Aristocrat Leisure Limited · ASX:ALL
Aristocrat Leisure — Merger or Acquisition (October 2021)
77 slides from Aristocrat Leisure's merger presentation, Oct 18, 2021
Slide 1: Investor Presentation: proposed acquisition of Playtech
INVESTOR PRESENTATION Aristocrat accelerates its growth strategy with the proposed acquisition of Playtech 18 October 2021 Not for release to US wire services or distribution in the United States
Slide 2: Important notices and disclaimer
Important notices and disclaimer This investor presentation (Presentation) has been prepared by Aristocrat Leisure Limited (ACN 002 818 368) (ALL or Aristocrat). By accepting this Presentation you represent and warrant that you are entitled to receive this Presentation in accordance with the restric
Slide 3: Important notices and disclaimer (cont'd)
Important notices and disclaimer (cont’d) To the maximum extent permitted by law, Aristocrat, the underwriters and each of their respective affiliates and related bodies corporate, and each of their respective directors, officers, partners, employees and agents (Extended Parties) disclaim any respon
Slide 4: Agenda
AGENDA 1. Acquisition summary 2. Overview of Playtech 3. Strategic rationale 4. Combined group and financial impact 5. Trading update 6. Q&A 7. Appendices
Slide 5: Acquisition Summary
ACQUISITION SUMMARY
Slide 6: Accelerating Aristocrat's strategy by expanding into online real-money gaming
Accelerating Aristocrat’s strategy by expanding into the online real-money gaming (“online RMG”) segment ▪ Aristocrat has announced the proposed acquisition of 100% of Playtech for a cash offer price of 680 British pence per share (the “Acquisition”) ▪ Playtech is a leading technology provider that
Slide 7: A strategic and financially compelling acquisition
A strategic and financially compelling acquisition 1 Provides Aristocrat material scale in the ~US$70bn online RMG segment, offering new, complementary growth channels for Aristocrat’s gaming content Delivers medium-term revenue and earnings growth, in particular in the fast-growing North America on
Slide 8: Materially accelerating Aristocrat's growth strategy
Materially accelerating Aristocrat’s growth strategy PORTFOLIO GROWTH + PERFORMANCE TAKE SHARE WHEREVER STRONG PRODUCT ACCELERATION WE PLAY INVESTMENT OPTIONS BEST PEOPLE INNOVATION LEADERSHIP + CAPABILITY INVESTMENT OPERATIONAL EXCELLENCE GOOD GOVERNANCE + STRONG BALANCE ESG CUSTOMER EXPERIENCE SHE
Slide 9: Combined distribution, technology and content for emerging customer and player needs
Aristocrat and Playtech’s combined distribution, technology and content will enable a much broader range of emerging customer and player needs Gaming venues powered by Aristocrat products and technology Distribution Technology Content Slot machines CX 8bn UX Player wallet Loyalty programs Convergent
Slide 10: Overview of Playtech
OVERVIEW OF PLAYTECH @ ARISTOCRAT
Slide 11: Leading technology and platform provider in the global online RMG industry
Leading technology and platform provider in the global online RMG industry Playtech is a leading technology provider that develops platforms and content for the global gambling industry, as well as engaging directly with consumers in select segments Playtech FY20 revenue by businesses2 B2B1 ▪ Provid
Slide 12: Providing B2B technology and content globally and B2C solutions in select segments
Providing B2B technology and content globally and delivering B2C solutions in select segments B2B providers B2C operators End users Small number of B2B technology / platform providers with scale Gaming content 170+ leading global licensees casino games poker bingo Technology platform Structured agre
Slide 13: Online RMG is positioned for significant growth
Online RMG is positioned for significant growth Significant growth trajectory, driven by product innovation, customer demand and opening of regulated jurisdictions for online RMG Online RMG segments and 2020 global addressable market (US$bn)1 Expected global online RMG gross gaming revenue (‘GGR’)1
Slide 14: Playtech has industry leading scale in attractive growth regions
Playtech has industry leading scale in attractive growth regions Playtech’s technology, platform and presence are positioned for growth in regions with attractive opportunities such as the US and Canada 170+ c. 400m Global licensees Sports bets placed 30+ c. 45m Regulated jurisdictions Poker tournam
Slide 15: Leading online RMG content, technology and digital capabilities
Leading online RMG content, technology and digital capabilities Playtech's B2B division provides products across all key iGaming and OSB verticals B2B overview B2B revenue by product1 ▪ Playtech provides the technology, services and game content required to operate an online gambling business Other
Slide 16: A proven and powerful online RMG platform
A proven and powerful online RMG platform The B2B business is a global unified online RMG technology and platform provider Key highlights B2B IMS platform and services ▪ Operates across all key online RMG segments including casino, live casino, Casino / Live / Sport / Poker / Bingo / Virtual poker a
Slide 17: Complementary geographic B2C business; poised to benefit from shift to online
Complementary geographic B2C business; poised to benefit from shift to online B2C consists predominantly of Snaitech, a leading Italy-based omni-channel gaming operator with a top position in sports betting B2C overview B2C FY20 revenue by vertical Snaitech FY20 revenue mix ▪ Playtech's B2C division
Slide 18: Strategic Rationale
STRATEGIC RATIONALE
Slide 19: Key acquisition rationale
Key acquisition rationale 1 Provides Aristocrat material scale in the ~US$70bn online RMG segment, offering new, complementary growth channels for Aristocrat’s gaming content Delivers medium-term revenue and earnings growth, in particular in the fast-growing North America online RMG segment, combini
Slide 20: Global scale and capability in online RMG, enhancing addressable market
Acquisition would deliver global scale and capability in the online RMG 1 segment and materially enhance Aristocrat’s addressable market Significant expansion of Aristocrat’s addressable market Indicative 2020 sub-segment GGR (US$bn) ✓ Significantly market increases and diversifies Aristocrat’s tota
Slide 21: US states liberalise, creating timing for entry into online RMG
As US states liberalise, gaming customers are demanding premium online 2 RMG solutions, creating the perfect timing for entry into the segment Expected North America online RMG segment (GGR, US$bn)1 ▪ Growing popularity and liberalisation of online gaming is driving 19.6 customers to explore the opp
Slide 22: Regulated online RMG growth is accelerating in the US
2 Regulated online RMG growth is accelerating in the US Legalisation of iGaming in the US1 (# of states) ▪ iGaming is currently legal and operational in 6 states, representing 12% ~20 of the US adult population New Jersey West Virginia Pennsylvania Michigan ▪ COVID has accelerated the demand for iGa
Slide 23: Interconnected gaming network attracting leading content creators
Interconnected gaming network attracting the industry's leading content 3 creators to deliver a platform for Aristocrat’s long-term growth Best-in-class content Scaled online RMG content provider Content Content leveraged across Fully-integrated Innovative Live Casino content various distribution ch
Slide 24: Leading content and capabilities across complementary segments
Utilising our leading content and capabilities across complementary segments 3 to broaden Aristocrat’s portfolio and deepen customers’ relationships Land- based Digitisation of land-based content and Convergence of gaming content across creation of digital-first content, with an multiple gaming chan
Slide 25: Continuing the customer and player led evolution of Aristocrat
3 Continuing the customer and player led evolution of Aristocrat Strategic partnership Aristocrat well- large gaming operators positioned to respond Select commercial models to evolving customer and system products: RPG preferences ONE LINK Oasis Loyalty Oasis Loyalty Kiosk Casual MLAs/MSAs Aristocr
Slide 26: Snaitech provides best-in-class capabilities and expertise in online B2C
Snaitech, a leading omni-channel gaming operator, provides Aristocrat with 4 best-in-class capabilities and expertise in online B2C Leading ✓ Provides Aristocrat with a fully-scaled, vertically integrated operation free of channel conflicts in the Italian jurisdiction position 270+k ~1,600 Shops and
Slide 27: Combined Group and Financial Impact
COMBINED GROUP AND FINANCIAL IMPACT
Slide 28: Aristocrat has a strong track record of successful strategic acquisitions
Aristocrat has a strong track record of successful strategic acquisitions The Acquisition continues Aristocrat’s track record of investment in the medium term growth and accelerates Aristocrat’s aspirations to become a trusted and leading global gaming entertainment and technology company Aristocrat
Slide 29: Indicative Aristocrat composition pre and post Acquisition
Indicative Aristocrat composition pre and post Acquisition The proposed acquisition of Playtech will expand Aristocrat's capabilities to complementary segments and further accelerate shift to recurring revenue model FY14 FY20PF3 FY202 Pre-VGT1 Including Playtech 6% 15% Revenue by strategic segment 2
Slide 30: Indicative Aristocrat composition pre and post Acquisition (cont.)
Indicative Aristocrat composition pre and post Acquisition (cont.) Following the Acquisition, Aristocrat's earnings will be further diversified across segments and geographic jurisdictions FY141 FY20PF3 FY202 Pre-VGT Including Playtech 6% 7% 5% Revenue by segment 15% 26% 25% ANZ 41% A$0.9bn A$4.1bn
Slide 31: Sources and uses
Sources and uses The Acquisition is expected to be financed with a combination of cash, debt, and equity Acquisition funding details Sources and uses Uses A$m ▪ All cash offer of 680 pence per share, representing a premium of approximately 58% to the closing price per Playtech share of approximately
Slide 32: Financially compelling acquisition
Financially compelling acquisition ▪ Acquisition expected to be mid to high single digit EPSA accretive in the first full year of ownership (expected to be FY23) including cost synergies and the estimated impact of potentially exiting certain jurisdictions which may not be consistent with Aristocrat
Slide 33: Leverage impact from the Acquisition
Leverage impact from the Acquisition Aristocrat expects pro forma leverage at completion of less than 2.5x net debt / EBITDA Pro forma credit metrics Pro forma leverage profile Aristocrat1 Playtech Adjustments2 Combined ~2.6x A$bn Sep-21E Jun-21 Jun/Sep-21E PF Cash and cash equivalents 2.4 (1.1) 1.4
Slide 34: Details of the Entitlement Offer
Details of the Entitlement Offer ▪ Underwritten 1 for 20.56 pro rata accelerated renounceable entitlement offer with retail entitlements trading to raise approximately A$1,300 Offer size and structure million (“Entitlement Offer”) ▪ Proceeds from the Entitlement Offer will be used to reduce a portio
Slide 35: Entitlement Offer timetable
Entitlement Offer timetable Trading halt and announcement of Entitlement Offer, Institutional Entitlement Offer opens Monday, 18 October, 2021 Institutional Entitlement Offer closes Tuesday, 19 October, 2021 Institutional Entitlement Offer Shortfall book closes Wednesday, 20 October, 2021 Announceme
Slide 36: Trading Update
TRADING UPDATE AriTOCRNT
Slide 37: Trading update
Trading update Aristocrat expects to announce a strong 2021 full fiscal year with normalised net profit after tax before amortisation of acquired intangibles (“NPATA”) of A$864 million Key financial summary and estimates FY21 unaudited FY20A FY19A Revenue A$4.73bn A$4,139m A$4,397m EBITDA A$1.54bn A
Slide 38: Summary: a strategic and financially compelling acquisition
Summary: a strategic and financially compelling acquisition 1 Provides Aristocrat material scale in the ~US$70bn online RMG segment, offering new, complementary growth channels for Aristocrat’s gaming content Delivers medium-term revenue and earnings growth, in particular in the fast-growing North A
Slide 39: AriTOCRNT
AriTOCRNT
Slide 40: Thank you
THANK YOU Not for release to US wire services or distribution in the United States
Slide 41: AriTOCeNt
AriTOCeNt
Slide 42: A. Glossary of Terms
GLOSSARY OF TERMS @ ARISTOCRAT
Slide 43: Glossary of Terms
Glossary of Terms € Euro. Assumed AUDEUR of 0.64 as at 13 October 2021 GGR Gross Gaming Revenue £ Pound sterling. Assumed AUDGBP of 0.54 as at 13 October 2021 GO Gaming Operations A$ Australian dollar ABPDAU Average Bookings Per Daily Active User Interim Facilities Agreement. Designed to provide fin
Slide 44: Glossary of Terms (cont'd)
Glossary of Terms (cont’d) Professional and Amateur Sports Protection Act 1992, effectively outlawed UX User Experience PASPA sports betting in the US with the exception of several states until it was repealed in May 2018 VLT Video Lottery Terminals A non-branded system available for B2B customers t
Slide 45: B. Irrevocable Undertakings and Letters of Intent
B. IRREVOCABLE UNDERTAKINGS AND LETTERS OF INTENT
Slide 46: Irrevocable Undertakings and Letters of Intent
Irrevocable Undertakings and Letters of Intent Aristocrat has received irrevocable undertakings or letters of intent to vote in favour of the scheme in respect of a total of approximately 63.4 million shares, representing approximately 20.7% of Playtech’s outstanding shares Number of Playtech shares
Slide 47: C. Supporting Financial Materials
C. SUPPORTING FINANCIAL MATERIALS
Slide 48: Summary of Playtech's H1 2021 results
Summary of Playtech’s H1 2021 results Playtech H1 2021 results A$m H1 2020 H1 2021 ▪ Playtech performance in line with expectations Revenue (continuing operations) Core B2B revenue 294.5 349.1 ▪ Solid H1 performance despite retail closures Asia unregulated revenue 64.4 68.4 ▪ B2B very strong online
Slide 49: Playtech's historical financials
Playtech’s historical financials Playtech revenue (A$m)1 Playtech adjusted EBITDA (A$m)1 2,385.6 2,272.5 COVID-19 627.2 282.7 impacted 586.4 175.0 COVID-19 1,704.8 136.6 impacted 243.6 126.1 396.3 1,501.3 1,407.0 931.7 250.8 199.7 202.5 B2B EBITDA by Core B2B and 601.7 690.5 647.0 181.1 199.1 196.6
Slide 50: Playtech B2B performance
Playtech B2B performance Playtech B2B revenue and margins A$m FY181 FY19 FY20 B2B gaming revenue UK 273.0 318.5 234.2 Other regulated 224.7 263.4 276.1 Total regulated B2B 497.7 581.9 510.3 Unregulated excl. Asia 104.0 108.6 136.7 Total core B2B 601.7 690.5 647.0 Asia 282.7 175.0 126.1 Total revenue
Slide 51: Pro-forma balance sheet
Pro-forma balance sheet Aristocrat Playtech Adjustments1,2 Aristocrat A$ million Mar-21 Jun-21 PF Cash and cash equivalents 1,728 845 (1,061) 1,511 Other3 5,987 4,307 4,866 15,160 Total assets 7,715 5,152 3,805 16,671 Loans and borrowings 3,058 1,701 2,770 7,529 Other3 1,344 1,386 – 2,729 Total liab
Slide 52: Reconciliation to Playtech financials
Reconciliation to Playtech financials A$m FY19 FY20 Playtech adjusted EBITDA (as reported) 586.4 396.3 Alignments identified to date, based on Aristocrat’s current estimates of accounting adjustments for stock compensation and capitalised (43.6) (43.6) development Playtech adjusted EBITDA including
Slide 53: Aristocrat leverage over time
Aristocrat leverage over time Aristocrat has a consistent history of deleveraging following acquisitions Net debt / EBITDA 3.1x 2.6x ~2.6x 2.2x COVID-19 1.7x impacted <2.5x 1.4x 1.4x 1.2x 1.2x 0.6x 0.5x FY14PF for FY15 FY16 FY17 FY17 PF for FY18 PF for FY19 FY20 1H21 FY21E FY21E PF for Expected PF a
Slide 54: D. Segment Sizes, Snaitech and Finalto
D. SEGMENT SIZES, SNAITECH AND FINALTO
Slide 55: Online RMG GGR by geography
Online RMG GGR by geography Online RMG GGR by geography1 US$bn 2018 2019 2020 2021 2022 2023 2024 2025 FY18-25 CAGR Africa 0.8 0.9 1.0 1.1 1.4 1.6 1.9 2.2 16.0% Asia and Middle East 16.3 18.2 23.5 26.4 27.5 29.9 32.1 34.4 11.2% Europe 25.1 27.9 33.8 37.7 40.2 43.1 46.1 48.9 10.0% Latin America and C
Slide 56: Online RMG growth in North America
Online RMG growth in North America OSB and iGaming offshore activity is expected to continue to decrease as the legalisation of online RMG accelerates in North America and moves back onshore Onshore and offshore online RMG in North America GGR (US$bn) 21.8 20.2 2.3 17.8 2.3 15.3 2.5 2.6 11.3 3.1 19.
Slide 57: Italy's online RMG segment
Italy’s online RMG segment Attractive jurisdiction in the B2C online RMG transition Italy’s online RMG segment GGR (US$bn)1 4.7 ▪ Italy is one of the largest online RMG jurisdictions in Europe with ~US$3bn GGR in 2020 ▪ Online RMG made up over 25% of Italy’s total gaming sector in 2020, more than do
Slide 58: Snaitech's proprietary platform
Snaitech’s proprietary platform Snaitech’s betting system is a proprietary platform with a focused set of integrated products and solutions to deliver the best-in-class user experience Proven efficiency and flexibility Open to third- Designed for Scalable party solutions scalability and and protocol
Slide 59: Overview of Finalto
Overview of Finalto Finalto is a specialist in next-generation B2B and B2C multi-channel trading software and services Finalto overview1 Key offerings ▪ Finalto covers the entire value chain of a financial trade, providing proprietary technology, business intelligence systems and best-in-class data-
Slide 60: E. Key Risks
ff P) ©. KEY RISKS » AriTOCeNT
Slide 61: Key Risks – Acquisition Specific Risks
Key Risks – Acquisition Specific Risks This section discusses some of the key risks associated with any investment in Aristocrat (including matters in relation to the Acquisition), which may affect the value of Aristocrat shares. The risks set out below are not listed in order of importance and do n
Slide 62: Key Risks – Acquisition Specific Risks (cont'd)
Key Risks – Acquisition Specific Risks (cont’d) ACQUISITION SPECIFIC RISKS While the basis for the Acquisition is to enhance the medium-term growth potential of Aristocrat rather than generating cost synergies, Aristocrat expects to achieve operating cost and scale benefits across the combined group
Slide 63: Key Risks – Acquisition Specific Risks (cont'd)
Key Risks – Acquisition Specific Risks (cont’d) ACQUISITION SPECIFIC RISKS Aristocrat has entered into an interim facilities agreement (IFA) for a bridge loan to ensure Aristocrat has committed "certain funds" financing available to pay the cash consideration to Playtech shareholders, as is required
Slide 64: Key Risks – Acquisition Specific Risks (cont'd)
Key Risks – Acquisition Specific Risks (cont’d) ACQUISITION SPECIFIC RISKS It is possible that there will be some unintended loss of key staff leading up to and following the Playtech acquisition by Aristocrat. Loss of key staff may have an impact on Playtech's collective 'know-how', Loss of key sta
Slide 65: Key Risks – Business Risks
Key Risks – Business Risks BUSINESS RISKS 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 are possible. A failure to respond to pandemics (such as COVID-19)
Slide 66: Key Risks – Business Risks (cont'd)
Key Risks – Business Risks (cont’d) BUSINESS RISKS Aristocrat operates in a business environment which remains highly competitive. This competitive environment can be significantly affected by market forces, such as new market entrants, and changes in economic conditions and product demand. Failure
Slide 67: Key Risks – Business Risks (cont'd)
Key Risks – Business Risks (cont’d) BUSINESS RISKS The gaming industry is constantly employing new technologies in both new and existing markets. The Group relies on a combination of patents and other technical security measures to protect Aristocrat's products, and continues to apply for patents pr
Slide 68: Key Risks – Equity Raising Risks
Key Risks – Equity Raising Risks Equity Raising Risks Aristocrat has entered into an underwriting agreement with UBS AG, Australia Branch and Goldman Sachs Australia Pty Ltd (the Underwriters) pursuant to which the Underwriters have agreed to underwrite the Offer (Underwriting Agreement), subject to
Slide 69: F. International Offer Restrictions
F. INTERNATIONAL OFFER RESTRICTIONS
Slide 70: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of entitlements ("Entitlements") or new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the Entitlements
Slide 71: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in
Slide 72: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) Norway This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007 no. 75. Accordingly, this document shall not be deemed to constitute an offer to the public in No
Slide 73: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Marke
Slide 74: G. Underwriting Agreement Summary
G. UNDERWRITING AGREEMENT SUMMARY
Slide 75: Underwriting Agreement Summary
Underwriting Agreement Summary Aristocrat entered into an underwriting agreement with UBS AG, Australia Branch and Goldman Sachs Australia Pty Ltd (the Underwriters) in respect of the Entitlement Offer on 18 October 2021 (Underwriting Agreement). The Underwriters' obligations under the Underwriting
Slide 76: Underwriting Agreement Summary (cont'd)
Underwriting Agreement Summary (cont’d) • Aristocrat becomes required to give or gives a correcting notice under certain sections of the Corporations Act relating to the requirement to correct a defective cleansing notice; • a government agency implements or deems effective a measure which makes it
Slide 77: Not for release to US wire services or distribution in the United States
Not for release to US wire services or distribution in the United States
Aristocrat Leisure — Merger or Acquisition (October 2021) on 6ix