Aydem Yenilenebilir Enerji : Consolidated Financial Statements For the Year Ended 31 December 2023

Aydem Yenilenebilir Enerji Anonim Şirketi and Its Subsidiaries

Consolidated Financial Statements For the Year Ended 31 December 2023

Güney Bağımsız Denetim ve SMMM A.Ş.	Tel: [phone]
Maslak Mah. Eski Büyükdere Cad.	Fax: [phone]
Orjin Maslak İş Merkezi No: 27	ey.com
Daire: 57 34485 Sarıyer	Ticaret Sicil No : 479920
İstanbul - Türkiye	Mersis No: 0-4350-3032-6000017

(Convenience translation of a report and consolidated financial statements originally issued in Turkish)

INDEPENDENT AUDITOR'S REPORT

To the General Assembly of Aydem Yenilenebilir Enerji Anonim Şirketi

1. Report on the Audit of the Consolidated Financial Statements

1. Opinion

We have audited the consolidated financial statements of Aydem Yenilenebilir Enerji Anonim Şirketi (the Company) and its subsidiaries the Group, which comprise the consolidated statement of financial position as at December 31, 2023, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the Turkish Financial Reporting Standards (TFRS).

1. Basis for Opinion

We conducted our audit in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and Independent Auditing Standards (InAS) which are part of the Turkish Auditing Standards as issued by the Public Oversight Accounting and Auditing Standards Authority of Turkey (POA). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics for Independent Auditors (Code of Ethics) as issued by the POA, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

A member firm of Ernst & Young Global Limited

1. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter	How our audit addressed the key audit matter
Valuation of power plants
Power plants comprises 85% of total assets of	Among the other audit procedures we performed,
the Group as at 31 December 2023. The Group	we assessed the qualifications, competencies and
measures power plants using the revaluation	independence of the professional appraisers
method as stated in Note 2.8 in the	engaged by the management.
consolidated financial statements; therefore,
management makes estimates and uses	We have evaluated the appropriateness of the
assumptions to determine those fair values.	information and assumptions used in the
The fair value is measured, as explained in	valuations. These include the estimates by the
note 2.8 to the consolidated financial	external appraisal firms (such as the market price,
statements, based on appraisal reports by	production volume and discount rate). For this
independent and external appraisers. For the	assessment, we involved valuation experts from
valuations, estimates are made of the expected	another entity that we have engagemed with to
future cash flows taking into account the related	support our audit. We assessed whether the
risks.	valuation methods as applied by appraisers are
	acceptable for the valuation of the power plants.
Detailed explanations on property, plant and
equipment are provided in Note 2.8 and Note	In addition, we have assessed the appropriateness
9.1 to the consolidated financial statements.	of the disclosures in the consolidated financial
	statements and notes regarding the above-
Since the valuation of power plants is complex	mentioned accounting policy, estimates used and
and highly dependent on estimates and	the valuation methodology and their conformity to
assumptions, and also given the magnitude of	TFRS.
the amounts involved, we consider the
valuation of power plants as a key audit matter.

(2)

A member firm of Ernst & Young Global Limited

3)	Key Audit Matters (Continue'd)
Key Audit Matter	How our audit addressed the key audit matter
Cash Flow Hedge Transaction
As stated in note 2.7, As of 31 December 2023,	Among the other audit procedures we performed,
the Group used its bond amounting to USD	we assessed the qualifications, competencies and
574.107.000 as a hedging instruments to	independence of the professional appraisers
hedge against the exchange rate risk resulting	engaged by the management.
from the highly probable sales income earned
in the scope of Renewable Energy Sources	We have evaluated the appropriateness of the
Support Mechanism ("YEKDEM") and bilateral	information and assumptions used in the
agreements, and implemented cash flow hedge	valuations. These include the estimates by the
accounting for highly-probable YEKDEM and	external appraisal firms (such as the market price,
bileteral agreement sales as a result of	production volume and discount rate). For this
efficiency tests carried out within this scope.	assessment, we involved valuation experts of a
		firm which is in our audit network to support our
The criteria for the application of the hedge	audit. We assessed whether the valuation methods
accounting include defining, documenting and	as applied by appraisers are acceptable for the
regularly testing the effectiveness of the hedge	valuation of the power plants.
accounting transactions. Due the fact that
hedge accounting has complicated structure	In addition, we have assessed the appropriateness
and requires complex calculations, we	of the disclosures in the consolidated financial
considered this to be one of the key audit	statements and notes regarding the above-
matters.	mentioned accounting policy, estimates used and
		the valuation methodology and their conformity to
		TFRS.

(3)

A member firm of Ernst & Young Global Limited

3) Key Audit Matters (Continue'd)

Key audit matter	How our audit addressed the key audit
	matter
Application of the hyperinflationary
accounting
As stated in Note 2.2 to the consolidated	Our audit procedures included the following;
financial statements, the Group has started to	• We inquired management responsible
apply "TAS 29 Financial Reporting in
for financial reporting on the principles,
Hyperinflation Economies" since the functional
which they have considered during the
currency of the Group (Turkish Lira) is the
application of TAS 29, identification of
currency of a hyperinflationary economy as per
non-monetary accounts and tested TAS
TAS 29 as of December 31, 2023.
29 models designed,
In accordance with TAS 29, consolidated	• We have tested the inputs and indices
used, to ensure completeness and
financial statements and corresponding figures
accuracy of the calculations,
for previous periods have been restated for the
• We have audited the restatements of
changes in the general purchasing power of
corresponding figures as required by
Turkish Lira and, as a result, are expressed in
TAS 29,
terms of purchasing power of Turkish Lira as of
• We assessed the adequacy of the
the reporting date.
disclosures in inflation adjusted financial
In accordance with the guidance in TAS 29, the	statements for compliance with TAS 29.
Group utilised the Turkey consumer price
indices to prepare inflation adjusted financial
statements. The principles applied for inflation
adjustment is explained in Note 2.1.
Given the significance of the impact of TAS 29
on the reported result and financial position of
the Group, we have assessed the hyperinflation
accounting as a key audit matter.

1. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with TFRS, 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.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

(4)

A member firm of Ernst & Young Global Limited

(Convenience translation of a report and consolidated financial statements originally issued in Turkish)

1. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

In an independent audit, our responsibilities as the auditors are:

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and InAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with standards on auditing as issued by the Capital Markets Board of Turkey and InAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

(5)

A member firm of Ernst & Young Global Limited

(Convenience translation of a report and consolidated financial statements originally issued in Turkish)

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

1. Report on Other Legal and Regulatory Requirements

1. Auditors' report on Risk Management System and Committee prepared in accordance with paragraph 4 of Article 398 of Turkish Commercial Code ("TCC") 6102 is submitted to the Board of Directors of the Company on 15 March 2024.
2. In accordance with paragraph 4 of Article 402 of the TCC, no significant matter has come to our attention that causes us to believe that the Company's bookkeeping activities for the period 1 January - 31 December 2023 and financial statements are not in compliance with laws and provisions of the Company's articles of association in relation to financial reporting.
3. In accordance with paragraph 4 of Article 402 of the TCC, the Board of Directors submitted to us the necessary explanations and provided required documents within the context of audit.

The name of the engagement partner who supervised and concluded this audit is Onur Ünal.

Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A member firm of Ernst & Young Global Limited

Onur Ünal, SMMM

Partner

15 March 2024 İstanbul, Türkiye

(6)

A member firm of Ernst & Young Global Limited

Aydem Yenilenebilir Enerji Anonim Şirketi and Its Subsidiaries

Contents

Consolidated Statement of Financial Position

Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flow

Notes to the Consolidated Financial Statements

Aydem Yenilenebilir Enerji Anonim Şirketi and Its Subsidiaries

Consolidated statement of financial position as at 31 December 2023

(Amounts expressed in terms of the purchasing power of the Turkish Lira ("TL") as of December 31, 2023, unless otherwise indicated.)

		Audited	Audited
	Notes	31 December 2023	31 December 2022
ASSETS
Current assets:
Cash and cash equivalents	3	1,393,347,665	2,131,820,839
Financial investments	27	626,629,118	585,511,774
Trade receivables		2,001,075,460	2,148,799,944
- Due from related parties	5	1,928,894,734	2,030,660,755
- Due from third parties	6	72,180,726	118,139,189
Other receivables		655,967,001	107,884,655
- Due from related parties	5	641,543,115	57,682,313
- Due from third parties	7	14,423,886	50,202,342
Inventories	8	21,071,412	20,830,560
Prepaid expenses	26	40,244,202	44,800,601
Other current assets	13.1	42,587	84,133
Total current assets		4,738,377,445	5,039,732,506
Non-current assets:
Other receivables		3,262,076	2,556,976
- Due from third parties	7	3,262,076	2,556,976
Property, plant and equipment	9.1	48,608,887,652	51,989,813,772
Right of use assets	9.2	254,120,885	259,469,472
Intangible assets	10	1,696,393,888	1,738,185,808
Investment properties		-	72,624,161
Prepaid expenses	26	272,515,676	667,874,306
Other non-current assets	13.2	33,227,884	18,177,915
Total non-current assets		50,868,408,061	54,748,702,410
Total assets		55,606,785,506	59,788,434,916

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

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Aydem Yenilenebilir Enerji Anonim Şirketi and Its Subsidiaries

Consolidated statement of financial position as at 31 December 2023

(Amounts expressed in terms of the purchasing power of the Turkish Lira ("TL") as of December 31, 2023, unless otherwise indicated.)

		Audited	Audited
	Notes	31 December 2023	31 December 2022
LIABILITIES
Current liabilities:
Short-term portion of long-term financial liabilities	23.1	1,495,046,954	1,657,468,152
Lease liabilities	23.2	16,625,292	8,962,032
Trade payables		403,201,926	782,958,490
- Due to related parties	5	11,435,775	12,727,319
- Due to third parties	6	391,766,151	770,231,171
Liabilities for employee benefits	12	11,764,821	5,490,644
Other payables		236,074	388,383
- Due to third parties	7	236,074	388,383
Current provisions		57,932,618	57,766,379
- Provisions for employee benefits	11.1	44,202,139	37,234,930
- Other short-term provisions	11.1	13,730,479	20,531,449
Other current liabilities	13.3	101,910,829	120,276,188
Total current liabilities		2,086,718,514	2,633,310,268
Non-current liabilities:
Financial liabilities	23.1	18,603,594,131	20,071,487,686
Lease liabilities	23.2	37,868,181	41,420,774
Other payables		50,402,202	66,256,354
- Due to related parties	5	50,402,202	66,256,354
Non-current provisions		68,561,192	57,245,791
- Provisions for employee benefits	11.4	68,561,192	57,245,791
Deferred tax liabilities	22	6,138,866,162	7,596,464,840
Total non-current liabilities		24,899,291,868	27,832,875,445
Total liabilities		26,986,010,382	30,466,185,713

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

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