Net : 31.12.2020 Financial Statements

NET HOLDİNG ANONİM ŞİRKETİ

AND IT'S SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REPORT

FOR THE PERIOD ENDED AT 31 DECEMBER 2020

CONTENTS		PAGE
Independent Audit Report..........................................................................................................................................	1-7
Consolidated Balance Sheets…………………………………………………………………………………………	8-9
Consolidated Statements of Income …………………………………………………………………………………	10
Consolidated Statements of Other Comprehensive Income………………………………………………………	11
Consolidated Statements of Change in Shareholder's Equity ……………………………………………………	12
Consolidated Statements of Cash Flow ……………………………………………………………………………	13-14
Notes to the Consolidated Financial Statements ……………………………………………………………………	15-112
NOTE 1	Organization and Nature Of Activities………………………………………………………………..	15
NOTE 2	Basis of the Consolidated Financial Statement…………………………………………………………	16-38
NOTE 3	Business Mergers and Subject to Joint Control and Joint Ventures……………………………………	39
NOTE 4	Shares in Other Companies……………………………………………………………………………	39-44
NOTE 5	Report by Segments……………………………………………………………………………………	44-51
NOTE 6	Related Party Disclosures………………………………………………………………………………	51-56
NOTE 7	Cash And Cash Equivalents……………………………………………………………………………	57-59
NOTE 8	Financial Investments, net………………………………………………………………………………	59-60
NOTE 9	Financial Borrowings, net………………………………………………………………………………	61
NOTE 10	Trade Receivables and Payables………………………………………………………………………	62-63
NOTE 11	Receivables and Payables from Finance Sector Activities……………………………………………	64
NOTE 12	Other Receivables and Payables………………………………………………………………………	65-68
NOTE 13	Payables from Employee Benefits………………………………………………………………………	68
NOTE 14	Inventories………………………………………………………………………………………………	68-69
NOTE 15	Prepaid Expenses and Deferred Income………………………………………………………………	69-70
NOTE 16	Investments Consolidated by Equity Pick Up Method…………………………………………………	70-72
NOTE 17	Right of Use Assets……………………………………………………………………………………	72
NOTE 18	Investment Properties…………………………………………………………………………………	73
NOTE 19	Tangible Fixed Assets…………………………………………………………………………………	74
NOTE 20	Intangible Fixed Assets, net……………………………………………………………………………	75
NOTE 21	Government Incentives and Grants……………………………………………………………………	76
NOTE 22	Commitments and Contingent Assets and Liabilities …………………………………………………	77-78
NOTE 23	Commitments…………………………………………………………………………………………	79
NOTE 24	Provisions for Employee Benefits………………………………………………………………………	79
NOTE 25	Other Assets……………………………………………………………………………………………	80
NOTE 26	Shareholders' Equity……………………………………………………………………………………	80-84
NOTE 27	Sales and Cost of Sales…………………………………………………………………………………	84
NOTE 28	General Administrative Expenses and Marketing Expenses……………………………………………	85
NOTE 29	Expenses According to Qualifıcations…………………………………………………………………	86
NOTE 30	Other Operating Income / Expenses……………………………………………………………………	87
NOTE 31	Investment Activities Income / Expenses………………………………………………………………	88
NOTE 32	Financial Income / (Expenses)…………………………………………………………………………	88-89
NOTE 33	Current Assets Held for Sale and Discontinued Operations……………………………………………	89-90
NOTE 34	Tax Assets and Liabilities (Including Deferred Tax Assets and Liabilities)……………………………	91-96
NOTE 35	Earnings Per Share……………………………………………………………………………………	96
NOTE 36	Exposure to Financial Risks Due to Financial Instrument………………………………………………	97-104
NOTE 37	Financial Instruments (Fair Value Disclosures and Hedge Accounting Disclosures)..................	105-107
NOTE 38	Post Balance Sheet Events…………………………………………………………………………….	107
	Other Issues Affecting the Consolidated Financial Statements Significantly or Required to be
NOTE 39		108-112
	Disclosed for Clear, Understandable and Interpretable Presentation .............................................

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of Net Holding Anonim Şirketi,

1. Audit of the Consolidated Financial Statements

1. Opinion

We have audited the accompanying consolidated financial statements Net Holding Anonim Şirketi (the "Parent Company") and its subsidiary (referred to as the "Net Group"), which comprise the consolidated statement of financial position as at 31 December 2020 and the consolidated statement of profit or loss, consolidated statement of other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended and the notes to the consolidated financial statements and a summary of significant accounting policies and consolidated financial statement notes.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Net Group as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with Turkish Accounting Standards ("TAS").

2. Basis for Opinion

Our audit was conducted in accordance with the Standards on Independent Auditing (the "SIA") that are part of Turkish Standards on Auditing issued by the Public Oversight Accounting and Auditing Standards Authority (the "POA"). Our responsibilities under these standards are further described in the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements" section of our report. We hereby declare that we are independent of the Net Group in accordance with the Ethical Rules for Independent Auditors (the "Ethical Rules") and the ethical requirements regarding independent audit in regulations issued by POA that are relevant to our audit of the financial statements. We have also fulfilled our other ethical responsibilities in accordance with the Ethical Rules and regulations. We believe that the audit evidence we have obtained during the independent audit provides a sufficient and appropriate basis for our opinion.

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3. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. Key audit matters were addressed in the context of our independent audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

How to Perform of Matter in Audit

Recoverability of Trade Receivables

As of 31 December 2020, trade receivables

are

We performed the following

procedures in

constitute a significant portion of the

consolidated

relation

to

the

recoverability

of

trade

assets of the Group.

receivables;

Furthermore, the assessment of the recoverability of

-Understanding

the business

process

for

these assets involves significant level of management

collections

from

customers

and

testing the

estimates. Such estimation includes considering

the

operational

effectiveness

of

selected

key

following for each customer-the

amount

of

controls,

guarantees/collateral

held,

past

collection

performance, creditworthiness

and

aging

of

-Analytical procedures on aging of receivables

receivables. The outcome of such esitmates is very

and trade receivable turnover days, comparing

sensitive to changes in market conditions. Therefore

them to the prior period,

recoverability of trade receivables is a key matter for

our audit.

- Inquiries with management in relation to any

disputes with customers or distributors and

Please refer to notes 2.d, 10 and 36 to the consolidated

written

inquiries

with

the

Group's

legal

financial statements for the Net Group's disclosures

counsels on outstanding litigation in relation

on trade receivables, including the related accounting

to trade receivables,

policy and risk management policy.

-Testing receivables from third parties by

obtaining confirmation letters from customers

and distributors and reconciling them to the

Group's accounting records,

-Testing collections in the subsequent period

from selected customers and distributors,

- Assessing the adequacy of disclosures

around recoverability of trade receivables in

the consolidated financial statements.

We had no material findings related to the

recoverability of trade receivables as a result

of these procedures.

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Key Audit Matter			How to Perform of Matter in Audit
Revaluation in Tangible Assets and Investment
Properties
As of 31 December 2020, land and buildings	are	In our audit, revaluation and impairment of
constitute a significant portion of the assets in total	buildings have been applied for the following
consolations of underground and surface layouts and	audit procedures related to land,
buildings.			-We assessed the qualifications, competencies
Land, underground and overland plants of the	Net	and indepence of the professional appraisers
Group shown in the accompanying	financial	engaged by the management,
statements by fair value method. Due to the fact that	-In our audit, we assessed whether the
investment properties are significant part of	the
Group's assets and applied valuation methods contain	valuation methods as applied by appraisers are
significant judgements and assumptions,	we have	acceptable for valuation of the underlying
considered the valuation of investment properties as a	investment property,
key audit matter.			- We reconciled the appraised value for the
Please refer to notes 2.d, 18 and 19 to the consolidated	independent sections in the valuation report
with disclosed amount in note 18 and 19.
financial statements for the Net Group's lands and
land improvements including the related accounting	- As of 31 December 2020, reviewing and
policy and risk management policy.			calculation of the impairment.
			We had no material findings related to the
			tangible assets and investment properties as a
			result of these procedures.

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