STRATEGIC PRESENTATION September 2016 Runion SFAF 27 janvier 2016 - - PowerPoint PPT Presentation

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STRATEGIC PRESENTATION September 2016 Runion SFAF 27 janvier 2016 - - PowerPoint PPT Presentation

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STRATEGIC PRESENTATION September 2016 Runion 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

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Réunion SFAF – 27 janvier 2016

STRATEGIC PRESENTATION

September 2016

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SLIDE 2

Disclosure

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September 2016

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

  • perating 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

  • bligation 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.

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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

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1 Atari at a glance Much more than video games

4

September 2016

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SLIDE 5

Iconic Brands (Refer to full deck of games)

5

$92

Million

$265

Million

$391

Million

$85

Million

$154

Million

$456

Million

$525

Million

More than $2 Billion of Historical Revenue

September 2016

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SLIDE 6

There is much more than video games

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Flashback 250,000 unités

September 2016

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SLIDE 7

Strategic Priorities

7

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).

September 2016

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SLIDE 8

2 2013 – 2015 : Turnaround

8

September 2016

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SLIDE 9

2013-2015 : Turnaround

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Atari ran into significant financial difficulties. January : the US subsidiaries filed for bankruptcy protection (Chapter 11). February : Frédéric Chesnais and the Alden Capital fund took over.

  • F. Chesnais, is the former Deputy-

COO of the Atari Group, and CEO of Atari Interactive. He left Atari in 2007. .

  • Alden Capital, is a New York-based

investment fund but not involved in the management of the Atari Group. .

Décembre :

  • F. Chesnais

managed the exit of the US subsidiaries out

  • f the Chapter

11 in the US From mid-2014, the new team relaunched game production and began implementation of a robust turnaround strategy.

2014 2013 2012

September 2016

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SLIDE 10

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Atari is a company implementing a turnaround phase. Atari owns iconic brands in the video game industry and can capitalize

  • n new opportunities outside of the videogaming market

Simplified organization (external studios, digital distribution…)

March 2015, Atari is Back to Profitability

2013-2015 : Turnaround

Turnaround, improved financial structure Cap table simplified (Oranes reimbursed) Opportunities outside of the videogame industry casinos, TV, licensing…

September 2016

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Today: A Simple and Very Efficient Structure

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Atari SA

French listed entity on Euronext Paris 100%-owned subsidiaries

Atari US Atari Europe

  • Fred Chesnais, CEO, is the largest shareholder with approximately 22% of

the Atari Group.

  • A production team is based in New York City, with 3rd 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.

September 2016

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Publishing Distribution Rights Prod / Dev

Old Value Chain

  • Integration of key functions;

limited use of third party studios

  • Great dependence on physical

distribution

  • Limited level of ancillary revenue

(digital, licenses, merchandising,…)

12

Atari is No Longer Operating Like This

September 2016

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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

13

To Maximize Profits:

  • Fixed costs are at the lowest

levels and the production management is externalized

  • Co-investments are favored

with studios or third party

  • Digital distribution is fully

implemented and deployed

Atari Capitalizes On:

  • A huge IP portfolio
  • Efficient production and
  • perations
  • Effective digital marketing

management

  • An experienced Management

Team

September 2016

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SLIDE 14

The New Value Chain

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€ Team Executive Production External Studios Digital Distribution Others (Casino, ...) Licensing Box distribution IPs

  • Intensification of

externalization

  • Diversification of

the distribution channel and sources of income

  • Digital

Distribution

The New Atari

September 2016

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3 Summary Financials / Cap Table

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September 2016

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Successful financial turnaround

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  • 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

September 2016

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2013-2015 : Turnaround achieved

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Revenue: From 1,2 M€ to 12,6 M€ From a net loss of (35,8) M€ to a net profit of 0,3 M€ Equity : From (34,9) M€ to + 2,3 M€

(proforma)

From a net debt

  • f (31,4) M€ to
  • 0,8 M€

(proforma)

March 2013 to March 2016 :

(Year end as at March 31) September 2016

(€ million) 2015-2016 Proforma 2015-2016 2014-2015 2013-2014 2012-2013 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)

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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

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September 2016

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Full Year Consolidated Statements as of March 31, 2016

A positive net income for the second consecutive year.

Net revenue: 12,6 M€

  • An increase of turnover of 66%,

Current operating income: + 1,8 M€

  • R&D expenses: - 3,3 M€
  • Marketing costs: - 1,3 M€
  • Overhead costs: - 4,0 M€

Operating income: + 0,4 M€

  • Other operating expenses: - 1,3 M€

including 0,8 M€ for legal fees relating to Alden litigation.

19 Net consolidated income: + 0,3 M€

  • Cost of debt: - 0,8 M€
  • Other financial income: + 0,1 M€
  • Impôt sur les sociétés : + 0,5 M€

September 2016

(€ 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% Operating income 0,4 1,5 1,3 Net income (loss) 0,3 1,2 (2,5)

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Development costs capitalized for 4,8 M€ including:

  • RollerCoaster Tycoon World

3,6 M€

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Full Year Consolidated Statements as of March 31, 2016

Trade receivables 6,6 M€ :

  • Impact of the release of RCTW et Atari Vault in March 2016
  • Trade receivables licensing casino 2,3 M€ (see Other current liabilities)

September 2016

ASSETS (€ million) March 31, 2016 March 31, 2015 Intangible assets 5,0 2,8 Property, plant and equipment 0,0

  • Non-current financial assets

0,2 0,2 Deffered tax asset 0,5

  • Non-current assets

5,7 3,0 Trade receivables 6,6 0,7 Current tax assets

  • 0,6

Other current assets 0,7 0,9 Cash and cash equivalents 1,2 3,7 Current assets 8,6 5,9 Total Assets 14,3 8,9

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SLIDE 21

Equity:

  • 10,2 M€ as of March 31, 2016

+ 2,3 M€ on a pro forma basis

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Net cash position:

  • 0,8 M€ after Alden Agreement

Other current liabilities: 3,6 M€ including 1.8 M€ of deferred revenue of casino license fees.

Full Year Consolidated Statements as of March 31, 2016

September 2016

EQUITY & LIABILITIES (€ million) March 31, 2016 Proforma March 31, 2016 March 31, 2015 Total equity

  • 10,2

2,3

  • 13,0

Non-current financial liabilities 14,4 1,9 1,8 Other non-current liabilities 0,1 0,1 0,1 Non-current liabilities 14,5 2,0 1,9 Provisions for current contingencies and l 1,2 1,2 1,2 Current financial liabilities 0,2 0,2 12,8 Trade payables 5,0 5,0 4,6 Current tax liabilities

  • 0,3

Other current liabilities 3,6 3,6 1,1 Current liabilities 9,8 9,8 19,9 Total equity and liabilities 14,3 14,3 8,9

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A Very Significant Reduction of the Net Debt

Net debt significantly reduced

  • Net financial debt decreased from - 24,8 M€ in March 2014 to - 0,8 M€ in

July 2016 after the Alden debt restructuring

  • Debt-free save for a small 2020 convertible bond.

22

September 2016

(€ million) March 31, 2016 Proforma March 31, 2016 March 31, 2015 March 31, 2014 OCEANEs 2003-2020 (0,6) (0,6) (0,6) (0,6) OCEANEs 2019 (18,4) OCEANEs 2020 (1,3) (1,3) (1,2)

  • Others

(0,2) (0,2) (0,7) Alden loan

  • (12,5)

(12,1) (11,5) Gross financial debt (2,0) (14,5) (14,6) (30,5) Cash and cash equivalents 1,2 1,2 3,7 5,8 Net cash (Net financial debt) (0,8) (13,3) (11,0) (24,8)

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Deferred Tax Assets

  • Significant losses in the past: circa 735 million euros at the level of

Atari SA, head of the tax consolidation.

  • Potential tax savings: circa 245 million euros, subject to usual

applicable tax limitations

  • Potential tax savings: circa Euro 1.40 per share (calculated on the

basis of shares outstanding as at June 30, 2016 less treasury shares)

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September 2016

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Cap Table Simplified as at March 31,2016

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All the Oranes have been reimbursed as at September 30, 2015.

Double voting rights: 249 607 (no impact)

Potential dilution :

  • Océanes 2020 : 3,4 million shares (€0,35 per oceane)
  • Stock options : 5,5 million shares (€0,20 per share)

September 2016

As at March 31, 2016 #Shares % Ownership Ker Ventures LLC 39 877 179 21,8% F Chesnais Alex Zyngier 12 013 615 6,6% Director Public 116 679 245 63,7% Treasury shares 14 615 535 8,0% TOTAL 183 185 574 100%

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Cap Table Simplified as at July 31, 2016

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Cap Table after the Alden Agreement of July 2016.

Double voting rights: 249 607 (no impact)

Potential dilution :

  • Océanes 2020 : 3,4 million shares (€0,35 per oceane)
  • Stock options : 5,5 million shares (€0,20 per share)
  • Stock options : 2,5 million shares (€0,17 per share)

September 2016

As at July 31, 2016 #Shares % Ownership Ker Ventures LLC 39 494 826 19,6% F Chesnais Alex Zyngier 9 062 139 4,5% Administrateur Financière Arbevel 15 764 705 7,8% Public 129 330 599 64,2% Treasury shares 7 798 010 3,9% TOTAL 201 450 279 100% The warrants issued in connection with the shareholders' loan (5,1 million shares – €0,17 per share) can be redeemed with the use of treasury shares or issuance of new shares

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4

Products 2016-2017 / Key Investment Considerations

26

September 2016

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The Atari Group will develop the following business lines:

  • Video games
  • Online gaming
  • Connected devices
  • Multimedia productions (TV, …) but only through co-production

agreements

  • Licensing

Business Lines for 2016-2017

September 2016

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Additionnal games developpement under process, release expected in 2016 and

  • 2017. High potential cross-media opportunities currently under evaluation.

Products 2016-2017

UNANNOUNCED SIMULATION TITLE

September 2016

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Strong positioning enables worldwide operations with a small team

PC Download Online Casino Streaming Digitaln Console Advertising 29

Broad, Diversified Platforms

September 2016

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30

Atari

September 2016

  • Iconic brand, with a worldwide appeal across generations
  • Sector with strong growth and multiple opportunities.

Much more than video games – significant trans-media opportunities:

  • Hardware (console, drones,…)
  • TV (scripted series, unscripted series)
  • Connected devices
  • Web series
  • Movies
  • Comic books
  • Merchandising
  • Efficient business model:
  • No fixed cost / Build portfolio value
  • Highly skilled management, financially involved
  • Non-operational assets (tax savings of up to Euro 1.40 per share)
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31

Thank you Atari

September 2016