NAVER : 2021 NAVER Consolidated Audit Report

NAVER Corporation and Subsidiaries

Consolidated Financial Statements

December 31, 2021 and 2020

NAVER Corporation and Subsidiaries

Index

December 31, 2021 and 2020

Page(s)

Independent Auditor's Report ···············································································	1 - 5
Consolidated Financial Statements
Consolidated Statements of Financial Position ·····························································	6 - 7
Consolidated Statements of Comprehensive Income ·····················································	8 - 9
Consolidated Statements of Changes in Equity ····························································	10 - 11
Consolidated Statements of Cash Flows ····································································	12
Notes to the Consolidated Financial Statements ···························································	13 - 159

Independent Auditor's Report

(English Translation of a Report Originally Issued in Korean)

To the Shareholders and Board of Directors of

NAVER Corporation

Opinion

We have audited the accompanying consolidated financial statements of NAVER Corporation and its subsidiaries (collectively referred to as the "Group"), which comprise the consolidated statements of financial position as at December 31, 2021 and 2020 and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea ("Korean IFRS").

Basis for Opinion

We conducted our audits in accordance with Korean Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of the consolidated financial statements and we have fulfilled our other ethical responsibilities in accordance with the ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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. These matters were addressed in the context of our 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.

(1) Revenue recognition of search advertisement service

Reasons why the matter was determined to be a key audit matter

The Group recognizes search advertisement service revenue when a platform user has searched relevant information and executed related activities on the Group's platform (Note 2). For the year ended December 31, 2021, total operating revenues and search advertisement revenue are ₩ 6,818 billion and ₩ 3,318 billion, respectively.

We have determined the revenue recognition (occurrence) of the search advertisement service as a key audit matter because (i) search advertisement service revenue represents a significant portion of the Group's total operating revenues and (ii) there is a risk of potential material misstatement related

to search advertisement service revenue due to various and complex systems involved in recognition and measurement of such revenue.

How our audit addressed the key audit matter

Our main audit procedures performed on the Group's revenue recognition of the search advertisement

service are as follows:

•  Obtained an understanding of the Group's accounting policies, processes, and internal controls relating to the search advertisement service revenue recognition

•  Evaluated the design and operating effectiveness of IT general controls and internal controls relating to the search advertisement service revenue recognition

•  Tested the accuracy and completeness of the revenue related data transfer between/to search service related systems and accounting system

•  Tested the occurrence of revenue transactions by examining related underlying data on a sample basis

(2) Fair value measurement of financial assets categorized as level 3

Reasons why the matter was determined to be a key audit matter

As at December 31, 2021, the Group's financial assets measured at fair value amount to ₩ 4,993 billion, of which ₩ 2,629 billion were categorized as level 3 financial assets measured based on unobservable valuation inputs (Note 5).

We have determined the fair value measurement of financial assets categorized as level 3 as a key audit matter because (i) book value of the financial assets categorized as level 3 is material to the Group's consolidated financial statements and (ii) the significant judgment and estimation by

management when determining valuation models and inputs used to measure the fair value of financial assets.

How our audit addressed the key audit matter

Our main audit procedures performed on the Group's fair value measurement of financial assets

categorized as level 3 are as follows:

•  Obtained an understanding of the Group's accounting policies, processes, and internal controls relating to the fair value measurement of financial assets based on the risk assessment.

•  Evaluated the design and operating effectiveness of the internal controls on the fair value measurement of financial assets

•  Reviewed the competency and independence of valuation expert engaged by the Group

•  Evaluated the appropriateness of the valuation methods and the reasonableness of input assumptions used in the valuation by management on a sample basis

(3) Fair value measurement for identifiable intangible assets of associates

Reasons why the matter was determined to be a key audit matter

The Group acquired A-Holdings, an investment in associate, in relation to business integration with SoftBank Corp. on March 1, 2021, for 17,283 billion. The Group recognized fair value of identifiable intangible assets of the associate for 3,588 billion to account for equity method in investment in associates (Note 14).

We have determined the fair value measurement for identifiable intangible assets of associate as a key audit matter because (i) the acquisition of A-Holdings, an investment in associate, is an event that has a significant impact on the consolidated financial statements for the year ended December 31, 2021 and (ii) the significant judgment and estimation by management when determining valuation models and inputs used to measure identifiable intangible assets of the associate.

How our audit addressed the key audit matter

Our main audit procedures performed on the fair value measurement for the identified intangible assets of the associate are as follows:

•  Obtained an understanding and assessed risks in relation to fair value measurement of intangible assets

•  Reviewed the competency and independence of valuation expert engaged by the Group

•  Evaluated the appropriateness of the valuation methods and the reasonableness of input assumptions used in the valuation by management on a sample basis

Other Matter

Auditing standards and their application in practice vary among countries. The procedures and practices used in the Republic of Korea to audit such consolidated financial statements may differ from those generally accepted and applied in other countries.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Korean IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations.

Those charged with governance are responsible for overseeing the Group's financial reporting process.