Building a Sustainable Future with Vestel
Vestel Elektronik 2020 Annual Report Contents
Introduction Summary Financial and Operational Indicators 8 Shareholding Structure, Corporate Governance Rating and Vestel Elektronik Shares 10
2020 in Review Vestel and the COVID-19 Pandemic 12 Other Highlights of 2020 22
The Management Chairman’s Message 36 Board of Directors 41 Interview with the CEO 44 Senior Management 52
Activities Vestel: A Global Manufacturer and A Technology Company 54 Vestel’s Manufacturing Power: Vestel City 56 Vestel’s Main Strengths 57 Vestel Serving the Whole World... 64 Vestel’s Strategy and 2020 Realizations 66 Vestel R&D: Trend Setting Vision 72 New Horizons in Customer Experience 97 Vestel Proje Ortağım 104 Vestel Ventures 110 Meta Nikel Kobalt Madencilik 115 Vestel Savunma 118 AYESAŞ 122 Vestel and Sustainability 126 Sustainability Principles Compliance Framework 169
Additional Disclosures Required by the Legislation Additional Disclosures Required by the Legislation 180
Corporate Governance Risks and Assessment of the Board of Directors 190 Internal Audit Activities and Internal Control System 195 Statement of Compliance with Corporate Governance Principles 197 Corporate Governance Compliance Report 198 Corporate Governance Information Form 207 Board Committees 213 Board of Directors’ Evaluation regarding the Board Committees 217 Statements of Independence 218
Financial Information Statement of Responsibility for the Annual Report 222 For the pdf copy of Vestel 2020 Independent Auditor’s Report on the Board of Directors’ Annual Report 223 Annual Report, you can scan Statement of Responsibility for Financial Statements 225 the QR code on your browser. Consolidated Financial Statements and Independent Auditor’s Report 226 Investor Information
http://www.vestelinvestorrelations. com/en/financials/annual-reports. aspx By combining our capabilities of being a powerful technology company with our agile and effective management approach, we supported the efforts to tackle the coronavirus in Turkey with our social contributions during the pandemic, as well as ensuring sustainability in production and employment.
We have implemented a vast array of applications by focusing on making people’s lives easier. With our vision and mission to be the pioneer of technological developments, we have developed household appliances which save water and energy as well as products which meet individuals’ desires for more hygiene and healthy living. While we supported home education with our range of Smart TVs, we made the time spent at home more enjoyable with our UHD TVs.
With the vision of Smart Life 2030, we are committed to implementing the life-enhancing power of technology and digitalization on the basis of a business model which combines profitability and social benefit. We will continue to work to shape a sustainable future with smart approaches.
Vestel Elektronik 2020 Annual Report 1 Brand New Customer Experiences
2 Vestel Elektronik 2020 Annual Report High Customer Satisfaction
Vestel Elektronik 2020 Annual Report 3 Brand New Technologies
4 Vestel Elektronik 2020 Annual Report Extra Hygienic and Health-Focused Products
Vestel Elektronik 2020 Annual Report 5 Brand New Goals
6 Vestel Elektronik 2020 Annual Report Increasing our Contribution to Society
Vestel Elektronik 2020 Annual Report 7 Introduction Summary Financial and Operational Indicators
Condensed Income Statement (USD million) 2016 2017 2018 2019 2020 Net Sales 3,158 3,317 3,298 3,028 3,075 Exports/Sales 65% 66% 75% 77% 73% Gross Profit 700 665 891 754 859 Gross Profit Margin 22.2% 20.1% 27.0% 24.9% 27.9% Operating Profit* 186 137 384 301 407 Operating Profit Margin 5.9% 4.1% 11.6% 10.0% 13.2% EBITDA* 292 238 479 412 514 EBITDA Margin 9.2% 7.2% 14.5% 13.6% 16.7% Net Profit** 56 15 77 57 253 Net Profit Margin 1.8% 0.5% 2.3% 1.9% 8.2% *Excluding other operating income and expense **After minority shares Condensed Balance Sheet (USD million) 2016 2017 2018 2019 2020 Cash and Cash Equivalents 359 530 587 403 436 Trade Receivables 692 971 681 568 737 Inventories 517 781 544 477 553 Current Assets 1,712 2,381 1,908 1,618 1,877 Property, Plant and Equipment 467 627 634 581 656 Total Assets 2,742 3,671 3,414 3,275 3,689 Short-Term Liabilities 1,528 2,711 2,577 2,467 2,333 Long-Term Liabilities 692 356 206 172 344 Shareholders’ Equity 523 604 631 636 1,012 Net Financial Debt* 520 667 931 930 769 *Blocked deposits are not included in the calculation.
Condensed Cash Flow Statement (USD million) 2016 2017 2018 2019 2020 Cash Flows from Operating Activities 340 166 250 547 323 Net Cash Flows from Investing Activities -243 -265 -657 -476 -310 Net Cash Flows from Financing Activities 94 305 447 -69 70
The USD amounts in the Summary Balance Sheet are calculated using the Central Bank of the Republic of Turkey’s (“CBRT”) official USD/TL buying rate as of December 31, 2020.
The USD amounts in the Summary Income Statement and Cash Flow Statement are calculated using the CBRT’s average USD/TL official buying rate for the year ended December 31, 2020.
8 Vestel Elektronik 2020 Annual Report Net Sales Gross Profit Margin (%) TL million %
27.9 21,546 27.0 24.9 17,174 22.2 15,852 20.1
12,101 9,540
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Despite the negative effects of the pandemic, domestic revenues Gross profit margin increased from 24.9% to 27.9% thanks to the grew by 49% and export revenues by 18% in 2020, while total positive impact of lower commodity prices and exchange rate turnover increased by 25% to TL 21.5 billion. movements, increased productivity and an improved sales mix.
EBITDA and EBITDA Margin Net Profit TL million, % TL million
3,602 1,773 16.7% 14.5% 13.6%
2,302 2,336
9.2% 7.2%
882 867 371 324 168 55
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Having grown at a CAGR of 42% over the last 4 years, EBITDA In parallel with the strong growth in operating profitability, net reached an all-time high of TL 3.6 billion in 2020, with an EBITDA profit surged by 447% to TL 1.8 billion, with a net profit margin margin of 16.7%. of 8.2%.
2020 EBITDA EBITDA EBITDA margin
Geographical Distribution of Revenues Revenue Breakdown by Business Segment
% %
Turkey 27
Europe Other 8 65 Household 56 44 TV and Appliances Electronic Devices
Vestel Elektronik 2020 Annual Report 9 Introduction Shareholding Structure, Corporate Governance Rating and Vestel Elektronik Shares
Shareholding Structure Shareholders Nominal Value of Shares (TL thousand) Share in Capital (%) Zorlu Holding AŞ 216,053,592 64.41 Zorlu Holding AŞ (Free Float) 7,042,925 2.10 Other Shareholders (Free Float) 112,359,757 33.49 Total 335,456,275 100.00
Zorlu Holding AŞ’s stake in the Company fell from 73.66% to 66.51% as a result of the share sales executed on Borsa İstanbul during 2020. Corporate Governance Rating Sub-categories Weight Rating in 2020 (%) Shareholders 0.25 94.91 Public Disclosure and Transparency 0.25 98.44 Stakeholders 0.15 99.48 Board of Directors 0.35 94.47 Total 1.00 96.32
The Company’s Corporate Governance Rating, which stood at 9.59 (95.87%) in 2019, was revised upwards to 9.63 (96.32%) as of 21.02.2020, in line with improvement efforts. Vestel Elektronik Shares The shares of Vestel Elektronik Sanayi ve Ticaret AŞ (“Vestel”, “Vestel Elektronik” or “the Company”) have been trading on the Borsa İstanbul (“BIST”) under the VESTL ticker since 1990. Vestel Global Depository Certificates, which have been traded on the London Stock Exchange since 2000, started to be traded on the London Over the Counter Market (OTC market) from January 3, 2011. The shares of Vestel Elektronik’s subsidiary, Vestel Beyaz Eşya Sanayi ve Ticaret AŞ (“Vestel Beyaz Eşya”) have also been trading on the BIST under the VESBE ticker since 2006. Vestel Elektronik was included in the Borsa İstanbul (BIST) Sustainability Index on November 2, 2015, which consists of the shares of companies traded on Borsa İstanbul with a high corporate sustainability performance. Having been listed in the BIST Sustainability Index for five periods and having maintained its compliance with the index criteria, Vestel Elektronik qualified for inclusion in the index for the sixth time from December 1, 2020. As of the end of 2020, Vestel Elektronik, which is traded on the STARS MARKET, was included in the BIST 50, BIST 100, BIST 100-30, BIST ALL, BIST STAR, BIST CORPORATE GOVERNANCE, BIST METAL GOODS, MACHINERY, BIST INDUSTRY and BIST SUSTAINABILITY indices.
10 Vestel Elektronik 2020 Annual Report IN 2020, WHICH WAS OVERSHADOWED BY THE PANDEMIC, VESTEL ELEKTRONİK’S SHARES ROSE BY 67% IN LINE WITH THE COMPANY’S STRONG OPERATIONAL AND FINANCIAL PERFORMANCE, OUTPERFORMING THE BIST 100 INDEX BY 29%. THE BIST 100 INDEX INCREASED BY 29% IN THE SAME PERIOD.
Vestel Elektronik - Share Price Performance Vestel Elektronik - Relative Performance TL TL million
25 1,200 200 180 1,000 20 160 140 800 15 120 600 100 10 80 400 60 5 40 200 20 0 0 0 31/12/19 31/01/20 29/02/20 31/03/20 30/04/20 31/05/20 30/06/20 31/07/20 31/08/20 30/09/20 31/10/20 30/11/20 31/12/20 31/12/19 31/01/20 29/02/20 31/03/20 30/04/20 31/05/20 30/06/20 31/07/20 31/08/20 30/09/20 31/10/20 30/11/20 31/12/20
Share Price (TL) Daily Trading Volume (TL Million) VESTL BIST 100
AS OF 31 DECEMBER, 2020, THE COMPANY’S MARKET CAPITALIZATION STOOD AT TL 7,065 MILLION.
Summary Share Price Information for 2020 Number of Shares 33,545,627,500 Shares in Free Float* 11,940,268,256 Yearly High (TL) 21.06 Yearly Low (TL) 8.91 Year-End Closing Price (TL) 21.9 Market Capitalization* (TL Million) 7,065 *As of 31.12.2020
Vestel Elektronik 2020 Annual Report 11 2020 in Review Vestel and the COVID-19 Pandemic
Vestel has attracted attention as an exemplary organization with the precautionary measures taken to curb the spread of COVID-19 and its effectiveness in the fight. Setting out an emergency action plan and crisis management road map to combat the pandemic, Vestel rapidly put in place precautions and practices as part of its efforts to overcome the virus.
The virus which broke out in Wuhan, pandemic, Vestel rapidly put in place to protect its employees and their the capital of China’s Hubei Region in precautions and practices as part of its families, and constantly improves December 2019, spread rapidly around efforts to overcome the virus. these measures. While hygiene and the world. The virus, which can be cleaning measures are maximized From January 2020, the Vestel Health transmitted from person to person, based on the principle of mask- Unit started to inform employees was named SARS-COV2 (COVID-19), distance-hygiene principle in all areas, of the issue through e-mails and and as a result of the developments many applications have been initiated announcements. Vestel later drew up which followed, a pandemic was to prevent close contact. awareness-raising training programs declared by the World Health and prepared announcement posters. The COVID-19 Coordination Team Organization on March 11, 2020. Training programs were provided has been established in order to While the declaration of the pandemic through portal publications, e-mails, ensure a healthy working environment on a global scale brought lockdown digital screens and meetings. throughout Zorlu Holding and Group measures, the rapid increase in The Company constantly provided companies during the pandemic. the number of cases and patients information in various media on basic Likewise, sub-teams were established succumbing to the disease in Turkey, requirements such as the importance at the companies and started as in most countries around the world, of personal care and hygiene, activities. The control system has been led to restrictions and strict measures increasing body immunity, avoiding set up with responsibility from the first being put in place and a relentless crowded areas and maintaining supervisor to the highest supervisor. effort to target the pandemic got social distancing. With the first underway. Continuity is ensured by taking all cases being announced in Turkey, a the necessary measures within the Vestel has attracted attention as range of measures and, accordingly, framework of the Ministry of Health an exemplary organization with the restrictions were put in place. circulars and Pandemic Committee precautionary measures taken to Vestel has taken protective, preventive decisions in the factory, office and curb the spread of COVID-19 and its and improving measures at its other facility areas. effectiveness in the fight. Setting out factories and other facility areas and an emergency action plan and crisis In addition to the protective measures, in production processes in order management road map to combat the pandemic related measures were
S1 Plan (Awareness) COVID-19 started to spread in the world S2 Plan (Warning) Suspected presence of COVID-19 in Turkey S3 Plan (Serious) Discovery of the first COVID-19 cases in a limited region in Turkey S4 Plan (Severe) Spread of the virus in Turkey and/or the detection of cases at Vestel Rapid spread of the virus, cases seen in every corner of Turkey/widespread detection of S5 Plan (Critical) cases at Vestel
12 Vestel Elektronik 2020 Annual Report taken in the administrative units while the remote working model was the COVID-19 measures, practices such as remote working, restrictions adopted where possible. and regulations it has implemented. on travel and holding all meetings Vestel, which started investing in a Vestel also provided support through digital channels. new Health Center to improve its and donations to healthcare In order to ensure sustainability in capacity and facilities, aims to open institutions during the pandemic customer service units and services, the center in the first quarter of 2021. while strengthening its identity as a measures and practices such as corporate citizen and increasing its Vestel received the “TSE (Turkish distance learning, remote technical social contribution with its initiatives Standards Institution) COVID-19 Safe support and remote call center in the field of public health. Production Certificate” as a result of services were put into practice,
Measures Taken in the Vestel Ecosystem in Sustainability and OHS Perspectives during the Pandemic
Practices for social distancing, preventing transmission of the virus and reducing contact • Individual/collective visitor and subcontractor entrances to the facilities are restricted. • The entry of truck drivers into the factory is restricted. • Before all local and foreign visitors, subcontractors and suppliers enter the facility, an HES code query, symptom checks, fever measurement and, if necessary, health examinations are carried out. The approval of the deputy general manager is required for all visitor admissions and entries. • An automatic temperature measurement and data recording system has been put into use at the entrances, production areas and the entrances to personnel buses. Thermal cameras were installed at 11 points where the movement of personnel was highest. An employee displaying a fever are informed by an automatic e-mail, quickly directed to the infirmary and placed in isolation. • All employees, visitors and drivers in the facility are obliged to wear face masks. All field workers are provided with PPE including disposable masks, gloves where necessary, goggles where necessary and visors). • Daily symptom checking app runs digitally via the Symptom tracker App (Android and iOS). • Within the scope of social distancing regulations in public areas, three seat benches are converted into single seat benches. • Additional shelters were installed in the rest areas, and shelter inspections were increased with the Closed-Circuit Television (CCTV) equipment. • The number of shift breaks was increased in the production units. • Measures were taken to ensure social distancing in cafeterias and personnel shuttles and entrance and exit doors of the cafeteria were separated. • Although not mandatory, personnel buses were operated at a limit of 50% passenger capacity. • Sequential ordering was introduced in the dining hall and locker rooms. • Occupancy is checked in the locker rooms. • In order to keep the risk of transmission to a minimum, a screen application was introduced in the dining halls and offices.
Vestel Elektronik 2020 Annual Report 13 2020 in Review
Vestel and the COVID-19 Pandemic
Practices to improve health, cleanliness and hygiene • Sensor-based sanitizer dispensers have been installed on all security doors. Hand sanitizer is made contactless throughout the facility. • Water dispensers have been made contactless. In addition, a packaged water service is provided in all units. • The Food Production Center was commissioned and food service was provided in lunch boxes. • Workplace physicians inform and direct employees regarding vitamin and mineral support which they may use according to their health status. • Disinfection of factories, common areas, offices and high contact surfaces such as door handles and tables with special chemicals is carried out along with measurements and monitoring of the effectiveness of disinfecting with UV light and electronic devices. • Station-based disinfection of the tools and equipment used by each employee is provided by the user. • Additional air disinfection devices have been installed in common use areas such as the dining hall and changing room. • UV lamps were installed in VRF and central ventilation systems, providing sterilization of circulating air. • Fresh air is provided by keeping windows open. • Encouraging sharing of support to quit smoking.
Implementations in the work environment to prevent transmission • A flexible working system has been adopted in all departments where remote working is possible, such as Finance, Accounting and Call Center. In order to reduce the number of employees in the office by at least 50%, business arrangements and remote or alternating work plans are set out by the department directorates. • As a result of the implementation of alternating and remote working models, pregnant employees and employees with disabilities and those with chronic illnesses who are identified as being in a high-risk group in evaluations conducted by the workplace physician are directed to work remotely or are considered for administrative leave. • Arrangements were put in place for customer services and call center units to work remotely, with the exception of those required to be in the workplace. • Many activities and events which require a collective presence, such as training, have been either postponed or restricted, and the use of digital channels for these activities has been encouraged. All visits and meetings are conducted online, except in compulsory cases. • To ensure the continuity of the work, advanced measures were put in place to support the health and safety of employees continuing to work in the field, production facilities and the offices. • International travel was suspended while domestic travel was contingent on the approval of the deputy general manager. • Necessary equipment and medical support are provided to personnel who will go abroad when needed.
14 Vestel Elektronik 2020 Annual Report Many activities and events which require a collective presence, such as training, have been either postponed or restricted, and the use of digital channels for these activities has been encouraged. All visits and meetings are conducted online, except in compulsory cases. To ensure the continuity of the work, advanced measures were put in place to support the health and safety of employees continuing to work in the field, production facilities and the offices.
Supervision-control, case-oriented applications • Risk analysis is carried out in respect to COVID-19 and is constantly updated. • Contact tracing is performed quickly and effectively; necessary measures are taken to contain the risk of contamination, and cases are reported to the Provincial Pandemic Board. • A transfer waiting area for suspected cases was established in the facility. • Specially equipped vehicles have been allocated for referral to the hospital. • Continuous communication is maintained and coordinated efforts are made with the Provincial Pandemic Board. • The facilities are inspected by the Provincial Pandemic Board.
Pandemic related communication • Activities aimed at raising awareness and educational activities are carried out regarding the pandemic and prevention methods, the measures to be taken and the steps to combat the pandemic. Developments regarding the pandemic are shared through open communication. Up-to-date information is shared through all written, visual and audio channels. • In the new normal, an Application Guide, which includes policies and approaches for a safe working environment, was prepared and shared with the employees. • Information is provided in all areas through written and visual posters. • All visitors, subcontractors and employees at Vestel facilities are informed of the rules to be followed within the factory site, with information screens positioned on factory security gates to provide instant information and raise awareness. • The Guide for Remote Working, which includes various tips to increase the efficiency of working from home, was shared with all the employees. • Employees have been provided with various informative training on COVID-19 through the Zorlu Academy. • A COVID communication-hotline has been made available for all employees. • SMS notifications regarding COVID-19 are provided every day. • The Vestel Health Monitoring smartphone application was put into operation. • Employees receiving treatment at home or in hospital are provided with a medical team who will check their condition by phone and maintain constant contact.
Vestel Elektronik 2020 Annual Report 15 2020 in Review
Vestel and the COVID-19 Pandemic
“We’re Good Together” – Our access psychologist and dietitian recreation areas, waste management, Corporate Well-Being Program services through the mobile nurseries and services, and practices application “wellbees”. covering the health of all stakeholders Vestel has introduced its corporate taken as part of the COVID-19 Well-Being Program, “We Are Good Vestel was awarded COVID-19 Safe measures since January. Together”, to provide various healthy Production Certificate by the Turkish life supports for its employees Standards Institution (TSE) Changing Consumer during the pandemic. In this context, Vestel, which has prepared all the Behaviour and Vestel’s employees and family members necessary action plans since the Actions During the Pandemic • could receive support by phone outbreak of the COVID-19 pandemic, from the experts in the field of was awarded the “TSE COVID-19 Safe During the pandemic, Vestel once psychological counseling and Production Certificate” in recognition again proved to its suppliers, healthy eating. of the COVID-19 measures which customers and consumers that it is a it has taken and the practices and flexible, agile and adaptable company. • can access various latest content arrangements it has implemented. Vestel has successfully managed on nutrition and health, personal this process thanks to its diversified development, parenting, good Vestel met all of the conditions supplier base, flexible production sleep, healthy relationships set out in the “COVID-19 Hygiene, capability, extensive and effective and sports through the www. Infection Prevention and Control sales and service channels and zorludabirlikteiyiyiz.com website. Guide” prepared by the Turkish experience in e-commerce. Statistical Institute regarding • can receive advice on endurance, personnel information and training, Responding strongly to the increasing anxiety management, wellness, high-level hygiene measures, shift to digital channels, Vestel has sports, child psychology and suitability of working and production offered a flawless digital shopping personal development, as well as areas, regulations in the dining halls, experience with delivery in as little
16 Vestel Elektronik 2020 Annual Report as 24 hours, a wide product diversity volume products, this practice has Improved hygiene with Vestel and service infrastructure, and been a feature which has set Vestel Daylight Technology has strengthened its bond with the apart from its competitors during the While Vestel continues to bring consumers. pandemic. ease to the lives of consumers with 24-hour delivery - A first in the Vestel has a solution the technologies it develops, it also industry in online sales responds to the increased demand Vestel Customer Services offers for greater hygiene due to the Demonstrating that it is always by the customers the opportunity to solve pandemic with its washing machines, side of its customers with a superior any problems they may encounter with refrigerators, dishwashers and air service understanding during the their products without the need for conditioning units which use Daylight pandemic, Vestel has introduced a authorized service support through Technology, inspired by the cleansing revolutionary service in the retail the cozumuvar.vestel.com.tr website, nature of sunlight. sector, by delivering products in all which includes video-based solutions. categories, which are purchased This implementation was launched to It is verified by scientists that clean air through its own website (vestel.com.tr), protect the health of both employees fed by sunlight is a natural protector, to all parts of Turkey within 24 hours. and customers. In addition, customers and while sunlight feeds our lives, it may submit malfunction and assembly also protects us from harmful bacteria Thanks to its wide dealer network requests through the portal and by improving the air quality at the spread throughout the country and contact the service staff. In addition, points it reaches. its integrated retail system, which it Vestel extended the warranty periods has developed over the past decade, for products, which were to expire Vestel is able to deliver quickly and between March and May, for a period smoothly to all parts of Turkey within of three months, free of charge. the space of just 24 hours. A first among retailers which sell large-
Consumer Behaviour Vestel’s Solution
Increasing the variety of products offered for sale through vestel.com.tr, regal-tr.com and vsoutlet.com.tr
In addition to own online sales channels, opening of stores in Turkey’s Shift to online shopping leading online marketplaces
24-hour delivery service and hygienic delivery to all parts of Turkey in online sales
Call Center providing 24/7 service Orientation to digital channels in customer services Visual service support via cozumuvar.vestel.com.tr
Products with Daylight Technology which eliminate viruses and provide The increased importance of healthy food extra hygiene consumption and the need for hygiene during the pandemic The new generation MAYA refrigerator which provides all the necessary conditions for healthy fermented food preparation
Larger volume refrigerators and freezers, higher capacity washing machines and tumble dryers, multi-functional ovens, small kitchen Increasing demand for white goods, TVs and appliances electrical appliances with more time spent at home and in the kitchen TVs with larger screens and with UHD and Smart (connectable to the internet) features
Vestel Elektronik 2020 Annual Report 17 2020 in Review
Vestel and the COVID-19 Pandemic
The Daylight Technology developed by use of additional chemicals thanks Healthy living with the Vestel MAYA Vestel preserves all kinds of food for to the special light applied to the Refrigerator longer, in a fresher and natural way, laundry from the chamber placed During the pandemic, the consumption by cleaning the air in the refrigerator in the washing machine door. The of healthy food and the importance and improving the quality of the air washing machine with Vestel Daylight of home cooking have grown. With its which the food comes into contact Technology also stands out as an new generation MAYA Refrigerator, with. environmentally friendly product Vestel meets the expectations of requiring less detergent, using less The dishwasher with Daylight consumers wanting to prepare healthy energy and saving water. Technology provides additional fermented food at home. hygiene to dishes with the natural light The inverter air conditioning unit The MAYA Refrigerator, which allows it emits. using Vestel Daylight Technology easy production and storage of 7 offers clean ambient air with its beam The washing machine, which has different food types which require technology and multi-stage filtration four different programs - Daylight, fermentation, such as dough, yoghurt, system. Daylight Technology both Quick Daylight, Dry Daylight and Baby kefir, vinegar and pickles, all with improves the quality of air in the Clothes - provides extra hygienic automatically adjusted temperature indoor environment and ensures that washing by shining special light on and duration functions, meets the indoor heat exchanger surface the clothing and allows to sterilize a consumers’ demand for healthy living. remains clean. load of wash without using water. With the’Dry Daylight’ program, which ensures that every surface is exposed to daylight through special drum movements, frequently touched objects, such as shoes, banknotes, credit cards, wallets, as well as laundry, can be easily sterilized without the need for washing in the space of 29 minutes, solely by using special light. With Daylight Technology, extra hygiene can be achieved without the
Vestel responds to the increased demand for greater hygiene due to the pandemic with its washing machines, refrigerators, dishwashers and air conditioning units which use Daylight Technology, inspired by the cleansing nature of sunlight.
18 Vestel Elektronik 2020 Annual Report With its Maximum Freshness Technology in addition to the Yeast Technology, the Vestel MAYA Refrigerator allows the gases generated by the respiration of fruit and vegetables to be removed from the environment, so that food can be stored for a longer period of time without losing its nutritional value. Active Ion Technology releases negatively charged ions into the cabinet to neutralize positively charged bad odour molecules and increase air quality. At the same time, the large volume MAYA Refrigerator with the “PUZZLE” feature can be used in 19 different modes with its multi-functional smart compartments. The yeast compartment can be used as a freezer or cooler at any time, while the function of other compartments can be adjusted according to consumer preferences. In addition, the MAYA Refrigerator also allows energy savings by turning off the special compartments when not in use. A Strong Social Contribution from Vestel throughout the Pandemic Support for health institutions and healthcare workers Taking its social contribution and community health initiatives to a whole new dimension during the pandemic, Vestel has contributed to Turkey’s
During the pandemic, the consumption of healthy food and the importance of home cooking have grown. With its new generation MAYA Refrigerator, Vestel meets the expectations of consumers wanting to prepare healthy fermented food at home.
Vestel Elektronik 2020 Annual Report 19 2020 in Review
Vestel and the COVID-19 Pandemic
efforts to tackle the virus by standing Vestel authorized service personnel, Support for children undergoing shoulder to shoulder with the health who provide services by maintaining cancer treatment from Vestel organizations and healthcare workers. social distancing as well as wearing Vestel has ensured the continued PPE, initiated an initiative for the As part of its work to support treatment of children suffering from over-65s during the pandemic. Elderly hospitals with its products in order worsened health problems due to individuals who have been cut off from to bring ease to the lives of altruistic the threat of COVID-19 and whose their children, grandchildren and healthcare workers, Vestel donated treatment is followed by the Cancer relatives, being unable to meet for a household appliances such as air Stay Away from My Child Association long time due to social isolation but conditioners, washing machines, (KAÇOD), by taking on the expenses who do not have the opportunity to dishwashers and dryers, as well as incurred during the treatment carry out video calls or do not know televisions and packages consisting processes and which require special how to use this feature, were given of small household appliances such support. a chance to meet those they miss as coffee and tea makers and toasters thanks to the support of the service At the same time, Vestel donated 5% along with vaccine cabinets to health personnel. Under the initiative, Vestel- of the amount paid by consumers in institutions at more than 200 points authorized service personnel conduct online purchases in the campaigns in Turkey, mainly in İstanbul, Ankara, video calls from their own phone at which it has organized, to KAÇOD. İzmir, Manisa, Bursa and Antalya. As the request of over-65s, helping bring part of its efforts to meet the health With the ’Mask Conversion Unit’, people together. In addition, Vestel institutions’ need for devices, Vestel used masks are transformed into Customer Services ask customers donated automatic temperature WeWALK. over the age of 65 about their needs scanners to MOSTEM and Celal Bayar by calling them before going to their In another example of its social University, biological sampling and homes, also bringing food supplies responsibility efforts to protect public intubation cabinets to the Manisa City which the customers may need. health and create social awareness Hospital and other regional hospitals, during the pandemic, Vestel and transparent screens to COVID Free 24/7 technical support for introduced its Mask Conversion Unit, polyclinics. healthcare professionals which is designed by Vestel to help Vestel also provided support with With the application initiated by Vestel, prevent the spread of COVID-19 and surgical masks to areas affected all workers in the healthcare sector the danger emitted by used masks. by the earthquake in İzmir, which such as doctors, nurses, pharmacists, In the application, which started out suffered from an earthquake disaster carers and service attendants who with the motto “Protect yourself, in the midst of this difficult period. are at the forefront of the fight protect your surroundings, protect against COVID-19, may call out Vestel Video call support for over-65s in a everyone”, masks collected in the service agents 24 hours a day, 7 days key initiative from authorized service Mask Conversion Unit located in Vestel a week, free of charge. Healthcare providers stores are turned into donations workers are entitled to technical for WeWALK smart cane, which While continuing their services on support and servicing free of charge, one hand, Vestel authorized service including for products outside the providers have also taken maximum scope of warranty, by calling their own measures to protect the health of dedicated line at 0850 393 56 66. both customers and their own staff.
Taking its social contribution and community health initiatives to a whole new dimension during the pandemic, Vestel has contributed to Turkey’s efforts to tackle the virus by standing shoulder to shoulder with the health organizations and healthcare workers.
20 Vestel Elektronik 2020 Annual Report In another example of its social responsibility efforts, Vestel introduced its Mask Conversion Unit, which is designed by Vestel to help prevent the spread of COVID-19 and the danger emitted by used masks.
facilitate the lives of visually impaired individuals through the “What’s on the Rack?” (Askıda Ne Var?) Platform. Easy access to EBA and distance learning through Vestel Smart TVs The distance learning application, which was launched in response to the outbreak of the COVID-19 pandemic, can be accessed via the Vestel Smart TVs. Vestel updated its Smart TV screens in accordance with the platform in order to facilitate access to the Education Information Network (EBA) provided by the Ministry of National Education. In this way, teachers and students can easily access EBA on Vestel Smart TV screens, as well as follow online courses published by the Ministry of National Education from the TRT application. Vestel Smart TV users may receive EBA installation support by calling Vestel Customer Services. We also support our furry friends Vestel also considers stray animals which have struggled to find food on the streets during the pandemic, and leaves food for birds, cats and dogs at designated points. Vestel authorized service providers, which provide food to the shelters, also build kennels for dogs.
Vestel Elektronik 2020 Annual Report 21 2020 in Review Other Highlights of 2020
Undersigning another first in Turkey, Vestel started the production of domestic electric bicycle battery. The batteries, whose hardware, software and mechanical designs as well as production and testing infrastructure were developed entirely by Vestel engineers, provide a number of advantages with their reliability, long life and online service.
Vestel produces Turkey’s first connection over Bluetooth, also allows authorizations of Crosslee PLC’s White domestic electric bicycle battery. users to follow the status of the Knight and Hostess trademarks, one battery via the application. of the major players in the UK white Undersigning another first in Turkey, goods market. While the registration Vestel started the production of Vestel signs an agreement with transfers of trademarks in the EU domestic electric bicycle battery. The Iberdrola to manufacture electric have been completed, the registration batteries, whose hardware, software vehicle chargers. processes in some non-EU countries and mechanical designs as well as Vestel won the tender held by the are ongoing. production and testing infrastructure Spanish electric utility company, were developed entirely by Vestel With this acquisition, Vestel is Iberdrola S.A. (Iberdrola), for the engineers, provide a number of expected to further strengthen its international electric vehicle charging advantages with their reliability, long position in the UK market. devices (EVC) project and signed an life and online service. agreement with Iberdrola as one of ‘Vestel Ekspres’ brings the It is anticipated that the bicycle the three suppliers of the project. The convenience of online shopping to the batteries offered for the use of the project, which will be implemented retail outlet. bicycle manufacturers and e-bike as part of Iberdrola’s sustainable Continuing its innovations in the system manufacturers will provide transportation plan, sets out the retail sector, Vestel appeals to a a great advantage in quality, cost, establishment of 150,000 electric new generation of consumers with delivery time and after-sales services. vehicle charging stations in Europe the “Vestel Ekspres”, a small store Vestel aims to produce batteries for all over the next 5 years. The total size of concept where a digital display domestic bicycle manufacturers and the project is around EUR 45 million. application is implemented and for the world. Within the scope of this project, Vestel majority of sales are carried out Elektronik plans to provide 50,000 Inspired by the batteries used in the over digital screens. The Vestel EVC04 EV chargers for the electric automotive industry and adapted Ekspres concept, which promises vehicle charging stations which to electric bicycles and designed a new shopping experience to the Iberdrola will establish in various by Vestel engineers, the batteries consumer and is planned to be rolled regions of Europe, especially Spain, successfully passed the shock, out to busy streets throughout Turkey, the UK and Italy. impact and crush tests required by offers consumers the opportunity to the EN 50604-1 approval with their Acquisition of the British White Knight instantly find and quickly compare water-resistant design at IP66 level and Hostess brands the product they want to buy while and were awarded the EN 50604-1 saving time with the same-day delivery Vestel Ticaret AŞ, a wholly-owned Safety Certificate. High energy density option. Combining online purchasing subsidiary of Vestel Elektronik, NCA cells are used in the batteries. experience with physical retail in its acquired the names, production The system, which allows online new concept, Vestel plans to develop and intellectual property rights, servicing with a battery-mobile phone special digital applications suitable domain names, and sales rights and
22 Vestel Elektronik 2020 Annual Report The proceeds from the green bonds issuance will be used in R&D, new business and innovation projects and green technology investments which contribute to areas such as water resource conservation, carbon reduction, energy efficiency, waste reduction and development of environmental products within the scope of Vestel’s sustainability perspective. for the new generation retail and international rating agency, through Vestel Beyaz Eşya continues to introduce these to consumers in its the intermediation of Garanti BBVA. Ekspres stores. develop collaboration between As a result of the evaluation carried industry and academia. Vestel issued Turkey’s TL first out in terms of compliance with Vestel Beyaz Eşya, which continues to denominated green bond with an the Green Bond Principles of develop R&D projects in cooperation international sustainability rating. the International Capital Market with the universities in the Aegean Association (ICMA), the issuance - Vestel took an important step forward Region, following its collaborations which had the highest sustainability towards Zorlu Group’s Smart Life with Uşak University and Muğla rating - was offered to investors with 2030 sustainability vision, realising Sıtkı Koçman University, signed a two alternatives of 1-year and 2-year Turkey’s first green TL denominated cooperation protocol with the Afyon maturities, raising TL 100.4 million in bond issuance to be rated by an Kocatepe University in 2020 to support total. the professional development of
Vestel Elektronik 2020 Annual Report 23 2020 in Review
Other Highlights of 2020
students and create new product and live broadcasts with the academics Smart and environmental products technology development platforms. from the universities which it from Vestel collaborates with, discussing current With these collaborations, Vestel In 2020, Vestel developed the following issues. Beyaz Eşya aims to develop products and introduced them to the projects to increase the use of Vestel Smart Watch - with you every market. domestic resources with the help moment of the day New products and technologies of the academic knowledge of the Vestel has introduced the Vestel Smart developed in the fields of electronics universities. Watch, a new member of the VFit and LED lighting: Within the scope of these smart product family, to the users. • The low-cost Ultra HD HDR TV collaborations, Vestel Beyaz Eşya’s Featuring 8 different sports modes, with advanced image and audio R&D managers convey Vestel’s pulse checker, sleep tracking, step technology, global achievements in the fields and distance measurement, the Smart of technology, innovation, digital Watch also allows users to perform • Alexa-supported TV and remote transformation and Industry 4.0 to breathing exercises and control music. area microphones, university students, while the R&D With the Vestel Smart Watch, which • Amazon Fire TV, engineers and academics of the is integrated with VFit, Vestel’s health university come together to organize and sports ecosystem, users can track • Domestically designed new workshops on the localization of daily health and sports indicators from generation smart boards integrated imported products. both the VFit+ app and their smart with a white board, watches. The continuity of the process was • Digital instrument cluster designs ensured during the pandemic With a full-touch 1.3-inch IPS display, for passenger vehicles, by transferring the connections the Vestel Smart Watch features a • Infotainment system designs for established with the universities from 12 mm stainless steel body, call, passenger vehicles, the physical environment to digital message and social media notification, platforms in 2020. Evaluation meetings water resistance, a long battery life, an • Electric vehicle charging station of ongoing projects continued to be affordable price and personalization management system, held online at certain intervals. In options. addition, Vestel Beyaz Eşya conducted
24 Vestel Elektronik 2020 Annual Report • Ultra-fast electric vehicle charging • 60 cm wide top freezer refrigerator washing capacities of 6 kg, 7 kg and stations (AC-DC), using LessFrost cooling technology, 8 kg, • LED lighting fixtures suitable for • 70 cm wide top freezer refrigerator • Smart washer and washer-dryer M class road types, using LessFrost cooling technology, with remote access in the T Series product range, • Domestic LED lens modules • 4-door refrigerator with suitable for asymmetric road types, FermentStore technology that • 1600 spin low depth washing allows 7 different products to be machine with 8 kg load capacity, • Ultraviolet disinfection box with fermented, LED. • 1400 spin washing machine with • Single door refrigerator with 54 cm 12 kg load capacity, combining high New products and technologies width and 145 cm height with Static speed with high capacity, developed in the field of white goods: Cooling technology, • Washing machine range offering • 60 cm wide top freezer refrigerator • Smart refrigerator with remote 8 kg, 9 kg and 10 kg load capacities with NF MultiCooling technology, access door display, using Daylight technology which removes 99.99% of bacteria, • 60 cm wide and 155 cm high single • Extra energy-efficient washing door freezer and cooler product machine and washer dryer product • Washing machine product family range with NF and Static Cooling range, in accordance with the new with superior steam technology technologies, Labelling and Ecodesign Directives which ensures extra hygiene and • 60 cm wide combi refrigerator with which came into force in Europe in removes creases, offering 6 kg, NF MultiCooling technology, 2020, 7 kg, 8 kg, 9 kg and 10 kg load capacities, • Washing machines with low depth BLDC motor technology with
Vestel Elektronik 2020 Annual Report 25 2020 in Review
Other Highlights of 2020
• Intellicare washing machine • User information light technology, kitchen application, providing with one-touch washing, touch shining informative light on kitchen the best cooking experience at a screen, remote access feature and floors in 45 cm built-in dishwashers professional level and guaranteeing automatic dosage system, (Infoled 2.1), great cooking results, providing control of all food preparation and • 24-inch dishwashers with BLDC • “Machine Cleaning Program” (Self cooking processes, washing technology developed for Clean), used for machine cleaning the North American market and in dishwashers at certain periods, • 24-inch built-in ovens suitable which meet the requirements of for the US market, meeting the • 100x60 cm Range Cooker product this market, requirements of this market, range, offering a solution to • 45 cm “slim” type dishwashers with crowded families with three • Built-in oven product range with an Asynchronous and BLDC washing different cooking volumes, one expanded remote access feature, technology developed for the North drawer and seven different • Extending the use of pyrolytic American market and which meet hotplates, products in the upper segment oven the requirements of this market, • 60 cm and 78 cm V-Flex induction controls, • Dishwashers that can perform cooktops providing independent • Entry level and mid-segment more hygienic washing with UV-C control in each area (8 different built-in ovens with steam support technology in addition to the Ion areas), developed for baking pastries with technology which prevents the • Built-in ovens with new controls in more crispy results using steam, formation of bad odours, new trend slim designs, • Inverter air conditioner with UV-C • A-series remote access smart • Freestanding double ovens with (Daylight) technology, dishwashers, a modern and stylish design with • UV-C Kit Solution Package for air • The new I-series built-in 50 cm and 60 cm widths, conditioning units, dishwasher product family, • Built-in oven product range • New square metal filters in 45 cm which integrates the Innit smart dishwashers,
26 Vestel Elektronik 2020 Annual Report Built-in oven product range which integrates the Innit smart kitchen application, providing the best cooking experience at a professional level and guaranteeing great cooking results, providing control of all food preparation and cooking processes, was introduced to the market.
• Remote access adaptation in all • T series tumble dryer product Vestel has also developed the Inverter air conditioning models, range, which stands out with its following products and technologies stylish and user-friendly style, to be introduced to the market in 2021 • R32 environmental Inverter air in the field of white goods during the • The most hygienic heat pump conditioner product range, year: tumble dryer with ION+Ozone • Multi Inverter air conditioners, technology, • Adaptation of the UV-C lamp to built- • On-off air conditioner series in ovens, which enables the oven to • Condenser tumble dryer with 10 kg produced for the Egyptian market, be used as a sterilization cabinet drying capacity, when not cooking, • Inverter air conditioners produced • Heat pump tumble dryer with 10 kg for the Egyptian market, • New metal and glass built-in drying capacity, cooker product range, • On-off air conditioner product • Heat pump tumble dryer with the family developed for the Middle • The world’s first A+++ compact fastest short program, in just 20 East, North Africa and CIS markets, built-in oven, minutes, • A +++ energy class tumble dryer • The world’s first built-in oven • Tumble dryers using Pearl Odour product range with 7-8-9 kg capable of traditional Sous-Vide technology which leaves laundry capacities using Inverter motor cooking with the integration of a smelling fragrant while drying. technology, special independent heater, • Combining a microwave and traditional oven in one product, with the microwave support in the compact built-in oven,
Vestel Elektronik 2020 Annual Report 27 2020 in Review
Other Highlights of 2020
Vestel aims to develop distributed artificial intelligence systems with 49 project partners from 11 countries in the DAIS (Distributed Artificial Intelligence Systems) project, which is eligible for funding under Horizon 2020, the European Union’s most comprehensive R&D and innovation program, and to produce solutions to improve user experience and data security.
• Android-supported fully touch • New square water heater project, With this audit, the Vestel Call Center operated oven control with Smart once again proved that it could provide • The most hygienic heat pump TFT Touch Control, services at EU standards in many tumble dryer using Active Ion critical issues such as accessibility, • Heat pump tumble dryers which technology, effective on bacteria quality, data management, customer provide additional hygiene with and viruses. and employee satisfaction. UV-C technology, Vestel awarded new funding from The TS EN ISO 18295-1 and TS EN • Washing machine with 4.0 cubic Horizon 2020. ISO 18295-2 Customer Contact feet condenser suitable for the US Having already received funding Centers standards are management market, from Horizon 2020, the European system standards prepared in order • Tumble dryers with remote access Union’s most comprehensive R&D to meet customer expectations, in the T Series product family, and innovation program, with its provide accurate, fast, reliable KYKLOS 4.0 project which covers and customer-oriented service to • The new low-depth, large drum smart and flexible production activities customers, improve the quality of diameter washer and washer-dryer for personalized consumer needs, communication with customers and product range, Vestel was awarded funding for three address the problems experienced in • Built-in washing machines with other projects this year. In the DAIS communication. 7 kg and 8 kg load capacities (Distributed Artificial Intelligence While these standards define the with Universal and BLDC motor Systems) project, accepted this year, technical conditions under which alternatives, Vestel aims to develop distributed customer communication centers artificial intelligence systems with 49 • A project for the development of should operate within the framework project partners from 11 countries and washing machines with 1.95 cubic of the management system logic, they generate solutions which will enhance feet and 2.2 cubic feet capacities for also create a framework for managing user experience and data security. the North American market, customer communication. Vestel Call Center successfully • The HydroBoost washing machine, Top marks from testing institutions passed the ISO 18295-1 Customer which washes 10 kg of laundry in for the Sharp branded dishwashers, Service Quality Certificate interim a record 159 minutes by spraying washing machines and tumble dryers audit. a mixture of water and detergent manufactured by Vestel Beyaz Eşya from 20 different points, The Vestel Call Center was included in Dishwashers, washing machines the interim evaluation audit conducted • Easy Bill (Smart Billing) air and tumble dryers developed under in 2020 for the ISO 18295-1 Customer conditioner, the Sharp brand, a licensed brand of Service Quality Certificate, which it • Bottom controlled water heater, received in 2019, and successfully completed the audit process.
28 Vestel Elektronik 2020 Annual Report Vestel, received the highest scores household appliances in the world, AWARDS in the tests conducted by Haus & in recognition of its features such as Garten Test, one of Germany’s most hygienic washing performance, design, CUSTOMER SATISFACTION AWARDS prestigious testing institutes, and high energy and water saving and low A.C.E. (Achievement in Customer testberichte.de, on performance, noise level, as well as the convenience Excellence) Awards safety, ease of use and energy it provides to the end user. consumption. Vestel Costumer Services was handed Rapid growth in the number of female the “Achievement in Customer The Sharp branded tumble dryer of the technicians in Vestel Authorized Excellence” Award in the White A+++ energy class with inverter motor Service Providers Goods and Television categories at technology and high energy efficiency Vestel, which started the Women the sikayetVar A.C.E Awards 2020, received the ‘Sehr Gut/Very Good’ Technician Training Project at Vestel which showcases Turkey’s brands Certificate with a score of 1.3 points City within the framework of its which provide the highest customer in Haus & Garten’s evaluation to rank support for women’s employment, satisfaction. first among the 763 tumble dryers on had trained 58 female technicians the testberichte.de website. Founded in 2001, sikayetvar.com is in total as of the end of 2020, with the world’s first and now the largest Among other tested Vestel products, training organized for those seeking complaints platform. With 5.9 million the Sharp branded washing machine to volunteer as technicians from individual members, the platform and dishwasher attained the highest specialized customer representatives serves as an important reference site scores for both functionality and working in authorized service which shapes consumer behaviour performance, and ranked first among providers. Vestel aims to increase the and brand preferences. Vestel won four different products, surpassing number of female technicians trained the first place for the seventh time their world-renowned competitors. to 130 by the end of 2021. on the platform, which is consulted At the same time, the Sharp branded For the time being, training is only by 16.7 million users each month dishwasher received full marks provided for employees of Vestel before making a purchase, as the from the Home Appliances World authorized service providers, but is most successful brand in its sector in Magazine, one of the most established planned to be rolled out to women recognition of the support it provides its and prestigious magazines covering applying to work at Vestel in the customers in pre-sales and after-sales coming period. activities.
Vestel Elektronik 2020 Annual Report 29 2020 in Review
Other Highlights of 2020
IMI Conferences Turkey Call Center and working environment. Vestel Household Appliances Category Awards was one of the companies deemed to • Sharp 2K20 Series Refrigerator offer the’ Best Workplace in Turkey’. The Vestel Call Center received the Companies are evaluated in three • Sharp Built-in Oven “Best Remote Call Center” Award categories; ‘Leadership’, ‘Agility’, and within the scope of the 13th Turkey • Sharp Washing Machine ‘Talent Focus’. Vestel was the first Call Center Awards hosted by IMI Zorlu Group company to receive this • Sharp Dishwasher Conferences in November 2020, where award. it once again registered the high • Sharp Tumble Dryer standards and quality of its service. DESIGN AWARDS iF Design Awards HUMAN RESOURCES AWARDS Good Design Awards Vestel has been awarded one Award in ‘Turkey’s Best Work Place’ Award to Vestel received a total of 11 awards the Mobility category at the iF Design Vestel Customer Services in the The Good Design Awards, the Awards which has a history of more oldest and most prestigious design than 65 years. Vestel Customer Services was award in the world with its 70-year awarded “Turkey’s Best Workplace” • DC Satellite Charger history, and strengthened its place Award at the “Kincentric Best among the most renowned brands in Plus X Award Employers 2019” survey conducted terms of the number of awards in the by Kincentric, the world’s leading history of the competition. Vestel Elektronik won four awards for human resources and management its two products in the best product, consulting company. The survey has Electronics Category best brand and most innovative been carried out for more than 20 brand categories in the 2020 award • RunnerDuo electric vehicle years, and has been conducted in organization, where many world charging station Turkey since 2006. leading brands took part, in the Plus • EVC 08 electric vehicle charging X Award, which is among the most The list, which is Turkey’s largest station prestigious design and innovation workplace survey and compiled on awards in the world. Vestel, which was the basis of evaluations carried out by • Glassy OLED ranked as one of the ‘Most Innovative company employees, includes the 32 • Lucid TV Brands’ in 2013, 2017, 2018 and companies providing their employees 2019, was the first brand to bring this with the best workplace experience • VCross TV • Cromo TV
30 Vestel Elektronik 2020 Annual Report In the 2020 awards of the Plus X Awards, in which many global brands took part, Vestel was ranked as one of the ‘most innovative brands’ and the first brand to bring this success to Turkey for a 5th time in the ‘Consumer Electronics’ category.
success to Turkey for the fifth time in • DUO Built-in Oven with Hot Air QUALITY AWARD the ‘Consumer Electronics’ category. Shield Technology KalDer Successful Team of the Year Plus X Award - Best Product • T30 Tumble Dryer with 3D Rack and Award (2 Awards) Pearl Odour Technology The Vestel Service Academy, operating • TV with ME (Portable TV) • French Door Refrigerator with under Vestel Customer Services, FermentStore and Vacuum which advances its customer-oriented • Cromo TV Technology service approach within the framework Plus X Award - Best Brand (1 Award) of ISO 9001: 2015 Quality Management EXPORT AWARD System and ISO 10002: 2014 Customer • TV Category Turkey’s Most Successful Exporter Satisfaction Management System, won Plus X Award - Most Innovative Brand in the Turkish Exporters’ Assembly the Gold Award by ranking first in the (1 Award) Ranking ‘KalDer Successful Team of the Year Award’ competition, which plays a • Home Entertainment Category Vestel once again won the role in popularizing quality awareness championship in the ‘Electric Red Dot Design Award and teamwork in enterprises, with its Electronics and Service’ sector in the “Fault Codes Application” project. Vestel Beyaz Eşya received awards for “Turkey’s Most Successful Exporter its 3 products at the Red Dot Design 2019” ranking announced by the R&D - TECHNOLOGY - INNOVATION Award 2020, the most prestigious of Turkish Exporters’ Assembly (TIM) in AWARDS international design competitions, 2020 and carried its success to a 22nd High Technology Award to become the company to win the year. highest number awards in the Red The “High Technology Award” given Dot Design Award competition in our by the İzmir Institute of Technology to country in 2020. industrial organizations operating in
Vestel Elektronik 2020 Annual Report 31 2020 in Review
Other Highlights of 2020
the field of innovation and high-tech Under the TPM model established by ENVIRONMENTAL AWARDS on the basis of 33 indicators under the JIPM, it is stated that it takes an İstanbul Chamber of Industry Energy the headings of research capacity, average 14 years for manufacturing Efficiency Awards research quality, interaction and companies aiming to maximize cooperation, was given to Vestel productivity, employee competence Vestel Beyaz Eşya received the third Elektronik for its extensive R&D and quality to reach the World Class prize in the “Large-Scale Enterprise studies in the category of ‘Most level. Vestel was the first and only Energy Efficient Product” category in Successful Large-Scale Company’. company to achieve this success in the Energy Efficiency Awards, which just 10 years, and is also one of the have been presented by the İstanbul Vestel wins the TPM World Class only 15 companies worldwide to have Chamber of Industry since 2016, with Award received this award. its New Generation Panel Condenser Vestel has been meticulously EKONF Refrigerator Project carried CORPORATE SOCIAL RESPONSIBILITY conducting activities as part of the out at the Refrigerator Factory where AWARDS the company achieved energy savings TPM (Total Productive Management) of up to 15%, annual greenhouse gas program, a Japanese management “Most Creative Volunteering Project” reduction of 10,385 tonnes/year and model which targets operational Award to Vestel Beyaz Eşya raw material savings of 830 tonnes/ excellence in production, for more Vestel Beyaz Eşya received the “Most year, according to the results for 2019 than 10 years in its factories. Having Creative Volunteering Project” Award which were announced in January won all other stage awards, Vestel with the “Overcoming Obstacles with 2020. received the World Class Award, which Vestel/Walker Project” in the 2020 is the highest accolade in the TPM COMMUNICATION - MARKETING “Heartfelt Awards” Award Ceremony. Program, awarded by the JIPM (Japan AWARDS The Awards are presented to honour Institute of Plant Maintenance). With successful programs and projects Crystal Apple Creativity Awards this success, Vestel received the title by the Private Sector Volunteers of being the first and only company in During the Crystal Apple Creativity Association to promote employee nd the world to receive this prestigious Awards, hosted as part of the 32 volunteering projects in Turkey. At the award in the consumer electronics Crystal Apple Festival organized same time, the company’s promotional sector with its simultaneous work at by the Advertisers Association, the film of the project was chosen as the six different factories. Women’s Day communication “Today, “Best Project Film”. 7.5 March” received the “Silver Apple” Award.
32 Vestel Elektronik 2020 Annual Report Vestel was given the World Class Award, the highest accolade in the TPM Program, by the JIPM.
Felis Awards Category: Native Ads Category: Different Ideas Vestel won three awards in the 15th yemek.com Ya Evde Yapsan – Golden Attachable Household Appliances - Felis Awards in 2020. Mixx Silver Category: Transformative Marketing Prida Communications Awards Category: Microsite Campaign Effect - Product / Best Innovative Vestel was awarded in the Prida yemek.com Ya Evde Yapsan - Bronze Approach Communication Awards with its Hammers Awards Attachable Household Appliances - Attachable Household Appliances. Felis Vestel won five awards in the Category: Launch/Relaunch Hammers Awards. Category: Film - Consumer Durables Vestel Attachable Household Digital Transformation Team of the Vestel MAYA Refrigerator - Success Appliances Year Category: Integrated Campaigns - Social Media Awards Best Search Marketing Team Corporate Image Vestel won four awards in the Social Best Sponsorship and Brand March 7.5 - Success Media Awards. Collaboration Team Mixx Awards Category: Online-Offline Integration Best Marketing Team in the Consumer Vestel won two Gold Awards in the Attachable Household Appliances - Electronics Industry Mixx Awards. Gold Best Marketing Team in the Consumer Category: Brand Positioning/ Category: Social Media Campaign Durables Industry Awareness Raising Campaigns Attachable Household Appliances - Arvak A Awards (Outdoor Advertising Attachable Household Appliances – Gold Competition) Golden Mixx Vestel won three awards in the Arvak A Awards with its Attachable Household Appliances.
Vestel Elektronik 2020 Annual Report 33 2020 in Review
Other Highlights of 2020
Best Consumer Durables Advertising EURASIA’20 Health Informatics and Participating in the symposium, Vestel Award Technologies Conference and Fair”. Proje Ortağım introduced its VRF air conditioning and digital display Attachable Household Appliances Participating in the digital fair, Vestel solutions to representatives in the Proje Ortağım (My Project Partner) Jury Special Prize education sector. Vestel Interactive introduced the digital hospital, digital LED Smart Board products, which are display, VRF air conditioning with Attachable Household Appliances the leading products in the education UV-C kits and thermometer thermal sector with their technological Ambient Category Award imaging camera solutions to industry solutions which provide interactive representatives. The Vestel & Hayriya Attachable Household Appliances and fast learning environments to branded iSina CML Digital ECG Golden Spider Awards all educational institutions including System, iSina HLS New Generation primary schools, universities and Holter Monitor and the Vestel branded Vestel won one award in the Golden language courses, and digital screens vaccine cabinet with cold chain Spider Awards. which meet a wide variety of needs monitoring were the most outstanding with different models and sizes, Category: Digital Marketing - products of the fair. Integrated Campaign were among the products to attract In addition, the cassette type VRF attention in the fair. Vestel VRF air st Attachable Household Appliances - 1 air conditioning unit, which provides conditioning systems, which stand Prize hygiene using UV-C ray technology out in the sector with their energy FAIR PARTICIPATIONS and a thermal imaging device which efficiency, long piping distances and can take precise temperature capacities, and are the preferred HIMSS EURASIA’20 measurements with artificial option in projects with these special With the support of the Ministry of intelligence and face recognition features and service quality, were also Health and with the cooperation algorithms were also exhibited in the exhibited at the fair. fair. of universities, private hospitals, ACE of M.I.C.E 2020 the Social Security Institute and 19th TRADITIONAL EDUCATION Participating in the ACE of M.I.C.E. similar organizations, and with the SYMPOSIUM participation of health authorities from Exhibition hosted by the Turkish countries in the surrounding region, a The 19th Traditional Education Airlines Congress, Meeting and Event number of practices and developments Symposium, organized by the Industry Fair with its stand this year, in the area of continuously changing Association of Private Schools of Vestel Proje Ortağım presented its and developing health informatics Turkey under the theme of “New solutions which meet the basic needs were shared with the participants Currents in Education”, was held in of the events sector, presenting its within the scope of the “HIMSS Antalya on January 29-31, 2020 with LED lighting, digital display and air the participation of international conditioning products. scientists and experts from Turkey and the world.
34 Vestel Elektronik 2020 Annual Report The basis of Vestel Elektronik’s corporate and R&D strategy is based on expanding its experience in different sub‑sectors and areas of the electronics sector.
Vestel Elektronik 2020 Annual Report 35 The Management Chairman’s Message
During this difficult pandemic process, Vestel rapidly implemented practices which center on employee and community health, and contributed to ensuring sustainability in production and employment.
36 Vestel Elektronik 2020 Annual Report The pandemic disrupted the recovery phase one trade agreement signed The Turkish economy displays strong in the global economy. between the United States and China resilience in the face of the pandemic. at the beginning of the year, with Beyond the global health crisis, the After its balancing process, the the trade war continuing. At the pandemic, which became a part of Turkish economy, which had begun to end of the year, the signing of an our lives in 2020, has dominated build back growth momentum, grew agreement between the EU and the the agenda with its macroeconomic by 4.5% in the first quarter of 2020. UK to regulate post-Brexit trade was a impact. As the restrictive measures However, this was followed by a sharp positive development which eliminated taken to curb the spread of the virus contraction of 9.9% in the second uncertainty on this issue. While the throughout the world have taken quarter due to the pressure from impact of geopolitical developments their toll on global economic activity, lockdown measures implemented on economic activity on a global scale production and trade volumes have to tackle the pandemic. In the third has also come under the spotlight, the plunged, with a contraction in both quarter, domestic demand surged developments in the US presidential supply and demand. with the help of financial support election and their aftermath in the last and measures implemented and In order to mitigate the effects of quarter of the year have resonated on the economy recorded a V-shaped the pandemic on the economy, many the world political scene. recovery, with growth in the third countries have introduced large- In 2020, a year when the world’s quarter reaching 6.7% year-on-year. scale financial measures and support leading economies, indeed almost Growth in the economy continued in packages, while central banks have all economies, recorded a sharp the fourth quarter with a 5.9% growth, turned to expansionary monetary contraction, especially in the second while the economy grew by 1.8% for policies. quarter, European countries suffered the whole year. The US Federal Reserve (Fed) the deepest economic damage, while The current account balance, which gradually lowered its policy rate China was the only major economy yielded a surplus in 2019, posted a from a 1.50-1.75% band at the end to end the year without a contraction, deficit in 2020 due to the impact of of 2019 to 0-0.25%, and aimed to having brought the pandemic under the foreign trade deficit, which had meet the short-term liquidity needs control in the summer. widened on the back of a decline in by undertaking Treasury and private In its January 2021 World Economic exports due to global contraction and sector bond purchases. The European Outlook report, the IMF predicted that increased gold imports, as well as Central Bank (ECB) maintained its the global economy would contract by the losses experienced in the tourism deposit interest rate steady at -0.5%, 3.5% in 2020, after having predicted a sector owing to the pandemic. The while ramping up its asset purchases 4.4% contraction in its previous report, need for external financing increased and long-term re-financing operations due to a stronger-than-expected due to deterioration in the current to support liquidity. Likewise, the Bank recovery in the second half of the year. account balance, with weakness in of England (BoE) and Bank of Japan It also revised its growth forecast for foreign capital flows piling pressure (BoJ) also stepped up their asset the global economy for 2021 from 5.2% on the foreign exchange reserves and purchases. to 5.5%. exchange rates. Although expansionary policies have The prevalence and success of the Inflation, which had remained at created an abundance of liquidity vaccine rollout will play a key role moderate levels due to weak demand in the markets, there have been in setting the course of the global conditions in the first half of the year, significant increases in capital economy in 2021. However, the edged higher with increasing volatility outflows from developing countries uncertainty surrounding the efforts in financial markets and exchange and a rise in country risk premiums in to bring the pandemic under control rates and revival in domestic demand parallel with the decline in global risk due to new variants of the virus has along with normalization in the second appetite. had a downward impact on short- and half of the year, and annual CPI While protectionist trade policies medium-term forecasts. inflation ended the year at 14.6%. which remained in place throughout In June 2020, the CBRT ceased the 2020 exacerbated the contraction interest rate cuts which had continued in global trade, customs duties for about a year and implemented remained at high levels despite the a tight monetary policy along with
Vestel Elektronik 2020 Annual Report 37 The Management
Chairman’s Message
simplification steps from September developed. In addition, production of consumers through actions such and raised the policy interest rate from the ventilator manufactured by Vestel as video service support, priority 8.25% to 17% by the end of the year. is planned to start in 2021. service for consumers over the The CBRT is expected to maintain its age of 65 and privileged services The shock and uncertainty brought tight stance for the most of 2021. for healthcare workers, as well as about by the sudden change in 24-hour delivery service in hygienic The Turkish Lira began to gain ground lifestyles, as well as the widespread conditions throughout Turkey in online against foreign currencies when the measures and restrictions in sales, in what is a “first” in the sector. Central Bank abandoned the multi- international and domestic markets, We started to open Vestel Ekspres interest rate system and increased the especially in the second quarter stores, where we have integrated the policy interest rate. In parallel with of the year, had a negative impact digital and retail experience, further this, Turkey’s 5-year CDS premium fell on the sales of TVs and household advancing our omni-channel strategy. to below 350 basis points in December appliances. Demand for televisions, from the 650 basis points reached in white goods and small domestic We have once again demonstrated April. appliances rebounded in the second our vision and superiority in R&D and half of the year, and a rapid recovery innovation, which is our strongest Vestel successfully passed an was observed in the market with the suit, with our new products which important test. unfolding of deferred demand and met the growing demand for hygiene During this difficult pandemic process, more time spent at home as people and health-oriented products Vestel rapidly implemented practices got accustomed to the conditions during the pandemic. Refrigerators, which center on employee and of the “new normal”. While Vestel washing machines, dishwashers and community health, and contributed to compensated the losses in its white air conditioners using the Daylight ensuring sustainability in production goods exports in the second half of the Technology, which we have developed, and employment. year with the strong surge in demand respond in the best way to consumers’ in foreign markets, television exports demand for a safer, sterile and Vestel set an example with the fell slightly below the previous year’s hygienic life. In the coming period, we protective and preventive measures level due to tightening panel supply, will introduce more advanced products which it put in place in its factories despite the increase in demand. using the UV-C technology to meet the and other areas, as well as in its growing demand for hygienic products. production processes in order to In the domestic market, the recovery protect its employees and their was more pronounced due to lighter At Vestel, where we have made all of families and the Company’s efforts lockdown restrictions, the low interest our products smart products thanks were recognized with the award of rate environment in the normalization to our investments in R&D and a TSE Safe Production Certificate. process which started in June, the innovation, we continuously work on Combining its capabilities of being a record increase in housing sales different concepts to move them from powerful technology company with triggering deferred demand, and the homes to cities, and from the cities to an agile and effective management low base effect. While Vestel increased different areas of life. approach, Vestel continued its its market share in white goods We have stepped up our work on activities without interruption, with by growing above the sector in the automotive electronics, electric vehicle the exception of a one week halt at the domestic market, it also maintained chargers and battery production, beginning of the pandemic. its leadership in the TV market with which we view as areas open to continued growth and market share Taking on a key responsibility in development. As one of the partners gains. supporting the nationwide fight against of TOGG, which is undertaking the virus, Vestel donated products to During this difficult period, as we Turkey’s Automobile Project, we offer health institutions in many parts of the responded to the expectations of our experience in this regard to the country in order to support the heroes consumers in the domestic market, service of our country. We also started of the hour, our healthcare workers, we sought to remind them that we are the production of the first domestic while also providing support with the always with them. Thanks to Vestel’s electric bicycle battery, whose temperature measurement, sampling integrated retailing system, we have hardware, software, mechanical and intubation cabinets, which it has strengthened our connection with designs as well as production and
38 Vestel Elektronik 2020 Annual Report As one of the first companies to invest in Turkey’s digital transformation, Vestel maintains its leadership in this regard. In this vein, about 90% of the Industry 4.0 transformation at Vestel City has been completed.
testing infrastructure were completely a development which increased our It is a source of pride for our country developed by Vestel engineers, and claim in Europe, and the UK market that we were one of the 15 companies received our first orders. Meanwhile, in particular. In the TV business, the worldwide to be given this title in the we won the tender held by the Spanish success of the Toshiba brand in the organization’s 56-year history. electric utility company, Iberdrola, European television market has been a Sustainability is at the heart of our for the international electric vehicle cause of great satisfaction. business model. charger project and signed an As one of the first companies agreement with Iberdrola to be one of We are heading towards a process to invest in Turkey’s digital the three suppliers of the project for where stakeholder-based and transformation, Vestel maintains the next 5 years. social-benefit-oriented approaches its leadership in this regard. In are coming to the forefront around As a manufacturing and technology this vein, about 90% of the Industry the world, where all work is shaped giant which exports to 157 countries, 4.0 transformation at Vestel City around a focus on sustainability. As a we maintain our global cooperation has been completed, and all the reflection of these efforts, investing while expanding the number of processes from the entry of raw in employees, the environment and our export destinations with the materials to the delivery of products society is becoming an integral part of determination to further consolidate can be monitored digitally from end business for the leading companies. our global presence. The household to end with intelligent recognition appliances we produce under the systems. With the completion of In line with the vision of Smart brand licensing agreement with this transformation, Vestel City will Life 2030, we strive to develop an Sharp play an important role in become a fully automated smart innovative perspective which will increasing our market share in production complex. The pandemic be a part of our corporate culture Europe while standing out from process has clearly demonstrated as we move towards achieving our competing products with the ratings the importance of this transformation goals for a sustainable future in this they receive from the independent in the name of business continuity. dynamic environment, where a great testing institutes in Europe. In the transformation experienced globally At the beginning of 2021, we were last quarter of 2020, Vestel Ticaret’s is shaping the future and affecting our delighted to receive the TPM World acquisition of the White Knight business. Class Award, the highest accolade in and Hostess trademarks held by the TPM activities, having previously We minimize the environmental Crosslee Plc, one of the key players won all the stage awards with our impact of our production processes in the UK white goods market, was operational excellence in production. with innovative solutions supported
Vestel Elektronik 2020 Annual Report 39 The Management
Chairman’s Message
by technology. We develop smart pandemic, we have continued to take products which make future alive. We measures to ensure our furry friends also introduce innovative products are not left hungry or thirsty. which have features such as providing Continuing to look to the future with additional hygiene and sterilization hope… and creating fermentation conditions, in addition to our products which During the pandemic, while remaining are highly advanced with their mindful of the importance of managing energy efficiency and water saving non-financial risks as well as financial characteristics. risks, we also recognized the power of digitalization and sustainability in In what was an important step in our managing risks. We have once again Smart Life 2030 journey, in 2020 we seen that technology and innovation, realized Turkey’s first TL denominated one of the most important leverages in green bond issuance to be rated by Smart Life 2030, represent a force that an international rating agency. We can create a multiplier effect. will use the proceeds from the green bonds in Vestel’s sustainability and Vestel has been strengthened by green technology investments. this process, which confirms the astuteness of the Company’s future In developing our projects, roadmap formed on the foundations we internalize a 360-degree of R&D, technology, innovation and understanding of sustainability where value-added production. we think about our entire world. Whatever the circumstances, as long Within the framework of gender as we have dreams, we will exist to equality, we carry out our Women produce more value for our world, our Technicians Project, while with our country and our stakeholders. social awareness, we strive to provide greater space in business life to those I express my sincere gratitude to all with disabilities. We ensure that our our stakeholders who share our hopes products can be easily used by people for a better future. with disabilities with the designs and Respectfully, arrangements we develop within the scope of our Accessibility Project. We continue to transform the benevolence which runs in the DNA of Zorlu Group into a structure where our employees can draw up their own volunteering projects and create Ahmet Nazif ZORLU collaborations and partnerships with our stakeholders with the Sparks Chairman of the Board of Directors movement, our corporate volunteering program which we launched within the scope of Smart Life 2030. We always emphasize that we are on the side of our furry friends. Our Walker Project, which attracted a clutch of high-profile international awards last year, received the “Most Creative Volunteering Project” Award in 2020 in the “Heartfelt Awards” event organized by the Private Sector Volunteers Association. During the
40 Vestel Elektronik 2020 Annual Report Board of Directors
The Board of Directors manages and execution of the General Assembly and to determine their performance represents the Company. In addition to decisions, criteria, this main task, the Board of Directors • Taking the measures stipulated • To determine the communication is also responsible to the Company’s in the Article 376 of the Turkish and relationship approach taken stakeholders (customers, employees, Commercial Code in case of loss of by the company in communicating suppliers and other stakeholders). capital or insolvency. with the stakeholders and external The following are the non-transferable authorities, In this context, the responsibilities of and inalienable duties and powers of the Board of Directors are as follows: • To determine and implement the Board of Directors: business ethics rules for the • To act cautiously in line with duty of • Managing the company at a high company and its employees, care and supervision, level and including the issue of • To ensure that the company’s instructions, • To determine the company’s short- internal and external activities and and long-term goals, • Determining the management actions comply with the relevant organization of the company, • To examine the strategies which legislation. will be implemented to achieve the • Establishing the necessary order The Board of Directors is authorized to company’s goals, to contribute to for financial planning to the extent take decisions on all kinds of work and their development and to ensure required by accounting, financial transactions as required to perform their implementation, audit and management of the the company’s business activities, company, • To examine the strategic and except those to be taken by the financial performance of the General Assembly in accordance with • Appointment and dismissal of company and to take measures for the law and the Articles of Association. managers and persons serving the improvement, same purpose and who hold the authority to sign, • To select the general manager, evaluate him/her in accordance • Higher supervision of whether with certain performance the persons responsible for criteria and to determine his/her management act in accordance with remuneration, the laws, articles of association, internal guidelines and written • To ensure the administrative and instructions of the Board of financial audit of the company, Directors, • To ensure that the Board of • Keeping the books of shares, the Directors has the structure and Board of Directors’ resolutions and function required to ensure the minutes of the general assembly effective and efficient operation of meetings, preparation of the the sub-committees of the Board annual report and the corporate of Directors and senior managers, governance report and submission to the General Assembly, organization of the General Shareholders’ Meetings and
Vestel Elektronik 2020 Annual Report 41 The Management
Board of Directors
Ahmet Nazif Zorlu Bekir Ağırdır Olgun Zorlu Chairman Vice Chairman Board Member
(1944 - Denizli) Ahmet Nazif Zorlu began his (1956 - Denizli) Bekir Ağırdır graduated from the (1965 - Trabzon) After graduating from professional career in a family-owned textiles Department of Business Administration, Faculty university in the United Kingdom with degrees business in Denizli, Babadağ. In 1970, Mr. of Economics and Administrative Sciences, in Textiles and Business Administration, Zorlu moved the company’s headquarters at Middle East Technical University in 1979, Mr. Olgun Zorlu began his professional to İstanbul and laid the foundations of Zorlu before working as a Sales Manager and then career in 1986. He has started to serve in Holding together with his brother, Zeki Zorlu. Deputy General Manager at Bilsan Bilgisayar managerial positions at various Zorlu Group Ahmet Zorlu set up his first company, Korteks, Malzemeleri AŞ between 1980 and 1984. He companies in 1988 and managed their foreign in 1976 and gathered all the companies under served as Sales Coordinator at Meteksam Ltd. market research and business development the roof of Zorlu Holding in 1990. Acquiring between 1984 and 1986 and as General Manager operations. Mr. Zorlu started serving as a Vestel in 1994, Ahmet Zorlu opened the door at Pirintaş Bilgisayar Malzemeleri ve Basım Board Member at Zorlu Holding in 1998. In to new lines of business for Zorlu Holding. Sanayi AŞ between 1986 and 1996. He then served addition to his board membership at Vestel Ahmet Zorlu’s entrepreneurial spirit, which as the Deputy General Manager at Atılım Kağıt Elektronik Sanayi ve Ticaret AŞ, Mr. Zorlu also began in the textile industry, went on to ve Defter Sanayi AŞ between 1996 and 1999 and serves as a Board Member at Zorlu Holding manifest itself in more companies operating in as General Manager and Board Member at PMB and other Zorlu Group companies. a wide range of industries, such as consumer Akıllı Kart ve Bilgi Teknolojileri AŞ between 1999 electronics, household appliances, energy, and 2003. Between 2003 and 2005, he worked property development, metallurgy and at Tarih Vakfı (History Foundation of Turkey) defence. Ahmet Zorlu serves as the Chairman as Coordinator and then as General Manager. or Deputy Chairman of the Board in numerous In addition to his duty as the Vice Chairman at Zorlu Group companies operating in different Vestel Elektronik Sanayi ve Ticaret AŞ, Bekir industries, including Vestel Elektronik and Ağırdır also serves as a Board Member at Vestel Vestel Beyaz Eşya. With a keen interest in Beyaz Eşya Sanayi ve Ticaret AŞ and Zorlu Enerji non-governmental organizations, Ahmet Zorlu Elektrik Üretim AŞ, which are other Zorlu Group sits on the Boards of DEIK (Foreign Economic companies. Relations Board), TUSIAD (Turkish Industry and Business Association), DENSIR (Education and Culture Foundation of People of Denizli), BASIAD (Babadağ Industry and Business Association) and TETSIAD (Turkish Home Textile Industrialists’ Association).
42 Vestel Elektronik 2020 Annual Report Selen Zorlu Melik Mehmet Emre Zorlu Elmas Melih Araz Ayşegül İldeniz Board Member Board Member Board Member Board Member
(1975 - Trabzon) Selen Zorlu Melik (1984 - İstanbul) Mehmet Emre Zorlu (1948 - İstanbul) Melih Araz (1969 - İzmir) Ayşegül İldeniz has a bachelor’s graduated from the Department graduated from the Department completed his high school education degree in Business Administration from of Business Administration at of Electrical and Electronics at Robert College and graduated Boğaziçi University and a master’s degree Uludağ University. She began her Engineering at Koç University in from the Faculty of Political Science in Electronic Communication Arts from professional career at Denizbank 2006. He graduated with a Master’s at Ankara University in 1972. San Francisco State University. Ms. İldeniz in 1998. Following her internship at degree in Innovation and Technology He completed his MBA (Master joined Intel Corporation, the leading global Denizbank’s Bursa branch, she joined Management from the University in Business Administration) at microprocessor company, in 1998, where the bank’s Management Trainee of Essex in the UK in 2008 and Kelley School of Business, Indiana she served as the General Manager for Intel Program in 1999. After working in began working at Vestel Group of University in 1975 under the USAID/ Turkey, as Regional Director for Middle a number of positions at Denizbank Companies in 2009. In addition to TEV scholarship. He also attended East, Turkey and Africa region, covering 67 head office, Mrs. Melik attended a serving as a Board Member at Vestel the “Executive Management countries and as Board Member for Europe Marketing Certificate Program at the Elektronik, Mehmet Emre Zorlu also Program” at Harvard Business before being appointed to the position of University of California, Berkeley, USA sits on the Boards of Zorlu Holding School in 1988. Starting his career Global Vice President of the New Devices in 2001. She subsequently started to and other Zorlu Group companies. in finance and banking at Citibank Group at Intel Headquarters in Silicon Valley work at the Korteks Yarn Plant in 2002 Emre Zorlu is also a Board Member N.A.’s Turkey office in 1977, Mr. in 2013. In 2016, Ayşegül İldeniz became the and became a Board Member of the of Vestel Ventures ARGE AŞ, which Araz held various senior positions COO (Chief Operating Officer) at Silver Spring same company in 2004. Selen Zorlu aims to provide support and funding at the bank’s İstanbul, Bahrain, Networks Company, which is listed on the Melik currently serves as a Board for start-ups in various areas such Athens and New York offices and New York Stock Exchange and controls half of Member in numerous companies as technology, innovation and IP assumed key responsibilities in the the US smart energy market with 26 million within Zorlu Group in addition to being investments since 2015. Mr. Zorlu is establishment and expansion phases users. Ms. İldeniz is a pioneer in the fields a Board Member at Vestel Elektronik. a member of the Board of Trustees of of the Citibank’s Turkey organization. of innovation, technology and future vision, the Enterprise Foundation, a member He later served as the CEO/General both in Silicon Valley and İstanbul. She was of the Board of Directors of Endeavor Manager at Interbank AŞ, a Çukurova selected as the “IT Female of the Year” in Turkey and a member of the Social Holding affiliate, for eight years where 2004 and the “Female Executive of the Year” Innovation Exchange (SIX) Global he played a key role in elevating in 2006 by the Dünya Newspaper and as one Council. Interbank to a respected and leading of the “Top 100 Most Creative Persons in position in corporate and investment Business” by the San Francisco-based Fast banking in Turkey. After leaving Company Magazine and the “Third Most Interbank, Mr. Araz worked as a Influential Turkish-American Woman” by the consultant in various major projects Turks of America (TOA) Magazine in 2015. and served as a Board Member in a Ayşegül İldeniz is currently the President of number of companies including Zorlu TUSIAD Silicon Valley Network and a Board Enerji Elektrik Üretim AŞ (2008-2013) Member of the American-Turkish Society and and Enka İnşaat ve Sanayi AŞ (2012- Turkish Philanthropy Funds. In addition to 2018). He currently serves in senior her Board membership at Vestel Elektronik, positions at Ata Group. In addition Ayşegül İldeniz also serves on the Boards of to being a Board Member at Vestel Vestel Beyaz Eşya Sanayi ve Ticaret AŞ and Elektronik, Melih Araz aalso serves Zorlu Enerji Elektrik Üretim AŞ. She is also a as a Board Member at Vestel Beyaz Board Member at Eczacıbaşı Holding AŞ. Eşya Sanayi ve Ticaret AŞ and Zorlu Enerji Elektrik Üretim AŞ, which are other Zorlu Group companies. Mr. Araz continues to serve as a Member of the Board of Directors at Ata Yatırım Menkul Kıymetler AŞ, Ata Gayrimenkul Yatırım Ortaklığı AŞ, TFI Gıda Yatırımları AŞ, Burger King China JV Ltd., İzmir Enternasyonel Otelcilik AŞ and Entegre Harç Sanayi ve Ticaret AŞ.
Vestel Elektronik 2020 Annual Report 43 The Management Interview with the CEO
Enis Turan ERDOĞAN CEO
Vestel closed the year with a record level of profitability, which it achieved by proactively managing all processes in a year during which many unforeseen challenges were encountered in all operational processes, from supply to production and from production to sales due to the pandemic.
44 Vestel Elektronik 2020 Annual Report Could you evaluate the developments Due to the pandemic, a similar pattern Supply issues in television and white experienced in your sectors under the was observed in consumer demand goods production, increases in the negative conditions of the pandemic and sales in export markets. The prices of key inputs such as TV that struck in 2020? contraction in the EU economies, panels, steel, plastics and metals which constitute the main export due to supply constraints, and the In 2020, which was overshadowed by market for the sector, and the fact likely impact of this cost inflation on the pandemic, the global economy, that the effect of pandemic was felt profitability will be the key agenda which was dealt a new blow in the more strongly in some countries piled items in the sector, apart from the recovery process, suffered significant serious pressure on exports in the pandemic, for 2021. production losses as well as a notable second quarter; however, with the contraction in trade volumes. All On the other hand, the signing of a gradual removal of restrictions and sectors throughout the world and in Free Trade Agreement with the UK the release of pent-up demand from our country have faced conditions of a after Brexit which will maintain the May, exports had largely made up kind not experienced before, and been existing commercial conditions within their lost ground in the second half of affected by this process in different the scope of the Customs Union has the year. According to data covering ways. removed an important source of five major countries in Europe, our uncertainty for the sector. In the domestic market, white goods largest market abroad, after a 7% sales, which had got off to a brisk contraction in the first half of 2020, How would you evaluate the year start in 2020 due to the low base effect demand for white goods increased in terms of Vestel’s financial and from the previous year, suddenly by 11% in the second half of the year operational results? fell in April and May due to the strict with the reopening of the economies We think that by combining our measures and restrictions put in place and closed the year with a 3% growth. competencies of being a strong to contain the COVID-19 outbreak While export volumes in the Turkish technology company with our following the announcement of first white goods sector, which sells 74% comprehensive risk management, cases in our country on March 11 while of its production abroad, stayed agile and flexible company structure the TV sales had slowed down. The at similar levels with last year, TV and effective decision-making normalization process starting in June exports fell below their 2019 levels processes, we have overcome an and the release of pent-up demand due to the tigthness in global panel important test of endurance and set the stage for a strong recovery in supply in the second half of the year, adaptability with successful results. both white goods and television sales despite the increase in demand. in the third quarter. While sales in In passing this test, our extensive and While it is difficult to make forecasts the white goods sector maintained diversified supplier network played for 2021, the rate of progress in the their growth trend in the last quarter an important role in overcoming vaccination rollout and the threat of the year, television sales followed the supply chain issues, originating of a new wave of infections will be a flat course due to the high base especially in China. We sustained our the determining factors for our effect from the previous year. While a production without interruption to industry. The year 2021 will clearly combination of a surge in new housing meet the growing demand, with the present opportunities and competitive sales during the year, increasing time exception of a one-week halt at the challenges both in terms of changes spent at home and in the kitchen, and onset of the pandemic. in consumer habits as well as the growing need for hygiene supported upcoming global sporting events, Exports got off to a strong start in white goods sales, the prominence especially the European Cup and the 2020 with TV and white goods exports of television as the main source of Olympics. As people continue to stay recording strong growth in the first 2 entertainment at a time when people at home due to the pandemic, it is months of the year. However, exports were working from home combined expected that the high demand for began to decline from March due to with online schooling and restrictions TVs and household appliances will the pandemic. As the market bounced positively affected demand for continue in the first half of the year, back very rapidly with the unfolding televisions. Domestic wholesale white with some return to normal in the of pent-up demand in the second half goods sales climbed by 16% in 2020 second half. of the year, driven by an increasing while the TV market, on the other need for hygiene and growing focus hand, grew by 13%, with TV sales on home as people spent more time at reaching 2.6 million units, returning to home, which stimulated the demand their 2018 level.
Vestel Elektronik 2020 Annual Report 45 The Management
Interview with the CEO
As an exporter, we benefited from the favorable exchange rate movements in our international sales while our profitability in the domestic market increased in parallel with our rising market share, thus propelling EBITDA to TL 3.6 billion, breaking an all-time record. for our products, we compensated Vestel Ekspres, which we developed as operational processes, from supply our losses in white goods exports in a result of the successful execution of to production and from production to the second quarter and managed to our omni-channel strategy. We aim to sales due to the pandemic. slightly increase our export volumes develop new generation retail-specific In 2020, we also chalked up new compared to 2019. On the other hand, digital applications at Vestel Ekspres breakthroughs in further increasing our TV exports remained slightly lower stores, which have a small retail area our success and market share in the than last year due to tightening in and limited SKUs and where products European market with branded sales, global TV panel supply. are displayed digitally and orders especially with Toshiba in the TV are placed on digital screens and the While market trends followed a similar segment and Sharp in the white goods products are delivered on the same course in the domestic market in segment. We took over the name, day. parallel with consumer behaviour, production and sales rights of the relatively limited restrictions and Another advantage reflected in our White Knight and Hostess trademarks the low base effect led to a strong sales was that the introduction of our of Crosslee PLC, one of the major growth in sales and we increased our hygiene and health-oriented products players in the UK white goods market, market share in both TV and white to the market in this period turned for the European market. With goods segments and maintained our out to be very timely, coinciding with this acquisition, we aim to further market leadership in television sales. changing consumer priorities and consolidate our presence, especially in The remarkable momentum which we demands. the UK and the EU market. achieved in online sales with “24-hour Our consolidated turnover increased What actions did you take during the delivery”, which is the most important by 25% YoY in 2020 to reach TL 21.5 pandemic for your stakeholders, application we have implemented billion, while exports accounted especially your employees and during the pandemic, was also for 73% of our total revenues. As consumers? instrumental in this growth. With this an exporter, we benefited from the application, which is revolutionary As COVID-19 began to spread around favorable exchange rate movements in the retail sector, we promised 24- the world, we prepared our emergency in our international sales while our hour delivery to all parts of Turkey for action plan and began informing profitability in the domestic market products purchased through vestel. employees about the issue. As part increased in parallel with our rising com.tr, demonstrating to all that of the efforts to tackle the COVID-19 market share, thus propelling EBITDA even large-volume products such as pandemic, we quickly and effectively to TL 3.6 billion, breaking an all- household appliances can be delivered put protective measures and practices time record. Reflecting the growth in within 24 hours. Our greatest strength into operation as soon as the first EBITDA, net profit increased by 447% in this application was Vestel’s cases appeared in Turkey, and YoY to reach TL 1.8 billion. Vestel extensive and nationwide dealer and ensured their continuity both at Vestel closed the year with a record level service network in all four corners of City and in all other work fields. of profitability, which it achieved by Turkey. proactively managing all processes in We moved to a remote working On the other hand, we also supported a year during which many unforeseen practice wherever possible for our our sales by combining online challenges were encountered in all white-collar employees. In addition, purchasing experience with physical we implemented a number of retail with our new store concept,
46 Vestel Elektronik 2020 Annual Report As a result of the COVID-19 precautions we have taken and the practices and regulations we have implemented, Vestel Elektronik and Vestel Beyaz Eşya were among the first companies in the sector to be awarded the “TSE COVID-19 Safe Production Certificate”. pandemic-oriented measures such as on which continues and which offers and Antalya. In addition, we have restrictions on travel with all contacts wider opportunities, for service in the donated an automatic temperature and meetings to be carried out first quarter of 2021. scanner to MOSTEM and Celal Bayar through digital channels. University, biological sampling and As a result of the COVID-19 intubation cabinets to Manisa City We took a number of comprehensive precautions we have taken and the Hospital and other regional hospitals, health measures for our blue-collar practices and regulations we have and transparent screens to COVID employees in our facilities and implemented, Vestel Elektronik and polyclinics. production areas. With the advantage Vestel Beyaz Eşya were among the that comes from being a technology first companies in the sector to be I would also like to briefly mention company, we first put into use a digital awarded the “TSE COVID-19 Safe our support project for the Protect My temperature measurement and data Production Certificate”. Child from Cancer (KAÇOD), which is recording system, digital track and something I care about very deeply. Meanwhile, we have taken measures trace applications, digital entry-exit As part of the project, we assumed the which will protect the health of systems and automatic disinfectant treatment of children who had been the community, as well as allow systems. We also set ourselves apart receiving treatment with the support consumers access our products or with our applications such as digital of KAÇOD, but who could not continue services as quickly and easily as information screens, monitoring their treatment due to the economic possible in this process which is with closed circuit television system situation of their families in this dominated by social isolation. During and the Vestel Health Monitoring environment. In addition, we donated the pandemic, our daily lives and the smartphone application. With the 5% of the purchase price paid by our way we do business have changed countless high level measures we customers in our Online Shopping drastically. As always, we go beyond have taken such as our catering (Çarşı Pazar) campaign to KAÇOD. merely keeping up with this change, company, which prepares meals in Being a source of hope for the children and instead lead it. In this context, we the form of lunch boxes, our 24-hour has become our hope, too. have introduced many applications available health center, our staff by focusing on making people’s lives By taking our approach to social shuttles operating at 50% capacity easier. contribution to a higher level during even though there was no such legal the pandemic, we began to use our requirement, our distance training During this period, we continued power to create social benefit with and information programs, rest to increase the support we extend an awareness of our impact area. areas and dining halls organized to health institutions and different Accordingly, while achieving gains according to social distancing rules, organizations. We have donated in the name of sustainability, we disinfection works which continue household appliances such as air have also stepped up our efforts to without interruption on a 24-hour conditioners, washing machines, become part of a stakeholder-oriented basis in all production and common dishwashers, tumble dryers, new generation economy which is areas, our Company won wide acclaim televisions and small domestic beginning to emerge as a result of throughout the pandemic by setting appliances and vaccine cabinets to the transformation which the world is an example. In the meantime, I should health institutions at more than 200 going through. also note that we aim to open our points of Turkey, mainly in İstanbul, new Health Center, the investment Ankara, İzmir, Manisa, Bursa
Vestel Elektronik 2020 Annual Report 47 The Management
Interview with the CEO
By investing in areas which will shape the smart world of the future, we continue to take important steps with the determination of transforming into a global group which produces value added products and services.
Which products have seen an increase Our other important and innovative What would you like to say about your in demand during this period? Could product, the MAYA refrigerator, new areas of development? you provide some information about which caters to consumers who care By investing in areas which will shape your featured products? about healthy eating, provides all the smart world of the future, we the necessary conditions for food Having the technology that can meet continue to take important steps with items which require fermenting such the needs of our customers in this the determination of transforming as dough, yogurt, kefir, vinegar and period, when our hygiene-oriented into a global group which produces pickles, and allows them to be stored products came to the forefront, proved value added products and services. conveniently. that we had made the right decisions, We strive to be a part of the innovation especially in R&D and design. In addition to these products, we economy driven by megatrends such recorded increased sales in other as the “Internet of Things”, “Artificial Thanks to our vision and our mission categories during the pandemic, Intelligence”, “Augmented Reality” of being the pioneer of technological especially in the larger refrigerator and “Blockchain” technologies. We developments, we can support and freezer categories, as consumers aim to play our part in the smart and individuals’ desire for a healthy life stocked up on food and cooked more connected product-service ecosystem with our products today. food as they spent more time at home. which is focused on consumer We introduced Daylight Technology, experience that is emerging with a In the post-pandemic era, which we which we developed with the combination of big data, IT and digital refer to as the “new normal”, where inspiration of nature, to the market at communication. consumer expectations of healthy the beginning of the pandemic. With living will become permanent and We continue our innovative work and this technology, we can offer products hygienic products will stand out, strategic cooperation with the belief which have revolutionized the market we will continue to offer different that there will be a “Vestel” signature including our refrigerator which cleans products such as washing machines leaving its mark on the “smart” world the air inside the unit, our dishwasher using UV-C technology, extra hygienic of the future with its smart products, which kills harmful bacteria with the dryers using UV-C technology and services and concepts. While placing natural light it emits, our washing Active Ion technology, dishwashers our televisions at the heart of smart machine which provides additional using UVON, ION and UV-C technology, homes, with a wide array of smart hygiene for laundry using special advanced UV-enabled air conditioning products such as televisions and lighting and our air conditioning units units and water heaters with household appliances which can which offer safer and more sterile antibacterial and virus-preventing be controlled by voice commands, ambient air. functions. washing machines that can order their Our washing machine can easily own detergents and ovens that can be On the other hand, our large screen sterilize frequently touched objects, controlled by voice through a phone 4K and Smart TVs have also attracted such as laundry, shoes, banknotes, application, we continue to make our considerable interest in the market credit cards and wallets in just 29 consumers’ lives easier every day. and proven to be highly popular minutes, using Daylight Technology On the other hand, we are focused on with consumers. During this period, with its special lighting in the we have also observed an increase waterless washing program, providing in demand for our small domestic a solution to an important issue in this appliances as well. period.
48 Vestel Elektronik 2020 Annual Report At Vestel, we believe start-ups develop real transformative technologies. With our leadership in this field, we support the enterprise ecosystem with our wholly-owned subsidiary Vestel Ventures.
developing our collaborations with The fact that the projects which we working in close cooperation with our telecom companies in value added produce are funded by programs venture company, which has produced services. which are accepted around the world respiratory support devices during the is another source of pride for us. Last pandemic. In 2021, we are planning We are taking our work in automotive year, we received our first Horizon mass production of the ventilators electronics for electric and 2020 grant to fund our smart and designed by our venture company autonomous vehicles, which we flexible production project. This year, at Vestel plants. Another venture believe will be one of the brightest we received research grants for two investment was to develop the first areas of the future, to a higher level. more projects which include battery domestic mobile Holter monitor and We continue to expand our work in this technologies and electric vehicle ECG devices, with pilot production field with battery systems and electric charging points. In addition, we have of the devices carried out at Vestel vehicle charging units. We started once again demonstrated our R&D City and the first sales realized. In production of the first domestic prowess by launching an ECSEL addition, we improved our existing electric bicycle battery, the hardware, (Electronic Components and Systems refrigerators and produced medical software, mechanical designs and for European Leadership) project for vaccine cabinets, with our product production and testing infrastructure the first time this year. brought into use at many points of which were developed entirely including health centers and hospitals. by Vestel. Our batteries provide Could you tell us about your Remote monitoring and home health users with a number of advantages position and plans in the enterprise technologies are another area we with their reliability, long life and ecosystem? are looking at. In this context, we are online service. While we continue At Vestel, we believe start-ups develop developing technologies to monitor to export electric vehicle chargers real transformative technologies. and analyze data obtained from health to the whole world, in November With our leadership in this field, we devices. We have also completed our 2020 we signed an agreement with support the enterprise ecosystem with feasibility and preparation studies Iberdrola, one of the largest electric our wholly-owned subsidiary Vestel on medical imaging devices. We will utility companies in the world. Within Ventures and we have so far invested continue to advance in this area by the scope of the agreement, we will in 20 start-ups both in Turkey and expanding our product range with our be a manufacturer and supplier for abroad. new devices. Iberdrola’s international electric vehicle charger project and we will Healthcare devices and technologies How far have you come in the Industry manufacture devices which will be are at the heart of Vestel Ventures’ 4.0 transformation? Can we expect positioned by Iberdrola in many key investment focus. Within the scope the work on automation in production regions of Europe within the next five of our future strategies, long before to gain pace in the post-pandemic years. With this project, we will initially the pandemic we had partnered period? support the establishment of electric with venture companies working on We have been working on the Industry vehicle charging points by Iberdrola healthcare devices through Vestel 4.0 transformation for over six years in the UK, Italy and Spain. We aim to Ventures and invested in a total of and have achieved 90% of the work rollout the project to other countries five healthcare initiatives. We are going forward.
Vestel Elektronik 2020 Annual Report 49 The Management
Interview with the CEO
As a company which has previously won all TPM awards consisting of 5 main stages, we are proud to have reached the highest level and receive the TPM World Class Award.
to reach our target. In production activities with an increased use of TPM (Total Productive Management) processes, the attention has turned to remote intervention in dealing with activities, a Japanese management self-operating robots or robot-human- failures. model based on the understanding powered collaborative applications. of “Operational Excellence” in In the new period, when the Industry With the Industry 4.0 applications, production, have been meticulously 4.0 concept is expected to take on a an end-to-end smart and traceable carried out at Vestel’s production new dimension, new infrastructure value chain is formed which extends plants for more than 10 years. With needs will emerge, where the from the entry of the order up to the this understanding, we have increased entire production chain will become point where the product reaches the production efficiency and minimized integrated. Although these are issues end user. By incorporating intelligent, losses with each passing day. As a which were known about and studied learning and self-enhancing artificial company which has previously won before the pandemic struck, it is likely intelligence (AI) technologies into all TPM awards consisting of 5 main that research on this issue will also this cycle, we monitor all data and, stages, we are proud to have reached gain pace after the pandemic, given accordingly, further develop and the highest level and receive the TPM that the current infrastructure levels improve our processes. World Class Award. Under the TPM remain insufficient in terms of their model, it takes an average of 14 years While many white-collar employees implementation and prevalence. for manufacturing companies aiming were able to continue their work Large companies which have already to maximize productivity, employee outside of office during the pandemic, allocated substantial budgets for competence and quality, to reach the blue-collar employees remained robotics, artificial intelligence, World Class level. Vestel became under risk because they could not Industry 4.0, automation and the first and only company in the work from home due to the nature digitalization in their business world to have attained this success of their jobs. Within the scope of the processes will have many reasons to in a space of just 10 years and to pandemic measures, changes such further increase their interest in these receive this prestigious award in the as reducing the number of employees areas, especially in ensuring labour consumer electronics sector with its working on production lines or at continuity. simultaneous work at six different machinery to ensure social distancing factories. were put in place. While focusing At the beginning of 2021, you were on the use of robots, some of our awarded the TPM World Class Could you briefly tell us a little bit factories started manufacturing as a Award by the Japan Institute of Plant about the Green Bond issuance fully automated “lights-out factory”. Maintenance (JIPM). Is there anything you made in 2020 to finance your you would like to say about this? sustainability investments? In the current conditions, increasing automation is an absolute necessity We are pioneering Industry 4.0 As a company that carries out all in order to ensure continuity in the applications in our country, and we are of its investments on the axis of manufacturing sector. For the post- implementing important applications sustainability, we took a pioneering pandemic period, work in the areas with the aim of being the first company step in this field with our green bond of remote follow-up and traceability, to complete this transformation. issuance in 2020. digital twin control of machines or In terms of compliance with the Green production lines, and AR and VR will Bonds Principles of the International come under the spotlight in production
50 Vestel Elektronik 2020 Annual Report As Vestel, we strive to make breakthroughs in sustainability by playing a leading role with our production processes, the environmentally friendly products we offer to consumers and our contribution to the circular economy, and improve our ESG (Environmental, Social, Governance) scorecard.
Capital Market Association (ICMA), On the other hand, the pandemic, Through Smart Life 2030, which we received the highest score the fallout of which we continue to describes our contribution to in the evaluation conducted by experience, was a clear example the United Nations Sustainable an independent investment and of how the cycles of human life, Development Goals, we are working sustainability rating agency which is ecosystems and economics are all to harness the life-improving power widely respected in the international intertwined with the climate crisis. of technology and digitalization and arena, breaking new ground in Turkey While we believe the pandemic will shape a sustainable future with smart with our TL denominated Green Bond end in due course thanks to the stage approaches, based on a business issuance. reached in vaccine development, the model which combines profitability climate crisis, with its environmental, and social benefit. By creating With the Green Bond issuance, we also social and economic impacts, is innovative and sustainable solutions achieved the 2022 goals which we set already considered the biggest risk for global problems, we are taking within the framework of the Smart Life threatening our sustainable future. strong strides towards our goal of 2030 vision. We will use the proceeds becoming one of the key stakeholders from the bond issuance for our In this vein, it is up to us and large in the great transformation. R&D activities and environmentally companies like us to quickly and friendly technology investments which completely fulfil our responsibilities Vestel is committed to strengthening contribute to areas such as protecting for reducing the increasing pressure its presence as a global player with water resources, carbon reduction, on our planet and our future. its experience, vision, intellectual energy efficiency and waste reduction. strength and technological As Vestel, we strive to make competencies and to increase its What would you like to say about the breakthroughs in sustainability contribution to achieving a better future? by playing a leading role with and liveable world by focusing on our production processes, the The pandemic has once again sustainable profitability, efficiency and environmentally friendly products demonstrated the importance of savings. we offer to consumers and our sustainability. In this process, we have contribution to the circular economy, seen that companies that adopt a and improve our ESG (Environmental, stakeholder-oriented and profit-based Social, Governance) scorecard. On this growth approach with integrated risk long and difficult road, Zorlu Group’s and multiple capital management sustainability approach, Smart Life are more resilient to global risks and 2030 vision also serves as a guide for threats and perform well by emerging us. from this crisis without much damage.
Vestel Elektronik 2020 Annual Report 51 The Management Senior Management
Enis Turan Erdoğan Bekir Cem Köksal Necmi Kavuşturan Alp Dayı Chairman of the Executive Executive Committee Executive Committee Member Chief Financial Officer of the Committee Member Vestel Group of Companies (1956 - Gaziantep) Necmi (1955 - Mersin) Turan Erdoğan (1967 - Ankara) Cem Köksal Kavuşturan graduated from the (1963 - Alaşehir) Alp Dayı obtained his bachelor’s degree graduated from the Department Faculty of Political Sciences at graduated from the Department in mechanical engineering from of Mechanical Engineering at Ankara University in 1979. Mr. of Industrial Engineering at İstanbul Technical University in Boğaziçi University in 1988 and Kavuşturan began his career in Dokuz Eylül University in 1985 1976 and his MBA from Brunel obtained a Master’s degree at 1979 as a specialist at İş Bank. He and received a Finance Certificate University in the UK in 1979. Bilkent University in 1990. Having became Deputy General Manager from the UC Berkeley, University Following his return to Turkey, worked in the banking industry of Interbank in 1985, supervising of California, in 2006. Alp Dayı he served in managerial positions between 1990 and 2001, Mr. projects involving management has served as a senior manager in various companies in the Köksal was appointed as Deputy trainee programs, open performance in charge of financial affairs at private sector before joining General Manager at Denizbank in systems and total quality various industrial companies Vestel in 1988. Having held 1997. Mr. Köksal joined Vestel as management. He served as Deputy since 1987, and has continued his several managerial positions at Chief Financial Officer in 2002. He General Manager of Management career at Vestel Group since 1999. Vestel since 1988, Mr. Erdoğan currently serves as an Executive Services at Denizbank between He currently serves as the Chief served as the Chairman of Vestel Committee Member at Vestel 1997 and 2003. Mr. Kavuşturan also Financial Officer at Vestel Group Foreign Trade and as an Executive Group of Companies and as the managed Denizbank’s Advertising, of Companies, comprising Vestel’s Committee Member at Vestel Head of Financial Affairs Group Public Relations, Construction and domestic and foreign subsidiaries. Elektronik until 2013. Since at Zorlu Holding. Mr. Köksal also Purchasing Departments during January 1, 2013, Mr. Erdoğan serves as the Chairman of the this period. Since 2003, Necmi has been serving as the CEO Sustainability Committee at Zorlu Kavuşturan has been serving as of Vestel Group of Companies. Holding. the Head of Zorlu Holding Human Mr. Erdoğan served as the Resources Group, as well as a President of TURKTRADE (Turkish Member of the Executive Board of Foreign Trade Association) for Vestel Group of Companies and two periods between 2002 and a Member of the Board of Zorlu 2006. He also served as a Board Gayrimenkul. Member of Europe’s largest ICT Confederation, DIGITALEUROPE, between 2010 and 2014 as the first Turkish citizen to be elected.
52 Vestel Elektronik 2020 Annual Report İsmail Murat Sarpel Erdal Haspolat Seda Kaya Ergün Güler Ali Tarkan Tekcan General Manager of General Manager of General Manager in General Manager in General Manager in Vestel Elektronik Sanayi Vestel Beyaz Eşya Sanayi Charge of International Charge of Domestic Charge of Customer ve Ticaret AŞ ve Ticaret AŞ Sales at Vestel Ticaret Sales and Marketing at Services at Vestel Ticaret AŞ Vestel Ticaret AŞ AŞ (1968 - İzmir) Murat (1970 - Bitlis) Erdal Haspolat Sarpel graduated from the graduated from the (1975 - İzmir) Seda Kaya (1974 - Berlin) Ergün Güler, (1970 - İzmir) Tarkan Department of Electrical Department of Mechanical graduated from the who holds an undergraduate Tekcan graduated from the and Electronics Engineering Engineering at Middle East International Relations degree in Business Department of Electrical and at Middle East Technical Technical University in 1992. Department at Bilkent Administration from Dokuz Electronics Engineering at University in 1990 and He started his career as a University in 1997. In the Eylül University and an MBA Dokuz Eylül University in 1991 completed a Master’s degree Systems Design Engineer at same year, she began to from Bilkent University, started and obtained a Master’s degree in the same department in the Rocket Industry Group work as a Sales Specialist his career at Vestel in 1999 in the same department in 1993. Mr. Sarpel started of Ankara Makina ve Kimya at Vestel Dış Ticaret and as a Finance Specialist and 1994. Mr. Tekcan completed his career at Vestel Group Endüstrisi Kurumu in 1992. took on roles as a Sales served as the Deputy General an Engineering Management in 1990. He worked on TV Mr. Haspolat began to work in Specialist, Product Manager Manager in Charge of Financial Program at İzmir Institute design projects and served the R&D Department of Vestel and Regional Sales Manager Affairs and Treasury between of Technology in 2006 and as a TV Design Engineer and Beyaz Eşya’s Refrigerator responsible for different 2006 and 2012. Mr. Güler, obtained a PhD degree from TV Project Manager at Vestel Plant in 1998. Between 1998 regions and product groups who was appointed as the the Department of Electrical Elektronik between 1990 and and 2002, he worked as an between 2000 and 2006. Ms. Corporate Risk & Treasury and Electronics Engineering 1997. Mr. Sarpel, who worked R&D Engineer and R&D Kaya served as the Deputy Coordinator at Zorlu Holding at Dokuz Eylül University in as the Design Group Manager Laboratory Officer at the General Manager in charge in May 2012, has been serving 2012. Mr. Tekcan, who worked in Information Technologies Refrigerator Plant. During this of the international sales of as the General Manager in as a Research Assistant at the between 1997 and 1998, was period, Erdal Haspolat also the consumer electronics Charge of Domestic Sales and Department of Electrical and assigned to establish Vestel took part in projects aimed at products between 2006 and Marketing at Vestel Ticaret AŞ Electronics Engineering at USA, which would operate the localization of imported 2015. She was appointed since October 2012. Dokuz Eylül University between in the area of Information components used in the as the General Manager in 1992 and 1996, served as a Technologies in Silicon Valley production of air conditioning Charge of International Sales Director at the İzmir branch in 1998. Until 2001, he served units. Between 2002 and at Vestel Ticaret AŞ in June of the Chamber of Electrical as the R&D Director and 2005, he served as the Quality 2015 and has been serving in Engineers between 1996 General Manager of Vestel Assurance Manager and R&D this position since then. and 1997 and as Director at USA. After returning to Turkey Manager in Vestel Beyaz the Aegean Calibration and in 2001, Mr. Sarpel established Eşya’s new Washing Machine Metrology Training Center in the R&D Department at Vestel Plant project. In 2005, he 1997-1998. Mr. Tekcan started Komünikasyon, which was assumed the management of his career at Vestel as a Test Turkey’s first R&D department the dishwasher project, which Engineer at the R&D Test to work on digital media was launched for the addition Group in 1999 and served as projects, where he served as of dishwashers to Vestel Beyaz the Deputy General Manager the Deputy General Manager. Eşya’s product range. He took in charge of R&D at Vestel In 2005, he was appointed as part in the production, quality, Elektronik Sanayi ve Ticaret AŞ the General Manager of Vestel product design and related between 2006 and 2012. Tarkan Komünikasyon and served in processes of the plant, and Tekcan was appointed as the this position for a year and a carried out all the investment General Manager in Charge of half. Mr. Sarpel became the and design processes of the Customer Services at Vestel General Manager in Charge project together with the Ticaret AŞ in October 2012. of the Electronics R&D project team. He served as the Department at Vestel Group Manager of the Dishwasher of Companies in 2007. Mr. Plant until 2013 when he was Murat Sarpel was appointed appointed as the Manager of as the General Manager of the Refrigerator Plants. In Vestel Elektronik Sanayi ve April 2015, Mr. Haspolat was Ticaret AŞ in 2017 and became named the General Manager responsible for all operations, of Vestel Beyaz Eşya, and has including manufacturing, been carrying out this duty planning, logistics and since then. purchasing in addition to R&D.
Vestel Elektronik 2020 Annual Report 53 Activities Vestel: A Global Manufacturer and A Technology Company
Vestel appeals to different consumer tastes in 157 countries with its wide range of products which reflects its competencies in technological development, design and product customization.
Standing out with its competencies in One of the world’s leading ODM Vestel, a prominent technology manufacturing, R&D and innovation, (Original Design Manufacturer) company both in Turkey and in Vestel is a prominent technology providers in consumer electronics the world, is working unabatedly company and a global manufacturer, and household appliances, Vestel is to complete its Industry 4.0 which shapes the market not only in the second largest TV producer and transformation and its transition to Turkey but also on a global scale. one of the top five manufacturers of fully automated smart factories. Vestel household appliances in Europe. A is also playing a pioneering role in Vestel operates in the following areas; strong and well-known brand at home, smart city and smart home platforms • Consumer electronics, Vestel is also the leading player in with its competencies in artificial the Turkish TV market and one of the intelligence software and IoT (Internet • Household appliances, top three players in the Turkish white of Things). • Digital and mobile products. goods market. Vestel is also one of In foreign markets, in addition to sales the most widely recognized brands in Vestel is a global group of companies, made on an ODM basis, Vestel also Turkey. which consists of 27 companies in undertakes branded product sales total, 16 of which are located abroad. Vestel’s manufacturing facilities are with the regional brands acquired and Vestel represents an important source located in Manisa. Established over with the global brands held under the of power for the Turkish economy a 1.3 million sqm of area in Manisa, brand licensing agreements. with its nearly 19,000 employees, its Vestel City is one of Europe’s largest Vestel’s partnerships with Sharp in production capability supported by industrial manufacturing complexes household appliances and Toshiba its technological superiority and its operating in a single location. in TVs under the brand licensing contribution to Turkey’s exports.
54 Vestel Elektronik 2020 Annual Report Vestel’s Competitive Advantages • Competitive Cost Base • Flexibility in Production • Strengths in R&D, Innovation and Design • Proximity to Key Markets • An Extensive Sales and After- Sales Service Network in Turkey • Outstanding After-Sales Customer Services • Industry 4.0 Transformation
agreements further strengthen its position in the European market. Vestel reaches a wide consumer base through the “multi-brand and omni- channel strategy” which it pursues in the domestic market. The Company boasts one of Turkey’s most extensive sales and after-sales service networks and also attracts attention with its strong retailer identity. Vestel appeals to different consumer tastes in 157 countries with its wide range of products which reflects its competencies in technological development, design and product customization. Accounting for 90% of Turkey’s TV exports and 33% of the nation’s white goods exports, Vestel has been an unwavering export leader in the Turkish electronics sector for the past 22 years.
Vestel Elektronik 2020 Annual Report 55 Activities Vestel’s Manufacturing Power: Vestel City
Established over an area of 1.3 was granted the “TPM Excellence tumble dryers, dishwashers, cooking million sqm, Vestel City - Vestel’s Award” in 2012 in recognition of its appliances, air conditioners, water production base - is one of the largest work which started in 2010 and the heaters) at 7 different factories at the manufacturing complexes in Europe “Award for Excellence in Consistent same time. With these achievements, operating in a single location. TPM Commitment” in 2014. Vestel the company has further raised the Elektronik successfully passed the bar of its success. Officially opened in 2003, Vestel evaluations in the TPM Special Award City, established over an area of 1.3 Vestel Beyaz Eşya won the Turkey category and won the title of the million sqm, is one of the largest Championship and afterwards, first TV manufacturer to receive the manufacturing complexes in Europe the European Championship at “Special Award for TPM Achievement” operating in a single location. the Industrial Excellence Award in television production in 2016. competitions held in 2016. Vestel Vestel’s mega factory - Vestel City - Vestel Elektronik, which unwaveringly Beyaz Eşya was the first Turkish was featured in the “Mega Factories” maintains its work in this area, also company, and the only company in the documentary series on the National added the “Advanced Special Award white goods sector in the world to have Geographic Channel. Vestel was the for TPM Achievement” to its portfolio won this award. world’s first electronics and household of awards in 2018. In February 2021, appliances company and Turkey’s Vestel Elektronik was awarded the As a manufacturer which cares for the first brand and industrial facility to “World Class TPM Achievement” environment and the future, Vestel appear in the documentary series, Award, the top prize category of TPM. holds the ISO 14001 Environmental which features some of the world’s Management System, ISO 50001 Having won the “TPM Excellence most famous brands. In 2016, Vestel Energy Management System and ISO Award” in 2014, Vestel Beyaz Eşya was was featured in the popular “How Do 14064 Greenhouse Gases Management handed the “Award for Excellence in They Do It?” program on the Discovery System Certificates. Additionally, Consistent TPM Commitment” in 2017. Channel, where it showcased its Vestel Beyaz Eşya received the ISO Vestel Beyaz Eşya became the first expertise in the production of LED TVs. 14046 Water Footprint Approval and only company in the white goods The show covered all aspects of the Certificate, serving as a pioneer in its sector in the world to obtain this award LED TV production process at Vestel industry. with six different factories at the same City. time, thus achieving a global success. In addition to manufacturing products Excellence Awards and Having completed its preparatory with high energy and water efficiency, Sustainability-Oriented Facilities work for the “Special Award for TPM Vestel also focuses on the efficient use Achievement” in 2019, Vestel Beyaz of energy and water in its production The Excellence Awards are handed Eşya won the “Special Award for TPM processes. Compared with a 22% out by the Japan Institute of Plant Achievement” in February 2020. Vestel increase in its production volume in the Maintenance (JIPM) each year to Beyaz Eşya became the first and only household appliances segment over the companies performing the best company in the white goods sector last 4 years, the Company managed to Total Productive Maintenance (TPM) in the world to be handed this award reduce its water consumption per unit work in the world. Vestel Elektronik with seven different product families product by 24%. (refrigerators, washing machines,
56 Vestel Elektronik 2020 Annual Report Vestel’s Main Strengths
With innovation encoded into its DNA, technology and innovation have been an integral part of Vestel’s culture since its establishment.
Innovation Cost Advantages Being a Pioneer in Digital • Creating new value for customers • Benefiting from economies of scale Transformation with its strong R&D structure, in procurements, especially in the • With innovation ingrained in its DNA, production capabilities and human purchase of components, which the Company has adopted innovation resources, meeting consumer represents the most important cost and technology as part of its culture needs in the shortest space of factor, with its strong position as a since the day it was founded, time with technological solutions, large-scale manufacturer, making innovation fast and • Extensive technological capability • The efficiency, effectiveness and accessible to all. and vision, cost advantages brought about by Economies of Scale, Flexibility manufacturing under a single roof • Business processes transferred at Vestel City, one of the largest to electronic media; customer in Production and Product experience strengthened by Customization production complexes in Europe established in a single location, digitalization, • Responding to the needs of • Advantages over Far Eastern • A pioneer in Turkey’s digital different customers with various competitors in transportation transformation like it has been a socio-cultural characteristics in cost and delivery time due to the pioneer of Turkey’s technological foreign markets with appropriate proximity of its production facilities transformation, products, right pricing and suitable to the European market, sales channels, • Being at the center of digital • The existence of a well-developed transformation with its solutions, • Thanks to flexible production supplier base in Manisa especially innovations and products as a capability, the ability to develop for the household appliances company that exports technology to products in numerous various and cost advantages in terms of the world, models for different customers. distribution and logistics, facilitated • With its TM (Transport Management) Customer Commitment by Vestel City’s proximity to İzmir and SNC (Supplier Network port and the Company’s suppliers, Collaboration) modules, being the • Providing a seamless ODM service at only company in Turkey to manage all stages from original design and • Relatively lower unit labour its material movements and orders production to point delivery, costs compared to European manufacturers, in digital integration with its logistics • Not directly competing with the partners and suppliers through SAP. customers’ brands in Europe, • Newer and more modern production facilities than European • Offering prompt production and manufacturers, delivery with the ability to handle small batch orders, • The import tax advantage in exporting to countries with which • TPM World Class Award Turkey has a Free Trade Agreement in recognition of fast and over the manufacturers of countries uninterrupted production and which do not have such an flawless delivery capability. agreement.
Vestel Elektronik 2020 Annual Report 57 Activities
Vestel’s Main Strengths
THE INDUSTRY 4.0 TRANSFORMATION The adaptation to Industry 4.0 is one of Cobots (Collaborative Robots) working the most important agenda items for industrial giants around the world. The in cooperation with the operators in transition to Industry 4.0 is essential for all companies operating in the manufacturing speed up the production manufacturing sector to maintain their competitive power. Companies that processes as well as increase efficiency fail to complete this transformation and reduce costs. In addition, the will lose their competitiveness in global markets, which renders the pandemic has once again highlighted the Industry 4.0 transformation crucial for companies that seek to sustain their importance of automation systems. competitive advantages, profitability and continuity. One of the main processes in vehicles have started to be adapted to INDUSTRY 4.0 WORK AT VESTEL Industry 4.0 is to increase the level the system in the majority of material ELEKTRONİK of automation in factories. Vestel transfer processes. Automation Vestel Elektronik has been working Elektronik continues its work in this systems have become smarter with on the Industry 4.0 transformation direction with great determination. new handling systems, doing away for more than six years. Teams To give an example, all stations with the need for physical additions composed of specialist in-house on TV production lines can be to the factory floor. These systems engineers endeavour to successfully instantly monitored, thus maximizing will determine their own routes in the apply the digital transformation vision production efficiency thanks to the coming years. production efficiency monitoring in all processes from suppliers to All of these technologies, which are system available on the production customers, in addition to digitalizing deployed in the manufacturing of TVs, lines. With the image processing existing processes and adding new ensure that the production lines, which systems installed on the lines, processes. These teams undertake produce 850 different models per tests have started to be carried out studies in the areas of vertical/ month with a high degree of flexibility, automatically. In addition, with the horizontal value chain integration, work with a minimum cost and a high help of similar image processing artificial intelligence software, IoT level of efficiency. The performance systems, precision operations in the technologies, lights-out factory of robots used in production can be production of Bezelless TV (Unlimited applications, automation (robots, monitored through remote access. TV), which would normally only be Cobot -collaborative robots), 3D As one of the first companies to performed by humans with great printing (additive manufacturing), AGV adopt SAP ERP (Enterprise Resource difficulty can be carried out using (Automated Guided Vehicle) and SDV Planning) in Turkey and to use it on a robots. (Self-Driving Vehicle) applications. wide scale, Vestel has long employed This transformation, which will require Within the context of Industry 4.0 monitoring and control systems in its a sizable investment, will accelerate technologies, Vestel attributes great production processes. The Horizontal/ Vestel Elektronik’s innovation importance to collaborative robot Vertical Integration, an advanced process and technological adaptation. technology and applications. Cobots version of these systems, is one As factories become smarter, all (Collaborative Robots) working of the technologies of the Industry processes will be connected to each in cooperation with the operators 4.0. Efforts continue to digitize all other from the beginning to the end, in manufacturing speed up the processes from placing an order losses will be reduced significantly, production processes as well as with the suppliers to the dispatch of production lines will operate in a more increase efficiency and reduce costs. materials, conversion of materials into agile and coordinated manner and In addition, the pandemic has once products and delivery of products to customer requests will be met more again highlighted the importance of customers. automation systems. promptly and effectively. The MES (Manufacturing Execution In addition to robot automation on System) System is also an production lines, new advanced versions of unmanned transport
58 Vestel Elektronik 2020 Annual Report the model change could be carried Vestel was the first company to commission out unmanned. MOM (Manufacturing SAP’s MES module in Turkey. With this Operations Management) work started with the software team consisting module, all operations in production of competent engineers. With the help of MOM, and M2M (Machine to are monitored instantly in the digital Machine Connectivity) in particular, environment, significantly shortening the all production activities were fully automated and any losses experienced time for decision-making. became clearly visible. Planning data was also included in the system by integrating the ERP system. Studies important element of the horizontal commissioned in the plastic parts on access to data on material used integration in terms of production manufacturing plant, the Company in the machines have been brought management. Vestel was the first not only achieved monitoring of to a very advanced level and the company to commission SAP’s production, but also established infrastructure of a system to prevent MES module in Turkey. With this the Model Exchange Parameter losses of materials has been prepared module, all operations in production Management System under the by associating it with planning data. are monitored instantly in the heading of Big Data & Analytics. By collecting data from all operating digital environment, significantly With this system, the monitoring systems, the Company started to shortening the time for decision- of complex structures became develop projects that will provide making. For example, with the project possible and setup settings during support in terms of operational
Vestel Elektronik 2020 Annual Report 59 Activities
Vestel’s Main Strengths
efficiency with Machine Learning and Artificial Intelligence studies aimed to be carried out on the Data Lake. 3D printing, also known as additive/ In 2020, Vestel Beyaz Eşya continued layered manufacturing technology, to commission the most robot cells was integrated into prototyping processes in the early 2000s. The in one year, both in the white goods prototype of the design carried out in accordance with the requests sector and in all sectors, for the fourth of customers can be produced in less than 24 hours and put through year in a row. testing processes. This speeds up the Company’s process for fulfilling customer orders.
The goal to be reached as a result of INDUSTRY 4.0 WORK AT VESTEL in the world thanks to its production the digital transformation, which the BEYAZ EŞYA and mechanical lines and paint shops Company refers to as VESTEL 4.0, established with the Industry 4.0 Vestel Beyaz Eşya is able to manage is the “Smart Factory”. In the Smart infrastructure. Factory, processes will be managed all automation and Industry 4.0 with artificial intelligence software. activities singlehandedly with a special One of the most important tools in With Industry 4.0 transformation, the unit created within its body. The Industry 4.0 are the autonomous profile of the Company’s workforce company follows the state-of-the-art robots positioned at various points will also change, whereby workers technologies closely and performs along the production lines, serving doing manual work will be replaced all activities for software, design and as an important step in achieving by qualified employees who are electrical hardware design through production flexibility. In 2020, Vestel capable of designing, developing and this unit. Beyaz Eşya continued to commission controlling manufacturing processes. the most robot cells in one year, both All mechanical designs, process in the white goods sector and in all analysis, part manufacturing, PLC The Industry 4.0 transformation sectors, for the fourth year in a row. (Programmable Logic Controller) is aimed at maximizing customer The company expands the trinity of and robot software and simulation satisfaction as well as providing robot-machine-human more and more analyses can be undertaken, from flexible and fast production, increased with each passing day, working with their inception to completion, within productivity, higher quality and impeccable production techniques. the company. As such, projects can cost savings. One of the goals to Vestel Beyaz Eşya stands at the be carried out quickly and at low be achieved as a result of the work forefront of all sectors in the world cost. In addition to the products it to be carried out is to produce today with its 180 articulated robots manufactures, Vestel Beyaz Eşya different product models on the per more than 9,200 employees. same production line simultaneously also invests in production technology. without sacrificing efficiency. As a With its competent engineers and To achieve unmanned and remotely result of these efforts, Vestel will be technicians, Vestel Beyaz Eşya has controlled in-factory transportation, able to build on its global competitive transformed into a company which Vestel Beyaz Eşya is switching from power by offering products with can design and build the production the methods of line, metal or magnetic higher added value to the market. lines and machinery, which had tracking on the ground to systems Vestel is ambitious to see Vestel City been previously procured externally that can be entirely managed by being the first facility to perform this and even apply for patents for the mobile communication and special transformation in Turkey. machinery it has designed. navigation systems. All automatically guided vehicles used at Vestel Beyaz Vestel Beyaz Eşya has established Eşya’s seven production plants can special automation systems with the be controlled simultaneously by a support of its competent workforce single piece of traffic software in what and has reached a level where all is the first development of its kind in software, electrical and mechanical Turkey, both in the white goods sector training can be provided in-house. and indeed in any sector, in terms of The company carries out its production number and function. Autonomous activities using the latest technologies
60 Vestel Elektronik 2020 Annual Report systems which operate simultaneously despite their shorter life. As a result, industrial robots into use. It ensures that at all plants serve as a bridge between all in-factory transportation activities these systems communicate with each planning and production. The use of are carried out more quickly and other in order to keep up with the rapid automatic guided vehicles serves to safely, minimizing the risk of human changes taking place in the industry and reduce on-site transportation costs error. With its strong identity as a is thus able to establish smart systems and the need for forklift trucks, technology company, Vestel Beyaz within its organization. In addition to while damage caused during the Eşya has adopted the task of using, reducing storage and transportation transportation of products and producing and experimenting with costs with the automated warehouse components is also minimized, rapidly changing technologies systems, the company also achieves increasing production efficiency. in addition to the production of online controlled consumption and Pairing of automatic transport vehicles white goods, and directs its work minimizes the incidence of human error with remote control software and accordingly. The goal is to create a that may occur in the production flow. production programs has also been more environmentally friendly, safer Vestel Beyaz Eşya provides fast and started. Accordingly, the company and longer-lasting ecosystem. In the easy training to operators by utilizing also aims to achieve autonomy in next step, the company aims to carry virtual reality and augmented reality, production planning operations. out all production with unmanned which is a component of Industry vehicles, in contrast with modular and Extra measures are taken to protect 4.0, thus increasing the quality of standard production lines. human health and safety in factory its production. While the company transportation and for this purpose, Vestel Beyaz Eşya is increasing the aims to meet technical and financial gel type batteries are used in vehicles, number of its automated warehouses by targets at once via virtual reality bringing automated guided vehicles and programs and special simulations
Vestel Elektronik 2020 Annual Report 61 Activities
Vestel’s Main Strengths
carried out before all investment The aim is to eliminate human errors and vertical integration within the decisions (robot-machine-equipment- that may occur and improve the quality next few years by establishing an automated warehouse, etc.), the further with proper training. infrastructure where machines and technical measurements conducted at robots communicate with each other, As part of the Industry 4.0 applications, the beginning of projects ensure the and then to integrate the whole additive manufacturing (3D Printing) is flawless operation of systems. internal ecosystem with its suppliers. extensively used at Vestel Beyaz Eşya. Digitalization of quality systems, online With the help of these programs, Robot arm holders, machine parts monitoring of defects, production test systems and equipment, large project and trial production for mould making results and raw material consumption, costs can also be analyzed correctly, are carried out with 3D printers. and obtaining all production reporting avoiding additional costs which may Thus, all trials, commissioning and with a 99.9% accuracy are the most occur in future. any production stoppages that may important goals of the coming years. occur due to breakdown or failure can At a time when classic business be concluded rapidly and the mould- Vestel Beyaz Eşya, which incorporates methods are changing and undergoing machine investments undertaken may Industry 4.0 based applications at a process of transformation, be executed flawlessly and quickly. its factories, is closely following preparations are also being made to the journey of the Industry 4.0 create the necessary infrastructure Concrete steps have been taken transformation. In the recent period, for training to be given by methods of for online monitoring of machine the company completed various information transfer which are free of generated data and tracking of data automation projects with laser human intervention. By systematically stored in the cloud on special screens technologies, cutting, evap wrapping, recording usage information for all and through mobile devices, and labelling, packaging and the 7-axis machines used in production, it will progress has been achieved in studies robot applications. be possible to transfer accurate on the development of systems to information to newly recruited be directed by artificial intelligence. In 2020, more flexible and planned employees through augmented and/ Various applications are created in production got underway, especially or virtual reality. In summary, it will be order to manage all the machinery with automatic labelling projects possible for new employees to become in different factories. Vestel Beyaz which communicate online with the fully equipped in a short space of time Eşya aims to complete its horizontal data network. All the test stations with simple software by using glasses, started to become robotic and a tablet or a mobile device.
62 Vestel Elektronik 2020 Annual Report Utilities Facility 3 established to meet the water and energy needs of the washing machine and tumble dryer plant was also put into operation and the human-related operating problems were eliminated with the SCADA systems that were fully automated.
automated in order to detect any projects, takes the company identity Vestel Beyaz Eşya will be able to offer errors before the product leaves the one step further and facilitates its customers products with cutting factory and with the aim of producing process adaptation. edge technology, with higher quality a flawless product. Even the cleaning and more rapidly, through its smart The new washing machine and tumble of products is performed with robots factory structure aimed at flawless dryer plant commissioned in 2018 to ensure the highest levels of and flexible production, which will was built directly with the Industry customer satisfaction. The packaging do away with the need for human 4.0 infrastructure. Production lines, of products is also automated in order contact. At the beginning of 2020, machines, transport vehicles and for all factories to achieve faster work got underway on the digitization automation projects in the factory are and higher quality production, with of processes in the new factory and able to communicate with each other, the safety of products increased not connecting production-planning aiming to track production instantly. only during production, but also until management with the machines. Along with this flow of information the product reaches the end user. An example of the digital concept transferred, it is possible to view these With visual control-based special which will be created here, and the technologies in all areas of the factory, software, all installation operations experience gathered during this trial, from the intelligent warehouse system are discharged with the correct torque will be easily transferred to all of the to the installations where automation and high precision. company’s production facilities in the is integrated. Utilities Facility 3 medium term. In addition to being pioneering and established to meet the water and unique in their fields, all these energy needs of the washing machine automation projects greatly increase and tumble dryer plant was also put the flexibility and efficiency of systems. into operation and the human-related Vestel Beyaz Eşya, which supports operating problems were eliminated its personnel with training programs with the SCADA systems that were and assigns them to the Industry 4.0 fully automated.
Vestel Elektronik 2020 Annual Report 63 Activities Vestel Serving the Whole World...
Vestel reaches a large consumer base in the domestic market through its “multi-brand and omni- channel strategy” and boasts one of the most extensive sales and after-sales service networks in Turkey.
Vestel in Turkey Within the scope of its omni-channel strategy, Vestel reaches consumers through household stores, hypermarkets, discount stores, electronic retailer chains and e-commerce websites, in addition to its exclusive dealer network. This strategy enables the Company to reach a wider customer base and increase its effectiveness and market share in Turkey.
Domestic Sales Network 1,073 Vestel stores (including 21 Vestel Ekspres stores) 9 Vs Outlet stores 748 Regal stores (224 of which are Exclusive Regal Dealers) emagaza.vestel.com.tr vsoutlet.com.tr regal-tr.com
After-Sales Services Call Center 352 Authorized Service Providers 4 Central Services 1 SDA Base (for small domestic appliances) 3 güVENUSsü (Trust Base) Centers 3 Mini güVENUSsü (Trust Base) Centers
Vestel’s Global Operation Network Vestel’s international sales and marketing organization comprises the local sales offices of 10 foreign trade companies, of which 9 are located in Europe and the direct sales points in surrounding regions.
64 Vestel Elektronik 2020 Annual Report 157 10 2,196 1,073 Number of Vestel’s 10 Foreign Trade Number of Stores and Vestel Stores in Export Markets Offices, 9 in Europe Sales Points Abroad Domestic Market
Vestel City Manisa
Vestel’s Export Markets
Vestel’s Foreign Trade Offices The United Kingdom The Netherlands Romania France Russia Poland Germany Kazakhstan The United Arab Emirates Spain
Vestel Elektronik 2020 Annual Report 65 Activities Vestel’s Strategy and 2020 Realizations
MAIN STRATEGY To grow profitably by investing in its main fields of activity and new business lines with high market potential
STRATEGIES REALIZATIONS
Improving Market Diversity To grow in regions outside of Europe, which is Vestel’s main An export map spanning 157 countries in total export market Entry into new markets in the Middle East, Africa and Asia Evaluating organic and/or inorganic growth options to enter in line with the goal of increasing sales in these regions these markets Initiation of sales to the North American market Increasing Customer and Product Diversity To increase the sales of mid- and high-end products Growing share of larger screen and UHD TVs in production and sales, increase in the average screen size in both To increase the sales of high-end and large-screen TVs using domestic and international sales the latest display technologies, which offer higher profitability, in the consumer electronics segment The launch of the new Android TV model and its shipment to Europe
Launch of the first embedded Alexa-controlled TV with far field microphone under the Toshiba brand
The introduction of the HD+ and embedded CAS system TV which sets itself apart from its competitors, and its sale in Germany
Introduction of Fire TV in many countries
Opening of Toshiba virtual showroom
Toshiba being among the top 5 best-selling television models with its two models and being the best-selling TV model and the second best-selling TV brand in the UK in “Black Friday” sales
The commissioning of Twitch, one of the most important applications for the gaming industry
To capture a higher share of the rising “outsourcing” trend Increasing business volumes with existing A-brand among A-brand manufacturers, especially in household customers in the household appliances segment appliances
To increase the sales of built-in products with new customer New customer acquisitions in the kitchen manufacturers’ acquisitions in the kitchen manufacturers’ channel in the channel European market To increase the share of A brand customers in the Gaining new local A-brand customers in markets outside of portfolio, for which ODM based production is carried out Europe in the household appliances segment
66 Vestel Elektronik 2020 Annual Report STRATEGIES REALIZATIONS
Increasing Market Share by Improving Product Variety To expand and further enrich product range in household Development of next generation products which are appliances record breaking in their class, with higher performance in energy and water efficiency and silent operation To maximize customer satisfaction by constantly working on energy efficiency, water savings, the Internet of Things and Development and launch of new products with Daylight meeting the expectations of the market through existing products Technology and hygiene programs which remove in the best way possible viruses, to meet the increasing awareness for health and growing consumer demand for hygienic products after the pandemic
Expanding the range of innovative and smart household appliances with innovative technologies
Creating product families in different segments for new markets, suitable for those markets’ needs
To develop joint products and services with technology brands Increasing product models which can be controlled with such as Amazon and Google Amazon Alexa
Adding controllability features with Google Assistant Actions
Addition of the Evin Aklı (Mind of the House) application to new TV models
Development of the Evin Aklı (Mind of the House) Android TV application which can work on all Android TVs on the market
To expand product portfolio by developing services, in addition to Creation of additional revenues by displaying physical products, which can provide a recurring revenue stream advertisements through the Smart Center application
Developing augmented reality (AR) applications to present products for customers
Realizing the Online Education Project on TV and bringing the first phase into operation together with the Education Informatics Network
Vestel Elektronik 2020 Annual Report 67 Activities
Vestel’s Strategy and 2020 Realizations
STRATEGIES REALIZATIONS
Branded Growth To increase business volume and capture market share by Continuing the successful sales and marketing initiative strengthening the brand image, distribution and sales network launched with the “Turkey is Vestelized” campaign and after-sales service quality in the Turkish market with the “Proudly Domestic” campaign; which will be followed with a more consumer-centric and innovation- To create and implement efficient business models based on a oriented brand communication strategy with the motto sharing economy with integrated retail-oriented business plans “Possible with Vestel - Why Not?”, which will help strengthen the brand image, continuing efforts to strengthen the dealer network, continuously moving forward the promise of providing a distinctive customer experience by going beyond standard services in after-sales and customer services, opening of stores in Turkey’s leading online marketplaces in addition to the corporate online sales channels, offering 24-hour delivery service to consumers in online shopping as a first in Turkey, creation of new sales points through the launch of small format Vestel Ekspres stores which combine online shopping experience with physical retail, also positioning Vestel Ekspres stores and other selected Vestel outlets as delivery points for the online sales of leading brands from different sectors Maintaining the position as a leading producer in the Turkish TV market To strengthen position in the European market and to increase Maintaining double-digit growth in sales of household branded sales through the regional brands in the portfolio and appliances to Europe under the Sharp brand despite the global brands licensed pandemic To accelerate branded growth by evaluating brand acquisition Acquisition of the UK-based Crosslee PLC’s White and brand licensing collaborations for the European market and Knight and Hostess Brands in line with the strategy of other markets increasing branded sales abroad To strengthen position in nearby markets by improving activities Entering new markets with the Vestel brand in Africa in these countries and Asia regions
68 Vestel Elektronik 2020 Annual Report STRATEGIES REALIZATIONS
Capturing Market Share by Investing in New Areas and Innovative Products To develop new products with similar technology with the existing The development and launch of the first domestic products but having different uses in consumer electronics, digital smartphone, the Venus, development, production and products and IT sectors sales of smart cane, WeWALK, development of the Smart City Technology Platform
To enter automotive electronics sector with solutions for electric Development of digital dashboards and infotainment vehicles screens for automakers
Development of a digital instrument cluster for the domestic automobile initiative
Development of compact type, low power DC chargers suitable for the existing electricity network infrastructure
Completion of the R&D design and approval processes for battery packs used in electric bicycles and start of mass production in the last quarter of 2020
To further integrate artificial intelligence and machine learning Development of algorithms capable of load management technologies into products and services which can handle the instantaneous power supply of electric vehicle chargers in electricity networks to which they are connected
Development and licensing of a software platform for the management of electric vehicle charging stations
To provide value-added services by analyzing the collected data Development of cloud infrastructure and mobile applications which enable easy use of electric vehicle chargers by both individual and corporate users
Development of an ecosystem for personal wellness with VFit+
Expanding the collection of usage data of smart products in the cloud in line with the approval of users
Investments in new ventures in the areas of energy, health, bioplastics, mobile applications, AR/VR technology, smart city applications, cyber security, customer services and social responsibility by Vestel Ventures Ar-Ge AŞ, which was established to support and invest in innovative ideas and projects, especially the Internet of Things, mobile projects and electronic devices
Vestel Elektronik 2020 Annual Report 69 70 Vestel Elektronik 2020 Annual Report THE NEXT STEP Focus on generation and processing of big data through the Vestel Cloud and uncovering useful information from this data by using artificial intelligence, the Internet of Things, smart products, smart homes, smart cities, augmented reality and 5G technologies, autonomous and robotic solutions, productization of wearable technologies, medical electronics, automotive electronics, battery and energy storage systems Increase the contribution of services to overall revenues by expanding the number and scope of services developed under the XaaS model Develop new value-added services by analyzing the data collected from smart products and create new sources of revenue by marketing this data to business partners Develop solutions for the automotive sector and offer these to global automotive manufacturers Collaborate with smaller companies and universities in order to develop more innovative products
Vestel Elektronik 2020 Annual Report 71 Activities Vestel R&D: Trend Setting Vision
THE VESTEL R&D CENTER With its R&D and innovation power, Vestel provides a valuable contribution Vestel, an to our country’s sustainable R&D influential player ecosystem with ideas and projects developed in its domestic R&D Centers which directs the and global R&D offices, and continues market not only in to develop high-tech domestic and national products with its leading role our country but also in the electronics industry. in global markets, Vestel, an influential player which directs the market not only in our is also the leader in country but also in global markets, is also the leader in Turkey’s electronics Turkey’s electronics sector when it comes to exporting sector when it technology to the world. comes to exporting Vestel was one of the first companies in Turkey to have been accredited technology to the by the Republic of Turkey Ministry of Science, Industry and Technology as world. an “R&D Center” within the framework of Law No. 5746. As of the end of 2020, Vestel, which carries out R&D activities for electronics and white goods products with its team of 1,700 R&D personnel, continues to grow by accelerating its work in the new fields of activity such as automotive electronics, electric vehicle charging stations and battery technologies. Becoming one of Vestel’s R&D by cloud computing and mobile Centers, IDECA MCBÜ TEKNOKENT application platforms, Vestek develops Vestel allocates approximately 2% of carries out R&D activities under two remotely controlled TV systems its sales revenues to R&D investments headings: automotive electronics and for hotels and hospitals, remotely each year, and is one of the Turkish innovative technologies. controlled information screens companies with the highest R&D and videowall solutions which offer Vestel Komünikasyon, which joined spending. digital advertising integration and Vestel’s R&D Centers in 2020 as an smart board management systems Vestel has five R&D Centers which are accredited organization, operates and mobile applications which offer accredited in accordance with the Law in the fields of LED lighting, electric remote management. No. 5746. vehicle charging stations and battery • Electronics High-End: R&D technologies. 2. CABOT (Bristol, UK): Providing software development and testing Center 1 R&D Offices services on digital TV features, Cabot • Electronics Center: R&D Center 2 1. ITU Technopark VESTEK (İstanbul): operates in the field of joint design • White Goods: R&D Center 3 Vestek, which has been operating in development in Vestel projects, the ITU Technopark since 2005, has together with its 21 software • Manisa Celal Bayar University recently been developing software engineers. IDECA (Idea Creation, Definition, solutions in the field of B2B display Evaluation, Conceptualization, solutions. Taking advantage of all the Application) Teknokent: R&D technological opportunities provided Center 4 • Vestelcom, Aegean Free Zone: R&D Center 5
72 Vestel Elektronik 2020 Annual Report Vestel allocates approximately 2% of its sales revenues to R&D investments each year, and is one of the Turkish companies with the highest R&D spending.
expanded the product family of digital information screens (Visual Solutions) and developed products on common platforms with TV, and has also started work on its LED Wall product in 2020. With the goal of rapidly responding to current technological developments, Vestel Elektronik has become one of the first companies to launch designs suitable for updates such as Youtube 2020 and Netflix 5.2 worldwide. At the same time, the integration of 3. Shenzhen Office (People’s Vestel Elektronik’s company and television into different platforms Republic of China): Mainly engaged in R&D strategy is based on growing and the emergence of television component approvals and mechanical and increasing its experience in the as the main screen at home have design. electronics sector in different sub- gained importance during this period. sectors and areas. Accordingly, the R&D units which Vestel Savunma Sanayi AŞ and Meta develop applications which aim to Nikel Kobalt Madencilik Sanayi ve Vestel Elektronik’s trend of rapid bring the television to the forefront Ticaret AŞ, which are associate development in the field of display as the central hub of the smart home, companies of Vestel Elektronik, were technologies also continued in 2020. also developed televisions which are also certified as R&D Centers under The R&D units continued their R&D compatible with the specific platforms the Law No.5746. work in various fields including of the global giants such as Amazon high brightness, high contrast, high R&D Activities in Electronics and Google. resolution, high color gamut, ultra- Vestel Elektronik has been continuing slim mechanical structure, bezel-free Smart solutions have gained its R&D activities in the electronics design, 8K, Local Dimming, Quantum importance with the development sector for more than 30 years. Its main Dot, OLED, 50 Hz MEMC (Motion of the internet and wireless field of activity is consumer electronics Estimation-Motion Compensation), communication systems. Against products. LED Display and HDR (High Dynamic such a backdrop, different uses of Range) technologies. Vestel smart applications stand out, such While Vestel Elektronik continues to Elektronik, which also deploys the as the Smartphone, the Smart Home, strengthen its R&D activities with a knowledge gained from TV production Smart Factories and Smart Cities. focus on TV products, it also started to in different display technologies, The products manufactured by operate in many sub-sectors. Vestel Elektronik were successfully
Vestel Elektronik 2020 Annual Report 73 Activities
Vestel R&D: Trend Setting Vision
integrated with the Smart Home Big Data have begun to bear fruit. stakeholders in Turkey’s Automobile concept. R&D units, which have Steps have been taken to adapt Joint Venture Group (TOGG), is a taken important steps towards the technologies which can create new supplier for these technologies. creation of a big data platform in 2020, sources of revenue and contribute to The Information and Entertainment stepped up their work on the security a sustainable revenue stream, such System and Digital Instrument Cluster and analysis of this data and have as targeted advertising displays via Systems in the preview vehicle that managed to develop an ecosystem smart TVs, the dissemination of voice TOGG introduced to the public with able to serve all connected products recognition technologies through its launch in December 2019 were and which works in harmony with Vestel products, the analysis and use manufactured by Vestel. In addition, the current technologies and voice of data stored in the cloud, and the projects are carried out on the design assistants. provision of additional services to and production of circuit boards such consumers through subscriptions. Vestel Elektronik has stepped up its as motherboards, control cards, LCD efforts to generate service-based Vestel Elektronik, which started screens and power cards for the recurring revenues by using the activities in the fields of the automotive sector. content and connectivity opportunities Information and Entertainment The Company’s knowledge and offered to consumers in smart System (IVI - In-Vehicle Infotainment) experience in power electronics forms products and technologies developed and the Digital Instrument Cluster the basis of the R&D studies for the in its related software. In this vein, in Automotive Electronics with the design of electric vehicle charging new revenue sharing agreements Automotive Group established in early stations and management systems have been signed by entering into 2018, continues work on projects in for these stations. In addition to the collaboration with the digital service these fields with the support of its Company’s electric vehicle charging providers. Internet-based TV products experienced R&D staff. In addition, stations which are available in the such as Android and Amazon Fire studies on Computer Vision and market, R&D work on DC chargers, TV have been brought to the market, Autonomous Driving got underway in which provide fast charging, were and extensive R&D studies on 2019. Vestel, which is also one of the completed and the work on the
74 Vestel Elektronik 2020 Annual Report Vestel’s knowledge and experience in power electronics forms the basis of the R&D studies for the design of electric vehicle charging stations and management systems for these stations.
software was carried out for the packs used in electric bicycles, with design of lithium batteries which management of charging points. mould investments carried out for the can be used in products such as Downtube battery project, which was electric motorcycles, caravans and In March 2019, the Design Directorate first introduced at the Eurobike Fair. olive stripping machines, which are of Battery Systems was established All safety tests (EN50604, EN62133, increasingly being used in the field. and R&D activities in this area UN38.3) of accredited laboratories got underway. Vestel Elektronik’s The Vestel Elektronik Optical Design in Europe were then successfully capabilities such as mechanical R&D Group also closely follows passed and R&D design and approval and thermal design, electronic card technological developments with its processes were completed, and design, accredited test laboratories, researchers who hold a PhD or a mass production started in the final production assembly automation and post-graduate degree. It continues quarter of 2020. The design process supply chain management can easily to support Vestel’s technological of the battery pack developed for be applied in the newly established goals by identifying projects which Rear Carrier Type bicycle applications battery systems field. offer commercial advantages as well has been completed and testing as carrying out preliminary work. In The Vestel Elektronik Battery Systems processes will get underway after trial this context, in addition to the optical Group moved to its new R&D and production. The design process of the designs of the rear light unit of LCD production facilities in the Aegean InFrame battery pack, which can be televisions, studies are also carried Free Zone (ESBAŞ) in November installed within the bicycle frame, is out on advanced screen technologies 2019. A Battery Production Line, ongoing. such as avionics screens and in- which also includes investments in In addition, a battery pack for vehicle screens. a Battery Test Laboratory, Laser breathing apparatus has been Welding Machine, and Cell Sorting The Optical Design Group is also developed and the investment process Machine, was installed at Vestel working in cooperation with academia has been completed, with testing Komünikasyon’s Factory. In the and develops projects with some of processes now underway. Feasibility first phase, work started on battery studies are being carried out for the
Vestel Elektronik 2020 Annual Report 75 Activities
Vestel R&D: Trend Setting Vision
Turkey’s most prestigious universities. The Vestel Elektronik Optical Design and Materials Laboratory at Vestel in In 2019, together with Koç University R&D Group became one of the three order to transfer the accumulation of it completed the project for a mobile stakeholders in the TÜBİTAK 1004 knowledge obtained through projects phone rear light unit with a high Project, along with Şişecam and to mass production. color gamut. Long-term project TUSAS. This project consists of a In addition to display technologies, collaborations are carried out on consortium formed of Vestel, Şişecam, research is continuing on the color several projects with the Bilkent TUSAŞ, Abdullah Gül University and sensitivity of yarns in production jointly International Nanotechnology a number of companies under the with Korteks, another Zorlu Group Research Center (UNAM - The Bilkent University UNAM Directorate. company. The Optical Design R&D Institute of Materials Science and The Vestel Elektronik Optical Design Group constantly refreshes itself and Nanotechnology). Group will develop and test quantum follows up technology by participating dot based displays and display screens Work on the quantum dot-based in many fairs, conferences and in this project. The final goal at the end high-colour gamut LCD television workshops every year both in Turkey of the project, which will also involve development project, which was and abroad. in-vehicle screen designs, is the initiated in 2019, continued in 2020. realization of prototype production and Software work on the electronic, Such long-term project collaborations testing of avionics screens based on power and control cards of all paved the way for the Vestel Elektronik the knowledge and experience gained. consumer electronics goods and Optical Design Group to carry out As a result, the project will also household appliances produced at project-oriented studies at UNAM. contribute to our country’s defence Vestel Elektronik and the cards to The Company’s Office in UNAM is in industry. include the products in the smart an important step for Vestel in the home network continued in 2020. cooperation between industry and In 2019, the foundations were Moreover, the domestic design academia. laid for the establishment of the process for these products, which Advanced Technology Application will be included in the sustainable product range, to ensure that they
76 Vestel Elektronik 2020 Annual Report In 2020, R&D activities were carried out in many different fields including sensor technologies, healthcare technologies, advanced materials, virtual reality, energy transformation and storage solutions and 3D printers.
will consume less energy and will be materials, virtual reality, energy charging stations, lighting products produced at a lower cost, continued in transformation and storage solutions and household appliances in the 2020. Thus, dependency on external and 3D printers, as part of the projects laboratory, and to prepare TÜRKAK resources was reduced and the created as a result of these studies. approved accreditation reports. The product portfolio for the card supply Vestel EMC Laboratory is the first Vestel EMC Laboratory was expanded. In addition, R&D and only laboratory in Turkey which activities were carried out for control Located within the Vestel R&D Center, can provide RF (Radio Frequency) cards, screen cards, Wi-Fi modules the Vestel EMC (Electro Magnetic approval to radio modules, in addition and engine drivers which can serve Compatibility) Laboratory is the to the EMC approvals. In parallel with different product groups. first manufacturer laboratory to Vestel’s expanding product range, the have been accredited by the Turkish work for scope expansion required Vestel, which closely follows new Accreditation Agency (TÜRKAK) in order to approve all products is technologies, continues to carry in accordance with the ISO 17025 ongoing. Vestel’s target is for each out projects for innovation through standard, and has had the authority to product produced at Vestel to be collaborations with academia, issue approvals for Electromagnetic approved by the R&D-EMC Laboratory. new company investments via Compatibility since 2009. The Vestel The laboratory also provides services Vestel Ventures and Zorlu Group’s EMC Laboratory stands out among to other companies within the scope of intrapreneurship project called “A its European counterparts by having support for the developing EMC sector, Bright Idea” (Parlak Bi’Fikir). In the performed 34,000 tests and producing and effectively participates in national culmination of the first cycle of A 333 approved test reports in 2020. With and international standardization Bright Idea, investments were carried the test infrastructure investments efforts. out in the Connecto and Abilitypool carried out at the EMC Laboratory, projects. In 2020, R&D activities Vestel R&D has gained the ability to were carried out in many different conduct tests on TVs, visual solutions, fields including sensor technologies, satellite receivers, electric vehicle healthcare technologies, advanced
Vestel Elektronik 2020 Annual Report 77 Activities
Vestel R&D: Trend Setting Vision
Vestel Product Safety Laboratory The laboratory issues approvals for the investments undertaken at approximately 4,000 models per year the Calibration Laboratory, Vestel The Vestel Product Safety Laboratory for different product groups such enabled the calibration of RF (Radio has gained the highest level of as televisions, satellite receivers, Frequency), LF (Low Frequency), recognition from the world’s most household appliances, lighting temperature and relative humidity respected independent approval products, IT products, batteries, devices and the preparation of institutions such as Verband der small domestic appliances and TÜRKAK approved accreditation Elektrotechnik (VDE) and Technischer electric vehicle charging stations. The certificates to be carried out at the Überwachungsverein (TÜV), INTERTEK laboratory can also issue the required laboratory. The Calibration Laboratory and DEKRA. Accredited for the reports and certifications with its own provides services to the EMC and first time in Turkey by TÜRKAK means. Product Safety Laboratories, which in accordance with the ISO 17025 operate under Vestel, as an accredited standard, the laboratory has the Laboratory engineers also play laboratory. Outside the accreditation capability and infrastructure to test a part in creating standards by scope, it also serves other units in all product groups either produced effectively participating in the world production facilities in the calibration by Vestel or procured from external standardization studies. of LF, temperature, relative humidity, sources for resale purposes. All Vestel Calibration Laboratory size and optical devices. Invesments risks which could pose a danger to for scope expansion and devices human life, such as electric shocks, Accredited by the Turkish are carried out in line with the fire caused by the product or toppling Accreditation Authority TÜRKAK goal of conducting the calibration, over, overheating or explosion of the in accordance with the ISO 17025 maintenance, repair and inventory product are eliminated through the standard, the Calibration Laboratory, process for all devices at Vestel by the world-scale tests conducted on the which operates under Vestel R&D, Vestel Calibration Center. With these designs at the laboratory. has been active since 2015. It is the investments and the inclusion of new first private laboratory to include personnel in the team, the number passive microwave elements under of annual calibrations carried out is TÜRKAK accreditation. Through constantly increasing and reached
78 Vestel Elektronik 2020 Annual Report Accredited by the Turkish Accreditation Authority in accordance with the ISO 17025 standard, the Calibration Laboratory, which operates under Vestel R&D, has been active since 2015.
700 in 2020. In addition, the Vestel data of lamps and fixtures, carrying also carries out the necessary work in Calibration Laboratory has started out photometric measurements following up of legislative differences to provide external services in order of lighting products and testing and the application of any required to support the growing calibration photobiological safety of lamps. changes to product design and sector, which is becoming increasingly certification. Vestel Certification Department important. Project Based R&D Activities The Vestel Certification Department Vestel LED Lighting Laboratory ensures that Vestel’s products, which The Electronics R&D conducts its The LED Lighting (Optics) Laboratory, are exported to many countries around activities on a project basis in eight operating in Vestel campus in the the world, meet the conditions of main groups, in addition to numerous Aegean Free Zone, has been in service the CE markings, so they can pass supplementary subgroups: since 2011. As a laboratory accredited through the customs checks, as well • Hardware Design by TÜRKAK in accordance with the as prepares the Producer Conformity ISO 17025 standard, the Vestel Optics Declarations and test reports, which • Software Development Laboratory can perform tests at every are required in accordance with the • Industrial and Mechanical Design stage of production, from the design of EU legal regulations. In addition, the product to its manufacture. Testing where there are national differences • Power Card Design of LED Panels, LED Downlighting, in target markets aside from the • Testing and Approval LED Lamps, LED Tubes, LED Street usual regulations, the follow-up and Lighting Fixtures, Water resistant LED implementation studies are also • Certification of Compliance to lighting, LED High Ceiling Fixtures carried out by this department. The International Directives and and LED Linear Lighting Fixtures product certification required to fulfil Standards are carried out in the laboratory. In the regulations, rules and import/ addition, the Vestel Optics Laboratory export processes are also carried out • Optical Design is capable of detecting photometric by this department. The department • IoT - Internet of Things
Vestel Elektronik 2020 Annual Report 79 Activities
Vestel R&D: Trend Setting Vision
Innovative Technologies Group and researchers with software and/or For patent applications deemed to be electrical-electronics infrastructure valuable as a result of a commercial In addition to the eight basic R&D experience. evaluation, a more detailed Groups, Vestel Elektronik established infringement assessment is carried a new Research Group consisting of One of the other working areas of out. Within the scope of this study, researchers holding doctorates and the Group is the R&D&D (Research, existing products in the technology of working in advanced research areas Develop and Design) Laboratory, which the relevant patent are investigated in 2016 with the aim of stepping up is the rapid prototyping and hardware and reports are prepared to determine its research-intensive activities. The acceleration laboratory supported by if the patents have been violated. Research Group, which has four the Zafer Development Agency and years of experience, took on the title which Vestel established jointly with Standard Essential Patent (SEP) of the Innovative Technologies Group the Manisa Celal Bayar University Studies in 2020 and continues its activities Technology Development Zone. With Regular participation was achieved in under the IoT Deputy General this laboratory, the Company aims to the meetings organized by the WiFi 7 Manager. This group closely monitors create a prototype of any product in (802.11be) and WLAN SENS (802.11bf) new and developing technologies as little as a week, while at the same working groups regarding work on the to support Vestel’s medium and time significantly reducing Vestel’s IEEE802.11 WLAN standard for new long-term technology strategy, prototype costs. generation wireless communication and carries out the first studies of Intellectual Property and Patents technologies. Candidate studies new projects in areas which offer which could be included in the commercial potential. In line with Vestel also demonstrates its strength establishment of relevant standards Vestel’s R&D strategy, researchers and innovation in R&D with its claim were initiated within the scope of the at Vestel carry out project based on patents and intellectual property. collaboration struck between Vestel research studies in collaboration For the 44 inventions which met the and İstanbul Medipol University and with distinguished universities. criteria, Vestel Elektronik filed 32 EP Koç University. The general meetings These studies are concluded with patent applications to the European held in July, September and November academic publications and patents, Patent Office (EPO), 12 PCT patent regarding the standard achieved active contributing to Turkey’s scientific applications to the World Intellectual participation with a working group activities. Vestel is aware of the value Property Organization (WIPO) and of 12 individuals formed through brought by the collaboration in the 44 TR patent applications to the the cooperation with universities. In process of transferring the studies Turkish Patent and Trademark Office these meetings, four contributing carried out in university laboratories (TÜRKPATENT) in 2020, filing a total of presentations were provided on to the industry after reaching a certain 88 patents. behalf of Vestel Elektronik in the maturity, and the Company thus takes fields of WiFi 7, WLAN SENS and WNG the necessary steps to establish long- Commercial Assessment and (Wireless Next Generation). In 2020, term partnerships with the leading Infringement Analysis for Patents Vestel Elektronik applied for eight EP universities in Turkey in order to Commercial evaluation studies are patents which could be candidates reach qualified patent and scientific carried out in order to determine the for the WLAN Standard. In the publications. value of Vestel Elektronik’s existing coming period, ten IEEE802.11 WLAN The scope of work of the Innovative patent portfolio and to ensure that Standard members will be able to Technologies Group has been the patent pool consists of valuable vote on behalf of Vestel Elektronik in expanded to support Vestel’s rapid patents. Within the scope of this the meetings related to the standard. prototyping and Proof of Concept (PoC) study, a decision is taken by holding The work carried out will contribute to studies as well as project-based work. meetings with managers who are the development of next-generation Vestel Elektronik’s PoC work was one experts in the technical fields related communication technologies for of the Group’s core businesses as of to the patent applications. the smart home technologies of the 2020. The Innovative Technologies future. Group consists of a team of engineers
80 Vestel Elektronik 2020 Annual Report Development Areas for the Electronics R&D OLED TV, 8K TV, LED Screen Technology, Backlight Unit, Wide Color Gamut, HDR - High Display Technologies Dynamic Range, Local Dimming, Quantum Dot Technology, High Brightness, High Resolution, High Contrast, High Security, Borderless TV QUI new UI features (Global Search, FVP Box sets, Artificial Intelligence on TV), Big Data Collection Phase 2&3, Collecting extra TV data (Phase-2), Editing TV texts in accordance with the Personal Data Protection Act, secure TV profile file update, Amazon AVS security tests with Invictus, Youtube Kids (Youtube feature for kids), new projects with the chip provider Novatek, STR (Suspend to RAM) - TV’s fast-opening feature (2-3 seconds), HDR10 Netflix Innovative Software support, Dolby Vision technology support, Train Portal, FVP 2019 (Freeview Play 2019 support Solutions for the UK), Youtube Cobalt 2019 (Youtube support with high performance), BBC 2019, Netflix 5.1, HbbTV 2.0.2 (current features for HbbTV), CI+ 1.4 (latest generation conditional access support), Android TV, Amazon Fire TV, Amazon Alexa (AVS1, Login, PCO, AVS2) Dual Tuner TV, multiprocessor and operating system support, HTML, Java, collaborations with content providers (Netflix Worldwide, Freeview Play, Freeview Plus, Maxdome), VoD - Video on Demand, 50 Hz MEMC (Motion Estimation-Motion Compensation), Hotel TV (MB230) With improved connectivity, the internet is everywhere in our lives: Smartphones Smart Cities (Smart LED Lighting) Smart Factories Smart Home (TV, Household Appliances, Mirror, Lighting, Sensors, Cameras, Home Type Electric Vehicle Charging Unit, Smart Home Kit) Health Technologies, e-health Portal Smart Education (Smart Board, Tablet) Internet of Things - IoT Creation of the Big Data platform Smart Home Data analytics for all connected products (all smart home appliances such as Smart TV, Smart Fridge, Smart Air Conditioning) Recommendation systems for connected products More than 20 Android and IoS mobile apps for all connected products Cloud Informatics Domestic and international CRM (Customer Relations Management) integrations Alexa, Google Home Voice Assistant integrations for smart TVs and smart household appliances Cybersecurity tests and platform Electric vehicle charging stations and charging station management system, in-vehicle Automotive Electronics information/entertainment screens, digital instrument clusters, autonomous driving, lighting systems, battery management systems (BMS) Telecommunication Product Groups in Communication Technologies, Smartphone Solutions Reflecting technologies, which can be productized, on product designs Smart and advanced technology, which supports automation of production: Industry 4.0, Design for Production robotic systems Collaborative Robot Technology and Automation, AR, VR, MES LED Lighting, A+ and A++ TV, Regional Dimming, products with high energy efficiency and low Sustainable Products carbon emissions, Nano Chrome Plating, Smart Home Kits, Electric Vehicle Charging Units, Smart Cane
Vestel Elektronik 2020 Annual Report 81 Activities
Vestel R&D: Trend Setting Vision
Vestel R&D’s Collaboration hardware developed is used in new with its collaborations in Medical Ecosystem designs. The work carried out within Technologies, Battery Technologies the scope of cooperation between and Automotive Electronics, in addition Vestel’s R&D units have established industry and academia gained to its fields of activity. strong collaborations with numerous momentum with the workshops national and international institutions Non-Governmental Organizations carried out to discuss the problems and organizations, especially faced by the industry and the priority Vestel provides contributions at universities, within the scope of areas. In addition to trending areas various levels to non-governmental their studies. Collaborating with the such as Industry 4.0 and the IoT, these organizations such as the Turkish relevant departments of respected collaborations also cover areas such Industry and Business Association national and international universities as RF (Radio Frequency), TV and set- (TÜSİAD), the Telecommunications in the generation of knowledge and top box designs. Satellite and Publishing Business the transformation of this knowledge People Association (TÜYAD), the into technologies and products at Vestel takes important steps for Technology Development Foundation the R&D units represents one of the the future of the university-industry of Turkey (TTGV), the Electronic cornerstones of Vestel’s sustainable collaborations by playing an active Equipment Manufacturers’ Association development. role in the External Advisory Boards (ECİD), the Association of Turkish of the universities with which it Collaboration between Industry and Electronics Industrialists (TESID), the cooperates. Vestel also supports Academia Turkish White Goods Manufacturers’ the “Industry Oriented Dissertation” Association (TÜRKBESD), the Vestel’s projects of collaboration studies carried out by the universities. Automotive Suppliers’ Association of between industry and academia are Vestel collaborates with Technology Turkey (TAYSAD) and R&D Centers shaped on the basis of supporting and Transfer Offices throughout Turkey, Platforms in order to develop the promoting research activities. The most notably with the successful competitiveness of the IT, electronics successfully completed studies enter Technology Transfer Offices in the and white goods sectors in Turkey on the national patent pool by obtaining Aegean region. Technology Transfer a global level and to mobilize their patents, creating added value for our Offices offer academic studies and new innovation potential. country. technologies developed at universities for the use of industry in order to Vestel also contributes to the Vestel’s R&D personnel, who are meet the needs of the industry and to development of these sectors by graduates of some of the Turkey’s provide added value to our country’s playing an active role in platforms leading universities and possess national development. where sectoral problems are high qualifications, carry out project- evaluated and proposed solutions are based collaborations with academics In 2018, project based university- developed by the stakeholders. at Turkey’s most distinguished industry collaboration studies were universities. In addition, academic stepped up. Within this context, International Technology Platforms publications produced jointly with the through a project, in which Vestel As the largest ODM (Original universities, the organization of career was involved, the Smart Product and Design Manufacturer) provider of days and providing support for student Production Systems Research and TVs in Europe, Vestel Elektronik clubs and projects are the other Education Center was set up at the also continues to work jointly with important components of Vestel’s Celal Bayar University Technology international partners on R&D projects sustainable development. Development Zone campus. The goal carried out through the European of this project is to accelerate the The projects carried out jointly by the Technology Platforms such as Horizon digital transformation in the industry Vestel R&D Center and universities 2020, ECSEL, EUREKA, ITEA, Celtic and increase the competitive clout of provide an important contribution to and Catrene. Involved in over 60 the manufacturing industry, primarily the synergy between industry and projects with European partners since in the Manisa province, within the academia. Within the scope of the 2006, Vestel Elektronik actively took framework of the university-industry industry-university collaboration, part in international work through the collaboration. Vestel cooperated with 22 universities in 2019 and 2020. The knowledge Vestel’s project-based cooperation generated at the universities is efforts continued unwaveringly in transformed into technology at 2020. During the pandemic, Vestel has Vestel’s R&D units by teams of closely followed current developments specialists and the software and
82 Vestel Elektronik 2020 Annual Report Vestel Elektronik received the highest budget in the ECSEL program of any Turkish company in 2020 with its ECSEL (Electronic Components and Systems for European Leadership) Project, while at the same time achieving the accolade of receiving the third highest budget in Turkey within the scope of the ECSEL RIA program to date.
seven Horizon 2020, two Erasmus+ Vestel has formed a network of key Collaboration with Zorlu Group and two Eureka projects, which it collaborations with more than 70 Vestel also collaborates with Zorlu applied for in 2020, and continued industrial business partners, including Group companies operating in the to be one of Turkey’s pioneering Google, Amazon, Roku, Broadcom, textiles, energy and real estate companies in this field. Qualcomm, Netflix, Digiturk, Viaccess, sectors. Mediatek, Irdeto, Novatek and Nagra. Four Horizon 2020 projects, the With the growing popularity of applications of which were completed R&D Support under Vestel Ventures wearable technologies, sensors which in 2019 and 2020, were accepted by In order to introduce new can be integrated into the textile and the European Commission and were technologies, Vestel also contributes IT products have especially attracted reported in national news agencies. to work in areas such as innovative attention. Vestel Elektronik received the highest devices, materials, smart city, smart budget in the ECSEL program of any Vestel undertakes joint work with home and smart factory through Turkish company in 2020 with its Zorlu Enerji in areas including energy Vestel Ventures Ar-Ge AŞ, which was ECSEL (Electronic Components and storage systems and solar panels, established to support entrepreneurs Systems for European Leadership) and in international projects focusing undertaking R&D activities. Project, while at the same time on energy. Such collaborations are achieving the accolade of receiving the Within this scope, Vestel’s know- planned to be increased further in the third highest budget in Turkey within how and facilities are offered to coming years. the scope of the ECSEL RIA program entrepreneurs at all stages of the to date. product development process such as product design, industrial design, Industrial Partners multi-screen interface design, Vestel establishes professional prototyping, testing, certification and collaboration with leading companies production. throughout the world in the technological fields where it operates.
Vestel Elektronik 2020 Annual Report 83 Activities
Vestel R&D: Trend Setting Vision
Electronic Product Groups and Innovations Product Products/ Group Technologies Features / Description Turkey’s first domestic ultra-thin OLED TV, the Vestel OLED TV, offers a unique OLED TV image quality with its independently illuminated organic LED technology Motherboard with New A new mechanical TV motherboard design with a side-access connector structure Mechanical Structure which offers greater utility for the end user A motherboard design capable of driving UHD tconless panels, which are becoming common today and preferred by panel manufacturers UHD Tconless Motherboard A UHD TV motherboard design providing small side input/output support HD/FHD Tconless A motherboard capable of driving HD and FHD tconless panels, which are becoming Motherboard common today and are preferred by panel manufacturers Tconless Low-Cost TV A motherboard design with all module cards taken on the motherboard, which is Motherboard with Built-in also capable of driving cost-effective tconless panels Keycard and LED Module A TV design which can detect and apply voice commands with the microphone or Alexa TV external Alexa module The Vestel 4K Ultra HD TV provides the most realistic colours and pictures with its “perfect black” and “limitless contrast” offered by the High Dynamic Range (HDR) and V-UHD Wide Colour Gamut features. Other features: Ultra HD TV 50 Hz MEMC, DTS-HD, Wide Colour Gamut, Quantum Dot Technology (QDOT), High
Television Bright and Ultra High Bright TV, Borderless TV, Glass LGP, HDR, Netflix Worldwide, Freeview Play, ISDB-T HTML 5, HBB 2.0, CI+ Local Dimming, Slim ELED, DLED UNB, Dual Tuner, Dolby Vision, Netflix 5.2, Youtube 2020, AV1, DAP, Dolby Atmos A TV design which offers 4 times clearer image performance than 4K UHD TVs with 8K TV a resolution of 7680×4320 Development of Multicore ARM Android applications
Introducing the only TV solution capable of decoding operators’ Irdeto-encrypted Android TV broadcasts without a CAM module or additional set-top box (STB) CAS TV New Android project design capable of driving HD panels – the first of its kind in Borderless TV Turkey
The first Android TV project with side input and output support, capable of driving a 100 Hz panel Prison TV Transparent mechanical design and control design A TV with a minimum distance between the wall and the TV, with electronic circuits Wallpaper TV and cables presented outside the TV casing for the first time
84 Vestel Elektronik 2020 Annual Report Product Products/ Group Technologies Features / Description Security Oriented DVBIP & Achieving the transition to a low-cost assembly concept in the STB product range Hybrid Oriented with Viaccess CAS support. Under this new concept, two separate platforms with Android STB S2 and Cable support were prepared. Smart Home In order to provide the operator with a cost advantage in Türk Telekom’s Tivibu Smart Network product, work was completed jointly with Nagra to allow distribution of product Without Nagra Card without smart cards. Design work got underway for the Ethernet Gateway and DSL Modem Router to be New Telco Line used in FTTH infrastructure A new motherboard has been added to the 4K product line, derived from the MB130 project. The card also offers Irdeto Cardless as an option.
Set Top Boxes (STB) A new alternative with a small form factor has been created for the Android- 4K supported 4K platforms thanks to the low power consumption of the Amlogic concept.
Work on the design of a new FHD STB platform supported by Verimatrix has got underway. Information screen design which offers 4 times clearer image performance than 8K Information Screen 4K UHD TVs with 7680×4320 resolution MB135VS motherboard with built-in UI (Linux operating system) and Android 7.0
Visual VS Motherboards operating systems Solutions Mb170VS motherboard with Android 9.0 operating system Artificial Intelligence Supported Shooting Modes Smart Phone Face Recognition Technology Tablet Front Camera with Pop Up Capture Smart Watch Android Pie Support
Mobile Devices 1.3” multi-touch screen Energy-efficient lighting products, produced and developed with the R&D carried out at the Vestel City, comprising of power source products suitable for different purposes and outdoor and indoor lighting products including road lighting, street lighting, park and garden lighting, office lighting, architectural lighting, high ceiling LED Lighting Fixtures lighting and industrial lighting fixtures
LED cards used in interior lighting of refrigerators manufactured by Vestel Beyaz Eşya LED Lighting Optical Design and domestic production of secondary optical components such as lenses
LED Lighting Components and reflectors used in LED lighting products with the know how in the field of optics Smart city lighting solutions (street lighting with wireless automation system applied at İzmir Institute of Technology, street lighting projects in Mexico and LED Power Sources Saudi Arabia) Smart Lighting Solutions IoT platform for lighting products, wireless communication receiver, LED driver design with high switching frequency, UV-C box
Vestel Elektronik 2020 Annual Report 85 Activities
Vestel R&D: Trend Setting Vision
Product Products/ Group Technologies Features / Description Smart Home Smart Cane Industrial IoT, Big Data, Artificial Intelligence and Deep Learning Smart Mirror Rapid Prototyping Integrated TV STB Social Responsibility and Accessible Technology Smart Test Platform User Interface and User Experience Joint Language User Experience and Heterogeneous Cloud System Compatibility Interface Work to make security tests a part of the design verification process, Cloud Architecture and to conduct automatized tests Artificial Intelligence IoT (Internet of Things) The first artificial intelligence project implementation with the Spare Parts Solutions Warehouse Inventory Management System project Cyber security Electric Vehicle Charging Stations Charging Station Management System In-Vehicle Information/ Central System Entertainment Screens Operator Web Interface Digital Instrument Clusters User Mobile Application Automotive Lighting Systems Battery Management Systems (BMS) Electronic Cards
Electronic Cards For Vestel Beyaz Eşya and external customers and Other Product Groups Card Design for White Goods
86 Vestel Elektronik 2020 Annual Report Product Products/ Group Technologies Features / Description Products with similar technology developed in different fields with the technological infrastructure shaped by Vestel’s unrivalled electronics R&D and the knowledge accumulated over the years. Activities carried out through companies which Vestel Ventures has invested in:
Ventilators: The ventilator, designed by Medicraft, a Vestel Ventures investment which develops respiratory support devices, has been productized with the support and cooperation of Vestel Beyaz Eşya. Mass production of the ventilator is planned to get underway at Vestel factories in 2021.
Self-Healing Anode (Horizon 2020 Project): With the technology to be developed Sensor Technologies (3D within the scope of the EU-supported Horizon 2020 project, in which Vestel and Sensor, Piezo, Ultrasonic, Vestel Ventures’ affiliate Enwair are among partners, Vestel aims to develop etc.) lithium battery anode technology which will automatically prevent any deformation Wi-Fi and Li-Fi to the battery over time. This is expected to maintain battery health at the same Medical Devices and capacity as on its first day and ensure a long battery life. e-Health Wearable Technologies Bioplastics: Vestel Ventures’ investment Biolive has completed the studies and tests required for the use of bioplastic, which was developed for the first time in Virtual & Augmented the world following studies of the raw material from waste olive stones, in Vestel Reality and Artificial products. Vestel aims to start using bioplastics in its products in the near future. Intelligence Touch Screen Technologies Laser Epilation Device: The first and only laser epilation device with artificial Image Processing intelligence image processing and optical laser technology, which stands out from Blockchain competing products with its ability to perform more painless and safer epilation. Automotive Electronics
Innovative Areas Digital ECG and Holter Monitor: Mobile ECG and Holter devices, which are 5G Telecommunications developed with domestic technology for the first time in Turkey, will play an Products important role in the use of domestic technology and digitalization of cardiology Advanced Material units. Technologies Micro LED Smart Vaccine Cabinet: Vestel’s vaccine cabinet has been developed to include remote monitoring and manageability features. Energy Conversion and Storage Solutions Smart Pole: The smart pole, developed to provide an internet connection service Home Assistant in open areas, derives its energy from solar panels placed on the pole. Users are 3D Printing offered the opportunity to charge their phones through the USB connections placed on the poles. With the Trust Ring Technology which is offered with the smart poles, children and the elderly suffering from conditions such as Alzheimer’s may move freely within the areas where the smart poles are located. Wristbands worn by children enable instant location tracking and information on how far away they are, and allow monitoring of whether they stay within certain areas.
Factory Cyber Security Software: Software which can detect anomalies occurring in the field of operation technology at factories and which enables precautions to be taken before an attack occurs. In addition, the software can take an inventory of all devices connected to the factory network and draw attention to any idle or open connections.
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Vestel R&D: Trend Setting Vision
R&D in White Goods the implementation of necessary The R&D units and the Technology investment activities for these studies Development and Industrial Design Vestel Beyaz Eşya, which sets with the company’s own resources. Centers perform the following tasks: itself apart from the competition with its advantages in R&D and As of the end of 2020, Vestel Beyaz • Keep close track of the innovations innovation, maintains a commanding Eşya has an R&D staff of 632 people. and developments in the sector by position in the development of new following technical, academic and Vestel Beyaz Eşya’s R&D axis consists and pioneering technologies and industrial publications related to of developing technologies and transformation of these technologies household appliances, products that are environmentally into designs and products which friendly, use resources efficiently by • Apply the results obtained by meet the needs and preferences maximizing energy and water savings, carrying out basic research in of global consumers, thanks to the have functional and aesthetic designs, laboratories as innovative features competences and the work of its prolong the life and freshness of to products, strong R&D team. food, provide extra hygiene, deliver • Make customer visits and attend Within the framework of Law No. maximum performance thanks to use trade fairs to closely monitor the 5746 on Supporting Research and of smart sensors and can be remotely needs and requests of customers, Development Activities, Vestel Beyaz controlled via an internet connection. design products based on these Eşya obtained the R&D Center The R&D strategy adopted in this vein findings and carry out studies to Certificate on 17 October 2008. is as follows: improve existing products, The company’s R&D expenditures • Develop new platforms that will adapt • Design products with more amounted to 1.1% of its sales to changing product trends in the functional features through revenues in 2020. market, and offer products that will studies carried out to improve the Vestel Beyaz Eşya’s R&D Department provide user comfort, production parameters, carries out separate R&D activities • Establish strong relationships • Perform pre-production based on the area of production. In based on continuous cooperation qualification of newly designed addition to the internal R&D units with the national and international products or improved products by which carry out specific R&D activities institutions and organizations, conducting trial productions. for each plant, there are also central R&D units that undertake studies on • Contribute directly to the The number of registered inventions industrial design, intellectual property development of technologies, in patented by Vestel Beyaz Eşya had rights, innovation and Industry 4.0 addition to closely monitoring reached 244 as of the end of 2020. for all products manufactured. The technological developments, Technological trends are analyzed central R&D units, which operate through patent research studies and • Protect the intellectual property under the General Directorate and new projects are initiated. The new rights of the company in the designs conduct joint studies with the R&D technologies developed are protected developed, and gain a competitive units of the production plants, consist by patents to prevent their imitation. advantage over competitors, of the Technology Development As such, the company has made Department, the Design Department • Develop products which cater to the around 427 inventions available to the and the Automation and Project preferences and habits of different sector. In addition, the patent portfolio Development Department. Studies markets, is periodically reviewed and patents for industrial design and intellectual relating to obsolete technologies in • Reflect the design trends property right for all products are areas which have been replaced by developing on the axes of carried out by the Design Department new technologies are abandoned. functionality and ease of use to the and innovation studies by the products. Technology Development Department. The Automation and Project Development Department undertakes studies on Industry 4.0 applications, automation, process analysis and
88 Vestel Elektronik 2020 Annual Report Vestel Beyaz Eşya successfully deploys • Electronic Design Koçman University, Uşak University, its competent technical infrastructure Hacettepe University, Afyon Kocatepe • Fluid Mechanics in the process of transforming University and Özyeğin University. information into technology, and • Fluid Analysis The first stage of one application for transforming technology into • Mould Design TÜBİTAK 1004 Center of Excellence products. In line with its sustainable Support Program was accepted in development, exemplary investments • Intellectual Property Rights 2019 and the second stage application are carried out by the company’s • Materials was submitted, with the evaluation competent and innovation-oriented process currently ongoing. In 2020, R&D engineers together with national • Performance Tests one application for TÜBİTAK 2209/B and international project partners by Industry Oriented Research Projects using the state-of-the-art equipment • Thermodynamics Support Program for Undergraduate and systems and through collaboration • Acoustics Students and 2 applications for with universities. • Mechatronics TÜBİTAK 2244 Industry PhD The teams within the R&D Department Fellowship Program were accepted, conduct studies in the following areas: • Robotics for which studies will be carried out jointly with Özyeğin University and • Development or implementation of • Automation Ege University. Within the scope of new technologies, • User Interface Design international R&D support programs, • New product designs, • Industrial Design three applications were submitted in 2020, one to Horizon 2020 (the • Environmentally-friendly Vestel Beyaz Eşya’s R&D European Union Scientific R&D and production, Collaborations Innovation Grant Program), two to • Product development, Applications for 14 of the 43 TÜBİTAK the Support Program for Increasing the Capacity to Benefit from TÜBİTAK • Efficiency improvement and cost TEYDEB (Technology and Innovation 1071 International Research Funds reduction. Funding Programs Directorate) Projects made by Vestel Beyaz Eşya’s and Increasing Participation in Vestel Beyaz Eşya’s R&D units R&D Center in 2019 were accepted. In International R&D Collaborations. work with the aim of increasing 2020, 19 projects, which are carried the company’s competitiveness in out with the support of TÜBİTAK, were international markets by helping the reported. company develop its own products and achieve customer satisfaction. Many of the projects carried out were realized through collaborations Thanks to these competencies, the with the universities. Intensive R&D units are specialized in solving collaborations have been entered into technical problems related to products with İzmir Dokuz Eylül University, and production methods. Ege University, Sabancı University, The fields of expertise of the R&D staff the Middle East Technical University, include: Yeditepe University, İstanbul Technical University, İzmir High Technology • Structural Design University, Katip Çelebi University, Yıldız Technical University, Muğla Sıtkı • Structural Analysis • Electronic Control
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Household Appliances Product Groups and Innovations Product Group Products/Technologies Specifications/Description Fermented products are defined as products produced by the addition of natural or initiating cultures from plant and animal products. Fermented foods and beverages are produced by microorganisms and enzymes such as bacteria, yeast, and fungi. Fermented foods and beverages constitute approximately 5-40% of the total food intake, equal to approximately 50-400 FermentStore grams per person per day. With the increase of fermented food production (Fermentation) Technology at home in recent years, products such as yogurt making machines have started to appear in the market. The fermentation feature is offered to users in the fermentation compartment of Vestel’s 4-door puzzle refrigerator, which can ferment 7 different foods. The product also offers distinctive features such as special accessories, lighting and screen designs specific for this compartment. During the storage of food in refrigerators, bad odour molecules and volatile organic compounds (ethylene, etc.) are formed, with an increase in the amount of bacteria present. These substances reduce air quality and pollute the air inside the refrigerator. The state-of-the-art special photocatalytic filter, inspired by the cleansing effect of sunlight, cleans the CrystaLight air inside the refrigerator. The special titanium dioxide (TiO ) coated filter is (UV-A and Photocatalytic Filter 2 activated by UV-A light and creates hydroxy radicals on the filter’s surface. Technologies) With these hydroxy radicals, bacteria, viruses and malodour molecules are broken down and transformed into harmless molecules such as water and carbon dioxide. The CrystaLight Technology was put into use in the combi
Refrigerator - Freezer refrigerator models in 2019. The product’s 95% odour removal and 99.99% antibacterial properties have been registered by an independent laboratory.
The special titanium dioxide (TiO2) coated filter is activated by UV-A (365 nm) light and creates hydroxy radicals on the filter’s surface. With these CrystaLight hydroxy radicals, bacteria and malodour molecules are broken down and (UV-A and UV-C Technologies) transformed into harmless molecules such as water and carbon dioxide. The use of UV-C Light Technology will ensure that Daylight Technology has a more rapid effect on microorganisms and is also effective on viruses. Air inside the refrigerator is cleansed at a higher rate with the operation Hygiene Mode of Active Ion Technology by selecting the hygiene mode on the refrigerator screen. This selection also ensures the removal of unpleasant odours. A new generation refrigerator that can be used either as a freezer or as a Dual Control fridge in line with consumer’s needs. R&D studies have been completed for (Either Fridge or Freezer) this feature, which is planned to be offered to users in the 60 cm single-door Technology refrigerator with the new generation No Frost Multi Cooling system.
90 Vestel Elektronik 2020 Annual Report Product Group Products/Technologies Specifications/Description Technology which allows the freezer to be set as a fridge to allow for increased cooler volume in line with the needs of consumers, for the space Convert Zone to be used as a fridge or a freezer, and to be completely turned off when (You Have the Control) not needed. R&D studies are being carried out to rollout this technology, Technology which has been put on the market for 70 cm wide refrigerators, to the 84 cm double-door Top Freezer refrigerators with the new generation No Frost Multi Cooling system. The isolated vegetable compartment and Humidity Filter feature offered MaxiFresh Plus Technology with the MaxiFresh Plus Technology keeps fruit and vegetables fresh for up to 30 days. This technology has been put into use in the 60 cm combi models. A 360-degree rotating tray in the Turning Shelf mechanism allows food items Turning Shelf Technology placed at the rear of the uppermost shelves to be accessed more easily. The remote access module on the refrigerator allows users to access and control the unit remotely. In addition, users receive instant notifications through the application in situations such as when the door is left open, which Smart Technology would risk spoiling of food inside the fridge, allowing timely intervention. Smart Technology has been introduced in the double-door refrigerators with IMD screens. With the new generation No Frost Multi Cooling system developed in the 84
Refrigerator - Freezer cm and 91 cm wide 4-door refrigerator development project, an independent air cycle is created, preventing odours from mixing with each other while at 4 Door Refrigerators with New the same time ensuring that food can be stored for a longer period of time. Generation No-Frost Multi The 4 doors provide a great deal of convenience to users during the loading Cooling System and storage of food. The project will bring an array of features to users, such as LED lighting, crisper humidity control, multizone and automatic ice dispenser integration. A new vertical freezer product family will be commissioned with 54 cm and 60 cm wide and 144 cm, 155 cm and 175 cm high models, with No-Frost and Vertical Freezer Projects Static cooling systems. Basket and flap features as well as features such as quick cooling trays and icematic ice dispenser will also be available as options.
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Product Group Products/Technologies Specifications/Description New European Energy High energy efficiency washing machine and washer dryer product family Regulation Compliant Product developed in accordance with the new Labelling and Ecodesign Directives Range which entered force in Europe in 2020. Low Depth BLDC Washing Washing machines with low depth BLDC motor technology with 6 kg, 7 kg Machine Range and 8 kg load capacities. Production of remote access products in the fully renewed T series washing machine product range, which stand out with their stylish and user-friendly features, has got underway. The T series product range includes a wide T Series Smart Product Range selection of units, including washing machines with load capacities from 4 kg up to 12 kg and washer-dryer products with washing capacities of 7-10 kg and drying capacities of 5-6 kg, with a range of interface and remote access options. The 1600 rpm low depth washing machine, with a load capacity of 8 kg, offers The 1600 Spin Washing Machine silent washing and spinning, and also stands out by using 40% less energy with 8 kg Load Capacity than A+++ products. The 1400 Spin Washing Machine A washing machine with a 1400 rpm and 12 kg capacity, combining high Washing Machine with 12 kg Load Capacity speed with high capacity. A wide product range offering superior steam technology which ensures hygiene and crease removal, provided in 6 kg, 7 kg, 8 kg, 9 kg and 10 kg Washing Machine Range with capacities. With Steam Technology, clothes are cleaned more deeply and Steam Technology hygienically, with wrinkles effectively reduced and bad odours removed without needing to get the laundry wet. Washing Machine Product Range Product range with 8 kg, 9 kg and 10 kg capacities which removes 99.99% of with Daylight Technology bacteria with Daylight Technology. Intellicare washing machine with one-touch washing, touch screen, remote Intellicare Washing Machine access feature and automatic dosing system. Tumble dryers with Inverter Motor Technology with 7 kg, 8 kg and 9 kg Tumble Dryers with Inverter capacities. These high efficiency products stand apart in the market with Motor Technology their A+++ energy rating. Tumble dryers, which have two quick drying programs in all models, are Heat Pump Tumble Dryer with designed in harmony with Vestel’s washing machines with the fast wash Record Fast Program Time feature. Thus, users will be able to wash and dry their laundry in less than half an hour. Production of the fully renewed T Series tumble dryer product range, which stands out with its stylish and user-friendly features, has got underway. The T Series Tumble Dryer Product T Series product family includes a wide range of products including 7-8-9-10 Family kg capacity heat pump and condenser tumble dryers with a range of interface and remote access alternatives. Studies into ION-Tech Technology were carried out in 2019 and the technology Tumble Dryer was integrated into the T Series platforms. With this feature, which is offered New Platform Development in heat pump models, users will be able to expel unwanted odours such Project with Natural ION-Tech as cigarette smoke from their clothes. In addition, the technology allows Technology hygienic drying thanks to its ozone technology. In tests carried out in the Ekoteks Laboratory, the technology was found to destroy 99.99% of bacteria. With Pearl Odour Technology, fragrance capsules, which infuse laundry with a Pearl Odour Technology pleasant fragrance during drying, have been designed and integrated into both heat pump and condenser tumble dryers.
92 Vestel Elektronik 2020 Annual Report Product Group Products/Technologies Specifications/Description Innit is a smart kitchen application which allows the user to experience the best cooking at a professional level (UX) in his/her kitchen at home and guarantees the cooking result. INNIT Application in Built-in Ovens Unlike traditional oven cooking methods (single function, specific time and temperature), all of the oven’s cooking functions use a smart algorithm to achieve the best cooking result. With this project, a cooking appliance with three separate cooking 100x60 cm Range Cooker compartments will be developed for the first time and all compartments will Product Family for Crowded be able to operate at the same time. In addition, for the first time, a cooking Families with 3 Different Cooking configuration with 7 burners will be used, one of which being a wok burner Volumes, 1 Drawer and 7 with a power of 4 kW. As the new cooker will be larger and heavier than other Different Hotplates cooking appliances produced by the Company, it will provide new gains in terms of packaging and packaging tests. 60 cm and 78 cm V-Flex Cooking Appliances Flex induction product family that automatically detects the pan size and only Induction Cookers Providing heats the required part of the burner, also providing convenience to users Independent Control in Each with its ready-to-cook functions. Area (8 Different Areas) The positive effect of steam on baking, especially in pastries, has long been proven. With the work done in the project, steam support will now be offered Entry Level and Mid- Segment not only in high-end products but also in the mid- and entry segments. This Steam Supported Built-in Ovens option will allow the baking of pastries and breads which are fluffy on the inside and crispy on the surface.
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Product Group Products/Technologies Specifications/Description Energy-efficient products have been developed for the North American 24 Inch Dishwashers with BLDC market (USA and Canada) in accordance with the requirements of the Washing Technology for the market. The products developed meet special needs in terms of size and North American Market safety requirements. 45 cm “Slim” Type Dishwashers Entry-level and high-end energy efficient products have been developed with Asynchronous and BLDC for the North American market (USA and Canada) in line with the market Washing Technology for the requirements. The products developed meet special needs in terms of size North American Market and safety requirements. Dishwashers Offering More Dishwashers which can perform more hygienic washing are designed with Hygienic Washing with UV-C the UV-C Technology developed in addition to the Ion Technology which Technology removes unpleasant odours from dirty dishes. During the development of the A Series, a new range of freestanding A-Series Smart Dishwashers products, preparations were made to develop remote access products and with Remote Access Technology IoT features, and remote access technology was added to the products to make them smart. The total number of models of built-in products in dishwashers has quadrupled New I Series Built-in Product with this product range. In preparing new products, a comprehensive product Family range was obtained with the addition of the features and functions demanded by the market.
Dishwasher The existing metal filter in 45 cm dishwashers was improved and a new New Square Metal Filter in 45 cm filter consisting partly of metal and partly of plastics was developed and a Products cost-efficient alternative was created. Designs have also been developed to positively affect product performance. Built-in products are products which do not contain any information screens when viewed from the front, and can be hidden in kitchen cabinets. The user User Information Light may not clearly understand which stage the program is running on, or when Technology (Infoled 2.1) on it will be completed. A dishwasher with Infoled 2.1 Technology, which informs Kitchen Floor in 45 cm Built-in the users of the stage of the program with red and green LED lighting, has Products been developed in fully built-in dishwashers. The user will be able to see the program step through lighting reflected from the floor when the feature is activated. Dishwashers need to be cleaned periodically. A special cleaning program Machine Cleaning Program (Self has been developed for this purpose. When the machine is empty, the inside Clean) of the machine is cleaned hygienically through operation with or without detergent.
94 Vestel Elektronik 2020 Annual Report Product Group Products/Technologies Specifications/Description A number of scientific studies have demonstrated that UV-C rays with a wavelength of 254-275 nm are the most effective ultraviolet rays in killing bacteria. Indoor inverter air conditioning units using Vestel’s Daylight Technology contain a UV-C hygiene system which can remove bacteria, Air Conditioner with UV-C viruses and microorganisms brought to the surface of the heat exchanger Technology (exchanger) with the ambient air absorbed. This system not only provides healthy ambient air by improving indoor air quality, but also keeps the heat exchanger surface of the indoor unit clean. The function can be activated or deactivated by pressing an “automatic cleaning” button on the remote control. A UV-C hygiene kit compatible with many brands has been designed which UV-C Hygiene Kit can work with indoor cassette type-duct type air conditioning units. Full Series Inverter Air All Inverter air conditioner models will be produced using remote access Conditioning Units with Remote technology. Access Inverter Air Conditioner Range An inverter air conditioner product range developed for the Egyptian market. for the Egyptian Market On-off Air Conditioner Range for 15 different on-off air conditioning unit projects, the equivalent of previously the Middle East, North Africa and outsourced air conditioners, have been commissioned within the scope of CIS Markets international sales projects. Air Conditioner - Water Heater The Easy Bill inverter air conditioner warns users of their quota. With this Easy Bill (Smart Billing) Air system, which can be integrated into Vestel’s mind of the house application, Conditioner consumers are informed of approximately how much electricity they have consumed in TL terms. In line with the goal of maximizing energy efficiency and product diversity in Bottom-Controlled Water domestic and international markets, the bottom-adjustable water heater, Heaters which will include smart applications, will be added to the product range. New Square and Cylindrical A low-cost square water heater design has been developed to suit the Water Heater Projects aesthetic needs of the market.
Vestel Elektronik 2020 Annual Report 95 As the unwavering export leader in the electronics sector, Vestel realizes its sales in international markets through its strong international sales network while attracting attention with its multi- channel organization in the domestic market.
96 Vestel Elektronik 2020 Annual Report New Horizons in Customer Experience
As the unwavering export leader in In addition to expanding the customer and Africa regions are carried out by the electronics sector, Vestel realizes portfolio for which it provides ODM Vestel Electronics Gulf DMCC, which its sales in international markets services, Vestel also aims to increase Vestel Ticaret established in Dubai in through its strong international sales its brand penetration and market August 2017. The sales and marketing network while attracting attention share in foreign markets with the activities in other foreign markets are with its multi-channel organization regional brands acquired in Europe carried out directly by Vestel Ticaret. in the domestic market. Consistently and the global brands held under the Vestel Ticaret acquired the rights carrying its ambition in retailing brand licensing agreements. for the development, production, forward with its store concept and In line with its profitable growth sales and marketing of Sharp innovative approaches to sales strategy, Vestel is increasing the branded household appliances for and after-sales services in the share of mid- to high-end products the European market under the domestic market, Vestel goes beyond in its sales mix. Vestel carries out its brand licensing agreement signed expectations to open up new horizons marketing and sales activities in the in September 2014. As of January in customer experience. European market through the local 1, 2015, Vestel Ticaret became International Sales sales and distribution network of the the exclusive distributor of Sharp 9 foreign trade offices owned by its branded household appliances in Vestel’s sales strategy in international wholly-owned subsidiary Vestel Ticaret Europe, which are manufactured at markets is implemented on the pillars AŞ (“Vestel Ticaret”). The Company’s Vestel Beyaz Eşya’s plants and at the of sales on an ODM basis to A-brand European sales and distribution Sharp Corporation’s plants in Asia. manufacturers, distributors and retail network consists of the foreign trade Vestel expanded the range of Sharp’s chains, and branded product sales offices located in the UK, France, products for the European market through the regional brands acquired Germany, Spain, the Netherlands, with washing machines, dishwashers, and global brands licensed by Vestel Poland, Russia, Kazakhstan and cooking appliances and tumble Group. Romania. The sales and marketing dryers developed exclusively for the activities in the Middle East, the Gulf Sharp brand. Under Vestel’s strong management, Sharp has started to be recognized as a household appliance brand in Europe.
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While Vestel has been strengthening its presence in the European market with Sharp-branded product sales, Vestel brings the the Sharp brand has captured a visible market share in some European convenience of online countries thanks to the high double- digit growth rates achieved in the shopping to retail past 6 years. The scope of the brand with Vestel Ekspres licensing agreement signed with the Sharp Corporation, which is valid stores, which offer a until the end of 2024, was expanded in 2019 to include the development shopping experience of a family of smart products for the product range of six household through digital appliances (refrigerators, washing screens and fast machines, dishwashers, electric ovens, tumble dryers and wall type delivery. split air conditioning units) for the European market. Under the expanded agreement, Vestel aims to reach EUR 300 million in sales revenues from the sale of Sharp-branded products by 2024. In line with Vestel’s objective of players in the UK white goods Ticaret’s strong distribution network, building strategic partnerships with market. With this acquisition, Vestel which transforms into an important global brands, a brand licensing is expected to further strengthen its competitive advantage. position in the UK market. agreement was signed with Toshiba Vestel reaches a wide range of Visual Solutions Corporation in the Maintaining its rapid growth in the customers in the domestic market TV segment in 2016. Vestel Ticaret Eastern European market, Vestel also through 1,073 Vestel stores (including has assumed the production, sales, exports to Africa, the Middle East, 21 Vestel Ekspres stores), 748 marketing and supply chain operations Australia, Asia, Oceania and South Regal sales points (of which 224 are of Toshiba branded televisions in America in addition to Europe, and exclusive Regal stores), 9 Vs Outlets the European market under this is unwaveringly pressing ahead to and online stores (emagaza.vestel. brand licensing agreement. With maintain its efforts to expand its range com.tr, vsoutlet.com.tr and regal-tr. this agreement, which entered into of export destinations in order to com) as well as through household effect in December 2016, Vestel exploit the growth potential, especially stores, hypermarkets, discount started production and sales of in the Sub-Saharan region, India, stores, electronic retailer chains and Toshiba branded TVs from January Australia and the American continent. e-commerce websites. 2017. With the completion of the In 2020, Vestel exported dishwashers In addition to the physical distribution product range, sales started to gain and mini smart ovens to the North network, Vestel, as the first consumer momentum from the second half of American market for the first time. 2017, with the products capturing a durables brand to sell products visible market share in the European Domestic Sales online, also reaches consumers via its e-store, emagaza.vestel.com.tr. The TV market in a space of just 3 years. Vestel’s marketing and sales website, where all Vestel products Under the Toshiba brand, growth is activities in Turkey are carried out are offered for sale in a virtual mainly derived from the sales of upper by Vestel Ticaret. Vestel’s diversified environment, attracts attention with segment products such as Smart TV product portfolio with advanced its user-friendly design. Periodical and UHD TVs, positively affecting the technology and high quality, along Company’s profitability. with its experience in the multi-brand In 2020, Vestel Ticaret acquired the concept, is complemented by Vestel White Knight and Hostess trademarks of Crosslee PLC, one of the major
98 Vestel Elektronik 2020 Annual Report Antalya. The Vestel Ekspres concept, which is planned to be rapidly rolled out to busy streets throughout Turkey in order to reach consumers at more points, combines the online shopping experience with physical retail, responding to changing shopping habits, saves time by providing the customer with the ability to instantly find the product he/she wants, allows quick comparisons and offers same- day delivery. Vestel aims to develop special digital applications suitable for the new generation retail and offer these to consumers in its Ekspres stores. Cafe Vesto: Taking a break in a brand new shopping experience Reflecting Vestel’s vision of directing the consumer electronics and white goods sectors and achieving firsts in Turkey, “Café Vesto” is a concept that campaigns and promotions are entered into with e-commerce brings the cafe and store together. held regularly for consumers at the sites, namely N11, Hepsiburada and Vestel has been one of the few such e-store. In the virtual environment, Gittigidiyor, Vestel is undertaking examples in the world and the first products are also sold over vsoutlet. product sales under Vestel and Regal brand of its sector in Turkey, having com.tr and regal-tr.com, where Regal brands via the online stores opened in implemented this concept. branded products are offered for sale. those marketplaces. The Vestel stores in Beşiktaş, the In line with its online sales strategy, As of the end of December 2020, Zorlu Center and Bahçeşehir in Vestel opened stores in online www.vestel.com.tr and İstanbul, Elvankent in Ankara and marketplaces, which play an important www.vsoutlet.com.tr had 962,887 Karşıyaka and Alsancak in İzmir are role in e-commerce in Turkey, and 15,473 members, respectively designed with the cafe concept. In during 2020 while developing its own while www.regal-tr.com had 21,960 addition, there is also a Café Vesto corporate online sales channels. members. at Levent 199 in İstanbul, which is With the impact of the pandemic the headquarters of the Company. Vestel Ekspres – A New Generation during the year, a wider product Vestel opened its doors to a new retail Retailing Concept range was offered via vestel.com. experience with its café concept which tr, regal-tr.com and vsoutlet.com. Vestel brings the convenience of was developed to provide customers tr, and significant steps were taken online shopping to retail with Vestel with a better quality, richer and towards becoming the preferred Ekspres stores, which offer a shopping distinct service and to allow customers sales channel and raising customer experience through digital screens experience Vestel products as they experience in online shopping to and fast delivery. wish, while they relax. a higher level. As of May, the first In 2020, Vestel realized a first in the Café Vesto, where Vestel’s “Proudly and fastest delivery application in retail sector and launched the small Domestic” theme is reinforced, mainly the sector was introduced with the format Vestel Ekspres store concept, offers dishes with a local zest and promise of “delivery in 24 hours” for which differentiates itself with its provides visitors a varied menu. purchases made on the vestel.com. digital displays. The Ekspres stores, tr. With this application, products are Vestel aims to spread the retail the first of which was opened in collected by Vestel authorized service approach with the cafe concept, which February, are operating at 21 locations providers from the nearest dealer and has been rolled out at seven sales as of the end of 2020, mainly in delivered to the customer within 24 İstanbul, with stores also in İzmir and hours. Within the scope of agreements
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points, to all four corners of Turkey, Successful Application project, which thus bringing a breath of fresh air to was initiated at 10 stores as a pilot in VRA opened 170 the sector. order to be in constant communication classes during the with the field personnel, draws The Vestel Retail Academy – the on the knowledge and experience year. With 89 different Address of Development in Retail of the field staff and encourages training programs for The Vestel Retail Academy (VRA) them to share good ideas and continued to provide training activities successful practices in their areas 3,553 employees from for the Head Office and dealer channel of specialization. The project aims to in 2020 and organized training enable store employees to share ideas the Head Office, the programs for both Zorlu Holding and practices which they believe will dealer channel, Zorlu companies and other companies with increase customer loyalty and sales, its own internal staff of trainers. 74% improve business performance or Holding and other of the training offered during the year create a common retail culture, and was provided by the staff trainers. perpetuate online information and companies, a total of experience sharing. In addition to these training programs, 14,889 man hours of the VRA initiated Leader and Effective The Vestalks project is aimed at training was provided. Team Player Training programs in a developing employees in both business modular structure for white-collar and social areas with inspiring employees of Vestel together with speeches by the experts from different Sabancı University, Boğaziçi University disciplines. and Yıldız Technical University. The center located at Vestel City, 352 The Vetoks project is a training VRA also organized the Vestelektüel authorized service points providing program specially designed for Training Program for white-collar services nationwide, the Central managers and senior employees, and employees in specialist and assistant Services located at four locations in is geared towards the private lives of specialist positions, where different three provinces, three güVENUSsü managers rather than their business disciplinary fields come together. (trust-VENUS-base) and three mini competencies. This program, in which güVENUSsü centers that provide all executives may attend, is aimed The 5-day “Sales Camp” program services for the Venus smartphones at supporting personal development continues to be provided to store staff. and Vestel tablets, one SDA base to rather than professional development, Due to the pandemic, the program serve small domestic appliances, and offering content which brings many was moved from the classroom to the technical and training units and benefits for managers from health to an online environment. The Online field operations managed through nutrition, meditation and drama. Sales Camp training program, which the four Regional Directorates, Vestel was provided by internal trainers and Apart from these projects, in-house Customer Services promises a unique using videos taken by the store team, professional coaching training customer experience with the mission ensured development continuity for programs have been organized so that of providing services that transform the store staff. employees in responsible positions expectations into satisfaction and Apart from these training programs, can transfer their experience to others satisfaction into appreciation and online training programs were who they work with using scientific trust. methods. Employees who complete provided to students carrying out an Vestel Customer Services continues the in-house coaching program are internship at Zorlu Holding during the to make a difference in the sector with included in the Praktikum (advanced summer months of 2020. its pioneering projects in after-sales coaching) training, which is a VRA opened 170 classes during services. continuation of the program. the year. With 89 different training Having proven its success with top Continuously Raising Vestel’s programs for 3,553 employees from prizes in the world and held up as an Customer Promise in After-Sales the Head Office, the dealer channel, example in its sector in Turkey, the Services Zorlu Holding and other companies, a Vestel Call Center works towards total of 14,889 man hours of training Vestel’s after-sales activities are the goal of getting “A THANK YOU” was provided. carried out by the Vestel Customer (Bİ TEŞEKKÜR) by leaving a good In addition to standard online-based Services General Directorate (Vestel impression on each customer with its (vpa.com.tr) training, the Good Idea Customer Services). With the call approach of sincere communication which touches the hearts of the
100 Vestel Elektronik 2020 Annual Report The first female technicians assumed their duties on the International Women’s Day, on 8th of March in 2019. A total of 58 women technicians had been trained by the end of 2020.
customers. In addition to phone Working in coordination with the Directorates operate in the field and calls, the Call Center voice response factories, technical teams at Vestel service operation specialists work at system, the Vivacious (Capcanlı) Customer Services, help provide these directorates. support chat channel, the mobile customers with quality products Three güVENUSsü and three mini assistant application, the Vestel in line with the effective user tests güVENUSsü centers located in website, the WhatsApp channel, the and feedback received from the İstanbul, Ankara, İzmir and Trabzon social media, the Venus support line customers and stakeholders for new offer services with a brand new and Çözümü Var website are also products to be launched within the service concept exclusive to Venus available for customers, so they scope of product development and smartphones and Vestel tablets. These can access customer services from improvement activities. services not only include the promise the channel of their choice, at any The Spare Parts Planning & Supply of fixing software and accessory time of their choosing. On the one and Spare Parts Warehouse units malfunctions within 20 minutes, but hand, technological developments located in the Electronic Factory also provide a temporary device to the related to infrastructure are closely area work on the planning, ordering, customer and tracking of the repair followed up and digitalization is rapidly procurement, storage and shipment process on venusdestek.vestel.com.tr. implemented through pioneering of spare parts in line with the goal projects which set the company apart. In addition, 352 Vestel authorized of providing the fastest service to On the other hand, efforts are taken service providers throughout the customers. to ensure that the communication country operate as güVENUSsü repair process is not robotic. Four Central Services were points. established in three provinces by The Vestel Call Center provides call Vestel Customer Services, which Vestel Customer Services, to act as a center services not just for the Vestel ensures that all processes are carried role model for the authorized service brand, but also for Zorlu PSM, Vestel out meticulously, accurately, quickly providers serving customers in the Germany, V-taksit, Zorlu Tekstil and and reliably while targeting continuous field. The Central Services support the Zorlu Santral. The high standards improvement, was entitled to maintain field with training, inspection and rapid of the Vestel Call Center have been its ISO 9001: 2015 Quality Management supply of spare parts. Central Services recognized with the “Best Remote System and ISO 10002: 2014 Customer also work in a co-ordinated manner Call Center” Award within the scope Satisfaction Management System with central technical units in new of the 13th Turkey Call Center Awards certification which it has held since product testing. organized by IMI Conferences in 2014 following a 3-day successful November 2020. In order to improve the coordination audit conducted by the TSE (Turkish between authorized service providers, Standards Institution) in 2020. factories and dealers, four Regional
Vestel Elektronik 2020 Annual Report 101 Activities
New Horizons in Customer Experience
Projects which set Vestel Customer in the cooling, cooking and washing customers self-service and ease of Services Apart product groups. At the end of use, the website will be expanded to the applied training, application include informative content for the Women Technicians Project: The examinations are carried out. Those field employees and Vestel Customer project began in March 2019 with who pass these examinations begin to Services. the participation of volunteers from work as technicians. The first female female employees who work as The Vestel Service Academy technicians assumed their duties on specialist customer representatives at the International Women’s Day, on 8th In order to provide a flawless authorized service providers. of March in 2019. experience in after-sales services, The objectives of the project are as the Vestel Service Academy has been A total of 58 women technicians had follows: operating within the Vestel Customer been trained by the end of 2020. Services since 2012 for regular and • Placing women employees as Efforts to increase the number of continuous training and development assembly technicians at authorized women technicians and to provide of all service teams such as authorized service providers, to raise the quality sustainable services are ongoing. service technicians, customer of the work and satisfaction rate There is a Solution (Çözümü Var): The representatives and authorized service among customers, solution portal “There is a Solution for center managers. The Academy • To attract female technicians, which Everything” is a website project that provides 18,000 man-days of training are rare in the sector, includes all information and solution per year in a wide array of educational content for customers regarding the modules through various training • To contribute to the employment of products. With the website created, methods, including digital and live women. customers can access information and broadcasting. The Vestel Service Voluntary female technician solution videos and user manuals for Academy, which has won awards candidates receive technical training each product, thus solving problems on many national and international provided by the Service Academy they may encounter when using the platforms, achieved a first in Turkey instructors in workshops. They products, submitting breakdown and when it was awarded the ISO 29990 complete their training program, assembly requests at any time and Certificate, proving the quality of its which lasts approximately 2 weeks, communicating with the call center education programs at international through written channels. In the next standards. phase of the project, which offers
The solution portal “There is a Solution for Everything” is a website project that includes all information and solution content for customers regarding the products.
102 Vestel Elektronik 2020 Annual Report The “Turkey is Vestelized” campaign will take a step further with the new message of “Possible With Vestel - Why Not?” in line with the new brand communication strategy in 2021, after having proclaimed its “Proudly Domestic” campaign.
The Vestel Service Academy ranked communication approach and from With an awareness of the tremendous first with the “Fault Codes Application” sales campaigns to digital projects, role that women play in the cycle project in the KALDER Successful all processes are fed by these two of production, sales and after- Team of the Year Awards 2020 concepts. The greatest pillar of sales services and in achieving competition, which plays a role in support behind this structure is Vestel high customer satisfaction, in 2017, the spreading quality awareness and City, the Company’s manufacturing Vestel brought women, who are teamwork among enterprises, and complex - where Vestel proudly a cornerstone of the Company’s received the Golden Award. produces domestic technologies in success, to the heart of its Turkey. communication and expressed its Vestel’s Corporate Brand and gratitude to them. This communication Communication Strategy The objective of the communication path, which was supported in 2018, campaign is to bring state-of-the- The concept of “Turkey is Vestelized” 2019 and 2020, will evolve into a more art technology to all four corners and “Proudly Domestic” form the basis technological and pioneering position of Turkey by achieving firsts of the communication strategy that in 2021 with a new and creative and to become one of Turkey’s sets out the goals, vision and mission discourse of “Possible with Vestel - inspiring brands. Great success of the Vestel world. Why Not?”. has been achieved with the “Turkey The elements that shape this concept is Vestelized” and the “Proudly Vestel will continue to set itself apart are to make people’s lives easier Domestic” platform, which was and build on the momentum it has with the products produced by Vestel, launched 6 years ago. While the achieved in its communication and Turkey’s domestic brand producing product categories that were already advertising activities in 2021. The high-tech to world standards, its good were strengthened further, Company will continue to deliver wish to bring the state-of-the-art the success of the communication technology as the main message in technology into every home and to campaign was reinforced with the its communication activities, while provide the very best to consumers effect of holistic communication. advancing its successful core brand with the products it manufactures. In communication in 2019 and 2020 The “Turkey is Vestelized” campaign this vein, the goal is to have at least with a new discourse and method in will take a step further with the new one Vestel product in each home. 2021. Vestel will maintain its projects message of “Possible With Vestel - leading the industry in the field of the The concept of “Turkey is Vestelized” Why Not?” in line with the new brand Internet of Things and its pioneering lies at the heart of the creative communication strategy in 2021, position in e-commerce in 2021. strategy. This approach is reinforced after having proclaimed its “Proudly by the motto of “Proudly Domestic”. Domestic” campaign. From product strategy to the
Vestel Elektronik 2020 Annual Report 103 Activities Vestel Proje Ortağım
Designed as a project to draw on the combined strengths of Zorlu Group and Vestel’s domestic technology, Vestel Proje Vestel Proje Ortağım brings ease to people’s lives, aiming to provide Ortağım aims to result-oriented and effective solutions provide the most to customers through innovative products in various fields. appropriate turnkey Merging the LED Lighting, Air solutions starting Conditioning, Hotel & Construction Projects, Digital Solutions and Public from the design, Sales Directorates at Vestel under one roof, Vestel Proje Ortağım offers in order to attain professional solutions to projects the highest level of single-handedly with its expert teams. Vestel Proje Ortağım aims to provide technology in both the most appropriate turnkey solutions public and private starting from the design, in order to attain the highest level of technology sector projects. in both public and private sector projects. To this end, the needs, requests and existing problems of corporate customers are analyzed and determined rapidly and accurately, and products are designed in accordance with the needs. Aiming to design the most appropriate projects in the most accurate way, flexible and various payment alternatives are offered to customers mix offered for hotel and construction Vestel Interactive IP TV offers for financing project costs. After-sales projects. an unforgettable entertainment services, which are shaped by Vestel’s experience through the interface it Identifying needs fully by responding unconditional customer satisfaction provides. On the other hand, standing to customers on a timely basis with approach, is also among the main out with their user-friendly designs, its team of specialists, Vestel Proje components of the service cycle at Vestel RF Hotel TVs transform Ortağım is able to change the design Vestel Proje Ortağım. standard TVs to an all-in-one content characteristics such as color, size and entertainment center through a and logo, as well as the project- Hotel and Construction Projects series of features. specific software and technical Vestel offers customers solutions specifications of its products in hotel For construction project solutions, which go beyond their expectations and construction projects, in line with built-in sets are preferred with their by customizing the existing products the special requests of customers. durable, user-friendly and stylish in its product mix in line with the designs. The Vestel built-in sets, In addition to freestanding household customers’ needs. which add elegance to the kitchens appliances and built-in sets, IP TV in construction projects, are used in Providing an appropriate solution and RF TV alternatives are also many flagship projects. for each and every project, Vestel offered as hotel solutions. The Proje Ortağım expands its customer software in these product groups is The Bodrum Yalıkavak Delta Hotel, portfolio through collaborations developed in collaboration with Vestek Mersin Athena Hotel, Voyage Bodrum, with the leading firms in the sector Elektronik Araştırma Geliştirme AŞ, Maxx Royal Kemer Resort, Raymar thanks to its wide range of product a Vestel Group company. Designed Hotels, Novotel, Kemer Sailor’s Beach to meet a range of expectations,
104 Vestel Elektronik 2020 Annual Report screens, which can be managed from a single center and have the ability to publish documents in various formats, facilitate advertising, promotion and information activities wherever desired with different models and sizes. Intensive R&D activities are carried out to design products which can meet the sector’s constantly changing needs. Vestel Digital Display Solutions, which launched its slim and stylish design, side-illuminated information display models with the 592 product Hotel, Arnor De Luxe Hotel & Spa, Operating in a wide range of sectors, family in 2020, meets all the needs Yasmin Bodrum Resort, Maxeria Hotel, including retail, food, transportation for information products in a product Rixos Sungate Hotel Antalya are some and finance in addition to education, range with sizes ranging from 24 of the exemplary hotel projects to have healthcare and tourism, Vestel Digital inches to 98 inches. chosen Vestel in 2020. Display Solutions first participated in Vestel Digital Display Solutions also the digital transformation process in In reference housing projects such provides digital display products the education sector with the Vestel as the Fikirtepe Life Center-Torkam for large food and fast-food chains. Interactive LED Smart Board products. Construction, Folkart Line, Herdem- Product sales in this area have gained The Vestel Interactive LED Smart Makro İnşaat and Babacan Port Royal, momentum with the expansion in Boards, which provide an interactive many different product groups from TV customers’ businesses. and a rapid learning environment to white goods were used together to for all educational institutions from In addition to the food industry, deals provide a tailored package solution. elementary school to university and were made for the sale of digital Digital Display Solutions language courses, are the leading display products to other industries. products in the education sector. Within the scope of such projects, all Vestel Dijital Ekran Çözümleri information to patients in a private (Vestel Digital Display Solutions) The transformation which started hospital is provided through Vestel offers customers technological in restaurants with the Vestel digital display products. In addition, solutions with its products such as the Information Displays and was Vestel IPTV products offer state-of- Interactive LED Smart Board, Video developed to meet corporate needs, the-art healthcare solutions in the Wall, Information Displays, Led Wall, continues with Videowall to meet new hospitals established due to the Totem and Office Boards. the needs of different sectors. These pandemic, which has been spreading in our country as well.
Vestel Elektronik 2020 Annual Report 105 Activities
Vestel Proje Ortağım
Vestel flight information screens are with the Vestel touch information environmentally friendly with their used at the new İstanbul Airport, in screens, which are the most important mercury-free structures and reduce what has been one of the biggest component of these stores. waste generation with a service life projects undertaken by Vestel Digital of more than 200,000 hours, ensure a In addition to all these developments, Display Solutions. quick payback period on investment Vestel continues to enrich its sales with their reduced maintenance The flight information screens were range abroad with new countries and and renewal needs when compared especially designed to bring ease to customers. The Company is on course to standard conventional lighting passengers, and are positioned at the to be a key player in the production of fixtures. entrance of the airport, the waiting information screens as an ODM player areas, the check-in counters, the in the B2B field. Maintaining its competitiveness in gates and the common areas of the terms of quality and pricing in the LED Lighting Products airport. field of LED lighting, Vestel has The Vestel LED Lighting Group expanded its product range in different In 2020, many institutions such as continues to maintain its strong categories. Istek Schools, Bilfen Schools, MEF presence in indoor and outdoor University, İpekyol Twins and Istikbal With its aesthetically pleasing design lighting with its range of high included Vestel digital display products and easy-to-mount structure, the energy efficiency products in in their projects. Vestel Highbay UFO fixture, which is industrial lighting, street lighting, suitable for use in production facilities Vestel pioneers new breakthroughs garden lighting and sports and field and warehouses, offers innovative in retail and breaks new ground in illumination. solutions in the field of high ceiling the industry with its Ekspres store LED lighting products, which provide lighting. concept, which sets itself apart energy savings of up to 80%, are
106 Vestel Elektronik 2020 Annual Report Vestel Digital Display Solutions meets all the needs for information products with its product range offered in sizes ranging from 24 inches to 98 inches.
The Vestel Magnesia Street fixture, lighting fixtures used on the roads for different armature classes in which was developed to meet the and streets in Turkey, and which is this major transformation project. needs and expectations of the market, carried out by TEDAŞ (the state-owned With the Company’s know-how in stands out with its competitive pricing. Turkish Electricity Distribution Corp.) light and optics, local optical lens and the Ministry of Energy and Natural module designs for classes using With its wireless technology using Resources. different road lighting criteria in this GSM communication, the Sardes project have been completed and Street Fixture range offers the By sharing the experience and prototyping processes have started. benefit of remote access and is knowledge in lighting and system With the designed lens modules with programmable enabling lighting design with TEDAŞ, positive 3 different light distribution, the goals at certain times of the day and at contributions were made to the project of contributing to domestic production, certain rates, ensuring optimal energy specifications, which were revised low cost and reducing external savings. and published in November 2020. At dependence have been achieved. least 21,000 street lighting fixtures The Vestel Floodlight product has will be purchased in 2021, with the Disinfection of bacteria in the air also been updated and offers the aim of converting a total of 6.5 million and on surfaces has taken on great most appropriate solution for outdoor conventional fixtures used in road and importance during the COVID-19 lighting requirements of up to 900 W, street lighting into LEDs in the coming pandemic, which has affected the offering high efficiency lighting in years. entire world. In view of the superior large areas such as stadiums or open features offered by LED light sources car parks. With the Sardes Street Lighting when compared to conventional fixture range, Vestel LED Lighting Vestel closely monitors the LED lighting, research was carried out is ready to produce the armature Conversion Project developed to on disinfecting surfaces with LED types which TEDAŞ will demand replace the conventional street
Vestel Elektronik 2020 Annual Report 107 Activities
Vestel Proje Ortağım
lighting that can radiate in the UV-C Air Conditioning Products calculations, device layout and system spectrum. Design of the UV-C box design at the design phase of the Vestel has been one of the leading which can accommodate items such projects. companies in the Turkish air as phones, wallets, key holders and conditioning sector with its residential The installation is as important headphones – products which come type split air conditioning solutions. as the quality of the product for into constant contact during the day - Making a strong entrance into the ensuring customer satisfaction in air and can rapidly disinfect the items on central acclimatization field in 2015 conditioning systems, and the quality a 360° basis, has been completed. The with its VRF air conditioning systems, and customer satisfaction are kept at product is planned to be introduced Vestel undertook many important the highest level through regular site to the market after accredited flagship projects, in addition to inspections. microbiology laboratories located in providing the air conditioning for the our country confirm which bacteria Distinguished in the sector with their entire Vestel City. and viruses are disinfected by the light energy efficiency, high piping distance and the proportion, and in what doses. In addition to its complete product and capacity values, Vestel VRF air range consisting of VRF air conditioning systems have been the In 2020, institutions such as Petkim, conditioners, multi inverter air preferred choice in reference projects Aksa Natural Gas, İsdemir and Erikli- conditioners and split air conditioners, thanks to their premium features and Nestle Waters have used Vestel LED Vestel Proje Ortağım provides service quality. lighting products in their different comprehensive and professional projects. As in many public tenders, Vestel services with its specialized engineers, VRF air conditioning systems were who perform cooling-heating load also used in the Çanakkale Provincial
108 Vestel Elektronik 2020 Annual Report Police Department building. Vestel units, comfortable air was provided The Vestel V4+R series were used split air conditioning units were to doctors, patients and patients’ as the air conditioning system in the included in the project, in which more relatives. The project is one of the “Ağaoğlu My Newwork”, a giant office than 470 indoor units were used, in most important health investments project developed by the Ağaoğlu addition to cassette, wall and duct to have been carried out in Ankara in Group of Companies at the heart of the type indoor units, and it was revealed recent years. finance district in Ataşehir. The system that the Vestel Proje Ortağım air was among the key technologies In the Concord İstanbul Project, the conditioning product range could offer adding comfort and value to the first urban regeneration project in solutions suitable for every need with project, including the heat recovery Kadıköy’s Fikirtepe district which its wide product range. The project, in feature, which allows heating and received the “Best Regeneration” which 55 new V6 series VRF outdoor cooling at same time, particularly Award at the Sign of the City Awards, units were used, has the distinction during the transition of seasons, for Vestel’s VRF air conditioning system, of being one of the most important different places connected to the same which consists of Vestel V4+K public tenders to have been held in system, in addition to providing high series outdoor units and channel Çanakkale in recent years. level of (SEER: 7.0-Seasonal Energy type internal units, was used. The Efficiency Ratio) energy efficiency Within the scope of the Hacettepe air conditioners are equipped with through the use of waste energy. University Adult Hospital Restoration the Vestel-IMM system, which Project, the Vestel VRF systems automatically calculates the energy were selected in the re-opened consumption per centrally controlled building. With over 250 channel type dwelling. internal units and 24 V5 X outdoor
Vestel Elektronik 2020 Annual Report 109 Activities Vestel Ventures
Vestel Ventures Ar-Ge AŞ (Vestel Ventures) is an investment company founded in 2015 by Vestel Elektronik Vestel Ventures offers the R&D, design to support new ventures and add new areas of business to Vestel. power, manufacturing, marketing, Believing that ventures help facilitate distribution, sales channels, business people’s lives, improve efficiency and make a difference with their network and management experience innovations, Vestel Ventures has adopted the vision of “targeting the of Vestel to entrepreneurs as a strategic future, aiming for growth and focus on partner so that entrepreneurs can channel being a world leader in Vestel Group’s global journey...” while its mission is their focus to their projects. to “Foster ventures and provide them with the support they need to achieve commercial success”. In addition to its strong position in the domestic market, with its exports to 157 countries and its extensive sales and marketing network in foreign markets, Vestel provides a significant contribution to entrepreneurs in opening up to international markets. These innovative venture companies (start-ups) which Vestel Ventures invests in can bring their unique products, which they produce with the state-of-the-art technologies, to new users by drawing on the power of Vestel’s sales network. The products, which are introduced to consumers at Vestel’s sales points throughout since its inception, having had the Vestel Ventures also plays a role in Turkey and in many parts of the world, opportunity to meet thousands of opening doors to entrepreneurs so allow the ventures to achieve sales entrepreneurs during the events and they can meet and collaborate with success more rapidly. Thanks to this meetings in which it participated, and Zorlu Holding companies. The work cooperation, Vestel is able to offer has remained in touch with some of to be developed as a result of these successful and innovative products these entrepreneurs. Through these collaborations contributes to Vestel’s which attract attention in different start-ups which Vestel Ventures has intellectual property rights and paves sectors to its customers who are invested in, Vestel is stepping into new the way for the generation of ideas to already familiar with Vestel’s quality areas of operation. improve the patent pool. In addition, and technology. Vestel Ventures’ innovation coefficient The experience gained in these is increasing through its platform In addition to its product diversity, different sectors expands Vestel’s which it designed for the ventures it Vestel brings the start-ups which experience pool and facilitates the has invested in, as well as through have received investment from transition to new areas. Learning the other innovation-driven ventures Vestel Ventures and the Group by adapting the start-ups’ method which it remains in communication companies together, thereby allowing of doing business to corporate life, with. the establishment of new business Vestel brings more creative work to lines through the speed and agility fruition in a shorter space of time and In the course of this work, Vestel of these start-up companies. Vestel develops the process for designing builds close relationships with the Ventures has been a key component new business models within itself. human resources in the start-ups, of the entrepreneurship ecosystem
110 Vestel Elektronik 2020 Annual Report which Vestel Ventures invests in as Vestel employees positively reflect this Entrepreneurs receive guidance well as at those which are not included motivation - a result of this joint work of intellectual property rights in in Vestel Ventures’ portfolio. - to the corporate culture. Turkey and abroad, with support for research and applications provided The creative and highly Vestel Ventures works with the where necessary. Solutions are found entrepreneurial individuals working teams in these ventures from the to solve the problems faced by the in these ventures, which develop with moment it invests in them in order entrepreneurs through consultancy Vestel’s leverage, have the opportunity to help them achieve commercial where there is such a need, and to work with Vestel employees in this success. Vestel Ventures offers the entrepreneurs are guided in their process. This synergy gives rise to R&D, design power, manufacturing, marketing and branding efforts in a cultural interaction between the marketing, distribution, sales international fairs and exhibitions. entrepreneurs and Vestel employees. channels, business network and Vestel offers support to successful management experience of Vestel to The Vestel teams, who are experts in ideas in helping them expand beyond entrepreneurs as a strategic partner their fields, share their experience Turkey’s borders. Vestel also deploys so that entrepreneurs can channel with the entrepreneurs, enabling its means to provide know-how their focus to their projects. In the ventures to achieve success in support to entrepreneurs through addition, Vestel offers intermediation a short space of time. In return, the academics, industrial experts and to help entrepreneurs access funds Vestel teams adopt the entrepreneurs’ international consultants, with whom through its experience of state- creative, innovative and highly Vestel has had the opportunity to work sponsored grant funds in Turkey and motivated entrepreneurial spirit which in all regions of the world and who are the network of venture capital funds is constantly pushing the boundaries. the best in their fields. in Europe and the United States.
Vestel Elektronik 2020 Annual Report 111 Activities
Vestel Ventures
Startups supported by Vestel’s initiatives offering new technology mobile applications, AR/VR (Virtual leverage soon begin to demonstrate proposals in Vestel products, to & Augmented Reality) technology, remarkable success in the market and develop cooperation and to capture smart city applications, cyber gain value by building a commanding appropriate venture investment security, customer services and social presence in their sectors. The opportunities. responsibility in Turkey and abroad success of an investment company is since its inception. With the cooperation developed dependent on the exit strategy (sale, between the İzmir Chamber of The entrepreneurial spirit of the transfer, merger, public offering, Commerce and Vestel, Vestel Ventures human resources in start-ups, both liquidation) it has chosen for the supports the activities and events in and outside of Vestel Ventures’ management of its shares in the organized by the İzmir Chamber of portfolio, combine with the experience companies invested. Commerce to enrich the venture of Vestel’s human resources to Vestel Ventures has achieved a high ecosystem in İzmir. Tasks such as jury form a strong synergy thanks to the return on investment by selling membership and mentoring support interaction created as a result of the all of its shares (sales strategy) in to initiatives are undertaken in the close collaborations established. two companies (APlus Energy and Demo Day event. Solution proposals The best example of this synergy is SmartPulse), which it has invested are developed and presented by the ventilator device produced under to support their growth in the venture companies for the pilot project the initiative of Vestel Beyaz Eşya energy sector and which are rapidly determined by Vestel. The pilot study and Medicraft, a portfolio investment dominating the market, in 2018 as to be carried out is aimed at planning which produces devices for respiratory the values of these companies have the steps to be taken for the evaluation support. During the COVID-19 increased by 6 times in TL terms and and productizing of suggested pandemic, Medicraft’s know-how in by 3.5 times in US dollar terms. Vestel solutions. the field of ventilator production was Ventures transferred its shares in combined with Vestel Beyaz Eşya’s Supported Projects the Hayriya company, which develops production power and quality, and a wearable ECG device in the healthcare Aiming to use the leverage of Vestel collaboration was developed to quickly field, to Vestel Group companies and Zorlu in transforming technologies productize the design and start mass (transfer strategy), and ensured that which bring new freedom to life production in large quantities. The specialists working on the processing and which aim for higher efficiency mass production of the ventilator at of biological signals and biometric into products, Vestel Ventures Vestel Beyaz Eşya’s plants is planned data and the development of devices provides support for entrepreneurs’ to start following the completion of the such as ECG were transferred to investments in the fields of the productization work. Vestel staff and enabled Vestel to Internet of Things, smart city, smart Another investment of Vestel Ventures, incorporate important technologies home and smart factories, materials, Biolive is engaged in the production in the field of health. Thanks to this energy, battery technologies and of all-natural bioplastic granules transfer, Vestel Ventures increased innovative devices. from olive waste. The second round of the value of its investment five-folds Vestel Ventures supports initiatives investment for Biolive was completed in TL terms while tripling its value in which will stand out and will in February 2020. In a funding round US dollar terms in the space of three generate significant value for Vestel attended by two institutions and nine years. or consumers. As an arena of ideas angel investors, Biolive reached Vestel Ventures develops close where innovative technologies a company valuation of USD 30 relationships and contributes to the come together, Vestel Ventures million. With the investment received, Far East enterprise ecosystem within aims to contribute to Vestel’s work has got underway on the the scope of the cooperation developed global competitive clout through establishment of a production facility between the Singapore Trade Office the companies it invests in, by which will have a monthly production and Vestel. Vestel Ventures served as expanding the technological potential capacity of 1,000 tonnes in the Tuzla a jury member and a mentor to start- in the entrepreneurial ecosystem. Leather Organized Industrial Zone ups at the Slingshot 2020 enterprise For this purpose, Vestel Ventures in order to increase the production organization held in Singapore. Efforts had invested in 20 initiatives in the capacity of Biolive, which continues are underway to evaluate the Far East fields of energy, health, bioplastics, its production activities in the Yıldız Technical University Technopark Laboratory. While installation work
112 Vestel Elektronik 2020 Annual Report Vestel Ventures supports initiatives which will stand out and will generate significant value for Vestel or consumers.
on the facility continues, the pilot cameras and sensors, which recognize in many news channels, including the facility was delivered to entrepreneurs the food placed in the oven and offer BBC, CNN Business and the Guardian. in November 2020. Biolive aims to cooking suggestions to the users, Introduced by Mayor Eric Adams minimize the damage caused by where food can be inspected instantly in Brooklyn City Hall, WeWALK is petroleum-derived plastics on the during cooking. With the collaboration supported by the New York Transport environment and human health between Vestel Beyaz Eşya and June Authority (MTA) and the Helen Keller thanks to the bioplastic granules Life Oven, the production of smart Center for the Visually Impaired. produced from olive waste. With ovens is carried out by Vestel Beyaz The development and production its raw material named Bio-Pura, Eşya. Investing in the oven of the of WeWALK smart canes, Vestel which is biodegradable, Biolive does future, Vestel Ventures realized the Ventures’ first social enterprise not contain carcinogenic or toxic first export of smart ovens produced investment outside the company, substances and offers differentiated by Vestel Beyaz Eşya to the United is provided with the necessary raw material alternatives for a range States in 2020. engineering and production support at of sectors. Vestel City. Smart canes are designed Founded by three Turkish by Vestel engineers. In the second The CY Vision company, headquartered entrepreneurs in the UK, WeWALK investment round of WeWALK, Vestel in the USA, working on the technology develops smart canes which aim to Ventures, along with many angel of creating virtual reality images ensure the full independent and equal investors, also invested USD 250,000 flawlessly in the human eye, participation of the visually impaired into the venture. In this tour, WeWALK completed the 3rd stage funding in social life. The smart canes detect received a total seed investment of round, which also includes Turkey’s obstacles with ultrasonic sensors USD 750,000. leading business group and venture and warn users with vibrations. investment fund, and is working to Smart canes can be connected to the Another venture investment, Pisano, integrate its unique technology into WeWALK mobile application on mobile headquartered in the UK, develops the next generation vehicles. Prototype phones via Bluetooth and integrated products to meet the needs of studies are ongoing in Turkey’s with Google Maps for directions. The companies to measure customer Automobile Project and at a leading WeWALK smart cane was selected experience and communicate German automotive company. by TIME magazine as one of the best effectively with customers. It inventions of 2019. WeWALK, which increases customer satisfaction by June Life Oven, headquartered in exports smart canes to 37 countries, determining the source of complaints California, produces smart ovens with has attracted considerable interest at store visits, e-mail communicaton,
Vestel Elektronik 2020 Annual Report 113 Activities
Vestel Ventures
conversations with customer services manufacture their products quickly, at improving the talents of corporate and other contact points. Besides its with high quality and at affordable employees outside of work. After presence in Turkey, Pisano is one of costs. their establishment, in the space the leading enterprises in its sector, of just 8 months, both companies Innovation Projects exporting its products to world-wide passed a crucial stage by producing companies in Europe, the Middle East, Vestel Ventures, a corporate the first ready-to-sell versions of North Africa and Asia-Pacific regions. investment company, is responsible their products and issuing multiple Founded by the Turkish entrepreneurs for spreading innovation and in- invoices. Their next goal is to attract in the UK, the company continues house enterprise within Zorlu Group many customers throughout Turkey its R&D and engineering activities companies. It supports in-house and expand in the world with the in Turkey. Pisano received a total enterprise and contributes to “Parlak experience they have gained in investment of USD 2.5 million in the Bi’Fikir!” (A Bright Idea), which is an Turkey. Vestel Ventures set up the investment tour with the participation in-house enterprise project launched Z-Port Support Program to support of Elevator Ventures, the corporate by Zorlu Group to help Zorlu Group the entrepreneur/entrepreneurial venture capital company of Austrian employees work and think like ecosystem with Zorlu Group Raiffeisen Bank. In this funding round, entrepreneurs. In this context, Parlak companies and to create a bridge USD 625,000 of convertible bonds Bi’Fikir!, the Innovation Ambassadors between corporate structures and which Vestel Ventures had previously program was implemented with first- the entrepreneurial ecosystem. given to Pisano were also converted cycle graduates. The Parlak Bi’Fikir! Z-Port offers the opportunity to into shares. project, which achieved tremendous see a working model like a venture success in the first cycle, is now in its company, to contribute to the in-house UpTecRa, was established in second cycle. While more applications innovation culture, to easily follow new partnership with Vestel Ventures and have been made when compared to technologies, to establish new and entrepreneurs in order to prepare the the first cycle, the sectoral fields of profitable business partnerships and ground for Vestel Group companies to the ideas applied have also become to access initiatives which meet the work closely and to develop projects more diversified. The eight business required criteria, quickly and free of with venture companies. The purpose ideas chosen after the application charge. of the venture is to develop fast and phase of the program are in the fields innovative solutions to meet the needs In addition to these studies on of agriculture, logistics, gaming, of Vestel Group companies. innovation, ALAN 1, a common energy and smart urbanism. If the working space open to the use of all Vestel Ventures purchased 100% of 24 candidate entrepreneurs taking employees was launched at Zorlu the shares in the RingPara initiative, part in the program are selected at Holding’s Levent 199 building in June a mobile advertising technologies the end of the program, they will be 2020 to reinforce the open innovation platform which created a new able to receive investments as in culture and create a foundation to business area in the advertising the first cycle. The ratio of women in increase the experience of sharing industry and has attracted Vestel’s employee teams, who will have the which will stimulate entrepreneurship interest with its focus on the Internet opportunity to develop their enterprise and innovation. Designed to be of Things. The aim of the venture is to competencies through various training dynamic, smart and open to dialogue integrate the RingPara platform with and workshops over a 6-month period, with moving furniture, ALAN 1 aims all of Vestel’s smart devices, thereby is considerably higher than that in the to spread and enrich the culture of offering more value-added services ecosystem. At the end of the first term interaction and experience online and and advantages to customers using of Parlak Bi’Fikir!, the two initiatives offline. ALAN 1 plans to host different Vestel products. deemed appropriate for investment institutions and representatives from by Vestel Ventures were Conectohub The demands of Vestel Ventures’ academia, the enterprise ecosystem, and Abilitypool. Conectohub is working portfolio companies for rapid stakeholders in the field of innovation, on an artificial intelligence-based prototyping and the production business partners and consultants, business management application of their first products are met at and to organize various events such as for project teams in corporations. ArGeTa, which is established under hackathons, ideathons, workshops and Abilitypool, on the other hand, is a the partnership of Vestel and Celal conversations. talent management platform aimed Bayar University. Thanks to this cooperation, Vestel Ventures’ venture investments have the opportunity to create prototypes and develop and
114 Vestel Elektronik 2020 Annual Report Meta Nikel Kobalt Madencilik
META, is a pioneer of nickel mining in our country, processing ores extracted aboveground in a closed circuit system with a modern and eco-friendly production facility, and operating with a new generation mining approach.
First Specialized Enterprise Gördes-Manisa Nickel-Cobalt Mining be built and help reduce Turkey’s Established to Develop Turkey’s Facility dependency on imports, thereby Nickel-Cobalt Resources helping to lower the current account Work on the Gördes facility, which is deficit by carrying out domestic and Established as Turkey’s first nickel- designed to produce 10,000 tonnes of national production. cobalt mining company in the district nickel from approximately 1.7 million of Gördes, Manisa, Meta Nikel Kobalt tonnes of ore feed annually, got Nickel is mainly used in the stainless Madencilik Sanayi ve Ticaret AŞ underway in 2011 and the facility was steel industry, in corrosion resistant (META) is a pioneer of nickel mining in completed at the end of 2014. META alloys, and in the armour coating our country, processing ores extracted started commercial production and and defense industries. Today, the aboveground in a closed circuit system realized its first exports in 2016. batteries used in electric vehicles and with a modern and eco-friendly energy storage systems consist of META produced 2,175 tonnes of nickel production facility, and operating with nickel and cobalt elements. In studies metal equivalent over a period of 138 a new generation mining approach. In conducted with the aim of increasing working days due to the planned halt 2007, Zorlu Group became a partner battery life with the developing in 2019, and with the contribution of in the company, which was founded technology, it has been determined optimization studies, approximately in early 2000, and acquired full that prolonged battery life can be 4,723 tonnes of nickel metal equivalent ownership of the company in 2016. achieved with the increased use of MHP (Mixed Hydroxide Precipitate) 50% of META’s shares were purchased nickel in the composition. Demand was produced in 2020 over a period of by Vestel Elektronik from Zorlu Group for nickel is set to accelerate going 290 working days. for USD 250 million in June 2018. forward with the expected increase in META carries out open-pit mining, the ratio of nickel used in battery and META continues its mineral producing nickel and cobalt elements energy storage systems. exploration, operations, exports, R&D in hydroxide form (MHP) by processing and investment activities in order to Adopting a vision of producing nickel ore near the surface through the use bring our country’s nickel potential and cobalt elements in different forms of new generation technologies, and to the economy by investing in nickel and exploiting and bringing rare earth exports all of its production. and cobalt mining. In addition to elements contained in the ore to the nickel-cobalt mine operation in META will transform the concentrated the Turkish economy, META aims to Manisa-Gördes, the company also nickel and cobalt product into different become a global supplier by gradually has nickel reserves in Eskişehir and metal forms and increase the added increasing its production capacity. Uşak. META, which continued its ore value by combining Zorlu Group’s Besides its mining activities, META production activities in Eskişehir in identity as an industrialist and investor is focused on producing high value- 2020, continues to carry out geological with R&D and innovation in the added, innovative products by using surveys in Uşak and nickel and cobalt medium term. The company aims to the disciplines of metallurgy and mine exploration in various regions of produce its own input and maximize chemistry. Turkey. its energy efficiency by recovering the inert heat energy with the new Ranking among the top 10 facilities auxiliary and combined facilities to in its industry, extracted ores with a nickel content of approximately
Vestel Elektronik 2020 Annual Report 115 Activities
Meta Nikel Kobalt Madencilik
0.75% are processed and enriched at the Gordes plant with advanced technologies, resulting in a product Besides its mining with 38% nickel content. activities, META Thanks to the strength derived from its approach focused on innovation and is focused on its learning process, META continues to work unwaveringly for the recovery producing high value of other elements besides nickel and cobalt from the crude ore to utilize added, innovative all the available elements and aims products by using to increase its contribution to the economy by expanding its sellable the disciplines of product range. metallurgy and In its production facilities the company, chemistry. • Undertakes “Open Pit Mining” in its licensed lateritic nickel ore fields. • Uses digital systems and computer supported programs to minimize losses in production. • Employs fully mechanized R&D CENTER and R&D Center. Nine of these systems, which are followed by projects are R&D Center projects, and Analysis Laboratory and R&D the expert teams with the aim of three of them have been approved achieving correct planning and high The analysis laboratories within by TÜBİTAK. The projects approved efficiency. META carry out their activities in by TÜBİTAK concern the production • Within the framework of an enclosed area of approximately of end products, the recovery of rare sustainable production, different 600 sqm with fully equipped device earth materials and the production of processes are implemented for the infrastructure and competent sulphate-based compounds used in recovery and reuse of waste water personnel. Engineering work has got battery cells. An increased number of in order to reduce the use of water underway for the project of enlarging projects are aimed to be carried out in the facilities as well as for the the working area in order to expand in 2021, with plans to continue the use of waste heat. the research projects. laboratory-scale characterization tests of the projects. The plant has a 25 million m³ of waste META, which continues its work on storage facility for the wastes, the 2nd TÜBİTAK funded R&D projects and Work to increase the number stage of which has been completed maintains its R&D cooperation with of working days and extend the and which will come onstream in the Middle East Technical University, operational life of machinery and three stages, and holds the biggest Hacettepe University and İstanbul equipment at Gördes plant continued Environmental Impact Assessment University, received the “R&D Center” in cooperation with TÜBİTAK and permit given to date in its industry with Certificate in March 2018, crowned its universities. The target is to reach an area of 3,834 hectares. activities in the field of new generation full capacity production following mining in Turkey with the “R&D the completion of the improvements Preparations continue for the Center” Certificate obtained in March planned in the areas of ore implementation of the ISO 9001 Quality 2018. preparation, water treatment and Management System, the ISO 14001 waste storage reservoir in the coming Improvement and research studies for Environmental Management System years. and the ISO 45001 Occupational Health increasing the efficiency of the Gördes and Safety Management System. The plant in recovering precious metals The planned investment and R&D certification processes are expected continued in 2020. In this context, projects include the following: studies aimed at reducing costs and to be completed in the first quarter of • Production of high purity Nickel and R&D studies to obtain end products 2021. Cobalt compounds (metal/sulphate) were carried out. A total of 25 projects used as the main raw materials are ongoing at the R&D Department
116 Vestel Elektronik 2020 Annual Report R&D and Innovation Working Group As Turkey’s First Nickel-Cobalt Mining Enterprise established in Manisa Gördes, META contributes to the development of R&D and technology‑based mining activities in Turkey. META, which also has the first and only R&D center in the mining sector, carries out important collaborations with many national and international technology institutions and universities. In the field of R&D, studies are carried out on solving problems in production processes, reducing production costs, expanding the product range, producing raw materials for high- tech products and developing cathode materials for batteries. In this context, the company applied to TÜBİTAK with two projects, and the project of “Cobalt Sulfate Production from MHP, an in lithium ion batteries from attaches importance to preventing and Intermediate Product Produced from intermediate product (MHP), managing possible effects of the risks the Gördes Lateritic Ore by Solvent in its facilities on its stakeholders. Extraction Method” was found eligible • Establishing a sulfuric acid With this in mind, the company, which for support. production facility with an annual continues its ISO 45001 certification production capacity of 750,000 The Environmental Working Group process, targets a zero occupational tonnes, to reduce the cost of accident rate with its work carried out META, which continues its work to sulphuric acid and increase within the scope of this process. obtain the ISO 14001 Environmental environmental sustainability, Management System certification, META supports and participates in • Manufacturing by-products such as implemented the first phase of the the work undertaken by Zorlu Holding scandium, magnesium, manganese “Waste Water Recovery Project” in the field of gender equality. The and iron. developed for water recovery and decisions taken in these studies are waste reduction. With this project, SUSTAINABILITY STUDIES AT META shared with the senior management the company pumps about 1.8 million with the aim of raising awareness Sustainability activities at META are m3 of the water accumulated in the within the company. carried out under the coordination waste reservoir to the facility and of the “Employees”, “Customer In this context, while allows water to be used for a second Relations”, “Social Relations”, recommendations are offered to time, thus extracting less water from “Supplier Relations”, “Corporate increase the number of female nature. Communication”, “R&D and employees at all levels, opportunities Other components of the Waste Innovation” and “Environment” are investigated to meet the needs of Water Recovery Project, which is an working groups. In this context, female employees. integrated project, are the Waste the company attended the 2nd META, which is actively involved in Dehydration and Waste Water Sustainability Smart Life Architects social responsibility projects, has Treatment Plant investments. These meetings held by Zorlu Holding in also achieved its goal for volunteering investments have been completed 2020. hours per person in 2020 with the and testing activities are ongoing. Employees Working Group Spark’s (Kıvılcımlar) Movement, It is planned that if the targeted which is Zorlu Group’s corporate performance values are achieved, all META, which prioritizes the volunteering movement. water required in 2021 will be met establishment of a healthy and safe from these facilities. working environment in accordance with the sector in which it operates,
Vestel Elektronik 2020 Annual Report 117 Activities Vestel Savunma
Vestel Savunma maintained and accelerated its product development and R&D activities, turning the challenges of the pandemic period into an advantage, given the increase in demand for the UAV systems and Fuel Cell technologies from institutions both in Turkey and abroad.
UNMANNED AERIAL VEHICLE (UAV) The international sales and marketing systems and fuel cell technologies SYSTEMS PROJECTS activities for the Karayel UAV System with a focus on digital platforms. were expanded globally, especially in Increasing the capabilities of the Seeking to expand its share in exports the Far East and the Middle East. Karayel UAV System by entering new markets, and aiming The process of digitalization in the to contribute more to the country’s With the awareness that demand business world and the transfer of economy, Vestel Savunma aims to for UAVs will increase further in trade to online platforms in the digital have a permanent presence in the the future, Vestel Savunma Sanayi environment, which had already been markets it enters by offering the most AŞ (Vestel Savunma) continued its taking place in recent years, grew suitable and reliable products for the work to expand the areas of use for more important during the pandemic. users and by cooperating with the the KARAYEL UAV System in 2020. Vestel Savunma also transformed its right stakeholders. In this context, the integration of way of doing business in this process, various useful payloads and the latest Vestel Savunma maintained and changing its strategies at home and technology sub-systems into the accelerated its product development abroad in order to reach new markets, KARAYEL UAV System was realized. and R&D activities, turning the maintaining its presence in the challenges of the pandemic period into Sales and Marketing Activities markets where it operates and turning an advantage, given the increase in the pandemic into an opportunity Despite the pandemic, Vestel Savunma demand for the UAV systems and Fuel and carried out its marketing and continued its exports in 2020. Cell technologies from institutions promotion activities related to the UAV both in Turkey and abroad.
118 Vestel Elektronik 2020 Annual Report New UAV System Development Border Security and Mobile Health the year were submitted to TÜBİTAK Activities with the aim of transferring the for evaluation within the scope of the company’s capabilities in the defense call programs opened at national and Vestel Savunma continues its design industry to different sectors. international levels. and development activities in different classes and systems for Unmanned Vestel Savunma R&D Center The R&D projects carried out during Systems, its area of expertise. the period and the R&D projects By the end of 2020, the number of Test flights and system verification completed in the previous periods employees in Vestel Savunma’s R&D activities of a newly developed UAV brought new opportunities to expand Center had doubled compared to the system were successfully carried out the product range by improving the level at the time of its establishment. in 2020. capabilities of unmanned aerial Of the 29 projects carried out at vehicles. At the same time, localization At the same time, studies on the the R&D Center, 21 have been studies carried out within the scope of design, production and development of successfully completed, while 5 of the R&D projects in order to reduce the a high load carrying capacity UAV with 13 projects active during the operating dependency on foreign parts for UAVs vertical landing and take-off abilities year have been successfully completed were completed at the end of the year, continued throughout the year. and there were 8 ongoing projects as bringing significant gains. of the end of the year. In line with the New Business Areas R&D strategies, new project proposals Personnel with undergraduate and In 2020, studies were undertaken formed as a result of the studies graduate degrees who work at Vestel in the fields of Advanced Imaging carried out under new collaborations Savunma R&D Center make up 60% Systems, Electro-Optical Systems, with the industry and academia during of the all R&D Center personnel.
Vestel Elektronik 2020 Annual Report 119 Activities
Vestel Savunma
In order to increase its competitive edge with its high technological know-how and to respond to the changing needs of customers and users, Vestel Savunma intensifies its R&D activities, and continues its operations with the objective of producing innovative and pioneering products in its field of activity.
Efforts are underway to encourage Intellectual Property and Patents energy source in fuel cells would researchers to participate in graduate be converted into content suitable Vestel Savunma has filed a total education programs and to perform for use with reformer and fuel cell of 16 patent applications as of the thesis studies with consulting catalysts, and adsorbents targeting end of 2020, including new patent academics within the company different sulphur components, was applications during the year, while in order to improve the activities successfully completed during the company has 9 registered and increase the competences at the period. Meanwhile, a project patents. Work continues to establish the R&D Center. In this context, proposal for ACT3 (Accelerating a performance and reward system for additional benefits will be provided to CCS Technologies) was submitted to the evaluation of patentable ideas in employees holding master’s degrees TÜBİTAK/Multi-Cooperation Support the R&D Center. and doctorates. Support is provided Program in 2020, by participating in to active participation in scientific Work on Hydrogen and Fuel Cell a multinational consortium for an activities such as congresses, Technologies electrochemical NH3 synthesis, which conferences and training held within stands out as a low-cost, scalable Vestel Savunma continued to work on the scope of the project and thesis and sustainable alternative method the use of fuel cells in mini-UAVs in work. for the production of ammonia (NH ), 2020. In addition, it maintains its R&D 3 which is widely used in the production In order to increase its competitive activities on the development of fuel of fertilizers, plastics, explosives, edge with its high technological know- cells which will meet the very high textiles, pharmaceuticals, paint, how and to respond to the changing power requirements for underwater cleaning materials and a wide variety needs of customers and users, Vestel platforms in the defence industry. of chemicals and is one of the most Savunma intensifies its R&D activities, The “Development of Anode Supported produced basic chemicals in the world. and continues its operations with Micro-Tube Solid Oxide Fuel Cell” the objective of producing innovative Collaborations between Industries project, which includes the scientific and pioneering products in its field of and between Industry and Academia infrastructure and preliminary activity. studies of a project carried out Vestel Savunma cooperates with a Vestel Savunma R&D Center within the scope of international number of universities and industrial participated in the “R&D 250” survey cooperation, was successfully organizations in the activities of prepared by the Turkishtime Economy completed during the period. In Unmanned Aerial Vehicles, Fuel and Business Culture Portal for the addition, the “Desulphurization of Cell and Hydrogen Technologies and first time in 2020. According to the Natural Gas at Low Temperature” Electronics R&D groups. Since its results of the survey, the company project, in which studies were carried establishment, Vestel Savunma R&D ranked 44th in the “250 Largest out on the development of a reactor Center has formed consortia within Companies in Turkey based on R&D in which natural gas used as an the scope of national and international Expenditures”.
120 Vestel Elektronik 2020 Annual Report animations, videos, posters, media sharing and distance education tools. • Cleaning and hygiene of personnel shuttles and offices were provided at frequent intervals. • The personnel bus layout was numbered so that passengers could sit in the same place. • With due regard to social distancing and hygiene rules, the rows and table order in the dining hall were arranged in orderly manner with a numbering system applied to ensure that those entering the dining hall sit in the same place. The hours of operation for the dining hall and the seating The integration of various useful payloads arrangements were revised with and the latest technology sub-systems into separate sittings. • Efforts were taken to ensure that the KARAYEL UAV System was realized. meetings and training activities which could not be postponed due to legal obligations were conducted through methods such as distance learning and teleconferencing. • In circumstances where distance programs for a large number of dining halls and recreation areas, learning could not be applied, activities with R&D content, and waste management practices and training activities were carried out conducted joint studies on projects. arrangements in personnel shuttles in with the lowest number of people, light of the measures taken to protect with due regard to social distancing DOCUMENTS AND CERTIFICATION against COVID-19. Within the scope of and hygiene rules. RECEIVED this document, across all facilities: • The maximum number of people TSE COVID-19 Safe Production • Working methods and forms have permitted to attend meetings was Certificate been redefined by observing social determined for each meeting room Vestel Savunma was awarded the distancing rules. with a notification placed on the “TSE COVID-19 Safe Production doors of the meeting rooms. • Applications were put in place Certificate”, having met all of the which will allow personnel able to • Buffets with food and drink were conditions stipulated in the “COVID-19 work remotely to do so. not provided in the meeting rooms. Hygiene, Infection Prevention and Control Guide” prepared by the • The use of masks for all personnel, • Only business-critical visitors were Turkish Standards Institution, thanks as well as the use of masks permitted to enter the facility. to the comprehensive approach it took and face shields in all activities towards the health of all stakeholders requiring close contact was made in areas such as personnel information mandatory. and training, high-level hygiene • Personnel were informed of measures, suitability of working and measures to prevent the spread of production areas, reorganization of COVID-19 by electronic messages,
Vestel Elektronik 2020 Annual Report 121 Activities AYESAŞ
While advancing its activities with its original products, AYESAŞ effectively deploys its powerful production, engineering and software competencies in various defence industry projects and offers them to the service of the state.
New Products at the end of 2019. The project has National Truck Screening (MILTAR) critical importance in reducing foreign System based on the needs of the While advancing its activities with dependence in production of aviation Directorate General of Customs its original products, Aydın Yazılım engines. The company continues to be Enforcement. Activities aimed at Elektronik ve Sanayi AŞ (AYESAŞ) responsible for the design, hardware domestic and national production effectively deploys its powerful and manufacture of the digital engine of X-ray systems and a vehicle and production, engineering and software control system, which forms a critical container screening system prototype competencies in various defence part of Turkey’s Pride Turboshaft to be placed at the customs borders, industry projects and offers them to Engine Development Project. produced in only 7 countries around the service of the state. In this context, the world with the aim of preventing the company continues its original At the same time, domestic design illegal trade, were successfully development of new generation and production planning of display carried out by AYESAŞ and its solution Command Control and Platform technologies, including avionics partner. Control Consoles and Cabinets for systems which can be used in the warships, the Helicopter Obstacle National Combat Aircraft Project AYESAŞ, which has a vast knowledge Detection System and the Digital launched in 2019, continued in 2020. of naval platforms, has taken on Moving Map and Duty Planning important tasks in the integrated Seeking to carry the experience gained Systems for air platforms. platform management system of in the field of defence and aviation to the TCG Anadolu Project, which is Backed by the experience it has gained the field of security, AYESAŞ signed intended to be the largest combat over the years, AYESAŞ took part in the a contract with the Presidency of platform in the history of the Turkish Digital Engine Control System Project, the Defence Industry covering the navy. a national project to be developed with domestic design and production of the domestic resources, for the first time
122 Vestel Elektronik 2020 Annual Report In the Test and Training Ship (TVEG) maintains its business development the production design incentive from Project, the design and production activities abroad, especially with the the Ministry of Trade. Moreover, the of the combat management system US and European companies. company is involved in R&D projects hardware was carried out in 2020. within the context of TÜBİTAK New Markets, Marketing and and European Union Framework The design and production of combat Promotion Activities Programs, and continues to support management system hardware in the Having directed its exports fully original product development MILGEM-5 Project will also be carried towards Western markets, AYESAŞ activities. out by AYESAŞ. has recently begun showing interest DOCUMENTS AND CERTIFICATION Export Activities for the Turkic Republics and Middle RECEIVED East and African markets. In this In addition to exporting directly context, marketing activities are Design Center and R&D Center to defence and aerospace giants, carried out for customers in these Certificate AYESAŞ has scored an important markets, in addition to making success as the first Turkish defence AYESAŞ applied for Design Center presentations and demos. company to win orders from the NATO and R&D Center Certification with the Communications Information Agency. R&D Studies and Realized R&D aim of increasing its competitiveness Projects by developing value-added products Aiming to consolidate its export efforts and services which meet the current through collaborations, AYESAŞ Although AYESAŞ predominantly and future needs of consumers and finances its R&D activities with its own the market. The audits related to resources, the company succeeded in the application were carried out by becoming the first company to obtain
Vestel Elektronik 2020 Annual Report 123 Activities
AYESAŞ
the auditors assigned within the • Personnel were informed of • Buffets with food and drink were framework of the provisions of the measures to prevent the spread of not provided in the meeting rooms. Implementation and Audit Regulation, COVID-19 by electronic messages, • Only business-critical visitors were and as a result of the audit reports, animations, videos, posters, media permitted to enter the facility. AYESAŞ has been awarded the R&D sharing and distance education Center Certificate for the METU tools. ISO/IEC 27001: 2013 Certification Technopolis Area and the Design • Cleaning and hygiene of personnel The ISO/IEC 27001: 2013 Information Center Certificate for the Ankara shuttles and offices were provided Security Management System Sincan OIZ campus in 2020. at frequent intervals. Certificate, which was first acquired TSE COVID-19 Safe Production in 2016 to cover the work of the • The personnel bus layout was Certificate Teknokent Software and System numbered so that passengers could Group, within the scope of the AYESAŞ was awarded the “TSE sit in the same place. information security of the personal COVID-19 Safe Production Certificate”, • With due regard to social distancing data and electronic information assets having met all of the conditions and hygiene rules, the rows and within the company and design, stipulated in the “COVID-19 Hygiene, table order in the dining hall software, hardware, production, Infection Prevention and Control were arranged in orderly manner testing and integration activities in the Guide” prepared by the Turkish with a numbering system applied field of defence industry, was renewed Standards Institution, thanks to the to ensure that those entering in January 2020. comprehensive approach it took the dining hall sit in the same towards the health of all stakeholders EYDEP ES-601-A Certification place. The hours of operation for in areas such as personnel information the dining hall and the seating AYESAŞ underwent detailed audits and training, high-level hygiene arrangements were revised with in the field of ‘SYSTEM’, which is the measures, suitability of working and separate sittings. most comprehensive audit category production areas, arrangement of covering only a limited number of dining halls and recreation areas, • Efforts were taken to ensure that companies in the sector, within the waste management practices and meetings and training activities scope of the Industrial Competence arrangements in personnel shuttles in which could not be postponed due Assessment and Support Program light of the measures taken to protect to legal obligations were conducted (EYDEP) carried out by the Presidency against COVID-19. Within the scope of through methods such as distance of Defence Industry. In recognition of this document, across all facilities: learning and teleconferencing. its expertise in the fields of production, • Working methods and forms have • In circumstances where distance design and system engineering, it been redefined by observing social learning could not be applied, has been awarded the ES-601-A distancing rules. training activities were carried out Certificate. with the lowest number of people, • Applications were put in place with due regard to social distancing which will allow personnel able to and hygiene rules. work remotely to do so. • The maximum number of people • The use of masks for all personnel, permitted to attend meetings was as well as the use of masks determined for each meeting room and face shields in all activities with a notification placed on the requiring close contact was made doors of the meeting rooms. mandatory.
124 Vestel Elektronik 2020 Annual Report With the awareness that demand for UAVs will increase further in the future, Vestel Savunma continued its work to expand the areas of use for the KARAYEL UAV System in 2020.
Vestel Elektronik 2020 Annual Report 125 Activities Vestel and Sustainability
CORPORATE Vestel manages its sustainability Performance Indicators determined SUSTAINABILITY strategy in parallel with Zorlu within the framework of the Smart Life Holding’s “Smart Life 2030” vision, 2030 vision. MANAGEMENT AND which focuses on the United Nations Vestel places sustainability at the 2030 Sustainable Development Goals STRUCTURE heart of its growth and common and guides the sustainability approach value creation process, in line with its Sustainability Approach and of all Group companies. Strategy business strategy which focuses on Zorlu Holding has set its sustainability technology and generates innovative goals for 2022 for 7 priority issues solutions, taking into account all Vestel’s approach to sustainability (Corporate Governance, Community stakeholders and Zorlu Group’s has been shaped by the goal of a Relations, R&D and Innovation, sphere of influence. better future based on the foundations Employees, Environment, Customer of its economic, humanitarian, Vestel carries out its sustainability Relations and Supply Chain) within environmental and social contribution. activities by taking into account the framework of the Smart Life the needs and priorities of all As a global manufacturer, which 2030 sustainability vision. Vestel stakeholders (such as employees, manages its processes with a vision of and other Zorlu Group companies customers, suppliers and service sustainability, Vestel considers all the contribute towards the realization of providers, public institutions, environmental impacts of its products these consolidated targets. The 2022 shareholders, the community and from the design and production to the Sustainability Strategy was approved non-governmental organizations). In procedures carried out after the end by the Board of Zorlu Holding. The 2021, the Company plans to issue its of the life of its products. Expanding targets can be reached at http://www. Integrated Report established by the the range of its products, which zorlu.com.tr/akillihayat2030/en/home. International Integrated Reporting hold world records with their energy These goals have been prepared by Council (IIRC) and implement an efficiency and water conservation, taking into account the international integrated management system while Vestel mitigates the environmental indices, based on the Environmental- aiming to carry out a materiality impacts of its operations through Social-Governance (ESG) headings, analysis, which will cover Vestel Group its environmentally friendly and which constitute the main components companies and be carried out by people-focused manufacturing, while of sustainability. Zorlu Holding obtaining the views of stakeholders. minimizing production costs and risks. coordinates the process of monitoring Subsequently, the sustainability and achieving these goals in the short strategy adopted by Vestel Group Placing attention on the use of and long term and guides the Group companies and their Environmental, recyclable materials in production and companies, including Vestel. reducing the diversity and quantity Social and Governance policies, the of materials used, Vestel aims to A “Sustainability Committee” was short- and long-term goals, action mitigate the environmental impacts of established within Zorlu Holding, plans and practices will be reviewed its operations through monitoring its under the chairmanship of Zorlu and revised. sustainability performance indicators Holding’s CFO, with the participation Vestel is in Borsa Istanbul (BIST) such as energy efficiency, reduction, of representatives from Group Sustainability Index re-use and recycling of waste, and companies and the leaders of the limiting or eliminating the use of working groups formed on the basis Vestel Elektronik, which applies hazardous chemicals. of priority topics. This committee sustainability throughout its entire convenes at least once a year at business model from the use of Vestel views its own development required intervals, shares the work technology to its management to be equivalent to the development carried out throughout Zorlu Holding strategies, was included in the BIST of society. With this awareness, and its affiliated companies, and Sustainability Index, which comprises in addition to its contributions informs the senior management of to economic and environmental developments. sustainability, Vestel is determined to expand its support to social Smart Life 2030 aims to provide responsibility projects which add value long-term and measurable concrete to society with ample resources, to solutions to global economic, lead new projects and increase its environmental and social problems. efforts and contributions towards a Performance and improvements better future. are monitored in line with the Key
126 Vestel Elektronik 2020 Annual Report the shares of companies listed on Verification Statement Certificate since • Undertakes continuous efforts to Borsa Istanbul with a high corporate 2017 in order to identify and define prevent climate change by reducing sustainability performance, for the important environmental factors in its its greenhouse gas emissions first time on November 2, 2015. Having activities and to create goals, targets and to protect biodiversity and been listed in the BIST Sustainability and programs related to these factors. ecosystems. Index for five periods, Vestel Vestel Beyaz Eşya has held the ISO Elektronik qualified for inclusion in 14001 Environmental Management • Commits to comply with the the index for the sixth time with effect Certificate since 2010 and the TS relevant environmental legislation from December 1, 2020 thanks to its EN ISO 50001 Energy Management and administrative regulations continued compliance with the index System Certificate since 2012. In and all the applicable legal and criteria. addition, since 2016, Vestel Beyaz Eşya other requirements as well as has been calculating and verifying international operating standards Vestel Beyaz Eşya, a subsidiary of its carbon and water footprints in in its processes and fulfils these Vestel Elektronik, was included in the accordance with the TS EN ISO 14064 requirements. BIST Sustainability Index voluntarily and 14046 standards by employing the for the first time in November 2016. • Aims to minimize its energy services of organizations authorized by Being included in the index for four and water consumption, waste TÜRKAK. periods and having maintained its generation and water and compliance with the index criteria In line with Environmental Policy air emissions by training its in 2020, Vestel Beyaz Eşya will Vestel employees, subcontractors, be voluntarily listed in the BIST dealers and suppliers, and by using • Perceives any waste disposal as Sustainability Index in the December continuous improvement tools. a loss of natural resources and 2020 - October 2021 period as well. works to prevent and reduce waste • Manufactures products which have ENVIRONMENTAL completely, if possible, and to a lower environmental impact and reuse, recycle and recover waste contain more recyclable materials. SUSTAINABILITY AND where this is not possible, in order CLIMATE CHANGE to prevent pollution at its source • Plans and implements measures during its activities starting from which will minimize environmental Environmental Policy and the design phase and extending harm in the event of any accident or Environmental Management throughout the entire life cycle emergency, which may occur. System of its products by monitoring the environmental impact of its • Targets an approach that protects Vestel operates in the Manisa processes. and enhances the quality of life of Organized Industrial Zone with its employees and customers with approximately 19,000 employees. • Continuously improves its energy its Environmental Policy by adopting Acting on its responsibility of performance through the design the protection and improvement of being a global company in the of energy efficient processes and environmental quality as a general consumer electronics and household procurement of energy efficient purpose together with all of its appliances sectors, Vestel conducts products and services. It aims to employees. environmental impact reviews for all save energy, water and natural of its operations, production lines and resources by increasing productivity • Implements practices aimed products. The Company believes that and by promoting the use of new at obtaining the views of its it has a duty to safeguard the health technology and where possible the stakeholders on matters related to and safety of its employees, customers use of renewable energy. its activities, informing them with and the general public affected by its regard to its activities and acting activities, products and services, and • Takes into account the together in line with common goals. to protect the environment and natural environmental aspects when life on behalf of future generations. evaluating new products, projects • By complying with the requirements and operations and prioritizes of the Environmental and Energy Vestel Elektronik has held the TS EN reliable production by reducing the Management Systems, promotes ISO 14001 Environmental Management use of hazardous substances and participation and a culture of System Certificate since 1998, the TS using less polluting substances innovation among stakeholders EN ISO 50001 Energy Management in its products and manufacturing in order to continuously improve System Certificate since 2012, and processes. and increase the effectiveness of the TS EN ISO 14064 Greenhouse Gas
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In 2021, Vestel aims to complete its work on determining its Science- Based targets, as suggested by the UN Climate Change Conference of the Parties to reduce its environmental impacts.
management systems, providing indirect greenhouse gas emissions opportunities, and the decisions taken adequate and due resources from the generation of purchased are integrated into business goals and towards this purpose. energy are verified every year on a strategies. voluntary basis in accordance with the • Conducts risk analysis and In 2021, Vestel aims to complete its TS EN ISO 14064-1 Standard. assessments without delay. work on determining its Science- Environmental management at Based targets, as suggested by the • Constantly continues its work on Vestel Elektronik is carried out by the UN Climate Change Conference of the sustainability. Management Systems team under Parties to reduce its environmental Vestel’s environmental reports cover the Quality Group Directorate in the impacts. the Company’s production facilities. capacity of an Environmental Officer Vestel offers various incentives Vestel regularly observes, analyzes and Environmental Management to support the management of and records environmental outputs Representative. Additionally, within environmental issues, including the and changes at its 13 production the scope of Zorlu Holding’s Smart realization of its goals. At the end of plants. In this context, various Life 2030, Vestel representatives are the environmental training provided to reports are prepared on a monthly also present in 7 different working all employees, employees are asked and annual basis. The Company groups (The Environment, Community to share their ideas for improvement monitors wastewater analyses, Relations, R&D and Innovation, with the Environmental Management energy and water consumption, water Corporate Governance, Employees, System team. Vestel Beyaz Eşya and carbon footprints, diesel usage Customer Relations and Supply has been implementing a reward and the amount of hazardous and Chain) established under the Zorlu system for employees working on non-hazardous waste on a monthly Holding Sustainability Committee. the assembly lines since 2019, where basis, and publishes this information Within the framework of the goals assembly units are given points when in its monthly assessment report of these working groups, Vestel they achieve their defined goals for the within the scope of environmental undertakes to observe the health specified environmental performance legislation. Apart from the reporting and safety of all its stakeholders, indicators, and are ranked among and notifications carried out in line especially its employees, customers themselves at the end of each month. with its legal obligations, the Company and those affected by its activities, With the ranking, Vestel points are voluntarily calculates its carbon products and services, and to awarded to the units which rank in the footprint and reports the values and protect the environment and top 3, and all employees can collect its related policies through the CDP natural life on behalf of future these points and receive gifts which (Carbon Disclosure Project). generations in all of its activities they select from the reward catalogue. and to implement and develop Environmental monitoring and Vestel Elektronik also carries out work lean and proactive environmental measurement follow-up programs to implement a similar application. and energy management systems are used at Vestel to collect and within the framework of sustainable CONTRIBUTION TO SDG calculate environmental data. Data development principle. The Company on energy and water consumption is committed to continuing its activities is tracked from invoices, and waste within this framework and allocating is tracked from the registration sufficient and appropriate resources system. In accordance with legal to these studies. Vestel also works requirements for air quality, emission to integrate its sustainability goals measurements are carried out into its business strategies. An every two years. In addition direct annual management review meeting greenhouse gas emissions and is held with the senior management to evaluate environmental risks and
128 Vestel Elektronik 2020 Annual Report Collaborations in Environmental Plan and Roadmap for Sustainable Integrated Management Issues Consumption and Production” System and Certificates conducted by the UN Environment • Vestel has been actively involved and the Ministry of Environment in the TÜSİAD Environment and Vestel holds the TS EN ISO 14001 and Urbanization of the Republic Climate Change Working Group Environmental Management of Turkey and contributed to the since 2019. In addition to the main System, TS EN ISO 50001 Energy project with its good practices. working group, the Company Management System, TS EN ISO started to take part in the newly • In addition, Vestel Beyaz Eşya 9001 Quality Management System, established Circular Economy was selected as a pilot facility TS ISO 45001 (transition from ISO Sub-Working Group in 2020 and representing the sector within 18001) Occupational Health and Safety aims to participate in the Policy the scope of the “Adding Audit Management System, TS EN ISO 27001 Development Sub-Working Group, Capability to the Waste Declaration Information Security Management which is planned to be established System and Improving Waste System and IATF 16949 Automotive in 2021. Management (ABSIS) Project” Quality Management System (only carried out by the Ministry of Vestel Elektronik) certification, • Vestel’s subsidiary, Vestel Beyaz Environment and Urbanization and ensures the continuity of these Eşya has been following the “The and the Middle East Technical certificates and the continuous European Green Deal”, the most University, and took part in the improvement of the systems with important output of the United project in meetings held within the its Integrated Management System, Nations Climate Summit held in scope of the COVID-19 measures. which is successfully executed. December 2019, from day one A Management System where and actively participates in policy • Under the leadership of the authorities and responsibilities are development processes. In this European Union, the Green documented in order to fulfil the vein, in 2020, it started to take part Deal, Border Carbon Regulation requirements of the standards in the in the activities of the TÜSİAD EU Mechanism and Circular Economy process, to achieve the targets for Green Deal Task Force where it Action Plan are discussed in detail environment, energy, quality, OHS represented the sector. within the scope of cooperation, (Occupational Health and Safety) along with Vestel Beyaz Eşya’s • In addition, Vestel Beyaz Eşya, and ISMS (Information Security and proactive work on these issues. which is a member of TOBB DTM Management System), to reduce (Consumer Durables Council) • The Smart Life Academy Program, production costs, to ensure their and TÜRKBESD, took over the initiated by Zorlu Holding in continuity, to continuously develop and Presidency of the TOBB DTM cooperation with the Boğaziçi improve them, has been established Environment Commission in 2020. University Lifelong Education with required steps taken to ensure its In this context, the company actively Center (BÜYEM) in 2019 in order continuity and development. followed harmonization studies to contribute to the development Vestel took the necessary precautions in environmental legislation, of the sustainability vision at Zorlu with the rapid actions put in place especially GEKAP (Recycling Holding and Group companies, during the pandemic which broke out Participation Share), taking part continued in 2020. Vestel employees in the first quarter of 2020, and passed in the policy formation processes, also attended the program. The the necessary inspections conducted both providing its views and by program continues to be developed by the Turkish Standards Institution carrying out visits to the Ministry every year, covering a wide range (TSE) in line with the ISO Standards of Environment and Urbanization of topics which will enable the on tackling COVID-19 to receive the in the capacity of representing the development of a sustainability COVID-19 Safe Production Certificate. sector. vision, from global trends and system thinking to the climate CONTRIBUTION TO SDG • Vestel Beyaz Eşya played an crisis, sustainability leadership and active role in the European the enterprise ecosystem. Union Environmental Legislation harmonization studies, following CONTRIBUTION TO SDG the “EU F-Gases Project” which ended in 2019, while in 2020 the company became a representative of the sector within the framework of the “Current Situation Study for the Preparation of a National Action
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Vestel voluntarily calculates its carbon footprint and reports the values and its related policies through the CDP (Carbon Disclosure Project).
130 Vestel Elektronik 2020 Annual Report Climate Crisis, Carbon In line with this strategy, Vestel ground in its sector, Vestel Beyaz Footprint and Carbon Elektronik received the TS EN ISO Eşya calculated its water footprint Disclosure Project 14064 Greenhouse Gas Verification within the scope of the TS EN ISO Statement Certificate from an 14046 standards, which was then With an awareness of the climate independent and authorized verified by accredited organizations crisis facing us, Vestel aims to take organization for the first time in 2017 and reported to the CDP. It became the measures in this area. Vestel’s and continued to verify and certify first company in its sector to receive Strategy for Combating the Climate its greenhouse gas emissions in a B rating from the CDP with its first Crisis includes the following actions: 2018, 2019 and 2020. In addition, the water reporting. In 2018, when there Company continues its membership was an overall decline in ratings due to • To determine the harm greenhouse and annual reporting activities of a change in the system, the company gas emissions cause to the the international Carbon Disclosure recorded a carbon rating of C and a environment, drawing attention to Project (CDP) on a voluntary basis. water rating of B-, and ranked in the the role they play in climate change top 20 among the 125 companies in and their impact on the sector, Vestel Elektronik issued a statement the rating ranking. Vestel Beyaz Eşya, in the Climate Change, Water Program • To reduce the impact created by which maintained its 2018 scores in and Supply Chain modules within the greenhouse gas emissions, first on 2019, obtained a carbon rating of C and scope of the CDP’s renewed scoring a local basis and then on a global a water rating of B. The data for 2020 methodology in 2016 and received level, by monitoring their sources, will be reported to the CDP in 2021. a score of B in the climate change • To choose environmentally friendly module (the average score of the Vestel is committed to reducing its vehicles and equipment which emit module was C), B- (average score negative impact on the environment low carbon emissions, of the module is B-) in the water in all areas. Within the scope of Smart program module and B (average score Life 2030, the Company contributes to • To develop energy efficiency of the module is D) in the supply chain Zorlu Holding’s target of reducing the projects, prioritizing the use of model. While Vestel maintained its ratio of carbon emissions to turnover renewable energy, score of B by issuing a statement in by 15% by 2022, taking 2017 as the • To comply with national and the Climate Change module in 2017 base year. international legislation on and 2018, it received a score of C in managing greenhouse gas 2019. emissions, Vestel Beyaz Eşya, on the other • To reduce consumption of hand, has been measuring its carbon energy and natural resources footprint and has been reporting of employees, suppliers and to the CDP since 2012. In addition, subcontractors through training since 2016, Vestel Beyaz Eşya has programs as part of continuous been calculating its carbon footprint improvement. in accordance with TS EN ISO 14064 standards and has been verifying it with accredited organizations. With this step in 2016, the company increased its CDP score to B in 2016. At the same time, by breaking new
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ENVIRONMENTAL INDICATORS - GREENHOUSE GAS EMISSIONS Vestel Elektronik (Standalone) 2020/2019 2017 2018 2019 2020 change (%)
Greenhouse Gas Emissions (Scope-1) (tonnes CO2e) 2,653 2,695 2,620 2,880 9.92
Greenhouse Gas Emissions (Scope-2) (tonnes CO2e) 57,355 53.556 52.477 52.570 0.18
Emission Per Unit Product (tonnes CO2e*/product) 0.0057 0.0065 0.0068 0.0073 8.26
kgCO2e*/TL turnover 0.0093 0.0072 0.0070 0.0062 (10.42)
Vestel Beyaz Eşya 2020/2019 2017 2018 2019 2020 Change (%)
Greenhouse Gas Emissions (Scope-1) (tonnes CO2e*) 14,222 15,022 14,937 14,887 (0.33)
Greenhouse Gas Emissions (Scope-2) (tonnes CO2e*) 52,349 56,890 63,097 63,318 0.35
Emission Per Unit Product (tonnes CO2e*/product) 0.0081 0.0082 0.0080 0.0075 (5.81)
kgCO2e*/TL turnover 0.0173 0.0126 0.0112 0.0083 (25.78)
*equivalent
Vestel Elektronik - Greenhouse Gas Emissions In accordance with the Industrial Air Pollution Control Regulation, air emission measurements are carried out every two years in all 0.0073 the production facilities and all 57,355 0.0065 0.0068 parameters (CO, NOx, SOx, VOC, Dust) were found to be below threshold 0.0057 53,556 52,477 52,570 values. CONTRIBUTION TO SDG
2,653 2,695 2,620 2,880 Conservation of Biodiversity 2017 2018 2019 2020 Vestel’s production facilities are
Greenhouse Gas Emissions (Scope-1) (tonnes CO2) located within the borders of the Greenhouse Gas Emissions (Scope-2) (tonnes CO ) 2 Manisa Organized Industrial Zone Emission Per Unit Product (tonnes CO /product) 2 (MOIZ). Organized Industrial Zones are special regions established by clustering industrial facilities together in order to ensure the efficiency of industry and support regular settlement in the city. One of the
132 Vestel Elektronik 2020 Annual Report Vestel Beyaz Eşya - Greenhouse Gas Emissions
0.0082 0.0081 0.0080 0.0075
63,097 63,318 56,890 52,349
14,222 15,022 14,937 14,887
2017 2018 2019 2020
Greenhouse Gas Emissions (Scope-1) (tonnes CO2)
Greenhouse Gas Emissions (Scope-2) (tonnes CO2)
Emission Per Unit Product (tonnes CO2/product)
purposes of establishing Organized are not protected areas or areas determined that there are no Industrial Zones is to minimize and with a high biodiversity value, but are protected species and no endangered control potential negative impacts on areas that have been planned and flora species in Vestel Beyaz Eşya’s waste management and biodiversity. landscaped as green spaces. A total of area of activity. All production facilities went through 110 different plant species were used CONTRIBUTION TO SDG the Environmental Impact Analysis in the landscaping of these areas. process during the establishment Lawn covers 29,000 m2 of the area phase and when a process change with 7,000 m2 of the remaining area and/or capacity increase was carried consisting of ground cover plants and out, with an evaluation of any negative another 4,000 m2 to be allocated as environmental impacts which may green space. Environmental Training result from the activities. The reports The inclusion of Vestel Beyaz Eşya, Indicators prepared revealed that there would a subsidiary of Vestel Elektronik, in be no impact which would cause a Vestel provides continuous the MOIZ and the presence of only deterioration in the ecological balance. environmental awareness training industrial areas within a 2 km radius of to its employees so that they can Maintenance and development work the company’s area of activity, a flora acquire the right behavioural habits continues with the assigned landscape and fauna study has not been carried regarding environmental awareness personnel to ensure the sustainability out. Vestel Beyaz Eşya commits to and energy efficiency. For each new of green areas at Vestel City. The comply with the Environmental Law recruitment, regular on-the-job maintenance work mainly covers No. 2872 and the regulations issued training is provided to instil general fertilization, spraying, soil cultivation in accordance with this law on the environmental awareness among and irrigation activities. Retention measures to be taken for flora and employees and provide information activities involve renewing degraded fauna. about the Company’s Environmental green areas and landscaping of areas As a result of the previous studies Management System. While Vestel after construction and renovation. conducted in accordance with the Elektronik employees received 1,389 The total green space of the Vestel “Bern Convention”, it has been hours of training in 2019, this amount Central, High-End, Digital and EPS fell to 798 hours in 2020 due to the Factories is 40,000 m2. These areas pandemic.
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Some training activities at Vestel Vestel’s subsidiary Vestel Beyaz Eşya’s the “Star of Innovation” Award in the Beyaz Eşya were suspended from efforts were rewarded with the “Grand Stars of Technology Awards organized March 2020 due to the pandemic. Industry Award” given by the Ministry by Yıldız Technical University. One-point training continued, with a of Energy and Natural Resources in The “Waste Paint Recycling and maximum of three people attending recognition of the company’s “New Reuse System”, another piece of when necessary. While 1,767 employee Generation Panel Condenser ECONF technology developed by Vestel, hours of environmental training was Refrigerator” project at the Energy recovers waste paint particles used provided in 2019, 315 employee hours Efficiency Awards organized by the in the plant and prepares them for of environmental training could be Istanbul Chamber of Industry in 2020. re-use. The design of all chemical provided in 2020. In addition, training In 2020, Vestel Elektronik formulations and machineries used was provided to employees working implemented the H2020 BAT4EVER in the system belongs to Vestel. The in the area defined as a scrapyard and HELIOS projects for energy system was used by Vestel Elektronik on the disposal of mask waste, a efficiency and sustainable environment for the first time across all industries problem which has surged due to and mobility. The BAT4EVER project and was registered with 3 patents. the pandemic, as amended by the is aimed at contributing to the Vestel, which competed with major Communiqué published by the Ministry circular economy and the transition European industrial enterprises in of Environment and Urbanization. to environmentally friendly energy the “Process Innovation” category In line with the Business World systems by reducing waste with new for the second time in the 2018 EU Plastics Initiative, which was launched generation batteries to be developed in Awards for Environment with its in the first quarter of 2020 and in the field of energy. The HELIOS project “Waste Paint Recycling and Reuse which Zorlu Holding was one of the is aimed at integrating new generation System”, won the First Prize. Within first signatories, two hours of training batteries into smart mobile systems. the scope of the award, which has was provided to the relevant personnel been held since 1990, Vestel became In electrolysis and chrome plating from the R&D units of Vestel Beyaz the first and only Turkish company systems currently in use in industry, Eşya’s 7 plants to discuss what could to rank as the successive finalist acids and carcinogenic Cr6-Cr3 oxides be done in this context. in this category. With “Waste Paint which are harmful to the environment Recycling and Reuse System” Vestel During the unforeseen pandemic and human health are used. also won the “Large Scale Company process, studies have been initiated Nano Chrome Plating Production Process Category Award” in the to provide training in computer-aided Technology, which does not use Technology Awards, a product of the environments. chemical and carcinogenic Cr6-Cr3 synergy created between TÜBİTAK, oxides, with a “0” waste feature, was CONTRIBUTION TO SDG TTGV and TÜSİAD, which recognizes developed by Vestel for the first time creative and innovative solutions in the smartphone and TV industry. featuring technical excellence and The development of the technology competitiveness. As of the end of 2020, has increased resource efficiency a total of 177 tonnes of waste paint while reducing the effects of the was recovered under the project, with life cycle on the environment, while SUSTAINABILITY IN THE a 460 tonnes reduction in the carbon achieving a 97% rate of production PRODUCTION PROCESSES footprint while also saving 123 tonnes efficiency with 70% cost savings of water. Sustainability Achievements compared to existing technologies. in Processes and Awards Since harmful substances and water CONTRIBUTION TO SDG are not used with this technology, Received which marks an important step in Vestel adopts the same environmental Vestel’s sustainability mission, it is sensitivity in its production processes ensured that emissions and wastes as it does in its products, and are “0”. In 2017, this project was continues to work within the scope of deemed worthy of the Second Prize in its energy saving targets. In addition to the “Process Innovation” category at the process improvements undertaken the EU Environment Awards, one of to achieve these goals, new technology Europe’s most prestigious awards, and is also used where appropriate.
134 Vestel Elektronik 2020 Annual Report Vestel monitors water consumption within the objectives and scope of the TS EN ISO 14001 Environmental Management System, and follows a policy to reduce water consumption in this direction.
Compliance with Legal • Ecodesign Framework Directive for Water Management Energy-Related Products, Regulations in Production Vestel monitors water consumption Processes • Energy Efficiency Law and within the objectives and scope of Regulation on Increasing Efficiency Vestel monitors the compliance the TS EN ISO 14001 Environmental in the Use of Energy Resources and of its products with all the legal Management System, and follows a Energy, regulations before production, during policy to reduce water consumption in the production process and throughout • Valid energy label regulations this direction. their life cycle. In order to guarantee applicable to each product group, Domestic wastewater from the the protection of the environment • Environmental Law No. 2872 and factories is never directly discharged and human health, the Company has related regulations. into the receiving environment, but is established many procedures on the fed into the wastewater line connected basis of legal regulations and the CONTRIBUTION TO SDG to the Manisa Organized Industrial Management Systems Policy, and Zone (MOIZ) Treatment Plant. Each ensures and maintains its activities in month, samples are taken from the full compliance with these procedures wastewater line and the level of and legal regulations. pollution of the water is analyzed and In this context, Vestel fully complies reported by the MOIZ. with the following legal regulations Vestel Elektronik does not have for the sector in Europe, in addition process-based wastewater discharge, to complying with all the national In this vein, Vestel Elektronik aims laws, especially the Environmental to verify its Water Footprint by 2021 Law, stipulated by the Ministry of and obtain the TS EN ISO 14046 Environment and Urbanization: Water Footprint Certificate in order • WEEE - Directive on Waste Electrical to contribute to the Environmental and Electronic Equipment, Management System. • RoHS - Directive on the Restriction Vestel Beyaz Eşya calculated its water of the Use of Certain Hazardous footprint for 2016 on a corporate basis Substances in Electrical and in accordance with the “ISO 14046 Electronic Equipment, Water Footprint Standard”, which was then verified by Rina, an accredited • REACH - Regulation of the organization. The company has met Registration, Evaluation, the required conditions to receive the Authorization and Restriction of ISO 14046 Water Footprint Approval Chemicals, and Verification Certification and achieved another first in its sector.
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ENVIRONMENTAL INDICATORS - WATER CONSUMPTION AND AMOUNT OF WASTEWATER Vestel Elektronik (Standalone) 2020/2019 2017 2018 2019 2020 change (%) Mains Water (m3) 624,612 574,458 482,768 485,824 0.63 Underground Water (m3) 95,007 46,062 129,215 145,536 12.63 Total Water (m3) 719,619 620,520 611,983 631,360 3.2 Wastewater (m3) 647,657 558,468 550,785 682,559 23.92 Recycled and Reused Water (m3) 40,000 40,000 40,000 40,000 0 Water Consumption Per Unit Product (m3/unit) 0,0685 0.0721 0.0751 0.0833 10.98
Vestel Beyaz Eşya 2020/2019 2017 2018 2019 2020 change (%) Total Water (m3) 995,105 922,099 967,780 964,126 (0.38) Wastewater (m3) 895,595 829,889 871,002 867,713 (0.38) Water Consumption Per Unit Product (m3/unit) 0.12 0.10 0.10 0.09 (6.37)
Vestel Elektronik - Water Consumption and Amount of Wastewater CONTRIBUTION TO SDG
0.0833 0.0751 0.0721 0.0685
719,619 682,559 647,657 620,520 611,983 631,360 558,468 550,785
2017 2018 2019 2020 Wastewater (m3) Total Water (m3) Water Consumption Per Unit Product (m3/unit)
136 Vestel Elektronik 2020 Annual Report Vestel Beyaz Eşya - Water Consumption and Amount of Wastewater
0.12
0.10 0.10 0.09 995,105 967,780 964,126 922,099 895,595 871,002 867,713 829,889
2017 2018 2019 2020
Wastewater (m3) Total Water (m3) Water Consumption Per Unit Product (m3/unit)
Waste Management legislation, after being temporarily and transferred to recycling stored in the Hazardous Waste Vestel has put in place a Waste facilities (Collection and Separation Temporary Storage areas located in Management System for the Facility) licensed by the Ministry of the factories, in accordance with the prevention, reduction, recycling, Environment and Urbanization. Waste Control Regulation. energy recovery, separation at source, With the establishment of the Zero proper storage and dispatch of waste Non-hazardous (Solid-Scrap) wastes Waste Management System in 2020, within the scope and objectives of its are separated in Waste Classification Vestel aims to improve the process Environmental Management System. areas in the factories and taken in line with the goals and objectives to recycling facilities licensed by Wastes are categorized as hazardous/ of the management system and is the Ministry of Environment and non-hazardous, recyclable/non- carrying out the necessary work. Urbanization, in accordance with the recyclable, and their weight is Vestel closely follows the Business relevant regulations. monitored and managed. World Plastics Initiative, which Packaging waste arising from Hazardous wastes are transported Zorlu Holding is a signatory to. In production is separated in waste to Hazardous Waste Recycling this context, it conducts studies on sorting areas located in the factories and Disposal facilities licensed by the circular economy in the plastics in accordance with the Regulation the Ministry of Environment and industry and the reduction of plastic on the Control of Packaging Waste Urbanization in accordance with the usage.
ENVIRONMENTAL INDICATORS – AMOUNT OF WASTE GENERATED Vestel Elektronik (Standalone) 2020/2019 2017 2018 2019 2020 change (%) Hazardous Waste (kg) 689,625 576,769 494,010 470,540 (4.75) Non-Hazardous Waste (kg) 15,904,010 17,496,302 15,422,319 16,081,180 4.27 Total waste (kg) 16,593,635 18,073,071 15,916,329 16,551,720 3.99 % of Recycled Waste 90.26% 89.68% 89.65% 90.35% 0.79 Waste Per Unit Product (kg/unit) 1.58 2.10 1.95 2.18 11.87
Vestel Elektronik 2020 Annual Report 137 Activities
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Vestel Beyaz Eşya 2020/2019 2017 2018 2019 2020 change (%) Hazardous Waste (kg) 1,239,925 1,290,626 1,439,718 1,391,845 (3.33) Non-Hazardous Waste (kg) 32,863,766 33,450,475 37,945,622 39,052,543 2.92 Total Waste (kg) 34,103,691 34,741,101 39,385,340 40,444,388 2.69 % of Recycled Waste 96% 98% 97% 94% (2.68) Waste Per Unit Product (kg/unit) 4.17 3.94 4.01 3.87 (3.49)
Vestel Elektronik - Amount of Waste Generated CONTRIBUTION TO SDG
2.18 2.10 1.95 1.58
17,496,302 16,081,180 15,904,010 15,422,319
689,625 576,769 494,010 470,540
2017 2018 2019 2020
Non-Hazardous Waste (kg) Hazardous Waste (kg) Waste Per Unit Product (kg/unit)
Vestel Beyaz Eşya - Amount of Waste Generated
4.17
37,945,622 39,052,543 32,863,766 33,450,475 4.01
3.94
3.87
1,239,925 1,290,626 1,439,718 1,391,845
2017 2018 2019 2020
Non-Hazardous Waste (kg) Hazardous Waste (kg) Waste Per Unit Product (kg/unit)
138 Vestel Elektronik 2020 Annual Report Energy Management and Vestel initiated feasibility studies for operating the compressor or chiller Energy Efficiency - Total the installation of solar panels on the in the other facility. As a result Productive Maintenance roof of one of its factories in 2020 to of this project, annual electricity use renewable energy resources. In savings of 8,124,367 kWh were Having obtained the TS EN ISO addition, other projects are planned achieved. Meanwhile, significant 50001 Energy Management System to be implemented to support the use energy savings were also achieved Certificate after passing the necessary of low carbon electricity, the purchase in 2020 by eliminating the need audits in 2012, and ensured the of renewable energy certificates to for employee intervention with continuity of the certification, Vestel reset or reduce the carbon footprint of Utilities 3, which provides the systematically implements various the purchased electrical energy and energy and the needs of the new projects by evaluating the means conservation of resources. Washing Machine and Tumble to increase energy efficiency in its Dryer Plant, built in a smart An Energy Manager and an Energy operations. Vestel’s basic policy is building concept with the vision Management Representative have to attain high production volumes of Industry 4.0, where all energy been appointed to effectively manage with low energy consumption. In line elements (electricity, air, heating, the Energy Management System at with this approach, Vestel aims to cooling, cooling water, hot water, Vestel. Relevant performance results achieve better results in terms of water, etc.) can be monitored and are regularly monitored and evaluated efficiency and quality by considering controlled remotely. by the senior management. In addition, energy consumption in its production the development of new projects for • A new generation AC motor with processes. energy saving continues with detailed a driver was brought into use in In line with its Energy Policy, Vestel: energy study reports commissioned place of a DC main motor in the for internal and external energy Refrigerator Factory, bringing • Uses energy-efficient and efficiency. annual electricity savings of environmentally friendly 639,360 kWh. Instead of the central technologies, equipment and The energy efficiency studies cooling system used for the cooling services to ensure its energy conducted at Vestel factories in 2020 water of the Refrigerator Factory, performance is environmentally saved a total of 11,494,541 kWh of chillers and efficient pumps were and economically sustainable by electricity. installed to save 435,600 kWh of continuously improving it and aims Some of the energy efficiency and electricity per year. By installing to use renewable sources of energy saving projects implemented are a central vacuum system instead where possible. described below: of the vacuum pump found in • Always places priority on the design the thermoforming machines, • In 2020, Vestel Elektronik achieved of energy-friendly products. annual savings of 432,432 kWh annual electricity savings of 130,000 of electricity were achieved. In kWh by meeting and optimizing • Carries out awareness activities on addition, the installation of infrared the compressor need of the High- energy efficiency through training, dryers with new technology in the End factory from plastic injection seminars and visual posters drying process of the sheet metal without investment. by ensuring the participation panels in the paint shops of the of all stakeholders in order to • At Vestel Beyaz Eşya, the air line Refrigerator Factory, instead of meet its target for lower energy and chiller cold water line between burners, saved natural gas with an consumption, while supporting the Utilities 1 and Utilities 3 at the equivalent energy of 244,188 kWh. use of new technology and creative Washing Machine and Tumble ideas. Dryer Plant were bypassed, and • By comparing its energy the compressors and chillers in performance with the best practices Utilities 3 were removed to the in the world and of its peers, backup in 2020. Thus, in the event determines areas for improvement of a compressor or chiller failure in energy efficiency and regularly in any facility, any interruption to conducts internal and external production can be prevented by energy efficiency studies.
Vestel Elektronik 2020 Annual Report 139 Activities
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Vestel Elektronik was awarded the “World Class” Award, the highest level in the TPM awards, given by the JIPM.
Energy consumption and related passing the evaluations in the TPM foundations of which were laid by processes are managed in integration Special Award category. Continuing combining the TPM philosophy with with the TPM (Total Productive its activities with this title, Vestel the Company’s digital transformation Maintenance) model and business Elektronik also received the “Advanced vision. plans which aim to achieve zero Special Award for TPM Achievement” Vestel Beyaz Eşya, which increases equipment downtime and zero quality in 2018. Most recently, Vestel its efficiency with continuous defects in production systems within Elektronik was awarded the “World improvement activities carried out the scope of the Environmental and Class” Award, the highest level in the in all of its processes by integrating Energy Management Systems. Vestel TPM awards, given by the JIPM (Japan the TPM philosophy into its system, successfully implements the TPM Institute of Plant Maintenance). received the “TPM Excellence Award” Management System and ensures Vestel has increased its efficiency, from the Japan Institute of Plant its sustainability. The environmental competencies of its employees and Maintenance (JPIM) in 2014, the gains achieved as a result of the TPM quality to the highest level with “Award for Excellence in Consistent System approach are listed below: TPM, a management model based TPM Commitment” in 2017 and the • Maintaining an orderly organization on the understanding of operational “Special Award for TPM Achievement” with the 5S approach, reducing excellence in production. Since 1964, in 2020 in recognition of the successful pollution and pollution sources, a total of 3,611 applications have TPM work carried out in all its been made to this program, which factories. With these achievements, • Improvement and reduction of consists of five main stages, and Vestel Beyaz Eşya became the first losses in all processes with the only 15 companies, including Volvo, and only company in the world to Kaizen principle, Mazda, Unilever, reached the “World receive this award simultaneously in • Reduced incidence of breakdown, Class” stage. While on average, it 7 different product groups and at 7 less scattering, energy savings takes 14 years for these companies production facilities in its sector. and raw material savings with to reach this stage; Vestel Elektronik the autonomous maintenance completed the program, which it approach, started in 2010, in just 10 years. • Reducing scrap and reworking, thus Vestel Elektronik was the first reducing waste, company to receive this prestigious award in the consumer and automotive • Continuous improvement studies to electronics sectors worldwide with its increase efficiency and quality. simultaneous work in its 6 separate Vestel Elektronik was awarded the factories. “TPM Excellence Award” in 2012 The Company will continue to move and the “Award for Excellence in forward in line with its goal of Consistent TPM Commitment” in 2014 becoming the world’s most powerful with the work initiated in 2010. In 2016, production and technology group in Vestel Elektronik won the title of the its sector, with the Vestel Elektronik first TV manufacturer to receive the Production System (VEPS), the “Special Award for TPM Achievement” in television production by successfully
140 Vestel Elektronik 2020 Annual Report ENVIRONMENTAL INDICATORS - ENERGY CONSUMPTION Vestel Elektronik (Standalone) 2020/2019 2017 2018 2019 2020 change (%) Electricity (kWh) 82,056,747 79,202,949 83,028,597 85,870,134 3.42 Natural Gas (kWh) 9,117,155 8,941,871 8,833,909 10,650,523 20.56* Steam (kWh) 70,990,740 67,145,007 69,638,235 62,593,579 (10.12) Hot Water (Heat) (kWh) 4,180,960 4,093,728 2,177,236 4,778,896 119.49** Diesel (kg) 3, 213, 424 3, 519, 715 3, 325, 363 3, 071, 526 (7.63) Total Energy Consumption (TOE***) 14, 570 13, 979 14, 340 14, 136 (1.42) Energy Per Unit Product (TOE***/Unit) 0.0014 0.0016 0.0018 0.0019 6.04
* The increase in natural gas consumption resulted from the commissioning of the kitchen serving all Vestel Group companies. ** The difference in hot water usage was caused by a meter failure in 2019. *** Tonne of Oil Equivalent Vestel Beyaz Eşya 2020/2019 2017 2018 2019 2020 change (%) Electricity (kWh) 86,809,697 91,151,604 90,931,466 101,343,622 11.45 Natural Gas (kWh) 64,266,744 65,254,335 68,233,469 69,266,903 1.51 Hot Water (Heat) (kWh) 19,103,777 16,474,817 16,345,386 15,538,995 (4.93) Diesel (kg) 93, 691 94, 665 93, 180 95, 546 2.54 Total Energy Consumption (TOE*) 14, 039 13, 020 14, 566 14, 463 (0.71) Energy Per Unit Product (TOE*/Unit) 0.0017 0.0015 0.0015 0.0014 (6.68)
* Tonne of Oil Equivalent
Vestel Elektronik – Energy Consumption CONTRIBUTION TO SDG
0.0019 14,570 0.0018 0.0016
0.0014 14,340
14,136
13,979
2017 2018 2019 2020
Total Energy Consumption (TOE) Energy Per Unit Product (TOE/Unit)
Vestel Elektronik 2020 Annual Report 141 Activities
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Vestel Beyaz Eşya - Energy Consumption
14,566 0.0017 14,463
0.0015 0.0015 14,039 0.0014
13,020
2017 2018 2019 2020
Total Energy Consumption (TOE) Energy Per Unit Product (TOE/Unit)
SUSTAINABILITY IN The power consumption of TVs is Reductions of up to 30% in electricity PRODUCTS increasing each year as new products consumption are achieved thanks to are added to the television product automatic turning off lights when not Vestel’s sustainable product portfolio group, such as UHD, OLED, Mini Led in use, illumination at 90% brightness includes LED lighting products, and 8K televisions. With its work to and programming of devices to televisions with A+ and A++ energy reduce the electricity consumption of automatically switch on during lower ratings, Smart Home kits, electric its products in recent years, Vestel has tariff periods. vehicle charging units and household achieved A+ and A++ energy ratings Work continues on the sales of Smart appliances which offer high energy for most of its TV products. In line with Home kits. and water efficiency. The R&D designs the new energy labelling practice, of this entire product portfolio are which started in November 2020 with Vestel has identified electric vehicle carried out within the framework a transition period and which will charging units as one of the important of sustainability criteria, and all become mandatory in March 2021, the focal points of its sustainable processes from the product design to new energy class chart, which Vestel R&D policy. Vestel Elektronik has the recycling of resulting waste are has also started to use, has been accelerated its R&D projects in this managed under this focus. updated and new energy labels have field in line with the transformation LED lighting products, which provide started to be used. With the scale in taking place in the automotive industry energy savings of up to 80%, are new energy labelling, a product which towards the use of electric vehicles environmentally friendly with their had been classified as A+++ will now driven by the diminishing fossil mercury-free structure and reduce be declared as Class A. However, the fuel reserves, fight against climate waste generation with a service life of scale change in energy labelling will change and growing fuel economy more than 35,000 hours, contribute to not require a change in the power and started the production and sales efforts to lower carbon emissions by saving of products. of electric vehicle charging units in 2018. The Company aims to achieve an consuming less energy than standard Integrating heating systems and increasing market share in this area in lighting fixtures. With these features, electrical systems with Smart Home the coming years. all of the LED lighting products sold kits reduces heat energy consumption in domestic and foreign markets form by 10-30%. On the other hand, after having been a part of the sustainable product included in Turkey’s Automobile Joint portfolio.
142 Vestel Elektronik 2020 Annual Report Venture Group in 2018, Vestel aims In addition to energy records, Vestel Central Recovery and Repair in to contribute to the production of Beyaz Eşya has the most water- Customer Service Turkey’s first homegrown electric car efficient products on the market with as one of the stakeholders involved in its dishwashers consuming 45% less With a circular economy perspective, this project with its infrastructure and water than the market average at Vestel Customer Services initiated know-how in the electronics sector. only 5.4 litres per wash and washing central repair and recovery units as machines consuming 35 litres per a project for phones and tablets in Continuously revising its targets wash, saving 30% water. Water 2019, which were expanded to other for energy efficiency, Vestel Beyaz consumption rates of dishwashers products and were transformed into Eşya’s entire product range consists are reduced by up to 3 litres per wash an organizational unit in 2020. In these of environmentally friendly products with Aquazone technology. Vestel units, scrap product dismantling and with A, A +, A++ ratings or higher, Beyaz Eşya provides consumers repairs of defective materials are carried which are considered to be high with a high level of hygiene in out. Products which have lost their energy efficiency categories. Striving refrigerators, dishwashers, washing usefulness in scrap product dismantling to develop environmentally friendly machines and air conditioners with its are processed before scrapping, and any and highly economical products with environmentally friendly “Daylight” useful materials which may be present reduced environmental impacts by technology. Vestel Beyaz Eşya reduces are checked and removed. In the unwaveringly continuing its R&D and the carbon footprint of consumers defective material repair process, the innovation studies, Vestel Beyaz Eşya with its products that use less energy, repair and reuse status of the replaced allocates half of its R&D budget to water and detergents, and increases materials are evaluated and products developing environmentally friendly the variety of green product models which can be repaired are made products, and realizes these projects in the sustainable product category operational. Both practices contribute by promptly providing additional funds with its refrigerators with vacuum to the economy by regaining materials when environmental projects come up. technology which keep food fresh which have financial value both for the Vestel Beyaz Eşya holds world records for up to eight times longer and national economy and the Company. in energy saving with its: significantly reduce the amount of In addition, the amount of electronic food waste, ovens with HeatWrap waste is reduced, contributing towards • Refrigerators with A+++ -35% technology which can cook 5 different environmental protection. On the other energy label with Pro-Drive trays at the same level, and induction hand, as the need for new materials Technology, cookers, which have a significantly decreases, new production is reduced • Dishwashers with A+++ -20% higher thermal efficiency than gas and savings are achieved in the use of energy label with Autodoor and cookers. On the other hand, Vestel natural resources. Waterbox technologies, tumble dryers manufactured using CONTRIBUTION TO SDG the R290 refrigerant in all models • Washing machines with A+++ -75% contribute to sustainability, being 500 energy label with HydroBoost® and times more environmentally friendly Pyrojet technologies, than their counterparts. • Ovens with A++ energy label with CONTRIBUTION TO SDG technologies such as HeatWrap and Hot Air Shield, • Air conditioning units which save 7% more energy than those in the A+++ energy class, • Tumble dryers with A+++ energy label and environmentally friendly R290 refrigerant and digital drive engine technology.
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With the “Control Tower” project, in which advanced analytical applications related to materials management, procurement and logistics processes are designed, processes have reached an end‑to‑end controllable structure.
SUSTAINABILITY IN SUPPLY Supply Chain solutions in 2020 was logistics processes experienced during CHAIN addressed under three main headings: 2020 were minimized. integration, traceability and autonomy The effects of volatilities in customer Vestel Elektronik Digital of processes. demand which have resulted from the Supply Chain Solutions With the “Control Tower” project, in spread of the pandemic around the The contributions of the digitalization which advanced analytical applications world can be managed with effective projects commissioned in recent years related to materials management, digital solutions developed for under the roof of Vestel Elektronik’s procurement and logistics processes demand planning and order fulfilment Supply Chain Excellence Center were are designed, processes have reached processes. The improvements clearly seen during the pandemic an end-to-end controllable structure. carried out to the ICRON optimization in 2020. Volatilities created by the Thanks to the Power BI solution used model, which is used in the process pandemic on the supply chain were in the project commissioned with of predicting the supply chain needs managed through a high level of Microsoft Office 365 infrastructure, on a characteristic basis, during digital integration with suppliers and SAP BI reports and SAP SNC (Supplier 2020 brought the ability to predict in customers. A number of projects were Network Collaboration) transaction detail, and as a result, planning can developed in this vein in 2020, placing data can now be viewed on a single be carried out at optimal supply chain emphasis on improving the ability to screen on the dozens of screens costs and service levels. With this quickly reach the right information and on the main corporate system SAP improvement, the effects of changes in make and implement the decisions R/3, while warning mechanisms customer demand and material supply on a timely basis. Vestel Elektronik have been created and personal can be measured rapidly and analytical supply chain management was controllable features have been added. studies of alternative scenarios could awarded in the sixth “Turkey’s Most With the project, which was rapidly have been carried out. commissioned in a short space of time Effective Supply Chain Professionals” In order to fulfil the requirements of and entirely with the use of internal event in recognition of its successful the Authorized Economic Operator resources, a structure that is rich both process management and digital Status, which is a proof of Vestel’s visually and in terms of content, and transformation investments. competencies in import and export which will control the operation was processes, system improvements In 2020, 86 digitalization projects established. The “TM Kokpit” project, in the fields of documentation and were considered within the Vestel which was developed on top of the workflow management continued Elektronik supply chain with 26 of existing transportation management during 2020. In this context, system the projects, in which 36 employees (SAP TM) system, ensures traceability improvements, digital archiving actively participated, completed of all transportation operations. In this studies, digital documentation and implemented during the year. way, the effects of the global issues in Work started on 24 projects in 2020 and is continuing. In addition to the 15 projects under preparation, 21 projects have been suspended to evaluate priority and project relations. The roadmap for Sustainable
144 Vestel Elektronik 2020 Annual Report and approval follow-up projects supply chain in order to increase new trends and projects in materials- which enable efficient working and the company’s competitiveness, finished goods warehouses and full compliance with the changing the Supply Department identifies communication channels with legislation were brought into use. alternative suppliers in coordination suppliers are evaluated in parallel with with the R&D and Quality Departments the principle of benefit and cost. CONTRIBUTION TO SDG and includes them in the company’s With the new module investments supplier pool. planned for the Enterprise Resource In 2020, 78% of the total container Planning (ERP) software, Vestel Beyaz volume used for the import and Eşya aims to considerably strengthen export activities within the Vestel the communication with its suppliers Supply Chain Approach at Group of Companies was organized and prevent human errors. In addition, Vestel Beyaz Eşya by Vestel Beyaz Eşya. Due to the the company’s ability to meet variable density of Vestel Beyaz Eşya’s customer demands will improve. The Always aiming for the best in supply business volume, all steps of the Supply Chain Digital Transformation chain management, Vestel Beyaz Eşya supply chain are examined in detail Excellence Center, staffed by has proven itself with the Industrial and master data values for materials members who are specialists in Excellence and TPM Continuity and products and material-based their fields, was established for this Awards, and continued to strive for a inventory indicators are checked purpose, which ensures that the faster and more reliable supply chain and updated algorithmically. The work is managed more effectively. in 2020. customer-oriented perspective of the With the finalization of projects Although each of the 7 different employees involved in these processes whose conceptual designs have been factories at Vestel Beyaz Eşya has its ensures that everyone works towards prepared, supply processes will be own planning team, all of these teams a common goal. As in previous years, integrated on an end-to-end basis. are located at Vestel City. Instead of these efforts continued in 2020 with With work carried out for the pursuing a factory-based approach, an expanding customer portfolio and optimization of packaging, the loss Vestel Beyaz Eşya’s supply chain an increasing number of orders. Key of space in containers, trucks and managers use these differences as performance indicators (KPIs) that intermodal transfers were minimized a driving force to develop alternative demonstrate the efficiency of the in loadings from the Far East and methods. These teams, which meet entire supply chain are evaluated by European regions, thus lowering costs regularly every month and who are the Supply Chain Workshop Groups. while at the same time reducing traffic in constant communication, work In 2020, sales volumes increased by and carbon emissions. towards the commonization of 6%, while the order fulfilment rate standard processes across different improved by 5%. Despite the problems CONTRIBUTION TO SDG plants and share the best practices experienced in the supply chain due to with each other at the Supply Chain the impact of COVID-19, performance Workshop groups. indicators for raw material inventory, which are expected to rise due to Thanks to the redesign of the supply the increase in orders, have been chain to improve raw material successfully maintained at the same procurement processes, delivery time level. from suppliers has been reduced, as a result of which customers’ requests Regular analysis is carried out with can be met faster, giving the company consulting firms to ensure that the a competitive advantage in the market. processes become more synchronized Vestel Beyaz Eşya aims to create a with the use of technology. All the reliable supply chain by diversifying its network of suppliers. In line with the goal of achieving a sustainable
Vestel Elektronik 2020 Annual Report 145 Activities
Vestel and Sustainability
Procurement and Digital Vestel aims to manage supplier financial risks which could impact Transformation at Vestel relations and logistics activities from Vestel Elektronik were minimized. Elektronik a single point in order to maintain a With this project, it became possible sustainable business relationship with for suppliers to sign the “Zorlu In its processes, the Vestel Central its suppliers. In line with this goal, the Holding Supply Chain Principles”, Purchasing Department has Company implemented the “Supplier which form an indispensable part of accelerated its work on digital Life Cycle Management (SLC)” project the contracts aimed at sustainable transformation projects that adapt in 2015 and gathered candidate supplier relations, along with the to the needs of a digitalizing world supplier application evaluation, contracts. The centralized contract to take the place of traditional master data management, candidate process has been systematized with purchasing processes since 2015. supplier approval, performance and the E-Contract project, which was In the procurement life cycle, which risk management processes on a launched in July 2020. A total of 123 starts with creation of a purchase single digital platform. The main contracts, including the contracts request, Vestel digitized the processes functions of the Supplier Lifecycle signed in 2020, have started to be of source and supplier selection, Management project are to prepare managed through this system. The placing of a purchase order, order quality reports for suppliers, carry process has been systemized from end tracking, acceptance of goods and out process improvement inquiries, to end, and integration with the SLC invoice control, thereby maximizing prepare meeting notes, gather system has been achieved. The system its strategic and operational certificates to prevent financial could check if the signature circular performance. With the inclusion of risks, carry out supplier satisfaction was up to date as well as checking its the budget and financial processes surveys, perform financial risk blockage and status. This system is in the digitalized purchasing analysis according to periodic activity aimed at preventing the signature of processes, “three-way matching” was reports and to roll out the integrated contracts not approved by the Legal implemented in a manner which would supplier score card application with Department, financial advisor and cover all purchasing operations. As the participation of Vestel Elektronik’s senior management. a result, Vestel Elektronik’s central internal stakeholders. In the last With the E-Mechanics Project purchasing processes have taken on four years, Vestel has reached a commissioned in 2017, an average an auditable and transparent structure point where it manages the life of 2,138 purchasing processes per where financial risks can be tracked cycle of 7,886 suppliers through the year for all plastic and metal moulds and supplier relations have been Supplier Lifecycle Management. In and parts are carried out on the strengthened. 2020, supplier performance reports E-Mechanics digital platform. This were published for 69 suppliers on a The implementation of digital platform covers all processes from quarterly basis. transformation projects in purchasing the purchase request to the purchase have brought with them structural Contract management is an order. At the same time, within the changes in materials management. indispensable part of the procurement framework of full compliance with These efforts have resulted in process in raising awareness of Vestel Elektronik’s policies, requests the transformation of purchasing possible legal risks and of legal from suppliers are collected through hierarchies from a single layer display obligations to be fulfilled in the the portal, a form is created in which to a multi-layer structure. When event of possible business disputes alternative offers are collected material classification is taken to a between the parties. Vestel Elektronik according to their competitiveness lower level, the material resolution Central Purchasing Department which is then submitted for the increases and since the interrelated first centralized and restructured its approval of management. This project materials are gathered under a single contract management in parallel with speeds up mechanical procurement roof, the responsibility of materials the material classification in 2015, processes by 50%, eliminating the management can be covered by a addressing a total of 347 material need to send 9,200 emails annually. single purchasing employee. These hierarchies to 28 contract drafts. The Dashboard Project was efforts have accelerated the functional Operationally, a comprehensive initiated in 2016 to monitor the processes of Vestel Elektronik Central study was carried out jointly with the Purchasing Department and paved the Zorlu Holding Legal Directorate, and way for more competitive strategic decisions.
146 Vestel Elektronik 2020 Annual Report performance report regarding the central purchasing activities. With In the last four years, Vestel has reached a the reflection of the multi-layered point where it manages the life cycle of 7,886 material classification structure on the Dashboard, relevant purchasing suppliers through the Supplier Lifecycle employees are able to access their own performance objectively and Management. In 2020, supplier performance instantaneously. On the other hand, reports were published for 69 suppliers on a due to the functional capability of the Dashboard, performance criteria quarterly basis. such as the turnover or order, price movements, earnings, single source, payment, maturity and the delivery method are scaled in different layers of the material classification structure and instantly provide data for purchasing employees and the senior management. This has helped slash the total time required for the preparation of performance reports (saving USD 200,000 per year); and
Vestel Elektronik 2020 Annual Report 147 Activities
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more importantly, these savings have The Purchasing Department also continues been shifted to purchasing activities and value-added projects as strategic its automation studies in parallel with the purchasing. digitalization efforts gathered under the The E-Taxi Project was commissioned umbrella of Industry 4.0 projects, which are on in 2016 to consolidate the 47,760 annual taxi requests in all factories, the agenda on a global basis. speed up invoicing and approval processes and ensure their collected from the system, included Digital Transformation and traceability. Within the scope of in the process and reported. Under Data Analytics in Procurement the project, requests for similar this project, it will be possible to at Vestel Beyaz Eşya destinations were consolidated, thus systematize the supplier selection increasing the number of passengers processes, savings calculation, In order to emphasize its efforts in the per vehicle from 1.1 to 2.4. The taxi supplier comparison forms and field of “economic and environmental travel cost, which would previously manager approvals. The aim of this factors”, which is one of the elements have been collected from only project, which will be implemented in of sustainability, Vestel Beyaz Eşya’s one employee, was distributed to the first quarter of 2021, is to speed Purchasing Department, which employees sharing the vehicle with the up these purchasing processes and manages all components of the 7 E-Taxi Project, thus contributing to the minimize e-mail traffic. Integrating main product groups from a single cost management between factories. suppliers into Vestel’s systems and center, accelerated the digitalization Another result of consolidating including them into the training steps taken in 2015 with the adoption requests for taxis was a reduction of processes are also among the of the United Nations Sustainable 240 tonnes in annual CO emissions, priorities of the project. Development Goals by Zorlu Holding 2 in 2016. In 2020, work on the following and a 20% reduction in annual taxi The E-Sourcing Project is aimed main areas continued. expenses. The mobile application of at digitalizing the procurement the E-Taxi Project also allows the processes. The E-Sourcing Project Work on data analytics at the tracking of requests and the entry covers all processes from the entry Purchasing Department started in of online requests. As a result, this of the procurement request to the 2015. Instant data management is application has had a positive effect on selection of supply locations and the provided with reporting systems Vestel employee satisfaction. entry of potential suppliers and prices where the performance of purchasing The E-Indirect Project, which was into the system. Potential earnings activities is measured, supplier initiated in 2020, is aimed at carrying are calculated automatically for each management is carried out on a out approximately 7,147 requests procurement activity. This system category basis, strategic decisions per year for indirect and software has increased the traceability and are guided and risk analysis studies license processes through the reportability of the supply processes are managed. SAP and BW (Business E‑Indirect digital platform. The while potential earning amounts Warehouse) are the main programs project covers all processes from the could be monitored instantly. 166 used for data analysis, which allow purchase request to the purchase procurement processes were initiated reports to be generated in a shorter order. At the same time, within the in 2020. time and an 85% efficiency rate is achieved per person hour. As a result, framework of full compliance with CONTRIBUTION TO SDG Vestel Elektronik’s policies, requests most of the data can be controlled and from suppliers are collected through instantly reported. the portal, a form is created in which The Purchasing Department also alternative offers are collected in line continues its automation studies in with their competitiveness which is parallel with the digitalization efforts then submitted for the approval of gathered under the umbrella of management. Industry 4.0 projects, which are on the A transparent system has been agenda on a global basis. established where supplier offers are In this context, all processes starting from the purchase request to supplier selection, placement of orders,
148 Vestel Elektronik 2020 Annual Report acceptance of goods and services and accept that they will comply with the accounting, budget and planning invoice approval have been digitized. conditions set out under the main processes in the digitalized purchasing This has allowed the achievement headings such as Anti-Discrimination, processes, financial risks have been of labour savings and the formation Humane Treatment, Remuneration, minimized and suppliers have reached of corporate memory and footprint, Working Hours, Occupational Health fast solutions. In addition, the audit which is one of the main elements of and Safety, the Environment and has become easier and controllable digitalization. Ethics. through the system. Paper consumption for an average of 2,500 Thanks to the Supplier Life Cycle (SLC) Action/activity assignments have been invoices per year was eliminated with Platform, suppliers can reach Vestel digitalized with process improvements the Price Differences-Invoice Controls Beyaz Eşya promptly and be registered based on purchasing, quality, R&D, screen (ZFF) via the SAP. quickly. Multiple risky processes are planning and management systems, gathered on a single platform. In this supplier audits and audit results. CONTRIBUTION TO SDG project, which is carried out jointly The process is followed through with with Zorlu Holding, a supplier data continuous training and information. pool has been created. If there is This process is targeted to be historical data about a supplier, it can advanced even more rapidly in 2021. be accessed quickly; if it is blacklisted, CONTRIBUTION TO SDG action can be taken in response. With SOCIAL SUSTAINABILITY the use of SLC, consumption of paper in the annual approval procedure has Human Resources at Vestel been reduced by 70%. Vestel’s human resources activities
are carried out by the Vestel Human The E-contract system, which is Resources Directorate, which is carried out as a central project, was Purchasing Information affiliated to the Zorlu Holding Human put into use in 2020. As a platform Systems Tools Resources Group. The Directorate is of contract creation, regulation and Systematic and structural measures structured under 5 main organizations: approval, legal regulations have were put in place in order to realize The Industrial Relations Directorate, come to a position to progress on the digital transformation projects. the Recruitment, Employer Branding the system, with an aim of providing Solutions such as the “Supplier Portal” and Business Partnership (BP) maximum transparency. and the “Digital Offer Platform” under Directorate, the Organizational With the SAP-based FIORI application, the title of “Purchasing Information Development Directorate, the Istanbul approval processes have been Systems Tools” have ensured that Human Resources Directorate and accelerated, and a significant degree corporate memory is permanent. the HR Analytics & Digitalization of digitalization has been achieved With the formation of corporate Management. The Head of Zorlu with time savings. Efforts are memory, the traceability, permanence Holding’s Human Resources Group continuing rapidly to ensure that the and sustainability of the footprint of also sits on the Executive Committee entire invoicing process will progress the purchasing function has been of the Vestel Group of Companies, through the system at all levels in ensured. While rapidly adapting to thus ensuring continuity on conveying 2021. changing working processes in 2020, information to the management on “Digital Transformation” also gained all types of issues related to the With all of the opportunities brought momentum. In 2021, all processes will employees. by the digitalization, the purchasing be organized to be followed through process at Vestel Beyaz Eşya has the system. Vestel is aware that a qualified become even more systematic and workforce is the most important studies are carried out by taking into Steps for acceptance of goods, invoice factor for maintaining and improving account the sustainability and Ethical control and order planning were its technological superiority and Principles. digitized, thus increasing strategic leadership in design in addition to performance and operational providing quality customer services. The “Zorlu Holding Supply Chain efficiency. With the inclusion of Principles” prepared within the scope of sustainability work are signed with the suppliers. With these principles, Vestel Beyaz Eşya’s suppliers
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Vestel has created its Human In 2018, rotation practice has been CONTRIBUTION TO SDG Resources Policy with this in mind, and put in place to help employees expand manages its human resources with their knowledge, skills and experience comprehensive procedures, which and achieve their career targets by include all the legal and regulatory gaining experience in different roles requirements, training processes and companies. and needs and training programs for Ethics Policy This application covers all the white- meeting these needs, performance collar employees between the 2nd Vestel carries out its activities within evaluation, reflection of performance and 11th levels. Rotation requests are the framework of Zorlu Holding evaluation results to remuneration, received through the system once a Ethical Principles prepared by the career planning, promotion, year and are collectively evaluated for Zorlu Holding Board of Directors and termination and compensation. the long term by senior management disclosed to the public on its website. Vestel by taking into account the current The Zorlu Holding Ethical Principles needs of the Company. can be accessed at http://www. • Facilitates the adaptation process zorlu.com.tr/assets/files/pdf/zorlu- for its employees, Rotations among employees of holding-etik-ilkeler-en.pdf. (Efforts the Vestel Group of Companies • Takes into consideration the needs to tackle bribery and corruption and are considered to serve as an of its employees so that they can be the principle of tax integrity can also important source of leverage in successful, be viewed at http://www.zorlu.com.tr/ terms of supporting back-up by assets/files/pdf/zorlu-holding-etik- • Ensures fairness and equal opening different career paths and ilkeler-en.pdf). opportunity among employees by strengthening communication and balancing employees’ expectations collaboration between Vestel Group Ethical Principles are an indispensable with those of the Company, companies and facilitating an increase set of rules, which are based on in employee and Group performance. “integrity” and “honesty”, drafted in • Supports and promotes the order to regulate internal relations, development of its employees The rotation request process the relations of the company and through continuous training continued in 2020, and rotation all employees with customers, programs, requests were collected online from suppliers and other stakeholders employees in November. After the • Follows up and evaluates the and to effectively protect assets and necessary evaluations and manager performance of employees, while resources. approvals, rotations are planned encouraging and rewarding them to be implemented in 2021 on a The ultimate aim of the Zorlu Holding for their achievements, departmental and function basis, in Ethical Principles is to write the • Performs career planning with view of staff availability. code of conduct in order to create vertical and horizontal promotions a common corporate culture on Human resources practices and maintains long-term business ethics and to increase are shaped by the principles of cooperation with the employees. the awareness of employees and increasing the sense of belonging, stakeholders as an institution New developments are monitored, internalizing the corporate culture responsible to society. In this regard, evaluated and implemented for and ensuring employee loyalty and the Ethical Principles aims to guide improving the management of long-term cooperation. Human Zorlu Group employees and those human resources at Vestel. Internal resources are represented at the acting on behalf of the organization in duty backups for sustainability are senior management level in order to their decisions and behaviours while conducted periodically, with most of determine and effectively implement performing their duties in accordance these needs met through in-house the principles of the Human Resources with the laws and business ethics. human resources. Policy. The Zorlu Holding Ethical Principles applies to all Zorlu Group companies, including the Vestel Group companies. CONTRIBUTION TO SDG
150 Vestel Elektronik 2020 Annual Report In Vestel’s recruitment practices, no discrimation is allowed on the basis of gender, age, religion, race, sect, social status, physical structure, ethnic origin, nationality, sexual orientation or any other personal characteristics.
Equal Opportunity in Recruitment Vestel’s recruitment processes are CONTRIBUTION TO SDG Processes constantly updated in line with the requirements of the era of speed In Vestel ‘s recruitment practices, and digitalization. In this vein, the no discrimination is allowed on the recruitment processes, which had basis of gender, age, religion, race, been digitally transformed in many sect, social status, physical structure, Regulations Preventing stages, were entirely moved to an ethnic origin, nationality, sexual Discrimination, Inequality, Human online environment in 2020. Job orientation or any other personal Rights Violations, Forced Labour and applications, exams for general skills characteristics. Child Labour and English, personality inventory, Vestel attaches tremendous competency-based HR interviews Vestel shapes the future with the importance to the full and effective and all interviews with executives strength of its employees. It views its participation of women in the decision- (including technical interviews) employees as its most valuable asset making processes of economic and are all carried out on the online and respects and protects their rights. social life. In this vein, the Company platform. New applications, which It offers its employees a working promotes efforts to ensure inclusive will accelerate the adaptation process environment which is respectful, fair growth and gender equality in working of new employees who have not and guarantees human dignity. life. The Gender Equality Manifesto come to Vestel physically before they Vestel embraces an understanding of is available from the link at http:// started working, are also planned honest, trustworthy and constructive www.zorlu.com.tr/assets/files/pdf/ to be included in the Onboarding communication, exhibits ethical ZH_Manifest.pdf and the Women’s Program. In this context, work on the behaviours within the framework Empowerment Principles are available preparation of content and the process of love and respect, and avoids acts at http://www.vestelinvestorrelations. is ongoing. The Company aims to which would be humiliating to honour com/en/sustainability/social- attract high potential young talented or pride. Vestel cares about its awareness/women-empowerment- individuals from all over Turkey to principles.aspx. Vestel.
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employees’ ideas and creates working Vestel has always set out to be fair in its work environments where they can express their ideas freely. environment and attaches importance to At Vestel, acts of intimidation which providing equal opportunities based on the cause distress through all kinds of physical, sexual or psychological talents and experiences of its employees. harassment and violence are not tolerated. Vestel is sensitive to the protection of the personal rights Employee Satisfaction and Conflict death leave, cash assistance, and of its employees, does not allow Resolution Processes assistance to enroll in a Master’s or doctorate program. Successful the violation of personality-based With the Employee Satisfaction children of employees are also eligible values with any form of psychological and Loyalty Survey, Vestel aims for scholarship opportunities provided pressure or harassment, and does not to evaluate the opportunities and by the Zorlu Holding Mehmet Zorlu allow the attrition of its employees working environments it provides Foundation. with emotional attacks. When such to its employees from an employee situations are encountered, the perspective and to identify the issues CONTRIBUTION TO SDG situation which is the subject of the which require improvement. In this complaint is investigated carefully context, an employee loyalty and and meticulously, ensuring that satisfaction survey is conducted every the process is concluded fairly and 2 years. quickly. Thanks to Vestel’s Complaints, Investment in Employees: Qualified Vestel has always set out to be fair Wishes and Requests Assessment and Sustainable Training Activities in its work environment in line with System, all employees may report At Vestel, where every employee is its commitments regarding human their complaints, wishes or requests considered to be a source of value, a rights, and attaches importance to to the Human Resources Directorate consistent training model has been providing equal opportunities based anonymously via the kiosks in the adopted in order to improve the on the talents and experiences of its factories. The Complaints, Wishes existing abilities of employees and employees. and Requests Evaluation Board is to further facilitate their adaptation responsible for reviewing issues and Vestel always takes into consideration to innovation and change. In this ensuring that the issues which can the importance of young people and context, qualified and sustainable be remedied are put into practice, their social contribution to our future, training activities are provided to evaluating the complaints, taking and attaches importance to this in promote the continuity of inquisitive, action and ensuring the permanence its working conditions. In this vein, reflective, creative, entrepreneurial of the system. the Company continues its activities and productive human resources. A in accordance with the minimum Compensation payments for the number of personal development and age provisions specified in the Company’s employees are made technical training programs were Constitution, Labour Law and relevant in accordance with the relevant carried out in this direction in 2020. legislation, and does not employ child provisions of the Labour Law No. 4857 Within the scope of the Vocational workers. It conducts audits to ensure and the still valid Article 14 of the Qualifications Authority Law, 9 that there is no child labour in its repealed Labour Law No. 1475. The employees were certified as Steel supply chain. Company’s Employee Compensation Welders and 45 employees as Bridge Policy can be viewed at http://www. CONTRIBUTION TO SDG Crane Operators in 2020. With the vestelinvestorrelations.com/en/ operator training, 50 employees corporate-governance/employee- qualified for Forklift Operator’s compensation-policy.aspx license, 42 employees for Manlift Employees are provided common Operator’s license and 51 employees fringe benefits including nursery support, marriage, maternity and
152 Vestel Elektronik 2020 Annual Report for Electric Pallet Truck Operator’s Within the scope of the Vestel the necessary prerequisites were license. With the first aid training Technology Academy 2020 program, appointed as an “Adjunct Faculty” held within the framework of the postgraduate education continued to (Visiting Faculty Member). During legal obligation in 2020, a total of be provided in the fields of Computer the 2019-2020 academic year, one of 37 employees completed the basic Engineering, Electrical and Electronics these employees had the opportunity first aid training and received their Engineering, Industrial Engineering to teach in the field of Electrical and certificates. and Mechanical Engineering. Electronics Engineering. The third internal instructor course was given in At Vestel Elektronik, 34,411 The program, which won the Golden the spring semester of the 2019-2020 participants received an average of 13 Award by TEGEP in Turkey, and the academic year. hours of training per person in 2020, Bronze Award in the category of while at Vestel Beyaz Eşya, 23,261 “Human Resources Team of the Year” CONTRIBUTION TO SDG participants received an average of 10 at the Stevie International Business hours of training per person. Awards in 2018 in the international arena, fully achieved its aim of Vestel aims to provide informative “bringing the university campus to meetings and offer training programs the company”, which it had targeted for employees on the Company’s ESG Vestel Retail Academy when it started to be implemented. policies and practices, which will be As of the end of 2020, 167 employees The Vestel Retail Academy (VRA) renewed in 2021. were receiving training at the Vestel unwaveringly continued its training CONTRIBUTION TO SDG Technology Academy. A total of 294 activities for the employees of the employees have graduated from the Head Office, Vestel dealers, Zorlu Academy. Holding and non-group companies in 2020. During the year, the VRA The “Impact Assessment Form” which opened 170 classes and organized 89 is used for the evaluation of thesis different training programs for 3,553 Vestel Technology Academy and project studies was delivered to participants, and provided a total of all students who graduated from the The Vestel Technology Academy is a 14,889 hours of training. program. Following an examination program designed to maximize the of the results of the forms filled The Academy organizes modular motivation and efficiency of employees out by 183 graduates, a total of 47 training programs in order to ensure through the trainings offered. academic studies were turned into the continuous development not The Technology Academy, which industrial implementations, 35 of only of the Head Office employees operates in cooperation with the Vestel which belong to Vestel Elektronik but also the dealers, who are one Group of Companies and Özyeğin employees. A total of 29 studies have of the most important business University, offers lifelong education been included in patent, publication partners of Vestel. Within the scope opportunities and aims to increase the and incentive processes, 25 of which of sustainability, in order to ensure technical knowledge and experience of belong to Vestel Elektronik employees. that the dealers remain in the sector engineers in their fields. Academic studies continue to be for years, training is provided not turned into viable optimizations at only to the dealer owners, who are Within the program; Vestel. the founding generation, but also to the new generations who will ensure • Employees who have been trained While the Company continues to the continuity of the business in the in different fields of engineering contribute to the academic life of coming years. Within the scope of have the opportunity to address its employees, internal academia these training programs, founding their areas of improvement in areas have been included in the program dealer owners, new generations required by Vestel, in order to respond to the course which will ensure the continuity • Employees may obtain Master’s requests of students and to benefit of the dealers, store managers or doctoral degrees in the fields in from the academic knowledge and and field employees complete the which they have completed their career-based experiences of the training modules in line with their undergraduate degrees, employees who have completed their own business competencies, thus doctoral studies. For this purpose, contributing to the trained manpower, • Studies are carried out to enable the CVs were evaluated by Özyeğin which is an important need in the the thesis or projects emerging University and employees who met as a result of the program to be retail sector. applicable at Vestel in parallel with the employees’ line of work.
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Attentive to the current and future Zorlu Academy Online Training continued the development process needs of the institution, the Vestel Platform of its employees without interruption Retail Academy has carried out by providing them online training The Ethical Principles distance different studies in 2020 in addition to opportunities, regardless of time training was created on the Zorlu the standard training programs, such and place, through various personal Academy online training platform as in-house coaching, the Good Idea development and technical training in order to ensure that the Zorlu Successful Implementation Project in programs. A total of 1,289 Vestel Holding Ethical Principles, which was order to be in constant contact with Elektronik employees benefited put into writing in 2018 to cover all the field staff, which was launched as from online training in 2020. The the Group companies within Zorlu a pilot scheme in 10 stores to follow Vestel Group of Companies aims to Holding, is adopted by all employees. their experience, the Vetoks training ensure equal opportunity in education The Ethical Principles Training, program aimed at touching the lives and create a common memory by which aims to increase awareness of employees outside of work, and the delivering online training to all regarding the Zorlu Holding Ethical V-Circle, which enables employees employees. Principles as well as guiding the working in the Head Office to share ways of doing business, approaches New training programs are being their experiences in innovation. and perspectives of the employees in prepared to raise the awareness of CONTRIBUTION TO SDG accordance with these principles, was the issue of sustainability and its prepared under the Coordination of importance. the General Directorate of Audit and The Vestel Group of Companies the Human Resources Group within Training Regulation covers the the scope of the Corporate Governance principles of participation in training Working Group activities carried out Vestel Services Academy programs in which employees under the umbrella of Smart Life 2030. of Vestel Group companies will The Vestel Services Academy has been The confidentiality of private life, participate in jointly, and the training operating within the Vestel Customer and especially the right to protection programs which companies will carry Services since 2012 to provide regular of personal data, is protected by on in-house as well as participation and continuous training for the many international human rights in external training and specialized development of all service teams such conventions and constitutions. Zorlu training programs. as authorized service technicians, Group, which carries out all of its customer representatives and service CONTRIBUTION TO SDG activities with the aim of compliance managers, with the aim of providing with international standards and a flawless experience in after-sales continuous improvement, is obliged services. The Academy provides 18,000 to act in accordance with Personal employee-days of training per year Data Protection Law No. 6698, which with different training approaches entered force on April 7, 2016. With The Focus of HR at Vestel: To be which it actively uses in many training the coordination of the Zorlu Holding where the talent is modules, including digital and live Legal Group Presidency and Human broadcasting. The Vestel Service Aware that sustainable success relies Resources Group Presidency, in Academy, which has received awards on happy and motivated employees order to fulfil these obligations and on many national and international who have the ability to manage and for employees to learn about these platforms, proved its educational work for a common purpose, Vestel obligations, distance learning on quality at international standards constantly reinforces its existing the Protection of Personal Data was by achieving the first TS ISO 29990 workforce by investing in qualified provided on the Zorlu Academy online Certification in Turkey. human resources and contributes training platform. significantly to the employment of the CONTRIBUTION TO SDG The online training platform, which country. was put into practice at Zorlu Vestel sets its change and Holding in March 2019, started to development strategies based on the be implemented at the Vestel Group idea of “Being where the talent is”. of Companies in July 2019. In 2020, the Vestel Group of Companies
154 Vestel Elektronik 2020 Annual Report Vestel has embarked on an employer brand journey with the “Campuses The eleventh Vestel Management Trainee are Vestelized” project since 2013 Program (the MT Program) was held in order to attract the young talents which Vestel needs due to its rapid online in 2020 with the cooperation of Koç growth, and its goals in this project are to create new resources in addition University. to existing tools to reach qualified candidates and the discovery of young “Vestel Dream” within the scope of Vestel Management Trainee Program talents on campuses before they their projects and integrate Vestel’s The eleventh Vestel Management graduate. Based on the importance strong characteristics into this dream Trainee Program (the MT Program), Vestel attaches to the employment as part of their project. Bringing carried out by Vestel with the of new graduates and young talents, students’ dreams to the campuses academic support of leading university students have been and designing (Vestelizing) campuses universities in Turkey to train young identified as potential candidates, as the students wish, is one of the talented individuals who have recently and intensive activities are carried Employer Branding’s activities. out at university campuses to further graduated from university as future increase Vestel’s perception as an Another project implemented in managers, was held online in 2020 “Attractive Employer”. These activities attracting talent is the VesTELLer with the cooperation of Koç University. Project, which received the Bronze consist of projects which require close Young talented individuals, who have Award in the “Best Brand Ambassador relationships with university career gone through many stages in order Program” category at the Employer centers and student clubs, such as to participate in the MT Program, Brand Management Awards (EBMA) in university career events, engineering are given the opportunity to improve 2018. Within the scope of the project, competitions, graduation projects, themselves in many areas within students are selected to carry out sponsorships, workshops and case a period of 4 months from the day work on the campuses of Turkey’s studies, and support collaboration they join the program. Within the leading universities so that Vestel is between industry and academia. scope of the program, Management a recognized, popular and preferred Trainees who enrich their theoretical Within the scope of “Campuses are employer. Since 2015, 35 students knowledge both with the academic Vestelized”, Vestel participated in a have undertaken the role of VesTELLer courses taken at the university and in total of 23 events at 7 universities (Vestel’s Brand Representative in internal training programs organized before the pandemic struck in 2020, Campuses). New VesTELLers could online, are also given personal which provided an opportunity to not be included in the process in the development training which includes reach out and attract young talents in 2020-2021 academic year, as face-to- guiding information in their new Turkey’s leading universities. face education has not yet resumed at business lives. Vestel attaches importance to the universities. The most important feature which sets ideas of young people and is nourished CONTRIBUTION TO SDG by their ideas. For this purpose, since the MT Program apart is the practical 2015, the V-Inception Project has internship period that the trainees been carried out at the beginning go through across the entire Vestel of each academic year in order to Group of Companies, which has an determine the Employer Branding important place in recognizing the Strategy to be followed by the Vestel corporate culture in addition to the Human Resources for that year and to training they receive. In this process, reach young talents. With this project, the management trainees have the representatives of student clubs from opportunity to meet people at various different universities come to Vestel management levels within the Group, City, experience Vestel and develop as well as being able to benefit from projects in line with the mission given the knowledge and experience of to them. These young people build a the managers and to directly learn the duties, responsibilities and the relations of the departments, so that they complete the program by amassing the most up-to-date
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and accurate information about the to ensure that the students accepted the most critical in achieving long- operation of the Company. for the internship came together term success. This program consists with the technical teams online and of a series of enjoyable tasks ranging This program is aimed at ensuring prepared projects. In addition to from an entertaining video including that the young management trainees the technical interviews and project information which the new recruit may who join the Vestel family will have work held during the internship, need during his/her adaptation period the best understanding of Vestel Vestel interns were also included to Vestel, the National Geographic and the sector in which it operates, in the training program designed Mega Factories documentary, obtain the information they need and for all interns at Zorlu Holding, and the Vestel jargon game and office use this information effectively in they had the opportunity to receive a exercises. In 2020, the Onboarding their business life. It is hoped that comprehensive range of training. application underwent a transition the management candidates who to a new online platform. With this successfully complete the program CONTRIBUTION TO SDG platform, all relevant employees will go on to develop new projects and who will support the new employees provide added value to Vestel. during the adaptation process were In 2020, a total of 9,528 candidates included in the online system and the applied to the MT Program. A total informative content was enriched. of 30 people who graduated from Onboarding Application and Pole Star The Onboarding project received the Turkey’s leading universities were Project Silver Award in the “Best New Hire accepted into the MT Program, One of the most important goals of Onboarding Program” category at the and started working at Vestel after Vestel’s Human Resources Policy Brandon Hall Group HCM Excellence completing the program. is to be a company which talented Awards in 2018. CONTRIBUTION TO SDG individuals dream of working at, and to In the “Pole Star” application, ensure their loyalty to the organization which is a part of the Onboarding by offering them a suitable career program and is carried out to help path. For this purpose, projects are new employees adapt to the job and developed for not only to reach such accelerate his/her adaptation to the talented people more easily, but also Vestel V-Compass University corporate culture, an employee who to retain such talent and ensure the Internship Program can help the new recruit is selected commitment of employees to the from the employee’s department Engineering departments provide a organization. and the selected person will support key source of the workforce at Vestel, One of these projects, the “Onboarding the new employee for a period of 3 in line with its fields of activity. In this Project”, was launched in 2017 as months. Pole Stars are identified by context, a large number of engineering part of the recruitment process. managers among the volunteering students are offered short-term Studies conducted at a global employees and referred to the Human internships both in production and level demonstrate that employee Resources Department before the new R&D activities each year. In addition to loyalty is largely linked to the initial employee takes up his/her position. the engineering students, internship employment process. The Onboarding The Pole Stars selected within the opportunities in departments such process was designed by considering scope of the application were included as Financial Affairs, Sales and the expectations of generation Y in the training organized by the Human Resources are also offered and realizing the need for a bridge Human Resources so they could be to students studying Economics and application which would create informed about the process. In 2020, Administrative Sciences or other corporate loyalty. The Onboarding a total of 252 Pole Stars took part fields at the university, to provide program is aimed at facilitating the in the adaptation process of newly them with experience and contribute process which the candidate will go recruited employees. Development to their development. The program, through during and after the job offer, studies regarding the application are which is physically carried out each making it more friendly and allowing continuing. year in the relevant units at Vestel the candidate to learn about the during the summer period when the CONTRIBUTION TO SDG culture at Vestel before he/she starts academic year ends, was carried out work. The Onboarding program is online this year within the scope of designed to cover the first 3 months, pandemic measures. The application given that the first 3-month period is and admission processes were carried out online, with steps taken
156 Vestel Elektronik 2020 Annual Report Work/Life Balance Solutions at Vestel The project was put into practice in Protection of Personal Data and Data 2020 by channelling the Wellbees Security Policies “Viva!”, which first emerged as an application within Zorlu Holding. employer brand project, was approved In accordance with the Law No. 6698 as a sustainability project in 2019. While training activities are provided On the Protection of Personal Data The project aims to ensure the to Vestel’s employees in line with (LPPD), Vestel takes all the necessary sustainability of both the quality of life their career plans to ensure the technical and administrative measures of employees and corporate longevity continuity of their development, to ensure the appropriate level of by focusing on the topic of “Corporate employees are also offered the security in order to prevent the Well Being”, which ranks among the chance to take part in hobbies outside unlawful processing of personal data most important sustainability goals. of work, with the Airsoft Milsim, and unlawful access to personal Basketball, Dancing, Outdoor Sports, data and to ensure the protection of The project in general includes the Photography, Football, Swimming, personal data. following: Sailing/Water Sports, Martial Arts, Vestel processes, records and • Various activities to be organized Drama, Tennis, Music, Running and protects the personal information for employees to protect their Motor Sports clubs being established. and confidentiality of its customers physical and mental well-being, Among these clubs, the Vestel Venus and consumers in accordance with roadRUNNERteam Running Club • Various seminars and workshops the relevant legal regulations and and Vestel Corporate Basketball aimed at promoting a good and confidentiality rules. The Company Team continue to work intensely and healthy life, uses the information obtained actively. The Running Club regularly concerning customers and consumers • A common sharing platform where organizes night runs every week, during the course of its business forthcoming events are announced participating and competing on behalf processes only for the fulfilment to employees, of Vestel in running events such as of the service or to carry out future half marathons and marathons. The • E-mails/notifications which improvements. Vestel Running Club only took part increase employee motivation, in the Antalya Runanatolia and Izmir Vestel Group companies, which are • Activities to be carried out with the Marathon in 2020 due to the global the data controllers in accordance aim of instilling the motto “Being pandemic, successfully representing with the Article 4 of the LPPD, act part of Vestel means living better” the Vestel brand in these events. Since in accordance with the following to employees, the corporate league games were principles in the processing of cancelled due to the global pandemic, personal data: • Sharing useful information to the Vestel Corporate Basketball Compliance with the law and good increase awareness about healthy Team was unable to participate in faith: Personal data is processed in living, any competition in 2020. A Corporate accordance with the law and good • Creating sharing environments to Women’s Volleyball Team is planned faith. In this vein, Vestel Group encourage employees to adopt the to be established in 2021. companies, as data controllers, act company culture and strengthen CONTRIBUTION TO SDG in accordance with the legislation communication between the HR in force in all types of personal data department and the employees, processing processes and comply with • Various suggestions and practices the rules of honesty. to improve physical conditions. Accuracy and timeliness: Data controllers should set up the necessary processes to ensure that the personal data which they process is accurate and up-to-date. Accordingly, Vestel Group companies
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provide opportunities for individuals to Ensuring that data is linked, limited the purpose of data use and the update their data and take necessary and measured for the purpose for company procedures, and data is only measures to ensure that the data is which it is processed: Personal data is retained for this period. Following transferred to databases correctly. processed by Vestel Group companies the expiry of the stipulated periods, in connection with the purpose and the data is deleted, destroyed or Processing for specific, explicit limited to this purpose and to the anonymized in line with the company and legitimate purposes: Data extent necessary for the purpose, procedures. controllers are obliged to inform data which is reported to the data owner at owners of the purposes of processing CONTRIBUTION TO SDG the time of delivery. personal data in line with the disclosure obligations under the Law. Retention of data for the period Accordingly, Vestel Group companies, stipulated in the relevant legislation which are the data controllers, limit or required for the relevant their data processing activities to purpose: If a certain period of time specific and legitimate purposes and is determined within the scope inform data subjects clearly regarding of the legislation in force, data is these purposes through disclosure retained during this period. Where texts. such a period is not specified in the legislation, reasonable retention periods are determined by considering
HR Indicators Vestel Key HR Indicators (Based on 2020 Year-End Data) Number of Personnel Person Ratio Total 18,864 - Female 6,375 34% Male 12,489 66% Average Seniority 5 years Distribution of Senior Management by Gender Female Male General Manager 1 6 Deputy General Manager 7 51 Middle Level Management 65 303 Total 73 360 Distribution of Personnel by Education Female Male Doctorate 8 12 Master’s Degree 247 512 University Graduate 1,123 1,937 Vocational School Graduate 765 1,254 High School Graduate 1,942 4,028 Primary School Graduate 2,290 4,746 Total 6,375 12,489
Number of Personnel By Category Senior Managers Other Personnel (Except Administrative Staff) 433 18,431
158 Vestel Elektronik 2020 Annual Report CONTRIBUTION TO SDG measuring workplace excellence, • To be protected from dangerous Vestel Customer Services ranked and unhealthy conditions which may among the top 32 companies providing occur during activities and to create the best workplace experience and a healthier working environment by working environment to its employees keeping risk analyses up-to-date among 200 companies from 50 with the “prevent before it happens” HR Awards different sectors taking part in the policy, survey. Vestel’s Human Resources received • To establish occupational health the following awards in 2020. As part of Kincentric Best Employers, and safety together with the Top Talent – Top 100 – Talent the largest workplace survey in employees by seeking their opinions Program 2020 Most Admired Talent Turkey, employees evaluated their through continuous education and Programs of the Year Award workplaces on the axis of important employee participation platforms, agenda items in today’s business • To recognize that occupational Vestel Human Resources won world, including commitment, agility, health and safety is an this award in recognition of its leadership and talent. “Management Trainee (MT)” indispensable priority for all recruitment program, which Vestel CONTRIBUTION TO SDG employees and an integral part of calls the Generation V. their work and to ensure that all employees are occupational safety Istanbul Technical University supervisors, Employer of the Year Offering the Most Internships Award • To eliminate or minimize unsafe OCCUPATIONAL HEALTH AND situations and unsafe movements Vestel Human Resources won the SAFETY in the workplace by conducting risk “Employer of the Year Offering the analyses and applying preventive Most Internships” Award, in the Occupational Health and Safety plans by adopting the principle awards ceremony held every year (OHS) Policy and Practices of ensuring that the work is during the ITU Career Summit. appropriate for the employee and CONTRIBUTION TO SDG Vestel displays the greatest sensitivity the employee is appropriate for the to occupational health and safety work. as it strives to maintain a safe and healthy work environment. Vestel In line with the Company’s Occupational Health and Safety Policy, attaches importance to assessing and managing the potential impacts of the following work is carried out to Kincentric Turkey’s Best Workplace risks in the workplace on employees, achieve the target of 0 (zero) accident of the Year Award subcontractors, visitors, solution and occupational illness: partners and other personnel in the Vestel Customer Services was • OHS board meetings, workplace. selected as “Turkey’s Best Workplace” • OHS evaluation meetings organized by Kincentric, one of the world’s Vestel continuously educates its within departments, leading human resources and employees to ensure that they gain management consulting companies. the right habits of behavior in terms • Acceptance and risk assessment of of quality, environmental awareness, new machinery and equipment, The 2019 results of the Best Employer energy efficiency, information security Survey, which for the last 20 years • Risk assessment of the current and potential health and safety risks. has been conducted by Kincentric, machinery park, an international independent The framework of Vestel’s • Approval and risk assessment of new human resources and management Occupational Health and Safety Policy chemicals, consulting company which has been can be summed up as follows: operating for more than 50 years, • Risk assessment of existing • To create and adopt a “Safe were announced. Within the scope of chemicals, Working Culture” at every point in interviews with employees and studies the Company, • Use of personal protective equipment at points where collective protection methods against risks cannot be
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applied or in the management of residual risks after the measures With the Vestel Health Monitoring application taken based on the assessments of developed by the R&D Department, all the occupational safety specialists and workplace physicians and employees are required to fill out daily employees’ views, contact tracing forms. • Workplace hygiene measurements (internal environment measurements), • Periodic checks of work equipment, • Medical examinations for those starting work for the first time, Vestel started to take the necessary turnstiles at the company entrance measures before the COVID-19 and employees were encouraged • Periodic medical examinations and pandemic started to appear in our to work from home where possible. health scans, country in 2020: Employees are provided with disposable surgical masks and • Preventive health practices for • The Company ensured that additional masks are provided to employees by having them work in the process was accurate, employees if needed. an environment suitable for their understandable and manageable, health and changing the place of by providing informative and With the Vestel Health Monitoring the employee where necessary, educational information to all application developed by the R&D • Ergonomic risk assessments and employees, department, all personnel are required to fill out daily contact tracing forms. application training, • International travel was restricted A COVID Emergency Communication as much as possible, and where • Training specific to the field of work Line was put in place and the condition travel was unavoidable, a practice and the OHS training given under of employees who had come into of working from home for 14 days the legislation, contact with anyone infected, or who was implemented following the had fallen ill, were checked on a daily • Trainings for the creation of return from the trip. emergency teams and management basis and the details of the cases were of emergency situations, regional and After the first cases started to appear tracked and traced. Daily coordination general drills, in our country, fallowing measures is established with the Provincial were taken: Health Directorate and information • Efforts to keep all OHS practices of identified cases and contacts are Working areas were reorganized under constant supervision by the provided. As a result of the analysis, it by putting in place a wide range of internal audit mechanism, was observed that the measures taken measures and support for employees, were sufficient, and almost all cases at • In order to support employee those with chronic conditions were the Company were found to be caused participation, the collection of allowed to work from home or were by external contact. employee notifications submitted given administrative leave, shuttles to the portal by mobile phone or were operated at 50% occupancy OHS training, which is given to computer, in addition to the near rate to ensure social distancing, increase the level of personal miss/suggestion notification tables. the rest areas and dining halls development and awareness of were reorganized with transition employees, was provided in halls to a single seating arrangement in which comply with social distancing order to ensure social distancing, regulations throughout the pandemic, food was provided in lunchboxes, with their capacity not exceeding the new resting areas were created in limits set by the legal regulations 19 different locations, temperature and the halls disinfected before and measurement systems were installed after each training session. A total of in shuttles, automatic thermometers 112,175 employee hours of basic OHS and disinfectants were installed at training was provided during the year.
160 Vestel Elektronik 2020 Annual Report OHS PERFORMANCE INDICATORS Vestel Elektronik (Standalone) 2020/2019 2017 2018 2019 2020 change (%) Injury Severity Rate 0.15 0.12 0.10 0.08 (20) Injury Frequency Rate 28.49 27.37 22.49 15.45 (31)
Vestel Beyaz Eşya 2020/2019 2017 2018 2019 2020 change (%) Injury Severity Rate 0.28 0.36 0.33 0.23 (30) Injury Frequency Rate 75.47 91.24 71.47 55.71 (22)
Vestel Elektronik - Injury Severity Rate* CONTRIBUTION TO SDG
0.15
0.12 0.10
0.08
2017 2018 2019 2020 * Injury Severity Rate: Number of lost work days experienced per each 100 work days due to accidents
Vestel Elektronik - Injury Frequency Rate*
28.49 27.37
22.49
15.45
2017 2018 2019 2020
* Injury Frequency Rate: Number of injuries per 1 million employee-hours worked
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Vestel Beyaz Eşya - Injury Severity Rate*
0.36 0.33 0.28
0.23
2017 2018 2019 2020 * Injury Severity Rate: Number of lost work days experienced per each 100 work days due to accidents
Vestel Beyaz Eşya - Injury Frequency Rate*
91.24
75.47 71.47
55.71
2017 2018 2019 2020
* Injury Frequency Rate: Number of injuries per 1 million employee-hours worked
CORPORATE SOCIAL CONTRIBUTION TO SDG when they are offered equal RESPONSIBILITY AND SOCIAL opportunities and the right working CONTRIBUTION environment, Vestel has developed a project entitled the “Equal Opportunity Vestel’s Social Contribution Project” for the employment of people with disabilities. The project, which is Endeavours Life Without Barriers Projects intended to be rolled out throughout Behind its core business strategy, Many projects are carried out at Turkey, involved school visits to reach Vestel aims to create value for society Vestel, demonstrating the sensitivity young people with disabilities, and and keep values alive together and to Vestel shows towards individuals with attracted 50,000 views through videos provide resources and opportunities, disabilities at every opportunity. shared on social media, as well as especially to the younger generations, extensive coverage in the printed These projects are briefly summarized in areas where support is limited media and news channels. through long-term social contribution below: In different seminars, conferences projects. Vestel continues to develop Believing that people with disabilities and sessions held for the individuals future-oriented social projects which can work in harmony and productively reflect its perfectionism in the context of people and the environment.
162 Vestel Elektronik 2020 Annual Report with disabilities, the Equal Opportunity Vestel aims to undertake a Sustainable Development Association Project was presented and a wider transformation which will bring ease DO! (Be Sensitive) Project audience was reached, and the first of life to all segments of society with Vestel Customer Services became Equal Opportunity Conference was its “Accessibility Project” initiated to a participant in the “Be Sensitive” organized in the Manisa Organized improve accessibility for the people project of the Sustainable Industrial Zone in 2017. This activity with disabilities in every area, from Development Association in order contributed to the employment of its products and factories to its to raise awareness of responsible hearing-impaired individuals by customer services and stores. The consumption in offices. With this breaking down the prejudices of Accessibility Project, which is carried project, an awareness of responsible various companies and organizations. out as a 360-degree project, is aimed consumption was created through at ensuring that Vestel’s products, Vestel has been providing extensive various actions in areas such as in- technologies and services, all working support in the recruitment and office waste, electricity, water and environments and communication adaptation process of individuals with paper consumption. Waste in the channels are easily accessible and disabilities since 2015 with a range of building is separated at source and usable by individuals with disabilities. activities and support, including the monitored regularly, together with As part of the project, household following: the electricity and water consumption appliances manufactured by Vestel every month. In an exemplary • Organization of accommodation became easily usable by the visually application, all cardboard and plastic impaired individuals thanks to the • Providing dormitories and cups used before the pandemic were Braille alphabet placed on the control guesthouses removed, and the amount of waste panels of the products with the was significantly improved with the • Sign language interpreters emboss application. With the Braille use of individual flasks and mugs. In alphabet added to the remote controls • Special training programs order to create and raise awareness of Vestel televisions, the visually of consumption, visual communication • Communication with their families impaired individuals can turn the studies have been carried out at points (communication line open 24/7 for television on and off, adjust the volume where material and energy are used individuals with disabilities) and change the channel without with eye-catching “only use as much the assistance of another person. as you need” labels. In 2020, a total of 19 individuals with Likewise, Vestel’s small domestic disabilities were employed at Vestel, appliances can be used with voice In addition, a multidisciplinary with 15 being recruited by Vestel Beyaz control. In addition, user manuals in environmental working group Eşya, thus taking the total number of audio form and promotional videos has been established in order to employees with disabilities at Vestel described by voice were prepared and coordinate and communicate all to 464. The recruitment of people a visual call center for the hearing environmental activities within the with disabilities has been temporarily impaired individuals was established organization. halted due to the pandemic. under the Accessibility Project. CONTRIBUTION TO SDG Vestel also supports the sporting Thanks to the Waste Plastic Cap activities of its employees with Collection campaign, which has been disabilities. In this context, 14 ongoing since 2011, a total of 10,430 kg employees with disabilities have of waste plastic caps were collected received a total of 476 days of paid in 2020 and 4 battery powered Vestel Customer Services’ ISO 10002 leave since 2015 in order to participate wheelchairs and 3 manual wheelchairs Customer Satisfaction Management in sporting competitions in football, delivered to people in need. volleyball, cycling and handball System Certification branches. In 2020, two hearing CONTRIBUTION TO SDG Vestel Customer Services ensured impaired employees were given 45 continuity of the TS ISO 10002 hours (6 days) of paid leave. Customer Satisfaction Management System certification which it has held As of the end of 2020, 20 individuals with mental disabilities had been since 2015. Regular inspections are recruited by Vestel within the scope carried out simultaneously at the of the ZEKI (Protected Workplace General Directorate of Customer for People with Mental Disabilities) Services, as well as at the Istanbul Project implemented by the MOIZ. (Anatolian and European side) and Ankara Central Services and the
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Istanbul and Ankara güVENUSsü the framework of the management visually impaired individuals, customer centres. system logic and also create a representatives who know the sign framework for managing customer language, water dispenser with a No incidences of non-conformity communication. Braille alphabet, direction signs and were detected during the audits of a special parking area with ramps for this certification, which is awarded CONTRIBUTION TO SDG people with disabilities, the authorized in response to the management of service providers serve customers customer complaints. with disabilities with the aim of ISO 10002 is a management system providing a customer experience like which helps organizations determine nothing they have ever experienced the areas which require development “Specialist of Demanding Work” before, by providing easy access to to eliminate the causes of complaints, Online Authorized Service Meetings wherever they want access. defines necessary management Vestel Customer Services Authorized service providers receive tools for more effective and efficient regularly holds meetings with the the title of 3-star, 2-star and 1-star management of customer complaints authorized service providers, which Barrier-Free Authorized Service and ensures customer satisfaction serve the customers, in order to Providers according to the access with the services provided. ensure sustainable stakeholder criteria they provide. Accordingly, CONTRIBUTION TO SDG communication. In 2020, these 4 authorized service providers meetings were held online due to the were entitled to receive 3 stars, 19 pandemic. These meetings, called the authorized service providers were Specialist of Demanding Work, were given 2 stars, and 1 authorized service held twice during the year. provider received one star. Renewal of Vestel Call Center’s ISO The satisfaction of dealers, who Women Technicians Project 18295-1 Customer Service Quality represent another important The project started in March 2019 Certification stakeholder group in addition to with the participation of volunteers the authorized services, with Vestel Vestel Call Center was included in the from women employees who serve as Customer Services is regularly interim evaluation audit for the TS EN specialized customer representatives measured every year. ISO 18295-1 Customer Service Quality in the authorized service providers. Certificate, which it was awarded in CONTRIBUTION TO SDG The goals of the project are as follows: 2019, and successfully completed the audit process. • Increasing the quality of the work done and the rate of customer With this audit, the Vestel Call Center satisfaction by employing female once again demonstrated that its employees as installation services met EU standards in many Barrier-Free Authorized Service technicians in authorized service critical areas such as accessibility, Providers providers, quality, data management, customer Vestel, which opened Turkey’s first and employee satisfaction. • Increasing interest in women Barrier-Free Authorized Service technicians, who remain rare in the The TS EN ISO 18295-1 and TS Provider in Avcılar, Istanbul in sector, EN ISO 18295-2 Standards for December 2018 within the scope of Customer Communication Centers its Accessibility Project, continues • To contribute to women’s are management system standards its work to ensure that all authorized employment. prepared to ensure that customer service providers throughout the Volunteer female technician expectations are met and customers country are “Barrier-Free Authorized candidates receive practical technical are provided with a fast, accurate, Service Providers”. training given by the Service Academy reliable and customer-centric Opening with the completion of trainers in workshops, and complete service and to improve the quality measures such as a front door entry a two-week training program in the of customer communication and ramp, easy inward opening doors, cooler, cooker and washer product eliminate communication problems. accessible toilets and washbasin, groups. At the end of the practical These standards define the technical yellow routing floor marking for the training process, practical exams also conditions under which the Customer take place. Those who successfully Contact Centers should operate within
164 Vestel Elektronik 2020 Annual Report Vestel raised its involvement in sports to a higher level with its new agreement with the Turkish Volleyball Federation in 2020, where it became the “Main Sponsor of Women’s Volleyball National Teams” and the “Official Sponsor of Men’s Volleyball National Teams”. complete this process start to work results by using the power of Vestel raised its involvement in as technicians. The first female cooperation and innovation which sports to a higher level with its new technicians started their jobs with the shape the future, creating profitability agreement with the Turkish Volleyball receipt of their certificates on March 8, with a measurable impact and Federation in 2020, where it became the International Women’s Day. cooperating in competition, beyond the “Main Sponsor of Women’s traditional cooperation models, in line Volleyball National Teams” and the By the end of 2020, 58 female with the common goals they set. Care “Official Sponsor of Men’s Volleyball technicians had been trained. Efforts is taken to ensure that the cooperation National Teams”. The sponsorship continue to increase the number between institutions has an ordinary, agreement covers all age groups of female technicians and for the redefined and common sustainability in the national teams category. sustainability of service providers. (environmental, social, economic Moreover, the Burhan Felek Volleyball CONTRIBUTION TO SDG impact) goal within the scope of their Hall, which is the only International activities. Volleyball Hall in Istanbul, will adopt the title of the “TVF Burhan Felek In the women’s empowerment Vestel Volleyball Hall” for a period category of the Sustainability Business of 3 years under the sponsorship Awards, effective and pioneering agreement. Vestel Customer Services wins models which break down gender Sustainability Grand Award roles and all kinds of discrimination in In 2019, Vestel also entered a business life with equitable policies, sponsorship agreement with In line with the United Nations enable women to be empowered by Trabzonspor, one of Turkey’s biggest Sustainable Development Goals, including them in the business world football teams with the jersey Vestel Customer Services was based on qualitative data and with sponsorship agreement, which will awarded the first prize with the qualified steps are evaluated. This see the Vestel brand emblazoned on “Unleash the Ideas Project” in the award is given to business models Trabzonspor jerseys for a period of 3 “Employee Participation” category and projects which create value with a years. at the Sustainable Business Awards holistic approach to empower women given by the Sustainability Academy Continuing their support in many in business life, with various programs in order to highlight projects which different types of sports, Vestel on issues such as human rights, equal generate significant economic, continued to extend support for the opportunities, and gender perception. environmental and social impacts and world diving record holder, national to share them with the general public. CONTRIBUTION TO SDG athlete Şahika Ercümen, in 2020. Vestel Customer Services became a In 2020, Vestel became the “Main finalist in the “Cooperation” category Sponsor” of the Kastamonu with its “My Voice Heritage” project, Municipality Youth and Sports Club and in the “Empowerment of Women” Women’s Handball Team, which category with its “Woman Technicians” Sponsorships for Different Sports achieved significant success in project in 2020. handball both in our country and in the Within the scope of its approach In the cooperation category of the world, and this support will continue to social responsibility, Vestel also Sustainability Business Awards, an in 2021. considers its contributions to the evaluation process takes place for development of social life in the Vestel, which has provided valuable projects in which more than one field of sports to be among its main contributions to the development organization achieve sustainable responsibilities. of e-sports in Turkey, implemented
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its own e-sports tournament, “Kupa Manisa Metropolitan Municipality and CONTRIBUTION TO SDG Vestel” in order to introduce the MOSTEM (Private MOIZ Vocational and Vestel brand to the consumers of the Technical Anatolian High School) is to future and to attract their interest. In reach animals with disabilities all over response to the interest shown in the the world. event, Kupa Vestel will be held again With the Walker Project, Vestel Beyaz Demli Chats in 2021. Eşya, which displays its sensitivity to In line with the sustainability goals CONTRIBUTION TO SDG employees, society, the environment in human resources, a series of and those with fewer chances in lives seminars entitled “Demli Chats” were with social responsibility projects, was launched in 2018 to raise employee deemed worthy of the “Best Social awareness of certain issues (such as Responsibility Project” Award at the education, women and the people with ACE of M.I.C.E Awards 2019 Event and The Walker Project for Animals with disabilities). In the Demli Chats, where Meeting Awards, which hosts world- Disabilities issues such as the Education System, renowned brands and professionals Gender Equality and Women’s Rights, Within the scope of its sustainability every year, the “Best Practice” Place and Representation of Women vision, Vestel’s subsidiary, Vestel Award in the “Large Companies Best in Social Life, Disability Awareness, Beyaz Eşya produced walkers for Practice” category at the International Being a Father and Conscious animals with disabilities under a social CSR Excellence Awards held in Parenting, Economic Developments in responsibility project launched in London and the “CSR World Leader” Turkey and in the World are discussed, 2018. The Walker Project is a social title by the Green Organization. employees can get answers to their responsibility project which aims to The Walker Project received the “Most questions from people who are experts bring ease to the lives of animals Creative Volunteering Project” Award in their fields. with disabilities. Vestel Beyaz Eşya in 2020 at the Heartfelt Awards, where designed walkers for animals in Due to the global epidemic, the “Demli successful programs and projects need of assistance by using the parts Chats” seminars were suspended are awarded, organized by the Private of products which had completed in 2020, while seminars on social Sector Volunteers Association. In their useful lives and, as a result of responsibility issues such as disability additional, the promotional film of the work carried out in this context awareness and gender equality the project was selected as the “Best between 2018 and 2020, a total of 20 will continue online in 2021, with Project Film”. walkers for animals with disabilities educational guests for special days. were produced and donated. The goal of the project, which is carried out in cooperation with the
166 Vestel Elektronik 2020 Annual Report In line with the Sustainable Development Goals, main focus issues in the field of sustainability have been determined and efforts are carried out to achieve these goals.
Other Projects and Events The Sparks Movement Reducing Social Inequalities” in the general framework, volunteering Scarfs handmade by women were Within the framework of Zorlu activities within the scope of the distributed to all women employees on Group’s Smart Life 2030 sustainability Sparks Movement at Vestel Group the Women’s Day in 2020. approach, the main focus issues of Companies are carried out in 5 in the field of sustainability have Vestel demonstrates its position basic groups: “The Environment”, been determined in line with the as a responsible employer with its “Children”, “People with Disabilities”, Sustainable Development Goals set projects which do not only consider its “Use of Materials” and “Animals-Our out by the United Nations in order to employees but also their families. With Friends”. All employees who wish to eliminate poverty, protect the world this in mind, the “Vestel Children’s contribute voluntarily, regardless of and ensure that all people live in Festival”, which is held annually for the company, may participate in these peace and prosperity, and efforts are the children of employees as part of activities. Employees who voluntarily carried out to achieve these goals. the April 23 National Sovereignty and contribute to this process are In this framework, 5 main indicators Children’s Day celebrations, was held included in the process as a “Spark”. have been determined in the scope of online this year due to the pandemic. Some examples of volunteering corporate volunteering focus area: activities carried out in 2020 with During the event, the “Big Inventions • A zero accident severity rate the participation of the Vestel From Small Hands!” contest was held Sparks within the scope of the Spark online and 4 Little Vestel Inventors • Increasing the ratio of women Movement are given below: who participated in the event were employees in management and awarded a scholarship from the throughout the company The Vocational High School Coaches Mehmet Zorlu Foundation. Program, which started in 2019 in • Increasing the level of employee cooperation with the Private Sector CONTRIBUTION TO SDG loyalty Volunteers Association (PSVA) is • Increasing the rate of employee aimed at involving members of the satisfaction Sparks in coaching the 10th and 11th grade students of vocational high • Increasing corporate volunteering schools for two years. In this context, activities members of the Sparks regularly Within the scope of “Increasing meet with the same student group Corporate Volunteering Activities”, to support their socialization and which is one of these main indicators, development. A total of 23 Sparks who the “Sparks Movement”, which was participated in the program completed initiated in 2019, aims to gather all their 10-hour coaching training last volunteering projects under one year. As of 2020, they had carried out a roof with the awareness of social total of 103.5 hours of interviews with responsibility existing in the corporate the students. culture and to generate projects All employees may voluntarily which have a long-lasting impact participate in the “My Voice Heritage on society. While work continues on Project” realized in cooperation with the theme of “The Environment and GETEM. The books voiced by the volunteers approved for participation after trial recordings are sent to the
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e-library of the Boğaziçi University “Sparks Movement” aims to gather all volunteering Visually Impaired Technology Center. Since the beginning of the study, a projects under one roof with the awareness of total of 58 audiobooks have been social responsibility existing in the corporate recorded, with the books receiving a total of 2,330 views. culture and to generate projects which have a long- A total of 8 Sparks participated in lasting impact on society. the “Science Heroes Meet” volunteer activity in cooperation with the Science to their imagination, increase their CONTRIBUTION TO SDG Heroes Association, in order to awareness of environmental and listen and evaluate the experiences, health issues and leave a mark on skills and achievements of children their lives, were carried out with a participating in the activity, and 144 group of Sparks on online platforms. hours of jury training on competition Handicrafts, fairy tales, music and topics such as innovative projects, dance workshops conducted by 5 Sparks in line with their own abilities robot design and core values were provided. and interests were completed with the participation of 11 children under the Within the scope of the “Happy supervision of their parents. Stories” project realized in cooperation with the Laughing Heals With the “First Spark to Your Career” Association, stories were recorded and project, Vestel managers began played online with the participation preparations for a series of online of volunteer Sparks so that children conferences where they will share continuing their treatment at hospital their experiences and technical could listen to the stories. A total of knowledge on issues which appeal 73 different stories with a total of 36.5 to the curiosity of university students hours of playtime were recorded with unable to access equal opportunities. the participation of 63 Sparks. Within the scope of the “Future Workshop for Children”, workshops which encourage children to discover their talents, give a different direction
168 Vestel Elektronik 2020 Annual Report Sustainability Principles Compliance Framework
The “Sustainability Principles Group of Companies’ sustainability A2. Implementation/Monitoring Compliance Framework” sets out the strategy, risks and opportunities, The Board of Directors determines basic principles which publicly listed environmental-social-governance the committees/units responsible companies are expected to disclose (ESG) policies, short- and long-term for the execution of ESG policies and while conducting their Environmental, goals, action plans and practices will discloses them to the public. The Social and Corporate Governance (ESG) be reviewed and renewed. responsible committees or units shall activities. The Board of Directors determines the report the activities carried out within Although the implementation of these Company Strategy in line with the ESG the scope of the policies to the Board principles is voluntary, reporting policies, risks and opportunities. It of Directors at least once a year and, in the status of their implementation determines the short- and long-term any case, within the maximum period is obligatory in accordance with the goals in line with the company strategy determined for the public disclosure principle of “Comply or Explain”. and ESG policies and discloses them of the annual report in accordance to the public. with the CMB’s relevant regulations. The companies specified in the Article 1, paragraph 5 of the Communiqué on Vestel manages its sustainability A “Sustainability Committee” was Corporate Governance (No. II-17.1) of strategy in parallel with the “Smart Life established within Zorlu Holding with the Capital Markets Board of Turkey, 2030” vision set out by its controlling the participation of representatives have to include the sustainability shareholder, Zorlu Holding, which from Zorlu Group companies, including principles compliance framework in focuses on the United Nations 2030 Vestel, and the leaders of the working their annual reports, including the data Sustainable Development Goals and groups formed for the priority topics. for the year 2020, starting from 2021. directs the sustainability approach This committee convenes at least of all Zorlu Group companies. Vestel once a year at the required intervals, A. General Principles plans to implement the Integrated shares the work carried out in all Zorlu A1. Strategy, Policy and Goals Reporting and Management System Holding and affiliated companies, and established by the International informs the senior management of The Board of Directors determines Integrated Reporting Council (IIRC) developments. Vestel will renew its priority ESG issues, risks and in 2021. The Company’s Board of own internal sustainability committees opportunities and sets ESG policies Directors aims to conduct a materiality within the scope of the Integrated accordingly. Internal directives, analysis in 2021, which will be formed Reporting and Management System business procedures etc. may be by taking the opinions of Vestel Group in 2021 and report to its Board of prepared to ensure the effective of Companies’ stakeholders and Directors at least once a year. implementation of these policies. The shareholders. Subsequently, Vestel The Board of Directors creates Board of Directors takes decisions Group of Companies’ sustainability implementation and action plans in regarding these policies and they are strategy, risks and opportunities, line with the short- and long- term publicly disclosed. environmental-social-governance goals determined and discloses them (ESG) policies, short- and long-term Vestel aims to implement the to the public. Integrated Reporting and Management goals, action plans and practices will System established by the International be reviewed and renewed. Zorlu Holding has set its sustainability targets for 2022 within the scope of the 7 Integrated Reporting Council (IIRC) For the Smart Life 2030 vision, refer priority issues (Corporate Governance, in 2021. The Company’s Board of to the link at http://www.zorlu.com.tr/ Community Relations, R&D and Directors aims to conduct a materiality akillihayat2030/en/home analysis covering Vestel Group of Innovation, Employees, Environment, Companies in 2021, which will be Customer Relations and Supply Chain) carried out by taking the opinions within the framework of the Smart of stakeholders and shareholders Life 2030 sustainability vision. Vestel into account. Subsequently, Vestel and other Zorlu Group companies contribute to the achievement of the
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Sustainability Principles Compliance Framework
consolidated targets. (See: http://www. A3. Reporting The company takes maximum care to zorlu.com.tr/akillihayat2030/en/home) ensure transparency and reliability. The company reports its sustainability It objectively explains all kinds of As part of the Integrated Reporting performance, targets and actions at developments concerning material and Management System will be least once a year and discloses them issues in its disclosures and reporting implemented in 2021, Vestel will set to the public. It discloses information within the scope of a balanced its own short- and long-term goals, on its sustainability activities in the approach. create action plans in line with them, annual report. and announce them to the public in the All sustainability performance data Vestel aims to implement the following reporting period. is transparently disclosed in 4-year Integrated Reporting and Management trends, regardless of whether it is The company determines its Key ESG System established by the IIRC in 2021. positive or negative. (See Environmental Performance Indicators (KPI) and The Company will publicly disclose its Indicators - Pages: 132, 133, 136, discloses them on an annual basis. own sustainability goals and actions in 137, 138, 141, 142; OHS Performance Provided that there is confirmable its 2021 integrated report/integrated Indicators - Pages: 161, 162) data, the company presents its KPIs annual report, apart from those together with local and international The company states which of the contained within the Zorlu Holding sector comparisons. United Nations (UN) 2030 Sustainable umbrella targets. Development Goals its activities are Key Performance Indicators for Information on Vestel’s sustainability relevant to. ESG issues are included in the performance and activities within the “Environmental Indicators”, “HR Since 2016, Vestel has been managing scope of sustainability in 2020 can be Indicators” and “OHS Performance its sustainability efforts under a found in the “Vestel and Sustainability” Indicators” tables in the “Vestel and coordinated and strategic approach section of the annual report. Sustainability” section of the annual in line with the “Smart Life 2030” report. (See pages: 132, 133, 136, 137, It is essential to share information sustainability vision of Zorlu Holding 138, 141, 142, 158, 161, 162) which is important for stakeholders and Group companies, which focuses in understanding the position, on the United Nations 2030 Sustainable The company discloses innovation performance and development of Development Goals (SDG). activities which improve its the company in a direct and concise sustainability performance for The UN 2030 Sustainable Development manner. The company may also business processes or products and Goals, which are served by Vestel’s disclose detailed information and data services. activities are indicated by the SDG on the corporate website, and prepare logos under the relevant headings in Vestel aims to reduce the separate reports which directly meet the “Vestel and Sustainability” section environmental impact of its production the needs of different stakeholders. of the annual report. processes through using recyclable Vestel will identify the issues which materials in production, reducing The company discloses any legal action are important to all of its stakeholders the variety in material use and using taken or concluded in environmental, through a materiality analysis planned less raw materials and monitors its social and corporate governance to be carried out in 2021. In this analysis, sustainability performance indicators issues to the public. surveys and one-to-one interviews will such as energy saving, waste be conducted with all internal and No legal action was taken or concluded reduction, reuse and recycling, limiting external stakeholders. The results of against Vestel Elektronik in regard to or eliminating harmful chemicals. the analysis to be carried out in order environmental or corporate governance Information regarding the Company’s to understand the needs of different issues. In the social context, a lawsuit sustainable product portfolio and stakeholders will be published in the was filed against Vestel in 2020, but the innovation activities can be found 2021 integrated report/integrated claims have not been finalized and the under the heading of “Sustainability annual report. process is still ongoing. in Products” in the “Vestel and Sustainability” section of the annual report. (See pages: 142, 143)
170 Vestel Elektronik 2020 Annual Report A4. Verification The company complies with issues, including the achievement environmental laws and other of targets, are included under the If verified by independent third parties relevant regulations and discloses heading “Environmental Policy and (independent sustainability assurance them. Environmental Management System” providers), the company discloses in the “Vestel and Sustainability” Vestel considers compliance with its sustainability performance section of the annual report. (See the applicable legislation and measurements to the public and pages: 127, 128) seeks to increase such verification administrative regulations, all legal and processes. other requirements and international The company discloses how operating standards related to the environmental problems are Vestel Elektronik received the TS EN environment as a basic requirement integrated into its business goals and ISO 14064 Greenhouse Gas Calculation in its processes, and duly fulfils this strategies. and Verification Management System requirement. Certificate for the first time in 2017 An annual management review meeting See “Compliance with Legal is held to evaluate environmental risks from an independent and authorized Regulations in Production Processes” and opportunities with the senior institution, and continued to verify and (page: 135) management, and the decisions taken certify its greenhouse gas emissions are integrated into business goals in 2018, 2019 and 2020. In addition, the The company discloses the limitations and strategies. A review meeting may such as the scope, reporting period, Company maintains its membership be held on key environmental issues reporting date, data collection of the international Carbon Disclosure without waiting for a year. Project (CDP) and conducts its annual process and the reporting conditions reporting activities on a voluntary of the environmental report to be The review regarding the integration of basis. (See Page: 131) included in the sustainability report sustainability issues into the business to be prepared within the scope of strategy will be reconsidered when the Vestel Beyaz Eşya has been measuring Sustainability Principles. Integrated Reporting and Management its carbon footprint since 2012 and has System is put in place in 2021. been reporting to the CDP. In addition, Information regarding the since 2016, it has been calculating its environmental reporting of the The company discloses the carbon footprint according to TS EN ISO Company is available under the sustainability performance of its heading “Environmental Policy and business processes or products and 14064 standards and have it verified by Environmental Management System” services, and the activities undertaken accredited organizations. Vestel Beyaz in the “Vestel and Sustainability” to improve this performance. Eşya’s water footprint has also been section of the annual report. (See verified by organizations authorized Sustainability performance and pages: 127, 128) by TÜRKAK in accordance with the ISO performance improvement activities 14046 standards since 2016. Data for Vestel Komünikasyon Sanayi for business processes and products ve Ticaret AŞ is not included in the and services are included under the The relevant sustainability performance environmental indicators. heading “Sustainability Approach measurements can be viewed on pages and Strategy” in the “Vestel and The company discloses its most 132, 133, 136 and 137 of the annual Sustainability” section of the annual senior officer, relevant committees report. report. (See page: 126) and their duties on the issues of the B. Environmental Principles environment and climate change. The company discloses how it manages environmental issues The highest-level officials and The company discloses its policies and throughout its value chain and how it related committees regarding the practices, action plans, environmental integrates suppliers and customers environment and climate change and management systems (known by the into its strategies, not just in terms of their duties are included under the ISO 14001 standard) and programs direct operations. in the field of environmental heading of “Environmental Policy and management. Environmental Management System” Information on how environmental in the “Vestel and Sustainability” issues are managed throughout the The Company’s Environmental Policy section of the annual report. (See Company’s value chain is provided and Environmental Management pages: 127, 128) under the heading of “Sustainability System are included in the “Vestel in Supply Chain” in the “Vestel and The company discloses its incentives and Sustainability” section of Sustainability” section of the annual for managing environmental issues, the annual report, under the report. (See pages: 144-149) including the achievement of goals. heading “Environmental Policy and Environmental Management System”. The incentives provided by Vestel for (See pages: 127, 128) the management of environmental
Vestel Elektronik 2020 Annual Report 171 Activities
Sustainability Principles Compliance Framework
The company discloses whether it is The company discloses the details of The company sets short- and involved in policy-making processes the standard, protocol, methodology, long-term targets to reduce the on environmental issues (sectoral, and the base year used to collect and environmental impact of its activities regional, national and international); calculate its data. and discloses these targets. It is the collaborations it has made with the recommended that these targets be Environmental monitoring and environmental associations, related determined based on scientific data measurement programs are used organizations and non-governmental as suggested by the United Nations at Vestel to collect and calculate organizations of which it is a member; Conference of the Parties on Climate environmental data. Data on energy the duties it has undertaken, if any; Change. The company discloses any and water consumption are tracked and the activities it supports. progress made in the reporting year from the invoices while data on waste towards the previously established The Company’s contributions to policy- is tracked through the recording targets. making processes on environmental system. In accordance with legal issues and its collaborations in requirements for air quality, emission In 2021, Vestel aims to complete environmental issues are included measurements are conducted every the necessary work to determine its under the heading of “Collaborations 2 years. In addition, direct and energy science-based targets as suggested in Environmental Issues” in the “Vestel indirect Greenhouse Gas Emissions by the United Nations Climate Change and Sustainability” section of the are verified every year in accordance Conference of the Parties to reduce its annual report. (See page: 129) with the TS EN ISO 14064-1 Standard. environmental impact. (See page: 128) The company reports comparable The company discloses its strategy information on its environmental See “Environmental Indicators” (Pages: and actions to combat the climate impacts periodically in the light 132, 133, 136, 137, 138, 141, 142) crisis. of environmental indicators The company discloses the status of The strategy and actions to combat (Greenhouse gas emissions [Scope-1 environmental indicators (increase the climate crisis are covered {direct emissions}, Scope-2 {indirect or decrease) for the reporting year in under the heading “Climate Crisis, emissions – owned}, Scope-3 comparison with previous years. Carbon Footprint and Carbon {indirect emissions – not owned}]1, Disclosure Project” in the “Vestel and air quality, energy management, Environmental indicators are included Sustainability” section of the annual water and wastewater management, under the headings of “Environmental report. (See pages: 131, 132) waste management, and biodiversity Indicators” in the “Vestel and impacts). Sustainability” section of the annual The company discloses the program report in comparison with previous or the procedures put in place to Environmental indicators are included years. (See Environmental Indicators prevent or minimize the potential in the “Environmental Indicators” – Pages: 132, 133, 136, 137, 138, 141, negative impact of its products and/or tables on a periodical basis in a manner 142) services. It also discloses its actions which is comparable in the “Vestel and towards reducing the greenhouse gas Sustainability” section of the annual emissions of third parties. report. (See Environmental Indicators – Pages: 132, 133, 136, 137, 138, 141, 142) Vestel details its efforts to prevent or minimize the potential negative effects In addition, explanations on the subject of its products in the “Vestel and are included under the heading Sustainability” section of the annual “Conservation of Biodiversity”. (See pages: 132, 133)
1 Scope 1 Direct Greenhouse Gas Emissions: Greenhouse gas emissions emitted from greenhouse gas sources owned or controlled by an organization - Stationary combustion (boiler, furnace, turbine, heater, incinerator, engine, etc.) - Mobile combustion (cars, trucks, ships, aircraft, etc.)
- Process emission (CO2 from calcination in cement production, CO2 from the catalytic cracking process in the petrochemical industry, PFC (Perfluorocarbon) emission in aluminium melting) - Fugitive emissions (leaks from equipment connections, wastewater treatment plant, cooling towers, gas processing plants, etc.) Scope 2 Indirect Greenhouse Gas Emissions: Greenhouse gas emission occurring during the generation of electricity, heat or steam outsourced and consumed by an organization Scope 3 Other Indirect Greenhouse Gas Emissions: Apart from indirect greenhouse gas emissions from energy, greenhouse gas emissions arising from the greenhouse gas sources owned or controlled by other organizations as a result of the activities of an organization
172 Vestel Elektronik 2020 Annual Report report. Actions to reduce greenhouse Carbon Footprint and Carbon The company carries out energy gas emissions are presented in the Disclosure Project” in the “Vestel and efficiency projects and discloses the “Vestel and Sustainability” section of Sustainability” section of the annual amount of energy consumption and the annual report under the headings of report. (See pages: 131, 132) the reduction in emissions realized as “Climate Crisis, Carbon Footprint and a result of these activities. The company provides information on Carbon Disclosure Project”, “Energy the electricity, heat, steam and cooling Studies for energy efficiency and Management and Energy Efficiency generated and consumed during the the savings achieved in energy - Total Productive Maintenance” and reporting year. consumption as a result of these “Sustainability in Supply Chain”. (See efforts are included under the pages: 131-132, 139-142, 144-149) Information on energy consumption heading “Energy Management and is provided in the Environmental The company discloses the actions Energy Efficiency - Total Productive Indicators table under the heading taken to reduce its environmental Maintenance” in the “Vestel and “Energy Management and Energy impacts, the total number of projects Sustainability” section of the annual Efficiency - Total Productive and initiatives carried out, and the report. (See pages: 139-142) Maintenance” in the “Vestel and environmental benefits, gains and Sustainability” section of the annual The company reports the amount cost savings associated with them. report. (See pages: 141, 142) of water which is withdrawn, used, Actions taken by Vestel to reduce its recycled and discharged from No electricity was generated during the environmental impacts, the projects underground or above ground, reporting year. and initiatives carried out by the its sources and procedures (Total Company and the environmental The company conducts activities water withdrawal by source, water benefits they provide are provided in on increasing the use of renewable resources affected by the withdrawal detail in the “Vestel and Sustainability” energy, pursuing transition to zero or of water; percentage and total volume section of the annual report. low carbon electricity and discloses of recycled and reused water, etc.). such activities. In addition, the Company’s activities Data on water usage can be found under to reduce its environmental impacts Vestel started feasibility studies to the heading of “Water Management” in are also explained in the CDP Climate install solar panels on the roof of the “Vestel and Sustainability” section Change reports. (Vestel’s CDP reports one of its factories to use renewable of the annual report. (See pages: 135, can be accessed from http://www. energy resources in 2020. In addition, 136, 137) vestelinvestorrelations.com/en/ new projects are planned to be The company discloses whether its sustainability/ecological-awareness/ implemented in the areas of using operations or activities are included in climate-change.aspx). The total cost low-carbon electricity, purchasing any carbon pricing system (Emission savings were not calculated due to the renewable energy certificates to reset Trading System, Cap & Trade or size and the complexity of the structure. or reduce the Company’s carbon Carbon Tax). footprint from purchased electricity, The company reports its total energy and conserving resources. Vestel’s operations are not included in consumption data (excluding raw any carbon pricing system. materials) and sets out its energy The company discloses its renewable consumption in Scope-1 and Scope-2 energy production and usage data. The company discloses information categories. on the carbon credits accumulated In the reporting period, there was or purchased during the reporting Total energy consumption data no renewable energy generation or period. is provided in the Environmental usage but the Company carries out Indicators table under the heading feasibility studies on the use of solar Although there were no carbon credits “Energy Management and Energy energy and the purchase of renewable accumulated or purchased during the Efficiency - Total Productive energy certificates to reset or reduce reporting period, Vestel continues to Maintenance” in the “Vestel and the carbon footprint of purchased work on purchasing carbon credits. Sustainability” section of the annual electricity. report. (See pages: 141, 142) Scope-1 and Scope-2 greenhouse gas emissions are given in the Environmental Indicators table under the heading “Climate Crisis,
Vestel Elektronik 2020 Annual Report 173 Activities
Sustainability Principles Compliance Framework
The company discloses the details of Information and policies on human and The company reports developments any carbon pricing applied within the employee rights are included in the regarding discrimination, inequality, Company. “Vestel and Sustainability” section of human rights violations, forced the annual report under the heading labour, and corrective practices. The Carbon pricing is not applied at Vestel. “Human Resources in Vestel”. (See company discloses its regulations to The company discloses all mandatory pages: 149-159) prevent child labour. and voluntary platforms where the The company provides equal Practices and regulations on this Company presents its environmental opportunity in recruitment processes. issue are included in the “Vestel and information. With consideration of supply and value Sustainability” section of the annual Information on platforms where chain effects, it includes the issues of report under the heading “Regulations environmental information is fair labour, improvement of labour Preventing Discrimination, Inequality, disclosed are included in the “Vestel standards, women’s employment Human Rights Violations, Forced and Sustainability” section of the and inclusion (on the basis of gender, Labour and Child Labour”. (See pages: annual report under the headings religious belief, language, race, ethnic 151, 152) of “Environmental Policy and origin, age, disability, refugee status, The company discloses its policies Environmental Management System” etc.) in its policies. regarding investment in employees and “Climate Crisis, Carbon Footprint Information on recruitment (training, development policies), and Carbon Disclosure Project”. (See processes is included in the “Vestel compensation, fringe benefits, the pages: 127, 128, 131, 132) and Sustainability” section of the right to unionization, work/life balance C. Social Principles annual report under the heading solutions and talent management. “Equal Opportunity in Recruitment It determines dispute resolution C1. Human Rights and Employee Processes”. (See page: 151) processes by creating mechanisms Rights to deal with employee complaints The company discloses the measures and dispute resolution. It regularly The Company forms a Human Rights taken along the value chain for the discloses the activities carried out to and Employee Rights Policy with a protection of groups sensitive to ensure employee satisfaction. commitment to fully comply with the certain economic, environmental, Universal Declaration of Human Rights, social factors (low-income groups, Investments in employees and the ILO Conventions, which are ratified women, etc.) or minority rights/ activities related to employee by Turkey and the legal framework equality of opportunity. satisfaction are included in the “Vestel and legislation regulating human and Sustainability” section of the Information on equality of opportunity rights and working life in Turkey. It annual report under the headings of and the measures taken along the value discloses the policy in question, and “Investment in Employees: Qualified chain are included in the “Vestel and the roles and responsibilities for its and Sustainable Training Activities”, Sustainability” section of the annual implementation, to the public. “Zorlu Academy Online Training report under the headings of “Equal Platform”, “Employee Satisfaction Vestel respects the human rights and Opportunity in Recruitment Processes” and Conflict Resolution Processes” dignity of all its employees. It treats and “Regulations Preventing and “Work/Life Balance Solutions at its employees within the principles of Discrimination, Inequality, Human Vestel”. (See pages: 152, 153, 154, 157) equality and honesty. It undertakes Rights Violations, Forced Labour and full compliance with the Universal Child Labour”. (See pages: 151, 152) Managers inform employees of Declaration of Human Rights, the ILO decisions which may affect them. There Conventions ratified by Turkey and is no personnel at Vestel working under the legal framework and legislation the Collective Bargaining Agreement. governing human rights and working All employee rights and benefits are life in Turkey in order to create a safe protected and observed under the and healthy working environment. Labour Law No. 4857.
174 Vestel Elektronik 2020 Annual Report The company establishes occupational The company discloses its work within The company creates a customer health and safety policies and the scope of social investment, social satisfaction policy regarding the announces them to the public. The responsibility, financial inclusion and management and resolution of company discloses the precautions access to finance. customer complaints and announces taken to avoid occupational accidents it to the public. Studies on social investment and and to protect health and publishes social responsibility are included Vestel’s after-sales activities are accident statistics. under the heading “Corporate Social carried out by the Vestel Customer Information on occupational health Responsibility and Social Contribution” Services General Directorate. (See and safety policy, measures taken to in the “Vestel and Sustainability” page: 100-103). Vestel Customer prevent occupational accidents and section of the annual report. (See Services has held the TS ISO 10002 accident statistics are included under pages: 162-168) Customer Satisfaction Management the heading “Occupational Health and System Certification since 2015. (See The company organizes information Safety (OHS) Policy and Practices” in pages: 163, 164) meetings and training programs the “Vestel and Sustainability” section for employees on ESG policies and The company conducts stakeholder of the annual report. (See pages: 159- practices. communication continuously and 162) transparently discloses information Vestel aims to hold informative The company creates and publicly on which stakeholders the meetings and provide training discloses personal data protection communication is conducted with, the programs for employees on ESG and data security policies. purpose, subject and frequency of the policies and practices, which will be communication, and the progress in Information on the protection of renewed in 2021. its sustainability activities. personal data and data security C2. Stakeholders, International is included in the “Vestel and Vestel conducts stakeholder Standards and Initiatives Sustainability” section of the annual communication continuously and report under the heading “Protection The company conducts its activities in transparently. Information concerning of Personal Data and Data Security the field of sustainability by taking into stakeholder communication is Policies”. (See pages: 157, 158) account the needs and priorities of all summarized in the table below: stakeholders (employees, customers, The company creates an ethical suppliers and service providers, public policy (including work, work ethics, institutions, shareholders, society compliance processes, advertising and non-governmental organizations, and marketing ethics, open disclosure, etc.). etc.) and discloses it to the public. Vestel carries out its activities in the Information on the ethical policy can be field of sustainability by taking into found in the “Vestel and Sustainability” account the needs and priorities of all section of the annual report, under the stakeholders (employees, customers, heading “Ethics Policy”. (See page: 150) suppliers and service providers, public institutions, shareholders, society and non-governmental organizations, etc.).
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Employees Intracompany information in different formats (e-mail, digital screens, online platforms, face-to-face meetings) Surveys, opinion and advice kiosks Trainings Annual company meetings Annual reports Online and physical in-house leader communication sessions Industrial Excellence Principles Sectoral Organizations and Membership to professional and sectoral associations Associations, NGOs, International Chairmanship at the boards of professional and sectoral associations Organizations Annual reports Research reports Participation in seminars and summits Suppliers Zorlu Holding Supply Chain Principles Inspection and counts Periodic evaluation meetings Announcements Annual reports Investors and Shareholders Public disclosures Press releases Website One-to-one meetings and e-mail correspondence Phone calls Video conferences Investor conferences and roadshows General Shareholders’ Meetings Annual and interim activity reports Investor presentations Brokerage research reports Public Institutions One-to-one visits Team meetings with relevant institutions Reports, analyses Public events Media Press releases and interviews Advertisements Social media Website Press meetings Fair visits Reports and researches Consumers and Customers Press releases and interviews Advertisements Social media Website Customer services Annual reports Local Community Regular visits Annual reports Seminars and educational activities Social responsibility projects Universities University career events University and student club sponsorships Reports and research studies Joint ventures and projects
176 Vestel Elektronik 2020 Annual Report The company publicly discloses the Index for the first time on November 2, As stated in the Corporate Governance international reporting standards 2015. Having been listed in the index Principles, the company takes the it has adopted such as the Carbon for five periods, and having maintained necessary measures to comply Disclosure Project (CDP), Global its compliance with the index criteria in with the principles regarding the Reporting Initiative (GRI), International 2020, Vestel Elektronik will be included stakeholders and to strengthen Integrated Reporting Council (IIRC), in the BIST Sustainability Index for the communication with stakeholders. It Sustainability Accounting Standards sixth time from December 1, 2020. seeks the opinions of stakeholders in Board (SASB) and Climate-Related determining measures and strategies Vestel Elektronik’s subsidiary Vestel Financial Disclosures Task Force in the field of sustainability. Beyaz Eşya was voluntarily included (TCFD). in the BIST Sustainability Index for the Vestel aims to implement the The international reporting standards first time in November 2016. Having Integrated Reporting and Management adopted by Vestel are included been listed in the index for four periods, System established by the IIRC in 2021. under the heading “Climate Crisis, and having maintained its compliance The Board of Directors aims to conduct Carbon Footprint and Carbon with the index criteria in 2020, Vestel a materiality analysis covering Vestel Disclosure Project” in the “Vestel and Beyaz Eşya will be included in the BIST Group of Companies in 2021, which will Sustainability” section of the annual Sustainability Index voluntarily in the be carried out by taking into account report. (See pages: 131, 132) December 2020 - October 2021 period the opinions of stakeholders and as well. shareholders. Vestel aims to implement the Integrated Reporting and Management D. Corporate Governance In this analysis, surveys and one-to-one System established by the IIRC in 2021. Principles interviews will be held with all internal and external stakeholders. The results The company publicly discloses The company undertakes maximum of the analysis, which is being conducted the international organizations effort to comply with all the Corporate with an aim of understanding the needs or principles such as the Equator Governance Principles besides the of stakeholders, will be set out in the Principles, United Nations mandatory principles in the Corporate 2021 integrated report/integrated Environment Program Finance Governance Principles appended to annual report. Initiative (UNEP-FI), United Nations the CMB’s Communiqué on Corporate Global Principles (UNGC), United Governance (II-17.1). The company works on raising Nations Principles for Responsible awareness on the issue of Investment (UNPRI), of which it Vestel carries out its activities in sustainability and its importance is a signatory or a member, and compliance with the applicable through social responsibility projects, international principles adopted legislation and the “Corporate awareness activities and training. (such as the International Capital Governance Principles” set out by the Information on social responsibility Market Association (ICMA) or Green/ Capital Markets Board. The Company projects, awareness activities and Sustainable Bond Principles). fully complies with all the compulsory principles set out in the Corporate training on this subject are included Information regarding the international Governance Principles appended to under the heading of “Corporate Social organizations and principles which the CMB’s Communique on Corporate Responsibility and Social Contribution” Vestel is a signatory to or a member Governance (II-17.1), and has also in the “Vestel and Sustainability” of, are included under the heading voluntarily adopted the majority of the section of the annual report. (See “Collaborations in Environmental non-compulsory principles. pages: 162-168) Issues” in the “Vestel and Sustainability” The sustainability training program section of the annual report. (See page: The company takes into account carried out with the Boğaziçi University 129) the issue of sustainability, the environmental impact of its activities Lifelong Education Center is given The company undertakes concrete and the principles in this regard under the heading of “Collaborations in efforts to be included in the Borsa while determining its corporate Environmental Issues”. (See page: 129) Istanbul Sustainability Index and management strategy. international sustainability indices such as the Dow Jones Sustainability Information on this subject is available Index, the FTSE4Good or the MSCI ESG under the heading “Sustainability Indices. Approach and Strategy” in the “Vestel and Sustainability” section of the Vestel Elektronik was included in the annual report. (See page: 126) Borsa Istanbul (BIST) Sustainability
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The company endeavors to become a Regulations in Production Processes”. are available to all stakeholders on the member of the international standards (See pages: 129, 135) corporate website. Employees are also and initiatives on sustainability and to provided with in-house training on this The company discloses its policies and contribute to such studies. subject. (See page: 154) programs towards the principle of tax Information on membership and honesty that aim to combat bribery There is a Tax Department within the contributions to international and corruption. Company to ensure tax compliance. standards and initiatives on In addition, periodic and systematic Zorlu Holding’s Ethical Principles, sustainability is included in the “Vestel inspections are carried out by the Tax which are also adopted by Vestel in its and Sustainability” section of the Audit Directorate and the Internal efforts to tackle bribery and corruption, annual report under the headings Audit Review Directorate under the are designed to include issues related of “Collaborations in Environmental Audit General Directorate within Zorlu to anti-bribery and anti-corruption and Issues” and “Compliance with Legal Holding in order to prevent risks.
178 Vestel Elektronik 2020 Annual Report Additional Disclosures Required by the Legislation
Vestel Elektronik 2020 Annual Report 179 Additional Disclosures Required by the Legislation
Additional Disclosures Required by the Legislation
ADDITIONAL DISCLOSURES MADE WITHIN THE SCOPE OF THE REGULATION ON THE DETERMINATION OF THE MINIMUM CONTENT OF ANNUAL REPORT OF COMPANIES DATED 28.08.2012 AND NUMBERED 28395
GENERAL INFORMATION Reporting Period: 01.01.2020 - 31.12.2020 Legal Name: Vestel Elektronik Sanayi ve Ticaret AŞ Trade Registry Information: Istanbul Trade Registry Office, No: 193621 Registered Capital Ceiling: TL 1,000,000,000 Paid-in/Issued Capital: TL 335,456,275 Head Office: Levent 199 Büyükdere Cad. No: 199 34394 Şişli - ISTANBUL / TURKEY Phone: +90 (212) 456 22 00
Branch 1: Manisa Branch Organized Industrial Zone, 45030, MANISA / TURKEY Phone: +90 (236) 233 01 31
Contact Information for the Head Office and Branches: Branch 2: Manisa Teknokent Branch Muradiye Mahallesi Celal Bayar Üniversitesi Kampüsü Küme Evleri No: 22 Yunusemre - MANISA / TURKEY Phone: +90 (236) 233 01 31
Branch 3: Manisa Protected Workplace Branch Keçiliköy OSB Mahallesi 5639 Sok. No: 17/2/04 Yunusemre - MANISA / TURKEY Phone: +90 (236) 233 18 16 Company Website: www.vestel.com.tr Investor Relations Website: www.vestelinvestorrelations.com
Shareholding Structure and Capital Distribution As of 31.12.2020, the Company’s paid-in capital is TL 335,456,275 and the shareholding structure is as follows: Shareholders Nominal Value of Shares (TL) Share in Capital (%) Zorlu Holding AŞ 216,053,592 64.41 Zorlu Holding AŞ (Free Float) 7,042,925 2.10 Other (Free Float) 112,359,757 33.49 Total 335,456,275 100.0
Zorlu Holding AŞ’s stake in the Company fell from 73.66% to 66.51% due to share sales executed on Borsa Istanbul in 2020. Privileged Shares and Voting Rights of Shares There are no privileged shares in the Company.
180 Vestel Elektronik 2020 Annual Report Organizational Chart of Vestel Elektronik
CHAIRMAN OF THE EXECUTIVE COMMITTEE
EXECUTIVE EXECUTIVE COMMITTEE COMMITTEE MEMBER MEMBER (HUMAN (FINANCIAL RESOURCES) AFFAIRS)
GENERAL GENERAL GENERAL GENERAL GENERAL FINANCIAL MANAGER MANAGER MANAGER MANAGER MANAGER AFFAIRS (HOUSEHOLD (DOMESTIC SALES (CUSTOMER (ELECTRONICS) (FOREIGN TRADE) COORDINATOR APPLIANCES) AND MARKETING) SERVICES)
R&D HUMAN PUBLIC DEPUTY GM / INVESTOR TECHNICAL PRODUCTION SALES DEPUTY DEALER SALES DEPUTY RESOURCES SALES REFRIGERATOR RELATIONS OPERATIONS DEPUTY GM GM DEPUTY GM GM DIRECTOR DEPUTY GM PLANTS 1-2 DIRECTOR DEPUTY GM
PLANNING R&D SECURITY AND DEPUTY GM ADMINISTRATIVE SALES DEPUTY FINANCE CALL CENTER AND LOGISTICS DEPUTY / WASHING DOMESTIC AFFAIRS GM DEPUTY GM & SITE DEPUTY GM GM MACHINE MARKETING DIRECTOR PLANTS DEPUTY GM OPERATIONS DEPUTY GM ACCOUNTING R&D DEPUTY GM / PURCHASING SALES DEPUTY & FINANCIAL DEPUTY TUMBLE DRYER DEPUTY GM GM REPORTING GM PLANT DEPUTY GM ONLINE & CORPORATE R&D DEPUTY GM / QUALITY SALES DEPUTY SALES DEPUTY DISHWASHER DEPUTY GM GM DEPUTY GM GM PLANT
DEPUTY GM/ R&D PRODUCT COOKING DEPUTY MANAGEMENT APPLIANCES GM DEPUTY GM PLANT
R&D MARKETING DEPUTY GM / AIR AND PRODUCT DEPUTY CONDITIONER & MANAGEMENT WATER HEATER GM DEPUTY GM PLANT
PRODUCT PURCHASING MANAGEMENT DEPUTY GM DEPUTY GM
CENTRAL R&D DEPUTY GM
Vestel Elektronik 2020 Annual Report 181 Additional Disclosures Required by the Legislation
Additional Disclosures Required by the Legislation
The Board of Directors The members of the Board of Directors are elected by the General Assembly in accordance with the provisions of the Company’s Articles of Association pursuant to the Turkish Commercial Code and relevant regulations. In the event of a vacancy in the Board of Directors, a new member shall be appointed to the vacant position by the Board of Directors in accordance with the Articles of Association and the relevant provisions of the Turkish Commercial Code. If the vacant position is for an independent member of the Board, the appointment shall be made in accordance with the regulations of the Capital Markets Board. The approval of the shareholders for the newly appointed member shall be obtained at the first General Meeting of Shareholders. The member approved by the General Assembly shall complete the term of office of his/ her predecessor. The Board members elected at the 2019 Annual General Meeting held on 30 June 2020, who have executed their duty during the period, and their tenure are listed in the table below. Term of Office Other Positions Held Positions Held Member Duty Beginning Date Ending Date Within Zorlu Group Outside the Zorlu Group Status Ahmet Nazif Chairman and Vice Chairman Non- Chairman June 30, 2020 June 30, 2023 - Zorlu at Zorlu Group Companies executive General Manager and Vice Chairman at Zorlu Enerji Board Member at Vice Elektrik Üretim AŞ and Board Bekir Ağırdır June 30, 2020 June 30, 2023 KONDA Araştırma ve Independent Chairman Member at Vestel Beyaz Eşya Danışmanlık Limited Sanayi ve Ticaret AŞ Şirketi Board Board Member at Zorlu Non- Selen Zorlu Melik June 30, 2020 June 30, 2023 - Member Group Companies executive Mehmet Emre Board Board Member at Zorlu Non- June 30, 2020 June 30, 2023 - Zorlu Member Group Companies executive Board Board Member at Zorlu Non- Olgun Zorlu June 30, 2020 June 30, 2023 - Member Group Companies executive Board Member at Ata Yatırım Menkul Kıymetler AŞ, Ata Gayrimenkul Yatırım Vice Chairman at Vestel Beyaz Ortaklığı AŞ, TFI Board Eşya Sanayi ve Ticaret AŞ and Elmas Melih Araz June 30, 2020 June 30, 2023 Tab Gıda Yatırımları Independent Member Board Member at Zorlu Enerji AŞ, Burger King Elektrik Üretim AŞ China JV Ltd. Izmir Enternasyonel Otelcilik AŞ and Entegre Harç Sanayi ve Ticaret AŞ COO at Silver Spring Board Member at Vestel Beyaz Board Networks and Board Ayşegül İldeniz June 30, 2020 June 30, 2023 Eşya Sanayi ve Ticaret AŞ and Independent Member Member at Eczacıbaşı Zorlu Enerji Elektrik Üretim AŞ Holding AŞ
Changes in the Board of Directors during the year There has been no change in the Board of Directors elected at the Annual General Meeting during the year. Duties and Authorities of the Members of the Board of Directors The Chairman and the members of the Board of Directors have the duties and the authorities set forth in the relevant articles of the Turkish Commercial Code and the Company’s Articles of Association.
182 Vestel Elektronik 2020 Annual Report Number of Board Meetings held during the year and the Attendance Rate of Board Members Board of Directors convened 12 times in 2020. While 3 physical meetings were held until March, 9 virtual meetings were held after the pandemic. The members of the Board of Directors attended the meetings to a large extent regularly and the attendance rate to the meetings stood at 96%. Senior Management Name Surname Job Title Enis Turan Erdoğan Chairman of the Executive Committee Bekir Cem Köksal Executive Committee Member Necmi Kavuşturan Executive Committee Member Alp Dayı Chief Financial Officer of the Vestel Group of Companies İsmail Murat Sarpel General Manager of Vestel Elektronik Sanayi ve Ticaret AŞ Erdal Haspolat General Manager of Vestel Beyaz Eşya Sanayi ve Ticaret AŞ Seda Kaya General Manager responsible for International Sales at Vestel Ticaret AŞ Ergün Güler General Manager responsible for Domestic Sales and Marketing at Vestel Ticaret AŞ Ali Tarkan Tekcan General Manager responsible for Customer Services at Vestel Ticaret AŞ
Changes in the Senior Management during the year Sedat Şengül, who has been working as a Technologist, was appointed as the Deputy General Manager of R&D (Mechanical Design) in January 2020. Mustafa Selim Göksu, who has been serving as the Deputy General Manager in Charge of Purchasing, moved to the position of Deputy General Manager in Charge of Production in January 2020. Uğur Savaş, who has been serving as the Deputy General Manager in Charge of R&D, moved to the position of Deputy General Manager in Charge of Purchasing in January 2020. Kutay Kutlu, who has been serving as the Quality Group Manager, was appointed as the Deputy General Manager in Charge of Quality in September 2020. Ömer Hakan Kutlu, who has been serving as the Deputy General Manager of Marketing & Product Management, moved to the position of Deputy General Manager of R&D in January 2020. Cemile Selcen Uyguntüzel, who has been serving as the Deputy General Manager in Charge of Customer Services, moved to the position of Deputy General Manager in Charge of Sales for Visual & Digital Solutions in January 2020. Yıldıray Başkurt, who has been serving as the Deputy General Manager of Field & Technical Operations, moved to the position of Deputy General Manager in Charge of Call Center & Field Operations in March 2020. Barış Altınkaya, who has been serving as Product Manager, was appointed as the Deputy General Manager in Charge of Marketing & Product Management in January 2020. Onur Tokuç, who has been serving as Sales Manager, was appointed as the Deputy General Manager in Charge of Sales Outside of Europe in December 2020. Eyüp Güler, who has been serving as Sales Group Manager, was appointed as the Deputy General Manager in Charge of Online & Corporate Sales in January 2020. Mustafa Nevzat Yatır, who has been serving as the güVENUSsü & Special Projects Manager, was appointed as the Deputy General Manager in Charge of Technical Operations in January 2020.
Vestel Elektronik 2020 Annual Report 183 Additional Disclosures Required by the Legislation
Additional Disclosures Required by the Legislation
Özgür Yılmaz, who has been serving as the Deputy General Manager in Charge of the Washing Machine and Tumble Dryer Plants, was appointed as the Deputy General Manager in Charge of Purchasing for the White Goods Plants in January 2020. Serkan Balcı, who has been serving as R&D Manager at the Washing Machine Plant, was appointed as the Deputy General Manager in Charge of the Washing Machine and Tumble Dryer Plants in January 2020. Because of the appointment of Özgün Döşemeciler as the Deputy General Manager in Charge of the Tumble Dryer Plant in September 2020, Serkan Balcı will continue his position as the Deputy General Manager in Charge of the Washing Machine Plants. Turgay Büyük, who has been serving as the Technology Development Manager, was appointed as the Deputy General Manager in Charge of the Central R&D for White Goods in September 2020. Özgün Döşemeciler, who has been serving as R&D Manager, was appointed as the Deputy General Manager in Charge of the Tumble Dryer Plant in September 2020. Number of Employees As of 31.12.2020, Vestel Elektronik has 18,864 employees. Transactions of Board Members conducted with the Company on Behalf of Themselves or of a Third Party and Their Activities within the scope of Prohibition of Competition In the Annual General Meeting held on 30 June 2020, the members of the Board of Directors were given permission for the year 2020 to carry out transactions in accordance with the Articles 395 and 396 of the Turkish Commercial Code. The Board members did not take any action under this scope during the year. Personnel and Labour Movements, Collective Bargaining Practices and Rights and Benefits provided to Employees The Company does not employ any personnel working under the Collective Bargaining Agreement. All employee rights and interests are protected and overseen under the Labour Law No. 4857. Amendments to the Articles of Association The 6th article of the Company’s Articles of Association, entitled “The Company’s Share Capital” has been amended and the period for the current registered capital ceiling has been extended to be valid for the years of 2020-2024 (5 years). COMPENSATION AND MONETARY BENEFITS PROVIDED TO BOARD MEMBERS AND SENIOR MANAGERS At the Company’s 2019 Annual General Meeting held on 30 June 2020, the decision was taken to pay a net annual remuneration of TL 182,160 (TL 15,180 per month) to each independent Board member and making no payment to other Board members for the year 2020. In the twelve-month period ending on 31.12.2020, the total compensation and monetary benefits provided to the members of the Board of Directors and senior managers amounted to TL 33,505 ths. in total. ACTIVITIES OF THE COMPANY AND IMPORTANT DEVELOPMENTS REGARDING THE ACTIVITIES Capacity and Production Unit Plant Enclosed Area (m2) TV 306,713 Household Appliances 405,864 Digital Products 49,780 TOTAL 762,357
The capacity utilization rate in white goods production was 77% in 2020, similar to its 2019 level. With the completion of the capacity expansion investment, the annual production capacity of the refrigerator plant increased by 500,000 units as of the end of January, taking Vestel’s total annual white goods production capacity from 12,000,000 to 12,500,000 units. The capacity utilization rate in television production, which stood at 76% in 2019, declined to 68% in 2020 due to the negative impact of the pandemic measures on export orders and the severe shortage in global panel supply in the second half of the year.
184 Vestel Elektronik 2020 Annual Report Production The Company’s production volume remained flat compared to 2019. Sales Vestel Elektronik recorded TL 23,225,395 ths. of gross revenues in 2020, of which TL 17,006,217 ths. comprised of export revenues. 65% of total revenues were generated from sales to European countries, 27% from domestic market and 8% from sales to other countries. In 2020, domestic revenues increased by 49% while export revenues grew by 18% yoy. Net revenues grew by 25% in Turkish Lira terms while unit sales increased by 7% in 2020. Investments and Investment Incentives The Company’s total capital expenditures amounted to USD 132 million in 2020. The investment expenditures consisted of machinery and equipment investments (33%), research and development activities (27%), mold investments (26%) and other investments (14%). Information on Direct and Indirect Subsidiaries and Ownership Interests As of 31 December 2020, the Company’s major subsidiaries are as follows: 31.12.2020 31.12.2019 Voting Effective Voting Effective Consolidated subsidiaries Rights (%) Ownership (%) Rights (%) Ownership (%) Vestel Beyaz Eşya Sanayi ve Ticaret AŞ 89.9 89.9 95.2 95.2 Vestel Komünikasyon Sanayi ve Ticaret AŞ 100 100 100 100 Vestel Ticaret AŞ 100 100 100 100 Vestel CIS Ltd. 100 100 100 100 Vestel Iberia SL 100 100 100 100 Vestel France SA 100 100 100 100 Vestel Holland BV 100 100 100 100 Vestel Germany GmbH 100 100 100 100 Cabot Communications Ltd. 90.8 90.8 90.8 90.8 Vestel Benelux BV - - 100 100 Vestel UK Ltd. 100 100 100 100 Vestek Elektronik Araştırma Geliştirme AŞ 100 100 100 100 Vestel Trade Ltd. 100 100 100 100 Intertechnika LLC 99.9 99.9 99.9 99.9 Vestel Central Asia LLP 100 100 100 100 Vestel Poland sp. Z.o.o. 100 100 100 100 Vestel Polska Technology Center sp. Z.o.o 100 100 100 100 Vestel Electronics Gulf DMC 100 100 100 100 Vestel Electronics Shanghai Trading Co. Ltd 100 100 100 100 Vestel Electronica SRL 100 100 100 100
Since Vestel Savunma and Aydın Yazılım have a net liability position, the carrying value of these investments in associates, which are accounted for by the equity method, is zero in the consolidated balance sheet as of 31 December 2020 and 31 December 2019. As of 31 December 2020, Vestel Elektronik Sanayi ve Ticaret AŞ’s voting rights and effective ownership interests in Vestel Savunma Sanayi AŞ, Aydın Yazılım Elektronik ve Sanayi AŞ, Meta Nikel Kobalt Madencilik Sanayi ve Ticaret AŞ and Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret AŞ, which are accounted for by the equity method, were 35%, 21%, 50% and 19%, respectively (31 December 2019: 35%, 21%, 50%, 19%).
Vestel Elektronik 2020 Annual Report 185 Additional Disclosures Required by the Legislation
Additional Disclosures Required by the Legislation
Information on the Company’s acquisition of its own shares The Company did not acquire its own shares in 2020. Information on Special Audit and Public Audit Within the framework of the regulations of the Capital Markets Board regarding financial reporting and independent audit, the Company’s semi-annual and yearly financial statements are audited by an independent audit firm. KPMG Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ was selected as the independent auditor for auditing the Company’s accounts and transactions for the fiscal year 2020 in accordance with the Capital Market Law, the Turkish Commercial Code and the related legislation, in the Annual General Meeting held on 30 June 2020. Information on Legal Action taken against the Company which could affect the Company’s Financial Status and Activities and the Possible Consequences of such Legal Action No material lawsuit, which could affect the financial status and activities of the Company, was filed against the Company in 2020. Administrative or Judicial Sanctions imposed against the Company or the Board Members due to Practices Violating the Legislation There are no administrative or judicial sanctions applied against the Company or the members of the Board of Directors. General Shareholders’ Meetings The Company achieved the targets set in the previous periods. The decisions taken in the Company’s Annual General Meeting held on 30 June 2020 were implemented. No Extraordinary General Shareholders’ Meeting was held during the year. Donations and Social Responsibility Projects In 2020, the total donations made in line with the Company’s Donation and Charity Policy amounted to TL 561,186. Conclusion Section of the Affiliation Report Prepared Pursuant to the Article 199 of the Turkish Commercial Code In accordance with the provisions of the Turkish Commercial Code, Vestel Elektronik was an affiliated company of Zorlu Holding AŞ during the fiscal year 2020. Pursuant to the Article 199 of the Turkish Commercial Code, Vestel Elektronik’s Board of Directors issued the following declaration in its affiliation report, which was prepared regarding the Company’s relationship with the controlling company or an affiliated company of the controlling company: “Within the scope of the conditions and circumstances known to us regarding all the transactions conducted in 2020 with the controlling company and its affiliates, we have evaluated the Company’s legal transactions conducted on behalf of the controlling company or its affiliates and all the measures taken or avoided to benefit the controlling company or its affiliates under Zorlu Holding AŞ’s direction in 2020. As a result of this evaluation, we hereby declare, within the scope of the conditions and circumstances known to us, that the Company did not suffer any loss due to such transactions in 2020 and that there were no measures required to be taken in this regard.” Information on Transactions There were no transactions within this scope.
186 Vestel Elektronik 2020 Annual Report FINANCIAL POSITION Determination of the Adequacy of the Company’s Capital and Assessment of the Board of Directors The Company has neither suffered capital impairment nor is insolvent within the scope of the calculation performed by taking into account the ratios specified in the Article 376 of the Turkish Commercial Code. Information on Capital Market Instruments Issued Vestel Elektronik issued the following debt instruments to qualified domestic investors in 2020. Type of Issuance Term Nominal Interest Interest Rate Coupon Principal ISIN Code Date (Days) Maturity Value (TL) Rate (%) Payments Payment TRSVSTL72110 09.07.2020 372 16.07.2021 50,066,100 Floating Benchmark Quarterly At maturity Rate Bond + 2% TRSVSTL72227 09.07.2020 728 07.07.2022 50,380,000 Floating Benchmark Quarterly At maturity Rate Bond + 2.75%
Corporate Credit Rating JCR Eurasia Rating BB+/Negative
On 18 December 2020, JCR Eurasia Rating evaluated “Vestel Elektronik Sanayi ve Ticaret AŞ” in investment grade category in its periodic annual review and affirmed the Company’s ratings on Long-Term and Short-Term National Scales as ‘A (Trk)’ and ‘A-1 (Trk)’, respectively along with ‘Stable’ outlook. Moreover, the ratings for the outstanding and prospective debt instrument issuances were affirmed as ‘A (Trk)’ for the long term and ‘A-1 (Trk)’ for the short term. On the other hand, the Company’s Long Term International Foreign Currency and Local Currency Ratings have been determined as ‘BB+/Negative’, in line with the sovereign ratings of Turkey. International Credit Rating Agency Standard & Poor’s terminated all the credit rating activities related to Vestel Elektronik Sanayi ve Ticaret AŞ upon the Company’s request as of June 29, 2020. Dividend Distribution Policy Vestel Elektronik distributes profit in accordance with the provisions of the Turkish Commercial Code, Capital Market Regulations, Tax Regulations and other pertinent legislation as well as the profit distribution provision of its Articles of Association. The amount of profit to be distributed and date of distribution are approved by the General Assembly, upon the proposal of the Board of Directors. Company has adopted the profit distribution policy of distributing at least 25% of its distributable profit in cash and/or as bonus shares. Board of Directors shall review this policy every year, by taking into account the national and global economic conditions, Company’s growth and investment plans and financial position. Revisions made in the policy shall be submitted to the approval of the shareholders at the first General Assembly meeting following such revisions and the policy will be published on the Company’s web site. Distribution of profit shall commence on the date determined by the General Assembly, provided that it is no later than the end of the year in which the General Assembly meeting is held. Subject to the provisions of the legislation in force, the Company may consider distributing advance dividends or paying dividends in equal or in varying installments. At the Company’s 2019 Annual General Meeting, considering the conditions set forth in the Company’s Profit Distribution Policy; the decision was taken not to distribute the 2019 profit and to add it to extraordinary reserves after setting aside the required amount for the first legal reserve in order to strengthen the financial structure of the Company and not to create an additional funding requirement in view of the current economic outlook, the long term strategies and the investment, liquidity and financing policies of the Company as well as to protect the long term interests of the shareholders, the employees and the Company.
Vestel Elektronik 2020 Annual Report 187 Additional Disclosures Required by the Legislation
Additional Disclosures Required by the Legislation
OTHER MATTERS Information on Conflicts of Interest between the Company and the Institutions from which the Company obtains investment consultancy, rating and similar services, and the measures taken to prevent such conflicts of interest None. Information on Legislative Changes that could have a significant impact on the Company’s Activities There were no legislative changes in 2020 that could significantly affect the Company’s activities. Information on Cross-Shareholdings where Direct Participation in Share Capital exceeds 5% None. Required Information on Related Party Transactions and Balances The required information concerning the Company’s related party transactions are provided in the footnotes of the 2020 financial statements.
188 Vestel Elektronik 2020 Annual Report Corporate Governance
Vestel Elektronik 2020 Annual Report 189 Corporate Governance Risks and Assessment of the Board of Directors
Risk Management Zorlu Holding’s Enterprise Risk Management Department is responsible for the early detection of risks which could jeopardize the existence, development and continuity of Vestel Elektronik Sanayi ve Ticaret AŞ (“Vestel Elektronik” or “the Company”), implementation of necessary measures against detected risks and the management of risks in a centralized structure. In this regard, the Zorlu Holding Risk Policy and Procedure and Enterprise Risk Management Framework were established to govern all Zorlu Group companies. Zorlu Holding Enterprise Risk Management Policy is summarized below: Goal Setting • Embedding risk management principles into strategic planning and goal setting processes • Aligning the strategy and goals set with the Company’s risk appetite Risk Definition • Identifying the risks and opportunities which may affect the Company’s goals with the participation of the entire organization in a coordinated manner and within the framework of a shared perception Risk Assessment and Inherent Risk • Assessing the probability of risks and their impact on the Company in case of their occurrence • Determining the value of risk before the actions taken and control activities, i.e. inherent risk Determining Actions • Addressing the risks in the most appropriate way (Accepting the Risk, Transferring the Risk, Mitigating the Risk, Avoiding the Risk) by taking into consideration the risk appetite and cost/benefit factors • Determining actions in line with the responses identified and managing the risks proactively Residual Risk and Action Plan Follow-up • Determining the value of risk after the actions taken, i.e. residual risk • Monitoring the completion process of the activities specified in action plans Reporting and Communication of Risks • Prioritizing the revealed risks and tracking them using the Key Risk Indicators • Measuring and reporting the key risk indicators which give warnings and all other risks taking into consideration the control points • Sharing all activities transparently and ensuring that risk management process is integrated into the decision-making mechanisms with the establishment of a culture of risk awareness across the entire organization
CONTINUOUS MONITORING
190 Vestel Elektronik 2020 Annual Report Vestel Elektronik’s Early Detection of Risk Committee, which was established on 15 March 2013 pursuant to the Article 378 of the Turkish Commercial Code, undertakes studies for the early detection of risks which could jeopardize the existence, development and continuity of the Company, implementation of the necessary actions and remedies and managing the risks in a coordinated manner. During 2020, Enterprise Risk Management Department submitted 6 risk reports to the Early Detection of Risk Committee to support the Committee in the effective supervision of the enterprise risk management processes, and the reports were presented to the Board of Directors following the review of the Committee. The headings of the risk reports submitted to the Committee and the Board of Directors are listed below:
• Results of the Risk Assessment Survey for Vestel Group of Companies - 2019
• The Effects of the Slowdown in the European Economy on the Electronics and White Goods Sectors
• The Effects of COVID-19 on National Economies
• Preventive Measures Taken by Zorlu Group Subsidiaries in Response to COVID-19 within the Framework of the World Economic Forum’s (WEF) Global Risks Report
• Cyber Risk Awareness and Perception
• 2021 Expectations for the Turkish and Global Economy The Company’s vision is defined as creating sustainable value for all parties by ensuring operational efficiency, growth and legal compliance. The six main risk categories, which may jeopardize the realization of the Company’s goals towards its vision and the actions taken in relation thereto, are summarized below. Strategic Risks Strategic risks refer to the inadequacy of the Company’s strategies and inability to remain competitive and achieve targets due to failure to accurately identify the external factors, employment of an outdated business model, incorrect composition of the business portfolio, inefficient organizational structure, inconsistency of performance measures with business strategies and insufficient resource allocation. The strategic risks category includes, among others, various risks in relation to environmental analysis, business model and portfolio, organizational structure, resource allocation and planning. The following actions are taken against these risks:
• Conducting coordinated feasibility studies, benefit and cost analysis and budgeting studies by the relevant departments in relation to new investment decisions,
• Evaluation of the legal, political, etc., risks before and after the investment by obtaining consultancy services as and when necessary,
• Diversification of investments made in different countries and business lines,
• Monitoring of the return on investments,
• Using dealers, distributors, online sales and similar distribution channels actively and considering each one as a business model,
• Entering new business lines by making use of strategic partnerships in public and private sectors,
• Formulating innovative strategies with respect to sales and marketing.
Vestel Elektronik 2020 Annual Report 191 Corporate Governance
Risks and Assessment of the Board of Directors
Sector Related Risks The sector related risks mainly result from the delays in adapting to changes in short and long term supply and demand balances that occur as a result of changing production and consumption patterns. It is inevitable for these changes to have an impact on price predictability. Moreover, sector related risks also include adaptation to the climate change-related shifts in the industry. Vestel Elektronik uses its best efforts to mitigate the negative impact of such risks by diversifying its areas of operation. Financial Risks Financial risks refer to the inadequacy of the Company’s finances, the emergence of currency, interest rate and credit risks and other uncertainties and fluctuations in financial markets, which may have a negative impact on the Company, and inability to secure adequate liquidity. The financial risks category includes, among others, risks in relation to interest rates, currency, capital, financial derivative instruments, commodity prices, liquidity, cash flow management and receivable collection. In order to determine the effects of financial risks on financial statements, various indicators are monitored, in particular, the Net Financial Debt/EBITDA ratio, Net Foreign Currency Position/Shareholders’ Equity ratio and liquidity ratios as well as the effective maturity dates of financial liabilities, and it is ensured that the necessary actions are taken at the levels which require warning. The following actions are taken against these risks:
• Use of alternative financing methods,
• Asset and liability management,
• Making use of various derivative instruments for hedging purposes, when necessary,
• Within the scope of stress tests and scenario analyses, stress tests are carried out in order to observe the effects of changes in market risk factors and market volatility on the financial position of the Vestel Group and to mitigate possible risks,
• Conducting Value at Risk (VaR) study for forward contracts recognized in equity within the cash flow hedge reserve account, measuring the worst one and five-day fair value variations within a 99% confidence interval,
• Paying attention to not taking on a financing burden which cannot be covered with the highly liquid assets as per the Company’s philosophy,
• Following up the budget targets with the realizations on a monthly basis and making revisions as necessary,
• Following up the profit target with the realizations on a monthly basis and making revisions as necessary,
• Insuring receivables and obtaining various guarantees. Operational Risks Operational risks refer to the inability of the Company’s business model to secure and sustain operational efficiency over the course of its operations towards achieving customer satisfaction and the Company’s performance targets in relation to quality, cost and time. The operational risks category includes, among others, risks in relation to decision making with respect to operational processes such as supply, capacity, business interruption, customer satisfaction, human resources, environmental health and safety, information capital, authorization, information processing and technology, contractual obligations and pricing and risks related to financial reporting processes and budgeting and fraud risks.
192 Vestel Elektronik 2020 Annual Report The following actions are taken against these risks:
• Supervision of all operational activities by the Internal Audit, Financial Audit and Tax Audit Departments set up under the organization of Zorlu Holding,
• Oversight by Zorlu Holding Enterprise Risk Management Department of the operational risks deemed significant via key risk indicators through the IT system and informing the related business units on risk levels, when necessary,
• Measuring, reporting and monitoring of customer satisfaction in relation to products and service network,
• Regularly providing compulsory training programs on occupational health and safety to all Zorlu Holding employees in accordance with the related regulations,
• Centralized follow-up of recommendations proposed by the insurance companies to Group companies subsequent to risk inspections,
• Following-up the policies and procedures for compliance with the legally defined standards in relation to environmental health, stakeholder safety and stakeholder health,
• Monitoring and keeping records of repair and maintenance of plant and machinery,
• Making commitments in relation to compliance with various principles such as human rights, environment, society, ethics, anti-corruption, etc. through the United Nations Global Compact.
• Carrying out work to fulfill all the obligations imposed by the legislation for the processing, storage and security of personal data throughout the Company, taking into account the local regulations. Reputation Risk The Company’s performance in other risk areas naturally poses a reputation risk for the Company. The reputation risk mainly refers to the negative impacts that may be caused by the Company’s operations on the environment, society and internal and external stakeholders. The following actions are taken against these risks:
• Establishing a multi-faceted, consistent and continuous communication with all stakeholders,
• Protecting the brand value and credibility; ensuring integrated management of all communication processes in accordance with the strategic business targets and in this regard representing Zorlu Holding Corporate Communications Department at the General Directorate level.
Vestel Elektronik 2020 Annual Report 193 Corporate Governance
Risks and Assessment of the Board of Directors
External Risks External risks refer to the presence of external factors which may affect the continuity of the Company’s business model and the core values which drive the overall targets and strategies. The external risks category includes, among others, risks in relation to access to capital, shareholder relations, natural disasters (force majeure risks), competition, customer demand (trends), financial markets, market sensitivity, sector risks, legal risks and risks in relation to regulatory compliance, political status and technological innovation. The following actions are taken against these risks:
• Developing necessary plans for recovering and resuming critical systems, technical infrastructure and facilities in alternative sites in case of a natural disaster or contingency, regularly monitoring business continuity and emergency action plans, • Determining a broad insurance coverage across the Company, taking into consideration natural disasters and terrorist acts to transfer potential risks to insurance companies and minimizing the potential tangible effects of such incidents, • Managing regulatory changes, legal actions, tax conflicts, intellectual property infringements, unfair competition and risks in relation thereto through coordinated communication among all the relevant departments, • Carrying out specific short-lived rehabilitations and works to integrate with new technologies, • Taking proper measures against adverse geographical and climatic conditions, • Establishing continuous and healthy communication which is open to all stakeholders through the activities of the Corporate Communications Department. Other than the actions listed under the risk headings above, insurance policies are purchased as a risk transfer mechanism. The primary insurance policies purchased are listed below.
List of Primary Insurances Purchased • Fire, Machinery Breakdown and Loss of Profit • Employer’s Liability • Directors and Officers (D&O) Liability • Professional Indemnity • Third Party Liability • Product Liability • Credit Insurance • Marine/Cargo • Fidelity Guarantee, Cash in Transit and Cash in Safe • Hazardous Materials • Personal Accident • Construction/Installation Policy
194 Vestel Elektronik 2020 Annual Report Internal Audit Activities and Internal Control System
The General Directorate of Internal Audit and Its Activities As is the case for all Zorlu Group Companies, the internal audit of the Vestel Group of Companies is carried out by the centralized Internal Audit Department operating within Zorlu Holding since 2000. The Internal Audit Department carries out the board approved audit programs in line with the International Internal Audit Standards and legal requirements and shares the results of its audits through both the audit reports prepared after each audit and the annual reports detailing all the audit and control activities conducted throughout the year with the Board of Directors, the Audit Committees where applicable, and the CEOs of Business Units. In addition to the Internal Audit Department, Financial Audit and Tax Audit Departments were established in 2011 in order to perform financial audits across all Group companies, which commenced their activities in 2012. In the last quarter of 2013, the Internal Audit and Financial and Tax Audit Departments were gathered under the umbrella of Zorlu Holding General Directorate of Audit and Internal Control. In accordance with the evolving needs of Zorlu Group, the Tax Audit Department was restructured as Tax Audit Directorate as of 1 December 2015 while the Internal Audit Department was restructured into two distinct Directorates, namely, the Internal Audit Process Oversight and Internal Audit Inspection Oversight as of 1 January 2016. Following the completion of the organizational restructuring process in the General Directorate of Audit and Internal Control for the execution of internal control activities separately in 2017, the General Directorate of Internal Control has started to carry out its activities as an independent department as of 1 January 2018. The purpose, authorities and duties as well as the operating principles and structure for the internal audit activities have been defined by a series of board-approved documents circulated across Group companies, such as the “Audit Regulation” and the “Internal Audit Working Principles”. Internal Audit Activities Process audit activities are carried out in line with a board-approved, risk-based annual audit program to evaluate the effective and efficient use of resources, adherence to written rules (laws, regulations, internal policies and directives), and the accuracy, security and reliability of information. Prior to each audit, internal auditors meet with senior management for risk assessment where the risks which could jeopardize the Company’s targets are positioned on a risk matrix based on their potential impact and probability of occurrence. During audit field work, tests are carried out to evaluate the effectiveness of internal controls which monitor risks with high impact and high probability of occurrence. The results of the observations are shared with the company management in the form of a draft report, and then a final report, including the feedback of the management, is sent to the senior management. As a result, the department provides consultancy services with reasonable assurance while offering best practices drawing from synergy within the Group. One month after the issue of the final report, actions taken in line with the 4T approach (Treat, Terminate, Transfer, Tolerate) are reported to the Board of Directors. Internal Audit Department organizes periodic meetings with the Audit Committee throughout the year. In these meetings, participants evaluate planned and actual audits, consultancy activities and special audits, etc. for the year, share findings, review action plans, follow-up results based on these findings, and review plans for the upcoming period. Zorlu Group supports and promotes Zorlu Group Internal Audit Team, which consists of 8 people, in receiving additional training to improve and enhance their existing knowledge, skills and other qualities, becoming a member of the related associations (e.g. The Institute of Internal Auditors, Turkey – TIA) and obtaining international certificates. The Internal Audit team includes 2 CIAs (Certified Internal Auditor), 2 CFEs (Certified Fraud Examiner), 1 CRMA (Certification in Risk Management Assurance), 1 CMAAAL (CMB Level 3 License), 1 CGRL (CMB Corporate Governance Rating License), 1 DIL (CMB Derivatives License) and 1 CMB Real Estate Appraisal License.
Vestel Elektronik 2020 Annual Report 195 Corporate Governance
Internal Audit Activities and Internal Control System
Financial Audit and Tax Audit Activities The Financial Audit and Tax Audit Departments have been carrying out their activities at Zorlu Group companies since 2012. Currently, these departments have 7 and 5 employees, respectively. These departments ensure that the Group companies’ balance sheet and income statement accounts used for financial and tax reporting purposes are in conformity with the uniform chart of accounts, tax legislation and audit standards and provide reasonable assurance to the Board of Directors in these areas. Audit findings are reported to the Company executives and senior management. When deemed necessary, the Tax Audit Department also provides advisory services with reasonable assurance to Group companies against potential tax risks. In addition, the Financial Audit Team reviews the CMB-compliant financial reports of the listed Group companies and shares its comments with the related departments. The Financial Audit Team includes 1 Certified Public Oversight Authority Licensed Auditor and 6 CPAs (Certified Public Accountant), while the Tax Audit Team includes 4 CPAs. The General Directorate of Internal Control and Its Activities The internal control function at the Vestel Group of Companies is carried out in a structure which is centrally coordinated within Zorlu Holding AŞ, as in other Zorlu Group companies. A special field team in the Internal Control Department has been assigned to the Vestel Group of Companies, which has been serving since 2017. The purpose, duties and authorities and the working principles of the Internal Control Department and the professional and ethical rules to which it adheres, are defined by the documents such as the “Internal Control Regulation” and the “Internal Control Manual”, which were shared with the relevant managers. The mission of the Internal Control Department is to coordinate the development and sustainability of an internal control system at Group companies, which will function in a consistent and integrated manner towards the objectives, enable the risk management to be carried out effectively and efficiently and share and propagate the “best practices” within the Group and apply these by rolling them out in Group companies. The Internal Control Department helps managers and employees identify the areas where processes and the internal control system need development, the steps to be taken in this regard, the implementation of the agreed actions and the monitoring of the status of the actions on a regular basis. It also guides managers and process owners on these issues. The Department also ensures that all relevant managers and employees of the Company contribute to the establishment, functioning, monitoring and evaluation of the internal control system and take the necessary measures. The Internal Control Department conducts its work with a systematic, continuous and disciplined approach by preparing a risk-based internal control work plan on an annual basis. Risk-based assessments carried out by the Internal Control Department, requests from the Board of Directors and the management, findings regarding the internal control that are determined by the Internal Audit Department during the audits and corporate risk maps play an important role in the formation of the internal control work plan. The annual internal control work plan is submitted to the CEO and the Board of Directors for approval and information. The internal control activities, which are planned and realized during the year, are evaluated during the periodic meetings held between the Internal Control Department and the management. In these meetings, the findings are shared and the action plans that are decided to be taken for the related findings and the follow-up results are evaluated and the plans for the upcoming period are reviewed. The Internal Control team is supported and encouraged by the Zorlu Group to obtain training in order to improve their existing knowledge and competencies, to take part in related professional associations and to obtain professional international certificates such as CIA, SMMM, CISA, CFE, CICA, CRMA, etc. Opinion of the Board of Directors regarding the Company’s Internal Control System and Internal Audit Activities None.
196 Vestel Elektronik 2020 Annual Report Statement of Compliance with Corporate Governance Principles
Statement of Compliance with Corporate Governance Principles Corporate governance activities were initiated at Vestel Elektronik Sanayi ve Ticaret AŞ (“Company” or “Vestel Elektronik”), which takes utmost care to comply with the “Corporate Governance Principles” of the Capital Markets Board (“CMB”) in late 2004. In order to have an independent evaluation of the Company’s corporate governance practices and share the results with the public, the Company has been obtaining corporate governance rating services for the past thirteen years. Vestel Elektronik’s Corporate Governance Rating has been improving steadily since its inclusion in the BIST Corporate Governance Index in 2007. Based on the corporate governance rating study conducted by SAHA Kurumsal Yönetim ve Kredi Derecelendirme Hizmetleri AŞ (SAHA Corporate Governance and Credit Rating Services Inc.), which has been certified by the Capital Markets Board to perform corporate governance rating assessment in accordance with the Corporate Governance Principles in Turkey, Vestel Elektronik’s corporate governance rating was revised up to 9.63 (96.32%) out of a scale of 10 as of 21 February 2020. This high score yet again confirms the importance, which Vestel Elektronik attaches to corporate governance and its commitment to achieve further progress in this area. The breakdown of the Company’s Corporate Governance Rating by sub-categories is as follows: Sub-categories Weight Rating in 2020 (%) Shareholders 0.25 94.91 Public Disclosure and Transparency 0.25 98.44 Stakeholders 0.15 99.48 Board of Directors 0.35 94.47 Total 1.00 96.32
The Company’s Corporate Governance Rating Reports can be accessed on the Company’s website at www.vestelinvestorrelations.com. Vestel Elektronik carries out its activities in compliance with the applicable legislation and the Capital Markets Board’s “Corporate Governance Principles”. The Company fully complies with all the compulsory principles in the Corporate Governance Principles appended to the CMB’s Communiqué on Corporate Governance (II-17.1), and has also adopted the majority of the non-compulsory principles. No conflict of interest has been noted between the stakeholders in relation to the principles that have not yet been fully complied with. Aware of the positive contributions that adoption of the Corporate Governance Principles brings to the Company, Vestel Elektronik Sanayi ve Ticaret AŞ continues its efforts to further improve its compliance with the Corporate Governance Principles and to comply with the non-mandatory principles that are not yet implemented. For the period ended on 31 December 2020, the compliance with the Corporate Governance Principles that are appended to the Corporate Governance Communiqué and the explanations with regard to the principles that have not yet been complied with are included in the Corporate Governance Compliance Report, the Corporate Governance Information Form and in the other relevant sections of the annual report. In case of a change in the Corporate Governance Compliance Report or the Corporate Governance Information Form during the reporting period, a material event disclosure will be made and the changes will also be included in the interim activity reports.
Vestel Elektronik 2020 Annual Report 197 Corporate Governance Corporate Governance Compliance Report
Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 1.1. FACILITATING THE EXERCISE OF SHAREHOLDER RIGHTS 1.1.2-Up-to-date information and disclosures which may affect the exercise X of shareholder rights are available to investors at the corporate website. 1.2. RIGHT TO OBTAIN AND REVIEW INFORMATION 1.2.1-Management did not enter into any transaction that would complicate the X conduct of special audit. 1.3. GENERAL ASSEMBLY 1.3.2-The company ensures the clarity of the General Assembly agenda, and that X an item on the agenda does not cover multiple topics. 1.3.7-Insiders with privileged information have informed the board of directors about transactions conducted on their There were no transactions behalf within the scope of the company’s X in this scope in 2020. activities in order for these transactions to be presented at the General Shareholders’ Meeting. 1.3.8-Members of the board of directors who are concerned with specific agenda items, auditors, and other related persons, as well as the officers who are X responsible for the preparation of the financial statements were present at the General Shareholders’ Meeting. A separate item on donations and grants is included in the agenda of the Annual General 1.3.10-The agenda of the General Meeting. Detailed information Shareholders’ Meeting included a on the amount of donations separate item detailing the amounts X made and the beneficiaries are and beneficiaries of all donations and provided to shareholders upon contributions. request at the Annual General Meeting. The implementation is planned to continue in this vein in the following AGMs. 1.3.11-The General Shareholders’ Meeting was held open to the public, including the X stakeholders, without having the right to speak.
198 Vestel Elektronik 2020 Annual Report Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 1.4. VOTING RIGHTS 1.4.1-There is no restriction preventing shareholders from exercising their X shareholder rights. 1.4.2-The company does not have shares X that carry privileged voting rights. 1.4.3-The company withholds from exercising its voting rights at the General The Company has no cross- Shareholders’ Meeting of any company shareholding relationship X with which it has cross-ownership, in which brings a controlling case such cross-ownership provides relationship. management control. 1.5. MINORITY RIGHTS 1.5.1-The company pays maximum X diligence to the exercise of minority rights. The scope of minority rights 1.5.2-The Articles of Association extend in the Articles of Association the use of minority rights to those who has not been expanded and own less than one twentieth of the X no changes to the Articles of outstanding shares, and expand the scope Association are planned in of the minority rights. this regard. 1.6. DIVIDEND RIGHT 1.6.1-The dividend policy approved by the General Shareholders’ Meeting is posted X on the company website. 1.6.2-The dividend distribution policy comprises the minimum information to ensure that the shareholders can have an X opinion on the procedure and principles of dividend distributions in the future. 1.6.3-The reasons for retaining earnings, and their allocations, are stated in the X relevant agenda item. 1.6.4-The board reviewed whether the dividend policy balances the benefits of the X shareholders and those of the company. 1.7. TRANSFER OF SHARES 1.7.1-There are no restrictions preventing X shares from being transferred.
Vestel Elektronik 2020 Annual Report 199 Corporate Governance
Corporate Governance Compliance Report
Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 2.1. CORPORATE WEBSITE 2.1.1.-The company website includes all elements listed in Corporate Governance X Principle 2.1.1. There are no individual shareholders in the Company’s direct shareholding 2.1.2-The shareholding structure (names, structure who are subject privileges, number and ratio of shares, to the reporting obligation. and beneficial owners of more than 5% of X Information on individual the issued share capital) is updated on the shareholders who own capital website at least every 6 months. indirectly is disclosed in the Corporate Governance/ Ownership Structure section of the Company’s website. Apart from the interim activity reports, all information that may affect the investment decisions of foreign investors 2.1.4-The company website is prepared in is available in English on other selected foreign languages, in a way X the Company’s Investor to present exactly the same information Relations website. Interim with the Turkish content. activity reports are planned to be published in English within the scope of time and cost management. 2.2. ANNUAL REPORT 2.2.1-The board of directors ensures that the annual report represents a true and X complete view of the company’s activities. 2.2.2-The annual report includes all elements listed in Corporate Governance X Principle 2.2.2. 3.1. CORPORATION’S POLICY ON STAKEHOLDERS 3.1.1-The rights of the stakeholders are protected pursuant to the relevant X regulations, contracts and within the framework of bona fides principles. 3.1.3-Policies or procedures addressing stakeholders’ rights are published on the X company’s website.
200 Vestel Elektronik 2020 Annual Report Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 3.1.4-A whistleblowing programme is in place for reporting legal and ethical X issues. 3.1.5-The company addresses conflicts of interest among stakeholders in a X balanced manner. 3.2. SUPPORTING THE PARTICIPATION OF THE STAKEHOLDERS IN THE CORPORATION’S MANAGEMENT Although there is no provision in the Articles of 3.2.1-The Articles of Association, or the Association, employees are internal regulations (terms of reference/ encouraged to participate X manuals), regulate the participation of in company management employees in management. through internal practices (Vestel Complaint/Wish/ Request Evaluation System). 3.2.2-Surveys/other research techniques, consultation, interviews, observation method etc. were conducted to obtain X opinions from stakeholders on decisions that significantly affect them. 3.3. HUMAN RESOURCES POLICY Work on the creation of a succession plan for the key management positions of the Company (Deputy General Manager and above) was completed in 2020 and shared with the Head of Zorlu Holding’s Human Resources Group to be submitted to the Zorlu Holding Board of Directors. The succession plan is planned 3.3.1-The company has adopted an to be submitted to the Zorlu employment policy ensuring equal X Holding Board of Directors in opportunities, and a succession plan for 2021. all key managerial positions. The Vestel Leadership Power Program was initiated in 2021 in cooperation with Koç University for the Company’s Deputy General Managers and the Vestel Management Power Program in collaboration with Boğaziçi University, for promising managers demonstrating a high performance. 3.3.2-Recruitment criteria are documented. X
Vestel Elektronik 2020 Annual Report 201 Corporate Governance
Corporate Governance Compliance Report
Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 3.3.3-The company has a policy on human resources development, and organizes X trainings for employees. 3.3.4-Meetings have been organized to inform employees on the financial status X of the company, remuneration, career planning, education and health. Employees are informed 3.3.5-Employees, or their representatives, by their managers of any were notified of decisions impacting them. X decisions that may affect The opinion of the related trade unions them. There is no labor union was also taken. at Vestel Elektronik. 3.3.6-Job descriptions and performance criteria have been prepared for all employees, announced to them and taken X into account to determine employee remuneration. 3.3.7-Measures (procedures, trainings, raising awareness, goals, monitoring, complaint mechanisms) have been taken X to prevent discrimination, and to protect employees against any physical, mental, and emotional mistreatment. 3.3.8-The company ensures freedom of There is no collective association and supports the right for X bargaining agreement at collective bargaining. Vestel Elektronik. 3.3.9-A safe working environment for X employees is maintained. 3.4. RELATIONS WITH CUSTOMERS AND SUPPLIERS 3.4.1-The company measured its customer satisfaction, and operated to X ensure full customer satisfaction. 3.4.2-Customers are notified of any delays X in handling their requests.
202 Vestel Elektronik 2020 Annual Report Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 3.4.3-The company complied with the quality standards with respect to its X products and services. 3.4.4-The company has in place adequate controls to protect the confidentiality X of sensitive information and business secrets of its customers and suppliers. 3.5. ETHICAL RULES AND SOCIAL RESPONSIBILITY 3.5.1-The board of the corporation has adopted a code of ethics, disclosed on the X corporate website. 3.5.2-The company has been mindful of its social responsibility and has adopted X measures to prevent corruption and bribery. 4.1. ROLE OF THE BOARD OF DIRECTORS 4.1.1-The board of directors has ensured strategy and risks do not threaten the X long-term interests of the company, and that effective risk management is in place. 4.1.2-The agenda and minutes of board meetings indicate that the board of directors discussed and approved X strategy, ensured resources were adequately allocated, and monitored company and management performance. 4.2. ACTIVITIES OF THE BOARD OF DIRECTORS 4.2.1-The board of directors documented its meetings and reported its activities to X the shareholders. 4.2.2-Duties and authorities of the members of the board of directors are X disclosed in the annual report. 4.2.3-The board has ensured the company has an internal control framework X adequate for its activities, size and complexity. 4.2.4-Information on the functioning and effectiveness of the internal control X system is provided in the annual report. The Chairman of the Board of Directors and the Chief Executive Officer are 4.2.5-The roles of the Chairman and different individuals. Internal Chief Executive Officer are separated and X regulatory work continues on defined. the working principles of the Board of Directors, including job descriptions.
Vestel Elektronik 2020 Annual Report 203 Corporate Governance
Corporate Governance Compliance Report
Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 4.2.7-The board of directors ensures that the Investor Relations department and the corporate governance committee work X effectively. The board works closely with them when communicating and settling disputes with shareholders. 4.2.8-The company has subscribed to a Directors and Officers liability insurance X covering more than 25% of the capital. 4.3. STRUCTURE OF THE BOARD OF DIRECTORS There is no policy or target for the election of female directors to the Board. As of 2020, two female members, 4.3.9-The board of directors has approved one of whom is independent, the policy on its own composition, setting were serving on the Board a minimal target of 25% for female X of Directors, with the rate directors. The board annually evaluates of women among board its composition and nominates directors members standing at 29%, so as to be compliant with the policy. thus achieving the minimum rate of female members as envisaged under this principle. 4.3.10-At least one member of the audit committee has 5 years of experience in X audit/accounting and finance. 4.4. BOARD MEETING PROCEDURES Following the outbreak of the pandemic, the Board of Directors convened in a virtual environment. Board 4.4.1-Each board member attended members attended most of the majority of the board meetings in X the meetings both physically person. and online. Evaluations regarding the holding of Board meetings in an electronic environment are ongoing.
204 Vestel Elektronik 2020 Annual Report Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 4.4.2-The board has formally approved a minimum time by which information and X documents relevant to the agenda items should be supplied to all board members. 4.4.3-The opinions of board members The board members who that could not attend the meeting, but did did not attend the board X submit their opinion in written format, meetings did not submit a were presented to other members. written declaration. 4.4.4-Each member of the board has one X vote. 4.4.5-The board has a charter/written internal rules defining the meeting X procedures of the board. 4.4.6-Board minutes document that all items on the agenda are discussed, and X board resolutions include director’s dissenting opinions if any. There is no restriction for board members to assume other duties outside the Company and there are no plans to impose such 4.4.7-There are limits to external restrictions. The duties commitments of board members. undertaken by the members Shareholders are informed of board X of the Board of Directors members’ external commitments at the outside the Company are General Shareholders’ Meeting. presented in the annual report and in the AGM information document and presented to shareholders at the AGM. 4.5. BOARD COMMITTEES Two independent members of the Board of Directors serve on more than one committee due to the number of the board members and 4.5.5-Board members serve in only one of X the committee formation the Board’s committees. requirements. No changes are planned in connection with the current number of independent members of the Board of Directors. 4.5.6-Committees have invited persons to the meetings as deemed necessary to X obtain their views.
Vestel Elektronik 2020 Annual Report 205 Corporate Governance
Corporate Governance Compliance Report
Company Compliance Status Not Explanation Yes Partial No Exempted Applicable 4.5.7-If external consultancy services are The committees did used, the independence of the provider is X not obtain any external stated in the annual report. consultancy services in 2020. 4.5.8-Minutes of all committee meetings are kept and reported to board X members. 4.6. FINANCIAL RIGHTS 4.6.1-The board of directors has conducted There is no performance a board performance evaluation to X evaluation practice for the review whether it has discharged all its Board of Directors. responsibilities effectively. 4.6.4-The company did not extend any loans to its board directors or executives, nor extended their lending period or enhanced the amount of those loans, or X improve conditions thereon, and did not extend loans under a personal credit title by third parties or provided guarantees such as surety in favour of them. Remuneration of the members of the Board of Directors and senior executives is disclosed collectively in the annual 4.6.5-The individual remuneration of board report. Even if the information members and executives is disclosed in X is disclosed on the basis the annual report. of authority, disclosure on an individual basis will be guided by the majority in practice, in accordance with the legislation on the protection of personal data.
206 Vestel Elektronik 2020 Annual Report Corporate Governance Information Form
1. SHAREHOLDERS 1.1. Facilitating the Exercise of Shareholders Rights During the year, a total of 96 meetings were held with investors The number of investor meetings (conference, seminar/etc.) organized and analysts either face to face or via video calls or by phone. The by the company during the year Company attended 2 virtual investor conferences and 3 virtual investor group meetings organized by the brokerage houses. 1.2. Right to Obtain and Examine Information No requests were made for the appointment of a special auditor The number of special audit request(s) in the reporting period. The number of special audit requests that were accepted at the General Shareholders’ Meeting None.
1.3. General Assembly Link to the PDP announcement that demonstrates the information https://www.kap.org.tr/tr/Bildirim/849106 requested by Principle 1.3.1. (a-d) Whether the company provides materials for the General Shareholders’ It is presented. Meeting in English and Turkish at the same time The links to the PDP announcements associated with the transactions that are not approved by the majority of independent directors or by There is no such transaction in 2020. unanimous votes of present board members in the context of Principle 1.3.9 The links to the PDP announcements associated with related party transactions in the context of Article 9 of the Communique on Corporate There is no such transaction in 2020 within the scope of Article 9. Governance (II-17.1) The links to the PDP announcements associated with common and continuous transactions in the context of Article 10 of the Communique https://www.kap.org.tr/tr/Bildirim/862207 on Corporate Governance (II-17.1) The name of the section on the corporate website that demonstrates Corporate Governance / Policies / Donation and Charity Policy the donation policy of the company The relevant link to the PDP with minute of the General Shareholders’ https://www.kap.org.tr/tr/Bildirim/216237 Meeting where the donation policy has been approved The number of the provisions of the articles of association that discuss None. the participation of stakeholders to the General Shareholders’ Meeting Although there are no restrictions on the participation of the Identified stakeholder groups that participated in the General stakeholders in the AGM, there was no participation in the AGM Shareholders’ Meeting, if any other than the shareholders. 1.4. Voting Rights Whether the shares of the company have differential voting rights No In case that there are voting privileges, indicate the owner and None. percentage of the voting majority of shares. The percentage of ownership of the largest shareholder 66.51% 1.5. Minority Rights Whether the scope of minority rights enlarged (in terms of content or No the ratio) in the articles of the association If yes, specify the relevant provision of the articles of association. None. 1.6. Dividend Right The name of the section on the corporate website that describes the Stock Information / Dividend Distribution Policy dividend distribution policy Considering the current economic outlook, the long term strategies and the investment, liquidity and financing policies of the Company as well as to protect the long term interests of Minutes of the relevant agenda item in case the board of directors shareholders, employees and the Company, the decision was proposed to the general assembly not to distribute dividends, the taken not to distribute the 2019 distributable profit and to add it reason for such proposal and information as to use of the dividend to extraordinary reserves after setting aside the required amount for the first legal reserve, in order to strengthen the financial structure of the Company and not to create an additional financing need. PDP link to the related general shareholder meeting minutes in case the board of directors proposed to the general assembly not to https://www.kap.org.tr/tr/Bildirim/853527 distribute dividends
Vestel Elektronik 2020 Annual Report 207 Corporate Governance
Corporate Governance Information Form
GENERAL ASSEMBLY MEETINGS Specify the name of the page of the Specify the corporate name of the The number website that page of the The number of of information contains corporate the relevant requests the General website that item or received by Shareholders’ contains all paragraph the company Meeting questions of General The regarding the Shareholder minutes, and asked in Shareholders’ number of The link to clarification participation Percentage also indicates the general Meeting declarations the related of the agenda rate to the of shares Percentage for each assembly minutes in by insiders PDP general General of the General General directly of shares resolution the meeting and relation to received by shareholder Meeting Shareholders’ Shareholders’ present at represented voting levels for all responses related party the board of meeting Date Meeting Meeting the GSM by proxy or against to them transactions directors notification Corporate Corporate Governance Governance https://www. 30.06.2020 None. 83.5284% 0.00082% 83.5276% / General / General None. None. kap.org.tr/tr/ Meetings of Meetings of Bildirim/853527 Shareholders Shareholders
2. DISCLOSURE AND TRANSPARENCY 2.1. Corporate Website The information requested in the corporate governance Specify the name of the sections of the website providing principle numbered 2.1.1. is available on the Company’s the information requested by the Principle 2.1.1. Investor Relations website under the sections “About Us, News, Corporate Governance, Financials, Stock Information and Frequently Asked Questions”. If applicable, specify the name of the sections of the website providing the list of shareholders (ultimate beneficiaries) who directly or indirectly own more Corporate Governance / Ownership Structure than 5% of the shares. List of languages for which the website is available Turkish & English 2.2. Annual Report The page numbers and/or name of the sections in the Annual Report that demonstrate the information requested by principle 2.2.2. a) The page numbers and/or name of the sections in the Annual Report that demonstrate the information on the duties of the members of the board of It is presented in the Management / Board of Directors and directors and executives conducted out of the company and declarations on Corporate Governance sections of the annual report. independence of board members b) The page numbers and/or name of the sections in the Annual Report It is presented in the Corporate Governance section of the that demonstrate the information on committees formed within the board annual report. structure c) The page numbers and/or name of the sections in the Annual Report that It is presented in the Additional Disclosures Required by the demonstrate the information on the number of board meetings in a year and Legislation section of the annual report. the attendance of the members to these meetings ç) The page numbers and/or name of the sections in the Annual Report that It is presented in the Additional Disclosures Required by the demonstrate the information on amendments in the legislation which may Legislation section of the annual report. significantly affect the activities of the corporation d) The page numbers and/or name of the sections in the Annual Report It is presented in the Additional Disclosures Required by the that demonstrate the information on significant lawsuits filed against the Legislation section of the annual report. corporation and the possible results thereof e) The page numbers and/or name of the sections in the Annual Report that demonstrate the information on the conflicts of interest of the corporation It is presented in the Additional Disclosures Required by the among the institutions that it purchases services on matters such as Legislation section of the annual report. investment consulting and rating and the measures taken by the corporation in order to avoid from these conflicts of interest f) The page numbers and/or name of the sections in the Annual Report that It is presented in Additional Disclosures Required by the demonstrate the information on the cross ownership subsidiaries that the Legislation section of the annual report. direct contribution to the capital exceeds 5% g) The page numbers and/or name of the sections in the Annual Report that demonstrate the information on social rights and professional training of the It is presented in the Activities / Vestel & Sustainability employees and activities of corporate social responsibility in respect of the section of the annual report. corporate activities that arises social and environmental results
208 Vestel Elektronik 2020 Annual Report 3. STAKEHOLDERS 3.1. Corporation’s Policy on Stakeholders The name of the section on the corporate website that demonstrates the Corporate Governance / Policies / Employee Compensation employee remedy or severance policy Policy The number of definitive convictions the company was subject to in 10 relation to breach of employee rights The position of the person responsible for the alert mechanism (i.e. Internal Audit General Director on behalf of Zorlu Holding AŞ’s whistleblowing mechanism) Ethics Committee (Billur Demet Atan - [email protected]) Code of Ethics Hotlines: The contact detail of the company alert mechanism [email protected] 0 212 456 23 23 /0 850 226 23 23 3.2. Supporting the Participation of the Stakeholders in the Corporation’s Management The Complaint/Wish/Request Evaluation System, which was Name of the section on the corporate website that demonstrates created in order to evaluate the complaints, wishes and the internal regulation addressing the participation of employees on requests of employees and to increase employee motivation and management bodies satisfaction as well as efficiency, is available on the corporate portal which is only open to the Company employees. Occupational Health and Safety Committee, Meal Satisfaction Corporate bodies where employees are actually represented and Menu Selection Committee and committees established within the scope of TPM (Total Productive Maintenance) activities 3.3. Human Resources Policy Work on the creation of a succession plan for the key management positions of the Company (Deputy General Manager and above) The role of the board on developing and ensuring that the company has a was completed in 2020 and shared with the Head of Zorlu succession plan for the key management positions Holding’s Human Resources Group to be submitted to the Zorlu Holding Board of Directors. The succession plan is planned to be submitted to the Zorlu Holding Board of Directors in 2021. The Vestel Group of Companies’ Recruitment and Placement Regulation, which includes the criteria for equal opportunities and recruitment of personnel, is available on the Company’s corporate portal. The Regulation sets out the general rules The name of the section on the corporate website that demonstrates the regarding the employment of individuals, who are compatible human resource policy covering equal opportunities and hiring principles. with the vision, mission, work requirements and values of Also provide a summary of relevant parts of the human resource policy. the Vestel Group of Companies, by offering them an equal opportunity and by evaluating them fairly and impartially to meet the human resource needs of the Group companies. The Human Resources Policy is available in the Corporate Governance / Policies section on the corporate website. Whether the company provides an employee stock ownership programme There isn’t an employee stock ownership programme. The Human Resources Policy is available in the Corporate Governance / Policies / Human Resources Policy section. The name of the section on the corporate website that demonstrates the It is specifically mentioned in all regulations: “No discrimination human resource policy covering discrimination and mistreatments and is permitted in applications on the basis of gender, age, the measures to prevent them. Also provide a summary of relevant parts religion, race, sect, social status, physical appearance, ethnic of the human resource policy. origin, nationality, sexual orientation or any other personal characteristics.” The number of definitive convictions the company is subject to in relation None. to health and safety measures 3.5. Ethical Rules and Social Responsibility The name of the section on the corporate website that demonstrates the Corporate Governance / Code of Ethics code of ethics The name of the section on the company website that demonstrates the It is presented in the Sustainability section under the corporate social responsibility report. If such a report does not exist, Social Awareness / Our Values and Ecological Awareness / provide the information about any measures taken on environmental, Environmental Practices headings of the corporate website. social and corporate governance issues. These measures are included in the Code of Ethics of Zorlu Any measures combating any kind of corruption including embezzlement Holding AŞ, which is available under the heading of the Code of and bribery Ethics in the Corporate Governance section on the Company’s corporate website.
Vestel Elektronik 2020 Annual Report 209 Corporate Governance
Corporate Governance Information Form
4. BOARD OF DIRECTORS-I 4.2. Activity of the Board of Directors Date of the last board evaluation conducted - Whether the board evaluation was externally facilitated No Whether all board members released from their duties at the GSM Yes Chairman: Ahmet Nazif Zorlu, Vice Chairman: Bekir Ağırdır.
All members of the Board of Directors have been given first degree signature authority. With the Board resolution dated Name(s) of the board member(s) with specific delegated duties and 30.06.2020 and numbered 2020/32, any member of the Board of authorities, and descriptions of such duties Directors who has first degree signature authority is authorized to represent and bind the Company without any monetary limitation in any matter with a joint signature together with Ahmet Nazif Zorlu. Number of reports presented by internal auditors to the audit 4 committee or any relevant committee to the board Specify the name of the section or page number of the annual report It is presented in the Corporate Governance section of the annual that provides the summary of the review of the effectiveness of internal report. controls Name of the Chairman Ahmet Nazif Zorlu Name of the CEO Enis Turan Erdoğan If the CEO and Chair functions are combined: provide the link to the relevant PDP announcement providing the rationale for such combined They are different individuals. roles Link to the PDP notification stating that any damage that may be caused by the members of the board of directors during the discharge of their https://www.kap.org.tr/tr/Bildirim/860591 duties is insured for an amount exceeding 25% of the company’s capital The name of the section on the corporate website that demonstrates There is no such policy. current diversity policy targeting women directors The number and ratio of female directors within the Board of Directors Number: 2 Ratio: 29%
COMPOSITION OF BOARD OF DIRECTORS Whether Whether the Whether the She/He is Director has at Link to PDP Independent the Director least 5 years of Whether Whether Notification that Director who ceased experience on Executive Independent includes the considered by to satisfy the Audit, Accounting Name, Surname Director or Director or The First Election Independency the Nomination Independence and/or Finance of Board Member Not Not Date to Board Declaration Committee or Not or Not Not Ahmet Nazif Non- independent 14.09.1995 - - - - Zorlu executive director https://www. Non- Independent Bekir Ağırdır 09.05.2018 kap.org.tr/tr/ Considered No Yes executive director Bildirim/849106 Not Non- Selen Zorlu Melik independent 19.06.2012 - - - - kexecutive director Not Mehmet Emre Non- independent 27.05.2009 - - - - Zorlu executive director Not Non- Olgun Zorlu independent 27.05.2009 - - - - executive director https://www. Non- Independent Ayşegül İldeniz 09.05.2018 kap.org.tr/tr/ Considered No - executive director Bildirim/849106 https://www. Non- Independent Elmas Melih Araz 09.05.2018 kap.org.tr/tr/ Considered No Yes executive director Bildirim/849106
210 Vestel Elektronik 2020 Annual Report 4. BOARD OF DIRECTORS-II 4.4. Meeting Procedures of the Board of Directors While 3 meetings were held in a physical environment until March, Number of physical board meetings in the reporting period (meetings the following 9 meetings were held in a virtual environment due in person) to the pandemic. Director average attendance rate at board meetings 96.4% Whether the board uses an electronic portal to support its work or not No Number of minimum days ahead of the board meeting to provide 1 week before the meeting information to directors, as per the board charter The name of the section on the corporate website that demonstrates It is specified in Article 16 of the Articles of Association which is information about the board charter available in the Corporate Governance section of the website. Number of maximum external commitments for board members as None. per the policy covering the number of external duties held by directors 4.5. Board Committees Page numbers or section names of the annual report where information It is presented in the Corporate Governance section of the annual about the board committees are presented report. https://www.kap.org.tr/tr/Bildirim/220052 https://www.kap.org.tr/tr/Bildirim/267337 Link(s) to the PDP announcement(s) with the board committee charters https://www.kap.org.tr/tr/Bildirim/348328 https://www.kap.org.tr/tr/Bildirim/348330 https://www.kap.org.tr/tr/Bildirim/348331
COMPOSITION OF BOARD COMMITTEES-I Names of the Board Name of Committees Defined Name-Surname of Whether Committee Whether Board Member Committees As “Other” in the First Column Committee Members Chair or Not or Not Audit Committee - Elmas Melih Araz Yes Board member Audit Committee - Bekir Ağırdır No Board member Corporate Governance Bekir Ağırdır Yes Board member Committee - Corporate Governance Mehmet Emre Zorlu No Board member Committee - Corporate Governance Serap Mutlu No Not board member Committee - Committee of Early Elmas Melih Araz Yes Board member Detection of Risk - Committee of Early Selen Zorlu Melik No Board member Detection of Risk -
Vestel Elektronik 2020 Annual Report 211 Corporate Governance
Corporate Governance Information Form
4. BOARD OF DIRECTORS-III 4.5. Board Committees-II Specify where the activities of the audit committee are presented in It is presented in the Corporate Governance section of the annual your annual report or website (Page number or section name in the report. annual report/website) Specify where the activities of the corporate governance committee are It is presented in the Corporate Governance section of the annual presented in your annual report or website (Page number or section report. name in the annual report/website) Specify where the activities of the nomination committee are presented It is presented in the Corporate Governance section of the annual in your annual report or website (Page number or section name in the report. annual report/website) Specify where the activities of the early detection of risk committee are It is presented in the Corporate Governance section of the annual presented in your annual report or website (Page number or section report. name in the annual report/website) Specify where the activities of the remuneration committee are It is presented in the Corporate Governance section of the annual presented in your annual report or website (Page number or section report. name in the annual report/website) 4.6. Financial Rights Specify where the operational and financial targets and their It is presented in the Management / Interview with the CEO achievement are presented in your annual report (Page number or section of the annual report. section name in the annual report) Specify the section of website where remuneration policy for executive Corporate Governance / Policies / Remuneration Policy and non-executive directors are presented. Specify where the individual remuneration for board members and It is presented in the Additional Disclosures Required by the senior executives are presented in your annual report (Page number Legislation section of the annual report. or section name in the annual report)
COMPOSITION OF BOARD COMMITTEES-II Name of The Number The Percentage Committees The Percentage The Number of of Reports on of Independent Names of the Board Committees defined as “Other” of Non-executive Meetings Held in its Activities Directors in the in the First Directors Person Submitted to the Committee Column Board Audit Committee - 100% 100% 6 5 Corporate Governance Committee - 67% 33% 4 3 Committee of Early Detection of Risk - 100% 50% 6 6
212 Vestel Elektronik 2020 Annual Report Board Committees
• In order to assist the Board of Directors to perform its duties and responsibilities more effectively, a Corporate Governance Committee, an Early Detection of Risk Committee and an Audit Committee have been set up, all of which report directly to the Board. Owing to the nature of the Board structure, the Company has not set up a separate “Remuneration Committee” or a “Nomination Committee”, the duties of which are performed by the Corporate Governance Committee.
• As per the Corporate Governance Principle No. 4.5.3, all members of the Audit Committee and the chairs of the other committees are elected from among the independent members of the Board.
• The independent board members, Mr. Bekir Ağırdır and Mr. Elmas Melih Araz serve on more than one committee due to the number of the Board members and the committee formation requirements in accordance with the CMB’s Corporate Governance Principles.
• Committees convene at intervals stipulated by the legislation and the related Committee’s working principles or upon a request from a member. The Committees’ activities and meeting minutes are presented to the Board of Directors.
• All kinds of resources and support are provided by the Board of Directors to the committees to enable them to perform their duties. Committees can invite individuals who are deemed to be necessary to their meetings in order to obtain their views.
• Duties, working principles and the members of the Committees are determined by the Board of Directors and are publicly disclosed on the Public Disclosure Platform and the Company website.
Audit Committee
• The Audit Committee was set up for the effective oversight of the Company’s financial and operational activities pursuant to the Article 3 of the CMB’s Communiqué Serial X, No. 19. The Committee is responsible for the supervision of the Company’s accounting system, public disclosure of financial information, independent audit and the functioning and efficiency of the Company’s internal control and internal audit system.
• Pursuant to the CMB’s Communiqué on Corporate Governance No. II-17.1, the “Working Principles of the Audit Committee” were revised and approved at the Board of Directors’ meeting dated March 27, 2014. The revised version of the working principles was disclosed to shareholders via the Public Disclosure Platform and the Company website. • The Audit Committee is structured in accordance with the Capital Markets Board’s Corporate Governance Principles and comprises two members. • The Chairman of the Committee was elected from among the independent members of the Board and certain criteria were taken into account in the election process. The Chairman of the Audit Committee is ensured to have served in a similar position previously, have the knowledge and experience needed to analyze financial statements and be versed in accounting standards. • Both Audit Committee members were elected from among the independent Directors. The Chairman of the Committee is Mr. Elmas Melih Araz, and the other member is Mr. Bekir Ağırdır. The structure of the Committee and membership information are as follows as per the decision taken in the Company’s Board meeting on 30 June 2020: Committee Members Duty Status Elmas Melih Araz Chairman of the Committee Independent Board Member Bekir Ağırdır Member of the Committee Independent Board Member
• In principle, the Audit Committee shall convene at least four times a year, being once in each quarter. The Committee convened six times in 2020.
Vestel Elektronik 2020 Annual Report 213 Corporate Governance
Board Committees
• The Committee carries out its activities in line with the working principles put into writing in detail. • In 2020, the Audit Committee performed the following functions: · Oversight of the Company’s financial and operational activities, · Supervision and approval of the accuracy and conformity of the annual and interim financial statements, which will be disclosed to the public, with the accounting principles employed by the Company, · Selection of the independent audit firm, preparation of the independent audit contract and initiation of the independent audit process, · Monitoring of the effectiveness and performance of the independent audit activity, · Monitoring of the functioning and effectiveness of the internal control and internal audit system, · Review of the internal control and internal audit reports. Corporate Governance Committee • The Corporate Governance Committee was established to monitor the Company’s compliance with the CMB’s Corporate Governance Principles, carry out studies for improvement and make proposals to the Board of Directors in order to improve the implementation of corporate governance practices. • Pursuant to the CMB’s Communiqué on Corporate Governance No. II-17.1, the “Working Principles of the Corporate Governance Committee” were revised and approved at the Board of Directors’ meeting dated 27 March 2014. The revised version of the working principles was disclosed to shareholders via the Public Disclosure Platform and the Company website. • The Corporate Governance Committee is composed of at least three members, including two non-executive Board Members and the Investor Relations Manager. The Chairman of the Committee is Mr. Bekir Ağırdır, an independent Board member. • Corporate Governance Committee also fulfills the duties of the Nomination Committee and the Remuneration Committee. The structure of the Committee and membership information are as follows as per the decision taken in the Company’s Board meeting on 30 June 2020: Committee Members Duty Status Bekir Ağırdır Chairman of the Committee Independent Board Member Mehmet Emre Zorlu Member of the Committee Non-executive Board Member Serap Mutlu Member of the Committee Investor Relations Director
• In principle, the Committee convenes at least twice a year in order to ensure the effective performance of its duties. Corporate Governance Committee convened four times in 2020. • The activities carried out by the Corporate Governance Committee in 2020, in accordance with its working principles put into writing in detail, are presented below: · Proposing improvements in corporate governance practices to the Board of Directors to enhance compliance with the CMB’s Communiqué on Corporate Governance No. II-17.1; conducting and supervising the necessary works for alignment with the legislation, · Overseeing the activities of the Investor Relations Department, · Preparing the evaluation reports on the independence of the independent Board member candidates for submission to the Board of Directors, · Carrying out the activities related with the Corporate Governance Rating, · Within the scope of the Remuneration Committee duties, submission to the Board of its recommendation for the remuneration of the members of the Board of Directors and executives with administrative responsibility for 2020, which takes into account their progress in meeting the remuneration criteria.
214 Vestel Elektronik 2020 Annual Report Early Detection of Risk Committee • The Early Detection of Risk Committee was established in order to identify the risks which could threaten the existence, development and continuity of the Company, take the necessary measures against these risks and undertake risk management activities in line with the Turkish Commercial Code, Articles of Association and CMB’s Communiqué on Corporate Governance. The Committee continues its activities with regard to the early detection of threats which may have negative consequences on the development and continuity of the Company and manage the risks effectively by developing action plans against such threats. • Pursuant to the CMB’s Communiqué on Corporate Governance No. II-17.1, the “Working Principles of the Early Detection of Risk Committee” were revised and approved at the Board of Directors’ meeting dated 27 March 2014. The revised version of the working principles was disclosed to shareholders via the Public Disclosure Platform and the Company website. • The Early Detection of Risk Committee is composed of at least two Board members. In case the Committee has only two members, both of them, and in case it has more than two members, the majority of them, must be non-executive Board members. The Chairman of the Committee is Mr. Elmas Melih Araz, who is an independent Board member. The other member is Mrs. Selen Zorlu Melik. • Early Detection of Risk Committee submits a report to the Board of Directors once in every two months. The structure of the Committee and membership information are as follows as per the decision taken in the Company’s Board meeting on 30 June 2020: Committee Members Duty Status Elmas Melih Araz Chairman of the Committee Independent Board Member Selen Zorlu Melik Member of the Committee Non-executive Board Member
• The Early Detection of Risk Committee convenes as frequently as necessitated for the efficiency of its activities and in principle at least three times a year. The Committee held six meetings in 2020 and presented six risk reports to the Board of Directors.
Vestel Elektronik 2020 Annual Report 215 Corporate Governance
Board Committees
• The activities carried out by the Committee in 2020, in line with the working principles put into writing in detail, are presented below: · High risk evaluation was carried out and risk inventory was prepared including strategic, financial and operational risks which are critically important for the Company. · Risks were classified according to the following criteria on the risk map, where they are positioned according to their impact and probability levels.
Potential Impact Levels: · Negligible · Minor · Moderate · Serious · Critical Likelihood Levels: · Rare · Low · Possible · High · Almost Certain · Sector and company based risks contained in the risk reports were grouped under 9 main risk headings (External Environment, Operational, Authorization, Information Technology and Technology, Honesty/Integrity, Financial, Process/ Operational, Reporting and Strategic) according to COSO (The Committee of Sponsoring Organizations of the Treadway Commission) risk taxonomy. · As a result of these assessments, it was seen that risks were generally gathered under the main headings of External Environment, Operational, Financial and Strategic Risks.
· As a result of the risk inventory and risk management analyses, risk reports were prepared and submitted to the Committee in order to ensure early detection of risks which may jeopardize the Company’s existence, development and continuity and adoption of the necessary measures against these risks and management of risk. These reports were as follows: · Results of the Risk Assessment Survey for Vestel Group of Companies - 2019 · The Effects of the Slowdown in the European Economy on the Electronics and White Goods Sectors · The Effects of COVID-19 on National Economies · Preventive Measures Taken by Zorlu Group Subsidiaries in Response to COVID-19 within the Framework of the World Economic Forum’s (WEF) Global Risks Report · Cyber Risk Awareness and Perception · 2021 Expectations for the Turkish and Global Economy
216 Vestel Elektronik 2020 Annual Report Evaluation of the Board of Directors Regarding the Working Principles and Effectiveness of the Board Committees
The Board Committees were established to support the Board of Directors in fulfilling its duties and responsibilities more effectively. In line with the Corporate Governance Principles of the Capital Markets Board, at its meeting on 30 June 2020, the Board of Directors resolved to: • Elect Mr. Bekir Ağırdır, Independent Member of the Board, as the Chairman of the Corporate Governance Committee and Mr. Mehmet Emre Zorlu, Board Member, and Ms. Serap Mutlu, Investor Relations Director, as Committee members, • Elect Mr. Elmas Melih Araz, Independent Member of the Board, as the Chairman of the Audit Committee and Mr. Bekir Ağırdır, Independent Member of the Board, as Committee Member, • Elect Mr. Elmas Melih Araz, Independent Member of the Board, as the Chairman of the Early Detection of Risk Committee and Mrs. Selen Zorlu Melik, Board Member, as Committee Member. Due to the structure of the Board, the Company did not establish a separate “Remuneration Committee” and a “Nomination Committee”. The duties of these committees are fulfilled by the Corporate Governance Committee. The “Working Principles” of the Board Committees were revised in accordance with the CMB’s Communiqué on Corporate Governance No. II-17.1 and approved at the Board meeting held on 27 March 2014. The revised Working Principles were announced to the public via the Public Disclosure Platform and the Company website (www.vestelinvestorrelations.com/). In 2020, the Board Committees performed their duties and responsibilities effectively as required in the Corporate Governance Principles and their own Working Principles. In compliance with the way required for the effectiveness of their functions, their Working Principles and annual meeting schedules, in 2020: • The Corporate Governance Committee convened twice, • The Corporate Governance Committee convened once to fulfill the duties of the Nomination Committee, • The Corporate Governance Committee convened once to fulfill the duties of the Remuneration Committee, • The Audit Committee convened six times, • The Early Detection of Risk Committee convened six times. The Committees submitted reports on the results of their meetings to the Board. According to these meetings: • The “Corporate Governance Committee”, which was established in line with the Capital Markets Board’s Communiqué on Corporate Governance in order to monitor the Company’s compliance with the Corporate Governance Principles, carry out studies for improvement, and submit proposals to the Board of Directors, monitored the Company’s compliance with the Corporate Governance Principles, made recommendations to the Board to improve compliance with the non- mandatory principles and oversaw the activities of the Investor Relations Department. • The Corporate Governance Committee also fulfills the duties of the Nomination Committee. Within the scope of its duties as the Nomination Committee, the Corporate Governance Committee evaluated the applications for independent board membership by assessing the independence status of the board member candidates according to the independence criteria. The Committee prepared a report on its evaluations and submitted it to the Board of Directors for approval. • The Corporate Governance Committee also fulfills the duties of the Remuneration Committee. Within the scope of its duties as the Remuneration Committee, the Corporate Governance Committee submitted to the Board of Directors its proposal for the remuneration of Board members and executives with administrative responsibility for 2020, by taking into account the extent of the fulfilment of the remuneration criteria. • The “Audit Committee”, which was established for the supervision of the Company’s accounting system, the independent audit, public disclosure of financial information, and functioning and efficiency of the Company’s internal control and internal audit system, presented its views and recommendations in the areas of its responsibility to the Board of Directors. • The “Early Detection of Risk Committee”, which was established for the early detection of risks which could threaten the Company’s existence, development and continuity, implementation of necessary measures against these risks and management of risks, made a high-level risk assessment during the year, prepared a risk inventory pertaining to the critical risks in strategic, financial and operational areas and prepared and submitted six Risk Reports to the Board within the scope of its duties set forth in its Working Principles.
Vestel Elektronik 2020 Annual Report 217 Corporate Governance Statement of Independence by the Independent Board Member Candidates
11.02.2020 Statement of Independence I hereby declare that I am a candidate for assuming the role of an “Independent Member” on the Board of Directors of Vestel Elektronik Sanayi ve Ticaret AŞ within the scope of the criteria stipulated in the legislation, the Company’s Articles of Association, and the Capital Markets Board’s Communiqué on Corporate Governance no. II-17.1, and in that regard; a) Within the last five years, no employment relationship has been established between me, my spouse and my relatives by blood or marriage up to second degree and the Company, the affiliated companies which the Company controls the management of or has material influence over, shareholders who control the management of or have material influence over the Company and legal entities which these shareholders control the management of, in an executive position with important duties and responsibilities, nor have I/we individually or jointly held more than 5% of the capital or voting rights or privileged shares in or established a material business relationship with the same, b) Within the last five years, I have not been a shareholder (5% and more), or held an executive position with significant duties and responsibilities, or served as a Board member in any company from or to which the Company purchases or sells a significant quantity of products or services based on the agreements made during the periods these products or services were sold or purchased including particularly those companies which provide auditing (including tax audit, legal audit and internal audit), rating and consultancy services to the Company, c) I have the professional education, knowledge and experience necessary to duly carry out the duties which I shall assume due to my position as an independent Board member, d) I will not be working as a full-time employee at any public institution or organization after being elected as a Board member with the exception of working as a faculty member at a university provided that this is in compliance with the relevant legislation, e) I am deemed to be a resident in Turkey according to the Income Tax Law dated 31 December 1960 and numbered 193, f) I have strong ethical standards, professional reputation and experience which will allow me to make positive contributions to the activities of the Company, to protect my neutrality in case of conflicts of interest between the Company and the shareholders and to decide independently by taking into consideration the rights of the stakeholders, g) I will be able to dedicate a sufficient amount of time to the affairs of the Company in a manner to follow up the conduct of the Company activities and to duly perform the duties I shall assume, h) I have not served as a Board member at the Company’s Board of Directors for more than 6 years within the last ten years, i) I am not serving as an independent board member at more than three companies whose management is controlled by the shareholders controlling the Company and Company management and at more than five companies which are traded on the stock exchange, j) I am not registered and declared on behalf of the legal entity which is elected as a board member.
Bekir Ağırdır
218 Vestel Elektronik 2020 Annual Report 11.02.2020 Statement of Independence I hereby declare that I am a candidate for assuming the role of an “Independent Member” on the Board of Directors of Vestel Elektronik Sanayi ve Ticaret AŞ within the scope of the criteria stipulated in the legislation, the Company’s Articles of Association, and the Capital Markets Board’s Communiqué on Corporate Governance no. II-17.1, and in that regard; a) Within the last five years, no employment relationship has been established between me, my spouse and my relatives by blood or marriage up to second degree and the Company, the affiliated companies which the Company controls the management of or has material influence over, shareholders who control the management of or have material influence over the Company and legal entities which these shareholders control the management of, in an executive position with important duties and responsibilities, nor have I/we individually or jointly held more than 5% of the capital or voting rights or privileged shares in or established a material business relationship with the same, b) Within the last five years, I have not been a shareholder (5% and more), or held an executive position with significant duties and responsibilities, or served as a Board member in any company from or to which the Company purchases or sells a significant quantity of products or services based on the agreements made during the periods these products or services were sold or purchased including particularly those companies which provide auditing (including tax audit, legal audit and internal audit), rating and consultancy services to the Company, c) I have the professional education, knowledge and experience necessary to duly carry out the duties which I shall assume due to my position as an independent Board member, d) I will not be working as a full-time employee at any public institution or organization after being elected as a Board member with the exception of working as a faculty member at a university provided that this is in compliance with the relevant legislation, e) I am deemed to be a resident in Turkey according to the Income Tax Law dated 31 December 1960 and numbered 193, f) I have strong ethical standards, professional reputation and experience which will allow me to make positive contributions to the activities of the Company, to protect my neutrality in case of conflicts of interest between the Company and the shareholders and to decide independently by taking into consideration the rights of the stakeholders, g) I will be able to dedicate a sufficient amount of time to the affairs of the Company in a manner to follow up the conduct of the Company activities and to duly perform the duties I shall assume, h) I have not served as a Board member at the Company’s Board of Directors for more than 6 years within the last ten years, i) I am not serving as an independent board member at more than three companies whose management is controlled by the shareholders controlling the Company and Company management and at more than five companies which are traded on the stock exchange, j) I am not registered and declared on behalf of the legal entity which is elected as a board member.
Ayşegül İldeniz
Vestel Elektronik 2020 Annual Report 219 Corporate Governance
Statement of Independence by the Independent Board Member Candidates
11.02.2020 Statement of Independence I hereby declare that I am a candidate for assuming the role of an “Independent Member” on the Board of Directors of Vestel Elektronik Sanayi ve Ticaret AŞ within the scope of the criteria stipulated in the legislation, the Company’s Articles of Association, and the Capital Markets Board’s Communiqué on Corporate Governance no. II-17.1, and in that regard; a) Within the last five years, no employment relationship has been established between me, my spouse and my relatives by blood or marriage up to second degree and the Company, the affiliated companies which the Company controls the management of or has material influence over, shareholders who control the management of or have material influence over the Company and legal entities which these shareholders control the management of, in an executive position with important duties and responsibilities, nor have I/we individually or jointly held more than 5% of the capital or voting rights or privileged shares in or established a material business relationship with the same, b) Within the last five years, I have not been a shareholder (5% and more), or held an executive position with significant duties and responsibilities, or served as a Board member in any company from or to which the Company purchases or sells a significant quantity of products or services based on the agreements made during the periods these products or services were sold or purchased including particularly those companies which provide auditing (including tax audit, legal audit and internal audit), rating and consultancy services to the Company, c) I have the professional education, knowledge and experience necessary to duly carry out the duties which I shall assume due to my position as an independent Board member, d) I will not be working as a full-time employee at any public institution or organization after being elected as a Board member with the exception of working as a faculty member at a university provided that this is in compliance with the relevant legislation, e) I am deemed to be a resident in Turkey according to the Income Tax Law dated 31 December 1960 and numbered 193, f) I have strong ethical standards, professional reputation and experience which will allow me to make positive contributions to the activities of the Company, to protect my neutrality in case of conflicts of interest between the Company and the shareholders and to decide independently by taking into consideration the rights of the stakeholders, g) I will be able to dedicate a sufficient amount of time to the affairs of the Company in a manner to follow up the conduct of the Company activities and to duly perform the duties I shall assume, h) I have not served as a Board member at the Company’s Board of Directors for more than 6 years within the last ten years, i) I am not serving as an independent board member at more than three companies whose management is controlled by the shareholders controlling the Company and Company management and at more than five companies which are traded on the stock exchange, j) I am not registered and declared on behalf of the legal entity which is elected as a board member.
Elmas Melih Araz
220 Vestel Elektronik 2020 Annual Report Financial Information
Vestel Elektronik 2020 Annual Report 221 Financial Information Statement of Responsibility for the Annual Report
STATEMENT OF RESPONSIBILITY PURSUANT TO THE ARTICLE 9 OF THE CAPITAL MARKETS BOARD’S COMMUNIQUÉ ON THE PRINCIPLES OF FINANCIAL REPORTING IN CAPITAL MARKETS NO. II-14.1 BOARD OF DIRECTORS’ RESOLUTION ON THE APPROVAL OF THE ANNUAL REPORT RESOLUTION DATE: 11.03.2021 RESOLUTION NUMBER: 2021/10 We hereby declare that the Annual Report for the year 2020 prepared by our Company in accordance with the Turkish Commercial Code and the Capital Markets Board’s Communiqué on the “Principles of Financial Reporting in Capital Markets” No. II-14.1 (“Communiqué”) and audited by KPMG Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ • Has been reviewed by us in line with the Capital Markets Board regulations, • Based on the information we possess within the scope of our duties and responsibilities in the Company, the annual report does not contain any incorrect statement or any omission of material facts which may result in a misleading conclusion as of the date of issuance, • Based on the information we possess within the scope of our duties and responsibilities in the Company, the annual report prepared in accordance with the Communiqué presents fairly the progress and the performance of the business and the financial position of the Company and of those included in the scope of consolidation along with the material risks and uncertainties the Company is exposed to.
Chairman of the Audit Committee Member of the Audit Committee Elmas Melih Araz Bekir Ağırdır
Financial Affairs Coordinator Alp Dayı
222 Vestel Elektronik 2020 Annual Report Independent Auditor’s Report on the Board of Directors’ Annual Report
KPMG Bağımsız Denetim ve Tel +90 (232) 464 2045 Serbest Muhasebeci Mali Fax +90 (232) 464 2145 Müşavirlik A.Ş. www.kpmg.com.tr Adalet Mah. Manas Bulvarı, No: 39 Folkart Towers, B Kule, Kat: 35 Bayraklı 35530 İzmir
CONVENIENCE TRANSLATION INTO ENGLISH OF INDEPENDENT AUDITOR’S REPORT ON THE BOARD OF DIRECTORS’ ANNUAL REPORT ORIGINALLY ISSUED IN TURKISH To the Shareholders of Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Opinion We have audited the annual report of Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi (the “Company”) and its subsidiaries (together will be referred as “the Group”) for the period between 1 January 2020 and 31 December 2020, since we have audited the complete set consolidated financial statements for this period. In our opinion, the consolidated financial information included in the annual report and the analysis of the Board of Directors by using the information included in the audited financial statements regarding the position of the Group are consistent, in all material respects, with the audited complete set of consolidated financial statements and information obtained during the audit and provides a fair presentation. Basis for Opinion We conducted our audit in accordance with the standards on auditing issued by the Capital Markets Board of Turkey and Standards on Auditing which is a component of the Turkish Auditing Standards issued by the Public Oversight, Accounting and Auditing Standards Authority (“POA”) (“Standards on Auditing issued by POA”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Annual Report section of our report. We declare that we are independent of the Group in accordance with the Code of Ethics for Auditors issued by POA (POA’s Code of Ethics) and the ethical requirements in the regulations issued by POA that are relevant to audit of financial statements, and we have fulfilled our other ethical responsibilities in accordance with the POA’s Code of Ethics and regulations. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matter The annual report of the Group for the period between 1 January 2019 and 31 December 2019 was audited by another auditor who expressed an unmodified opinion on the annual report on 10 March 2020. Auditor’s Opinion on Complete Set of consolidated Financial Statements We have expressed an unqualified opinion on the complete set of consolidated financial statements of the Group for the period between 1 January 2020 and 31 December 2020 on 9 March 2021.
Vestel Elektronik 2020 Annual Report 223 Financial Information
Independent Auditor’s Report on the Board of Directors’ Annual Report
Board of Directors’ Responsibility for the Annual Report In accordance with the Articles 514 and 516 of the Turkish Commercial Code numbered 6102 (“TCC”) and Communiqué on the Principles of Financial Reporting In Capital Markets numbered II – 14.1 (the “Communiqué”), the Group’s management is responsible for the following regarding the annual report: a) The Group’s management prepares its annual report within the first three months following the date of statement of financial position and submits it to the general assembly. b) The Group’s management prepares its annual report in such a way that it reflects the operations of the year and the consolidated financial position of the Group accurately, completely, directly, true and fairly in all respects. In this report, the financial position is assessed in accordance with the Group’s consolidated financial statements. The annual report shall also clearly indicates the details about the Group’s development and risks that might be encountered. The assessment of the Board of Directors on these matters is included in the report. c) The annual report also includes the matters below: • Significant events occurred in the Group after the reporting period, • The Group’s research and development activities. • Financial benefits such as wages, premiums and bonuses paid to board members and key management personnel, appropriations, travel, accommodation and representation expenses, benefits in cash and kind, insurance and similar guarantees. When preparing the annual report, the Board of Directors also considers the secondary legislation arrangements issued by the Ministry of Trade and related institutions. Auditor’s Responsibility for the Audit of the Annual Report Our objective is to express an opinion on whether the consolidated financial information included in the annual report in accordance with the TCC and the Communiqué and analysis of the Board of Directors by using the information included in the audited financial statements regarding the position of the Group are consistent with the audited consolidated financial statements of the Group and the information obtained during the audit and give a true and fair view and form a report that includes this opinion . We conducted our audit in accordance with the standards on auditing issued by the Capital Markets Board of Turkey and Standards on Auditing issued by POA. These standards require compliance with ethical requirements and planning of audit to obtain reasonable assurance on whether the consolidated financial information included in the annual report and analysis of the Board of Directors by using the information included in the audited financial statements regarding the position of the Group are consistent with the consolidated financial statements and the information obtained during the audit and provides a fair presentation.
224 Vestel Elektronik 2020 Annual Report Statement of Responsibility for Financial Statements
STATEMENT OF RESPONSIBILITY PURSUANT TO THE ARTICLE 9 OF THE CAPITAL MARKETS BOARD’S COMMUNIQUÉ ON THE PRINCIPLES OF FINANCIAL REPORTING IN CAPITAL MARKETS NO. II-14.1 BOARD OF DIRECTORS’ RESOLUTION ON THE APPROVAL OF FINANCIAL STATEMENTS RESOLUTION DATE: 09.03.2021 RESOLUTION NUMBER: 2021/9 We hereby declare that the consolidated financial statements for the fiscal year 2020 prepared by our Company in accordance with the Turkish Accounting Standards/Turkish Financial Reporting Standards and the formats determined by the Capital Markets Board pursuant to the Capital Markets Board’s Communiqué on the “Principles of Financial Reporting in Capital Markets” No. II-14.1 (“Communiqué”) and audited by KPMG Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ • Have been reviewed by us in line with the Capital Markets Board regulations, • Based on the information we possess within the scope of our duties and responsibilities in the Company, the consolidated financial statements do not contain any incorrect statement or any omission of material facts which may result in a misleading conclusion as of the date of issuance, • Based on the information we possess within the scope of our duties and responsibilities in the Company, the consolidated financial statements prepared in accordance with the Communiqué present fairly the assets, liabilities, financial position and the results of operations of the Company together with the companies included in the scope of consolidation and we are responsible for the announcement made.
Chairman of the Audit Committee Member of the Audit Committee Elmas Melih Araz Bekir Ağırdır
Financial Affairs Coordinator Alp Dayı
Vestel Elektronik 2020 Annual Report 225 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Convenience Translation into English of Consolidated Financial Statements at 1 January - 31 December 2020 Together with Independent Auditor’s Report (Originally Issued in Turkish)
226 Vestel Elektronik 2020 Annual Report Independent Auditor’s Report
KPMG Bağımsız Denetim ve Tel +90 (232) 464 2045 Serbest Muhasebeci Mali Fax +90 (232) 464 2145 Müşavirlik A.Ş. www.kpmg.com.tr Adalet Mah. Manas Bulvarı, No: 39 Folkart Towers, B Kule, Kat: 35 Bayraklı 35530 İzmir
CONVENIENCE TRANSLATION OF THE INDEPENDENT AUDITOR’S REPORT ORIGINALLY PREPARED AND ISSUED IN TURKISH TO ENGLISH To the Shareholders of Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi A) Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi (“the Company”)and its subsidiaries (together will be referred to as “the Group”), which comprise the consolidated statement of financial position as at 31 December 2020, the consolidated statements of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Turkish Financial Reporting Standards (“TFRS”). Basis for Opinion We conducted our audit in accordance with standards on auditing issued by Capital Markets Board of Turkey (“CMB”) and Standards on Auditing which is a component of the Turkish Auditing Standards published by the Public Oversight Accounting and Auditing Standards Authority (“POA”) (“Standards on Auditing issued by POA”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We declare that we are independent of the Group in accordance with the Code of Ethics for Auditors issued by POA (“POA’s Code of Ethics”) and the ethical requirements in the regulations issued by POA that are relevant to audit of consolidated financial statements, and we have fulfilled our other ethical responsibilities in accordance with the POA’s Code of Ethics and regulations. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recoverability of Trade Receivables from Third Parties Refer to Note 2 and Note 9 to the consolidated financial statements for summary of significant accounting policies and significant accounting estimates and assumptions for recoverability of trade receivables from third parties.
Vestel Elektronik 2020 Annual Report 227 Financial Information
Independent Auditor’s Report
The key audit matter How the matter was addressed in our audit Trade receivables from third parties, amounting to TL Audit procedures that are applied in this matter involves 5.445.356 thousands as of 31 December 2020, constitute a below: significant portion of the consolidated financial statements • The evaluation and assessment of the Group’s credit risk of the Group. management and policies to monitor receivables credit The assessment of the recoverability of these receivables limits, made by the Group management includes considerations • Testing of trade receivable balances from third parties by of the amount of guarantees/collateral received from the sending confirmation letters on a sample basis, customers, past collection performance, analysis of aging of receivables and litigations or disputes regarding receivables. • Testing the selected invoices for the aging analysis of As a result of all of these assessments, determination of receivables from third parties on a sample basis, doubtful receivables and setting of impairment provision • Investigating whether there is any dispute or litigation for these receivables include also management judgements related to the collection of trade receivables from third and estimations. parties and obtaining formal assessment of legal counsels Therefore, we have determined recoverability of trade on outstanding litigations and disputes. receivables to be a key audit matter. • Testing received collections after the reporting period on a sampling basis, • Assessment of the appropriateness and adequacy of the disclosures in the notes to the consolidated financial statements related to recoverability of trade receivables from third parties in accordance with the related financial reporting standards.
Fair Value Measurement of Tangible Assets Refer to Note 2 and Note 14 to the consolidated financial statements for summary of significant accounting policies and significant accounting estimates and assumptions for fair value measurement of tangible assets.
228 Vestel Elektronik 2020 Annual Report The key audit matter How the matter was addressed in our audit The Group has applied the accounting policy to measure Audit procedures that are applied in this matter involves its land, buildings and land improvements at fair value in below: its consolidated financial statements in accordance with • The evaluation of the competence, capabilities and TAS 16, “Property, Plant and Equipment”. As a result of objectivity of the independent professional valuation the revaluation in 2020, the Group recognized TL 1.389.947 experts to determine the fair value of tangible assets, thousand fair value increase on tangible assets. • Testing the depreciation amounts of revaluated tangible Fair values of the Group’s revaluated tangible assets are assets by recalculation, determined by professional independent valuation expert authorized by the CMB. • Evaluating the valuation methods and inputs used for fair value measurement of tangible assets with the Fair value measurement of tangible assets is determined as participation of our valuation experts, a key audit matter, since the amount of fair value increase recognized in the consolidated financial statements as of • Evaluating the appropriateness of key estimates and 31 December 2020 is material to the consolidated financial inputs used in valuation methods, including comparison statements of the Group and the inputs and calculations used of current precedent values in the market and preceding in valuation methods are complex and includes significant values with the participation of our valuation experts, estimates and judgements. • Assessment of the appropriateness and adequacy of the consolidated financial statement disclosures, including the explanations of the key estimates and assumptions regarding the fair value measurement of tangible assets, in accordance with TFRS.
Impairment of Investments Accounted for Using the Equity Method Refer to Note 2 and Note 13 to the consolidated financial statements for summary of significant accounting policies and significant accounting estimates and assumptions for impairment of investments accounted for using the equity method.
Vestel Elektronik 2020 Annual Report 229 Financial Information
Independent Auditor’s Report
The key audit matter How the matter was addressed in our audit As of 31 December 2020, the carrying value of Group’s Audit procedures that are applied in this matter involves below: equity accounted investee, Meta Nikel Kobalt Madencilik • The evaluation and assessment of the approval mechanisms Sanayi ve Ticaret A.Ş. (“Meta”), amounted to TL808.203 for the impairment test and controls developed by the Group, thousands. • Evaluation of the appropriateness of the approach used in cash In accordance with Turkish Accounting Standard 36 flow projections in accordance with TAS 36 “Impairment of (“TAS 36”), Impairment of Assets, the Group shall Assets” standard, assess at the end of each reporting period whether • Evaluation of the significant estimates and assumptions used in there is any indicator that assets may be impaired and projections taking into account of below issues by considering perform impairment test accordingly. inquiries with Group management, analysis, future plans and Impairment test is carried out by evaluating cash flow explanations of Group management in light of macroeconomic projections prepared according to business models data with the involvement of internal and external experts , based on significant management estimates and • Evaluating the significant estimates and assumptions such assumptions for future periods. as valuation technique used by the Group management, the mathematical accuracy of the discounted cash flow model and The impairment testing of Meta is considered to be the discount rate used in the cash flows together with internal a key audit matter since the carrying value of Meta specialist and checking the calculation of this discount rate,, is material in the assets of the Group and due to the significant management estimates and assumptions • Comparing the Group management’s estimates about future sensitive to market and operational conditions such as metal prices with those of the forecasts in analysis reports discount rate, metal prices, mineral resource amount, published by independent institutions and similar products, facility capacity and efficiency in cash flows used in the • Evaluation of the competence, adequacy and independence of projection. the independent expert appointed by the Group management for determination of mine resource, • Comparison of the amount of economically feasible mineral resources at the facility with the amount determined in the resource report issued by the independent expert appointed by the Group management, evaluation of the estimates used in the model such as facility production capacity and efficiency and production costs with the involvement of external experts by taking into account the investment budgets of the Group management, • Evaluation of tax advantages originating from investment incentive documents related with the completed investments to the applicable tax regulations by involving tax specialists, • Assessment of the appropriateness and adequacy of the disclosures in the notes to the consolidated financial statements related to impairment of investments accounted for using the equity method in accordance with the related financial reporting standards.
230 Vestel Elektronik 2020 Annual Report Other Matter The consolidated financial statements of the Group for the year ended 31 December 2019 were audited by another auditor who expressed an unmodified opinion on those consolidated financial statements on 3 March 2020. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with TFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Responsibilities of auditors in an audit are as follows: Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with standards on auditing issued by the CMB and Standards on Auditing issued by POA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the standards on auditing issued by the CMB and Standards on Auditing issued by POA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: · Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Vestel Elektronik 2020 Annual Report 231 Financial Information
Independent Auditor’s Report
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. B) Other Legal and Regulatory Requirements 1) Pursuant to the fourth paragraph of Article 398 of Turkish Commercial Code (“TCC”) numbered 6102; the Independent Auditor’s Report on System and Committee of Early Identification of Risks is presented to the Board of Directors of the Company on 9 March 2021. 2) Pursuant to the fourth paragraph of Article 402 of the TCC; no significant matter has come to our attention that causes us to believe that for the period between 1 January 2020 and 31 December 2020, the Company’s bookkeeping activities and consolidated financial statements are not in compliance with TCC and provisions of the Company’s articles of association in relation to financial reporting. 3) Pursuant to the fourth paragraph of Article 402 of the TCC; the Board of Directors provided us the necessary explanations and required documents except annual report in connection with the audit.
232 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020
Contents
PAGE CONSOLIDATED STATEMENT OF FINANCIAL POSITION 234 CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 239 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 240 CONSOLIDATED STATEMENTS OF CASH FLOWS 242 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2020 NOTE 1 GROUP’S ORGANISATION AND NATURE OF OPERATIONS 245 NOTE 2 BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS 246 NOTE 3 INTERESTS IN OTHER ENTITIES 262 NOTE 4 SEGMENT REPORTING 263 NOTE 5 CASH AND CASH EQUIVALENTS 265 NOTE 6 FINANCIAL ASSETS 266 NOTE 7 FINANCIAL LIABILITIES 266 NOTE 8 RELATED PARTY DISCLOSURES 268 NOTE 9 TRADE RECEIVABLES AND PAYABLES 271 NOTE 10 OTHER RECEIVABLES 272 NOTE 11 INVENTORIES 273 NOTE 12 PREPAID EXPENSES 273 NOTE 13 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD 274 NOTE 14 PROPERTY, PLANT AND EQUIPMENT 276 NOTE 15 RIGHT OF USE ASSETS 279 NOTE 16 INTANGIBLE ASSETS 280 NOTE 17 GOODWILL 281 NOTE 18 GOVERNMENT GRANTS 281 NOTE 19 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES 282 NOTE 20 COMMITMENTS 284 NOTE 21 EMPLOYEE BENEFITS 284 NOTE 22 OTHER ASSETS AND LIABILITIES 285 NOTE 23 CAPITAL, RESERVES AND OTHER EQUITY ITEMS 285 NOTE 24 SALES 287 NOTE 25 EXPENSES BY NATURE 288 NOTE 26 GENERAL ADMINISTRATIVE EXPENSES, MARKETING EXPENSES, RESEARCH AND DEVELOPMENT EXPENSES 288 NOTE 27 OTHER INCOME AND EXPENSE FROM OPERATING ACTIVITIES 289 NOTE 28 FINANCIAL INCOME AND FINANCIAL EXPENSE 289 NOTE 29 ANALYSIS OF OTHER COMPREHENSIVE INCOME ITEMS 290 NOTE 30 TAXES ON INCOME (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) 291 NOTE 31 EARNINGS/(LOSS) PER SHARE 294 NOTE 32 DERIVATIVE INSTRUMENTS 294 NOTE 33 FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT 295 NOTE 34 FINANCIAL INSTRUMENTS (FAIR VALUE AND HEDGE ACCOUNTING DISCLOSURES) 302 NOTE 35 SUBSEQUENT EVENTS 304 NOTE 36 NOTES ON STATEMENT OF CASH FLOWS 304 NOTE 37 NOTES ON STATEMENT OF CHANGES IN EQUITY 304
Vestel Elektronik 2020 Annual Report 233 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statement of Financial Position as of 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Audited Audited Footnotes 31 December 2020 31 December 2019
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 5 3.201.571 2.394.334 Trade Receivables 5.412.504 3.372.832 Trade Receivables Due from Related Parties 8 15.473 55.810 Trade Receivables Due from Third Parties 9 5.397.031 3.317.022 Other Receivables 637.914 800.384 Other Receivables Due from Related Parties 8 278.551 550.383 Other Receivables Due from Third Parties 10 359.363 250.001 Derivative Financial Assets 111.789 45.487 Derivative Financial Assets Held for Trading 32 105.345 42.291 Derivative Financial Assets Held for Hedging 32 6.444 3.196 Inventories 11 4.061.469 2.833.115 Prepayments 230.086 89.674 Prepayments to Third Parties 12 230.086 89.674 Current Tax Assets 30 2.197 7.259 Other Current Assets 119.997 65.496 Other Current Assets Due from Third Parties 22 119.997 65.496
TOTAL CURRENT ASSETS 13.777.527 9.608.581
The accompanying notes are an integral part of these consolidated financial statements.
234 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statement of Financial Position as of 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Audited Audited Footnotes 31 December 2020 31 December 2019
NON-CURRENT ASSETS
Financial Investments 6 79.502 69.941 Investments in subsidiaries. joint ventures and associates 13 923.330 974.192 Trade Receivables 2.307 67.595 Trade Receivables Due From Related Parties 8 768 768 Trade Receivables Due from Third Parties 9 1.539 66.827 Other Receivables 5.968.570 3.986.552 Other Receivables Due from Related Parties 8 5.961.187 3.981.045 Other Receivables Due from Third Parties 10 7.383 5.507 Property. Plant and Equipments 4.815.797 3.452.328 Land 14 1.145.890 635.564 Land Improvement 14 135.762 125.506 Building 14 2.113.319 1.428.183 Machinery and Equipment 14 1.284.840 1.115.091 Vehicle 14 1.074 2.705 Fixtures and Fittings 14 88.842 78.708 Leasehold Improvement 14 8.006 12.276 Construction in Progress 14 38.064 54.295 Right of Use Assets 15 199.761 163.776 Intangible Assets and Goodwill 907.508 815.521 Goodwill 17 196.568 197.793 Other Rights 16 29.044 15.779 Capitalized Development Costs 16 609.948 528.242 Other Intangible Assets 16 71.948 73.707 Prepayments 73.380 73.496 Prepayments to Third Parties 12 73.380 73.496 Deferred Tax Asset 30 321.146 230.498 Other Non-current Assets 22 9.590 9.925
TOTAL NON-CURRENT ASSETS 13.300.891 9.843.824
TOTAL ASSETS 27.078.418 19.452.405
The accompanying notes are an integral part of these consolidated financial statements.
Vestel Elektronik 2020 Annual Report 235 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statement of Financial Position as of 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Audited Audited Footnotes 31 December 2020 31 December 2019
LIABILITIES
CURRENT LIABILITIES
Short Term Borrowings 7 3.047.824 5.830.835 Short Term Borrowings from Related Parties 12.644 7.368 Lease Liabilities 8 12.644 7.368 Short Term Borrowings from Third Parties 3.035.180 5.823.467 Bank Loans 7 2.887.146 5.766.814 Lease Liabilities 7 94.589 56.653 Issued debt instruments 7 53.445 - Current Portion of Long Term Borrowings 7 3.933.163 1.411.361 Current Portion of Long Term Borrowings from Third Parties 3.933.163 1.411.361 Bank Loans 7 3.933.163 1.411.361 Trade Payables 8.060.078 6.127.709 Trade Payables to Related Parties 8 29.601 7.830 Trade Payables to Third Parties 9 8.030.477 6.119.879 Employee Benefit Obligations 21 245.568 200.055 Other Payables 71.923 56.799 Other Payables to Related Parties 8 69.442 56.195 Other Payables to Third Parties 2.481 604 Derivative Financial Liabilities 32 303.178 52.592 Derivative Financial Liabilities Held for Trading 135.768 42.532 Derivative Financial Liabilities Held for Hedging 167.410 10.060 Current Tax Liabilities 30 10.554 - Current Provisions 19 745.810 582.081 Other Current Provisions 745.810 582.081 Other Current Liabilities 22 706.190 391.043 Other Current Liabilities to Third Parties 706.190 391.043
TOTAL CURRENT LIABILITIES 17.124.288 14.652.475
The accompanying notes are an integral part of these consolidated financial statements.
236 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statement of Financial Position as of 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Audited Audited Footnotes 31 December 2020 31 December 2019
NON-CURRENT LIABILITIES
Long Term Borrowings 7 1.833.675 568.081 Long Term Borrowings from Related Parties 20.333 15.759 Lease Liabilities 8 20.333 15.759 Long Term Borrowings from Third Parties 1.813.342 552.322 Bank Loans 7 1.657.777 456.424 Lease Liabilities 7 105.185 95.898 Issued debt instruments 7 50.380 - Trade Payables 61.787 6.747 Trade Payables to Third Parties 9 61.787 6.747 Non-current Provisions 298.808 201.953 Non-current Provisions for Employee Benefits 21 226.307 156.116 Other Non-current Provisions 19 72.501 45.837 Deferred Tax Liabilities 30 333.362 233.589 Other Non-current Liabilities 964 9.649 Other Non-current Liabilities to Third Parties 964 9.649
TOTAL NON-CURRENT LIABILITIES 2.528.596 1.020.019
TOTAL LIABILITIES 19.652.884 15.672.494
The accompanying notes are an integral part of these consolidated financial statements.
Vestel Elektronik 2020 Annual Report 237 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statement of Financial Position as of 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Audited Audited Footnotes 31 December 2020 31 December 2019
EQUITY
Equity Attributable to Owners of Parent 7.071.747 3.690.656 Issued Capital 23 335.456 335.456 Inflation Adjustments on Capital 688.315 688.315 Share Premium (Discount) 98.019 103.776 Other Accumulated Comprehensive Income (Loss) that will not be Reclassified in Profit or Loss 2.449.676 1.275.275 Gains (Losses) on Revaluation and Remeasurement 2.449.676 1.275.275 Increases (Decreases) on Revaluation of Property. Plant and Equipment 29 2.514.867 1.310.274 Gains (Losses) on Remeasurements of Defined Benefit Plans 29 (65.191) (34.999) Other Accumulated Comprehensive Income (Loss) that will be Reclassified in Profit or Loss 580.551 406.591 Exchange Differences on Translation 612.892 406.932 Gains (Losses) on Hedge 29 (43.776) (4.662) Gains (Losses) on Cash Flow Hedges (43.776) (4.662) Gains (Losses) on Revaluation and Reclassification 11.435 4.321 Gains (Losses) on Remeasuring Financial Assets Measured of Fair Value through Other Compressive Income 23 11.435 4.321 Restricted Reserves Appropriated from Profits 67.091 67.179 Legal Reserves 23 67.091 67.179 Prior Years’ Profits or Losses 23 1.080.040 490.017 Current Period Net Profit Or Loss 1.772.599 324.047
Non-controlling Interests 353.787 89.255
TOTAL EQUITY 7.425.534 3.779.911
TOTAL LIABILITIES AND EQUITY 27.078.418 19.452.405
Consolidated financial statements for the period 1 January - 31 December 2020, were approved by the Board of Directors of Vestel Elektronik Sanayi ve Ticaret A.Ş. on 9 March 2021. General Assembly and specified regulatory bodies have the right to make amendments to statutory financial statements after issue.
The accompanying notes are an integral part of these consolidated financial statements.
238 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statements of Profit or Loss and Other Comprehensive Income for the Periods 1 January - 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Audited Audited 1 January - 1 January - Footnotes 31 December 2020 31 December 2019
PROFIT OR LOSS
Revenue 24 21.546.180 17.174.123 Cost of Sales 24 (15.527.830) (12.896.358)
GROSS PROFIT 6.018.350 4.277.765
General Administrative Expenses 26 (505.628) (401.822) Marketing Expenses 26 (2.328.754) (1.905.221) Research and Development Expense 26 (335.131) (261.830) Other Income from Operating Activities 27 1.565.719 1.197.610 Other Expenses from Operating Activities 27 (2.468.334) (1.631.561)
PROFIT FROM OPERATING ACTIVITIES 1.946.222 1.274.941 Share of Profit (Loss) from Investments Accounted for Using Equity Method 13 (224.902) (234.719)
PROFIT BEFORE FINANCING INCOME 1.721.320 1.040.222
Finance Income 28 3.309.067 2.282.672 Finance Costs 28 (3.091.106) (3.008.981)
PROFIT FROM CONTINUING OPERATIONS. BEFORE TAX 1.939.281 313.913
Tax (Expense) Income. Continuing Operations (32.044) 37.937 Current Period Tax (Expense) Income 30 (51.208) (14.782) Deferred Tax (Expense) Income 30 19.164 52.719
PROFIT FROM CONTINUING OPERATIONS 1.907.237 351.850
PROFIT 1.907.237 351.850
Profit (loss). attributable to Non-controlling Interests 134.638 27.803 Owners of Parent 1.772.599 324.047
Earnings per 100 share with a Kr 1 of Par Value (TL) 31 5,28 0,97
OTHER COMPREHENSIVE INCOME
Other Comprehensive Income that will not be Reclassified to Profit or Loss 1.271.401 (15.440) Gains (Losses) on Revaluation of Property. Plant and Equipment 1.389.947 - Gains (Losses) on Remeasurements of Defined Benefit Plans (40.449) (19.300) Taxes Relating to Components of Other Comprehensive Income that will not be Reclassified to Profit or Loss (78.097) 3.860 Taxes Relating to Gains (Losses) on Revaluation of Property. Plant and Equipment (86.187) - Taxes Relating to Remeasurements of Defined Benefit Plans 8.090 3.860 Other Comprehensive Income that will be Reclassified to Profit or Loss 173.855 152.591 Exchange Differences on Translation 205.960 144.346 Gains (Losses) on Remeasuring Financial Assets Measured of Fair Value through Other Compressive Income 8.761 3.020 Other Comprehensive Income (Loss) Related with Cash Flow Hedges (48.893) 7.550 Gains (Losses) on Cash Flow Hedges (48.893) 7.550 Taxes Relating to Components of Other Comprehensive Income that will be Reclassified to Profit or Loss 8.027 (2.325) Taxes Relating to Financial Assets Measured of Fair Value through Other Compressive Income (1.752) (664) Taxes Relating to Cash Flow Hedges 9.779 (1.661)
OTHER COMPREHENSIVE INCOME (LOSS) 1.445.256 137.151
TOTAL COMPREHENSIVE INCOME (LOSS) 3.352.493 489.001
Total Comprehensive Income Attributable to Non-controlling Interests 90.266 27.485 Owners of Parent 3.262.227 461.516
The accompanying notes are an integral part of these consolidated financial statements.
Vestel Elektronik 2020 Annual Report 239 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statements of Changes in Shareholders’ Equity For the Periods 1 January - 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Gains (Losses) on Remeasur- ing and/or Other Reclassi- Accumulated fication of Increases Gains Compre- Financial Other (Decreases) (Losses) on Gains hensive Reserve Assets Accumulated Inflation on Remeasure- (Losses) Income That Exchange Of Gains Measured of Gains Comprehensive Equity Adjust- Share Revaluation ments of Reval- Will Not Be Differen- or Fair Value (Losses) on Income Restricted Prior attribut- Non- ments Premium of Property. Defined uations and Reclassified ces on Cash Losses through Other Revaluation That Will Be Reserves Years’ able to controll- Issued on or Plant and Benefit Remeasure- In Profit Or Tran- Flow on Compressive and Reclass- Reclassified In Appropriated Profits or Net Profit Retained owners of ing Capital Capital Discounts Equipment Plans ments Loss slation Hedges Hedge Income ification Profit Or Loss From Profits Losses or Loss Earnings parent interests Equity Previous Period 1 January -31 December 2019 Beginning of Period 335.456 688.315 103.776 1.338.777 (19.907) 1.318.870 1.318.870 262.586 (10.521) (10.521) 1.965 1.965 254.030 48.909 108.631 371.153 479.784 3.229.140 89.115 3.318.255 Transfers ------18.270 352.883 (371.153) (18.270) - - - Total Comprehensive Income (Loss) - - - (28.503) (15.092) (43.595) (43.595) 144.346 5.859 5.859 2.356 2.356 152.561 - 28.503 324.047 352.550 461.516 27.485 489.001 Profit (Loss) - - - (28.503) - (28.503) (28.503) ------28.503 324.047 352.550 324.047 27.803 351.850 Other Comprehensive Income (Loss) - - - - (15.092) (15.092) (15.092) 144.346 5.859 5.859 2.356 2.356 152.561 - - - - 137.469 (318) 137.151 Dividends Paid(8) ------(27.345) (27.345) End of Period 335.456 688.315 103.776 1.310.274 (34.999) 1.275.275 1.275.275 406.932 (4.662) (4.662) 4.321 4.321 406.591 67.179 490.017 324.047 814.064 3.690.656 89.255 3.779.911
Current Period 1 January -31 December 2020 Opening Balance 335.456 688.315 103.776 1.310.274 (34.999) 1.275.275 1.275.275 406.932 (4.662) (4.662) 4.321 4.321 406.591 67.179 490.017 324.047 814.064 3.690.656 89.255 3.779.911 Transfers - - - (37.466) - (37.466) (37.466) ------(88) 361.601 (324.047) 37.554 - - - Total Comprehensive Income (Loss) - - - 1.303.760 (32.359) 1.271.401 1.271.401 205.960 (39.114) (39.114) 7.009 7.009 173.855 - - 1.772.599 1.772.599 3.217.855 90.266 3.308.121 Profit (Loss) ------1.772.599 1.772.599 1.772.599 134.638 1.907.237 Other Comprehensive Income (Loss) - - - 1.303.760 (32.359) 1.271.401 1.271.401 205.960 (39.114) (39.114) 7.009 7.009 173.855 - - - - 1.445.256 (44.372) 1.400.884 Dividends Paid ------(9.601) (9.601) Transactions with noncontrolling interests - - (5.757) (61.701) 2.167 (59.534) (59.534) - - - 105 105 105 - 228.422 - 228.422 163.236 183.867 347.103 Closing Balance 335.456 688.315 98.019 2.514.867 (65.191) 2.449.676 2.449.676 612.892 (43.776) (43.776) 11.435 11.435 580.551 67.091 1.080.040 1.772.599 2.852.639 7.071.747 353.787 7.425.534
The accompanying notes are an integral part of these consolidated financial statements.
240 Vestel Elektronik 2020 Annual Report
Gains (Losses) on Remeasur- ing and/or Other Reclassi- Accumulated fication of Increases Gains Compre- Financial Other (Decreases) (Losses) on Gains hensive Reserve Assets Accumulated Inflation on Remeasure- (Losses) Income That Exchange Of Gains Measured of Gains Comprehensive Equity Adjust- Share Revaluation ments of Reval- Will Not Be Differen- or Fair Value (Losses) on Income Restricted Prior attribut- Non- ments Premium of Property. Defined uations and Reclassified ces on Cash Losses through Other Revaluation That Will Be Reserves Years’ able to controll- Issued on or Plant and Benefit Remeasure- In Profit Or Tran- Flow on Compressive and Reclass- Reclassified In Appropriated Profits or Net Profit Retained owners of ing Capital Capital Discounts Equipment Plans ments Loss slation Hedges Hedge Income ification Profit Or Loss From Profits Losses or Loss Earnings parent interests Equity Previous Period 1 January -31 December 2019 Beginning of Period 335.456 688.315 103.776 1.338.777 (19.907) 1.318.870 1.318.870 262.586 (10.521) (10.521) 1.965 1.965 254.030 48.909 108.631 371.153 479.784 3.229.140 89.115 3.318.255 Transfers ------18.270 352.883 (371.153) (18.270) - - - Total Comprehensive Income (Loss) - - - (28.503) (15.092) (43.595) (43.595) 144.346 5.859 5.859 2.356 2.356 152.561 - 28.503 324.047 352.550 461.516 27.485 489.001 Profit (Loss) - - - (28.503) - (28.503) (28.503) ------28.503 324.047 352.550 324.047 27.803 351.850 Other Comprehensive Income (Loss) - - - - (15.092) (15.092) (15.092) 144.346 5.859 5.859 2.356 2.356 152.561 - - - - 137.469 (318) 137.151 Dividends Paid(8) ------(27.345) (27.345) End of Period 335.456 688.315 103.776 1.310.274 (34.999) 1.275.275 1.275.275 406.932 (4.662) (4.662) 4.321 4.321 406.591 67.179 490.017 324.047 814.064 3.690.656 89.255 3.779.911
Current Period 1 January -31 December 2020 Opening Balance 335.456 688.315 103.776 1.310.274 (34.999) 1.275.275 1.275.275 406.932 (4.662) (4.662) 4.321 4.321 406.591 67.179 490.017 324.047 814.064 3.690.656 89.255 3.779.911 Transfers - - - (37.466) - (37.466) (37.466) ------(88) 361.601 (324.047) 37.554 - - - Total Comprehensive Income (Loss) - - - 1.303.760 (32.359) 1.271.401 1.271.401 205.960 (39.114) (39.114) 7.009 7.009 173.855 - - 1.772.599 1.772.599 3.217.855 90.266 3.308.121 Profit (Loss) ------1.772.599 1.772.599 1.772.599 134.638 1.907.237 Other Comprehensive Income (Loss) - - - 1.303.760 (32.359) 1.271.401 1.271.401 205.960 (39.114) (39.114) 7.009 7.009 173.855 - - - - 1.445.256 (44.372) 1.400.884 Dividends Paid ------(9.601) (9.601) Transactions with noncontrolling interests - - (5.757) (61.701) 2.167 (59.534) (59.534) - - - 105 105 105 - 228.422 - 228.422 163.236 183.867 347.103 Closing Balance 335.456 688.315 98.019 2.514.867 (65.191) 2.449.676 2.449.676 612.892 (43.776) (43.776) 11.435 11.435 580.551 67.091 1.080.040 1.772.599 2.852.639 7.071.747 353.787 7.425.534
Vestel Elektronik 2020 Annual Report 241 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statements of Cash Flows For the Periods 1 January - 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
Audited Audited 1 January - 1 January - Footnotes 31 December 2020 31 December 2019
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES 2.261.556 3.104.493 Profit 1.907.237 351.850 Profit (Loss) from Continuing Operations 1.907.237 351.850 Adjustments to Reconcile Profit 1.607.653 2.276.037 Adjustments for Depreciation and Amortisation Expense 14. 15. 16 753.032 626.954 Adjustments for Impairment Loss (Reversal of Impairment Loss) 24.398 68.217 Adjustments for Impairement Loss (Reversal of Impairment Loss) of Receivables 9 33.473 46.752 Adjustments for Impairment Loss (Reversal of Impairment Loss) of Inventories 11 (9.075) 21.465 Adjustments for Provisions 239.332 61.441 Adjustments for (Reversal of) Provisions Related with Employee Benefits 21 48.939 42.010 Adjustments for (Reversal of) Lawsuit and/or Penalty Provisions 19 4.286 (21.121) Adjustments for (Reversal of) Warranty Provisions 19 78.894 11.594 Adjustments for (Reversal of) Other Provisions 19 107.213 28.958 Adjustments for Interest (Income) Expenses 353.416 611.741 Adjustments for Interest Income 28 (543.927) (534.325) Adjustments for Interest Expense 28 897.343 1.146.066 Adjustments for Unrealised Foreign Exchange Losses (Gains) (180.498) 173.969 Adjustments for Fair Value Losses (Gains) 135.391 (150.890) Adjustments for Fair Value (Gains) Losses on Derivative Financial Instruments 135.391 (150.890) Adjustments for Losses From Investments Accounted for Using Equity Method 224.902 234.719 Adjustments for Tax (Income) Expenses 30 32.044 (37.937) Adjustments for Losses (Gains) on Disposal of Non-Current Assets (56.783) (7.582) Adjustments for Losses (Gains) Arised from Sale of Tangible Assets (56.783) (7.582) Other Adjustments to Reconcile Profit (Loss) 5 82.419 695.405
The accompanying notes are an integral part of these consolidated financial statements.
242 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statements of Cash Flows For the Periods 1 January - 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
1 January - 1 January - Footnotes 31 December 2020 31 December 2019
Changes in Working Capital (1.206.687) 504.259 Decrease (Increase) in Financial Investments 6 (9.561) (3.020) Adjustments for Decrease (Increase) in Trade Accounts Receivable (2.007.857) 101.941 Decrease (Increase) in Trade Accounts Receivables from Related Parties 40.337 (1.213) Decrease (Increase) in Trade Accounts Receivables from Third Parties (2.048.194) 103.154 Adjustments for Decrease (Increase) in Other Receivables Related with Operations (111.238) 9.639 Decrease (Increase) in Other Third Party Receivables Related with Operations 10 (111.238) 9.639 Adjustments for Decrease (Increase) in Inventories (1.229.892) 3.556 Decrease (Increase) in Prepaid Expenses 12 (140.296) (15.347) Adjustments for Increase (Decrease) in Trade Accounts Payable 1.987.409 327.248 Increase (Decrease) in Trade Accounts Payables to Related Parties 21.771 3.466 Increase (Decrease) in Trade Accounts Payables to Third Parties 1.965.638 323.782 Increase (Decrease) in Employee Benefit Liabilities 21 45.513 95.039 Adjustments for Increase (Decrease) in Other Operating Payables 1.877 (355) Increase (Decrease) in Other Operating Payables to Third Parties 1.877 (355) Other Adjustments for Other Increase (Decrease) in Working Capital 257.358 (14.442) Decrease (Increase) in Other Assets Related with Operations (49.104) (30.574) Increase (Decrease) in Other Payables Related with Operations 306.462 16.132 Cash Flows from (used in) Operations 2.308.203 3.132.146 Payments Related with Provisions for Employee Benefits 21 (19.197) (16.294) Income Taxes Refund (Paid) 30 (27.450) (11.359)
The accompanying notes are an integral part of these consolidated financial statements.
Vestel Elektronik 2020 Annual Report 243 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Consolidated Statements of Cash Flows For the Periods 1 January - 31 December 2020 and 2019 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
1 January - 1 January - Footnotes 31 December 2020 31 December 2019
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES (2.170.053) (2.702.582) Proceeds from sales of Shares Without Change in Control of Subsidiaries or Other Businesses 279.926 - Cash Outflows Arising from Purchase of Shares or Capital Increase of Associates and/or Joint Ventures (95.116) (17.840) Proceeds from Sales of Property. Plant. Equipment and Intangible Assets 280.603 13.826 Proceeds from Sales of Property. Plant and Equipment 280.603 13.826 Purchase of Property. Plant. Equipment and Intangible Assets (927.156) (685.446) Purchase of Property. Plant and Equipment 14 (654.366) (481.422) Purchase of Intangible Assets 16 (272.790) (204.024) Cash Advances and Loans Made to Other Parties (1.708.310) (2.013.122) Cash Advances and Loans Made to Related Parties 8 (1.708.310) (2.013.122) CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES 493.333 (389.963) Proceeds from Borrowings 10.986.459 6.674.923 Proceeds from Loans 7 10.886.459 6.674.923 Proceeds from Issued Debt Instruments 7 100.000 - Repayments of Borrowings (10.042.972) (6.313.561) Loan Repayments 7 (10.042.972) (6.313.561) Increase in Other Payables to Related Parties 13.247 6.426 Payments of Lease Liabilities (116.773) (85.948) Dividends Paid 8 (9.601) (27.345) Interest Paid (880.954) (1.178.783) Interest Received 543.927 534.325 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS BEFORE EFFECT OF EXCHANGE RATE CHANGES 584.836 11.948 Effect of Exchange Rate Changes on Cash and Cash Equivalents 7 304.820 (7.870) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 889.656 4.078 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 5 2.283.040 2.278.962 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 5 3.172.696 2.283.040
The accompanying notes are an integral part of these consolidated financial statements.
244 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 1 - GROUP’S ORGANISATION AND NATURE OF OPERATIONS Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi (“Vestel Elektronik” or “the Company”) and its subsidiaries (together “the Group”), mainly produce and sell a range of brown goods and white goods. The Company’s head office is located at Levent 199, Büyükdere Caddesi No: 199, 34394 Şişli/Istanbul. The Group’s production facilities are located in Manisa Organized Industrial Zone, İzmir Aegean Free Zone, and Russia. The ultimate controller of the Company is Zorlu Family. Vestel Elektronik is registered to Capital Market Board (“CMB”) and its shares have been quoted to Borsa Istanbul (“BİST”) since 1990. As of 31 December 2020, 35,59 % of the Group’s shares are publicly traded (2019: 35,59%). As of 31 December 2020 the number of personnel employed at Group is 18.864 (31 December 2019: 16.775). The Company’s subsidiaries and associates are as follows: Subsidiaries Country Nature of operations
Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. Turkey Production Vestel Komünikasyon Sanayi ve Ticaret A.Ş. Turkey Sales Vestel Ticaret A.Ş. Turkey Sales Vestel CIS Ltd. Russia Sales Vestel Electronica SRL Romania Sales Vestel Iberia SL Spain Sales Vestel France SA France Sales Vestel Holland BV ** Holland Sales Vestel Germany GmbH Germany Sales Cabot Communications Ltd. UK Software Vestel UK Ltd. UK Sales Vestek Elektronik Araştırma Geliştirme A.Ş. Turkey Software Vestel Trade Ltd. Russia Sales Vestel Electronics Shanghai Trading Co. Ltd China Service OY Vestel Scandinavia AB Finland Sales Intertechnika LLC Russia Service Vestel Central Asia LLP Kazakhstan Sales Vestel Ventures Ar-ge A.Ş. Turkey Service Vestel Poland sp. z.o.o. Poland Sales Vestel Polska Technology Center sp. z o.o. Poland Sales Vestel Electronics Gulf DMC UAE Sales Vest Batarya Sistemleri A.Ş. Turkey Production
(*) OY Vestel Scadinavia AB of which Vestel Ticaret A.Ş. is 100% shareholder was liquidated on 10 February, 2020. (**) Vestel Benelux BV and Holland BV are merged as of 31 December, 2020. Investments accounted for using equity method Country Nature of operations
Vestel Savunma Sanayi A.Ş. Turkey Production/Sales Aydın Yazılım Elektronik ve Sanayi A.Ş. Turkey Software Meta Nikel Kobalt Madencilik San. ve Tic. A.Ş Turkey Mining Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş Turkey Automotive
Vestel Elektronik 2020 Annual Report 245 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS 2.1 Basis of presentation 2.1.1 Statement of compliance The accompanying consolidated financial statements are prepared in accordance with the Communiqué Serial II, No: 14.1, “Principals of Financial Reporting in Capital Markets” published in the Official Gazette numbered 28676 on 13 June 2013. According to the article 5 of the Communiqué, consolidated financial statements are prepared in accordance with Turkish Financial Reporting Standards (“TFRS”) and its addendum and interpretations (“IFRIC”) issued by the Public Oversight Accounting and Auditing Standards Authority (“POA”) Turkish Accounting Standards Board. The Group and its subsidiaries operating in Turkey maintains its accounting records and prepares its statutory financial statements in accordance with the Turkish Commercial Code (“TCC”), tax legislation and the uniform chart of accounts issued by the Ministry of Finance. The consolidated financial statements, except for land, buildings and land improvements and the financial assets and liabilities presented with their fair values, are maintained under historical cost conversion in TL. Consolidated subsidiaries operating in foreign countries have prepared their financial statements in accordance with the laws and regulations of the countries in which they operate with the required adjustments and reclassifications reflected in accordance with CMB Financial Reporting Standards. These financial statements are based on the statutory records which are maintained under historical cost conversion, with the required adjustments and reclassifications reflected for the purpose of fair presentation in accordance with the TFRS. With the decision taken on 17 March 2005, the CMB announced that, effective from 1 January 2005, the application of inflation accounting is no longer required for the companies operating in Turkey and preparing their financial statements in accordance with CMB Financial Reporting Standards. Accordingly, TAS 29, “Financial Reporting in Hyperinflationary Economies” issued by the IASB, has not been applied in the financial statements for the accounting year commencing from 1 January 2005. 2.1.2 Currency used i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated financial statements are prepared and presented in Turkish Lira (“TL”), which is the functional currency of the parent company. ii) Transactions and balances Transactions in foreign currencies have been translated into functional currency at the exchange rates prevailing at the date of the transaction. Exchange gains or losses arising from the settlement and translation of monetary assets and liabilities denominated in foreign currency at the exchange rates prevailing at the balance sheet dates are included in consolidated comprehensive income, except for the effective portion of foreign currency hedge of cash flow and net investment which are included under shareholders’ equity. iii) Translation of financial statements of subsidiaries operating in foreign countries Assets and liabilities of subsidiaries operating in foreign countries are translated into TL at the exchange rates prevailing at the balance sheet dates. Comprehensive income items of those subsidiaries are translated into TL using average exchange rates for the period (if the average exchange rates for the period do not reasonably reflect the exchange rate fluctuations, transactions are translated using the exchange rates prevailing at the date of the transaction). Exchange differences arising from using average and balance sheet date rates are included in “currency translation differences” under the shareholders’ equity.
246 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.1.2 Currency used (Cont’d) The balance sheet date rates and average rates used for translation of income statement items for the related periods are as follows: Period End: 31 December 2020 31 December 2019
Turkish Lira/EUR 0,1110 0,1504 Turkish Lira/GBP 0,1006 0,1286 Turkish Lira/RUB 10,1585 10,469 Turkish Lira/PLN 0,5025 0,6398 Turkish Lira/USD 0,1362 0,1683 Turkish Lira/KZT 57,3723 64,2674 Turkish Lira/AED 0,5000 0,61782 Turkish Lira/RMB 0,8943 1,18280 Turkish Lira/RON 0,5443 0,72296 1 January - 1 January - Average: 31 December 2020 31 December 2019
Turkish Lira/EUR 0,1247 0,1575 Turkish Lira/GBP 0,1112 0,1383 Turkish Lira/RUB 10,3717 11,4656 Turkish Lira/PLN 0,5537 0,6764 Turkish Lira/USD 0,1427 0,1763 Turkish Lira/KZT 59,0899 67,4702 Turkish Lira/AED 0,5241 0,6470 Turkish Lira/CNY 0,9878 1,2247 Turkish Lira/RON 0,6069 0,7518
2.1.3 Basis of consolidation The consolidated financial statements include the accounts of the parent and its subsidiaries from the date on which the control is transferred to the Group until the date that the control ceases. The financial statements of the companies included in the scope of consolidation have been prepared as of the date of the consolidated financial statements and have been prepared in accordance with CMB Financial Reporting Standards by applying uniform accounting policies and presentation. a) Subsidiaries The Group has power over an entity when it has existing rights that give it the current ability to direct the relevant activities, i.e. the activities that significantly affect the entity’s returns. On the other hand, the Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In order to be consistent with accounting policies accepted by the Group, accounting policies of the subsidiaries are modified where necessary.
Vestel Elektronik 2020 Annual Report 247 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.1.3 Basis of consolidation (Cont’d) a) Subsidiaries (Cont’d) The balance sheet and statement of income of the subsidiaries are consolidated on a line-by-line basis and all material intercompany payable/receivable balances and sales/purchase transactions are eliminated. The carrying value of the investment held by Vestel Elektronik and its subsidiaries is eliminated against the related shareholders’ equity. The non-controlling share in the net assets and results of subsidiaries for the period are separately classified as “non‑controlling interest” in the consolidated statements of comprehensive income and the consolidated statements of changes in shareholders’ equity. As of the balance sheet date, consolidated companies and the proportion of ownership interest of Vestel Elektronik in these subsidiaries are disclosed in note 3. Financial assets in which the Group has direct or indirect voting rights equal to or above 50% which are immaterial to the Group financial results or over which a significant influence is not exercised by the Group are carried at cost less any provisions for impairment. b) Investments in associates Investments in associates are accounted for by the equity method and are initially recognized at cost. These are entities in which the Group has an interest which is more than 20% and less than 50% of the voting rights or over which a significant influence is exercised. Unrealized gains on transactions between the Group and its associate are eliminated to the extent of the Group’s interest in the associates, whereas unrealized losses are eliminated unless they do not address any impairment of the asset transferred. Net increase or decrease in the net asset of associates is included in the consolidated statements of comprehensive income in regards with the Group’s share. The Group ceases to account the associate using the equity method if it loses the significant influence or the net investment in the associate becomes nil, unless it has entered to a liability or a commitment. After the Group’s interest in the associates becomes nil, additional losses are provided for, and a liability recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the Group resumes including its share of those profits only after its share of the profits equals the share of net losses not recognized. Since Vestel Savunma and Aydın Yazılım has net liability position as of 31 December 2020 and 31 December 2019, carrying value of such investment accounted for by equity method is reduced to zero in the consolidated balance sheets. The Group’s voting rights and effective ownership rates in Vestel Savunma and Aydın Yazılım are 35% and 21%, respectively (31 December 2019: 35%, 21%). The carrying amounts of the investments accounted for using the equity method are reviewed whether there is any indication of impairment at each reporting date. If such an indicator exists, the recoverable amount of the asset is estimated. The recoverable amount of the investments accounted for using the equity method refers to the higher of value-in-use or fair value less cost to sell. Value-in-use is the present value of future cash flows expected to be generated from an asset or cash generating unit. If the carrying amount of the investments accounted for using the equity method exceeds the recoverable amount, the impairment is accounted for. Impairments are recognized in profit and loss accounts. Impairments are recorded in the statement of profit or loss and other comprehensive income. In investments accounted for using the equity method, impairments allocated in previous periods are re-evaluated in each reporting period in the event that impairment decreases or there are indicators that impairment is not valid. Impairment is reversed in case of changes in the estimates used when determining recoverable amount. The increase in the carrying amount of the investments due to the reversal of the impairment loss is accounted in such a way that it does not exceed the carrying amount determined if the impairment loss has not been included in the consolidated financial statements in the previous years.
248 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.2 Comparatives Consolidated financial statements of the Group have been prepared comparatively with the preceding financial period, in order to enable determination of trends in financial position and performance. Comparative figures are reclassified, where necessary, to conform to changes in presentation in the consolidated financial statements. 2.3 Restatement and errors in the accounting estimates Major changes in accounting policies are applied retrospectively and any major accounting errors that have been detected are corrected and the financial statements of the previous period are restated. Changes in accounting policies resulting from the initial implementation of a new standard, if any, are implemented retrospectively or prospectively in accordance with the transition provisions. If the changes in accounting estimates only apply to one period, then they are applied in the current period in which the change occurred; if the changes also apply to future periods, they are applied in both the period of change and in the future periods, prospectively. 2.4. Amendments in Turkey Financial Reporting Standards New standards, amendments and interpretations issued and effective for the financial year beginning 31 December 2020 Standards issued but not yet effective and not early adopted A number of new standards, interpretations of and amendments to existing standards are not effective at reporting date and earlier application is permitted; however the Group has not early adopted are as follows. Classification of Liabilities as Current or Non-current (Amendments to TAS 1) On 23 January 2020, IASB issued “Classification of Liabilities as Current or Non-Current” which amends TAS 1 Presentation of Financial Statements to clarify its requirements for the presentation of liabilities in the statement of financial position which are issued by POA on 12 March 2020 as amendments to TAS 1. The amendments clarify one of the criteria in TAS 1 for classifying a liability as non-current-that is, the requirement for an entity to have the right to defer settlement of the liability for at least 12 months after the reporting period. The amendments include: (a) Specifying that an entity’s right to defer settlement must exist at the end of the reporting period; (b) Clarifying that classification is unaffected by management’s intentions or expectations about whether the entity will exercise its right to defer settlement; (c) Clarifying how lending conditions affect classification; and (d) Clarifying requirements for classifying liabilities an entity will or may settle by issuing its own equity instruments. The Group shall apply retrospectively these amendments for annual periods beginning on or after 1 January 2022 with earlier application permitted. However, the amendment published on 15 July 2020, IASB decided to defer the effective date of TAS1 until 1 January 2023. The Group does not expect that application of these amendments to TAS 1 will have significant impact on its financial statements. Covid-19 related rent concession (Amendments to TFRS 16) In May 2020, IASB issued Covid-19 related rent concession which amends TFRS 16 Leases which is issued by POA on 5 June 2020. The amendments allow lessees not to account for rent concessions as lease modifications if they arise as a direct consequence of COVID-19.
Vestel Elektronik 2020 Annual Report 249 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Cont’d) 2.4. Amendments in Turkey Financial Reporting Standards (Cont’d) The practical expedient will only apply if: - the revised consideration is substantially the same or less than the original consideration; - the reduction in lease payments relates to payments due on or before 30 June 2021 - no other substantive changes have been made to the terms of the lease. No practical expedient is provided for lessors. Lessors are required to continue to assess if the rent concessions are lease modifications and account for them accordingly. The Group shall apply these amendments for annual periods beginning on or after 1 June 2020 with earlier application permitted. Reference to the Conceptual Framework (Amendments to TFRS 3) In May 2020, IASB issued Reference to the Conceptual Framework, which made amendments to TFRS 3 Business Combinations. The amendments updated TFRS 3 by replacing a reference to an old version of the Board’s Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The Group shall apply these amendments for annual periods beginning on or after 1 January 2022 with earlier application permitted. Property, Plant and Equipment-Proceeds before Intended Use (Amendments to TAS 16) In May 2020, IASB issued Property, Plant and Equipment-Proceeds before Intended Use, which made amendments to TAS 16 Property, Plant and Equipment. The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. The amendments improve transparency and consistency by clarifying the accounting requirements-specifically, the amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. The Group shall apply these amendments for annual periods beginning on or after 1 January 2022 with earlier application permitted. Onerous Contracts-Cost of Fulfilling a Contract (Amendments to TAS 37) In May 2020, IASB issued Onerous Contracts-Cost of Fulfilling a Contract, which made amendments to TAS 37 Provisions, Contingent Liabilities and Contingent Assets. The amendments specify which costs an entity includes in determining the cost of fulfilling a contract for the purpose of assessing whether the contract is onerous. IASB developed amendments to TAS 37 to clarify that for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts. The Group shall apply these amendments for annual periods beginning on or after 1 January 2022 with earlier application permitted. IBOR Reform and its Effects on Financial Reporting-Phase 2 In August 2020, IASB issued amendments which is issued by POA in 18 December 2020 that complement those issued in 2019 and focus on the effects of the interest rate benchmark reform on a company’s financial statements that arise when, for example, an interest rate benchmark used to calculate interest on a financial asset is replaced with an alternative benchmark rate.
250 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Cont’d) 2.4. Amendments in Turkey Financial Reporting Standards (Cont’d) IBOR Reform and its Effects on Financial Reporting-Phase 2 (Cont’d) The Phase 2 amendments, Interest Rate Benchmark Reform-Phase 2, address issues that might affect financial reporting during the reform of an interest rate benchmark, including the effects of changes to contractual cash flows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate (replacement issues). In 2019, the Board issued its initial amendments in Phase 1 of the project. The objectives of the Phase 2 amendments are to assist companies in: - applying TFRS Standards when changes are made to contractual cash flows or hedging relationships because of the interest rate benchmark reform; and - providing useful information to users of financial statements. In Phase 2 of its project, the Board amended requirements in TFRS 9 Financial Instruments, TAS 39 Financial Instruments: Recognition and Measurement, TFRS 7 Financial Instruments: Disclosures, TFRS 4 Insurance Contracts and TFRS 16 Leases relating to: - changes in the basis for determining contractual cash flows of financial assets, financial liabilities and lease liabilities; - hedge accounting; and - disclosures. The Phase 2 amendments apply only to changes required by the interest rate benchmark reform to financial instruments and hedging relationships. Annual Improvements to TFRS Standards 2018-2020 Improvements to TFRSs POA issued Annual Improvements to TFRSs - 2018-2020 Cycle for applicable standards in May 2020. The amendments are effective as of 1 January 2022. Earlier application is permitted. The Group does not expect that application of these improvements to TFRSs will have significant impact on its financial statements. TFRS 1 First-time Adoption of International Financial Reporting Standards This amendment simplifies the application of TFRS 1 for a subsidiary that becomes a first-time adopter of IFRS Standards later than its parent - i.e. if a subsidiary adopts TFRS Standards later than its parent and applies TFRS 1.D16 (a), then a subsidiary may elect to measure cumulative translation differences for all foreign operations at amounts included in the financial statements of the parent, based on the parent’s date of transition to TFRS Standards. This amendment will ease transition to TFRS Standards for subsidiaries applying this optional exemption by i) reducing undue costs; and ii) avoiding the need to maintain parallel sets of accounting records. TFRS 9 Financial Instruments This amendment clarifies that - for the purpose of performing the ‘’10 per cent test’ for derecognition of financial liabilities - in determining those fees paid net of fees received, a borrower includes only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. Amendments are effective on 1 January 2020 Changes that have become effective and have been adopted for annual periods beginning on or after 1 January 2020. The changes that become effective as of January 1, 2020 are as follows: 1-) The revised Conceptual Framework (Version 2018) 2-) Amendments to TFRS 3 - Definition of a Business The application of the amendment in TFRS 3 did not have a significant impact on the financial statements of the Group. 3-) Amendments to TAS 1 and TAS 8 - Definition of Material
Vestel Elektronik 2020 Annual Report 251 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Cont’d) 2.4. Amendments in Turkey Financial Reporting Standards (Cont’d) The application of the amendment to TAS 1 and TAS 8 does not have a significant impact on the financial statements of the Group. 4-) Interest Rate Benchmark Reform (Amendments to TFRS 9, TAS 39 and TFRS 7) The application of this amendment is not expected to have a significant impact on the financial statements of the Group. 2.5 Summary of significant accounting policies 2.5.1 Revenue recognition Group recognizes revenue in accordance with IFRS 15 “Revenue from contracts with customers” standard by applying the following five step model: - Identification of customer contracts - Identification of performance obligations - Determination of transaction price in the contract - Allocation of price to performance obligations - Recognition of revenue when the performance obligations are fulfilled. Revenue from sale of goods is recognized when all the following conditions are satisfied: a) The parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations, b) Group can identify each party’s rights regarding the goods or services to be transferred, c) Group can identify the payment terms for the goods or services to be transferred, d) The contract has commercial substance, e) It is probable that Group will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer’s ability and intention to pay that amount of consideration when it is due. Revenue from sale of goods Group recognizes revenue based on the production and sale of white goods, consumer electronics, air conditioners and home appliance. Revenue is recognized when the control of the goods is transferred to the customer. In addition, Group provides legal warranty commitment to its customers depending on the type of goods and the location of sale between 1-3 years. These legal warranty commitments are mandatory by regulations, have not a separate price apart from the good and are not separately sold. Therefore, they are not treated as a separate good or service apart from the sale of good. 2.5.2 Inventories Inventories are stated at the lower of cost and net realizable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories held by the method most appropriate to the particular class of inventory. Group uses moving weighted average method for costing. Net realizable value represents the estimated selling price less all estimated costs of completion and costs necessary to make a sale. When the net realizable value of inventory is less than cost, the inventory is written down to the net realizable value and the expense is included in statement of income in the period the write-down or loss occurred. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write‑down is reversed. The reversal amount is limited to the amount of the original write-down.
252 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.3 Property, plant and equipment Land, land improvements and buildings are stated at fair value less accumulated depreciation, based on valuations performed at 31 December 2020 by professional independent valuer Çelen Kurumsal Gayrimenkul Değerleme ve Danışmanlık A.Ş. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the relevant asset, and the net amount is the revalued amount of the asset. Property, plant and equipment except for land, land improvements and buildings acquired before 1 January 2005 are carried at cost in the equivalent purchasing power of TL as at 31 December 2004 and items acquired after 1 January 2005 are carried at cost, less accumulated amortization and impairment losses, if any. Any revaluation increase arising on the revaluation of such land, land improvements and buildings is credited in equity to the revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognized in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such land, land improvements and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset. Depreciation on revalued land improvements and buildings is charged to profit or loss. Each period, the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to the statements of comprehensive income) and the depreciation based on the asset’s original cost is transferred from revaluation reserves to the retained earnings. Land is not depreciated. Plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under construction, over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Gains or losses on disposals of property, plant and equipment are determined by reference to their carrying amounts and are included in the related income and expense accounts, as appropriate. On the disposal of revalued assets, amounts in the revaluation reserve relating to that asset are transferred to the retained earnings. Subsequent costs such as repairs and maintenance or part replacement of plant and equipment are included in the asset’s carrying value or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group. All other costs are charged to the statements of comprehensive income during the financial period in which they are incurred.
Vestel Elektronik 2020 Annual Report 253 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.3 Property, plant and equipment (Cont’d) Leases The Group - as a lessee At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset. The Group assess whether: a) The contract involved the use of an identified asset - this may be specified explicitly or implicitly. b) The asset should be physically distinct or represent substantially all of the capacity of a physically distinct asset, if the supplier has a substantive substitution right, the asset is not identified. c) The Group has the right to obtain substantially all of the economic benefits from the use of an asset throughout the period of use; and d) The Group has the right to direct use of the asset, The Group concludes to have the right of use, when it is predetermined how and for what purpose the Group will use the asset. The Group has the right to direct use of asset if either: i. The Group has the right to operate (or to have the right to direct others to operate) the asset over its useful life and the lessor does not have the rights to change the terms to operate or; ii. The Group designed the asset (or the specific features) in a way that predetermines how and for what purpose it is used At the actual commencement date of the contract, the group reflects a right-of-use asset and a lease liability in its financial statements. The Group rents various buildings, warehouses, forklifts and machinery. The duration of the leasing contracts for machine and equipment is usually 5 years; for building and warehouses is usually fixed from 2 to 10 years. Lease Liability The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. Lease liabilities are discounted to present value by using the interest rate implicit in the lease if readily determined or with the incremental borrowing rate. of the relevant Group company. Lease payments included in the measurement of the lease liability comprise the following: a) Fixed payments, including in-substance fixed payments; b) Variable lease payments that depend on an index or a rate, initially measured using the index or rate as the commencement date. c) The exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewable period if the Company is reasonably certain to exercise an extension option and penalties for early termination of a lease unless the Company is reasonably certain to terminate early. After initial recognition, the lease liability is measured: a) Increasing the carrying amount to reflect interest on lease liability, b) Reducing the carrying amount to reflect the lease payments made and c) Remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The duration of the contracts, which constitute the lease obligation of the company, varies between 1 - 10 years. The Group - as a lessor The Group’s activities as a lessor are not material.
254 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.3 Property, plant and equipment (Cont’d) Right of use assets: The cost of the right-of-use asset comprises: a) the amount of the initial measurement of the lease liability, b) any lease payments made at or before the commencement date, less any lease incentives received, c) any initial direct costs incurred by the Group To apply the cost model, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability. The Group applies the depreciation requirements in TAS16 Property, Plant and Equipment in depreciating the right-of-use asset. 2.5.4 Intangible assets a) Research and development costs Research costs are recognized as expense in the period in which they are incurred. Intangible assets arising from development (or from the development phase of an internal project) are recognized as intangible assets when the following criteria are met; - It is technically feasible to complete the intangible asset so that it will be available for use; - Management intends to complete the intangible asset and use or sell it; - There is an ability to use or sell the intangible asset; - It can be demonstrated how the intangible asset will generate probable future economic benefits; - Adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and - The expenditure attributable to the intangible asset during its development can be reliably measured. In other cases, development costs are expensed as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. In cases where it is difficult to separate the research phase from the development phase in a project, the entire project is treated as research and expensed immediately. b) Rights and other intangible assets Rights and other intangible assets consist of acquired computer software, computer software development costs and other identifiable rights. Rights and other intangible assets are recognized at their acquisition costs and are amortized on a straight line basis over their expected useful lives which are less than fifteen years. c) Goodwill Goodwill arising on acquisition is the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities recognized. Within the scope of TFRS 3 “Business Combinations”, beginning from 1 January 2005 the Group has stopped amortizing goodwill. Goodwill recognized on acquisitions before 31 December 2004 was being amortized until 31 December 2004 on a straight line basis over their useful lives not to exceed twenty years. Goodwill is tested for impairment annually or more frequently when there is an indication of impairment. Goodwill arising on acquisitions measured at cost less any impairment losses. Impairment losses calculated on goodwill cannot be reversed in the statement of income even if the impairment ceases to exist in the following periods. Goodwill is linked to cash generating units during the impairment test.
Vestel Elektronik 2020 Annual Report 255 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.3 Property, plant and equipment (Cont’d) c) Goodwill (Cont’d) In case the consideration transferred in a business combination includes any contingent considerations, the Group recognizes the acquisition date fair value of the contingent consideration as part of the consideration transferred. During the measurement period, contingent considerations recognized at the acquisition date fair value are retrospectively adjusted when necessary. The measurement period is the period after the acquisition date during which the acquirer may adjust the provisional amounts recognized for a business combination. This period shall not exceed one year from the acquisition date. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. The provisional amounts are adjusted during the measurement period or additional assets or liabilities are recognized to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. 2.5.5 Financial instruments a) Financial assets The Group classifies its financial assets into the following specified categories: financial assets as at fair value through profit or loss and financial assets measured at fair value through other compressive income. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets carried at amortized cost Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest, whose payments are fixed or predetermined, which are not actively traded and which are not derivative instruments are measured at amortized cost. The Group’s financial assets carried at amortized cost comprise “trade receivables”, “other assets” and “cash and cash equivalents” in the statement of financial position. Group has applied simplified approach and used impairment matrix for the calculation of impairment on its receivables carried at amortized cost, since they do not comprise of any significant finance component. In accordance with this method, if any provision to the trade receivables as a result of a specific event, Group measures expected credit loss from these receivables by the life-time expected credit loss. The calculation of expected loss is performed based on the past experience of the Group and its expectations for the future indications. Financial assets carried at fair value Assets that are held by the Group for collection of contractual cash flows and for selling the financial assets are measured at their fair value. Impairment of financial assets Impairment of the financial and contractual assets measured by using “Expected credit loss model”. The impairment model applies for amortized financial and contractual assets. The Company has preferred to apply “simplified approach” for the recognition of impairment losses on trade receivables, carried at amortized cost and that do not comprise of any significant finance component (those with maturity less than 12 months). In accordance with the simplified approach, Company measures the loss allowances regarding its trade receivables at an amount equal to “lifetime expected credit losses” except incurred credit losses in which trade receivables are already impaired for a specific reason.
256 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.5 Financial instruments (Cont’d) b) Financial liabilities Financial liabilities are measured initially at fair value. Transaction costs which are directly related to the financial liability are added to the fair value. c) Derivative financial instruments and hedge accounting Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The derivative instruments of the Group mainly consist of foreign exchange forward contracts. These derivative transactions, even though providing effective economic hedges under risk accounting, do not generally qualify for hedge accounting under the specific rules and are therefore treated as derivatives held for trading in the financial statements. The fair value changes for these derivatives are recognised in the consolidated profit or loss statement. The hedging transactions of the Group that qualify for hedge accounting are accounted regarding to TFRS 9. As TFRS 9 does not change the general principles of how an entity accounts for effective hedges, applying the hedging requirements of TFRS 9 will not have a significant impact on Group’s financial statements. Cash flow hedges: As long as a cash flow hedge meets the qualifying criteria, the hedging relationship shall be accounted for as follows: (a) the separate component of equity associated with the hedged item (cash flow hedge reserve) is adjusted to the lower of the following (in absolute amounts): (i) the cumulative gain or loss on the hedging instrument from inception of the hedge; and (ii) the cumulative change in fair value (present value) of the hedged item (i.e. the present value of the cumulative change in the hedged expected future cash flows) from inception of the hedge. (b) the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge shall be recognised in other comprehensive income. (c) any remaining gain or loss on the hedging instrument is hedge ineffectiveness that shall be recognised in profit or loss. 2.5.6 Foreign currency transactions Transactions in foreign currencies during the period are recorded at the rates of exchange prevailing on the dates of the transactions. Monetary items denominated in foreign currencies are translated to TL at the rates prevailing on the balance sheet date. Exchange differences on foreign currency denominated monetary assets and liabilities are recognized in profit or loss in the period in which they arise except for the effective portion of the foreign currency hedge of net investments in foreign operations. Monetary items which are denominated in foreign currency and measured with historical costs are translated using the exchange rates at the dates of initial transactions. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are expressed in TL using exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period. Exchange differences arising are recognized in other comprehensive income and in equity. On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the company are reclassified to profit or loss.
Vestel Elektronik 2020 Annual Report 257 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.7 Provisions, contingent assets and liabilities Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. Possible assets or obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group are not included in the consolidated financial statements and treated as contingent assets or liabilities. 2.5.8 Warranty and assembly expenses provision Warranty expenses include repair and maintenance expenses of products sold and labor and material costs of authorized services for products under the scope of warranty terms without any charge to the customers. Based on estimations using past statistical information, warranty expense provision is recognized for the products sold with warranty terms in the period, for possible repair and maintenance expenses to be incurred during the warranty period. Based on estimations using past statistical information, assembly expenses provision is recognized for products sold during the period but not yet installed in the sites of the end customers, against the cost of free of charge installments. 2.5.9 Related parties Shareholders, key management personnel and board members, their close family members and companies controlled, jointly controlled or significantly influenced by them and Zorlu Holding Group companies are considered and referred to as related parties. 2.5.10 Taxation on income Tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items directly recognized in equity. In that case, tax is recognized in shareholders’ equity. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases which is used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Investment incentives that are conducive to payment of corporate taxes at reduced rates are subject to deferred tax calculation when there is reasonable assurance that the Group will benefit from the related incentive. Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
258 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.11 Employee benefits Employment termination benefits, as required by the Turkish Labor Law and the laws applicable in the countries where the subsidiaries operate, represent the estimated present value of the total reserve of the future probable obligation of the Group arising in case of the retirement of the employees. According to Turkish Labor Law and other laws applicable in Turkey, the Group is obliged to pay employment termination benefits to all personnel in cases of termination of employment without due cause, call for military service, be retired or death upon the completion of a minimum one year service. Employment termination benefits are considered as being part of defined retirement benefit plan as per TAS 19. All actuarial gains and losses are recognized in consolidated statements of income. The effects of the significant forecasts used in employment termination benefits provision calculations have been recognized as actuarial gains and losses and they have been explained in the relevant note. 2.5.12. Government grants Government grants, including non-monetary grants at fair value, are recognized in consolidated financial statements when there is reasonable assurance that the entity will comply with the conditions attaching to them, and the grants will be received. Incentives for research and development activities are recognized in consolidated financial statements when they are authorized by the related institutions. 2.5.13 Earnings per share Earnings per share disclosed in the consolidated statement of income is determined by dividing consolidated net income attributable to equity holder of the parent by the weighted average number of such shares outstanding during the year concerned. 2.5.14 Statement of cash flows In the consolidated statement of cash flows, cash flows are classified into three categories as operating, investment and financing activities. Cash flows from operating activities are those resulting from the Group’s production and sales activities. Cash flows from investment activities indicate cash inflows and outflows resulting from property, plant and equipments and financial investments. Cash flows from financing activities indicate the resources used in financing activities and the repayment of these resources. Cash and cash equivalents comprise of cash in hand accounts, bank deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash with maturities equal or less than three months. 2.5.15 Segment reporting Operating segments are identified on the same basis as financial information is reported internally to the Group’s chief operating decision maker. The Group Board of Directors has been identified as the Group’s chief operating decision maker who is responsible for allocating resources between segments and assessing their performances. The Group management determines operating segments by reference to the reports reviewed by the Board of Directors to make strategical decisions. The Group management evaluates the operational results at industrial and geographical level. An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses. Group’s operations are reported under three industrial segments: - Television and electronic devices - White goods - Other Group’s operations are reported under three geographical segments: - Turkey - Europe - Other
Vestel Elektronik 2020 Annual Report 259 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.5 Summary of significant accounting policies (Cont’d) 2.5.16 Offsetting All items with significant amounts and nature, even with similar characteristics, are presented separately in the financial statements. Insignificant amounts are grouped and presented by means of items having similar substance and function. When the nature of transactions and events necessitate offsetting, presentation of these transactions and events over their net amounts or recognition of the assets after deducting the related impairment are not considered as a violation of the rule of non-offsetting. As a result of the transactions in the normal course of business, revenue other than sales are presented as net if the nature of the transaction or the event qualify for offsetting. 2.5.17 Events after the balance sheet date Events after the balance sheet date, announcements related to net profit or even declared after other selective financial information has been publicly announced, include all events that take place between the balance sheet date and the date when balance sheet was authorized for issue. In the case that events require a correction to be made occur subsequent to the balance sheet date, the Group makes the necessary corrections to the financial statements. Moreover, the events that occur subsequent to the balance sheet date and that do not require a correction to be made are disclosed in accompanying notes, where the decisions of the users of financial statements are affected. 2.5.18 Going Concern The Group prepared consolidated financial statements in accordance with the going concern assumption. 2.5.19 Trade payables Trade payables are recognized at their fair values. 2.5.20 Borrowings and borrowing costs Borrowings are recognised initially at the proceeds received, net of any transaction costs incurred. In subsequent periods, borrowings are restated at amortized cost using the effective yield method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income as finance cost over the period of the borrowings. Borrowing costs are expensed as incurred. If the borrowings mature within 12 months, then they are classified in current liabilities, otherwise they are classified in non-current liabilities. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates. General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which (at least a period of one year) are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. 2.6. Critical accounting estimates and judgments Preparation of consolidated financial statements requires the use of estimates and assumptions that may affect the amount of assets and liabilities recognized as of the balance sheet date, disclosures of contingent assets and liabilities and the amount of revenue and expenses reported. Although these estimates and assumptions rely on the Group management’s best knowledge about current events and transactions, actual outcomes may differ from those estimates and assumptions. Significant estimates of the Group management are as follows: i. Revaluation of land, buildings and land improvements: Land, land improvements and buildings are stated at fair value, based on valuations performed as at 31 December 2020 by professional independent valuer Çelen Kurumsal Gayrimenkul Değerleme ve Danışmanlık A.Ş. (Note 14).
260 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 2 - BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS (Cont’d) 2.6. Critical accounting estimates and judgments (Cont’d) i. Revaluation of land, buildings and land improvements: (Cont’d) As there were no recent similar buying/selling transactions nearby, revaluations of land were based on the method of reference comparison whereas revaluations of buildings and land improvements were based on the method of cost approach and based on the following valuation techniques and assumptions: - Revaluations of land were based on the method of reference comparison whereas revaluations of buildings and land improvements were based on the method of cost approach, considering existing utilization of the aforementioned land, building and land improvements are consistent to the highest and best use approach. - In the market reference comparison method, current market information was utilized, taking into consideration the comparable property in the market in recent past in the region, price adjustment was made within the framework of criteria that could affect market conditions, and accordingly an average m2 sale value was determined for the lands subject to the valuation. The similar pieces of land found were compared in terms of location, size, settlement status, physical conditions, real estate marketing firms were consulted for up-to-date valuation of the estate market, also, current information and experience of the professional valuation company was utilized. - In the cost approach method, fair value of the buildings and land improvements was calculated by considering recent re- construction costs and related depreciation. In the cost approach method, above explained market reference comparison method was used in calculation of the land value, one of the components. The carrying values of land, land improvements and buildings do not necessarily reflect the amounts that would result from the outcome of a sales transaction between independent parties. As of initial recognition and as of balance sheet date, the Group performs impairment assessment for buildings and land improvements of which valuations are based on cost approach, accordance with the TAS36 “Impairment of Assets”, and no impairment indicator is identified. ii. Impairment tests of investments accounted for using the equity method As stated in the accounting policies in Note 2.1.3.b, if there is an indicator of impairment related to the carrying amount of investments accounted for using the equity method, such investments are subjected to impairment tests. The impairment test is performed by comparing the carrying amounts of the calculated cash flows with the recoverable amount calculated with the value-in-use of the investment. Significant estimates and assumptions used in determining the cash flows and their sensitivity analysis are presented in Note 13. As of 31 December 2020, no impairment was identified as a result of the impairment tests performed (Note 13).
Vestel Elektronik 2020 Annual Report 261 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 3 - INTERESTS IN OTHER ENTITIES Subsidiaries: As of 31 December 2020 and 31 December 2019 the Group’s major subsidiaries are as follows: 31 December 2020 31 December 2019 Voting Effective Voting Effective Consolidated subsidiaries rights ownership rights ownership
Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. (*) 89,9 89,9 95,2 95,2 Vestel Komünikasyon Sanayi ve Ticaret A.Ş. 100 100 100 100 Vestel Ticaret A.Ş. 100 100 100 100 Vestel CIS Ltd. 100 100 100 100 Vestel Iberia SL 100 100 100 100 Vestel France SA 100 100 100 100 Vestel Holland BV (**) 100 100 100 100 Vestel Germany GmbH 100 100 100 100 Cabot Communications Ltd. 90,8 90,8 90,8 90,8 Vestel UK Ltd. 100 100 100 100 Vestek Elektronik Araştırma Geliştirme A.Ş. 100 100 100 100 Vestel Trade Ltd. 100 100 100 100 Intertechnika LLC 99,9 99,9 99,9 99,9 Vestel Central Asia LLP 100 100 100 100 Vestel Poland sp. z.o.o. 100 100 100 100 Vestel Polska Technology Center sp. z o.o. 100 100 100 100 Vestel Electronics Gulf DMC (***) 100 100 100 100 Vestel Electronics Shanghai Trading Co. Ltd (***) 100 100 100 100 Vestel Electronica SRL (***) 100 100 100 100
(*) Vestel Elektronik Sanayi ve Ticaret A.Ş. sold 5,000,000 Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. shares on 29 June 2020, 18.365 on 3 September 2020 and 5,000,000 on 25 November, 2020 on Borsa Istanbul. Following the transaction, amounting to TL 279.926 TL proceeded, Vestel Elektronik Sanayi ve Ticaret A.Ş.’s share in Vestel Beyaz Eşya declined to 89.9%. (**) Vestel Benelux BV and Holland BV are merged under “Vestel Holland BV” as of 31 December. 2020. (***) Included in consolidated financial statements as of 31 December 2020. Financial information of Vestel Beyaz Eşya Sanayi ve Ticaret A.Ş. which is not wholly owned by the Group and has significant non-controlling interests is as follows. 31 December 2020 31 December 2019
Accumulated non-controlling interests 358.946 94.414 Comprehensive income attributable to non-controlling interests 90.266 27.485
The financial statements of the subsidiary is adjusted to include the effects of revaluation of land, buildings and land improvements in accordance with the Group’s accounting policies applied in preparation of the consolidated financial statements.
262 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 3 - INTERESTS IN OTHER ENTITIES (Cont’d) Condensed balance sheet: 31 December 2020 31 December 2019
Current assets 5.616.772 3.167.744 Non-current assets 2.613.219 1.816.058 Current liabilities (4.458.675) (2.991.718) Non-current liabilities (409.551) (185.856)
Net assets 3.361.765 1.806.228
Condensed statement of comprehensive income: 1 January - 1 January - 31 December 2020 31 December 2019
Net sales 9.409.285 6.967.964 Income/(loss) before tax 1.331.932 564.564 Tax benefit/(expense) (624) 3.508 Net income/(loss) for the period 1.331.308 568.072 Total comprehensive income 1.684.303 574.646
Condensed statement of cash flows: Operating activities: Changes in working capital (1.114.925) (127.423) Net cash provided by operating activities 574.223 617.727
Investing activities: Net cash used in investing activities (958.714) (135.306)
Financing activities: Proceeds from bank borrowings 2.006.706 1.116.152 Repayment of bank borrowings (1.461.014) (1.041.103) Other payables to related parties (128.766) (566.829) Net cash (used in)/provided by financing activities 489.340 (503.417)
Cash and cash equivalents at the beginning of the period 82.287 103.283 Cash and cash equivalents at the end of the period 187.136 82.287
The financial information of Group’s 50% associate META which is accounted for using the equity method, is disclosed in note 13. Other financial information of Company’s subsidiaries are not presented on the grounds of materiality. NOTE 4 - SEGMENT REPORTING Operating segments are identified on the same basis as financial information is reported internally to the Group’s chief operating decision maker. The Group Board of Directors has been identified as the Group’s chief operating decision maker who is responsible for allocating resources between segments and assessing their performances. The Group management determines operating segments by reference to the reports reviewed by the Board of Directors to make strategical decisions. Considering the fact that the Group’s risks and rate of returns are dissimilar between product types and between geographical areas, The Group management uses industrial segments as primary reporting format and geographical segments as secondary reporting format.
Vestel Elektronik 2020 Annual Report 263 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 4 - SEGMENT REPORTING (Cont’d) Industrial segments Television and electronic devices White goods Total
1 January -31 December 2020 Revenue 9.457.185 12.088.995 21.546.180 Cost of sales (7.454.733) (8.073.097) (15.527.830)
Gross profit 2.002.452 4.015.898 6.018.350
Depreciation and amortization 397.878 355.154 753.032
1 January -31 December 2019 Revenue 8.566.217 8.607.906 17.174.123 Cost of sales (6.378.929) (6.517.429) (12.896.358)
Gross profit 2.187.288 2.090.477 4.277.765
Depreciation and amortization 312.139 314.815 626.954
Capital expenditure Television and Electronical devices White goods Total
1 January -31 December 2020 327.248 599.908 927.156 1 January -31 December 2019 320.333 365.113 685.446
Geographical segments: 1 Ocak - 1 January - Segment revenue 31 Aralık 2020 31 December 2019
Turkey 6.219.178 4.182.503 Europe 15.179.270 12.777.917 Other 1.826.947 1.585.624
Gross segment sales 23.225.395 18.546.044
Discounts (-) (1.679.215) (1.371.921)
Net sales 21.546.180 17.174.123
The amount of export for the period 1 January - 31 December 2020 is TL 17.006.217 thousand (1 January - 31 December 2019: TL 14.363.541 thousand). Export sales are denominated in EUR, USD and other currencies as 61,5%, 28,6%, and 9,8% of total exports respectively. (1 January - 31 December 2019: 60,9% EUR, 29,1 % USD, 10 % other) The carrying value of segment assets and costs incurred in order to obtain these assets are not separately disclosed since significant portion of assets of the Group are located in Turkey.
264 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 5 - CASH AND CASH EQUIVALENTS 31 December 2020 31 December 2019
Cash 1.278 1.618 Bank deposits - Demand deposits 2.943.625 2.104.712 - Time deposits 156.839 62.608 Cheques and notes 9.223 93.401 Other 61.731 20.701 3.172.696 2.283.040 Blocked deposits 28.875 111.294
Cash and cash equivalents 3.201.571 2.394.334 Effective interest rates 31 December 2020 31 December 2019
EUR 0,21% 0,00% TL 18,00% 0,00% USD 1,00% 1,00% KZT 8,50% 9,50% PLN 0,00% 8,93% RUB 2,50% 0,00%
The Group has has time deposits amounting to USD 7.500 thousand, EUR 5.100 thousand, KZT 107.000 thousand, RUB 3.800 TL and TL 53.650 thousand. (31 December 2019: PLN 1.937 thousand and TL 10.025 thousand) As of 31 December 2020 and 31 December 2019 the Group’s time deposits have an average maturity of less than 3 months.
Vestel Elektronik 2020 Annual Report 265 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 6 - FINANCIAL ASSETS Ownership Amount 31 December 31 December 31 December 31 December Country 2020 2019 2020 2019
Financial assets measured at fair value through other comprehensive income:
Zorlu Enerji Elektrik Üretim A.Ş. Turkey < 1% < 1% 22.160 13.337 Tursoft A.Ş. Turkey 7% 7% - 11 Zorlu Endüstriyel Enerji A.Ş. Turkey 1% 1% - 51 İzmir Teknoloji Geliştirme A.Ş. Turkey 5% 5% 11 11 Other Turkey - - 200 200
22.371 13.610 Ownership Amount Non-consolidated subsidiaries on the grands of 31 December 31 December 31 December 31 December materiality: Country 2020 2019 2020 2019
Vestel Ventures Ar-ge A.Ş. Turkey 100% 100% 57.081 54.115 Vestel Electronics Gulf DMC (*) UAE 100% 100% - 1.409 Vestel Electronica SRL (*) Romania 100% 100% - 1.778 Vestel Electronics Shanghai Trading Co. Ltd (*) China 100% 100% - 751 Vest Batarya Sistemleri A.Ş. Turkey 100% 100% 50 50 Uts-United Technical Services. S.R.O Slovakia 100% 100% - 6
57.131 58.109 Impairment of subsidiaries (-) Vestel Electronica SRL - (1.778)
57.131 56.331
NOTE 7 - FINANCIAL LIABILITIES 31 December 2020 31 December 2019
Short term financial liabilities
Short term bank loans 2.887.146 5.766.814 Short term portion of long term bank loans 3.933.163 1.411.361 Short term portion of long term lease liabilities 107.233 64.021 Short term lease liabilities (*) 53.445 -
6.980.987 7.242.196
Long term financial liabilities
Long term bank loans 1.657.777 456.424 Long term lease liabilities 125.518 111.657 Long term lease liabilities (**) 50.380 -
1.833.675 568.081
(*) The interest rate for the second coupon payment of amounting to thousand TL 50.066 nominally valued corporate bond, which was sold to qualified investors on July 9, 2020 with a maturity of 372 days. (**) The interest rate for the second coupon payment of amounting to thousand TL 50.380 nominally valued corporate bond, which was sold to qualified investors on July 9, 2020 with a maturity of 728 days.
266 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 7 - FINANCIAL LIABILITIES (Cont’d) Details of the Group’s short term bank loans are given below: 31 December 2020 31 December 2019 Weighted average Weighted average of effective interest Original TL of effective interest Original Currency rates per annum currency Equivalent rates per annum currency TL Equivalent
- USD 3,52% 206.611 1.516.630 3,94% 231.736 1.376.559 - EUR 2,65% 92.928 837.082 3,02% 214.139 1.424.156 - TL 21,21% 533.434 533.434 20,44% 2.966.099 2.966.099
2.887.146 5.766.814
Details of the Group’s long term bank loans are given below: 31 December 2020 31 December 2019 Weighted average Weighted average of effective interest Original TL of effective interest Original TL Currency rates per annum currency Equivalent rates per annum currency Equivalent
- USD 5,22% 103.139 757.091 6,79% 62.298 370.065 - EUR 4,13% 16.955 152.730 5,07% 18.681 124.239 - TL 11,84% 3.023.342 3.023.342 25,84% 917.057 917.057
Short term portion 3.933.163 1.411.361
- USD 3,97% 60.368 443.128 8,77% 41.054 243.871 - EUR 3,97% 15.402 138.738 6,02% 18.619 123.825 - TL 12,29% 1.075.911 1.075.911 17,30% 88.728 88.728
Long term portion 1.657.777 456.424
5.590.940 1.867.785
Total amount of Group’s floating bank loans is amounting to TL 4.728.647 thousand (31 December 2019: TL 3.397.145 thousand). The maturity schedule of Group’s long term bank loans is given below: 31 December 2020 31 December 2019
One to two years 1.628.858 269.599 Two to three years 16.500 162.200 Three to four years 12.419 14.045 Four years and over - 10.580
1.657.777 456.424
The analysis of Group’s bank loans in terms of periods remaining to contractual re-pricing dates is as follows: 31 December 2020 31 December 2019
6 months or less 2.160.025 2.964.330
2.160.025 2.964.330
Vestel Elektronik 2020 Annual Report 267 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 7 - FINANCIAL LIABILITIES (Cont’d) Guarantees given for the bank loans obtained are presented in note 19. Fair values of short term bank borrowings are considered to approximate their carrying values due to immateriality of discounting. Fair values are determined using average effective annual interest rates. Long term bank borrowings are stated at amortized cost using effective interest rate method and their fair values are considered to approximate their carrying values since loans usually have a re-pricing period of six months. As of 31 December 2020 and 31 December 2019, the Group’s net financial debt reconciliation is shown below: 31 December 2020 31 December 2019
Net financial debt as of 1 January 5.527.237 4.898.069 Cash inflows from loans 10.986.459 6.674.923 Cash outflows from loan payments (10.042.972) (6.463.286) Cash outflows from financial leasing payments (71.702) 137.107 Unrealized Fx gain/loss 124.323 167.494 Accrued interest 8.277 117.008 Change in cash and cash equivalents (889.656) (4.078)
Net financial debt at the end of the period 5.641.966 5.527.237
NOTE 8 - RELATED PARTY DISCLOSURES a) Short term trade receivables from related parties 31 December 2020 31 December 2019
Vestel Electronica S.R.L. (3) - 19.255 Zorluteks Tekstil Sanayi ve Ticaret A.Ş. (1) 5.601 3.415 Vestel Electronics Gulf DMCC . (3) - 15.812 UTS- United Technical Services. Spol S.R.O. (3) 4.820 3.388 Other related parties 5.052 13.940
15.473 55.810 b) Long term trade payables to related parties 31 December 2020 31 December 2019
Zorlu Holding A.Ş. (2) 768 768
768 768 c) Short term trade payables to related parties 31 December 2020 31 December 2019 Vestel Electronics Shanghai Trading Co. Ltd. (3) - 2.072 ABH Turizm Temsilcilik ve Ticaret A.Ş. (1) 1.789 3.094 Zorlu Elektrik Enerjisi İthalat İhracat ve Toptan Tic. A.Ş. 24.688 290 Other related parties 3.236 2.374
29.713 7.830 Unearned interest on payables (-) (112) -
29.601 7.830
268 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 8 - RELATED PARTY DISCLOSURES (Cont’d) d) Other short term receivables from related parties 31 December 2020 31 December 2019
Zorlu Holding A.Ş. (2) 86.740 376.015 Vestel Ventures A.Ş (3) 191.366 148.579 Türkiyenin Otomobil Girişim Grubu Sanayi ve Ticaret A.Ş. (3) - 25.650 Other related parties 445 139
278.551 550.383
(1) Zorlu Holding Group Company, (2) Parent (3) Subsidiary As of 31 December 2020, the annual average effective interest rate of other receivables in TL is 20%. and in USD is 7%.(31 December 2019: USD 7%, TL 21%). e) Other long term receivables from related parties 31 December 2020 31 December 2019
Zorlu Holding A.Ş. (2) 2.424.465 1.647.724 Vestel Savunma Sanayi A.Ş. (3) 2.244.748 1.470.762 Meta Nikel Kobalt Madencilik Sanayi Ve Ticaret A. Ş. (3) 1.291.974 862.559
5.961.187 3.981.045 f) Other payables to related parties 31 December 2020 31 December 2019
Zorlu Family (2) 69.442 56.195 g) Lease liabilities to related parties 31 December 2020 31 December 2019
Zorlu Gayrimenkul Geliştirme ve Yatırım A.Ş.(1) 29.181 22.943 Zorlu Yapı Yatırım A.Ş.(1) 3.796 184
32.977 23.127 h) Transactions with related parties 1 January - 1 January - 31 December 2020 31 December 2019
Sales Vestel Electronics Gulf DMCC . (3) - 45.274 Vestel Electronica S.R.L. (3) - 42.984 Zorluteks Tekstil Sanayi ve Ticaret A.Ş. (1) 5.189 5.330 Other related parties 7.451 3.916
12.640 97.504
(1) Zorlu Holding Group Company, (2) Parent (3) Subsidiary
Vestel Elektronik 2020 Annual Report 269 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 8 - RELATED PARTY DISCLOSURES (Cont’d) h) Transactions with related parties (Cont’d) 1 January - 1 January - 31 December 2020 31 December 2019
Operating expenses ABH Turizm Temsilcilik ve Ticaret A.Ş. (1) 7,477 33,340 Zorlu Holding A.Ş. (2) 63,841 42,162 Zorlu Gayrimenkul Gel. ve Yat. A.Ş. (1) 12,521 10,908 Zorlu Air Havacılık A.Ş. (1) 4,792 5,602 Other related parties 14,737 15,524 103,368 107,536 Other income from operating activities Other related parties 4.726 8.956
Other expense from operating activities Other related parties 292 99 1 January - 1 January - 31 December 2020 31 December 2019
Financial income Zorlu Holding A.Ş. (2) 702.921 550.957 Vestel Savunma Sanayi A.Ş. (3) 397.476 235.333 Other related parties 332.142 58.154 1.432.539 844.444
Financial expense Zorlu Holding A.Ş. (2) 44.701 - Other related parties 176 371 44.877 371
Dividend paid 9.601 27.345
Zorlu Holding Group Company, (2) Parent (3) Subsidiary i) Guarantees received from and given to related parties are disclosed in note 19. j) Compensation paid to key management including directors, the Chairman and members of Board of Directors, general managers and assistant general managers Compensation paid to key management for the year ended 31 December 2020 is TL 33.505 thousand (1 January - 31 December 2019: 29.669 thousand TL). k) Financial income from related parties result from interest income from financial liabilities.
270 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 9 - TRADE RECEIVABLES AND PAYABLES 31 December 2020 31 December 2019
Short term trade receivables Trade receivables - Related parties (note 8) 15.473 55.810 - Other parties 5.175.695 3.084.681 Cheques and notes receivables 263.751 261.793 Other 192.746 146.437
5.647.665 3.548.721 Unearned interest expense (-) - Other parties (35.215) (10.966) Allowance for doubtful receivables (-) (199.946) (164.923)
Total short term trade receivables 5.412.504 3.372.832 Cheques and notes receivables 2.426 77.527 Unearned interest expense (-) (119) (9.932)
Total long term trade receivables 2.307 67.595 1 January - 1 January - 31 December 2020 31 December 2019
Opening balance. 1 January 164.923 118.450 Current year additions 58.940 51.807 Provisions no longer required (139) (850) Doubtful receivables written-off (25.467) (5.055) Currency translation differences 1.689 571
Balance at 31 December 199.946 164.923
Vestel Elektronik 2020 Annual Report 271 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 9 - TRADE RECEIVABLES AND PAYABLES (Cont’d) 31 December 2020 31 December 2019
Short term trade payables Trade payables - Related parties (note 8) 29.713 7.830 - Other parties 8.031.657 6.116.995 Notes payables - Other parties - 59 Other 5.181 3.491
8.066.551 6.128.375 Unearned interest income (-) - Related parties (note 8) (112) - - Other parties (6.361) (666)
Total short term trade payables 8.060.078 6.127.709
Long term trade payables Trade payables - Other parties 61.787 6.747
Total long term trade payables 61.787 6.747
NOTE 10 - OTHER RECEIVABLES 31 December 2020 31 December 2019
Short term other receivables Receivables from official institutions 267.203 187.448 Receivables from related parties (note 8) 278.551 550.383 Deposits and guarantees given 88.093 59.075 Other 93.758 92.854
727.605 889.760 Allowance for doubtful receivables (-) (89.691) (89.376)
637.914 800.384 Long term other receivables Deposits and guarantees given 7.323 5.507 Receivables from related parties (note 8) 5.961.187 3.981.045 Other 8.338 8.278
5.976.848 3.994.830 Allowance for doubtful receivables (-) (8.278) (8.278)
5.968.570 3.986.552
The Group provides allowance for doubtful receivables.
272 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 11 - INVENTORIES 31 December 2020 31 December 2019
Raw materials 2.055.425 1.115.649 Work in process 151.867 94.662 Finished goods 1.835.398 1.520.401 Merchandise 72.205 155.044 Other 5.981 5.228
4.120.876 2.890.984 Provision for impairment on inventories (-) (59.407) (57.869)
4.061.469 2.833.115
Cost of the inventory included in the consolidated statement of comprehensive income in the period 1 January - 31 December 2020 is 13.280.997 thousand TL (2019: 11.188.015 thousand TL). As of 31 December 2020 the Group does not have inventories pledged as security for liabilities (31 December 2019: None) Allocation of provision for impairment on inventories in terms of inventory type is as follows: 31 December 2020 31 December 2019
Raw materials 17.579 21.005 Finished goods and merchandise 41.828 36.864
59.407 57.869
Movement of provision for impairment on inventories is as follows: 1 January - 1 January - 31 December 2020 31 December 2019
Opening balance, 1 January 57.869 32.801 Current year additions 4.626 34.574 Realised due to sale of inventory (13.701) (13.109) Currency translation differences 10.613 3.603
Balance at 31 December 59.407 57.869
NOTE 12 - PREPAID EXPENSES 31 December 2020 31 December 2019
Prepaid expenses in current assets Order advances given 105.667 29.423 Prepaid expenses 119.237 56.664 Business advances given 5.182 3.587
230.086 89.674
Prepaid expenses in non-current assets Advances given for fixed asset purchases 58.930 64.471 Prepaid expenses 14.450 9.025
73.380 73.496
Vestel Elektronik 2020 Annual Report 273 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 13 - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD 31 December 2020 31 December 2019 % Amount % Amount
Investment in associates Meta Nikel Kobalt Madencilik San. ve Tic. A.Ş. 50% 808.203 50% 961.272 Türkiyenin Otomobil Girişim Grubu Sanayi ve Ticaret A.Ş. 19% 115.127 19% 12.920
923.330 974.192
As on 29 June 2018, pursuant to the Group’s goal to diversify its lines of business and achieve profitable growth by investing in new-generation technologies, in order to secure the supply of nickel sulphate and cobalt sulphate compounds, which are critical raw materials for the production of EV batteries, of Meta Nikel Kobalt Madencilik Sanayi ve Ticaret A.Ş. (“META”), which is a Zorlu Holding A.Ş. subsidiary and is involved in nickel-cobalt mining. The Group has purchased 916.335.000 shares (each with a nominal value of TL1 and representing 50% of the Group’s share capital) from Ahmet Nazif Zorlu, Olgun Zorlu, Mehmet Emre Zorlu, Selen Zorlu Melik, Meta Madencilik Enerji Turizm Danışmanlık Sanayi ve Ticaret A.Ş. and Zorlu Holding AŞ, for a total consideration of US$250 mn. The acquisition value is in accordance with the valuation range of US$447,2 million and US$572 million stated in June 29, 2018 the independent appraisal report prepared by Ernst & Young Advisory Services, which is licensed by the Capital Markets Board. META was founded in 2000 to undertake nickel mining in Turkey, has been operating under Zorlu Group since 2007. The Group’s nickel cobalt mining facility in Gördes, Manisa was commissioned at the end of 2014. The facility has a production capacity of 10.000 tons of nickel content and 550 tons of cobalt content per annum. Besides Gördes, META also has a licensed field in Eskişehir and undertakes surveying activities in various regions of Turkey. Currently, META produces nickel-cobalt hydroxide (MHP), which is an intermediate product, and plans to undertake an investment for the production of nickel sulfate and cobalt corbonat compounds, which are critical for Li-ion battery production in the upcoming period. Within the framework of Turkey’s Automobile Project, following the work undertaken by the Joint Initiative Group, to which Group’s controlling shareholder, Zorlu Holding AŞ was a party, Vestel Elektronik Sanayi ve Ticaret AŞ decided has participated with a 19% share in “Türkiye’nin Otomobili Girişim Grubu Sanayi ve Ticaret A.Ş.”, which is planned to be established to produce mainly electric passenger cars and carry out supporting activities. In this respect, the Shareholders Agreement and Articles of Association have been signed on 31 May 2018. Establishment of the new Group is completed on 28 June 2018. The movements of META, which is an investment accounted for using the equity method during the period 1 January - 31 December 2020 and 2019 is as follows: 1 January - 1 January - 31 December 2020 31 December 2019
Balance at 1 January 961.272 1.131.130 Shares from profit/loss (209.309) (219.139) Shares from other comprehensive income/expense 56.240 49.281
Balance at 31 December 808.203 961.272
Summary financial statement information of META is as follows: 31 December 2020 31 December 2019
Total Assets 4.248.886 3.482.654 Total Liabilities (3.967.817) (2.894.281)
Net assets 281.069 588.373
274 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 13 - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Cont’d) 1 January - 1 January - 31 December 2020 31 December 2019
Net sales 402.000 135.171 Income/(loss) before tax (323.950) (469.943) Tax benefit/(expense) (94.668) 31.665 Net income/(loss) for the period (418.618) (438.278) Total comprehensive loss (306.139) (339.716)
Impairment test of investments accounted for using the equity method: As stated in the accounting policies in Note 2.1.3.b, on the grounds of materiality, the Group has subjected META to impairment testing in accordance with the provisions of TAS 36 “Impairment of Assets”, which is accounted for using the equity method. The recoverable amount was determined based on discounted cash flow analysis prepared on the basis of the mine resources of META in licensed mine areas in Gördes and the future investments. As a result of impairment tests, no impairment was identified related to META as of 31 December 2020. (2019: None) Sensitivity analysis: The sensitivity analysis performed for the estimates and assumptions used in determining the cash flows is as follows: Sensitivity scenarios are analyzed by comparing base scenario to the scenarios where significant assumptions used in impairment tests show negative deviations in defined percentages. In the related sensitivity analyzes performed as of 31 December 2020, the deviations of the recoverable amount compared to the carrying amount including goodwill are summarized in the table below: Percentage of META’s carrying amount
Sensitivity analysis 1% increase in discount rate 108% 10% decrease in nickel prices 75% 10% decrease in cobalt carbonat prices 117% 10% decrease in metal equivalent mine resource amount 120%
In accordance with the loan agreement of Meta Nikel as amended on 23 August 2020: - Pursuant to the Commercial Enterprise Pledge Agreement, a first degree pledge amounting to TL 1.670.000 thousand is placed on behalf of creditors Meta Nikel’s assets indefinitely and the pledge will be valid until Meta Nikel is canceled the pledge after the payment of the mentioned loans. - In accordance with the Mining License Mortgage Agreement a top limit mining license first degree mortgage amounting to USD 420,000 thousand is established. - Pursuant to the share pledge agreement, first degree pledge was established on all shares representing 100% of Meta Nikel’s share capital, including all shares to be issued by Meta Nikel. - In accordance with the Transfer of Receivables Agreement, Vestel Elektronik is the Successor Creditor in the collection of receivables from Meta Nikel in order to establish a permanent guarantee of the performance of the debts of Meta Nikel resulting from the loan agreement subject to collateral.
Vestel Elektronik 2020 Annual Report 275 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 14 - PROPERTY, PLANT AND EQUIPMENT Currency 1 January translation Fair value 31 December 2020 Additions Disposals differences Transfers increase 2020
Cost or revaluation Land 635.564 - (46.972) 5.370 - 551.928 1.145.890 Land improvements 132.438 1.445 (5.110) (1.060) (15.183) 23.232 135.762 Buildings 1.489.078 12.857 (163.501) 33.364 (70.923) 814.787 2.115.662 Leasehold improvements 156.981 9.490 (7) 1.625 180 - 168.269 Plant and machinery 3.168.798 523.531 (113.367) 16.687 50.723 - 3.646.372 Motor vehicles 7.546 1.119 (1.253) 538 - - 7.950 Furniture and fixtures 427.429 40.382 (7.240) 6.972 9.937 - 477.480 Other tangible assets 849 - - - - - 849 Construction in progress 54.295 65.542 (46) 10 (81.737) - 38.064
6.072.978 654.366 (337.496) 63.506 (107.003) 1.389.947 7.736.298
Accumulated depreciation Land improvements 6.932 8.598 (552) 271 (15.249) - - Buildings 60.895 52.060 (29.410) 13.150 (94.352) - 2.343 Leasehold improvements 144.705 14.550 (5) 1.013 - - 160.263 Plant and machinery 2.053.707 404.649 (112.729) 15.905 - - 2.361.532 Motor vehicles 4.841 1.197 (1.253) 537 1.554 - 6.876 Furniture and fixtures 348.721 40.716 (6.475) 5.676 - - 388.638 Other tangible assets 849 - - - - - 849
2.620.650 521.770 (150.424) 36.552 (108.047) - 2.920.501
Net book value 3.452.328 4.815.797
276 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 14 - PROPERTY, PLANT AND EQUIPMENT (Cont’d) Currency 1 January translation Fair value 31 December 2019 Additions Disposals differences Transfers increase 2019
Cost or revaluation Land 625.381 - - 10.183 - - 635.564 Land improvements 126.962 251 - 5.212 13 - 132.438 Buildings 1.407.645 14.318 (6.757) 69.387 4.485 - 1.489.078 Leasehold improvements 154.233 2.822 (1.068) 495 499 - 156.981 Plant and machinery 2.756.625 354.742 (44.042) 35.558 65.915 - 3.168.798 Motor vehicles 7.725 718 (1.258) 361 - - 7.546 Furniture and fixtures 407.792 19.896 (7.641) 4.422 2.960 - 427.429 Other tangible assets 849 - - - - - 849 Construction in progress 39.874 88.675 (88) 4 (74.170) - 54.295
5.527.086 481.422 (60.854) 125.622 (298) - 6.072.978
Accumulated depreciation Land improvements - 5.949 - 983 - - 6.932 Buildings - 49.061 (4.297) 16.131 - - 60.895 Leasehold improvements 129.113 16.084 (781) 289 - - 144.705 Plant and machinery 1.744.385 324.678 (42.452) 27.096 - - 2.053.707 Motor vehicles 4.546 1.075 (1.134) 354 - - 4.841 Furniture and fixtures 313.486 38.438 (7.107) 3.904 - - 348.721 Other tangible assets 849 - - - - - 849
2.192.379 435.285 (55.771) 48.757 - - 2.620.650
Net book value 3.334.707 3.452.328
Vestel Elektronik 2020 Annual Report 277 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 14 - PROPERTY, PLANT AND EQUIPMENT (Cont’d) Cost and accumulated depreciation of land, land improvements and buildings before revaluation are as follows: Land improvements 31 December 2020 Land and buildings
Cost 180.642 588.508 Accumulated depreciation (-) - (194.195)
Net book value 180.642 394.313
Land improvements 31 December 2019 Land and buildings
Cost 96.653 666.083 Accumulated depreciation (-) - (214.491)
Net book value 96.653 451.592
Additions to property, plant and equipment in the period 1 January - 31 December 2020 mainly consist of machinery and equipment investments made to television and electronic devices factory, first and second refrigerator, cooker, dishwasher, washing machine and tumbler drier factories. As of 31 December 2020 the Group does not have property, plant and equipment pledged (2019: None) Useful lives of property, plant and equipment is as follows: Useful life
Land improvements 5 - 35 years Buildings 10 - 46 years Leasehold improvements 3 - 10 years Plant and machinery 2 - 30 years Motor vehicles 5 - 10 years Furniture and fixtures 5 - 14 years
Allocation of current year depreciation and amortization expenses is as follows: 1 January - 1 January - 31 December 2020 31 December 2019
Cost of sales 450.402 367.625 Research and development expenses 164.814 144.387 Marketing. selling and distribution expenses 102.863 74.010 General administrative expenses 30.619 35.797 Other operating expense (idle capacity depreciation expense) 4.334 5.135
753.032 626.954
278 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 14 - PROPERTY, PLANT AND EQUIPMENT (Cont’d) 31 December 2020 Level 1 Level 2 Level 3
Tangible Assets Lands - 1.145.890 - Buildings and land improvements - 2.249.081 -
31 December 2019 Level 1 Level 2 Level 3
Tangible Assets Lands - 635.564 - Buildings and land improvements - 1.553.689 -
NOTE 15 - RIGHT OF USE ASSETS 1 January Effect of change in 31 December 2020 accounting policies Additions Disposals 2020
Cost Land and buildings 141.468 - 109.898 - 251.366 Machinery 66.316 - 5.020 (5.932) 65.404 Motor vehicles 15.271 - 15.356 - 30.627
223.055 - 130.274 (5.932) 347.397
Accumulated amortization Land and buildings 37.068 - 59.540 - 96.608 Machinery 15.765 - 18.442 - 34.207 Motor vehicles 6.446 - 10.375 - 16.821
59.279 - 88.357 - 147.636
Net book value 163.776 - 41.917 (5.932) 199.761 1 January Effect of change in 31 December 2019 accounting policies Additions Disposals 2019
Cost Land and buildings - 141.468 - - 141.468 Machinery - 66.316 - - 66.316 Motor vehicles - 15.271 - - 15.271
- 223.055 - - 223.055
Accumulated amortization Land and buildings - - 37.068 - 37.068 Machinery - - 15.765 - 15.765 Motor vehicles - - 6.446 - 6.446
- - 59.279 - 59.279
Net book value - 223.055 - 163.776
Vestel Elektronik 2020 Annual Report 279 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 16 - INTANGIBLE ASSETS Currency 1 January translation 31 December 2020 Additions Disposals differences Transfers 2020
Cost Rights 70.878 15.151 - 1.829 (2.881) 84.977 Development cost 1.169.884 248.201 (36.120) - 1.414 1.383.379 Other intangible assets 180.684 9.438 (26.009) 12.436 (1.132) 175.417
1.421.446 272.790 (62.129) 14.265 (2.599) 1.643.773 Accumulated amortization Rights 55.099 619 - 1.770 (1.555) 55.933 Development cost 641.642 131.789 - - - 773.431 Other intangible assets 106.977 10.497 (25.381) 11.376 - 103.469
803.718 142.905 (25.381) 13.146 (1.555) 932.833
Net book value 617.728 710.940 Currency 1 January translation 31 December 2019 Additions Disposals differences Transfers 2019
Cost Rights 70.832 140 (636) 542 - 70.878 Development cost 975.596 195.085 (797) - - 1.169.884 Other intangible assets 167.259 8.799 (455) 4.783 298 180.684
1.213.687 204.024 (1.888) 5.325 298 1.421.446 Accumulated amortization Rights 52.070 3.143 (636) 522 - 55.099 Development cost 527.517 114.125 - - - 641.642 Other intangible assets 93.503 9.987 (91) 3.578 - 106.977
673.090 127.255 (727) 4.100 - 803.718
Net book value 540.597 617.728
Development costs, incurred by the Group on development projects relating to television and electronic devices, refrigerators, split air conditioners, washing machines, cookers, drying machines and dish washers are capitalized as intangible assets when it is probable that costs will be recovered through future commercial activity and only if the cost can be measured reliably. Useful lives of intangible assets are as follows: Useful life
Rights 2 - 15 years Development cost 2 - 10 years Other 2 - 15 years
280 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 17 - GOODWILL Goodwill is distributed on cash generating unit which are based on segmental reporting. Summary table of goodwill based on segmental reporting is given below: 31 December 2020 31 December 2019
White goods 168.543 168.543 Television and electronic devices 25.773 26.998 Software 2.252 2.252
196.568 197.793
Impairment of the goodwill amount relating to the listed subsidiary of the Group is tested through the evaluation of the fair value determined on the average transaction amounts effective as of the balance sheet date as recoverable amount. NOTE 18 - GOVERNMENT GRANTS There are investment incentive certificates to which the Group has been entitled by the official authorities in connection with certain capital expenditures. The grants obtained by the Group in nature are as follows: i) Exemption from customs duty on machinery and equipment to be imported, ii) VAT exemption with respect to purchases of investment goods both from domestic and export markets, iii) Incentives under the jurisdiction of the research and development law,(Note 30) iv) Inward processing permission certificates, v) Cash refund from Tübitak - Teydeb for research and development expenses, vi) Discounted corporate tax incentive, vii) Insurance premium employer share incentive viii) Brand support incentive (Turquality) given by Republic of Turkey Ministry of Economy. Research and development incentive premium from Tübitak Teknoloji ve Yenilik Destek Programları Başkanlığı (“TEYDEB”) amounts to TL 3.656 thousand for the period 1 January - 31 December 2020. (1 January -31 December 2019: TL 7.625 thousand). Brand support incentive Turquality obtained from Republic of Turkey Ministry of Economy amounts to TL 2.039 thousand in year 2020. (2019: TL 14.551 thousand).
Vestel Elektronik 2020 Annual Report 281 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 19 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES a) Provisions 31 December 2020 31 December 2019
Short term provisions Warranty and assembly provision 315.313 266.042 Other provisions 401.302 291.130 Provision for lawsuit risks 29.195 24.909
745.810 582.081
Long term provisions Warranty and assembly provision 72.501 42.878 Other provisions - 2.959
72.501 45.837
There are various cases filed and continuing against the Group domestically and in foreign countries. With reference to Group management’s and legal advisors’ assessments, no provision is provided for those cases amounting to EUR 18.506 thousand and TL 11.778 thousand (2019: EUR 31.889 thousand and TL 31.259), that are expected to be finalized in favor of the Group. As of 31 December 2020, the amount of provision provided for the cases for which the probability of losing the case is assessed to be high by the Group management and legal advisors is TL 150.802 thousand (2019: TL 24.909 thousand). As of 31 December 2020 and 2019 movements of warranty and assembly provisions are as follows: 1 January - 1 January - 31 December 2020 31 December 2019
Opening balance. 1 January 308.920 297.326
Current year additions 459.098 368.934 Provisions no longer required (380.204) (357.340)
Balance at 31 December 387.814 308.920 b) Guarantees received by the Group Guarantee letters, collaterals, cheques and notes received 31 December 2020 31 December 2019
Guarantee letters 645.077 550.767 Cheques and notes 1.053.010 387.751 Collaterals and pledges 1.425.038 1.407.870
3.123.125 2.346.388
282 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 19 - PROVISIONS, CONTINGENT ASSETS AND LIABILITIES (Cont’d) c) Collaterals, pledges and mortgages (“CPM’s”) given by the Group USD EUR TL CPM’s given by the Group (‘000) (‘000) TL Equivalent
31 December 2020 A. CPM’s given on behalf of its own legal entity 5.239 27.743 111.587 399.950
B. CPM’s given on behalf of fully consolidated subsidiaries (*) 1.963.193 169.418 2.741.621 18.678.540
C. CPM’s given on behalf of third parties for ordinary course of business - - - -
D. Total amount of other CPM’s given 36.437 - 22.001 289.467
i. Total amount of CPM’s given on behalf of the parent company - - - - ii. Total amount of CPM’s given to on behalf of other group companies which are not in scope of B and C. 36.437 - 22.001 289.467 iii. Total amount of CPM’s given on behalf of third parties which are not in scope of C. - - - -
Total 2.004.869 197.161 2.875.209 19.367.957 USD EUR TL CPM’s given by the Group (‘000) (‘000) TL Equivalent
31 December 2019 A. CPM's given on behalf of its own legal entity 5.993 22.493 196.638 381.833
B. CPM's given on behalf of fully consolidated subsidiaries (*) 1.918.972 239.495 2.900.583 15.892.446
C. CPM's given on behalf of third parties for ordinary course of business - - - -
D. Total amount of other CPM's given 36.437 - 22.001 238.444
i. Total amount of CPM's given on behalf of the parent company - - - - ii. Total amount of CPM's given to on behalf of other group companies which are not in scope of B and C. 36.437 - 22.001 238.444 iii.Total amount of CPM's given on behalf of third parties which are not in scope of C. - - - -
Toplam 1.961.402 261.988 3.119.222 16.512.723
(*) Fully consolidated subsidiaries have given collaterals to various financial institutions on behalf of each other for their forward contracts and for the total amount of loans utilized. As of 31 December 2020, proportion of other CPM’s given by the Group to its equity is 4%.(31 December 2019: 6%)
Vestel Elektronik 2020 Annual Report 283 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 20 - COMMITMENTS As of the balance sheet date the Group has committed to realize exports amounting to 1.025.633 thousand USD (31 December 2019: 1.041.140 thousand USD) due to the export and investment incentive certificates obtained. As of 31 December 2020 the Group has forward foreign currency purchase contract that amounts to USD 937.197 thousand, EUR 171.944 thousand, GBP 44.323 thousand, PLN 20.279 thousand, TL 3.051.872 thousand against forward foreign currency sales contract that amounts to USD 545.704 thousand, EUR 490.860 thousand, GBP 78.192 thousand, RUB 1.185.200 thousand, RON 5.747 thousand, PLN 48.817 thousand, SEK 9.447 thousand, CHF 250.139 thousand and TL 619.549 thousand. (31 December 2019: USD 857.412 thousand, EUR 334.503 thousand, GBP 52.928 thousand, PLN 40.850 thousand, RON 4.270 thousand, RUB 30.750 thousand and TL 1.489.514 thousand against forward foreign currency sales contract that amounts to USD 616.000 thousand, EUR 309.307 thousand, GBP 118.911 thousand, RUB 1.381.929 thousand, RON 8.669 thousand, PLN 133.695 thousand, SEK 9.447 thousand, CHF 249.707 thousand and TL 748.328 thousand against forward foreign currency sales contract). NOTE 21 - EMPLOYEE BENEFITS Liabilities for employee benefits: 31 December 2020 31 December 2019
Due to personnel 113.466 91.078 Social security payables 132.102 108.977
245.568 200.055
Long-Term provisions for employee benefits: 31 December 2020 31 December 2019
Provision for employment termination benefits 226.307 156.116
Under Turkish law, the Group is required to pay employment termination benefits to each employee whose employment is terminated without due cause. In addition, under the existing Social Security Law No.506, clause No. 60, amended by the Labor Laws dated 6 March 1981, No.2422 and 25 August 1999, No.4447, the Group is also required to pay termination benefits to each employee who has earned the right to retire by receiving termination indemnities. The amount payable is the equivalent of one month’s salary for each year of service and is limited to a maximum of 7.117,17 TL/year as of 31 December 2020 (31 December 2019: 6.379,86 TL/year). Provision for employment termination benefits is not subject to any funding. The provision is calculated by estimating the present value of the future obligation of the Group arising from retirement of employees. TAS 19 (“Employee Benefits”) requires actuarial valuation methods to be developed to estimate the enterprise’s obligation under defined employee plans. Accordingly actuarial assumptions were used in the calculation of the total liability which are described below: The principal assumption is that the maximum liability for each year of service will increase in line with inflation. Thus, the discount rate applied represents the expected real rate after adjusting for the anticipated effects of future inflation. An expected inflation rate and appropriate discount rate should both be determined, the net of these being real discount rate. Consequently in the accompanying financial statements as of 31 December 2020, the provision is calculated by estimating the present value of the future obligation of the Group arising from retirement of employees. As of 31 December 2020 provision is calculated based on real discount rate of 4,44% (31 December 2019: 5,21%) assuming 8,5% annual inflation rate and 12,94% discount rate.
284 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 21 - EMPLOYEE BENEFITS (Cont’d) The movement in the provision for employment termination benefit is as follows: 1 January - 1 January - 31 December 2020 31 December 2019
Balance at 1 January 156.116 111.100
Increase during the year 30.875 25.702 Payments during the year (19.197) (16.294) Actuarial (gain)/loss 40.449 19.300 Interest expense 18.064 16.308
Balance at 31 December 226.307 156.116
As of 31 December 2020, an increase in annual discount rate by 0,25% would lead to decrease in employee benefit liability by 3,6%; a decrease in annual discount rate by 0,25% , would lead to an increase in employee benefit liability by 3,7%.(31 December 2019: 4% decrease and 4,2% increase). As of 31 December 2020, an increase in salary escalation by 0,25% would lead to an increase in employee benefit liability by 3,9%; a decrease in salary escalation by 0,25% would lead to a decrease in employee benefit liability by 3,7%.(31 December 2019: 4,3% increase and 4,1% decrease). NOTE 22 - OTHER ASSETS AND LIABILITIES 31 December 2020 31 December 2019
Other current assets VAT carried forward 53.422 9.588 Rebates from suppliers and incentives income accurals 26.961 23.194 Other 39.614 32.714
119.997 65.496
Other non - current assets Assets held for sale 9.590 9.925
9.590 9.925 31 December 2020 31 December 2019
Other current liabilities Advances received 164,431 108,124 Tax payables 154,594 83,479 Other 387,165 199,440
706,190 391,043
NOTE 23 - CAPITAL, RESERVES AND OTHER EQUITY ITEMS a) Paid in capital 31 December 2020 31 December 2019
Shares of par value Kr 1 each limit on registered share capital 1.000.000 1.000.000 Issued share capital 335.456 335.456
Vestel Elektronik 2020 Annual Report 285 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 23 - CAPITAL, RESERVES AND OTHER EQUITY ITEMS (Cont’d) As of 31 December 2020 and 31 December 2019 the shareholding structures are as follows: Shareholding Amount 31 December 2020 31 December 2019 31 December 2020 31 December 2019
Zorlu Holding A.Ş. 64,41% 64,41% 216.067 216.054 Shares held by public Other shareholders 33,49% 26,34% 112.344 88.359 Zorlu Holding A.Ş. 2,10% 9,25% 7.045 31.043
100% 100% 335.456 335.456
There is no investor holding 10% or more of shares of the company, traded in BIST. b) Adjustment to share capital Adjustment to share capital (restated to 31 December 2004 purchasing power of money) is the difference between restated share capital and historical share capital. c) Share premium Share premium account refers the difference between par value of the Company’s shares and the amount the company received for newly issued shares. The share premium account is disclosed under equity as a separate line item and may not be distributed. It may be used in capital increase. d) Legal reserves The legal reserves consist of first and second legal reserves appropriated in accordance with the Turkish Commercial Code (“TCC”). The first legal reserve is appropriated out of the statutory profits at the rate of 5%, until the total reserve reaches a maximum of 20% of the Company’s share capital. The second legal reserve is appropriated at the rate of 10% of all distributions in excess of 5% of the Company’s share capital. Under TCC, the legal reserves can only be used to offset losses and are not available for any other usage unless they exceed 50% of paid in share capital 31 December 2020 31 December 2019
Legal reserves 67.091 67.179 e) Revaluation reserve
Fair value gains on financial assets 11.435 4.321 Revaluation of property. plant and equipment 2.514.867 1.310.274
2.526.302 1.314.595 f) Accumulated deficit
Extraordinary reserves 512.541 512.541 Previous year’s loss 447.781 (142.242) Other inflation adjustment of share capital 119.718 119.718
1.080.040 490.017
286 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 23 - CAPITAL, RESERVES AND OTHER EQUITY ITEMS (Cont’d) g) Dividend distribution For quoted companies dividends are distributed in accordance with the Communiqué Serial II -19.1 on “Principals Regarding Distribution of Interim Dividends” issued by the CMB effective from 1 February 2014. Companies distribute dividends in accordance with their dividend payment policies settled and dividend payment decision taken in general assembly and in conformity with relevant legislations. The communiqué does not state a minimum dividend rate. Companies distribute dividends in accordance with the method defined in their dividend policy or articles of association. Additionally, dividend can be distributed in fixed or variable installments and dividend advances can be paid over the profit on interim financial statements. Unless the general reserves that has to be appropriated in accordance with TCC or the dividend to shareholders as determined in the articles of association or dividend policy are set aside; no decision can be taken to set aside other reserves, to transfer reserves to the subsequent year or to distribute dividends to holders of usufruct right certificates, to board of directors members or to employees; and no dividend can be distributed to those unless the determined dividend to shareholders is paid in cash. On the other hand, in accordance with the Articles of Association of the Company, the net period income is allocated after deducting the accumulated losses from the previous years, if any, as follows: a) As per Article 519 of the Turkish Commercial Code, 5% is allocated to a general legal reserve. b) A dividend is allocated from the remaining amount, at the rate determined by the General Assembly over an amount to be found after the addition of a donation, which is made in line with the Turkish Commercial Code and Capital Market Legislation. c) After the deductions above, the General Assembly has the right to decide how to allocate the dividend to members of the board of directors and officers, employees and workers, foundations established with various purposes, and similar persons and corporations. d) After the amounts stated in paragraph (a), (b) and (c) are deducted from the net period profit, the General Assembly is authorized to allocate the remaining amount as a second dividend or to allocate the remaining amount to its own reserve as per Article 521 of the Turkish Commercial Code. e) One tenth of the amount obtained after a dividend of 5% of the paid in capital and other legal reserve are deducted from the amount that is agreed to be allocated to the shareholders and other persons participating to the profit is added to the general legal reserve as per paragraph (c) of the second clause of article 519 of the Turkish Commercial Code. NOTE 24 - SALES 1 January - 1 January - 31 December 2020 31 December 2019
Domestic sales 6.219.178 4.182.503 Overseas sales 17.006.217 14.363.541
Gross sales 23.225.395 18.546.044
Sales discounts (-) (1.679.215) (1.371.921)
Net sales 21.546.180 17.174.123
Cost of sales (15.527.830) (12.896.358)
Gross profit 6.018.350 4.277.765
Vestel Elektronik 2020 Annual Report 287 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 25 - EXPENSES BY NATURE 1 January - 1 January - 31 December 2020 31 December 2019
Raw materials. supplies and finished goods 13.570.360 11.287.871 Changes in finished goods. work in process. trade goods (289.363) (99.856) Personnel expenses 1.693.857 1.301.246 Depreciation and amortization 748.698 621.819 Export. transportation. warehouse expenses 879.691 697.123 Warranty and assembly expenses 459.098 368.934 Advertising expenses 219.044 199.477 Other 1.415.958 1.088.617
18.697.343 15.465.231
NOTE 26 - GENERAL ADMINISTRATIVE EXPENSES, MARKETING EXPENSES, RESEARCH AND DEVELOPMENT EXPENSES a) General administrative expenses: 1 January - 1 January - 31 December 2020 31 December 2019
Personnel expenses 169.313 143.126 Depreciation and amortization 30.619 35.797 Consultancy expenses 65.777 40.412 Information technology expenses 49.306 38.330 Rent and office expenses 35.317 35.176 Tax and duties 19.811 14.361 Insurance expenses 14.058 10.299 Travelling expenses 5.836 9.065 Benefits and services provided externally 3.557 1.817 Other 112.034 73.439
505.628 401.822 b) Marketing expenses: 1 January - 1 January - 31 December 2020 31 December 2019
Export. transportation. warehouse expenses 823.637 652.655 Warranty and assembly expenses 459.098 368.934 Personnel expenses 409.766 336.769 Advertising expenses 192.457 177.054 Depreciation and amortization 102.863 74.010 Other 340.933 295.799
2.328.754 1.905.221 c) Research and development expenses: Depreciation and amortization 164.814 144.387 Personnel expenses 74.769 37.159 Travel expense 2.781 8.378 Other 92.767 71.906
335.131 261.830
288 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 27 - OTHER INCOME AND EXPENSE FROM OPERATING ACTIVITIES a) Other income from operating activities: 1 January - 1 January - 31 December 2020 31 December 2019
Credit finance gains arising from trading activities 31.168 74.349 Foreign exchange gains arising from trading activities 1.306.895 919.253 Reversals of provisions 4.762 25.642 Other income 222.894 178.366
1.565.719 1.197.610 b) Other expense from operating activities: Debit finance charges arising from trading activities 127.069 149.585 Foreign exchange expenses arising from trading activities 2.178.573 1.209.641 Provision expenses 33.125 52.244 Other expenses 129.567 220.091
2.468.334 1.631.561
NOTE 28 - FINANCIAL INCOME AND FINANCIAL EXPENSE a) Financial income: 1 January - 1 January - 31 December 2020 31 December 2019
Foreign exchange gains 1.776.585 853.041 Gains on derivative financial instruments 988.555 895.306 Interest income 543.927 534.325
3.309.067 2.282.672 b) Financial expense: 1 January - 1 January - 31 December 2020 31 December 2019
Foreign exchange losses 1.016.223 695.978 Losses on derivative financial instruments 1.173.752 1.157.491 Interest and commision expense 897.343 1.146.066 Other finance expenses 3.788 9.446
3.091.106 3.008.981
Vestel Elektronik 2020 Annual Report 289 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 29 - ANALYSIS OF OTHER COMPREHENSIVE INCOME ITEMS a) Fixed assets revaluation fund: 1 January - 1 January - 31 December 2020 31 December 2019
Opening balance. 1 January 1.310.274 1.338.777 Depreciation transfer upon revaluation reserves - net (36.784) (27.129) Net depreciation transfer upon revaluation reserves attributable to non-controlling interests (682) (1.374) Increase in reserves arising from revaluation of land. buildings and land improvements 1.389.947 - Deferred tax income calculated over increase in revaluation reserves (86.187) - Increase in revaluation reserves attributable to non-controlling interests (40.542) - Deferred tax income calculated over increase in revaluation reserves attributable to non-controlling interest 530 - Transactions with non-controlling interests (21.689) -
Balance at 31 December 2.514.867 1.310.274 b) Cash flow hedge fund: 1 January - 1 January - 31 December 2020 31 December 2019
Opening balance. 1 January (4.662) (10.521) Profit/(loss) from cash flow hedges (52.611) 7.550 Deferred tax calculated over cash flow hedge fund 10.523 (1.661) (Profit)/loss from cash flow hedges attributable to non-controlling interests 3.718 (38) Deferred tax calculated over profit/(loss) from cash flow hedges attributable to non-controlling interests (744) 8
Balance at 31 December (43.776) (4.662)
290 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 29 - ANALYSIS OF OTHER COMPREHENSIVE INCOME ITEMS (Cont’d) c) Actuarial gain/loss arising from defined benefit plans: 1 January - 1 January - 31 December 2020 31 December 2019
Opening balance. 1 January (34.999) (19.907) Actuarial gain/loss arising from defined benefit plans (40.449) (19.300) Deferred tax calculated over actuarial gain/loss arising from defined benefit plans 8.090 3.860 Actuarial gain/loss arising from defined benefit plans attributable to non-controlling interests 1.733 435 Deferred tax calculated over actuarial gain/loss arising from defined benefit plans attributable to non-controlling interests (347) (87) Transactions with non-controlling interests 781 -
Balance at 31 December (65.191) (34.999)
NOTE 30 - TAXES ON INCOME (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) 31 December 2020 31 December 2019
Corporation and income taxes 43.066 10.182 Prepaid taxes (-) (34.709) (17.441)
Current income tax liabilities - net 8.357 (7.259)
Deferred tax liabilities (333.362) (233.589) Deferred tax assets 321.146 230.498
Deferred tax liabilities - net (12.216) (3.091)
Turkish Tax Legislation does not permit a parent company its subsidiaries and investments in associates to file a consolidated tax return. Therefore, tax liabilities as reflected in these consolidated financial statements have been calculated on a separate entity basis for the fully consolidated subsidiaries. Corporate tax is applied on taxable corporate income, which is calculated from the statutory accounting profit by adding back non-deductible expenses and by deducting other exempt income. In addition to corporate taxes, companies should also calculate income withholding taxes on any dividends distributed at the rate of % 15, except for companies receiving dividends who are resident companies in Turkey. Undistributed dividends incorporated in share capital are not subject to income withholding taxes. In Turkey, advance tax returns are filed on a quarterly basis at the rate of 20%, until the 14th day of the following month and paid until the 17th day. Advance tax returns files within the year are offset against corporate income tax calculated over the annual taxable corporate income. According to the Corporate Tax Law, 50% of the capital gains arising from the sale of tangible assets and 75% of the earning from investments in equity shares owned for at least two years are exempted from corporate tax on the condition that such gains are reflected in the equity. Under the Turkish taxation system, tax losses can be carried forward to be offset against future taxable income for up to five years. Tax losses cannot be carried back.
Vestel Elektronik 2020 Annual Report 291 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 30 - TAXES ON INCOME (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (Cont’d) There is no procedure for a final and definitive agreement on tax assessments. Tax returns are filed between 1-25 April following the close of the accounting year to which they relate. Tax authorities may however examine such returns and the underlying accounting records and may revise assessment within five years. For the years 2006-2017, corporate tax rate in Turkey is 20%. In accordance with the regulation numbered 7061, published in Official Gazette on 5 December 2017, corporate tax rate for the years 2018, 2019 and 2020 has increased from 20% to 22%. Therefore, deferred tax assets and liabilities as of 31 December 2020 are calculated with 22% tax rate for the temporary differences which will be realized in 2018, 2019 and 2020, and with 20% tax for those which will be realized after 2021 and onwards. Russian Federation In Russia, corporate tax rate applicable is 20% (2019: 20%). Under the Russian Federation taxation system, tax losses can be carried forward to be offset against future taxable income for up to ten years. There are no restrictions on the amounts subject to net off. On the other hand, tax, currency and customs legislations are subject to various interpretations and changes which can occurs frequently in Russian Federation. Management’s interpretation for such legislation, which is applied to the Group’s operations and activities, can be interpreted by regional and federal authorities in different ways. The events of the recent past in Russian Federation, shows that risk could be possible on approval of operations and activities, which approved in the past may not be approved in the future as a result of reviews by the tax authorities on legislation. According to a review by the tax inspection authorities, without exceptional circumstances, tax inspection covers three years prior to the final inspection. Under certain circumstances, such views may cover longer periods. The tax results of Company’s subsidiaries in other countries are not material to consolidated financial statements. As of 1 January - 31 December 2020 and 2019 tax benefit in the consolidated statement of income is as follows: 1 January - 1 January - 31 December 2020 31 December 2019
Current period tax expense (51.208) (14.782) Deferred tax benefit 19.164 52.719
Total tax (expense)/benefit (32.044) 37.937 1 January - 1 January - 31 December 2020 31 December 2019
Profit before tax 1.939.281 313.913
Local tax rate 22% 22% Tax income calculated using local tax rate (426.642) (69.061) Carry forward tax losses utilized 103.528 23.425 Non-deductible expenses (38.356) (10.574) Loss from equity accounted investment (22.897) (51.480) Adjustments with no tax effects (27.574) (20.427) Deduction and exemptions 115.207 55.233 Reduced taxation 267.121 112.860 Deferred tax effect of change in legal tax rate (2.431) (2.039)
Total tax (expense)/benefit (32.044) 37.937
Due to modernization, plant extension and investments incentive documents in Manisa Organized Industrial Zone, the Group has reduced rate of corporate tax advantage.
292 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 30 - TAXES ON INCOME (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (Cont’d) Deferred tax assets and liabilities The Group recognizes deferred tax assets and liabilities based upon temporary differences arising between their financial statements prepared in accordance with CMB Communiqué II, No. 14.1 and their statutory financial statements. These temporary differences usually result from the recognition of revenue and expenses in different reporting periods for the Communiqué and tax purposes. As of 31 December 2020 and 2019, the Group has not recognized deferred tax assets arising from its investment incentive certificate, in accordance with conservatism principle of accounting. The breakdown of cumulative temporary differences and the resulting deferred tax assets and liabilities provided using principal tax rate as of the balance sheet dates is as follows: Cumulative temporary differences Deferred tax 31 December 2020 31 December 2019 31 December 2020 31 December 2019
Deferred tax assets Employment termination benefits (226.307) (151.080) 45.261 30.216 Warranty provision (89.295) (108.750) 17.859 23.925 Provision for doubtful receivables (199.946) (177.777) 39.989 39.111 Unearned interest expense - (21.082) - 4.638 Maddi ve maddi olmayan duran varlıkların kayıtlı değerleri ile vergi matrahları arasındaki net fark (38.085) - 7.617 - Provision for impairment on inventories (59.407) (16.264) 11.882 3.578 Derivative financial instruments (303.178) (7.105) 60.636 1.556 R&D incentives (317.745) (607.600) 63.549 121.520 Other (371.765) (179.755) 74.353 39.546 321.146 264.090 Deferred tax liabilites Useful life and valuation differences on property. plant and equipment and intangible assets - 71.025 - (14.205) Derivative financial instruments 111.789 - (22.358) - Revaluation of tangible fixed assets 2.806.830 1.091.436 (280.683) (251.322) Other 151.605 7.518 (30.321) (1.654) (333.362) (267.181)
Deferred tax assets/(liabilites) - net (12.216) (3.091)
Carry forward tax losses subject to deferred tax calculation amounted to TL 141.864 thousand was utilized in 2020. Furthermore, within R&D law framework, the Group has R&D incentives amounted to thousand TL 317.743 (2019:451.550 thousand TL) Group did not recognized any deferred tax assets from investment incentives as of 31 December 2020. 31 December 2020 31 December 2019
Subsidiares with net deferred tax liabilities (333.362) (233.589) Subsidiares with net deferred assets 321.146 230.498
Vestel Elektronik 2020 Annual Report 293 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 30 - TAXES ON INCOME (INCLUDING DEFERRED TAX ASSETS AND LIABILITIES) (Cont’d) The movement of net deferred tax assets and liabilities is as follows: 1 January - 1 January - 31 December 2020 31 December 2019
Opening balance. 1 January (3.091) (54.287) Tax benefit recognized in income statement 19.164 52.719 Recognized in shareholders’ equity (70.070) 1.535 Currency translation differences 41.781 (3.058)
Deferred tax (liabilities)/assets at the end of the period. net (12.216) (3.091)
NOTE 31 - EARNINGS/(LOSS) PER SHARE 1 January - 1 January - 31 December 2020 31 December 2019
Net income/(loss) attributable to equity holders of the parent 1.772.599 324.047 Weighted number of ordinary shares with a Kr 1 of par value (hundred shares) 33.545.600 33.545.600
Earnings per share 5,28 0,97
NOTE 32 - DERIVATIVE INSTRUMENTS 31 December 2020 31 December 2019 Contract Fair Value Contract Fair Value amount Assets/(Liabilities) amount Assets/(Liabilities)
Derivative financial assets:
Held for trading Forward foreign currency transactions 4.762.883 105.345 4.349.967 42.291
Cash flow hedge Forward foreign currency transactions 479.576 6.444 250.574 3.196
Derivative financial liabilities:
Held for trading Forward foreign currency transactions 2.960.271 (135.768) 3.702.635 (42.532)
Cash flow hedge Forward foreign currency transactions 4.039.615 (167.410) 988.469 (10.060)
12.242.345 (191.389) 9.291.645 (7.105)
294 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT a) Capital risk management: The Group manages its capital to ensure that it will maintain its status as a going concern while maximizing the return to stakeholders through optimization of the debt and equity balance. The management considers the Group’s cost of capital and the risks associated with each class of capital. The management aims to balance its overall capital structure through the payment of dividends, share issues and proceeds from or repayments of debt. As of 31 December 2020 and 31 December 2019 the Group’s net debt/total equity ratios are as follows: 31 December 2020 31 December 2019
Total financial liabilities (note 7) 8.814.662 7.810.277 Cash and cash equivalents (note 5) (3.201.571) (2.394.334)
Net debt 5.613.091 5.415.943
Total shareholders equity 7.425.534 3.779.911
Total capital invested 13.038.625 9.195.854
Net debt/capital invested 43% 59%
Financial risk factors: The Group’s activities expose it to a variety of financial risks including the foreign currency exchange rates risk, credit risk and liquidity risk. The Group’s overall risk management programme on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments in order to protect itself from various financial risks. b.1) Credit risk: The Group is exposed to credit risk arising from receivables from credit finance sales and deposits with banks. Credit risk of receivables from third parties is managed by securing receivables with highest possible coverage. Methods used are: - Bank guarantees (guarantee letters, etc.) - Credit insurance - Mortgages - Cheque-notes
For customers receivables from which are not secured with collaterals, the credit quality of the customer is assessed by taking into account its financial position, past experience and other factors and individual risk limits are determined and monitored regularly.
Vestel Elektronik 2020 Annual Report 295 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont’d) Receivables Trade receivables Other receivables Related Other Related Other Bank 31 December 2020 party party party party deposits Other
Maximum exposed credit risk as of 31 December 2020 (A+B+C+D) 15.473 5.398.570 6.239.738 366.746 3.100.464 101.107 - Secured portion of the maximum credit risk by guarantees. etc. - (4.143.163) - - - - A. Net book value of financial assets either are not due or not impaired 15.473 4.874.958 6.239.738 366.746 3.100.464 101.107 - Secured portion by guarantees etc. - (3.751.130) - - - - B. Financial assets with renegotiated conditions ------C. Net book value of the overdue but not impaired financial assets - 403.154 - - - - - Secured portion by guarantees etc. - (271.575) - - - - D. Net book value of the impaired financial assets - 120.458 - - - - - Over due (gross book value) - 320.404 - 97.969 - - - Impairment (-) - (199.946) - (97.969) - - - Secured portion of the net value by guarantees etc. - (120.458) - - - -
296 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont’d) Receivables Trade receivables Other receivables Related Other Related Other Bank 31 December 2019 party party party party deposits Other
Maximum exposed credit risk as of 31 December 2019 (A+B+C+D) 55.810 3.384.617 4.531.428 255.508 2.167.320 227.014 - Secured portion of the maximum credit risk by guarantees, etc. - (1.988.751) - - - - A.Net book value of financial assets either are not due or not impaired 55.810 2.816.215 4.531.428 255.508 2.167.320 227.014 - Secured portion by guarantees etc. - (1.680.182) - - - - B. Financial assets with renegotiated conditions ------C.Net book value of the overdue but not impaired financial assets - 508.971 - - - - - Secured portion by guarantees etc. - (249.138) - - - - D.Net book value of the impaired financial assets - 59.430 - - - - -Over due (gross book value) - 224.353 - 97.654 - - -Impairment (-) - (164.923) - (97.654) - - -Secured portion of the net value by guarantees etc. - (59.430) - - - -
Aging of financial assets which are overdue but not impaired is as follows: 31 December 2020 31 December 2019
Overdue 1 - 30 days 260.006 192.556 Overdue 1 - 3 months 18.865 131.354 Overdue 3 - 12 months 93.961 134.964 Overdue 1 - 5 years 30.322 49.171 Overdue more than 5 years - 926
Total 403.154 508.971 b.2) Liquidity risk: The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of non-derivative financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. Derivative financial liabilities are presented by undiscounted net inflows and outflows.
Vestel Elektronik 2020 Annual Report 297 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont’d) As of 31 December 2020 maturity analysis of the Group’s financial liabilities is as follows: Carrying Contractual Up to 3 3 - 12 1 - 5 More than Contractual maturities value cash flows months months years 5 years
Non-derivative financial liabilities
Financial liabilities and leasing liabilities 8.814.662 9.103.232 1.349.117 5.885.533 1.867.784 798 Trade payables 8.121.865 8.212.026 4.612.760 3.193.311 405.955 - Other payables 71.923 71.923 - 71.923 - -
17.008.450 17.387.181 5.961.877 9.150.767 2.273.739 798
Derivative financial instruments
Derivative cash inflows - 12.242.345 8.913.521 3.328.824 - - Derivative cash outflows - (12.129.433) (8.655.619) (3.473.814) - -
191.389 112.912 257.902 (144.990) - -
As of 31 December 2019 maturity analysis of the Group’s financial liabilities is as follows: Carrying Contractual Up to 3 3 - 12 More than Contractual maturities value cash flows months months 5 years
Non-derivative financial liabilities
Financial liabilities 7.810.277 8.040.256 5.454.282 1.871.836 714.138 Trade payables 6.134.456 6.135.122 - 6.128.375 6.747 Other payables and liabilities 56.799 56.799 - 56.799 -
14.001.532 14.232.177 5.454.282 8.057.010 720.885
Derivative financial instruments
Derivative cash inflows 9.291.645 6.180.631 3.111.014 - Derivative cash outflows (9.269.692) (6.194.005) (3.075.687) -
7.105 21.953 (13.374) 35.327 - b.3) Foreign currency risk: The Group is exposed to exchange rate risk due to its foreign currency denominated transactions. The main principle of foreign currency risk management is to maintain foreign exchange position at the level that minimizes the impact of foreign exchange fluctuations. Derivative instruments are used in foreign currency risk management where necessary. In this respect the Group mainly prefers using foreign exchange forward contracts.
298 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont’d) Other (TL TL 31 December 2020 USD EUR Equivalent) Equivalent
1. Trade receivables 175.092 249.226 389.606 3.919.872 2a. Monetary financial assets (including cash and cash equivalents) 54.363 32.248 2.074.641 2.764.179 2b. Non-monetary financial assets - - - - 3. Other 37.723 - - 276.906 4. Current assets (1+2+3) 267.178 281.474 2.464.247 6.960.957 5. Trade receivables - - - - 6a. Monetary financial assets - - - - 6b. Non-monetary financial assets 742 2.698 - 29.750 7. Other 622.148 51 - 4.567.337 8. Non-current assets (5+6+7) 622.890 2.749 - 4.597.087 9. Total assets (4+8) 890.068 284.223 2.464.247 11.558.044 10. Trade payables 757.706 125.697 10.840 6.705.047 11. Financial liabilities 309.750 31.883 - 2.560.917 12a. Other monetary liabilities 17.156 1.949 5.468 148.958 12b. Other non-monetary liabilities - - - - 13. Current liabilities (10+11+12) 1.084.612 159.529 16.308 9.414.922 14. Trade payables - 6.833 - 61.551 15. Financial liabilities 60.368 15.402 - 581.866 16a. Other monetary liabilities - - - - 16b. Other non-monetary liabilities - - - - 17. Non-current liabilities (14+15+16) 60.368 22.235 - 643.417 18. Total liabilities (13+17) 1.144.980 181.763 16.308 10.058.339 19. Off-balance sheet derivative instruments net asset/(liability) position (19a+19b) 391.494 (318.917) (2.601.428) (2.600.439) 19a. Hedged total assets 937.198 171.943 481.097 8.909.444 19b. Hedged total liabilities (545.704) (490.860) (3.082.525) (11.509.883) 20. Net foreign currency asset/(liability) position (9-18+19) 136.582 (216.457) (153.489) (1.100.734) 21. Net foreign currency monetary asset/(liability) position (=1+2a+3+5+6a+7-10-11-12a-14-15-16a) (255.654) 99.762 2.447.939 1.469.955 22. Fair value of financial instruments used in foreign currency hedging - - - (191.389) 23. Export 615.064 1.168.897 1.516.127 17.006.217 24. Import 1.110.140 162.600 6.747 9.217.737
Vestel Elektronik 2020 Annual Report 299 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont’d) Other (TL TL 31 December 2019 USD EUR Equivalent) Equivalent
1. Trade receivables 120.347 166.085 454.618 2.274.068 2a. Monetary financial assets (including cash and cash equivalents) 62.236 21.927 1.525.566 2.041.088 2b. Non-monetary financial assets - - - - 3. Other 96.936 - - 575.819 4. Current assets (1+2+3) 279.519 188.012 1.980.184 4.890.975 5. Trade receivables - - - - 6a. Monetary financial assets - - - - 6b. Non-monetary financial assets 1.936 4.031 - 38.309 7. Other 514.071 117 - 3.054.463 8. Non-current assets (5+6+7) 516.007 4.148 - 3.092.772 9. Total assets (4+8) 795.526 192.160 1.980.184 7.983.747 10. Trade payables 757.779 128.994 12.612 5.371.858 11. Financial liabilities 294.035 154.820 - 2.776.272 12a. Other monetary liabilities 9.461 2 5.537 61.751 12b. Other non-monetary liabilities - - - - 13. Current liabilities (10+11+12) 1.061.275 283.816 18.149 8.209.881 14. Trade payables - 905 - 6.019 15. Financial liabilities 41.054 18.619 - 367.696 16a. Other monetary liabilities - - - - 16b. Other non-monetary liabilities - - - - 17. Non-current liabilities (14+15+16) 41.054 19.524 - 373.715 18. Total liabilities (13+17) 1.102.329 303.340 18.149 8.583.596 19. Off-balance sheet derivative instruments net asset/(liability) position (19a+19b) 241.412 25.196 (2.320.891) (719.287) 19a. Hedged total assets 857.412 334.503 484.285 7.802.129 19b. Hedged total liabilities (616.000) (309.307) (2.805.176) (8.521.416) 20. Net foreign currency asset/(liability)position (9-18+19) (65.391) (85.984) (358.856) (1.319.136) 21. Net foreign currency monetary asset/(liability) position (=1+2a+5+6a-10-11-12a-14-15-16a) (919.746) (115.328) 1.962.035 (4.268.440) 22. Fair value of financial instruments used in foreign currency hedging - - - (7.105) 23. Export 647.153 1.207.925 1.261.120 14.363.541 24. Import 1.095.309 196.440 2.217 7.462.087
300 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont’d) As of 31 December2020 and 31 December 2019 sensitivity analysis of foreign exchange rates is presented in below tables. Secured portions include impact of off-balance sheet derivative instruments. Gain/Loss Equity Foreign Foreign Foreign Foreign exchange exchange exchange exchange 31 December 2020 appreciation depreciation appreciation depreciation
+/- 10% fluctuation of USD rate: USD net asset/liability (187.662) 187.662 (187.662) 187.662 Secured portion from USD risk (-) 26.841 (26.841) 268.713 (268.713)
USD net effect (160.821) 160.821 81.051 (81.051)
+/- 10% fluctuation of EUR rate: EUR net asset/liability 89.864 (89.864) 89.864 (89.864) Secured portion from EUR risk (-) (63.098) 63.098 (268.145) 268.145
EUR net effect 26.766 (26.766) (178.281) 178.281
+/- 10% fluctuation of other currency rates: Other currencies net asset/liability 244.794 (244.794) 244.794 (244.794) Secured portion from other currency risk (-) (252.790) 252.790 (260.502) 260.502
Other currency net effect (7.996) 7.996 (15.708) 15.708 Gain/Loss Equity Foreign Foreign Foreign Foreign exchange exchange exchange exchange 31 December 2019 appreciation depreciation appreciation depreciation
+/- 10% fluctuation of USD rate: USD net asset/liability (546.347) 546.347 (546.347) 546.347 Secured portion from USD risk (-) 89.603 (89.603) 141.573 (141.573)
USD net effect (456.744) 456.744 (404.774) 404.774
+/- 10% fluctuation of EUR rate: EUR net asset/liability (76.700) 76.700 (76.700) 76.700 Secured portion from EUR risk (-) 61.738 (61.738) 15.948 (15.948)
EUR net effect (14.962) 14.962 (60.752) 60.752
+/- 10% fluctuation of other currency rates: Other currencies net asset/liability 196.204 (196.204) 196.204 (196.204) Secured portion from other currency risk (-) (246.481) 246.481 (246.481) 246.481
Other currency net effect (50.277) 50.277 (50.277) 50.277
Vestel Elektronik 2020 Annual Report 301 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 33 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont’d) b.4) Interest rate risk: The Group is exposed to interest rate risk as the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, by the use of interest rate hedge contracts and forward interest rate contracts. Analysis of financial instruments of the Group which are sensitive to interest rate changes is as follows 31 December 2020 31 December 2019
Financial instruments with fixed interst rates Bank deposits 156.839 62.608 Financial liabilities 2.618.430 4.413.132
Financial instruments with floating interst rates Financial liabilities 6.196.232 3.397.145
On 31 December 2020, if interest rates of all currency denominated financial assets and liabilities with variable interest rates has strengthened/weakened by 100 base point with all other variables held constant, income before taxes would have been 1.857 thousand TL (2019: 2.191 thousand TL) lower/higher as a result of interest expenses. NOTE 34 - FINANCIAL INSTRUMENTS (FAIR VALUE AND HEDGE ACCOUNTING DISCLOSURES) Categories of financial instruments and fair values Among Group’s financial assets, cash and cash equivalents (note 5), trade receivables (notes 8 and 9) and other receivables (notes 10), are classified as amortized cost, financial assets (note 6) as fair value through other comprehensive income, derivative instruments (note 31) as fair value through profit or loss. Group’s financial liabilities consist of financial liabilities (note 7), trade payables (note 8 and 9) and other payables (note 10) and are measured at amortized cost using the effective interest method, derivative instruments (note 31) are classified as fair value through profit or loss. Fair value of financial instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimated fair values of financial instruments have been determined by the Group, using available market information and appropriate valuation methodologies. However, judgement is necessarily required interpret market data to estimate the fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Group could realize in a current market exchange. Following methods and assumptions were used to estimate the fair value of the financial instruments for which is practicable to estimate fair value: Monetary assets The book value of foreign currency denominated balances which are translated to TL using exchange rates prevailing on the date of the balance sheet approximate their fair values. For financial assets measured at cost including cash and cash equivalents, the carrying amounts are the same with fair values due to their short term nature. Carrying amounts of trade receivables net of impairments approximate their fair values. Monetary liabilities The fair values of short term financial liabilities and other financial liabilities are estimated to be their fair values since they are short term. Fair value is calculated by discounting the cash out flows regarding due dates of financial liabilities considering the changing country risk premium and changes in the market interest rates.
302 Vestel Elektronik 2020 Annual Report Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 34 - FINANCIAL INSTRUMENTS (FAIR VALUE AND HEDGE ACCOUNTING DISCLOSURES) (Cont’d) Fair value hierarchy The Group classifies the fair value measurement of each class of financial instruments according to the source, using the three level hierarchy, as follows: Level 1: Market price valuation techniques for the determined financial instruments traded in markets (unadjusted) Level 2: Other valuation techniques includes direct or indirect observable inputs Level 3: Valuation techniques does not contains observable market inputs Fair value hierarchy tables as of 31 December 2020 and 31 December 2019 are as follows: 31 December 2020 Level 1 Level 2 Level 3 Total
Financial assets Derivative financial assets - 111.789 - 111.789 Financial investements 22.160 - - 22.160
Financial liabilities Derivative financial liabilities - (303.178) - (303.178) 31 December 2019 Level 1 Level 2 Level 3 Total
Financial assets Derivative financial assets - 45.487 - 45.487 Financial investements 13.337 - - 13.337
Financial liabilities Derivative financial liabilities - (52.592) - (52.592)
An independent valuation of the Group’s land, land improvements and buildings was performed by valuers to determine the fair value of the land and buildings as at 31 December 2020. The fair value of land, land improvements and buildings was determined using the inputs other than quoted prices (Level 2). As of 31 December 2020, land, land improvement and buildings are measured at fair value less accumulated depreciation. (Note 2.6.i).
Vestel Elektronik 2020 Annual Report 303 Financial Information
Vestel Elektronik Sanayi ve Ticaret Anonim Şirketi Notes to the Consolidated Financial Statements For the Period 1 January - 31 December 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise indicated.)
NOTE 35 - SUBSEQUENT EVENTS None: NOTE 36 - NOTES ON STATEMENT OF CASH FLOWS As at 31 December 2020, cash flows from operating activities is amounting to thousand TL 2.261.556 (31 December 2019: 3.104.493 thousand TL), cash flows from investing activities is amounting to thousand TL 2.170.053 (31 December 2019: 2.702.582 thousand TL), cash flows from financing activities is amounting to thousand TL 493.333 (31 December 2019: TL 389.963 thousand). NOTE 37 - NOTES ON STATEMENT OF CHANGES IN EQUITY As at 31 December 2020, equity attributable to owners of parent is amounting thousand TL 7.071.747 (31 December 2019: 3.690.656 thousand TL).
304 Vestel Elektronik 2020 Annual Report INVESTOR INFORMATION
General Information Reporting Period: 01.01.2020 - 31.12.2020 Legal Name: Vestel Elektronik Sanayi ve Ticaret AŞ Trade Register No: Istanbul Ticaret Sicil Müdürlüğü, No: 193621 Registered Capital Ceiling: TL 1,000,000,000 Paid-in/Issued Capital: TL 335,456,275
Headquarters/Branches Contact Details
Headquarters: Levent 199 Büyükdere Caddesi No: 199 34394 Şişli - ISTANBUL / TURKEY Phone: +90 (212) 456 22 00
Branch 1: Manisa Branch Organize Sanayi Bölgesi, 45030 - MANISA / TURKEY Phone: +90 (236) 233 01 31
Branch 2: Manisa Teknokent Branch Muradiye Mahallesi Celal Bayar Üniversitesi Kampüsü Küme Evleri No: 22 Yunusemre - MANISA / TURKEY Phone: +90 (236) 233 01 31
Independent Auditor KPMG Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ Adalet Mahallesi Manas Bulvarı No: 39 Folkart Towers, B Kule, Kat: 35 35530 Bayraklı - IZMIR / TURKEY Phone: +90 (232) 464 20 45 Fax: +90 (232) 464 21 45
Financial Data and Company Announcements Consolidated financial statements, auditor reports, annual reports and material event disclosures of of Vestel Elektronik Sanayi ve Ticaret AŞ are available on the Company’s website at www.vestelinvestorrelations.com.
Additionally, requests for information can be submitted to the Investor Relations Directorate of the Vestel Group of Companies via phone and e-mail.
Investor Relations
Serap Mutlu Investor Relations Director Levent 199 Büyükdere Cad. No: 199 34394 Şişli - Istanbul / TURKEY Phone: +90 (212) 456 34 56 E-mail: [email protected]
Arya Özçam Senior Investor Relations Specialist Levent 199 Büyükdere Cad. No: 199 34394 Şişli - Istanbul / TURKEY Tel: +90 (212) 456 34 56 E-posta: [email protected]
Produced by Tayburn Tel: (90 212) 227 04 36 www.tayburnkurumsal.com Vestel Elektronik 2020 Annual Report www.vestel.com.tr