Entain Plc · LSE:ENT
Entain — FY2018 Earnings Presentation
34 slides from Entain's earnings presentation, Mar 5, 2019
Slide 1: 2018 Full Year Results
2018 Full Year Results 5 March 2019
Slide 2: Disclaimer
Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. This presentation has been prepared by GVC Holdings PLC (“GVC”). This presentation includes state
Slide 3: Contents
Contents Introduction Kenneth Alexander Financial Review Rob Wood Operational Update Kenneth Alexander Summary Kenneth Alexander 3
Slide 4: Introduction
Introduction • A global online-led business of scale – licensed in over 20 countries • Highly effective operating model – proprietary technology and local execution are distinguishing features • Underlying business is highly cash generative, operating in high growth markets within a high growth sect
Slide 5: 2018 Overview
2018 Overview • Strong financial and operational performance • Group NGR1 +9% (cc2 +9%) with very strong growth in Online1 +19% (cc2 +21%) • Underlying EBITDA1,3 +13% and underlying operating profit1,3 +19% • Online market share gains in all key territories • Integration progressing well; Playtech a
Slide 6: Rob Wood, Chief Financial Officer
Rob Wood Chief Financial Officer 6
Slide 7: Financials: Group P&L
Financials: Group P&L Proforma underlying EBITDA growth of 13% Reported 1 Proforma 2 • Group Proforma NGR +9% Year ended 2018 2017 Change 2018 2017 Change CC 3 • Online +19% 31 December • UK Retail -5% £m £m % £m £m % % • Euro Retail +16% NGR 2,979.5 815.9 265% 3,571.4 3,288.1 9% 9% • Group Proforma
Slide 8: Financials: Proforma Underlying EBITDA Bridge
Financials: Proforma Underlying EBITDA Bridge StrongStrong growth in Online growth in Online and European and European RetailRetail £800m 3.4 0.1 £750m Online UK POCT - £9.8m 16.8 (5.4) Horse Race Levy - £2.5m (5.1) Aus POCT - £3.6m £700m 94.9 (15.9) £650m £755.3m £600m £666.5m £650.6m £550m £500m O
Slide 9: Online
Online Very strong growth with market share gains in all key territories Proforma 1 Sports brands NGR +20% (cc +22%) Year ended 2018 2017 Change CC 2 • GVC brands +27% (cc +29%) 31 December • Ladbrokes.com +12% £m £m % % • Coral.co.uk +16% Sports brands: sports wagers 10,182.1 9,035.5 13% 14% • Ladb
Slide 10: UK Retail
UK Retail Slow LFL NGR decline of 3% and strong cost control results in stable EBITDA and operating profit Proforma 1 OTC wagers -8% (LFL3–6%) Year ended 2018 2017 Change • LFL trend in-line with long-term 31 December expectations. Positive impacts of full £m £m % ARC content and World Cup offset OT
Slide 11: UK Retail – Post Triennial Plan
UK Retail – Post Triennial Plan Transition to a post £2 estate already well underway – opportunity to grow market share Minimising disruption • Business is ready for 1st April implementation • Significant level of planning has been conducted and a clear response plan is in place Expecting to take ma
Slide 12: European Retail
European Retail Strong revenue growth and tight cost control driving a material increase in profitability Proforma 1 OTC wagers +11% (cc +9%) Year ended 2 • Growth in Eurobet Italy football 2018 2017 Change CC 31 December wagers +13%, estate growth in £m £m % % Belgium and World Cup benefit OTC wage
Slide 13: Financials: Statutory P&L
Financials: Statutory P&L Reported 1 Proforma 2 Group Proforma underlying EBITDA Year ended +13% 2018 2017 Change 2018 2017 Change 31 December £m £m % £m £m % Group Proforma Op. profit +19% Underlying EBITDA 640.8 211.3 203% 755.3 666.5 13% • Reduced SBP charge reflects a number of legacy GVC scheme
Slide 14: Financials: Other Separately Disclosed Items
Financials: Other Separately Disclosed Items Reported 1 Impairment loss £41.3m 2018 • Primarily impairment of UK Retail Year ended 31 December assets following TR timing P&L acceleration £m Impairment loss (41.3) Movement in fair value of contingent consideration £192.5m credit Movement in fair valu
Slide 15: Financials: Cashflow
Financials: Cashflow Reported 1 Underlying W/C: £24.8m outflow Year ended 31 December 2018 2017 • As a result of only including nine £m £m month trading of Ladbrokes Coral Underlying EBITDA 640.8 211.3 Capex/Invest. in JVs: £214.2m outflow Underlying working capital (24.8) 14.1 • Includes capex of £
Slide 16: Financials: Net Debt
Financials: Net Debt Debt stack is flexible and has a good maturity profile Par Issue costs/ Total As at 31 December 2018 Value Premium • Next material refinancing not due until 2023 £m £m £m Bonds (500.0) (32.0) (532.0) • Interest cost is c4% of gross debt Terms loans / RCF (1,727.8) 32.4 (1,695.4)
Slide 17: FY19 Guidance
FY19 Guidance • Online NGR Double-digit growth • Online contribution margin c40% (after betting duty changes adverse impact of c2%) • Online marketing / NGR c23% • US Guidance NGR run-rate >$100m1 Impact on Group EBIT c£0m-£5m loss2 No cash payments required from GVC into the JV2/3 in FY19 • Trienni
Slide 18: Kenneth Alexander, Chief Executive
Kenneth Alexander Chief Executive 18
Slide 19: GVC Recap
GVC Recap A truly global operator in a high growth sector 2004 2009 2012/13 2016 2018 IPO of Acquisition of Acquisition of Acquisition of Acquisition of Ladbrokes Casino Club Betboo Sportingbet bwin.party Coral and establishment of 50/50 JV with MGM The business now: Largest online-led sports-bettin
Slide 20: Strategic Overview
Strategic Overview TO BE THE WORLD’S LARGEST VISION SPORTS-BETTING AND GAMING BUSINESS STRATEGIC GEOGRAPHIC IMPERATIVES SCALE + DIVERSIFICATION MARKET LEADING GOALS ORGANIC GROWTH + M&A KEY ENABLERS TECH + BRANDS + PRODUCT + MARKETING + PEOPLE A PASSION FOR DELIVERING SUPERIOR CUSTOMER VALUES EXPERI
Slide 21: Integration Update
Integration Update Integration well underway, detailed plans in place and synergies being delivered • Cost synergies expected to be £130m and capex synergies of at least £30m • Signed Playtech agreement provides flexibility for earlier migration of the Ladbrokes Coral online business to the GVC tech
Slide 22: Market Leading Global Online Growth
Market Leading Global Online Growth Consistent market share gains consolidating leading positions Country/ Brands Estimated FY18 NGR Growth2 Driven By Brand Market Position1 +12% UK 4 +16% Technology +11% Brands Germany 1 +23% Australia3 3 +17% Product +17% Italy 2 Marketing +11% Brazil 1 +33% Peopl
Slide 23: Product
Product Product development remains a priority throughout integration Examples of product development: Coral and Ladbrokes live casino apps New gaming content – Neds Toolbox focus on localisation Continued roll out of Build-a-bet Improved ‘bet and stream’ Poker – improved table layout across brands
Slide 24: Brands and Marketing
Brands and Marketing Well established brands and advanced marketing capabilities are a competitive advantage • The Group operates 19 brands across multiple territories worldwide • Our brands are well established, with high levels of customer recognition creating barriers to entry in established mark
Slide 25: US Opportunity: Progress and Roadmap
US Opportunity: Progress and Roadmap Combination of leading brands, proprietary technology and market access will create a leading position in the US JV with MGM Progress to date • 25 year agreement • CEO and CMO appointments • playMGM as the lead brand • New Jersey launch (with limited driven by GV
Slide 26: Regulation Update
Regulation Update Scale, diversification & multi-channel offerings are advantages in new markets & in markets where regulation is increasing United States UK Sweden • 8 states have now • Voluntary ban on TV sports advertising Licences issued 1/1/19. legalised sports-betting before 9pm watershed, eff
Slide 27: Corporate Social Responsibility
Corporate Social Responsibility CSR strategy reflects Group’s position as industry leader Safer Gambling • Leading industry to improve standards e.g. UK whistle- to-whistle advertising ban (Aug 2019) • Launch of Changing for the Bettor strategy • Working with the UK Gambling Commission and internati
Slide 28: Current Trading
Current Trading Trading in the period 1 January to 24 February 20191 was strong • Group NGR +11% • Online NGR +22% • European Retail NGR +9% • UK Retail like-for-like NGR -2% • Comfortable with expectations – online double digit growth [1] Proforma basis 28
Slide 29: Summary
Summary • Strong financial and operational performance • Online operating model is delivering market leading growth in all territories • Integration progressing well – start to leverage “best-of-both” • Well placed to gain from US opportunity • Increased dividend – minimum 10% growth year-on-year •
Slide 30: Q&A
&A QO 8 O
Slide 31: Appendix
Appendix 31
Slide 32: FY19 Guidance: Triennial Review and Synergies
FY19 Guidance: Triennial Review and Synergies Triennial Review Guidance Synergies • Guidance unchanged • Cost synergy guidance unchanged • Now split by financial year • Playtech agreement provides flexibility • Shop closures: Up to 1,000 shops expected to close, with a cash cost of c£50k per shop Ca
Slide 33: US Opportunity: Progress and Roadmap
US Opportunity: Progress and Roadmap Combination of leading brands, proprietary technology and market access will create a leading position in the US Market Access and Regulation • Operational in Nevada, New Jersey, Delaware (B2B) and New Mexico (B2B) • Current market access to a further 15 states •
Slide 34: IFRS 16 Impact
IFRS 16 Impact • Applicable for financial periods commencing on or after 1 January 2019 • The Group will apply the simplified prospective methodology (i.e. 2018 will not be restated) and will first report under IFRS16 at the 2019 interims • Reporting changes: • For 2019 onwards the Group will additi