2022

ANNUAL
REPORT
2022
ANNUAL
REPORT
 01 Key Financial Metrics 2

02 Chairman & CEO Letters 10

03 Mavi Brand Highlights 18

3.1 About Mavi 20
3.2 Sustainable Growth Strategy 22
3.3 Growth In Each Category 25
3.4 Diversified and Reliable Sourcing Model 28
3.5 Multi-Channel Execution with Retail, International Markets and Online 31
3.6 Brand Priorities and Cornerstones of the Future 36

INDEX
04 Mavi̇’s Sustainability Evolution 52
4.1 Strategy: Mavi All Blue. All Better. For All. 58
4.2 Sustainability Goals 68
4.3 Sustainability Management 74
4.4 Material Sustainability Issues 75
4.5 People-Better. Empower 82
4.6 Planet-Better. Protect 117
4.7 Denim-Better. Transform 134
4.8 Community-Better. Mobilize 157
4.9 Sustainability Journey 164
4.10 Performance Indicators, GRI Index and Tables 169

05 Corporate Governance 196

5.1 Declaration of Compliance with Corporate Governance Principles 199
5.2 Explanations Regarding Corporate Governance 200
5.3 Board of Directors 212
5.4 Risk Management 216
5.5 Internal Control System and Internal Audit 218
5.6 Board of Directors' Discussion and Analysis 219
5.7 Legal Disclosures 220
5.8 Responsibility Statement 223
5.9 Related Party Transactions Report 225
5.10 Corporate Governance Compliance Report and Information Form 226

06 Independent Auditors Report & Consolidated Financial Statements 248

07 General Assembly 382

7.1 Agenda of the Ordinary General Assembly 385
7.2 Dividend Distribution Policy 387
7.3 Dividend Distribution Proposal 388
7.4 Dividend Distribution Table 389
7.5 Declaration for Independency 390
01 KEY FINANCIAL
METRICS

01 KEY FINANCIAL 02 CHAIRMAN & CEO 03 MAVİ BRAND 04 MAVİ'S SUSTAINABILITY 05 CORPORATE 06 INDEPENDENT AUDITORS REPORT & 07 GENERAL
METRICS LETTERS HIGHLIGHTS EVOLUTION GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ASSEMBLY

2 2022 ANNUAL REPORT 3

 FINANCIAL PERFORMANCE

REVENUE (million TL) EBITDA (million TL)

92% 129% 165% 140%

2,402 4,619 10,592 392 1,038 2,491

2020 2021 2022 2020 2021 2022

NET INCOME (million TL) NET CASH (million TL)

Net debt
0.16x EBITDA

245%

8 423 1,459
(33) 618 1,762
2020 2021 2022
2020 2021 2022

4 2022 ANNUAL REPORT 5

CONSOLIDATED GLOBAL FIGURES

Wholesale
TURKEY EUROPE
2.463 billion TL
Retail stores: 329 Retail stores: 1
107% Growth
Average store size (sqm): 510 Wholesale doors: ~800
Franchise stores: 67 HQ: 1
Wholesale doors: ~520 Showroom: 10
HQ and showroom: 1 Warehouse: (3rd party)
Warehouse: (3rd party) Employees: 52
Retail
Employees: 5,312
6.957 billion TL
146% Growth E-com
1.172 billion TL
96% Growth
USA CANADA 2022 Consolidated Channel Revenue
Wholesale doors: ~1,150 Retail stores: 4 2022 Consolidated Channel Growth
HQ: 1 Wholesale doors: ~900
Showroom: 3 HQ: 1
Warehouse: 1 Showroom: 3
Employees: 80 Warehouse: 1
Employees: 81

RUSSIA REST OF THE WORLD 459 396 63 ~4,500

Retail stores: 17 Franchise stores: 24 Mono-Brand Mono-Brand Mono-Brand Points of
Franchise stores: 17 Wholesale doors: 23 Stores Stores Stores Sale
Wholesale doors: 150 Global Turkey International Global
HQ and showroom: 1
Warehouse: (3rd party)
Employees: 145

6 2022 ANNUAL REPORT 7

MAVI AT A GLANCE

Global Turkey

TOTAL 10.6 83% 17%

REVENUES Billion TL Turkey International REVENUE (million TL) 329 retail, 67 franchise stores
revenue revenue revenue ~520 wholesale doors

2 net store openings

GLOBAL 37 459 ~4,500 94% 135% 12 retail store expansions

MARKET Mono-brand Points of
Countries
stores sale 167.7k sqm total selling
space, average

1,936 3,753 8,829

510 sqm per store

RETAIL 146% 2 2020 2021 2022

Retail revenue Net new store 36% women, 64% men
growth openings 39% denim, 61% lifestyle
(TL-value)

96% 11% Wholesale

1.3 billion TL
8.4m customers
ONLINE E-com revenue E-com 127% Growth
5.7m active for the last two years
growth share in sales
Turkey's leading jeans brand with

E-com
a market share of ~18.5+%1
793 million TL

EMPLOYEES 5,670 Retail

6.7 billion TL
144% Growth
88% Growth
Among top three brands in women's
Employees
and men's apparel market

SUPPLIERS
~80% 120+ 2022 TR Channel Revenue
2022 TR Channel Growth 1According to IPSOS data, 14+ age
Local Global
sourcing suppliers
8 2022 ANNUAL REPORT 9
02 CHAIRMAN &
CEO LETTERS

01 KEY FINANCIAL 02 CHAIRMAN & CEO 03 MAVİ BRAND 04 MAVİ'S SUSTAINABILITY 05 CORPORATE 06 INDEPENDENT AUDITORS REPORT & 07 GENERAL
METRICS LETTERS HIGHLIGHTS EVOLUTION GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ASSEMBLY

10 2022 ANNUAL REPORT 11

 LETTER FROM repeat the same message for 2022 with results outperforming the previous year. In 2022, we
increased our consolidated revenues by 129% year on year, reaching TL 10 billion 592 million.
THE CHAIRMAN This strong performance delivered a net profit of TL 2 billion 491 million. We closed the year
with an EBITDA of TL 2 billion 491 million and an EBITDA margin of 23.5%, growing our EBITDA
by 140%.
I am deeply saddened by the devastating
earthquake that shook Turkey deeply on Despite all the crises that the world has faced, we have many reasons for Mavi to continue
February 6, 2023, and offer my condolences to write new success stories. First, Mavi is an all-around well-managed company with a
to everyone who lost their loved ones. This very strong foundation and a robust financial structure. We are an excellent team with a
earthquake was of massive proportions, and passion for always driving Mavi forward. And we have the skills to respond to change in an
we know that it will take a long time to recover environment of uncertainty, adapt to the social transformation that comes with the new
from the immeasurable loss and destruction. generations, and boldly move ahead.
At Mavi, we sprang into action from the very
early moments and worked in coordination The relationships we build with all our stakeholders in our ecosystem and our customers are
with public institutions and non-governmental based on love and trust. We remain committed to our strategy of offering the right product
organizations to extend a helping hand to at the right price with the highest quality, no matter what the conditions. For this purpose,
the affected region with our local and global we focus on analyzing the changing customer needs accurately as a key priority. Our
Ersin Akarlılar strength. As a brand that proudly sources 80% investments in people, technology, CRM, and innovation lie at the heart of our determined
CHAIRMAN of its products from Turkey, we understand efforts to achieve our financial and product targets. Together with our head offices in Turkey,
that it is very important for our suppliers in North America, and Europe, we constantly strive to upgrade and develop our omnichannel
the region to resume production. Therefore, sales platforms worldwide to build the Mavi of the future.
we are supporting a project launched to
In 2023, we mark the centennial of the build prefabricated houses in the organized Our customers, who are our biggest motivation and inspiration, recognize the value Mavi
Republic of Turkey and we recognize the industrial zones in the affected region. And adds to their lives. In line with Mavi’s “All Blue. All Better. For All.” vision, we captured more than
responsibility that falls on us as a leader we will continue to stand by our communities, 100% growth in all categories, led by jeans, connecting with all segments of society. We sold
in our industry. Mavi has blazed a trail in employees, business associates and 12.5 million pairs of jeans in total. And our Mavi logo sweatshirts, a symbol of unity, were the
Turkey for more than three decades and manufacturers. choice of one million people.
proudly represented our country around
the world, while always looking to the In 2023, we mark the centennial of the Republic We have integrated the All Blue sustainability strategy as a way of life into all our functions.
future. The organizations that perform of Turkey and we recognize the responsibility And we drive our commitment to “making the best jeans” by always delivering better and
that falls on us as a leader in our industry. Mavi more innovative products. As a result, the share of the All Blue products in our revenues rose
well, work, create and grow by putting
has blazed a trail in Turkey for more than three to 14% in 2022. We are honored to be recognized with the “Best Sustainable Collection” title
their minds, hearts, and passion into
decades and proudly represented our country for the fifth consecutive time at the Rivet x Project Awards. We also made the 2022 Climate
everything they do, those that evolve with around the world, while always looking to the Change A List, announced by CDP, the world’s largest environmental disclosure platform. We
the new generations, capture the moment, future. The organizations that perform well, take great pride in becoming the first and only Turkish apparel brand to earn a score of “A”
and have the skills to build the future, will work, create and grow by putting their minds, to be included in this list of 283 out of the 20 thousand companies worldwide that respond
drive Turkey to its second century. And hearts, and passion into everything they do, to CDP.
Mavi, epitomizing all of these features, will those that evolve with the new generations,
continue to add value to our country, or as capture the moment, and have the skills to Mavi is known for its unique culture, values, and innovative ways of doing business, both by
we say it, “continue to be too much.” build the future, will drive Turkey to its second our customers and the industry. We are savvy in understanding and interpreting the new
century. And Mavi, epitomizing all of these world order, next generations, new shopping experiences options and lifestyles. And this
features, will continue to add value to our understanding guides us in every step from creating innovative sustainable collections and
country, or as we say it, “continue to be too upgrading our technological infrastructure to diversifying our sales channels and enhancing
much.” our communications. In the times ahead, we will continue to do better together with our
employees, customers, partners, manufacturers, and shareholders.
In my letter last year, I had remarked that 2021
was Mavi’s best year yet. I am so happy to We wish the whole world health and peace in 2023.
12 2022 ANNUAL REPORT 13
 LETTER FROM THE CEO performance ever. Factors such as positioning the brand accurately, following the right
product and price strategy, always focusing on quality and customer experience, maintaining
a flexible supply chain, product planning and inventory management, ensured our resilience
In the aftermath of the earthquakes that
in the face of crises. In 2022, we successfully increased our consolidated revenues by 129%
devastated a wide region in Turkey and left us
year on year to TL 10 billion 592 million. And thanks to our strong performance, we posted a
all in deep sorrow, we still feel a sense of grief.
net profit of TL 1 billion 459 million. We ended the year with TL 2 billion 491 million in EBITDA
As the Mavi family, guided by our people-
and an EBITDA margin of 23.5%, recording an EBITDA growth of 140%. Our robust balance
oriented values and our heartfelt sense of
sheet structure enabled us to generate cash from our operations and raise our net cash
unity, we immediately mobilized our local
position to TL 1 billion 762 million. I am pleased to note that we have submitted the proposal
and global network and got to work to meet
to distribute 30% of the 2022 profit as dividend to the General Assembly for approval.
the essential needs of our teams, business
partners, manufacturers and communities in We acquired more than 1 million new customers by increasing our market share
the affected region. We joined forces with our
local manufacturers and built shelters in four In 2022, we increased Mavi’s market share and acquired more than 1 million new customers.
provinces already in the early days after the We also drove customer demand, delivering a 21% increase in sales volume, 29.5% UPT growth
Cüneyt Yavuz earthquake. As a brand that proudly sources and higher basket size and traffic. With digitalization, CRM and data analytics investments
80% of its products locally, we are supporting placed at the core of the company, we continued to work toward a more digital future.
CEO
a project launched by the Turkish Exporters
Assembly to set up prefabricated houses I am happy to report that we are making effective progress thanks to our strong retail
in organized industrial zones to prevent network in Turkey, presence in international markets, a global e-commerce and multi-
Our products, which our customers love migration from the region and to ensure channel sales organization, new omnichannel apps and diversified marketplaces. The
and trust, play a lead role in our success. that life and production can resume. We are 2022 growth figures of 146% in global retail, 107% in wholesale and 96% in e-commerce are
Therefore, we continue to focus on what we aware that it will take a long time to recover testament to all these efforts.
do best, growing through denim innovations from the massive damage and as always, we
and offering lifestyle products that respond will continue to stand by our communities by We grow with collections that promote innovation, new lifestyles and sustainability
to changing habits. With the Mavi Black, acting in coordination with public institutions
Mavi Pro, Mavi Icon, MV91 and sustainable and non-governmental organizations to lend Our products, which our customers love and trust, play a lead role in our success. Therefore,
Hemp Denim collections, we expanded a helping hand in any way we can. we continue to focus on what we do best, growing through denim innovations and offering
Mavi's reach and improved our ability to lifestyle products that respond to changing habits. With the Mavi Black, Mavi Pro, Mavi Icon,
price our products at a premium. Overall, we We captured growth and profitability beyond MV91 and sustainable Hemp Denim collections, we expanded Mavi's reach and improved
sold 12.5 million pairs of jeans in a year. expectations our ability to price our products at a premium. Overall, we sold 12.5 million pairs of jeans in
a year.
Drawing from our belief that the best denim For us at Mavi, 2022 was marked with
is sustainable denim, we continue to expand confident strides and successful growth and Drawing from our belief that the best denim is sustainable denim, we continue to expand
profitability, thanks to our experience of more our sustainable jeans offering every year. Accordingly, we increased the share of sustainable
our sustainable jeans offering every year.
than 30 years. To repeat what we always say, jeans in total denim sales to 27%, and the share of our All Blue collection in revenues from
Accordingly, we increased the share of
Mavi is a people-oriented global company 9% to 14%.
sustainable jeans in total denim sales to 27%,
and the share of our All Blue collection in with robust financial management and
continues to grow by developing strategies As we own denim expertise and leadership, we also continue to increase our market share
revenues from 9% to 14%. with innovation and variety in the non-denim categories. For the first time, the share of the
in response to the ever-changing conditions.
non-denim lifestyle categories in our total sales exceeded 60%. The Mavi logo sweatshirt
I want to thank once again the entire Mavi
Even though uncertainties, high inflation group, the new Mavi ProTech premium jacket collection, and the exclusive Freedom of
team and all our customers, suppliers,
rates and supply chain disruptions prevailed Space X Blue and Esra Gülmen X Mavi collaborative collections, captured the spirit of the
business associates and shareholders for
worldwide, Mavi delivered its most successful times creatively.
helping us achieve our goals.
14 2022 ANNUAL REPORT 15
LETTER FROM For us, next generation is more than just an age group and it epitomizes the new values
that shape the world
THE CEO At Mavi, we value the importance of working with both our current employees and the next
generation by accurately interpreting the changing cultural composition and new lifestyles.
We care about being a youthful brand that understands the needs and expectations of its
people. With the NextGen initiative that we recently launched, we are investing in young
talent that will drive our business and industry forward and training the leaders of the future
by passing on Mavi's corporate values and experience.

As a brand that connects with all segments of society and acts with the ‘All Blue. All Better.
For All.’ motto, we manifest our vision of inclusion in the world of women. In the fall season,
we launched the “We Are So Beautiful Together” ad campaign, highlighting Mavi's brand
and product positioning for women of all ages, sizes, fashion choices and lifestyles. This
campaign not only strengthened our love brand position but also drove our new customer
acquisition and sales. Our efforts to promote Gender Equality and women's rights will always
remain a key topic on our agenda.

Mavi: the first and only Turkish apparel brand to make the reputable global sustainability
lists

The steps we are taking in line with our All Blue strategy, built on sustainable growth through
quality, continue to be recognized by reputable global organizations and initiatives. We
made the 2022 Climate Change A List, announced by CDP, the world’s largest environmental
disclosure platform. The emission reduction targets that we set in line with Paris Climate
Agreement, were verified by the Science-Based Targets initiative. And we became the first
Turkish apparel brand to make both lists. We were also included in the BIST Sustainability
25 Index of Borsa Istanbul, marking another first in our industry. We remain committed to
our goal of becoming a climate positive company by 2050 and we will continue to work
passionately for a better Mavi and a better world.

In a nutshell, 2022 was a year when Mavi was “being too much” in all aspects. The times
ahead will inevitably bring developments that we may or may not anticipate but we will
adapt to change by “being beautiful together”. I am confident that we will continue on our
path, stronger than ever, as we mark the 32nd anniversary of Mavi and the centennial of our
Republic in 2023. I want to thank once again the entire Mavi team and all our customers,
suppliers, business associates and shareholders for helping us achieve our goals.

16 2022 ANNUAL REPORT 17

03 MAVI BRAND HIGHLIGHTS
3.1 About Mavi
3.2 Sustainable Growth Strategy
3.3 Growth In Each Category
3.4 Diversified and Reliable Sourcing Model
3.5 Multi-Channel Execution with Retail, International Markets and Online
3.6 Brand Priorities and Cornerstones of the Future

01 KEY FINANCIAL 02 CHAIRMAN & CEO 03 MAVİ BRAND 04 MAVİ'S SUSTAINABILITY 05 CORPORATE 06 INDEPENDENT AUDITORS REPORT & 07 GENERAL
METRICS LETTERS HIGHLIGHTS EVOLUTION GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ASSEMBLY

18 2022 ANNUAL REPORT 19

3.1 ABOUT MAVİ
Mavi, incorporated in 1991 in Istanbul, is recognized as a highly successful
global lifestyle brand, rooted in 32 years of denim expertise. Mavi has been
publicly traded since 2017 and has a presence in 37 countries, including Turkey,
the USA, Canada, Germany, Russia, and Australia, selling its products through
approximately ~4,500 points, including 459 Mavi shops.

Mavi, recognized as a trusted brand with high quality and right price
positioning, is established in the apparel market between the high-end and
premium segments. Perfect Fit philosophy guides Mavi in designing jeans that
perfectly fit its customers’ lifestyles, body types, and quality expectations. Mavi
ranks among the world’s leading premium denim brands and stands apart as
the preferred lifestyle brand across female and male consumer segments.

The loyalty program Kartuş, recognized as Turkey’s best-in-class with more

than 8 million members, serves as a key tool for Mavi to analyze and leverage
customer data. Mavi has a unique brand position with fashion-savvy young
adults and continues to gain 1 million new customers every year with its vision
of creating the Happiest Mavi Customers.

In line with its global strategy, All Blue, built on sustainable growth through
quality, the company integrates sustainability into its corporate culture, vision,
products, and growth targets, believing that a better world is possible with
a better Mavi. A global team of 5,670 employees, whose hearts beat with
denim, work passionately to develop the world’s best and most innovative
jeans, driving Mavi to the future on a path focused on people, planet, denim,
and community.

20 2022 ANNUAL REPORT 21

3.2 MAVİ’S PEOPLE-ORIENTED SUSTAINABLE
GROWTH STRATEGY

01 06
Aspirational denim-centric lifestyle brand positioning, inspiring the customer, employees, Innovative and creative collaborations differentiating the brand, communication and
and business partners. growing market share driven by sustainable products and projects.

02 07
Strong brand commitment to superior quality, the happiest Mavi customer, and Strong retail network in Turkey, international presence, and global e-commerce and
sustainability, maintaining the customer’s trust across all touchpoints, from product and omnichannel sales operations. Online experience in Turkey and international markets,
service approach to marketing and communications. digital strategy to drive growth.

03 08
Global Perfect Fit strategy and the right fit, right product, and right price approach to Strong and sustainable financial performance.
address different customer groups and maintain growth. Brand and product strategy
driving price positioning and category expansion.

09
04 Mavi All Blue strategy built on ‘sustainable growth through quality’ and incorporated
into the global brand culture, product structure, and company goals. Responsibility with
Organizational structure that manages innovation and profitability with digital data, all employees for achieving sustainability goals with the ‘All Blue. All Better. For All.’
consumer insights and market knowledge. narrative.

05 10
Managing the quality and efficiency with a focus on sustainability and innovation as a Experienced management team, agile and result-oriented organizational structure.
priority. Effective supply chain and flexible product planning, leveraging proximity to local Corporate culture, focused on reaching common goals, embracing diversity, and
manufacturers. responding to change while earning the trust of the customers and business partners.

22 2022 ANNUAL REPORT 23

 3.3 GROWTH IN EACH CATEGORY

Denim Products (million TL) Lifestyle Products (million TL)

DENIM KNITS SHIRTS

96% 137% 114% 153% 82% 150%

568 1,116 2,642 336 720 1,819 146 265 663

2020 2021 2022 2020 2021 2022 2020 2021 2022

NON-DENIM BOTTOMS JACKETS ACCESSORIES

194% 162% 94% 158% 102% 152%

52 152 397 144 279 721 85 172 433

2020 2021 2022 2020 2021 2022 2020 2021 2022

24 2022 ANNUAL REPORT 25

 PRODUCT PORTFOLIO PRODUCT PORTFOLIO
AND CATEGORY SHARES AND CATEGORY SHARES

Turkey Retail Net Sales Turkey Retail Net Sales

36% Women 64% Men 39% Denim 61% Lifestyle

Product Category Shares in Sales Product Category Shares in Sales

39% 27% 10% 11% 6% 6%

DENIM KNITS SHIRTS JACKETS ACCESSORIES NON-DENIM BOTTOMS

WOMEN
MEN

Monetary Value
Share in 2022 Turkey retail net sales.

26 2022 ANNUAL REPORT 27

3.4 DIVERSIFIED AND RELIABLE
SOURCING MODEL
As a denim-centric ready-to-wear company, Mavi does not engage directly in any
production activities. Mavi works with over 120 suppliers that manufacture at world
standards through its global purchasing network.

Quality-Driven Efficient Sourcing Structure

39% Denim ~80% ~20% +120 responsible

61% Lifestyle Made in imported suppliers (18
Turkey strategic, 38
critical) 538
sub-suppliers

• Turkey Retail Net • Quality textile • Mainly outerwear and • Well-established, long
Sales Split ecosystem accessories term relationships
• Denim-lifestyle balance • Proximity improving • 35 suppliers in 7 • Internal audit team
of sales speed and RFT countries ensuring social
compliance

MAVİ DENIM BUSINESS

50% of Product Cost

Owned by Mavi Controlled by Mavi

Design & Fabric & Raw Manufacturing

Development Materials (Cutting, Sewing and Washing)

• Multinational denim • Direct relationship with • Cutting, sewing ERAK

design & development denim fabric mills & washing • Best-in-class
team • Fabric selection and • ~60% from ERAK production facility
• Fit blocks are created management are • Four manufacturers • Sourcing to top
and owned by Mavi handled by Mavi teams tendered for best global brands
• Wash recipes and • Working with top- price/quality • Advantage on
development managed quality mills in Turkey • Sustainable process delivery times and
by Mavi that manufacture for and production manufacturing
premium global capacity
denim brands • Competent
• Fabric R&D, exclusive cooperation in
development and sustainability and
innovation bring innovation projects
distinguished quality • Improved energy
and look & water efficiency

28 2022 ANNUAL REPORT 29

 3.5 MULTI-CHANNEL EXECUTION WITH RETAIL,
INTERNATIONAL MARKETS AND ONLINE

Sustainable and Efficient Growth in Turkey

Mavi’s sales operations in Turkey consist of 76% retail, 15% wholesale, and 9% e-commerce.

Turkey Revenue (Million TL)

1,936 3,753 8,829 2022

Channel Growth
793
94% 135%
1.342 88%
421
591 127%
207
E-com 373
Wholesale 144%
Retail 1,356 2,740 6,694

2020 2021 2022

Expanding Retail and New Stores

Retail Stores Gross Selling Space in Turkey (K Sqm)

Net
New 6 7 2 2022 sqm 167.7
Stores
510sqm Avg. Sqm/Retail Store

Expansion sqm 2.8

New store sqm 0.9

501 sqm Avg. Sqm/Retail Store

2021 sqm
164.0
320 327 329
2022
2020 2021 2022

Complementary Wholesale Growth and Growing Multi-Channel Execution

580 67 333 180

points franchise corner department
of sale stores stores stores

30 2022 ANNUAL REPORT 31

Investing in Online Platform and Growth Strategy International Growth and Profitability

Online shopping, which saw a significant surge during the pandemic, maintained its growth Mavi’s international operations are focused on the United States, Canada, European
trend in 2022. Meanwhile, Mavi’s revenues in owned e-commerce channels (including mavi. countries, with Germany as base, and Russia. The global distribution network spanning 36
com and marketplaces), which promise strong growth potential in global markets and countries consists of 63 mono-brand stores, 3,500 doors and mavi.com as well as wholesale
in Turkey, increased by 96%. Mavi’s owned mavi.com e-commerce site in Turkey, the US, and e-commerce partners, including the likes of Bloomingdale’s, Nordstrom, Zappos.com,
Canada, Germany and Russia as well as marketplaces accounted for 11% of total sales. Amazon, Simons, David Jones, and Zalando.com.
With wholesale online channels included, the online revenues’ share in total sales reached
12.8%. In addition to achieving growth, Mavi also continued to steadily enhance the online Other than the four main international markets, Mavi operates in the neighboring regions
infrastructure and made further investments to create an even better user experience. and has 24 mono-brand and 23 multi-brand franchise stores in 21 countries. The operations
in these countries, mainly in the Middle East, North Africa, Balkan and Caucasus countries,
In 2022, mavi.com Turkey grew by 88% year-on-year and accounted for 9% of Turkish are managed as wholesale channels completely from the Istanbul head office.
revenues together with direct marketplace sales to the customers. The number of active
mobile app users rose to 3.7 million, with sales via the app representing 50% of the online
channels. The mission of mavi.com, upgraded with a new face in 2022, is to provide a more
~3,500 63 Online
dynamic and convenient shopping experience with more variety for the customers.
doors in mono-brand channels’ share
36 (22 own- in global
Once migration to the SAP system was completed, the omnichannel applications planned
countries operated, 32%*
for a more digital future gained momentum. Omnichannel CRM approach enables the
41 franchise)
campaign and loyalty processes via the cash registers, mavi.com, Mavi App and all
future channels to be monitored holistically. Additionally, the digital sales channels were
*Wholesale included
enhanced, allowing the store inventories to be sold on mavi.com and the stores to perform
online transactions. Mavi launched a “return collection service” to improve the customer
experience when returning items and introduced a “2-hour delivery” option in addition
to “same day delivery” to shorten delivery times, becoming one of the first brands in the
industry to offer such a service. Mavi also started to sell the gift cards, previously available
only in the stores, online with the option to purchase physical and digital gift cards on
mavi.com.

96% 11% 88% 9%

global global online sales online
consolidated consolidated growth in revenues’
online online Turkey share in
growth revenues’ total sales
share in total – Turkey
sales

32 2022 ANNUAL REPORT 33

USA Operation Europe Operation

23% 68%
30%
E-com Wholesale
E-com
~1.150 Wholesale: Online wholesale Mono-brand Wholesale: Online wholesale
wholesale Nordstrom, partners: 2% retail stores: 1 About You, partners:
multi-brand Bloomingdale's, Stitchfix, Retail Amazon, Otto, Karstadt
doors Von Maur, Amazon, 8% ~800 Zalando & Kaufhof,
Patrick James, Zappos, Wholesale wholesale Modepark Röther,
22% 48% Tom James, Nordstrom E-com multi-brand Breuninger,
Wholesale Wholesale Scheels doors Beutin, Sinn
E-com America mavi. Leffers, Maratex,
com, Retail Active,
Channel share Channel share
34heritage.com Wöhrl, Kleider
Bauer, Baltz,
Hold, Peek &
Cloppenburg

Germany
mavi.com

Canada Operation Russia Operation

14% 13%
E-com 24%
E-com Wholesale
Mono-brand Wholesale: Online wholesale Mono-brand Franchise retail 150 wholesale
retail stores: 4 Nordstrom, partners: retail stores: 17 stores: 17 multi-brand
16%
Retail Harry Rosen, Simons, Mark's doors
~900 Simons, Ernest,
wholesale Mark’s Canada 63%
70% multi-brand mavi.com Retail
Wholesale doors and
34heritage.com
Channel share Channel share

34 2022 ANNUAL REPORT 35

3.6 BRAND PRIORITIES AND CORNERSTONES OF THE FUTURE

BRAND AND PRODUCT INNOVATIONS

• Mavi continued to gain market share and new customers while increasing
Keeping Mavi’s mission
frequency by focusing on different customer segments with fresh
alive as a priority across all
products.
channels and experiences.
• In line with the right quality, right product and right pricing strategy, customer
•
demand was closely monitored.
Creating value with a strong • Brand positioning was elevated with premium product segments
and trusted jean-centric and aspirational marketing: Mavi Black Pro, Mavi Icon, Mavi Pro Sport
casual lifestyle brand Repreve®.
identity.
• Casual lifestyle expanded with activewear, sporty, logo and sweatshirt
• collections.
Highlighting brand’s positive • Strong customer engagement captured through celebrity campaigns and
values as a jean-centric influencers.
lifestyle brand where people
love to shop and where • Collaborative collections with brands and designers were effective in acquiring
people love to work. new and young customers and driving traffic.

•
GROWING RETAIL
Designing and developing
the right and responsible • New retail concepts (1000 m2) were developed to improve shopping
products with the highest experience and grow customer frequency and conversion.
quality and Mavi’s perfect fit
• The physical store experience was enhanced to feature Mavi's growing
philosophy.
lifestyle categories.
•
• Product availability was improved to increase conversion and stock-
Driven by a passion turn rates by analyzing store clusters.
for creating a genuine • A customer experience project was initiated to address touchpoints
experience across all with new and loyal customers and lifecycles as a whole.
touchpoints for Mavi
customers of all ages and
styles.

36 2022 ANNUAL REPORT 37

BRAND PRIORITIES AND CORNERSTONES OF THE FUTURE

ONLINE INVESTMENTS ALL BLUE. ALL BETTER. FOR ALL.

• A multi-team omni-channel project was • Global All Blue strategy continued to to drive
launched. sustainable growth.

• Shared inventory availability across warehouse • All Blue products increased with product
and stores, 2-hour doorstep delivery offered in innovations in the denim and non-denim groups.
three major cities.
• Responsible supply chain management remained
• Online shopping experience enhanced with a key focus area of sustainability.
AI-based customer review analysis tools.
• Mavi became the first and only Turkish apparel
• New marketplaces were integrated into the brand to make the CDP's Climate Change A List.
ecosystem to increase customer reach.
• Mavi’s emission reduction targets were approved
• International platforms were localized to meet by the Science-Based Targets initiative.
specific market needs by analyzing different
• Mavi was included in BIST 25 Sustainability Index.
markets.
• Mavi won the “Best Sustainable Collection”
category for the fifth time at the Rivet x Project
Awards.

TOWARD A MORE DIGITAL FUTURE PEOPLE-ORIENTED CULTURE

• Digitalization and CRM investments were • In line with the diversity & inclusivity commitment,
positioned at the core of the company gender equality training programs started.
strategy.
• Mavi joined the UN Target Gender Equality
• AI-driven analysis tools were developed to Program.
understand and respond to customer and
• Mavi supported social projects empowering
market expectations.
women and youth.
• Data analytics investments were accelerated
• Mavi NextGen initiative was launched to train
to increase process efficiency.
future leaders.
• After Turkey, the SAP transformation was also
• Women accounted for 58% of the total workforce,
completed in the US and Canada offices.
52% of managers and 60% of senior executives.

38 2022 ANNUAL REPORT 39

MARKETING COMMUNICATIONS 2022 – COLLABORATIVE COLLECTIONS WITH
BRANDS AND DESIGNERS

SERENAY X MAVİ ICON PARTY – SS22 DIRECT MESSAGE X MAVİ – SS22

• Serenay X Blue Icon Party collection, designed with • In its second season, this collaborative collection
inspiration from the 80s spirit, themes and music, continued to offer designs appealing to the young
appealed especially to the trendy Mavi woman & adult fashion savvy consumer at a premium price
seeking bold styles. point.
• The Collection was effective in increasing the • With an engaging launch event and effective
brand’s share in the womenswear market.
influencer communications, the beachwear
collection won over the women seeking iconic
fashion pieces, bringing excitement to the
accessory category and accelerating the
acquisition of new customers.

FREEDOM OF SPACE X MAVİ – SS22 WEARABLE ART BY

• Mavi and Freedom of Space teamed up to
ESRA GÜLMEN X MAVİ – SS22
reinterpret the cult looks of the 90s street culture for • Esra Gülmen, who embraces an artistic approach
the next generation. that fuses typography and illustration to address
everyday problems and concepts in a simple yet
• Taking action today for the future, the patchwork
sweatshirts designed with discarded denim pieces striking manner, collaborated with Mavi to bring
emphasized the sustainability vision of both brands. her nature-themed designs to a sustainable eco-
friendly collection.
• The dynamic and innovative attitude of the
collection was reflected in the communications • Earth-inspired motifs came to life in the Esra
with special executions on digital platforms. Gülmen X Mavi collection with the themes “Waves,
Mountains, Trees, Rivers,” referencing nature and
• This collaborative collection appealed to young the climate crisis.
men and women under 24 with high purchasing
power. • The denim pieces in the Esra Gülmen X Mavi
collection, which also pays tribute to jeans, are
made sustainably, using production methods that
consume less water and energy and designed
with vegan and recycled labels.

40 2022 ANNUAL REPORT 41

MARKETING COMMUNICATIONS 2022 – DESIGNER COLLABORATIONS AND EXCLUSIVE COLLECTIONS

MAVİ HEMP DENIM – FW22 MAVİ LOGO

• Mavi believes that the best jeans are sustainable • Since their introduction, Mavi logo t-shirts and
jeans and continues to transform denim with unique sweatshirts have always been a wardrobe
innovative ideas and the power of technology. essential for consumers of all ages and styles,
driving sales growth in sweatshirts for men and
• The new styles in the Mavi Hemp Denim Collection are women.
made with hemp fibers that consume minimum water
and are set to revolutionize the future of sustainable • Supported by the customers’ brand love and
fashion. sense of belonging, Mavi Logo pieces have
come to unite people around friendship and love.
• With pieces for men and women, the collection, With different logo and color options, the styles
which consumes less water and less energy during became one of the most popular fashion trends
production, features hemp along with recycled on TikTok and Instagram.
cotton, seams and trims, and bio-based nutshell
buttons. EXCLUSIVE ACTIVEWEAR
• Mavi won the “Best Sustainable Collection” category
COLLECTION – FW22
for its Hemp collection at the Rivet x Project Awards. • With the consumer habits evolving into more
Made with Comfort technology, the collection is relaxed and casual styles in the post-pandemic era,
not only sustainable but also super soft and gentle, activewear and loungewear are on the rise.
appealing especially to consumers seeking comfort
and softness. The Mavi Hemp campaign, featuring • In response to this change in consumer habits, the
Kıvanç Tatlıtuğ, highlighted premium denim on denim brand introduced an activewear range, featuring
trend for men. casual styles along with products for yoga, pilates
and the gym.

• Athleisure, with flexibility and fabric technology, and

Sport Lux, with comfort and convenience, were the
most popular product groups.

EXCLUSIVE MV91 COLLECTION MAVİ PROTECH – FW22

FW22 – 90S’ MAVİ • With a strong outerwear offering for men and women
every season, Mavi introduced Pro Tech, Pro Tech
• The Mavi design team created the MV91 capsule
Explorer, Premium and Premium Tech coats and
collection with the narrative “90s Mavi for today”.
parkas, with high performance and functional,
Mavi's young consumer found the street, 90s and cool
colorful, striking details and accessories.
fits they knew from the Les Benjamins and Freedom of
Space collaborations in the MV91 Collection. • Some of the products, made with technical fabrics,
came with Water Repellent properties while some
• The brand partnered with influencers, who represent
featured PrimaLoft, an all-vegan and ecofriendly,
the early and late 90s styles, for the communication
breathable and no-sweat filling material that offers
activities.
warmth equivalent to down filling.

• The Collection was effective in acquiring young

customers and increasing market share.

42 2022 ANNUAL REPORT 43

MARKETING COMMUNICATIONS 2022 – AD CAMPAIGNS

"WE ARE BEAUTIFUL WHEN WE ARE TOGETHER"

WITH SERENAY - FW22
• Mavi has touched the lives of millions of women with its jeans since the 90s. The brand celebrated
BRAND NEW MAVİ PRO WITH KIVANÇ - SS22 the special bond it has built with women over the years with a new campaign, “Together, We Are
So Beautiful,” featuring Serenay Sarıkaya. Mavi designs its jeans drawing from the belief that each
• As the leader of the casual lifestyle category in Turkey, Mavi wanted to drive its growth in
woman is unique, regardless of her age, body type, clothing, and lifestyle. This passion is expressed in
menswear by embracing this look and color. In the commercial featuring Kıvanç Tatlıtuğ, the Mavi
the campaign film with the song “Birlikte çok güzeliz, sadece sevgimize benzeriz” written by Kalben.
Pro collection, offering innovative high-performance jeans and oversized t-shirts and sweatshirts
with modern street touches, was highlighted. • The campaign film featured Serenay Sarıkaya, Mavi’s brand face for many years, İpek Bilgin, the
esteemed actor who has always impressed with her inimitable style and talent, and special women
• The iconic M logo, the most striking feature of the Mavi Pro line, became the symbol of urban
from all walks of life, who came together to keep this beautiful spirit alive with their energy.
fashion with updated and youthful forms, contrast prints, bright graphics and digital prints,
pushing the brand ahead of the competition. • The film’s cast and crew, along with the director, producer, cinematographer, and art director,
included many talented women.

• Mavi also transformed its message of being ‘beautiful together when we are together’ into an
action by giving women a chance to touch more lives and make other women happy. As part of
this movement, Mavi partnered with Needs Map and gifted Mavi jeans to female university students
across Turkey.

• The “Together, We Are So Beautiful” movement spread to wider audiences through an effective
TikTok project design around the campaign.

44 2022 ANNUAL REPORT 45

MARKETING COMMUNICATIONS 2022 – AD CAMPAIGNS

MAVİ PREMIUM BLACK WITH KIVANÇ – FW22 SERENAY X MAVİ ICON – FW22
• Mavi continued to be the favorite jeans of men with the innovative touches, innovation • The FW22 Serenay X Mavi Icon collection, designed with inspiration from Serenay's
and design perspective brought to denim. In addition to premium jeans, a new Mavi iconic style and energy, revisited the minimal spirit of the 90s with a feminine
Black collection was launched with pieces offering head-to-toe premium looks and attitude, touching women with strong stories in their wardrobes.
style.
• The collection, shaped with the simplicity and power of monochromatic styles,
• Mavi Black was launched with a TV ad campaign featuring Kıvanç Tatlıtuğ, highlighting highlighted the self-confident attitude of the modern woman, standing out with a
the brand’s denim passion and premium positioning in the market. unique fashion look and offering timeless pieces.

46 2022 ANNUAL REPORT 47

 Customer Loyalty Program: Kartuş

Customer data and product strategy are at the core of the brand’s communication
activities, supported by the loyalty program (Kartuş) of 8.4m members. The Kartuş loyalty
program, with approximately 5.7m members active for the last two years, is a card and
mobile app, with ~3.7m downloads and used extensively in retail transactions in Turkey.

Customer data derived largely from Mavi’s best-in-class loyalty program (Kartuş) since 2007
is at the core of the brand strategy. The loyalty card/program is used widely in shopping and
accounts for 77% of retail revenues, serving as an exceptional tool to provide the marketing
team with data and a deep understanding about Mavi customers.

Mavi makes effective use of CRM data to develop opportunities and advantages that
respond to customer expectations and needs, and runs personalized campaigns and
communications to drive customer frequency, basket size and lifetime value. A complete
360-degree view of customer data, including shopping data derived from all channels, is
key to the success of these CRM applications.

Mavi continues to deepen its CRM-driven strategy with new marketing automation,
advanced data analytics and sophisticated campaign management projects. The technical
and process enhancements in CRM applications lend to a sustainable and continuously
learning system. With all these efforts, Mavi aims to design its marketing communications
with a personalized approach throughout the customer lifecycle and to improve the
customer experience across all touchpoints.

Effective CRM analyses guide brand and product strategy. Mavi leverages customer insights
and technology to create innovative products. CRM data offers significant advantage
in the new product development process by analyzing customer profiles and matching
products to identify potential areas.

8.4m ~5.7m ~3.7m 1m

loyalty card members active mobile app new Kartuş loyalty
77% members downloads card members
of the retail revenue in 2022

Rapid Growth with Young Generation

~48% ~70%
of customers of new
under 35 customers
under 35

48 2022 ANNUAL REPORT 49

AWARDS

123rd among Turkey’s Leading denim brand with Winner of the “Best Sustainable Leader of the apparel
largest 500 enterprises 20% market share in the 14+ Collection” category for the industry in Fast Company’s
and 2nd among apparel, segment, ranking among All Blue collection at the “Customer Experience”
underwear and sportswear the top 3 women’s and Rivet x Project Awards, which survey.
brands in the “Fortune 500” men’s apparel brands in recognize the brands bringing
survey. Turkey according to IPSOS newness and creativity to the
data. global denim market, marking
its 5th title.

Hands down the most preferred Top brand in consumers’ Gold medal in the casualwear “Most Active Use of
denim brand of all generations apparel loyalty according category in Social Brands Automation in the Customer
according to Marketing Türkiye’s to Marketing Türkiye’s Data Analytics at the Journey” award at the
“Apparel Brand Choices by “Loyalty Brands of Turkey” Brandverse Social Media Insider’s “LIFTAWARDS22”
Generations” survey. survey. Awards (SMAT) gala.

Among the top brands admired “Mavi Transformation” Mavi Pro Sport Repreve Mavi Hemp Denim recognized
for its store experience and campaign is the winner of collection won the Special with the “Climate Friendly
website/mobile app and Bronze Effie in the Fashion - Recognition Award at “Unifi Collection” award at the
driving sustainable fashion Textiles - Accessories category Repreve Champions of Elle Green Awards X Aveda
according to Marketing Türkiye’s at the Effie Awards, one of the Sustainability”. event.
“Brands Driving Fashion” most prestigious awards of the
survey. advertising world.

Turkey’s iconic apparel brand 2nd most admired company in Among the top apparel Innovation leader of the
according to Turkey Reputation the textiles industry according brands that make consumers apparel industry in Platin’s
Academy survey. to Capital’s “Most Admired happy according to Marketing “Global 100” survey.
Companies” survey. Türkiye’s “Turkey’s Happiness
Brands” survey.

5th in Ekonomist 45th in Turkishtime magazine’s 1st in the retail & textiles Kıvanç Tatlıtuğ named “Most
magazine’s “Franchise 100” “R&D 250” survey on top R&D category in Toptalent. Admired Brand Face” with
survey. spenders. co’s “TOP100 Talent the Mavi commercial in
Program”. AYD’s “Number One Brands”
survey.

50 2022 ANNUAL REPORT 51

 MAVİ’S SUSTAINABILITY
04
EVOLUTION
4.1 Strategy: Mavi All Blue. All Better. For All.
4.2 Sustainability Goals
4.3 Sustainability Management
4.4 Material Sustainability Issues
4.5 People–Better.Empower
4.6 Planet–Better.Protect
4.7 Denim–Better.Transform
4.8 Community–Better.Mobilize
4.9 Sustainability Journey
4.10 Performance Indicators, GRI Index and Tables

01 KEY FINANCIAL 02 CHAIRMAN & CEO 03 MAVİ BRAND 04 MAVİ'S SUSTAINABILITY 05 CORPORATE 06 INDEPENDENT AUDITORS REPORT & 07 GENERAL
METRICS LETTERS HIGHLIGHTS EVOLUTION GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ASSEMBLY

52 2022 ANNUAL REPORT 53

ABOUT THE SUSTAINABILITY
SECTION
The Sustainability Section included in the 2022 Annual Report of Mavi is
based on the sustainability performance of Mavi Giyim Sanayi ve Ticaret
A.Ş. in the fiscal year from February 1, 2022 to January 31, 2023. This
section provides information on the company’s environmental, social,
and governance activities based on Mavi’s sustainability strategy "All
Blue. All Better. For All." and the progress achieved in these areas. The
2022 Annual Report of Mavi is published on 4th of April, 2022.

This section has been prepared in accordance with the Global Reporting
Initiative (GRI) Standards. In addition to providing details about the
company’s contribution to the United Nations Sustainable Development
Goals (SDGs), this section also includes information on activities carried
out in line with UN Global Compact (UNGC) and Women’s Empowerment
Principles (WEPs), both of which Mavi is a signatory.

For all your questions, comments, and suggestions related to this section,
please contact us at: [email protected].

All Blue.
All Better.
For All.

54 2022 ANNUAL REPORT 55

 MAVİ’S SUSTAINABILITY
EVOLUTION
As Turkey’s leading jeans and apparel brand, Mavi has accelerated
its sustainability efforts starting from 2020 to drive its vision of industry
leadership to encompass sustainability. Grounded in strategic priorities,
Mavi’s sustainability strategy has been developed to respond to the global
trends that guide the textiles industry and to contribute to the United
Nations Sustainable Development Goals (SDGs). The company’s All Blue. All
Better. For All. sustainability strategy defines the areas where Mavi creates
value and its related goals.

56 2022 ANNUAL REPORT 57

4.1 MAVİ ALL BLUE. ALL BETTER. FOR ALL.
The company believes that a better world is possible with a As part of its sustainability strategy and driven by its core values focused on people,
better Mavi. On the journey toward achieving the best, Mavi planet, denim, and community, Mavi will:
quality remains at the heart of all the activities. Empowered Better.Empower, Better.Protect, Better.Transform and Better.Mobilize.
by every individual touched in the process, particularly its
employees, Mavi recognizes that every step and action
taken will bring about massive transformations, and it will
continue to explore and innovate for a brighter future.
PEOPLE PLANET
Mavi cares about today and takes action for tomorrow now. · People-oriented Mavi culture · Tackling climate crisis
· Inclusive business model and responsible value chain · Ecosystem restoration
The company grows with people who inspire each other
and share similar aspirations. A better Mavi means All Blue.
All Better. For All.

All Blue.
All Better.
For All.

COMMUNITY DENIM
Mavi's impact-driven transformative power · Quality first
· Denim innovation and partnerships
· Responsible raw material sourcing

58 2022 ANNUAL REPORT 59

BETTER.
EMPOWER

Driven by the people-oriented Mavi culture, transformation

for a better future starts with the value chain. Mavi fulfills its
responsibility for providing fair living and working conditions
for its employees, suppliers and business partners. Empowered
by its employees and suppliers who share its responsibilities on
the journey toward achieving the best, Mavi also supports their
development.

PEOPLE-ORIENTED MAVİ CULTURE:

Mavi’s work culture is focused on people. In the company culture,
Mavi upholds human rights, respects the diversity and differences of
its employees, and promotes gender equality. Accordingly, practices
are implemented to support the professional development of the
employees across their career journey at Mavi.

INCLUSIVE BUSINESS MODEL AND RESPONSIBLE VALUE CHAIN:

Mavi develops practices for an equitable, accessible and inclusive

business model to make sure its products and services are accessible
to all. Ensuring that environmental, social and governance principles
and standards are applied across the value chain is important to
Mavi. Therefore, the company has adopted an inclusive business
model that aims to improve sustainability performances of all
suppliers and support their development. The company conducts
supplier audits to achieve full traceability and conformity with
applicable standards across the entire supply chain.

60 2022 ANNUAL REPORT 61

 BETTER.
PROTECT

As a denim-centric brand, Mavi regards the protection and restoration of what nature offers
as a fundamental responsibility. Accordingly, Mavi promotes a net-zero business model by
tackling the climate crisis to protect natural resources and restore the ecosystem.

TACKLING CLIMATE CRISIS:

The textile industry is responsible for generating significant amounts of greenhouse gas
emissions across the value chain, from cotton grown in the fields to the end products
purchased by the consumers. Mavi focuses on reducing its carbon footprint along the
entire value chain to tackle the global climate crisis. For this purpose, the company brings
its suppliers into the process and encourages them to reduce their environmental impact
caused by production. In addition to designing collections with innovative and sustainable
materials, Mavi also aims to gradually increase the share of these products in its sales
revenues. As more investment is made in sourcing renewable energy, Mavi continues to
launch pioneering projects such as energy efficient eco-stores to pave the way for the
industry.

ECOSYSTEM RESTORATION:
Mitigating the intense stress on nature and restoring the frail ecosystem are among key
priorities for Mavi. Therefore, the company focuses on areas such as effective use of water
resources, controlled use of chemicals, packaging and waste management, and biodiversity
across the supply chain. Accordingly, Mavi encourages making sustainable products that
require less water and recycling water in production processes. To protect the health of
manufacturers and consumers, and minimize environmental impact, Mavi strives to reduce
the consumption of chemicals and comply with the Zero Discharge of Hazardous Chemicals
(ZDHC) criteria. Furthermore, the company aims to use only FSC-certified (Forest Stewardship
Council) packaging, making sure that all packaging materials are recycled. Adopting the
circular economy approach to waste management, the company works to reintroduce the
scraps and other excess materials back into the system. Mavi also develops and launches
projects to raise social awareness about protecting biodiversity.
62 2022 ANNUAL REPORT 63
 BETTER.
TRANSFORM Mavi transforms denim with unique, innovative ideas and the power of technology. The
customers are included in the sustainability evolution process with quality and sustainable
products to change their consumption habits. Mavi aims to inspire the industry by embracing
the circular economy model and by developing innovative products with low environmental
impact. This approach is supported by innovative partnerships to shape the future of
sustainable fashion. With responsible raw material sourcing and production, the company
spreads this transformation to every aspect of the value chain, from the farmer to the end
consumer.

QUALITY FIRST:
Since the very beginning, Mavi has continued to meet customer expectations with the right
price-quality balance with its Perfect Fit philosophy guiding the company. Taking it one
step further, Mavi now aims to make quality and sustainable products accessible to all its
customers. As a result, the company helps consumers make better choices with its eco-
friendly All Blue collection.

DENIM INNOVATION:
Mavi believes that the best denim is sustainable denim and therefore, continuously invests
more in R&D and product development. With the eco-friendly All Blue collection, developed
with innovative methods and produced with less water, less chemicals and less energy and
made with recycled, upcycled and organic materials, Mavi continues to lead the industry in
denim innovation.

INNOVATION PARTNERSHIPS:
Partnerships play a key role in the industry’s sustainability transformation and driving
innovation. Accordingly, Mavi engages in innovative partnerships with various other brands,
designers, and universities to expand its positive impact and inspire the industry.

RESPONSIBLE RAW MATERIAL SOURCING:

Manufacturers are encouraged to make responsible raw material choices and supported
toward transforming their production processes. Mavi traces and steadily increases the ratio
of sustainable materials (organic, recycled, upcycled and Better Cotton-certified cotton,
recycled metal, etc.) in its products.

64 2022 ANNUAL REPORT 65

 BETTER.
MOBILIZE
Aiming to create shared values in the community, Mavi
uses its transformative and mobilizing brand power to
achieve better. Therefore, the company particularly focuses
on empowering young people and women for social
development so that no one is left behind. Customers who
choose Mavi and other stakeholders are also included in the
mobilization efforts.

MAVİ'S IMPACT-DRIVEN TRANSFORMATIVE POWER:

Mavi intends to mobilize its stakeholders, starting with
the customers, by leveraging its brand power. Therefore,
impact-driven and measurable social projects that involve
customers, employees, suppliers, universities and non-
governmental organizations (NGOs) are launched.

66 2022 ANNUAL REPORT 67

4.2 SUSTAINABILITY GOALS

PEOPLE PLANET
BETTER.EMPOWER BETTER.PROTECT

MAVİ’S SUSTAINABILITY TARGETS MAVİ’S SUSTAINABILITY TARGETS

Having a fully inclusive and responsible value chain by 2030. Becoming a climate-positive company by 2050.

MONITORING TARGETS PROGRESS IN 2022 MONITORING TARGETS PROGRESS IN 2022

Keeping employee satisfaction and The employee satisfaction survey conducted Reduce Scope 1 + 2 GHG emissions by 70% by Scope 1 + 2 GHG emissions reduced by 75%
engagement scores over 70% every year. in 2021 resulted with 80% among store staff 2030 (vs. 2019 baseline)1. in 2022 (vs. 2019 baseline).
and 78% among head office employees.
Action plans were created in 2022 to improve
employee satisfaction and loyalty. The Reduce Scope 3 GHG emissions from Scope 3 GHG emissions from purchased goods
company will continue to take actions to purchased goods and services by 55% per TL and services were reduced by 66% per TL added
improve employee satisfaction and loyalty with added value by 2030 (vs. 2019 baseline)1. value in 2022. (vs 2019).
focus group activities in 2023.

Become carbon neutral by 2040. Working on reducing greenhouse gas emissions

Increasing female manager ratio to 50% and As of 2022, female employment ratio at Mavi with long-term carbon neutrality through quality
maintaining this balance by 2023. was 58% and female manager ratio was 52%. carbon offsetting tools supported by standards.

Ensuring compliance of all main suppliers and Environmental compliance topics have been Continuing to procure 100% renewable Renewable energy is used at Mavi head office
their subcontractors with the Global Purchasing added to the Global Purchasing Principles. electricity for Mavi operations by 2030. and all street stores (105 stores) with controlled
Principles and Supplier Code of Conduct by Environmental and social compliance electricity meters. Own solar power plant project
2025. audits will be conducted to ensure the in pre-licensing approval process.
suppliers’ compliance with the principles.

Conduct environmental audits at all critical Environmental audits are conducted in 68% of
Achieving 100% traceability in the supply chain In addition to social compliance audits, suppliers and wet process sub-manufacturers facilities owned by the critical suppliers and wet
by 2030. environmental audits have been initiated. by 2025. process sub-manufacturers in 2022.

Ensure compliance with ZDHC MRSL2 at all Continuing to work towards targets based on
strategic suppliers and wet process sub- 2022 environmental audit results.
manufacturers by 2030.

Ensure FSC3 certification for all label, 47% of the label, cardboard and paper
cardboard and paper packaging materials packaging materials procured in 2022 are
by 2025. FSC-certified.

1 The GHG reduction targets set by Mavi have been approved by the Science-Based Targets initiative (SBTi)
2 ZDHC MRSL compliance: Zero Discharge of Hazardous Chemicals-ZDHC Manufacturing Restricted Substances List-MRSL
3 FSC: Forest Stewardship Council

68 2022 ANNUAL REPORT 69

DENIM COMMUNITY
BETTER.TRANSFORM BETTER.MOBILIZE

MAVİ’S SUSTAINABILITY TARGETS MAVİ’S SUSTAINABILITY TARGETS

Ensuring that the whole denim collection consists of sustainable All Blue products by 2030. Driving an impact-focused and measurable social change.

MONITORING TARGETS PROGRESS IN 2022 MONITORING TARGETS PROGRESS IN 2022

Sourcing 100% of the cotton used in denim In 2022, 33% of the cotton used in denim Keeping the social return of social investment Mavi is in the process of designing its own
products from sustainable resources4 by 2030. products was procured from sustainable programs at SROI>15 levels. social investment program to align with the
resources. material sustainability topics. Once the
program is finalized, SROI analysis will be
conducted together with program outputs.
Increasing the revenues of innovative products Target has been achieved by expanding the
in the sustainable All Blue collection by sustainable All Blue collection with the addition
20% year on year through R&D activities and of innovative lines such as Mavi Hemp Denim, Allocating 1% of EBITDA for social investments Social investment spending in 2022 amounted
partnerships. Mavi Upcycle, Esra GülmenXMavi and Freedom from 2025 onward. to TL 2,378,290, which corresponds to 0,10% of
of SpaceXMavi in 2022. EBITDA.

Reaching 1 million people every year through With the projects focused on sustainability,
sustainability awareness projects. women’s empowerment, inclusion,
innovation and partnerships, circular
economy, biodiversity etc., awards
received, and all the awareness raising
activities, including leadership communication,
more than 5 million engagements were
achieved in 2022.

4 Sustainable materials: Organic, recycled, Better Cotton. 5 SROI>1: Social return on investment (SROI) higher than investment.

70 2022 ANNUAL REPORT 71

2022 HIGHLIGHTS

BETTER.EMPOWER BETTER.PROTECT BETTER.TRANSFORM BETTER.MOBILIZE

58%
Female
A SBTi √ 27% 1 million
CDP Climate GHG emission targets Share of the sustainable Engagements with the "Birlikte Çok
employment Change Program approved by the All Blue jeans in total Güzel Oluyoruz" campaign
ratio score Science-Based Targets denim sales
initiative
1,000
Female university students supported
52% 60%
Female Female 68% 108 14%
through the Birlikte Çok Güzel
Oluyoruz İyilik Hareketi" project

manager executive Wet process facilities Stores using Sustainable product's share
ratio ratio audited for environ-
mental compliance
renewable
energy
in total revenues
32
Female university students benefit
from the TEV and Koç University
Mavi Scholarship Fund
64% 10%1 16%1 43
Ratio of management
positions filled with
internal promotions
Less water
consumption
Less energy
consumption
Products with Life Cycle
Assessment (LCA) studies 56,500
Hatchlings reached the sea with
the Indigo Turtles project

80% 80%1
of products treated with 5 350+
Miav outdoor cat houses
Local product laser and sustainable Best Sustainable placed across Turkey in
supply ratio washing processes Collection awards partnership with Encander

1 In the manufacturing process with strategic partners Erak and Tayeks, which account for 80% of Mavi’s denim production.

72 2022 ANNUAL REPORT 73

4.3 SUSTAINABILITY MANAGEMENT emission reduction targets set by the company were verified by the Science-Based Targets
Initiative (SBTi) in 2022 and Mavi became the first Turkish apparel brand to make the list of
companies taking climate action.
A Sustainability Committee functions under the Mavi Board of Directors to ensure that
sustainability management is carried out in integration with the company’s business In 2022, Mavi was included in the Borsa Istanbul Sustainability 25 Index in recognition of its
strategy and objectives. The Committee, headed by the CEO, has formed working groups sustainability performance. At the time it was included in the Sustainability Index, whose
– Employees, Corporate Governance and Risk, Environment, Supply Chain, Sustainable constituents are companies with high corporate sustainability performance and that are
Products and R&D, Customer and Digitalization – to report to the leadership team. Over 60 traded on Borsa Istanbul, Mavi was the only apparel brand listed in the index.
people work in these working groups, each following a roadmap to assist with determining
and realizing Mavi’s sustainability goals. Since 2021, these groups have proceeded along
their roadmaps, regularly updating their actions in line with the changes in the company’s 4.4 MATERIAL SUSTAINABILITY ISSUES
future plans and global developments.
The material sustainability issues have been identified based on a stakeholder analysis in
Board of Directors accordance with the AA1000 Stakeholder Engagement Standard. These analyses involved
Yönetim Kurulu
obtaining the opinions of various internal and external stakeholders, including Mavi
Committee Head (CEO)
employees and franchisees, analysts, investors, financial institutions, business partners,
Sustainability Committee and suppliers. In addition to one-on-one meetings with senior management, focus group
studies were used for the franchisees to share their opinions while the other stakeholders
Working Groups
were asked to respond to an online questionnaire. The external trends included the
global risks published by the World Economic Forum (WEF), the industry-specific material
issues prepared by the Sustainability Accounting Standards Board (SASB), Sustainable
Corporate Supply Sustainable
Customer and Development Goals (SDGs), and the priorities of other leading companies in the industry.
Employees Governance Environment Chain Products
Digitalization
and Risk and R&D

Stakeholder Group Stakeholders Methods

As a company that aspires to lead the industry’s sustainability transformation, Mavi
Direct economic impact Senior Management Online surveys
recognizes the importance of participating in the international sustainability platforms.
Employees One-to-one meetings
Accordingly, Mavi has become a signatory of United Nations Global Compact (UNGC), the Suppliers Focus group study
world’s largest corporate sustainability initiative. With this signature, Mavi has declared its Franchisees
commitment to aligning its strategies, ways of doing business, and operations with the ten Business Partners
UNGC principles on human rights, labor, environment, and anti-corruption. Mavi is also a Investors
Customers
signatory of the UN Women’s Empowerment Principles (WEPs) and a member of the 30%
Club, confirming its concrete support of gender equality. Mavi became the first and only Indirect economic impact Analysts Online surveys
apparel brand from Turkey to be included in the 2022 Climate Change A List, announced Financial Institutions Literature reviews
Media
by CDP, the world’s largest environmental disclosure platform. Only 283 of the 20 thousand NGOs
companies worldwide that respond to CDP, which aims to change how businesses operate
to mitigate the impacts of climate change, made the A List this year, becoming the climate New opportunity, knowledge, Universities Online surveys
and approach drivers Literature reviews
leaders of 2022.

Mavi also received a score of A in the Supplier Engagement Rating (SER). Marking another In the process, SASB’s materiality analysis methodology, which enables addressing each
first in the Turkish apparel industry, the company has signed the CEO Water Mandate, a issue in terms of different impacts and opportunities, was used. As a result of this analysis,
UNGC initiative, to support the global effort to find sustainable solutions to the water issue. the material topics were categorized as medium, high, and very high priority. Then, the
Furthermore, the company has joined the Climate Ambition Accelerator, a program led by sustainability team grouped material topics under 6 working groups and started working on
the UNGC, aiming to achieve progress toward setting science-based emission targets. The these key areas. Material topics have not changed since 2021.
74 2022 ANNUAL REPORT 75
 MATERIALITY MATRIX
Importance for
stakeholders Medium Priority High Priority Very High Priority

Importance
for Mavi

Very High Priority High Priority Medium Priority

1 Water and wastewater 10 Digitalization and 18 Employee loyalty and
customer experience satisfaction
2 Customer satisfaction
11 Talent management 19 Data privacy and security
3 R&D and innovation
12 Supply chain 20 Occupational health
4 Raw material
management and safety
management
13 Sustainable products 21 Corporate governance
5 Brand reputation
14 Women’s 22 Youth empowerment
6 Human rights and fair
empowerment
working conditions 23 Equal opportunity
15 Circular economy and diversity
7 Climate change and
energy 16 Business ethics 24 Industry-specific
sustainability
8 Wastes 17 Risk management
transformation
9 Chemicals management
25 Entrepreneurship
26 Biodiversity
27 Community investment
programs

76 2022 ANNUAL REPORT 77

 Impor- Material Potential Impact How is it managed? Related SDG Place in Strategy and
tance Topic Relevant Section

Water and Water is an essential resource for the textile industry, Mavi is a signatory of the CEO Water Mandate. Policies Better.Protect –
wastewater including denim production. The industry’s negative regarding water and wastewater are addressed in the Ecosystem Restoration
environmental impact is caused mainly by excessive use Environment and Energy Policy. The products in the All Blue
of water resources in the sector, consumption in areas with collection are made with processes that use less water in
water scarcity and contamination of water resources with production and in raw materials. Water consumption and
process outputs. All the industries that rely on water and related water risks are identified through environmental
people whose livelihoods depend on local water resources audits conducted in the supply chain. Recovery and reuse
may be adversely affected by such environmental impact. of water is encouraged. Mavi does not work with suppliers
that fail to comply with local legislation on water and waste
water.

Customer Customer satisfaction has direct impact on Mavi’s financial Customer expectations are met with the right price-quality Better.Transform –
satisfaction performance. Failure to meet customer expectations may balance and after-sales service approach to create the Quality First
lead to lower financial performance. Responding to the “Happiest Mavi Customers”. Mavi’s customer satisfaction
evolving customer needs and expectations provides an approach is also defined in the Customer Satisfaction Policy.
important competitive advantage. The company’s loyalty program, Kartuş, has been a key
focus of the marketing strategy since 2007. With 6 million
active customers, the brand acquires more than 1 million
new customers every year and continuously improves the
customer experience in both offline and online channels.

Very R&D and R&D and innovation activities enable development of new Mavi engages in effective R&D activities to develop products Better.Transform –
High innovation products and services with economic, environmental and with high environmental performance that align with fashion Denim Innovation
Priority social benefits and help the company lead the industry trends and meet customer expectations. The sustainable All
with innovative applications. Blue collection is continuously updated and supported by
innovative collaborations. Mavi also monitors the revenues
generated by the collection, compares its share in total
revenues and works to increase this share.

Raw material Raw material management is directly related to Mavi’s Mavi’s raw material management policies are addressed in Better.Transform –
management financial, environmental and social performance. Inefficient the Environment and Energy Policy, Animal Welfare Policy Responsible Raw
raw material use in the supply chain, sourcing raw material and Forestry and Paper Products Policy. Mavi continuously Material Sourcing
with high environmental impact and raw material choices increases the sustainable material content in its products
that may cause social injustices are some of the negative and packaging. Mavi is a member of Better Cotton and
impacts whereas managing these processes properly holds Recycled Claim Standard (RCS) and Organic Content
would create competitive advantages. Standard (OCS) certifications.

Brand Brand reputation is directly related to Mavi’s financial Mavi is a leading denim-centric brand and also ranks among Better.Transform –
reputation performance. the top four apparel brands in menswear and womenswear. Quality First
The brand approach driven by the customer, technology and
data redefines the customer experience in the age of diverse Better.Mobilize –
digital & offline channels and reinforces Mavi’s lovemark Mavi’s Impact-driven
position and market share. Transformative Power

78 2022 ANNUAL REPORT 79

 Impor- Material Potential Impact How is it managed? Related SDG Place in Strategy and
tance Topic Relevant Section

Human The multi-layered and multi-stakeholder textile industry Mavi provides fair work environments where human rights Better.Empower –
rights and is highly exposed to risks such as human rights violations are respected for the employees in its value chain. Related People-oriented Mavi
fair working and poor working conditions. These risks also come with policies are addressed in the Human Rights Policy, Mavi’s Culture
conditions potential negative social and economic impact. People and Its Principles and Supplier Code of Conduct. &
Social compliance audits are conducted at all new suppliers Inclusive Business Model
joining the supply chain and only the suppliers that pass the and Responsible Value
audits are selected for partnership. Chain

Climate Climate change imposes the risk of impacting several Policies, procedures, targets and actions related to climate Better.Protect –
change and stages across Mavi’s value chain and may trigger change are published in detail every year with CDP Climate Tackling Climate Crisis
energy capacity loss in raw material and product sourcing with its Change surveys. Mavi reduces its direct emissions by
chronic and acute physical impact and also lead to price procuring renewable energy and working to improve energy
increases. Failure to take the necessary precautions may efficiency. The company has also taken action to build
result in reputation and market share loss. Regulations and its own solar power plant with the pre-licensing process
laws that will be introduced to address climate risks may currently ongoing. A raw material sourcing strategy has been
also affect Mavi’s business model. developed for the emissions in the purchased goods and
Very services category, which makes up the majority of indirect
High emissions, and GHG emissions of the suppliers are inquired
Priority during the audits.

Wastes Failure to manage wastes properly may lead to adverse Mavi adopts a circular economy approach to managing Better.Protect –
environmental and economic consequences. Specific to wastes effectively. The wastes generated during and after Ecosystem Restoration
the textile industry, products with short lives and linear production are utilized to develop sustainable products. Mavi
production models fuel the waste problem. When waste is also engages in ecosystem collaborations for this purpose.
seen as a resource, it may be reintroduced to the economy The goal is to increase the content of recycled materials in
and its impact may be reduced. the products. Mavi holds Recycled Claim Standard (RCS)
certification.

Chemicals Mismanagement of chemicals in the textile industry may Mavi requires its suppliers to comply with the applicable Better.Protect –
management harm the water and water-dependent ecosystems. The wastewater regulations. Mavi also encourages its suppliers to Ecosystem Restoration
use of chemicals may adversely impact product safety reduce the consumption of chemicals and develop products
and customer satisfaction. On the other hand, chemicals made without chemicals and with natural raw materials. Better.Transform –
create economic value as they change product properties Mavi aims for all its wet process suppliers to manufacture Product Quality and
and differentiate the products. in accordance with the ZDHC MRSL list. In terms of product Safety
safety, quality and safety standards and procedures are
applied to ensure safe production.

80 2022 ANNUAL REPORT 81

 4.5
PEOPLE
BETTER.EMPOWER

82 2022 ANNUAL REPORT 83

PEOPLE-ORIENTED MAVİ CULTURE
Driven by the people-oriented Mavi culture, transformation
for a better future starts in the value chain, and Mavi fulfills its
responsibility for providing fair living and working conditions
for its employees, suppliers, and business partners. Mavi is
empowered by its employees and suppliers who share the
company’s responsibilities on the journey toward becoming
better and to support their development.

People are at the core of Mavi’s work culture. Therefore, the

company upholds human rights, respects the differences
of its employees, and promotes gender equality in line with
Mavi Culture. Furthermore, various practices are introduced to
support the employees’ professional development throughout
their careers at Mavi.

The human resources approach is built on Mavi’s People and Its Principles.
Mavi provides a work environment where human rights are respected
in conformity with the Universal Declaration of Human Rights, United
Nations Global Compact (UNGC), UN Convention on the Rights of the
Child, International Labor Organization (ILO) conventions, Organization
for Economic and Development Cooperation (OEDC), Guidelines for
Multinational Enterprises, the UN Guiding Principles on Business and
Human Rights, and applicable laws.

84 2022 ANNUAL REPORT 85

EQUAL OPPORTUNITY AND DIVERSITY such international platforms is a testament to Mavi’s commitment to promoting gender
equality across all levels of the organization.

Of the entire 5,670-strong workforce, 94% is located in Turkey and 6% in the other markets In 2022, Mavi made significant strides towards achieving a balanced male/female
employment ratio. Women constituted 58% of the total workforce and approximately 52% of
of operation. Head office employees account for 16% of the total human resource and the
the managers. At the head office, they accounted for 60% of the employees and 56% of the
field employees for 84%. Mavi offers employment opportunities to the youth and taps into managers. In terms of store recruitment, women accounted for 59% of all hires, while men
the country’s young and dynamic workforce potential. At Mavi, the average employee age made up the remaining 41%. The female manager ratio also increased to 50%. For Turkey
is 26, with 80% under 30. operations, women comprised 69% of new hires. As part of Mavi's Career Management
Procedure, 58% of the employees promoted to Maviolog status were women. The job
description of a Maviolog includes enhancing product knowledge, ensuring customers leave
Employees by Place of Work Employees by Location with the right products and combinations, and creating an excellent shopping experience.
At the head office, 58% of the employees promoted to upper positions were women.
16%
6%
Gender Equality Training

84% 94%
Mavi recognizes the importance of organizing awareness raising, training and development
activities in terms of promoting a culture of diversity and inclusion. In 2022, the company
Head office employees Field employees International Turkey began to offer “Gender Equality Workshops” in collaboration with Ebru Nihan Celkan, a
project consultant and trainer known for her work on spreading gender equality awareness.
The workshops, which started with the C-suite and directors, will be extended to all head
Mavi provides a work environment where each individual is respected and inclusive practices office and field employees in 2023 according to plan.
are implemented . Therefore, cultural diversity and equal opportunity are promoted. In all
human resources processes, including recruitment, training and development, performance UN Target Gender Equality Program
and talent management, career management, and remuneration, Mavi acts without any
In 2022, Mavi joined the “Target Gender Equality” program, organized by UN Global Compact
discrimination against gender, race, skin color, religious belief, spiritual or political ideology,
to help companies measure their gender equality performance. Mavi sustainability and
ethnicity, economic status, sexual orientation, health condition, disability, age, or physical
HR teams regularly attend the programs and workshops where development areas are
appearance, and all employees are treated equally in line with the Diversity and Inclusion identified after performance measurements and develop multi-stakeholder dialogues.
Policy.

Mavi extends its equality approach to the career development and remuneration of all the Employees by Gender Managers by Gender
employees, with performance being the only factor to affect differences in remuneration.
Base salaries and compensation packages are reviewed regularly to ensure remuneration %42 52%
is not gender biased. Accordingly, the gender wage ratio in 2022 was 3% in favor of women 42%
58%
among store employees and 6% among the head office employees (excluding the CEO).
48%

Gender Equality Women Men Women Men

As part of its sustainability efforts, Mavi has focused on women’s empowerment and become
a signatory of the United Nations Women’s Empowerment Principles (WEPs) in early 2021. Mavi
has also joined the 30% Club, a global platform that takes action to increase gender diversity
at board and senior management levels. Mavi promotes the active participation of men
in addressing all kinds of challenges and biases that cause gender-based discrimination.
To serve this purpose, Mavi is a member of the Yanındayız Association, whose mission is to
contribute to the transformation of social life to achieve gender equality. Participating in

86 2022 ANNUAL REPORT 87

 Women-Friendly Practices at Mavi

As a leader in female employment in the retail sector, Mavi applies its equality approach
across the organization and continues to introduce women-friendly practices that
strengthen the narrative, "Women are the secret power of Mavi."

To encourage women’s participation in the workforce and help them achieve work/life
balance, all female employees with children in the 1-6 age group are offered daycare
support, shuttle, and breakfast. In 2022, 30 women and their children benefited from this
support. Furthermore, 91 employees took maternity leave and 88% returned to work later.
A "Maternity Support Program," moderated by a psychologist, was created to support
women in adapting to work life after maternity leave. Private health insurance, which
offers wide coverage and extra child coverage at discounted premiums after birth, is
also available for women employees. Annual check-up is an added benefit offered to
women aged 40 and over. The nursing rooms for female employees who return to work
after maternity leave to spend their nursing time in the early period of motherhood were
recently renovated to provide a private, calm and comfortable space. Furthermore,
parenting seminars are organized to help mothers and fathers improve in their roles as
parents.

Mavi runs both internal and also external social investment projects to promote gender
equality. With the Mavi Scholarship Fund, granted in partnership with Turkish Education
Foundation (TEV) since 2014, Mavi supports female university students throughout their
higher education.

Celebrating Women's Day

Every year, Mavi marks March 8 with engaging campaigns, starting within the company. In
2022, Mavi launched the "I Celebrate My Women’s Day" campaign, reminding women that they
should starting celebrating the day by honoring themselves first. The movement, which was
started by Mavi employees who believe that celebrating their own success, worth and values
will make the world even better, quickly spread, with the brand face Serenay Sarıkaya and
followers posting their own selfies.

88 2022 ANNUAL REPORT 89

TALENT MANAGEMENT Attracting and Retaining Talent

Mavi aims to acquire young talent through an effectively planned talent attraction and
Mavi strives to attract and hire the talent required for sustainable corporate success. The recruitment process. For this purpose, the company works in close cooperation with
company also aims to tap into the talent within the organization, help them unlock their universities and student bodies and organizes a range of effective activities such as
potential, retain them and train the leaders of the future. projects, internships, interview simulations and case studies. As part of these activities,
Mavi participates in career day events on digital platforms, which bring together university
The Human Resources Policy and Practices are designed to support Mavi’s strategic goals students from various provinces across Turkey. Taking part in these platforms allows Mavi
and the performance needed for sustainable growth. All the investment made in human to communicate with the students to advise them about career and job opportunities
resources aims to reinforce Mavi’s objective to become the employer of choice. Mavi’s most and introduce the company’s retail units and business practices. In 2022, the company
important asset is its human resource. Therefore, ensuring that the employees work with participated in more than 34 events on digital platforms, reaching 100+ universities and more
high effectiveness and efficiency and creating ultimate satisfaction, loyalty and motivation than 6,000 students in Turkey and engaging with over 23,000. The company also provided
are among the key corporate objectives. training programs on interview tips and communication for more than 100 students and
held interview simulations with 150 students. As a result of the activities to attract talent, 30
As part of talent management, the Mavi Competency Model defines the competencies students were offered internships in the summer of 2022 and 4 of these students were later
and skills that each employee needs to have and the path they should follow to succeed hired as employees.
in the growing and developing Mavi world. This model also defines the personality and
behavioral traits that the employees need to display to become the leaders that will support Mavi’s efforts to attract talent were recognized with first place prize in the Retail & Textile
the company’s vision. In 2022, a project was executed with the consulting firm Korn Ferry category of the Toptalent Talent Program and fourth place in the “Retail Employer of
to renew the competency model. Once the project was completed, the core skills at the Choice” category and fifth place in the “Inspirational HR Leader” category at the Youthall
heart of the people-oriented Mavi culture and the competencies to drive Mavi employees Youth Awards.
forward were updated with the contributions of Mavi leaders and working groups with
In 2022, “Mavi NextGen” was launched as a young talent program to train the managers of
members from different functions.
the future and 37 young professionals joined the Mavi family as part of the management
The renewed Mavi Competency Model was introduced with a launch event in December. trainee program. The objective of the Mavi NextGen program is to offer seniors from
Following the launch, Competency Model Workshops were organized to enable the universities and/or new graduates opportunities to experience different functions with
rotations and learn about various business models in the retail industry. The plan is to have
employees to become familiarized with the competencies and to transform them into
the participants develop projects on topics such as sustainability, supply chain and human
behavior. Human Resources practices and how to leverage competencies as a talent
resources at the end of the program and to benefit from these projects as inspiration for
management tool were also shared during the workshops.
Mavi’s vision and business strategy.

The employees’ career development is supported through an internal job application system,
which prioritizes in-house applications. All vacancies at Mavi are announced on the intranet,
which allows the company to give the employees a chance to move between departments
and/or stores and the head office. In 2022, 31 employees changed departments, including
27 store employees who moved to head office roles, and 513 store positions were filled with
internal promotions.

Mavi also has an International Assignment Program for employees who intend to continue
their careers in another country. With this program, Mavi aims to transfer the essential know-
how of the head office employees to different cultures to build a wealth of experience and
support their career development in the international arena. Since 2016, 6 employees have
benefited from this program and found the opportunity to work for Mavi’s international
operations. In 2022, activities were carried out to attract Turkish talent for vacancies in the
international offices and 3 people were hired for Mavi’s international operations.
90 2022 ANNUAL REPORT 91
Performance Management Total Compensation

Talent management at Mavi includes a systematic assessment of the employees. Mavi continuously strives to improve the compensation and benefits offered to encourage
Accordingly, a performance management system based on objective criteria is applied the employees’ positive performance and ensure their satisfaction and loyalty.
in the annual performance assessments to guide career planning. The results obtained
through the performance management system are taken into consideration in career Total Remuneration and Benefits
planning, identifying development needs and establishing performance-based
remuneration processes. As part of the annual performance assessments, all employees Mavi supports its employees with competitive remuneration and benefits that reward
receive feedback on their development and career plans. All head office employees go high performance. At Mavi, remunerations are aligned with the company’s ethical values,
through the performance assessment process once a year. The performance assessment internal balances and strategic goals and the employees are compensated in the highest
period starts in February with the goal setting process, continues with the check-in process standards for their performance and the value they create. Mavi aims to ensure that a
in August to review the targets and ends with the end-of-year assessments in January remuneration policy of similar pay for equal work is applied and individual differences are
after the feedback meetings of the managers with their teams. Managers enter the based on performance. Therefore, different remunerations are not applied for male and
performance assessment scores of their teams into the Mavi Pusula system. The Human female employees. On the other hand, the company regularly monitors the economic
Resources department ensures that the performance targets are set according to SMART conditions to ensure that the employees maintain their positions in the job market and
(Specific, Measurable, Achievable, Relevant, and Time-Bound) criteria and the process keeps the compensation packages balanced and competitive. Furthermore, Mavi strives to
calendar is monitored. meet the employees’ social needs and raise their working and living standards by offering
a variety of fringe benefits, including personnel shuttles, lunch, private health insurance,
In 2022, the Mavi Pusula performance system was updated to align Mavi’s sustainability company vehicle, Kartuş discounts, breakfast, and daycare support, birth and marriage
strategy and long-term goals with the priorities and targets of all employees and to ensure subsidies, etc. Depending on the position and job categories, private health insurance, family
that they are embraced. With the update, “Encouraging Progress in Mavi Sustainability benefits and annual check-ups can also be offered. A workplace physician is available to
employees at the head office two days a week and a nurse every weekday.
Goals” was included among the company’s material issues. This has made monitoring and
reporting the department- and topic-specific secondary sustainability goals possible and
The monthly salaries are determined on the basis of market and/or industry conditions,
sustainability goals were integrated into the employee performance system.
inflation rates, the employee’s position, tenure in the company, qualifications and
individual performance. Base salaries are revised and determined annually following the
As part of career planning, 604 people, including 91 head office employees and 513 store
recommendations of the Corporate Governance Committee. Salary surveys conducted by
employees (281 sales representatives, 159 Maviolog employees, 58 assistant store managers
independent consulting firms are also taken into account in every pay raise period.
and 15 deputy managers) were promoted to one higher position. The employee turnover
rates were 26% (23% voluntary) at the head office and 90% (77% voluntary) in the stores. In
Monthly Sales Commissions
2022, the ratio of high-performing mid-level and higher managers who resigned was 6%.
Monthly sales commissions are an integral part of Mavi’s compensation system, which
rewards the store employees’ performance by specific criteria, including customer
satisfaction (Happiest Mavi Customer), product reviews, store coordination, new customer
CAREER LADDER AT MAVI STORES
acquisition, sales targets and sales with Kartuş.
Retail Sales Associate
Annual Bonuses
Store Manager
The objective of bonus payments is to improve the efficiency of the executives to reach
Deputy Manager the corporate targets, maintain sustainable performance, distinguish successful executives
by emphasizing individual performance and reward the executives who create added
Assistant Store Manager value for the company. Bonuses are paid if the EBITDA target set for the calendar year
and approved by the Board of Directors is exceeded and in proportion to the extent that
Maviolog individual executives meet their own key performance indicators (KPIs). Some of the top
executive level KPIs include net indebtedness, opex management, inventory turnover, sell-
Sales Representative through and mark-down ratios, new customer acquisition, new store ROI and ramp-up

92 2022 ANNUAL REPORT 93

 management and capex management along with the risk actions identified within the
scope of corporate risk management activities and the secondary annual targets for long-
term sustainability goals.

Long-term Incentives

The Board of Directors may grant executives with administrative responsibilities a

performance-based long-term incentive by taking into account the net profit and share
price targets set for a period of three years (Incentive Period) in accordance with the
principles defined by the Board itself. In 2021, Mavi publicly disclosed its short-, medium-
and long-term environmental, social, governance (ESG) targets, which are integrated into
the performance criteria of the long-term incentive allowances of all senior management
positions. On the other hand, the success criteria for the variable performance-based
payments to the CEO include net profit for the year, share price and key sustainability
goals.

94 2022 ANNUAL REPORT 95

 EMPLOYEE DEVELOPMENT
Mavi’s brand identity as an industry leader is driven by its strong human resource, which
continually helps the company move forward and keeps pace with change and innovations.
Accordingly, the employees are offered various learning and development opportunities to
improve their skills throughout their careers.

The company’s approach to in-house training has evolved from basic to personalized and
targeted training programs. The requirements for training and development programs are
identified according to the performance system results and by conducting needs analyses via
one-to-one interviews with all department managers. Accordingly, individual development
plans consisting of professional, technical and personal development training modules are
designed for all employees in line with the Mavi Competency Model. The employees are
provided with opportunities to attend conferences, seminars and summits on a range of
subjects in Turkey and abroad and also offered foreign language learning support.

Various tools are developed to leverage digital resources in training programs. Accordingly,
the company has compiled a Digital Training Library, created video training programs and
designed development programs tailored to different positions in hybrid formats. In 2022,
total training time was nearly 122,541 hours, with an average of 21.6 hours of training per
employee.

Training time
by employee

22.2

21.6

13.9

2020 2021 2022

96 2022 ANNUAL REPORT 97

Development of Head Office Employees Mavi Sustainability Strategy Launch

Mavi offers training opportunities to the head office employees for their professional, The sustainability strategy and goals were announced internally by Mavi CEO Cüneyt
technical, and personal development and supports them with classroom trainings while Yavuz during a live show of the Esmiyor Podcast. Training programs were delivered at the
planning and encouraging their participation in events such as summits, seminars and head office, followed by field and international teams in order for all employees to own
conferences. In addition, some employees may be encouraged to take open classroom and internalize the strategy and targets.
training to support their professional qualifications as needed and included in the English
language program. The training programs are designed for individual development based Mavi Kampüs Development Programs
on basic and functional competencies to help the participants understand the behaviors
expected of the employee, display the behaviors required for the role and prepare for The Mavi Kampüs program, designed to support the personal and professional development
the next role. Based on the training needs analysis conducted at the beginning of the of the managers that will drive Mavi’s strategic goals further, has been regularly offered
year and the employees’ training requests for their own development received through since 2016. In 2022, the development program was redesigned with a job-specific structure.
their managers, job-specific catalog training programs are included and individual Accordingly, the “Leadership Development” program was created with Koç University,
development plans are created. In 2022, 410 head office employees took 16,934 person x and the “Talent” program with Yenibirlider Association and Boğaziçi University Lifelong
hours of training. Education Center. The program, featuring a modular structure to accommodate digital
learning methodologies, is based on Mavi’s leadership development model and strategic
Onboarding programs are delivered to help the newly recruited employees become priorities. The program, which includes classroom training, aims to equip the participants
familiar with corporate culture, the company’s operations, organizational structure and with the knowledge, skills and experience to become market-driven leaders with global
practices so that they can adapt more easily to their new responsibilities. Furthermore, 16 awareness and social responsibility in an evolving and developing world, able to make
trainers in the in-house trainer ecosystem train the new employees who join the Mavi family informed decisions for strategic targets.
as Assistants, Supervisors and Managers and share their knowledge and experiences in
line with the continuous learning culture. In 2022, 21 employees attended in the Mavi Kampus Leadership Development program and
29 employees in the Talent program. From 2016 to 2022, 134 employees have participated
In 2022, these activities focused primarily on restructuring the training and development in the program with 67% of these participants still working at Mavi while 76% have received
programs based on the positions. The development programs under the umbrella of Mavi promotion after the program.
Kampüs have been divided into two separate structures and two university collaborations.
In addition, digitalization and data-driven management training programs were Mentoring Program
introduced.
A mentoring program has been launched to strengthen Mavi’s corporate culture and pass
The renewed Mavi Competency Model defines the next generation leadership skills on knowledge and experiences to new generation employees. The program provides
and success criteria, which are shared with the employees. A 360-degree performance personal and professional development opportunities through interaction between the
system is designed to measure and instill these skills and criteria. Individual training and mentor and mentee. In 2022, 27 mentees and 25 mentors joined the program for an eight-
development programs will be duly designed for the employees with a 360-degree month development journey.
performance system.
The Mentoring Program, which aims to spread the corporate culture and transfer
The sales teams are also supported with the Turkey Sales Group Development Center App, knowledge and experiences to new generations, continued with great interest this year
Regional Manager Development Program and “Haydi Sahaya” (“To the Field”) programs as well. As usual, the mentees and mentors prepared for the process with a training
to encourage head office employees to visit the stores. delivered by Tim Bright, the founder of One World Consulting and a director in the
European Coaching and Mentoring Council. The eight-month long mutual development
journey includes 12 meetings between the mentee and the mentor.

98 2022 ANNUAL REPORT 99

 Technology and Product Development Training Program

In 2022, the Technology and Product Development Training Program, designed to

enhance the technical knowledge of the design and product development teams, was
restructured in a modular format in collaboration with Istanbul Technical University to
study five topics. During the program, the participants found the opportunity to learn
more about the latest developments from the academics, tried the current applications
and refreshed their technical knowledge.

UnSchool Training Program

The Cognitive Flexibility approach, regarded as a valuable behavioral skill, proposes unlearning
the previously acquired knowledge and thought patterns and making room for new learning areas
(unlearning) as a key competency. Drawing from this concept, Mavi aims to enrich the UnSchool
Training Program to keep the continuous learning environment alive and passing on the Mavi
knowledge and experience to the new employees.

In 2022, an In-house Trainer Development Program was organized to add more trainers to Mavi’s
internal training ecosystem and to equip them with the necessary competencies. By the end of
the program, which aimed to train the participants as in-house trainers capable of giving online
classroom trainings, conferences or shorter subject-specific orientation sessions, they gained
trainer qualifications needed to effectively impart their knowledge. The UnSchool Training,
designed as part of the development program, trained 16 in-house trainers within the year. The
objective of the UnSchool Training Program is to promote an environment of continuous learning
and development and to enable Mavi employees to share their knowledge.

In 2022, the program gave 130 employees an opportunity to listen to digital training content delivered
by in-house trainers. Some of the training topics were: Retail Mathematics, Inventory Management,
Cyber Security, Finance for Non-finance People, and Seasonless and Timeless Denim.

Working with Data Training Program

The GoData group started a training program to create interest in digital transformation and
data-driven management orientation and 36 people took the six-day training. By the end of the
program, which focused on explaining how value could be derived from data, the participants
learned how to create their own data sets and reports. The training, which included topics such
as business intelligence, data design methodology, data visualization and making sense of data,
gave the participants an opportunity to develop practical solutions for reporting processes and
learn advanced data analytics techniques.

English Language Advancement Program

The English Language Advancement Program helps the employees advance their English language
skills with one-on-one lessons. With this program, Mavi extends a 50% financial support for the
English language education of its employees. According to the results of the level tests of the 46
people included in the program, participants advanced at least 1 level, with some reaching the
highest level.

100 2022 ANNUAL REPORT 101

Go Mavi Culture

As part of the Go Mavi culture, which aims for continuous progress and development,
Mavi creates various working and project groups with the employees and organizes
extensive monthly, annual and seasonal meetings to encourage employee participation
in management. In 2022, Go Mavi project groups were renewed.

Three new projects were launched with the participation of the newly formed groups:
NextGen, the management trainee program of Mavi; integration of sustainability goals
into the performance system; and the Working with Data Training Program organized
within GoData.

Regular meetings are an integral part of the Go culture at Mavi to increase employee
participation in the management and to guide the entire organization toward common
goals.

MassMavi meetings: Open to all head office employees, these meetings provide a
platform for departments to share their monthly business plans.

Management Forum meetings: The company’s activities over the previous six months are
presented at these biannual meetings, open to all head office employees.

Coffee Break with the CEO: All new employee starting at the head office meet with the
CEO in these events.

Marketing Direction meetings: These are seasonal meetings where brand strategy
and priorities are evaluated together with customer, market, product, and competition
analyses and results are shared with the management teams, particularly the sales and
category departments.

Go Mavi: This refers to the working/project groups that consist of a multidisciplinary

team with members from all functions within the company including mid-level and
senior managers in line with the GoMavi culture. These working groups convene at the
GoForward meeting at the beginning of each year to determine Mavi’s priorities and
goals and continue to work in coordination with the teams to meet the set targets.

Field Strategy and Goal Meetings: Outdoor meetings for store managers and assistant
store managers. Through presentations by directors about the company’s strategies,
common goals are set and a common culture is built across Mavi.

102 2022 ANNUAL REPORT 103

Adding Variety to Work Life with GoSocial Secret Customer Surveys and Field Development

Mavi organizes a range of arts and sports activities to reinforce the sense of belonging Secret customer surveys are conducted 12 times a year to assess the performance of
and team spirit among the colleagues and enhance their social life. The social clubs the field teams and the results are regularly monitored by the sales, marketing, training
established under the GoSocial umbrella include yoga, photography, sailing, cycling and and HR teams. In 2022, a total of 4,153 secret customer visits took place in more than 390
rowing clubs. The employees also represent Mavi at various intercompany tournaments stores in 71 cities. In all the visits, Net Promoter Scores (NPS) were measured in objective
such as basketball, running, bowling and tennis throughout the year. and subjective standards. Accordingly, the development areas and the stores that have
room for improvement were identified and training was planned. In 2022, the NPS score of
Development of Store Employees the Mavi stores reached 50.24, far above the retail average.

Creating the happiest Mavi customers is the foremost priority of the field teams. An
intensive training program is delivered throughout the year to ensure that store employees
provide world-class service to Mavi customers.

Store managers take classroom training on onboarding, store responsibilities and team
management as well as on-the-job training, digital training and function-specific training
programs to develop their leadership skills.

In 2022, 27 mentors selected from mostly non-sales functions and 27 mentees selected
from employees with high potential joined the Field Mentoring Program.

The Store Manager Development Program offers the store managers an opportunity
to improve their knowledge, leadership skills and technical competencies in line with
strategic priorities.

Furthermore, assistant store managers, Maviolog employees, sales representatives,

cashiers and warehouse workers receive orientation, classroom, on-the-job and digital
training throughout the year. To date, 144 different training contents were delivered via Mavi
Connect, the digital training and communication platform, to enhance the employees’
technical and behavioral skills.

Maviolog

The job of a Maviolog is to enhance the product knowledge of the teammates in the
store where they serve, ensure every customer leaves the store with the right product
and combination and create an excellent shopping experience for the customer. The
employees to serve as Maviologs are selected very carefully and trained specifically to
provide customers with product and style advice in line with Mavi’s identity as a denim
specialist and fashion brand. Three applications in the concepts “What to Recommend
Today,” “Grab and Go” and “Where Are We Going?” are used to reinforce theory with
practice. As part of the program running since 2012, the number of Maviolog employees
working at Mavi stands at 337 as of year-end 2022.

104 2022 ANNUAL REPORT 105

 EMPLOYEE ENGAGEMENT
Mavi has developed a suggestion system to encourage the active participation of the
employees in the decision-making mechanisms and to benefit from innovative ideas.
All the suggestions submitted to the suggestion/comment section of the Maviletişim
platform are collected and evaluated systematically. The field team may also submit
their suggestions and complaints via the “Jean Fikir” ("Jean-ious”) section on the Mavi
Connect app.

According to the results of the employee satisfaction survey conducted among Mavi
employees in 2021, the employee satisfaction score was 80% in the stores and 78% in the
head office. The employee engagement scores, which is another output of the same
survey, were 77% and 76% among store and head office employees, respectively. The
consultancy firm that conducted the survey has analyzed the results and submitted a
report with their evaluations. The report was shared with both the senior management and
all employees. Based on the report, five workshops were organized with sample groups.
Drawing from these workshops, action plans, which included new employee satisfaction
practices and improvements to existing practices, were created and communicated to
all the employees in a Human Resources newsletter. Some of the practices that will be
introduced in 2023 include paternity leave above the legally required period, partnering
with 400 kindergartens in 44 provinces and special discounts. The company has plans to
analyze employee expectations through focus group studies in the times to come.

HEALTHY AND SAFE WORK ENVIRONMENT

Mavi’s top priority is to create and provide a secure, healthy and peaceful workplace that
complies with environment and occupational health and safety standards. Therefore,
activities are designed to foster a culture of occupational health and safety (OHS) beyond
legal requirements and manage the process with a systematic and proactive approach.
The Occupational Health and Safety Committee at Mavi is tasked with ensuring that
occupational health and safety practices are implemented. This committee manages
OHS-related processes including regular reviews of the occupational health and safety
practices, recommends improvements and enhancements and ensures regulatory
compliance. The senior executive responsible for occupational health and safety is the
Chief Human Resources Officer (CHRO), who reports directly to the CEO. Mavi's OHS system
covers all employees in its operations, including subcontractors.

Risk analyses are conducted and emergency action plans are made by OHS specialists
at the head office and stores, and preventive measures are implemented based on the
findings. OHS performance is monitored regularly and in 2022, no workplace fatality has
occured at Mavi with only some minor incidents reported.
106 2022 ANNUAL REPORT 107
In 2022, the Mavi OHS checklist was introduced with the objective of checking all OHS
risk factors in stores twice a year. With this practice, regional managers measure the OHS
INCLUSIVE BUSINESS MODEL AND
performance of the stores using a checklist of 30 questions during store visits. Thanks to RESPONSIBLE VALUE CHAIN
these biannual visits, OHS risk factor checks are performed above legal obligations and
potential non-compliances are eliminated. As a denim-centric apparel brand, Mavi does not engage in any direct production activities.
However, the company works with 116 responsible suppliers with world-class production
capabilities through its global sourcing network and 485 sub-manufacturers through these
Occupational Health and Safety 2019 2020 2021 2022
Performance suppliers.

Injury rate (IR)* 0.54 0.09 3.88 4.52

In addition to using general parameters such as product and service quality and capacity,
Occupational disease rate (ODR) 0 0 0 0
Mavi applies various performance criteria, including quantity and revenue volume, speed
and flexibility, contribution to collections, unique product creation capability, risk level, scope,
Lost day rate (LDR)** 0.65 1.30 3.69 6.39 compliance and cooperation to evaluate and select strategic and critical suppliers. As of
2022, Mavi works with 18 strategic and 38 critical suppliers. The critical suppliers account for
* Incident rate is computed with the following formula: (incidents with lost workday / total annual hours worked) x 1,000,000 71% of Mavi’s production and strategic suppliers for 57% by their numbers.
** Lost day rate is computed with the following formula: (absentee rate to injury / total annual hours worked) x 200,000.

Mavi expects its entire value chain to comply with and contribute to its sustainability goals
During the recruitment process, the candidates are asked to provide health information and objectives. Accordingly, the company adopts an inclusive business model to improve
and health reports confirming their suitability for the job. A workplace physician and OHS the sustainability performance of all suppliers and support their development. The suppliers
specialists are available to provide assistance to employees when needed. Employees in are audited to achieve traceability across the supply chain.
management and higher positions are entitled to private health insurance at the time they
start their jobs while store managers, deputy managers, and assistant managers earn this
right six months into their employment.

Training sessions are held to reinforce and raise occupational health and safety awareness.
Training content also includes information on specific occupational health and safety issues
Design Raw Yarn Manufacturing Logistics Sales Product
such as workplace accidents, occupational diseases, infectious diseases, first aid, fires, Materials Fabric Use
earthquakes and ergonomics. In 2022, head office and store employees received a total
of 35,304 employee x hours of OHS training, while employees of the subcontractors took
624 employee x hours of training, both averaging 8 hours per person. The mandatory basic
occupational health and safety training content has been integrated into the Meditek Responsible purchasing strategies and actions are a critical part of the sustainable value
remote training portal for the head office and the Mavi Connect app for the stores, and the chain management. As part of its sustainability strategy, Mavi strives to ensure traceability
training system has been digitalized. The training sessions are repeated at regular intervals. and continuity across the supply chain by developing innovative, inclusive and sustainable
practices that can be applied throughout the value chain.
To enhance workplace ergonomics, Mavi performs Ambient Measurements and Periodic
Checks to improve lighting and indoor air quality, optimize noise, humidity and heat levels
and upgrade equipment.

108 2022 ANNUAL REPORT 109

 Mavi Value Chain
The financial stakeholders impacting Mavi’s value chain

Upstream Mavi Downstream

Suppliers of the traded products and other suppliers (service providers

Mavi management, employees, business partners, investors Customers
and semi-finished goods)

Sourcing Operations Use Wastes/End-Of-Life

Suppliers - Suppliers – OPERATIONS SALES CUSTOMERS WASTES

Raw Material Raw Material Sub-suppliers Main Suppliers 5 global offices including the head Omnichannel sales network active People who purchase Mavi Post-consumer products that
Manufacturers Processors (Tier 2) (Tier 1) office in Turkey in 37 countries products online or offline no longer meet the quality or
(Tier 4) (Tier 3) and use them other expectations of the
Design 459 monobrand stores, including
customers and discarded
Suppliers of raw Suppliers that 538 sub- 116 main 396 in Turkey
Purchasing packaging materials
materials used process raw suppliers that suppliers that 18 showrooms
R&D
in production materials into produce and produce and
4,500 doors globally
or other semi-finished process apparel finish end- Quality Control and Product
production goods such as materials products Testing Online sales channels: mavi.com
processes yarn and Mavi App
Marketing & CRM
Sales
Products or Products or Products or Products or
processes processes processes processes Logistics Management
sourced from sourced from sourced from sourced from Corporate Communications
suppliers suppliers suppliers suppliers
Customer Relations
Cotton Yarn production Knitted and Cutting, sewing,
woven fabrics and embroidery Human Resources
Polymers Production of
Accounting CIRCULARITY
dyes, chemicals Bleaching, Washing,
Recycling
dyeing, garment Finance Products and packaging
processes (e.g., Production of
treatment, dyeing, laser materials reintroduced to previous
polyester) plastics and Investor Relations
finishing washing stages of the value chain
metal alloys
Wood, rubber processes Legal through models such as
Paper pulp Ironing
Metal recycling, upcycling, reuse
Production of IT
production Printing and reselling
Livestock zippers, buttons
Leather and rivets Packaging
(cattle, sheep,
preparation
etc.) Paper and Packaging
processes,
Other natural cardboard materials
including
fibers production
tanning
Logistics – Product Deliveries Logistics – Sales Network &
E-Commerce
Logistics and customs processes, carried out
with business partners to deliver the products Transportation activities, carried
from the manufacturers to the warehouses out with business partners to
deliver the products from the
Central warehouse in Turkey, 3PL warehouses
warehouses to stores
in Russia and Germany and managed (in-house)
logistics warehouses in the USA and Canada Shipping activities, carried out
with business partners to deliver
mavi.com and Mavi App orders
to the customers

110 2022 ANNUAL REPORT 111

 SUSTAINABILITY IN THE SUPPLY CHAIN
In all its activities, Mavi aims to offer quality and innovative products by considering ESG
responsibilities. The relations with suppliers are regulated by the Supplier Code of Conduct
and Global Purchasing Principles. These guidelines, used to monitor the ESG performance
of the suppliers, are in conformity with the Universal Declaration of Human Rights, the
International Labor Organization (ILO) conventions and the 10 Principles of the United Nations
Global Compact (UNGC). Mavi only works with suppliers that meet the high standards
defined for supply chain management and supports their continuous development.
In units, 86% of Mavi’s production takes place in Turkey. The company also supports the
socio-economic development of the country by making 80% of its total payments to local
suppliers.

SOCIAL COMPLIANCE AUDITS

Mavi conducts social compliance assessments for all the new suppliers that join the supply
chain and only works with those that pass these inspections. In addition to the Supplier
Code of Conduct and Global Purchasing Principles, field and documentation audits have
been conducted with suppliers and their subcontractors in all production categories since
June 2017.

The Social Compliance Department positioned under the Quality Assurance Department
conducts inspections to determine social compliance in suppliers. These inspections focus on
identifying the extent that the suppliers apply and comply with restrictions and regulations in
areas such as child labor, health, safety, and the environment, working hours and payments,
forced labor, the right to association and collective bargaining, discrimination, discipline,
and management responsibility as required by international standards. Compliance
with the Social Compliance Criteria established within the framework of ILO conventions,
local legislation, and internationally accepted reporting standards (such as BSCI, SMETA,
SA8000), including environmental criteria established under local legislation, management
systems, operational efficiency, product safety and risk assessment is verified through an
integrated audit structure.

Child labor and fire safety are crucial issues for Mavi, which therefore does not work with
suppliers that fail to comply with the related practices. Furthermore, the business relationship
with any existing supplier is terminated if such non-compliance is determined.

In 2022, the Mavi Social Compliance Team was expanded to perform the field audits in a
new cycle that includes the previously audited suppliers. During the year, the team visited
17% of all supplier sites. All new suppliers and sub-manufacturers are subjected to full
documentation review and asked to provide site photographs and documents in accordance
112 2022 ANNUAL REPORT 113
with OHS practices and Labor Law before they are approved for production. During the
audits, suppliers are regularly informed about the requirements of Mavi’s corporate social
compliance procedures, broken needle policy, fire safety and follow-through actions and
given feedback to improve their ESG performance.

ERAK, one of the two major producers of Mavi in Turkey in terms of production volume and
revenues, holds BSCI certification while the other, TAYEKS, has BSCI and Sedex certificates.
The purpose of these certifications and audits is to minimize environmental impact by
prioritizing the health and social security of the employees across all production processes.
Mavi accepts such certificates only if the audits of institutions like Sedex and BSCI are valid
for at least one year and their results are favorable.

ERAK and TAYEKS, which account for the majority of Mavi’s denim sourcing, are also included
in the Higg Index, developed by SAC (Sustainable Apparel Coalition) to provide the tools for
measuring the sustainability performance of a company or product.

In 2022, Mavi started to conduct environmental compliance audits in the supply chain.
More information on this topic is provided in the Ecosystem Restoration section.

114 2022 ANNUAL REPORT 115

 4.6
PLANET
BETTER.PROTECT

116 2022 ANNUAL REPORT 117

 BETTER. PROTECT A TACKLING CLIMATE CRISIS
CDP Climate
As a denim-centric brand, Mavi sees the protection and The textile industry is responsible for generating significant amounts of greenhouse gas
restoration of what nature offers us as a fundamental
Change Program score emissions across the value chain, from growing cotton in the field to the final product sold
responsibility. Accordingly, the company promotes a to the consumer. In tackling the global climate crisis, Mavi keeps its focus on reducing its
net-zero business model by tackling the climate crisis carbon footprint along the entire value chain. For this purpose, the company involves its
to protect natural resources and restore the ecosystem. B suppliers in the process to encourage the reduction of the environmental impact of their
production, designs collections with innovative and sustainable products and works to
The majority of the impact that the apparel industry CDP Water Security gradually increase the share of these products in total sales revenues.
has on the environment is created in the raw material Program and CDP
sourcing and textile production stages. However, the In addition to making more investment in renewable energy, Mavi also launches industry-
scale that the climate crisis, environmental pollution
Forests Program scores leading projects such as M30 and the eco-store with a focus on energy efficiency. In 2022,
and biodiversity loss reached calls for all to take action, Mavi was granted ISO 14001 Environmental Management System certification for its head
regardless of their operational capacities. Mavi takes office building in Turkey.
steps and develops projects and applications to
improve its environmental performance related to water,
55.7 million Reducing Carbon Footprint and CDP Climate Change Program
waste, biodiversity and in particular climate change.
TL investment
Mavi became the first and only apparel brand from Turkey to be included in the 2022 Climate
The company also complies with environmental laws Change A List, announced by CDP, the world’s largest environmental disclosure platform.
and other applicable regulations and discloses its Only 283 of the 20 thousand companies worldwide that respond to CDP, which aims to
compliance efforts.
4,984 tons change how businesses operate to mitigate the impacts of climate change, made the
A List this year, becoming the climate leaders of 2022. Mavi also earned A in the Supplier
CO2 eq. emisson Engagement Rating (SER), a secondary score of the CDP Climate Change Program, which
reduction aims to enable companies to measure the impact of their suppliers on climate change.

In its environmental 2022 was the third year that Mavi submitted its performance data to the program, which
calls for the largest publicly traded Turkish companies and uses one of the world’s most
investments and expenditures, trusted scoring methodologies. In 2022, Mavi also improved its climate score from B in the
Mavi aims for effective
management of natural 2022 Greenhouse Gas Emissions by Category

resources and protection of Scope 1

1%
biodiversity with particular Scope 2
0%
focus on the efforts to tackle
climate change. In 2022, the
company’s investments for
these purposes amounted
to TL 55.7 million. No
environmental fines have
been imposed on Mavi in the Scope 3
reporting period. 99%

118 2022 ANNUAL REPORT 119

previous two years to A – Leadership level, again outperforming the global industry average. CDP Water Security and Forests Program
The company’s energy efficiency and renewable energy purchasing projects resulted in
eliminating 4.984 tons of CO2 eq. emissions per year in 2022. In addition to the CDP Climate Change Program, Mavi also started responding to the
Water Security and Forests Programs in 2021. Already in the second year of responding
In 2022, Scope 1 emissions, the greenhouse gas emissions from directly owned or controlled to the programs, Mavi improved its scores by two levels and reached a score of B,
sources, such as fuel consumed by vehicles or heating buildings, were measured as 1,760 outperforming the global industry averages. With these programs, Mavi has focused on
tons of CO2 eq. Meanwhile, Scope 2 greenhouse gas emissions from the consumption of water and raw material consumption across the supply chain and identified its risks in these
purchased electricity amounted to 11.5 tons of CO2 eq. (market-based). The other indirect areas. The company also aims to engage in partnerships for mapping risks and reducing
greenhouse gas emissions from employee shuttles and business trips, waste management its environmental impact through increased efficiency in water and raw materials. Within
and purchased goods are included in Scope 3. The Scope 3 emissions, which make up 99% the scope of the CDP methodology, Mavi has also updated the Environment and Energy
of Mavi’s total emissions, were measured as 241,730 tons of CO2 eq. Policy and Forestry and Paper Products Policy and eliminated the gaps and lacking best
practices.
Science-Based Targets initiative
As provided in Mavi’s response to the CDP Water Security program in 2022, Mavi’s direct
The Science-Based Targets initiative (SBTi) drives ambitious climate action in the private water consumption is negligible compared to the amount of water used in the supply chain.
sector by enabling organizations to set science-based emissions reduction targets. By To identify the water consumption in the supply chain and the related water risks in 2022,
guiding companies in science-based target setting, the SBTi enables them to remain Mavi conducted environmental inspections in the wet process facilities where wet water
focused on keeping the impacts of global warming below pre-industrial levels. In 2022, consumption and wastewater discharge are higher than other facilities.
Mavi updated its emission reduction targets according to the SBTi’s target setting criteria.
Following the validation process that involved checking the greenhouse gas inventories Mavi is the first Turkish company to respond to the CDP Forests Program, which allowed
and the assumptions used to determine the inventories and the reduction rates, Mavi’s the company to map its approximate material/raw material footprint. Accordingly, around
greenhouse gas reduction targets were approved by SBTi and aligned with the goals of 83% of Mavi’s footprint consists of polyester and cotton alone. Mavi aims to concentrate on
the Paris Agreement “to keep global warming below 1.5 °C.” Accordingly, Mavi became the these fibers, expand the scope of mapping with more details and achieve progress toward
first and only Turkish apparel brand to make the list of companies whose science-based its sustainable raw material target. Every year, Mavi continues to increase the use of FSC-
targets have been approved. Mavi will continue to report its progress toward the targets certified packaging materials, ensuring that the products come from responsibly managed
to the CDP Climate Change Program and disclose its performance publicly, as it has in the forests. The company is in the process of obtaining raw material origin information as a
last three years. critical data on deforestation for all its packaging materials. In 2022, 25,699 metric tons of
materials, 75% of which are renewable and 25% of which are non-renewable, were used. 5%
Accordingly, the company has committed to reduce its Scope 1 and 2 emissions by 70% of total material use was comprised of recycled materials.
from the base year 2019 to 2030, and Scope 3 emissions by 55% (per TL added value) in the
purchased goods and services category, in line with the goals of the Paris Agreement “to Material Footprint
keep global warming below 1.5 °C.” Polyester
20.5%

Paper Acryclic Modal

6.0% 0.9% 0.6%
Lyocell
0.5%
Polyamide
3.7% Linen
%0.2%
Polyurethane
1.2% Other
0.5%

Metal
Viscose Alloys
Cotton
1.4% 1.6%
62.9%

120 2022 ANNUAL REPORT 121

In its submission to the 2022 CDP Climate Change Program, Mavi expanded the scope of Renewable Energy and Energy Efficiency
the report by filling the gaps in the previous carbon footprint inventories with assumptions
Mavi takes important steps toward procuring renewable energy to reduce carbon emissions
and included the material footprint, production processes, AC gases and greenhouse gas
created through electricity consumption. Accordingly, a renewable energy purchasing
emissions from end-of-life product in Scope 3 reporting. Additionally, greenhouse gas
agreement is in place with Selenka Energy to use electricity from renewable sources where
emissions from uncontrolled energy consumption were included in Scope 3 during the
possible. As of January 2022, the head office building and 105 stores with controlled meters
Science-Based Targets initiative development process, bringing Mavi one step closer to
are powered by renewable energy. With the company’s guidance, seven franchisees have
an emission profile that fully reflects its value chain. The next goal is to include greenhouse
also voluntarily chosen to procure renewable energy. Mavi has recently started the process
gas emissions from the production processes of the non-denim products within the scope.
of building its own solar power plant and currently waits to receive pre-licensing approval.

In 2022, half of the AC devices in the head office building were replaced with new energy-
Mavi’s Scope 3 Emissions saving models, with this change expected to result in electricity savings from 15% to 20%.
Furthermore, the escapes of conditioned air were reduced with the installation of wind
panels on the head office building.

To reduce the fuel consumption of the leased vehicles, the rental agreements were renewed.
0.51% 4.13% In 2023, 37 vehicles – corresponding to 21% of Mavi Turkey’s fleet - will be replaced with
hybrid models. This change will create fuel savings and contribute to Mavi’s greenhouse
gas reduction targets.
89.38% 10.62%
Remote Energy Management System
3.50% 0.54%
In 2019, Mavi partnered with Reengen, an IoT (Internet of Things) platform for integrated
1.48% energy, to conduct an energy efficiency and management study in 10 pilot stores. With the
0.03% pilot study delivering positive results, the scope of the agreement was expanded in August
0.17%
0.26% 2020 to cover all Mavi stores and the head office, resulting in eliminating unnecessary
energy consumption. With the Reengen system and deployment of alert devices along
with increased user awareness, energy consumption in the stores decreased by 10% in 2022.
Purchased products and services The installation of the Reengen system also allows the company to monitor the energy
Fuel and energy related activites consumption amounts in the shopping mall stores that do not have electricity meters
Upstream transportation and distribution
controlled by Mavi and to report full energy consumption with actual values.
Waste generated in operations
Business travel
Employee commuting
Upstream leased assets
Franchises
End of life treatment of sold products

122 2022 ANNUAL REPORT 123

Mavi M30 and Eco-Store Concept

To reduce the environmental impact and in particular the carbon footprint of its stores,
Mavi designed a sustainable store concept and opened its first eco-store at the Zorlu
Shopping Mall in Istanbul. The store, featuring an architectural design focused on consuming
less energy and using less raw material, was built with materials with sustainability and
greenhouse gas emission certifications.

The efficiency results of this store demonstrate that an eco-store consumes 25% less energy
and 20% less water than a standard Mavi store and is built with 30% less raw materials.

• Aisle systems are redesigned to reduce the total quantity of materials used in the
construction of the eco-store. The new design features lacquered MDF panels, cabinet
style product sections, raw OSB and natural coated walls instead of plaster primer and
paint, as well as naturally painted cork wall tiles and two-dimensional section and column
systems.

• With a new industrial ceiling design, many systems and materials used in the old store
design are eliminated, reducing resource consumption. The ventilated air is released directly
into the store through the open ceiling system, preventing capacity loss in the process.
More efficient lighting fixtures resulted in reduced electricity consumption while the waste
heat generated by the luminaires in the store also decreased.

• In the design process of the eco-store design, the life cycle assessment reports of the
selected products, required to have international sustainability certifications, were studied
and the locally produced options were prioritized.

M30, the energy efficiency focused concept store was introduced in 2022. Stores in the M30
concept consume 25% less energy than standard Mavi stores. In 2022, 22 stores were built
with the M30 concept.

124 2022 ANNUAL REPORT 125

 THE ENVIRONMENTAL IMPACT THAT ONE PAIR OF Retail Lighting Design Study

As part of the energy efficiency efforts, metal halogen lamps in the stores are replaced
TESS GOLD LUX MOVE TENCEL™JEANS CREATES DURING PRODUCTION with the more efficient LED versions. In a study on retail lighting, two types of lamps were
(excluding the logistics, sales and customer effects) compared in a simulation using energy consumption and lighting data collected from Mavi
stores. As a result, the study demonstrated with real data that LED lamps outperformed
metal halogen lamps in terms of both lighting performance and energy efficiency. Based
on these studies, Mavi will continue to increase LED lighting in the stores.

Life Cycle Assessment (LCA)

Mavi continues to conduct Life Cycle Assessments (LCA) to identify the environmental
impact of its products. Life Cycle Assessment involves calculating and reporting how a
product, service, process, or activity affects the environment throughout its life using a
Climate Eutrophication specific methodology. This enables scientific calculation and reporting of the products’
Change 0.0132 kg PO4 eq. environmental impact across all the related production, shipping, consumer use and
(Carbon Footprint) waste disposal processes. This approach also facilitates the decision-making process by
7.64 kg CO2 eq. considering sustainability starting from the design stage of the product.
30km driven by
an average car. Acidification Using LCA, the environmental impact, and in particular the carbon footprint, water
32.3 gram SO2 eq. consumption and environmental footprint of the products have been analyzed in detail,
drilled down to production stages. In addition to offering a roadmap, these results also
Water provide direction to the denim design and product development teams to consider reducing
Consumption Ozone Layer environmental impact in their decision-making processes. This inventory now enables Mavi
861 lItreS to compare the environmental impact of fabric suppliers and their different fabrics. As the
Depletion
Water use of an LCA studies continue, Mavi aims to expand the scope with the non-denim product groups
8.69 x 10-7 CFC-11 eq.
average person in in the next stage. The LCA analyses of the non-denim products will also be used to build
Turkey for 3.8 Days.
a more detailed carbon footprint inventory and calculate relevant values more accurately.

Land Use Photochemical LCA study outputs were used in the design process of the Mavi Hemp Denim collection,
3 m2/year
Oxidation recognized as the “Best Sustainable Collection” at the Rivet x Project Awards in 2022.
1.5 gram C2H4 eq. An LCA study was conducted to compare the environmental impacts of the collection
Two people components such as fabrics, rivets, inner and back labels made of different materials and
holding hands
together would the results informed the design process of the new collection with superior environmental
make one side performance.
of a square this size

126 2022 ANNUAL REPORT 127

Logistics Activities
ECOSYSTEM RESTORATION
To calculate its logistics-related greenhouse gas emissions, Mavi has mapped its logistics
network based on supplier data such as shipping volume, departure and destinations and Reducing the stress on nature and protecting the fragile ecosystem is a material issue for
engine classes. Greenhouse gas emissions of the logistics activities from manufacturers Mavi. Therefore, the company focuses on using water resources efficiently, controlling the
to distribution centers to stores, marketplaces and mavi.com customers have been use of chemicals, packaging and waste management and protecting biodiversity across
calculated. Since December 2020, the company has partnered with a logistics provider the supply chain. Accordingly, efforts such as making sustainable products that require
and shifted to intermodal shipment for land transportation to Mavi Germany, achieving less water and recycling water in production processes are encouraged. To protect the
more fuel efficiency in product shipments. In 2021, the same provider queried the locations health of manufacturers and consumers and minimize environmental impact, Mavi aims to
of the warehouses through heat maps and achieved improvements through increased reduce the use of chemicals, which should comply with the ZDHC criteria. Mavi recognizes
efficiency in the transfer centers with route optimizations. The reduction in fuel consumption the importance of using recycled materials in paper and plans to use only FSC certified
with this mode of transportation results in lower Scope 3 greenhouse gas emissions from paper and cardboard. Furthermore, the company adopts a circular approach to waste
logistics. In 2022, Mavi also signed a new service agreement with another global logistics management and works to reintroduce textile waste and other wastes into the system.
provider to offset the greenhouse gas emissions from air freight operations. With this Mavi also develops projects to raise social awareness about protecting biodiversity.
agreement, the greenhouse gas emissions from the handling and transportation activities
with the logistics provider will be offset by purchasing carbon credits from renewable Environmental Compliance Audits
energy or climate protection projects such as efficient cooking stoves. The carbon credits
In 2022, Mavi started to conduct environmental audits at select supplier facilities toward
purchased in this process will also be assured by an independent accredited institution.
its 2025 target of having all critical suppliers and wet process sub-manufacturers undergo
environmental audits. For field inspections, a 143-question checklist was created with Mavi’s
Logistics activities included within the scope of emission calculations feedback and used in the audits conducted by a third-party environmental audit expert.
During the audits, the suppliers’ environmental performance was questioned on a number
of topics, including their environmental management systems, legal compliance, water and
wastewater date, use of chemicals, wastes, air and noise emissions, energy management
and greenhouse gas management. In 2022, audits were carried out at 68% of the wet
process supplier and subcontractor facilities. The results of the audit reports provide key
data for measuring Mavi’s environmental sustainability performance. The next plan is to
conduct inspections in all the other targeted facilities and to assess the suppliers based on
the results of their environmental audits. Following the assessments, the suppliers that fail
to achieved the required scores will receive improvement recommendations and then they
will be monitored with control audits.

Water, Energy and Chemicals Management with the Suppliers

Mavi focuses on more efficient energy and water use and reducing environmental impact
both in its own operations and across the supply chain. In addition to conducting inspections,
the company also develops various projects, collaborations and applications for this
purpose. ERAK and TAYEKS, the two major suppliers of Mavi that account for nearly 80%
of the denim production, have practices in place to improve energy efficiency and water
use. The heat, hot water and steam generated during the production process (especially
in washing and drying machines) are reused in the facility, ensuring efficient energy use in
production. Furthermore, the majority of the electricity that ERAK uses comes from natural
gas cogeneration. With the solar panels installed in the factory, TAYEKS now uses renewable
energy.
128 2022 ANNUAL REPORT 129
 In 2022, ERAK and TAYEKS consumed 10% less water and 16% less energy year-on-year while
laser and sustainable washes and treatments accounted for 80% - with an increase of 10%
- of denim production, thanks to their machinery parks.

All the chemicals that these two major suppliers use are ZDHC (Zero Discharge of Hazardous
Chemicals) certified. These chemicals undergo tests and controls and are used only after
With Mavi's strategic manufacturing approval. In line with international and local regulations, the companies work to minimize
the employees’ contact with these chemicals, and only safe chemicals that are not harmful
partners ERAK and TAYEKS, compared to last year; to humans are preferred. Furthermore, the dosage system applied during the stage where
washing chemicals are added to the machines eliminate using excessive chemicals.

Mavi takes utmost care to keep the discharged water from production below the legal

10%
limits. Mechanical, chemical and biological membrane treatment systems are used at the
manufacturing sites. With the enhancements implemented, fewer chemicals, less water and
less energy are used in the processes. Starting with the All Blue collection, Mavi has started
LESS WATER to focus on using e-flow technology more to reduce water consumption.

Waste Management

16% In 2022, Mavi’s operations generated 3311.5 tons of non-hazardous waste - including the
wastes within the scope of Recycling Participation Share (GEKAP) and 0.53 tons of hazardous
waste. With a circular economy approach, 12% of this waste was delivered to recycling while
LESS ENERGY 3.8% was incinerated at a licensed facility. In logistics, 65% of the boxes that manufacturers
use for delivery of Mavi products are reused. All packaging waste is delivered to licensed
waste collectors for recycling. The deadstock items may create hazardous or non-hazardous
waste depending on product type. Licensed waste management companies are used to

80% dispose of these wastes.

Cardboard and Paper Packaging Materials

OF TOTAL DENIM
PRODUCTION IS DONE In 2022, 47% (in mass units - tons) of the purchased cardboard and paper materials were
FSC-certified. For gift and courier pouches, cardboard boxes, shopping bags, thermal
WITH LASER AND cash register POS paper rolls and printed materials, FSC-certified alternatives were
preferred. Furthermore, Mavi has started to request information about the origins of the raw
SUSTAINABLE materials used in cardboard and paper packaging against procurement from countries
WASH TREATMENT with deforestation risk.

Biodiversity

The rapidly increasing urbanization, deforestation and changing consumer habits are
affecting natural life more than ever. To address the impacts on biodiversity, programs and
projects should be developed to prevent the endangered species from extinction and
protect the species in their natural habitats.

130 2022 ANNUAL REPORT 131

Indigo Turtles Project

As a Mediterranean fashion brand, Mavi has supported the activities of the Ecological
Research Society (EKAD) with the Indigo Turtles project since 2014, helping to protect the
endangered sea turtles and aiming to encourage volunteering for a sustainable nature.
The objective of the project, which raises awareness about biodiversity, is to protect and
ensure continuity of the Caretta caretta and Chelonia mydas, two species of sea turtles
native to the Mediterranean for 110 million years. EKAD, which focuses its activities on Belek,
the largest nesting area in the Mediterranean, has helped over one million Caretta caretta
make it to the sea in the last 22 years. The number of nests, which was only 500 when the
activities started in the region, has reached 1,652 and the number of hatchlings that made
it to the sea exceeded 56 thousand in 2022.

2014 2015 2016 2017 2018 2019 2020 2021 2022

Number of 1,998 2,111 2,478 2,283 2,069 2,165 3,191 3,850 1,652
nests
Number of 149,850 151,992 183,372 157,527 144,830 155,880 232,943 300,300 120,000
adult turtle
eggs
Number of 75,824 75,540 106,172 81,284 79,512 77,472 130,914 168,000 75,500
hatchlings
Number of 56,643 64,901 92,236 69,942 63,291 66,561 114,375 150,800 56,500
hatchlings
that reach
the sea

132 2022 ANNUAL REPORT 133

 4.7
DENIM
BETTER.TRANSFORM

134 2022 ANNUAL REPORT 135

BETTER.TRANSFORM PRODUCT QUALITY AND SAFETY
Mavi transforms denim with unique, innovative ideas and the power of Mavi aims to bring quality and safe products to its customers by ensuring
technology. Involving its customers in the sustainability transformation the highest standards across the value chain. The quality control team
process with quality and sustainable products, Mavi helps change of experts under the Global Purchasing Directorate is responsible for
their consumption habits. Mavi also aims to inspire the industry with product quality and assurance and conducts regular quality controls in
innovative products with low environmental impact by embracing the all processes from production to distribution. The interim controls during
circular economy model. This approach is supported with innovative production and final controls for the finished products are performed by
partnerships to shape the future of sustainable fashion. With responsible Mavi’s quality control team and accredited independent inspectors.
raw material sourcing and production, this transformation extends to Mavi performs regular inspections to measure and score quality at the
every aspect of the value chain, from the farmer to the end-consumer. companies in the supply chain. This assurance process enables the
manufacturers to produce according to the specified quality and safety
standards and procedures. The Mavi Manufacturer Handbook, where
QUALITY FIRST these standards are explained in procedures, is shared with the suppliers.
These standards include Global Purchasing Principles, Fabric Performance
The Perfect Fit philosophy that has guided Mavi since the very
Standards, Ecological and Physical Test Matrices, Audit Procedure, Wash
beginning allows the company to meet customer expectations with
and Dye Machine Approval Procedure, Error Definitions, Error Examples
the right price-quality balance. Taking this one step further, Mavi
and Measurement Guide.
aims to make quality and sustainable products accessible to all its
customers. With the eco-friendly All Blue collection, Mavi plays a role At the sample stage, technical product refinements are made for fit,
in helping consumers make more informed choices. performance and functionality. Furthermore, customer feedback is
carefully evaluated to achieve the highest product quality and ultimate
customer satisfaction through the work of the product development and
procurement teams and improvements made with manufacturers.

Mavi tests every fabric, model and related options in international

test laboratories and follows the world standards defined by global
organizations to the letter. Mavi also requires chemical analyses and
quality performance tests from the manufacturers to check that the
products are manufactured in the declared standards. The products,
beginning at the sample stage, are tested by third-party laboratories
for levels of chemicals. Furthermore, raw materials are tested under the
manufacturers’ responsibility within the scope of EU legislation (REACH
- Registration, Evaluation, Authorization and Restriction of Chemicals)
for other chemicals. The tests are conducted according to specified
criteria by accredited laboratories, the results are evaluated and only the
approved products are shipped. Each item is tested and products that
fail to conform are canceled and not purchased.

136 2022 ANNUAL REPORT 137

 PERFECT FIT STRATEGY
Mavi’s Perfect Fit approach is grounded in understanding and monitoring customer needs
and meeting expectations with the right quality-price balance. Following the latest fashion
trends in the global markets to identify the target consumers’ requirements and to offer
the optimal options to meet their needs enables Mavi to position itself as a high-end and
no filter premium menswear and womenswear brand. Mavi embraces people of all ages, sizes and
all vegan lifestyles no matter what they wear, connects with its customers every moment of their lives
less water and aims to build long-term relationships. These attributes bring global recognition to Mavi
as a denim-centric lifestyle brand that offers world-class quality products.
much love
In 2022, Mavi expanded its offering with: Mavi Hemp Denim, the most sustainable jeans line
of the eco-friendly All Blue collection; Esra Gülmen X Mavi, a collaborative collection with
the rising designer Esra Gülmen with inspiration from earth symbols; MV91, reinterpreting
the 90s styles of Mavi for today; Freedom of Space X Mavi, a cult version of streetwear;
Maviterranean, inspired by the Mediterranean; and brand new Outerwear and Activewear
collections. With a wide range of jeans and casualwear, Mavi continued to stand apart in
the market by understanding and responding to the needs of all types of customers at a
time when shopping behavior is changing and smart-casual is becoming the style choice.
The brand maintained its market share in women’s while growing its share in men’s.

Mavi is the leader of the Turkish denim market with 18.5+% share and ranks among the
top four womenswear and menswear brands in the apparel market. In addition to ranking
first in top-of-mind jeans brand awareness and powerful brand recognition in Turkey, Mavi
also stands apart as the preferred jeans brand across both male and female consumer
segments. With a diverse design team that feels the market and an R&D team with strong
technical expertise, the brand’s broad denim assortment for all markets includes more than
300 fits and over 2,000 model options. The CRM applications used in analyzing matrices of
jeans fits and customer demographics serve as a key tool in differentiating the brand. Even
during the pandemic, Mavi has remained focused on doing what it does best, interpreting
change from a jeans culture perspective and maintaining its leadership with denim
innovations.

138 2022 ANNUAL REPORT 139

CUSTOMER SATISFACTION AND
COMMUNICATION
Creating the “Happiest Mavi Customers“ is a top priority for the company. To spread this
approach of ultimate customer happiness across the field, Mavi has formed a special project
group called GoCustomer. Employees from the marketing, HR, sales and training departments
actively participate in this group, which works throughout the year to deliver an excellent
shopping experience to the customer with premium products and service quality.

Mavi’s best-in-class loyalty program (Kartuş) has grown to 8.4m members since its launch in
2007. Kartuş data is used effectively to develop offers and deals that respond to customer
expectations and needs and personalized campaigns and communications are run to drive
customer frequency, basket size and lifetime value. With personalized offers and deals, Kartuş
is used in 77% of the shopping at ~400 Mavi stores and on mavi.com.

Responding to the evolving needs and expectations of the consumers creates a significant
competitive advantage. Therefore, companies that focus their skills and assets from human
resources to data-driven tools on understanding the changing consumer behaviors are able
to adapt to the evolving conditions faster . Mavi adapts to the rapidly changing dynamics
of the fashion industry without compromising quality and brand reputation in the eyes of
the customer and continues to create the Happiest Mavi Customers . In 2022, Mavi’s efforts
in this area were recognized with the bronze award in the Brand with the Best Customer
Satisfaction category at the A.C.E. (Achievement in Customer Excellence) Awards.

Projects Improving the Customer Experience

Mavi diversifies and enriches the shopping and feedback channels through digitalization to
always provide better experiences for Mavi customers and improve customer satisfaction:

• Mavi.com, which was upgraded with a new face in 2022, offers a closer look into each
product and creates a convenient, fast, understanding and engaging customer experience
with smart suggestions that consider the user’s tastes.

• Recognizing that people have different sizes, ages, lifestyles and clothing preferences,
menswear and womenswear categories were featured with special images for different
customer types, emphasizing that there is a pair of Mavi jeans for everyone.

• Managing the customer experience from a single platform with an omnichannel CRM
approach has enabled monitoring the campaign and loyalty processes in integration with
the cash registers, mavi.com, Mavi App and all future channels.

140 2022 ANNUAL REPORT 141

• The projects developed to enhance the digital sales channels have made it possible to The company conducts regular surveys to collect information on the brand’s perception
sell store inventories on mavi.com and to sell online from stores. Additionally, a 2-hour delivery among customers and consumers’ shopping habits in relation to the Mavi brand, products
option was introduced for deliveries to select districts in Istanbul, Ankara and Izmir in purchases and ad campaigns. The secret customer surveys at Mavi stores and franchisees enable
via Mavi.com and Mavi App . inspection of every single sales point and monitoring and reporting on their service quality.
Net Promoter Score (NPS) is monitored with secret customer surveys. In 2022, Mavi captured
• Mavi started a “return collection service” to improve the return experience of its customers. an NPS score of 50.24 according to the results of the secret customer survey.
The customers may benefit from this service in 29 provinces without having to go to a courier
branch. The Information Security Policy defines the actions required for implementing, running,
monitoring, reviewing, maintaining and enhancing information security. Furthermore, the
• A customer review option was added to mavi.com to facilitate the other customers’ selection customers may access the Privacy Notice for Protection of Personal Data at the stores, on
and decision making. In the 12-month period, the site received nearly 60 thousand reviews. the website, the Mavi mobile app or via the call center at all times.

• With the introduction of the option to purchase physical and online gift cards both in stores
and online, digital coupons accounted for nearly 90% of the total gift card sales online.

• Mavi leverages machine learning to facilitate the selection process of the users by suggesting
the most accurate fits according to the details they enter, reduce returns due to mismatched
sizes and enhance customer satisfaction.

Customer Relations Management

The customers may provide feedback regarding products or services and communicate
their thoughts and ideas about Mavi and all kinds of recommendations to Mavi by phone,
email, social media channels and stores. As part of an agreement with Global Bilgi, Mavi
has outsourced its call center operations, which were managed in-house until then, to the
experts. In this new system, the customer relations teams continue to provide service at the
head office while Global Bilgi has a dedicated team of 48 at its call center to serve only
Mavi. With the new structure that integrates the customer call center processes in stores and
e-commerce, Mavi now serves customers from 8:00 am to 12:00 am seven days a week. The
call center team manages the flow of communications and responds to customers by taking
the necessary actions. In 2022, 100% of the complaints communicated to Mavi were resolved.
According to the surveys conducted by the call center, customer satisfaction was 89% in 2022.

Mavi manages customer relations according to the EN 15838 Customer Contact Centers
-Requirements for Service Provision and ISO 10002 Customer Satisfaction Management
System certifications. The sales representatives and managers at Mavi stores have received
77.5 hours of customer relations training, which included topics such as customer psychology,
handling customer objections, happiest Mavi customer, excellent shopping experience,
customer relationship management and next-generation customer experience.

The company procures services from a third-party to monitor all customer posts and
engagements on social media about Mavi. This service delivers valuable insights about Mavi,
enabling swift response to the issues that require action.

142 2022 ANNUAL REPORT 143

 DENIM INNOVATION
Mavi believes that the best denim is sustainable denim and continues to invest more in R&D
and product development processes. The innovative All Blue collection, which consumes
less energy, water and chemicals and uses organic, recycled and upcycled materials, drives
denim innovation in the industry.

Turkey maintains an unrivalled position worldwide in terms of R&D investments, innovation and
technology development in denim fabric and jeans production, giving Mavi a competitive
edge in shaping the industry. The company combines its denim expertise with its strong
product development team, optimally leveraging Turkey’s high quality supply ecosystem.
As a denim innovator, Mavi has become a force to contend with in setting quality and price
benchmarks in the market. For the design and product teams, accurate interpretation of
fashion trends for the brand and the customer with their technical expertise is a key priority.
To ensure the softness, comfort and wearability that Mavi aims to deliver to the customer,
the R&D activities focus on detailed fabric research, product trials and wearability tests
together with suppliers.

The budget allocated for R&D in 2022 corresponded to 0.86% of the company’s revenues.
The sales of the sustainable All Blue products accounted for 14% of total revenues. The R&D
employees constitute 3.5% of the white-collar workforce in Turkey.

144 2022 ANNUAL REPORT 145

ALL BLUE: MAVİ’S MOST SUSTAINABLE
COLLECTION
Mavi’s sustainable All Blue collection reflects the brand’s love of nature in various ways and
drives a change in shopping habits by instilling an awareness about sustainable products in
the consumers . The All Blue collection is made with innovative techniques and sustainable, no filter
upcycled materials using less water and energy. all vegan
The All Blue collection features products made with sustainable organic, recycled or Better less water
Cotton-certified cotton, recycled polyester, TENCEL™ modal and lyocell, hemp and upcycled much love
materials. The sustainable fiber content in fabrics is shaped around Mavi’s quality first focus,
design approach and product performance specifications.

The All Blue products contain sustainable fibers and are made with efficient technologies
that consume less water and energy than conventional production techniques. Mavi
collaborates with its strategic partners ERAK and TAYEKS to use the E-flow technology to
reduce water, energy and chemicals consumption and laser technology that guarantees
product standards , reduces the use of chemicals and protects the health of the employees,
and an automated dosing system that eliminates faulty and excessive use of chemicals in
washing due to manual processes. Environmental impact measurement methods such as
EIM Score and LCA are used to assess these processes.

The products - true, unfiltered versions of denim - are 100% vegan and the labels are made
from recycled paper.

The pioneering role Mavi plays in sustainability resonates with the customers and is recognized
on international platforms. After winning the Best Sustainable Collection category at the
Rivet x Project Awards, which recognize the brands bringing newness and creativity to
the global denim market, with the eco-friendly and sustainable All Blue collection in the
2019, 2021, 2022 and February 2023 editions, Mavi was recognized with the same title for
the fifth time for its sustainable products with superior sustainability performance. Rivet,
affiliated with the Sourcing Journal, one of the world’s most important sectoral publications,
evaluated brands that made a difference with their innovations in denim design, product
development and sustainability during the Las Vegas fair, and as a result of the evaluations,
the best jeans brands were awarded in seven different categories.

In 2022, icons were incorporated into the labels and online descriptions to inform the
customers about the product features of the All Blue collection. These expressive icons
help Mavi customers identify the environment friendly features of the products quickly and
easily.

146 2022 ANNUAL REPORT 147

Fabric and Sustainable Materials All Blue Sustainable Product Focus Areas in 2022

• Mavi aims to develop environment-friendly products and expand the sustainable

product collection every year.

• With Mavi becoming a member of Better Cotton, the use of Better Cotton-certified
materials in the collection increased significantly.
ORGANIC HEMP RECYCLED TENCEL
COTTON COTTON CELLULOSE
BASED FIBERS • The use of recycled and organic raw materials in fabrics increased. Recycled polyester
and REPREVE® were preferred especially in product groups targeting the youth.

• The use of water, energy and chemicals in fabrics, washing processes and accessories
decreased.

• Products with high environmental performance have been designed with hemp, the
UPCYCLED RECYCLED REPREVE BETTER
MATERIALS POLYESTER POLYESTER COTTON environment friendly fiber that consumes the least amount of water and TENCEL™, the
innovative eco-friendly fiber.

• The use of laser in distressed and worn treatments instead of washing increased by 10%
year on year, reaching 80% in 2022.

• All-vegan materials are used in product accessories.

ALL VEGAN NATURAL CLAY BIOBASED NUT BIOBASED OLIVE
DYE FABRIC SHELL BUTTONS SEED BACK LABEL • 100% recycled yarn is used in all the woven labels inside the waistbands.

• All rivets are made with 20% recycled zamak.

• All back label notes are made from cloth material containing 65% recycled polyester.

• For paper materials on the products, 50% recycled and recyclable paper is used on
average.
FSC CERTIFIED
PACKAGING
• Paper label suppliers with FSC certification are preferred.

• The jacron back patches are made from FSC-certified raw materials.

Innovative Production Methods Resource Management

LESS WATER LASER LESS

LESS ENERGY WASH CHEMICALS

148 2022 ANNUAL REPORT 149

 Mavi’s Most Sustainable Jeans: “Mavi Hemp Denim”

Mavi Hemp Denim is the new member of the environment friendly All Blue collection and
features new styles made with hemp fibers that consume minimum water and are set to
revolutionize the future of sustainable fashion. The collection is made with hemp, grown only
with rain water and without the need for artificial irrigation, minimizing water consumption.
Hemp has lesser environmental impact and naturally promotes soil biodiversity. Hemp is
also naturally antibacterial, anti-microbial and biodegradable. It requires no herbicides,
pesticides, synthetic fertilizers or GMO seeds, improving soil health and preventing erosion.

The collection, which consumes less water and less energy during production, features hemp
along with recycled cotton seams and trims and bio-based nutshell buttons. Made with
Comfort technology, the fabrics are not only sustainable but also super soft and gentle and
every single component of the Hemp Collection is selected by considering their environmental
impact. Mavi won the “Best Sustainable Collection” category for its Hemp collection at the
Rivet x Project Awards, which recognize the brands bringing newness and creativity to the
global denim market.

The fabrics used in the Mavi Hemp collection are manufactured in Turkey by ORTA, which
designs innovative denim fabrics for the world with a focus on innovation, technology and
sustainability. The fabrics created with leading denim innovation offer flexibility, durability and
comfort. ORTA sources the hemp used in its fabrics from La Chanvrière, a member of CELC
(The European Confederation of Flax and Hemp).

Mavi Upcycle

The Mavi Upcycle collection was created by the Mavi design and P&D teams who collaborated
to bring back denim and non-denim products from the archives to life by upcycling them for
today’s fashion. For the collection, 12 styles and 779 products were upcycled. Made with fabrics
from different products, each piece is unique, genderless and sizeless. Offered in select stores,
the collection interprets tonal and textural variations with color blocking and draws attention
with youth codes blended with streetwear. Additionally, the hang tags of this product group
are made from packaging waste.

150 2022 ANNUAL REPORT 151

INNOVATION PARTNERSHIPS
Partnerships play a key role in the sustainability transformation of
the industry and driving innovation. Mavi engages in innovation
partnerships with various other brands, designers and universities to
expand its positive impact and inspire the industry.

Esra Gülmen x Mavi: Mavi Version of Wearable Art

For the new collaborative Esra Gülmen X Mavi collection, the designer
created earth-inspired motifs with the themes “Waves, Mountains,
Trees, Rivers,” transforming a sustainable line within the All Blue
collection into wearable pieces of art. The denim pieces in the Esra
Gülmen X Mavi collection are made sustainably, using production
methods that consume less water and energy and designed with
vegan and recycled labels. To evoke the Mediterranean character of
Mavi, raw white and ecru fabrics were produced exclusively for the
collection. The white raw fabric, which perfectly complements Esra
Gülmen’s simple style, is made with minimal processing. As a result,
each piece is environment friendly in terms of water and energy use
and a part of Mavi’s sustainable All Blue collection.

Freedom of Space x Mavi

Mavi and Freedom of Space partnered to reinvent the cult looks of

the 90s street culture for future generations. Mavi, defining the denim
trends for thirty years, and Freedom of Space, created an exclusive
collection with sustainable Better Cotton-certified fabrics, innovative
printing techniques and sustainable components. Acting today for
the future, the patchwork sweatshirts made with scraps of denim are
a testament to both brands’ sustainability commitment.

152 2022 ANNUAL REPORT 153

 RESPONSIBLE RAW MATERIAL SOURCING
Mavi encourages manufacturers to make responsible raw material choices and helps them
transform their production processes. Accordingly, Mavi traces and steadily increases the
sustainable material content (organic, recycled, upcycled and Better Cotton-certified
cotton, recycled metal, etc.) in its products.

In 2021, Mavi received OCS and RCS certificates, earning the right to sell products with
proven organic and recycled content across the supply chain. RCS certification verifies
recycled content and OCS certification verifies organically grown content, ensuring
that these materials can be traced from their origins to the final product. In addition
to Mavi’s two major suppliers, ERAK and TAYEKS, Rimaks is also a manufacturer with
international Global Organic Textile Standard (GOTS) and Organic Content Standard
(OCS) certifications . Overall, 10 suppliers have the capability to manufacture organic
products.

In 2022, Mavi became a member of Better Cotton and began to support the world’s
leading sustainability initiative for cotton by using Better Cotton-certified cotton. Better
Cotton addresses cotton production with its environmental, social and economic impacts,
trains farmers with the necessary knowledge, skills and tools, and aims to continuously
improve agricultural practices . As a result, farmers who grow cotton by following factors
such as mitigating the harmful effects of plant protection practices , managing and using
water resources effectively, ensuring soil health, protecting and enriching biodiversity,
maintaining fiber quality, and improving the welfare of agricultural workers , attain an
internationally recognized standard. Mavi remains focused on more responsible raw
material sourcing by purchasing cotton from such sustainable sources. Mavi has reached
its five-year consumption target declared during the Better Cotton membership process
in September 2022.

In 2022, the sustainable alternatives monitored for various fibers were used in the ratios
shown in the table below.

Fiber Sustainable Alternative Sustainable Alternative Usage Ratio

Cotton Organic Cotton 18.5%

Polyester Recycled Polyester (Repreve®) 0.7%
Lyocell TENCEL™ Lyocell 65.8%
Modal TENCEL™ Modal 58%

154 2022 ANNUAL REPORT 155

 4.8
COMMUNITY
BETTER.MOBILIZE

156 2022 ANNUAL REPORT 157

BETTER.MOBILIZE İndigo Turtles

Mavi aims to create shared values in the community and use its Mavi has supported the activities of the Ecological Research
transformative and mobilizing brand power to achieve better Society (EKAD) with the Indigo Turtles project since 2014, helping
things. The company is particularly focused on empowering young to protect the endangered Caretta caretta and Chelonia
people and women for social development so that no one is left mydas, two species of sea turtles native to the Mediterranean
behind. Customers who choose Mavi and other stakeholders are for 110 million years. EKAD, which focuses its activities on Belek,
also included in this movement. the largest nesting area in the Mediterranean, has helped over
one million Caretta caretta make it to the sea in the last 22 years.
Mavi’s Impact-Driven Transformative Power The number of nests, which was only 500 when the activities
started in the region, has reached 1,652 and the number of
Mavi intends to mobilize its stakeholders, especially the customers, hatchlings that made it to the sea exceeded 56 thousand in
by leveraging its brand power. Therefore, impact-driven and 2022. Facing many difficulties, only 40% of hatchling turtles
measurable social projects that involve customers , employees, reach the water and only one in a thousand survives. This is why
suppliers, universities and non-governmental organizations the Indigo Turtles project raises awareness about supporting
(NGOs) are launched. the survival effort s of the sea turtles, supports protection of
biodiversity and promotes the importance of volunteering.

Young volunteers join the Indigo Turtles project and set up

camp on the 30km-long beaches for four months, working
every day to protect the mature female turtles’ eggs from
external factors and help hatchlings climbing out of their nests
to reach the water. Along with hundreds of university volunteers
from Turkey and around the world, customers , scholars, social
media followers, brand ambassadors and employees of Mavi
also join the project voluntarily.

Supported by the awareness seminars hosted at universities, the

project gains more recognition as the number of applications
to volunteer increases every year. In 2022, over 100 university
students volunteered for the program while the camp event
was promoted with competitions for social media followers
and influencer partnerships.

Since the launch of the project, each customer that purchases

an Indigo Turtles T-shirt adopts five sea turtles and contributes
to the efforts. The T-shirts, designed for all customer groups, are
sold in Turkey as well as online stores in the US, Canada, and
Germany. Every year, thousands of Mavi customers become
voluntary ambassadors of the project with their T-shirts.

158 2022 ANNUAL REPORT 159

Mavi Scholarship Fund BlindLook Partnership

Since 2016, Mavi has granted annual scholarships to female students Mavi partnered with BlindLook, the startup that develops technological solutions for a
in a number that corresponds to the age of the company through visually accessible world, to make mavi.com and Mavi App accessible to people with visual
the Turkish Education Foundation. For the 2021–2022 academic impairment. Mavi became the first blind-friendly fashion brand to join BlindLook’s global
year, 31 students received grants under the Mavi Scholarship EyeBrand network, committing to an accessible and inclusive life. Thanks to this partnership,
project, which supports them throughout their university education. 285 million visually impaired people may have an inclusive fashion and shopping experience
Mavi has also supported the education of one student as part of on mavi.com and the Mavi App. The application enables the visually impaired users to
Koç University’s Anatolian Scholars program, which gives a second complete their online shopping with Mavi by using voice commands without the support of
chance to successful students that achieve scores in the top 1% in anyone else and easily access all information and content.
the university exams despite limited education privileges but are
unable to qualify for scholarships.

A movement for good: “We Are Beautiful When We Are Together”

Mavi has always designed its jeans drawing from the belief that
each woman is unique, regardless of her age, body type, clothing
and lifestyle. In 2022, the brand launched the “We Are Beautiful
When We Are Together” project with this belief. Mavi transformed
this message of being ‘beautiful together when we are together’
into an action by giving women a chance to touch more lives
and make other women happy. As part of this movement, Mavi
partnered with Needs Map and gifted Mavi jeans to 1,000 female
university students across Turkey. Mavi also sent gift cards to a
group of 200 opinion leaders and asked them to give those cards
to women, ensuring their participation in this movement for good.

Miav cat houses for stray animals

After designing T-shirts and jeans with the “Miav” logo, a word play
on the brand name to mean the meows of cats, Mavi continued
to protect animals with the Miav cat houses. The special project,
which involved transforming unused shelves in the stores into cat
houses for the stray animals, succeeded in helping more furry
friends on the streets.

With the proceeds from the sales of Miav jeans and T-shirts, the
company supports ENCANDER (Association for Protecting Animals
with Disabilities and in Need), the association that works to meet
the needs of stray and disabled animals and takes care of animals
in need. With 472 cat and 50 dog houses placed around its stores
and various locations across Turkey, the company aimed for stray
animals to spend the winter in their warm homes and the project
was welcomed with great interest by animal lovers.
160 2022 ANNUAL REPORT 161
 Mavi’s Other Activities for Social Benefit

· On April 23rd, National Sovereignty and Children’s Day, Mavi supported the music,
painting, dance, game and invention workshops organized by the SosyalBen
Foundation to contribute to the social development of children.

· On Mother’s Day, Mavi supported AÇEV’s (Mother Child Education Foundation),

programs to empower mothers and on Father’s Day, the father support program.

· In the 44th Istanbul Marathon, The Mavi Running Team ran for charity and raised
funds for the Tree Fellowship project of TEMA Foundation. The donations collected
contributed to educating children about the environment and planting
saplings on behalf of children in the Hayrettin Karaca Tree Fellowship Forest.

· To mark the arrival of 2023, Mavi supported UNICEF’s “Leader Girls of the Future”
program, which aims to empower girls and to promote gender equality, encouraging
both Mavi employees and stakeholders to contribute to the program.

162 2022 ANNUAL REPORT 163

4.9 MAVİ’S SUSTAINABILITY JOURNEY

2006
» Mavi became one of the first brands
worldwide to start the organic cotton 2018 2020
movement with the Mavi Organic collection
made with 100% organic Aegean cotton. » Mavi partnered with the eco-friendly material » Mavi became the first Turkish apparel brand to
producer Lenzing and started using TENCEL™ disclose its carbon footprint transparently. With the
branded lyocell and modal fibers. first report submitted to the CDP’s Climate Change
Program, Mavi received a score of B, outperforming
» Mavi’s social compliance statement was added to the global industry average.
2010 the agreements, which the suppliers were asked
to sign. » Mavi earned A- in the Supplier Engagement Rating
» Innovative and sustainable materials such as (SER) by the CDP platform, outperforming its peers.
TENCEL™ and modal were introduced in the » The sustainable All Blue collection doubled in scope
Mavi Premium line. and variety.
» Mavi Kids T-shirt collection made with 100%
organic cotton was launched.
2019 » All Blue collection was expanded with 100% organic
cotton, eco-friendly T-shirts.
» Mavi’s sustainable, eco-friendly products were
grouped under the All Blue collection. » Mavi collaborated with Coca-Cola for an exclusive
collection made with organic cotton and sustainable
2014 » Leather was completely eliminated from back labels of
jeans, which became all vegan.
recycled materials.

» Indigo Turtles project was launched in » Life Cycle Assessment (LCA) studies started.
» Paper used in all product labels was reduced by half,
partnership with the Ecological Research shifting to recycled materials. » Mavi switched to renewable energy at the head
Society (EKAD) to protect the endangered office and the stores with controlled meters.
sea turtles. » Packaging materials used in shipments of online orders
dropped from three to one, both in number and type. » Mavi signed UN Global Compact.
» Indigo Turtles T-shirt collection was created
with 100% organic cotton. Mavi customers » Remote Energy Management System based on instant » Materiality analysis was completed.
began to support the efforts to protect baby monitoring was launched in partnership with
sea turtles with each T-shirt they purchased. Reengen in 10 pilot stores. » Sustainability Committee and working groups were
formed.
» Lighting fixtures in stores were replaced with LED
2017 luminaires for energy savings. » Activities to determine the sustainability strategy
and goals began.
» Mavi All Blue won in the “Most Sustainable Collection”
» Mavi replaced the light bulbs in the stores with category at the Rivet Awards.
energy-saving LED luminaires.
» Supplier Code of Conduct was published.
» Social compliance guidelines were shared with
the suppliers and social compliance audits
started.
» Mavi started trading on Borsa Istanbul following
the IPO.

Environment Social Governance

164 2022 ANNUAL REPORT 165

 2021
» Jeans made from recycled plastic bottles were introduced 2022
with the Mavi Pro Sport Repreve® collection and the
“Mavi Transformation Launched” ad campaign was
launched.
» Being the first and only apparel brand from Turkey to
be included in the 2022 Climate Change A List by CDP,
2023
the world’s largest environmental disclosure platform,
» The sustainable Les Benjamins x Mavi collection was » Mavi’s greenhouse gas emission reduction
and receiving a score of B in the 2022 CDP Forests
designed and produced with organic, recycled, and targets were validated by the Science-Based
Program and CDP Water Security Program.
eco-friendly materials in collaboration with the luxury Targets initiative (SBTi).
streetwear brand Les Benjamins. » Becoming a member of the Better Cotton program.
» Mavi’s Supplier Engagement Score has
» The use of sustainable fibers was extended further with a » Mavi Hemp Denim, the most sustainable jeans increased to A with CDP 2022.
global partnership with TENCEL™. collection of Mavi, was created with hemp fibers that
» The Rivet x Project Awards named Mavi the
consume minimum water, recycled cotton, seams and
» Better Cotton Initiative-certified cotton was used in the winner of the “Best Sustainability” category
trims and bio-based nutshell buttons.
special 30th anniversary Maviterranean collection. for the Recycled Blue and Pro Dark Tech lines,
» Esra Gülmen X Mavi, a collaborative collection with the marking the brand’s fifth win to date.
» OCS (Organic Content Standard) and RCS (Recycled artist Esra Gülmen, was launched, using production
Claim Standard) certifications were obtained. » Mavi was included in the BIST Sustainability 25
methods that consume less water and energy and
Index, whose constituents are publicly traded
» First reports were submitted to the CDP Water Security designed with vegan and recycled labels.
companies with high corporate sustainability
and Forests Programs. Mavi became the first and only » Mavi and Freedom of Space created an exclusive performance.
Turkish company to report to the CDP Forests Program collection with sustainable Better Cotton-certified
in Turkey. With the 2021 report submitted to CDP’s » Mavi became a member of the Business
fabrics, innovative printing techniques and sustainable
Climate Change Program, Mavi received a score of B, Council for Sustainable Development Turkey
components.
outperforming the global industry average, and an A- (BCSD Turkey).
in the Supplier Engagement Rating (SER) by the CDP » Winning its fourth award in the “Best Sustainable
platform, outperforming its peers. Collection” category at the Rivet Awards, this time for
its hemp and recycled cotton products.
» The Remote Energy Management System with Reengen
was deployed in all Mavi stores. » Mavi Pro Sport Repreve collection won the Special
Recognition Award at “Unifi Repreve Champions of
» Women’s Empowerment Principles (WEPs), the joint Sustainability”.
initiative of UNGC and UN Women, was signed.
» Mavi Hemp Denim recognized with the “Climate
» Mavi joined the 30% Club, the initiative that aims for Friendly Collection” award at the Elle Green Awards.
diversity in business.
» Receiving ISO 14001 Environmental Management
» CEO Water Mandate was signed. System certification for its Turkey head office building.
» Mavi CEO Cüneyt Yavuz entered the Fast Company » Partnering with BlindLook to enable visually impaired
Sustainability Leaders 50 Survey list at 18th place. users to complete their online shopping with Mavi by
» Board Diversity, Human Rights, Diversity and Inclusion, using voice commands without the support of anyone
Biodiversity, Environment and Energy, Forest and Paper else.
Products, and Animal Welfare policies were published. » Mavi published its first sustainability report, disclosing
» All Blue won in the “Best Sustainable Collection” category the sustainability strategy and goals.
at the Rivet x Project Awards for the second time. » Being included in Borsa Istanbul Sustainability Index in
recognition of its sustainability performance.
» Mavi CEO Cüneyt Yavuz moving up to the 16th place
in the Fast Company Sustainability Leaders 50 Survey
list.

Environment Social Governance

166 2022 ANNUAL REPORT 167

 4.10 PERFORMANCE INDICATORS, GRI CONTENT
AND OTHER INDEXES

MEMBERSHIPS
• United Nations Global Compact (UNGC)

• United Nations Women’s Empowerment Principles (WEPs)

• CEO Water Mandate

• Better Cotton

• 30% Club

• Yanındayız Association

• United Brands Association of Turkey (BMD)

• Ethics and Reputation Society (TEİD)

• Turkish Investor Relations Society (TÜYİD)

• Corporate Governance Association of Turkey (TKYD)

• The Institute of Internal Auditing – Turkey (TİDE)

• Istanbul Chamber of Commerce

• Business Council for Sustainable Development Turkey (BCSD Turkey)

168 2022 ANNUAL REPORT 169

STAKEHOLDER ENGAGEMENT PERFORMANCE INDICATORS
Stakeholder Group Communication Methods
SOCIAL PERFORMANCE INDICATORS
Employees Maviletişim and Maviconnect internal communication portals, digital Employee statistics under this section are compiled at the end of each year with head
channels (website and social media platforms), internal meetings count methodology.
(Massmavi, Management Forum, Go meetings, etc.), info mailings,
employee engagement and satisfaction surveys, campaign impact
surveys, volunteering activities, social clubs, field visits, annual reports, and
Employees by 2019 2020 2021 2022
sustainability reports
Gender and
Customers Sales points (stores, mavi.com, and marketplaces), digital channels, call Category Female Male Female Male Female Male Female Male
center, satisfaction surveys, annual reports and sustainability reports, media
coverage Total employees 2,209 1,877 2,211 1,849 2,976 2,135 3,316 2,354
Suppliers Supplier meetings, field visits, audits, innovation projects, annual reports and
sustainability reports, digital channels Head office
426 301 418 296 477 324 558 365
employees
Franchisees Franchisee meetings, field visits, one-to-one meetings, annual reports and
sustainability reports, digital channels Store
1,783 1,576 1,793 1,553 2,499 1,811 2,758 1,989
employees
Shareholders, Investors, General Assembly meetings, material event disclosures, press releases, one-
and Analysts to-one meetings and correspondence, broker and bank reports, periodic Employees with
14 69 16 73 24 78 32 104
briefings, annual reports and sustainability reports, digital channels disabilities

Non-Governmental Social responsibility projects, one-to-one meetings, participation in Under 30

1,784 1,391 1,727 1,281 2,450 1,555 2,742 1,789
Organizations meetings and working groups, seminars and conferences, annual reports and years old
sustainability reports, digital channels 30 to 50
413 465 466 543 507 553 552 540
Universities Training programs, internship programs, career days, conferences, Mavi years old
Scholarship Fund, industry-specific projects, digital channels, annual reports, Over 50
and sustainability reports 12 21 18 25 19 27 22 25
years old
Media Press conferences and launch events, special features and interviews, press Employees in
releases, digital channels, annual reports, and sustainability reports revenue
1,828 1,644 1,834 1,629 2,541 1,885 2,813 2,063
generating
functions

Total employees 4,086 4,060 5,111 5,670

Employees 2019 2020 2021 2022

by Type of
Employment Female Male Female Male Female Male Female Male

Full-time 1,482 1,380 1,422 1,368 1,650 1,404 1,840 1,528

Part-time 727 497 789 481 1,326 731 1,476 826

170 2022 ANNUAL REPORT 171

 2019 2020 2021 2022 2019 2020 2021 2022
Employees by Newly Hired
Location Employees*
Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male

United States of Newly hired

33 23 37 28 42 29 51 29
America employees - 58 30 45 26 98 36 108 48
total
Canada 49 25 43 23 50 24 55 26
Under 30
40 13 31 13 65 14 72 30
years old
Russia 84 46 97 44 101 45 100 45
30 to 50
18 17 14 13 33 22 36 18
years old
Europe 40 27 33 26 34 28 32 20
Over 50
0 0 0 0 0 0 0 0
years old
Turkey 2,003 1,756 2,001 1,728 2,749 2,009 3,078 2,234
*Number of newly hired employees refers only to Turkish operations.

2019 2020 2021 2022

Subcontractor 2019 2020 2021 2022 Employee
Employees by Turnover*
Female Male Female Male Female Male Female Male
Gender Female Male Female Male Female Male Female Male
Number of
Subcontractor employees
employees by 20 82 18 91 12 104 24 96 1,326 978 662 557 1,666 1,190 2,432 1,685
who left the
gender - total organization
Subcontractor 2019 2020 2021 2022 Under 30
Employees by 1,264 903 618 519 1,564 1,061 2,320 1,560
years old
Type of Full- Part- Full- Part- Full- Part- Full- Part-
Employment time time time time time time time time 30 to 50
62 74 44 37 102 129 111 124
years old
Subcontractor
employees Over 50
0 1 0 1 0 0 1 1
by type of 92 10 97 12 43 73 41 79 years old
employment -
*Number of employees who left the organization refers only to Turkish operations.
total

2019 2020 2021 2022

Employees by
Tenure
Female Male Female Male Female Male Female Male

0-5 years 1,781 1,472 1,715 1,338 2,423 1,615 2,739 1,843

5-10 years 332 318 377 395 427 389 116 114

10+ years 96 87 119 116 126 131 461 397

172 2022 ANNUAL REPORT 173

 Managers and 2019 2020 2021 2022 2019 2020 2021 2022
Executives Parental Leave*
by Gender Female Male Female Male Female Male Female Male
Female Male Female Male Female Male Female Male
and Age
Employees who
Under 30 took parental 59 0 42 0 68 0 91 0
63 77 215 222 296 248 361 290
years old leave – total
30 to 50 Employees who
176 212 244 307 349 378 368 390
years old returned to work
42 0 38 0 65 0 80 0
Over 50 after parental
1 8 4 12 8 12 11 11 leave – total
years old
*Number of employees who took parental leave and returned to work later refers only to the Turkish operations.
All employees
with manager 324 359 463 541 653 638 740 691
titles
2019 2020 2021 2022
Junior-level Training Times -
227 289 338 414 421 433 469 463 Stores*
managers Female Male Female Male Female Male Female Male
Mid-level Total training
51 32 62 33 73 49 57 38 26,691 24,808 28,451 25,897 57,036 45,226 61,202 44,405
managers time
Senior-level Average
46 38 51 34 57 44 61 50
managers training time 15.77 15.77 16.25 16.25 26.72 26.72 22.68 22.68
Board of per employee
1 5 1 5 2 4 2 4
directors *Training time covers only Turkish operations.

2019 2020 2021 2022 2019 2020 2021 2022

Performance Training Times -
Management Head Office*
Female Male Female Male Female Male Female Male Total Total Female Male Female Male

Employees Total training

7,583 2,157 7,492 3,900 11,176 5,758
subjected to time
regular Average
performance 288 194 294 185 307 210 333 200 training time - - - - 15.70 12.00 20.00 15.80
and career per employee
development
reviews *Training time covers only Turkish operations.

Employees
assessed
according to 288 194 294 185 307 210 333 200 2019 2020 2021 2022
measurable OHS Training*
goal realization Total Total Total Female Male

Total training
8,264 4,984 27,576 21,080 13,056
time

Average
training time 8 8 8 8 8
per employe

*Training time covers only Turkish operations.

174 2022 ANNUAL REPORT 175

 OHS Training - 2019 2020 2021 2022 ENVIRONMENTAL PERFORMANCE INDICATORS
Subcontractors*
Total Total Total Female Male
GHG emissions were calculated according to GHG Protocol.
Total training time 3,212 4,524 736 32 592

Average training time GHG Emissions* Unit 2019 2020 2021 2022
8 8 8 8 8
per employee
*Training time covers only Turkish operations.
Scope 11 ton CO2 eq. 2,423.20 2,444.49 2,403.21 1,759.86

Work Health and Safety* 2019 2020 2021 2022 Scope 21 (market-
ton CO2 eq. 4,583.14 1,684.52 10.42 11.50
based)
Injury cases (employees) 0 1 25 83

Injury cases (subcontractors) 0 0 0 0 Scope 3 ton CO2 eq. 182,420.68 140,863.61 179,386.51 241,729.55
Injury cases (total) 0 1 25 83
Total ton CO2 eq. 189,427.03 144,992.62 181,800.15 243,500.90
Lost time accidents (employees) 6 1 25 34

Lost time accidents (subcontractors) 0 0 0 0

Emissions within the
Lost time accidents (total) 6 1 25 34 scope of approved SBTi ton CO2 eq. 7,006.35 4,129.01 2,413.63 1,771.36
target (Scope 1 + 2)
Fatalities (employees) 0 1 0 0

Fatalities (subcontractors) 0 0 0 0 Emissions within the

scope of approved SBTi ton CO2 eq. 159,198.73 121,414.81 156,808.88 216,063.60
Fatalities (total) 0 1 0 0
target (Scope 3)
Accidents (employees) 40 48 72 107
GHG emission
Accidents (subcontractors) 23 22 1 0 reduction rate
% - 41.07% 65.55% 74.72%
Accidents (total) 63 70 73 107 compared to the base
year 2019 (Scope 1 + 2)
Injury rate (IR) (employees) 0.54 0.09 3.88 4.52
GHG emission
Injury rate (IR) (subcontractors) 0 0 0 0 reduction rate
compared to the base
Injury rate (IR) (total) 0.50 0.08 3.10 4.42 year 2019 (Scope 3 - % - 7.66% 41.66% 65.97%
Lost days (employees) 36 71 119 240 Purchased Goods and
Services only. per TL
Lost days (subcontractors) 0 0 0 0 value added)

Lost days (total) 36 71 119 240

Scope 3 - Purchased
Lost day rate (LDR) (employees) 0.65 1.30 3.69 6.39 ton CO2 eq. 159,198.73 121,414.81 156,808.88 216,063.60
products and services
Lost day rate (LDR) (subcontractors) 0 0 0 0

Lost day rate (LDR) (total) 0.60 1.18 2.95 6.25

Scope 3 - Fuel and
ton CO2 eq. 1,929.65 1,458.88 1,262.93 1,301.04
Occupational disease cases (employees) 0 0 0 0 energy related activites

Occupational disease cases (subcontractors) 0 0 0 0

Scope 3 - Upstream
Occupational disease cases (total) 0 0 0 0 transportation and ton CO2 eq. 3,567.79 2,247.77 3,755.57 3,581.07
distribution
*Work Health and Safety metrics are only valid for Turkish operations. Formulas used for OHS metrics can be seen on page 105.

176 2022 ANNUAL REPORT 177

 Scope 3 - Waste Raw Materials and
generated in ton CO2 eq. 63.06 48.10 64.36 70.59 Other Materials Used in 2019 2020 2021 2022
operations Packaging (tonnes)

Scope 3 - Business Paper - 1,895.57 2.544.13 3,051.69

ton CO2 eq. 452.32 192.57 295.87 626.61
travel
Plastic - 131.00 178.33 65.94
Scope 3 - Employee
ton CO2 eq. 341.60 310.46 318.87 399.58 Glass - 23.02 62.03 58.97
commuting

Scope 3 - Upstream
ton CO2 eq. 8,253.54 8,093.34 8,253.54 8,463.31
leased assets
Waste Quantity
2019 2020 2021 2022
Scope 3 - Franchises ton CO2 eq. 1,703.20 1,029.50 1,343.48 1,228.39 (tonnes)

Scope 3 - End of life Total hazardous waste - 2,308.39 3,010.41 3,311.49

treatment of sold ton CO2 eq. 6,910.80 6,068.17 7,283.02 9,995.36
products Total non-hazardous
- 1.24 0.33 0.53
waste
GHG intensity. (Scope
1+2 per revenues in ton CO2 eq. 2.45 1.72 0.52 0.17 Recycled waste 361.19 370.65 608.68 382.50
mio TL)
Burned waste 165.23 260.04 226.25 124.94
*1Scope 1 and 2 emissions cover operations in Turkey, USA, Canada, EU and Russia. Scope 1 includes natural gas and fuel con-
sumption, emissions from air conditioning gas leaks while Scope 2 includes emissions from purchased electricity. Scope 2
emissions for the years 2019 to 2022 was recalculated using the official electricity carbon footprint coefficient. GHG category
End-of-life processes for products sold was added during the SBTi approval process and are included in the inventory with the
assumption that these products end up in landfills. Water Withdrawal
2019 2020 2021 2022
Quantity (m3)

Municipal water - 9,422 6,338 10,368

Energy1 Unit 2019 2020 2021 2022

Non renewable fuel

MWh 3,589.88 2,805.81 3,312.21 3,875.29
consumption

Renewable electricity
MWh 0,00 4,912.37 10,392.55 11,327.55
consumption

Non renewable
MWh 10,433.06 3,843.18 40.51 44.84
electricity consumption

Total energy
MWh 14,022.94 11,561.36 13,745.27 15,247.67
consumption

Energy intensity MWh / mio

4.90 4.81 2.98 1.44
(per revenue) TL

*1Energy consumption table only covers energy use related to Scope 1 and 2 GHG emissions.

178 2022 ANNUAL REPORT 179

INDEX WEPs REFERENCES
UNGC REFERENCES
Principles Related Section in the Report

Principle 1: Establish high-level corporate leadership for gender

Related Section equality.
Impact Area Principles
in the Report
Principle 2: Treat all women and men fairly at work – respect and
Better.Empower – support human rights and nondiscrimination.
Principle 1: Businesses should support and respect the
People-oriented
protection of internationally proclaimed human rights.
Mavi Culture Principle 3: Ensure the health, safety and well-being of all women
& and men workers.
Human Rights Inclusive Business Better.Empower –
Principle 2: Businesses should make sure that they are not Model and Principle 4: Promote education, training, and professional Equal Opportunity
complicit in human rights abuses. Responsible Value development for women. and Diversity
Chain
Principle 5: Implement enterprise development, supply chain and
marketing practices that empower women.
Principle 3: Businesses should uphold the freedom of
association and the effective recognition of the right to Principle 6: Promote equality through community initiatives and
collective bargaining. Better.Empower –
advocacy.
People-oriented
Principle 4: Businesses should uphold the elimination of all forms Mavi Culture Principle 7: Measure and publicly report on progress to achieve
of forced and compulsory labor. & gender equality.
Labor
Inclusive Business
Principle 5: Businesses should uphold the effective abolition of Model and
child labor. Responsible Value
Chain
Principle 6: Businesses should uphold the elimination of
discrimination in respect of employment and occupation.

Principle 7: Businesses should support a precautionary

approach to environmental challenges. Better.Protect –
Tackling Climate
Principle 8: Businesses should undertake initiatives to promote Crisis
Environment
greater environmental responsibility. &
Ecosystem
Principle 9: Businesses should encourage the development and Restoration
diffusion of environmentally friendly technologies.

Corporate
Anti- Principle 10: Businesses should work against corruption in all its
Governance –
Corruption forms, including extortion and bribery.
Business Ethics

180 2022 ANNUAL REPORT 181

GRI CONTENT INDEX GRI 2-16 Communication of critical concerns 207 - 211

The information is reported in accordance with the GRI Standards for the period from February 1, 2022 to January 31, 2023.
GRI: Foundation 2021 is used as GRI 1 Collective knowledge of the highest
GRI 2-17 213 - 215
governance body

GRI 2: GENERAL DISCLOSURES 2021 Evaluation of the performance of the highest

GRI 2-18 237
governance body
If omitted,
Disclosure GRI 2-19 Remuneration policies Remuneration Policy
Disclosure Name Page number / document reasons for
Number
omission
GRI 2-20 Process to determine remuneration 93
The organization and its reporting practices
Confi-
GRI 2-1 Organizational details 5 - 9, 220 GRI 2-21 Annual total compensation ratio
dential

Entities included in the organization’s

GRI 2-2 54, 171 - 179 Strategy, policies and practices
sustainability reporting

GRI 2-3 Reporting period, frequency and contact point 54 GRI 2-22 Statement on sustainable development strategy 219 - 220

GRI 2-4 Restatements of information 171 - 179

Mavi Code of Conduct
External assurance process in
GRI 2-23 Policy commitments Human Rights Policy
place for GHG emissions.
GRI 2-5 External assurance
169, 180 - 181
CDP Climate Change 2022
External Assurance
Mavi Code of Conduct
Activities and workers
Human Rights Policy
GRI 2-24 Embedding policy commitments
Activities, value chain and other
GRI 2-6 110 - 111 Duties and Working Principles of
business relationships
The Sustainability Committee
GRI 2-7 Employees 171 - 176
GRI 2-25 Processes to remediate negative impacts Mavi Code of Conduct
GRI 2-8 Workers who are not employees 171 - 176

Governance Mechanisms for seeking advice and

GRI 2-26 207 - 211
aising concerns
GRI 2-9 Governance structure and composition 202 - 207, 212 - 220
GRI 2-27 Compliance with laws and regulations 221
Nomination and selection of the highest
GRI 2-10 Board Diversity Policy GRI 2-28 Membership associations 169
governance body

GRI 2-11 Chair of the highest governance body 213 Stakeholder engagement

Role of the highest governance body in Duties and Working Principles of GRI 2-29 Approach to stakeholder engagement 75, 170
GRI 2-12
overseeing the management of impacts The Sustainability Committee
No em-
Delegation of responsibility for managing ployees
GRI 2-13 202 - 207
impacts under a
collective
GRI 2-30 Collective bargaining agreements
Role of the highest governance body in Duties and Working Principles of bar-
GRI 2-14
sustainability reporting The Sustainability Committee gaining
agree-
GRI 2-15 Conflicts of interest Mavi Code of Conduct ment.

182 2022 ANNUAL REPORT 183

 GRI 3: MATERIAL TOPICS 2021 Material Topic: Raw Material Management

If omitted, If omitted,
Disclosure Disclosure
Disclosure Name Page number / document reasons for Disclosure Name Page number / document reasons for
Number Number
omission omission

GRI 3-1 Process to determine material topics 75 GRI 3-3 Management of material topics 78 - 79

GRI 3-2 List of material topics 77 GRI 301: Materials 2016

Material Topic: Water And Wastewater GRI 301-1 Materials used by weight or volume 121

If omitted, GRI 301-2 Recycled input materials used 121

Disclosure
Disclosure Name Page number / document reasons for
Number
omission GRI 204: Procurement Practices 2016

GRI 3-3 Management of material topics 78 - 81 GRI 204-1 Proportion of spending on local suppliers 72

GRI 303: Water and Effluents 2018

% of sustainable alternatives used for fibers 155
Mavi CDP Water Security 2022
GRI 303-1 Interactions with water as a shared resource
2 Material Topic: Brand Reputation

GRI 303-5 Water consumption 179 If omitted,

Disclosure
Disclosure Name Page number / document reasons for
Number
Material Topic: Customer Satisfaction omission

If omitted, GRI 3-3 Management of material topics 78 - 79

Disclosure
Disclosure Name Page number / document reasons for
Number
omission Awards received during the financial year 50 - 51

GRI 3-3 Management of material topics 78 - 79 Material Topic: Human Rights And Fair Working Conditions

Customer satisfaction policy Customer Satisfaction Policy If omitted,

Disclosure
Disclosure Name Page number / document reasons for
Number
Number of loyalty program members 49 omission

Number of active loyalty program members 49 GRI 3-3 Management of material topics 80 - 81

Percentage of retail revenues attributed

49 GRI 205: Anti-corruption 2016
to loyalty program

Number of new customers 49 Communication and training about

GRI 205-2 Mavi Code of Conduct
anti-corruption policies and procedures
Material Topic: R&D And Innovation
Confirmed incidents of corruption
GRI 205-3 209 - 210
If omitted, and actions taken
Disclosure
Disclosure Name Page number / document reasons for
Number
omission GRI 401: Employment 2016

GRI 3-3 Management of material topics 78 - 79

GRI 401-1 New employee hires and employee turnover 173
% of revenues allocated to R&D 145
Benefits provided to full-time employees that
% increase of revenues generated from GRI 401-2 are not provided to temporary or part-time 93, 95
145
products in All Blue collection employees

Number of employees in the R&D department 145 GRI 401-3 Parental leave 89

184 2022 ANNUAL REPORT 185

 GRI 403: Occupational Health and Safety 2018 GRI 408: Child Labor 2016

Occupational health and safety Operations and suppliers at significant risk for
GRI 403-1 107 - 108 GRI 408-1 113 - 115
management system incidents of child labor

Hazard indentification, risk assessment, GRI 409: Forced or Compulsory Labor 2016
GRI 403-2 107 - 108
and incident investigation
Operations and suppliers at significant risk for
GRI 409-1 113 - 115
GRI 403-3 Occupational health services 107 - 108 incidents of forced or compulsory labor

Worker participation consultation and GRI 414: Supplier Social Assessment 2016
GRI 403-4 communication on occupational 107 - 108
health and safety New suppliers that were screened using
GRI 414-1 113 - 115
social criteria
Worker training on occupational
GRI 403-5 107 - 108
health and safety Negative social impacts in the supply chain
GRI 414-2 113 - 115
and actions taken
GRI 403-6 Promotion of worker health 107 - 108
Material Topic: Climate Change And Energy
Prevention and mitigation of occupational
GRI 403-7 health and safety impacts directly linked 107 - 108 If omitted,
Disclosure
by business relationships Disclosure Name Page number / document reasons for
Number
omission
Workers covered by occupational health
GRI 403-8 107 - 108 GRI 3-3 Management of material topics 80 - 81
and safety management system

GRI 403-9 Work-related injuries 176 GRI 302: Energy 2016

GRI 403-10 Work-related ill health 176 GRI 301-1 Energy consumption within the organization 178

GRI 404: Training and Education 2016 GRI 301-3 Energy intensity 178

Average hours of training per year GRI 301-4 Reduction of energy consumption 123 - 125, 178
GRI 404-1 97
per employee
GRI 305: Emissions 2016
Programs for upgrading employee skills and
GRI 404-2 97 - 105
transition assistance programs GRI 305-1 Direct (Scope 1) GHG Emissions 177 - 178

Percentage of employees receiving regular GRI 305-2 Energy indirect (Scope 2) GHG Emissions 177 - 178
GRI 404-3 174
performance and career development reviews
GRI 305-3 Other indirect (Scope 3) GHG Emissions 177 - 178
GRI 405: Diversity and Equal Opportunity 2016
GRI 305-4 GHG Emissions intensity 177 - 178
GRI 405-1 Diversity of governance bodies and employees 171 - 172
GRI 305-5 Reduction of GHG Emissions 177 - 178
Ratio of basic salary and remuneration
GRI 405-2 86
of women to men Material Topic: Wastes

GRI 407: Freedom of Association and Collective Bargaining 2016 If omitted,

Disclosure
Disclosure Name Page number / document reasons for
Number
Operations and suppliers at significant risk omission
GRI 407-1 for incidents of freedom of association and 113 - 115
collective bargaining GRI 3-3 Management of material topics 80 - 81

186 2022 ANNUAL REPORT 187

 GRI 306: Waste 2020

Waste generation and significant

GRI 306-1 131
waste-related impacts

Management of significant
GRI 306-2 131
waste-related impacts

GRI 306-3 Waste generated 179

GRI 306-4 Waste diverted from disposal 179

GRI 306-5 Waste directed to disposal 179

Material Topic: Chemicals Management

If omitted,
Disclosure
Disclosure Name Page number / document reasons for
Number
omission

GRI 3-3 Management of material topics 80 - 81

OTHER TOPICS
If omitted,
Disclosure
Disclosure Name Page number / document reasons for
Number
omission

GRI 201: Economic Performance 2020

Direct economic value generated

GRI 201-1 5
and distributed

Financial implications and other risks and Mavi CDP Climate Change 2022,
GRI 201-2
opportunities due to climate change Page 3-7

188 2022 ANNUAL REPORT 189

SUSTAINABILITY PRINCIPLES COMPLIANCE FRAMEWORK A3. Reporting

Should report and publicly disclose

its sustainability performance, goals
and actions at least once a year.
COMPLIANCE STATUS A3.1 X 68 - 71
Should provide information about its
sustainability activities within its annual
ANNUAL REPORT report.
Sustainability Principles Compliance Outline WHERE RELATED
EXPLA- INFORMATION It should provide information as to with
YES NO PARTIAL N/A
NATION IS DISCLOSED which of the United Nations (UN) 2030
PUBLICLY (PAGE A3.2 X 68 - 71
Sustainability Development Goals its
NO./LINK) activities are related.

A. General Principles It should disclose information about

lawsuits filed and/or completed
A3.3 X 181 - 221
A1. Strategy, Policy and Goals against it in environmental, social and
corporate governance issues.
The Board of Directors should
determine ESG-priority issues, risks and A4. Verification
X 54 - 81
opportunities, and form ESG policies in
accordance with them. External
assurance
For the sake of effective If verified by independent third parties process in
A.1.1
implementation of the aforesaid (independent sustainability assurance place for GHG
policies, internal directives, work providers), it should disclose its emissions.
A4.1 X
procedures, etc. may be prepared for X Mavi - Policies sustainability performance measures,
the corporation. For these policies, and should endeavor to increase said CDP Climate
a decision of the Board of Directors verification actions. Change 2022
should be taken and made public. External
Assurance
Should determine and publicly disclose
A1.2 its short and long-term goals in line X 68 - 71 B. Environmental Principles
with its ESG policies.
Should declare its policies and
A2. Implementation / Monitoring practices, action plans, and
B1 environmental management systems X 181 - 221
(known as ISO 14001 standard) and
programs.
Mavi Sustainability
Should appoint and publicly disclose
Committee Duties
its committees/units in charge of X Should disclose limitations to the
and Working
implementation of ESG policies. environmental report that will be
Principles
prepared under the Sustainability
B2 X 54
Principles, reporting period, reporting
date, data collection process and
A2.1 Committees/units in charge should restrictions in reporting conditions.
report the activities carried out under
the policies to the Board of Directors Mavi Sustainability
at least once a year and in any case, Committee Duties B3 Provided in A2.1. X
X
within the maximum periods of time and Working
stipulated for disclosure of annual Principles Should disclose the incentives it offers for
reports in the regulations of the Board B4 management of environmental issues, 92, 95
pertaining thereto. including the achievement of goals.

Should formulate and publicly disclose Should disclose how environmental

the implementation and action plans B5 issues are integrated into business X 78 - 81
A2.2 X 68 - 71
in line with the short- and long-term objectives and strategies.
goals determined as above.

Should determine ESG Key Performance 68 - 71, B6 Provided in A2.4.

A2.3 Indicators (KPIs) and declare them X
comparatively on an annual basis. 171 - 179 Should disclose how it manages
environmental issues and integrates
Should declare innovation activities suppliers and customers into its
B7 X 78 - 81
aimed to improve the sustainability strategies, not only in terms of direct
A2.4 X 54 - 181
performance in relation with business operations, but also along the
processes or products and services. corporation value chain.

190 2022 ANNUAL REPORT 191

 Should disclose whether it is included Should provide information about
in the (sectoral, regional, national and electricity, heat, steam and cooling
B17 X 178
international) policy formulating processes generated and consumed in the
on environmental issues or not, as well reporting year.
78 - 81,
as associations it is a member of, its
B8 X
environmental cooperation initiatives
169
entered into with related institutions and Should carry out and disclose works on
non-governmental organizations, and increasing the use of renewable energy
its duties and functions, if any, assumed B18 X 123
sources, and transition to zero or low
thereon, and the activities supported by it. carbon electricity.

Should periodically report in a

comparable manner, information about
environmental effects in the light of Should disclose its renewable energy
B19 X 123, 178
environmental indicators [Greenhouse generation and consumption data.
gas emissions [Scope-1 (Direct),
B9 X 177 - 179
Scope-2 (Energy indirect), Scope-3
(Other indirect)], air quality, energy
management, water and waste water
Should conduct energy efficiency
management, waste management,
projects, and disclose the resulting
biodiversity effects]. B20 X 123
reduction in energy consumption and
emission due to its projects.
Should disclose details in relation to
standards, protocols, methodologies
B10 X 177 - 179
and base year employed for collection Should report quantities, sources and
and calculation of its data. procedures of water extracted from
underground or ground waters, used,
recycled and discharged (Total water
Should declare the status of B21 X 129 - 131
extraction on source basis, water
environmental indicators for the sources affected from water extraction,
B11 X 177 - 179
reporting year in comparison with past percentage and total volume of
years (increase or decrease). recycled and reused water, etc.).

Should determine and disclose short

and long-term goals for reduction Mavi is not
of its environmental impact. If an 69, included
B12 improvement is detected in the X in any
Should disclose whether its operations
reporting year over the previously 177 - 178 carbon Mavi 2022
or activities are included in any carbon
determined goals, it should provide B22 X pricing CDP Climate
pricing system or not (Emission Trade
information thereabout. schemes. Change, p. 35
System, Cap & Trade or Carbon Tax).
Develop-
ments are
Should disclose its strategy and actions monitored.
B13 X 119 - 128
for fight against climate crisis.

Should disclose its programs or

procedures aiming to prevent or There is no
X 127
minimize the potential negative effects accumu-
Should disclose its carbon credit data Mavi 2022
of its products and/or services. lated or
B23 accumulated or bought in the reporting X CDP Climate
B14 purchased
period. Change, p. 36
carbon
Should also declare the actions of third credit.
parties aiming to reduce greenhouse X 128
gas emissions.

Should declare the total number of

If carbon pricing is applied in the Mavi 2022
actions taken, projects implemented
B24 corporation, it should disclose details X CDP Climate
and initiatives entered into for
B15 X 123 relating thereto. Change, p. 36
reduction of its environmental impact,
as well as their environmental benefits
and cost savings.

Should report total energy consumption Should disclose all mandatory

data (with the exception of raw B25 and voluntary platforms where its X 119
B16 X 177 environmental data are disclosed.
materials), and disclose its energy
consumptions as Scope-1 and Scope-2.

192 2022 ANNUAL REPORT 193

 C. Social Principles
Data Protection
Should formulate and disclose to public
Policy
C1. Human Rights and Employee Rights C1.7 its personal data protection and data X
security policies.
Privacy Notice
Should establish a Corporate
Human Rights and Employee Rights
Policy covering its commitment of Mavi’s People
full compliance with the Universal and Its Principles
Declaration of Human Rights, ILO Should formulate and disclose its
C1.8 X
Conventions ratified by Turkey, and Human Rights ethics policy.
C1.1 X Supplier Code of
legal framework and legislation Policy Conduct
regulating human rights and labor
issues in Turkey. Should disclose the
aforesaid policy and the roles played Should disclose initiatives focused on
and responsibilities assumed in the social investment, social responsibility,
implementation of the policy. C1.9 X 158 - 163
financial inclusion and access to
finance.
Should provide equal opportunities
in recruitment processes. Includes Should organize information meetings
fair labor, improvement of working and training programs for employees
Diversity and C1.10 X 98
standards, employment of women and
Inclusion Policy with respect to ESG policies and
social inclusion issues (such as non-
C1.2 X applications.
discrimination towards women, men,
Supplier Code
religious beliefs, language, race, ethnical
of Conduct
origin, age, disablement, refugees, etc.) C2. Stakeholders, International Standards and Initiatives
in its policies by also considering the
supply and value chain effects.
Should formulate and disclose its
Customer
customer satisfaction policy dealing
C2.1 X Satisfaction
Should disclose measures taken with management and resolution of
Policy
along the value chain for the sake of customer complaints
supervision and protection of rights/
equal opportunities for minorities
C1.3 X 113 - 114 Should handle stakeholder
or certain population segments
vulnerable to particular economic, communications continuously and
environmental and social factors (low- transparently, and disclose with which
C2.2 X 170
income segments, women, etc.). stakeholders, for which purposes, on
which issues and in which frequency it
communicates.
Should report developments relating
to applications aiming to prevent
and correct discrimination, inequality, Mavi 2022 CDP
C1.4 breaches of human rights and forced X 113 - 114 Climate Change,
Should disclose international reporting
labor, and disclose its regulations C2.3 X p.18
standards it has adopted.
and measures aiming to prevent
employment of child labor. 54

Mavi’s People Should disclose the international

and Its organizations or principles it has signed
Should disclose its policies regarding C2.4 X 169
Principles or enrolled in and the international
investments in employees (training and
development policies), compensations, principles it has adopted.
C1.5 X Severance
fringe benefits, unionization rights,
Policy
work/life balance solutions and talent
management. Mavi is
Remuneration Should concretely endeavor to
included in BIST
Policy be included in the Borsa İstanbul
C2.5 X Sustainability
Sustainability Index and international
Index and BIST
sustainability indices.
Should determine dispute resolution Sustainability 25.
processes through the establishment of Mavi’s People
mechanisms for resolution of employee X and Its
complaints and disputes, and determine Principles D. Corporate Governance Principles
its dispute resolution processes.

Should consult with stakeholders

Mavi’s People
and Its D1 in determination of measures and X 198 - 247
Regularly declares its activities aimed strategies in sustainability field.
X Principles
at employee satisfaction.
89, 104
Should endeavor to raise awareness
Should disclose actions and measures on sustainability and the importance
taken for protection of health and D2 thereof through social responsibility X 158 - 163
C1.6 X 107 - 108 projects, awareness activities and
against occupational accidents, and
occupational accident statistics. trainings.

194 2022 ANNUAL REPORT 195

05 CORPORATE GOVERNANCE
5.1 Declaration of Compliance with Corporate Governance Principles
5.2 Explanations Regarding Corporate Governance
5.3 Board of Directors
5.4 Risk Management
5.5 Internal Control System and Internal Audit
5.6 Board of Directors' Discussion and Analysis
5.7 Legal Disclosures
5.8 Responsibility Statement
5.9 Related Party Transactions Report
5.10 Corporate Governance Compliance Report and Information Form

01 KEY FINANCIAL 02 CHAIRMAN & CEO 03 MAVİ BRAND 04 MAVİ'S SUSTAINABILITY 05 CORPORATE 06 INDEPENDENT AUDITORS REPORT & 07 GENERAL
METRICS LETTERS HIGHLIGHTS EVOLUTION GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ASSEMBLY

196 2022 ANNUAL REPORT 197

 CORPORATE GOVERNANCE
Mavi’s corporate culture is defined by remaining close to its customers, being passionate for
its product quality, earning the trust of its employees, and building long-term partnerships.
Mavi conducts its operations with a corporate governance and sustainability approach
based on the principles of transparency, fairness, responsibility, and accountability. Mavi
continues to design its corporate governance processes to enable transparency for both
internal and external shareholders. In determining its corporate governance strategy, Mavi
considers the sustainability principles and the environmental impact of its operations.

Since the introduction of an organizational structure dedicated to sustainability in 2020,

Mavi has made strides in managing its business processes with an integrated approach
and in line with measurable targets in 2022.

5.1 DECLARATION OF COMPLIANCE WITH

CORPORATE GOVERNANCE PRINCIPLES
Mavi began trading on Borsa Istanbul on June 15, 2017 and has been subject to CMB
regulations since then. As a matter of policy, Mavi fully complies with the mandatory principles
set out in the Corporate Governance Communiqué No. II-17.1. Mavi also aims to achieve full
compliance with non-mandatory corporate governance principles and currently works on
the principles that have yet to be implemented.

The Corporate Governance Compliance Report (“URF”) and Corporate Governance

Information Form (“KYBF”) pertaining to the Company’s special accounting period of
February 1, 2022-January 31, 2023 have been prepared in accordance with the presentation
principles laid out by the CMB’s resolution no. 2/49 dated January 10, 2019, published in the
CMB Weekly Bulletin, and duly approved by the Company’s Board of Directors.

The non-mandatory Corporate Governance principles – marked “partial” or “no” in the

above mentioned Corporate Governance Compliance Report (URF) published on the Public
Disclosure Platform – that Mavi has yet to implement are indicated below, along with their
respective descriptions. Mavi has not been exposed to any conflicts of interest due to lack
of full compliance with the non-mandatory principles.

Article 1.3.10. Donations made by the Company during the reporting year are disclosed in
a separate agenda item in the General Assembly Meeting as an overall figure without the
details of the beneficiaries of such donations.

198 2022 ANNUAL REPORT 199

Article 1.5.2. Under the Articles of Association, minority rights are not granted to shareholders the Company’s profile and credibility, ensuring two-way communication and information
who hold less than one twentieth of the capital and in line with general practices, minority flow between the Board of Directors and the capital markets regulators and participants,
shareholders hold rights accorded by the general provisions of law. complying with legislation and the Articles of Association related to shareholder rights, and
fulfilling the public disclosure obligations in accordance with applicable legislation and the
Article 3.1.3. Policies that address stakeholders’ rights are published on the corporate website Company’s Disclosure Policy. The Investor Relations Department reports directly to the CFO.
while other procedures are provided on Maviletişim, the internal disclosure platform.
No discrimination is made among shareholders in terms of exercising the right to view
Article 4.4.7. The Board members are made sure to allocate sufficient time to company and request information, and all information, other than those considered trade secrets, is
business and are not restricted in terms of assuming other positions outside the company. disseminated to shareholders in accordance with the company’s Disclosure Policy to avoid
Considering the professional and sector-specific experience that the members bring to the inequality in obtaining information.
Board of Directors, imposing restrictions on their external duties is not deemed necessary.
The Board members’ résumés and the duties they hold outside the company are presented The Investor Relations Department promptly responds to shareholders’ and other
to the shareholders before the General Assembly Meeting. stakeholders’ information requests and questions via various channels and the most
effective means of communication. Furthermore, in order to enable shareholders to
Article 4.5.5. Considering various factors such as the volume of operations and administrative exercise their right to information in the most efficient manner, the Department maintains
needs, Mavi has determined the number of independent members to serve on the Board an Investor Relations tab on the corporate website (mavicompany.com) – also linked from
of Directors as three. Currently, the Board has three committees. Given that the committee the official website (www. mavi.com) – where investors and other stakeholders are provided
chairs are required to be independent members according to the relevant principle, these with all publicly available financial and operational data, all the company’s material event
independent directors serve on multiple committees. These committee assignments do not disclosures, and public announcements and notifications. The website is available in English
give rise to any conflicts of interest within the Company. and Turkish. Additionally, individuals or institutions may subscribe to the Investor Relations
Department’s mailing list to receive emails about the company’s latest operational and
Article 4.6.1. A specific performance appraisal has not been conducted on Board level. financial announcements.

Article 4.6.5. The remunerations of the Board members are determined by the General In the special accounting period from February 1, 2022 to January 31, 2023, the Investor
Assembly. Furthermore, remunerations of Board members and senior executives are Relations Department attended nine online and in-person investor conferences to share
disclosed to the public in the Company’s financial table notes as a total figure in line with Mavi’s financial, operational, and strategic developments with investors and analysts.
general practices. At these events and in further meetings, the company engaged with 335 investors and
analysts from 107 local or international institutions and funds. Furthermore, throughout the
In 2022, all corporate governance practices, the Ordinary General Assembly process, and year, the Department held four webcasts to present the quarterly earnings releases to the
the Board committees’ activities were carried out in accordance with the Capital Markets investors and analysts. The recordings and transcriptions of the webcasts, presentations,
Law, which includes the CMB’s corporate governance principles and the communiqués and the questions addressed to the management as well as the answers were duly posted
based on this Law. on the corporate website for the investors and analysts who were unable to participate in
the events on the announced days and times.

5.2 EXPLANATIONS REGARDING CORPORATE All the requests for information received by phone or email in the special accounting
period from February 1, 2022 to January 31, 2023 were answered in accordance with the
GOVERNANCE company’s Disclosure Policy and in line with the publicly available information. In this period,
the department also responded to the information requests of nearly 200 local investors.
Shareholders
The Investor Relations Department submits monthly and quarterly reports to the Board of
The Investor Relations Department is responsible for informing the local and foreign Directors on Mavi’s stock performance and the macroeconomic and industry developments
investors in an accurate, consistent and timely manner (while protecting trade secrets and and also presents an annual report to the Corporate Governance Committee on investor
confidential information and avoiding asymmetrical dissemination of information), elevating
200 2022 ANNUAL REPORT 201
relations activities throughout the year. The Investor Relations Department regularly informs Board members casting weighted votes or vetoes in Board meetings. In the 2022 reporting
the Board of Directors on the developments about the issues raised in the investor meetings. period, no related party transactions or material transactions, which were disapproved by
the independent members and therefore required presentation to the General Assembly
Contact details of the Investor Relations Department: for approval, took place.

Duygu İnceöz The Company holds an executive liability insurance with a coverage of $5 million, which
Senior Director, Investor Relations extends to all members of the Board of Directors and the senior management of Mavi and
Phone: +90 (212) 371 20 29 its affiliates/ subsidiaries.
Email: [email protected]
Yonca Dervişoğlu resigned from her position as an independent director on the Board of
Board of Directors Directors on May 30, 2022. The Board of Directors, as per the recommendations of the
Corporate Governance Committee and pursuant to Article 363 of the Turkish Commercial
The Board of Directors is primarily responsible for defining the company’s strategic targets, Code, appointed Ms. Zeynep Yalım Uzun to replace Ms. Yonca Dervişoğlu's vacant
determining the workforce and financial resources needed, and overseeing the performance Independent Board Membership until the end of her predecessor's term of office, to be
of the executive management. The Board of Directors consists of two types of members: submitted to the approval of the first General Assembly.
executive members and non-executive members. Non-executive members, free of any
other administrative duties at the company, will constitute the majority of Board members. Currently, the Board of Directors of Mavi consists of six members whose positions are
detailed below.
The company is governed and represented by a Board of Directors consisting of six
members. Half of Mavi’s Board members are elected from among candidates nominated
by Class-A shareholders. The Chairperson of the Board of Directors is elected from among Other Positions Within Positions External to the
the Board members nominated by Class-A shareholders. Name Position the Group and Name of Group and Name of the
the Relevant Company Relevant Company
A sufficient number of independent members are appointed to the Board of Directors by
the General Assembly, in line with the principles concerning independence of the members
President - Mavi USA
of Boards of Directors, as set out in the CMB’s Corporate Governance Principles. In the Chairman Head of Supervisory
special accounting period from February 1, 2022 to January 31, 2023, no circumstances that Ragıp Ersin Akarlılar Non-executive Board - Mavi Germany -
would impair the independence of the independent members occurred. Company Secretary -
Mavi Canada
In line with Mavi’s Board Diversity Policy, the company aims to increase the female
Board Member - DP Eurasia N.V.,
membership ratio in its Board of Directors to one-third by 2024 and to maintain this ratio Independent Yapi Kredi Bank, Hepsiburada
thereafter. Accordingly, two women were elected to the Board of Directors at the General Ahmet F. Ashaboğlu Director - (NASDAQ), Koç Financial
Assembly Meeting on April 28, 2021. Non-executive Services, Koç Finansman and
Sirena Marine

The agenda of the Board meetings are determined by the Chairperson, or the Vice Board Member
Chairperson in the absence of the Chairperson, by considering the executive management’s Ahmet Cüneyt Supervisory Board
Executive -
Yavuz Member - Mavi Germany
suggestions. The Board convenes and/or passes resolutions as and when the company’s CEO
affairs necessitate upon the request of the Chairperson or the Vice Chairperson in the
absence of the Chairperson. In the special accounting period from February 1, 2022 to Board Member
Executive Supervisory Board
January 31, 2023, the Board of Directors convened five times and passed 295 resolutions. Fatma Elif Akarlılar
Chief Brand Member – Mavi Germany
-
All members generally attend the Board meetings held in accordance with Article 390/1 of Officer
the Turkish Commercial Code. Mavi’s Articles of Association include no provisions granting

202 2022 ANNUAL REPORT 203

 Audit Committee
Board Member & former CEO
- Yemeksepeti; Board Member
- Endeavor, TOBB Young Name Title on the Committee Independent/Non-executive
Entrepreneurs, American Turkish
Independent Society; Chairman - GEN Ahmet F. Ashaboğlu Head Independent, non-executive
Nevzat Aydın Director - Turkey (Global Entrepreneurship
Non-executive Network); Member of the Board Nevzat Aydın Member Independent, non-executive
of Trustees - Boğaziçi University;
Founding Member - Galata
Business Angels, WTech (Women
in Technology) The Audit Committee oversees the company’s accounting system, public disclosure of
financial information, and functioning and effectiveness of the internal control system
Non-executive Director - and the Internal Audit department. Accordingly, the Committee ensures that financial
Independent
Doğanlar Furniture Group; and operational activities are supervised, and all internal and independent audits are
Executive Board member - carried out in a healthy manner. The Committee also offers its opinion on the accuracy of
Zeynep Yalım Uzun Director -
European Women on Boards;
Non-executive financial statements and recommendations to the Board of Directors about the selection
Board Member - Turkish Futurist
Association of the independent auditor, and reviews company policies related to investigations about
legal compliance, ethical codes, conflicts of interest, poor management and fraudulent
transactions, as well as suitability of corporate governance policies through the internal
Board Committees and the Board of Directors’ Review of the Committees’ Effectiveness audit department.

The Board of Directors has established an Audit Committee, a Corporate Governance The Audit Committee convenes at least four times a year and at least every three months at
Committee and an Early Identification of Risk Committee to ensure that the Board fulfills the company’s head office or another location upon the Committee head’s invitation. The
its duties and responsibilities in a safe and sound manner. The committees carry out their Committee may also hold meetings with the auditors and executives to address a specific
duties in accordance with the specified operating principles, which are also available on agenda. The Audit Committee convened four times during the fiscal year 2022 and also
the corporate website. reviewed and approved the internal audit reports three times. The Audit Committee also
passed eight resolutions and submitted them to the Board of Directors in writing, expressing
The Board of Directors appointed members to these committees on April 27, 2022 and its observations regarding the factualness, accuracy, and compliance of the annual and
disclosed the resolution on the Public Disclosure Platform (PDP). Following the resignation interim financial statements prepared for public disclosure with the company’s accounting
of Yonca Dervişoğlu from her position as an independent director, the Board of Directors principles along with its evaluations about the execution of the Company’s related party
has resolved on May 31, 2022 to assign the role of Corporate Governance Committee Head transactions in accordance with the relevant resolution passed at the beginning of the
to Zeynep Yalım Uzun, who was appointed to the vacated independent director position. year.

Corporate Governance Committee

The company has not formed a Nomination Committee or a Remuneration Committee in
2022 and the relevant functions are delegated to the Corporate Governance Committee. Name Title on the Committee Independent/Non-executive
The Board of Directors provides all resources and extends full support to the committees for
performance of their assigned duties. Zeynep Yalım Uzun Head Independent, non-executive

Executive members are not eligible for appointment to these committees. The heads of the Ragıp Ersin Akarlılar Member Non-independent, non-executive
three Board committees and the Audit Committee members are Independent Directors. Duygu İnceöz Member -

204 2022 ANNUAL REPORT 205

The Corporate Governance Committee was established to monitor the company’s compli- written reports to the Board of Directors, with four on enterprise risk management that
ance with corporate governance principles, examine the reasons for non-implementation involves detection of risks and determining the steps and actions to avoid or mitigate risks,
of the principles that have yet to be implemented, and submit recommendations to the and two on the efficacy of the risk management and internal control mechanisms in place
Board of Directors to improve corporate governance practices. The Committee also works to ensure that the company’s capital structure is preserved.
in coordination with the Investor Relations department to review the requests and opinions
communicated to the company by investors and shareholders, ensuring that they are re- The Board of Directors is of the opinion that the Board committees’ activities have delivered
solved, and develops proposals to make sure that public disclosures and analyst presenta- the expected benefits.
tions are made in compliance with the laws and regulations and particularly in accordance
with the company’s public disclosure policy. Business Ethics

As a brand that elicits confidence from the consumer and a reputable business partner for
Since Nomination and Remuneration Committees are not yet established within Mavi, it has
suppliers, Mavi offers its employees a career open to development as it nurtures a strong
been accepted as a principle that the Corporate Governance Committee should fulfill the
sense of belonging and loyalty. These attributes are rooted in principles that the Company
duties and responsibilities of these committees. The Committee submits reports regarding
embraces and practices in all its business affairs. Since its founding, Mavi’s core principles,
its activities and recommendations to the Board of Directors in writing.
which ensure the sustainability of its corporate direction, have been uncompromising
integrity, fairness and full compliance with laws and codes of conduct. Working under the Mavi
In the fiscal year 2022, the Committee assessed the company’s corporate governance
umbrella demands professionalism and integrity under all conditions and identifying one’s
practices and the Corporate Governance Compliance Report and monitored the activities personal reputation with that of the brand and the organizational structure. Accordingly,
of the Investor Relations department, and served as the nomination committee for the Mavi expects each employee to respect all living creatures and the environment, to
election of an independent director to the position vacated within the year. The Committee maintain a sense of social responsibility, and to internalize all aspects of the business code
also submitted its opinion on the attendance fees to be paid to the non-executive directors of conduct. Mavi secures its brand image by ensuring that the employees put the brand’s
on the Board. interests above their own and avoid any behavior to the detriment of the company and its
reputation.
Early Identification of Risks Committee
Code of conduct is detailed in the booklet, Mavi’s People and Its Principles, and published
Name Title on the Committee Independent/Non-executive on the corporate website for all stakeholders and the intranet (Maviletişim) for all the
employees. With Mavi’s People and Its Principles, the Company aims to ensure that
Ahmet F. Ashaboğlu Head Independent, non-executive employees embrace business ethics and comply with the codes of conduct and relevant
procedures. The principles that govern key aspects such as protecting brand interests,
Ragıp Ersin Akarlılar Member Non-independent, non-executive preserving company assets, privacy and information security, nondiscrimination, and anti-
bribery and anti-corruption lay out the responsibilities with which the employees and
Bige İşcan Aksaray Member -
executives are required to comply. Mavi’s People and Its Principles, which contains the code
of conduct and business ethics, has been updated to align with the latest developments
The Early Identification of Risk Committee was established to identify the risks that pose a and communicated to all the employees.
threat to the company’s existence, development and continuity ahead of time, implement
risk mitigation and risk management measures, and manage the risks. The Committee The Legal and Compliance Division delivers training on Corporate Compliance and Ethics
submits opinions to the Board of Directors about identifying the risks that might affect as part of the topics included in Mavi’s People and Its Principles. In 2022, 231 employees
the company’s stakeholders, starting with the shareholders, and establishing the internal took the Code of Conduct training for an average of one hour per employee as part of
control mechanisms, including risk management and information systems processes to the efforts to ensure that the ethical principles are understood and embraced by all the
minimize the impact. employees. In line with the renewed Mavi Ethics Line and the updated Mavi’s People and
Its Principles, a training program titled Mavi Business Ethics and Code of Conduct Training
The Early Identification of Risk Committee is required to convene at least six times a year was prepared to help all employees embrace the ethical work culture and refresh their
and report to the Board of Directors. In the fiscal year 2022, the Committee submitted six knowledge and this interactive video training was made accessible to participate of all
company employees.
206 2022 ANNUAL REPORT 207
In 2022, 95% of the head office employees and 84% of the store staff completed the training The Ethics Line is a channel where every employee can communicate verbally in their
via the intranet. native language and voice their complaints without having to disclose their identity. Mavi
assures that the identity of the individual who reports a violation will be protected. In the
In 2022, Mavi Ethics Line began to operate on a new independent international system and reports submitted via the Ethics Line channels, individuals are not obligated to disclose
became accessible to the employees of all subsidiaries as well. Information regarding the their identity, and anonymous reporting option is available.
ethics line is provided via the intranet and with posters placed in all stores.
The Ethics Committee, consisting of two permanent members and headed by the CEO,
Please click to access Mavi’s People and Its Principles. is responsible for investigating and resolving complaints and reports of code of conduct
infractions. In 2022, 50 inquries and 465* reports received via the Ethics Line through and
The Mavi Compliance Project that the Board of Directors launched in April 2021 to review out of the Ethics Line channels, all reports were investigated and 139 of these reports are
the existing ethics and compliance policies, procedures and activities and to respond to all substantiated. The distribution of the subject of substantiated reports is as follows:"
stakeholder expectations with best practices by elevating the compliance maturity levels
was completed in the first quarter of 2022. During the project, the internal regulations,
Issue Type Number of Substantiated Reports
related documentation, and all relevant processes, including Mavi’s People and Its Principles,
the Company’s code of conduct, the Anti-bribery and Anti-corruption Policy and Ethics Working Conditions and Respect in the
Line, were revised and updated. Furthermore, the Compliance Policy, which includes all 97
Workplace
of these processes and provides a framework for Mavi’s approach to the best corporate
governance practices and ethical codes and defines where Mavi stands and how Mavi Business Ethics Practices 41
addresses compliance topics, was published and made available on the corporate
Theft, Abuse and Misuse of Assets 1
website in the “Policies & Ethics” section under the “Ethics” heading for all stakeholders
and the intranet (Maviletişim) for the employees. As a result, all employees of Mavi and its * Investigation reports regarding irregular transactions under TRY 10,000 within the purview of the Loss
subsidiaries receive regular training. Prevention Department are also entered into the central incident registry system, where ethics reports are
managed. The number of such reports is not included in the total number of ethics reports.
With the Mavi Compliance Program, compliance with the code of conduct and relevant
internal policies and procedures is ensured. The components of this program strengthen To raise awareness across the organization, interactive video and face-to-face training
the compliance culture at Mavi while enabling the employees and all business partners programs were provided to all the company employees during the relevant fiscal year as
to act appropriately. The compliance program is executed by the Ethics Committee and part of the Compliance Program and the training was supported with additional information
the compliance unit. In line with the Compliance Policy, the Ethics Committee and the regularly communicated via the intranet systems. As a result, the number of reports received
compliance unit regularly monitor the relevant practices and periodically submit reports to from the employees increased.
the Mavi Management and Audit Committee.
The employees who violated the code of conduct either received verbal feedback/training,
At Mavi, situations deemed to violate laws and regulations, internal policies and procedures, verbal warning, written warning or termination sanctions depending on the nature of the
best corporate governance practices, and ethical principles (starting with the code of violation. As a result of substantiated cases in the 2022 fiscal year, it was decided to impose
conduct stipulated in Mavi’s People and Its Principles) should be immediately reported "termination of employment contract" sanction to 5 employees.
truthfully and by respecting the personal rights of the individuals involved. The Ethics Line
is a 24/7 support system managed by a third party (parties), completely independently Supplier Code of Conduct includes a complaint procedure to report violation of ethical
from the company management, and enables the Mavi employees in Turkey and other codes or irregularities. Such complaints or reports may always be communicated anony-
countries to report the non-compliances they detect or witness, voice their concerns, or mously, if desired, by sending an email to suppliercompliance@ mavi.com. Customers may
ask questions. also report irregular and unethical transactions by phone or email.

Ethic Line website: www.mavietikhat.com / www.maviethicsline.com Please click here for the Mavi Code of Conduct for Suppliers.
Anti-bribery and Anti-corruption

208 2022 ANNUAL REPORT 209

Mavi does not tolerate any form of bribery and corruption. Mavi has an Anti-Bribery Any suspicions that involve employees or persons acting on behalf of Mavi to be in violation
and Anti- Corruption Policy, which lays out the company’s stance against bribery and of the Anti-bribery and Anti-corruption Policy must be reported to the Mavi Ethics Line
corruption. This policy is available on the corporate website for all stakeholders and the or the relevant compliance manager. In cases that are in violation of the Procedure, the
intranet (Maviletişim) for the employees. The policy aims to achieve compliance with issue is investigated by the Mavi Ethics Committee without endangering the safety and
the anti-bribery and anti-corruption laws and regulations in all the countries where the reputation of the reporting individual and sanctions are imposed if impropriety or irregularity
company operates, ethical and professional principles and universal codes. The policy is determined.
applies to Mavi’s Board members, managers and employees, Mavi’s subsidiaries, affiliates,
and their Board members, managers and employees, and all types of entities (“Business The Corporate Compliance and Ethics at Mavi training organized for head office employees
Partners”) and Business Partners that carry out work on behalf of Mavi, including suppliers, is designed to cover two topics included in the Anti-bribery and Anticorruption Policy
manufacturers, subcontractors, franchisees, consultants, etc., and their employees. The and its Annex, Implementation Guidelines for Accepting Gifts and Hospitality. In 2022, 231
company’s anti-bribery and anti-corruption practices are addressed in Mavi’s People and employees took the training for an average of one hour per employee. Mavi Business Ethics
Its Principles and defined in the Anti-Bribery and Anti- Corruption Policy. and Code of Conduct Training is designed to cover the Anti-bribery and Anticorruption
Policy.
• Bribery or corruption will not be tolerated under any circumstances whatsoever.
In 2022, the Ethics Line did not receive any reports or notifications of bribery or corruption.
• Job-related financial favors, so-called commission or by any other name, will
not be accepted or offered.
Political Impact
• Direct or indirect propositions to public or private persons or entities to secure
any preference or favors, whether related to business or not, as well as written Mavi has not made any contributions to and spending for political campaigns, political
or verbal agreements for such purposes are strictly prohibited. organizations, lobbyists or lobbying organizations, trade associations and other tax-
• Relationships with third parties will not be abused to secure favors against exempt groups.
the promise of preferential treatment, and any propositions for such must
be rejected.
• Utmost care must be taken to ensure that no act or behavior, whatever the
intention may be, creates even the slightest suspicion or impression of a favor.

The Code of Conduct for Suppliers stipulates that all business partners and their employees
are obligated to act ethically and morally to avoid any personal dependence, obligation, or
influence in all their business dealings in line with antibribery and anti-corruption principles.
All employees and business partners are expected to behave professionally with a sense
of fairness and in full compliance with all applicable national and international laws and
regulations.

Relations with suppliers and state institutions, payment terms, human resources processes,
accounting and purchasing processes are regarded as activities prone to high risk
of corruption. Operational processes with high risk are within the purview of the Audit
Committee. An annual internal audit calendar is prepared with the approval of the Audit
Committee, which consists of independent board members. The processes susceptible to
corruption risk have been reviewed by the internal audit team and the findings were shared
with the company’s senior management and the Audit Committee.

210 2022 ANNUAL REPORT 211

5.3 BOARD OF DIRECTORS Board of Directors Résumés

Ersin Akarlılar | Chairman

Ersin Akarlılar holds a bachelor’s degree in Economics from Boğaziçi University and an MBA
in finance and international business from New York University, Leonard N. Stern School of
Business. He joined Mavi in 1991 and was elected as a member of Mavi’s Board of Directors
in August 2008. Ersin Akarlılar, who has been the chairman of the Company since July 2017,
also serves as President at Mavi USA, which he established in 1996 in New York City.

Ahmet F. Ashaboğlu | Vice Chairman

Mr. Ashaboğlu holds a BSc degree from Tufts University and a Master of Science degree
from Massachusetts Institute of Technology (MIT), both in Mechanical Engineering. He
began his career as a Research Assistant at MIT in 1994, followed by various positions in
capital markets within UBS Warburg, New York (1996-1999). After serving as a management
Ersin Akarlılar / Chairman Ahmet F. Ashaboğlu/ Vice Chairman consultant at McKinsey & Company, New York (1999-2003), Ahmet Ashaboğlu moved back
to Turkey and joined Koç Holding as Finance Group Coordinator in 2003. He was appointed
Group CFO in 2006 and served in this position until April 2022. He is currently a Board
member at DP Eurasia N.V., Yapi Kredi Bank, Hepsiburada (NASDAQ), Koç Financial Services,
Koç Finansman, and Sirena Marine. He is a member of the Board of Directors of Mavi since
July 2017
Cüneyt Yavuz | Member
Cüneyt Yavuz, who holds a bachelor’s degree in Political Science from Boğaziçi University
and a graduate degree in International Relations from Johns Hopkins University, started
his professional career in 1992 at Procter & Gamble where he held various senior sales and
marketing management positions. During his tenure, he was appointed Country Manager
Cüneyt Yavuz / Member Elif Akarlılar / Member for Poland in 2003 and lived in Warsaw for five years. Cüneyt Yavuz joined Mavi in 2008 as
Chief Executive Officer and has served as a member of the Board of Directors since March
2017.

Elif Akarlılar | Member

Elif Akarlılar, who holds an undergraduate degree in International Politics from the University
of Vienna and an MA in Visual Culture and History of Design from New York University, joined
Mavi in 1991 and prior to her appointment as global brand director, she held various product
development and brand management positions within the Mavi organizations in Istanbul
and New York City. Elif Akarlılar continues to serve as a member of the Board of Directors
since August 2008.
Nevzat Aydın / Independent Member Zeynep Yalım Uzun/ Independent Member

212 2022 ANNUAL REPORT 213

Nevzat Aydın | Independent Member recognized with multiple awards throughout her career, was named by Advertising Age as
one of the 20 female leaders in Europe’s “Women to Watch” list in 2020.
Nevzat Aydın is the co-founder and former CEO of Yemeksepeti, the leading quick commerce
platform in Turkey. Born in 1976, Nevzat Aydın holds a computer engineering degree from
Executive Management Résumés
Boğaziçi University. After completing his studies, he went to University of San Francisco to
do his MBA. During his stay in Silicon Valley he had his inspiration to start "yemeksepeti.com" Cüneyt Yavuz | CEO
and returned to Istanbul to pursue his endeavor. In May 2015, Yemeksepeti was acquired
Cüneyt Yavuz, who holds a bachelor’s degree in Political Science from Boğaziçi University
by the global leader Delivery Hero with the highest valuation ever in the Turkish internet
and a graduate degree in International Relations from Johns Hopkins University, started
history. Nevzat Aydın was among the 150 entrepreneurs invited from all around the world
his professional career in 1992 at Procter & Gamble where he held various senior sales and
to the Entrepreneurship Summit held by USA President Barack Obama in 2010. In 2013 and
marketing management positions. During his tenure, he was appointed Country Manager
2015, he was named number one on Fortune’s “40 Under 40” list. He was honored with
for Poland in 2003 and lived in Warsaw for five years. Cüneyt Yavuz joined Mavi in 2008 as
the Philanthropy Award of the American Turkish Society in 2017. In 2018, he was named
Chief Executive Officer and has served as a member of the Board of Directors since March
among Turkey’s Best Minds by Forbes on the occasion of the magazine’s centennial. He has
2017.
received many awards as the top angel investor in Turkey by leading industry organizations
such as Webrazzi.
Elif Akarlılar | Chief Brand Officer
Nevzat Aydın is currently the chairman of GEN Turkey (Global Entrepreneurship Network), Elif Akarlılar, who holds an undergraduate degree in International Politics from the University
board member of Endeavor Turkey, TOBB (Union of Chambers and Commodity Exchanges of Vienna and an MA in Visual Culture and History of Design from New York University, joined
of Turkey) Young Entrepreneurs, and American Turkish Society and a member on Boğaziçi Mavi in 1991 and prior to her appointment as global brand director, she held various product
University’s board of trustees. He is also a founding member of Galata Business Angels and development and brand management positions within the Mavi organizations in Istanbul
Wtech (Women’s Association in Technology). Nevzat Aydın is an independent director on and New York City. Elif Akarlılar continues to serve as a member of the Board of Directors
the Board of of Mavi since July 2017. since August 2008.

Zeynep Yalım Uzun | Independent Member Bige İşcan Aksaray | CFO

After graduating from Robert College, Zeynep Yalım Uzun studied economics and psychology Bige İşcan Aksaray holds a bachelor’s degree in Economics from Boğaziçi University and
at Agnes Scott College in the USA. During her 25+ years at Unilever, she worked in Poland, an MBA from Boston University. She started her professional career at EY’s Istanbul office
Turkey and the UK and managed the global and regional operations of the company’s (1991) and later joined Procter & Gamble (Gillette) as a financial analyst (1993), serving in
various brands. Her last position at Unilever was Global Vice President, based in London, various management positions in the company’s Istanbul and London offices, and finally
overseeing Unilever’s second-largest brand Omo, which exists in more than 80 markets. as Regional Finance & Treasury Manager, Turkey, the Balkans and the Mediterranean Hub.
Zeynep Yalım Uzun later joined Arçelik as Chief Marketing Officer, leading communication She then joined Avon Turkey (2005) as Finance Director, later serving as Executive Finance
and brand management for 14 brands including Beko with a focus on global product Director - Turkey, North Africa & Middle East. She was appointed CFO at Mavi in 2019.
management, consumer insights, industrial design, customer care, and small domestic
appliances with a global team of 2,000, dispersed across a wide geography from Thailand Okan Gürsan | Chief Commercial Officer (Turkey & Export Markets)
to the USA.
Okan Gürsan holds a bachelor’s degree in Economics (in English) from Dokuz Eylül
With 10 years of experience in the international start-up ecosystem, including the Boston University, and graduate degrees in Business Administration from the Georgia Tech and
chapter of accelerator Mass Challenge, Uzun currently works as an advisor and mentor Bilgi Universities. Mr. Gürsan started his career in 2001 at Ernst & Young and went on to work
to various start-ups. She is also a non-executive director at Doğanlar Furniture Group. in various audit, finance, and sales and marketing roles from 2004 onward for 11 years at
Zeynep Yalım Uzun serves on the Executive Board of European Women on Boards, an Coca-Cola America, Turkey and Azerbaijan. After joining Boyner Group in 2015 and serving
organization promoting gender equality in the business world. She is also a Board member in senior management positions at Beymen and Boyner, Okan Gürsan became part of the
at the Turkish Futurists Association, a member of the Northwestern University Family Council, Mavi family in 2018 as Chief Commercial Officer (Turkey & Export Markets).
and a member of the board of trustees at the Koruncuk Foundation. Uzun, who has been

214 2022 ANNUAL REPORT 215

 ORGANIZATIONAL CHART AND CHANGES DURING THE REPORTING and systematically. In 2022, all foreign currency liabilities on the balance sheet were hedged
with natural and financial hedge instruments in line with the strategic decision to minimize
PERIOD open position on the balance sheet. The chronic physical impact of climate change and
the changes in sustainable raw material prices due to rising demand are also monitored
within the scope of financial risks. Macroeconomic developments such as slowing economic
growth, decline in consumer confidence index and tighter consumer spending are also
considered among financial risks. To detect the risks that may arise in such conditions
early on, the company monitors specific macroeconomic indicators regularly and has set
strategic priorities such as not exceeding minimum liquidity levels, keeping indebtedness
levels low and having adequate and diverse credit lines.

Operational and strategic risks

Key operational risks include failing to realize expansion plans due to inability to secure
5.4 RISK MANAGEMENT required retail space, the need to increase operating capital due to ineffective inventory
management and decline in profitability, supply shortages, and capacity loss or service
The Early Identification of Risk Committee identifies the risks that may jeopardize Mavi’s
disruptions due to natural disasters as a results of climate change. Mavi introduces
existence, development and continuity ahead of time, thereby supporting the Board of
continuous improvements in all its systems to increase the efficiency of its operational
Directors’ implementation of risk-mitigation and management measures. The Committee
processes. For this purpose, a project team (Go Operations) operating across functions
reports to the Board of Directors at each meeting of the Board, and the company forwards
has been established and working toward concrete measurable targets for the last three
these reports to the independent auditors. The Board of Directors regularly assesses the
years. On the other hand, key strategic risks include the issues and decisions that can
risks that the company faces based on the information provided by the Early Identification
adversely affect the future existence and sustainability of the company such as material
of Risk Committee.
mistakes in assumptions and measurements in short-, medium- and long-term business
plans, making insufficient investments or misguided investments, and failing to anticipate
Responsibility for the management and reporting of risks is supervised by the CFO in
evolving consumer preferences, fashion trends and the competitive landscape. Therefore,
coordination with other departments. The risks are evaluated with periodical analyses and
Mavi creates three-year strategic roadmaps, with the first year in detail and subsequent two
reports to determine potential risk exposure and probability. Then, risk levels are identified
years in macro scale, and annually reviews and updates this roadmap in light of the latest
and the risks are assigned to relevant risk officers to take action. In this process, actions for
developments. Mavi exercises due diligence in selecting the markets where it will operate
“Very High” and “High” level risks are monitored closely and frequently. The principal risks
strategically and avoids direct investments in risky geographical zones. The Company’s R&D
that Mavi is exposed to are categorized and followed under four main headings: financial
and innovation culture also serves to maintain its competitive strength. According to the
risks, operational and strategic risks, reputation risks and legal risks.
World Economic Forum’s (WEF) 2022 Global Risks Report, the most severe risks on a global
scale over the next 10 years are identified as failure to combat climate change, natural
Financial risks
disasters and extreme weather events, biodiversity loss and ecosystem collapse, large-
The FX risks that could arise from the changes in the value of different currencies with scale involuntary migration, natural resource crises, erosion of social cohesion and societal
respect to assets and liabilities in such currencies, liquidity and cash flow issues due to polarization, widespread cybercrime and cyber insecurity, geoeconomic confrontation,
operating capital requirements or disruptions in sales, and interest rate risks within the and large-scale environmental damage incidents. These are addressed and studied in
scope of financial borrowing strategy are among the key financial risks. working groups to determine potential action plans.

To keep the financial risks under control, various financial indicators, including Net Financial Reputation risks
Debt/EBITDA and liquidity ratios, FX position, maturity and distribution of debt are monitored
Major reputation risks that may harm the brand image include: social and/or environmental
both on company basis and also on consolidated and combined basis, ensuring that they
violations across the brand’s product lifecycle from production to sales caused by suppliers,
are maintained within specified limits. In managing FX risk, natural hedges are preferred
franchises, sales teams or support staff and within the scope of the franchise activities that
while financial hedge instruments related to commodity imports are also utilized regularly
216 2022 ANNUAL REPORT 217
are not directly under the company’s control, failure of the franchises and wholesalers to effectiveness and efficiency of operations, and contributing to finding solutions to minimize
act in accordance with the company’s product quality, pricing and marketing strategy such risks. The Audit Committee is regularly briefed about the Internal Audit Department’s
and other conditions. Therefore, the company has incorporated provisions that impose activities.
various obligations into the agreements with relevant parties and established control and
audit processes for compliance. Mavi has also obtained ISO 27001 Information Security The Board of Directors is of the opinion that the internal control system is functioning
Management System certification as part of the efforts toward full compliance with the effectively and the internal audit activities can be executed independently.
Information Systems Management Communiqué. All processes are now carried out in
accordance with the ISO standard. The ISO 9001 Quality Management System standard,
adopted since 2020, ensures that the products and services are continuously provided in
the quality that the customers expect from Mavi.
5.6 BOARD OF DIRECTORS’ DISCUSSION AND
Legal risks
ANALYSIS
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Legal regulations and changes that may decrease competitive strength, social, legal or
in 2022
political instability or material legislative changes that may adversely affect trade with
countries of operation or sourcing, security breaches that may result in third party access As a global company with sound financial management, in 2022 Mavi achieved revenue
to customer information, environmental law, trade regulations, personal data protection growth beyond expectations and a considerable margin increase thanks to its brand
legislation, occupational health and safety, and failure to comply with statutory and other positioning, the right product, the right price, high quality and customer-centric strategy,
regulatory provisions within the scope of consumer protection issues are considered legal and flexible supply chain, product planning and inventory management mechanisms in
risks. place.

Supported by the strong demand in the Turkish retail sector in a period of high inflation, Mavi
5.5 INTERNAL CONTROL SYSTEM AND increased its market share, ranking among the most preferred brands by consumers. This
strong performance was driven by increased traffic, growth in volume and the acquisition
INTERNAL AUDIT of more than 1 million new customers as well as a larger basket size.

The internal control system is composed of standard definitions, job descriptions, Mannagement’s Discussion and Analysis on ESG Integration
authorization system, and policies and written procedures included in the workflows. The
senior management of the company and its subsidiaries hold responsibility for ensuring In 2022, Mavi accelerated the sustainability-focused efforts that started in 2020, making
that the internal control mechanisms function. The internal control system is periodically strides in integrating sustainability into the business processes and managing it with
reviewed and audited by the Internal Audit Department for effectiveness. The audit results measurable targets.
are submitted to the Audit Committee, which consists of independent Board members and
the company management, and the planned actions are monitored. In line with the All Blue approach, focused on People, Planet, Community, and Denim, several
innovations were introduced to integrate sustainability into the company culture, vision,
Within the organizational structure of the company, the Internal Audit Department business processes, products, and growth targets.
reports directly to the Audit Committee, which consists of independent Board members, in
accordance with the principle of independence. The All Blue collection, all vegan and made with innovative techniques using less water and
energy, using sustainable materials such as organic, recycled or Better Cotton-certified
The Internal Audit Department’s duties include checking the reliability and accuracy of cotton, recycled polyester, TENCEL™ modal and lyocell, cottonized hemp, and upcycled
the financial statements of the company and its subsidiaries, ensuring that the activities materials, continued to expand. Mavi’s sustainable collections All Blue, Hemp and Mavi Pro
are carried out in accordance with applicable laws and accepted ethical codes of the Sport have been named the “Best Sustainable Collection” four times in 2019, 2021 and 2022
company, analyzing processes and identifying current and potential risks to improve the editions of the Rivet x Project Awards, which recognize the brands bringing newness and
creativity to the global denim market. In recognition of the success achieved in corporate
218 2022 ANNUAL REPORT 219
sustainability and stock performance, Mavi was included in the BIST Sustainability 25 Index Pursuant to Article 199, paragraphs (1) through (3) of the Turkish Commercial Code No.6102,
of Borsa Istanbul. within the first three months of the fiscal year, the Board of Directors of Mavi is obligated
to issue a report regarding the relations of Mavi during the previous fiscal year with the
Mavi became the first and only apparel brand from Turkey to be included in the 2022 controlling shareholders of Mavi and the subsidiaries of such controlling shareholders.
Climate Change A List, announced by CDP, the world’s largest environmental disclosure
platform. Only 283 of the nearly 20 thousand companies worldwide that respond to CDP, As stated in the Subsidiaries Report, issued by Mavi’s Board of Directors on March 30, 2023,
which aims to change how businesses operate to mitigate the impacts of climate change, it has been concluded that with respect to all transactions carried out between Mavi on
made the A List this year, becoming the climate leaders of 2022. In addition to the Climate one side and Mavi’s controlling shareholders and their subsidiaries on the other side during
Change Program, Mavi also started to respond to the CDP Water Security and Forests the accounting period of February 1, 2022 – January 31, 2023, the consideration received in
Programs, earning a score of B and confirming its commitments to these areas. Mavi is also each transaction was appropriate under the conditions and circumstances then known to
the first Turkish apparel brand to join the CEO Water Mandate. The near-term greenhouse Mavi, there were no measures that should have been taken or avoided that could give rise
gas reduction targets set by Mavi, Turkey’s leading jeans and apparel brand, as part of its to damages to be suffered by Mavi, and accordingly, there were no measures or actions to
sustainability efforts were recently approved by the Science-Based Targets initiative (SBTi). be taken for the purpose of compensation.
Accordingly, the company has committed to reduce its Scope 1 and 2 emissions by 70%
from the base year 2019 to 2030, and Scope 3 emissions by 55% (per TL added value) in the Information on Lawsuits Filed Against Mavi that Could Materially Affect the Financial
purchased goods and services category, in line with the goals of the Paris Agreement “to Standing and Activities of the company and Potential Outcome of Such Lawsuits
keep global warming below 1.5 °C.” There are only 12 companies from Turkey whose targets
have been approved by SBTi, while Mavi stands out as the only apparel company in the list. No lawsuit has been filed against Mavi that could materially affect the Company’s financial
standing or activities.

5.7 LEGAL DISCLOSURES Disclosures Regarding Administrative and Judicial Sanctions Imposed on the Company
and its Board Members Due to Acts Violating Applicable Legislation
Company Information and Shareholding Structure
There is no administrative or judicial sanction imposed on Mavi or its Board Members due
Trade Name : Mavi Giyim Sanayi Ve Ticaret A.Ş. to acts violating the applicable legislation.
Address : Sultan Selim Mah. Eski Büyükdere Cad. No:53/2 34418
Information on the Amendments to the Articles of Association in the Reporting Period
Kağıthane/İSTANBUL
Trade Registry
Following the resolution passed on April 27, 2022 at the Ordinary General Assembly Meeting,
and number : Istanbul Trade Registry Directorate / 309315
where the activities of the special accounting period of February 1, 2021 –January 31,
Web address : www.mavi.com , www.mavicompany.com,
2022 were reviewed, to increase the registered capital ceiling of the Company from TRY
www.maviyatirimciliskileri.com
245,000,000 to TRY 500,000,000, to determine the validity of the registered capital as
Registered Capital
2022-2026, and to increase the issued capital of the Company from TRY 49,657,000 to
Ceiling : TL 500,000,000
TRY 99,314,000 by covering the total increase amount from the “Retained Profits” account,
Issued Capital : TL 99,314,000
the necessary amendment to Article 6 “Capital and Share” in the Company’s Articles of
BIST Code : MAVI
Association was registered by the Istanbul Trade Registry on May 13, 2022.
Information On Extraordinary General Assembly Meetings During The Year, If Any
Disclosures Regarding the Private And Public Audits Conducted In the Reporting Period
No Extraordinary General Assembly Meeting was held during the year.
Regular audits have been conducted by the public authorities in the special accounting
period from February 1, 2022 – January 31, 2023 and no official notification of a material
Subsidiaries Report nature has been communicated to Mavi.

220 2022 ANNUAL REPORT 221

Information Regarding the Company Shares Acquired
5.8 RESPONSIBILITY STATEMENTS
The Company has not acquired any of its own shares in the special accounting period of
February 1, 2022 – January 31, 2023.
RESPONSIBILITY STATEMENT FOR FINANCIAL STATEMENTS
Review Under Article 376 of the Turkish Commercial Code
RESPONSIBILITY STATEMENT PURSUANT TO CAPITAL MARKET BOARD’S COMMUNIQUÉ ON
Upon review of whether Mavi’s capital was preserved and not lost as per Article 376 of
PRINCIPLES OF FINANCIAL REPORTING IN CAPITAL MARKETS (II-14.1) ARTICLE 9
the Turkish Commercial Code, it has been ascertained that as of January 31, 2023, Mavi
Giyim San. ve Tic. A.Ş.’s issued capital of TRY 99,314,000 was well preserved, with the main Regarding the financial statements pertaining to the special accounting period from February
shareholder having a shareholder’s equity of TRY 2,591,537,000 and with a net cash position, 1, 2022 to January 31, 2023, which were prepared by the Company and independently
the company’s indebtedness level was adequate for the continuation of its activities in a audited by DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. in compliance
sound and safe manner. with the Turkish Accounting Standards/Turkish Financial Reporting Standards and formats
determined by the Capital Markets Board (CMB) in accordance with CMB’s Communiqué
on Principles of Financial Reporting in Capital Markets (“Financial Reporting Communiqué”)
II.14.1, and that include the consolidated statement of financial position, comprehensive
income statement, statement of cash flow and statement of changes in equity as well
as notes to year-end financial statements, we hereby declare our responsibility for the
following:
• We have examined the financial statements,
• Within the frame of information that we hold in our fields of duty and responsibility in the
Company, the financial statements do not contain any untrue statement on material
events or any deficiency, which may make them misleading as of the date of statement,
• Within the frame of information that we hold in our fields of duty and responsibility in
the Company, the financial statements prepared pursuant to the Financial Reporting
Communiqué – together with those covered by consolidation – fairly reflect the truth
relating to assets, liabilities, financial statements, profits and losses of the Company.

Sincerely,
Mavi Giyim San. ve Tic. A.Ş.
Audit Committee

222 2022 ANNUAL REPORT 223

RESPONSIBILITY STATEMENT FOR THE ANNUAL REPORT 5.9 RELATED PARTY TRANSACTIONS REPORT
RESPONSIBILITY STATEMENT FOR THE ANNUAL REPORT PURSUANT TO CAPITAL MARKET RELATED PARTY TRANSACTIONS REPORT SUBMITTED TO THE BOARD OF DIRECTORS OF
BOARD’S COMMUNIQUÉ ON PRINCIPLES OF FINANCIAL REPORTING IN CAPITAL MARKETS MAVI GIYIM SANAYI VE TICARET ANONIM ŞIRKETI
(II-14.1) ARTICLE 9
Pursuant to the internal regulations “Principles on Related Party Transactions” and “Audit
Committee Working Principles” of Mavi Giyim San. ve Tic. A.Ş. (“Company”), in its meetings
Regarding the Annual Report prepared by the Company for the special accounting period
following the release of the quarterly financial statements within the fiscal year, the Audit
from February 1, 2022 to January 31, 2023 and independently audited by DRT Bağımsız
Committee is required to review the related party transactions, which are frequent and
Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş., including the Corporate Governance
continuous and annually approved by the Board of Directors, that have taken place in the
Compliance Report and Corporate Governance Information Form and the Company’s
respective period.
disclosures in line with the CMB’s Sustainability Principles Compliance Framework and
in compliance with the Turkish Commercial Code and Capital Markets Board’s (CMB)
Based on the above mentioned internal regulations, we have reviewed and analyzed
“Communiqué on Principles of Financial Reporting in Capital Markets” (“Communiqué”) II.14.1,
the “Management Report on the Frequent and Continuous Related Party Transactions in
we hereby declare our responsibility for the following:
the Special Accounting Period of 01.02.2022 - 31.01.2023” (“Management Report”) and the
• We have examined the Annual Report, table annexed to the report about the actual implementations and practices during the
• Within the frame of the information that we hold in our fields of duty and responsibility period of 01.02.2022-31.01.2023 with regard to the “Frequent and Continuous Related Party
in the Company, the Annual Report does not contain any untrue statement on material Transactions Planned for the Special Accounting Period of 01.02.2022 - 31.01.2023” approved
events or any deficiency, which may make them misleading as of the date of the by the Board of Directors Resolution dated 10.06.2022 and numbered 2022/275 (“General
statement, Resolution of the Board of Directors”). As a result of the analyses, we have ascertained that:

• Within the frame of the information that we hold in our fields of duty and responsibility
in the Company, the Annual Report fairly reflects the progress and performance of the 1. there were some differences between the “estimated transaction volumes” stated in
business and the financial situation of the entity – together with the financial situation the General Resolution of the Board of Directors and the “actual transaction volumes”
of the consolidated entities – along with material risks and uncertainties encountered of the frequent and continuous related party transactions in the period from 01.02.2022
by the Company. to 31.01.2023, and that the explanations and the justifications for such differences were
satisfactory, and
Sincerely, 2. the terms and conditions governing the frequent and continuous related party
Mavi Giyim San ve Tic. A.Ş. transactions, as well as the methods and procedures, indicated to be used for determining
Audit Committee whether they were arm’s length transactions, were all implemented in the period from
01.02.2022 to 31.01.2023.

To the extent of the information and documents provided to us, we have not identified any
material issue during the period of 01.02.2022 - 31.01.2023 that might be in violation of the
General Resolution of the Board of Directors.

224 2022 ANNUAL REPORT 225

5.10 CORPORATE GOVERNANCE COMPLIANCE
REPORT AND INFORMATION FORM
Corporate Governance Compliance Report
Not Not
Yes Partial No Exempted Explanation Yes Partial No Exempted Explanation
Applicable Applicable

1.1. FACILITATING THE EXERCISE OF

SHAREHOLDER RIGHTS
The agenda
1.1.2-Up-to-date information and of the General
disclosures which may affect the Shareholders'
exercise of shareholder rights X Meeting included
1.3.10-The agenda of the General
are available to investors at the a separate item
Shareholders' Meeting included
corporate website. X for the total
a separate item detailing the
1.2. RIGHT TO OBTAIN AND REVIEW amounts and beneficiaries of all amount of the
INFORMATION donations and contributions. donations and
contributions
1.2.1-Management did not enter made, details of
into any transaction that would the beneficiaries
X
complicate the conduct of special have not been
audit. specified.

1.3. GENERAL ASSEMBLY

1.3.11-The General Shareholders'
1.3.2-The company ensures the Meeting was held open to the
X
clarity of the General Assembly public, including the stakeholders,
agenda, and that an item on the X without having the right to speak.
agenda does not cover multiple
topics. 1.4. VOTING RIGHTS

1.3.7-Insiders with privileged 1.4.1-There is no restriction

information have informed preventing shareholders from X
the Board of Directors about exercising their shareholder rights.
There was no
transactions conducted on their
notification made
behalf within the scope of the X 1.4.2-The company does not have
regarding such a
company's activities in order for shares that carry privileged voting X
transaction.
these transactions to be presented rights.
at the General Shareholders'
Meeting. 1.4.3-The company withholds from No cross ownerships
exercising its voting rights at the exist that are
1.3.8-Members of the Board of General Shareholders' Meeting associated with
X
Directors who are concerned with of any company with which it a controlling
specific agenda items, auditors, has cross-ownership, in case relationship within
and other related persons, as well such cross-ownership provides our Company.
X management control.
as the officers who are responsible
for the preparation of the financial
statements were present at the
General Shareholders' Meeting.

226 2022 ANNUAL REPORT 227

Corporate Governance Compliance Report

Not Not
Yes Partial No Exempted Explanation Yes Partial No Exempted Explanation
Applicable Applicable

1.5. MINORITY RIGHTS 1.7. TRANSFER OF SHARES

1.5.1-The company pays maximum 1.7.1-There are no restrictions

diligence to the exercise of minority X preventing shares from being X
rights. transferred.

Minority rights 2.1. CORPORATE WEBSITE

are not vested
by the Articles 2.1.1-The company website includes
1.5.2-The Articles of Association
of Association all elements listed in Corporate X
extend the use of minority rights
in shareholders Governance Principle 2.1.1.
to those who own less than one X
holding less than
twentieth of the outstanding shares,
one twentieth of the
and expand the scope of the 2.1.2-The shareholding structure
capital and rights
minority rights. (names, privileges, number and
are vested within the
general framework of ratio of shares, and beneficial
X
the regulations owners of more than 5% of the
issued share capital) is updated on
the website at least every 6 months.
1.6. DIVIDEND RIGHT

1.6.1-The dividend policy approved 2.1.4-The company website is

by the General Shareholders' X prepared in other selected foreign
Meeting is posted on the company languages, in a way to present X
website. exactly the same information with
the Turkish content.
1.6.2-The dividend distribution
policy comprises the minimum 2.2. ANNUAL REPORT
information to ensure that the X
shareholders can have an opinion 2.2.1-The Board of Directors ensures
on the procedure and principles of that the annual report represents
dividend distributions in the future. X
a true and complete view of the
company's activities.
1.6.3-The reasons for retaining 2.2.2-The annual report includes
X Dividend distribution
earnings, and their allocations, are all elements listed in Corporate X
has been made.
stated in the relevant agenda item. Governance Principle 2.2.2.

1.6.4-The board reviewed whether 3.1. CORPORATION'S POLICY ON

the dividend policy balances the STAKEHOLDERS
X
benefits of the shareholders and 3.1.1-The rights of the stakeholders
those of the company. are protected pursuant to the
X
relevant regulations, contracts and
within the framework of bona fides
principles.

228 2022 ANNUAL REPORT 229

Corporate Governance Compliance Report

Not Not
Yes Partial No Exempted Explanation Yes Partial No Exempted Explanation
Applicable Applicable

3.3.2-Recruitment criteria are X

Policies that address documented.
stakeholders’ rights
3.1.3-Policies or procedures are published on the 3.3.3-The company has a policy on
addressing stakeholders' rights X company’s website, human resources development, and X
are published on the company's other procedures are organises trainings for employees.
website. published via the
internal disclosure 3.3.4-Meetings have been
platform Maviletişim. organised to inform employees on
the financial status of the company, X
remuneration, career planning,
3.1.4-A whistleblowing program is education and health.
in place for reporting legal and X
ethical issues. 3.3.5-Employees, or their
representatives, were notified of
3.1.5-The company addresses decisions impacting them. The X
conflicts of interest among X opinion of the related trade unions
stakeholders in a balanced manner. was also taken.

3.3.6-Job descriptions and

3.2. SUPPORTING THE PARTICIPATION performance criteria have been
OF THE STAKEHOLDERS IN THE prepared for all employees, X
CORPORATION'S MANAGEMENT announced to them and taken into
account to determine employee
remuneration.
3.2.1-The Articles of Association,
or the internal regulations (terms 3.3.7-Measures (procedures,
of reference/manuals), regulate X trainings, raising awareness,
the participation of employees in goals, monitoring, complaint
management. mechanisms) have been taken X
to prevent discrimination, and to
3.2.2-Surveys/other research protect employees against any
techniques, consultation, interviews, physical, mental, and emotional
observation method etc. were X mistreatment.
conducted to obtain opinions from
stakeholders on decisions that 3.3.8-The company ensures
significantly affect them. freedom of association and X
supports the right for collective
bargaining.
3.3. HUMAN RESOURCES POLICY
3.3.9-A safe working environment for X
3.3.1-The company has adopted an employees is maintained.
employment policy ensuring equal
X
opportunities, and a succession
plan for all key managerial
positions.

230 2022 ANNUAL REPORT 231

Corporate Governance Compliance Report

Not Not
Yes Partial No Exempted Explanation Yes Partial No Exempted Explanation
Applicable Applicable

3.4. RELATIONS WITH CUSTOMERS 4.1.2-The agenda and minutes

AND SUPPLIERS of board meetings indicate that
3.4.1-The company measured the Board of Directors discussed
and approved strategy, ensured X
its customer satisfaction, and
X resources were adequately
operated to ensure full customer
satisfaction. allocated, and monitored company
and management performance.
3.4.2-Customers are notified of any X
delays in handling their requests. 4.2. ACTIVITIES OF THE BOARD OF
DIRECTORS

3.4.3-The company complied with 4.2.1-The Board of Directors

X documented its meetings and
the quality standards with respect X
to its products and services. reported its activities to the
shareholders.
3.4.4-The company has in place
adequate controls to protect 4.2.2-Duties and authorities of the
the confidentiality of sensitive X members of the Board of Directors X
information and business secrets of are disclosed in the annual report.
its customers and suppliers.
4.2.3-The Board has ensured the
3.5. ETHICAL RULES AND SOCIAL company has an internal control
RESPONSIBILITY X
framework adequate for its
activities, size and complexity.
3.5.1-The board of the corporation
X 4.2.4- Information on the
has adopted a code of ethics,
functioning and effectiveness of the X
disclosed on the corporate website.
internal control system is provided
in the annual report.
3.5.2-The company has been
mindful of its social responsibility X 4.2.5-The roles of the Chairman
and has adopted measures to and Chief Executive Officer are X
prevent corruption and bribery. separated and defined.

4.1. ROLE OF THE BOARD OF 4.2.7-The Board of Directors

DIRECTORS ensures that the Investor Relations
department and the corporate
4.1.1-The Board of Directors has governance committee work
X
ensured strategy and risks do not effectively. The Board works closely
threaten the long-term interests of X with them when communicating
the company, and that effective risk and settling disputes with
management is in place. shareholders.

4.2.8-The company has subs-

cribed to a Directors and Officers X
liability insurance covering more
than 25% of the capital.

232 2022 ANNUAL REPORT 233

Corporate Governance Compliance Report

Not Not
Yes Partial No Exempted Explanation Yes Partial No Exempted Explanation
Applicable Applicable
4.3. STRUCTURE OF THE BOARD OF 4.4.5-The Board has a
DIRECTORS charter/written internal
X
4.3.9-The Board of Directors has rules defining the meeting
approved the policy on its own procedures of the Board.
composition, setting a minimal 4.4.6-Board minutes
target of 25% for female directors. X document that all items on
The Board annually evaluates the agenda are discussed, X
its composition and nominates and board resolutions
directors so as to be compliant with include director's dissenting
the policy. opinions if any.
4.3.10-At least one member of the
audit committee has 5 years of X
experience in audit/accounting While board members
and finance. are required to pay
sufficient time to the
4.4. BOARD MEETING PROCEDURES Company’s affairs,
there is no restriction
4.4.1-Each board member attended on their duties outside
the majority of the board meetings X
of the Company.
in person. Considering the
4.4.2-The Board has formally significant contribution
approved a minimum time by board members make
4.4.7-There are limits to to Mavi’s Board of
which information and documents X external commitments Directors with their
relevant to the agenda items
of board members. professional and sector
should be supplied to all board X
Shareholders are informed specific experience,
members.
of board members' external imposing restrictions
commitments at the General on their external
Although there is the Shareholders' Meeting. duties is not deemed
possibility to present
necessary. Prior to each
4.4.3-The opinions of board an opinion in such a
General Assembly, the
members that could not attend case, there has not
curricula vitae of the
the meeting, but did submit their X been any notification
board members and
opinion in written format, were made by the BoD
their duties external
presented to other members. members who could
to the Company
not attend the
are submitted for
meetings.
the attention of
shareholders.
4.4.4-Each member of the Board
X
has one vote.

234 2022 ANNUAL REPORT 235

Corporate Governance Compliance Report

Not Not
Yes Partial No Exempted Explanation Yes Partial No Exempted Explanation
Applicable Applicable

4.5. BOARD COMMITTEES 4.5.8-Minutes of all

committee meetings are X
kept and reported to board
members.
Mavi has determined
the number of its
4.6. FINANCIAL RIGHTS
independent board
members at three. In so
4.6.1-The Board of Directors
doing, the Company No specific study
has conducted a board
considered various was conducted at
performance evaluation
factors such as the X board level regarding
to review whether it
volume of its operations performance
has discharged all its
and its administrative evaluation.
responsibilities effectively.
needs. Currently,
4.5.5-Board members serve the Board has three
in only one of the Board's X committees. In respect 4.6.4-The company did not
committees. of the principle requiring extend any loans to its board
committee chairs directors or executives, nor
to be independent extended their lending period
members, it is necessary or enhanced the amount
to delegate multiple of those loans, or improve X
committee chairs conditions thereon, and did
to the independent not extend loans under a
members. This does not personal credit title by third
give rise to any conflict parties or provided guarantees
of interest within the such as surety in favour of
Company. them.

The General
In accordance with Assembly determines
the working principles remuneration rates
of the committees, the payable to members
4.5.6-Committees have invited committees may make of Mavi’s Board of
persons to the meetings as X use of the opinions Directors. In line with
4.6.5-The individual
deemed necessary to obtain of the independent general practice,
remuneration of board X
their views. experts. During the past total amount of
members and executives is
year, no such request remunerations of
disclosed in the annual report.
was brought up by the board members and
committees. senior executives are
disclosed to the public
4.5.7-If external consultancy in the Company’s
There has not been any financial table
services are used, the X
external consultancy footnotes.
independence of the provider
services used.
is stated in the annual report.

236 2022 ANNUAL REPORT 237

Corporate Governance Information Form

1. SHAREHOLDERS The number of the provisions of the articles of association

that discuss the participation of stakeholders to the General Article 10-e
1.1. Facilitating the Exercise of Shareholders Rights Shareholders' Meeting

Investor Relations Department

According to the General Assembly
attended 11 virtual investor
internal directive article 5, press
conferences meeting local and
members, guests that have been
international investors and held Identified stakeholder groups that participated in the
The number of investor meetings (conference, seminar/etc.) invited by the management and
over 200 teleconferences. At these General Shareholders' Meeting, if any
organised by the company during the year other persons for whom the Meeting
events and meetings, the Company
Chairman permits can attend the
had contact with 330 investors
General Meetings
and analysts from 114 local or
international institutions.
1.4. Voting Rights
1.2. Right to Obtain and Examine Information Whether the shares of the company have differential voting
No
The number of special audit request(s) - rights

The number of special audit requests that were accepted at In case that there are voting privileges, indicate the owner
- -
the General Shareholders' Meeting and percentage of the voting majority of shares.

1.3. General Assembly The percentage of ownership of the largest shareholder 9,06%

Link to the PDP announcement that demonstrates the https://www.kap.org.tr/tr/ 1.5. Minority Rights
information requested by Principle 1.3.1. (a-d) Bildirim/1014146 If yes, specify the relevant provision of the articles of
No
association.
Whether the company provides materials for the General
Yes 1.6. Dividend Right
Shareholders' Meeting in English and Turkish at the same time
The name of the section on the corporate website that Corporate Governance - Policies
The links to the PDP announcements associated with the describes the dividend distribution policy and Ethics
transactions that are not approved by the majority of
There is no such transaction Minutes of the relevant agenda item in case the Board of
independent directors or by unanimous votes of present
board members in the context of Principle 1.3.9 Directors proposed to the general assembly not to distribute
-
dividends, the reason for such proposal and information as to
The links to the PDP announcements associated with use of the dividend.
related party transactions in the context of Article 9 of the There is no such transaction
Communique on Corporate Governance (II-17.1) PDP link to the related general shareholder meeting minutes
in case the board of directors proposed to the general -
https://www.kap.org.tr/tr/ assembly not to distribute dividends
The links to the PDP announcements associated with Bildirim/1010434
common and continuous transactions in the context of Article GENERAL ASSEMBLY MEETINGS
10 of the Communique on Corporate Governance (II-17.1) https: //www.kap.org.tr/tr/
Bildirim/1036815 General Meeting Date 27.04.2022

The name of the section on the corporate website that Corporate Governance - Policies The number of information requests received by the company
demonstrates the donation policy of the company and Ethics regarding the clarification of the agenda of the General 0
Shareholders' Meeting
The relevant link to the PDP with minute of the General
https://www.kap.org.tr/tr/ Shareholder participation rate to the General Shareholders'
Shareholders' Meeting where the donation policy has been 54,4%
Bildirim/680430 Meeting
approved

238 2022 ANNUAL REPORT 239

Corporate Governance Information Form

GENERAL ASSEMBLY MEETINGS 2.2. Annual Report

The page numbers and/or name of the sections in the Annual
Percentage of shares directly present at the GSM 0,0000003%
Report that demonstrate the information requested by
Percentage of shares represented by proxy 54,4% principle 2.2.2.

a) The page numbers and/or name of the sections in

Specify the name of the page of the corporate website that the Annual Report that demonstrate the information on Annual Report - Corporate
Corporate Governance / General
contains the General Shareholders' Meeting minutes, and also the duties of the members of the Board of Directors and Governance Section, Statements of
Assembly
indicates for each resolution the voting levels for or against executives conducted out of the company and declarations Independence
on independence of board members
Specify the name of the page of the corporate website that
Corporate Governance / General
contains all questions asked in the general assembly meeting b) The page numbers and/or name of the sections in
Assembly Annual Report Corporate
and all responses to them the Annual Report that demonstrate the information on
Governance Section
committees formed within the board structure
The number of the relevant item or paragraph of General
Shareholders' Meeting minutes in relation to related party - c) The page numbers and/or name of the sections in the
transactions Annual Report that demonstrate the information on the Annual Report Corporate
number of board meetings in a year and the attendance of Governance Section
The number of declarations by insiders received by the board
0 the members to these meetings
of directors
The link to the related PDP general shareholder meeting https://www.kap.org.tr/tr/ ç) The page numbers and/or name of the sections in
Annual Report Corporate
notification Bildirim/1024262 the Annual Report that demonstrate the information on
Governance Section - Legal
amendments in the legislation which may significantly affect
Disclosures
the activities of the corporation

2. DISCLOSURE AND TRANSPARENCY d) The page numbers and/or name of the sections in
Annual Report Corporate
the Annual Report that demonstrate the information on
2.1. Corporate Website Governance Section- Legal
significant lawsuits filed against the corporation and the
Disclosures
possible results thereof
Financial Reports and Presentations,
Specify the name of the sections of the website providing the
Annual Report, Announcements, e) The page numbers and/or name of the sections in the
information requested by the Principle 2.1.1.
Corporate Governance Annual Report that demonstrate the information on the
conflicts of interest of the corporation among the institutions
There is no such case
If applicable, specify the name of the sections of the website Corporate Governance that it purchases services on matters such as investment
providing the list of shareholders (ultimate beneficiaries) who -Shareholder Structure and consulting and rating and the measures taken by the
directly or indirectly own more than 5% of the shares. Subsidiaries corporation in order to avoid from these conflicts of interest

f) The page numbers and/or name of the sections in the

List of languages for which the website is available Turkish, English Annual Report Corporate
Annual Report that demonstrate the information on the cross
Governance Section - Legal
ownership subsidiaries that the direct contribution to the
Disclosures
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 employees and
Annual Report Sustainability Section
activities of corporate social responsibility in respect of the
corporate activities that arises social and environmental
results

240 2022 ANNUAL REPORT 241

Corporate Governance Information Form

3. STAKEHOLDERS 3.5. Ethical Rules and Social Responsibility

The name of the section on the corporate website that Corporate Governance - Policies
3.1. Corporation’s Policy on Stakeholders demonstrates the Code of Ethics and Ethics
The name of the section on the corporate website that Corporate Governance - Policies The name of the section on the company website that
demonstrates the employee remedy or severance policy and Ethics demonstrates the Corporate Social Responsibility Report. If
https://www.mavi.com/
The number of definitive convictions the company was such a report does not exist, provide the information about
- sustainability/index-en.html
subject to in relation to breach of employee rights any measures taken on environmental, social and corporate
governance issues.
The position of the person responsible for the alert
Ethics Board Corporate Governance - Policies
mechanism (i.e. whistleblowing mechanism) Any measures combating any kind of corruption including
And Ethics, Anti-Bribery and Anti-
www.mavietikhat.com / embezzlement and bribery
The contact detail of the company alert mechanism Corruption Policy
www.maviethicsline.com

3.2. Supporting the Participation of the Stakeholders in the

Corporation’s Management 4. BOARD OF DIRECTORS-I
Name of the section on the corporate website that 4.2. Activity of the Board of Directors
Internal regulation does not have a
demonstrates the internal regulation addressing the Date of the last Board evaluation conducted -
public link on company website
participation of employees on management bodies
Whether the Board evaluation was externally facilitated No
GoMavi, Masmavi, Management
Forum, Marketing Direction, Whether all board members released from their duties at the
Yes
Corporate bodies where employees are actually represented GoSeason meetings, GoWellness GSM
Work Group and Occupational No delegation was made among
Name(s) of the board member(s) with specific delegated
Health and Safety Board duties and authorities, and descriptions of such duties the board members
3.3. Human Resources Policy Number of reports presented by internal auditors to the Audit
4
Within Mavi Succession Policy Committee or any relevant committee to the Board
The role of the Board on developing and ensuring that the
the Board of Directors approve Specify the name of the section or page number of the
company has a succession plan for the key management Annual Report Corporate
the succession plan for top level Annual Report that provides the summary of the review of the
positions Governance Section
management effectiveness of internal controls
The name of the section on the corporate website that Name of the Chairman Ragıp Ersin Akarlılar
Corpoarte Governance - Policies
demonstrates the human resource policy covering equal
and Ethics - Diversity and Inclusion Name of the CEO Ahmet Cüneyt Yavuz
opportunities and hiring principles. Also provide a summary of
Policy
relevant parts of the human resource policy. If the CEO and Chair functions are combined: provide the link
to the relevant PDP announcement providing the rationale for -
Whether the company provides an employee stock There isn't an employee stock such combined roles
ownership program ownership program
Link to the PDP notification stating that any damage that
The name of the section on the corporate website may be caused by the members of the Board of Directors https://www.kap.org.tr/tr/
Corporate Governance - Policies
that demonstrates the human resource policy covering during the discharge of their duties is insured for an amount Bildirim/1016690
and Ethics - Mavi Code of Conduct,
discrimination and mistreatments and the measures to exceeding 25% of the company's capital
Human Rights Policy, Diversity and
prevent them. Also provide a summary of relevant parts of
Inclusion Policy The name of the section on the corporate website that
the human resource policy.
demonstrates current diversity policy targeting women -
The number of definitive convictions the company is subject directors
-
to in relation to health and safety measures
The number and ratio of female directors within the Board of 2 board member - 1/3
Directors

242 2022 ANNUAL REPORT 243

Corporate Governance Information Form

Composition of Board of Directors

Name, Whether Whether The First Link To PDP Whether the Whether She/ Whether The Number of maximum external commitments for board
Surname Executive Independent Election Notification Independent He is the Director Has At
of Board Director Or Director Or Date To That Director Director Who Least 5 Years’ members as per the policy covering the number of external There is no such policy
Member Not Not Board Includes The Considered By Ceased to Experience On duties held by directors
Independency The Nomination Satisfy The Audit, Accounting
Declaration Committee Independence And/Or Finance 4.5. Board Committees
or Not Or Not

Page numbers or section names of the Annual Report where Annual Report Corporate
Ragıp Ersin Non
Not information about the board committees are presented Governance Section
independent 12/01/1994 - Not applicable Not applicable Not applicable
Akarlılar executive
director
Link(s) to the PDP announcement(s) with the Board https://www.kap.org.tr/tr/
Ahmet Not Committee charters Bildirim/627118
Cüneyt Executive independent 22/03/2017 - Not applicable Not applicable Not applicable
Yavuz director

Not
Fatma Elif
Akarlılar
Executive independent
director
12/01/1994 - Not applicable Not applicable Not applicable Composition of Board Committees-I

https://www.
Ahmet Fadıl Non independent kap.org.tr/tr/ Names Of The Board Name Of Committees Name-Surname of Whether Committee Whether Board
17/07/2017 Considered No Yes Committees Defined As "Other" In The Committee Members Chair Or Not Member Or Not
Ashaboğlu executive director Bildirim/
922248 First Column

https://www.
Non independent kap.org.tr/tr/ Audit Committee Ahmet F. Ashaboğlu Yes Board member
Nevzat Aydın 17/07/2017 Considered No No
executive director Bildirim/
922248

https:// Audit Committee Nevzat Aydın No Board member

Zeynep Non independent www.kap.org.tr
31/05/2022 Considered No No
Yalım Uzun executive director /tr/Bildirim/
1033500 Committee of Early
Ahmet F. Ashaboğlu Yes Board member
Detection of Risk

Committee of Early
Ragıp Ersin Akarlılar No Board member
Detection of Risk
4. BOARD OF DIRECTORS-II
Committee of Early
Bige İşcan Aksaray No Not board member
4.4. Meeting Procedures of the Board of Directors Detection of Risk

Number of physical board meetings in the reporting period Corporate Governance

Zeynep Yalım Uzun Yes Board member
5 Committee
(meetings in person)

Corporate Governance
Director average attendance rate at board meetings 100% Ragıp Ersin Akarlılar No Board member
Committee
Whether the Board uses an electronic portal to support its
No
work or not Corporate Governance
Duygu İnceöz No Not board member
Committee
Number of minimum days ahead of the board meeting to
5 working days
provide information to directors, as per the board charter

The name of the section on the corporate website that There is no public link available for
demonstrates information about the board charter the internal board charter document

244 2022 ANNUAL REPORT 245

Corporate Governance Information Form

Composition of Board Committees-II

4. BOARD OF DIRECTORS-III
Names Of The Board Name of Percentage Of Percentage Of Number Of Number Of Reports On
4.5. Board Committees-II Committees committees Non-executive Independent Meetings Held In Its Activities Submitted
defined as Directors Directors In The Person To The Board
Specify where the activities of the Audit Committee are "Other" in the first Committee
Annual Report Corporate
presented in your annual report or website (Page number or column
Governance Section
section name in the Annual Report/website)
Audit Committee 100% 100% 4 11
Specify where the activities of the Corporate Governance
Annual Report Corporate
Committee are presented in your annual report or website
Governance Section Committee of Early
(Page number or section name in the Annual Report/website) Detection of Risk
66,6% 33,3% 4 6

Specify where the activities of the Nomination Committee are

Annual Report Corporate
presented in your annual report or website (Page number or Corporate Governance
66,6% 33,3% 0 4
Governance Section Committee
section name in the Annual Report/website)

Specify where the activities of the Early Detection of Risk

Annual Report Corporate
Committee are presented in your Annual Report or website
Governance Section
(Page number or section name in the annual report/website)

Specify where the activities of the Remuneration Committee

Annual Report Corporate
are presented in your Aannual Report or website (Page
Governance Section
number or section name in the Annual Report/website)

4.6. Financial Rights

Specify where the operational and financial targets and Annual Report Corporate
their achievement are presented in your Annual Report (Page Governance Section
number or section name in the Annual Report)

Specify the section of website where Remuneration Policy for Corporate Governance - Policies
executive and non-executive directors are presented. and Ethics

Annual Report Corporate

Specify where the individual remuneration for board members
Governance Section
and senior executives are presented in your Annual Report
(Page number or section name in the Annual Report)

246 2022 ANNUAL REPORT 247

06 INDEPENDENT AUDITORS
REPORT & CONSOLIDATED
FINANCIAL STATEMENTS

01 KEY FINANCIAL 02 CHAIRMAN & CEO 03 MAVİ BRAND 04 MAVİ'S SUSTAINABILITY 05 CORPORATE 06 INDEPENDENT AUDITORS REPORT & 07 GENERAL
METRICS LETTERS HIGHLIGHTS EVOLUTION GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ASSEMBLY

248 2022 ANNUAL REPORT 249

 AUDITORS REPORT & CONSOLIDATED
FINANCIAL STATEMENTS

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and

Its Subsidiaries

Consolidated Financial Statements

As At and For The Year Ended
31 January 2023 and Independent Auditor’s Report

(Convenience Translation of
the Report and the Consolidated
Financial Statements Originally Issued in Turkish)

14 March 2023
This report includes 7 pages of independent auditor’s report and 85 pages of consolidated financial statements together with
their explanatory notes.

250 2022 ANNUAL REPORT 251

252 2022 ANNUAL REPORT 253
254 2022 ANNUAL REPORT 255
256 2022 ANNUAL REPORT 257
Table of Contents Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Consolidated Statements of Financial Position 259-261 Consolidated Statements of Financial Position
Consolidated Statements of Profit or Loss and Other Comprehensive Income 262-263 As of 31 January 2023
Consolidated Statement of Changes in Equity 264
Consolidated Statement of Cash Flows 265 (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
Notes to the consolidated financial statements 266-379

Note Disclosure Pages Audited Audited

1 Organization and operations of the Group 266-267 Note 31 January 2023 31 January 2022
2 Basis of presentation of financial statements 268-312 ASSETS
- Basis of presentation of consolidated financial statements 268-269
- Basis of consolidation 270-274 Current assets
- Changes in significant accounting policies 274 Cash and cash equivalents 4 3,244,612 1,481,617
- Changes in accounting estimates and errors 275
Financial investments 58,150 27,024
- Summary of significant accounting policies 275-306
- Use of accounting estimates and assumptions 306 Trade receivables 870,657 394,487
- New and Amended Turkish Financial Reporting Standards 307-312 - Due from third parties 7 870,657 394,487
3 Segment reporting 313
4 Cash and cash equivalents 314
Other receivables 31,410 33,211
5 Financial borrowings 315-318 - Due from related parties 6 12,216 --
6 Related party disclosures 318-321 - Due from third parties 8 19,194 33,211
7 Trade receivables and payables 321-323
8 Other receivables and payables 323-325 Inventories 9 2,307,586 751,398
9 Inventories 325-326 Derivative instruments 32 -- 28,882
10 Prepaid expenses and deferred income 327
11 Property, plant and equipment 328-329
Prepaid expenses 10 196,142 120,666
12 Intangible assets 330-331 - Due from related parties 6 82,365 86,982
13 Goodwill 332-334 - Due from third parties 113,777 33,684
14 Right-of-use assets 335-336
15 Provisions, contingent assets and liabilities 336-338 Current tax assets 30 32,987 7,453
16 Commitments 339-341 Other current assets 19 43,204 11,445
17 Employee benefits 341-342
18 Payables to related to employee benefits 343
Total current assets 6,784,748 2,856,183
19 Other assets and liabilities 343
20 Capital, reserves and other capital reserves 344-346
21 Revenue 347
Non-current assets
22 Cost of sales 347
23 Administrative expenses, selling, marketing and distribution expenses 348 Other receivables 10,575 6,354
24 Research and development expenses 349
- Due from third parties 8 10,575 6,354
25 Other operating income and expense 349-350
26 Gains and losses from investment activities 350 Property, plant and equipment 11 395,452 258,987
27 Expenses by nature 351-352 Right-of-use assets 14 576,392 450,505
28 Finance income 352
29 Finance expenses 353 Intangible assets 662,644 473,907
30 Income taxes 353-363 - Other intangible asset 12 185,268 130,889
31 Earnings per share 364
- Goodwill 13 477,376 343,018
32 Derivative instuments 364
33 Financial instruments 365-367 Prepaid expenses -- 7
34 Nature and level of risks related to financial instruments 368-377 - Due from third parties 10 -- 7
35 Financial instruments (fair value disclosures and disclosures under hedge accounting) 377-378
36 Subsequent events 378-379 Deferred tax asset 30 212,933 49,361
Total non-current assets 1,857,996 1,239,121
Supplementary Information
TOTAL ASSETS 8,642,744 4,095,304
Appendix 1 Ebitda reconciliation 380
Appendix 2 Effect of TFRS 16 on Financial Statements 381

The accompanying notes from an integral part of these consolidated financial statements.

258 2022 ANNUAL REPORT 259

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Consolidated Statements of Financial Position Consolidated Statements of Financial Position
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

Audited Audited Audited Audited

Note 31 January 2023 31 January 2022 Note 31 January 2023 31 January 2022
LIABILITIES EQUITY
Current liabilities
Short-term borrowings 5 813,247 644,828 Equity attributable to owners of the Company 2,591,537 1,114,503
Short-term lease liabilities 5 350,245 229,295 Paid-in share capital 20 99,314 49,657
- Due to related parties 6 459 3,872 The effect of mergers involving undertakings or businesses
- Due to third parties 349,786 225,423 under common control (35,757) (35,757)

Short-term portion of long-term borrowings 5 217,297 245,780 Share based payment fund 945 --

Short-term issued debt instruments 5 509,972 -- Other comprehensive income or expenses not to be reclassified
to profit or loss (14,388) (12,293)
Trade payables 2,960,521 1,188,646
Defined benefit plans remeasurement losses (14,388) (12,293)
- Due to related parties 6 323,941 212,803
Other comprehensive income or expenses to be reclassified to
- Due to third parties 7 2,636,580 975,843 profit or loss 529,961 375,518
Payables related to employee benefits 18 203,020 100,056 Foreign currency translation differences 544,118 353,279
Other payables 39,762 19,019 Hedging gain / (losses) (14,157) 22,239
- Due to related parties 6 41 41 Restricted reserves appropriated from profit 19,771 19,771
- Due to third parties 8 39,721 18,978 Retained earnings 552,316 317,166
Deferred income 10 81,668 29,826 Net profit for the period 1,439,375 400,441
Short-term provisions 124,343 43,303 Non-controlling interests 140,411 78,854
- Short-term provisions for employee benefits 15 18,829 8,773
- Other short-term provisions 15 105,514 34,530 Total equity 2,731,948 1,193,357
Derivative instruments 32 17,698 --
Current tax liabilities 30 82,191 51,501 TOTAL EQUITY AND LIABILITIES 8,642,744 4,095,304
Other current liabilities 19 43,633 18,119
Total current liabilities 5,443,597 2,570,373

Non-current liabilities
Long-term lease liabilities 5 289,816 276,630
- Due to related parties 6 -- 330
- Due to third parties 289,816 276,300
Deferred income 10 34,009 730
Payables related to employee benefits 67,480 19,921
Long-term provisions 61,122 23,176
- Long-term provisions for employee benefits 15,17 61,122 23,176
Deferred tax liability 30 14,772 11,117
Total non-current liabilities 467,199 331,574
TOTAL LIABILITIES 5,910,796 2,901,947

The accompanying notes from an integral part of these consolidated financial statements. The accompanying notes from an integral part of these consolidated financial statements.

260 2022 ANNUAL REPORT 261

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Consolidated Statements of Profit or Loss and Other Comprehensive Income Consolidated Statements of Profit or Loss and Other Comprehensive Income
For the year ended 31 January 2023 For the year ended 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

Audited Audited Audited Audited

1 February 2022– 1 February 2021– 1 February 2022– 1 February 2021–
Note 31 January 2023 31 January 2022 Note 31 January 2023 31 January 2022
Profit or loss Other comprehensive income
Revenue 21 10,591,901 4,619,319 Items that will not be reclassified to profit or loss
Cost of sales (-) 22 (4,989,794) (2,247,656) Remeasurement (losses) of defined benefit plans 17 (2,618) (7,560)
Gross profit 5,602,107 2,371,663 Deferred tax income 30 523 1,512
Administrative expenses (-) 23 (674,224) (302,490) Items that will be reclassified to profit or loss
Selling, marketing and distribution expenses (-) 23 (2,874,658) (1,366,067) Foreign currency translation differences 225,269 243,606
Research and development expenses (-) 24 (75,714) (45,065) Cash flow hedging gains (46,580) 37,482
Other operating income 25 76,108 47,761 Deferred tax income/(expense) 30 10,184 (8,363)
Other operating expenses (-) 25 (30,875) (7,162) Other comprehensive income 186,778 266,677
Operating profit 2,022,744 698,640 Total comprehensive income 1,645,922 689,695
Income from investment activities 26 14,455 158
Expenses from investment activities (-) 26 (685) (12) Distribution of total comprehensive income
Operating profit before finance expense 2,036,514 698,786 Non-controlling interests 54,199 54,637
Finance income 28 304,767 163,132 Owners of the Company 1,591,723 635,058
Finance costs (-) 29 (638,198) (322,896)
Finance expenses, net (333,431) (159,764)
Profit before tax 1,703,083 539,022
Tax expense 30 (243,939) (116,004)
- Tax expense for the period 30 (399,948) (155,823)
- Deferred tax income 30 156,009 39,819
Net profit 1,459,144 423,018

Distribution of profit for the period

Non-controlling interests 19,769 22,577
Owners of the Company 1,439,375 400,441
Earnings per share 31 14.4932 4.0320

The accompanying notes from an integral part olidated financial statements. The accompanying notes from an integral part of these consolidated financial statements.

262 2022 ANNUAL REPORT 263

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Consolidated Statements of Changes In Equity Notes to the Consolidated Statements of Cash Flow
For the year ended 31 January 2023 For the year ended 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
Audited Audited

Total equity

534,009

--

(30,347)

689,695

1,193,357

1,193,357

--

(120,429)

13,098

1,645,922

2,731,948
Cash flows from operating activities Note 31 January 2023 31 January 2022
Net profit for the period 1,459,144 423,018
Adjustments for:
Adjustments for depreciation and amortization expense 11,12,14,27 503,024 358,049
Attributable Attributable
to non-
controlling
interest

24,217

--

--

54,637

78,854

78,854

--

--

7,358

54,199

140,411
Adjustments for interest income 28 (272,650) (134,294)
Adjustments for interest expense 29 633,538 298,560
Adjustments for provision for vacation 15 10,184 3,722
Adjustments for fair value losses / (gains) of financial assets (13,087) --
to owners
of the
Company

509,792

--

(30,347)

635,058

1,114,503

1,114,503

--

(120,429)

5,740

1,591,723

2,591,537
Adjustments for provision for employment termination benefit 17 54,961 19,996
Adjustments for impairment losses on trade receivables 34 3,407 147
Adjustments for rediscount interest expense/(income) on trade payables 25 (25,945) (6,477)
Adjustments for share-based payments 945 --
Net profit

4,583

(4,583)

--

400,441

400,441

400,441

350,784 (400,441)

--

--

1,439,375

1,439,375
Adjustments for expected credit losses 25 1,279 (1,248)
Retained earnings

Adjustments for inventory impairment 9 90,857 20,572

Adjustments for provisions for short-term and long-term payables 15 62,408 10,006
Adjustments for (gains) / losses on disposal of property, plant and equipment 26 (683) (146)
Retained
earnings

342,930

4,583

(30,347)

--

317,166

317,166

-- (120,429)

4,795

--

552,316
Adjustments for tax expense 30 243,939 116,004
Adjustments for unrealized foreign currency translation differences 161,954 192,298
2,913,275 1,300,207

The accompanying notes from an integral part of these consolidated financial statements.
Hedging
reserve

(6,880)

--

--

29,119

22,239

22,239

--

--

(36,396)

(14,157)
Other comprehensive

reclassified to profit

Changes in working capital:

income that will

Change in trade receivables (497,853) (177,430)

or loss

Change in inventories (1,654,872) (218,098)

Foreign
currency
translation
reserve

141,733

--

--

211,546

353,279

353,279

--

--

--

190,839

544,118
Change in prepaid expenses (75,470) (73,357)
Change in other receivables 9,796 (26,692)
Change in other current and non-current assets (31,756) 12,610
Change in employee benefits liabilities 150,525 81,114
Remeasurement
of defined
benefit liability

(6,245)

--

--

(6,048)

(12,293)

(12,293)

--

--

--

(2,095)
income that will

(14,388)
comprehensive

not reclassified
to profit or loss

Change in trade payables 1,686,683 500,421

Change in payables to related parties 111,138 56,372
Other

Change in deferred income 85,122 10,979

Change in other payables 20,744 15,107
Change in short-term and long-term provisions (798) (891)
Change in other liabilities 25,320 5,034
Share based
control payment fund

--

--

--

--

--

--

--

--

945

--

945

Cash flows used in operating activities 2,741,854 1,485,376

Employment termination benefits paid 15,17 (22,308) (15,022)
Tax payments 30 (394,792) (100,343)
A. Net cash from operating activities 2,324,754 1,370,011
Purchase
of share of
entities under
common

(35,757)

--

--

--

(35,757)

(35,757)

--

--

--

--

(35,757)

Cash flows from investing activities

Cash outflows from purchase of property, plant and equipment 11 (220,815) (130,292)
Cash inflows from sale of property, plant and equipment and intangible assets 3,207 411
Cash inflows from purchase of funds (357) --
Cash outflows from purchase of intangible assets 12 (74,141) (33,537)
Legal
reserves

19,771

--

--

--

19,771

19,771

--

--

--

19,771

Other investing activities (18,112) (27,024)

Interest received 254,158 83,683
Net cash flow used in investing activities (56,060) (106,759)
Share capital

49,657

--

--

--

49,657

49,657

Cash inflows from borrowings 5 1,286,528 736,901

49,657

--

--

--

99,314

Cash outflows from payment of borrowings 5 (762,280) (886,251)

Cash outflows from payments of lease contracts (429,847) (269,864)
Other financial cash outflows 29 (322,504) (133,633)
Increase (decrease) due to

Dividend paid (120,429) (30,347)

share-based transactions
Balance as at 1 February

Balance as at 1 February

Interest paid (175,659) (91,324)

Total balance as at 31

Total balance as at 31
Total comprehensive

Total comprehensive

C. Net cash flow generated from/(used in) financing activities (524,191) (674,518)
Dividend payment

Dividend payment

Net increase in cash and cash equivalent (A+B+C) 1,744,503 588,734

Cash and cash equivalents at the beginning of the period 1,478,609 889,875
January 2022

January 2023

Cash and cash equivalents at the end of the period (A+B+C+D) 4 3,223,112 1,478,609
(Note 2.2c)
Transfers

Transfers
income

income
2022
2021

The accompanying notes from an integral part of these consolidated financial statements.

264 2022 ANNUAL REPORT 265

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

1 Organization and Operations of the Group 1 Organization and Operations of the Group (continued)
Mavi Giyim Sanayi ve Ticaret A.Ş. (the “Company” or “Mavi Giyim”), established in 1991, The ownership interest of and voting power held by the Company as at and for the years
engages in wholesale and retail sales of ready-to-wear denim apparel. The product range ended 31 January 2023 and 31 January 2022 are as follows:
includes knit and woven shirts, t-shirts, sweaters, jackets, skirts, dresses, accessories and
denim bottoms for men, women and children. The Company’s registered office is Sultan
Selim Mahallesi, Eski Büyükdere Caddesi, No. 53, 34418 Kağıthane Istanbul/Turkey.
Subsidiaries Place of Incorporation Principal Activities Ownership interest and voting rights
Export sales operations started in 1994. Mavi Giyim has offices and showrooms in New York, 31 January 2023 31 January 2022
Vancouver, Moscow, New Jersey, Los Angeles, Atlanta, Dallas, Toronto, Montreal, Düsseldorf,
Wholesale and retail sales of
Munich, Hamburg, Leipzig, Sindelfingen, Heusenstamm, Zurich, Salzburg, Prague, Brussels Mavi Europe Germanya 100.00 100.00
apparel
and Almere. Wholesale and retail sales of
Mavi Russia Russia 100.00 100.00
apparel
Shares of the Company has been traded at Borsa Istanbul (“BIST”) since 15 June 2017. As Eflatun Giyim Turkey Holding 51.00 51.00
of 31 January 2023, the Company's main shareholders are Blue International Holding B.V., Mavi USA(1) USA
Wholesale and retail sales of
47.69 51.00
apparel
which owns 0.22% of the Company's share capital, and Fatma Elif Akarlılar, Hayriye Fethiye
Wholesale and retail sales of
Akarlılar and Seyhan Akarlılar, each of whom own 9.062% of the Company's share capital Mavi Canada Canada
apparel
63.25 63.25
(31 January 2022: Blue International Holding B.V., which owns 0.22% of the Company's share Mavi Kazakhstan(2) Kazakhstan Retail sales of apparel 100.00 100.00
capital, and Fatma Elif Akarlılar, Hayriye Fethiye Akarlılar and Seyhan Akarlılar, each of whom
own 9.062% of the Company's share capital). Blue International Holding B.V. is controlled by Change in Mavi USA ownership interest is explained in note 2.2c
(1)

Fatma Elif Akarlılar, Hayriye Fethiye Akarlılar and Seyhan Akarlılar.

Mavi Kazakhstan is in the liquidation process and does no longer proceed any operations
(2)

The consolidated financial statements as at 31 January 2023 include financial position and as of 31 October 2015. Financial statements of Mavi Kazakhstan have not been consolidated
the results of Mavi Giyim, Mavi Europe AG (“Mavi Europe”) and Mavi LLC (“Mavi Russia”), since its operations insignificant in terms of consolidated financial statements, as of 31
Eflatun Giyim Yatırım Ticaret Anonim Şirketi (“Eflatun Giyim”), Mavi Jeans Incorporated January 2023.
(“Mavi Canada”), Mavi Jeans Incorporated (“Mavi United States of America (“USA”), Mavi
Kazakhstan LLP and its subsidiaries are referred here as the “Group” and individually“ the As of 31 January 2023, Group’s total number of employees is 5,670 (31 January 2022: 5,111).
Group entity” in this report.

266 2022 ANNUAL REPORT 267

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements 2 Basis of presentation of financial statements (continued)

2.1 Basis of presentation of consolidated financial statements 2.1 Basis of presentation of consolidated financial statements (continued)
(a) Statement of compliance to Turkish Financial Reporting Standarts (“TFRSs”) (b) Functional and presentation currency (continued)

The accompanying consolidated financial statements have been prepared in line with The table below summarises functional currencies of the Group entities.
Capital Markets Board (“CMB”), Communiqué Serial: II, No. 14.1 on “Principles on Financial
Reporting in Capital Market” (“the Communiqué”), promulgated in Official Gazette No. 28676 Company Functional currency
dated 13 June 2013. TFRSs include Standards and Interpretations published by POA under
the names of Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards, Mavi Giyim TL
TAS Interpretations and TFRS Interpretations. Mavi Europe Euro (“EUR”)
Mavi Russia Rouble (“RUB”)
The consolidated financial statements are presented in accordance with TFRS Taxonomy
Eflatun Giyim TL
developed based on the “Financial Statement Examples and User Guide” announced by
Mavi USA US Dollars (“USD”)
the POA published in the Offical Gazette dated 7 June 2019 and numbered 30794.
Mavi Canada Canada Dollars (“CAD”)
Approval of consolidated financial statements:

The consolidated financial statements were approved by the Board of Directors of the (c) Basis of measurement
Company on 14 March 2023. The General Assembly of the Company has the right to amend A number of the Group’s accounting policies and disclosures require the measurement
and the related regulatory authorities have the right to demand the amendment of these of fair values, for both financial and non-financial assets and liabilities. The consolidated
consolidated financial statements. financial statements have been prepared on the historical cost basis except for derivative
financial instruments which are measured at fair value.
(b) Functional and presentation currency
Except for its subsidiaries established abroad, the functional currency of the companies The methods used to measure fair values are discussed further in Note 2.5(q).
included in the consolidation is Turkish Lira (“TL”) and they keep their accounting records in
Restatement of financial statements during periods of high inflation
TL in accordance with the commercial legislation, financial legislation and Uniform Chart of
Accounts published by the Ministry of Finance.
POA made an announcement on 20 January 2022 regarding the application of TAS 29
“Financial Reporting in Hyperinflationary Economies” (“TAS 29”) for entities adopting
Consolidated financial statements and notes are based on the legal records of the Group
Turkish Financial Reporting Standards (“TFRS”) for the year ended 31 December 2021. The
companies and are presented in TL unless otherwise stated and it has been prepared by
announcement stated that, entities that apply TFRS should not adjust their financial
subjecting some adjustments and classification changes in order to present adequately
statements in accordance with TAS 29 for the year ended 31 December 2021. As of the date
the status of the Group in accordance with the Turkish Accounting Standards published
of this report, POA has not made any further announcements regarding the scope and
by KGK. All other foreign currency amounts are shown in Thousand Turkish Lira (“TL”) unless
application of TAS 29. As a result, no inflation adjustment was made to the accompanying
otherwise stated.
consolidated financial statements as of 31 December 2022 in accordance with TAS 29.

268 2022 ANNUAL REPORT 269

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.2 Basis of consolidation 2.2 Basis of consolidation (continued)
Consolidated financial statements include the financial statements of the Company and (b) Subsidiaries
its subsidiaries controlled by the Company. Control is exercised by an entity having power
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is
over its financial and operational policies in order to derive benefits from its activities. The
exposed to, or has right to, variable returns from its involvement with the entity and has the
financial statements of the companies included in the consolidation have been prepared
ability to affect those returns through its power over the entity. The financial statements
as of the same date as the consolidated financial statements.
of subsidiaries are included in the consolidated financial statements from the date that
(a) Business combinations control commences until the date that control ceases.

The Group accounts for business combinations using the acquisition method when control (c) Non-controlling interests
is transferred to the Group. The consideration transferred in the acquisition is generally
Non-controlling interests (“NCI”) are measured at their proportionate share of the acquiree’s
measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises
identifiable net assets at the date of acquisition.
is tested annually for impairment (see 2.5 (f)). Transactions costs, other than those associated
with the issuance of debt or equity securities, that the Group incurs in connection with a Changes in the Group's share in subsidiaries that do not result in loss of control are accounted
business combination are expensed as incurred. for as equity transactions.

The consideration transferred does not include amounts related to the settlement of pre- Eflatun Giyim, 51% subsidiary of the Group, has transferred 6.5% of its Mavi Jeans Inc. (“Mavi
existing relationships. Such amounts are generally recognized in profit or loss. USA”) shares to one of its personnel in accordance with the 6-year contract signed on
30 December 2022. The Group accounted for the transaction in accordance with TFRS 2
Any contingent consideration is measured at fair value at the date of acquisition. If an
share-based payments standard and recorded a share based payment fund amounting
obligation to pay contingent consideration that meets the definition of a financial
to TL 945.
instrument is classified as equity, then it is not remeasured and settlement is accounted for
within equity. Otherwise, other contingent consideration is remeasured at fair value at each (d) Transactions eliminated on consolidation
reporting date and subsequent changes in the fair value of the contingent consideration
are recognised in profit or loss. Intra-group balances and transactions, and any unrealised income and expenses arising
from intra-group transactions, are eliminated.
If share-based payment awards (replacement awards) are required to be exchanged for
awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the (e) Acquisitions from entities under common control
amount of the acquirer’s replacement awards is included in measuring the consideration Business combinations arising from transfers of interests in entities that are under the control
transferred in the business combination. This determination is based on the market- of the shareholder that controls the Company are accounted for as if the acquisition had
based measure of the replacement awards compared with the market-based measure occurred at the beginning of the earliest comparative year presented or, if later, at the
of the acquiree’s awards and the extent to which the replacement awards relate to pre- date that common control was established; for this purpose comparative periods are
combination service. restated. The restatement does not extend to periods during which the entities were not
under common control. The assets and liabilities acquired are recognised at the carrying
amounts recognised previously in the Company’s controlling shareholder’s consolidated

270 2022 ANNUAL REPORT 271

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.2 Basis of consolidation (continued) 2.2 Basis of consolidation (continued)
(e) Acquisitions from entities under common control (continued) (f) Foreign currency (continued)
financial statements. The components of equity of the acquired entities are added to the ii) Foreign operations (continued)
same components within the Company equity and any gain/loss arising is recognised
directly in equity. Foreign currency differences are recognised in other comprehensive income and
accumulated into the translation reserve, except to the extent that the translation difference
(f) Foreign currency is allocated to NCI.

i) Foreign currency transactions When a foreign operation is disposed of in its entirety or partially such that control,
Transactions in foreign currencies are translated into the respective functional currencies of significant influence or joint control is lost, the cumulative amount in the translation reserve
Group companies at the exchange rates at the dates of the transactions. related to that foreign operation is reclassified to profit or loss as part of the gain or loss
on disposal. If the Group disposes of part of its interest in a subsidiary but retains control,
Monetary assets and liabilities denominated in foreign currencies are translated into the then the relevant proportion of the cumulative amount is reattributed to non-controlling
functional currency at the exchange rate at the reporting date. Non-monetary assets interests. When the Group disposes off only part of its investment in an associate or joint
and liabilities that are measured at fair value in a foreign currency are translated into the venture while retaining significant influence or joint control, the relevant proportion of the
functional currency at the exchange rate when the fair value was determined. Non-monetary cumulative amount is reclassified to profit or loss.
items that are measured based on historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction. Foreign currency differences are generally The Group and subsidiaries use either TL, EUR, RUB, USD or CAD as functional currencies
recognised in profit or loss and presented within finance costs. since these currencies are used to a significant extent in, or have a significant impact on,
the operations of the related Group and subsidiaries and reflect the economic substance
However, foreign currency differences arising from the translation of the following items are of the underlying events and circumstances relevant to these entities. All currencies other
recognised in OCI: than the currency selected for measuring items in the financial statements are treated as
foreign currencies. Accordingly, transactions and balances not already measured in the
Ɋ an investment in equity securities designated as at FVOCI (except on impairment, functional currency have been re-measured to the related functional currencies. The Group
in which case foreign currency differences that have been recognised in OCI are uses TL as the reporting currency.
reclassified to profit or loss);
Ɋ a financial liability designated as a hedge of the net investment in a foreign operation The financial statements of subsidiaries that reported in the currency of an economy
to the extent that the hedge is effective; and formerly accepted as hyperinflationary (Turkey) are restated in terms of the measuring unit
current at the reporting dates as the reporting currency. Since the inflation acoounting
Ɋ qualifying cash flow hedges to the extent that the hedges are effective. practises are decided to be ended on 31 December 2005, TL has been evaluated as the
currency of a non-hyperinflationary economy as of 1 January 2005.
ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on acquisition, are translated into TL at exchange rates at the reporting date. The
income and expenses of foreign operations are translated via monthly average exchange
rates.
272 2022 ANNUAL REPORT 273
Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.2 Basis of consolidation (continued) 2.4 Changes in accounting estimates and errors
(f) Foreign currency (continued) Changes in accounting policies or accounting errors are applied retrospectively and the
consolidated financial statements of the previous periods are restated. If estimated changes
ii) Foreign operations (continued) in accounting policies are for only one period, changes are applied on the current year but
if the estimated changes effect the following periods, changes are applied both on the
The foreign currency exchange rates as at balance sheet date of the related periods are
current and following years prospectively. When a significant accounting error is identified,
as follows:
it is corrected retrospectively and the prior year consolidated financial statements are
restated.
31 January 2023 31 January 2022
TL / EUR 20.4525 14.9676 Comparative information and restatement of prior period financial statements
TL / USD 18.7876 13.4015 The consolidated financial statements of the Group are prepared in comparison with the
TL / RUB 0.2684 0.1719 prior period in order to allow the determination of financial position and performance
TL / CAD 14.0723 10.5121 trends. In order to comply with the presentation of the current period consolidated financial
statements, comparative information is reclassified when deemed necessary. In the current
period, the Group has made some reclassifications in its prior period financial statements.
The foreign average currency exchange rates for the related periods are as follows: The nature, reason and amounts of the classifications are explained below:

Ɋ Fx protected deposit amounting to TL 27,024, which was accounted as time deposit

1 February 2022– 1 February 2021– in the consolidated statement of financial position for the accounting period ending
31 January 2023 31 January 2022 on 31 January 2022, is reclassified to “financial investment” in comparative financial
TL / EUR 17.7789 10.9760 statements.
TL / USD 16.9962 9.3764
The reclassification has no impact on the profit for the period ended on 31 January 2022.
TL / RUB 0.2573 0.1262
TL / CAD 12.9552 7.4663 2.5 Summary of significant accounting policies

Accounting policies have been applied consistently by the Group in all periods presented
2.3 Change in significant accounting policies
in the consolidated financial statements. If changes in accounting estimates and errors are
The Group has consistently applied the following accounting policies to all periods presented for only one period, changes are applied in the current year but if the estimated changes
in these consolidated financial statements. Material changes in accounting policies and affect the following periods, changes are applied both on the current and following years
material accounting errors are adjusted retrospectively and prior period’s consolidated prospectively.
financial statements are restated.
There has been no significant change in the accounting estimates of the Company as of
31 January 2023.

274 2022 ANNUAL REPORT 275

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(a) Leases (a) Leases (continued)
The Group has applied TFRS 16 as of 1 February 2019 using the modified retrospective As a lessee (continued)
approach and therefore the comparative information has not been restated and continues
The right-of-use asset is initially measured at cost, which comprises the initial amount of
to be reported under TAS 17 and TFRS Interpretation 4. The details of accounting policies
the lease liability adjusted for any lease payments made at or before the commencement
under TAS 17 and TFRS Interpretation 4 are disclosed separately.
date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site on which it is located, less
At inception of a contract, the Group assesses whether a contract is, or contains, a lease.
any lease incentives received.
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
The right-of-use asset is subsequently depreciated from the commencement date to the
a contract conveys the right to control the use of an identified asset, the Group uses the
end of the lease term, unless the lease transfers ownership of the underlying asset to the
definition of a lease in TFRS 16.
Group by the end of the lease term or the cost of the right-of-use asset reflects that the
Group will exercise a purchase option. In other circumstances, the right of use asset is
This policy is applied to contracts entered into, on or after 1 February 2019.
subjected to depreciation according to the shorter of the useful life of the aforementioned
As a lessee asset or the leasing period, starting from the date when the leasing has actually started.
In addition, the value of the right of use asset is periodically reduced by also deducting
At the actual commencement date of the lease or at the date of the change in the contract the impairment losses if any and adjusted in accordance with the re-measurement of the
containing the lease component, the Group allocates to each lease component based on leasing liability. The lease liability is initially measured at the present value of the lease
the relative stand-alone price of the lease component and the total stand-alone price of payments that are not paid at the commencement date, discounted by using the rate
the non-lease components. implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental
borrowing rate.
The Group has chosen not to separate the non-lease components from the lease
components, but instead to account for each lease component and its associated non- The Group determines the alternative borrowing interest rate by taking into account the
lease components as a single lease component. interest rates it will pay for the debts to be used from various external financing sources
and makes some adjustments to reflect the lease terms and the type of the leased asset.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement The lease payments which are included in the measurement of the leasing liability, consist
date. The right to use asset is first recognized by the cost method and includes the following:· of the following:

Ɋ The initial measurement amount of the lease obligation, Ɋ Fixed payments (including the fixed payments by their essence);
Ɋ The amount obtained by deducting all the rental incentives received from all lease Ɋ Amounts expected to be paid by the lessee within the scope of residual value undertakings
payments made at or before the beginning of the lease,
Ɋ All initial direct costs incurred by the Group Right-of-use asset is initially measured at cost and after the lease actually commenced, it
Ɋ An estimate of costs to be incurred by the Group in restoring the underlying asset to the is measured at fair value in accordance with the Group's accounting policies.
condition required by the terms and conditions of the lease

276 2022 ANNUAL REPORT 277

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(a) Leases (continued) (b) Property and equipment
As a lessee (continued) (iii) Depreciation
Leasing liability is measured by reducing the lease payments with a discount rate. In case, Property and equipment are depreciated from the date they are available for use.
as a result of a change in an index or rate used in determination of the lease payments in
the future, a change occurs in these payments and in the amounts expected to be paid Depreciation is calculated to write off the cost of items of property, plant and equipment
within the scope of residual value undertaking, the Group considers the options of renewal, less their estimated residual values using the straight line method over their estimated
termination and purchasing. useful lives, and is generally recognised in profit or loss.

In case the leasing liability is remeasured, it is reflected into the financial statements as Leased assets are depreciated over the shorter of the lease term and their useful lives
an adjustment in the right of use asset in accordance with the newly determined debt. unless it is reasonably certain that the Group will obtain ownership by the end of lease
However, in case the book value of the right of use asset is reduced down to zero and the term. Land is not subject to depreciation.
measurement of the leasing liability involves more reduction, the remaining re-measurement The estimated useful lives for the current and comparative periods are as follows:
amount is reflected into profit or loss.
Ɋ Vehicles (5) years
Right-of-use assets or liabilities related to performance-based contracts have not been Ɋ Furniture and fixtures (3–15) years
created with all of the rent. Rental prices are created by taking into account the minimum Ɋ Leasehold improvements shorter of (1–10) years or lease term
payment amount and the right-of-use asset and lease liability minimum values for rental Depreciation methods, useful lives and residual values are reviewed at each reporting date
agreements based on sales performance. and adjusted if appropriate.
(b) Property and equipment c) Intangible assets and goodwill
(i) Recognition and measurement (i) Recognition and measurement
Items of property, plant and equipment are measured at cost including borrowing costs- Goodwill
less accumulated depreciation and any accumulated impairment losses.
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated
When parts of an item of property, plant and equipment have different useful lives, they are impairment losses. A cash-generating unit to which goodwill has been allocated is tested
accounted for as separate items (major components) of property, plant and equipment. for impairment annually, or more frequently when there is an indication that the unit may
Any gain and loss on disposal of an item of property, plant and equipment is recognised in be impaired. If the recoverable amount of the cash-generating unit is less than its carrying
profit or loss and presendet under “gains/(losses) from investment activities”. amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of the unit pro rata based on the carrying
(ii) Subsequent expenditure amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in
profit or loss in the consolidated [statement of profit or loss/statement of profit or loss and
Subsequent expenditure is capitalised only if it is probable that the future economic benefits
other comprehensive income]. An impairment loss recognized for goodwill is not reversed in
associated with the expenditure will flow to the Group. Ongoing repairs and maintenance
subsequent periods.
are expensed as incurred.
278 2022 ANNUAL REPORT 279
Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
c) Intangible assets and goodwill (continued) (d) Inventories
(i) Recognition and measurement (continued) Inventories are measured at the lower of cost or net realizable value.
Goodwill (continued)
The cost of inventories is based on first-in first-out principle, and includes expenditure
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is incurred for the purchase and bringing the items to their current condition. Net realizable
included in the determination of the profit or loss on disposal. value is the estimated selling price, in the ordinary course of business, less estimated costs
of completion and estimated costs to sell. Net realizable value write-downs are evaluated
Intangible assets recognised in a business combination in product groups and for particular seasons such as fall/winter and spring/summer.

Customer relationships arising from the business acquisitions were recognized at their fair (e) Financial instruments
values.
(i) Recognition and initial measurement
Other intangible assets Trade receivables and debt securities issued are initially recognised when they are
originated. All other financial assets and financial liabilities are initially recognised when
Other intangible assets that are acquired by the Group, which have finite useful lives, are
the Group becomes a party to the contractual provisions of the instrument.
measured at cost less accumulated amortisation and accumulated impairment losses.
A financial asset (unless it is a trade receivable without a significant financing component) or
(ii) Subsequent expenditures
financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction
Subsequent expenditure is capitalised only when it increases the future economic benefits costs that are directly attributable to its acquisition or issue. A trade receivable without a
embodied in the specific asset to which it relates. All other expenditure is recognised in significant financing component is initially measured at the transaction price.
profit or loss as incurred.
(ii) Classification and subsequent measurement
(iii) Amortisation
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI
Except for goodwill, intangible assets are amortised on a straight-line basis in profit or loss –debt investment; FVOCI–equity investment; or FVTPL.
over their estimated useful lives, from the date that they are available for use.
Financial assets are not reclassified subsequent to their initial recognition unless the
The estimated useful lives for the current and comparative periods are as follows: Company changes its business model for managing financial assets, in which case all
affected financial assets are reclassified on the first day of the first reporting period following
Ɋ Trademark (15) years
the change in the business model.
Ɋ Licenses (3–5) years
Ɋ Customer relationships (9-15) years
Amortisation methods, useful lives and residual values are reviewed at each reporting date
and adjusted if appropriate.

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Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(e) Financial instruments (continued) (e) Financial instruments (continued)
(ii) Classification and subsequent measurement (continued) (ii) Classification and subsequent measurement (continued)
A financial asset is measured at amortized cost if it meets both of the following conditions Financial assets–Evaluation of the business model (continued)
and is not designated as at FVTPL:
Ɋ the risks that affect the performance of the business model (and the financial assets
Ɋ it is held within a business model whose objective is to hold assets to collect held within that business model) and how those risks are managed;
contractual cash flows; and Ɋ how managers of the business are compensated–e.g. whether compensation is
Ɋ its contractual terms give rise on specified dates to cash flows that are solely based on the fair value of the assets managed or the contractual cash flows collected;
payments of principal and interest on the principal amount outstanding. and

On initial recognition of an equity investment that is not held for trading, the Group may Ɋ the frequency, volume and timing of sales of financial assets in prior periods, the
irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This reasons for such sales and expectations about future sales activity.
election is made on an investment-by-investment basis.
Transfers of financial assets to third parties in transactions that do not qualify for
All financial assets not classified as measured at amortised cost or FVOCI as described derecognition are not considered sales for this purpose, consistent with the Group’s
above are measured at FVTPL. On initial recognition, the Group may irrevocably designate continuing recognition of the assets.
a financial asset that otherwise meets the requirements to be measured at amortised
cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting Financial assets that are held for trading or are managed and whose performance is
mismatch that would otherwise arise. evaluated on a fair value basis are measured at FVTPL.

Financial assets–Evaluation of the business model Financial assets–Assessment whether contractual cash flows are solely payments of
principal and interest
The Group makes an assessment of the objective of the business model in which a financial
asset is held at a portfolio level because this best reflects the way the business is managed For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial
and information is provided to management: asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money
and for the credit risk associated with the principal amount outstanding during a particular
Ɋ the stated policies and objectives for the portfolio and the operation of those
period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative
policies in practice. These include whether management’s strategy focuses on earning
costs), as well as a profit margin.
contractual interest income, maintaining a particular interest rate profile, matching the
duration of the financial assets to the duration of any related liabilities or expected cash In assessing whether the contractual cash flows are solely payments of principal and
outflows or realizing cash flows through the sale of the assets; interest, the Group considers the contractual terms of the instrument. This includes assessing
Ɋ how the performance of the portfolio is evaluated and reported to the Group’s whether the financial asset contains a contractual term that could change the timing or
management; amount of contractual cash flows such that it would not meet this condition.

282 2022 ANNUAL REPORT 283

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(e) Financial instruments (continued) (e) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) (ii) Classification and subsequent measurement (continued)

Financial assets–Subsequent measurement and gains and losses (continued)

Financial assets–Assessment whether contractual cash flows are solely payments of
principal and interest (continued)
These assets are subsequently measured at amortized cost
In making this assessment, the Group considers:
using the effective interest method. The amortized cost is
Ɋ contingent events that would change the amount or timing of cash flows; reduced by impairment losses. Interest income, foreign
Financial assets at amortized cost
Ɋ terms that may adjust the contractual coupon rate, including variable-rate exchange gains and losses and impairment are recognized in
features; profit or loss. Any gain or loss on derecognition is recognized
Ɋ prepayment and extension features; and in profit or loss.
Ɋ terms that limit the Group’s claim to cash flows from specified assets (e.g. non-
recourse features). These assets are subsequently measured at fair value.
Interest income calculated using the effective interest
A prepayment feature is consistent with the solely payments of principal and interest method, foreign exchange gains and losses and impairment
Debt investments at FVOCI
criterion if the prepayment amount substantially represents unpaid amounts of principal are recognized in profit or loss. Other net gains and losses
and interest on the principal amount outstanding, which may include reasonable additional are recognized in OCI. On derecognition, gains and losses
compensation for early termination of the contract. accumulated in OCI are reclassified to profit or loss.

Additionally, for a financial asset acquired at a discount or premium to its contractual par
These assets are subsequently measured at fair value.
amount, a feature that permits or requires prepayment at an amount that substantially
Dividends are recognized as income in profit or loss unless
represents the contractual par amount plus accrued (but unpaid) contractual interest (which
Equity investments at FVOCI the dividend clearly represents a recovery of part of the cost
may also include reasonable additional compensation for early termination) is treated as
of the investment. Other net gains and losses are recognized
consistent with this criterion if the fair value of the prepayment feature is insignificant at in OCI and are never reclassified to profit or loss.
initial recognition.

Financial assets–Subsequent measurement and gains and losses Financial liabilities–Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL.

These assets are subsequently measured at fair value. Net
gains and losses, including any interest or dividend income, A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative
Financial assets at FVTPL
are recognized in profit or loss. For derivatives identified as or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured
a hedging tool, see section (v) below. at fair value and net gains and losses, including any interest expense, are recognised in
profit or loss. Other financial liabilities are subsequently measured at amortised cost using
284 2022 ANNUAL REPORT 285
Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(e) Financial instruments (continued) (e) Financial instruments (continued)

(ii) Classification and subsequent measurement (continued) (iv) Offsetting of financial asset and liabilities

Financial liabilities – Classification, subsequent measurement and gains and losses Financial assets and financial liabilities are offset and the net amount presented in the
(continued) statement of financial position when, and only when, the Group currently has a legally
enforceable right to set off the amounts and it intends either to settle them on a net basis
the effective interest method. Interest expense and foreign exchange gains and losses are or to realize the asset and settle the liability simultaneously.
recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or
loss. For derivatives identified as a hedging tool, see section (v) below. (v) Derivative financial instrument and hedge accounting

(iii) Derecognition The Group uses derivative financial instruments for the purpose of hedging foreign currency
and interest rate risk.
Financial assets
Derivatives are initially recognized at fair value. Subsequent to initial recognition of derivative
The Group derecognizes a financial asset when the contractual rights to the cash flows from
instruments, changes in fair value are recognized in profit or loss.
the financial asset expire, or it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all of the risks and rewards of ownership of the financial The Group defines certain derivatives as hedging instruments in order to maintain the
asset are transferred or in which the Group neither transfers nor retains substantially all of variability in the cash flows related to the high probability of realization arising from the
the risks and rewards of ownership and it does not retain control of the financial asset. changes in exchange rates and interest rates. The Group defines certain derivatives and
non-derivative financial liabilities as hedging instruments for net investment in foreign
The Group enters into transactions whereby it transfers assets recognized in its statement
operations.
of financial position but retains either all or substantially all of the risks and rewards of the
transferred assets. In these cases, the transferred assets are not derecognized. At the beginning of the hedge relationship, the Group makes a certification regarding the
risk management purpose and strategy that causes the hedging relationship and the
Financial liabilities
operation of the enterprise. The Group also documents the economic relationship between
The Group derecognizes a financial liability when its contractual obligations are discharged the hedged item and the hedging instrument, including whether the changes in the cash
or cancelled or expire. The Group also derecognizes a financial liability when its terms are flows of the hedged item and the hedging means are expected to offset each other.
modified and the cash flows of the modified liability are substantially different, in which
case a new financial liability based on the modified terms is recognized at fair value. Hedge accounting

On derecognition of a financial liability, the difference between the carrying amount If a derivative instrument is designed as a cash flow hedge hedging instrument, the effective
extinguished and the consideration paid (including any non-cash assets transferred or portion of the change in the fair value of the derivative instrument is recognized in other
liabilities assumed) is recognized in profit or loss. comprehensive income and presented under equity in the hedging reserve. The ineffective
portion of the change in the fair value of the derivative is recognized directly in profit or loss.
The effective portion of the change in the fair value of the derivative instrument determined

286 2022 ANNUAL REPORT 287

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(e) Financial instruments (continued) (e) Financial instruments (continued)
(v) Derivative financial instrument and hedge accounting (continued) (v) Derivative financial instrument and hedge accounting (continued)

Hedge accounting Hedge accounting (continued)

on the present value basis from the beginning of the hedging relationship recognized in cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in
other comprehensive income is limited to the cumulative effect of the change in the fair the same period or periods as the hedged expected future cash flows affect profit or loss.
value of the hedging instrument.
If the hedged future cash flows are no longer expected to occur, then the amounts that have
The Group identifies only the change in value in the spot element of the forward contract been accumulated in the hedging reserve and the cost of hedging reserve are immediately
as the hedging instrument in the cash flow hedging relationship. reclassified to profit or loss.

The Group enters into forward contracts in order to hedge the foreign currency risk on
(f) Impairment of assets
product imports arising from the foreign currency differences between the purchase order
date and arrival date. Non-derivative financial assets

The change in the FV of the forward value of forward foreign currency contracts (“forward Financial instruments and contract assets
element”) is accounted for as a hedge fund as a separate component in equity as the cost
The Group recognizes loss allowances for ECLs on:
of hedging.
Ɋ financial assets measured at amortized cost
If a hedged forecast transaction results in the subsequent recognition of a non-financial
The Group measures loss allowances at an amount equal to lifetime ECL, except for the
asset or liability, the amount accumulated in the hedge fund and the cost of the hedge are
following, which are measured as 12-month ECL:
included directly in the initial cost of the non-financial asset or liability.
Ɋ bank balances for which credit risk has not increased significantly since initial
For all other hedge transactions, the hedging reserve and the hedging cost are classified recognition.
in profit or loss in the hedging reserve in the period or periods when the estimated future Loss allowances for trade receivables, other receivables, other assets and contract assets
cash flows are affected by profit or loss. are always measured at an amount equal to lifetime ECL.
The hedge accounting is discontinued in case the hedging relationship (or part of it) no
When determining whether the credit risk of a financial asset has increased significantly
longer meets the required criteria, the hedging instrument is expired or sold, terminated or
since initial recognition and when estimating ECL, the Group considers reasonable and
used.
supportable information that is relevant and available without undue cost or effort. This
When hedge accounting for cash flow hedges is discontinued, the amount that has been includes both quantitative and qualitative information and analysis, based on the Group’s
accumulated in the hedging reserve remains in equity until, for a hedge of a transaction historical experience and informed credit assessment and including forward-looking
resulting in the recognition of a non-financial item, it is included in the non-financial item’s information.

288 2022 ANNUAL REPORT 289

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(f) Impairment of assets (continued) (f) Impairment of assets (continued)

Non-derivative financial assets (continued) Credit-impaired financial assets

The Group considers bank balances to have low credit risk when its credit risk rating is At each reporting date, the Group assesses whether financial assets carried at amortized
equivalent to the globally understood definition of ‘investment grade’. cost are creditimpaired. A financial asset is ‘credit-impaired’ when one or more events that
have a detrimental impact on the estimated future cash flows of the financial asset have
The maximum period considered when estimating ECLs is the maximum contractual period occurred.
over which the Group is exposed to credit risk.
Presentation of impairment
12-month expected credit losses are that result from possible default events within the 12
months after the reporting date. Loss allowances for financial assets measured at amortized cost are deducted from the
gross carrying amount of the assets.
The maximum period considered when estimating expected credit losses is the maximum
Write-off
contractual period over which the Group is exposed to credit risk.
The gross carrying amount of a financial asset is written off (either partially or in full) to the
Measurement of ECLs
extent that there is no realistic prospect of recovery. This is generally the case when the
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as Group determines that the debtor does not have assets or sources of income that could
the present value of all cash shortfalls. generate sufficient cash flows to repay the amounts subject to the write-off. However,
financial assets that are written off could still be subject to enforcement activities in order
ECLs are discounted at the effective interest rate of the financial asset. to comply with the Group’s procedures for recovery of amounts due.

For trade receivables, other receivables, other assets and contract assets the Group applies Financial assets are written off when there is no reasonable expectation of recovery,
the simplified approach to providing for expected credit losses prescribed in TFRS 9, which such as a debtor failing to engage in a repayment plan with the Group. Where trade
requires the use of the lifetime expected loss provision for all trade receivables (TFRS 9 receivables, other receivables, other assets and contract assets have been written off, the
requires lifetime expected credit losses to be used for all trade receivables). The Group Group continues to engage in enforcement activity to attempt to recover the receivable
performed the calculation of ECL rates separately for individual, corporate, public and due. Where recoveries are made, these are recognized in profit or loss.
wholesale customers. The ECLs were calculated based on actual credit loss experience
over the past years.
Non-financial assets
ECLs are a probability-weighted estimate of credit losses. In other words, it is the credit At the end of each reporting period, the Group reviews the carrying amounts of its tangible
losses that are measured on the present value of all the cash deficits (for example, the and intangible assets to determine whether there is any indication that those assets have
difference between the cash inflows to the entity and the cash flows expected by the suffered an impairment loss. If any such indication exists, the recoverable amount of the
entity to be collected based on the contract). asset is estimated in order to determine the extent of the impairment loss (if any). Goodwill
is tested annually for impairment.

290 2022 ANNUAL REPORT 291

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(f) Impairment of assets (continued) (g) Employee benefits (continued)
Non-financial assets (continued) (i) Long term employee benefits (continued)

For impairment testing, assets are grouped together into the smallest group of assets Provision for employee termination benefits (continued)
that generates cash inflows from continuing use that are largely independent of the cash
under defined benefit plans. Consequently, in the accompanying consolidated financial
inflows of other assets or CGUs (“Cash Generating Unit”). Goodwill arising from a business
statements, the provision has been calculated by estimating the present value of the future
combination is allocated to CGUs that are expected to benefit from the synergies of the
probable obligation of the Group arising from the retirement of the employee. Severance
combination.
payment provisions are not subject to legal funding.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value
In accordance with the Russian Labor Law (the Article 178 “Dismissal allowances”, Chapter
less costs to sell. Value in use is based on the estimated future cash flows, discounted to
27, Section VII “Guarantees and compensations”), when the Group company unilaterally
their present value using a pre-tax discount rate that reflects current market assessments
terminates the employment agreement, employer should inform the employee two months
of the time value of money and the risks specific to the asset of CGU.
before position cancelling date. After two months, at the date of dismissal, employer is
required to pay the employee a dismissal compensation at the amount of one-month
An impairment loss is recognised if the carrying amount of an asset of CGU exceeds its
average wage. In case the employee can not find an employment during two preceding
recoverable amount.
months after the dismissal date, employee has right to request.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the
The Group has not recorded any reserve for employee severance payments for its employees
carrying amount of any goodwill allocated to the CGU and then to reduce the carrying
in foreign subsidiaries, except Russia since only under very specific circumstances a company
amounts of the other assets in the CGU on a pro rata basis.
is liable to pay a severance according to labour laws of the foreign entities.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment
(ii) Short term employee benefits
loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if Short-term employee benefit obligations are consisting of reserve for the vacation pay
no impairment loss had been recognised. liability due to the earned and unused vacation rights of its employees. The Group is
obliged to make payments for unused vacation days in the amount of the employment
(g) Employee benefits contract is terminated on the date of the daily gross wage and contract related interests
on the total payment. The Group provides reserve for the vacation pay liability due to the
(i) Long term employee benefits
earned and unused vacation rights of its employees. Vacation pay liability is measured on
Provision for employee termination benefits an undiscounted basis and is recognised in profit or loss as the related service is provided.
In accordance with existing social legislation in Turkey, the Company is required to make
lump-sum payments to employees whose employment is terminated without due cause,
called up for military service, death or retirement. TAS 19 “Employee Benefits” requires
actuarial valuation method to be developed to estimate the enterprise’s obligation

292 2022 ANNUAL REPORT 293

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(h) Provisions; contingent liabilities and contingent assets (i) Related parties (continued)

In cases where there is a present legal or contractual obligation as a result of past events, it b) An entity is related to a reporting entity if any of the following conditions applies:
is probable that an outflow of resources embodying economic benefits will arise to settle the
i. The entity and the reporting entity are members of the same group (which
obligation, and the amount of the obligation can be reliably estimated, Group management
means that each parent, subsidiary and fellow subsidiary is related to
allocates a provision for the amount of the obligation in the accompanying consolidated
the others).
financial statements. Provisions are calculated based on the Group management's best
estimate of the expenditure to be made to settle the obligation as of the balance sheet ii. One entity is an associate or joint venture of the other entity (or an associate
date and are discounted to present value where the effect of time value of money is or joint venture of a member of a group of which the other entity is a member).
material. It is defined as a current liability that will result in an outflow of resources resulting
from past events and which, in case of fulfillment, will contain economic benefits. iii. Both entities are joint ventures of the same third party.

iv. One entity is a joint venture of a third entity and the other entity is an
Contingent liabilities are reviewed to determine if there is a possibility that the outflow of
associate of the third entity,
economic benefits will be required to settle the obligation. Except for the economic benefit
outflow possibility is remote such contingent liabilities are disclosed in the notes to the v. The entity is a post-employment benefit plan for the benefit of employees of
consolidated financial statements. either the reporting entity or an entity related to the reporting entity. If the
reporting entity is itself such a plan, the sponsoring employers are also related
If the entry of the economic benefit to the Group is possible, explanations are included in to the reporting entity.
the disclosures of the consolidated financial statements about the contingent asset if the
entry of economic benefit is certain, the asset and its related income changes are included vi. The entity is controlled or jointly controlled by a person identified in (a).
in the consolidated financial statements at the date that they occurred.
vii. A person identified in (a)(i) has significant influence over the entity or is a
member of the key management personnel of the entity (or of a parent of the
(i) Related parties entity).

A related party is a person or entity that is related to the entity that is preparing its financial viii. The entity, or any member of a group of which it is a part, provides key
statements (in this Standard referred to as the ‘reporting entity’). management personnel services to the reporting entity or to the parent of the
reporting entity.
a) A person or a close member of that person’s family is related to a reporting entity if
that person: (j) Revenue

i. has control or joint control of the reporting entity; (i) General model for accounting of revenue
ii. has significant influence over the reporting entity; or In accordance with TFRS 15, a five-step model is followed in recognizing revenue for all
iii. is a member of the key management personnel of the reporting entity or of a contacts with customers.
parent of the reporting entity.

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Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(j) Revenue (continued) (j) Revenue (continued)
(i) General model for accounting of revenue (continued) (i) General model for accounting of revenue (continued)

Step 1: Identify the contract Step 3: Determine the transaction price

A contract exists only if it is legally enforceable, the collection of the consideration is In order to determine the transaction price, the Group assesses how much consideration it
probable, the rights to goods and services and payment terms can be identified, the expects to be entitled to by fulfilling the contract. In arriving at the assessment, the Group
contract has commercial substance; and the contract is approved and the parties are considers variable elements of consideration, as well as the existence of a significant
committed to their obligations. financing component.

If either contracts were negotiated as a single commercial package, or consideration in Significant financing component
one contract depends on the other contract or goods or services (or some of the goods or
The Group revises the promised amount of consideration for the effect of a significant
services) are a single performance obligation the Group accounts the contracts as a single
financing component to the amount that reflects what the cash selling price of the promised
contract.
good or service. As a practical expedient, the Group does not adjust the transaction price
Step 2: Identify the performance obligations for the effects of a significant financing component if, at contract inception, the entity
expects the period between customer payment and the transfer of goods or services to
The Group defines ‘performance obligation’ as a unit of account for revenue recognition. be one year or less. In cases where advance for the services are received and the payment
The Group assesses the goods or services promised in a contract with a customer and scheme is broadly aligned with the Group’s performance throughout the period, the Group
identifies as: concludes that the period between performance and payment is never more than 12
months, therefore the expedient is applied.
(a) a performance obligation either a good or service that is distinct; or
(b) or a series of distinct goods or services that are substantially the same and have Variable cost
the same pattern of transfer to the customer.
The Group identifies items such as price concessions, incentives, performance bonuses,
The Group describes a good or service specified in the contract as a different good or completion bonuses, price adjustment clauses, penalties, discounts, credits, or similar items
service, if it can describe them separately from the other undertakings in the contract may result in variable consideration if there is any in a customer contract.
and ensures that the customer can use the said good or service solely or together with
other resources made available to it. A contract may contain an undertaking to provide Step 4: Allocate the transaction price
a series of different goods or services which are essentially the same. At the beginning
If distinct goods or services are delivered under a single arrangement, then the consideration
of the contract, a business determines whether a series of goods or services is a single
is allocated based on relative stand-alone selling prices of the distinct goods or services
performance obligation.
(performance obligations). If directly observable stand-alone selling prices are not available,
the total consideration in the service contracts is allocated based on their expected cost
plus a margin.

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Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(j) Revenue (continued) (j) Revenue (continued)
Stage 5: Revenue recognition franchises nor does the Group earn franchise fees on these agreements. The Group
recognizes revenues from franchisees on a principal basis as gross when the control has
The Group recognizes revenue over-time if any of the following conditions is met:
been transferred to the franchisees.
Ɋ Customer simultaneously receives and consumes the benefits as the entity
performs, or In addition, the Group has consignments in certain department stores. Revenue from these
Ɋ The customer controls the asset as the entity creates or enhances it, or consignments is recognized only after they are sold to the end customer as defined above.
Ɋ Group’s performance does not create an asset for which the entity has an use; E-commerce represents direct sales that the Group makes to consumers on own mavi.com
and alternative there is a right to payment for performance to date. websites. Revenue is recognized when persuasive evidence exists, usually in the form of an
executed sales agreement that the significant risk and rewards of ownership have been
For each performance obligation that is satisfied over time, an entity selects a single
transferred to the buyer, recovery of the consideration is probable, the associated costs
measure of progress, which depicts the transfer of control of the goods or services to the
and possible return of goods can be estimated reliably, there is no continuing management
customer. The Group uses a method that measures the work performed reliably.
involvement with the goods, and the amount of revenue can be measured reliably. If a
rebate is likely to be granted and the amount can be reliably measured, the deduction
If a performance obligation is not satisfied over time, then the Group recognize revenue at
amount is deducted from revenue at the time revenue is recorded.
the point in time at which it transfers control of the good or service to the customer.

The Group also generates revenue in the form of royalty fees.

The Group recognizes a provision in accordance with TAS 37 “Provisions, Contingent
Liabilities and Contingent Assets” when the unavoidable costs of meeting the obligations
Corporate cards given to customers during the reporting period are valid until a specific
under a contract exceed the economic benefits.
maturity date. Unused balance of the corporate cards are recognized as revenue following
Goods sold the expiration date.

In overall, the Group has wholesale, retail and e-commerce business. Retail sales represent Loyalty programme
sales to consumers at mono-brand Mavi stores that the Group operates. Revenue is
recognized when the control is transferred to the buyer. Revenue from the sale of goods For customer loyalty programmes, the fair value of the consideration receivable in respect
through retail business in the course of ordinary activities is measured at the fair value of of the initial sale is allocated to the “Kartuş Card Points”. The present fair value of the Kartuş
the consideration received in cash or credit card. The discount is recognized as a reduction Card Points, which can be redeemed as discount against future purchases by customers,
of revenue as the sales are recognized. is estimated by taking into account the expected redemption rate and the timing of such
expected redemptions. Such amount is deferred and revenue is recognized only when the
Wholesale sales are to third-party retailers that then on-sell to consumers. The wholesale points are redeemed and the Group has fulfilled its obligations to supply the discounted
channel includes Mavi mono-brand stores operated by franchisees, department store products. The amount of revenue recognized in those circumstances is based on the number
chains, corner shops, and third-party online channels. The Group signs franchise agreements of points that have been redeemed in exchange for discounted products, relative to the
with franchises. However, the Group does not send consignment inventory to these total number of points that is expected to be redeemed.

298 2022 ANNUAL REPORT 299

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(k) Income from investing activities and expenses from investing activities (o) Tax

Income from investment activities includes income from sales of property, plant and Tax expense comprises of current and deferred tax. Current and deferred tax is recognised
equipment and scrap. in profit or loss except to the extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.
Expenses from investment activities include expenses incurred by sales of property, plant
and equipment. (i) Current tax

(l) Earnings per share Current tax is the expected tax payable or receivable on the taxable income or loss for the
period, using tax rates enacted or substantively enacted at the reporting date, and any
Earnings per shares is calculated by dividing the consolidated profit/(loss) for the period
adjustment to tax payable in respect of previous years.
attributable to ordinary shareholders by weighted average number of ordinary shares
outstanding during the period.
Turkish tax legislation does not permit a parent company and its subsidiary to file a
(m) Research and development expenses consolidated tax return. Therefore, provisions for taxes, as reflected in the consolidated
financial statements, have been calculated on a separate-entity basis.
The Group has a separate department which operates to research and develop new
fabric and design. As a result of these operations of the department, sample productions (ii) Deferred tax
are made including new collections’ desgins. Costs incurred on development projects are
Deferred tax is recognized on temporary differences between the carrying amounts of
recognised as intangible assets only if the cost can be measured reliably. Other development
assets and liabilities in the consolidated financial statements and the corresponding tax
expenditures are recognised as an expense as incurred. Development costs that have
bases which is used in the computation of taxable profit. Deferred tax is not recognised for
been capitalised are amortised on a straight-line basis over their estimated useful lives (1
the following temporary differences:
year).

(n) Finance income and finance cost Ɋ the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit,
Finance costs comprise interest expense on borrowings, impairment losses recognised
Ɋ differences relating to investments in subsidiaries to the extent that it is
on financial assets, (other than trade receivables). Borrowing costs that are not directly
probable that they will not reverse in the foreseeable future,
attributable to the acquisition, construction or production of a qualifying asset are
Ɋ taxable temporary differences related to initial recognition of goodwill.
recognised in profit or loss using the effective interest method.
Foreign currency gains and losses on financial assets and financial liabilities (other than Deferred tax assets are recognized if it is probable that taxable profits will be sufficient to
trade receivables and payables) are reported on a gross basis as either finance income or offset unused prior year tax losses, tax benefits and deductible temporary differences in
finance cost depending on whether foreign currency movements are in a net gain or net the future. Taxable profit is determined according to the business plans of each subsidiary
loss position. Interest income or expense is recognised using the effective interest method. in the Group. A deferred tax asset is recognised for unused tax losses, tax credits and
Dividend income is recognised in profit or loss on the date on which the Group’s right to deductible temporary differences to the extent that is probable that future taxable profits
receive payment is established. will available against which they can be utilised.

300 2022 ANNUAL REPORT 301

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(o) Tax (continued) (p) Government grants

(ii) Deferred tax (continued) The Group obtains government incentives under the Turquality program from Turkish Republic
Ministry of Economy. The Group is initially recongnises government grants related to trade
The measurement of deferred tax liabilities and assets reflects the tax consequences that mark developments in international markets in profit or loss as deduction of relevant selling,
would follow from the manner in which the Group expects, at the reporting date, to recover marketing and distribution expenses at fair value when there is reasonable assurance that
or settle the carrying amount of its assets and liabilities. the incentives will be received.

The Company and its consolidated subsidiaries have reflected their deferred tax assets (q) Measurement of fair value
and liabilities in their financial statements, but there has been no netting on a consolidated
basis. ‘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 in the
(iii) Tax risk principal or, in its absence, the most advantageous market to which the Group has access
at that date. The fair value of a liability reflects its non-performance risk.
The Group takes into account whether the Group has the uncertain tax position and the
surcharge has to be paid and the tax liability while it determines the current tax expense A number of the Group’s accounting policies and disclosures require the measurement of
and delayed tax expense. The assessment might include judgments about future events fair values, for both financial and non-financial assets and liabilities.
and is based on estimates and assumptions. In case there exists new information about the
adequacy of the Group's current tax liability which will cause a change in the professional When one is available, the Group measures the fair value of an instrument using the quoted
judgment; this change will affect the period which the situation emerges. price in an active market for that instrument. A market is regarded as ‘active’ if transactions
for the asset or liability take place with sufficient frequency and volume to provide pricing
(iv) Transfer pricing
information on an ongoing basis.
The transfer pricing provisions have been stated under the Article 13 of Corporate Tax
Law with the heading of “disguised profit distribution via transfer pricing”. The General If there is no quoted price in an active market, then the Group uses valuation techniques that
Communiqué on disguised profit distribution via transfer pricing dated 18 November 2007 maximise the use of relevant observable inputs and minimise the use of unobservable inputs.
sets details about implementation. The chosen valuation technique incorporates all of the factors that market participants
would take into account in pricing a transaction.
If a tax payer enters into transactions regarding sale or purchase of goods and services
with related parties, where the prices are not set in accordance with arm’s length basis, If an asset or a liability measured at fair value has a bid price and an ask price, then the
then related profits are considered to be distributed in a disguised manner through transfer Group measures assets and long positions at a bid price and liabilities and short positions
pricing. Such disguised profit distributions through transfer pricing are not accepted as a at an ask price.
tax deductible for corporate income tax purposes.

302 2022 ANNUAL REPORT 303

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.5 Summary of significant accounting policies (continued)
(q) Measurement of fair value (continued) (q) Measurement of fair value (continued)

(i) Financial assets

The best evidence of the fair value of a financial instrument on initial recognition is normally
the transaction price–i.e. the fair value of the consideration given or received. If the Group Cash and cash equivalents are presented on cost basis and are assumed to reflect their
determines that the fair value on initial recognition differs from the transaction price and fair values as they are liquid and classified as current assets.
the fair value is evidenced neither by a quoted price in an active market for an identical
asset or liability nor based on a valuation technique for which any unobservable inputs are Trade receivables are presented netted off related doubtful portion of the receivable and
judged to be insignificant in relation to the measurement, then the financial instrument is are assumed to reflect their fair value.
initially measured at fair value, adjusted to defer the difference between the fair value on Derivative financial instruments reflect their fair value as they include hedging transactions.
initial recognition and the transaction price. Subsequently, that difference is recognised in The classification of derivative financial instruments for fair value measurement is Level 2.
profit or loss on an appropriate basis over the life of the instrument but no later than when
the valuation is wholly supported by observable market data or the transaction is closed (ii) Other non-derivative financial liabilities
out.
Forward exchange contracts
When measuring the fair value of an asset or a liability, the Group uses observable market The fair values of forward exchange contracts are based on broker quotes. Those quotes
data as far as possible. Fair values are categorised into different levels in a fair value are tested for reasonableness by discounting estimated future cash flows based on the
hierarchy based on the inputs used in the valuation techniques as follows: terms and maturity of each contract and using market interest rates for a similar instrument
at the measurement date. Fair values reflect the credit risk of the instrument and include
Ɋ Level 1: quoted prices (unadjusted) in active markets for identical assets and adjustments to take account of the credit risk of the Group entity and counterparty when
liabilities. appropriate.
Ɋ Level 2: inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from
(iii) Property, plant and equipment
prices).
Ɋ Level 3: inputs for the asset or liability that are not based on observable market The fair value of property, plant and equipment recognised as a result of a business
data. combination is the estimated amount for which a property could be exchanged on the
date of acquisition between a willing buyer and a willing seller in an arm’s length transaction
If the inputs used to measure the fair value of an asset or a liability fall into different levels
after proper marketing wherein the parties had each acted knowledgeably and willingly.
of the fair value hierarchy, then the fair value measurement is categorised in its entirety in
The fair value of items of equipment, fixtures and fittings is based on the market approach
the same level of the fair value hierarchy as the lowest level input that is significant to the
and cost approaches using quoted market prices for similar items when available and
entire measurement.
replacement cost when appropriate. Depreciated replacement cost reflects adjustments
for physical deterioration as well as functional and economic obsolescence.

304 2022 ANNUAL REPORT 305

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.5 Summary of significant accounting policies (continued) 2.7 New and Amended Turkish Financial Reporting Standards
(q) Measurement of fair value (continued) a) Amendments that are mandatorily effective from 2022
(iv) Intangible assets Amendments to TFRS 3 Reference to the Conceptual Framework
Amendments to TAS 16 Property, Plant and Equipment–Proceeds before Intended Use
The fair value of intangible assets is based on the discounted cash flows expected to be
Amendments to TAS 37 Onerous Contracts–Cost of Fulfilling a Contract
derived from the use and eventual sale of the assets.
Amendments to IAS 8 Definition of Accounting Estimates
The fair value of customer relationships acquired in a business combination are determined Annual Improvements to TFRS Standards Amendments to TFRS 1, TFRS 9 and TAS 41
according to the income approach. 2018-2020
Amendments to TFRS 16 COVID-19 Related Rent Concessions beyond 30 June 2021
2.6 Use of accounting judgements and estimates
Amendments to TFRS 3 Reference to the Conceptual Framework
In preparing these consolidated financial statements management has made judgements,
estimates, and assumptions that affects the application of the Group’s accounting policies The amendments update an outdated reference to the Conceptual Framework in TFRS 3
and the reported amounts of assets, liabilities, income, and expenses. Actual results may without significantly changing the requirements in the standard.
differ from these estimates.
The amendments are effective for annual periods beginning on or after 1 January 2022. Early
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to application is permitted if an entity also applies all other updated references (published
estimates are recognized prospectively. together with the updated Conceptual Framework) at the same time or earlier.

Information about assumptions and estimation uncertainties that have a risk of resulting in Amendments to TAS 16 Proceeds before Intended Use
a material adjustment is included in the following notes:
The amendments prohibit deducting from the cost of an item of property, plant and
Ɋ Note 7 Trade receivables: Allowance for doubtful receivables, Expected credit losses. equipment any proceeds from selling items produced while bringing that asset to the
Ɋ Note 9 Inventory: Allowance for inventory impairment. location and condition necessary for it to be capable of operating in the manner intended
Ɋ Note 10 Deferred income: Estimation of loyalty credits that can be redeemed in the by management. Instead, an entity recognizes the proceeds from selling such items, and
next years. the cost of producing those items, in profit or loss.
Ɋ Note 11 and 12 Property equipment and and intangibles: Useful lives.
Ɋ Note 12 and 13 Impairment of intangible assets including goodwill: Key assumptions, The amendments are effective for annual periods beginning on or after 1 January 2022.
underlying recoverable amounts. Early application is permitted.
Ɋ Note 15 and 17 Provision for employee termination benefits: Key actuarial assumptions.
Amendments to TAS 37 Onerous Contracts–Cost of Fulfilling a Contract
Ɋ Note 15 Provisions for sales returns: Estimation of return, provision for upcoming
months using the historical data. The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate
Ɋ Note 30 Deferred tax asset: Estimation of recoverability. directly to the contract’. Costs that relate directly to a contract can either be incremental
costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling
contracts.

306 2022 ANNUAL REPORT 307

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.7 New and Amended Turkish Financial Reporting Standards (continued) 2.7 New and Amended Turkish Financial Reporting Standards (continued)
a) Amendments that are mandatorily effective from 2022 (continued) a) Amendments that are mandatorily effective from 2022 (continued)

Amendments to TAS 37 Onerous Contracts–Cost of Fulfilling a Contract (continued) Amendments to TFRS 16 COVID-19 Related Rent Concessions beyond 30 June 2021
(continued)
The amendments published today are effective for annual periods beginning on or after 1
January 2022. Early application is permitted. On issuance, the practical expedient was limited to rent concessions for which any reduction
in lease payments affects only payments originally due on or before 30 June 2021. Since
Annual Improvements to TFRS Standards 2018-2020 Cycle
lessors continue to grant COVID-19 related rent concessions to lessees and since the effects
of the COVID-19 pandemic are ongoing and significant, the POA decided to extend the
Amendments to TFRS 1 First time adoption of International Financial Reporting Standards
time period over which the practical expedient is available for use.
The amendment permits a subsidiary that applies paragraph D16(a) of TFRS 1 to measure
cumulative translation differences using the amounts reported by its parent, based on the The new amendment is effective for lessees for annual reporting periods beginning on or
parent’s date of transition to TFRSs. after 1 April 2021. Earlier application is permitted.

Amendments to TFRS 9 Financial Instruments The Group assessed that the adoption of these amendments that are effective from 2022
do not have any effect on the Group’s consolidated financial statements.
The amendment clarifies which fees an entity includes in assessing whether to derecognize
a financial liability. An entity includes only fees paid or received between the entity (the
b) New and revised TFRSs in issue but not yet effective (continued)
borrower) and the lender, including fees paid or received by either the entity or the lender
on the other’s behalf. The Group has not yet adopted the following standards and amendments and interpretations
to the existing standards:
Amendments to TAS 41 Agriculture

The amendment removes the requirement in paragraph 22 of TAS 41 for entities to exclude TFRS 17 Insurance Contracts
taxation cash flows when measuring the fair value of a biological asset using a present Amendments to TAS 1 Classification of Liabilities as Current or Non-Current
value technique. This will ensure consistency with the requirements in TFRS 13. Amendments to TFRS 4 Extension of the Temporary Exemption from Applying TFRS 9
Amendments to TAS 1 Disclosure of Accounting Policies
The amendments to TFRS 1, TFRS 9, and TAS 41 are all effective for annual periods beginning Amendments to TAS 8 Definition of Accounting Estimates
on or after 1 January 2022. Early application is permitted. Amendments to TAS 12 Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
Amendments to TFRS 16 COVID-19 Related Rent Concessions beyond 30 June 2021 Amendments to TFRS 17 Initial Application of TFRS 17 and TFRS 9—Comparative
Information (Amendment to TFRS 17)
Public Oversight Accounting and Auditing Standards Authority (“POA”) has published Amendments to TFRS 16 Lease Liability in a Sale and Leaseback
Amendments to TFRS 16 COVID-19 Related Rent Concessions beyond 30 June 2021 that Amendments to TAS 1 Non-current Liabilities with Covenants
extends, by one year, the June 2020 amendment that provides lessees with an exemption
from assessing whether a COVID-19 related rent concession is a lease modification.
308 2022 ANNUAL REPORT 309
Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 2 Basis of presentation of financial statements (continued)
2.7 New and Amended Turkish Financial Reporting Standards (continued) 2.7 New and Amended Turkish Financial Reporting Standards (continued)
b) New and revised TFRSs in issue but not yet effective (continued) b) New and revised TFRSs in issue but not yet effective (continued)

TFRS 17 Insurance Contracts Amendments to TAS 12 Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
TFRS 17 requires insurance liabilities to be measured at a current fulfillment value and
provides a more uniform measurement and presentation approach for all insurance The amendments clarify that the initial recognition exemption does not apply to transactions
contracts. These requirements are designed to achieve the goal of a consistent, principle- in which equal amounts of deductible and taxable temporary differences arise on initial
based accounting for insurance contracts. TFRS 17 supersedes TFRS 4 Insurance Contracts recognition.
as of 1 January 2023.
Amendments to TAS 12 are effective for annual reporting periods beginning on or after 1
Amendments to TAS 1 Classification of Liabilities as Current or Non-Current January 2023 and earlier application is permitted.
The amendments aim to promote consistency in applying the requirements by helping
companies determine whether, in the statement of financial position, debt and other Amendments to TFRS 17 Insurance Contracts and Initial Application of TFRS 17 and TFRS
liabilities with an uncertain settlement date should be classified as current (due or potentially 9—Comparative Information
due to be settled within one year) or non-current. Amendments have been made in TFRS 17 in order to reduce the implementation costs, to
explain the results and to facilitate the initial application.
Amendments to TAS 1 are effective for annual reporting periods beginning on or after 1
January 2023 and earlier application is permitted. The amendment permits entities that first apply TFRS 17 and TFRS 9 at the same time
to present comparative information about a financial asset as if the classification and
Amendments to TFRS 4 Extension of the Temporary Exemption from Applying TFRS 9
measurement requirements of TFRS 9 had been applied to that financial asset before.
The amendment changes the fixed expiry date for the temporary exemption in TFRS 4
Insurance Contracts from applying TFRS 9, so that entities would be required to apply TFRS Amendments are effective with the first application of TFRS 17.
9 for annual periods beginning on or after 1 January 2023 with the deferral of the effective
date of TFRS 17. Amendments to TFRS 16 Lease Liability in a Sale and Leaseback

Amendments to TFRS 16 clarify how a seller-lessee subsequently measures sale and

Amendments to TAS 1 Disclosure of Accounting Policies
leaseback transactions that satisfy the requirements in TFRS 15 to be accounted for as a
The amendments require that an entity discloses its material accounting policies, instead sale.
of its significant accounting policies.

Amendments to TAS 1 are effective for annual reporting periods beginning on or after 1
January 2023 and earlier application is permitted.

310 2022 ANNUAL REPORT 311

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

2 Basis of presentation of financial statements (continued) 3 Segment reporting

2.7 New and Amended Turkish Financial Reporting Standards (continued)
1 February 2022-31 January 2023 1 February 2021-31 January 2022
b) New and revised TFRSs in issue but not yet effective (continued) Reportable segment Reportable segment
Turkey International Total Turkey International Total
Amendments are effective from annual reporting periods beginning on or after 1 January
Segment revenue (1) 8,829,288 1,762,613 10,591,901 3,752,851 866,468 4,619,319
2024.
-Retail 6,694,253 262,688 6,956,941 2,740,432 90,526 2,830,958
Amendments to TAS 1 Non-current Liabilities with Covenants -Wholesale 1,341,962 1,121,202 2,463,164 591,437 600,586 1,192,023

-E-commerce 793,073 378,723 1,171,796 420,982 175,356 596,338

Amendments to TAS 1 clarify how conditions with which an entity must comply within twelve
months after the reporting period affect the classification of a liability. Segment profit/(loss) before tax 1,654,222 48,861 1,703,083 459,786 79,236 539,022

31 January 2023 31 January 2022

Amendments are effective from annual reporting periods beginning on or after 1 January Reportable segment Reportable segment
2024.
Turkey International Total Turkey International Total
Total segment assets 7,261,292 1,381,452 8,642,744 3,185,132 910,172 4,095,304
The Group evaluates the effects of these standards, amendments and improvements on
Total segment liabilities 5,301,859 608,937 5,910,796 2,455,586 446,361 2,901,947
the consolidated financial statements.

The Group applies TFRS 8 and operating segments are determined based on internal
reports that are regularly reviewed by the Group's decision maker.
The Group has 2 strategic operating segments as Turkey and International based on the
geographical areas where sales are generated. These divisions are managed separately
because they require different trading and marketing strategies. International segment
comprises Europe, USA, Canada, Russia and rest of the world.

Segment revenue comprised of third-party sales after elimination between consolidated

(1)

entities.

312 2022 ANNUAL REPORT 313

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

4 Cash and cash equivalents 5 Financial borrowings

As of 31 January 2023 and 31 January 2022 cash and cash equivalents comprises the As at 31 January 2023 and 31 January 2022, financial borrowings comprise the following:
following:
31 January 2023 31 January 2022 31 January 2023 31 January 2022
Cash on hand 6,535 2,974 Current liabilities
Cash at banks 2,722,275 1,210,973 Unsecured bank loans 813,247 644,828
Demand deposits 136,294 91,449 Current portion of unsecured bank loans 217,297 245,780
Time deposits 2,585,981 1,119,524 Issued debt ınstruments 509,972 --
Other cash and cash equivalents 494,302 264,662 Lease liabilities 350,245 229,295
Cash and cash equivalents in the statement of cash flow 3,223,112 1,478,609 1,890,761 1,119,903
Time deposit interest accrual 21,500 3,008 Non-current liabilities

3,244,612 1,481,617 Lease liabilities 289,816 276,630

289,816 276,630
As at 31 January 2023 and 31 January 2022, other cash and cash equivalents consist of
credit card receivables with maturities less than 3 months.
As of 31 January 2023 and 31 January 2022, the Group's total bank borrowings and lease
As at 31 January 2022 and 2021, the details of time deposits based on maturity dates and payables are as follows:
interest rates of the Groups are as below:
31 January 2023 31 January 2022
Maturity Interest rate 31 January 2023 Bank loans(1) 1,030,544 890,608
TL 1 February -3 March 2023 11.00%-29.75% 2,506,440 Issued debt instruments 509,972 --
USD 1 February 2023 0.50% 71,769 Lease liabilities 640,061 505,925
EUR 1 February 2023 0.50% 7,772 2,180,577 1,396,533
2,585,981
Bank loans comprise financial liabilities to participation banks amounting to TL 187,769
(1)

(31 January 2022: TL 86,846).

Maturity Interest rate 31 January 2022
TL 1 February -1 March 2022 14.5%-20.5% 1,065,935 As of 31 January 2023 and 31 January 2022 the repayments of bank loan agreements
USD 1 February 2022 0.50% 33,132 according to the original maturities comprised the following:
EUR 1 February 2022 0.25% 20,457
1,119,524
31 January 2023 31 January 2022

As of 31 January 2023 and 31 January 2022, there is no restriction or blockage on cash and Less than one year 1,540,516 890,608
cash equivalents. The Group’s exposure to foreign currency credit risk, interest rate risk and 1,540,516 890,608
related sensitivity analyses are disclosed in Note 34.

314 2022 ANNUAL REPORT 315

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

5 Financial borrowings (continued) 5 Financial borrowings (continued)

As of 31 January 2023 and 2022 maturities and conditions of outstanding bank loans The movement of borrowings for the year ended 31 January 2023 and 31 January 2022 is
comprised the following: as follows:

31 January 2023 31 January 2022

31 January 2023
1 February balance 890,608 926,541
Nominal Carrying
Currency interest rate% Maturity Face value amount Proceeds from borrowings 1,286,528 736,901

Unsecured bank loans TL 16.50%-28.00% 2023 894,000 948,588 Repayment of borrowings (762,280) (886,251)

Unsecured bank loans USD 6.89% 2023 16,909 16,909 Interest accrual 51,978 2,893

Unsecured bank loans RUB 13.50% 2023 13,419 13,830 Currency translation differences 69,248 86,993

Unsecured bank loans CAD 7.20% 2023 50,934 51,217 Change in exchange rates 4,434 23,531

Issued debt instruments TL 33.50%-35.18% 2024 500,000 509,972 31 January balance 1,540,516 890,608

1,475,262 1,540,516

The movement of lease liabilities for the year ended 31 January 2023 and 31 January 2022
31 January 2022 is as follows:
Nominal Carrying
Currency interest rate% Maturity Face value amount 31 January 2023 31 January 2022
Unsecured bank loans EUR 0.70% 2022 60,614 60,828 1 February balance 505,925 478,618
Unsecured bank loans TL 8.72%-25.20% 2022-2023 682,234 692,835 Payments of lease liabilities (429,847) (269,864)
Unsecured bank loans USD 2.00%-3.26% 2022 40,205 40,524 Covid discount (Note 28) -- (51,211)
Unsecured bank loans RUB 9.50%-12.00% 2022-2023 91,134 91,891 Lease modifications 351,367 168,248
Unsecured bank loans CAD 2.95% 2022 4,530 4,530 Interest on lease liabilities 83,397 70,711
878,717 890,608 New lease contracts 80,113 43,830

The Group’s exposure to liquidity, foreign currency and interest rate risk as well as related Currency translation differences 60,423 71,077

sensitivity analyses for financial liabilities are disclosed in Note 34. Change in exchange rates (458) 610
Terminations (10,859) (6,094)
31 January balance 640,061 505,925

316 2022 ANNUAL REPORT 317

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

5 Financial borrowings (continued) 6 Related party disclosures (continued)

(a) Related party balances (continued)
Short term portion of long term liabilities 31 January 2023 31 January 2022
The balance of trade payables to related parties for the periods ended 31 January 2023
Lesase liabilities 409,849 273,248
and 31 January 2022 is as follows.
Deferred lease borrowing cost (-) (59,604) (43,953)
350,245 229,295 31 January 2023 31 January 2022
Long term lease liabilities Trade payables to related parties
Erak(1) 193,311 144,281
Leases liabilities 346,321 334,258
Akay Lelmalabis Elgazhizah LLC (“Akay”) (2)
130,630 68,522
Deferred lease borrowing costs (-) (56,505) (57,628)
323,941 212,803
289,816 276,630
Total contractual lease liabilities 640,061 505,925 Amounts due to Erak, a company controlled by immediate family members of the
(1)

shareholder of the parent company, are for purchases of inventory. Amounts are non-
interest bearing and have 90 days repayment date.
6 Related party disclosures Amount comprise of inventory purchases to subsidiary Akay situated in Egypt. Amounts
(2)

are non-interest bearing and have 90 days repayment date.

Related parties in consolidated financial statements are determined as key management
personnel, board of directors, family members, subsidiaries controlled by the Company. As at 31 January 2023 and 31 January 2022, Other receivable to related parties comprised
Several related party transactions are carried out during ordinary course of the business. the following:

As of 31 January 2023, the members of the Akarlılar Family (Fatma Elif Akarlılar, Hayriye 31 January 2023 31 January 2022
Fethiye Akarlılar and Seyhan Akarlılar) are the controlling shareholders of the Group with a Other receivables from related parties
total ownership interest of 27.41% where 27.19% is the direct ownership interest and 0.22% is Mavi USA shareholders 12,216 --
the indirect ownership interest through Blue International Holding B.V. 12,216 --

(a) Related party balances

As of 31 January 2023, there are no short-term trade receivables from related parties (31 As at 31 January 2023 and 31 January 2022, other short-term payables to related parties
January 2022: None). comprised the following:
31 January 2023 31 January 2022
Advances given to related parties 31 January 2023 31 January 2022
Other payables to related parties
Erak Giyim Sanayi Ticaret A.Ş.("Erak")(1) 82,365 86,982
Eflatun Giyim shareholders 41 41
82,365 86,982
Short-term other payables to related parties 41 41
(1)
Advances given to Erak is related to fabric purchases and are tracked in prepaid expenses.

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Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

6 Related party disclosures (continued) 6 Related party disclosures (continued)

(a) Related party balances (continued) (b) Related party transactions (continued)
As at 31 January 2023 and 31 January 2022, lease liabilities to related parties comprised As of 31 January 2023 and 31 January 2022, the services from related parties of the Group
the following: comprised the following:
31 January 2023 31 January 2022
1 February 2022– 1 February 2021–
Short-term lease liabilities to related parties
31 January 2023 31 January 2022
Sylvia House Inc. 184 1,464
Mavi Jeans Holding Inc. 275 2,408 Services from related parties

459 3,872 Erak (1) 4,370 2,255

Mavi Jeans Holding Inc.(2)
3,433 1,799
Sylvia House Inc.(3) 2,495 1,442

31 January 2023 31 January 2022 10,298 5,496

Long-term lease liabilities to related parties
Sylvia House Inc. -- 133
(1)
The Group rented Çerkezköy and Bayrampaşa retail stores from Erak.
Mavi Jeans Holding Inc. -- 197
(2)
Mavi Canada rented its Office and warehouse from Mavi Jeans Holding Inc.
-- 330
(3)
Mavi Canada rented its office in Yaletown, Vancouver from Sylvia House Inc.

The balance of trade payables to related parties for the periods ended 31 January 2023 (c) Information regarding benefits provided to the Group’s key management
and 31 January 2022 is as follows.
For the year ended 31 January 2023, short-term (salaries and wages, attendance fee,
bonus, holiday overtime, severance payment, premium, and other benefits) and long-term
(b) Related party transactions benefits provided to senior management and board of directors amounted to TL 294,656
(31 January 2022: TL 121,538).
For the years ended 31 January 2023 and 2022, purchases from related parties of the Group
comprised the following:
1 February 2022– 1 February 2021– 7 Trade receivables and payables
31 January 2023 31 January 2022
Product purchase from related parties
Short-term trade receivables
Erak 1,906,959 730,510
As at 31 January 2023 and 31 January 2022, short-term trade receivables are as follows:
Akay 309,149 110,200
2,216,108 840,710

31 January 2023 31 January 2022

Purchases from related parties comprise approximately one third of total purchases.
Trade receivables from third parties 870,657 394,487
870,657 394,487

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Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

7 Trade receivables and payables (continued) 7 Trade receivables and payables (continued)
Short-term trade receivables (continued) Short-term trade payables (continued)
As at 31 January 2023 and 31 January 2022, trade receivables from third parties are as Trade payables mainly include outstanding amounts arising from trade purchases and
follows: ongoing expenditures. Currency and liquidity risk related to the Group's short-term trade
payables are explained in Note 34. As of 31 January 2023 and 31 January 2022, the Group's
short-term trade payables to third parties are as follows:
31 January 2023 31 January 2022
Receivables 754,730 344,531 31 January 2023 31 January 2022

Post-dated cheques 7,483 5,322 Trade payables(1) 2,538,840 932,373

Endorsed cheques 20,702 6,179 Expense accruals 97,740 43,470

Notes receivables 91,917 40,622 2,636,580 975,843

Expected credit losses (-) (4,175) (2,167)

Doubtful receivables 53,262 37,265 TL 458,511 (31 January 2022: TL 243,372) of trade payables consists of import factoring
Allowance for doubtful receivables (-) (53,262) (37,265) payables and TL 892,744 (31 January 2022: TL 278,358) consists of supplier financing payables.
The Company carries out import factoring for its goods purchases from abroad. Within the
870,657 394,487
scope of import factoring, foreign suppliers transfer their receivables from the Company to
The provision for the doubtful receivables is determined based on the past experience of the financial institutions they work with, with the Company's confirmation of assignment.
non-collectible receivables. Within the scope of supplier financing, domestic suppliers transfer their receivables from
the Company to the financial institutions with which the Company works with confirmation
Details related to Group’s exposure to credit and foreign currency risk and impairment of assignment.
losses for short term trade receivables is disclosed in Note 34.

8 Other receivables and payables

Short-term trade payables
Other short-term trade receivables
As at 31 January 2022 and 31 January 2021, short term trade payables of the Group are as
follows: As at 31 January 2023 and 2022, short term other receivables of the Group are as follows:

31 January 2023 31 January 2022 31 January 2023 31 January 2022

Trade payables to third parties 2,636,580 975,843 Other receivables from third parties 19,194 33,211

Trade payables to related parties (Note 6) 323,941 212,803 19,194 33,211

2,960,521 1,188,646

322 2022 ANNUAL REPORT 323

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

8 Other receivables and payables (continued) 8 Other receivables and payables (continued)
Other short-term trade receivables (continued) Short term other payables

As at 31 January 2023 and 31 January 2022, short-term other receivables from third parties As at 31 January 2023 and 2022, short term other payables of the Group are as follows:
of the Group are as follows:
31 January 2023 31 January 2022
31 January 2023 31 January 2022
Other payables to third parties 39,721 18,978
Receivables from public institutions (1)
1,952 5,394
Other payables to related parties (Note 6) 41 41
Other short-term receivables 17,242 27,817
39,762 19,019
19,194 33,211

Receivables from public institutions consist of the Group’s receivables related to Turquality
(1) As at 31 January 2023 and 2022, other payables to third parties of the Group are as follows:
incentive program amounting to TL 62 (31 January 2022: TL 76) and value added tax
receivables amounting to TL 870 (31 January 2022: TL 4,300). 31 January 2023 31 January 2022
Taxes and duties payable 32,375 18,401
The Group’s exposure to credit and foreign currency risk for short term other receivables are Other payables 7,346 577
disclosed in Note 34. 39,721 18,978

Long-term other receivables The Group’s exposure to foreign currency and liquidity risk for other short term payables is
disclosed in Note 34.
As at 31 January 2023 and 2022, long term other receivables of the Group are as follows:

31 January 2023 31 January 2022

Other receivables from third parties 10,575 6,354
9 Inventories
10,575 6,354
As at 31 January 2023 and 2022, inventories are as follows:

The Group’s exposure to credit and foreign currency risk for long term other receivables are 31 January 2023 31 January 2022
disclosed in Note 34. Trade goods 2,257,791 737,768
Consignment trade goods 152,511 41,290
Goods in transit 5,472 5,265
Provision for impairment on inventory (-) (108,188) (32,925)
2,307,586 751,398

As at 31 January 2023 there is no restriction/ pledge on inventories (31 January 2022: none).

324 2022 ANNUAL REPORT 325

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

9 Inventories (continued) 10 Prepaid expenses and deferred incomes

As at 31 January 2023 and 31 January 2022, movement of the provision for inventory Short and long-term prepaid expenses
impairment is as follows:
As at 31 January 2023 and 2022, the remaining balance of prepayments under current and
non-current assets is as follows:
31 January 2023 31 January 2022
Opening balance 32,925 26,222 31 January 2023 31 January 2022
Provision for the year 90,857 20,572 Advances given (1)
131,305 90,731
Effect of movements in exchange rates 7,827 6,212 Prepaid sales marketing and advertising expenses 20,222 10,080
Write-off (23,421) (20,081) Prepaid license expenses 7,192 3,347
Closing balance 108,188 32,925 Prepaid general administrative expenses 5,890 4,563
Prepaid insurance expenses 4,710 1,789
As of the year ending on 31 January 2023, inventories of TL 90,857 (31 January 2022: TL Prepaid rent expenses 2,068 5,653
20,572) were recognised as an expense for slow moving inventory and net realizable value Prepaid stamp tax and duties expenses 861 274
assessment in accordance with Group policies of provision for impairment on inventory Other prepaid expenses 23,894 4,236
during the year and included in “cost of sales”. In addition, for the year ended on 31 January Total prepaid expenses 196,142 120,673
2023, inventories of TL 23,421 (31 January 2022; TL 20,081) were disposed and written off. Long-term prepaid expenses -- 7
Short-term prepaid expenses 196,142 120,666

(1)
Advances given mainly comprise of advances given to producers and service providers including fabric
advances given to Erak (Note 6).

Deferred revenue

As at 31 January 2023 and 31 January 2022, deferred income of the Group are as follows:

31 January 2023 31 January 2022

Customer loyalty programme (1)
46,128 19,159
Salary protocol 54,237 1,318
Corporate sales (2)
14,258 8,835
Rent income 1,054 1,244
Total deferred revenue 115,677 30,556
Short term deferred revenue 81,668 29,826
Long term deferred revenue 34,009 730

The deferred income related to loyalty credits granted has been estimated with reference to the past
(1)

usage rates.

(2)
Corporate sales consist of prepaid cards which are given to corporate firms.

326 2022 ANNUAL REPORT 327

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

11 Property, plant and equipment 11 Property, plant and equipment (continued)

The movement of property and equipment for the year ended 31 January 2023 and 31 The movement of property and equipment for the year ended 31 January 2023 and 2022
January 2022 is as follows: is as follows:
Furniture Leasehold Construction in Furniture and Leasehold Construction
Vehicles Total
Vehicles and fixtures improvements progress Total fixtures improvements in progress
Cost Accumulated Depreciation
1 February 2021 opening balance 186 318,091 238,169 16,243 572,689 1 February 2021 opening balance 186 211,053 163,771 -- 375,010
Additions -- 58,179 40,971 31,142 130,292 Foreign currency translation effect -- 24,358 17,736 -- 42,094
Disposals (41) (1,724) (2,067) -- (3,832) Depreciation for the year -- 34,036 27,970 -- 62,006
Foreign currency translation effect -- 34,469 25,862 2,460 62,791 Disposals (41) (1,641) (1,888) -- (3,570)
Transfers(1) -- 6,036 7,524 (40,973) (27,413) 31 January 2022 closing balance 145 267,806 207,589 -- 475,540
31 January 2022 closing balance 145 415,051 310,459 8,872 734,527
1 February 2022 opening balance 145 267,806 207,589 -- 475,540
1 February 2022 opening balance 145 415,051 310,459 8,872 734,527 Foreign currency translation effect -- 27,125 15,806 -- 42,931
Additions -- 112,581 91,346 16,888 220,815 Depreciation for the year -- 52,174 39,250 -- 91,424
Disposals -- (14,214) (10,390) -- (24,604) Disposals -- (13,294) (8,786) -- (22,080)
Foreign currency translation effect -- 41,211 22,543 1,750 65,504 31 January 2023 closing balance 145 333,811 253,859 -- 587,815
Transfers(1) -- 4,678 3,858 (21,511) (12,975) Net book value
31 January 2023 closing balance 145 559,307 417,816 5,999 983,267 31 January 2022 balance -- 147,245 102,870 8,872 258,987
31 January 2023 balance -- 225,496 163,957 5,999 395,452
Transfers of TL 12,975 as of 31 January 2023, and TL 27,413 as of 31 January 2022 are related
(1)

to transfers to intangible assets. For the year ended 31 January 2023, TL 19,976 (31 January 2022: TL 10,501) of depreciation
expenses are included under administrative expenses, TL 71,194 (31 January 2022: TL 51,457)
under selling, marketing and distribution expenses and TL 254 (31 January 2022: TL 48)
under research and development expenses.

As of 31 January 2023, there is no pledge on property, plant and equipment (31 January
2022: nil).

As at 31 January 2023 the amount of insurance on property, plant and equipment is TL

1,593,295 (31 January 2022: TL 472,454).

328 2022 ANNUAL REPORT 329

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

12 Intangible assets 12 Intangible assets (continued)

The movement of intangible assets As of 31 January 2023 and 31 January 2022 are as
Customer Development
follows: Licenses Brand Total
relationships Costs
Amortisation
Customer Development
1 February 2021 balance 56,836 39,973 384 16,550 113,743
Cost Licenses relationships Brand Costs(1) Total
1 February 2021 balance 74,637 82,244 923 29,712 187,516 Foreign currency translation effect 6,865 35,529 -- -- 42,394
Additions(2) 15,546 -- -- 18,109 33,655 Current year amortization 13,556 10,645 43 12,698 36,942
Transfer from property, plant and Disposals (14) -- -- -- (14)
equipment 9,599 65,788 -- -- 75,387 31 January 2022 balance 77,243 86,147 427 29,248 193,065
Foreign currency translation effect 27,413 -- -- -- 27,413
Disposals (17) -- -- -- (17)
1 February 2022 balance 77,243 86,147 427 29,248 193,065
31 January 2022 balance 127,178 148,032 923 47,821 323,954
Foreign currency translation effect 7,494 34,539 -- -- 42,033

1 February 2022 balance 127,178 148,032 923 47,821 323,954 Current year amortization 23,594 19,188 49 19,357 62,188
Additions(2) 40,599 -- -- 34,737 75,336 Disposals (1,552) -- -- -- (1,552)
Transfer from property, plant and 31 January 2023 balance 106,779 139,874 476 48,605 295,734
equipment 12,975 -- -- -- 12,975
Foreign currency translation effect 13,411 56,878 -- -- 70,289
Carrying amount
Disposals (1,552) -- -- -- (1,552)
31 January 2022 balance 49,935 61,885 496 18,573 130,889
31 January 2023 balance 192,611 204,910 923 82,558 481,002
31 January 2023 balance 85,832 65,036 447 33,953 185,268

Consist of capitalized design and development expensesin accordance with incentive

(1)

programme. For the year ended 31 January 2023, TL 31,285 (31 January 2022: TL 18,465) of amortisation
expenses are included under general administrative expenses and TL 13,650 (31 January
(2)
Development costs consist TL 1,195 capitalized amortisation expenses (31 January 2022: 2022: TL 7,979) under selling, marketing and distribution expenses, and TL 16,058 (31 January
TL 118). 2022: TL 10,380) under research and development expenses.

The depreciation charge of TL 1,195 for the period ended 31 Januray 2023 is capitalized in
accordance with incentive program. (31 January 2022: TL 118).

330 2022 ANNUAL REPORT 331

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

13 Goodwill 13 Goodwill (continued)

The movement of goodwill as at 31 January 2023 and 2022 is as follows: Impairment testing for CGUs containing goodwill

Cost 31 January 2023 31 January 2022 A valuation of the fair value of CGU of Mavi USA and Mavi Canada as two separate CGU’s
As of 1 February 344,315 190,242 was performed by the Company management As of 31 January 2023 and 2022. The income
Foreign currency translation effect 134,358 154,073
approach (discounted cash flow method) is used to determine the fair value of CGUs of
Mavi USA and Mavi Canada.
As of 31 January 478,673 344,315
The Group used 5 years business plans prepared by the Company management for the
Impairment loss
valuation of CGUs. The growth of business plans of Mavi USA and Mavi Canada is associated
As of 1 February (1,297) (1,297) with an increase in the number of customers and growth in the market.
Impairment loss -- --
As of 31 January 2023, the impairment test performed on CGU based is resulted with no
As of 31 January (1,297) (1,297)
impairment loss to be recorded for Mavi USA and Mavi Canada. The discount rate and
the final growth rate, which are two important assumptions used in the impairment test,
Net book value were taken as 10% above or below the management estimates, and sensitivity analysis is
As of 31 January 477,376 343,018 performed and no impairment is detected.

Key assumptions used in discounted cash flow projections

Impairment test for cash generating units with allocated goodwill
Key assumptions used in the calculation of the recoverable amount of Mavi USA are discount
Goodwill is allocated to cash generating units for impairment test purposes. As of 31
rates, terminal value growth rates, and EBITDA margin at terminal value. These assumptions
January 2023 and 31 January 2022, details of cash generating units related to goodwill are
are %12.7; %2.0; %16.0 (31 January 2022:10.9%, 2.0%, 18.9%) respectively. The values assigned
as follows. The carrying amount of goodwill allocated to each cash generating unit are as
to the key assumptions represent management’s assessment of future trends in ground
follows;
handling industry and are based on both external sources and internal sources.

31 January 2023 31 January 2022

Key assumptions used in the calculation of the recoverable amount of Mavi Canada are
discount rates, terminal value growth rates, and EBITDA margin at terminal value. These
Mavi America 431,283 307,641
assumptions are %11.6; %1.9; %10.5 (31 January 2022:10.7%, 1.7%, 13.0%) respectively. The values
Mavi Canada 42,360 31,644
assigned to the key assumptions represent management’s assessment of future trends in
Other 3,733 3,733
ground handling industry and are based on both external sources and internal sources.
477,376 343,018

As of 31 January 2023, the increase in goodwill is related to foreign currency translation

differences on goodwill recognized at foreign subsidiaries.
Goodwill is primarily attributable to the synergies expected to be derived from the integration
of Mavi America and Mavi Canada into the Group's existing business.

332 2022 ANNUAL REPORT 333

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

13 Goodwill (continued) 14 Right-of-use assets

Discount Rate The movement of right-of-use assets for the years ended 31 January 2023 and 31 January
2022 is as follows:
The discount rate is for Mavi USA estimated based on the company specific weighted cost
of capital. Value in use is determined by applying post tax discount rate of 12.7% (31 January
Cost Buildings Store Vehicles Warehouse Total
2022:10.9%).
1 February 2022 balance 113,923 947,587 27,107 47,476 1,136,093
The discount rate is for Mavi Canada estimated based on the company specific average
Additions 589 19,919 21,378 38,227 80,113
weighted cost of capital. Value in use is determined by applying post tax discount rate of
Modification 9,301 338,404 1,922 1,740 351,367
11.6% (31 January 2022:10.7%).
Disposals (1,880) (48,697) (8,225) -- (58,802)
Growth rate Foreign currency translation effect 29,203 63,741 3,030 21,362 117,336

The discounted cash flow models of Mavi USA and Mavi Canada are based on the cash 31 January 2023 balance 151,136 1,320,954 45,212 108,805 1,626,107
flows projected fro the following five years. A long-term growth rate has been determined
as the lower of nominal GDP rates for USA and Canada and long-term compound annual
Accumulated depreciation Buildings Store Vehicles Warehouse Total
growth rate in EBITDA estimated by management.
1 February 2022 balance 70,333 591,648 13,667 9,940 685,588
Income approach Charge for the period 38,195 295,020 9,115 8,277 350,607
Discounted cash flow methodology is used under the income approach. In this method, the Disposals (1,883) (38,291) (8,114) -- (48,288)
cash flow available for distribution after funding internal needs of the Company is forecasted Foreign currency translation effect 22,456 32,906 2,043 4,403 61,808
for the determined period of years. Beyond such determined period, a terminal value is 31 January 2023 balance 129,101 881,283 16,711 22,620 1,049,715
developed by capitalising an assumed stabilised cash flow figure. Then, the determined
period cash flows and terminal value are discounted to present value.
31 January 2023 net book value 22,035 439,671 28,501 86,185 576,392

Cost Buildings Store Vehicles Warehouse Total

1 February 2020 balance 78,936 716,742 18,115 26,217 840,010
Additions -- 36,509 7,321 -- 43,830
Modification 4,250 163,045 871 82 168,248
Disposals (1,741) (26,300) (2,126) -- (30,167)
Foreign currency translation effect 32,478 57,591 2,926 21,177 114,172
31 January 2022 balance 113,923 947,587 27,107 47,476 1,136,093

334 2022 ANNUAL REPORT 335

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

14 Right-of-use assets (continued) 15 Provisions, contingent assets and liabilities (continued)

Short-term provisions (continued)
Accumulated depreciation Buildings Store Vehicles Warehouse Total
1 February 2021 balance 31,629 363,050 7,545 2,767 404,991 Short-term employee benefits
Charge for the year 21,901 227,299 6,302 3,717 259,219 Short-term employee benefit obligations are measured on an undiscounted basis and
Disposals (1,740) (20,762) (2,126) -- (24,628) are expensed as the related service is provided. A liability is recognised for the amount
Foreign currency translation effect 18,543 22,061 1,946 3,456 46,006 expected to be paid under short-term vacation pay liability if the Company has a present
31 January 2022 balance 70,333 591,648 13,667 9,940 685,588 legal or constructive obligation to pay this amount as a result of past service provided by
the employee, and the obligation can be estimated reliably.
31 January 2022 net book value 43,590 355,939 13,440 37,536 450,505

In accordance with the existing labour law in Group, the Company is required to pay to
For the year ended 31 January 2023 TL 17,838 (31 January 2022: TL 13,706) of amortisation the employee, whose employment is terminated due to any reasons, the wage of the
expenses are included under general administrative expenses and TL 332.253 (31 January deserved and unused vacation days over the gross prevailing wage and other benefits
2022: TL 244,467)under selling, marketing and distribution expenses, and TL 516 (31 January subject to contract at the date the contract is terminated. Vacation pay liability is the total
2022: TL 1.046) under research and development expenses. undiscounted liability of the deserved and unused vacation days of all employees.

For the years ended 31 January 2023 and 31 January 2022, the movement of other short-
15 Provisions, contingent assets and liabilities term provisions is as follows:
Short-term provisions
31 January 2023 31 January 2022
As at 31 January 2023 and 31 January 2022, short-term provisions are as follows: Sales return provision 91,646 27,183
Legal provision (1)
5,751 4,098
31 January 2023 31 January 2022
Other provisions 8,117 3,249
Short-term provisions for employee benefits 18,829 8,773
105,514 34,530
Other short-term provisions 105,514 34,530
124,343 43,303 Legal provisions mainly comprise of labor lawsuits.
(1)

Short-term provision for employee benefits consists of provision for vacation pay liability.
For the years ended 31 January 2023 and 2022, the movement of provision for vacation
liability is as follows:
1 February 2022–31 January 2023 1 February 2021–31 January 2022
1 February balance 8,773 4,144
Current period provision 10,184 3,722
Foreign currency translation differences 1,735 1,815
Payments (1,863) (908)
31 January balance 18,829 8,773

336 2022 ANNUAL REPORT 337

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

15 Provisions, contingent assets and liabilities (continued) 16 Commitments

Short-term provisions (continued) (a) Guarantees, pledges and mortgages
Short-term employee benefits (continued) As of 31 January 2023 and 2022, the Group's guarantee/pledge/mortgage ("GPM") position
statement is as follows:
For the years ended 31 January 2023 and 31 January 2022, the movement of short-term
provisions is as follows: 31 January 2023
TL
TL EUR RUB USD CAD
Legal Return Other Equivalent
provision(1) provisions provision Total A. On behalf of its own legal personality of the total amount of GPMs 161,233 75,028 3,218 3,619 1,033 --

1 February 2021 balance 2,843 10,947 1,879 15,669 Guarantee 161,233 75,028 3,218 3,619 1,033 --
Pledge -- -- -- -- -- --
Current year provision 2,269 10,211 1,251 13,731
Mortgage -- -- -- -- -- --
Foreign currency translation differences -- 8,334 1,412 9,746 B. Total amount of GPM included in the scope of consolidation given on
59,898 -- 53 4,159 75 4,000
Provisions used during year (891) -- -- (891) behalf of subsidiaries
Guarantee 59,898 -- 53 4,159 75 4,000
Provisions reversed (123) (2,309) (1,293) (3,725)
Pledge -- -- -- -- -- --
31 January 2022 balance 4,098 27,183 3,249 34,530
Mortgage -- -- -- -- -- --
C. Total amount of GPM given to conduct other 3rd parties to guarantee
1 February 2022 balance 4,098 27,183 3,249 34,530 -- -- -- -- -- --
the depts.
Current year provision 2,779 56,774 3,898 63,451 Guarantee -- -- -- -- -- --
Pledge -- -- -- -- -- --
Foreign currency translation differences -- 7,689 1,684 9,373
Mortgage -- -- -- -- -- --
Provisions used during year (797) -- -- (797)
D. Total amount of other GPM -- -- -- -- -- --
Provisions reversed (329) -- (714) (1,043) i. Total amount of GPM given on behalf of the main partners -- -- -- -- -- --
31 January 2023 balance 5,751 91,646 8,117 105,514 Guarantee -- -- -- -- -- --
Pledge -- -- -- -- -- --
Litigation provisions mainly consist of workers' lawsuits.
(1)
Mortgage -- -- -- -- -- --
ii. Total amount of GPM given on behalf of other group companies
-- -- -- -- -- --
which are not in the scope of B and C section
Long-term provisions
Guarantee -- -- -- -- -- --
As of 31 January 2023 and 31 January 2022, the movement of long-term provisions is as Pledge -- -- -- -- -- --
follows: Mortgage -- -- -- -- -- --
iii. Total amount of GPM given on behalf of other group companies
31 January 2023 31 January 2022 -- -- -- -- -- --
which are not in the scope of C section
Long-term provisions for employee benefits 61,122 23,176 Guarantee -- -- -- -- -- --
Pledge -- -- -- -- -- --
61,122 23,176
Mortgage -- -- -- -- -- --
Total GPM 221,131 75,028 3,271 7,778 1,108 4,000
Long term employee benefits consist of severance pay liabilities. The details of severance
pay liability are disclosed in Note 17.

338 2022 ANNUAL REPORT 339

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

16 Commitments (continued) 16 Commitments (continued)

(a) Guarantees, pledges and mortgages (continued) (b) Guarantees received

31 January 2022
As of 31 January 2023, Group has received letter of guarantees for the amount of TL 176,570
TL as in the form of security (31 January 2022: TL 16,827).
TL EUR RUB USD CAD
Equivalent
A. On behalf of its own legal personality of the total amount of GPMs 190,152 51,842 8,122 -- 1,249 --
Guarantee 190,152 51,842 8,122 -- 1,249 --
17 Employee benefits
Pledge -- -- -- -- -- -- Provision for employment termination benefits
Mortgage -- -- -- -- -- --
B. Total amount of GPM included in the scope of consolidation given
47,644 -- 156 13,131 75 4,000 Under the Turkish Labour Law, the Company is required to pay termination benefits to each
on behalf of subsidiaries
employee who has completed one year of service and whose employment is terminated
Guarantee 47,644 -- 156 13,131 75 4,000
Pledge -- -- -- -- -- --
without due cause.
Mortgage -- -- -- -- -- --
C. Total amount of GPM given to conduct other 3rd parties to
Under the Turkish Labour Law, the Company is required to pay termination benefits to each
-- -- -- -- -- --
guarantee the depts. employee who has completed one year of service and whose employment is terminated
Guarantee -- -- -- -- -- -- without due cause, is called up for military service, dies or who retires after completing 25
Pledge -- -- -- -- -- -- years of service (20 years for women) and reaches the retirement age (58 for women and 60
Mortgage -- -- -- -- -- --
for men). Due to changes in legislation as of 8 September 1999, there are certain transitional
D. Total amount of other GPM -- -- -- -- -- --
obligations related to the retirement age.
i. Total amount of GPM given on behalf of the main partners -- -- -- -- -- --
Guarantee -- -- -- -- -- --
Severance payments are calculated on the basis of 30 days’ pay, limited to a maximum of
Pledge -- -- -- -- -- --
TL 19,983 at 31 January 2023 (31 January 2022: TL 10,849) per year of employment at the rate
Mortgage -- -- -- -- -- --
ii. Total amount of GPM given on behalf of other group companies
of pay applicable at the date of retirement or termination. Reserve for retirement pay is
-- -- -- -- -- --
which are not in the scope of B and C section computed and reflected in the accompanying financial statements on a current basis. This
Guarantee -- -- -- -- -- -- provision is calculated by expecting the present value of the future liability which will be
Pledge -- -- -- -- -- -- paid for the retired personnel. The calculation was based upon the retirement pay ceiling
Mortgage -- -- -- -- -- --
announced by the Government.
iii. Total amount of GPM given on behalf of other group companies
-- -- -- -- -- --
which are not in the scope of C section
The liability is calculated by estimating the present value of the future probable obligation
Guarantee -- -- -- -- -- --
Pledge -- -- -- -- -- --
of the Company arising from retirement of employees. TAS 19 requires actuarial valuation
Mortgage -- -- -- -- -- --
methods to be developed to estimate the enterprise’s obligation under defined benefit
Total GPM 237,796 51,842 8,278 13,131 1,324 4,000 plans.

As of 31 January 2023, ratio of other GPM given by the Group to equity was 0% (31 January 2022: 0%).
As of 31 January 2023, there are no letters of guarantee given to Eximbank. (31 January 2022: TL 67,349).
The Group has purchase commitments related to inventory amounting to TL 3,618,520 as of 31 January
2023 (31 January 2022: TL 1,852,521).

340 2022 ANNUAL REPORT 341

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

17 Employee benefits (continued) 18 Payables related to employee benefits

Provision for employment termination benefits (continued) As at 31 January 2023 and 31 January 2022 payables to employees are as follows:
As basic assumption, maximum liability is correspondingly increased with inflation for every
year. Therefore, discounted rate refers to estimated real interest rate after correction of the
31 January 2023 31 January 2022
effects of future inflation. To conclude, As at 31 January 2023 and 2022, liabilities in integral
part of consolidated financial statements, are calculated by the way of estimating the fair Payables to personnel(1) 170,709 88,184

value of the liability caused by possible retirement of employees Accordingly, the liability is Social security premiums payable 32,311 11,872
calculated using the following actuarial assumptions. 203,020 100,056

31 January 2023 31 January 2022 (1)

Payables to personnel consist of the salary and wages to be paid in the following month.
Discount rate (%) 2.50 3.83
Estimated inflation (%) 19.12 17.50
19 Other asset and liabilities
All actuarial gain and losses are recognized in other comprehensive income.
Other current assets

For the years ended 31 January 2022 and 2021 the movement of provision for severance As at 31 January 2023 and 31 January 2022, other current assets are as follows:
pay liability is as follows:

1 February 2022– 1 February 2021– 31 January 2023 31 January 2022

31 January 2023 31 January 2022
Transferred and deducted value added tax (“VAT”) 43,204 11,445
As of 1 February 23,176 9,081
Interest cost 832 401 43,204 11,445

Service cost 54,129 19,595

Paid benefits (20,445) (14,114)
Effect of movements in exchange rates 812 653 Other current liabilities
Actuarial difference 2,618 7,560
As of the end of the period 61,122 23,176 As at 31 January 2023 and 31 January 2022, other current liabilities are as follows:

31 January 2023 31 January 2022

Advances received 43,633 18,119
43,633 18,119

342 2022 ANNUAL REPORT 343

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

20 Capital, reserves and other capital reserves 20 Capital, reserves and other capital reserves (continued)
Paid-in capital Paid-in capital (continued)

As at 31 January 2023 and 31 January 2022, paid capital is as follows: Ɋ Changing the Company's field of operation, entering into new lines of business or
abandoning existing lines of business.
% 31 January 2023 % 31 January 2022 Ɋ Capital increases of the Company other than those to be effected within the
Akarlılar Family 27.19 27,000 27.19 13,500 registered capital system, liquidation or dissolution of the Company, any capital
Blue International 0.22 216 0.22 108 decrease, change of legal form of the Company.
Publicly held 72.60 72,098 72.60 36,049 Ɋ Filings for bankruptcy, concordat, financial restructuring, adjournment of
100.00 99,314 100.00 49,657 bankruptcy.
Ɋ Transfer of all or a substantial part of the Company's commercial enterprise.
Increasing the registered capital ceiling from TL 245,000,000 to TL 500,000,000, which Ɋ Changes to the privilige of Class A Shareholders to nominate Board Members, or to
was approved at the Ordinary General Assembly Meeting held on 27 April 2022 and the the structure of the Board of Directors.
transactions regarding the increase of Company's issued capital from 49,657,000 TL to Ɋ Changes to the meeting and resolution quorums of the Board of Directors and
99,314,000 TL by covering the whole of the "Retained Earnings" account were registered on committees of the Company.
13 May 2022. As a result of the capital increase transaction registered on 13 May 2022, the Ɋ Approval of the annual activity report, the profit and loss statement and the
Company's capital was issued as of 31 January 2023 and consists of 99,314,000 shares (31 balance sheet, and release of the Board members from liability.
January 2022: 49.657,000 shares), each with a nominal value of 1 full TL (31 January 2022: 1
full TL). If, following the public offering, Blue International Holding B.V., its shareholders and/or
affiliates and subsidiaries do not hold at least 20% of the capital or voting rights of the
The Company comprises of A and B group shares. Company (aggregate Class A and Class B shares), the increased quorum stated above for
the Matters Requiring Increased General Assembly Resolution Quorum shall authomatically
-As long as Blue International Holding B.V., its shareholders and/or affiliates and subsidiaries
cease to be effective, without the possibility of being rejuvenated at a later date. The
hold at least 20% of the capital or voting rights of the Company (aggregate Class A
Company has adopted the registered capital system under the provisions of the Capital
and Class B shares), half of the members of the Company's Board of Directors shall be
Markets Law, and has initiated the registered capital system based on the permission of
elected from among the persons to be nominated by Class A shareholders. The Board of
the Capital Markets Board dated 3 March 2017 No.9/332. The upper limit of the Company's
Directors members to be elected from among the nominees of the Class A shareholders
registered capital is TL 245,000,000, which is divided into 245,000,000 registered shares,
shall be members other than the independent members stipulated under the Corporate
each with a nominal value of TL 1 (one Turkish Lira).
Governance Principles of the Capital Markets Board.

-Provided that the quorums stipulated under the Capital Markets Law and the Turkish Remeasurement loss on defined benefit plans
Commercial Code are reserved, in order for the Company's General Assembly to pass a
resolution on the matters listed below and on amendments to these Articles of Association Amounts include actuarial gains and losses recognized in other comprehensive income.
on any of such matters ("Matters Requiring Increased General Assembly Resolution Quorum"),
the affirmative votes of all of the Class A Shareholders shall also be required: Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation
of the financial statements of foreign operations.

344 2022 ANNUAL REPORT 345

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

20 Capital, reserves and other capital reserves (continued) 21 Revenue

Translation reserve (continued) For the years ended 31 January 2023 and 2022, revenue comprised the following:

Legal reserves 1 February 2022– 1 February 2021–

31 January 2023 31 January 2022
The legal reserves consist of first and second legal reserves in accordance with the Turkish
Goods and service revenue
Commercial Code. The first legal reserve is appropriated out of the statutory profits at
-Retail 6,956,941 2,830,958
the rate of 5%, until the total reserve reaches a maximum of 20% of the Company’s share
-Wholesale 2,463,164 1,192,023
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. The first and second legal reserves are not -E-commerce 1,171,796 596,338
available for distribution unless they exceed 50% of the share capital, but may be used to 10,591,901 4,619,319
absorb losses in the event that the general reserve is exhausted. As at 31 January 2023, the
Company’s legal reserves are amounting to TL 19,771 (31 January 2022: TL 19,771). The Group derives its revenue from the transfer of goods and services over time and at
a point in time. This is consistent with the revenue information that is disclosed for each
Dividend distribution reportable segment under TFRS 8 (Note 4).
At the Ordinary General Assembly meeting held at 27 April 2022, dividend distribution of TL
120,429 (dividend per gross share: TL2.43) from 2021 and previous years’ distributable net 22 Cost of sales
income was approved unanimously. Entire dividend payment has been completed as of
For the years ended 31 January 2023 and 31 January 2022, cost of sales comprised the
reporting date.
following:
Financial hedging reserve
1 February 2022– 1 February 2021–
The hedging reserve consists of the effective part of the accumulated net change in its fair 31 January 2023 31 January 2022
value from cash flow hedging to the subsequent recognition of instruments for hedging Cost of trade goods sold 4,989,794 2,247,656
purposes. 4,989,794 2,247,656

Purchase of share of entities under common control

On 2 December 2011 the Company merged with Mavi Grup Giyim Ticaret A.Ş. (“Mavi Grup”).
Mavi Grup had owned the Company’s shares in amount of 99.9% until the date of this
merger. The difference between investment and share capital of the Company amounting
to TL 35,757 has been recognized as an equity transaction as purchase of share of entities
under common control.

346 2022 ANNUAL REPORT 347

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

23 Administrative expenses, selling, marketing and distribution 24 Research and development expenses
expenses For the years ended 31 January 2023 and 2022, research and development expenses
comprised the following:
For the years ended 31 January 2023 and 31 January 2022, administrative expenses
1 February 2022– 1 February 2021–
comprised the following:
31 January 2023 31 January 2022
1 February 2022– 1 February 2021–
31 January 2023 31 January 2022 Personnel expenses 53,094 31,191

Personnel expenses 458,449 202,543 Depreciation and amortization expenses (Note 11, 12, 14) 16,828 11,474

Depreciation and amortization expenses (Note 11, 12, 14) 69,099 42,672 Travel expenses 2,745 692

Consultancy expenses 47,109 14,212 Other 3,047 1,708

Office materials expenses 27,885 11,381 75,714 45,065

General office expenses 12,182 3,942

Rent expenses(1) 7,342 2,374
25 Other operating income and expense
Travel expenses 8,102 2,123
Other 44,056 23,243 For the years ended 31 January 2023 and 31 January 2022, other operating income
674,224 302,490
comprised the following:
1 February 2022– 1 February 2021–
31 January 2023 31 January 2022
For the years ended 31 January 2023 and 31 January 2022, selling, marketing and distribution Rediscount interest income on trade payables, net 25,945 6,477
expenses comprised the following: Foreign exchange gain on trade receivables and payables, net 14,206 16,116
1 February 2022– 1 February 2021– Salary protocol income 8,098 1,977
31 January 2023 31 January 2022
Covid 19 incentive income 5,282 10,337
Personnel expenses 996,992 447,052 Invesment support income 2,550 4,762
Rent expenses (1)
532,961 171,328 Reversal of expected credit loss 393 1,585
Depreciation and amortization expenses (Note 11, 12,14) 417,097 303,903 Income from lease contract terminations -- 434
Other 19,634 6,073
Freight-out expenses 191,780 75,436
76,108 47,761
Outsourced logistics expenses 146,065 89,355
Advertising expenses 146,240 77,230
Consultancy expenses 55,301 20,834
Shopping bag expenses 43,394 21,175

Travel expenses 29,093 9,603

Other 315,735 150,151

2,874,658 1,366,067

Rent expenses covers rent payments calculated on turnover, building management and
(1)

utilities.
348 2022 ANNUAL REPORT 349
Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

25 Other income and expense (continued) 27 Expenses by nature

For the years ended 31 January 2023 and 31 January 2022, other expenses comprised the For the years ended 31 January 2023 and 31 January 2022, expenses by nature are as
following: follows:

1 February 2022– 1 February 2021– Depreciation and amortization expenses

31 January 2023 31 January 2022 1 February 2022– 1 February 2021–
Foreign exchange gain and loss, net 5,029 3,498 31 January 2023 31 January 2022
Expected credit losses 1,672 337 Selling, marketing expenses (Note 23) 417,097 303,903
Non-deductible tax expense related with previous period -- 505
Administrative expenses (Note 23) 69,099 42,672
Other 24,174 2,822
Research and development expenses (Note 24) 16,828 11,474
30,875 7,162
503,024 358,049

26 Gains and losses from investment activities Expenses related to personnel

As of 31 January 2023 and 31 January 2022, gains from investment activities comprised the 1 February 2022– 1 February 2021–
following: 31 January 2023 31 January 2022
Selling, marketing and distribution expenses (Note 23) 996,992 447,052
1 February 2022– 1 February 2021–
Administrative expense (Note 23) 458,449 202,543
31 January 2023 31 January 2022
Fx protected deposit income 13,087 -- Research and development expenses (Note 24) 53,094 31,191
Gains on sale of fixed assets 1,368 158 1,508,535 680,786
14,455 158

As of 31 January 2023 and 31 January 2022, the details of expenses related to personnel
As of 31 January 2023 and 31 January 2022, losses from investment activities comprised the
are as follows:
following:
1 February 2022– 1 February 2021–
31 January 2023 31 January 2022
1 February 2022– 1 February 2021–
Wages and salaries 710,466 351,903
31 January 2023 31 January 2022
Bonus expense 409,168 166,627
Losses on sale of fixed assets 685 12
685 12 Social security premiums 136,804 64,437
Meal expenses 79,881 28,658
Employment termination benefit expenses 70,523 28,228
Overtime expenses 30,167 9,843
Personnel travel expenses 17,076 7,397
Other 54,450 23,693
1,508,535 680,786

350 2022 ANNUAL REPORT 351

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

27 Expenses by nature (continued) 29 Finance expenses

Expenses related to personnel (continued) For the years ended 31 January 2023 and 31 January 2022, finance costs comprised the
following:
Fees for services received from independent auditor / independent audit firm
1 February 2022– 1 February 2021–
The Group’s explanation regarding the fees for the services received from the independet 31 January 2023 31 January 2022
auditor, which is based on the letter of POA dated 19 August 2021, the preparation principles
of which are based on the Board decision published at offical gazette on 30 March 2021, Interest expense on financial liabilities 227,637 94,216
are as follows : Discount interest on purchases of goods 173,461 77,858
Interest expenses on lease liabilities 83,397 70,711
2022 2023 Credit card commission expenses 72,129 18,248
Independent audit fee for the reporting period 866 1,359 Import financing expenses 69,815 32,495
Other asuurance services fee 5 5 Foreign exchange loss 4,660 24,336
Other service fees other than independent audit service 125 173
Other 7,099 5,032
996 1,537
638,198 322,896

28 Finance income
30 Income taxes
For the years ended 31 January 2023 and 31 January 2022, finance income comprised the
Corporate tax
following:
The Group is subject to Turkish corporate taxes. Provision is made in the accompanying
financial statements for the estimated charge based on the Group’s results for the years and
1 February 2022– 1 February 2021– periods. Turkish tax legislation does not permit a parent company and its subsidiary to file
31 January 2023 31 January 2022 a consolidated tax return. Therefore, provisions for taxes, as reflected in the accompanying
Interest income on time deposits 272,650 83,083 consolidated financial statements, have been calculated on a separate-entity basis.
Foreign exchange gain 32,117 28,838
Other (1)
-- 51,211 Corporate tax is applied on taxable corporate income, which is calculated from the statutory
304,767 163,132
accounting profit by adding back non-deductible expenses, and by deducting dividends
received from resident companies, other exempt income and investment incentives utilized.
Other finance income mainly consists of discounts related with rent payments due to
(1)

Covid-19 pandemic (31 January 2022: TL 51,211).

In Turkey, advance tax returns are filed on a quarterly basis. Advance corporate income tax
rate applied in 2022 is 23% (after 2022 corporate tax rate will be 20%) (31 January 2022: 25%).

352 2022 ANNUAL REPORT 353

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

30 Income taxes (continued) 30 Income taxes (continued)

Corporate tax (continued) Corporate tax (continued)
The Law numbered 7061 on Amendment of Certain Taxes and Laws and Other Acts was In Turkey, advance tax returns are filed on a quarterly basis. Under the Turkish taxation
published on the Official Gazette dated 5 December 2017 and numbered 30261. Article 5 system, tax losses can be carried forward to be offset against future taxable income for up
entitled "Exceptions" of the Corporate Tax Law has been amended in Article 89 of the Law. to five years. Tax losses cannot be carried back.
In accordance with (a) clause in the first paragraph of the Article, the exemption of 75%
applied to gains from the sales of lands and buildings held by the entities for two full years In Turkey, there is no procedure for a final and definitive agreement on tax assessments.
has been reduced to rate of 50%. This regulation has been effective from 5 December 2017. Companies file their tax returns between 1-25 April following the close of the accounting
year to which they relate (Between 1st-25th days of the fourth month following the closing
According to the Law No. 7352 Amendments to the Tax Procedure Law and the Corporate of the period for those with special accounting periods). Tax authorities may, however,
Tax Law published in the Official Gazette dated 29 January 2022 and numbered 31734, the examine such returns and the underlying accounting records and may revise assessments
application of inflation accounting in the financial statements based on the Tax Procedure within five years.
Law was postponed to 31 December 2023.
Foreign subsidiaries are subject to the tax legislation in the respective countries and
Tax rate used in the calculation of deferred tax assets and liabilities was %20 over temporary necessary provisions for tax expense have been reflected in the financial statements.
timing differences expected to be reversed in 2023 (31 January 2022: 23%), and %20 over
temporary timing differences expected to be reversed in 2024 and the following years (31 Under the Turkish taxation system, 75% of profit gained from sale of property, plant and
January 2022: 25%). equipment of subsidiaries owned at least 2 years can be recognized as exempt income
on condition that would be added to equity in following five years. The remaining 25% is
As of 31 January 2023 and 31 January 2022 tax rates used in deferred tax calculation subject to corporate tax.
according to the tax laws of the countries except Turkey is as follows:
The tax legislation in Turkey does not allow the parent company and its subsidiaries to
issue a consolidated tax declaration. For this reason, the tax provisions reflected in the
consolidated financial statements are separately calculated for each company subject to
Country 31 January 2023 31 January 2022
consolidation.
Russia 20% 20%
Germany 28.9% 28.9% Tax returns are open for five years from the beginning of the year that follows the date
America 21% 23.25% of filing during which time the tax authorities have the right to audit tax returns, and the
Canada 26.88% 26.88% related accounting records on which they are based, and may issue re-assessments based
on their findings.
Provision is made in the accompanying consolidated financial statements for the estimated
charge based on the each of the Group entities’ results for the year.

354 2022 ANNUAL REPORT 355

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

30 Income taxes (continued) 30 Income taxes (continued)

Corporate tax (continued) Corporate tax (continued)

USA However, the offset is limited: losses may be offset against profits up to EUR 1,000 thousand
without restriction, but only 60% of income exceeding EUR 1,000 thousand may be offset
The United States imposes a tax on the profits of US resident corporation at a rate of 21%. against loss carry forwards.
Taxable corporate profits are equal to a corporation’s receipts less allowable deductions
including the cost of goods sold, wages and other employee compensation expenses, Canada
interest, nonfederal taxes, depreciation, and advertising. US-based corporations owned
by foreign multinational companies generally face the same US corporate tax rules on their Canada’s federal-provincial general corporate income tax rate is 26.88%. Tax losses can be
profits from US business activities, as do US-owned corporations. In addition to the federal carried forward for 20 years.
taxes, US income can be taxed at the state and local government levels as well. State tax
rates vary from 0% to 13%, and the state income tax paid is deductible for federal income Withholding income tax
tax purposes.
Except for the dividends paid to non-resident corporations which have a representative
office in Turkey or resident corporations, dividends are subject to withholding tax at the
U.S.-based companies owned by foreign multinational corporations are generally subject
rate of 15%. An increase in capital via issuing bonus shares is not considered as a profit
to the same U.S. corporate tax rules regarding earnings from U.S. business activities as U.S.
distribution and thus does not incur withholding tax.
corporations. In addition to federal taxes, U.S. income can be taxed at the state and local
government levels.
State tax rates range from 0% to 13%, and state income tax paid is deductible from federal Tax Expense
income tax.
For the years ended 31 January 2023 and 31 January 2022, tax expense recognized in profit
loss comprised the following:
Russia
In Russia, the tax system has a legislative nature that is often changed by the authorities. 1 February 2022– 1 February 2021–
20%. Tax authorities and "delay penalties" may be subject to investigation and investigation 31 January 2023 31 January 2022
by competent authorities. A tax year is the primary consolidation that follows up to be Tax expense:
examined by tax authorities. The recent events in Russia show that they are more stable in Current year tax expense (396,507) (153,666)
the interpretation and implementation of tax legislation. Financial losses can be carried for Revaluation tax expense (3,441) (2,157)
a period of three years to be deducted from the profit of the institution. (399,948) (155,823)
Deferred tax income:
Deferred tax income/(expense) on temporary differences 156,009 39,819
Germany
Total tax expense (243,939) (116,004)
Germany’s effective corporate tax rate, including trade tax and solidarity tax is about 28.9%.
Germany’s overall income tax rate for corporations includes corporate income tax at a
rate of 15%, solidarity surcharge at a rate of 0.825% (5.5 %of the corporate income tax) and
municipal trade tax which varies between 7% and 17.64%. Losses can be carried forward for
offset against future taxable income indefinitely.

356 2022 ANNUAL REPORT 357

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

30 Income taxes (continued) 30 Income taxes (continued)

Tax Expense (continued) Tax Expense (continued)
For the years ended 31 January 2023 and 31 January 2022, tax income recognized in other Reconciliation of effective tax rate
comprehensive income the following:
The reported taxation charge For the years ended 31 January 2023 and 31 January 2022
are different than the amounts computed by applying the statutory tax rate to profit before
1 February 2022– 1 February 2021–
tax as shown in the following reconciliation:
31 January 2023 31 January 2022
Tax income/(expense), net:
1 February 2022– 1 February 2021–
Deferred tax income/(expense) on remeasurement of the defined
% 31 January 2023 % 31 January 2022
benefit liability, net 523 1,512
Profit for the year 1,459,144 423,018
Deferred tax income/(expense) on cash flow hedge gains, net 10,184 (8,363)
Total income tax expense (243,939) (116,004)
Profit before tax 1,703,083 539,022
Tax calculated with the Company's statutory
As of 31 January, the details of the current tax assets/liabilities is as follows: tax rate (23.0) (391,709) (25.0) (134,756)
Effect of tax rates in foreign jurisdictions 0.1 2,418 0.2 1,320

Non-deductible expenses(1) (1.4) (24,479) (1.5) (7,878)

1 February 2022– 1 February 2021–
31 January 2023 31 January 2022 Tax effect of exempt income 0.7 12,689 1.0 5,389

Related to prior year's tax (receivables)/payables 44,048 (11,432) Impact of change in tax rate (0.1) (1,958) (1.3) 6,947
Tax expense 399,948 155,823 Impact of revaluation reserve(2) 9.0 153,981 2.9 15,843
Corporate taxes paid (394,792) (100,343) Effect of other adjustments (0.3) 5,119 (0.5) (2,869)
Total tax (asset)/liability, net 49,204 44,048
Current tax expense (14.3) (243,939) (21.5) (116,004)
Current tax asset (32,987) (7,453)
Current tax liabilities 82,191 51,501
For the year ended 31 January 2023 tax effect of non-deductible expenses mainly consists
(1)

of inventory counting differences amounting to TL 39,785 (31 January 2022: TL 12,955).

Provisional Article 32 of the Tax Procedure Law and repeated Article 298-ç; taxpayers are
(2)

allowed to revaluate their depreciable economic assets and immovables with tax as of 31
January 2023 and taxfree in the following period, respectively. In this framework, a revaluation
has been made in the legal financial statements, and as a result of the revaluation, a
deferred tax asset of TL 153,981 has been recorded in the consolidated financial statements.

358 2022 ANNUAL REPORT 359

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

30 Income taxes (continued) 30 Income taxes (continued)

Tax Expense (continued) Tax Expense (continued)
Recognized deferred tax assets and liabilities Recognized deferred tax assets and liabilities (continued)
As of 31 January 2023 and 31 January 2022, the items attributable to deferred tax assets
and deferred tax liabilities consist of the following:
31 January 2022
31 January 2023
Assets Liabilities Net amount
Assets Liabilities Net amount
Property, plant and equipment 12,969 (2,821) 10,148
Property, plant and equipment 94,888 (3,902) 90,986
Intangible assets 1,081 (14,949) (13,868)
Intangible assets 18,207 (16,357) 1,850
Right-of-use asstes -- (64,049) (64,049)
Right-of-use asstes -- (82,918) (82,918)
Inventories 15,497 (967) 14,530
Inventories 35,447 (2,195) 33,252
Due from related parties 1 (401) (400)
Due from related parties -- (2,832) (2,832)
Trade receivables 5,527 (655) 4,872
Trade and other receivables 13,874 (1,516) 12,358
Derivative instruments -- (6,643) (6,643)
Derivative instruments 3,541 -- 3,541
Trade and other payables 11,482 (668) 10,814
Trade and other payables 21,827 (1,033) 20,794
Provisions 5,305 -- 5,305
Lease liabilities 91,312 -- 91,312
Employee benefits 4,142 -- 4,142
Provisions 14,248 (1,183) 13,065
Financial borrowings -- (38) (38)
Employee benefits 13,695 -- 13,695
Lease liabilities 71,932 -- 71,932
Financial borrowings -- (1,156) (1,156)
Other temporary differences 1,627 (128) 1,499
Other temporary differences 4,230 (16) 4,214
Total 129,563 (91,319) 38,244
Total 311,269 (113,108) 198,161
Offset (80,202) 80,202
Offset (98,336) 98,336
49,361 (11,117)
212,933 (14,772)

360 2022 ANNUAL REPORT 361

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

30 Income taxes (continued) 30 Income taxes (continued)

Deferred tax assets and deferred tax liabilities are attributable to the items detailed in the
table below:

Current period Foreign Current period Foreign

deferred Recognised in currency deferred Recognised in currency
1 February tax income/ comprehensive translation 31 January 1 February tax income/ comprehensive translation 31 January
2022 (expense) income differences 2023 2021 (expense) income differences 2022

Property, plant and equipment 10,148 81,563 -- (725) 90,986 Property and equipment 33,117 (23,338) -- 369 10,148

Intangible assets (13,868) 21,546 -- (5,828) 1,850 Intangible assets (43,174) 37,587 -- (8,281) (13,868)

Inventories 14,529 18,203 -- 520 33,252 Inventories 6,450 7,216 -- 863 14,529

Due from related parties (400) (2,209) -- (223) (2,832) Due from related parties (221) 1 -- (180) (400)

Trade and other receivables 4,872 7,197 -- 289 12,358 Trade and other receivables 927 3,434 -- 511 4,872

Derivative instruments (6,643) -- 10,184 -- 3,541 Derivatives 1,720 -- (8,363) -- (6,643)

Right-of-use assets (64,049) (18,863) -- (6) (82,918) Right of use assets (72,101) 9,037 -- (985) (64,049)

Trade and other payables 10,814 10,351 -- (371) 20,794 Trade and other payables (936) 12,049 -- (299) 10,814

Lease liabilities 71,932 19,380 -- -- 91,312 Lease liabilities 78,229 (6,297) -- -- 71,932

Provisions 5,305 6,851 -- 909 13,065 Provisions 2,650 2,526 -- 129 5,305

Employee benefits 4,142 8,303 523 727 13,695 Employee benefits 2,344 (85) 1,512 371 4,142

Financial borrowings (38) (1,118) -- -- (1,156) Financial borrowings (35) (3) -- -- (38)

Other temporary differences 1,500 4,805 -- (2,091) 4,214 Other temporary differences 1,665 (2,308) -- 2,143 1,500

38,244 156,009 10,707 (6,799) 198,161 10,635 39,819 (6,851) (5,359) 38,244

362 2022 ANNUAL REPORT 363

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

31 Earnings per share 33 Financial instruments

The amount of earnings per share is calculated by dividing the net period profit attributable Financial risk management
to the owners of the Company shares by the weighted average share of the company's
The Group has exposure to the following risks from its use of financial instruments:
shares during the period. The calculation of earnings per share for the years ended 31
January 2023 and 31 January 2022 is as follows: Ɋ Credit risk
Ɋ Liquidity risk
Restated Ɋ Market risk
31 January 2023 31 January 2022
This note presents information about the Group’s exposure to each of the above risks,
Net profit for the year attributable to owners of the Company 1,439,375 400,441
the Group’s objectives, policies and processes for measuring and managing risk, and the
Weighted average number of ordinary shares 99,314,000 99,314,000 Group’s management of capital.
Earnings per share 14.4932 4.0320

Risk management of framework

32 Derivative instruments The Board of Directors has overall responsibility for the establishment and oversight of the
Group’s risk management framework. The Group’s risk management policies are established
As at 31 January 2023 and 31 January 2022, short-term derivatives are as follows:
to identify and analyse the risks faced by the Group, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the Group’s
31 January 2023 31 January 2022 activities. The Group, through its training and management standards and procedures,
Financial liabilities arising from forward contracts for hedging aims to develop a disciplined and constructive control environment in which all employees
(17,698) --
purposes understand their roles and obligations.
Financial assets arising from forward contracts for hedging
-- 28,882
purposes Credit risk
(17,698) 28,882
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from the Group’s
As of 31 January 2023, the Group has open forward exchange contracts to hedge the foreign
receivables from customers.The Group’s exposure to credit risk is influenced mainly by the
currency risk on inventory purchases in amount of USD 42,522 thousand in equivalent of TL
individual characteristic of each customer.
890,938. By applying hedge accounting, the fair value difference of TL 17,698, resulting from
such forward transactions, is recognized in other comprehensive income. The companies operating under these segments have set a credit policy under which each
new customer is analysed individually for the creditworthiness before each company’s
standard payment and delivery terms and conditions are offered.

The Group establishes an allowance for impairment that represents its estimate of incurred
losses in respect of accounts receivable. The allowance is provided for receivables that are
legally insolvent. The Group establishes an allowance for impairment that represents its
estimate of incurred losses in respect of trade and other receivables.

364 2022 ANNUAL REPORT 365

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

33 Financial instruments (continued) 33 Financial instruments (continued)

Credit risk (continued) Market risk (continued)
The Group exposure to credit risk on trade receivables is influenced mainly by the individual
characteristics of each customer. The Group closely monitors its customers and the risks are Currency risk
monitored by limiting the aggregate risk to any individual counterparty. The Group secures The Group has exposure to the effects of fluctuations in the prevailing foreign currency
a portion of its receivables through the use of the Direct Debiting System (“DDS”) and the exchange rates on its financial position and cash flows. The functional currencies of Group
use of credit cards by customers. In Turkey, the banks provide credit limits for the Group’s entities are CAD, USD, EUR and RUB. The Group uses derivative financial instruments such
customers through DDS and credit cards and the Group collects its receivables from the as short-term forward foreign exchange contracts to hedge currency risk.
banks when due. As of 31 January 2023, the DDS limit of the Company is amounting TL 579,471
thousand (31 January 2022: 237,066 thousand). The Company also obtains guarantees from The interest on the loans received is based on the exchange rate of the loan. Loans received
its customers as another means of securing its receivables. are mainly in TL, and are generally at rates that match the cash flows generated as a result
of the group's operations. This provides economic hedging from financial risk without the
Management believes that the unimpaired amounts that are pass due by more than 30 need for derivative transactions.
days are still collectable in full, based on the historical behavior and analysis of customer
credit risk. Interest rate risk
The Group is not exposed to the risk of interest rate since the Group does not have any
Liquidity risk
variable interest rate borrowings.
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations
associated with its financial liabilities that are settled by delivering cash or another financial Capital management
asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor
will always have sufficient liquidity to meet its liabilities when due, under both normal and
and market confidence; to sustain future development of the business and to maintain an
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s
optimal capital structure in order to reduce the cost of capital.
reputation. The Group also monitors the level of expected cash inflows on trade and other
receivables together with expected cash outflows on trade and other payables.

Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices will affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimizing the return.

366 2022 ANNUAL REPORT 367

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

34 Nature and level of risks related to financial instruments 34 Nature and level of risks related to financial instruments
Credit risk (continued)
The carrying amounts of financial assets shows the maximum credit risk exposure. As of the Credit risk (continued)
reporting date, the maximum exposure to credit risk is as follows:

Receivables Receivables
Trade receivables Other receivables Trade receivables Other receivables
Related Cash and cash Related Related Cash and cash
31 January 2023 Related party Other party Other (1)
equivalents (2) 31 January 2022 party Other party Other (1)
equivalents (2)
The maximum exposure to credit risk as financial The maximum exposure to credit risk as
-- 870,657 12,216 29,769 3,238,077 -- 394,487 -- 33,211 1,505,667
instruments (A+B+C+D) financial instruments (A+B+C+D)
- Portion of maximum risk covered by guarantees -- -- -- -- -- - Portion of maximum risk covered by
-- -- -- -- --
A. Net book value of financial assets that are guarantees
-- 817,928 12,216 29,769 3,238,077
neither past due not impaired A. Net book value of financial assets that are
-- 355,638 -- 33,211 1,505,667
B. Net book value of financial assets which are neither past due not impaired
-- 52,729 -- -- --
overdue, but not impaired B. Net book value of financial assets which are
-- 38,849 -- -- --
overdue, but not impaired
C. Net book value of impaired assets -- -- -- -- --
C. Net book value of impaired assets -- -- -- -- --
- Overdue (gross book value) -- 53,262 -- -- --
- Impairment (-) -- (53,262) -- -- -- - Overdue (gross book value) -- 37,265 -- -- --

-Secured portion of net amount by guarantees -- -- -- -- -- - Impairment (-) -- (37,265) -- -- --

- Not past due (gross carrying amount) -- -- -- -- -- -Secured portion of net amount by guarantees -- -- -- -- --

- Impairment (-) -- -- -- -- -- - Not past due (gross carrying amount) -- -- -- -- --

- Secured portion of net amount by guarantees -- -- -- -- -- - Impairment (-) -- -- -- -- --

D. Elements including credit risk on off - Secured portion of net amount by guarantees -- -- -- -- --
-- -- -- -- --
consolidated statement of financial position D. Elements including credit risk on off
-- -- -- -- --
consolidated statement of financial position

31 January 2023 Receivables

31 January 2022 Receivables
Trade receivables Other receivables
Trade receivables Other receivables
Past due between 1-30 days 28,686 --
Past due between 1-30 days 22,780 --
Past due between 1-3 months 9,434 --
Past due between 1-3 months 13,816 --
Past due between 3-12 months 14,609 --
Past due between 3-12 months 2,253 --
Total past due 52,729 --
Total past due 38,849 --

(1)
Other receivables from third parties excludes deposits and guarantees given. (1)
Other receivables from third parties excludes deposits and guarantees given.
(2)
Cash and cash equivalents exclude cash on hand (2)
Cash and cash equivalents exclude cash on hand.

368 2022 ANNUAL REPORT 369

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

34 Nature and level of risks related to financial instruments 34 Nature and level of risks related to financial instruments
(continued) (continued)
Credit risk (continued) Liquidity risk
Impairment As at 31 January 2023 and 31 January 2022, maturities of financial liabilities including
estimated interest payments based on repayment schedules are included below:
For the years ended 31 January 2023 and 31 January 2022, movement of the provision for
doubtful receivables is as follows:
5 year
1 February 2022- 1 February 2021-
Carrying Contractual 3 month 3-12 1-5 than
31 January 2023 31 January 2022
31 January 2023 Note amount cash flow or less months year more
Balance as of the beginning of the period 37,265 22,175
Non-derivative financial
Current year provision 3,974 1,561
liabilities
Provisions released (567) (1,414)
Bank loans 5 1,540,516 1,807,815 99,719 1,708,096 -- --
Write-offs (4,412) (479)
Effect of exchange rates 17,002 15,422 Lease liabilities 5 640,061 756,108 163,682 246,167 317,533 28,726

Balance as of the end of the period 53,262 37,265 Trade payables to third parties 7 2,636,580 2,645,566 1,426,877 1,217,929 760 --
Trade payables to related parties 6 323,941 330,526 61,821 268,705 -- --
The Group monitors the collectability of its trade receivables periodically and records
Other payables to related parties 6 41 41 41 -- -- --
provision for potential losses on doubtful receivables based on historical collection rates.
Total 5,141,139 5,540,056 1,752,140 3,440,897 318,293 28,726
Subsequent to recognition of allowance for doubtful receivables, partial or full recovery
of doubtful receivables will be recorded under profit or loss with an offset to provision for
doubtful receivables. 5 year
Carrying Contractual 3 month 3-12 1-5 than
31 January 2022 Note amount cash flow or less months year more
Non-derivative financial
liabilities
Bank loans 5 890,608 958,680 279,507 679,173 -- --
Contractual lease liabilities 5 505,925 607,506 108,199 165,049 301,234 33,024
Trade payables to third parties 7 975,843 979,457 786,429 193,028 -- --
Trade payables to related parties 6 212,803 214,489 206,008 8,481 -- --
Other payables to related parties 6 41 41 41 -- -- --
Total 2,585,220 2,760,173 1,380,184 1,045,731 301,234 33,024

370 2022 ANNUAL REPORT 371

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

34 Nature and level of risks related to financial instruments 34 Nature and level of risks related to financial instruments
(continued) (continued)
Market risk Market risk (continued)
Currency risk Currency risk (continued)
As of 31 January 2023 the Group's foreign currency position specified in the following table As of 31 January 2022 the Group's foreign currency position specified in the following table
arises from foreign currency is denominated as assets and liabilities. arises from foreign currency is denominated as assets and liabilities.

TL Equivalent USD Euro Other TL Equivalent USD Euro Other

1. Trade receivables 21,140 781 -- 6,467 1. Trade receivables 12,962 582 -- 5,162
2a. Monetary financial assets (including cash. banks) 100,737 4,053 548 13,375 2a. Monetary financial assets (including cash. banks) 65,150 2,645 1,511 7,087
2b. Non-monetary financial assets -- -- -- -- 2b. Non-monetary financial assets -- -- -- --
3. Other 29,872 1,581 8 -- 3. Other 13,924 1,039 -- --
4. Current assets (1+2+3) 151,749 6,415 556 19,842 4. Current assets (1+2+3) 92,036 4,266 1,511 12,249
5. Trade receivables -- -- -- -- 5. Trade receivables -- -- -- --
6a. Monetary financial assets -- -- -- -- 6a. Monetary financial assets -- -- -- --
6b. Non-monetary financial assets -- -- -- -- 6b. Non-monetary financial assets -- -- -- --
7. Other -- -- -- -- 7. Other -- -- -- --
8. Non-current assets (5+6+7) -- -- -- -- 8. Non-current assets (5+6+7) -- -- -- --
9. Total assets (4+8) 151,749 6,415 556 19,842 9. Total assets (4+8) 92,036 4,266 1,511 12,249
10. Trade payables 59,739 2,268 797 823 10. Trade payables 21,264 1,001 509 239
11. Financial liabilities 8,714 286 164 -- 11. Financial liabilities 67,751 340 4,222 --
12a. Monetary other liabilities -- -- -- -- 12a. Monetary other liabilities -- -- -- --
12b. Non-monetary other liabilities -- -- -- -- 12b. Non-monetary other liabilities -- -- -- --
13. Current liabilities (10+11+12) 68,453 2,554 961 823 13. Current liabilities (10+11+12) 89,015 1,341 4,731 239
14. Trade payables -- -- -- -- 14. Trade payables -- -- -- --
15. Financial liabilities 8,346 242 186 -- 15. Financial liabilities 12,373 505 376 --
16a. Monetary other liabilities -- -- -- -- 16a. Monetary other liabilities -- -- -- --
16b. Non-monetary other liabilities -- -- -- -- 16b. Non-monetary other liabilities -- -- -- --
17. Non-current liabilities (14+15+16) 8,346 242 186 -- 17. Non-current liabilities (14+15+16) 12,373 505 376 --
18. Total liabilities (13+17) 76,799 2,796 1,147 823 18. Total liabilities (13+17) 101,388 1,846 5,107 239
19. Net asset/(liability) position of derivative instruments (19a-19b) (799,452) (42,552) -- -- 19. Net asset/(liability) position of derivative instruments (19a-19b) (134,385) (10,028) -- --
19a. Hedged total asset -- -- -- -- 19a. Hedged total asset -- -- -- --
19b. Hedged total liabilities 799,452 42,552 -- -- 19b. Hedged total liabilities 134,385 10,028 -- --
20. Position of net foreign currency assets/liabilities (9-18+19) (724,502) (38,933) (591) 19,019 20. Position of net foreign currency assets/liabilities (9-18+19) (143,737) (7,608) (3,596) 12,010
21. Position of net foreign currency monetary assets/liabilities
21. Position of net foreign currency monetary assets/liabilities
(=1+2a+5+6a-10-11-12a-14-15-16a) 45,078 2,038 (599) 19,019
(=1+2a+5+6a-10-11-12a-14-15-16a) (23,276) 1,381 (3,596) 12,010

As at 31 January 2023, Mavi Turkey has trade receivables amounting to TL 176,719 from consolidated As at 31 January 2022, Mavi Turkey has trade receivables amounting to TL 23,261 from consolidated subsidiaries
subsidiaries which comprise; USD 554 thousand, CAD 462 thousand EUR 1.598 thousand and RUB 473,714 which comprise; USD 81 thousand, CAD 143 thousand EUR (112) thousand and RUB 127,618 thousand. These
thousand. These amounts have been eliminated in consolidation. Considering these receivables, the Group's amounts have been eliminated in consolidation. Considering these receivables, the Group's net foreign
net foreign currency monetary assets position amounts to TL 221,798. The Group has fx protected deposits currency monetary assets position amounts to TL 16. The Group has fx protected deposits amounting USD
amounting USD 3,000 thousand as of the balance sheet date. 2,000 thousand as of the balance sheet date.
372 2022 ANNUAL REPORT 373
Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

34 Nature and level of risks related to financial instruments 34 Nature and level of risks related to financial instruments
(continued) (continued)
Market risk (continued) Market risk (continued)
Currency risk (continued) Currency risk (continued)
Sensitivity analysis
Foreign Currency Sensitivity Analysis
The Group's foreign exchange risk consists of movements of TL against Euro, US Dollar and
31 January 2022
Rouble and Australia Dollar.
The basis for performing sensitivity analysis to measure foreign exchange risk is to disclose Profit/Loss Equity
total currency position of the Company. Total foreign currency position consists of all Appreciation Depreciation Appreciation Depreciation
purchase/sales agreements in foreign currency and all assets and liabilities. Analysis does of foreign of foreign of foreign of foreign
currency currency currency currency
not include net foreign currency investments.
The Group’s short-term and long-term borrowings are carried out in balance under pooling/ In case of 10% appreciation/depreciation of US Dollar
portfolio model. 1- USD net asset/liability 1,851 (1,851) 1,851 (1,851)
2- Hedged portion of USD (-) -- -- 13,439 (13,439)
Foreign Currency Sensitivity Analysis
3- Net effect of USD (1+2) 1,851 (1,851) 15,290 (15,290)
31 January 2023
In case of 10% appreciation/depreciation of EUR
Profit/Loss Equity
4- EURO net asset/liability (5,380) 5,380 (5,380) 5,380
Appreciation Depreciation Appreciation Depreciation
5- Hedged portion of EURO (-) -- -- -- --
of foreign of foreign of foreign of foreign
currency currency currency currency 6- Net effect of EURO (4+5) (5,380) 5,380 (5,380) 5,380
In case of 10% appreciation/depreciation of US Dollar In case of 10% appreciation/depreciation of other
1- USD net asset/liability 3,830 (3,830) 3,830 (3,830) 7- Other currency net asset/liability 1,201 (1,201) 1,201 (1,201)
2- Hedged portion of USD (-) -- -- 79,945 (79,945) 8- Hedged portion of TL against other risk(-) -- -- -- --
3- Net effect of USD (1+2) 3,830 (3,830) 83,775 (83,775) 9- Net effect of other (7+8) 1,201 (1,201) 1,201 (1,201)
In case of 10% appreciation/depreciation of EUR Total (3+6+9) (2,328) 2,328 11,111 (11,111)
4- EURO net asset/liability (1,224) 1,224 (1,224) 1,224
5- Hedged portion of EURO (-) -- -- -- --
6- Net effect of EURO (4+5) (1,224) 1,224 (1,224) 1,224
In case of 10% appreciation/depreciation of other
7- Other currency net asset/liability 1,902 (1,902) 1,902 (1,902)
8- Hedged portion of TL against other risk(-) -- -- -- --
9- Net effect of other (7+8) 1,902 (1,902) 1,902 (1,902)
Total (3+6+9) 4,508 (4,508) 84,453 (84,453)

374 2022 ANNUAL REPORT 375

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

34 Nature and level of risks related to financial instruments 34 Nature and level of risks related to financial instruments
(continued) (continued)
Market risk (continued) Capital risk management (continued)
Interest rate risk As at 31 January 2023 and 31 January 2022, net debt / equity ratios are as follows:
Profile
31 January 2023 31 January 2022
(1)
The interest rate profile of the Group’s interest-bearing financial instruments is: Loans and borrowings (Note 5) 2,180,577 1,396,533
Cash and cash equivalents (Note 4) (3,244,612) (1,481,617)
Fixed interest rate items 31 January 2023 31 January 2022 Net financial liabilities (1,064,035) (85,084)
Financial assets 2,607,481 1,122,532 Equity 2,731,948 1,193,357
Financial liabilities (2,180,577) (1,396,533)
Net financial liabilities / equities rate (0.39) (0.07)

The fair value of fixed rate instruments risk: (1)

Lease liabilities are included arising from TFRS 16.
The Group does not have any derivative instruments (interest rate swaps) accounted under
fair value hedge accounting model or financial assets or liabilities for which fair values
are recorded in profit or loss. Therefore, any changes in interest rates during the reporting
35 Financial instruments (fair value disclosures and disclosures
period will not have an impact on profit or loss. under hedge accounting)
Fair values
The fair value of variable rate instruments risk:
Carrying amount Fair value
As the Group does not have any variable rate borrowings, changes in interest rates as of Other
the reporting period will not have an impact on profit or loss. Loans and financial
31 January 2023 receivables liabilities Total Level 1 Level 2 Level 3 Total
Capital risk management Financial liabilties measured at
fair value
The Group's objectives when managing capital are to safeguard and provide benefits to Derivative financial instrument (17,698) -- (17,698) -- (17,698) -- (17,698)
other stakeholders in order to reduce the cost of capital in order to maintain and protect Total (17,698) -- (17,698) -- (17,698) -- (17,698)
the optimal capital structure of the Group.
To maintain or adjust the capital structure, the Group determines the amount of dividends
Other
paid to shareholders, issue new shares or may sell assets to reduce debt. Loans and financial
Group capital and net financial debt/equity ratio is followed using net financial debt 31 January 2022 receivables liabilities Total Level 1 Level 2 Level 3 Total
Financial assets measured at
less cash and cash equivalents; total financial debt is calculated by deducting from that fair value
amount.
Derivatives 28,882 -- 28,882 -- 28,882 -- 28,882
Total 28,882 -- 28,882 -- 28,882 -- 28,882

376 2022 ANNUAL REPORT 377

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements
As of 31 January 2023 As of 31 January 2023
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

35 Financial risk management (continued) 36 Subsequent events (continued)

Fair values (continued) Pursuant to the “Law on Restructuring of Certain Receivables and Amending Certain Laws”
published in the Official Gazette dated 12 March 2023 and numbered 32130, by showing
Fair value disclosures
in the corporate tax return for 2022, it is ensured that a one-time additional tax of 10% is
The Group estimates the fair values of financial instruments based on market information charged on the exemptions and deductions made from corporate income, and on the
readily available and proper valuation approaches. The following tables show the valuation tax bases subject to reduced corporate tax, without being associated with the period's
techniques used in measuring Level 2 and Level 3 fair values for financial instruments income. Although this issue is considered as a non-adjusting event after the reporting
measured at fair value in the statement of financial instruments measured at fair value in period within the scope of TAS 10 Events After the Reporting Period, the Group assessed
the statement of financial position, as well as the significant unobservable inputs used. that related amendments do not have any significant effect on the Group's consolidated
financial statements as of 31 January 2023.
When measuring fair value of an asset or a liability, the Group uses observable market data
as far as possible. Fair values are categorised into different levels in fair value hierarchy
based on the inputs used in the valuation techniques as follows:

Ɋ Level 1: quoted prices (unadjusted) in active markets for identical assets and
liabilities.
Ɋ Level 2: inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from
prices).
Ɋ Level 3: inputs for the asset or liability that are not based on observable market
data.

36 Subsequent events
The Group evaluated possible impacts of earthquake that took place in Kahramanmaraş
on 6 February 2023 on the consolidated financial statements and reviewed the estimates
and assumptions used in preparation of the consolidated financial statements. The Group
management assessed that the earthquake does not have any significant effect on the
consolidated financial statements as of 31 January 2023.

The Law numbered 7438 on Social Security and General Health Insurance and the Law on
the Amendment of the Decree Law numbered 375, which includes the regulation on the
Retirement Age Victims (EYT), entered into force after being published in the Official Gazette
No. 32121, dated 3 March 2023. Although this issue is considered as a non-adjusting event
after the reporting period within the scope of TAS 10 Events After the Reporting Period,
studies on measuring the impact on the operations and financial position of the Group are
still in progress.

378 2022 ANNUAL REPORT 379

Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries Mavi Giyim Sanayi ve Ticaret Anonim Şirketi and Its Subsidiaries
Unaudited Supplementary Information Unaudited Supplementary Information
(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

APPENDIX 1 Ebitda reconciliation APPENDIX 2 Effect of TFRS 16 on Financial Statements

EBITDA is not a defined performance measure under TFRS. Reconciliation of EBITDA For the The effects of TFRS 16 lease standard on the Group's financial statements are presented
years ended 31 January 2023 and 31 January 2022 are as follows: below:

Note 31 January 2023 31 January 2022 31 January 2023 TFRS 16 Effect After TFRS 16

Profit 1,459,144 423,018 Current assets 6,788,195 (3,447) 6,784,748

Tax expense 30 243,939 116,004 Non-current assets 1,267,919 590,077 1,857,996

Profit before tax 1,703,083 539,022 Short-term liabilities 5,093,352 350,245 5,443,597
- Fx protected deposit income (13,087) -- Long-term liabilities 177,383 289,816 467,199
- Net finance costs 333,431 159,764 Equity 2,785,379 (53,431) 2,731,948
- Rediscount interest on trade payables, net (25,945) (6,477) 1 February–
- Exchange difference on trade receivables and TFRS 16 Effect After TFRS 16
(9,177) (12,618) 31 January 2023
payables, net
- Depreciation and amortisation 27 503,024 358,049 Operating profit 1,944,848 77,896 2,022,744

EBITDA 2,491,329 1,037,740 Operating profit before finance costs 1,958,618 77,896 2,036,514
Finance income 304,767 -- 304,767
As of 31 January 2023 TFRS 16 has an impact of TL 428,503 (31 January 2022 : TL 272,409) on Finance expense (555,902) (82,296) (638,198)
EBITDA. Profit before tax 1,707,483 (4,400) 1,703,083
Net profit 1,462,768 (3,624) 1,459,144
EBITDA 2,062,826 428,503 2,491,329

380 2022 ANNUAL REPORT 381

07 GENERAL ASSEMBLY
7.1 Agenda of the Ordinary General Assembly
7.2 Dividend Distribution Policy
7.3 Dividend Distribution Proposal
7.4 Dividend Distribution Table
7.5 Declaration for Independency

01 KEY FINANCIAL 02 CHAIRMAN & CEO 03 MAVİ BRAND 04 MAVİ'S SUSTAINABILITY 05 CORPORATE 06 INDEPENDENT AUDITORS REPORT & 07 GENERAL
METRICS LETTERS HIGHLIGHTS EVOLUTION GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS ASSEMBLY

382 2022 ANNUAL REPORT 383

 7.1 AGENDA OF THE ORDINARY GENERAL
ASSEMBLY OF MAVİ GİYİM SANAYİ VE TİCARET
ANONİM ŞİRKETİ DATED 27 APRIL 2023 FOR
THE SPECIAL ACCOUNTING PERIOD OF
1 FEBRUARY 2022–31 JANUARY 2023

1. Opening and Election of the Meeting’s Chairperson,

2. Reading, discussion and approval of the Annual Report prepared by the

Company’s Board of Directors for the special accounting period of 1 February
2022–31 January 2023,

3. Reading of the Independent Audit Report Summary for the special accounting
period of 1 February 2022–31 January 2023,

4. Reading, discussion and approval of the Financial Statements relating to the

special accounting period of 1 February 2022–31 January 2023,

5. Release of the Board of Directors’ members separately and individually from

their liabilities with respect to their activities within the Company’s special
accounting period of 1 February 2022–31 January 2023,

6. Approval of the Board of Directors’ proposal prepared within the framework of

the Dividend Distribution Policy on the determination of the manner of
utilization and distribution of the profit for the special accounting period of
1 February 2022–1 January 2023 the applicable dividend distribution ratios and
the date of dividend distribution,

7. Informing the shareholders on the Remuneration Policy which sets out the
principles of remuneration of the Board Members and the Senior Executives in
accordance with the Capital Markets Board’s regulations and providing
information regarding the attendance fees paid to the Board of Directors’
members in accordance with such Policy within the special accounting
period of 1 February 2022–31 January 2023,

8. Determination of the salaries and other rights of Board of Directors’ Members such
as attendance fees, bonuses and premiums,

384 2022 ANNUAL REPORT 385

9. Approval of the appointment made in accordance with Article 363 of the Turkish
Commercial Code to the Independent Member of the Board of Directors, which
7.2 DIVIDEND DISTRIBUTION POLICY
became vacant within the special accounting period of 1 February 2022–31
The purpose of the dividend distribution policy is to ensure that a balanced and consistent
January 2023,
policy is implemented pursuant to the applicable legislation in relation to the interests of
10. Appointment of the auditor, the investors and the Company, inform the investors sufficiently and maintain a transparent
policy toward the investors.
11. Informing the shareholders on the donations made by the Company within
the special accounting period of 1 February 2022 - 31 January 2023, approval of The general assembly, upon the proposal of the Board of Directors, resolves on the
donations made due to the earthquake by the General Assembly within the distribution of dividends and the timing and manner of such distribution. To the extent
framework of the Capital Markets Board's decision dated 09 February 2023 and allowed by applicable regulations and financial resources, and taking into account market
numbered 8/174 and determination of an upper limit for the donations to be expectations, long term strategies of the Company, needs of the subsidiaries and affiliates,
made within the special accounting period of 1 February 2023 - 31 January 2024, investment and financing policies and profitability and cash reserves, the Company aims
to distribute to the shareholders and other persons sharing the profit at least 30% of
12. Informing the shareholders on the securities, pledges, collaterals and mortgages the distributable net profit calculated for the relevant period pursuant to the Articles of
granted to third parties within the special accounting period of 1 February 2022–31 Association, TCC, CMB’s Dividend Distribution Communiqué No. II-19.1 and tax legislation.
January 2023 in accordance with the Capital Markets Board regulations and the Dividends may be distributed in cash and/or bonus shares and/or as a combination of
revenues or benefits obtained in connection therewith, both in certain ratios. Dividends are distributed equally to all shares in existence at the time
of distribution, pro rata to their respective ratios and regardless of their date of issuance or
13. Granting authority to the members of the Board of Directors in accordance
their date of acquisition. Dividend payments may be made in equal or varying installments,
with sections 395 and 396 of the Turkish Commercial Code, and informing the
provided that this is resolved upon during the general assembly meeting where the general
shareholders on the transactions carried out during the special accounting
assembly has resolved to make dividend distribution. The dividend distribution will commence
period between 1 February 2022–31 January 2023, in accordance with the
on the date determined by the General Assembly, provided that the distribution is initiated
mandatory principle 1.3.6 of the Corporate Governance Communiqué as
before the end of the accounting period within which that General Assembly meeting takes
promulgated by the Capital Markets Board,
place. The General Assembly’s dividend distribution resolution, passed in accordance with
14. Wishes and requests. the Articles of Association, may not be revoked unless permitted by applicable law. Should
the Board of Directors propose not to distribute dividends, the reasons for this proposal
and the manner in which the retained profit would be used will be explained under the
agenda item concerning dividend distribution, and this information will be submitted to the
shareholders during the General Assembly.

The Board of Directors’ dividend distribution proposal or the Board resolutions relating to
the distribution of advance dividends will be announced to the public in accordance with
the relevant regulations, with the form and content of the relevant proposal/resolution,
and the tables showing the dividend distribution or the advance dividend distribution, as
applicable. Furthermore, to the extent any amendments to this dividend distribution policy
are to be introduced, the Board resolution regarding such amendments shall be announced
to the public with the reasons of amendment.

386 2022 ANNUAL REPORT 387

7.3 THE BOARD OF DIRECTORS’ DIVIDEND 7.4 DIVIDENT DISTRIBUTION TABLE
DISTRIBUTION PROPOSAL FOR THE SPECIAL 1. Paid-in Capital
Mavi Giyim Sanayi ve Ticaret A.Ş. Profit Distribution Proposal for 2022 (TL)

99.314.000,00

ACCOUNTING PERIOD DATED 1 FEBRUARY 2. General legal reserves (as per statutory records) 19.165.758,02

Information concerning preferred shares, if, as per the company Articles of Association, there are any privileges for preferred shares in distribution of dividends: No

2022–31 JANUARY 2023 As per Capital Markets Board As per Statutory Records

3. Profit for the period 1.703.083.208,00 1.578.581.461,70

4. Taxes (-) 243.938.992,00 369.417.318,59
It has been decided that the payment of TRY 429,455,142.33 total gross amount of cash 5. Net Profit (=) 1.439.375.251,00 1.209.164.143,11
covered from the 2022 financial year dividend resulting in TRY 4.3242 (432,42%) gross payment 6. Prior years' losses (-) -- --

per TRY 1 nominal value share to the approval of the shareholders at the Ordinary General 7. Legal reserve fund (-) 9.931.400,00 9.931.400,00
8. NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=) 1.429.443.851,00 1.199.232.743,11
Assembly Meeting in which the operating results of 2022 financial year will be discussed.
Dividend Advance Distributed (-) -- --
According to the proposal, dividend payments will commence as of 10.05.2023. Dividend Advance Less Net Distributable Current Period Profit 1.429.443.851,00 1.199.232.743,11
9. Grants made during the year (+) 2.073.290,03 0,00
10. Net distributable profit including grants 1.431.517.141,03 --
First category dividend to shareholders -- --
-Cash 429.455.142,31 --
11.
-Shares -- --
-Total 429.455.142,31 --
12. Dividends distributed to preferred shareholders -- --
Other dividends distributed -- --
-Members of the Board of Directors -- --
13.
-Employees -- --
-Non-shareholders -- --
14. Dividends distributed to holders of usufruct right certificates -- --
15. Second category dividend to shareholders -- --
16. Legal reserve fund 42.448.944,23 --
17. Status reserves -- --
18. Special reserves -- --
19. EXTRAORDINARY RESERVES 957.539.764,46 727.328.656,57
Other sources planned for distribution -- --
20
Retained Earnings -- --
-Extraordinary reserves -- --
-Other distributable reserves as per the legislation and Articles of Association -- --

Mavi Giyim Sanayi ve Ticaret A.Ş. Information on Dividend per Share for 2022
TOTAL DIVIDEND AMOUNT/ NET
TOTAL DIVIDEND AMOUNT* DISTRIBUTABLE PROFIT FOR THE DIVIDEND PER SHARE FOR 1 TL NOMINAL VALUE
GROUP
PERIOD*
CASH (TL) SHARES (TL) RATIO (%) AMOUNT (TL) SHARE (%)
A (**) 936.564,55 -- 0,07 4,3242 432,42
Gross B (***) 428.518.577,78 -- 29,77 4,3242 432,42
Total 429.455.142,33 -- 29,84
A (**) 842.908,10 -- 0,06 3,8918 389,18
Net B (***) 385.666.720,00 -- 26,79 3,8918 389,18
Total 386.509.628,10 -- 26,85

* Group A shares representing 0,22% of the capital are owned by Blue International Holding BV. The Company shall be
subject to withholding tax within the framework of the provisions of the Double Taxation Prevention Agreement.
**The Company does not have information regarding the entity type of Group B shareholders (“limited liability, full
liable, legal entity or real person”). The calculation is based on the assumption that all shareholders in this group are
subject to withholding tax at the local rate.

388 2022 ANNUAL REPORT 389

7.5 DECLARATION FOR INDEPENDENCY i) I am not registered in the name of any legal entity elected as a board member.

31.05.2022
I hereby declare that I am a candidate for independent board membership at the Board of Directors
Zeynep Yalım Uzun
of Mavi Giyim Sanayi ve Ticaret A.Ş. (“Company”) under related regulations, Articles of Association of
the Company and the criteria stated in Capital Markets Board’s (“CMB”) Communiqué on Corporate
Governance, I have benefited from the exemption regulated in the article 5 (6) of the Corporate
Governance Communiqué numbered II-17.1 of the Capital Markets Board because of the other
independent board members are being resident in Turkey under the Revenue Tax Law No.193 (“RTL”)
dated December 31, 1960 and for the nomination based on the RTL was not necessary to resident
in Turkey. In that regard I also confirm that;

a) In the last five years, I, my spouse or my up to the second degree blood or affinity relatives
is not or has not been; employed by as a key management personnel; has not had ordinary or
privileged shareholding exceeding 5% by himself or together with; or has not been involved in
any material business dealings with the Company, its subsidiaries and affiliates, or shareholders
controlling the Company or having material effect over the Company and all entities controlled by
those shareholders.

b) In the last five years, I am not or have not been employed by as an executive having significant
duties and responsibilities or have not been a member of the board or did not have a shareholding
exceeding 5% of an entity which has had a contractual relationship with the Company for a material
business transaction including audit (including tax audit, legal audit, and internal audit) rating or
consulting services during the terms in which the goods or services were provided.

c) My CV indicates that I have skills, knowledge and expertise relevant to the Company’s business
and extensive experience to fulfill my duties as an independent board member.

d) After my election I will not work full-time in a Turkish governmental or public institution, except for
the faculty membership under relevant regulations.

e) I am capable to contribute positively to the operations of the Company, to maintain my

objectivity in conflicts of interests between the Company and the shareholders, to have strong
ethical standards, professional reputation and experience to freely take decisions by considering
the rights of the stakeholders.

f) I will dedicate enough time to follow up the activities of the Company and for the duly fulfillment
of my responsibilities.

g) I have not been on the board the Company for more than six years within last ten years.

h) I am not an independent board member in more than three of the corporations controlled by
the Company or its controlling shareholders and in more than five corporations listed on Borsa
İstanbul in total.

390 2022 ANNUAL REPORT 391

392 2022 ANNUAL REPORT 393
394
DISCLAIMER
This Annual Report is prepared in accordance with the legal requirements to be presented to the Ordinary
General Assembly, for the special accounting period of 1 February 2022-31 January 2023. Report is prepared
only to provide information to the shareholders, and it is not intended to form the basis of any investment
decision.

To the extent available, the industry, market and competitive position data contained in this Report come
from independent official or third party sources. Although the Company believes that these information are
provided by reliable sources, it has not, however, independently verified accuracy and completeness of the
information contained therein. In addition, some of the market and competitive position data contained
in this Report come from the internal research and estimates based on the knowledge and experience of
the Company’s management in the markets that the Company operates. Although, the Company believes
that the internal research and estimates are reasonable, accuracy and completeness of these research
and estimates and methodologies and assumptions relevant with these research and estimates have not
verified by independent third parties. The Company, its management and/or its employees and/or other
related persons may not be held responsible for any direct or indirect loss that could arise from the use of
the data stated in this Report.

Forward-looking statements included in this Report are subject to risks, uncertainties and other important
factors which are known or unknown to the Company or which cannot be controlled or which can be
controlled in a limited manner by the Company. These risks, uncertainties and other important factors may
cause our actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such statements. Changes in customer tastes and
spending patterns; changes in customer traffic; ability to accurately predict customer preferences and
demands; ability to successfully implement new store rollout and retail strategy; effectiveness of brand
awareness and marketing programs; difficulties that can be observed in retail fashion and fragility that
can be observed in customer loyalty; competitive factors in retail fashion; impact of extreme unseasonal
weather conditions on retail fashion; ability to retain key management and personnel; circumstances
affecting relationships with major suppliers and distributors; currency and interest rate risks and fluctuations
and other changes in financial markets and macro economic conditions; changes in tax rates, applicable
laws and government policies and operational disruptions, natural disasters, wars, terrorist activities, work
stoppages, slowdowns or strikes are, without any limitation of the foregoing, among these risks, uncertainities
and other important factors. Explanations regarding risks, uncertainities and other important factors that
may affect forward looking statements can be found in the explanatory notes of financial statements and
in the “Risk Management and Internal Control System” section of this Report.

Forward-looking statements included in this Report are based on a number of assumptions relevant to the
current and future business strategies of the Company and the business environment in which the Company
operates. Forward-looking statements speak only as at the date on which they are made. The Company
warns addressees of this Report that forward -looking statements does not constitute a guarantee as
to the future performance and results of the Company and that actual results as to Company’s financial
position, expectations, growth, business strategy, plans and future operations may differ materially from
forward-looking statements stated in this Report. In addition, even if the actual results and achievements
as to Company’s financial position, expectations, growth, business strategy, plans and future operations
will be consistent with the forward-looking statements included in this Report, this consistency cannot be
considered as an indicator as to any further future results and achievements. The Company, its management
and/or its employees and/or other related persons may not be held responsible for any direct or indirect loss
that could arise from the use of the forward-looking statements stated in this Report. The Report and the
accompanying disclaimer are provided both in Turkish and English languages. In case of any discrepancy
between Turkish and English version of Zthe Report and the accompanying disclaimer, Turkish version shall
prevail. The Company believes that the information included in this Report is accurate as of the date of the
Report and accepts no responsibility for any spelling or printing errors that may occur during the Report’s
preparation.