Message from the CEO

Dear Shareholders,

2019 started with the fear of recession in the world; with the effect of trade wars between the USA and China, uncertainties about Brexit, and negative indicators from European economies and increased geopolitical risks, the FED and the European Central Bank switched to easing monetary policy and cut interest rates. These developments had a positive impact on stock markets in emerging markets and also supported the rebalancing process in Turkey.

Turkey’s economy turned to negative territory in the last quarter of 2018 and continued on the same path during the first two quarters of 2019. Growth resumed with 1% in the third quarter and 6% in the fourth quarter, closing 2019 with an annual growth of 0.9%. In the second half of 2019, a moderate recovery ensued in the economy with the fall in the fluctuation of the exchange rates and strong export and tourism revenues. In 2019, the energy industry in Turkey suffered from lower electricity prices, the effect of higher fuel and operating costs and worsening funding conditions, in addition to the slowdown in macroeconomics, fluctuations in oil supply and oil prices and developments against TL in exchange rates.

Despite the difficult conditions of 2019, with our experience of 31 years in the energy sector and with our installed power of 1,224 MW, we are one of Turkey’s largest energy companies. We pursued all the opportunities in order to sustain our operations in a healthy financial structure, and despite the uncertainties in the market, we are proud of our operational and financial achievements. In 2019, our Company completed a successful year with a turnover of TL1.8 billion, TL346 million EBITDA and we reached an asset size TL6.9 billion. Our company created the highest EBITDA in its history in 2019 with the effect of its balanced production portfolio and proactive approach in raising the level of operational profitability.

As one of Turkey’s largest energy companies, we continued our efforts unabated in 2019 as well, to serve our country. Within the scope of our basic strategy, while we operate our existing power plants in an optimum manner according to market prices, we developed and pursued a range of different ideas and projects that will create added value for our Company in the market. In order to consolidate our financial position and carry out our market activities with a stronger structure and with a higher level of confidence in 2019, when financial sustainability has emerged to be of paramount importance, we provided refinancing with a long-term repayment plan and advantageous conditions in favor of our Company’s total current debt amounting to USD 859 million. In addition, we reduced our sensitivity to exchange rate fluctuations by reducing the exposure of our Company to exchange rate risks by converting a significant portion of our loan into Turkish Lira. We undertook this exercise within the context of financial restructuring and in line with our company’s cash-generating capacity. Thanks to our cash flow, which is relieved by the restructuring of the loan, the competitive position of our Company will be further strengthened. In addition to the restructuring in 2019, the rise in the value of our Company’s assets through revaluation has also affected our financial standing positively. With our more robust financial structure and with our 1,224 MW installed power, we meet 3% of Turkey’s energy needs. We closely follow the innovations and developments in the fields we operate and work to adapt to changing market conditions. Despite the restrictive factors such as low market prices and low trade volume in the futures markets due to high hydroelectric production in 2019, Akenerji was successful in terms of operational profitability with its balanced production portfolio, experience in trade, and its proactive and innovative approaches. Akenerji continues its active and leading role in the Turkish electricity market. In speculative trading, together with the reduction in liquidity in recent years in Turkey’s energy market, the Company has expanded its trading volume in international electricity markets 2.5-fold compared to 2018 reaching a 217 GWh transaction volume in 5 countries by making use of physical and financial products, with risk management and expansion strategies. Thanks to the experience and information technologies infrastructure that we have in Turkey’s Energy Market, we have expanded our plant management services we provide to third party plants without the need for additional investment. We increased the number of power plants we serve to 10 and the total installed power to 300 MW. At Akenerji, we closely follow the natural gas market as well as the electricity market. With the strategy of being more active in the spot market for 2020, we activated our natural gas license and completed our preparations to operate in the spot market. In the coming period, we aim to reduce our natural gas supply costs and to play an effective role in the natural gas trade and sales by evaluating the LNG or spot gas import conditions. Akenerji continued to be one of the companies providing the highest contribution to Turkey’s economy in 2019 as well. Akenerji ranked 161st in the Istanbul Chamber of Industry’s research “Turkey’s Top 500 Industrial Enterprises 2018”.  And in Turkey’s largest 500 companies in the Fortune 500 research, Akenerji ranked 128th.

Akenerji, one of the leading players in the industry, continued to support the industry on every platform related to the energy market. We were one of the biggest sponsors of ISTRADE, which was held for two days in Istanbul in 2019. We supported as “Premium” sponsor at the “Turkey Energy Summit” that was held in Antalya under the auspices of the Ministry of Energy and Natural Resources and brought together all players in the Turkish energy sector. We were also the “Energy Sponsor” at the AYD Shopping Economy Summit. As in previous years, in 2019 as well we continued our activities in the areas of social responsibility and sustainability. In all our activities, it has always been our basic principle to add value to our country, contribute to the environment and be beneficial to the society. We reinforced our respect for the society with our local public awareness meetings in the power plant regions, and our understanding of high-standard, environmentally and society-friendly service with our GRI Sustainability Report. Children in Saimbeyli District of Adana, where Himmetli and Gökkaya power plants of Akenerji are located, met again this year at the “Kite Festival” organized with our contributions. In the same region, the toys we brought to Adana with the cooperation of the Saimbeyli District Governorship and the Police Headquarters were a treat for the children. It was worth everything to see the happiness on the faces of the children at the Himmetli Secondary School and the Yardibi Ortaoba Primary School. In 2019, despite the numerous uncertainties and negativities in the world, in Turkey and in our sector, we, at Akenerji, achieved successful results in financial and operational terms, with our proactive approach and the correct and timely decisions we took. Thanks to the effective teamwork, solidarity and efficient collaborations that our employees show with dedication, we were able to overcome all these difficulties with the best possible outcomes, by meeting the challenges we faced throughout the year. I strongly believe that by continuing this understanding in 2020, we will achieve milestone successes with our employees.



Chief Executive Officer