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Project Delta Confidential Information Memorandum \| December 2021 Strictly private and confidential IFC 1Table of contents Section Page I Executive summary 2 II Key investment highlights 10 III Business model overview 23 IV Financial overview 53 V Appendix 70 IFC I. Executive summary IFC 3DeFacto : Leading innovative fast -fashion retailer with a global vision Overview Financial performance1At a glance Key figures EBITDA margin1 excl.IFRS 16 (2021B)c.14% Net sales1 (2021B)c.TL 7.3 bn Total net selling space2427k sqm # of stores2495 Annual online visitors toDefacto.com115+ mn →Founded bytwo shareholders with complementary backgrounds infast-fashion retailing and textile production, DeFacto (the “Company ”)isaleading Turkish fast- fashion retailer with presence inover 90countries -495 stores globally ;301 stores inTurkey, 168 stores in18international markets, and 26franchise stores inover 10countries -Sales from stores account forc.75%ofNet sales in2021 B,while remaining c.25% arerealized through online and other channels ;established omnichannel model →DeFacto operates with abalanced strategy ofTurkey and international sales -Turkey sales (55%ofNetsales ):DeFacto stores arewidespread inalmost every city inTurkey athigh traffic locations both inmain streets and shopping malls, registering yearly footfall of300+mnvisitors3 -International sales (45%ofNet sales ):International stores are currently located mainly inMENA and CIS, while the strategy toramp -uppresence indeveloped countries with a“more online, lessphysical ”model isattheimplementation stage →The Company has become atrue omnichannel retailer with continuous investments, adapting tochanging trends and customer needs, resulting instrong sales growth especially through online channels →Asone ofthe“love brands” inTurkey, DeFacto boasts ahigh brand awareness score among itscompetitors, and commands thesecond highest market share4inTurkey →DeFacto places operational excellence attheheart ofitsoperations, with itsfocus on HR, anagile store management strategy, best -inclass automated warehouse investments, in-house ERP system and continuous technological investments →Ozon Tekstil (“Ozon ”),DeFacto’s wholly owned -subsidiary, brings in-house supply arrangement capability aswell asexposure toglobal best practices, through its relationships with leading multinational brands →Solid financial performance with real topline growth and c.14%EBITDA margin ; excluding IFRS 1614.4% 10.4% 15.2% 16.0% (1) Big 4 audited IFRS financials for the historical period of 2019 -2020, excluding IFRS 16 effect (2) As of October 2021, for 469 stores excluding franchise s(3) Pre -Covid -19 figures (4) Apparel retail market share as of Q2 2021 (5) Calculated excluding Defacto.com operations in international markets ,which areat ramp -upstages , both at Net sales and EBITDA levels Source: Company, Euromonitor, IPSOS, TUIKOnline sales (2021B)c.20% International sales (2021B)c.45% Turkey sales (2021B)c.55% 2022E 2019 2020 2021B 2026E39,429 4,564 4,2237,34413,067+27%+40%14.6% 14.3% 10.3% 13.8% 15.2% 13.8% Net sales (TL mn)EBITDA margin5 excl. IFRS 16CAGR EBITDA margin excl. IFRS 1617% vs CPI IFC 4 DeFacto penetrated high -growth emerging markets through timely and effective execution, expanding to more than 10 countries within a three -year time frame It took only 6 years for DeFacto to become the second largest apparel retailer in TurkeyExecutive summary Distinguished player with unique operational DNA forgrowth and innovation Established as a male only retailer by native entrepreneurs with vast experience in retail and textile production First store opened in IstanbulCategory expansion Aggressive land grabbing strategy with strong execution Store expansion in Turkey through organic store roll -out and store acquisitionsContinuous investment to improve operations with fully automated warehouse investments New category launched: Baby and athleisure International sales reached up to 20% of Net sales Internationalization milestone: 100thstore in Morocco Launch of DeFacto AcademyNew category launched: Denim Cooperation with Solvoyo2to implement algorithmic replenishment system and other machine learning - based modules Professionals being assigned top management rolesNew category launched: Studio collectio n Internationalization milestone: Expansion to East Asia with Malaysia and first EU store in Romania Reached 450+ storesFirst stores openings in Macedonia and Montenegro Berlin flagship store opening in Q4 2021 Internationalization journey and brand investment strategy continue…Investing in fully integrated omnichannel capabilities Globalizing brand with continuous omnichannel expansion Launch of e -commerce websites in Germany and the UK, and surge in online sales, testaments to DeFacto’s adaptable modelSwift expansion inTurkey Applying expertise garnered inTurkey tohigh -growth emerging markets New category launched: Kids New international markets: Iraq, Egypt, Belarus Minority investment from Franklin Templeton1Internationalization journey start edwith first international store opened in Kazakhstan Design office inaugurated in Barcelona with respected designers 2005 2011 2012 2013 2014 2016 2017 2018 2020 2021 -… 2019 2,649 3,531 4,564 4,223 Net sales (TL mn)7,344First e -commerce sales in Kazakhstan, Egypt, Morocco and Iraq Turkey’s first Smartest Digital Fashion store in Akasya Mall Istanbul # of stores in Turkey3 # of stores in international markets3 (1) Executed in 2015 (2) Third -party s ystem provider (3) Excluding franchise stores ( 4) As of October 2021 Source: Company3014299 153 307 146 332 141 325 98 2,033 323 642 133163 238 4 20 1684 IFC 5Executive summary Brand of the future: DeFacto making the right moves in an ever -changing landscape Source: CompanyDeFacto is always one -step ahead to welcome fashion’s new trends and opportunities Embracing new norms of fashion at all capacity Digital transformation Online penetration and digital infrastructure investments are multiplying 1 Omnichannel transformation Agile operati onal model mix enabling “Buy online; Pick - up in store” 2 Experience stores Stores are meant tobefor beyond shopping 3 Casual fashion Homewear has gained momentum with work -from - home becoming the new norm 4 Sustainability It is not an option but a priority 5Precise focus on to gearing up online channel through continuous investments in operational infrastructure, technology and company culture DeFacto follows multi -platform approach to support its online presence via Defacto.com and marketplaces Responsiveness to customer needs represents the fulcrum of DeFacto’s operating model Omnichannel solutions such as Pay-at-store and Buy online; Pick -up in store options areavailable across markets Strategic allocation of channel mix to fuel further growth and profitability with optimal resource allocation Online sales facilitate access to international markets by promoting brand awareness with limited initial investments One-stop shop approach to capture emerging trends with flexible and agile operational maneuver Key pillars of DeFacto’s philosophy for happy customers: Fashion -forwardness, Dynamism, Consciousness, Empathy Sustainability is a core value deeply embedded in DeFacto’s operations and fully subscribed by management Emerging trends in fashion… …opening new horizons for DeFacto 1% c.20% 2015 2021BSurging online share in total sales IFC 6Executive summary Expansion -led strategy playbook customized for each sales channel Other2Turkey International3Financial
customer needs represents the fulcrum of DeFacto’s operating model Omnichannel solutions such as Pay-at-store and Buy online; Pick -up in store options areavailable across markets Strategic allocation of channel mix to fuel further growth and profitability with optimal resource allocation Online sales facilitate access to international markets by promoting brand awareness with limited initial investments One-stop shop approach to capture emerging trends with flexible and agile operational maneuver Key pillars of DeFacto’s philosophy for happy customers: Fashion -forwardness, Dynamism, Consciousness, Empathy Sustainability is a core value deeply embedded in DeFacto’s operations and fully subscribed by management Emerging trends in fashion… …opening new horizons for DeFacto 1% c.20% 2015 2021BSurging online share in total sales IFC 6Executive summary Expansion -led strategy playbook customized for each sales channel Other2Turkey International3Financial performance (TL mn)Stores Online →301 stores ;foothold inalmost every city →Attracts 300+mn1footfall annually →Strong brand investment and category extension and optimization strategy →Captured strategic locations infrequented venues with high consumer traffic →Land grabbing strategy completed after years ofexpansion -ledstrategy execution ;always opportunistic forattractive locations→Initiated with the establishment of Defacto .com platform in2012 →Constant improvement with beter inventory management techniques →Increased partnerships with marketplaces to fuel further growth inonline channel →Enhanced omnichannel capabilities by streamlining the processes across channels tofulfill customer needs with Pay-at-store and Buy online and Pick-upinstore options→Covering allareas ofretail through wholesale channel, inaddition tostore network in Turkeyc.75% c.20% c.5% →Replicating proven success inTurkey with rapid expansion inattractive emerging markets such asMENA and CISregions →Reached 168 stores (in 18 countries) internationally inadecade →Ongoing expansion inattractive markets →Flagship store openings in developed markets starting from 2021 ;“more online, lessphysical”→Bolstered the market presence with the launch of Defacto.com platform in 2019 in key international markets →Continuous collaboration with global/local marketplaces to boost online presence →Strategic gateway in penetrating developed markets ahead of offline, to promote brand awareness and gain traction via marketplaces followed byDefacto.com→Franchise system to support store roll -out strategy in international markets is key for growth (currently 26 stores ), especially where local expertise is crucial to overcome regulatory and operational hurdles →Well -established supplier relationships of Ozon with international retailers, primarily Primark and C&A, contributing to DeFacto sales through exports 2026E 2022E 2019 2021B 20204,063 3,2625,5559,55717,052 +17%+25% 2022E 2019 2020 2026E 2021B233 707 1,4012,81019,726+145%+70% 2026E 2022E 2021B 2019 20202673882547002,651 +20%+47% # of effective stores % share in Netsales % share in 2021B Net sales318 300 308 340 146 149 160 2664% 11% 10% 20% 1% 6% 9% 30%Strategy 316 18111% 11%c.55% c.45% % share in 2021B Netsales (1) Pre -Covid -19 figures (2) Other category consists of Wholesale, Franchise and Ozon sales to third -partie s (3) Consists of Developing markets and Developed markets Source: Company IFC 7 Source: CompanyExecutive summary Offering broad assortment of products for the whole family, centered around one -stop shop strategy Men Core segment , unique know -how and experienceWomen Key segment targeting the broad wardrobe with focus on fashionBaby & kids Fast growing category, key to complementing all family needsAccessories Support category to drive frequency of visits and boost sales transactionsFootwear Complementary category to enable complete outfit building Homewear Sportswear Expansion category to respond to changing customer needsCore segments Complementary segments c.80% c.20% New category Global brand with agile portfolio management strategy and customer responsiveness built on the key brand pillars o f: Fashion -forwardness; Dynamism; Consciousness; Empathy Focusing on more value -added SKUs and kids' category to ensure profitable growthTrusted brand, offering high quality standards at affordable pricesSeason range styling and tailor -made offerings to suit local preferences Addressing consumer needs with dynamic product portfolio % share in 2021B Net sales IFC 8 Source: CompanyExecutive summary Brand house of DeFacto : Enjoy/Embrace the new you DeFacto’s key features… …attracting customers with different characteristics Enjoy/Embrace the new youDynamic and bold Trendy and forward thinker Conscious Selfexplorer Global mindedPromises to bring “ feel good ” factor with comfortable products Unique design capability Aims to be the best friend of its customer by offering quality at value prices Embraces differences with different sub -brands for each customer type Tailor -made offerings befitting diverse lifestyle preferences All communicated within the marketing tagline of “The Joy of Refreshing Life”Strong brand portfolio led by DeFacto umbrella brand enriched with distinguished sub -brands DeFacto FIT DeFacto Coool DeFacto Modest DeFacto Studio DeFacto Plus IFC 9Executive summary Transaction structure →Project Delta refers tothe contemplated minority stake sale of10.67%treasury shares ofDeFacto owned bytheCompany (“Proposed Transaction ”) →Staying true totheir ambition ofbuilding alisted global fast-fashion brand, DeFacto shareholders continuously channel their efforts into establishing astructure with well-invested operations and visionary corporate culture .Inthis respect, the shareholders sold 10.67%minority stake toagroup offinancial investors ledby Franklin Templeton (“FT”)in2015 ,tosupport theCompany foritsfuture IPO →Having reached theend ofitsinvestment horizon, DeFacto isbuying back itsshares with aview toplacing these shares with anew investor that will support the Company’s growth and realize itsIPOplans inthemedium term -The buy back ofshares ismostly completed and targeted tobefinalized in January 2022 →Inthis respect, DeFacto has appointed ÜNLÜ &Cotoactasitsexclusive financial advisor intheProposed TransactionTransaction scope Transaction timeline Shareholding structure1 DeFacto Ozon Tekstil100%NDA CIM distributionLimited Q&A & MMIndicative Offer due dateBinding bidsSigning Initiation of due diligencePhase II Phase I January 27th, 2022 →Due diligence period for a limited number of selected potential investors →Virtual dataroom access along with Q&A process →Management presentations and site/store visits →Exact timetable for Phase II to be circulated in a separate process letter for short -listed potential investorsPhase I details →Distribution of the CIM →Limited Q&A process for key questions and clarification requests →A meeting with the management (“ MM”) to be arranged upon request of the potential investors →Non-binding terms & conditions for Indicative Offer due by January 27th, 2022 →Selected potential investors will be granted access to a virtual dataroom Phase II detailsFounding shareholders2 ShareholdingDeFacto Teknoloji100% Int. subsidiaries3100%The Company 89.33% 10.67% (1) Presents the target as of January 2022 (2) Zeki Cemal Özen with 66.5% shareholding, İhsan Ateş with 13.7%, İdris Özçelik with 4.6%, Şahin Demir with 4.6% (3) Consists of wholly owned subsidiaries in international markets Source: Company IFC II. Key investment highlights IFC 11Key investment highlights Strategic positioning of DeFacto Innovative fast - fashion retailer, meeting global quality standards, at affordable pricesVision
I details →Distribution of the CIM →Limited Q&A process for key questions and clarification requests →A meeting with the management (“ MM”) to be arranged upon request of the potential investors →Non-binding terms & conditions for Indicative Offer due by January 27th, 2022 →Selected potential investors will be granted access to a virtual dataroom Phase II detailsFounding shareholders2 ShareholdingDeFacto Teknoloji100% Int. subsidiaries3100%The Company 89.33% 10.67% (1) Presents the target as of January 2022 (2) Zeki Cemal Özen with 66.5% shareholding, İhsan Ateş with 13.7%, İdris Özçelik with 4.6%, Şahin Demir with 4.6% (3) Consists of wholly owned subsidiaries in international markets Source: Company IFC II. Key investment highlights IFC 11Key investment highlights Strategic positioning of DeFacto Innovative fast - fashion retailer, meeting global quality standards, at affordable pricesVision to become a global retail brand 1 Well -balanced internationalization strategy; benefiting from its omnichannel model 2 Multi -platform/diversified approach to online sales 3 One-stop shop approach offering a broad assortment of products addressing the whole family 4 Unique brand, well -positioned to benefit from attractive global trends 5 Strategic production base as a check and balance for the supply chain 6 Operational excellence constantly nurtured by technology investments 7 Strong professional management and rooted corporate culture 8 Strict commitment to sustainability guidelines 9 Robust financial performance backed by outstanding growth prospects ;system well- managed during Covid -19 pandemic10 IFC 12 2005 2011 2012 2017 2018 2020from 2021 onwardsInternationalization lies at the heart of DeFacto’s vision since its inception First steps of building tomorrow’s global fast -fashion brand Finding new avenues for growth in achieving the globalization vision of DeFacto →DeFacto was established bytwo visionary founders that came together with thecommon goal ofbuilding atruly global brand →Opening itsfirst store in2005 ,DeFacto quickly expanded its network inTurkey through organic store roll-outs and store acquisitions, and became thesecond largest brand bymarket share asearly asin2011→DeFacto replicated itssuccessful expansion -ledstrategy ininternational markets and grew its footprint to18countries inamere five years, starting offwith MENA and the CIS, tobe followed bydeveloped countries →The Company transformed itself byleveraging in-house technology toexecute asuccessful omnichannel strategy, with growing online sales and improving supply chain infrastructure ; both inTurkey and ininternational markets1Vision to become a global retail brand Unique combination offast-fashion retailing and production know -howEstablishing strong Turkish market presence with increased penetrationStepping into international markets with attractive fundamentals followed by rapid expansionInitiating online strategy + leveraging online channels to tap into developed marketsExpedited omnichannel growth and expansion into new international markets with optimized resource allocation strategy First international store Establishment of online presenceFirst store in TurkeyReaching more than 130 storesReaching the milestone of c.100 stores in international marketsReaching c.150 stores by expanding to more than 15 countries in international marketsFirst physical presence in Europe with flagship store opening1in Berlin, Germany (1) Expected opening in Q4 2021 Source: CompanyExpansion to Asia with Malaysia storeMore online, less physical IFC 13 (1) Store count as of October 2021 , excluding franchise stores Source: Company, World Bank2Well -balanced internationalization strategy; benefiting from its omnichannel model Bringing online and offline format together under omnichannel strategy… …with room for further growth to exploreTurkey c.80 mnpopulationMENA & CIS c.700 mnpopulationEurope c.750 mnpopulation Flagship stores in selected countries, starting from Q4 2021 with Germany, to be followed by Austria, the Netherlands and the UKLand grabbing strategy paid off by capturing prime locations… … and further growth lies in underpenetrated MENA & CIS regions with already established DeFacto operations…… as well as Europe, a new territory for DeFacto to step in, enroute to realizing its vision of becoming a global brand Internationalization strategy: Entry into developed markets “ more online, less physical ”Expand presence built on marketplaces with own Defacto.com platform and then flagship stores Become the brand of tourist shoppingCities with DeFacto stores301 stores1 168 int. stores1 70in MENA; 98in CIS, CEE, Balkan and East Asian countries IFC 14 Source: Company3Multi -platform/diversified approach to online sales Key pillars of online strategy Sustained technology investments for enhanced consumer experienceTargeted marketing efforts to promote Defacto.com Increasing partnerships with global/local marketplacesExpanding product variety and fulfillment options2MarketplacesIDefacto.com platform A truly omnichannel platformOnline strategy Clear omnichannel strategyDeFacto has been steadily focusing its efforts towards diversifying and expanding its online presence with… Multi -platform online strategy enables Accessing new territories with limited initial investmentEstablishing brand awarenessGaining valuable market insights and learning customer behavior IFC 15 (1) As of October 2021, there is one phygital store in Istanbul, Turkey Source: Company4One -stop shop approach offering a broad assortment of products addressing the whole family Product assortments with broad consumer appeal delivered through… Key category 02Men Women Core category 01Baby & kids Homewear / Sportswear Footwear Accessories Expansion category Complementary categorySupport category Growth category 06 05 04 03Key category 02 … reinvented and customized “One -stop shop” store concept to address a broader fashion spectrumTrendy and comfortable Broad offerings at value prices Serves the whole family →DeFacto stores are designed with one-stop shop concept, allowing customers toenjoy a convenient shopping experience .Going forward, DeFacto plans toopen new concept stores with niche sub-brands toappeal toawider consumer base →DeFacto Fit, anexample ofconcept stores aspreviously mentioned, was launched bythe Company, with itsfirst store opening inBursa, Turkey, in2020 →DeFacto also concentrates itsefforts onreinventing in-store experience through unique in-store activities .Phygital stores1allow customers toenjoy easier product assessment through smart screen sand afaster checkout process c.80% c.20% % share in 2021B Netsales IFC 16 (1) Individual shops’ share in total apparel market as of Q2 2021 in Turkey Source: Company, Euromonitor, IPSOS, market research1,1259201,525 2020500 630 920 895 2015 2024E2,045 1,420+1%+8% Emerging markets OthersDeFacto , ideally positioned to gain leverage from… Growing target market DeFacto operates in the most strategic segment of the apparel sector, with flexible price points enabling the Company to leverage trade up/down opportunities in the market In addition, market growth is further enhanced with the ongoing shift from unorganized individual brands/shops (still currently at c.40%1) to organized market , especially for Turkey and emerging countries where DeFacto is well -positioned to capture this growth Agile global growth strategy (i)Expanding to underpenetrated markets with relatively lower share of organized retail, signaling strong growth prospects (ii) Opening flagship stores in highly visited, tourist attracting cities
total apparel market as of Q2 2021 in Turkey Source: Company, Euromonitor, IPSOS, market research1,1259201,525 2020500 630 920 895 2015 2024E2,045 1,420+1%+8% Emerging markets OthersDeFacto , ideally positioned to gain leverage from… Growing target market DeFacto operates in the most strategic segment of the apparel sector, with flexible price points enabling the Company to leverage trade up/down opportunities in the market In addition, market growth is further enhanced with the ongoing shift from unorganized individual brands/shops (still currently at c.40%1) to organized market , especially for Turkey and emerging countries where DeFacto is well -positioned to capture this growth Agile global growth strategy (i)Expanding to underpenetrated markets with relatively lower share of organized retail, signaling strong growth prospects (ii) Opening flagship stores in highly visited, tourist attracting cities carrying DeFacto brand to the next level in the international arena One step ahead for technological investments Omnichannel: Integration of physical stores and online Supply chain: Fast and flexible delivery optionsShopping experience: Seamless and inspiring in every channelDeFacto’s strategically built store network enables the Company to capture different growth dynamics that each market offers ; DeFacto has two distinctive strategies : DeFacto was well -prepared torespond tochanges , as shopping rapidly shifted to online with the outbreak of the Covid -19 pandemic The Company’s long -running investments paid off, as the pandemic speededup changes already underway in fashion sectorGlobal apparel market size (USD bn) 10% 6% CAGR5% -1% CAGR…attractive fundamentals in global landscape Following the increasing prices globally, consumers tend to seek out products with good price/performance ratio, using quality and value as their guides Global apparel market is set to grow at a higher pace, rebounding from the slump caused by Covid -19. Growth is estimated to come from emerging markets as shown below Online sales are seen as a silver lining, presenting the biggest opportunity for the fashion industry, going forward. Digital channels are envisaged as the primary growth driver in the coming years Online sales’ share in global apparel sales <5% 2005c.20% 202030+% 2024E 5Unique brand, well -positioned to benefit from attractive global trends Ongoing shift from unorganized individual brands toorganized markets , especially in Turkey and in emerging countries IFC 17 6Strategic production base as a check and balance for the supply chain Ozon in a nutshellA leading textile producer in Turkey, active in tricot, woven and knitwear groups Acting as an important supplier for DeFacto across categories, constituting c.12% of DeFacto’s total purchases in 2021B. Ozon is fully outsourcing DeFacto products to third -party workshops and factories across Turkey and controlling their production process from raw material sourcing to final products Strategic ownership critical for key capabilitiesOzon Tekstil enabling flexibility and favorable cost base for DeFacto Access to market intelligence and know -how via strategic suppliers →Proactive cost control through market intelligence →Best practice transferStrategic tool to benchmark and control costs of third - party suppliers→Platform to control cost base and leverage price negotiations with suppliers →Strategic production base enabling check and balance for the supply chainThird -party sourcing, benefiting from Ozon’s sector expertise→Strategic partnerships with key raw material suppliers enabling proper planning →Advantageous sourcing from carefully selected third -party suppliersDedicated capability providing sourcing security and flexibility→Optimal sourcing strategy to maximize capacity and profitability →Rapid response to fashion trends, with shorter lead timesI IVII III Source: Company IFC 18 (1) Artificial intelligence Source: Company7Operational excellence constantly nurtured by technology investments Professional management with hands -on approach, controlling day -to-day businessIn-house technology powerhouse: DeFacto TeknolojiOmnichannel native warehouse management systemCentralized logistics/warehouse management networkKey pillars behind DeFacto’s operational excellenceOnline operations1 Store operations2 Distribution/logistics3Agile management vision encouraging continuous excellence aiming highest customer satisfaction DeFacto has invested heavily in operations to serve convenient and seamless shopping experience for its customers →The Company looks tocontinuously invest, together with DeFacto Teknoloji ,toimprove its online infrastructure, and dedicates itsefforts toproviding the most convenient online shopping experience, emulating thequality offered atDeFacto stores →DeFacto seeks toextend itsfashion experience to make itavailable anytime, anywhere via mobile devices, with the added convenience ofcustomers being able pick uptheir products ataconvenient DeFacto store→DeFacto isconsistently improving its in-store experience foritscustomers, with agile store staff management and incentive tools supported bybig data analysis and AI1 →Omnichannel integration started in2015 with Pay- at-store and Buy online ;Pick-upinstore options, now available across Turkey →As part of DeFacto’s constant improvement principle, theCompany invested in: -Fully digitized hand terminal software that tracks important operational information such as shipping, shift schedules, stock keeping, etc. -Smart camera systems tracking customer decisions with variables such asgender, age, etc.→DeFacto invested inafully automated warehouse at itsmain distribution center inTurkey, enabling centralized control over supply chain processes and KPIs →Warehouse investment paved the way forefficient and swift integration ofDeFacto’s store and online operations throughout storage, transport and distribution processes →In tandem with the rapid proliferation of international operations, the Company built a network of local distribution centers across countries, toallow transfer ofmerchandise within stores IFC 19 (1) Only board member with an executive role (2) Chief growth officer (3) Chief supply chain officer (4) Board consisti ng of Zeki Cemal Özen , İhsan Ateş, İdris Özçelik, Şahin Demir, Erman Kalkandelen representing FT and Cengiz Solakoğlu , independent board member. Plus, Yılmaz Argüden is acting as advisor to the board with his extensive experience as board member roles across local and global companies Source: CompanyÖnder Şenol CFO/Online Operations 25+ years of work experienceCenk Karapınar CSCO3 years of work experience 20+Strong professional management dedicated to deliver DeFacto’s vision to become a global brand Serdar Ersoy COO/CGO2 years of work experience 20+ İhsan Ateş1 CEO 30+ years of work experience Quality and innovation driven professional management……committed to delivering sustainable growth across markets…supported by fully -equipped and visionary board4of non -executive shareholders…8Strong professional management and rooted corporate culture… Board member IFC 20 9… with strict commitment to sustainability guidelines Environmental Social Governance a member of committed to delivering the best combination of fashion , quality , price and sustainability→Viewing the environment as an integral stakeholder, DeFacto prioritizes reducing its environmental footprint by focusing on innovation and using more environmentally friendly materials, as well as developing efficient production processes with lower levels of production waste →Focusing on long -term sustainable outcomes, DeFacto
professional management dedicated to deliver DeFacto’s vision to become a global brand Serdar Ersoy COO/CGO2 years of work experience 20+ İhsan Ateş1 CEO 30+ years of work experience Quality and innovation driven professional management……committed to delivering sustainable growth across markets…supported by fully -equipped and visionary board4of non -executive shareholders…8Strong professional management and rooted corporate culture… Board member IFC 20 9… with strict commitment to sustainability guidelines Environmental Social Governance a member of committed to delivering the best combination of fashion , quality , price and sustainability→Viewing the environment as an integral stakeholder, DeFacto prioritizes reducing its environmental footprint by focusing on innovation and using more environmentally friendly materials, as well as developing efficient production processes with lower levels of production waste →Focusing on long -term sustainable outcomes, DeFacto management works to increase social welfare through various efforts, with participation from different departments of theCompany →DeFacto employees volunteered for over 60 events, devoting more than 8,500 hours to several campaigns. Efforts were channeled mostly to raising awareness for women’s empowerment and promoting equal opportunities in education, health and child raising →DeFacto management assumes a collaborative approach, adapting sustainability measures to corporate governance and decision -making processes. DeFacto’s governance model is equipped with secure mechanisms, aligned to value creation for all stakeholders →As the highest authority in the Company, the Board runs the governance through C -suite and director level management. The CEO, the highest managerial role overseeing the full set of business functions at DeFacto , is appointed by the Board, to which the CEO reports 10-15% of the product assortment is made from regenerated yarn Recycled 4 mn1parcels and 3.6k1tons of paperAdoption of zero waste target of waste managementReduced avg. yearly per sqm electricity consumption in stores by c.37%1,2compared to 20157.7k1tons water saved for 770k products1.2k1tons scraps reused for 4.3 mn1products (1) 2020 figures (2) Turkey stores (2017 -2019) Source: Company IFC 21 Robust financial performance backed by outstanding growth prospects ;… 10 Key remarks Net sales1(TL mn) EBITDA4(TL mn)Sustained investment in technology and human resources enabling steady growth and profitabilityTargeting around 55% international sales and around 50% online sales by 2026E (1) Represents store and online operations foreach market. Others constitute thetotal sales forWholesale , Franchise and Ozon sales tothird -parties (2) Consists of MENA, CIS, Balkan and East Asian countries (3) Consists of Western European countries (4) Excluding IFRS 16 effect Source: Company, TUIKOperational excellence and close monitoring of cost items facilitating margin improvement 14.3% 10.3% 13.8% 13.8% 13.8% 14.0% 14.4% 15.2%4,0267,0749,344 11,44814,03216,960 1,341 1,423 2,5254,5866,4418,80211,43813,969 147 4057063,8515,849 267254 3887009311,3271,902 2,931 2022E 2020A 2019A 2024E1,572 2023E 2021B18,288 2,500 2025E2,651 2026E7,344 2,399254,564 4,22313,06724,07631,22339,429 +27%+40%5% 17% 19% 22% 30% 37% 44% 50% % share of onlineTopline growth across geographies and channels; focusing on further internationalization and online conversion Focusing on recently added categories such as kids and continuous shift to more value -added productsCovid -19 Covid -19 Robust EBITDA margin despite Defacto.com’s international operations still at ramp -up stage contributing negative to EBITDA during the projection period EBITDA %14.4% 10.4% 14.6% 15.2% 15.9% 16.4% 16.1% 16.0% 1,0141,7992,5313,3734,507474,599 2021B 2019A65514344 2020A 2023E1,061309 2024E 2022E92 -338 2025E5,978 141 2026E656 4391,9402,7983,6825,640 267 EBITDA exc. Defacto.com international EBITDA EBITDA % exc. Defacto.com internationalInternational operationsDeveloped markets3Turkey Developing markets2Others17% vs CPI IFC 22 (1) Please refer to Appendix section for country specific details (2) Excluding IFRS 16 effect and Defacto.com international Source: CompanyStrong negative impact of Covid -19 on the global retail industry Physical store and mall closures during lockdown dampening fashion retail sales volume and value Drastic shift in consumer behavior Major hurdles in manufacturing and supply chain DeFacto : Success story in turning threats into opportunities Widespread and diverse customer portfolio providing a natural hedge against anybusiness downturns Operational excellence due toin-house technology powerhouse and well-invested talent pool Well -managed eco-system enabling continuous goods and services flow and effective cost management formain cost items including rent and others Rapid decision making, swift implementation, and continuous monitoring tointroduce modifications, ifneeded4,564 4,2237,344 2019A 2021B 2020A 656 4391,061 2019A 2020A 2021B10.4% 14.6% 14.4%Net sales (TL mn) EBITDA2(TL mn)Region Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 13.0% 47.3% 0.1% 7.9% 21.6% 33.1% 0.1% 9.4% 44.3% 13.4% 4.1% 7.4% 4.3% 3.9%Turkey Developing markets1Turbulence caused by forced store closures due to Covid -19 pandemic in many of DeFacto’s operational markets in 2020 and 2021 EBITDA % exc. Defacto.com international…system well-managed during Covid -19 pandemic 10 Ratio of non -operational days of stores due to Covid -19 per country ≤1% ≤20% ≤50% Challenges compelled DeFacto to devise alternatives which served to bolster its financial performance Swiftly adjusting to shifts in trends and customer behavior such as online shopping , leveraging DeFacto team’s agility and flexibility Hands -onmanagement and day-to-day control ofthe business onallrevenue and cost aspects , limiting theimpacts caused bysudden external factors such asCovid -19 IFC III. Business model overview -Operational flow -Key business functions IFC 24 Source: CompanyDeFacto’s unique business operations are ideal to quickly respond to fast -fashion needs Excellence enabled by key business functions lying at the center of operations Key business functionsProcurement & Production → Experienced innovative design team, composed of 71 product designers & 31 graphic designers → Step -by-step design process based on calendar year, including in -depth analysis of micro/macro & seasonal trends, review of fabrics → Working with 200+ top suppliers for design samples and market intelligence→ Procurements made through c.500 local and international suppliers → Around 15% of procurements go through Ozon, wholly owned subsidiary of DeFacto → Local production support enabling favorable cost base, checks & balances system controlled by Ozon → Optimal sourcing in each product category due to its strategic partnership with around 25+ key suppliers→ Well -established logistics network both in Turkey and international markets, securing fast and reliable supply chain operations → Fully automated, best -in class distribution center in Turkey → International operations supported through 22 local warehouses in selected markets → AI backed inventory management provided by strategic partner, Solvoyo DeFacto Teknoloji → One-stop shop strategy executed at global standards across all countries → Omnichannel integration to fulfill customer needs for various occasions → 495 stores globally; 301 stores in Turkey,
local and international suppliers → Around 15% of procurements go through Ozon, wholly owned subsidiary of DeFacto → Local production support enabling favorable cost base, checks & balances system controlled by Ozon → Optimal sourcing in each product category due to its strategic partnership with around 25+ key suppliers→ Well -established logistics network both in Turkey and international markets, securing fast and reliable supply chain operations → Fully automated, best -in class distribution center in Turkey → International operations supported through 22 local warehouses in selected markets → AI backed inventory management provided by strategic partner, Solvoyo DeFacto Teknoloji → One-stop shop strategy executed at global standards across all countries → Omnichannel integration to fulfill customer needs for various occasions → 495 stores globally; 301 stores in Turkey, 168 stores in 18 international markets and 26 franchise stores → Online existence in over 90 countriesLogistics & Distribution Sales/store operations Design Human resources Sustainability Business model overview Unique business model built on innovation, continuous improvement and agility Marketing IFC 25 Source: CompanyBusiness model overview Fast retail and value -driven strategy characterized by flexibility Customer -centric company culture supported by technology to timely meet specific customer demands →DeFacto implements a “ Fast Retail” and “ Cluster” strategy to address its customers’ needs. DeFacto management’s unique experience in production/supply chain and retailing lays a reliable foundation for the implementation and proper execution of this strategy →The Company forecasts fashion trends, makes quick changes to the product mix and efficiently manages store inventory due to i ts distinctive operational edge. Complementing this, the cluster strategy through constant feedback from customers and use of big data analytics, can make the right product reach the right location at the right time →Forecasting →Supporting trends →Brainstorming →Every idea through the “grinder” →Letting the best ideas winFast thinking →Establishing guiding principles →Removing bureaucracy →Shuffling portfolios →Constantly repackaging →Track recordFast decision making→Competitive advantage →Faster suppliers →Efficient process →Scalability →Institutionalizing innovationFast to market →Simplicity →Without boundaries →Growth mentality →Financial flexibility →Business process managementSustaining speed IFC III. Business model overview -Operational flow -Key business functions IFC 27Highly structured and efficient process built on unique design know -how Design Production Procurement Distribution & Logistics Sales operations Source: Company →Offering 6 main collections and 12 lines with 6 well - balanced product phases →Product lines prepared based on calendar; small quantities lined up to address additional sales opportunities →Design team has weekly milestones to roll out new lines every 2 months, with weekly deliveries to storesAnalysis Design Order →Following global trends and reviewing product design performance →Evaluating new seasonal products, including competitors →Hands -on review of fabrics and accessories from start to finish, together with Ozon Tekstil→Product development throughout the year; focus on creating new designs for current core products and updating existing designs →Product development performed by both in -house and strategic external designers, providing diversity to DeFacto’s product rangeStep -by-step design process based on →Macro/micro trends →Historical product performance review →Customer behavior Repeat →Early -order -placement mostly for “basics” and partially for “updated basics” categories, as most of the products are repeated →Up to 80% of allocated capacity ordered in advance, reducing cost and supply risk Balanced mix of designers, optimizing fashion risk and enabling differentiationLeveraging critical supplier relationships to bring external know -how to the processComprehensive detailed design process based on a wealth of data pointsEfficient order strategy capitalizing on quick response production capabilitiesRepeat or new design created by Internal designers External designersInternal designers New50% 50%Orders consist of →40% early orders with up to 8 months delivery time →40% in season orders with; c.3 months delivery time →20% open -to-buy ordersTransition TransitionWinter Fall & WinterSpring SummerCollection offeringStore operations IFC 28Favorable cost base with unique strategic partnerships % share in 2021B total purchasesDeFacto mitigates potential risks in supply chain through… Flexible sourcing decision - making abilityCost -effective approach Secured capacity→ DeFacto leverages Ozon Tekstil’s know -how inoptimizing delivery times and sourcing costs → For DeFacto purchases, Ozon outsources production tothird -party suppliers and coordinates production byguiding suppliers starting from raw material purchasing −Ozon remains thelargest supplier ofDeFacto ,with c.12%share ofthe Company’s overall purchases in2021 → Ozon plays acritical role inthevalue chain bycoordinating other suppliers via benchmarking their quality/costs with its own metrics .Ozon participates inDeFacto’s order tenders and allocates the production to relevant suppliers with desired capability and quality → Ozon’s market intelligence and production know -how stirupcompetition inthetender process, enabling DeFacto tobenefit from favorable rates → DeFacto and Ozon teams come together tocritically assess order specifications indetail, which allows DeFacto toprevent any errors or misalignments from thestart, thereby averting risks tothefinal product Shorter lead times Source: Company→ DeFacto isworking with amix ofdedicated and outsourced workshops across Turkey aswell asEast Asian countries, ranging insize and capability → The Company works with more than 500 suppliers individually −c.85%ofthesuppliers arelocated inTurkey −International suppliers are mostly used for the procurement of accessories orspecific merchandise that cannot bebought within Turkey .Purchases from international suppliers make upc.10%oftotal procurements in2021 B → 70+international suppliers enable global reach and proximity to operational markets → DeFacto hasbuilt aspecial partnership model with around 25keysuppliers tofurther optimize itssourcing ineach ofitsproduct categories .DeFacto makes capacity arrangements with these producers and guarantees the majority ofitsannual procurement need satthebeginning oftheyear −Annual capacity arrangements enable clear visibility onsourcing and production scheduleDesign Production Procurement Distribution & Logistics Sales operations c.88% c.12% Strategic suppliers (Third -party) Ozon TekstilFlexible and well -linked sourcing model enables cost optimization through unique market intelligence and know -howStore operations IFC 29Ozon Tekstil : DeFacto’s strategic ownership driving key achievements SivasHQ Istanbul 2 Source: CompanyOzon Tekstil enabling flexibility and favorable cost base throughout production→Established in2000 ,Ozon isaleading textile producer in Turkey ;producing tricot, woven and knitwear groups -Ozon Tekstil has two facilities with atotal ofc.20ksqm closed area .Factory 1inSivas produces jersey wear, while Factory 2inSivas isaprint house →Acting asakeysupplier forDeFacto across categories, Ozon is constituting c.12%ofDeFacto’s total purchases in2021 B →Ozon isfully outsourcing DeFacto products tothird -party workshops and factories across Turkey and controlling their production process from raw material sourcing tofinal products -Some factories arededicated only toDeFacto’s production →Ozon acts aschecks and balances mechanism, controlling the supply base forDeFacto ,thanks toitsrooted relationships with raw material suppliers
enables cost optimization through unique market intelligence and know -howStore operations IFC 29Ozon Tekstil : DeFacto’s strategic ownership driving key achievements SivasHQ Istanbul 2 Source: CompanyOzon Tekstil enabling flexibility and favorable cost base throughout production→Established in2000 ,Ozon isaleading textile producer in Turkey ;producing tricot, woven and knitwear groups -Ozon Tekstil has two facilities with atotal ofc.20ksqm closed area .Factory 1inSivas produces jersey wear, while Factory 2inSivas isaprint house →Acting asakeysupplier forDeFacto across categories, Ozon is constituting c.12%ofDeFacto’s total purchases in2021 B →Ozon isfully outsourcing DeFacto products tothird -party workshops and factories across Turkey and controlling their production process from raw material sourcing tofinal products -Some factories arededicated only toDeFacto’s production →Ozon acts aschecks and balances mechanism, controlling the supply base forDeFacto ,thanks toitsrooted relationships with raw material suppliers and outsourced producers →Ozon sells c.80%ofitsproducts toDeFacto ,outsourcing the orders tosuppliers across Turkey .The remaining 20%is comprised ofexports mostly toEuropean retailers, mainly Primark and C&A -Ozon’s own production sold only toexport customersDesign Production Procurement Distribution & Logistics Sales operations Ozon Tekstil at a glance Location overview Flexible/visible production capabilitySelected blue -chip customer portfolio Shorter lead -time Product intelligence Pricing architecture# of facility 2 Total open area c.60k sqm Capacity per month 30 mnpieces Cutting per month 2 mn Total Employees c.440 Total suppliers c.650Store operations Ozon applies best practices from multinational brands inboth production technique and design variety IFC 30 Source: CompanyProduction facilities at global quality standards Design Production Procurement Distribution & Logistics Sales operations →Opened in 2005 →Total capacity is 30 mnpieces per annum with the breakdown of 70% jersey wear, 20% flat knit and 10% woven —2 mnpcs cutting / month —350k pcs garment / month …adhering to sustainability guidelines Sivas facility I (Jersey wear) 1 Sivas facility II (Print house) 2 →Opened in 2016 →1 mnpcs / month →Equipped with latest technology →Capable of various print techniques 15k sqm Closed area280 # of employees30 mnpieces capacity per annum5k sqm Closed area160 # of employees1 mnpieces capacity per annumBest in class production facilities with significant capacity…Store operations IFC 31 Integrated supply chain iskey to fast -fashion deliveryDesign Production Procurement Distribution & LogisticsEffective management of merchandise flow through DC network Sales operations Source: CompanyOrder initiated by DeFactoProduct flow from suppliersMain warehouse in ÇerkezköyStores/online consumers (Turkey) International distribution center (“DC”)Stores/online consumers (International) Products are stored inthe main warehouse, located inÇerkezköy orin international DCs, tobedistributed toB2BorB2Cclients ForTurkey warehouse, in-house Enterprise Resource Planning (ERP) system, provided byDeFacto Teknoloji ,isused .International DCs employ third -party systems Inresponse tothe Covid -19outbreak, the Company opted formulti -usage, dedicating selected stores partly towarehousing .Usage ofsuch stores aslocal hubs paved theway foramore efficient and effective distribution systemThe Company works with Solvoyo torunoperations smoothly throughout its supply chain processes .Solvoyo system, which employs analgorithmic replenishment system covering DeFacto store network, forecasts customer demand via machine learning capability and provides recommendations regarding product dispatchments onastore basis DeFacto optimizes its shipping network through applying region -specific strategies. The Company works with over 10 logistics providers to deliver goods to customers on a timely and efficient basisProduct preparation and production phase Warehousing and product delivery to sales channels/end customersStore operations IFC 32 Centralized logistics with fully -automated warehouse, supported by… Design Production Procurement Distribution & Logistics Sales operations (1) Artificial intelligence Source: CompanyInternal ITpowerhouse Omnichannel integrationFully automated best in -class warehouseAIbacked inventory managementOperational excellence and agility secured byMain DC in Istanbul→The Company centralized itsoperations inTurkey ,conducting them through thedistribution center located inTekirdağ ,Çerkezköy with atotal ofc.100ksqm area -Distribution center hasastock capacity ofc.32mnunits →Products delivered bysuppliers arereceived and dispatched tosales points through thedistribution center →Distribution center hasfour main sections ;automated warehouse, manual warehouse, storehouse and warehouse -to-warehouse →Amajor part oftheoperations inTurkey and half ofthee-commerce operations arehandled atthe distribution center →Fully automated, best-inclass distribution center inTurkey enables shorter lead -times and faster delivery from warehouse tocustomers -International operations aresupported through 22local warehouses ininternational markets →DeFacto utilizes AI2backed inventory management provided bystrategic partners, torun efficient omnichannel operations across itsstore network and centralized warehouse, ensuring the right product store allocation attheright time →Wholly -owned subsidiary, DeFacto Teknoloji with its60engineers, provides aunique competitive edge with thein-house ERP system tailored -made forthespecific needs oftheCompanyDCOpening yearArea (sqm k)Storage Capacity (unit m n) Movement Capacity (unit m n) Turkey B2B 2014 15.0 18.0 700.0 Turkey Manual 2009 18.7 5.0 150.0 Turkey Bonded 2017 7.5 3.0 60.0 Turkey Transfer 2012 4.0 2.7 30.0 Turkey B2C 2017 2.0 1.2 34.3 Turkey B2C -2 2019 6.0 2.0 54.6 Total 53.2 31.9 1,028.9Fully automated, best -in-class integrated distribution centerStore operations IFC 33 …international DC network enabling store/merchandise connectivity Source: CompanyWidespread DC network Key in achieving…Proximity to each operational marketEase of transfer and flow of merchandise across marketsCentralized approach for the inventory managementDC Opening yearArea (sqm k)Storage Capacity (unit mn)Movement capacity (unit mn) B2B Egypt 2017 1.0 0.5 15.2 Morocco 2017 1.2 0.6 20.6 North Iraq 2016 3.6 0.8 4.2 South Iraq 2017 1.2 0.4 6.2 Albania 2019 0.3 0.1 0.0 Moldova 2021 0.2 0.1 0.0 Serbia 2021 0.4 0.1 0.0 Georgia 2019 0.4 0.2 0.0 Belarus 2017 1.4 0.3 4.2 Belarus 2021 1.1 0.3 4.2 Russia 2020 1.5 0.3 13.0 Kazakhstan 2014 1.7 0.6 15.1 Kazakhstan 2020 0.9 0.2 0.4 Kazakhstan 2021 2.3 0.6 6.3 Ukraine 2021 1.1 0.3 9.4 Total 18.3 5.3 98.8 B2C Kazakhstan 2019 0.8 0.1 1.0 Egypt 2020 1.0 0.3 2.1 Morocco 2020 1.0 0.1 1.0 Ukraine 2021 0.5 0.1 1.2 Poland 2021 6.5 0.4 1.4 UK 2021 0.9 0.0 1.8 Russia 2021 0.4 0.0 0.8 Total 11.0 1.0 9.3 B2B & B2C Total 29.3 6.3 108.1Both B2B # of DCs B2CDesign Production Procurement Distribution & Logistics Sales operations Store operations IFC 34 Source: CompanyLeveraging in -house production experience and capability DeFacto’s strategic partner, Solvoyo , brings an important edge by leveraging artificial intelligence in supply chain →DeFacto started tocooperate with Solvoyo ,aglobal digital service provider specialized intheretail industry .The working relationship developed through theyears, as theCompany added more advanced supply chain modules toitssystem, and reaped thebenefits ofefficient forecasting and inventory management techniques Proven results of technology in supply chain Lower lost sales Reduced stock -outs by c.25% On time sourcingIncreased on shelf availability of products from c.65% to c.85%c.95% demand forecast success rateOn time
2021 0.9 0.0 1.8 Russia 2021 0.4 0.0 0.8 Total 11.0 1.0 9.3 B2B & B2C Total 29.3 6.3 108.1Both B2B # of DCs B2CDesign Production Procurement Distribution & Logistics Sales operations Store operations IFC 34 Source: CompanyLeveraging in -house production experience and capability DeFacto’s strategic partner, Solvoyo , brings an important edge by leveraging artificial intelligence in supply chain →DeFacto started tocooperate with Solvoyo ,aglobal digital service provider specialized intheretail industry .The working relationship developed through theyears, as theCompany added more advanced supply chain modules toitssystem, and reaped thebenefits ofefficient forecasting and inventory management techniques Proven results of technology in supply chain Lower lost sales Reduced stock -outs by c.25% On time sourcingIncreased on shelf availability of products from c.65% to c.85%c.95% demand forecast success rateOn time delivery of right product to the right store→Predictive analytics for discount pricingPricing →Product allocations to individual stores →On time stock replenishment →Store to store transfer →Markdown optimization →Predictive analytics and machine learning →Product grading by store to optimize allocationIn-season →Demand forecasts of different attribute clusters such as color, size, fit and climate →Dynamic store clustering based on demographics →Assortment planning based on store clusters →Life-cycle estimation →Merchandise financial planningPre-season 1 2 3Design Production Procurement Distribution & Logistics Sales operations Store operations IFC 35 (1) Remaining 5% belongs to Wholesale, Franchise and Ozon sales to 3rdparties (2) Includes 26 franchise stores (3) Excludes franchise stores (4) Excludes Pay-at-store with c.4% share Source: CompanyRoute -to-market strategy shaped with multiple customer touchpoints Omnichannel model: DeFacto’s route -to-market strategy is shaped via integrating physical stores with online channel 1 Stores2 Online DeFacto aims to offer holistic shopping experience for their customers by integrating offline and online worlds Design Production Procurement Distribution & Logistics Sales operations One-stop shop designed stores located at prime locations… Turkey 301 Stores in Turkey with c.2 85k sqm net effective selling spaceInternational markets 1942 Stores in int. markets with c.143k sqm3net effective selling space c.20%Defacto.com -originated sales’ share in total Online sales4(2021B)…capturing footfall across occasionsMulti -platform strategy executed across markets… Own platformMarketplaces Marketplace -originated sales’ share in total Online sales4(2021B) …with sales derived from c.53% Turkey -originated online sales’ share in total Online sales (2021B)International markets -originated online sales’ share in total Online sales (2021B)c.47%Store operations 123178 31137 Street mix Mall mixc.75%1c.20%1 c.76% % share in 2021B Net sales IFC 36 (1) As of October 2021 Source: Company, TUIKBringing DeFacto quality through well -established store network in Turkey… İstanbul DeFacto stores: 77 DeFacto’s effective space per 1,000 people (sqm): 5.4Marmara DeFacto stores: 46 DeFacto’s effective space per 1,000 people (sqm): 4.0Black Sea DeFacto stores: 24 DeFacto’s effective space per 1,000 people (sqm): 2.4Eastern Anatolia DeFacto stores: 11 DeFacto’s effective space per 1,000 people (sqm): 1.5 Aegean DeFacto stores: 47 DeFacto’s effective space per 1,000 people (sqm): 3.9Mediterranean DeFacto stores: 37 DeFacto’s effective space per 1,000 people (sqm): 2.9Central Anatolia DeFacto stores: 43 DeFacto’s effective space per 1,000 people (sqm): 3.3Southeastern Anatolia DeFacto stores: 16 DeFacto’s effective space per 1,000 people (sqm): 1.6DeFacto’s wide store1network commands an extensive catchment area to attract its target market of Turkey’s total GDPc.95% c.90% of Turkey’s population store network covers DeFacto has successfully completed its landgrabbing strategy and secured its foothold in high -traffic locations in almost every city in TurkeyDesign Production Procurement Distribution & Logistics Sales operations 77 4624 43 47 371611Store operations IFC 37 (1) Excluding franchise stores Source: Company…and expanding international footprint from emerging to developed markets Design Production Procurement Distribution & Logistics Sales operations Number of stores of top 6 countries by revenue in international market2012 - Q4/2021: First flagship store in Berlin, Germany 168 international stores1 70 in MENA; 98 in CIS, CEE , Balkans and East Asian countries Planned expansion to developed countries with flagship stores NEW MARKETSPlanned expansion in already penetrated marketsFirst wave: Internationalization through emerging countries Second wave: Expansion to developed markets with limited flagship stores Internationalization journey continues…Expected store openings in 2022 in Germany, the UK, the Netherlands and Austria Established presence in emerging countries... … planned expansion in emerging countries as well as in developed countries DeFacto steps up its internationalization drive by expanding into developed markets, at the tailwind of growing online sales 2021 -Store operations # of stores planned to be opened in 2022 # of stores as of October 20215 3 38 2 Ukraine Russia Egypt Other MENAOther CIS21 1 1 Germany Austria UK the Netherlands33 29 24 1715 11 Kazakhstan Russia Morocco Iraq Egypt Belarus IFC 38 Source: CompanyInternational footprint of DeFacto Online -only Online & Offline Offline -only FranchiseGlobal presence in over 90 countries through diverse operational models with its 2022 target to enter the UK, Austria and the Netherlands offline 14 13 68 4 # of countriesDesign Production Procurement Distribution & Logistics Sales operations Store operations IFC 39 Pay-at-storeMulti -platform approach in online sales to maximize reach Source: CompanyDesign Production Procurement Distribution & Logistics Sales operations →DeFacto leverages itsstrong relationships with marketplaces togain easier access tonew markets, aspart ofitsinternational expansion strategy →Online sales through marketplaces enable DeFacto tocollect valuable customer data ;identify market potential ;gain insights into customer habits and preferences ;and adapt tolocal conditions, before contemplating the costlier option oflaunching itsDefacto .con site and opening physical stores inanew market →DeFacto follows this asitsmain online strategy tofacilitate market penetration and establish brand awareness, which also serves asatool toincrease Defacto .com sales over medium/long term →The Company hired account managers with local language and market skills, aspart ofitsone-year expansion plan comprising 90countries .Recently, DeFacto started tocollaborate with marketplaces inIndia and Latam region→DeFacto has evolved into atrue omnichannel retailer through sustained investments, adapting itself tochanging trends and customer needs, thereby attaining robust sales growth, especially viaitsown platform →DeFacto invested heavily initsonline platform over the years, collaborating with itstechnology subsidiary, DeFacto Teknoloji →Defacto .com platform aims toprovide users with aseamless customer journey through personalized offers ,click and collect experience and top-notch recommendation tool →Distinctive omnichannel features such asPay-at-store, click and collect and ship from store arealso executed through Defacto .com platform →Throughout the years, DeFacto increased itssocial media footprint vialocal celebrities and influencers, inorder toattract more customers and support the growth oftheplatformMarketplace 76% 4% →The Company encourages customers
account managers with local language and market skills, aspart ofitsone-year expansion plan comprising 90countries .Recently, DeFacto started tocollaborate with marketplaces inIndia and Latam region→DeFacto has evolved into atrue omnichannel retailer through sustained investments, adapting itself tochanging trends and customer needs, thereby attaining robust sales growth, especially viaitsown platform →DeFacto invested heavily initsonline platform over the years, collaborating with itstechnology subsidiary, DeFacto Teknoloji →Defacto .com platform aims toprovide users with aseamless customer journey through personalized offers ,click and collect experience and top-notch recommendation tool →Distinctive omnichannel features such asPay-at-store, click and collect and ship from store arealso executed through Defacto .com platform →Throughout the years, DeFacto increased itssocial media footprint vialocal celebrities and influencers, inorder toattract more customers and support the growth oftheplatformMarketplace 76% 4% →The Company encourages customers toenjoy the convenience ofinnovative features such asPay-at-store, Click and Collect thanks toitsdeveloped omnichannel infrastructure →Pay-at-store and Click and Collect areavailable atevery store inTurkey and hasgrowing availability ininternational marketsDefacto.com platform 20% 18+ % share in 2021B Online sales # of countriesOnline sales through… Select list of strategic partner marketplaces →Platform isalso designed toprovide the same unique shopping experience from each device, facilitating shopping ateach occasion Multi -device availability90+Store operations IFC 40 2026DeFacto’s online journey over the years →Set up online presence →Provided basic information to customers →Offloaded excess merchandise from previous seasons →Limited product variety →No substantial growth→Focus on clearing out stock from previous seasons →Product variety limited with outlet products only →Tested “ click and collect ” in 2016 →Initiated selling products on marketplaces→Appointed new team →Changed product mix from outlet to current stock →Increased product variety, exceeding offline −Exclusive product lines updated weekly →Increased inventory levels and size availability →In-store ordering in pilot phase in Istanbul →“Ship from Store” launched in 2018→Mobile application relaunched →Online website r edesigned →Online catalog styling enhanced →First online sales in Kazakhstan, Egypt, Morocco and Iraq →Launch of Defacto.com in Germany and in the UK and surge in online sales →Improving shopping experience initiatives: −Launch of Astrafit −Launch of Snap -by →“Ship from Store” expanded to 15 countries within 2018Step 1 –Launch Step 2 –First steps Step 3 –Strategy shift Step 4 –Growth →Expansion of online presence in 90+ countries through marketplaces →Initiated collaborations with strong local players in new geographies such Latam , India and East Asia →Started working with locally -based account managers to gain deeper insights into customer demand and improve communication →Defacto.com platform constantly streamlined to support growthFuture is here Source: Company2% % share of Online sales in Net sales17% c.50%2021 -Onwards 2018 -2020 2017 -2018 2012 2013 -2016 Being one of the early adopters of digital transformation in the fashion industry, DeFacto is well -equipped to deliver a seamless online shopping experience to its customers Management’s target for online sales by 2026 2018 2020Design Production Procurement Distribution & Logistics Sales operations Store operations c.20%2021 IFC 41 April 2020 Source: Company, Zalando websiteCase study: DeFacto’s exemplary success with Zalando Impressive expansion success with Zalando Partnership Two-tiered market expansion Strong partnership continues… DeFacto live in 4 marketsDeFacto live in an additional 8 marketsContinuous expansion in Europe1stphase 2ndphase March 2020 October 2020 → In March 2020, DeFacto joined Zalando via Partner Program, under the concept of reaching the widest fashion customer base possible → The program enables DeFacto to readily access a large and diverse, previously untapped customer potential→ Based on data forecasts provided by the Partner Program, DeFacto went live in four markets → Testing its offer in these markets first, DeFacto became acclimated to this platform, especially with respect to assessing the right level of assortment depth and width to meet demand → DeFacto ensured a solid stock flow to Zalando Fulfillment Solutions warehouses → DeFacto went live in an additional eight markets in May, paving the way for an incremental net merchandise value (NMV) growth of 9,700+% from March to October 2020→ DeFacto leveraged its Partner’s logistical infrastructure in Europe, saving both time and money → Internationalization drive remains under way, to continue with other European countries → Increasing assortment width through new category additions → Integration process in new markets facilitated by integrator partner, ChannelAdvisor 12 markets in less than 4 months4x sales in less than 4 months9,700 +% NMV growth in less than 4 monthsMay 2020 IFC 42 Source: CompanyDiligent evaluation on store opening process Site identificationSite evaluation Go / No Go decision by Head of ExpansionTerm negotiationFit out and recruitmentOpening →Search criteria →Agent relationship →Regular contact→Site visits →Feasibility analysis →Business case →Letter of intent→Legal review by lawyers →Lease agreed →Pre-exchange check list→Handover to technical team →Capex deployment →Store fitted out by store development team →Virtual merchandising team handling final pre-opening phase →Marketing activities Up to 2 years before openingc.8 weeks c.2 weeks c.10 weeks Design Production Procurement Distribution & Logistics Sales operations Store operations The whole process is managed by a dedicated team of 11 employees IFC 43One -stop shop concept promises pleasant in -store shopping experience… ENTRANCE ENTRANCEENTRANCEFASHIONWOMEN YOUNG MEN YOUNGKIDS BOYDENIMMEN ACTIVEWEARWOMEN ACTIVEWEAR DENIMKIDS F.R. KIDS ACCKIDS GIRLWOMEN CASUALWOMEN ACC MEN ACC MEN CASUALCASH ACC[CHINO]SMARTCASH DESKDEPOTMEN F.R. MEN HOMEWEAR1 2 3 4 5 6 7 HOMEWEAR LINGERIEWOMEN [ ]1 2 3 4 5 678MATERNITYIndividual sections for each product category Store sections suited to target customers Store design of one -stop shop concept … …offering visitors an enjoyable shopping experience Source: Company c.950 sqmAverage store sizeTurkey c.850 sqmInternationalComfortable and easy shopping experience Visually appealing store designs More light and more space Employee incentivization at the register to promote cross -selling opportunities Tailor -made employee ranking system creating a fair ground and visibility for high -performing staff Smart fitting rooms equipped with a call staff button for customers requiring a different size or colored itemDesign Production Procurement Distribution & Logistics Sales operations Store operations Sample DeFacto store layout IFC 44 Source: Company…as well as displaying DeFacto’s popular product assortment to customers 30% of product range are repeat styles, while 65% are re -orders of successful test stylesBasics Repeated and updated styleTrendy basic Repeated and updated styleAcceptable fashion Proven and reorderedNew fashion New offering →Value for money →Quality →Always in style→Broad appeal →Fashion details →Innovation→New trend →Easily adopted →Commercial details→Variety →Question mark →Test
appealing store designs More light and more space Employee incentivization at the register to promote cross -selling opportunities Tailor -made employee ranking system creating a fair ground and visibility for high -performing staff Smart fitting rooms equipped with a call staff button for customers requiring a different size or colored itemDesign Production Procurement Distribution & Logistics Sales operations Store operations Sample DeFacto store layout IFC 44 Source: Company…as well as displaying DeFacto’s popular product assortment to customers 30% of product range are repeat styles, while 65% are re -orders of successful test stylesBasics Repeated and updated styleTrendy basic Repeated and updated styleAcceptable fashion Proven and reorderedNew fashion New offering →Value for money →Quality →Always in style→Broad appeal →Fashion details →Innovation→New trend →Easily adopted →Commercial details→Variety →Question mark →Test productc.20% c.25% c.53% c.2% % share in 2021B Net sales 10-15% of the product assortment is made from regenerated yarnDesign Production Procurement Distribution & Logistics Sales operations Store operations IFC 45 Source: CompanySupportive franchise model to foster international expansion efforts DeFacto ’s franchise model is based on supporting its franchisees at allaspects toensure thesame quality of service with its own storesOperational support Global best practiceIT Integrated technology with DeFacto HQMarketing Traditional and new -ageTraining model Alignment with DeFacto staff training programConstruction Cost effective build DeFacto’s franchise opening criteria Supporting franchisees in every step of the way Well -defined franchise pre -qualification criteria Continuously monitoring franchises according to key performance criteria Long -term business relationships with operational franchisees Global thinking and local approach for effectively penetrating markets with high barriers to entry No inventory and consignment agreement risk Integrated IT system enabling seamless monitoring of DeFactoKosova franchiseDesign Production Procurement Distribution & Logistics Sales operations Store operations Tajikistan franchise Azerbaijan franchiseModel No royalty in place DeFacto sells products to franchisees IFC III. Business model overview -Operational flow -Key business functions A. Sustainability B. HR C. Marketing D. Technology IFC 47 (1) 2020 figures (2) Turkey stores (2017 -2019) Source: CompanySustainability is central to the strategy 01 Supplier code of conduct →DeFacto suppliers DeFacto are required to comply with certain conditions, such as UNGC Principles, Universal Declaration of Human Rights, ILO and DeFacto’s social values →Supplier audits are conducted regularly by the Company in order to examine the capabilities →Key supplier audits include child labor (not accepted under any circumstances), fire and safety, use of personal protective equipment →Physical and analytical testing laboratories, in accordance with European Union Accreditation standards, analyze; —Product quality —Non-fire safety—Baby and kids apparel safety —Ecological standards and hazardous chemicals02 Testing 04 Environmental and social responsibility initiatives →Committed member of Global Compact Alliance, as well as local initiatives →Management of impacts arising from activities and products with awareness is DeFacto’s responsibility to the environment, employees and society03 Sustainability Recycled 4 mn1parcels and 3.6k1tons of paperAdoption of zero waste target of waste managementReduced avg. yearly per sqm electricity consumption in stores by c.37%1,2compared to 20157.7k1tons water saved for 770k products Sustainability at the heart of operations… 1.2k1tons scraps reused for 4.3 mn1products 10-15% of the product assortment is made from regenerated yarn IFC 48 (1) Since 2014 (2) Since 2015 Source: CompanyEthical and sustainable retailer compliant with ESG standards …aimed at generating the best combination of fashion and sustainability →DeFacto hasaclear mission todeliver fashionable products atgood quality and atvalue prices bymeeting exemplary sustainability criteriaSustainability is embedded in DeFacto’s operations … Environmental 1 →DeFacto’s main priorities are —Reducing raw material consumption —Preventing water and energy waste in production —Efficient energy usage in stores Sustainability at coreEnvironmental Social Governance Social 2 →DeFacto administers stringent audit measures toitssuppliers, ascertaining that good practices areapplied throughout thesupply chain —DeFacto audited more than 500 suppliers in 2020 →The Company tests allofitsproducts’ compliance byStandard 100 Oeko - Tex,certifying thehighest quality and safety product standards →DeFacto organizes special days every year toevaluate creations and exchange ideas with itssuppliers Governance 3 →DeFacto established sound corporate governance principles (independent board, separation ofownership and management) and haswell-operating audit and riskcommittees inplace toprevent internal/external riskfactors that could pose athreat tobusiness →C-suite responsible forleadership and oversight ofsustainability efforts DeFacto is a committed Global Compact1and Women Empowerement Principles2signatory since 2014, and uses Global Reporting Initiative (GRI) standards as a guide… and central to DeFacto’s strategy IFC 49 Source: Company2020 -2021 2023 2030 →Use of parcels made from recycled paper has been started. 4 mnwaste parcels and 3.6k tons of wastepaper were recycled annually →7.7k tons of water saved for 770k sustainable products →Prevented waste generation by reusing 1 .2k tons of scrap in 4.3 mnproducts →Conducted more than 5 00supplier audits →Upholding environmental values, while creating fashion : With 3.5 mnrecycled products and 260,000 tons of water savings, DeFacto has met the clean water needs of 4 -member 11,682 households for one month →More than 500,000 people received seed tags →Maintain cooperation with civil society organizations and associations to support sustainability →DoğaKalpBen collection constitutes 35% of total goods sold →100% zero waste in main stores and logistics →100% Green to Pack →100% plastic -free disposable materials →Eco-friendly stores →100% sustainable cotton →100% recycled polyester →100% sustainable linen →100% renewable energy consumption at own locationsSustainability is a core component of DeFacto’s long -term vision, with key targets scheduled for implementation Achievements Goals for the future Social awareness campaign in back to school period to inspire social awareness at early ages 2.1 mnviews 400k likesDeFacto strongly committed to achieving sustainability goals IFC 50Strong HR culture dedicated to promoting best in class work environment CFO CGO1CMO (1) Chief Growth Officer (2) Chief Supply Chain Officer Source: CompanyC-suite on charge of key departments… CEO CSCO2 Finance and e-commerceMarketingExpansion and offline operationsSupply chain, audit and project management …managing a dedicated workforce of 13,000 people Headquarters Warehouses Stores c.2,000 c.10,000 c.1,000 # of employees Like-minded talent pool connecting with DeFacto’s consumer base… …retained and recruited through visionary corporate initiatives →Attheforefront ofDeFacto’s success liesitsdesire tounderstand itscustomer base, starting from itsown employees →DeFacto’s young talent pool, 97%ofwhich pertains toGeneration Zand Y, enables theCompany toconnect with itscustomer base →Taking cues from itsemployees, DeFacto excels innew designs, delineating seasonal trends and next generation clothing ideas→Cognizant ofthefact that itsyounger generation employees setitapart from competition, DeFacto iskeen tomaintain afriendly and joyful workplace
culture dedicated to promoting best in class work environment CFO CGO1CMO (1) Chief Growth Officer (2) Chief Supply Chain Officer Source: CompanyC-suite on charge of key departments… CEO CSCO2 Finance and e-commerceMarketingExpansion and offline operationsSupply chain, audit and project management …managing a dedicated workforce of 13,000 people Headquarters Warehouses Stores c.2,000 c.10,000 c.1,000 # of employees Like-minded talent pool connecting with DeFacto’s consumer base… …retained and recruited through visionary corporate initiatives →Attheforefront ofDeFacto’s success liesitsdesire tounderstand itscustomer base, starting from itsown employees →DeFacto’s young talent pool, 97%ofwhich pertains toGeneration Zand Y, enables theCompany toconnect with itscustomer base →Taking cues from itsemployees, DeFacto excels innew designs, delineating seasonal trends and next generation clothing ideas→Cognizant ofthefact that itsyounger generation employees setitapart from competition, DeFacto iskeen tomaintain afriendly and joyful workplace −DeFacto employs a Happiness Director overseeing employee morale −DeFacto encourages its employees to broaden their horizons through its own online learning system, DeFacto Academy →DeFacto conducts management trainee programs toattract new talent from reputable universities −c.65% of DeFacto employees are university graduates IFC 51 Source: Company360˚marketing with focused messaging across multiple customer points Effective use of both traditional and digital media marketing 1. One -stop Shop Strategy Effective use of all available communication media TV ads are key to sustaining brand awareness, both in Turkey and international markets For Women : Support “fashion” perception among women and promote women customers’ potential with continuous interaction For Men : Communicate seasons, Father’s Day, holiday periods For Kids : Special advertisements and collaborations and license collaborations to widen brand reach and to convert one -time shoppers to loyal customers 2. 365 -Day Digital Support Enhanced collaboration with local influencers to reinforce bonds with customers both in Turkey and international markets Close interaction with customer base with professional social media account management Specialized discount campaigns for social media followers, to promote mobile application usage and brand awareness5. Content Marketing Available throughout the year to support all campaigns Theme -based campaigns to promote social awareness 4. In -Store and Event Marketing 52-week new product and pricing communication Occasional event sponsorships 3. Online and Offline, Integrated Projects 360 Support Continuous communication with customers to bridge online and in - store shopping experiences, and drive omnichannel capabilities Loyalty card initiative launched to collect valuable customer data Plans include tailored shopping recommendations to customers, based on their past preferences Effective use of search engine optimization (SEO) marketing to attract traffic to Defacto.com Printed Media Magazines, NewspapersVideo All Video Content Platforms Yotube etc.TV TVC, Scenario, Integrations, Garment Sponsorships Radio National, Regional Digital Media Web pages, All Other Platforms Social Media Proactive Social Media, e -dictionary DeFacto Channels Defacto.com.trSearch Engines Targeting, SEO and TrafficBlogs Bloggers, Mass Web PagesMobile Platforms Apps, SMS and Other Mobile Digital Media ChannelsE-mailing Mailing and NewsletterEvents All Instore and Mall Events1 2 345Marketing efforts are scattered across the brand calendar, including those marking traditions and celebrations (Christmas, Ra mad an, etc.) DeFacto’s “Back to School ” campaign to promote sustainability ideas among students Ratio of marketing expenses over net sales of c.1.5% in the historical period increased to c.2.5% in 2021B which is estimated to increase to c.3.5% in 2022 and gradually to c.6.5% by 2026; continuous brand investment to fuel growth, increase geographical footprint and increase online presence IFC 52 Source: CompanyLeveraging in -house production experience and capability In-house IT capabilities secured by DeFacto Teknoloji E-Commerce →E-Commerce and Omnichannel Platforms (in-house ) →Mobile app & mobile web IT Business Services →ERP applications (in-house ) →3rdparty applications →Application integrations →B2B, web & mobile applications Business Intelligence →Data warehouse →Reporting & analytics services →Big data platformIT Infrastructure Services →Datacenter (Main & disaster recovery) →Server and storage →Network →Database management →Monitoring (availability and capacity & performance) →Backup and replication services Information Security →IT governance →Information security →Access & identity management →Security monitoring & intervention Service Desk →Incident management →Request fulfillment for all DeFacto ecosystem with defined service -level agreements→Employing 60engineers, wholly -owned subsidiary DeFacto Teknoloji provides aunique competitive edge, with in-house ERP system tailored toDeFacto’s specific needs IFC IV. Financial overview IFC 54 Source: Company, IMFBasis of preparation Proposed Transaction scope includes minority stake sale of 10.67% treasury shares of DeFacto owned by the Company, as described in Executive Summary →DeFacto prepares three sets of consolidated financial information with fiscal year being the 12 -month period as of January 1 of the cal endar year, ending on December 31 of the calendar year (i.e. ,01.01.2020 –31.12.2020) −Statutory accounts :DeFacto’s statutory accounts areprepared inaccordance with theTurkish Commercial Code fortaxfiling purposes −Management accounts :DeFacto keeps itsmanagement accounts IFRS-like inTLonaconsolidated basis, and issues monthly accounts detailed atgeography and channel level -Compatible with IFRS financials except for2applications :(i)IFRS 16implementation and (ii)recording ofsome merch andise costs under COGS ,asopposed tounder OPEX inIFRS accounts (Please refer toAppendix forfurther details ) −IFRS financials :DeFacto’s consolidated IFRS financials issued onaquarterly basis areaudited byDeloitte since 2020 and byKPMG theretofore Historical financials presented in this section are based on the consolidated Management accounts of DeFacto →DeFacto management tracks its consolidated operational performance under 4 main segments; (i) Turkey operations, (ii) Developing markets, (iii) Developed markets and (iv) Others including Wholesale operations, Franchise operations and Ozon sales to third -parties →For main segments; namely Turkey, Developing markets and Developed markets; the management follows both holistic and channel -based performance reporting, analyzing the segments under 2 main channels, covering Store operations and Online operations which include performance of De facto.com, Marketplace operations as well as Pay -at-store operations −Although Pay-at-store operations arecovered and reported under Online channel performance, management periodically reviews effective selling space performance and direct costs forStore and Pay-at-store operations combined, foreffective and efficient growth and profitability analysis →Management reports for segments and channels go up to the contribution level which comprises cost of goods sold as well as ch annel-based direct costs including personnel, building, marketing and other operational expenses 2021 Budget and forecast period (2022 -2026) presented in this section are prepared by DeFacto management, on a consolidated basis ,as per below →2021B –2026 Efigures are on the same basis with Management accounts as explained above, presenting management estimates for the forecast period →c.15% of price and cost correction ha vebeen incorporated
De facto.com, Marketplace operations as well as Pay -at-store operations −Although Pay-at-store operations arecovered and reported under Online channel performance, management periodically reviews effective selling space performance and direct costs forStore and Pay-at-store operations combined, foreffective and efficient growth and profitability analysis →Management reports for segments and channels go up to the contribution level which comprises cost of goods sold as well as ch annel-based direct costs including personnel, building, marketing and other operational expenses 2021 Budget and forecast period (2022 -2026) presented in this section are prepared by DeFacto management, on a consolidated basis ,as per below →2021B –2026 Efigures are on the same basis with Management accounts as explained above, presenting management estimates for the forecast period →c.15% of price and cost correction ha vebeen incorporated to the 2022E business plan by the management considering recent sharp devaluation of TL and increasing inflationary environment; a portion of thiscorrection has already been applied for prices as we ll as costs Management prepared forecast period Management accounts as perthemacro assumptions below 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E Inflation (TL) 11.8% 14.6% 20.0% 18.0% 15.0% 15.0% 15.0% 15.0% USD / TL (Avg) 5.68 7.02 8.90 14.42 16.17 18.60 21.39 24.59 USD / TL (EoP) 5.95 7.35 13.80 15.04 17.30 19.89 22.88 26.31 EUR / TL (Avg) 6.35 8.03 10.50 16.30 18.27 21.01 24.17 27.79 EUR / TL ( EoP) 6.66 9.02 15.59 17.00 19.55 22.48 25.85 29.73 IFC 55Financial overview onDeFacto as a whole Key remarks Net sales1(TL mn) EBITDA4(TL mn)Sustained investment in technology and human resources enabling steady growth and profitabilityTargeting around 55% international sales and around 50% online sales by 2026E (1) Represents store and online operations foreach market. Others constitute thetotal sales forWholesale , Franchise and Ozon sales tothird -parties (2) Consists of MENA, CIS, Balkan and East Asian countries (3) Consists of Western European countries (4) Excluding IFRS 16 effect Source: Company, TUIKOperational excellence and close monitoring of cost items facilitating margin improvement 14.3% 10.3% 13.8% 13.8% 13.8% 14.0% 14.4% 15.2%4,0267,0749,344 11,44814,03216,960 1,341 1,423 2,5254,5866,4418,80211,43813,969 147 4057063,8515,849 267254 3887009311,3271,902 2025E4,223 2019A2539,429 2,931 2023E2,399 2020A1,572 2022E2,500 2026E 2024E 2021B2,651 18,288 4,5647,34413,06724,07631,223 +27%+40%5% 17% 19% 22% 30% 37% 44% 50% % share of onlineTopline growth across geographies and channels; focusing on further internationalization and online conversion Focusing on recently added categories such as kids and continuous shift to more value -added productsCovid -19 Covid -19 Robust EBITDA margin despite Defacto.com’s international operations still at ramp -up stage contributing negative to EBITDA during the projection period EBITDA %14.4% 10.4% 14.6% 15.2% 15.9% 16.4% 16.1% 16.0% 1,0141,7992,5313,3734,50747 -338 2019A6554 2020A 2024E 2025E 2021B141 2022E439 2023E26730992 5,978 4341,0612,798 1 2026E5,640 6561,9403,6824,599 EBITDA EBITDA exc. Defacto.com international EBITDA % exc. Defacto.com internationalInternational operationsDeveloping markets2Turkey Developed markets3Others17% vs CPI IFC 56 Source: CompanyDeFacto , a success story for profitable growth with a global vision from Day 1 →Focus ononline ;enter with marketplace, establish brand awareness and continue with Defacto .com →Increase global presence with less capital and resource incentive strategy ;mainly focusing onEuropean countries and US →Physical entry toGermany in2021 willbefollowed with theUK,Austria and theNetherlands in2022 →Extending itsglobal footprint, willseek tobecome the“sought after brand” bytourists inDeveloped markets→Focus onDefacto .com and marketplaces ;online isakeypocket todeep -dive inTurkey →Continuously explore growth opportunities both for new marketplaces, aswell asshifts toDefacto .com from marketplaces →Enhance inventory management ;avoid stock -outs and integrate effective AIsystem into online operations →Opportunistic new store openings ;focus onenhancing efficiency atexisting stores interms ofcost and sqm usage →Continuous brand investment Developed marketsTurkey operations “Key milestone for globalization with more online, less physical strategy”“Focus on further enhancing brand positioning, consumer acquisition and market share” →Grow inexisting markets and explore new markets forgeographical expansion (such asLatam, India ,etc.) →Heavily invest inonline growth (Egypt ispriority), focusing onboth Defacto .com and marketplaces ;China ismedium - term target foronline growth →Store openings are still important strategy where the shift from unorganized toorganized retail isakey trend in Developing markets ;growth supported byincreasing brand awareness and experience instore strategies →Opportunistically explore growth viafranchises, especially formarkets where local presence and know -how arekey“Replicate the success in Turkey for continuous expansion and profitable growth across channels”Developing marketsShift towards more profitable products Be opportunistic and explore growth opportunities across geographies and channelsMaintain keener focus on baby and kids segment Better inventory management and SKU optimizationPlace emphasis on online, technology and HR Big data analysisClosely monitor consumer trends and be a leaderDeFacto’s key strategies… …enriched with regional strategies for agility and flexibility IFC 57 Source: CompanyOverview of store and online operations →The figures on the left pertain to DeFacto’s Turkey operations, comprising DeFacto stores and online operations →Management tracks Turkey operations under two main sales channels, stores and online, which account for c.82% and c.18% of 2021B Turkey net sales, respectively →As clearly denoted by historical figures, a shift to online operations is evident, as DeFacto management has adapted its business strategy over the years in parallel with the changing global retail landscape and trends →With the Covid -19 pandemic having upended the retail industry with forced store closures, DeFacto has successfully pivoted its operations to serve its customers through the online channel −Online sales’ share increased to 19% in 2020, as DeFacto quickly responded to the changing realities of the retail sector, thanks to its well -invested online infrastructure −Going forward, the weight of the online channel in Turkey net sales is projected to rise towards c.50% as of 2026E →DeFacto showed strong resilience against the uncertainties and disruptions caused by Covid -19 by closely controlling its cost base and store operations through constant efficiency improvements and monitoring of day -to-day operations −Gross profit margin improved in 2021B due to a longer inventory days as well as DeFacto’s substantial efforts towards managing demand fluctuations through Ozon’s supplier management expertise, ongoing supplier optimization and improved inventory management techniques; later 3 estimated to have permanent impact on gross profit margin →As a result of management’s cost -control approach, operational cost increases were kept at a minimum in 2020, despite store closures due to Covid -19 →Contribution margin is projected to improve to 26% from 24% over the next five years, due to improving category & brand mix, maturing
of 2026E →DeFacto showed strong resilience against the uncertainties and disruptions caused by Covid -19 by closely controlling its cost base and store operations through constant efficiency improvements and monitoring of day -to-day operations −Gross profit margin improved in 2021B due to a longer inventory days as well as DeFacto’s substantial efforts towards managing demand fluctuations through Ozon’s supplier management expertise, ongoing supplier optimization and improved inventory management techniques; later 3 estimated to have permanent impact on gross profit margin →As a result of management’s cost -control approach, operational cost increases were kept at a minimum in 2020, despite store closures due to Covid -19 →Contribution margin is projected to improve to 26% from 24% over the next five years, due to improving category & brand mix, maturing online sales and scale impactRemarksTurkey operations Developing markets Developed markets Others CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 # of effective stores # 318 300 308 316 325 330 335 340 Turkey net sales TL mn 2,931 2,399 4,026 7,074 9,344 11,448 14,032 16,960 17.2% 33.3% growth % -18.1% 67.8% 75.7% 32.1% 22.5% 22.6% 20.9% Store % 2,734 1,938 3,289 5,639 6,920 7,606 8,225 8,884 9.7% 22.0% % of net sales % 93.3% 80.8% 81.7% 79.7% 74.1% 66.4% 58.6% 52.4% Online % 197 461 737 1,435 2,425 3,842 5,807 8,076 93.6% 61.4% % of net sales % 6.7% 19.2% 18.3% 20.3% 25.9% 33.6% 41.4% 47.6% Gross profit TL mn 1,341 1,057 1,965 3,319 4,449 5,497 6,738 8,127 21.1% 32.8% margin % 45.8% 44.1% 48.8% 46.9% 47.6% 48.0% 48.0% 47.9% Operational costs TL mn 773 684 1,000 1,683 2,144 2,544 3,095 3,742 13.7% 30.2% % of net sales % 26.4% 28.5% 24.8% 23.8% 22.9% 22.2% 22.1% 22.1% Personnel expenses TL mn 285 234 352 580 727 880 1,054 1,269 11.1% 29.3% Building expenses TL mn 326 248 360 570 696 734 790 851 5.0% 18.8% Marketing expensesTL mn 18 28 42 100 127 162 243 352 52.3% 52.8% Operational expensesTL mn 144 174 246 434 595 768 1,007 1,270 30.8% 38.9% Contribution TL mn 568 373 965 1,636 2,305 2,953 3,643 4,385 30.4% 35.3% margin % 19.4% 15.6% 24.0% 23.1% 24.7% 25.8% 26.0% 25.9% IFC 58 (1) Pay -at-store sales are sales to store customers whereby payment is made at store and merchandise is shipped to customer (2 ) Calculated using effective net selling space presented in thispage Source: CompanyOverview of store operations →In Turkey, DeFacto has implemented an effective land grab bing strategy over the years, capturing strategic locations in frequented venues with high consumer traffic −Store network across Turkey reached more than 300 stores →After having taken DeFacto brand to almost every city in Turkey, the Company decided to adapt store optimization and efficiency strategy →Pursuing an opportunistic approach to new store openings and being constantly on the lookout for new prime locations across Turkey, management targets 340 stores by 2026E −Sub-brand store openings such as DeFacto Fit are included in the targets →Store sales’ share isexpected to gradually decrease to c. 50% from c.80% in 2021B with an accelerating shift to online →Despite this demand shift, management plans to increase sales per sqm in 2022 and 2023 through improved category mix, more effective sqm usage and implementation of technological tools in stores →Gross profit margin improved in 2021B mainly due to slower inventory turnover and is expected to decrease in 2022 to c.47%, with slight improvements envisaged thereafter due to shift towards value -added products and supplier optimization; tactical moves by the management creating lasting margin improvements →Improvements in operational costs are mainly due to effective personnel and rental expense strategies, and better inventory management with omnichannel integration −Leveraging its anchor store status in malls, DeFacto exerts its bargaining power in rental term negotiations →As part of their holistic omnichannel strategy, management monitors the effect of Pay -at-store sales’ efficiency on sales per sqm and contribution, as denoted by figures on the leftRemarksTurkey operations Developing markets Developed markets Others Additional analysis with Pay -at-store performance1CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 # of effective stores # 318 300 308 316 325 330 335 340 Effective net selling space sqm k 279 223 241 292 300 307 313 319 Sales per sqm TL/sqm 9,799 8,675 13,662 19,342 23,034 24,772 26,264 27,845 18.1% 15.3% growth % -11.5% 57.5% 41.6% 19.1% 7.5% 6.0% 6.0% Store n et sales TL mn 2,734 1,938 3,289 5,639 6,920 7,606 8,225 8,884 9.7% 22.0% growth % -29.1% 69.7% 71.5% 22.7% 9.9% 8.1% 8.0% Gross profit TL mn 1,265 867 1,640 2,663 3,330 3,712 4,030 4,353 13.8% 21.6% margin % 46.3% 44.8% 49.9% 47.2% 48.1% 48.8% 49.0% 49.0% Operational costs TL mn 712 560 805 1,291 1,565 1,678 1,802 1,945 6.3% 19.3% % of store net sales % 26.0% 28.9% 24.5% 22.9% 22.6% 22.1% 21.9% 21.9% Contribution TL mn 554 307 835 1,372 1,766 2,034 2,228 2,408 22.8% 23.6% margin % 20.3% 15.9% 25.4% 24.3% 25.5% 26.7% 27.1% 27.1% CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Store netsales TL mn 2,734 1,938 3,289 5,639 6,920 7,606 8,225 8,884 9.7% 22.0% Pay-at-store sales TL mn 17 43 64 226 538 951 1,448 2,034 94.0% 100.0% Total TL mn 2,751 1,981 3,353 5,864 7,457 8,557 9,673 10,919 10.4% 26.6% Sales per sqm2 TL/sqm 9,859 8,869 13,927 20,116 24,824 27,868 30,886 34,222 growth % -10.0% 57.0% 44.4% 23.4% 12.3% 10.8% 10.8% Contribution TL mn 557 315 848 1,447 1,953 2,370 2,743 3,132 23.5% 29.9% margin % 20.2% 15.9% 25.3% 24.7% 26.2% 27.7% 28.4% 28.7% IFC 59 Source: Company→For online business, management tracks the performance under three main sub -channels: Own online platform “Defacto.com”; 3rdparty marketplaces such as Trendyol and Hepsiburada ; and omnichannel feature of Pay -at-store option →Online sales posted massive growth in 2020, accounting for c.19% of total Turkey net sales, taking leverage from increasing online shopping habit during Covid -19 −The Company was able to handle the spike in online sales, thanks to its well -established tech infrastructure →Marketplaces, where DeFacto’s sales doubled year over year, were the main growth driver of online sales in 2020 and
growth % -10.0% 57.0% 44.4% 23.4% 12.3% 10.8% 10.8% Contribution TL mn 557 315 848 1,447 1,953 2,370 2,743 3,132 23.5% 29.9% margin % 20.2% 15.9% 25.3% 24.7% 26.2% 27.7% 28.4% 28.7% IFC 59 Source: Company→For online business, management tracks the performance under three main sub -channels: Own online platform “Defacto.com”; 3rdparty marketplaces such as Trendyol and Hepsiburada ; and omnichannel feature of Pay -at-store option →Online sales posted massive growth in 2020, accounting for c.19% of total Turkey net sales, taking leverage from increasing online shopping habit during Covid -19 −The Company was able to handle the spike in online sales, thanks to its well -established tech infrastructure →Marketplaces, where DeFacto’s sales doubled year over year, were the main growth driver of online sales in 2020 and 2021B, surpassing Defacto.com →Capitalizing on its strong online infrastructure and supply chain, the Company focused on boosting itsonline existence viamarketplace s and g oing forward, DeFacto seeks greater shift to Defacto.com from marketplaces →Operational costs are expected to increase in 2022 mainly as a result of new marketplaces being introduced to the system, driving marketing expenses to Turkey online sales up by c.1% −Marketing expenses decrease over time and normalize at c.4% of Turkey online sales →Personnel expenses grow in tandem with a larger account management team to cover a wider marketplace network →Management has identified several improvement areas to increase contribution margin by gaining further efficiencies in operational costs mainly through −Reducing logistics costs by distribution of merchandise from fewer stores, deepening inventory and integrating smaller warehouses into the main DC in Çerkezköy →DeFacto aims to quickly replicate the profit ramp -up captured in the contribution margin in Turkey to international markets, which are currently at a slightly earlier stageRemarksOverview of online operations Turkey operations Developing markets Developed markets Others CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Online n et sales TL mn 197 461 737 1,435 2,425 3,842 5,807 8,076 93.6% 61.4% growth % 134.3% 59.9% 94.6% 69.0% 58.4% 51.2% 39.1% Defacto.com TL mn 99 179 203 426 738 1,210 1,933 2,843 42.8% 69.6% % of online net sales% 50.5% 38.7% 27.5% 29.7% 30.5% 31.5% 33.3% 35.2% Marketplace TL mn 81 239 471 784 1,149 1,681 2,426 3,198 141.8% 46.7% % of online net sales% 41.0% 51.9% 63.9% 54.6% 47.4% 43.8% 41.8% 39.6% Pay-at-store TL mn 17 43 64 226 538 951 1,448 2,034 94.0% 100.0% % of online net sales% 8.6% 9.4% 8.6% 15.7% 22.2% 24.7% 24.9% 25.2% Gross profit TL mn 76 190 325 656 1,118 1,785 2,707 3,774 107.1% 63.3% margin % 38.5% 41.1% 44.1% 45.7% 46.1% 46.5% 46.6% 46.7% Operational costs TL mn 61 124 195 393 580 866 1,293 1,797 78.1% 55.9% % of online net sales% 31.2% 26.8% 26.4% 27.4% 23.9% 22.5% 22.3% 22.3% Contribution TL mn 14 66 130 263 539 919 1,415 1,976 201.4% 72.3% margin % 7.3% 14.3% 17.6% 18.4% 22.2% 23.9% 24.4% 24.5% IFC 60Overview of store and online operations →On top of its growth in Turkey, DeFacto focused on establishing a sound market presence by investing heavily in brand equity in Developing markets over the years →The Company first targeted MENA and CIS regions due to their attractive fundamentals and growth potential on the back of i) young and growing populations ii) low level of global brand penetration and iii) ample room for online penetration →The Company later penetrated to Malaysia and CEE region as part of its globalization journey, reaching 168 stores as of October 2021 →Store sales, which constitute c.90% of Developing market sales as of 2021B, are estimated to post 2 6% CAGR over the next five years, underpinned by solid store openings in MENA and CIS regions and organic growth forexisting stores →Online channel, on the other hand, is projected to generate 92% CAGR, capturing further share within Developing market operations −Online sales in Developing markets are forecast edto constitute c.50% of Developing markets net sales in 2026E, up from c.10% levels in 2021B, on the back of growing partnerships with several marketplaces in the region with extensive local market knowledge →Gross profit margin is projected to edge up c.1.5% through the forecast period, supported by DeFacto’s established know - how in textiles and supplier optimisation →Operational costs increase along with higher marketing and operational expenses to support market penetration in both physical and online worlds →Contribution margin1, stabilizing at c.26% over the years, is to be analyzed excluding Defacto.com which is at ramp -up stageRemarks (1) Excluding Defacto.com at ramp -up stage Source: CompanyTurkey operations Developing markets Developed markets Others CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 # of effective stores # 146 149 160 179 198 217 233 245 Developing net salesTL mn 1,341 1,423 2,525 4,586 6,441 8,802 11,438 13,969 37.2% 40.8% growth % 6.1% 77.5% 81.6% 40.4% 36.7% 30.0% 22.1% Store TL mn 1,329 1,324 2,264 3,852 4,744 5,701 6,609 7,188 30.5% 26.0% % of net sales % 99.2% 93.1% 89.6% 84.0% 73.7% 64.8% 57.8% 51.5% Online TL mn 11 99 261 734 1,696 3,101 4,830 6,781 n.m. 91.8% % of net sales % 0.8% 6.9% 10.4% 16.0% 26.3% 35.2% 42.2% 48.5% Gross profit TL mn 706 718 1,323 2,388 3,409 4,685 6,094 7,461 36.9% 41.3% margin % 52.7% 50.4% 52.4% 52.1% 52.9% 53.2% 53.3% 53.4% Operational costs TL mn 351 414 748 1,244 1,846 2,598 3,372 4,128 46.0% 40.7% % of net sales % 26.2% 29.1% 29.6% 27.1% 28.7% 29.5% 29.5% 29.5% Personnel expenses TL mn 105 105 184 315 423 587 787 986 32.1% 39.9% Building expenses TL mn 176 187 309 485 580 682 792 861 32.7% 22.7% Marketing expensesTL mn 5 8 24 51 166 313 364 438 111.0% 78.3% Operational expensesTL mn 64 114 231 393 678 1,016 1,429 1,843 89.3% 51.5% Contribution TL mn 355 304 575 1,144 1,563 2,086 2,722 3,333 27.2% 42.1% margin % 26.5% 21.3% 22.8% 24.9% 24.3% 23.7% 23.8% 23.9% Contribution1 TL mn 357 305 576 1,139 1,588 2,130 2,656 3,181 27.1% 40.7% margin1 % 26.6% 21.8% 23.3% 25.8% 26.3% 26.6% 26.2% 26.0% IFC 61Overview of store operations →Following an aggressive land grab bing strategy
4,128 46.0% 40.7% % of net sales % 26.2% 29.1% 29.6% 27.1% 28.7% 29.5% 29.5% 29.5% Personnel expenses TL mn 105 105 184 315 423 587 787 986 32.1% 39.9% Building expenses TL mn 176 187 309 485 580 682 792 861 32.7% 22.7% Marketing expensesTL mn 5 8 24 51 166 313 364 438 111.0% 78.3% Operational expensesTL mn 64 114 231 393 678 1,016 1,429 1,843 89.3% 51.5% Contribution TL mn 355 304 575 1,144 1,563 2,086 2,722 3,333 27.2% 42.1% margin % 26.5% 21.3% 22.8% 24.9% 24.3% 23.7% 23.8% 23.9% Contribution1 TL mn 357 305 576 1,139 1,588 2,130 2,656 3,181 27.1% 40.7% margin1 % 26.6% 21.8% 23.3% 25.8% 26.3% 26.6% 26.2% 26.0% IFC 61Overview of store operations →Following an aggressive land grab bing strategy pursued in Turkey, the Company’s international expansion started with Kazakhstan, where its debut store was launched in 2012. The Company quickly expanded its international presence over the past two years, penetrating 10+ countries →As of October 2021, DeFacto has 168 stores in Developing markets; top 5 countries on store count are Kazakhstan (33), Morocco (29), Iraq (24), Egypt (17) and Russia (15) −In Q3 2021, the Company solidified its presence in CEE by expanding into two new countries, Macedonia and Montenegro, alongside existing ones like Serbia, Romania, Bulgaria, Bosnia, and Albania, hence reaching 14 stores →Strong store sales growth was interrupted by forced store closures due to Covid -19 in 2020. With stores starting to operate at higher capacity in 2021B, store sales are expected to achieve 71% growth and reach sales of c.TL 2.3 bn →DeFacto aims to open more than 80 stores over the next 5 years, with 75% of openings envisaged in the CIS region −DeFacto’s agile management strategy enables the Company to adjust to shifts in competitive landscape and macroeconomic conditions. To reach the intended topline, management can modify growth plans by interchanging country specific targets →Gross profit is expected to be slightly higher on better inventory management, going forward →Operational costs are estimated to decrease on the back of better rental terms, as DeFacto’s pricing power increases in line with an expanding presence and store count, and more efficient personnel utilizationRemarksTurkey operations Developing markets Developed markets Others (1) Calculated using effective net selling space presented in this page Source: CompanyCAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 # of effective stores # 146 149 160 179 198 217 233 245 Effective net selling space sqm k 119 97 132 161 186 212 232 247 Sales per sqm TL/sqm 11,138 13,660 17,193 23,978 25,444 26,931 28,538 29,150 24.2% 11.1% growth % 22.6% 25.9% 39.5% 6.1% 5.8% 6.0% 2.1% Store net sales TL mn 1,329 1,324 2,264 3,852 4,744 5,701 6,609 7,188 30.5% 26.0% growth % -0.4% 71.0% 70.2% 23.2% 20.2% 15.9% 8.8% Gross profit TL mn 701 662 1,169 1,985 2,478 3,005 3,483 3,788 29.1% 26.5% margin % 52.7% 50.0% 51.6% 51.5% 52.2% 52.7% 52.7% 52.7% Operational costs TL mn 348 363 592 928 1,115 1,317 1,524 1,652 30.4% 22.8% % of net sales % 26.2% 27.4% 26.2% 24.1% 23.5% 23.1% 23.1% 23.0% Contribution TL mn 353 298 577 1,057 1,363 1,687 1,958 2,136 27.9% 29.9% margin % 26.6% 22.5% 25.5% 27.4% 28.7% 29.6% 29.6% 29.7% CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Store net sales TL mn 1,329 1,324 2,264 3,852 4,744 5,701 6,609 7,188 30.5% 26.0% Pay-at-store sales TL mn 0 0 0 83 226 562 892 1,331 n.a. n.a. Total TL mn 1,329 1,324 2,264 3,935 4,970 6,264 7,501 8,519 30.5% 30.4% Sales per sqm1 TL/sqm 11,138 13,660 17,193 24,495 26,655 29,586 32,390 34,549 growth % 22.6% 25.9% 42.5% 8.8% 11.0% 9.5% 6.7% Contribution TL mn 353 298 566 1,077 1,417 1,836 2,205 2,520 26.7% 34.8% margin % 26.6% 22.5% 25.0% 27.4% 28.5% 29.3% 29.4% 29.6%Additional analysis with Pay -at-store performance IFC 62Overview of online operations →Online operations presented on the left include marketplace and Pay -at-store, but exclude Defacto.com figures due to its early operational stage ; presented separately below →Online operations are heavily managed through marketplaces to establish familiarity and awareness with customers and support DeFacto’s online brand visibility, alongside established physical operations with stores →DeFacto mainly works with leading marketplaces in MENA including Jumia, Souq, Noon and Lamoda , Wildberries in CIS −In 2022E, DeFacto plans to build partnerships with strong marketplaces in new regions such as Latam and India →Following 2021B, the Company plans to sharpen its focus on Defacto.com and developing Defacto.com operations first at a pilot country (Egypt )and thereafter extending to other countries building on its accumulated experience →Management plans to designate Egypt as its center focus for Defacto.com operations, given its growing consumption base and established DeFacto presence −Modest and kids' categories carry strategic importance to drive sales growth −As the next step, Defacto.com operations are planned to be expanded to other countries in MENA & CIS regions −As of October 2021, DeFacto is present in Morocco, Egypt, Russia, Kazakhstan, Ukraine and Iraq through Defacto.com →Pay-at-store is also expected to play a significant role with increasing omnichannel integration →Gross profit margin1is projected to drop c.5% over the next five years, with increasing volume and related pricing strategy →Operational costs1are expected to stabilize following 2021B, driving contribution margin1up to c.20% as of 2024E →Contribution margin of Defacto.com will slowly ramp -up, as economies of scale start to kick in , turning topositive in 2025ERemarks (1) Excluding Defacto.com at ramp -up stage Source: CompanyTurkey operations Developing markets Developed markets Others CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Online n et sales1 TL mn 11 78 211 555 1,303 2,300 3,533 5,056 n.m. 88.8% growth % 633.5% 169.6% 163.2% 134.8% 76.6% 53.6% 43.1% Marketplace TL mn 11 78 211 472 1,077 1,738 2,641 3,725 n.m. 77.6% % of online sales % 100.0% 100.0% 100.0% 85.0% 82.7% 75.6% 74.8% 73.7% Pay-at-store TL mn 0 0 0 83 226 562 892 1,331 n.a. n.a. % of online sales % 0.0% 0.0% 0.0% 15.0% 17.3% 24.4% 25.2% 26.3% Gross profit1 TL mn 5 47 130 317 740 1,290 1,979 2,826 404.7% 85.0% margin
start to kick in , turning topositive in 2025ERemarks (1) Excluding Defacto.com at ramp -up stage Source: CompanyTurkey operations Developing markets Developed markets Others CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Online n et sales1 TL mn 11 78 211 555 1,303 2,300 3,533 5,056 n.m. 88.8% growth % 633.5% 169.6% 163.2% 134.8% 76.6% 53.6% 43.1% Marketplace TL mn 11 78 211 472 1,077 1,738 2,641 3,725 n.m. 77.6% % of online sales % 100.0% 100.0% 100.0% 85.0% 82.7% 75.6% 74.8% 73.7% Pay-at-store TL mn 0 0 0 83 226 562 892 1,331 n.a. n.a. % of online sales % 0.0% 0.0% 0.0% 15.0% 17.3% 24.4% 25.2% 26.3% Gross profit1 TL mn 5 47 130 317 740 1,290 1,979 2,826 404.7% 85.0% margin % 48.0% 59.7% 61.8% 57.1% 56.8% 56.1% 56.0% 55.9% Operational costs1 TL mn 1 40 131 235 514 848 1,282 1,781 n.m. 68.5% % of online sales % 13.7% 51.0% 62.2% 42.3% 39.5% 36.9% 36.3% 35.2% Contribution1 TL mn 4 7 -1 82 225 442 697 1,045 n.a. -507% margin % 34.3% 8.7% -0.4% 14.7% 17.3% 19.2% 19.7% 20.7% CAGR Defacto.com Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Net sales TL mn 1 21 51 179 394 801 1,297 1,725 n.m. 102.6% Gross profit TL mn 0 9 24 87 192 390 633 847 n.m. 104.7% margin % 11.0% 45.1% 46.7% 48.4% 48.7% 48.7% 48.8% 49.1% Operational cost TL mn 2 11 25 81 217 433 566 695 n.m.93.9% % of net sales % 215.4% 53.1% 50.1% 45.4% 55.0% 54.1% 43.7% 40.3% Contribution TL mn -1 -2 -2 5 -25 -43 67 152 9.5% -344.7 % margin % -204% -8.0% -3.4% 3.0% -6.3% -5.4% 5.2% 8.8% IFC 63 CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 # of effective stores # 0 0 0 2 9 13 17 21 Developed net sales TL mn 25 147 405 706 1,572 2,500 3,851 5,849 299.6% 70.6% growth % 479.6% 175.4% 74.5% 122.6% 59.0% 54.1% 51.9% Store TL mn 0 0 3 65 284 476 703 980 n.a. 230.1% % of net sales % 0.0% 0.0% 0.6% 9.3% 18.1% 19.0% 18.2% 16.8% Online TL mn 25 147 402 641 1,288 2,024 3,148 4,869 298.3% 64.7% % of net sales % 100.0% 100.0% 99.4% 90.7% 81.9% 81.0% 81.8% 83.2% Gross profit TL mn 12 88 250 408 898 1,431 2,225 3,419 353.5% 68.7% margin % 48.0% 59.7% 61.8% 57.7% 57.1% 57.2% 57.8% 58.5% Operational costs TL mn 3 78 275 472 946 1,387 1,919 2,549 789.6% 56.1% % of net sales % 13.7% 52.9% 67.9% 66.9% 60.2% 55.5% 49.8% 43.6% Personnel expenses TL mn 0 3 23 67 169 264 369 527 n.m. 86.8% Building expenses TL mn 0 3 9 25 85 115 149 193 n.m. 84.4% Marketing expenses TL mn 0 4 57 152 311 496 674 893 n.m. 73.6% Operational expensesTL mn 3 67 186 228 382 512 727 937 n.m. 38.2% Contribution TL mn 9 10 -25 -65 -49 43 306 870 n.a. n.m. margin % 34.3% 6.8% -6.1% -9.1% -3.1% 1.7% 7.9% 14.9% Contribution1 TL mn 9 13 20 82 194 309 465 684 53.4% 101.8% margin1 % 34.3% 8.7% 5.3% 13.6% 15.6% 17.8% 18.9% 19.8%Overview of store and online operations →DeFacto has targeted Europe in line with its vision of becoming a global brand, as the next major step in its internationalization strategy −Turning Covid -19 pandemic into an opportunity, the Company leaned towards online channels thanks to its agile management and infrastructure →As part of this strategy, DeFacto has been forging strong relations with multiple marketplaces to create brand awareness, so as to enable easier market access when contemplating physical presence →DeFacto aims to expand presence built on marketplaces with own Defacto.com platform and subsequently flagship stores →DeFacto works with leading marketplaces in Europe such as Zalando, Amazon and Aliexpress →Along with its first store in Berlin, DeFacto aims to become a brand of choice for tourists in selected cities across Europe −New entries into Developed market s; Germany will be followed by the UK , Austria and theNetherlands by 2022 E →In line with DeFacto’s “more online, less physical” strategy, Developed markets store sales are expected to stall at c.17% of sales ,with a bounce in 2022 Eand 2023 E on new store openings →Online sales in Developed markets through marketplaces are expected to constitute c.85% of Developed market sales →Gross profit margin is expected to normalize around 58-59% →Operational costs are expected todecline along with operational efficiencies gained through economies of scale −Personnel and marketing expenses are projected to increase in 2022E, due to expanding physical presence and heavier advertising spending to generate brand awareness →Contribution margin1, which increases with scaling operations in 2022E, is projected to climb up to c. 20% Remarks (1) Excluding Defacto.com at ramp -up stage Source: CompanyTurkey operations Developing markets Developed markets Others IFC 64Overview of store operations →DeFacto stepped into Europe by opening its first store in Berlin, Germany, expected to be operational before end of the year 2021 −The store is designed as a flagship store located at a prime location with high traffic to act as an attraction center to promote DeFacto brand →The Company aims to replicate this strategy across selected cities in Europe with popular tourist attractions, to lift DeFacto brand recognition to a higher level →Following the launch in Germany, management aims to expand DeFacto brand to other major European countries including the UK, the Netherlands and Austria −DeFacto forecasts c.20 store openings over the next five - year period →Gross profit margin in Developed market store operations is expected to be higher vs. Developing markets, due to higher priced products −Delivery and return costs incorporated into prices are typically higher compared to other markets →Contribution margin improves after 2023 with positive mix effect of new flagship stores and scale impact →No pay -at-store assumed for Developed markets during the projection periodRemarksTurkey operations Developing markets Developed markets Others Source: CompanyCAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 # of effective stores # 2 9 13 17 21 Effective
level →Following the launch in Germany, management aims to expand DeFacto brand to other major European countries including the UK, the Netherlands and Austria −DeFacto forecasts c.20 store openings over the next five - year period →Gross profit margin in Developed market store operations is expected to be higher vs. Developing markets, due to higher priced products −Delivery and return costs incorporated into prices are typically higher compared to other markets →Contribution margin improves after 2023 with positive mix effect of new flagship stores and scale impact →No pay -at-store assumed for Developed markets during the projection periodRemarksTurkey operations Developing markets Developed markets Others Source: CompanyCAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 # of effective stores # 2 9 13 17 21 Effective net selling space sqm k 3 13 18 23 28 Sales per sqm TL/sqm 21,198 22,599 26,115 30,267 34,737 n.a. 2.3% growth % -31.7% 6.6% 15.6% 15.9% 14.8% Store net sales TL mn 65 284 476 703 980 n.a. 230.1% growth % n.m. n.m. 67.2% 47.7% 39.5% Gross profit TL mn 36 155 261 390 544 n.a. 193.4% margin % 54.3% 54.6% 54.9% 55.5% 55.5% Operational costs TL mn 24 113 165 226 300 n.a. 369.9% % of net sales % 36.6% 39.6% 34.7% 32.2% 30.6% Contribution TL mn 12 43 96 164 244 n.a. 152.6% margin % 17.7% 15.0% 20.2% 23.3% 24.9% IFC 65 (1) Excluding Defacto.com at ramp -up stage Source: CompanyOverview of online operations →DeFacto pursues a multi -platform online strategy, enabling easier access with limited initial investments, while establishing brand awareness as well as gaining valuable market insights and learning customer behavior →The Company first entered Germany with its strategic partner Zalando in 2020 via Partner Program to reach awide and established fashion customer base →DeFacto expanded to 12 other markets in less than four months while ensuring a steady merchandise flow and increasing level of assortment depth (Please refer toZalando case study onpage 41 for further details) →The Company plans to increasingly incorporate new countries as well as new marketplaces across countries →Gross profit margin1expected to normalize in 2022 Etrends at 58% going forward →Improvement in contribution margin is mainly due to; −Profit -oriented strategy for Zalando, with merchandise portfolio optimized, keeping higher priced items in focus −UK warehouse becoming operational, with positive ramifications in terms of logistics and distribution costs →DeFacto also contemplates focusing on its Defacto.com operations by investing heavily in branding and marketing. The Company expects to achieve ramp -up level by 2026 E →The Company will focus on channeling a growing number of customers from marketplaces to its own Defacto.com platform, with a view to creating a loyal customer base, and achieving significant scale to help it attain ramp -up stageRemarksTurkey operations Developing markets Developed markets Others CAGR Defacto.com Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Net sales TL mn 0 0 22 104 333 766 1,387 2,386 n.a. 154.2% Gross profit TL mn 0 0 13 59 185 437 811 1,434 n.a. 156.3% margin % n.a. 62.9% 57.6% 56.1% 55.6% 57.0% 58.5% 60.1% Operational cost TL mn 0 3 58 205 427 702 969 1,248 n.a. 84.6% % of net sales % n.a. n.m. n.m. n.m. n.m. 91.7% 69.9% 52.3% Contribution TL mn 0 -3 -45 -146 -242 -266 -158 186 n.a. -232.7% margin % n.a. n.m. n.m. n.m. -72.9% -34.7% -11.4% 7.8%CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Online n et sales1 TL mn 25 146 380 536 955 1,258 1,761 2,483 287.0% 45.6% growth % n.m. 159.2% 41.2% 78.0% 31.8% 39.9% 41.0% Marketplace TL mn 25 146 380 536 955 1,258 1,761 2,483 n.m. 45.6% Gross profit1 TL mn 12 87 235 314 557 733 1,024 1,442 339.2% 43.8% margin % 48.0% 59.7% 61.8% 58.5% 58.4% 58.3% 58.2% 58.1% Operational costs1 TL mn 3 75 217 243 406 520 724 1,001 689.6% 35.8% % of online sales % 13.7% 51.0% 57.0% 45.4% 42.5% 41.4% 41.1% 40.3% Contribution1 TL mn 9 13 18 70 151 213 301 441 44.2% 89.4% margin % 34.3% 8.7% 4.8% 13.1% 15.8% 16.9% 17.1% 17.8% IFC 66 Source: CompanyOthers →Others include sales excluding store sales and online; i.e. Wholesale, Franchise and Ozon sales to 3rdparties →Others’ share in total sales is forecast to pick up from c.5% of total sales in 2021B to c.7% in 2026E →Wholesale channel, which represents DeFacto’s sales to local department stores in Turkey, is expected to trend at c.1% of total sales going forward →The Company leverages franchises as a strategic tool in selected international markets, where local expertise entails significant advantages. Franchising acts as an additional mechanism to drum up growth, helping DeFacto in its bid to expand its presence globally −Franchising also allows the Company to expand with limited financial, operational risk and CAPEX →Franchise sales, which stand at c.2% of total sales in 2021B, are expected to gradually increase to c.4% in 2026E →The figures presented on the left for Ozon represent Ozon sales to 3rdparties and account for c.1% of total sales in 2021B −Ozon sales are forecast edas stable over the next five years −Ozon exports predominantly to European retailers, such as C&A and Primark →Gross profit margin is estimated to increase from 24 .2% in 2021B to 28.5% in 2026E, due to the mix effect →A modest improvement in contribution margin is projected within the forecast period, along with growing operational efficiency and mix effect RemarksTurkey operations Developing markets Developed markets Others CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Others net sales TL mn 267 254 388 700 931 1,327 1,902 2,651 20.5% 46.9% growth % -5.1% 52.8% 80.5% 33.0% 42.5% 43.3% 39.4% Wholesale TL mn 128 140 165 204 239 279 326 380 13.4% 18.2% growth % 9.7% 17.2% 23.8% 17.1% 17.0% 16.8% 16.6% Franchise TL mn 99 69 115 264 374 618 1,008 1,533 8.1% 67.8% growth % -29.7% 66.3% 129.2% 41.5% 65.1% 63.2% 52.1% Ozon TL mn 41 44 108 232 319 430 568 738 62.8% 46.9% growth % 8.1% 145.2% 115.0% 37.3% 35.0% 32.0% 30.0% Gross profit TL mn 81 82
projected within the forecast period, along with growing operational efficiency and mix effect RemarksTurkey operations Developing markets Developed markets Others CAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Others net sales TL mn 267 254 388 700 931 1,327 1,902 2,651 20.5% 46.9% growth % -5.1% 52.8% 80.5% 33.0% 42.5% 43.3% 39.4% Wholesale TL mn 128 140 165 204 239 279 326 380 13.4% 18.2% growth % 9.7% 17.2% 23.8% 17.1% 17.0% 16.8% 16.6% Franchise TL mn 99 69 115 264 374 618 1,008 1,533 8.1% 67.8% growth % -29.7% 66.3% 129.2% 41.5% 65.1% 63.2% 52.1% Ozon TL mn 41 44 108 232 319 430 568 738 62.8% 46.9% growth % 8.1% 145.2% 115.0% 37.3% 35.0% 32.0% 30.0% Gross profit TL mn 81 82 94 186 255 368 535 756 8.0% 51.7% margin % 30.1% 32.1% 24.2% 26.6% 27.4% 27.8% 28.1% 28.5% Operational costs TL mn 7 4 5 11 15 21 29 39 -19.7% 51.8% % of net sales % 2.8% 1.4% 1.2% 1.6% 1.6% 1.6% 1.5% 1.5% Personnel expenses TL mn 3 3 3 7 9 13 17 23 0.2% 45.8% Marketing expensesTL mn 3 0 0 0 0 0 0 0-93.7% 42.2% Operational expensesTL mn 1 1 1 4 6 8 11 16 -1.6% 63.9% Contribution TL mn 73 78 89 175 241 348 507 718 10.5% 51.7% margin % 27.3% 30.7% 23.0% 25.0% 25.8% 26.2% 26.6% 27.1% IFC 67 Source: CompanyCentral costs →All HQ -related costs are followed within central costs, where share in net sales is forecast edat around 8.5% →Central costs excluding marketing expenses, which stood at 7.1% of net sales in 2019, saw Covid -19 related increases in 2020 and 2021B. Those are expected to gradually decrease to 6.2% of net sales by 2026 Edue to increasing net sales, operational efficiencies and economies of scale →The Company is planning to invest heavily in marketing to build brand awareness across geographies during 2022E - 2026E; especially in new countries −Marketing expenses include advertising costs, digital advertising, marketing research expenses and agency service expenses −Marketing expenses over net sales is estimated to settle at around 2-2.5% in the long -term when DeFacto reaches saturation in terms of global footprint →Other than marketing expenses, central costs mainly consist of personnel, building ,operating expenses a ndopex for Ozon −The largest item in central costs, personnel expenses, include HQ and warehouse staff which is estimated to decrease to 4.5% of net sales in 2026E, from 5.1% as of 2021B −Building expenses comprise HQ’s rental expenses −Operational expenses consist mainly of licence fees, outsourced services, domestic & overseas travelling, vehicles expenses, cleaning, security expenses, mail, shipping cost, communication and utility expenses -This item isestimated todecrease to1.2%ofnetsales in2026 E,from 1.5%asof2021 B −Ozon opex includes Ozon’s 3rdparty sales related operational expensesRemarksCAGR Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E 19-21 21-26 Total central costs TL mn 359 360 615 1,116 1,558 2,092 2,713 3,379 30.8% 40.6% % of net sales % 7.9% 8.5% 8.4% 8.5% 8.5% 8.7% 8.7% 8.6% % of net sales exc. marketing exp.% 7.1% 7.7% 7.5% 7.3% 6.7% 6.5% 6.3% 6.2% Personnel expenses TL mn 216 207 374 669 900 1,136 1,443 1,782 31.8% 36.6% % of net sales % 4.7% 4.9% 5.1% 5.1% 4.9% 4.7% 4.6% 4.5% Building expenses TL mn 16 17 24 35 46 55 66 75 24.3% 25.6% % of net sales % 0.3% 0.4% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% Marketing expensesTL mn 36 34 63 163 329 539 749 946 32.5% 71.8% % of net sales % 0.8% 0.8% 0.9% 1.3% 1.8% 2.2% 2.4% 2.4% Operational expensesTL mn 73 67 112 193 219 289 375 473 23.8% 33.3% % of net sales % 1.6% 1.6% 1.5% 1.5% 1.2% 1.2% 1.2% 1.2% Ozon opex TL mn 19 34 41 55 64 72 81 103 47.4% 19.9% % of net sales % 0.4% 0.8% 0.6% 0.4% 0.4% 0.3% 0.3% 0.3% IFC 68 Source: CompanyNet working capital (“NWC”) →The Company’s NWC ratio of 6.8% in 2019 deteriorating to 12.5% in 2021 is estimated to gradually improve to around 2% of net sales by 2026E →Collection period of around 6 days increased to 11 -14 days partially due to Covid -19 pandemic and partially due to increasing share of online sales / marketplace sales →Collection period is estimated to slightly decrease to 12.5 days in 2022, mainly eliminating Covid -19 impacts which is estimated to gradually increase to 16.5 days by 2026E mainly on the back of increase share of online sales in overall DeFacto sales →Inventory turnover of 145 days in 2019 increased to around 200 days due to Covid -19. Inve ntory turnover is estimated to reach its 2019 levels in 2023 and further improve over years and reach to 130 days by 2026 mainly driven by SKU optimization and technological investments to better inventory management as well as eliminating stock outs →For payment terms, the Company foresees an improvement of c.15 days over the projection period mainly due to its ongoing supplier optimization strategy and increasing scaleRemarks Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E Trade receivables TL mn 94 152 321 528 798 1,129 1,565 2,103 Inventory TL mn 964 1,291 2,008 2,873 3,685 4,640 5,781 7,004 Trade payables TL mn 815 1,210 1,620 3,062 4,319 5,748 7,530 9,600 Trade working capitalTL mn 243 234 709 339 165 20 -184 -493 share of net sales % 5.3% 5.5% 9.7% 2.6% 0.9% 0.1% -0.6% -1.2% Other current assets TL mn 210 282 446 794 1,111 1,463 1,897 2,396 Other current liabilitiesTL mn 142 159 231 410 574 756 981 1,238 Other working capitalTL mn 68 123 216 384 537 707 917 1,157 Net working capital TL mn 311 357 925 723 702 726 733 665 share of net sales % 6.8% 8.4% 12.6% 5.5% 3.8% 3.0% 2.3% 1.7% Trade receivables days 6 11 14 13 14 15 16 17 Inventory days 145 207 198 155 145 140 135 130 Trade payables days 104 164 135 140 144 147 149 151 Cash conversion cycledays 47 54 76 28 15 8 2 -5 IFC 69 Source: CompanyCapital expenditures (“CAPEX”) and Net debt CAPEX
of net sales % 5.3% 5.5% 9.7% 2.6% 0.9% 0.1% -0.6% -1.2% Other current assets TL mn 210 282 446 794 1,111 1,463 1,897 2,396 Other current liabilitiesTL mn 142 159 231 410 574 756 981 1,238 Other working capitalTL mn 68 123 216 384 537 707 917 1,157 Net working capital TL mn 311 357 925 723 702 726 733 665 share of net sales % 6.8% 8.4% 12.6% 5.5% 3.8% 3.0% 2.3% 1.7% Trade receivables days 6 11 14 13 14 15 16 17 Inventory days 145 207 198 155 145 140 135 130 Trade payables days 104 164 135 140 144 147 149 151 Cash conversion cycledays 47 54 76 28 15 8 2 -5 IFC 69 Source: CompanyCapital expenditures (“CAPEX”) and Net debt CAPEX →Main CAPEX items for DeFacto are (i) store CAPEX, (ii) CAPEX spent for online activities, (iii) CAPEX for warehouse and (iv) other CAPEX →Store CAPEX includes CAPEX for new stores, as per new openings during the business plan period in Turkey, Developing markets and Developed markets; as well as renewal and maintenance CAPEX for existing stores →Online CAPEX is key to ensuring robust growth at DeFacto’s online operations across regions. Considering the existing well -invested nature of the technology investments of DeFacto and its alliances with 3rdparty service providers, Online CAPEX is estimated at c.0.3% of Online net sales in 2022E, edging back to 0.1% as of 2026E →Warehouse CAPEX includes CAPEX of warehouse -related requirements of DeFacto to ensure seamless supply chain systems for the operations, both for store network and for online operations including Defacto.com and marketplace globally →Other CAPEX, which is forecasted to enhance the business plan in terms of store experience and operational excellence, is estimated to be around 0.2% of net sales in 2021B, goes up to 0.5% -0.6% in 2022E -2024E. For the remaining years, it is estimated to be around 0.1% of net sales →Terminal CAPEX of 2% once projection period CAPEX is completed enabling the projected expansion and growth Net debt →Financial debt summary presented on the left excludes IFRS 16 effect →c.55% of the financial debt is short -term (including short -term portion of the long -term debt) and the rest is long -term →Estimated cash balance of c.TL 2 bnas of year end 2021BRemarks CAPEX Unit 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026E New store openings # 0 0 0 37 29 28 21 21 Turkey # 11 5 5 5 5 Developing markets# 21 19 19 12 12 Developed markets# 5 5 4 4 4 Store TL mn 116 93 150 395 488 625 851 1,028 New TL mn 286 348 440 434 574 Renewal TL mn 109 140 186 416 454 Online TL mn 5 6 9 8 11 14 18 24 Warehouse TL mn 4 2 6 60 100 150 250 350 Others TL mn 16 16 16 73 110 120 31 20 CAPEX TL mn 141 116 181 535 708 910 1,150 1,421 share of net sales % 3.1% 2.8% 2.5% 4.1% 3.9% 3.8% 3.7% 3.6% Financial debt (mn) 2021B TL 972 EUR 91 USD 104 KZT 2,100 MAD 29 IFC V. Appendix IFC 71 (1) Countries penetrated in 2021 areexcluded foranalysis purposes Source: CompanyStore closures due to Covid -19 DeFacto proved resilient in both 2020 and 2021, despite challenges posed by forced store closures due to Covid -19 in many operating mar kets Region / Country1 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 13.0% 47.3% 0.1% 7.9% 21.6% 33.1% 0.1% 9.4% 44.3% 13.4% 4.1% 7.4% 4.3% 3.9%MENA5.4% 15.3% 0.0% 0.2% 0.0% 0.0% 0.0% 13.4% 15.3% 0.9% 0.0% 0.0% 1.1% 1.1% 19.2% 35.6% 6.4% 0.0% 2.2% 2.1% 0.7% 20.5% 79.3% 25.5% 0.9% 24.1% 9.3% 1.6%CIS & Others11.5% 29.4% 0.0% 3.0% 31.1% 35.2% 50.5%7.7% 54.7% 56.8% 14.3% 9.5% 7.4% 13.0%21.2% 45.9% 0.0% 0.0% 1.1% 0.0% 1.1% 5.9% 27.5% 0.0% 4.3% 0.7% 0.7% 0.0%17.6% 50.0% 0.5% 0.5% 4.4% 1.1% 0.5%0.3% 0.3% 0.6% 0.1% 0.6% 0.2% 0.0% 12.1% 57.5% 0.5% 20.2% 31.0% 0.0% 0.0%n.a. 0.0% 0.0% 37.0% 45.6% 16.5% 0.0% 2.9% 56.3% 2.9% 0.0% 0.3% 0.0% 0.6%12.5% 54.2% 0.0% 0.0% 3.3% 0.4% 0.0% 3.8% 13.4% 0.0% 2.5% 12.2% 12.2% 0.0%Turkey Developing markets Egypt Morocco North Iraq South Iraq Malaysia Kazakhstan Albania Romania Bosnia Belarus Georgia Bulgaria Russia Moldova Ukraine Serbia 12.4% 32.1% 0.0% 4.9% 11.7% 3.8% 0.0% Ratio of non -operational days of stores due to Covid -19 per country ≤1% ≤20% ≤50% >50% IFC 72 Source: Company, Deloitte IFRS audit reportIncome statement 2019 -2020 from IFRS audit report and rest as per Management accounts (TL mn) 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026ECAGR 19-21CAGR 21-26 Net sales 4,564 4,223 7,344 13,067 18,288 24,076 31,223 39,429 26.8% 40.0% COGS 2,424 2,278 3,712 6,766 9,277 12,096 15,631 19,666 Gross Profit ex. DA 2,140 1,944 3,632 6,301 9,011 11,980 15,592 19,763 30.3% 40.3% %of net sales 46.9% 46.0% 49.5% 48.2% 49.3% 49.8% 49.9% 50.1% Personnel expenses 394 345 562 969 1,329 1,744 2,227 2,804 Building expenses 502 438 678 1,079 1,361 1,532 1,732 1,905 Marketing expenses 27 40 123 303 603 971 1,281 1,683 Operational expenses 213 356 664 1,059 1,660 2,304 3,175 4,065 Total operational costs 1,135 1,180 2,028 3,411 4,952 6,550 8,414 10,458 Contribution 1,005 765 1,604 2,890 4,060 5,430 7,178 9,306 26.3% 42.1% %of net sales 22.0% 18.1% 21.8% 22.1% 22.2% 22.6% 23.0% 23.6% Personnel expenses 216 207 374 669 900 1,136 1,443 1,782 Building expenses 16 17 24 35 46 55 66 75 Marketing expenses 36 34 63 163 329 539 749 946 Operational expenses 73 67 112 193 219 289 375 473 Ozon opex 19 34 41 55 64 72 81 103 Total central costs 359 360 615 1,116 1,558 2,092 2,713 3,379 Other income ( Turquality ) 9 30 25 25 30 36 43 51 EBITDA 655 434 1,014 1,799 2,531 3,373 4,507 5,978 24.4% 42.6% EBITDA margin 14.3% 10.3% 13.8% 13.8% 13.8% 14.0% 14.4% 15.2% Depreciation expenses 144 161 256 309 380 471 568 710 Other income 12 4 - - - - - - Other expense 38 18 - - - - - - EBIT 484 260 758 1,490 2,151
207 374 669 900 1,136 1,443 1,782 Building expenses 16 17 24 35 46 55 66 75 Marketing expenses 36 34 63 163 329 539 749 946 Operational expenses 73 67 112 193 219 289 375 473 Ozon opex 19 34 41 55 64 72 81 103 Total central costs 359 360 615 1,116 1,558 2,092 2,713 3,379 Other income ( Turquality ) 9 30 25 25 30 36 43 51 EBITDA 655 434 1,014 1,799 2,531 3,373 4,507 5,978 24.4% 42.6% EBITDA margin 14.3% 10.3% 13.8% 13.8% 13.8% 14.0% 14.4% 15.2% Depreciation expenses 144 161 256 309 380 471 568 710 Other income 12 4 - - - - - - Other expense 38 18 - - - - - - EBIT 484 260 758 1,490 2,151 2,903 3,939 5,267 EBIT margin 10.6% 6.2% 10.3% 11.4% 11.8% 12.1% 12.6% 13.4% Total financial income/(expense) (362) (306) Other financial income/(expense) 7 109 PBT 129 63 Tax expense/(income) 34 15 Net income 95 48 Net income margin 2.1% 1.1% EBITDA -IFRS 16 1,051 778 EBITDA margin 23.0% 18.4%1 2 3 4 5 IFC 73 (1) Income statement converted to USD (for convenience purposes) using the USD/TL averages (as provided on page 54) for each corresponding year Source: CompanyConvenience conversion of Income statement in US Dollars1 2019 -2020 from IFRS audit report and rest as per Management accounts (USD mn) 2019A 2020A 2021B 2022E 2023E 2024E 2025E 2026ECAGR 19-21CAGR 21-26 Net sales 804 602 825 906 1,131 1,295 1,460 1,603 1.3% 14.2% COGS 427 325 417 469 574 650 731 800 Gross Profit ex. DA 377 277 408 437 557 644 729 804 4.0% 14.5% %of net sales 46.9% 46.0% 49.5% 48.2% 49.3% 49.8% 49.9% 50.1% Personnel expenses 69 49 63 67 82 94 104 114 Building expenses 88 62 76 75 84 82 81 77 Marketing expenses 5 6 14 21 37 52 60 68 Operational expenses 37 51 75 73 103 124 148 165 Total operational costs 200 168 228 237 306 352 393 425 Contribution 177 109 180 200 251 292 336 378 0.9% 16.0% %of net sales 22.0% 18.1% 21.8% 22.1% 22.2% 22.6% 23.0% 23.6% Personnel expenses 38 30 42 46 56 61 67 72 Building expenses 3 2 3 2 3 3 3 3 Marketing expenses 6 5 7 11 20 29 35 38 Operational expenses 13 10 13 13 14 16 18 19 Ozon opex 3 5 5 4 4 4 4 4 Total central costs 63 51 69 77 96 113 127 137 Other income ( Turquality ) 2 4 3 2 2 2 2 2 EBITDA 115 62 114 125 157 181 211 243 -0.6% 16.4% EBITDA margin 14.3% 10.3% 13.8% 13.8% 13.8% 14.0% 14.4% 15.2% Depreciation expenses 25 23 29 21 24 25 27 29 Other income 2 1 - - - - - - Other expense 7 3 - - - - - - EBIT 85 37 85 103 133 156 184 214 EBIT margin 10.6% 6.2% 10.3% 11.4% 11.8% 12.1% 12.6% 13.4% Total financial income/(expense) (64) (44) Other financial income/(expense) 1 16 PBT 23 9 Tax expense/(income) 6 2 Net income 17 7 Net income margin 2.1% 1.1% EBITDA -IFRS 16 185 111 EBITDA margin 23.0% 18.4% IFC 74 (1) Balance sheet converted to USD (for convenience purposes) using the USD/TL year -end figures (as provided on page 54) for eac h corresponding year Source: Company, Deloitte IFRS audit reportBalance sheet in TL as reported and in USD1converted for convenience 2019 -2020 from IFRS audit report and rest as per Management accounts (TL mn) 2019A 2020A Cash and cash equivalents 623 922 Trade receivables 94 152 Inventory 964 1,291 Other current assets 210 282 Others 23 106 Short term assets 1,914 2,753 Tangible assets 767 1,004 Intangible assets 53 72 Other non -current assets 74 98 Long term assets 894 1,174 Total assets 2,808 3,927 Short -term borrowings 785 1,280 Trade payables 815 1,210 Other current liabilities 142 159 Others 18 11 Short term liabilities 1,760 2,660 Long -term borrowings 723 856 Other non -current liabilities 15 71 Long term liabilities 738 928 Total liabilities 2,498 3,587 Paid in capital 213 213 Reserves, share prem., reval. ofFA (143) (131) Retained earnings 145 211 Net income/loss for the period 95 48 Equity 309 340 Total liabilities & SH equity 2,808 3,927 IFRS 16 impact to liabilities 1,482 1,6316 7 8 57(USD mn) 2019A 2020A Cash and cash equivalents 105 126 Trade receivables 16 21 Inventory 162 176 Other current assets 35 38 Others 4 14 Short term assets 322 375 Tangible assets 129 137 Intangible assets 9 10 Other non -current assets 12 13 Long term assets 150 160 Total assets 472 535 Short -term borrowings 132 174 Trade payables 137 165 Other current liabilities 24 22 Others 3 1 Short term liabilities 296 362 Long -term borrowings 122 117 Other non -current liabilities 2 10 Long term liabilities 124 126 Total liabilities 420 488 Paid in capital 36 29 Reserves, share prem., reval. ofFA (24) (18) Retained earnings 24 29 Net income/loss for the period 17 7 Currency translation adjustment (1) (0) Equity 52 46 Total liabilities & SH equity 472 535 IFC 75Additional notes for Income statement and Balance sheet Some merchandise costs are recorded under COGS in Management accounts as they are directly related to COGS (Recorded under OPEX in IFRS accounts; TL 16.1 mn in 2019, TL 22.5 mn in 2020)1 Other income , which has non -recurring nature, comprises gain on sale of property and equipment, insurance reimbursements and some other smaller items Other expense , which has non -recurring nature, consists of loss on sale of property and equipment, some provision expenses, other taxes and duties2 3 Other financial income includes net gain on unrealized firm commitments, net gain on financial instruments at fair value through profit or loss, effective interest income on financial assets and liabilities other than bank borrowings and revaluation of fixed assets4 5 Other current assets comprise primally prepayments related to rent, insurance and advances given to suppliers; VAT receivables, receivable from Turquality program, current tax asset, advances given to personnel, job advances, deposits and guarantees given6
2019, TL 22.5 mn in 2020)1 Other income , which has non -recurring nature, comprises gain on sale of property and equipment, insurance reimbursements and some other smaller items Other expense , which has non -recurring nature, consists of loss on sale of property and equipment, some provision expenses, other taxes and duties2 3 Other financial income includes net gain on unrealized firm commitments, net gain on financial instruments at fair value through profit or loss, effective interest income on financial assets and liabilities other than bank borrowings and revaluation of fixed assets4 5 Other current assets comprise primally prepayments related to rent, insurance and advances given to suppliers; VAT receivables, receivable from Turquality program, current tax asset, advances given to personnel, job advances, deposits and guarantees given6 Others consist of derivative financial asset and liabilities such as cross currency swaps and forward exchange contracts on both sides of thebalance sheet 7 Other current liabilities predominantly comprise employee benefits, expense accruals, payable to employees and social security premiums payable 8 Source: Company, Deloitte IFRS audit reportIFRS 16 impact on EBITDA Unit 2019A 2020A Reported EBITDA exc. IFRS 16 TL mn 655 434 IFRS 16 impact TL mn 396 344 Cost of sales TL mn 1 - S&M exc. D&A TL mn 383 332 G&A exc. D&A TL mn 12 12 Reported EBITDA with IFRS 16 TL mn 1,051 778IFRS 16 impact on total debt Unit 2019A 2020A Loans and financial liabilities exc. IFRS 16 impact TL mn 1,508 2,136 LT loans and borrowings TL mn - - LT lease liabilities TL mn 1,305 1,370 ST loans and borrowings TL mn -1 -5 ST lease liabilities TL mn 178 265 Loans and financial liabilities with IFRS 16 impact TL mn 2,990 3,767 Unit 2019A 2020A Interest income on installment TL mn 32 11 Interest expense on credit purchases TL mn -75 -36 Bank commissons TL mn -70 -56 Interest income/(expense) & FX gain/(loss), net TL mn -250 -225 Total financial income/(expense) TL mn -362 -306 IFC 76 Simge Ündüz Managing Director [email protected] +90 (533) 283 8113Information, opinions and projections inthis document have been compiled orarrived atbyÜNLÜ Yatırım Holding A.Ş.(“ÜNLÜ &Co”)from thedata provided bythe Company and itsshareholder, and publicly available information, without ourown separate verification .The Company and itsshareholder have been consulted about and have confirmed theappropriateness ofthebasic principles and assumptions used byÜNLÜ &Cotoperform theanalyses /projections . However, norepresentation orwarranty, expressed orimplied, ismade astotheaccuracy orcompleteness oftheinformation contained inthis document .Itshould be noted that wehave notsought independent verification oftheinformation .This document isnottoberelied upon asauthoritative ortaken insubstitution fortheexercise ofjudgment bytheRecipient and ÜNLÜ &Coaccepts noliability whatsoever foranydirect orconsequential loss arising from theuseofthisdocument oritscontents .This document and theopinions, projections and conclusions contained inthis document arefortheexclusive useoftheRecipient and itsofficers and employees .Distribution ordisclosure thereof toany parties issubject totheprior written permission ofÜNLÜ &Co.The information, comments and opinions contained inthis document fall outside ofthescope ofTurkish Capital Markets legislation and donotinclude apersonal recommendation .This document does notinclude apersonal recommendation and does notconstitute anoffer, orthesolicitation ofanoffer forthesale orpurchase ofanyfinancial product, service, investment orsecurity . Allcommunications, inquiries and/or requests relating tothisdocument and/or thepossible process contemplated should only beaddressed toÜNLÜ &Co. Forfurther information please contact : Zeynep Koçak Director [email protected] +90 (532) 242 5378İbrahim Romano Head of Investment Banking [email protected] +90 (533) 960 0122Can Ölger Vice President [email protected] +90 (536) 209 5566Disclaimer IFC
Project Knight Confidential Information Memorandum February 2022 Strictly private and confidential Türk Tuborg 1Table of contents Section Page I Executive summary 2 II Key investment highlights 9 III Business overview 27 IV Financial overview 44 Türk Tuborg I. Executive summary Türk Tuborg 3Executive summary The leading kitchen consumables company in Turkey →Established 40years ago, Koroplast (the “Company ”)isthe undisputed leader ofTurkish kitchen consumables (“KC”) market with a47%market share1,drawing onarich brand heritage, anextensive distribution network, and adiverse portfolio ofinnovative, premium quality products −Turkish kitchen consumables ,ahigh -growth and underpenetrated sub-segment ofFMCG market, generated 39%CAGR invalue through 2017 –2020 →The Company offers awide portfolio ofgarbage bags, storage products, cooking products and the newly launched cleaning products, addressing everyday household needs →Being thefirst company tointroduce garbage and freezer bags toTurkish consumers inthe1980 ’s, Koroplast isacknowledged asamarket -leading innovator and trendsetter inKCmarket −Koroplast has introduced anumber ofinnovative solutions tothe market, such asodor -block technology, fresh keeping storage bags, and scented garbage bags −Alongside anexemplary commitment toenvironmental sustainability, theCompany also sets the barhigh with powerful social awareness campaigns →Inaddition toitsmain brand “Koroplast ”and sub-brand targeting price sensitive consumers “Ideal ”, theCompany also serves discounters and retailers with private label (“PL”)production −Branded product sales account forc.85%ofnetsales in2022B −Koroplast isthesole brand with continuous listing indiscount stores →The Company sells itsproducts through national chains, local chains, discount stores, traditional stores and out-of-home markets, reaching more than c.69ksales points nationwide −Koroplast recently started tooffer itsproducts infast-growing online groceries →Additionally, exports, mainly toEurope, account for6%ofnetsales .Expansion toexport markets is reserved asanimportant upside going forward →Located inIstanbul and dedicated exclusively toKoroplast products, the production facility has c.15.5ktons ofextrusion and c.2.6ktons ofwrapping capacity −Fully integrated production process enables in-house production ofmain products, namely, garbage, fridge and freezer bags, providing cost competitiveness →Koroplast hasdelivered asolid financial performance through 2018 -2022B,with 46%and 51%CAGR insales and EBITDA, respectively →The Company budgets TL730 mninrevenue for2022B,with anEBITDA margin of25% →Koroplast has313employees2with anaverage tenure of6.6years (1) 2020 revenue market share excluding discount markets. Nielsen Kitchen Consumables Reports include garbage bags, storage bags, baki ng sheets, oven bags, ice bags, microwave bags (2) As of February 2022 Source: Koroplast , Nielsen market intelligence, PwC Financial VDD report100+ SKUs Garbage bags Storage products Cooking products Cleaning productsMain brand Tactical brand İdeal EBITDA margin (%)4 main categoriesCompany overview Product portfolio overview Key figures (TL mn)Reputable brands CAGR22.1% 23.8% 25.6% 26.9 % 24.8% 202035 2022B730 2019 2018 2021281 2026F458 159200 48 72410 1061811,705 +46%+24% EBITDA Net sales25.9% Türk Tuborg 4 Source: KoroplastExecutive summary Leadership journey: Innovation at the heart of Koroplast brand DNA 1973Korozo Group established 1981Koroplast brand introducedFirst to produce freezer bag s and garbage bagsin Turkey 1997 2014 Introduced zipper and double zipper bags 2020 Launched cleaning category in the last quarter of 2020 2004First biodegradable garbage bagFirst to produce recyclable garbage bags in Turkey 2004 2015 Participated in Turkish Waste Management Committee 2019 Trashtag Turkey campaign 2009Introduced the first microwave cooking bag in Turkey 2017 Parent group Korozo acquired by Actera, a leading PE fund in Turkey 2021 Continued profitable growth & innovation 2018 Kidzania Recycling and Waste Management Project Introduced cling wrap, aluminum foil and zip -lock freezer bags Türk Tuborg 5 (1) 2020 revenue market share excluding discount markets. Nielsen Kitchen Consumables Reports include garbage bags, storage b ags, baking sheets, oven bags, ice bags, microwave bags (2) Basket products sales (bundled promotional items) and other sales (scrap, raw material and semi -finished goods sales) are not shown on this page ;i.e. 2.6% of Net sales in 202 2B Source: Koroplast , PwC Financial VDD report, Nielsen market intelligenceExecutive summary Wide range of product offering sunder 4 main categories Garbage bags Storage products Cooking products Cleaning products →Market leader with c.42% market share1 in Turkey→Market leader with c.55% market share1 in Turkey→Market leader with c.49% market share1 in Turkey →Significant room for further growth in local market→New product category, introduced in 2020 →New and Growing: Benefits from the brand power of other categories Offers a variety of top-quality… % of 202 2BNet sales2Branded Offers freezer bags, storage bags… Offers cooking bags and cooking paperOffers microfiber & nonwoven cleaning cloths and dish sponges 2026F 2019 2018 2020 2021 2022B81730 97 119190309+40%+24%… and innovative garbage bags … and aluminum foil, cling film, zipper bags Overview Brands Product portfolio Net sales2 (TL mn) 42.3% 33.4% 15.5 % 6.2% PL Branded PL Branded PL Branded 30% 70% 96% 4% 89% 11% 100% % of 202 2BBranded and PL in respective category Net sales2018515 202051 2022B 2021 2019 2026F61 86131244+48%+21% 2022B 2019 2020113 2021 2018 2026F21 2342 52297+53%+27% 2018 2021 2019 2020 2022B 2026F7 1345118+27% CAGR New category Türk Tuborg 6 (1) Other sales are not shown on this page Source: Koroplast, PwC Financial VDD reportExecutive summary Well -established sales network with strong nationwide coverage Retailers Distributors Discounters Out-of-home Export →Koroplast’s main channel. Established relation ships with prominent national chains over the years →Growing sales from online retailers→Accessing local chains and traditional shops (e.g. grocery stores, mom -and-pop shops, etc.) through 45 distributors in 6 regions, ensuring wide coverage and accessibility→Established presence in major discounters through Koroplast as well as PL products→Working with large wholesalers selling Koroplast products to major Horeca chains and other institutions such as municipalities →Sale of branded and PL products to 11 countries, mainly in Europe Through 45 distributors in 6 regions 32.7% 42.3 % 14.6% 3.3% 6.1% 2020 2021 2018 2022B 2019 2026F66 4985133239550+49%+23%National chainsLocal chains and traditional shopsDiscounters Horeca Major distributors Cash & carry Online retailersKey clients Overview Net sales1 (TL mn) Corporate 694 2020 2018 2019 2021 2022B164 2026F66 74 97309+47%+22% 2022B 2019 2018 2020 2021 2026F17 2360 52106288+59%+28% 2020 2022B 2018 201916 2021 2026F128122457+11%+24% 2019 2018 2022B 2021 2020 2026F16 17 173345104+29%+23%PL Branded 23% 77% Branded 100% PL Branded 20% 80% PL Branded 86% 14% % of 202 2B Net sales CAGR % of 202 2B Branded and PL in respective channel Net salesBranded 100% Historically, Koroplast did not focus on growth in out -of-home and export markets as a business strategy Türk Tuborg 7 (1) 2020 revenue market share. Nielsen Kitchen Consumables Reports include garbage bags, storage bags, baking sheets, oven ba gs,ice bags, microwave bags (2)
4985133239550+49%+23%National chainsLocal chains and traditional shopsDiscounters Horeca Major distributors Cash & carry Online retailersKey clients Overview Net sales1 (TL mn) Corporate 694 2020 2018 2019 2021 2022B164 2026F66 74 97309+47%+22% 2022B 2019 2018 2020 2021 2026F17 2360 52106288+59%+28% 2020 2022B 2018 201916 2021 2026F128122457+11%+24% 2019 2018 2022B 2021 2020 2026F16 17 173345104+29%+23%PL Branded 23% 77% Branded 100% PL Branded 20% 80% PL Branded 86% 14% % of 202 2B Net sales CAGR % of 202 2B Branded and PL in respective channel Net salesBranded 100% Historically, Koroplast did not focus on growth in out -of-home and export markets as a business strategy Türk Tuborg 7 (1) 2020 revenue market share. Nielsen Kitchen Consumables Reports include garbage bags, storage bags, baking sheets, oven ba gs,ice bags, microwave bags (2) Includes national chains, local chains and discount stores, c.38k points Source: KoroplastSustainable market leadership position ensured by purpose -led brand and rooted management culture Purpose -led brand Rooted management culture Agile responsiveness Trend -driven portfolio, swiftly responding to changing customer needs Impactful innovation Committed to improving people’s wellbeing and creating quality time A strong and responsible brand Actively engaged in addressing today’s most urgent and deep - seated social and environmental challengesExecutive summary Key pillars differentiating Koroplast Leading market position Highest market share1in all key categories, beating its closest competitor Has access to largest points of sale to consumers with extensive physical availability 42% 15% Koroplast Comp.155% 16% Koroplast Comp.149% 20% Koroplast Comp.1Garbage bags Storage products Cooking products 60%Dominates physical shelf space in national chains with 60% shelf space share95%Covers c.95% of points of sale of organized retail universe2,reaching more than 36k pointsFMCG -oriented mindset Innovation skills complemented by strong marketing capabilities Consumer first approach Spearheading a culture of listening to and acting on feedback from consumers and building a community Brand -focused company culture Utilizing the power of employees to drive continuous brand improvement Türk Tuborg 8 Source: KoroplastExecutive summary Transaction overview →Project Knight refers tothe contemplated sale of100%stake inKoroplast (the “Proposed Transaction ”) →Koroplast isawholly -owned subsidiary ofKorozo ,leading flexible packaging group inTurkey .Korozo isconsidering apotential divestment ofKoroplast , with aview tostrengthening itspresence inflexible packaging inEurope →Koroplast represents aunique opportunity forpotential investors with its leading market position, pioneer brand image, premium product quality and further growth potential →Korozo hasappointed ÜNLÜ &Cotoactastheexclusive financial advisor in theProposed Transaction →Korozo Group consolidated all of its KC operations under Koroplast between 2017 -2019, and transformed Koroplast into an operationally stand -alone companyEnvisaged transaction timeline Transaction scope NDA IM distributionLimited Q&ANon- binding offersBinding bidsSigning Initiation of due diligencePhase II Phase I →Due diligence period for a limited number of selected potential investors →Virtual dataroom access along with Q&A process →Access to PwC Financial Vendor Due Diligence Report (“ PwC Financial VDD Report ”), covering years 2018 -2020 and PwC Tax Vendor Due Diligence Report (“ PwC Tax VDD Report ”), covering years 2016 -2020 →Management presentations and site visits →Exact timetable for Phase II to be circulated in a separate process letter for short -listed potential investorsPhase I details →Distribution of the IM →Limited Q&A process for key questions and clarification requests →Selected potential investors will be granted access to a virtual dataroom Phase II detailsShareholding structure ShareholdingKoroplastKorozo 100% Türk Tuborg II. Key investment highlights Türk Tuborg 10Strategic positioning of Koroplast Key investment highlights Market leading producer of kitchen consumables in Turkey 1Sizeable and high -growth domestic market with ample growth prospects on attractive fundamentals 2Undisputed market leader with solid market share, targeting continuous growth across categories with diversification strategy 3Broad product portfolio catering to everyday household needs with deep -rooted innovation culture 4Reputable and high -quality brand image cemented by growing customer awareness 5Strong nationwide coverage and growing export base with multi -faceted go -to-market strategy 6Largest production facility with vertical integration in key product lines 7Competent professional management delivering solid financials with strong growth strategy and vision 8Multiple untapped value enhancers beyond the business plan Türk Tuborg 11 (1) Percentage of households that purchase a product more than once in a year (2) Storage products data include only freeze r bags (3) Cooking category data include cooking paper and oven bag data Source: Koroplast, Nielsen market intelligence (Market size data, provided by Nielsen, account for approximately 70% of the t otal market), IPSOS, EuropanelSizeable and high -growth domestic market… 1 1,092 2017 2020 2018 20191,0161,4272,010 +26%Garbage bag market size (mn pieces) 2,930 2017 2019 2018 20202,6632,9883,607+11% 2018 2017 2019 20202733 3447+21% 2020Seasonal buyers during the Eid al - Adha bringing in significant volumes 2020Turkey is relatively underpenetrated when compared with developed countriesStorage products2 Storage category market size (mn pieces) Storage category2penetration Cooking products3 Cooking category market size (mn pieces) Cooking category3penetrationGarbage bags category posted 26%CAGR, reaching 2,010 mnpieces in2020 Turkish consumers have alower repeat rate1(c.3/4ofEU) and amount per purchase, implying significant growth potential Despite its strong growth, cooking category remains highly underpenetrated, with annual sales of47mn pieces (1.9 piece perhousehold) in2020 Repeat rate, despite the increase from 31%to44%between 2017 and 2020 ,is stillbelow EUbenchmarksGarbage bag penetration Target in the next five years Storage category market size reached 3,607 mnpieces, growing steadily with 11% CAGR 43% c.53%1.6x 1.6x…offering further growth potential Strong growth in Turkish KC market… Garbage bags 60% 30% 2020 CAGR2017 202032%50%80% 2025Retailers’ free distribution ofplastic bags, which were used inlieu ofgarbage bags by consumers, was banned in2019 , contributing tothecategory’s growth Base penetration rate offrequent users stands atc.30%,while conversion of seasonal users willbeacrucial driver57% 2020 Türk Tuborg 12 … with ample growth prospects on attractive fundamentals 1 (1) Inception year of the ban on free plastic bags in stores Source: Koroplast , IPSOS, Turkstat , World Bank, IMF, Fitch Ratings, European Commission, ÜNLÜ & Co estimates Increasing sizeable population c.84 mn c.95 mn 1 Growing GDP (2020 GDP at current prices)c.USD 650 bn c.USD 962 bn 2 Continuing urbanization (share in total population)c.76% c.80% 3 Declining average household size (# of people per household)c.3.5 c.3.0 4 Expanding female workforce participation (share in females aged 15 -65)c.38% c.40+% 5Growth drivers 2020 2030F CAGR →As of 2019, Turkey initiated a regulation imposing charges on plastic bags, reflected to retail consumers Plastic bag consumption per person, annually (unit)
atc.30%,while conversion of seasonal users willbeacrucial driver57% 2020 Türk Tuborg 12 … with ample growth prospects on attractive fundamentals 1 (1) Inception year of the ban on free plastic bags in stores Source: Koroplast , IPSOS, Turkstat , World Bank, IMF, Fitch Ratings, European Commission, ÜNLÜ & Co estimates Increasing sizeable population c.84 mn c.95 mn 1 Growing GDP (2020 GDP at current prices)c.USD 650 bn c.USD 962 bn 2 Continuing urbanization (share in total population)c.76% c.80% 3 Declining average household size (# of people per household)c.3.5 c.3.0 4 Expanding female workforce participation (share in females aged 15 -65)c.38% c.40+% 5Growth drivers 2020 2030F CAGR →As of 2019, Turkey initiated a regulation imposing charges on plastic bags, reflected to retail consumers Plastic bag consumption per person, annually (unit) 3.5x420 120 201912020 Garbage bag penetration 45% 50%→The decline in plastic bag usage in shopping supported household garbage bag penetration 2019 20205% →Plastic bag usage is expected to further decrease to EU level 2020 2025120 40 3.0xPlastic bag consumption per person, annually (unit)Strong country fundamentals Impact of free plastic bag ban c.1.2% c.4.0% Türk Tuborg 13 Ownership Kitchen Consumables market share2 Provel Sedat Tahir Korozo Established 2011 1984 1981 Product categories Garbage bagsStorage productsCooking productsCleaning products 47.3% 202016.5% 20208.7% 20203.8% 2020 (1) Shelf space in national chains (2) 2020 revenue market share excluding discount markets. Nielsen Kitchen Consumables Re ports include garbage bags, storage bags, baking sheets, oven bags, ice bags, microwave bags (3) Mostly outsources its production Source: Koroplast , Nielsen market intelligence, company websitesUndisputed market leader with solid market share… Extrusion Capacity5-6k tons Gözde Girişim 1993 <3k tonsSultanlar Grup 1980’s <2k tons3c.8k tons 15k tons2 Koroplast’s superior market position over its closest competitor 3.1% 2020Shelf space share1 c.5-10% <5% <5% c.20% c.60% 3x market share42% 55% 49% x% Kitchen Consumables market share2 Türk Tuborg 14 Source: KoroplastKoroplast aims to grow its customer base through … 1 2Growing market share by attracting new consumers and increasing penetration & frequency Gaining share of wallet by introducing value - added productsStrategic guidance on competitive yet profitable pricing to regularly position Koroplast products as achievable for a wide customer base Addressing a more diverse customer base through tactical brand and PL production, to increase profitable sales volume Value -added and innovative product development strategy to accommodate diverse customer needs -Fresh keeping storage bags, scented and odor blocking garbage bags are recent examples of innovative products by Koroplast Introducing new categories leveraging Koroplast’s brand image and quality -Expanding presence in kitchen consumables aisle with recently launched cleaning category Pricing strategy project with Simon Kucher , 2019 … targeting continuous growth across categories with diversification strategy2 Continuous marketing activities across channels to increase penetration and frequency Private label production Türk Tuborg 15 3 44 SKUs Garbage bags9SKUs Cooking products 35 SKUs Storage products13 SKUs Cleaning productsBroad product portfolio catering to everyday household needs… 7.5 42% 2022B Sales volume1(k tons) % of 202 2B Net sales1Wide product portfolio with 100+ SKUs comprising top-quality productsInnovative products enriching the categoryBecoming a cleaning expert, capitalizing on brand awareness and image (1) Basket products sales (bundled promotional items) and other sales (scrap, raw material and semi -finished goods sales) are no t shown on this page; i.e.2.6% of Net sales in 202 2B Source: Koroplast , PwC Financial VDD report4.5 33%1.8 16% 0.4 6% New category launched in Q4 2020 Environmentally friendly and sustainable product base 309 244113 45 2022B Net sales (TL mn) Türk Tuborg 16 Source: Koroplast1980 -90s Early 2000s Present 1981 First to produce garbage bags 1981 First to produce freezer bags 1997 Introduced zip -bags to the market 2008 First to release biodegradable garbage bag 2009 First to produce microwave bags 2014 Lemon scented garbage bags received best product of the year award 2017 Fresh keeping storage bags introduced to the market 2017 First to release odor blocking garbage bags 2021 and beyond Prospective new products: →Cleaning gloves →Antibacterial wipes →Single use food containers Ability to develop new products with proven experienceDeveloping existing products with new features and technologiesProducts tailored to consumer needs, yet to be released to the marketLeading brand with innovative product releases throughout the years3… with deep -rooted innovation culture Türk Tuborg 17 (1) 2020 December revenue market share excluding discount markets. Market data include sponges and cleaning cloths Source: Koroplast, Nielsen market intelligence, PwC Financial VDD report Success of cleaning category is an example of how Koroplast can capitalize on its brand power in new categoriesCase Study: Koroplast’s successful new category strategy Positioning “Quality” Procurement “Supply security”Pricing “Value for money” Distribution “Visible and available”Marketing “Cares about the family”Key pillars Key considerations Targeting market leadership in the next 2 years, capturing market share from the main competitorIncreasing net sales through sustained expansion and growing presence 202012022F6.2% 15+%2021 2026FTL 117.9 mn55% CAGR→Competitive pricing at the beginning →Continuous monitoring including sales volume, market share, competitors, etc. →Focus group study demonstrated strong affinity between Koroplast and cleaning category consumers →Introduced cleaning clothes and sponges in Q4 2020 →Planning to introduce additional products, e.g.cleaning mops in 2021 →Diversified supplier base with 5 main suppliers both in Turkey and abroad to ensure supply security →Benefiting from Company’s existing brand heritage to build strong branding in cleaning category →Dedicated advertisements in traditional and social mediaExpanding category with products tailored to consumer needs TL 13.3 mn →Acquired shelf space to secure consumer reach →Secured availability in every national and local chain Koroplast reaches Türk Tuborg 18 Source: KoroplastReputable and high -quality brand image… 4 Proven quality Trusted brand with high quality standards “Food safety is Koroplast’s ultimate priority” Pioneer brand First to introduce kitchen consumable products to Turkish consumers in the 1980’s Distinguished name for the category Leading brand with highest brand recognition and awareness scores Innovation ingrained in brand DNA Functional and innovative products developed for diverse customer needs High customer responsiveness Addressing customers needs with different brands and evolving product portfolio Türk Tuborg 19 Source: Koroplast, SOR research 90% Koroplast88% Koroplast7%80% Comp.1 Koroplast54%99% Koroplast Comp.1 High quality brand imageTrusted brand perceptionTop-of-mind awarenessEstablished brand with top recognitionKoroplast continues to improve its leading brand image among consumers and… Koroplast: The brand that introduced kitchen consumable
national and local chain Koroplast reaches Türk Tuborg 18 Source: KoroplastReputable and high -quality brand image… 4 Proven quality Trusted brand with high quality standards “Food safety is Koroplast’s ultimate priority” Pioneer brand First to introduce kitchen consumable products to Turkish consumers in the 1980’s Distinguished name for the category Leading brand with highest brand recognition and awareness scores Innovation ingrained in brand DNA Functional and innovative products developed for diverse customer needs High customer responsiveness Addressing customers needs with different brands and evolving product portfolio Türk Tuborg 19 Source: Koroplast, SOR research 90% Koroplast88% Koroplast7%80% Comp.1 Koroplast54%99% Koroplast Comp.1 High quality brand imageTrusted brand perceptionTop-of-mind awarenessEstablished brand with top recognitionKoroplast continues to improve its leading brand image among consumers and… Koroplast: The brand that introduced kitchen consumable products to Turkish consumers#1 ...stands out from close competitors with a well -established brand heritage Competitor 1 Competitor 2 6 780748599 Competitor 1 Competitor 2 “Innovative at heart” “Makes life easier” “Premium quality” “Thinks green”Customer perceptions of Koroplast “Truly a Pioneer”…cemented by growing customer awareness 4 “Healthy”The first brand that comes to mind Assisted brand awarenessSolid consumer perception scores (2020) Türk Tuborg 20 (1) Regular medium -size garbage bag including 15 pieces, except for Sera and Piknik , packages of which contain 20 pieces each (2) 30 pieces Source: Koroplast , Nielsen market intelligenceCase study: Premium pricing strategy secured by brand equity and quality Koroplast successfully reflected high quality and trusted brand image to its prices Koroplast price index versus competitors based on average monthly prices Garbage bags1 Freezer bags2 Cooking paper 2020 2020 2020 100% 100% 100% 87% 85% 83% 74% 92% 75% 72% 51%96% 92% 72% 64% Türk Tuborg 21 In export marketsIn the domestic market5 Source: Koroplast, PwC Financial VDD reportRetailers 4.9 239 Distributors 5.6 309 Discounters 1.9 106 Out-of-home 0.7 24Long -tenured relationships with major retailers, reaching c.83% of national chains; strong consumption base Multi -brand offering along with PL production to leading national chains, including Migros Adaptation to emerging online channels : Partnering with top online groceries, expanding online presenceExtensive reach across Turkey via wide distributor network of 45 in 6 regions, accessing c.33k points c.95% of distributors offer Koroplast products exclusively in kitchen consumables categoryReaches local chains through distributor channel Strategic partner for discounters : Offers both branded and PL products to top 2 leading discounters in Turkey Only premium brand listed continuously on discounter shelves Aims to increase share of branded sales in discounters Diverse set of clients Works with large restaurant chains Utilizes distributor network to reach international customersExports to 11 countries, mainly in EuropeStorage products and garbage bags focused sales Strong nationwide coverage and growing export base… Participates in tender processes of sizeable municipalities13.1 679 1.4 45 2022B Sales volume (k tons)Has the highest visibility and availability , dominating physical shelf space with c.60% share in national chains 3%33% 15%42% 6% 2022B Share in Net sales (%)94% 2022B Net sales (TL mn)Maintains selective customer portfolio with profit -oriented mindset Türk Tuborg 22 (1) Other sales (scrap, raw material and semi -finished goods sales) are not shown on this page ;i.e.1.0% of Net sales in 202 2B (2) 2020 revenue market share excluding discount markets. Nielsen Kitchen Consumables Reports include garbage bags, storage bags, baking sheets, oven bags, ice bags, microwave bags Source: Koroplast , PwC Financial VDD report, Nielsen market intelligenceBranded sales championed by Koroplast Strong PL business connections with major retailers/discounters 15.8% % of 202 2B Net sales1 Market leader brand with premium positioningTactical brand offering value for money with high quality5… with multi -faceted go -to-market strategy Strategic and trusted business partner of the largest national chain in Turkey, Migros, as well as largest discounters A101 and BİM since their establishment Positioning Categories Key highlights ✓Higher portion of PL business generated via major retailers ✓Accumulated working know -how with major local discounters ✓Penetrates entire market and each customer segment ✓Offers its PL products to customers in export markets as well✓High product quality compared to pricing ✓Positioned to capture price sensitive consumers ✓Lower level of customer interaction and marketing communication✓Well -known kitchen consumables brand in Turkey ✓Widely available in each category ✓Premium pricing power ✓Easy to penetrate other categories due to reputation and brand recognition Garbage bagsStorage productsCooking productsCleaning productsKoroplast can address diverse customer categories with different go -to-market strategies through branded and private label sales 83.2% 47% x% Kitchen Consumables market share2 In addition to PL, continuous listing of Koroplast branded products, underpinned by solid relationships forged with local discounters Türk Tuborg 23 (1) Including warehouse areas Source: Koroplast Largest production capacity in kitchen consumables market in TurkeyHigh quality machinery and equipment from leading global brandsFlexibility to handle multiple SKUsSkilled and experienced workforce focused on quality c.2.6k tons/annum Wrapping capacityc.23.4k sqm Total area1c.12k pallet Storage capacity Key machinery and equipment suppliersLargest production facility with vertical integration in key product lines 6 Production facility c.15.5k tons/annum Extrusion capacityAmple area available for capacity increase Fully integrated production for key products, providing cost competitiveness Istanbul Türk Tuborg 24 Source: Koroplast Oğuz Arıkan Head of Sales 29years of work experience Previous experience Nestle ColgateErgün Geçkin Head of R&D and Quality Previous experience Bostik -ArkemaÖzlem Mesutoğlu Head of Finance Previous experience Saica Pack Garanti BBVA Quality and innovation driven managementFocus on sustainable growthImproved brand perception & sustained market leadershipyears of work experience21 years of work experience217Competent professional management… Gülsün Mersin Head of Marketing 23years of work experience Previous experience Eczacıbaşı Holding Hayat KimyaAmbitious management team with proven experience in FMCG sector Previous experience KoçHolding Bekir Türkoğlu CEO 29 years of work experienceSince 2004 with Koroplast Banu Dirlik Head of Production Previous experience Korozoyears of work experience22 Türk Tuborg 25 (1) Excluding Others sales volume (2) Others includes PwC Financial VDD adjustments for 2018 -2020 Source: Koroplast… delivering solid financials with strong growth strategy and vision 7 42 971911,423 2019 2026F81410 -5 2018611,705 119 20201901311,165 24413 202130927 11396 2022B399306515 15116 2023F73021 496118 36977 281 2024F608441241 2025F730297 159 200941 +46%+24%Key remarks Net sales (TL mn) EBITDA (TL mn) 2025F 2021 2018372.2 2019 2024F 2020 2022B 2023F 2026F35.1 47.671.9106.2181.1234.6298.4457.8 +51%+26% EBITDA margin (%)22.1% 23.8% 26.9% 25.6% 24.9% 24.8 % 25.9 % 25.6%Sales volume1(k
Marketing 23years of work experience Previous experience Eczacıbaşı Holding Hayat KimyaAmbitious management team with proven experience in FMCG sector Previous experience KoçHolding Bekir Türkoğlu CEO 29 years of work experienceSince 2004 with Koroplast Banu Dirlik Head of Production Previous experience Korozoyears of work experience22 Türk Tuborg 25 (1) Excluding Others sales volume (2) Others includes PwC Financial VDD adjustments for 2018 -2020 Source: Koroplast… delivering solid financials with strong growth strategy and vision 7 42 971911,423 2019 2026F81410 -5 2018611,705 119 20201901311,165 24413 202130927 11396 2022B399306515 15116 2023F73021 496118 36977 281 2024F608441241 2025F730297 159 200941 +46%+24%Key remarks Net sales (TL mn) EBITDA (TL mn) 2025F 2021 2018372.2 2019 2024F 2020 2022B 2023F 2026F35.1 47.671.9106.2181.1234.6298.4457.8 +51%+26% EBITDA margin (%)22.1% 23.8% 26.9% 25.6% 24.9% 24.8 % 25.9 % 25.6%Sales volume1(k tons)11.0 10.5 20.7 17.4 15.9 14.5 13.3 12.9 Net sales growth between 2022 and 202 6mainly fueled by volume growth Unit prices mainly raised in line with inflation, with limited real price increases and limited product mix impact during business plan period Increasing EBITDA with growing salesGarbage bags Storage Cleaning Cooking Basket Others2Strong volume growth boosted by rising penetration of kitchen consumables categories19.0 26.2% Türk Tuborg 26 Above bullets are additional streams of growth not reflected in business plan8Multiple untapped value enhancers beyond the business plan I Offering new cleaning category products, targeting market leadership II III IV Cleaning mops, cleaning gloves and wet cleaning towels Plastic food containersOther household and homecare productsNew distributorship agreements in new geographiesAdditional product offerings in existing categoriesLaunch of new adjacent categoriesGrowth in export markets Source: Koroplast Türk Tuborg III. Business overview Türk Tuborg 28 Support functions (1) Low -density polyethylene (2) High -density polyethylene Source: Koroplast Koroplast: Business overview Procurement Production Sales & Distribution → Main raw materials are LDPE1and HDPE2 as well as other raw materials such as masterbatches, additives and packaging materials → Koroplast diversifies its supplier base in key categories to create competitive edge on purchase prices → 7.6k tons of raw PE supplied in 2020, comprised of 3.2k tons of LDPE and 4.4k tons of HDPE→ Garbage, fridge and freezer bags entail vertically integrated in -house production from extrusion to final packaging stage → Cooking paper, aluminum foil, and PVC film are procured as semi -finished goods and undergo converting processes involving cutting and packaging → Cleaning products are purchased as final products, packaged in -house, and sold directly to customers → Koroplast sells its products to retailers, discounters, out -of-home and export market customers via its own sales team of 35-40employees → Koroplast also reaches a wide network of traditional shops and local chains via 45 distributors, covering every region in Turkey → With an on -the-ground team of more than 70 merchandisers , Koroplast carries out its in -store marketing and listing activities Information TechnologiesHuman ResourcesValue chain overview Research & DevelopmentHealth & Safety Türk Tuborg 29 Source: KoroplastEffective procurement process enabling seamless operations →The Company has anestablished supplier base ofreputable local and international names foreach raw material, toensure supply security and competitive pricing -Sixmain procurement items arePEraw materials (HDPE &LDPE), cooking paper, aluminum foil, PVC film, cleaning and packaging products →Koroplast sources allraw material needs directly from itssuppliers →Suppliers forbranded and PLproducts differ, depending oncustomer needs and pricing/quality differences →Procurement costs aremainly based oncommodity prices, which arequoted inEUR/USD -Locally sourced packaging materials arepurchased inTL →Cooking paper, aluminum foiland PVC film are procured assemi -finished goods →Cleaning products areprocured asfinal products from 8different suppliers from Turkey and abroad, and sold byKoroplast →Koroplast works with 3rdparty logistics provider .Products arecarried from Koroplast facility tocustomers’ warehouses Koroplast works with multiple suppliers to ensure better pricing terms and supply security in all key material purchasesShare in total procurement (2020) PEraw materials Cooking paper Aluminum foil / PVC film Cleaning products Packaging productsProcurement Sales & marketing Production Support functions Supply chain overview 44% 7% 16%11% 3% Suppliers 5 main suppliers 2 main suppliers3 main suppliers 5 main suppliers4 main suppliers Türk Tuborg 30 (1) Koroplast shares the corporate office area with Korozo Source: KoroplastModern production facility with the largest production capacity in Turkey… Modern production facility (“ Facility ”) located in a single area, strategically located in Istanbul, easy access to key regions, domestic and export customers Ample area Facility & HQ Main storage unit Open area High quality machinery and continuous investments to increase production capacityLocated on 23.4k sqm with an area for potential capacity increase Corporate office1located on 3rdand 4thfloors of production facility, enabling close monitoring in every step of productionArea (sqm) Description Facility & HQ 15.7kProduction area and HQ are in the same establishment Open area 2.6k Raw materials are stored in an open area Main storage unit 5k Warehouse with 12,000 pallet capacityProcurement Sales & marketing Production Support functions 15.5k tons/annum Extrusion capacity 2.6k tons/annum Wrapping capacityKoroplast production facility Koroplast has a long -term rental agreement for facility and storage area Türk Tuborg 31 Source: Koroplast…equipped with high quality machinery and infrastructure Procurement Sales & marketing Production →Brands: 5 Mam, 1 Alpine, 1 Kiefel , 1 Wenzhou −7 Coex -3, 1 mono production −Extrusion range between 250 –410 and 850 –1,800 mm −6 HDPE / LDPE and 2 LDPE processing →Brands (Garbage bag cutting ): 3 Mobert , 3 Lemo , 1 Coemter , 1 CMD −3 drawstring −1 drawstring + interleave + regular −2 star seal 3 ban d, 1 star seal 2 ban d −1 regular →Brands (Fridge & freezer bag cutting): 3 De Bernardi , 3 Lemo −1 bellowless, 5 with bellow →Boxing brands (Fridge & freezer bags): 4 Lead →Boxing brands (Cooking and ice bags): 2 Lead →Rewinding brands: 2 Rotomac, 1 Bragernes →Both cutting and boxing brands: 2 De Bernardi , 1 Wenzhou, 1 Yağmur MakineExtrusion Cutting Boxing / WrappingSupport functions Well -maintained high -quality machinery and equipment base Türk Tuborg 32 Quality control throughout the process (1) In -line production refers to a seamless manufacturing process executed in one line, without switching to another production line Source: KoroplastProven production process experience with stringent control measures… Procurement Sales & marketing Production Extrusion Cutting Boxing / Wrapping Products Garbage bags Garbage bags Storage products Fridge & freezer bags Cling wraps Aluminum
regular →Brands (Fridge & freezer bag cutting): 3 De Bernardi , 3 Lemo −1 bellowless, 5 with bellow →Boxing brands (Fridge & freezer bags): 4 Lead →Boxing brands (Cooking and ice bags): 2 Lead →Rewinding brands: 2 Rotomac, 1 Bragernes →Both cutting and boxing brands: 2 De Bernardi , 1 Wenzhou, 1 Yağmur MakineExtrusion Cutting Boxing / WrappingSupport functions Well -maintained high -quality machinery and equipment base Türk Tuborg 32 Quality control throughout the process (1) In -line production refers to a seamless manufacturing process executed in one line, without switching to another production line Source: KoroplastProven production process experience with stringent control measures… Procurement Sales & marketing Production Extrusion Cutting Boxing / Wrapping Products Garbage bags Garbage bags Storage products Fridge & freezer bags Cling wraps Aluminum foils Ice bags Cooking products Cooking papers Cooking bags In-line productionGarbage bag, cling wrap, aluminum foil and cooking paper production are carried out in -line1 Cleaning products are purchased as final products from both abroad and Turkey (Toll manufacturing)→Color, filler and additive masterbatch production →Extruders can process both PE and aluminum →8 machines with high and low density PEprocessing capability (2 of the machines are focused on low density PE processing) →Supplements such as scents are added into the process to add different characteristics to products→8 Garbage bag cutting machines allow production of regular, star seal and bucket products →6 fridge & freezer bag cutting machines allowing both small, medium and large size fridge & freezer bag production→4 fridge & freezer bag boxing machines, 1 cooking paper and 2 ice bag boxing machines →3 rewinding machines, 1 machine devoted to cooking paper wrapping →4 cutting and boxing machines allowing in -line production for resealable, zippered, regular bags and bags with adhesive tapes →Promotion products go through additional shrinking processSupport functions The Company pays close attention to production process, from using top-quality raw materials to manufacturing Türk Tuborg 33 Source: Koroplast, SOR research, TNS researchTop ranking on a continuum of customer preference for kitchen consumables Food safety and general quality standardsEnvironmental standards and organic productionDietary standards Brand image associated with environmental protection and sustainabilityProcurement Sales & marketing Production Support functions…and quality certificates Founding member of ÇEVKO, a non -profit foundation devoted to environmental protection ,and packaging waste recovery and recycling Koroplast’s high quality products certified by… 90% overall customer trust score Vegan packaging product certificationHalal certificate Türk Tuborg 34 … and manages export operations…Well -established sales organization managing a wide distributor network (1) Including 4 distributors serving only out -of-home customers, and 1 distributor serving only online groceries Source: Koroplast , PwC Financial VDD reportSales channels Coverage area3 Key account managers 15 Key accounts 5 Regional directors 5 RegionsHands -on in -house sales team of 38 people Widespread network of 451distributors Key account teams manage large national chains, discounters and online groceries totaling c.30k points Distributor network enables access to a wide network of local chains and grocery stores totaling c.40k points, with a focus on Turkey’s highly populated regionsOutsourced on -the-ground merchandise team of 70+ people carry out in - store marketing and listing activities Koroplast sales team closely supervises distributors with regular visits Koroplast also serves out -of-home and export markets, which consist mainly of B2B customers, with its own dedicated sales team Multi -distributor model ensures operational sustainability and distribution security Daily route of the merchandise team is optimized regularly to reach maximum amount of high -turnover stores ✓Distributors grant product category exclusivity while working with 100% warranty, providing security in receivables collection for Koroplast✓ 98 77 14# of distributors in each regionProcurement Sales & marketing Production Support functions % of 202 2B Net salesKoroplast reaches the domestic market via… 94% 6%National chains Discounters Out-of-home Online retailers … through well -connected distributors in each market, accessing c.10 countries in EMEA and CIS regions Each color represents a different region46% 54% % of 202 2B domestic net sales % of 202 2B domestic net sales (exc. distributors)29% 6% 1% 64% Türk Tuborg 35Customer network in the domestic market Turkish retail sector landscapeProcurement Sales & marketing Production Support functions Source: Koroplast, PwC VDD reportRetailers Discounters Local chains and traditional shops Online retailers c.129ksales points across Turkey Koroplast sales concentration –Top 10 customers revenue share→Migros and CarrefourSA ,theonly two national chains with c.3ksales points inthe modern channel, have been Koroplast’s long -standing customers→Traditional channel consists ofsmall local chains and traditional stores , making upaconsiderable portion of Turkish retail universe→Rapidly growing channel with theshift inconsumers’ shopping habits →Koroplast sells itsproducts through top 3leading online retailers inTurkey→BİM, A-101 and ŞOK arethetopthree discounters with c.26.5kstores →Koroplast increased availability in discounters with itsown brand over theyears ;working with BİM and A101 2018 2020 201930%32% 19%39% 10% 22%10% 20%20% 2018 2020 201941%43%49% 10% 19%11% 22%10%11% 20%20%10% 20%14% 201810% 2019 202067%62% 25%10%69% 12% 27%10%10% 24%20%16%Top 3 customers Top 5 customers Top 10 customers Discounters Retailers Others Distributors Türk Tuborg 36 Key highlights Example practices Increasing brand awareness and customer perceptionGrowing household penetration in categoryHigher turnover through targeted communicationCreating public awareness on sustainabilityMarketing channels Source: KoroplastTo expand usage of kitchen consumables, Koroplast focuses its marketing communication on interactions with a diverse consumer base through various occasions and channels with the aim of … →Attractive and informative content underlining Koroplast products’ usage areas and benefits →Seasonal advertising strategy →Advertorial campaigns with leading TV program Masterchef TurkeyTraditional media →Over 200 cooking videos on the top food website sponsored by Koroplast →Highly active social media usage with influencers →Joint campaign with e -commerce siteDigital & social media →Point of sale displays →Basket promotional items at register →Focus on high visibility at retail shelves Points of sale →Initiated # Trashtag Turkey in 2019, collecting c.17k bags of trash →“Tips for making life easier” book, authored by a record c.9k women in Turkey →Aims to increase public awareness on sustainabilitySocial responsibilityProcurement Sales & marketing Production Support functionsAcross channel marketing activities… % % of 2021B Fair & Advertising expensesc.54% c.38% c.5% c.3% Türk Tuborg 37 Source: KoroplastUse of popular figures as brand ambassadors to promote usage of Koroplast productsCost -effective marketing strategy enabling continued marketing activities and visibilityConstantly optimizing marketing methods with trackable and measurable results→Leading YouTube channel (“ Hayatı
by Koroplast →Highly active social media usage with influencers →Joint campaign with e -commerce siteDigital & social media →Point of sale displays →Basket promotional items at register →Focus on high visibility at retail shelves Points of sale →Initiated # Trashtag Turkey in 2019, collecting c.17k bags of trash →“Tips for making life easier” book, authored by a record c.9k women in Turkey →Aims to increase public awareness on sustainabilitySocial responsibilityProcurement Sales & marketing Production Support functionsAcross channel marketing activities… % % of 2021B Fair & Advertising expensesc.54% c.38% c.5% c.3% Türk Tuborg 37 Source: KoroplastUse of popular figures as brand ambassadors to promote usage of Koroplast productsCost -effective marketing strategy enabling continued marketing activities and visibilityConstantly optimizing marketing methods with trackable and measurable results→Leading YouTube channel (“ Hayatı Kolaylaştırır ”) in Turkey under cleaning segment with c.45k subscribers and c.84 mn views →Among top 10 most watched advertisements on YouTube Turkey (c.18 mn views) →Weekly uploads with different contents →Partners with Dublin HQ for brand strategies →With active branding and marketing activities reached c.20k followers →Informative and promotional videos with influencers YouTube Instagram Twitter Others →Reaching consumers through occasional hashtags and content marketing activities →Top-trend hashtag (# paylasbayramet ) with c.12k interactions in one day →Initiated social awareness project with #trashtag challenge in Turkey #paylasbayramet→Over 200 cooking videos with c.7k views shared on the top food website →Joint campaign with leading e-commerce company ( Trendyol ) →Garnered the Silver Prize at Social Media Awards Turkey Use of social media in digital channels enables the Company to reach wider target audiences, growing its customer base “Makes life easier” strategy Procurement Sales & marketing Production Support functions… with specific focus on social media to expand customer awareness… Türk Tuborg 38 Source: Koroplast Cares about product quality Leads a fast -paced lifestyle Well -informed Willing to pay more for better products Environmentally conscious Family -oriented Minds personal well -being Prefers consuming domestic brands Socializes digitally and frequently uses Instagram and YouTube Open to discovering new products Procurement Sales & marketing Production Support functions… by reinforcing brand positioning as “modern, urban, quality seeker” Attributes of Koroplast customer : Türk Tuborg 39Information Technologies (“IT”) Enroute Panorama (Dealer Integration System)Joint systems with Korozo Systems used only by Koroplast Management & Planning Customer Master Data ECOD Router (EDI System ) Dashboard / Analytics Data Warehouse Document Management Order Management Performance Management HRFunctions Advanced IT capabilities that ensure efficiency in operations and control over organizational planning→Koroplast’s SAP powered IT infrastructure interconnects separate business functions across manufacturing facility, warehouse and distributors, enabling seamless operations −The Company monitors quality throughout themanufacturing life-cycle oftheproduct viaSAP →Koroplast’s IT infrastructure is currently integrated with Korozo. A separation workstream will be carried out as part of the transaction →Koroplast currently shares IT functions with Korozo, as indicated in the below chart Finance & ControllingSales & Order ManagementPlanning & ProductionBusiness Activities Source: KoroplastProcurement Sales & marketing Production Support functions Koroplast IT infrastructure Türk Tuborg 40 Sales 38Production 84Finance 14Marketing 12 Merchandisers 76Human Resources (“HR”) # of personnel Gender Employee tenure Educational background → Average tenure is 11 years95 White collar 109 Blue collar184 20Male Female176 5879 +10 years 0-5 years 5-10 years30% 18% 29%16%7% OthersAssociate degreeUniversity Vocational high school High school# of personnel1Gender Employee tenure Educational background White collar Blue collarMale Female→ Average tenure is 6.6years87 226279 3451%22% 21% 3%3% # of employees contracted from 3rdpartyProcurement Sales & marketing Production Support functions (1) As of February 2022 Source: KoroplastLeadership Supply chain 25Maintenance 17Supply chainProduction & Production support 206OperationsCEO Elementary School High school University Masters degree Others176 5879 0-5 years 5-10 years +10 years Türk Tuborg 41 Source: Koroplast Operations LeadershipTitle Work experience Background CEO 20+ 15+ years of senior management experience Head of Marketing 20+ Brand management experience in multinational FMCGHead of Sales 20+ Held various posts in multinational FMCG companies Head of Production 20+ 20+ years of production management experienceHead of Finance 20+ Varied finance experience in leading banks Supply Chain Manager 20+20+ years of supply chain management experience in global FMCG company Plant Manager 20+ 20+ years of plant management experience in Korozo Maintenance Manager 20+18 years of maintenance management experience in KorozoManagement team Procurement Sales & marketing Production Support functions Koroplast organization is managed by a strong and committed leadership and operations team Türk Tuborg 42Research & Development (“R&D”) and Health & Safety (“H&S”) Procurement Sales & marketing Production Support functions R&D overview Selected R&D projectsH&S overview →Koroplast iscommitted tomaintaining stringent occupational health and safety standards, inline with legal directives −H&S certificates (ISO 45001 ,ISO14001 ),currently licensed under Korozo ,willbe transferred toKoroplast →Standard training program foremployees includes vocational best practices, first aid, hygiene, disaster recovery and firetraining →Control measures currently inplace include −Daily and weekly coordination meetings −Monthly siteaudits −Monthly best practice sharing sessions →The Company encourages itsemployees toreport any irregularities on the production floor .Koroplast rewards employees who suggest new H&S measuresNew product generation →Development of odor blocking technology →Production of fresh keeping storage bags R&D and Quality team focuses on Quality improvement for final products and packaging Quality tests and production efficiency improvements for raw materials and production techniques →Production of scented garbage bagsR&D processes before final product stage Technical research and benchmark analysis with comparable productsRegular m eetings with customers and suppliersOn-site performance tests Source: Koroplast Türk Tuborg 43 Case Study: Sustainability is at the core of Koroplast Source: KoroplastWater waste Food waste Garbage pollutionOffering products that contribute to waste reduction, Koroplast upholds sustainability Koroplast also promotes circular economy by producing 62% of its garbage bags from recycled plasticsPrompt water and electricity savings Provide longer shelf life for foodMinimize environmental pollution and negative spillover impacts Reduce cleaning chemicals usagePrevent food waste by preserving food for multiple useIncrease awareness for recycling and waste collection & sortingCooking papers & bags Freezer bags & storage bags Garbage bags Türk Tuborg IV. Financial overview Türk Tuborg 45 Source: Koroplast, PwC Financial VDD reportBasis of preparation Proposed Transaction scope includes 100% equity stake sale in Koroplast , as described in the Executive Summary →Koroplast prepares three sets of financial information with fiscal year being the 12 -month period as of January 1 of the calendar year, e nding
products that contribute to waste reduction, Koroplast upholds sustainability Koroplast also promotes circular economy by producing 62% of its garbage bags from recycled plasticsPrompt water and electricity savings Provide longer shelf life for foodMinimize environmental pollution and negative spillover impacts Reduce cleaning chemicals usagePrevent food waste by preserving food for multiple useIncrease awareness for recycling and waste collection & sortingCooking papers & bags Freezer bags & storage bags Garbage bags Türk Tuborg IV. Financial overview Türk Tuborg 45 Source: Koroplast, PwC Financial VDD reportBasis of preparation Proposed Transaction scope includes 100% equity stake sale in Koroplast , as described in the Executive Summary →Koroplast prepares three sets of financial information with fiscal year being the 12 -month period as of January 1 of the calendar year, e nding on December 31 of the calendar year (i.e. 01.01.2020 –31.12.2020) −Statutory accounts :Koroplast’s statutory accounts areprepared inaccordance with theTurkish Commercial Code fortaxfiling purposes −Management accounts :Koroplast keeps itsmanagement accounts (statutory basis) inTLand issues monthly accounts detailed atcategory and channel level −IFRS financials :Koroplast’s IFRS financials issued onanannual basis areaudited byDeloitte since 2019 and byKPMG before 2019 -IFRS adjustments onstatutory accounts have limited impact atEBITDA level and mainly relate toexclusion ofrent expenses aspart ofIFRS 16,netrealizable value provision oninventory, unused vacation and severance payprovision Historical financials presented in this section are based on the PwC Financial VDD report for2018 -2020 and based on Management accounts for2021 and represent kitchen consumable operations under Koroplast as a stand -alone entity. Historical financials include: →Consolidation of net sales for hotel and municipality tenders and export activities in 2018 and 2019 under Koroplast (implying a net sales increase of c.TL 20 mnin each year); since the beginning of 2020 Koroplast has been carrying out these activities under its own roof →Proforma adjustments to 2018 and 2019 for the extrusion machinery, which were transferred to Koroplast from Korozo in 2020. These adjustments mainly include the transfer of related costs under both COGS and OPEX as well as elimination of the mark -up charged by Korozo to Koroplast →Proforma adjustments over the years to fully reflect the costs of shared functions (such as HR, IT, etc.) to Koroplast to present the historical financials on a stand - alone basis independent from Korozo →Due diligence adjustments of PwC to present the historical operational performance on a normalized and IFRS -like nature (“ VDD adjustments ”) →PwC Financial VDD report will be available to potential participants during Phase II, as indicated in the Executive Summary →2021 is based on Management accounts and arecomparable to2018 -2020 Forecast period presented in this section is prepared for Koroplast , as per below →2022B –2026F figures are as per management accounts, reflecting management’s forecasts, and incorporate the VDD adjustments made on hist orical figures for comparability purposes Macro assumptions 2018A 2019A 2020A 2021 A 2022 B 2023F 2024F 2025F 2026F EUR / TL (avg.) 5.62 6.32 8.03 9.25 17.52 20.52 23.23 26.04 28.59 Inflation ( %) 20.3% 11.8% 14.6% 36.1 % 25.4 % 15.5% 12.0% 11.0% 8.9% Türk Tuborg 46 (1) Excluding other sales (scrap, raw material and semi -finished goods sales) (2) PwC Financial VDD adjustments are not shown separately on the graph (3) Represent sales discounts to customers offered by the Company, which include turnover premiums, discounts on invoices, in -store activities and stock incentives Source: Koroplast , PwC Financial VDD reportOverview of historical performance Sales volume1(k tons) EBITDA (TL mn) 35 2019 2020 2018 2021 2022B4872106181 +51%22.1% EBITDA margin (%)10.5 1.3 9.6 2018 20191.4 11.99.21.0 202012.9 11.81.5 202113.11.4 2022B11.013.3 14.5+7% Net sales2(TL mn) 23.8% 25.6% 24.8%Historical overview Storage products Garbage bags Cooking products Cleaning products Domestic Export 2019149 2018410 16177172641745 202037733 2021686 2022B159 200281730+45% Domestic Export→Koroplast’s sales consist of four main product categories: Garbage bags, Storage products, Cooking products and Cleaning products →Garbage bags and storage products are the two main categories, jointly commanding c.76% of net sales in 2022B, with individual respective shares of c.42% and c.34% −Cooking products follow with c.16%in2022 B →Cooking products are the fastest growing category both in volume (c.20% CAGR) and value terms (c.53% CAGR) through 2018 to 2022B, due to increasing market size and penetration ratio →The newly launched cleaning category started to generate revenue in Q4 2020 . Still at ramp up stage, the category’s 2022B share is c.6% of net sales →Koroplast mainly focuses on domestic market and branded sales −Branded sales make upc.85%ofnetsales in2022 B −Comprising c.6%ofnetsales, exports consist mainly ofprivate label products →Historically, the Company’s strong growth performance relies largely on volume growth, and to a certain extent on real price increases →Koroplast secures volume growth by penetrating new channels as well as introducing new SKUs →The Company demonstrated strong pricing power, passing on cost increases to customers −Pricing and SKU optimization project in2018 yielded results in2019 and 2020 , evidenced bymarked increases insales prices and hence profitability −Discount rates3are used asastrategic tool bythe Company toadjust itslist prices atacertain level, and toensure ahealthy balance between value and price growthRemarks 25.9% Türk Tuborg 47 Source: Koroplast, PwC Financial VDD reportCategory deep -dive: Garbage bags Unit 2018 2019 2020 2021 2022B CAGR Volume k tons 6.1 5.8 6.6 7.2 7.5 5.3% Growth % n.a. -5.1% 13.3% 9.8% 4.2% Retailers k tons 1.7 2.0 2.6 2.7 3.0 15.7% Distributors k tons 1.9 1.7 1.7 2.1 2.1 2.2% Discounters k tons 0.1 0.2 0.8 0.4 0.4 48.2% Out-of-home k tons 1.1 0.6 0.6 0.6 0.7 -10.6% Export k tons 1.3 1.2 0.9 1.4 1.3 -0.9% Net sales TL mn 81.3 97.0 119.3 190.2 309.3 39.7% Growth % n.a. 19.4% 22.9% 59.5% 62.6% PL share % 8.4% 16.6% 20.8% 22.5% 30.1% Retailers TL mn 25.4 35.5 48.2 73.4 128.2 49.9% Distributors TL mn 26.1 29.8 33.5 64.3 98.9 39.5% Discounters TL mn 1.2 4.8 15.6 11.0 19.6 n.m. Out-of-home TL mn 13.1 10.8 7.4 10.9 22.5 14.6% Export TL mn 15.5 16.1 14.5 30.6 40.1 26.8% Direct materialsTL mn 37.5 40.4 54.1 96.4 161.2 44.0% Contribution I TL mn 43.7 56.6 65.2 93.8 148.1 35.6% CM I % 53.8% 58.3% 54.7% 49.3% 47.9%Historical overview Storage products Garbage bags Cook ingproducts Cleaning products →Garbage bags have been Koroplast’s leading revenue generator, albeit
0.6 0.6 0.7 -10.6% Export k tons 1.3 1.2 0.9 1.4 1.3 -0.9% Net sales TL mn 81.3 97.0 119.3 190.2 309.3 39.7% Growth % n.a. 19.4% 22.9% 59.5% 62.6% PL share % 8.4% 16.6% 20.8% 22.5% 30.1% Retailers TL mn 25.4 35.5 48.2 73.4 128.2 49.9% Distributors TL mn 26.1 29.8 33.5 64.3 98.9 39.5% Discounters TL mn 1.2 4.8 15.6 11.0 19.6 n.m. Out-of-home TL mn 13.1 10.8 7.4 10.9 22.5 14.6% Export TL mn 15.5 16.1 14.5 30.6 40.1 26.8% Direct materialsTL mn 37.5 40.4 54.1 96.4 161.2 44.0% Contribution I TL mn 43.7 56.6 65.2 93.8 148.1 35.6% CM I % 53.8% 58.3% 54.7% 49.3% 47.9%Historical overview Storage products Garbage bags Cook ingproducts Cleaning products →Garbage bags have been Koroplast’s leading revenue generator, albeit decreasing share in net sales, from 51% in 2018 to 4 2% in 202 2B, amid faster growth by other categories →Volume growth remained at 5.3% CAGR, where retailers and discounters stood out as main growth drivers. Management opted to gradually cut back on out -of-home and export sales with relatively lower profitability levels, in 2019 and onwards →Retail channel volume grew in line with the long -standing partnership with Migros , which expanded its store network, for both branded and PL sales −PLshare inretail volume increased to50%in2022Bfrom 32%in2018 ,growing by30%CAGR involume between 2018 and 2022B →Discounters channel volume grew strongly in 2020 with new SKUs →Net sales growth is mainly price driven, and manifests Koroplast’s pricing power →Garbage bag prices were increased following an SKU/pricing optimization project, driving garbage bags’ prices upwards →Changing product mix to discounters in 2020 in favor of higher priced garbage bags had a positive impact on average prices; positively impacting the category with discounters’ increasing share →Contribution margin improved c.5% in 2019 due to the Company’s selective growth strategy towards a more profitable channel mix and SKU optimizationRemarks Türk Tuborg 48 Source: Koroplast, PwC Financial VDD reportCategory deep -dive: Storage products Storage products Garbage bags Cook ingproducts Cleaning products Historical overview →Storage products, comprised mainly of freezer bags, cling films, aluminum foils, zipper bags, etc., make up Koroplast’s second largest product category, with 3 3% share in 202 2B net sales −Freezer bags dominated thecategory with c.61%share in2021netsales −Second largest product iscling film with c.18%share, followed byaluminum foils and zipper bags with c.10%and c.6%share in2021netsales, respectively −The remaining products arewrap and cook, icecube bags and others →Storage products are mainly Koroplast branded products. Customers are more brand sensitive in this category, and place greater emphasis on hygiene and quality, as these products are in direct contact with food −Private label sales only include aluminum foilproducts indiscounter channel →Storage product volumes posted c. 8% CAGR between 2018 –2022B, rebounding strongly in 2020 following stagnant growth in 2019 due to lower -than -anticipated sales during the high season of Eid Al -Adha −Alarge portion offreezer bag sales isgenerated during thisperiod →Strong volume growth in 2020 was spurred mainly by increasing discounter channel presence with Koroplast branded new SKUs as well as growing penetration of a major discounter →Volume growth in 202 1is sustained, with Koroplast listing in one of the major discounters for storage products →Positive impacts of SKU/pricing optimization project were apparent in freezer bags as well, contributing to price hikes in this category in 2019 and 2020Unit 2018 2019 2020 2021 2022B CAGR Volume k tons 3.3 3.3 4.1 4.2 4.5 8.3% Growth % n.a. 1.0% 26.0% 2.0% 6.0% Retailers k tons 1.1 1.2 1.3 1.3 1.4 6.1% Distributors k tons 2.0 1.8 2.1 2.2 2.4 4.5% Discounters k tons 0.1 0.2 0.7 0.6 0.6 65.4% Out-of-home k tons 0.0 0.0 0.0 0.0 0.0 -24.0% Export k tons 0.0 0.0 0.1 0.0 0.0 14.0% Net sales TL mn 50.7 60.6 85.8 131.1 243.8 48.1% Growth % n.a. 19.6% 41.4% 52.8% 86.0% PL share % 1.6% 4.1% 4.4% 3.2% 4.1% Retailers TL mn 18.2 22.7 24.4 41.2 73.5 41.8% Distributors TL mn 29.3 32.3 43.2 68.3 126.9 44.3% Discounters TL mn 1.4 4.0 16.0 19.3 39.5 n.m. Out-of-home TL mn 1.3 0.9 0.3 0.7 0.9 -8.8% Export TL mn 0.5 0.8 1.8 1.5 3.1 55.7% Direct materialsTL mn 24.7 29.8 37.2 56.6 116.1 47.3% Contribution I TL mn 26.0 30.8 48.5 74.5 127.7 48.8% CM I % 51.3% 50.8% 56.6% 56.8% 52.4%Remarks Türk Tuborg 49 Source: Koroplast, PwC Financial VDD reportCategory deep -dive: Cooking products Storage products Garbage bags Cooking products Cleaning products Historical overview →Cooking products are the third largest product category in terms of both volume and sales, with a growing share in total net sales −Cooking paper makes upmore than 90%ofthecategory −Other products areoven bag and microwave cooking bags →Cooking products have outperformed o ther categories as the fastest growing product category both in terms of volume (c. 20% CAGR) and net sales (c.53% CAGR) between 2018 and 202 2B −Household penetration has been propelled byapandemic -related change in lifestyle .Management expects the robust demand forcooking products to remain intact, going forward −Asturdy growth performance notwithstanding, Turkey’s cooking products market remains underpenetrated vis-à-visdeveloped markets →Strong volume growth of 20% CAGR is attributable to increased usage of these products across all channels →Volume growth is accompanied by price hikes amid mounting consumer demand →The Company increased its share of branded products with higher prices compared to private label products, further supporting the net sales increase →The Company has asset -light production in this category and only performs slitting operations for cooking papersUnit 2018 2019 2020 2021 2022B CAGR Volume k tons 0.9 0.9 1.5 1.4 1.8 20.4% Growth % n.a. 7.3% 60.7% -4.1% 27.1% Retailers k tons 0.2 0.2 0.4 0.3 0.4 14.9% Distributors k tons 0.4 0.3 0.5 0.5 0.7 15.1% Discounters k tons 0.2 0.4 0.6 0.6 0.7 32.5% Out-of-home k tons 0.0 0.0 0.0 0.0 0.0 -11.6% Export k tons 0.0 0.0 0.0 0.0 0.0 31.4% Net sales TL mn 20.6 22.8 42.0 51.6 113.2 53.1% Growth % n.a. 10.8% 83.9% 23.1% 119.1% PL share % 4.1% 16.7% 14.1% 10.7% 10.9% Retailers TL mn 5.6 6.1 10.3 13.1 25.0 45.1% Distributors TL mn 10.2 8.4 14.4 19.3 45.7 45.5% Discounters TL mn 4.4 7.9 16.6 18.4
in this category and only performs slitting operations for cooking papersUnit 2018 2019 2020 2021 2022B CAGR Volume k tons 0.9 0.9 1.5 1.4 1.8 20.4% Growth % n.a. 7.3% 60.7% -4.1% 27.1% Retailers k tons 0.2 0.2 0.4 0.3 0.4 14.9% Distributors k tons 0.4 0.3 0.5 0.5 0.7 15.1% Discounters k tons 0.2 0.4 0.6 0.6 0.7 32.5% Out-of-home k tons 0.0 0.0 0.0 0.0 0.0 -11.6% Export k tons 0.0 0.0 0.0 0.0 0.0 31.4% Net sales TL mn 20.6 22.8 42.0 51.6 113.2 53.1% Growth % n.a. 10.8% 83.9% 23.1% 119.1% PL share % 4.1% 16.7% 14.1% 10.7% 10.9% Retailers TL mn 5.6 6.1 10.3 13.1 25.0 45.1% Distributors TL mn 10.2 8.4 14.4 19.3 45.7 45.5% Discounters TL mn 4.4 7.9 16.6 18.4 40.7 74.8% Out-of-home TL mn 0.3 0.1 0.1 0.1 0.2 -1.8% Export TL mn 0.2 0.2 0.6 0.6 1.5 75.8% Direct materialsTL mn 9.2 11.0 18.4 23.3 49.3 52.1% Contribution I TL mn 11.4 11.8 23.6 28.4 63.8 53.9% CM I % 55.3% 51.9% 56.2% 55.0% 56.4%Remarks Türk Tuborg 50 Source: Koroplast, PwC Financial VDD reportCategory deep -dive: Cleaning products Storage products Garbage bags Cooking products Cleaning products Historical overview →Cleaning products are the new product category of Koroplast , launched in Q4 2020 →Product portfolio consists of sponges and cleaning cloths →The Company only offers cleaning products under its main brand, Koroplast →Products are sourced as finished trade goods from Turkey and abroad →Management originally planned an earlier launch date but had to delay it due to Covid -19. Regular listings in retailers were only available around November 2020 →In 2020, management pursued an entry pricing strategy in cleaning category, initially setting a relatively lower price versus main competitors, with a view to attracting a larger consumer base and leveraging Koroplast brand’s recognition →Koroplast made the necessary marketing investments and acquired shelf -space from retailers in 2020, as in other categories →Currently, retailers and distributors are the main sales channels for the category →Cleaning category has a different cost structure to in -house produced categories due to its trade nature →Cleaning products are the highest priced category, hence generating a high contribution in TL on a per ton basis, despite lower contribution margins than other categoriesUnit 2018 2019 2020 2021 2022B CAGR Volume k tons - - 0.1 0.2 0.4 n.m. Growth % n.a. n.a. n.a. 37.6% 121.1% Retailers k tons - - 0.0 0.0 0.1 n.m. Distributors k tons - - 0.1 0.1 0.3 n.m. Discounters k tons - - - - - 0.0% Out-of-home k tons - - 0.0 0.0 0.0 n.m. Export k tons - - 0.0 0.0 0.0 n.m. Net sales TL mn - - 6.8 13.3 45.2 n.m. Growth % n.a. n.a. n.a. 97.3% 239.2% PL share % n.a. n.a. 0.0% 0.0% 0.0% Retailers TL mn - - 1.5 3.8 11.0 n.m. Distributors TL mn - - 4.7 9.2 34.0 n.m. Discounters TL mn - - - - - n.m. Out-of-home TL mn - - 0.4 0.0 0.1 n.m. Export TL mn - - 0.1 0.2 0.2 n.m. Direct materialsTL mn - - 4.6 7.5 28.9 n.m. Contribution I TL mn - - 2.1 5.9 16.4 n.m. CM I % n.a. n.a. 31.4% 44.0% 36.2% New category launched in Q4 2020 Remarks Türk Tuborg 51Cost of goods sold (“COGS”) and Operating expenses (“OPEX”) Unit 2018 2019 2020 2021 2022B Net sales TL mn 158.8 199.9 281.0 410.2 730.5 Direct materials TL mn 74.3 88.5 131.1 203.1 367.2 Contribution I TL mn 84.6 111.4 149.9 207.1 363.3 CM I % 53.2% 55.7% 53.3% 50.5% 49.7% Utility TL mn 2.5 3.2 4.5 6.1 15.8 Labor TL mn 13.6 16.9 19.6 23.2 42.2 Line maintenance TL mn 2.2 3.1 4.1 5.3 8.7 Contribution II TL mn 66.2 88.2 121.7 172.4 296.6 CM II % 41.7% 44.1% 43.3% 42.0% 40.6% Indirect production TL mn 5.6 6.7 7.9 8.3 15.0 GP (ex. D&A) TL mn 60.7 81.5 113.8 164.1 281.6 GP margin % 38.2% 40.8% 40.5% 40.0% 38.6% OPEX TL mn 25.6 33.9 41.9 57.9 100.5 % of net sales % 16.1% 17.0% 14.9% 14.1% 13.8% S&M TL mn 22.3 30.1 37.2 51.2 87.4 % of net sales % 14.0% 15.0% 13.2% 12.5% 12.0% Fair & Adv. TL mn 5.4 8.5 10.1 12.6 21.4 Personnel TLmn 5.4 6.8 8.6 15.0 24.4 Shipping TLmn 3.9 5.2 6.6 6.2 14.5 Merchandise TLmn 4.3 5.4 6.6 8.6 14.2 Others TLmn 3.3 4.2 5.2 8.7 12.9 G&A TL mn 3.3 3.9 4.7 6.7 13.1 % of net sales % 2.1% 1.9% 1.7% 1.6% 1.8% Personnel TLmn 2.1 2.4 2.6 3.1 6.2 Others TLmn 1.2 1.5 2.1 3.6 6.9 EBITDA TL mn 35.1 47.6 71.9 106.2 181.1 EBITDA margin % 22.1% 23.8% 25.6% 25.9% 24.8% Source: Koroplast , PwC Financial VDD report→COGS has been adjusted to reflect the stand -alone cost structure, with proforma adjustments for labor and direct production costs that would have been incurred had extrusion for garbage and freezer bags been performed by Koroplast in 2018 and 2019 →Direct material costs constitute the largest port ionof COGS, with the ratio to net sales at around 4 5%-50% on average →Direct material costs consist of the cost of raw materials and semi -finished goods used in production ; raw materials are mainly EUR -and USD -denominated −HDPE and LDPE forgarbage bags, paper forcooking products, aluminum foils and PVC films aremain items →Utilities remained stable at c.1.6% of net sales during the historical period ; which increased to2.2% in 2022B →Labor costs comprise direct and indirect costs. Labor costs -to-sales ratio is estimated to ease from 9% to 6% in 202 2B, with improved efficiency per employee →Line maintenance consists of technical consumables and repair &maintenance related cost items and accounts for 1. 2% of net sales in 2022B →Indirect production costs include mainly rent c. 2% of net sales in 2021 and 2022B →OPEX has been adjusted to reflect the stand -alone cost structure with proforma adjustments mainly incorporating: −Additional personnel with respective costs mainly forsales and administrative roles such asITand HRand rent aswell asother stand -alone expenses →Fair & adv. includes mainly advertising spending for TV and
items →Utilities remained stable at c.1.6% of net sales during the historical period ; which increased to2.2% in 2022B →Labor costs comprise direct and indirect costs. Labor costs -to-sales ratio is estimated to ease from 9% to 6% in 202 2B, with improved efficiency per employee →Line maintenance consists of technical consumables and repair &maintenance related cost items and accounts for 1. 2% of net sales in 2022B →Indirect production costs include mainly rent c. 2% of net sales in 2021 and 2022B →OPEX has been adjusted to reflect the stand -alone cost structure with proforma adjustments mainly incorporating: −Additional personnel with respective costs mainly forsales and administrative roles such asITand HRand rent aswell asother stand -alone expenses →Fair & adv. includes mainly advertising spending for TV and digital media →Shipping costs pertain to transportation of goods to customers’ premises →Merchandise costs refer to outsourced field reps regularly visiting sales points to promote Koroplast branded products −These costs aremainly driven bybranded sales volume growth, asmerchandise personnel isresponsible only forKoroplast and Ideal branded products →Others in S&M and G&A include mainly rent, transportation, IT maintenance and consultancy expensesRemarks Türk Tuborg 52 (1) Include keynet working capital adjustments prepared by the Management to be comparable with P wC’s VDD methodology for2018 -2020 Source: Koroplast , PwC Financial VDD reportNet working capital (“NWC”) NWC Unit 2018 2019 2020 202112022B Trade receivables TL mn 73.7 102.2 98.8 155.2 249.5 Domestic TL mn 70.6 98.6 96.1 157.6 249.5 Export TL mn 3.1 3.6 2.7 0.1 - Inventory TL mn 22.3 22.1 43.6 100.3 114.6 Trade payables TL mn 30.4 38.3 30.8 21.9 82.4 TWC TL mn 65.6 86.0 111.5 233.5 281.7 % of net sales % 41.3% 43.0% 39.7% 56.9% 38.6% Other current assets TL mn 1.6 2.0 5.5 9.5 16.9 Other current liabilities TL mn 8.1 3.4 8.6 8.5 15.1 Other working capital TL mn -6.6 -1.4 -3.1 1.0 1.8 NWC TL mn 59.0 84.6 108.4 234.6 283.5 % of net sales % 37.1% 42.3% 38.6% 57.2% 38.8% Trade receivables days 144 158 109 117 106 Domestic days 153 167 113 129 113 Export days 70 77 58 1 0 Inventory days 83 68 95 149 93 Trade payables days 92 94 54 26 54→The Company’s NWC ratio, which had trended at c.40% over the historical period except for 2021, is budgeted at 39% for 2022B →2021 year end NWC level is caused by the sharp FX movement in Turkey during December 2021; not representing the normal course of NWC level of the Company −Trade receivables and inventory increased ontheback ofincreasing prices and raw material prices, respectively .Plus, due tosudden movements, the Company decided not tosell for2weeks atthe end ofDecember which increased theinventory level oftheCompany −Trade payables decreased due toterms and conditions theCompany could get with cash payments and/or shorter payment periods ;one-offpurchase terms →Collection period for domestic sales (c.95% of net sales) was around 160 days in 2018 and 2019, higher than the normal course of business due to ( i) relatively lower performance of one of the major retailers and (ii) extended payment terms for distributors due to credit card installments →Collection terms improved in 2020 across channels, mainly led by increased sales to discounters, better inventory management of retailers, and management’s strategy of discontinuing credit card installments; c.113 days is budgeted for domestic sales in 2022B, in line with 2020 performance →Inventory turnover days, which had historically stood at c.70 -80, increased to 95 in 2020 due to management’s strategic decision to build up raw material inventory, based on global supply -demand considerations →In 2022B, management foresees similar to 2020 inventory turnover days →For budgeting purposes, management forecasts hard currency raw material purchases in cash for 2022B and onwards. For compatibility purposes, hard currency payables are deducted from the trade payable balance in 2020 and 2021. In other words, proforma trade payable amounts of TL 30.8 mnand TL 21.9 mndo not include hard currency payable balances −Historically, Koroplast followed Korozo’s purchasing terms inline with the overall Group strategy −2018 & 2019 TPs are not adjusted by PwC; extrusion machinery was owned and raw materials were purchased by Korozo ; hence from a trade payables perspective, Koroplast had a different operating systemRemarks Türk Tuborg 53 (1) Include FX -denominated payables as of 2021YE and keynet debt adjustments prepared by the Management to be comparable with P wC’s VDD methodology for2018 -2020 Source: Koroplast , PwC Financial VDD reportCapital expenditures (“CAPEX”) and Net debt CAPEX Unit 2022B Growth CAPEX TL mn 52.7 Maintenance CAPEX TL mn 7.4 Others (HSE&IT) TL mn 7.0 CAPEX TL mn 67.1 % of net sales % 9.2%CAPEX →Main item in 2022B CAPEX is growth related (TL 35 mn). The Company is investing in extrusion machinery for production of garbage bags and storage products →Other CAPEX mainly include IT infrastructure investments Net Debt →Net debt schedule has been prepared including VDD adjustments →VDD adjustments mainly comprise non -operational balances with related parties, CAPEX payables and reclassification of credit card receivables from cash to trade receivables →As explained under the NWC page, for the procurement of FX -based raw materials, management foresees the possibility of switching to a cash -based purchasing strategy following the transaction −Assuch, trade payable balance forFX-based procurements hasbeen adjusted in NWC and innet debt inproforma form :TL47.0mn FX-denominated raw material purchases were reclassified from trade payables into short -term borrowingsRemarks Net debt (TL mn) Unit 2021 Cash and cash equivalents TL mn 24.0 Short -term borrowings1 TL mn 111.5 Long -term borrowings TL mn 60.3 Net debt TL mn 147.8 Türk Tuborg 54 Source: KoroplastOverview of projection period 72 1,092 2022B45 686 2026F882 2023F58 2024F1,705 1,335104 88 2025F1,6007309411,1651,423+24% 2022B 2026F 2023F 2025F 2024F181235298372458+26%19.0 2024F1.7 15.7 13.1 2023F1.5 1.4 2022B18.714.4 17.21.8 2025F2.0 2026F15.9 14.517.420.7+9% 26.9% 25.6% 24.9% 24.8%Future outlook Storage products Garbage bags Cooking products Cleaning products Domestic ExportSales volume (k tons) EBITDA (TL mn)Net sales (TL mn) EBITDA margin (%)Domestic Export→Koroplast is strategically positioned to benefit from attractive market fundamentals, owing to its unique brand heritage and reputation →Management forecasts robust net sales CAGR of 24% through 2022B -2026F, with growth across all product categories supported by market expansion, improving
(TL mn) Unit 2021 Cash and cash equivalents TL mn 24.0 Short -term borrowings1 TL mn 111.5 Long -term borrowings TL mn 60.3 Net debt TL mn 147.8 Türk Tuborg 54 Source: KoroplastOverview of projection period 72 1,092 2022B45 686 2026F882 2023F58 2024F1,705 1,335104 88 2025F1,6007309411,1651,423+24% 2022B 2026F 2023F 2025F 2024F181235298372458+26%19.0 2024F1.7 15.7 13.1 2023F1.5 1.4 2022B18.714.4 17.21.8 2025F2.0 2026F15.9 14.517.420.7+9% 26.9% 25.6% 24.9% 24.8%Future outlook Storage products Garbage bags Cooking products Cleaning products Domestic ExportSales volume (k tons) EBITDA (TL mn)Net sales (TL mn) EBITDA margin (%)Domestic Export→Koroplast is strategically positioned to benefit from attractive market fundamentals, owing to its unique brand heritage and reputation →Management forecasts robust net sales CAGR of 24% through 2022B -2026F, with growth across all product categories supported by market expansion, improving household penetration, and sustained expansion into various sales channels →Sales growth is mainly driven by volume increases. Price increases are more or less in line with expected inflation rate, with very limited real price increases across product categories →Garbage and storage bags remain to be the two largest categories, commanding 73% in value as of 2026F, followed by cooking products →Cooking products remain to be the fastest growing category, in value and volume terms, set to attain 13% CAGR in volume between 2022B and 2026F −Cooking products’ share innetsales isforecasted toreach 17%in2026 F,from 15%in2022 B →Cleaning category is expected to make up c.7% of net sales in 2026F →Private label’s share in total net sales is estimated to reach 17% in 2026F, from 16% in 2022B, on the back of increasing sales volumes to retailers, mainly led by garbage bags →Export ratio remains at c.6%, mainly consisting of private label sales →Going forward, volume growth is accompanied by sales price hikes reflecting raw material cost increases, given the Company’s proven ability to pass through costs →Koroplast’s current category leadership position and high penetration rate across channels enables the Company to achieve an attractive growth trajectory, whereby it depends less on new points of sale acquisitions, enabling higher profitability →Koroplast benefits from an improving product mix towards relatively more profitable product categories, such as cooking productsRemarks 26.2% Türk Tuborg 55 Source: KoroplastCategory deep -dive: Garbage bags Unit 2022B 2023F 2024F 2025F 2026F CAGR Volume k tons 7.5 8.3 9.2 10.0 11.0 9.9% Growth % n.a. 10.7% 10.1% 9.4% 9.5% Retailers k tons 3.0 3.4 3.7 4.1 4.5 10.6% Distributors k tons 2.1 2.3 2.5 2.7 2.9 8.3% Discounters k tons 0.4 0.5 0.5 0.6 0.7 12.0% Out-of-home k tons 0.7 0.8 0.8 0.9 1.0 10.4% Export k tons 1.3 1.4 1.6 1.7 1.9 10.0% Net sales TL mn 309.3 399.4 496.4 608.0 729.9 23.9% Growth % n.a. 29.1% 24.3% 22.5% 20.0% PL share % 30.1% 31.1% 31.7% 32.0% 32.4% Retailers TL mn 128.2 166.4 207.9 256.1 309.2 24.6% Distributors TL mn 98.9 125.5 154.1 186.8 221.9 22.4% Discounters TL mn 19.6 25.6 32.5 40.8 50.2 26.6% Out-of-home TL mn 22.5 29.4 36.6 45.0 54.3 24.6% Export TL mn 40.1 52.4 65.3 79.3 94.3 23.8% Direct materialsTL mn 161.2 208.8 260.0 318.9 383.3 24.2% Contribution I TL mn 148.1 190.6 236.4 289.1 346.5 23.7% CM I % 47.9% 47.7% 47.6% 47.6% 47.5%Future outlook Storage products Garbage bags Cooking products Cleaning products →Garbage bags category retains its leadership in terms of revenue contribution, making up around 4 3% of total net sales during the projection period →With a CAGR of c.24% between 202 2Band 202 6F, net sales growth is mainly driven by volume growth across channels →Retailers are expected to retain their weight in the category, owing to private label sales volumes increasing on the back of a widening consumer audience →Going forward, with the growing importance of discounters in Turkish retail landscape, sales to discounters are forecasted to retain their strong growth on the back of both branded sales and PL volumes →For export markets, management plans to lean towards private label, while scaling back branded sales to a minimum →Local distributors in export markets will assume an active role in the marketing of PL products, contributing to sales growth with lower marketing spending −Potential export markets areTurkic Republics, Morocco, Iraq, Romania, Austria and Denmark →In 2022 B, the Company is planning to enrich the category even further by introducing new products such as t -shirt garbage bags (a type of garbage bag that is easier to close after using; no similar product in Turkey) which will support the volume growth of branded products →Prices are forecasted a little above theinflation projections (12% during the projection period ), with around 1 3% annual increaseRemarks Türk Tuborg 56 Source: KoroplastCategory deep -dive: Storage products Storage products Garbage bags Cook ingproducts Cleaning products Future outlook Remarks →Storage products remain to be the second largest product category in terms of value, whereas the share in total sales is projected to decline to c. 30% from 3 3% between 202 3F and 202 6F →With a CAGR of 20.6 % between 202 2B and 202 6F, net sales growth is mainly driven by volume growth across channels →Distributors keep their heavy weight, followed by retailers in the category, as freezer bag consumers tend to make their shopping mostly from local chains and traditional stores →With 2 4% CAGR in value, discounters are the fastest growing channel in this category, on the back of increased penetration of a major discounter with new SKUs −Management plans toexpand itsbranded SKUs indiscounters through in&out sales throughout theyear →Freezer bags and other types of storage products that are in direct contact with food, leave little room for changes in formula and production cost optimization. Therefore, management intends to keep private label sales at its current level, devoting production largely to branded products −Private label’s share stands atc.5%over theyears (i.e.PLaluminum foilfora major discounter) →Management plans to shift the category from more traditional products (e.g. freezer bags, cling film) to more value -added products such as zipper bags in the projection period, in line with market trends −Lower volume growth incomparison toother categories isoffset byincreased share ofhigher priced products inthecategory, namely zipper bags →Prices are forecasted a little above theinflation projections (12% during the projection period ), with
plans toexpand itsbranded SKUs indiscounters through in&out sales throughout theyear →Freezer bags and other types of storage products that are in direct contact with food, leave little room for changes in formula and production cost optimization. Therefore, management intends to keep private label sales at its current level, devoting production largely to branded products −Private label’s share stands atc.5%over theyears (i.e.PLaluminum foilfora major discounter) →Management plans to shift the category from more traditional products (e.g. freezer bags, cling film) to more value -added products such as zipper bags in the projection period, in line with market trends −Lower volume growth incomparison toother categories isoffset byincreased share ofhigher priced products inthecategory, namely zipper bags →Prices are forecasted a little above theinflation projections (12% during the projection period ), with around 1 3% annual increaseUnit 2022B 2023F 2024F 2025F 2026F CAGR Volume k tons 4.5 4.8 5.1 5.4 5.7 6.4% Growth % n.a. 6.8% 6.5% 6.1% 6.2% Retailers k tons 1.4 1.4 1.5 1.6 1.7 5.8% Distributors k tons 2.4 2.5 2.7 2.8 3.0 5.8% Discounters k tons 0.6 0.7 0.8 0.9 0.9 10.0% Out-of-home k tons 0.0 0.0 0.0 0.0 0.0 5.4% Export k tons 0.0 0.0 0.0 0.1 0.1 3.4% Net sales TL mn 243.8 305.6 369.4 440.6 515.4 20.6% Growth % n.a. 25.3% 20.9% 19.3% 17.0% PL share % 4.1% 4.5% 4.7% 5.0% 5.2% Retailers TL mn 73.5 91.8 110.3 130.8 152.2 20.0% Distributors TL mn 126.9 157.6 189.4 224.6 261.1 19.8% Discounters TL mn 39.5 51.3 63.9 78.4 94.3 24.3% Out-of-home TL mn 0.9 1.1 1.4 1.6 1.9 18.9% Export TL mn 3.1 3.8 4.5 5.2 5.9 17.8% Direct materialsTL mn 116.1 145.4 175.4 208.8 243.8 20.4% Contribution I TL mn 127.7 160.2 194.1 231.8 271.6 20.8% CM I % 52.4% 52.4% 52.5% 52.6% 52.7% Türk Tuborg 57 Source: KoroplastCategory deep -dive: Cooking products Storage products Garbage bags Cooking products Cleaning products Future outlook Remarks →Having posted 20.4% CAGR in sales volumes within 2018 to 2021, cooking products are expected to maintain their robust growth trajectory through the projection period →With net sales CAGR of 27% between 2022B and 2026F, cooking products category sales are expected to be driven by strong volume growth →Strong double -digit volume growth is estimated to elevate the weight of the category, making up 17% of total sales in 2026F, underpinning the Company’s profitability, given its higher margin with respect to other categories →With 32% CAGR in net sales, discounters are the fastest growing sales channel, featuring both private label and Koroplast branded products −PLsales share isprojected tostay constant around 11% −Management plans toexpand presence atamajor discounter through in&out sales with increasing frequency over theyears −Inaddition toPL,Koroplast branded products arealso regularly listed inamajor discounter’s stores, paving theway forsustained growth inthischannel →Retailers and distributors are the two other main channels in this category −Ideal branded sales should further support thegrowth ofdistributors channel, dominated byKoroplast branded product sales inhistorical period →Cooking products’ penetration is expected to increase over the years through a larger consumer audience, including low -to-middle income groups with higher home -cooking frequency compared to higher income groups →Prices are forecasted a little above the inflation projections (12% during the projection period), with around 13% annual increaseUnit 2022B 2023F 2024F 2025F 2026F CAGR Volume k tons 1.8 2.1 2.3 2.6 2.9 12.6% Growth % n.a. 13.8% 12.4% 12.0% 12.2% Retailers k tons 0.4 0.4 0.5 0.5 0.6 9.6% Distributors k tons 0.7 0.8 0.9 1.0 1.1 10.6% Discounters k tons 0.7 0.8 0.9 1.1 1.2 16.1% Out-of-home k tons 0.0 0.0 0.0 0.0 0.0 9.8% Export k tons 0.0 0.0 0.0 0.0 0.0 9.3% Net sales TL mn 113.2 150.6 191.5 240.6 296.8 27.3% Growth % n.a. 33.1% 27.1% 25.6% 23.3% PL share % 10.9% 11.0% 11.1% 11.0% 11.0% Retailers TL mn 25.0 32.4 40.0 48.7 58.1 23.5% Distributors TL mn 45.7 59.8 74.8 92.0 110.9 24.8% Discounters TL mn 40.7 56.2 73.9 96.5 123.8 32.0% Out-of-home TL mn 0.2 0.3 0.4 0.5 0.6 24.3% Export TL mn 1.5 1.9 2.4 2.9 3.4 22.8% Direct materialsTL mn 49.3 65.6 83.3 104.4 128.4 27.0% Contribution I TL mn 63.8 85.0 108.2 136.2 168.4 27.5% CM I % 56.4% 56.4% 56.5% 56.6% 56.7% Türk Tuborg 58 Source: KoroplastCategory deep -dive: Cleaning products Storage products Garbage bags Cook ingproducts Cleaning products Future outlook Remarks →Following the launch in Q4 2020, cleaning products are expected to become the second fastest growing product category, closely following cooking category in the projection period →Net sales growth, estimated at 2 7% CAGR between 202 2B and 202 6F, is expected to be driven by both volume and price increases in retail and distributor channels →Growth is estimated to be derived mainly from volume expansion, with a view to gaining higher market share and increasing penetration →Koroplast will continuously support the growth of this category by extending the number of net sales points across channels →Currently, retailers and distributors are the main channels in this category →Penetration growth will also feed off Koroplast’s current market reach, and improve in line with other categories −AsofApril 2021 ,cleaning products areavailable ataround 2,000 stores inretail channel and listed inc.65%oflocal chains and traditional shops →Increasing usage of microfiber cloths will remain to be an important growth driver, going forwardUnit 2022B 2023F 2024F 2025F 2026F CAGR Volume k tons 0.4 0.5 0.5 0.6 0.7 12.5% Growth % n.a. 14.8% 12.5% 11.4% 11.4% Retailers k tons 0.1 0.1 0.1 0.1 0.2 11.0% Distributors k tons 0.3 0.4 0.4 0.5 0.5 13.0% Discounters k tons - - - - - 0.0% Out-of-home k tons 0.0 0.0 0.0 0.0 0.0 4.0% Export k tons 0.0 0.0 0.0 0.0 0.0 12.3% Net sales TL mn 45.2 60.7 77.2 96.4 117.9 27.1% Growth % n.a. 34.2% 27.1% 24.8% 22.3% PL share % 0.0% 0.0% 0.0% 0.0% 0.0% Retailers TL mn 11.0 14.6 18.3 22.5 27.1 25.2% Distributors TL mn 34.0 45.8 58.5 73.4 90.2 27.7% Discounters TL mn - - - - - 0.0% Out-of-home TL mn 0.1 0.1 0.1 0.2 0.2 17.5% Export TL mn 0.2 0.2 0.3 0.3 0.4 26.9% Direct materialsTL mn 28.9 38.7 49.1 61.3 74.9 26.9% Contribution I TL mn
Retailers k tons 0.1 0.1 0.1 0.1 0.2 11.0% Distributors k tons 0.3 0.4 0.4 0.5 0.5 13.0% Discounters k tons - - - - - 0.0% Out-of-home k tons 0.0 0.0 0.0 0.0 0.0 4.0% Export k tons 0.0 0.0 0.0 0.0 0.0 12.3% Net sales TL mn 45.2 60.7 77.2 96.4 117.9 27.1% Growth % n.a. 34.2% 27.1% 24.8% 22.3% PL share % 0.0% 0.0% 0.0% 0.0% 0.0% Retailers TL mn 11.0 14.6 18.3 22.5 27.1 25.2% Distributors TL mn 34.0 45.8 58.5 73.4 90.2 27.7% Discounters TL mn - - - - - 0.0% Out-of-home TL mn 0.1 0.1 0.1 0.2 0.2 17.5% Export TL mn 0.2 0.2 0.3 0.3 0.4 26.9% Direct materialsTL mn 28.9 38.7 49.1 61.3 74.9 26.9% Contribution I TL mn 16.4 22.0 28.1 35.1 43.0 27.3% CM I % 36.2% 36.3% 36.4% 36.4% 36.4% Türk Tuborg 59 Source: KoroplastCost of goods sold (“COGS”) and Operating expenses (“OPEX”) Unit 2022B 2023F 2024F 2025F 2026F Net sales TL mn 730.5 940.6 1,164.7 1,422.6 1,704.5 Direct materials TL mn 367.2 473.0 585.4 714.5 855.3 Contribution I TL mn 363.3 467.6 579.3 708.1 849.3 CM I % 49.7% 49.7% 49.7% 49.8% 49.8% Utility TL mn 15.8 21.8 27.6 33.7 40.7 Labor TL mn 42.2 54.0 63.2 71.5 80.2 Line maintenance TL mn 8.7 9.5 10.6 12.9 15.4 Contribution II TL mn 296.6 382.3 477.9 590.0 713.0 CM II % 40.6% 40.6% 41.0% 41.5% 41.8% Indirect production TL mn 15.0 17.9 20.6 23.3 25.9 GP (ex. D&A) TL mn 281.6 364.3 457.3 566.7 687.0 GP margin % 38.6% 38.7% 39.3% 39.8% 40.3% OPEX TL mn 100.5 129.8 158.9 194.6 229.3 % of net sales % 13.8% 13.8% 13.6% 13.7% 13.5% S&M TL mn 87.4 113.1 139.1 171.4 202.7 % of net sales % 12.0% 12.0% 11.9% 12.1% 11.9% Fair & Adv. TL mn 21.4 27.6 34.1 45.8 54.9 Personnel TLmn 24.4 32.1 38.8 45.4 52.1 Shipping TLmn 14.5 18.8 23.3 28.5 34.2 Merchandise TLmn 14.2 19.0 24.3 29.9 36.6 Others TLmn 12.9 15.8 18.6 21.7 24.9 G&A TL mn 13.1 16.6 19.8 23.1 26.5 % of net sales % 1.8% 1.8% 1.7% 1.6% 1.6% Personnel TLmn 6.2 8.2 9.9 11.6 13.3 Others TLmn 6.9 8.4 10.0 11.6 13.3 EBITDA TL mn 181.1 234.6 298.4 372.2 457.8 EBITDA margin % 24.8% 24.9% 25.6% 26.2% 26.9%Remarks →Direct materials are forecasted in line with volume projections for each category, and are estimated to stabilize at c.50% to net sales in the projection period →Utilities remain stable at 2.2% -2.4% of net sales during the forecast period →Labor cost increases in line with operational growth and CAPEX, whereas the ratio to sales gradually shrinks to 5% in 2026F from 6% in 2022B, through increasing efficiency per employee →Labor cost implies on average c.1.5% real wage hike above targeted inflation during the projection period; in line with past years →Line maintenance shrinks to 0.9% of net sales in 2026F from 1.2% in 2022B →Indirect production costs mainly include rent expenses for the production facility, which reflect the expense in the current contractual agreement for the business period →OPEX stands at c.14% over the projection period with limited improvements →The largest expense item in OPEX, fair & advertising, is projected to be around c.3.0% during the projection period →Personnel expenses are more or less stable during the projection period at c.3.3% −Personnel cost incorporates c.1.5%real wage hike above the targeted inflation, inline with past years →Merchandise expenses are forecasted to be around 2.1% during the projection period →Others consist of warehouse rent expense and leased vehicles Türk Tuborg 60 (1) Mainly consist of prepaid tax and funds, deferred tax, advances given and prepaid expense (2) Mainly consist of tax and fund payables, advances received, expense accruals and social security payables Source: KoroplastNet working capital (“NWC”) NWC Unit 2022B 2023F 2024F 2025F 2026F Trade receivables TL mn 249.5 321.1 397.6 485.9 582.5 Domestic TL mn 249.5 321.1 397.6 485.9 582.5 Export TL mn - - - - - Inventory TL mn 114.6 146.9 179.0 215.3 255.0 Trade payables TL mn 82.4 105.8 130.5 159.5 190.5 TWC TL mn 281.7 362.2 446.0 541.7 647.1 % of net sales % 38.6% 38.5% 38.3% 38.1% 38.0% Other current assets1 TL mn 16.9 21.7 26.9 32.9 39.4 Other current liabilities2TL mn 15.1 19.4 24.0 29.3 35.2 Other WC TL mn 1.8 2.4 2.9 3.6 4.3 NWC TL mn 283.5 364.5 448.9 545.2 651.3 % of net sales % 38.8% 38.8% 38.5% 38.3% 38.2% Trade receivables days 106 106 106 106 106 Domestic days 113 113 113 113 113 Export days - - - - - Inventory days 93 93 92 92 91 Trade payables days 54 54 54 54 54→NWC -to-sales isexpected tosettle ataround 38%by2026 F,with aslight improvement when compared with 2022 B →Collection period fordomestic customers isexpected tobearound c.113 days, with the positive effect ofthe changing channel mix towards discounter channel improving theaverage collection period →Asexplained inthehistorical NWC page, theCompany terminated credit card installments in2020 and does notplan tooffer thisoption going forward →In2021 ,theCompany managed toconvert itsexport sales almost tocash basis where itaims tokeep thisstrategy during thebusiness plan period −Inline with cash -based raw material procurements, exports arebudgeted tobeincash terms aswell →Inventory turnover isexpected tonormalize in2022 Bat93days, and remain more orless stable going forward with slight improvement →In2022 B,the Company budgets forapayment period of54days, stemming from TL-denominated purchases such aspackaging materials, auxiliary materials and shipping &customs expenses →Going forward, payable period isestimated at54days .Raw material purchases inhard currency areexpected tobeinline with 2022 B(cash -basis) fortherest oftheprojection periodRemarks Türk Tuborg 61 Source: KoroplastCapital expenditures (“CAPEX”) CAPEX Unit 2022 B 2023F 2024F 2025F 2026F Growth CAPEX TL mn 52.7 11.9 12.3 2.6 0.0 Maintenance CAPEX TL mn 7.4 9.5 11.6 14.1 16.8 Others (HSE & IT) TL mn 7.0 4.1 3.8 2.5 2.1 CAPEX TL mn 67.1 25.5 27.7 19.2 18.9 % of net sales % 9.2% 2.7% 2.4% 1.4% 1.1%→Thanks toawell-invested asset base, the Company will have limited CAPEX requirement during theprojection period →In2022 B,anadditional line isprojected toadd c.7ktons ofextrusion capacity tothesystem →Maintenance CAPEX ismainly related with production efficiency improvement and machinery line renovations .Machinery lines have undergone extensive renovation between 2019
and shipping &customs expenses →Going forward, payable period isestimated at54days .Raw material purchases inhard currency areexpected tobeinline with 2022 B(cash -basis) fortherest oftheprojection periodRemarks Türk Tuborg 61 Source: KoroplastCapital expenditures (“CAPEX”) CAPEX Unit 2022 B 2023F 2024F 2025F 2026F Growth CAPEX TL mn 52.7 11.9 12.3 2.6 0.0 Maintenance CAPEX TL mn 7.4 9.5 11.6 14.1 16.8 Others (HSE & IT) TL mn 7.0 4.1 3.8 2.5 2.1 CAPEX TL mn 67.1 25.5 27.7 19.2 18.9 % of net sales % 9.2% 2.7% 2.4% 1.4% 1.1%→Thanks toawell-invested asset base, the Company will have limited CAPEX requirement during theprojection period →In2022 B,anadditional line isprojected toadd c.7ktons ofextrusion capacity tothesystem →Maintenance CAPEX ismainly related with production efficiency improvement and machinery line renovations .Machinery lines have undergone extensive renovation between 2019 and 2021 →Going forward, theCompany willnotrequire substantial maintenance CAPEX ; itenvisages amaintenance CAPEX -to-sales ratio ofc.1%Remarks Türk Tuborg 62 Source: Koroplast, PwC Financial VDD reportEBITDA statement EBITDA statement (TL mn) 2018 2019 2020 2021 2022 B 2023F 2024F 2025F 2026F Net sales 158.8 199.9 281.0 410.2 730.5 940.6 1,164.7 1,422.6 1,704.5 Garbage bags 81.3 97.0 119.3 190.2 309.3 399.4 496.4 608.0 729.9 Storage products 50.7 60.6 85.8 131.1 243.8 305.6 369.4 440.6 515.4 Cooking products 20.6 22.8 42.0 51.6 113.2 150.6 191.5 240.6 296.8 Cleaning products - - 6.8 13.3 45.2 60.7 77.2 96.4 117.9 Others 1.3 1.5 13.4 16.2 7.0 8.2 9.3 10.4 11.4 Basket products 10.9 12.1 13.0 7.7 12.0 16.1 20.9 26.6 33.2 DD Adjustments -5.9 5.8 0.8 - - - - - - Direct materials -74.3 -88.5 -131.1 -203.1 -367.2 -473.0 -585.4 -714.5 -855.3 Garbage bags -37.5 -40.4 -54.1 -96.4 -161.2 -208.8 -260.0 -318.9 -383.3 Storage products -24.7 -29.8 -37.2 -56.6 -116.1 -145.4 -175.4 -208.8 -243.8 Cooking products -9.2 -11.0 -18.4 -23.3 -49.3 -65.6 -83.3 -104.4 -128.4 Cleaning products - - -4.6 -7.5 -28.9 -38.7 -49.1 -61.3 -74.9 Others -0.7 -1.4 -12.1 -15.5 -6.3 -7.4 -8.4 -9.4 -10.3 Basket products -4.1 -3.4 -4.4 -3.8 -5.3 -7.2 -9.3 -11.7 -14.5 DD Adjustments 2.0 -2.5 -0.3 - - - - - - Contribution I 84.6 111.4 149.9 207.1 363.3 467.6 579.3 708.1 849.3 CM I 53.2% 55.7% 53.3% 50.5% 49.7% 49.7% 49.7% 49.8% 49.8% Utility -2.5 -3.2 -4.5 -6.1 -15.8 -21.8 -27.6 -33.7 -40.7 DD Adjustments 0.0 0.0 -0.0 - - - - - - Labor -13.6 -16.9 -19.6 -23.2 -42.2 -54.0 -63.2 -71.5 -80.2 Line maintenance -2.2 -3.1 -4.1 -5.3 -8.7 -9.5 -10.6 -12.9 -15.4 Contribution II 66.2 88.2 121.7 172.4 296.6 382.3 477.9 590.0 713.0 CM II 41.7% 44.1% 43.3% 42.0% 40.6% 40.6% 41.0% 41.5% 41.8% Indirect production -5.6 -6.7 -7.9 -8.3 -15.0 -17.9 -20.6 -23.3 -25.9 Gross Profit (ex. D&A) 60.7 81.5 113.8 164.1 281.6 364.3 457.3 566.7 687.0 GP margin 38.2% 40.8% 40.5% 40.0% 38.6% 38.7% 39.3% 39.8% 40.3% OPEX -25.6 -33.9 -41.9 -57.9 -100.5 -129.8 -158.9 -194.6 -229.3 % of net sales -16.1% -17.0% -14.9% -14.1% -13.8% -13.8% -13.6% -13.7% -13.5% S&M -22.3 -30.1 -37.2 -51.2 -87.4 -113.1 -139.1 -171.4 -202.7 % of net sales -14.0% -15.0% -13.2% -12.5% -12.0% -12.0% -11.9% -12.1% -11.9% G&A -3.3 -3.9 -4.7 -6.7 -13.1 -16.6 -19.8 -23.1 -26.5 % of net sales -2.1% -1.9% -1.7% -1.6% -1.8% -1.8% -1.7% -1.6% -1.6% EBITDA 35.1 47.6 71.9 106.2 181.1 234.6 298.4 372.2 457.8 EBITDA margin 22.1% 23.8% 25.6% 25.9% 24.8% 24.9% 25.6% 26.2% 26.9% Türk Tuborg 63 Simge Ündüz Managing Director [email protected] +90 (533) 283 8113Information, opinions and projections inthis document have been compiled orarrived atbyÜNLÜ Yatırım Holding A.Ş.(“ÜNLÜ &Co”)from thedata provided bythe Company and itsshareholder, and publicly available information, without ourown separate verification .The Company and itsshareholder have been consulted about and have confirmed theappropriateness ofthebasic principles and assumptions used byÜNLÜ &Cotoperform theanalyses /projections . However, norepresentation orwarranty, expressed orimplied, ismade astotheaccuracy orcompleteness oftheinformation contained inthis document .Itshould be noted that wehave notsought independent verification oftheinformation .This document isnottoberelied upon asauthoritative ortaken insubstitution fortheexercise ofjudgment bytheRecipient and ÜNLÜ &Coaccepts noliability whatsoever foranydirect orconsequential loss arising from theuseofthisdocument oritscontents .This document and theopinions, projections and conclusions contained inthis document arefortheexclusive useoftheRecipient and itsofficers and employees .Distribution ordisclosure thereof toany parties issubject totheprior written permission ofÜNLÜ &Co.The information, comments and opinions contained inthis document fall outside ofthescope ofTurkish Capital Markets legislation and donotinclude apersonal recommendation .This document does notinclude apersonal recommendation and does notconstitute anoffer, orthesolicitation ofanoffer forthesale orpurchase ofanyfinancial product, service, investment orsecurity . Allcommunications, inquiries and/or requests relating tothisdocument and/or thepossible process contemplated should only beaddressed toÜNLÜ &Co. Forfurther information please contact : Zeynep Koçak Director [email protected] +90 (532) 242 5378İbrahim Romano Head of Investment Banking [email protected] +90 (533) 960 0122Disclaimer Türk Tuborg
© ÜNLÜ & Co \| All Rights ReservedProject Coral Information Memorandum August 2020 1Disclaimer Ayşe Akkın Managing Director [email protected] +90 (212) 367 38 05 +90 (530) 940 48 66İbrahim Romano Head of Investment Banking [email protected] +90 (212) 367 36 04 +90 (533) 960 01 22Zeynep Koçak Director [email protected] +90 (212) 367 36 22 +90 (532) 242 53 78Information and opinions inthis document have been compiled orarrived atbyÜNLÜ Yatırım Holding A.Ş.(“ÜNLÜ &Co”)from thedata provided byKılıç Deniz Ürünleri Üretimi İhracat İthalat veTic.A.Ş.(hereafter referred together with itssubsidiaries and other group companies asthe“Group ”)and publicly available information, without ourown separate verification .The Group hasbeen consulted about and hasconfirmed theappropriateness ofthebasic principles used by ÜNLÜ &Cotoperform theanalyses inthisdocument . However, norepresentation orwarranty, expressed orimplied, ismade astotheaccuracy orcompleteness oftheinformation contained inthis document .It should benoted that wehave not sought independent verification ofthe information .This document isnot toberelied upon asauthoritative ortaken in substitution fortheexercise ofjudgment bytheRecipient and ÜNLÜ &Coaccepts noliability whatsoever forany direct orconsequential loss arising from theuse ofthis document oritscontents .This document and theopinions and conclusions contained inthis document arefortheexclusive use oftheRecipient and its officers and employees .Distribution ordisclosure thereof toany parties issubject totheprior written permission ofÜNLÜ &Coand theGroup .The information, comments and opinions contained inthis document falloutside ofthescope ofTurkish Capital Markets legislation .This document does notinclude apersonal recommendation and does notconstitute anoffer, orthesolicitation ofanoffer forthesale orpurchase ofanyfinancial product, service, investment orsecurity . Allcommunications, inquiries and/or requests relating tothis document and/or thepossible process contemplated should beaddressed toÜNLÜ &Co.Forfurther information please contact : Simge Ündüz Managing Director [email protected] +90 (212) 367 36 17 +90 (533) 283 81 13 2 Table of contents Section Page I. Executive summary 3 II. Key investment highlights 7 III. Business overview 24 a. Fish feed production 29 b. Hatchery operations 30 c. Fish farming operations 31 d. Processing & packaging operations 34 e. Sales & marketing operations 35 IV. Financial overview 38 a. Historical period & 2020 Budget 40 b. Business plan period 50 V. Appendices 64 I. Executive summary 4 Leading aquaculture platform for production of Mediterranean species with strong growth fundamentals Harvested fish volume Net sales EBITDA ( inc. Fair value “FV”) EBITDA margin561.0k tons2019 CAGR 2026F 24.6%EUR 263.4 mn 71.9%3.1% 3.6% 7.7% Change + 8.6%75.7k tons EUR 114.4 mn 33.2%EUR 337.9 mn EUR 67.9 mn 2.8x Hard currency share in net sales including USD, EUR, GBP and Yen 2019 Net debt / 2019 EBITDA➢Kılıç Deniz, leading integrated aquaculture platform mainly for production of Mediterranean species 2 Entry to new markets and growing Mediterranean species demand globally Americas OthersReplicating market entry and growth success of Kılıç Deniz in other markets 3 Continuous R&D focus enabling improvements in Significant impact on profitability levelsFCR3Fish sizeGrowth timeFeed ratio1 New production locations, which became operational in 2017 and 2018 Mersin, TurkeyDominican RepublicSecured locations and licenses 33k tons 20k tons 4 Further diversifying product offering by additional species in Dominican Republic Supported by Kılıç Deniz’s multi -species cultivation capability 20k tonsTilapia CobiaYellow tailOthers4▪Established in 1993 by Orhan Kılıç and headquartered in Muğla , Turkey, Kılıç Deniz Aquaculture Group (together with its subsidiaries and other group companies the “Group ” or “Kılıç Deniz ” or “ Kılıç”) is the leading aquaculture company with its: ‒globally leading position in Mediterranean species production ‒distinguished capacity among its peers for both harvested fish (c. 64ktons1) and juvenile (c .550 mnpieces) secured via its existing licenses creating strong entry barrier with limited issuance of new licenses globally ‒fully integrated business model across the value chain; enabling supply security , traceability and full control over its operations from feed to plate ‒multi -species cultivation capability enabling diversified product offering of seabream, seabass, meagre, trout, salmon trout, bluefin tuna and other species; which are either offered as whole fish or processed value -added products; complemented by juvenile and fish feed sales to 3rdparties ‒well-equipped facilities optimally designed at multiple locations in Turkey and Albania with over 1,000 cages at 49existing fish farming projects ;minimizing business disruption risk ‒over 25 years of experience in the aquaculture sector enriched with its long - tenured management team, accumulated know -how and solid track record ▪Net sales of EUR 263.4 mnand EBITDA margin of 24.6% in 2019 ‒c.86.6% of net sales is generated from harvested fish sales; offered either as whole or processed; where main revenue drivers are seabream and seabass ‒geographically diversified clientele base with sales in hard currency2having a share of 71.9% ▪Its well -established growth fundamentals will enable Kılıç Deniz to evolve to a EUR 337.9 mnnet sales company by 2026F with increasing profitability levels mainly driven by its recent investments in Turkey (Mersin) as well as byits continuing efficiency increase projects➢New initiatives to fuel future growth 2026F licensed fish farming capacity (tons) (1) Includes total installed production capacity for seabream, seabass, meagre, trout and bluefin tuna . The Group has also existing issued licenses for an additional production capacity of c.50k tons which have not been reflected above (2) Hard currency share in net sales including USD, EUR, GBP, Yen Source: Group(3) Feed conversion ratio (“ FCR”), amount of feed consumed for every kg body weight gained (4) Others include more than 10 different species mainly targeting Americas markets (5) EBITDA margin is calculated as EBITDA over Net sales plus Fair value impact 5 Dominican Republic AlbaniaTurkey# of facilitiesTotal capacity Fish feed production facilities 1 160.0k tons Marine hatcheries & adaptation units 9 479.5 mnunits Fresh water (" FW")hatcheries & adaptation units 2 70.0 mnunits Marine farms132 51.8k tons Fresh water farms117 12.0 tons Processing & packaging facilities 5 68.1 k tons Polystyrene box (" EPS") production facilities 2 7.9 mnboxes Şanlıurfa GaziantepMaraş MersinAydın Muğlaİzmir 11 68 211 51 203 1Turkey Albania 11Dominican Republic 1 Marine hatcheries FW hatcheries Fish feed production facilities Marine farms FW farms EPS facilities Processing & packaging facilitiesGeographically diversified operations at multiple locations minimizing business disruption risk (1) 49 fish farming projects placed at 8 different locations Source: Group(#) numbers in bubbles indicate number of facilities in each location1011 6 2019 onwards 2017 2015 2013 2011 2010 2008 2006 Completion of packaging facility investments for processed productsExpanding product portfolio with bluefin tuna farming in Çeşme , İzmir Buy back of shares
FW")hatcheries & adaptation units 2 70.0 mnunits Marine farms132 51.8k tons Fresh water farms117 12.0 tons Processing & packaging facilities 5 68.1 k tons Polystyrene box (" EPS") production facilities 2 7.9 mnboxes Şanlıurfa GaziantepMaraş MersinAydın Muğlaİzmir 11 68 211 51 203 1Turkey Albania 11Dominican Republic 1 Marine hatcheries FW hatcheries Fish feed production facilities Marine farms FW farms EPS facilities Processing & packaging facilitiesGeographically diversified operations at multiple locations minimizing business disruption risk (1) 49 fish farming projects placed at 8 different locations Source: Group(#) numbers in bubbles indicate number of facilities in each location1011 6 2019 onwards 2017 2015 2013 2011 2010 2008 2006 Completion of packaging facility investments for processed productsExpanding product portfolio with bluefin tuna farming in Çeşme , İzmir Buy back of shares from NBK Capital by Kılıç family Expanding operations to AlbaniaEstablishment of Güvercinlik and Yaşyer hatcheries in Milas , MuğlaInitiation of trout production and packaging operations in Maraş , Turkey Establishment of Akarca hatchery in Milas , MuğlaSAP implementation Completion of full insurance of biological assetsCapacity expansion and establishment of trout facility in Giresun, Turkey1 New market penetration Development of new species Utilization of FMO term loanVerification by Global G.A.P. certificate across the value chain NBK Capital acquiring 20% shares of Kılıç Deniz; fueling further growth2005 2004 2003 2002 2000 1999 1997 1993 Establishment of Kılıç Deniz in Muğla , Turkey as an aquaculture producer of Mediterranean species Penetration to international markets with harvested fish sales to ItalyEstablishment of juvenile fish production facility in Bodrum , Muğla , TurkeyConstruction of feed production facility in Milas , MuğlaEstablishment of sales and distribution company, Spador SRL, in Italy to manage and strengthen sales to Italy and other European countriesEstablishment of first off-shore fish cages in Muğla , TurkeyConstruction of EPS facility in Milas , Muğla Extension of Bafa facilities with addition of hatchery unitConstruction of extruder type feed production facility in Milas , MuğlaEstablishing strong foundations Construction of packaging and processing facility in Milas , Muğla Acquisition of Bafa adaptation unit in Didim , AydınInvestment period towards becoming a fully integrated aquaculture company Improvement of operational excellence securing sustainable healthy growth New era for Kılıç as the leading Mediterranean species aquaculture platform globallyKılıç has continuously grown to become the leading aquaculture company for Mediterranean species production Expanding production capacity in Turkey with geographical diversification; Mersin facility Expanding to Americas with establishment of fish farms in Dominican Republic 42 71 103 121 127 202 244 15k 46k 263 (1) Capacity of 3,000 tons Source: GroupNet sales (EUR mn) Harvested fish capacity (tons)64k II. Key investment highlights 8 Solid historical performance with strong growth prospectsAccumulated know -how backed by R&D -centric innovation culture enhancing top line growth and value creation Best -in-class production facilities located at multiple strategic locations minimizing business disruption risk Long -tenured vision with accumulated experience and proven track record Growth strategy focused on ensuring top line growth and increased profitabilityAquaculture; an attractive market with solid fundamentals and growth prospects; where Turkey strategically -positioned as the largest producer of Mediterranean species Growing diversified clientele base served through its expanding route -to-market strategy with increasing hard currency revenue streamFully integrated aquaculture platform enabling competitive advantage with diversified product offering (Mediterranean and other species) and strong profit generationKılıç Deniz, #1 seabream and seabass aquaculture company globally with its distinguished production capacity and proven capabilities secured by its existing licenses creating strong entry barrier 854 7 91 632 The leading fully integrated aquaculture company globally Unique investment opportunity in the growing aquaculture sector with its leading position in Mediterranean species Source: Group 9 Aquaculture; an attractive market with solid fundamentals and growth prospects; …1 ➢Aquaculture sector growth mainly fueled by global macro fundamentals and consumption habits ▪Expected world population growth of 1.0% p.a. coupled with a fast pace household spending growth of 3.2% p.a. for the period of 2019 -2024 F is predicted to result in ‒depletion of food resources in the ecosystem, hence intensifying the importance of food supply and supply security ‒surge in demand for alternative nutrition sources; especially for protein ▪Global fish consumption, one of the key protein sources, is forecasted to grow at a CAGR of 1.2% between 2019 -2024 F, implying higher per capita fish consumption globally (where the growth is expected higher in developing countries than developed countries), mainly triggered by ‒strengthening consumer awareness and appetite; seafood not only provides high -value protein but also a wide range of essential micronutrients including various vitamins and minerals ‒changing consumer habits globally, hence shift towards more healthy diet preferences ‒environmentally sustainable aquaculture fishing; providing increasing supply and supply security ▪In parallel with growing seafood consumption trends, total seafood production (aquaculture & capture) is expected to grow at a CAGR of 1.3% between 2019 -2024 F and reach 188.1 mntons by 2024 F ‒aquaculture production is expected to cover significant portion of the total seafood production at a CAGR of 2.4% for the same period … ‒…and continue to outperform capture seafood production and fulfill increasing portion of the rapidly expanding global seafood demand ▪Share of aquaculture in total seafood production expected to reach to 50.3 % by 2024 F vs. 41.7 % in 2012 , with ‒strict fishing quotas to prevent further resource depletion and over - fishing ‒more efficient aquaculture production techniques mainly driven by technological and operational advancements Source: Group, FAO, IMF, OECDTotal seafood production (m tons)CAGR 2012 -2019 2019 -2024F 2.1% 4.1%1.3% 2.4%152.1 176.3 188.1 0.6% 0.3%CAGR 2012 -2019 2019 -2024F 1.8% 1.2%3.2% 1.0%75.1 87.8 99.8 World GDP (USD tn) GlobalCAGR 2012 -2019 2019 -2024F 1.2% 0.4%18.9 20.5 20.9➢…leading to increasing demand for high sources of protein; mainly fish ➢A distinct shift towards aquaculture seafood production in total supply➢Growing world population and increasing GDP exponentially triggering household spending… 152,1177,9 189,0 2019A 2012A 2024F Global fish consumption (mn tons)7,1 7,7 8,142,648,456,8 0204060 051015 2012A 2019A 2024F World population (bn) Household spending (USD tn) 58.3 % 49.7%41.7%47.7% 2012A50.3% 52.3% 2019A 2024 F Aquaculture Capture2.3% 1.2%18.0 20.1 20.6 Developing countriesper capita fish consumption (kg)1.6% 0.5% 10 …where Turkey strategically -positioned as the largest producer of Mediterranean species1 ➢Turkey achieved robust historic growth and emerged as the leading
2012 -2019 2019 -2024F 2.1% 4.1%1.3% 2.4%152.1 176.3 188.1 0.6% 0.3%CAGR 2012 -2019 2019 -2024F 1.8% 1.2%3.2% 1.0%75.1 87.8 99.8 World GDP (USD tn) GlobalCAGR 2012 -2019 2019 -2024F 1.2% 0.4%18.9 20.5 20.9➢…leading to increasing demand for high sources of protein; mainly fish ➢A distinct shift towards aquaculture seafood production in total supply➢Growing world population and increasing GDP exponentially triggering household spending… 152,1177,9 189,0 2019A 2012A 2024F Global fish consumption (mn tons)7,1 7,7 8,142,648,456,8 0204060 051015 2012A 2019A 2024F World population (bn) Household spending (USD tn) 58.3 % 49.7%41.7%47.7% 2012A50.3% 52.3% 2019A 2024 F Aquaculture Capture2.3% 1.2%18.0 20.1 20.6 Developing countriesper capita fish consumption (kg)1.6% 0.5% 10 …where Turkey strategically -positioned as the largest producer of Mediterranean species1 ➢Turkey achieved robust historic growth and emerged as the leading producer ▪Specific breeding conditions (climate, water temperature, oxygen levels, etc.) are required for different fish species leading to geographically diversified aquaculture production map ▪Turkey, considering its strategic geographical positioning globally, is ideally placed for production of Mediterranean species; namely seabream and seabass ‒currently, Turkey has 46.3% share in the seabream and seabass aquaculture production, placing itself as the #1 country globally ‒Turkey's lower production costs resulting from low -cost labour and favorable farming conditions further enhancing its leader position ▪Following the global pattern, Turkish seafood production is also shifting towards aquaculture; at a historical CAGR of 13.8% between 2012 -2019 ‒373.4k tons of aquaculture production in Turkey, Mediterranean species accounting for 63.5% of production followed by trout with 33.7% share ▪In line with increasing production, Turkish aquaculture export volume has grown at a CAGR of 15.7% between 2012 -2018 and reached level 177.5k tons ‒main seabream and seabass export markets are EU countries including Italy, Spain, Netherlands as well as Russia and Middle East countries ‒main trout export markets are Russia, Germany and Netherlands ▪Going forward, Turkey is expected to keep its leading position in Mediterranean species for both supply and demand enriched with other species (such as trout, meagre, etc.) and is well -positioned to capture promising growth prospects in aquaculture demand ‒globally as a net exporter of seafood fuel ledby improving global macro conditions with continuous GDP / disposal income growth ‒in Turkey with its large domestic consumption base positively evolving with dynamic population and increasing per capita seafood consumption in Turkey of 4.1 kg vs. EU of 23.7 kg Source: Group, FEAP, Turkstat , Kontali,Turkish Ministry of Agriculture and ForestyCAGR 2012 -2018 15.7% 7.0%Net export: 8.6kNet export: 79.2k➢Seabream, seabass and trout accounting for 97.2% of Turkish aquaculture production in 201 9 ➢Turkey as net exporter of aquaculture products with fast -paced volume growthCAGR 2012-2019 Total (‘000 tons) (%) Share in total318 360 481 0.0% 5.5%-0.4%13.8 %6.1% Increasing share of Turkey 373.4 k tons➢Turkey is the largest aquaculture producer of seabream and seabass with the fastest growth trend among its peers 2016 201228.3% 38.1% 10.5%27.8% 23.0%37.2% 10.3 % 24.7%46.3% 24.5% 7.0% 22.2% 2019 Turkey Greece Spain Others 26,7% 36,8%33,7%0.9% 1.9% TroutSeabream Seabass Meagre Other 74,065,4 2012A Export (k tons) Imports (k tons)177,5 98,3 2018A 11 Per capita seafood consumption in 2019 (kg) Total seafood consumption in 2019 ( mntons)0.5 0.9 3.7 6.7 9.0 12.6 11.4 59.6Strong and promising consumption base in Kılıç Deniz ’s existing and new markets Canada United States TurkeyEU countries ChinaJapanRussia Increasing share of aquaculture in overall seafood consumption; affirming importance of aquaculture companies for supply security Source: Group, OECD -FAO Agricultural OutlookGlobal reach of Kılıç Deniz Strong and promising consumption base1 45,8 39,4 23,722,4 22,0 21,8 10,6 4,1 Latin America USA Turkey Japan Europe China Canada Russia Latin America 12 Kılıç Deniz , #1 seabream and seabass aquaculture company globally with its distinguished production capacity and proven capabilities…2 Sales volume (2019) Harvested fish1: 61.0k tons Juvenile: 103.6 mnpieces Fish feed: 12.8k tons ▪#1 market position with established market share in Turkey and the international arena ▪Fully integrated business model ▪Production facilities optimally designed at multiple locations ▪Accumulated know -how & innovation culture backed by strong R&D capabilities ▪25+ years of experience in aquaculture sector (1) Harvested fish includes both whole and processed products of seabream, seabass, meagre, trout ,bluefin tuna and other trade sales Source: Group, market research and intelligenceHarvested fish 63.8k tons Juvenile 549.5 mn juveniles Fish feed c.160k tons#1 position with its 63.8k tons production capacity for Mediterranean species & others ▪Higher capacity than European peers ▪By far the highest production capacity in Turkey Strong #1 in breeding with 549.5 mnjuvenile production capacity ▪More than double juvenile production capacity compared to its closest European peer ▪By far market leader in Turkey compared to its peers One of the leading fish feed producers with c.160k tons capacity in the Mediterranean region ▪Satisfactory capacity when compared to European peers Existing operational capacities as of August 2020 (further details provided on the next pages) ▪Supply security and quality control over the value chain from feed to plate ▪Positioning at multiple locations diversifying business disruption risk ▪Multi -species cultivation, product development and diversification know -how ▪Ability to create new markets with the accumulated know -how of long -tenured management team ▪Continuous cost optimization on the back of well -developed strategies , technologically advanced production infrastructure and ideal farming conditions ▪Ability to adapt swiftly to market conditions and changing customer preferences with proactive cultureDistinguished production capacities A Proven capabilities B 13 Kılıç Deniz is well -positioned to obtain new licenses through its well -designed facilities and processes; setting best practices for aquaculture farming in Turkey… secured by its existing licenses creating strong entry barrier2 Already secured licenses1renewable at the option of the license holder… ›Turkey (Marine & Fresh water) ▪Total capacity2: Marine: 50.8 k tons Fresh water: 10.0 k tons ▪Licenses renewable at the option of the license holder ▪Rent renewal period3: 15 years ›Albania ▪Total capacity2: 2.0k tons ▪Licenses renewable at the option of the license holder ▪Rent renewal period3: 10 years ›Dominican Republic ("Dominic") ▪Total capacity2: 1.0k tons ▪Licenses renewable at the option of the license holder ▪Rent renewal period3: annualHarvested fish ›Turkey ▪Total capacity2: 529.5 mnpieces ▪Licenses renewable at the option of the license holder ▪Production permit renewal period: 3 years ›Albania ▪Total capacity2: 20.0 mnpieces ▪Licenses renewable at the
and processes; setting best practices for aquaculture farming in Turkey… secured by its existing licenses creating strong entry barrier2 Already secured licenses1renewable at the option of the license holder… ›Turkey (Marine & Fresh water) ▪Total capacity2: Marine: 50.8 k tons Fresh water: 10.0 k tons ▪Licenses renewable at the option of the license holder ▪Rent renewal period3: 15 years ›Albania ▪Total capacity2: 2.0k tons ▪Licenses renewable at the option of the license holder ▪Rent renewal period3: 10 years ›Dominican Republic ("Dominic") ▪Total capacity2: 1.0k tons ▪Licenses renewable at the option of the license holder ▪Rent renewal period3: annualHarvested fish ›Turkey ▪Total capacity2: 529.5 mnpieces ▪Licenses renewable at the option of the license holder ▪Production permit renewal period: 3 years ›Albania ▪Total capacity2: 20.0 mnpieces ▪Licenses renewable at the option of the license holder ▪Production permit renewal period3: annualJuvenile…creating strong entry barrier ▪Limited issuance of new licenses by the Turkish Government ‒most of the areas allocated to aquaculture have already been tendered ▪Strong monitoring of farming activities and operations in Turkey and globally ▪Already obtained Dominic licenses providing first mover advantage to Kılıç Deniz in the expansion of the Mediterranean and other species into the US and other Americas markets▪Similar license scarcity in other Mediterranean countries as well as in other aquaculture farming countries for other species putting a cap on supply expansion for the seafood sector globally ▪Established juvenile capacity covering c.50% of the market demand in Turkey; steps ahead of potential upcoming competition (1) Please refer to Business overview section for further details on licensing and existing licenses (2) Existing operation al capacities as of August 2020. The Group has additional harvested fish licenses of c.50k tons which have not been reflected (3) Rental contracts for specified farm locations which are attached to licenses are subject to renewal Source: Group 14 III IV Achieve sustainable & increasing profitability withGain market intelligence ▪Effective player in juvenile supply ▪Access to market data, intelligence and competitive landscape▪Operational synergies / leverage ▪Economies of scale Fully integrated aquaculture platform enabling competitive advantage…3 Fully integrated platform from feed to plate with operations across thevalue chain Fully integrated operations… 1Fish feed production “Providing supply and cost control; catering for almost all internal consumption need” 2Hatchery “Ensuring supply and quality from fish egg (roe) enabling effective production planning as well as supplying c. 50% of juvenile need of its competitors in Turkey ” 3Fish farming (in cages) “Strong entry barrier with existing licenses at multiple locations in Turkey, South America and Albania” 4Processing & packaging “Proactive culture, timely response to customer orders and flexibility in customer preferences” 5Sales & distribution “Well -diversified network with increasing reach to customers across different geographies”…enabling Kılıç Deniz to… I Have full control over its operations ▪Supply security of main raw materials including fish feed and juvenile ▪Continuity in production & efficiency ▪Product quality & traceability ▪Flexible and timely offering with accurate production planning II Offer wide product portfolio ▪One-stop shop offering of harvested fish, juvenile and fish feed ▪Supply security of harvested fish throughout the year ▪Multi -species cultivation capability ▪Processed / value -added products offering Source: Group 15 62.9% Key highlightsShare in 20192 net sales Sales volume (2019) Net sales of EUR 263.4 with… …gross profit margin of 33.2 %1in 201 9 Harvested fish -whole 23.7% 6.4%Harvested fish -processed 4.8%Juvenile Fish feed Seabream Seabass Meagre 31.4% 24.7% 1.8% ▪Strategic product ▪Key producer; project capacity of 1,800 tons Bluefin tuna▪Product types include fresh/frozen gutted and fillet fish, MAP3, smoked, packaged and other s across fish types; seabream, seabass, meagre and trout ▪All trout products are sold as processed value -added products ▪Trout used as a strategic market entry product to Russia which in turn enabled seabream and seabass sales to Russia ▪Flexibility in responding to customer preferences▪c.50% used internally enabling quality control and continuity in production ▪Rest sold to the market; supplying c.50% of total demand in Turkey enabling access to market intelligence and competitive landscape ▪Key capability to increase access to Middle East market▪Total production of c.150k tons in 2019 ▪c.90% of produced feed is utilized internally, rest is sold to the market ▪Catering for almost all of internal need ▪Enabling supply security and cost control44.4 k tons 16.6ktons 103.6 mnjuveniles412.8k tons4 Multi -species and multi -size product offering across the value chain enabling flexibility, growth and profitability% of total net sales 201925.0%Additional revenue streamProfitability enhancer with 69.7 % gross marginValue -added products Main focus on Mediterranean species Focus on bluefin tuna sales to Japanese customers…with diversified product offering and strong profit generation3 (1) Gross profit margin excluding depreciation (2) Other sales such as feed raw material, polystyrene box, imported seafood , fish market sales, incentives and others corresponding to 2.2% of net sales and 1.5% of gross profit in 2019 are not shown above (3) MAP: Modified atmosphere packaging (4) Indicates sales to 3rdparties Source: Group 16 Best -in-class production facilities located at multiple strategic locations minimizing business disruption risk4 Presence at multiple locations Facilities in place through the value chain ➢Fish feed production New capacity investments completed in 2017 (c.50.0k tons); no capacity constraints in the mid -term ▪c.160.0k tons total fish feed production capacity ▪1facility located in Milas , Muğla , owned by Kılıç ➢Hatchery Well -invested facilities with no capacity constraints in the mid - term ▪549.5 mnjuvenile production capacity ▪9 hatcheries and adaptation units ; 6 in Muğla , 1 in Aydın, 1 in Maraş and 1 in Albania, mainly owned by Kılıç ➢Fish farms (cages) Cages varying in size and material for different species ▪63.8k tons production capacity1with over 1,000 cages ▪49 existing fish farming projects at 8 locations; located in Muğla (20), İzmir (1), Mersin (10), Dominic (1), Gaziantep (6), Maraş (8), Şanlıurfa (2) and Albania (1) ➢Processing & packaging Internationally certified facilities providing flexibility to deliver products as per customer orders & preferences ▪68.1 tons processing & packaging capacity ▪7.9 mnboxes EPS production capacity ▪5 facilities; 3 in Muğla , 1 in Mersin and 1 in Maraş , mainly owned by Kılıç ▪Capabilities including fresh/frozen gutted and fillet fish, IQF2, MAP, smoked, packaged and othersCertificates Key differentiators Şanlıurfa GaziantepMaraş MersinAydın Muğlaİzmir Marine hatcheries FW hatcheries Fish
Aydın, 1 in Maraş and 1 in Albania, mainly owned by Kılıç ➢Fish farms (cages) Cages varying in size and material for different species ▪63.8k tons production capacity1with over 1,000 cages ▪49 existing fish farming projects at 8 locations; located in Muğla (20), İzmir (1), Mersin (10), Dominic (1), Gaziantep (6), Maraş (8), Şanlıurfa (2) and Albania (1) ➢Processing & packaging Internationally certified facilities providing flexibility to deliver products as per customer orders & preferences ▪68.1 tons processing & packaging capacity ▪7.9 mnboxes EPS production capacity ▪5 facilities; 3 in Muğla , 1 in Mersin and 1 in Maraş , mainly owned by Kılıç ▪Capabilities including fresh/frozen gutted and fillet fish, IQF2, MAP, smoked, packaged and othersCertificates Key differentiators Şanlıurfa GaziantepMaraş MersinAydın Muğlaİzmir Marine hatcheries FW hatcheries Fish feed production facility Marine farms FW farms EPS facilit y Processing & packaging facilities Turkey Dominican Republic AlbaniaDiversify business risk Enhance market presence with existing licenses ➔ creating strong barrier to entry Flexible product offering across value chain Ensure product quality & supply security Provide ease of access internally and to customers ➔low logistics costs & timely deliveryEffective capacity utilization & production planning (1) Includes total installed production capacity for seabream, seabass, meagre, trout and bluefin tuna . The Group has also existing issued licenses for an additional production capacity of c.50k tons which have not been reflected above (2) IQF: Individual quick freezing Source: Group 17 Accumulated know -how backed by R&D -centric innovation culture enhancing top line growth and value creation5 Innovation at the core resulting in improvements in operations and key performance indicators: Decrease in FCR Seabream Seabass Decrease in mortality rate Geographical diversification Secured shorter growth period in cages Mersin, Turkey Muğla , Turkey DominicTurkey Dominican Republic Albania ~12 -18 months ~ 10 -16 months ~ 9 -15 months Product portfolio enrichment Tilapia Cobia Yellow tail Others1Coupled with extensive R&D capabilities mainly focusing on … ▪Quality control and technological improvements ▪Selective breeding; creating race with the most favorable traits ▪Genetic selection ▪New species development ▪Feed ratio improvementKılıç Deniz’s accumulated know - how deriving from its… ▪+25 years of experience in the aquaculture sector ▪Well -seasoned senior management team with 20+ years of experience on average ▪Long -term senior management tenure of 15+ years on average (1) Others include more than 10 different species mainly targeting Americas markets Source: Group2015 2019 c.23% improvement c.17% improvement Seabream Seabass2015 2019 c.10+% improvement c.15+% improvement 18 Target is to increase number of brood fish to c. 3,200 and produce c. 150 mnjuveniles 2012 -2013 2020 onwards 2009 2015 -2016 2016 -2017 2017 -2018Initiation of Selective Breeding ProjectInitiation of the selection of brood fish races with the most favorable traits for fish productionInitiation of the fish egg production from selected brood fish races starting from 2015 onwards Registration of all existing brood fishes including their genetic traits along with their race treesProduction of 60 brood fish races from 30 selected brood fish races every year Monitor and analyze produced races in terms of growth rate, growth period and sizeProduction of fish eggs from 122 selected brood fishes with favorable genetic traits Production of fish eggs from 400 selected brood fishes with favorable genetic traits Target is to produc e allfish eggs from 800 selected brood fishes with favorable genetic traits 15 months laterc.2 mnjuveniles placed to marine farms 250-300 gr300-400 gr c.30% better performanceRegular production resultsSelective breeding resultsc.5.7 mnjuveniles placed to marine farmsTarget is to place c.20 mn juveniles to marine farmsAim is to create brood fish races with the most favorable genetic traits for further production which going forward will have significant impact on FCR, quality and growth size hence on profitability levels vs. Source: GroupSelected case study: Investing in selective breeding since 2009 Selective Breeding Project 19 Growing diversified clientele base served through its expanding route - to-market strategy with increasing hard currency revenue stream6 Diversified clientele base through expanding access to end customers Robust increase in international sales as well as successive growth in TurkeyGrowing exposure in international markets ▪Sales to 50+ countries ▪Carried by c.15 people ▪Directly managing sales & distribution in Italy to serve customers in Italy and other EU countries ▪2012 -2019 agriculture products export champion in TurkeyProven presence in Turkey ▪Sales in Turkey carried by c.20 employees at ‒HQ and ‒3 sales & distribution offices in Ankara, Antalya and İstanbul4.7%2.3%2017 -2019 CAGRc.63% c.37% Reaching to end customers through diversified channel network% of net sales 2019 2017 2018 201970.6%71.3%71.9 % + c.0.7%+ c.0.6% Hard currency share in net sales including USD, EUR, GBP and Yen Source: Group% of net sales 2019Main sales channel both internationally and in Turkey Including fish feed and juvenile salesLimited direct sales to retailersWholesalers c.60%Aquaculture companiesc.25% Retailers c.12% Direct sales mainly through tendersHoReCa c.1% Sales to end customers through its own stores (3 outlets)Kılıç fish marketsc.2% Increasing hard currency revenue stream enabling inherent hedging97.6 2018A 2017A93.3 2019A151.1 86.3155.5165.8 Domestic sales International salesIncreasing net sales (EUR mn) 20 Market dynamics ▪With seafood consumption market -size of c.3.7 mntons in 2019, Russia is a key seafood consumer globally ‒overall, among one of the leading consumers globally ▪While the market is dominated by fresh water species (mainly trout and others), increasing demand for premium species (mainly seabream and seabass) during the last years are catered by imports ‒Russia is among top 10 seafood importers globally ▪Growth in the market has been mainly fueled by increasing per capita consumption, especially for premium products Kılıç Deniz's strategy ▪10+ years ago, Kılıç Deniz seized the opportunity in Russia for seafood consumption potential and started its market entry considerations ▪Results of Kılıç Deniz's market analysis indicated that Russian wholesalers prefer to buy seabream and seabass bundled with high margin trout ▪Accordingly, Kılıç increased its trout capacity and gained significant competitive advantage leading to increasing sales volume for seabream, seabass and trout to Russia, hence increasing penetration and market share ▪Russian market started consuming seabream and seabass where the shift in consumption patterns were mainly triggered by Kılıç Result ▪Kılıç Deniz’s seabream and seabass sales to Russia substantially increased through cross -selling with high margin smoked trout ▪Over years, Kılıç successfully became the key supplier
fueled by increasing per capita consumption, especially for premium products Kılıç Deniz's strategy ▪10+ years ago, Kılıç Deniz seized the opportunity in Russia for seafood consumption potential and started its market entry considerations ▪Results of Kılıç Deniz's market analysis indicated that Russian wholesalers prefer to buy seabream and seabass bundled with high margin trout ▪Accordingly, Kılıç increased its trout capacity and gained significant competitive advantage leading to increasing sales volume for seabream, seabass and trout to Russia, hence increasing penetration and market share ▪Russian market started consuming seabream and seabass where the shift in consumption patterns were mainly triggered by Kılıç Result ▪Kılıç Deniz’s seabream and seabass sales to Russia substantially increased through cross -selling with high margin smoked trout ▪Over years, Kılıç successfully became the key supplier of seabream and seabass to the Russian market outperforming its competitors globally ‒Turkish fish exports volume to Russia increased with a CAGR of 44.6% between 2009 -2019 where Kılıç acted as the main exporter to Russia ▪Currently, Kılıç is enriching its portfolio with red trout in line with Russian customers’ preferencesIncreasing per capita fish consumption in Russia 2006 18.6kg + 3.2kg 2019 21.8 kg Substantial increase in exports to Russia… 2009 CAGR 44.6 % 2019484 tons 19.3k tons Turkey’s total seafood exports volume to Russia … where Kılıç acts as the leading supplier 2009 CAGR 28.0% 2019465 tons 5.5k tons Kılıç Deniz’s sales volume to Russia Source: Group, OECD -FAO, TurkstatSelected case study: Kılıç Deniz, a pioneer to grow its markets 21 7 Enables Kılıç to…Develop long -term vision Secure strategic positionPenetrate to new markets Increase operational efficiencyFocus on innovation Develop R&D projectsCFOCOO, Head of Hatchery Operations & Production▪Founder of Kılıç Deniz ▪Remarkable experience and know -how in the Turkish aquaculture sector ▪Transformed Kılıç Deniz into a leading global aquaculture company through hisvision Source: GroupLong -tenured vision with accumulated experience and proven track record Orhan Kılıç Chairman of the Board of Directors Since 1991 with Kılıç 30 years İhsan Bozan Vice Chairman of the Board of Directors Since 1994 with Kılıç 26 years Hakan Uyanık CEO Since August 2019 with Kılıç 30+ years FMCG industry experience Ahmet Yıldız Vice Chairman of the Executive Board Since 2006 with Kılıç 14 years Additional 7 years of related sector experienceSerkan İlgaz Vice Chairman of the Executive Board Since 2007 with Kılıç 13 years Additional 9 years of related sector experienceSinan Kızıltan KLC –Board Executive Since 1999 with Kılıç 21 yearsErsin Kılıç Kızıltan Vice Chairman of the Board of Directors Since 2002 with Kılıç 18 years 22 Net sales (EUR mn) EBITDA ( inc.FV) (EUR mn)Harvested fish volume (k tons)Solid historical performance with strong growth prospects8 (1) EBITDA margin is calculated as EBITDA over Net sales plus Fair value impact Source: Group2024 F 2018A 2017A 2021F73.7 2019A 2023F 2020B 2022 F73.7 46.350.961.065.968.771.7 2025 F 2026F75.7 75.7+2.3% 283.4 2017A 2021F 2022 F 2018A 2019A 2020B 2024F 2023F325.6 244.4 241.9263.4300.3314.2 324.0 2025F 2026F336.0 337.9+3.0% 2017A 2018A 2022F 2019A 2020B 2024F 2021 F 2023F77.3 79.067.976.294.5102.6 106.5 108.2 2025F 2026F112.6 114.4+7.0%%29.9 29.7 % 24.6 % 26.3 % 30.9 % 32.0 % 32.2 % 33.2 % 32.6 % 32.9 % EBITDA margin1(inc.FV) 23 Growth strategy focused on ensuring top line growth and increased profitability9 Strategic steps taken by Kılıç Deniz... … ensuring top line growth and increased profitability IRecent investments in Mersin Leading to operational enhancements with significant impact on revenue and profitability levels ▪Mersin investment leading to FCR improvements and quicker growth rates as well as enabling increasing sales to new marketsII R&D -centric innovation culture Continuously focusing on improvements and innovation ▪Improvements in FCR, mortality rates, feed ratio, etc. ▪Selective breeding project ▪Enriching its cultivation portfolio with new species ▪Other ongoing projects Growth potential in existing marketsPenetration potential into new marketsFurther profitability enhancers Well -positioned to cater surge in demand and maintain its strong position via its established operations and increasing capacityIncreasing availability of Mediterranean species in the US and Americas via Kılıç’s recent investment in Dominican RepublicProfitable growth lying at the center of Kılıç Deniz’s strategy ▪International markets: established consumption base for Mediterranean species, mainly in Italy and other EU countries and for trout in Russia ▪Turkey: c.1% expected population growth coupled with room for growth for per capita seafood consumption (Turkey of 4.1 kg vs EU of 23.7 kg)▪US: high seafood consumption market (22.4 kg per capita consumption) ▪Other countries: Dominican Republic, Canada, Mexico, etc. ▪Asia: Exploring potential growth opportunities in Asia with specific focus on Japan, China, Hong Kong and Thailand ▪Middle East (“ME”): growing aquaculture sector in ME triggering increasing demand for juvenile with high profitability ▪Scale advantages / operating leverage ▪Operational synergies ▪Logistics advantages ▪Others Source: Group, OECD -FAO Agricultural Outlook III. Business overview 25 Kılıç has fully integrated business model enabling flexibility, control over its operations and significant synergies ▪Procuring raw material ▪Able to supply almost allof its own need ▪Selling fish feed to 3rdparties (only c.10% of total output) Fish feed productionHatchery operationsFish farming operationsPackaging & ProcessingSales & Marketing ▪Importing larva feed from 3rdparties ▪Selling juvenile to 3rdparties (c.50% of total output)▪Off-shore cages for marine water breeds (‘’ marine cages ’’) ▪On-shore cages for fresh water breeds (‘’FW cages ’’)▪Packaging of harvested whole fish ▪Processing and packaging of harvested processed fish▪Selling both to international and Turkish markets ▪3 existing distribution offices in Turkey ▪Own ssales and distributor company in Italy, covering Italy and EuropeSupporting functions HR IT EPS production i ii Source: GroupAs of August 2020, Kılıç had 2,273 employees; 1,654 blue collar, 458 white collar and 161 divers and ship crew 26 Offering a broad product portfolio of whole and processed products % of net sales 20191 Seabream Seabass Meagre Trout Bluefin tunaWhole products Processed products Juvenile Fish feed 62.9% 23.7 % 4.8% 6.4% Fresh whole fishFresh fillet and gutted fishFrozen products (whole, gutted and fillet)MAP products (fillet and gutted)Canned and smoked (trout only) products▪seabream ▪seabass ▪meagre ▪trout ▪others▪seabream ▪seabass ▪meagre ▪trout (1) Other sales such as feed raw material, EPS box, imported seafood, fish market sales, incentives and others corresponding to 2.2% of net sales in 2019 are not shown above Source: Group 27 Strategically dispersed facilities minimizing business disruption risk (1) Fish feed
production i ii Source: GroupAs of August 2020, Kılıç had 2,273 employees; 1,654 blue collar, 458 white collar and 161 divers and ship crew 26 Offering a broad product portfolio of whole and processed products % of net sales 20191 Seabream Seabass Meagre Trout Bluefin tunaWhole products Processed products Juvenile Fish feed 62.9% 23.7 % 4.8% 6.4% Fresh whole fishFresh fillet and gutted fishFrozen products (whole, gutted and fillet)MAP products (fillet and gutted)Canned and smoked (trout only) products▪seabream ▪seabass ▪meagre ▪trout ▪others▪seabream ▪seabass ▪meagre ▪trout (1) Other sales such as feed raw material, EPS box, imported seafood, fish market sales, incentives and others corresponding to 2.2% of net sales in 2019 are not shown above Source: Group 27 Strategically dispersed facilities minimizing business disruption risk (1) Fish feed production facilities, hatcheries and adaption units (except for Güvercinlik and Maraş ) and processing & packaging facilities are owned by Kılıç (2) Farming projects in Çeşme are only for bluefin tuna farming (3) Those facilities are located at the same premise Source: GroupLocation TypeAnnual capacity (k tons) Milas , Muğla Feed, extruder 160.0 Total 160.0Fish feed production facilities 1 Location KeyspeciesAnnual capacity (mnpieces ) Ören ,Muğla Seabream, seabass, meagre 80.0 Bafa , Aydın Seabream, seabass, meagre 146.0 Güvercinlik , Muğla Seabream, seabass, meagre 39.5 Yaşyer ,Muğla Seabream, seabass, meagre 39.0 Akarca , Muğla Seabream, seabass, meagre 75.0 Özbaşer ,Muğla Seabream, seabass, meagre 20.0 Alagün, Muğla Seabream, seabass, meagre 80.0 Total 479.5 Maraş Trout, redtrout 50.0 Albania Trout 20.0 Total 70.0Hatcheries and adaptation units 1 2 3 4 5 6 1 2Fish farms Location KeyspeciesAnnual capacity (k tons) Bodrum, Muğla Seabream, seabass, meagre 13.7 Milas , Muğla Seabream, seabass, meagre 12.5 Didim , Aydın Seabream, seabass, meagre 6.0 Mersin Seabream, seabass 16.8 Dominic Med. and other species 1.0 Çeşme , İzmir2 Bluefin tuna 1.8 Total 51.8 Gaziantep Trout 4.1 Maraş Trout , red trout 4.5 Şanlıurfa Trout 1.4 Albania Trout 2.0 Total 12.01 2 3 4 5 6 1 2 3 4Marine FW Processing & packaging facilities Location TypeAnnual capacity (k tons) Processing and packaging Milas , Muğla3 Packaging 32.8 Silifke, Mersin Packaging 13.6 Milas , Muğla3 IQF, MAP, filleting / gutting 8.2 Milas , Muğla Value added processing 4.9 Maraş IQF, MAP, fillet ./gutt ., smokin g 8.6 Total 68.1 Polystyrene box production (“EPS”) Milas , Muğla3 EPSbox 6.3 mnboxes Silifke, Mersin EPSbox 1.6 mnboxes1 3 4 5 1 Facilities operating for all species Facilities operating only for trout and red trout Marine hatcheries FW hatcheries Fish feed facility Marine farms FW farms EPS facilit y Processing & packaging facilitiesTurkey1 Şanlıurfa GaziantepMaraş Mersinİzmir Aydın Muğla1 12 3 45611 23 46 12 3 13 45 1 Dominican Republic Albania 25 4 Marine FW6 22 22 28 Operational excellence proven by international quality certificates Fish feed plantsSelected quality certificates Hatcheries Processing & packaging Fish farms Source: Group 29 Fish feed production ensuring supply security and quality control Feed production Hatchery Fish farming Processing Sales ➢Overview ▪Kılıç Deniz has 1 well -equipped extruder type fish feed production facility located in Milas (Muğla ), in close proximity to its hatcheries and fish farms in Muğla , enabling logistics and timing advantages ▪Through its fully automated fish feed production facilities, Kılıç Deniz produces high quality fish feed under its own brand “Aqua -K” , with total annual production capacity of c.160k tons ▪Current fish feed production portfolio of Kılıç includes various fish feed of all grades for different fish sizes and types ‒fish feed portfolio tailored as per environmental production conditions including seasonal changes and requirements ▪Currently, existing production facilities are catering for almost all internal fish feed need of Kılıç Deniz including existing demand of newly operating Mersin and Dominican Republic fish farms ▪Therefore, feed production facilities provide significant edge to Kılıç Deniz considering overall cost profile of harvested fish where fish feed constitutes significant portion of total harvested fish costs with 70.2%1in 201 9 ‒c.92% of the fish feed production volume is internally consumed where the remainder is sold to 3rd party customers, mainly in Turkey ‒Kılıç procures key fish feed ingredients such as fish meal and fish oil from Mauritania2, Morocco, Peru and the Black Sea Region, mainly in USD terms ▪In-house fish feed production capability enables Kılıç Deniz ‒supply security and quality control ‒to ensure quality which has significant impact on FCR achieved in the harvesting operations ‒to control and alter composition of fish feed ( “feed ratio” ) enabling swift adaptation to changing water and climate conditions; adding operational flexibility and allowing improvement in results ‒effective cost monitoring and management➢Fish feed production capacity details FacilityStart yearRenewal year LocationCapacity (tons)Closed area (sqm ) #1 2003 2017 Milas , Muğla 160,000 5,000 Total 160,00 5,000 ▪In 2017, Kılıç renewed one of its feed production facilities and increased its overall capacity to c.160k tons from c.110.0k tons ➢Expanding fish feed production volume (k tons) 2017 2018 2019 112k tons 120k tons 150k tons (1) Provided as guidance including feed, juvenile, cage and packaging costs without depreciation for seabream, seabass, meagre and trout (2) Kılıç purchases some part of its fish feed raw materials from Atlantic Protein, a related party company Source: Group 30 In-house breeding capabilities ensuring full traceability of production Feed production Hatchery Fish farming Processing Sales Hatchery Start year LocationAdaptation unitCapacity2 (mnpieces) #1 1997 Ören , Muğla – 80.0 #2 2004 Bafa , Aydın ✓ 146.0 #3 2006 Güvercinlik , Muğla – 39.5 #4 2006 Yaşyer , Muğla3 ✓ 39.0 #5 2008 Akarca ,Muğla ✓ 75.0 #6 2015 Özbaşer , Muğla3 ✓ 20.0 #7 2019 Alagün, Muğla3 ✓ 80.0 Total 5 479.5 #8 2008 Maraş ✓ 50.0 #9 2016 Albania ✓ 20.0 Total 2 70.0 Overall total 7 549.5Marine water FW ➢Overview ▪Kılıç has strong juvenile production capability through its hatcheries with an annual juvenile production capacity of 549.5 mnlocated at 8different locations ‒Kılıç has 7 marine water hatcheries for juvenile production for seabream, seabass and meagre; 5 of which are equipped with adaptation units plus 2 additional adaptation units; with a total capacity of 479.5 mnpieces ‒6 of the facilities are located in Muğla and 1 in Aydın, adjacent to Kılıç’s fish farms providing logistics and
, Muğla – 39.5 #4 2006 Yaşyer , Muğla3 ✓ 39.0 #5 2008 Akarca ,Muğla ✓ 75.0 #6 2015 Özbaşer , Muğla3 ✓ 20.0 #7 2019 Alagün, Muğla3 ✓ 80.0 Total 5 479.5 #8 2008 Maraş ✓ 50.0 #9 2016 Albania ✓ 20.0 Total 2 70.0 Overall total 7 549.5Marine water FW ➢Overview ▪Kılıç has strong juvenile production capability through its hatcheries with an annual juvenile production capacity of 549.5 mnlocated at 8different locations ‒Kılıç has 7 marine water hatcheries for juvenile production for seabream, seabass and meagre; 5 of which are equipped with adaptation units plus 2 additional adaptation units; with a total capacity of 479.5 mnpieces ‒6 of the facilities are located in Muğla and 1 in Aydın, adjacent to Kılıç’s fish farms providing logistics and timing advantages ‒in addition, Kılıç has 2 fresh water hatcheries along with adaptation units for the production of trout juvenile with a capacity of 70 mnpieces, 1 located in Maraş and 1 in Albania ▪Hatchery process : internally produced fish eggs are hatched and grown first to larvae, then to fry fish and juvenile on average in c.3 -4 months time period ‒survival rate of c.30% for seabream and c.40% for seabass; notable performance of Kılıç compared to global peers ▪With its existing capacity, Kılıç is a significant player in the production of juvenile and has a direct effect on Turkish juvenile market supply ‒the Group is covering its overall juvenile need including for Mersin and Dominic mainly from genetically selected brood fishes (" selective breeding ") ‒Kılıç is also supplying c.50% of the juvenile demand in Turkey providing direct access to the market and visibility on competitive landscape ▪Looking at the overall cost profile of harvested fish, juvenile costs constitute 6.2%1of total costs in 2019 ‒Kılıç imports artemia and rotifer, mainly in EUR terms, from 3rdparties for juvenile production ▪Key differentiation point of Kılıç is its in -house fish egg production capability enriched with its well -equipped microbiology labs and strong R&D capabilities; enabling Kılıç Deniz ‒quality control and improvement through selective breeding ‒effective / accurate production planning, supply security and continuity in production ‒improvement in the growth rate / lower FCR ‒continuous addition of new species; enriching its multi -species cultivation capability➢Juvenile production capacity details ▪Hatcheries and adaptation units have significant contribution to R&D capabilities of Kılıç where current focus is on selective breeding and new species additions ▪Bafa facility, as the main capacity source, contributes to energy savings due to its convenient location in close proximity to water reservoir with ideal water temperature of 26 °C ➢Increasing juvenile production volume ( mnpieces) (1) Provided as guidance including feed, juvenile, cage and packaging costs without depreciation for seabream, seabass, meagr e and trout (2) Capacities can be expanded without significant additional investments (3) Only adaptation units, no hatchery units Source: Group119,1 112,3 103,698,6 130,3 142,1 2018A 2017A 2019A217.7242.5 245.7 Internal usage 3rd party sales 31 Well -equipped farms located both in Turkey and abroad… Feed production Hatchery Fish farming Processing Sales Fish farm Location# of Projects# of cagesKeyspeciesCapacity (tons) #1 Muğla 20 296 Seabream, seabass, meagre 32,140 #2 Mersin 10 168 Seabream, seabass 16,850 #3 Dominic 1 28 Med .and other species 1,000 #4 Çeşme , İzmir 1 12 Bluefin tuna 1,840 Total 32 504 51,830 #5 Gaziantep 6 140 Trout 4,100 #6 Maraş 8 192 Trout, redtrout 4,497 #7 Şanlıurfa 2 92 Trout 1,400 #8 Albania 1 80 Trout 2,000 Total 17 504 11,997 Overall total 49 1,008 63,827FW Marine water➢Overview ▪Kılıç Deniz has the leading fish farming capacity with 63.8k tons mainly focused on Mediterranean species with farms located in Turkey, Dominic and Albania ‒secured licenses constitute strong entry barrier ‒additional licensed capacity of c.50.0k tons secured in Turkey, Dominic and Albania but not operational yet ‒each fish farming project, a collection of cages, is secured by licenses issued by the Ministry of Food, Agriculture and Livestock (the “ Ministry ”) for a specific capacity and location ▪Currently, Kılıç Deniz operates ‒504 off -shore marine water cages for seabream, seabass, meagre, bluefin tuna and other species as well as 504 fresh water cages for trout and red trout in dam lakes with different cage diameters varying from 20 to 30 and 50 meters ▪Projects at multiple locations in Turkey, Dominic and Albania are minimizing business disruption risk ‒cages made of special materials to endure all weather conditions ▪Fish farming process starts when ‒juveniles in adaptation units reach size of 2.5 -5 gr and are transferred to 20 m cages until they reach to weight of 30 -50 gr; usually taking around 2.5 -3 months ‒then, fishes are transferred to larger cages of 30 m and 50 m until they reach the market -size of 300 -1,200 gr to harvest; usually takes around 7 -15 months depending on fish type and water temperature ‒seabass vaccinated prior to being transferred to 30 -50 m cages ▪Fishes in the cages are fed by automated barges that track the amount of feed used and feeding duration ‒off-shore marine water farms are equipped with GPS units and underwater cameras, monitored regularly by expert personnel ▪Looking at the overall cost profile of harvested fish, cage costs ( including labor, energy, utility and other production expenses ) constitute 9.3%1of total costs in 201 9 ▪Kılıç has been fully insuring its biological assets since 2011➢Fish farming production capacity ▪Kılıç is operating ‒31 projects for seabream, seabass and meagre with a total of 492 cages and capacity of c.50.0k tons in Turkey and Dominic ‒1 project for tuna with a total of 12 cages and capacity of 1.8k tons in İzmir ‒17 projects for trout with a total of 504 cages and capacity of c.12.0k tons in Turkey and Albania ➢Biomass2expansion in line with increasing capacity and sales volume (k tons) 2017 c.40.8 2018 c.55.6 2019 c.57.2 (1) Provided as guidance including feed, juvenile, cage and packaging costs without depreciation for seabream, seabass, meagre and trout (2) Biomass figures include seabream, seabass, meagre, trout and bluefin tuna Source: Group 32 Biomass expansion in line with increasing capacity and sales volume (k tons) 2017 c.40.8 2018 c.55.6 2019 c.57.2 Seabass Seabream Meagre
projects for seabream, seabass and meagre with a total of 492 cages and capacity of c.50.0k tons in Turkey and Dominic ‒1 project for tuna with a total of 12 cages and capacity of 1.8k tons in İzmir ‒17 projects for trout with a total of 504 cages and capacity of c.12.0k tons in Turkey and Albania ➢Biomass2expansion in line with increasing capacity and sales volume (k tons) 2017 c.40.8 2018 c.55.6 2019 c.57.2 (1) Provided as guidance including feed, juvenile, cage and packaging costs without depreciation for seabream, seabass, meagre and trout (2) Biomass figures include seabream, seabass, meagre, trout and bluefin tuna Source: Group 32 Biomass expansion in line with increasing capacity and sales volume (k tons) 2017 c.40.8 2018 c.55.6 2019 c.57.2 Seabass Seabream Meagre Trout Bluefin tuna Biomass levels of each fish type at theyear -end (k tons) Source: Group…with increasing biomass level to support the envisaged volume growth… Feed production Hatchery Fish farming Processing Sales CAGR 2017 -2019 8.8% 21.9% 67.6% -0.5% 26.4%15,619,3 18,5 2017A 2018A 2019A 20,630,5 30,6 2017A 2018A 2019A 1,53,24,3 2017A 2018A 2019A 1,30,92,1 2019A 2018A 2017A 1,7 1,7 1,7 2017A 2018A 2019A 33 ▪Turkish aquaculture sector mainly under the governance of the Ministry of Food, Agriculture and Livestock has been regulated with a well -established framework ▪Aquaculture licenses are issued by the Ministry through tenders in areas, designated as aquaculture farming zones, on the bas is of specified production capacity, location and production method ▪The licenses are renewed upon expiration at the request of the license holders and could be transferred with the consent of t he Ministry…with long -term secured licenses Established regulations governing aquaculture sector in Turkey with regular monitoring Licensing process at a glanceDetermination of ideal fish farming locations by the Ministry and other regulatory bodiesPre-approval by the Ministry for selected locations for further processProcess to obtain EIA1 approval which includes application to 14 different regulatory bodiesApproval of the fish farming project(s) at specified location(s) by the MinistryLicense issuanceAnalysis of pre - determined locations by potential license acquirer and selection of one or more locations Licenses of Kılıç DenizProduction capacity: utilized licensed capacity63.8k tonsTurkey: 58.8k tons Albania: 2k tons Dominic: 1k tonsProduction capacity: licensed but not utilized currently51k tonsTurkey: 24k tons Albania: 8k tons Dominic: 19k tonsProduction capacity: ongoing license application process23k tons Turkey: 3k tons Dominic: 20k tons License payment details of Kılıç (EUR k)▪License acquisition requires a one -off payment (at an immaterial cost) as well as annual sea surface rent payments to the Ministry depending on the area utilized ▪Kılıç Deniz annually pays c.EUR 200k of sea surface rent to the Ministry ▪Rent paid to the Ministry is considered within Kılıç Deniz’s EBITDA ▪Kılıç Deniz does not need to pay any extra charges for license renewal upon expiration (1) Environmental Impact Assessment Source: GroupFeed production Hatchery Fish farming Processing Sales 149.8 2019A 2017A 2018A168.7206.8 34 Processing and packaging facilities securing continuous customer satisfaction Feed production Hatchery Fish farming Processing Sales ➢Processing and packaging & EPS capacities (1) Kılıç also processes and packages trade goods prior to delivery of those products to its customers (2) P rovided as guidance including feed, juvenile, cage and packaging costs without depreciation for seabream, seabass, meagre and trout Source: GroupFacility LocationProduction capacity (tons/yr)Keycapabilities Processing and packaging #1 Milas , Muğla 32,803 Packaging #2 Silifke , Mersin 13,560 Packaging #3 Milas , Muğla 8,201 IQF, MAP, filleting/gutting #4 Milas , Muğla 4,881 Value added processing #5 Maraş 8,640IQF, MAP, filleting/gutting , smok ing Total 68,080 EPS production #1Muğla and Mersin7.9mn boxes Polystyrene box Facilities operating for all species Facilities operating only for trout ➢Overview ▪Harvested from cages by Kılıç-owned sea vessels, fishes are transferred to processing and packaging facilities in thermally insulated tanks with ice, ensuring instant fatal shock to preserve the freshness and taste ▪Kılıç, through its 5 modern processing and packaging facilities, is processing and packaging final products1based on customer preferences and orders ▪Kılıç has annual processing and packaging capacity of 68.1k tons through ‒4 facilities located in Milas , Muğla and 1 facily in Mersin; processing all species with atotal annual capacity of 59.4k tons ‒1 facility, processing only trout and redtrout , located in Maraş with a total capacity of 8.6k tons, where… ‒…Maraş facility is only engaged with processing and packaging of trout to benefit from low transport costs given its proximity to fresh water farms ▪Kılıç Deniz’s processing and packaging facilities ensure operational efficiency, flexibility and customer satisfaction for changing preferences with key capabilities including, IQF, MAP, filleting / gutting, marinating and smoking ‒harvested fish is either directly packaged and offered to customers or first processed as per customer orders and then packaged and offered to customers ▪Kılıç also produces its own polystyrene boxes and ice for packaging, which guarantees hygiene and temperature control for packaging materials, as well as ensuring food quality and security of final products; hence increasing customer satisfaction ‒EPS facilities are located in Muğla and Mersin with an annual capacity of 7.9 mnboxes ▪Facilities are continuously modernized and their capacities are expanded to support harvested fish volume growth and achieve continuous customer satisfaction ▪Looking at the overall cost profile of harvested fish, processing and packaging operations constitute 13.7%2of total costs in 201 9➢Operational excellence proven by international quality certificates ▪Packaging and processing facilities are certified by highly recognized Global G A.P. Standards, leading farm assurance program globally ‒certified with international quality certificates including ISO 900, ISO 22000, BRC (British Retail Consortium Global Standards), ASC (Aquaculture Stewardship Council), IFS (International Featured Standards) and Halal certificates ‒following the Codex Alimentarius Commission standards, internationally recognized food trade safety standards of WHO and FAO 35 International+50 countriesSales & Marketing team covering diversified clientele base globally Feed production Hatchery Fish farming Processing Sales Reaching to diversified clientele base through various channels in Turkey ▪HQ ▪3 sales & distribution offices in Ankara, Antalya and İstanbul ▪Total of c. 20 employeesSales organized by Additional sales through Distribution▪3 retails stores; 2 are located in Muğla and 1 in İzmir ▪Total of c.40 employees ▪Mainly selling to wholesalers with direct sales to retailers and HoReCa ▪Domestic juvenile sales are carried by Group - owned
‒certified with international quality certificates including ISO 900, ISO 22000, BRC (British Retail Consortium Global Standards), ASC (Aquaculture Stewardship Council), IFS (International Featured Standards) and Halal certificates ‒following the Codex Alimentarius Commission standards, internationally recognized food trade safety standards of WHO and FAO 35 International+50 countriesSales & Marketing team covering diversified clientele base globally Feed production Hatchery Fish farming Processing Sales Reaching to diversified clientele base through various channels in Turkey ▪HQ ▪3 sales & distribution offices in Ankara, Antalya and İstanbul ▪Total of c. 20 employeesSales organized by Additional sales through Distribution▪3 retails stores; 2 are located in Muğla and 1 in İzmir ▪Total of c.40 employees ▪Mainly selling to wholesalers with direct sales to retailers and HoReCa ▪Domestic juvenile sales are carried by Group - owned vessels and trucks in the Turkish market ▪Feed sales are transported by outsourced logistics companies▪HQ −sales to Europe, Russia, Japan, Middle East, Africa, US and Canada ▪Sales&distribution subsidiary in Italy -Spador Srl −managing sales&distribution to Italy and European countries ▪Total of c.15 employees 2019 international sales➢International sales breakdown (1) Juvenile and fish feed sales personnel are responsible for both Turkey and international sales Source: Group▪3 distributors in Spain, Russia and Ukraine ▪1 agency based in UAE ▪Outsourced truck fleet operated by 3rdparty logistics providers for MENA and Europe ▪Products are shipped via plane and vessels to the US, Japan and European markets ▪Group -owned vessels are used for shipping of juvenile mainly to Tunisia18,9% 13,8% 9,7% 7,2% 5,9%29,4% 5.9%5.5%3.8% USAItaly Russia UKSouth Korea PortugalSpain OthersGermany 36 Selected customersDiversified clientele base across channels; strengthening sales performance Feed production Hatchery Fish farming Processing Sales International % of net sales 2019c.63% Turkeyc.37% Customer concentration; reducing customer dependency Well -established and diversified customer base in TurkeySelected customers Source: Group20.4% Top 3 Top 537.0% Top 1028.1% Top 2014.2% Customer concentration in overall sales (2019) 17.3% Top 1011.2% Top 322.5% Top 5 Top 207.6% Customer concentration in overall sales (2019) 37 Kılıç’s solid IT infrastructure is equipped with advanced applications and systems to drive continuous business & operational efficienc ies ▪Integrated aquaculture management softwares for −production planning and management to secure optimization in operations −proper flow to secure accurate feeding −better monitoring of production value chain in terms of inputs and outputs −cost analysis and optimization enabling better production strategies and proper financial planning −Aqua Manager is used for juveniles where Fish Time is used for the rest of the production▪Food processing software enabling −integration of packaging, processing and customer delivery data with SAP accounting modules −management of packaging & processing operations −own -label design of pack, pallet & order labels in Turkey in Albania Accurate production planning Reliable & timely financial & operational reportingOperational efficiencies Source: Group Fish Time IV. Financial overview 39 Basis of preparation (1) Group started consolidation of Mavi Deniz, Mavi Balık and Mavi Buzcompanies under Kılıç Deniz, under IFRS accounts, since June 2017 Source: GroupProposed Transaction scope comprises of Kılıç Deniz Aquaculture Group as illustrated in the Appendices section ▪Kılıç Deniz Ürünleri Üretimi İhracat İthalat veTic. A.Ş. is the main base of the Group's operations and financial statements as well as the main profit center, records its financials in accordance with IFRS (annual basis) and its financial statements are annually audited by PwC ▪The Group’s reporting currency for its audit reports is Turkish Lira ( "TL") ▪The Group’s fiscal year is 12 -month speriod starting on 1 January of the calendar year and ending on 31 December of the calendar year (i.e. 01.01.2019 -31.12.2019) Consolidated historical financials for the Group presented in this IM have been prepared based on management accounts of all Group companies by ▪taking the IFRS financials of Kılıç Deniz as the main basis ‒please note that there are minor differences between IFRS audit report and management account ▪consolidating a total of 13 legal entities1 ‒operations in Turkey, Albania, Italy, Tunisia and Dominican Republic are consolidated in IFRS accounts ▪all figures presented in this section are in EUR considering the hard currency focused revenue generation and mainly USD and EUR denominated purchases ▪reclassifying factoring liabilities under financial liabilities instead of trade payables due to their financial nature 2020B and the business plan until 2026 have been prepared as per management accounts ▪2020B -2026F financial performance has been prepared by the management and presented in line with the methodology mentioned for historical period above ▪Business plan has been structured under 2 main geographical hubs ‒Turkey: including existing operations / facilities in Muğla , Mersin, Maraş , Gaziantep, Şanlıurfa , Izmir and Albania ‒Dominic: recently established facility to cater mainly for the US and Americas markets; with limited volume and topline impact ▪Bottom -up approach has been used over the business plan period based on segments (harvested fish, juvenile, fish feed) ‒top line figures projected based on volume and unit price expectations for each segment to be offered to various geographies ‒detailed costing approach for COGS, estimating ( i) feed (ii) juvenile (iii) cage and (iv) packaging and processing costs based on their key operational metrics, i.e. FCR in fish feed and mortality rate in juvenile costs, etc. a. Historical period & 2020 Budget 41 Historically proven robust top line growth 46.3 50.9 61.0Harvested fish volume (k tons)65.9 24.6 % 29.7% 29.9% 26.3 %62.9 % 64.3% 61.8% 68.2 %International share in sales➢Commentary ➢Net sales (EUR mn) ▪Kılıç Deniz generates its sales under 4 main segments: −Harvested fish (86.6% of net sales in 2019): sales of whole and processed seabream, seabass, meagre, trout, salmon trout, bluefin tuna to a diversified customer base internationally and in Turkey −Juvenile ( 6.4%): sales to 3rd parties, currently mainly in Turkey but with increasing share of international sales achieved through new customer acquisition in M iddle East −Fish feed ( 4.8%): Sales to 3rd parties in the previous years decreased as Kılıç uses almost all of its production internally −Others (2.3%): retail operations, fish feed raw material, polystyrene boxes, imported sea food and canned products sales . Incentives1are not included in this item ▪Having a worldwide presence, Kılıç’s international sales are expected to reach a level of 68.2% in 2020B −in 2020B, c.73.4% of net sales is expected to be generated
of net sales in 2019): sales of whole and processed seabream, seabass, meagre, trout, salmon trout, bluefin tuna to a diversified customer base internationally and in Turkey −Juvenile ( 6.4%): sales to 3rd parties, currently mainly in Turkey but with increasing share of international sales achieved through new customer acquisition in M iddle East −Fish feed ( 4.8%): Sales to 3rd parties in the previous years decreased as Kılıç uses almost all of its production internally −Others (2.3%): retail operations, fish feed raw material, polystyrene boxes, imported sea food and canned products sales . Incentives1are not included in this item ▪Having a worldwide presence, Kılıç’s international sales are expected to reach a level of 68.2% in 2020B −in 2020B, c.73.4% of net sales is expected to be generated in hard currency as juveniles and fish feed sales in the domestic market are also in hard currency ▪Top line growth with net sales CAGR of 3.8% between 2017 -2019 mainly stemming from volume increase in harvested fish from 46.3k tons to 61.0k tons at a CAGR of 14.8% where seabass sales volume showed a steep increase of 10.4k tons… −…despite decreasing blended unit prices for both seabream and seabass by 5% and 12% respectively, due to the aggressive supply increase ▪Kılıç managed to grow its top line thanks to the growth in its harvested fish volume during a time when excess global production put pressure on the export prices. Growth in the top line was coupled with ( i) disciplined approach in cost control & operational improvements and (ii) operational efficiencies derived from increasing scale protected Kılıç’s profitability ▪Kılıç budgeted to achieve net sales of EUR 283.4 in 2020B with 7.6% y -o-y growth; where EBITDA margin is forecast to be at 26.3%. The expansion of the global supply is subdued, elevating the prices of the Mediterranean species in 2020 despite the Covid -19 situation ➢EBITDA ( inc.FV) (EUR mn) EBITDA margin2(%) (1) Incentives related only to meagre and trout totaling to an amount of only c.EUR 395.9k in 2019 (2) EBITDA margin is calculated as EBITDA over Net sales plus Fair value impact Source: Group13.619.021.113.9 21.5 187.522.113.3 2018A228.04.8 16.9 2017A283.4 12.6 188.25.9 2020B 2019A262.7241.92.0244.4263.4+3.8%+7.6% Harvested fish Others Fish feed Juvenile 2017A 2018A 2019A 2020B77.3 79.0 67.976.2 42 Harvested fish Core revenue and profitability source ➢Net sales volume (k tons)A ➢Net sales (EUR mn)➢Gross profit (exc. D&A) (EUR mn) 31.7% 33.0 % 35.0 %Gross margin (%)34.8 % 1 (1) Includes purchase and sale of bigger market -size fish to timely meet customer orders including trade of seabream, seabass, meagre and trout Source: Group➢Commentary ▪Net sales of harvested fish grew at a CAGR of 5.9% between 2017 -2019, driven by 14.8% volume growth ▪Notable growth in volume between 2017 -2019 was mainly driven by −higher demand from customers in Turkey and in the export markets for seabass; where volume increased at a CAGR of 45.0% and 27.7%, respectively −higher demand from customers in Turkey and in the export markets for seabream, where volume increased at a CAGR of 22.5% and 5.8%, respectively −penetration into new markets with trout, whose sales volume increased by 15.2% ▪Turkish producers played a prominent role in weakening the prices especially in the EU market by flooding the market in 2017 -2019 −lower juvenile transfer in 2018 and 2019 is beginning to be reflected on the fish prices as 2020 bodes well for export prices and thus, an improvement in the gross margin13.2 2018A22.20.75.123.7 23.13.5 2017A16.11.05.43.965.9 1.5 28.21.31.2 6.7 2019A 2020B28.827.81.36.8 1.646.350.961.0 1.2 +14.8%+8.0% Seabream Tuna Seabass Meagre Trout Other trade sales 86.25.216.6 63.3 82.94.620.2 13.8 2017A68.94.513.4 2018A99.688.018.9 22.0203.313.2 2019A106.8119.23.913.9 2020B15.2 14.6200.9228.0262.7 +5.9%+15.3% Seabream Seabass Meagre Trout Tuna Other trade sales2017A 2019A 2018A71.1 2020B66.372.391.4 +0.8%+26.4% 43 Harvested fish sales in detail Core revenue and profitability sourceA Seabream Seabass41% 45%3.40 4.182.97 4.042.99 3.992.93 4.21 3.90 5.243.14 4.802.78 4.313.44 4.82 Source: GroupInternational unit sales price (EUR/kg) Turkey unit sales price (EUR/kg) Share in 2020B harvested fish net sales5.0 14.311.14.4 2017A8.8 2018A9.316.1 2019A10.9 16.9 2020B13.223.727.8 +33.8% International Turkey60.654.028.829.6 56.6 2017A 2018A39.0 2019A32.9 73.9 2020B86.282.999.6106.8 +7.5% 15.6 62.081.617.326.0 46.063.3 2020B 2018A 2017A53.3 2019A37.6 68.988.0119.2 +17.9%Net sales volume (k tons) Net sales (EUR mn) 2020B8.7 2018A13.617.513.4 2017A9.713.0 15.2 2019A11.222.2 23.128.2 28.8 +12.6% 44 Harvested fish sales in detail Core revenue and profitability sourceA Trout Bluefin tuna7% 5%Source: Group International unit sales price (EUR/kg) Turkey unit sales price (EUR/kg) Share in 2020B harvested fish net sales4.7 2019A0.3 2017A0.2 5.2 2018A6.40.3 0.3 6.5 2020B5.15.46.7 6.8+15.2% 21.20.7 14.2 13.1 2017A0.4 2018A0.8 2019A0.7 18.1 2020B13.814.622.0 18.9+26.0% 2017A1.20.10.1 1.5 1.4 2018A 2019A1.2 2020B1.61.5 1.2 1.2 13.20.6 19.90.3 2017A 2020B16.0 2018A 2019A13.920.2 16.6 13.2 13.9Meagre2% 0.4 2020B0.5 2017A0.7 2019A0.30.5 2018A0.50.7 0.9 0.41.01.3 1.3+30.7% International Turkey2.84.6 1.8 2017A1.9 2.72.3 2018A2.9 2019A2.1 1.9 2020B4.55.2 3.9+6.0%2.42 2.762.17 2.722.88 3.292.38 2.81Net sales volume (k tons) Net sales (EUR mn) 4.8 13.28.0 11.4- 11.2- 11.87.08 5.313.45 5.713.22 5.342.21 4.78 Source: Group 45 ➢Net sales (EUR mn)➢Net sales volume ( mnpieces) 0.17 0.210.16 0.220.16 0.160.18 0.18 International unit sales price (EUR/piece) Turkey unit sales price (EUR/piece) Source: GroupGross margin (%)69.7% 71.4% 67.7% 72.5 %Juveniles Strategic sales to 3rdparties ,only from Muğla, with high gross marginB ➢Commentary ▪Juvenile sales to 3rdparties accounted for 6.4% of the total sales in 2019 vs. 8.8% in 2017 −demand is lower in line with the slowdown in capacity expansion in the sector •main customers are aquaculture companies in Turkey; Gümüşdoğa , Agromey and Nordzee •international customers are mainly located in the Middle East (such as Oman where aquaculture is subsidized by the government) and North Africa regions ▪Sales are denominated in EUR both in Turkey and international markets as the main raw material; artemia (living organism used as fish feed); is procured in EUR terms ▪Juvenile is one of the key profitability enhancers of Kılıç Deniz with a gross margin of 72.5 %in 20 20B mainly due to −decreasing unit costs on the back of improved proficiency, accumulated production know -how and increasing survival rates ▪Kılıç budgeted net sales of EUR 13.9 mnin 2020B20.399.5103.6 82.5 2018A 2017A22.989.4 21.1 2019A61.2112.3 15.7 2020B119.7 76.9 International Turkey 5.117.3 3.4 4.213.419.0 2017A13.9 2.8 2018A 2019A11.0 2020B21.5 16.9 13.9 International Turkey10.1 2017A11.8 2018A13.614.5 2019A 2020B➢Gross profit (exc. D&A) (EUR
are mainly located in the Middle East (such as Oman where aquaculture is subsidized by the government) and North Africa regions ▪Sales are denominated in EUR both in Turkey and international markets as the main raw material; artemia (living organism used as fish feed); is procured in EUR terms ▪Juvenile is one of the key profitability enhancers of Kılıç Deniz with a gross margin of 72.5 %in 20 20B mainly due to −decreasing unit costs on the back of improved proficiency, accumulated production know -how and increasing survival rates ▪Kılıç budgeted net sales of EUR 13.9 mnin 2020B20.399.5103.6 82.5 2018A 2017A22.989.4 21.1 2019A61.2112.3 15.7 2020B119.7 76.9 International Turkey 5.117.3 3.4 4.213.419.0 2017A13.9 2.8 2018A 2019A11.0 2020B21.5 16.9 13.9 International Turkey10.1 2017A11.8 2018A13.614.5 2019A 2020B➢Gross profit (exc. D&A) (EUR mn) 46 Fish feed Sales to 3rdparties , only from Muğla, after capacity increase in 2017C ➢Net sales volume (k tons) ➢Commentary 967.8969.5 898.9898.9 917.8917.8 International unit sales price (EUR/tons) Turkey unit sales price (EUR/ton)Gross margin (%)18.1 % 24.7% 24.2% 13.3 % ➢Net sales (EUR mn)▪92% of fish feed produced is internally consumed in hatcheries & fish farms while remaining is sold to 3rdparties, constituting c.8% of total sales in 2019 −main customers are aquaculture companies in Turkey −limited presence in international markets ▪Sales denominated in USD both in Turkey and international markets as the main raw materials; fish oil and fish meal; are procured in USD terms ▪Fish feed sales to 3rdparties have been considered as additional revenue stream, however c.94% of the production capacity is expected to be diverted to internal consumption in 2020B, leaving a marginal volume available for sale Source: Group2.6 2017A12.6 2020B1.410.2 2.610.2 2018A 2019A4.2 1.014.1 12.8 12.8 5.2 TurkeyInternational 12.2 10.1 1.4 2017A10.6 2.7 2018A2.5 2019A3.8 1.0 2020B4.813.6 13.312.6 Turkey International2020B 2018A3.3 2017A 2019A0.73.3 2.31,041.0 1,041.0➢Gross profit (exc. D&A) (EUR mn) 47 1Full control over COGS as internally produced fish feed and juvenile are the largest components 70.2% Fish Feed6.2% Juvenile9.3% Cage13.7%Packaging & processing➢COGS by segment (exc. D&A) (EUR mn) ➢Harvested fish COGS breakdown (1) The Group records COGS of tuna and other trade sales as single line cost item Source: Group▪Group records COGS by segment sunder management accounts ▪Harvested fish COGS are composed of fish feed, juvenile, cage, packaging & processing, tuna and other trade sales costs ▪Juvenile and fish feed costs include costs of sales to 3rdparties ▪Others include costs of retail operations, fish feed raw material, polystyrene boxes, imported sea food, canned products ▪COGS is mainly ‒USD denominated with 70.2% share; mainly related to fish feed raw materials ‒followed by TL with 23.0% share; including personnel, utilities, maintenance costs ‒and EUR with 6.2% share; mainly related to juvenile raw material ▪Fish feed consumption; the largest component of harvested fish COGS; improved as a result of improving FCR rates across species leading to better profitability levels ‒seabream : c.8% improvement in FCR between 2017 -2019 ‒seabass : remained flat in terms FCR between 2017 -2019 after significant improvements in the previous years ▪Juvenile costs, which have been stable at EUR 0.06 per unit, provide a significant cost advantage versus competitors who need to procured juveniles externally ▪Cage costs include labor, energy, utility and other production expenses incurred at seabream, seabass, meagre and trout cages ▪Packaging & processing costs include packaging and processing of harvested fish (seabream, seabass, meagre and trout)➢Harvested fish COGS breakdown for seabream , seabass , meagre and trout5.410.3 132.3 134.65.1 7.0 2017A10.02.0 2018A155.75.1154.6 10.3 2020B5.0 2019A171.4152.13.8 1.0 4.1176.2 180.3 Harvested fish Fish feed Juvenile Others 14.7 69.67.212.0155.7 12.7 71.312.516.217.8 2017A6.09.017.8 2018A105.613.9 9.220.46.6 0.0 2019A132.3 134.6 Juvenile Fish feed Tuna Cage Other trade sales Packaging & processing1➢Commentary 48 2017 2019EUR 20.4 mnEUR 26.7 mnDetails of Operating Expenses (“OPEX”) 2017 2019EUR 6.6 mnEUR 6.3 mn➢S&M breakdown (EUR mn) ➢G&A breakdown (EUR mn)▪Sales and marketing expenses (“ S&M ”) is the largest component of operating expenses; predominantly comprising of freight, personnel and insurance expenses −Freight costs are the largest component of operating expenses, the bulk arising from exported goods’ freight costs −personnel expenses include sales, marketing and retail operations staff −insurance expenses consists of accounts receivable insurance through trade credit insurance ("Coface ") −others include rent expenses; mainly comprising of warehouse and ship lease, utility, maintenance, outsourced, consultancy, travel, marketing and other expenses ▪General administrative expenses (“ G&A ”) mainly consist of personnel, consultancy and rent expenses −personnel expenses include HQ and admin staff −consultancy expenses consist of consultancy for R&D activities and audit fees −rent expenses under G&A are mainly related to car leases −others include travel, legal, outsourced, maintenance, communication, utility, tax, insurance, severance pay and other expenses ▪The Group ’s operating expenses maintained a stable pattern between 2017 - 2019; with an average ratio of c.12% of net sales➢OPEX (exc. D&A) (EUR mn) as % of net sales11.1 % 12.2 % 12.5 % 11.7 % 2018A23.6 2017A20.426.56.66.3 26.76.0 2019A6.6 2020B27.029.633.0 33.1+10.5% S&M G&A 8,2%20,2% 69.4%2.2% Freight expenses Personnel expenses Maintenance expenses Others82,6%10,9% 5.6% 0.9% 13,1%54.9%26.7% 5.3% Personnel expenses Rent expenses Consultancy expenses Others14,8%53.1%32.0% 0.0% Source: Group➢Commentary 49 (1) Includes sales of retailing operations, fish feed raw material, polystyrene box, imported sea food, canned products and o thers Source: GroupSales growth primarily driven by harvested fish sales ➢Net sales 2017-2019(EUR mn) Harvested fish: + EUR 24.6 mn ➢Net sales 2019-2020B (EUR mn) Harvested fish: + EUR 34.8 mn1CAGR 2017-2019 4.7% 2.3% Growth 2019-2020B 16.6 % -7.6%3.8% 7.6%Meagre4.00.0 Seabream2.18.724.7 Seabass0.5 -4.6 Tuna1.18.1 0.6 3.9 Trout0.3 6.7 7.0 Others0.08.2 Fish feed Other trade sales2017A Juvenile0.0 1.1 2019A16.0 9.4-1.08.1 263.4 13.4 244.4-7.0 -15.20.8 Seabream13.3-1.2 Tuna1.6 3.9 2019A6.10.3 Trout283.40.7 Meagre31.2 0.0 Other trade sales2.4 7.2 Juvenile 2020B6.3 Fish feed0.6 Others1.03.0 263.4 Seabass0.00.0 19.611.6-3.10.7 -3.9-3.0 -7.8 Turkey sales International sales 1 b. Business plan period 51 Robust growth prospects with enhancing profitability 68.7 71.7Harvested fish volume (k tons)75.7 32.0 % 30.9 %70.2 % 68.2 % 69.5%International share in sales➢Commentary ➢Net sales (EUR mn) ➢EBITDA ( inc.FV) (EUR mn) EBITDA margin1(%) (1) EBITDA margin is calculated as EBITDA over Net sales plus Fair value impact Source: Group73.7 65.9 70.8 % 70.7 % 26.3 % 32.2%▪Kılıç’s net sales is forecasted to increase at a CAGR of 3.0% between 2020B - 2026Fperiod −volume increase
Seabass0.5 -4.6 Tuna1.18.1 0.6 3.9 Trout0.3 6.7 7.0 Others0.08.2 Fish feed Other trade sales2017A Juvenile0.0 1.1 2019A16.0 9.4-1.08.1 263.4 13.4 244.4-7.0 -15.20.8 Seabream13.3-1.2 Tuna1.6 3.9 2019A6.10.3 Trout283.40.7 Meagre31.2 0.0 Other trade sales2.4 7.2 Juvenile 2020B6.3 Fish feed0.6 Others1.03.0 263.4 Seabass0.00.0 19.611.6-3.10.7 -3.9-3.0 -7.8 Turkey sales International sales 1 b. Business plan period 51 Robust growth prospects with enhancing profitability 68.7 71.7Harvested fish volume (k tons)75.7 32.0 % 30.9 %70.2 % 68.2 % 69.5%International share in sales➢Commentary ➢Net sales (EUR mn) ➢EBITDA ( inc.FV) (EUR mn) EBITDA margin1(%) (1) EBITDA margin is calculated as EBITDA over Net sales plus Fair value impact Source: Group73.7 65.9 70.8 % 70.7 % 26.3 % 32.2%▪Kılıç’s net sales is forecasted to increase at a CAGR of 3.0% between 2020B - 2026Fperiod −volume increase in harvested fish from 65.9k tons to 75.7 k tons at a CAGR of 2.3% between 2020B -2026F; −average overall unit sales price increase in harvested fish from EUR 4.0/kg to EUR 4.27/kg in the same period with a CAGR of 1.1%; mainly due to 5.2% price elevation expectation between 2019 and 2021 −limited juvenile sales due to subdued demand from domestic aquaculture companies after the aggressive growth period in the past years −limited fish feed sales to 3rd parties as Kılıç’s current capacity is only sufficient to cater for its internal consumption ▪Having an existing worldwide presence, Kılıç’s international sales forecasted to further increase throughout business plan period and reach a level of 69.5% in 2026F vs. 68.2% in 2020, predominantly driven by −escalating demand in international markets including Europe, Russia, Asia (Japan and China ), US and Americas ▪Solid top line growth enhanced with several initiatives favorably impacting profitability levels −operational improvements and efficiencies sustained through continuous R&D investments for key KPIs (FCR, mortality rate, feed ratio, etc.) −more efficient production conditions in Mersin facility (water temperature, oxygen level, etc.) −continuous disciplined approach for cost control −extraction of operational efficiencies derived from increasing scale ▪Kılıç expects to achieve EBITDA CAGR of 7.0% between 2020B -2026F with 202 6F EBITDA of EUR 114.4 mnand margin of 33.2 %33.2 %12.1324.0 2.03.0 2024F1.1325.6 2022F 2021F298.012.11.1 3.01.1 13.9 307.812.1 4.81.1 262.7 2023F309.412.1 284.13.0 3.0 3.0337.9 1.1 319.812.1336.0 283.4 2020B3.0 2025F321.712.1 300.3 1.1 2026F314.2+3.0% Harvested fish Juvenile Others Fish feed 2023F106.5 2024F 2020B 2021F 2022F 2025F 2026F76.294.5102.6108.2112.6 114.4+7.0%75.7 70.6 % 69.9 %73.7 32.9 % 32.6 % 52 Harvested fish Continue to be largest and core revenue and profitability source ➢Gross profit (exc. D&A) (EUR mn) ➢Net sales volume (k tons) ➢Net sales (EUR mn)A (1) Tuna volume projected to be 800 tons 2021 onwards in line with current ICCAT tuna quota Source: Group➢Commentary ▪Harvested fish net sales are estimated to grow at a CAGR of 3.4% between 2020B - 2026F, reaching to EUR 321.7 mnin 2026F vs. EUR 262.7 mnin 2020B ▪Kılıç expects to maintain its growth momentum in harvested fish volume with a CAGR of 2.3% for 2020B -2026F period, mainly underpinned by −growth in existing customers backed by long -lasting relations established over years −penetration into new markets with new customer acquisitions supported by its recent investments in Mersin and product diversification such as salmon trout ▪Seabream, seabass and trout are expected to be the key drivers of volume growth between 2020B -2026F at CAGRs of 2.3%, 1.4% and 6.7%, respectively whereas relatively moderate volume growth is expected for meagre and tuna1 ▪Through Dominic facility, Kılıç commence sales of Mediterranean species and other breeds’ in 2019 with an aim to reach from 400 tons by 2026F ▪2020 onwards, profitability improvement is expected to be mainly driven by a normalization in fish prices and operational improvements & efficiencies in harvested fish production (selective breeding driven low FCR, shortened growth periods in new facilities, etc.) and economies of scale40.7 % 34.8 %Gross margin (%)40.9 % 39.5 % 41.5 % 1.31.51.275.7 29.2 27.8 28.8 2020B32.06.8 30.2 30.20.2 31.028.227.21.58.00.8 1.50.2 2021F0.8 32.01.565.9 1.59.00.8 2022F10.00.871.7 2026F73.7 68.7 2024F0.2 0.2 10.0 2023F32.029.20.8 0.2 2025F33.010.00.80.2 33.01.510.073.775.7+2.3% Seabream Trout Meagre Seabass Other fish breeds Tuna 3.913.9309.4 2020B32.4 137.7 123.2126.80.9 4.78.1 24.9 2023F8.1 129.432.5 0.8 2022F 2021F132.04.84.729.18.1 118.932.48.1 0.8 124.0 124.74.832.5 106.8138.50.8 0.8 2024F144.24.9 119.218.9284.1 2025F130.2145.24.98.1 8.1 2026F307.8 262.7298.0319.8 321.7 0.9+3.4% Seabream Meagre Seabass Tuna Trout Other fish breeds91.4 2022F 2026F 2020B 2021F 2024F 2023F 2025F112.1121.3 126.0 127.2 132.1 133.6+6.5%41.3 % 41.1 % 53 Harvested fish sales in detail Turkey operations further enhanced with the additional capacity of Mersin facilityA Net sales volume (k tons) Net sales (EUR mn) Seab ream Seab ass40% 45%2.93 4.212.73 4.543.02 4.54 Source: GroupInternational unit sales price (EUR/kg ) Turkey unit sales price (EUR/kg) Share in 20 26Fharvested fish net sales2.84 4.542.77 4.54 32.0 12.531.0 11.2 17.5 2020B 2021F12.5 12.1 19.5 18.932.0 2022F19.5 2023F12.5 19.5 2026F 2024F12.9 20.1 2025F12.933.0 20.128.832.033.0+2.3% International Turkey36.1 2020B33.0 73.9 2024F32.934.6 85.8 88.6 2021F 2022F35.4 88.6 88.6 2023F38.0 91.4106.8 2025F38.8 91.4 2026F118.9123.2 124.0 124.7129.4 130.2+3.4% 29.2 17.2 2025F10.629.228.2 2022F 2021F 2020B10.9 16.9 17.8 16.611.0 2026F11.4 2023F11.4 11.8 17.8 2024F18.411.8 18.427.8 27.230.2 30.2+1.4%3.44 4.823.62 5.304.00 5.303.77 5.303.68 5.30 94.6 88.2137.7 38.6119.2 37.6 81.640.6 91.4 2020B 2021F 2022F43.1 2024F94.6 2023F43.946.3 97.847.4 2025F97.8 2026F138.5 126.8132.0144.2 145.2+3.3%2.89 4.542.95 4.54 3.84 5.303.92 5.30 54 Harvested fish sales in detail Turkey operations further enhanced with the additional capacity of Mersin facilityA Net sales volume (k tons) Net sales (EUR mn) Trout Bluefin tuna10% 3% International unit sales price (EUR/kg) Turkey unit sales price (EUR/kg) Share in 20 28Fharvested fish net sales2021F 2026F7.66.50.3 9.50.4 2022F 2020B9.0 0.4 8.60.5 9.5 2023F0.5 2024F9.50.5 9.5 2025F0.56.810.0 8.010.0 10.0 10.0+6.7% International Turkey32.5 2026F 2020B0.7 18.10.91.0 24.1 2021F28.2 2022F 2025F1.1 31.318.9 2023F1.1 31.3 31.332.4 2024F1.2 1.229.1 31.324.932.4 32.5+9.5% 2021F1.2 0.8 2020B0.8 0.8 0.8 2023F 2022F0.8 2024F 2025F0.8 0.8 2026F1.2 0.8 0.8 0.8 0.8 0.8 2023F8.1 8.1 13.9 8.1 2022F8.1 2020B8.1 8.1 2021F8.1 2024F8.1 2025F8.1 2026F13.9 8.1 8.1 8.10.4 0.41.1 1.1 0.9 2020B 2021F1.1 0.4 2022F0.41.1 0.4 2023F1.11.5 0.4 2024F1.1 0.4 2025F 2026F1.31.5 1.5 1.5 1.5 1.5+2.0% 2.22.42.1 1.9 2.2 2020B4.7 2.5 2.7 2.6 2021F 2022F2.5 2.2 2.2 2023F2.2 2024F2.6 2025F2.2 2026F3.94.7 4.8 4.8 4.9 4.9+3.8%2.21 4.782.30 5.032.55 5.032.40 5.032.34 5.03 Meagre2%2.81 3.28 3.28 3.15 3.28 11.8 10.1 10.1 10.1 10.1 Source: Group3.28 3.28 2.49 5.032.44 5.03 10.1 10.1 55 ➢Gross profit (exc. D&A) (EUR mn) ➢Net sales volume (
0.4 8.60.5 9.5 2023F0.5 2024F9.50.5 9.5 2025F0.56.810.0 8.010.0 10.0 10.0+6.7% International Turkey32.5 2026F 2020B0.7 18.10.91.0 24.1 2021F28.2 2022F 2025F1.1 31.318.9 2023F1.1 31.3 31.332.4 2024F1.2 1.229.1 31.324.932.4 32.5+9.5% 2021F1.2 0.8 2020B0.8 0.8 0.8 2023F 2022F0.8 2024F 2025F0.8 0.8 2026F1.2 0.8 0.8 0.8 0.8 0.8 2023F8.1 8.1 13.9 8.1 2022F8.1 2020B8.1 8.1 2021F8.1 2024F8.1 2025F8.1 2026F13.9 8.1 8.1 8.10.4 0.41.1 1.1 0.9 2020B 2021F1.1 0.4 2022F0.41.1 0.4 2023F1.11.5 0.4 2024F1.1 0.4 2025F 2026F1.31.5 1.5 1.5 1.5 1.5+2.0% 2.22.42.1 1.9 2.2 2020B4.7 2.5 2.7 2.6 2021F 2022F2.5 2.2 2.2 2023F2.2 2024F2.6 2025F2.2 2026F3.94.7 4.8 4.8 4.9 4.9+3.8%2.21 4.782.30 5.032.55 5.032.40 5.032.34 5.03 Meagre2%2.81 3.28 3.28 3.15 3.28 11.8 10.1 10.1 10.1 10.1 Source: Group3.28 3.28 2.49 5.032.44 5.03 10.1 10.1 55 ➢Gross profit (exc. D&A) (EUR mn) ➢Net sales volume ( mnpieces) 0.2 0.20.2 0.20.2 0.20.2 0.2 International unit sales price (EUR/piece ) Turkey unit sales price (EUR/piece ) Source: Group73.5 % 73.5 % 73.5 %Juveniles Continued strategic sales to 3rdparties , only from MuğlaB ➢Commentary 0.2 0.20.2 0.2 Gross margin (%)73.5 % ▪Juvenile sales to 3rdparties are estimated to decrease at a CAGR of 2.3% between 2020 -2026F, reaching EUR 12.1 mnin 2026F vs. EUR 13.9 mnin 2020B ▪Strategical volume decrease mainly stemming from −decreasing juvenile demand by aquaculture companies in the wake of the drop in fish prices due to excess supply in the recent years ▪Juvenile unit sales price denominated in EUR terms both in Turkey and international markets, where Kılıç expects unit sales prices to be constant throughout the business plan period in Euro terms at 2020B level ▪Being a key profitability enhancer for Kılıç, juvenile gross profitability iswas at 72.5% in 2020B and is expected to be 73.5% from 2021 onwards. Juvenile capacity will not be fully utilized as per the sales volume projections, which creates an upside potential if the sector goes through another aggressive growth phase 64.6 61.2 13.2 2020B15.751.4 51.4 2021F13.2 2022F51.4 13.2 2023F51.4 13.2 2024F51.4 13.2 2025F51.464.6 13.2 2026F76.9 64.6 64.6 64.6 64.6 International Turkey 9.6 2.511.0 9.6 9.6 2.5 2.8 2020B2.5 2021F 2022F2.5 2.5 2023F9.6 2.5 2024F9.6 2025F9.6 2026F13.9 12.1 12.1 12.1 12.1 12.1 12.1 Turkey International2020B10.1 2026F 2021F 2022F 2023F 2024F 2025F8.9 8.9 8.9 8.9 8.9 8.90.2 0.272.5 % 73.5 % 73.5 % ➢Net sales (EUR mn) 56 Fish feed 3rdparty fish feed sales , only from Muğla, with c.160k tons capacity in placeC ➢Gross profit (exc. D&A) (EUR mn) ➢Net sales volume (k tons) Source: Group➢Net sales (EUR mn)1.0 1.01.0 1.0 International unit sales price (EUR/kg ) Turkey unit sales price (EUR/kg)22.4 % 22.4 % 22.4 % 0.9 0.91.0 1.0 Gross margin (%)22.4 % 13.8 % ➢Commentary ▪Fish feed sales to 3rdparties are estimated to decrease at a CAGR of 7.5% between 2020B -2026F, reaching EUR 3.0mnin 2026F vs. EUR 4.8 mnin 2020B ▪Volume expected to strategically decrease mainly during business plan period stemming from −feed production is expected to serve mainly internal consumption −c.3k tons is expected to be needed mainly by Kılıç’s sister companies, who purchase feed at an arm’s length basis ▪Fish feed unit sales price denominated in USD terms both in Turkey and international markets, where Kılıç expects unit sales prices to remain constant throughout the business plan period in USD terms at 2019 level ▪Kılıç expects to sustain its fish feed gross profitability at 13.8% in 2020B and 22.4% from 2021 onwards1.0 1.0 2.4 0.64.2 2021F1.0 2023F0.62.4 0.63.0 2020B0.62.4 2022F2.4 0.6 2024F2.4 2025F2.4 0.6 2026F5.2 3.0 3.0 3.0 3.0 3.0 International Turkey 2.43.8 2021F 2026F1.00.6 2020B2.4 0.62.4 2022F2.4 0.6 2023F0.6 2024F2.4 0.6 2025F2.4 0.64.8 3.0 3.0 3.0 3.0 3.0 3.0 International Turkey2026F 2025F 2020B 2021F 2022F 2023F 2024F0.7 0.7 0.7 0.7 0.7 0.7 0.7+0.2%22.4 % 22.4 % 1.0 1.01.0 1.0 57 Cost improvement sustained through new facilities as well as positive impact of selective breeding ➢COGS by segment (exc. D&A) (EUR mn) ➢Harvested fish COGS breakdown1 (1) Please refer Appendices section for COGS figures not shown on this graph (2) The Group records COGS of tuna and other trade sales as single line cost item Source: Group➢Harvested fish COGS breakdown Harvested fish volume (k tons)65.9 68.7 71.7 73.7 75.7 for seabream , seabass , meagre and trout2020B1.1 171.4188.14.1 2023F2.31.0 171.93.2180.33.2 176.72.3 2025F2.31.1 1.1 2021F 2022F194.7 2.3 182.21.1 181.81.1 2024F187.63.23.23.2 2.3 2.3194.2 1.1 3.83.2 2026F178.5183.3188.4 188.8+1.3% Harvested fish Juvenile Others Fish feed 181.8 7.7 17.1 11.4 2020B118.710.018.3 10.417.4176.7 23.220.2 10.8 2021F121.417.820.121.6 11.05.0 2022F124.618.3 18.822.9 116.45.0 2025F 2023F124.6171.4 5.0 5.0171.9 2024F128.218.824.2 11.05.1182.2 5.024.7 128.2 2026F187.6 188.1 11.4+1.6% Feed Juvenile Cage Packaging & Processing Tuna▪Kılıç estimates COGS by segment for 2020B -2026F period, in line with its historic management accounts ‒harvested fish COGS includes fish feed, juvenile, cage, packaging & processing, tuna and other trade sales costs ‒juvenile and fish feed costs include costs of sales to 3rdparties ‒others include costs of retail operations and others ▪Fish feed costs are forecasted to remain as the largest component whilst with a decreasing trend forfishfeed usage mainly due to lower FCR resulting from ; total fishfeed costs over harvested fish sales improves from c. 44% in 2020B to c.39% in 2026F ▪Feed costs are expected to rise on an average of 2% p.a. ▪FCR for all species are expected to remain similar to 2019 performance, with the exception of seabass where the management believes there is some room for improvement ▪Cage costs are estimated as a ratio of feed and juvenile costs combined ▪Mortality rates are expected to decline gradually thanks to R&D efforts ▪Unit packaging and processing costs, which are in TL terms, are expected to rise in line with TL inflation ▪Kılıç expects 2020 year -to-date margins to be stable in the business plan period for bluefin tuna➢Commentary 73.7 75.7 58 Details of operating expenses ➢Total OPEX (exc. D&A) (EUR mn) 11.7 % 11.3 % 11.2 % 11.1 % 10.7 % OPEX as % of total net sales ▪For Turkey operations ,OPEX share in net sales is forecasted to be gradually decrease from 11.7% of sales over years and reach toc.10.7% of sales in 2026F mainly due to ‒economies of scale sustained through new investment in Mersin where operational synergies would be reaped, such as from perso nnel expenses and other back office
to decline gradually thanks to R&D efforts ▪Unit packaging and processing costs, which are in TL terms, are expected to rise in line with TL inflation ▪Kılıç expects 2020 year -to-date margins to be stable in the business plan period for bluefin tuna➢Commentary 73.7 75.7 58 Details of operating expenses ➢Total OPEX (exc. D&A) (EUR mn) 11.7 % 11.3 % 11.2 % 11.1 % 10.7 % OPEX as % of total net sales ▪For Turkey operations ,OPEX share in net sales is forecasted to be gradually decrease from 11.7% of sales over years and reach toc.10.7% of sales in 2026F mainly due to ‒economies of scale sustained through new investment in Mersin where operational synergies would be reaped, such as from perso nnel expenses and other back office functions ‒partially TL denominated nature of the operating expenses decreasing as a proportion due to mainly FX denominated nature of r evenues ▪The fixed component of operating expenses from Kılıç’s Dominic activities is expected to remain below EUR 0.7 mn, while variable costs are forecasted to increase in line with the increasing production and sales volumes which are reflected in the above chart Source: Group2021F6.6 29.426.5 2020B27.46.56.5 28.6 2022F6.7 2023F29.16.635.2 2024F29.76.736.4 2025F29.56.6 2026F33.1 33.836.1 35.7 36.2+1.5% S&M G&A11.0 % 10.8 % 59 Harvested fish: + EUR 45.0 mn (1) Includes sales of retailing operations and others Source: GroupHarvested fish sales expected to be the key driver of sales growth ➢Net sales 2020B-2023F ( EUR mn) ➢Net sales 2023F -2026F (EUR mn) 1Harvested fish: + EUR 13.9 mnCAGR 2020B-2023F 5.8% 1.9%4.6% 0.9% 2.7%1.4%CAGR 2023F-2026F0.55.8 0.40.4 13.1 Trout Tuna-5.8 13.0 Other breed1.413.5 Others0.4 Juvenile1.40.90.4 -0.9 Fish feed 2023F Meagre 2020B283.418.5 2.5 14.7 Seabream-1.80.8 17.20.8324.00.8 5.5 Seabass-1.8 Seabream4.30.1 Meagre Other breed0.1 Juvenile0.1 0.0 Fish feed0.2 Others 2026F0.0 0.07.5 Trout0.2 Seabass0.1 3.2 324.00.0 Tuna0.0 337.9 2.8 2023F3.46.2 Turkey sales International sales 1 60 Sector specific high working capital level estimated to improve going forward on the back of newly established facilities NWC as % of net sales➢Net working capital (EUR mn) 71.5 % 76.5 % 73.4 % 73.5 % 69.4% 67.7 % 67.5 % 67.2 % -30.6 2022F52.0 13.3 -42.2139.8193.2 13.569.6 2017A186.351.0 157.458.8 -39.5 -36.7 2018A208.4 2025F54.7 166.8212.8 2023F11.3 2019A177.8 12.2 -40.3 2020B180.3 12.862.1 173.3 -43.6 -40.0 2021F185.065.0 175.4185.9 13.4 -41.0208.3 67.1 13.9 2024F67.4 13.9 -42.314.4 -43.5226.3 180.770.0 14.5174.7219.1 219.8227.2 2026F Trade receivables Inventory Other current asset / liabilities (net) Trade payables Source: Group▪Net working capital as a % of sales is typically high in aquaculture business, standing at 73.4% as of 2019YE ‒inventory days is expected to lengthen in 2020 due to Covid -19 pandemic, and gradually decline towards 350 days for Turkey opera tions and 290 days for Dominican operations over year ‒trade receivable days have been consistent at around 76 days in the past 3 years and expected to remain flat ‒trade payable days are expected to remain unchanged compared to 2019YE and stay at 82 day levels ▪Inventory is presented without fair value impact67.6% 67.4 % 61 Planned capital expenditures mainly for newly established facilities ➢CAPEX (EUR mn) Source: Group0.5 1.25.4 0.40.40.52.9 0.31.1 1.70.20.5 2019A0.4 2017A0.10.4 5.5 0.20.6 0.28.6 0.7 0.4 2018A0.1 1.5 2022F1.80.40.2 3.12.70.30.40.61.0 0.2 2020B0.30.10.1 0.1 2021F1.20.27.0 0.10.5 0.10.3 2023F1.30.30.1 0.5 2024F6.40.30.40.5 2025F1.70.20.30.7 0.20.41.1 2026F11.5 9.28.7 5.7 4.1 2.74.2 2.83.4 0.5 Cages Others Trout Hatchery Fish feed Packaging and processing ▪Kılıç has made a total of close to EUR 30 mncapital expenditures in the past 3 years in line with its efforts to grow its production capacity. The Group’s integrated asset base is now well -invested and does not imminently require big ticket capex items ▪The only big ticket item is the planned feed factory in Mersin, for which the projected investment will be EUR 5.3 mn ▪Cages have a useful life of 5 years and the Group replaces a portion of its cages even if there is no capacity expansion 62 Net debt position of the Group 2.2%7.8% 90.0% Euro denominated (EUR) TL denominated (EUR) USD denominated (EUR)EUR 217.8 mn41.8% 58.2% Long term portion Short term portionEUR 91.1 mn 90.3%1.7%8.0% Euro denominated (EUR) TL denominated (EUR) USD denominated (EUR) ▪The majority of the loans of the Group are provided by Isbank , one of the leading local banks in Turkey ▪The Group utilized a EUR 50 mnterm loan from FMO (the Dutch Development Bank) in 2019 ▪USD denominated liabilities are related to factoring payables only ‒the Group utilizes factoring when purchasing feed raw material; and the payables, which are classified as trade payables in t he IFRS accounts, are reclassified as financial liabilities➢Currency breakdown ➢Maturity breakdown EUR 217.8 mn➢LT loans currency breakdown 63 EBITDA statement Management accounts (EUR mn) 2017A 2018A 2019A 2020B 2021F 2022F 2023F 2024F 20205F 2026F Net sales 244.7 242.1 263.8 284.0 300.8 314.7 324.6 326.2 336.6 338.5 Harvested fish 203.3 200.9 228.0 262.7 284.1 298.0 307.8 309.4 319.8 321.7 Juvenile 21.5 19.0 16.9 13.9 12.1 12.1 12.1 12.1 12.1 12.1 Fish feed 13.6 13.3 12.6 4.8 3.0 3.0 3.0 3.0 3.0 3.0 Others1 5.9 8.7 5.9 2.0 1.1 1.1 1.1 1.1 1.1 1.1 Incentives 0.3 0.3 0.4 0.6 0.6 0.6 0.6 0.6 0.6 0.6 COGS (exc. D&A) 154.6 152.1 176.2 180.3 178.5 183.3 188.4 188.8 194.2 194.7 Harvested fish 132.3 134.6 155.7 171.4 171.9 176.7 181.8 182.2 187.6 188.1 Juvenile 7.0 5.4 5.1 3.8 3.2 3.2 3.2 3.2 3.2 3.2 Fish feed 10.3 10.0 10.3 4.1 2.3 2.3 2.3 2.3 2.3 2.3 Others 5.1 2.0 5.0 1.0 1.1 1.1 1.1 1.1 1.1 1.1 Gross Profit (exc. D&A) 90.1 90.1 87.6 103.6 122.3 131.5 136.1 137.4 142.3 143.8 GP margin 36.8% 37.2% 33.2% 36.5% 40.7% 41.8% 41.9% 42.1% 42.3% 42.5% OPEX (exc. D&A) 27.0 29.6 33.0 33.1 33.8 35.2 36.1 35.7 36.4 36.2 S&M 20.4 23.6 26.7 26.5 27.4 28.6 29.4 29.1 29.7 29.5 G&A 6.6 6.0 6.3 6.6 6.5 6.5 6.7 6.6 6.7 6.6 Other Income (Expense) net 0.4 -5.8 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fair value, net 13.9 24.3 12.4 5.7 6.0 6.3 6.5 6.5 6.7 6.8 EBITDA 77.3 79.0 67.9 76.2 94.5 102.6 106.5 108.2 112.6 114.4 EBITDA margin2 29.9% 29.7% 24.6% 26.3% 30.9% 32.0% 32.2% 32.6% 32.9% 33.2% EBIT3 73.2 74.8 62.5 70.3
2.3 Others 5.1 2.0 5.0 1.0 1.1 1.1 1.1 1.1 1.1 1.1 Gross Profit (exc. D&A) 90.1 90.1 87.6 103.6 122.3 131.5 136.1 137.4 142.3 143.8 GP margin 36.8% 37.2% 33.2% 36.5% 40.7% 41.8% 41.9% 42.1% 42.3% 42.5% OPEX (exc. D&A) 27.0 29.6 33.0 33.1 33.8 35.2 36.1 35.7 36.4 36.2 S&M 20.4 23.6 26.7 26.5 27.4 28.6 29.4 29.1 29.7 29.5 G&A 6.6 6.0 6.3 6.6 6.5 6.5 6.7 6.6 6.7 6.6 Other Income (Expense) net 0.4 -5.8 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Fair value, net 13.9 24.3 12.4 5.7 6.0 6.3 6.5 6.5 6.7 6.8 EBITDA 77.3 79.0 67.9 76.2 94.5 102.6 106.5 108.2 112.6 114.4 EBITDA margin2 29.9% 29.7% 24.6% 26.3% 30.9% 32.0% 32.2% 32.6% 32.9% 33.2% EBIT3 73.2 74.8 62.5 70.3 87.9 95.8 99.0 100.2 104.4 106.3 (1) Others include retail operations, fish feed raw material, polystyrene boxes, imported sea food, canned products and other s (2) EBITDA margin is calculated as EBITDA over Net sales plus Fair value impact Source: Group V. Appendices 65 Overview of Kılıç Deniz Aquaculture Group structure and companies Transaction scope includes companies highlighted in blue which are fully owned and controlled by Orhan Kılıç and other family members (either directly or indirectly) (1)9.5% of Seaworld owned by a trustee as per Cyprus regulations where 100% is owned and controlled by Shareholders (2) Gündoğdu , a related party company whose financials and operational capacities are not reflected in this IM Source: Group (3) Mavi Deniz, Mavi Balık , Mavi Buz, Bafa and Erşen have been merged to Kılıç Deniz Ürünleri Üretimi İhracat İthalat ve Tic. A.Ş. in 2020 to simplify the organizational structure.Other Hatchery, farming, processing and packaging companiesFish feed production companies Sales and marketing companies Mavi Deniz Yem3 Mavi Balık Yem3Kılıç Deniz Albania Dominican Republic Bafa3KLC Erşen3 Spador Tunisia Seaworld1 Gündoğ du2 Kılıç Holding Atlantic Kılıç Süt EragonKılıç Tarım Mavi Buz3Oregon Kılıç TuristicKılıç Family Kılıç Aquaculture Group 66 Brief overview of aquaculture sector regulations Turkey ▪Turkish aquaculture sector is regulated under the Ministry through its sub -body, Fishing and Aqua Products General Directorate; mainly responsible for ‒designating fish farming zones ‒evaluating aquaculture license applications ‒continuous monitoring farming activities ▪Ministry of Health, Ministry of Forestry and Water Management, Ministry of Culture and Tourism, Ministry of Environment and C ity Planning and local governmental bodies also responsible for other regulations and approvals in the areas of health, environme nt, transportation and tourism ▪Currently, discussions ongoing between Central Union of Aquaculture Producers of Turkey and governmental bodies to improve conditions in aquaculture farming, including ‒decrease VAT on fishes to 1% in retail markets to increase seafood consumption in Turkey ‒amendments to aquaculture legislation in line with EU regulations ‒usage of fuel without special consumption tax Albania ▪The Ministry of Agriculture, Rural Development and Water Administration is responsible for the fishery and aquaculture sector through the Directory of Agriculture Production Trade Policies Directorate ▪Government restructured Fishery and Aquaculture Authority to be in line with EU directives & standards in 2015 Dominican Republic ▪Main fisheries management agency is the Directorate of Fisheries Resources, part of the Ministry of Environment and Natural Resources, responsible for ‒licensing and registration of fishers, data collection and fisheries monitoring, aquaculture development, post -harvest technology, quality assurance, etc.Required conditions to establish marine fish farm in Turkey Cages have to be at least 1.1 km off the shores Sea depth has to be at least 30 m Speed of currents should be at least 0.1 m / sec Source: Group, OECD -FAO Agricultural Outlook, Central Union of Aquaculture Producers, market research 67 30-35 days 30-35 days 35-45 dayspre-adaptation adaptationFish eggs LarvaeHatchery process Genetically fittest brood fishes selected and 3 periods of staggered hatching/breeding are carried to produce fish eggs in ha tcheries 3-4 months Water temperature, salinity, light, ventilation and nutrition conditions are critical control variables for efficient juvenil e production Fry fishes Juveniles < c.0.2 grc.0.2 -2.0 grc.2.5 -5.0 gr ▪Fish egg tanks are continuously sterilized and monitored to protect fish eggs ▪Once fish eggs are hatched, produced larvae are transferred to larval units▪Juveniles transferred to adaptation units fed only with powder feed ▪Juveniles; reaching to 2.5 -5 gr are either transferred to fish farms or sold to third parties ▪Total time elapsed in hatchery and adaptation units to produce juveniles is around 3 -4 months▪Larvae are first fed with algae, rotifers and small -sized artemias and then with enriched artemias several times in a day ▪Larvae transferred to adaptation units after they reach c.0.2 -2 gr (called fry fish) where conditions are kept at natural levels to adapt them to sea conditionsSurvival rate of c.30% for seabream and c.40% for seabass; notable performance compared to global peers Source: Group 68 Fish farming process Once juveniles reach a size of 2.5 -5 gr they are transferred to cages (off -shore or on -shore )depending on fish type Time spent in fish farms and market -size fish weights (based on Muğla average figures) Seabass 16-18 months 400-600 gr Seabream 12-14 months 300-400 gr Meagre 16-20months 1,000 -1,200 gr Trout 10-12 months 280-400 gr 2.5-3 monthsJuveniles Immature fish Market -size fish c.30-50 grc.2.5 -5.0 grCages 20mCages 30-50m c.300 - 1,200 gr ▪Juveniles of 2.5 -5 gr are transferred from the adaptation units to 20 meter cages ▪Fishes in the cages are fed by automated barges ▪Mortality rate in these cages is around c.10% and majority of the fish mortality takes places in the juvenile cages ▪When juveniles reach 30 to 50 gr, they are transferred to 30 -50 meter cages ▪Seabasses are vaccinated prior to being transferred to larger cages▪Immature fishes are taken to 30 -50 meter cages ▪Growth period in cages varies depending on the species & location of the cages ▪Fishes in the cages are fed by automated barges, tracking −the amount of feed used −the time of the feeding by cage to optimize the feeding process ▪When fishes reach to desired market -size, they are harvested by Kılıç -owned vessels ▪Harvested fishes are then transferred to processing and packaging facilities7-15 months 10-18 months Source: Group
the fish mortality takes places in the juvenile cages ▪When juveniles reach 30 to 50 gr, they are transferred to 30 -50 meter cages ▪Seabasses are vaccinated prior to being transferred to larger cages▪Immature fishes are taken to 30 -50 meter cages ▪Growth period in cages varies depending on the species & location of the cages ▪Fishes in the cages are fed by automated barges, tracking −the amount of feed used −the time of the feeding by cage to optimize the feeding process ▪When fishes reach to desired market -size, they are harvested by Kılıç -owned vessels ▪Harvested fishes are then transferred to processing and packaging facilities7-15 months 10-18 months Source: Group
Project Artemis Confidential Information Memorandum June2023 Strictly private and confidential 1 Table of contents Page Section 2 Executive summary I 9 Key investment highlights II 33 Business overview III 49 Financial overview IV 59 Appendix V I. Executive summary 3 (1) Based on Nielsen April YTD 2023 scantrackreport including supermarkets, hard discounters and traditional channels (2) Ready-to-eat (3) Converted by average USD rates for presentation purposes Source: Company, NielsenExecutive summary Unique opportunity to invest in a leading food company with an iconic brand Company overview Proven brand recognition & strong awareness →With 55+ years of know-how, Tat GıdaSanayi A.Ş. (” Tat Gıda” or the ”Company”) is one of the long-established and pioneering companies in the Turkish food sector with its well-known iconicbrand in Türkiye and global expansion −Tat Gıdais owned by KoçHolding and related entities (53%), Kagome of Japan (3.7%), Sumitomo of Japan (1.5%), and rest is publicly traded on Borsaİstanbul →Diverse portfolio of high-quality branded products across five main categories: tomato and pepper pastes, condiments (ketchup, mayonnaise, and other sauces), ready-to-eat meals and vegetables, pickles, and tomato products −BrandedproductsalesinTurkeyaccountfor c.86.0%ofNetsalesin2023B →Tat Gıdamaintains a clear market leadership across its categories in Türkiye, with its brand ranking #1 in six product categories −Premium pricing strategy secured by brand equity and quality →Tat Gıdaexports its branded products to 40 countries and has strong industrialand private label partnerships with leading European retailers, ensuring hard currency income generation −Main export markets include Japan, EU countries, and Middle East −Exports account for one-third of Net sales in 2023B, with further growth potential →Solid financial performance with top-line CAGR of c.20% between 2019 and 2022 in USD3, along with sustained profitability →Strong emphasis on operational excellence and sustainability from seed to fork, the Company maintains strong ties and long-lasting relations with farmers and all business partners to enable seamless process management →With three production facilities located in western part of Türkiye, Tat Gıdais Türkiye’s leading tomato processor. In 2022, the Company processed 543,000 tonnes of tomatoes, accounting for 23% of total tomato processing in the country −Türkiye’s share of industrially processed tomatoes worldwide stands at 6%, ranking fourth after US, China, and Italy Market-leading food brand in Türkiye Total 737k m2open(includingagriculturalland) and 85k m2closed area Total annual production capacity of c.199k tonnes, with tomato processing capacity of c.11k tonnes/day 3 state-of-the- art production facilities in the western part of Türkiye Strategic locations in close proximity to raw materials 1Mustafakemalpasa 2Karacabey 3TorbaliLeader with the highest market shares across all categories, with a significant lead over its closest rivals1 1 41%Tomato products21%Tomato paste26%Pepper paste 18% Ketchup 20% Pickles 25%RTE2 meals Market share1 4 (1) ExcludingHolding chargeandIFRS-16 application. Holding chargesandRentexpenseshavebeendeductedtocalculateaboveEBITDA Source: CompanyExecutive summary Key figures Proven top-line growth across markets and categories, driven by enhanced brand recognition and quality <TL financials CAGR EBITDA margin (%) Net sales(mn) EBITDA(mn)1 % of Exportsalesin Net sales16.4% 19.4% 14.4% 19.7% 20.3% 20.5% 21.5% 22.0% 35.4% 36.8% 34.7% 36.2% 36.7% 37.6% 39.0% 40.6%1.0922.7874.9907.2169.87512.616 1574589671.4232.0032.5843.3504.164 2021 2022 2023B 2024F 2025F 2026F 2027F 2028F15,59218,962 +114%+31% 5 (1) Other sales,other product sales (fruit jam, fruit puree and other products), andIFRS adjustmentsconstitute 3.8% of total sales which have not been presented on this page separately (2) Based on Nielsen April YTD 2023 scantrackreport including supermarkets, hard discounters and traditional channels (3) Based on Nielsen April YTD 2023 scantrackreport including only supermarkets (4) Based on Nielsen March YTD 2023 scantrackreport including only supermarkets (5) As % of 2023B Net sales Source: Company Executive summary Wide range of product offerings under fivemain categories →Market leader with c.22% market share in Türkiye2→Market leader with c.41% market share in Türkiye2→Market leader in condimentssegment with c.17% market share in Türkiye2→Market leader in ready meals segment with c.25% market share in Türkiye3→Market leader with c.20% market share in Türkiye4 Overview Brand breakdownfor Domestic5 Domestic / Export5 Product portfolio Net sales (TL mn)49%51% 48157364 2021 2022 2023B 2028F1,522+176%+33% 129264548 2021 2022 2023B 2028F2,151+106%+31% 193429919 2021 2022 2023B 2028F4,097+118%+35% 86216361 2021 2022 2023B 2028F1,927+104%+40% 6081.6072.610 2021 2022 2023B 2028F8,771+107%+27%Industrial 2%Branded 85% PL 13%Branded 55%100% Industrial 55%11%Branded 55%81% PL 55%8%Branded 55%86% PL 55%14%Branded 55%71% PL 55%29%Tomato & Pepper paste52.3%Tomato products7.3%Condiments 18.4%Ready-to-eat meals& vegetables11.0% Pickles 7.2% % of 2023B Net sales1Export Domestic 44%56% 93%7% 84%16% 63%37% 6 (1) Analyzedfromchannel-basedsalesdata of Düzey Pazarlama (2) Basedon Düzey Pazarlama’spointof salesdata Source: Company Executive summary Well-established sales network with strong nationwide coverage in Türkiye Nationwide coverage in Türkiye achievedthroughsales and distribution carriedout by Tat Gıda’ssister company,Düzey Pazarlama,based on arm’s length contractualrelation National chains 58.6% Localchains 12.1% Traditional stores 17.4% HoReCa 11.8% →Long-standing relationships with prominent national chains and discounters →Growing sales from online retailers with a CAGRof 128% from2020 to2022→Presence at local chains throughout the country, ensuring wide coverage and market access→One of the key advantages of nationwide coverage is accessto traditional shops (mom-and-pop shops) throughout Türkiye →Enables the Company to support local businesses and communities →Working with trusted partners for out-of-home channels Supermarkets(22.7%) Online retailers(6.3%)Hard discounters(29.6%) c.31k 2020 2021 202243.4% 40.0%58.6% 2020 2021 202215.0% 16.6%12.1% 2020 2021 202232.8% 30.1% 17.4% 2020 2021 20228.9%13.9%11.8%c.6.5k c.90k c.30kSelectedexamples Traditionalstores % of Domestic Net sales Point of sales2 Key clients Overview % of 2022 DomesticNet sales1→Hotels →Restaurants →Cateringfirms Through its distributor in 7regions 7 (1) Calculatedbasedon TL financialfigures (2) Each6 monthsin anygivenyearconvertedby 6 monthsaverage USD rates for presentation purposes (3) Middle Asia Source: CompanyExport share in Net saleshas surgedover theyears, reflectinga growing global presence… % of Exportsalesin Net sales1Net sales(Export)(mnUSD)2 … currently operating in c.40 countries with plans for further expansion41,158,879,3 84,996,8110,1127,0147,9 2021 2022 2023B 2024F 2025F 2026F 2027F 2028F+39%+13%35.4% 36.8% 36.2% 36.7% 37.6% 39.0% 34.7%Promising vision and targets for export markets in the short and medium term with new country expansions Main export itemsare tomato paste, pickles,and tomato products 73%11%7%5% 4% Tat Gıda’sexport sales are primarily driven by industrial products with c.56% share in 2023B export sales, followed by branded and private label sales of c.25% and c.19%,respectively Tat Gıdacontinues its overseas marketing investments to increase its branded sales2 41 3 2North America(c.3%)Europe (c.40%) Asia–Pacific (c.28%) MiddleEast & MA3 (c.28%)40.6% Significant increase in the sales of branded products driving an improvement in the shares of categories other than tomato pasteExportsalesbreakdown(2022)Exportsales breakdown(2023B) Tomato & pepper pastes Tomato products Pickles
currently operating in c.40 countries with plans for further expansion41,158,879,3 84,996,8110,1127,0147,9 2021 2022 2023B 2024F 2025F 2026F 2027F 2028F+39%+13%35.4% 36.8% 36.2% 36.7% 37.6% 39.0% 34.7%Promising vision and targets for export markets in the short and medium term with new country expansions Main export itemsare tomato paste, pickles,and tomato products 73%11%7%5% 4% Tat Gıda’sexport sales are primarily driven by industrial products with c.56% share in 2023B export sales, followed by branded and private label sales of c.25% and c.19%,respectively Tat Gıdacontinues its overseas marketing investments to increase its branded sales2 41 3 2North America(c.3%)Europe (c.40%) Asia–Pacific (c.28%) MiddleEast & MA3 (c.28%)40.6% Significant increase in the sales of branded products driving an improvement in the shares of categories other than tomato pasteExportsalesbreakdown(2022)Exportsales breakdown(2023B) Tomato & pepper pastes Tomato products Pickles Ready-to-eat meals & vegetables CondimentsExecutive summary Growing export base 8 Source: CompanyExecutive summary Transaction overview Transaction scope Envisagedtransaction timeline Phase I Phase II NDA IM distributionLimited Q&ANon- binding offersBinding bidsSigning Initiation of due diligence→Project Artemis refers to the contemplated sale of 53% stake in Tat Gıda(the “ Proposed Transaction ”) →After strategic deliberations, Koç Holding decided to divest Tat Gıdaas part of its portfolio optimisation initiative →Tat Gıdarepresents a unique opportunity for potential investors with its market-leading position, pioneeringbrand image, premium product quality, andthepotentialforfurther export growth →Tat Gıda’sstrongand proven brand is well-positioned to serveas a solid umbrella brand for a wider portfolioof F&B products in Türkiye and the region →Koç Holding has appointed ÜNLÜ & Co as the exclusive financial advisor forthe Proposed Transaction Shareholding structure Koç Holding & related entitiesKagome SumitomoPublicly traded 53%4% 2% 41% Tat Gıda Shareholding Transaction perimeterPhase I details Phase II details →Due diligence period for a limited number of selected potential investors →Selected potential investors will be granted access to a virtual dataroomalongwithQ&A process →Management presentations and site visits →Exact timetable for Phase II to be circulated in a separate process letter for short-listed potential investors→Distribution of the IM →Limited Q&A process for key questions and clarification requests →CollectingNBO’s(non-binding offers) and short-listingpotential investorsforthenextphaseJuly21th II. Key investment highlights 10 Strategic positioning of TatGıda Key investment highlights Market leading food producer with an iconic brand in Türkiye 1Strategic industry with increasing focus on sustainable food production 2Türkiye is the 2ndlargest country in Europe in terms of agricultural economy and the 4thlargest industrial tomato producer globally 3Tat Gıdais a clear market leader in Türkiye in its categories 4Reputable and high-quality brand image with proven brand equity, solidifiedwith highcustomer awareness scores 5Broad product portfolio catering to the main needs of the Mediterranean cuisine and is enriched with trendy new categories 6Strong nationwide coverage withgrowing export base 7Large and well-located production facilities backed by strategic procurement management 8Competent professional management delivering solid financials with strong growth vision Source: Company9Multiple untapped value creationopportunity beyond the business plan 11 Source: Company, UN, World Bank, World Food Program, FAOAs ensuring food security becomes a critical focus for the global food market, the World Bank is striving to enhance food and nutrition security, mitigate risks, and strengthen food systems by allocating up to USD 30 bn for existing and new projects in areas such as agriculture, nutrition, social protection, and more 1 32 4 5→The world’s population reached 8.0 billion in 2022, marking an increase of 2 billion since 1998. It is projected to grow by another 2 billion by 2050 →Between 2010 and 2050, the global food demand is expected to rise by c.35%-55%, in line with population growthIncreasing demand for food mainly driven by growing population globally →More frequent extreme weather events, such as droughts, floods, and heatwaves, are reducing crop yields and causing global food shortages →Food supply and security will face significant threats over the next 30 years, necessitating increased production and productivity to address for the potential deficitExisting challenges in the food supply primarily driven by natural factors →Food price inflation remains robust worldwide, affecting not only high-income countries, but also 85-90% of the world population, with the majority experiencing double-digit inflation Food prices and inflation compounding food security challenges posed by changing supply-demand dynamics →The number of people experiencing acute food insecurity worldwide increased by 20% in 2020 compared to previous years, primarily due to the impacts of the COVID-19 pandemic →COVID-19 severely disrupted global food supply chainsFood supply reeling from the disruption caused by COVID-19 →Around one-third of all food produced for human consumption, equivalent to about 1.3 billion tonnes, is lost or wasted each year according to FAO →Between 2019 and 2022, the number of undernourished people increased by up to 150 million, primarily attributed to conflict, climate change, and the COVID-19 pandemic Food loss, waste, and malnutrition posing additional challenges to global food supplyStrategic industry with increasing focus on sustainable food production1 12 (1) Global Food Security Index 2022 rankings among 113 countries (2) Intermsof volume Source: Company, Global Food Security Index, FAO, TST data, Turkish Export Agency (TIM) data Türkiye is the 2ndlargest country in Europe in terms of agricultural economy and the 4thlargest industrial tomato producer globally2 2022 global tomato processing by country2 26% 16% 14%6%6%31% USA China ItalyTürkiye Spain Other30th→Türkiye ranks 30thamong 113 countries in food availability1 26th→Türkiye ranks 26thamong 113 countries in food quality and safety1 26th→Türkiye ranks 26thamong 113 countries in sustainability and adaptation1Quality and safety: Türkiye is committed to preserving high standards in order to provide consumers with nutrient-rich and safe food Sustainability and adaptation: Türkiye adheres to global sustainability and adaptation standards and takes necessary measuresAvailability: Türkiye excels at maintaining consistent and adequate outputTürkiye is a key actor in global food security system… … as the world’s 4thlargesttomato producer Türkiye is one of the leading producers of vegetables, specifically tomatoes, in the world Share of exports in agriculture is growing with an increase of 22.2% in 2021 Tomatoes are the most widely produced vegetable in Türkiye, accounting for a 41.2% share of total vegetable production Türkiye was the 4thlargest tomato producer in the world in 2022 13 (1) Türkiye’s total yearly tomato production is c.13mntonnesin 2021 Source: Company, Market research Türkiye well- positioned to become a regional hub with its good quality tomato supply and processing capabilitiesTürkiye is the 2ndlargest country in Europe in
to global sustainability and adaptation standards and takes necessary measuresAvailability: Türkiye excels at maintaining consistent and adequate outputTürkiye is a key actor in global food security system… … as the world’s 4thlargesttomato producer Türkiye is one of the leading producers of vegetables, specifically tomatoes, in the world Share of exports in agriculture is growing with an increase of 22.2% in 2021 Tomatoes are the most widely produced vegetable in Türkiye, accounting for a 41.2% share of total vegetable production Türkiye was the 4thlargest tomato producer in the world in 2022 13 (1) Türkiye’s total yearly tomato production is c.13mntonnesin 2021 Source: Company, Market research Türkiye well- positioned to become a regional hub with its good quality tomato supply and processing capabilitiesTürkiye is the 2ndlargest country in Europe in terms of agricultural economy and the 4thlargest industrial tomato producer globally2 One of the top tomato processors in the world Yearly industrial tomato production1of c.2.2-2.3mntonnes4thlargest industrial tomato processor globally after US, Italy,andChina Unique location offers swift access to strategically important regions Next door to MiddleEast , NorthAfrica, and CIS, within three-hour distanceComparatively easy access to Asia Competitive cost advantages in production and distribution High availabilityof qualified labor at competitive costFavorable weather conditions and sustainable tomatoproductionReasonable transportation costs 14 (1) Based on Nielsen April YTD 2023 scantrackreport including supermarkets, hard discounters and traditional channels (2) Based on Nielsen March YTD 2023 scantrackreport including only supermarkets (3) Based on Nielsen April YTD 2023 scantrackreport including only supermarkets Source: Company, NielsenTat Gıdais a clear market leader brand in Türkiye in its categories 3 Tat Gıda:Türkiye’sleadingtomatoprocessorisundisputedmarket leader with solid market share across its categories #1 in Ketchup#1 in Ready-to- eat meals#1 in Tomato paste #1 in Tomato products #1 in Pickles #1 in Pepper paste 41% 21%26%18% 15%20%25% Tomato products1Tomato paste1Pepper paste1 Ketchup1 Mayonnaise1 Pickles2Ready-to-eat meals3 Tat Gıda Others #1 #1 #1 #1 #1 #1 #1 in Mayonnaise #1 15 (1) Based on Nielsen April YTD 2023 scantrackreport including supermarkets, hard discounters and traditional channels (2) Based on Nielsen April YTD 2023 scantrackreport including only supermarkets Source: Company, NielsenTat Gıdamaintainsits market leadership, growing its share and extending its lead over the competition Traditionalchannel Supermarkets Hard discounters Revenueshare1 5% 45% 50% Pastes 2% 61% 37% Tomato products 6% 34% 60% Ketchup 4% 37% 60% MayonnaisePastes 11.0% Ketchup 14.4% Mayonnaise 13.8%Hard discounters have emerged as the predominant channel across all categories in Türkiye Tat Gıdaenjoys a strategic position in the hard-discount markets as the leading brand across all categories Tomato paste121.4% +3.1% +12.4 pt over 1stRunner-up Pepper paste126.0%+13.4%+4.9 pt over 1stRunner-up Ketchup118.4%+1.5%+7.7 pt over 1stRunner-up Mayonnaise115.4%+1.2%+1.1 pt over 1stRunner-up Ready-to-eat meals224.7% +4.1% +4.3pt over 1stRunner-up Tat Gıdais a clear market leader brand in Türkiye in its categories 3 % of YTD market shares1% of YTD hard discount market shares Year-over-year increase+3.8% +4.5% +4.4%+2.7 ptover Runner Up +10.4 ptover Runner-up +8.0 pt over Runner-upDespite its long-standing market leadership, Tat Gıdacontinues to experience year-on-year growth in market shares across segments,while also extending its lead overits closest competitor 16 (1) Based on Nielsen YTD 2023 scantrackreport including supermarkets, hard discounters and traditional channels (2) Private label data only includes BIMmarket shares Source: Company, NielsenTat Gıdahas consistently maintained its prominent status as a leader in the domain of branded products for numerous years, while widening the gap between its closest competitors Tomato paste #1 22,4% 22,0%22,8% 20,4% 17,7%21,4% 6,8%9,7% 6,9%11,0% 8,7% 9,0% 2018120191202012021 2022 YTD 20232+15.6 pt. +12.3 pt.+15.9 pt. +9.4 pt. +9.0 pt.+12.4 pt. Tat Gıda Runner up #1 #1 #1 #1 #1Case study: Tat Gıda has consistently maintained its prominent status as a leader 17 (1) Based on Nielsen YTD 2023 scantrackreport including supermarkets, hard discounters and traditional channels (2) Private label data only includes BIMmarket shares Source: Company, NielsenKetchup 17,9% 18,0%17,6% 17,7%17,1%18,4% 13,3% 11,5%13,2%12,8% 11,3%10,7% 2018120191202012021 2022 YTD 20232+4.6 pt. +6.5 pt.+4.4 pt. +4.9 pt.+5.8 pt.+7.7 pt. Tat Gıda Runner upCase study: Tat Gıda has consistently maintained its prominent status as a leader Tat Gıdahas consistently maintained its prominent status as a leader in the domain of branded products for numerous years, while wideningthe gap between itsclosest competitors #1 #1 #1 #1 #1 #1 18 Source: Company Case study: Thriving sales growth of branded products in the growing hard discount markets Strategically increasing branded products in the rapidly expanding hard discount markets, effectively capitalizing on the growth momentum with the below initiatives Increase product variety and availability 1 Expand product portfolio2 →Product listing(continuous sales) →In& outcampaigns→To fulfill the diverse product demands of hard discounters and differentiate theselection from supermarkets −Tat Gıdaembarked on a rapid process of product innovations and revisionsCampaign performance ∆226% Frequency 19 62 Variety 16 38∆137% 2021 2022 Balance private label and branded sales3 Enable multi-categorization4 →Over the years Tat Gıdadeveloped multi-category sales by adding categories such as ready-to-eat meals, tomato products, vegetables, and etc. to hard discounters→Tat Gıdaachieved an increase in private label sales to hard discounters while concurrently collaborating and increasing branded sales 14,332 8,675Branded sales (k tonnes) ∆65% 2021 2022 Tat Gıda’sbranded Net sales in hard discounters experienced remarkable growth of 295% (2021- 2022)…… witha growthimpactof 29% foroverallbranded Net salesin TürkiyeSignificantgrowth in hard discount markets played a pivotal role in contributing to the substantial increase for Tat Gıda’soverall market share 19 Source: Company, Nielsen, Ipsos Customercentricoptimizedproduct portfolio Functional products developed for diverse customer needsNationally recognized heritage brand 50+ years with high customer loyalty Widely recognized as a pioneer in the food market Brand image communicates reliability, safety, and qualityAn award-winning trackrecord Distinguished name in itscategory Leading brand with highest brand recognition and awareness scores Trusted expert In the eyes of customers ,with its unwavering commitment to food safety Tatis positionedas a strong umbrella brandin Türkiyefora broaderportfolioof F&BproductsReputable and high-quality brand image…4 20 (1) Paste and ketchup brand health and communication performance research December 2022 report Source: Company, Ipsos…withprovenbrandequity…4 In the realm of brand equity assessment, Tat Gıdaundeniably emerges as the most invaluable and reputable brand, surpassing all others by a significant margin 34 20 Tomato Paste Runner up 30 21 Ketchup Runner upTat Gıda outclasses itsclosest competitor by 14% in terms of brand value, firmly establishing its dominance and attaininga larger market share than its rivals Brand that
food market Brand image communicates reliability, safety, and qualityAn award-winning trackrecord Distinguished name in itscategory Leading brand with highest brand recognition and awareness scores Trusted expert In the eyes of customers ,with its unwavering commitment to food safety Tatis positionedas a strong umbrella brandin Türkiyefora broaderportfolioof F&BproductsReputable and high-quality brand image…4 20 (1) Paste and ketchup brand health and communication performance research December 2022 report Source: Company, Ipsos…withprovenbrandequity…4 In the realm of brand equity assessment, Tat Gıdaundeniably emerges as the most invaluable and reputable brand, surpassing all others by a significant margin 34 20 Tomato Paste Runner up 30 21 Ketchup Runner upTat Gıda outclasses itsclosest competitor by 14% in terms of brand value, firmly establishing its dominance and attaininga larger market share than its rivals Brand that excels inmarket management, demonstrating astute proficiency in navigating the industry landscape. Its strategies attract consumers and contribute to its success, making it a notable presence in the market 21 (1) Paste and ketchup brand health and communication performance research December 2022 report (2) Please refer to Appendixfor detailed competitor analysis (3) "Which statement best reflects your view of the brand? " (4) Insisters& preferers: Consumerswhoonlybuy Tat-brandedproductsorpreferTat-brandedproductsoverothers. Acceptors: ConsumerswhoareopentobuyingTat-brandedproductsin thefutureunder certain conditions. Unaware: Consumerswhoarenot familiarwiththeTat brand. Rejectors: Consumerswhorefusetobuy Tat-brandedproducts Source: Company, Ipsos→Tat Gıda is the firstbrandthatcomesto mindin themain categoriesandhas a clear leadershipin terms of mindshareandbrand awareness→Leading brand in termsof translating its brand awareness into frequency of use and loyalty withthehighestrate2→Consumers show the highest level of "purchase inclination" (insisters & preferers) with Tat Gıda3…solidifiedwith highcustomer awareness scores4 Tomato paste1 Condiments1Mostly Last Month Last Week Last 3 Months Try Tendency Total Awareness 100899160442335 100909579634542 Mostly Last Month Last Week Last 3 Months Try Tendency Total Awareness44 17 Tat Gıda Runner up+27 pt 57 27 Tat Gıda Runner up+30 pt 99 2966 10 Tat Gıda50 Runner up100 100 Insisters & preferers4 Acceptors4Unaware4 Rejectors4 96 2770 40 Tat Gıda30 Runner up100 100 forKetchup 22 (1) # of SKUs as of year-end2022 (2) Ready-to-eat (3) Other sales,other product sales (fruit jam, fruit puree and other products)andIFRS adjustmentsconstitute 3.8% of total sales which have not been presented on this page as a separate breakdown Source: CompanyBroad product portfolio catering to themain needs of the Mediterranean cuisineand isenriched with trendy new categories Tomatoproducts (59 SKUs)118.4 7.3%364Condiments (168 SKUs)127.7 18.4%919Tomato& pepper paste(133 SKUs)167.5 52.3%2,610 A food expert, capitalizing on brand awareness and imageExtensiveportfolio oftop-quality productsNewproducts enriching the category Pickles (119 SKUs)112.2 7.2%361 2023B Sales volume (k tonnes)3% of 2023B Net sales32023B Net sales (TL mn)35 RTE2meals& vegetables (217 SKUs)114.6 11.0%548 23 Source: Company5 Tat Gıdais growing its customer base with diversification strategy 1 Growing market share by attracting new consumers and increasing penetration & frequency 2 Gaining share of wallet by introducing value- added products Strategic guidance on competitive yet profitable pricing to continuously position Tat Gıda products as affordable for a wide customer base Continuous marketing activities across channels to enhancepenetration and frequency Addressing a more diverse customer base through tactical brand and PL(privatelabel) production to increase profitable sales volume Value-added and innovative product development strategy to satisfy diverse customer needs →Condiments are recent examples of value- addedandinnovative products by Tat GıdaIntroducing new categories thatleverageTat Gıda’sbrand image and quality →Growingpresence in thefoodaisle with newlyaddedproductsBroad product portfolio catering to themain needs of the Mediterranean cuisineand isenriched with trendy new categories 24 (1) Includeshard discount marketsandonline channel (2) Basedon Düzey Pazarlama’spointof salesdata Source: Company % of 2022 Domestic Net sales Number of pointsreached22022 breakdownNational chains1 Market share growth with branded and innovative products Increasing share of sales in the growing e-commerce channel Competitive advantage in hard discounters offered by the lead in branded products HoReCa Penetrationgrowthwithnew channel-specificproductsc.31k 58.6% c.30k 11.8%Traditional stores Established presence Availablein 34% of traditional sales points c.90k 17.4%Local chains Presence at local chains throughout the country, ensuring wide coverage and market access c.6.5k 12.1%Strong nationwide coverage…6 25 (1) Calculatedbasedon TL financialfigures (2) Each6 monthsin anygivenyearconvertedby 6 monthsaverage USD rates for presentation purposes (3) Middle Asia Source: CompanyExport share in Net saleshas surgedover theyears, reflectinga growing global presence… % of Exportsalesin Net sales1Net sales(Export)(mnUSD)2 … currently operating in c.40 countries with plans for further expansion41,158,879,3 84,996,8110,1127,0147,9 2021 2022 2023B 2024F 2025F 2026F 2027F 2028F+39%+13%35.4% 36.8% 36.2% 36.7% 37.6% 39.0% 34.7%Promising vision and targets for export markets in the short and medium term with new country expansions Main export itemsare tomato paste, pickles,and tomato products 73%11%7%5% 4% Tat Gıda’sexport sales are primarily driven by industrial products with c.56% share in 2023B export sales, followed by branded and private label sales of c.25% and c.19%,respectively Tat Gıdacontinues its overseas marketing investments to increase its branded sales2 41 3 2North America(c.3%)Europe (c.40%) Asia–Pacific (c.28%) MiddleEast & MA3 (c.28%)40.6% Significant increase in the sales of branded products driving an improvement in the shares of categories other than tomato paste…with growing export base 6 Exportsalesbreakdown(2022)Exportsales breakdown(2023B) Tomato & pepper pastes Tomato products Pickles Ready-to-eat meals & vegetables Condiments 26 (1) Refers to 2023 figures (2) Based on average number of working days and raw material supply curve (3) The Company holds ISO 90001, 50001 and 14001 certificates Source: CompanyLarge and well-located production facilities…7 3 state-of-the-art facilities with a total capacity of c.200k tonnes/year across categoriesStrategic location with proximity to raw materials and portsTat Gıdaaccountedfor23.1% of Türkiye's tomatoprocessing in 2022 312Bursa Izmir 2Karacabey plant 3Torbali plant Paste, tomatoproducts, ready-to-eatmealsand vegetables, condiments, picklesProducts c.52k m2Closed area1 133k tonnesAnnualtomato processing capacity12 116k tonnesp.a.Total production capacity1Paste, tomato products Products c.32k m2Closed area1 301k tonnesAnnualtomato processing capacity12 60k tonnesp.a.Total production capacity1Paste, fruit puree Products c.10k m2Closed area1 148k tonnesAnnualtomato processing capacity12 23k tonnesp.a.Total production capacity11Mustafakemalpasa plant Successfully passes periodic inspections; accredited with global certifications Global tomato processing (2022)Tat Gıda’s share in Türkiye (2022) USA 26.2%China 16.3%Italy 14.4% Türkiye 6.2% Spain 5.6%Other 31.3%Tat Gıda 23%Other 77% 3 27 (1) Total costof ownership Source: CompanyAStrong controlover tomato procurement and processing yieldscompetitive advantage…backed by strategic procurement management7 BClosely monitored and well-executed procurement strategy for key raw materialsConsiderable market influence as one of the largest tomato buyers, enablingTat Gıda toguidefarmers to sustain quality Effective harvestmanagement to reduce costs Smart farming applications (for physical and aerial tracking of the produce) and global agricultural practices (c.5% of total raw material
capacity1Paste, tomato products Products c.32k m2Closed area1 301k tonnesAnnualtomato processing capacity12 60k tonnesp.a.Total production capacity1Paste, fruit puree Products c.10k m2Closed area1 148k tonnesAnnualtomato processing capacity12 23k tonnesp.a.Total production capacity11Mustafakemalpasa plant Successfully passes periodic inspections; accredited with global certifications Global tomato processing (2022)Tat Gıda’s share in Türkiye (2022) USA 26.2%China 16.3%Italy 14.4% Türkiye 6.2% Spain 5.6%Other 31.3%Tat Gıda 23%Other 77% 3 27 (1) Total costof ownership Source: CompanyAStrong controlover tomato procurement and processing yieldscompetitive advantage…backed by strategic procurement management7 BClosely monitored and well-executed procurement strategy for key raw materialsConsiderable market influence as one of the largest tomato buyers, enablingTat Gıda toguidefarmers to sustain quality Effective harvestmanagement to reduce costs Smart farming applications (for physical and aerial tracking of the produce) and global agricultural practices (c.5% of total raw material in 2022) Actsas a corporate farmer withextensive expertise in the fieldanda robust agricultural team overseeing all operationsYearly purchasing improvement planning with company wide collaboration platform (TCO1) Wellestablishedrelationswithkeysuppliers Produces its own raw material for condiments, instead of relying on purchasing like competitors Trusted partner to approved suppliers with significant purchasing volumes Diligent purchasing strategy and constant monitoringof market prices Long-term relationship with approved suppliers enabling quick and flexible solutionsSupply continuity and cost transparencyAgricultural procurement Othermaterialsandservices 28 Competent professional management…8 Evren Albaş CEO 29years of work experiencePrevious experience Arçelik, Defy(South Africa) 24 years of work experience Previous experience N11.com Vodafone32 years of work experience Previous experience ArçelikEsra Süzme Head of MarketingHakan Turan Head of Trade and OperationsBaşak Tekin Özden Head of Finance 24 years of work experience Previous experience Koç Holding Tofaş (1) RefinitivESG companyscores Source: CompanyStrongandreliable corporategovernance culturefromKoç Holding Improved brand perception & sustained market leadershipQuality and innovation driven management witha focuson sustainablegrowth 53 202185 2022Governancescore1 29 (1) ExcludingHolding chargesand IFRS-16 application. Holding chargesand RentexpenseshavebeendeductedtocalculateaboveGrossprofit%, EBITDA and EBITDA % Source: Company…delivering solid financials with strong growth strategy and vision 8 Net sales(TL mn) Key remarks EBITDA1(TL mn)Toplinegrowthmainly triggeredbyincreasingvolume acrosscategories Net salesgrowthcomingboth fromTürkiye and export markets Margin improvementmainlyat grossprofit levelduetoprice correctionin 2023B and mainly productmix impactand limited priceincreasefor2024 onwards EBITDA1%1.0922.7874.9907.21612.61618.962 2021 2022 2023B 2024F 2026F 2028F+113.8%+30.6% 1574589671.4232.5844.164 2021 2022 2023B 2024F 2026F 2028F14.4% 16.4% 19.4% 20.5% 22.0% 19.7%111 133 142 173 204 149 Volume (k tonnes) 30.2% 30.1% 30.4% 32.8% 33.8% 31.5% IncreasingEBITDA with growingsales Grossprofit1% 30 Source: CompanyTat Gıdais a well-positioned platform to absorb inorganic and organic growth quickly and efficientlyMultiple untapped value creation opportunities beyond the business plan9 Above bullets are additional streams of growth not reflected in the business planI II Inorganic growth is key for Tat GıdaOrganicgrowthis thenaturalnextstep for Tat Gıda M&A opportunity within the European marketDiversifying into new product categories benefitingfrom its strong brand equity Promising markets to leverage include Italy, Spain and Portugal Focus on paste and condimentsHarnessing Tat Gıda’sexpertise for imminent entry into the frozen food category 31 Inorganic growth is key for Tat Gıda: M&A opportunity within the European market Source: CompanyMultiple untapped value creation opportunities beyond the business plan9 I Tat Gıdacan leverage its know-how through inorganicgrowth Ready, equipped with strong management know-how Secured raw material access of Tat Gıdain Türkiye Quality transfer between companies Extensive technical capabilitiesTAT Gıda’sNet sales target/vision in 5 years Acquired company can turn into an c.USD200 mnNet sales company in 5 years→Tax-free, fast access to most of Europe and Italy's export markets and the opportunity for branded growth c.USD365 mn c.USD200 mn →Tat Gıdahas beenanalyzingmarkets globallyfor size, landscapeandpotential→Most interesting market is Italy for size and importance of branded products, second potentially most attractive market is Spain→Market analysis forItaly in terms of size and competitive landscapehas been extensively completed byTat GıdaAn opportunity to reveal Tat Gıda’shidden value USD 550-600 mnNet salesin mediumtolongterm 32 Organic growth is the natural next step for Tat Gıda: Diversifying into new product categories benefiting from its strong brand equity Source: CompanyMultiple untapped value creation opportunities beyond the business plan9 II Market leading food brand in Türkiye Widely recognized pioneer in the food market with high customer loyalty Trusted expert in its product categories Extensive know-how in vegetable supply and processingHigh quality and hygienic brand Harnessing Tat Gıda’sexpertise for imminent entry into the frozen food category An opportunity to boost and diverse “Tat“ brand TAT Gıda’sNet sales target/vision in 5 years Projected growth in frozen food category sales in 5 years c.USD365 mn c.USD50 mn USD 400-450 mnNet salesin mediumtolongterm →There is a growing demand for frozen food due to changing lifestyles and busy schedules both globally and in Türkiye→Significant export potential and strong product portfolio for HoReCachannel →12-monthcontinuous production portfolio to diversify seasonality of Tat Gıda→Positioning Tat Gıdaas a holistic umbrella brand III. Business overview 34 (1) Central warehousesdetailshas beenincludedin theAppendix (2) DüzeyPazarlamais Tat Gıda’srelated party Source: CompanyTat Gıda: Business overview →Tat Gıdaemploys a strategic approach to ensure effective supply chain management, which results in operational efficiency and sustainable growth →At the heart of the production process lies the primary raw material the versatile and widely utilized tomato →Primary raw material is supplied through various methods: contracted farms, spot purchases, and company-operated farms →Tat Gıdais the only company in the industry to grow its own produce, which accounts for c.5% of the total tomato processed Support functionsProcurement →Three production facilities strategically located in close proximity to suppliers, main hubs for local demand, and key ports →Mustafakemalpaşa, Karacabeyand Torbalı facilities boast a total tomato processing capacity 11,150tonnes/day →Tat Gıdastrategically plans production operations to optimize efficiency and cost savings→Tat Gıdaconducts its domestic salesand distributionactivities through Düzey Pazarlama2 andalsodistributeswithitsown robustlogisticscapabilities –Tat Gıdaproducts are available through various channels, including national chains, online retailers, discounters, local and traditional channels and out- of-home →Proven presence in export markets with significant growth potential →All products are stored in the Company’s automated centralwarehouse1 Production Sales & Distribution Marketing Research & Development Information Technologies ESG Human Resources Health& Safety 35 Source: CompanyTat Gıda secures steady supply and quality with a keen focus on procurement Tomato The key raw material of the Company; 543k tonnes processed in 2022 (381k tonnes in 2020 and 503k tonnes in 2021) Tomato is locally sourced supplied through contracted farms, spot purchases,and company-operated farms (c.5% in 2022) c.45-50% of tomato procurement is through contract farming1to ensure supply continuity and quality Contracts begin in midJanuary, and
through Düzey Pazarlama2 andalsodistributeswithitsown robustlogisticscapabilities –Tat Gıdaproducts are available through various channels, including national chains, online retailers, discounters, local and traditional channels and out- of-home →Proven presence in export markets with significant growth potential →All products are stored in the Company’s automated centralwarehouse1 Production Sales & Distribution Marketing Research & Development Information Technologies ESG Human Resources Health& Safety 35 Source: CompanyTat Gıda secures steady supply and quality with a keen focus on procurement Tomato The key raw material of the Company; 543k tonnes processed in 2022 (381k tonnes in 2020 and 503k tonnes in 2021) Tomato is locally sourced supplied through contracted farms, spot purchases,and company-operated farms (c.5% in 2022) c.45-50% of tomato procurement is through contract farming1to ensure supply continuity and quality Contracts begin in midJanuary, and tomatoes are used throughout the processing period of 2-3 months starting from July Tat Gıdais the only company in the industry that operates its own farms—an investment to improve efficiency and develop best practices Overview of procurement assessment Agricultural support HarvestContractwith farmersTransplanting and growing / field checksDelivery (Brix& qualitycheck) Procurement Support functions Production Sales& distribution Other key raw materials / inputs Other vegetables including gherkin, pea, red pepper etc. →Contractedorspot purchases Sunfloweroilandsugar →Midtermagreements Packagingandenergy →Seasonalagreements Procurement conducts research for inputs and awaits approval from the R&D and Quality Control before making offers Purchasing plan for necessary supplies is made at the end of the yearSamples from suppliers are retained in case of any issues or problemsCompetitive advantage of producing own raw material for condiments, while competitors rely on purchases 36 (1) As of March 2023 (2) Including subcontractors (3) As of 2022 (4) Mustafakemalpaşafacilityengagesin year-roundproduction, encompassingvariousproductcategoriesin additiontotomatoes, the capacityutilizationrate ierelativelylowercomparedtotheothertwo facilitiesthatexclusivelyoperateduringtomatoseason. Thisis primarilyduetomonthlyproductionfluctuations Source: CompanyModern production facilities with the largest capacity in its field… Mustafakemalpaşa-Bursa1 Karacabey-Bursa2 Torbalı-İzmir3 TBU TBU TBU Production capacities per product 29k tonnes/year Paste 42k tonnes/year Condiments 26k tonnes/year Ready to eat meals & vegetables 19k tonnes/year PicklesProduction capacities per product 41k tonnes/year Paste 19k tonnes/year TomatoproductsProduction capacities per product 23k tonnes/year PasteProcurement Support functions Production Sales& distribution →Established in 2006 →45k m2land areawithc.10k m2closed area →23k tons p.a. production capacity3 →9white collar1, 28 blue collar workers1,2 →Capacityutilizationrate: 106%3 (with extendednumberof workingdays)→Established in 1977 →216k m2land areawithc.32k m2closed area →60k tons p.a. production capacity3 →9white collar1,2, 86 blue collar workers1,2 →Capacityutilizationrate: 84%3→Established in 1968 →286k m2land areawithc.52k m2closed area →116k tons p.a. production capacity3 →75 white collar1, 542 blue collar workers1,2 →Capacityutilizationrate: 79%34 37 Source: CompanySales & distribution –DüzeyPazarlama Tat Gıda conducts its domesticsales anddistributionactivities through DüzeyPazarlama, which has the necessary infrastructure, personnel, vehicles, andequipment Overview of DüzeyPazarlama DüzeyPazarlamadistribution channels →Established in 1975, DüzeyPazarlamaprovides domestic sales and distribution services for leading brands in the fast-moving consumer goods industry →With seven regional warehouses, DüzeyPazarlama reaches more than c.160k sales points through five sales channels across Türkiye →Has a strongsalesforceincludinga teamsolelydedicatedtoTat Gıda→TatGıda conducts its sales and distribution activities in thelocal market through DüzeyPazarlama →With its extensive network and infrastructure, DüzeyPazarlama distributes and sells Tat Gıdaproducts through fivechannels across Türkiye Sales force 550+ employeesVehicle fleet 450+ vehiclesStorage area 40,000 m2Sales points reached c.160k+ →DüzeyPazarlama boasts extensive distribution experience in snacks, long shelf life, and cold & semi-frozen product categories Majorbusinesspartners Sales channel # of sales points reached Sample retail chains Traditionaloutlets HoReCaLocalchainsNationalchains Online retailers Total Mom-and-pop shops Restaurants& hotelsc.90k c.160kc.30kc.6.5kc.30k c.1k Sales points reached by DüzeyProcurement Support functions Production Sales& distribution 38 (1) Calculated based on TL financial figures (2) Each 6 months in any given year converted by 6 months average USD rates for presentation purposes Source: CompanyInternational footprint of Tat Gıda Tat Gıdareaches itsexport markets via distributors and direct exports Exports to c.40 countriesHigh-quality products and long-term customer relationshipsReputation as a sustainable and reliable supplier Leading export markets(Export sales shares in 2022)Growingexportshare 41,158,879,3147,9 2021 2022 2023B 2028F+39%+13%35.4% 36.8% 34.7% 40.6% % of Exports in Net sales1Export(mnUSD)2 27% 18% 16%19% 12%7%Japan Germany OmanItaly Iraq OtherProcurement Support functions Production Sales& distribution 24 1 3 2North America(c.3%)Europe (c.40%) Asia–Pacific (c.28%) MiddleEast & MA2 (c.28%) Branded Germany, Iraq, North Cyprus, Bulgaria, USA, Russia, Sweden, Dubai, Georgia, LibyaPL Aldi, Kaufland, REWE, Spar, Norma, Arriva, My Oro, Robert Shaw’s, Prima Voglia, Cook MeIndustrial Japan, Oman, UAE, France, Italy, USA, Russia55.8% 18.9% 25.3% % of 2023B ExportNet salesExportsalesbreakdown(2022) 39 Source: CompanyBenefiting from 55 years of expertise, Tat Gıdapossesses a well-established and robust logistics network for both domestic and export markets Domestic sales Export sales Karacabey warehouse5%Central warehouse85% Torbalı warehouse9% Mustafakemalpaş awarehouse1% →National chains →Local chains →Traditional channels →HoReCa →OtherSales channels Local micro distributions are held by DüzeyPazarlama, while larger shipments and macro distributions are held by the Company Karacabey warehouse32%Central warehouse9% Torbalı warehouse43% Mustafakemalpaş awarehouse17% →Europe →Asia →Africa →America →Middle East →JapanExport areas % represents tonnes of shipment to customers Strong distributioncapabilities Procurement Support functions Production Sales& distribution 40Cross-channel marketing activities –Overalland Türkiye Marketing expenses Local marketingactivities →Tat Gıdauses its marketing budget to promote innovative products and increase brand awareness →Tat Gıdaspent c.TL46mn on marketing activities in 2022 Marketing expenses (TL mn) 2.7% 1.7% 1.5% 2.3% Marketing expenses (TL mn) 39%28%12% 10% 6% 5%TR Media expenses Global Marketing expenses TR Production expenses TR Other expenses TR Maintenance expenses TR Market Research expenses%Marketing expenses as %of Net sales2021 2022 2023B 2028F304776436→Digital Campaign (EnBeğenilenSalça) →Ramadan Campaign →Shopper MarketingActivities →E-Commerce Activities →Influencer Marketing →TV+ Campaign →Digital →Radio Ads →OOH Ads →Shopper Marketing Activities →E-Commerce Activities →University Activities →Influencer Activities→Tasting Activities →TV+ Campaign →Digital →Shopper Marketing Activities →E-Commerce Activities →Influencer Activities 1. Tomato Paste (Oct 2022 -Apr 2023) 2. Condiments (Apr -May 2023) Procurement Support functions Production Sales& distribution Marketing activities aim to maintain brand awareness and raise market share in new products/launches TL 47mn Source: Company 41 Source: CompanyCross-channel marketing activities –Export markets Global Marketing activities aim to build brand awareness and securemarket share in focus countries in 2022-23, Germany and Iraq Global Marketing Activities →Tomato paste TV Ads →TV Sponsorship →Digital Giveaway Campaigns →OOH Ads →Always On Social Media Marketing1. Creating Brand Awareness in Germanyand Iraq Germany →Influencer Marketing for ethnic customers →Radio Sponsorship →Always On Social Media Marketing 2. Commercials & New Business Development Activities →Participation in fairs & meetings to explore new client opportunities and for representation (SIAL Paris Fair ‘22
→E-Commerce Activities →Influencer Activities 1. Tomato Paste (Oct 2022 -Apr 2023) 2. Condiments (Apr -May 2023) Procurement Support functions Production Sales& distribution Marketing activities aim to maintain brand awareness and raise market share in new products/launches TL 47mn Source: Company 41 Source: CompanyCross-channel marketing activities –Export markets Global Marketing activities aim to build brand awareness and securemarket share in focus countries in 2022-23, Germany and Iraq Global Marketing Activities →Tomato paste TV Ads →TV Sponsorship →Digital Giveaway Campaigns →OOH Ads →Always On Social Media Marketing1. Creating Brand Awareness in Germanyand Iraq Germany →Influencer Marketing for ethnic customers →Radio Sponsorship →Always On Social Media Marketing 2. Commercials & New Business Development Activities →Participation in fairs & meetings to explore new client opportunities and for representation (SIAL Paris Fair ‘22 / GulfoodFair ‘23 / ProdexpoFair ‘23) →Instore Tasting Activities →Shopper Marketing Activities →E-Commerce Activities (Amazon etc.) Procurement Support functions Production Sales& distribution 42 Source: CompanyProcurement Support functions Production Sales& distributionInformation Technologies (“IT”) Mustafakemalpaşa On-premises Infrastructure Server, Backup Appliance, Storage, SAN Switch, Router, Network Switch, Access PointOT management Identity access managementFile server Karacabey On-premises Infrastructure Server, Router, Network Switch, Access PointOT management Identity access managementFile server Torbalı On-premises Infrastructure Server, Router, Network Switch, Access PointOT management Identity access managementFile server Tat Gıda HQ On-premises Infrastructure Server, Backup Appliance, Storage, SAN Switch, Router, Network Switch, Access PointMessaging Identity access management Security & monitoringFile server SAP(IaaS) SAP BW (IaaS) Information security IoT Data Hub Tat.com.tr Tatgida.com Office 365 RPA Microsoft Azure Public cloudKoçSistemÇamlıcaDC Virtual privatecloudAdvanced IT capabilities to ensure operational efficiency, maintain control over organizational planning, and prioritize datasafety 43 (1) As of March-end2023 (2) Includes employees contracted from 3rd parties (3) Includes all white and blue collar employees (4) Excludes temporary field workers and subcontractors (5) Showsoffice employees Source: CompanyHuman Resources (“HR”) Educational background Employee tenure Gender # of personnel →Average tenure is 11 years95 White collar 109 Blue collar184 20Male Female176 5879 0-5 years 5-10 years +10 years30% 18% 29%16%7% OthersAssociate degreeUniversity Vocational high school High schoolEducational background5 Employee tenure4 Gender3 # of personnel1 White collar Blue collarMale Female→Average tenure is 8.4years192 656264% 36%75% 19% 1%5%1%178 120163 0-5 years 5-10 years 10+ yearsCEO 3 FinanceBusiness, R&D and technologyHR & other IT Internal audit MarketingAgile Transformation & Project ManagementTrade & OperationsCorporate Communications and Sustainability 27 49 23 14 1 20 2 51 2 Permanent field workerTemporary field workerSub-contractors 269 324 63Procurement Support functions Production Sales& distribution Open minded, customer centricandhighlycompetent teamFocus on leadership skills continuouslywith"Tat Leadership Academy"Culturaltransformationas partof corporate governance University Mastersdegree High school Elementaryschool Others 44 Source: CompanyResearch& development(“R&D”) Procurement Support functions Production Sales& distribution One of the R&D leaders in domestic food industry, operating as R&D Centersince 2017 with highly experienced R&D team of 9 experts1 The team employs an agile mindset and utilizes agile methods to achieve excellence in innovation through continuous funnel management2 Continuous research into flavour trends and food technologies around the globe and technical expertise in consumer insights3 Staying attuned to consumer trends by actively engaging in continuous interaction with customers and key partners Tailor-made products that cater to new trends and localtastesTwo corestudyareasin projectdimension: new productdevelopmentandscientificresearchand designThree core study areas in technical dimension: formulation & sensory, process technology and packaging Launch of 12 new SKUs in ready-to-eat meals (August-October 2023) Condiment varieties including vegan mayonnaise, low sugar & low salt ketchup are in process to enhance product portfolio and planned to launch Q42023 R&D partners Focusing on… … with a packed pipeline 45 (1) Referring to 2020-2022 Source: CompanyHealth& safety(“H&S”) Procurement Support functions Production Sales& distribution Occupational health & safety →Tat Gıda prioritizes occupational health and safety, ensuring that employees have a safe and conducive work environment to perform theirdutieseffectively →Tat Gıda diligently implements occupational health and safety practicesinallfacilitiesandofficeswithaholisticperspective →In 2022, a company-wide project "Cultural Transformation Project for Occupational Health And Safety" was launched with the objective of achievingzeroworkplaceaccidents →The "Intenseye Project" has been implemented to enhance security byinstallingCCTVsystemswithinthepremises, −LeveragesAItechnologiesforanalysisandwarningsystem 0 Employees with first aid training65Fatal accidents over the last three years1Health and safety training provided to every new hire12 hours Reduction in accident frequency in the first nine months of 202269%Productionalqualityandfoodsafety →Tat Gıdais committed to maintain stringent quality control standards, in line with legal directives →Control measures that are in place include −Process control −Quality control −Quality assurance →The Company monitors step of the value chain starting from the farm to processing facilities →High quality products are certified by food safety and general quality standards 46 (1) Refinitiv ESG company scores Source: CompanyEthical and sustainable producer meeting the ESG standards Sustainability is deeply ingrained in Tat Gıda’soperations… …to ensure a more livableworld →Tat Gıda has a clear mission to deliver progress in every ESG area and becomeamoreactiveandharmoniousorganization →Tat Gıda’s sustainability model has been created in accordance with UN Sustainable Development Goals: Values, World, People, and Society →Endeavors to be a reliable global brand with its governance approach thatputsqualityatthecenterofeveryprocess →Commitment to founding values and principles to establish ethical collaborationswithallstakeholders →TatGıdaaimstoprovidehealthy,reliable,andaffordableproductsthat addvaluetohumanity →All operations farm to table focus on protecting soil, water, and air while supporting the conservation of nature through digital agriculturalpractices →TatGıdarespectsallfarmersandallbusinesspartnersitworkswith →Attaches the utmost importance to equality and diversity in its relationshipswithstakeholders →The Company seeks to contribute to the communities in every region where it operates, preparing them for the future through developmentactivitiesGovernance1 Environmental2 Social3Sustainability at core Procurement Support functions Production Sales& distribution 62 202174 2022ESG score1 47 (1) The ongoing 2MWp Solar Power Plant Project, which is a joint campus with Koç Group companies, is planned to be carried out with the build-operate-transfer model (2) 2022 data will be verified in the upcoming months Source: CompanyContinuous commitment to reducing natural resource usage Tat Gıdaproactively reduces its carbon emissions, energy consumption, and waste in order to save water Greenhouse gas emissions (tonnesCO2e) Waste recovered for power generation (tonnes) Water consumption per tonne(m3)38.75344.62053.995 45.555 2019 2020 2021 20222+6% 42 37 2730 2019 2020 2021 2022-11% 3.0238.721 7.0696.248 2019 2020 2021 2022+27%Implemented various projects and investments, such as solar energy and economizer systems, resulting in significant reductions in greenhouse gas emissions Water saving projects implemented in plants increased water recovery rate byc.25% Tat Gıda collaborates with licensed companies to recover/generate energy
2MWp Solar Power Plant Project, which is a joint campus with Koç Group companies, is planned to be carried out with the build-operate-transfer model (2) 2022 data will be verified in the upcoming months Source: CompanyContinuous commitment to reducing natural resource usage Tat Gıdaproactively reduces its carbon emissions, energy consumption, and waste in order to save water Greenhouse gas emissions (tonnesCO2e) Waste recovered for power generation (tonnes) Water consumption per tonne(m3)38.75344.62053.995 45.555 2019 2020 2021 20222+6% 42 37 2730 2019 2020 2021 2022-11% 3.0238.721 7.0696.248 2019 2020 2021 2022+27%Implemented various projects and investments, such as solar energy and economizer systems, resulting in significant reductions in greenhouse gas emissions Water saving projects implemented in plants increased water recovery rate byc.25% Tat Gıda collaborates with licensed companies to recover/generate energy from its production plants' waste, creatinga positiveimpact on theenvironmentProcurement Support functions Production Sales& distribution Ongoing solar energy project expect to supply the electricity needs of the plants1 48 Source: CompanyCreating a winning culture through agile cultural transformation Procurement Support functions Production Sales& distribution A holistic approach to managing four initiatives backed by strategic priorities and corporate valuesVision: Agile Company Cultural mind-set and agile leadership transformationTeams transformation and organization blue- print designOperating modeland strategy alignmentCommunication management Cooperation Courage Patience Open-minded Development Customer love Strategic priorities Maintaining the leading position in Türkiye and becoming a prominent player globally Investing in emerging technologies in agriculture and foodTransforming the corporate culture through agile transformationEnsuring access to healthy and nutritious products for all 5# of ongoing agile projects IV. Financial overview 50 Source: CompanyBasis of preparation Proposed Transaction scope includes 53% share sale of Tat Gıdaowned by Koç Group, as described in Executive Summary →Tat Gıdaprepares three sets of consolidated financial information with fiscal year being the 12-month period as of January 1 of the calendar year, ending on December 31 of the calendar year (i.e., 01.01.2022-31.12.2022) −Statutoryaccounts: TatGıda’sstatutory accountsarepreparedinaccordancewiththeTurkishCommercialCodefortaxfilingpurposes −Management accounts: Tat Gıda keeps its management accounts IFRS-like in TL and issues monthly accounts detailed at geography and category levels -CompatiblewithIFRSfinancialsexceptfor:Salescut-off −IFRSfinancials: TatGıdaconsolidatedIFRSfinancialsissuedonaquarterlybasisareauditedbyPwCsince2022andbyKPMGtheretofore Historical financials presented in this section are based on the IFRS financials of Tat Gıdawhere the segment and category-based breakdowns are based on Managementaccounts →Tat Gıdamanagement tracks its consolidated operational performance under 2 main segments; (i) Domestic operations and (ii) Export operations →For main segments; namely domestic and export; the management follows category-based performance reporting, analysing the segments under 6 main categories; (i)Paste, (ii) Tomato products, (iii) Ready-to-eat meals and vegetables, (iv) Condiments, (v) Pickles, (vi) Other →Management reports for segments and categories go up to the gross profit level which comprises cost of goods sold, and they follow OPEX for the Company under three main categories; sales and marketing, general administrative and research and development 2023 Budget and forecast period (2024-2028) presented in this section are prepared by Tat Gıdamanagementon 6M basis, as per below →2023B-2028E figures are on the same basis with Management accounts as explained above, presenting management estimates for the forecast period(excludingIFRS-16 implementation) −BothhistoricalfiguresandforecastperiodhavebeenpresentedexcludingHoldingcharges →Management forecastscategory-basedunitsellingpricesforDomesticoperationsin TL andforExport operationsin USD on a semi-annualbasis whereunitcostsarealsoforecastedseparatelyforeachcategoryundereachsegment semi-anually →Financial forecasts only include organic growth for the existing categories as listed above →Management strongly believes there are easily attainable untapped growth and value creation areas beyond the business plan and 2visible examples are provided on pages 29, 30and 31 Management preparedforecastperiodManagement accountsas perthemacroassumptionswhicharepresentedin theAppendix 51 (1) Net sales include other sales and IFRS adjustments, both representing 3.8% of Net sales in total, which have not been shown as a separate box in the above graph (2) Excluding Holding chargesand IFRS-16 application. Holding chargesand Rent expenses havebeen deducted to calculate above Gross profit %, EBITDA and EBITDA % Source: CompanyRemarks Salesvolume(k ton) 56 93 2024F71 103 2026F91 11238 72 2021111133 142 149173204 49 84 202254 88 2023B 2028F+13.2%+7.5% Net sales1(TL mn) 2,612 4,404 2024F4,743 7,580 2026F7,699 378 2028F699 20211,092 2,7874,9907,21612,61618,962 9881,704 20221,8353,014 2023B10,894+113.8%+30.6% Domestic ExportEBITDA2(TL mn) 14.4% 2021 2022 2023B 2024F 2026F 2028F157 458967 1,4232,5844,164 +148.4%+33.9%16.4% 19.4% 19.7% 20.5% 22.0% EBITDA EBITDA2%Overviewof historicalperformanceandforecastperiod 30.2% 30.1% 30.4% 31.5% 32.8% 33.8% Grossprofit2%Toplinegrowth mainlytriggered byincreasingvolumeacross categories Net salesgrowthcomingboth fromTürkiye and exportmarkets Marginimprovementmainlyat grossprofit levelduetoprice correctionforselectedproducts in 2023B and mainlyproductmix impactand limitedpriceincrease for2024 onwards IncreasingEBITDA withgrowing sales 52 (1) Net salesincludeother product sales (fruit jam, fruit puree and other products)which have not been shown as a separate box in the above graph (2) Excluding Holding chargesand IFRS-16 application. Holding chargesand Rent expenses has been deducted to calculate above Gross profit (3) RTE standsforready-to-eatmeals Source: CompanySalesvolume(k ton) 5 40 2022826126 34 2023B929 137 35 2024F10 33 20218 37 2026F11 37 189 38 2028F5191184 88 93103112 154328201172+10.6%+4.9% Net sales1 (TL mn) Paste Tomato products RTE & vegetables3Condiments Pickles8534611611,274 2023B1,2856552241,853 2024F2,318 20213961853,048 2026F3,571 1,688582 4,064 2028F116253051,7043,0144,4047,58010,894 1,149 410 23880846 2022699+107.6%+29.3% Grossprofit2(TL mn) 29.8% 2021 2022 2023B 2024F 2026F 2028F209 484 8591,2852,3593,50228.4% 28.5% 29.2% 31.1% 32.1% Grossprofit Grossprofit%Overviewof Domesticsales 94.6% 81.1% 86.0% 84.3% 85.9% 87.3% % of brandedsalesas of Net salesRemarks Volume growth mainly triggered by innovative and new products for Tomato products, Ready-to- eat meals and condiments Real priceincreasesforPaste, Condimentsand Picklesdueto pricecorrectionin 2023 and new productslaunchesand brand positioningfor2024 and onwards Grossprofitmarginimprovement mainlytriggeredbyPasteand Condiments Increasing Grossprofitwith growing sales 53 (1) Net sales include other product sales (fruit jam, fruit puree and other products) which have not been shown as a separatebox in the above graph (2) Excluding Holding chargesand IFRS-16 application. Holding chargesand Rent expenses has been deducted to calculate above Gross profit (3) RTE stands for ready-to-eat meals Source: CompanySalesvolume(k ton) 20224 2212 34 2023B632 13 32 2024F9333 17 38 2026F125 1522 47 2028F14 303849 54 567191 20216 118 32+18.1%+11.2% Net sales1(TL mn) Paste Tomato products RTE & vegetables3Condiments Pickles66 872031,336 2023B124290 1,718 2024F321 183247555 3,001 2026F526 7463940 4,707 2028F13233033789881,8352,6124,7437,699 202120 2577761 2022+120.2%+33.2% Grossprofit2(TL mn) 36.9% 2021 2022 2023B 2024F 2026F 2028F140 352 643 9551,7412,84535.6% 35.0% 36.6% 36.7% 37.0% Grossprofit% GrossprofitOverviewof Exportsales 61.2% 64.5% 55.8% 55.7% 52.8% 49.9% % of industrialsalesas of Net salesRemarks Volume growth acrosscategories, mainlyforbrandedproducts Toplinegrowth in exsiting countriesas wellas ongoing initiativestopenetratenew markets Improvinggrossprofitmarginin linewiththetoplinegrowth, triggeredbyproductmix and brandmix Increasing Grossprofitwith growing sales 54 Source: CompanyNWC (TL mn) (637)347 20221,670 2,619 (1,348)398 2023B1,699 2,976 (1,599)576 2024F2,739 844 (2,739)1,007 2026F4,071 6,787 (4,060)1,514 2028F9582,946 4743,6535,7578,311 6284,750 (258)114 20212,3923,340 Trade receivables Inventory Trade payables Net current
meals Source: CompanySalesvolume(k ton) 20224 2212 34 2023B632 13 32 2024F9333 17 38 2026F125 1522 47 2028F14 303849 54 567191 20216 118 32+18.1%+11.2% Net sales1(TL mn) Paste Tomato products RTE & vegetables3Condiments Pickles66 872031,336 2023B124290 1,718 2024F321 183247555 3,001 2026F526 7463940 4,707 2028F13233033789881,8352,6124,7437,699 202120 2577761 2022+120.2%+33.2% Grossprofit2(TL mn) 36.9% 2021 2022 2023B 2024F 2026F 2028F140 352 643 9551,7412,84535.6% 35.0% 36.6% 36.7% 37.0% Grossprofit% GrossprofitOverviewof Exportsales 61.2% 64.5% 55.8% 55.7% 52.8% 49.9% % of industrialsalesas of Net salesRemarks Volume growth acrosscategories, mainlyforbrandedproducts Toplinegrowth in exsiting countriesas wellas ongoing initiativestopenetratenew markets Improvinggrossprofitmarginin linewiththetoplinegrowth, triggeredbyproductmix and brandmix Increasing Grossprofitwith growing sales 54 Source: CompanyNWC (TL mn) (637)347 20221,670 2,619 (1,348)398 2023B1,699 2,976 (1,599)576 2024F2,739 844 (2,739)1,007 2026F4,071 6,787 (4,060)1,514 2028F9582,946 4743,6535,7578,311 6284,750 (258)114 20212,3923,340 Trade receivables Inventory Trade payables Net current assets/(liabilities)Net working capital(“NWC”) Remarks Improving collection daysin Türkiye in line with Düzey Pazarlamaagreement; 100 days in 2022and 90 days for 2023 and onwards 60 daysof collectiontermfor exportmarketsfor2024 and onwards 2024 andonwardsinventory turnoveris expectedtoimprove withproductmix andtactical inventorymanagement Paymentstermsimprovefor2024 andonwards 55 (1) OtherCAPEX includesCAPEX fornewproducts, quality, headquarters, R&D amongother (2) Excluding IFRS-16 application; Net debtdoesn’tincludediscountedvalueof existingrentagreements Source: CompanyCAPEX (TL mn) 96.145.726.9 2023B30.724.515.3102.8 2024F56.137.418.769.2 2025F64.564.50.0 21.4 2026F71.771.70.071.7 2027F78.00.00.078.0 2028F190.1173.4181.4193.4215.1 156.064.5 Maintenance CAPEX Capacity CAPEX Logistics CAPEX Other CAPEX1Capitalexpenditures(“CAPEX”)andNet debt 230.9 287.7 Cash and cash equivalents 1,547.4 2,321.9 Shorttermborrowings 1,063.1 149.8 Longtermborrowings 2,379.5 2,184.1 Net debtNet debt (TL mn)23.8% 2.4% 1.8% 1.5% 1.3% 0.8% CAPEX as of Net salesRemarks Well-investedexistingassetbase CapacityCAPEX forecastedin line withthevolumegrowthand capacityof theexistingassets MaintenanceCAPEX forecastedin linewiththeconditionof the assetbaseand pastpractice Net debt: MainlyTLborrowings2022 2023B 56 (1) Holding chargepaidtothemain shareholder, thisamounthas not beenprojectedfor2023B and forthebusinessplan Source: Company, 2022 PwCAuditreportIncomestatement 2021-2022 fromIFRS audit reportandrest as perManagement accounts CAGR (23-28)CAGR (21-23)2028F 2027F 2026F 2025F 2024F 2023B 2022 2021 (TL k) 30.6% 113.8% 18,961,971 15,592,461 12,615,676 9,875,083 7,215,695 4,990,432 2,786,598 1,091,764 Net sales 12,559,672 10,366,086 8,472,473 6,678,844 4,945,491 3,473,501 1,948,390 762,411 COGS 33.4% 114.6% 6,402,300 5,226,375 4,143,203 3,196,239 2,270,204 1,516,932 838,208 329,352 Gross Profit ex. DA 33.8% 33.5% 32.8% 32.4% 31.5% 30.4% 30.1% 30.2% Gross Profit margin 1,718,495 1,412,942 1,155,634 855,289 582,679 315,450 233,793 103,102 Sales and marketing expenses 495,066 443,600 387,588 325,040 255,324 220,745 143,154 68,176 General administrative expenses 24,402 20,077 16,256 12,742 9,326 14,205 3,685 1,403 Research and development expenses 2,237,963 1,876,620 1,559,478 1,193,072 847,329 550,400 380,632 172,682 Total OPEX ex. DA 33.9% 148.4% 4,164,337 3,349,755 2,583,724 2,003,167 1,422,875 966,532 457,576 156,671 EBITDA 22.0% 21.5% 20.5% 20.3% 19.7% 19.4% 16.4% 14.4% EBITDA margin 152,055 138,533 117,024 99,755 83,695 66,332 34,014 19,891D&A 260,387 71,024 Other income 179,672 63,887Other expenses 13,938 8,656 IFRS-16 adjustments 53,088 14,423Holding charge1 465,127 138,150 EBIT 16.7% 12.7% EBIT margin 2,926 2,044 Income (expense) from investment activities -178,005 14,104Income (expense) from financing activities 290,048 154,298 PBT 5,214 3,329 Tax income (expense) 295,262 157,627 Net income 10.6% 14.4% Net income margin 57 (1) Income statement converted to USD (for convenience purposes) using the 6M USD/TL averages for each corresponding 6M (2) Holding chargepaidtothemain shareholder, thisamounthas not been projectedfor2023B and forthebusinessplan Source: CompanyConvenience conversion of Income statement in US Dollars1 2021-2022 fromIFRS audit reportandrest as perManagement accounts CAGR (23-28)CAGR (21-23)2028F 2027F 2026F 2025F 2024F 2023B 2022 2021 (USD k) 10.7% 34.1% 364,461 325,966 293,215 263,831 235,068 219,370 165,314 122,061 Net sales 241,388 216,689 196,897 178,412 161,081 153,651 115,020 85,263 COGS 13.4% 33.6% 123,072 109,278 96,318 85,419 73,987 65,719 50,295 36,798 Gross Profit ex. DA 33.8% 33.5% 32.8% 32.4% 31.5% 30.0% 30.4% 30.1% Gross Profit margin 33,042 29,551 26,874 22,891 19,039 13,915 14,150 11,351 Sales and marketing expenses 9,524 9,284 9,021 8,702 8,343 9,975 8,544 7,726 General administrative expenses 468 419 377 339 302 599 216 156 Research and development expenses 43,034 39,254 36,272 31,932 27,685 24,489 22,911 19,233 Total OPEX ex. DA 14.2% 53.2% 80,038 70,024 60,046 53,487 46,302 41,230 27,384 17,565 EBITDA 22.0% 21.5% 20.5% 20.3% 19.7% 18.8% 16.6% 14.4% EBITDA margin 2,927 2,902 2,727 2,677 2,747 2,968 1,965 2,142 D&A 15,281 7,667 Other income 10,362 6,652Other expenses 851 987 IFRS-16 adjustments 3,271 1,575Holding charge1 27,917 15,849 EBIT 16.9% 13.0% EBIT margin 190 258 Income (expense) from investment activities -9,932 1,687Income (expense) from financing activities 18,175 17,794 PBT 236 444 Tax income (expense) 18,411 18,239 Net income 11.1% 14.9% Net income margin 58 (1) Balance sheet converted to USD (for convenience purposes) using the USD/TL year-end figures for each corresponding year Source: Company, 2022 PwCAuditreportBalance sheet in TL as reported and in USD1converted for convenience 2021-2022 fromIFRS audit reportandrest as perManagement accounts 2022 2021 TL k 287,658 106,046 Cash and cash equivalents 843,981 473,883 Trade receivables 2,392,033 627,595 Inventory 391,306 133,228 Other current assets - 9,064 Other 3,914,978 1,349,816 Short term assets 415,119 229,427 Tangible assets 16,874 8,737 Intangible assets 90,459 49,859 Other non-current assets 522,452 288,024 Long term assets 4,437,430 1,637,840 Total assets 2,321,933 239,546 Short-term borrowings 636,790 257,816 Trade payables 139,677 50,255 Other current liabilities - - Others 8,751 5,619 IFRS-16 application 3,107,151 553,236 Short term liabilities 149,781 160,000 Long term borrowings 47,028 17,296 Other non-current liabilities 29,314 22,097 IFRS-16 application 226,123 199,393 Long term liabilities 3,333,274 752,629 Total liabilities 136,000 136,000 Paid-in capital 131,208 104,768 Other 541,686 421,252 Retained earnings 295,262 223,190 Net income/loss for the period 1,104,156 885,210 Equity 4,437,430 1,637,840 Total liabilities & SH equity2022 2021 USD k 15,384 8,164 Cash and cash equivalents 45,137 36,483 Trade receivables 127,928 48,317 Inventory 20,927 10,257 Other current assets - 698 Other 209,376 103,918 Short term assets 22,201 17,663 Tangible assets 902 673 Intangible assets 4,838 3,839 Other non-current assets 27,941 22,174 Long term assets 237,317 126,092 Total assets 124,179 18,442 Short-term borrowings 34,056 19,849 Trade payables 7,470 3,869 Other current liabilities - - Others 468 433 IFRS-16 application 166,173 42,592 Short term liabilities 8,010 12,318 Long term borrowings 2,515 1,332 Other non-current liabilities 1,568 1,701 IFRS-16 application 12,093 15,351 Long term liabilities 178,266 57,943 Total liabilities 7,273 10,470 Paid-in capital 7,017 8,066 Other 28,970 32,431 Retained earnings 15,791 17,183 Net income/loss for the period 59,051 68,150 Equity 237,317 126,092 Total liabilities & SH equity V. Appendix 60 Source: CompanyLeadership journey: Innovation lying at the heart of Tat Gıda’s DNA 2006 2021 2022 Going forward 2017 2018 2019Tat Konserveis establishedMustafakemalpaşa plant starts productionAcquisitionof KaracabeyplantPartnerships withKagome (3.7%)and Sumitomo (1.5%)Diced tomato technology introduced in TürkiyeStockslistedon Borsa İstanbul 1967 1968
assets 27,941 22,174 Long term assets 237,317 126,092 Total assets 124,179 18,442 Short-term borrowings 34,056 19,849 Trade payables 7,470 3,869 Other current liabilities - - Others 468 433 IFRS-16 application 166,173 42,592 Short term liabilities 8,010 12,318 Long term borrowings 2,515 1,332 Other non-current liabilities 1,568 1,701 IFRS-16 application 12,093 15,351 Long term liabilities 178,266 57,943 Total liabilities 7,273 10,470 Paid-in capital 7,017 8,066 Other 28,970 32,431 Retained earnings 15,791 17,183 Net income/loss for the period 59,051 68,150 Equity 237,317 126,092 Total liabilities & SH equity V. Appendix 60 Source: CompanyLeadership journey: Innovation lying at the heart of Tat Gıda’s DNA 2006 2021 2022 Going forward 2017 2018 2019Tat Konserveis establishedMustafakemalpaşa plant starts productionAcquisitionof KaracabeyplantPartnerships withKagome (3.7%)and Sumitomo (1.5%)Diced tomato technology introduced in TürkiyeStockslistedon Borsa İstanbul 1967 1968 1977 -1983 1983 1997 1989 1993 Organicproduct rangeis expandedwith organictomato and pepper pastes Introductionof sauce filling lines equippedwith state-of-the art, zero-touch production machinery Newplant is openedin Izmir Torbalı to increase capacityLaunchof the "Digital Agriculture"Tat Gıda increasesits export sales to 35% in line with its export growth targetsExpansion in totalannual tomato paste and gherkin pickle production capacityProfitable growthfocusing onIntroductionof PET bottle filling linesto fill ketchup and mayonnaise bottles →Optimized product portfolio →Value-added product growth →Increasing export sales 61 (1) Paste and ketchup brand health and communication performance research December 2022 report Source: Company, IpsosCase study: Tat Gıdapioneersthrough distinctive brand equity propositions in all categories 28,2 18,1 13,6 10,3 5,2 4,5 3,9 3,6 3,5 3,4 3,2 2,65,9 2,1 -3,6 -1,3 -1,0 1,6 -0,4 -1,4 -0,9 -0,3 -0,1 -0,734,1 20,2 10,1 9,0 4,2 6,0 3,5 2,2 2,6 3,1 3,1 1,9 Brand desire Market effects Brand equity Brand desire Market effects Brand equity 21,7 18,2 14,9 7,7 9,1 6,4 3,4 5,1 5,0 3,2 2,2 3,18,6 2,7 -2,0 2,0 -2,2 -2,5 0,0 -2,1 -2,1 -0,5 -0,4 -1,530,3 20,9 12,9 9,7 6,9 3,9 3,3 3,0 2,9 2,7 1,8 1,6I. Pastes II. Condiments Competitor1 Competitor2 Competitor6 Competitor8 Competitor9 Competitor10 Competitor11Competitor7Competitor3 Competitor5Competitor4Competitor1 Competitor2 Competitor6 Competitor8 Competitor9 Competitor10 Competitor11Competitor7Competitor3 Competitor5Competitor4 62 Mostly Last week Last month Last 3months Try Tendency Totalawareness (1) Ipsos Tomato Paste Brand Health and Communication Performance Research-December 2022 Report Source: CompanyTomato paste consumer experience Consumer experience pyramid for tomato paste (awareness to conversion funnels)1 →One out of every three people most frequently use Tat. The most frequent consumption levels of competitors are relatively more limited Mostly Last week Last month Last 3months Try Tendency Totalawareness 100899160442335 96767646271020 886159301778 69% 50%58%38% 967168301755 74% 43%56%32% 5222227623 43% 33%77%44% 864350191033 49% 39%53%32% 61283113522 4517188623 82333912422 72323513612 5923247411 823643201155 Sample Size: 400 participants Question: Looking at the brands listed above, which statement do you think is most appropriate for each? Competitor1 Competitor2 Competitor5 Competitor4 Competitor3 Competitor6 Competitor7 Competitor10 Competitor9 Competitor8 Competitor11 63 Mostly Last week Last month Last 3months Try Tendency TotalawarenessMostly Last week Last month Last 3months Try Tendency TotalawarenessSauce consumer experience Consumer experience pyramid for sauce (awareness to conversion funnels)1 →In terms of the total sauce consumer experience pyramid, Tat is the leader and outperforms all otherbrands 9071714731169 97838663472923 895463301672 926569361884 100909579634542 853953261663 936066301872 63313113610 9259714428137 854055251452 77284118831 915461291241 (1) Ipsos Tomato Paste Brand Health and Communication Performance Research-December 2022 Report Source: CompanySampleSize: 400 participants Question: Lookingat thebrands listedabove, whichstatementdo youthinkis mostappropriate foreach? Competitor1 Competitor2 Competitor5 Competitor4 Competitor3 Competitor6 Competitor7 Competitor10 Competitor9 Competitor8 Competitor11 64 Mostly Last week Last month Last 3months Try Tendency TotalawarenessMostly Last week Last month Last 3months Try Tendency TotalawarenessReady-to-eatmealsconsumer experience Consumer experience pyramid for ready-to-eat food category(awareness to conversion funnels)1 →When asked about the most frequently consumed brand spontaneously, Tat is the most frequently consumed brand with a share of 12% 97828061482610 9679836344172 10092917461357 9068664729131 6844443323120 9990927861346 9677837061398 7855543524110 100929177633112 9883826345185 (1) Ipsos Tomato Paste Brand Health and Communication Performance Research-December 2022 Report Source: CompanySample Size: 400 participants Question: Looking at the brands listed above, which statement do you think is most appropriate for each? Competitor1 Competitor2 Competitor5 Competitor4 Competitor3 Competitor6 Competitor7 Competitor10 Competitor9 Competitor8 Competitor11 65 Source: CompanyProduct portfolio Tomato & pepper pastes Tomato products Condiments Ready-to-eat meals & vegetables Pickles Other products Organic Organic Organic 66 Source: CompanyMustafkemalpaşa facility Sauceline Pickle line Vegetable line Tomato paste lineWarehouseWarehouseTreatment plant Closed Area: 52k m2 67Karacabey facility Closed Area: 32km2 Warehouse Treatment plantDiced line Tomato paste line Sauceline Source: Company 68Torbalı facility Closed area: 10k m2Warehouse Treatment plantAuxiliary facilitiesTomato paste line Source: Company 69 Source: CompanyProduction lines Highlights Photo Production Line Category →Tomato processing capacity of 133,000 tonnes per year →Ability to produce puree, passata, etc. →Main production center for jarred products →Aseptic bag-in-box filling technologyMustafakemalpaşa facility Pastes→Tomato processing capacity of 300,000 tonnes per year →Diced and peeled tomato production technology →First pre-evaporator system in tomato paste plants in Türkiye →The fastest 1/1 can filling line among tomato paste plantsKaracabey facility →Tomato processing capacity of 148,000 tonnes per year →Lean productportfolio: drum, 1/1 can and 5/1 canTorbalı facility →Ketchup production capacity of 100 tonnes per day →The best technology: high capacity in one single unit, high automation →High efficiency with less raw material usage thanks to high pressure homogenizerKetchup preparation unit Condiments →Mayonnaise production capacity of 120 tonnes per day →High automation with flowmeter and loadcell technologiesMayonnaise preparation unit →Green pea processing capacityof 4,000 tonnes per year →Vegetable production capacity of 1,500 tonnes per year →RTE food production capacity of 16,000 tonnes per year →Stainless autoclaves with ergonomic chain pull systemCanned vegetables & RTE production unit Vegetables 70 Source: CompanyProduction lines Highlights Photo Production lines Category →Fastest ketchup & mayonnaise filling line in Türkiye with 40,000,000 pcs per year (400gr bottles) →Production with ultraclean technology →Highly automated production with three workers per shiftPET sauces production line Bottling →Production capacity of 750mnunits per year →Flexible production: stick or sachet →High automation with automatic weighing systemPortion pack sauces production lines Sauce packaging unit→Production capacity of 2.7 mnunits per year →Automatic bucket feeding and lid closing systemsBucket sauces production lines →Production capacity of 11 mnunits per yearMini jar sauces production line →Production capacity of 7.5 mnunits per yearPouch pack sauces filling line 71 Source: CompanyCentralwarehouse →67,000 m2storagearea →As-Rs supported mixed pallet preparation automation →Warehouse management traceability with SAPe-WM →780 delivery points(TR) →Order management and routing with SAP TM →Capacity of 75 vehicles
Highlights Photo Production lines Category →Fastest ketchup & mayonnaise filling line in Türkiye with 40,000,000 pcs per year (400gr bottles) →Production with ultraclean technology →Highly automated production with three workers per shiftPET sauces production line Bottling →Production capacity of 750mnunits per year →Flexible production: stick or sachet →High automation with automatic weighing systemPortion pack sauces production lines Sauce packaging unit→Production capacity of 2.7 mnunits per year →Automatic bucket feeding and lid closing systemsBucket sauces production lines →Production capacity of 11 mnunits per yearMini jar sauces production line →Production capacity of 7.5 mnunits per yearPouch pack sauces filling line 71 Source: CompanyCentralwarehouse →67,000 m2storagearea →As-Rs supported mixed pallet preparation automation →Warehouse management traceability with SAPe-WM →780 delivery points(TR) →Order management and routing with SAP TM →Capacity of 75 vehicles per day →3.5 million km per year of transportation →Loading organization and documents →Customs clearance operation →Digital supply chain →OTIF focused work →Real time KPI tracking →Demand forecasting/planning →Integrated S&OP process projects →Order and supply management →123 SKUs and 10,000 units handled per day (packaging, shrinking, labelling, multipack) 72 Source: CompanyTomato and other vegetable supply regions Tomato Gherkin →1,000+ farmers →50+ agriculturalareas →3,000 ha+ contracted area→500k+ tonnesof raw material →EUR 50 mnpurchase →EUR 5 mnagricultural support Pea →50+farmers →10+ agriculturalareas →400ha+contracted area→2.5ktonnesofrawmaterial →EUR1+mnpurchase →EUR250k+agriculturalsupport→500+ farmers →10+ agriculturalareas →500 ha+ contractedarea→10k+ tonnes of rawmaterial →EUR 5+ mnpurchase →EUR 1+ mnagriculturalsupport Other vegetables →100+farmers →50+agriculturalareas→10k+tonnesofrawmaterial →EUR4+mnpurchase →Red pepper →Green pepper →Artichoke →Green Bean→Red beet →Potato →Eggplant →Okra →Apple 73 Source: CompanyIT systems Majority of all systems are designed by SAP Business Process Analytics HCM Finance/Controlling Procurement Sales Transportation Management WarehouseManagementSRM Allocation ProductionPlanning QualityManagement Plant Maintenance ProjectSystem IntegrationSystemPlatform Business Systems SAP BW on HANA Power BI S4HANA HR (Comp. Scope ) SuccessFactor / EC SAP S4/HANA Finance incl. FI, FM, CO, AA, BPC, TRM, RE SAP S4/HANA SRM SAP S4/HANA MM SAP S4/HANA SD SAPS4/HANA GATP SAPS4/HANA TM SAPS4/HANA EWM SAP S4/HANA PP SAP S4/HANA QM SAP S4/HANA PM SAP S4/HANA PS SAP S4/HANA PO 74 Source: Company, Koç HoldingMacro assumptions 2028F 2027F 2026F 2025F 2024F 2023B 2022 2021 Unit CPI TL 10.0% 12.0% 15.0% 20.0% 30.0% 40.0% 64.3% 36.1% % CPI ( (EoP) 11.0% 13.5% 17.5% 25.0% 35.2% 42.8% 72.3% 19.6% % CPI (Average) USD 2.0% 2.0% 2.0% 2.1% 2.1% 3.0% 6.4% 7.4% % CPI (EoP) 2.0% 2.0% 2.0% 2.1% 2.3% 4.5% 8.1% 4.7% % CPI (Average) 2028F 2027F 2026F 2025F 2024F 2023B 2022 2021 Unit USD / TL 50.03 45.56 40.41 34.37 27.00 18.70 12.99 7.35 TL Beginning of period 51.99 47.80 42.99 37.39 30.69 22.85 16.58 8.89 TL Average 53.95 50.03 45.56 40.41 34.37 27.00 18.70 12.99 TL End of period This document (along with any verbal or written responses to the queries thereof, referred as the “Presentation”) is provided for information purposes only on the express understanding that theinformationcontainedhereinwillberegardedasstrictlyconfidential. 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Draft February 2022 Strictly private and confidentialProject North Information Memorandum Draft 1Table of contents Section Page I Executive summary 3 II Key investment highlights 11 III Business overview 25 IV Financial overview 39 Draft I. Executive summary Draft 3Executive summary Largest red meat processor in MENA region c.900 SKUs Fresh meat Delicatessen MAP FFPPremium brand Heritage brand5 main categoriesCompany overview Product portfolio overview Key figures2,3,4 Reputable brands Döner (1) Euromonitor; Namet and Maret combined for branded processed red meat market share in Turkey, excluding private label (2 ) 2018-2020 figures and 9M 2021 based on EY VDD report and Q4 2021 is based on management accounts (3) Namet participated in the social welfare campaign launched by the government back in 2017 to pro vide affordable meat to the public. In the framework of this program, which was finalized in mid -2019, the Company sold 14.9 tons of meat procured from The Meat and Milk Board (ESK). 2017, 2018 and 2019 s ales volumes and revenues have been adjusted to eliminate the effects of this campaign (effect on EBITDA negligible; hence no EBITDA adjustment performed) (4) 2016 -2017 financials are based on IFRS a ccounts Source: Company, EuromonitorNet sales (TL mn)EBITDA (TL mn)13.1% 15.7%56 60 12.2%60 12.5%63 14.8%61 EBITDA marginSales volumes (tons, ‘000)1998 1984→Established in 1998 , Namet (“North ” or the “Company ”) is the largest branded and fresh meat processor in Turkey and in the MENA region . North is owned c.60% by Kayar family with almost a century’s knowhow in nurturing cattle and meat processing, and c.40% by Investcorp -In 2013 , North acquired the largest cattle farm in Turkey , becoming a vertically integrated producer with control over value chain . North supplies c.25% of carcasses from its own farm -In 2014 , North acquired “Maret ”, a highly prominent brand and a major producer of delicatessen and packaged processed meat products in Turkey →North is uniquely positioned with its meat processing capacity and diverse product portfolio consisting of fresh meat, delicatessen, modified atmospheric packaged (MAP) products, döner (Turkish kebab specialty), and frozen and further processed (FFP) products, with over 900 SKUs →North has a strong distribution network, reaching c.80k retail sales points and c.15k HoReCa across Turkey . North covers the whole spectrum of channels including B2B2C (Retail) and B2B →Besides offering primal meat cuts, North enjoys remarkable brand awareness and customer loyalty through its “Namet” and “Maret” branded products, which have a combined market share of c.23%1 in 2020 →The Company’s existing facilities have 90k tons of annual production capacity . North is building a new facility at an incentivized investment zone in Turkey, to expand production capacity and improve operational efficiency with high -tech and environmentally friendly features . The facility, expected to be operational in Q4-2024, will also enable North to introduce new product categories , such as soups , bone chips and bone broths →North continuously increased its sales volume in historical periods until the outbreak of Covid - 19, with 6.4% p.a. volume growth through 2016 -2019 . Extensive product portfolio , diverse channel penetration , and flexibility to shift sales across channels provide a natural hedge against business downturns, as evidenced by the Company’s resilience during the pandemic 1,423 1,632 1,9002,256 2,3443,1015,251+24.3% 172 213299 282 286459707 2016 2017 2018 2019 202012.1%52 13.5%64 2021E 2022B Draft 4 Source: CompanyExecutive summary Leadership journey: Innovation and quality deeply embedded in Namet ’s DNA 1998Namet is establishedQualified as globally approved supplier of Burger King 2021 Initiates construction of state -of-the-art facility in Düzce Receives Halal certification 2012 2005Kayar family acquires Namet brand 2009 2010 2014 Acquires Maret , founded in 1984 Investcorp, a global private equity investor, buys 40% stake in NametIntroduces döner product segment Receives patent for ready -to-eat tripeGlobally approved supplier of McDonalds 2013 Acquires Şanlıurfa cattle farm, the largest in Turkey2011Pioneers smoked products, which garner nationwide approval Namet Çayırova facility launches operations Starts supplying meat to Nusr -Et Steakhouse 2012 2016 Draft 5Executive summary Wide range of product offerings under 5 main categories Delicatessen Fresh Meat MAP FFP Döner kebab →Market leader1 in Turkey →Quality and Hygiene: High quality products trusted by consumers→Market leader with c.6% market share2 in Turkey →Strong Market Position: Largest player in fresh red meat segment→Benefiting from the exposure to fast growing discounters →Convenience and Hygiene: Fresh meat in special packaging→Significant room for further growth in local market →Original and Creative: Innovative product category→New product category, introduced in 2020 →New and Growing: Benefits from the brand power of other categories Veal/Chicken sausage, soujouk , salamiVeal/lamb with and without bones, offal, fatMAP fresh meat and MAP offalMeatballs and marinated productsMAP, cooked döner, PL dönerOverview Product portfolio Gross sales (TL mn)4,534% Share in gross sales (2021E, %)3Channel breakdown (2021E , %) CAGR (1) Market share in branded processed products (2) Estimated by ÜNLÜ & Co based on North’s fresh meat sales and Euromonitor fresh meat market size estimate (3) Product category breakdown represents meat product sales (excluding by products and trade goods) (4) Gross sales including returns (5) 201 8-2021 inflation CAGR: 15.6% and 2021 average inflation: 19.6% Source: Company, Euromonitor18 21 23 24 25 28 23 18 17 18 2 5 6 7 7 8 8 6 7 8 4 6 6 5 6 Sales volume (k tons) 29% 11% 11% 8% 529 683 847 1,1041,651 2018 2019 2020 2021E 2022B+28%+50% 961 899 759 9301,638 2018 2019 2020 2021E 2022B-1%+76% 48184 232362617 2018 2019 2020 2021E 2022B+96%+70% 153226 248 255544 2018 2019 2020 2021E 2022B+18%+113% 210 261 221343642 2018 2019 2020 2021E 2022B+18%+87%89%11% Retail B2B18% 82%98%2% 44%56%10% 90% Draft 6 B2B2C (Retail)1B2B1 Organized retail Traditional retail HoReCa Catering Other Long -tenured relationships with national, local, discounter, and online retail chains with its brands, sub-brands and private label productsDirect sales: Covering traditional small stores through direct sales and extensive distributor network in all regions Distributors: Maret products sold via “Düzey”; small -sized retailers covered by “Seher” for Namet productsMain supplier of global and local quick service restaurants (QSR), restaurants and hotel chainsMain supplier of sizeable catering service providers of business centers, factories, educational institutions & hospitalsIncluding mainly food processors, wholesalers and dealers (1)
9301,638 2018 2019 2020 2021E 2022B-1%+76% 48184 232362617 2018 2019 2020 2021E 2022B+96%+70% 153226 248 255544 2018 2019 2020 2021E 2022B+18%+113% 210 261 221343642 2018 2019 2020 2021E 2022B+18%+87%89%11% Retail B2B18% 82%98%2% 44%56%10% 90% Draft 6 B2B2C (Retail)1B2B1 Organized retail Traditional retail HoReCa Catering Other Long -tenured relationships with national, local, discounter, and online retail chains with its brands, sub-brands and private label productsDirect sales: Covering traditional small stores through direct sales and extensive distributor network in all regions Distributors: Maret products sold via “Düzey”; small -sized retailers covered by “Seher” for Namet productsMain supplier of global and local quick service restaurants (QSR), restaurants and hotel chainsMain supplier of sizeable catering service providers of business centers, factories, educational institutions & hospitalsIncluding mainly food processors, wholesalers and dealers (1) Channel breakdown represents meat product sales (excluding by products and trade goods) (2) 2018 -2021 inflation CAGR: 15. 6% and 2021 average inflation: 19.6% Source: CompanyExecutive summary Expansion -led strategy with strong nationwide coverage with balanced sales channel mix % of 2021E Gross sales46% 4% Key clients Overview Gross sales2 (TL mn) Individual stores26% 10% 14%51% 49% National chains Online retailers Hotels Restaurants53% 5% 42% 70% 28% 2% 6% 94% 5% 95% 21% 79% Branded Non-branded Private Label Distributors CAGR5837961,0881,2962,099 2018 2019 2020 2021E 2022B+31%+62% 264305335 351566 2018 2019 2020 2021E 2022B+10%+61% 238 263225279506 2018 2019 2020 2021E 2022B+5%+81% 459598 3987081,293 2018 2019 2020 2021E 2022B+16%+83% 357291 262359629 2018 2019 2020 2021E 2022B0%+75% Draft 7 “ (1) Includes discount stores, local and national chains Source: CompanySustainable market leadership position ensured by purpose -led brand and rooted management culture Strong brand awareness Rooted innovation culture Long standing brand history Undisputed robust position in customer awareness, with high quality brand image cemented by long standing brand history Trusted brand eliciting loyalty Reputed brand associated with “deliciousness”, “freshness” and “convenience”, with quality consistently meeting household expectations Extensive distribution network One of the most efficient and extensive distribution networks in Turkey, with penetration in all sales channels serving brand convenienceExecutive summary Leadership journey: Key pillars differentiating Namet in the market Market leader position Largest player in branded processed red meat products market in Turkey Extensive penetration in sales channels 70%Leading supplier of tourism sector, covering more than 70% of all 5 -star hotels in south of Turkey90%Covers c.90% of points of sale in organized food retail universe1, reaching more than 40k pointsConsumer -centric mindset Innovative skills and agile R&D capabilities harnessed to address consumer needs through a dynamic product portfolio Ability to introduce new products High penetration across various sales channels enables the Company not only to target more customers and increase brand awareness, but also facilitates new product introduction 16% 14% Comp.1 Comp.2Processed meat 23% Namet & Maret First to bring dried cured beef without spicy paste into retail First to produce MAP meat and döner products in Turkey, supplied only to Migros Received patent for ready -to-eat tripe Draft 8 3 1 42 Existing factories & HQ Cattle farm New facility Source: CompanyExecutive summary Operational excellence with vertical integration from farm to fork DescriptionDeboning, processing packaging Establishment 2010 Closed area c.35k sqm Annual processing capacity (k ton)63k tonsDescription Processing & packaging Establishment 1987 Closed area c.25k sqm Annual processing capacity (k ton)27k tons DescriptionDeboning, processing packaging Construction start date -Expected operation dateQ4 2021 - Q4 2024 Closed area 116k sqm Annual processing capacity (k ton)104k tonsDescription Cattle farm Acquisition year 2013 Open area 740k sqm Cattle capacity c.50kKocaeli facility 1 İstanbul facility 2 Düzce facility (New investment) 3 Şanlıurfa cattle farm 4Largest of its kind cattle farm in Turkey, providing c.25% of the Company’s carcass supply serving as checks and balances for the third -party supply chain Extensive know -how in procurement of calves for fattening, and established network for locally sourced grown cattle Largest red meat processing capacity in Turkey with 2 facilities and a new facility underway to almost double the capacity Qualified as approved supplier of global Horeca chains reflective of strict commitment to quality and hygiene Successfully passes periodic inspections; accredited with global certifications Draft 9 (1) Owns through its SPV named Gulf Delicatessen Investors S.a.r.l . Source: CompanyExecutive summary Transaction overview →Project North refers to the contemplated sale of up to 100% stake in the Company (the “Proposed Transaction ”) →The Company presents a unique opportunity for potential investors with its leading market position, pioneer brand image, premium product quality and further growth potential →Shareholders of Namet have appointed ÜNLÜ & Co to act as their exclusive financial advisor in the Proposed TransactionEnvisaged transaction timeline Transaction scope NDA IM distributionLimited Q&A / MMNon- binding offersBinding bidsSigning Initiation of due diligencePhase II Phase I April 7th →Due diligence period for a limited number of selected potential investors with a virtual dataroom access along with Q&A process →Access to EY Financial Vendor Due Diligence Report (“ EY Financial VDD Report ”) and EY Tax Vendor Due Diligence Report (“ EY Tax VDD Report ”) →Access to Gen & Temizer \| Özer (Kinstellar Istanbul) Legal Vendor Due Diligence Reports (“ Gen & Temizer \| Özer Legal VDD Report ”) →Management presentations and site visits →Exact timetable for Phase II to be circulated in a separate process letter for short -listed potential investorsPhase I details →Distribution of the IM →Limited Q&A process for key questions and clarification requests →A meeting with the management (“ MM”) to be arranged upon request of the potential investors →Non-binding offers due by April 7th, 2022 Phase II detailsShareholding structure ShareholdingNametKayar family 60.8%Investcorp1 39.2 %April June -July Draft II. Key investment highlights Draft 11Strategic positioning of Namet Key investment highlights Largest red meat processor in MENA region1Strong demographic & industry fundamentals to fuel future growth 3Broad product portfolio meeting all kinds of meat consumption needs 4Nationwide coverage via broad range of customers and channel base 5 Strategically owned cattle farm ensuring supply security and cost control 6Integrated state -of-the-art facilities with proven production standards 2 Nationally recognized heritage brands enjoying strong customer recognition Robust financial performance backed by outstanding growth prospects 7 Draft 12 Solid growth prospects driven by demographic fundamentals in Turkey Sizeable and growing dynamics of sales channels in Turkey•
request of the potential investors →Non-binding offers due by April 7th, 2022 Phase II detailsShareholding structure ShareholdingNametKayar family 60.8%Investcorp1 39.2 %April June -July Draft II. Key investment highlights Draft 11Strategic positioning of Namet Key investment highlights Largest red meat processor in MENA region1Strong demographic & industry fundamentals to fuel future growth 3Broad product portfolio meeting all kinds of meat consumption needs 4Nationwide coverage via broad range of customers and channel base 5 Strategically owned cattle farm ensuring supply security and cost control 6Integrated state -of-the-art facilities with proven production standards 2 Nationally recognized heritage brands enjoying strong customer recognition Robust financial performance backed by outstanding growth prospects 7 Draft 12 Solid growth prospects driven by demographic fundamentals in Turkey Sizeable and growing dynamics of sales channels in Turkey• Population growth: Population expected to hit c.93 mn by 2029• Significant room to catch up with the OECD average of 58.9%• Rising urbanization: Urban population forecast to reach c.81% by 2029, matching 2020 OECD average • Organized retail is steadily gaining share from traditional channel, which benefits the Company, as it has c.90% coverage in organized retail channel and reaches c.40k sales points in traditional channel • With 47% of its sales coming from organized retail channel, the Company is the best positioned player in the market to capitalize on the future growth potential of the fast -growing retail channel • Despite the adverse effects of Covid -19, food services channel sustains its promising growth potential, as out-of-home dining is expected to increase along with rising income and urbanization levels as well as increasing share of women in workforce• One of North’s core strengths is being the main supplier of the largest hotel chains in Turkey. The Company serves c.37% of total bed capacity , and more than 70% of all 5 -star hotels in Mediterranean coastal region • Due to extensive coverage in tourism sector, tourist number projections and hotel occupancy rates are significant growth drivers1 2 Number of tourists supporting HoReCa channel 3 Turkish food retail market size (TL bn)3,7Population (mn)1 Female workforce participation (% of total) Urban population (% of total) 2 2018A83.9 2019A 2020A 2021E 2029E 2025E82.981.984.988.892.5 +1.2%+1.1% 3377 201952 6 2022E 2010 2029E45+5.2%+4.0%Number of tourists per year (mn)5Strong demographic & industry fundamentals to fuel future growth 1 2010 201529.7% 2019 2020 202030.5%26.2%32.2%58.9% +3.5%+29.2% 2029 2010 2015 202070.8%73.6%76.1%81.0% +5.3%+4.9% (1) TURKSTAT database has a population estimate for 2030. 2029E is based on 2020 -2030E CAGR (2) Turkey’s urbanization is assum ed to reach 2020 OECD average of 81% in 2029E (3) Includes all food retailers (national, local, discount, and traditional stores) (4) Includes full -service & limited -service restaurants, self -service cafete rias, cafes/bars and street kiosks/stalls (5) 2021E -2029E growth rates are UNLU & Co estimates based on United Nations World Trade Organization (UNWTO) Tourism Towards 2030 report, which forecasts 2.2% growth g lobally and 4.4% in emerging countries (6) The figure depicts 2019 as the latest pre -Covid data (7) Based on the estimat ions of Euromonitor and UNLU & Co Source: TURKSTAT, TURSAB Euromonitor, OECD, Company , UNLU & CoTurkish food services market size (TL bn)4,7 2015 2021 2019 2020 2025E71457651214 +14%+32% 2021 2025E 2015 2019 2020112216 288 343841 +21%+25% Covid -19 effectCAGR % increase % increase CAGR CAGR CAGRTurkey OECD Draft 13 (1) Other m eat represents poultry and pork Source: OECD -FAO Agricultural Outlook 2021 -2030, TURKSTATPer capita red meat consumption (kg)Turkey ’s total meat and red meat consumption (‘000 tons) Key Remarks The total meat market volume in Turkey is expected to reach 4.0 million tons in 2029 with a CAGR of 1.8% The share of red meat in total meat consumption is expected to remain stable at around 45% Turkey's population growth forecast for 2021 -2029 is 1.1% annually, which supports growth in meat consumption Key Remarks Turkey is far behind the OECD averages in meat consumption per capita Growth potential for meat consumption is better understood when pork is included in red meat consumption38.1 38.8 38.5 38.6OECD incl. pork meatStrong demographic & industry fundamentals to fuel future growth 1 46% 201946%41%54% 2029E59%54% 2010 2021E45%55%2,2713,994 3,322 3,4623.9%1.8%Red meat1Other meat 16.0 2010 2029E18.7 2019 2021E12.718.415.8 15.719.515.7Turkey OECDCAGR Draft 14 (1) As of Q3 2021 Source: Company2 Wide and comprehensive product portfolio with 9331 SKUs Innovative products enriching each product categoryPresence in all sales channels thanks to extensive product portfolio and market penetration Multi -size and differentiated products key to flexibility 1 2 4 3 →Continuous product development effort according to changing trends and tastes of customers →Pioneer of innovative products in the sector thanks to newly developed products by the inhouse R&D team −Bringing the packaged cooked tripe and Philly’s Steak and MAP products to the market→Product portfolio includes a variety of product types, including fresh/frozen, smoked, cooked and non-cooked →Multi -size and weight options address consumers with different purchasing power →Product differentiation offers flexibility in responding to customer preferencesDelicatessen Fresh meat MAP Frozen and further processed Döner357 307 114 69 86→Well diversified sub-products under 2 brands with over 933 SKUs in total which serves the needs ofthe channel and channels →A wide portfolio, comprising cooked and uncooked products in different weights, developed for various areas of use→Notable presence in all sales channels with differentiated products →Differentiated products, addressing the needs of diverse sales channels →Robust production capabilities, ensuring quick response to the requirements of new sales channels, such as online B2B2C ChannelsB2B Channels Online ChannelsBroad product portfolio addressing all kinds of meat consumption needs Draft 15 Source: Company2… with deep -rooted innovation culture 1990 -2000s 2010s Present Mid-90s First to bring dried cured beef without spicy paste into retail 2000 First to produce MAP products in Turkey, supplied only to Migros 2009 MAP products segment launched under Namet brand2011 Pioneers smoked products, including smoked turkey, which garner nationwide approval 2014 Launches cooked döner (“Shawarma”) product segment 2014 Receives patent for ready -to-eat tripe2015 Starts to produce Philly’s Steak for Carl’s Junior and Subway, and Arby’s special meat recipe 2021 Smoked “Frankfurter” sausages for retail and cooked meatballs 2024 and beyond Prospective new products: →Broth →Bone chip →Soup2022 Tantuni (Roasted minced meat served in lavash bread)
such as online B2B2C ChannelsB2B Channels Online ChannelsBroad product portfolio addressing all kinds of meat consumption needs Draft 15 Source: Company2… with deep -rooted innovation culture 1990 -2000s 2010s Present Mid-90s First to bring dried cured beef without spicy paste into retail 2000 First to produce MAP products in Turkey, supplied only to Migros 2009 MAP products segment launched under Namet brand2011 Pioneers smoked products, including smoked turkey, which garner nationwide approval 2014 Launches cooked döner (“Shawarma”) product segment 2014 Receives patent for ready -to-eat tripe2015 Starts to produce Philly’s Steak for Carl’s Junior and Subway, and Arby’s special meat recipe 2021 Smoked “Frankfurter” sausages for retail and cooked meatballs 2024 and beyond Prospective new products: →Broth →Bone chip →Soup2022 Tantuni (Roasted minced meat served in lavash bread) Ability to develop new products addressing customer and channel needsOngoing plans to launch n ew categories (broth, bone chip and soup) after Düzce factory comes on streamInnovative product releases throughout the years, being the first mover in the market and addressing consumer needs Continuous development of new products by inhouse R&D team Draft 16 3 Market positioning Product Portfolio YearRetail sales (TL mn)1Branded products market share (%)Delicatessen Fresh Meat MAP FFP Döner Namet & Maret 1998 - 1984 1,265 23% Competitor I 1973 854 16% Competitor II 1986 779 14% Competitor III 2007 267 5%Brand remarks 1998Successfully boosted its brand heritage, offering new product categories with more value –added products addressing customer preferences As trusted brands associated with top quality and taste by consumers, Namet and Maret command top -of-mind brand recall Solid brand awareness with long -standing brand history Solid brand awareness with long -standing brand history 24 years of brand history since establishment 1984FOR EVERY MEAL, FOR EVERY FAMILY Highest brand presence with extensive penetration to all sales channelsPioneer brand38 years of brand history since establishment Addressing customers needs with different brands and evolving product portfolioHigh customer responsiveness Trusted brand with high national and international quality standardsProven qualityNationally recognized heritage brands enjoying strong customer recognition (1) Excluding private label sales Source: Company, Euromonitor Market leader with nationally recognized brands through extensive product portfolio compared to three biggest competitors Draft 17 Source: CompanyB2B2C 50.6%Brands : Namet , Maret , Sub -brands and PL Direct access to a strong consumption base: Long -tenured relationships with national, local and online retail chains in Turkey National Online 90%40k % of 2021E Gross sales Share in 2021E Gross sales Sales points reached % channel coverage rate Direct sales to organized retailers based on long -term relationships Private label production tailored to the changing needs of national chains and households Direct delivery options either to warehouses or individual stores for retails Has a network of 45 distributors in 4 regions, accessing c.40k points c.30% of all traditional individual stores offer Namet and Maret branded delicatessen products Reaches local chains through distributor channelEnjoys highest visibility and availability , dominating physical shelf space with market leading position in branded productsAdaptation to emerging online channels: Partnering with top online groceries, expanding online presenceThe Company covers traditional small stores either through direct sales or through distributor network responsible for all regions of Turkey Penetration in the traditional channel will increase with the additional capacity of the new factoryBrands : Namet , Maret , Sub -brands Distributors Direct Sales Traditional individual stores 30%40k Sales points reached % channel coverage rate Share in 2021E Gross sales 4Nationwide coverage via broad range of customers and channel base Organized retail Traditional retail46.4%4.2% Draft 18 Strategic partner for top catering companiesMain red meat supplier to many well-known ready meals manufacturers Participates in tender processes of sizeable municipalities and militaryCatering HoReCa Main supplier of sizeable caterers serving business centers, factories, educational institutions and hospitals Hotels RestaurantsOther Main supplier of global and local QSRs, restaurant and hotel chains, reaching 15k sales pointsAccess to a large number of wholesalers, dealers and food processors Tender processes for municipalities and corporations Approved and long -term suppl ier of leading global restaurant chains including McDonalds, Arby’s and Nusr -Et Caters to diverse c ustomer portfolio , from international hotel chains to world -class restaurantsGoes through regular quality control processes of global restaurant chains Offers both branded and fresh meat products to leading catering companies4Nationwide coverage via broad range of customers and channel base B2B 49.4% % of 2021E Gross sales Share in 2021E Gross sales 10.1% 25.5% 13.8% Source: Company Draft 19 5 Kocaeli c.35k sqm Total closed area 2010 Establishment yearKocaeli facility İstanbul facility İstanbul 63k tons Production capacityc.25k sqm Total closed area1986 Establishment year27k tons Production capacity MENA’s largest red meat processing facility in terms of total production capacityPioneering facilities in the sector in terms of automation, hygiene standards, machinery park, capacity and technologyCattles from own farm slaughtered at own slaughterhouse and from 3rd parties at approved 3r party slaughterhouses meeting Namet’s quality standards Fully integrated production across the value chain, enabling supply security, traceability and full control over operations from farm to forkIn adherence to the highest hygiene standards, factory floors and walls are coated with antibacterial material Facilities CapabilityAnnual Processing Capacity (k tons) Kocaeli – Namet Deboning , processing, packaging 63 Istanbul – Maret Processing, packaging 27 Total Capacity 90High Quality Standards Integrated state -of-the-art facilities with proven production standards… Source: Company Draft 20 Largest capacity in Turkey in a single plant, located in an incentivized investment zoneOnce completed, assets of leased Istanbul - Maret plant will be transferred to the new facility, owned by the Companyc.212k sqm Total area…and new facility investment to expand capacity and product portfolio 5 New production facility with latest technology is under construction c.104k tons/annum Process capacity1 Sustainable project with eco -friendly features such as solar panels and cogeneration plant to improve efficiency 2902 Expected additional hires3 Düzce Düzce (New facility) Fresh meatDelicatessen c.39k Dönerc.25k c.11k FFP MAPc.12k c.17k c.155 km to Istanbul facility c.160 km to Kocaeli facility Q4 2024 Expected operation date (1) Calculated based on 300 working days and 3 shifts per day for d öner, 1 shift for fresh meat and FFP, and 3 shifts for delicatessen and MAP products (2) Includes blue collar direct and indirect personnel (3) Additional hires
- Maret plant will be transferred to the new facility, owned by the Companyc.212k sqm Total area…and new facility investment to expand capacity and product portfolio 5 New production facility with latest technology is under construction c.104k tons/annum Process capacity1 Sustainable project with eco -friendly features such as solar panels and cogeneration plant to improve efficiency 2902 Expected additional hires3 Düzce Düzce (New facility) Fresh meatDelicatessen c.39k Dönerc.25k c.11k FFP MAPc.12k c.17k c.155 km to Istanbul facility c.160 km to Kocaeli facility Q4 2024 Expected operation date (1) Calculated based on 300 working days and 3 shifts per day for d öner, 1 shift for fresh meat and FFP, and 3 shifts for delicatessen and MAP products (2) Includes blue collar direct and indirect personnel (3) Additional hires on top of the existing Istanbul facility personnel Source: CompanyKocaeli & Istanbul facilities (2021) Fresh meatDelicatessen c.37k Dönerc.27k c.7k FFP MAPc.7k c.12kThe new EUR 150 mn Düzce facility will replace the existing Istanbul facility and increase the total processing capacity of the Company to 167k tons Düzce + Kocaeli Fresh meatDelicatessen c.59k Dönerc.48k c.13k FFP MAPc.18k c.29k Draft 21 …with multiple value enhancers underpinned by new investment The facility will be equipped with best -in-class machinery and automation technology, optimizing order -specific carcass selection and ensuring efficiencyII New investments to increase efficiency The new facility will alleviate production bottlenecks, raising annual processing capacity to 16 7k tons from 90k tons. Order fulfillment rates will be maximizedI Additional production volume in existing products5 (1) Efficiency gains to be achieved from new investments are not incorporated into the business plan (2) Represents the inc rease of meat product volume per labor between 2022B -2030F Source: Company III Margin enhancement via operational leverage Gross profit and EBITDA margins are expected to improve with operational efficiency1. Improved s ales volume per employee by c.50%2 and energy usage optimization will be the main catalysts The facility will enable the Company to introduce new product categories; by - products, such as bones, will be converted into higher value -added products (bone chips, broths and soups)IV Launch of new product offerings Draft 22 (1) As of June 2021 Source: CompanyBest -in-class nurturing facility located in southern Turkey Certifications Key differentiatorsc.740k sqm Total areac.50k animals/annum Cattle capacityc.4.2k animals Quarantine capacityc.500 bovines/day Slaughtering capacityc.2,500 ovines /day Slaughtering capacityc.190 Employees1 Şanlıurfa Strategically owned cattle farm ensuring quality and cost control 6 →Operating the largest of its kind cattle farm in Turkey since 2013 , the Company’s supply chain traceability is unparalleled, starting from vertically integrated farm →Selecting its own calves and raising them on a best practice basis, the Company secures premium quality meat at competitive prices →The technological infrastructure of the farm optimizes the entire process, including automated feed preparation and rationing, and instantaneous monitoring for optimal slaughter timeSupply chain resilience during shortages in meat supplyEquipped with a biogas plant, invested and operated by 3rd party, to generate energy from waste, solar panels on the roofs and a rainwater collection systemStrategic positioning in Şanlıurfa with ideal climate conditions make it energy efficient Proximity to prominent animal breedersEnsuring maximum standardization and end -to- end quality control Specially prepared feed Price stability during volatility in meat prices Feed Conversion Rate (FCR) maximized by analyzing the information from attached chips to the animals and automating the process Draft 23 Robust financial performance backed by outstanding growth prospects 7 Net sales1 (TL mn) Key remarks EBITDA (TL mn) 172 213 299 282 286 459707931 2016 2021E 2017 2024F 2018 2019 20201,144 2023F 2022B 2025F 2026F2,068 2027F 2028F 2029F 2030F1,5142,7193,4874,1924,91815.7% 12.5% 12.2% 14.8% 13.5% 13.8% 13.8% 14.3% 14.9% 15.3% 15.6% 15.8% 15.8% EBITDA EBITDA marginTopline growth thanks to diversified channel penetration, pricing power with large SKU counts, and ability to reflect cost increases to customers Resilience exhibited during the pandemic attributable to flexibility in shifting sales across channels and product groups New facility investment to fuel growth and enhance production efficiency Robust EBITDA margin despite various macroeconomic setbacks in the historical period, driven by operational excellence and close monitoring of cost items60.2 63.0 59.5 60.6 64.0 67.0 71.2 79.8 91.8 102.8 113.0 122.8 118.8 k tons4 Covid -19 effect60.5 Maret fire2 Düzce investment3 ramp -up period (1) EY Financial VDD adjustments included (2) Loss of c.6k tons of capacity caused by fire incident at İstanbul facility (3) New facility expected to start production in Q4 2024 (4) Meat products only Source: Company, EY VDD Report6,725 2021E 2027F 2022B8,304 2026F 2016 2017 2018 2019 2030F 2023F10,607 5,25113,91217,77026,60031,052 22,294 20201,632 2024F2,256 2025F 2028F 2029F1,423 1,900 2,3443,101+24.3%+24.4%52.3 55.8 13.1% 12.1% Draft III. Business overview Draft 25 Locally Sourced Calves 1Imported Calves 1Cattle farm 2Slaughtering in own facility 3 Locally Sourced Cattle 3rd party slaughtering CarcassTransportation Cold storage with vehicles Kocaeli Facility Istanbul Facility 3 1 4 5Namet : Business overview Vertically integrated producer with complete control over value chain, from farm to fork Further Processing6 7Deboning 25% of carcass supply 75% of carcass supply Source: Company Draft 26 Source: CompanyNamet: Business overview Operational excellence aimed at supreme quality and utmost customer satisfaction Value chain overview (from farm to fork) ▪Imported or locally purchased calves are brought to the farm ▪After 8 – 9 months of nurturing, the cattle are slaughtered ▪25% of the carcasses are supplied by North’s cattle farm to ensure supply securityfrom own cattle farmfrom 3rd party farmsSlaughtering Deboning Sales, Marketing & Distribution ▪North also purchases grown cattle from c.25 local farms meeting the Company’s supply criteria ▪The Company has dedicated personnel to examine the cattle and send selected ones to approved slaughterhouses▪Slaughtering takes place at the Compan y’s own facility in Şanlıurfa farm, and at 3rd party approved slaughterhouses ▪3rd party slaughterhouses, meeting Namet’s quality standards, are monitored by the Company personnel▪Carcasses derived from slaughtering are transported in refrigerated trucks to Kocaeli facility ▪Carcass deboning yields prime cuts, which are packaged and directly shipped → Operating in all regions across Turkey, Namet reaches more than c.95k sales points → Sales and distribution are coordinated by logistic department at HQ in coordination with 4 regional sales offices operating a fleet of owned and subcontracted vehicles, in close cooperation with 2 distributors
▪North also purchases grown cattle from c.25 local farms meeting the Company’s supply criteria ▪The Company has dedicated personnel to examine the cattle and send selected ones to approved slaughterhouses▪Slaughtering takes place at the Compan y’s own facility in Şanlıurfa farm, and at 3rd party approved slaughterhouses ▪3rd party slaughterhouses, meeting Namet’s quality standards, are monitored by the Company personnel▪Carcasses derived from slaughtering are transported in refrigerated trucks to Kocaeli facility ▪Carcass deboning yields prime cuts, which are packaged and directly shipped → Operating in all regions across Turkey, Namet reaches more than c.95k sales points → Sales and distribution are coordinated by logistic department at HQ in coordination with 4 regional sales offices operating a fleet of owned and subcontracted vehicles, in close cooperation with 2 distributors → Distributors coordinate sales to local retailers and individual traditional stores As of August 2020, Kılıç had 2,273 employees; 1,654 blue collar , 458 white collar and 161 divers and ship crewSourcing Process Sales & Distribution Further processing ▪The rest of the meat is used to produce delicatessen, MAP, döner, and further processed and frozen product lines ▪Processed products are then packaged and delivered to consumers Support functionsInformation TechnologiesHuman Resources Research & DevelopmentHealth & Safety Draft 27Sourcing highest quality calves is a prerequisite for exceptional taste →As the quality of a beef product is determined by cattle breed and nurturing, sourcing is subject to rigorous standards by the Company Calf procurement →North procures calves at 7 – 8 months of age through imports and local purchases from partnered 3rd party farmers all around Turkey →The Company has strong capabilities and highly mobile procurement team to maximize the import opportunities in line with the import quota −The Company supplies calves through imports from an established supplier based in South America −Highly experienced procurement team visits South America 4 to 5 times a year to select calves with higher carcass yield −Local procurement team, consisting of 16 agents, supplies c.15% of calves from partnered individual breeders in 20 cities in Turkey −Despite lower yields, local calve procurement provides logistic cost and delivery time advantages crucial to sustain a healthy supply chain of calves in the farm throughout the year Nurturing program →Calves are nurtured for 8 -9 months with a special feeding program to maximize carcass yield taking into consideration the food conversion ratio →Cattle are monitored by expert veterinarians to ensure animal health and wellbeingSourcing Sales, marketing & distribution Process Support functions Calf supply and cattle farm overview Operating a cattle farm offers significant advantages via… ensuring supply security to overcome shortages in meat supplyascertaining utmost standardization and end-to-end quality controlproviding protection against volatility in meat pricesCattle farm c.740k sqm Open areac.190 c.4.2k cattle Quarantine facility capacity1 Local procurement # of cities from which the Company mainly procures calves20 (1) Cattle are first accommodated in the quarantine facility for 20 days and after careful examinations, healthy cattle are t ransported to the main farm facility Source: CompanyPersonnelŞanlıurfa 50k calves Cattle farm capacity ImportCalf supply sources Main imported breeds Angus, HerefordBrangus Draft 28 →Namet procures grown cattle from local 3rd party suppliers, which constitute c.75% of total carcass supply →Large volume of cattle procurement with more favorable payment terms helps Namet to be the most preferred cattle procurer in the market →A highly experienced team of more than 50 operates at 25 different locations to find the best cattle sourcing opportunities →Quality controls and health inspections are diligently carried out by grown cattle procurement agents in the field →All the movements of procured cattle are monitored up until arrival to approved slaughterhouse →The Company has an established supplier base of reputed local names for other raw materials such as poultry, lamb, seasoning, fat, and packagingEffective procurement process enabling seamless operations Procurement overview Leader ship status in the industry enables North to be the initial buyer, consistently enabling the Company to procure cattle with the highest carcass yield Regional procurement 3rd party supplier concentrationGrown cattle procurement 30% 10%60% Top 5 Top 5 -10 Other Source: Company16 # of cities from which the Company mainly procures calves High supplier coverage with >1k different suppliers of grown cattle Long -tenured relationship with major cattle suppliers Sourcing Sales, marketing & distribution Process Support functions Draft 29In-house and 3rd party slaughtering ensuring full traceability of production In-house slaughterhouse Approved slaughterhouses Shipping to Çayırova → Cattle grown in Şanlıurfa cattle farm are slaughtered at in -house slaughterhouse → In-house slaughterhouse has a slaughtering capacity of c.500 bovines and c2,500 ovines per day → After slaughtering, carcass and offal are shipped to the plant to be processed→ Approved slaughterhouses are used to slaughter cattle procured from 3rd party suppliers → The Company works with 12 approved slaughterhouses dispersed across 5 cities, and ensures full monitoring of the slaughtering process through its dedicated personnel in the field → After slaughtering, carcass and offal are shipped to the plant to be processed→ Carcasses are delivered to Kocaeli via cold storage vehicles → Quality control of carcasses is performed prior to admission to the factory; only approved carcasses are processed +Slaughtering and cold -chain shipment ŞanlıurfaÇayırova Slaughtering is performed by competent and trained butchers, in accordance with Halal practicesSanitary slaughtering ensured by a team of veterinarians, food engineers, and food technologists is present at slaughter points Shipping vehicles and warehouses are spontaneously monitored, to ensure full traceability of carcasses Source: CompanySourcing Sales, marketing & distribution Process Support functions Draft 30 Modern production facilities with the largest capacity in its field… State -of-the-art processing facility strategically located in Çayırova – Kocaeli; easy access to key customers and heavily populated regionsKocaeli Production Facility Established in 2009 Closed area c.35k sqm Warehouse area c.6k sqm Warehouse capacity c.3.6k tons p.a. Production capacity3 63k tons p.a.White collar1,2 514 Blue collar1,2 850 1 (1) As of June 2021 (2) Including subcontractors (3) December 2020 Source: Company 23k tons/annum Fresh meatAerial view of the facility Production Capacity3 20k tons/annum Delicatessen 12k tons/annum MAP 6k tons/annum FFP 2k tons/annum Döner Production area and HQ are in the same establishment located on the land, owned by the CompanyLand area 52k sqm Having carcass deboning capabilities, the
CompanySourcing Sales, marketing & distribution Process Support functions Draft 30 Modern production facilities with the largest capacity in its field… State -of-the-art processing facility strategically located in Çayırova – Kocaeli; easy access to key customers and heavily populated regionsKocaeli Production Facility Established in 2009 Closed area c.35k sqm Warehouse area c.6k sqm Warehouse capacity c.3.6k tons p.a. Production capacity3 63k tons p.a.White collar1,2 514 Blue collar1,2 850 1 (1) As of June 2021 (2) Including subcontractors (3) December 2020 Source: Company 23k tons/annum Fresh meatAerial view of the facility Production Capacity3 20k tons/annum Delicatessen 12k tons/annum MAP 6k tons/annum FFP 2k tons/annum Döner Production area and HQ are in the same establishment located on the land, owned by the CompanyLand area 52k sqm Having carcass deboning capabilities, the plant delivers delicatessen, fresh meat, further processed products, frozen meatball and burger productsSourcing Sales, marketing & distribution Process Support functions Draft 31 Modern production facilities with the largest capacity in its field… İstanbul Production Facility 2 Established in 1987 Closed area c.25k sqm Warehouse area c.4k sqm Warehouse capacity c.2.5k tons p.a. Production capacity3 27k tons p.a. Aerial view of the facility Production Capacity3 16k tons/annum Delicatessen 5k tons/annum Fresh meat 5k tons/annum Döner 1k tons/annum FFP White collar1,2 29 Blue collar1,2 255 Land area 175k sqm Located in Tuzla, in the periphery of Istanbul, the largest market for its products, this facility is the 2nd largest closed area facility on the Anatolian side of Istanbul The land and the facility belong to Kayar familyDeboned meats from Kocaeli production facility are delivered to İstanbul facility to produce both Maret and Namet branded delicatessen, FFP and döner All operations in İstanbul will cease, with the machinery to be transported to the new facility, upon completion of the Düzce plant in 2024 Sourcing Sales, marketing & distribution Process Support functions (1) As of June 2021 (2) Including subcontractors (3) December 2020 Source: Company Draft 32Well -established sales organization in charge of wide distributor network North coordinates a network of distributors and direct sales fleet through its 7 sales offices Direct SalesSales offices responsible for direct sales✓ →Regional offices are divided by regional proximity to customers ; each regional office supplies various sales channels within their region →Marmara sales office serves national chains and catering companies since the headquarters of these customers are based in Istanbul →Regional offices have c.120 employees divided between sales and logistics →Each day the Company directly reaches c.4k sales points, with a fleet of c.70 company owned and c.60 leased vehicles →Software based confirmation system is in place to ensure the delivery of products on a timely mannerSourcing Sales, marketing & distribution Process Support functions 1National retail chains sales office: →Responsible for sales through the distributor “Düzey” →Maret branded delicatessen sales in national chains →Coordination of national restaurant chains such as Little CaesarDistributorsSales offices responsible for distributors✓ →The Company works with distributors to serve traditional small - scale retailers across Turkey →North has a strategic partnership with 2 distributors, “Seher ” for Namet branded products and “Düzey ” for Maret branded products →Distributor network enables coverage of local chains and grocery stores in all regions of Turkey →Key performance indicators tracked are transportation cost per kg of meat and sales volume of distributors 2Dealers and local markets sales office: →Responsible for sales through distributor “Seher” →Namet branded delicatessen sales to traditional food retail points →Sales of processed meat products to traditional restaurants through dealer network Source: Company A B C D E AKey accounts (McDonald i.e.), offal sales via slaughterhouses and tender processes D Responsible for mainly hotels in the region BNon-delicatessen product sales to national chains, catering chains and clients located in the regionCResponsible for mainly HoReCa clients in Central Anatolia and Black sea regions E Responsible for mainly hotels in the regionTop management Marmara sales office Aegean sales officeAnkara sales office Mediterranean sales office Draft 33Well -established sales organization in charge of wide distributor network Sourcing Sales, marketing & distribution Process Support functions North has regional warehouses with total c. 8,202 tons of storage capacity and delivering its products more than 36k final po ints in a year and transports to all cities in Turkey Warehouses owned and operated by Namet via its own personnelEDCB A F→Considering the locations of Şanlıurfa slaughterhouse, İstanbul and Kocaeli facilities, continuous and efficient logistic operation has a vital role for production →Namet sustain its logistic operations trough its own vehicles (#71) and 3rd party firms (#57) with trucks specialized for carcasses transportation. Due to the very short deterioration time of fresh meat, Namet delivers its fresh products to the final stop of its clients directly. Whereas delicatessen products are transported to the warehouses of the clients →There are 6 regional warehouses operated by North to increase service quality and 4 warehouses operated by third parties →The warehouses are the intermediary hubs to serve the distributors and customers directly in their neighborhoodsRemarks Location In Tuzla, İstanbul In Çayırova , Kocaeli Description Frozen, cold and dry storage Frozen, cold and dry storage Closed area c.4,060 sqm c.6,094 sqm Annual capacity (tons) c.2,451 c.3,625 # of Vehicles 43 Location In Şanlıurfa Description Frozen, cold and dry storage Closed area c.1,097 sqm Annual capacity (tons) c.580 # of VehiclesOutsourced vehicles by 3rd party logistic firmsLocation In Yenimahalle , Ankara Description Frozen, cold and dry storage Closed area c.638 sqm Annual capacity (tons) c.699 # of Vehicles 9 Location In Torbalı , İzmir Description Frozen, cold and dry storage Closed area c.732 sqm Annual capacity (tons) c.306 # of Vehicles 10Location In Antalya Description Frozen and cold storage Closed area c.763 sqm Annual capacity (tons) c.542 # of Vehicles 9İstanbul Facility - Warehouse A Kocaeli Facility – Warehouse B Ankara – Warehouse1C İzmir - Warehouse D Antalya - Warehouse E Şanlıurfa - Warehouse FWarehouses operated by 3rd parties (1) The Company sold Ankara warehouse in Q4 2021 and will be able to use the warehouse free of charge until end of 2022 Source: Company Draft 34 Highlights Increasing brand awareness and customer perception Extending penetration in all product categoriesMarketing channelsGiven unparalleled brand awareness as well as capacity bottlenecks in existing facilities
c.699 # of Vehicles 9 Location In Torbalı , İzmir Description Frozen, cold and dry storage Closed area c.732 sqm Annual capacity (tons) c.306 # of Vehicles 10Location In Antalya Description Frozen and cold storage Closed area c.763 sqm Annual capacity (tons) c.542 # of Vehicles 9İstanbul Facility - Warehouse A Kocaeli Facility – Warehouse B Ankara – Warehouse1C İzmir - Warehouse D Antalya - Warehouse E Şanlıurfa - Warehouse FWarehouses operated by 3rd parties (1) The Company sold Ankara warehouse in Q4 2021 and will be able to use the warehouse free of charge until end of 2022 Source: Company Draft 34 Highlights Increasing brand awareness and customer perception Extending penetration in all product categoriesMarketing channelsGiven unparalleled brand awareness as well as capacity bottlenecks in existing facilities to satisfy additional demand, marketing activities are minimized and geared towards social media campaigns with the aim of …→With facilities operating at full capacity, North followed a limited advertising strategy for brands in 2020 and 2021 and focused on social media . Traditional mediaDigital & social mediaMarketing activities across channels… →Within 2010 -2016 , the Company executed a sustained and ambitious brand communication campaign on traditional media with various celebrities →With the new facility, marketing will be once again be crucial to attract the demand for the additional capacity and new product offerings→North seeks to achieve deeper penetration across sales channels, and greater visibility at retail shelves →Accessibility and visibility are paramount, as wider brand awareness, high quality image, and customer loyalty are conducive to salesPoints of sale Sourcing Sales, marketing & distribution Process Support functions Source: Company Draft 35Human Resources (“HR”) # of personnel Gender Employee tenure Educational background → Average tenure is 11 years95 White collar109 Blue collar18420 MaleFemale49 51104 5-10 years 0-5 years +10 years# of personnel1Gender Employee tenure White collar Blue collar Male Female → Average tenure is 5.3 years532 1,102 1,194 440 # of employee (1) As of June 2021 Source: Company879 527 228 +10 years 5-10 years 0-5 yearsBoard of Directors GM Nurettin Kayar Chief Operations Officer (COO) Ferit Kiraz Sales Deputy GMSupply Chain Deputy GMFinance Deputy GMChief Technical Officer (CTO) Volkan YıldırımChief Marketing Officer (CMO) Seren Tümöz20+ 2 13 25+15 10 10+ # of tenure in yearsSourcing Sales, marketing & distribution Process Support functions Draft 36Quality control and Research & Development (“R&D”) R&D overview Selected R&D projectsQuality control overview →Namet is committed to maintain stringent quality control standards, in line with legal directives with a team of 40 personnel →Control measures that are in place include, −Process control : Ensuring adherence to best practices and health and safety protocols, mainly in processing, carcass supply and pest control . Samples are taken from a total of 400 points and analyzed in 3 laboratories in various facilities −Quality control : Analyzing carcasses, products and equipment for health and hygiene standards −Quality assurance : Periodic audits are conducted by national retail and global QSR chains, in addition to BRC (Global Food Certificate) audits which take place twice a year →The Company monitors carcasses in every step of the value chain with a barcode system, starting from the farm to slaughterhouses and processing facilities Information Technologies and ReportingNew product generation →Production of Philly’s Steak for Carl’s Junior and Subway, and Arby’s special meat recipe →Production of smoked “Frankfurter” sausages for retail and cooked meatballsR&D team focuses on Quality improvement for carcasses, final products and packaging Quality tests and production efficiency improvements for production techniques →Development and receival of patent for ready - to-eat tripeR&D processes before final product stage Technical research and benchmark analysis with comparable productsRegular m eetings with customers and suppliersOn-site performance evaluation for pilot testing 10→Namet’s Netsis powered ERP systems interconnects separate business functions across farm, manufacturing facilities, warehouses and distributors, enabling seamless operations →Netsis system is the backbone of the IT infrastructure, however, production related software are developed by in -house software engineering team, consisting of 6 people →Daily sales -based reporting capabilities with detailed client and product breakdowns Advanced IT capabilities and in -house software engineers that ensure efficiency in operations and control over organizational planning →R&D team of 5 people, working on potential product offerings and new production techniques ; received 2 production process patens and 1 product patent Sourcing Sales, marketing & distribution Process Support functions Source: Company Draft 37 Source: CompanyCore values relies on the production under the guidance of rules for Environmental Social Governance Biogas plant in cattle farm and solar panels to be implemented on the roofs of the new facility to supply electricity from renewable sources Eco-friendly animal waste disposal via decomposing the waste in the biogas plant Water saving from the rainwater collection system Vocational High -School to educate industrial butchers with the help of Namet’s experts and technological infrastructure to bring quality labor force to the sector Scholarships for students to provide educational support Established sound corporate governance principles Producing with utmost care for environment and natureRespecting ethical rules and lawsFood safety without wasting natural resources Strong commitment to sustainability with strict agenda to follow Sourcing Sales, marketing & distribution Process Support functions Draft IV. Financial overview Draft 39 (1) Effective from 2018 to May 2019 Source: Company, EY Financial VDD reportBasis of preparation Macro assumptions 2019A 2020A 2021E 2022B 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F CPI - General 15.2% 12.3% 19.6% 39.5% 21.5% 14.8% 12.6% 12.6% 12.6% 12.6% 12.1% 11.6% CPI - General (EoP) 11.8% 10.5% 36.1% 26.5% 17.6% 12.6% 12.6% 12.6% 12.6% 12.6% 12.1% 11.6% CPI - Food 19.9% 13.9% 24.8% 41.0% 22.9% 16.2% 14.1% 14.1% 14.1% 14.1% 13.6% 13.1%The Company issues three sets of accounts in Turkish Lira: Statutory accounts for tax filing , management accounts and audited IFRS accounts →Fiscal year is 12-month period from January 1st to December 31st −Statutory accounts : Prepared in accordance with the Turkish Commercial Code for tax filing purposes −Management accounts : Kept inlinewith statutory accounts in TL; monthly accounts issued atproduct category and channel level −IFRS financials : Drawn up on an annual basis ; audited by KPMG since 2021 and by PwC theretofore −IFRS adjustments to statutory accounts have a limited impact at the EBITDA level,
11.6% CPI - General (EoP) 11.8% 10.5% 36.1% 26.5% 17.6% 12.6% 12.6% 12.6% 12.6% 12.6% 12.1% 11.6% CPI - Food 19.9% 13.9% 24.8% 41.0% 22.9% 16.2% 14.1% 14.1% 14.1% 14.1% 13.6% 13.1%The Company issues three sets of accounts in Turkish Lira: Statutory accounts for tax filing , management accounts and audited IFRS accounts →Fiscal year is 12-month period from January 1st to December 31st −Statutory accounts : Prepared in accordance with the Turkish Commercial Code for tax filing purposes −Management accounts : Kept inlinewith statutory accounts in TL; monthly accounts issued atproduct category and channel level −IFRS financials : Drawn up on an annual basis ; audited by KPMG since 2021 and by PwC theretofore −IFRS adjustments to statutory accounts have a limited impact at the EBITDA level, and mainly relate to exclusion of rental expenses as part of IFRS 16, biological asset revaluation, net realizable value provision on inventory, unused vacation and severance pay provision Historical financials presented in this section are based on EY Financial VDD report for 2018 -2020 and for 2021, 9M based on EY Financial VDD report plus 3M based on Management accounts →Management tracks North’s sales performance under −5 main product categories : (i) Delicatessen ; (ii) Fresh meat ; (iii) MP;(iv)Döner and (v)Frozen & further processed where they have By-product and Trade sales asanintegral part oftheir operations aswell −2main channels :B2B2C (Retail) and B2B →Due diligence adjustments of EY present the historical operational performance of theCompany on a normalized and IFRS -like basis (“ VDD adjustments ”) −Excluding c.13k tons of volume (11.3k tons in 2018 ) and TL 353 mn of revenue & cost (TL 307 mn in 2018 ) regarding the participation in the affordable meat program1 of ESK due to its one-off nature →EY Financial VDD report willbe available to potential participants during Phase II 2022 Budget and forecast period projections presented in this section are prepared by Namet management, as per below →2022B – 2030F figures are as per Management Accounts, reflecting management’s forecasts, and are applied the VDD adjustments mad e on historical figures for comparability purposes Forecast period Management Accounts prepared by management, as per below macro assumptions Draft 40Overview of historical performance Sales volume1,2 (k tons) EBITDA (TL mn) 15.7% EBITDA margin (%)Net sales2 (TL mn) 12.5% 12.2% 14.8%Historical overview Sales channels Product categories →The Company tracks its sales performance under 5 main meat products (Delicatessen, Fresh meat, MAP, Döner, and Frozen & further processed) , totaling up to c.94% of net sales in 2022B followed by by -products and trade goods →For meat product category, management historically follows channel -based sales performance reporting under 2 main sales channels covering B2B2C (Retail) and B2B →The Company’s existing facilities are operating close to full capacity (c.65k ton) with its current product portfolio during 2018 -2021. Meat product volume has been resilient despite the closures due to Covid -19 in Horeca in 2020 and 2021 −Sales volume was secured thanks to its effective management of sales channels, high penetration in retail channels, entry into new channels (i.e. online) as well as introducing new SKUs −Namet was also able tooffset the shortfall driven by afire incident atthe İstanbul facility onMarch 2021 →Namet mainly focuses on domestic market and branded product sales −Branded premium products make up c.33% of gross sales5 in 2021 −Fresh meat and B2B focused products constitute c.48% of gross sales5 −Private label sales comprise c.19% of gross sales5 →Historically, the Company’s growth and profitability performance relies also on its pricing power, which enables it to pass on cost increases to customers −Within 2018 A-2022 B, net sales posted 28.9% CAGR, higher than the corresponding average inflation rate of 20.4% during the same period −Namet delivered on average EBITDA margin of over 13.5%Remarks 2022B 2019A64.0 2018A59.5 2020A 2021E63.0 60.2 60.5 Covid -19 effectCovid -19 and f ire incident 8092 1,90068 2022B3042 2018A58 46 2,8912,256 54 2019A 2020A2,344129 2021E3,1012325,251 1,828 2,156 2,2194,928+28.9% Meat products By-product Trade goods 299 282 286459707 2019A 2018A 2020A 2022B 2021E+24.0%13.5%4 3 (1) Meat products excluding other sales (by -products and trade goods) (2) EY Financial VDD adjustments and sales returns inclu ded (3) Includes sales discounts (4) Includes IFRS adjustments and other sales (5) Branded, and PL product sales can only be provided at the gross sales level Source: Company, EY Financial VDD report Draft 41Deep -dive: Product categories →The Company has five main meat product categories, namely Delicatessen, Fresh meat, MAP, Döner, and Frozen & further processed →Delicatessen category has been Namet’s leading revenue generator, with a growing share in gross sales, from 27% in 2018 to 31% in 2022B, as branded delicatessen product sales have outgrown other categories →Fresh meat, historically the top revenue contributor, currently accounts for a relatively lower share of sales in 2020 and 2021 , mainly on diminished HoReCa demand amid Covid -19 restrictions →The performance of frozen & further processed category, including mainly B2B focused products, was similar to that of fresh meat during the pandemic →MAP proved the fastest growing category both in gross sales (c.90% CAGR) and volume terms (c.37% CAGR), between 2018A and 2022B, due to increasing market demand from discount retailers via branded and PL products →Döner category, still on a ramp up phase with new customer acquisitions, stepped up its share in gross sales to c.8% as of 2021E, despite loss of significant döner production capacity due to the fire incident in March 2021 →In addition to the meat products, by -products (hide, offal, and bone) sales yielded from the slaughtering process; and trade goods sales , including mainly cattle livestock and feed sales, follow with c.4% and c.2% shares in 2022B, respectively →Mainly price -driven, net sales growth is reflective of Namet’s pricing power due to its strength in brand awareness, sales channel pentration, SKU management (over c. 900) and long run relationship with its customers together with broad product range RemarksHistorical overview Sales channels Product categories Unit 2018A 2019A 2020A 2021E 2022B Volume k ton 60.2 63.0 59.5 60.5 64.0 Growth % n.a. 4.7% -5.6% 1.7% 5.8% Delicatessen k ton 18.4 20.9 23.4 24.0 24.6 Fresh meat k ton 27.7 23.1 17.9 17.1
to the fire incident in March 2021 →In addition to the meat products, by -products (hide, offal, and bone) sales yielded from the slaughtering process; and trade goods sales , including mainly cattle livestock and feed sales, follow with c.4% and c.2% shares in 2022B, respectively →Mainly price -driven, net sales growth is reflective of Namet’s pricing power due to its strength in brand awareness, sales channel pentration, SKU management (over c. 900) and long run relationship with its customers together with broad product range RemarksHistorical overview Sales channels Product categories Unit 2018A 2019A 2020A 2021E 2022B Volume k ton 60.2 63.0 59.5 60.5 64.0 Growth % n.a. 4.7% -5.6% 1.7% 5.8% Delicatessen k ton 18.4 20.9 23.4 24.0 24.6 Fresh meat k ton 27.7 23.1 17.9 17.1 17.6 MAP k ton 2.1 4.9 6.1 7.3 7.3 Döner k ton 4.3 5.7 5.9 4.9 6.3 Frozen & further processedk ton 7.7 8.4 6.1 7.2 8.2 Gross sales TL mn 1,963 2,345 2,425 3,190 5,416 Growth % n.a. 19.5% 3.4% 31.6% 69.7% Meat products TL mn 1,901 2,253 2,308 2,994 5,092 Delicatessen TL mn 529 683 847 1,104 1,651 Fresh meat TL mn 961 899 759 930 1,638 MAP TL mn 48 184 232 362 617 Döner TL mn 153 226 248 255 544 Frozen & further processedTL mn 210 261 221 343 642 By-products TL mn 42 46 68 129 232 Trade goods TL mn 20 46 49 67 92 Sales discounts and other salesTL mn (63) (89) (80) (90) (164) Net sales TL mn 1,900 2,256 2,344 3,101 5,2511,2 22 3CAGR 1.6% n.a. 7.5% -10.8% 36.6% 10.2% 1.9% 28.9% n.a. 27.9% 32.9% 14.3% 89.5% 37.2% 32.3% 53.3% 46.3% 27.3% 28.9% (1) Meat products excluding other sales (by -products and trade goods) (2) EY Financial VDD adjustments and sales returns inclu ded (3) Including IFRS adjustments Source: Company, EY Financial VDD report Draft 42Deep -dive: Sales channels →The Company follows channel -based performance reporting under 2 main sales channels covering B2B2C (Retail) and B2B −Sales is mostly generated from the domestic sales channel, with a rather limited portion being generated by export revenue (around 2% of total net sales) →Namet enjoys high penetration across various sales channels, namely B2B2C (Retail), and B2B including HoReCa, catering, wholesale, and food processors →B2B2C (Retail) channel sales value more than doubled during 2018 -2021 period through a volume growth supported by long -standing partnerships with organized retailers, especially with discount retailers ’ increasing market share −The share of branded products in retail sales value grew to c.56% in 2021 from c.39% in 2018 →A firmly established brand and a leading market share helped Namet hike retail sales prices by c.25% in 2021 →Changing consumption patterns sparked by Covid -19 boosted retail sales in 2020A −Online grocery reached c.3% of retail sales in 2021 −MAP products’ sales increased c.56% in 2021 →B2B channel makes up c.42% and c.39% of 2022B net sales and sales volumes, respectively −HoReCa sales, experienced a strong recovery thanks to reopening of restaurants and hotels after mass vaccination efforts and less restrictive lockdowns and is expected to account for 57% of the 2022 B demand −Catering customers, the second largest group with c.22% share, are followed by wholesalers and food processors, with c.13% and c.7% respective shares in 2022 B B2B net salesRemarksHistorical overview Sales channels Product categories 2 1,3 (1) Meat products excluding other sales (by -products and trade goods) (2) EY Financial VDD adjustments and sales returns inclu ded (3) Including IFRS adjustments Source: Company, EY Financial VDD report2 3Unit 2018A 2019A 2020A 2021E 2022B CAGR Volume k ton 60.2 63.0 59.5 60.5 64.0 1.6% Growth % n.a. 4.7% -5.6% 1.7% 5.8% n.a. B2B2C (Retail) k ton 28 32 38 35 36 6.5% Organized retail k ton 18 22 28 27 28 11.3% Unorganized retail k ton 10 10 10 8 8 -4.4% B2B k ton 27 28 20 23 25 -1.7% Horeca k ton 13 15 9 12 13 -0.2% Catering k ton 7 7 6 5 6 -4.6% Others k ton 6 5 5 5 6 -2.0% Other sales k ton 5 3 2 3 3 -14.3% Net sales TL mn 1,900 2,256 2,344 3,101 5,251 28.9% Growth % n.a. 18.7% 3.9% 32.3% 69.4% n.a. B2B2C (Retail) TL mn 784 1,013 1,342 1,557 2,521 33.9% Organized retail TL mn 532 727 1,026 1,224 1,983 39.0% Unorganized retail TL mn 252 285 316 334 538 20.8% B2B TL mn 881 1,039 813 1,233 2,230 26.1% Horeca TL mn 456 595 395 701 1,282 29.5% Catering TL mn 234 258 221 275 498 20.8% Others TL mn 191 186 197 257 450 23.8% Other sales TL mn 235 204 190 310 500 20.8%1,2 Draft 43Cost of goods sold (“COGS”) and Operating expenses (“OPEX”) →The ratio of direct material costs - the foremost constituent of COGS - to net sales is 75 -77% on average →Direct material costs comprise the costs of raw materials and semi -finished goods used in production −Beef carcasses supplied from Urfa farm and 3rd party suppliers constitute over c.80% of total raw material cost −Lamb for fresh meat, poultry and seasoning for delicatessen, döner and frozen & further processed products are the remaining raw materials →Contribution margin remains more or less stable which represents the pricing power of North to reflect cost increases to its sales price →Labor, consisting of direct and indirect labor, and utilities are on average at c.3.4% and c.1.4% of net sales, respectively, through the historical period −Energy costs in 2022 reflect January 2022 price hikes and energy prices almost doubled in 2022 B →O&M related cost items, accounts for c.0.5% of net sales →Rental expenses of Kocaeli facility represent c.0.7% of net sales →Comprising of S&M and G&A expenses, OPEX corresponds to 3.4% - 4.0% of net sales on average in the historical period →Personnel costs, the largest item within OPEX, represents c.1.1% of net sales →Logistics costs under S&M pertain to expenses incurred for transportation of goods to customer premises →Marketing costs are mainly comprised of personnel cost →Others in S&M and G&A include mainly rent, transportation, IT maintenance, subcontractor and consulting expenses
and indirect labor, and utilities are on average at c.3.4% and c.1.4% of net sales, respectively, through the historical period −Energy costs in 2022 reflect January 2022 price hikes and energy prices almost doubled in 2022 B →O&M related cost items, accounts for c.0.5% of net sales →Rental expenses of Kocaeli facility represent c.0.7% of net sales →Comprising of S&M and G&A expenses, OPEX corresponds to 3.4% - 4.0% of net sales on average in the historical period →Personnel costs, the largest item within OPEX, represents c.1.1% of net sales →Logistics costs under S&M pertain to expenses incurred for transportation of goods to customer premises →Marketing costs are mainly comprised of personnel cost →Others in S&M and G&A include mainly rent, transportation, IT maintenance, subcontractor and consulting expenses →Other income and expenses comprise mainly operational FX gain/loss, R&D costs, provisions for doubtful receivables, gain on fixed asset sales, and insurance indemnities →Namet delivered on average EBITDA margin of over 13.5%Remarks2 Source: Company, EY Financial VDD report1 1Unit 2018A 2019A 2020A 2021E 2022B CAGR Net sales TL mn 1,900 2,256 2,344 3,101 5,251 28.9% Raw material costs TL mn 1,427 1,747 1,809 2,321 4,059 29.9% Contribution TL mn 473 508 536 780 1,193 26.0% CM % 24.9% 22.5% 22.9% 25.2% 22.7% n.a. Labor TL mn 66 75 87 96 134 19.3% Energy TL mn 24 32 38 40 82 35.8% O&M TL mn 7 8 11 23 17 22.6% Rent TL mn 10 16 19 18 25 26.4% Other COGS TL mn 11 16 22 34 50 44.8% GP (ex. D&A) TL mn 355 359 359 569 886 25.7% GP margin % 18.7% 15.9% 15.3% 18.3% 16.9% n.a. OPEX TL mn 75 81 87 116 177 23.8% % of net sales % 4.0% 3.6% 3.7% 3.7% 3.4% n.a. S&M TL mn 61 64 71 89 119 18.4% % of net sales % 3.2% 2.9% 3.0% 2.9% 2.3% n.a. Personnel TL mn 21 24 27 34 48 23.2% Logistics TL mn 23 20 22 25 33 9.9% Marketing TL mn 4 7 6 5 7 16.2% Others TL mn 13 14 17 25 31 23.9% G&A TL mn 14 17 16 27 57 41.3% % of net sales % 0.8% 0.7% 0.7% 0.9% 1.1% n.a. Personnel TL mn 7 8 7 16 23 36.5% Others TL mn 8 8 9 11 34 45.0% Other income TL mn 135 19 22 34 19 -38.6% Other expense TL mn 116 16 8 27 22 -34.2% EBITDA TL mn 299 282 286 459 707 24.0% EBITDA margin % 15.7% 12.5% 12.2% 14.8% 13.5% n.a. Draft 44Net working capital (“NWC”) →NWC figures are based on EY Financial VDD Report for 2018 -2020 and based on Management accounts for 2021, where Management calculated their best approximation for VDD adjustments other than IFRS adjustments, which are estimated to have minimal impact →The Company’s TWC ratio remains within the range of 34%-38% in 2018 -2021 →Trade receivables, including checks received, increased from 57 days in 2018 to 65 days in 2021 which is budgeted to be around 63 days −Collection term for organized retail (c.41% of 2021 net sales), which was around 50 days in 2018 , increased to around 66 days as of September 2021 −Collection term for HoReCa , which had been stable at around c.55 days in 2018 -2019 , soared to 97 days as of September 2021 , reflecting deterioration in payment practices amid Covid -19 related lockdowns →As of 30 September 2021, cattle livestock, raw materials and semi -finished / finished products constitute c.53%, 31%, and 16% of the inventory, respectively −The Company’s inventory turnover increased to 105 days in 2020 , up from a historical c.90-100 days, reflecting management’s strategic decision to build up raw material inventory, addressing global demand -supply balances and reducing exposure to price volatility in procurements −For 2022 B, management foresees a normal inventory level, implying a turnover of 100 days →Company’s normal course of business trade payables days is around 30 days, which is also the budgeted figure for 2022B →In normal course of business, the Company’s NWC requirement over EBITDA is around 50 -60%. However, 2022 is an exceptional year for the NWC requirement on the back of the growth in net sales mainly due to increasing prices in line with inflation. After 2022, the level goes back to normal course of business levelsRemarks2NWC Unit 2018A 2019A 2020A 2021E Trade receivables TL mn 348 461 506 698 Inventory TL mn 379 450 524 697 Trade payables TL mn (80) (143) (148) (250) TWC TL mn 647 768 882 1,145 % of net sales % 34.1% 34.1% 37.6% 36.9% Other working capital TL mn (31) 6 (27) (15) NWC TL mn 616 774 855 1,130 % of net sales % 32.4% 34.3% 36.5% 36.4% Trade receivables days 57 73 74 65 Inventory days 91 100 105 103 Trade payables days 17 31 27 33 (1) Calculated based on monthly financials on a rolling basis Source: Company, EY Financial VDD report1 2022B 1,140 1,185 (402) 1,923 36.6% (40) 1,884 35.9% 63 100 301 1 1 Draft 45Capital expenditures (“CAPEX”) and Net debt CAPEX →Main CAPEX items are related to growth and capacity expansion −Urfa cattle farm investments expanded cattle nurturing and slaughtering capacity −Kocaeli facility investment extended delicatessen, döner, and further processed product capacity −The Company initiated investments related to Düzce facility, which is to replace the İstanbul facility in 2024; mostly completed land acquisition, project development and machinery testing within 2018 -2022B →Urfa cattle farm, Kocaeli facility and the new Düzce facility, all located in incentivized investment zones, benefit from investment incentive certificates that provide corporate tax incentives Net Debt →Net debt schedule includes VDD adjustments by EY for 30.09.2021 and by Management as best approximation for 31.12.2021 →VDD adjustments mainly include CAPEX payables, reclassification of credit card receivables from cash to trade receivables, severance pay liability, and exclusion of IFRS 16 accounts →Financial liabilities have maturity less than a year and are mostly denominated in TL →The Company has a TL 309.8 mn net cash position as of 30.09.2021 and TL 176.4 mn net cash position as 31.12.2021Remarks CAPEX Unit 2018A
replace the İstanbul facility in 2024; mostly completed land acquisition, project development and machinery testing within 2018 -2022B →Urfa cattle farm, Kocaeli facility and the new Düzce facility, all located in incentivized investment zones, benefit from investment incentive certificates that provide corporate tax incentives Net Debt →Net debt schedule includes VDD adjustments by EY for 30.09.2021 and by Management as best approximation for 31.12.2021 →VDD adjustments mainly include CAPEX payables, reclassification of credit card receivables from cash to trade receivables, severance pay liability, and exclusion of IFRS 16 accounts →Financial liabilities have maturity less than a year and are mostly denominated in TL →The Company has a TL 309.8 mn net cash position as of 30.09.2021 and TL 176.4 mn net cash position as 31.12.2021Remarks CAPEX Unit 2018A 2019A 2020A 2021E Urfa TL mn 18 27 19 42 Çayırova TL mn 9 8 10 13 Düzce TL mn 32 40 28 184 Maintenance TL mn 0 % of net sales % 3.1% 3.3% 2.4% 7.7% Net cash Unit 30.09.2021 31.12.2021 Cash and cash equivalents TL mn 541.0 Financial liabilities TL mn (334.9) CAPEX related balances TL mn (16.6) Severance pay liability TL mn (13.2) Net cash position TL mn 176.4 309.8CAPEX TL mn 60 75 57 2380 0 0 (1) It is followed under location CAPEX and OPEX as per its type and scope for historical period while it is budgeted as a se parate line item for 2022B Source: Company, EY Financial VDD report371.4 (39.1) (9.3) (13.2)2022B 0 4 277 26 307 5.8%1 Draft 46Quarterly trading analysis 16.0 Q4 2021 Q1 2021 Q2 2021 Q3 202114.7 14.9 14.9 591673794 833 Q4 2021 Q2 202154 37 Q1 202160 Q3 202157629734851887 Meat products Others2022B 2021E64.060.5+5.8% 2093,101 2021E3245,251 2022B2,8914,928+69.4%40.2 49.6 45.3Sales volume1 (k tons) Net sales (TL mn)65.7 51.2 51.3Oct Nov Dec 77.0 Meat product prices (TL/kg) EBITDA (TL mn)Due to sharp depreciation of the TL and inflationary upswing at the end of 2021, meat product prices reached to c.66 TL/kg in December 451702 2021E 2022B+55.5% EBITDA EBITDA margin13.5% 14.8% c.42% price increase has already been applied in December when compared with 11M 2021 averages (1) Meat products excluding other sales (by -products and trade goods) Source: Company, EY Financial VDD reportGrowth rate Growth rate65.7Dec21 +17% 46.3 +42%11M 2021 Average2022B Average Draft 47Overview of projection period 13.5%Future outlook Sales volume1 (k tons) EBITDA (TL mn)Net sales (TL mn) EBITDA margin (%)→Owing to its unique brand heritage and reputation, Namet is strategically positioned to benefit from attractive market fundamentals →Management forecasts net sales growth of CAGR 25% between 2022B – 2030F, with growth across all product categories, benefiting from the tailwind of an expanding market, and sustained capacity increases, with Düzce facility coming on stream →Going forward, volume growth will be supported by the Düzce facility, which will replace the İstanbul facility and increase total meat production capacity by c.74% (capacity expansion of 71k tons) →Sales price increases are in line with expected food inflation, which is c.1 50bps above general inflation on average between 2022B -2030F →Döner capacity expansion in İstanbul facility in 2022 increases sales volume and decreases overhead’s share in net sales, enabling EBITDA margin increase from around 13.5% in 2022B to 13.8% in 2023 -2024 period →Düzce facility is expected to improve production efficiency and economies of scale , paving the way for higher EBITDA margin →Namet’s current market leadership, and high penetration rates across channels, are foreseen to enable the Company to fulfill customer demand currently unmet due to lack of capacity and volume growth projections RemarksProduct categories 64 67 71 8092103113 119 123 2028F 2026F 2022B 2023F 2024F 2027F 2025F 2029F 2030F+8.5% 2024F 2025F 2023F 2022B 2029F 2026F 2027F 2028F 2030F5,251 6,725 8,30410,60713,91217,77022,29426,60031,052+24.9% Meat products Trade goods By-products 707 931 2029F 2024F 2022B 2027F 2023F 2026F 2025F 2028F 2030F4,192 1,144 1,5142,0682,7193,4874,918 +27.4%13.8% 13.8% 14.3% 14.9% 15.3% 15.6% 15.8% 15.8% New facility to be launched in Q4 2024 (1) Meat products excluding other sales (by -products and trade goods) (2) Includes sales discounts Source: Company2 Draft 48Deep -dive: Product categories Future outlook Product categories →Net sales is expected to increase from TL 5.3 bn to TL 31.1 bn in 2030F, which is mainly driven by 8.5% CAGR in volumes through 2022B to 2030F, and price hikes commensurate more or less with inflation projections →The product mix is assumed to remain relatively stable, reflecting strategic product yield from meat processing envisaged to maximize profitability by management →The channel mix is expected to remain relatively stable through 2022B to 2030F, as well →Accounting for c.31% of total gross sales through the projection period, delicatessen category retains its leadership in terms of revenue contribution →Fresh meat, forecast to make up c.32% of gross sales in 2030F, remains a crucial component of the product mix throughout the projection horizon →The weight in gross sales of döner category increases from c.8% in 2021 to c.11% in 2030F, along with the planned capacity expansions in 2022 B and 2024F −Backed by strong growth at organized retailers and discounters →MAP category, sold mainly by retailers and discounters, is expected to command a steady c.12% share in gross sales, whereas the share of B2B focused frozen & further processed category is set to drop from c.12% in 2022 B to c.9% in 2030FRemarks New facility to be launched in Q4 2024 (1) Meat products excluding other sales (by -products and trade goods) Source: Company1Unit 2022B 2023F 2024F 2025F 2030F CAGR Volume k ton 64 67 71 80 123 8.5% Growth % 5.8% 4.7% 6.3% 12.0% n.a. n.a. Delicatessen k ton 25 26 28 31 48 8.7% Fresh meat k ton 18 19 20 23 35 9.0% MAP k ton 7 8 8 9 15 9.2% Döner k ton 6 8 8 9 13 9.5% Frozen & further processed k ton 8 7 7 8 12 4.8% Gross sales TL mn 5,416 6,950 8,582 10,962 32,094 24.9% Growth % 69.7% 28.3% 23.5% 27.7% n.a. n.a. Meat products TL mn 5,092 6,582 8,128 10,382 30,394 25.0% Delicatessen TL mn 1,651 2,132 2,644 3,377 9,998 25.2% Fresh meat TL mn 1,638 2,176 2,681 3,424 10,136 25.6% MAP TL mn 617 828 1,020 1,303
Source: Company1Unit 2022B 2023F 2024F 2025F 2030F CAGR Volume k ton 64 67 71 80 123 8.5% Growth % 5.8% 4.7% 6.3% 12.0% n.a. n.a. Delicatessen k ton 25 26 28 31 48 8.7% Fresh meat k ton 18 19 20 23 35 9.0% MAP k ton 7 8 8 9 15 9.2% Döner k ton 6 8 8 9 13 9.5% Frozen & further processed k ton 8 7 7 8 12 4.8% Gross sales TL mn 5,416 6,950 8,582 10,962 32,094 24.9% Growth % 69.7% 28.3% 23.5% 27.7% n.a. n.a. Meat products TL mn 5,092 6,582 8,128 10,382 30,394 25.0% Delicatessen TL mn 1,651 2,132 2,644 3,377 9,998 25.2% Fresh meat TL mn 1,638 2,176 2,681 3,424 10,136 25.6% MAP TL mn 617 828 1,020 1,303 3,857 25.8% Döner TL mn 544 824 1,015 1,296 3,498 26.2% Frozen & further processed TL mn 642 624 768 981 2,905 20.8% By-products TL mn 232 250 308 394 1,154 22.2% Trade goods TL mn 92 118 146 186 546 25.0% Sales discounts and other salesTL mn (164) (225) (278) (355) (1,042) 26.0% Net sales TL mn 5,251 6,725 8,304 10,607 31,052 24.9% Draft 49Cost of goods sold (“COGS”) and Operating expenses (“OPEX”) Remarks →Direct material cost projections are consistent with volume forecasts for each category, and will stabilize at c.77% to net sales in the projection period −Beef constitutes c.65% of net sales in the projection period →Energy costs are expected to be c.1.5% of net sales in 2022 -2030 period →Labor cost increases are commensurate with operational growth and new CAPEX investments, with the ratio to net sales gradually shrinking to 1.8% in 2030F, from 3.1% in 2021, through increasing efficiency per labor hour −Labor cost implies c.2% real wage hike above targeted inflation, in line with past years →Rental expenses cease as of Q4 2024 due to the transfer of operations from İstanbul facility to the new Düzce facility located on land owned by Namet →OPEX to net sales stands at 3.4% in 2022 B, and gradually decreases to 2.6% in 2030F through operational efficiencies gained by economies of scale →The largest expense item in S&M, logistics expenses, are forecast to grow in line with volume growth and energy price rises →The Company will focus on marketing activities from 2024 along with the commissioning of the new facility to utilize capacity expansion −Going forward, marketing expenses are forecast at c.1.5% of branded sales →Personnel expenses will increase in line with operational growth −Personnel cost implies c.2% real wage hike above targeted inflation, in line with past years →Other income and expenses, including mainly operational FX gain/loss, R&D costs, provisions for doubtful receivables, gain on fixed asset sales and insurance indemnities, are expected to increase in line with topline growthUnit 2022B 2023F 2024F 2025F 2030F Net sales TL mn 5,251 6,725 8,304 10,607 31,052 Raw material costs TL mn 4,059 5,176 6,393 8,166 23,929 Contribution I TL mn 1,193 1,549 1,910 2,440 7,124 CM I % 22.7% 23.0% 23.0% 23.0% 22.9% Labor TL mn 134 170 211 267 545 Energy TL mn 82 104 127 160 439 O&M TL mn 17 21 26 33 89 Rent TL mn 25 31 26 2 3 Other COGS TL mn 50 64 78 98 269 GP (ex. D&A) TL mn 886 1,159 1,444 1,881 5,778 GP margin % 16.9% 17.2% 17.4% 17.7% 18.6% OPEX TL mn 177 219 289 354 821 % of net sales % 3.4% 3.3% 3.5% 3.3% 2.6% S&M TL mn 119 149 206 257 641 % of net sales % 2.3% 2.2% 2.5% 2.4% 2.1% Personnel TL mn 48 59 71 90 209 Logistics TL mn 33 42 52 65 179 Marketing TL mn 7 10 39 50 148 Others TL mn 31 38 44 51 106 G&A TL mn 57 70 83 97 180 % of net sales % 1.1% 1.0% 1.0% 0.9% 0.6% Personnel TL mn 23 29 35 43 84 Others TL mn 34 42 48 54 96 Other income TL mn 19 10 12 15 44 Other expense TL mn 22 18 22 29 83 EBITDA TL mn 707 931 1,144 1,514 4,918 EBITDA margin % 13.5% 13.8% 13.8% 14.3% 15.8% Source: CompanyCAGR 24.9% 24.8% 25.0% n.a. 19.2% 23.4% 23.4% -23.1% 23.4% 26.4% n.a. 21.2% n.a. 23.4% n.a. 20.2% 23.4% 45.6% 16.6% 15.4% n.a. 17.6% 13.7% 11.0% 18.3% 27.4% n.a. Draft 50Net working capital (“NWC”) →NWC to sales is estimated to stabilize at c.37% by 2030 F →Trade receivables are expected to normalize in 2022 B at 63 days, and remain broadly steady going forward →Inventory turnover is expected to normalize in 2022 B at 100 days, and remain broadly stable thereafter →For 2022 B, the Company budgets a payment term of 30 days, applicable to TL- denominated purchases, such as raw materials and packaging materials as well as hard currency -denominated cattle livestock imports →Other current assets and liabilities including prepaid expenses, deferred VAT, advances received, dues to personnel, tax payables, and expense accruals are estimated at c.1% of net salesRemarks NWC Unit 2022B 2023F 2024F 2025F 2030F Trade receivables TL mn 1,140 1,460 1,803 2,303 6,742 Inventory TL mn 1,185 1,511 1,867 2,384 6,987 Trade payables TL mn (402) (512) (633) (809) (2,369) TWC TL mn 1,923 2,459 3,037 3,879 11,359 % of net sales % 36.6% 36.6% 36.6% 36.6% 36.6% Other working capital TL mn (40) (51) (63) (80) (235) NWC TL mn 1,884 2,408 2,974 3,798 11,124 % of net sales % 35.9% 35.8% 35.8% 35.8% 35.8% Trade receivables days 63 63 63 63 63 Inventory days 100 100 100 100 100 Trade payables days 30 30 30 30 30 Source: Company Draft 51Capital expenditures (“CAPEX”) →The Company is planning to complete the construction and development of the Düzce facility, which is to replace the existing İstanbul facility, in Q4 2024 −Total investment amount is projected asEUR 150 mn, out of which c.EUR 29 mn was incurred until the end of 2021 , with the remaining c.EUR 121 mn to be spent within 2022 B-2024 F −Investment incentive certificate for Düzce facility will entitle North to TL c.1.6 bn in corporate tax incentive, exempting
(63) (80) (235) NWC TL mn 1,884 2,408 2,974 3,798 11,124 % of net sales % 35.9% 35.8% 35.8% 35.8% 35.8% Trade receivables days 63 63 63 63 63 Inventory days 100 100 100 100 100 Trade payables days 30 30 30 30 30 Source: Company Draft 51Capital expenditures (“CAPEX”) →The Company is planning to complete the construction and development of the Düzce facility, which is to replace the existing İstanbul facility, in Q4 2024 −Total investment amount is projected asEUR 150 mn, out of which c.EUR 29 mn was incurred until the end of 2021 , with the remaining c.EUR 121 mn to be spent within 2022 B-2024 F −Investment incentive certificate for Düzce facility will entitle North to TL c.1.6 bn in corporate tax incentive, exempting it from corporate taxes until Q4 2027 →Thanks to the well-invested asset bases of Urfa cattle farm and Kocaeli facility, CAPEX requirement for these facilities will be limited in the projection period →Maintenance CAPEX is mainly related to production efficiency improvement and machinery line renovations →Going forward, the Company’s maintenance CAPEX requirement remains at a limited c.0.5% to sales Remarks CAPEX Unit 2022B 2023F 2024F 2025F 2030F Urfa TL mn 0 0 0 0 0 Çayırova TL mn 4 3 0 0 0 Düzce TL mn 277 556 1,875 0 0 Maintenance 26 34 42 53 155 CAPEX TL mn 307 592 1,916 53 155 % of net sales % 5.8% 8.8% 23.1% 0.5% 0.5%TL mn New facility to be launched in Q4 2024 (1) Maintenance capex is represented in a separate line during the projection period Source: Company1 Draft 52EBITDA statement EBITDA statement (TL mn) 2018 2019 2020 2021E 2022B 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F Net sales 1,900 2,256 2,344 3,101 5,251 6,725 8,304 10,607 13,912 17,770 22,294 26,600 31,052 Delicatessen 529 683 847 1,104 1,651 2,132 2,644 3,377 4,430 5,658 7,099 8,528 9,998 Fresh meat 961 899 759 930 1,638 2,176 2,681 3,424 4,491 5,737 7,197 8,646 10,136 MAP 48 184 232 362 617 828 1,020 1,303 1,709 2,183 2,739 3,290 3,857 Döner 153 226 248 255 544 824 1,015 1,296 1,700 2,172 2,725 3,094 3,498 Frozen & further processed 210 261 221 343 642 624 768 981 1,287 1,644 2,063 2,478 2,905 By-products and trade goods 62 92 117 197 324 368 454 580 761 972 1,219 1,456 1,700 Sales discounts -72 -97 -89 -102 -164 -225 -278 -355 -466 -596 -747 -892 -1,042 Others 10 8 8 13 0 0 0 0 0 0 0 0 0 Direct materials -1,427 -1,747 -1,809 -2,321 -4,059 -5,176 -6,393 -8,166 -10,711 -13,682 -17,165 -20,491 -23,929 Contribution 473 508 536 780 1,193 1,549 1,910 2,440 3,201 4,088 5,129 6,109 7,124 Contribution margin 24.9% 22.5% 22.9% 25.2% 22.7% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 22.9% Labor -66 -75 -87 -96 -134 -170 -211 -267 -309 -357 -413 -476 -545 Energy -24 -32 -38 -40 -82 -104 -127 -160 -207 -261 -324 -381 -439 O&M -7 -8 -11 -23 -17 -21 -26 -33 -42 -53 -66 -77 -89 Other COGS -21 -33 -42 -52 -75 -95 -104 -100 -129 -162 -201 -236 -272 Gross Profit (ex. D&A) 355 359 359 569 886 1,159 1,444 1,881 2,513 3,254 4,126 4,938 5,778 GP margin 18.7% 15.9% 15.3% 18.3% 16.9% 17.2% 17.4% 17.7% 18.1% 18.3% 18.5% 18.6% 18.6% OPEX -75 -81 -87 -116 -177 -219 -289 -354 -427 -513 -611 -713 -821 % of net sales -4.0% -3.6% -3.7% -3.7% -3.4% -3.3% -3.5% -3.3% -3.1% -2.9% -2.7% -2.7% -2.6% S&M -61 -64 -71 -89 -119 -149 -206 -257 -318 -388 -470 -553 -641 % of net sales -3.2% -2.9% -3.0% -2.9% -2.3% -2.2% -2.5% -2.4% -2.3% -2.2% -2.1% -2.1% -2.1% G&A -14 -17 -16 -27 -57 -70 -83 -97 -110 -125 -141 -160 -180 % of net sales -0.8% -0.7% -0.7% -0.9% -1.1% -1.0% -1.0% -0.9% -0.8% -0.7% -0.6% -0.6% -0.6% Other income and expenses 19 3 15 7 -2 -9 -11 -13 -18 -22 -28 -33 -39 EBITDA 299 282 286 459 707 931 1,144 1,514 2,068 2,719 3,487 4,192 4,918 EBITDA margin 15.7% 12.5% 12.2% 14.8% 13.5% 13.8% 13.8% 14.3% 14.9% 15.3% 15.6% 15.8% 15.8% Source: Company, EY Financial VDD report Draft 53 This document is provided for information purposes only on the express understanding that the information contained herein will be regarded as strictly confidential . This document and the opinions, projections and conclusions contained in this document are for the exclusive use of the recipient and its employees and it is not to be delivered to any third parties, nor shall its contents be disclosed to anyone other than them and shall not be reproduced or used, in whole or in part, for any purpose other than for the consideration of the financing or transaction described herein, without the prior written consent of Ünlü Yatırım Holding A.Ş. and/or its subsidiaries* (together or individually referred as “ÜNLÜ & Co”). The information contained in this document does not purport to be complete and is subject to change . This is a commercial communication . The document does not include a personal recommendation and does not constitute an offer, or the solicitation of an offer for the sale or purchase of any financial product, service, investment or security . The investments and strategies discussed here may not be suitable for all investors ; you are to rely on your own independent appraisal of and investigations into all matters and things contemplated by this document . Information, opinions and projections in this document have been compiled by or arrived at by ÜNLÜ & Co from the data provided by the Company and its shareholder, and publicly available information, without our own separate verification . The Company and its shareholder have been consulted about and have confirmed the appropriateness of the basic principles and assumptions used by ÜNLÜ & Co. to perform the analyses / projections . The Company, its affiliates and ÜNLÜ & Co do not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this document . The Company, its affiliates or ÜNLÜ & Co have
your own independent appraisal of and investigations into all matters and things contemplated by this document . Information, opinions and projections in this document have been compiled by or arrived at by ÜNLÜ & Co from the data provided by the Company and its shareholder, and publicly available information, without our own separate verification . The Company and its shareholder have been consulted about and have confirmed the appropriateness of the basic principles and assumptions used by ÜNLÜ & Co. to perform the analyses / projections . The Company, its affiliates and ÜNLÜ & Co do not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this document . The Company, its affiliates or ÜNLÜ & Co have not sought independent verification of the information included herein . The information, comments and recommendations contained in this document fall outside of the definition of investment advisory services under the Capital Markets Laws No. 6362 , Capital Markets Board’s secondary legislation and other applicable legislation . Investment advisory services are provided by authorized entities considering the risk and return preferences of the concerned persons . The comments and recommendations contained in this document have general nature . These recommendations may not fit to your financial situation, risk and return preferences . For that reason, investment decisions that rely solely on the information contained in this document might not meet your expectations . You should pay necessary discernment, attention and care in order not to experience losses . The Company, its affiliates and ÜNLÜ & Co accepts no liability whatsoever for any direct or indirect loss arising from (i) the use of this document or its contents, or (ii) any error, omission, misstatement, negligence or otherwise in this document . Distribution of this document in and from certain jurisdictions may be restricted or prohibited by law or regulation . The recipient is required to inform itself of their compliance with any such restrictions or prohibitions in such jurisdictions . ÜNLÜ & Co does not accept any liability in relation to the distribution or possession of this document in and from any jurisdiction . By receiving and not immediately returning the document, the recipient warrants, represents and acknowledges (i) it has read, agreed to and will comply with the contents of this important notice and disclaimer ; and (ii) it will conduct its own analyses, due diligence or other verification of the information and data set forth in this document, and will bear the responsibility for all or any cost incurred in so doing . This document is governed by, and shall be construed in accordance with, Turkish laws and any claims or disputes arising out of, or in connection with, this document shall be subject to the exclusive jurisdiction of the Istanbul Central courts . All communications, inquiries and/or requests relating to this document should be addressed to ÜNLÜ & Co. For further information, please contact : Zeynep Koçak Director [email protected] +90 (532) 242 5378Simge Ündüz Managing Director [email protected] +90 (533) 283 8113Süheyl Bilgel Vice President [email protected] +90 (537) 585 2767İbrahim Romano Managing Director [email protected] +90 (533) 960 0122 *Ünlü Menkul Değerler A.Ş., is a subsidiary of Ünlü Yatırım Holding A.Ş. and is authorized & regulated by the Turkish Capital Markets Board .Disclaimer
Project Orange Information Package September 2019 Strictly private and confidential Strictly private and confidentialDisclaimer This presentation is provided by Anadolu Restoran İşletmeleri Ltd. Şti. (the “ Company ”) for your general information and the information herein is based on the Company’s current knowledge at the time of this presentation and subject to changes without any notice . The presentation contains forward -looking statements reflecting the Company’s view, assumptions and expectations on future events, w hich may be affected by a number of variables that may cause such events to result materially different from the Company’s expecta tions and are subject to risks and uncertainties. The Company does not give any representation, warranty or guarantee of any kind for t he performance of the forward -looking statements or for the completeness or accuracy of the information herein. The Company is unde r no obligation to update, amend any statement in this presentation due to future events, developments and uncertainties. This presentation does not contain any investment advice, recommendation to offer, sell, purchase or subscribe for any shares . The previous results of the Company do not account for future performance of the same. Any person considering an investment in th e Company should consult their own legal, accounting and tax advisors. This presentation or any information in this presentation is strictly confidential. You should not reproduce or distribute th is presentation or the information herein to any third party. The Company, its subsidiaries, their managers and employees shall have no liabi lity whatsoever for any loss arising from your use or distribution of this presentation. 1 Strictly private and confidentialTable of Contents 21 Executive summary3 3 Key investment highlights13 4 Financials & Business plan36 5 Appendix49Page # 2 McDonald’s at a glance5 I. Executive summary Strictly private and confidential 4 Company overview Transaction scope and timelineExecutive summary →Anadolu Restoran (the “Company ”) is McDonald’s developmental licensee (“DL”) in Turkey since 2005 ▪The Company is fully owned by Anadolu Holding Group, a prominent Turkish conglomerate active in retail, food & beverage, automotive, agriculture, real estate, stationery and energy sectors ▪First McDonald’s restaurant in Turkey had been opened in 1986 and Anadolu Group was granted McDonald’s developmental license in Turkey as of 2005 →The Company is the second largest QSR1 burger chain restaurant in Turkey with c.30% market share as of 2018 ▪Turkish QSR market reached a scale of c.TL 9.3 bn (c.USD 1.9 bn) in 2018 , of which QSR burger market2 accounted for c.33% (1) Quick service restaurant (QSR) denotes the limited -service restaurant per Euromonitor data (2) Denotes the Burger Limited Service Restaurants market per Euromonitor data Source: Company, McDonald’s Corporation, Euromonitor→Project Orange refers to the contemplated sale of 100% equity stake in Anadolu Restoran (the “Transaction “) →In addition, the buyer will execute Multi -Unit Franchise Agreement (“MUFA ”) with McDonald’s Corporation, where the summary of key MUFA terms is presented in the Appendix section →Anadolu Holding Group has appointed ÜNLÜ & Co as the exclusive advisor for the proposed Transaction →The Transaction will be executed as per the schedule below and as further described in the Project Orange Process Letter I circulated along with this Information Package (‘’Info Pack ’’) Phase I details →Distribution of the Info Pack →Limited Q&A process for key questions and clarification requests →Non -binding offers due by 3 September 2019 →Due diligence period for limited number of selected potential investors →Virtual data room access including financial analysis prepared by EY on financials and Q&A process →Management presentations →Exact timetable for Phase II to be circulated in a separate process letter for shortlisted potential investorsPhase II detailsKey figures (2019P) 259 # of restaurants as of 2019P year end c.TL 1.2 bn System -wide sales in 2019P c.TL 819 mn Company sales in 2019P c.68 mn Total guest count (“GC”) in 2019P Info Pack distributionLimited Q&ANon-binding offersInitiation of due diligenceBinding bidsSigningPhase I Phase II c.TL 44 mn EBITDA in 2019P 3 September 2019 II. McDonald’s at a glance Strictly private and confidentialMcDonald’s: The only restaurant business amongst the world’s most valuable brands 6Brand value (USD bn) Value change (y -o-y %) Brand revenue (USD bn) Industry Source: Forbes The World’s Most Valuable Brands List 2019 1 2 109876543205.5 167.7 125.3 97 88.9 59.2 53.1 52.2 44.6 43.812% 27% 20% 37% -6% 3% 11% 10% 0% 6%265.8 136.2 110.2 211.4 48.8 23.8 221.6 33.8 190.8 96.1Technology Technology Technology Technology Technology Beverage Technology Leisure Automotive Restaurant Strictly private and confidentialMcDonald’s: Beating its peers in terms of operational and financial metrics 7 Sales / outlet # (USD mn) System -wide sales (USD mn) Market cap (USD bn) 162 106 34 33 5 2.41.6 1.4 1.2 1.1 0.9 0.7 0.7 0.7 0.4 90,000 23,654 23,197 18,721 18,350 11,930 10,414 10,211 9,084 8,724 Source: McDonald’s Corporation, Bloomberg as of July 2019 Strictly private and confidentialMcDonald’s: Continuous focus on innovation and growth 8THE STRA TEGYCustomer insights have shaped our strategy What’s next? Our learnings: Customers Identified our Biggest Growth opportunities are Quality, Convenience, and ValueThe actions we are taking are three - pronged with a kicker 1. 2. 3.Retain Customers Who Are Loyal to McDonald’s Regain Customers We have Lost to Competitors Convert Casual Customers to Committed Customers Strictly private and confidentialMcDonald’s: Continuous focus on innovation and growth 9 VELOCITY ACCELERATORS We are identifying opportunities we can ACCELERATE…U.S. Experience of The FutureDigital Delivery Strictly private and confidentialAnadolu Restoran : Developmental licensee of McDonald’s in Turkey 10Since 2005, Anadolu Restoran is the developmental licensee of McDonald’s in Turkey #2 QSR1 burger chain in Turkey with c.30% market share2259 restaurants (2019P)c.TL 1.2 bn (2019P)c.68 mn (2019P) Strategically located restaurants under 4 main categoriesSystem -wide sales Company -owned & Franchisee restaurantsSystem -wide guest count (“GC”) Company -owned & Franchisee restaurants c.28%Franchisee restaurants106Store front118Shopping mallc.30% by Franchisee restaurants c.30% by Franchisee restaurants 24Drive thru11 Special c.20% by D elivery sales c.10% by D elivery sales (1) Quick service restaurant (2) 2018 data Source: Euromonitor Strictly private and confidentialEstablishing strong base for the restaurant network 115 key cities hosting c.65% of total restaurants1102 2 3 571 13 3123 1131 1 3 2 1 3 4 92 31 1111 1 11
Restoran : Developmental licensee of McDonald’s in Turkey 10Since 2005, Anadolu Restoran is the developmental licensee of McDonald’s in Turkey #2 QSR1 burger chain in Turkey with c.30% market share2259 restaurants (2019P)c.TL 1.2 bn (2019P)c.68 mn (2019P) Strategically located restaurants under 4 main categoriesSystem -wide sales Company -owned & Franchisee restaurantsSystem -wide guest count (“GC”) Company -owned & Franchisee restaurants c.28%Franchisee restaurants106Store front118Shopping mallc.30% by Franchisee restaurants c.30% by Franchisee restaurants 24Drive thru11 Special c.20% by D elivery sales c.10% by D elivery sales (1) Quick service restaurant (2) 2018 data Source: Euromonitor Strictly private and confidentialEstablishing strong base for the restaurant network 115 key cities hosting c.65% of total restaurants1102 2 3 571 13 3123 1131 1 3 2 1 3 4 92 31 1111 1 11 4 1 16 İzmirAnkara Bursa Antalyaİstanbul 10 1915122 No presence1-4 restaurants 5-9restaurants10+ restaurants# of McDonald’s restaurants 254 Total # of restaurants1 GDP per capita (TL k) 225 #1 164 #3 119 #12 137 #7 143 #5İstanbul 102Ankara 22 Antalya 19 İzmir 15 Bursa 10 Total of 5 cities Population (mn) 15 #1 6 #2 2 #5 4 #3 2 #4 c.30 GDP (TL bn) 970 #1 281 #2 90 #6 192 #3 128 #4 c.1,660c.37% of total GDPc.53%of total population covering # of restaurants Ranking in Turkey per category(1) As of June 2019 Source: Turkstat Strictly private and confidentialMcDonald’s timeline in Turkey 12McDonald’s Corporation operating as JV Full ownership under McDonald’s Corporation 1986 1989 1993 1994 1998 2003 First McDonald’s restaurant launched in İstanbul by a local DLMcDonald’s Corporation acquired 50% of Turkey operationsFirst Drive thru restaurant openedMcDonald’s Corporation took over control100th restaurant in Turkey launchedInitiated first delivery service Growth & expansion under Anadolu Group’s ownership New management focusing on profitable growth 2005 2008 2012 2016 2017 2018 Anadolu Holding acquired DL of McDonald’s in Turkey for 20 yearsBreakfast service introduced200th restaurant opened First McCafé launchedNew management New strategyMcDonald’s Turkey became the fastest growing DL on a regional basisAttained c.TL 1 bn System - wide sales 82Restaurants in 2005 III. Key investment highlights Strictly private and confidentialAnadolu Restoran : Uniquely positioned in the Turkish QSR market 14Growing Turkish QSR market on the back of country fundamentals and changing lifestyles World -renowned McDonald’s brand supported by continuous marketing activities Strategically -located diverse restaurant portfolio and well - designed offerings to capture guest count across occasions Compelling white space enabling room for further growth Established operational excellence resting on proven McDonald’s standardsReputable supplier network supported by well -managed supply chainClearly defined strategy targeting profitable growth backed by the strong managementMultiple untapped value enhancers beyond business plan 5 48 7 21 3 6 Strictly private and confidentialGrowing Turkish QSR market … 15(1) QSR market denotes the limited -service restaurant category, combining fast food and 100% home delivery/takeaway outlets as p er Euromonitor data Source: Euromonitor, company analysis1 Turkish QSR market1(TL bn) 1.6 1.9 2.1 2.2 2.6 3.0 3.74.45.36.3 2.83.34.04.55.26.37.89.411.313.5 2013 2014 2015 2016 2017 2018 2019F 2020F 2021F 2022Fc.4.3c.9.3c.19.8 CAGR: c.17%CAGR: c.21%QSR burger Others # of total QSR transactions c.434 mnc.817 mnCAGR: c.7%CAGR: c.8%c.629 mnFirst global brand to capitalize on the market’s lucrative potential in the 1980’s Selected global players c.55% > > > Selected local players c.45% Local delicacies Local chains > > > QSR burger chains > QSR pizza chains > QSR chicken chainsX%share in QSR market in 2018, by valueControls 80+% of the Turkish QSR burger market in terms of value Strictly private and confidential … on the back of country fundamentals and changing lifestyles 161 (1) 2017 data Source: Euromonitor , Turkstat , World Bank Per capita QSR consumption (USD) 511 392 294 241 215 92 84 63 24UK Italy Netherlands France Germany Czechia Poland Russia TurkeySelected CEE countries average: c.80 USD vs. Turkey: c.24 USD c.28 USD by 2022Rising disposable income (per capita in real TL terms) Growing urbanization (share in total population) Expanding female workforce participation (share in 15 -65 aged females) Declining average household size (# of people per household)Increasing sizeable populationGrowth drivers 2018 2022F c.TL 22k1 c.75% c.38%c.3.5c.82 mn c.TL 28k c.77% c.41%c.3.3c.84 mn >c.2% c.7% +c.2% +c.3% Strictly private and confidentialWorld -renowned McDonald’s brand supported by continuous marketing activities 172 (1) Based on Kantar TNS report dated February 2019; average of total brand awareness in QSR sector in 2017 and 2018 (2) c.4 % of System -wide sales where the actual spending amount can vary depending on final discussions with McDonald’s Corporation on a yearly basis (3) McDonald’s application, enabling users to order delivery and to access personalized campaigns; showed strong growth performance with its existing user portfolio of c.1.3 mn subscribers Source: Kantar TNS Continuous marketing activities boosting guest count World -renowned brand 97% 20% Unique experienceTotal brand awareness1 Leader in total brand awareness in the Turkish QSR market Top-of-mind ad awareness1 Leader in top -of-mind ad awareness in the Turkish QSR market Brand image “People come to McDonald’s not basically for their product based needs but to experience the atmosphere”28.5 33.7 42.3 2017 2018 2019PMarketing expenses2 (TL mn) 1Substantial marketing spending … TV Digital c.42% c.28% Out-of-home Others c.29% c.1%2… with focus on brand awareness across channels 3Joint campaigns with leading brands 4 Focusing on value Targeting GC increase CoffeeDaba Daba BurgerMcDonald’s digital application3 Strictly private and confidentialStrategically -located diverse restaurant portfolio and well -designed offerings to capture guest count across occasions 183 Shopping mall Store front Drive thru Special Selected KPIs (2019P) Selected KPIs (2019P) Selected KPIs (2019P) Selected KPIs (2019P) Share in total (2019P) Share in total (2019P) Share in total (2019P) Share in total (2019P) Key highlights Key highlights Key highlights Key highlights106 28.7 526.3# of restaurantsGC (mn)System -wide sales (TL mn) 118 30.3 445.6# of restaurantsGC (mn)System -wide sales (TL mn) 24 7.2 142.6# of restaurantsGC (mn)System -wide sales (TL mn) 11 2.1 59.0# of restaurantsGC (mn)System -wide sales (TL mn) c.41% c.42% c.45% c.46% c.44% c.38% c.9% c.11% c.12% c.4% c.3% c.5% Generating strong GC Acting as key revenue and profit driverCapturing GC Increasing availability and brand awarenessProviding whole McDonald’s experience Limited availabilityServing as a fine PR tool Touching GC across occasions Strictly private and confidential Well -designed menu offerings Key considerationsFocus on
Selected KPIs (2019P) Selected KPIs (2019P) Selected KPIs (2019P) Selected KPIs (2019P) Share in total (2019P) Share in total (2019P) Share in total (2019P) Share in total (2019P) Key highlights Key highlights Key highlights Key highlights106 28.7 526.3# of restaurantsGC (mn)System -wide sales (TL mn) 118 30.3 445.6# of restaurantsGC (mn)System -wide sales (TL mn) 24 7.2 142.6# of restaurantsGC (mn)System -wide sales (TL mn) 11 2.1 59.0# of restaurantsGC (mn)System -wide sales (TL mn) c.41% c.42% c.45% c.46% c.44% c.38% c.9% c.11% c.12% c.4% c.3% c.5% Generating strong GC Acting as key revenue and profit driverCapturing GC Increasing availability and brand awarenessProviding whole McDonald’s experience Limited availabilityServing as a fine PR tool Touching GC across occasions Strictly private and confidential Well -designed menu offerings Key considerationsFocus on global core productsIntroduce limited time offeringsFocus on attracting GCValue based pricing 19 c.37% of sales1 c.15 -20 TL ticket size Selected products Global core products Top-selling offerings acting as key drivers of GC and sales growth1 Coffee Ice cream Daba Daba BurgerGC capturing value products Products generating increased GC c.23% of sales1c.1-10 TL ticket size2 Düp Dürüm Tok Artık Limited time offerings Mainly local taste offerings to attract wider audience c.8% of sales1c.10 -15 TL ticket size3 Quarter PounderShow Burger Higher priced, more profitable offerings Value products to fill price gap or missing parts to strengthen presence in affordable premium c.12% of sales1c.20+ TL ticket size4 (1) Total sales amount for the period of January 2018 to May 2019. Remaining 20% of sales represents products sold individual ly, not as part of a menu (excluding coffee and ice cream) 3Strategically -located diverse restaurant portfolio and well -designed offerings to capture guest count across occasions BigMac McChickenMcRoyal Double Cheese burger Strictly private and confidential 204 İstanbul İzmirAnkaraBursa Antalya0.54 AdanaTrabzon KayseriPromising and visible white space with c.61.7 mn population, where McDonald’s restaurant presence is less than half that of its closest peer# of restaurants in Turkey1 254 643 Cities without any McDonald’s or Burger King Restaurant ratio McDonald’s / Burger King Population falling into respective bucketsRestaurant ratio for McDonald’s / Burger King 0 1 0.50< 0.25< 0.75< 19.8 mn 41.9 mn 15.7 mn 4.7 mnFootprint: McDonald’s vs. Burger KingVisible white space for McDonald’s in Turkey vis -a-vis competition … 0.340.46 0.50 0.450.75 0.44 0.58 0.53 Muğla0.43SamsunCompelling white space enabling room for further growth (1) As of June 2019 Source: Burger King website Strictly private and confidential 21 1,762 2,197 1,753 310 768 482 122 896 5151,2921,489 1,463 249578 421 99255682800 470708 290 61190 6123641600 Spain UK Germany France Netherlands Italy Poland Czechia Turkey Russia Total # of restaurants # of Burger King restaurants1# of McDonald’s restaurants1 Total # of restaurants per 1 mn population226.7 26.6 26.1 18.1 12.7 12.7 11.5 11.1 1,2828.9 1,31528.24Compelling white space enabling room for further growth (1) As of year -end 2018 (2) Population according to 2017 World Bank figures Source: Euromonitor , World Bank, McDonald’s Corporation, Restaurant Brands equity research reports, Statista, Company websites … reinforced by the existing leader position of McDonald’s in selected other countries # of McDonald’s and Burger King restaurants per capita in Turkey lags significantly behind selected markets Turkey is one of the few markets where Burger King has more restaurants than McDonald’s Strictly private and confidential Established operational excellence resting on proven McDonald’s standards 225 Diligent and systematic approach to open new restaurants ensuring optimal restaurant performance Company -wide involvement Defined criteria for restaurant openings Geographical and macro analysis Competitive landscape analysis Financial and operational feasibility analysis Standardized requirements for construction and equipment Approval by McDonald’s Corporation on architectural details1 2 43 5 1 5 42 3New location discovery Go orNo-Go decisionStaffing and training Design, tendering and constructionFeasibility analysisNew restaurant opening process BoD1/ McDonald‘s CorporationConstruction DepartmentRestaurant operations DepartmentReal estate Department Real estate Department (1) Anadolu Restoran Board of Directors Strictly private and confidentialEstablished operational excellence resting on proven McDonald’s standards 235 Well -balanced approach prioritizing both customer experience and operational excellence Operational -centric approach Customer -centric approach Focus on service quality Customer at the center Excellence in customer experience Profitability through sales increaseFocus on products Focus on internal processes Excellence in operations Profitability through cost management Well -balanced approach enables: Capturing new trends in the marketStanding out from the competitionHigh customer satisfactionIncreasing top -line and profitability Strictly private and confidential 245Established operational excellence resting on proven McDonald’s standards Customer -centric operations supported by strict guidelines, trainings and well -defined KPIs Measures to increase GC and sales Customer -oriented service provider Personal touch and social interaction by crew Customer experience visits (CEV) by business consultants Special focus on children and elderly “Capture the magical moments” Special programs for the high performersTracking performance of cashiers on an individual basis Incentivizing employees to maximize sale of add-on products Placing LSM (local -store marketing) ads in nearby schools, businesses and offices Focusing on initiatives like McCafe and delivery Increasing sales with efficient people management (GPMH to measure labor efficiency) Strictly private and confidentialNo underperforming1 restaurants in the portfolio as of June 2019 255Established operational excellence resting on proven McDonald’s standards Hands -on operational management in line with global standards Restaurant Operations Improvement Process (ROIP ) Year -long operational and service quality improvement process coordinated by the certified in-house Business Consultants (BCs) ROIP scheduleBusiness Planning Session (BPS) Planning Monitoring Monitoring Controlling January - March April - June July - September October - DecemberBrand Standard Visits (BSV)Follow -up Visits (FUV) Unannounced 3rd party audits by parties mandated and certified by McDonald’s CorporationDefine yearly action plansExamine quality and service measures of restaurantsSurvey underperforming restaurants in BSVs 0 (1) According to Improvement Process for Underperforming Restaurants (IPUR) that tracks underperforming restaurants following the FUV surveysperformed quarterly by BCs to evaluate restaurants from customer perspectiveQuarterly Customer Experience Visits (CEV) Strictly private and confidential 265Established operational excellence resting on proven McDonald’s standards Proven success in managing franchisee ecosystem Strict selection criteria→Detailed background check →Solid financial position requirement →Personal commitment and full focus on the business are must→No related exposure in the sector →Sound performance on the 5 -day on the job training program →Initial 6 -month education for new franchisees →Regular visits to restaurants →Continuous performance check
Visits (BSV)Follow -up Visits (FUV) Unannounced 3rd party audits by parties mandated and certified by McDonald’s CorporationDefine yearly action plansExamine quality and service measures of restaurantsSurvey underperforming restaurants in BSVs 0 (1) According to Improvement Process for Underperforming Restaurants (IPUR) that tracks underperforming restaurants following the FUV surveysperformed quarterly by BCs to evaluate restaurants from customer perspectiveQuarterly Customer Experience Visits (CEV) Strictly private and confidential 265Established operational excellence resting on proven McDonald’s standards Proven success in managing franchisee ecosystem Strict selection criteria→Detailed background check →Solid financial position requirement →Personal commitment and full focus on the business are must→No related exposure in the sector →Sound performance on the 5 -day on the job training program →Initial 6 -month education for new franchisees →Regular visits to restaurants →Continuous performance check and training →Routine financial stability and capability check→Periodic meetings →Proper feedback / coaching mechanisms →Internal benchmarking of restaurants →Performance analyses for franchisees looking to expandContinuous monitoring →Royalty and advertising fees on sales →Rent contract secured by the Company and paid by the franchisee →Construction commissioned and financed by the Company→Equipment investments financed by the franchisee →Opening fee for 10 years received at the start of operations Key terms set at thebeginning Strictly private and confidential 275Established operational excellence resting on proven McDonald’s standards Focus on digital innovation: Continuous result -driven operational improvements Customer satisfaction ensured via efficient operations driven by digital innovationsProven success in delivery metrics GPS Tracking and POS integration Order sharingDigital innovation projects for McDelivery 1Order reaches to the restaurant 2Order matching with the closest driver 3Order is prepared fresh as driver approaches 4Driver picks up the fresh prepared order 5Ticket automatically transferred to restaurant when order is delivered 1Order placed by the customer 2System analyzes the order according to: →Exact order time →Calculated potential wait time 3Order matched with the best fitting restaurant GC increased by c.14% c.3.1 mn c.3.6 mn Avg. ticket size increased by c.16% c.TL 29 c.TL 33Sales increased by c.33% c.TL 89 mn c.TL 119 mn6M 20181 6M 20191 (1) Represents management figuresProprietary technologies of Anadolu Restoran Strictly private and confidential McDonald’s handling strategic sourcing Identifying suppliersSecuring competitive pricingNegotiations Havi providing end -to-end supply chain solutions Warehousing DeliveryInventory management Phase 1 Phase 2 Phase 3 Restaurants Suppliers Procurement from suppliersWarehousing and inventory trackingRoute planning and delivery of supplies Havi warehouses 286Reputable supplier network supported by well -managed supply chain Mainly local sourced supply chain consisting of multiple long -term partners Meat 3 years 30+ years 3 years 17 years Beverage 30+ years 12 years Bakery & pastry 20+ years 15 years Condiments 30+ years 20+ yearsPaper & packaging 30+ years 20+ years Poultry c.24% c.9% c.5%c.7% c.6% c.9% Potato c.12% Supplier tenure years % of sub -category in total purchases in 2018 Strictly private and confidential 29 Key facts Long -term strategic building blocks 1. Focus on restaurant network2. Increase guest count per restaurant 3. Increase average ticket size4. Optimize costs3Significant white space2Well -positioned brandIGrowing QSR market 4Well -established customer base secured through operational excellenceClearly defined strategy targeting profitable growth…7 Strictly private and confidential 30Focus on restaurant network Closure of under -performing restaurants Tighter opening criteria and shorter payback period targets1 Increase guest count per restaurant Value offering product launches Customer -centric marketing and store renovations2 Increase average ticket size Increase of McDelivery performance Increase of recommended add -on product sales3 Optimize costs Stricter negotiation terms with suppliers and landlords 4 Organizational restructuring System - wide GC (mn)EBITDA (TL mn)System - wide sales (TL bn)51 68 2015 2019P0.71.2 2015 2019P23819 28 44 2015 2016 2017 2018 2019PSelected KPIsStrategic building blocks 20151 2019PClearly defined strategy targeting profitable growth… Positive impact of actions taken since 2016 visible in key metrics7 (1) Represent management figures to show the pattern since 2015; not taken from draft financial analysis prepared by EY (2) Reflecting System -wide figures (3) Calculated based on Net sales which only includes sales of Company -owned restaurants Source: Draft financial analysis prepared by EY# of total restaurants # of total restaurants262 259 c.195k c.266k c.8.1% CAGR # of GC per restaurant2 # of GC per restaurant2 EBITDA margin3 EBITDA margin3c.4.9% c.5.4%average ticket size2 average ticket size2c.TL 13.8 c.TL 17.2Limited impact; building the basis for the future growth c.8% CAGR 1 1c.14% CAGRc.5.7% CAGR Strictly private and confidential 31 19,076 16,67618,30421,15821,832 Jan 2019 2014 2018 2017 2016 2015Avg. GC per restaurant adjusted for seasonality and trading days2Avg. sales per restaurant adjusted for seasonality and trading days2 Proven success of change of strategyClearly defined strategy targeting profitable growth…7 Visible performance improvements in key metrics1 Anadolu Restoran became the top DL in terms of number of GC growth performance among 119 DLs globally in 2017 Awards (1) Seasonally adjusted GC and sales analysis performed by McDonald’s Corporation to compare performance across markets (2) Represents system -wide performance Source: McDonald’s Corporation 226,353239,604246,871286,741353,794 Jan 2019 2014 2018 2017 2016 2015Average GC per restaurant adjusted for seasonality and trading days – all restaurants Average GC per restaurant adjusted for seasonality and trading days – comp restaurants Average GC per restaurant trendline adjusted for seasonality and trading days – all restaurants Average sales per restaurant adjusted for seasonality and trading days – all restaurants Average sales per restaurant adjusted for seasonality and trading days – comp restaurants Average sales per restaurant trendline adjusted for seasonality and trading days – all restaurants Strictly private and confidential 32Clearly defined strategy targeting profitable growth…7 Continuous cost control having its impact on key cost items Source: TurkstatNegotiating better terms with landlords Proper management of Food & Paper cost (“F&P”) F&P was increasing higher than PPIThe Company managed to confine F&P growth to below PPIPre 2016 Post 2016 c.7% PPI c.22%c.12% F&P costs c.20% 2010 -2015 CAGR2015 -2019P CAGR+5% -2% More frequent negotiations with suppliers Introducing new suppliers & bulk ordersTotal rent expense as % of System -wide sales consistently risingDecreasing trend in rent as a % of System -wide salesPre 2016 Post 2016 12.1%14.0% 12.9% Diligent restaurant opening process Renegotiating existing rent agreements2010 2019P 2015 Strictly private and confidential 3368144 2019P 2025F1.25.3 2019P 2025F44378 2019P 2025F (1) Reflecting System -wide figures (2) Despite the targeted and planned strategic actions, average ticket
profitable growth…7 Continuous cost control having its impact on key cost items Source: TurkstatNegotiating better terms with landlords Proper management of Food & Paper cost (“F&P”) F&P was increasing higher than PPIThe Company managed to confine F&P growth to below PPIPre 2016 Post 2016 c.7% PPI c.22%c.12% F&P costs c.20% 2010 -2015 CAGR2015 -2019P CAGR+5% -2% More frequent negotiations with suppliers Introducing new suppliers & bulk ordersTotal rent expense as % of System -wide sales consistently risingDecreasing trend in rent as a % of System -wide salesPre 2016 Post 2016 12.1%14.0% 12.9% Diligent restaurant opening process Renegotiating existing rent agreements2010 2019P 2015 Strictly private and confidential 3368144 2019P 2025F1.25.3 2019P 2025F44378 2019P 2025F (1) Reflecting System -wide figures (2) Despite the targeted and planned strategic actions, average ticket size is forecasted t o increase less than the forecasted inflation CAGR of c.14% between 2019P -2025F (3) Calculated based on Net sales which only includes sales of Company -owned restaurantsClearly defined strategy targeting profitable growth… 2019P -2025F: Significant room for further improvement7 Focus on restaurant network Tap into underpenetrated major cities Focus on store front and shopping mall1 Increase guest count per restaurant Remodeling investments EOTF installments2 Increase average ticket size Prioritize delivery sales EOTF installments3 Optimize costs Exercise greater bargaining power on rents and supplier agreements4 System - wide GC (mn)EBITDA (TL mn)System - wide sales (TL bn)Selected KPIsStrategic building blocks 2019P 2025F # of total restaurants # of total restaurants259 460 c.266k c.323k # of GC per restaurant1 # of GC per restaurant1 EBITDA margin3 EBITDA margin3c.5.4% c.9.6%average ticket size1 average ticket size1c.TL 17.2 c.TL 36.7 c.13% CAGRc.29% CAGRc.43% CAGRc.3.2% CAGR c.13.5% CAGR2 Strictly private and confidential 34…backed by the strong management7 Yeşim Taner Deputy General Manager Years of total experience: 29 Elif Göktaş Marketing Director Years of total experience: 24 Feliks Boynuinceoğlu Operations Director Years of total experience: 17 Mahmut Sunar Finance Manager Years of total experience: 32 Oğuz Uçanlar CEOSince 2014 with Anadolu Restoran Years of total experience: 20 Since 2006 with Anadolu RestoranSince 2016 with Anadolu RestoranSince 20 16 with Anadolu RestoranSince 1995 with Anadolu Restoran Customer -centric approach to expand the customer baseSustained focus on restaurant profitability Focus on new trends and developments Strictly private and confidential 35 IIExpand McD Café presence IIncrease delivery capabilities beyond business plan IIIExplore potential areas to penetrate in value chainIn-house logistics services IVEvaluate real estate opportunities Opportunistic approach to value -enhancing real estateMultiple untapped value enhancers beyond business plan8 IV. Financials & Business plan Strictly private and confidentialBasis of preparation 37Proposed Transaction scope comprises of the Company as illustrated in the Executive summary →The Company’s functional currency is Turkish Lira (“ TL”) →The Company keeps its management accounts (monthly basis) in TL detailed at Company -owned and franchise restaurant level →The analysis presented in this Info Pack is based on management accounts and reflects draft financial analysis prepared by EY adjustments →The Company’s fiscal year is 12 -months period starting on 1 January of the calendar year and ending on 31 December of the calendar year (i.e. 01.01.2017 -31.12.2017) →Consolidated IFRS financials (annual basis) are audited by Deloitte since 2017 Historical financials presented in this Info Pack reflect the draft financial analysis prepared by EY and normalization adjustments →EY’s work is based on the Company’s management accounts for the analysis and factors in normalization and IFRS like adjustments ▪Draft financial analysis prepared by EY is also provides reconciliation to consolidated IFRS financials →2019P figures represent management expectations based on actual 3M 2019 plus 9M 2019 expected →2019P -2025F figures are as per management accounts reflecting the Company’s projections and are applied the EY analysis adjustments done on historical figures for compatibility Strictly private and confidential Introduction 38 Key metrics # of restaurantsGuest count per restaurant & Total guest countAverage ticket size & System -wide salesFinancial performance presented under 2 main concepts Company - owned performanceFranchisee performance # of RestaurantGuest count Sales1 2 Net Sales (-) Restaurant expenses (-) Royalty feeCompany -owned contribution Franchisee contribution HQ expenses & Other income/expenses EBITDA System -wide performance Company performance Strictly private and confidentialNumber of restaurants evolution 39(1) Net openings calculated as new openings minus closed restaurants for any given period Source: Draft financial analysis prepared by EY Number of restaurants at year end 180 184 18721324427430332534474 71 72778695104110116 2017 2018 2019P 2020F 2021F 2022F 2023F 2024F 2025F Company-owned Franchisee Total net openings1 Total1 31 40 39 38 28 25 4 -1 254 255 259 290 330 369 407 435 460 Strategy for new restaurant openings Focus on underpenetrated major cities Opportunistic on smaller cities Ratio of franchisee restaurant to company - owned restaurant to reach 25% in 2025F Strictly private and confidential System -wide guest count evolution 40 (1) Including performance of restaurants opened before 31.12.2016 (2) Including performance of restaurants opened in 2017, 2018 and 2019P; for historical periods performance of closed restaurants are also included here (3) Including performance of restaurants opened before 31.12.2018 (4) Including performance of restaurants opened during 2019P to 2025F Source: Draft financial analysis prepared by EY # of restaurants System -wide GC bridge (in mn)254 180259 187460 344+5 +201 Company -owned restaurants 68.3144.4 (2.2)61.1 6.5 0.5 2.4 11.847.9 3.313.1 2017 Comp New Comp New 2019P Comp New Comp New 2025F1 2 1 2 3 4 3 4 Franchisee Company -owned Total GC increase20.1 41.020.2 48.036.7 107.77.0 0.259.7 16.4 Company -owned FranchiseeCompany -owned Franchisee GC per restaurant (in k)223 CAGR: c.4% 260 326 CAGR: c.8%Comp Company -owned Total250 CAGR: c.3% 281 328 CAGR: c.6% 234 CAGR: c.3% 266 323 CAGR: c.7%Comp Franchisee Strictly private and confidential 1,1745,302 (37) 839 248 13 1111,3651,770506488 2017 Comp New Comp New 2019P Comp New Comp New 2025FSystem -wide sales performance (1) Including performance of restaurants opened before 31.12.2016 (2) Including performance of restaurants opened in 2017, 2018 and 2019P; for historical periods performance of closed restaurants are also included here (3) Including performance of restaurants opened before 31.12.2018 (4) Including performance of restaurants opened during 2019P to 2025F (5) Inflation of c.12%, c.20% and c.19% for 2017 -2019P, respectively. Inflation CAGR for 2017 -2019P is c.20% and c.14% for 2019P -2025F Source: Draft financial analysis
Franchisee GC per restaurant (in k)223 CAGR: c.4% 260 326 CAGR: c.8%Comp Company -owned Total250 CAGR: c.3% 281 328 CAGR: c.6% 234 CAGR: c.3% 266 323 CAGR: c.7%Comp Franchisee Strictly private and confidential 1,1745,302 (37) 839 248 13 1111,3651,770506488 2017 Comp New Comp New 2019P Comp New Comp New 2025FSystem -wide sales performance (1) Including performance of restaurants opened before 31.12.2016 (2) Including performance of restaurants opened in 2017, 2018 and 2019P; for historical periods performance of closed restaurants are also included here (3) Including performance of restaurants opened before 31.12.2018 (4) Including performance of restaurants opened during 2019P to 2025F (5) Inflation of c.12%, c.20% and c.19% for 2017 -2019P, respectively. Inflation CAGR for 2017 -2019P is c.20% and c.14% for 2019P -2025F Source: Draft financial analysis prepared by EY # of restaurants System -wide sales bridge (TL mn) 1 2 1 2 3 4 3 4 Franchisee Company -owned Total Sales increase281 558355 8191,349 3,953261 743,134 994 Company -owned FranchiseeCompany -owned Franchisee Average ticket size5 (TL) 4113.5 CAGR: c.14% 17.0 36.9 CAGR: c.12%Comp Company -owned Total14.0 CAGR: c.13% 17.5 36.7 CAGR: c.12% 13.7 CAGR: c.13% 17.2 36.7 CAGR: c.12%Comp Franchisee254 180259 187460 344+5 +201 Company -owned restaurants Strictly private and confidentialRestaurant expenses 42Source: Draft financial analysis prepared by EY→F&P cost includes food and packaging •Expected to decrease to 40.0% over Net sales in 2025F from its level of 41.0% in 2019P →Labor expense accounts for both crew and restaurant management •Expected to reach 20.7% of Net sales in 2025F from 22.0% in 2019P →Rent expense for all Company -owned restaurants; all denominated in TL •Expected to reach 12.6% of Net sales in 2025F from 14.1% in 2019P→Royalty expense is the license fee paid to McDonald’s Corporation •Current agreement that is valid until 2025, determines the rate until the end of 2024 →Advertising expense is the amount booked as per the agreement with McDonald’s Corporation •Any difference between this amount and the actual spending is booked under the Other income / expense account above EBITDA →Others include opening fee, utilities, maintenance & re pair, outside services such as mall fees, etc.44.0% 44.6% 43.2% 43.5% 43.9% 44.1% 44.3% 44.4% 44.4%22.6% 21.5% 23.2% 23.3% 23.2% 23.1% 23.0% 22.9% 23.0%14.8% 15.1% 14.9% 14.7% 14.5% 14.4% 14.3% 14.1% 14.0%4.3% 4.2% 4.2% 4.2% 4.3% 4.8% 5.1% 5.5% 5.6%4.2% 4.2% 4.2% 4.2% 4.3% 4.4% 4.4% 4.4% 4.4%10.1% 10.4% 10.2% 10.0% 9.7% 9.2% 9.0% 8.6% 8.5% 2017 2018 2019P 2020F 2021F 2022F 2023F 2024F 2025F F&P cost Labor expense Rent expense Royalty expense Advertising expense Others Total (TL mn)532 657 776 1,049 1,434 1,923 2,462 3,038 3,558 As a % of total restaurant expenses Strictly private and confidentialHQ expenses 27 30 35517087106124136 9 8 5 7 9 12 15 19 22 2017 2018 2019P 2020F 2021F 2022F 2023F 2024F 2025F Source: Draft financial analysis prepared by EY→Personnel expense includes HQ employees •Expected to be c.3.4% of Net sales in 2025F from c.4.3% in 2019P→Main items in other HQ expenses include; HQ office rent, car rental and other car expenses, travel, financial and legal advisory services 43110 104 105 115 125 135 145 150 150c.6.5% c.5.6% c.5.0% c.5.2% c.5.1% c.4.7% c.4.5% c.4.2% c.4.0% HQ expenses as % of Net sales Personnel expense Other HQ expense Total (TL mn)36 38 41 58 79 99 121 143 158 Total HQ personnel count Strictly private and confidentialCompany performance (1) The Company has agreed with McDonald’s Corporation to spend c.TL 4.7 mn, c.TL 5.7 mn, c.TL 4.6 mn less than the advertising expense budget, respectively in 2017, 2018 and 2019P as per the DL agreement. Going forward adverti sing expenses are projected as 4% of sales (2) Currently, term of MUFA for the Company is valid until July 2025 where 2025F reflects full year projections (3) Company -owned restaurant margin is calculated as Net sales of company -owned restaurants minus restaurant expenses including but not limited royalty and opening fee expenses Source: Draft financial analysis prepared by EY44 # of restaurants Net Sales (TL mn) EBITDA1 (TL mn) CAGR: c.21%CAGR: c.30%→Expanding restaurant network →Top line improvement secured by increasing GC and average ticket size →Improving EBITDA margin with scale and operational improvements19 28 44 53100165238 311378 2017 2018 2019P 2020F 2021F 2022F 2023F 2024F 2025F3.4% 9.6% 9.2% 8.8% 7.8% 6.4% 4.8% 5.4% 4.1% 4.7% 9.8% 9.6% 8.8% 7.6% 5.7% 5.2% 4.3% EBITDA (TL mn) EBITDA %Company -owned restaurant margin %32558 687 8191,1131,5522,1092,7223,3703,953 2017 2018 2019P 2020F 2021F 2022F 2023F 2024F 2025F254 180259 187460 344+5 +201 Company -owned restaurants 10.0% Strictly private and confidentialNet Working Capital (“NWC”) cycle NWC days NWC (TL mn)29.0 31.4 32.8 44.4 61.4 83.2 107.2 132.7 155.6 -40.9 -49.0 -65.3 -87.9-119.6-159.1-203.1-248.8-291.16.4 10.1 12.016.1 22.129.4 37.646.154.0 -12.4 -10.7-16.4-22.3 -31.1 -42.2 -54.5 -67.4 -79.1 2017 2018 2019P 2020F 2021F 2022F 2023F 2024F 2025F Trade receivables Trade payables Inventory Other current assets and liabilities, net-18.2 -36.9 -49.6 -67.2 -88.7 -112.7 -137.4 -160.6 -17.8 3NWC (1) Calculated as: Trade receivables / blended rate / (Net sales + Income from franchisee)360 (2) Calculated as: Trade payables / blended rate / (Cost of company -owned restaurants - Labor + Franchise rent expense)360 (3) Other current assets include; prepaid expenses, income accruals, deferred and deductible VAT, prepaid taxes and funds, advances to personnel. Othe r current liabilities include; accrual of head office bonus, due to personnel, taxes and funds payable, expense accruals, VAT payable, allowances, social withholding payable Source: Draft financial analysis prepared by EY15 14 12 12 DSO 31 30 35 35 DPO 5 6 6 6 DIOConstant between 2019P and 2025F 45Improving collection terms with franchisees and suppliers1 2 Strictly private and confidentialCAPEX 37144159172231 183169 2019P 2020F 2021F 2022F 2023F 2024F 2025F Total CAPEX (TL mn) (1) Including positive impact of reuse of equipment for closed restaurants (2) Include IT software, HQ office capex, small kitchen and restaurant equipment→CAPEX movement is in line with the new restaurant openings →Periodic re -imaging CAPEX to achieve global standards for restaurants →Almost all restaurants, except food court restaurants which do not have enough space for EOTF equipment, will be EOTF ready by 2024FCAPEX (TL mn) 2019P 2020F 2021F 2022F 2023F 2024F 2025F New restaurant openings 10.7 90.0 127.5 137.6 152.9
analysis prepared by EY15 14 12 12 DSO 31 30 35 35 DPO 5 6 6 6 DIOConstant between 2019P and 2025F 45Improving collection terms with franchisees and suppliers1 2 Strictly private and confidentialCAPEX 37144159172231 183169 2019P 2020F 2021F 2022F 2023F 2024F 2025F Total CAPEX (TL mn) (1) Including positive impact of reuse of equipment for closed restaurants (2) Include IT software, HQ office capex, small kitchen and restaurant equipment→CAPEX movement is in line with the new restaurant openings →Periodic re -imaging CAPEX to achieve global standards for restaurants →Almost all restaurants, except food court restaurants which do not have enough space for EOTF equipment, will be EOTF ready by 2024FCAPEX (TL mn) 2019P 2020F 2021F 2022F 2023F 2024F 2025F New restaurant openings 10.7 90.0 127.5 137.6 152.9 126.1 129.9 Construction 6.8 39.3 58.5 63.5 70.4 57.2 61.5 Equipment1 3.9 50.7 68.9 74.1 82.5 68.8 68.4 Re-modelling 26.7 53.5 31.6 34.2 78.1 57.2 39.1 Re-imaging 10.4 40.1 17.8 18.1 56.8 32.7 5.6 EOTF 3.6 2.7 2.9 3.6 3.2 0.0 0.0 Others2 12.7 10.7 10.9 12.6 18.1 24.5 33.5 46 Strictly private and confidentialTrading update (8 month 2019) 44.9 48.0 30.736.219.720.2 13.813.6 2018 2019P 8M 2018 8M 2019 Company -owned GC Franchisee GC Total GC44.5 49.7 64.6 68.3 687.0818.7 454.6592.6302.9354.8 204.7239.0 2018 2019P 8M 2018 8M 2019 Company -owned sales Franchisee sales System -wide sales659.3 831.6 989.9 1,173.5 47256 254 255 259# of restaurants ( EoP) 5.7% (1) Monthly figures taken from Management reports where 2018 figures are coming from draft financial analysis prepared by EY Source: Draft financial analysis prepared by EYGuest count1 (mn unit) System -wide sales1 (TL mn) Realization69%% of 2018 year -end 73%% of 2019P11.6% 18.6% 26.1%14.8 16.7 15.3 17.2Average ticket size (TL) 5.7%13.0% 12.2% Realization67%% of 2018 year -end 71%% of 2019P Strictly private and confidential Trading update (8 month 2019) 48Net sales1 (TL mn) EBITDA1 (TL mn) 14.8 16.5 15.3 5.1% 3.5% 4.5% 16.4 19.1 17.1EBITDA (TL mn)EBITDA margin % 5.3% 4.5% 5.1%687.0 454.6232.3 8M 2018 4M 2018 2018 818.7592.6226.2 8M 2019 4M 2019P 2019P31.1 23.0 8.1 8M 2018 4M 2018 2018 41.531.410.1 8M 2019 4M 2019P 2019P-2.9SID adjustments 28.1 2.5SID adjustments 44.0EBITDA margin %Average ticket (TL) Average ticket (TL)Net sales (TL mn) Net sales (TL mn) EBITDA (TL mn)16.4% 2 % of 2019P year -end% of 2018 year -end % of 2019P year -end2019P (1) Monthly figures taken from Management reports where 2018 figures are coming from draft financial analysis prepared by EY (2) Represents year to go figures calculated as 2019P – 8M 2019 Source: Draft financial analysis prepared by EY% of 2018 year -end 74.0% 26.0%2018 66.2% 33.8% 2share in total 72.4% 27.6% 75.7% 24.3%share in totalshare in totalshare in total11.4% V. Appendix Strictly private and confidential 50General Terms Business Related TermsFranchise Grant & Terms →20-year non-exclusive right to operate existing and new McDonald’s branded stores Ownership →Ownership of the franchised business must be held either personally by the DL or through a NewCo that is separate from any other businesses →DL required to maintain all times during the term of the MUFA, majority ownership, and operative control of the franchised business →Any proposed ownership changes or any encumbrances over securities will be subject to prior written consent from McDonald’s →Prohibition of direct or indirect ownership by a listed or public company Real Estate →DL required to use sales proceeds of any sale or disposal of owned real estate to purchase additional real estate within 36 months after receipt of proceeds Right to Purchase →Any control transfer of interest to a third party is subject to a Right of Refusal («ROFR») at the lower of (i) purchase price agreed with a third party or (ii) purchase price pursuant to the terms of the Call Option set out in the MUFA Management →Removal of the current Managing Director will require McDonald’s consent →Newly introduced Managing Directors will need to undergo 9-12 months of training at the expense of the DL →If deemed necessary by McDonald’s, the DL, at their cost, will complete 9-12 months of full-time unpaid DL orientation/training Cash Distributions →Cash distributions to be restricted if certain MUFA requirements are not complied with Non -Compete →Neither the DL nor certain related parties (including the immediate family members of the DL) are permitted to engage in any competing businesses for the term of the MUFA and a period 2 years thereafterSummary of key MUFA terms Source: McDonald’s Corporation Strictly private and confidential 51Franchise Fee →Initial franchise fee equal to USD 2,250 (or, if it is a satellite location, USD 1,125) multiplied by the number of years remaining in the MUFA term →Continuing franchise fee – The MUFA will reflect rate of 8% of gross sales throughout the term . However subject to fulfilment of certain conditions, there will no change to the existing rates as agreed with DL until end 2024 as follows, to be documented separately →Continuing sub-franchise fee – There will be a direct flow -through of all sub-franchisee royalties collected by DL to McDonald’s →Advertising & Promotion (A&P) expenditure – The MUFA will reflect a minimum of 5% of gross sales throughout the term for A&P expenditure . However subject to fulfilment of certain conditions, DL shall be obliged to spend at least 4% of net sales each year on A&P expenditure until end 2024 , to be documented separately New Restaurant Openings →Annual restaurant opening requirements, based on prescribed number of minimum net restaurants p.a. and minimum requirements on EOTF/reimages as follows : Minimum number of restaurantsPeriod1 Jan 2019 to 31 Dec 2021 1 Jan 2022 to 31 Dec 2024 2019 2020 2021 2022 2023 2024 Royalty Rate (%) 4.0% 4.0% 4.0% 4.4% 4.6% 5.0% Financial Terms Year 2019 2020 2021 2022 2023 2024 Planned openings (minimum) 7 7 7 10 16 22 Planned closings (maximum) 3 3 3 3 2 2 Year end Restaurant count (minimum) 258 262 266 273 287 307Summary of key MUFA terms Source: McDonald’s Corporation Strictly private and confidential 52New Restaurant Openings Minimum requirements on EOTF/reimages* *Notes : 1. Restaurants include sub-franchised Restaurants 2. All new and reimaged Restaurants must have all EOTF components 3. Annual EOTF/Reimages plans
requirements, based on prescribed number of minimum net restaurants p.a. and minimum requirements on EOTF/reimages as follows : Minimum number of restaurantsPeriod1 Jan 2019 to 31 Dec 2021 1 Jan 2022 to 31 Dec 2024 2019 2020 2021 2022 2023 2024 Royalty Rate (%) 4.0% 4.0% 4.0% 4.4% 4.6% 5.0% Financial Terms Year 2019 2020 2021 2022 2023 2024 Planned openings (minimum) 7 7 7 10 16 22 Planned closings (maximum) 3 3 3 3 2 2 Year end Restaurant count (minimum) 258 262 266 273 287 307Summary of key MUFA terms Source: McDonald’s Corporation Strictly private and confidential 52New Restaurant Openings Minimum requirements on EOTF/reimages* *Notes : 1. Restaurants include sub-franchised Restaurants 2. All new and reimaged Restaurants must have all EOTF components 3. Annual EOTF/Reimages plans shall be subject to approval by MMEDC →Sub-franchisees restaurants – DL to be committed to reducing the percentage of sub-franchisees restaurants to 25% of all restaurants within 5 years of the term . DL is not permitted to grant new terms or new restaurants to any new or existing sub-franchiseesFinancial TermsPhase 1 - 2019 to 2021 Istanbul Ankara Izmir Total Restaurants > 10 years 8 1 1 10 Restaurants > 7 years 32 7 1 40 Total Reimage Projects 41 8 2 51 EOTF Conversion Projects 21 3 4 28 Phase 2 - 2022 to 2024 Istanbul Ankara Izmir Total Restaurants > 7 years 32 6 6 44 Other TermsShare Pledge →The DL and the other equity holders will pledge all of the equity interest they hold by providing a share pledge to McDonald’s as a security for the performance of the MUFA obligations Personal Guarantee →The DL will personally be responsible to McDonald’s for the payment of all amounts due and performance of all obligations Call Option →Under certain circumstance including a control transfer proposal, expiration or a material breach of the MUFA, McDonald’s will have the option to purchase all of the assets or equity of the businessSummary of key MUFA terms Source: McDonald’s Corporation Strictly private and confidentialOverview of Key Franchise Terms 53→ Franchisor and the DL will enter into a MUFA that will grant to the DL the non-exclusive right to operate McDonald’s restaurants in Turkey for 20 years, with the potential to be granted a new term of 10 years . → The DL will make the entire investment required to develop the market, secure the real estate and open new restaurants . The DL will be obligated to invest a defined amount for periodic maintaining and repairing, reimaging and modernizing and updating technology of the restaurant portfolio . → Franchisor will charge a monthly continuing franchise fee based on gross sales of operated restaurants, paid in U.S. Dollars by the 10th calendar of each month . → The DL will pay the Franchisor an initial franchise fee for each new restaurant opened . Such fee is to be paid in full within the time set forth in the invoice issued by Franchisor to the DL. → A letter of credit will be required to be secured from a Franchisor -approved bank and provided to the Franchisor on or before the signing of the MUFA . The letter of credit should remain in effect throughout the life of the MUFA . → The DL will be obligated to spend a minimum amount each year on advertising and promotion of the operated restaurants in Turkey, based on a specified percentage of gross sales of such restaurants . → The MUFA will set forth Franchisor’s restaurant opening requirements . → Franchisor will provide training and consultation to the DL on the establishment of DL’s McDonald’s branded restaurant business, selection of restaurant locations and requirements around Franchisor - approved suppliers . → The DL shall purchase products and services from suppliers that have been approved and/or certified by Franchisor, and in accordance with the McDonald’s standards for operation of restaurants . → The DL will only sell food or beverage products designated by Franchisor and prepared in accordance with the methods prescribed by Franchisor . Franchisor will retain the right to approve any new localized product introduction .Term and Exclusivity Investment, Fees & Continuing Franchise Fees Marketing Operations Source: McDonald’s Corporation Strictly private and confidentialOverview of Key Franchise Terms 54→ The DL will be required to maintain long term plans, including restaurant opening plan, reinvestment plan, annual marketing plan, technology plan, and menu plan . → The DL needs to maintain compliance with Franchisor’s system standards during the MUFA term . → The DL will be required to implement a compliance and business ethics program, and to develop a culture of compliance and business ethics, within the franchised business . Such program will include anti-corruption and anti- bribery programs . → The DL will be required to use existing suppliers for a period of two years . After that timeframe the DL shall be entitled to purchase any key product or service from an approved supplier to replace or supplement an existing supplier subject to conditions . → The DL will need to pledge shares of the DL entity to the Franchisor as security for the fulfillment of its obligations under the MUFA . → The DL will not be permitted to own or operate any competing businesses during the term of the MUFA and for a period of 24 months after it expires or terminates . → The DL and certain related parties must agree not to invest in property, lease property or provide services (either as an employee or consultant) to any competing business . → The DL will personally undertake or guarantee the performance of all obligations under the MUFA . → The ownership of the franchised business in Turkey must be held either personally by the DL or through a newly set up company that is separate from any other existing businesses of the DL. Ownership, direct or indirect, of the franchised business in Turkey by a “Listed” or “Public” company will not be allowed . → Public market listing of the Turkey franchised business on a stock exchange will not be allowed (i.e. No IPO or other equity or
. → The DL and certain related parties must agree not to invest in property, lease property or provide services (either as an employee or consultant) to any competing business . → The DL will personally undertake or guarantee the performance of all obligations under the MUFA . → The ownership of the franchised business in Turkey must be held either personally by the DL or through a newly set up company that is separate from any other existing businesses of the DL. Ownership, direct or indirect, of the franchised business in Turkey by a “Listed” or “Public” company will not be allowed . → Public market listing of the Turkey franchised business on a stock exchange will not be allowed (i.e. No IPO or other equity or debt capital market fund raising) . → Any ownership changes or encumbrances to the franchised business in Turkey will be subject to Franchisor’s prior written consent . → In the event the DL desires to sell its interest in franchised business in Turkey to a third party, Franchisor shall have the first option to purchase the same in accordance with the terms of the MUFA . → Franchisor will have a purchase option relating to the franchised business in Turkey, exercisable upon certain defined events, including a material breach of the MUFA . → Franchisor and/or its affiliates remains the owner of all intellectual property . All intellectual property developed by the DL will be owned by Franchisor and/or its affiliates . → The DL shall comply and maintain certain financial covenants during the term of the MUFA, such as fixed charge coverage ratio, debt to equity ratio, and debt and capital lease to EBITAR . Source: McDonald’s CorporationOthers Strictly private and confidentialMcDonald’s global market segment organization chart 55PresidentIan Borden Chief Alignment OfficerGianfranco CuneoExecutive AssistantDiana Lim 5 Business Unit Leads Director, Strategy & AlignmentHazel Kraft Director, Internal CommunicationsElvin Ong Head of EuropeJo Sempels Head of Asia Head of JapanBob Larson Head of Latin AmericaSamuel Cunado Head of Middle East & AfricaKanjee MwaffakSimone Hoyle / Gino Potesta McDonald’s Turkey Strictly private and confidentialMcDonald’s Middle East and Africa organizational chart 56Sr. Supply Chain DirectorSr. HR & TLD DirectorSr. Finance DirectorSr. IT DirectorSr. Operations DirectorSr. Development & RE Director Office Manager / B&C SpecialistTraining managerOperations DirectorSnr. Development ManagerSr. Marketing & Communications Director Digital ManagerMarketing & Comms. DirectorCBI DirectorIT Manager Financial AnalystManagement AccountantHead of Middle East & AfricaKanjee Mwaffak Strictly private and confidentialMcDonald’s Turkey o rganizational chart 57As of April 2019, Anadolu Restoran has c.102 employees at HQ and c.5,540 employees working at Company -owned restaurants Long -tenured and committed HQ team Trained restaurant crewExperienced senior management team 11 24 Average tenure years of HQ employees Average number of experience for senior management # of reporting employees as of April 2019Chief Executive OfficerOğuz Uçanlar Operations DirectorFeliks Boynuinceoğlu Deputy General ManagerYeşim Taner Restaurant Operations Legal Finance & Accounting Training ITPurchasing / Supply Chain HQ HR Development Restaurant HR7 44 42 8 Finance ManagerMahmut SunarMarketing DirectorElif Göktaş Marketing Franchising Delivery Construction Strictly private and confidential Proprietary technologies of Anadolu RestoranRFM→Allows real -time updating of prices at restaurants NP6 – MDS integration→Integrates all POS devices with restaurant cash register framework →Allows for simultaneous tracking and reporting GPS→Creates route optimization and tracking for delivery couriers Microsoft Kaizala→Software that enables the training of restaurant crew →Utilized by restaurants to track their inventory reserves and send orders to Havi SMS →Anadolu Restoran’s proprietary add -on software allows for delivery order placement GMA IT framework 58Well -developed IT framework integrated with McDonald’s global systems and proprietary technologies Managing daily operations at restaurants Online access to customers Well -managed supply chain system Strictly private and confidentialPricing overview1 for selected McDonald’s products 59 Acılı Tavuk Menu McChicken MenuCoffeeTavuklu Leziz Burger Menu Ice Cream1.10 TL 11.3 TL 1.50 TL 13.0TL Happy Meal Hamburger Menu 14.0 TL Happy Meal Cheeseburger Menu15.0 TL 16.1 TL 17.4 TLDouble Köfte Burger Menu 17.8 TLBig Mac Menu Quarter Pounder Menu21.7 TL 21.7 TLMcRoyal Menu 21.7 TLMax Burger Menu (1) Takes the weighted average of prices collected from widely selected sample of c.35 restaurants; as of May 2019GC capturing value products Happy mealsGlobal and mid -priced offeringsHigher priced profitable offerings GC drivers capturing casual customersEssential for brand imageTop-selling offeringsAffordable premium segment offerings Strictly private and confidentialEBITDA and Cash flow statement (1) Currently, term of MUFA for the Company is valid until July 2025 where 2025F reflects full year projections (2) Include s rent income / expense, royalty income / expense and net opening fees (3) Includes marketing over/less, other rental income (rental income from subleases) and other income/expense accounts such as waste oil income, warehouse and archive expenses, cl osed restaurant expenses (4) The Company has tax carry forward amount of c.TL 87.6 mn as of year end 2018 Source: Draft financial analysis prepared by EY 60TL mn 2017 2018 2019P 2020F 2021F 2022F 2023F 2024F 2025F1 System -wide sales 839 990 1,174 1,569 2,143 2,866 3,677 4,531 5,302 Net sales 558 687 819 1,113 1,552 2,109 2,722 3,370 3,953 Restaurant expenses 532 657 776 1,049 1,434 1,923 2,462 3,038 3,558 F&P cost 234 293 336 456 630 848 1,090 1,348 1,581 Labor expense 120 141 180 244 333 444 566 697 818 Rent expense 79 99 116 154 208 277 351 427 499 Royalty expense 23 28 33 45 62 93 125 168 198 Advertising expense 22 27 33 45 62 84 109 135 158 Others 54 68 79 105 139 177 221 262 304 Company -owned restaurant margin 26 30 42 64 118 186 260 332 395 margin % 4.7% 4.3% 5.2% 5.7% 7.6% 8.8% 9.6% 9.8% 10.0% Franchisee restaurant margin2 23 28 35 45 58 75 95 117 136 HQ expense 36 38 41 58 79 99 121 143 158 Other income/expenses3 6 8 7 2 3 3 4 4 5 EBITDA 19 28 44 53 100 165 238 311 378 EBITDA margin % 3.4% 4.1% 5.4% 4.8% 6.4% 7.8% 8.8% 9.2% 9.6% (-) Tax4 0 0 0 7 22 35 43 (-) ∆NWC -19 -13 -18 -22 -24 -25 -23 (-) Prepaid opening expense & deferred opening income -1 0 -1 -2
27 33 45 62 84 109 135 158 Others 54 68 79 105 139 177 221 262 304 Company -owned restaurant margin 26 30 42 64 118 186 260 332 395 margin % 4.7% 4.3% 5.2% 5.7% 7.6% 8.8% 9.6% 9.8% 10.0% Franchisee restaurant margin2 23 28 35 45 58 75 95 117 136 HQ expense 36 38 41 58 79 99 121 143 158 Other income/expenses3 6 8 7 2 3 3 4 4 5 EBITDA 19 28 44 53 100 165 238 311 378 EBITDA margin % 3.4% 4.1% 5.4% 4.8% 6.4% 7.8% 8.8% 9.2% 9.6% (-) Tax4 0 0 0 7 22 35 43 (-) ∆NWC -19 -13 -18 -22 -24 -25 -23 (-) Prepaid opening expense & deferred opening income -1 0 -1 -2 -7 -7 -7 (-) CAPEX 37 144 159 172 231 183 169 Cash flow to firm 26 -77 -41 9 16 124 196 Strictly private and confidentialIFRS financial statements 61TL k 2017 2018 Cash and cash equivalents 26,439 39,029 Trade receivables 13,087 16,600 Inventories 6,437 10,119 Prepaid expenses - ST 5,044 4,509 Other current assets 1,963 3,361 Total current assets 52,969 73,618 Other receivables 2,937 3,200 Tangible fixed assets 150,843 153,133 Intangible fixed assets 1 1 Prepaid expenses - LT 9,207 7,933 Total non -current assets 162,989 164,267 Total assets 215,959 237,885 Short term liabilities 110,864 128,469 Trade payables 44,887 52,901 Short term provisions 8,405 11,642 Other short -term liabilities 20,157 13,876 Total current liabilites 184,313 206,888 Long term provisions 6,324 7,821 Deferred tax 6,369 5,072 Other long -term liabilities 647 3,391 Total non -current liabilities 13,340 16,284 Total liabilities 197,654 223,172 Total shareholder's equity 18,305 14,713 Total liabilities and shareholder's equity 215,959 237,885TL k 2017 2018 Net sales 636,333 771,502 Cost of sales -568,133 -687,672 Gross profit 68,201 83,830 G&A expenses -39,659 -42,346 S&M expenses -29,133 -34,024 Other operating income 2,047 5,336 Other operating expenses -5,405 -7,966 Operational profit / loss -3,950 4,829 Income from investing activities 594 493 Loss from investing activities -4,204 -3,584 Profit/loss before financing -7,559 1,738 Financial income 1,144 3,601 Financial expense -15,538 -26,177 Loss before tax -21,953 -20,838 Deferred tax income/expense -260 519 Tax expense -77 -152 Net income -22,290 -20,471 Source: 2018 IFRS audit report by Deloitte, Draft financial analysis prepared by EYEBITDA reconciliation (TL k) Operational profit / loss -3,950 4,829 D&A 17,100 18,504 IFRS EBITDA 13,150 23,334 IFRS adjustments & reclassification 3,413 5,033 Other adjustments 2,632 -232 EBITDA 19,195 28,136 Strictly private and confidentialCompany -owned restaurant list1 (1/8) 62# Restaurant name Type City Opening date 1 Adana Bulvar Store front Adana 31.01.2009 2 Adana Baraj Yolu Store front Adana 21.09.2014 3 Adana Türkmenbaşı Store front Adana 23.03.2018 4 Kızılay Store front Ankara 09.03.1990 5 Köroğlu Store front Ankara 29.12.1996 6 Turan Güneş Store front Ankara 19.12.2009 7 Ankara Karanfil Store front Ankara 13.06.2010 8 Ankara Keçiören Store front Ankara 30.04.2014 9 Ankara Dikmen Store front Ankara 23.08.2014 10 Ankara Cebeci Store front Ankara 23.12.2014 11 Ankara Eryaman Store front Ankara 13.04.2018 12 Antalya Piramit Store front Antalya 06.08.1997 13 Kuşadası Store front Aydın 05.06.2009 14 Bursa FSM Store front Bursa 29.05.2013 15 Bursa Özlüce Store front Bursa 23.12.2013 16 Bursa Görükle Store front Bursa 12.06.2014 17 Çanakkale Store front Çanakkale 26.02.2013 18 Denizli Store front Denizli 23.04.1999 19 Edirne PO Store front Edirne 30.09.2014 20 Eskişehir Store front Eskişehir 28.10.1995 21 Eskişehir Üniversite Caddesi Store front Eskişehir 16.06.2012 22 Isparta Store front Isparta 25.12.2012 23 Süreyyapaşa Store front İstanbul -Asya 24.09.1994 24 Üsküdar Store front İstanbul -Asya 25.03.1997 25 Çekmeköy Store front İstanbul -Asya 09.12.2009 (1) As of June 2019 Strictly private and confidentialCompany -owned restaurant list1 (2/8) 63(1) As of June 2019# Restaurant name Type City Opening date 26 Altıntepe Store front İstanbul -Asya 31.12.2009 27 Libadiye Store front İstanbul -Asya 02.10.2010 28 Mühürdar Store front İstanbul -Asya 02.01.2011 29 Kavacık Store front İstanbul -Asya 09.12.2011 30 Şerifali Store front İstanbul -Asya 17.09.2012 31 Maltepe E-5 Store front İstanbul -Asya 28.02.2013 32 Tuzla Store front İstanbul -Asya 31.05.2013 33 Kozyatağı Yanyol Store front İstanbul -Asya 31.10.2013 34 Kayışdağı Store front İstanbul -Asya 23.12.2013 35 Kartal Soğanlık Store front İstanbul -Asya 24.01.2014 36 İstanbul Kızıltoprak Store front İstanbul -Asya 07.02.2014 37 Kartal Çarşı Store front İstanbul -Asya 10.10.2014 38 Göztepe Minibüs Yolu Store front İstanbul -Asya 10.02.2016 39 Caddebostan Store front İstanbul -Asya 22.02.2017 40 Kozyatağı E-5 Store front İstanbul -Asya 01.06.2017 41 Kazasker Ayşekadın Store front İstanbul -Asya 10.02.2018 42 Beyoğlu Store front İstanbul -Avrupa 03.08.1993 43 Beşiktaş Store front İstanbul -Avrupa 17.09.1994 44 Bebek Store front İstanbul -Avrupa 06.01.1995 45 Şişli Meydan Store front İstanbul -Avrupa 25.11.1996 46 Bakırköy Çarşı Store front İstanbul -Avrupa 10.07.1997 47 Sultanahmet Store front İstanbul -Avrupa 17.11.1998 48 Göktürk Store front İstanbul -Avrupa 12.09.2006 49 Beykent Store front İstanbul -Avrupa 30.12.2009 50 Avcılar Store front İstanbul -Avrupa 24.10.2010 Strictly private and confidentialCompany -owned restaurant list1 (3/8) 64# Restaurant name Type City Opening date 51 Levent Store front İstanbul -Avrupa 13.07.2011 52 Istanbul Çapa Store front İstanbul -Avrupa 31.12.2011 53 Taksim Meydan Store front İstanbul -Avrupa 28.12.2012 54 Başakşehir Store front İstanbul -Avrupa 30.12.2012 55 İstanbul Bağcılar Store front İstanbul -Avrupa 29.03.2013 56 4.Levent Emniyet Evler Store front İstanbul -Avrupa 26.04.2013 57 Zeytinburnu 58. Bulvar Store front İstanbul -Avrupa 11.04.2014 58 Eyüp Yeşilpınar Store front İstanbul -Avrupa 30.10.2014 59 Şişli Abide -i Hürriyet Store front İstanbul -Avrupa 21.11.2014 60 Aksaray 2 Store front İstanbul -Avrupa 01.09.2015 61 Pangaltı Store front İstanbul -Avrupa 20.01.2018 62 Esenyurt Merkez Store front İstanbul -Avrupa 28.02.2018 63 İzmir Alsancak Store front İzmir 16.04.2010 64 İzmir Çankaya Store front İzmir 12.12.2014 65 İzmir Hatay Nokta Store front İzmir 25.04.2015 66 İzmir Karşıyaka Store front İzmir 07.04.2017 67 İzmir Buca Store front İzmir 27.04.2018 68 İzmit Çarşı Store front Kocaeli 29.12.2008 69 Konya Selçuker Store front Konya 08.12.2017 70 Mersin GMK Cad. Store front Mersin 10.12.2010 71 Bodrum Store front Muğla 29.03.1997 72 Marmaris Merkez Store front Muğla 02.06.2007 73 Bodrum Turgutreis Store front Muğla 31.05.2010 74 Samsun Bulvar Store front Samsun 22.11.2012 75 Trabzon Merkez Store front Trabzon 23.03.2007 (1) As of June 2019 Strictly private and confidentialCompany -owned restaurant list1 (4/8) 65# Restaurant name Type City
İstanbul -Avrupa 01.09.2015 61 Pangaltı Store front İstanbul -Avrupa 20.01.2018 62 Esenyurt Merkez Store front İstanbul -Avrupa 28.02.2018 63 İzmir Alsancak Store front İzmir 16.04.2010 64 İzmir Çankaya Store front İzmir 12.12.2014 65 İzmir Hatay Nokta Store front İzmir 25.04.2015 66 İzmir Karşıyaka Store front İzmir 07.04.2017 67 İzmir Buca Store front İzmir 27.04.2018 68 İzmit Çarşı Store front Kocaeli 29.12.2008 69 Konya Selçuker Store front Konya 08.12.2017 70 Mersin GMK Cad. Store front Mersin 10.12.2010 71 Bodrum Store front Muğla 29.03.1997 72 Marmaris Merkez Store front Muğla 02.06.2007 73 Bodrum Turgutreis Store front Muğla 31.05.2010 74 Samsun Bulvar Store front Samsun 22.11.2012 75 Trabzon Merkez Store front Trabzon 23.03.2007 (1) As of June 2019 Strictly private and confidentialCompany -owned restaurant list1 (4/8) 65# Restaurant name Type City Opening date 76 Yalova Store front Yalova 26.08.2011 77 Adana Tepe Shopping mall Adana 14.07.2009 78 Afium AVM Shopping mall Afyon 28.12.2013 79 Mesa Shopping mall Ankara 20.11.1996 80 Anka Mall 2 Shopping mall Ankara 27.08.1999 81 Armada Shopping mall Ankara 16.11.2002 82 Ankara Cepa Shopping mall Ankara 23.08.2007 83 Ankara Optimum Shopping mall Ankara 14.04.2009 84 Ankara Gordion Shopping mall Ankara 17.09.2009 85 Ankara Kentpark Shopping mall Ankara 12.03.2010 86 Ankara Nata Shopping mall Ankara 22.12.2011 87 Ankara A -City AVM Shopping mall Ankara 30.11.2014 88 Antalya Migros Shopping mall Antalya 05.07.2001 89 Söke Novada Shopping mall Aydın 28.08.2012 90 Susurluk Shopping mall Balıkesir 20.07.2006 91 Bandırma Liman AVM Shopping mall Balıkesir 29.10.2011 92 Edremit Shopping mall Balıkesir 20.06.2017 93 Bursa Anatolium Shopping mall Bursa 01.09.2010 94 Bursa CarrefourSA Shopping mall Bursa 07.07.2011 95 Bursa Eker Shopping mall Bursa 18.09.2014 96 Bursa Özdilek Park AVM Shopping mall Bursa 24.03.2017 97 Denizli Forum Shopping mall Denizli 18.04.2008 98 Denizli Teraspark Shopping mall Denizli 30.12.2014 99 Erzurum Shopping mall Erzurum 31.05.2011 100 Erzurum Palerium Shopping mall Erzurum 15.05.2014 (1) As of June 2019 Strictly private and confidentialCompany -owned restaurant list1 (5/8) 66# Restaurant name Type City Opening date 101 Eskişehir Espark Shopping mall Eskişehir 30.11.2007 102 Gaziantep Sanko Shopping mall Gaziantep 14.04.2009 103 Forum Gaziantep Shopping mall Gaziantep 03.10.2013 104 İskenderun Prime Mall Shopping mall Hatay 25.08.2010 105 Antakya Prime Mall Shopping mall Hatay 14.10.2011 106 Kozyatağı Carrefour Shopping mall İstanbul -Asya 31.08.2003 107 Palladium Shopping mall İstanbul -Asya 25.09.2008 108 Via Port Shopping mall İstanbul -Asya 25.12.2008 109 İstanbul Buyaka Shopping mall İstanbul -Asya 21.03.2012 110 Tepe Nautilus Shopping mall İstanbul -Asya 26.07.2014 111 Akasya AVM Shopping mall İstanbul -Asya 20.12.2014 112 Ümraniye Meydan Shopping mall İstanbul -Asya 23.09.2016 113 Emaar Square Mall Shopping mall İstanbul -Asya 07.12.2017 114 Olivium Shopping mall İstanbul -Avrupa 12.07.2000 115 Şişli Cevahir Shopping mall İstanbul -Avrupa 15.10.2005 116 Yenibosna Koçtaş Shopping mall İstanbul -Avrupa 31.10.2006 117 İstinye Park Shopping mall İstanbul -Avrupa 21.09.2007 118 Gaziosmanpaşa Shopping mall İstanbul -Avrupa 12.10.2007 119 Capacity Shopping mall İstanbul -Avrupa 14.12.2007 120 Metroport Shopping mall İstanbul -Avrupa 22.04.2010 121 Airport Shopping mall İstanbul -Avrupa 07.09.2010 122 Haramidere Torium AVM Shopping mall İstanbul -Avrupa 29.10.2010 123 İstanbul Florya Akvaryum Shopping mall İstanbul -Avrupa 04.10.2012 124 Eyüp Vialand AVM Shopping mall İstanbul -Avrupa 26.05.2013 125 Zorlu Center AVM Shopping mall İstanbul -Avrupa 10.10.2013 (1) As of June 2019 Strictly private and confidential# Restaurant name Type City Opening date 126 Starcity Outlet Center Shopping mall İstanbul -Avrupa 22.02.2014 127 Özdilek Park AVM Shopping mall İstanbul -Avrupa 12.09.2014 128 Historia2 Shopping mall İstanbul -Avrupa 25.09.2018 129 İzmir Kipa Shopping mall İzmir 01.10.1999 130 Mavişehir Shopping mall İzmir 20.11.1999 131 Balçova Kipa Shopping mall İzmir 13.04.2007 132 İzmir Agora Shopping mall İzmir 20.03.2009 133 İzmir Mavibahçe Shopping mall İzmir 14.11.2015 134 Point Bornova Shopping mall İzmir 27.11.2015 135 İzmir WestPark Outlet Shopping mall İzmir 18.05.2018 136 Karabük Kares Shopping mall Karabük 24.06.2011 137 İzmit Outletcenter Shopping mall Kocaeli 31.03.2011 138 Konya Kule Site Shopping mall Konya 27.01.2006 139 Konya Novada Shopping mall Konya 19.02.2016 140 Kütahya AVM Shopping mall Kütahya 17.08.2012 141 Malatya Shopping mall Malatya 18.11.2009 142 Mersin Forum Shopping mall Mersin 29.10.2007 143 İçel Tarsu AVM Shopping mall Mersin 24.02.2012 144 Mersin Carrefour Shopping mall Mersin 26.04.2012 145 Bodrum Midtown Shopping mall Muğla 15.06.2017 146 Samsun Yeşilyurt Shopping mall Samsun 14.04.2007 147 Urfa Piazza AVM Shopping mall Şanlıurfa 13.10.2013 148 Çorlu Shopping mall Tekirdağ 26.10.1999 149 Tekira Shopping mall Tekirdağ 27.11.2008 150 Tokat Novada Shopping mall Tokat 29.04.2014Company -owned restaurant list1 (6/8) 67(1) As of June 2019 Strictly private and confidential# Restaurant name Type City Opening date 151 Trabzon Forum Shopping mall Trabzon 15.07.2008 152 Trabzon Atapark Shopping mall Trabzon 02.10.2010 153 Adana Galleria Drive thru Adana 27.12.1995 154 Adana Alparslan Türkeş Drive thru Adana 22.12.2013 155 Afyon Drive thru Afyon 19.03.1999 156 Aksaray Ağaçlı Drive thru Aksaray 21.03.2014 157 Çetin Emeç Drive thru Ankara 14.03.1997 158 Antalya Gazi Bulvarı Drive thru Antalya 08.06.2012 159 Aydın Drive thru Aydın 07.02.2000 160 Bozüyük Drive thru Bilecik 26.08.2011 161 Bolu DT Drive thru Bolu 28.02.2013 162 Bursa Bademli Drive thru Bursa 30.11.2010 163 Acıbadem Drive thru İstanbul -Asya 25.12.1998 164 İstanbul Taşdelen Drive thru İstanbul -Asya 08.09.2013 165 Merter Drive thru İstanbul -Avrupa 26.12.1993 166 Tüyap Drive thru İstanbul -Avrupa 23.10.1996 167 Güneşli Drive thru İstanbul -Avrupa 30.10.1998 168 Florya Drive thru İstanbul -Avrupa 31.12.1998 169 Beylikdüzü DT Drive thru İstanbul -Avrupa 31.12.2010 170 Çayırova Drive thru Kocaeli 27.12.1996 171 Şekerpınar DT Drive thru Kocaeli 28.12.2013 172 İzmit Akarca Yuvam DT Drive thru Kocaeli 30.12.2014 173 Mersin Mezitli DT Drive thru Mersin 20.12.2014 174 Bodrum Gümbet Drive thru Muğla 21.06.2007 175 Sabiha Gökçen Kara Special İstanbul -Asya 31.05.2012Company -owned restaurant list1 (7/8) 68(1) As of June 2019 Strictly private and confidential# Restaurant name Type City Opening date 176 Sabiha Gökçen Hava Special İstanbul -Asya 07.06.2012 177 BTA Bostancı Special İstanbul -Asya 30.09.2012 178 Sabiha Gökçen Gelen Katı Special İstanbul -Asya 30.12.2016 179 Sabiha Gökçen Dış Hatlar 2 Special İstanbul -Asya 27.07.2017 180 BTA Yenikapı Special İstanbul -Avrupa 11.01.2013 181 Maslak Hub Special İstanbul -Avrupa 10.03.2015 182 Beyoğlu Fitaş Special İstanbul -Avrupa 21.09.2018 183 Dalaman Special Muğla 05.07.2018 184 BTA Yalova Special Yalova 16.05.2012Company -owned restaurant list1 (8/8) 69(1) As of June 2019 Strictly private and confidential# Restaurant Name Type City Opening date 1 Bahçelievler 7. Cadde Store front Ankara
Mersin 20.12.2014 174 Bodrum Gümbet Drive thru Muğla 21.06.2007 175 Sabiha Gökçen Kara Special İstanbul -Asya 31.05.2012Company -owned restaurant list1 (7/8) 68(1) As of June 2019 Strictly private and confidential# Restaurant name Type City Opening date 176 Sabiha Gökçen Hava Special İstanbul -Asya 07.06.2012 177 BTA Bostancı Special İstanbul -Asya 30.09.2012 178 Sabiha Gökçen Gelen Katı Special İstanbul -Asya 30.12.2016 179 Sabiha Gökçen Dış Hatlar 2 Special İstanbul -Asya 27.07.2017 180 BTA Yenikapı Special İstanbul -Avrupa 11.01.2013 181 Maslak Hub Special İstanbul -Avrupa 10.03.2015 182 Beyoğlu Fitaş Special İstanbul -Avrupa 21.09.2018 183 Dalaman Special Muğla 05.07.2018 184 BTA Yalova Special Yalova 16.05.2012Company -owned restaurant list1 (8/8) 69(1) As of June 2019 Strictly private and confidential# Restaurant Name Type City Opening date 1 Bahçelievler 7. Cadde Store front Ankara 09.03.2002 2 Ankara Batıkent Store front Ankara 09.12.2011 3 Antalya Store front Antalya 19.08.1994 4 Alanya Store front Antalya 09.05.1997 5 Alanya Damlataş Store front Antalya 13.06.2007 6 Antalya Lara Store front Antalya 15.12.2009 7 Antalya Konyaaltı Store front Antalya 26.06.2012 8 Antalya Kemer Store front Antalya 27.05.2014 9 Manavgat Store front Antalya 09.04.2015 10 Antalya Side Store front Antalya 19.05.2016 11 Didim Store front Aydın 26.05.2012 12 Düzce Store front Düzce 24.10.2014 13 Elazığ Store front Elazığ 06.07.2013 14 Pendik Store front İstanbul -Asya 29.04.1995 15 Ataşehir Store front İstanbul -Asya 12.07.1997 16 Cevizli Store front İstanbul -Asya 23.10.1998 17 Bahçeşehir Store front İstanbul -Avrupa 14.02.2008 18 Halkalı Atakent Store front İstanbul -Avrupa 12.11.2010 19 Mimaroba Store front İstanbul -Avrupa 28.09.2012 20 İstanbul Okmeydanı Store front İstanbul -Avrupa 31.12.2012 21 Esenyurt Cumhuriyet Store front İstanbul -Avrupa 29.03.2014 22 Ispartakule Store front İstanbul -Avrupa 29.03.2018 23 İzmir Girne Store front İzmir 30.12.2010 24 Kayseri Store front Kayseri 07.06.1997 25 Kırşehir Store front Kırsehir 13.07.2015Franchisee restaurant list1 (1/3) 70(1) As of June 2019 Strictly private and confidential# Restaurant Name Type City Opening date 26 Marmaris Migros Store front Muğla 12.08.1997 27 Fethiye Store front Muğla 26.05.2010 28 Marmaris Dörtyol Store front Muğla 05.08.2016 29 Nevşehir Avanos Store front Nevşehir 12.10.2013 30 Sivas Store front Sivas 08.06.2011 31 Adana Optimum Shopping mall Adana 08.04.2011 32 Ankara Antares Shopping mall Ankara 14.02.2008 33 Ankara Panora Shopping mall Ankara 14.08.2009 34 Antalya Özdilek Shopping mall Antalya 14.08.2009 35 Antalya Terracity Shopping mall Antalya 01.06.2011 36 Mark Antalya AVM Shopping mall Antalya 29.08.2013 37 Alanya Konakli Shopping mall Antalya 07.05.2015 38 Novada Manavgat Shopping mall Antalya 04.07.2016 39 Mall Of Antalya Shopping mall Antalya 29.04.2017 40 Mall Of Side Shopping mall Antalya 14.05.2019 41 Batman Park Shopping mall Batman 28.09.2012 42 Bursa Zafer Plaza Shopping mall Bursa 16.10.1999 43 Bursa Kent Meydan Shopping mall Bursa 30.04.2010 44 Gaziantep Prime Mall Shopping mall Gaziantep 13.09.2013 45 Antakya Palladium AVM Shopping mall Hatay 29.11.2013 46 Maltepe Carrefour 2 Shopping mall İstanbul -Asya 15.01.2005 47 Ümraniye Canpark AVM Shopping mall İstanbul -Asya 28.02.2014 48 Tuzla Viaport Marina Shopping mall İstanbul -Asya 12.11.2015 49 Capitol Shopping mall İstanbul -Asya 08.09.2016 50 Beylikdüzü Migros Shopping mall İstanbul -Avrupa 06.12.1997Franchisee restaurant list1 (2/3) 71(1) As of June 2019 Strictly private and confidential# Restaurant Name Type City Opening date 51 Metrocity Shopping mall İstanbul -Avrupa 30.05.2003 52 Armoni Park Shopping mall İstanbul -Avrupa 29.04.2008 53 212 AVM Shopping mall İstanbul -Avrupa 01.09.2009 54 Forum İstanbul Shopping mall İstanbul -Avrupa 17.11.2009 55 Kale AVM Shopping mall İstanbul -Avrupa 09.04.2010 56 Pelikan AVM Shopping mall İstanbul -Avrupa 23.12.2010 57 Forum Marmara Shopping mall İstanbul -Avrupa 31.03.2011 58 Akbatı Shopping mall İstanbul -Avrupa 15.09.2011 59 Marmara Park Shopping mall İstanbul -Avrupa 08.11.2012 60 Mall Of İstanbul Shopping mall İstanbul -Avrupa 23.05.2014 61 Forum Bornova Shopping mall İzmir 12.10.2006 62 İzmir Gaziemir Optimum Shopping mall İzmir 30.03.2012 63 Kahramanmaraş Piazza Shopping mall Kahramanmaraş 26.04.2013 64 Kayseri Park Shopping mall Kayseri 01.06.2006 65 Forum Kayseri Shopping mall Kayseri 21.12.2011 66 Gebze Center Shopping mall Kocaeli 03.09.2010 67 Adapazarı Serdivan AVM Shopping mall Sakarya 17.12.2010 68 Samsun Piazza Shopping mall Samsun 29.03.2013 69 Kayseri Talas Yolu DT Drive thru Kayseri 10.06.2016 70 Antalya Akvaryum Special Antalya 15.08.2012Franchisee restaurant list1 (3/3) 72(1) As of June 2019
© 2024 ÜNLÜ & Co \| All Rights ReservedProject Atlas Confidential Information Package December 2024 1Table of contents Section Page I Executive summary 2 II Key investment highlights 9 III Business overview 18 IV Financial overview 29 V Appendix 36 I. Executive summary 3 (1) As of 2023 (2) Member of the founding family and board member of Yıldız Holding (3) Only the number of SKU of products that has been sold as of June 2024 has been specified (4) As of 30.09.2024 (5) Years 2022 and 2023 are based on audited IAS -29 applied IFRS financials, 2024B and 2025F are presented based on non -IAS-29 basis Management accounts . Historical figures have been presented based on each period’s own purchasing power and converted to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29 .4 USD/TL for 2023A. Forecast figures 2024B and 2025F ha ve been converted to USD using estimated yearly average USD/TL exchange rates of 33.3 USD/TL for 2024B and 42 .6 USD/TL for 2025F (6) Pre IFRS -16 & both historical figures and forecast period have been presented excluding Holding charges and historical period also excludes machinery rental cost where the machinery has been bought by Azmüsebat at the beginning of 2024 Source: Company, 2023 PwC audit report , Management accounts , Nielsen Retail Panel 2023Executive summary Overview Company overview Production plant →Established in 1950 , Azmüsebat Çelik San. ve Tic. A.Ş. (“Atlas ”, “Azmüsebat ” or the “ Company ”) is by far the second leading grooming products company in Türkiye with c.41% market share1 ―Gözde Girişim , the investment arm of Yıldız Holding, acquired a 48.8% stake in 2013 alongside a 2.2% stake by Murat Ülker2. In 2016, an additional 49.0% was purchased, resulting in full ownership →Atlas offers a basic range of shaving products under the brand DERBY; ―Disposable razors and razor blades: Disposable razors with 1,2 or 3 blades for men and women account for approximately 7 4.9% of 2024B Net sales while full and half razor blades hold a 1 7.5% share, together comprising a total of c. 70 SKUs3 ―Cosmetics: Shaving foams, creams, aftershaves and hair removal creams/sprays, which account 7. 6% of 2024B Net sales are all outsourced for production with a total of c. 40 SKUs3 →Leveraging its capabilities in both branded product and private label (" PL"), Atlas holds a total volume share of 41.4% in Türkiye’s disposable razors market , with half of this attributed to PL products ―In 2024B, total private label products represent c.20% of Net sales, with nearly all private label production dedicated to local market ―Nation -wide coverage with its established sales team , the Company covers the whole spectrum of sales channels in Türkiye including modern channel and traditional channel →Atlas maintains a well-established position in the razor market in Türkiye while exporting to over 70 countries , with exports contributing to c.35% of Net sales in 2024B →Atlas’ well-maintained production facility in Tuzla, Istanbul spans c.3 1k sqm with a monthly production capacity of 85 mn units 2nd largest razor production capacity in MENAMarmara region 85 mn unit Monthly production capacity31k sqm Total area19k sqm Production area342 / 60 Blue collar / White collar employees4 Key financial overview5 (USD mn) 38.747.0 44.952.7 10.8 13.1 11.1 15.7 2022A 2023A 2024B 2025F Net sales EBITDA6Located in Istanbul, Tuzla , the only razor production facility in Türkiye IAS-29 applied IFRS basis reporting Management reporting based 4 Expanding into the system razor segment to capture additional market share and diversify product portfolioPotential for additional growth in topline with new product offeringsTürkiye’s strategic location offers easy access to both European and Asian markets, combined with cost -effective local production High quality production opportunities in Türkiye with relatively low production costs and Azmüsebat’s well-maintained production facility provide strategic location advantage combined with competitive cost advantages Reputable brand with a strategic product portfolio Attracting a considerable customer base with a product portfolio of complementary products, and maintaining that customer base with a brand of 80+ years of heritage Substantial possible cost savings through automation Implementing an automated end -to-end production process, including the automation of the packaging line, can lead to substantial cost savingsHigh entry barriers Production of razors and blades requires custom made machinery, which prevents both local and global potential competitors from easily entering the market – Azmüsebat with its production capacity of 85 mn units maintains its market position Source: CompanyExecutive summary Value enhancers of Azmüsebat beyond business plan 5 1950 -87 1996 2000 2010 2013 2014 2016 2019 2023 Going forward Introduction of the DERBY Lady disposable razorAcquired DERBY, the sole razor blade manufacturer in Türkiye, which had been in operation since 1940 Acquisition of the remaining stake of 49.0% from the founding familyTokai carve -out solely focusing on razor business and export countries reached 66 countriesIntroduction of the women’s cosmetic line DERBY Lady and men's cosmetic line DERBY ProfessionalStarted producing Samurai 2 and Samurai 3 razors with replaceable heads and launched the cosmetics lineCommenced production of aftershave products under the cosmetics lineAcquisition of a 48.8% stake by Gözde and 2.2% stake by Murat Ülker in AzmüsebatFounded in 1950 as an ironmongery business re-focused over time to produce razors and lighters →Enrich product portfolio →Enhance market position →Profitable growth →Grow presence in export markets Key milestonesExecutive summary Source: Company 6 Basic range of shaving products catering to diverse consumer needsExecutive summary Overview Product portfolio Branded / PL1 Domestic – export % of Net salesDisposable razors 74.9% Razor blades 17.5% Cosmetics 7.6% →Range of disposable razors for both men and women, designed for convenience with options of 1, 2 and 3 blades→Full and half razor blades, renowned for their sharpness and durability, catering to traditional wet shavers and barbers alike→Shaving foams, shaving creams, aftershave colognes for men and hair removal creams/sprays for women. Outsources the production of its cosmetics line Branded 72% Private label 28%Branded 100% Branded 100% 76%24% 2022A78%22% 2023A78%22% 2024B11%89% 2022A15%85% 2023A11%89% 2024B83%17% 2022A95%5% 2023A89%11% 2024B % of 2024B Net sales % Domestic sales % Export sales (1) 2023A figures Source: Company, Management accountsAll private label manufacturing is made for
shaving products catering to diverse consumer needsExecutive summary Overview Product portfolio Branded / PL1 Domestic – export % of Net salesDisposable razors 74.9% Razor blades 17.5% Cosmetics 7.6% →Range of disposable razors for both men and women, designed for convenience with options of 1, 2 and 3 blades→Full and half razor blades, renowned for their sharpness and durability, catering to traditional wet shavers and barbers alike→Shaving foams, shaving creams, aftershave colognes for men and hair removal creams/sprays for women. Outsources the production of its cosmetics line Branded 72% Private label 28%Branded 100% Branded 100% 76%24% 2022A78%22% 2023A78%22% 2024B11%89% 2022A15%85% 2023A11%89% 2024B83%17% 2022A95%5% 2023A89%11% 2024B % of 2024B Net sales % Domestic sales % Export sales (1) 2023A figures Source: Company, Management accountsAll private label manufacturing is made for local customers (Türkiye) 7 Domestic Modern channelExport Traditional trade65% 38% 62%35% →Following recent transformations, Türkiye's retail market is now predominantly modern, with Azmüsebat collaborating with nearly all national chains →Azmüsebat’s DERBY products are sold at c.45k sales points in the modern channel, and the Company also produces private label products for discount chainsDiscounters 71% National chains1 29% Distributors →Sales through local chains, mom & pop stores, buffets, perfumeries etc.79% Tenders 11% Barbers 10% →Azmüsebat has developed long -standing relationships with 19 key distributors in Türkiye, providing the Company with access to all 81 provinces →Traditional trade represents nearly 24% of Azmüsebat’s Net sales in 2024B with DERBY products available at c.90k sales points→Azmüsebat exports grooming products to over 70 countries across the world through regional distributors specifically professionalized in relevant product groups →The Company has untapped potential in export marketRegional distributors % of 2024B Net sales % of 2023A Net category sales % of 2024B Net domestic sales (1) Includes >USD 200k of e -commerce and other sales Source: Company, Management accountsRoute -to-marketExecutive summary 8 Transaction scope Envisaged transaction timeline Phase I Phase II NDA IP distributionLimited Q&ANon- binding offersBinding bidsSigning Initiation of due diligence→Project Atlas refers to the contemplated sale of up to 100% shareholding in Azmüsebat (the “ Proposed Transaction ”) →Shareholders have appointed ÜNLÜ & Co to act as the exclusive financial advisor in the Proposed Transaction →Azmüsebat is the only company in Türkiye with razor manufacturing capabilities, offering a unique investment opportunity with its pioneering brand image →The Company currently operates as a stand -alone company , independent from its parent and Yıldız Holding with no shared services →Interested parties should contact ÜNLÜ & Co for their inquiries Shareholding structure Shareholding Transaction perimeterPhase I details Phase II details →Due diligence period for a limited number of selected potential investors →Selected potential investors will be granted access to a virtual data room and will be invited to a Q&A process →Management presentations and site visits →Exact timetable for Phase II to be circulated in a separate process letter for short -listed potential investors→Distribution of the information package ( “Info Pack “ or “ IP“) →Limited Q&A process for key questions and clarification requests →Collecting NBO’s (non -binding offers) and short -listing potential investors for the next stageTransaction overview Gözde Girişim1 97.8% AzmüsebatMurat Ülker2 2.2%27th January 2025Executive summary (1) Shareholding structure of Gözde Girişim is as follows: Yıldız Holding 22.79%, Kökler Yatırım Holding 29.73%, Clarastra Danışmanlık 5.14%, İhsaniye Danışmanlık 5.14%, Şükran Danışmanlık 5.14%, Franklin Templeton 5% and Other 27.06%. Kökler Yatırım Holding, Clarast ra Danışmanlık , İhsaniye Danışmanlık and Şükran Danuşmanlık are owned by Ülker family members (2) Member of the founding family and board member of Yıldız Holding Source: Company II. Key investment highlights 10 Nation -wide coverage across channels complemented with prominent presence in export marketsSolid market position in Türkiye with c.99% brand awareness and strong brand value Complementary product range that meets shaving needs for both men and womenAdditional growth through new market opportunities and product diversification Well -maintained production facility offering a considerable capacity Source: Company The only Company in Türkiye with razor manufacturing capabilities, offering a unique investment opportunity with its pioneering brand image 11 By far the 2nd position in Türkiye’s disposable razors market1 Volume share2 Valu e share2 Atlas’ total volume share: 41.4% Atlas’ total v alue share: 27.9% 20.8% 20.6% 34.3%20.6%3.8% Branded - Atlas PL - Atlas Leading competitor PL - Other Other16.7%11.2% 55.2%11.2%5.8%571.0 mn units3USD 175 mln3Azmüsebat secures by far the 2nd position in the disposable razors market in Türkiye with 41.4% volume and 27.9% value shares The Company holds a strong position in the private label category, manufacturing approximately half of the PL disposable razor supply in Türkiye On the branded side Azmüsebat has gained a market share of c.1 4% from the leading competitor and significantly narrowed the volume share gap in the last five years5 (1) As of 2023 (2) Basedon Nielsen’s reported figure forthe“Total Türkiye” cluster (3) Adjusted with 60% Nielsen coverage factor. Unadjusted (raw) Nielsen market sizes are 342.4 mn units by volume and USD 105 mn by value. Only includes sales through domestic retail channels; excludes tenders, sales to hotels and prisons and has been converted t o USD with 2023 yearly average USD/TL exchange rate of 23.9 (4) Based on Nielsen’s reported figure for the“Türkiye Supermarkets ”, sub-category of “Total Türkiye” cluster (5) From July2020 to October 2024 according to Nielsen Scantrack data Source: Company, Nielsen Retail Panel 2023, Nielsen Scantrack PanelSolid market position in Türkiye… 1 07/20 01/21 07/21 01/22 07/22 01/23 07/23 01/24 07/24 01/2516%76% 27%61% 30%56%Volume share evolution of branded disposable razor market (Nielsen Scantrack )4 Branded - Atlas Leading competitor 12 Backed by over 80 years of experience, Atlas enjoys c.99% brand awareness1 across Türkiye Atlas solidifies its market position1 with strong brand equity Atlas is one of the two brands in the category that can manage market impact in its favorLeveraging its position as Türkiye's only domestic razor manufacturer, Azmüsebat offers competitive pricingAtlas outclasses its secondary competitor by a wide margin in terms of brand value Brand desire2 Market impact3 Brand value Brand 1 Brand 2 Brand 3 Brand 4 Brand 5 Brand 644.2 22.9 13.0 12.9 4.1 1.5 1.452.6 25.7 11.8 7.1 2.1 0.4 0.48.4 2.8 -1.2 -5.8 -2.0 -1.1 -1.1Brand 1 Brand 2 Brand 3 Brand 4 Brand 599% 99% 97%
evolution of branded disposable razor market (Nielsen Scantrack )4 Branded - Atlas Leading competitor 12 Backed by over 80 years of experience, Atlas enjoys c.99% brand awareness1 across Türkiye Atlas solidifies its market position1 with strong brand equity Atlas is one of the two brands in the category that can manage market impact in its favorLeveraging its position as Türkiye's only domestic razor manufacturer, Azmüsebat offers competitive pricingAtlas outclasses its secondary competitor by a wide margin in terms of brand value Brand desire2 Market impact3 Brand value Brand 1 Brand 2 Brand 3 Brand 4 Brand 5 Brand 644.2 22.9 13.0 12.9 4.1 1.5 1.452.6 25.7 11.8 7.1 2.1 0.4 0.48.4 2.8 -1.2 -5.8 -2.0 -1.1 -1.1Brand 1 Brand 2 Brand 3 Brand 4 Brand 599% 99% 97% 79% 49% 45%…with c.99% brand awareness and a strong brand value 1 DERBY is a brand whose products are utilized by individuals across all income levels across all regions in Türkiye (1) As of 1H24 ( 2) Score indicating the strength of the brand in customers’ minds based on the extent to which the brand meets customers’ expe ctations, how close customers feel to the brand, brand image & brand personality analyses ( 3) Score indicating the extent to which market impact is managed to turn brand desire into purchase or customer conversion bas ed on price, availability, promotions/discounts, recommendations by experts and product variety Source: Ipsos Brand Health Tracking April -May 2024 13Complementary product range that meets shaving needs for both men and women2 1 blade 2 blades 3 blades Half blade Full blade # of SKUDisposable razors Razor bladesComplementary products supported by competitive pricing policy Cosmetics Post -shave Hair removal Pre-shave % of 2024 B Net sales # of SKUs1 % of 202 3ANet category sales Other 11% →Comprised of deodorant, wax, serum etc.75% 31% 14 26% 13 44% 26 17% 46% 7 54% 10 71% 13 14% 10 4% 38%Balanced distribution of sales across shaving product lines (1) Only the SKU numbers of products sold as of June 2024 are specified Source: Company, Management accounts 14 14 c.7k storesNational chains1Barbers c.38k storesDiscounters (Covering both branded and PL)Distributors Sales through local chains, mom & pop stores, buffets, perfumeries etc.Tenders Modern channel c.62% Traditional channel c.38%Nation -wide coverage across channels… 3 (1) Includes >USD 200k of e -commerce and other sales Source: Company , Management accounts% of 2024B Net d omestic sales Point of sales covered by Azmüsebat 15 …complemented with prominent presence in export markets 3 Export sales breakdown (2023) North America (13.0 %) Sub-Saharan Africa (0.3%)East & South Asia (2.4%)Europe (15.0%) South America (3.6%)MENA ( 49.5 %) Oceania (0.2%)Central & North Asia1 (16.0 %) DERBY products reaching over 70 countries and 6 continentsKey remarks Disposable razors and razor blades are sold across a global network Main export items are branded disposable razors and branded razor blades Atlas is renowned for its strong brand equity in selling branded razor blades to the barber shops in Europe and the Americas Export sales breakdown (2024B) 53%45%2% Razor blades Disposable razorsCosmetics (1) Sales to Russia is below USD 50k in 2023, the sales are made via a local distributor Source: Company , Management accounts2024 export sales 16 Well -maintained, modern machinery and equipment base →Located in Tuzla, Istanbul, Azmüsebat’s rented facility1, established in 1996, is Türkiye's sole razor factory and holds the 2ndlargest razor production capacity in the MENA region →Azmüsebat has a modern machinery park of 9 grinding machines, 36 injection machines, 16 assembly machines and 12 packaging stations for razor and blade manufacturing85 mn Monthly production capacity31k sqm Total area19k sqm Production area342 Blue collar employees2 The facility is in the Marmara region, contributing 47% of Türkiye’s GDP3Marmara region accounts for 68.5% of Türkiye’s total export value4 Operational excellence and agilityMarmara region 2nd largest razor production capacity in MENA 1 2 34Manufacturing facility & management office1 Warehouse2 Old management office3 Spare warehouse4Well -maintained production facility1 offering a considerable capacity 4 The facility offers substantial potential for capacity expansionEnd-to-end process in the facility, from production to packaging (1) Owned by the previous owners; the facility is operated under a long -term rent agreement , and the agreement can be terminated at Azmüsebat’s discretion (2) As of 30.09.2024 (3) As of 2022 (4) As of 2023, excluding agricultural export Source: Company, TURKSTAT 17 Potential introduction of new product lines to enhance growthI Room for capacity expansionIII End-to-end automation of the production process driving top -line profitIV The potential growth in market share and profit margin the company can achieve by entering the system razor segment, where it currently has no presence or market shareThe facility provides ample room for capacity expansion with minimal adjustments, there is 10,000 m² of available space for growthIn the facility where end -to-end production is carried out, packaging is currently semi -automated. Future enhancements are expected to lead to substantial cost reductions through increased automationAdditional growth through new market opportunities and product diversification5 Enhance export prospects globallyII Unlocking additional export opportunities across regions Source: CompanySignificant profitable top line growth on the back of above -mentioned actions which have not been reflected in 2025 forecast provided in this Info Pack III. Business overview 19Azmüsebat: Business overview Procurement Production Sales & distribution Local market →In the local market, products are sold at modern and traditional channels →Modern channel is comprised of national and discount chains while the traditional channel is comprised of local chains, barbers and mom & pop stores etc. →Domestic sales are managed by 7 key account managers, with 3 overseeing modern trade and 4 regional managers handling traditional channels Export market →Products are distributed through local distributors in export market s →Export sales are managed by a team of 3, consisting of 2 export sales managers and 1 assistant export specialist→The Company’s main procurement items include steel sheet and plastic (k -resin, anti - shock, crystal, rubber etc.) along with packaging materials →The Company sources its procurement items from both local and international suppliers, either directly or through intermediaries →Steel is supplied from Sweden and India while plastic is supplied from the local market and Germany →Local suppliers directly deliver items
the traditional channel is comprised of local chains, barbers and mom & pop stores etc. →Domestic sales are managed by 7 key account managers, with 3 overseeing modern trade and 4 regional managers handling traditional channels Export market →Products are distributed through local distributors in export market s →Export sales are managed by a team of 3, consisting of 2 export sales managers and 1 assistant export specialist→The Company’s main procurement items include steel sheet and plastic (k -resin, anti - shock, crystal, rubber etc.) along with packaging materials →The Company sources its procurement items from both local and international suppliers, either directly or through intermediaries →Steel is supplied from Sweden and India while plastic is supplied from the local market and Germany →Local suppliers directly deliver items to the Company’s warehouse →International suppliers’1 delivery method varies as follows: CIF for steel and plastic and EXW for the remaining purchases→The facility was established in 1996 in Tuzla, İstanbul and has a well -equipped machinery park encompassing plastic injection, fixed head and assembly machines, oven and molding units →The facility is capable of producing a wide range of product types and designs, with a monthly capacity of 85 mn + units →Routine chemical and mechanical testing of all products is conducted in -house testing facilities →All products are stored in the Company’s warehouse with 3,610 pallet capacityProcurement Sales & distribution Support functions Production Support functionsMarketing Information Technologies Human Resources (1) Intermediary suppliers deliver to the Company’s warehouse using DDP (Delivered Duty Paid) delivery method Source: Company 20 Procurement Sales & distribution Support functions ProductionEffective procurement process enabling seamless operations Procurement overview Procurement items breakdown1 (2023) →Azmüsebat collaborates with a strong network of local and international suppliers, covering all procurement material types to ensure consistent supply and competitive cost structure →Azmüsebat sources all procurement items either directly from suppliers or through intermediar ies →Main procurement items include steel, polystyrene, k -resin along with cosmetic trade products and packaging materials →Procurement costs are mainly based on commodity prices, which are quoted in EUR/USD –Steel and plastic, the primary raw materials, are sourced from international suppliers, with steel primarily coming from Sweden and India, and plastic from Germany –Other key raw materials (packaging, polystyrene, gas and paint) are sourced from domestic suppliers –Packaging materials, sourced totally from local suppliers, are purchased in TL –The average payment terms are 90 days for packaging materials, 120 days for plastic s and 75 days for steel purchases –Price fixing options are available for 1 year for steel purchases , and 3 months for alloy purchases which are based on foreign exchange rate →The Company’s suppliers are long -term business partners with an average of over 10 years of business relationship To secure competitive pricing and stable supply, Azmüsebat engages with a diverse range of suppliers for all critical material procurements 21.9%49.0%20.4%8.7% Raw material Packaging materials Trade goods Consumables Category of raw material supply1 (2023) 48.5%47.1%2.9% 1.5% Plastic Steel Supporting parts Paint 41.0% 33.8%16.5%5.2% 3.5%Sweden Türkiye UAEIndia GermanyRaw material sourcing breakdown1 (2023) (1) Management accounts were converted to USD by dividing the TL figures by the period's average USD/TL exchange rate of 23.9 Source: Company , Management accountsUSD 17 mn USD 8 mn 21Only razor production facility in Türkiye and the 2nd largest capacity in MENA Procurement Sales & distribution Support functions Production Overview of the production facility Main machinery and equipment →Located in Istanbul, Tuzla, Azmüsebat’s rented facility1 operates as the only razor factory in Türkiye with the 2nd largest razor production capacity in the MENA region →The facility is strategically located, providing easy access to all regions in Türkiye and to the East and West globally, allowing Azmüsebat to lower its transportation costs −Close proximity to both a national railway and road network, including the main west -to-east state highway of T ürkiye (E-5 highway) and within 35km of T ürkiye 's third largest port, Haydarpaşa Port →Azmüsebat has a modern machinery park of 9 grinding machines, 36 injection machines, 16 assembly machines and 12 packaging stations for razor and blade manufacturing →The facility, owned by Azmüsebat's founding family and former owners, operates under a long -term rent agreement that Azmüsebat can terminate at its discretion Production capacities per product Ample room for capacity expansion, ensuring flexibility for future growth 22.1 mn units / month 1 blade disposable razor 25.3 mn units / month Double edged razor blade11.4 mn units / month 2 blade disposable razor 25.3 mn units / month Single edged razor blade8.8 mn units / month 3 blade disposable razor 9 grinding machines 36 plastic injection and molding machines 16 fixed head and assembly machines 12 packaging stations (1) Owned by the previous owners; the facility is operated under a long -term rent agreement and the agreement can be terminated at Azmüsebat’s discretion (2) As of 30.09.2024 (3) As of 2022 (4) As of 2023, excluding agricultural export Source: Company 22Only razor production facility in Türkiye and the 2nd largest capacity in MENA Procurement Sales & distribution Support functions Production Theoretical capacity (mn units ) Production (mn units ) Capacity utilization rate 1blade disposable razor 2blade disposable razor 3blade disposable razor Half blade Full bladeProduction capacities and utilization rates by product type - 2023 22.1 11.4 8.8 25.3 25.311.9 8.7 6.0 18.0 22.153.7% 76.0% 68.1% 71.2% 87.4% Source: Company 23End -to-end production process… Procurement Sales & distribution Support functions Production Punching 1Heat treatment (Hardening)2 Coil joining 3 Printing 4 Coating (PTFE) 8 Coating (PVD) 7 Blade cleaning 6 Grinding 5 Blue light (control process )9Blade splitting & oiling10Inspection (QA center)11 Source: Company 24…adhering to rigorous standards Azmüsebat’s high quality products are certified as per Turkish standards Global standards Source: CompanyProcurement Sales & distribution Support functions Production Net-zero waste certificate 25 Overview % of Net sales over yearsModern channel 40% Traditional trade 25% Export 35% →Directly sells its branded products to widely known national chains and discounters all around Türkiye →PL production is for discounters, with distribution handled by Yeni Teközel , a Yıldız Holding subsidiary→Through its 9 distributors, reaches all 81 provinces of Türkiye; →Exports to more than 70 countries →Reaches its end customers through regional distributors
Production Punching 1Heat treatment (Hardening)2 Coil joining 3 Printing 4 Coating (PTFE) 8 Coating (PVD) 7 Blade cleaning 6 Grinding 5 Blue light (control process )9Blade splitting & oiling10Inspection (QA center)11 Source: Company 24…adhering to rigorous standards Azmüsebat’s high quality products are certified as per Turkish standards Global standards Source: CompanyProcurement Sales & distribution Support functions Production Net-zero waste certificate 25 Overview % of Net sales over yearsModern channel 40% Traditional trade 25% Export 35% →Directly sells its branded products to widely known national chains and discounters all around Türkiye →PL production is for discounters, with distribution handled by Yeni Teközel , a Yıldız Holding subsidiary→Through its 9 distributors, reaches all 81 provinces of Türkiye; →Exports to more than 70 countries →Reaches its end customers through regional distributors 37% 38% 40% 2022A 2023A 2024B24%28%25% 2022A 2023A 2024B39%34% 35% 2022A 2023A 2024B % of 2024B Net sales (1) Includes >USD 200k of e -commerce and other sales Source: Company , Management accountsWell -designed route to market Procurement Sales & distribution Support functions Production Key clientsDiscounters National chains1→Distributors Sales through local chains, mom & pop stores, buffets, perfumeries etc. →Tenders →BarbersRegional distributors in the importing country specializing specifically in the relevant product group Point of sales c.45k stores c.90k points 26Marketing activities Mission & Vision Selected marketing activities (2020 - 2023)Cross -channel marketing activities aligned with Azmüsebat’s mission and vision →The marketing and advertising strategy of the Company is designed to enhance brand perception of its products and boost market share →Azmüsebat has brought its long -established cult advertising culture to modern digital platformsEnhancement of the product's image through the ‘VER Bİ DERBY' motto in traditional media channels Innovative 3D outdoor advertising in strategic locations Campaigns conducted through periodic brand alliancesTraditional marketing Outdoor marketing Digital marketing Campaigns and collaborationsProcurement Sales & distribution Support functions Production Sponsorship arrangements for sports -related programs on social media platforms Source: Company 27Information Technologies (“IT”) Wide IT network connecting and digitalizing each business unit in the Company for ERP Core business run by SAP1 →Offers a personnel attendance control system designed to enhance operational efficiency and ensure precise attendance trackingMeyer for employee managementEBA for workflow management →Includes features for document management, digital signatures, workflow automation, and process tracking VEEAM for protection and back up →Provider of data protection and disaster recovery solutionsMicrosoft SQL →Database management system designed to store, retrieve, and manage data for various applicationsQDMS for document management →Software for organizing documents, automating workflows, and ensuring quality compliance.WAZUH for log tracking and analysis →Security platform designed for threat detection, log analysis, and compliance management across IT infrastructureProcurement Sales & distribution Support functions Production (1) Azmüsebat has its own SAP license, independent of Yıldız Holding Source: CompanyAzmüsebat maintains its operational independence without any shared service s with its parent and Yıldız Holding Accounting & Finance (CO,FI module) →The modules support internal cost management, external financial transactions, and reporting Warehouse (WM module) →Manages warehouse operations, including inventory tracking, stock movements, and picking and packing processesProcurement & raw material (MM module) →Streamlines procurement and inventory management processesProduction (PP module) →Supports planning and control of manufacturing processes to ensure efficient production flow Sales (SD module) →Handles sales processes, order management, pricing, shipping, billing, and customer managementMaintenance (PMmodule) →Manages planning, scheduling, and maintenance tasks, to enhance equipment reliability, and reduce downtime 28 (1) As of 30.09.2024 (2) Includes all white - and blue -collar employees Source: CompanyHuman Resources (“HR”) → Average tenure is 11 years95 White collar 109 Blue collar184 20Male Female176 5879 0-5 years 5-10 years +10 years# of personnel1 Gender2 Employee tenure White collar Blue collarMale Female Average tenure is 7 years60 34261% 39%167 112123 0-5 years 5-10 years 10+ years1General manager General manager assistant Factory, supply chain 364Sales and marketing 20Export 3HR1 Finance and accounting 6Quality 2 5Procurement Sales & distribution Support functions Production IV. Financial overview 30 →2024 Budget and 2025 Forecast are prepared by the Management on a non -IAS-29 basis →During the 2024 audit process, IAS -29 will be applied to 2024 figures and will become the same base as 2022 and 2023 financials. However, historical figures presented in this Pack are prepared on an IAS - 29 applied IFRS basis, while the forecast period figures are on a non -IAS-29 basis →Both historical figures and forecast period have been presented excluding Holding charges and historical period also excludes machinery rental cost where the machinery has been bought by Azmüsebat at the beginning of 2024→All historical figures in this section are derived from IFRS financial statements prepared in accordance with IAS -29 . The breakdown by geography and category are based on Management accounts→Azmüsebat prepares three sets of financial information with fiscal year being the 12 -month period as of January 1st of the calendar year, ending on December 31st of the calendar year (i.e., 01.01.2023 -31.12.2023) –Statutory accounts : Azmüsebat’s statutory accounts are prepared in accordance with the Turkish Commercial Code for tax filing purposes –Management accounts : Azmüsebat keeps its Management accounts in TL, statutory -like reporting and issues monthly accounts detailed at geography and category levels –IFRS financials : Azmüsebat IFRS financials issued on a yearly basis are audited by PwC since 2022 –The IFRS financial statements are prepared in accordance with IAS -29 in 2023, as the cumulative inflation in Türkiye has exceede d 100% over the past three years, making the application of IAS -29 mandatoryProposed Transaction scope includes 100% share sale of Azmüsebat , as described in Executive Summary Historical financials presented in this section are based on IFRS financials where Net sales breakdowns are based on Manageme nt accounts 2024 Budget presented in this section is prepared by Azmüsebat management on 9M actual basis, as per below Basis of preparation Source: Company→Financial forecasts only include organic growth for the existing categories in the product portfolio of the CompanyManagement strongly believes there are easily attainable untapped growth and value creation areas beyond the business plan as presented in this document 31 USD mn 2022 A 2023 A 2024B 2025F Net sales 38.7 47.0 44.9 52.7 COGS223.7 27.5 24.2 26.9 Gross profit (exc. D&A) 15.0 19.5 20.7 25.7 Gross profit (%) 38.7% 41.5% 46.2%
Transaction scope includes 100% share sale of Azmüsebat , as described in Executive Summary Historical financials presented in this section are based on IFRS financials where Net sales breakdowns are based on Manageme nt accounts 2024 Budget presented in this section is prepared by Azmüsebat management on 9M actual basis, as per below Basis of preparation Source: Company→Financial forecasts only include organic growth for the existing categories in the product portfolio of the CompanyManagement strongly believes there are easily attainable untapped growth and value creation areas beyond the business plan as presented in this document 31 USD mn 2022 A 2023 A 2024B 2025F Net sales 38.7 47.0 44.9 52.7 COGS223.7 27.5 24.2 26.9 Gross profit (exc. D&A) 15.0 19.5 20.7 25.7 Gross profit (%) 38.7% 41.5% 46.2% 48.8% Sales and marketing expenses 3.1 4.7 General and administrative expenses31.1 1.6 Research and development expenses 0.0 0.1 Total OPEX (exc. D&A) 4.2 6.4 9.7 10.0 EBITDA (pre IFRS -16) 10.8 13.1 11.1 15.7 EBITDA (%) 28.0% 27.9% 24.6% 29.8% EBITDA (IFRS -16 applied) 11.3 13.8 EBITDA (%) 29.2% 29.3% (1) Years 2022 and 2023 are based on audited IAS -29 applied IFRS financials, 2024B and 2025F are presented based on non -IAS-29 basis Management accounts. Historical figures have been presented based on each period’s own purchasing power and converted to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29 .4 USD/TL for 2023A. Forecast figures 2024B and 2025F ha ve been converted to USD using estimated yearly average USD/TL exchange rates of 33.3 USD/TL for 2024B and 42 .6 USD/TL for 2025F. Both historical figures and forecast period have been presented excluding Holding charges and historical period also excludes machinery rental cost where the machinery has been bought by Azmüsebat at the beginning of 2024 (2) Excludes machinery rent of USD 1.2 mn for 2022A and USD 1.1 mn for 2023A since the machinery was bought by Azmüsebat in 2024 (3) Excludes Holding charge of USD 0.4 mn for 2022A and USD 0.6 mn for 2023A Source: Company, PwC 2023 audit report, Management accountsRemarks 2024B and 2025F are presented based on non -IAS-29 basis Management accounts which are prepared in TL and converted to USD using estimated yearly average USD/TL exchange rates of 33.3 USD/TL for 2024B and 4 2.6 USD/TL for 2025FThe financial figures for 2022 and 2023, presented on the left -hand side, are derived from the 2023 audit report that has been prepared in accordance with IAS -29. Historical figures have been presented based on each period’s own purchasing power for presentation purposes and converted to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A, 29.4 USD/TL for 2023A1 2 3Income statement Overview1 IAS-29 applied IFRS basis reporting Management reporting based 32 (1) Years 2022 and 2023 are based on audited IAS -29 applied IFRS financials, 2024B and 2025F are presented based on non -IAS-29 basis Management accounts. Historical figures have been presented based on each period’s own purchasing power and converted to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29 .4 USD/TL for 2023A. Forecast figures 2024B and 2025F ha ve been converted to USD using estimated yearly average USD/TL exchange rates of 33.3 USD/TL for 2024B and 42 .6 USD/TL for 2025F Source: Company, PwC 2023 audit report , Management accountsRemarks Sales volume (mn unit) 353 349 310505 5104523 2022A4 2023A3 2024B Net sales1 (USD mn) 23.515.2 2022A31.116.0 2023A29.215.7 2024B 2025F38.7 47.0 44.9 52.729.6 34.4 33.69.87.71.4 2022A2.8 2023A7.83.4 2024B 2025F38.747.0 44.952.716.9% 20.1% c.20% Disposable razors Razor blades Cosmetics Domestic Export % PLSales for 2025F are projected to grow modestly to c.USD 53 mn, with growth expected across categories and regions, particularly in the razors segmentIn 2024, the Company experienced a decline in sales volume mainly driven by market dynamics , tough competition in PL and a one -off product launch. For 2025 and onwards the Company is budgeting to increase its volume to historical levels and increase its profitabilityOverview of Net sales 1 33 (1) Years 2022 and 2023 are based on audited IAS -29 applied IFRS financials, 2024B and 2025F are presented based on non -IAS-29 basis Management accounts. Historical figures have been presented based on each period’s own purchasing power and converted to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29 .4 USD/TL for 2023A. 2024B has been converted to USD using estimated yearly average USD/TL exchange rate of 33.3 USD/TL (2) Pre IFRS -16 & excluding machinery rent of USD 1.2 mn for 2022A and USD 1.1 mn for 2023A (3) Includes change in semi -finished goods and change in finished goods for a total of (1.3)% of COGS in 2022A and (2.3)% in 2023A Source: Company, PwC 2023 audit report , Management accountsRemarks COGS1,2 exc. D&A ( USD mn ) Well managed cost structure despite the macro conditions in T ürkiye and despite the volume drop in 2024Overview of COGS 2 23.727.524.2 2022A 2023A 2024B COGS breakdown USD mn 2022 A 2023 A Raw material 12.5 11.1 As a % of Net sales 32.4% 23.5% Production expense37.7 8.2 As a % of Net sales 19.8% 17.5% Labor cost 3.0 5.7 As a % of Net sales 7.7% 12.2% Trade goods 0.6 2.5 As a % of Net sales 1.5% 5.3% Total 23.7 27.538.7% 41.5% 46.2% Gross profit margin (%) Raw material cost is mainly hard currency denominated while othe r items are in TL 2023A and 2024B are exceptional years for labor costs, marked by several minimum wage increases that raised wage levels in hard currency. These are expected to return to historic levels in 2025 and beyond 34 (1) Years 2022 and 2023 are based on audited IAS -29 applied IFRS financials, 2024B and 2025F are presented based on non -IAS-29 basis Management accounts . Historical figures have been presented based on each period’s own purchasing power and converted to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29 .4 USD/TL for 2023A. 2024B figures has been converted to USD
Total 23.7 27.538.7% 41.5% 46.2% Gross profit margin (%) Raw material cost is mainly hard currency denominated while othe r items are in TL 2023A and 2024B are exceptional years for labor costs, marked by several minimum wage increases that raised wage levels in hard currency. These are expected to return to historic levels in 2025 and beyond 34 (1) Years 2022 and 2023 are based on audited IAS -29 applied IFRS financials, 2024B and 2025F are presented based on non -IAS-29 basis Management accounts . Historical figures have been presented based on each period’s own purchasing power and converted to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29 .4 USD/TL for 2023A. 2024B figures has been converted to USD using estimated yearly average USD/TL exchange rate of 33.3 USD/TL (2) Exclud es Holding charge of USD 0.4 mn in 2022A and USD 0.6 mn in 2023A Source: Company, PwC 2023 audit report , Management accountsRemarks The rise in the operating expenses in 2024 was primarily driven by increased marketing and retail expendituresOPEX1,2 exc. D&A (USD mn) Selling & marketing expense USD mn 2022 A 2023 A Personnel expenses 0.7 1.2 As a % of Net sales 1.7% 2.5% Marketing expenses 0.8 1.5 As a % of Net sales 2.2% 3.2% Retail expenses 0.5 0.9 As a % of Net sales 1.3% 1.8% Transportation expenses 0.5 0.7 As a % of Net sales 1.3% 1.5% Other 0.5 0.4 As a % of Net sales 1.3% 0.9% Total 3.1 4.7 USD mn 2022 A 2023 A Personnel expenses 0.5 0.9 As a % of Net sales 1.4% 1.9% IT expenses 0.2 0.3 As a % of Net sales 0.5% 0.7% Consultancy expenses 0.1 0.2 As a % of Net sales 0.2% 0.4% Vehicle expenses 0.0 0.0 As a % of Net sales 0.1% 0.1% Other 0.2 0.2 As a % of Net sales 0.6% 0.4% Total 1.1 1.6General & administration expense10.8% 13.6% 21.5% 3.14.77.22.4 1.1 0.0 2022A1.60.1 2023A0.0 2024B4.26.49.7 S&M G&A R&D as a % of Net salesOverview of OPEX 3 Marketing expenses, which remained relatively stable during the historical period, increased in 2024 due to sponsorship of media programs for the Euro 2024 tournament held in June Retail expenses, previously stable in the historical period, saw an uptick in 2024, largely due to inflationary pressures 35 (1) IAS -29 applied audited financials . All figures have been presented based on each period’s own purchasing power and converte d to USD using the corresponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29.4 USD/TL for 2023A (2) The finance nature receivable from the ultimate parent Yıldız Holding traced under other receivables line item has been treated as cash and added to cash and cash equivalents line and exc luded from other receivables Source: Company, PwC 2023 audit reportNet working capital (“NWC”) and Net debt Remarks NWC1 (USD k) 2022A 2023A Accounts receivable 5,243.2 7,287.0 Inventory 6,972.8 6,936.2 Accounts payable 7,698.8 8,081.0 Other receivables2 190.3 174.1 Other payables 134.7 313.1 Net working capital 4,572.8 6,003.1 As a % of Net sales 11.8% 12.8% 2022A 2023A Cash and cash equivalents2 1,811.1 7,060.1 Financial investments - 198.5 Short -term borrowings 3,213.3 2,043.7 Long -term borrowings 20,795.1 18,518.1 Net debt (pre IFRS -16) 22,197.3 13,303.2Net debt1 (USD k)The Company maintains a robust cash conversion cycle on the back of its profitability and effective NWC management The Company has substantially lowered its Net debt over the years, decreasing from c.USD 60 mn in 2016 to c.USD 15 mn by the end of 2023 V. Appendix 37 (1) IAS -29 applied audited financials presented in their own periods purchasing power has been converted to USD using the corres ponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29.4 USD/TL for 2023A (2) The finance nature receivable from the ultimate parent Yıldız Holding traced under other receivables line item has been treated as cash and added to cash and cash equivalents line and exc luded from other receivables Source: 2023 PwC audit reportUSD k12022A 2023A Short -term debt 3,213 2,044 Short -term rent related liabilities 300 345 Accounts payable 7,699 8,081 Other payables 135 313 Employee benefit related payables 677 944 Deferred revenues 1,202 1,662 Short -term provisions 589 680 Other short -term liabilities 13 292 Short -term liabilities 13,827 14,360 Long -term rent related liabilities 334 68 Long -term debt 20,795 18,518 Long -term provisions 1,291 1,217 Long -term liabilities 22,420 19,804 Total liabilities 36,247 34,163 Paid -in-capital 1,709 1,791 Other 19,300 19,844 Retained earnings (loss) (49,611) (40,172) Net income (loss) for the period 11,277 11,027 Equity (17,325) (7,511) Total liabili ties & SH equity 18,922 26,653USD k12022A 2023A Cash and cash equivalents2 1,811 7,060 Financial investments - 199 Accounts receivable 5,243 7,287 Other receivables2 190 174 Inventory 6,973 6,936 Prepaid expenses 639 607 Other current assets 52 1 Current tax assets 2 0 Short -term assets 14,910 22,264 Other long -term receivables 12 7 Tangible fixed assets 3,398 3,790 Right -of-use assets 474 541 Intangible fixed assets 40 51 Prepaid expenses 88 - Long -term assets 4,012 4,389 Total assets 18,922 26,6532022 -2023 from IAS -29 applied IFRS audit report, presented in USD1 Balance sheet 38 USD k12022A 2023A Revenue 38,738 47,010 COGS exc. D&A2 (23,745) (27,513) Gross profit 14,993 19,497 Gross profit % 38.7% 41.5% R&D expenses (40) (65) General administrative expenses3 (1,064) (1,617) Sales and marketing expenses (3,060) (4,709) EBITDA4 10,828 13,107 EBITDA % 28.0% 27.9% D&A (1,146) (1,537) Other income from operating activities 545 499 Other expenses from operating activities (2,256) (2,446) IFRS-16 adjustments 475 677 Machinery rent (1,198) (1,113) Holding charges (394) (622) EBIT 6,854 8,566 Income from investment activities 8 29 Operating profit before financing expenses 6,862 8,595 Financing expenses (11,093) (8,810) Monetary gain (loss) 15,508 11,242 PPT 11,277 11,027 Tax income (expense) - - Net income 11,277 11,027 (1) IAS -29 applied audited financials presented in their own periods purchasing power has been converted to USD using the corres ponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29.4 USD/TL for 2023A (2) Excluding machinery rent of
(40) (65) General administrative expenses3 (1,064) (1,617) Sales and marketing expenses (3,060) (4,709) EBITDA4 10,828 13,107 EBITDA % 28.0% 27.9% D&A (1,146) (1,537) Other income from operating activities 545 499 Other expenses from operating activities (2,256) (2,446) IFRS-16 adjustments 475 677 Machinery rent (1,198) (1,113) Holding charges (394) (622) EBIT 6,854 8,566 Income from investment activities 8 29 Operating profit before financing expenses 6,862 8,595 Financing expenses (11,093) (8,810) Monetary gain (loss) 15,508 11,242 PPT 11,277 11,027 Tax income (expense) - - Net income 11,277 11,027 (1) IAS -29 applied audited financials presented in their own periods purchasing power has been converted to USD using the corres ponding year -end USD/TL exchange rates of 18.7 USD/TL for 2022A and 29.4 USD/TL for 2023A (2) Excluding machinery rent of USD 1.2 mn for 2022A and USD 1.1 mn for 2023A (3) Excluding holding charges of USD 0.4 mn for 2022A and USD 0.6 mn for 2023A (4) Pre IFRS -16 Source: 2023 PwC audit reportIncome statement 2022 -2023 from IAS -29 applied IFRS audit report, presented in USD1 This document is provided for information purposes only on the express understanding that the information contained herein will be regarded as strictly confidential . This document and the opinions, projections and conclusions contained in this document are for the exclusive use of the recipient and its employees and it is not to be delivered to any third parties, nor shall its contents be disclosed to anyone other than them and shall not be reproduced or used, in whole or in part, for any purpose other than for the consideration of the financing or transaction described herein, without the prior written consent of Ünlü Yatırım Holding A.Ş. and/or its subsidiaries* (together or individually referred as “ÜNLÜ & Co”) . The information contained in this document does not purport to be complete and is subject to change . This is a commercial communication . The document does not include a personal recommendation and does not constitute an offer, or the solicitation of an offer for the sale or purchase of any financial product, service, investment or security . The investments and strategies discussed here may not be suitable for all investors ; you are to rely on your own independent appraisal of and investigations into all matters and things contemplated by this document . Information, opinions and projections in this document have been compiled by or arrived at by ÜNLÜ & Co from the data provided by the Company and its shareholder, and publicly available information, without our own separate verification . The Company and its shareholder have been consulted about and have confirmed the appropriateness of the basic principles and assumptions used by ÜNLÜ & Co. to perform the analyses / projections . The Company, its affiliates and ÜNLÜ & Co do not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this document . The Company, its affiliates or ÜNLÜ & Co have not sought independent verification of the information included herein . The information, comments and recommendations contained in this document fall outside of the definition of investment advisory services under the Capital Markets Laws No. 6362 , Capital Markets Board’s secondary legislation and other applicable legislation . Investment advisory services are provided by authorized entities considering the risk and return preferences of the concerned persons . The comments and recommendations contained in this document have general nature . These recommendations may not fit to your financial situation, risk and return preferences . For that reason, investment decisions that rely solely on the information contained in this document might not meet your expectations . You should pay necessary discernment, attention and care in order not to experience losses . The Company, its affiliates and ÜNLÜ & Co accepts no liability whatsoever for any direct or indirect loss arising from (i) the use of this document or its contents, or (ii) any error, omission, misstatement, negligence or otherwise in this document . Distribution of this document in and from certain jurisdictions may be restricted or prohibited by law or regulation . The recipient is required to inform itself of their compliance with any such restrictions or prohibitions in such jurisdictions . ÜNLÜ & Co does not accept any liability in relation to the distribution or possession of this document in and from any jurisdiction . By receiving and not immediately returning the document, the recipient warrants, represents and acknowledges (i) it has read, agreed to and will comply with the contents of this important notice and disclaimer ; and (ii) it will conduct its own analyses, due diligence or other verification of the information and data set forth in this document, and will bear the responsibility for all or any cost incurred in so doing . This document is governed by, and shall be construed in accordance with, Turkish laws and any claims or disputes arising out of, or in connection with, this document shall be subject to the exclusive jurisdiction of the Istanbul Central courts . All communications, inquiries and/or requests relating to this document should be addressed to ÜNLÜ & Co. *Ünlü Menkul Değerler A.Ş., is a subsidiary of Ünlü Yatırım Holding A.Ş. and is authorized & regulated by the Turkish Capital Markets Board . 39 Zeynep Koçak Managing Director [email protected] +90 (532) 242 5378Simge Ündüz Managing Director [email protected] +90 (533) 283 8113Disclaimer

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