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Financial Statements

1) What is the link between statutory regulatory statements and IFRS financial statements

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The main differences between IFRS and statutory financial statements are:

1. Financial income

• Exists in both IFRS and statutory financial statements, however calculation differs

2. Capex reimbursements

• Part of statutory P&L, however not in IFRS due to application of IFRIC 12

• Adjusted in KPI “EBITDA + Capex reimbursements”

3. Capex outperformance

• Recognized in IFRS earnings, while it is only shown implicitly as a Capex reduction in statutory accounts

• Need to reclassify this EBITDA contribution from operating cash flow to investing cash flow when reconciling operational earnings

with cash flows

4. Fair value change of financial assets

• Only relevant in IFRS as a direct consequence of IFRIC 12 application

2) What is CAPEX reimbursements?

“CAPEX reimbursements” refer to the guaranteed capital return component of the investment returns (the other component being the WACC return,

i.e. financial income). In terms of a financial bond instrument, it is comparable to the return of the principal amount. In other regulatory jurisdictions

(e.g. the UK) it is also known as an “amortization allowance” as it can be thought to offset depreciation expenses if the depreciation and

reimbursement period are aligned. In Turkey the reimbursement period is only 10 years, while the depreciation period is until end of concession

period. As a result, Capex reimbursements currently grows much faster than depreciation expenses, which is why tax correction revenues are

recognized in Turkey to adjust for the difference. While Capex reimbursements are a revenue item in local GAAP and a cash-effective component of

operating cash flow, it is not part of the IFRS P&L, as also depreciation of previous investments is not part of the IFRS P&L. Both are a result of IFRIC

12 accounting (see above).

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3) How does the Capex reimbursement mechanism work?

• For the calculation of Capex reimbursements in the 3rd regulatory period, the actual allowed Capex of the 2nd regulatory period and the initial

allowed Capex for the 3rd regulatory period, as established by regulation, are relevant and represented above.

• Overspend Capex of the 3rd regulatory period only starts to be reimbursed at the beginning of the next regulatory period (from 2020).

Consequently, the real Capex reimbursement amount for each year of the 3rd regulatory period above is fixed ex ante. The nominal realization

of these amounts will only vary with inflation.

• Actual allowed Capex from the 1st regulatory period does not play a role in determining the reimbursements of the 3rd regulatory period as the

reimbursement period was only 5 years and therefore the related Capex has already been fully reimbursed within the 2nd regulatory period by

the year 2016.

• The unamortized amounts as of year-end 2020 represent the build-up of the regulatory RAB at this point in time.

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4) What is the return of a marginal 100mTL investment?

There are three scenarios with different return mechanisms for spending an additional 100mTL of Capex into the regulated asset base:

Scenario 1: Spending with the initial allowed Capex

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Scenario 2: ‘Front-loaded’ Capex, i.e. spending within the cumulated initial Capex allowance, however earlier than initially assumed

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Scenario 3: ‘Overspend’ Capex, i.e. spending in excess of the cumulative initial Capex allowance

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5) What is Regulated Asset Base?

The Regulated Asset Base is the cumulative balance of investments approved by the regulator, valued at regulated unit costs and adjusted for inflation,

net of the reimbursement of investments.

6) Why do you use “Operational Earnings” as your key earnings KPI instead of EBITDA?

“Operational Earnings” refer to EBITDA plus CAPEX reimbursements excluding exceptional items. Since in Turkey Distribution companies are not the

legal owners of the networks and we receive guaranteed investment return components, our Distribution companies are subject to the application

of IFRIC12 (an IFRS standard that governs accounting for service concession arrangements). As a consequence, we account our licence to operate and

invest in the networks as a financial asset. This asset is not depreciated but held at market value. Accordingly our P&L does not include depreciation

expenses of networks. Similarly our P&L does also exclude the reimbursement of Capex (i.e. the depreciation allowance) as a revenue item. This

means that our EBITDA figures compare unfavourably vs. international peers that do not apply IFRIC12 accounting. As a result we adjust EBITDA for

this item, which is a cash-effective component of our operating cash flow. Secondly, since our networks are accounted for at their market value, our

P&L may include significant mark-to-market effects whenever long-term assumptions regarding the value of these assets change (e.g. change of

regulated WACC). Since these effects cannot be predicted, are non-cash in nature and refer to all future periods until the end of the concession, we

adjust them from our EBITDA as exceptional item.

7) What is Underlying Net Income?

“Underlying Net Income” refers to reported Net Income excluding exceptional items. Exceptional items mostly refer to the mark-to-market effects

related to IFRIC12 accounting mentioned above, but can also entail significant non-recurring items related to prior periods. The resulting KPI is the

basis on which our dividend pay-out policy is applied.

8) How is IFRIC 12 affecting the reporting?

Since in Turkey Distribution companies are not the legal owners of the networks and we receive guaranteed investment return components, our Distribution companies are subject to the application of IFRIC12 (an IFRS standard that governs accounting for service concession arrangements). As a consequence, we account our licence to operate and invest in the networks as a financial asset. This asset is not depreciated but held at market value. Accordingly our P&L does not include depreciation expenses of networks. Similarly our P&L does also exclude the reimbursement of Capex (i.e. the depreciation allowance) as a revenue item. This means that our EBITDA figures compare unfavourably vs. international peers that do not apply IFRIC12 accounting. As a result we adjust EBITDA for this item, which is a cash-effective component of our operating cash flow. Secondly, since our networks are accounted for at their market value, our P&L may include significant mark-to-market effects whenever long-term assumptions regarding the value of these assets change (e.g. change of regulated WACC). Since these effects cannot be predicted, are non-cash in nature and refer to all future periods until the end of the concession, we adjust them from our both EBITDA and Net Income as exceptional item.

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9) What is Initial Allowed CAPEX?

CAPEX amounts granted to the distribution companies by EMRA at the beginning of the tariff implementation period. The initial allowed Capex is

announced as a cumulative number in real terms over the entire regulatory period of 5 years and then assumed to be equally distributed over all 5

years.

10) What is Actual Allowed CAPEX?

Actual allowed CAPEX corresponds to the actual investments executed in a given period and valued at regulated unit costs. They are different from

cash-effective Capex (to be found in the cash flow statement) for the same period for 3 reasons:

1. Actual unit costs are different from regulated unit costs (Capex outperformance)

2. VAT payment is not included, but will be incurred net of VAT incentive on specific Capex items

3. Actual Capex payments do not match the regulatory recognition/approval process

11) How should we think about the distribution earnings that are ‘not yet cash effective’, and how confident are you that you will get the cash

eventually?

The majority of our operational earnings are directly cash effective. However, we do have earnings that become cash effective with a time lag indeed.

There are two categories in our distribution business:

1. The first we explicitly label and quantify via ‘financial income not yet cash effective’.

These result from our investments, and arise in case we invest faster or more than originally assumed by the regulator. Thus far (mid 2018), we have

invested faster, but have not yet exceeded the initial CAPEX allowance. We assume we will do so around the turn of the year 2018. As a result, all of

our investment returns generated until year-end will become cash effective in the current regulatory period (until end 2020).

Any excess versus the original CAPEX allowance in this regulatory period is then becoming cash effective at the start of the new regulatory period

(2021).

The ‘return of principal’ (CAPEX reimbursements) follows a 10 year Schedule. For initially allowed Capex it starts within this regulatory period, for

overspend Capex it starts with the next regulatory period.

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2. The second category comes from our efficiency & quality earnings

In our efficiency & quality earnings, most incentive mechanisms are directly cash-effective via the related allowances. However, part of theft

accrual collection income, as well as the quality bonus is being remunerated by the regulator with a ‘T+2 mechanism’, i.e. 2 years later.

12) Are you worried about your level of debt, type of debt and debt progression?

Leverage is on the decline since many years, absolute net debt will also peak, and the ‘quality’ of the debt is extraordinarily high in the local context

Our leverage as defined by net debt/operational earnings has decreased from around 7x in 2014 to 2.9x at the end of 2017, and is expected to decline

further until year-end 2018.

Our absolute net debt stood at 8.8bn at 1H 2018, and is expected to decline until year-end. Other than around €60m payables, which are fully hedged,

and FX loans which are immediately swapped into TL to mimic TL loans, we do not have a FX loan exposure.

Around 82% of our loans are fixed rate bank loans with minimal covenants, and around 18% are CPI-linked bonds, matching our CPI exposure in the

operating business.

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The further progression of our net debt and leverage depends among others on our investments. Those we undertake based upon the needs of our

grids, the evaluation of the investment spread (difference between return and financing cost) as a measure for value add, as well as the overall cash

& funding situation of the company in the prevailing market circumstances.

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Regulation

1) What are the tariff implementation periods?

In Turkey, the regulation works in periods of 5 years, starting in 2006. We refer to these periods either as “regulatory periods” or “tariff

implementation periods”. Regulatory parameters are defined ex ante before the start of a new period and usually remain valid for the entire period

of 5 years.

1st tariff implementation period: Between September 1, 2006, and December 31, 2010

2nd tariff implementation period: Between January 1, 2011, and December 31, 2015

3rd tariff implementation period: Between January 1, 2016, and December 31, 2020

2) What is National Tariff?

National Tariff is composed of a regulated “Retail Energy Sales Tariff” (including, among others, energy procurement costs (i.e. the cost of electricity

generation) and the regulated gross profit margin for Retail companies), and a regulated “Distribution Tariff” (including, among others, the regulated

investment returns and efficiency & quality allowances for the Distribution companies as well as transmission fees).

3) What is Distribution Tariff?

Regulated distribution tariff which is determined by EMRA, including: I. the cost of operating and maintaining the distribution network,

II. reimbursement of CAPEX and return on RAB (related to WACC), III. cost of supplying energy for theft and loss and general illumination, IV. transmission fees (calculated through transmission tariffs and passed on to the state-owned transmission operator), V. fixed meter reading fees,

VI. meter replacement costs, and

4) What is Retail Energy Sales Tariff?

Regulated retail sales tariff which is determined by EMRA, including: I. energy procurement costs,

II. gross profit margin (which is currently set at 2.38% for the period between 2016 and 2020), and III. other market costs and costs associated with the provision of the retail services

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5) Who are Eligible customers?

Eligible customers in Turkey have the option to choose their energy supplier in the liberalized market, i.e. a supplier different to the incumbent supplier of the respective region. Customers are eligible if

I. They consume equal to or more than the eligibility limit determined by EMRA (i.e. 2.0 MWh per year since January 2018), II. customers in the premises connected to transmission lines

III. they are directly connected to transmission lines (i.e. lines with 36 kV and above high voltage level) and IV. they are organized industrial zones, irrespective of their consumption level

6) Who are regulated customers?

All ineligible customers and eligible customers who choose to remain in the regulated market. The sales price to regulated customers is defined by the National Tariff.

7) Who are residential and SME customers?

Customers consuming up to 400 MWh per year.

8) How long are the current concession periods and what is the process for renewal? Our distribution companies (AYEDAS, Baskent EDAS and Toroslar EDAS) hold distribution licenses for their distribution operations and our retail companies (AYEPSAS, Baskent EPSAS and Toroslar EPSAS) hold supply licenses for their retail sale operations. The expiry dates of the licenses are as follows: AYEDAŞ: December 31, 2042 Baskent EDAS: September 1, 2036 Toroslar: December 31, 2042 Since the electricity retail market in Turkey is being liberalized, a further extension of regulated retail licences will not be required and we will remain the owners of our retail customer portfolio post these dates. For the Distribution business, when these licenses expire, a new tender process will be held with two potential outcomes:

1. We win the tender process and can continue to operate the networks in our regions 2. We lose the tender process and receive the unreimbursed regulated asset base

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9) What is the mechanism for additional CAPEX Allowances?

As the regulation in Turkey on the one hand obliges Distribution companies to execute all new connections (whether in the scope of the initial Capex allowance or not) and on the other hand explicitly allows and even encourages investments beyond the scope the initial Capex allowance, there is a clearly defined process of when and how to apply for additional Capex allowance. Whenever a Distribution company reaches 80% of the cumulative initial Capex allowance for a given regulatory period an application for additional CAPEX allowances may be made to the regulator EMRA. Following the approval by EMRA, the additional Capex allowance can be spend and will start to be reimbursed at the beginning of the next regulatory period (adjusted for the time value of money).

10) What are Tariff Parameters for Enerjisa Distribution Companies?

Tariff details defined by EMRA are available at EMRA’s webpage: http://www.epdk.gov.tr/TR/Dokumanlar/Elektrik/Mevzuat/KurulKararlari

11) How do you see your cash flow exposure with respect to ‘government intervention’, change in government course of action etc? We collect money from customers, not the government. Towards state entities we have a payables rather than receivables position.

All of our cash flows from our Retail and Distribution business come from customers. Therefore, just like any other company, our risk is that customers

do decide for a different supplier (free market sales) or pay their bills later than contractually foreseen.

We do not receive any money from the government, nor do we have receivables or similar against the government (the only minor exception being

income received from municipalities for providing general lighting as a regulated activity of Distribution companies). On the contrary, Retail companies

rather have a payable to the state and/or municipalities, as the collected end-customer invoice also includes taxes and levies.

Furthermore, for the majority of our Sales and Distribution cash flow, our own sales channels actually act as the collection vehicle.

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Both our Retail and Distribution companies however have cash flow relationships with state-owned entities. First and foremost with EÜAŞ (formerly

TETAŞ, the state-owned electricity wholesale company) from both the price equalization mechanism, as well as the procurement of energy for

regulated activities (regulated sales, theft and loss as well as lighting). On balance, the latter is much more significant than the former, which is why

this is mostly a payable relationship. The second state-owned entity is TEİAŞ (the state-owned transmission company) to which our Distribution

companies owe the transmission-related component of the end-customer electricity bill, i.e. exclusively a payable relationship.

There is no direct cash flow relationship to the regulator EMRA, however a lot of information exchange so that EMRA is able to revise the electricity

tariffs on a quarterly basis to ensure that via the different mechanisms all sector players receive the money they are owed from the overall system

based on their actual performance.

12) Are you expecting the regulator to become tougher on the industry? What kind of claw backs may come? We cannot foresee the future actions of the regulator, nor any other future developments. We do however take comfort from the past regulatory

actions going back to the first regulatory period starting in 2006.

From the beginning the regulator has send clear signals, that investments into the electricity grid infrastructure are needed, structuring the incentives

in a way that operators can expect high real returns with quick pay-backs. Furthermore, appropriate benchmarks are set to ensure a continuous

development in efficiency & quality.

On the Distribution side, the regulator has shown a clear behavioural logic for adjusting both investment as well as efficiency returns over the past

year. Investment returns, i.e. the WACC, has been adjusted according to macroeconomic pressures mainly stemming from real TL financing cost as

well as FX development (considering that a major part of the sector debt is not in local currency).

Efficiency & quality returns have been adjusted on a continuous basis. Examples include the start of the third regulatory period in 2016 and recently

at year-end 2017, in order to increase the scope of activities of Distribution companies, shield those companies from uncontrollable costs and

incentivize regulatory priorities such as theft reduction and service quality improvements.

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Other

1) On which stock exchange is Enerjisa traded and what is the stock symbol?

Enerjisa Enerji shares are traded in Borsa Istanbul (BIST). Stock symbol is ENJSA.E

2) Which indices is Enerjisa Part of?

BIST 30 BIST 50 BIST 100 BIST ELECTRICITY BIST STARS BIST ISTANBUL BIST IPO BIST ALL SHARES BIST SERVICES FTSE All-world Index

3) Since when has Enerjisa been listed on the stock exchange?

Enerjisa shares started trading at BIST on February 8, 2018.

4) What is Enerjisa’s ownership structure?

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5) What is Enerjisa’a paid in capital?

Enerjisa’s paid in capital amount is 1,181,068,967.12 TL.

6) How many outstanding shares does Enerjisa have?

Enerjisa’s total number of outstanding shares is 118,106,896,712. Shares are traded in lots of 100.

7) What is the free float?

20% of our shares are free floating.

8) What are the business areas of Enerjisa?

Our business operates in two segments, namely the retail and distribution segments. Our distribution companies (Baskent EDAS, AYEDAS, and

Toroslar EDAS) operate the electricity distribution networks (up to 36 kV), whereas our retail companies (Baskent EPSAS,AYEPSAS and Toroslar

EPSAS) supply electricity to our end-users.

9) What are the group companies of Enerjisa?

Our Subsidiaries Place of

incorporation and operation

Proportion of ownership interest and voting power held by the Group %

Principal activity

30 June 2018

Başkent Elektrik Dağıtım A.Ş. Ankara 100 Electricity distribution services

Enerjisa Elektrik Perakende Satış A.Ş. Ankara 100 Electricity retail services

İstanbul Anadolu Yakası Elektrik Dağıtım A.Ş. İstanbul 100 Electricity distribution services

Enerjisa İstanbul Anadolu Yakası Elektrik Perakende Satış A.Ş.

İstanbul 100 Electricity retail services

Toroslar Elektrik Dağıtım A.Ş. Adana 100 Electricity distribution services

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Enerjisa Toroslar Elektrik Perakende Satış A.Ş. Adana 100 Electricity retail services

Enerjisa Müşteri Çözümleri A.Ş. İstanbul 100 Customer solutions and distributed generation services

E-şarj Elektrikli Araçlar Şarj Sistemleri A.Ş. İstanbul 80 Electric vehicles and charging stations equipment services

10) How many people does Enerjisa employ?

Enerjisa has 9,706 employees as of 30 June 2018 on a consolidated basis.

11) When is Enerjisa’s fiscal year?

Fiscal year of Enerjisa is the 12-month calendar year (January - December).

12) How often does Enerjisa report Earnings? When does it release its financial results?

Enerjisa releases its financials every three months in compliance with CMB rules. Among the listed companies, Enerjisa is one of the earliest

companies to disclose its quarterly financials. Please visit Investor Calendar for more information.

13) How can I find historical financial information on Enerjisa?

Our Consolidated Financial Statements can be found in the below link:

https://www.enerjisainvestorrelations.com/en/reports-presentations/consolidated-financial-statements

14) Where can I find Enerjisa’s Annual Report?

Our Annual Report can be found in the below link:

https://www.enerjisainvestorrelations.com/en/reports-presentations/annual-reports-menu

15) Where can I find Enerjisa’s Investor Presentation?

Our Investor Presentation can be found in the below link:

https://www.enerjisainvestorrelations.com/en/reports-presentations/company-presentations

16) Where can I find Enerjisa’s Articles of Association?

Our Article of Association can be found in the below link:

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https://www.enerjisainvestorrelations.com/en/corporate/articles-of-association

17) Where can I find Enerjisa’s Code of Ethics?

Our Code of Ethics can be found in the below link:

https://www.enerjisainvestorrelations.com/en/corporate-governance/code-of-ethics

18) Where can I find Enerjisa’s Public Disclosures? Our Public Disclosures can be found in the below link:

https://www.enerjisainvestorrelations.com/en/kap/material-disclosure

19) Where can I access Enerjisa’s Corporate Governance Compliance Reports?

Our Corporate Governance Compliance Report can be found in the below link:

https://www.enerjisainvestorrelations.com/en/corporate-governance/corporate-governance-compliance-report

20) When is the Annual General Assembly of Enerjisa? The Company held its Ordinary General Assembly for 2017 on May 29, 2018. The minutes of the meeting were announced to the public on our website and at PDP. https://www.enerjisainvestorrelations.com/en/corporate-governance/general-assembly-top

21) What is Enerjisa’s dividend policy? Our dividend policy can be found in the below link:

https://www.enerjisainvestorrelations.com/en/corporate-governance/policies/dividend-policy

22) When did the last dividend payment made? Enerjisa pays dividends annually after the approval of the Annual General Assembly. The first dividend payment of Enerjisa was realized on 3 April 2018.

23) What is Enerjisa’s disclosure policy? Our disclosure policy can be found in the below link: https://www.enerjisainvestorrelations.com/en/corporate-governance/policies/disclosure-policy

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24) Does Enerjisa have a credit rating? On December 19, 2017 Fitch Ratings confirmed our national long-term rating at “AA(tur)” with a stable outlook for Enerjisa Enerji A.Ş. after already confirming the same rating for our Başkent EDAŞ subsidiary.

25) Whom can I contact regarding Enerjisa’s shareholder questions? For shareholder questions, please send an e-mail Investor Relations at investorrelations@enerjisa.com or call +90 212 385 8984. https://www.enerjisainvestorrelations.com/contact