NET HOLDING CORPORATE PRESENTATION 1
Disclaimer This presentation contains forward-looking statements about Net Holding A.S. and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future growth potential of markets and products, profitability in specific areas, the future product portfolio, development of and competition in economies and markets of the Group. These forward looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of Net Holding’s control, are difficult to predict and may cause actual results to differ significantly from any future results expressed or implied in the forward-looking statements on this presentation. While Net Holding believes that the assumptions made and the expectations reflected on this presentation are reasonable, no assurance can be given that such assumptions or expectations will prove to have been correct and no guarantee of whatsoever nature is assumed in this respect. The uncertainties include, inter alia, the risk of a change in general economic conditions and government and regulatory actions. These known, unknown and uncertain factors are not exhaustive, and other factors, whether known, unknown or unpredictable, could cause the Group’s actual results or ratings to differ materially from those assumed hereinafter. Net Holding A.S. undertakes no obligation to update or revise the forward-looking statements on this presentation whether as a result of new information, future events or otherwise. 2
Table of Contents • The World of Merit International Page 4 • Net Holding Financial Highlights Page 15 • Core Business Activities Page 23 • Merit Hotels-Casinos & Revenue Generation Page 26 • Branding & Marketing Page 33 3
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Gaming Leader in Northern Cyprus and Eastern Europe • Uniquely Positioned to offer world class gaming experience within a maximum of 4-hours flight time from Russian speaking countries, Middle East, Europe, Africa and Scandinavian countries. • Our dominant position in N. Cyprus enables us to pursue global growth opportunities in the neighborhood of our region. Merit opened 5 new casinos in Montenegro and Croatia and plans to add 8 more casinos in Eastern Europe in the next two years. • Significant real estate base ; Book value of hotel&casinos at 1,6 bn TL and book value of investment property at 531 mn TL in Turkey, Northern Cyprus and Azerbaijan, except Bodrum Land. • Exclusive Joint Venture Agreement with Scientific Games in 26 neighbouring countries to develop acquire and operate Lottery concessions. • Net Holding founded in 1981 and listed on Borsa Istanbul (BIST) since 1989 with the ticker symbol “ NTHOL” . The combined avg. daily trading volume of Net Group companies (NTHOL – 0.5 mn $ / NTTUR - 2.2 mn $) was more than 2.7 mn $ in 2017. 6
Milestones: The Path to Growth From single casino on 2000 to 10 casinos on 2017 International Expansion (2011- 2016) ▪ 2013 Opening of Merit Royal Hotel & Casino Transformation ▪ 2013 Re-opening of Park Years (2000-2010) under Merit brand ▪ 2014 Antalya Duty Free sold Early Years (1990- to Nuance for USD150 mn 1999) ▪ 2014 Bid and won Turkish National Lottery Tender Beginnings (1974- ▪ together with JV partner SG. 2006 Bodrum Milas Project ▪ 2014 Opening of Merit Royal Agreement 1990) ▪ Premium Hotel 2007 Acquisition of Antalya ▪ ▪ 2016 Market entry to 1994 Total 21 Casinos in Turkey Duty Free license with Nuance ▪ group Montenegro with opening of 1996 Acquisition of Merit ▪ casino in Podgorica Crystal Cove in TRNC 2008 Opening of Merit Lefkosa ▪ ▪ ▪ 2016 Opening of Merit Casino 1996 Casinos outlawed in 2009 First Texas Holdem Poker ▪ 1974 Net Turizm founded by Royal Splendid and Avala in Turkey Tournament Mr. Besim Tibuk ▪ ▪ Budva 1998 Opening of Merit Cyprus 2010 Acquisition of Merit Esprit ▪ 1981 Net Holding established ▪ Hotel 2016 Opening of 2016 Market Garden and Merit Crystal Cove ▪ 1985 First Casino opened in entry to Croatia with opening Turkey of Merit Casino Grand Lav in ▪ 1989 NTHOL listed on Istanbul Split Stock Exchange ▪ 2016 Opening of Merit Casino ▪ 1990 Net Turizm listed Libertas in Dubrovnik 7
Casino Performance: EBITDA & Sales * CASINO EBITDA (mn $) 80 70 60 50 40 30 74 20 32 52 45 51 10 0 2013 2014 2015 2016 2017 E CASINO SALES (mn $) 200 180 160 140 120 100 179 80 134 132 90 138 60 40 20 0 2013 2014 2015 2016 2017 E * These tables are taken from independent auditors ’ report in EBITDA breakdown page by TL and converted to $ with, end of year CBRT fx rates. 8
2017 EBITDA GUIDANCE $68 9
Merit: Operational Statistics Total Visits to Merit Properties (mn people) Occupancy and ADR 350 64% 2 300 62% 308 300.0 250 60% 1.5 267 247 200 58% 1 150 56% 1.5 1.1 100 54% 0.8 0.5 50 52% 0 0 50% 2014 2015 2016 2013 2014 2015 2016 $ Revenue Distribution By Currency (2016) Visitors Nationality (2016) 10
Disciplined Execution of Our Expansion Strategy • Merit is clear regional leader in integrated casino resort development and management and is well positioned to bring its expertise and business model to selected countries in Eastern Europe. • 5 new casinos opened in 2016 in Montenegro and Croatia with 386 slot machines and 79 tables. • 8 new casinos planned in 2017 and 2018. When completed, the expansion to increase our gaming capacity to more than 1,500 machines and 200 live tables in Eastern Europe. • Capital efficient asset-light expansion model with an average investment of 3 mn € per point. Geographic Areas of Future Development Interest for Merit Macedonia Bulgaria Ukraine Bosnia Serbia Slovenia 11
Corporate Action • NET Holding made an application to merge NTTUR and NTHOL via a share swap on February 8 th , 2017. CMB approved the merger on July 21 th , 2017 . • Independent valuation conducted by KPMG determined the ratio to be 0.97861. • The merger to result in elimination of cross-holding pattern that existed since 1989 through NTTUR & NTHOL merger and 1,064 mn TL outside interests. • Restructuring of entire Net Group into regional gaming operator focused on casinos, sports betting and lottery management. • Simplification of participants through mergers and wind ups. This elimination will solidify minority rights and application of corporate governance compliance. 12
Ownership Structure (Pre-Merger) Net Holding Shareholder Structure Foreign Institutional Investors 148,984,000 44.00% Net Group (Treasury Shares) 77,878,000 23.00% Tibuk Family 57,562,000 17.00% Free Float 54,176,000 16.00% Total 338,600,000 100.00% 13
Ownership Structure (Post-Merger) Net Holding Shareholder Structure Foreign Institutional Investors 242,917,754 43.08% Net Group (Treasury Shares) 81,310,910 14.42% Tibuk Family 145,931,092 25.88% Free Float 93,716,181 16.62% Total 563,875,937 100.00% 14
NET HOLDING FINANCIAL HIGHLIGHTS 15
Financial Overview mn TL 1HF17 1HF16 Chg. FY 2016 FY 2015 Chg. Revenues 242.8 184.4 32% 478.6 403.1 19% EBITDA 48.1 36.2 33% 143.7 83.9 71% OPERATING PROFIT 5.6 0.2 n.m. 68.5 30.5 124% Investment Income (Net) 1.6 2.2 -29% 4.2 124.8 -97% Interest (Expense)/ Revenue* -16.3 -15.6 4% -31.7 -30.5 4% Foreign Exchange (Loss)/Profit -17.9 0.6 n.m. -8.0 -2.3 248% Other Financial Commissions -1.0 -0.5 92% -2.6 -4.0 -35% Profit Before Tax -28.6 -13.5 112% 28.5 124.6 -77% Tax 10.1 4.0 152% -32.8 -27.2 21% Net Profit -19.9 -10.4 91% -4.3 97.4 n.m. Minorities -3.2 4.8 n.m. 19.9 31.3 -37% Attributable profit -16.7 -15.2 10% 24.2 66.1 n.m. *-12 mn TL non-cash impact: The impact of depreciation of TL on foreign currency debt stock. -4.3 mn TL is cash impact. 16
Summarized Segmental Review mn TL 1HF17 1HF16 Chg. FY 2016 FY 2015 Chg. EBITDA N. Cyprus 62.2 46.1 34.9% 180.7 147.4 22.6% Merit Crystal Cove 12.4 9.2 34.8% 32.1 28.0 14.6% Merit Lefkosa 4.3 3.1 38.7% 41.7 30.9 35.0% Merit Royal 32.8 24.3 35.0% 65.2 57.6 13.2% Merit Cyprus Gardens 0.8 0.6 33.3% 8.1 4.7 72.5% Merit Park 11.9 8.9 33.7% 33.6 26.2 28.2% Eastern Europe -1.7 0.3 n.m. 1.0 0.0 n.m. Others 1.6 -0.1 n.m. 1.0 -0.8 n.m. Holding -13.0 -7.9 64.6% -32.3 -52.6 -38.6% Consolidation adj. -1.0 -2.2 -54.5% -6.8 -10.1 -33.2% Consolidated EBITDA 48.1 36.2 32.9% 143.7 83.9 71.3% 17
Cash Flow mn TL 1HF17 1HF16 Chg. FY2016 FY2015 Chg. Reported EBITDA 48.1 36.2 11.9 143.8 83.9 59.9 Working Capital -15.2 -7.1 -8.1 -5.1 -18.1 13.0 Cash Flow generated by operations 32.9 29.1 3.8 138.7 65.8 72.9 Net interest expenses -34.3 -12.3 -21.9 -21.0 -16.9 -4.1 Taxes paid -14.9 -12.0 -2.9 -11.3 -19.1 7.8 Operating Cash Flow -16.2 4.8 -21.0 106.3 29.8 76.5 Capital Expenditure (net) -56.6 -90.2 33.6 -239.9 -103.5 -136.4 Cash Flow before financing activities -72.8 -85.4 12.6 -133.6 -72.7 -60.9 Net borrowings 26.5 1.0 25.5 98.6 -275.2 373.8 Share sale (buybacks) 1.8 28.3 -26.5 31.2 200.1 -168.9 Net increase (decrease) in cash -44.6 -56.1 11.6 -3.8 -147.8 144.0 18
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