2018 ANNUAL REPORT & SUSTAINABILITY REPORT BOYNER RETAIL AND TEXTILE INVESTMENTS BOYNER RETAIL AND TEXTILE INVESTMENTS www.boynergrup.com www.boynerperakende.com 2018 ANNUAL REPORT & 2018 ANNUAL REPORT & SUSTAINABILITY REPORT SUSTAINABILITY REPORT CONTENTS 04 06 14 20 76 FROM THE MANAGEMENT BOYNER GROUP BOYNER RETAIL AND TEXTILE INVESTMENTS BOYNER RETAIL AND TEXTILE SUSTAINABILITY REPORT (BRTI) INVESTMENTS COMPANIES 04 Message from the CEO 07 Boyner Group Companies 16 Members of the Board of 22 Boyner Büyük Mağazacılık A.Ş. 79 Boyner Group Sustainability Directors Vision 08 History 36 Beymen Mağazacılık A.Ş. 18 Shareholder Structure 80 Democracy In the Workplace 10 2018 Awards 52 AY Marka Mağazacılık A.Ş. 19 Key Indicators 92 Value Chain 11 Boyner Group Values 68 Altınyıldız Tekstil ve Konfeksiyon A.Ş. 97 Environmental Impact 12 Working Environment 105 Social Investment 126 Stakeholders 129 144 145 146 148 CORPORATE GOVERNANCE PRINCIPLES RISK MANAGEMENT AND INTERNAL AUDIT CAPITAL MARKET INSTRUMENTS LEGAL DISCLOSURES AGENDA FOR THE ORDINARY GENERAL COMPLIANCE REPORT DONATIONS AND GRANTS ISSUED IN 2018 ASSEMBLY MEETING FOR 2018 149 Statements of Independent Members for Ordinary General Assembly Meeting for 2018 152 Dividend Distribution Proposal and Statement for 2018 153 Remuneration Policy for The Board of Directors and Senior-Level Managers 155 Dividend Distribution Policy 156 160 INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITOR’S REPORT & ON ANNUAL REPORT FINANCIAL STATEMENTS 2 3 2018 ANNUAL REPORT & 2018 ANNUAL REPORT & SUSTAINABILITY REPORT SUSTAINABILITY REPORT We completed 2018 as a year in which economic confusion increased, FED’s We believe that 2019 will be a year in which economic activity and domestic demand MESSAGE FROM monetary tightening policies, global geopolitical uncertainties and commercial will be relatively weak. We expect a gradual improvement in access to finance and confrontations came to the forefront, and Turkey experienced currency and interest the increased support of banks to the economy, and we observe that tally system THE CEO rate fluctuations. With the addition of Turkey’s structural macroeconomic challenges have become very important for the entire retail sector in high inflation conditions. to this environment, we witnessed the slowdown of economic growth and liquidity Despite all the difficulties, Turkey continues to offer significant opportunities for contraction in the second half of the year. 2018 was one of the most difficult years business people and investors. of the retail sector due to the decline in consumer confidence led by high interest rates, high inflation and depreciation in Turkish Lira. In 2019, our priority will be to retain and improve our Group productivity. We will manage the whole year not with budgets but with an extraordinary dynamic Despite all, Boyner Group has closed this difficult year with successful operational approach based on different economic scenarios. Within the framework of this results due to the fact that the entire team, from our managers to the sales dynamic approach, we will haveflexible plans in accordance with global and domestic representatives in the field, made right choices in almost every moment of the macroeconomic changes. As usual our most important goal will be to increase the encountered turbulence. In 2018, our BRTI consolidated turnover grew by 28% and happiness and loyalty of our customers. Our customers and our mission to make our reached TRY 5.4 Billion. Operating incomes of our companies increased significantly. customers happy is the essence of our business. We will continue to work to stand Excluding non-recurring incomes and expenses, EBITDA exceeded 660 billion by by our customers whenever and wherever they need us, not only in our stores, but 71% increase, whereas our consolidated EBITDA margin became 12.3%. On the other also with our websites and mobile applications. hand, depreciation in Turkish Lira and rapid rise in the interest rates in the second half of the year prevented our operational profitability from being reflected to net Our customers and our Our greatest strength in 2019 will be the determination, effort, teamwork and profit. efforts of our Group employees as it was in the past. We will continue to support mission to make our customers our employees and raise new leaders among them. I believe that the Boyner Group In 2018, our Board of Directors decided to increase our capital to 657.7 Million TL by happy is the essence of our Academy whose seeds we planted in 2018, will add great value to our business in 155% increase, to be fully paidin cash, in order to strengthen our capital structure. 2019 and in the future. We will uplift this feature of our Group, which is a school for In addition, Mayhola for Investments has purchased 11% of BOYP’s shares that are business. We will continue the fashion and retail sector in Turkey from the first day, to a higher level with the publicly-traded in İstanbul Stock Exchange and owned by individual and institutional to work to stand by our Boyner Group Academy. I hope that we will see the positive effects of this on our investors. Mayhola’s share percentage in BOYP became approximately 54%, whereas business results in a short time. the share percentage of Boyner Holding has not changed. Within the framework of customers whenever and the ongoing partnership and cooperation between Boyner Holding and Mayhoola, wherever they need us, not Throughout 2018, we maintained our sustainability efforts, which were the result of management, conduct and administration of BOYP and its subsidiaries continue as our values and responsibility for our business, our customers, our country and the it is without any change. At the beginning of May, we decided to cancel the initial only in our stores, but also whole world, with great care and sensitivity. While we feel proud of ourselves on public offering of Beymen to be evaluated later as a result of low demand stemming with our websites and mobile the impact of our 8 March campaign, positive reactions we received and the awards from fluctuations in emerging markets. that our campaign film obtained, we have been encouraged in terms of targeting the applications. better for our customers, Turkey and the world. I would like to take this opportunity In 2018, Boyner Buyuk Magazicilik achieved a turnover growth of 23%. We managed to thank the Boyner Group Family one by one who considers our “good works” such to increase EBITDA by 62% compared to 2017 as a result of our operational as 8 March Campaigns, “Donate Goodness”, “Cycle Into Goodness”, Boyner Group productivity focus. 80% increase in online sales had important contribution in the Volunteers, Bulusum and “Good for Business” as an organic part of our job and who results of Boyner. Beymen completed 2018 with a 42% growth with the ongoing keeps our values alive and puts into practice. high performance of all channels. While Beymen’s worldwide renowned operational CEM BOYNER excellence was crowned by an EBITDA increase of 93%, one of the main reasons We will continue to aim the best and the unique, and to produce and offer the best CEO of Boyner Group behind the successful results was tourist sales which has increased by 135%. AY Marka products and services for our customers and our country in 2019. I would like to Magazacilik grew by 23,7% in 2018 and increased its revenue over TRY 700 Million. thank all our customers, employees, shareholders and business partners for their AY Marka amplified its effieciency, which is a model for retail sector and increased trust in and support for Boyner Group. We will continue to work together to make its EBITDA margin by 2 points to 17%. Altınyıldız Tekstil completed this year that was 2019 a very good and successful year. more difficult for the production sector with 18% growth and managed to increase the ratio of its export and foreign exchange based revenues to total turnover from 26% to 46% within the framework of its export-oriented strategy. 4 5 2018 ANNUAL REPORT & 2018 ANNUAL REPORT & SUSTAINABILITY REPORT SUSTAINABILITY REPORT 2018 %53,95* %3,25 %42,80 Mayhoola For Other Boyner Holding Investments Partners A.Ş. BNR Teknoloji Fırsat Elektronik BR Mağazacılık A.Ş. Tic. A.Ş. A.Ş. Boyner Retail and Textile Investments BOYNER GROUP (BRTI) p.06-17 Altınyıldız AY Marka Beymen Boyner Büyük Tekstil A.Ş. Mağazacılık A.Ş. Mağazacılık A.Ş. Mağazacılık A.Ş. * The share of Mayhoola for Investments in the capital of the Company increased to 54.09% as of January 2019. 6 7 2018 ANNUAL REPORT & 2018 ANNUAL REPORT & SUSTAINABILITY REPORT SUSTAINABILITY REPORT HISTORY Hello to e-commerce Unconditional Customer Street became more Entering e-commerce Happiness amusing with Beymen Launching the concept Installment credit card market with morhipo.com; A new family member Suadiye of Unconditional Pioneer of the Boyner Group has, unlike YKM, one of the most With its gross sales Customer Happiness, installment credit its rivals, gathered under long-established area of nearly 5 Boyner Group started a card market a single umbrella both its 2 multi-storey thousand m , over new era for consumers With the Advantage seasonal products and daily department store 700 global brands and in Turkey. Unconditional Card, Boyner Group promotional campaigns. companies of our 20 different product Customer Happiness became the pioneer The first Beymen store was country, was acquired, categories, Beymen became a unique and of the installment opened thus adding a new Suadiye 481 became registered brand of credit card market in HOPI, the new Boyner Family entered valuable member to Beymen’s largest Boyner Group. Turkey. invention of Boyner into ready-to-wear Boyner Group family. Street store. and retail business by Group introducing Beymen The mobile to consumers. The first application Hopi Beymen store was bringing a brand opened in Nişantaşı.