STRATEGIC PRESENTATION September 2016 Réunion SFAF – 27 janvier 2016
Disclosure In this strategic presentation, the terms "Atari“ and/or the "Company" mean Atari. The term "Group" means the group of companies belonging to the parent Company and all companies within its consolidation’s scope. This strategic presentation contains statements relating to ongoing or future projects, future financial and operating results, and other statements about Atari’s managements’ future expectations, beliefs, goals, plans or prospects that are based on current expectations, estimates, forecasts and projections about Atari, as well as company’s future performance and the industries in which Atari operate will operate, in addition to managements’ assumptions. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements which are not statements of historical facts. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. These risks and uncertainties are based upon a number of important factors including, among others: political and economic risks of our respective global operations; changes to existing regulations or technical standards; existing and future litigation; difficulties and costs in protecting intellectual property rights and exposure to infringement claims by others summarized in chapter 8 of the company’s annual report registered to the AMF under the number D16-0776 on August 4, 2016. For a more complete list and description of such risks and uncertainties, refer to Atari’s annual report in its chapter 8. Except as required the rules and regulations of the AMF, Atari disclaim any intention or obligation to update any forward-looking statements after the distribution of this document, whether as a result of new information, future events, developments, changes in assumptions or otherwise . 2 September 2016
Table of Contents 1. Atari at a glance : Much more than video games 2. 2013-2015 : Turnaround 3. Summary Financials / Cap Table 4. Products 2016-2017 / Key Investment Considerations 3 September 2016
1 Atari at a glance Much more than video games 4 September 2016
Iconic Brands (Refer to full deck of games) More than $2 Billion of Historical Revenue $456 $391 Million Million $154 $525 $265 Million Million Million $85 $92 Million Million 5 September 2016
There is much more than video games Flashback 250,000 unités 6 September 2016
Strategic Priorities The Atari Group prioritizes the following business lines, combining direct exploitation and partnerships: Video games Online gaming Multimedia productions (TV, … ) but only through co- production agreements Connected devices The other business activities are conducted through licensing agreements. Also, the Atari Group capitalizes on the awareness of the Atari brand to promote “ Atari Ventures ”, by taking stakes in high-growth start- ups in exchange for an Atari brand license (example: ROAM). 7 September 2016
2 2013 – 2015 : Turnaround 8 September 2016
2013-2015 : Turnaround 2012 Atari ran into significant financial difficulties. 2013 February : January : Décembre : Frédéric Chesnais and the the US F. Chesnais Alden Capital fund took over. subsidiaries managed the filed for • exit of the US F. Chesnais , is the former Deputy- COO of the Atari Group, and CEO of bankruptcy subsidiaries out Atari Interactive. He left Atari in 2007. protection of the Chapter . (Chapter 11). 11 in the US • Alden Capital, is a New York-based investment fund but not involved in the management of the Atari Group. . 2014 From mid-2014, the new team relaunched game production and began implementation of a robust turnaround strategy. 9 September 2016
2013-2015 : Turnaround Atari is a company implementing a turnaround phase. Atari owns iconic brands in the video game industry and can capitalize on new opportunities outside of the videogaming market Simplified organization Turnaround, improved (external studios, digital financial structure distribution…) Cap table simplified Opportunities outside of (Oranes reimbursed) the videogame industry casinos, TV, licensing… March 2015, Atari is Back to Profitability 10 September 2016
Today: A Simple and Very Efficient Structure Atari SA French listed entity on Euronext Paris Atari Europe Atari US 100%-owned subsidiaries Fred Chesnais, CEO, is the largest shareholder with approximately 22% of the Atari Group. A production team is based in New York City, with 3 rd party development studios in the US and in Europe. Products are primarily sold digitally, on a worldwide basis. The Atari group uses third parties to manufacture and distribute physical boxes. A streamlined and flexible cooperation structure based on a set of key partners. 11 September 2016
Old Value Chain Rights Integration of key functions; limited use of third party studios Prod / Dev Great dependence on physical distribution Publishing Limited level of ancillary revenue (digital, licenses, merchandising,…) Distribution Atari is No Longer Operating Like This 12 September 2016
Current Business Model Atari is a content production company aiming at maximizing the value of its brands and IP portfolio in the interactive entertainment industry Atari Capitalizes On: To Maximize Profits: • • A huge IP portfolio Fixed costs are at the lowest levels and the production • Efficient production and management is externalized operations • Co-investments are favored • Effective digital marketing with studios or third party management • Digital distribution is fully • An experienced Management implemented and deployed Team 13 September 2016
The New Value Chain The New Atari Intensification of externalization € Team IPs Diversification of the distribution channel and Executive External sources of Production Studios income Digital Distribution Others Digital Box Licensing (Casino, ...) Distribution distribution 14 September 2016
3 Summary Financials / Cap Table 15 September 2016
Successful financial turnaround Significant turnover growth Back to profitability Debt-free thanks to the July 2016 debt restructuring, save for a small 2020 convertible bond Positive shareholders ’ equity 16 September 2016
2013-2015 : Turnaround achieved 2015-2016 (€ million) 2015-2016 2014-2015 2013-2014 2012-2013 Proforma Revenue 12,6 12,6 7,6 3,3 1,2 Current operating income 1,8 1,8 0,2 0,9 0,6 Operating income 0,4 0,4 1,5 1,3 (2,0) Net income (loss) 7,4 0,3 1,2 (2,5) (35,8) Shareholders' equity 2,3 (10,2) (13,1) (31,3) (34,9) Net financial debt (0,8) (13,3) (11,0) (24,8) (31,4) (Year end as at March 31) March 2013 to March 2016 : Revenue: From a net loss of Equity : From a net debt From 1,2 M € (35,8) M € to a net From (34,9) M € of (31,4) M € to to 12,6 M € profit of 0,3 M € to + 2,3 M € - 0,8 M € (proforma) (proforma) 17 September 2016
Debt Repayment of July 2016 Alden loan of Euro 12.6 million repurchased for Euro 5.3 million Sources of funds (Euro 5.3 million): Euro 2.0 million in new shares issued to Financière Arbevel Euro 0.8 million in new shares issued to Alden Euro 2.5 million through a bridge loan with warrants purchased by Ker ventures (holding of F. Chesnais) and Alex Zyngier Atari has announced its intention to refinance the bridge loan by issuing shares 18 September 2016
Full Year Consolidated Statements as of March 31, 2016 A positive net income for the second consecutive year . (€ Million) 2015/2016 2014/2015 2013/2014 Net revenue 12,6 7,6 3,3 Gross Margin 10,5 6,3 3,2 % of the net revenue 83,7% 83,4% 96,5% Current operating income 1,8 0,2 0,9 % of the net revenue 14,1% 2,3% 27,7% 0,4 Operating income 1,5 1,3 Net income (loss) 0,3 1,2 (2,5) Net revenue: 12,6 M € Operating income: + 0,4 M € Other operating expenses: - 1,3 M € An increase of turnover of 66%, including 0,8 M € for legal fees relating to Alden litigation. Net consolidated income: + 0,3 M € Current operating income: + 1,8 M € Cost of debt: - 0,8 M € R&D expenses: - 3,3 M € Other financial income: + 0,1 M € Marketing costs: - 1,3 M € Impôt sur les sociétés : + 0,5 M € Overhead costs: - 4,0 M € 19 September 2016
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