#1TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Investor Presentation Teknosa İç ve Dış Ticaret A.Ş. Investor Presentation << Turkey's Leading Electronics Retailer>> Korhan Bilek, CFO Erman Tütüncüoğlu, Head of IR#2TEKNO SA 2 Agenda Teknosa at a Glance 3Q15 Results Electronics Retail Market Financial Overview Year-end Guidance TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION#3TEKNO SA 3 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION • Leading the 1 Strong Growth Potential market with in the Market pioneer • 2 Undisputed Market Leader services & products... 3 4 LO 5 60 Omni-channel Business Model Differentiation Through Pioneer Services & Products Financial Strength Strong Operational and Technical Infrastructure • • • Young population with higher tendency for electronics spending Turkey's CE retail is under-penetrated, growing strongly with favorable demographics and rising per capita income Having the first-mover advantage, Teknosa is the by far market leader amongst electronics retailers Emphasizing growth both as an omni- channel player through teknosa.com and as a pure player through kliksa.com Our mission is to evolve to a «<service provider>> from a «classical box mover>> Unique services & products are being launched since 2H14 Strong & debt free balance sheet Strong cash flow generation supported by the negative working capital cycle Targeted marketing via advanced ERP and CRM programs Teknosa Akademi, the first and only training program in electronics retail State of the art logistics infrastructure#4TEKNO SA Shareholder Structure <TKNSA TI> Other 11.7% TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Sabancı Family 28.1% Sabancı Holding 60.3% 4 Sabancı Holding <SAHOL TI> is the major shareholder of Teknosa with a 60.3% stake. ➤ Among one of the leading & most respected conglomerates in Turkey, Sabancı Holding is active on financial services (Akbank, Aksigorta, Avivasa), energy (Enerjisa), retail (Teknosa, Carrefoursa), cement (Akcansa, Cimsa) and automotive and tire reinforcement materials (Brisa, Kordsa, Temsa) sectors. 11.7% of Teknosa shares are free floated and the company is listed on the BIST since May 17, 2012.#5TEKNO SA 5 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Teknosa retail operations are carried out in 3 different store formats in order to increase market penetration Retail Operations Store Formats ■ 203 stores in 78 cities Standard ■ <750 m² store area extra exxtra ■ 39 stores in 14 cities ☐ ■ 45 stores in 26 cities 750-1,200 m² store area ■ >1,200 m² store area TEKNO SA Teknosa operates 287 stores in all 81 cities of Turkey, with a total net sales area of 173K m² as of 30 September 2015#66 TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION The evolution TEKNOSA.com Turuncu Kart M-dr-teknolog Teknofinans TEKNOSA mobil TEKNOSA kliksa. Her bütçeye kolaylık TEKNO SA preo TEKNOSA towards a <<Service Provider>> continues... • Traditional Dealer Mono brand Narrow product spectrum No aftersales services Electronics Retailer • Multi brand • Wide product spectrum • • Aftersales services • TEKNOSA Pioneer services Bundled private label products 7/24 tailored customer solutions#7TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Pioneer services & products launched over the last year... Teknosa will continue to differentiate itself from the competition, carrying on its evolution into a «<service provider» from a «classical box mover>> As the first step towards this goal, «TeknoFinans» was launched in June 2014, offering new financing options to our customers ➤ Aftersales services rebranded under «Dr. Teknolog»> in 1Q15 > <<Teknosa Mobil launched in February 2015, rendering Teknosa as the first & only Electronics Retailer in Turkey offering complete telecom services under its own brand > <<Teknosa Preo» branded smartphone and smartwatch was launched in July 2015 as the first private label product by an electronic retailer in Turkey Teknofinans T Her bütçeye kolaylık TEKNOSA TEKNOSA Mobil 7 www.dr.teknolog TEKNOSA preo TEKNOSA#8TEKNO SA TeknoFinans: ~115K loans ~8% share in sales... 8 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Teknofinans Her bütçeye kolaylık TEKNOSA TEKNOSA AKBANK ING BANK After its launch in June 2014 in collaboration with ING Bank, consumer financing business saw a rapid increase in the number of applicants. Akbank also entered into picture in October 2014 with its wide network, which makes a positive impact on growth figures. ➤ Consumers are benefitting from installments up to 36 months on every. product, with interest rates rivalling mortgages and without bearing any additional fees. ➤ Unlike the competition, Teknosa is partnering with larger scale banks with better IT structures for its consumer financing program, helping the procedures to run smoothly and without a glitch. Sales are en-route to our 10% target#9TEKNO SA Teknosa Mobil is to support growth in Telecom segment... 6 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION The First & Only Electronic Retailer in Turkey Offering Complete Telecom Services under its Own Brand TEKNOSA mobil Creating synergies with the existing product line, while also turning the business to a profit center by utilizing a revenue sharing model ✓ Utilizing Teknosa's strong brand image synonymous with high-tech products to attract subscribers ✓ Wide store network reaching all cities of Turkey, visited by ~100mn people each year ✓ ~1mn mobile phones sold in 2014, which is to be further boosted with Teknosa Mobil#10TEKNO SA Benefits of the MVNO... 10 10 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION ➤ To offer a «one-stop-shop» experience for the customers where the product and the related services are offered under one roof ONE STOP SHOP ✓ The lack of GSM contract options in the TSS channel prevents it to be the #1 address in customer's mind in telecom products ✓ Coupled with Teknosa's wide product range, we aim to garner market share in telecom segment in all channels To create a continuous & closer relationship with the customer via the monthly receipt ➤ New private label products to further enhance the already sizeable product spectrum#11TEKNO SA 11 After Sales Services TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION www.dr.teknolog TEKNOSA In order to further differentiate Teknosa from the competition and increase customer satisfaction, after sales services were enriched and relaunched under Dr. Teknolog brand in 1Q15. After sales services has 2 main components: ✓ Protection plans (sold attached to main product groups (TV, smartphone, major domestic appliances, etc.) are the major revenue drivers for Dr. Teknolog brand. The aim is the increase the attachment rates of protection plans to main products. ✓ On-site or in-shop technical services are the second category under Dr. Teknolog. The objective is to improve the share in Dr. Teknolog financials.#12TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION First private label product offered by a Turkish Electronics Retailer... Teknosa launched its own private label products (Preo smartphone, smart watch and phone case) in the telecom category - the largest category in the electronics market This initiative not only aims to increase the margins but also enhance Teknosa Mobil sales through bundled offers As the next step, new private label categories such as accessories, complimentary products and tablets are being analyzed, while discussions with different suppliers continue 12 preo TEKNOSA Google 19:01 15 TEMMUZ CAR ail 1:01 Play Store Google 06:15 19:01#13TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Our Platforms on E-commerce: kliksa.com & teknosa.com Two legged strategy in e-commerce which aimed to gain share in both electronics retail market and fast developing e-commerce business: Reached 14% of total retail sales in 3Q15 from 9% in 3Q14 kliksa. ✓ Aims to gain share in fast growing e-commerce business ✓ Combining Sabancı brand with the modern online shopping experience Targets to become a leading player in B2C e-commerce ✓ # of visits/month reached ~5 million ✓ Kliksa.com will soon become an important part of total Teknosa sales ✓ ✓ TEKNOSA.com Teknosa.com is the critical component of Teknosa's multi channel strategy Sets the web to store link Considered as a 4th store format which enables; Customers in provinces with smaller store assortment to reach the whole product range ☐ To prevent stock-outs 13 ✓ # of visits/month reached ~9 million#14TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION E-commerce Market in Turkey (2014) Ratio of household with internet access increased from 20% to 60% in 2007-2014 period (2013: 49%). Number of internet users increased to 54 million (2013: 49 million). Ratio of online shoppers among internet users is 31% (2013: 24%). The category breakdown of online purchase is as follows: 52% apparel and sport equipment; 27% house goods; 25% electronics; 26% travelling & 16% books 3G users in TR reached 58 million in 2014 from 49 million in 2013 ➤Broadband penetration is 57% (OECD average: 78%) ➤ The main factors stimulating the growth are; ◉ Increasing share of internet users who made a purchase online Secure e-trade (3D secure) application, Various incentive/discount campaigns High credit card penetration (~75%) Internet banking active users: +10 million 14 Source: TUIK#15TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Per Capita E-Commerce Global Country Online Retail Internet / Total Retail Penetration Mobile Broadband Penetration Online Mobile Shoppers Shoppers Income (PPP - '000 Population (mn) US$) Comparison (2014) UK 12.2% 89% 86% 64% 18% 39.5 64.5 USA 8.4% 87% 87% 56% 17% 54.6 319.0 Germany 7.5% 89% 87% 63% 20% 45.9 81.1 France 6.2% 84% 67% 49% 12% 40.4 63.9 Japan 6.2% 86% 118% 40% 6% 37.4 127.1 Spain 3.1% 77% 70% 44% 17% 33.7 46.5 Italy 2.2% 60% 91% 39% 16% 35.5 60.0 6.5% China 8.5% 47% 44% 37% 27% 12.9 1,367.8 Poland 5.8% 67% 84% 44% 14% 25.1 38.0 Brazil 3.5% 54% 76% 36% 15% 16.1 202.7 Russia 3.3% 60% 55% 30% 8% 24.8 143.7 India 1.5% 19% 8% 14% 9% 5.9 1,259.1 4.5% TURKEY 1.6% 54% 76% 33% 19% 19.6 76.9 15 Source: TUBISAD (Informatics Industry Association)#16TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION CRM & Customer Experience Management (CEM) TEKNO BA Turuncu Kart 4.9 million Orange Card owners ~70% of total sales conducted through Orange Card Vast customer database allows for detailed monitoring of purchasing behavior and tailored CRM applications Recognition by mobile phone number Pre-campaign notifications Special discounts/campaigns for Orange Card holders Starting the Customer Segmentation Renew Project Via the First Phase of the Customer Experience Project Teknosa will take its first steps towards a more Customer Centric structure. Through a better CEM process, Teknosa will: ➤ Engage existing customers as a sustainable engine for growth, Increase operational and marketing Customer Infrastructure Processo efficiency, 16 Reduce revenue at-risk, Reduce the costs of new customer acquisition, ➤ Engage employees, reduce staff turnover and cost of hiring Organization Infrastructure Processes Custome#17TEKNO SA 17 Number of Employees Breakdown TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Human 3,067 3,060 3,334 2,986 3,282 3,689 4,151 3,511 3% 2% 2% 2% 2% 2% 2% 2% Resources 15% 14% 13% 13% 12% 12% 13% 16% Teknosa employs 83% 83% 84% 85% 86% 86% 85% 83% 2007 2008 2009 2010 2011 2012 2013 2014 Stores Headquarter Dealership TEKNOOA KABM top-class management with a solid understanding of the Turkish market and consumers. KNDBA TEKNOSA AKADEMI Performance assessment and training are two principles that underpin Teknosa's human resources strategy. Teknosa Akademi, the first and only training program in the technology goods market#18TEKNO SA 18 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Warehouses and Distribution Teknosa operates its supply chain based on central and regional warehouses. In 2007, Teknosa's central warehouse in Gebze has started its operations with a closed area of 30k m2 on a 60k m2 land, to serve all regions in Turkey. The other 4 regional transfer points are used for cross-docking. Suppliers of Teknosa are authorized distributors of international manufacturers. ► Logistics operations between cross-docking points and stores are outsourced to third parties. # of Location Closed Area (m²) Provinces Served İstanbul Gebze Gebze Logistics Center Cross-docking Points 30,000 All provinces Ankara Ankara 300 35 İzmir Adana 300 19 İzmir 300 6 Adana Antalya Antalya 200 3 Sub-total 31,100 Gebze Logistics Center In-store Warehouses 20,374 Regional Transfer Points. Total 51,474#19TEKNO SA 19 Expansion Through Different Store Formats TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Net Sales Area (km²) 166 171 141 128 101 80 67 56 33 22 12 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number of Stores 2013 2014 232 244 256 269 283 294 291 218 152 96 96 56 2004 2005 2006 2007 # of provinces: 9 23 43 56 2008 2009 2010 61 65 68 2011 72 2012 2013 2014 77 77 81 FY14 YoY Growth 3%#20TEKNO SA 20 Growth Track Dealership sales Retail sales Net Sales (MTL) TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION FY14 Growth 3,016 2% 2,957 '10-'14 CAGR 24% 95 117 -19% 1,672 1,294 1,148 80 1,020 65 97 945 94 740 138 1,575 93 467 1,214 1,083 340 930 67 807 49 647 400 291 2,337 117 2,216 2,922 3% 2,840 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014#21TEKNO SA 21 Agenda Teknosa at a Glance 3Q15 Results Electronics Retail Market Financial Overview Year-end Guidance TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION#22TEKNO SA 22 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Main messages Despite the plummeting CCI rivaling the 2008 global crisis, top-line growth achieved via solid performance displayed in e-commerce... ➤ 5% YoY growth realized in 3Q15, while CCI hit 58.5 in September, the trough point since January 2009 ➤ E-commerce has been the growth engine with 53% YoY increase in 3Q15 to TL 111mn 14% of Net Sales in 3Q15; from 9% in 3Q14 Bottom-line is back to black... Stronger EBITDA and lower financial Strict working capital management yields noteworthy results... Improvement in existing value added services continue, while new ones are being launched... expenses elevated net profit back to the positive territory ➤ Net Cash position nearly doubled to TL 220mn both YoY & QoQ ➤ WCR is down by TL 115mn QoQ Aftersales services revenues up by +17% YoY in 9M15, despite lower growth at topline ➤ Consumer credit gained further traction with +115k loans issued since its launch Mobile service and private label are on track#2323 TEKNO SA 80 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION CCI anchored to the trough point of last six years... Due to the macro and political uncertainties in Turkey, the downward trend in consumer confidence has been persistent since 2H14. This trend has endured in 3Q15, pushing CCI close to January 2009 level, while hitting the trough point of last 6 years at 58.5 in September. Consumer Confidence Index 85 2011 2012 2013 2014 2015 55 60 60 Jan-11 Apr-11 65 I Jul-11 70 Oct-11 75 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Source: TUIK Jul-15#2424 TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION The wallet share of CE products in CC spending is declining... The share of CE spending via credit cards deteriorated after the credit card law until Jul14 then improved towards pre-law average until Dec14 The weakness since the beginning of 2015 seems to stem from low consumer confidence due to political & macro economic uncertainties and weak TL making a negative impact on retail prices 9.5% 2011 9.0% Share of CE Products in Total Credit Card Spending 2012 2013 2014 2015 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% Jan11 Feb11 Mar11 Apr11 May11 Jun11 Jul11 Aug11 Sep11 Oct11 Nov11 Dec11 Jan12 Feb12 Mar12 M.. Share of CE products in CC Spending New Regulation Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12 Nov12 Dec12 Jan13 Feb13 Mar13 Apr13 May13 Jun13 Jul13 Aug13 Sep13 Oct13 Nov13 Dec13 Jan14 Feb14 Mar14 Apr14 May14 Jun14 Jul14 Aug14 Sep14 Oct14 Nov14 Dec14 Jan15 Feb15 Mar15 Apr15 May15 Jun15 Jul15 Aug15 Sep15 Jan11 Jan14 Monthly Avg. Source: Interbank Card Center#25TEKNO SA 25 3Q15 Results Net Sales Area ('000 m²) Net Sales (TL mn) TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION 177 172 173 3Q14 2Q15 3Q15 813 776 723 3Q14 2Q15 3Q15 2 Net Income 3Q14 2Q15 3Q15 (TL mn) -12 ➤ 7 stores opened while 8 stores closed in 3Q15 5% YoY revenue growth despite lowest CCI in the last 6 years 1.4pps QoQ improvement in EBITDA margin ➤ Non-operational expenses down by 26% QoQ#26TEKNO SA Revenues by activity TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Teknosa operations are composed of Retail, Dealership and e-commerce activities Revenue Breakdown as of 9M15 Retail Operations TEKNOSA Revenue Breakdown by Product Groups as of 9M15 E-Commerce 13% Dealership Group 4% Other* 12% CE & IT 21% Photo 31% Telecom 36% 26 E-trade Operations KLIKSA.com ■ Separate legal entity fully owned by Teknosa ■ Started operations in March 2012 Retail Operations 83% TEKNOSA.com ■ Started operations in 2005 * Consists of major and small domestic appliances and warranty sales Dealership Group iklim SA Türkiye'nin İklimlendirme Merkezi Revenue Breakdown by Product Groups as of 9M15 ■ Air Conditioners: 97% ■ Refrigerators: 3%#27TEKNO SA Strong growth in e-commerce revenues... TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION E-Commerce (teknosa.com + kliksa.com) Revenues (TLmn) 111 (+53% 72 3Q14 3Q15 276 (+31%) 210 9M14 9M15 27 Growth in e-commerce is expected to maintain the high pace E-commerce revenues are anticipated to exceed TL 400mn in 2015 The share of e-commerce is to reach 25% of revenues over the next 5 years Further investments in order to improve omni-channel model for teknosa.com and implement a marketplace model for kliksa.com <<Click & Collect>> is fully integrated into teknosa.com (reached over 10% of sales) 700k customers are directed to stores via online site or mobile (per month) Mobile applications are used by 1.2mn users, constituting ~15% of internet sales#28TEKNO SA Like-for-Like Sales Growth Trend -9% TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION -1% -2% 3Q14 2Q15 3Q15 Actions to revive LfL trend is yielding results despite persisting pressure from declining consumer confidence ➤ These actions include: ○ New bonus scheme for personnel 28 New personnel at selected stores ○ Targeted promotional campaigns in designated cities Increased communication and shifting the weight to TV & digital media TSS market share is back to 35% from 33% in 1H15#29TEKNO SA Working Capital and Cash Position Improvement TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Working Capital Requirement (TL mn) TL -45mn TL -111mn TL-227mn 581 454 488 35 47 37 660 613 752 3Q14 2Q15 T. Receivables 3Q15 Inventories T. Payables Net Cash Position (TL mn) 111 111 220 29 3Q14 2Q15 3Q15#30TEKNO SA Main OPEX Items are Under Control TL 1,134 3Q14 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Minimum Wage TKNSA Personnel Costs +12% TL 1,274 3Q15 TKNSA FX Basket 2.619 +23% ←---- TL 38mn 3Q14 +6% TL 41mn 3Q15 TKNSA Rent Costs 3.230 TL 41mn +7% TL 44mn 3Q14 3Q15 3Q14 3Q15 30#31TEKNO SA 31 Quarterly OPEX Breakdown TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Despite TL depreciation, rent costs continued to remain flat YoY in TL terms in 9M15 thanks to contract renegotiations held since mid-2014 ➤ Personnel costs were up by 1% YoY in 9M15 Marketing expenses were up by 26% YoY in 9M15 due to the costs related to web related digital marketing expenses &Teknosa Mobil Shares of Major OPEX Items in Net Sales 18.5% 17.6% 16.5% 15.3% 18.4% 18.2% 17.2% 1.7% 2.0% 2.0% 2.4% 2.4% 1.5% 1.6% 6.1% 5.9% 5.8% 5.7% 5.4% 5.4% 4.8% 6.1% 5.3% 5.8% 5.5% 5.0% 4.6% 5.0% 1Q14 TL128mn 2Q14 TL125mn Personnel Expenses / Sales 3Q14 TL128mn 4Q14 TL130mn Rent / Sales 1Q15 TL123mn 2Q15 3Q15 TL132mn TL140mn OPEX/Sales I Marketing Expenses / Sales#32TEKNO SA 32 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Key Performance Indicators 3Q14 2Q15 3Q15 YoY (%) QoQ (%) 9M14 9M15 YoY (%) Number of Provinces 81 81 81 0% 0% 81 81 0% 90 Net Sales Area ('000 sqm) 177 172 173 -2% 0% 177 173 -2% (Retail Number of Stores 300 288 287 -4% 0% 300 287 -4% Operations) Number of Visitors (mn) 25 21 22 -11% 4% 75 67 -11% Number of Customers (mn) 1.9 1.6 1.7 -10% 8% 5.6 5.0 -9% Conversion Rate 7.7% 7.5% 7.8% 0.1pp 0.3pp 7.4% 7.6% 0.1pp Average Basket Size (TL) 359 369 380 6% 3% 342 361 6% Teknosa has the highest penetration among Technical Super Stores with 287 stores in all 81 provinces of Turkey and 173K m2 net sales area as of 3Q15 Conversion rate exhibited 0.1pps YoY and 0.3pps QoQ improvement in 3Q15 Average basket growth is 6% YoY in 3Q15#33TEKNO SA 33 Agenda Teknosa at a Glance 3Q15 Results Electronics Retail Market Financial Overview Year-end Guidance TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION#34TEKNO SA Electronics Retail Market in Turkey Hypermarkets/ Supermarkets & Department Stores (MASS MERCHANTS) TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Sales Channels of Technical Consumer Goods Market Consumer Electronics Stores (CES) Computer Shops & System Houses (CSS) Telecom Specialists (TCR) Technical Super Stores (TSS) Points of Sale: ~3K Points of Sale: -18K Points of Sale: ~6K Points of Sale: ~17K Points of Sale: -600 Hypermarkets /Supermarkets Carrefour, Migros, Real, Kipa, Tesco, Beğendik Exclusive and Non- exclusive Dealerships Arçelik, Beko, Bosch, Profilo, Siemens, Tefal, Samsung, LG, Regal, Vestel, Philips, İhlas, Esse Exclusive Dealerships Escort, Casper, Apple Cash&Carry Metro Do It Yourself (DIY) Retailers Bauhaus, Koçtaş, Tekzen Department Stores Boyner, YKM, EVKUR Pure Online Players Hepsi Burada, Hızlıal, E- Reyon Furniture / Kitchen Spec. (Furnkibaf) Points of Sale: ~5K Exclusive and Non- exclusive Dealerships Ahşapsan, Alno, Arçelik, Berloni, Bianco, Demsaş, İntema (Vitra), Lineadekor, Scavolini etc. 34 Source: GfK Mobile Phone Dealerships Turkcell, Vodafone, Avea TEKNOSA Media Markt, Bimeks, Gold Bilgisayar, Vatan Non-exclusive Dealerships#35TEKNO SA Channel Development TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Technical Super Stores (TSS) grew below the market for the first time in 2014 due to their disadvantage in consumer financing. The new law offered Telecom Retailers (TCR) an advantage, as they are able to apply up to 24 months of installments on Telecom products via contracts, helping them to raise their share by 3pps in FY14, compared to FY13. This trend continues in 2015 Consumer Electronic Stores (CES) were also able to use IOUS in order to offer their customers installment options exceeding 9 months. Channel Development (inc. MDA & SDA) TSS TSS TSS TSS TSS TSS TSS TSS TSS 16% 18% 19% 20% 23% 27% 24% 24% 23% TCR TCR TCR 17% TCR 16% TCR 20% 21% TCR TCR TCR TCR 20% 23% 26% 26% 28% CES CES CES CES CES 53% 48% CES 44% 42% CES CES CES 39% 34% 34% 35% 34% MASS MASS 12% 8% Other 6% Other 6% 35 2008 Source: GfK 2009 MASS MASS 13% 13% Other 4% Other 5% 2010 2011 MASS MASS 14% 12% Other 4% Other 4% 2012 2013 MASS 12% Other 3% 2014 MASS 12% Other 3% 9M14 MASS 12% Other 2% 9M15#36TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Electronics Retail Market and Teknosa (9M15) As of 9M15, the market grew by 16% YoY, reaching TL 29.3bn Technical Super Stores (TSS) channel recorded 11% YoY growth in the same period to TL 6.8bn in the 5 major categories Teknosa retail sales were up by 4% YoY in 9M15 TSS channel accounts for 23% of the total market Teknosa has 34% market share in the TSS channel as of 9M15 TSS market share is back to 35% in 3Q15 from 33% in 1H15 Electronics Retail Market (CE, IT, Telecom, MDA, SDA) - 9M15 36 Source: GfK 34% TEKNOSA Technical Other Channels Super Stores 77% 23% Bimeks Media Markt 66% Vatan Gold & Other#37TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION TSS Consolidation Trend 3 players have exited the market since 2010 Regardless, the existing 5 TSS players are still too many to operate efficiently and profitably in the Turkish electronics market Given the recent demand and channel trends outlook, we expect further decline in the number of players 2010 2014 COMPANY Sales Index (TSA=100) COMPANY Sales Index (TSA=100) TEKNOSA 100 TEKNOSA 100 Competitor 1 54 Competitor 1 73 Competitor 2 35 Competitor 2 50 Competitor 3 19 Competitor 3 42 Competitor 4 19 Competitor 4 12 Competitor 5 15 Competitor 6 15 Competitor 7 4 37 Source: CMB reports, TeknoSA estimates#38TEKNO SA 38 Agenda Teknosa at a Glance 3Q15 Results Electronics Retail Market Financial Overview Year-end Guidance TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION#39TEKNO SA Income Statement Summary TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION (TL mn) 3Q14 2Q15 3Q15 YoY (%) QoQ (%) 9M14 9M15 YoY (%) Net Sales 776 723 813 5% 12% 2,167 2,202 2% Gross Profit Gross Profit Margin 145 131 151 4% 18.7% 18.1% 18.6% -0.1pp 16% 0.5pp 404 405 0% 18.6% 18.4% -0.3pp EBITDAR 68 EBITDAR Margin 8.8% 52 7.1% 67 8.2% -2% -0.5pp 30% 1.1pp 178 169 -5% 8.2% 7.7% -0.6pp EBITDA 27 10 23 -15% 124% EBITDA Margin 3.4% 1.4% 2.8% -0.6pp 1.4pp 54 2.5% 2.0% 44 -18% -0.5pp Other Expenses -9 Financial Expenses -5 88 95 -8 -6 -38% -26% -24 -20 -16% -6 -5 -11% -25% -16 -17 5% Profit Before Tax 2 -15 1 -64% n.m. -16 -27 -69% Tax 0 3 0 -54% -108% 3 5 71% Net Profit Net Profit Margin 2 -12 1 -66% n.m. -13 -22 -69% 0.2% -1.7% 0.1% -0.2pp 1.7pp -0.6% -1.0% -0.4pp 39 Source: Independent Auditor's report#40TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Sep.14 Jun.15 Sep.15 745 639 766 Cash and Cash Equivalents 111 111 220 Due From Related Parties 3 7 3 Trade Receivables 32 40 35 Inventories 581 454 488 Other Current Assets 19 26 20 Balance Sheet Summary Assets (in TL mn) Current Assets 40 40 Non-current Assets 177 198 202 Investment Property 11 11 11 Property, Plant and Equipment 122 119 121 Intangible Assets 22 30 29 Deferred Income Tax Assets 14 21 21 Other Non-current Assets 8 17 20 Total Assets 922 836 968 Liabilities (in TL mn) Sep.14 Jun.15 Sep.15 Current Liabilities 723 683 814 Financial Liabilities 0 0 0 Due to Related Parties 4 2 1 Trade Payables 656 611 751 Other Current Liabilities 63 70 62 Non-current Liabilities 4 3 3 Total Equity 195 150 151 Total Liabilities 922 836 968 Source: Independent Auditor's report#41TEKNO SA Working Capital -9 86 99 3Q14 5 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Working Capital Days -7 68 2Q15 80 5 -24 64 69 3Q15 93 Days of NWC Days of TR Days of Inventory Days of TP 41 ➤ Negative working capital allows Teknosa to generate positive cash flow in tandem with growth ➤ Working Capital Requirement is down by TL 182mn to TL -227mn in 3Q15 from TL-45mn in 3Q14#42TEKNO SA 42 Capital Expenditures 20.3 3Q14 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Total CAPEX (TL mn) 11.7 3Q15 46.5 34.9 9M14 9M15 We continue to invest in our operations even in challenging times with a focus on profitability. New store openings and store renovations account for a major part of the Company's capital expenditures. ➤ Capital expenditures are financed with cash generated from operations.#43TEKNO SA 43 Agenda Teknosa at a Glance 3Q15 Results Electronics Retail Market Financial Overview Year-end Guidance TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION#44TEKNO SA Macroeconomic Indicators 44 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION 2013 2014 2015 GDP growth 4.1% 2.9% 2.3% Private Consumption 5.1% 1.3% 3.3% CPI Inflation 7.4% 8.2% 8.0% USD/TL rate (avg.) 1.90 2.19 2.77 EUR/TL rate (avg.) 2.53 2.9 3.11#45TEKNO SA 45 2015 Full Year Financial Guidance TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION 2014 2015 YE Net Sales Area (km²) 171 175 Net Sales (TL mn) 3,016 3,200 - 3,300 Growth (%) 2% 5%-10% LFL Growth (%) -4% 0%-5% EBITDA (*) (%) 2.70% 2.5% - 3.0% CAPEX (TL mn) 62 40 (*) EBITDA excludes Other Income/Expenses We expect to remain towards the lower end of our guidance band, provided that the deterioration in consumer confidence comes to a halt.#46TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Our 5 year growth plan... 46 Benefitting from the «Economic Darwinism>> as the strongest player... - Control costs in order to adopt to lower annual market growth - Utilize debt-free strong balance sheet - Strengthen our foothold in the sector via market share gains E-commerce is the new frontier... - Further benefit from the low penetrated e-commerce market of Turkey - Carry on perfecting our omni-channel business model with teknosa.com - Position kliksa.com as the leading pure-player in Turkey - Derive ~25% of our revenues from our e-commerce over the next 5 years ➤ Evolving our business model into a service provider... - Evolve into a <<service provider» from a «classical box mover>> - Improve our CRM capabilities, - Offer new & enhanced after sales products - Further differentiate Teknosa from the competition#47TEKNO SA TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Our 5 year growth plan... ➤ Laying the foundations for new services to our clients... -Consumer financing options under TeknoFinans brand -Telecom contract sales via Teknosa Mobil in order to provide a complete service and boost market share in telecom products ➤ Private label products in order to gain additional market share... -Teknosa Preo smartphone, smart watch and phone case launched in July -New private label categories such as accessories, complimentary products and tablets are being analyzed 47#48TEKNO SA 48 Thank You TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION Contact Information: Erman Tutuncuoglu - Head of Investor Relations +90 (216) 468 32 29 [email protected] IR web page: http://yatirimci.teknosa.com/homepage IR e-mail: [email protected]#49TEKNO SA Disclaimer 49 49 TEKNOSA İÇ VE DIŞ TİCARET A.Ş INVESTOR PRESENTATION The information and opinions contained in this document have been compiled or arrived at by Teknosa from sources believed to be reliable and in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in this document constitute the Teknosa's judgment as of the date of this document and are subject to change without notice. The information contained in this document is presented for the assistance of recipients, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any recipient. The Company does not accept any liability whatsoever for any direct or consequential loss arising from any use of this document or its contents.