2013.

OPIC loans

The OPIC loans are funded with the issue of Government backed certificates in the US Capital Markets and have a 12-year term of principal repayment in 24 semi-annual installments commencing on May 15, 2003 for Adapazarı and Gebze Elektrik, on October 15, 2003 for İzmir Elektrik. In December 2002, the variable interest rates (3 months US Treasury bill rate plus a maximum of 4,25% and minimum of 3,80%) were converted to a fixed rate of 7,54%, 7,85% and 7,90% for İzmir Elektrik, Gebze Elektrik and Adapazarı Elektrik, respectively. Total amount of these loans are paid in 2013.

Hermes loans

The Hermes loans are guaranteed by the Export Credit Agencies of the German Government and have a 12-year term of principal repayment in 24 semi-annual installments commencing on May 15, 2003 for Adapazarı and Gebze Elektrik, on October 15, 2003 for İzmir Elektrik. Interest is paid semi-annually at a rate of 12-months LIBOR plus a margin of 0,625%. Total amount of these loans are paid in 2013.

OND loans

The OND Loans are guaranteed by the Export Credit Agencies of the Belgian Government and have a 12-year term of principal repayment in 24 semi-annual installments commencing on May 15, 2003 for Adapazarı and Gebze Elektrik, on October 15, 2003 for İzmir Elektrik. A syndicate of commercial banks provides the funding. The interest is paid semi-annually at a rate of 12-months LIBOR plus a margin of 0,70%. Total amount of these loans are paid in 2013.

Other long-term bank borrowings Other long-term bank borrowings include Euro denominated Hermes loan and loan denominated in Japanese Yen. These loans were obtained to finance the operations of Enka Pazarlama which is the subsidiary of the Group.

(126) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

8. FINANCIAL LIABILITIES (cont’d)

b) Finance lease obligations

31 December 2013 Weighted Average Currency Original USD Interest rate Type Currency Equivalent Current portion of long-term finance lease obligations 2.36% USD 277 277 3.00% RUB 238,988 7,180

7,457 Long-term 3.00% RUB 7,690,317 233,488

233,488 240,945

31 December 2012 Weighted Average Currency Original USD Interest rate Type Currency Equivalent

Current portion of long-term finance lease obligations 2.36% USD 282 282 3.00% RUB 73,905 2,408 2,690

Long-term 3.00% RUB 2,656,677 86,559

86,559 89,249

c) Finance lease commitments

As of 31 December 2013 and 2012, repayment schedule of finance lease obligations are as follows:

31 December 2013 31 December 2012

Less than 1 year 7,457 2,693 1 - 5 years 35,560 16,799 More than 5 years 197,928 69,760

Total finance lease obligations 240,945 89,252

Interest - (3)

Present value of total finance lease obligations 240,945 89,249

YILLIK FANNUAL REPORT (127)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

9. TRADE RECEIVABLES AND PAYABLES

a) Trade receivables 31 December 31 December Short-term trade receivables 2013 2012 Trade receivables 357,324 536,643 Discount on trade receivables (-) (175) (142) Contract receivables 387,398 281,172 Notes and cheques receivables 55,617 73,253 Discount on notes and cheques receivables (-) (1,255) (1,159) Retention receivables (*) 23,089 13,609 821,998 903,376 Less: Allowance for doubtful receivables (24,436) (24,656) 797,562 878,720

(*) Retention receivables are described as withheld by the customers until the contracts are completed or, in certain instances for even longer periods and undue trade receivables in the construction contracts.

Collection periods of receivables from construction works depends on the agreement conditions are between 30 and 90 days.

As of 31 December 2013 and 2012, movement of allowance for doubtful receivables is as follows: 1 January - 1 January - 31 December 31 December 2013 2012

Balance at beginning of the year 24,656 30,809 Additional provision 4,337 5,489 Foreign currency translation effect (725) 652 Amounts recovered during the year (Note 26) (441) (297) Write-offs (*) (3,391) (11,997)

Closing balance 24,436 24,656

(*) Allowances of the previous periods which were decided as bad debts were written-off as of 31 December 2013 and 2012. 31 December 31 December Long-term trade receivables 2013 2012 Notes and cheques receivables 4,210 5,172 Discount on notes and cheques receivables (-) (144) (34) Trade receivables 9,591 9,201 Discount on trade receivables (-) (140) (33) Retention receivables (*) - 7,612 13,517 21,918

(*)Retention receivables are described as withheld by the customers until the contracts are completed or, in certain instances for even longer periods and undue trade receivables in the construction contracts.

Explanations about the nature and level of risks related to cash and cash equivalents are provided in Note 34.

(128) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

9. TRADE RECEIVABLES AND PAYABLES (cont’d)

b) Trade payables 31 December 31 December Short-term trade payables 2013 2012 Trade payables 527,983 613,448 Discount on trade payables (-) (8) (14) Notes Payable 5,569 8,038 Discount on notes payable (-) (19) (33) Other trade payables 204 117 533,729 621,556

31 December 31 December Long term trade payables 2013 2012 Trade payables 5,503 5,277 5,503 5,277

Explanations about the nature and level of risks related to cash and cash equivalents are provided in Note 34.

10. OTHER RECEIVABLES AND PAYABLES

a) Other receivables

31 December 31 December Short-term other receivables 2013 2012 Deposits and guarantees given 693 9,864 Other receivables from related parties (Note 33) 43 233 736 10,097

b) Other payables

31 December 31 December Short-term other payables 2013 2012 Deposits and guarantees taken 28,791 26,576 Other payables to related parties (Note 33) 1,198 1,457 29,989 28,033

31 December 31 December Long-term other payables 2013 2012 Deposits and guarantees taken 30,127 25,862 30,127 25,862

YILLIK FANNUAL REPORT (129)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

11. INVENTORIES 31 December 31 December 2013 2012 Raw materials and spare parts 164,344 162,615 Work in progress 68,558 12,645 Trade goods (machinery and others) 63,332 85,272 Finished goods 10,835 22,263 Goods in transit 19,724 29,781 Construction materials 18,317 27,474 Allowance for impairment on inventory (*) (704) (2,458) 344,406 337,592

(*) As of 31 December 2013 and 2012, allowance for impairment on finished goods and trade goods is recognized as an expense in cost of sales.

As of 31 December 2013, there is not any pledge on inventories (31 December 2012 - None).

12. CONSTRUCTION CONTRACTS

31 December 31 December 2013 2012 Costs incurred on uncompleted contracts 1,904,214 1,945,441 Recognized profit less recognized losses to date 88,102 319,918 1,992,316 2,265,359

Less: progress billing (2,054,715) (2,378,807)

(62,399) (113,448)

The net balance is included in the consolidated balance sheet under the following captions: 31 December 31 December 2013 2012 Costs and estimated earnings in excess of billings on 108,938 68,573 uncompleted contracts (net) Billings in excess of costs and estimated earnings on (171,337) (182,021) uncompleted contracts (net) (62,399) (113,448)

As of 31 December 2013, the amount of advances received of subsidiaries and companies shares in joint operations is USD 209.083 (31 December 2012 – USD 226.692).

(130) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

13. INVESTMENT PROPERTIES

As of 31 December 2013 and 2012, movement of investment properties is as follows: 1 January - 1 January - 31 December 2013 31 December 2012

Opening balance 2,133,921 1,942,767 Currency translation difference (108,269) 82,877 Change in fair value, net (Note 27) 4,778 20,554 Transfers from fixed assets (Note 14) 7,381 1,005 Additions 153,135 53,383 Change in present value of lease obligations 156,383 35,771 Disposals (797) (2,436) Closing balance 2,346,532 2,133,921

Investment properties include mainly real estate properties in Russia and Turkey which are leased to tenants. As of 31 December 2013 and 2012 investment properties consist of real estates in Russia from which rent income is obtained and lands and buildings held as investment in Turkey amounting to USD 11.021 (31 December 2012: USD 12.432). These properties are revalued by Artı Gayrimenkul Değerleme A.Ş. which is a CMB licenced independent valuation firm.

Investment properties of the consolidated subsidiaries MKH, Mosenka and Enka TC have been revalued at fair value. Fair values of such investment properties are reviewed every year through the report of independent valuers. As of 31 December 2013, the fair values of investments properties of the consolidated subsidiaries MKH, Mosenka and Enka TC have been set respectively as follows: MKH; 12,06 million RUB equivalent to USD 368.360 (31 December 2012 – 11.85 million RUB equivalent to USD 390.121), Mosenka; 4,12 million RUB equivalent to USD 125.861 (31 December 2012 – 4.08 billion RUB equivalent to USD 134.312), Enka TC; 37,8 billion RUB equivalent to USD 1.155.451 (31 December 2012 – 30.5 billion RUB equivalent to USD 1.003.994). These properties are revalued by Artı Gayrimenkul Değerleme A.Ş. which is a CMB licenced independent valuation firm.

The fair values of the investment properties of the Company in Russia, determined at 31 December 2013 as USD 664.750 (31 December 2012 – USD 580.473) the investment properties of the Group located in Moscow includes land leased from Moscow City Authorities under a 49 year operating lease agreement, which are renewable at the option of the Group.

The investment properties owned by the Group are carried at fair value determined by independent professionally qualified valuers on the basis of market value supported by market evidence and other information obtained in the course of market research. Fair values of such investment properties are periodically reviewed by the Group through the report of independent valuers.

For the circumstances that the fair value of the properties have not been determined based on transactions observable in the market because of the nature of the property and the lack of comparable data, a valuation model based on income capitalisation method has been applied. The fair value of the investment properties of the Group are estimated by using income capitalization method, with capitalization and discount rates ranging between 9% to 14,1% and 8,60% to 10,8% (31 December 2012: 8% to 10% and 9% to 9,5%) respectively.

“KOMIT Invest” which is licenced by Russian Federation as an independent valuation firm, has revalued the fair values of the investment properties of the Group.

Fair value as at 31 December 2013 31 December 1. Level 2. Level 3. Level 2013 USD USD USD

Investment properties in Russia 2,332,688 - - 2,332,688 Investment properties in Turkey 13,844 - 13,844 -

Total 2,346,532 - 13,844 2,332,688

YILLIK FANNUAL REPORT (131)

- -

Total 5,889 5,449 2,246 54,754 16,055 41,703 102,745 (97,193) (13,270) (77,923) (24,810) (964,619) (949,573) 1,832,530 1,816,885 2,797,149 2,766,458

“American ------

(696) 30,713 24,792 30,713 23,519 24,792 (2,281) (3,168) (11,453) lued by in progress in

Construction - - - - 47 352 768 (391) 3,663 1,744 1,058 11,694 10,102 Others (1,312) (3,968) (6,439) (1,257) (11,342)

------(594) 7,725 2,340 10,399 14,899 19,319 (7,174) (8,920) (4,420)

Aircrafts (*) ------(27) (36) 4,521 6,951 3,486 30,674 34,635 (1,928) (3,925) Land and buildings of Enka Pazarlama, Pazarlama, of Enka buildings and Land equity. uded under (26,153) (27,684)

formworks

and Scaffolding - - -

901 5,865 2,707 2,074 20,206 23,795 65,828 10,720 75,342 (5,622) (2,402) (4,295) (2,641) fixtures (45,622) (51,547) (10,896)

Furniture and - - - - 19 380 102 (39)

9,232 3,584 2,986 Motor 10,883 29,848 31,807 (3,617) (5,066) vehicles (20,616) (20,924) - - -

47 (66) 6,026 7,140 30,612 58,778 (1,110) (5,253) (72,827) (37,931) (818,199) (780,900) 1,282,374 1,297,005 2,100,573 2,077,905

equipment

M achinery and

24 220 940 403 (27) 5,642

11,205 14,997 (8,563) 250,572 268,840 261,925 299,016 barracks (11,353) (30,176) (17,787) (11,186) (14,136)

)

Buildings and and Buildings from arising difference Revaluation valuers. qualified independent by revalued are MKH of part office and hotel building - -

52 443 924 (74) 1,058 2,246 4,595

52,889 (2,730) (3,125) 226,835 170,557 250,995 193,540 (24,160) (22,983)

Land and land and Land improvements

are revalued by Artı Gayrimenkul Değerleme A.Ş. which is a CMB licenced independent valuation firm. Buildings of MKH are reva A.Ş. AND ITS SUBSIDIARIES ITS AND A.Ş.

Enka. Air Company, the subsidiary of by aircrafts used the of consists

PROPERTY, PLANT AND EQUIPMENTS AND PLANT PROPERTY, are made by “precedent value” and “discounted cash flow” methods. flow” cash “discounted and value” by “precedent made are Appraisal”. Revaluations , Federation Russian in of Pimas lands 2013, December of 31 As ands surplu incl as revaluation and tax classified deferred related the off with netted is fairand value difference book value between Pimaş, Çimtaş and Enka İnşaat

. 4 1 FOR THE YEAR ENDED 31 DECEMBER 2013 DECEMBER 31 ENDED YEAR THE FOR ENKA İNŞAAT VE SANAYİ SANAYİ VE İNŞAAT ENKA STATEMENTS FINANCIAL CONSOLIDATED THE TO NOTES (Amounts are expressed as thousands U.S. of Dollars (”USD”) unless otherwise stated. Net book value as of 31 December 2013 as of 31 December Net book value Net book value as of 1 JanuaryNet 2013 book value Closing balance as of 31 January 2013 balance Closing Transfers to investment properties (Note 13) Other reclassifications(***) Disposals Charge of the year Charge Revaluation (**) Revaluation Currency translation differences Opening balance as of 1 January 2013 balance Opening Accumulated depreciation Closing balance as of 31 December 2013 as of 31 December balance Closing Other reclassifications(***) Transfers assets from for sale held Transfers to investment properties (Note 13) Disposals Disposals Additions Revaluation (**) Revaluation Currency translation differences Currency translation differences Cost as of 1 January 2013 balance Opening groups of fixed assets and have no effect on net book value of fixed assets. value of fixed book on net effect no and have assets of fixed - groups between sub classifiacations are reclassifications (***) Other (*) The amount The (*) (**)

(132) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

14. PROPERTY, PLANT AND EQUIPMENTS (cont’d)

Land and land Buildings and M achinery and Motor Furniture and Scaffolding and Construction

improvements barracks equipment vehicles fixtures formworks Aircrafts (*) Others in progress Total Cost Opening balance as of 1 January 2012 185,703 279,879 2,072,831 29,798 67,138 38,188 19,319 9,258 20,491 2,722,605 Currency translation differences 1,250 8,313 3,975 (1,089) 1,734 (724) 3,356 628 17,443 Revaluation (**) 281 7,650 ------7,931 Additions 5,902 8,053 45,118 4,629 7,283 2,184 - 216 11,362 84,747 Disposals (398) (3,960) (45,792) (1,760) (715) (1,312) - (5,620) (5,509) (65,066) Transfers to investment properties (Note 13) - (1,062) (4) - (8) - - - - (1,074) Transfers from construction in progress and other 802 143 1,777 229 (90) (3,701) - 2,892 (2,052) - reclassifications(***) Transfers to intangible assets ------(128) (128) Closing balance as of 31 December 2012 193,540 299,016 2,077,905 31,807 75,342 34,635 19,319 10,102 24,792 2,766,458

Accumulated depreciation Opening balance as of 1 January 2012 (20,244) (27,874) (724,973) (18,801) (44,443) (29,869) (7,121) (7,414) - (880,739) Currency translation differences (38) 186 (3,127) 553 (1,012) 525 - (756) - (3,669) Revaluation (**) - 2,402 ------2,402 Charge of the year (2,903) (10,051) (77,197) (3,554) (6,060) (2,667) (1,799) (815) - (105,046) Disposals 194 3,293 31,198 932 203 784 - 806 - 37,410 Other reclassifications(***) 8 1,799 (6,801) (54) (235) 3,543 - 1,740 - -

YILLIK F YILLIK Transfers to investment properties (Note 13) - 69 ------69 Closing balance as of 31 December 2012 (22,983) (30,176) (780,900) (20,924) (51,547) (27,684) (8,920) (6,439) - (949,573)

Net book value as of 1 January 2012 165,459 252,005 1,347,858 10,997 22,695 8,319 12,198 1,844 20,491 1,841,866 ANNUAL REPORT (133) REPORT ANNUAL Net book value as of 31 December 2012 170,557 268,840 1,297,005 10,883 23,795 6,951 10,399 3,663 24,792 1,816,885

(*) The amount consists of the aircrafts used by subsidiary of the Company, Air Enka. (**) As of 31 December 2012, lands of Pimas in Russian Federation, hotel building and office part of MKH are revalued by independent qualified valuers. Revaluation difference arising from difference between book value and fair value is netted off with the related deferred tax and classified as revaluation surplus and included under equity. Buildings of MKH are revalued by “American Appraisal”. Revaluations are made by “precedent value” and “discounted cash flow” methods. (***) Other reclassifications are classifiacations between sub-groups of fixed assets and have no effect on net book value of fixed assets.

48 ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

14. PROPERTY, PLANT AND EQUIPMENTS (cont’d)

As of 31 December 2013, total cost of property, plant and equipment obtained via finance lease and the related accumulated depreciation amounts to USD 5.192 (31 December 2012: USD 9.267) and USD 3.477 (31 December 2012: USD 6.120).

As of 31 December 2013, there is no security on the property, plant and equipment of the Group. (31 December 2012: USD 2.290.588)

If the buildings were measured using the cost model, the carrying amounts would be as follows: 31 December 31 December 2013 2012 Cost 350,755 359,797 Accumulated depreciation (150,089) (155,981) Net book value 200,666 203,816

The distribution of depreciation expenses as of 31 December 2013 and 2012 is presented in note 25.

Fair value as at 31 December 2013 31 December 1. Level 2. Level 3. Level 2013 USD USD USD

Lands 226,835 - 226,835 - Buildings 250,572 - - 250,572 Total 477,407 - 226,835 250,572

15. INTANGIBLE ASSETS 1 January - 1 January - 31 December 2013 31 December 2012 Cost Opening balance 40,183 37,496 Currency translation difference (626) 432 Additions 3,025 3,439 Disposals (144) (1,312) Transfers from fixed assets - 128 Closing balance 42,438 40,183 Accumulated amortization Opening balance (10,218) (8,072) Currency translation difference 266 (444) Charge of the year (513) (1,702) Closing balance (10,465) (10,218) Carrying value 31,973 29,965

As of 31 December 2013, there is not any pledge on intangible assets (31 December 2012: None).

The distribution of amortization expenses as of 31 December 2013 and 2012 is presented in Note 25.

16. GOODWILL

The Group had acquired the remaining 100% interest stake in the Power Companies between the years 2003 to 2005, where the Company had 40% shareholding. As a result of these acquisitions goodwill amounting to USD 55.151 (31 December 2012: USD 55.151) was recorded in the consolidated financial statements.

(134) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

16. GOODWILL (cont’d)

Çimtaş, the subsidiary of the Company, acquired 100% shares of IBH Engineering GMBH in the amount of EUR 10.000 in 21 April 2010. Thus, goodwill of EUR 6.486 was recognized in this acquisition.

As of 31 December 2013 and 2012, the movement of goodwill is as follows:

1 January - 1 January - 31 December 2013 31 December 2012 Opening balance 63,725 63,560 Currency translation difference 367 165 Closing balance 64,092 63,725

17. PREPAID EXPENSES AND DEFERRED INCOME

31 December 31 December Short-term Prepaid Expenses 2013 2012

Advances given 103,552 62,781 Prepaid expenses 8,662 9,810 112,214 72,591

31 December 31 December Long-term Prepaid Expenses 2013 2012

Advances given 40 48 Prepaid expenses 1,739 3,111

1,779 3,159

31 December 31 December Short-term Deferred Income 2013 2012 Advances taken 220,344 251,066 Deferred rent revenue 120,378 66,163

340,722 317,229

31 December 31 December Long-term Deferred Income 2013 2012

Deferred income (*) 708,084 787,816 Deferred rent revenue 3,327 2,813 711,411 790,629

(*) Represents the Power Companies’ deferred income, which is the difference between the average price recognized over the life of the project and actual charges.

YILLIK FANNUAL REPORT (135)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

18. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES

31 December 31 December Short-term accrued expenses 2013 2012 Accrual for construction costs 28,744 25,325 Forward accrual (*) 599 3,813 Provision for legal claims 5,396 5,310 Accrued expenses 6,054 2,018 40,793 36,466

(*) As of 31 December 2013, the Group’s derivative liabilities formed from forward foreign-currency transactions are USD 599 (31 December 2012: derivative liabilities USD 3.813) These contracts are reflected in the consolidated financial statements as follows.

Derivative instruments / forward contracts purchase – sales agreements

In the ordinary course of business, the Group enters into various types of transactions that involve derivative financial instruments. A derivative financial instrument is a financial contract between two parties where payments are dependent upon movements in price in one or more underlying financial instruments, reference rates or indices.

The table below shows derivative financial instruments analyzed by the term to maturity. The notional amount is the amount of a derivative’s underlying asset, reference rate or index and is the basis upon which changes in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding at year-end and are neither indicative of the market risk nor credit risk.

As of 31 December 2013 and 2012, the fair value of financial instrument is calculated by using forward exchange rates at the balance sheet date.

31 December 2013 Unrealized 1 to 12 1 to 2 2 to 5 (Loss) months years years

Derivative instruments (599) - - - Forward contracts sales agreements - 63,969 - - Forward contracts purchase agreements - 63,136 - -

31 December 2012 Unrealized 1 to 12 1 to 2 2 to 5 (Loss) months years years Derivative instruments (3,813) - - - Forward contracts sales agreements - 75,396 32,824 - Forward contracts purchase agreements - 72,968 31,663 -

(136) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

19. COMMITMENTS

Operating lease commitments – Group as lessee

Future minimum lease payments under non-cancellable operating leases of the Group as of 31 December 2013 and 31 December 2012 are as follows:

31 December 31 December 2013 2012 Within one year 142 378 After one year but not more than five years - 1,584 More than 5 years - 6,737 142 8,699

Operating lease commitments – Group as lessor

The minimum future rental income of the Group under non-cancelable operating leases at 31 December 2013 and 31 December 2012 are as follows:

31 December 31 December 2013 2012

Within one year 348,185 318,129 After one year but not more than five years 598,070 608,987 More than 5 years 269,861 245,050 1,216,116 1,172,166

Litigations

- In relation to the legal case regarding the construction project of the Group in Russia, due to losses incurred and due to receivable claims which have not been invoiced yet, the decision has been made and the Group has been entitled to receive USD 42.333 excluding litigation expenses and VAT. The full amount has been collected during the year.

- For the Group’s Esentai Park Project in Kazakhstan, an agreement has been reached with the job owner and their bank and after receiving the pledge for the overdue receivables the construction has been re-started.The provisions for this project are still being carried in the consolidated financial statements.

- As of 31 December 2013, regarding the motorway project of the Group in Albania, for 2006-2009 period the Group has been exposed to tax penalties and interest and penalties amounting to ALL 693.729 (USD 6.943) as a result of tax office audits which were held on different dates. Of this amount ALL 568.691 (USD 5.691) was paid. The Group has appealed against all these amounts and the appeal process is continuing as of the report date.

YILLIK FANNUAL REPORT (137)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

19. COMMITMENTS (cont’d)

Litigations (cont’d)

- As of 31 December 2013, an international arbitration has been filed by the Group for the losses incurred and unbilled receivables related to the joint operation in Oman. The employer has also filed a lawsuit at the same court. Since the calculations are still continuing total amount of the claims has not been finalised yet . Necessary provisions have been done at in the Group’s financial statements.

Others

- As of 31 December 2013, Pimaş has 5.750 USD and 3.700 Euro export commitments related with foreign currency loans with export commitments obtained from different domestic banks (31 December 2012 - 4.500 USD and 5.750 Euro).

- The breakdown of letters of guarantee, guarantee notes given, mortgage and pledges (together referred to as Guarantees) by the Group as of 31 December 2013 and 2012 is as follows:

31 December 2013 31 December 2012 Letters of guarantee, guarantee notes given, Original USD Original USD mortgage and pledges Currency Equivalent Currency Equivalent A. Total amount of guarantees provided by the Company on behalf of itself 870,475 3,148,784 -USD 689,048 689,048 2,834,614 2,834,614 -EUR 64,918 89,318 102,744 135,545 -TL 29,052 13,612 20,273 11,373 -Others (*) 78,497 167,252 B. Total amount for guarantees provided on behalf of subsidiaries accounted under full consolidation method 383,945 480,188 -USD 4,185 4,185 4,435 4,435 -EUR 55,298 76,083 78,814 103,976 -TL 1,738 814 1,738 975 -Others (*) 302,863 370,802 C. Provided on behalf of third parties in order to maintain operating activities - - (to secure third party payables) D. Other guarantees given - 400 i. Total amount of guarantees given on behalf of the parent company - - ii. Total amount of guarantees providedon behalf of the associates which are not in the scope of B and C - 400 -USD - 400 400 iii. Total amount of guarantees provided on behalf of third parties which are not in the scope of C - - 1,254,420 3,629,372

(*) U.S Dollar equivalents of letters of guarantee, guarantee notes given, mortgage and pledges other than USD, TL and EUR

As of 31 December 2013 the portion of other guarantess given to shareholders’ equity is 0% (31 December 2012: 0,01%).

(138) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

20. PROVISIONS FOR EMPLOYEE BENEFITS

a) Short-term employee benefits

Liabilities with the scope of employee benefits 31 December 31 December 2013 2012 Payroll payable 30,307 22,026 30,307 22,026

Short-term provisions related to employee benefits 31 December 31 December 2013 2012 Bonus accrual 7,386 12,337 Vacation pay liability 12,551 11,482 19,937 23,819

b) Long-term employee benefits

In accordance with existing social legislation, the Company and its subsidiaries incorporated in Turkey are required to make lump-sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. Such payments are calculated on the basis of 30 days’ pay limited to a maximum of full TL 3.254 equivalent to full USD 1.525 (31 December 2012 - full TL 3.034 equivalent to USD full 1.702) per year of employment at the rate of pay applicable at the date of retirement or termination. Effective from 1 January 2014, the retirement pay ceiling has been increased to full TL 3.438.

The liability is not funded as there is no funding requirement.

The provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of employees. IAS 19 requires actuarial valuation methods to be developed to estimate the enterprise’s obligation under defined benefit plans. Accordingly, the following actuarial assumptions were used in the calculation of the total liability:

The principal assumption is that the maximum liability for each year of service will increase parallel with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. Consequently, in the accompanying financial statements as at 31 December 2013, the provision has been calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. The provisions at the respective balance sheet dates have been calculated with %2,88 real discount rate, assuming an annual inflation rate of % 5 and a discount rate of %7,6. (31 December 2012 - 4,66)

Movements of the provision for employee termination benefits during years ended 31 December 2013 and 2012 are as follows: 1 January - 1 January - 31 December 2013 31 December 2012 Opening balance 17,038 13,048 Service cost 395 4,412 Actuarial loss 1,294 1,045 Retirement benefits paid (1,256) (1,918) Translation gain / loss (1,764) 451 Closing balance 15,707 17,038

YILLIK FANNUAL REPORT (139)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

21. OTHER ASSETS AND LIABILITIES

31 December 31 December Other current assets 2013 2012 Deferred VAT 24,002 52,672 VAT receivable 20,818 12,351 Prepaid taxes and funds 6,690 8,620 Other 5,396 4,908 56,906 78,551

31 December 31 December Other non-current assets 2013 2012 Prepayment for land leases 5,479 6,307 Restricted cash (*) - 2,977 Other 871 1,310 6,350 10,594

(*) The balance is related with cash held by the Group as blocked deposit in banks for maintenance purposes for the Steam turbines of the Power Companies.

31 December 31 December Other current liabilities 2013 2012 VAT payable 37,131 20,599 Taxes and funds payable 6,527 7,260 Other 857 1,709 44,515 29,568

(140) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

22. SHARE CAPITAL

a) Share capital

The shareholders of the Group and their percentage of ownership as of 31 December 2013 and 31 December 2012 is as follows:

31 December 2013 31 December 2012 Percentage of Percentage of ownership Amount ownership Amount Tara Holding A.Ş. 49,27% 1,005,282 49,27% 901,242 Tara and Gülçelik families 28,07% 572,727 27,99% 511,991 Publicly traded 12,34% 251,983 12,42% 227,186 Enka Spor Eğitim ve Sosyal Yardım Vakfı 5,95% 121,197 5,95% 108,837 Alternatif Aksesuar Sanayi ve Ticaret Ltd. Şti. 4,37% 89,163 4,37% 79,936 100% 2,040,352 100% 1,829,192

Based on the Group’s Ordinary General Assembly held on April 12, 2013; the Group increased its share capital on June 12, 2013 from TL 2.800.000 to TL 3.200.000; and covered the TL 400.000 from the 1st Dividend at an amount of TL 243.500, and from the 2nd Dividend at an amount of TL 156.500.

Within the above mentioned shares, founders of Enka İnşaat and former Enka Holding have one thousand founders share each. The founder shares of Enka İnşaat and the founder shares of former Enka Holding are entitled to receive, 5% and 2,5%, respectively, of the net income after the deduction of legal reserve and the first dividends.

YILLIK FANNUAL REPORT (141)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

22. SHARE CAPITAL (cont’d)

b) Revaluation surplus

Revaluation fund

Revaluation difference arising from difference between book value and fair value of the buildings is netted off with the related deferred tax and classified as revaluation surplus and included under equity.

The movement of revaluationf fund for years 2013 and 2012 is as follows:

1 January- 1 January- 31 December 2013 31 December 2012

Opening balance 186,592 201,631 Currency translation difference (853) 1,339 Revaluation of fixed assets 58,666 10,333 Deferred tax effect of revaluation of fixed assets (4,249) (2,010) Share of non-controlling interests (5,034) (3,589) Transfer of depreciation difference (net of deferred tax) of revaluation effect (2,979) (3,494) Transfer of revaluation surplus of sold buildings - (17,618)

Closing balance 232,143 186,592

Financial Risk Hedge Fund

The cash flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and accumulated under the heading of cash flow hedging reserve will be reclassified to profit or loss only when the hedged transaction affects the profit or loss, or included as a basis adjustment to the non-financial hedged item, consistent with the relevant accounting policy.

c) Legal reserves and accumulated profit

The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code (“TCC”). The TCC stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total reserve reaches 20% of the company’s paid-in share capital. The second legal reserve is appropriated at the rate of 10% per annum of all cash distributions in excess of 5% of the paid-in share capital. Under the TCC, the legal reserves can be used only to offset losses and are not available for any other usage unless they exceed 50% of paid-in share capital. Dividend distributions are made in TL in accordance with its Articles of Association, after deducting taxes and setting aside the legal reserves as discussed above.

Public companies in Turkey (only applicable for Enka İnşaat and Pimaş) make profit distributions in accordance with the regulations of CMB.

(142) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

22. SHARE CAPITAL (cont’d)

c) Legal reserves and accumulated profit (cont’d)

When net profit for the year ended 2013 based on consolidated financial statements prepared according to CMB and financial statements prepared in accordance with Turkish Trade Law are compared, distributable net profit for the year is determined as TL 1.212.752 after deduction of first legal reserve.

Equity inflation adjustment and carrying value of extraordinary reserves can be used in free capital increase, cash profit distribution and loss deduction. However, equity inflation adjustment is subject to corporate tax if it is used in cash profit distribution.

As of 31 December 2013, legal reserves of Enka İnşaat are amounting to TL 326.171 equivalent to USD 152.823 (31 December 2012 – TL 277.679 equivalent to USD 155.772).

The movement of the share capital (in numbers and in historical TL) of the Group during 31 December 2013 and 31 December 2012 is as follows:

31 December 2013 31 December 2012 Number TL Number TL

At 1 January, 280,000,000,000 2,800,000 250,000,000,000 2,500,000 Bonus shares issued out of general reserve 40,000,000,000 400,000 30,000,000,000 300,000

320,000,000,000 3,200,000 280,000,000,000 2,800,000

YILLIK FANNUAL REPORT (143)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

23. SALES AND COST OF SALES 1 January - 1 January - Sales 31 December 2013 31 December 2012 Domestic sales 4,419,178 4,374,847 Export sales 2,127,563 1,370,915 6,546,741 5,745,762

1 January - 1 January - Cost of Sales 31 December 2013 31 December 2012 Cost of domestic sales 3,961,970 4,032,647 Cost of export sales 1,499,446 913,063 5,461,416 4,945,710

The Group is operating in five main geographical areas alone or together with its affiliated companies or, in partnerships with other contractors through joint ventures. Segmental information of the Group is disclosed in Note 5.

24. MARKETING, SALES, DISTRIBUTION AND ADMINISTRATIVE EXPENSES

1 January - 1 January - 31 December 2013 31 December 2012

Marketing, sales and distribution expenses 38,954 41,553 Administrative expenses 124,731 121,445 163,685 162,998

a) Marketing, sales and distribution expenses

1 January - 1 January - 31 December 2013 31 December 2012 Employee benefit expenses 22,394 18,892 Business development expenses 3,424 2,511 Transportation expenses 2,951 9,845 Office expenses 723 893 Depreciation and amortization expenses (Note 25) 485 580 Others 8,977 8,832 38,954 41,553

b) General administrative expenses 1 January - 1 January - 31 December 2013 31 December 2012 Employee benefit expenses 66,973 76,982 Depreciation and amortization expenses (Note 25) 6,703 6,014 Consulting and legal expenses 5,105 3,993 Transportation expenses 4,678 5,488 Rent expenses 1,999 679 Others 39,273 28,289 124,731 121,445

(144) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

25. EXPENSES BY NATURE

Depreciation and amortization expenses are detailed below: 1 January - 1 January - 31 December 2013 31 December 2012 Depreciation expenses Cost of revenues 90,187 99,414 Selling and administrative expenses 6,735 5,003 Other operating expense 271 629 97,193 105,046 Amortization expenses Selling and administrative expenses 453 1,591 Cost of revenues 60 111 513 1,702 97,706 106,748

Employee benefit expenses are detailed below:

1 January - 1 January - 31 December 2013 31 December 2012 Wages and salaries 314,581 238,369 Social security costs 55,480 38,480 Provision for employee termination benefits 1,689 5,457 Other benefits 9,954 8,202 381,704 290,508

26. OTHER OPERATING INCOME / EXPENSES

1 January - 1 January - Other operating income 31 December 2013 31 December 2012 Foreign exchange gains from trade receivables 20,433 12,465 Warranty income 19,264 2,809 Compensation Income 5,332 3,669 Machinery and other rent income 2,130 1,605 Service income 523 134 Collection of doubtful receivables (Note 9) 441 297 Insurance income 323 661 Commission income 254 1,558 Other 11,804 5,525

60,504 28,723

YILLIK FANNUAL REPORT (145)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

26. OTHER OPERATING INCOME / EXPENSES (cont’d)

1 January - 1 January - Other operating expense 31 December 2013 31 December 2012 Foreign exchange losses from trade receivables 18,082 12,007 Litigation provisions 7,572 6,267 Donations 6,803 6,901 Provision for doubtful receivables (Note 9) 4,337 5,489 Commission expense 1,103 807 Provisions for land lease rights 908 23,687 Capital increase expense 944 914 Tax penalties 303 37 Depreciation expense 271 630 Rent expense 131 60 Other 7,695 7,244

48,149 64,043

27. INVESTMENT INCOME / EXPENSES

1 January - 1 January - Income from investing activities 31 December 2013 31 December 2012

Interest income: Interest revenue from financial assets held for sale 52,689 38,463 Increase in value of financials assets 29,189 111,262 Income from sale of securities 14,239 23,325 Dividend income 7,739 5,276 Increase in the fair value of investment properties 4,778 20,554 Gains from sales of property, plant and equipment 1,954 2,134 Foreign exchange income from investing activities 1,310 17,810

111,898 218,824

(146) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

27. INVESTMENT INCOME / EXPENSES (cont’d)

1 January - 1 January - Expenses from investing activities 31 December 2013 31 December 2012

Losses from valuation of investment securities (91,525) (3,714) Foreign exchange losses from investing activities (22,609) (26,636) Losses from sale of securities (709) (10,232) Loss from sales of property, plant and equipment (379) (357) (115,222) (40,939)

28. FINANCIAL INCOME 1 January - 1 January - 31 December 2013 31 December 2012 Interest income 11,194 8,951 Foreign exchange gains 11,695 15,138 Forward income 1,740 2,555 Others 235 1,136 24,864 27,780

29. FINANCIAL EXPENSES

1 January - 1 January - 31 December 2013 31 December 2012 Foreign exchange losses 24,742 5,705 Bank commission expenses 8,306 7,505 Interest expenses 7,807 11,058 Commission expenses of letters of guarantee 1,868 2,150 Deferred financing cost 1,466 2,014 Forward losses 817 669 Others 43 10 45,049 29,111

YILLIK FANNUAL REPORT (147)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

30. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

a) Lands and buildings held for sale

As of 31 December 2013 and 2012, assets held for sale comprise of lands and buildings obtained by Enka Pazarlama and Pimas in consideration of its doubtful receivables amounting to USD 1.196 and USD 3.916 respectively

b) Discontinued operations

The Group sold the assets classified as held for sale of retail operations in Russia on 3 April 2012 for an amount of EUR 126.800 (USD 168.993). Total profit of this transaction is recorded in the consolidated financial statements as follows; USD 17.618 is transferred from revaluation surplus to retained earnings in the consolidated statement of changes in equity, USD 6.275 is recorded as tax expense in the consolidated statement of income and the remaining balance amounting USD 32.083 is recorded as profit in the consolidated statement of income.

The results of discontinued operations is as follows:

1 January - 3 April 2012

Sales revenue 23,953 Sales cost (-) (13,598) Marketing and sales expenses (-) (6,939) General administrative expenses (-) (4,666) Other operation income 193 Other operation expenses (-) (26) Financial expenses (-) (95) Corporate tax expense (-) (14) Deferred tax benefit 10 Net profit / (loss) from discontinued operations (1,182)

Gain on sale of discontinued operations 38,358 Current tax effect of sale of discontinued operatios (10,679) Deferred tax effect of sale of discontinued operatios 4,404

Net profit 30,901

(148) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

31. TAXATION ON INCOME

Tax legislation in Turkey

Enka İnşaat and its consolidated subsidiaries are subject to taxation in accordance with the tax procedures and the legislation effective in the countries in which they operate.

In Turkey, the corporation tax rate is 20% (31 December 2012: 20%). Corporate tax returns are required to be filed by the twenty-fifth day of the fourth month following the balance sheet date and taxes must be paid in one installment by the end of the fourth month. The tax legislation provides for a temporary tax of 20% to be calculated and paid based on earnings generated for each quarter. The amounts thus calculated and paid are offset against the final corporate tax liability for the year.

In Turkey, the tax legislation does not permit a parent company and its subsidiaries to file a consolidated tax return. Therefore, provision for taxes, as reflected in the consolidated financial statements, has been calculated on a separate entity basis.

Dividend income obtained from full fledged tax payer subsidiaries are exempt from corporate tax (except dividend obtained from investment fund shares and equities). 75% of the gains derived from the saleof preferential rights, usufruct shares and founding shares from investment equity and real property which have remained in assetsfor more than two full years are exempt from corporate tax. To be entitled to the exemption, the relevant gain is requiredto be held in a fundaccount in the liabilities and it must not be withdrawn from the entity for a period of five years. The cost of the sale has to be collected up ıntil the end of the second calender year the sale was realized. Brokerage housesand real estate companies who are dealing with the trading and the leasing of real estate can not benefit from this exemption.

15% (31 December 2012 – 15%) withholding applies to dividends distributed by resident corporations to resident real persons, those who are not liable to income and corporation tax, non-resident real persons, non-resident corporations (excluding those that acquire dividend through a permanent establishment or permanent representative in Turkey) and non-resident corporations exempted from income and corporation tax. Dividend distributions by resident corporations to resident corporations are not subject to a withholding tax. Furthermore, in the event the profit is not distributed or included in capital, no withholding tax shall be applicable.

Corporate tax losses can be carried forward for a maximum period of five years following the year in which the losses were incurred. The tax authorities can inspect tax returns and the related accounting records for a retrospective maximum period of five years.

As of 31 December 2013 and 2012, components of tax expense are as follows:

1 January - 1 January - 31 December 31 December 2013 2012

Consolidated income statement Current corporate tax (170,981) (122,031) Deferred tax expense (46,502) (28,397) (217,483) (150,428)

YILLIK FANNUAL REPORT (149)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

31. TAXATION ON INCOME (cont’d)

Tax legislations in other countries

As of 31 December 2013 and 31 December 2012 effective corporation tax rate in other countries are as follows:

31 December 31 December 2013 2012 Russia %20 %20 Netherlands %25 %25 Kazakhstan %28 - %32 %28 - %32 Iraq %15 - %35 %15 - %35 Romania %16 %16 Oman %12 %12 Libya %20 %20

Kosovo %10 %10

The movement of the current income tax liability is given as follows:

2013 2012 1 January 38,415 40,304 Current year tax expense 170,981 132,724 Taxes paid (154,893) (134,613) 31 December 54,503 38,415

A reconciliation of the nominal (on the basis of the income tax rate of the Company and the Turkish subsidiaries) to the effective tax rate for the years ended 31 December 2013 and 2012 is provided below:

1 January - 31 December 2013 1 January - 31 December 2012

Profit before tax 910,486 808,144 Tax per statutory tax rate 20% 182,097 20% 161,629 20% Jobsites exempt from income tax (12,449) (1,4%) (5,567) (0,7%) Effect of different functional currencies and others 47,834 5,3% (5,634) (0,7%)

Taxation charge 217,482 23,9% 150,428 18.6%

(150) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

31. TAXATION ON INCOME (cont’d)

As of 31 December 2013 and 31 December 2012, the breakdown of temporary differences which give rise to deferred taxes is as follows: 31 December 31 December 2013 2012 Remeasurement and revaluation of property, plant and equipment, intangible assets and investment property (444,616) (498,250) GE Inventory in the context of "PSA" (*) (31,085) (28,867) Adjustments on financial instruments and derivatives (11,362) (4,383)

Gross deferred income tax liabilities (487,063) (531,500) Adjustment of revenue levelization 140,201 155,988 Allowance for retirement pay liability 2,463 2,517 Allowance for doubtful receivables 2,603 2,862 Allowance for inventories (60) 513 Others (57,064) 6,192 Gross deferred income tax assets 88,143 168,072 Net deferred tax liability (398,920) (363,428)

(*) Implies deferred tax liabilities estimated from temporary differences related to “Parts and Services Agreement” PSA made with the Group’s spare part supplier General Electric (GE).

Reflected as:

31 December 31 December 2013 2012 Deferred tax assets 450 84 Deferred tax liabilities (399,370) (363,512) Net deferred liabilities (398,920) (363,428)

Total amount of temporary differences and deferred tax liabilities which have not been recognized as of 31 December 2013 related with Group’s shares in its subsidiaries, branches and associates is USD 1.289.032 (31 December 2012: USD 912.620)

YILLIK FANNUAL REPORT (151)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

31. TAXATION ON INCOME (cont’d)

Movement of net deferred tax asset (liability) can be presented as follows:

31 December 31 December 2013 2012 Balance at 1 January 363,428 324,547 Deferred income tax expense recognized in income statement 46,502 23,993 Deferred income tax expense recognized in equity 4,252 2,044 Currency translation difference (15,262) 12,844

398,920 363,428

As of 31 December 2013 and 31 December 2012, the breakdown of deferred taxes which are recognised in other comprehensive income is as follows:

31 December 2013 31 December 2012 Deferred tax Deferred tax Before (expense)/ Netted-off Before (expense)/ Netted-off Taxation income deferred tax Taxation income deferred tax Change in revaluation of buildings 58,666 (4,249) 54,417 10,333 (2,010) 8,323 Revaluation loss of defined benefit plans (1,294) - (1,294) (1,045) - (1,045) Changes in fair value of derivative assets 15 (3) 12 170 (34) 136 Changes in currency translation differences (78,591) - (78,591) 115,493 - 115,493 (21,204) (4,252) (25,456) 124,951 (2,044) 122,907

(152) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

32. EARNINGS PER SHARE

Basic earnings per share (EPS) is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. In Turkey, companies can increase their share capital by making a pro-rata distribution of shares (“Bonus Shares”) to existing shareholders without consideration for amounts resolved to be transferred to share capital from retained earnings and revaluation surplus. For the purpose of the EPS calculation such bonus share issues are regarded as stock dividends. Dividend payments, which are immediately reinvested in the shares of the Company, are regarded similarly. Accordingly the weighted average number of shares used in EPS calculation is derived by giving retroactive effect to the issue of such shares without consideration through 31 December 2013. 31 December 2013 31 December 2012 Earning per share - ordinary share certificate (full cent) 0.20 0.20 - founder shares (*) - -

Weighted average number of share certificates (nominal value of 1 YKr each) - ordinary share certificate 320,000,000,000 320,000,000,000 - founder shares

(*) Since 2013 profit distribution was not determined as of the date of the preparation date of the consolidated financial statements, total of the earnings per share is reflected on ordinary share certificates.

33. RELATED PARTY BALANCES AND TRANSACTIONS

Related parties

The Group is controlled by Tara Holding (49,27%) (31 December 2012 - 49,27%) and Tara and Gülçelik families (28,07%) (31 December 2012 – 27,99%). For the purposes of the consolidated financial statements, balances with the shareholder companies, individual shareholders, unconsolidated subsidiaries, associated companies, equity participations and their affiliates are referred to as “related parties”. Related parties also include management and members of the Group’s Board of Directors.

In the course of conducting business, the Group conducted various business transactions with related parties on commercial terms. The breakdown of balances with related parties and details of significant related party transactions are as follows: 31 December 2013 31 December 2012 Receivables Payables Receivables Payables

Shareholders - 1,198 - 1,457 Enka Spor Kulübü 20 - 172 - Derince Uluslararası Konteyner Terminal İşletmeciliği A.Ş. 23 (*) - 61 (*) - 43 1,198 233 1,457

(*) Funds provided by Enka İnşaat (in USD) with interest rates Libor + 0,5% and Libor + 2%.

As of 31 December 2013, the Group does not have any rent income (31 December 2012: None) and sales to related parties (31 December 2012: None) as of 31 December 2013.

YILLIK FANNUAL REPORT (153) ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

33. RELATED PARTY BALANCES AND TRANSACTIONS (cont’d)

Directors’ remuneration

The total wages paid for the members of Board of Directors of the Group is amounting to USD 10.327 (31 December 2012 - USD 9.031), the social security payments and retirement pay provisions are USD 899 (31 December 2012 – USD 1.092) and USD 439 (31 December 2012 – USD 468) respectively. Total wages paid for the general manager, general coordinators and vice general managers of the Group (except BOD members), is amounting to USD 20.487 (31 December 2012 – USD 15.372), the social security payment and retirement pay provisions are USD 840 (31 December 2012 – USD 485) and USD 1.782 (31 December 2012 – USD 1.472) respectively.

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise bank loans, investment securities, finance leases, cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations.

The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The board / management reviews and agrees policies for managing each of these risks. The Group monitors the market price risk arising from all financial instruments periodically.

Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. Capital structure of the Group comprises from liabilities, cash and cash equivalents, paid-in capital and legal reserves explained in Note 22.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders or the shareholders may make a direct cash contribution of the needed working capital to the Group. No changes were made in the objectives, policies or processes during the years ended 31 December 2013 and 2012.

Interest risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s debt obligations with floating interest rates. The Group is managing interest risk that arises from assets and liabilities sensitive to interest risk by using derivative instruments.

The following table demonstrates the sensitivity to a reasonably possible increase of 1% in the interest rates, with all other variables held constant, on the floating rate borrowings of the Group’s profit before tax and the Group’s non-controlling interest.

31 December 2013 31 December 2012

Financial assets with floating rates

Financial assets - - Financial liabilities (197) (2,060)

(154) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

Foreign currency risk

The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to Euro, Russian Ruble and also U.S Dollar which arises from the liabilities belonging to the companies in the consolidation scope, whose the functional currency is not U.S Dollar.

The Group is engaged in construction, trading, energy and real estate operations business in several countries qand, as a result, is exposed to movements in foreign currency exchange rates. In addition to transactional exposures, the Group is also exposed to foreign exchange movements on its net investments in foreign subsidiaries. The Group manages foreign currency risk by using natural hedges that arise from offsetting foreign currency denominated assets and liabilities.

The foreign currency risk of the Group arises from the credits used in U.S. Dollars and Euro. In order to mitigate the risk, the Group continuously monitors its cash inflows/outflows and also uses financial instruments to hedge the risk when it is necessary.

The following table details the Group’s foreign currency position as at 31 December 2013 and 31 December 2012:

31 December 2013 31 December 2012

A. Assets denominated in foreign currency 1,315,774 1,635,937 B. Liabilities denominated in foreign currency (687,574) (603,513) Net foreign currency position (A+B) 628,200 1,032,424

YILLIK FANNUAL REPORT (155)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

Foreign currency risk (cont’d)

The Group’s foreign currency position at 31 December 2013 and 31 December 2012 is as follows (non monetary items are not included in the table as they don’t have foreign currency risk): 31 December 2013 USD USD Other USD Total USD TL Equivalent Eu r o Equivalent (*) USD (**) Equivalent

Cash and cash equivalents 20,905 9,795 113,257 155,830 274,639 90,291 530,555 Financial investments 29,249 13,704 68,407 94,121 65,148 228,750 401,723 Trade and other receivables 20,273 9,499 88,067 121,171 40,295 84 171,049 Other currrent assets 65,553 30,714 13,881 19,099 20,570 570 70,953 Current assets 135,980 63,712 283,612 390,221 400,652 319,695 1,174,280 Financial investments 58,482 27,401 29,879 41,110 52,403 - 120,914 Trade and other receivables - - 2,834 3,899 615 6,442 10,956 Other non current assets 2,275 1,066 564 777 2,579 5,202 9,624 Non-current assets 60,757 28,467 33,277 45,786 55,597 11,644 141,494

Total assets 196,737 92,179 316,889 436,007 456,249 331,339 1,315,774

Short-term borrowings 11,833 5,544 23,556 32,411 39,459 18,492 95,906 Trade and other payables 55,861 26,173 93,728 128,961 104,628 6,522 266,284 Other current liabilities and accrued expenses 151,467 70,968 18,131 24,946 69,637 34,331 199,882 Current liabilities 219,161 102,685 135,415 186,318 213,724 59,345 562,072 Trade and other payables - - 4,000 5,503 - - 5,503 Long-term borrowings - - 8,881 12,219 101,921 - 114,140 Other non-current liabilities 84 39 1,156 1,591 - 4,229 5,859 Non-current liabilities 84 39 14,037 19,313 101,921 4,229 125,502

Total liabilities 219,245 102,724 149,452 205,631 315,645 63,574 687,574

Net foreign currency position (22,508) (10,545) 167,437 230,376 140,604 267,765 628,200

Net notional amount 1,642 769 24,851 34,192 - 34,961 of de ri vati ve s

(*) U.S.Dollar equivalents of the foreign currency balances other than TL and Euro.

(**) U.S.Dollar balances of consolidated subsidiaries and joint ventures whose functional currency is other than U.S.Dollar.

(156) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

Foreign currency risk (cont’d) 31 December 2012 USD USD Other USD Total USD TL Equivalent Eu r o Equivalent (*) USD (**) Equivalent

Cash and cash equivalents 28,831 16,174 188,272 248,387 226,099 76,972 567,632 Financial investments 93,081 52,216 27,711 36,559 77,024 323,871 489,670 Trade and other receivables 14,394 8,075 74,865 98,769 76,479 7,430 190,753 Other currrent assets 94,912 53,244 45,546 60,089 27,089 278 140,700 Current assets 231,218 129,709 336,394 443,804 406,691 408,551 1,388,755 Financial investments 11,454 6,426 113,955 150,341 67,814 - 224,581 Trade and other receivables - - 3,932 5,188 1,014 6,002 12,204 Other non current assets 2,967 1,665 897 1,183 2,585 4,964 10,397 Non-current assets 14,421 8,091 118,784 156,712 71,413 10,966 247,182

Total assets 245,639 137,800 455,178 600,516 478,104 419,517 1,635,937

Short-term borrowings 212 119 30,298 39,972 43,195 14,508 97,794 Trade and other payables 33,334 18,700 48,905 64,520 124,284 11,067 218,571 Other current liabilities and accrued expenses 84,437 47,367 31,945 42,145 43,328 26,721 159,561 Current liabilities 117,983 66,186 111,148 146,637 210,807 52,296 475,926 Trade and other payables - - 4,000 5,277 - - 5,277 Long-term borrowings - - 15,864 20,930 95,593 4,000 120,523 Other non-current liabilities - - 782 1,032 526 229 1,787 Non-current liabilities - - 20,646 27,239 96,119 4,229 127,587

Total liabilities 117,983 66,186 131,794 173,876 306,926 56,525 603,513

Net foreign currency position 127,656 71,614 323,384 426,640 171,178 362,992 1,032,424

Net notional amount of de ri vati ve s - - 78,550 103,627 (1,064) - 102,563

(*) U.S.Dollar equivalents of the foreign currency balances other than TL and Euro.

(**) U.S.Dollar balances of consolidated subsidiaries and joint ventures whose functional currency is other than U.S.Dollar.

YILLIK FANNUAL REPORT (157)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

Foreign currency risk (cont’d)

The details of the forward contracts and sales-purchase agreements are explained in Note 17 in order to manage Group’s foreign currency position.

The following table demonstrates the sensitivity to reasonably possible increase of 10% in the exchange rates against functional currency, with all other variables held constant, of the Group’s consolidated income statement.

The following table details the Group’s foreign currency sensitivity as at 31 December 2013 and 31 December 2012:

31 December 2013 31 December 2012 Profit / (loss) Profit / (loss) Valuation of Valuation of Valuation of Valuation of foreign foreign foreign foreign currency currency currency currency In the case of TL gaining 10% value against US Dollar 1- TL net asset / (liability) (1,055) 1,055 7,161 (7,161) 2- Portion hedged against TL risk (-) 77 (77) - - 3- TL net effect (1+2) (978) 978 7,161 (7,161)

In the case of Euro gaining 10% value against US Dollar 4- Euro net asset / (liability) 23,038 (23,038) 42,664 (42,664) 5- Portion hedged against Euro risk (-) 3,419 (3,419)- 10,363 (10,363) 6- Euro net effect (4+5) 26,457 (26,457) 53,027 (53,027)

In the case of other foreign currencies gaining 10% value against US Dollar 7- Other foreign currency net asset / (liability) 14,060 (14,060) 17,118 (17,118) 8- Portion hedged against - - (106) 106 other foreign currency risk (-) 9- Other foreign currency net effect (7+8) 14,060 (14,060) 17,012 (17,012) Total (3+6+9) 39,539 (39,539) 77,200 (77,200)

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counterparties, and continually assessing the creditworthiness of counterparties.

Concentrations of credit risk arise when a number of counterparties are engaged in similar business activities or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. The Group seeks to manage its credit risk exposure through diversification of sales activities to avoid undue concentrations of risks with individuals or groups of customers in specific locations or businesses. . It also obtains security when appropriate. It is the Group’s policy to enter into financial instruments with a diversity of creditworthy counterparties. Therefore, the Group does not expect to incur material credit losses on its risk management or other financial instruments.

(158) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d) Receivables Financial assets Credit risk (cont’d) Trade receivables Other receivables at fair value 3rd Related 3rd Bank Derivative through Related party 31 December 2013 party party party deposits instruments profit or loss The maximum amount of exposure to credit risk at the end of the reporting period (A+B+C+D+E) - 811,079 43 693 1,272,136 - 1,480,114 - Total receivable that have been secured with collaterals, other credit enhancements etc.* - 305,465 - - - - - A. Financial assets that are either past due or impaired - 771,861 43 693 1,272,136 1,480,114

B. The amount of financial assets that would otherwise be past due or

impaired whose terms have been renegotiated - 1,426 - - - - C. The amount of financial assets that are past due as at the end of the

reporting period but not impaired. - 34,981 ------The amount that have been secured with collaterals, other credit enhancements etc. - 29,308 - - - - - D. The amount of financial assets that are impaired - 2,811 ------Past due (Gross book value) - 24,436 ------The amount of impairment (-) - (21,625) ------The amount that have been secured with collaterals, other credit enhancements etc. - 2,811 - - - - -

YILLIK F YILLIK - Not past due (Gross book value) ------The amount of impairment (-) ------E. Off balance sheet credit risk amount ------

ANNUAL REPORT (159) REPORT ANNUAL (*) As of 31 December 2013, trade receivables from TETAŞ amounting to USD 248.117 are guaranteed by Turkish Treasury.

Receivables Trade receivables Other receivables Bank deposits ve instruments Other 31 December 2013 Overdue between 1 to 30 days 8,229 - - - - Overdue between 1 to 3 months 1,419 - - - - Overdue between 3 to 12 months 5,395 - - - - Overdue between 1 to 5 years 19,938 - - - - Overdue over 5 years ------

34,981 - - - -

74 (160 ) ANNUAL ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

R 34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

EPORT Credit risk (cont’d) Receivables Financial assets Trade receivables Other receivables at fair value 3rd Related 3rd Bank Derivative through Related party 31 December 2012 party party party deposits instruments profit or loss The maximum amount of exposure to credit risk at the end of the reporting period (A+B+C+D+E) - 900,638 233 9,864 1,017,855 - 1,692,337 - Total receivable that have been secured with collaterals, other credit enhancements etc.* - 490,863 - - - - -

A. Financial assets that are either past due or impaired - 808,385 233 9,864 1,017,855 - 1,692,337

B. The amount of financial assets that would otherwise be past due or impaired whose terms have been renegotiated - 3,265 - - - - -

C. The amount of financial assets that are past due as at the end of the

reporting period but not impaired. - 87,823 ------The amount that have been secured with collaterals, other credit enhancements etc. - 18,678 - - - - -

D. The amount of financial assets that are impaired - 1,165 ------Past due (Gross book value) - 24,656 ------The amount of impairment (-) - (23,491) ------The amount that have been secured with collaterals, other credit enhancements etc. - 1,165 ------Not past due (Gross book value) ------The amount of impairment (-) ------E. Off balance sheet credit risk amount ------(*) As of 31 December 2012, trade receivables from TETAŞ amounting to USD 447.803 are guaranteed by Turkish Treasury.

Receivables Trade receivables Other receivables Bank deposits ve instruments Other 31 December 2012 Overdue between 1 to 30 days 8,786 - - - - Overdue between 1 to 3 months 9,127 - - - - Overdue between 3 to 12 months 27,798 - - - - Overdue between 1 to 5 years 42,112 - - - - Overdue over 5 years ------87,823 - - - -

75 ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

Liquidity risk

Liquidity risk is the risk that an entity will be unable to meet its net funding requirements. The risk is mitigated by matching the cash in and out flow volume supported by committed lending limits from qualified credit institutions.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments.

Current liabilities

31 December 2013 Total cash outflow according to 1 to 3 Carrying contract Up to 1 months 3 to 12 Contractual maturity anaylsis val ue (I+II+III) month (I) (II) months (III) Non-derivative financial liabilities Financial liabilities and finance lease obligations 101,938 104,122 15,722 8,460 79,940 Trade payables 533,729 533,754 299,262 74,011 160,481 Other payables to related parties 1,198 1,198 1,198 - - Provisions for employee benefits 42,157 42,157 29,745 7,694 4,718 Other payables 28,791 28,791 4 218 28,569

Non-current liabilities

31 December 2013 Total cash outflow according to 1 to 3 Carrying contract Up to 1 months 3 to 12 Contractual maturity anaylsis val ue (I+II+III) month (I) (II) months (III) Non-derivative financial liabilities Financial liabilities and finance lease obligations 280,474 281,933 118,712 22,569 140,652 Trade payables 5,503 5,503 - 5,503 - Other payables 30,127 30,127 29,282 712 133

YILLIK FANNUAL REPORT (161)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)

Liquidity risk (cont’d)

Current liabilities

31 December 2012 Total cash outflow according to 1 to 3 Carrying contract Up to 1 months 3 to 12 Contractual maturity anaylsis val ue (I+II+III) month (I) (II) months (III)

Non-derivative financial liabilities

Financial liabilities and finance lease obligations 157,511 161,420 8,626 8,883 143,911 Trade payables 621,556 621,602 491,405 56,589 73,608 Other payables to related parties 1,457 1,457 1,457 - - Provisions for employee benefits 34,363 34,363 24,366 7,385 2,612 Other payables 26,576 28,033 1,462 326 26,245

Non-current liabilities

31 December 2012 Total cash outflow according to 1 to 3 Carrying contract Up to 1 months 3 to 12 Contractual maturity anaylsis val ue (I+II+III) month (I) (II) months (III) Non-derivative financial liabilities Financial liabilities and finance lease obligations 219,041 222,331 195,251 22,380 4,700 Trade payables 5,277 5,277 - 5,277 - Other payables 25,862 25,862 23,615 2,247 -

(162) ANNUAL REPORT

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

35. FINANCIAL INSTRUMENTS – FAIR VALUE EXPLANATIONS AND ACCOUNTING POLICY FOR HEDGING FINANCIAL RISK

Fair value of financial assets and liabilities

Fair value is the amount for which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.

Foreign currency denominated receivables and payables are revalued with the exchange rates valid as of the date of the financial statements.

The following methods and assumptions were used to estimate the fair value of the financial instruments that are not carried at fair value on the balance sheet:

Financial assets

The fair values of cash, amounts due from banks and other monetary assets are considered to approximate their respective carrying values due to their short-term nature. The carrying values of trade receivables are estimated to be their fair values due to their short-term nature. It is considered that the fair values of the long term receivables are approximate to their respective carrying values as they are accounted for in foreign currencies.

Financial liabilities

The fair values of trade payables and other monetary liabilities are considered to approximate their respective carrying values due to their short-term nature. The fair values of bank borrowings are considered to approximate their respective carrying values, since initial rates applied to bank borrowings are updated periodically by the lender to reflect active market price quotations. The fair values of the trade receivables after discount are considered to be approximate to their corresponding carrying values. It is considered that the fair values of the long term payables and long term financial borrowings are approximate to their respective carrying values as they are accounted for in foreign currencies.

Fair value hiearchy

The Group classifies the fair value measurement of each class of financial instruments that are measured at fair value on the balance sheet, according to the source, using three-level hierarchy, as follows:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: Other valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable,either directly or indirectly.

Level 3: Valuation techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

YILLIK FANNUAL REPORT (163)

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

(Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated.)

35. FINANCIAL INSTRUMENTS – FAIR VALUE EXPLANATIONS AND ACCOUNTING POLICY FOR HEDGING FINANCIAL RISK (cont’d)

Fair value hiearchy (cont’d)

31 December 2013: Level 1 Level 2 Level 3

Private sector bonds 855,327 - - Equity securities 177,860 - - Foreign government bonds 308,111 - - Turkish government bonds 89,355 - - Mutual funds 49,461 - - Financial assets at fair value through 1,480,114 profit or loss - - Derivative instruments - 599 -

Financial liabilities at fair value through profit or loss - 599 -

31 December 2012:

Level 1 Level 2 Level 3

Private sector bonds 840,979 - - Equity securities 168,415 - - Foreign government bonds 546,155 - - Turkish government bonds 51,787 - - Mutual funds 85,001 - - Financial assets at fair value through profit or loss 1,692,337 - - Derivative instruments - 3,813 -

Financial liabilities at fair value through profit or loss - 3,813 -

36. SUBSEQUENT EVENTS

None.

(164) ANNUAL REPORT