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NAVER Corporation Separate Financial Statements December 31, 2020 and 2019

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NAVER Corporation Separate Financial Statements December 31, 2020 and 2019 NAVER Corporation Index December 31, 2020 and 2019 Page(s) Independent Auditor’s Report ··············································································· 1 - 4 Separate Financial Statements Separate Statements of Financial Position ·································································· 5 Separate Statements of Comprehensive Income ·························································· 6 Separate Statements of Changes in Equity ································································· 7 Separate Statements of Cash Flows ·········································································· 8 Notes to the Separate Financial Statements ································································ 9 - 100 Report on Independent Auditor’s Audit of Internal Control over Financial Reporting ············· 101-102 Report on the Effectiveness of Internal Control over Financial Reporting ··························· 103 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 separate financial statements of NAVER Corporation (the “Company”), which comprise the separate statements of financial position as at December 31, 2020 and 2019, and the separate statements of comprehensive income, separate statements of changes in equity and separate statements of cash flows for the years then ended, and notes to the separate financial statements, including a summary of significant accounting policies. In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Company as at December 31, 2020 and 2019, and its separate financial performance and its separate cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”). We also have audited, in accordance with Korean Standards on Auditing, the Company's Internal Control over Financial Reporting as at December 31, 2020, based on Conceptual Framework for Designing and Operating Internal Control over Financial Reporting, and our report dated March 5, 2021 expressed an unqualified opinion. 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 Separate Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements of the Republic of Korea that are relevant to our audit of the separate 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 separate financial statements of the current period. These matters were addressed in the context of our audit of the separate 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 Company recognizes search advertisement service revenue when a platform user has searched relevant information and executed related activities on the Company’s platform (Note 2). For the year ended December 31, 2020, total operating revenues and search advertisement revenue are ₩ 4,127 billion and ₩ 2,817 billion, respectively. The principal considerations for our determination that revenue recognition (occurrence) of the search advertisement service is a key audit matter are (i) search advertisement service revenue represents a significant portion of the Company’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 Company’s revenue recognition of the search advertisement service are as follows: Obtained an understanding of the Company’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, 2020, the Company’s financial assets measured at fair value amount to ₩ 2,611 billion, of which ₩ 1,417 billion were categorized as level 3 financial assets measured based on unobservable valuation inputs (Note 5). The principal considerations for our determination that fair value measurement of financial assets categorized as level 3 is a key audit matter are (i) book value of the financial assets categorized as level 3 is material to the Company’s separate 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 Company’s fair value measurement of financial assets categorized as level 3 are as follows: Obtained an understanding of the Company’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 Company 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 separate financial statements may differ from those generally accepted and applied in other countries. 2 Responsibilities of Management and Those Charged with Governance for the Separate Financial Statements Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with Korean IFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the separate financial statements, management is responsible for assessing the Company’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 Company or to cease operations. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Separate Financial Statements Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Korean Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and 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 separate financial statements. As part of an audit in accordance with Korean Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the separate 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. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. 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
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