2015-2016 ANNUAL REPORT Table of Contents
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2015-2016 ANNUAL REPORT Table of Contents Message from the Board Zorlu Group Overview Real Estate 2 18 of Directors 75 3 Zorlu Group Milestones 22 Board of Directors 83 Mining - Metallurgy 4 Zorlu Holding 24 CEO's Assessment 85 Other Activities Message from the Sustainability at the Focus Chairman of the Human Resources 5 of Zorlu Holding's Strategy 28 86 Sustainability Committee Summary Financial 6 Statements and 32 Senior Management 92 Mehmet Zorlu Foundation Operational Indicators Zorlu Group’s Fields of Consumer Electronics Audit and Internal Control 8 Operation 37 and White Goods 94 Consolidated Financial Growth Strategies of Textiles Statements and Independent 16 Group Companies 51 96 Auditor’s Report 61 Energy Scan to view Zorlu Holding’s previous annual reports Continued growth with a focus on institutionalization and sustainability... The journey that began with the textile industry in 1953 in Babadağ, Denizli continues with great pace today with the addition of many other fields of business, including consumer electronics and white goods, energy, real estate, mining-metallurgy, factoring, and tourism among others. Starting its life as a family business, Zorlu Holding has continuously grown during its transformation into a corporate enterprise, exceeding Turkey’s boundaries and reaching far continents, yet it always remained a role model and game changer with subsidiaries that play an important role in their respective sectors. Throughout the years, Zorlu Holding became a reputable brand in both Turkey and the world, combining its deep- rooted experience, know-how and qualified human resources with highly intuitive, strong management. Since then, Zorlu Holding has embarked upon new journeys with the goal of further strengthening its corporate structure as it continues to create value for all of its stakeholders and grows alongside Turkey, acting as a unified whole and taking firm steps towards sustainability with the synergy created by Group companies. 2015-2016 ANNUAL REPORT ZORLU HOLDING 1 Zorlu Group Overview Zorlu: A Reliable and Zorlu Group’s foundation was laid in • real estate, Reputable Brand in 1953 with the establishment of a textile • mining-metallurgy company in Babadağ, Denizli. • other (tourism, factoring, aviation) Turkey and the World Having begun its life as a family and continues to generate value-added With around 27 business, Zorlu Group today is one for the country’s economy, with the thousand employees of the key conglomerates in Turkey Group accounting for a significant with over 60 countries and around portion of the country’s overall exports. and over 60 27 thousand employees. companies, Zorlu is Standing out in their areas of business one of the leading Zorlu Group companies are some of with their innovative approach, the leading players in their respective pioneer position, corporate structure conglomerates in sectors. As of the end of 2016, Zorlu and performance coupled with Turkey. Group is active in five main categories distinct global production and service of capabilities, Zorlu Group companies are set to carry their operations into the • textiles, future to further enhance the value of • consumer electronics and white the Zorlu brand, which has become a goods, symbol of quality, trust and reputation • energy, in the market, and to create lasting value for all their stakeholders. Zorlu Group Organization Chart Zorlu Family Zorlu Holding Consumer Other (Tourism, Mining - Real Estate Textiles Electronics and Energy Aviation, Metallurgy White Goods Factoring) 2 ZORLU HOLDING 2015-2016 ANNUAL REPORT Zorlu Group Milestones 1953 1997 2007 2015 Hacı Mehmet Zorlu lays the Vestel Household Appliances is Zorlu Holding signs the UN Zorlu Holding signs the United foundation of the Zorlu Group founded. Global Compact. Nations Women Empowerment by establishing Zorlu Mensucat Denizbank is founded Meta Nikel-Kobalt is Principles, institutionalizing in Babadağ, Denizli. established. its support for empowering 1999 women in the society, business, 1960 and the economy. Mehmet Zorlu Education, 2008 The Group enters textile Health, Culture and Solidarity Zorlu Enerji wins the Phase I of Alaşehir I trading business by opening a Foundation is established. privatization tender held by Geothermal Power Plant enters store in Trabzon. into operation. White goods production ADÜAŞ, involving nine power plants with a total installed 1966 begins. The Ramat Negev and Ashdod capacity of 141 MW, with a natural gas cogeneration The company takes the 2000 bid of USD 510 million. power plants in Israel, in which information and experience The construction of Zorlu Zorlu Energy has 42.15% gained in Trabzon to 20% of Zorlu Energy’s shares Center, Turkey’s first five- stakes, become operational. Istanbul and begins contract are offered to the public, and function multi-use project, manufacturing. listed on Borsa Istanbul for Vestel Electronik is included in trading. begins. the BIST Sustainability Index 1976 for the November 2015 - 2001 2011 October 2016 period. Korteks Velvet Weaving Plant Vestel wins the first Smart is established in Bursa. Zorluteks becomes Europe’s 2016 largest and the world’s third Board (Interactive Board) 1984 largest cotton household linen tender issued as part of Fatih Vestel Beyaz Eşya and Zorlu producer. Project. Enerji voluntarily enter Borsa The company begins its first Istanbul’s (BIST) Sustainability official exports with Korteks 2003 2012 Index for the November 2016 products. - October 2017 period. Zorlu Group celebrates its 50th Zorlu Factoring begins 1989 anniversary. operations. Sarıtepe-Demirciler Wind Power Plants commence Korteks Yarn Factory is builtin Vestel City opens its doors. 2013 generation. Bursa to meet the need for Zorlu Center’s shopping mall high-quality polyester yarn in 2004 Zorlu Center is named and performing arts center the Turkish textile industry. Europe’s Best Shopping Center Jules Verne joins the Zorlu open their doors. Group by ICSC. 1990 Kızıldere II Geothermal Power Having advanced to the finals Korteks Polyester Yarn Factory, 2006 Plant is commissioned. of the Industrial Excellence Europe’s largest integrated Zorlu Real Estate Group is Jhimpir Wind Power Plant in Awards 2016 after winning polyester yarn manufacturer established. Pakistan goes into operation. the title in Turkey, Vestel Beyaz Eşya is proclaimed the winner, and exporter, commences Vestel wins the second Zorlu Group sells its stake in becoming the first Turkish production. Smart Board tender worth Denizbank to Dexia for USD company in its sector to win TL 1 billion. 1993 2.4 billion in total. the award. Zorlu Enerji is founded to meet 31.5% of Vestel Beyaz Eşya’s 2014 Zorluteks R&D Center enters the energy and steam needs shares are offered to the into service. public, and listed on Borsa Meta Nikel-Kobalt starts nickel of Zorlu Group’s industrial production in Gördes. enterprises. Istanbul for trading. Zorlu Energy Group obtains Turkey’s first locally produced 1994 natural gas distribution licenses smartphone Venus is launched. Vestel joins the Zorlu Group. for Gaziantep and Trakya A+ office project Levent 199 regions and begins supplying enters into service. natural gas. The Dorad Natural Gas Combined Cycle Power Plant in Israel, in which Zorlu Enerji has a 25% stake, starts commercial operation. 2015-2016 ANNUAL REPORT ZORLU HOLDING 3 Zorlu Holding Zorlu Holding AŞ (“Zorlu Holding”) is The Group’s real estate and mining well as the corporate bonds of Korteks the parent company of Zorlu Group companies, on the other hand, are Mensucat Sanayi ve Ticaret AŞ, Zorlu affiliates. directly controlled by the Zorlu Family. Faktoring AŞ and Zorlu Enerji Elektrik Üretim AŞ are listed on Borsa Istanbul Zorlu Group’s consumer electronics, The stocks of other companies that (BIST). white goods, textiles and energy operate under Zorlu Holding, including companies operate under Zorlu Vestel Elektronik Sanayi ve Ticaret AŞ, As of December 31, 2016, Zorlu Holding, which is controlled by the Vestel Beyaz Eşya Sanayi ve Ticaret AŞ Holding’s paid-in capital amounts to Zorlu Family. and Zorlu Enerji Elektrik Üretim AŞ, as TL 3,325,000,000. Zorlu Holding Shareholding Structure Zorlu Zorlu Family Holding 100% 4 ZORLU HOLDING 2015-2016 ANNUAL REPORT Sustainability at the Focus of Zorlu Holding’s Strategy Zorlu Holding aims to contribute Zorlu Holding has accelerated its efforts Through the Mehmet Zorlu Foundation, to a better future by focusing on towards what it considers to be the main Zorlu Holding carries out projects for social sustainability. pillars of sustainability, namely reduction benefit in a number of key areas such as of the environmental impact and carbon culture & arts, health and social solidarity Zorlu Holding aims to contribute to a better emissions of its companies, transitioning to in line with its mission of investing in the future by focusing on sustainability. eco-friendly production technologies, future of Turkey. To leave a better world to future developing products which consume less Zorlu Holding will continue to work generations, Zorlu Holding builds upon natural resources, and increasing the share with great determination to strengthen its responsibilities to carry out economic, of renewables in electricity generation. its corporate structure by taking its environmental and social activities and It leverages its excellence in R&D and sustainability-focused institutionalization projects, and driven with its strong innovation to further these initiatives approach to new levels, and to