Sustainability & Growth

İNŞAAT VE SANAYİ A.Ş. Balmumcu Mah., Zincirlikuyu Yolu No: 10, 34349 Beşiktaş / İstanbul Phone: +90 (212) 376 10 00 (pbx) Fax: +90 (212) 272 88 69

ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 İNŞAAT VE SANAYİ A.Ş. Balmumcu Mah., Zincirlikuyu Yolu No: 10, 34349 Beşiktaş / İstanbul Tel: +90 (212) 376 10 00 (pbx) Fax: +90 (212) 272 88 69 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 01

DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Maslak no1 Plaza Eski Büyükdere Caddesi Maslak Mahallesi No:1 Maslak, Sarıyer 34398 (CONVENIENCE TRANSLATION OF INDEPENDENT İstanbul, Türkiye AUDITOR’S REPORTON THE MANAGEMENT’S ANNUAL REPORT Tel : +90 (212) 366 6000 ORIGINALLY ISSUED IN TURKISH) Fax : +90 (212) 366 6010 www.deloitte.com.tr INDEPENDENT AUDITOR’S REPORT ON THE MANAGEMENT’S Mersis No: 0291001097600016 ANNUAL REPORT

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

Report on the Audit of Management’s Annual Report in accordance with Independent Auditing Standards We have audited the annual report of Enka İnşaat ve Sanayi A.Ş. (Enka İnşaat), its subsidiaries and joint operations (together the “Group”) for the year ended 31 December 2014. Management’s Responsibility for the Annual Report

The Group Management is responsible for the preparation and fair presentation of the annual report which is consistent with the consolidated financial statements in accordance with the Article 514 of the Turkish Commercial Code No. 6102 (“TCC”) and “Communiqué on Principles of Financial Reporting in Capital Markets” with No.14.1 of the Capital Markets Board (“the Communiqué”), and for such internal control as management determines relevant to the preparation and fair presentation of such annual report. Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s annual report based on our audit conducted in accordance with the provisions of the Article 397 of the TCC and the Communiqué. Our audit involves whether the financial information provided in the annual report are fairly presented and consistent with the consolidated financial statements. We conducted our audit in accordance with Independent Auditing Standards, which is a part of Turkish Auditing Standards issued by the Public Oversight Accounting and Auditing Standards Authority (“POA”). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial information provided in the annual report are fairly presented and consistent with the consolidated financial statements. An audit involves performing procedures to obtain audit evidence about the historical financial information. The procedures selected depend on the auditor’s judgment. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion

In our opinion, the financial information provided in the Management’s annual report, in all material respects, are fairly presented and consistent with the audited consolidated financial statements.

Other Legal and Regulatory Requirements In accordance with paragraph three of the Article 402 of the TCC, nothing significant has come to our attention that may cause us to believe that the Company may not continue its activities for the foreseeable future in accordance with Independent Auditing Standard 570 “Going Concern”.

DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED Burç Seven, SMMM Partner Istanbul, 2 March 2015

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. Member of Deloitte Touche Tohmatsu Limited 02 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 03

ENKA İnşaat ve Sanayi A.Ş. The Board of Directors’ Annual Report

Reporting Period : 01.01.2014 - 31.12.2014 Registered Company Name : ENKA İnşaat ve Sanayi A.Ş. Registration or Incorporation : 1957 Registered Country : Istanbul / Turkey Chamber of Commerce Registration Number : 68194 Paid-in Capital : 3.600.000.000 TL (Turkish Lira) 2.230.411.647 US Dollars (equivalent) BS EN ISO 9001 : 2008 Registered Certificate No : FS 57544 BS EN ISO 14001 : 2004 Registered Certificate No : FS EMS 71388 OHSAS 18001 : 2007 Registered Certificate No : OHS 71389 ASME A : 2013 Registered Certificate No : 45151 ASME U : 2013 Registered Content Certificate No : 45152 Companies 04 ASME U2 : 2013 Registered The General Assembly Meeting 05 Certificate No : 45153 The Board of Directors 06 ASME S : 2013 Registered Executive Board 07 Certificate No : 45154 Chairman’s Message 08 Engineering&Construction 10 Corporate Governance Rating : 9.02 (November 2014 - Saha Kurumsal Yönetim ve Kredi Oil&Gas 13 Derecelendirme A.Ş.) Power Plants 21 Head Office Address : Balmumcu Mah., Zincirlikuyu Yolu No:10, 34349 Building Projects 37 Beşiktaş / İstanbul Infrastructure Projects 47 Phone : +90 (212) 376 10 00 (pbx) Group Companies 57 Fax : +90 (212) 272 88 69 Power 73 Real Estate 77 Officialebsite W : http://www.enka.com Trade 87 E-mail : [email protected] Social Activities 93 Financial Reports 119

Corporate Governance Principles TM BSI TM BSI TM BSI A A A A Compliance Report 120 S S S S M M M M Basic Ratios&Backlog 138 ACCREDITED ACCREDITED E E E E Independent Auditors’ Report 139 (FS 57544 ISO 9001) (FS 71388 ISO 14001) (FS 71389 ISO 1001) SAU U2 04 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 05

COMPANIES THE GENERAL ASSEMBLY MEETING

Date : March 27, 2015 ENGINEERING&CONSTRUCTION Time : 14:30 Address : Balmumcu Mahallesi, Hacı Faik Bey Sokak, No: 3 • ENKA İnşaat ve Sanayi A.Ş. ENKA Toplantı Merkezi Binası, • Çimtaş Çelik İmalat Montaj ve Tesisat A.Ş. Beşiktaş - İstanbul • Çimtaş Gemi İnşa Sanayi ve Ticaret A.Ş. • Çimtaş Boru İmalatları ve Ticaret Ltd. Şti. AGENDA • Cimtas (Ningbo) Steel Processing Co. Ltd. 1. Election of the General Assembly Presidential Board and authorization of the Presidential Board • Capital City Investment B.V. for signing the Minutes of the General Assembly Meeting. • Kasktaş Kayar Kalıp Altyapı Sondaj Kazık ve Tecrit A.Ş. 2. Reading and discussing the Annual Report of the Board of Directors and the Financial Statements for the fiscal year 2014. • ENKA Teknik Genel Müteahhitlik Bakım İşletme Sevk ve İdare A.Ş. • Titaş Toprak İnşaat ve Taahhüt A.Ş. 3. Reading and discussing the Report of Independent Auditors. • ENKA Holding B.V. 4. As per the regulations of the Capital Markets Board, informing the shareholders of the donations • ENKA Construction and Development B.V. made within the fiscal year 2014 under the framework of the Company’s current Donation and Aid Policy. • ENKA Power Systems B.V. 5. Approval of the 2014 Balance Sheet and Income Statement Accounts. POWER 6. Acquittal and release of the Board Members due to the Company’s activities for the fiscal year 2014. • Adapazarı Elektrik Üretim Ltd. Şti. 7. Election of the Board Members. • Gebze Elektrik Üretim Ltd. Şti. 8. As per the regulations of the Capital Markets Board, determination of the attendance fee for the • İzmir Elektrik Üretim Ltd. Şti. Board Members according to the principles set out in the Remuneration Policy Applicable to the Board Members and Administratively Responsible Managers. REAL ESTATE 9. Approval of the selection of the Independent Auditors recommended by the Board of Directors.

• JSC Mosenka 10. As per the regulations of the Capital Markets Board, decision to be made on the distribution of the Balance Sheet profit of 2014 according to the current Profit Distribution Policy of the Company. • JSC Moskva Krasnye Holmy • ENKA Holding Investment S.A. 11. Informing the shareholders that there are no guarantees, pledges, mortgages and encumbrances given to the benefit of third parties as per the regulations of the Capital Markets Board. • City Center Investment B.V. 12. Approving the Authorization of the Board of Directors for deciding the distribution of the Advance • Limited Liability Company ENKA TC Dividend for the fiscal year 2015 in accordance with Article No.37 of the Articles of Association and within the scope of Capital Markets Board’s Communiqué No.II-19.1 dated January 23, 2014 TRADE for advance dividends. 13. Discussion and approval of a set off of the Dividend Advances to be distributed from any • ENKA Pazarlama İhracat İthalat A.Ş. distributable resources as given in the annual financial situation statement for the fiscal year 2015, • Entaş Nakliyat ve Turizm A.Ş. if insufficient profits are realized, or if losses should be suffered at the end of the fiscal year 2015. • Airenka Hava Taşımacılığı A.Ş. 14. Authorization of the Board Members to engage in businesses mentioned in Articles 395 and 396 • ENKA Finansal Kiralama A.Ş. 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 within this framework during the fiscal year 2014. (The full list of the companies can be found in the Consolidated Financial Statements as of December 31, 2014). 15. Requests and recommendations. 06 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 07 The Board of Directors Executive Committee

Sinan Tara A. Mehmet Tara Chairman of the Board (Executive Member)

Haluk Gerçek Vice Chairman of the Board (Executive Member) M. Gökhan Sağnaklar B. Burak Özdoğan C. Şan Gürdamar Özger İnal

Erdoğan Turgut E. Melih Araz V. Ergin İmre Member of the Board Member of the Board Member of the Board (Non-Executive Member) (Non-Executive & Independent Member) (Non-Executive & Independent Member) S. Oğuz Kırkgöz Zafer Gür Asaf Yener Fehmi Bayramoğlu 08 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 09

Adapazarı and İzmir, ENKA continues to be the private sector’s largest electricity producer in Turkey and met approximately 11% of Turkey’s energy demand. In 2014, the contribution of the energy Chairman’s segment to the company’s consolidated turnover approached 3.2 billion US Dollars.

In real estate, we generated approximately 0.5 billion US Dollars in revenue last year, and we continue Message to develop and manage class-A office buildings and shopping centers through our entities established in Russia. In this segment, at year-end, we owned 337,000 m2 of rentable class-A office space and 297,000 m2 of rentable space in shopping centers and a hotel, located in Moscow, with the exception of one shopping center. We completed Sergiev Posad in mid-2014 and Kuntsevo Shopping Center by year-end. Kuntsevo’s office buildings, which will amount to almost 26,000 m2, are planned for completion and operation by mid-2015. In all of the office buildings that we manage, our tenants are leading international companies. Our success in real estate development and management increases due to ENKA’s brand prestige and its association with quality and its reputation to deliver on its promises with perfection. The fact that our investments in this segment were not realized by debt, but with income generated from the segment itself is the key difference which separates ENKA from Dear Shareholders, other real estate development companies.

On behalf of the Board of Directors of ENKA İnşaat ve Sanayi A.Ş. we wish to extend our deepest In our rental operations, we forecast a moderate decline in 2015 profitability as a reflection of both respect to all of you and thank you for attending our General Assembly’s annual meeting which has the sanctions against Russia as well as the rapid decline in oil prices. However, with the contribution of convened to share the company’s activities in 2014, as well as our expectations for 2015. new investments we do not expect any contraction in this segment. As President of a company that has invested in Russia for over 30 years, I would like to underline that we will always believe in the At year-end 2014, ENKA İnşaat ve Sanayi A.Ş. had realized an equity of 5.2 billion US Dollars, a Russian market and continue to invest without slowing down. We will assess every possibility in order consolidated turnover of 5.8 billion US Dollars and a consolidated net profit of 659 million US Dollars. to turn the current crisis into new opportunities. When compared to the previous year, having almost the same level of consolidated net profit, yet increasing the company’s net cash position by 351 million US Dollars and reaching a level of 2.7 billion Construction of office space and a car park next to the Vernadskovo Shopping Center andthe US Dollars is a significant achievement, in spite of leaving behind a difficult year due to problems in demolition and reconstruction of Kashirskaya Shopping Center will be our upcoming investment steps the countries where we operate abroad. Everyone, from the Board of Directors to the most junior along this business line. In addition, project development activities have commenced on building employee in the company, can claim a share in this success. office space and a car park next to the Moskova Leningradsky Shopping Center and the demolition and reconstruction of Marino Rosha Shopping Center. ENKA’s core business concentrated on the segments of engineering and construction, power production, real estate investment and management, as well as trading. By the end of 2014, we had withdrawn from manufacturing activities with the sale of Pimaş, which did not create any synergy within ENKA Group, and for which we did not anticipate any growth Turnover from engineering and construction dropped by 16% and saw revenues of 2.1 billion US potential. The turnover of the trading activities has been realized as 302 million US Dollars in 2014. Dollars with the completion of some major construction projects. Some recently awarded projects did not contribute to the entire year. With our strong financial structure and our dedication to the responsibilities of being a global Newly signed projects in 2014 include: the Route 6 Motorway Project in Kosovo; the first phase of the presence, we continue, as we always have, to earn your trust and support as our esteemed Sulaymaniyah Bazian combined cycle power plant project and at Baghdad the Besmaya combined shareholders. cycle power plant project, both in Iraq; two compressor stations and one pressure reduction station construction activity within the scope of South Caucasus Pipeline Project Expansion Project in Georgia; SİNAN TARA a US Embassy building in Ashgabat, Turkmenistan; and oil storage tanks in Kazakhstan. In addition to Chairman of the Board these and with the contribution of affiliated companies’ contracts, the share of ENKA additions in the February 20, 2015 last year have exceeded 1.9 billion US Dollars.

We work full force in order to undertake new projects, particularly in the energy and oil related sectors, without compromising our criteria in the construction segment.

In energy production, with the natural gas combined cycle power plants operated within the Build- Own-Operate framework with full ownership, and a total installed capacity of 3.854 MW in Gebze, 10 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 11 Tengiz, Kazakhstan

Engineering&Construction Power Real Estate Trade Social Activities

Oil&Gas Projects Engineering&Construction Power Plant Projects Building Projects Infrastructure Projects Group Companies’ Projects 12 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 13

Oil&Gas Projects 14 Development of Tengiz Oil Field, Kazakhstan Crude Shipment Capacity New Tank Farm Project, 15 Tengiz, Kazakhstan

Mechanical and Electrical Installation Works of 16 Khabarovsk Refinery, Russia

Engineering Contract for Trans Anatolian Natural 18 Gas Pipeline (TANAP), Turkey SCPX (South Caucasus Pipeline Expansion) Early 19 Works and Facilities Project, Georgia

Tengiz, Kazakhstan 14 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 15

Crude Shipment Capacity New Tank Farm Project Development of Tengiz Oil Field, Kazakhstan Tengiz, Kazakhstan

ENKA and Bechtel have carried out an extensive range of engineering, procurement and construction services in the Tengiz Oil Field, west of Kazakhstan, since 1993. Their joint Tengizchevroil has awarded the Crude Shipment Capacity New Tank Farm Project to Senimdi subsidiary, Senimdi Kurylys LLP (SK), a local limited liability partnership that was established Kurylys LLP (SK) in 2014 with a 250 million US Dollars contract. The project consists of engineering, in the year 2000, performs an ongoing operations and maintenance contract among other procurement and construction of new crude oil storage tanks, switching manifolds and export pumps large scale projects. along with all their associated piping systems, utilities and control systems.

In 2014, SK continued to perform operations and maintenance services under an operations SK had completed geotechnical investigation, site stripping, hauling of fill material, ground and maintenance call-off contract with Tengizchevroil. The current contract amount is 120 preparation for temporary site facilities, and installation of a dining hall and office buildings by the million US Dollars. ENKA’s share is 50%. The contract basically consists of the following end of December 2014. The project reached 9% completion by the end of 2014, with 40 employee scope of work: engineering, procurement and construction works such as civil, structural, staff. The planned completion date for the project is June 2017. piping, pipelines, mechanical, electrical and instrumentation and maintenance works for the Petrochemical Plant in the Tengiz Oil Field. SK successfully completed 69% of the contract in 2014 with 1500 personnel as of the end of December 2014. The contract end date stands as December 2015, however Tengizchevroil regularly extends the duration of the contract on annual basis. Gas & Oil 16 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 17

Mechanical and Electrical Installation Works of Khabarovsk Refinery Mechanical and Electrical Installation Works of Khabarovsk Refinery Russia Russia ENKA is the subcontractor of the EPC contractor, Technicas Reunidas from Spain for the mechanical erection, electrical and instrumentation installation works of the Khabarovsk Refinery Modernization Project, which is owned by ALLIANCE OIL of Russia. The aim of the project was to expand the existing refinery which was built during the 1930s, increase its primary processing capacities and comply with applicable regulations. After the completion of planned units and modernization projects, production capacity is planned to increase up to 90,000 barrels per day. The scope of the project consisted of full mechanical and E&I erection works including pre-commissioning and start up activities in 3 units (Hydro cracking, Hydro-treating and Hydrogen manufacturing units) and Interconnecting racks. The project was completed in stages and units with hand-over commencing in the last quarter of 2013 and finishing in the second quarter of 2014.

The subcontract price for the total work scope was set at 122 million US Dollars. Over the course of the project, 1,012 days and 8,457,713 man-hours were spent. The maximum period without a Lost Time Accident (LTA) turned out to be 761 days and 6,038,101 man-hours. Until the second quarter of 2014, the last 251 days and 2,419,612-manhour continued uninterrupted without any LTA. The project was complete by the second quarter of 2014. Gas & Oil 18 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 19

SCPX (South Caucasus Pipeline Expansion) Early Works&Facilities Project Engineering Contract for Trans Anatolian Natural Gas Pipeline (TANAP) Georgia

The existing 690 km South Caucasus Pipeline is 42” in diameter and transports gas from the Sangachal Terminal in Azerbaijan to markets in Georgia and Turkey with a system design capacity of 7.4 bcma. The South Caucasus Pipeline Expansion (SCPX) will increase the capacity of the existing system by approximately 16 bcma through a 48” in diameter pipeline and will connect to the Trans Anatolian Natural Gas Pipeline (TANAP). ENKA and Bechtel Joint Venture were awarded the SCPX Early Works and Facilities contract on 7 February 2014. The client, SCP, is an international consortium whose shareholders are BP – United Kingdom (28.8%), TPAO – Turkey (19%), SOCAR – Azerbaijan (16.7%), Statoil – Norway (15.5%), Lukoil – Russia (10%) and, NICO – Iran (10%). The Bechtel-ENKA Joint Venture’s scope under this contract consists of all the related early civil works and the construction of two compressor stations and a pressure reduction and metering station at three different locations. Construction of a 15 km access road between the existing Millennium Highway and the second compressor station, CSG-2, is also in the early works stage of the contract. The current contract value is 548 million US Dollars with the project completion date slated for 1 March 2018. With regard to the first compressor station, CSG-1, all temporary pads have been completed and significant progress on the facilities pad was made in 2014. The work will continue with concrete foundations and structural steel fabrication and erection in 2015. At CSG-2, the erection of the road camp which was built specifically to construct the aforementioned access road is now complete and the camp is occupied. Parallel to the camp erection works, the construction of a temporary service road was completed and safe access has been provided to the CSG-2 site. The planned mobilization date for the Area 81 Pressure Reduction and Metering Station, which is the closest facility to the Turkish border, is 1 April 2015.

Bechtel-ENKA Joint Venture has been awarded an engineering contract by TANAP Doğalgaz İletim A.Ş. with a value of 59 million US Dollars of which Bechtel and ENKA have equal shares. TANAP will be a buried natural gas pipeline system including all of the above and sub ground facilities with a total length of 1,950 kilometers. The project consists of the pipeline starting from the Turkish-Georgian border which then crosses 21 Turkish provinces ending at the Turkish-Greek border. It also includes facilities such as compressor stations, metering stations, off-take stations, block valve stations, SCADA, telecom and control systems, and other related equipment and installations inside Turkey. The pipeline dimensions, by design, are: 56” from Georgian border to Eskişehir and 48” from Eskişehir to the Greek border. When operating at high flow capacity, the pipeline system will transport 31 billion m3 of natural gas annually, thus meeting its required specifications.

From mid-2014, “Work Order No. 1” including FEED (Front End Engineering Design) works on the Gas TANAP Project were successfully completed. The scope of the work includes the endorsement of the design basis, FEED surveys, permits, land acquisition activities and providing support for procurement & of long lead items and construction contractors’ tenders. In this context, ENKA has a strategic contribution to the project as a local partner of the engineering contractor Bechtel and played a key role in the completion of FEED for the pipeline project with its local resources. ENKA worked together with Bechtel in the main office provided by TANAP in Ankara. Oil Bechtel’s London and Houston Offices have also supported the engineering activities of the project. 20 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 21

Power Plant Projects 22 Lukoil Power Plant Project, Basra - Iraq Berezovskaya Coal Fired Power Plant, Boiler 24 Mechanical Erection Works in Krasnoyarsk - Russia

Erbil Combined Cycle Power Plant Project, 26 Erbil - Iraq

Sulaymaniyah Combined Cycle Power Plant Project, 28 Sulaymaniyah - Iraq

Duhok Combined Cycle Power Plant Project, 30 Duhok - Iraq

Bazyan Combined Cycle Power Plant Project, 32 Sulaymaniyah - Iraq

Besmaya Combined Cycle Power Plant Project, 34 Baghdad - Iraq

Sulaymaniyah, Iraq 22 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 23

Lukoil Power Plant Project, Basra, Iraq Lukoil Power Plant Project, Basra, Iraq

This project, located in the Basra region, West Qurna-2 Oil Field, and consisting of a 126 MW gas fired power plant, gas treatment system, power distribution systems and associated utilities, was the first power plant construction project that ENKA undertook 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 387 million US Dollars, including variations to the contract.

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

Activity that took place in 2014 were minor construction and mainly pre-commissioning, commissioning and performance testing. The first firing of the three gas turbines occurred in the first quarter of 2014. Reliability tests conducted on the three gas turbines with diesel and gas fuels were completed in June and July 2014, respectively.

The project’s completion certificate was signed on the 21 July 2014, after which possession of the plant was passed on to Lukoil Mid-East Limited. The project’s warranty period will come to an end in July 2016.

Project work was successfully completed and fully compliant with specifications and quality procedures. In spite of the harsh and arduous working, environmental and security conditions present in Southern Iraq, 4,000,000 man-hours were spent without any LTA. Power Plant 24 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 25

Berezovskaya Coal Fired Power Plant, Boiler Mechanical Erection Works Berezovskaya Coal Fired Power Plant, Boiler Mechanical Erection Works Krasnoyarsk, Russia Krasnoyarsk, Russia ENKA was awarded the subcontract for the boiler mechanical erection works on the Berezovskaya Coal Fired Power Plant in June 2012.

The contract for mechanical erection works of the boiler were initially signed by ENKA and the EPC contractor. In 2014 the existing contract with the EPC contractor was cancelled and a cost-plus-fee contract was signed by ENKA and the project’s owner, E.ON Russia.

Weighing in with approximately 26,000 tons of material, the erection of the boiler entails duct work, steel structure work, equipment erection, pressure parts erection, piping erection as well as hydro- testing of the boiler.

After the erection of all the pressure parts, the most critical activity was the hydro-test of the boiler and it was completed successfully in October 2014 on schedule.

The remaining scope of erection works, after hydro-testing and additional works, are ongoing and scheduled to be complete within the first half of 2015.

From the beginning of the project in August 2012, until the end of 2014, 904 days and 9,670,155 man- hours were spent. The maximum LTA free period was 848 days and 9,240,996 man-hours. LTA occurred on 5th of November 2014 and from there on until the end of 2014, the last 56 days and 429,159 man- hours were spent without LTA.

The project reached 97% completion by the end of 2014. The work force for the project as of the end of 2014 totaled 669 people and the project is ongoing and was at full speed for the winter period.

The estimated subcontract price for mechanical erection works is approximately 165 million US Dollars and the project is scheduled for completion within the first half of 2015. Power Plant 26 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 27

Erbil Combined Cycle Power Plant Project, Erbil - Iraq

Erbil Combined Cycle Power Plant Project, Erbil - Iraq The existing simple cycle power plant is designed to work with natural gas as the primary fuel source and diesel as a secondary fuel source. In the framework of converting this ENKA was awarded a contract by Mass Group Holding Ltd. (MGH) to convert an Independent plant into combined cycle technology, the necessary arrangements are being made Power Project (IPP) from simple cycle to combined cycle technology in Northern Iraq, accordingly. 20 kilometers south of the City of Erbil. The Erbil Combined Cycle Power Plant will be capable of being dispatched for any The existing simple cycle Erbil Gas Power Station was developed by MGH with a capacity combination of base-load operation throughout the service life period for which it was of 1,000 MW with eight GE - 9E gas turbines. By using two steam turbines manufactured designed. A direct Air Cooled Condenser (ACC) system will be used for the cooling by GE, it will be converted into a combined cycle power plant and there will be 500 MW of system which will consist of two blocks, each with approximately 40 cells. The scope of additional capacity. 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. The major areas of work under the contract are design, procurement, installation and start-up of the eight HRSGs, two nominally rated 250 MW STGs, two GSUs and all other The contractual completion of the project, which commenced in April 2012, is set as equipment in order to convert the simple cycle plant into a 4x4x1, two block configuration 12 January 2015. At the end of 2014, construction/installation works were complete and combined cycle project, including all civil and erection works. In addition to works mentioned testing and commissioning works were continuing, pending the availability of the grid above, a demonstration of parallel operation with the grid at the required net output, which has been assured by the owner. The anticipated completion date is within the first performance tests, and classroom training of the operating and maintenance personnel, half of 2015. and the preparation of integrated operation and maintenance manuals are all within the scope of ENKA’s responsibilities. The facility will be designed for a working principle of 7 days per week and 24 hours a day with an efficient operating life of 30 years. Power Plant 28 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 29

Sulaymaniyah Combined Cycle Power Plant Project Sulaymaniyah Combined Cycle Power Plant Project Sulaymaniyah - Iraq Sulaymaniyah - Iraq ENKA was awarded a contract by Mass Group Holding Ltd. (MGH) to convert an Independent Power Project (IPP) from simple cycle to combined cycle technology in Northern Iraq, 40 kilometers south of the City of Sulaymaniyah.

The existing simple cycle Sulaymaniyah Gas Power Station was developed by MGH 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 with 500 MW of additional capacity.

The major contractual obligations are design, procurement, installation and the start-up of the eight HRSGs, two nominally rated 250 MW STGs, two GSUs and all other equipment to convert the simple cycle plant into a 4x4x1, two block configuration combined cycle project, including all the civil and erection works. In addition to works mentioned above, there is the demonstration of the parallel operation with the grid at the required net output, performance tests, classroom training of the operating and maintenance personnel, and the preparation of the integrated operation and maintenance manuals are all part of ENKA’s remit. 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 fuel, and diesel as the secondary fuel source. In the framework of converting this plant into combined cycle technology, the necessary arrangements are to be made accordingly.

The Sulaymaniyah Combined Cycle Power Plant will 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.

The project started on 15 July 2013 and the first structural concrete was poured on 14 September 2013. Completion of the plant is targeted for 15 March 2016. In 2014, 70% of the construction and erection works were completed.

As of the end of 2014, the Sulaymaniyah Combined Cycle Power Plant has involved 1,229 personnel with 950,982 man-hours without any LTA. Power Plant 30 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 31

Duhok Combined Cycle Power Plant Project, Duhok - Iraq Duhok Combined Cycle Power Plant Project, Duhok - Iraq The existing simple cycle power plant is designed to work with natural gas as the primary ENKA was awarded a contract by Mass Group Holding Ltd. (MGH) to convert an Independent fuel source and diesel as a secondary source. In the framework of converting this plant into Power Project (IPP) from simple cycle to combined cycle technology in Northern Iraq, 40 combined cycle technology, all the necessary arrangements will be performed accordingly. kilometers north of the City of Duhok. The Duhok Combined Cycle Power Plant will be capable of being dispatched for any The existing simple cycle at the Duhok Gas Power Station was developed by MGH with combination of base-load operation throughout its design service life. A direct Air Cooled a capacity of 1,000 MW with eight GE - 9E gas turbines. By using two steam turbines Condenser (ACC) system will be used for the cooling system which will consist of two blocks manufactured by GE, it will be converted into a combined cycle power plant with additional each with approximately 40 cells. The contractual work scope includes a 400kV switchyard for capacity of 500 MW. which the interconnection point will be a dead-end structure to be erected by the Ministry of Electricity. The main contractual work scope includes the design, procurement, installation and start-up of the eight HRSGs, two nominally rated 250 MW STGs, two GSUs and all other equipment The project, which commenced 20 October 2013 has a targeted completion date of to convert the simple cycle plant into a 4x4x1, two block configuration combined cycle 20 May 2016. Mobilization activities have been completed and construction work will project, as well as all the civil and erection works. In addition to works outlined above, there commence in 2016. The project is scheduled for completion in the first quarter of 2018. will be a demonstration of the parallel operation with the grid at the required net output, performance tests, classroom training of the operating and maintenance personnel, and preparation of integrated operation and maintenance manuals are also ENKA’s responsibility. 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. Power Plant 32 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 33

Bazyan Combined Cycle Power Plant Project Sulaymaniyah - Iraq

Bazyan Combined Cycle Power Plant Project, Sulaymaniyah - Iraq

ENKA was awarded a contract by Qaiwan Group to construct the first phase, the simple cycle portion, of a new combined cycle power plant with a nominal capacity of 700 MW in Northern Iraq, in the Bazyan Region of the City of Sulaymaniyah.

The contractual scope of works include the design, supply, construction, commission, operation and maintainenance of a simple cycle power plant with a capacity of 500 MW with GE gas turbines, bypass stacks, fuel conditioning system and 132 kV switchyard with expansion capability. The simple cycle plant will consist of four gas turbine generators and all auxiliaries. In addition to this, performance tests, class room training of the operating and maintenance personnel, and preparation of integrated operation and maintenance manuals are also within ENKA’s remit. 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 25 - 30 years and will be designed to work with natural gas as the primary fuel source and distilled oil as the secondary fuel source.

The project commenced on 5 September 2014 with the first structural concrete poured on 17 December 2014. Completion date for the plant is targeted as 5 December 2015. In 2014, 16% of the engineering, design, procurement, construction and erection works were complete.

With 235 personnel, the man-hours spent on Bazyan Power Plant Project reached 82,021 without any LTA by the end of 2014. Power Plant 34 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 35

Besmaya Combined Cycle Power Plant Project, Baghdad - Iraq Besmaya Combined Cycle Power Plant Project, Baghdad - Iraq

Located 25 km southeast of Baghdad, this project is configured as 2 blocks of 2x2x1 combined cycle (1,500 MW), with an option to expand it to a 4-block power plant (3,000 MW).

The project will be carried out on a turnkey basis, covering engineering, procurement, installation and construction, interconnection, pre-commissioning, commissioning and start-up and performance testing of the power plant.

The contract was signed in September 2014 by ENKA and the Mass Energy Group Holding Ltd. with a 555 million US Dollars contract price. The planned completion is July 2017.

The project will be executed in two phases. Phase one is the Simple Cycle operation, which is slated for completion within 22 months. Phase two is the Combined Cycle operation which is slated for completion within 34 months.

The simple cycle part of the plant will consist of four GE 9F 3-series Gas Turbines and all auxiliaries. The combined cycle part of the plant will consist of four Heat Recovery Steam Generators (HRSG) including surface type condensers, two nominal rated 250 MW Steam Turbine Generators (STG), six GSU Transformers, two wet type mechanical draft cooling towers, and all the requisite equipment and systems to make the resulting plant a safe, reliable, efficient combined cycle power generating facility.

In the first three months of project execution, engineering and procurement of major long lead items and basic design works were started to allow construction to commence within the first quarter of 2015. The mobilization and erection of a temporary camp, site facilities and site preparation works are ongoing.

By the end of 2014, the project involved 150 personnel and 8% overall project progress had been reached. Power Plant 36 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 37

Building Projects Esentai Park Residences B and C, 38 Almaty - Kazakhstan

Ufa Perinatal Medical Center Project, Ufa, 40 Republic of Bashkortostan - Russia 42 Conference Center Project, Libreville - Gabon 42 Mausoleum Project, Franceville - Gabon 42 Presidential Palace Project, Libreville - Gabon The US Embassy Projects 44

Swissôtel, Russia 38 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 39

Esentai Park Residences B and C, Almaty - Kazakhstan Esentai Park Residences B and C, Almaty - Kazakhstan From 2005 to 2008, ENKA undertook the construction of Esentai Tower, which is the highest building in Almaty with 4+37 stories at a height of 162 m, and the construction of 3+21 story Residence A, Residence B and Residence C buildings. The project scope consisted of structural works, electrical and mechanical works for a 2+4 story fitness center and the structural works for the groundwork and basement floors of a 2+4 story shopping center. The value of the work done has reached 575 million US Dollars and the total construction area covered is 265,000 m2. Due to financial problems on the part of Capital Partners Group, construction was suspended in 2008 on Residence B and Residence C buildings.

In June 2013, ENKA agreed upon a contract with KUSA KKB-2 LLP to complete the construction of Esentai Residence B and Esentai Residence C in Almaty. The total contract was awarded to ENKA with a fixed price of 89.5 million US Dollars. ENKA is responsible for the construction work, design development for the electrical and mechanical parts of the design (MEP), the elimination of the defects in the Residence B, Residence C and the parking spaces, which cover a gross area of 99,000 m2 with 18 duplex apartments and 268 standard apartments.

13,300 m2 of the gross area include 4 duplex apartments and 43 standard apartments which belong to ENKA. The buildings are 22 stories high and have three floors beneath ground level. The underground levels consist of a mezzanine floor connecting to the pedestrian tunnel that will serve Residential A, B & C. ENKA strives to offer the highest standards available to the owner since the residential buildings are the most prestigious buildings in Almaty, Kazakhstan for a target market of high-end buyers.

The mobilization to the construction site started in June 2013. The signed agreement in 2013 includes installation of 145,000 m2 gypsum board, 17,000 m2 of stone walls and floors, 46,000 2m of parquet, 4,600 wooden doors, 64,000 m pipe and 155,000 m of power cables, etc. The project was completed in December 2014. The peak number of personnel on site was 2,099 and the project took 5,730,000 man hours without any LTAs. Kazak manpower totalled was 70%.

The total contract value of Esentai Park (Esentai Tower, Esentai Shopping Center and Residential Buildings A, B and C) reached 678 million US Dollars with a total construction area of 380,000 m2. Building Projects 40 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 41

Ufa Perinatal Medical Center Project, Ufa, Republic of Bashkortostan Ufa Perinatal Medical Center Project, Ufa, Republic of Bashkortostan Russia Russia The project has 7-floor plus basement and is a maternity hospital consisting of2 33.300m of The hospital has a total of 95 beds, 51 of which are in the physiology, pregnancy pathology, and construction area. The client is MD Projekt 2010. The total contract price of the project located in observation units of the obstetrics center, with the remaining 44 beds devoted to the rehabilitation, Ufa Region, Oktyabrsky District is 72 million US Dollars. neonatal pathology, gynecology, in vitro fertilization (IVF) and inpatient units of the neonatal center.

Awarded in March 2013, the project scope includes the working design and detail design, structural The hospital has an outpatient diagnostic center, laboratory and a physiotherapy center with a work, lift installations plus all the mechanical, electrical, plumbing facades and architectural finishings. capacity of 100 patient visits per day for children and 150 patient visits per day for adults. The hospital The project was completed 6 months ahead of the contract schedule and the hospital has been put covers an area of 4.22 hectares and is located in the Oktyabrsky District in the city center of Ufa, into operation following the hand over and opening ceremony held on 31 October 2014. between Oktyabrskaya and Salavat Yulaev Mendeleev streets.

Ufa Perinatal Medical Center was designed as a modern health complex providing a family-oriented The hospital was constructed as two main blocks, with Block A serving as the main medical center alternative for inpatient health rehabilitation for all stages of recovery. and Block B functioning as the premises for the management and the kitchen facilities. These two blocks are connected by a passage on each floor and have been designed with Level-2 fire-resistance classification. Building Projects 42 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 43

Conference Center Project, Libreville - Gabon Gabon Projects

ENKA, under a contract signed with the Presidency of the Gabonese Republic, undertook the construction of the Conference Center at Libreville, Gabon.

The project was designed by leading engineering and architectural companies from the United States. The project will not only be one of the most prestigious projects in Gabon, but one of most prestigious on the continent. The design of the structure can be described as a circular structural steel building with various harmonious geometric shapes. From the sloping roof, a clean panoramic view of Libreville will be enjoyed. The project’s scope consists of the construction of meeting rooms and five auditoriums. With the use of special gardening and sprinkler systems, Gabon’s natural habitat and rainforests will be emphasized. Environmentally friendly design, water recycling, use of natural ventilation, solar light and the ability to take advantage of shadow are the main priorities and architectural concerns on this project. The project aims for LEED (Leadership in Energy and Environmental Design) GOLD certification. Though scheduled for completion in the first half of 2015, financial issues experienced by the Gabonese Government resulted in the contract being terminated amicably.

Mausoleum Project, Franceville - Gabon

ENKA signed a contract with The Presidency of the Gabonese Republic in 2012 for the construction of the Mausoleum, Mosque, Library and Museum at Franceville, Gabon.

The scope of ENKA’s work for the Mausoleum Project consisted of partial design work, procurement and construction for the Mausoleum, Mosque, Museum, Library and other supporting buildings and structures. The Mausoleum Project is dedicated to the previous president of the Gabonese Republic, El Hadj Omar Bongo Ondimba. Architectural designs were drawn up by the Tunisian company, Atelier 6.

The project work was completed in 2014. Accordingly, a provisional acceptance certificate is anticipated for delivery in the first quarter of 2015.

Presidential Palace Project, Libreville - Gabon

ENKA, under the contract signed with the Presidency of the Gabonese Republic, undertook the construction of the Presidential Palace at Libreville, Gabon.

The project, with a total 17,934 m2 construction area, consists of the work for the presidential palace where the president will reside, the building where the president will receive guests and the Porte Cochere (primary palace entrance). In addition to these 3 buildings, the construction of a music studio, pool Cabana, guest house and mechanical room are included within the project plans. Initially, the project was planned for completion in the first half of 2015. However, due to

financial issues experienced by the Gabonese Government the contract was terminated amicably. Building Projects 44 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 45

The US Embassy Projects The US Embassy Projects

Following the collaboration between ENKA and Caddell Construction Co. of the USA for the DOMINICAN REPUBLIC building of the US Consulate project in İstinye, İstanbul, which was completed in 2003, the two companies agreed that ENKA will provide consultancy and services for the construction on future AFGHANISTAN US Embassy building projects. MAURITANIA The employer for all these projects is the US State Department’s Bureau of Overseas Construction Operations. Within the framework of this agreement, the construction of the US Embassy building DJIBOUTI in Cameroon was completed in 2005, and embassy buildings in Guinea, Mali and Sierra Leone NETHERLANDS were completed in 2006. Embassy buildings in Algeria and Nepal were completed in 2007 and Sarajevo, Bosnia project was completed in 2010. Djibouti was completed in 2011 and Burundi RUSSIA was completed in 2012 and Equatorial Guinea was completed in 2013, and subsequently, the Dominican Republic project was completed in 2014. While the Papua New Guinea project was TURKMENISTAN cancelled, a new embassy project in Ashgabat, Turkmenistan was awarded in 2014.

The embassy project in Afghanistan was awarded in 2010, with Russia, the Netherlands, Mauritania and a US Navy Project in Camp Lemonier, Djibouti added in 2013. The total value of these 5 projects amounts to 1.1 billion US Dollars. By the end of 2014, an embassy project was undertaken with a contract value of 185 million US Dollars in Turkmenistan.

As of the year-end 2014, overall construction completion rates on projects are: 56% in Afghanistan, 27% in Mauritania, 17% in Djibouti, 15% in Netherlands and 15% in Russia. By the final quarter of 2014, mobilization was completed and concreting works had started on the projects in Mauritania, the Netherlands, Djibouti and Russia. On the Turkmenistan project, design work and mobilization preparation have started.

The first phase of the Afghanistan project will be completed mid-2015 with the second phase in the first quarter of 2017. Mauritania will be complete in December 2016, Russia in January 2017, the Netherlands in August 2017 and Djibouti Military Project will be completed in May 2016. As of year-end 2014, there were a total of 1760 employees working on these projects. Building Projects 46 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 47

Infrastructure Projects Route 7 Motorway (Morina Merdare Motorway 48 Project), Kosovo

Route 6 Motorway (Pristina Han-i Elezit 50 Motorway Project), Kosovo

Development of Muscat International Airport 54 Project, Main Contract 3, Muscat - Oman

Kosovo Motorway 48 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 49

Route 7 Motorway (Morina Merdare Motorway Project) Kosovo Motorway Projects

In April 2010, the Bechtel-ENKA General Partnership and the Ministry of Transport and Communications of the Republic of Kosovo entered into the contract for the construction of the 78-kilometer motorway that is a part of the corridor extending from Vermice on the border with Albania to Merdare on the Serbian border, and connects southwestern Kosovo with the northeastern region, passing through Prizren, Suhareka, Malisheva, Pristina and Leban.

The motorway project was based on equal partnership with the American company Bechtel, with a contract value amounting to 824 million Euros. In November 2013 it was handed over to the customer.

With this motorway project, ENKA was honoured with the “Best Global Project” award in the “Motorways and Roads” category of the “Global Best Projects Competition, 2013” which was organized by Engineering News Records (ENR). Furthermore, the project was awarded with the “Program Management” award of the “Global Road Achievement Awards 2012” by the International Road Federation; with the Colossus award for “Outstanding Achievements in Transportation / Highway Projects” in the “Best Ongoing Project” category by the Croatian Chamber of Civil Engineering and also with the local “Green Print” award for environmental awareness and sustainability applications pioneered across Kosovo and the “Innovation” award under the “Borrow Haulage Management System” category. Infrastructure 50 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 51

Route 6 Motorway (Pristina Han-i Elezit Motorway Project) Kosovo Motorway Projects

In July 2014, the Bechtel-ENKA General Partnership and the Ministry of Infrastructure of the Republic of Kosovo entered into a 600 million Euros contract for the construction of the 65-kilometer motorway that forms a segment of the corridor extending from the capital city Pristina to Han-i Elezit on the border with Macedonia and adjoins the Route 7 Motorway Project, connecting the southwest of the capital city Pristina and the southern part of the country passing through Lipjan, Babushi, Ferizaj, Doganaj, Kacanik and Han-i Elezit. The motorway project is an equal partnership with the American company, Bechtel. A 42-month project duration is forecasted, including design and construction works.

Upon quick completion of the mobilization stage, works on a 5-kilometer section were started in August 2014. Work is being performed all over the 14 km territory allotted by the customer, with the number of personnel involved continuing to grow. At the same time, the design work is being rapidly executed. The motorway has been designed as a 2x2 lane motorway with a total platform width of 27.2 meters. It is designed according to TEM standards, and provides 8 crossroads.

While the design work was being carried out, a 20-kilometer section was completed. Meanwhile on other sections, field and office works are underway. In accordance with the completed preliminary design study, the scope of the project work also consists of a total of 11.6 million m3 of excavations, 8.6 million m3 of back fill, 300 thousand 3m of concrete, 864 thousand m3 of subgrade material and cement mixture, 668 thousand tons of asphalt, and 130 000 m of pipe drainage.

With regards to the topography of a specific 20-kilometer section of very rugged terrain, in accordance with the preliminary plan, the maximum excavations and back fill are estimated as 61 m and 48 m. The project includes a total of 6 viaducts or bridges with heights varying from 10 m to 61 m, with the longest bridge span at 440 m. The final project work is ongoing, consistent with the preliminary route project.

A total of 619 employees from 11 different countries, including Kosovo, Turkey, Albania, Romania, Macedonia, England and the USA are working on the project; with more than 80% of the staff being Kosovan nationals .

The total machinery on this project amounts to 1,156 pieces; with 3 camp sites planned and operated by a capacity of 1,200 people. Infrastructure 52 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 53

Route 6 Motorway (Pristina Han-i Elezit Motorway Project) Kosovo Motorway Projects

This project does not merely serve to connect Kosovo and Macedonia, but through its integration with the Route 7 Motorway, it will connect Kosovo, Macedonia, Montenegro and Albania. Upon completion of the Route 7 Motorway, it will be easier to travel from Kosovo to the Durres Sea Port in Albania. The Route 6 Motorway will also expand transportation access to Greece, Bulgaria and Turkey via Macedonia. Facilitating increased freight and passenger transportation from Turkey, Bulgaria and Greece through Kosovo to central Europe, it will serve as a useful alternative to Corridor 10 and is expected to increase the trade volume of Montenegro and Bosnia as a result.

Companies from Kosovo and Albania have found opportunities to increase their experience performing large scale works within the framework of the R7 Motorway project. Training programs in the fields of health, safety & environment and craft skills have been planned, drawing on the companies’ experience and being implemented within the framework of the project by the Bechtel- ENKA General Partnership. As a result of all the training and special consideration, over 620,566 of man-hours have been spent without lost time or accident. During 2014, 64 different training courses on occupational safety, equivalent to 9,323 hours were received by 5,180 people.

Over the course of the project, daily production rates amount to: 15,000 m3 of excavations, 10,000 m3 of back fill, and 200 3m of concrete. These production rates will increase in the new year.

ENKA will add the Route 6 Motorway to the list of its previously successful projects with regards to safety, quality and customer satisfaction. Infrastructure 54 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 55

Development of Muscat International Airport Project, Main Contract 3 Development of Muscat International Airport Project, Main Contract 3 Muscat, Oman Muscat, Oman Development of the Muscat International Airport Project is the largest construction project in the As of the end of year 2014, major equipment within the machine park totalled 1,232, of which 395 were Sultanate of Oman. The development works have been divided into eleven main contracts and heavy equipment. Two 1,600-ton capacity crawler cranes, which are only used in mega construction standard national contracts. Main Contract 3, the design development and construction of a passenger projects, were used in the project in 2014. Construction works continued throughout the year. Curtain terminal building, is the largest in scope. Upon completion, Muscat International Airport will have an wall works, roofing works and stone cladding works progressed for the north, south & east piers, annual capacity of 12 million passenger, which can be extended to 24 and 36 million passengers per as well as the passenger terminal building and forecourt buildings. Architectural works for these annum. buildings as well as the construction works for the external buildings continue. Structural Steel work is substantially complete for all buildings. As of the year-end 2014; 490,421 m3 structural concrete was The Sultanate of Oman’s Ministry of Transport and Communication awarded Main Contract 3 (MC3) poured; 29,938 tons of structural steel was installed, 122,078 m2 of stone work was completed, and to the consortium composed of Bechtel, ENKA and Bahwan on 23 February 2011 with a contract 39 travelators, 59 escalators and 29 elevators were installed. Work is moving forward swiftly for the value of 706 million Omani Rials, which equals 1.8 billion US Dollars. Bechtel ENKA Joint Venture has provision of wild air and energization to the buildings. a 77% share in the consortium, where Bechtel & ENKA shares are equal in the Joint Venture. Bahwan Engineering Company is one of the biggest construction companies in the Sultanate of Oman and The project totalled 8,413,400 man-hours without a lost time accident and was 76% complete by 2014 specializes in mechanical and electrical works. Total approved variations amount to 24.4 million Omani year-end. Rials (63.5 million US Dollars). By the close of 2014, the MC3 project had a total headcount of 12,363, consistsing of 1,244 technical Total gross closed building area is 647,480 m2 and the planned completion date is July 2016 (excluding administrative personnel and labor force of 11,119. the defects liability period). The scope of the work consists of approximately 516,000 m3 of concrete work, 80,000 tons of rebar work, 1,900,000 m3 of earthwork, 30,500 tons of structural steel, 158,000 m2 of façade & cladding, 175,000 m2 of roofing, 285,000 m2 of block work and 600,000 m2 of flooring and 600,000 m2 of wall covering work. Infrastructure 56 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 57

Group Companies’ Projects 58 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 59

Çimtaş Çelik İmalat Montaj ve Tesisat A.Ş. (Çimtaş Steel)

Established in 1973, Çimtaş and its subsidiaries engineer and fabricate pressure vessels, heat recovery steam generators, storage tanks, steel structures, steel bridges, steel wind towers, oil and chemical tankers, floating platforms, powerships, piping systems for the power, oil, gas and chemical industries, process skids and modules and turbine auxiliary systems according to ISO, ASME, API, LTA, IACS and CE requirements. In 2014, Çimtaş set a record by fabricating a total of 97,000 tons of welded products at its four facilities in Turkey and one in China. A substantial part of this tonnage was achieved via the İzmit Bay Crossing Suspension Bridge Project, where Çimtaş is the nominated subcontractor of IHI (Japan). With a main span of 1,550 m and total length of 2,682 m, the İzmit Bay Crossing Suspension Bridge will be the longest suspension bridge in Turkey, and the fourth longest in the world upon completion. Çimtaş Steel (Gemlik Works) and Çimtaş Module and Shipyard (Gölcük Yard) carried out the following fabrication and ground assembly activities for the İzmit Bay Crossing Suspension Bridge Project in 2014: Çimtaş Steel Gemlik Works • Çimtaş Steel fabricated 11,000 tons of bridge tower panels and 29,000 tons of girder panels, thus, completing a total of 40,000 tons of welded fabrication on time and in compliance with the required quality norms and standards.

• The formation and trial assembly of the 108 tower blocks consisting of 432 panels, with a total weight of 18,000 tons, was completed within the year.

• The tower blocks were delivered to the installation site by the 4,400 DWT dynamic positioning vessel, GMK-1, built by Çimtaş Module and Shipyard.

• 85% of fabrication of the 3,200 girder panels was completed by year-end 2014.

• The girder panels were progressively shipped by truck from Gemlik to Gölcük for ground assembly.

Within the year 2014, Çimtaş Module and Shipyard completed the ground assembly of 20,000 tons of such girder panels, forming 113 girder blocks in total, each with a size of 35 m x 25 m x 5 m. Çimtaş M&SY Ground Assembly Yard

Other Çimtaş Gemlik projects for the year 2014 are as follows:

• Fabrication and partial delivery of 9 ASME U stamped pressure vessels with a total weight of 850 tons to Bechtel OG&C (USA) for Angola LNG Project.

• Fabrication and delivery of 44 wind towers with a total weight of 8,500 tons for Nordex (Germany). The 2015 volume has been set as 15,000 tons.

• Completion of the delivery of 7 PSA modules to UOP (USA) for a petrochemical plant.

• Fabrication of a heat recovery steam generator and associated piping systems under purchase order from Hamon Deltak Corporation (USA) for TCO (Kazakhstan) - Thermal Oxidizer Unit Project.

• Fabrication of the gas turbine combustion casings under a long-term supply agreement with GE Power Group Companies (USA) with an increased yearly volume. Bridge Tower Block Trial Assembly 60 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 61

Çimtaş Gemi İnşa Sanayi ve Ticaret A.Ş. (Çimtaş Module&Shipyard)

In addition to the Çimtaş Module and Shipyard’s İzmit Bay Crossing Suspension Bridge project related works as detailed above, the Shipyard continued to outfit the 4,500 DWT chemical tanker NB 16.

Çimtaş Boru İmalatları ve Ticaret Ltd. Şti. (Çimtaş Pipe)

In 2014, Çimtaş Pipe fabricated and delivered 23,500 tons of process pipe spools to Bechtel OG&C for the Santos - Petronas - Total owned Gladstone LNG (Australia), the Conoco Philips - Origin Energy - Sinopec owned Pacific LNG (Australia) and the Cheniere Energy owned Sabine Pass LNG (USA) projects, setting a record in annual fabrication and delivery quantities since its inception in 2002.

In 2014, Çimtaş Pipe was awarded with “Excellence in Quality and Performance” for the Sabine Pass LNG Project. Based on its successful execution of this project, Çimtaş Pipe was selected as the main pipe spool supplier for Cheniere’s Corpus Christi (USA) Project. Çimtaş M&SY Girder Block Transport

Additionally, as per the past thirteen years, Çimtaş Pipe continued to deliver gas and steam turbine piping systems for GE Power (USA) in 2014. The 2015 volume has already been set.

Major fabrication orders received by Çimtaş Pipe in 2014 are as follows:

• Delivery of power piping spools to Mitsubishi Hitachi Power Systems for Kozienice (Poland) Coal Power Plant.

• Delivery of process piping spools to Bechtel - Linde Consortium for ExxonMobil owned NAG Olefins Recovery Plant (USA).

• Delivery of process piping spools to Bechtel OG&C for Chevron (USA) owned Angola LNG Project.

• Delivery of process piping spools to Bechtel - Enka JV for BP (UK) owned SCPX Compressor Stations Project (Georgia). Çimtaş Pipe Robotic Welding Group Companies

Çimtaş Pipe 42 inch Pipe Spool with Ball Valve 62 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 63

Cimtas Ningbo Steel Processing Co. Ltd. (Republic of China)

In 2014, Çimtaş Ningbo (China) delivered, on-time with zero LTA, gas and steam turbine piping systems and turbine auxiliary units to customers, including GE Power and Water, GE Energy Services and GE Oil & Gas (USA), Mitsubishi Hitachi Power Systems (Japan), Fjords Processing (Norway) and Harbin Electric (China).

Major projects completed by Çimtaş Ningbo in 2014 are as follows:

• Fabrication and delivery of 300 tons of middle bore and 250 tons of large bore piping systems for GE Power and Water’s Saudi Arabia, USA, Russia and Kuwait project sites.

• Fabrication and delivery of 600 tons of gas turbine piping and 20 modular skids to Mitsubishi Hitachi Power Systems for various projects.

In the year 2014, Çimtaş and its subsidiaries, consisting of 3,500 employees, achieved 445 million US Dollars in sales. Çimtaş Ningbo Modular Process Skid

Çimtaş Steel PSA Modules

Bridge Tower Block Shipment Group Companies

Çimtaş Pipe Spool Delivery Field 64 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 65

ENKA Teknik Genel Müteahhitlik Bakım İşletme Sevk ve İdare A.Ş. ENKA TEKNİK

Established in 1981, ENKA Teknik became a preferred partner for turnkey projects, as its expert engineering and project management teams proficiently undertook plant engineering, fabrication, procurement, construction, erection, commissioning, and operation phases of industrial projects to the full satisfaction of its clients.

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, desalination and environmental engineering, infrastructure and construction, electrical, control systems and instrumentation engineering. The primary objective of ENKA Teknik is, and has always been, customer satisfaction achieved by effective implementation of the ISO 9001:2008 Quality Management System.

ENKA Teknik provides its services from the head office in Istanbul, as well as its Tripoli, Libya and Basra, Iraq offices and its offices located at project sites.

The Obari 4x160 MW Gas Turbine Power Plant Contract, amounting to 378 million Euros, was signed between Libya Electric Company (GECOL) and GESCO - ENKA Teknik Consortium in 2011. Whilst ENKA Teknik’s scope in the consortium was valued at 170 million Euros, the contract had to be suspended in February 2011 due to local uprisings; however the engineering works continued without interruption. In October 2012, the purchasing and site activities resumed and all activities gained momentum in 2013. In 2014, engineering works and material supply were completed and site personnel reached a total of 670 people. Also in 2014, a 25-kilometer long crude oil pipeline construction work contract, worth 9 million Euros, was signed. Although it was on schedule for completion by the end of 2014, 8 months prior to the contractual completion date, and following the firing of the first turbine, which had been targeted for completion in October 2014, the project site had to be evacuated on 21 September 2014, due to ongoing local issues in Libya.

The Zawia, Derna, Soussa and Zuvara desalination plant projects and the Zawia Potable Water Pipeline Project, which were contracted with Libya Electric Company (GECOL) and transferred to the General Desalination Company of Libya (GDCOL), have been completed on time by the consortium composed of French Sidem and ENKA Teknik, and acceptance activities had been initiated. However, re-mobilization was performed at the Derna and Soussa sites in March 2013 for the site acceptance activities, which had been suspended in February 2011 due to local issues. The site activities were completed in May 2014. The final acceptance and hand-over activities, which were planned for the Zawia and Zuara projects in 2014 were postponed due to circumstances prevailing at the site locations in Libya and due to the client, GDCOL’s organizational problems. Group Companies

Obari 4x160 MW Gas Tubine Power Plant 66 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 67

ENKA Teknik Genel Müteahhitlik Bakım İşletme Sevk ve İdare A.Ş. ENKA TEKNİK

The Al Najybia (Basra, Iraq) 4x125 MW Gas Turbine Power Plant Contract valued at 237 million US Dollars, one of the “Mega Deal Projects”, was signed in January 2012 with the Ministry of Electricity of Iraq. The contract became effective on 2 May 2013, upon the employer’s completion of its financial obligations as per contract and concluding addendum for additional piling works, amounting to approximately 35 million US Dollars.

In 2014, 90% of the project scope, including engineering, supplies, construction and installation works, was completed.

Parallel to the Al Najybia Power Plant Project, the PS-1 Crude Oil Pumping Station contract valued at 57.5 million US Dollars in Rumaila, Basra was signed at the end of 2012 with the Iraqi state-owned South Oil Company (SOC). This is a highly significant contract as it is the first project contracted directly with Iraq’s largest local state oil company. The contract became effective on 22 December 2013 after the employer performed its financial obligations. Throughout 2014, a substantial amount of engineering works were completed, almost all foreign supply materials were ordered, gas turbine-pump packages were shipped from production facilities, excavation and foundation works, including turbine-pump foundations, were completed. An addendum for additional works was signed with the employer in 2014. Project progress is 35% at present and will accelerate to its peak within the first quarter of 2015 after arrival of main equipment and the commencement of installation and piping activities. The project will be completed in mid-2015 as planned.

As a result of its outstanding performance on the PS-1 Project, ENKA Teknik has been invited to bid for the Zubair-2 Pump Station Project. At year-end 2014, the Zubair-2 bids were under technical evaluation. Group Companies

Al Najybia 4x125 MW Gas Turbine Power Plant 68 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 69

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

Kasktaş began soil engineering and foundation works in 1957 as an Turkey Projects internal department of ENKA and was transformed into an individual 1. Istanbul Bosphorus Strait Crossing Road Project – Asia Transion Shoring Works company in 1975. 2. Izmit Bay Crsossing Suspension Bridge Project – North Side Span Pier Jet Grouting Works With 455 employees at year-end 2014, Kasktaş offers high-quality 1 3. Izmit Kartonsan Factory Waste Water Treatment Facilities and economical solutions through its personnel’s experience in 4. NEF 03 Kağıthane Project geotechnical design and all types of soil engineering, and its special 5. Eroğlu Seyrantepe Skyland Project geotechnical machinery and equipment. 6. Istanbul Bosphorus Strait Crossing Road Project - Koşuyolu Bridge Enlargement Works With this aim, and its posession of a large and modern machinery 7. Istanbul Bosphorus Strait Crossing Road Project - European Side Excavation Support Works park, Kasktaş continues to add new machinery and equipment to 8. Star Refinery Anchorage Works its fleet in order to meet the current requirements in the area of soil engineering. Saudi Arabia Projects

The Environmental and Occupational Health and Safety System was 1. Jeddah Stormwater Drainage Project established in the company headquarters and main workshop in 2. Tahliyah Business Center Project 2007, and extended within the first half of 2009 in order to include all 3. Haram Utility Services Project construction sites both in Turkey and abroad. Its affiliate, located in 4. Kudai Towers Project Saudi Arabia, has also implemented the ISO 14001 Environmental and 5. First Ring Road Project OHSAS 18001 Occupational Health & Safety Management Systems, 6. Jabal Omar Development Project which was also certified by BSI in 2009. 7. King Faisal Specialist Hospital Project 8. Jabal Al Ka’aba Project Having successfully passed the third party inspection on the ISO 9001:2008 Quality Management System, conducted by BSI in 2014, Russia and Other Projects Kasktaş performs its activities without compromising quality. 1. St Petersburg WHSD Project The list of projects undertaken by the company throughout the year 2. Yekaterinburg Office-Apart Hotel Project 2014 is shown on the right hand side. Kasktaş entered 2014 with 12 3. Palajevskaya Shopping Center Project ongoing projects, 7 of which were completed in 2014. Furthermore, 4. Moscow City Plot 17-18 Office and Housing Project 13 new projects were undertaken by the company in 2014. 5. Skulkova HUB Project 6. Nox American Embassy Projects The breakdown of Kasktaş’s 2014 projects, with respect to the 7. Bretskaya Project Group Companies countries where those projects are being undertaken, can be seen 8. Al Najybia Power Plant Project on the right hand side. 9. New Ashgabat Airport Soil Improvement Works 10. 11. 70 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 71

Titaş Toprak İnşaat ve Taahhüt A.Ş. TİTAŞ

Founded in 1974, Titaş, with its experience of 40 years, continues to complete any kind of work undertaken by integrating modern construction machinery with contemporary technology and a team spirit of the highest quality.

Titaş has been successfully carrying out excavation-backfilling works on highway projects, drainage, quarry and crusher plant operations, municipal domestic water distribution networks and housing waste water networks, as well as energy, communication, natural gas, heating-cooling networks, and also infrastructure works on university campuses and embassy complexes, both domestically and internationally - all within work schedules.

After the completion of the Morine-Merdare Motorway Project in Kosovo at the end of 2013, Titaş committed to a new project in 2014, the South Caucasus Pipeline Expansion (SCPX), infrastructure consisting of a 15-kilometer road and compressor stations. These works consist of quarry and crusher plant installations / operations and asphalt works. Titaş set up a Georgian Branch for these projects. Despite the extreme weather conditions present at 1,500 – 2,000 meter altitudes, Titaş aims to complete its works according to the employer’s work schedule. By the end of 2014, Titaş had commenced a portion of its work on this contract. Group Companies 72 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 73

Engineering&Construction Power Real Estate Trade Social Activities

Power Gebze Elektrik Üretim Ltd. Şti. Adapazarı Elektrik Üretim Ltd. Şti. İzmir Elektrik Üretim Ltd. Şti. 74 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 75

İzmir Aliağa Natural Gas Combined Cycle Power Plant - Turkey The electricity production companies have signed a 20-year natural gas sales contract with BOTAŞ and a 20-year electricity sales agreement with the 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 by the Gebze Elektrik Üretim Ltd. Şti. 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 Adapazarı Elektrik Üretim Ltd. Şti. authorities by a private producer. Through the use of advanced technology employed in the plants, İzmir Elektrik Üretim Ltd. Şti. 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.

Among these, the fuel costs item is a pass-through item, and fluctuations in natural gas prices are proportionally reflected in the sales price. Thus, ENKA does not incur any price risks with regard to natural gas.

With the acquisition of InterGen’s shares, ENKA increased its shares to become the sole owner of the electricity generation companies.

A report conducted by TEİAŞ stated that Turkey’s energy consumption for 2014 totalled 255 billion kilowatt-hours. Accordingly, ENKA’s plants, with their collective annual generation capacity of 30 billion kilowatt-hours, are capable of meeting 12% of Turkey’s aggregate energy consumption.

In November 2014, the EMRA (Republic of Turkey Energy Market Regulatory Authority) issued Established in 1997 as a 40-60% partnership between ENKA and InterGen, respectively, InterGen-ENKA Electricity Generation Licenses for Gebze Elektrik Üretim Ltd. Şti., Adapazarı Elektrik Üretim Ltd. Şti. was awarded the turnkey construction and operation of the Gebze, Adapazarı and İzmir natural gas and İzmir Elektrik Üretim Ltd. Şti. combined cycle power plants, with a total installed capacity of 3,854 MW, by the General Directorate of TEAŞ and the Ministry of Energy and Natural Resources in accordance with the Build-Own-Operate model.

With 25% of it financed through equity and 75% through project finance, the total investment for the three plants amounts to 2.04 billion US Dollars. Individual amounts committed by international financial institutions, totalling 1.53 billion US Dollars, are as follows: 860 million US Dollars by US Exim (USA), 185 million US Dollars by Hermes (Germany), 125 million US Dollars by OND (Belgium), 300 million US Dollars by OPIC (USA), and 60 million US Dollars by various commercial banks.

The Environmental Impact Assessment Report completed in accordance with the protocols outlined by the Ministry of Environment has received official approval from 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’s environmental guidelines and duly approved as it indicated minimal impact levels. Similar to today’s prevalent technology employed at natural gas combined cycle power plants around the world, Adapazarı, Gebze and İzmir plants operate below the minimum criteria established regarding air quality protection, water pollution and noise control regulations, and they are an exemplary array of investments in the energy sector in Turkey.

The turnkey construction of the Gebze, Adapazarı and İzmir natural gas combined cycle power plants was awarded to a Bechtel-ENKA Joint Venture, with ENKA possessing a 50% share. Of these projects launched in 2000, the Gebze and Adapazarı plants were commissioned in 2002 and the İzmir plant in Power 2003. Together with its partner, InterGen, ENKA has become the largest electricity producer in Turkey’s private sector since the plants began to operate. Adapazarı and Gebze Natural Gas Combined Cycle Power Plants - Turkey 76 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 77

Engineering&Construction Power Real Estate Trade Social Activities

City Center Investment B.V. Real Estate ENKA Invest ENKA TC JSC Mosenka JSC Moskva Krasnye Holmy 78 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 79

ENKA Invest

ENKA Invest began operating in 1994, as a part of ENKA’s real estate investment division which has been working in Moscow since the early 1990s. Its 97 personnel lease office and residential premises, coordinate building and facility management, as well as provide building services for the fit-out works required by tenants. Their four complexes, all located in the centre of Moscow, have a total rentable area of 76,000 m2.

Approximately 20% of ENKA’s office portfolio is composed of buildings belonging to ENKA Invest. The occupancy rate in ENKA Invest’s buildings increased to 97% by the end of 2014. Some of the leases with international tenants, whose business relations date back to the 1990s, have even been extended.

ENKA Invest’s existing tenants include big multinational firms such as Accenture, Chanel, Cleary Gottlieb Steen & Hamilton, HSBC, IATA, La Prairie, Les Laboratoires Servier, LG Electronics, Linde Gas, Linklaters, National Oilwell Varco, Nestle, Nintendo, Statoil, Tommy Hilfiger and UBS.

City Center Investment B.V.

City Center Investment B.V. commenced business in 2003 with the realization of the Naberezhnaya Tower complex, which is one of the most prestigious business centers in Moscow. Naberezhnaya Tower holds a Commercial Real Estate Award for the best Class-A business center. Located in Moscow’s International Business Center, it has an inspiring architecture and hi-tech innovative design.

Naberezhnaya Tower complex continues to operate with 114 personnel in the sphere of leasing offices, including facility management of the buildings and acting as a contractor for fit-out works.

The complex consists of three blocks with a total rentable area of 163,000 m2. During 2014, City Center Investment B.V. concluded nearly 25,000 m2 of new lease contracts and carried out 32,000 m2 of office fit-out works in Naberezhnaya Tower.

The occupancy rate of Naberezhnaya Tower increased to 95% by the end of 2014. In addition to increased occupancy, with the leases finalized during 2014, average rental rates in the buildings also increased. Naberezhnaya Tower is the most compelling office choice for any leading international or Russian business. Some of the leases with international tenants with business relations spanning more than a decade have even been extended for additional periods.

Existing tenants of City Center Investment B.V. include reputable corporations such as BASF, Citibank,

CMS, E.On, Eli Lilly, Fortum, General Electric, IBM, KPMG, Medtronic, Merz Pharma, Mitsui & Co, Norilsk Estate Real Nickel, Pfizer, Qualcomm, Renaissance Capital, Richemont, SKF, Symantec and Universal Pictures. 80 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 81

ENKA TC

ENKA TC, formerly Ramenka, was established in Moscow as an equal partnership between ENKA and Migros in 1997 to create shopping centers and supermarket chains in Russia. In November of the same year it 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 m2. The company continued its growth and opened its second hypermarket and shopping center, Marino Rosha, despite the economic crisis in Russia in 1998. Adhering to high quality standards, ENKA completed the construction of the 32,500 m2 Marino Rosha shopping center in a short time.

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 outside Moscow soon saw the opening of stores at Krasnoyarsk, Kazan and Nizhiy Novgorod the same year. Despite some closures between 2004 and 2007, the total number of stores had increased to 53, and shopping centers to 10.

The company used its own resources as well as International Finance Corporation (IFC) and commercial bank loans for its investments. A total of 170.5 million US Dollars in loans were provided by IFC between 1998 and 2006. All of these debts were repaid in 2008 before their maturity dates. Real Estate Real 82 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 83

The construction of the shopping mall was completed and commenced operation at the end of 2014. ENKA TC The office buildings are planned to open towards the end of the 2nd quarter in 2015. This 465 million US Dollars investment project features a shopping mall with 63,831 m2 of net leasable area, an office building with 25,835 m2 net leasable area, and an underground parking lot with a 2,350-car capacity.

ENKA TC’s Kuntsevo redevelopment project was deemed worthy of the 2012 “Cityscape Future Retail Award in Emerging Markets” at the International Conference for Global Real Estate. The Award ceremony, in which 36 nominee projects in 13 different countries were showcased, took place in Dubai.

Kuntsevo Plaza also became one of Russia’s 37 green investment projects after receiving a green building certificate (Green Standard – GOLD) in April 2013.

The shopping mall in Sergiev Posad (Moscow Region) which commenced construction during the 2nd quarter of 2013, opened for retail operation at the beginning of August 2014. This shopping mall project consists of a total area of 38,050 m2 (leasable area of 25,086 m2) and a parking area with a In addition to retail space in shopping centers, the company started renting large scale offices in 723-car capacity. This project was realized for an investment of 59 million US Dollars. 2007 at the Vernadskovo complex. Project development works for the construction of a new 37,800 m2 (leasable area of approximately By purchasing the 50% share of Migros in 2007, ENKA became the sole owner of the company and 20,000 m2) class-A office building with an additional 6,8702 m of standalone covered parking in consequently renamed it “ENKA TC”. In line with concentrating on rental as its main line of business, Moscow on Prospect Vernadskovo, in front of Vernadskovo Kapitoly Shopping Mall owned by ENKA it has transferred the hypermarket operations at the Moscow and St. Petersburg shopping centers to TC, was completed in 2014 with project construction works projected to start in 2015. Investment for Auchan through rental agreements. Upon completion of this operation the rentable space of ENKA this project is estimated at 55 million US Dollars. TC increased from 167,000 m2 to 227,000 m2. Project development works for the construction of a new 55,000 m2 (leasable area of approximately Shopping malls owned by ENKA TC and which were operated under the “Ramstore” brand name 22,000 m2) office building and underground parking project in Moscow on Leningradsky were rebranded “Kapitoliy” in 2009. Also, the supermarket brand name “Ramstore” was renamed Pravaberejnaya, in front of Leningradsky Kapitoly shopping mall, owned by ENKA TC, started in “Citystore” from January 2010. 2014. Project development works are expected to be complete in 2015, with commencement of construction projected for 2016. Investment for the development is estimated at 70 million US Dollars. In accordance with the company’s plans to exit the retail business and concentrate on real estate operations within the scope of sales agreements, ENKA TC retail assets were transferred to OOO With regard to the Kashirskaya Shopping Mall redevelopment project, construction and land BILLA and OOO BILLA REALTY in April 2012. Following this transfer process, at the end of 2012, plot plan approval has recently been granted by the Moscow Municipality. However the ENKA TC had completely exited the retail sector. Rental revenues of the company reached 148 million project development and project approval processes are ongoing. The current plan is to start US Dollars in 2014. the construction of the new project after the existing building is demolished in the middle of the 2nd quarter of 2015. The new building is expected to have an area of approximately Two of ENKA TC’s most significant shopping mall developments won the “Best Shopping Center” awards 173,000 m2 (leasable area of approximately 75,000 m2) and a total investment of 260 million from the Commercial Real Estate Committee in Russia. Kapitoliy Shopping Mall in St. Petersburg was US Dollars. honoured with “St. Petersburg’s Best Shopping Center” award in 2006, while Kapitoliy-Vernadskovo Shopping Mall in Moscow received “Moscow’s Best Large-Scale Shopping Mall” award from the CRE In addition to these works, ENKA TC has started project development for redevelopment in 2007. Also awarded the “Best Project in the Sphere of Investment and Construction in Moscow in of its existing Marino Rosha Shopping Mall. The plan is to start the construction of the new 2012” organized by Moscow’s local government in 2013 from a list of 60 nominee projects. Kapitoliy- project after the existing building is demolished in 2016. The new building is expected to have Sevastopolsky Shopping Mall in Moscow was also awarded by the Moscow Municipality with “The an area of approximately 210,000 m2 (leasable area of approximately 80,000 m2) and a total Most Convenient Shopping Center in the South-West Administrative District of Moscow”. investment of 335 million US Dollars.

During the 2nd quarter of 2011, ENKA TC finished the project development phase and commenced redevelopment works for Kuntsevo Shopping Mall, which originally opened in 1997. Within the scope of this project, the existing building, covering 19,400 m2 was demolished and a new 245,127 2

m modern complex was constructed. The complex consists of a shopping mall, office buildings and Estate Real a small number of apartment units. 84 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 85

JSC Moskva Krasnye Holmy JSC Mosenka Having signed an investment agreement with a number of Russian partners, including the Municipality of Moscow, ENKA established Moskva Krasnye Holmy (MKH) with the specific aim to develop, in five progressive stages, the Russian Cultural Center, a center that includes office buildings, trade, cultural and sports centers on a seven-hectare plot of land with a 49-year lease. ENKA owns 100% of this company which commenced operation in the summer of 1995 and has thus far completed a number of buildings totalling 163,000 m2, including 63,000 m2 of rentable office space which is nearing rental capacity.

The complex, known as Riverside Towers®, accommodates a five-star hotel with 235 rooms, under the name “Swissôtel Krasnye Holmy” and operated by the Swissôtel group since 2005. The hotel’s roof bar, “City Space” is highly popular and listed on the 2011 chart of the World’s 50 Best Bars, as compiled by Drinks International, the No 1. Trade magazine for global drinks buyers. The new conference center, also managed by Swissôtel, became a featured attraction from the moment it opened its doors, and now hosts many conferences, seminars and other events catering to prestigious participants.

The corporate policy of the company emphasizes a process of institutionalization and dictates that productivity and profitability excel by employing the finest local staff and the best local companies to collaborate with a core Turkish management team.

The company’s 2014 turnover was 80 million US Dollars.

The total number of JSC Moskva Krasnye Holmy employees, including hotel staff, has reached 408, 13 of whom are Turkish nationals, as well as an additional, outsourced workforce of 150 employees.

In 1991, ENKA took advantage of its good business relations in Russia as well as the steady economic progress of the country, to found JSC Mosenka in Moscow with some Russian partners as the first real estate investment company which practiced and provided western quality real estate services. ENKA now owns a 100% stake in Mosenka, which developed and rented out office space, aiming to meet Moscow’s growing demand. Mosenka has reconstructed six historic buildings with a total construction area of 46,500 m2 and converted them into modern office buildings, all of which are nearing rental capacity. Tenants of Mosenka include well-known local and international companies such as Lego, Sber bank, Air Liquide, Saipem, Roquette and Claas.

Excepting subcontractors, the company employs 68 personnel and recorded a 2014 turnover Estate Real of 22 million US Dollars. 86 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 87

Engineering&Construction Power Real Estate Trade Social Activities

Trade ENKA Pazarlama İhracat İthalat A.Ş. ENTAŞ Nakliyat ve Turizm A.Ş. Airenka Hava Taşımacılığı A.Ş. 88 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 89

ENKA Pazarlama İhracat İthalat A.Ş.

Established in 1972, ENKA Pazarlama began its business activities with the sales and servicing of ENKA Pazarlama’s operations generated 221 million Euros in 2014, increasing its market share and Hitachi excavators and Kawasaki wheel loaders and has become the representative of numerous maintaining its position amongst the market leaders despite the fact that the construction machinery well known international brands of machinery and construction equipment. Focusing on heavy market in Turkey has contracted sharply. ENKA Pazarlama aims to continue building on its 40 years construction equipment and machinery, heavy vehicles and industrial products, ENKA Pazarlama of experience and expertise in the market and make future investments, while continuing to offer its provides its services throughout Turkey from its 5 regional branches, 1 sales office and 150 dealers trustworthy, high quality service. providing support and after sales service to all of its customers with 4 TSI approved service centers all of which hold ISO 9001:2008 quality certificates. As a distributor of the world’s leading manufacturers, ENKA Pazarlama provides the following product groups: ENKA Pazarlama’s primary center is located in Tuzla, Istanbul and occupies a total area of 15,200 m2, of which 7,500 m2 is covered; the Ankara office occupies a total area of 12,0002 m , of which 4,800 m2 is covered; İzmir occupies a total area of 13,450 m2, of which 4,882 m2 is covered; Adana, a total area • Machinery Group 2 2 of 8,400 m , of which 1,800 m is covered area, and finally the offices in the Mersin Free Zone which • Mining, Crane and Road Equipment Group occupy a total area of 3,970 m2. • Recycling Equipment In 2010 ENKA Pazarlama received an ISO quality certificate for its sustained vision and mission, its technical expertise, the customer-oriented approach of its human resources, and its high quality • Truck and Trailer Group service and economical solutions that have earned the company nationwide acclaim and its well respected institutional status. ENKA Pazarlama has completed the process of integration with the ERP • Industrial Products system SAP for both efficient internal and external use and the CRM module for customer relations. • Material Handling and Lifting Equipment

ENKA Finansal Kiralama A.Ş., is a subsidiary of ENKA Pazarlama, whose experienced staff monitor Trade • Agricultural Machinery Group market conditions closely and provide customer support services for all products, and offer financing opportunities through leasing. 90 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 91

Airenka Hava Taşımacılığı A.Ş.

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 for domestic and international routes.

Airenka operates a Hawker 900XP aircraft manufactured with the latest on-board flight technology in 2009. The highly experienced flight crew regularly advance and refresh their training in the United States in compliance with international aviation rules and regulations. The company has logged a total of 445 flight hours to 41 different cities located on 3 continents.

Entaş Nakliyat ve Turizm A.Ş.

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

Entaş, with its excellent and high-quality approach to service, has secured a lasting position in the sector and offers diverse cultural and business travel alternatives to the individual and group requirements of national and international customers. The mission of Entaş is to accurately comprehend customers’ requests, improve the quality of its services, to closely follow global developments in best practices in order to implement them here in Turkey, alongside striving to contribute to the development of the sector, and most importantly, to maintain its extensive service approach and long-lasting collaborations through creating customer satisfaction. Entaş pioneered the utilization of the latest online international reservation systems in Turkey, such as Amadeus, Galileo and Troya, and can offer customers a wide range of services, which includes: providing worldwide airline tickets; hotel reservations; rent-a-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; the organization of congresses, seminars, fairs, and symposia; dealer conventions and motivational trips and cruises; catering services; internal organizations for corporate customers 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 its 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 Trade agencies in airline ticket sales for more than a decade and has the highest turnover of any agency serving at a single location without branch offices. 92 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 93

Engineering&Construction Power Real Estate Trade Social Activities

Social Activities ENKA Foundation ENKA Sports Club ENKA Schools ENKA Culture and Arts 94 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 95

ENKA FOUNDATION

The ENKA Foundation was established in 1983 to uphold and advance the company culture’s core philosophy and values that have the ultimate goal of the advancement of the intellectual, physical and spiritual development of human civilization.

Accordingly, the Sadi Gülçelik Sports Complex was founded in 1983 in Istanbul on the gentle slopes of Istiniye. Sadi Gülçelik is irrefutable evidence of Enka Foundation’s commitment and ability to actually realise its mission through enrichment programs that introduce Turkish youth to sport and make it a central part of their lives that identifies talent and potential using scientific methods that can offer coaching and training to raise champions in the international arena as well. The strengthening of educational and social structures is a natural area for the foundation to work in for the fulfilment of its mission.

The ENKA Foundation began by establishing the Sadi Gülçelik Sports Complex, which resulted in the founding of the ENKA Sports Club. In 1996 ENKA Schools was established on the same site in Istinye, followed by ENKA Schools in Adapazarı which was launched just after the devastating 1999 earthquake in order to help children who were affected. Then, in 2008 the foundation launched the Private ENKA Technical and Industrial Vocational High School and the Private ENKA Science and Technology High School in Gebze. ENKA Culture and Arts, works with all its different units and foundation members towards disseminating and sharing the wealth of its heritage with society at large. Social Activities 96 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 97

• At the Second Junior Olympics European Qualification, held in Baku, Azerbaijan between May 30 and June 1, 2014; Emin Öncel achieved 2nd place with 74.89m throw in Javelin.

ENKA SPORTS CLUB • In the 10,000m European Cup, held in Skopje, Macedonia on June 7, while the Men’s National Team became the Champions, Polat Arıkan placed first at 28:17.14 and Ali Kaya finished 2nd at 28:17.82.

• At the Under-23 Mediterranean Games held in Aubagne, France on June 14-15, Elçin Kaya came 2nd with 52.25m in the Discus Throw; Nimet Karakuş 3rd in the 100m at 11.91. Aykut Ay came 4th in the 100m with a time of 10.44 setting the new Turkish Junior’s Record.

• Our athlete İlham Tanui Özbilen gained 1st place with his time of 2:15.08 in the 1,000m at the IAAF World Challenge Golden Spike Meetings held in Ostrava on June 17 and making him the World Leader of his category in this event.

• 15th IAAF World Junior Championships took place in Eugene, the United States of America between July 21 and 27, 2014, Emine Hatun Tuna achieved her personal best record with a time of 9:06.85 in 3,000m and ranked 6th in the Junior World.

• Polat Kemboi Arıkan gained 16th place with a time of 1:01.22 at the World Half Marathon Championships, held in Copenhagen, Denmark on March 29 and setting a new Turkish Record with this time. In addition to this, Polat held the highest ranking position among the European As of 2014, the ENKA Sports Club, within the framework of its sports events, has been preparing and athletes in the meeting and the accolade of being the only male Turkish athlete holding the participating in national and international competitions with 1,019 licensed athletes and 72 trainers ‘Golden Label’ given to athletes in the road races by IAAF with his result at this meeting. nd who are experts in their fields. At the same time he ranked 2 on the list of top marks in Europe.

Our club set out with the motto of “The Future Belongs to Youth”. To this end ENKA implements a • At the European Championships, held in Zurich on August 12-17, 2014, Ali Kaya won the quality educational system for our club teams and sports schools in order to equip thousands of bronze medal in the 10,000m also a personal best with the time of 28:08.72, and Polat th children with the necessary mental and physical discipline they need to excel. ENKA Sports Club Arıkan placed 4 at 28:11.11, his best of the season. Elvan Abeylegesse, ran the second th recruits talented young people as national athletes every year. ENKA Sports Club is built on a solid marathon of her career placing 5 in Europe with a time of 2:29.46. infrastructure that consists of its sports schools as well as the students from ENKA Schools and other • Emin Öncel advanced to the final in the 2nd Summer Youth Olympic Games, in Nanjing talented young people who come from diverse backgrounds. in August 2014 by finishing nd2 in the qualification round, achieving his personal best in Track and Field Javelin with a 77.55m throw which also broke the Turkish Youth Record. In the final round of the competition he gained 6th place with a 69.28m throw. In track and field, ENKA Sports Club has 427 athletes in total, including 52 athletes competing in the national teams, 382 athletes with active licenses, and 45 athletes in training. Every year ENKA Sports • At the Balkan Meetings, in Ljubljana, Slovenia, on September 20, 2014, Mustafa Güneş st nd Club selects new members from thousands of students from the Sarıyer and other surrounding became 1 in the 110m Hurdles; Emine Hatun Tuna and Elmas Seda Fırtına came 2 in the school districts. With its vision, its highly skilled staff and modern facilities, ENKA Sports club is 1,500m and Pole Vault, respectively; Halit Kılıç in the 400m, Kemal Koyuncu in the 1,500m, rd regarded as a model sports club in Turkey and trains athletes not only from Istanbul but from all and Serpil Koçak in the 100m Hurdles all achieved 3 place finishes. over Turkey. • Süleyman Bekmezci became the Junior Men’s Champion at the Balkan Cross As of 2014 at International Events; Championships, held in Darıca on November 8.

st • İlham Tanui Özbilen achieved 4th place in the World with a time of 3:39.10 at the 1,500m event at • At the 21 European Cross Championships, held in Bulgaria, Samokov, on December 14, the IAAF World Indoor Championships held in Sopot, Poland between March 07 and 09, 2014. 2014, Polat Arıkan became European Champion, taking gold with a time of 32:19 while Ali Kaya took the 2nd place spot and the silver medal with the same time of 32:19. In • Elçin Kaya attained the 3rd highest ranking in Europe in Discus Throwing with 51.41m in the the Junior Women’s category, athlete Emine Hatun Tuna became the European Junior

Under-23 Women’s category at the European Winter Throwing Cup, held in Leira, Portugal on Champion, winning gold with a time of 14:13. Social Activities March 15-16, 2014. 98 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 99

Branch Rating Date Competition Place Record Süleyman Bekmezci - 15.11.1995 1,500m 3:49.02 15.02.2014 Federation Hall Trial / Ataköy, Turkey GSTR ENKA SPORTS CLUB 3,000m 8:07.63 20.02.2014 Record Trial Races / Ataköy, Turkey GSTR 1,500m 3:46.17 22.02.2014 Balkan Salon Şampiyonası / Ataköy, Turkey GSTR İlham Tanui Özbilen - 05.03.1990 1,000m 2:15.96 20.02.2014 Record Trial Races / Ataköy, Turkey STR 1,000m 2:15.08 17.06.2014 Golden Spike Meetings / Ostrava TR Aykut Ay - 03.08.1995 60m 6.76m 27.12.2014 Hall Records Trial / Ataköy, Turkey GSTR 100m 10.44 14.06.2014 U23 Mediterranean Games / France GTR Emin Öncel - 01.05.1997 Javelin 77.55m 16.08.2014 2th Summer Youth Olympic Games / China YTR Javelin 72.93m 06.08.2014 Youth Clubs Championship League Finals / Samsun, Turkey GTR Polat Kemboi Arıkan - 12.12.1990 Half Marathon 1:01:22 29.03.2014 IAAF/AL-Bank World Half Marathon Championships / Denmark TR Ümit Sungur - 26.02.1994 Pole Vault 5.15m 27.12.2014 Hall Records Trial / Ataköy, Turkey U23STR ENKA A Team; Aykut Ay - İzzet Safer - İsmail Aslan - Jak Ali Harvey Turkish Interclub and European Championship Clubs Cup in 2014; 4x100m 39.62 02.09.2014 Interclub Super League Finals / Ankara, Turkey TR

• At the European Championship Clubs Cup A Group held on May 24-25 in Vila Real De Santo Tennis Antonia, Portugal, the women’s team ranked 3rd place once again in Europe and the men’s team th ranked 6 in Europe. ENKA Sport has a total of 393 active tennis players, including 209 players with valid licenses and 184 at formative stages. • In the Turkish Interclub Under-16 League the women’s team became champions with 154 points in the finals held in Eskişehir on April 15-16, 2014. In 2014, at the end of the 10, 12, 14, 16 and 18-and-over age group tournaments organized by the Turkish and International Tennis Federations (TTF-ITF), ENKA tennis players won 29 • Also the Turkish Interclub Youth League saw the men’s team become champions and the women’s championships, competed in 33 singles finals and 49 singles semi-finals in the tournament team finish nd2 in Turkey in the finals of the Turkish Interclub Youth League held in Kastamonu on circuit. In doubles tournaments ENKA won 54 championships and competed in 48 finals and July 12-13, 2014. in 83 semi-finals. In the 14, 16, 18 and senior age categories, 16 of its club members played • Turkish Interclub Junior League: The men’s and women’s team both placed 2nd at the finals of the successfully on the National Team in 2014. Turkish Interclub Junior League held in Samsun on August 06-07, 2014. In 2014, ENKA players were ranked by the WTA as follows: Çağla Büyükakçay 137th, Melis th nd th nd • In the Turkish Interclub Senior League at the final meetings in Ankara, the men’s team became Sezer 417 , İpek Soylu 302 and Ayla Aksu 794 . Junior player Cem İlkel was ranked at 432 champions, while our women’s team placed 2nd. The men’s team set the New Turkish Record with on the ATP list. a time of 39.62 in 4x100m and in addition to this, they will be representing Turkey in the 2015 The ITF Junior rankings in 2014 were as follows: Berfu Cengiz 156th, Ayla Aksu 298th, Mert European Championships Club Cup as the title holders in the Super League final. Adanalı 144th, Sarp Agabigün 266th, Efekan Bülbül 312nd and Mert Zincirli 349th. Renewed Turkish Records by our athletes in 2014; Major International Events for the 2014 Season; • Our athletes held 1 record in the Youth category, 6 in the Junior category, 1 in the Under-23 • Junior US Open; category and 4 in the Senior category. • ENKA player İpek Soylu won the junior doubles title at the US Open, between August 25 and September 8 and İpek became the first Turkish player winning a Grand Slam Championship. Social Activities 100 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 101

• $10,000 ITF Women’s Tournament;

• In the $10,000 ITF Women’s Tournament held between January 13-19, in Sharm El Sheikh, ENKA SPORTS CLUB Egypt, İpek Soylu took the singles title, while she and Melis Sezer also won the doubles title.

• İpek Soylu and Melis Sezer also reached the doubles finals in the $10,000 ITF Women in Sharm El Sheikh, Egypt, between January 20-26.

• In the $10,000 ITF Women’s between March 31-April 06 in Antalya, Melis Sezer reached the singles finals and İpek Soylu and Melis Sezer also competed in the doubles finals.

• İpek Soylu ranked 5th place on the ITF Pro Circuit for singles in her 2nd of the year in the $10,000 ITF Women’s held in Antalya between April 07-13. İpek Soylu faced off against Israeli player Deniz Khazaniuk who was the top player in the tournament (ranked 301 in the world with 10 ITF singles titles to her name). İpek won the first set 7-5, lost the second set 6-4 but won 6-1 in the last set to claim the singles title.

• Melis Sezer reached the finals in both the singles and doubles tournaments at the $10,000 ITF Women’s Tournament in Tarsus, held May 26-June 01, 2014.

• İpek Soylu won both the singles and doubles title in the $10,000 ITF Women’s Tournament, in Adana, June 02-08.

• In the $10,000 ITF Women’s, held in Göztepe between June 16-22, İpek Soylu won the • $250,000 WTA, $100,000 ITF Women’s Tournament; singles title, Melis Sezer reached the singles final and İpek Soylu and Ayla Aksu won the doubles title. • Çağla Büyükakçay advanced to her first ever $250,000 WTA singles quarterfinal in Kuala Lumpur, Malaysia, April 14-20, 2014. • Melis Sezer won the singles and the doubles titles and Müge Topsel reached the final in the doubles in the $10,000 ITF Women’s Tournament in Konya, June 23-29. • Çağla Büyükakçay reached the doubles finals in $250,000 WTA, held in Bucharest, Hungary, July 07-13. • Melis Sezer won the doubles title in the $10,000 ITF Women’s Tournament in Dalyan Tennis Club, June 30 - July 06. • Çağla Büyükakçay lost in the $100,000 ITF Women’s singles final held in Astana, Kazakhstan, July 21-27, 2014. • İpek Soylu reached the singles final in the $10,000 ITF Women’s competition at İstanbul Tennis Club, August 11-17. • $25,000 ITF Women’s Tournaments; • Melis Sezer won the doubles title at the $10,000 ITF Women’s Tournament in Egypt, • Çağla Büyükakçay reached the $25,000 ITF Women’s singles finals in England, March 03-09, September 29 - October 05. 2014. • Melis Sezer was a singles finalist and won the doubles title in the $10,000 ITF Women’s • Çağla Büyükakçay defeated her French opponent Pauline Parmentier, 6-4, 2-6 and 6-2, Tournament held in Antalya, November 03-09. and won the singles title in the $25,000 ITF Women’s final held in Birmingham, England, March 31-April 06, 2014. • Melis Sezer made the finals in the doubles in the $10,000 ITF Women’s Tournament in Antalya, November 10-16. • Melis Sezer reached the $25,000 ITF Women doubles finals in South Korea, May 05-11, 2014. • In the $10,000 ITF Women’s Tournament held at Taç Spor, December 22-28, İpek Soylu • At the 15th ITF $25,000 Ekin Maden Republic Girls, Tournament held at the TED Sports Club, and Ayla Aksu reached the doubles final. Istanbul, October 27 - November 02, 2014, İpek Soylu won the singles title and Ayla Aksu and Müge Topsel reached the doubles final. Social Activities 102 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 103

• Grade 3-4-5 ITF Junior Tournaments;

• In singles, ENKA players won 7 championships while 5 ENKA athletes competed in the finals. In ENKA SPORTS CLUB doubles, ENKA players won 15 championships and competed in 11 finals in various tournaments.

• Lara Biter, turning 13 years of age on September 3rd, qualified to play at the ITF Junior Tournament, reached the final and put her name in the history books. Competing in the ITF Junior Tournament for the first time and facing opponents older than her reached the finals at the 6th Bahrain ITF Junior G5 becoming the only Turkish player at this age to have ever played an ITF Final.

• Turkish Championships 2014 Season;

• Women’s; • Turkish Championships at Age 12; İpek Akgül won the doubles and İlayda Baykan also became a finalist in the doubles. • Turkish Championships at Age 14; İrem Soylu was a finalist in doubles. • Turkish Championships at Age 18; Ayla Aksu won the singles and doubles; Müge Topsel won the doubles; Melis Bayraktaroğlu played in the final of both the singles and doubles. • $10,000 ITF MEN’S Tournaments; • Senior Turkish Championships; Melis Sezer won the singles title, Ayla Aksu and Müge Topsel • Cem İlkel won the doubles title in the $10,000 ITF Men’s Tournament held in Antalya, February won the doubles title; İpek Soylu and İrem Soylu made it to the final in doubles. 03-09. • Men’s; • In the $10,000 ITF Men’s Tournament, held in Antalya, May 26 - June 01, Cem İlkel reached the • Turkish Championships at Age 10; Osman Çetin and Ata Taş finalist in doubles, singles finals and played with Efe Yurtacan at the doubles final. • Turkish Championships at Age 16; Tolunay Sümer finalist in singles, • Cem İlkel and Efe Yurtacan won the doubles title in the $10,000 ITF Men’s Tournament in • Turkish Championships at Age 18; Altuğ Çelikbilek was the Champion in both singles Bodrum, June 02-08. and doubles,

• Cem İlkel and Efe Yurtacan also won the doubles title at the $10,000 ITF Men’s Tournament • Senior Turkish Championships; Sarp Agabigün was a finalist in the doubles. held at Taç Spor, June 16-22. Swimming • Tuna Altuna was one of the doubles finalists at the $10,000 ITF Men’s Tournament in ITK, June We have a total of 271 athletes, including 240 athletes with active licenses and 31 young 30 - July 06. trainees in our swimming branch. In 2014, 10 of our swimmers were selected for the National Swimming Team. • Tuna Altuna was a doubles finalist at the $10,000 ITF Men’s Tournament at ATK, August 11-17. • International Events 2014; • Tuna Altuna won the doubles title at the $10,000 ITF Men’s Tournament in Antalya, held September 29 - October 05. • In the Balkan Juniors Championships held in Greece on April 26-27, Zeynep Odabaşı won the bronze medal in the 100m Freestyle, and broke the national records in both • Tuna Altuna was a doubles finalist at the $10,000 ITF Men’s Tournament in Antalya, October the 4x100m and 4x200m Freestyle and won the championship. Eyüp Taşpınar won 06-12, as well as in the $10,000 ITF Men’s Tournament held in Bakırköy, December 22-28. silver in the 200m Medley and bronze in 400m Medley.

• Cem İlkel won the singles title at the $10,000 ITF Men’s Tournament in Antalya, November • In the Belgrade Trophy Events in Serbia on June 14-15, Zeynep Odabaşı won a cup for 03-09. the best performance in the Junior Women’s finals. In the same tournament, Zeynep Odabaşı won 3 gold and 1 bronze medal while Eyüp Taşpınar won 3 gold and 1 silver • Tuna Altuna became a doubles finalist in the $10,000 ITF Men’s Tournament held at Bakırkoy, medal. December 22-28. Social Activities • Ediz Yıldırımer represented our country in 400m, 800m, 1,500m and 4x200m Freestyle in the European Swimming Championship in Berlin, August 18-24. 104 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 105

Water Polo

In our water polo branch, we have a total of 207 players, including 78 players with active licenses and 129 players at formative stages in 2014.

• Achievements at International Events 2014;

• Our players Atamer Albayrak and Kaan Özden Yıldız participated in the qualifiers for the U19 European Championships, held in La Roohelle, France. Our National Team qualified to attend ENKA SPORTS CLUB the U19 European Championships that were organized in Georgia, August 24 - 31, 2014.

• Our water polo players, Emirhan Özdemir, Atamer Albayrak and Kaan Özden Yıldız, played on the National Team at the FINA U18 World Junior Water Polo Championships, held in Ataköy, August 02 - 10. Our National Team finished in 6th place in the final of World Junior Championships, in which 20 countries took part. This successful ranking was the first ever in Turkish water polo history.

• Turkish Swimming Championships, 2014; • The Turkish Interclubs League 2014;

Our team’s achievements in the Turkish Summer Swimming Championships, August 05-09: • Born in 2001 2nd in Turkey • Open Aged Women and Men 3rd • Born in 2000 National Title in Turkey • Junior and Youth Men 3rd • Born in 1999 National Title in Turkey • Category Age 13 Men 2nd • Junior-Youth Women and Age 14 Men 4th • Born in 1998 National Title in Turkey

nd Our teams achievements in the Turkish Short Course Swimming Championships, December 17-21: • Born in 1996-1997 2 in Turkey • Category Age 14 Men Champion • Senior Team 2nd in Turkey • Category Age 15-16 Women and Men 3rd • Category Age 17-18 and Open Aged Men 3rd Scholarships and Awards • Category Age 13-14 , Open Aged Women and Age 13 Men 4th 227 talented and hard-working athletes in need of financial support received scholarships during the 2014-2015 academic year. Furthermore, 63 trainers and 149 athletes who were successful in four of our categories received achievement awards in 2014. Branch Rating Pool Competition Age Date Zeynep Odabaşı Summer and Winter Sports Schools 4x100m Freestyle 3:55.80 50m Young Multinations Swimming Ch. Age 15-16 April 12-13 Once again we had successful summer and winter sports schools programs in 2014. In the 4x200m Freestyle 8:33.52 50m Young Multinations Swimming Ch. Age 15-16 April 12-13 30th Summer Sports School programs of ENKA Sports Club, run by an experienced team of 4x100m Freestyle 3:54.29 50m Balkan Youth Swimming Ch. Age 15-16 April 26-27 professional staff, a total of 1,294 students attended part-time or full-time swimming, tennis, 4x200m Freestyle 8:31.66 50m Balkan Youth Swimming Ch. Age 15-16 April 26-27 volleyball, basketball, athletics, and football programs. A total of 1,433 students participated Murat Can Varol in the 2013-2014 Winter Sports School programs held in four semesters. 200m Freestyle 1:58.53 50m TYF Swimming Competition, Age 12+ Age 13 November 22-23 400m Freestyle 54.72 25m Turkey Short Course Swimming Ch. Age 13 December 17-21 Social Members Activities Derin Zaimoğlu 4x100m Freestyle 4:03.15 50m Atus Graz Trophy 2014 Age 14 April 04-06 ENKA Sports Club has a variety of sports facilities that include a fitness center, one outdoor and one indoor tennis court, a 50-meter outdoor swimming pool that can be covered for the ENKA Age 13 Men’s Team; Murat Can Varol, Mehmet Naci Keskin, Bora Çalış, Çağıl Uyaroğlu winter season, two indoor swimming pools (25m and 25x33 meters respectively) an indoor 4x50m Mixed 1:54.60 25m Turkey Short Course Swimming Ch. Age 13 December 17-21 sports hall, an international synthetic track and field ring and a health center. All of these facilities are at the service of the 5,899 club members. After restructuring, our club lounge Social Activities offers inexpensive and high-quality service primarily to our athletes and our members. 106 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 107

ENKA SPOR KULÜBÜ Social Activities 108 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 109

ENKA SCHOOLS - ISTANBUL In line with its mission and philosophy, ENKA Schools implement the Turkish Ministry of Education Program and also the International Baccalaureate Primary Years Program in the 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 serve an important role as do academic pursuits within the educational program. These activities emphasize the development of leadership and communication skills, 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 their future lives. They also help ensure that ENKA students become responsible citizens who are sensitive towards those less affluent in our society. Through 101 clubs, 46 after school activities, and school teams in 8 different categories founded to achieve this end, such as the Model United Nations, Drama, Musical Drama, European Youth Parliament, English Drama, Community Volunteers, and the International Chain of Awareness, students represent ENKA 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 competitions: third place at the 2007 World High School Tennis Championship; the World Champion title in the 200 meters freestyle category in the 2011 World High School Swimming Championship and the Taekwondo Championship at the 36th Balkan Championship in 2014 - all great 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 also representatives of universities visit the school and meet the students. This provides our students with the opportunity to learn about the different types of universities. An annual event, Career Day is organized for students in order to familiarize them with professions in which they are interested. Various aptitude tests are offered which aim to increase students’ awareness Founded in 1994, ENKA Schools educates a total of 1,244 students in preschool, primary, middle regarding their interests and abilities and help them to make appropriate choices. school and high school with a student-centered, progressive approach to teaching and learning. Istanbul ENKA Schools graduated its first high school cohort in 2008. Graduates continue to study at top universities in Turkey such as METU, Boğaziçi University, Bilkent University, Koç ENKA Schools aim to lay the intellectual and behavioural foundations that will prepare and motivate University and Sabancı University, as well as abroad. To date, ENKA students have studied a students to develop to the full extent of their capacities, to employ the mental and moral habits that wide range of disciplines in leading universities such as Harvard, Stanford, Oxford, Columbia, foster freedom of thought and action, and to seek to be leading citizens of Turkey or their country of Northwestern, Brown, Duke, John Hopkins, McGill and Imperial College. Having completed origin. their undergraduate degrees, many of our first graduates are now pursuing graduate Established with the aim of becoming a reputed, model school recognized not only in Turkey but also studies both in Turkey and abroad and taking their first steps towards their careers. ENKA in the world for its educational practices, ENKA Schools Istanbul is well established and well respected graduates also continue to play a role through the ENKA Schools Alumni Association which in the Turkish educational system as it progresses steadily towards achieving its mission. Currently was established in 2010. the school employs 180 teachers, 42 of whom are international and a total of 262 academic and administrative staff. ENKA Schools boasts world class facilities. The schools occupy an area of more than 33,684 m2 within the ENKA Sadi Gülçelik Sports Complex with the school buildings providing 21,450 m2 of usage area in total. The school facilities are housed in two main buildings. The Primary School and High School buildings consist of four floors and four blocks. There is also an auditorium and a multi-purpose area with a cafeteria attached to the main building. The preschool is housed in a separate specially designed building and has its own separate play area. The classrooms provide bright, modern learning spaces equipped with good IT resources and fully- equipped chemistry, biology and physics teaching laboratories. The curriculum is supported by Social Activities technology at all levels. 110 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 111

ENKA SCHOOLS ADAPAZARI High School • The high school is an IB MYP candidate school with 234 students and 27 regular and nine hourly paid teachers. • In 2014, four of our teachers attended PYP regional workshops that were held in Turkey and 4 teachers attended the regional workshops abroad. • In the 2014-2015 academic year, four of our students are continuing their education in Germany, Japan and Italy within the framework of AFS’s student exchange program. • In 2014, seven of our students passed the AFS exchange program examination enabling them to attend the program. • One of our 12th grade students was awarded a placement at United World College Dilijan school in Armenia in the 2014-2015 academic year as part of United World College. • Ten of our students visited Zurich International School within the framework of the Community Service Project. • Sixty-four of our students attended a summer English camp organised by our school and 10 other students attended language school in England. As of 2014, Mac Laboratories were established in the primary school building. The use of tablets for one-on-one instruction has been developed with 4th grade students and above. Adapazarı ENKA Schools were swiftly established in response to the Marmara Earthquake in 1999 to Tablets are used in guided instruction to support the curriculum at all levels. support students who were affected by the earthquake of that year. Our school became a Google School in 2014. As of 2014, there are 660 students and 160 full-time employees, 86 of whom are teachers. In addition to the full time staff and administration, there are 16 hourly paid personnel. Our schools offer both 167 of our students are licenced athletes in swimming, basketball, volleyball, track & field, national and international academic curriculums, alongside sports, artistic and cultural programs to gymnastics, chess, table tennis, tennis, archery and step aerobics. support the holistic development of our students. Primary School • The Adapazarı Primary School is an authorised IB PYP school with 236 students, 30 full-time and 2 hourly paid teachers. • In 2014, 28 of our teachers attended PYP regional workshops that were held in Turkey and 2 teachers attended the regional workshops abroad. • The primary school gained membership into the worldwide Changemaker school network of the Ashoka Foundation alongside two other Turkish schools. • A new school building was built in 2014 and came into use in the 2014-2015 academic year. Middle School • The middle school is an IB MYP (Middle Year’s Program) candidate school with 190 students, 29 full-time and five hourly paid teachers. • In 2014, 4 of our teachers attended PYP regional workshops that were held in Turkey and four teachers attended the regional workshops abroad. • Sixty-four of our students attended summer English camp that has organised in our school and 4 other students attended language school in England.

• Four of our teachers were able to attend a language school in England within the framework of Social Activities the EU Erasmus Teachers Mobility Project. 112 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 113

PRIVATE ENKA TECHNICAL AND INDUSTRIAL VOCATIONAL To maintain the relationships formed through this cooperation, every year some of our students are given the chance to undertake vocational internship studies abroad for a month, while guest students HIGH SCHOOL - KOCAELI from our sister schools network are hosted at our school. Moreover, every year some of our students are awarded a full scholarship for a language course in England. In line with our goal to be the leading model for schools of this kind in Turkey, we worked towards and were awarded the ISO 9001:2008 Quality Management System in June 2011. Accreditation studies are also being carried out. Our students also participate in the European Union Erasmus Plus Projects, and other field related domestic projects such as the TUBITAK science contests. Ninety-one students graduated from our school in June 2014, with 68% of our graduates entering undergraduate programs at universities. All of our students have full scholarship in the school. The scholarships cover education, the service bus, lunch while the private course fees of the senior students preparing for university entrance exams are met by ENKA Foundation. Adults are able to benefit from the same opportunities that the students have during the day. We offer free evening classes for adult students/trainees in order to improve or learn new skills relating to their current profession or other professions they are interested in moving into.

Founded in 2008, the Private ENKA Technical and Industrial Vocational High School was first set up in a temporary building but moved to permanent premises in 2010. It provides educational services in the fields of industrial automation and machine and chemical technology with its 58 teachers and 437 students. It is the first private school in Turkey to offer scholarships to all its students. The Private ENKA Technical Schools’ mission is: to provide professional education in fields that are demanded by the market, using modern methods and machinery; an education built on and developing integrity, responsibility, professional work ethics, moral standards and sensitivity; that fulfills our students’ cultural and social needs; to raise students who are competent and well equipped with the necessary skills to satisfy the demands of the industrial sectors and technical/vocational educational institutions; to contribute to Turkish Industry and to society through offering training to employees already in technical sectors as well as unemployed youth. Our vision is to provide quality education worthy of the esteem and reputation of ENKA and to fulfill our responsibility in establishing the first and leading model in its field in Turkey. Also we aim to have a voice in the field of vocational/technical education in Europe and globally. With its unique educational program, technical opportunities and its experienced and well qualified staff, our school is the first of its kind in Turkey. The school building has a 750-student capacity. It is situated in 30,750 m2 green belt, next to a large organized industrial zone, which was donated by the Istanbul Machinery Manufacturers Industry Cooperation. In this building, which has 15,000 m2 of covered area, there are 16 workshops within the machinery CNC, industrial automation and electrical and electronics departments, 20 classrooms, 5 laboratories, a dining hall and sports hall. The School

floorplan, equipment and program have been developed in cooperation with similar types of schools Social Activities abroad, but in particular, with Germany. 114 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 115

PRIVATE ENKA SCIENCE AND TECHNOLOGY HIGH SCHOOL –KOCAELI

Established in 2014 on the same campus as the Private ENKA Vocational and Technical High School in Kocaeli, the sole aim of our school is to raise well qualified people that will help shape the future advancement of Turkey. English language training starts from the prep year of our school and the education period is 5 years in total.

Our main targets in the Science and Technology High School are: 1. Project-based education, 2. To enable our students to achieve high grades to enter departments in renowned universities, 3. Provide them with good language training, 4. To familiarize and train students in the use of modern technology in the real world, 5. To help students develop socially, 6. Prepare them for training and education abroad.

With its full-scholarship students, transportation and food expenses are financed by our foundation.

Our students prepare for the TUBITAK Science Olympics at weekends and they are given language Social Activities training in England in the summer with the help of our foundation. 116 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 117

ENKA CULTURE AND ARTS

In the 26 years since its establishment, ENKA Culture and Arts has developed a great reputation for its arts programming, organizing events spread throughout the course of the year. In the summer, events are held at the ENKA Eşref Denizhan Open Air Theatre which has a 1,000-person capacity. In spring and winter, events are held in the ENKA İbrahim Betil Auditorium with a 600-person capacity. These venues played an important role in the programming of events when Istanbul was the European Capital of Culture in 2010. These activities reach a very wide audience including employees of ENKA Group, ENKA Foundation and ENKA Sports Club, the athletes and students of ENKA’s 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 bringing a variety of activities to Turkish Art-Lovers. In its 26th year, a comprehensive program reached an audience of 16,000 people at events held throughout the year — concerts ranging from jazz to classical and pop to ethnic music, modern and classical ballet and dance performances and theatre performances. ENKA Culture and Arts also Social Activities hosted exhibitions in the ENKA Dr. Clinton Vickers Art Gallery from various disciplines. 118 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 119

Financial Reports Corporate Governance Principles Compliance Report Basic Ratios&Backlog Independent Auditors’ Report 120 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 121

Within this period, there have been no complaints made to the company by any shareholders regarding their shareholding CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT rights. There is no regulation about the right to request the appointment of special auditors in the firm’s Articles of Association. Within the period, there has been no special auditor appointment request pursuant to the Turkish Code of SECTION I - STATEMENT OF COMPLIANCE WITH CORPORATE Commerce. GOVERNANCE PRINCIPLES The Corporate Governance Committee of the company was elected by the resolution of the Board of Directors dated 2.3. GENERAL ASSEMBLY MEETINGS 02.04.2014 and Board Members E.Melih Araz (Chairman) and Erdoğan Turgut (Member) as well as Gizem Özsoy (Member, Any shareholders of our company who are entitled to attend or take part in the General Assembly Meetings thereof and who holds the Capital Market Activities Advanced Level License and the Corporate Governance Rating Specialists License) whose shares are being traced by the Central Securities Depository Institution, MKK (Merkezi Kayıt Kuruluşu) on the basis were selected. According to the same resolution it was decided that the scope of activities of the Nominating and of the records thereof are authorized to attend physically or to take part in person or by proxy in such General Assembly Compensation Committee will be carried out by the Corporate Governance Committee. The Principles and Responsibilities meetings. Any shareholders intending to attend physically such General Assembly Meetings are entitled, by submitting of the committees were approved by the Board of Directors on 28.05.2012 and have been announced to the public. On their identity cards, to exercise their rights arising out of their shares recorded in the “Shareholders List” kept by the Central 11.06.2014, the duties and working principles of the committees were revised to ensure compliance with the legislation and Securities Depository Institution (MKK). However, any shareholders who have previously provided to their stockbrokers were declared on the company’s official website. There are no compulsory principles, stated on the annex to the Capital any restrictions for the provisioning and communication to our company of any information on their identities and on Markets Board’s Corporate Governance Communiqué No. II-17.1 which are not applied. the shares held in their accounts, are required to apply to their stockbrokers for the abolishment of such restrictions and The Corporate Governance Committee’s main objectives are: to present the proposals for the corporate governance provisioning and communication by such stockbrokers to our company of the information on their identities and on the policies of the company; enhance the quality of the corporate governance applications and inform the Board of Directors shares kept in their accounts, no later than one day before the General Assembly Meeting, should they intend and request of the effective pursuit of the legislation of the Capital Markets Board related to the corporate governance principles and to be added to the General Assembly Shareholders List. Taking part online in such General Assembly Meetings by the the generally accepted corporate governance principles of the international capital markets and about implementing shareholders themselves or their proxies is allowed only by secure electronic signatures. Any shareholders are allowed those principles which it deems applicable. The Corporate Governance Principles Compliance Report of the Corporate to authorize their proxies by whom they will be represented in the General Assembly, either online in the electronic Governance Committee has been presented below for the review of our stakeholders. environment by virtue of the Electronic General Assembly System or by providing them with 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 authorized signatures in the accompaniment of their authenticated Official Signature Sample CORPORATE GOVERNANCE COMMITTEE Statement. Information about the date, agenda and location of General Assembly meetings are announced to the public via the Public Disclosure Platform (KAP), on our website and by e-mail sent to those who have selected the option on Chairman Member our website to receive e-mails. The minutes of the General Assembly meetings are disclosed to the public by Public E. Melih ARAZ Erdoğan Turgut Disclosure Platform, in accordance with the provisions of the Communiqué on the special conditions put into force by the (signature) (signature) 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 maintain any practice that makes the usage of shareholder voting rights difficult. SECTION II- SHAREHOLDERS Further to the Communiqué of the Capital Markets Board on the Principals Regarding Determination and Application of 2.1. INVESTOR RELATIONS UNIT Corporate Governance Principles, there are provisions in the Articles of Association related to important decisions such as spin-off, sale, purchase and lease of any significant amount of assets to be resolved by the General Assembly. The Investor Relations Management was established in 2002 within the structure of ENKA İnşaat ve Sanayi A.Ş., for the purpose of arranging relations with the shareholders. Within the relative period, the Ordinary General Assembly Meeting was held on 27.03.2014 and the Extraordinary General The Investor Relations Department reports to Gücüyener Ilhan the Deputy General Manager of the company and is not Assembly Meeting was held on 19.06.2014. Shareholders did not give any agenda item proposals to the General Assembly. preparing reports on activities. Type of the meeting Ordinary Extraordinary The main activities conducted by the unit can be summarized as answering questions regarding: financial statements, Date of the meeting 27.03.2014 19.06.2014 activities of the company, the conditions for participation in the company’s General Assemblies, announcements to public, Participation Rate 88,48% 85,78% capital increases, information on issuance of new share certificates and preparation of the company’s annual reports. Participation of stakeholders Ye s Ye s The numerous applications to the unit and the responses to the investors are generally made through telephone. The Participation of media No No members are; Sinan Yavuz Akturk, Leyla Yüksel, Ali Aslan and the manager Gizem Özsoy of the Investor Relations Unit. Was right of asking questions by shareholders used? Used No Used Gizem Özsoy holds Advanced Level License (205945) and the Corporate Governance License (700865). The Investor Were questions answered? Answered - Relations Unit can easily be accessed through the company’s main telephone number: +90 212 376 10 00. Did shareholders make any proposals? No proposals made No proposals made Result of proposal - - .2.2. EXERCISE OF THE SHAREHOLDERS’ RIGHTS TO OBTAIN INFORMATION Any kind of information about the company in relation to developments that would possibly affect the exercising of the The minutes of the General Assembly are disclosed to the public by Public Disclosure Platform as well as on our website shareholder rights is presented for the consideration of the shareholders via the internet (www.enka.com). The Investor and always made available at the company’s head office upon any request. Relations Unit provides guidance to those shareholders who prefer to use the internet for their requests for information. All questions asked by shareholders at the Ordinary General Assembly meeting were answered directly at the event. Those shareholders, who cannot use internet facilities, are informed either by fax or mail. Therefore, there were no questions that had to be answered by Investor Relations Unit in written format. 122 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 123

Donations made in 2013 were submitted for the shareholders’ appraisement as a separate agenda item at the General Shareholers, holding 5% and above shares of ENKA İnşaat ve Sanayi A.Ş. as of 31.12.2014 are listed below: Assembly on 27.03.2014. Our Company’s Donation & Aid Policy, which was approved at the same General Assembly is as follows; SHAREHOLDER % Tara Holding A.Ş. 49.27 Donation & Aid Policy Vildan Gülçelik 7.99 Any donations and aid to be granted by our Company are determined pursuant to the basic criteria below, and always in Sevda Gülçelik 6.43 compliance with the provisions of the applicable Capital Markets Legislation. ENKA Spor Eğitim ve Sosyal Yardım Vakfı 5.87

Main Purposes: The list of legal person ultimate controlling shareholders as of June 19, 2014 is as follows: Our Company’s main purpose in making donations and giving aid to various organizations is not only to fulfill our social responsibility towards society but also to create a corporate social responsibility for shareholders, employees and partners, Legal Group provided, however, that all such donations and aids meet a certain social need and provide public benefit. Actual Person Shareholder of Share Amount Explanation Shareholding Ultimate Shares Organizations to which donations/aid could be granted: Shareholder • ENKA Spor ve Eğitim Vakfı (ENKA Sports and Education Foundation): A major portion of the donations and aid granted A 459.00 0.00% Tara Holding A.Ş. 0.00% by our company go to ENKA Spor ve Eğitim Vakfı. Making donations and aids to this Foundation, the main purpose B 177,383,165,387.00 49.27% - of which is to help the Turkish youth reach their full potential in contemporary sports and to strengthen and raise A - 0.00% educational and social standards on a national and international level, has been adopted by our company as a principle. Şarık Tara 33.56% Tara Holding A.Ş. 66.49% + 0.80% B 2,862,133,922.25 0.80% • Relief accounts to be formed by government agencies upon the occurrence of natural disasters. A - 0.00% Sinan Tara 16.52% Tara Holding A.Ş. 33.51% + 0.01% • Foundations listed in the Schedule of Recognized Foundations. B 32,401,833.00 0.01% A - 0.00% • Any other foundations and organizations in case of need. Vildan Gülçelik 7.99% B 28,748,184,937.88 7.99% - Limitation for Donation/aids: A - 0.00% Sevda Gülçelik 6.43% • If there is no limitation set in the General Assembly regarding donations and aid for the current year, the limit of B 23,135,761,731.38 6.43% - donation/aid is at most 3% of the distributable profit of the previous year which is calculated in accordance with the Enka Spor Eğitim ve A - 0.00% Capital Markets Board’s regulations and any other relevant legislation. 0.00% Sosyal Yardım Vakfı B 21,162,375,762.75 5.88% - • Donations/aid for relief accounts to be formed by government agencies upon the occurrence of natural disasters are A 28.00 0.00% Alternatif Aksesuar San. ve Tic. Ltd. not taken into account in the calculation above. Ayşe Verda Gülçelik 5.02% B 2,364,132,929.25 0.66% Şti. 99.90% + 0.66%

The Internal Decision-Making Procedure for providing donations/aid: Alternatif Aksesuar A - 0.00% 0.00% • Any donation/aid which exceeds TL 10,000 may only be made upon approval by at least one member of the Board of San. ve Tic. Ltd. Şti. B 15,725,950,228.13 4.37% - Directors or of the Executive Committee. A 75.00 0.00% Ali Gülçelik 4.58% • Any internal committees, departments and workshop-groups may make proposals to the members of the Board of B 16,494,428,591.13 4.58% - Directors or of the Executive Committee regarding any donations/aid. A 11.00 0.00% Bilgi Gülçelik 4.31% B 15,514,412,095.13 4.31% - 2.4. VOTING RIGHTS AND MINORITY RIGHTS A - 0.00% Shareholders, or their representatives, participating in the General Assembly meetings of ENKA İnşaat ve Sanayi A.Ş. Nurdan Gülçelik 1.58% B 5,680,272,627.13 1.58% - are accorded 10 votes for each Group-A share and 1 vote for each Group-B share that they hold. However, even if it is A 160.00 0.00% considered cumulatively, it will not have any influence on changing the result on any decision and therefore it will not have Selim Gülçelik 1.55% any negative impact to any Group-B shareholders due to the amount of shares being immaterial. B 5,589,302,953.20 1.55% - A 434.00 0.00% Free Float 12.59% + Enka Spor The share amount of each group with a nominal value of 1 Kr (One Kurus) and the total voting right as of the year end is Free Float & Other 18.46% B 45,307,475,834.80 12.59% Eğitim ve Sosyal Yardım Vakfı 5.88% stated below:

Share Amount TL Nominal Total Voting Right The shareholder structure of ENKA İnşaat ve Sanayi A.Ş. does not involve any legal person engaged in cross-shareholding Group-A 1,167 11.67 11,670 relations. There is no provision for representation of the minority shares in the management, and cumulative voting is Group-B 359,999,998,833 3,599,999,988.33 359,999,998,833 not allowed. Our company does not maintain any practice to make the usage of the voting rights attached to the shares TOTAL 360,000,000,000 3,600,000,000.00 360,000,010,503 difficult. 124 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 125

2.5. DIVIDEND RIGHT SECTION III- INFORMING THE PUBLIC AND TRANSPARENCY The Profit Distribution Policy of ENKA İnşaat ve Sanayi A.Ş which has been approved at the General Assembly held on 3.1. WEBSITE OF THE COMPANY AND ITS CONTENT 27.03.2014 is as follows: The internet address of ENKA İnşaat ve Sanayi A.Ş. is www.enka.com. This site contains all the information listed in the The Board of Directors of ENKA İnşaat ve Sanayi A.Ş (”the Company”) takes into account the performance of the Company legislation as well as in the Corporate Governance Principles of the Capital Markets Board both in Turkish and in English of that year, economic conditions, the finalized projects, investments and the cash flow of the Company, the Turkish and this information is updated periodically. Special condition disclosures done by our company can be followed from Commercial Code, the relevant articles of Capital Markets Law, regulations and the practices of the Capital Market Board the company’s or Public Disclosure Platform’s (www.kap.gov.tr) internet sites. Special condition disclosures announced in when presenting the profit distribution proposal to the General Assembly. the related reporting period are listed on the company’s internet site in chronological order.

The principal policy adopted and applied by the company in the area of profit distribution is to always act in compliance 3.2. ANNUAL REPORT with the applicable criteria as outlined in the Capital Markets Legislation while considering a fair balance between the All the information listed in Corporate Governance Principles is provided in our company’s Annual Report. interests of the Company and that of the shareholders thereof. In this manner, at least 20% of the distributable profit which is calculated in accordance with the Capital Markets Board regulations and other relevant legislation is distributed as cash and/or bonus shares. SECTION IV- STAKEHOLDERS Under the framework determined by profit distribution policy and the Capital Markets Board, after reserving the 1st dividend pursuant to the provisions of Article 36 of the Articles of Association, dividends are distributed to the Bonus Certificate 4.1. INFORMING THE STAKEHOLDERS holders as per the rate stated in the Articles of Association. Our company uses circulated announcements and electronic media to inform stakeholders about matters that concern them and the company. Dividends are distributed equally at once to all existing shares as per their rates regardless of date of issuance and acquisition dates. The distribution of cash dividends is scheduled to happen no later than one month after the General Assembly where The information provided is governed by the agreement concluded between the employee and the company on the the date of dividend distribution is resolved by the General Assembly. rights, tasks and liabilities of the personnel.

The place and date of the profit distribution, agreed upon during the General Assembly in accordance with the relevant The execution procedures for the administrative and social work of the personnel at the local construction sites have legislation provisions, is announced to shareholders through the Public Disclosure Platform and by the announcement on been established by the regulations. In case of updates, the relevant people are notified. the website of the Company. 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 Board of Directors may distribute dividend advance if it is authorized by the General Assembly as well as in compliance the law. with the regulations of the Capital Market. The authorization given to the Board of Directors by the General Assembly is limited to the year in which the authorization is given. 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. 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. Until this day, profit distributions have been performed without any delays. 4.2. STAKEHOLDERS’ PARTICIPATION IN MANAGEMENT

As per provisions of the Ordinary General Assembly Meeting held on 27.03.2014, regarding the distribution of the year The Corporate Governance Committee established within the structure of ENKA İnşaat ve Sanayi A.Ş. performs, in 2013 profit, it was resolved to distribute to shareholders for each TL 1 (one) nominal valued share TL 0.085 gross / TL 0.074 addition to its other assignments, the necessary coordination of beneficiaries’ participation in the management. net (as being 8.5% gross, 7.4% net from issued share capital) in total TL 272,000,000 cash dividend plus TL 94,000,000 Stakeholders who have access to ENKA Portal have an opportunity for presenting ideas and submitting proposals st nd from the 1 dividend, TL 270,000,000 from the 2 dividend and TL 36,000,000 from the extraordinary reserves, totals at regarding any topic. TL 400,000,000 bonus share increase (at a rate 12.50%). 4.3. ENKA HR / HSE / QUALITY POLICIES At the Extraordinary General Assembly Meeting held on 19.06.2014, the General Assembly authorized the members of the Board of Directors to decide on the distribution of Dividend Advances for the Fiscal Period 2014 in compliance with 4.3.1. HR POLICY Article 37 “Dividend Advance Distribution” of the Articles of Association of the company and the Communiqué No: II-19.1 Prepared with the aim of supporting ENKA İnşaat ve Sanayi A.Ş. and to achieve its vision and values, the Human on Dividends of the Capital Markets Board. The Board of Directors resolved to distribute a total of TL 288,000,000 from Resources Management Policy, as shown on our web page, is as follows: the amount that remains after deduction of the relevant reserves as required, pursuant to the provisions of the Turkish 1. Advance the strategic goals and interests of our company. Code of Commerce and the Articles of Association, to be set apart from the net profit of the current period as indicated on the financial statements comprising the interim period from 01.01.2014 to 30.06.2014, as Dividend Advances, starting 2. Be responsive to the changing needs of employees, management and government related entities. from 15.08.2014, at a rate of 8.00% gross and 6.80% net per share, to the holders of share certificates representing the 3. Establish and sustain ENKA’s reputation as a preferred employer. share capital amounting to TL 3,600,000,000 and the distribution was completed at the stated date. 4. Maintain a workplace culture in which there is mutual trust and respect, where all employees feel valued, are listened .2.6. TRANSFER OF SHARES to and are able to contribute their best efforts to achieve our mission. Pursuant to Article 8 of the company’s Articles of Association which is related to the transfer of share certificates, the 5. Hire the individual who is best qualified for the position. Provide an equal opportunity to all qualified candidates share certificates can be freely transferred in accordance with the provisions of Turkish Code of Commerce. The transfer regardless of race, language, religion, sex or physical disabilities. of shares requires full compliance with the Turkish Code of Commerce and Capital Market Law. 126 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 127

6. Consider external sources after ascertaining that the open position cannot be filled by an employee of ENKA. Health, safety and environment are, in fact, its highest priority. ENKA recognizes and acknowledges the importance of achieving world-class performance with respect to the protection of HSE on every project as an integral part of its 7. Know and comply with the laws and guidelines relevant to the functions performed. organizational culture. All personnel are encouraged to actively engage in all the HSE programs and every conceivable effort is made to provide all the necessary training and development to enforce the project requirements to attain its Zero 8. Commit to ensuring that all employees know what is expected from them in their jobs and are helped to develop their Accident goals. capabilities through constructive performance evaluations, training and career planning. Health and Safety Policy Statement As an organization committed to the effectiveness and compliance of its services with the specifications and the agreements Our company is proud that safety and health management is its highest priority in all activities. that are contingent upon its employees, ENKA provides the necessary working environment and resources to meet the needs of its employees. The Management of ENKA believes that all accidents are preventable. This is achievable through our desire for continual improvement and our dedication to a Zero Accident policy. To ensure effective management of the activities by the qualified employees, “work flexibility and enhancement” is focused All employees are expected to be accountable for their own actions and shall execute their work in a safe and healthy on in each stage of the organization. manner, protecting the environment and property. This expectation is communicated to all people involved in all projects The personnel of ENKA, cannot disclose any confidential information obtained during their employment in the company, including, but not limited to, ENKA’s own workforce, joint venture partners’ employees, subcontractors and suppliers. in relation to the operating structure and technical matters of the company. Unless a legal sanction applies, personnel Preventative measures and the elimination of potential hazards are of the utmost importance for the safety of all cannot, under any other circumstances, make any disclosure to any authority, institution or person. employees, visitors and the public in general. By this means, our policy is to provide a safe environment for our own workers and subcontractors on all projects. Ceyhun Tutkun, Human Resources and Administrative Affairs Manager, has been working as a representative of ENKA, for the coordination of employer-employee relations. The company has not received any complaint regarding any kind We commit to comply with the requirements of all applicable Safety Health and Environmental (HSE) legal and other of discrimination. requirements, and we expect every employee to uphold the applicable requirements in the countries in which they operate.

4.3.2. HSE POLICY The protection of health and safety is given the highest priority throughout all project phases, from front-end engineering A “Zero Accident” policy is both a goal and an achievement at ENKA. The company implements its comprehensive Health through construction/commissioning, ending with demobilisation and reinstatement. Safety and Environment (HSE) policy to protect all employees and associates working at ENKA offices, construction sites Our project management teams put into place clear and effective Project HSE programs to implement this policy.

and related facilities. It includes protection from every kind of pollution, hazard and accident that may result from its The achieve this goal, each Project HSE program; business. HSE Management System, is based on the standards of the ISO 14001:2004 Environment Management System • Is well informed, motivated and committed to achieve the Zero Accident Target, and the OHSAS 18001 Occupational Health and Safety Management System. • Will embrace the philosophy that no job or task is so important that we cannot take the time necessary to do it safely. It is clearly understood by all levels of the company that the HSE policy is a core company value and this management • Upholds the virtue of protecting and keeping the environment in its original state, or making it better. system is managed in five steps: • Setting HSE policy • Has a workforce and management sensitive, conscious, responsible and proactive with regard to all hazards. • Organizing All employees have the responsibility to take the required action - within their authority - to implement the Project HSE program. This responsibility includes eliminating potential hazards, or reporting potential hazards to their immediate • Planning & implementing supervisor, and contributing to and supporting the implementation of safety precautions. • Measuring / monitoring the performance Environment Policy • Auditing & reviewing. ENKA is committed to maintaining a conscientious attitude to the environment by using all available and relevant ENKA will always have a comprehensive HSE training program to increase awareness of safety, to teach safer working knowledge to identify and eliminate or minimise environmental impacts which may arise from construction activities in all practices and to promote environmental adherence. In the ENKA Quality and HSE Manuals all the roles and responsibilities countries of operation. of the individuals in the organization are clearly defined to promote a positive HSE culture. Starting from the business development stages, through the tendering, engineering, mobilisation, construction/ All managers demonstrate a clear commitment to the HSE policy to establish and implement a discipline procedure and commissioning and ending with demobilisation and reinstatement, all activities shall be performed with due consideration an award program to run the HSE management system more effectively. given to environmental impact and related aspects. Monitoring is essential to maintain and improve HSE performance. ENKA believes that proactive monitoring, which The Management of ENKA shall provide all necessary resources to establish and implement environmental management oversees the achievement of plans and the extent of compliance with standards before an accident, incident, illness or systems as required by assigning responsibilities, authorising respective persons and fostering environmental awareness environmental leakage occurs, is a key factor in HSE performance. amongst all personnel. Auditing and reviewing provide considerable improvements on HSE corrective actions by managing risks through lessons ENKA aims to create environmental awareness in all of its employees and to continuously increase awareness towards the learned from past experiences. Internal and external audits are continually performed. environment and to promote conservative usage of natural resources. To realise this aim, its environmental management philosophy is based on the continual improvement and implementation of preventative and corrective activities as a natural behaviour of all employees. 128 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 129

With this aim, ENKA is: ISO 9001:2008 Quality Management System is used as an important tool for the continuous assurance and improvement • Complying with the environmental laws and regulations applicable in the countries of operation, and other of ENKA’s Quality Management System. By way of closely monitoring the process performed, the certification body of the requirements associated with environmental aspects of our activities. British Standard Institution performs periodical audits for the continuation of the validity of the ISO 9001:2008 certificate. • Using natural resources economically. All employees have access to the ENKA Quality Manual, which has been prepared by the Corporate Quality Management • Mitigating environmental impacts through effective waste management. Department, on Electronic Document Management System. All Projects shall delineate their projects’ quality programs in their Project Quality Plans to be prepared based on ENKA’s Quality Manual. • Reducing the risks of emergency. • Fostering environmental awareness of all employees. In addition to the ISO Certification, ENKA’s Quality Assurance Program for performing construction, including engineering design, procurement, quality control, contracting, fabrication or installation, as applicable complies with the ASME Boiler • Meeting the requirements of the ISO 14001 Environmental Management System and providing the necessary and Pressure Vessel Codes. The following ASME certification marks, which are regarded as the hallmark of acceptance and resources. certification, are used to indicate that the stamped item(s) conform to the latest edition of the ASME Boiler and Pressure All our employees are responsible for supporting and assisting in establishing, implementation and continual improvement Vessel Codes on such projects. of Environmental Management System.

TM BSI TM BSI TM BSI A A A A 4.3.3. QUALITY POLICY S S S S M M M M ENKA’s Quality Management System has been established based on the principles of minimal bureaucracy and ACCREDITED ACCREDITED E E E E documentation which allows quick decision-making and implementation. These features are achieved and successfully (FS 57544 ISO 9001) (FS 71388 ISO 14001) (FS 71389 ISO 1001) S A U U2 integrated into the quality management system by utilizing the site-based management and process approach which includes: 4.4. ETHICS AND SOCIAL RESPONSIBILITY • Understanding current and future customer needs, meeting with customer requirements and striving to exceed As stated on the Company’s website, the employees of ENKA İnşaat ve Sanayi A.Ş; customer expectations. • Do not compromise general and professional ethical rules. • Leadership to establish unity of purpose and direction to create and maintain the internal environment in which ENKA • Act honestly, reliably and transparently and in accordance with the principles and strategies of the corporation in the employees can become fully involved in achieving the company’s objectives. course of the execution of their tasks. • Pay the utmost attention to behave honestly toward the employer, government, dealers (suppliers), shareholders, and • ENKA members, at all levels, are the essence of ENKA’s organization and their full involvement enables the usage of subcontractors and treat quality as a priority in each and every task they perform. their abilities to maintain ENKA’s quality achievement. • Not only fulfill our contractual obligations but also have a constructive attitude towards their employers, customers • Management of activities and related resources as a whole process to achieve the desired results more efficiently. and partners at all times. • Identifying, understanding and managing interrelated processes as a system which contributes to ENKA’s effectiveness • Endeavor to comply with all the relevant laws and regulations regarding the environment in the countries of operations. and efficiency in achieving ENKA’s quality objectives. • Conserve natural resources and avoid wastefulness. • Continuous improvement of ENKA’s overall performance as a permanent objective of the ENKA organization. • Keep waste under control and minimize their adverse environmental effects. • Effective decisions based on the analysis of data and information. • Fulfill the requirements of the ISO 14001 Environmental Management System and provide the necessary resources. • Mutually beneficial relationships with suppliers to create value. • Constantly improve work security and employee health and safety procedures and ensure the avoidance of work accidents. On each project undertaken, ENKA is paying attention to; ENKA Sports, Education and Social Aid Foundation is one of the leading platforms of Turkey where ENKA İnşaat ve Sanayi • Protect human beings and the environment. A.Ş. fulfills its social responsibilities. The activities carried out by ENKA Foundation throughout the year are included in the • Complete its tasks according to the highest quality standards. annual reports of ENKA İnşaat ve Sanayi A.Ş., and such information is accessible at www.enka.com the company’s website. • Complete each work contracted by the client before the end of the specified completion period. In order to continue its environmentally friendly and responsible attitude and minimize the risk of pollution that could • Establish long-term collaboration with clients. result from construction, ENKA uses all available and expedient information in each and every country in which it operates. All the activities, starting with the business development stage, and including proposals, design, establishing the • Treat client satisfaction as a priority. construction site, construction and closing the construction site, are performed by taking into account the environmental In order to effectively fulfill its obligations towards its suppliers and subcontractors as a natural part of its services, ENKA dimensions and effects. pays utmost attention to: By delegating power and responsibility to the necessary people to operate the Environment Management System, ENKA’s • Establishing long-term collaboration with reliable suppliers/subcontractors. top management enables all personnel to become conscious of its environment policy and its objectives and provides • Fulfilling its agreement obligations towards the reliable suppliers/subcontractors who fulfill their responsibilities. all the necessary resources to do so. . 130 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 131

ENKA plans to increase the degree of diligence it exercises with regard to the environment and its stewardship. In order to • I have not been on the board of ENKA for more than six years within the last ten years.

carry out this plan, it ensures all personnel commit themselves to continuously improving the Environmental Management • I am not an independent board member in more than three of the companies which are controlled by ENKA or its Implementation Program which constitutes the basis of this policy. controlling shareholders and in more than five companies listed on the stock exchange.

All employees are responsible for protecting the environment and establishing the Environmental Management System, • I am not registered as a board member elected for the legal entity. providing support and assistance in the implementation stage and continuously developing the system. During the I hereby declare my independency within the framework of the relevant legislation in force and the articles of association period, no action has been brought against the company for damages to the environment. of ENKA and criteria mentioned above.

In the period, no situation occurred to negate the independency of members. For the Members of the Board of Directors, BÖLÜM V – THE BOARD OF DIRECTORS there is no restriction for undertaking responsibilities outside of our company.

5.1. STRUCTURE AND FORMATION OF THE BOARD OF DIRECTORS Besides his membership on the Board of Directors of our company, E. Melih Araz is also a member of the Board of The goal of determining the company’s board members is to create a structure which will enable the members to be Directors of Ata Holding A.Ş., Ata Yatırım ve Menkul Değerler A.Ş., Zorlu Enerji A.Ş., İzmir Ent. Otelcilik A.Ş., Entgre Harç productive and constructive, to take decisions quickly and rationally, and to form committees in order to organize their San. A.Ş., Ata Portföy Yönetim A.Ş., Ata G.Y.O. A.Ş. and Burger King China JV. E. Melih Araz has no relation with our group activities in an effective way. Although the aim is to have one female member on the Board of Directors, the proposal of companies. the Board Members submitted to the General Assembly has been formed in line with the above-mentioned targets. The Besides his membership on the Board of Directors of our company, V. Ergin İmre is the Chairman of the Board of Directors Board of Directors which is approved by General Assembly consists of 5 members: two executive members, one non- of Ahmet Veli Menger Holding A.Ş and Mengerler Ticaret Türk A.Ş. V. Ergin İmre has no relation with our group companies. executive member and two independent non-executive members. In accordance with the Articles of Association of the company, the Board of Directors is responsible for the management Regarding the independent members, 2 nominees were submitted to the Corporate Governance Committee, which of ENKA İnşaat ve Sanayi A.Ş. and its representation. Validity of all documents to be given by ENKA İnşaat ve Sanayi A.Ş. undertook authority of the Nominating Committee on 14.01.2014 and were approved by the Board of Directors on and all the agreements to be concluded require the names of two persons authorized to represent the company under 15.01.2014. the official heading and per the signature circular of ENKA İnşaat ve Sanayi A.Ş. The Board of Directors assembles at the The Declaration of Independent Members of the Board of Directors about their independency is as follows: beginning of each fiscal year and divides up the tasks as well as the management and representation authorizations between the board members. With the Ordinary General Assembly resolution dated March 27, 2014, the Board of In the context of my nomination being “Independent Member of the Board of Directors” at ENKA İnşaat ve Sanayi A.Ş.’s Directors was resolved to a tenure of one year with a task division as below: (“ENKA”) Ordinary General Assembly Meeting of 2013 which was held in 2014:

• No relationship was formed in employment, in capital or in important trading activities, either by me nor by my Board of Directors spouse, nor by my blood or affinity relatives up to the 3rd degree nor have I had any direct or indirect relationship Name, Surname Profession Position with ENKA, 3rd parties in relation with ENKA or legal entities who have relation with shareholders of ENKA having a M. Sinan Tara Civil Engineer M.Sc. Chairman of the Board share of 5% or more within the last five years. Haluk Gerçek Industrial Engineer Vice Chairman of the Board Erdoğan Turgut Civil Engineer M.Sc. Member of the Board (Non-Executive Member) • Within the last five years, I have not been a partner (5% or above), employed as an executive having a significant E. Melih Araz Economist Member of the Board (Non-Executive & Independent Member) duty and responsibility, or as a member of the board of directors in a company, which is primarily serving as auditing V. Ergin İmre Chemical Engineer M.Sc. Member of the Board (Non-Executive & Independent Member) (tax audit, legal audit and including any internal audit), consulting and rating ENKA, which undertakes material Our Company’s Executive Committee is as follows: business activities under an agreement, in the period where the services or goods have been purchased or sold.

• As being an independent member of the board of directors, I have the required professional training, knowledge and Executive Committee experience for undertaking the duties of the position. Name, Surname Profession Position President and Chairman of the Executive Committee (Engineering and Architectural Project Offices; Personnel and Human Resources; Health, Safety • I am not working full time in a governmental or public institution. A. Mehmet Tara Civil Engineer and Environment; Legal Matters; Quality Assurance; Machinery Supply and • I am a resident of Turkey in accordance with the Income Tax Law no 193 dated 31.12.1960. Real Estate Investments) M. Gökhan Sağnaklar Civil Engineer Vice Chairman of the Executive Committee • I have strong ethical standards, a professional reputation and the experience to make a positive contribution to ENKA, B. Burak Özdoğan Civil Engineer Member of the Executive Committee (Moscow Projects) to maintain my independency regarding conflicts between shareholders and for making independent decisions C. Şan Gürdamar Civil Engineer M.Sc. Member of the Executive Committee (Nuclear Related Projects) Özger İnal Civil Engineer M.Sc. Member of the Executive Committee (Infrastructure Projects) which take into account stakeholders’ rights. S. Oğuz Kırkgöz Civil Engineer Member of the Executive Committee (Oil, Gas and Petrochemical Projects) • I will be able to spend the necessary time for fulfilling the requirements of the position and monitoring processes of Zafer Gür Civil Engineer Member of the Executive Committee (Special Projects) the activities of the company. M. Asaf Yener Mechanical Engineer M.Sc. Member of the Executive Committee (Industrial Production and Fabrication) H. Fehmi Bayramoğlu Mechanical Engineer Member of the Executive Committee (Power Projects)

132 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 133

Curricula Vitae of Board of Directors and the President and Chairman of the Executive Committee, which were also E. MELİH ARAZ - Member of the Board (Non-Executive Independent Member) announced on the official internet site are as follows: Melih Araz, born in 1948, graduated in 1967 from Robert College of Istanbul and in 1972 from the University of Ankara, M. SİNAN TARA - Chairman of the Board (Executive Member) Faculty of Political Sciences, Department of Economy and Public Finance. He completed his Master of Business Administration (MBA) Degree Program at the University of Indiana in 1975, and took part in 1988 in the Executive Sinan Tara, born in 1958 at Istanbul, graduated in 1980 from the ETH Zürich, Department of Civil Engineering with a Management Program at the Harvard Business School. He is fluent in English. Having started his professional working Bachelor of Science Degree (B.Sc.) and completed his Master of Business Administration (MBA) Degree Program at the life in 1977 Melih Araz built a career in the fields of international corporate banking and investment banking during his University of Stanford in 1983. He is fluent in English and German. employment of 12 years at various Citibank entities around the globe, and acted as senior official in various units of the Having joined ENKA in 1980 being first assigned as a field engineer in Saudi Arabia, Sinan Tara worked thereafter in various bank. After having acted as CEO of Interbank A.Ş. between 1988 and 1996, he provided independent consulting services departments, units and projects of the company in the fields of finance, energy investments, construction projects, project to various firms and groups in the fields of initial public offering, acquisition of companies, venture capital, formalizing of financing and other investment areas. From 1984, he acted as General Manager, Board Member and Managing Director family constitution, institutionalization, restructuring of debts to banks, NPL tenders of the Savings Deposit Insurance Fund and Executive of ENKA İnşaat ve Sanayi A.Ş., and since 1994, he has acted as the Chairman of the Board of Directors of (TMSF), and strategic management. Melih Araz acted as Board Member of Medya Holding A.Ş. between 1990 and 1996, ENKA İnşaat ve Sanayi A.Ş. Moreover, in the fields of social activity and the social responsibility projects of the company, he of Klimasan A.Ş. between 2000 and 2011, and of Şenocak Holding A.Ş. between 1998 and 2011 and also he acted as an plays an active role in the organization and operation of the ENKA Foundation and Sadi Gülçelik Sports Center established Independent Member of the Board of Zorlu Energy A.Ş. between 2008 and 2013. He currently acts as a Member of Board in 1983 and the ENKA Sports Club under the umbrella of the ENKA Foundation as well as ENKA Schools İstinye, founded of Directors of Ata Holding A.Ş., Ata Portföy Yönetim A.Ş., Ata Gayrimenkul Yatırım Ortaklığı A.Ş, Burger King China JV, in 1996, 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. Sinan Tara is also a member of the Turkish Entegre Harç Sanayi A.Ş., İzmir Enternasyonel Otelcilik A.Ş. and TFI TAB Food Investments A.Ş. Since 2006 Melih Araz, as Contractors Association. Board Member of Ata Yatırım ve Menkul Değerler A.Ş., is active as the responsible official thereof in the fields of corporate finance, investment banking, company mergers and venture capital. 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 Moreover, Melih Araz is also an active member of various non‐governmental organizations, associations, and institutions, within the last ten years and is currently director in charge of the Board of Directors of ENKA İnşaat ve Sanayi A.Ş. and of and is one of the charter members of the Turkish Economic and Social Studies Foundation (TESEV). He acted as the the affiliated group companies thereof. President of the Education & Training Committee, the Social Affairs Committee and the Social Security Reform Project of the Turkish Industry & Business Association (TÜSİAD) between 1989 and 2007, and since 1989 he has been a Member and HALUK GERÇEK - Vice Chairman of the Board (Executive Member) Honorary Member of the Board of Trustees of the Robert College of Istanbul. Melih Araz also acts as a Member of the Haluk Gerçek was born in 1956 in Istanbul. He graduated in 1979 from the Middle East Technical University, Department Executive Committee of Turkish – Japanese and Vice Chairman of Turkish – Chinese Business Councils in Foreign Economic of Industrial Engineering. He is fluent in English. Relations Board (DEIK) as well as having other memberships in various clubs and associations.

He joined ENKA in 1980 when he started to work in the group company ENKA Pazarlama İhracat İthalat A.Ş. in the Melih Araz meets the criteria applicable to Independent Board Members within the scope of the Corporate Governance position of Deputy General Manager. After having worked as Logistics Manager in Tripoli, Libya between 1981 and 1982, he Principles of the Capital Markets Board, and acted between 2012 and 2014 as a Non‐Executive Independent Board continued to act as Deputy General Manager of ENKA Pazarlama İhracat İthalat A.Ş. until 1983. Between 1983 and 1987 he Member of ENKA İnşaat ve Sanayi A.Ş. 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. He was a Management Committee Member in the investment and construction projects in Russia between 1987 and 1991, and a Board Member of ENKA İnşaat ve Sanayi V. ERGİN İMRE - Member of the Board (Non-Executive Independent Member) A.Ş. between 1991 and 2001 and the General Manager of ENKA İnşaat ve Sanayi A.Ş., between 2006 and 2012. Since 2001 Ergin İmre, born in 1958, graduated in 1981 from the Polytechnic School in Zurich, Department of Chemistry Engineering. Haluk Gerçek has acted as the Vice‐Chairman of the Board of Directors. He is fluent in German and English. Haluk Gerçek, being an Executive Board Member within the scope of the Corporate Governance Principles of the Capital Having started his professional career in 1982 at Ahmet Veli Menger Holding A.Ş. and its subsidiary, Mengerler Ticaret Türk Markets Board, is not an Independent Member of the Board of Directors of ENKA İnşaat ve Sanayi A.Ş. He was within the A.Ş., Ergin İmre acted until 2010 at the company Ahmet Veli Menger Holding A.Ş. as Board Member and General Manager last ten years and is currently director in charge of the Board of Directors of ENKA İnşaat ve Sanayi A.Ş. and of the affiliated thereof, and as Board Member of Mengerler Ticaret Türk A.Ş., and post-2010 he served as the Chairman of the Board group companies thereof. of Directors for both companies. Moreover, Ergin İmre was also a Board Member for Mercedes Benz Türk A.Ş. between ERDOĞAN TURGUT - Member of the Board (Non-Executive Member) 1994 and 1999 and for Robert Bosch Türk A.Ş. between 1987 and 1994. Upon expiry of the partnership between these Erdoğan Turgut, born in 1953, graduated in 1977 from the Aegean University, Department of Civil Engineering, and companies, he resigned from both positions. completed his Masters of Science (M.Sc.) Degree Program in Soil Mechanics at the London University Kings College, 1979. Ergin İmre meets the criteria applicable to Independent Board Members within the scope of the Corporate Governance He is fluent in English. Principles of the Capital Markets Board, and acted between 2012 and 2014 as a Non‐Executive Independent Board Erdoğan Turgut worked as Deputy Project Manager in the company Koray Al‐Mutamidoon İnşaat A.Ş. in Saudi Arabia Member of ENKA İnşaat ve Sanayi A.Ş. between 1981 and 1986 during the construction of the Intercontinental Hotel. From 1986 to 1991 he acted as General Manager for the firm Koray – Turser A.Ş. when the latter constructed the 5 Stars Sheraton Hotel & Karum Shopping A. MEHMET TARA (President and Chairman of the Executive Committee) Center in Ankara, and between 1991 and 1993 as Board Member of the Kavala Group of Companies, and as the partner in Mehmet Tara, born in 1983, graduated in 2002 from the Cushing Academy and in 2006 from Wentworth Instıtute of the company PMS A.Ş. between 1993 and 1995. Between 1995 and 2010 he acted as Foreign Relations Manager, Deputy Technology, Department of Civil Engineering. He is fluent in English. He started his professional working life in 2006 as a Chairman of the Executive Board and Group Coordinator in and of the company Koray Yapı Endüstrisi ve Ticaret A.Ş. construction site engineer, moving on to become Deputy Project Manager, Vice President and Executive Board Member Erdoğan Turgut, being a Non‐Executive Board Member within the scope of the Corporate Governance Principles of the responsible for Moscow Projects and Investments. On May 02, 2012, he became the President and Chairman of the Capital Markets Board, is not an Independent Member of the Board of ENKA İnşaat ve Sanayi A.Ş. and acted between Executive Committee. Mehmet Tara is also a member of the Turkish Industry & Business Association (TUSİAD). He is 2012 and 2014 as a Non‐Executive Board Member. married and has two children. 134 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 135

5.2. OPERATIONAL PRINCIPLES OF THE BOARD OF DIRECTORS Purpose of the Early Identification of Risks Committee:

The Board of Directors of ENKA İnşaat ve Sanayi A.Ş. was approved at the Ordinary General Assembly dated 27.03.2014 It is to identify early on any potential risks that might jeopardize the existence, development and continuation of the and 23 meetings until the end of report period were made with an average meeting attendance rate for that period company, and to take and implement the necessary measures and preventative actions for the elimination of such of 92%. Prior to each meeting, the secretariat of the Board of Directors personally informs board members about the detected potential risks as well as to perform any work related to risk management and to review at least once a year any meeting agenda. Since the IPO of ENKA İnşaat ve Sanayi A.Ş., no divergent views have been suggested by board applied risks management systems. members. There are no privileged voting rights for any member of the Board of Directors. Due to the formation of the Board of Directors being, in total, five people, some members of the Board of Directors are The Board of Directors was authorized at the Ordinary General Assembly held dated 27.03.2014 for the execution of assigned to more than one committee. written transactions listed in articles No. 395 and 396 of the Turkish Commercial Code. Committees meet regularly within the months stated below. In 2014 the Audit Committee held five meetings, Corporate There was no material or related transactions submitted for the approval of the Independent Board Members or of the Governance Committee held two meetings and the Early Identification of Risks Committee held six meetings. General Assembly that did not receive the approval of the Independent Board Members.

The Company’s Board of Directors discussed the Affiliated Company Report and the declaration is as follows: COMMITTEE MEETINGS “On such date on which the relevant legal steps as mentioned in the report were taken, always a proper counteract has AC CGC EIRC been undertaken for/towards each of such legal steps in accordance with such terms and conditions and circumstances as JANUARY X X 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 company.” FEBRUARY X

MARCH X X 5.3. NUMBER, STRUCTURE AND INDEPENDENCE OF THE COMMITTEES ESTABLISHED WITHIN THE BOARD OF DIRECTORS APRIL

Three committees officiate in affiliation with the Board of Directors of ENKA İnşaat ve Sanayi A.Ş. The committees assemble MAY X X as often as it is necessary. The Board of Directors’ resolution dated 02.04.2014 regarding these committees is as follows: JUNE For the Audit Committee to elect for a tenure of one year: E. Melih Araz (Chairman) and V. Ergin İmre (Member) JULY X X

For the Corporate Governance Committee to elect for a tenure of one year: AUGUST X E. Melih Araz (Chairman), Erdoğan Turgut (Member) and Gizem Özsoy (Member) SEPTEMBER X For the Early Identification of Risks Committee to elect for a tenure of one year: OCTOBER 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 NOVEMBER X X of the Nominating Committee and the Remuneration Committee are to be carried out by the Corporate Governance DECEMBER Committee and the working principles of the committees and task fields are to be identified by the committee members AC: Audit Committee CGC: Corporate Governance Committee EIRC: Early Identification of Risks Committee and to be submitted to the Board of Directors. Purposes of committees as established thereof, have been stated below:

Purpose of the Audit Committee: 5.4. RISK MANAGEMENT AND INTERNAL CONTROL MECHANISM It is to duly ensure supervision of the independent audit of the accounting system and financial data of the company as well as of the functioning and efficiency of the internal control system. The Financial Control Unit within the structure of ENKA İnşaat ve Sanayi A.Ş., 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 Purpose of the Corporate Governance Committee: of the potential risk factors to the management. It is to propose suggestions regarding the corporate governance of the company; to ensure the increase in quality of The internal control systems and its structure is organized in a way that can eliminate all risks to be encountered by the the corporate governance applications; to pursue efficiently the legislation of the Capital Markets Board regarding the company, especially the ones which could adversely affect the activities. It also proactively works towards solutions to corporate governance principles and any other corporate governance principles generally accepted on the international preempt problems even during a crisis. The increasing strength of the company’s financial position is an indication that capital markets as well as to advise the Board of Directors on the implementation of any applicable ones thereof; to make this system is working effectively. 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 managers of the Company and to propose suggestions to the Board in this aspect. 136 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 137

5.5. MISSION, VISION AND OBJECTIVES OF THE COMPANY 2. Principles Applicable to Remuneration

Our Mission: Remuneration Payable to the Members of the Board of Directors

Continuously increase our contribution to the economies of the countries where we work while preserving our our Independent Members and Non-executive Board Members: The Independent Members and Non-executive Board Members proposition as an enterprise which implements the tasks it undertakes with outstanding success in quality and execution of the Board of Directors are entitled to a monthly attendance fee as honorarium to the amount determined each year time; to be a company whose involvement is desired by its clients; to be a company that retains a reasonable profit by the General Assembly. The amount of such monthly attendance fee is not fixed on the basis of the performance of the margin from its undertakings; and to be a company with which its employees are proud to be associated. company so that the independency of the Independent Members is not adversely affected.

Our Performance Objectives: Executive Board Members: The Executive Board Members are paid a monthly attendance fee in the same amount as • To be open to innovations, using advanced technologies and always seeking better ways of doing things. payable to the Independent Members as aforesaid, in addition to this, and mentioned below, bonuses are payable relating

• To be prudent and sensitive about work security and environmental protection. to their performances and contributions to the company as well as their ability to meet targets set.

• To train our young employees in accordance with our culture as creative, hardworking and honest employees and Remuneration Payable to Administratively Responsible Managers to ensure that our employees work as individuals who have self-confidence, are able to communicate and use Remuneration payable to Administratively Responsible Managers include performance determined bonuses in addition discretionary power and take responsibility. to the fixed pay to be determined and calculated in accordance with the scope of duties and responsibilities thereof • To seek our competitive power and profit in perfecting our management and technical skills. and taking into consideration the requirements and the experience determined for each position. Executive Committee

Pursuit of the Objectives and Achievement of Goals: Members are entitled to a monthly attendance fee as honorarium as well as bonuses and fixed pays. The objectives that reflect our sensitivity to completing projects before the end of the planned time frame for delivery to 3. Performance and Remuneration Methods the client are pursued very diligently at the highest and most detailed level. The members of the Executive Board pursue Fixed Payments: In the determination of the attendance fees payable to the Members of the Board of Directors as well the objectives and the degree of their achievement in relation to the projects carried out in those countries for which as of the fixed payments to the Administratively Responsible Managers as aforesaid, the preservation of the company’s they are responsible and periodically resolve in the Executive Board to ascertain the causes of any deviations, whether the deviations affect the result of the project and if it is necessary to create new targets, as well as to take any necessary internal balances and the compliance thereof with strategic targets and the ethical values of the company are always measures with personnel responsible for such delays. considered. The amount of the fixed payments are determined and calculated for each position in accordance with the scope of duties and responsibilities of the relevant payee taking into consideration various factors such as the economic 5.6. FINANCIAL BENEFITS PROVIDED TO THE BOARD OF DIRECTORS conditions in the market, the size of the company, any long-term targets and the level of realization thereof as well as For stand-alone ENKA İnşaat ve Sanayi A.Ş.; total wages paid to the members of the Board of Directors is TL 3,065,261, the position and the level of experience of the relevant payee. In the determination and calculation of the remuneration social security payments are TL 38,403 and the accrued retirement pay provisions as of December 31, 2014 are TL 230,484. made to the Board Members and Administratively Responsible Managers of the company, no short-term performance- The total amount of the fees and similar benefits provided to the top managers such as the general manager, general based payment plans such as the company’s profit or income shall be applicable. coordinator and vice general managers is TL 24,407,486, the social security payments are TL 693,257 and the accrued retirement pay provisions as of period end are TL 1,682,438. There are no payments made to the members of the Board Performance Payments (Bonus Payments): of Directors and top managers in the form of shares, derivative products originating from shares, share buying options or Also in the determination and calculation of performance-based bonus payments, various factors are taken into account, any payments not made in cash (such as a house or a car) whose proprietorship is bestowed and/or allocated for their such as: bonus policies applicable in the market to any staff in similar or equivalent positions, the level of reach and the use. ENKA İnşaat ve Sanayi A.Ş. is not in any sort of outstanding debt relation whatsoever with any of the members of the board or any top managers. realization of the company targets, as well as individual performance., 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 Administratively The Remuneration Policy Applicable to the Board Members and Administratively Responsible Managers was submitted to Responsible Managers of the Company is lent any money or granted any loan or any personal credit by virtue of any the shareholders at the General Assembly dated 27.03.2014 and was published on our internet site as follows: third parties or provided any securities or guarantees. Any remuneration and benefits paid to Board Members and 1. Objective and Scope Administratively Responsible Managers of the company are disclosed to the public in the Annual Report thereof. 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 mode of implementation applicable to the remuneration of the Board Members and Administratively Responsible 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, and any mode of and requirement 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 on the website of the company. The remuneration policy hereunder is aimed at the sustainability and enhancement of the performance of the Board Members and Administratively Responsible Managers of the Company. 138 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 139

Backlog as of 31.12.2014 (Million US Dollars)

Country Amount Perc. (%) Iraq 1,302 44 US Embassies 455 15 Kosovo 330 11 Georgia 291 10 Oman 200 7 Kazakhistan 116 4 Turkey 64 2 United States 45 2 Germany 31 1 Russia 26 1 Others 111 4 TOTAL 2,971 100

BASIC RATIOS (Thousand US Dollars) 31.12.2014 31.12.2013 Current Ratio: ENKA İNŞAAT VE SANAYİ ANONİM ŞİRKETİ Current Assets 3,271,583 3,175,750 = 240,1% = 232,2% Current Liabilities 1,362,466 1,367,770 AND ITS SUBSIDIARIES

Cash Ratio: CONSOLIDATED FINANCIAL STATEMENTS Cash&Cash Equivalents+Financial Investments 2,990,209 2,752,250 = 219,5% = 201,2% FOR THE YEAR ENDED 31 DECEMBER 2014 Current Liabilities 1,362,466 1,367,770 AND INDEPENDENT AUDITOR’S REPORT Leverage Ratio: Total Liabilities 2,598,011 2,810,362 = 33,3% = 33,2% Total Assets 7,812,769 8,471,431

Total Equity to Total Assets Ratio: Total Equity 5,214,758 5,661,069 = 66,7% = 66,8% Total Assets 7,812,769 8,471,431

Current Assets to Total Assets Ratio: Current Assets 3,271,583 3,175,750 = 41,9% = 37,5% Toplam Varlıklar 7,812,769 8,471,431

Non-current Assets to Total Assets Ratio: Non-current Assets 4,541,186 5,295,681 = 58,1% = 62,5% Total Assets 7,812,769 8,471,431

Return on Assets (ROA) Ratio: Net Income 659,042 655,983 = 8,0% = 6,9% Total Assets 7,812,769 8,471,431

Net Income to Revenue Ratio: Net Income 659,042 655,983 = 11,3% = 10,0% Revenue 5,821,028 6,546,511 140 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 141

DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Maslak no1 Plaza Eski Büyükdere Caddesi Maslak Mahallesi No:1 Maslak, Sarıyer 34398 İstanbul, Türkiye Opinion Tel : +90 (212) 366 6000 INDEPENDENT AUDITOR’S REPORT Fax : +90 (212) 366 6010 ON THE CONSOLIDATED FINANCIAL STATEMENTS www.deloitte.com.tr In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial positions Mersis No: 0291001097600016 of the Group as at 31 December 2014, and of its financial performance and its cash flows for the year then ended in ac- Ticari sicil No: 304099 cordance with International Financial Reporting Standards. To the Board of Directors of Enka İnşaat ve Sanayi Anonim Şirketi DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. We have audited the accompanying consolidated financial statements of Enka İnşaat ve Sanayi A.Ş. (Enka İnşaat), its Member of DELOITTE TOUCHE TOHMATSU LIMITED subsidiaries and joint operations (together the “Group”) which comprise the consolidated balance sheet as of 31 December 2014, 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 Istanbul, 2 March 2015 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.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. Member of Deloitte Touche Tohmatsu Limited 142 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 143

144 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 145

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER 2014

(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 2014 2013

CONTINUING OPERATIONS Revenue 5,23 5,821,028 6,456,511 Cost of revenues (-) 5,23 (4,887,989) (5,389,031) GROS S PROFIT 933,039 1,067,480

Marketing, selling and distribution expenses (-) 5,24 (33,419) (31,997) Administrative expenses (-) 5,24 (126,077) (119,948) Other operating income 5,26 21,796 57,321 Other operating expenses (-) 5,26 (67,724) (45,042) PROFIT FROM OPERATIONS 727,615 927,814

Income from investing activities 5,27 189,542 111,826 Expenses from investing activities 5,27 (40,191) (115,222) OPERATING PROFIT BEFO RE FINANCE EXPENS ES 876,966 924,418

Financial income 5,28 39,252 24,864 Financial expenses (-) 5,29 (45,095) (37,557) PROFIT BEFORE TAX FROM CONTINUING OPERATIONS 871,123 911,725

Current tax expense (-) 31 (139,570) (170,643) Deferred tax expense 31 (42,265) (46,630) PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 689,288 694,452

DISCONTINUED OPERATIONS Profit for the year from discontinued operations, net of tax 30 (1,111) (1,449)

NET PROFIT FOR THE YEAR 688,177 693,003

Attributable to: Non-controlling interest 29,135 37,020 Equity holders of the parent 659,042 655,983 688,177 693,003

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

Earning per share from continuing operations - ordinary share certificate (full cent) 32 0.18 0.18

Weighted average number of shares (1 cent weighted average shares) 360,000,000,000 360,000,000,000

The accompanying notes form an integral part of these consolidated financial statements. 3 146 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 147

148 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 149

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.)

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 2014, 12.59% of the shares of Enka İnşaat is traded publicly in İstanbul Stock Exchange (ISE).

As of 31 December 2014, the average numbers of white and blue-collar personnel are respectively 5,087 and 18,754 (31 December 2013 – 5,299 and 21,435).

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, Georgia 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, Djibouti, Mauritania and Equatorial Guinea in Africa; Saudi Arabia, Oman, Iraq and Afganistan in Asia and also in Dominican Republic.

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

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

1. ORGANIZATIONS AND OPERATIONS OF THE GROUP (cont’d) 1. ORGANIZATIONS AND OPERATIONS OF THE GROUP (cont’d) As of 31 December 2014 Enka İnşaat has the following subsidiaries, whose business and country of incorporation The construction contracts are undertaken by Enka İnşaat alone or together with its affiliated companies or, in are provided below: partnerships with other contractors through joint operations. As of 31 December 2014, Enka İnşaat has the Country of Year of following joint operations: Name of Subsidiary Nature of business activities incorporation establishment Bechtel-Enka Joint Venture (Kazakhistan) – Senimdy Kurylys Bechtel-Enka Joint Venture Bautino (Kazakhistan) Enka Pazarlama İhracat İthalat Anonim Engaged in marketing and after-sales service of Turkey 1972 Şirketi (Enka Pazarlama) construction machineries, trucks, industrial Caddell Construction Company Inc. (Caddell Global) products and spare parts. Bechtel-Enka Joint Venture (Romania) Çimtaş Çelik İmalat Montaj ve Tesisat Engaged in manufacturing of structural steel Turkey 1973 Bechtel-Enka Joint Venture (Albania) Anonim Şirketi (Çimtaş) works, installation and establishing of the Bechtel-Enka Joint Venture (Kosovo) technical equipment. AECO Development Limited Liability Company (Oman) Titaş Toprak İnşaat ve Taahhüt Engaged in all kinds of exacavation activities, Turkey 1974 Bechtel-Enka Joint Venture (Oman) Anonim Şirketi (Titaş) excavation backfilling works and quarrying- crushing operation of highway projects. Bechtel-Enka Joint Venture (Georgia) Kasktaş Kayar Kalıp Altyapı Sondaj Engaged in pile dwelling work, any kind of Turkey 1975 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS Kazık ve Tecrit Anonim Şirketi base and superstructure construction, slip form (Kasktaş) and construction of drilling and ground surveys. 2.1 Basis of presentation Entaş Nakliyat ve Turizm Anonim The firm operates in organization of domestic Turkey 1976 Şirketi (Entaş) and international conventions and seminars and The Basis for Preparation of the Financial Statements and Significant Accounting Policies also engaged in tour reservations and ticket sales. The consolidated financial statements of the Group have been prepared in accordance with International Financial Enet Proje Araştırma ve Müşavirlik Performs architectural design services. Turkey 1980 Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated A.Ş. (Enet) 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 Enka Teknik Genel Müteahhitlik Operates in the business of material handling Turkey 1981 measured at fair values. The consolidated financial statements are presented in U.S. Dollars (USD) and all values Bakım İşletme Sevk ve İdare Anonim and storage systems, auxilary facilities, water Şirketi (Enka Teknik) treatment and environmental engineering, are rounded to the nearest thousand (‘000) except when otherwise indicated. infrastructure and construction, control systems The Group adopted all standards, which were mandatory as of 31 December 2014. The consolidated financial and instrumentation engineering. statements of Enka İnşaat were authorized for issue by the management on 2 March 2015. Although there is no such Entrade GmbH (Entrade) Manages foreign investments of the Company. Germany 1984 intention, the General Assembly and certain regulatory bodies have the power to amend the statutory financial statements after issue. Limited Liability Company Enmar Engaged in ready-mixed concrete production Russia 1994 (Enmar) and various construction works. 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 Airenka Hava Taşımacılığı A.Ş.(Air Engaged in all kinds of air transportation. Turkey 2001 Enka) 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 Enka Holding B.V. Manages foreign investments of the Company. Netherlands 2001 issued by the Ministry of Finance. The foreign subsidiaries maintain their books of accounts in accordance with the Enka Müteahhitlik Hizmetleri A.Ş. Engaged in construction activities. Turkey 2002 laws and regulations in force in the countries where they are registered. The consolidated financial statements are (Enka Müteahhitlik) based on the statutory records with adjustments and reclassifications for the purpose of fair presentation in Adapazarı Elektrik Üretim Limited Performs production and selling of electricity. Turkey 2004 accordance with IFRS. Şirketi (Adapazarı Elektrik) (*) The Group also reported separately for the consolidated financial statements for the same period prepared in İzmir Elektrik Üretim Limited Şirketi Performs production and selling of electricity. Turkey 2004 accordance with accounting principles promulgated by CMB. (İzmir Elektrik) (*) There are no differences between the consolidated financial statements prepared in accordance with the accounting Gebze Elektrik Üretim Limited Şirketi Performs production and selling of electricity. Turkey 2004 policies promulgated by CMB and consolidated IFRS financial statements except for the use of TL and USD as the (Gebze Elektrik) (*) presentation currency, respectively. Enka Limited Liability Company Manages the company’s construction, Ukraine 2006 (Enka LLC) engineering 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

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

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.1 Basis of presentation (cont’d) 2.1 Basis of presentation (cont’d) Functional and presentation currency Basis of consolidation 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. The consolidated financial statements comprise the financial statements of the parent company, its joint operations Dollar or indexed to U.S. Dollar, this currency has been determined as the functional and the presentation currency and its subsidiaries as at 31 December each year. The financial statements of the joint operations and the of the Group in line with IAS 21 - The Effects of Changes in Foreign Exchange Rates. Each entity in the Group subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. 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 Subsidiaries are all entities over which the Group has power to govern the financial and operating policies so as to currency) are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets benefit from its activities. Subsidiaries in which the Group owns directly or indirectly more than 50% of the voting and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet rights, or has power to govern the financial and operating policies under a statute or agreement are consolidated. date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical The existence and effect of potential voting rights that are currently exercisable or convertible are considered when cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non- assessing whether the Group controls another entity. 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 Subsidiaries are fully consolidated from the date of acquisition, being the date on which control is transferred to the adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and Group and cease to be consolidated from the date on which control is transferred out of the Group. All significant liabilities of the foreign operation and translated at the closing rate. intra-group transactions and balances between Enka İnşaat and its consolidated subsidiaries and joint operations are Until 31 December 2005, the financial statements of the subsidiaries, functional currency of which was TL, were eliminated. 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 Under the equity method, an investment in associate is initially recognized in the consolidated statement of financial were no longer applicable at that time, Turkey came off hyperinflationary status effective from 1 January 2006. position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive After the Turkish economy ceased to be hyperinflationary, such subsidiaries no longer restate their financial income of the associate. When the Group's share of losses of an associate exceeds the Group's interest in that statements in accordance with IAS 29, and use as the historical costs for translation into the presentation currency associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the the amounts restated to the price level at the date these subsidiaries ceased restating their financial statements. associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to Therefore, the non-monetary assets and liabilities and components of shareholders’ equity of such subsidiaries the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. including share capital reported in the balance sheet as of 31 December 2014 and 2013 are derived by indexing the additions occurred until 31 December 2005 and carrying the additions after this date with their nominal amounts. 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, The assets and liabilities of the subsidiaries whose functional currency is other than U.S. Dollars are translated into separately from parent shareholders’ equity. 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 2014 and 2013 for one U.S. Dollar can be summarized as below: 2014 2013 U.S. Dollars /TL – as of balance sheet date 2.3189 2.1343 U.S. Dollars /TL – yearly average 2.1865 1.9032 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: • As the Group has classified Pimaş Plastik İnşaat Malzemeleri A.Ş’s (“Pimas”) operations to the discontinued operations, the consolidated statement of income for the year ended 31 December 2013 and segmental information note is reclassified in accordance with IFRS 5 Non-Current Assets Held For Sale and Discontinued Operations. The reclassification does not have any impact on prior period equity and net income.

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

2.2 Changes in the accounting policies 2.4 Adoption of New and Revised International Financial Reporting Standards (cont’d) Significant changes in accounting policies are applied retroactively and prior year financial statements are restated b) New and Revised IFRSs applied with no material effect on the consolidated financial statements (cont’d) when necessary. Significant changes applied during the year are detailed in Note 2.4. Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets 2.3 Changes and Errors in Accounting Estimates Changes in accounting policies or accounting errors are applied retroactively and the financial statements of the As a consequence of IFRS 13 Fair Value Measurements, there are amendments in the explanations about the previous periods are restated. If estimated changes in accounting policies are for only one period, changes are measurement of the recoverable amount of an impaired asset. This amendment is limited to non-financial assets and applied on the current year but if the estimated changes effect the following periods, changes are applied both on the paragraphs 130 and 134 of IAS 36 has been changed. current and following years prospectively. There is no material change in accounting estimates of the Group in the current year. Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting 2.4 Adoption of New and Revised International Financial Reporting Standards 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. The following amendments to IASs have been applied in the current year and have affected the amounts reported in these consolidated financial statements. IFRIC 21 Levies a) Amendments to IFRSs affecting amounts reported and/or disclosures in the consolidated financial statements 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. IFRS 9 Financial Instruments: Classification and Measurement c) New and revised IFRSs in issue but not yet effective 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 The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective: 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 IFRS 9 Financial Instruments 5 financial assets as either at amortized cost or a fair value. The new standard is mandatory for annual periods Amendments to IAS 19 Defined Benefit Plans: Employee Contributions 1 beginning on or after 1 January 2017, earlier adoption is permitted. The Group has adopted IFRS 9 and the related 1 Annual Improvements to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and IAS 38, IAS 24 consequential amendments since 31 December 2010. 2010-2012 Cycle b) New and Revised IFRSs applied with no material effect on the consolidated financial statements Annual Improvements to 2011-2013 Cycle IFRS 1, IFRS 3, IFRS 13, IAS 40 1 2 1 IFRS 14 Regulatory Deferral Accounts Amendments to IFRS 10, 11, IAS 27 Investment Entities 2 Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities1 Amendments to IFRS 11 Accounting for Acquisition of Interests in Joint operations 1 Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets 2 1 Amortisation Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting 2 IFRIC 21 Levies1 Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants IFRS 15 Revenue from Contracts with Customers 4 2 1 Effective for annual periods beginning on or after 1 January 2014. Amendments to IAS 27 Equity Method in Separate Financial Statements Amendments to IAS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 2 Amendments to IFRS 10, 11, IAS 27 Investment Entities Annual Improvements to 3 This amendment with the additional provisions of IFRS 10 provide 'investment entities' (as defined) an exemption 2012-2014 Cycle IFRS 5, IFRS 7, IAS 9, IAS 34 Amendments to IAS 1 Disclosure Initiative 2 from the consolidation of particular subsidiaries and instead require that an investment entity measure the 2 investment in each eligible subsidiary at fair value through profit or loss. Amendments to IFRS 10, IFRS 12 and Investment Entities: Applying the Consolidation Exception IAS 28 Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities 1 Effective for annual periods beginning on or after 1 July 2014. 2 The amendments to IAS 32 clarify existing application issues relating to the offset of financial assets and financial Effective for annual periods beginning on or after 1 January 2016. 3 Effective for annual periods beginning on or after 1 July 2016. liabilities requirements. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable 4 right of set-off’ and ‘simultaneous realization and settlement’. Effective for annual periods beginning on or after 1 January 2017. 5 Effective for annual periods beginning on or after 1 January 2018.

14 15 158 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 159

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

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

c) New and revised IFRSs in issue but not yet effective (cont’d) c) New and revised IFRSs in issue but not yet effective (cont’d)

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions Annual Improvements to 2011-2013 Cycle (cont’d)

This amendment clarifies the requirements that relate to how contributions from employees or third parties that are Amendments to IFRS 11 Accounting for Acquisition of Interests in Joint operations linked to service should be attributed to periods of service. In addition, it permits a practical expedient if the amount of the contributions is independent of the number of years of service, in that contributions, can, but are not required, This amendment requires an acquirer of an interest in a joint operation in which the activity constitutes a business to be recognised as a reduction in the service cost in the period in which the related service is rendered. to:

Annual Improvements to 2010-2012 Cycle • apply all of the business combinations accounting principles in IFRS 3 and other IFRSs, except for those principles that conflict with the guidance in IFRS 11 IFRS 2: Amends the definitions of 'vesting condition' and 'market condition' and adds definitions for 'performance condition' and 'service condition' • disclose the information required by IFRS 3 and other IFRSs for business combinations.

IFRS 3: Require contingent consideration that is classified as an asset or a liability to be measured at fair value at Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation each reporting date. This amendment clarifies that that a depreciation method that is based on revenue that is generated by an activity IFRS 8: Requires disclosure of the judgments made by management in applying the aggregation criteria to that includes the use of an asset is not appropriate for property, plant and equipment, and introduces a rebuttable operating segments, clarify reconciliations of segment assets only required if segment assets are reported regularly. presumption that an amortisation method that is based on the revenue generated by an activity that includes the use of an intangible asset is inappropriate, which can only be overcome in limited circumstances where the intangible IFRS 13: Clarify that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure asset is expressed as a measure of revenue, or when it can be demonstrated that revenue and the consumption of the certain short-term receivables and payables on an undiscounted basis (amends basis for conclusions only). economic benefits of the intangible asset are highly correlated. The amendment also adds guidance that expected future reductions in the selling price of an item that was produced using an asset could indicate the expectation of IAS 16 and IAS 38: Clarify that the gross amount of property, plant and equipment is adjusted in a manner technological or commercial obsolescence of the asset, which, in turn, might reflect a reduction of the future consistent with a revaluation of the carrying amount. economic benefits embodied in the asset.

IAS 24: Clarify how payments to entities providing management services are to be disclosed. Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

Annual Improvements to 2011-2013 Cycle This amendment include “bearer plants” within the scope of IAS 16 rather than IAS 41, allowing such assets to be accounted for a property, plant and equipment and measured after initial recognition on a cost or revaluation basis in IFRS 1: Clarify which versions of IFRSs can be used on initial adoption (amends basis for conclusions only). accordance with IAS 16. The amendment also introduces a definition of 'bearer plants' as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period and has a IFRS 3: Clarify that IFRS 3 excludes from its scope the accounting for the formation of a joint arrangement in the remote likelihood of being sold as agricultural produce, except for incidental scrap sales, and clarifies that produce financial statements of the joint arrangement itself. growing on bearer plants remains within the scope of IAS 41.

IFRS 13: Clarify the scope of the portfolio exception in paragraph 52. IFRS 15 Revenue from Contracts with Customers

IAS 40: Clarifying the interrelationship of IFRS 3 and IAS 40 when classifying property as investment property or IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers. owner-occupied property. The five steps in the model are as follows: IFRS 14 Regulatory Deferral Accounts IFRS 14 Regulatory Deferral Accounts permits an entity which is a first-time adopter of International Financial • Identify the contract with the customer Reporting Standards to continue to account, with some limited changes, for 'regulatory deferral account balances' in • Identify the performance obligations in the contract accordance with its previous GAAP, both on initial adoption of IFRS and in subsequent financial statements. • Determine the transaction price IFRS 14 was issued by the IASB on 30 January 2014 and is applies to an entity's first annual IFRS financial • Allocate the transaction price to the performance obligations in the contracts statements for a period beginning on or after 1 January 2016. Recognise revenue when the entity satisfies a performance obligation.

16 17 160 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 161

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

2.4 Adoption of New and Revised International Financial Reporting Standards (cont’d) 2.5 Summary of significant accounting policies Revenue c) New and revised IFRSs in issue but not yet effective (cont’d) Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the Annual Improvements to 2011-2013 Cycle (cont’d) 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: Amendments to IAS 27 Equity Method in Separate Financial Statements Construction contract activities This amendment permits investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate financial statements. 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 Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or proportion of contract costs incurred for work performed to date relative to the estimated total contract costs. Joint Venture Revenue arising from cost plus fee contracts is recognized on the basis of costs incurred plus a percentage of the This amendment clarifies the treatment of the sale or contribution of assets from an investor to its associate or joint contract fee earned during the year. venture. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, Annual Improvements 2012-2014 Cycle 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 IFRS 5: Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to contracts are made in full, in the period in which such losses are determined. Changes in job performance, job held for distribution or vice versa and cases in which held-for-distribution accounting is discontinued. 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 IFRS 7: Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, determined. Profit incentives are included in revenues when their realization is reasonably assured. and clarification on offsetting disclosures in condensed interim financial statements Costs and estimated earnings in excess of billings on uncompleted contracts represent revenues recognized in excess IAS 9: Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment of amounts billed. Billings in excess of costs and estimated earnings on uncompleted contracts represent billings in benefits should be denominated in the same currency as the benefits to be paid excess of revenues recognized.

IAS 34: Clarify the meaning of 'elsewhere in the interim report' and require a cross-reference Energy activities

Amendments to IAS 1 Disclosure Initiative 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 This amendment addresses perceived impediments to preparers exercising their judgement in presenting their years in accordance with the Build-Own-Operate Law numbered 4283 and Build-Own-Operate regulation. As the financial reports. 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 Amendments to IFRS 10, 11, IAS 28 Investment Entities: Applying the Consolidation Exception 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 This amendment addresses issues that have arisen in the context of applying the consolidation exception for recalculated over the realized amounts. Therefore, revenues from the sale of electricity under long-term contracts investment entities by clarifying the following points: 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 • The exemption from preparing consolidated financial statements for an intermediate parent entity is as deferred revenue in the consolidated balance sheet and are recognized over the life of the project. available to a parent entity that is a subsidiary of an investment entity, even if the investment entity measures all of its subsidiaries at fair value. Sale of goods

• A subsidiary that provides services related to the parent’s investment activities should not be consolidated Revenue is recognized when significant risks and rewards of ownership of the goods have been transferred to the if the subsidiary itself is an investment entity. buyer.

• When applying the equity method to an associate or a joint venture, a non-investment entity investor in an Rental income investment entity may retain the fair value measurement applied by the associate or joint venture to its Rental income arising on investment properties is accounted for on a straight-line basis over the lease terms on interests in subsidiaries. ongoing leases. Rental income collected in advance is treated as deferred income and is amortised on a monthly basis during the lease period. • An investment entity measuring all of its subsidiaries at fair value provides the disclosures relating to investment entities required by IFRS 12.

The Group evaluates the effects of these standards on the consolidated financial statements.

18 19 162 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 163

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (cont’d) 2.5 Summary of significant accounting policies (cont’d) 2.5 Summary of significant accounting policies (cont’d) Property, plant and equipment (cont’d) Revenue (cont’d) Repairs and maintenance are charged to the consolidated statements of income during the financial period in which Rendering of services 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 Revenue is recognized by reference to the stage of completion. asset will flow to the Group.

Interest income 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: 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 Useful life management of the Group, the interest accrual is not recognized in the consolidated income statement. Land improvements 5-50 years Buildings 10-50 years Dividends Power plant equipment 35 years Pipelines 16 years Revenue is recognized when the Group’s right to receive the payment is established. Electrical interconnection lines 16 years Machinery and equipment 4-10 years Inventories Motor vehicles 3-10 years Furniture and fixtures 5-10 years Inventories are valued at the lower of cost or net realizable value. Costs incurred in bringing each product to its Barracks, scaffolding and formworks 5 years present location and condition, are accounted for as follows: Aircrafts 10-15 years Others 5-10 years Raw materials, spare parts, merchandise and construction materials - purchase cost on moving weighted average basis. 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. Goods for resale - purchase cost on moving weighted average basis. Expenditures for maintenance, repairs and minor renewals to maintain facilities in operating condition are expensed as incurred. Finished goods - cost of direct materials and labor and a proportion of manufacturing overheads based on moving weighted average basis. The asset’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial year end. The Group also provides an allowance for the slow moving and obsolete items. Intangible assets Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of Intangible assets mainly includes software rights, they are initially recognized at acquisition cost that are amortized completion and the estimated costs necessary to make the sale. over 3 to 10 years on straight-line basis.

Property, plant and equipment Trademarks

With the exception of land and buildings, items of property, plant and equipment are stated at cost less accumulated Acquired trademarks are shown at historical cost. Trademarks have a finite useful life and are carried at cost less depreciation and any accumulated impairment in value. Land is not depreciated. The initial cost of property, plant accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any trademarks and licenses over their estimated useful lives (9 years). directly attributable costs of bringing the asset to its working condition and location for its intended use. Contractual customer relationships Land and buildings are carried at revalued amounts, which is the fair value at the date of the valuation less Contractual customer relationships acquired in a business combination are recognized at fair value at the acquisition accumulated depreciation and impairment losses charged subsequent to the date of the revaluation. Valuations are date. The contractual customer relations have a finite useful life and are carried at cost less accumulated performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its amortization. Amortization is calculated using the straight-line method over the 23 years of life of the customer carrying amount. 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.

20 21 164 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 165

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

2.5 Summary of significant accounting policies (cont’d) 2.5 Summary of significant accounting policies (cont’d) Investment properties Business combinations (cont’d) 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 When the consideration transferred by the Group in a business combination includes assets or liabilities resulting business are classified as “investment property”. Investment properties are measured initially at cost, including from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects value and included as part of the consideration transferred in a business combination. Changes in the fair value of market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with properties are included in the consolidated statement of income in the year in which they arise. corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from Investment properties are derecognized when either they have been disposed of or when the investment property is additional information obtained during the ‘measurement period’ (which cannot exceed one year from the permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses acquisition date) about facts and circumstances that existed at the acquisition date. on the retirement or disposal of an investment property are recognized in the consolidated income statement in the The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as year of retirement or disposal. measurement period adjustments depends on how the contingent consideration is classified. Contingent Transfers are made to investment property when, and only when, there is a change in use, evidenced by ending of consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent owner-occupation, commencement of an operating lease to another party or ending of construction or development. settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is Transfers are made from investment property when, and only when, there is a change in use, evidenced by remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities commencement of owner-occupation or commencement of development with a view to sale. and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss. Investment property also includes long-term leasehold land held under an operating lease, which is accounted for as When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is a finance lease in accordance with IAS 40 “Investment Property” and IAS 17 “Leases”. Each lease payment on the remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain long-term leasehold land is allocated between the liability and finance charges so as to achieve a constant rate on the or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquire prior to the acquisition finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in current date that have previously been recognized in other comprehensive income are reclassified to profit or loss where and non-current lease liability on leasehold land. The interest element of the finance cost is charged to consolidated such treatment would be appropriate if that interest were disposed of. statement of income over the lease period so as to produce a constant periodic rate of interest on the remaining If the initial accounting for a business combination is incomplete by the end of the reporting period in which the balance of the liability for each period. 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 Business combinations are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date The acquisition of subsidiaries and businesses are accounted for using the acquisition method. The consideration that, if known, would have affected the amounts recognized at that date. transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition- Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the version of IFRS 3. 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. Goodwill At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the at the acquisition date, except that: business less accumulated impairment losses, if any. • deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognized For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; of cash-generating units) that is expected to benefit from the synergies of the combination. • liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently 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 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 • assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held 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 for Sale and Discontinued Operations are measured in accordance with that Standard. unit. Any impairment loss for goodwill is recognized directly in profit or loss in the consolidated statement of Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling income. An impairment loss recognized for goodwill is not reversed in subsequent periods. interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after of the profit or loss on disposal. 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 consolidated statement of income as a bargain purchase gain.

22 23 166 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 167

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

2.5 Summary of significant accounting policies (cont’d) 2.5 Summary of significant accounting policies (cont’d)

Non-current assets held for sale Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or The Group measures a non-current asset (or disposal group) classified as held for sale at the lower of its carrying equity instrument of another entity. amount and fair value less costs to sell, and depreciation on such assets are ceased. According to IFRS 9 as from 1 January 2010, the group classifies its financial assets in the following categories: The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered those to be measured subsequently at fair value, and those to be measured at amortised cost. This classification principally through a sale transaction rather than through continuing use. For this to be the case, the asset (or depends on whether the financial asset is a debt or equity investment. 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. (a) Financial assets at amortised cost

For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset A debt investment is classified as ‘amortised cost’ only if both of the following criteria are met: the objective of the (or disposal group), and an active programme to locate a buyer and complete the plan must have been initiated. group’s business model is to hold the asset to collect the contractual cash flows; and the contractual terms give rise Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. The current fair value. In addition, the sale should be expected to qualify for recognition as a completed sale within one nature of any derivatives embedded in the debt investment are considered in determining whether the cash flows of year from the date of classification, and actions required to complete the plan should indicate that it is unlikely that the investment are solely payment of principal and interest on the principal outstanding and are not accounted for significant changes to the plan will be made or that the plan will be withdrawn. separately. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging Discontinued operations 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. 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 (b) Financial assets at fair value 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 If either of the two criteria above are not met, the debt instrument is classified as ‘fair value through profit or loss. value less costs to sell. 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 Impairment of non-financial assets commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from The carrying values of non-financial assets, other than goodwill which is reviewed for impairment at least annually, the investments have expired or have been transferred and the group has transferred substantially all risks and are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset rewards of ownership. may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment At initial recognition, the group measures a financial asset at its fair value. A gain or loss on a debt investment that loss is recognized in the consolidated income statement for items carried at cost and treated as a revaluation is subsequently measured at fair value and is not part of a hedging relationship is recognised in consolidated decrease for items carried at revalued amount to the extent that impairment loss does not exceed the amount held in statement of income and presented within ‘other (losses) / gains — net in the period in which they arise. the revaluation surplus. The Group is required to reclassify all affected debt investments when and only when its business model for The recoverable amount of property, plant and equipment is the greater of net selling price and value in use. The net managing those assets changes. selling price is the amount obtainable from the sale of an asset in an arm’s length transaction while value in use is Impairment of financial assets 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, Financial assets at amortised cost 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 The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or recognized in consolidated statement of income unless the asset is carried at revalued amount, in which case the group of financial assets measured at amortised cost is impaired. A financial asset or a group of financial assets is reversal is treated as a revaluation increase. 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 Borrowing costs future cash flows of the financial asset or group of financial assets that can be reliably estimated. 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 consolidated statement of income / (loss) in the period in which they are incurred.

24 25 168 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 169

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

2.5 Summary of significant accounting policies (cont’d) 2.5 Summary of significant accounting policies (cont’d)

Financial instruments (cont’d) Financial instruments (cont’d)

Impairment of financial assets (cont’d) Financial liabilities (cont’d)

Financial assets at amortised cost (cont’d) Financial liabilities are classified as either financial liabilities at fair value through profit and loss or other financial liabilities. The criteria that the group uses to determine that there is objective evidence of an impairment loss include: a) Financial liabilities at fair value through profit and loss • significant financial difficulty of the issuer or obligor; Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is • a breach of contract, such as a default or delinquency in interest or principal payments; designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss • the group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the concession that the lender would not otherwise consider; financial liability. • 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 b) Other financial liabilities • observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. 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: Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with i. adverse changes in the payment status of borrowers in the portfolio; and interest expense recognized on an effective yield basis. ii. national or local economic conditions that correlate with defaults on the assets in the portfolio. 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 The Group first assesses whether objective evidence of impairment exists. cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying Derivative financial instruments and hedging 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 The Group uses derivative financial instruments such as forward currency purchase and sale contracts and also reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or heldto- maturity interest rate cap transactions, to hedge its risks associated with foreign currency and interest rate fluctuations. Such investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is interest rate determined under the contract. As a practical expedient, the group may measure impairment on the entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is basis of an instrument’s fair value using an observable market price. 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 statement of income. The If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), with similar maturity profiles. The fair value of interest rate cap contracts is determined based on quoted market the reversal of the previously recognised impairment loss is recognised in the consolidated statement of income. prices in active markets.

Cash and cash equivalents 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 Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the investments which their maturities are three months or less from date of acquisition and that are readily convertible Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. to a known amount of cash and are subject to an insignificant risk of changes in value. 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 Financial liabilities 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 Financial liabilities and equity instruments issued by the Group are classified according to the substance of the determine that they actually have been highly effective throughout the financial reporting periods for which they contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity were designated. 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. Hedges which meet the strict criteria for hedge accounting are accounted for as follows:

26 27 170 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 171

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

2.5 Summary of significant accounting policies (cont’d) 2.5 Summary of significant accounting policies (cont’d)

Financial instruments (cont’d) Provisions, contingent liabilities, contingent assets Provisions Derivative financial instruments and hedging (cont’d) Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that Cash flow hedges the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the Cash flow hedges are a hedge of the exposure to variability in cash flows that is attributable to a particular risk obligation. associated with a recognized asset or liability and could affect consolidated statement of income. The Power If the effect of the time value of money is material, provisions are determined by discounting the expected future Companies have borrowings with variable interest rates and the Group uses interest rate caps to hedge the exposure cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where to variability in cash flows due to the change in interest rates. The effective portion of the gain or loss on the appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the hedging instrument is recognized directly in equity, while the ineffective portion is recognized in consolidated passage of time is recognized as an interest expense. statement of income. Contingent liabilities and assets Amounts taken to equity are transferred to the consolidated statement of income when the hedged transaction affects consolidated statement of income. 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 The Group has classified these cash flow hedge derivative assets under “Other Non-current Assets” and classified not recognized in consolidated financial statements but disclosed in the footnotes when an inflow of economic the fair value changes in these instruments directly in equity under “Other Reserves” as net gain/loss on cash flow benefits is probable. hedges. Leases - The Group as lessee Accounting at the date of transaction Finance leases All financial assets are recognized and derecognized on a trade date where the purchase or sale of a financial asset is Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the under a contract whose terms require delivery of the financial asset within the timeframe established by the market leased item, are capitalized at the inception of the lease at the fair value of the leased property or, if lower, at the concerned. present value of the minimum lease payments. Lease payments are apportioned between the finance charges and Offsetting 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 consolidated statement of income. Leased assets are depreciated over Financial assets and liabilities are offset and the net amount is reported in the consolidated balance sheet when there the useful life of the asset. However, if there is no reasonably certainty that the Group will obtain ownership by the is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis, or end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the realise the asset and settle the liability simultaneously. asset and the lease term. Derecognition of financial liabilities Operating lease The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled Leases of assets under which substantially all the risks and rewards of ownership are effectively retained by the or they expire. lessor, are classified as operating leases, except long-term leasehold land classified as investment property. Lease Effects of Changes in Foreign Exchange Rates 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 Transactions in currencies other than functional currency are recorded at the rates of exchange prevailing on the term on a straight-line basis. 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 Leases - The Group as lessor foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non- Operating lease 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. 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 Earnings per share significant risks and rewards of ownership of these properties and so accounts for the contracts as operating leases. Basic earnings per share (EPS) disclosed in the consolidated statement of income are determined by dividing net Lease income from operating leases is recognized in consolidated statement of income on a straight-line basis over profit by the weighted average number of shares that have been outstanding during the related year concerned. the lease term. Costs, including depreciation, incurred in earning the lease income are recognized as an expense. In Turkey, companies can increase their share capital by making a pro-rata distribution of shares (Bonus Shares) to Initial direct costs incurred by the Group in negotiating and arranging an operating lease is added to the carrying existing shareholders without a consideration for amounts resolved to be transferred to share capital from retained amount of the leased asset and recognized as an expense over the lease term on the same basis as the lease income. 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.

28 29 172 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 173

ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.) are expressed in thousands unless otherwise indicated.)

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

2.5 Summary of significant accounting policies (cont’d) 2.5 Summary of significant accounting policies (cont’d)

Related parties Employee termination benefits

Parties are considered related to the Group if; The Group has both defined benefit and defined contribution plans as described below: (a) directly, or indirectly through one or more intermediaries, the party: Defined benefit plans (i) controls, is controlled by, or is under common control with, the Group (this includes parents, subsidiaries and fellow subsidiaries); In accordance with existing social legislation in Turkey, the Company and its subsidiaries in Turkey are required to (ii) has an interest in the Group that gives it significant influence over the Group; or make lump-sum termination indemnities to each employee who has completed one year of service and whose (iii) has joint control over the Company; 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 (b) the party is an associate of the Company; separately for each plan using the projected unit credit actuarial valuation method. All actuarial gains and losses are (c) the party is a joint venture in which the Group is a venturer; recognized in other comprehensive income. (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); Personnel working in branches operating in foreign countries and joint-operations do not have any employee (f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which termination benefit as there is no legal obligation in these countries. significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or Defined contribution plans (e); (g) the party is a post-employment benefit plan for the benefit of employees of the Group, or of any entity that is The Company and its subsidiaries in Turkey pay contributions to publicly administered Social Security Fund on a a related party of the Group. mandatory basis. The Group has no further payment obligations once the contributions have been paid. The Related party transaction is the transfer of resources, services or liabilities regardless of whether a price is charged contributions are recognized as employee benefit expense when they are due. or not. Foreign subsidiaries and joint operations contribute to the related government body for the pension scheme of its Income tax employees in the country they are domiciled. Mandatory contributions to the governmental pension scheme are Tax expense / (income) is the aggregate amount included in the determination of net consolidated statement of expensed when incurred. income for the period in respect of current and deferred tax. Statement of cash flows 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 Cash flows are classified according to operating, investment and finance activities in the statement of cash flows. 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 For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those equivalents as defined above, excluding short term deposits with an original maturity of more than three months and that are enacted by the balance sheet date. Current income tax relating to items recognized directly in equity is deposits blocked in bank accounts as collateral. recognized in equity and not in the consolidated statement of income. Subsequent events 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 Events following the balance sheet date, also known as ‘subsequent events’ include any favorable or unfavorable recognized for all taxable temporary differences. event that took place between the balance sheet date and the publication date of the balance sheet, despite any Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax possible event that might arise after the publicization of any information regarding profits or other financial figures. 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 Company adjusts its financial statements if such adjusting subsequent events arise. 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 statement of income. 30 31 174 ENKA İNŞAAT VE SANAYİ A.Ş. ANNUAL REPORT 2014 ANNUAL REPORT 2014 ENKA İNŞAAT VE SANAYİ A.Ş. 175

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.)

18. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES

31 December 31 December Short-term accrued expenses 2014 2013 Accrual for construction costs 38,101 28,744 Forward accrual (*) 5,075 599 Provision for legal claims 5,542 5,396 Accrued expenses 7,543 6,054 56,261 40,793

(*) As of 31 December 2014, the Group’s derivative liabilities formed from forward foreign-currency transactions are USD 5,075 (31 December 2013: derivative liabilities USD 599). 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 2014 and 2013, the fair value of financial instrument is calculated by using forward exchange rates at the balance sheet date.

31 December 2014 Unrealized 1 to 12 1 to 2 2 to 5 (Los s ) months years years Derivative instruments (5,075) - - - Forward contracts sales agreements - 53,345 - - Forward contracts purchase agreements - 48,656 - -

31 December 2013 Unrealized 1 to 12 1 to 2 2 to 5 (Los s ) months years years

Derivative instruments (599) - - - Forward contracts sales agreements - 63,969 - - Forward contracts purchase agreements - 63,136 - -

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.)

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 2014 Total cash outflow according to 1 to 3 Carrying contract Up to 1 months 3 to 12 Contractual maturity analysis val ue (I+II+III) month (I) (II) months (III) Non-derivative financial liabilities - Financial liabilities and finance lease obligations 49,393 49,393 1,280 17,799 30,314 Trade payables 537,216 537,216 421,779 73,990 41,447 Other payables to related parties 1,378 1,378 1,378 - - Payables to employees 26,568 26,568 20,270 4,685 1,613 Other payables 29,462 29,462 4 142 29,316

Non-current liabilities

31 December 2014 Total cash outflow according to 1 to 3 Carrying contract Up to 1 months 3 to 12 Contractual maturity analysis val ue (I+II+III) month (I) (II) months (III) Non-derivative financial liabilities Financial liabilities and finance lease obligations 220,163 220,163 109,234 8,070 102,859 Trade payables 1,900 1,900 1,900 - - Other payables 27,690 27,690 27,226 399 65

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ENKA İNŞAAT VE SANAYİ A.Ş. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014 (Amounts are expressed as thousands of U.S. Dollars (”USD”) unless otherwise stated. Currencies other than USD are expressed in thousands unless otherwise indicated.)

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 hierarchy

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.

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