STAR CONFERENCE - LONDON October 23, 2018

Transcription

1 STAR CONFERENCE - LONDON October 23, 2018

2 Disclaimer This proprietary presentation (including any accompanying oral presentation, question and answer session and any other document or materials distributed at or in connection with this presentation) (collectively, the Presentation ) has been prepared by Gamenet Group S.p.A. (the Company ) in connection with this offering and the acquisition by Gamenet S.p.A. of 100% of the share capital of GoldBet S.r.l. (the "GoldBet"), which is expected to close in October Under no circumstances may this Presentation be deemed to be an offer to sell, a solicitation to buy or a solicitation of an offer to buy securities of any kind in any jurisdiction where such an offer, solicitation or sale should require registration, qualification, notice, disclosure or application under the securities laws and regulations of any such jurisdiction. This Presentation has not been independently verified and contains summary information only and does not purport to be comprehensive and is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information contained in this Presentation, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein. To the extent available, the industry, market and competitive position data contained in this Presentation has come from official or third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable source, the Company has not independently verified the data contained therein. In light of the foregoing, no reliance may be or should be placed on any of the industry, market or competitive position data contained in this Presentation. The information in the Presentation may include statements that are, or may be deemed to be, forward-looking statements regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts and projections about the industry in which the Company operates and the beliefs, assumptions and predictions about future events of the management of the Company. In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management are forward-looking in nature. Forward-looking information and forward-looking statements (collectively, the forward-looking statements ) are based on the Company s internal expectations, estimates, projections assumptions and beliefs as at the date of such statements or information including management s assessment of the Company s future financial performance, plans, capital expenditures, potential acquisitions and operations concerning, among other things, future operating results from targeted business and development plans and various components thereof or the Company s future economic performance. The projections, estimates and beliefs contained in such forward-looking statements necessarily involve known and unknown risks, assumptions, uncertainties and other factors which may cause the Company s actual performance and financial results in future periods to differ materially from any estimates or projections contained herein. When used in this Presentation, the words expects, believes, anticipate, plans, may, will, should, scheduled, targeted, estimated and similar expressions, and the negatives thereof, whether used in connection with financial performance forecasts, expectation for development funding or otherwise, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements and the risk that the future benefits and anticipated production by the Company may be adversely impacted. These forward-looking statements speak only as of the date of this Presentation. In the view of the Company s management, this Presentation was prepared by management on a reasonable basis, reflects the best currently available estimates and judgements, and presents, to the best of management s knowledge and belief, the expected course of action and the expected future performance and results of the Company. However, such forward-looking statements are not fact and should not be relied upon as being necessarily indicative of future results. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions of the information, opinions or any forwardlooking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based except as required by applicable securities laws. This Presentation contains non-international Financial Reporting Standards ( IFRS ) and non-italian GAAP industry benchmarks and terms, such as EBITDA and "Adjusted run-rate EBITDA". The non-ifrs financial measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies. Run-rate adjustments regarding synergy and cost savings estimates are based on a number of assumptions made in reliance on the information available and management's judgment, and they are inherently uncertain and subject to a wide variety of significant business, economic, and competitive risks and uncertainties. The Company uses the foregoing measures to help evaluate its performance. As an indicator of the Company's performance, these measures should not be considered as an alternative to, or more meaningful than, measures of performance as determined in accordance with IFRS and non-italian GAAP. The Company believes these measures to be key measures as they demonstrate the Company's underlying ability to generate the cash necessary to fund operations and support activities related to its major assets. Recipients of this Presentation are specifically referred to Presentation of Financial Information in the Offering Memorandum available on the company s website at in the Investor Relations / Press Releases section. By reading or accessing the Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company's business. Recipients should not construe the contents of this Presentation as legal, tax, regulatory, financial or accounting advice and are urged to consult with their own advisers in relation to such matters. Unless as otherwise stated herein, the Presentation speaks only as of June 30, 2018, The information included in this Presentation may be subject to updating, completion, revision and amendment and such information may change materially. No person is under any obligation to update or keep current the information contained in the Presentation and any opinions expressed relating thereto are subject to change without notice. The unaudited financial information presented in the Presentation has been prepared by management. The unaudited pro forma financial information was not prepared with a view towards compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of pro forma financial information, GAAP or IFRS. Our independent auditors have not audited, reviewed, compiled or performed any procedures with respect to such unaudited financial information for the purpose of its inclusion herein and accordingly, they have not expressed an opinion or provided any form of assurance with respect thereto for the purpose of this Presentation. Furthermore, the unaudited financial information does not take into account any circumstances or events occurring after the period it refers to. The unaudited pro forma financial information is based on a number of assumptions that are subject to inherent uncertainties subject to change. In addition, although we believe the unaudited pro forma financial information to be reasonable, our actual results may vary from the information contained above and such variations could be material. As such, you should not place undue reliance on such unaudited financial information and it should not be regarded as an indication that it will be an accurate prediction of future events. 1

3 Team presenting today Guglielmo Angelozzi CEO Mario Bruno CFO Josef Mastragostino Investor relator Joined Gamenet Group in August 2014 Chairman of Acadi-Confindustria association from July 2015 until May 2018 IGT (Senior Vice President Gaming Machines and Online) Bain & Company Accenture Degree in Engineering from Bologna University and MBA from SDA Bocconi Joined Gamenet Group in October 2012 Carlson Wagonlit (CFO Italy) Exxon Mobil (Europe Downstream Financial Reporting Manager) Degree in Business and Economics from LUISS University Joined Gamenet Group in November 2017 IGT (Director Investor Relations) TREVI Group (Investor Relations Manager) Lottomatica Investor Relations BBA from City University of New York, MS from LUISS University and MBA from Cornell University 2

4 Company Overview 3

5 Gamenet Group at a glance Key combined pro forma metrics Bet: 8.9bn Revenues: 793.9m Contribution margin: 232.1m EBITDA: 143.8m Net Income: 28.0m Betting and Online Retail and Street Operations Retail offering of wide variety of sports and horse betting, non-sport betting (music, events, etc.) and virtual events Bets in dedicated gaming halls or in betting corners within bars, tobacconists, etc. 2.5bn bet 50% of total contrib. margin (1) Retail: gaming halls hosting VLTs, AWPs and sport betting, also offering other services (drinks, restaurants, live concerts and events, etc.) Street Operations: management of directly owned AWPs (e.g., technical assistance, cash management, IT, etc.) 0.4bn bet 12% of total contrib. margin (1) 1,732 (2) betting shops & corners rights 69 owned Gaming halls 9,942 (3) owned AWPs AWP (concessionaire) VLT (concessionaire) Traditional slot machines with low average bet and low winning amounts with immediate cash payment Located in betting shops and corners, bars, tobacconists 2.7bn bet 12% of total contrib. margin (1) Greater variety of games and higher average payout ratio compared to AWPs Slot machines located only in dedicated gaming halls and connected remotely 3.2bn bet 27% of total contrib. margin (1) 8,588 Points of Sale 29,505 AWPs in operation 763 Points of Sale 8,327 VLTs in operation Source: Company information, MAG Consulenti Associati estimates on ADM and Market data (2018). Note: LTM as of June 30, (1) Contribution margin refers to revenues and other income gross of unallocated items and eliminations and net of distribution and platform costs, concession fees and other direct costs. (2) Includes 5 franchisee-managed points of sale bearing the GoldBet banner. #1,618 in operation. (3) Of which 6,009 refer to the AWP segment and 3,933 to the Retail & Street Operations segment. 4

6 Gamenet Group key milestones Gamenet has succesfully grown into one of the largest and more diversified operators in the Italian gaming market CRIGA ownership Trilantic Phase I Trilantic Phase II Public Company Pure Concessionaire VLT-ready 2010 Pure Concessionaire Trilantic enters Gamenet Focus on the exploitation of the VLT opportunity Improved efficiency across the organization 200m bond July 2013 New CEO 2014 Profitability growth via vertical integration Expansion into gaming halls Entry in the street operations and services Market share growth and diversification via horizontal integration Acquisition of the Italian activities of Intralot (betting) Financial structure optimization Deleverage lead to a successful 200m bond refinancing in August Successfully accessed the equity capital market through an IPO on the STAR segment of the Milan Stock Exchange 2018 Profitability growth via vertical integration Continuing vertical expansion via a distribution insourcing strategy Completed set up of business model for AWP-R Market share growth and diversification via horizontal integration 2018 Gamenet purchases 100% of GoldBet, Italian leader in betting & online Founded in 2000 in Innsbruck, licensed under Austrian Law by the Government of Tirol; Operating in Italy via a physical network of CTDs (Centri Trasmissione Dati) and Goldbet.com; Participates to the sanatoria envisaged by Italian budget law for 2015 for the CTDs (Centri Trasmissione Dati); Certified virtual games within Italian concession. EBITDA (1) m; m; 2018 H1 18 LTM 54m Financial structure optimization Refinanced bond for in April 2018 New bond issue for in September 2018 (to finance GoldBet acquisition) EBITDA: 14m Employees: 95 EBITDA: 61m Leverage: 2.8x Employees: 211 EBITDA: 82m Leverage: 1.9x Employees: 593 EBITDA: 144m Leverage (2) : 2.7x Employees: 770 Source: Company information. Note: 2010 figures reported under Italian GAAP and 2017 reported under IFRS. (1) GoldBet financial information reported under Italian GAAP. (2) Ratio of pro forma adjusted net financial debt ( 425.2m) to pro forma adjusted run-rate EBITDA as of LTM June 30,

7 Gamenet Group s essentials 1 Highly-regulated and resilient market with high barriers to entry 2 Scaled to lead the market with the most attractive products 3 Well-balanced business and high level of diversification 4 Strong financial performance with solid liquidity, consistent cash flow generation and deleveraging 5 Growth strategy focused on capturing and increasing share of the value chain 6

8 1 The largest gaming market in Europe Italy is the largest European gaming market (approx. 21% market share based on Gross Gaming Revenues - "GGR") Well-developed regulatory framework with fully licensed concessions resulting in high barriers to entry and attractive cash flow visibility YoY Growth Italian Market trends and growth (bet, bn) European GGR (1) ( bn, 2017) 9.4% 10.5% -4.6% 0.2% 4.1% 8.5% 6.7% 2.3% 1.7% 3.0% 1.9% 2.6% (2) 19.1 Avg. 5.0% Avg. 2.3% 10,6 24% of Italian public deficit 19,0 8,5 11,1 10,1 8,5 Estimates Continuous shift of gaming activities to dedicated locations (gaming halls), beneficial to larger players Regulation favors players with retail Omni-channel offer over pure online players Taxes NGR Sources: Company information, MAG Consulenti Associati estimates on ADM and Market data (2018), H2 Gambling Capital (published on September 28, 2017). (1) Gross Gaming Revenues calculated as total bet minus payout as winnings. (2) Based on MAG Consulenti Associati estimates. 7

9 1 Highly fragmented market Italian GGR breakdown (2017) AWP VLT Betting Online Lotteries 30% Bingo 2% Concessionaires m m (2) Online 4% Betting 9% 19.1bn (1) VLT 15% AWP 40% Street operation companies 3,750 1,144m Segments in which Gamenet Group operates worth c. 13bn of GGR and c. 6bn of Net Gaming Revenues (NGR) (1) Retail (PoS) 85,025 1,507m 4, m 5,470 4,190 NGR breakdown across the value chain Shops Corners Source: ADM, MAG Consulenti Associati srl 2017 Estimation on ADM and Market data. (1) Net Gaming Revenues calculated as total bet minus winnings minus taxes. (2) Sport betting concessionaires. 8

10 2 with leadership and scale in key segments #1 player in Overall betting, Retail Sports betting as well as in Virtual betting Overall betting (1) Retail Sports betting 17.7% 11.7% 14.4% 11.7% 10.4% 10.4% 9.8% 6.0% 5.8% 21.0% 11.3% 16.4% 14.4% 13.6% 11.6% 10,2% 9.7% No.1 No.1 Online Sports betting Virtual betting Pure online players represent c. 53% of market share based on bet. Remaining c. 47% have both retail and online network 16.1% 14,5% 33.4% 10.1% 8.9% 7.7% 6.7% 5,5% 5.3% 5.2% 1,4% 28.6% 18,4% 12,8% 9,1% 7,1% 4,7% Significant synergies to grow market share No.6 No.1 By far the market leader with state of the art product offering/technology Source: MAG Consulenti Associati estimates on ADM and market data (2018). Market shares based on GGR as of June Includes Gamenet Group portion. (1) Includes virtual. 9

11 2 including gaming machines Attractive market shares in a significant segment of the market AWP 16,0% 15,0% 14,3% 11,7% 9,0% 9,0% 6,8% 5,7% 5,1% 3,9% 3,6% No.4 VLT 19,6% 18,1% 14,9% 14,0% 10,0% 8,4% 5,6% 4,6% 2,8% 1,3% 0,6% No.3 Source: MAG Consulenti Associati estimates on ADM and market data (2018). Market shares based on machines in operation as of June Market share and ranking as of June 30, 2018 based on gaming machines in operation. 10

12 2 Market positioning & opportunities The Group is very well positioned to gain further market share in a very fragmented market Opportunity to gain market share in the pure online segment Betting Further consolidation in the market AWPs VLT Omni-channel distribution (includes both online and retail); A sweet spot in the market 11

13 3 Well balanced and diversified business Contribution margin 2014 (1) Contribution margin 2017 (1) Pro forma LTM contribution margin (1) Retail & Street Operations Betting & Online 1% 2% AWP 22% 89m Entry in Street Operations Entry in the medium and high-end retail segment Retail & Street Operations 18% Online 3% 144m VLT 43% Online 11% Retail & Street Operations 12% 232m VLT 27% 2015 VLT 75% Increased presence in betting through Intralot acquisition 2016 Betting 19% AWP 17% Betting 39% AWP 11% Significant expansion in Online Betting & Online represent ca.50% Margin Provider Concessionaire Street operation companies Retail Provider Concessionaire Street operation companies Retail Source: Company information. (1) Pro forma LTM figures as of June 30, Breakdown gross of unallocated items and eliminations. 12

14 4 Strong financial performance ( Million) EBITDA and EBITDA margin evolution EBITDA margin calculated on revenues Net financial debt Ca.20% 18.1% 13.3% 13.0% 13.1% (2) 12.1% (1) H1'18PF LTM PF Adjusted Run-rate Net Debt/EBITDA 2.8x 2.4x 2.3x 1.9x 2.7x (3) Trilantic Phase II Public Company Note: Pro forma LTM figures as of June 30, (1) Gamenet Group stand-alone H1 18 LTM EBITDA (2) Includes 14.9m of cost synergies (3) Ratio of pro forma adjusted net financial debt ( 425.2m) to pro forma adjusted run-rate EBITDA as of LTM June 30,

15 4 solid liquidity and consistent cash flow As of Jun-18 LTM ( million) Pro forma Pro forma Adjusted runrate Key P&L items Revenues Contribution margin EBITDA (A) EBITDA margin 18.1% 19.9% Includes 14.9m of cost synergies Key cash flow items Cash capex (1) (B) (35.3) (35.3) Change in NWC (C) (10) (10) Cash flow (A-B-C) Conversion rate % of EBITDA 68.5% 71.3% (1) Cash capex excludes business combination investments. 14

16 4 dedicated to Maintain and Optimize Assets Deleverage Dividend Payments Growth Opportunities Preserve in full efficiency, integrate, rationalize and optimize the physical retail network of >1,700 betting shops, >700 VLT PoS and ca owned AWPs Maintain historically balanced approach on debt; retaining significant flexibility to grow cash flow Continue to deleverage post acquisition, reaching an attractive leverage profile Issued new bond in September 2018 to fund the acquisition and refinanced debt in April 2018 Attractive dividend policy: 0.60 per share paid in 2018 or 18 million 0.65 per share to be paid in 2019 or 19.5 million 0.70 per share to be paid in 2020 or 21 million Growth through disciplined capital allocation Cherry pick attractive business opportunities that enhance value to shareholders 15

17 5 Gamenet Group strategy Gaming Machines Betting & Online Continuing distribution insourcing Further increase presence in the Retail space by leveraging our Retail and Street Operations Exploitation of AWP-Rs Full use of licenses available Product innovation Cross selling on products and channels Extract and deliver synergies: the GoldBet acquisition 16

18 Distribution costs ( 272m) Distribution costs 5 Growth strategy: impact on Gamenet s P&L A AWP A VLT B C BETTING & ONLINE Revenues (1) 307mn Revenues (1) 204m Revenues (2) 95m Revenues (3) 275m Other Cost ( 12m) Other Cost ( 24m) Other Cost Retail PoS Retail PoS ( 123m) Retail PoS Street operation companies Contrib.Margin ( 24m) Contrib. Margin ( 61m) Other Cost Retail PoS Contrib. Margin (2) ( 43m) Ca.3X increase Contrib. Margin (3) ( 117m) INCREASE PROFITABILITY (REDUCTION OF EXTERNAL DISTRIBUTION COSTS) DISTRIBUTION INSOURCING EXPLOIT AWP-R INCREASE PROFITABILITY (REDUCTION OF EXTERNAL DISTRIBUTION COSTS) INCREASE THE NUMBER OF GAMING HALLS INCREASED SCALE, SIZE, AND REVENUES EXTRACT AND DELIVER SYNERGIES Source: Company information as of FY 17 for AWPs and VLT and as of LTM H1 18 for Betting & Online. (1) Net Gaming Revenues excludes "other revenues" (EUR 0.3mn for AWP and EUR 3.0mn for VLT). (2) Gamenet Group stand-alone LTM figures as of June 30, (3) Pro forma LTM figures as of June 30,

19 5 Growth strategy: a proven track record Street Operations: from the infrastructure set-up to the distribution insourcing more to come Retail: a professional network built in the last three years Retail Betting: becoming a leading player leveraging on both the Intralot and GoldBet acquisitions EoP ,671 insourced AWP Licences on betting (#) 1, EoP ,825 insourced AWP 69 gaming halls 17 betting points EoP ,326 insourced AWP 761 AWP 1,474 VLT EoP H1 18 9,942 insourced AWP 2013 EoP 2017 EoP H1'18PF Non operating licences Operating licences former Intralot Operating licenses GoldBet Operating licences Gamenet Pipeline > 7,000 AWP Note: Company data as of June 30, EoP: End of Period 18

20 REMUNERATION TO THE VALUE CHAIN: NGR = 2,790m 5 Increase profitability: AWP OLD MODEL Current AWPs value chain breakdown NEW MODEL Gamenet s AWPs value chain breakdown Distribution insourcing = EBITDA Recapture REVENUES SHARING MECHANISM 1,507m 54% 54% DISTRIBUTION INSOURCING / AWP-R STREET OPERATOR: Will provide field services (technical assistance and logistics) STREET OPERATOR: Owns machines Has commercial relationship with PoS Provides field services (technical assistance and logistics) 1,144m 41% 17% 29% Will get 17% + Will own machines of NGR Will have commercial relationship with PoS CONCESSIONAIRE: Provides connection services 140m 5% Provides connection services Will of get 29% NGR EBITDA CONCESSIONAIRE STREET OPERATOR PoS Source: ADM, company estimates, MAG Consulenti Associati srl 2017 Estimation on ADM and Market data. Note: 2016 average payout for the market. 17.5% PREU + 0.3% concession fee. 19

21 5 Integrating with a well sought plan A complementary and attractive portfolio of products which paves the way to becoming an undisputed leader in Italy Retail Network Online Sports Betting Virtual Betting AWP VLT Retail & Street Ops ,505 8,327 Betting rights 69 Gaming Halls Betting rights The transaction follows the Intralot deal with key focus on value accretion 1 Create largest retail betting network in Italy and extract related synergies 2 Exploit GoldBet online offer and model for Gamenet s (Intralot) online client base 3 Launch GoldBet premium virtual offer on Gamenet s (Intralot) retail network 4 Launch GoldBet premium virtual offer on Gamenet s (Intralot) online client base 5 Exploit GoldBet distribution network for Gamenet s AWPs and VLT Note: As of June 30, Post transaction opportunities for deployment/launch of complementary product offering between Gamenet and GoldBet networks and operating segments. 20

22 5 Exploit relevant synergies to rapidly deleverage and maximize cash generation Significant synergies resulting in 17.9m EBITDA run-rate impact by SG&A (personnel, marketing, data center, etc.) AWP distribution cost reduction Platform savings Total cost synergies 14.9m Virtual segment revenue synergies 3.0m Combined EBITDA synergies 17.9m Gamenet has a strong track record of successfully integrating newly acquired companies and maximizing synergies exploitation (i.e. Intralot Italia) Significant cost synergies (representing over 80% of total run-rate synergies) to be realized in full by 2020 SG&A, lower AWP distribution costs, optimization of platform providers cost Revenue synergies Deployment of GoldBet s virtual games (with a higher profitability) on Gamenet's network 21

23 Key financials ( Million) Revenues (1) Contribution margin (2) Margin (%) (3) Margin (%) (3) EBITDA 18% 19% 21% 23% 30% 12% 13% 12% 13% 16% 18% FY'14 FY'15 FY'16PF FY'17 H1'18PF LTM FY'14 FY'15 FY'16PF FY'17 H1'18PF LTM AWP VLT Betting & online Retail & street operation FY'14 FY'15 FY'16PF FY'17 H1'18PF LTM Consistent revenues, contribution margin and EBITDA growth leading to a strong cash-flow generation Dividend policy: i) in 2019 Euro 0.65 per share or Euro 19.5 million (based on year ended results 2018) ii) in 2020 Euro 0.70 per share or Euro 21 million (based on year ended results 2019) Source: Company information. (1) Including infra-segment revenues and excluding unallocated. Total revenues net of unallocated / consolidation effect equal to 502m in 2014A, 473m in FY 15, 607m in FY 16, 620m in FY 17 and 794m in H1 18PF LTM. (2) Contribution margin including unallocated / eliminations equal to 89m in FY 14, 91m in FY 15, 130m in FY 16PF, 144.5m in FY 17 and 232m in H1 18PF LTM. (3) Calculated on net revenues. 22

24 Contacts Gamenet Group S.p.A. Corso d Italia, Rome Italy Investor Relations Josef Mastragostino ir@gamenetgroup.it