Net Holding A.s. · BIST:NTHOL
Net Holding A.s — Investor Presentation (August 2017)
42 slides from Net Holding A.s's investor presentation, Aug 29, 2017
Slide 1: Net Holding Corporate Presentation
NET HOLDING CORPORATE PRESENTATION 1
Slide 2: Disclaimer
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 specifi
Slide 3: Table of Contents
Table of Contents • The World of Merit International Page 4 • Net Holding Financial Highlights Page 15 • Core Business Activities Page 23 • Merit Hotels-Casinos & Revenue Generation Page 26 • Branding & Marketing Page 33 3
Slide 4: The World of Merit International
THE WORLD OF MERiT INTERNATIONAI RESORTS BULGARIA Coming Soon HOTELS « reMGeH Royal & Premium Hotel & Casino, Kyrenia * Merit Crystal Cove Hotel & Casino, Kyrenia * Merit Park Hotel & Casino, Kyrenia é ewMerit Lefkosa Hotel & Casino, Nicosia ) ese: Merit Gyprus;Gardén Hotel & Casino, Famagusta TURKE
Slide 5: Net Holding at a Glance
NET HOLDING AT A GLANCE ——— eae, —— 10 8 Casinos pr" =~ 4,390 } y ay Properties (Land & Buildings inTurkey, iliimay = Northern Cyprus & Azerbaijan) dai@roan m4 : appraised at f : = and in Turke Live Tables =. 531mn $ (Bodrum land is off pee llet rz = Pa ae 2.5 mn m? land in N.Cyprus 0.3mn m? land in
Slide 6: Gaming Leader in Northern Cyprus and Eastern Europe
Gaming Leader in Northern Cyprus and Eastern Europe • 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
Slide 7: Milestones: The Path to Growth
Milestones: The Path to Growth From single casino on 2000 to 10 casinos on 2017 International Expansion (2011- 2016) ▪ 2013 Opening of Merit Royal Hotel & Casino Transformation ▪ 2013 Re-opening of Park Years (2000-2010) under Merit brand ▪ 2014 Antalya Duty Free sold Early Years (1990- to Nuance fo
Slide 8: Casino Performance: EBITDA & Sales
Casino Performance: EBITDA & Sales * 80 CASINO EBITDA (mn $) 70 60 50 40 30 74 20 32 52 45 51 10 0 2013 2014 2015 2016 2017 E CASINO SALES (mn $) 200 180 160 140 120 100 80 179 132 134 60 90 138 40 20 0 2013 2014 2015 2016 2017 E * These tables are taken from independent auditors’ report in EBITDA b
Slide 9: 2017 EBITDA Guidance
2017 EBITDA GUIDANCE $74 -$6 $6 $12 a S68 $56 | $52 a One offs (+) New Casinos 2017 Casino Ebitda 2017 Guidance 2016 Ebitda 2016 Ebitda (+) Cyprus Organic Growth (-) Corporate Center
Slide 10: Merit: Operational Statistics
Merit: Operational Statistics Total Visits to Merit Properties (mn people) Occupancy and ADR 350 64% 2 300 62% 300.0 308 250 60% 1.5 267 200 247 58% 1 150 56% 1.1 1.5 100 54% 0.5 0.8 50 52% 0 0 50% 2014 2015 2016 $ 2013 2014 2015 2016 Revenue Distribution By Currency (2016) Visitors Nationality (201
Slide 11: Disciplined Execution of Our Expansion Strategy
Disciplined Execution of Our Expansion Strategy • Merit is clear regional leader in integrated casino resort development and management and is well positioned to bring its expertise and business model to selected countries in Eastern Europe. • 5 new casinos opened in 2016 in Montenegro and Croatia w
Slide 12: Corporate Action
Corporate Action • NET Holding made an application to merge NTTUR and NTHOL via a share swap on February 8th, 2017. CMB approved the merger on July 21th, 2017 . • Independent valuation conducted by KPMG determined the ratio to be 0.97861. • The merger to result in elimination of cross-holding patter
Slide 13: Ownership Structure (Pre-Merger)
Ownership Structure (Pre-Merger) Net Holding Shareholder Structure Foreign Institutional Investors 148,984,000 44.00% Net Group (Treasury Shares) 77,878,000 23.00% Tibuk Family 57,562,000 17.00% Free Float 54,176,000 16.00% Total 338,600,000 100.00% 13
Slide 14: Ownership Structure (Post-Merger)
Ownership Structure (Post-Merger) Net Holding Shareholder Structure Foreign Institutional Investors 242,917,754 43.08% Net Group (Treasury Shares) 81,310,910 14.42% Tibuk Family 145,931,092 25.88% Free Float 93,716,181 16.62% Total 563,875,937 100.00% 14
Slide 15: Net Holding Financial Highlights
NET HOLDING FINANCIAL HIGHLIGHTS 15
Slide 16: Financial Overview
Financial Overview mn TL 1HF17 1HF16 Chg. FY 2016 FY 2015 Chg. Revenues 242.8 184.4 32% 478.6 403.1 19% EBITDA 48.1 36.2 33% 143.7 83.9 71% OPERATING PROFIT 5.6 0.2 n.m. 68.5 30.5 124% Investment Income (Net) 1.6 2.2 -29% 4.2 124.8 -97% Interest (Expense)/ Revenue* -16.3 -15.6 4% -31.7 -30.5 4% Fore
Slide 17: Summarized Segmental Review
Summarized Segmental Review mn TL 1HF17 1HF16 Chg. FY 2016 FY 2015 Chg. EBITDA N. Cyprus 62.2 46.1 34.9% 180.7 147.4 22.6% Merit Crystal Cove 12.4 9.2 34.8% 32.1 28.0 14.6% Merit Lefkosa 4.3 3.1 38.7% 41.7 30.9 35.0% Merit Royal 32.8 24.3 35.0% 65.2 57.6 13.2% Merit Cyprus Gardens 0.8 0.6 33.3% 8.1
Slide 18: Cash Flow
Cash Flow mn TL 1HF17 1HF16 Chg. FY2016 FY2015 Chg. Reported EBITDA 48.1 36.2 11.9 143.8 83.9 59.9 Working Capital -15.2 -7.1 -8.1 -5.1 -18.1 13.0 Cash Flow generated by operations 32.9 29.1 3.8 138.7 65.8 72.9 Net interest expenses -34.3 -12.3 -21.9 -21.0 -16.9 -4.1 Taxes paid -14.9 -12.0 -2.9 -11.
Slide 19: Debt Structure
Debt Structure mn TL 1HF17 1HF16 Chg. FY2016 FY2015 Chg. Nature of Facility TL Bank Debt (secured) 28.4 15.2 13.2 13.4 16.7 -3.3 Debt Short Term 20.7 3.7 17.0 3.7 3.7 0.0 Debt Long Term 7.7 11.5 -3.8 9.7 13.0 -3.3 Fx Bank Debt (secured) 406.2 90.9 315.3 290.2 83.5 206.7 Debt Short Term 74.3 44.9 29.
Slide 20: Capital Expenditures / Expectations in Casinos
Capital Expenditures / Expectations in Casinos 40 35 3 3 30 5 5 3 Net Holding Expectation 25 5 20 3 3 3 23 23 5 15 5 5 12 3 10 3 7 7 3 3 5 5 5 5 5 5 5 0 mn € 2014 2015 2016 2017 2018 2019 Maintenance Eastern Europe Merit Royal RoB MCC expansion Others * RoB: Renovations on Buildings. ** These capita
Slide 21: Core Business Activities
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Slide 22: Business Activities
Business Activities Core Activities Other Activities Gaming Real Estate Development Merit Casinos 35,000 m2 gaming space in 5 -11.7 mn m2 of land in Turkey, 2.5 mn m2 in Casinos in Northern Cyprus and Eastern Europe. Northern Cyprus & 0.3mn m2 of land in Baku, 40% of gaming market in N. Cyprus. Casi
Slide 23: Gaming Business Update
Gaming Business Update • BULGARIA Svilengrad – Casino is under construction, the only 5-star hotel in the area. Operations in Svilengrad – just 2,5 hours driving distance from Istanbul – will start by the end of 2017. • MACEDONIA Skopje – Merit Marriott Hotel – Casino is expected to be open in the e
Slide 24: Lottery Business Update
Lottery Business Update • Exclusive Joint Venture Agreement with Scientific Games covering 26 countries surrounded by Turkey, additionally with IGT, starting strategic partnership. TURKEY • New privatization structure and schedule will be determined by Sovereign Wealth Fund administration. • We are
Slide 25: Merit Hotels - Casinos & Revenue Generation
Merit Hotels - Casinos & Revenue Generation
Slide 26: Casino Data in Northern Cyprus
Casino Data in Northern Cyprus Merit Royal & P. Merit Crystal Cove Merit Lefkosa Merit Park Merit Cyprus Gardens Slots: 894 Slots: 635 Slots: 1,233 Slots: 544 Slots: 194 Table Games: 60 Table Games: 50 Table Games: 40 Table Games: 45 Table Games: 20 Hotel Rooms:243 Hotel Rooms:277 Hotel Rooms:125 Ho
Slide 27: Casino Data in Eastern Europe
Casino Data in Eastern Europe Merit Avala Merit Royal Splendid Merit Montenegro Merit Libertas Merit Grand Lav Slots: 123 Slots:70 Slots: 70 Slots: 114 Slots: 123 Table Games: 23 Table Games:15 Table Games: 11 Table Games: 14 Table Games: 16 Merit Skopje * Merit Svilengrad * Slots: 170 Slots: 220 Ta
Slide 28: Casino Revenue Generation - 2016
Casino Revenue Generation -2016 Total Casino Distribution Slots 100% 25% 90% 80% 39% 70% 57% 71% 70% 60% 83% 50% 40% 30% 61% 20% 43% 29% 30% 10% 17% 0% Live Games Merit Royal Merit Park Merit Lefkosa Merit Cyprus Merit Crystal 75% Garden Cove Slots Live Games 28
Slide 29: Revenue Distribution by Live Games in 2016
Revenue Distribution by Live Games in 2016 Total Casino Distribution Baccarat 4% 100% 10% 13% 8% 12% 90% 22% Roulette 53% 7% 80% Poker 27% 70% 22% 38% 44% 27% 52% 60% 50% 40% 30% 61% 51% 50% 20% 43% 40% 10% 0% Blackjack Merit Royal Merit Park Merit Lefkosa Merit Cyprus Merit Crystal Garden Cove 16%
Slide 30: Peer Casino Operators vs. Net Holding
Peer Casino Operators vs. Net Holding Data Net Holding Las Vegas Sands Wynn Resorts MGM China Wynn Macau Melco Philip. Bloomberry Philip. VIP Tables 42 318 171 162 178 108 188 GGR (mn $) 0.72 9.00 17.81 6.85 14.68 2.64 2.23 Mass Table 444 2,340 620 252 425 165 204 GGR (mn $) 0.21 2.40 7.80 Poker; 3.
Slide 31: Peer Casino Operators vs. Net Holding (EV/EBITDA)
Peer Casino Operators vs. Net Holding (EV/EBITDA)* 16.0x EV/EBITDA 2017 14.0x 14.0x 12.1x 12.0x 11.4x 10.0x 7.7x 8.0x 6.1x 6.0x 4.0x 2.0x 0.0x Net Holding Poker;Macau Casinos Philippines Eastern Europe Las Vegas Casinos22% Roulette;Casinos Casinos 51% EV/EBITDA 2018 & Margins 16.0x 40% 12.1x 13.5x 1
Slide 32: Branding & Marketing
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Slide 33: Player Club Card
PLAYER CLUB CARD • Merit Casinos has an active base of more than 700,000 members registered Player Club Card (1,000 people) to their Player Loyalty Program & Net Holding Expectation 1,200 1,100 Tracking System at four different levels; Sapphire, Silver, Gold and Platinum. 1,000 900 • Valued members
Slide 34: Mega Jackpot
Mega Jackpot • Merit Casinos offer to its slot machine players a unique experience by its Mega Progressive Jackpot system, linking with Wide Area Progressive all of its 4,000 slot machines at its 10 casinos. • In the 29-casino Northern Cyprus gaming market, Merit is the only casino to offer a 0.5 mn
Slide 35: A New Brand in Gaming: Merit Poker
A New Brand in Gaming: Merit Poker • Leading Texas Hold’em Poker Tournament Operator «Merit Poker» has exclusive JV with Bwin while developing its own brands; Lebanese Poker Tour (LPT), Russian Poker Tour (RPT) and Mediterranean Poker Cup (MPC). • Merit Poker has been founded by Merit Casinos in 200
Slide 36: Newest Tournaments: Roulette and Backgammon
Newest Tournaments: Roulette and Backgammon • Tournaments which have organized in the Merit Casinos attracted more attention than expected, as a result, turned into an activity that all guests eagerly track its annual timetable eagerly. • For the first time, the Merit Open International Backgammon T
Slide 37: Merit Brand Combines with Technology
Merit Brand Combines with Technology 37
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Slide 39: JCR Corporate Credit Rating - Annual Review
JCR, Japan Credit Rating Agency Corporate Credit Rating - Annual Review Strengths • Sustained operational volume and earnings growth throughout FY2015 and the 1H2016 despite the downturn in the tourism industry across Turkey. • Established market-leading position in the TRNC luxury hotel and chance
Slide 40: Merit Hotels Property Update
i i Merit Hotels Property Update
Slide 41: Land & Buildings
Land & Buildings Number of Book Value Properties Properties mn $ Istanbul 22 30.6 Other locations in Turkey 52 23.0 TRNC 61 477.0 Azerbaijan 2 0.7 Total 137 531.2 41
Slide 42: Bodrum Land
Bodrum Land 300 mn $ of monetization opportunity – NOT even on balance sheet. 1,000 hectares (10 mn of land running along just behind the town of Gulluk on the Mediterranean coast; 5 minutes drive from Bodrum International Airport, 30 minutes from the town of Bodrum. Topography lends itself well to
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