Entain PLC · LSE:ENT
Entain — H1 2022 Earnings Presentation
47 slides from Entain's earnings presentation, Aug 11, 2022
Slide 1: 2022 Interim Results
2022 Interim Results 11 August 2022
Slide 2: Disclaimer
Disclaimer NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, 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 Entain PLC (“Entain”) so
Slide 3: Agenda
Agenda 1H22 Overview Jette Nygaard-Andersen CEO Entain CEE & SuperSport Jette Nygaard-Andersen CEO Financial Review Rob Wood CFO and Deputy CEO Delivering our Strategy Jette Nygaard-Andersen CEO Q&A 3
Slide 4: Overview
Overview Jette Nygaard-Andersen Chief Executive Officer
Slide 5: 1H22 Overview
1H22 Overview Further delivery on strategic objectives Customer focus driving record actives Growth through M&A - opportunities remain US business positioned towards market leadership Responsibility & Sustainability remain core to our strategy Underlying strength & momentum 5
Slide 6: Key Highlights
Acquisition Key Highlights Central and Eastern Europe (“CEE”) is a highly attractive regulated market for Entain, with significant opportunities Creation of Entain CEE, owned 75% by Entain and 25% by EMMA Capital, a leading investment firm in the region, to drive expansion across CEE Entain CEE is a
Slide 7: CEE is a highly attractive growth market of ~€5.0bn GGR
Acquisition CEE is a highly attractive growth market of ~€5.0bn GGR ~€5.0bn TAM Today across 10 major fully regulated markets >10% GGR CAGR expected over next 4 years <0.5% Entain current market share All market size, market share, and growth estimates via local intelligence / internal sources; Esti
Slide 8: Entain CEE: Unlocking the CEE Opportunity
Acquisition Entain CEE: Unlocking the CEE Opportunity The Challenge of CEE Consolidation How Entain CEE Unlocks the CEE Opportunity Despite the clear opportunity, regional consolidation in CEE by international gaming companies has been limited CEE Local market leaders have had limited success in
Slide 9: SuperSport - Leading Operator in the Attractive Croatian Market
Acquisition SuperSport - Leading Operator in the Attractive Croatian Market Selected KPIs Business Overview Product Segments • Sports betting (pre-match / live, fixed-odds, virtuals, Betting etc.) available both online and offline in SuperSport’s betting stores Casino • Online casino platform availa
Slide 10: SuperSport - Leading Operator in the Attractive Croatian Market
Acquisition SuperSport - Leading Operator in the Attractive Croatian Market Divisional Overview Leading Proprietary Tech Built In House 85% of revenue from online, alongside best-in- class retail offering: proven omnichannel approach that helps drive brand awareness and customer acquisitions Sportsb
Slide 11: SuperSport has Demonstrated Outstanding Financial Performance
Acquisition SuperSport has Demonstrated Outstanding Financial Performance Outstanding financial performance with strong EBITDA margins Net Revenue1 EBITDA2 Sustainable €m €m margin c.52%3 FY16A FY17A FY18A FY19A FY20A FY21A FY22E FY16A FY17A FY18A FY19A FY20A FY21A FY22E Source: Company information
Slide 12: Entain CEE Acquisition of SuperSport - Overview
Acquisition Entain CEE Acquisition of SuperSport - Overview • Entain CEE is acquiring 100% of SuperSport • The transaction is expected to value SuperSport at €920m (9.6x FY22E EBITDA / 9.1x FY22E fully synergized EBITDA1) • For 75% of the economic rights, Entain will pay: • €600m in cash at completi
Slide 13: Seizing the CEE Opportunity
Acquisition Seizing the CEE Opportunity CEE: A Highly Attractive Growth Creation of Entain CEE Market • Platform to drive consolidation in • €5.0bn regulated betting and gaming the region market • EMMA Capital as a key partner • 10%+ annual growth rate through 2025 • Exciting and dynamic market with
Slide 14: Financial Review
Financial Review Rob Wood Chief Financial Officer and Deputy CEO
Slide 15: Key financial highlights
Key financial highlights Group Online Group BetMGM Adj. diluted Net Gaming Net Gaming Underlying Net Gaming EPS Revenue Revenue EBITDA Revenue (exc. US) £2.1bn £1.5bn £471m2,4 $608m 47.6p3,4 +18%cc1,4 -7%cc1 +17% +65% +50% Underlying Net Debt £100m Dividend Free £2,210m Evolve returning at Cashflow
Slide 16: 1H22 EBITDA bridge
1H22 EBITDA bridge +£69.9m YoY (+17%) Strong underlying business performance with H1 EBITDA of £471m, +17% YoY Channel movements principally reflect Covid comparatives, with Online EBITDA of £385m down £111m YoY and Retail of £141m up £204m YoY New Opportunities and Corporate movement of £23m reflec
Slide 17: Cashflow and net debt
Cashflow and net debt As at 30 June Key metrics 2022 2021 EBITDA1 £471m £401m Underlying free cashflow2 £191m £198m (before investment in BetMGM/acquisitions) Net investment in acquisitions/BetMGM £293m £453m Net debt3 £2,210m £1,951m Leverage3 2.3x 2.2x Accessible cash4 £386m £395m Adding undrawn R
Slide 18: Capital allocation and M&A priorities
Capital allocation and M&A priorities Investment in: Value enhancing acquisitions: US leadership New market entry Organic New audiences M&A Deepening presence Growth Entain Platform New audience expansion Innovation Disciplined ROI approach Strong & flexible balance sheet New progressi
Slide 19: Update to FY 2022 Guidance
Update to FY 2022 Guidance Group Cashflow • FY22 EBITDA expected to be in the range of £925m to £975m • Greek tax refund of c£160m received in H1 • Completed acquisitions c£200m (including deal fees) in H1 • Initial consideration on BetCity (€300m) and SuperSport (€600m) in H2 Online • NGR expected
Slide 20: Delivering our Strategy
Delivering our Strategy Jette Nygaard-Andersen Chief Executive Officer
Slide 21: Growth and sustainability strategy for long term success
Growth and sustainability strategy for long term success Vision The world leader in betting, gaming and interactive entertainment Purpose Bring moments of excitement into people’s lives Strategy GROWTH SUSTAINABILITY ⬢ Leadership in the U.S. ⬢ Regulated markets ⬢ Grow presence in core ⬢ Lead on resp
Slide 22: The Entain Platform enables our growth ambitions globally
The Entain Platform enables our growth ambitions globally Customer Technology Talent In-built Centricity Growth Scale & M&A Brand Excellence Content Creation Marketing & Products Excellence Grow into New Market Customer Regulatory Relationships Expertise & & Data Responsibility New Growth Opportunit
Slide 23: Significant opportunity underpinned by diversified revenues
Significant opportunity underpinned by diversified revenues Entain Opportunity Diversified Revenues Trebling of Total Addressable Market Most Diversified Regulated Revenue in Industry 10% 2% 2% 3% 29% 3% 3% H1 2022 6% Online NGR 6% 14% 9% 13% l United Kingdom 29% l Australia 14% Incremental Entain G
Slide 24: Customer focus and engagement at our core
Customer focus and engagement at our core Record actives driven by recreational focus Cohort evolution & retention NGR by Registration Year 3000 Actives 2021 2500 2020 2000 2019 2018 1500 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2019 2020 2021 2022 1000 2015 Pre-2015 Recreational Pl
Slide 25: Building brands around our Customers
Building brands around our Customers Understanding our customers Segment 1 Gala-land Campaign > 160m user profiles > 30 licensed territories Segment 2 > 250yrs of brand history +33% +16% Segment 3 Weekly Weekly Segmenting the market Gala Bingo FTDs Gala Bingo Player Volumes Rethinking existi
Slide 26: Driving greater customer engagement
Driving greater customer engagement Emerging Categories Expanded Offering Community Development Leveraging bespoke content, Enhancing Free-to-Play offering, Building social engagement, growing exciting new categories: increasing retention & engagement: driving audience expansion: c.400k c.90k >25m >
Slide 27: Broadening customer appeal
Broadening customer appeal Partnerships Content & Media Partners with shared values, Showcasing compelling stories, Match day media, reaching new audiences: multi-channel: accessing new fanbases and unlocking unique experiences Against the Odds Ladbrokes Australia >170k +30k >3.9m >15m c.600 >21m so
Slide 28: Digitalisation of offering delivers an unrivalled retail experience
Digitalisation of offering delivers an unrivalled retail experience Market leading customer offering Digitalised store environment >70% 60% Newest cabinets and greatest content Retail NGR from of Gaming volume products in growth is via exclusive Proprietary BetStation software rollout content
Slide 29: BetMGM - continued success in a fast growing market
BetMGM - continued success in a fast growing market Estimated market share U.S. Sports-Betting and iGaming1,2 $608m 50% >$1.3bn c41% Forecast 2022 US adult H1 2022 Net Revenue Net Revenue population 40% currently covered COMPETITOR 1 23% 30% Market share3 $450m 23 BetMGM Expected combined Live juris
Slide 30: BetMGM - product and UX focus driving strong performance
BetMGM - product and UX focus driving strong performance Differentiated Product UX Enhancement Intelligent Engagement Team specific offers Personalised based on Favorite Team Odds feeds Editorial content Exclusive and deep offering, App redesign, Personalised approach, securing iGaming leadership: k
Slide 31: BetMGM sees significant structural margin advantage
BetMGM sees significant structural margin advantage Over 30% EBITDA Margin Structural Cost Advantages Marketing Buying Content Long-term Margin Target & Brand Power Royalties 600-700 bps Rewards Market Database Access + ENTAIN PLATFORM 30% - 35% Technology, Talent, Data, Product, Predictive Analytic
Slide 32: Delivering continued excellence across our Sustainability Charter
Delivering continued excellence across our Sustainability Charter Safer Gaming Social Impact Reducing environmental impact Investing in grassroots and community sports… GamCare Advanced Safer SBC North America Socially Gambling Standard Responsible Operator of the Year AA rated by MSCI Impact around
Slide 33: Summary
Summary Further delivery on strategic objectives Customer focus driving record actives Growth through M&A - opportunities remain US business positioned towards market leadership Responsibility & Sustainability remain core to our strategy Underlying strength & momentum 33
Slide 34: Zntain oa
Zntain oa —
Slide 35: Appendix
Appendix
Slide 36: BetMGM overview
BetMGM overview BetMGM is live in 23 Jurisdictions with access to c41% of the U.S. adult population n Jurisdictions Online Horse Retail iGaming Bingo ONTARIO Sports Racing1 ME Colorado ✓ WA VT Indiana ✓ NH MA MT ND Iowa ✓ OR MN NY Michigan ✓ ✓ ✓ RI ID WI MI Mississippi ✓ SD CT WY PA NJ Nevada ✓ ✓ IA
Slide 37: Financials: Group Income Statement
Financials: Group Income Statement Robust group performance with Retail strength offset by lower Online as we lap lockdowns in the prior year Six months ended 20225 20215 Change CC1 30 June £m £m % % Group NGR +18% (+18% cc) Net gaming revenue 2,117.6 1,792.6 18% 18% • Online NGR -7% (-7% cc) Revenu
Slide 38: Online
Online Strong underlying health with record active customers in H1 and a 3yr CAGR of +13%cc but YoY comparisons impacted by strong comparators due to Covid, Euro 2020 and temporary closure of the Netherlands Six months ended 20223 20213 Change CC1 30 June £m £m % % NGR -7% (-7% cc) Sports wagers 6,8
Slide 39: Retail
Retail Retail +232% versus prior year as customers re-engage post lockdowns Six months ended 20223 20213 Change CC1 30 June £m £m % % Retail NGR +232% (+244% LFL4cc1) ahead of a lockdown impacted prior year Sports wagers4 1,913.7 509.9 275% 276% with customers returning in strength to our shops Spor
Slide 40: Financials: Statutory Income Statement
Financials: Statutory Income Statement Profit after tax from continuing activities of £28m Six months ended 20221 20211 Change 30 June £m £m % Underlying depreciation and amortisation £113m, 3% higher Underlying EBITDAR 480.1 410.5 17% Rent and associated costs (9.1) (9.4) 3% Share of JV loss £106m
Slide 41: Financials: Other separately disclosed items
Financials: Other separately disclosed items One-off £162m cash income related to the Greek Tax Assessment partially offset by furlough and costs associated with acquisitions Profit & Loss Cashflow Tax litigation Six months ended 2022 2021 2022 30 June £m £m £m • £162m cash inflow reflecting amounts
Slide 42: Financials: Cashflow
Financials: Cashflow Strong underlying free cashflow generation of £191m and leverage ratio of 2.3x following H1 acquisitions Six months ended 2022 2021 30 June £m £m Capital expenditure £104m outflow including licenses and innovation Underlying EBITDA 471.0 401.1 Discontinued EBITDA (Intertrader) -
Slide 43: Financials: Net debt
Financials: Net debt Leverage of 2.3x with sufficient liquidity available to support the Group’s strategy Issue costs/ Net debt £2,210m or 2.3x Six months ended Par Value Premium Total 30 June £m £m £m • c£290m invested in H1 in acquisitions and BetMGM Bonds (500.0) (7.3) (507.3) Total accessible ca
Slide 44: Evolve - phased cost savings programme (announced 12th August 2021)
Evolve - phased cost savings programme (announced 12th August 2021) Efficiencies programme to support investment in innovation and growth opportunities Estimated savings, phasing & splits 2021 £35m Total EBITDA Capex Cost Savings 2022 £70m 2021 £35m - £35m 2022 £55m £15m £70m 2023 £100m 2023 £75m £2
Slide 45: Sustainability Charter
Sustainability Charter We launched our new Sustainability Charter in November 2020. We have long held the view that the most sustainable business in our industry will be the most successful business in our industry Our Sustainability Charter is based around four cornerstones 45
Slide 46: Overview of Entain CEE
Acquisition Overview of Entain CEE 1 Structure • Investment remit solely on fully regulated markets in-line with Entain’s group strategy • Local management teams to lead growth • Future acquisitions anticipated to unlock significant synergy benefits 2 EMMA Capital’s Regional Expertise 75% 25%1 • EMM
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