Net Holding A.s. · BIST:NTHOL
Net Holding A.s — Investor Presentation (April 2019)
34 slides from Net Holding A.s's investor presentation, April 2019
Slide 1: Company Presentation Net Holding A.S.
COMPANY PRESENTATION NET HOLDING A.S.
Slide 2: Geographical Footprint
Geographical Footprint *Merit Operations 2
Slide 3: Corporate Presentation At a Glance
CORPORATE PRESENTATION AT A GLANCE EARNINGS REVIEW TARGETTING ASIA REGULATORY RISK LAND AND PROPERTY BARRIERS TO ENTRY EXPANSION INTO THE BALKANS EXPERIENCE & KNOW-HOW COMPETTION NON-CORE ACTIVITIES EXPANSION INTO NORTHERN CYPRUS SHAREHOLDER STRUCTURE CORE ACTIVITIES 3
Slide 4: Core Activities
CORE ACTIVITIES Gaming Hotel Management Merit Casinos - 16,000 m2 gaming area in five casinos in Merit International Hotels & Resorts – Operating six five-star Northern Cyprus and four casinos in Eastern Europe (Balkans). hotels in Northern Cyprus - the only company operating as a The sole casino ch
Slide 5: Non-Core Activities
NON-CORE ACTIVITIES Real Estate Portfolio Publishing Nearly 900,000 m2 of land and buildings in Turkey and just over Net Turistik Yayınlar. Established in 1982, the company had a 1m m2 in Northern Cyprus, appraised at nearly 942mn USD pioneering role in publishing touristic titles in many languages,
Slide 6: Shareholding Structure (as of March 2019)
SHAREHOLDING STRUCTURE (as of March, 2019) Number of Shares Percentage Net Holding A.Ş. 186,394,508 33.06% Besim Tibuk 173,515,087 30.77% Publicly Held Shares 203,966,342 36.17% Total Outstanding Shares 563,875,937 100% 6
Slide 7: Experience and Know-How
EXPERIENCE AND KNOW-HOW • Net Holding was founded in 1981 and became one of the first companies to be listed on the Istanbul Stock Exchange (now known as Borsa Istanbul) in 1989. • Prior to the 1998 casino ban in Turkey, the group operated seventeen hotels and casinos nation-wide. • Net Holding comp
Slide 8: Expansion into Northern Cyprus
EXPANSION INTO NORTHERN CYPRUS Initial investment in Merit Cyrstal Cove in Northern Cyprus was in Kyrenia in 2000. 349 1998 with the acquisition of rooms. Merit Cyprus Gardens in Famagosa. 85 villas. Merit Lefkoşa in 2008. 116 rooms. 8
Slide 9: Investment in Northern Cyprus Continues
INVESTMENT IN NORTHERN CYPRUS CONTINUES Merit Park in Kyrenia Merit Royal in Kyrenia 2012. 285 rooms. 2013. 125 rooms. Merit Royal Premium in Kyrenia 2014. 131 rooms. 9
Slide 10: Investment in Northern Cyprus Continues
INVESTMENT IN NORTHERN CYPRUS CONTINUES 10
Slide 11: Northern Cyprus Operations
NORTHERN CYPRUS OPERATIONS Solid Growth in Margins (mn TRY) 700 42% 40% 40% 600 40% 38% 500 37% 38% 400 34% 36% 300 34% 200 100 32% 0 30% 2014 2015 2016 2017 2018 Revenue Ebitda Margin Revenue, EBITDA and margin Player numbers continue to grow Growth in international players growth 11
Slide 12: Expansion in Northern Cyprus
EXPANSION IN NORTHERN CYPRUS • Currently a 274-room five-star hotel, namely Merit Royal Garden, is under construction next door to Merit Royal Hotel and Casino. Upon completion – slated for 1H20 – a tunnel will connect the hotel to the flagship casino (Merit Royal Casino), alleviating room capacity
Slide 13: Expansion in Northern Cyprus Continues
EXPANSION IN NORTHERN CYPRUS CONTINUES • Successful completion of new wing to Merit Crystal Cove with the addittion of 69 deluxe suites in 2017. In addition, the gaming area for Merit Poker Tournaments was enhanced to 900m2 to accommodate the growing events. • Flagship Merit Royal Casino gaming area
Slide 14: Barriers to Entry
BARRIERS TO ENTRY Cost Prohibitive TRNC Gaming Law enacted Mar 12, 2009 stipulates that gaming must be jointly operated with a minimum 500-bed capacity, five- star hotel or resort. Suitable land on the island is hard to come by… 14
Slide 15: Competition
COMPETITION A consortium in Cyprus (ICR) was recently awarded a 30-year license to build and operate an integrated casino resort in the south- western city of Limassol for 550mn Euro. Expected to be operational in 2021, the casino, named City of Dreams Mediterranean, is expected to attract 300,000 t
Slide 16: Competition: Creating Synergies
COMPETITION Creating Synergies Rather than viewing the casino as a threat, we welcome the move as it: • Will help promote the island as a tourist destination, especially among Asian players. • Larnaca International Airport is 89km south of the flagship Merit Royal Hotel & Casino – a short, hour-and-
Slide 17: Regulatory Risk
REGULATORY RISK Regulatory Risk Licenses are renewed yearly. With tourism1 accounting for 20% of the island’s near $4bn GDP, the likelihood of a gaming license being revoked is low. Further, tourism accounts for nearly 15% of the island’s 118,000 employed. 1 Prime Ministry State Planning Organizatio
Slide 18: Expansion into the Balkans
EXPANSION INTO THE BALKANS Flexible, low capex model Currently operating four casinos and one hotel in Eastern Europe Montenegro - In Podgorica Montenegro - In Splendid Merit Montenegro Merit Royal Splendid Casino began operations Casino began operations in April 2016 and in Budva. in May 2016. Croa
Slide 19: Expansion into the Balkans: Planned Openings
EXPANSION INTO THE BALKANS Capex is capped at $5m per new initiative. Casino area is leased in a hotel that is equivalent to Merit standards for a 10 year term (renewable in 5 years), fitted with a 6-month rent penalty exit option in the event the initiative fails to deliver positive EBITDA in two y
Slide 20: Targeting Asia
TARGETING ASIA • Promotion agreement signed with SunCity VIP junket operator – one of the biggest VIP junket operators in Macau. • Similarily, a promotion agreement signed with JingCity junket operator. • Target to enlist to two more junket operators in 2019. 20
Slide 21: Real Estate Portfolio
REAL ESTATE PORTFOLIO M2 2018 FY Appraisal Value USD Turkey Land+Buildings 858,316 54,935,705 Cyprus Land+Buildings 1,060,733 886,938,526 TOTAL 1,919,049 941,874,231 *Not including land in Bodrum 21
Slide 22: 2018 FY Earnings Review
2018 FY EARNINGS REVIEW TL(’000s) 2018 FY 2017 FY YoY Grw $(’000s) 2018 FY 2017 FY YoY Grw Sales 767,114 651,870 17.7% Sales 145,265 172,823 -15.9% EBITDA 307,135 223,993 37.1% EBITDA 58,158 59,385 -2.1% 30% YoY Growth in TL YoY Growth in $ 800,000 17.7 % 200,000 -15.9% 700,000 180,000 160,000 600,0
Slide 23: Breakdown of Revenue
BREAKDOWN of REVENUE Revenue by Segment Casino Revenue Breakdown 100% Slot Machines 90% 16% 26% 32% 80% 46% 70% 68% 60% 80% 50% 40% 84% 68% 30% 54% 20% 32% Live Games 10% 20% 74% 0% Cyprus Gardens Lefkoşa Park Crystal Cove Royal Live Games Slot Machines Live Games Slot Machines 23
Slide 24: EBITDA Breakdown by Region
EBITDA BREAKDOWN by REGION $ (‘000s) 2018 2017 YoY Grw N Cyprus 50,083 60,513 -17.2% Balkans 7,819 8,543 -8.7% 24
Slide 25: Balance Sheet (TL '000s)
BALANCE SHEET (TL ‘000’s) ASSETS 2018 FY 2017 FY ASSETS 2018 FY 2017 FY CURRENT ASSETS NON-CURRENT ASSETS Cash and Cash Equivalents 291,565 283,008 Financial Investments 69,719 72,667 Financial Investments 33,214 12,123 Other Receivables 6,355 5,250 Trade Receivables 275,348 256,490 Investments Eval
Slide 26: Balance Sheet (TL '000s)
BALANCE SHEET (TL ‘000’s) LIABILITIES 2018 FY 2017 FY EQUITIES 2018 FY 2017 FY CURRENT LIABILITIES PARENT COMPANY’S EQUITY Financial Borrowings 17,425 13,118 Paid in Capital 563,876 563,876 Current Installment of Long Term Financial Borrowings 313,018 272,129 Treasury Shares -433,231 -378,393 Trade
Slide 27: Income Statement (TL '000s)
INCOME STATEMENT(TL ‘000’s) OPERATING ACTIVITIES 2018 FY 2017 FY 2018 FY 2017 FY Sales 767,144 651,870 OPERATING ACTIVITY TAX EXPENSE -107,419 -97,696 - Hotel 364,210 314,791 - Current Tax Expense -18,228 -7,919 - Casino 379,661 319,316 - Deferred Tax Expense) -89,191 -89,778 - Other 23,273 17,763 P
Slide 28: Cash Flow (TL '000s)
CASH FLOW (TL ‘000s) 2018 FY 2017 FY Cash Flow from Operations 139,310 219,253 Cash Flow from Investment -248,702 -201,959 Cash Flow from Finance Sector 57,011 -69,367 Currency Effect Adjustments 60,937 13,502 Net Increase/Decrease of Cash & Cash Equivalents 8,557 -38,570 Cash & Cash Equivalents at
Slide 29: Debt Dynamics (TL '000s)
DEBT DYNAMICS (TL ‘000s) 2018 FY 2017 FY SHORT TERM FINANCIAL BORROWINGS 330,443 285,247 - Financial Borrowings with Turkish Lira 17,380 11,547 - Financial Borrowings with Foreign Currency 45 1,571 - Current Installment of Long Term Financial Borrowings with TL 4,114 3,787 - Current Installement of
Slide 30: Maturity Breakdown (TL '000s)
MATURITY BREAKDOWN (TL ‘000s) 2018 FY 2017 FY Due within 1 yr 330,443 285,247 Due within 1-2 yrs 246,468 196,494 Due within 2-3 yrs 185,655 135,020 Due within 3-4 yrs 109,505 83,080 Due within 4-5 yrs 90,738 31,731 Due within 5-6 yrs 100,390 28,565 Due within 6-7 yrs 35,634 14,491 TOTAL FINANCIAL BO
Slide 31: Fitch affirmed Long-Term Default Rating at 'B'
• On November 28, 2018, Fitch affirmed Net Holding’s Long-Term Default Rating at ‘B’ with a Stable Outlook. • The Issuer Defulat Rating (IDB) reflects Net Holding’s “Sustainable Bussiness Model (which) has shown resilient performance in recent years, particularly in 2018 against a sharp depreciation
Slide 32: JCR affirmed Long Term Ratings 'BBB-'
• On November 1, 2018, JCR affirmed the Long Term International Foreign and Local Curency Ratings as ‘BBB-‘ the same as that of the sovereign ratings of the Republic of Turkey and TRNC. The Long-Term National Ratings were affirmed as ‘A (Trk)’ – denoting a high-level investment grade. • Outlook on t
Slide 33: AML
AML • AML Policies and Procedures are in place and strictly adhered to. Documentation available for review upon request. • Net Holding complies with relevant EU anti-Money laundering and counter terrorist financing legislation in the EU countries in which it operates, including, at this time, Croati
Slide 34: Disclaimer
DISCLAIMER This presentation contains forward-looking statements about Net Holding A.S. and its 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 specific
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