Slide 1: Six months ending 30 June 2011
Six months ending 30 June2011
Slide 2: Agenda
• Introduction Roger Withers, Chairman • Financial Review David Mathewson, CFO • Review of H1 Mor Weizer, CEO • Strategic Positioning & PTTS Spotlight • Current Trading • Questions and Answers 1
Slide 3: Strong performance across key financial metrics
• Strong performance across key financial metrics • Gross income up 8%; (19% ex-France) • Adj EBITDA up 4% • Strategic opportunities for M&A and JVs • Becoming supplier of choice to the gaming industry 2
Slide 4: Strategic partnerships delivering
• Strategic Partnerships delivering • Videobet: The Global Draw • Sciplay JV with Scientific Games • Acquisitions broadening reach • Intelligent Gaming (Jan 11) • PTTS Turnkey (Mar 11) • Mobenga (July 11) 3
Slide 5: Financial Review
FINANCIAL REVIEW
Slide 6: Gross income, total revenue and adjusted EBITDA excluding France offshore
Excluding France offshore 100 € 95.0 90 € 87.9 € 85.2 € 79.8 80 € 76.3 € 72.9 € 69.4 70 € 64.8 60 € 56.1 € 54.2 50 € 48.9 € 46.1 40 Gross income Total revenue Adjusted EBITDA H1-10 H2-10 H1-11 4
Slide 7: Reported results
Reported results 100 € 95.0 90 € 87.9 € 85.2 80 € 76.3 € 72.9 € 69.4 70 60 € 56.1 € 54.2 50 € 48.9 40 Gross income Total revenue Adjusted EBITDA H1-10 H2-10 H1-11 5
Slide 8: Revenue by product vertical
100 €49. € 52.7 15.8 90 1m 47.6 10.7 80 € 76.3 € 72.9 70 Casino Poker 60 7.1 2.9 50 4.5 1.3 40 Total revenue H1-10 H1-11 Bingo Videobet 6
Slide 9: Videobet and UK FOBT market
• A significant portion of UK FOBT market uses Videobet technology • €7.2m invested for the purchase of machines, through the ITL JV with Global Draw • ROI already at 30% and is anticipated to be paid back within less than 12 months • Stable EBITDA margins now in line with Playtech’s consolidated ma
Slide 10: Licensee concentration
H1 2010 H1 2011 Top 2 licensees 33% 27% Top 5 licensees 49% 48% Top 10 licensees 64% 64% Top 15 licensees 74% 72% Licensees > €2m revenue 8 8 Licensees > €0.5m revenue 29 29 8
Slide 11: Gross income bridge H1 2010 to H1 2011
105.0 4% , €3.7 100.0 -9% , -€8.1 3% , €2.7 €95.0 2% , €1.6 95.0 8% , €7.2 90.0 €87.9 85.0 80.0 75.0 H1 2010 Existing Licensees VideoBet Other New Business WH SOP France Withdrawl H1 2011 9
Slide 12: Gross income by segment and WHO share of profit
100 Full recovery from the France withdrawal in 90 June 2010. 80 70 WHO Share of profit Other 60 Videobet Bingo 50 Poker 40 Casino 30 20 H1-09 H2-09 H1-10 H2-10 H1-11 10
Slide 13: Operating Expenses H1 2011
Operating Expenses H1 2011 H1-10 H2-10 H1-11 Total Revenue €72.9m €69.4m €76.3m Revenue Driven Costs €6.4m €6.7m €7.9m % out of Revenue 8.8% 9.7% 10.3% €7.9m, 14% Adjustable Operating Expenses Including Dep €18.8m, 32% & Amor Adjusted Expenses €31.0m, 54% Excluding Dep & Amor Revenue Driven Costs 11
Slide 14: Operating Expenses H1 2011 breakdown
Operating Expenses H1 2011 (€31.0m= 100%) (excl’ Dep&Amor & Revenue driven costs) Employee Related €4.6m, 14.7% Costs €2.3m, 7.4% €2.5m, 8.2% Other Operational Costs €21.6m 69.7% Traveling, Exhibitions & Marketing Costs Admin & Office Costs 12
Slide 15: Operating Expenses H1 2011 table
Operating Expenses H1 2011 (€31.0m= 100%) (excl’ Dep&Amor & Revenue driven costs) H1-10 H2-10 H1-11 Adjusted Operating Expenses w/o Revenue €27.3m €29.8m €31.0m Driven Costs Employee Related Costs €18.8m €20.8m €21.6m % out of Adjusted Operating Expenses w/o 68.9% 69.7% 69.7% Revenue Driven Costs Ad
Slide 16: Highly cash generative with strong EBITDA conversion
PTEC continues to be highly cash generative with strong conversion rate from adjusted EBITDA Net cash provided from operating activities including cash received from WHO – €45.0m Conversion from adjusted EBITDA – 80% Cash Used in investing activities: • Acquisition of Intelligent Gaming Systems – €2
Slide 17: Existing cash commitments
Existing cash commitments to be paid in the future include: • PTTS – €140m + payment based on earnout of x7 2014 results • GTS – based on earnout of 1.5 2011 results • Mobenga – €8m + payment based on earnout of x6 2013 results • Final payment for the acquisition of assets related to the investment
Slide 18: Robust balance sheet
Robust balance sheet Cash balance of €64.3m at 30 June 2011 Total Balance Sheet – €386.8m Main Assets & Investments VF – €34.9m GTS – €19.8m Tribeca – €22.3m Investment in WH Online – €159.2m Investment in International terminal leasing – €7.2m Other investments – €10.9m (*) Full summary of the bala
Slide 19: Review of H1 2011
REVIEW OF H1 2011
Slide 20: Product development: casino, poker, bingo, sports
Casino: • 36 new games developed, 19 delivered to licensees • 15 branded games including Kong: 8th Wonder of the World, Spamalot, Iron Man 2 • Additional themed content including Easter Surprise, Tennis Stars • Innovative slot format: ‘Mr Cashback’ • Move to monthly release cycle • Poker: Poker side
Slide 21: Preparation for Italian and Spanish markets
• Preparation for Italian and Spanish markets • Development of new Portal format giving greater flexibility • New casino lobby & mini games platform • Mobile poker product • Enhanced bingo customer retention tools • Maltese regulatory approval for Live product • IG: slot management & BIS systems lau
Slide 22: Offshore poker market trends
• Offshore poker market has been subdued >18 months • Recent trends/ activity reflects new market dynamic • Growth in tournament activity • PTEC has cumulative $30m in prizes • Ongoing strength in quiet summer period • Benefits seen most in strong brands • Poker outlook uncertain, but regulated mark
Slide 23: Regulated market launches and North America progress
• Italy: casino & cash poker: 8 licensees launched • Spain: casino & poker in Madrid region: CGM launched • North America: progress in US • Nordic Gaming (launched Jan 11) • COPA (signed May 11) • Gala Coral (signed July 11) • Strong pipeline 20
Slide 24: Videobet, Sciplay, Sportech and William Hill Online
Videobet • UK rollout with The Global Draw completed: >20,000 machines Sciplay • Services mandate for COPA: greenfield operation in California • B2G opportunities in Americas & Europe Sportech • Migration of existing sites underway • Joint product initiatives William Hill Online • Continued strong p
Slide 25: Strategic Initiatives
STRATEGIC INITIATIVES ee td rs
Slide 26: Becoming the supplier of choice
• Maintaining leading market position and profile • Delivering broad & dynamic content, product & network suite • Enhancing current flexibility of market approach • Achieving a market-defining, integrated cross platform capability • Extending across value chain by providing a full turnkey solution P
Slide 27: Acquisitions broadening reach
ACQUISITIONS BROADENING REACH • Acquisitions leverage key industry convergence trends • Deliver technology advances and quality client base • Developing integrated cross platform capability Mobenga (Jul 11) • Market leading mobile sports enabler • Highly flexible platform delivering products onto sm
Slide 28: Maximising player lifetime value
• Maximising player lifetime value (LTV) key to performance • Strong player acquisition and retention abilities: fundamental • Successful ROI through harnessing complex dynamic: • Lower cost acquisition • achieves efficient marketing reach • Maximise retention • to deliver high Player LTV and ROI •
Slide 29: Spotlight on PTTS @playtech
Spotlight on PTTS @playtech OPERATOR VALUE CHAIN \MS tools IMS tools Conversio™ : ; —_— 25
Slide 30: Operator core role and outsourcing
• Operator has certain core responsibilities • Appetite for outsourcing depends on: - Business strategy & priorities - In-house capability & experience Operator core role Can outsource Brand management Software Business strategy Technology Financing Content Regulation Services Player cash mgmt Playe
Slide 31: Player acquisition and retention services
Acquisition External • Experienced in targeting players across .com/ .net • Track record in all European & international markets • Optimising marketing spend across channels/ media • Understand dynamic of changing/ seasonal markets Affiliate • One of the largest & most successful networks network •
Slide 32: PTTS support services
Supervision of cash outs and jackpot claims, Hosting environments complied with local cross-cage reconciliation, collusion regulations. Includes: Hardware maintenance, prevention, server hosting, tournament set- Technical support, up, 24/7 operator support and data analysis. Marketing Poker Network
Slide 33: PTTS benefits for operators
• Levels playing field for operator in highly competitive marketplace • Harnesses 10 years of experience and relationships • Combining software & services immediately boosts capability • Minimal upfront cost across software or services & infrastructure PTEC software: sophisticated tools and analytic
Slide 34: Slide 34
Slide 35: COPA and Italian casino & poker acquisitions
Italian casino & COPA poker H1 2011 acquisition acquisition acquisition 30
Slide 36: Current Trading
• Strong performance in traditionally slow quarter • Daily average growth vs. Q3/10: over 23% • Daily average vs. Q2/11: over 2% ahead 31
Slide 37: Q&A
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Slide 39: Adjusted EBITDA reconciliation
H1 ‘10 H2 ’10 H1 ’11 €’000 €’000 €’000 Operating profit 28,989 16,320 21,829 Amortisation 6,382 7,292 7,804 Depreciation 1,423 1,993 1,837 EBITDA 36,794 25,605 31,470 Share of Profit of associates before amortisation of 15,013 15,779 18,720 intangibles Change in FV of available for sale investment (
Slide 40: Adjusted net profit reconciliation
H1 ‘10 H2 ‘10 H1 ‘11 €’000 €’000 €’000 Net profit 36,958 27,712 37,860 Amortisation of investment in WH Online 4,922 3,344 2,864 Change in FV of available for sale investment (CYF & (231) 2,454 551 ALOG) Discounting of deferred consideration 358 378 115 Amortization on acquisitions 3,564 3,952 4,005
Slide 41: Cash flow summary
H1 ‘10 H2 ‘10 H1 ‘11 €’000 €’000 €’000 Net profit 36,958 27,712 37,860 Depreciation, Amortisation 7,806 9,285 9,642 Employees Stock Options Expenses 1,825 4,030 2,620 Change in FV of available for sale investments (231) 2,454 551 Income from associate (15,013) (15,779) (18,720) Amortisation of intan
Slide 42: Balance sheet summary
H1 ’10 H2 ’10 H1 ’11 €’000 €’000 €’000 Cash and Cash Equivalents 59,958 68,519 64,255 Receivables 21,599 22,749 26,734 Investments (CYF, ALOG & Sportech) 11,997 10,932 10,381 Investment in WH and other equity associates 165,606 162,583 166,832 Intangible assets 98,955 100,384 101,748 Fixed Assets &
Slide 43: Depreciation and amortisation
• Depreciation • In line with business growth, still immaterial • Capex additional growth only on dedicated investments for regulated markets • Amortisation • Development costs (internally generated) – €3.0m • Amortisation on acquisitions/investments: • Tribeca – €1.6m • WHO – €2.9m • GTS – €0.7m •