Message from CEO

Dear Stakeholders;

We are deeply saddened by the earthquakes that started on February 6, 2023 and affected eleven of our provinces, causing tens of thousands of our citizens to lose their lives. I wish Allah's mercy to all our citizens who lost their lives, condolences and patience to their families and relatives, and urgent healing to our wounded as soon as possible.

We have endless faith that we will overcome these difficult days in unity and togetherness. As Zorlu Enerji, we have taken action to help the people of the region by mobilizing all our resources from the first day. We supported the provision of electricity supply by assigning our electricity distribution services teams in Adiyaman. We mobilized all our teams in Gaziantep and Kilis, our gas distribution region, and worked 24/7 to ensure that the region quickly got natural gas. We have sent our aid trucks to the region to quickly heal wounds in the entire earthquake region, especially in the province of Osmaniye, where our Gökçedağ Wind Power Plant is located. Our search and rescue teams and volunteer colleagues Decamped to the region from the first day of the disaster and actively participated in the works. On behalf of the rapid recovery of the region, we will continue to stand by our citizens with our projects that touch life in the coming period.

With these feelings and thoughts, I would like to present to you our second integrated annual report, in which we have compiled our activities and sectoral developments for the year 2022 with a sustainable future mission.

As we enter the second century of our republic, I am proud to share that our Company is moving forward with strong steps towards its goals for a more solid future.

With the increasing effects of the climate crisis in the world, natural disasters such as droughts, hurricanes and floods continue and the global health crisis is being kept under control, the year 2022 has become a year in which the world is trying to get used to the “new normal”.

In our sector, which is one of the main actors of the economy, energy geopolitics has become decisive in international relations. The energy sector's activity agenda mainly included supply security, climate crisis, digitalization, automation, electrification and mobility-based transformation.

The political relations that caused the energy crisis that seriously affected Europe, as well as the increase in energy prices, led to disruptions in food policies, deepening the chip and raw material problem that is already on the agenda. Difficulties experienced in the supply of high-priced chips and raw materials and logistics costs have been decreasing since the last quarter of 2022. The implementation of renewable alternative energy solutions can only produce a result in the medium term, taking into account the investment processes.

When we look at the steps taken in the field of sustainability in the global arena, we see that it was a year in which carbon targets were closely monitored. At November's COP27, the presidents of the world's two largest greenhouse gas emitting countries, the United States and China, met to restart cooperation in the field of climate change after a Decadent period of tension and gave hope to the world by reaching an agreement. On the other hand, discussing the need for sectoral and system-wide transformations on the table can also be considered as a positive step. According to the UN Environment Programme (UNEP)’s Emissions Gap 2022 report, the world needs to reduce emissions by 45 percent to avoid disaster and societies need to transform for a collective solution. The steps to be taken by the energy sector, which is one of the few important sectors in terms of reduction, will be extremely critical.

We should implement steps that will turn the energy crisis in favor of Turkey

Despite the developments around the world, the figures show that Turkey has maintained its employment and production, and has increased its exports, which are the most important stabilizing element of the current account deficit. If we can make a good use of this moment when the right time intersects with the opportunities we have and if we can quickly implement the moves that will turn the energy crisis in Europe in favor of both our country and our sector, we can make a new start. In this regard, I consider the natural gas discoveries made by our country in various fields valuable and I care about the rapid provision of gas to the service of the sector as an element that will change the balances in terms of investments to be launched in our country.

As a highly experienced and successful company in terms of ”new beginnings", we know from our experience that actors who have sufficient size, talent, technology and make quick decisions will stand out in this environment where the need for supply security is at an advanced stage. Based on this experience, as a company that has all the capabilities within it to take the necessary steps, we focus on producing local and regional solutions that touch this moment today, without waiting for tomorrow in the fields of both electric vehicles and solar panels. We are also working with our consumer brands ZES and electrip with the goal of implementing environmentally friendly and sustainable business models both in the field of solar panels and electric vehicle charging stations.

In this direction, we have continuously continued our efforts to increase the share of renewable energy in our production portfolio and improve our resource diversity throughout 2022. It became one of the most important agendas of our investment agenda, especially in electrification and energy efficiency-oriented businesses.

in 2022, our consolidated turnover reached TL 30 billion with an increase of 158%

As Zorlu Enerji, we achieved a healthy growth and profitability in 2022. The company's consolidated turnover increased by 158% compared to the previous year and reached TL 30 billion in 2022. During this period, EBITDA grew by 121% to TL 8.2 billion, while the Net Financial Debt/EBITDA ratio decreased to 3.8x. As a result of the strong growth in turnover and EBITDA, we closed the year 2022 with a net profit of TL 111 million.

During the year, in order to finance the investments we will make in the field of electricity distribution, we provided financing from international financial institutions, including the European Bank for Reconstruction and Development (EBRD), the Asian Infrastructure Investment Bank (AIIB), the International Finance Corporation (IFC), and the Netherlands Development Bank (FMO), as well as Denizbank for a total of $ 375 million, which will be paid back in Turkish lira. Dec.

We aim to grow healthy in Turkey with ZES and abroad with the electrip brand

We have expanded our electric charging station network. With ZES, we have started to establish our European-oriented growth teams abroad with our electrip brand in Turkey. We continue our studies with the aim of growing with charging station investments in Southern and Eastern Europe and obtaining a minimum Sunday share of 10% in the countries we have entered. Our goal is to maintain the leadership we have achieved in our country with ZES and to reach a considerable size for our electrip brand. We anticipate differentiation in energy management especially with the investments we will make in our software and digital technology infrastructure. As a company with customer experience points that are managed with a good platform and produce fast solutions, we have received our license from EMRA to carry out charging network management activities. With this license, in addition to installing our own charging stations, we can also activate the dealership process by issuing a certificate and make platform sales.

We have signed a first in the field of geothermal energy, where we are the leader in Turkey, and we have converted Alaşehir Geothermal Power Plant into a hybrid (unified energy) power plant with the support of a solar energy unit. This project will also be one of the leading examples of unified power plants in Turkey in terms of the technology it uses. On the other hand, we have serious geothermal discoveries that we have made in fields such as Aydın and Ağrı in order to evaluate when the investment climate is formed. With the support of the EU Horizon 2020 Program, especially geothermal, our fields continue to be used as pilot areas in many R&D projects. Dec. GECO, one of the projects we have implemented, is the first in the world in this field as an international carbon emission reduction project at our Kizildere 3 Power Plant, which is the largest geothermal power plant in Turkey.

We continue to make cooperation with both production and important manufacturers of the world in the field of solar panels. This year, we started to produce upper segment solar panels with our ZES brand for the first time. On the other hand, we continue to be the distributor of strong brands such as Solis and Enphase, which are world giants.

4 Among 57 companies in the world with our sustainability-oriented activities. Dec. We became.

another important investment area of 2022 was our stakeholder, community and planet-oriented works that we carried out in line with Zorlu Holding's Smart Life 2030 strategy. As a result of the assessment made by Moody's in 2022, we raised our rating on our activities in the ESG fields by 4 points compared to the previous year. Thus, we have increased our rating to the “Advanced Level” level with a total of 61 points. With the high success we have shown in our ESG activities, we have become the 4th among 57 energy companies that actively evaluate on a global scale. Dec. Our goal is to be able to move our grade much higher.

This year, with our sustainability strategy, we became one of the 14 companies included in the ‘Global Sustainability Leaders’ research prepared by Argüden Governance Academy from Turkey. We were among the first signatories of the “CFO Principles for Integrated SD Dec Investments and Financing” published by the “CFO Coalition” formed by UN Global Compact in line with the Sustainable Development Goals (SDGs). In addition, we became the first energy company to sign the international Science Based Targets Initiative (SBTi), which aims to eliminate the negative effects of the climate crisis by reducing them.

As an important step we have taken in the field of equality of opportunity, we have first equalized the number of women and men employees at OEPSAŞ. Then, we implemented the “Women's Power Future Power Program” in Gaziantep, one of our regions of activity, where we aim to train women technicians of the future as a project aimed at increasing women's employment in the technical business areas of our sector and as one of the good examples of public-academic-private sector cooperation.

Our activities were also awarded many awards throughout the year. The Zero Carbon Footprint Forests Project, which we have implemented on behalf of combating the climate crisis and a sustainable future, received the Silver Achievement Award at the Sustainable Development Goals Awards organized by the Corporate Social Responsibility Association of Turkey. We were awarded in the “Climate Action” category in the organization where organizations that contribute to the realization of the 17 Sustainable Development Goals defined by the United Nations were evaluated. Again, with the same project, we received the “Our Energy is Our Future” Award given within the scope of the Turkish Energy and Natural Resources Summit.

We were awarded as the best in our sector in the “Leadership in Ethical and Environmental Responsibility” category at the Communitas Awards organized by the International Association of Marketing and Communication Professionals (AMCP) with the social responsibility projects and sector-leading practices we have implemented on behalf of combating the climate crisis and a sustainable future.

Our efforts to become a company that touches the customer more with our infrastructure activities in the field of energy management are 16. It was crowned with the Gold Award in the field of “Contact Center of the Year” at the Stevie® Awards Sales and Customer Service Awards. In addition, all units of brands in Turkey that come into contact with the customer are evaluated by the customer satisfaction management A.C.E. We were selected as the “Brand that Manages Customer Experience the Best” at the Awards 2021 and won the ‘Diamond Award’ by taking the first place in the category of our industry. Thus, we have become the company that provides the best customer satisfaction in the ’Energy' category for the fourth time in a row.

We have signed a sponsorship that will be an example of industry and university cooperation in order to transfer their experiences to future generations and contribute to the efforts of young people to put forward their learning-based scientific projects. We also provide mentoring to the ITU ZES Solar Car Team by sharing our knowledge and experience far beyond financial support.

we are proud of the work we have done throughout the year 2022. But we have a long way to go. Our goals on this path are also clear. As a company that produces energy and directs the management and transformation of the energy it produces, we plan to reach net zero emissions in our operations and energy production by 2030, to make this goal to cover the entire value chain by 2040, and to become an institution that has reached net zero emissions in 2050. We also aim to invest at least 10 million TL in the field of biodiversity.

We wish that our integrated annual report, in which we share a comprehensive view of our company's performance with financial, social, environmental and governance dimensions and our future goals, as well as revealing that we put our ESG studies at the center of our business practices, explaining our plans for our sustainability journey, will provide a comprehensive view of our performance from all angles and inspire the entire business world, especially our sector, to work to create a more sustainable future.

in line with our domestic and international growth strategy, we will continue to work in 2023 with the goal of leading our sector in many areas.

I would like to thank all our shareholders, business partners, and all our colleagues who work with endless dedication under any circumstances, whose support we have always felt on our side during this process.

With love and respect,

Sinan AK

Head of The Sector