Net : 2021 4Q Earning Reviews

NET HOLDİNG A.Ş.

August 2021

Earning Reviews / 2021 1H

*Merit Operations

**Soon

NET HOLDİNG A.Ş.

Earning Reviews / 2021 1H

• Hotels and casinos in the TRNC remained closed from 04 January 2021 to 15 April 2021 and were able to provide service for only 2.5 months during the first half of 2021.
• Our casino in Bulgaria reopened in 01.03.2021 and providing service since then. Montenegro, on the other hand, accepting guests since May 21, 2020.
• The casino renovation process in Croatia has been completed during the lock-down period and started its activities as of 18.06.2021.
• Due to the measures taken by the public authorities, EBITDA of our hotels and casinos in TRNC was realized under our desired levels in the first six months of 2021.
• However, despite all the negative effects of the epidemic, EBITDA of our Balkan operations in the first half of 2021, has reached its highest level since the establishment of the casinos.

Accordingly;

• Net Holding's consolidated sales decreased from 195.7mn TL (28.6mn USD) in 2020 1H, to 179.7mn TL (20.6mn USD) in 2021 1H. (-8.2% TL terms, -27.8% USD terms)
• Consolidated EBITDA for 2021 1H increased to 14.1mn TL (1.6mn USD) from 13.2mn TL (1.9mn USD) in 2020 1H. (+6.6% TL terms, -16.2%USD terms)
• The Cash position of the Company escalated from 414.4mn TL (60.6mn USD) in 2020 1H, to 619.1mn TL (71.1mn USD) in 2021 1H, by providing new resources from long-termforeign loans. (+49.4% TL terms, +17.4% USD terms)
• The Net Debt position of the Company increased due to forex volatility; as 1,751.6 mn TL (201.2mn USD) in 2021 1H vs. 1,379.8TL (201.7mn USD) in 2020 1H. (+27% TL terms, -0.2% USD terms)

According to new CMB regulation, rent costs (including buildings in operation, equipment etc.) are now required to be recorded in balance sheet, in the asset side as «Right of Use Assets», and in the liabilities side as «Right of Use Liabilities». However, as per the requirements of CMB, rent costs are recorded as part of debt in the liabilities side instead of a separate item named «Right of Use Liabilities». To clarify, new regulation implementation resulted in an increase in total debt in B&S, however, this item is not a bank loan or any financial institution debt. In balance sheet, total debt of 2,704.6mn TL includes 2,370.7mn TL financial debt and 333.9mn TL «Right of Use Liabilities».

2

SUMMARY (Continued)

Regional Split of 2021 1H for EBITDA & General Remarks;

• Due to the restrictions and forex volatility, EBITDA in Northern Cyprus Merit Hotels & Casinos was recorded -17,7mnTL(-2mn USD) in 2021 1H. However, we expect that the fast increase in vaccination will normalize the tourism operations and positively effect the EBITDA of our TRNC activities in the upcoming periods.
• EBITDA of Merit Casinos in Balkan operations increased sharply from 1.1 mn TL( 0.2mn USD) in 2020 1H to 26.5mn TL (3 mn USD) in 2021 1H, regarding to the normalization process in Balkan countries. (+2338.5% in TL terms; +1816.6% in USD terms.)
• The sales figures in Balkan operations also increased tremendously to 78.7 mn TL(9 mn USD) in 2021 1H, from 26.4 mn TL (3.9 mn USD) in 2020's same period. (+198.4% in TL Terms, +134% in USD Terms)
• The construction of Merit Royal Garden in Kyrenia, and other constructions in TRNC were suspended as a result of the COVID-19 period. However, gradual normalization with vaccination provided a safer environment to complete our investments. Thus, the construction of these investments restarted and will be completed in the upcoming periods. .
• Our new project, Merit Starlit Hotel & Casino in Budva/Montenegro is expected to be completed by June 2022, meanwhile sales of the residences within this project has started.
• Liman Otel by Merit leased in Kyrenia was opened at the beginning of 2021 and we expect a positive contribution to the Net Holding's balance sheet for the upcoming periods.

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FINANCIAL OVERVIEW (TL Terms)

		Sales (mn TL)
220
	195,7		16
200
	-8,2 %
		179,7
180
			14
160
140			12
120
100			10
	2020 1H	2021 1H
6.000	Parent Shareholders' Equity (mn TL)	20%

5.000

-7,8%

4.041,1

4.000

3.726,2

10%

3.000

2.000			0%
	2020 1H	2021 1H

Consolidated EBITDA (mn TL)

+6,6%14,1

13,2

2020 1H

2021 1H

EBITDA Margin

6,7%	+1,1%	7,8%

2020 1H

2021 1H

4

FINANCIAL OVERVIEW (USD Terms)

35	Sales (mn USD)
30	28,6
25	-27,8%	20,6
20

15

10

5

0
2020 1H	2021 1H

Parent Shareholders' Equity (mn USD)

800

700

590,6

600		-27,5%
500		428,0
400
300
200
100
0
2020 1H	2021 1H

2

2

2

2

2

2

2

2

2

2

2

1

130

125

120

115

110

105

100

95

90

Consolidated EBITDA (mn USD)

1,9

-16,2%

1,6

2020 1H

2021 1H

Net Debt/Ebitda x

124,6

+19 bps

104,6

2020 1H

2021 1H

5