CORPORATE PRESENTATION November 2017 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 whatever 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 ✓ Core Business Activities (Page 4 - Page 15) ✓ Financial Performance in 3Q 2017 (Page 16 - Page 21) ✓ Operational Performance (Page 22 - Page 26) ✓ Branding & Marketing (Page 27 - Page 31) ✓ Net Holding Financial Highlights (Page 32 - Page 35) ✓ Appendix (Page 36 - Page 40) 3
NET HOLDING OPERATES UNDER ‘’MERIT’’ BRAND 4 4
NET HOLDING AT A GLANCE 10 Casinos Properties Appraised at 8 Hotels 524 mn USD except Bodrum Land 2.5 mn m 2 land in 4,305 Beds Northern Cyprus 11.7 mn m 2 land in Turkey (Bodrum Casino Floor: Land is off balance 35,000 m 2 sheet) 4,390 Slot 486 Live Tables Machines 5
BUSINESS ACTIVITIES Core Activities 1- Gaming ✓ Merit Casinos 35,000 m2 gaming space in 5 casinos in Northern Cyprus and 5 casinos in Eastern Europe. 40% of gaming market in N. Cyprus. Casino operator with 4,390 slot machines & 486 live game tables. (including Skopje & Svilengrad) Only company to operate as a casino chain in Northern Cyprus. ✓ Merit Poker Exclusive JV with Bwin, own brands Lebanese Poker Tour(LPT), Russian Poker Tour (RPT), Merit Mediterranean Poker Cup (MMC), Merit Poker Winter Fest, Merit Poker Fall Open, Merit World Cup of Poker, Merit Poker Summer Open, Merit Poker Spring Open, Merit Poker Festival. 2- Hotel Management ✓ Merit International Hotels & Resorts, only company to operate as a hotel chain in Northern Cyprus. ✓ We have mostly 5-Star Casino Hotels with 4,305 beds in Northern Cyprus, 36% of 5-Star bed capacity in Northern Cyprus. Non-Core Activities 3- Real Estate Portfolio (To be Sold) ✓ Net Holding has 11.7 mn m 2 of land in Turkey, 2.5 mn m2 in Northern Cyprus & 0.3 mn m 2 of land in Baku, Azerbaijan. ✓ All real estate will be revalued in 2017 with expectations of value increases especially for Northern Cyprus. ✓ Bodrum Land of 10 mn m 2 not included in revaluation and does NOT show on B/S; appraised at 524 mn USD. 4- Lottery ✓ New privatization schedule will be determined by Sovereign Wealth Fund administration. We expect that, tender will have down payment base on management fee. ✓ We are following closely opportunities in our region. 6
MILESTONES: The PATH to GROWTH From single casino on 2000 to 10 casinos on 2017 International Transformation Years Expansion (2000-2010) (2010-2017) ✓ 2006 Bodrum Milas Project ✓ 2013 Opening of Merit Royal Hotel Agreement & Casino ✓ 2007 Acquisition of Antalya Duty ✓ 2013 Re-opening of Park under Free license with Nuance group Merit brand ✓ 2008 Opening of Merit Lefkosa ✓ 2013 Antalya Duty Free sold to ✓ 2009 First Texas Holdem Poker Nuance for USD150 mn ✓ 2014 Bid and won Turkish National Tournament Lottery Tender together with JV partner SG. ✓ 2014 Opening of Merit Royal Premium Hotel ✓ 2016 entry to Montenegro with opening of casino in Podgorica ✓ 2016 Opening of Merit Casino Royal Splendid and Avala in Budva ✓ 2016 Opening of 2016 Market entry to Croatia with opening of Merit Casino Grand Lav in Split ✓ 2016 Opening of Merit Casino Libertas in Dubrovnik 7
STRONG BACKGROUND & OPPORTUNITIES ✓ 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 3 more casinos in Eastern Europe in 2018. In Bulgaria, Svilengrad Casino is under construction, the only 5-star hotel in the area. Svilengrad is just 2,5 hours driving distance from Istanbul and will start operations by the end of 2017. In Macedonia, Skopje Casino is expected to be open in the end of 2018 1H. In Croatia, Zagreb Casino is expected to be open by year end 2018. ✓ Significant real estate base ; Book value of hotel&casinos at 1,7 bn TL and book value of investment property at 532 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 avg. daily trading volume of Net Holding was more than 2.0 mn USD in November 2017. 8
NET HOLDING MASTER PLAN Background & Status of the Company : The theme is “ Transform and Improve Transparency ” ✓ Net Holding was established in 1974 by a group of tourist guides. ✓ Listed in Istanbul Stock Exchange since 1989, first of ten initially listed entities in Turkey. ✓ The company is managed by Tibuk Family and several foreign institutional investors. The institutional investors represent 43% of the company. ✓ Complete transformation started in 2007 with current professional management with the aim of transforming the Company into a regional leading gaming operator. The Current Business Plan : Focus on Casino Operations ✓ The core of the business development plan by the current professional management stands as hotel and casino management with a strong potential interest in any form of licensed gaming and lottery in the “Regions of Interest ” . ✓ The current business plan of the Company defines “Regions of Interest” as Turkey, Northern Cyprus, the Balkans, the Southeast Europe and high-demographic African and Arab countries that show clear appetite for licensed gaming and lottery. ✓ Only licensed physical and online casino management, lottery management and sports betting remain as allowed business segments of the Company by the same business plan with strict capex rules and restrictions in place. 9
NET HOLDING MASTER PLAN First Phase : Northern Cyprus, unmatched opportunity The first phase of the Company’s business plan was to expand into Northern Cyprus in hotel & casino management with strong emphasis on solid non-volatile EBITDA generation. First phase has been completed with Northern Cyprus expansion at its best generating a minimum base of USD 50mn even in adverse conditions as the ones experienced in 2016 with USD 60 mn expected in 2017 through organic sustainable growth. Adverse conditions experienced in 2016 were; ✓ Rapid devaluation of TL vs USD with NO effect on the Company’s EBITDA as revenue distribution stands at 77% hard currency. ✓ July 15 th , 2017 failed coup attempt in Turkey leading to a massive drop in consumer confidence, consumer spending and restricted travel out of Turkey with NO effect on the Company’s EBITDA as Turkish visitors still made up 47% of visitors’ nationality. ✓ Shooting of Russian jet by Turkish Air Force, a first since 1954 for Russia leading to a massive drop in Russian arrivals to Turkey with NO effect on the Company’s EBITDA as visitors’ nationality stands at 53% foreign with a WELL DIVERSIFIED base that does not have a single nationality exposure. The Company’s business plan proved in 2016 that its strong vertebra of EBITDA generation in Northern Cyprus is NOT affected by economic downturn in Turkey, regional wars in Syria and Northern Iraq, a first time shut down Russian jet since 1954 by Turkey nor a massive devaluation of TL/USD. 10
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