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Project Fame Confidential Information Pack Strictly private and confidentialSeptember 2025 1 Table of contents Page Section 2 Executivesummary I. 13 Türkiye is the 3rdlargest exporter of scripted series globally II. 18 Operational overview III. 35 Strategic growth pillars IV. 44 Financial overview V. 47 Appendix VI. I. Executive summary 3 (1) Includes international sales of domestic production revenues and global production (2) Based on management accounts (3) Intellectual property (4) Others include co-production roles for theatrical movies (5) Full lists provided in Appendix section Source: CompanyAy Yapım: Leading content producer with established operations in Türkiye Companyoverview →Founded 20 years ago by Çatayfamily, Ay Sanat Prodüksiyon Ve Yapım A. Ş. ( “Ay Yapım“ or the “Company“ ) is Türkiye’s leading content producer −The Company is privately owned and operates as an independent production house , working with leading broadcasters and streaming platforms globally →Creator of renowned domestic, SVOD andglobal scripted series andmovies; 85% of which are Ay Yapımoriginals −Acknowledged as one of Türkiye’s largest exporter of scripted series , captivating international audiences with prime-time hits (international sales1contributing c.44% of total revenues in 2024A2) and securing hard currency revenue generation →Diverse portfolio of content spanning across various genres, including drama, action, and romance, tailored for both local and international audiences −Iconic series like Forbidden Love, Fatmagül, Ezel, Yargı, and İçerdehave achieved critical and commercial success worldwide →Operational excellence through an established ecosystem in Türkiye, integrating pre- production, shooting, and post-production −Collaborates with top-tier talent in Türkiye, including writers, directors, and actors, to create premium productions →Proven model easily replicable in international markets promising profitable growth potential −Newly established entity in Saudi Arabia (“Ay YapımKSA”) aims to capture the Middle Eastern audience with innovative scripts and localized productions −Strategic partnerships with MBC , the region's largest broadcaster, to maximize reach and engagement →The Company’s growing libraryof at 45+ scripted series under Ay Yapım’sIP3offering significant potential, as a series remains marketable and valuable for at least 10-15 years after its initial air date −A proven global distribution network ensuressustained revenue streams from library content, capitalizing on global demand −Ay Yapım’sstrong IP ownership unlocks high-margin remake potential, providing a differentiated source of recurring and long-term revenuesBusiness segments 1 42 3 Domestic productions Others4SVOD productions Global productions Key figures 85% Scripted series are Ay Yapımoriginals75+ Scripted series5 (45+ in Ay Yapım’sIP4) c.5,800 hours Domestic scripted series15+ SVOD productions5 (7 SVOD movies) 59% of aired episodes in top 3 ratings15+ Theatrical movies5Exceptional storytelling and high-quality productions, shaping the global appeal of Turkish dramas 4 Source: CompanyAy Yapım: Appealing track record and accumulated know-how over years 85% of produced series are Ay Yapımoriginals31remake series have been produced worldwide from Ay Yapımcreated scripts 80scripted series Over 5,800episodes Over 5,500hours 12 SVOD series 17Theatrical movies 4TV movies 7 SVOD movies 50 scripted series Ownership11 scripted series No rights Included SVOD 19 scripted series Shareholder2025 2005Quality IP library established over years 5 Source: CompanyAy Yapım: A true success story built over years with proven track record New subsidiaries founded: Ay YapımKSA in Riyadh (MENA productions), AyLuna in Madrid (Spanish-language markets)International expansionRoots of Ay Yapım: Founded by Ekrem and Kerem Çatay(“CEO”) , the Company is an independent production house specializing in premium scripted content 2005 2021 2023 2025–Future Breakthrough and global recognition Ay Yapımbecomes a dominant player in Turkish television with iconic series 2010–2020Export leadership Recognized 7 times as Türkiye’s top cultural content exporter First Turkish production Company to win three International Emmy Awards 2016–2024Distribution strategy Global Distribution Power MADD Entertainment is launched in partnership with Medyapım 2018 Ay Yapımestablishes its Design CenterCreative innovation Transformation into a global content powerhouse, grow its IP library, format sales, and international partnershipsFuture goals 6 Source: CompanyAy Yapım: Award-winning productions and global acclaim across the global Ay Yapım is the only Turkish production company to have won three International Emmy Awards International Emmy Awards 2017 winner France Soap Awards 2021 winner International Emmy Awards 2019 winner International Emmy Awards 2023 winnerAwards & nominations Seoul International Drama Awards Nominations: 17 Awards: 8 France Soap Awards 2019 Best International Serie Award Fatmagül ProduAwards 2023 International Emmy Awards 2014 Nominee International Emmy Awards 2018 Nominee 7 (1) Advertisement revenues (2) For presentation purposes 1% of other revenues were not presented on this page (3) Based on Management accounts Source: CompanyExceptional storytelling and high-quality productions Focused on three key product categories →Locally produced scripted series that are broadcasted on FreeTV −Ay Yapımhas been retaining intellectual property (IP) rights since 2012; indicating further potential →Consistently delivering 3-4high-quality new productions annually (1 episode is c.135 minutes) for Free TV →TV channels pre-pay 2-3 episodes in advance to finance the preparation →Revenue generated through Free TV sales, international sales, integration revenues1and digital sales; making this category a strong profit generator →Scripted mini-series and movies produced for digital streaming platforms →Ay Yapımmay or may not retain intellectual property (IP) rights for the produced content. −Retaining IP rights for Disney; unique positioning unlocking upside potential for future value creation →SVOD series have an average runtime of 45 minutes per episode →SVOD productions follow two financial models −Cost + producer fee (open budget) −Fixed total fee (includes producer’s markup) →Streamers provide upfront payments, ensuring secured funding for each production →Highly adaptable formats tailored to markets needs and circumstances −Two distinct types: i) Productions with Ay Yapım’soriginal scripted content (international remakes) and ii) Brand-new productions with new scripts →Adaptations with local actors and languages ensure cultural relevance in diverse markets →Intellectual property (IP) ownership rights vary depending on the project’s terms →Global productions adopt flexible structures , with terms customized to suit each project’s unique requirements →Collaborating with MBC for the MENA region and with various companies for Spanish territories to expand international reach Net sales % (2024A)2,3Domestic productions 71%1 SVOD productions 18%2 Global productions 10%3 8 (1) Platforms are YouTube, Dailymotion and PuhuTV (2) Based on management reporting Source: CompanyMaximizing value extraction from Domestic productions Revenue streams of Domestic productions Domestic productions generate revenue through multiple channels; all revenue components are considered when evaluating a show’s return in totalSuccessful series generate c.1.6x–1.7x returns on production costs, while standard productions deliver around 1.5x i. Free TV sales 44.1% ii. International sales
languages ensure cultural relevance in diverse markets →Intellectual property (IP) ownership rights vary depending on the project’s terms →Global productions adopt flexible structures , with terms customized to suit each project’s unique requirements →Collaborating with MBC for the MENA region and with various companies for Spanish territories to expand international reach Net sales % (2024A)2,3Domestic productions 71%1 SVOD productions 18%2 Global productions 10%3 8 (1) Platforms are YouTube, Dailymotion and PuhuTV (2) Based on management reporting Source: CompanyMaximizing value extraction from Domestic productions Revenue streams of Domestic productions Domestic productions generate revenue through multiple channels; all revenue components are considered when evaluating a show’s return in totalSuccessful series generate c.1.6x–1.7x returns on production costs, while standard productions deliver around 1.5x i. Free TV sales 44.1% ii. International sales 48.2% iii. Digital sales 7.7% →Each domestic show is broadcasted on digital platforms1after its initial airing on Free TV →Digital sales are sharedwith the broadcasting channel −Older shows on digital channels generate higher profits without revenue sharing →Ay Yapımcollaborates with digital distributors to maximize digital sales and drive sustained revenue growth −Current distribution deal set to expire in early 2026, opening avenues for expansion and improved sales & profitability performance →As digital adoption grows, online consumption of traditional TV series is expected to increase exponentially YouTube view (# mn) 2022 2023 20242.9 3.15.7+40%→Strong international sales muscle enables Ay Yapımto maximize gains from Domestic productions →Under negotiated contracts, international sales revenue is shared with the broadcasting channel for a defined period International sales of existing portfolio The Company’s sales network enables to sell current content directly, creating connectivity Resale of current series after certain period Ay Yapım’sstrong library holds great potential and enables the Company to earn more on old series Format sale (international remakes) Selling Ay Yapım’sscripts to international producers for local productions→All newly produced domestic series are broadcast on Free TV →Episode earningsare based on a fixed base price + rating bonus →Additional brand integration revenues are generated through Free TV sales, with the broadcasting channel executing the sales −For all domestic productions, product placements and associated revenues are integrated into the business model −Evolving consumer habits have led marketers to favor product placement advertising over traditional spot advertisements −Integration revenues are shared with the broadcasting channel Domestic production sales % (2024A)2 9 Source: CompanyPromising potential: Driving international growth with on-the-ground presence MENA growth via Ay YapımKSA Spanish expansion via AyLuna LATAM Growth via targeted projects →Cultural proximity and storytelling style align closely with Latin American audience preferences →Growing demand for premium Turkish dramas across Latin America, fueled by cultural affinity and shared storytelling tradition→Cultural and emotional storytelling resonates with Spanish audiences, driving high ratings →Strong appetite for Turkish-inspired dramas among Spanish audiences, reinforcing cross- cultural resonance→High demand for premium Turkish dramas across MENA →Cultural proximity ensures strong audience resonance Actions Actions Actions →Established Ay YapımKSA as a dedicated production hub in Saudi Arabia →Produced Alasha Street (aired Ramadan 2025), which became the #1 show in MENA →Mobilized a Saudi-based team of 80–90 professionals, ensuring execution capability and cultural adaptation →Working on a theatrical movie in collaboration with CJ ENM for Saudi Market→Established AyLuna as an on-the-ground production arm for Spanish-language content →Co-produced La Encrucijada (remake of Cesur ve Güzel); prime-time leader in Spain →Pipeline includes 3 projects: 2 local remakes of Ay Yapımoriginals,1 original series; Butterfly Labyrinth, a co-production with Secuoyaset to air in Q4 2026 →First in Spain to retain IP rights, creating long- term monetization upside in a two-broadcaster market→Signed agreements with top Latin American scriptwriters and consultants →Pipeline includes 4 projects: 2 local remakes of Ay Yapımoriginals, 1 original series, and 1 feature film with a renowned Turkish star →Created a foundation for long-term expansion in Latin America through on-the-ground partnerships and localized productionProven global recognition & presence, scaling with local hubsLeveraging IP library and execution globally via remakes and originals Proven success in MENA & Spain, with LATAM as the next growth frontier Transformation into a global content powerhouse 10 Source: CompanyStrong fundamentals and accumulated know-how enabling profitable growth Vision, Mission & Strategic priorities I IVII IIIStrategic prioritiesMaintain creative excellence & operational agility Preserve the centralized creative leadership model while leveraging a flexible, freelance-led production base — allowing for scalability, faster time-to-market, and consistent delivery of high-quality content Expand global footprint through localized productions Deepen presence in high-growth international markets (e.g., MENA, LATAM, Europe) by adapting original IPs and producing locally resonant content via partnerships and on-the-ground operations (e.g., Ay YapımKSA) Strengthen IP portfolio and format exportability Continue building long-tail value through the development of ownable formats with remake potential, maximizing licensing and adaptation cycles globally Accelerate digital content growth & monetization Scale digital operations and capitalize on upcoming platform contract shifts (e.g., 2026 digital revenue share increase), boosting monetization of new and library content across SVOD, AVOD, and social platformsMission To create high-quality, emotionally resonant scripted content that captivates diverse audiences through compelling storytelling, exceptional talent, and artistic integrity —while delivering sustained value through IP ownership and innovationVision To be the region’s most influential and globally recognized storyteller —elevating Turkish drama to an enduring international standard and shaping cultural narratives across borders 11 (1) Remake of Ay Yapım’soriginal Cesur veGüzel, which was a prime-time leader Source: CompanyInvestment rationale: Strong growth potential fuelled by operational excellence Market leading content producer with an iconic brand in Türkiye Ay Yapımis the leading independent production house in Türkiye, consistently producing premium content across Free TV, digital, and global formats, and is widely credited with shaping the global appeal of Turkish dramas Creative-led model anchored by Founder/Producer Kerem Çatay, with deep relationships across Türkiye’s top writers, directors, and actors; script-to-screen control enables consistent quality and brand trust with buyers Türkiye is now the third-largest exporter of scripted series globally; global demand for Turkish content has grown 184% (2020–2023), outpacing Korean dramas and capturing strong interest from both traditional and digital buyers Exported to 150+ countries with 4,000+ hours sold; recipient of three International Emmy Awards; 30+ remakes across India, LATAM, MENA, and Europe underscore broad appeal and adaptability of original formats Demonstrated strong and resilient financial performance with c.50% EBITDA margins under IFRS and
house in Türkiye, consistently producing premium content across Free TV, digital, and global formats, and is widely credited with shaping the global appeal of Turkish dramas Creative-led model anchored by Founder/Producer Kerem Çatay, with deep relationships across Türkiye’s top writers, directors, and actors; script-to-screen control enables consistent quality and brand trust with buyers Türkiye is now the third-largest exporter of scripted series globally; global demand for Turkish content has grown 184% (2020–2023), outpacing Korean dramas and capturing strong interest from both traditional and digital buyers Exported to 150+ countries with 4,000+ hours sold; recipient of three International Emmy Awards; 30+ remakes across India, LATAM, MENA, and Europe underscore broad appeal and adaptability of original formats Demonstrated strong and resilient financial performance with c.50% EBITDA margins under IFRS and positive cash EBITDA after production costs; lean and repeatable production structure enables scalability across platforms and geographies Upcoming renewal of digital distribution agreement in early 2026 expected to materially improve profitability —revenue share increases from 50% to 85%, unlocking upside in back-catalog and new digital titles Over 45 high-value scripted series owned by Ay Yapım, with 10–15 years of monetization tail through syndication, digital licensing, remakes, and YouTube/Dailymotion monetization First-mover advantage in Saudi Arabia via Ay YapımKSA, with breakout hits such as Alasha Street supported by strategic partnerships (e.g. MBC) and cultural localization expertise; further validated by international success in Spain through La Encrucijada, a Secuoyaco-production1Türkiye’s top independent studio with global recognition 1 Strong creative engine & talent relationships Attractive market dynamics with global demand tailwinds Global export footprint and award-winning content High-profitability business with scalable model Near-term profit expansion from digital contract reset Proprietary library with long- tail monetization Unique exposure to MENA and Spain via localized production 2 3 4 5 6 7 8 12 (1) Detailed structure is provided in Appendix section (2) AyLunais the newly established sister company owned by Kerem Çatay. AyLunais expected to generate financial impact starting from 2026 which has been reflected in the business plan. Shareholders are open to consider AyLunaas part of the Proposed Transaction Source: CompanyTransaction overview Transaction scope Envisaged transaction timeline →Project Fame refers to thethecontemplated sale of up to 100% stake inAySanatProdüksiyonVeYapımA.Ş.( “AyYapım“ orthe“Company“ ) (the“ProposedTransaction ”) →With its production expertise and strategic positioning, Ay Yapım has become a leading content producer in Türkiye, enabling a strong growthpotentialinTürkiyeandglobally →The Shareholders have appointed ÜNLÜ & Co to act as the exclusive financial advisor for the Proposed Transaction. Potential investors should note that all queries related to the Proposed Transaction shouldbeaddressedexclusivelytoÜNLÜ&Co Shareholding structure1, 2 Ekrem Çatay 50.7%Kerem Çatay 49.3% Shareholding Transaction perimeterAy Yapım Tara 100.0%Bambini 100.0%Ay Yapım KSA 70.0%MADD 50.0%Phase I Phase II NDA Info Pack distributionLimited Q&ANon- binding offersBinding offersSigning Initiation of due diligence October 7th, 2025 Phase I 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 →Field visits and meeting with management →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") →Limited Q&A process for key questions and clarification requests →Collecting NBO’s (non-binding offers) and short-listing potential investors for the next stage Phase II details II. Türkiye is the 3rdlargest exporter of scripted series globally 14 (1) The Company also holds Türkiye’s 500 Great Service Exporters awards for 2016 and 2017 (2) US Hispanic territories Source: Economist, Investment Office of the Presidency of the Republic of TürkiyeAy Yapımis among Türkiye’s top scripted series exporters… Ay Yapımstands out as one of the largest exporters of scripted series from Türkiye Exports Champion of Cultural Services1 →HİB Awards (2018) →HİB Awards (2019) →HİB Awards (2020)→HİB Awards (2022) →HİB Awards (2023) →HİB Awards (2024) Türkiye is the 3rd largest exporter of scripted series globally Importing territories Between 2020 and 2023 demand for Turkish series grew by 184% compared with 73% for Korean dramas LATAM & US2(50%) MENA (20%) CEE & South Europe (25%) Other(5%) 1 USA 2 United Kingdom 3 Türkiye Key metrics for Türkiye 2018 2022 2024Fc.350c.600c.1,000Scripted series exports (USD mn) Reach 750 mn+ people Broadcast in130+countries 15 Source: Company…with strong Turkish drama offerings across the globe Across platforms including Free TV and Digital LATAM & US HISPANIC MENA Europe Other regions 16 Source: Company information, Variety, The Guardian, Nikkei Asia, The EconomistTürkiye is the 3rdlargest exporter of scripted series globally… Hit Turkish movies and series garnered global success Customer perceptions of Turkish content “Powerful storylines” “Universal feelings” “Dramatic characters” “Authenticity” “High quality production”“Thanks to international sales and global viewership, Türkiye is second only to the US in worldwide TV distribution –finding huge audiences in Russia, China, Korea and Latin America. At present, Chile is the largest consumer of dizi in terms of number of shows sold, while Mexico, then Argentina, pay the most to buy them” “After conquering eyeballs in the Middle East, Latin America and Europe, Turkish TV dramas are now reaping stellar ratings in the U.S. on Spanish-language media giant Univision. The appetite for Turkish novelasis so strong that Univision’s new free streaming service, PrendeTV, features a channel called “Amor Turco” (Turkish Love) specifically dedicated to that series“ “Exports rose from a modest $100,000 in 2008 to $500 million in 2020, making Türkiye the second- largest exporter of TV content, surpassed only by the U.S. According to Eurodata, Turkish shows now comprise 25% of the imported shows around the world, and are expected to top $1 billion in global sales in 2023” “Türkiye is now the third-biggest exporter of scripted series in the world—behind only America and Britain. Between 2020 and 2023 global demand for Turkish shows grew by 184%, compared with 73% for Korean dramas, according to Parrot Analytics “ September 13, 2019, The Guardian May 21, 2021, Variety June 13, 2021, Nikkei Asia February 15, 2024, The Economist 17 Source: Company…with a very complicated market for drama producers Highly competitive primetime broadcasting… …with very diversified local female target audience and appealing for global audience at the same time III. Operationaloverview 19Business model: Integrated and repeatable design for global scalability Combining creativity with operational
Eurodata, Turkish shows now comprise 25% of the imported shows around the world, and are expected to top $1 billion in global sales in 2023” “Türkiye is now the third-biggest exporter of scripted series in the world—behind only America and Britain. Between 2020 and 2023 global demand for Turkish shows grew by 184%, compared with 73% for Korean dramas, according to Parrot Analytics “ September 13, 2019, The Guardian May 21, 2021, Variety June 13, 2021, Nikkei Asia February 15, 2024, The Economist 17 Source: Company…with a very complicated market for drama producers Highly competitive primetime broadcasting… …with very diversified local female target audience and appealing for global audience at the same time III. Operationaloverview 19Business model: Integrated and repeatable design for global scalability Combining creativity with operational capabilities and excellence From script to screen —and across the worldBuilt to create. Proven to deliver. Ready to scaleFrom concept to completion —at speed, with qualityDesigned for co-productions. Engineered for repeatability Development & Creative selection Pre-production & Execution planning Production, Delivery& Monetization Operational mobilization Goal: Demonstrate Ay Yapım’sreadiness and discipline before any camera rolls —even without a licenseProduction commitment ahead of licensing Digital vs Free TV planning models Pre-production timelinesIdea generation & IP sourcing Goal: Show the disciplined, high-quality creative engine behind every Ay Yapım productionScript evaluation & greenlighting Creative governanceHigh-velocity production model Goal: Build trust in Ay Yapım’sability to deliver high-quality content at scale, monetize globally and retain IP leverageIn-house & outsourced post- production Global distribution strategy Monetization & IP control Source: Company 20 Source: CompanyBusiness model: Integrated and repeatable design for global scalability Development & Creative selection A B CGoal: Show the disciplined, high- quality creative engine behind every Ay Yapım productionIdea generation & IP sourcing →Projects originate from CEO Kerem Çatay, in-house talent or are adapted from proven international formats →Idea funnel includes original pitches, format acquisitions and global trend tracking →Scripts are aligned to platform needs (Free TV vs Digital), genre gaps and audience insightsScript evaluation & greenlighting →c.50 projects are evaluated annually by CEO, Ekrem Çatayand Drama Director →Only 3–4 projects/year are selected for Free TV and 3–4 for Digital platforms →Scripts undergo 3–4 structured revision rounds before approval →Decision criteria include story strength, casting value, timing and format potential →Projects can be paused and reactivated depending on market appetite Creative governance →Final greenlight decisions are made collaboratively by the CEO, head writer and lead director →All greenlit projects are aligned with Ay Yapım’screative brand, narrative integrity and monetization outlook 21 Source: CompanyBusiness model: Integrated and repeatable design for global scalability Pre-production & Execution planning Goal: Demonstrate Ay Yapım’sreadiness and discipline before any camera rolls —even without a licenseOperational mobilization →Each project is assigned a dedicated executive producer upon greenlight →Casting begins immediately, prioritizing recurring talent from Ay Yapım’s trusted network →Crew selection (cinematography, art, lighting, ADs) is made based on project fit and past performance →Location scouting is guided by narrative and logistical efficiencyProduction commitment ahead of licensing →Ay Yapımoften begins pre-production before a license deal is secured →Confidence comes from proven placement record and quality assurance →Most projects ultimately find a buyer before production begins or during early shoot phaseA B D C Pre-production timelines →Typical timeline: 2–6 months, depending on scope, genre and cast →Legal, scheduling and budgeting run parallel to creative refinementDigital vs Free TV planning models Digital platforms Free TV Locked scripts pre-approvedWeekly revisions based on ratingsScript flexibility 40–60 mins 135 minsEpisode length 8–12 episodes, pre-structuredIndefinite / open- endedSeason structure Contracted per episode (WGA- style)Weekly updatesWriter model 22 Source: CompanyBusiness model: Integrated and repeatable design for global scalability Production, Delivery & Monetization Goal: Build trust in Ay Yapım’sability to deliver high-quality content at scale, monetize globally and retain IP leverageHigh-velocity production model →Free TV episodes (135 mins) produced in c.5–7 days →Digital series produced per locked script, with c.5 days turnaround per episode →Production teams include 110–130 freelance professionals, often recurring collaborators →Ay Yapımexecutive producers oversee execution, quality and delivery controlIn-house & outsourced post-production →Editing, sound, VFX, and color handled internally or by longstanding vendor partners →Final content packaged per platform/broadcaster specs (HD, HDR, subtitle-ready, platform cuts)A B D C Monetization & IP control →Ay Yapımoften starts projects before signing distribution deals —driven by conviction and reputation →Legacy titles monetize long-tail via YouTube, AVOD, format sales and remakes →Scripted IP rights retained for global remake licensing; Ay Yapımprovides adaptation kits and creative supportGlobal distribution strategy →Free TV projects placed with Turkish broadcasters →Digital distribution managed via Doğuş (until March 2026) →International licensing via MADD, Intermedya, and EcchoRights 23 Source: CompanyBusiness model: Integrated and repeatable design for global scalability Case study: Yargı; Proven excellence and global success story Domestic success & international sales boom →Year: 2021 -2024 →Genre: Action →Writers: –Sema Ergenekon Sold in 120+ countries # of episodes: 95 Library sales will continue 10-12 years Total hours aired: c.215→Actors/Actresses: –Kaan Urgancıoğlu –Pınar Deniz Domestic success & international sales boom Yargıhas a remake in Greece on Antenna TV International Emmy Award 2023 24 Business model: Integrated and repeatable design for global scalability Case study: Cesur veGüzel; Global co-production powerhouse La Encrucijada/ Remake of Brave & Beatiful Release date July 2 2025Channel Antena 3 (A3) / SPAIN Broadcast days Wednesday & Thursday Start / End time 23:15 -00:16 Duration 60 minutes -60 eps. The series became the prime time (22.00-24.00) leader, standing out the only program to reach a 10% share during this slot Co-production with Secuoyain Spain —35% IP retained by Ay Yapım Source: Company 25 Source: CompanyFlexible models catering needs of different business partners backed by… Free TV SVOD Global productions IP ownership: Ay Yapımretains full IP rights since 2012 Licensing structure: Channels receive 5–7 year licenses; digital and international revenues are shared 50 / 50 during this period Revenue model: Primary income comes from Free TV revenues, branded product integrations and shared international/digital sales during license term Post-license monetization: After license expiry, all rights revert to Ay Yapım Content lifecycle: Cancelled series may later be monetized via digital or international platforms Ratings dependency: Project continuation is decided after the first 3–4 episodes, based on real-time rating Script process: Weekly scripts are revised according to audience
share during this slot Co-production with Secuoyain Spain —35% IP retained by Ay Yapım Source: Company 25 Source: CompanyFlexible models catering needs of different business partners backed by… Free TV SVOD Global productions IP ownership: Ay Yapımretains full IP rights since 2012 Licensing structure: Channels receive 5–7 year licenses; digital and international revenues are shared 50 / 50 during this period Revenue model: Primary income comes from Free TV revenues, branded product integrations and shared international/digital sales during license term Post-license monetization: After license expiry, all rights revert to Ay Yapım Content lifecycle: Cancelled series may later be monetized via digital or international platforms Ratings dependency: Project continuation is decided after the first 3–4 episodes, based on real-time rating Script process: Weekly scripts are revised according to audience feedbackIP ownership: Varies by platform →Netflix owns the IP →Amazon: Ay Yapımretains ownership with exclusivity windows →Disney: Ay Yapımretains IP ownership Revenue model: Primary income is generated through two financial structures —either a cost-plus model with a producer fee, or a fixed total fee that includes the producer’s markup Revenue sharing: When Ay Yapımretains IP rights post-delivery, the standard model is a 50– 50 split of revenues generated after delivery Resale rights: After 3 years, Ay Yapımcan resell digital content to non-competing platforms or Free TV Secondary monetization: YouTube, Dailymotion, Facebook, PuhuTV, and TikTok offer additional income streams (e.g., ads, brand integration) Script process: Scripts are finalized in pre- production; no weekly revisions or real-time feedback loopsFormat ownership: IP remains with Ay Yapım if format originates internally; otherwise, Ay Yapımacts as outsourced producer →Strong potential to maximize revenue generation from IP with remakes Rights structure: Sales executed through limited-time licenses; Ay Yapımretains control over global strategy Revenue model: While revenue streams vary by project structure, a cost-plus model is most commonly used for local remakes and outsourced productions Revenue sharing: If Ay Yapımholds the IP rights to the produced or adapted content, post-delivery revenues are shared equally on a 50–50 basis Distribution strategy: Older titles sold via Intermedya/EcchoRights; new titles managed by MADD (Ay Yapım& Med YapımJV) Regional focus: Strategic presence in MENA and Spain through Ay YapımKSA (joint venture with MBC) and AyLuna Remake potential: Strong demand for Ay Yapım original scripts and locally produced series in Gulf markets (e.g., “Alasha” in Saudi Arabia) 26 Source: Company…creative leadership leading the whole process from seed to screens… Founder-driven creative authority Collaborative script development engine Proven cross-market adaptation capabilitiesFlexible execution model with deep talent bench→Led by renowned producer Kerem Çatay, ensuring experienced leadership at the helm →Core creative team at Ay Yapımcentrally oversees all key creative decisions →End-to-end control across: −Script development & amendments −Casting −Visual style and direction →Hands-on supervision throughout the production lifecycle, ensuring consistency and premium quality→Strong partnerships with leading writers, fostering long-term creative collaboration →Early-stage concept testing to refine ideas before full development →Tailored writing teams, especially effective for weekly Free TV formats →Supports sustained creative output with consistent tone and quality →Enhances adaptability across platforms and audience segments →Production network of 110–130 freelance professionals, offering flexibility and scale →Coordinated by executive producers who manage day-to-day execution →Operates under Ay Yapım’screative supervision, maintaining brand and quality standards →Enables efficient scaling across multiple concurrent productions and formats →Attracts top-tier talent based on Ay Yapım’sindustry reputation and consistent commercial→Proven track record of localizing and leading productions in diverse markets (e.g., Saudi Arabia, Spain) →Leverages Ay Yapım’sbrand strength and creative standards to meet regional content and cultural expectations →Ay Yapımbrings international production capability with a proven ability to run local sets and integrate its talent ecosystem with top local professionals 27 Source: Company…with a robust and strategically orchestrated creative ecosystem Not a supplier –a creative integrator Ay Yapımowns and directs the full creative lifecycle, from idea to global deliveryThis ensures complete control over storytelling quality, creative consistency, and brand identity Multi-layered, high- trust execution model A freelance network of 110–130 professionals (directors, producers, editors) are deployed repeatedly under the leadership of Executive ProducersThis model enables speed and flexibility, while preserving reliability through long-term collaboration Centralized creative command A compact leadership team drives all key creative decisions —from scripts and casting to tone and directionThis keeps every production aligned with Ay Yapım’ssignature quality and audience expectations Platform-and format- agnostic execution The ecosystem delivers 135-minute weekly FTA episodes, 8-episode digital series, and culturally localized productionsAy Yapımcan serve traditional broadcasters, global platforms, and regional buyers —without operational friction Built for scale without compromise This model enables Ay Yapımto run 3– 6 series in parallelIt allows the company to capture more market share while maintaining creative control and delivery quality Producing 10–12 titles annually across diverse categories through Ay Yapım’shigh-efficiency model 28 (1) International format sale and a portion of global productions are considered as remake Source: CompanyProven export track record… The Company is a five-time top TV exporter with 25+1international remakes of its original series Content sold Over 4,500 hoursNamed Türkiye’s top cultural services exporter To 130+ countriesof scripted drama exported6x winner (HIB awards) Remakes & format exports FTA and digital compatibility Repeat licensing strength Cultural resonance30+ scripted remakes of Ay Yapımoriginals in markets like Spain, Mexico, India, France, Greece, Romania and Saudi Arabia Iconic titles like Fatmagül, Kara Para Aşk, Ezel have been re-licensed across multiple platforms and languages Formats work for both weekly broadcast (135') and streaming platforms (3x45’ version), increasing distribution versatility Emotionally rich storylines, strong female leads, and universal conflicts have made Ay Yapımtitles global audience favorites Ay Yapım’slibrary is not just sold —it’s resold, remade, and reshaped across cultures. This is export IP with compounding global value Multiple series sold In 3+ licensing cycles across territories 29 Ay Yapım’s localization strategy and execution in Saudi Arabia Source: Company…with a strong growth potential further enriched by MENA expansion Stiletto Type Episodes Productionyear Timeslot Status Producedby Type Episodes Productionyear Timeslot Status Producedby Type Episodes Productionyear Timeslot Status Producedby Type Episodes Productionyear Timeslot Status Producedby Al Ameel Alasha Street Aser: Adapted from Stiletto Vendetta : 90 x 45 mins : 2022 : Primetime : Finished : Ay Sanat : Adapted from Insider : 87 x 45 mins : 2024 : Primetime : Completed : Ay Sanat :
and universal conflicts have made Ay Yapımtitles global audience favorites Ay Yapım’slibrary is not just sold —it’s resold, remade, and reshaped across cultures. This is export IP with compounding global value Multiple series sold In 3+ licensing cycles across territories 29 Ay Yapım’s localization strategy and execution in Saudi Arabia Source: Company…with a strong growth potential further enriched by MENA expansion Stiletto Type Episodes Productionyear Timeslot Status Producedby Type Episodes Productionyear Timeslot Status Producedby Type Episodes Productionyear Timeslot Status Producedby Type Episodes Productionyear Timeslot Status Producedby Al Ameel Alasha Street Aser: Adapted from Stiletto Vendetta : 90 x 45 mins : 2022 : Primetime : Finished : Ay Sanat : Adapted from Insider : 87 x 45 mins : 2024 : Primetime : Completed : Ay Sanat : Adaptation of a bestseller Saudi novel : 30 x 45 mins (season 1) : 2025 : Primetime : Next season is confirmed : Ay YapımKSA : Adaptation from Ezel : TBD x 45 mins : 2025 : Primetime : On air : Ay SanatStrategic shareholding behind Ay Yapım’sSaudi platform→Objective: Localize Turkish creative excellence for Saudi and broader GCC audiences →Execution: Launchedadedicatedproductionarm,AyYapımKSA,toleadlocal contentcreation →Productionmodel: ASaudi-basedteam of 80–90 professionalswasmobilized fromTürkiye,operatingunderAyYapım’screativeleadership →Flagship project: Alasha Street (30 episodes), aired during Ramadan 2025, becamethe#1showinMENA →Short-termplans: Season2&3ofAlashaStreetgreenlitforthenextRamadan −A second original series with deep cultural relevance is in development ShareholdingAy Yapım KSAAy Yapım 70.0%ARA 30.0% 30 Source: CompanyProven format appeal with 30+ global remakes Case study: Remakes delivering growth and success with strong growth potential Ezelhas remakes in Romania, Mena, Armenia, Mexico, Russia and IndiaFatmagulhas remakes in Spain and India →The Spanish version Albais on air right now Alba Spain/antena3 Amla India/StarPlus Yago Mexico/ UniMás Antsanoty Armenia Gunaah India/Disney+ Hotstar Recognize Me, If You Can Russia/Россия Vlad Romania/ PRO TV 31 Adaptation mastery with global impact A cultural crossover that ruled Ramadan primetime Al-Asha Street –Season 1 adapted from a Saudi Novel Release date March 1, 2025Channel Shahid & MBC (Mena) Broadcast days Whole week (1 ep. Per day) Duration 45 minutes -30 Episodes During Ramadan in Middle East and Worldwide Al Asha became the 1stseries which remained its continuous success. After 30 episodes’ first run broadcast Al Asha was still trending in many countries 29 mnviewers people reached through Shahid & MBC Source: Company 32 Format-driven growth with unstoppable remake momentum Ay Yapım’s format expertise turns iconic IP into record-breaking regional success Aser / Remake of Ezel Release date April 7 MBC , April 13 Shahid Channel Shahid & MBC (Mena) Broadcast days Daily Duration 45 minutes -90 Episodes After 10thepisode’s broadcast Aser became the #1 series in most watched category of Shahid Source: Company 33 Source: CompanySelection criteria for target countries derived from multi-dimensional analyses Target market framework Marketattractiveness& scale Market opportunity Ease of marketaccess03 02 01 →Countries purchasingTV seriesfrom Türkiye →Population size →Total number of films →Box officerevenueper capita →Internet usage rate in the population →Internet speed infrastructure →Cinema attendancerate →Film productionmarketsize →Television sales volume→Countries where Ay Yapımhas made sales →Google searchscore for "Turkish TV Drama" →Percentage of ethnicpopulation culturallyclose to Türkiye →Perception of “Made in Türkiye” →Countries importingfrom Türkiye →Change in GDP(past 5 years) →Change in disposableincomeper capita(past 5 years) →Torrent downloadrate per capita→Number of people not participating in employment →Disposable income per capita →Press freedom index →Gross domestic product →Ease of doing business →Rule of law ranking 34 Source: CompanySecuring seamless execution and delivering consistent quality and success ProminentTurkish film and television producer, has been instrumental in shaping the Turkish TV industry and has produced some of the most successful and internationally recognized Turkish dramas Quality and innovation driven managementImproved brand perception & sustained market leadershipFocus on sustainable growthyears of work experience years of work experience years of work experience years of work experience years of work experience Ex-DigiturkCCO, expert in content & media strategyex-GM at Yeni Asır & Yeni Yüzyıl, at Ay Yapım since 2005ex-U.N. Ro-Ro/DFDS, strong multinational finance leaderex-FOX Türkiye drama lead, award-winning playwright & screenwriterex-ATV production & external resources lead at Ay Yapımsince 2002Meltem Sayın Vargı COO, Business Development & StrategyHasan Mithat Topaç General ManagerÇağrı Yazar CFOErdi Işık Drama Development DirectorFatma Şapçı Director of Acquisitions, Sales & Formats 30+ 50+ 25+ 10+ 30+Kerem Çatay Founder&CEO years of work experience20+ IV. Strategic growth pillars 36 Proven success in Free TV will continue Completing presence with SVOD Next generation growth to come from Global productions Direct boost to profitability with Digital revenues High-value library with global appeal Source: CompanyStrategy built on 5 main pillars to deliver continousgrowth and profitability Strong model built on key pillars →IPs continue generating income for 10–15 years through international resales, remakes and digital syndication; considerable value creation for selected projects after year 5: c.30% of the total revenue generated over years coming after year 5 →The business plan excludes revenue from library sales , which could serve as a major source of incremental growth→Current 50% revenue share contract ends in early 2026 , with a planned decline to 15% boosting revenue growth significantly →Digital revenue gross margin is to remain stable at c.60% throughout the business plan period →Digital revenue is currently derived from platforms such as YouTube, Dailymotion, Facebook, and PuhuTV →Potential upside from TikTok has not been factored into the business plan→1–2 MENA-focused titles produced annually with growing traction and commercial success →Latin America expansion underway with 3 new projects , following Ay Yapım’sinitial entry via Persona and deepening collaboration with top regional screenwriters →Global productions revenue is projected to grow, primarily driven by Ay YapımKSA projects →The business plan reflects only Ay YapımKSA productions , with no additional partnerships or new projects assumed→5-6 premium SVOD projects are expected to be delivered annually for platforms like Netflix, Amazon, and Disney+ →Average SVOD gross margin expected to remain at 15%, in line with historical levels →Supported by a stable annual production capacity, averaging 4 series and 1–2 movies→Consistent market leader in Turkish Free TV, producing 3–4 series annually →At least 2 become major hits , enabling profitable international and digital sales →4 series per year expected to generate approximately 120+ episodes annually in the coming years IVII IIII VProducing 10–12 titles annually across diverse categories through Ay Yapım’shigh- efficiency model 37
regional screenwriters →Global productions revenue is projected to grow, primarily driven by Ay YapımKSA projects →The business plan reflects only Ay YapımKSA productions , with no additional partnerships or new projects assumed→5-6 premium SVOD projects are expected to be delivered annually for platforms like Netflix, Amazon, and Disney+ →Average SVOD gross margin expected to remain at 15%, in line with historical levels →Supported by a stable annual production capacity, averaging 4 series and 1–2 movies→Consistent market leader in Turkish Free TV, producing 3–4 series annually →At least 2 become major hits , enabling profitable international and digital sales →4 series per year expected to generate approximately 120+ episodes annually in the coming years IVII IIII VProducing 10–12 titles annually across diverse categories through Ay Yapım’shigh- efficiency model 37 (1) Please refer to selected examples on this page; details are also provided in the excel pack (2) Calculated as Revenue (sumof all four parts) minus Distributor commissions, Digital share & royalties and International share & royalties over Production cost Source: CompanyI. Proven success in Free TV will continue Delivered 56 scripted series over the past 21 years, totaling 2,050 episodes Sustainably producing 3–4 new series annually, equivalent to c.120 episodes per year c.40% of scripted series became successful productions; c.70% achieved either successful or standard status High-performing productions are key profitability drivers, with returns up to c.1.8x on production costRevenue & cost analysis1(USD mn) Return on production cost2Successful productionsYargi Uzak Şehir Aile Gaddar20 2 49 Revenue 72 22 5 28 Cost 57 26 2 4 33 Revenue 66 23 3 18 Cost 47 11 1 22 Revenue 34 13 2 9 Cost 24 9 1 4 0 Revenue 13 9 0 2 Cost 121.7x 1.8x 1.8x 1.2x InternationalDigital IntegrationFree TV Inter. share & royaltiesDigital share & royalties Distributor com.Production costRevenue CostStandartproductions 38 Source: CompanyII. Completing presence with SVOD Consistent premium pipeline Business plan assumes Selected examples Netflix 2028 2027 2026 Production type 2 2 2 Series - - 1 Movies Disney 2028 2027 2026 Production type 1 1 2 Series 1 1 1 Movies 1 - 1 Special model 2028 2027 2026 Production type 1 1 - SeriesOther platforms2–3 SVOD projects delivered annually , including both series and feature films 19 productions since 2020 (12 series and 7 films), underscoring consistent output Ay Yapımdoes not retain IP for Netflix or other platforms, but uniquely retains IP rights on Disney productions —a significant long-term monetization advantage 39 Source: CompanyIII. Next generation growth to come from Global productions Strong track record of Global productions 2025–2027 strategic growth priorities Ay Yapımis evolving from Türkiye’s top content exporter into a global co-production partner — with a model built to scale across cultures, formats, and platforms 25+ Remakes of Ay Yapım originals→Fatmagül, Kara Para Aşk, Ezel, Yargi, Stiletto etc. Multi-awarded exporter→Türkiye’s top scripted content exporter –5x HIB award winner Formats recognized for→Strong character arcs →Universal themes →High remake adaptabilityExpand Saudi Arabia production hub→Deepen content pipeline with regional partners →Develop Arabic-language originals & Ay Yapım-branded mini-series Co-productions with Global studios & platforms→Partner with international producers for dual-market content →Focus on social thrillers, dramas, and female-led storiesAdapted in 10+ countries→Including Mexico, India, Spain, France, Greece, Saudi Arabia, and more Develop platform originals in English & Spanish→Localized shows with global appeal →Tap into SVOD/AVOD growth in Latin America, MENA and Southeast Asia Establish Ay Yapımas a global creative brand→Promote director and IP-driven formats →Position company as the “Shonda Rhimes / Made in Türkiye” for international buyers 40 Source: CompanyIV. Direct boost to profitability with Digital revenues Proven digital model built on global IP and platform reach Ay Yapım’sshift to platform control and growing digital viewership unlocks a scalable, high-margin revenue stream —with upside still untapped to grow with focused strategy Gross margin →c.60% margin Payment cycle efficiency →90 days → 30 days Library revenue share →60% of digital revenue sourced from archive content which is expected to further increase with targeted attention →50 series currently monetized on YouTube, 43 of which are managed by DoğuşYouTube Views → 5.7 million →180% growth between 2024 - 20282024 2028→From March 2026, Ay Yapımwill shift to a new digital distribution structure, reducing the distributor’s revenue share from 50% to 15% →New model enables direct YouTube revenue collection by Ay Yapım, replacing third-party flow through Doğuş →Transition of 39 series to Ay YapımCMS by March 2026; residual 5 series remain under shared monetization until 2028 →All new series post-2026 will be fully controlled by Ay YapımContract shift toward a more profitable Digital model Inherent revenue growth powered by YouTube →Youtubeas primary driver of digital revenue powered by high-quality content →YouTube views to triple from 5.7M (2024) to 16.0M (2028) Unlocking untapped growth from emerging platforms →TikTok has strong potential for growth and monetization via short- form content and product integrations 41 Source: CompanyV. High-value library with global appeal A. Built for long-term monetization B. Strategic rights positioningAy Yapım’sIP library is a resilient monetization engine —driving Digital revenue, Global licensing, and Remake activity. This upside is not currently reflected in base-case projections →IP portfolio spans Free TV and Digital (SVOD) formats with wide cultural adaptability →Titles like Fatmagül, Kara Para Aşk, and Ezel continue to generate remake interest and licensing demand →Classical hits are frequently remade or re-sold to new territories and platforms →Ay Yapımretains post-exclusivity rights on major platform originals (e.g. Disney+, Amazon) →Enabling multi-window monetization after primary run — including YouTube, PuhuTV, and secondary local broadcasters →Resell rights unlocked across non-competing local and international markets C. Co-productions with global partners Selected examples →Original IP co-developed with international studios ensures built- in global format value. Plus, global productions allow Ay Yapımto retain remake rights and future distribution upside →Spanish co-production La Encrucijada(with Secuoya) —prime- time hit, remake of Cesur ve Güzel, 35% IP retained →New series Spanish co-production Butterfly Labirynt (with Secuoya) in production, 50% of IP retained →Pipeline: Working with leading Latin American/ Spanish writers; 3 series + 1 movie pipeline (2 remakes of Ay Yapımoriginals, 1 original series and 1 movie with a renowned Turkish actor) 42 Source: CompanyProven excellence and global success story Case study: Kara Para Aşk Domestic success & international sales boom Global
including YouTube, PuhuTV, and secondary local broadcasters →Resell rights unlocked across non-competing local and international markets C. Co-productions with global partners Selected examples →Original IP co-developed with international studios ensures built- in global format value. Plus, global productions allow Ay Yapımto retain remake rights and future distribution upside →Spanish co-production La Encrucijada(with Secuoya) —prime- time hit, remake of Cesur ve Güzel, 35% IP retained →New series Spanish co-production Butterfly Labirynt (with Secuoya) in production, 50% of IP retained →Pipeline: Working with leading Latin American/ Spanish writers; 3 series + 1 movie pipeline (2 remakes of Ay Yapımoriginals, 1 original series and 1 movie with a renowned Turkish actor) 42 Source: CompanyProven excellence and global success story Case study: Kara Para Aşk Domestic success & international sales boom Global remakes→Year: 2014 -2015 →Genre: Drama →Writers: ‒Eylem Canbolat ‒Sema Ergenekon ‒Ahmet Katıksız Library sales will continue for more yearsEarned c.USD 32mnwith international sales11-year revenue generation track record # of episodes: 54 Total hours aired: c.120→Actors/Actresses: ‒Tuba Büyüküstün ‒Engin Akyürek Kara Para Aşkhas two remakes in Mexico and India Sold in 130+ countries 43 Domestic success & international sales boom Global remakesProven excellence and global success story Case study -Fatmagül Source: Company →Year: 2010 -2012 →Genre: Drama →Writers: ‒Ece Yörenç ‒Melek Gençoğlu Earned c.USD 28 mnwith international sales15-year revenue generation track record # of episodes: 80 Total hours aired: c.180 Remake Alba in Spain on antena3 Remake Amla in India on StarPlus Alba reached 150 mnhours viewed on Netflix (higher than all Turkish-language series of Netflix) →Actors/Actresses: ‒Beren Saat ‒Engin Akyürek Sold in 136+ countries V. Financial overview 45 →Ay Yapımprepares three sets of financial information with fiscal year being the 12-month period as of January 1stof the calendar year, ending on December 31stof the calendar year (i.e., 01.01.2024-31.12.2024) –Statutoryaccounts : Ay Yapım’sstatutory accounts are prepared in accordance with the Turkish Commercial Code for tax filing purposes –Managementaccounts : Ay Yapımkeeps its Management accounts in USD, IFRS-like reporting except for costs for Domestic productions, SVOD performance, Global productions and IFRS-16 for which detailed reconciliations have been provided in excel pack –IFRSfinancials : Ay YapımIFRS financials issued on a yearly basis are audited by Deloitte since 2023 –The IFRS financial statements are prepared in accordance with IAS-29 in 2023, as the cumulative inflation in Türkiye has exceeded 100% over the past three years, making the application of IAS-29 mandatoryProposed Transaction scope includes 100% share sale of Ay Yapım, as described in Executive Summary →Ay YapımManagement tracks its consolidated operational performance under 4 main segments; (i) Domestic productions, (ii) SVOD productions, (iii) Global productions and (iv) Others →Management reports for segments go up to the gross profit level which comprises segmental costs, and they follow OPEX for theCompany under two main categories; sales and marketing and general administrative →All historical financials in this section are derived from Management accounts which are then reconciled to IFRS accounts →Management tracks costs for Domestic productions as incurred, rather than capitalizing them and amortizing over five years asrequired under IFRS. For SVOD and Global revenues and costs, Management monitors performance over the lifetime of each series, whereas under IFRS,all costs of a series are recognized once it is releasedHistorical financials presented in this section are based on management accounts, all indexed to 2024 year end and converted to USD with 2024 year end exchange rate →2025B-2028F figures are on the same basis with Management accounts as explained above, presenting management estimates for the forecast period in USD (excluding IFRS-16 implementation) →Management strongly believes there are untapped growth and value creation areas beyond the business plan as presented in thisdocument, especially in international markets with a wider and stronger distribution network and global production capabilities2025 Budget and 2026-2028 forecasts presented in this section are prepared by Ay Yapımmanagement, as per below Basis of preparation Source: CompanyAll details for the financial section is provided in the excel pack. Please refer to the excel for all details 46 (1) Years 2022–2024 are based on IAS 29–applied management financials, while 2025–2028 figures are presented on a non–IAS 29 basis using management accounts in hard currency. Historical results are restated to 31.12.2024 purchasing power and converted to USD at the 2024 year-end USD/TL exchange rate of 35.26. Forecast figures for 2025–2028 are converted to USD using estimated annual average USD/TL exchange rates (2) No IFRS-16 application; rent is included in cash EBITDA calculation as an expense Source: Company, Deloitte 2024 audit report, Management accountsRemarks Net sales1(USD mn) 7294 103131 138155 1682526314536522424 1317 2022A4 2023A14 2024A19 2025F13 2026F 2027F 2028F105126145183199218246 Cash EBITDA1, 2(USDmn) 20.4%Cash EBITDA, a key performance metric, is calculated as the Company’s EBITDA for a given year minus 100% of the production investments of the relevant year for series already capitalized as IP rights. Unlike the standard IFRS approach, which amortizes such investments over time, this measure provides a clearer view of the Company’s cash generation performanceGrowing topline fueled by increasing production volume as well as increasing revenue generation from existing products Domestic productions OTT productions Global productions Other 21 151125354149 2022A 2023A 2024A 2025F 2026F 2027F 2028F11.9% 7.8% 13.8% 17.8% 19.0% 20.0% Cash EBITDA margin (%)Overview of Net sales and Cash EBITDA This approach is highly conservative for a fast-growing company, as it expenses 100% of the capex for a given series in the year incurred, despite the series’ potential to generate substantial cash flows in subsequent years VI. Appendix 48 Source: CompanyFull list of Free TV series Broadcaster Distributor IP owner # of remakesDistribution rightsAy Yapim format# of episodesProduction yearName# Atv Atv Atv 16 2004 24 Saat 1 Show Tv Show Tv Show Tv 52 2004 Kadin Isterse2 Atv Atv Atv 7 2005 Dolunay 3 Kanal 7 Kanal7 Kanal 7 27 2005 Zeynep 4 Kanal D Kanal D Kanal D 174 2006 Yaprak Dökümü5 Atv Atv Atv 6 2006 KadınSeverse6 Kanal D Kanal D Kanal D 36 2007 MenekşeIle Halil 7 Show Tv Show Tv Show Tv 75 2007 DudaktanKalbe 8 Trt Trt Trt 13 2007 AşkYeniden9 Kanal D Kanal D Kanal D 3 79 2008 AşkıMemnu10 Atv Atv Atv 29 2009 Samanyolu 11 Atv Ecchorights Atv 5 71 2009 Ezel 12 Kanal D Kanal
VI. Appendix 48 Source: CompanyFull list of Free TV series Broadcaster Distributor IP owner # of remakesDistribution rightsAy Yapim format# of episodesProduction yearName# Atv Atv Atv 16 2004 24 Saat 1 Show Tv Show Tv Show Tv 52 2004 Kadin Isterse2 Atv Atv Atv 7 2005 Dolunay 3 Kanal 7 Kanal7 Kanal 7 27 2005 Zeynep 4 Kanal D Kanal D Kanal D 174 2006 Yaprak Dökümü5 Atv Atv Atv 6 2006 KadınSeverse6 Kanal D Kanal D Kanal D 36 2007 MenekşeIle Halil 7 Show Tv Show Tv Show Tv 75 2007 DudaktanKalbe 8 Trt Trt Trt 13 2007 AşkYeniden9 Kanal D Kanal D Kanal D 3 79 2008 AşkıMemnu10 Atv Atv Atv 29 2009 Samanyolu 11 Atv Ecchorights Atv 5 71 2009 Ezel 12 Kanal D Kanal D Kanal D 2 80 2010 Fatmagül 13 Kanal D Kanal D Kanal D 1 80 2011 Kuzey Güney 14 Kanal D Intermedya Kanal D 37 2011 Al Yazmalim15 Atv Ecchorights Ay Yapım 115 2012 Karadayi 16 Atv Ecchorights Atv 4 25 2012 Son 17 Star Tv Intermedya Ay Yapım 25 2013 20 Dakika 18 Star Tv Warner Wb 77 2013 Med Cezir 19 Atv Intermedya Ay Yapım 2 54 2014 Kara Para Aşk20 Star Tv Ecchorights Ay Yapım 21 2014 Kurt Seyit 21 Kanal D MADD Ay Yapım 13 2015 BeşKardeş22 Atv MADD Ay Yapım 9 2015 AnalarVe Anneler 23 Star Tv Intermedya Ay Yapım 2 74 2015 Kara Sevda 24 Star Tv Ecchorights Ay Yapım 1 32 2016 Cesur Ve Güzel 25 Show Tv Ecchorights Ay Yapım 1 39 2016 Içerde26 Now MADD Ay Yapım 22 2017 Bana SevmeyiAnlat27 Atv Ecchorights Ay Yapım 20 2017 Bu ŞehirArkandanGelecek28 Show Tv Intermedya Ay Yapım 1 131 2017 Çukur29 Star Tv MADD Ay Yapım 45 2017 UfakTefekCinayetler30 49 Full list of Free TV series Broadcaster Distributor IP owner # of remakesDistribution rightsAy Yapim format# of episodesProduction yearName# Atv MADD Ay Yapım 6 2018 8. Gün 31 n.a. Wb Wb 6 2018 Şahin Tepesi32 Show Tv MADD Ay Yapım 24 2018 Çarpişma33 Star Tv MADD Ay Yapım 21 2019 Kuzgun 34 Star Tv MADD Ay Yapım 20 2020 Babil 35 Show Tv MADD Ay Yapım 10 2020 Zemheri36 Star Tv MADD Tf1 45 2020 MenajerimiAra 37 Show Tv MADD Tf1 1 28 2020 Alev Alev38 Star Tv MADD Ay Yapım 25 2021 Ada Masali 39 Kanal D MADD Ay Yapım 1 95 2021 Yargi 40 Show Tv MADD Ay Yapım 28 2021 ÜçKuruş41 n.a. N.A. Ay Yapım 8 2021 Cam Tavanlar42 n.a. N.A. Ay Yapım 8 2021 Kahraman Babam43 Show Tv MADD Ay Yapım 30 2022 Baba 44 Show Tv MADD Ay Yapım 15 2022 Oğlum45 Fox+ MADD Paramount 9 2022 Darmaduman46 Show Tv MADD Ay Yapım 30 2023 Aile 47 Kanal D MADD Ay Yapım 13 2023 Ya ÇokSeversen 48 Fox MADD Ay Yapım 30 2023 ŞahaneHayatim49 Show Tv MADD Ay Yapım 8 2023 Ne GemilerYaktim50 Kanal D MADD Ay Yapım 6 2023 Bir DerdimVar51 Fox MADD Ay Yapım 20 2024 Gaddar52 Now MADD Ay Yapım 15 2024 Leyla 53 Show Tv MADD Ay Yapım 15 2024 Deha 54 Kanal D MADD Ay Yapım 8 2024 UzakŞehir55 Atv TBD Ay Yapım 10 2025 BaşkaBir Gün 56 Now TBD Ay Yapım TBD 2025 Kıskanmak57 TBA TBD Ay Yapım TBD Pre-production SevdiğimSensin58 Now TBD Ay Yapım TBD 2025 Sahtekarlar59 Now TBD Ay Yapım TBD Pre-production Ömür Usta60 Source: Company 50 Source: CompanyFull list of SVOD productions Broadcaster Distributor IP owner # of remakesDistribution rightsAy Yapim format# of episodesProduction yearName# Puhu TV MADD Ay Yapım 22 2017 Fi1 Puhu TV MADD Ay Yapım 3 22 2018-2023 Şahsiyet2 Netflix MADD Netflix 16 2020-2021 Love 1013 Netflix MADD Netflix 8 2022 Uysallar4 Netflix MADD Netflix 24 2022-2023 Kuş Uçuşu5 Disney+ MADD Disney 6 2023 Arayiş6 TV+ Miramax Miramax 8 2023 Turkish Detective7 Netflix MADD Netflix 24 2024-2025 Kimler GeldiKimler Geçti8 Disney+ MADD Ay Yapım 6 2025 El Turco9 Netflix MADD Netflix 9 2025 MasumiyetMüzesi10 Disney+ TBD Ay Yapım 8In productionAşk11 Netflix TBD Netflix 8In productionSonra GözlerGörür12 51 Source: CompanyFull list of Global productions Broadcaster Distributor IP owner # of remakesDistribution rightsAy Yapim format# of episodesProduction yearName# HBO MADDViacom / Ay Yapım10 2021 Olvido1 MBC MADD Ay Yapım 1 90 2022 Stiletto Vendetta2 MBC MADD Ay Yapım 87 2025 Al Ameel3 MBC MADD Ay Yapım 90 2025 Aser4 MBC MADD Ay Yapım r 30 2025 Alasha Street5 Antenna 3 / AtresplayerMADD Ayluna %35 60 2025 La Encrucijada6 MBC MADD Ay Yapım 90In productionKara Sevda7 TBDMADD / SecuoyaAy Yapım/ Secuoya90 2025 Butterfly Labyrinth8 52 Source: CompanyFull list of Movies IP Ownership Production type Movie type Production year NameNo. %50 Ay Yapım Mainstream Theatre movie 2011 DedeminInsanlari1 Ay Yapım Mainstream Theatre movie YangınVar2 Ay Yapım Mainstream Theatre movie 2014 Bi KüçükEylül Meselesi3 Ay Yapım Mainstream Theatre movie 2015 Delibal4 Ay Yapım Arthouse Theatre movie 2017 Kirik KalplerBankasi5 Ay Yapım Arthouse Theatre movie 2018 Daha 6 50% Ay Yapım Mainstream Theatre movie 2018 Bizim IçinŞampiyon7 50% Ay Yapım Mainstream Theatre movie 2018 Özgür Dünya8 (%50 revenue share) Arthouse Theatre movie 2019 NasipseAdayiz9 50% Ay Yapım Mainstream Theatre movie 2019 Bir AşkIki Hayat10 50% Ay Yapım Mainstream Theatre movie 2022 Kurak Günler11 50% Ay Yapım Mainstream Theatre movie 2022 Benden Ne Olur12 50% Ay Yapım Mainstream Theatre movie 2023 CenazemizeHoşGeldiniz13 33% Ay Yapım Mainstream Theatre movie 2024 KardeşTakimi14 34% Ay Yapım Arthouse Theatre movie 2025 O Da BirşeyMi15 Acquisition Theatre movie 2016 KardeşimBenim16 TBD Arthouse Theatre movie 2025 Kurtuluş17 Atv TV movie 2004 Tombala18 Atv TV movie 2005 ÇalinanCeset19 Digiturk TV movie 2009 HirçinKiz20 Digiturk TV movie 2009 AşkÜçgeni21 Netflix SVOD 2023 Kül22 Netflix SVOD 2023 Iyi AdaminOn Günü23 Netflix SVOD 2023 KötüAdamin10 Günü24 Netflix SVOD 2023 MerakliAdamin10 Günü25 Netflix SVOD 2023 Boğa Boğa26 Amazon SVOD 2024 Blue Cave 27 Ay Yapım Disney SVOD 2025 Öngörü28 53 Free TV series–Prime time series Source: Company 54 Free TV series–Prime time series Source: Company 55 Free TV series–Prime time series Source: Company 56 SVODproductions Source: Company 57 Remakes Source: CompanyTHE END FATMAGUL EZEL YAG O THE PIT 58 Remakes Source: CompanyPERSONA STILETTO INSIDER FAMILY SECRETS BLACK MONEY LOVE FORBIDDEN LOVE 59 Movies Source: CompanyTheatrical Arthouse 60 Selected awards for
Theatre movie 2016 KardeşimBenim16 TBD Arthouse Theatre movie 2025 Kurtuluş17 Atv TV movie 2004 Tombala18 Atv TV movie 2005 ÇalinanCeset19 Digiturk TV movie 2009 HirçinKiz20 Digiturk TV movie 2009 AşkÜçgeni21 Netflix SVOD 2023 Kül22 Netflix SVOD 2023 Iyi AdaminOn Günü23 Netflix SVOD 2023 KötüAdamin10 Günü24 Netflix SVOD 2023 MerakliAdamin10 Günü25 Netflix SVOD 2023 Boğa Boğa26 Amazon SVOD 2024 Blue Cave 27 Ay Yapım Disney SVOD 2025 Öngörü28 53 Free TV series–Prime time series Source: Company 54 Free TV series–Prime time series Source: Company 55 Free TV series–Prime time series Source: Company 56 SVODproductions Source: Company 57 Remakes Source: CompanyTHE END FATMAGUL EZEL YAG O THE PIT 58 Remakes Source: CompanyPERSONA STILETTO INSIDER FAMILY SECRETS BLACK MONEY LOVE FORBIDDEN LOVE 59 Movies Source: CompanyTheatrical Arthouse 60 Selected awards for Movies Source: CompanyAwards Bi Küçük Eylül Meselesi: 25. Ankara AnationalFilm Festival: Best music, Nil Karaibrahimgil Delibal: 2017 Turkey Youth Awards: Best movie actor, Çağatay Ulusoy One Love: 2020 Golden Palm Awards: Best movie actress, Farah Zeynep Abdullah Daha →2017 Valladolid International Film Festival: Best film, FipresciPrize →2017 Karlovy ınternationalFilm Festival: Best film poster, Sarp Sözdinler You Know Him →2020 Istanbul Film Festival: Best director, Ercan Kesal; Best editing, Ali Aga →2020 Nuremberg Film Festival: Best Actor, Ercan Kesal →2020 Turkish Film Critics Association Awards (Siyad): Best film, Best supporting actress, Selin Yeninci; Best supporting actor, İnanç Konukçu Burning Days →World Premiere at 2022 Cannes Film Festival: Un Certain Regard Award Nominee, Queer Palm Nominee →2022 Ankara International Film Festival: Best Film, Best Bcreenplay, Emin Alper; Best actor, Selahattin Paşalı; Best supporting actress, Selin Yeninci; Best supporting actor, Erdem Senocak →2022 Antalya Golden Orange Film Festival: Best director, Best actor, Selahattin Paşalı; Best supporting actor, Erol Babaoğlu; Best cinematography, Christos Karamanis; Best editing, Eytan İpeker, Özcan Vardar; Best music, Stefan Will; →CahideSonku Award, Çiğdem Mater; SİYAD Award: Best Film →2022 European Film Awars: European editor, Özcan Vardar, Eytan İpeker →2022 Turkish Film Critics Association Awards (Siyad): Best film; Best director, Emin Alper; Best actor, Selahattin Paşalı; Best cinematography, Christos Karamanis; Best screenplay, Emin Alper; Best music, Stefan Will; Best editing, Özcan Vardar, Eytan İpeker →2022 International Crime And Punishment Film Festival: Best film; Jury Special Award And The Rest Will Follow →World premiere at Rotterdam Festival 2025 →Turkey premiere at 44thIstanbul Film Festival →Best Screenplay Award at the Istanbul Film Festival: Pelin Ermes 61 Global productions Source: Company EZEL REBORN ALASHA STREET AL AMEEL LA ENCRUCIJADA 62 Source: CompanyRemakes delivering growth and success with strong growth potential Persona has remakes in Mexico and France Remake for MBC “Stiletto LB, produced by Ay Yapım →Mexican version as a co-production under the title El Asesino del Olvido →French version as an adaptation under the title MémoireVive and it is still in production→Remake for Crotiain pre-production International Emmy Awards 2019 –Winner Best Performance by an Actor – Haluk Bilginer International Emmy Awards 2024 –Nominee Best Performance by an Actor –Haluk Bilginer ASSESINO DEL OLVIDO Mexico/HBO Max MEMOIRE VIVE France/M6 STILETTO Lebanon/MBC 4+ ShahidVIP 63 Insider has a remake on Pro Tv in Romania and also aired on MENA / MBC produced by Ay YapımFamily Secrets has a remake in Greece Source: CompanyRemakes delivering growth and success with strong growth potential →A spin-off of one of the characters of Insider was so successful that there will be a second season Al Ameel MENA / MBC Shahid Pagidevmonoi Greece/ AntennaTV Tatutu Romania / VOYO Clanul Romania / Pro TV 64 Source: CompanyRemakes delivering growth and success with strong growth potential Black Money Love has a remake in Mexico and India which is currently in productionThe Pit has a remake in Romania Imperio De Mentiras Mexico/ Las Estrellas Groapa Romania / Pro TV 65 Source: CompanyRemakes delivering growth and success with strong growth potential The End has remakes in the Netherlands, the United States, Russia and SpainForbidden Love has remakes in India, South America and Armenia →VluchtHS13 is distributed across UK, Australia, and France →El Accidenteis distributed across North and Latin Ameria, including the Caribbean PASSION PROHIBIDA USA/Telemundo BROKEN HEARTS India RUNNER USA/ABCEL ACCIDENTE Spain/Telecinco NEW LIFE Russia/Series First Channel VLUCHT HS13 Netherlands/ KRO-NCRV 66 Each project’s freelance production team comprises 110–130 professionals across all roles, directly managed by the CEO Source: CompanyA well-established organizational structure supporting core operations Lean governance model supports fast decision-making and risk controlScalable structure designed to support future growth and partnershipsAcquisitions, Sales & Formats DirectorCFO Drama Development DirectorAds, Projects Sales DirectorHR Manager Project Incentives, Design Center ManagerArchieve ManagerCorporate communicati on ManagerIT ManagerGeneral ManagerCOO, Strategy & Business DevelopmentProduction Teams Chairman CEO HelthAnd Safety Manager Health And Safety Manager 67 (1) AyLunais the newly established sister company owned by Kerem Çatay. AyLunais expected to generate financial impact starting from 2026 which has been reflected in the business plan. Shareholders are open to consider AyLunaas part of the Proposed Transaction Source: CompanyShareholding structure1 ShareholdingAy YapımEkrem Çatay 50.7%Kerem Çatay 49.3% Ay YapımKSA Ay YapımKSA is a joint venture of Ay Yapımwith MBC based in Riyadh for MENA productions70.0%MADD MADD Entertainment, established in 2018 as a 50/50 joint venture between Ay Yapımand Med Yapım, serves as their international distribution company50.0%Bambini Bambini was established specifically to produce content for Netflix, leveraging VAT rebate advantages, and operates exclusively for Netflix productions100.0%Tara Tara was established as Ay Yapım’sinternational sales arm to leverage VAT exemptions and rebate advantages associated with international sales100.0% 68Disclaimer 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 anyoneotherthanthemandshallnotbereproducedorused,inwholeorinpart,foranypurposeotherthanfortheconsiderationofthefinancingortransactiondescribedherein,withoutthepriorwritten consentofÜnlüYatırımHoldingA.Ş.and/oritssubsidiaries*(togetherorindividuallyreferredas“ÜNLÜ&Co”). Theinformationcontainedinthisdocumentdoesnotpurporttobecompleteandissubjecttochange.Thisisacommercialcommunication.Thedocumentdoesnotincludeapersonalrecommendationand 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 suitableforallinvestors;youaretorelyonyourownindependentappraisalofandinvestigationsintoallmattersandthingscontemplatedbythisdocument. Information, opinionsand projections in this document have been compiled by or arrived at by ÜNLÜ & Co from the data provided by the Companyand its shareholder, and publicly available information, withoutourownseparateverification.TheCompanyanditsshareholderhavebeenconsultedaboutandhaveconfirmedtheappropriatenessofthebasicprinciplesandassumptionsusedbyÜNLÜ&Co.to perform the
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 anyoneotherthanthemandshallnotbereproducedorused,inwholeorinpart,foranypurposeotherthanfortheconsiderationofthefinancingortransactiondescribedherein,withoutthepriorwritten consentofÜnlüYatırımHoldingA.Ş.and/oritssubsidiaries(togetherorindividuallyreferredas“ÜNLÜ&Co”). Theinformationcontainedinthisdocumentdoesnotpurporttobecompleteandissubjecttochange.Thisisacommercialcommunication.Thedocumentdoesnotincludeapersonalrecommendationand 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 suitableforallinvestors;youaretorelyonyourownindependentappraisalofandinvestigationsintoallmattersandthingscontemplatedbythisdocument. Information, opinionsand projections in this document have been compiled by or arrived at by ÜNLÜ & Co from the data provided by the Companyand its shareholder, and publicly available information, withoutourownseparateverification.TheCompanyanditsshareholderhavebeenconsultedaboutandhaveconfirmedtheappropriatenessofthebasicprinciplesandassumptionsusedbyÜNLÜ&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 containedinthisdocument.TheCompany,itsaffiliatesorÜNLÜ&Cohavenotsoughtindependentverificationoftheinformationincludedherein. 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 recommendationsmaynot fit to your financial situation, risk and return preferences. For that reason, investment decisionsthat relysolelyon the information contained in thisdocument might notmeet your expectations. You shouldpaynecessary discernment,attentionand care in ordernottoexperience 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, negligenceorotherwiseinthisdocument. Distribution of thisdocument inand from certain jurisdictions mayberestricted orprohibitedbylawor regulation. Therecipient is required toinform itself of their compliance withany suchrestrictions 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 thedocument, the recipient warrants, represents and acknowledges (i) it hasread, agreed toand will comply with the contents of this important notice and disclaimer;and (ii) it will conduct its ownanalyses,duediligenceorotherverificationoftheinformationanddatasetforthinthisdocument,andwillbeartheresponsibilityforalloranycostincurredinsodoing. 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 jurisdictionoftheIstanbulCentralcourts. Allcommunications,inquiriesand/orrequestsrelatingtothisdocumentshouldbeaddressedtoÜNLÜ&Co.Forfurtherinformation,pleasecontact: ÜnlüMenkulDeğerlerA.Ş.,isasubsidiaryofÜnlüYatırımHoldingA.Ş.andisauthorized&regulatedbytheTurkishCapitalMarketsBoardİbrahim Romano Head of Investment Banking [email protected] +90 (533) 960 0122Zeynep Koçak Managing Director [email protected] +90 (532) 242 53 78
June 2023 Private and confidentialProject Daniel Confidential information package 1Table of contents Section Page I Executive summary 2 II Business overview 8 III Appendix 28 I. Executive summary 3 (1) As of 25.04.2023 (2) As of 31.12.2022 (3) Average calorific value assumption for the remaining reserve in the field is 2,600 kcal/kg, which is the base value fortheTCE contract . Average calorific value forthec.23 ml tons of coal produced between 2015 -2022 is 2,725 kcal/kg Source: CompanyExecutive summary Overview General information Location of the operations →Business taken over by Demir Export A.Ş. ( “Company” ) - Fernas İnşaat joint venture as a result of the tender conducted by TCE (Turkish Coal Enterprises) in 2011 (Shares: 75% and 25%) →The most efficient coal operation in Europe according to the coal production amount per employee since the start in 2015 →Uninterrupted production since the start of operations →Production period between 2015 -2029, contracted amount of 36.5 mn tons →Raw coal production with an average calorific value of 2,600 kcal/kg totally delivered to TCE inline with the agreement in return for an extraction cost →1,0421 employees in totalEynez I ( “Coal Operation I” ) and Eynez II ( “Coal Operation II” ) are the two underground coal mining operations which are located in Aegean Region of Turkey, in Soma district of Manisa province Coal Operation I I Coal Operation II II →Business taken over by Demir Export A.Ş. - Fernas İnşaat joint venture as a result of the tender conducted by TCE in 2018 →Production period between 2023 -2040, contract amount of 70 mn tons →High production potential in the operation that started in 2022 → Sale of low calorific value coal to Soma Thermal Power Plant through a contract and other potential plants with the sale of high calorific value coal to the market →The first and only UMREK report prepared for coal in Turkey →Turkey’s youngest and most qualified human capital in underground mining →1,2641 employees in totalIII ICoal Operation I IICoal Operation II Key details Eynez I Production period 2015 - 2029 Total production amount in the tender 36.5 mn tons (2.5 mn tons/year) Remaining production amount2 According to contract: 13.5 mn tons Coal remaining on field: 20.0 mn tons Average calorific value3 c.2,600 kcal/kgProduction period 2022 - 2040 Contracted reserve 70 mn tons Remaining production amount2 c.69. 6 mn tons Average calorific value Plant: 1,550 and 2,400 kcal/kg Market: 4,800 kcal/kgEynez IIManisa 4 Source: Company, UMREK ReportExecutive summary Technical information Eynez I Eynez II LocationManisa province, 25 km proximity to the center of Soma district Concession area 160.15 ha (TCE licence : 6,475.27 ha) Production method Longwall top coal caving (LTCC) system Panel width and lengthPanel width : 150 m -180 m, panel length: 650 m-900 m Average lower calorific value (kcal/kg)2,600LocationManisa province, 25 km proximity to the center of Soma district Licence area 1,179.13 ha Production method Longwall top coal caving (LTCC) system Panel width and lengthPanel width :150 m -180 m, panel length: 300 m - 700 m Average lower calorific value (kcal/kg)3,000 5 Source: CompanyKey milestones v2011Eynez I taken over by tender 2015Production kick off in Eynez I 2022 Production kick off in Eynez II2019 Construction kick off in Eynez II2018 Eynez II taken over by tender2012Executive summary Construction kick off in Eynez I 6 Source: CompanyExecutive summary Transaction overview General information Proposed timeline →Coal Operation I and Coal Operation II are the two coal operations in Manisa - Soma, which started operations as of 2015 and October 2022, respectively →As part of Project Daniel , Coal Operation I and Coal Operation II are being considered forsale (majority orcomplete ) (“Proposed Transaction” ) →As part of Project Daniel, Demir Export has appointed ÜNLÜ & Co to actas theexclusive financial adviso r →Interested parties should contact ÜNLÜ & Co for their inquiries Proposed transaction Shareholding %Demir Export Fernas İnşaat 75% 25% Eynez IDEF DEFAŞ Eynez IIPhase I Phase II NDA Infopack distributionLimited Q&ANon- binding offersBinding offersSigningDue diligence June 22nd Details of the Phase I I → Distribution of the Information Pack (“ IP”) and UMREK Report executive summary → Distribution of the Excel file containing the financial information → Limited Q&A session for keyquestions and clarification requests → Collection of non -binding offers until June 22nd, 2023 and short -listing of certain potential investors forthe next phase Details of the Phase II II → Due diligence process for a limited number of selected potential investors → Access to theVDR in addition to Q&A session s → Site visits → Exact timetable forPhase II to be circulated in a separate process letter forshort - listed potential investorsSite visits 7 Source: CompanyKey investment highlights of the Project Daniel Coal mines with an investment of USD c. 330 mn (Eynez I: USD 167 mn, Eynez II: USD 160 mn) Eynez II: High production potential with earlier than planned kick off Low calorie coal of Eynez II delivered to the power plant s within the scope of thecontract while high calorie coal is utilized in the market Increase in the demand for coal as a result of increas ing energy prices and theadvantageous location Highly qualified business management focused on efficiency and environment World class IT infrastructureThe most efficient coal operation in Europe by coal production per employee (since 2015 )Eynez I: High quality coal reserves in the operational area Uncompromising compliance with Environmental, Social and Governance (ESG) standards Adhere nceto Koç Group 's corporate standards in themanagement of all processes II. Business overview 9 (1) As of 31.12.2022 (2) As of 14.05.2023 (3) Average calorific value assumption for the remaining reserve in the field is 2,600 kcal/kg, which is the base value for the TCE contract. Average calorific value for the c.23 ml tons of coal produced between 2015 -2022 is 2,725 kcal/kg Source: CompanyBusiness model Overview Production Washing / enrichment Sales and distribution Eynez I Total production amount in the tender 36.5 m n tons (2.5 m n tons/year) Remaining production amount1 According to contract: 13.5 mn tons Coal remaining on field: 20.0 mn tons Average calorific value3 c.2,600 kcal/kg Eynez II Total production amount in the tender 70 mn tons Remaining production
(ESG) standards Adhere nceto Koç Group 's corporate standards in themanagement of all processes II. Business overview 9 (1) As of 31.12.2022 (2) As of 14.05.2023 (3) Average calorific value assumption for the remaining reserve in the field is 2,600 kcal/kg, which is the base value for the TCE contract. Average calorific value for the c.23 ml tons of coal produced between 2015 -2022 is 2,725 kcal/kg Source: CompanyBusiness model Overview Production Washing / enrichment Sales and distribution Eynez I Total production amount in the tender 36.5 m n tons (2.5 m n tons/year) Remaining production amount1 According to contract: 13.5 mn tons Coal remaining on field: 20.0 mn tons Average calorific value3 c.2,600 kcal/kg Eynez II Total production amount in the tender 70 mn tons Remaining production amount1 c.69.6 mn tons Average calorific value Plant: 1,550 and 2,400 kcal/kg Market: 4,800 kcal/kg Support functions→An annual average of 2.5 mn tons of raw coal production with a capacity of up to 4.2 mn tons →For the first time in Turkey , a fully mechanized Longwall Top Coal Caving (LTCC) system was utilized in Eynez I →The raw coal produced underground is transported to the surface by belt conveyors →The raw coal produced is sold / delivered without any of washing / enrichment processes→ The entire production is delivered to TCE in raw form to be utilized at the Soma Thermal Power Plant → The unit price of the extraction fee to be paid by TCE and the conditions of the price adjustment payment are stated in the contract → Road transport of the raw coal to TCE is carried out by Eynez I →An annual coal production capacity up to 4 mn tons →The extraction is carried out with the fully mechanized Longwall Top Coal Caving (LTCC) system →The coal production in Eynez II started before the official deadline where c. 370k tons of coal has been already extracted since October 20222 →The raw coal produced underground is transported to the surface by belt conveyors →All equipment in both enterprises is compatible, allowing for seamless equipment transfer between projects and creating capacity transition opportunities→A coal washing plant with an annual capacity of 4 mn tons in order to wash the raw coal →5 different coal types are produced based on their technical specifications and dimensions: ‐Product 1: +18mm, 4,800 -5,200 kcal/kg ‐Product 2: -18mm +10mm, 4800 -5200 kcal/kg ‐Product 3: -10mm +0.5mm, 4,800 kcal/kg ‐Product 4: 2,400 kcal/kg ‐Product 5: 1,550 kcal/kg→ 3 coal types with high calorific value (Product 1, 2 and 3) are utilized in the market whereas the ones with low calorific value (Product 4 and 5) are sold to Soma Thermal Power Plant through a contract (details arepresented in thissection ) →Extensive market opportunity, including export of high calorific value coal to Europe →Payment terms to TCE and price escalation formula of the coal sold to thepower plant (Product 4 and 5) are stated in the contract →Road transport of the coal to the power plant is carried out by Eynez II →The logistics of the coal sold to the market are carried out by the purchasers Human resources ESG IT 10 (1) 40.5 m n tons in the current plan and in case of excess production TCE will purchase the excess amount (2) Stands for the remaining production amount according to the contract as of 31.12.2022. The remaining coal amount in the field is 20.0 mn tons (3) As of 31.12.2022 Source: CompanyEynez I: High efficiency in production Overview of Eynez I 36.5 mn tons Contract amount1 2015 -2029 Production period 2,600 kcal/kg Calorific value c.2.5 mn tons Average raw coal production per year 13.5 mn tons Remaining production2 2012 -2015: USD 167 mn 2012 -2018: USD 190 mn Total investment amount Overview of the production process Raw coal Transport to TCE→Eynez I operation was built between 2012 -2015 →Prioritizing quality and security, a fully mechanized LTCC method (Longwall Top Coal Caving) is used in the field where the hitherto production amount is c.23 mn tons3 →LTCC method in Turkey was first implemented in Eynez I →Eynez I operation utilizes high quality Caterpillar equipment →As per the agreement with TCE, entire production is delivered to TCE as raw coal in return for an extraction fee →The interconnection of the two operations (Eynez I and Eynez II) creates two additional entry -exit alternatives for both operations . This provides additional operational advantages in terms of occupational safety and uninterrupted production Road transport Eynez I was built between 2012 -2015 with an investment of USD 167 mn Washing / enrichment Production Sales & distribution Support functions 11 Source: CompanyEynez I: Geological characteristics of the project area →Eynez I is located c.25 km from the center of the Soma district of Manisa →Located in a westward sloping topography between 400 m -600 m elevation →The climate in the region is hot and arid in summer, cold and humid in winter →It is possible to operate through all seasons of the year →The operational area is generally covered with agricultural land along with a limited amount of forest land Geological characteristics Geological map High quality coal reserves in the operational area Washing / enrichment Production Sales & distribution Support functions 12 Source: CompanyEynez I: Technical specifications Concession area: 160.15 ha →Eynez I operates exclusively within the license area and is utilized solely as a field for underground mining. Production is carried out with fully mechanized longwall top coal caving system which prioritizes quality and safety →Panel layout in Eynez I is optimized to ensure minimum reserve loss and stability of production galleries →Panels are designed to operate fully mechanized with planned wall width of 150 m -180 m and panel length of 650 m -900 m →The coal is produced as 2 or 3 segments / slices depending on the thickness across the field →The height of main gate is 3.8 m whereas the cross -sectional areas are 16.0 m2 and 18.0 m2 →The height of the tail gate is 4.0 m, the width is 4.5 m and the cross -sectional area is 18.0 m2. The main transportation gallery has a height of
for underground mining. Production is carried out with fully mechanized longwall top coal caving system which prioritizes quality and safety →Panel layout in Eynez I is optimized to ensure minimum reserve loss and stability of production galleries →Panels are designed to operate fully mechanized with planned wall width of 150 m -180 m and panel length of 650 m -900 m →The coal is produced as 2 or 3 segments / slices depending on the thickness across the field →The height of main gate is 3.8 m whereas the cross -sectional areas are 16.0 m2 and 18.0 m2 →The height of the tail gate is 4.0 m, the width is 4.5 m and the cross -sectional area is 18.0 m2. The main transportation gallery has a height of 4.4 m, width of 5.4 m and cross -sectional area of 22.0 m2Technical specificationsSite layout The most efficient coal operation in Europe by coal production per employee (since 2015) Licence areaWashing / enrichment Production Sales & distribution Support functions 13 Source: CompanyEynez I: Gallery view Turkey’s first LTCC applicationLTCC equipment supplied by CaterpillarUninterrupted production since thekick-off The most efficient coal operation in Europe by coal production per employee (since 2015) Washing / enrichment Production Sales & distribution Support functions 14 Source: CompanyEynez I: Machine park equipped with the latest technology Key machinery and equipment suppliers Key machinery and equipment Main chain conveyorRear conveyorAutomatic shearer / loader machineBack stage loader and crusherFully mechanized hydraulic shieldsBelt conveyorFace StockyardWord -class park of m achinery and equipment Low investment requirement going forward The most efficient coal operation in Europe by coal production per employee (since 2015) Washing / enrichment Production Sales & distribution Support functions 15 (1) USD 23 with the exchange rate on contract date (2) 2015 -2021: 0.9 & 2022 -2028:1.0 (3) The indexe s are calculated by dividing the formal statistics of the period by the statistics during the tender (4) In order to avoid do uble counting during the calculations of the price difference and calorific price difference, the tender coefficient is subtracted from the period coefficient (5) The base calorie used in the calculation of the calorie index is 2,600 kcal /kg (6) A premium of 50% of the calorific difference calculated in the interval of 2,600 kcal/kg -3,000 kcal/kg is paid while a penalty is charged in the amount of the calorific difference between 2,200 kcal/kg -2,600 kcal/kg. Source: CompanyEynez I: Procurement contract and price mechanism Conditions of the contract →According to the procurement contract with TCE in 2011, 36.5 m n tons of coal willbe produced in 18 years →As per the procurement contract , all raw coal production is delivered to TCE in return for an extraction fee →Final extraction fee is calculated multiplying thesum of theamounts below with the amount of raw coal delivered ‐Unit price of TL 40.951tendered in 2011 ‐Price difference ‐Calorific price difference Final extraction fee (per ton)Tender unit price (TL 40.95 )Constant coeff.2 (1.0)Tender unit price (TL 40.95)Tender unit pricePrice difference3,4Calorific price difference4,5,6 Calorie indexTender unit price (TL 40.95 ) Price difference Weight percentageMinimum wage index54% Coal and petroleum index7% Producer price Index32% Machinery and equipment index7%Price mechanism A B CA B C 1 1Washing / enrichment Production Sales & distribution Support functions 16 (1) Based on UMREK report (2) As of 31.12.2022 Source: CompanyEynez II: High potential of production Overview of Eynez II: Overview on the production processPlant: 1,550 and 2,400 kcal/kg Market: 4,800 kcal/kg Calorific value 2022 -2040 Production period USD 160 mn Total investment amount 70 mn tons Contract amount1 69.6 mn tons Remaining production amount2 -18mm+10mm teshin kömürTüvenan kömür Termik santrale sevkiyatKömür yıkama tesisi+18mm teshin kömür -10mm+0,5mm teshin kömürMiks kömür (ara ürün )Müşteriye sevkiyat -18mm+10mm heating coalRaw coal Transfer to thermal power plantsCoal washing facility+18mm heating coal -10mm+0,5mm heating coalMixed coal (by product)Sale to customers →The fully mechanized LTCC (Longwall Top Coal Caving) production method is utilized (Same as Eynez I) →The experience gained in Eynez I and the proximity of the two fields create OPEX and CAPEX cost synergies in Eynez II →DEFAŞ retains thesales of the coal produced while TCE receives a share payment →2 types of coal with low calorific value (Product 4 and Product 5) are sold to power plant with a contract whereas the ones with high calorific value (Product 1, Product 2 and Product 3) are utilized in the market →The split of the coal is c.50% -50% between the power plant and the market →9% percent of Eynez II’s electricity consumption will be covered by a Solar Power Plant with an installed capacity of 3MW power. The power plant is expected to start operations in 2024 →The interconnection of the two operations creates two additional entry -exit alternatives for both. This provides additional operational advantages / efficiencies in terms of occupational safety and uninterrupted productionc.4 mn tons Average raw coal production per year High production potential with earlier than planned kick off Washing / enrichment Production Sales & distribution Support functions 17 Source: CompanyEynez II: Geological characteristics of the area →Eynez II is located c.25 km from the center of the Soma district of Manisa province →Located in a westward sloping topography between an elevation of 450 m -950 m →Despite the general Mediterranean climate dominancy in the area, continental climate characteristics are also observed in the interior parts →It is possible to operate through all seasons of the year →It is generally covered with forested land and a little bit of private land →The thickness of the series is up to 33 m and 1 seam is observed in it Geological characteristics Geological map Coal in the operational field has high quality reserves Washing / enrichment Production Sales & distribution Support functions 18 Source: CompanyEynez II: Critical points of the project Coal typeKcal / kgAsh (%)Moistur e (%) +18mm 4,824 15% 14% -18mm +10mm 4,940 13% 15% -10mm +0,5mm 4,700 12% 19% Thermal power plant 1 2,421 37% 17% Thermal power plant 2 1,565 41% 19%Operating in one of Turkey’s richest lignite reserves High calorie coal profile World -class production method High production potential with earlier than planned kick off Characteristics of the coals to
the year →It is generally covered with forested land and a little bit of private land →The thickness of the series is up to 33 m and 1 seam is observed in it Geological characteristics Geological map Coal in the operational field has high quality reserves Washing / enrichment Production Sales & distribution Support functions 18 Source: CompanyEynez II: Critical points of the project Coal typeKcal / kgAsh (%)Moistur e (%) +18mm 4,824 15% 14% -18mm +10mm 4,940 13% 15% -10mm +0,5mm 4,700 12% 19% Thermal power plant 1 2,421 37% 17% Thermal power plant 2 1,565 41% 19%Operating in one of Turkey’s richest lignite reserves High calorie coal profile World -class production method High production potential with earlier than planned kick off Characteristics of the coals to be produced Longwall Top Coal Caving (LTCC) methodWashing / enrichment Production Sales & distribution Support functions Coal type Kcal / kg Ash (%)Moisture (%) +18mm 4,800 -5,200 15% 14% -18mm +10mm 4,800 -5,200 13% 15% -10mm +0.5mm +4,800 12% 19% Thermal power plant 12,400 37% 17% Thermal power plant 21,550 41% 19% Characteristics of the coal to be produced Longwall top coal caving (LTCC) method→The entire reserve in the Soma basin has been transferred by tenders. There are no other coal reserves to be utilized in the basin →The thickness of coal zone in Eynez II reaches up to 33 m →Coal that will be produced in Eynez II has high calorific value and low ash and moisture ratio →The production method that is applied in Eynez II is the LTCC method, which was first used in Eynez I. With the LTCC method, a safe working environment will be provided underground, and production will be undertaken with mechanized longwall equipment that can control possible risks at the source →A single -layer production method is used, which minimizes preparatory work and ensures high efficiency →The produced raw coal will be brought down below 200 mm underground and then transferred above ground through belt conveyors →A coal washing facility with the capacity of 4 mn tons / year →There is a packaging plant available at the facility →A facility investment has been made to enable the direct sale of raw coal in case of need →The company's machinery park facilitates the internal transfers of the produced coal and the process of blending and achieving the desired size and quality 19 Source: CompanyEynez II: Technical specifications License area: 1,179 ha High production potential with earlier than planned kick off Site layout License area →Eynez II has been utilized solely as a field for underground mining and the production is carried out with fully mechanized l ongwall top coal caving system which prioritizes quality and safety →Panel configuration in Eynez II is optimized in terms of base path stability providing the minimum loss on the reserve →Across the field the coal is produced as 1 slice depending on the thickness →Panels are designed to operate fully mechanized while panel width is planned as 150 m -180 m and panel length as 300 m -700 m →70% of the coal will be extracted from back caving while 30% will be produced from the front conveyor, via shearer - loaderTechnical specifications Washing / enrichment Production Sales & distribution Support functions 20 Source: CompanyEynez II: Gallery view High efficiency s ingle slice production methodLTCC equipment supplied by ZMJAdjacent operations enabling further advantages High production potential with earlier than planned kick off Washing / enrichment Production Sales & distribution Support functions 21 Source: CompanyEynez II: Machine park equipped with the latest technology Leading mechinery and equipment suppliers Important machinery and equipment Main chain conveyorRear conveyorAutomatic shearer / loader machineBack stage loader and crusherFully mechanized hydraulic shieldsBelt conveyorFaceCoal washing facilityStockyardWord -class park of machinery and equipment Low investment requirement going forward High production potential with earlier than planned kick off Washing / enrichment Production Sales & distribution Support functions 22 Source: CompanyEynez II: Coal washing / enrichment High production potential with earlier than planned kick off Washing / enrichment Production Sales & distribution Support functions Annual coal washing capacity of 4 m n tonsState -of-the-art washing facility with 3 product cyclonesPortfolio of 5 different product typesIntegrated packaging facility 23 (1) The coal delivered to thermal power plant on behalf of TCE is not included in the TCE share calculation (2) The raw coal price per ton defined by MAPEG for the 3,000 kcal/kg calorie (base calorie) lignite coal (3) The ratio of actual calorie of the raw coal over the base calorie (4) Data from the previous two years i s used for calculations Source: CompanyEynez II: TCE’s share and price mechanism →According to the transfer contract of license and operational rights made with TCE, 70 mn tons of coal will be produced in 23 years with 4 years for preparation and 19 years for operations. →As per the agreement, TCE’s share will be paid to TCE during the production period. A 50% discount as an incentive is applied to the TCE share until June 2024 ‐20% of the annual coal amount that TCE committed to supply to Soma Thermal Power Plant will be covered on behalf of TCE. TCE share will not be paid for the coal delivered to the power plant on behalf of TCE The base price in 2023 to be used in the price increase calculation is defined in the contract as TL 1,0701 per ton for the 2,400 kcal/kg coal and TL 7792 per ton for the 1,550 kcal/kg coal. The price in the following years is determined with the price increase formula Share of TCE (per ton)Tender rate (%43.1)Raw coal price2 Calorie factor3 Base price (t) (per ton)Base price (t-1)Day-ahead price index450% Minimum wage index24% Refined petroleum products index413% Producer price index413% Percentage weightConditions of the contract Price mechanism TCE’s share1A B B A Low calorie coal of is sold to the power plant through a contract while high calorie coal is utilized in the market Washing / enrichment Production Sales & distribution Support functions 24 Source: Company, Ministry of Energy and Natural Resources, TEİAŞ, MAPEG, S&P GlobalEynez II: Increase in demand for coal and advantageous location High coal
1,0701 per ton for the 2,400 kcal/kg coal and TL 7792 per ton for the 1,550 kcal/kg coal. The price in the following years is determined with the price increase formula Share of TCE (per ton)Tender rate (%43.1)Raw coal price2 Calorie factor3 Base price (t) (per ton)Base price (t-1)Day-ahead price index450% Minimum wage index24% Refined petroleum products index413% Producer price index413% Percentage weightConditions of the contract Price mechanism TCE’s share1A B B A Low calorie coal of is sold to the power plant through a contract while high calorie coal is utilized in the market Washing / enrichment Production Sales & distribution Support functions 24 Source: Company, Ministry of Energy and Natural Resources, TEİAŞ, MAPEG, S&P GlobalEynez II: Increase in demand for coal and advantageous location High coal production and consumption in Turkey Increase in coal prices due to global dynamics (USD / ton) →Turkey is the world’s 11thlargest coal producer with an estimated coal reserve of 20.8 bn tons →Coal consumption has steadily increased (2016 -2021 CAGR: 5.1%) and reached c.117 mn tons in 2021 →Coal makes up c.31% of the total electricity production in Turkey and has the most prominent share in the energy sources along with natural gas →Average coal prices have gone upwards significantly due to increased energy need s and as a result of the war between Russia - Ukraine that started in 2022 →To reduce dependence on imports and increase the country's energy security, domestic coal production is planned to be increased Potential to benefit from export prospects to Europe thanks to proximity to Aliağa Port in IzmirStrategic location with widespread thermal power plants and cement factories →Aegean Region, with its strategic coastal location, offers significant export potential for Eynez II→The operational thermal power plants in Turkey are predominantly concentrated in the Aegean and Marmara Regions →Eynez II, being located in Soma, Manisa, near thermal power plants and cement plants, holds a strong market opportunity due to its strategic proximity to these factories →Eynez II is already interconnected with the Soma Thermal Power Plant and supplies coal to the Kemerköy and Yatağan thermal power plants Increase in the demand for coal as a result of increased energy prices and advantageous location Washing / enrichment Production Sales & distribution Support functions 80 8492 6150290 2016 2017 2018 2019 2020 2021 2022 İzmir Manisa 25Organizational structure (1) As of 25.04.2023 Source: CompanyHighly qualified business management focused on efficiency and environment Number of employees1 Office 70Field 972Sub-contractor Total - 1,042 Eynez I 91 1,173 - 1,264 Eynez IIAverage tenure (years) Office 5.2Field 4.5Sub-contractor Total - 4.5 Eynez I 2.7 2.4 - 2.4 Eynez II Turkish Union of Mining Workers Washing / enrichment Production Sales & distribution Support functions Eynez operationsESG Procurement AccountingGeneral directorate IT Environment Eynez I operation managerTechnical managerSurface facilities managerElectricity managerMechanical managerProduction support head engineerMine planning managerEynez II operation managerSr. control center engineerOrganizational chart 26 Source: CompanyInformation technologies Important IT servicesCollaboration with global top-tier service providers in information technologies Robust and highly reliable IT infrastructure Source: CompanyLeading IT serviceprovid ers →Network access in the plant is mainly provided byTürk Telekom →Access to central and cloud systems through IPSEC with Cisco Network switchs and Access Points →Firewall systems are managed with Fortigate software and the logs are controlled by KoçSistem SOC central →Network traffic is tracked with Network Monitor →Physical servers in Soma aresupplied byDell and thecyber server management is provided byWmVare→SAP is utilized for the management of corporate processes , with conversion from SAP R3 system to SAP Hana currently underway →Engineering operations rely on Datamine UG, NPV Scheduler, and Studio RM for underground mine planning, Egrapffix for calorie calculation, and NetCad , AutoCad , and Civil3D licenses for drawing and design requirements →Underground personnel tracking is facilitated through MineSite , while PowerApps and PowerBI licenses are employed for tracking and reporting of operations →Mobile device management is handled with Microsoft Intune licenses, and PC management is carried out using Microsoft SCCM World class IT infrastructure Washing / enrichment Production Sales & distribution Support functions 27 Planned installment of a solar power plant with 3 MW of installed capacity Source: CompanyUnconditional compliance with ESG standards Operations prioritize their employees’ health and safety 2 Significant focus on social responsibility projects 3Renewable energy sources are carefully utilized with strong commitment to sustainability1Operations protect the surrounding plants and olive groves through the utilization of state -of-the-art machinery and equipmentOperations completed their Environmental Impact Assessment (EIA) processes successfullyWashing / enrichment Production Sales & distribution Support functions Uncompromising compliance with Environmental, Social and Governance (ESG) standards Yol Arkadaşım Mentorship Project Soma Afforestation Project Tohum Autism Foundation Project IV. Appendix 29 Source: CompanyPermissions, licenses and certificates License Operation permit Eynez I Eynez II 30Permissions, licenses and certificates Eynez I Eynez II EIA permits Source: Company 31Eynez I: Additional images Concession area layout and land ownership Layout and fall alignment of project surface structures Source: Company 32Eynez I: Additional images Source: CompanyA view of the operations Main fans 33Eynez II: Additional images Mini LTCC configuration image Main fan Source: Company 34Eynez II: Additional images Images from the operation s Source: Company 35 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
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 .Disclaimer Simge Ündüz Managing Director [email protected] +90 (212) 367 36 03 +90 (533) 283 81 13Zeynep Koçak Managing Director zeynep.kocak @unluco.com +90 (212) 367 36 22 +90 (532) 242 53 78
Project Hermes Confidential Information Memorandum September 2023 © 202 3 ÜNLÜ & Co \| Privileged and confidential 1Table of contents Section Page I Executive summary 2 II Key investment highlights 9 III Business overview 19 IV Financial overview and projections 38 V Appendix 47 I. Executive summary 3 (1) Calculated by the Management and represents the market share in IV fluids and serums (2) Fatih Zengin, a long tenure employee of the Company and currently the Finance Director has 0.3% shareholding Source: CompanyExecutive summary Overview Company overview Key figures →Polifarma İlaç San. ve Tic. A.Ş. (" Polifarma ") with its fully owned subsidiary Aroma İlaç San. A.Ş. (" Aroma ") (together " Polifarma " or the " Company ") is the leading parenteral solutions manufacturing company in Turkey with c.50-55%1 estimated market share in the domestic market -The Company is 100% owned by the founding family2 →The Company owns 511 product licenses (308 domestic and 203 export) and offers a wide portfolio of serums and IV fluids and drugs targeting 15 distinct therapeutic areas; ranging from radiocontrast, anesthesia, analgesic & anti - inflammatories and cardiology to nephrology and allergy →In the domestic market ( c.89% of Net sales in 2022A), Polifarma dominates the hospital channel , both public and private →In export markets ( c.11% of Net sales in 2022A), the Company sells to more than 50 countries in Europe, Middle East & North Africa and Balkans through local pharma distributors →The Company owns a modern production plant, which is located in a major organized industrial zone in Tekirdağ , Marmara region enjoying a strategic proximity to Istanbul and export gateways such as Istanbul & Derince ports and European border –The plant boasts a production capacity of c.400 mn units/year in various packaging forms →Thanks to its in -house R&D function encompassing a team of c.60 R&D professionals, Polifarma has the capability to develop APIs and formulas →Polifarma is budgeted to generate revenues of c.USD 198 mn with an EBITDA margin of c.32% in 2023BProduction plant511 Product licenses15 Therapeutic areasc.400 mn units/year Production capacity c.USD 198 mn Net sales (2023B)c.32% EBITDA margin (2023B)c.1,500 # of employees Production lines 5 IV medicine and 8 serum linesProduction capacity c.400 mn units/year Production plant Headquarter Regulatory office European border İstanbul ports (c.150 km) Derince Port (c.240 km) Karasu Port (c.330 km) AnkaraTekirdağ Istanbul 4 (1) 2020 A-2022 A financials converted to USD in scope of E&Y FVDD study and 2023B & onwards forecast by the Management based on E&Y FVDD finan cials ( 2) Represents annualized L9M 2020 A volume Source: CompanyExecutive summary Key figures <USD financials1 Net sales ( USD mn)30.9 % 32.4 % 34.0% 32.7 % 34.9 % 35.2 % 35.2 % 35.6 % 82111133198225244270294315 2638 4164738595104112 2020A 2021A 2022A 2023B 2024F 2025F 2026F 2027F 2028F+34%+10%Achieved double -digit top -line growth and robust EBITDA margin, set to further grow and raise margins with new products, portfolio optimization and higher efficiency EBITDA ( USD mn) EBITDA margin (%) Sales volume ( mn packed units ) Medicine as % of Net sales64.6% 66.2% 50.0% 69.0% 70.3% 72.1% 73.4% 74.2% 111.7 143.7 101.7 154.9 164.9 174.6 185.5 194.531.6% 48.4 %2 85.22 CAGR 5 Source: CompanyExecutive summary Key milestones 1963 1991 1996 2007 2011 2015 2016 2017 2018 2019 2020 2021 2022 -2023 2024 - 2026 Introduction of the first domestic peritoneal dialysis device and solution in Turkey Mid-long termEstablishment of AromaAcquisition of PolifarmaStart of serum productionFully automatic production of new generation serums with in PP bagsRelocation to production campus in Ergene , TekirdağEstablishment of the R&D center under government programBecomes the leading serum producer in TurkeyStart of contract manufacturing services that meet EU -GMP standardsAseptic field phase I investment Introduction of the first multi - chamber parenteral nutrition products in TurkeyAseptic field phase 2 investment Start of lyophilized vial and ampoule manufacturingBecomes the leader of hospital products in TurkeyEstablishment of a logistics centerLaunch of new products and investment in production and packaging linesLaunch of new products in nephrology, ophthalmology and respiratoryExpansion in biosimilar, bio better, and cytotoxic oncology products EU-GMP certification from Bulgarian Drug Agency 6 (1) 2021A and 2022A financials converted to USD in scope of E&Y FVDD study and 2023B & onwards forecast by the management bas ed on adjusted E&Y FVDD financials in USD (2) c. 2% of Net sales of 2022A is comprised of other sales which consist of sales of trade goods, raw materials, packag ingmaterials etc Source: Company, E&Y FVDD ReportExecutive summary Product portfolio Medicine Serum Overview→Addressing a total of 15 different therapeutic areas, mainly radiocontrast, anesthesia, analgesic & anti -inflammatories, antibiotics, proton pump inhibitors, cardiovascular etc. →Wide variety of packaging forms including vials (lyophilized, liquid), ampoules (lyophilized, liquid), PP /PVC bags, blow -fill-seal ("BFS") ampoules , prefilled syringes ( "PFS"), PP bottles→Consists of IV fluids and parenteral nutrition products →Diversified forms of PP / PVC bags, glass bottles, PP bottles and multi -chamber bags Sample products Breakdown of Net sales by channel (2022A) Net sales1 (USD mn) Sales volume (mn packed units ) Sales volume (mn litres )65% Retail 5%Public hospitals68% Export 9%Private hospitals17% % of Net sales in 2022 A2% of Net sales under each category for 2022 ARetail 7%Public hospitals47% Export 17%Private hospitals29% 33% 2021A 2022A 2023B 2028F55.5 85.8 131.2233.8+53.7%+12.3% 2021A 2022A 2023B 2028F25.9 36.561.289.2+53.7%+7.8% 2021A 2022A 2023B 2028F1.6 2.33.85.5+56.0%+7.8%2021A 2022A 2023B 2028F39.4 44.5 64.3 78.0+27.8% +4.0% 2021A 2022A 2023B 2028F75.8 75.2 82.6 105.4+4.4% +5.0% 2021A 2022A 2023B 2028F30.3 35.3 38.8 49.5+13.2% +5.0% CAGR 7Executive summary Sales channels Public hospitals Private hospitals Retail Export Overview→78%1 of all hospital beds in Turkey are in public hospitals →State Supply Office ( "DMO "), coordinates central procurement for all public health institutions through tenders→Direct sales to national hospital chains such as Acıbadem and Medicana →Sales to other regional / local hospitals are made through local pharma distributors→Sales to pharmacy chains through national pharma distributors, mainly Alliance Healthcare and Selçuk Ecza →New product launches in nephrology, ophthalmology and respiratory areas are expected to boost the growth in retail channel→Sales to more than 50 countries through local distributors →Capitalizing on existing cGMP accreditations Key clients→Iraq, Azerbaijan, Albania, Jordan, Israel, UAE, Libya, Bulgaria, Brazil Breakdown
75.2 82.6 105.4+4.4% +5.0% 2021A 2022A 2023B 2028F30.3 35.3 38.8 49.5+13.2% +5.0% CAGR 7Executive summary Sales channels Public hospitals Private hospitals Retail Export Overview→78%1 of all hospital beds in Turkey are in public hospitals →State Supply Office ( "DMO "), coordinates central procurement for all public health institutions through tenders→Direct sales to national hospital chains such as Acıbadem and Medicana →Sales to other regional / local hospitals are made through local pharma distributors→Sales to pharmacy chains through national pharma distributors, mainly Alliance Healthcare and Selçuk Ecza →New product launches in nephrology, ophthalmology and respiratory areas are expected to boost the growth in retail channel→Sales to more than 50 countries through local distributors →Capitalizing on existing cGMP accreditations Key clients→Iraq, Azerbaijan, Albania, Jordan, Israel, UAE, Libya, Bulgaria, Brazil Breakdown of Net sales by product2 (2022A) Net sales (USD mn)360% Medicine 74% Serum 26% Medicine 52% Serum 44% Medicine 59% Serum 41% Medicine 51% Serum 49% 2021A 2022A 2023B 2028F39.179.4115.0155.7+71.5%+6.3% (1) Includes state and university hospitals (2) Other sales are not shown in figures (3) 2021A and 2022A financials conve rted to USD in scope of E&Y FVDD study and 2023B and onwards forecast by the management based on E&Y FVDD financials and 8M 2023 actual results (4) Excluding other sales channel comprising c.2% of Net sales in 2022A Source: Company, E&Y FVDD Report, The Ministry of Health of Turkey - Health Statistics Yearbook 20212021A 2022A 2023B 2028F23.2 27.849.365.4+45.7%+5.8% 2021A 2022A 2023B 2028F6.1 7.8 14.259.6+52.4%+33.3% 2021A 2022A 2023B 2028F26.515.2 17.031.1+12.8% % of Net sales4 in 2022A % of Net sales under each channel for 2022A21% 6% 12% CAGR 8 (1) Fatih Zengin, a long tenure employee of the Company and currently the Finance Director has 0.3% shareholding in Polifarma Source: CompanyExecutive summary Transaction overview →Project Hermes refers to the contemplated sale of up to 100% stake in Polifarma İlaç San. ve Tic. A.Ş. together with its 100% subsidiary ( ”Polifarma ” or the ”Company ”) (the “ Proposed Transaction ”) →The Company is currently owned and operated by Kumrulu family (the " Shareholders ") →The Shareholders are not involved in the daily operations of the Company, rather monitor the business at Board level →Recently, Kumrulu family decided to explore strategic options for the Company and in this respect, appointed ÜNLÜ & Co to act as their exclusive financial advisor in the Proposed Transaction →Interested parties should only contact ÜNLÜ & Co for their questions and enquiries Ufuk S. Kumrulu Vildan Kumrulu Umur C. Kumrulu Elif S. Kumrulu 45.9% 21.4% 16.2% 16.2%Phase I Transaction scope Shareholding %NDA CIM Limited Q&ANon- binding offersBinding offersSigning Initiation of due diligence Phase I details →Distribution of the Confidential Information Memorandum (" CIM") →Limited Q&A process for key questions and clarification requests Phase II details →Due diligence period for a limited number of selected potential investors →Virtual data room access along with Q&A process →Access to E&Y Financial Vendor Due Diligence Report (" E&Y FVDD Report "), covering years 2020A -2022A and 8M 2023 based on USD conversion methodology →Management presentation and site visit →Exact timetable for Phase II to be circulated in a separate process letter for short -listed potential investorsPhase II Shareholding structure1 Polifarma İlaç Sanayi Aroma İlaç Sanayi100%Transaction scope Envisaged transaction timeline October 23rd Early November II. Key investment highlights 10Key investment highlights Source: Company4 1 3 2Dominant market leader in the parenteral segment of the Turkish pharmaceutical market Product portfolio addressing a wide range of therapeutic areas sold in hospital channel to be extended to the retail marketSolid financial performance with robust operating profitability to be further boosted by portfolio optimization, economies of scale and a new solar panel investment Strong R&D capabilities leading to a range of new products to bring additional avenues of growth 11 (1) Calculated by the Management based on the bids and win rates in the DMO tenders in 2022, volume based Source: CompanyPolifarma is the dominant market leader in Turkish parenteral solutions 1 Key pillars leading to… …dominant position in the domestic market Management approach →Experienced professional management team, employing an agile portfolio optimization approach based on the market trendsBroad product portfolio →Portfolio of serums and IV medicines targeting 15 distinct therapeutic areas, under 511 product licenses (308 domestic and 203 export)Large production capacity and versatile manufacturing capability →Medicine and serum production capacity of c.400 mn units/year →Ability to produce in different packaging forms such as lyophilized & liquid vials , ampoules, PP/PVC bags, glass bottles , blow -fill-seal ampoules and prefilled syringesStrategically located production plant →State -of-the-art production plant located in European part of Turkey →Proximity to import/export gateways Therapeutic area Win rate1 Total c.65-70% Radiocontrast c.90-95% Proton pump Inhibitorsc.90-95% Analgesics & anti - inflammatoriesc.80-85% Antivirals c.75-80% Cardiovascular c.60-65% 12 Parenteral segment of the Turkish pharmaceutical market continues to grow… 1 Turkish pharmaceutical market backed by strong fundamentals… …estimated to generate further growth on the back of →The market size of the Turkish pharmaceutical market reached c.USD 6.3 bn in 2022, with sale of c.2.6 bn packed units -Generic drugs constituted c.61% of the market in terms of volume -In tandem with government’s localization incentives, the share of locally produced products has risen from 44% in 2009 to 55% in 2022 in value terms →Pharma consumption is dominated by the retail channel, ie. pharmacies, with hospital chain taking an estimated share of c.20% in terms of sales value3 →The Government's commitment to improve healthcare services since early 2000s has promoted hospital investments by both public and private sector -Public sector, holding c.78%4 share in total hospital beds currently, is the largest consumer of parenteral solutions →In December 2019, the state underwent a significant reorganization of procurement procedures, transitioning to a centralized purchasing system under DMO -Under the new system, the requirements of all state and university hospitals are met through tenders conducted three times annually -Under centralized DMO structure, payment for purchases are made typically within c.105 days2002A 2021A164.5254.5+2.3% 2002A 2021A5.511.8+4.1% 2015A 2022A0.41.3+18.0%2002A 2025F4.49.7+3.5% Access to health services continue to be enhanced with the expansion of government’s universal health insurance coverage # of inpatients ( mn) Turkey has been emerging as a regional hub of medical tourism in recent years #
healthcare services since early 2000s has promoted hospital investments by both public and private sector -Public sector, holding c.78%4 share in total hospital beds currently, is the largest consumer of parenteral solutions →In December 2019, the state underwent a significant reorganization of procurement procedures, transitioning to a centralized purchasing system under DMO -Under the new system, the requirements of all state and university hospitals are met through tenders conducted three times annually -Under centralized DMO structure, payment for purchases are made typically within c.105 days2002A 2021A164.5254.5+2.3% 2002A 2021A5.511.8+4.1% 2015A 2022A0.41.3+18.0%2002A 2025F4.49.7+3.5% Access to health services continue to be enhanced with the expansion of government’s universal health insurance coverage # of inpatients ( mn) Turkey has been emerging as a regional hub of medical tourism in recent years # of medical tourists ( mn)The share of aged 65+ population is increasing faster than the total population Population ( mn) 65+ population ( mn) c.USD 6.3 bn Sales value1 (2022) c.2.6 bn packed units Sales volume (2022) 2002A 2025F66.488.8+1.3% The Government's commitment to improve healthcare services since early 2000s has promoted hospital investments # of hospital beds (k) 78%4Share of public hospital beds, 2021Ac.55% Share of local production2 (1) Manufacturer sales value (2) In value terms (3) As per management estimates (4) Includes state and university hospi tals Source: Company, TURKSTAT, The Ministry of Health of Turkey - Health Statistics Yearbook 2021CAGR 13 …with exports emerging as an additional growth area 1 Key remarks 894 692 403 309 210 191 Germany Italy Poland Czechia Spain TurkeyMinimum monthly wages1 (July 2023, USD)Electricity prices for non -household consumers2 (December 2022, USD/MWh)Export value of pharmaceutical products of Turkey (USD bn) Favorable cost base compared to other countriesTurkey stands out as an important export hub thanks to its strategically advantageous location at the crossroads of Europe and MENA 2009A 2012A 2015A 2019A 2020A 2022A0.50.71.11.41.81.9+11.4% (1) Represents gross amount of minimum monthly wages as of July 2023. USD 595 per month for Turkey represents the total cost to t he employer as of July 2023 (2) As of December 2022, as per data derived from https://www.globalpetrolprices.com/electricity_prices/ Source: Company, İEİS, EUROSTATThe long -standing presence of numerous international pharma companies in Turkey has contributed significantly to the development of a substantially competent industry workforce and management know -how Turkey’s labor and electricity costs are considerably lower than other similar countries (combined c.10% of 2022 A Net sales of the Company) Diversified natural gas supply network of Turkey comprised of Russia, Iran, Azerbaijan, Algeria and Qatar ensures supply security even during political uncertaintiesWith its well invested asset base and extensive manufacturing experience in the industry, Turkey emerges as a significant pharma manufacturing base 892 595 Germany France Spain Greece Poland Turkey2,197 1,922 1,386 1,001July 2023 202 USD/MWh3CAGR 14 (1) c. 2% of Net sales of 2022A is comprised of other sales (2) c.3% of medicine sales of 2022A is comprised of other sales (3) A PI details are available in the Appendix Source: Company, E&Y FVDD ReportOverview Medicine 65% →The Company’s products address a total of 15 different therapeutic areas, including radiocontrast, anesthesia, analgesic & anti - inflammatories, antibiotics, proton pump inhibitors, and cardiovascular →IV drugs are offered in a wide variety of packaging forms including: -Vials (lyophilized, liquid) -Ampoules (lyophilized, liquid) -PP/PVC bags -Blow -fill-seal ampoules -Prefilled syringes →Serums are supplied in various forms of PP / PVC bags including multi -chamber bags and PP/glass bottles →Parenteral nutrition products are packed in glass bottles, single and multi -chamber bags →The Company is the first to introduce multi -chamber parenteral nutrition products in Turkey Highly reliable hospital productsWide product portfolio with 511 licensed formulasSerums 33% % of Net sales, 2022A1Therapeutic area Selected brands3 % of Medicine sales2 (2022A) Radiocontrast agents Omnipol 21.1% Anesthesia products Brimadeks , Propofol, Muscobloc 19.0% Analgesic & anti - inflammatoryParacerol , Polaminofen 15.5% Antibiotics Moksilox , Polinoksid 9.8% Proton -pump inhibitors Zygosis, Omepreful , Essium 7.8% Cardiovascular system Poliparin , Esmobloc 7.2% Antifungals Mufines , Flukopol 4.8% Vitamin deficiency Todavit , Antoksi -C 3.8% Allergy Bradikant , Estereban 3.9% Local anesthetics Pricain , Buvicaine 1.4% Antiemetics Fosemazan , Ziaxe , Nauzex 1.1% Nephrology Teory , Rechrositol , Nefroset 0.8% Corticosteroids Cortipol 0.7% Antivirals Asimplex 0.3%2Product portfolio addressing a wide range of therapeutic areas sold in hospital channel 15 (1) Calculated by annualizing first 6M results (2) Represents management estimates of 2028F market size based on L6M 2023 m arket data (3) Market share in selected products only, in volume terms Source: Company, IQVIANew products to penetrate into sizeable retail channel 2 New products to be launch ed in the retail channel New products in hospital channelNephrologyRespiratory Ophthalmology Cardiology Anesthesia→Darbepoetin molecule for renal impairment →To be launched in 2026F →In PFS format→Budesonide, Fluticasone, Ipratropium Bromide & Salbutamol, Salbutamol →To be launched in 2024F →In BFS format →Alvotech’s Aflibercept molecule for macular degeneration →Rights of Turkish market acquired →To be launched in 2027F →In PFS format →A new variation of existing product (Propofol molecule) →In 20 ml ampoule and, 50 and 100 ml vials16.5%7.7% 75.8% Existing products New products for retail channel New products for hospital channel→Anticoagulant enoxoparin sodium molecule →To be launched in Q4 2023 →In PFS format90.2Market size2 (2028F, USD mn) 34.7%New products expected to bolster revenues in the upcoming years Share of new products in Net sales (2028F)Expected market share3 of Polifarma (2028F)Expected revenue (2028F, USD mn) 31.6 USD 315 mn33.1 40.0% 13.2 36.3 20.0% 7.3 16 Strong R&D capabilities transforming into robust product development 3 →Polifarma focuses on both new products and formula improvement of existing products in its R&D center -The R&D center is located in the production campus and currently employs 59 personnel -The Company has completed 47 R&D projects since the establishment of R&D center in 2017 →Polifarma R&D center is accredited by the Ministry of Health of Turkey -The Company enjoys several tax incentives including corporate tax, withholding tax and VAT etc. →The Company plans to extend its R&D activities to API development in the near future -The construction of the new building has started in the vacant c.2.2k sqm part of the existing site New molecule generation workflow 1 Molecule selection by the
40.0% 13.2 36.3 20.0% 7.3 16 Strong R&D capabilities transforming into robust product development 3 →Polifarma focuses on both new products and formula improvement of existing products in its R&D center -The R&D center is located in the production campus and currently employs 59 personnel -The Company has completed 47 R&D projects since the establishment of R&D center in 2017 →Polifarma R&D center is accredited by the Ministry of Health of Turkey -The Company enjoys several tax incentives including corporate tax, withholding tax and VAT etc. →The Company plans to extend its R&D activities to API development in the near future -The construction of the new building has started in the vacant c.2.2k sqm part of the existing site New molecule generation workflow 1 Molecule selection by the business development team # of ongoing projects1# of completed projects1Average completion time 66 47 22.5 months The first domestic production of the plasma volume expanderThe third producer of multi -chamber parenteral nutrition products globally and the first in the domestic market The first RAMAN test and rapid test approval in TurkeyThe first domestic producer of intravenous NK -1 Blocker Molecule selection criteria Product committee2 R&D stage for developing the product3 Licensing5 Mass production6Pilot production4High sales potential✓ ✓Limited competition ✓Higher import shareOverview R&D personnel by education 71%12%10%3%3%Bachelor’s degree Associate degree Master’s degree Phd High school59 (1) Includes API and primary packaging substitute projects Source: Company✓Contribution margin greater than 50% 17 Robust financial performance supported by outstanding growth prospects 4 Net sales1 (USD mn) Key remarks EBITDA1 (USD mn)3979115 125 132 139 145 15649 53 56 58 61 65 17455660 12 1685 63333 2021A282315 2022A1417 2023B2519 2024F33 2920 2025F253 2026F293 2027F313 2028F 2020A268211113321225244270294315 198+34%+10%85.22101.7 111.7 143.7 154.9 164.9 174.6 185.5 194.5 New products will diversify the sales channel mix with further penetration in the retail channelTop-line growth bolstered by increasing volume with new products to be introduced from 2024 onwards (1) 2020A -2022A financials converted to USD in scope of E&Y FVDD study and 2023B & onwards forecast by the Management based on E &Y FVDD financials (2) Represents annualized L9M 2020A volume figure (3) Excluding D&A Source: Company, E&Y FVDD Report21.8% 50.0% 64.6% 66.2% 69.0% 70.3% 72.1% 73.4% 74.2% Public hospitals Private hospitals Retail Export Other salesSales volume ( mn packed units) Medicine as % of Net sales 2638 4164738595 104 112 2020A 2021A 2022A 2023B 2024F 2025F 2026F 2027F 2028F+35%+12% Gross profit margin3 (%) EBITDA margin (%)40.8% 42.8% 40.3% 41.7% 42.4% 44.6% 45.0% 45.2% 45.4% 31.6% 34.0% 30.9% 32.4% 32.7% 34.9% 35.2% 35.2% 35.6% EBITDA growth driven by top -line expansion and gross margin improvementGross margin improvement thanks to efficiency gains from economies of scale driven by sales growth and new solar energy investment leading to significant electricity cost savings (c.2% of Net sales) from 2025 onwards 18 Source: CompanyI Strong market leadership in Turkish parenteral solutions market II Versatile manufacturing capabilities coupled with strong R&D muscle III Further growth on the back of new products IV Untapped potential of export markets Undisputed market leader, distinguished by its production capacityCapability to offer products in various packaging and volume options including vials, ampoules, PP /PVC bags , BFS ampoules and PFS Experienced management team with a n excellent command of market dynamicsManufacturing process supported by an R&D team specialized in product and API developmentNew molecules in nephrology, respiratory and ophthalmology to penetrate retail channel starting from 2024 F Diversification of product range for the hospital channel with new packaging forms in anaesthesia and cardiovascular fieldsIncreasing export sales supported by planned CMO and out -licensing agreement s with international players Potential to enrich export channel with securing new cGMP certifications along with approval from the US FDASolid fundamentals to support further growth 4 III. Business overview 20Business overview →Business Development team tracks and analyses global and local trends continuously to identify high potential APIs and drug types in the market →Factors such as sales potential, cost structure, raw material supply dynamics and competition are taken into account →The findings are presented to the Product Committe1 for evaluation to determine whether the product will be developed by in -house R&D teams or through in -licensingBusiness development R&D Procurement Production Sales & Distribution →The R&D function focuses on both new products and formula improvement of existing products →The Company’s R&D function was established in 2011, and certified as R&D center by the government in 2017 →The R&D team currently has 59 employees→The Company conducts its production within a two - floor manufacturing plant -The first floor of the production area is dedicated to large volume parenteral (LVP) and serum production and the second floor is dedicated to sterile IV medicine production -The production plant is certified for cGMP at both EU level and national level in 12 distinct countries →All production processes are managed and monitored by integrated IT systems for utmost control and quality assurance→Main raw material, namely API, is sourced from suppliers in China, Germany and France →Packaging materials make up c.47% of total procurement in 2022A -Paper, cardboards, and labels are acquired in the local market -Glass and plastic packaging materials are imported mainly from Germany, China, South Korea and India →All suppliers of the Company are approved by the Ministry of Health →In total value terms, c.44% of procurement was made from Asian countries, c.30% from Turkey and c.26% from Europe in 20223→In the domestic market (c.89% of Net sales in 2022A), the Company sells mainly to the public hospitals through DMO, followed by private hospitals served either directly or through pharma distributors →In export markets (c.11% of Net sales in 2022A), Polifarma sells to more than 50 countries in Europe, Middle East & North Africa and Balkans through local distributors →The Company’s sales team is comprised of 1182 people, 44 of whom are responsible for hospital products, 31 for prescription drugs, 11 for export markets and 32 for sales channels Organization and support functionsInformation Technology Organization (1) Consists of the CEO, Product Directors, Assistant General Manager responsible f or Sales and Marketing, Business Development Director, Finance Director and members of the Board of Directors (2) As of August 2023 (3) Based on top 30 suppliers
Net sales in 2022A), the Company sells mainly to the public hospitals through DMO, followed by private hospitals served either directly or through pharma distributors →In export markets (c.11% of Net sales in 2022A), Polifarma sells to more than 50 countries in Europe, Middle East & North Africa and Balkans through local distributors →The Company’s sales team is comprised of 1182 people, 44 of whom are responsible for hospital products, 31 for prescription drugs, 11 for export markets and 32 for sales channels Organization and support functionsInformation Technology Organization (1) Consists of the CEO, Product Directors, Assistant General Manager responsible f or Sales and Marketing, Business Development Director, Finance Director and members of the Board of Directors (2) As of August 2023 (3) Based on top 30 suppliers of the Company, comprising c.80% of total procurement in 2022A Source: Company, E&Y FVDD Report 21Robust business development and R&D capability Business Dev. and R&D Production Procurement Sales & Distribution Organization and support Commercialization of Propofol →The business development team conducted a pilot study for anesthesia and intensive care drugs in Turkey in April 2015. Propofol and Rocuronium Bromide were selected as the most suitable products for production →Consultancy services from abroad for lipid production technology were acquired →The Company completed the investments of lipid production area and ampoule filling machine for Propofol production →Formulation and production processes were completed by the end of 2018 →First Propofol product was commercialized in January 2020 after a 2 -year regulatory approval process →Development and commercialization of Propofol products in different volumes (50 -100 ml) and different formulations continue1.The new product is added to the GoNoGo list 2.Evaluation/scoring by the Medical and Sales & Marketing departments 3.Investment necessity assessment by the R&D department 4.Scoring is made in the GoNoGo list 5.The business model is determined 6.Forecast is requested from Sales & Marketing department 7.Product recipe and investment budget are studied by the R&D (If the product is developed in house - In case a business development project, an investment budget is prepared ) 8.Cost department studies the costs in detail and P&L is prepared 9.A presentation is made to the top management Polifarma will lead the growing Propofol market in Turkey with new formulations and volume options to be commercialized 700 2020A 2021A 2022A1,900 1,300Sales volume of Propofol (k units) Covid 19 & increasing demand from export marketsNew product evaluation process Source: Company 22 Main supply APIs and other raw materials Packaging materials Utilities and other Supplier breakdown Selected major suppliers Overview→Most of the raw materials are sourced from China, the rest is from Switzerland, Germany, France and Turkey →Most of the suppliers are contracted →Packaging products such as paper, cardboard and labels are sourced locally →Majority of glass packaging materials is purchased from India and China while the rest is sourced from Germany and South Korea →Most of the suppliers are contracted→Natural gas and electricity, which comprised 59% of utility and other costs in 2022A, are procured from the regional natural gas and electricity distribution companies Trakya Doğalgaz and Trepaş Elektrik →Other suppliers in this group are auto leasing and catering suppliers etc Payment terms→All procurement is made on cash basis in USD or EUR→All procurement is made on cash basis except Turkish suppliers, Turkish suppliers are term based →Payment is made in USD, EUR and TL→Electricity and gas payments are made in cash while other services are term based →Payment is made in USD, EURO, GBP and TL (1) Based on top 30 suppliers of the Company, comprising c.80% of total procurement in 2022A Source: Company41%Diversified supplier base enabling supply security 32% 16%11%41%Supplier I Supplier II Supplier III Other25% 13% 12%50%Supplier I Supplier II Supplier III Other33% 26%19%23% Supplier I Supplier II Supplier III Other 47% 12% % share in total procurement1, 2022A Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 23 Source: CompanyStrategically located production plant State -of-the- art production plant located at pharma manufacturing cluster of Turkey Production plant (Ergene , Tekirdağ ) 1 4 3 Derince Port1 c.240 km Karasu Port2 c.330 kmEuropean Border 3c.130 km Marmara region c.62k sqm Total areac.42 sqm Closed areac.11k sqm Expansion ( construction started in August 2023 ) With a total production capacity of c.400 mn units/year , the plant has the capability to supply products in various packaging and volume options with production activities continuing 6 days a week and 3 shifts a day Expansion possibility of a total closed area of c.31k sqm (including c.11k sqm that started in August 2023) Polifarma’s modern production plant is located at a major organized industrial zone in Tekirdağ , Marmara region enjoying strategic proximity to Istanbul and export/import gateways Positioned at the crossroads of the transportation infrastructure, Polifarma has direct access to local and international markets via marine and railroad transportation İstanbul 4Istanbul ports c.150 km2 Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 24Production campus with expansion possibility in R&D and production areas Plant layout (1) R&D center in the new building will have a total area of c.4.4k sqm on two floors Source: Company 12 3 4 5Expansion area →The construction of a new 5 -floor building, with a total closed area of c.11k sqm, began in August 2023 on a vacant land area of c.2.2k sqm →The new building will encompass a new R&D center1, an API production area, a raw material storage area and administrative offices1 2R&D center and offices →R&D center covers an area of c.1.3k sqm in the current administrative building together with quality control function 3Production area →The production area, spanning c.16.7k sqm and spread across 2 floors, is equipped with state -of-the-art machinery →Production of serums is located on the first floor →Production of IV medicines in various therapeutic areas, is carried out on the second floor, under Aroma →Production related units such as raw material warehouse, HVAC and water systems and cold storage area are also annexed to the production areas Warehouse →Modern product warehouse with advanced steel rail systems covers an area of c.4.7k sqm4 5Potential for further expansion →Opportunity to build a c.20k sqm closed area on vacant plots of
raw material storage area and administrative offices1 2R&D center and offices →R&D center covers an area of c.1.3k sqm in the current administrative building together with quality control function 3Production area →The production area, spanning c.16.7k sqm and spread across 2 floors, is equipped with state -of-the-art machinery →Production of serums is located on the first floor →Production of IV medicines in various therapeutic areas, is carried out on the second floor, under Aroma →Production related units such as raw material warehouse, HVAC and water systems and cold storage area are also annexed to the production areas Warehouse →Modern product warehouse with advanced steel rail systems covers an area of c.4.7k sqm4 5Potential for further expansion →Opportunity to build a c.20k sqm closed area on vacant plots of within the production siteBusiness Dev. and R&D Production Procurement Sales & Distribution Organization and support 25 (1) Applies for some products (2) Includes labelling (3) The capacity varies according to the product variety. If a single product (i.e. Pantaprazole ) is produced, the capacity increases to 45k Source: CompanyProduction process designed for medicine and serums →Finished goods are labelled and packaged →After this process, IV medicines are kept in quarantine for 15 days →Rapid test license enables to reduce quarantine days to 6 days for certain products→Certain finished products are kept in cold storage, all other products are kept in compliance with good storage practices→In medicine filling; vial, ampoule, BFS and PFS filling in different dimensions →In serum filling; filling of PVC and PP bags in different dimensions in addition to glass and PP bottles→Manufacturing is fully automated and controlled by computer control systems→API purchases for both medicine and serums are made by Polifarma →Aroma completes manufacturing of products from the APIs and packaging materials supplied by Polifarma , as a contract manufacturer1 Procurement 3 5 6 Overview of production process 3 2 →The Company has an annual production capacity3 of between c.35 -45k units of lyophilized vials and ampoules4 Production tankMedicine filling linesLyophilizationSterilization with autoclaves1Optic control Labelling Packaging Storage Production tank Serum filling lines2 Overpouching Sterilization PackagingMedicine Serums4 5 6 2 1Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 26Best -in-class machinery park Water system Solution preparation Production lines Packaging →24 reactors with a total capacity of 95.5 tonnes →2 homogenizers →2 vial filling lines →1 ampoule – vial (combi) filling line →1 PFS filling line →1 BFS filling line →6 lyophiliser machines →3 autoclave machines →5 PP filling lines (FFS machines) →3 PVC filling lines →1 glass bottle filling line →1 PP bottle filling line →10 autoclave machines→3 optic control machines →5 labelling machines →3 separator machines →4 packaging machines →7 packaging machines→3 purified water systems with total capacity of 26.4 cbm /hour →2 purified water storage tanks with total capacity of 20 cbm →3 distillers with total capacity of 18 cbm /hour →8 WFI1 storage tanks with total capacity of 61 cbmBrands Medicine Serum Best -in-class machinery & equipment from leading global brandsIncreased efficiency on the back of automated production process→8 strain tanks with total capacity of 2 tonnes →20 production tanks with total capacity of 28 tonnes →2 solution tanks with total capacity of 2 tonnes →1 carbomer tank with total capacity of 50 litres →1 emission tank with total capacity of 150 litres →1 mixture tank with total capacity of 200 litresThe production plant is equipped with state -of-the-art machinery and equipment enabling automated production (1) Water for injection Source: CompanyBusiness Dev. and R&D Production Procurement Sales & Distribution Organization and support 27Strong growth pillars in the production area Objective I.Capacity expansion IV. Other→1 PFS line→New cardiology product to be sold in the hospital channel →c.USD 13.3 mn revenue in 2028F →1 BFS line→New respiratory products to be sold in the retail channel →c.USD 31.6 mn revenue in 2028F →API synthesis production area →Sevoflurane production area →Transport trolley with LAF2 cabin II.New building→The construction of a new 5 -floor building, with a total closed area of c.11k sqm, on a vacant land area of c.2.2k sqm1 →Will include a novel R&D center, a section for API production, an area designated for raw material storage, as well as administrative offices→c.USD 7.5 mn (2023B - 2024F) →c.USD 1.3 mn in total (2023B)→c.USD 1.4 mn (2025F)→c.USD 4.4 mn (2025F) Details Total investment Single plant strategy to maximize productivity (1) The construction started in August 2023, however most of the related CAPEX is expected to be incurred in 2024F (2) LAF: Laminar air flow Source: Company III.Solar panels→28 MW solar power plant project →Annual electricity generation of 33 mn kWh, meeting the electricity demand of the production plant→c.USD 21 mn (2024F)Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 28 Source: CompanyVersatile manufacturing capabilities enabling production of wide array of forms Wide range of medicines in many different packaging formsPP bag IV fluids IV drugs Plasma volume expandersVial Injectable solution Lyophilized powder Concentrated solution Emulsion Ampoule Injectable solution Lyophilized powder Concentrated solution Emulsion Pre-filled syringes New type of packaging for retail channelBlow -Fill-SealExisting products New products Emulsion Multi -chamber bags Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 29Strict adherence to global manufacturing standards under GMP compliance Country Polifarma Aroma Certificate validity date3 Australia ✓ ✓ 2025 Azerbaijan ✓ On-going renewal process Bulgarian ✓ ✓ 2023 Cambodia ✓ 2025 Jordan ✓ Endless Kenya ✓ ✓ 2023 Peru On-going Philippines ✓ ✓ 2025 Saudi Arabia On-going South Korea ✓ 2025 Thailand ✓ 2024 Vietnam ✓ ✓ 2024 - 2025 Yemen ✓ ✓ On-going renewal process Polifarma’s plant holds cGMP certifications of 12 different countries and the European Union, as well as vaccine production in Turkey as an attestation to the highest quality assurance practices Error -free production with documentation and feedback in every processManufacturing adhering to the Nitrosamine Impurity Compliance Regularly supervised high environmental safetyUtmost importance given to occupational safety→Sampling through production tanks and SAP system →Microbiology Lab feedback system and Qmex Document Management technologyFilling →Goods receiving system integrated with material flow and ERP procedures →BMR1 controlling and high -capacity water for injection (WFI) production tanksProduction→Error -free raw material weighing with BMR1 control and Weighing
Peru On-going Philippines ✓ ✓ 2025 Saudi Arabia On-going South Korea ✓ 2025 Thailand ✓ 2024 Vietnam ✓ ✓ 2024 - 2025 Yemen ✓ ✓ On-going renewal process Polifarma’s plant holds cGMP certifications of 12 different countries and the European Union, as well as vaccine production in Turkey as an attestation to the highest quality assurance practices Error -free production with documentation and feedback in every processManufacturing adhering to the Nitrosamine Impurity Compliance Regularly supervised high environmental safetyUtmost importance given to occupational safety→Sampling through production tanks and SAP system →Microbiology Lab feedback system and Qmex Document Management technologyFilling →Goods receiving system integrated with material flow and ERP procedures →BMR1 controlling and high -capacity water for injection (WFI) production tanksProduction→Error -free raw material weighing with BMR1 control and Weighing Integration SystemRaw material Polifarma and Aroma obtained EU GMP from Bulgarian Drug Agency at 22/12/20212 (1) Batch manufacturing record (2) Valid for two years (3) The Company continuously renews its cGMP certificates as long as the country continues to be classified as a target market Source: Company Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 30Well -maintained plant with significant expansion CAPEX made recently Selected major CAPEX completed in recent years Year Amount (USD mn) CAPEX for serums 7.2 Area and equipment investment for central weighing areas 2022 0.6 Expansion project of quality control laboratory 2022 0.3 3 compartment plumat filling area 2022 1.8 Lipid production area 2022 1.1 Installation of new sample collection rooms 2022 0.3 Equipment investment for quality control laboratory 2022 1.0 Improvement of electric infrastructure 2022 1.6 UPS supply for prod. area/ Building strengthening project 2022 0.2 Equipment investment for quality control laboratory 2020 0.2 CAPEX for medicine 16.5 Establishment of AIS Aseptic -2 production area 2022 11.5 Investment of packaging equipment 2022 1.5 Investment of production tanks 2021 0.2 Aseptic area revision s (HVAC and area revision) 2021 0.1 Ampoule separating machine / Paliperidone production boilers 2021 0.1 Medicine serialization system 2021 0.1 Vial labelling/shrinking/wrapping/palletizing line 2020 0.3 BFS production area 2020 2.0 Investment of 20 sqm lyophiliser 2020 0.7 Expansion of product warehouse and packaging area 2021 6.0 (1) Laminar air flow Source: CompanyPolifarma has diversified its production capabilities with the investments made in recent years Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 31 Source: CompanyProduct commercialization under multiple business models →Polifarma owns a total of 511 licensed products , comprising 308 domestic and 203 export items→The Business Development Team consistently searches for new products to commercialize →Competent R&D team and production capability pave the way for continuous product launches Polifarma develops commercial partnerships continuously to boost revenue and profits →The Company continuously looks for high potential molecules with limited competition in the market →Polifarma has recently invested in two major projects in the fields of ophthalmology and nephrology →Engages in CMO sales by partnering with well-known international pharma companies →Currently there are two international partnerships in the pipeline →Developed high -value molecules are sold in other countries through out -licensing →Polifarma supplies the counterparty throughout the term of the agreement→A new molecule in nephrology (Darbepoetin) will be launched in 2026F -Estimated revenues of c.USD 13.2 mn in 2028F →A new biosimilar molecule in ophthalmology (Aflibercept) will be launched in 2027F -Estimated revenues of c.USD 7.3 mn in 2028FI In-licensing II Contract manufacturing III Out-licensingGrowth prospects→A CMO agreement with a major European pharma company for 7.5 – 15 – 30 ml vials to be sold in the Turkish market →A CMO agreement with a major European pharma company for lyophilized ampoules to be sold in the Portuguese market →The exclusive sale of 50 - 100 ml paracetamol products in Mexico for an international pharma company under a License & Supply Agreement →Polifarma is currently working on out licensing of certain products in markets such as Philippines, Ukraine and GeorgiaBusiness Dev. and R&D Production Procurement Sales & Distribution Organization and support 32Well -structured sales channel structure in the domestic market (1) Calculated by the Management, represents the market share in IV fluids and serums market (2) c.1% of Net sales and Dome stic sales comprise of other sales Source: CompanyPolifarma reaches the domestic market via… →Polifarma products are supplied to the pharmacies through mainly national distributors such as Alliance Healthcare and Selçuk Ecza Deposu →Payment term varies from 90 days to 135 days→On the private hospitals front, Polifarma sells to large chains such as Acıbadem and Medicana directly and serves other individual hospitals spread across the country via pharma distributors -On medicines, Polifarma is engaged with Turkey’s leading pharma distribution companies Sancak Ecza Deposu and Mersin Ecza Deposu -On the serums front Polifarma works with Doruk Ecza Deposu (Istanbul and İzmir) and Selçuk Ecza Deposu →Polifarma can charge 15 -20% higher prices than its competition in this channel thanks to its in time delivery, product reliability and after sales service →Payment term varies from 100 days to 135 daysPolifarma reaches the domestic market via… In the domestic market, Polifarma dominates the hospital channel, both public and private with c.50 -55% market share1 →DMO is the centralized procurement organization for all public health institutions →The procurement of pharmaceuticals is conducted via tenders held three times annually →The supplier with the lowest bid wins the tender. Half of the total tendered volume must be supplied within 45 days and the remaining half within 60 days →The DMO tenders are denominated in TL and payments are made in 105 days , that has decreased from over 200 days following the transition to centralized procurement →Polifarma stands out in the competition in DMO tenders for parenterals with its large production capacity, wide product portfolio and price advantage driven by high -capacity utilization68% Medicine 74% Serum 26% Other - 25% Medicine 52% Serum 44% Other 4% 7% Medicine 59% Serum 41% Other - Public hospitals 60% Retail 6% Private hospitals 21%DMO Pharma distributors % of Net sales2, 2022A % of Domestic sales2, 2022ABusiness Dev. and R&D Production Procurement Sales & Distribution Organization and support 33 Source: Company , E&Y FVDD ReportFoothold in export markets →The Company sells its products in more than 50 countries through local distributors
DMO tenders are denominated in TL and payments are made in 105 days , that has decreased from over 200 days following the transition to centralized procurement →Polifarma stands out in the competition in DMO tenders for parenterals with its large production capacity, wide product portfolio and price advantage driven by high -capacity utilization68% Medicine 74% Serum 26% Other - 25% Medicine 52% Serum 44% Other 4% 7% Medicine 59% Serum 41% Other - Public hospitals 60% Retail 6% Private hospitals 21%DMO Pharma distributors % of Net sales2, 2022A % of Domestic sales2, 2022ABusiness Dev. and R&D Production Procurement Sales & Distribution Organization and support 33 Source: Company , E&Y FVDD ReportFoothold in export markets →The Company sells its products in more than 50 countries through local distributors -Currently MENA is the focus of Polifarma’s export strategy due to the low competition and favorable currency rates -The Company has 203 licensed products in export markets →The Company also engages in CMO and out -licensing agreements to bolster export sales -Two CMO and one out -licensing projects to the export markets are in the pipeline of the Company Breakdown of export sales by country (2022A , USD mn ) Africa 8%Europe 15% Southeast Asia 4%Middle East 57%CIS 12%Breakdown of export sales by region (2022A)Overview Export sales value (USD mn) 2021A 2022A 2023B 2024F 2026F 2028F26.5 15.217.019.224.831.1 %13 Breakdown of export sales by product (2022A , USD mn ) 25% 13% 7% 8%7%6%4%30% Iraq Azebaijan AlbaniaJordan Israel UAELibya Other51% 49% Medicine SerumCovid 19Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 23.8% 11.5% 8.6% 8.5% 9.2% 9.9% Export s as % of Net sales 34Competent professional management team (1) Shareholder (2) Has 0.3% shareholding in Polifarma Source: CompanyBusiness Dev. and R&D Production Procurement Sales & Distribution Organization and support Supervision of an Executive Committee comprising C -level professionals Ufuk Kumrulu Chairman & Managing Director1Fatih Zengin Assistant General Manager2 →30+ years experience in Polifarma →Responsible for Financial Affairs, Procurement and Human Resources since 2020 Servet Aksu Assistant General Manager →26+ years experience in Polifarma →Responsible for Sales and Marketing since 2020 →25+ years experience in cosmetic & pharmaceutical industries →Responsible for Technical Operations since 2019 →Experience in pharma companies such as Bayer , Deva , and Pharmactive Ömer Bozyokuş Technical Operations Director →20+ years experience in cosmetic & pharma industries →Responsible for Supply Chain Management since 2021Ferhat Yalçın Supply Chain Director →20+ years experience in drug development →Responsible for R&D since 2019 →Experience in drug companies such as Sandoz, Actavis, Abdi İbrahim, Turgut & DEVAÖmer Faruk Fırat R&D Director Track record of continued customer and product portfolio growth Sustainable top -line growth of c. 27% CAGR in 2020A -2022AAgile portfolio management approach to embrace market trends and to maintain above 30% EBITDA margin in USD terms →20+ years experience in IT and project management, particularly in ERP →Responsible for IT since 2020Suat Özdemir IT Director Gürmen Kaynar Business Development Director →10+ years experience in pharma industry →Responsible for Business Development since 2021 →Experience in drug companies such as World Medicine and DEVA →30+ years experience in Polifarma →Oversees the operations as theManaging Director Executive Committee Member…with 35Organizational structure (1) As of December 2022 (2) AGM: Assistant General Manager (3) Outsourced pers onnel works in production Source: CompanyOverview Board of DirectorsUfuk Kumrulu (Chairman) Vildan Kumrulu (Vice chairman) Fatih Zengin (Member ) Personnel breakdown1 45% 34%9%8%4% 1,477 67%33% 79%21% Blue -collar White -collarIn-house personnel Outsourced3Direct labor Indirect labor R&D S&M G&A1,477 1,477Quality Man. and GMP Compliance CoordinatorR&D DirectorBus. Dev. DirectorQuality DirectorPublic Relations ManagerProduction ManagerRegulatory Affairs ManagerSales & Marketing AGM2Finance AGM2Technical Operations DirectorIT DirectorBusiness Dev. and R&D Production Procurement Sales & Distribution Organization and support 36Highly integrated IT infrastructure Source: Company Production Production planning Material management Maintenance man. Quality management IT infrastructure aligning with the highest global standards for seamless coordinationProject management Business planningHR Administrative Finance Finance & accounting Cost accounting Sales & distribution Business operations Weighing automation systemMedicine serialization system A fully integrated IT infrastructure enabling to oversee all processesAdvanced IT capabilities that ensure efficiency in operations and control over organizational planning QMEX (Quality document management system )Business Dev. and R&D Production Procurement Sales & Distribution Organization and support 37 (1) The investment will start upon the approval of EMRA (Energy Market Regulation Authority ) Source: CompanyAfyonkarahisarIstanbulSolar panel plant in Afyonkarahisar Capacity and generation 1 28 MW total capacity c.33 mn kWh/p.a. generation USD 21 mn investment Payback of c.4 yearsAnnual savings of over USD 5.0 mn→Turkish government promotes commercial entities ’ transition to renewable energy sources and achieve energy self sufficiency by allowing them to invest in renewable energy plants in or out of theproduction site without a license –The panel installments will start in early 2024 and the electricity generation in early 2025 following c.12 months investment period –All the energy generated will be used for the energy needs of the Company’s production plant2 3 4 5 The solar energy investment will be a major step for the company in the field of sustainability and the use of clean energySolar panel investment1 to achieve cost savings and enhance sustainability IV. Financial overview and projections 39Basis of preparation The Company prepares statutory accounts in compliance with local regulations →Statutory accounts: The Company maintains its books and prepares its statutory financial statements in TL, in accordance with Tax Legislation and the Uniform Chart of Accounts issued by the Ministry of Finance of Turkey (" Turkish GAAP ") →TFRS accounts (almost identical to IFRS): The Company’s stand -alone TFRS financials were issued on annual basis in 2020A and 2021A. The proforma consolidation for 2020A and 2021A was prepared within the scope of E&Y FVDD. Since the consolidated TFRS figures are not finalized yet for 2022A, proforma consolidated TFRS -like accounts were also prepared within the scope of E&Y FVDD →Management accounts: The Company issues monthly accounts detailed at product, channel and geography level, based on Turkish GAAP accounts →The Company’s fiscal year is the 12 months beginning on January 1 and ending on December 31 of the calendar year, i.e., 01.01 .2022 – 31.12.2022 Historical financials presented in this section are based in USD, proforma consolidated and
Ministry of Finance of Turkey (" Turkish GAAP ") →TFRS accounts (almost identical to IFRS): The Company’s stand -alone TFRS financials were issued on annual basis in 2020A and 2021A. The proforma consolidation for 2020A and 2021A was prepared within the scope of E&Y FVDD. Since the consolidated TFRS figures are not finalized yet for 2022A, proforma consolidated TFRS -like accounts were also prepared within the scope of E&Y FVDD →Management accounts: The Company issues monthly accounts detailed at product, channel and geography level, based on Turkish GAAP accounts →The Company’s fiscal year is the 12 months beginning on January 1 and ending on December 31 of the calendar year, i.e., 01.01 .2022 – 31.12.2022 Historical financials presented in this section are based in USD, proforma consolidated and TFRS based for the years 2020A, 2 021A and 2022A. All TFRS consolidation and USD conversion are made within the scope of E&Y FVDD →All figures in this Information Memorandum are presented in USD, as in the E&Y FVDD study, for a healthy analysis of the Comp any’s historical performance, eliminating the impact of TL volatility on the financials, and enabling a like -for-like analysis of historical and projected fin ancials →FVDD adjustments include certain TFRS -like adjustments as well as minor items to reverse the impact of non -recurring or non -oper ational records (USD mn) 2020A 2021A 2022A Net sales 87.1 114.5 144.1 COGS (44.4) (54.9) (69.1) Gross profit ex. D&A 42.8 59.7 75.0 Gross profit margin 49.1% 52.1% 52.0% Total OPEX ex. D&A (9.1) (11.7) (15.3) Total operating inc./(exp.), net (0.4) 4.0 1.0 EBITDA 33.4 51.9 60.7 EBITDA margin 38.3% 45.4% 42.1% (USD mn) 2020A 2021A 2022A Net sales 82.3 111.0 132.8 COGS (48.7) (63.5) (79.3) Gross profit ex. D&A 33.6 47.5 53.5 Gross profit margin 40.8% 42.8% 40.3% Total OPEX ex. D&A (8.8) (10.4) (14.2) Total operating inc./(exp.), net 1.2 0.7 1.7 EBITDA 26.0 37.8 41.0 EBITDA margin 31.6% 34.0% 30.9% Turkish GAAP accounts1 Adjusted E&Y FVDD figures (1) Converted to USD by using average USD/TL FX rates for the relevant periods Source: Company, E&Y FVDD report2023B and forecast period projections presented in this section are prepared by the Company’s management in USD in line with the historical adjusted contribution margins 40Overview of historical performance and forecast period (1) Excluding D&A Source: Company, E&Y FVDD reportRemarks Sales volume ( mn packed units ) 68 87 2024F79 96 2026F89 10526 76 2021A102 112144 155175195 36 75 2022A61 83 2023B 2028F+18.9%+6.2% Net sales (USD mn) 111 133198 225 270 315 2021A 2022A 2023B 2024F 2026F 2028F+33.6%+9.7% EBITDA (USD mn) 34.0% 2021A 2022A 2023B 2024F 2026F 2028F37.8 41.064.373.595.1112.2 +30.5%+11.8%30.9% 32.4% 32.7% 35.2% 35.6%42.8% 40.3% 41.7% 42.4% 45.0% 45.4% < Medicine SerumGross profit margin1 (%)EBITDA margin (%)EBITDA (USD mn)50.0% 64.6% 66.2% 69.0% 72.1% 74.2% Medicine as % of Net salesTopline growth led by volume increase across all product categories through new launches (esp. in medicine products), investment in filling and packaging lines and solid share in DMO tenders Positive price impact on Net sales as the share of medicine increases in total sales Gradual increase in gross profit and EBITDA margins mainly thanks to solar panel investment 41Overview of medicine sales (1) Contribution I = Net sales – raw material cost (2) Contribution II = Net sales – raw material cost – packaging cost Source: Company, E&Y FVDD reportRemarks Sales volume ( mn packed units) 2024F718 2026F7811 2028F26 2021A36263661 687989 2022A610 2023B644+53.7%+7.8% Net sales (USD mn) 56 86130 135 146 1584976 2021A 2022A1 2023B20 2024F 2026F 2028F5686131 155195234+53.7%+12.3% Contribution II (USD mn) 61.0% 2021A 2022A 2023B 2024F 2026F 2028F33.953.581.9 97.0121.5145.9+55.4%+12.3%62.4% 62.4% 62.4% 62.4% 62.4%72.5% 74.0% 74.0% 74.0% 74.0% 74.0% <Existing productsNew productsContribution II2 (USD mn)Contribution I1 margin (%)Contribution II2 margin (%)Volume growth of 5% annually in existing products augmented by new product launches in nephrology, respiratory, ophthalmology, anesthesia and cardiology Topline growth further supported by the change in product mix towards higher priced new products while the unit prices of existing medicine products are assumed to slightly decline Contribution margin s are projected to remain at the same level as in 2022A starting from 2023 onwards 42 <Overview of serum sales (1) Contribution I = Net sales – raw material cost (2) Contribution II = Net sales – raw material cost – packaging cost Source: Company, E&Y FVDD reportRemarks Sales volume ( mn packed units ) 2021A 2022A 2023B 2024F 2026F 2028F76 75 83 87 96 105+4.4% +5.0% Net sales (USD mn) 2021A 2022A 2023B 2024F 2026F 2028F39.4 44.564.3 66.8 72.278.0 +27.8%+4.0% Contribution II (USD mn) 54.5% 2021A 2022A 2023B 2024F 2026F 2028F21.5 26.338.0 37.9 40.3 42.9+33.0%+2.5%59.1% 59.1% 59.1% 59.1% 59.1%94.0% 91.9% 91.9% 91.9% 91.9% 91.9% Sales volume of serums ( mn packed units )Contribution II (USD mn)Contribution I margin (%)Contribution II margin (%)Sales volume of serums ( mn litres )30.3 35.3 38.8 40.7 44.9 49.5 5% volume growth in serum products from 2024 onwards, with no projected product mix impact Slight unit price decrease in USD terms from 2024 onwards in line with existing medicine products Contribution margins are projected to remain at the same level as in 2022A starting from 2023 onwards 43Net sales by channel Source: Company, E&Y FVDD reportRemarks Net sales by channel (USD mn) Unit 2021A 2022A 2023B 2024F 2025F 2026F 2027F 2028F Net sales USD mn 111.0 132.9 198.1 225.0 243.8 269.9 294. 2 315. 2 Public hospitals USD mn 39.1 79.4 115.0 124.6 131.8 138.5 145.4 155.7 As % of Net sales % 35.2% 59.7% 58.0% 55.4% 54.1% 51.3% 49.4% 49.4% Private hospitals USD mn 23.2 27.8 49.3 53.0 55.7 58.4 61.0 65.4 As % of Net sales % 20.9% 20.9% 24.9% 23.5% 22.8% 21.6% 20.7% 20.7% Retail USD mn 6.1 7.8 14.2 25.4 32.7 45.1 55.6 59.6 As % of Net sales % 5.5% 5.9% 7.2% 11.3% 13.4% 16.7% 18.9% 18.9% Export USD mn 26.5 15.2 17.0 19.2 20.7 24.8 29.0 31.1 As % of Net sales % 23.8% 11.5% 8.6% 8.5% 8.5% 9.2% 9.9% 9.9% Other sales USD mn 16.1 2.6 2.7 2.8 3.0 3.1 3.3 3.5 As % of Net sales % 14.5% 1.9% 1.4% 1.3% 1.2% 1.2% 1.1% 1.1%Driven by new medicine products in nephrology,
115.0 124.6 131.8 138.5 145.4 155.7 As % of Net sales % 35.2% 59.7% 58.0% 55.4% 54.1% 51.3% 49.4% 49.4% Private hospitals USD mn 23.2 27.8 49.3 53.0 55.7 58.4 61.0 65.4 As % of Net sales % 20.9% 20.9% 24.9% 23.5% 22.8% 21.6% 20.7% 20.7% Retail USD mn 6.1 7.8 14.2 25.4 32.7 45.1 55.6 59.6 As % of Net sales % 5.5% 5.9% 7.2% 11.3% 13.4% 16.7% 18.9% 18.9% Export USD mn 26.5 15.2 17.0 19.2 20.7 24.8 29.0 31.1 As % of Net sales % 23.8% 11.5% 8.6% 8.5% 8.5% 9.2% 9.9% 9.9% Other sales USD mn 16.1 2.6 2.7 2.8 3.0 3.1 3.3 3.5 As % of Net sales % 14.5% 1.9% 1.4% 1.3% 1.2% 1.2% 1.1% 1.1%Driven by new medicine products in nephrology, ophthalmology, and anesthesia, the retail channel is set to progressively expand its share, reaching c.19% by2028F from c.6% in 2022A Export channel is expected to maintain its c.10% share supported by out -licensing and CMO fo r major pharma companies 44 Source: Company, E&Y FVDD reportEBITDA statement Remarks Contribution margin is projected to stay stable at both medicine and serum lines Gross margin improvement is driven by the solar energy investment which reduces electricity costs substantially from 2025 onwards (c.2% of Net sales ) and efficiencies from economies of scale In parallel with penetration into the retail chain, the sales team is projected to expand to more than 245 people by 2027F (vs 118 currently)EBITDA statement (USD mn) Unit 2020A 2021A 2022A 2023B 2024F 2025F 2026F 2027F 2028F Net sales USD mn 82.3 111.0 132.8 198.1 225.0 243.8 269.9 294.2 315.2 Growth % n.a. 35.0% 19.6% 49.2% 13.6% 8.3% 10.7% 9.0% 7.2% Total material cost USD mn (39.2) (50.2) (75.6) (85.7) (92.8) (102.7) (111.8) (119.8) As % of Net sales % (35.3%) (37.8%) (38.1%) (38.1%) (38.1%) (38.0%) (38.0%) (38.0%) Contribution II USD mn 71.9 82.6 122.6 139.3 151.0 167.3 182.4 195.5 Contr. II margin % 64.7% 62.2% 61.9% 61.9% 61.9% 62.0% 62.0% 62.0% Total labour , energy and other production costsUSD mn (24.3) (29.0) (39.8) (44.0) (42.3) (45.8) (49.3) (52.3) As % of Net sales % (21.9%) (21.9%) (20.1%) (19.5%) (17.4%) (17.0%) (16.8%) (16.6%) Gross profit USD mn 33.6 47.5 53.5 82.7 95.3 108.6 121.5 133.1 143.2 Gross profit margin % 40.8% 42.8% 40.3% 41.7% 42.4% 44.6% 45.0% 45.2% 45.4% Total OPEX USD mn (8.8) (10.4) (14.2) (19.7) (23.3) (25.1) (28.1) (31.3) (33.1) As % of Net sales % (10.7%) (9.4%) (10.7%) (10.0%) (10.4%) (10.3%) (10.4%) (10.6%) (10.5%) R&D USD mn (0.6) (0.3) (0.4) (0.5) (0.5) (0.6) (0.7) (0.8) (0.9) S&M USD mn (5.4) (6.7) (9.8) (13.8) (16.3) (17.5) (20.0) (22.6) (24.0) G&A USD mn (2.8) (3.4) (4.1) (5.4) (6.5) (7.0) (7.4) (7.8) (8.2) Total opr. inc /(exp), netUSD mn 1.2 0.7 1.7 1.3 1.5 1.6 1.8 1.9 2.1 As % of Net sales % 1.5% 0.6% 1.3% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% EBITDA USD mn 26.0 37.8 41.0 64.3 73.5 85.1 95.1 103.7 112.2 EBITDA margin % 31.6% 34.0% 30.9% 32.4% 32.7% 34.9% 35.2% 35.2% 35.6%EBITDA margin is expected to hover around c .35% from 2025 onwards 45Net working capital (“NWC”) (1) DSO: Days sales outstanding, DIO: Days inventory outstanding, DPO: Days payable (2) Days in 2021A – 2022A are calculated b ased on average balance sheet figures, whereas days in 2020A are calculated based on 2020A balance sheet figures only Source: Company, E&Y FVDD reportRemarks Net working capital1 (USD mn) NWC1Unit 2020A 2021A 2022A 2023B 2024F 2025F 2026F 2027F 2028F Trade receivables USD mn 37.6 24.7 43.4 58.2 59.3 68.0 73.0 80.7 84.0 Inventory USD mn 20.9 23.5 30.3 48.0 39.9 51.7 49.0 60.3 56.4 Trade payables USD mn (6.6) (4.7) (5.0) (9.3) (7.2) (9.9) (9.0) (11.7) (10.5) Trade working capitalUSD mn 51.9 43.4 68.7 96.9 92.1 109.8 112.9 129.3 129.8 Other current assets USD mn 11.7 9.6 12.7 19.0 21.6 23.4 25.9 28.2 30.2 Other current liab. USD mn (5.2) (2.0) (4.1) (6.1) (6.9) (7.5) (8.3) (9.1) (9.7) Other working capitalUSD mn 6.5 7.6 8.6 12.9 14.6 15.8 17.5 19.1 20.5 Net working capital USD mn 58.3 51.0 77.4 109.8 106.7 125.6 130.5 148.4 150.3 As % of Net sales % 70.9% 46.0% 58.2% 57.9% 57.9% 57.8% 57.6% 57.5% 57.4% Cash conversion cycle1,2Days 245 185 184 184 184 184 184 184 184 DSO Days 152 93 85 85 85 85 85 85 85 DIO Days 155 126 122 122 122 122 122 122 122 DPO Days 62 34 23 23 23 23 23 23 23Following the centralization of procurement of public hospitals, the Company can collect in c.105 days from DMO The Company keeps a strategic inventory level to timely supply state hospitals, a key KPI in DMO tenders DPO is expected to remain steady at 2022A -2023B level , going forward 46Capital expenditures (“CAPEX”) and Net debt (1) As per the R&D Center status of the Company, the Company capitalizes personnel and other expenses incurred in the R&D dep artment in its statutory accounts benefiting from tax incentives Source: Company, E&Y FVDD reportRemarks CAPEX1 (USD mn) 0.2 2023B2.30.2 2024F0.2 2025F0.3 2026F0.3 2027F0.3 2028F10.630.0 11.6 2.0 6.7 7.2 4.04.4 3.53.021.0 3.05.82.6 3.03.0 3.03.4 3.03.86.2 Building CAPEX Maintenance CAPEXMachinery CAPEX Solar panelsR&D capitalization Intangible CAPEX (Rights & other)5.3% 13.3% 4.8% 2.3% 2.3% 2.3% CAPEX as % of Net sales Cash and cash equivalents 8.8 Short term borrowings (40.4) Long term borrowings (2.6) Other financial liabilities (6.0) Net debt (40.1)Net debt (USD mn)Net debt (USD mn) 31.12.2022Total of USD 7.5 mn CAPEX for the planned new building in the production campus is included in 2023B -2024F BFS and PFS line investments totaling USD 5.8 mn is planned to be made in 2025F USD 3.0 mn annual maintenance CAPEX forecast from 2024F onwards Majority of the e xpenditures related to R&D personnel and processes are capitalized in company’s accounts1Borrowings of the Company consists solely of TL denominated loansSolar panel investment of USD 21 mn planned in 2024F, leading to savings of c.USD 5.0 mn per annum from 2025F onwards V. Appendix 48Details about production plant (1) LAF. Laminar air flow Source: CompanyClass areas for medicine production Class areas for serum productionClass area Area (sqm) /
(6.0) Net debt (40.1)Net debt (USD mn)Net debt (USD mn) 31.12.2022Total of USD 7.5 mn CAPEX for the planned new building in the production campus is included in 2023B -2024F BFS and PFS line investments totaling USD 5.8 mn is planned to be made in 2025F USD 3.0 mn annual maintenance CAPEX forecast from 2024F onwards Majority of the e xpenditures related to R&D personnel and processes are capitalized in company’s accounts1Borrowings of the Company consists solely of TL denominated loansSolar panel investment of USD 21 mn planned in 2024F, leading to savings of c.USD 5.0 mn per annum from 2025F onwards V. Appendix 48Details about production plant (1) LAF. Laminar air flow Source: CompanyClass areas for medicine production Class areas for serum productionClass area Area (sqm) / Unit K 11,713 D 966 C 1,213 B 8 LAF1 cabinets 29 units Class area Area (sqm) / Unit K 5,309 D 281 C 387 B 570 LAF1 cabinets 49 units The total size of the non-classified areas in the production site is 5,514 sqmOverview of warehouses Warehouse Area (sqm) Pallet capacity Cold warehouse (2 -8 °C) 124 88 Cold warehouse (8 -15 °C) 20 8 Cold warehouse ( -20 °C) 40 23 Overview of stability rooms Stability room Area (sqm) 40°C (75%Rh) 23.65 30°C (75%Rh) 20.77 30°C (65%Rh) 26.28 25°C (60%Rh) 56.13 25°C (40%Rh) 14.36 40°C (25%Rh) 10.94 49Medicine portfolio by selected brand s and API Source: CompanyTherapeutic area Selected brands APIs Radiocontrast agents Omnipol Iohexol Anesthesia products Brimadeks , Propofol, Muscobloc Sugammadeks , Propofol, Rocuronium Bromide Analgesic & anti -inflammatory Paracerol , Polaminofen Paracetamol Antibiotics Moksilox , Polinoksid Moxifloxacin HCL, Linezolid Proton -pump inhibitors Zygosis, Omepreful , Essium Pantoprazole, Omeprazole, Esomeprazole Cardiovascular system Poliparin , Esmobloc Heparin Sodium, Esmolol HCL Antifungals Mufines , Flukopol , Mikafungus , CaspopolAnidulafungin, Micafungin, Caspofungin Acetate, Fluconazole Vitamin deficiency Todavit , Antoksi -C Multivitamin, Ascorbic Acid (Vitamin C) Allergy Bradikant , Estereban Icatibant Acetate Local anesthetics Pricain , Buvicaine Prilocaine HCL, Bupivacaine HCL Antiemetics Fosemazan , Ziaxe , NauzexFosaprepitant Dimeglumine , Palonosetron HCL, Ondansetron HCL Nephrology Teory , Rechrositol , Nefroset Calcitriol, Paricalcitol, Cinacalcet HCL Corticosteroids Cortipol Methylprednisolone Sodium Succinate Antivirals Asimplex Acyclovir 50Ongoing API R&D projects byATC codes Source: CompanyATC code# of ongoing projects Antianemic drugs - Iron preparations 1 Antibacterials 2 Antibiotics 1 Antineoplastic - Alkylating agent 1 Antineoplastic - Detoxifying drugs 1 Antineoplastic - Folic acid analogs 1 Central Nervous System (CNS) - Antipsychotic drugs 5 Ophthalmology 9 Parenteral nutrition 6 Radiocontrast agents 6 Respiratory 1 Total 34 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
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 : *Ünlü Menkul Değerler A.Ş., is a subsidiary of Ünlü Yatırım Holding A.Ş. and is authorized & regulated by the Turkish Capital Markets Board . 51 Zeynep Koçak Managing Director [email protected] +90 (532) 242 5378Burçin Müftü Director [email protected] +90 (533) 742 4929İbrahim Romano Managing Director [email protected] +90 (533) 960 0122Disclaimer
Information Package © 2018 ÜNLÜ & Co \| Strictly private and confidentialMay 2018 Project Karya RHIM copy 1 Disclaimer Information and opinions inthis document have been compiled orarrived atbyÜNLÜ Yatırım Holding A.Ş.(“ÜNLÜ &Co”)from thedata provided byKümaş Manyezit Sanayi A.Ş.(hereafter referred together with itssubsidiaries asthe“Company ”)and publicly available information, without ourown separate verification . The Company has been consulted about and has confirmed the appropriateness ofthe basic principles used byÜNLÜ &Cotoperform the analyses inthis document . 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 tothe prior written permission ofÜNLÜ &Coand the Company .The information, comments and opinions contained inthis document falloutside ofthescope ofTurkish Capital Markets legislation .This document does notinclude a personal recommendation and does notconstitute anoffer, orthesolicitation ofanoffer forthesale orpurchase ofanyfinancial product, service, investment or security . 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 03 +90 (533) 283 81 13Zeynep Koçak Director [email protected] +90 (212) 367 36 22 +90 (532) 242 53 78 RHIM copy 2 Table of contents Section Page I. Executive summary 3 II. Key investment highlights 7 III. Business overview 26 a. Mine sourcing 32 b. Mine concentration 33 c. Raw materials production 34 d. Refractory production 35 e. Sales 36 f. Others 38 IV. Financial overview 39 V. Appendices 55 RHIM copy I. Executive summary RHIM copy 4 Proposed Transaction timeline Kümaş, uniquely positioned market leader in refractory industry in TurkeyProposed transaction presents a unique opportunity to establish strong foothold in a growing industry ▪Kümaş Manyezit Sanayi A.Ş. (“Kümaş” or the " Company “), together with its subsidiaries, is fully owned by Gözde Girişim Sermayesi Yatırım Ortaklığı ("Gözde ") and Yıldız Holding (" Yıldız "); together referred as “ Shareholders “ −Gözde, the listed private equity majority owned by Ülker family and Yıldız, acquired Kümaş in 2012 through a privatization process run by TMSF1 ▪Shareholders, being financial investors , are evaluating its monetization options regarding Kümaş −presenting a unique opportunity for potential investors to establish strong foothold in the growing refractory industry and benefit from the strong prospects of the industry and Kümaş (the “ Transaction “) ▪Shareholders are exploring strategic options on the Board Business Unit (“ Board BU”) including a potential carve -out along with its production facility, established as a separate facility (Board Production Facility) and its sales & marketing subsidiary, Ak Alev via Yenilikçi ▪Shareholders of Kümaş have 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 Karya Process Letter I circulated along with this Information Package (‘’ IM’’) NDA IM distributionLimited Q&ANon-binding offersInitiation of due diligenceBinding bidsSigning May 31st, 2018Phase I Phase II Phase I details ▪Distribution of the IM ▪Limited Q&A process for key questions and clarification requests ▪Non-binding offers due by May 31st, 2018 Phase II details ▪Due diligence period for limited number of selected potential investors ▪Virtual data room access along with Q&A process ▪Access to ▪financial and tax vendor due diligence reports prepared by EY (“ EY VDD Reports ”) ▪Ian Wilson Consultancy Industrial Minerals Report (“ Ian Wilson Mining Sites Report ”) ▪Management presentations and site visits ▪Exact timetable for Phase II to be circulated in a separate process letter for the short -listed potential investors (1) Savings Deposit Insurance Fund (2) For further details please refer to Appendices section Source: Company Shareholding structure Shareholding percentage 49% 51% Subsidiaries Odak Refrakter Sanayi2 Yenilikçi Sales & marketing for Board BU Recycling businessAk Alev2100% 100% 75% Proposed Transaction scopePotential carve -out Refractory BU Raw materials BU Board BU RHIM copy 5 18.8 13.034.985.686.5 2015 2016 2017 2018E 2019F EBITDA EBITDA margin14.4% 10.4% 21.6% 35.1% CAGR: 65.7% EBITDA (USD mn)3 Net Sales (USD mn)2,3 Volume (k tons)2Turkey’s leading company in refractory industry established on strong fundamentals securing strategic position worldwide ▪Located in Kütahya and started its operations in 1972, Kümaş is Turkey’s largest vertically integrated refractory company mainly serving −customized Refractory products (“Refractory ”) for iron & steel and other industries where products are used in short life cycles; under Refractory Business Unit (“ Refractory BU ”) −magnesite based Raw materials for the refractory industry and increasingly to other industries; under Raw materials Business Unit (“ Raw materials BU ”) ▪Kümaş’ strategic positioning in the industry is secured via its −vertically integrated business model across the value chain −strong self supply of mines sourced from its own mining sites, enabling supply security, quality control and production planning −customized broad product portfolio consisting of: ▪The Company has rich mining sites of magnesite and dolomite with Joint Ore Resource Committee ( “JORC” ) compliant resources and reserves of c.163.6 mn tons and c.96.4 mn tons, respectively −plus, c.1.0 mn ton of chrome resources and reserves (currently not in use) ▪Kümaş has 3 production facilities in Kütahya, Turkey with magnesite ore processing capacity of c.1.2 mn tpa ▪Well -experienced management and sales teams are serving blue -chip client portfolio of leading industrial players; in Turkey and internationally −hard currency based revenue generation with functional currency USD accounts audited by Deloitte106.8 112.4 132.0 116.2 120.8185.4 153.8195.3 231.6 227.93.48.4 8.4 2015 2016 2017 2018E 2019F Refractory Raw materials Board292.2 266.1 330.7 356.3 TotalCAGR: 6.8% 80.3 82.0 103.9143.3 150.952.6 43.257.197.2 94.8 1.12.8 2.9 2015 2016 2017 2018E 2019F Refractory Raw materials Board130.2 161.5 243.7 125.3 CAGR: 23.2% Total Kümaş, uniquely positioned market leader in refractory industry in Turkey Hard currency based revenue generation Continuous efforts on operational efficiencies, innovation and cost control (1) On top of the above mentioned Business Units Kümaş has Board BU selling Board products (“ Board ”) (2) Volume and Net Sales figures indicate sales to 3rdparties under Kümaş solo
are serving blue -chip client portfolio of leading industrial players; in Turkey and internationally −hard currency based revenue generation with functional currency USD accounts audited by Deloitte106.8 112.4 132.0 116.2 120.8185.4 153.8195.3 231.6 227.93.48.4 8.4 2015 2016 2017 2018E 2019F Refractory Raw materials Board292.2 266.1 330.7 356.3 TotalCAGR: 6.8% 80.3 82.0 103.9143.3 150.952.6 43.257.197.2 94.8 1.12.8 2.9 2015 2016 2017 2018E 2019F Refractory Raw materials Board130.2 161.5 243.7 125.3 CAGR: 23.2% Total Kümaş, uniquely positioned market leader in refractory industry in Turkey Hard currency based revenue generation Continuous efforts on operational efficiencies, innovation and cost control (1) On top of the above mentioned Business Units Kümaş has Board BU selling Board products (“ Board ”) (2) Volume and Net Sales figures indicate sales to 3rdparties under Kümaş solo accounts, i.e. Raw materials supply to Refractory BU is not included in the above figures. Please refer “Financial overview” section for further details (3) Total Net Sales and EBITDA (both are representing Kümaş solo performance) presented include IFRS and due diligence adjustments as stated by EY Draft VDD Reports; those are not shown on the bar graph above separately (4) 2018E represents Q 1 2018 actual + 9M 2018 expected Source: Company, EY Draft VDD Reports▪magnesia, dolomite and alumina based refractory bricks (“ RB”) ▪magnesia, dolomite and alumina based monolithic products (“ RM”) ▪dead burned magnesia (“ DBM ”) ▪caustic calcined magnesia (“ CCM ”) ▪fused magnesia (“ FM”) ▪magnesia board (“ MB”)Refractory Raw materials Board1357.2 248.9 34.7%4 4 4 RHIM copy 6 Captive mining sites fueling production facilities strategically located close to mines, customers and transportation hubs 341 2 14 121Erzincan KütahyaBursaÇankırı Eskişehir Konya▪Mining sites of Kümaş mainly located in magnesite & dolomite rich region of Turkey; Kütahya, Eskişehir and Konya triangle ▪Proximity to industrial regions in Turkey; representing c.70% of GDP ▪Convenient location securing low transportation costs adjacent to both customers as well as transportation hubs; Gemlik and Mudanya Ports (205 km away) as well as İzmir Port (343 km away) (1) Magnesite and dolomite resources and reserves as per Ian Wilson Mining Sites Report including indicated and measured reso urces as well as probable and proven reserves, prepared in line with JORC (2) Chrome resources and reserves as per Dama Engineering study as at 2015 (“ Dama Engineering ”) Source: Company, Ian Wilson Mining Sites Report, Dama EngineeringProductsAnnual capacity Kütahya Production FacilityDBM, CCM, FM, RB, RMc.595k tons Tavşanlı (Kütahya) Production FacilityCCM c.55k tons Board Production FacilityMB c.12k tons(#) numbers in bubbles indicate number of mining sites and production facilities in corresponding cities Headquarter Kümaş mining sites Production facilities Magnesite & dolomite rich region of TurkeyResources & ReservesLocationsTotal area Magnesite1 163.6 mn tons▪Bursa ▪Çankırı ▪Eskişehir ▪Kütahya c.59.4k hectareDolomite1 96.4 mn tons▪Kütahya ▪Konya Chrome2 1.0 mn tons▪Bursa ▪Eskişehir ▪Erzincan ▪KütahyaMining sites Production facilities İzmir PortGemlik & Mudanya Ports RHIM copy II. Key investment highlights RHIM copy 8 Increasing demand for refractory products in industries served, creating opportunities for sustainable growth A flexible platform with its vertically integrated business model; creating a reliable solution partner for its customersUnique platform with leading position in the region in a strategic industry One of the leading fully integrated refractory companies worldwide Key attractiveness of Kümaş supported by strong fundamentals of global refractory industry, especially for non -Chinese supply, constituting strong basis for strategic growth going forward Source: Company Kümaş, Turkey’s leading refractory company with customized product offering under each Business Unit enabling the Company to flexibly expand its industry coverage Established portfolio of blue -chip customers with strong export base expanding with Kümaş’ product development capability Best -in-class production facilities supplied by captive mining sites with flexibility for quality raw material supply Established know -how through long -tenured management and veteran sales team supported by effective R&D capabilities Strong revenue with robust margins 1 2 3 4 7 8 5 Turkey, strategically located and positioned to become a global hub in refractory industry worldwide 8 6 RHIM copy 9 Owning more than 35% of the global cryptocrystalline magnesite reserves; c.400 mntonsTurkey, strategically located and positioned to become a global hub in refractory industry worldwide1 Source: CompanyTurkey, located within magnesite and dolomite rich region globally Second largest magnesite producer after China (c.13% of total in 2017) Significant amount of dolomite resources in Turkey Turkey: enabling competitive cost structure Relatively lower labor cost Relatively lower extraction costs Favorable transportation costs considering Turkey’s global locationTurkish iron & steel and cement sectors with strong growth fundamentals triggering growth of refractory usage Iron & steel : Over 2% annual growth expected in the long -term Cement : Over 3% annual growth expected in the long -term Well -located to act as a global hub with convenient access worldwide Close to Europe Next door to Middle East and CIS Easy transportation to Americas Ongoing restructuring in the Chinese refractory industry, accompanied by permanent decrease of Chinese supply capacity, leading to increasing importance of non -Chinese suppliers globally Strong potential and significant room for growth for Kümaş benefiting from its strategic positioning in Turkey RHIM copy 10 Kümaş, Turkey’s leading refractory company…2 Accumulated experience and know -how of over 45 years Vertically integrated business model Captive mining sites at multiple locations Diversified product portfolio Long -tenured management team with solid strategic vision High technical & design engineering know -how of veteran sales team Sustained R&D culture securing high product & service quality Providing critical component to all high temperature industrial processes Iron & steel Leading player with c.40% market share in Turkey, working with all steel producersCement Dominates the Turkish cement industry with wide product range with c.30% market share , working with majority of cement producersOther sectors Value -added offering to agriculture, construction, non -ferrous materials, glass sectors, etc.; providing room for sustainable growth going forwardRaw materials Strong positioning in DBM, CCM and FM sales both in Turkey and globally, supported by its own high quality captive mining sites Source: Company ▪#1 player for Refractory products in Turkey ▪High quality product portfolio enriched with diversified service offering; preferred solution provider for its customers ▪Customer -centric offering across industries ▪Flexible production capability to secure its leading position to timely meet customer needs ▪Strong self supply of
temperature industrial processes Iron & steel Leading player with c.40% market share in Turkey, working with all steel producersCement Dominates the Turkish cement industry with wide product range with c.30% market share , working with majority of cement producersOther sectors Value -added offering to agriculture, construction, non -ferrous materials, glass sectors, etc.; providing room for sustainable growth going forwardRaw materials Strong positioning in DBM, CCM and FM sales both in Turkey and globally, supported by its own high quality captive mining sites Source: Company ▪#1 player for Refractory products in Turkey ▪High quality product portfolio enriched with diversified service offering; preferred solution provider for its customers ▪Customer -centric offering across industries ▪Flexible production capability to secure its leading position to timely meet customer needs ▪Strong self supply of magnesite and dolomite ore sourced from its own mining sites, enabling supply security, quality control and efficient planning ▪Innovation culture enhanced with strong R&D capabilities to maximize customer satisfactionLeading company in refractory industry Secured via RHIM copy 11 Refractory products Key factors securing strategic market position and enhanced customer satisfaction (1) 2017 Volume where Raw materials BU volume includes the internal supply of Raw materials to Refractory BU (2) Net Sales and Gross Profit (excluding depreciation) figures for Refractory BU and Raw materials BU include the impact of Raw materials supply to Refractory BU to capture the stand -alone performance of both Business Units (3) Other sales corresponding to c.1.3% not shown in Refractory products breakdown (4) Shareholders are exploring strategic options on the Board BU including a potential carve -out along with its production facility, established as a separate facility (Board Production Facility ) and its sales & marketing subsidiary, Ak Alev via Yenilikçi Source: CompanySolution provider for its customers Reliable supplier High quality, sustainable and innovative product offering …with customized product offering under each Business Unit… 2 Key highlights2017 Volume (k tons)1& Net Sales & GP (USD mn)2 & GP%Refractory Business Unit Raw materials Business Unit Board Business Unit4 RB RM 82.9% 15.8% ▪Magnesia, dolomite and alumina based bricks and monolithic products including gunning, ramming, filling and lining mixes▪Concentrated magnesite ore and its processed forms including DBM, CCM and FM ▪FM; as a high quality and value -added product; is increasingly marketed to customers due to its high profitability▪A new generation building board for the construction sector under Modelpan brandDBM FM 64.5% 21.0%CCM 5.4%Others 9.1% Magnesia Board 100%Mainly serving customers in iron & steel and cement industries3Mainly serving customers in refractory industry with a growing base in non -refractory industriesComplementary product serving to construction industry90.7 24.1 103.9 30.4 1.1 -0.5 % of Business Unit Net Sales, 2017 Tailor -designed portfolio of products manufactured in line with customer specifications in size, shape and quality 132.0 290.6 3.4 26.6% 29.3% n.m. Raw materials Board products RHIM copy 12 Source: CompanyIron & steel Cement & lime GlassRefractory as raw material for FM … with increasing presence in additional industries2Non-ferrous industry Casting industryLeather processing Healthcare Chemicals Home appliancesAnimal feed and fertilizer Agriculture Hydrometallurgical process Flame retardant Glass process Abrasive Pulp & paper Diversified and rich product portfolio enabling Kümaş to increase its customer base across industries as well as to flexibly adjust its industry exposure as per market dynamics 1 Established position in selected industries… …enabling the Company to flexibly expand its industry coverage2 Refractory products DBM & FM CCMRaw materials RHIM copy 13 …serving global giants across industries1 …enabling continuous access to competitive landscape and market intelligence1Refractory Business Unit ▪Reliable solution provider with its tailor -made product offering and service quality both in Turkey and worldwide… 71% 29% Domestic Export2017 USD 103.9 mn 41%27%23%8% North America Africa Asia Europe c.5%Other industries c.10%Cement industry c.85%Iron & steel industry Raw materials Business Unit ▪High quality Raw material supplier mainly for its competitors both in Turkey and internationally… 52% 37%11% Export Supply to Refractory BU Domestic2017 USD 90.7 mn2 49%28%21%1%<1%Oceania Africa North America Asia Europe c.9%3 c.91%3 Refractory industry Non-refractory industries Indicates share of industries in Business Unit sales Proven success with customers secured by… Sector specific customer -oriented approachCustomized engineering services including application Supply security, on - demand production with timely deliveryBetter understanding of customer needs and preferences (1) Customers shown above is not a comprehensive list of all customers, only indicating selected customers (2) Internal sup plyof Raw materials to Refractory BU is shown to capture the stand -alone performance of both Business Units. Net Sales figure for Raw materials BU include impact of internal supply of Raw materials to Refractory BU (c. USD 33.6 mn in 2017) (3) Including internal supply of Raw materials to Refractory BU Source: Company 2Established portfolio of blue -chip customers… 3 …serving global giants across industries1…enabling continuous access to competitive landscape and market intelligence1<1% South America High level customer satisfaction RHIM copy 14 Global partner for 300+ customers Access to 6 continents Expanding global presence supported by Turquality Reach to 50+ countries 48%Overall export shareRefractory products export share 29% 82%Raw materials export share2 % of export share in 2017…with strong export base…3 National brand - building Program1 (1) For further details please refer to Appendices section (2) Excluding internal supply of Raw materials to Refractory BU Source: Company, EY Draft VDD Reports8% 13%21% <1%4% <1% % of export share in 2017; geographical breakdownNorth America South AmericaEurope AfricaAsia Oceania RHIM copy 15 Well -experienced management Strong R&D capabilities Kümaş……continuously developing new products……increasing presence in additional industries Electrical Grade Magnesia (EGM) Powder Magnesia Products for the Agriculture Industry; CCM & Magnesium oxide DBM for Leather Tanning Magnesium Hydroxide for Flame Retardant CCM for HydrometallurgyHeating elements for various sectors Automotive sector Animal feed sector Fertilizer sector Leather processing sector Healthcare sector Chemicals sector Cable production sector Hydrometallurgy sector Established platform Accumulated know -how …expanding with Kümaş’ product development capability3 Source: CompanyDBM for Dental Applications RHIM copy 16 Achieve sustainable & increasing profitability with Fully integrated platform with operations across the value chain 1 2 3 4 5 Mine sourcing “Providing supply security as well as cost and quality control with flexibility to internally source its magnesite and dolomite resources1" Magnesite ore concentration “Ensuring product quality and offering flexibility” Production of Raw materials “Strong capability internally
industries Electrical Grade Magnesia (EGM) Powder Magnesia Products for the Agriculture Industry; CCM & Magnesium oxide DBM for Leather Tanning Magnesium Hydroxide for Flame Retardant CCM for HydrometallurgyHeating elements for various sectors Automotive sector Animal feed sector Fertilizer sector Leather processing sector Healthcare sector Chemicals sector Cable production sector Hydrometallurgy sector Established platform Accumulated know -how …expanding with Kümaş’ product development capability3 Source: CompanyDBM for Dental Applications RHIM copy 16 Achieve sustainable & increasing profitability with Fully integrated platform with operations across the value chain 1 2 3 4 5 Mine sourcing “Providing supply security as well as cost and quality control with flexibility to internally source its magnesite and dolomite resources1" Magnesite ore concentration “Ensuring product quality and offering flexibility” Production of Raw materials “Strong capability internally catering needs of Refractory BU as well as supplying other refractory and non - refractory industries” Production of Refractory products “Offering diversified and enriched product portfolio to its customers across various industries” Sales & engineering “Providing tailored product and service capability including application; ensuring continuous customer satisfaction” (1) Kümaş is also flexible to source its mine resources from other mining companies Source: CompanyGain market intelligence ▪Effective player in Raw materials supply ▪Access to market data, intelligence and competitive landscape▪Dominantly hard currency based revenues with local currency based costs ▪Cost control ▪Operational synergies / leverage ▪Economies of scale I Have full control over its operations ▪Supply security of resources including magnesite and dolomite ore ▪Continuity in production & efficiency ▪Product quality & traceability ▪Flexible and timely offering with accurate production planning and efficient supply chain management II Offer wide product portfolio ▪High quality product offering securing customer satisfaction ▪Tailor -made and innovative product development enriched with engineering capabilities ▪Supply security for Refractory BU given internal sourcing of Raw materials III IVA flexible platform with its vertically integrated business model;…4 Fully integrated operations… …enabling Kümaş to… RHIM copy 17 …creating a reliable solution partner for its customers4 Differentiated customer proposition enabling continuous growth and increasing qualityCustomer -focused management cultureValue -added high quality products and tailored servicesProactive culture for better efficiency and productivity for its customersContinuous investment in R&D and innovationExperienced engineers providing on -site technical support & solutions RHIM copy 18 …fueling its production facilities in close proximity Mining sites at multiple locations in close proximity to production facilities 2 11 4 3 HeadquarterKümaş mining sites Production facilities Magnesite & dolomite rich region of TurkeyEskişehir KütahyaÇankırı KonyaBursa Erzincan 1421▪Mining sites mainly located in magnesite & dolomite rich region of Turkey; Kütahya, Eskişehir and Konya triangle ▪Proximity to industrial regions in Turkey; representing c.70% of GDP ▪Convenient location securing low transportation costs adjacent to both customers as well as transportation hubs ; Gemlik and Mudanya Ports (205 km away) as well as İzmir Port (343 km away) (#) numbers in bubbles indicate number of mining sites and production facilities in corresponding cities (1) Magnesite resource and reserves exhibit cryptocrystalline type mineral structure (largely differs from Chinese and other minerals) with exceptionally good properties for production of refractory bricks (2) Magnesite and dolomite resources and reserves as per Ian Wilson Mining Sites Report including indicated and measured resources plus probable and pro venreserves, prepared in line with JORC (3) Chrome resources and reserves as per Dama Engineering Source: Company, Ian Wilson Mining Sites Report, Dama EngineeringBest -in-class operations ensured via Kümaş -owned mining sites fueling its production facilities Capable of sourcing over 90% of its resources and raw materials; providing flexibility between own supply and 3rd party dependency on sourcing ▪JORC compliant magnesite (cryptocrystalline1) and dolomite resources and reserves of c.163.6 mn tons and c.96.4 mn tons, respectively2 −plus, c.1.0 mn ton of chrome resources and reserves3 (currently not in use) ▪Long -term and renewable licenses for over 40mining sites in portfolio −mining sites located mainly in Kütahya , Eskişehir and Konya as well as Erzincan, Bursa and Çankırı ▪Multi location presence providing minerals of different characteristics with various MgO grades Ideally designed plant layout for effective capacity utilization and production ▪3well-equipped production facilities with total magnesite ore processing capacity of c.1.2 mn tpa −Kütahya Production Facility with total production capacity of c.595k tpa, capable of producing DBM, CCM, FM, RB and RM −Tavşanlı (Kütahya) Production Facility with total production capacity of c.55k tpa, capable of producing CCM −Board Production Facility with total production capacity of c.12k tpa, producing only Board products (Shareholders are exploring strategic options on the Board BU including a potential carve -out along with its production facility)Key differentiators Flexible product offering as per customer specifications Certainty of supply & self-sufficiency & sourcing flexibility Effective capacity utilization & production planning High quality mines at various degrees Secured market presence with existing mines ➔ creating strong barrier to entry Well -located facilities decreasing logistics cost and securing timely delivery Mining sites located at multiple locations…Best -in-class production facilities supplied by captive mining sites… 5 RHIM copy 19 Kümaş has flexible raw material supply policy for its mine sourcing Over 90% of its resources and raw materials are provided internally where they have established relations with various companies for external mine and raw material sourcing; enabling cost optimization as well as access to various degrees of magnesite; if and when needed For other raw materials, Kümaş is working with high quality leader suppliers based on established relations…with flexibility for quality raw material supply5 Mine sourcing Others ➢Mine usage volume ➢Total usage volume▪Mainly includes DBM and FM purchases which are utilized internally for Refractory production Internally Externally 98% 99% 99%2% 1% 1% 2015 2016 2017 Internal supply External supply91% 88% 86%9% 12% 14% 2015 2016 2017 Internal supply External supply82% 69%85%18% 31%15% 2015 2016 2017 Internal supply External supplyDBM FM Source: Company941 818 771 71 81 78 26 26 Total volume (k tons)▪Over 40 mining sites ▪High quality at various degrees ▪Utilizing 3rdparty service providers for mining operations▪Flexibility to procure mine ore from 3rdparties ▪Working with various suppliers over 10 years 71 81 26Opportunistic purchases at advantageous prices 33Developing balanced portfolio of internal and external supply for supply security and profit maximization 78 RHIM copy 20 Established know -how through long -tenured management and veteran sales team…6 Refractory Business unit
volume▪Mainly includes DBM and FM purchases which are utilized internally for Refractory production Internally Externally 98% 99% 99%2% 1% 1% 2015 2016 2017 Internal supply External supply91% 88% 86%9% 12% 14% 2015 2016 2017 Internal supply External supply82% 69%85%18% 31%15% 2015 2016 2017 Internal supply External supplyDBM FM Source: Company941 818 771 71 81 78 26 26 Total volume (k tons)▪Over 40 mining sites ▪High quality at various degrees ▪Utilizing 3rdparty service providers for mining operations▪Flexibility to procure mine ore from 3rdparties ▪Working with various suppliers over 10 years 71 81 26Opportunistic purchases at advantageous prices 33Developing balanced portfolio of internal and external supply for supply security and profit maximization 78 RHIM copy 20 Established know -how through long -tenured management and veteran sales team…6 Refractory Business unit Nafiz Özdemir Refractory BU director Since 1996 with Kümaş together with Sales team Production teamMehmet Şevket Erol General manager Since 2014 with Kümaş Refractory Business Unit Raw materials Business Unit together with Sales team Production teamNuri Sarıoğlu Raw materials BU senior manager Since 2005 with Kümaş Bertan Beyaz Raw materials BU sales manager1 Since 2004 with KümaşSerkan Tetik Mining and Board BU senior manager Since 2005 with KümaşTaylan Şahin, PhD CFO Since 2015 with Kümaş Özkan Kurukavak, PhD R&D and technology manager Since 2009 with Kümaş Continuous interaction with R&D team Secure strategic position Increase operational efficiency Maintain proactive culture Ensure customer satisfaction Develop long -term vision Focus on innovationEnables Kümaş to… (1) Responsible for sales operations of Raw materials Business Unit to refractory sector Source: Company RHIM copy 21 (1) Including personnel at laboratories Source: Company… supported by effective R&D capabilities6 Well -experienced R&D team of 33 people1 Understand dynamics and needs of industries served as well as customer preferences and demandState certified R&D center since 2016 Strong product development and improvement capability In close collaboration with leading universities and institutions Customer -centric R&D culture promoting continuous development and innovation Innovative approachAbility to address customer needs Pre and post sales services via close contact with customers Ability to provide cost minimizing solutions for its customersContinuous improvementContinuous customer satisfaction approachPreferred solution provider for its clientele with its … Core focus areas of R&D New product development 1Product performance improvement2Production process improvement3Tailor -made solutions and services for customers4 The Company offers customized product portfolio and innovative solutions to meet changing industry/customer needsProactive culture & strategy Customer -centric approachRegular access to and feedback from customers Established R&D culture First & only R&D center in Turkey in the refractory sector RHIM copy 22 Case study: R&D positively impacting top line growth56 Supported by well -recognized State programs & bodies... TURQUALITY1incentive program since 2015Refractory products USD 13.2 mn Tundish spray coating MgO –Carbon Refractory Brick MgO –Spinel Brick Neutral ramming mass Gunning mortar for hot repair Contribution to 2017 Net SalesRaw materials USD 2.9 mn Fused Magnesia (≥ 97.5% MgO) Slag conditioner Caustic calcined magnesia for hydrometallurgical processes Contribution of c.USD 16.1 mn (c.10% of Net Sales) in 2017 through R&D Ministry of Science, Industry and Technology support since 2016 ...and proven success by prestigious awards in the industry 2ndplace in Innovation, Organization & Culture category in InnovaLIG 2015 3rdplace in industrial raw materials export in 2014 (1) National brand -building program. For further details please refer to the Appendices sections Source: Company RHIM copy 23 80.3 82.0103.9143.3 150.952.6 43.257.197.2 94.81.12.8 2.9 2015 2016 2017 2018E 2019F Refractory Raw materials Board130.2 125.3 161.5 243.7 TotalCAGR: 23.2%106.8 112.4 132.0 116.2 120.8185.4 153.8195.3 231.6 227.93.48.4 8.4 2015 2016 2017 2018E 2019F Refractory Raw materials Board292.2 266.1 330.7 356.3 Total 18.8 13.034.985.6 86.5 2015 2016 2017 2018E 2019F EBITDA EBITDA margin14.4% 10.4% 21.6% 35.1% CAGR: 65.7% (1) Volume and Net Sales figures indicate sales to 3rd parties under Kümaş solo accounts, i.e. Raw materials supply to Refractory BUis not included in the above figures. Please refer “Financial overview” section for further details (2) Total Net Sales and EBITDA (both are representing Kümaş solo performance) presented include IFRS and due diligence adjust men ts as stated by EY Draft VDD Reports; those are not shown on the bar graph above separately (3) 2018E represents Q1 2018 actual + 9M 2018 expected (4) 2017 figures; remaining 1% corresponds to GBP and TL sales Source: Company, EY Draft VDD Reports Increasing focus to value -added products Secured recurring revenue source driven by nature of products such as RB and RM with short life cycles Continuous efforts on operational and production efficiencies, innovation and cost control Competitive cost structure Hard currency based revenue generation 72% USD4 27% EUR4Strong revenue with robust margins7 Volume1 (k tons) Net Sales1,2 (USD mn) EBITDA2 (USD mn) Profit oriented volume base357.2 248.9 34.7%CAGR: 6.8% 3 3 3 RHIM copy 24 2010 -2017 CAGRIncreasing demand for refractory products in industries served, creating opportunities for sustainable growth Source: Company, World Steel Association, USGC, Cembureau, Turkish Steel Association, market research8 Growing cement sector has its share in the demand growth for refractory products 2 Glass & other sectors and usage areas will also trigger growth for refractory products 3 Copper3.0%Per capita steel production (kg) in 2010 Per capita steel production (kg) in 2017▪Historical growth CAGR of c.2.6% for the global steel production between 2010 -2017 (2017 total production of 1.7 bn tons); corresponding to c.1.4% CAGR for per capita steel production ▪c.1.5% of expected annual growth for the global steel sector during the next 10 years ▪Turkish steel sector ranking as the 8thlargest globally with comparatively higher per capita steel production; implying significant use of refractory products in Turkey for steel production (historical CAGR of c.1.4% globally vs c.2.1% for Turkey) ▪Historical growth CAGR of 3.2% for the global cement production between 2010 -2017; reaching global production level of c.4.1 bn tons in 2017 ▪Turkey with 1.9% share globally witnesses similar growth trajectory of a CAGR of 3.0% between 2010 -2017 ▪c.2.5% of expected annual growth for the global cement sector during the next 10 yearsHistorical growth trajectory in the steel sector is expected to continue going forward 1 Cement production (mn tons) in 2010 Refractory products heavily used in various sectors including… Iron & steel Cement Glass & others Non-ferrous Chemicals Glass2010 -2017 CAGR1.4%
steel sector ranking as the 8thlargest globally with comparatively higher per capita steel production; implying significant use of refractory products in Turkey for steel production (historical CAGR of c.1.4% globally vs c.2.1% for Turkey) ▪Historical growth CAGR of 3.2% for the global cement production between 2010 -2017; reaching global production level of c.4.1 bn tons in 2017 ▪Turkey with 1.9% share globally witnesses similar growth trajectory of a CAGR of 3.0% between 2010 -2017 ▪c.2.5% of expected annual growth for the global cement sector during the next 10 yearsHistorical growth trajectory in the steel sector is expected to continue going forward 1 Cement production (mn tons) in 2010 Refractory products heavily used in various sectors including… Iron & steel Cement Glass & others Non-ferrous Chemicals Glass2010 -2017 CAGR1.4% 2.1% 207 227403465 World Turkey NickelCement production (mn tons) in 20173,2804,080 63 773.2% World Turkey Kümaş, well -positioned to serve increasing demand globally and secure its prominent position as a non -Chinese supplier RHIM copy 25 Strategic growth pillars for Kümaş Source: Company Penetrate into new sectors with innovative products V Improve processes through cost efficiency projects VIII Increase usage of own mine resources with capacity increasesIII Expand to new geographies and new clientsI Increase value -added products IV Explore cross -sell opportunities at existing clients by expanding existing product portfolio Kümaş, strategically located and positioned to become a global hub in refractory industry worldwide RHIM copy III. Business overview RHIM copy 27 Kümaş has fully integrated business model enabling flexibility, control over its operations and significant synergies Supporting functions Magnesite ore concentration ▪Extracted magnesite ore processed at optical and magnetic separation facilities1 ▪Cryptocrystalline magnesite ore in Turkey has low iron oxide content Magnesia based Raw materials production ▪Concentrated magnesite ore processed to obtain products such as DBM , CCM and FM ▪FM is either obtained by (i) directly processing magnesite ore or (ii) further processing CCM at high temperatures Refractory products manufacturing ▪DBM and FM further processed to obtain RBand RMincluding gunning, ramming, filling and lining mixes HR IT R&D Sales ▪Sales operations organized under Raw materials & Refractory BUs ▪Pre and post sales technical assistance through close collaboration with R&D and production departments Close relations with customers, continuous R&D efforts and innovation -centric approach lying at the center of Kümaş’ business model (1) Separation facilities are located at Kümaş Production Facility as well as at 2 mining sites Source: Company▪Company -owned mining sites utilized for sourcing ▪3rdparty service providers engaged in mining operations ▪Flexibility to source mine resources from other mining companies Mine sourcing Quality control Logistics RHIM copy 28 Offering a broad product portfolio catering to needs of various industries… (1) Shareholders are exploring strategic options on the Board BU including a potential carve -out along with its production facil ity, established as a separate facility (Board Production Facility ) and its sales & marketing subsidiary, Ak Alev via Yenilikçi Source: CompanyDBM CCM FM Magnesite ore RB RM MB Specifications ▪90% MgO ▪97% MgO▪83-88% MgO ▪96-97% MgO▪97% MgO ▪90-98% MgO Application areas ▪Steel industry ▪Cement industry ▪Lime industry ▪Glass industry ▪Non-ferrous industry▪Steel industry ▪Cement industry ▪Lime industry ▪Glass industry ▪Non-ferrous industry▪Refractory industry ▪Leather processing ▪Clothing ▪Healthcare ▪Chemicals▪Agriculture ▪Hydrometallurgical processes ▪Pulp & paper ▪Construction & Sorel cement ▪Chemicals and pharma industry ▪Environmental applications ▪Glass industry ▪Cosmetics▪Refractory industry ▪Leather processing ▪Clothing ▪Healthcare ▪Chemicals▪DBM, CCM & FM production▪Construction Refractory products Raw materials Board products1 RHIM copy 29 …continuously increasing application areas serving to various non -refractory industries Product EGM powder is used as electrical insulation filler between the coil and the outer sheath in heating elements. EGM is widely used in applications in both the domestic and industrial heating element manufacturers. Its markets cover the following applications: ▪Heating elements used in domestic appliances ▪Heating elements for industrial applications ▪Automotive applications Capacity: 10 ,000 tons/year Some of the main applications served are: ▪Animal Feed: CCM is the principal magnesium source used in the feed industry, to provide supplementary magnesium to ruminant animals, predominantly, due to its highest bioavailability and Mg concentration ▪Fertilizer: Magnesium oxide is also commonly used for direct fertilization of magnesium deficient soils The collagen fibers of the animal hide are subject to biodegradation and for this reason chrome tanning sulphate is used as a tanning stabilization/preservation agent; pH must be slowly raised to higher values for the chrome to react and stabilize the collagen. To accomplish this, DBM grade is added in the solution Market Details Visuals Electrical Grade Magnesia (EGM) Powder Magnesia Products for the Agriculture Industry DBM for Leather Tanning Source: Company RHIM copy 30 …continuously increasing application areas serving to various non -refractory industries MgO is using for dental phosphate -bonded cements. The aim of dental precision casting is to produce defect -free castings with a fine surface finish and which match the dimensions of the pattern The thermal decomposition of Mg(OH)2at 350oC, is highly endothermic with an additional evolution of a large amount of water (about 31%). Due to this property Mg(OH)2is being used in the production of polymers with low flammability. Some of the main applications served are cable industry, aluminum composite panel, polymer CCM of closely controlled activity and particle size can be used to precipitate the hydroxides of metals such as nickel (Ni), cobalt (Co) or uranium (U) from acid leachate solutions of their respective ores Product Market Details Visuals DBM for Dental Applications Magnesia Hydroxide for Flame Retardant Source: CompanyCCM for Hydrometallurgy RHIM copy 31 Production facilities in close proximity to mining sites; strategically dispersed in the magnesite rich region of Turkey Magnesite Dolomite Chrome Resources and reserves (tons)163.6 mn196.4 mn11.0 mn2 Area (hectare) c.59.4kMining sites at multiple locations Best -in-class production facilities Kütahya Production Facility Tavşanlı Production FacilityBoard Production Facility Annual Production Capacity (tons)3 c.595k c.55k c.12k Area (sqm) c.572k (closed area: c.82k) KonyaErzincan KütahyaBursa 41Çankırı 2 14 121Eskişehir Headquarter Kümaş mining sites Production facilities Magnesite & dolomite rich region of Turkey(#) numbers in bubbles indicate number of mining sites and production facilities in corresponding cities (1) Magnesite and dolomite resources and reserves as per Ian Wilson Mining Sites Report including indicated and measured reso urces as well as probable and proven reserves, prepared in
Source: CompanyCCM for Hydrometallurgy RHIM copy 31 Production facilities in close proximity to mining sites; strategically dispersed in the magnesite rich region of Turkey Magnesite Dolomite Chrome Resources and reserves (tons)163.6 mn196.4 mn11.0 mn2 Area (hectare) c.59.4kMining sites at multiple locations Best -in-class production facilities Kütahya Production Facility Tavşanlı Production FacilityBoard Production Facility Annual Production Capacity (tons)3 c.595k c.55k c.12k Area (sqm) c.572k (closed area: c.82k) KonyaErzincan KütahyaBursa 41Çankırı 2 14 121Eskişehir Headquarter Kümaş mining sites Production facilities Magnesite & dolomite rich region of Turkey(#) numbers in bubbles indicate number of mining sites and production facilities in corresponding cities (1) Magnesite and dolomite resources and reserves as per Ian Wilson Mining Sites Report including indicated and measured reso urces as well as probable and proven reserves, prepared in line with JORC (2) Chrome resources and reserves as per Dama Engineering (3) Kümaş has total magnesite ore processing capacity of c.1.2 mn tons per a nnum Source: Company, Ian Wilson Mining Sites Report, Dama Engineering Mining sites mainly located in magnesite & dolomite rich region of Turkey; Kütahya, Eskişehir and Konya triangle ➢Suludere deposit main magnesite vein RHIM copy 32 Details of mine resources & reserves OverviewCaptive mines at multiple locations enabling flexibility and proper planning Mining Concentration Raw materials Refractory Sales ▪Kümaş is among the few refractory materials producers in the world having its own natural mining sites for magnesite and dolomite −one of the most vertically integrated companies in the industry with capability to source over 90% of its resources internally −self-sufficiency in mine enabling supply security, quality control, timely production planning as well as efficiency in cost control ▪In addition to its own mining sites, Kümaş may also opt to procure mine via −paying royalty to the owner of mines for the right to extract mine −directly procuring mines from other mining companies ▪The Company has more than 40 mining sites with the highest quality magnesite (cryptocrystalline) as well as dolomite resources and reserves, c.163.6 mn and c.96.4 mn tons, respectively −majority of mining sites are located within the magnesite and dolomite rich triangle formed by the provinces of Kütahya, Eskişehir and Konya with close proximity to Kümaş’ production facilities providing logistic advantages −additionally, the Company has mining sites in Erzincan, Bursa and Çankırı, mainly for chrome as well as limited magnesite reserve, where the Company has c.1 mn ton of chrome resources and reserves which are currently not utilized −long -term and renewable licenses for its mining sites with first right to extend its licenses upon request ▪3rd party service providers utilized for the extraction of crude oreCityMagnesite resource & reserve (mn ton)1Dolomite resource & reserve (mn ton)1Chrome resource & reserve (mn ton)2Mining area (k hectare) Kütahya 108.2 67.8 0.2 35.3 Eskişehir 54.6 - 0.6 20.0 Konya - 28.6 - 0.1 Erzincan - - 0.1 2.4 Bursa 0.1 - 0.1 0.7 Çankırı 0.7 - - 0.8 Total 163.6 96.4 1.0 59.4 Kümaş’ mining sites Kümaş mining sites EskişehirErzincan Bursa KonyaKütahyaÇankırı Company -owned captive mining sites enabling Kümaş (1) Magnesite and dolomite resources and reserves as per Ian Wilson Mining Sites Report including indicated and measured reso urces as well as probable and proven reserves, prepared in line with JORC (2) Chrome resources and reserves as per Dama Engineering Source: Company, Ian Wilson Mining Sites Report, Dama EngineeringSupply securityEfficient production planningCompetitive edge vis-à-vis competitorsStrict quality & cost controlContinuous customer satisfaction with high purity cryptocrystalline magnesite reserves RHIM copy 33 Concentration of extracted mines are critical to sustain highest quality Mining Concentration Raw materials Refractory Sales ▪Following mine extraction or procurement operations performed by 3rdparty service providers at Kümaş’ mining sites −the magnesite rich ore is separated from the earth (mainly serpentine) −white high purity magnesite is handpicked (photometric sorting) from the rest at some mining fields −the magnesite ore is then moved to concentration plants1where large pieces are crushed, screened, magnetically & optically separated, washed, analyzed and classified in accordance with its usage areas ▪Concentration is an important part of production process to ensure high quality and lower quality ore are kept separate Magnetic separation 1 ▪Crushing, sieving and separating of mines to achieve enrichment of crude ore and to separate the magnesite from the waste rock or gangue ▪Magnetic separation is checked regularly to ensure intended quality is satisfiedOptical separation 2 ▪In the ore enrichment plant up -to-date technology optical separation used ▪Optical separation of mines by its color to separate non -magnetic impurities (1) Separation facilities are located at Kümaş Production Facility as well as at 2 mining sites Source: CompanyLess impurities in products Continuous customer satisfactionSuperior product quality with high quality Raw materials Overview Concentration process is key to achieve RHIM copy 34 CertificationsCapable of supplying Raw materials to refractory and other industries Mining Concentration Raw materials Refractory Sales ▪Through Kümaş’ vertically integrated business model, concentrated magnesite stored in storage areas are transferred to kilns through well -structured layout in production facility to obtain Raw materials such as DBM, CCM & FM ▪Magnesite placed in a kiln are burnt to caustic, sintered and fused magnesia at temperatures ranging from 800 °to 2,800°celsius ▪The temperature and duration of the burning procedure determines the respective reactive properties / grades of magnesia −CCM , requires the lowest temperatures, from c.800 °to c.1,100 °celsius, resulting high reactivity where products are used in the construction, agriculture and other applications −DBM , burning at temperatures above 1,700 °celsius transforms magnesite into sintered magnesia with extremely low reactivity, which due to its heat resistance is primarily used as refractory material production −FM, melting of the material in electric arc furnaces at temperatures of c.2,800°celsius, resulting high density and very large crystals, used in refractory bricks and monolithic as well as heating elements production −FM is either obtained by (i) directly processing magnesite ore or (ii) further processing CCM at high temperatures ▪The ratio of magnesite ore used for the DBM production is c.2.3:1; i.e. 1,000 tons of concentrated magnesite ore resulting in c.435 tons of DBM ▪Depending on usage area of Refractory products, further processing of Raw materials could be performed at Kümaş’ facilities, including −sizing of DBM in accordance with customer demands / preferences −crushing,
°celsius transforms magnesite into sintered magnesia with extremely low reactivity, which due to its heat resistance is primarily used as refractory material production −FM, melting of the material in electric arc furnaces at temperatures of c.2,800°celsius, resulting high density and very large crystals, used in refractory bricks and monolithic as well as heating elements production −FM is either obtained by (i) directly processing magnesite ore or (ii) further processing CCM at high temperatures ▪The ratio of magnesite ore used for the DBM production is c.2.3:1; i.e. 1,000 tons of concentrated magnesite ore resulting in c.435 tons of DBM ▪Depending on usage area of Refractory products, further processing of Raw materials could be performed at Kümaş’ facilities, including −sizing of DBM in accordance with customer demands / preferences −crushing, sieving, grinding and mixing different size of raw materials with various additives and binding agents (1) Magnetic and optical separators are used in the mine concentration process Source: CompanyOptic separator MHF furnace Quality equipment from global suppliers▪Continuous focus on health, safety and environment achieved through compliance to regulations and industry -specific requirements where success is proved by certifications Environmental Management SystemQuality Management SystemNational Brand -building ProgramFeed Safety Assurance Occupational Health & Safety ManagementISO 14001:2004 ISO 9001:2008Information Security Management SystemsTavşanlı (Kütahya) Production F acility Annual production capacityCCM: c.55k tons Capabilities▪1 rotary kiln ▪2 shaft kilns Production facilities Overview Kütahya Production Facility Annual production capacityDBM: c.300k tons CCM: c.60k tons FM: c.40k tons Capabilities▪Magnetic & optical separators1 ▪3 rotary kilns ▪1 multiple hearth furnace ▪4 electric arc furnaces RHIM copy 35 Cement Iron & steel Production facilitiesServing to key industries through its diversified Refractory product offering ▪Relatively new production facility with quality equipment from global suppliersMining Concentration Raw materials Refractory Sales ▪The qualified magnesite and dolomite based Raw materials are transported via conveyer system to large holding bins within the Refractory products manufacturing facility where Kümaş produces −RM, unshaped refractory products −RB,shaped products in line with customer preferences and −functional products, designing tailored products for customers ▪In addition to sale of Refractory products, Kümaş delivers design engineering services with on -site technical sales experts; offering tailor -made solutions ▪As a strategic product, Refractory products are mainly consumed in the production of steel, cement and glass, among other industrial applications… ▪…where Refractory products are key inputs for steelmaking with no substitutes yet representing a relatively small cost (only c.3% of total cost of iron & steel production), ensuring −targeted -quality steel output and conversion efficiency −capacity utilization at maximum levels −higher useful life of equipment and fewer maintenance stoppages ▪Driven by their short life cycle nature, Refractory products constitute a secured recurring revenue source for Kümaş… ▪…where Kümaş has an established presence in Turkey for key industries with high market share▪Well -equipped production facility in Kütahya concentrates on the production of refractory bricks and monolithic products from magnesite and dolomite ores −dolomite production line is completely isolated from magnesite production line Cost in production up to 8 monthsc.%1 c.%1Glass Useful life Kümaş’ market share in Turkeyc.1 year c.10 years c.40% c.30%increasing exposurec.%3Mixers PressesGas fired tunnel kilnsRoboticsKütahya Production Facility Annual production capacityRB: c.120k tons RM: c.75k tons Capabilities▪10 mixers with mixing capacity of 1,500 kg per feed ▪8 hydraulic presses with capacities between 800 -2,500 tons ▪2 tempering furnaces with tempering temperature up to 400°C ▪2 gas fired tunnel kilns with firing temperatures up to 1,750 °C Overview Source: Company RHIM copy 36 Sales & marketing team covering diversified clientele base Mining Concentration Raw materials Refractory Sales Source: Company Overview Kümaş carries its sales activities in Turkey separately under its Business Units; Raw materials and Refractory Each Business Unit has its own sales team covering its customers in Turkey , separately ▪total of 13 sales personnel in Turkey for both Business Units ▪capable of on -site technical application and assistance; providing strong competitive edge to Kümaş vis -à-vis its competitors In export markets , Kümaş serves its customers mainly through commissioned representatives and agents together with some direct sales internal handled by its sales forceKümaş’ sales team is working closely with R&D and production departments to provide pre and post sales technical assistance as well as to develop new / tailor -made products ▪benefiting from its well -structured organization and its close proximity to customers, Kümaş obtains detailed knowledge of customer processes and technologies as well as recent developments to timely adjust and fine -tune its product offering ▪differentiating itself from its competitors as the solution provider for its customers For new customer acquisition process , sales team is closely collaborating with R&D and production departments to understand customer needs and preferences as their solution provider Reaching to diversified clientele base under its Business UnitsDetails ▪4 sales personnel responsible for Raw materials sales under two divisions ‒sales to the refractory industry (2 sales personnel) ‒sales to non -refractory industries (2 sales personnel) ▪Sales team is responsible for both domestic and export customers ‒sales to export customers directly organized by sales team where in some cases representatives and agents are also used ▪Various incoterms utilized including ex -works, FOB and CIF ‒FOB is generally preferred by customers in export sales ‒depending on the incoterms, products are transported by Company or customers▪9 sales personnel responsible for Refractory sales under two divisions ‒sales to the iron & steel industry (6 sales personnel) ‒sales to other sectors including cement, glass, lime and others (3 sales personnel) ▪Sales team is responsible for both and export customers ‒where export sales are mainly organized via representatives and agencies coupled with limited direct sales ▪Various incoterms including ex works, FOB and CIF ‒FOB is generally preferred by customers in export sales ‒depending on the incoterms, products are carried by Company or customersRaw materials Business Unit Refractory Business Unit RHIM copy 37 85%10%5% Steel Cement Others1Blue -chip customer base in its served industries 25%39%53%65% Top 3 Top 5 Top 10 Top 20 Customer concentration in BU Net Sales (2017) (1) Others include non -ferrous metals, glass, agriculture, construction and chemical industries (2) Net Sales figure for Raw m aterials include impact of Raw materials supply to Refractory BU (c.USD 33.6 mn in 2017) Source: CompanyMining Concentration Raw materials Refractory
▪Sales team is responsible for both and export customers ‒where export sales are mainly organized via representatives and agencies coupled with limited direct sales ▪Various incoterms including ex works, FOB and CIF ‒FOB is generally preferred by customers in export sales ‒depending on the incoterms, products are carried by Company or customersRaw materials Business Unit Refractory Business Unit RHIM copy 37 85%10%5% Steel Cement Others1Blue -chip customer base in its served industries 25%39%53%65% Top 3 Top 5 Top 10 Top 20 Customer concentration in BU Net Sales (2017) (1) Others include non -ferrous metals, glass, agriculture, construction and chemical industries (2) Net Sales figure for Raw m aterials include impact of Raw materials supply to Refractory BU (c.USD 33.6 mn in 2017) Source: CompanyMining Concentration Raw materials Refractory Sales 54% 37%9%Refractory industry Raw materials supply to Refractory BU Non-refrectory industries37% 17%26%38%49% Top 3 Top 5 Top 10 Top 20 Customer concentration in BU Net Sales (2017)USD 90.7 mn Indicates average customer tenure (years)8.0 10.4 10.5 10.5 25.3Diversified customer base with long tenures Raw materials mainly catering to refractory industry with increasing exposure to non -refractory sectorsUSD 103.9 mn25.0 19.7 12.8 Refractory products mainly sold to iron & steel and cement sectors with increasing presence in other sectorsSelected customers Customer base including well -know customers both in Turkey and globallySelected customersRefractory Business Unit Raw materials Business UnitRefractory Business Unit sales –2017 Raw materials Business Unit sales –20172 Sales to Refractory BU RHIM copy 38 People at the core of Kümaş with emphasis on employee development # of reporting employees as of 2017 year end1 (1) In addition to the number of employees provided in above table, there are additional 21 employees working in Quality cont rol(11), Human resources (7), New product and market development (1) and Head office (2) directly reporting to General manager Source: CompanyFinanceTaylan Şahin Accounting Administrative affairs Sales supportFinance Product & cost Quality & incentive management Odak refractory management31 Supply chainLevent Kurt Logistics Purchasing37 R&DÖzkan Kurukavak R&D Laboratory33 Raw materialsNuri Sarıoğlu DBM production FM productionCCM production Heating elements production213 Mine & boardSerkan Tetik Concentrated ore productionMining operations Mine prospection Board production and sales46 Technical services Mehmet Cem Alaybeyoğlu Energy & Automation Maintenance & Capex Mechanical maintenance Occupational health, safety &environment122 Refractory Nafiz Özdemir RB production RM production207 Sales planning Marketing & SalesDesign officeGeneral managerMehmet Şevket Erol As of year end 2017, Kümaş had 711 employees; 569 blue collar, 132 white collar and 10 trainee Long -tenured, committed senior management team Blue collar workforce is a member of a Maden - iş labor union since 1979 RHIM copy IV. Financial overview RHIM copy 40 Proposed Transaction scope comprises of Kümaş as illustrated in the Executive summary ▪Kümaş’ functional currency is US Dollar (“ USD”) ▪The Company keeps its solo management accounts (monthly basis) in USD detailed at Business Unit level. The analysis presented in this IM are based on management accounts and reflect IFRS and VDD normalization adjustments ▪Consolidated IFRS financials (annual basis) are audited by Deloitte since 2013 Historical financials presented in this IM reflect the EY Draft VDD Reports ▪EY’s work is based on Kümaş’ solo management accounts for the analysis and factor in normalization and IFRS like adjustments. EY VDD Report also provides reconciliation to consolidated IFRS financials including Kümaş’ subsidiaries ▪This section presents Kümaş’ solo management accounts for both historical period and 2018E and 2019F; historical performance of subsidiaries for 2017 is provided on the subsidiaries’ relevant pages in the Appendices sectionKümaş carries its operations under 3 Business Units under the same legal entity (Kümaş); Refractory, Raw materials and Board. For Business Units under solo management accounts, Kümaş is tracking stand -alone performances of each Business Unit by ▪assuming hypothetical arms -length transaction nature ( transfer pricing assumption ) between Business Units where Raw materials Business Unit is a key supplier for Refractory Business Unit; supplying Raw materials to Refractory Business Unit ▪Refractory and Raw materials Business Unit sections (pages 43 -46) are representing the stand -alone performances of each correspo nding Business Unit as per solo management accounts ▪other sections of financial overview presenting the overall performance of Kümaş solo are on actual accounting basis Project Karya Vendor Due Diligence Report prepared by EY will be provided during Phase II ▪EY is preparing a detailed VDD report; further analyzing historical performance and operational profitability of the Company for2015 -2017 as well as for 2018E Others ▪2018E and 2019F figures are as per management accounts reflecting the Kümaş’ forecasts and are applied the VDD adjustments do ne on historical figures for compatibility ▪2018E figures represent management expectations for Kümaş based on actual Q1 2018 plus 9M 2018 expected ▪2019F figures represent management forecast for Kümaş considering existing capacity, product portfolio and target markets wit hout reflecting potential upside attached to strategic growth pillars for Kümaş as illustrated on page 25 ▪The Company’s fiscal year is 12 -months period starting on 1 January of the calendar year and ending on 31 December of the calend ar year (i.e. 01.01.2017 -31.12.2017) ▪All figures presented in this section are in USDBasis of preparation Source: Company, EY Draft VDD Reports RHIM copy 41 Net Sales1(USD mn) 80.3 82.0103.9143.3 150.952.6 43.257.197.294.8 1.1 2.8 2.9 2015 2016 2017 2018E 2019F Refractory Raw materials Board292.2 266.1 330.7Net Sales volume (k tons)356.3 Export share in sales▪Kümaş sales could be summarized under 3 product groups ( Net Sales presented on this page only includes sales to 3rdparties without hypothetical impact of internal supply of Raw materials to Refractory BU ): −Refractory products (64.1% of Net Sales in 2017): sales of RB and RM to a diversified customer base mainly in Turkey and increasingly to export markets −Raw materials (35.2% ): sales of DBM, FM, CCM and other products to a diversified customer base both in Turkey and in export markets −Board products (0.7% ): sales of Modelpan branded magnesia Board mainly to customers in construction sector ▪With significant export base, Kümaş generates almost all of its revenue in hard currency, mainly in USD and in EUR −72% in USD and 27% in EUR in 2017 ( remaining in GBP and TL ) ▪Net Sales CAGR of 11.3% between
this page only includes sales to 3rdparties without hypothetical impact of internal supply of Raw materials to Refractory BU ): −Refractory products (64.1% of Net Sales in 2017): sales of RB and RM to a diversified customer base mainly in Turkey and increasingly to export markets −Raw materials (35.2% ): sales of DBM, FM, CCM and other products to a diversified customer base both in Turkey and in export markets −Board products (0.7% ): sales of Modelpan branded magnesia Board mainly to customers in construction sector ▪With significant export base, Kümaş generates almost all of its revenue in hard currency, mainly in USD and in EUR −72% in USD and 27% in EUR in 2017 ( remaining in GBP and TL ) ▪Net Sales CAGR of 11.3% between 2015 -2017 (c.4% from price and product mix and c.6% from volume) mainly due to recovery in the global markets positively impacting price levels of magnesia -based of Raw materials and Refractory… −…with its positive uptick on Kümaş’ sales volume ( price levels are key for Kümaş to determine its supply volume to the market; profit maximization rather than volume focus approach ) ▪7.2% increase in EBITDA margin from 2015 to 2017 resulting partially from the increase in gross profit and partially from the decrease in OPEX as % of Net Sales −mainly TL -denominated overhead costs and OPEX contributing to overall profitability of the Company due to its hard currency revenue generation nature −2016 was a difficult year for the global refractory market where Kümaş faced decrease in its EBITDA margin due to (i) sharp decrease in prices across products and (ii) the impact of fixed costs including personnel and others ▪In 2018E, the Company is expecting 50.9% Net Sales increase; c.40% from price and product mix effect and rest from volume; mainly due to global market dynamics −global prices starting their recovery in the second half of 2017 and continuing its trend in 2018 ▪Increase in prices positively impacting the EBITDA margin of the Company in 2018E; reaching a level of 35.1% from its level of 21.6% in 2017 −effective capacity utilization rates, achieved production efficiencies as well as efficiencies in sales team structure allowing Kümaş to pass the market -driven price increases to its margins47.7% 47.9% 48.8% 54.5%CAGR: 11.3% 130.2 125.3161.5243.7 Commentary EBITDA1(USD mn) 18.8 13.034.985.6 86.5 2015 2016 2017 2018E 2019F21.6% 10.4% 14.4% 35.1%EBITDA margin (%) CAGR: 36.2% (1) Total Net Sales and EBITDA presented includes IFRS and due diligence adjustments as stated by EY Draft VDD Reports; those are not shown on the bar graph above separately Source: Company, EY Draft VDD ReportsStrong revenue with robust margins 357.2 248.9 53.5% 34.7%31.6% 22.4% 28.5% 44.4%Gross Profit margin (%)44.2% RHIM copy 42 Strong margin recovery when compared with Q1 2017Robust performance in Q1 2018 providing strong confirmation for 2018E Net Sales1(USD mn) Commentary Gross Profit1(USD mn)34.061.8 Q1 2017 Q1 2018 10.126.3 Q1 2017 Q1 20186.421.3 Q1 2017 Q1 201882.0% EBITDA1(USD mn) 160.5% 231.4% (1) Total Net Sales, Gross Profit and EBITDA presented includes IFRS and due diligence adjustments as stated by EY Draft VDD Reports Source: Company, EY Draft VDD ReportsQ1 2018 Net Sales representing c.25% of 2018E Net Sales Significant EBITDA margin jump in Q1 2018; almost reaching 2018E level of 35.1%▪Kümaş further enhanced its 2017 growth trajectory in Q1 2018 with increased volume and prices ▪Net Sales growth of 82.0% between Q1 2017 and Q1 2018 where Net Sales increase mainly related to −DBM and FMfor Raw materials −MgO -Cbricks for Refractory products ▪c.51% Net Sales growth expected for 2018E compared to 2017 ▪15.5% increase in EBITDA margin when Q1 2018 compared with Q1 2017 mainly resulting from increase in gross profit −c.13% gross profit margin increase; mainly price and product mix driven ▪The Company already secured a significant portion of orders for remaining quarters of 2018 providing visibility for Kümaş’ 2018E figures; strong signal that the Company is on track to achieve 2018E 18.9%34.4% EBITDA margin (%) Gross Profit margin (%)29.7%42.6%63.488.7 Net Sales volume (k tons) RHIM copy 43 54.7 55.2 63.8 83.7 88.04.3 3.9 3.9 3.4 3.5 3.0 4.3 5.7 6.0 6.3 2015 2016 2017 2018E 2019F Raw material Personnel Overhead9.9 10.920.231.1 32.98.4 7.710.219.120.2 2015 2016 2017 2018E 2019F Domestic Export COGS (exc. D&A) (USD mn)51.0 55.273.694.3 99.329.3 26.830.349.051.6 2015 2016 2017 2018E 2019F Domestic Export29.3% 22.7% 22.9%Gross Profit margin (%)35.2% 62.0 63.473.593.180.3 82.0103.9143.3Refractory Business Unit Stand -alone profitability with transfer pricing assumptions A Commentary Gross Profit (exc. D&A) (USD mn) Net Sales (USD mn) (1) Including production related overhead plus packaging Source: Company, EY Draft VDD Reports▪This page presents the stand -alone performance of the Refractory BU; assuming hypothetical arms -length transaction nature between Business Units −Raw materials BU supplying DBM and FM (Raw materials) to Refractory BU at an agreed price (determined based on market prices) between Business Units −transfer pricing applied for the Raw materials reflected in raw material costs under COGS to present stand -alone performance1 ▪Net Sales CAGR of 13.7% between 2015 -2017 stemming from recovery of prices for mainly 2 product groups leading to increased supply volume by Kümaş −MgO -C bricks Net Sales CAGR of c.20% between 2015 -2017 and dolomite brick of c.30% for the same period ▪Strong recovery of gross profit margin by c.6.5% between 2015 -2017; mainly driven by volume increases across key product groups; increased supply due to recovery of prices ▪In 2018E, the Company is expecting 38.0% Net Sales increase with 5.7% margin increase, mainly due to market dynamics and conditions in the refractory industry (increasing price levels of magnesia -based of raw materials leading to increasing prices in refractory sector )CAGR: 13.7%CAGR: 28.7% CAGR: 8.9%18.4 18.630.450.2106.8 112.4 132.0Net Sales volume (k tons)116.2 1120.8 150.953.135.0% 97.8 RHIM copy 44 Gross Profit (exc. D&A) (USD mn) Net Sales (USD mn) 17.0 10.1 10.0 13.7 13.435.633.247.183.6 81.431.4 29.4 33.6 57.1 59.3 2015 2016 2017 2018E 2019F Domestic Export Refractory Business Unit 38.0 40.5 51.0 76.0 76.7 5.6 5.3 4.1 4.3 4.3 11.6 11.611.4 16.4 16.6 2015 2016 2017 2018E 2019F Raw material Personnel OverheadCAGR: 9.8%9.22.4 3.7 4.8 4.714.0 10.116.439.3 38.35.7 2.6 4.0 13.6 13.5 2015 2016 2017 2018E 2019F
prices ▪In 2018E, the Company is expecting 38.0% Net Sales increase with 5.7% margin increase, mainly due to market dynamics and conditions in the refractory industry (increasing price levels of magnesia -based of raw materials leading to increasing prices in refractory sector )CAGR: 13.7%CAGR: 28.7% CAGR: 8.9%18.4 18.630.450.2106.8 112.4 132.0Net Sales volume (k tons)116.2 1120.8 150.953.135.0% 97.8 RHIM copy 44 Gross Profit (exc. D&A) (USD mn) Net Sales (USD mn) 17.0 10.1 10.0 13.7 13.435.633.247.183.6 81.431.4 29.4 33.6 57.1 59.3 2015 2016 2017 2018E 2019F Domestic Export Refractory Business Unit 38.0 40.5 51.0 76.0 76.7 5.6 5.3 4.1 4.3 4.3 11.6 11.611.4 16.4 16.6 2015 2016 2017 2018E 2019F Raw material Personnel OverheadCAGR: 9.8%9.22.4 3.7 4.8 4.714.0 10.116.439.3 38.35.7 2.6 4.0 13.6 13.5 2015 2016 2017 2018E 2019F Domestic Export Refractory Business UnitCAGR: -8.5%26.6% 20.9% 34.3%Gross Profit margin (%)36.7% CAGR: 3.9%Net Sales volume (k tons) 84.072.690.7154.4 55.2 57.566.596.7Raw materials Business Unit Stand -alone profitability with transfer pricing assumptionsB 3rdparty 86.0 89.5 95.2 93.9Refractory BU185.4 153.8 195.3 227.9 COGS (exc. D&A) (USD mn) Commentary 28.8 15.224.157.7 ▪This page presents the stand -alone performance of the Raw materials BU; assuming hypothetical arms -length transaction nature between Business Units −Raw materials BU supplying DBM and FM (Raw materials) to Refractory BU at an agreed price determined based on market prices −transfer pricing impacting Net Sales to present stand -alone performance of Raw materials BU ▪Net Sales CAGR of 3.9% between 2015 -2017 −decreased Net Sales in 2016 mainly due to DBM volume decrease which started its recovery in 2017 −Kümaş’ recent focus on FM and high grade DBM led to increasing sales and profitability which is expected to continue in 2018 ▪Lower margin in 2016 due to the decrease in magnesia based raw material prices in China which started its recovery period in 2017 plus increased sales volume for high grade DBM which is expected to continue in 2018E ▪In 2018E, the Company is expecting 70.3% Net Sales increase with 10.8% margin increase mainly fueled by market conditions globallyIncreasing focus on FM and high grade DBM leading to increasing COGS. Plus, higher graphite electrode cost, a key raw material for FM, is also increasing COGS 1 (1) Including production related overhead plus packaging Source: Company, EY Draft VDD Reports154.191.2231.6 56.537.4% 97.5 RHIM copy 45 0.2 0.2 0.31.6 3.2 4.47.0 5.721.217.927.6 23.6 25.0 2015 2016 2017 2018E 2019F41.620.4 20.4 19.9 18.984.5 72.5115.3137.6 136.364.7 71.667.667.6 69.0 2015 2016 2017 2018E 2019F▪2016, difficult year for DBM : due to competition in the global markets prices dropped significantly despite Kümaş decided to keep its prices at reasonable levels but not enter price war which resulted in volume decrease in 2016 ▪Significant recovery in 2017 for volume due to improving market conditions switched the Net Sales trend to an increasing one… ▪…which is expected to continue in 2018E supported by increasing prices and focus more on value -added products ▪Recent focus product group for Kümaş : expanding its presence in export markets with value -added products increasing the importance of this product group for Kümaş ▪Increasing focus on high grade FM sales ▪Recovery of prices in global markets due to improving market conditions and increasing demand for this product group as well as decreasing supply from China ▪Increasing raw material prices such as electrode, a key raw material for this product group, have its share in increasing price levelsFMDBMNet sales volume (k tons) Net Sales (USD mn) Commentary 21%CAGR: 3.2%277 305293 274249 270401 340 190.8 164.5203.4225.1 12.75.6 5.5 6.8 6.427.1 23.834.463.3 62.818.7 19.718.528.5 29.0 2015 2016 2017 2018E 2019F58.6 49.058.598.6 CAGR: -0.1% 706 633691 711768 6861,319 n.a. 23.021.330.6CAGR: 18.5% 0.1 0.1 0.21.3 2.6 3.8 9.8 8.012.7 9.715.028.730.3 2015 2016 2017 2018E 2019F14.112.519.038.5 CAGR: 16.0%Domestic Export Refractory BU 32.3Raw materials Business Unit sales in detail Key product groups for Raw materialsB 65% Source: Company, EY Draft VDD ReportsDomestic average unit sales price –ex-works (USD/ton) Export average unit sales price –ex-works (USD/ton) Share in 2017 Raw materials BU Net SalesDomestic Export Refractory BU98.2402 340 1,321 n.a. 30.638.2224.1 RHIM copy 46 4.2 5.3 6.110.3 10.35.97.713.819.7 19.7 2015 2016 2017 2018E 2019F▪As per its strategy, the Company focuses on producing new value -added products to enter into new industries both in domestic and export markets ▪Includes crude ore, granular sinter, granular FM and others ▪Kümaş is selling crude ore as complementary product based on agreements with its selected customers OthersCCM 32.1 30.5 19.723.1 23.115.314.1 15.314.0 14.0 2015 2016 2017 2018E 2019F303 99309 105332 126406 133Net sales volume (k tons) Net Sales (USD mn) Commentary CAGR: 40.4%250 232211 207200 278196 352 1.0 1.11.73.7 3.8 1.61.83.14.3 4.4 2015 2016 2017 2018E 2019F2.62.94.98.1 CAGR: 37.0% 47.444.6 35.037.1 3.2 3.32.53.1 3.25.55.05.76.2 6.2 2015 2016 2017 2018E 2019F8.78.2 8.39.4 Share in 2017 Raw materials BU Net SalesCAGR: -2.5%Raw materials Business Unit sales in detail Key product groups for Raw materialsB 9%5% Source: Company, EY Draft VDD ReportsDomestic ExportDomestic Export CAGR: -14.1%10.113.019.930.0192 345 8.2 403 132 9.330.0 37.1 Domestic average unit sales price –ex-works (USD/ton) Export average unit sales price –ex-works (USD/ton) RHIM copy 47 1.1 2.8 2.9 2017 2018E 2019F 0.9 1.7 1.80.3 0.6 0.6 0.3 0.5 0.5 2017 2018E 2019F Raw material Personnel OverheadDomestic unit sales price (USD/ton)Net Sales volume (k tons)3.4 8.4 1.62.8Board Business Unit Complementary Business Unit established recentlyC COGS (exc. D&A) (USD mn) Commentary Net Sales (USD mn) ▪This page presents the performance of the Board BU −started its operations in 2017 under Kümaş, this Business Unit is producing MB mainly for construction sector ▪Net Sales growth between 2017 -2018E is due to being established recently and ramping up business ▪2018 is budgeted to be break -even year for Board BU at gross profit level where it is expected to generate profits starting from 2019F and onwards −gradually increasing prices considering the existing competition in the market ▪Sales & marketing operations for this Business Unit are carried by Ak Alev Manyezit; a subsidiary of Kümaş −financial impact of the sales & marketing operations has not been included in the financials presented on this page and in this section; in the overall financials of Kümaş −Ak Alev 2017 Net Sales of USD 1.5 mn and 2018E Net Sales
operations in 2017 under Kümaş, this Business Unit is producing MB mainly for construction sector ▪Net Sales growth between 2017 -2018E is due to being established recently and ramping up business ▪2018 is budgeted to be break -even year for Board BU at gross profit level where it is expected to generate profits starting from 2019F and onwards −gradually increasing prices considering the existing competition in the market ▪Sales & marketing operations for this Business Unit are carried by Ak Alev Manyezit; a subsidiary of Kümaş −financial impact of the sales & marketing operations has not been included in the financials presented on this page and in this section; in the overall financials of Kümaş −Ak Alev 2017 Net Sales of USD 1.5 mn and 2018E Net Sales of USD 3.2 mn with 2018E EBITDA of USD 0.2 mn ▪Main export markets are UK, Israel, Jordan and Estonia ▪Shareholders are exploring strategic options on the Board BU including a potential carve -out along with its production facility as well as its sales & marketing subsidiary −established as a separate facility (Board Production Facility), physical carve -out process could be carried out easily without impacting the operations of other Business Units314 336 1 (1) Including production related overhead plus packaging Source: Company, EY Draft VDD Reports3448.4 2.9 RHIM copy 48 61.2 66.3 82.2 104.3 107.1 9.9 9.3 8.4 8.2 8.4 14.615.917.4 22.9 23.4 2015 2016 2017 2018E 2019F Raw material Personnel Overhead Commentary COGS by nature (exc. D&A) (USD mn)1 (1) Overall COGS presented includes IFRS and due diligence adjustments as stated by EY Draft VDD Reports which are not shown on the bar graph above separately (2) Including production related overhead plus packaging (3) Including personnel and overhead expenses as well as IFRS and due diligence adjustments as stated by EY Draft VDD Reports Source: Company, EY Draft VDD Reports▪Kümaş records its COGS by Business Units under management accounts and COGS items presented in this page are overall figures; no transfer pricing assumption for internal supply of Raw materials to Refractory BU ▪COGS is −c.40% USD denominated mainly related to raw materials, some packaging and some overhead costs −c.60% TL denominated including personnel, maintenance and some other overhead costs ▪Raw material costs mainly include labor and extraction costs paid to subcontractor companies as well as additive materials, petcoke and graphite electrode costs −increase in raw material costs are due to inflation and increase in the imported raw material costs such as petcoke, graphite electrode and WFA ▪Depreciation of Turkish Lira against USD leading to lower total personnel costs in terms of USD even though personnel expenses are increasing with inflation in TL terms −Kümaş is enjoying lower level personnel costs when compared with its peers in developed countries due to Turkey’s advantages position in terms of lower labor costs when compared with those countries ▪Overhead costs mainly constitutes of production facility related expenses, mine rent expenses, license fees as well as packaging costs ▪In addition, overhead costs include utilities expenses (natural gas and electricity)… −…where Kümaş production facilities have advantages on electricity prices ( up to 10% cheaper) due to its direct purchases from certain electricity generators and its location in organized industrial zoneDetails of cost of goods sold (“COGS”) 93.197.3110.4135.5 CAGR: 8.9%68.4% 77.6%(%) of Net Sales55.6% 138.955.8% 71.5% 47.0%52.9% 50.9%42.8% 43.0%24.5%24.7% 17.5% 12.8% 12.8% 2015 2016 2017 2018E 2019F Raw material Others COGS % of Net Sales (exc. D&A) 32 RHIM copy 49 G&A breakdown (USD mn)▪Transportation, freight expenses & commission expenses include logistics costs depending on incoterms (FOV and CIF) as part of customer agreements, insurance costs as well as −…commission costs that are only applied for export sales −where transportation, freight expenses & commission recorded under Net Sales as a separate line item. For 2018E and 2019F the Company is assuming same amount for Net Sales and expense ▪General administrative expenses (“ G&A ”) predominantly comprising of personnel, consultancy and insurance expenses −personnel expenses include HQ and administrative staff −consultancy expenses consist of consultancy fees mainly related to IT −insurance expenses mainly include factory and some personnel related insurance expenses ▪Sales and marketing expenses (“ S&M ”) mainly consist of personnel and some other expenses −personnel expenses includes staff costs −others include consultancy expenses, notary and other fees, rent expenses, travel expenses among others ▪Decrease in OPEX in absolute USD terms has been mainly due to the depreciation of TL against the USD, as these expenses are mostly TL -denominated expenses −c.85% of OPEX is TL-denominated Commentary OPEX (exc. D&A) (USD mn) S&M breakdown (USD mn)9.2 7.2 11.6 15.7 16.2 6.4 3.8 1.2 3.1 3.3 2.1 2.9 2.4 2.8 3.0 0.6 1.1 1.0 1.0 1.0 2015 2016 2017 2018E 2019F Transportation, freight expenses & commission G&A S&M R&DDetails of operating expenses (“OPEX”) 16.218.322.6CAGR: -6.0%as % of Net Sales14.1% 12.0% 10.0% 9.3% 15.1 2015 2016 2017 2018E 2019F Personnel 1.8 1.5 1.8 1.8 1.9 Consultancy 1.0 0.3 0.4 0.4 0.4 Insurance 0.3 0.4 0.3 0.3 0.3 Others 3.3 1.6 (1.2)20.7 0.7 Total 6.4 3.8 1.2 3.1 3.3 % of Net Sales 4.9% 3.0% 0.8% 1.3% 1.3% 2015 2016 2017 2018E 2019F Personnel 1.3 1.5 1.4 1.4 1.6 Consultancy 0.1 0.2 0.2 0.2 0.3 Travel 0.1 0.2 0.1 0.2 0.2 Others 0.6 1.1 0.7 0.9 0.9 Total 2.1 2.9 2.4 2.8 3.0 % of Net Sales 1.6% 2.4% 1.5% 1.1% 1.2%23.59.5% (1) Includes IFRS and due diligence adjustments as stated by EY Draft VDD Reports (2) Negative due to IFRS and due diligenc e adjustments as per EY Draft VDD Reports Source: Company, EY Draft VDD Reports1 1 RHIM copy 50 Net Sales 2015 -2018E (USD mn)Historic sales growth mainly coming from the Refractory products, whereas 2018E growth is driven by both products; Refractory and Raw materials (1) Overall Net Sales presented include IFRS and due diligence adjustments as stated by EY Draft VDD Reports which are not shown on the bar gr aph separately Source: Company, EY Draft VDD ReportsRaw materials Net Sales Refractory Net Sales Board Net Sales4.523.61.12.140.139.4 1.8 0.9 130.2161.5243.7 2015 Raw materials Refractory Board Adjustments 2017 Raw materials Refractory Board Adjustments 2018E52.6 80.31.1 57.1 103.997.2 143.32.8 CAGR: 11.3%Growth: 50.9%
due diligence adjustments as stated by EY Draft VDD Reports (2) Negative due to IFRS and due diligenc e adjustments as per EY Draft VDD Reports Source: Company, EY Draft VDD Reports1 1 RHIM copy 50 Net Sales 2015 -2018E (USD mn)Historic sales growth mainly coming from the Refractory products, whereas 2018E growth is driven by both products; Refractory and Raw materials (1) Overall Net Sales presented include IFRS and due diligence adjustments as stated by EY Draft VDD Reports which are not shown on the bar gr aph separately Source: Company, EY Draft VDD ReportsRaw materials Net Sales Refractory Net Sales Board Net Sales4.523.61.12.140.139.4 1.8 0.9 130.2161.5243.7 2015 Raw materials Refractory Board Adjustments 2017 Raw materials Refractory Board Adjustments 2018E52.6 80.31.1 57.1 103.997.2 143.32.8 CAGR: 11.3%Growth: 50.9% 1 1 RHIM copy 51 29.5 25.8 35.4 48.0 45.2 38.9 42.539.439.5 38.56.3 2.4 0.6 0.9 0.9 -18.2 -16.5 -18.5 -26.4 -29.6 2015 2016 2017 2018E 2019F Trade receivables Inventory Other current assets and liabilities, net Trade payables Net working capital 2015 -2019F (USD mn)Net working capital & CAPEX 56.4 54.2 56.8 61.943.3 % 43.2% 35.2 % 25.4% NWC as % of Net Sales Source: Company, EY Draft VDD Reports55.022.1 % Net working capital days 2015 -2019F Days 2015 2016 2017 2018 E 2019F DSO 75 68 72 65 60 DIO 127 135 110 100 95 DPO 56 51 49 55 60 CAPEX 2015 -2019F (USD mn) ▪Improving NWC pattern over the historical period mainly driven by −decreased level of other current assets due to decreasing prepaid redemption costs and mine fields government share and forest fees −better management of inventory secured via change in raw material inventory keeping structure; stock keeping passed to 3rdparty mine operators in 2017 −limited WIP and final product inventory levels considering the make -to-order nature of those products ▪Well -invested facilities with limited renewal CAPEX requirement ▪Regular renewal maintenance spending securing proper condition of the facilities where some additional maintenance recorded under OPEX every year −renewal maintenance in 2015 and 2016 mainly related to repair and overhaul for rotary kiln Commentary 2015 2016 2017 2018 E 2019F Renewal maintenance 4.1 2.4 1.9 1.5 1.5 Capacity increase 0.8 - 0.9 - - New facility 13.1 7.9 0.1 - - Location change & equipment- 0.1 <0.1 - - Other 0.1 0.1 0.1 - - Total 18.1 10.5 3.1 1.5 1.5 RHIM copy 52 Net debt & macro assumptions (1) Converted at FX rate of 4.01 USD/TL (2018E average) Source: Company, EY Draft VDD Reports, CBRT, IMF Net debt (USD mn) Dec 2017 Cash & cash equivalents 1.6 Financial liabilities (138.9) Finance nature related party balances, net (68.6) Net debt (206.0 ) ▪Total tax carry forward amount of USD 71.6 mn (TL 287.4 mn)1available for utilization which has not been reflected in the above net debt calculation USD/TL currency movement 2015 -2019F 2.733.013.634.014.42 2.923.523.774.254.59 2015 2016 2017 2018E 2019F USD (avg) USD (eop) 11.1% 11.4% 10.5% 2.1%2.5% 2.4% 2017 2018E 2019F TL inflation USD inflation TL & USD annual inflation rates 2017 -2019F Tax carry forward amount (USD mn)1 2013 2014 2015 2016 2017 Kümaş 0.4 4.2 27.2 35.6 0.3 Ak Alev 0.1 0.7 0.9 1.1 1.3 Total 0.4 4.9 28.1 36.7 1.6 Total: USD 71.6 mn RHIM copy 53 Income statement Based on solo management accounts including due diligence adjustments until EBITDA level (1) Includes IFRS and due diligence adjustments as stated by EY Draft VDD Reports where adjustments for COGS are mainly due to FX Source: Company, EY Draft VDD ReportsUSD mn 2015 2016 2017 2018E 2019F Net Sales 130.2 125.3 161.5 243.7 248.9 Raw materials Business Unit 84.0 72.6 90.7 154.4 154.1 Refractory Business Unit 80.3 82.0 103.9 143.3 150.9 Board Business Unit - - 1.1 2.8 2.9 IFRS and DD adjustments1 (2.7) 0.1 (0.6) 0.3 0.3 Elimination of Raw materials supply to Refractory BU (31.4) (29.4) (33.6) (57.1) (59.3) COGS (exc. D&A) 93.1 97.3 110.4 135.5 138.9 Raw materials 61.2 66.3 82.2 104.3 107.1 Personnel 9.9 9.3 8.4 8.2 8.4 Overhead 14.6 15.9 17.4 22.9 23.4 IFRS and DD adjustments1 7.4 5.8 2.4 - - Gross profit (exc. D&A) 37.1 28.1 51.1 108.2 110.0 GP margin 28.5% 22.4% 31.6% 44.4% 44.2% OPEX (exc. D&A) 18.3 15.1 16.2 22.6 23.5 Transportation, freight expenses & commission 9.2 7.2 11.6 15.7 16.2 G&A 6.4 3.8 1.2 3.1 3.3 S&M 2.1 2.9 2.4 2.8 3.0 R&D 0.6 1.1 1.0 1.0 1.0 EBITDA 18.8 13.0 34.9 85.6 86.5 EBITDA margin 14.4% 10.4% 21.6% 35.1% 34.7% Reversal of IFRS and DD adjustments 11.8 6.1 1.3 - - Management EBITDA 30.6 19.2 36.1 85.6 86.5 EBIT (21.6) (44.2) 15.7 78.6 79.2 Other income / (expense), net 6.2 12.8 (5.4) - - Financial income / (expense), net (27.6) (15.4) (16.3) (10.4) (6.6) Profit before tax (43.1) (46.7) (6.0) 68.2 72.5 Tax - - - 0.1 16.0 Net Income (43.1) (46.7) (6.0) 68.1 56.6 RHIM copy 54 USD mn 31-Dec-15 31-Dec-16 31-Dec-17 31-Dec-18 31-Dec-19 Cash and cash equivalents 0.5 1.1 1.6 1.5 1.5 Trade receivables 29.5 25.8 35.4 48.0 45.2 Inventory 38.9 42.5 39.4 39.5 38.5 Other current assets 8.2 5.0 3.3 5.0 5.1 Current assets 77.0 74.3 79.6 93.9 90.3 Non-current assets1 30.8 23.9 37.9 37.9 37.9 Property, plant and equipment 85.2 72.4 65.8 61.6 57.1 Intangible assets 136.9 137.4 125.3 124.0 122.7 IFRS and DD adjustments impact2 10.8 29.3 5.7 5.7 5.7 Non -current assets 263.6 263.0 234.8 229.3 223.5 Total assets 340.6 337.3 314.4 323.2 313.8 Financial liabilities 365.9 324.9 177.3 132.5 92.7 Trade payables 18.2 16.5 18.5 26.4 29.6 Other current liabilities 1.9 2.6 2.7 4.1 4.2 Current liabilities 386.0 344.0 198.5 163.0 126.4 Financial liabilities -LT 0.0 20.0 53.1 29.4 0.0 Other trade payables 0.2 0.0 0.0 0.0 0.0 IFRS and DD adjustments impact2 (2.1) 19.9 6.0 6.0 6.0 Non-current liabilities (1.8) 39.9 59.1 35.4 6.0 Share capital 13.2 42.6 145.8 145.8 145.8 Retained earnings & others3 (13.7) (42.5) (83.1) (89.1) (21.0) Net profit for the year (43.1) (46.7) (6.0) 68.1 56.6 Total equity (43.6) (46.6) 56.7 124.8 181.4 Total equity and liabilities 340.6 337.3 314.4 323.2 313.8Balance sheet Based on solo management accounts with adjusted NWC and net debt figures (1) Includes
229.3 223.5 Total assets 340.6 337.3 314.4 323.2 313.8 Financial liabilities 365.9 324.9 177.3 132.5 92.7 Trade payables 18.2 16.5 18.5 26.4 29.6 Other current liabilities 1.9 2.6 2.7 4.1 4.2 Current liabilities 386.0 344.0 198.5 163.0 126.4 Financial liabilities -LT 0.0 20.0 53.1 29.4 0.0 Other trade payables 0.2 0.0 0.0 0.0 0.0 IFRS and DD adjustments impact2 (2.1) 19.9 6.0 6.0 6.0 Non-current liabilities (1.8) 39.9 59.1 35.4 6.0 Share capital 13.2 42.6 145.8 145.8 145.8 Retained earnings & others3 (13.7) (42.5) (83.1) (89.1) (21.0) Net profit for the year (43.1) (46.7) (6.0) 68.1 56.6 Total equity (43.6) (46.6) 56.7 124.8 181.4 Total equity and liabilities 340.6 337.3 314.4 323.2 313.8Balance sheet Based on solo management accounts with adjusted NWC and net debt figures (1) Includes trade receivables, other non -current assets, long -term financial investments, goodwill (2) Includes IFRS and due diligence adjustments as stated by EY Draft VDD Reports (3) Includes other comprehensive income not to be reclassified to profit/loss, other reserves and legal reserves Source: Company, EY Draft VDD Reports RHIM copy V. Appendices RHIM copy 56 Board Business of Kümaş Production flow Mainly serving to construction sector ▪ASTM fireproofing Certificate for UK ▪GreenGuard Gold Certificate MB certified for low chemical emissions ▪EI 120 for fire -cutting doors ▪TSEK 480 and CE for A1 Class Fireproof, water absorption and impact resistance Source: Company, EY Draft VDD Reports Production carried under Kümaş as a separate Business Unit plus sales & marketing operations carried under its subsidiary Ak Alev Selected customers Applications Certificates Board casting Board dismantling Board sizing Quality & Control DomesticReach to market via indicates # of distributors/retailersRetailersDistributors Export RetailersDistributors 18 141 29Board Business Unit 12k Annual production capacity (tons) in Board Production Facility Branded products 3.4k Net sales volume in 2017 (tons) Main export markets England, Israel, Jordan and Estonia USD 1.5 mn Net sales in 2017Ak Alev subsidiary Net Sales Ak Alev subsidiary market access RHIM copy 57 Recycling business, a subsidiary of Kümaş Odak Refrakter Sanayi Source: Company, EY Draft VDD ReportsAdditional revenue stream for Kümaş considering its expertise in the sector ▪Magnetic separation enabling separation of iron and iron oxide▪Processing as per customer need and order ▪Offering various sizes of 0-20 mm▪Including magnesia and alumina based bricks ▪Final products automatically packaged ▪Package sizes ranging from 25 kg to 2,000 kg Magnetic separation Crushing, handling & grinding Collection of used RB Packaging Sales ▪Selling mainly to refractor producers as alternative raw material Production flow USD (1.0) mn Net debt, 2017USD 0.5 mn EBITDA in 2017USD 7.9 mn Net sales in 20171 processing facility in Kütahya2014 Year of establishment RHIM copy 58 Turquality and R&D center Below costs on export activities are covered up to 50% by TurqualityBenefits of the R&D center National brand -building Program Expenses related to patents that are obtained to gain advantage in foreign markets Mandatory documentary and certificate expenses for entering into foreign markets Expenses related to attending expos in other countries Warehousing expenses in foreign markets Market research and report expenses for foreign markets Expenses related to consultancy activities for foreign marketsTax deduction allowed for R&D costs related to products developed (offered to 3rdparties ) by Kümaş R&D center Stamp tax exemption ( which is 0.759% on the monetary amount in legal agreements ) Customs tariff exemption Income tax withholding support Insurance premium support for R&D center employees ( c.50% of the total amount ) Source: Company RHIM copy 59 Mine sourcing: JORC compliant rich resources JORC compliant magnesite resources & reserves (mn tons) Resources Reserves Total resources & reserves Indicated Measured Probable Proven Total 26.8 28.8 13.5 94.4 163.6Resources Reserves Total resources & reserves Indicated Measured Probable Proven Total 82.7 - - 13.8 96.4JORC compliant dolomite resources & reserves (mn tons) Suludere deposit main magnesite vein Source: Company, Ian Wilson Mining Sites Report RHIM copy 60 Pre-concentration: Suludere pre -concentration facility Source: Company RHIM copy 61 Concentration: Concentration facilities Magnetic separation 1 Optical separation 2 Source: Company RHIM copy 62 Magnesia based Raw materials production: DBM production facility Source: Company RHIM copy 63 Source: Company Magnesia based Raw materials production: CCM production facility RHIM copy 64 Source: Company Magnesia based Raw materials production: FM production facility RHIM copy 65 Refractory production: RB and RM production facility Mortar preparation unit Brick shaping unit Firing & tempering unit Source: Company RHIM copy
Project Stellar Confidential Information Pack December 2023 Strictly private and confidential 1Table of contents Section Page I Executive summary 2 II Key investment highlights 8 III Business overview 16 IV Financial overview 28 I. Executive summary 3 (1) Net sales throughout the document refer to the consolidated figure including Nasmir Europe (2) Consolidated figures inc luding Nasmir Europe Source: CompanyExecutive summary An up -and-coming fragrances and flavors company in EMEA Business overview Production plants 35k tons/year Fragrances production capacity30k tons/year Flavors production capacity 40k sqm Total closed area 4k tons/year Fragrances production capacity c.7k sqm Total area of production Key financials2 The flavors business is currently at an early stage with significant growth prospects 46.5 58.480.2 14.9 17.3 26.442.9 2020A 2021A 2022A 2023B 2024F165-170 c.60124.9+39% 42% 48% 49% 48% c.50%32.0% 29.6% 32.9% 34.3% 34-35% CAGR EBITDA margin (%)Net sales (mn) EBITDA (mn) % of Export sales in Net salesBulgariaTürkiye→Established in 2007, Seluz Kimya Kozmetik Tic. Ve San. A.S. (" Stellar ", "Seluz Kimya " or the " Company ") is a fast growing fragrances and flavors company based in Türkiye →Stellar is founded and 100% owned by a young entrepreneur with 20+ years of experience in the industry →The Company offers a wide portfolio of fragrances serving its blue chip customer base; in perfumes, personal care and home care markets →Stellar has invested to extend its operations to flavors in 2018 -2020, to address the strong demand in food and beverages, personal care and tobacco markets →Stellar’s domestic sales (c.51% in Net sales1 in 2022A) are mainly made to both Turkish and multinational FMCG and cosmetic companies →Export sales (c.49% of Net sales in 2022A) are made to more than 30 countries across four continents →Stellar’s extensive sales network consists of an office in UAE, as well as strong presence in Iran and theMiddle East, CIS region , and North Africa →The Company’s modern production plant in Istanbul, went online in 2011 as the first fully integrated robotic fragrance production plant in Türkiye and the Middle East →To strengthen its position in European markets, Stellar invested in a modern production facility with a total space of c.7k sqm in Bulgaria in 2020 under its 100% owned subsidiary Nasmir Europe Fragrances EOOD (" Nasmir Europe ") →Further investment in Bulgaria including new facilities and state -of-the-art technologies has recently started →The Company budgets to generate Net sales of c.USD 125 mn with c.USD 8 mn is expected through flavor sales in 2023B 4 Source: CompanyExecutive summary Key milestones Establishment of Bulgaria entity and facility2020 2023Going forward Expansion in export and domestic markets Investments to establish a biotechnology center in IstanbulNew investments in Bulgaria and Türkiye plantsFragrance production facility opened 2010Award for best exporter of cosmetics/fragrance chemicals 2019 - 2022Investment in flavor segment 2018 - 2021 Seluz Kimya was established as a trading firm 2001 2022 Opening of a s ales office in Dubai 5Executive summary Product portfolio Fragrances Flavors Presence Breakdown of sales by segment1 (2022A) Sales volume1 (k tonnes) Sales1 (EUR mn)94% 6% 2020A 2021A 2022A 2023B 2024F2.3 2.4 2.94.1c.5+20.8% 2020A 2021A 2022A 2023B 2024F0.10.2 0.30.4c.0.6+75.9% 1.53.6 4.97.7 2020A 2021A 2022A 2023B 2024Fc.12+73.6% 44.6 54.174.5114.7 2020A 2021A 2022A 2023B 2024Fc.145+37.0% %of sales in 2022A1 53.8% 19.0% 16.0% 11.2%Fine fragrance Personal care Home care Other75.5% 16.8% 7.7%Tobacco Confectionery OtherServing fine fragrances, personal care and home care marketsTargeting food &beverages, personal care and tobacco markets (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials) 6Executive summary Sales geographies Türkiye Exports PresenceDomestic sales are mainly made to both Turkish and multinational FMCG and cosmetic companiesExtensive sales network consists of an office in UAE, as well as strong presence in Iran and the Middle East, CIS region, and North Africa Breakdown of sales by segment1,2 (2022A) Sales volume1 (k tonnes) Sales1 (EUR mn)Fragrance55% 45% 93% 1.60.0 2020A1.60.1 2021A2.00.2 2022A2.80.2 2023B 2024F1.7 1.7 2.13.0 c.4+22.0% 0.70.0 2020A0.80.1 2021A0.90.1 2022A1.30.1 2023B 2024F0.7 0.8 1.01.4c.2 %of sales in 2022A1Flavor 7% 40.762.4 0.8 2.32.94.9 25.6 2020A29.6 2021A 2022A 2023Bc.77c.8 2024F26.4 31.943.667.3c.85+36.7% 33.8 52.3 0.7 1.42.02.8 19.1 2020A24.5 2021A 2022A 2023Bc.68c.4 2024F19.7 25.935.855.1c.72 Fragrance sales Flavor salesMiddle East 61% Europe 13% North Africa 12% Asia 7% Other Africa 7% Americas <1% (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe (2) Excluding sales where country is not defined in the data Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials) 7 Source: CompanyTransaction scope Envisaged transaction timeline Phase I Phase II NDA Info Pack distributionLimited Q&ANon- binding offersBinding offersSigning Initiation of due diligence→Project Stellar refers to the contemplated sale of 100% stake in the Company (the "Proposed Transaction ”) →Company’s fully owned subsidiary Nasmir Europe in Stara Zagora, Bulgaria is also in scope of the Proposed Transaction →Recently the Shareholder decided to explore strategic options for the Company and in this respect appointed ÜNLÜ & Co to act as the exclusive financial advisor in the Proposed Transaction →Interested parties should exclusively contact ÜNLÜ & Co with all questions and enquiries 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 →Site visits and meeting with management →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 ") →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 Nasmir Europe Fragrances EOOD16 JanuaryExecutive summary Seluz Kimya Tic. ve San. A.Ş. 100%Murat Öztürk 100% II. Key investment highlights 9 (1)
exclusively contact ÜNLÜ & Co with all questions and enquiries 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 →Site visits and meeting with management →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 ") →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 Nasmir Europe Fragrances EOOD16 JanuaryExecutive summary Seluz Kimya Tic. ve San. A.Ş. 100%Murat Öztürk 100% II. Key investment highlights 9 (1) F&F refers to fragrances and flavors Source: CompanyKey investment highlights An up -and-coming player in the global F&F1 market rooted in the center of raw materials and high potential markets Wide portfolio of fragrances addressing diverse needs of customersSolid financial performance over the years Expanding into adjacent area of flavors to stimulate additional growthStrong foothold in export markets accelerating sales growth and bringing diversification 10 An up and coming player in global F&F1 market... 1 Stellar is one of the fastest growing F&F companies globally as a result of correct market positioning, state -of-the-art multicountry production facilities and right strategies of expansion to adjacent categories and attractive markets North Africa South AfricaMiddle EastStrong sales and distribution network c.40k sqm Production areaIstanbul, SilivriTürkiye Manufacturing footprint and capability (1) F&F refers to fragrances and flavors Source: CompanyTürkiye Stara ZagoraBulgariac.30k tons Annual flavor production capacityc.35k tons Annual fragrance production capacity c.7k sqm Production areac.4k tons Annual fragrance production capacity CIS countries 11 Source: Company, TURKSTAT…rooted in the center of raw materials and high potential markets 1 Major underlying industries Detergent production in Türkiye ( ton mn) Soap production in Türkiye (kg mn)Detergents Soap2012 20211.53.3+9.4% 2012 2021147242+5.7%→Türkiye has become a key player in the region in detergent manufacturing →Türkiye is a regional hub in soap production, with approximately half of the production directed to exports→Türkiye has more endemic plants than any other European country due to its unique geography lying between Asia and Europe, its mountainous structure and three climate regimes →The country’s particular landscape structure dividing east and west enables totally different natural biodiversity even under the same climate regime →A total of 80k+ plant species grow in Türkiye of which 3k+ are endemic to Türkiye Aromatic beverages Aromatic beverage production in Türkiye ( lt mn) 2012 20213,5664,103+1.6%→Türkiye has a sizeable yet growing market of aromatic beverages Mediterranean sea climate Terrestrial climate with different floraBlack sea climate 12 Wide portfolio of fragrance products addressing diverse needs of customers 2 A Products that can serve a large number of varied customers across sectors Fine fragrances Personal care Home care c.54% c.19% c.16% Translating customer insight into solutions for fine fragrances Extensive reference collection for body, hair and skin care products Air care and laundry care with a comprehensive formula collection →The design of all Stellar fragrances and flavors is enhanced by creative teams led by world -renowned senior perfumers and flavorists with in -depth global experience →Beyond standard physical quality tests, all raw materials are accepted only after a detailed GC –MS analysis ensuring full traceability of all final products →By working with numerous customers, Stellar’s creative team has become an expert on the local market’s taste →Stellar’s innovation team works on new technologies and applications in light of global and regional market trends and specif ic client requirements B Strong product development capability through an established R&D culture 100k+ references Product offering to date40% of all employees Employed in R&D3,000 new formulas Developed annually %Share in sales 2022A1,2 (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe (2) c. 11% of sales is comprised of other various segments Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study) 13 Expanding into adjacent areas of flavors to stimulate additional growth 3 Stellar has invested in flavors business since its decision in 2018 Istanbul plant has an area of 13k sqm dedicated to flavor production with total capacity of 30k tons/p.a The flavors business, currently at an early stage, offers significant growth prospects thanks to Türkiye's position as a major regional food and beverage hub in the region and the region’s potential Flavor segment sales growth1 (EUR mn) 1.53.64.97.7 2020A 2021A 2022A 2023B 2024Fc.12 +73.6% (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & onwards forecast by the Management based on E&Y VA financials)Stellar targets major food companies in Türkiye in order to grow its flavor business Strong aroma combinations developed for tobacco and shisha applicationsTobacco & Shisha c.75% Rich aroma portfolio in confectionery A wide portfolio ranging from carbonated beverages to oral care products %Share in Net Sales 2022AConfectionery c.17% Other c.8% 14 Solid financial performance over the years 4 Sales per product category1 (2020A -2023B, EUR mn)Sales per geography1 (2020A -2023B, EUR mn)Consolidated EBITDA (2020A -2023B, EUR mn) 1068 2020A 2023B+89%Stellar managed growth across categories through 2020A -2023B with double digit CAGR in both sales and EBITDA Fine fragrance 817 2020A 2023B+27% Home care 21 19 2020A 2023B-3% Personal care 2055 2020A 2023B+41% Export sales2667 2020A 2023B+37% Domestic sales Stellar achieved topline growth through significant growth across channels and segments……while maintaining a healthy EBITDA margin 1543 2020A 2023B+42% Consolidated EBITDA32.0% 34.3% (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B forecast made by Company based on E&Y VA financials)Consolidated EBITDA margin %611 2020A 2023B+25% Other various18 2020A 2023B+74% Flavor 15 (1) As of 31.12.2022, figures
growth across categories through 2020A -2023B with double digit CAGR in both sales and EBITDA Fine fragrance 817 2020A 2023B+27% Home care 21 19 2020A 2023B-3% Personal care 2055 2020A 2023B+41% Export sales2667 2020A 2023B+37% Domestic sales Stellar achieved topline growth through significant growth across channels and segments……while maintaining a healthy EBITDA margin 1543 2020A 2023B+42% Consolidated EBITDA32.0% 34.3% (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B forecast made by Company based on E&Y VA financials)Consolidated EBITDA margin %611 2020A 2023B+25% Other various18 2020A 2023B+74% Flavor 15 (1) As of 31.12.2022, figures represent the percentage of each geography in Seluz Kimya’s stand -alone export sales excluding sales where country is not defined in the data (2) IKMIB (Istanbul Chemicals and Chemical Products Exporters’ Association) (3) Consolidated figures including Nasmir Europe sales Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B projection made by Company based on E&Y VA financials )Market presence in over 60 countries through sales and representative offices1 Net sales breakdown (2022A, EUR mn) 6 Americas ( <1%) 62Europe (c.13%) 4 Other A frica (c.7%)5 Asia (c.7%) 1 Middle East (c. 61%)North Africa (c.12%)3 Key remarks Stellar has been the export leader of Türkiye in fragrance category since 20182 Offices in the region has significant impact for the commercial success in Middle Eastern marketsStellar is a fast growing fragrance&flavor company, active in EMEA regionStrong foothold in export markets accelerating sales growth and bringing diversification5 49%51% Export DomesticEUR 80 mn Net sales Growing export sales3 19.628.039.4 2020A 2021A 2022A 2023Bc.6048% 49% 42% c.48% % of Export sales in Net sales Export sales (EUR mn) III. Business overview 17Effective procurement process enabling seamless operations Product breakdown of purchases (2022A) Supplier breakdown of purchases (2022A)Procurement Sales & Distribution Production Product development Top 10 raw materials Value (k EUR) Volume (tons) Ambrofix 2,459 8 Hedione 2,250 139 CIS – 3 hexenyl salicyclate 1,556 10 Ambrocenide crystals 1,551 2 Diproprylene glycol 1,461 417 Cetalox 1,064 4 Galaxolide 969 99 Diethyl phthalate 968 491 Iso e super 965 112 Ambrettolide 863 5 Other 34,346 9,161 Total 48,452 10,447Top 10 suppliers Value (k EUR) Volume (tons) Supplier 1 11,091 756 Supplier 2 5,338 111 Supplier 3 4,444 76 Supplier 4 3,544 227 Supplier 5 2,098 31 Supplier 6 1,531 31 Supplier 7 1,501 119 Supplier 8 1,247 78 Supplier 9 1,037 355 Supplier 10 1,009 108 Other 15,612 8,555 Total 48,452 10,447 Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA studyStellar procures its raw materials from best quality, world renowned suppliers 18 Source: CompanyStrong R&D focus under leadership of a well -accomplished creative team Stellar gives strong importance to R&D and employs the best talent in industry to constantly develop the best formulas Procurement Sales & Distribution Production Product development →The expert team continues to develop new formulas and applications in the light of global and regional trends →40% of the human resources are employed in the R&D center equipped with the latest technological equipment →With its R&D laboratory, a high -speed sample composition robot with a blending capacity of 400 raw materials dedicated to the fragrance creation and development process, and fully equipped HPLC and GC -MS stations supported by advanced headspace and green CO2 extraction technologies , Stellar aims to produce an average of 3,000 new formulas every year →The R&D center was accredited by the Turkish Ministry of Industry and Technology in 2017. Ongoing innovation projects are supported by the Turkish government →Stellar contributes to the development of the sector with innovative projects carried out in its R&D center in collaboration with universities, project, business partners and various educational institutions 19 Source: CompanyApplication and innovation labs in place to ensure the quality of new products Procurement Sales & Distribution Production Product development Fragrance tests Physical and chemical stability tests such as color change, pH, rheology profiles, performances, odor stability, daylight and high temperature are routinely handled in finished product applications of essences designed for perfume, personal care and home care categories The quality of fragrances is ensured in many aspects such as fluidity, color resolution, and scent dispersion The essence -product interaction is examined using a special GC-MS system with automatic sampling, Gerstel Thermal Desorption and Gerstel Dynamis Headspace unit systems Microbiology test laboratoryLaundry test laboratory (testing 8 fragrances at the same time) Machine dishwash test laboratory Stability -aging, climatization and UV test unitsFragrance sampling mixing unitApplication and evaluation laboratoriesGC-MS, SFE, SPME analysis laboratories 10 fragrance evaluation cabins Machinery park units 20 Source: CompanyApplication and innovation labs in place to ensure the quality of new products Flavors The performance of flavors are evaluated in applications with an aging devicePasteurization and sterilization with state -of-the-art autoclaves are conducted to prepare applications of flavors with similar results to the production line, even for beverages produced with high heat treatmentIndustrial type laminators and baking units are used to prepare bakery applications at the highest quality in industrial standardsT o better understand the recipes of the target products, acidity and sugar parameters are measured and applied to the application bases prepared with the measured values of the flavorsDifferent types of applications are created for confectionery and chocolate categories using the most suitable molds and methods for the industryWith tasting evaluations , the most appropriate flavor selections are made for the application and production method Procurement Sales & Distribution Production Product development 21 Source: CompanyState -of-the art production facilities equipped with high -technology Fragrance production1 Istanbul facility c.23k sqm Area dedicated to fragrance productionc.35k tonnes Annual fragrance production capacity Bulgaria facilityIstanbul, Silivri →First fully integrated robotic essence production facility of Türkiye and the Middle East →The production facility, is equipped with the latest technology including highly automated robots →In the production line, the most unique components offered by nature and science are blended by fully automated and integrated processes →Flexible and large -scale robots and
the flavorsDifferent types of applications are created for confectionery and chocolate categories using the most suitable molds and methods for the industryWith tasting evaluations , the most appropriate flavor selections are made for the application and production method Procurement Sales & Distribution Production Product development 21 Source: CompanyState -of-the art production facilities equipped with high -technology Fragrance production1 Istanbul facility c.23k sqm Area dedicated to fragrance productionc.35k tonnes Annual fragrance production capacity Bulgaria facilityIstanbul, Silivri →First fully integrated robotic essence production facility of Türkiye and the Middle East →The production facility, is equipped with the latest technology including highly automated robots →In the production line, the most unique components offered by nature and science are blended by fully automated and integrated processes →Flexible and large -scale robots and production tanks enable fast production and delivery of customer requirements ranging from 25 kg to 5 tons →Bulgaria plant supports Istanbul plant in meeting high -volume demands from mainly Middle East countries . The plant also supplies high quality fragrances to Bulgarian cosmetics producers Procurement Sales & Distribution Production Product development c.7k sqm Open areac.4k tonnes Annual fragrance production capacity 22 Source: CompanyState -of-the art production facilities equipped with high -technology Procurement Sales & Distribution Production Product development Flavor production2 →Fully automated liquid and powder flavor production lines →The state -of-the-art production facility is equipped with highly automated robots, a CIP integrated spray drying tower with high security equipment and an automatic dosing robot with a precision of 0.05 gr →Flexible and large -scale robots enable fast production and delivery of customer requirements ranging from 25 kg to 5 tons Istanbul facility c.23k sqm Area dedicated to fragrance productionc.35k tonnes Annual fragrance production capacity Istanbul, Silivri 23 Source: CompanyMaintaining highest standards through stringent quality control Procurement Sales & Distribution Production Product development Fragrance Flavor All raw materials and other production inputs are checked with comprehensive sensory and analytical tests to comply with high quality level requirements Every stage of the production process is documented in accordance with international quality and GMP standardsIn quality control laboratories equipped with advanced technology, necessary evaluations are made with GC-MS analysis stations and density measurement, refractive index measurement, flash point measurement devices to ensure "Specification certificate, analysis certificate and safety data sheet" can be presented for all essences Beyond standard physical, sensory and quality tests, all raw materials and production inputs are accepted after a detailed GC -MS analysis , thus ensuring traceability of the final product All analysis results are evaluated according to international quality standards Beyond standard physical, sensory and quality tests, all raw materials and production inputs are accepted after a detailed GC -MS analysis , thus ensuring traceability of the final product "Product specification and analysis certificate " documents are shared with business partners for each product produced 24 Source: CompanyWell -accomplished sales team with strong sales oriented mindset Proven success with customers secured by product development capabilities, customer centric approach and constantly following industry trendsTailor -made products for specific customer needs Customer centric approach to preserve existing client relationships Constantly following industry trends The marketing team analyzes global trends and consumer expectations in depth and aligns them with customer expectations Innovative product development based on creative ideas and conceptsIn each project, a unique strategy is adopted to capture the target customer base Low concentration among customers creating a balanced portfolioSecuring high level customer satisfaction thanks to first-class service to mid -size customers Procurement Sales & Distribution Production Product development 25Fragmented customer base Top 5 domestic fragrance customers1 Top 5 export fragrance customers1 Share in domestic fragrance sales (2022A) Share in export fragrance sales (2022A) Customer 1 Customer 2 Customer 3 Customer 4 Customer 5 Other12.4% 4.8% 4.8% 4.3% 4.2% 69.5%Fine fragrance Fine fragrance Fine fragrance Fine fragrance Personal care c.460 customers 215 customersCustomer 1 Customer 2 Customer 3 Customer 4 Customer 5 Other16.8% 14.3% 7.0% 6.8% 3.0% 52.1%Fine fragrance Trader Trader Trader Trader Top 5 domestic customers account for c.30% of total domestic fragrance salesTop 5 export customers account for c. 48% of total export fragrance salesStellar maintains a long -term and trust - oriented relationship with its customers which creates a solid base for sales growth Procurement Sales & Distribution Production Product development c.49% c.51% Share in Net sales 2022A (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials) 26Enlarging clientele with increasing volume Stellar has a rapidly expanding customer base with growing sales Number of customers Portfolio of blue -chip local companies341 406 463180176220 2020 A 2021 A 2022 A521582683+14.5% European customers Middle Eastern customers Average purchase order (EUR k) 77 78 94109139154 2020 A 2021 A 2022 A186216248+15.3% Domestic ExportProcurement Sales & Distribution Production Product development Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study) 27 Food flavor sales manager (1) Seluz Kimya only, as of December 2022 Source: CompanyOrganization Fragrance department directorHR & administration directorPlant directorSpecial projects directorMarketing directorQuality assurance managerFinancial affairs senior managerGeneral Manager Tobacco flavor sales director Fragrance Central services Flavor # of personnel1 White collar160 77 Blue collar35.6% 21.9%20.0%22.5% R&D General managementSales and marketing Other49% 14%37% Fragrance Flavor OtherAverage tenure in the Company is 4 yearsBy function By segment IV. Financial overview 29Basis of preparation Source: Company, E&Y VA studyHistorical financials presented in this section are in EUR, proforma consolidated TFRS like for the years 2020A, 2021A and 20 22A; prepared by E&Y within the scope of VA →All figures in this Information Pack are presented in EUR, as in the E&Y VA study, for a healthy analysis of Stellar’s histor ical performance, eliminating the impact of TL volatility on the financials, and enabling a like -for-like analysis of historical and projected financials →For the conversion of Seluz Kimya solo accounts: −TL sales amounts derived from sales reports are converted to EUR with invoice date TL/EUR rates −COGS conversion has been made based
14%37% Fragrance Flavor OtherAverage tenure in the Company is 4 yearsBy function By segment IV. Financial overview 29Basis of preparation Source: Company, E&Y VA studyHistorical financials presented in this section are in EUR, proforma consolidated TFRS like for the years 2020A, 2021A and 20 22A; prepared by E&Y within the scope of VA →All figures in this Information Pack are presented in EUR, as in the E&Y VA study, for a healthy analysis of Stellar’s histor ical performance, eliminating the impact of TL volatility on the financials, and enabling a like -for-like analysis of historical and projected financials →For the conversion of Seluz Kimya solo accounts: −TL sales amounts derived from sales reports are converted to EUR with invoice date TL/EUR rates −COGS conversion has been made based on the purchase and inventory data of the management −beginning and ending inventories are calculated in EUR and raw material purchases are converted to EUR with the daily EUR/TL rate at the purchase dates. Cost of raw materials has been calculated accordingly −labor and overhead costs converted with annual average TL/EUR −OPEX items are converted to EUR at annual average TL/EUR rates −Balance sheet items are converted to EUR with period end spot TL/EUR rates →VA adjustments include TFRS -like adjustments with an impact on EBITDA, NWC and net debt as well as minor items to reverse the im pact of non -recurring or non - operational records →EUR financials of Nasmir Europe is prepared based on fixed Lev/EUR rate of 1.96 and included in the consolidated accounts 2023B and 2024F projections presented in this section are prepared by the Company in EUR in line with the historical financia ls and trading results 30Overview of historical performance and forecast period Consolidated (1) Excluding D&A Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials)Remarks Sales volume (k ton) 2.30.1 2020A2.40.2 2021A2.90.3 2022A4.10.4 2023Bc.5c.1 2024F2.4 2.63.24.5c.5 +23.3% Net sales (EUR mn) 46.5 58.4 80.2 2020A 2021A 2022A 2023B 2024F124.9165-170+39.0% EBITDA (EUR mn) 32.0% 14.9 17.326.4 2020A 2021A 2022A 2023B 2024F43c.60+42.3%c.35%42.9% c.45% < Fragrance FlavorGross profit margin1 (%)EBITDA margin (%)EBITDA (EUR mn)3.2% c.7 % Flavor as % of Net salesVolume increase through expansion in fragrances across geographies and ramp up in flavors Topline growth led by volume increase as well as projected slight increases in unit prices Slight increase in gross profit and EBITDA margins due to higher topline, also driven by expansion of operations in Nasmir Europe6.2% 6.1% 6.2% 29.6%39.6% 32.9%43.2% 34.3%43.8% 31Overview of fragrance sales Seluz Kimya solo1 (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe (2) Excluding D&A Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials)Remarks Sales volume ( k ton) 2020A 2021A 2022A 2023B 2024F2.3 2.42.9c.4.1c.5 +20.8% Sales (EUR mn) 44.6 54.174.5114.7 2020A 2021A 2022A 2023B 2024Fc.145+37.0% Gross profit2 (EUR mn) 18.5 21.431.849.1 2020A 2021A 2022A 2023B 2024Fc.60 +38.4%41.5% c.43% < Gross profit margin2 (%)Fragrance volume growth mainly driven by the growth in fine fragrances segment Fragrance topline growth further supported by the routine annual increases in prices Fragrance gross profit margin is projected to remain at the same level as in 2022A39.5% 42.7% 42.8% 32Overview of flavor sales Seluz Kimya solo1 (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe (2) Excluding D&A Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials)Remarks Sales volume (k tons) 2020A 2021A 2022A 2023B 2024F0.10.20.30.4c.0.6 +75.9% Sales (EUR mn) 1.53.64.97.7 2020A 2021A 2022A 2023B 2024Fc.12 +73.6% Gross profit2 (EUR mn)Flavor volume growth driven by the ramp up of newly invested business with strong customer leads Flavor topline growth on the back of volume growth Flavor gross profit margin is projected to remain at the same level as in 2022A0.92.02.84.3 2020A 2021A 2022A 2023B 2024Fc.7 +71.4%58.2% c.56% 54.8% 56.3% 56.0% < Gross profit margin2 (%) 33Net working capital (“NWC”) Seluz Kimya solo1 (1) Figures represent stand alone Seluz Kimya excluding sales of Nasmir Europe to third parties but including sales from Seluz Kimya to Nasmir Europe (2) DSO: Days sales outstanding, DIO: Days inventory outstanding, DPO: Days payables outstanding Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials)Remarks Net working capital (EUR mn) The Company keeps a strategic inventory level to timely supply its customers Purchases are mostly made from foreign suppliers in cash / advance payments 2024F NWC level in line with 2022A and 2023BNWC1Unit 2020A 2021A 2022A 2023B Trade receivables EUR mn 25.1 28.6 43.0 67.5 Inventories EUR mn 12.5 16.9 21.9 35.6 Trade payables EUR mn (6.7) (2.7) (6.6) (10.8) Trade working capital EUR mn 30.8 42.8 58.3 92.3 Other current assets EUR mn 0.7 2.0 2.4 3.8 Other current liabilities EUR mn (0.5) (0.5) (0.5) (0.7) Other working capital EUR mn 0.2 1.4 1.9 3.0 Net working capital EUR mn 31.0 44.2 60.2 95.4 As of Net sales % 66.5% 78.6% 78.6% 79.2% Cash conversion cycle days 260 313 309 309 DSO2 days 164 155 171 171 DIO2 days 177 183 185 185 DPO2 days 80 25 48 48 34Capital expenditures (“CAPEX”) and Net debt (1) Figures represent stand alone Seluz Kimya excluding Nasmir Europe (2) As per the R&D Center status of the Company, the Company capitalizes personnel and other expenses incurred in the R&D departm ent in its statutory accounts in compliance with government’s official R&D Incentivization Scheme Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study)Remarks CAPEX (EUR mn)1 0.20.1 2020A0.10.1 2021A0.30.2 2022A 2023B0.3 0.30.5c.3 R&D personnel2 Other R&D2Tangible
1.9 3.0 Net working capital EUR mn 31.0 44.2 60.2 95.4 As of Net sales % 66.5% 78.6% 78.6% 79.2% Cash conversion cycle days 260 313 309 309 DSO2 days 164 155 171 171 DIO2 days 177 183 185 185 DPO2 days 80 25 48 48 34Capital expenditures (“CAPEX”) and Net debt (1) Figures represent stand alone Seluz Kimya excluding Nasmir Europe (2) As per the R&D Center status of the Company, the Company capitalizes personnel and other expenses incurred in the R&D departm ent in its statutory accounts in compliance with government’s official R&D Incentivization Scheme Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study)Remarks CAPEX (EUR mn)1 0.20.1 2020A0.10.1 2021A0.30.2 2022A 2023B0.3 0.30.5c.3 R&D personnel2 Other R&D2Tangible fixed assets0.6% 0.5% 0.7% CAPEX as % of Net sales Cash and cash equivalents 4.2 Financial liabilities (24.9) Net debt (20.7)Net debt (EUR mn)Net debt (EUR mn) 31.12.2022New building investment in İstanbul production campus has recently started Investments to enlarge the capacity in Bulgaria plant has also kicked off <1.0x consolidated Net Debt / EBITDA as at 2022 year endTotal of c. USD 8 mn CAPEX in 2024F, for both Istanbul and Bulgaria investmentsc.3% 35Nasmir Europe Nasmir Europe solo Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials)Remarks EBITDA statement and NWC (EUR mn) Expanding business activity through Nasmir Europe from 2024 onwards Contributing to the cash profile of overall Stellar due to lower NWC requirementUnit 2020A 2021A 2022A 2023B 2024F Sales EUR mn 0.0 3.7 5.7 c.8 c.20 COGS EUR mn (0.0) (2.5) (2.9) c.4 (c.10) Gross profit EUR mn 0.0 1.2 2.9 c.4 c.9 Gross profit margin % 9.6% 33.4% 49.8% c.45 c.45% OPEX EUR mn (0.0) (0.4) (1.0) (c.1.5) (c.3.0) S&M expenses EUR mn (0.0) (0.4) (0.8) G&A expenses EUR mn (0.0) (0.1) (0.2) EBITDA EUR mn (0.0) 0.8 1.8 c.2 c.6 EBITDA margin % (78.3%) 21.5% 31.5% c.29% c.30% NWC EUR mn 0.1 1.0 1.9 c.3 6-7 As of sales % n.m. 25.5% 32.7% c.32% c.32% 36 Source: Company, E&Y VA study ( 2020A -2022A financials converted to EUR in scope of E&Y VA study and 2023B & 2024F forecast made by Company based on E&Y VA fina ncials)Consolidated EBITDA statement Remarks Topline growth led by volume increase as well as projected routine annual increase in unit prices Contribution margin is projected to stay stable at both fragrance and flavor segments Slight increase in gross profit and EBITDA margins at consolidated level, due to higher topline, also driven by expansion of operations in Nasmir EuropeConsolidated EBITDA statement (EUR mn) Consolidated Unit 2020A 2021A 2022A 2023B 2024F Net sales EUR mn 46.5 58.4 80.2 124.9 165-170 COGS EUR mn (26.5) (35.3) (45.5) 70.1 92-94 Gross profit EUR mn 19.9 23.1 34.6 54.8 73-77 Gross profit margin % 42.9% 39.6% 43.2% 43.8% c.45% OPEX EUR mn (5.0) (5.9) (8.2) c11.9 c.16 OPEX / Net sales % 10.8% 10.0% 10.3% 9.5% c.10% S&M expenses EUR mn (1.9) (2.9) (3.9) (5.9) R&D expenses EUR mn (1.6) (1.5) (1.7) (2.5) G&A expenses EUR mn (1.4) (1.5) (2.7) (3.5) EBITDA EUR mn 14.9 17.3 26.4 42.9 c.58 EBITDA margin % 32.0% 29.6% 32.9% 34.3% c.35% 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
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 . 37 Simge Ündüz Managing Director [email protected] +90 (533) 283 81 13Zeynep Koçak Managing Director [email protected] +90 (532) 242 53 78Burçin Müftü Director [email protected] +90 (533) 742 49 29Disclaimer
Draft Project Sun Information Memorandum Strictly private and confidential April 2020IM’deki tüm finansallar update edilecek Draft 1Contents Section Page I. Executive summary 2 II. Key investment highlights 8 III. Business overview 21 a. Sourcing 23 b. Preparation 24 c. Production 25 d. Filling & packaging 26 e. Sales & marketing 27 f. Others 29 IV. Production facility 32 V. Financial overview 36 VI. Appendices 47TBU Draft I. Executive summary Draft 3 (1) Marsa will include B2B business arm of Marsa Yağ Sanayi ve Tic. A.Ş., excluding its wholly -owned subsidiary Western Foods and Packaging SDN BHD (2) Currently not in use; for detailed l ist of assets, please refer to Appendix section (3) Figures include Marsa’s solo performance Source: Marsa and KPMG Draft VDD ReportMarsa at a glance The leading bakery and industrial fats manufacturer in Turkey Founded in 1925, Marsa is uniquely positioned as the market leader with its strong brands and established product portfolio →Marsa1 (the “Target ”) is the leading bakery and industrial fats manufacturer in Turkey with an established presence and proven market share →Marsa has an established position in its business segments in Turkey with well-known brands , diversified product portfolio , highly competent and experienced team , widespread sales capability and well-located production facility . In addition, Marsa boasts an active presence in export markets including Eastern Europe and MENA, with significant room for further growth →Marsa maintains a diversified portfolio of customers under 3 main Business segments : Pastry Business segment (“Pastry”) , Industrial Business segment (“Industrial”) and Catering Business segment (“Catering”) both in Turkey and in export markets −Product portfolio mainly comprises bakery fats used for sweet and salty pastries ; industrial fats for confectionary and snack manufacturers ; and various cooking fats for HoReCa businesses →Through its well-known brands USTAM , USTA , Akrim , Akbis and Mars , Marsa enjoys an established presence in Turkey, secured by its long -lasting and strong relations with pastry chefs, as well as leading producers such as Frito -Lay, Şölen , Nestle, etc. −In export markets, Marsa is active with its USTAM , Proser and Akyağ brands →With high -quality product offerings under reputable and strong brands and its customer - oriented business model, Marsa has been the key supplier and solution partner for its customers for years →Marsa reaches out to its customers both in Turkey and in export markets via a widespread network of c.95 3rd party distributors, supported by a seasoned and dedicated sales team of more than 40 −Bakery shops, sweet/salty snack manufacturers, semi -industrial producers and HoReCas are its main customers →The Target’s production facility is located in Adana, in close proximity to key logistics hubs and export markets, on a total area of c.90k sqm, with aggregate annual production capacity of c.146k tons of margarine and c.110k tons of liquid oil2; leading player in the sector with its capacity level →As of December 31st 2019 , Marsa has 203 employeesSales volume3 (k tons) Net sales3 (TL mn)2017A 2018A 2019P 2020F103.0 79.783.2102.1 43.550.19.4 36.335.28.2 41.132.99.1 47.243.511.4 Pastry Industrial Catering 2017A 2018A 2019P 2020F443.7408.8455.1631.1 186.2215.841.7 186.7179.542.6 224.9177.353.0 294.3262.374.6 Pastry Industrial Catering8.0% 11.9% 11.3% 12.9% 12.4% 16.3% 18.8% 20.7% EBITDA margin Export share (%) Draft 4 (1) Volume market share in 2019 Source: Marsa and KPMG Draft VDD ReportMarsa Business segments Wide product portfolio under three main Business segments Pastry Industrial Catering cc Net sales (TL mn) Offers various types of top-quality and high - performance bakery fats for sweet and salty pastriesOffers industrial fats for frying and biscuit, chocolate & cream production for confectionary and snack manufacturersOffers cooking fats for HoReCa businesses; mainly for frying and cooking hot and cold dishesProduct portfolioOverview→Market leader with 25-30% market share1 in Turkey →Well -known brands in CEE and MENA with leading position in Albania and Hungary via its USTAM brand→Key supplier of top confectionary, sweet and salty snack manufacturers in Turkey →Significant room for further growth in export markets→Close relationships with well -known HoReCa businesses in Turkey →Potential room for growth in export markets 81%19% 2017A77%23% 2018A78%22% 2019P74%26% 2020F186 18722529443.5 36.3 41.1 47.2 50.1 35.2 32.9 43.5 9.4 8.2 9.1 11.4 95%5% 2017A94%6% 2018A90%10% 2019P89%11% 2020F216 180 177262 80%20% 2017A73%27% 2018A65%35% 2019P66%34% 2020F42 435375 Share in net sales (%), 2019P Sales volume (k tons) Domestic Export Main brands USTA USTAM USTAM c.49% c.39% c.12% Draft 5 (1) Currently not in use; for detailed list of assets, please refer to Appendix section Source: MarsaMarsa production facility Well -located production facility providing significant competitive advantages Adanac.90k sqm Total areac.146k tons/annum Margarine production capacity c.110k tons/annum Liquid production capacity1Adana production facility Strategically located in Turkey to access key logistics hubs, as well as domestic and export customers High quality machinery and equipment from leading global brandsSituated on a large parcel that can accommodate new investments and ventures Largest margarine capacity in the sector in single facility Key machinery and equipment suppliers Draft 6 (1) Marsa Yağ has currently B2C bakery fat business, which is not included in the transaction scope (2) Yıldız Holding controls Marsa Yağ through its direct c.80% shareholding in Kerevitaş Gıda that owns 100% of Besler Gıda holding a 70% stake in Marsa Yağ; remaining 4% is owned by other related individuals (3) Manolya Holdings Coöperatief U.A. is owned by Hassanal Bolkiah (Sultan of Brunei) and is based in the Netherlands Source: MarsaTransaction overview Unique investment opportunity to acquire the leading bakery and industrial fats manufacturer in Turkey →Proposed transaction includes sale of up to a 100% stake in Marsa (“Proposed transaction ”) −Marsa will include B2B business arm of Marsa Yağ Sanayi ve Tic. A.Ş., excluding its wholly -owned subsidiary Western Foods and Packaging SDN BHD . Required carve -outs will be completed prior to the closing of the Proposed transaction1 −Optional assets : Liquid production capacity along with its machinery at Adana production facility and land of 150k sqm in Adana organized industrial zone can be optionally added to the scope, to be further discussed with the Shareholders →Marsa is currently owned by Yıldız Holding2 and related individuals (with 74% stake) and Manolya Holdings3 (with 26% stake) (together referred to as “Shareholders ”) −Marsa was
the leading bakery and industrial fats manufacturer in Turkey →Proposed transaction includes sale of up to a 100% stake in Marsa (“Proposed transaction ”) −Marsa will include B2B business arm of Marsa Yağ Sanayi ve Tic. A.Ş., excluding its wholly -owned subsidiary Western Foods and Packaging SDN BHD . Required carve -outs will be completed prior to the closing of the Proposed transaction1 −Optional assets : Liquid production capacity along with its machinery at Adana production facility and land of 150k sqm in Adana organized industrial zone can be optionally added to the scope, to be further discussed with the Shareholders →Marsa is currently owned by Yıldız Holding2 and related individuals (with 74% stake) and Manolya Holdings3 (with 26% stake) (together referred to as “Shareholders ”) −Marsa was acquired by Yıldız Holding, a leading global diversified food conglomerate, in 2010 →Shareholders are exploring potential strategic options for Marsa and in this respect hired ÜNLÜ & Co as the exclusive financial advisor for the Proposed transaction →Selected potential investors will be granted access to a virtual dataroom , where Financial Vendor Due Diligence Report prepared by KPMG along with KPMG Carve - out Financials will be available NDA IM distributionLimited Q&ANon- binding offersBinding bidsSigning Initiation of due diligencePhase II Phase I […] % Shareholding %B2B operationsMarsa 26% 74%Yıldız Holding2 and related individuals Manolya Holdings3→Due diligence period for a limited number of selected potential investors →Virtual dataroom access along with Q&A process →Access to KMPG Carve -out Financials (“ KPMG Carve -out Financials ”) →Access to KMPG Financial Vendor Due Diligence Report (“ KPMG 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 →Non-binding offers due by COB […] Phase II detailsTransaction timeline Transaction scope Shareholding structureTBU Draft 7Transaction overview Unique investment opportunity to acquire the leading bakery and industrial fats manufacturer in Turkey Marsa Estimated market value is EUR 700kOptional assetsB2B pastry, catering and industrial fats business as a running entity including its customers, widespread and specialized dis tributor network, existing relations, contracts, etc. Products and related SKUs under 3 Business segments Product recipes for all SKUs Production facility in Adana with a capacity of c.146k tons of margarine along with its land, warehouses and machinery & equipment Workforce of 203 employees Machinery & equipment and systems for liquid production Located at Marsa’s production facility in AdanaLand of c.90k sqm in one parcel; currently rented out to a 3rd party; contract expiring in 2021 Land of c.60k sqm in one parcelCrushing facility located in c.90k sqm land lotTransaction scope (1) Currently not in use; for detailed list of assets, please refer to Appendix section Source: Marsa and KPMG Draft VDD ReportLiquid production capacity of c.110k tons11 Lands and crushing facility in Adana Industrial Organized Zone2B2B brands in Turkey and export markets Draft II. Key investment highlights Draft 9Key investment highlights Established market position in its Business segments with strong and reputable brands and solution partner approach High performance products in a broad portfolio serving diversified end marketsSolid position in Pastry segment secured via close cooperation and regular contact with customers Strategically located production facility with high quality standards in proximity to customer base and logistics hubsSizeable and growing market in Turkey supported by sustainable growth drivers Established sales channel via wide distributor network and competent sales team ensuring loyal and proven customer base 1 6 5 2 3 4 Draft 10 (1) Bakery and industrial fats market excludes ghee, margarine spread and others (2) Bakery segment includes pastry and cat ering fats Source: Marsa, Turkstat , market intelligence, ÜNLÜ & Co estimatesSizeable and growing market in Turkey… Within aggregate margarine market of c.800k tons in 2018, bakery and industrial fats reached a scale of c.530k tons1 in 2018, generating c.7.0% CAGR between 2012 -2018, with an expected volume of c.655k tons by 2024F Bakery2 and industrial fats market in Turkey (k tons) c.4%c.3%c.7% Per capita margarine consumption, 2018 (kg) Established margarine consumption habit in Turkey… …coupled with growth prospects considering low per capita consumption when compared with selected peers109 125161 157 143 156 170243290316 334 335377 360 2015477 2013 2017 2012 2014 2018 2016530 352416491 479534+7.0% Bakery Industrial 691218 1824 26 Belgium Singapore UK US Turkey Denmark Netherlands Average c.20 kg c.9 kg ample room for growthCAGR Expected growth and breakdown of bakery and industrial fats market Established bakery and industrial fats market in Turkey with further growth prospects Low per capita consumption in Turkish margarine market implying room for further growth130360 201840530 2024F16543060655 Pastry Industrial Cateringc.7% c.8%CAGR1TBU Draft 11 …supported by sustainable growth drivers 1 Declining average household size (# of people per household)c.3.5 c.3.2 >Increasing sizeable populationc.82 mn c.86 mn c.1% Increasing GDP per capita (Real GDP / population)c.TL 22k c.TL 25k c.2%Pastry Industrial Catering→Fueled by increasing out -of-home bakery and pastry consumption growing on the back of increasing disposable income, changing consumer lifestyles and preferencesPastry market size in Turkey in 2018Pastry market size in Turkey in 2024Fc.130k tons c.165k tons c.4% CAGR →Fueled by the growth of sweet and salty snack manufacturers in Turkey, with increasing consumption of sweet and salty snacks both in domestic and export marketsc.360k tons c.430k tons c.3% CAGRIndustrial market size in Turkey in 2018Industrial market size in Turkey in 2024F →Highest growth segment on the back of Turkey’s strong tourism potential →Fueled by growing number of visitors driving consumption of catering fats in HoReCa businesses; especially in tourism regionsc.40k tons c.60k tons c.7% CAGRCatering market size in Turkey in 2018Catering market size in Turkey in 2024F +c.3%Expanding female workforce participation (share in 15 -65 aged females) c.38% c.40+% >Growing urbanization (share in total population)c.75% c.78% >Growth drivers 2018 2024F CAGRStrong growth prospects in Pastry, Industrial and Catering markets… …supported by promising macro fundamentals in Turkey Source: Marsa, Turkstat , World Bank, Fitch Ratings, ÜNLÜ & Co estimates TBU Draft 12 (1) Yıldız Holding controls Marsa Yağ through its direct c.80% shareholding in Kerevitaş Gıda that owns 100% of Besler Gıda holding a 70% stake in
Turkey in 2024F →Highest growth segment on the back of Turkey’s strong tourism potential →Fueled by growing number of visitors driving consumption of catering fats in HoReCa businesses; especially in tourism regionsc.40k tons c.60k tons c.7% CAGRCatering market size in Turkey in 2018Catering market size in Turkey in 2024F +c.3%Expanding female workforce participation (share in 15 -65 aged females) c.38% c.40+% >Growing urbanization (share in total population)c.75% c.78% >Growth drivers 2018 2024F CAGRStrong growth prospects in Pastry, Industrial and Catering markets… …supported by promising macro fundamentals in Turkey Source: Marsa, Turkstat , World Bank, Fitch Ratings, ÜNLÜ & Co estimates TBU Draft 12 (1) Yıldız Holding controls Marsa Yağ through its direct c.80% shareholding in Kerevitaş Gıda that owns 100% of Besler Gıda holding a 70% stake in Marsa Yağ; remaining 4% is owned by other related individuals (2) AAK does not have a production facility in Turkey. Upfield (ex-Unilever) produces on behalf of AAK at its Çorlu facility in Turkey Source: Marsa , Company websites and market intelligenceProduct categoriesOwnership Established Pastry and Catering sales volume in Turkey, 2019 (k tons) Production facility in TurkeyAAK IFFCO Cargill Savola Küçükbay family KerevitaşYıldız1 & Manolya Holdings (Turkey) (Sweden) (UAE) (USA) (Saudi Arabia) (Turkey) (Turkey) 1973 2013 2009 1986 2008 1979 1992 Margarine Liquid Margarine & Liquid c.40 c.30-35c.25-30 c.5-7 c.7-10c.15-20c.25-30 Adana Çorlu2İzmir Balıkesir Balıkesir İzmir İstanbulB2B Pastry Industrial CateringB2CCompetitive landscape in Turkish bakery fats market 1 Draft 13 (1) Volume market share in 2019 Source: Marsa and KPMG Draft VDD ReportEstablished market position in its Business segments with strong and reputable brands and solution partner approach Pastry Industrial Catering c.49% c.39% c.12% Marsa’s market position Strong and reputable brands Marsa, key solution partner with its strategic market position25-30%1 15-20%1Market leader in Turkey with reputable brands ensuring high quality and long -term consistency High brand perception in export markets; leading position in Albania and Hungary with USTAM brandSustained market share ; key supplier of major producers in Turkey Significant room for growth in export markets driven by high value perception and increasing marketing efforts One of the top 3 players in Turkey with significant growth potential Long -standing existence in selected export markets allowing potential scope for further growth #1 position with USTAM and USTA brandsMost recognized brands with its strong multi - brand strategyBest brand recognition with USTAM and other brands USTAM USTA USTAM Brands in Turkey Brands in export marketsBrands in Turkey Brands in export markets Brands in Turkey Brands in export marketsUSTAM Share in net sales (%), 2019PR&D and technical support to develop customized productsTimely delivery and short notice solution providerFlexibility to quickly adapt to changes in the marketClose relations with HoReCa businessesClosely working with chefs during implementation and productionHighly recognized and valuable brands with flexible approach2 Draft 14 High quality product and strong brand recognition in the market… …enabling premium pricing… Best seller products in Turkey High quality products with various applications in the marketHigh brand perception in the marketUnique formulation Ultra USTAM Multi -purpose margarine in Pastry Business segmentUSTAM Baklava 100% vegetable margarine for Baklava in Pastry Business segmentMarket share in Pastry segment in Turkey10% USTAM Selected competitorsMarsa’s price index 100x Competitors’ price index c.85-90x Additional sales via product bundlingUnique position in the marketStrong customer stickiness and brand loyaltyc.10-15% higher prices compared to competitors in the Turkish market …along with additional value -adds Source: Marsa2Strong brand recognition and solution -based approach by Marsa translate into premium pricing Draft 15High performance products in a broad portfolio serving diversified end markets Pastry Industrial Catering Sales volume (k tons) & Net sales (TL mn), (2019P) Share of exports in net sales (%), (2019P) & Main export markets Product offeringsFats for different areas of usage favored by local chefs. Main product offerings include: →Multi -purpose fats that are suitable for all bakery recipes thanks to their unique formulation; mainly under USTAM brand →Cream fats special for butter cream, chocolate sauces, short bread and cake varieties →Baklava fats for special baklava recipes →Other bakery fats for making mille - feuille, croissant and special bunsIndustrial fats for production of: →Soft sweets such as chocolate coating, couverture, cocolin toffee/fondant →Biscuit dough, biscuit and wafer creams →Cream chocolates and soft filling creams →Salty snacks such as chips and others that require fryingMulti -purpose fats for frying and cooking hot and cold dishes # of SKUs in domestic and export markets, (2019)15 SKUs ⬧ 55 SKUs 71 SKUs ⬧ 15 SKUs 4 SKUs ⬧ 12 SKUsMarsa is well -penetrated in three diverse end -markets with a broad range of product offerings addressing different purposes Diversified and rich product portfolio enables Marsa to flexibly adjust its Business segment exposure as per market dynamics Source: MarsaKey factors enhancing customer satisfaction both in Turkey and in export marketsTop-quality and high -performance products Broad range of product offerings Customer oriented service and flexible solution partnerc.49% c.39% c.12% TL 224 .9 mn 22.1 %41.1k tons TL 177.3 mn 9.8%32.9k tons TL 53.0 mn 34.9%9.1k tons3 Source: Marsa and KPMG Draft VDD ReportShare in net sales (%), 2019PMain export markets Iraq Syria Iraq Syria Romania IraqMain export marketsMain export markets Draft 16 (1) A, B and C class pastries & bakeries command sales volumes in excess of 1 ton, 500 -1,000 kg and less than 500 kg per month, respectively Source: MarsaEstablished sales channel via wide distributor network and competent sales team ensuring loyal and proven customer base in Turkey Share in domestic sales (%), 2019PMarsa distinguishes itself from its competitors via its… …widespread exclusive distributor network covering all cities in Turkey …hands -on sales team regularly in touch with customer base c.60% c.40% # of distributors in each region201157 7 15 Mediterranean regionMarmara region65 3rd party distributors in 6 main regions 6 Regional managers 38 Sales personnel and marketing specialist Key features of the distributors Financially strong and stableExclusive to Marsa in its business segmentsSales team with valuable know -how and experienceKey features of the sales team Seasoned team with average tenure of 7 years in the sectorWell -established customer relationsStrong commitment to excellence in customer serviceAccumulated experience and technical know -how of Marsa’s long -tenured sales team plays a crucial role in securing customer satisfactionKey
Turkey Share in domestic sales (%), 2019PMarsa distinguishes itself from its competitors via its… …widespread exclusive distributor network covering all cities in Turkey …hands -on sales team regularly in touch with customer base c.60% c.40% # of distributors in each region201157 7 15 Mediterranean regionMarmara region65 3rd party distributors in 6 main regions 6 Regional managers 38 Sales personnel and marketing specialist Key features of the distributors Financially strong and stableExclusive to Marsa in its business segmentsSales team with valuable know -how and experienceKey features of the sales team Seasoned team with average tenure of 7 years in the sectorWell -established customer relationsStrong commitment to excellence in customer serviceAccumulated experience and technical know -how of Marsa’s long -tenured sales team plays a crucial role in securing customer satisfactionKey accounts →Mostly industrial customers and high potential pastry & bakery points Wholesalers →Mostly serving C class pastries & bakeries Semi -industrial producers →Mostly serving large chains and retails Marsa’s entrenched presence in the market enables…High level of customer satisfactionA firm grasp of customer needs and preferencesReliable solution partner reputationContinuous access to competitive landscape and market intelligenceLoyal and long -standing customer base 20+ Years average tenure Focusing on4 Focusing on A, B and C class pastries & bakeries1HoReCa businesses mainly in Mediterranean and Marmara regions Draft 17 (1) Share in export sales, 2019 Source: MarsaEstablished sales channel via wide distributor network and competent sales team ensuring a loyal and proven customer base in export markets 3rd party distributorsSales personnel Distributors mainly focusing on Pastry and Catering Business segment sales in mid -sized pastries & bakeriesSales team mainly working with key accounts in Industrial Business segment directlyMarsa has presence in export markets… Top export markets% share1Key highlights 42% Iraq Strong brand perception 9% SyriaSignificant room for growth with higher volumes achieved in the past 6% Albania Market leading position with USTAM 12% Kazakhstan Highly demanded brand, Proser 5% Georgia First mover advantage with USTAM 5% RomaniaPioneer brand by introducing palm oil to the market, Proser 29 2 …through its strategy focusing on countries with High level of bakery and industrial fats consumption Import dependency for bakery and industrial fats Subdued competition Low customs dutiesActive presence in Eastern Europe, the Middle East and Africa regionsReach to c.30 countriesReliable business partner for 80+ customers4 Draft 18 Source: MarsaProblem Actions taken Solution provided Pastry Industrial Marsa is a key solution provider in addressing its customers needsMarsa is capable of working with customers at all stages including product applicationDemo chefs and R&D team are working together with sales team to maximize customer satisfactionMarsa has a pro -active culture, seeking to provide high quality product offerings for its customers!Dough sticking to the sides of the cooker while stirring !Solidification of the shortening cake fat during its transfer with tankersCooking tests on the product, as well as deep -dive into product recipe and cooking technique to comprehend underlying reasons Comprehensive analyses including tests on the delivery method conducted by the R&D team to identify underlying reasonsAmendments to the recipe along with guidance on proper cooking technique to ensure product quality Delivery method revised; opted for tankers with rotating drums 4Successful after -sales services through regular contact with customers Draft 19 Source: MarsaSolid position in Pastry segment secured via close cooperation and regular contact with customers Marsa cements its price leader position with USTAM brand in the value -added Pastry segment by collaborating closely with pastry chefs in various marketing efforts throughout the year#1Marketing efforts Key highlights Example practices Communication grounds Continuous communication with chefs on the field to improve product quality and proper implementation Industry partnershipsCollaboration with culinary vocational schools by organizing gatherings and events Education campaignsGatherings with well -known pastry chefs through certificate programs at reputed institutions such as Boğaziçi University Social media campaignsIncreasing existence on social media platforms further enhancing brand position and customer stickiness Create brand loyalty by instilling in young pastry chefs studying at vocational schools the habit of using USTAM brand early onRaise brand awareness across user groups through marketing campaigns Solidify leader brand image in the sector through various partnerships with leading institutionsEnables Marsa to…5 Draft 20 (1) Currently not in use and is an optional asset in the Transaction scope; for detailed list of assets, please refer to Appe ndix section Source: MarsaStrategically located production facility with high quality standards in proximity to customer base and logistics hubs Adanaİstanbul Ankara Mersin port Marsa facility c.90 kmAntalya Konya KaramanGaziantep Cluster of local sweet and salty snacks manufacturers Tourism cluster - Mediterranean region →Strategic location of Marsa’s production facility enabling advantages in accessing −local and global sweet and salty snack manufacturers as well as confectionery producers surrounding Karaman and Gaziantep regions and major hotel chains in the Mediterranean region −Mersin port, a major hub in the Mediterranean region, serving as a logistics base for raw material sourcing −export markets ; a key growth area for Marsa −sunflower and canola oil producers in Adana region AntalyaKonya Karaman MersinGaziantep →Marsa’s production capabilities are certified with global accreditations ISO 9001 Quality management systemBRC Certification Kosher Halal Certificate İzmirHigh quality production facility with the largest capacity in the sector… …located in close proximity to its customers and logistics hubs Total area c.90k sqm Margarine production capacity c.146k tons /annum Liquid production capacity1 c.110k tons/annumCrude & refined oil storage capacity c.29.8 k tonsFinished product warehouse capacity c.7.0k tons6 Draft III. Business overview Draft 22 Source: MarsaMarsa retains full control over quality throughout the value chain R&D Well -acknowledged product offerings, close relations with customers and high -quality standards rest at core of Marsa’s business modelSourcing Preparation Production Filling & packaging Sales & marketing →Main raw materials used in production are palm oil, its derivatives and other oilseeds such as canola, sunflower and cotton →Palm oil and its derivatives are mainly sourced from Malaysia and Indonesia →Other oilseeds are supplied locally within Turkey→Depending on product recipe, raw materials are prepared for production via bleaching, hydrogenation and interesterification→Production starts with blending and continues with deodorization to obtain an odorless form →In accordance with the final recipe, aroma and other additives are added to give the oil its final form before packaging→Produced oil is filled to boxes,
retains full control over quality throughout the value chain R&D Well -acknowledged product offerings, close relations with customers and high -quality standards rest at core of Marsa’s business modelSourcing Preparation Production Filling & packaging Sales & marketing →Main raw materials used in production are palm oil, its derivatives and other oilseeds such as canola, sunflower and cotton →Palm oil and its derivatives are mainly sourced from Malaysia and Indonesia →Other oilseeds are supplied locally within Turkey→Depending on product recipe, raw materials are prepared for production via bleaching, hydrogenation and interesterification→Production starts with blending and continues with deodorization to obtain an odorless form →In accordance with the final recipe, aroma and other additives are added to give the oil its final form before packaging→Produced oil is filled to boxes, tins or tanks through different filling lines and packaged to its final form →Packaged products are automatically directed to respective palletizing machines and are shelved for delivery →Products are finally delivered to either distributors or customers through 3rd party logistics service providers→Sales activities are carried out by 3rd party distributor network and Marsa’s sales team separately in Turkey and in export markets Supporting functions Quality control Logistics* HR IT *3rd party provider Draft 23 Source: MarsaEffective procurement process enabling seamless operations Overview Palm oil Others 1→Palm oil ; key ingredient used in bakery and industrial fats production; is obtained in two different forms: palm olein/stearin and palm kernel oil/olein −Palm olein/stearin is the solid fraction of palm produced by partial crystallization, whereas palm kernel olein is the liquid fraction of palm oil. Both forms are procured as refined, bleached and deodorized oil (“RBD ”) by Marsa −Marsa’s palm oil procurement is c.90% palm olein/stearin and c.10% palm kernel oil/olein on average over the years →Marsa acquires palm oil in USD terms from either Indonesia or Malaysia, through traders −Palm oil arrives at Mersin Port, one of the largest commercial ports in close proximity to Marsa, located within 90 km distance from the production facility in Adana →Marsa acquires oil as per its budgeted production planning; purchase agreement is executed at least 2/3 months ahead of the monthly production plan on average −Marsa may act strategically and commit itself to longer -term palm oil procurement from time to time, depending on market dynamics →Once palm oil arrives to the Adana production facility, quality control is performed by sampling and palm oil is accordingly fed into the production system through 9 designated pipe channels at the production facility→Oilseeds are sourced from within Turkey ; cotton is mainly sourced from Trakya region (northwestern part of Turkey) and sunflower and canola predominantly from Adana region (southeastern part of Turkey) −Marsa’s production facility in Adana has significant advantages to facilitate logistics operations efficiently →For oilseed supply, Marsa works with several traders in Turkey →Locally sourced raw materials except for cotton oil are priced in USD2 3→Additives mainly consist of aromas, flavors, vitamins and miscellaneous food additives −Suppliers span a wide range of local and international traders −Purchases are mainly in EUR terms 4→Main packaging materials used are cardboard boxes and metal tin containers −Suppliers of Marsa include major local producers in TurkeySourcing Production Filling & packaging Sales & marketing Preparation →Marsa’s main procurement items consist of four main categories : Palm oil 1 Oilseeds such as cotton, sunflower, canola etc.2 Additives such as vitamins, aroma ingredients, emulsifiers, etc. 3 Packaging materials such as metal containers and cardboard boxes4→Marsa works with variety of suppliers tenure with international raw material suppliers15+ years # of domestic raw material suppliers20 # of packaging suppliers3 Draft 24 Source: MarsaDiligently managed preparation process ensuring high product quality Sourcing Production Filling & packaging Sales & marketing Preparation →Palm oil sourced in RBD form serves as the main raw material for margarine production process . RBD palm oil undergoes various stages, including bleaching , hydrogenation and interesterification , before it gets ready for the production process →When other oilseeds such as sunflower, canola, etc. are needed as per the product recipe, neutralization stage is added to the process . Oilseeds go through neutralization before they get mixed with RBD palm oil Bleaching →RBD palm oil is heated and mixed with acid -activated bleaching earth to remove any coloring matters from the oil. In the second phase, bleached oil and earth are separated from each other through a metal filter and taken to bleached oil tank after cooling down →For some recipes, RBD oil is taken into the mix with other oilseeds such as sunflower, rapeseed, etc. In that case, oilseeds go through neutralization stage. After neutralization stage, neutralized oil is mixed with RBD palm oilRBD palm oil Preparation process overview Prepared oil 1 2 3Hydrogenation →Bleached oil is catalyzed with nickel in the hydrogenation stage to obtain saturated fatty acids. Hydrogenated oil is transfe rred to hydrogenated oil tank before moving to the next stage →Hydrogenation is required in around 60 -70% of the recipes produced Interesterification →Hydrogenated oil is taken into the interesterification stage to alter the melting properties of the fat or fat blend in order to improve the functional properties of the product →Interesterification is required in around 50 -60% of the recipes produced Draft 25 Source: MarsaProduction process enriched by unique formulation Sourcing Production Filling & packaging Sales & marketing Preparation →Prepared oil goes through various stages including blending, deodorization and mixing during production process to reach its final product form ; margarine Production process overview Blending →After interesterification stage prepared oil is mixed in preparation tanks according to the corresponding recipe. Samples of mixed oil in preparation tanks are sent to the laboratory for analysis and quality control →Blending stage ensures production quality and precisionRBD palm oil Margarine4 5 6Deodorization →Following the analysis in laboratory, mixed oil is fed into deodorization tanks for deodorization stage →Deodorization stage decolors the oil and removes hydrocarbons and ketones to prevent any unwanted flavor Mixing →The final stage before filling is the preparation and mixing in of additives, which gives the final form to the margarine acc ording to its recipe requirements and specifications →Additives such as vitamins, aroma, emulsifiers, as well as water/milk phase additives are mixed
its final product form ; margarine Production process overview Blending →After interesterification stage prepared oil is mixed in preparation tanks according to the corresponding recipe. Samples of mixed oil in preparation tanks are sent to the laboratory for analysis and quality control →Blending stage ensures production quality and precisionRBD palm oil Margarine4 5 6Deodorization →Following the analysis in laboratory, mixed oil is fed into deodorization tanks for deodorization stage →Deodorization stage decolors the oil and removes hydrocarbons and ketones to prevent any unwanted flavor Mixing →The final stage before filling is the preparation and mixing in of additives, which gives the final form to the margarine acc ording to its recipe requirements and specifications →Additives such as vitamins, aroma, emulsifiers, as well as water/milk phase additives are mixed in preparation tanks with the oil, as per depending on the corresponding recipe Draft 26 Source: MarsaEfficient flow from filling lines to warehouse →At the end of the production process, margarine is sent to appropriate filling lines, according to product types and then packaged for delivery to customers BPS pumpable shortening line1 Crystalized margarine is aged for 4 -12 hours before filling into the tankerBag in box production line2 Margarine is directly filled from preparation tanks to bags and packed by the semi -automatic filling machinePastry line 4 & 73 Margarine is transferred to resting tube and then packaged manually Industrial product line4 Margarine is filled into 10 - to 20 kg boxes by automatic machines. Filling bag sealing and box closing processes are handled automatically 7 6 5 Drum filling line After crystallization, manual filling is finalized at the drum filling station with the help of loadcellTin filling Crystallized margarine is filled by automatic filling machinesCatering line Margarine is transferred to dosing station and then packaged automatically →Pallets are stretched in automatic stretching machine and conveyed to the warehouse and placed on shelves for delivery →Logistics is carried out by 3rd party providers Warehousing / logistics→Packaged products arrive to palletizing area on a single conveyor →Products are identified by barcode readers and directed to respective palletizing machines →Filled pallets are registered to the SAP system with an automatic barcode printerPalletizing Filling & packagingSourcing Production Filling & packaging Sales & marketing Preparation Draft 27 Pastry Catering Industrial Source: Marsa and KPMG Draft VDD ReportWell -established sales organization Domestic sales Export sales →In export markets, Marsa serves its customers mainly through 29 3rd party distributors in 29 countries and its own sales team of 2 sales personnel −Marsa has approximately one distributor in each country →Distributors focus mainly on local mid-sized pastries and bakeries →Marsa sales team of 2 closely monitors the performance of its distributors and assists them in creating strong bonds with local chefs to promote Marsa’s brand presence in export markets through −regular visits and training programs −promotional activities −demo training sessions →At the same time, those 2 sales personnel work directly with key accounts in major markets such as Romania, Georgia, Kazakhstan, Iraq and Libya −One of the employees covers African markets −the other employee all remaining active export marketsMarsa carries out its sales activities in Turkey and in export markets separately through its distributors and own sales team c.80% c.20% Share in net sales (%), 2019P→Marsa reaches its customers in Turkey through its (i) 65 3rd party distributors (c.60% of net domestic sales in 2019 P) and (ii) more than 40 sales employees (c.40% of net domestic sales in 2019 P) (i) Distributor sales: 3rd party distributors covering all cities in Turkey with 20+ years of working relations with Marsa Top 3 Top 5 Top 1024%35%54% Concentration in distributor sales, 2019 (ii) Direct sales: 40+ sales employee mainly focusing on key accounts Top 3 Top 5 Top 1066%71%82% Catering Pastry IndustrialMainly focusing on Pastry segment Mainly focusing on Industrial segment →Pastry segment sales are carried out mainly by distributors, which account for c.85% of Pastry sales on a net sales basis, whereas direct sales are c.15% (2019 ) →Industrial segment sales are performed mostly by sales team, comprising c.79% in net sales terms, while distributors undertake the remaining c.21% (2019 ) →Catering segment sales are heavily reliant on distributors, with c.86% of Catering sales in terms of net sales, while direct sales constitutes only c.14% (2019 )24 22 21 14 10 11 Average tenure (years) Concentration in direct sales, 20192019A c.TL 221 mn 2019A c.TL 110 mnSourcing Production Filling & packaging Sales & marketing Preparation USTAM Export brands Pastry Industrial Catering 74%10%16% 24% 71%5%Average tenure (years) Draft 28 (1) As of March 2020 Source: MarsaTargeted marketing activities to strengthen brand loyalty Trainings & workshops Pastry trainings and free product support to vocational high schools and Chefs Table culinary academy Regional pastry workshops Digital platforms Highly active social media accounts (Facebook and Instagram)→One of the leading brands in food industry in social media with a targeted communication strategy c.36.1k followers on Instagram1c.284k followers o n Facebook1Social media accounts are managed in a target audience -oriented approach →Engagement rate 8%195%1→Reach Attends Sial expo held every two years in France, as well as annual Gulfood expo in DubaiAttended WorldFood Istanbul expo in 2019Main sponsor of Çamlıhemşin Pastry FestivalSponsorships & other activities Participating in annual distributor meetings every year Promotions Granting ingredients; such as flour and sugar; free of charge to pastries and bakeriesProviding promotional products to chefs; including aprons, t -shirts, knives and spatulas with USTAM logoMarsa’s marketing activities are mainly focused on USTAM brand, to sustain its leading position through various channels Marketing expensesSourcing Production Filling & packaging Sales & marketing Preparation →Marketing expenses are focused solely on USTAM brand both in domestic and export markets →Marsa incurred c.TL 913k expenses in marketing in 2019 Marketing expenses breakdown (2019A) c.TL 913k31% 35%16%17% →Consumer activity expenses mainly include promotions (e.g. promotional products, gifts, etc.) and expenses for the organization of seminars and trainings & workshops →Advertising, agency fee and production expenses consist of expenditures in relation to various advertising initiativesConsumer activity expenses Advertising expenses Agency fee comissions Production expenses Draft 29 Source: MarsaSupporting functions →Marsa focuses its R&D efforts on ( i) new product launches (ii) enhancing quality and efficiency of its existing products and
marketing activities are mainly focused on USTAM brand, to sustain its leading position through various channels Marketing expensesSourcing Production Filling & packaging Sales & marketing Preparation →Marketing expenses are focused solely on USTAM brand both in domestic and export markets →Marsa incurred c.TL 913k expenses in marketing in 2019 Marketing expenses breakdown (2019A) c.TL 913k31% 35%16%17% →Consumer activity expenses mainly include promotions (e.g. promotional products, gifts, etc.) and expenses for the organization of seminars and trainings & workshops →Advertising, agency fee and production expenses consist of expenditures in relation to various advertising initiativesConsumer activity expenses Advertising expenses Agency fee comissions Production expenses Draft 29 Source: MarsaSupporting functions →Marsa focuses its R&D efforts on ( i) new product launches (ii) enhancing quality and efficiency of its existing products and (iii) new raw material and packaging alternatives, with a team of 5 professionals −Marsa’s production facility in Adana has an R&D lab including a pilot plant and demo kitchen to run various tests and provide solutions to customer enquiries →R&D team assumes an active role in development of new recipes for customers and runs several processes before final product stage, including −technical research and benchmark analysis with comparable products −meetings with customers and suppliers −pilot product tests →R&D also conducts on -site performance tests, if needed, for ( i) pastry products with local chefs (ii) industrial products on customer’s production site →Production of pumpable shortening cake oil →Development of palm free spread oil →Customized ice cream oil production →Tailor -made cream oil manufacturing R&D overview Pilot plant in R&D facilityResearch & Development (“R&D”) Selected R&D projects →R&D team working closely with customers to launch tailored products →Production of liquid filling cream →Development of trans - free oil with natural antioxidant Draft 30 (1) Number of accident per one hundred employees (2) Work -related incidents mainly consists of small injuries and do not invol ve any casualties or serious injuries Source: MarsaSupporting functions Committee chair (employer representative) Company doctor OHS representative Administrative affairs →H&S Committee consists of 5 employees, of which 3 are also H&S Department members →Marsa is committed to maintaining stringent occupational health and safety standards, in line with legal directives −Separate Health & Safety team provides all internal checks and processes →Standard training program for employees includes vocational best practices, first aid, hygiene, disaster recovery and fire trainingCommittee secretary (OHS expert) Other solution partnersProcurement Warehouse managementLogisticsProduction & demand planning Health & Safety (“H&S”) and Information Technologies (“IT”) →Through its integrated IT systems, Marsa manages its operations effectivelyH&S overview IT Overview Frequency rate1 for work -related incidents2H&S committee 2017 2018 20190.30.63.9 Draft 31 (1) Position currently vacant; team reporting to Besler (2) Executive assistant to General Manager not presented above Source: MarsaSupporting functions Human Resources (“HR”) General Manager1 Supply chain R&D Technical Production Sales & Marketing Human resources 5 37 84 10 47 5Occupational health and safety 3 Quality control Financial affairs # of personnel Gender Employee tenure Educational background → Average tenure is 11 years95 White collar 109 Blue collar184 20Male Female49 51104 0-5 years 5-10 years +10 years30% 18% 29%16%7% High schoolUniversity Associate degree OthersVocational high schoolGeneral Manager1 Supply chain R&D Technical Production Sales & Marketing Human resources 5 37 84 10 46 5Occupational health and safety 3 Quality control Financial affairs # of personnel Gender Employee tenure Educational background White collar Blue collarMale Female→ Average tenure is 11 years49 51103 +10 years 0-5 years 5-10 years8 4 # of employees after carve -out294 109183 2031% 18%29%16%6% Associate degreeUniversity Vocational high school High school Others Draft IV. Production facility Draft 33 (1) Currently not in use; for detailed list of assets, please refer to Appendix section Source: MarsaAdana production facility Production area Storage area Maintenance and workshop area Boiler house Electricity systems Clean water Parking area Green area Chemical warehouseCooling towersOfficesOverview & Layout →Fully integrated production facility designed efficiently; from raw material sourcing to packaging and warehousing; also includes loading & unloading areas to secure continuous and efficient product flow →Energy cost advantage through coal -fired steam boiler Waste areaTotal area / Closed area c.90k sqm / c.48.2k sqm Overview Layout Margarine production capacity c.146k tons/annumLiquid production capacity1 c.110k tons/annum Finished product warehouse capacity c.7.0k tonsDry storage capacity c.2.5k tonsCold storage capacity c.4.5k tons Crude & refined oil storage capacity c.29.8k tonsCrude oil & Finished goods Loading / Unloading capacity c.6.9 k ton/day Draft 34 Source: MarsaAdana production facility Equipment & Machinery Storage tank by product Line 2 - Bag in box Line 8 - Industrial box (20 kg block) Line 4 - Pastry (10 kg block) Line 9 - Catering (2.5 kg block)Interesterification & Bleaching Palletizing 2Palletizing 1 Line 1 - BPS Line 7 - Pastry (10 kg block) Line 12 - Tin fillingDeo 4 Milk preparationBleaching Neutralization Electrolyze Palletizing Filling →Inka −9 palletizing system −Total capacity: 60 kg/min →Inka −2 palletizing system −Total capacity: 30 units/min→Keçeciler −Total capacity: 120 tons /day →Liquid Box Corp. −Total capacity: 50 tons /day →Schröder −Total capacity: 79 tons/ day→Schröder −Total capacity: 79 tons /day →Schröder -Pattyn −Total capacity: 210 tons /day →Keçeciler – Bock & Sohn −Total capacity: 54 tons /day→Gerstenberg −Total capacity: 200 tons /day →OCME −Total capacity: 180 tons /day →Comaco −Total capacity: 100 tons /day→Westfalia −Total capacity: 240 tons/ day →Alfa Laval 1 −Total capacity: 200 tons /day →Alfa Laval 2 −Total capacity: 240 tons /day→Bernardini 1 −Total capacity: 200 tons /day →Bernardini 2 −Total capacity: 200 tons/day →Bleaching 3 −Total capacity: 200 tons/ day →Bleaching 4 −Total capacity: 200 tons /day→Davy Bamag −Total capacity: 8,000 Amperes −Total capacity: 291 Nm³H2/h →Sulzer Burckhardt −Total capacity: 320 tons /day →DeSmet −Total capacity: 200 tons /day→DeSmet −Total capacity: 200 tons /day →DeSmet −Total capacity: 200 tons /day →Total capacity: 100 tons /day→10 tanks −Total capacity: 285 tons/day→6 tanks −Total capacity: 6 tons →2 preparation & 1 maturation tank −Total capacity: 5 tons/dayPreparation process Crude oil unloading Crude oil loading Liquid finished goods loading Crude & RBD & Liquid oil tank storage →10 unloading lines →Unloading 27 tons in 75 minutes (per line) −Total capacity: 5,184 tons/dayLoading & unloading →2 loading lines →Unloading 27 tons in 75 minutes (per line) −Total capacity: 1,037 tons/day→2 loading
−Total capacity: 200 tons/day →Bleaching 3 −Total capacity: 200 tons/ day →Bleaching 4 −Total capacity: 200 tons /day→Davy Bamag −Total capacity: 8,000 Amperes −Total capacity: 291 Nm³H2/h →Sulzer Burckhardt −Total capacity: 320 tons /day →DeSmet −Total capacity: 200 tons /day→DeSmet −Total capacity: 200 tons /day →DeSmet −Total capacity: 200 tons /day →Total capacity: 100 tons /day→10 tanks −Total capacity: 285 tons/day→6 tanks −Total capacity: 6 tons →2 preparation & 1 maturation tank −Total capacity: 5 tons/dayPreparation process Crude oil unloading Crude oil loading Liquid finished goods loading Crude & RBD & Liquid oil tank storage →10 unloading lines →Unloading 27 tons in 75 minutes (per line) −Total capacity: 5,184 tons/dayLoading & unloading →2 loading lines →Unloading 27 tons in 75 minutes (per line) −Total capacity: 1,037 tons/day→2 loading lines →Unloading 27 tons in 75 minutes (per line) −Total capacity: 648 tons/day→46 tanks of various volumes −Total capacity: 24,309 tons −Total intermediate tank capacity: 5,464 tons Deo 3 Water phase tankProduction process Hydrogenation & Bleaching Drum fillingEquipment & Machinery for margarine production Draft 35 (1) Currently not operational and hence not generating any cash flow; optional asset to be included in the proposed transacti on scope Source: MarsaAdana production facility Equipment & Machinery Equipment & Machinery for liquid production1 Refinery Filling →Deodorization 6 −1 vacuum tower & 1 water cooling tower −Total capacity: 300 tons /day →Winterization −22 maturation tanks (506 ton) −1 perlite mixer −20 press filters −Total capacity: 300 tons /day→Line 21 −1 bottle cleaning machine −1 sticker machine −1 shrink machine −1 sleeve machine −Total capacity: 110 t ons/day →Line 22 −1 bottle cleaning machine −1 sticker machine −Nitrogen dosing machine −Total capacity: 110 tons /day →Line 24 −1 sticker machine −1 capping machine −1 heat exchanger −Total capacity: 120 tons /day→Line 25 −1 capping machine −1 shrink machine −Total capacity: 120 t ons/day →Line 26 −1 capping machine −1 heat exchanger −1 cooling system −Total capacity: 180 t ons/day Draft V. Financial overviewTBU Draft 37Basis of preparation and key assumptions Proposed transaction scope includes Marsa as described in the Executive Summary →Marsa is the B2B business arm of Marsa Yağ Sanayi ve Tic. A.Ş. for Turkey operations (“ Marsa Yağ”) →Marsa Yağ keeps its management accounts (statutory basis) in TL and issues monthly accounts detailed at Business segment level −Marsa Yağ’s fiscal year is the 12 -month period as of January 1 of the calendar year, ending on December 31 of the calendar year (i.e. 01.01 .2018 -31.12.2018) →Marsa Yağ’s IFRS financials issued on an annual basis are audited by PwC since 2015 −As part of rotation, EY is appointed as the new auditor for Marsa Yağ starting with January 1st, 2020 Forecast period presented in this section is prepared for Marsa solo, as per below →2020F -2024F figures are as per management accounts, reflecting management’s forecasts, and are applied the VDD adjustments made on historical figures for compatibility purposes Source: Marsa , Yıldız Holding, ÜNLÜ & Co estimatesMacro assumptions 2017A 2018A 2019A 2020F 2021F 2022F 2023F 2024F USD / TL (avg.) 3.65 4.83 5.68 6.23 6.81 7.26 7.80 8.32 Inflation (TL) 11.9% 20.3% 11.8% 9.2% 8.5% 8.5% 8.5% 8.0% Inflation (USD) 2.1% 2.4% 2.0% 2.0% 2.0% 1.5% 1.5% 1.5%Historical financials presented in this section are based on the KPMG Draft VDD report →KPMG Financial Management and Reporting Services prepared carve -out financials, both income statement and balance sheet, for the Proposed transaction scope together with Marsa Yağ management for 2017, 2018 and 2019. Please refer to Appendices section for the KPMG Carve -out Financials pre VDD adjustments →KPMG Transaction Services has performed a Vendor Due Diligence on Marsa solo carve -out financials for 2017, 2018 and 2019 (“ KPMG VDD report ”). Final report will be provided during Phase II →KPMG VDD report is analyzing Marsa’s historical performance and operational profitability as well as factoring in normalization and IFRS -like adjustments for 2017, 2018 and 2019 financials (“ VDD adjustments ”) →Historical financials presented in this section are for Marsa solo and based on the KPMG Draft VDD report and reflect the VDD adjustments of KPMG. Majority of these adjustments related to effects of depreciation of TL against hard currency and shareholder related costs at EBITDA leve l Draft 38Snapshot of financial performance Marsa at a glance Sales volume (k tons) Remarks EBITDA (TL mn)Net sales (TL mn)43.5 36.3 41.1 47.2 49.1 51.1 53.1 55.250.135.2 32.943.5 45.3 47.1 48.9 50.89.4 8.2 2017A11.4 2019P 2018A9.1 2020F12.3102.1 2021F13.4 2022F14.4 2023F15.4 2024F103.0 79.7 83.2106.8121.4111.5 116.4-10.1%+7.9% Pastry Industrial Catering 186.2 186.7 224.9 294.3 341.3 384.3 433.6 488.1 215.8 179.5 177.3262.3304.8 342.7386.2434.1 41.7 42.6 53.074.689.8105.5123.2142.6 2018A 2017A 2019P832.5 2020F 2021F 2022F 2023F 2024F443.7 408.8 455.11,064.9 631.1736.0943.0 +1.3%+18.5% Pastry Catering Industrial 8.0% EBITDA margin (%)11.9% 11.3% 12.9% 13.1% 13.2% 13.3% 13.5% 35.3 48.5 51.681.3 96.7 110.3 125.8 143.4 051015 050100150 2018A 2024F 2017A 2021F 2019P 2023F 2020F 2022F+20.8%+22.7% EBITDA EBITDA margin (%) Source: Marsa and KPMG Draft VDD Report→Marsa tracks its performance under 3 main Business segments: Pastry, Industrial and Catering →Pastry has the largest share with c.49.4% in 2019 net sales , followed by Industrial and Catering segments with c.39.0% and c.11.6% , respectively →Sales in Pastry and Catering segments are generally more brand and product driven , whereas Industrial sales are more sensitive to pricing and sales terms →Price increases generally reflect increases in raw material costs , which are predominantly in USD →August 2018 saw a sudden and drastic depreciation of the Turkish Lira vs. the US Dollar , creating the need for extra working capital for Marsa →To weather the turbulence in the market, Marsa strategically opted to decrease collection terms and increase prices, which set the stage for volume shrinkage in 2018 (please refer to subsequent pages for segment -based analyses ) →2019 has been a partial normalization year with some improvements in sales terms for Marsa’s customers reflecting a partial recovery in volumes , whereas 2020F is budgeted to replicate 2017 in volume and pricing strategy with withdrawal of special discounts given to customers in 2019 and collection terms. Increase in net sales in 2020 is partially from gross price increases and partially from decreasing discounts −EBITDA margin decrease in
a sudden and drastic depreciation of the Turkish Lira vs. the US Dollar , creating the need for extra working capital for Marsa →To weather the turbulence in the market, Marsa strategically opted to decrease collection terms and increase prices, which set the stage for volume shrinkage in 2018 (please refer to subsequent pages for segment -based analyses ) →2019 has been a partial normalization year with some improvements in sales terms for Marsa’s customers reflecting a partial recovery in volumes , whereas 2020F is budgeted to replicate 2017 in volume and pricing strategy with withdrawal of special discounts given to customers in 2019 and collection terms. Increase in net sales in 2020 is partially from gross price increases and partially from decreasing discounts −EBITDA margin decrease in 2019 is OPEX driven mainly due to increased S&M spending →From 2021F onwards, the general strategy across segments is to grow in line with the market; retain market share; and reflect raw material cost increases to sales prices Draft 39 Gross profit margin (%)Pastry Business segment Overview Sales volume (k tons) Remarks Gross profit (TL mn)Net sales (TL mn) 38.9 41.4 47.970.2 82.1 92.6 104.8 118.3 0.00.51.0 050100150 2023F 2019P 2020F 2017A 2021F 2018A 2022F 2024F+11.0%+19.8% Gross Profit20.9% 22.2% 21.3% 23.9% 24.1% 24.1% 24.2% 24.2%34.027.7 31.6 34.0 35.3 36.8 38.2 39.89.58.69.613.2 13.7 14.3 14.9 15.5 2020F53.1 2018A 2017A 2019P 2021F 2022F51.1 2023F 2024F55.2 43.5 36.341.147.2 49.1-2.7%+6.1% Domestic Export 150.0 143.1 175.2 217.5 252.2 284.0 320.5 360.7 36.2 43.549.776.889.1100.3113.2127.4 186.7 186.2 2020F 2017A 2018A 2019P 2021F 2023F 2022F 2024F224.9433.6 294.3341.3384.3488.1+9.9%+16.8% Domestic Export Source: Marsa and KPMG Draft VDD Report→Pastry, Marsa’s leading revenue generator Business segment in 2019, is expected to remain its position in the forecast period →Domestic pastry volume sales have declined the least (c.18.6%) in response to Marsa’s 2018 sales strategy, as the customers are more loyal to the brand and product . Domestic volumes have mostly recovered with partial normalization of terms in 2019, with 2020F volumes budgeted to reach 2017 levels →A milder contraction of c.9.1% in export sales in volume in 2018 is attributable to changes in the organization of the sales team for exports . Starting with 2019, a new sales team has been appointed to cover export markets , with a view to extending Marsa’s reach in 2020 and beyond →2021F onwards, volumes are expected to increase in line with the envisaged market growth →Price increases in the market generally reflect increasing raw material costs . Despite reduced volumes, Marsa was able to keep its sales in 2018 similar to 2017 levels, owing to price increases in the domestic market and the help of foreign currency export sales . Going forward, sales prices are expected to reflect raw material cost increases in line with pricing strategy −In 2020, Marsa is targeting to decrease its sales discount level in this segment to 16.0%, back to its 2017 level , from 18.4% in 2019 →Slight increase in margin from 2020F onwards is partially due to increasing share of more profitable exports in net sales from c.22.1% in 2019P to.c.26.1% in 2024F Draft 40 Source: Marsa and KPMG Draft VDD ReportIndustrial Business segment Overview Sales volume (k tons) Remarks Gross profit (TL mn)Net sales (TL mn)47.5 33.0 29.638.6 40.1 41.6 43.2 44.82.6 2.23.34.9 5.2 5.5 5.7 6.0 2017A 2021F 2018A 2020F50.1 2019P 2022F 2023F 2024F35.2 32.943.5 45.3 47.1 48.9 50.8-19.0% +9.1% Export Domestic 205.3 168.1 159.9233.9 270.8 304.3 342.7 385.0 17.428.334.038.443.5 49.1 2019P434.1 2018A10.5179.5 2023F 2017A262.3 2020F 2021F 2022F304.8 2024F386.2 215.8177.3342.7 11.4-9.4%+19.6% Domestic Export 25.0 23.1 36.3 42.3 47.6 53.9 60.8 0.00.51.0 050100 13.3 2021F 2018A 2017A 2022F 2019P 2020F 2023F 2024F+31.9%+21.3% Gross Profit Gross profit margin (%)6.2% 13.9% 13.1% 13.8% 13.9% 13.9% 14.0% 14.0%→Industrial segment is positioned as Marsa’s second largest Business segment in 2019 in terms of net sales with c.39.0% share →The segment is predominantly domestic sales driven, with exports accounting for only c.10% as per industrial volume →Customers in this segment are more sensitive to pricing , and thus volumes have dropped the most in 2018 with c.29.9% and a further c.6.4% in 2019 →This has also been a result of Marsa’s strategy featuring a sharper focus on more profitable customers - creating loyalty with supply security, offering longer term contacts and favorable terms →2020F sales strategy is to partially recover lost sales volumes, though Marsa does not aim to reach its 2017 sales levels for this segment →Marsa is also sharpening its focus on export markets →Decline in volumes historically has been partially offset with increasing prices →Going forward, sales prices are foreseen to reflect raw material cost increases →Gross profit margins increased in 2018 to c.13.9%, from c.6.2% in 2017, as Marsa’s strategy foresaw reduced volumes and a heightened focus on more profitable customers →Going forward, gross profit level is expected to settle at around 13.8% -14.0% due to increasing sales volume and operational efficiencies Draft 41 Source: Marsa and KPMG Draft VDD ReportCatering Business segment Overview Sales volume (k tons) Remarks Net sales (TL mn) Gross profit (TL mn)7.5 6.0 5.97.5 8.0 8.5 9.0 9.52.2 3.24.0 4.44.95.4 5.9 2022F 2019P2.0 2023F 2021F 2017A 2018A 2020F 2024F9.1 9.48.211.412.313.414.415.4-1.5%+11.1% Domestic Export 33.4 31.0 34.5 49.0 58.5 67.8 77.9 88.6 8.3 11.7 18.525.531.337.845.254.1 2017A 2020F105.5 2021F 2018A 2019P 2022F 2023F89.8 2024F41.7142.6 42.653.074.6123.2+12.7%+21.9% Domestic Export 7.8 10.315.8 19.2 22.8 26.8 31.3 0.00.51.0 02040 2022F 2017A 2020F6.9 2023F 2018A 2019P 2021F 2024F+14.5%+25.0% Gross Profit18.8% 16.3% 19.4% 21.1% 21.4% 21.5% 21.7% 21.9% Gross profit margin (%)→Catering is Marsa’s third largest Business segment, with c.11.6% share in net sales as of 2019 →Catering is the highest growing segment, largely on the account of demand shifting to catering margarine from liquid oil in the market coupled with thriving tourism activity – reflected both in domestic and export market projections →The share of exports in this segment has been steadily increasing over the last couple of years, a trend expected to continue, going forward. Increasing exports have mostly offset the lower volumes of domestic sales in 2018 and 2019 →2020F strategy envisages a return to 2017 volumes in domestic sales, and maintenance of this market share going forward, along with sustained growth in export markets
Profit18.8% 16.3% 19.4% 21.1% 21.4% 21.5% 21.7% 21.9% Gross profit margin (%)→Catering is Marsa’s third largest Business segment, with c.11.6% share in net sales as of 2019 →Catering is the highest growing segment, largely on the account of demand shifting to catering margarine from liquid oil in the market coupled with thriving tourism activity – reflected both in domestic and export market projections →The share of exports in this segment has been steadily increasing over the last couple of years, a trend expected to continue, going forward. Increasing exports have mostly offset the lower volumes of domestic sales in 2018 and 2019 →2020F strategy envisages a return to 2017 volumes in domestic sales, and maintenance of this market share going forward, along with sustained growth in export markets →Increasing domestic prices as well as share of hard currency export sales have helped Marsa to grow its segment sales in 2018 and 2019 →Going forward, sales prices are expected to reflect raw material cost increases →Gross profit margin has increased in 2019 to c.19.4% from 2018 levels of c.16.3% due to more stable USD/TL rate in 2019 in contrast with volatile FX movement in 2017 and 2018; this led to significant profitability increase in export markets in 2019 →Going forward, gross profit level is expected to settle at around 21.5% -21.9% due to increasing sales volume and operational efficiencies Draft 42Sales evolution (1) Indicates price effect (2) Indicates volume and mixed effect Source: Marsa and KPMG Draft VDD ReportPastry segment is expected to be the key driver of sales growth in the forecast period Pastry Industrial+ TL 38.7 mn - TL 38.6 mn + TL 11.3 mn 1 2+ TL 69.4 mn + TL 85.0 mn + TL 21.6 mn+ TL 173.9 mn+ TL 68.7 mn + TL 196.1 mn Catering Pastry Industrial Catering Pastry Industrial CateringNet sales bridge (TL mn) →Volume decreases across segments due to changes in sales policies →Declines in volumes offset by price increases in Pastry and Catering segments, resulting in net sales growth →Decline in net sales in Industrial segment in line with strategy envisaging lower volumes and deeper focus on more profitable customers2017A -2019P →Expected positive volume effect of normalization of sales terms across segments →Pastry and Catering volumes projected to exceed 2017 levels →Net sales growth surpassing volume expansion, with sales discount decrease for domestic pastry and catering sales coupled with prices reflecting expected raw material cost rises →Growing share of hard currency export sales contributing positively to top line growth→Strategy to maintain market share in the domestic market and continue growth in export markets in all segments →The price increases in raw materials are expected to be reflected in sales price increases2019P -2020F 2020F Onwards443.7 455.1631.11,064.9 48.635.6 12.636.333.128.0 57.013.350.044.041.926.1 PE-74.2 VE PE VE VE143.8 VE127.9 PE 2019P VE VE-1.3 PE 2020P VE PE PE VE 2017A-9.98.3 PE PE 2024F PE VE Draft 43 (1) Excluding depreciation Source: Marsa and KPMG Draft VDD ReportCost of Goods Sold (“COGS”) Overview →Raw materials are the main cost component (c.73.2% of net sales in 2019) −Raw material comprise c.89.2% of COGS in 2019 →Palm oil and its derivatives , main raw material used in production, is USD -denominated −Palm oil prices are assumed to show a long -term trend of c.2.0% increase in USD terms →Other raw materials such as oilseeds are primarily sourced within Turkey and are USD -denominated −Cotton oil which has relatively low usage in the production process, is priced in TL →Export sales have lower cost of raw materials due to significant customs tax exemption→Direct costs (c.6.9% of net sales in 2019P) is comprised of packaging (c.3.4% of net sales in 2019P ), energy (c.2.4% of net sales in 2019 ) and direct labor expenses ( c.1.1% of net sales in 2019 ) −Direct costs account for c.8.4% of COGS in 2019 →Slight improvement in direct costs is projected in the forecast period with economies of scale and increasing operational efficiency→Other includes primarily indirect labor costs, maintenance expenses and various non -classified expenses −Other is expected to be in line with inflation growth trend COGS1 breakdown (TL mn) Raw materials Direct costs Other86.5% 82.1% 82.1% 80.5% 80.4% 80.3% 80.2% 7.0 10.914.116.518.721.223.9 9.8 10.19.310.211.012.013.014.0 8.2 683.730.4 458.69.3 7.2 2023F771.6 12.210.5 2024F383.7 373.8508.9592.4669.5757.6854.5 300.2333.3 8.710.619.7 351.74.6 335.534.5 2017A4.3 2018A534.5 15.54.8 2022F23.1 2019P 2020F 2021F604.126.5 6.2 Raw materials Packaging Energy Direct labor Other % of net sales (%)80.6% Draft 44 Source: Marsa and KPMG Draft VDD ReportOperating expenses (“OPEX”) Overview OPEX breakdown (TL mn) →S&M expenses (c.5.5% of net sales in 2019P ) are comprised of personnel expenses (c.1.8% of net sales in 2019P ), logistics (c.2.2% of net sales in 2019P ), advertising (c.0.4% of net sales in 2019P ) and other (c.1.2% of net sales in 2019P ) →Personnel and advertising expenses are expected to be in line with the sales trend whereas logistics expenses are volume driven over the forecast period →Other includes mainly travel, transportation, rent, exhibition and subscription expenses→G&A expenses (c.0.8% of net sales in 2019P ) are comprised of personnel (c.0.4% of net sales in 2019P ), IT expenses ( c.0.3% of net sales in 2019P ) and other expenses (c.0.2% of net sales in 2019P ) →Going forward, G&A is projected to allow Marsa to perform as a stand -alone company→R&D expenses primarily include personnel, raw material and other R&D related expensesSales & Marketing (S&M) General & Administrative (G&A) Research & Development (R&D)21.4 21.0 25.236.241.847.353.660.40.5 0.50.70.80.80.91.01.1 0.00.51.0 050100 4.6 3.3 2018A24.8 2019P4.0 2022F2.84.3 3.8 2021F 2017A46.95.0 2023F5.559.5 2024F24.729.741.052.867.0 2020F S&M G&A R&D % of net sales (%)5.6% 6.1% 6.5% 6.5% 6.4% 6.3% 6.3% 6.3% Draft 45 Source: Marsa and KPMG Draft VDD ReportNet working capital (“NWC”) & Capital expenditures (“CAPEX”) Overview Net working capital (TL mn) Remarks CAPEX (TL mn)DSO 95 68 68 61 61 61 61 60 DPO 54 69 67 70 70 70 70 70 DIO 25 25 25 25 25 25 25 25Net working capital days 0.81.01.11.21.4 2020F 2023F 2021F 2022F 2024F0.1% 0.1% 0.1% 0.1% 0.1%% of net sales34.9 40.6 45.9 51.9 58.5124.682.1 90.5111.6130.0146.9166.2187.4 -62.2 -71.9 -72.1-103.1 -120.1 -135.8 -153.7 -173.4-7.0 -7.1 -7.9 -10.9-12.7-14.4-16.3 -18.483.8 25.6 2018A27.4 28.4 2020F 2017A
General & Administrative (G&A) Research & Development (R&D)21.4 21.0 25.236.241.847.353.660.40.5 0.50.70.80.80.91.01.1 0.00.51.0 050100 4.6 3.3 2018A24.8 2019P4.0 2022F2.84.3 3.8 2021F 2017A46.95.0 2023F5.559.5 2024F24.729.741.052.867.0 2020F S&M G&A R&D % of net sales (%)5.6% 6.1% 6.5% 6.5% 6.4% 6.3% 6.3% 6.3% Draft 45 Source: Marsa and KPMG Draft VDD ReportNet working capital (“NWC”) & Capital expenditures (“CAPEX”) Overview Net working capital (TL mn) Remarks CAPEX (TL mn)DSO 95 68 68 61 61 61 61 60 DPO 54 69 67 70 70 70 70 70 DIO 25 25 25 25 25 25 25 25Net working capital days 0.81.01.11.21.4 2020F 2023F 2021F 2022F 2024F0.1% 0.1% 0.1% 0.1% 0.1%% of net sales34.9 40.6 45.9 51.9 58.5124.682.1 90.5111.6130.0146.9166.2187.4 -62.2 -71.9 -72.1-103.1 -120.1 -135.8 -153.7 -173.4-7.0 -7.1 -7.9 -10.9-12.7-14.4-16.3 -18.483.8 25.6 2018A27.4 28.4 2020F 2017A 2019P 2021F 2022F 2023F 2024F30.648.1 36.132.537.742.654.1 Trade receivables Other current assets and liabilities Inventory Trade payables18.9% 7.5% 7.9% 5.1% 5.1% 5.1% 5.1% 5.1%% of net sales→Net working capital stood at c.18.9% of net sales in 2017 →Marsa revised its net working capital strategy in 2018, decreasing its NWC level down to 7.5% −Collection terms for domestic customers decreased to 78 days in 2018 from 106 days in 2017 whereas collection terms for exports sales stood at around 20 days in line with 2017 −In 2018, DPO terms extended to c.70 days from c.54 days, primarily attributable to management’s strategy in extension of payment terms for raw material procurement →Marsa’s NWC in 2019 is expected to be c.8% of net sales −Collection terms for domestic sales in line with 2018 are 78 days whereas for exports are 23 days →Going forward, NWC is expected to stabilize at around 5% of net sales with further improvements at DSO level with domestic sales of around 70 days and export sales of around 23 days →DIO level has not changed significantly over the course of the historical period →Going forward, Marsa does not have any significant CAPEX due to adequate production capacity −Marsa also undertakes periodic maintenance and repair of its equipment to run its operations Draft 46 Source: Marsa and KPMG Draft VDD ReportEBITDA statement TL mn 2017A 2018A 2019P 2020F 2021F 2022F 2023F 2024F Gross sales 480.3 441.5 505.3 687.7 801.9 909.3 1,032.3 1,165.6 Pastry 215.7 211.8 266.6 339.2 393.3 443.9 502.0 565.1 Industrial 217.0 182.0 178.7 264.3 307.2 346.2 391.0 439.5 Catering 47.5 47.7 60.1 84.3 101.4 119.2 139.3 161.0 Sales discounts 36.5 32.7 50.2 56.6 66.0 74.8 84.9 95.8 Net sales 443.7 408.8 455.1 631.1 736.0 834.5 947.3 1,069.8 Pastry 186.2 186.7 224.9 294.3 341.3 385.2 435.6 490.4 Industrial 215.8 179.5 177.3 262.3 304.8 343.5 388.0 436.1 Catering 41.7 42.6 53.0 74.6 89.8 105.8 123.7 143.3 COGS (excl. depreciation) 383.7 335.5 373.8 508.9 592.4 671.3 761.1 858.5 as % of sales 86% 82% 82% 81% 80% 80% 80% 80% Raw material 351.7 300.2 333.3 458.6 534.5 605.5 686.9 775.1 Domestic 307.7 251.8 276.6 371.7 431.7 488.0 552.3 621.7 Exports 44.0 48.4 56.6 86.9 102.7 117.5 134.6 153.5 Direct Labor 4.6 4.3 4.8 6.2 7.2 8.3 9.4 10.6 Packaging 10.6 12.2 15.5 19.7 23.1 26.7 30.5 34.7 Energy 7.0 8.7 10.9 14.1 16.5 18.8 21.3 24.0 Others 9.8 10.1 9.3 10.2 11.0 12.0 13.1 14.1 Gross Profit 60.0 73.3 81.3 122.3 143.6 163.3 186.2 211.3 as % of sales 13.5% 17.9% 17.9% 19.4% 19.5% 19.6% 19.7% 19.8% OPEX (excl. depreciation) 24.7 24.8 29.7 41.0 46.9 52.9 59.8 67.3 as % of sales 5.6% 6.1% 6.5% 6.5% 6.4% 6.3% 6.3% 6.3% S&M 21.4 21.0 25.2 36.2 41.8 47.4 53.8 60.7 G&A 2.8 3.3 3.8 4.0 4.3 4.6 5.0 5.5 R&D 0.5 0.5 0.7 0.8 0.8 0.9 1.0 1.1 EBITDA 35.3 48.5 51.6 81.3 96.7 110.3 126.4 144.1 as % of sales 8.0% 11.9% 11.3% 12.9% 13.1% 13.2% 13.3% 13.5% Depreciation 2.8 2.6 2.3 2.3 2.4 2.5 2.6 2.8 Draft VI. Appendices - KPMG Carve -out Financials - Equipment & Machinery details Draft 48 TL mn 2017 2018 8M2019 Gross sales 480.1 441.6 318.8 Returns and discounts (36.5) (32.7) (28.2) Net sales 443.6 408.9 290.6 Cost of sales (376.0) (326.0) (237.8) Gross profit 67.7 82.9 52.9 Gross profit margin % 15.3% 20.3% 18.2% OPEX (29.5) (29.1) (22.8) S&M (21.5) (21.6) (17.3) G&A (7.5) (7.0) (4.8) R&D (0.5) (0.5) (0.7) EBITDA 38.1 53.8 30.0 EBITDA margin % 8.6% 13.2% 10.3% Depreciation (2.8) (2.6) (1.5) EBIT 35.3 51.2 28.5 EBIT margin % 8.0% 12.5% 9.8% Financial income/(expense), net (4.9) (7.8) (5.1) Other income/(expense), net 0.1 0.4 0.7 Profit before tax 30.6 43.8 24.1 Tax (5.0) (1.7) - Profit after tax 25.5 42.1 24.1 Profit after tax margin % 5.8% 10.3% 8.3%KPMG Carve -out Financials1 Income statement (1) KPMG Carve -out financials does not include the optional assets Source: Marsa and KPMG Carve -out Financials Draft 49KPMG Carve -out Financials1 Balance sheet TL mn 31-Dec-2017 31-Dec-2018 31-Aug-2019 Cash and cash equivalents - - - Marketable Securities - - - Trade receivables 124.2 79.9 64.8 Inventory 28.4 27.5 47.0 Other current assets 3.3 2.9 7.3 Total current assets 155.9 110.3 119.0 Tangible assets 26.7 24.4 22.7 Intangible assets 0.2 0.1 0.1 Financial non -current assets 47.4 47.4 47.4 Other non -current assets 0.0 0.0 0.2 Non - current assets 74.3 71.9 70.3 Total assets 230.2 182.2 189.4 Short -term bank loans - - - Trade payables 61.0 61.3 84.4 Other current liabilities 3.6 3.9 6.1 Corporate tax 2.5 - - Current liabilities 67.1 65.3 90.5 Other non -current liabilities - - - Non-current liabilities - - - Share capital 137.5 137.5 137.5 Transferred to other segment - (88.3) (130.4) Retained earnings - 25.5 67.6 Profit for the period 25.5 42.1 24.1 Total liabilities and shareholders' equity 230.2 182.2 189.4 (1) KPMG Carve -out financials does not include the optional assets Source: Marsa and KPMG Carve -out Financials Draft 50 Source: MarsaAdana production facility Equipment & Machinery details for margarine production Line Product group Equipment UnitTheoretical capacity (tons/day)Actual capacity (tons/day)Information Crude oil unloadingPalm oil & derivatives (Palm oil as RBD, cottonseed oil as neutralized bleached oil, sun flower & others as crude oil)- tons/day 5,184 4,665→Unloading 27 tons in 75 minutes (per line) →10 unloading lines; 9 of them are actively used Crude oil
Other non -current liabilities - - - Non-current liabilities - - - Share capital 137.5 137.5 137.5 Transferred to other segment - (88.3) (130.4) Retained earnings - 25.5 67.6 Profit for the period 25.5 42.1 24.1 Total liabilities and shareholders' equity 230.2 182.2 189.4 (1) KPMG Carve -out financials does not include the optional assets Source: Marsa and KPMG Carve -out Financials Draft 50 Source: MarsaAdana production facility Equipment & Machinery details for margarine production Line Product group Equipment UnitTheoretical capacity (tons/day)Actual capacity (tons/day)Information Crude oil unloadingPalm oil & derivatives (Palm oil as RBD, cottonseed oil as neutralized bleached oil, sun flower & others as crude oil)- tons/day 5,184 4,665→Unloading 27 tons in 75 minutes (per line) →10 unloading lines; 9 of them are actively used Crude oil loading Palm oil & derivatives - tons/day 1,037 518→Loading 27 tons in 75 minutes (per line) →2 loading lines; 1 of them is actively used Liquid finished goods loadingPalm oil & derivatives - tons/day 648 648→Loading 27 tons in 120 minutes (per line) →2 loading lines; 2 of them are actively used Crude, RBD and liquid oil tank storagePalm oil & derivatives →Tank tons 24,309 29,773 →46 tanks with various volumes NeutralizationLiquid oil (sunflower, corn etc.)→Westfalia →Alfa Laval 1 →Alfa Laval 2tons/day240 200 240240 200 200→Used in liquid oil refinery for composition recipes (liquid oils that are added to Industrial & Pastry fats) →Balance tank tons 196 196→13 tanks →Dewax maturation tanktons 90 80→6 tanks →Intermediate tanktons 480 480→8 tanks →Soap stock splittingtons 30 30→2 tanks →Sulfuric acid tank tons 46 46 →Caustic tank tons 150 150 →Acid oil tank tons 150 150→3 tanks →Water softening - - - Draft 51 Source: MarsaAdana production facility Equipment & Machinery details for margarine production Line Product group Equipment UnitTheoretical capacity (tons/day)Actual capacity (tons/day)Information BleachingCrude oil (palm, sunflower, corn etc)→Bernardini 1 →Bernardini 2 →Bleaching 3 →Bleaching 4tons/day200 200 200 200190 190 190 190→Used in liquid oil refinery for composition recipes (liquid oils that are added to Industrial & Pastry fats) →Earth loading tons/day 24 24 →Earth tank tons 11 11→3 tanks →Earth dosing tons/day 14 13→3 dosing systems →Vacuum pump - - -→2 vacuum systems →Filter tons/day 800 800→8 filter systems Electrolyze Hydrogenation →Davy Bamagamper nm³H2/h8,000 2914,000 145 →Caustic tank tons 20 20→2 tanks →Gasholder tank nm3110 110→1 tank →Compressor nm3/h 1,116 1,004→4 compressors →Hydrogen tank Nm3750 750→30 bars →Cooling tower - - - →Demi water system- - - →Nitrogen production systemnm3/h 6 6 Hydrogenation & BleachingPalm oil 45, Pamuk 40, Akrim→Sulzer Burckhardt tons/day 320 250 →Measure tank tons 21 21→3 tanks; 2 tanks can be used →Autoclave tons 42 42→4 autoclaves →Cooling tank tons 21 21→3 tanks; 2 tanks can be used →Press filter tons/day 320 250→6 filters; 4 filters can be used →Balance tank tons 90 90→5 tanks →Bleaching tank tons/day 36 36→4 tanks →Press filter tons/day 320 250→3 filters →Balance tank tons 108 108→8 tanks →Elimko tank tons 160 160→4 tanks →Vacuum pump - - -→2 vacuum systems Draft 52 Source: MarsaAdana production facility Equipment & Machinery details for margarine production Line Product group Equipment UnitTheoretical capacity (tons/day)Actual capacity (tons/day)Information Interesterification & BleachingIE12 →DeSmet tons/day 200 150 →Blending tank tons 40 40→2 tanks →Catalist dosing system- - - →Citric acid tank tons/day 200 150 →Citric acid dosing system- - - →Bleaching tank tons/day 200 150 →Earth loading tons/day 24 24 →Earth tank tons 1.5 1.5 →Earth dosing tons/day 2.5 2 →Vacuum system - - -→1 vacuum tower →Filter tons/day 200 150→2 filters →Intermediate tanktons 280 280→10 tanks →Caustic tank tons 26 26 Deodorization 1Crude oil (palm, sunflower, corn etc.)→Lurgi tons/day 100 100→Deodorization 1, vacuum system, vaporax and vacuum pump are inactive Deodorization 3Crude oil (palm, sunflower, corn etc.)→DeSmet tons/day 200 200 →Vacuum system - - - →Vaporax - - - →Blending tank tons 184 184→8 tanks →Fatty acid tank tons 36 36→2 tanks →Motorine tank tons 27 27 →Vacuum pumps - - -→3 vacuum pumps Deodorization 4 Palm oil →DeSmet tons/day 200 180→For flooding type deodorization →Vacuum system - - - →Vaporax - - - Draft 53Adana production facility Equipment & Machinery details for margarine production Line Product group Equipment UnitTheoretical capacity (tons/day)Actual capacity (tons/day)Information Storage tank by product Ready to pack oil storage tank→Fat phase tank tons 285 285→10 tanks →Truck tank tons 275 275→7 tanks →Return tank tons 10 10 →Cooking tank tons 1 1→2 tanks (900 kg & 300 kg) Water phase tank →Tank tons 6 6→6 tanks →Water preparation- - -→Water tank (6 tons), chlorine tank (1 ton), 2 pumps, 2 sartorius filters, sand filter, carbon filter, UV Milk preparation →System tons/day - 5→2 preparation tanks (2 tons), heat exchanger, 1 maturation tank (5 tons), heat exchanger, CIP system Line 1 - BPSShortening (BPS KN/KT)→Keçeciler tons/day 120 75→Shortening preparation tanks are bottleneck →Preparation & Perfector tons/day 120 120→Feed tank, pump, perfector →BPS Tank tons 41 41→2 tanks Line 2 – Bag in box (Akbis K5) →Liquid Box Corp. tons/day 50 43→Pump and filling Line 4 – Pastry (10 kg block)Pastry products (USTAM Börek,Usta 10 kg )→Schröder (Manual filling)tons/day 79 60 →Preparation & Perfector & Filling→Fat & water dosing pump, premixer , high pressure pump, perfector , resting tube, dosing, resting tube, manual packing, coding Line 7 – Pastry (10 kg block)Pastry products (USTAM Normal 10 kg)→Schröder (Manual filling)tons/day 79 78 →Preparation & Perfector & Filling→Fat & water dosing pump, premixer , high pressure pump, perfector , resting tube, dosing, resting tube, manual packing, coding Source: Marsa Draft 54Adana production facility Equipment & Machinery details for margarine production Line Product group Equipment UnitTheoretical capacity (tons/day)Actual capacity (tons/day)Information Line 8 – Industrial box (20 kg)Industrial products (Akbis 20 kg)→Schröder - Pattyn tons/day 210 200→Capacity decreases to 170 tons/day with lauric fats and 120 tons/day with 10 kg products →Preparation& Perfector & Filling→Fat &Water dosing pump, premixer , high pressure pump, perfector , Pattyn filling system, coding Line 9 (2.5 kg block)Pastry products (6*2.5 USTAM Catering)→Keçeciler →Bock & Sohntons/day 54 40→Scraped surface heat exchanger is a bottleneck →Preparation& Perfector & Filling→Fat & Water dosing pump, premixer , high pressure pump, perfector , dosing, resting tube, filling machine, coding →Pasteurization system is not used in this
perfector , resting tube, dosing, resting tube, manual packing, coding Source: Marsa Draft 54Adana production facility Equipment & Machinery details for margarine production Line Product group Equipment UnitTheoretical capacity (tons/day)Actual capacity (tons/day)Information Line 8 – Industrial box (20 kg)Industrial products (Akbis 20 kg)→Schröder - Pattyn tons/day 210 200→Capacity decreases to 170 tons/day with lauric fats and 120 tons/day with 10 kg products →Preparation& Perfector & Filling→Fat &Water dosing pump, premixer , high pressure pump, perfector , Pattyn filling system, coding Line 9 (2.5 kg block)Pastry products (6*2.5 USTAM Catering)→Keçeciler →Bock & Sohntons/day 54 40→Scraped surface heat exchanger is a bottleneck →Preparation& Perfector & Filling→Fat & Water dosing pump, premixer , high pressure pump, perfector , dosing, resting tube, filling machine, coding →Pasteurization system is not used in this line →Manual filling for 4.5 kg carton & plastic bucket Line 12 tin filling lineCooking products (Ghee 1,2,4,5, 8,10,18 kg, USTAM A24 bucket)→Gerstenberg (1974)tons/day 200 190→Perfector is able to feed both OCME & COMACO tin filling machines Cooking products (Ghee 1,2,4,5, 8,10,18 kg, USTAM A24 bucket)→OCME 1 (1975) tons/day 180 175→Capacity decreases to 175 tons/day with palm oil fats (18 kg) and 130 tons/day with palm olein 20 kg bucket products Cooking products (Ghee 1,2,4,5, 8,10,18 kg, USTAM A24 bucket)→COMACO 1 (1984)tons/day 100 90→Capacity decreases to 68 tons/day with palm oil fats (5 kg) Drum fillingFats & Oils (Mars 42 N)- tons/day 100 90→Scraped surface heat exchanger is a bottleneck Palettizing 1 Carton, plastic bucket →INKA (2016) kg/min 60 60→9 palletizing systems Palettizing 2 Tin →INKA (2016) unit/min 30 30→2 palettizing systems Source: Marsa Draft 55Adana production facility Equipment & Machinery for liquid oil production Line Equipment Model SupplierCapacity (ton/day)Product type Information Refinery→Alfa Laval 3 1986 Sweden 100 Not operational →Alfa Laval 4 1967 Sweden 100 Not operational →Deodorisation 5 - - Not operational →Deodorisation 6 1999 Desmet 300→1 vacuum tower and 1 water cooling tower →Vacuum pump →5 units (250 tons) final production tanks for after deodorisation →Winterisation 1988 Vardarcı 300→22 maturation tanks (506 tons) →1 perlite mixer →20 press filters; 16 of them are actively used Filling→Line 21 1985 Ronchi 1101 & 2 ltpet liquids→1 bottle cleaning machine →1 sticker machine →1 shrink machine →1 sleeve machine →Line 22 1985 Ronchi 1101 & 2 ltpet liquids→1 bottle cleaning machine →1 sticker machine →Nitrogen dosing machine →Line 24 1995 Saylan 1205 lt plastic bucket→1 sticker machine →1 capping machine →1 heat exchanger →Line 25 2003 Oluşum 120 5 lt tins→1 capping machine →1 shrink machine →Line 26 1992 Saylan 180 10 & 18 lt tins→1 capping machine →1 heat exchanger →1 cooling system; used for all liquid oil Source: Marsa Draft 56 Simge Ündüz Managing Director [email protected] +90 (212) 367 3603 +90 (533) 283 8113Ünlü Menkul Değerler A.Ş. 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Project Earth Information Memorandum August 2022 © 2022 ÜNLÜ & Co \| Privileged and confidential 1Table of contents Section Page I Executive summary 2 II Key investment highlights 8 III Business overview 15 IV Financial overview and projections 26 V Appendix 37 I. Executive summary 3 (1) Number of dealers invoiced over the previous three years (2) Average number of employees as of June 2022 (3) 2020, 20 21,and 6M 2022 financials converted to EUR by KPMG FVDD study and 2022E & onwards forecast by the management based on KMPG FVDD financials Source: Company, market research, KPMG FVDD Report, TUIKExecutive summary Overview Company overview →ERYAP Grup Mineral Yalıtım Malz . San. VeTic. A.Ş. (" Eryap Mineral " or the "Company ") is a prominent stone wool producer located in Hendek /Sakarya , at c.170 km distance to Istanbul, Turkey’s largest city with c.16 mnpopulation →Offering a wide range of stone wool products for both residential and industrial applications, Eryap Mineral boasts a solid reputation for compliance with stringent international standards including EUCEB →In the domestic market ( c.44% of Net sales in 2022E), Eryap Mineral sells to –its extensive dealer network of 256 dealers1reaching c.2,000 points of sales –direct accounts that use stone wool in their final products (panel manufacturers, HVAC producers, etc.) and sell to their clients →In export markets ( c.56% of Net sales in 2022E), the Company sells primarily to dealers and contractors; also engages in private label sales to insulation groups →With its modern production plant located at the Second Organized Industrial Zone (" OIZ") in Sakarya /Hendek , Eryap Mineral enjoys strategic proximity to a broad domestic demand base and major export gateways →Highlights of Eryap Mineral production plant, built in 2012, are the following –second largest production capacity in Turkey with 80k tonnes /year –over 40% share in production capacity on western and over 15% in overall Turkey –designed to permit capacity expansion –fitted with premium quality European equipment –Izoteh , K&S, Qubiqa , Woltz and Münstermann –boasts impressive efficiency ratios as per the "zero waste" principle →The Company is forecast to generate revenues of c.EUR 32mnthrough sale of c.54k tonnes of stone wool in 2022EKey figures 10.021.431.941.0 6.010.5 13.3 2020A 2026F 2021A 2022E0.2+78%+6% Net sales (EUR mn) EBITDA (EUR mn) 2 Production linesc.80k tonnes Production capacity136 Employees2 27+ Export countriesc.56% Share of exports in Net sales, 2022E256 Domestic dealers Key financial highlights3 32.8 51.0 53.9 75.3 Sales volume (k tonnes )CAGR Production plant Production capacity 80k tonnes /yearc.80 kmc.70 kmScope for capacity expansion of up to 40k tonnes /year Derince PortEryap Mineral production plantKarasu Port 4 Source: CompanyExecutive summary Key milestones 2005 -2007 2012 2017 2018Stone wool production launched in Hendek /Sakarya Secured "Investment of the Year" award in insulation industryStone wool business demerged from XPS and membrane businesses into a standalone company: Eryap MineralEruslu family embarks on insulation business (XPS in 2005; membrane in 2007)Second stone wool production line (Line II) with 4 5k tonnes /year capacity added Stone wool 2019 2019 -2021 2022 Line I modernized and renovated to enhance capacity and efficiency Storage area expanded by 10k sqm with developed packaging systems EUCEB certification obtained 5 (1) 2020, 2021, and 6M 2022 financials converted to EUR by KPMG FVDD study and 2022E & onwards forecast by the management bas ed on KMPG FVDD financials (2) Other products (BONUS Platin/ Lamella/Loose/Pipe), commanding c.0.0 1% in 2022E Net sales, not demonstrated on this page Source: Company, KPMG FVDD ReportExecutive summary Product portfolio Facade RoofVentilated facade / partition wallPanel Industrial BrandsBONUS Premium FBONUS Premium RBONUS Gold / Gold PlusBONUS PanelBONUS Industrial MW Usage areaExternal walls of buildingsFlat roof application systemsVentilated facade or rainscreen cladding systemsSandwich panel productionIndustrial plants and process equipment Product specifications0.036 -0.040W/mK 20-200 mm n.a.0.03 6-0.040W/mK 20-200 mm n.a.0.036 W/ mK 20-200 mm 40-90 kg/ cbm0.040 W/ mK 20-200 mm 90-150 kg/cbm0.040 W/ mK 20-200 mm 80-125 kg/ cbm Net sales (EUR mn)1 Sales volume (k tonnes )C T D 5.37.912.416.0 2026F 2021A 2020A 2022E+53.6%+6.5% 0.47.411.414.4 2022E 2020A 2021A 2026Fn.m.+5.9% 2.6 2.74.76.0 2020A 2021A 2022E 2026F+34.7%+6.1% 0.72.3 2.33.3 2020A 2026F 2021A 2022E+88.6%+9.2% 0.9 0.81.01.3 2020A 2022E 2021A 2026F+4.4%+7.3% 19.1 21.4 21.429.7 2020A 2026F 2021A 2022E+5.9%+8.6% 1.516.7 19.627.0 2026F 2020A 2022E 2021An.m.+8.4% 7.96.5 7.610.5 2020A 2022E 2021A 2026F-1.5%+8.3% 1.74.73.96.0 2020A 2022E 2021A 2026F+49.1%+11.8% 2.41.6 1.42.1 2020A 2021A 2026F 2022E-22.2% +9.4% %of Net sales in 2022E2C T D Conductivity Thickness Density39% 36% 15% 7% 3% 6 Turkey Exports PresenceEstablished presence throughout the country, particularly in western Turkey, the leading region in terms of demandGaining a foothold, mostly in Eastern Europe for the time being, complemented by private label sales to international players Breakdown of Net sales by brand and customer type Net sales (EUR mn)2 Sales volume (k tonnes )PLBranded PL1 (1) Private label (2) 2020, 2021, and 6M 2022 financials converted to EUR by KPMG FVDD study and 2022E & onwards forecast b y the management based on KMPG FVDD financials Source: Company, KPMG FVDD ReportExecutive summary Sales geographies and channels 44% 56% 97% 3% 3%Branded PL 81% 19% Dealer 8.7 10.114.118.9 2022E 2020A 2021A 2026F+27.1%+7.6% 1.311.117.822.1 2022E 2020A 2021A 2026Fn.m.+5.5% 2.723.929.239.2 2020A 2026F 2021A 2022E+226.1%+7.6% 30.1 27.1 24.736.1 2022E 2020A 2021A 2026F-9.5% +10.0%Contractor PL OEM 19% 69% 1% 11% OEM Dealer 88% 9% %of Net sales in 2022E % of Net sales under each geography for LTM 6M 2022 7 Source: CompanyExecutive summary Transaction overview Eryap Mineral→Project Earth refers to the contemplated sale of 100% stake in Eryap Mineral (the “ Proposed Transaction ”) →The Company is currently owned and operated by Eruslu Family (the " Shareholders ") –Apart from Eryap Mineral, Eruslu family is active in the building materials industry with two other companies manufacturing XPS, waterproofing membranes and siding/PVC profiles →Recently, Eruslu family decided to explore strategic options for the Company and in this respect, appointed ÜNLÜ & Co to act as the exclusive financial advisor in the Proposed Transaction →Interested parties should only contact ÜNLÜ & Co for their questions and enquiries Kahraman Eruslu Salih Eruslu Emrullah Eruslu Selim Eruslu 52.0 % 16.0 % 16.0 % 16.0 %Phase I Transaction scope Shareholding %NDA IM Limited Q&A MM and site visitsNon- binding offersBinding
Earth refers to the contemplated sale of 100% stake in Eryap Mineral (the “ Proposed Transaction ”) →The Company is currently owned and operated by Eruslu Family (the " Shareholders ") –Apart from Eryap Mineral, Eruslu family is active in the building materials industry with two other companies manufacturing XPS, waterproofing membranes and siding/PVC profiles →Recently, Eruslu family decided to explore strategic options for the Company and in this respect, appointed ÜNLÜ & Co to act as the exclusive financial advisor in the Proposed Transaction →Interested parties should only contact ÜNLÜ & Co for their questions and enquiries Kahraman Eruslu Salih Eruslu Emrullah Eruslu Selim Eruslu 52.0 % 16.0 % 16.0 % 16.0 %Phase I Transaction scope Shareholding %NDA IM Limited Q&A MM and site visitsNon- binding offersBinding bidsSigning Initiation of due diligence September 6thOctober Phase I details →Distribution of the Information Memorandum (" IM") →Limited Q&A process for key questions and clarification requests →A meeting with the management (" MM") and site visit to be arranged upon request Phase II details →Due diligence period for a limited number of selected potential investors →Virtual dataroom access along with Q&A process →Access to KPMG Financial Vendor Due Diligence Report (" KPMG FVDD Report "), covering years 2020 -6M 2022 based on EUR conversion methodology →Management presentation and site visit →Exact timetable for Phase II to be circulated in a separate process letter for short -listed potential investorsPhase IITransaction scope Envisaged transaction timeline Shareholding structure II. Key investment highlights 9Key investment highlights Source: CompanySizeable yet growing domestic market underpinned by proven fundamentals Wide and premium quality stone wool product portfolio, adhering to rigorous standardsFoothold in export markets Robust domestic presence with extensive dealer network Stone Wool4 1 3 2 10 (1) Other insulation materials comprise glass wool, XPS, EPS, PUR/PIR, FEF/PEF (2) Thermal Insulation Requirements for Buil dings (3) For further detail on legislations and initiatives, please refer to the Appendix section (4) Nearly zero energy building Source: Company, IZODER (Turkish Thermal, Water, Acoustic and Fire Insulation Manufacturers’ Association), EAE (European Asso ciation For External Thermal Insulation Composite Systems) , TUIK, Ministry of Interior Immigration OfficeSizeable yet growing domestic market underpinned by proven fundamentals 1 Increasing stone wool usage in T urkey in the growing insulation market… 8.317.8 11.614.0 2.2 20101.0 2.8 2015 20192.7 20219.320.6 13.816.7 Stone wool Others1 % share of stone wool4.9% 9.8% 5.5% Turkish thermal insulation market ( mncbm )CAGR (2010 -2021E)→Turkish thermal insulation market size is estimated to have reached 16.7 mncbm in 2021; implying a 5.5% CAGR since 2010 →Stone wool material surpassed total market growth with 9.8% CAGR , reaching 2.7 mncbm in 2021E Drop due to slowdown in construction activity 1 Recovery with better prospects and government stimulus in the construction sector2 …driven by higher thickness, as required by regulations…10.5% 13.5% 15.9% 16.2% 12 63180 185236 2019 2010 2015 202164.9 64.5 84.3 86.9Stone wool consumption (k tonnes ) 12.8% →Stone wool volume growth in tonnes eclipsed that in cbm terms throughout 2010 -2021, reaching c.236k tonnes in 2021 →Growth is driven mainly by implementation of greater density, as stipulated in a regulation (TS 8252) on fire protection of buildings, enacted in Turkey in 2015 Average density (kg/ cbm )…estimated to generate further growth on the back of 12.5 4.0 EU Turkey0.595 0.182 Turkey EUTurkey’s housing needs averaged at over c.600k dwelling units per year since 2000Uninterrupted building activity→Main drivers -growing population (c.1 % CAGR in 2021 - 2031F) -decreasing household size ( -1.4% CAGR in 2014 -2021) -immigration (4.7 million residency permits in 2017 -2021) A new legislation on energy efficiency in buildings, issued in Turkey in February 2022, introduced "NZEB"4standardsLegislation3→The legislation, effective as of January 1, 2023, requires new buildings to comply with -20% decrease in U -values -40% to 60% increase in required insulation thickness standards Turkey still lags behind Europe on thermal insulation penetrationConvergence to European marketThickness (2020, cm, avg.)Consumption per capita (2020, cbm ) The government recently announced a loan programme to incentivize insulation spending for homeownersFinancial initiatives by the government3→Favorable terms and conditions including tenor and interest rate Paris Climate Agreement3 Turkey became a party to the Paris Climate Agreement in November 2021 →Funding worth USD 3.2 bn was secured, a portion of which will be allocated to the insulation sector 11 Source: Company, KPMG FVDD ReportWide and premium quality stone wool product portfolio… 2 Established product categories for various household applications… 90%→BONUS stone wool is manufactured in board, blanket and loose forms, in different sizes and with varying technical properties, along with facin g materials suited for the intended use …along with a rich variety of offerings for industrial applications 10% BONUS DESIBEL BONUS GOLD / GOLD PLUS partition wall boards BONUS PLATIN floating floorboardsBONUS PREMIUM F facade boards for ETICS solutions BONUS PREMIUM R flat roof boardsBONUS GOLD / GOLD PLUS facade boards BONUS stone wool flexible aluminum sandwich panel batts BONUS stone wool looseBONUS stone wool industrial batts BONUS stone wool marine batts and blankets BONUS stone wool flexible aluminum chimney battsBONUS stone wool pro r oof blankets BONUS stone wool private a ir conditioner battsBONUS stone wool industrial MW blankets Wide stone wool product portfolio, catering to household and industrial usesStrong product development credentials to meet specific customer requirements1,000+ SKUs with varying technical features %of Net sales in 2022E % 12 Source: Company…adhering to rigorous standards 2 Eryap Mineral’s high -quality products are certified as per Turkish standards European standardsGlobal general and environmental standards Adhering to supreme quality standards, the Company recently qualified for the EUCEB certificate, joining a select cohort of international producers 13 Extensive dealer network, supported by a trusted brand and seamless operations, conducive to robust domestic presence (1) Number of dealers invoiced over the previous three years Source: Company, TUIK, KPMG FVDD ReportRobust domestic presence with extensive dealer network 3 Proven presence in Turkey… Reputation built on reliability Perceived as a reliable supplier by market players in terms of product quality and credibilityA primary local producer Ranks 2ndin Turkey and 1stin western Turkey with 80k tonnesof annual production capacityProximity to the market Unrivalled in speed, flexibility and logistics costs; focus on Marmara Region (marked with navy
are certified as per Turkish standards European standardsGlobal general and environmental standards Adhering to supreme quality standards, the Company recently qualified for the EUCEB certificate, joining a select cohort of international producers 13 Extensive dealer network, supported by a trusted brand and seamless operations, conducive to robust domestic presence (1) Number of dealers invoiced over the previous three years Source: Company, TUIK, KPMG FVDD ReportRobust domestic presence with extensive dealer network 3 Proven presence in Turkey… Reputation built on reliability Perceived as a reliable supplier by market players in terms of product quality and credibilityA primary local producer Ranks 2ndin Turkey and 1stin western Turkey with 80k tonnesof annual production capacityProximity to the market Unrivalled in speed, flexibility and logistics costs; focus on Marmara Region (marked with navy blue on the map) Seamless operations Well -managed system ensuring active involvement starting from procurement until the end client …further enhanced with extensive dealer network # of dealers in given regionPopulation share in given region (2021)GDP share in given region (2021) 125 30% 43%9 9% 7% 39 17% 18% 20 13% 10%38 13% 13%25 18% 10% Eryap Mineral production plant Reaching in 256 Domestic dealers1c.2,000 Domestic points of sale81 Provinces covering 85% -90% of the sales activity in Turkey 14 (1) Other countries in the Balkans, Eastern Europe, Western Europe, Asia, Africa and the Middle East which comprised c.16% of LTM 6M 202 2 Net sales, export have not been plotted on the above map Source: Company, KPMG FVDD ReportFoothold in export markets 4 The Company’s exports accelerated in 2021… 1.311.117.822.1 2026F 2021A 2020A 2022E Net sales, export (EUR mn)2.7 23.9 29.2 Sales volume, export (k tonnes ) →In LTM 6M 2022, Eryap Mineral exported its products to 27 countries , in CEE, Western Europe and MEANA regions –Balkans and Eastern Europe, where the Company has a solid track record, comprised c.90% of Net sales, export in LTM 6M 2022 –In this period, the Company served c.110 customers including various dealers and contractors →The Company accounted for over 30% of Turkey’s aggregate stone wool exports volume in 2021, leveraging its location advantage →In addition to sales of own products through dealers, the Company supplied private label products to major insulation companies in international markets →With EUCEB certification recently secured, the management aims for increased export penetration in 2023F and beyond…clustered most notably in the Balkans and Eastern Europe 18.7% 8.3%27.7% 8.1% 21.2% SerbiaRomaniaPoland Hungary Bulgaria Eryap Mineral production plant%of Net sales, export in LTM 6M 20221 Selected projects in export markets Project Type Country Samsung Battery Plant Industrial Hungary VGP PARK Kecskemet Warehouse & Logistics Hungary Pirelli Tyres Plant Industrial Romania Iasi-Dobrosloven -Sınesti Sport hall Romania Kaufland Commercial Romania Hubergroup Industrial Poland Al Rayyan Stadium Stadium Qatar Thessaloniki metro Transport infrastructure GreeceExports poised to sustain growth following significant leap 39.2 III. Business overview 16 Procurement Production Sales & DistributionBusiness overview Support functionsQuality Assurance & CertificatesOrganization→Main raw materials, namely coal, basalt, dolomite, resin, and dross, are sourced from Turkey →Proximity to main raw material suppliers confers the Company a competitive edge in terms of logistics costs and lead times →Coal and resin, making up over c.75% of total raw material purchases, are procured in USD, while other main raw material procurements are denominated in TL →Natural gas and electricity, which comprised c.10% of the Company’s total external supply cost, are supplied directly by the network at the Organized Industrial Zone→Production is carried out on two lines in Hendek , Sakarya : −Line I (2012): 120 cm wide; has production capacity of 35k tonnes /year −Line II (2017): 240 cm wide; has production capacity of 4 5k tonnes /year →The production plant, designed and equipped as per "zero waste" principles, has the capability to produce briquettes →The Company operates with a minimum final goods inventory, by virtue of its "order -based production" model Environmental Policy→In the domestic market, the Company generates over 85% -90% of its sales through a network of 2561dealers, followed by sales to direct OEM accounts (panel manufacturers, HVAC producers etc.) and limited private label product sales →Exports are also generated mainly through dealers, followed by private label production for major international brands, direct OEMs, and Turkish contractors undertaking projects abroad →In the domestic market, products are delivered by third party trucks either directly to the site or todealer warehouses →Export products are either shipped or transported by railway to the destinationValue chain overview (1) Number of dealers invoiced over the previous three years Source: Company, KPMG FVDD Report 17 (1) Total raw material procurement comprises c.69% of total procurement, which includes utilities (electricity, gas, water), other consumables etc. Source: Company, KPMG FVDD ReportClose supplier base ensuring cost competitiveness Procurement Sales & Distribution Production Support functions Main supplyShare in total raw material procurement1 (EUR, LTM 6M2022)Explanations Selected major suppliers Coal→Locally supplied in USD →The Company efficiently processes various grades of co al without compromising final product quality, thanks to its modern machinery park Resin→Locally supplied in USD →2-3 days of supply is stored at all times at the plant within the newly built tanks Basalt & dolomite→Locally supplied in TL →Basalt and dolomite delivered from c.50 km and c.150 km distance to the plant, respectively Dross→Locally supplied in TL →Proximity to major iron and steel producers ensures both cost and lead -time advantages Packaging materials→Locally supplied in TL, USD -indexed Not disclosed 3.9%47.9% 28.0% 4.3% 0.4% Having an established supplier base in close proximity to its production plant, Eryap Mineral collaborates with at least two suppliers at all times to minimize supply disruptions 18Strategically located production plant Procurement Sales & Distribution Production Support functions 2 Production lines136 Employees2c.62k sqm Total area80k tonnes p.a. Production capacityc.35k sqm Closed area1 +40% Production capacity share in Marmara regionMarmara region Insulation Industry "Investment of the Year" Award -2012 Production plant (Hendek , Sakarya ) 12 3 Derince Port 1 c.80km Karasu Port 2 c.70km Lüleburgaz railway 3 c.340 km (1) The main building, including production, warehouse, administrative and social areas, is based on 30,950 m2closed area. The side facilities ha vea closed area of c.4,000 sqm. (2) Average number of employees as of June2022 Source: Company, market researchSecond largest
an established supplier base in close proximity to its production plant, Eryap Mineral collaborates with at least two suppliers at all times to minimize supply disruptions 18Strategically located production plant Procurement Sales & Distribution Production Support functions 2 Production lines136 Employees2c.62k sqm Total area80k tonnes p.a. Production capacityc.35k sqm Closed area1 +40% Production capacity share in Marmara regionMarmara region Insulation Industry "Investment of the Year" Award -2012 Production plant (Hendek , Sakarya ) 12 3 Derince Port 1 c.80km Karasu Port 2 c.70km Lüleburgaz railway 3 c.340 km (1) The main building, including production, warehouse, administrative and social areas, is based on 30,950 m2closed area. The side facilities ha vea closed area of c.4,000 sqm. (2) Average number of employees as of June2022 Source: Company, market researchSecond largest production capacity in Turkey , enjoying proximity to export ports and high -demand regions in western Turkey Located at theSecond Organized Industrial Zone in Sakarya /Hendek with access to anuninterrupted supply of electricity, natural gas, and waterConstructed with steel infrastructure and built on extra reinforced ground , complying with the latest earthquake regulations Positioned at the crossroads of the transportation infrastructure, the Company has direct access to local and international markets via marine and railroad transportationDesigned to handle additional loads and capacities of up to 120k tonnes /year 19Best -in-class machinery park Hot process Cold process Packaging The production plant is equipped with state -of-the-art machinery and equipment, enabling an automated production process Briquette1Batching1 Cupola furnaceFlue gas treatmentCuring oven Cold partStacking/ packagingStitching & roll-up machineRobot palletizerPallet wrappingWeighing and dosing 20152 Eliar , 2012Woltz , 2012Envirotec , 2012Münstermann , 2012K&S, 2012Qubiqa , 2012K&S, 2012ABB, 2021Atlanta, 2016Jesma , 2012 Izoteh , 2017Izoteh , 2017Izoteh , 2017In-house, 2017Qubiqa , 2017-ABB, 2018Atlanta, 2017Herbold, 201280k tonnes Capacity per year Environmentally friendly as per "Zero Waste" principle 2 lines →Woltz / Münstermann / Envirotec →Izoteh 120/240 →Line I: 120 cm width →Line II: 240 cm widthProcurement Sales & Distribution Production Support functions (1) Single briquette and batching infrastructure used for both lines (2) In the above table, years refer to the model or ac quisition date of the machinery and equipment used Source: Company 20 Year: 2017 Width: 240 cm Capacity: 4 5k tonnes /yearYear: 2012 Width: 120 cm Capacity: 35k tonnes /yearAlternatives for capacity & production plant expansion Procurement Sales & Distribution Production Support functions 1 2 Aerial view of the OIZ Existing linesCapacity expansion alternatives Extension of Line I: →Refurbishment of hot cupola and investment of double spinner →Further 20k tonnes /year Installation of a new line (Line III) →New hot cupola and cold part machinery (requirement to shift/move production stock 1) →Additional 40k tonnes /year Expansion plans for OIZ Current OIZ expansion zone European motorwayFuture expansion zoneEryap Mineral production plant Source: Company 3 →Expansion of land at OIZ ongoing →Adjacent c.200 hectares of vacant land up to the European highway can be considered as a subsequent means of expansion for the OIZ, with the adjoining portion procurable from OIZ to further enlarge the production plant 1 21Domestic sales achieved through wide dealer base supported by direct sales Procurement Sales & Distribution Support functions Production % of 2022E Net salesEryap Mineral reaches the domestic market via… 44% Wide dealer network Direct account coverage # of dealers in given region 125 9 39 2038 25 →Eryap Mineral reaches c.2,000 sales points through 256 dealers1 covering 85% -90% of sales activity in the domestic market →The Company works with financially solid dealers that are involved in Turkey’s most prominent residential and industrial projects →The Company maintains continuous interaction with dealers through its CRM system and dealer portal →80% of the dealers are registered in the direct debiting system (DDS) to minimize the receivable risk (the Company applies a 2% discount for payments made via DDS) →Two sales managers covering western and eastern regions, supported by a team of sales/product specialists focused on dealersOEM Private label →OEM market consists of HVAC producers and sandwich panel manufacturers, which use stone wool within their final products −OEM customers comprise 5% -10% of domestic sales activity →The Company also sells (remaining sales in the domestic market) in small quantities to domestic players that bundle stone wool with their complementary products to gain sales channel synergies →The Company has one dedicated sales specialist for managing relationships with OEM and private label accounts (1) Number of dealers invoiced over the previous three years Source: Company, KPMG FVDD Report 22 % of 2022E Net salesProcurement Sales & Distribution Support functions ProductionExports achieved via diversified sales channels Eryap Mineral enjoys a solid presence in export markets 56% Export regions% in LTM 6M 2022 Net sales, exportKey highlights Balkans Proximity plays a vital role Eastern EuropeSupply of European standard products at competitive prices and with rapid service MENAStarts building relationships in the region Western EuropeSignificant room for growth with recently acquired EUCEB certification 30% 4%4%59% →Prior to Covid -19 and supply chain issues, the Company offered its products to the UK, Portugal and Spain as well →Export sales are expected to pick up momentum, going forward, along with the recently secured EUCEB certificate and a normalization in freight costs Private label Dealers Contractors OEM→Dealers are predominant buyers in export markets, accounting for c.65% of the sales activity →Various groups act as dealers of the Company in export markets, as exemplified below: -Poland: A major industrial building company -Romania: Largest construction company and leading DIY with access to 1,000+ sales points -Bulgaria: Foremost construction firm Source: Company, KPMG FVDD Report→The Company is the trusted supplier of global insulation players →The share of private label products in exports grew to +15% over the years →The Company aims to limit private label sales to 10 -12%, going forward →15-20% of export sales are generated by OEM sales→Turkish contractors undertaking projects ininternational markets prefer local brands →Local contractors, acting asdealers promoting the products, account fortherest ofNet sales, export 23Strict quality control processes at global standards →Coal controls →Batch control ( xrf spectrometer) →Resin controls →Chemical melt composition analysis (Mk, Sgh, Kz, etc. ) →Viscosity of melt →Fiber tests →Physical & visual controls →Product dimension controls →Flammability & organic components →Compression, tensile and point load tests
DIY with access to 1,000+ sales points -Bulgaria: Foremost construction firm Source: Company, KPMG FVDD Report→The Company is the trusted supplier of global insulation players →The share of private label products in exports grew to +15% over the years →The Company aims to limit private label sales to 10 -12%, going forward →15-20% of export sales are generated by OEM sales→Turkish contractors undertaking projects ininternational markets prefer local brands →Local contractors, acting asdealers promoting the products, account fortherest ofNet sales, export 23Strict quality control processes at global standards →Coal controls →Batch control ( xrf spectrometer) →Resin controls →Chemical melt composition analysis (Mk, Sgh, Kz, etc. ) →Viscosity of melt →Fiber tests →Physical & visual controls →Product dimension controls →Flammability & organic components →Compression, tensile and point load tests →Thermal conductivity and resistance →Water absorption 1. Input controls 2. Product controls 3. Product test controls EUCEB ISO 14001 ISO 9001CE EN 14303 CE EN 13162 TSEProcurement Sales & Distribution Support functions Production All products are tested regularly to ensure… …compliance with EUCEB and other certification standards Source: Company 24Sustainability accorded utmost priority Procurement Sales & Distribution Support functions Production Eryap Mineral assumes a responsible attitude in its obligations to the environment, upholding efficient use of natural resources an d minimized waste production→Allwaste management procedures arecompleted incompliance with related regulations →Any hazardous waste iscollected, sorted, and stored onatimely basis, and subsequently dispatched tocertified recycling ordisposal facilities bylicensed waste transportation companies →Spot stone wool isrecycled into production through briquetting →Zero waste objective ispursued not only inproduction but also inoffice spaces 40.233.6 32.4 2020 2019 2021-10.2%Electricity Natural gas2Water 270 237 226 2020 2019 2021-8.5% kWh0.217 0.115 0.096 2020 2019 2021-33.6% cbm Year Waste type Recovery (tonnes )Disposal (tonnes )Recovery rate (%) 2021Non- hazardous711 - 100.0% Hazardous 18 - 100.0% 2020Non- hazardous5 0.04 99.0% Hazardous 0.01 - 100.0% Energy consumption Waste management →Energy consumption decreased from 0. 26to 0.1 9TOE1per ton ne of stone wool production in the last three years Consumption per tonne of production Actions taken Electricity →Replacement of old engines with efficient and modern ones →Inspection of machinery →Switch to LED lighting Natural Gas→Conversion of inert heat released from chimneys →Tracking clean air and oxygen usage in burners and ensuring efficient combustion →Circulation of used and heated oil in office space Water →Filtering and recirculating cooling and processing water in production (1) Tonne sof oil equivalent (2) Natural gasconsumption in kWh converted tocbm at 0.083 cbm perkWh Source: Company 25 74.2%3.0% 9.1% 3.8% 9.8%Production Administrative Logistics Quality Purchases & export83.3%16.7% Blue -collar White -collarPersonnel breakdown1Organizational structure Procurement Sales & Distribution Support functions Production (1) As of June 30, 2022 Source: Company→Forallbusinesses, shareholders utilize thesame sales &marketing (S&M) and administrative staff, who areregistered with Eryap Grup Yalıtım Malz .San.ve Tic.A.Ş.("Eryap Yalıtım "),which produces XPSand membrane products →After the potential transaction, each entity will operate onastand -alone basis, with the tally ofthe Company’s S&M and administrative employees planned asnine and four, respectively →Related costs and proforma adjustments are provided atSection IV. (Financial overview and projected financials)Factory manager (1)Vice general manager (1) Production (67)Logistics and warehouse (11) Production planning (2)Maintenance (24) Purchasing (3)Operations chief (1)Quality manager (1) Quality control (4)Personnel affairs manager (1)Administrative manager (1)Investment and Business development manager (1)HR (1)Administration (2) Occupational health and safety (2)Hendek production facility 132 # of personnel1Office personnel (9) IV. Financial overview and projections 27Basis of preparation Eryap Mineral prepares statutory accounts in compliance with local regulations →Statutory accounts: Eryap Mineral maintains its books and prepares its statutory financial statements in TL, in accordance with Tax Legislation and the Uniform Chart of Accounts issued by the Ministry of Finance of Turkey →The Company’s fiscal year is the 12 months beginning on January 1 and ending on December 31 of the calendar year, i.e., 01.01 .2021 –31.12.2021 Historic financials presented in this section are based on conversion applied proforma accounts for the years 2020, 2021 and LTM 6M 2022, prepared within the scope of KPMG FVDD →Eryap Mineral sells its products in the domestic market mainly through sister company Eryap Yalıtım , although the products are physically and directly delivered from Eryap Mineral facility to its domestic customers . Certain operational functions including finance, administration and IT are also managed by Eryap Yalıtım for all group companies, with all personnel and other related costs accounted for under Eryap Yalıtım →Historic financials in this document present the proforma financials of Eryap Mineral, consolidating the gross profit and operational costs related to stone wool operations accounted for in the books of Eryap Yalıtım →All figures in this Information Memorandum are presented in EUR, as in the KPMG FVDD study, for a healthy analysis of the Com pany’s historic performance, eliminating the impact of TL volatility on the financials, and enabling a like -for-like analysis of historic and projected finan cials −Sales inTLareconverted toEUR attheEUR/TL rate asofthedate oftheinvoice −Cost ofgoods sold foreach month iscalculated byconverting : −monthly beginning and ending inventories toEUR with theEUR/TL rate, considering respective inventory turnover days −raw material purchases with thedaily EUR/TL rate atthepurchase dates, and −labor and overhead with monthly average EUR/TL −OPEX items areconverted with monthly average EUR/TL −Netdebt and working capital items areconverted with period -end EUR/TL rates →Other FVDD adjustments include certain IFRS -like adjustments as well as minor items to reverse the impact of non -recurring or no n-operational records 2022E and forecast period projections presented in this section are prepared in EUR (in line with the historic financials pre sented in this section) by Eryap Mineral management, incorporating the FVDD adjustments made on historic figures for compatibility purposes →2022E financial figures reflect the actual H1 2022 performance of the Company and management forecasts for the remainder of t he year →2023F –2026F figures are based on management forecasts Source: Company, KPMG FVDD report 28Sales and EBITDA evolution Sales volume (k tonnes) Net sales (EUR mn)1 EBITDA (EUR mn)24.731.0 33.4 36.12.7 23.9 27.9 31.2 35.0 39.253.9 30.129.227.1 2020A 2021A68.4 2022E29.5 2023F 2024F 2025F 2026F32.851.0 57.4 62.275.3+28.1%+8.7% 10.1 14.1 15.7 16.2 17.5 18.911.117.8 16.1 17.6 19.7 22.1 2025F1.341.0 2022E8.733.8 2020A 2023F 2021A 2026F 2024F10.021.431.9 31.837.2%78.3%+6.5% Domestic Export 10.5 10.3 10.6 11.9 13.3 2022E0.2 2021A 2020A6.0 2023F 2025F 2024F 2026Fn.m.+6%1.8%
prepared in EUR (in line with the historic financials pre sented in this section) by Eryap Mineral management, incorporating the FVDD adjustments made on historic figures for compatibility purposes →2022E financial figures reflect the actual H1 2022 performance of the Company and management forecasts for the remainder of t he year →2023F –2026F figures are based on management forecasts Source: Company, KPMG FVDD report 28Sales and EBITDA evolution Sales volume (k tonnes) Net sales (EUR mn)1 EBITDA (EUR mn)24.731.0 33.4 36.12.7 23.9 27.9 31.2 35.0 39.253.9 30.129.227.1 2020A 2021A68.4 2022E29.5 2023F 2024F 2025F 2026F32.851.0 57.4 62.275.3+28.1%+8.7% 10.1 14.1 15.7 16.2 17.5 18.911.117.8 16.1 17.6 19.7 22.1 2025F1.341.0 2022E8.733.8 2020A 2023F 2021A 2026F 2024F10.021.431.9 31.837.2%78.3%+6.5% Domestic Export 10.5 10.3 10.6 11.9 13.3 2022E0.2 2021A 2020A6.0 2023F 2025F 2024F 2026Fn.m.+6%1.8% 33.0 % 27.9% 31.3 % 32.0 % 32.3 % 32.3 % EBITDA margin (%) EBITDA8.4% 54.3% 46.8% 50.2 % 51.1 % 52.0% 48.6 % 12.7% 55.9% 51.8% 52.2% 53.1% 54.0% 50.5% Share of exports (%) (1) Net sales include other sales in 2020A and 2021A worth EUR 50k and EUR 200k, respectively, which have not been shown sepa rately above Source: Company, KPMG FVDD ReportExport Domestic Share of exports (%)→Following lackluster domestic demand in 2018 -2019, Eryap Mineral strategically shifted its focus to exports, in a bid to diversify its sales base. With the reopening of trade post Covid -19, the Company achieved expansion in export sales in 2021A →With continued growth in export markets, sales volumes are expected to reach c.54k tonnes in 2022E, raising both Net sales and EBITDA margin →Going forward, the Company plans to further penetrate export markets, reaching c.39k tonnes by 2026F, always keeping the share of exports in sales above 50% →With increased Net sales and operational leverage, the Company is estimated to generate EBITDA of c.EUR 10.5 mnin 2022E →With higher capacity utilization and operational leverage, EBITDA margin is forecast to prevail around 32% throughout the projection period, with EBITDA estimated to reach EUR 1 3.3mnas of 2026F →It is important to note that in 2021 and 2022, the Company decoupled significantly from its position of "domestic company with subscale production" in 2020. The management believes that the future of the Company will be built on the experience and relationships gathered over 2021 and 2022Remarks 29Sales evolution →Management tracks financial performance separately for domestic and export sales based on product groups →The Company’s sales volume, which surpassed 50k tonnes in 2021 on the back of strong exports, is projected to reach c.54k tonnes in 2022E →Sales growth exceeded volume growth within 2020A -2022E, driven by –increase in sales prices –growth in exports, which are priced higher, partly due to embedded freight costs →From 2023F onwards, with the expected recovery in the domestic market on the back of new legislation and further penetration of export markets, total sales volume is estimated to top 75k tonnes by 2026F →In 2023F, a slight decline in raw material prices (c.6%) is projected to create a concomitant decrease in unit sales prices, whereafter raw material prices are forecast to remain constant →A further 2% decrease in unit prices penciled in 2024F, to account for the expansion in both in domestic and export marketsRemarksUnit 2020A 2021A 2022E 2023F 2024F 2025F 2026F CAGR 20A-22ECAGR 22E-26F Sales volume k tonnes 32.8 51.0 53.9 57.4 62.2 68.4 75.3 28.1% 8.7% growth 55.2% 5.8% 6.4% 8.4% 10.0% 10.0% Domestic 30.1 27.1 24.7 29.5 31.0 33.4 36.1 (9.5%) 10.0% Export 2.7 23.9 29.2 27.9 31.2 35.0 39.2 226.1% 7.6% Net sales1EUR mn 10.0 21.4 31.9 31.8 33.8 37.2 41.0 78.3% 6.5% growth 113.0% 49.3% (0.4%) 6.4% 10.1% 10.1% Domestic 8.7 10.1 14.1 15.7 16.2 17.5 18.9 27.1% 7.6% Export 1.3 11.1 17.8 16.1 17.6 19.7 22.1 274.9% 5.5% Unit price EUR/ tonne 304 415 592 554 544 544 544 39.6% (2.1%) growth 36.6% 42.5% (6.4%) (1.9%) 0.1% 0.1% Domestic 289 372 570 533 522 522 522 40.3% (2.2%) Export 462 464 610 576 565 565 565 15.0% (1.9%) (1) Net sales include other sales in 2020A and 2021A worth EUR 50k and EUR 200k, respectively, which have not been shown separa tely above Source: Company, KPMG FVDD Report 30Sales evolution –Domestic →Sales volume decline in Turkey within 2020A -2022E was led by the Company placing greater emphasis on exports, in response to muted domestic demand →Waning sales volumes were offset by higher average unit prices, resulting in sales growth of EUR 1.4 mnand EUR 4 mnin 2021A and 2022E, respectively →Sales volume growth forecast in the projection period is driven mainly by anticipated market growth, led by legislations and initiatives aimed at energy conservation in buildings →Unit sales prices for 2022E are derived by the management based on actual 6M 2022 results and prices prevailing in the market at present (August 2022) →A c.6% decrease in unit sales prices is penciled in for 2023F for all product groups, in parallel with an expected similar decrease in raw material costs →A further 2% decrease in unit prices penciled in 2024F, to account for the volume expansionRemarks Source: Company, KPMG FVDD ReportDomestic sales Unit 2020A 2021A 2022E 2023F 2024F 2025F 2026F CAGR 20A-22ECAGR 22E-26F Sales volume k tonnes 30.1 27.1 24.7 29.5 31.0 33.4 36.1 (9.5%) 10.0% growth % (9.9%) (9.0%) 19.6% 5.0% 8.0% 8.0% Premium F 18.6 18.4 14.3 15.8 16.6 17.9 19.3 Premium R 1.1 1.1 0.9 2.8 2.9 3.2 3.4 Panel 1.2 1.1 1.5 2.3 2.4 2.6 2.8 Gold plus 5.9 4.5 5.6 6.2 6.5 7.0 7.6 Gold 1.0 0.5 0.9 1.0 1.0 1.1 1.2 Industrial MW 2.2 1.4 1.3 1.5 1.6 1.7 1.8 Others 0.2 0.1 0.0 - - - - Net sales EUR mn 8.7 10.1 14.1 15.7 16.2 17.5 18.9 27.1% 7.6% growth % 15.9% 39.3% 11.8% 2.9% 8.0% 8.0% Premium F 5.1 6.5 7.8 8.1 8.3 9.0 9.7 Premium R 0.3 0.4 0.5 1.4 1.4 1.5 1.6 Panel 0.4 0.4 0.9 1.2 1.2 1.3 1.4 Gold plus 1.7 1.7 3.3 3.4 3.5 3.8 4.1 Gold 0.4 0.3 0.7 0.7 0.7 0.8 0.9 Industrial MW 0.8 0.6 0.9 1.0 1.0 1.1 1.1 Others 0.0 0.0 0.0 - - - - Unit price EUR/ tonne 289 372
1.2 1.1 1.5 2.3 2.4 2.6 2.8 Gold plus 5.9 4.5 5.6 6.2 6.5 7.0 7.6 Gold 1.0 0.5 0.9 1.0 1.0 1.1 1.2 Industrial MW 2.2 1.4 1.3 1.5 1.6 1.7 1.8 Others 0.2 0.1 0.0 - - - - Net sales EUR mn 8.7 10.1 14.1 15.7 16.2 17.5 18.9 27.1% 7.6% growth % 15.9% 39.3% 11.8% 2.9% 8.0% 8.0% Premium F 5.1 6.5 7.8 8.1 8.3 9.0 9.7 Premium R 0.3 0.4 0.5 1.4 1.4 1.5 1.6 Panel 0.4 0.4 0.9 1.2 1.2 1.3 1.4 Gold plus 1.7 1.7 3.3 3.4 3.5 3.8 4.1 Gold 0.4 0.3 0.7 0.7 0.7 0.8 0.9 Industrial MW 0.8 0.6 0.9 1.0 1.0 1.1 1.1 Others 0.0 0.0 0.0 - - - - Unit price EUR/ tonne 289 372 570 533 522 522 522 40.3% (2.2%) growth % 28.6% 53.1% (6.5%) (2.0%) - - Premium F 274 356 544 511 501 501 501 Premium R 267 399 521 490 480 480 480 Panel 319 410 557 523 513 513 513 Gold plus 294 379 587 552 541 541 541 Gold 385 517 788 741 726 726 726 Industrial MW 368 466 686 645 632 632 632 Others 267 318 704 - - - - 31Sales evolution –Export →Export sales volume increased consistently over the historic period, driven by new customer acquisitions and expansion to new geographies, especially in the Balkans and Eastern Europe →Flagship product in export markets in the historic period was Premium R, used in roofing applications, estimated to reach c.EUR 11mn in sales as of 2022E →For 2023F, the Company factors in a slight decline in the sales volume of Premium R, also reflected in topline volume →As in the domestic market, export sales growth outpaced volume growth in 2020A - 2022E, attributable to rapid sales price rises →Export sales volumes are forecast to surpass c. 39k tonnes by 2026F →Unit prices, following an estimated c.6% and c.2% decline across product groups in 2023F and 2024F , are projected to remain constant thereafterRemarks Source: Company, KPMG FVDD ReportExport sales Unit 2020A 2021A 2022E 2023F 2024F 2025F 2026F CAGR 20A-22ECAGR 22E-26F Sales volume k tonnes 2.7 23.9 29.2 27.9 31.2 35.0 39.2 226.1% 7.6% growth % 767.8% 22.5% (4.7%) 12.0% 12.0% 12.0% Premium F 0.4 3.0 7.0 7.4 8.2 9.2 10.3 Premium R 0.5 15.6 18.7 16.8 18.8 21.1 23.6 Panel 0.5 3.6 2.3 2.3 2.5 2.9 3.2 Gold plus 1.0 1.2 1.0 1.1 1.2 1.4 1.5 Gold 0.1 0.2 0.2 0.2 0.2 0.2 0.2 Industrial MW 0.2 0.2 0.1 0.2 0.2 0.2 0.2 Others 0.1 0.0 - - - - - Net sales EUR mn 1.3 11.1 17.8 16.1 17.6 19.7 22.1 274.9% 5.5% growth % 772.2% 61.2% (10.0%) 9.8% 12.0% 12.0% Premium F 0.2 1.4 4.6 4.6 5.0 5.6 6.3 Premium R 0.1 7.0 10.9 9.3 10.2 11.4 12.8 Panel 0.3 1.9 1.5 1.4 1.5 1.7 1.9 Gold plus 0.5 0.5 0.6 0.6 0.7 0.7 0.8 Gold 0.0 0.2 0.2 0.2 0.2 0.2 0.2 Industrial MW 0.1 0.1 0.1 0.1 0.1 0.1 0.2 Others 0.1 0.0 - - - - - Unit price EUR/tonne 462 464 610 576 565 565 565 15.0% (1.9%) growth % 0.5% 31.5% (5.6%) (2.0%) - - Premium F 386 451 659 619 607 607 607 Premium R 322 449 586 551 540 540 540 Panel 512 531 639 600 588 588 588 Gold plus 478 426 592 556 545 545 545 Gold 685 691 982 923 904 904 904 Industrial MW 527 566 717 674 661 661 661 Others 681 410 - - - - - 32Contribution statement →Coal and resin make up the bulk (c.75%) of raw material costs. Per tonne coal and resin costs increased significantly in 2020A –6M 2022, warranting sales price hikes →An 8% decrease in unit resin prices was penciled in for the second half of 2022, in line with the latest purchases →The Company forecasts a further decrease (c.6%) in raw material prices as of 2023F along with normalization in commodity prices, and an ensuing drop in sales prices →Direct labor costs are denominated mainly in TL. Direct labor cost per tonne of stone wool eased by c.47% in 2020A -6M 2022 →Direct and indirect labor costs in EUR are forecast considering inflation and EUR projections →Increase in general production costs per tonne of stone wool in the historic period is mainly driven by energy costs, which consequently captured the highest share in general production costs (c.62%) in 6M 2022 →Energy costs per tonne are projected to remain steady at 6M 2022 realizations, going forwardRemarks Source: Company, KPMG FVDD ReportUnit 2020A 2021A 2022E 2023F 2024F 2025F 2026F CAGR 20A-22ECAGR 22E-26F Sales volume k tonnes 32.8 51.0 53.9 57.4 62.2 68.4 75.3 28.1% 8.7% Net sales EUR mn 10.0 21.4 31.9 31.8 33.8 37.2 41.0 78.3% 6.5% unit price EUR/tonne 304 415 592 554 544 544 544 39.6% (2.1%) (-) Raw material costsEUR mn 5.1 8.9 12.6 12.6 13.7 15.0 16.5 57.5% 7.0% unit cost EUR/tonne 155 174 234 220 220 220 220 23.0% (1.5%) Contribution EUR mn 4.9 12.3 19.3 19.2 20.1 22.2 24.4 98.4% 6.1% Unit contribution EUR/tonne 149 241 358 334 324 324 325 54.9% (2.4%) margin % 49.2% 58.1% 60.5% 60.4% 59.6% 59.6% 59.7% (-) Direct labor cost EUR mn 0.6 0.6 0.6 0.7 0.7 0.7 0.7 (0.1%) 6.3% unit cost EUR/tonne 18 11 11 12 12 11 10(22.0%) (2.3%) (-) General prod. costEUR mn 2.3 2.8 4.8 4.9 5.2 5.6 6.1 44.1% 6.3% unit cost EUR/tonne 70 55 89 85 84 82 81 12.5% (2.2%) Gross profit (before D&A)EUR mn 2.1 9.1 13.9 13.6 14.2 15.8 17.6 159.7% 6.0% margin % 20.6% 42.6% 43.7% 42.8% 42.0% 42.6% 42.9% 33EBITDA statement →Gross profit margin, which expanded in 2021A owing to both increasing unit contribution and scale, is estimated to recede slightly in 2022E, and remain stable thereafter at around 4 2% →OPEX is composed mainly of freight costs, which are also reflected in the sales prices. OPEX as a % of net sales is projected at around 11% going forward, in line with LTM 6M 2022 →FVDD adjustments are composed of –FX gain/loss: Related mainly to TL
(2.3%) (-) General prod. costEUR mn 2.3 2.8 4.8 4.9 5.2 5.6 6.1 44.1% 6.3% unit cost EUR/tonne 70 55 89 85 84 82 81 12.5% (2.2%) Gross profit (before D&A)EUR mn 2.1 9.1 13.9 13.6 14.2 15.8 17.6 159.7% 6.0% margin % 20.6% 42.6% 43.7% 42.8% 42.0% 42.6% 42.9% 33EBITDA statement →Gross profit margin, which expanded in 2021A owing to both increasing unit contribution and scale, is estimated to recede slightly in 2022E, and remain stable thereafter at around 4 2% →OPEX is composed mainly of freight costs, which are also reflected in the sales prices. OPEX as a % of net sales is projected at around 11% going forward, in line with LTM 6M 2022 →FVDD adjustments are composed of –FX gain/loss: Related mainly to TL sales and purchases in the domestic market –Other adjustments: Reclassification of other income above EBITDA, sales cut off correction and adjustment for vacation pay liability –Proforma items: Personnel and management salaries, reflecting the costs to the potential buyer post transaction →The Company is forecast to operate at an EBITDA margin of c.3 2% going forward, on the back of increased capacity utilization and operational leverageRemarks Source: Company, KPMG FVDD ReportUnit 2020A 2021A 2022E 2023F 2024F 2025F 2026F CAGR 20A-22ECAGR 22E-26F Net sales EUR mn 10.0 21.4 31.9 31.8 33.8 37.2 41.0 78.3% 6.5% (-) COGS 8.0 12.3 18.0 18.2 19.6 21.4 23.4 50.2% 6.8% Gross profit 2.1 9.1 13.9 13.6 14.2 15.8 17.6 159.7% 6.0% margin % 20.6% 42.6% 43.7% 42.8% 42.0% 42.6% 42.9% (-) OPEX 1.5 3.0 3.3 3.3 3.6 3.9 4.3 50.6% 7.0% as a % of Net sales % 14.5% 14.0% 10.3% 10.5% 10.7% 10.6% 10.6% Freight 1.0 2.4 2.6 2.7 2.9 3.2 3.6 60.1% 7.8% Personnel 0.2 0.3 0.3 0.3 0.3 0.3 0.3 17.3% (0.2%) Other 0.2 0.4 0.4 0.4 0.4 0.4 0.5 31.7% 6.5% (-) FVDD adjustments0.4 0.1 0.1 - - - - FX gain/loss 0.4 0.2 0.0 - - - - Other adjustments (0.0) (0.1) 0.0 - - - - Proforma items 0.0 0.0 - - - - - EBITDA 0.2 6.0 10.5 10.3 10.6 11.9 13.3 n.m. 5.8% margin % 1.8% 27.9% 33.0% 32.3% 31.3% 32.0% 32.3% 34Net working capital →Underlying NWC as a % of net sales is estimated to decrease from 39.3% in 2020A to 14.5% in 2022E (realized at 17.0% in 2021A and 14.7% in LTM 6M 2022) →The decrease is mainly driven by the drop in DSO. The DSO, which has shortened since 2020A, was realized at 45 days in LTM 6M 2022, as export customers pay in advance and the Company switched to cash terms in the domestic market →Average DIO, which reached 63 days in LTM 6M 2022, is expected to remain steady at 60 days, going forward →Main items on the supply side, namely coal, resin, and electricity, have payment terms varying between 0 -30 days, 60 -90 days and 8-12 days, respectively. In line with the 43 days realized as of LTM 6M 2022, DPO is projected to remain stable at around 45 days from 2022E onwardsRemarks (1) DSO: Days sales outstanding, DIO: Days inventory outstanding, DPO: Days payable outstanding. Average days calculated within the scope of KPMG FVDD by taking the averages of the days calculated in the last four quarters Source: Company, KPMG FVDD ReportUnit 2020A 2021A 2022E 2023F 2024F 2025F 2026F Trade debtors 3.4 4.7 4.6 4.6 4.9 5.4 6.0 Inventory 1.4 2.1 3.0 3.0 3.2 3.5 3.8 (-) Trade creditors 0.7 2.7 2.9 2.9 3.1 3.4 3.8 Trade working capital EUR mn 4.1 4.1 4.7 4.7 5.0 5.5 6.0 Other current assets 0.1 0.1 0.2 0.2 0.2 0.2 0.2 (-) Other current liabilities0.2 0.6 0.3 0.3 0.3 0.3 0.4 Net working capital EUR mn 3.9 3.6 4.6 4.6 4.9 5.4 5.9 NWC as a % of Net sales % 39.3% 17.0% 14.5% 14.6% 14.5% 14.4% 14.4% Cash conversion cycle1days 130 82 60 60 60 60 60 DSO days 101 70 45 45 45 45 45 DIO days 64 54 60 60 60 60 60 DPO days (36) (42) (45) (45) (45) (45) (45) 35Capital expenditures and net debt Capital expenditures (EUR mn) Net debt (EUR mn) Source: Company, KPMG FVDD Report0.3 0.30.30.40.4 0.00.20.40.60.81.0 0.00.10.20.30.40.5 2026F 2022E 2023F 2024F 2025F 30.06.2022 Cash and cash equivalents 2.9 Reported net cash/(debt) 2.9 FVDD adjustments 1.5 Adjusted net cash/(debt) 4.4Capital expenditures →The Company invested significantly in the capacity, storage and modernization of the plant in the historic period →Routine investments corresponding to 1% of Net sales are projected to suffice for the attainment of forecast volumes in 2023F - 2026F Net cash / (debt) →The Company has a net cash position as at the end of June 2022 →FVDD adjustments are comprised of –Reclassification of VAT assets, corporate tax payables and CAPEX payables from net working capital –Receivable impact of domestic sales to Eryap Yalıtım and –Retirement pay liability adjustmentRemarks 1.0% 1.0% 1.0% 1.0% 1.0% As a % of Net sales 36Clear outperformance based on 6M 2022 actual results Sales volume (k tonnes) Net sales (EUR mn) EBITDA (EUR mn)Contribution (EUR mn)Net sales and EBITDA on track to meet 2022E projections 2022E EBITDA margin well within reach, with 6M 2022 Amargin higher Strong 6M performance with 27.4k tonnes of sales volume and EUR 17.2 mnin Net sales 21.431.9 2021A 2022E+49.3% 7.217.2 6M 2021A 6M 2022A+137.8%33.8% 53.9 % 12.319.3 2021A 2022E+57.2% 3.910.3 6M 2021A 6M 2022A+161.0%32.0% 53.1 % 6.010.5 2021A 2022E+76.6% 1.26.0 6M 2022A 6M 2021A+385.1%20.9% 57.3 %35.1% 17.2% 33.0 % 27.9% EBITDA margin % Realization %51.0 53.9 2021A 2022E+5.8% 19.927.4 6M 2022A 6M 2021A+37.9%39.0% 50.9 % Source: Company, KPMG FVDD Report V. Appendix 38 Insulation product demand drivers in TurkeyLegislation Financial initiatives International commitmentsTarget energy limits for buildings as per TS 825 "Thermal Insulation Requirements for Buildings" warrants 40 -60% increase in required insulation thickness valuesAll new buildings will meet "NZEB"1standards as of 2023, in compliance with the regulation introduced in February 2022. The standards will ensure that buildings’ U -values are scaled back by c.20%Energy Efficiency Strategy Document (2012 –2023) envisions a 20% drop in the annual energy consumption of public enterprises, buildings and facilities as of 2023 The government
6M 2022A+161.0%32.0% 53.1 % 6.010.5 2021A 2022E+76.6% 1.26.0 6M 2022A 6M 2021A+385.1%20.9% 57.3 %35.1% 17.2% 33.0 % 27.9% EBITDA margin % Realization %51.0 53.9 2021A 2022E+5.8% 19.927.4 6M 2022A 6M 2021A+37.9%39.0% 50.9 % Source: Company, KPMG FVDD Report V. Appendix 38 Insulation product demand drivers in TurkeyLegislation Financial initiatives International commitmentsTarget energy limits for buildings as per TS 825 "Thermal Insulation Requirements for Buildings" warrants 40 -60% increase in required insulation thickness valuesAll new buildings will meet "NZEB"1standards as of 2023, in compliance with the regulation introduced in February 2022. The standards will ensure that buildings’ U -values are scaled back by c.20%Energy Efficiency Strategy Document (2012 –2023) envisions a 20% drop in the annual energy consumption of public enterprises, buildings and facilities as of 2023 The government recently announced a loan scheme featuring 5 -year tenor, TL 50k upper limit, and 0.99% interest to incentivize insulation spending by homeowners The government envisages energy -efficient refurbishments in 1.5 mn houses within 5 years, corresponding to 5.6 bn cbm in natural gas savings, i.e., c.USD 1 bn in annual savings from natural gas importsThe payback period of the loan for homeowners is estimated to range within 3-5 years By becoming a party to the Paris Climate Agreement, Turkey has agreed to certain undertakings on energy efficiencyAs a party to the Paris Climate Agreement, Turkey received USD 3.2 bn in funding, a portion of which will be allocated to the insulation sectorAs a signatory to the Kyoto protocol, Turkey has pledged to limit greenhouse gas emissions (1) Nearly zero energy building Source: Company, TUIK, IZODER (Turkish Thermal, Water, Acoustic and Fire Insulation Manufacturers’ Association), Energy Effic iency Strategy Paper Document 2012 -2023Turkish insulation market supported by robust regulations & initiatives 39 Karaman Biomass Power Plant ,Karaman Kipas Paper Plant , Kahramanmaras Arakli Biomass Power Plant , Trabzon Medcem Cement Factory , Mersin Carsamba Biomass Power Plant ,Samsun Zorlu Alasehir Geothermal Power Plant , Manisa Next Level , Ankara Bagfas Fertilizer Factory , Band irma Batisehir , Istanbul Aksa Thermal Power Plant , Bolu Akasya Acibadem , Istanbul Zorlu Center , Istanbul Istanbul Airport , Istanbul Buyukyali , Istanbul Selected reference projects –Domestic →Total stone wool applied area on selected projects in Turkey: c.656k sqm Applied stone wool product Application year Source: Company2017 Gold/Premium F 2018 -19Gold/Premium F/Premium R/Gold Plus2012Gold/Gold Plus/ Industrial2012 Gold 2015 Industrial 2014 Gold 2015 Industrial 2014 Industrial2021 Industrial 2021 Industrial 2022 Industrial 2015 Industrial 2021 Industrial 2013 Gold/Premium F 40 Double Tree By Hilton, Macedonia Heavy Fuel Oil Power Plant, Mali Japoma Sports Complex Stadium, Cameroon Socar Refinery, Azerbaijan International Airport, Kuwait Lusail Stadium , Qatar Al Rayyan Stadium, Qatar Khabat Thermal Plant, Iraq Cambro, Bulgaria Mercedes Benz Manufacturing Plant, Hungary Samsung SDI Battery Plant, Hungary P3 Logistics Parks, Poland Kaufland, Romania Selected reference projects –International Applied stone wool product Application yearTurkmenbasi Seaport , Turkmenistan Thessaloniki Metro, Greece Philip Morris International, Romania Source: Company 2017 Premium R 2022 Premium F 2014 Gold 2021 Gold Plus 2018 Gold2017 Premium R 2019 Industrial 2020 Industrial2021 Premium R 2021 Premium R 2015 Industrial 2016 Premium R 2016 Industrial 2016 Premium F 2017 Premium F 2017 Gold/Premium R This document isprovided forinformation purposes only ontheexpress understanding that theinformation contained herein willberegarded asstrictly confidential .This document and theopinions, projections and conclusions contained inthis document arefortheexclusive useoftherecipient and itsemployees and itisnottobedelivered toanythird parties, norshall itscontents bedisclosed to anyone other than them and shall notbereproduced orused, inwhole orinpart, forany purpose other than fortheconsideration ofthefinancing ortransaction described herein, without theprior written consent ofÜnlü Yatırım Holding A.Ş.and/or itssubsidiaries* (together orindividually referred as“ÜNLÜ &Co”). The information contained inthisdocument does notpurport tobecomplete and issubject tochange .This isacommercial communication .The document does notinclude apersonal recommendation and does notconstitute anoffer, orthesolicitation ofanoffer forthesale orpurchase ofanyfinancial product, service, investment orsecurity .The investments and strategies discussed here may notbe suitable forallinvestors ;you aretorely onyour own independent appraisal ofand investigations into allmatters and things contemplated bythisdocument . Information, opinions and projections inthis document have been compiled byorarrived atbyÜNLÜ &Cofrom the data 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 .The Company, itsaffiliates and ÜNLÜ &Codonotmake anyrepresentation orwarranty, expressed orimplied, astotheaccuracy orcompleteness of theinformation contained inthisdocument .The Company, itsaffiliates orÜNLÜ &Cohave notsought independent verification oftheinformation included herein . The information, comments and recommendations contained inthis document falloutside ofthedefinition ofinvestment advisory services under theCapital Markets Laws No.6362 ,Capital Markets Board’s secondary legislation and other applicable legislation .Investment advisory services areprovided byauthorized entities considering theriskand return preferences oftheconcerned persons .The comments and recommendations contained inthis document have general nature .These recommendations may not fittoyour financial situation, risk and return preferences .For that reason, investment decisions that rely solely onthe information contained inthis document might not meet your expectations .You should pay necessary discernment, attention and care inorder not to experience losses .The Company, itsaffiliates and ÜNLÜ &Coaccepts noliability whatsoever forany direct orindirect loss arising from (i)theuse ofthis document oritscontents, or(ii)any error, omission, misstatement, negligence orotherwise inthisdocument . Distribution ofthisdocument inand from certain jurisdictions may berestricted orprohibited bylaworregulation .The recipient isrequired toinform itself oftheir compliance with anysuch restrictions orprohibitions insuch jurisdictions .ÜNLÜ &Codoes notaccept anyliability inrelation tothedistribution orpossession ofthis document inand from anyjurisdiction .Byreceiving and notimmediately returning thedocument, therecipient warrants, represents and acknowledges (i)ithasread, agreed toand willcomply with thecontents ofthisimportant notice and disclaimer ;and (ii)itwillconduct its own analyses, due diligence orother verification oftheinformation and data setforth inthisdocument, and willbear theresponsibility foralloranycost incurred insodoing . This document isgoverned by,and shall beconstrued inaccordance with, Turkish laws and any claims ordisputes arising outof,orinconnection with, this document shall besubject totheexclusive jurisdiction oftheIstanbul Central courts . Allcommunications, inquiries and/or requests relating tothisdocument should beaddressed toÜNLÜ &Co.Forfurther information, please contact : *Ünlü Menkul Değerler A.Ş.,isasubsidiary ofÜnlü Yatırım Holding A.Ş.and isauthorized &regulated bytheTurkish Capital Markets Board . 41 Zeynep Koçak Managing Director [email protected] +90 (532) 242 5378Burçin Müftü Director [email protected] +90 (533) 742 4929İbrahim Romano Managing Director [email protected] +90 (533) 960 0122Disclaimer
ofthisimportant notice and disclaimer ;and (ii)itwillconduct its own analyses, due diligence orother verification oftheinformation and data setforth inthisdocument, and willbear theresponsibility foralloranycost incurred insodoing . This document isgoverned by,and shall beconstrued inaccordance with, Turkish laws and any claims ordisputes arising outof,orinconnection with, this document shall besubject totheexclusive jurisdiction oftheIstanbul Central courts . Allcommunications, inquiries and/or requests relating tothisdocument should beaddressed toÜNLÜ &Co.Forfurther information, please contact : *Ünlü Menkul Değerler A.Ş.,isasubsidiary ofÜnlü Yatırım Holding A.Ş.and isauthorized &regulated bytheTurkish Capital Markets Board . 41 Zeynep Koçak Managing Director [email protected] +90 (532) 242 5378Burçin Müftü Director [email protected] +90 (533) 742 4929İbrahim Romano Managing Director [email protected] +90 (533) 960 0122Disclaimer
Project Marvel Confidential Information Package December 2023 Strictly private and confidential 1Table of contents Section Page I Executive summary 2 II Business overview 7 III Financial overview 35 I. Executive summary 3 (1) Represents the contribution after cost of goods sold, logistic costs and rent expenses Source: Eczacıbaşı Tüketim Ürünleri, IPSOSExecutive summary Overview Business overview Key figures →Founded in 1996, Maratem is a leading cleaning chemicals brand in the away -from -home segment in Turkey −Maratem operates under the umbrella of the away -from -home business unit of Eczacıbaşı Tüketim Ürünleri (" Parent "), the tissue paper, baby and personal care and professional products subsidiary of prominent Turkish conglomerate Eczacıbaşı Holding →Maratem boasts a portfolio of high -quality cleaning products with c.190 SKUs grouped under five main categories −General purpose cleaning, laundry care, industry products (food & beverage and water conditioners), kitchen care and personal care →Established in 2008, Maratem’s production facility and warehouse are located in Gebze, Kocaeli (c.1.5 hours from İstanbul) −Maratem’s entire product portfolio is produced in -house, with the exception of powdered detergent →Sales are conducted through distributors, who then reach end - customers, as well as through direct sales to industries, hospitals, e - commerce platforms and cash & carry outlets −Maratem’s sales are carried out in collaboration with 11 3rd party distributors across Turkey reaching 3,553 points of sale nationwide →As the top local player in the industry, Maratem has established a strong brand presence, effectively maintaining a robust and stable value market share of c.8% Production facility and warehouse located in Gebze, Kocaeli, within a c.1.5 -hour distance from İstanbul25+ years Industry experience c.EUR 12 mn Net sales (2023 B)c.23% Contribution margin (2023 B)1 c.43k tons Annual production capacity c.8k sqm Closed area of the plant c.190 # of SKUs 3,553 # of points of sale Number one local player in its category A well -respected sub -brand under Eczacıbaşı with strong brand presence Gebze, Kocaeli 4 Source: Eczacıbaşı Tüketim ÜrünleriExecutive summary Key milestones 2013 In-house production starts for previously outsourced products at the Gebze facility1998Establishment of the Maratem brand 1996 2012 Introduction of the water conditioning products segment2002 2008 Eczacıbaşı Tüketim Ürünleri enters the away -from -home cleaning segment with liquid soapProduction relocates to Eczacıbaşı Özgün Kimya’s facilitiesEstablishment of the current production facility 2004Maratem production Facility established on Özgün Kimya’s land 2010 2014 Brand transformation through a refreshed logo, new packaging, and communication campaign Number of SKUs reaches 43 Launch of EP Akademi, the training department 2020 Maratem enter s two new categories – medical and food care2021 Launch of the online training and seminars in response to COVID -19 2011Maratem introduces eco-friendly phosphate -free laundry detergent, marking an industry first 2016 Introduction of the first-of-its-kind digital distance education platform First production of powder ed detergent 5 Source: Eczacıbaşı Tüketim ÜrünleriExecutive summary Key investments highlights Wide product portfolio addressing the away -from -home cleaning needs Strategic partnerships with key suppliers, and distributors enhancing market reach and brand visibilityStrict adherence to production quality standards and unwavering commitment to ESG principlesRobust and effective organizational structureWell -established position in the attractive away - from -home and hygiene markets with strong growth prospects supported by positive market trendsConsistent revenue growth and performance 1 2 3 4567 State -of-the-art production plant with versatile manufacturing capabilities and room for up to 9x current production with capacity increase 6 Source: Eczacıbaşı Tüketim ÜrünleriExecutive summary Transaction overview Transaction overview Envisaged transaction timeline →Project Marvel refers to the contemplated sale (the “ Proposed Transaction “) of Maratem, via asset sale including: –Maratem brand and product portfolio –Machinery, equipment and employees directly dedicated to the production –Net working capital mainly consisting of inventories →The Parent is open to the sale of the production building and land as part of the Proposed Transaction →The Parent has appointed ÜNLÜ & Co to act as the exclusive financial advisor in the Proposed Transaction and interested parties should only contact ÜNLÜ & Co with their questions and inquires Structure Eczacıbaşı Holding 100% Eczacıbaşı Tüketim Maratem Other assets Transaction scope (asset sale method) Shareholding %Phase I Phase II NDA Info Pack distributionLimited Q&ANon- binding offers January 17thBinding offersSigning Initiation of due diligence Phase 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 →Site visits and meeting with management →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 ") →Limited Q&A process for key questions and clarification requests →Collecting NBO’s (non -binding offers) and short -listing potential investors for the next stage II. Business overview 8 Source: Eczacıbaşı Tüketim ÜrünleriMaratem’s leading position in HoReCa with strong growth prospects Maratem’s wide product portfolio of c.190 SKUs successfully addresses away -from -home cleaning needs Maratem’s leading position in the HoReCa channel… … with strong growth prospects mainly fueled by… →Maratem has been present in the hotel, restaurant and cafe ("HoReCa ") channel since its inception, establishing a strong foothold →Maratem competes effectively in this segment, capitalizing on its robust distribution network, industry experience and product portfolio →Recent market research positions Maratem as the second -leading brand, commanding c.8% market share→Growth trend in the tourism sector, excluding the pandemic -hit 2020 - 2021, stands as a pivotal pillar for this channel →Tourist inflow is expected to reach c.55 mn in 2023, marking a c.10% increase from 2022 →People’s eating out habits have notably surged, with a c.22% increase between 2017 and 2021 →Development of restaurants and fast-food chains →Expansion and enhanced accessibility of out -of-home facilities →Increasing prevalence of single -child households →Active participation of women in the business world →Rising number of universitiesOthers Tourism Eating out trends 8% 30% 7%55% Maratem Competitor 1Competitor 2 OthersTurkey’s HoReCa cleaning chemicals market A EUR 123 mn segment 9 Source: Eczacıbaşı Tüketim ÜrünleriProduct portfolio Maratem’s wide product portfolio of c.190 SKUs successfully addresses away -from -home cleaning needs Maratem possesses a wide product portfolio Further room for growth in the promising food care segment Kitchen
as a pivotal pillar for this channel →Tourist inflow is expected to reach c.55 mn in 2023, marking a c.10% increase from 2022 →People’s eating out habits have notably surged, with a c.22% increase between 2017 and 2021 →Development of restaurants and fast-food chains →Expansion and enhanced accessibility of out -of-home facilities →Increasing prevalence of single -child households →Active participation of women in the business world →Rising number of universitiesOthers Tourism Eating out trends 8% 30% 7%55% Maratem Competitor 1Competitor 2 OthersTurkey’s HoReCa cleaning chemicals market A EUR 123 mn segment 9 Source: Eczacıbaşı Tüketim ÜrünleriProduct portfolio Maratem’s wide product portfolio of c.190 SKUs successfully addresses away -from -home cleaning needs Maratem possesses a wide product portfolio Further room for growth in the promising food care segment Kitchen care →Products ranging from surface disinfectants to commercial dishwashing solutions and specialized cleaners for fruits and vegetables General purpose cleaning →Cleaning solutions for diverse applications, including multi -purpose cleaners, bleach, stain removers, and carpet cleaners Laundry care →Products ranging from washing detergents to disinfecting bleaches, to ensure optimal laundry hygiene and freshness Personal care →Personal care products including alcohol -based disinfectants, liquid/foam hand wash, shampoo, and shower gels for daily use Industry products →Products tailored for industrial needs and specialty cleaners for various applications Maratem recently ventured into the food production hygiene segment, which holds significant potential The existing SKU count in this segment is 21, with plans to introduce around 20 additional SKUs in subsequent phases The target market for this channel encompasses food factories, pharmaceutical factories, and the agricultural sector Number one local player in its category c.190 SKUs A well -respected sub -brand under Eczacıbaşı with strong brand presence 10 Source: Eczacıbaşı Tüketim ÜrünleriProduct portfolio Maratem’s wide product portfolio of c.190 SKUs successfully addresses away -from -home cleaning needs Kitchen care General purpose cleaning 33 44% 49 21% →Surface disinfectants, vegetable and fruit washing liquids, dishwashing liquids, detergents for commercial dishwashers, tablet detergents, degreasers, alkaline cleaner, powder detergent, rinse -aid for commercial dishwashers, oven and grill cleaners, pre -soaking agents, removers, oven and equipment cleaning product s→Multi -purpose cleaners, hygienic cleaners, antimic, bleach, scouring creams, silicate and cement removers, drain openers, air fresheners, strippers, crystallizers, stain removers, defoamers, metal polish, carpet cleaners, anti -mite, grease cleaners, cleaners for glass, surfaces and auto scrubbers, toilet bowl cleaner , polished surface cleaner and care products Number one local player in its category c.190 SKUs A well -respected sub -brand under Eczacıbaşı with strong brand presence # of SKUs % share in 8M23 sales 11 Source: Eczacıbaşı Tüketim ÜrünleriProduct portfolio Maratem’s wide product portfolio of c.190 SKUs successfully addresses away -from -home cleaning needs Personal care Number one local player in its category c.190 SKUs A well -respected sub -brand under Eczacıbaşı with strong brand presence # of SKUs % share in 8M23 sales18 12% Laundry care 45 19% →Washing detergents, brighteners, fabric softeners, stain removers, boosters, bleaching agents, rust removers, washing agents, complexing agents, neutralizers, disinfecting bleaches→Alcohol -based disinfectants, liquid/foam hand wash, shampoo and shower gels Industry products 43 4% →Chlorine, pH adjusters, anti -algae agents and disinfectants, clarifiers, precipitants, hardness and ion binders, alkaline reducers, cleaners, coil tablets, biocide, care product 12 Source: Eczacıbaşı Tüketim ÜrünleriOperations overview Procurement Production Sales & distribution →Maratem’s main procurement items include essences, alcohols, dyes and other raw materials along with packaging materials →Maratem sources its procurement items from local and international suppliers, both directly and through distributors →Procured items are directed to the warehouse at the production facility whether local or imported →All of the locally sourced items and 10% of imports are directly supplied from manufacturers, while the remaining 90% are facilitated through distributors→Maratem’s production facility was established in 2008 in Gebze, Kocaeli (c.1.5 hour distance from İstanbul) and has a well - equipped machinery park encompassing filling lines, filling machines, mixing tanks, drop tanks, a wax boiler, and a melting pot →The facility is capable of producing a wide range of product types and designs, with an annual capacity of c.43k tons →Periodic chemical tests of all products are carried out in accredited external as well as internal laboratories →Housed within the production facility, a warehouse of c.2k sqm stores all the products→Maratem’s sales operations primarily leverage a network of 11 distributors , complemented by direct management of certain key customers, as well as industries, hospitals, e -commerce platforms and cash & carry outlets –Maratem’s wide product portfolio reaches 3,553 points of sale nationwide →Maratem’s sales organization of regional directorates, managers, and sales teams play pivotal roles in overseeing distributors and direct customer relationships →Maratem’s academy team provides product training to the distributors’ employees OthersESG Human resources EP Akademi 13Overview of procurement Overview of Maratem’s cost of goods sold and purchases Supplier breakdown of purchases Top 10 suppliersValue1 (k EUR)Working duration (years) Supplier 1 1,644 2 Supplier 2 1,353 20 Supplier 3 783 15 Supplier 4 685 15 Supplier 5 595 30 Supplier 6 491 10 Supplier 7 425 10 Supplier 8 265 10 Supplier 9 231 5 Supplier 10 209 10 Other 1,083 - Total 7,763 (1) 10M23 figures Source: Eczacıbaşı Tüketim ÜrünleriProcurement Others Sales & distribution Production →Maratem’s main procurement items include essences, alcohols, dyes and other raw materials along with packaging materials →Chemical raw materials constitute a significant portion of cost of goods sold, representing approximately two -thirds, with packaging costs following closely at c.12.2% →Chemical, packaging, and other raw materials from a diverse pool of 30+ suppliers →Leveraging both direct engagement and distributor channels, Maratem sources items from local and international suppliers through successful and sustainable relationships –The top 10 suppliers boast a weighted average collaboration duration of 10+ years, underscoring Maratem's commitment to sustainable and fruitful business partnerships →Following procurement, all locally sourced items and 10% of imports are directly obtained from manufacturers. These items are directed to the warehouse at the production facility after the completion of customs procedures. The remaining 90% of imports are facilitated through distributors c.62% Chemicalsc.12% Packagingc.10% Trading productsc.16% Others Maratem procures its raw materials from best quality, world renowned suppliersBreakdown of cost of goods sold1 14 Source: Eczacıbaşı Tüketim ÜrünleriOverview of production facility Facility overview
→Chemical, packaging, and other raw materials from a diverse pool of 30+ suppliers →Leveraging both direct engagement and distributor channels, Maratem sources items from local and international suppliers through successful and sustainable relationships –The top 10 suppliers boast a weighted average collaboration duration of 10+ years, underscoring Maratem's commitment to sustainable and fruitful business partnerships →Following procurement, all locally sourced items and 10% of imports are directly obtained from manufacturers. These items are directed to the warehouse at the production facility after the completion of customs procedures. The remaining 90% of imports are facilitated through distributors c.62% Chemicalsc.12% Packagingc.10% Trading productsc.16% Others Maratem procures its raw materials from best quality, world renowned suppliersBreakdown of cost of goods sold1 14 Source: Eczacıbaşı Tüketim ÜrünleriOverview of production facility Facility overview Key figures →Maratem’s production facility and warehouse are strategically located in Gebze, Kocaeli, within a c.1.5 -hour distance from İstanbul →At the Gebze plant, the entire Maratem product portfolio is manufactured in -house, with the exception of powdered detergent →The production plant is well -equipped, featuring: -3 filling lines with a combined capacity of c.3,200 units per shift and 3 filling machines with a combined capacity of c.1,800 units per shift -6 mixing tanks with a total capacity of c.32 m3 -5 drop tanks with a total capacity of c.42 m3 -A wax boiler with a capacity of 0.75 m3 and a melting pot with a capacity of 0.5 m³ →Capacity utilization of c.40% as of 2023 →Within the plant, the warehouse area covers a total of c.2k sqm, surpassing Maratem’s current warehousing requirements -This area stores c.475 tons of raw materials, including essences, alcohol, and dyes among others -The area also houses c.2 mn units of packaging materials such as parcels, labels, lids, triggers, jerrycans, and bottles among others →The production plant currently utilizes only a limited portion of its available area, providing ample room for potential expansion with additional machinery and equipment should the building be purchased Production plant c.10k sqm Total landc.8k sqm Total closed areac.2k sqm Warehouse area c.43k tons Annual prod. capacity c.147k tons Annual prod. capacitywith further room for capacity expansion, capacity to reachGebze, Kocaeli Procurement Others Sales & distribution Production 15 Source: Eczacıbaşı Tüketim ÜrünleriOverview of production facility Breakdown and utilization of the plant area Area sqm Description Bottle production 230 Used for Maratem Cologne filling 300 Used for Selin products Cologne mixer 195 Used for Selin products Disinfectant 150 Used for Maratem Cosmetic filling 370 Used for Unibaby products Cosmetic mixer 340 Used for Unibaby products Liquid filling 475 Partially used for Unibaby products Liquid mixer 460 Partially used for Unibaby products Quality lab 150 Used for all brands Powder area 350 Used as a warehouse Warehouse 1 1,370 Used for raw material and packaging Warehouse 2 820Used for raw material, packaging and daily finished goods Maintenance area 185 Used for Maratem R&D offices 800 Used for all brands Admin offices, academy and dining hall 735 Used foroffices , training and dining hall Total 6,930 Additional capacity expansion areas 2,525 sqm Further room for capacity expansion10,000 sqm Total land1,535 sqm Total administrative area5,395 sqm Total production area Procurement Others Sales & distribution Production 16 Source: Eczacıbaşı Tüketim ÜrünleriProduction machinery and equipment Key machinery and equipment suppliers Compatible machinery & equipment for the current product portfolio Low maintenance CAPEX requirement in the future Key machinery and equipment Mixing tanks Wax boilers Filling lines Drop tanks Melting pots Well -maintained and compact plant with low CAPEX requirement going forward Procurement Others Sales & distribution Production 17 Source: Eczacıbaşı Tüketim ÜrünleriProduction machinery and equipment Filling machines Mixing tanks and production equipment EquipmentEquipment yearCapacity (ton / year ) Enmak filling line (Chemicals) 2007 17,907 Aymaksan filling line (Hypo) 2004 8,104 STS filling line (Cosmetics) 2005 12,779 Kulp filling machine (VD 5001) (Cologne & disinfectants)2011 3,780 K. Aymaksan filling machine 2003 258 Total 42,828Equipment Capacity Mixing tank 1 (2001) 15 m³ Mixing tank 5 (2041) 1.5 m³ PE mixer (2024) 3.3 m³ Mixing tank 2 (1011) 7 m³ Gel mixer 1.5 m³ Drop tank 1 (2004) 15 m³ Drop tank 2 (2006) 15 m³ Drop tank 1 (1004) 7 m³ Drop tank 5 (1304) 2.5 m³ Drop tank 6 (1307) 2.5 m³ Wax boiler 0.75 m³ Melting pot 0.5 m³ Mixing tank 1 (5001) 3.27 m³ Drop tank 6 (7009) 2.5m³Procurement Others Sales & distribution Production 18 Source: Eczacıbaşı Tüketim ÜrünleriProduction facility Cosmetic products production hall Mixer – semi -finished goods production area Filling and packaging area Procurement Others Sales & distribution Production 19 Source: Eczacıbaşı Tüketim ÜrünleriProduction facility Mixer – semi -finished goods production area Filling and packaging areaLiquid cleaning products production hall Procurement Others Sales & distribution Production 20 Source: Eczacıbaşı Tüketim ÜrünleriProduction facility Mixer – semi -finished goods production area Filling and packaging areaDisinfectants production hall Procurement Others Sales & distribution Production 21 Source: Eczacıbaşı Tüketim ÜrünleriProduction facility Uniloy bottle blowing and molding machine Bekum blowing and molding machineBottle and can production hall 20 LT & 10 LT 5 LT & 0.75 LTProcurement Others Sales & distribution Production 22 Source: Eczacıbaşı Tüketim ÜrünleriProduction facility layout ‐Disinfectants / cologne production ‐Liquids production area ‐Cosmetics production area ‐Canisters production ‐Quality control lab ‐Microbiology lab ‐Warehouses ‐Powders production area ‐Administrative & social building ‐R&D ‐UtilitiesProcurement Others Sales & distribution Production 23 1 2 3 4 5 →Short -term and long - term business planning involves evaluating sales forecasts, machine capacities, inventory levels, and annual performance →R&D activities specifying products, creating formulations, and integration with Quality Data Management System (QDMS) →Responsibilities extend to loading product structures and recipes into the SAP system→Integrated planning considers production capabilities, machine capacities, and stock analysis →SKU-specific production plans are formulated, aligning with sales predictions and ensuring feasibility assessments→Efficient management of raw material and component planning through supply chain planning →Translation of production plans into daily SAP - generated work orders →Weekly planning of shifts and workforce, considering machine - based requirements→Rigorous quality checks conducted throughout the production stages →Implementation of QDMS for uploading product standards ensures adherence to quality benchmarksInitiation Production planning Supply chain and production Quality control →Operation of mixers involves planning and preparation for semi -
evaluating sales forecasts, machine capacities, inventory levels, and annual performance →R&D activities specifying products, creating formulations, and integration with Quality Data Management System (QDMS) →Responsibilities extend to loading product structures and recipes into the SAP system→Integrated planning considers production capabilities, machine capacities, and stock analysis →SKU-specific production plans are formulated, aligning with sales predictions and ensuring feasibility assessments→Efficient management of raw material and component planning through supply chain planning →Translation of production plans into daily SAP - generated work orders →Weekly planning of shifts and workforce, considering machine - based requirements→Rigorous quality checks conducted throughout the production stages →Implementation of QDMS for uploading product standards ensures adherence to quality benchmarksInitiation Production planning Supply chain and production Quality control →Operation of mixers involves planning and preparation for semi - finished goods →Rigorous measurements and quality checks performed on mixer - produced semi -finished goods →Ongoing evaluation of semi -finished goods against predetermined standardsMixer operations Production workflow Maratem facility's production workflow showcases meticulous planning, stringent quality control, and sustainability practices Source: Eczacıbaşı Tüketim ÜrünleriProcurement Others Sales & distribution Production 24 6 7 8 9 10 →Evaluation of semi - finished goods within standards or deviation →Decision -making processes for the reintegration of mixtures into production or disposal in case of non - compliance→Process continuation or adjustment based on the decision, with corrective actions applied as needed →Seamless transition back to the initial phase of the mixing operations for iterative refinement→Successful completion leads to the production of finished goods →Stringent quality checks, including sample collection and analysis, are conducted →Final products evaluated against established standards→Ensuring proper labeling and documentation, including barcode scanning →Validation of production quantities against orders, with revisions made if necessary →SAP reservation status updates for materials, facilitating a smooth transition to the next production phase →Proper handling of excess materials and the movement of finished goods to the loading areaDecision points Production continuation or adjustmentFinal stages Conclusion and post - production handling →Final checks to ensure order and work order quantities align →Closure of the SAP production order after successful completion →Disposal and removal of the scrapped materials from the area →Excess materials returned to the SAP system and inventory updates →Cycle finish by transporting the finished goods to the loading areaClosureProduction workflow Maratem facility's production workflow showcases meticulous planning, stringent quality control, and sustainability practices Source: Eczacıbaşı Tüketim ÜrünleriProcurement Others Sales & distribution Production 25 (1) Not included in the transaction scope (2) Eczacıbaşı Tüketim Ürünleri’s distribution center Source: Eczacıbaşı Tüketim ÜrünleriWarehouse and logistics Maratem’s demonstrated success backed by robust warehouse capacities and leading logistics providersWarehouse1 Logistics LocationAverage palletAverage sqmMax pallet Min pallet TDM2 1,700 1,088 2,410 1,542 Non-hazardous 1,050 672 790 506 Hazardous 650 416 1,620 1,037Raw materials are stored at the Gebze location, where one white collar and six outsourced employees are staffedMaratem’s finished products are warehoused at TDM2 and subsequently distributed to customers from this location Full truckload (FTL) shipments TLS LojistikPartial (LTL) shipments CEVA LojistikHazardous shipments Ascan LojistikThe logistics strategy includes collaboration with three distinct firmsMaratem engages various logistics firms based on specific requirements Procurement Others Sales & distribution Production 26 Source: Eczacıbaşı Tüketim ÜrünleriOverview of certificates Maratem’s high quality products are certified as per Maratem’s dedication to excellence, safety and compliance with regulatory standards is exemplified by various certifications, including TSE certified products, licensed offerings, products with domestic goods certificates and those with free sale cert ificatesTurkish standards Global standards Procurement Others Sales & distribution Production 27 (1) Microbiological tests are performed for liquid handwash products Source: Eczacıbaşı Tüketim ÜrünleriQuality & control Quality control measuresMaratem develops and analyses its products in quality control laboratories fitted with modern equipment to ensure the highest quality Semi -finished and finished product release →Total live →Mold / yeast →Candida albicans →Pseudomonas aeruginosa →Appearance →Color →Odor →pH →FTIR →Density →Viscosity →Refractive index →Brix →Cloud point →Foam→Total acidity →Total alkalinity →Anionic active substance →Cationic active substance →Free alkali content →Free amen →Active chlorine →Salt determination →Ca binding strength →Absorbance →Quantification (HPLC - GC)Testing parameters →Staphylococcus aureus →E. Coli Physical characteristics Chemical analysisMaratem subjects its products to thorough microbiological1, physical and chemical testing Rigorous testing protocols are applied to each new batch for quality assurance Maratem quality control team comprises ▪1 expert ▪4 technicians ▪2 process controllers Procurement Others Sales & distribution Production 28 Source: Eczacıbaşı Tüketim ÜrünleriOverview of sales operations Successful strategies and strong customer relations resulted in a weighted average tenure of c.5.7 years with its top 10 cust ome rs Key working terms Overview →Maratem’s sales are conducted through distributors who then reach end-customers, with direct management of key customers for optimal engagement, as well as industries, hospitals, e -commerce platforms and cash & carry outlets –Currently a network of 11 3rd party distributors covering 3,553 points of sale is utilized →Maratem’s internal sales structure involves regional directorates, managers and sales teams, strategically managed across 3 regions and 2 channels (Anatolia, Marmara, Mediterranean, e -commerce and Industry) –The sales teams oversee distributors and service direct customers →To enhance product knowledge and expertise, Maratem's academy team provides specialized training sessions for distributor employees→Maratem employs flexible and tailored working terms with its customers, aiming to meet their specific needs and optimize working term lengths for enhanced profitability. The diversified working agreements include: Recent strategic customer acquisitions Cost agreements Unit price agreements Discount agreements TendersCustomers receive a fixed price based on the number of guests, ensuring consistency regardless of the quantity or variety of products purchased Regardless of the product, customers benefit from an agreed -upon average price per kilogram, providing transparency and predictability A fixed discount agreement ensures stability in pricing. While list prices may fluctuate, the applied discount remains constant For certain arrangements, a one -time tender price is provided, offering a comprehensive solution with a single annual price Procurement Others Sales & distribution Production 29 Source: Eczacıbaşı Tüketim ÜrünleriSales network Number of partners % share in 8M23 salesMaratem reaches c.3,553 points of sale country -wide via an extensive sales network Distributors Direct customers →Customers directly engaged through Maratem’s sales team account for a 31% share in 8M23 sales →The direct customer channel highlights Maratem's ability to develop and maintain relationships with a
regardless of the quantity or variety of products purchased Regardless of the product, customers benefit from an agreed -upon average price per kilogram, providing transparency and predictability A fixed discount agreement ensures stability in pricing. While list prices may fluctuate, the applied discount remains constant For certain arrangements, a one -time tender price is provided, offering a comprehensive solution with a single annual price Procurement Others Sales & distribution Production 29 Source: Eczacıbaşı Tüketim ÜrünleriSales network Number of partners % share in 8M23 salesMaratem reaches c.3,553 points of sale country -wide via an extensive sales network Distributors Direct customers →Customers directly engaged through Maratem’s sales team account for a 31% share in 8M23 sales →The direct customer channel highlights Maratem's ability to develop and maintain relationships with a diverse clientele →Maratem successfully caters to the needs of each customer and provides tailored solutions→Maratem’s strategic partnership with 11 distributors contributes to a substantial 54% share in net sales →These distributors play a significant role in expanding Maratem’s local footprint, ensuring a wide distribution network across various regions →The strong partnership with distributors ensures efficient logistics and enhances product availability Industry customers B2B e -commerce →Leveraging the digital landscape, Maratem collaborates with several B2B e -commerce partners, accounting for a 4% share in net sales →Maratem’s presence in the B2B e -commerce channel confirms its adaptability to modern business trends by offering efficient online procurement options →This channel reflects Maratem's commitment to meeting the evolving needs of businesses through digital platforms→Maratem has a strong presence in the industrial sector, which accounts for 10% of its net sales →Industry partnerships showcase the efficacy of Maratem's products in meeting the unique demands of industrial clients11 54.3% 42 9.6%36 31.0% 9 4.0%Procurement Others Sales & distribution Production 30 Source: Eczacıbaşı Tüketim ÜrünleriSales network Hospitals Cash & carry →Maratem is also present in the cash & carry sector, which has a 0.3% share in net sales →The cash & carry channel signifies Maratem's presence in outlets catering to immediate consumer needs →Despite its smaller share, this channel contributes to Maratem's overall market coverage, particularly in locations where quick and convenient purchases are essential→Maratem's engagement in this channel contributes a 1% share in sales, underscoring its presence in healthcare environments →Maratem provides high quality cleaning solutions that meet the hygiene standards in critical healthcare settings →Maratem's products cater to the specific needs of hospitals, ensuring a clean and safe environment for patients and healthcare professionalsMaratem reaches c.3,553 points of sale country -wide via an extensive sales network Number of partners % share in 8M23 sales13 0.8% 2 0.3%Procurement Others Sales & distribution Production 31EP Akademi Source: Eczacıbaşı Tüketim ÜrünleriEP Akademi’s training programs have successfully reached 81k people at 6 .3k points and obtained 31k users since 2018 Objectives →Building teams with high technical competence, elevated hygiene standards and increased awareness →Creating industry differentiation →Pioneering digitalization with flexible, location -independent training →Contributing to a healthy and sustainable lifestyle Initiatives →Newcomer training sessions →Chemical level detection exams →Developmental training →Practical and theoretical training sessions →Remote learning programs and live broadcasts →Sustainability and hygiene education →Hand hygiene training →Collaborative training with organizations Training Consulting Objectives →Standing out through service excellence →Establishing authority in hygiene sector Initiatives →Problem identification →Guidance and information →Tailored product recommendations Audit Objectives →Improving hygiene standards →Creating a trustworthy environment →Adding value to businesses →Ensuring customer loyalty Initiatives →Audit →Training →Follow -up →Protection Procurement Others Sales & distribution Production 32Excellence in Hygiene program Source: Eczacıbaşı Tüketim ÜrünleriEP Akademi’s Excellence in Hygiene program adds value to the businesses Online trainings Overview →EP Akademi, the training and consultancy department of Eczacıbaşı Profesyonel, provides audit and certification, offering: –Elevated brand value –Enhanced hygiene standards for the businesses –Increased hygiene awareness among employees →Scope of the program achieves flawless hygiene in 4 steps: –Inspection –Training –Follow -up –Protection→EP Akademi’s pioneering online training platform, developed in the scope of Perfection in Hygiene Program, leads the way in digitalization within the Turkish sector →EP Akademi provides high quality training programs and materials about cleaning and hygiene practices in the industrial and institutional cleaning, ensuring sustainable development and hygiene awareness →The training spectrum involves 25 courses on fundamentals, surface, kitchen and textile hygiene, as well as recently added specialized training modules for hospital and food care settings Business model Feasibility Quotation Initial audit Training Interim audit Certification Identification of audit points and training, determining audit analysis needsPrice quotation after feasibility assessmentFirst audit in the process after the agreementTrainings tailored to the staff's needs after the auditControl of the hygiene conditions via interim auditsCertificate issuance to businesses that pass the audits Invoicing Invoicing Key highlights of the Hijyende Mükemmellik certifications Points certified in 2022 2023 targetsProcurement Others Sales & distribution Production 33Human resources Source: Eczacıbaşı Tüketim Ürünleri→The total Eczacıbaşı Profesyonel employs c.72 marketing and sales employees →Maratem currently utilizes c.60% of the available time of the sales and marketing team →Post -reorganization for the Proposed Transaction, c.40 white -collar employees , including those at the distributor locations, will be transferred to Maratem→The production workstream at Eczacıbaşı Profesyonel is managed by c.23 white -collar staff →Encompasses the production and maintenance team, the quality and assurance team, and the supply chain team →Maratem utilizes varying proportions of each employee, ranging from 5% to 40% →The reorganization under the Proposed Transaction will align with the proportional workforce utilization of each team member →Employees to remain at the Parent include –Plant manager –Quality assurance manager –Supply chain manager –Maintenance manager –Production manager (currently vacant) –Supply planning manager→The production workstream at Eczacıbaşı Profesyonel employs c.87 blue -collar employees, with c.60 of them being outsourced →Maratem currently utilizes c.45% of th is blue -collar workforce, totaling c.40 individuals →The envisaged plan involves the transfer of these c.40 employees as part of the Proposed TransactionMarketing and salesThe Proposed Transaction involves the transfer of relevant employees to ensure the stand -alone operation of Maratem Production (white -collar) Production (blue -collar) # of total employees # of employees to be transferred72 40 87 40Procurement Others Sales & distribution Production 34 Source: Eczacıbaşı Tüketim ÜrünleriESG Maratem is committed to a diligent and significant focus on ESG standards Maratem complies
remain at the Parent include –Plant manager –Quality assurance manager –Supply chain manager –Maintenance manager –Production manager (currently vacant) –Supply planning manager→The production workstream at Eczacıbaşı Profesyonel employs c.87 blue -collar employees, with c.60 of them being outsourced →Maratem currently utilizes c.45% of th is blue -collar workforce, totaling c.40 individuals →The envisaged plan involves the transfer of these c.40 employees as part of the Proposed TransactionMarketing and salesThe Proposed Transaction involves the transfer of relevant employees to ensure the stand -alone operation of Maratem Production (white -collar) Production (blue -collar) # of total employees # of employees to be transferred72 40 87 40Procurement Others Sales & distribution Production 34 Source: Eczacıbaşı Tüketim ÜrünleriESG Maratem is committed to a diligent and significant focus on ESG standards Maratem complies with all legal and industrial requirements… … and takes on voluntary steps to raise the bar →Maratem seeks to contribute to the communities in every region where it operates, preparing them for the future through development activities →Over 19.5k students across 57 schools in Turkey have benefited from the Eczacıbaşı Hygiene Project, which supplies schools with cleaning materials and basic suppliesSocial →Maratem aims to provide healthy, reliable, and affordable products that add value to humanity →Product series like Maratem Hero, featuring concentrated formulas to reduce water and packaging waste, and Maratem Bio, an environmentally friendly product with an automatic dilution cap, showcase Maratem's dedicationEnvironmental Commitment to ESG to lead a more sustainable future Sustainability at core →Maratem is dedicated to advancing in every ESG area, striving to become a more active and harmonious business unit →The commitment aligns with Eczacıbaşı Holding's high ESG standards adopted at the group level, where sustainable development and success through responsible business models are seen as crucial Governance →Endeavors to be a reliable brand with its governance approach that puts quality at the center of every process →Commitment to founding values and principles to establish ethical collaborations with all stakeholdersProcurement Others Sales & distribution Production III. Financial overview 36Basis of preparation Eczacıbaşı Tüketim Ürünleri is currently evaluating the sale of Maratem via asset sale, and, for interested parties, the opti on of the sale of the production building and land, as specified in the ‘Executive summary’ →Eczacıbaşı Tüketim Ürünleri does not publish solo financial statements on a business unit basis. The financial data presented in this section has been provided by the management of Eczacıbaşı Tüketim Ürünleri based on the IFRS financials of Eczacıbaşı Tüketim Ürünler i for 2020, 2021 and 2022 The financial figures and details provided in this section reflect Maratem’s operational performance and profitability as a b usiness unit →Maratem’s figures are tracked on a TL -denominated basis and have been converted to EUR -denominated figures using yearly -average exchange rates →Presented figures include −Maratem’s net sales and cost of goods sold directly attributable to its operations, both of which are easily traceable −Logistic s costs encompassing logistic staff, warehousing, shipping and other related expenses −Proforma rent expenses, which are calculated by factoring in Maratem's share (c.50%) in the total area as the production faci lity currently accommodates several other Eczacıbaşı Tüketim Ürünleri brands →For avoidance of doubt, the presented figures only include direct costs attributable to Maratem’s operations and do not invol ve any cost allocation from the HQ and hence exclude −Any costs related to joint senior management including CEO and CFO, sales and marketing, amortization, R&D, waste disposal an d any other costs not directly attributable to Maratem’s operations 2023B figures presented in this section are based on 9 -months actual performance plus 3 -months management expectations 2024 E projections are prepared by Eczacıbaşı Tüketim Ürünleri in EUR in line with the historical financials and trading results Source: Eczacıbaşı Tüketim Ürünleri 37 (1) Represents the contribution after cost of goods sold, logistic costs and rent expenses Source: Eczacıbaşı Tüketim ÜrünleriOverview of historical performance and forecast period Sales volume (tons) Remarks Net sales (EUR k) Contribution1 (EUR k) 16.7% c.25.9% 19.3% 23.3% 35.7%13,23211,04513,87616,58819,299 2020A 2021A 2022A 2023B 2024E+7.8%+16.3% 13,358 7,14010,93212,37716,276 2020A 2021A 2022A 2023B 2024E 4,774 1,1942,1122,8784,210 2020A 2021A 2022A 2023B 2024E Sales volume (tons) Contribution (EUR k) Contribution margin (%) Net sales (EUR k)Consistently increasing top -line performance Better pricing reflecting cost increases to customers in a more stable environment in 2024 Further margin improvement in 2024 following 400 bps in 2023 38 (1) Cost of goods sold does not include marketing and sales expenses Source: Eczacıbaşı Tüketim ÜrünleriContribution statement Contribution statement Remarks Unit 2020A 2021A 2022A 2023B 2024E Sales volume Tons 13,232 11,045 13,876 16,588 19,299 Net sales EUR k 13,358 7,140 10,932 12,377 16,276 Cost of goods sold1EUR k (7,842) (5,348 ) (7,967 ) (8,320 ) (10,515 ) Gross profit EUR k 5,515 1,792 2,965 4,057 5,761 GP margin % 41.3% 25.1 % 27.1 % 32.8% 35.4% Logistics costs EUR k (473) (329) (584) (909) (1,282) Rent expenses EUR k (269) (269) (269) (269) (269) Contribution EUR k 4,774 1,194 2,112 2,878 4,210 Contr. margin % 35.7 % 16.7 % 19.3 % 23.3% 25.9%2023 B based on 9 -months actual performance plus 3 - months projection Proforma rent expense included in the contribution in case the potential buyer decides to continue at the existing location by renting For avoidance of doubt, financials on the left consider the case where the building and land remain with the Parent The Parent also considers the sale of the production building and land separately 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
production building and land separately 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. For further information, please contact : *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 İbrahim Romano Head of Investment Banking [email protected] +90 (533) 960 01 22Zeynep Koçak Managing Director [email protected] +90 (532) 242 53 78Disclaimer

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