Introduction: Roger Withers, Chairman Financial Review: Shuki Barak, CFO Operational & Strategic Review: Mor Weizer, CEO Questions and Answers

Transcription

1

2 INTERIM RESULTS AGENDA Introduction: Roger Withers, Chairman Financial Review: Shuki Barak, CFO Operational & Strategic Review: Mor Weizer, CEO Questions and Answers TM & 2010 MARVEL FOX

3 INTRODUCTION OVERVIEW Gross income up 31%: 87.9m Adjusted EBITDA up 19.6%: 54.2m Adjusted EPS up 10.6%: 19.9 cents Interim dividend 9.4 cents per share Strategic positioning supports robust business model Positive outlook underpinned by new licensees and regulated market networks

4 INTRODUCTION H1 CORPORATE ACTIONS Acquisitions & strategic partnerships deliver immediate impact Board code compliant: 2 additional non-executive directors CFO search in later stages Investor day: demonstration of operational & technical capabilities

5

6 FINANCIAL REVIEW FINANCIAL HIGHLIGHTS (IN MILLIONS) Gross Income Total Revenue Adjusted EBITDA H1-09 H2-09 H1-10

7 GROSS INCOME (IN MILLIONS) FINANCIAL REVIEW Gross Income Vs H1 09 Vs H H % +25% Gross Income Gross Income Total Revenue Adjusted EBITDA H1-09 H2-09 H1-10 H1-09 H2-09 H1-10

8 90.0 FINANCIAL REVIEW GROSS INCOME GROWTH H1 10 vs H1 09 (in millions) 87.9 WH SOP +7.1% H1-09 H1-10 Existing licensees +5.6% New Business +18.6% WHO Share of profit Other Bingo Poker Casino

9 FINANCIAL REVIEW GROSS INCOME GROWTH (in millions) % 4% 5% 18% WHO Share of profit Other Bingo % Poker 10.0 Casino - H1-09 H2-09 H1-10

10 TOTAL REVENUE (IN MILLIONS) FINANCIAL REVIEW Vs H Vs H1 10 Casino Revenues H1 09 H Poker Revenues Bingo Revenues H % +25% H1 09 H2 09 H % -8% H1 09 H2 09 H Total Revenue Gross Income Total Revenue Adjusted EBITDA H1-09 H2-09 H1-10 H1-09 H2-09 H1-10 Total Revenue Vs H1 09 Vs H2 09 H % +25%

11 INFLUENCE OF ACQUISITIONS ON RESULTS 80.0 FINANCIAL REVIEW VF Bingo VF Casino GTS Casino Revenues H1-10 Adjusted EBIDTA H1-10

12 FINANCIAL REVIEW KEY LICENSEES The increase in diversification was enhanced with the addition of the GTS and VF licensees As local regulated markets grow, the diversity will continue, eliminating smaller, less economic licensees Increased diversity = Decreased risk H H Top 2 licensees 39% 33% Top 5 licensees 57% 49% Top 10 licensees 76% 64% Top 15 licensees 85% 74% Licensees > 2m revenue 8 8 Licensees > 0.5m revenue 20 29

13 WHO: REMINDER OF ACCOUNTING FINANCIAL REVIEW WHO share of profit after tax: 29% (from Aug-09 onwards) Blended tax rate: average c.1.2% Identical figures to WH minority: 12.9m = 15m H WH online EBIT 45 Tax 0.5 WH online profit % PT income from associate ( ) 12.9 PT income from associate ( ) 15.0

14 GROSS INCOME BY PRODUCT (IN MILLIONS) FINANCIAL REVIEW 87.9 WHO Share of profit Other Bingo Poker Casino 10.0 H1-07 H2-07 H1-08 H2-08 H1-09 H2-09 H1-10

15 ADJUSTED EBITDA (IN MILLIONS) FINANCIAL REVIEW 90 Adjusted EBITDA 80 Margin 70 Out of Gross Income Adjusted EBITDA Vs H1 09 Vs H2 09 H1 09 H2 09 H % 69% 62% H % +12% As indicated, margin decreased due to GTS & VF acquisitions, and further cost expansion The margin for FY 2010 is expected to be further impacted due the Adjusted EBITDA decrease Gross Income in revenues derived Total from Revenue France Adjusted EBITDA H1-09 H2-09 H1-10 H1-09 H2-09 H1-10

16 ANALYSIS OF COSTS & EXPENSES Operating Expenses H FINANCIAL REVIEW 10.2, 23% 33.7, 77% Adjusted operating expenses excl' Dep&Amor Adjustable operating expenses including Dep&Amor

17 ANALYSIS OF COSTS & EXPENSES Operating Expenses H ( 33.7m= 100%) (excl Dep&Amor) FINANCIAL REVIEW 18.8, 55.8% Employee related costs Other operational costs Admin & office costs 5.9, 17.5% Traveling, Exhibitions & Marketing 2.4, 7.3% 3.8, 11.2% 2.8, 8.3% Revenue Driven costs

18 ANALYSIS OF COSTS & EXPENSES Operating Expenses H ( 33.7m= 100%) (excl Dep&Amor) 18.8, 55.8% Revenue-driven costs: FINANCIAL REVIEW Employee related costs Other operational costs H1 H2 H Admin & office costs Total Revenue , 17.5% Revenue Driven Costs % out of Revenue 3.2% 4.0% 8.1% Traveling, Exhibitions & Marketing 2.4, 7.3% Revenue Driven costs As expected the Revenue Driven Costs increased due to Virtue 2.8, 8.3% 3.8, Fusion 11.2% and GTS

19 ANALYSIS OF COSTS & EXPENSES Operating Expenses H ( 27.8m= 100%) (excl Dep&Amor & Revenue driven cost) FINANCIAL REVIEW 18.8, 67.6% Employee related costs Other operational costs Admin & office costs Traveling, Exhibitions & Marketing 2.4, 8.8% 3.8, 13.5% 2.8, 10.0% Revenue Driven costs

20 ANALYSIS OF COSTS & EXPENSES FINANCIAL REVIEW H H H Adjusted Operational Expenses w/o Revenue Driven costs Employee related costs % out of Adjusted Operational Expenses w/o Revenue Driven costs 63.3% 65.1% 67.6% The increase in H1 10 is due to VF and GTS acquisitions and employee expansion. Traveling, Exhibitions & Marketing % out of Adjusted Operational Expenses w/o Revenue Driven costs 12.0% 10.3% 8.8% Admin & office costs % out of Adjusted Operational Expenses w/o Revenue Driven costs 13.9% 15.2% 13.5% Other Operational costs % out of Adjusted Operational Expenses w/o Revenue Driven costs 10.8% 9.4% 10.0%

21 CASH FLOW FINANCIAL REVIEW Playtech continues to be highly cash generative Net cash provided from operating activities including cash received from WHO 60.8m Cash used in investing activities: Sportech 11m Virtue Fusion - 26m (net of cash acquired) Cash used in financing activities dividend paid in period 22.9m Dividend per share = 9.4 EUR Cent per share (*) Full summary the cash-flow statement detailed in the appendixes

22 BALANCE SHEET FINANCIAL REVIEW Robust balance sheet Cash balance of 60m at 30 June 2010 Increase of intangible assets due to VF acquisition of 36.1m Investment in WH Online: Total investment as of 30 June m Deferred consideration of 16.2m, to be paid in December 2010 (*) Full summary the balance sheet statement detailed in the appendixes

23

24 OPERATIONAL AND STRATEGIC REVIEW AGENDA: H1 Highlights Strategic Actions: Update Industry Dynamics Current Trading & Outlook Outlook: Visibility of Earnings

25 H1 HIGHLIGHTS PRODUCT HIGHLIGHTS Casino 30+ new download games 35+ new flash games Casino personalisation engine VIP management tools New tournament engine Poker Revamp of table: resizable functionality and graphical improvements New Game type: Razz ECOOP tournaments - 14 main events with over $4,500,000 in guaranteed prizes Mini ECOOP VI series - over $600,000 in guaranteed prizes

26 H1 HIGHLIGHTS PRODUCT HIGHLIGHTS Bingo Video streaming within the client for a live caller or TV show to be screened Release of two new branded bingo games (Britain s Got Talent Bingo and Blockbusters Bingo) Launch of first bingo network for Italian Regulated Market Sports Betting New bet type derivatives and shared environment support 150+ new bet types and improved in-running support TST Certification for France Live dealer Revamp of facilities in Riga, European site

27 H1 HIGHLIGHTS KEY LICENSEES H H H Top 2 licensees 33% 39% 39% Top 5 licensees 49% 56% 57% Top 10 licensees 64% 73% 76% Top 15 licensees 74% 82% 85% Licensees > 2m revenue Licensees > 0.5m revenue

28 H1 HIGHLIGHTS ONGOING INNOVATION Web/flash development focus Casino: lobby personalisation IMS: responsible gaming module Bingo: social networking TV: casino VIP tools Mobile: ipad package

29 RECENT STRATEGIC PRODUCT ACTIONS: HIGHLIGHTS UPDATE ACQUISITIONS: Acquisitions have immediately delivered scale & breadth to Playtech platform: rapid integration Virtue Fusion Virtue Fusion enjoying strong revenue growth: expect ROI in excess of 15% Launch of new branded games: e.g. Britain s Got Talent Strong pipeline of prospective licensees GTS World Cup enhanced key sportsbook relationships Tapping into current industry trends: open architecture & flash technology

30 RECENT STRATEGIC PRODUCT ACTIONS: HIGHLIGHTS UPDATE PARTNERSHIP: Core agreement (Jan 10) Upgrading of 13,500 FOBT terminals in UK & 4,500 additional terminals world-wide: 5.25m pa Major shop trials progressing well On target for substantial H2 roll-out Ladbrokes (Aug 10) Contract for 7,800 machines: 95% of Ladbrokes estate Timeframe: expected roll-out within 2011 Outlook By 2012, VB will be a leading player in the UK FOBT market Progress in other jurisdictions, e.g. Italy, Mexico, Romania TM & 2010 MGM. ALL RIGHTS RESEVED

31 RECENT STRATEGIC PRODUCT ACTIONS: HIGHLIGHTS UPDATE STRATEGIC ALLIANCES: Business operational, key personnel hires underway Relationship building: focus on US lotteries Bespoke lottery product suite developed Sportech/SGR US regulatory approval exercise ongoing Bingo sites migrating

32

33 CURRENT TRADING & OUTLOOK INDUSTRY DYNAMICS Regulating markets dominates attention Momentum across Europe, US Growth in local market size offset by increased tax burden Ring-fenced markets favour strong local brands Attracting wide range of new entrants Operators business models changing in response Diminished benefit of offshore brand/liquidity Consolidation underway in sector Increasing focus on scale & breadth Plays to strength of a major B2B provider TM & 2010 MARVEL FOX

34 OUR STRATEGIC POSITIONING Pure play B2B strategy highly robust Economies of scale remain across markets Maintain operational gearing capability Partnering with well-established local operators Seeking a broad range of products & services CURRENT TRADING & OUTLOOK Comprehensive product capability/ liquid local networks Efficient low cost access to new regulated markets Flexible entry: ring-fenced networks/ monopoly Each delivers incremental high-quality revenues

35 CURRENT TRADING & OUTLOOK REGULATED MARKETS IN H1 Estonia: launched Q1 with regional leader, Olympic Italy: major market presence in poker & bingo Finland: won contract for state monopoly, RAY France: launched poker network Ongoing work in Serbia & Philippines

36 CURRENT TRADING & OUTLOOK CURRENT TRADING Like for like basis (excluding France) Absolute basis Q3-10 vs. Q % +12% Q3-10 vs. Q % -16% Seasonal effect magnified by World Cup & France casino closure August performance: all products performing positively Launch of Betfair flash casino & new networks End-August sees start of new football season

37 OUTLOOK VISIBILITY OF FUTURE EARNINGS: H Incremental revenue streams: Betfair flash casino: Q3 migration RAY: early Q4 launch Italian bingo network: launched Q3 France poker network: launched Q3

38 VISIBILITY OF FUTURE EARNINGS: 2011 OUTLOOK Italian cash poker: beginning of year Italian casino: likely to follow cash poker France development of poker network Casino Gran Madrid: H1 launch Videobet: >15,000 machines: by end H1

39

40

41 ADJUSTED EBITDA APPENDIX H1 09 H2 09 H Operating profit 27,561 28,888 28,989 Amortization 2,754 3,652 6,382 Depreciation 1,092 1,280 1,423 EBITDA 31,407 33,820 36,793 Share of Profit of associates before amortization of intangibles 10,286 12,248 15,013 Change in FV of available for sale investment (CYF & ALOG) (231) Professional expenses on acquisitions Employee stock option expenses 3,525 1,625 1,825 Adjusted EBITDA 45,290 48,380 54,165 Adjusted EBITDA margin 80% 83% 74% Adjusted EBITDA margin (out of gross income) 68% 69% 62%

42 ADJUSTED NET PROFIT APPENDIX H1 09 H2 09 H Net profit 32,387 37,063 36,958 Amortization of investment in WH Online 5,257 5,256 4,922 Change in FV of available for sale investment (CYF & ALOG) (231) Discounting of deferred consideration Amortization on acquisitions 1,597 1,685 3,564 Employee stock option expenses 3,525 1,625 1,825 Professional expenses on acquisition Adjusted net profit 43,040 46,593 48,161 Adjusted net profit margin 76% 80% 66% Adjusted net profit margin (out of Gross income) 64% 66% 55%

43 APPENDIX CASH FLOW H1 09 H2 09 H Net profit 32,387 37,124 36,958 Depreciation, Amortization 3,846 4,932 7,806 Employees Stock Options Expenses 3,525 1,625 1,825 Change in FV of available for sale investments (231) Income from associate (10,286) (12,248) (15,013) Amortization of intangibles in associate 5,257 5,256 4,922 Net change in Assets and Liability & other adjustments (7,697) 6,526 8,565 Net Cash Provided by Operating Activities 27,104 43,542 44,832 Dividend received from equity-accounted associates 10,286 8,242 15,996 Capex, intangibles & capitalized development costs (4,164) (9,534) (5,924) Acquisition of subsidiary net of cash acquired - (11,310) (26,136) Investment in held for sale investments - - (11,332) Proceeds from sale of available for sale investments - - 2,665 Other (206) (763) (852) Net Cash Used in Investing Activities 5,916 (13,324) (25,583) Net Cash Provided by (Used in) Financing Activities (15,853) (20,243) (17,991) Decrease in Cash and Cash Equivalents 17,167 9,975 1,258 Cash and Cash Equivalents at Beginning of year 31,558 48,725 58,700 Cash and Cash Equivalents at End of year 48,725 58,700 59,958

44 BALANCE SHEET APPENDIX As of As of As of 30 June Dec June Cash and Cash Equivalents 48,725 58,700 59,997 Receivables 14,562 17,113 16,738 Investments (CYF, ALOG & Sportech) 4,815 5,513 11,997 Investment in WH and other equity associates 175, , ,617 Intangible assets 44,718 65,459 98,282 Fixed Assets & other non current Assets 6,167 10,704 12,937 Total Assets 294, , ,568 Deferred Rev 19,911 18,186 16,532 Deferred consideration 13,580 13,554 16,151 Contingent consideration (VF & GTS) - 6,983 12,181 Trade and other accounts payable 10,796 19,216 32,102 Shareholders' Equity: Share Capital and Funds 182, , ,486 Available for sale reserve - 1,025 (1,389) Retained earnings 67,905 85, ,505 Total Liabilities and Shareholders Equity 294, , ,568

45 APPENDIX DEPRECIATION & AMORTISATION Depreciation In line with business growth, still immaterial Capex additional growth only on dedicated investments for regulated markets Amortisation Software costs & other intangibles 2.8m Amortisation on acquisitions/investments: Tribeca - 1.6m in H1 2010, expected in FY2010: 3.2m WHO - 4.9m in H1 2010, expected in FY2010 : 8.3m GTS - 0.7m in H1 2010, expected in FY2010 : 1.4m Virtue Fusion - 1.3m in H1 2010, expected in FY2010 : 2.9m

46 WHO RECAP: ROYALTY vs. SOP APPENDIX WHO JV consists of WH online and assets of PTEC s former licensee Casino and poker operations of WHO enjoy a preferred royalty rate PTEC gets in return: Enlarged combined casino and poker operations Exposure to WHO sports book operation Share of entire JV post tax profit Purchased Assets Playtech 29% 71% William Hill WH on line business WHO

47 EPS & ADJUSTED EPS 25.0 APPENDIX 19.9 Euro cents per share Adjustments to EPS EPS - H1-09 H1-10

48 90.0 APPENDIX GROSS INCOME GROWTH H1 10 vs H2 09 (in millions) 87.9 WH SOP +3.9% H2-09 H1-10 Existing licensees +4.7% New Business +16.3% WHO Share of profit Other Bingo Poker Casino

49 SUMMARY OF INCOME STATEMENT: PROFIT FOR THE YEAR Adjusted profit Adjusted EBITDA H APPENDIX H H Revenues 56,654 58,121 72,892 Adjusted operating expenses (excl Dep&Amor) (21,650) (21,989) (33,738) Depreciation & Amortization (2,249) (3,247) (4,241) Amortization on acquisitions (1,597) (1,685) (3,564) Other adjustable operating expenses (3,597) (2,312) (2,360) Operating profit 27,561 28,888 28,989 Share of WHO profit 10,286 12,248 15,013 Amortization of intangibles in WHO (5.257) (5,256) (4,922) Finance income (expenses), net 428 1,859 (1,001) Adjustable finance costs (202) (216) (358) Tax (429) (399) (762) Profit for the Period 32,387 37,124 36,959 (*) Breakdown of adjusted net profit and adjusted EBITDA items detailed in the appendixes

50 SUMMARY OF INCOME STATEMENT: PROFIT FOR THE YEAR Adjusted profit Adjusted EBITDA H APPENDIX H H Revenues In order to better reflect underlying 56,654 58,121 business, 72,892 Adjusted operating PTEC expenses adjusts for the following: (21,650) (21,989) (33,738) (excl Dep&Amor) Depreciation & Amortization Includes WHO share of (2,249) profit in adj (3,247) EBITDA (4,241) Amortization on acquisitions (1,597) (1,685) (3,564) Excludes non-cash items such as: Other adjustable operating Amortisation expenses on investments (3,597) (2,312) & acquisitions (2,360) Operating profit Discounting on deferred 27,561consideration 28,888 28,989 ESOP Share of WHO profit 10,286 12,248 15,013 mark to market of available for sale Amortization of intangibles investments WHO (5.257) (5,256) (4,922) Finance income (expenses), net 428 1,859 (1,001) Adjustable finance costs Excludes exceptional cash (202) items: (216) (358) M&A professional costs on acquisitions Tax (429) (399) (762) Profit for the Period 32,387 37,124 36,959 (*) Breakdown of adjusted net profit and adjusted EBITDA items detailed in the appendixes

51 SUMMARY OF INCOME STATEMENT: Profit for the year H APPENDIX H H Revenues 56,654 58,121 72,892 Adjusted operating expenses (excl Dep&Amor) (21,650) (21,989) (33,738) Depreciation & Amortization (2,249) (3,247) (4,241) Adjusted profit Adjusted EBITDA Operating profit 32,755 32,885 34,913 Share of WHO profit 10,286 12,248 15,013 Finance income (expenses), net 428 1,859 (1,001) Tax (429) (399) (762) Adjusted Profit 43,040 46,593 48,163 (*) Breakdown of adjusted net profit and adjusted EBITDA items detailed in the appendixes

52 SUMMARY OF INCOME STATEMENT: Profit for the year H APPENDIX H H Revenues 56,654 58,121 72,892 Adjusted operating expenses (excl Dep&Amor) (21,650) (21,989) (33,738) Adjusted profit Adjusted EBITDA Operating profit 35,004 36,132 39,154 Share of WHO profit 10,286 12,248 15,013 Adjusted Profit 45,290 48,380 54,167 (*) Breakdown of adjusted net profit and adjusted EBITDA items detailed in the appendixes Dividend per share = 9.4 EUR Cent per share

53 GROSS INCOME (IN MILLIONS) APPENDIX Gross Income Excl. VF & GTS Vs H Vs H2 09 H % +11% Gross Income Gross Income Total Revenue Adjusted EBITDA H1-09 H2-09 H1-10 H1-09 H2-09 H1-10

54 TOTAL REVENUE (IN MILLIONS) APPENDIX Excl 90 VF & GTS Vs H Vs H1 10 Casino Revenues H1 09 H Poker Revenues Bingo Revenues H % H % H2 09 H % -8% H1 09 H2 09 H Total Revenue Gross Income Total Revenue Adjusted EBITDA H1-09 H2-09 H1-10 H1-09 H2-09 H1-10 Total Revenue Excl VF & GTS Vs H1 09 Vs H2 09 H % +8%

55 ADJUSTED EBITDA (IN MILLIONS) APPENDIX Adjusted EBITDA Margin Excl. VF & GTS Out of Gross Income H1 09 H2 09 H % 69% 62% Adjusted EBITDA Excl. VF & GTS Vs H Vs H2 09 H % +12% Adjusted EBITDA Gross Income Total Revenue Adjusted EBITDA H1-09 H2-09 H1-10 H1-09 H2-09 H1-10

56 APPENDIX