Investor Presentation March 2018
Disclaimer The information contained herein has been prepared by Doğtaş Kelebek Mobilya Sanayi ve Ticaret A. Ş . (“Doğtaş Kelebek” or the “Company”) . It is not intended that the information in the content hereof is exhaustive nor has the information been verified independently. The information used in the presentation is with discussion purposes and it is not intended in the presentation that all the necessary information is used in order to be able to evaluate the Company or its operations, financial position or future performance. The information and opinions within the scope of this document have been obtained as of the date of presentation and the changes to the same shall not be the subject of notification. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. The data included herein with respect to industry, market and competition has been obtained from official entities or third parties as much as possible. The publications, studies and researches of the sector in the position of third party state that the data included in said sources has generally been obtained from sources considered to be reliable; however, there is not any guarantee on accuracy or completeness of said data. Although the Company believes that every publication, study or research has been prepared by reliable sources, it has not confirmed the accuracy of such information independently. In addition to this, the data on certain industry, market and competition environment is based on the own internal researches and estimations of the Company on the basis of the knowledge and experience of the Company management in the markets in which the Company is operating. Although the Company believes that such researches and estimations are favorable and reliable, such researches and estimations and the basic methodologies and assumptions in relation thereto have not been confirmed by any independent source in terms of their accuracy and completeness and the changes to the same shall not be subject of any notification. Hence, not any unnecessary meaning should be ascribed to any industry, market or competition data included herein. These materials contain statements about future events and expectations that are forward-looking statements. Any statement in these materials that is not a statement of historical fact is a forward-looking statement that involves known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this document or the underlying assumptions. Except to the extent required by law, we assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This presentation does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities and nothing contained herein shall form the basis of any contract or commitment whatsoever. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness, accuracy or fairness. None of the Company nor any of its shareholders, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. This presentation should be used on basis of participants for information purposes only. This presentation or any materials distributed in relation hereto cannot be taken, distributed or forwarded to any real or legal person that is the citizen or resident of jurisdictions in which they are illegal to be taken, distributed, published or they are illegal to exist or be used or in which registration or licensing is needed. This presentation cannot be reproduced in any form nor can it be divulged to any person nor can it be published either in part or in whole for any purpose. Failure to comply with this restriction shall constitute a contradiction to the relevant legislation in force. 1
I. Introduction & Overview
@ a glance Overview Shareholding structure → Doğtaş Kelebek is the #2 branded furniture company (1) in Turkey producing and selling modern design furniture at affordable prices Doğan Family* Free Float 46% → Created through the successful merger of two strong 50% heritage brands: Doğtaş Kelebek Doğanlar Yatırım Holding* 4% * Doğan Family and Doğanlar Yatırım Holding are two parties acting together → Selected as the most favorite furniture company in “Turkey’s Most Valuable Brands - Employs c.1,500 people Turkey 100 “ (2) (1) By # of stores following Boydak Group consisting İstikbal, Bellona and Mondi brands (2) By Brand Finance, 2016 (3) Doğtaş and Kelebek were merged through 3 a reversed merger transaction in October 2013. International Furniture B.V is owned by Turkish Private Equity Fund III
Milestones of Doğtaş Kelebek 1935 1972 Foundation as plywood producer Start of furniture production 1987 1978 Foundation of Doğtaş Mobilya A.Ş Start of furniture production 1994 1981 Incorporation into Enka Group First exports (Albania) 1996 1990 Extension into retail IPO on Borsa Istanbul Investments in upholstery and 2005 1991 First store abroad (Germany) mattress production Acquisition of majority stake by 2009 2006 “ Exclusive “ concept stores two industrialist families 2012 Acquisition of Kelebek by Doğtaş in partnership with International Furniture B.V. (3) 81 net stores opening 2013-2016 Post merger integration Start of current management team 2016 4
Snapshot Overview Key metrics → Full scale branded furniture company with: 600 mTL 27% 52% LTM revenue (2) LFL growth (3) Revenue growth (3) → 2 production facilities consisting 5 sub 4.0x units with a total of 108 k sqm closed area 114 mTL 19% y-o-y EBITDA EBITDA margin (5) LTM EBITDA growth (4) → Retail operations through 318 domestic 318 +24 and 48 international mono-brand stores (1) 383 k sqm domestic net store selling space (1) stores (1) openings (6) → Comprehensive product portfolio covering: Revenue breakdown (2017 YE) By product group By channel Other; Panel Furniture 11% International Bedding; 10% Upholstery; 5% 43% 600 MTL Domestic Panel; 90% Upholstery Bedding 41% (1) As of 2017 YE, domestic stores & sales area (2) As of 2017 year end (3) Growth in 2017YE compared to 2016YE (4) 2017YE EBITDA over 2016YE EBITDA 5 (5) 2017YE margin (6) Period between 31.12.2016 and 31.12.2017
Investment Highlights 1. Fast growing furniture demand 2. Higher growth in branded segment due to the shift from unbranded furniture 3. Experienced management team with proven track record in the industry 4. Company topline continues to outgrow the branded market 5. Remarkable EBITDA growth 6
Fast Growing Furniture Demand Per capita expenditure is still below Furniture demand is growing 16% per benchmark countries annum Furniture consumption (TRY bn) (1) Per capita market size (USD, 2016) (1)(3) 504 CAGR 19,3 ($6.4 bn) Western Europe 16.4% 362 average: ~350 261 2.8x 222 7,7 ~80 2010 2016 Turkey Italy France UK Germany Increasing per capita furniture spending on the back Number of households growing at a 2010-2016 CAGR of increasing income of 2.9% (1.6% over population growth) (1) Fast household formation – 2.6 mn new households by Shortening replacement cycle: +60% of consumers 2023 (average household size of 3.6 vs 2.4 in Western tend to replace furniture in less than 7 years vs 10+ Europe) (2) years in the past (4) Continuing urbanization trend (59 mn people living in cities projected to reach 66 mn by 2023) (2) (1) Turkstat, based on 2010 – 2016 data (2) Euromonitor (3) Euromonitor, home furnishings market retail value per capita. Turkey data is based on Turkstat furniture 7 consumption value (4) MUSIAD, 2013
Higher Growth in Branded Segment Significant shift to branded products… …unbranded market is still significant Market growth (2009-2016) (1) Breakdown of market size (2016) (1) 1.5x Branded 32% 1.0x 0.8x Unbranded 68% Branded Market Unbranded The most important criteria in choosing the furniture Share of branded segment increased from 25% in is brand followed by design and fashion (2) 2009 capturing share from unbranded Warranty, after sales service, health and safety Share of branded segment is much higher in aspects and reliability concerns increase the benchmark countries (65% in France and 72% in Poland) (3) demand towards branded products (1) Euromonitor, indoor living market growth is based on indexed values (2) MUSIAD, 2013 (3) Euromonitor Europe home furnishings market 8
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