Aristocrat Leisure Limited · ASX:ALL
Aristocrat Leisure — Merger or Acquisition (July 2014)
46 slides from Aristocrat Leisure's merger presentation, Jul 7, 2014
Slide 1: Acquisition of VGT
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Aristocrat Leisure Limited Acquisition of VGT
Slide 2: Important Notices and Disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. IMPORTANT NOTICES AND DISCLAIMER This presentation has been prepared by Aristocrat Leisure Limited (ABN 44 002 818 368) (“Aristocrat” or “Company”). Summary information This presentation contains summary information about Aristocrat and its subsi
Slide 3: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Agenda Section Page For personal use only 11 Transaction overview 3 22 Overview of VGT 4 33 Strategic rationale and combined group 12 64 Funding 19 95 Trading update 23
Slide 4: Transaction overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Transaction overview ▪ For personal use only Aristocrat has agreed to acquire VGT for a total consideration of US$1,283 million (1) (A$1,365 million(2)) in cash – VGT is a leading US gaming operations business, providing Class II gaming content,
Slide 5: Overview of VGT
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Section 2 Overview of VGT
Slide 6: VGT overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. VGT overview ▪ VGT is a leading provider of Class II gaming content, platforms, systems and technology For personal use only – Founded in 1991 by CEO, Jon Yarbrough – Headquartered in Tennessee, US with primary operations in Oklahoma ▪ VGT is the
Slide 7: Significant player affinity from leading titles
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Significant player affinity from leading titles For personal use only …deployed across multiple Long-lived well recognised brands… platforms Low denomination Strong WPU growth of ~6% CAGR from High denomination FY11–FY13 (1) Single line Operation
Slide 8: US Tribal gaming sector overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. US Tribal gaming sector overview Total gaming machines (US)(1) Tribal gaming machines(1) For personal use only By category By state 11% 20% 40% 39% 20% 49% 7% 8% 6% US Tribal US Commercial US Route Ops (2) California Oklahoma Washington Minnestot
Slide 9: Class II gaming sector overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Class II gaming sector overview For personal use only Tribal gaming machines(1) Class II machines (US tribal casinos)(2) By classification By state 16% 27% 50% 6% 84% 8% 9% Class II Class III Oklahoma Alabama Louisiana Montana Other Total # of un
Slide 10: A leader in tribal gaming
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. A leader in tribal gaming For personal use only North America Tribal Leased Game share (1) Combined 31% 30% 26% 25% 22% 20% 15% 15% 10% 9% 7% 5% 5% 4% 3% 0% Source: (1) Eilers-Fantini Quarterly Slot Survey (1Q CY14), information presented as of 3
Slide 11: Diversified Native American Tribal customer base
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Diversified Native American Tribal customer base For personal use only Geographic footprint Operational footprint spans over 120 venues and includes ▪ Key customers are in California, Kansas, Louisiana, Montana, ▪ California Oklahoma, Texas and W
Slide 12: Strong EBITDA and cash flow conversion
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Strong EBITDA and cash flow conversion VGT adj. operating cash flow (2) (US$ million) For personal use only VGT adj. EBITDA(1) (US$ million) Margin(3) 58% 66% 66% Conversion(4) 107% 98% 97% 180 180 157 149 152 150 150 146 131 122 120 120 90 90 60
Slide 13: Strategic rationale and combined group
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Section 3 Strategic rationale and combined group
Slide 14: Strong strategic rationale
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Strong strategic rationale For personal use only Increased scale in the North American gaming operations segment ▪ Step change in Aristocrat's gaming operations installed base from approximately 8,200 units to 28,400 units – 100% of VGT's revenue
Slide 15: Step change in Aristocrat's recurring revenue strategy
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Step change in Aristocrat's recurring revenue strategy For personal use only Strategy overview Gaming operations installed base (# of units)(1) North American Recurring 28,400 Revenue 30,000 25,000 Tailored "Asian" Content CORE 20,000 20,200 MOME
Slide 16: Combined group – Pro forma financial summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Combined group – Pro forma financial summary Pro forma revenue (A$ million)(1) Pro forma recurring revenue (A$ million)(1) For personal use only Group 932 1,085 1,065 Group 318 347 376 1,200 400 350 1,000 242 251 300 800 223 250 251 242 600 200 2
Slide 17: Combined group – Recurring Revenue profile
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Combined group – Recurring Revenue profile For personal use only 2013 operational revenue breakdown(1) Aristocrat standalone Aristocrat pro forma 15% 18% 24% 35% 47% 61% Recurring Revenue Product Sales Other 2013 geographic revenue breakdown(1) A
Slide 18: Combined group – Pro forma financial summary (cont.)
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Combined group – Pro forma financial summary (cont.) Pro forma adj. EBITDA (A$ million)(1),(2) Pro forma adj. operating cash flow (A$ million)(1),(3) For personal use only Group 278 337 355 Group 247 321 260 400 350 350 300 300 250 167 156 250 15
Slide 19: Strong EPS and cash flow accretion
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Strong EPS and cash flow accretion For personal use only Operational opportunities from product synergies and some potential cost synergies ▪ Combining Aristocrat's video strength with VGT's leading Class II mechanical reel position in United Sta
Slide 20: Funding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Section 4 Funding
Slide 21: Acquisition funding details
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Acquisition funding details For personal use only Acquisition funding details Sources and uses ($ million) Sources US$(3) A$ US$1,283 million transaction value subject to Purchase New TLB facility 1,300 1,383 certain adjustments(2) price(1) Pla
Slide 22: Pro forma Balance Sheet
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Pro forma Balance Sheet For personal use only Adjustments for Acquisition, Debt and Aristocrat VGT(1) Placement (2) Aristocrat pro forma A$ million 31-Mar-2014 31-Dec-2013 Cash and cash equivalents 20 - 10 31 Inventory, trade and other receivable
Slide 23: Strong pay down and appropriate approach to dividends
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Strong pay down and appropriate approach to dividends Pro-forma net debt/Bank EBITDA at March 2014 ~3.6x, pre Ainsworth Offer and SPP For personal use only Pro-forma net debt/Bank EBITDA expected to be closer to 3x at completion and targeting
Slide 24: Trading update
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Section 5 Trading update
Slide 25: Full year trading outlook
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Full year trading outlook For personal use only Aristocrat full year outlook(1) ▪ We expect solid NPAT growth over the 2014 full year excluding one-off transaction related expenses ▪ Although new technical standards for Macau have been issued, th
Slide 26: Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Summary For personal use only The acquisition of VGT is an exciting and transformational opportunity Strategically compelling transaction Increased scale in the North American gaming operations segment with a step change from approximately 8,
Slide 27: Appendix: Aristocrat capital raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Appendix 1 Aristocrat capital raising
Slide 28: Underwritten Placement, Ainsworth Offer and SPP
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Underwritten Placement, Ainsworth Offer and SPP ▪ Underwritten Placement to raise A$375 million For personal use only ▪ Placement price (Placement Price) determined by book build with underwritten floor price of A$5.12 per share ("New Underwritte
Slide 29: Key dates – Placement, Ainsworth Offer and SPP
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Key dates – Placement, Ainsworth Offer and SPP For personal use only Key event(1) Date Trading halt Monday, 7 July 2014 Placement bookbuild Monday, 7 July 2014 Shares recommence trading Tuesday, 8 July 2014 Placement settlement date Friday, 11 Ju
Slide 30: Q&A
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Q&A
Slide 31: Appendix: Additional financial information
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Appendix 2 Additional financial information
Slide 32: VGT financial summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. VGT financial summary For personal use only US$ million Dec-11 Dec-12 Dec-13 Revenue 209 227 236 Growth (%) 8% 4% Adj. EBITDA(1) 122 149 157 Margin (%) 58% 66% 66% Growth (%) 22% 5% Adj. EBIT(2) 83 111 119 Margin (%) 40% 49% 50% Growth (%) 33% 7%
Slide 33: Appendix: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Appendix 3 Key risks
Slide 34: Key risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Key risks For personal use only Introduction This section summarises some of the key risks that may affect the future performance of an investment in Aristocrat. This is not an exhaustive list of the relevant risks. If any of the following risks
Slide 35: Specific risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Specific risks For personal use only Changing economic conditions and other factors affecting the gaming industry Demand for our products and services can be dependent upon favourable conditions in the gaming industry, which is highly sensitive t
Slide 36: Specific risks – Government gaming regulation
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Specific risks For personal use only Government gaming regulation The global gaming industry is subject to extensive governmental regulation. While the regulatory requirements vary by jurisdiction, most require: Licences and/or permits; Findi
Slide 37: Specific risks – Foreign exchange
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Specific risks For personal use only Foreign exchange The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and Japanese yen. Foreign exchange r
Slide 38: Specific risks – Major incidents
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Specific risks For personal use only Major incidents Aristocrat has a diverse and expansive supply chain footprint. However financial losses stemming from a natural disaster, civil or labour unrest, terror incident, major fire or other incident a
Slide 39: Acquisition risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Acquisition risks For personal use only Completion risk Completion of the acquisition is subject to US anti-trust approval under the Hart–Scott–Rodino Antitrust Improvements Act (“HSR Act”). It is possible that this clearance may be substantially
Slide 40: Acquisition risks – Acquisition accounting
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Acquisition risks For personal use only Acquisition accounting In accounting for the acquisition, Aristocrat will need to perform a fair value assessment of all of the assets, liabilities and contingent liabilities of VGT, which will include the
Slide 41: Acquisition risks – Impairment risk
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. Acquisition risks For personal use only Impairment risk A significant proportion of VGT's assets are intangible and subject to annual impairment testing. Should any intangible assets become impaired the associated write downs in carrying values c
Slide 42: Appendix: International selling restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. For personal use only Appendix 3 International selling restrictions
Slide 43: International selling restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. International selling restrictions International Offer Restrictions For personal use only This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. New Share
Slide 44: International selling restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. International selling restrictions This right of action for rescission or damages is in addition to and without derogation from any other right the purchaser may have at law. In particular, Section 130.1 of the For personal use only Securities Ac
Slide 45: International selling restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. International selling restrictions Ireland For personal use only The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory a
Slide 46: International selling restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES. International selling restrictions United Kingdom For personal use only Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom
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