Net : 31.12.2023 Financial Statements

NET HOLDİNG ANONİM ŞİRKETİ

AND IT'S SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED AT 31 DECEMBER 2023

(CONVENIENCE TRANSLATION OF THE REPORT, THE FINANCIAL STATEMENTS

AND THE EXPLANATORY NOTES ORIGINALLY ISSUED IN TURKISH)

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 ……………………………………………………………………	15-106
NOTE 1	Organization and Nature Of Activities………………………………………………………………..	15
NOTE 2	Basis of the Consolidated Financial Statement…………………………………………………………	16-39
NOTE 3	Business Mergers and Subject to Joint Control and Joint Ventures……………………………………	39-40
NOTE 4	Shares in Other Companies……………………………………………………………………………	40-45
NOTE 5	Report by Segments……………………………………………………………………………………	45-50
NOTE 6	Related Party Disclosures………………………………………………………………………………	50-53
NOTE 7	Cash And Cash Equivalents……………………………………………………………………………	54-55
NOTE 8	Financial Investments, net………………………………………………………………………………	55-57
NOTE 9	Financial Borrowings, net………………………………………………………………………………	57-58
NOTE 10	Trade Receivables and Payables………………………………………………………………………	58-60
NOTE 11	Receivables and Payables from Finance Sector Activities……………………………………………	61
NOTE 12	Other Receivables and Payables………………………………………………………………………	61-64
NOTE 13	Payables from Employee Benefits………………………………………………………………………	64
NOTE 14	Inventories………………………………………………………………………………………………	64-65
NOTE 15	Prepaid Expenses and Deferred Income………………………………………………………………	65-66
NOTE 16	Investments Consolidated by Equity Pick Up Method…………………………………………………	66
NOTE 17	Right of Use Assets……………………………………………………………………………………	67
NOTE 18	Investment Properties…………………………………………………………………………………	68
NOTE 19	Tangible Fixed Assets…………………………………………………………………………………	69
NOTE 20	Intangible Fixed Assets, net……………………………………………………………………………	70
NOTE 21	Government Incentives and Grants……………………………………………………………………	71
NOTE 22	Commitments, Contingent Assets and Liabilities ………………………………………………………	72-73
NOTE 23	Commitments…………………………………………………………………………………………	73
NOTE 24	Provisions for Employee Benefits………………………………………………………………………	74
NOTE 25	Other Assets……………………………………………………………………………………………	74-75
NOTE 26	Shareholders' Equity……………………………………………………………………………………	75-78
NOTE 27	Sales and Cost of Sales…………………………………………………………………………………	79
NOTE 28	General Administrative Expenses and Marketing Expenses……………………………………………	79-80
NOTE 29	Expenses According to Qualifıcations…………………………………………………………………	81
NOTE 30	Other Operating Income / Expenses……………………………………………………………………	82
NOTE 31	Investment Activities Income / Expenses………………………………………………………………	83
NOTE 32	Financial Income / (Expenses)…………………………………………………………………………	83-84
NOTE 33	Current Assets Held for Sale and Discontinued Operations……………………………………………	84
NOTE 34	Tax Assets and Liabilities (Including Deferred Tax Assets and Liabilities)……………………………	85-90
NOTE 35	Earnings Per Share……………………………………………………………………………………	90
NOTE 36	Exposure to Financial Risks Due to Financial Instrument……………………………………………	91-98
NOTE 37	Financial Instruments (Fair Value Disclosures and Hedge Accounting Disclosures)…………	99-101
NOTE 38	Fees for Services Received from Independent Auditor's …………………….…………………….…	101
NOTE 39	Other Issues Affecting the Consolidated Financial Statements Significantly or Required to be	101-105
	Disclosed for Clear, Understandable and Interpretable Presentation
NOTE 40	Post Balance Sheet Events……………………………………………………………………………. 105-106

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 2023 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 2023, 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
Revaluation in Tangible Assets and Investment
Properties
As of 31 December 2023, 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
consolidations of underground and surface layouts	audit procedures related to land,
and 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 Net
Group's assets and applied valuation methods	valuation methods as applied by appraisers are
contain significant judgements and assumptions, we	acceptable for valuation of the underlying
have considered the valuation of investment	investment property,
properties as a key audit matter.	- We reconciled the appraised value for the
Please refer to notes 2.d, 18 and 19 to the	independent sections in the valuation report
consolidated financial statements for the Net	with disclosed amount in note 18 and 19.
Group's lands and land improvements including the	We had no material findings related to the
related accounting policy and risk management	tangible assets and investment properties as a
policy.	result of these procedures.

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Key Audit Matter

How to Perform of Matter in Audit

Revenue Recognition

As of 31 December 2023, Net Group's revenue and Procedures performed are as follows about accounting policies related to their revenue and their revenue;

revenue amounts shown in notes 2.d, 5 and 27.

		- Evaluation of the design and suitability of
Revenue is an important measurement	criteria in key	internal	controls of revenue	in	the
terms of evaluation of the results of the	strategies consolidated financial statements,
applied during the year and performance follow-up.
Revenue, service realization, reliable determination of - Examination of the risk and return transfers
revenue amount and the economic benefits are likely through	the	sales documents	taken for	the
to flow to the Net Group, this is why consideration selected	sales	transactions	by	sampling
received or receivable is recognized in the financial method and evaluation of the appropriateness
statements on an accrual basis at fair value. Net sales of the revenue to the accounting policies and
are presented by return from sales, discounts and the	receipt	of	the consolidated	financial
commissions from sales of goods.		statements in the audited financial reporting
		period,
The significant part of Net Group revenue is	- Sending a reconciliation for the selected
comprised of revenues from hotel and casino
operations. The nature of the operations of the Net	commercial receivables through the sampling
Group, service revenues are accrued daily by the	method and checking compliance with
customer and billed at the end of the service.	consolidated financial statements,
Because of this reason, the obligation related to the	- Performing analytical examinations to
service has not yet been fulfilled, so there may be
cases where the risk and the return may not passed	determine	the	existence	of	unusual
on to the customer. It is also necessary to make	transactions.
correct evaluations on the revenue of the products in	We had no material findings related to the
this case. Because of the complexity of the trade
transactions, accounting for each case is selected and	revenue as a result of these procedures.
the recognition of revenue as the key consideration
is defined as the recognition of the revenue to the
financial statements in the consolidated financial
statements.

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Application of TAS 29, "Financial Reporting in Hyperinflationary Economies

Key Audit Matter

How to Perform of Matter in Audit

Application of TAS 29, "Financial

Reporting in

We performed the following audit procedures

Hyperinflationary Economies"

in relation to the application of TAS 29:

The Net Group applied TAS 29 "Financial reporting

- Understanding and evaluating the process and

in hyperinflationary economies" ("TAS

29") in its

controls related

to

application

of

TAS 29

consolidated financial statements as of

and for the

designed and implemented by management,

year ending 31 December 2023.

-

Verifying

whether

management's

According to TAS 29, the consolidated

financial

determination of monetary and non-monetary

statements as of 31 December 2023

should be

items is in compliance with TAS 29,

restated in accordance with 31 December 2023

purchasing power.

- Obtaining detailed lists of non-monetary

items and testing original entry dates and

Applying TAS 29 results in significant

changes to

amounts on a sample basis,

financial statement items included in the Net Group's

- Verifying the general price index rates used in

consolidated financial statements as of

and for the

calculations correspond with the coefficients in

year ending 31 December 2023, which

have been

the

"Consumer

Price

Index

in

Turkey"

restated for comparative purposes. The application of

published by the Turkish Statistical Institute,

TAS 29 has a pervasive and material impact on the

consolidated financial statements.

In

addition,

- Testing the mathematical accuracy of

non-

considering the additional effort required to perform

monetary items,

income

statement,

and

cash

the audit of the application of TAS 29, we identified

flow statement adjusted for inflation effects,

the application of TAS 29 as a key audit matter.

The Group's accounting policies and

related

- Evaluating

the

adequacy

of

disclosures

related to the

application of

TAS

29 in the

explanations regarding the application of TAS 29 are

notes to the consolidated financial statements

disclosed in Note 2.

in accordance with IFRS.

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4. Other Matter

Without qualifying our opinion, we draw your attention to the following matters;

Net Holding A.Ş. had signed an agreement titled as "Construction Agreement in the base of Promise to sell Real Property and Share of the Revenues" with Ağaoğlu Group Companies (Akdeniz İnşaat ve Eğitim Hizmetleri A.Ş. and Eltes İnşaat Tesisat ve Sanayi Ticaret A.Ş.) on 29 June 2006 in frame of Net Milas Tourism and Real Estate Development Project that will be realized on the lands of Halikarnas Turizm Merkezi Ticaret ve Sanayi A.Ş. and Asyanet Turizm Ticaret ve Sanayi A.Ş. which are located in Milas, Muğla. The realization of the Project has started. Project is predicted and planned to have golf course, hotels, social and sport facilities, residences and all the necessary urban infrastructure completeness. Matters of Net Milas Tourism and Real Estate Development Project are as stated in Note 39.6.

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

Net Group management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with TAS, 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 Net 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 Net Group or to cease operations, or has no realistic alternative but to do so.

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

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6. Auditor's Responsibilities Regarding the Independent Audit of Consolidated Financial

Statements

In an independent audit, we, independent auditors, have the responsibilities of independent auditors:

Our aim is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an independent auditor's report that includes our opinion. Reasonable assurance expressed as a result of an independent audit conducted in accordance with SIA is a high level of assurance but does not guarantee that a material misstatement will always be detected. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an independent audit conducted in accordance with SIA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Assess the internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Net Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Net Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our independent auditor's report. However, future events or conditions may cause the Net Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Net Group audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence. We also communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

B. Other Responsibilities Arising From Regulatory Requirements

In accordance with subparagraph 4 of Article 398 numbered 6102 of the TCC, the auditor's report on the early risk identification system and committee was submitted to the Company's Board of Directors on 20 May 2024.

No matter has come to our attention that is significant according to subparagraph 4 of Article 402 of Turkish Commercial Code ("TCC") and that causes us to believe that the Company's bookkeeping activities concerning the period from 01 January to 31 December 2023 period are not in compliance with the TCC and provisions of the Company's articles of association related to financial reporting

In accordance with subparagraph 4 of Article 402 of the TCC, the Board of Directors submitted the necessary explanations to us and provided the documents required within the context of our audit.

Dr. Halil İbrahim Yürüdü is the person who carries out this independent audit.

ATA Uluslararası Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.

Member Firm of Kreston International

Dr. Halil İbrahim YÜRÜDÜ

Partner

Istanbul, 20 May 2024

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NET HOLDİNG ANONİM ŞİRKETİ AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF

31 DECEMBER 2023 AND 2022

(Amounts expressed in thousand Turkish Lira ("TRY") in terms of the purchasing power of the TRY at

31 December 2023, unless otherwise indicated.)

		Current Period	Prior Period
	Footnote	Audited	Audited
	References	31.12.2023	31.12.2022
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	7	2.044.142	1.827.024
Financial Investments	8	861	1.509
Trade Receivables		121.424	336.426
- Trade receivables from related parties	10	12.020	929
- Trade receivables from other parties	10	109.404	335.497
Other Receivables		148.894	10.605
- Other receivables from related parties	12	140	142
- Other receivables from other parties	12	148.754	10.463
Inventories	14	310.546	252.658
Prepaid Expenses	15	135.598	105.026
Assets Relevant to Current Period Taxes	34	391.730	286.463
Other Current Assets	25	67.374	50.742

TOTAL CURRENT ASSETS		3.220.569	2.870.453
NON-CURRENT ASSETS
Financial Investments	8	15.941	15.941
Other Receivables		8.527	10.103
- Other receivables from related parties	12	4.632	5.552
- Other receivables from other parties	12	3.895	4.551
Right of Use Assets	17	2.768.002	1.156.283
Investment Properties	18	14.053.222	11.800.763
Tangible Fixed Assets	19	32.524.496	27.858.842
Intangible Fixed Assets	20	404.073	319.848
Prepaid Expenses	15	1.524.162	1.000.204
Deferred Tax Assets	34	3.238.524	1.819.745
Other Non-Current Assets	25	42.025	39.160
TOTAL NON-CURRENT ASSETS		54.578.972	44.020.889
TOTAL ASSETS		57.799.541	46.891.342

The explanatory notes are an integral part of these statements.

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