Flutter Entertainment Plc · NYSE:FLUT

Flutter Entertainment — Paddy Power — FY2014 Earnings Presentation

27 slides from Flutter Entertainment's earnings presentation, February 2015

  1. Slide 1: Paddy Power 2014 Preliminary Results

    “I love Europe. When it comes to the Ryder Cup, we’re better together.” Nigel Farage UKIP Leader & MEP, Sep’14

  2. Slide 2: Highlights; Strategy & Outlook

    HIGHLIGHTS STRATEGY & OUTLOOK

  3. Slide 3: Revenue up 18%, strong momentum in all key top-line metrics

    Revenue up 18% , strong momentum in all key top-line metrics * PBT up 21% to €167m & EPS up 18% to 297.6 cent * Future strategy focused on Product & Brand differentiation Cash return of €8 per share (€392m) proposed 2015 has started well * In constant currency 3

  4. Slide 4: Financial & Operational Review

    FINANCIAL & OPERATIONAL REVIEW

  5. Slide 5: Group financial results

     Net revenue growth of 18% *  Gaming & B2B +25%  Sportsbook +16% Sportsbook Amounts Staked 7,003 6,014 +16% +16%  Sports results below expectations Net Revenue** 882 746 +18% +18%  2014 included World Cup stakes of Sportsbook Net Revenue % 9.2% 9.3% €198m & gross win of €34m  Operating cost gr

  6. Slide 6: Divisional results

    DIVISION 2014 CHANGE* 2014 CHANGE* 2014 CHANGE* 2014 CHANGE* Online Europe 2,763 +20% 335 +11% 205 +9% 75.3 +4% Online Australia** 2,056 +14% 227 +34% 119 +24% 52.4 +68% UK Retail 710 +22% 174 +30% 108 +26% 21.2 +50% Irish Retail 1,093 +11% 127 +9% 98 +7% 15.6 +15% Telephone 380 +5% 20 (15%) 20 (4%)

  7. Slide 7: Online Europe

     Strong sportsbook growth  Bet volumes +28%  Actives +24% Sportsbook Amounts Staked 2,763 2,218 +20%  Stakes +20% *  75% of actives used mobile in Dec’14 Sportsbook Net Revenue 194.2 180.6 +7%  eGaming growth driven by proprietary content & mobile (40% of revenues) Sportsbook Net Revenue % 7.0

  8. Slide 8: Online Australia

     Online growth accelerated  New customers +33%  Active customers +38% Online Sportsbook Amounts Staked 1,881 1,636 +22%  Net revenue +34% *  Mobile stakes up 66% to 53% of online * Total Sportsbook Amounts Staked 2,056 1,914 +14% stakes; 82% of actives used mobile in Dec’14 Net Revenue 226.9 17

  9. Slide 9: UK Retail

     Operating profit up 50% *  Like-for-like KPIs *  Sportsbook stakes +5% Sportsbook Amounts Staked 710 552 +22%  Sportsbook net revenue +4%  Machine gaming net revenue +13% Sportsbook Net Revenue 80.5 64.0 +20%  Total net revenue +8%  Opex +3% Sportsbook Net Revenue % 11.4% 11.5%  Operating p

  10. Slide 10: Irish Retail

     Record stakes >€1 billion  Like-for-like KPIs  Bet volumes +8% Sportsbook Amounts Staked 1,093 981 +11%  Amounts staked +5%  Net revenue +3% Net Revenue 126.6 115.6 +9%  Opex +2% Sportsbook Net Revenue % 11.6% 11.8%  Sports results below expectations  Record 20 new shops opened, including O

  11. Slide 11: Positive working capital inflow as business grows

    EBITDA 211.8 Positive working capital inflow Maintenance capex (17.9) as business grows Working capital 13.0 Tax & other (13.7) 2014 operating cashflow 133% of profit after tax Operating cashflow after tax 193.2 (5 years 2010-2014: 133%) Investing and financing activities: New shop openings & techno

  12. Slide 12: Cash return of €8.00 per share

    Rationale Increased efficiency without compromising growth Quantum €8.00 per share (€392m) Funding Surplus cash & debt raise of circa 1x EBITDA B-Share type scheme followed by a share consolidation Mechanics Shareholder approval required at AGM in May 12

  13. Slide 13: Regulatory and tax developments

    UK  Point of Consumption tax  15% tax payable since Dec 2014 (€44m* gross cost)  Mitigation opportunities  Gaming machines  Voluntary Code of Conduct since Mar 2014  Machine Gaming Duty increased to 25% from Mar 2015 (€4m* net cost)  DCMS measures affecting staking over £50 from Apr 2015  RG

  14. Slide 14: 14

    14

  15. Slide 15: Online growth outpacing retail; mobile sportsbetting biggest segment

    Online Growth Outpacing Retail Future Growth All in Mobile Sportsbetting Biggest Segment Global Online Gambling Market (% of Total Market) UK Sports & Gaming Market Growth 2014-18 UK Online Regular Gamblers – Product Usage Gross Win, € % of Total Customers (11%) 92% of UK growth is in Mobile 12% CAG

  16. Slide 16: PP exceptionally well positioned: online, mobile, sportsbook led

    PP Exceptionally Well Positioned Predominantly Online Mobile Leadership Sportsbook Led PP 2014 Group Operating Profit 2014 Mobile % of Online Net Revenue PP 2014 Group Net Revenue Retail & Gaming phones 55% 23% 27% Estimated UK Peers 40% 73% 77% Online Sportsbook 16

  17. Slide 17: PP exceptionally well positioned: geographic diversity and scale

    PP Exceptionally Well Positioned Geographic Diversity Scale Positions with Growth Potential Disproportionate Multichannel Reach PP 2014 Group Operating Profit (ex Italy)  Market leading positions in UK, Australia  Leading retail capabilities & ‘prime-pitch’ & Ireland locations Australia  Market s

  18. Slide 18: Future investment priorities emphasising three key elements

    Future Investment Three Key Elements Priorities Emphasising PRODUCT DISTINCTIVE BRANDS & LEADERSHIP IN LARGE, Online over DIFFERENTIATION MARKETING CAPABILITY REGULATED MARKETS Retail  Intuitive customer experience  Entertaining & engaging  Scale positions Mobile  Innovation  Sells product adva

  19. Slide 19: Importance of product: priorities to match customer priorities

    Importance of Product Product Priorities to Match Customer Priorities Most important factors for choosing bookmaker Consumer preferences (in order of importance) Associated development priorities UK, IRL & Aus consumers “always accessible & easy to use” Intuitive / Mobile and also….. 35% 25% 30% 10%

  20. Slide 20: Product innovation across multiple dimensions

    Product Innovation Across Multiple Dimensions Increased In-House Development Platforms Proportion of PP Product Development Spend In-House 73% 67% 68% 2013 2014 2015 Fcst Bets  Increases agility, pace & distinctiveness  Uncoupling & gaining ownership of critical customer facing front-ends  Increa

  21. Slide 21: Deepening the distinctiveness of our brands

    Deepening the Distinctiveness of our Brands Communicates Product & Value Marketing will increasingly highlight Launching new new & original product releases creative marketing campaigns for both brands in 2015 Ensure customers see us as being competitive on value with distinctive, simple & relevant

  22. Slide 22: UK, Ire & Aus positions offer substantial growth opportunities

    UK, Ire & Aus Positions Offer Substantial Growth Opportunities Italy Online Markets Retail Markets  Significant progress since market entry Paddy Power Online Net Revenue (UK, Aus & Ire)  Meaningful sportsbook market share Paddy Power Retail Net Revenue (UK & Ire) €’m (CC) €’m (CC)  Leadership in

  23. Slide 23: New organisation structure aligned to strategy

    New Organisation Structure Aligned to Strategy  Global approach to Customer Facing Segments Centres of Competitive Advantage product development  Efficiency opportunities from improving our investment discipline, and ONLINE ONLINE leveraging scale & RETAIL PRODUCT MARKETING geographic synergies EU

  24. Slide 24: Online Europe: market context and strategy implementation

    Market Context & Position Strategy Implementation 1. Strong Momentum Following 2014 Rebound Product (PP.com YoY CC)  Enhanced live betting pages Sportsbook Sportsbook Gaming Actives Stakes Net Rev  Cash Out extended to each way bets & industry first Partial +26% Cash Out to be released soon +18% +

  25. Slide 25: Online Australia: market context and strategy implementation

    Market Context & Position Strategy Implementation 1. Ideal Market Growth Drivers 2. Market Share Growth Product Market Turnover CAGR FY09 to FY13: Sportsbet Online Gross Win Market Share*  Cash Card for ATM withdrawals 24%  Online +22% vs Offline (3%)  Cash-Out launched in February 17%  Fixed Od

  26. Slide 26: Retail: market context and strategy implementation

    Market Context & Position Strategy Implementation 1. PP LFL Top-line Growth 2. PP New Openings Product YoY (CC)  Continue to lead on breadth of sports content Irish Stakes UK Sports Stakes UK Machines Rev 2014 75  Leadership in gaming content (incl. proprietary games) +13%  First-mover in SSBTs 

  27. Slide 27: 2015 year-to-date, strategy and outlook

    * 2015 Year-to-Date Strategy • Online sportsbook +18% We are confident about the Group’s prospects Stakes • Retail like-for-like sportsbook +8% Our strategy is focused on: 1. Product differentiation Sports Results • Sports results have been broadly in 2. Distinctive brands & marketing capability lin

Paddy Power — FY2014 Earnings Presentation on 6ix