Entain Plc · LSE:ENT
Entain — GVC Holdings — Investor Presentation (August 2018)
37 slides from Entain's investor presentation, August 2018
Slide 1: Investor Pack
Investor Pack August 2018
Slide 2: Contents
Contents Business Overview Appendix 2018 Trading Update Historic Proforma Numbers Other – Regulatory / Capital Structure / Geographic split 2
Slide 3: Business Overview
GVC- Business Overview
Slide 4: GVC Business Overview
GVC Business Overview Business overview Global presence GVC is a global, multi-channel sports betting led gaming company Diversified geographic footprint and product mix Operates B2C sports brands (bwin, Ladbrokes, Coral, Sportingbet, Eurobet) and games brands (partypoker, PartyCasino, Galabin
Slide 5: GVC Business Overview
GVC Business Overview Acquisition of Ladbrokes Coral creates an enlarged company with a range of competitive advantages: 1 Significant scale as the largest listed online-led betting and gaming operator by revenue 2 Geographic diversification with over 90% of revenue from regulated and/or taxed marke
Slide 6: Significant Scale
1 Significant Scale Acquisition of Ladbrokes Coral creates a global leader The largest online-led operator in the world (£ in billions, last reported full year revenue) 3.3 2.2 1.0 1.7 1.7 0.9 0.6 0.4 0.4 0.3 (1) (2) Source: Latest annual reports revenue figures. Note: Peer revenue based on last rep
Slide 7: Geographic Diversification
2 Geographic Diversification Present in the world’s most important gaming markets Present in all of the world’s top ten markets (ex Asia) Over 90% revenue from regulated / taxed markets (€ in billions, gross win, 2017) 105 25% Regulated/ing and Taxed GVC(1) Unregulated 20 75% + 17 16 14 11 10 9 0.2%
Slide 8: Market Leading Technology
3 Market Leading Technology Proprietary single, integrated technology platform yields a significant competitive advantage GVC proprietary technology Significantly improved since Key strategic benefits of the platform bwin.party acquisition GVC platform Highly AVAILABLE Previously Now 1 Provides
Slide 9: Strong and Complementary Brand Portfolio
4 Strong and Complementary Brand Portfolio Limited geographic brand overlap Online: Sports-led Online: Games Retail UK Highly complementary brand portfolios Italy Minimal brand overlap in key markets Ireland Addition of Retail adds powerful, low-cost marketing channel for Belgium Europe online
Slide 10: Brand Portfolio: Online
4 Brand Portfolio: Online Sports brands Games brands Most major markets Europe Latin America All major markets Latin America Central Europe 17 well established B2C sports and gaming brands Innovative products with in-house game studio building exclusive content Holds top 3 positions in Europe’
Slide 11: Brand Portfolio: Retail
4 Brand Portfolio: Retail UK Retail European Retail #1 operator in UK retail gaming industry Ireland Italy #3 retail #3 retail 41% market share(2) 140 shops Strong multi- channel presence Over 3,500 UK shops (3.6 year avg lease length in 2016) 850 shops Market leading multi-channel
Slide 12: Experienced Management Team
5 Experienced Management Team Experienced management team with a track record of successful acquisitions Name and role Year joined Experience Lee Feldman 2004 Non-executive (GVC) Chairman Kenneth Alexander 2007 Chief Executive (GVC) Officer Paul Bowtell 2011 Chief Financial (Gala Coral) Officer Andy
Slide 13: Proven Track Record of Synergies Delivery
5 Proven Track Record of Synergies Delivery Proven acquisition track record and ability to constantly overachieve on synergies over a short period Target Date 19 March 2013 1 February 2016 1 November 2016 Deal Size €83.9m(1) £1.1bn £2.3bn Delivered EBITDA of €38.3m in year 1 On track to de
Slide 14: Synergies
6 Synergies Announced upgraded cost synergies of £130 million Synergy overview Cost synergy areas Cost synergies now expected to be £130million (previously £100m) by the end of 20211 Technology and data enabled Corporate and administrative Common platforms Consolidating customer service teams
Slide 15: US Opportunity: JV with MGM
7 US Opportunity: JV with MGM Transaction structure and key terms • 50 / 50 joint venture between MGM Resorts International (“MGM”) and GVC Holdings (“GVC”) for sports Transaction betting and interactive gaming in the U.S. • Both parties providing exclusive rights to relevant assets subject to 25-ye
Slide 16: US Opportunity: JV with MGM
7 US Opportunity: JV with MGM Exclusive access to relevant assets Parties contributing exclusive access to: Economics of existing and future U.S. sportsbooks All U.S. gaming licenses, including all “skins” for sports betting and interactive gaming Market access agreements with Boyd Gaming, pro
Slide 17: US Opportunity: JV with MGM
7 US Opportunity: JV with MGM Joint venture transaction highlights Opportunity to leverage each company’s unique and complementary assets to capture a once-in-a- lifetime new market opportunity Creates a leading platform with world class content, state-of-the-art proprietary technology, and broa
Slide 18: US Opportunity: JV with MGM
7 US Opportunity: JV with MGM Broad footprint and marketable customer base MGM Nevada Mississippi New York New Jersey Maryland Massachusetts Michigan Boyd Pennsylvania Ohio Indiana Illinois Idaho Missouri Kansas 30 Million Louisiana M Life Members • Clear path to 15 states with total addressable pop
Slide 19: Appendix: 2018 Trading Update
Appendix: 2018 Trading Update
Slide 20: Combined Results – H1 Post Close Trading Update
Combined Results – H1 Post Close Trading Update Year-on-year growth in Q2 over Q1 driven by good underlying momentum and the World Cup Key highlights (proforma basis1): Q2: H1: Group NGR +11% (cc2 +12%) Group NGR +8% (cc2 +8%) Online NGR +22% (cc2 +25%) Online NGR +18% (cc2 +20%) UK Retail
Slide 21: Combined Results – Q1 2018 Trading Update
Combined Results – Q1 2018 Trading Update Strong start to 2018; synergies upgraded 1 Year to date growth (1 Jan 2018 to 20 May 2018) Change in Total NGR Total NGR CC Sports Wagers Sports Margin Margin Online Sports Brands 16% 18% 4% 10.4% 1.2pp Games Brands 16% 18% B2B 46% 48% Total Online 17% 18% U
Slide 22: FY18 Guidance
FY18 Guidance Guidance: • Capex – underlying1 c£125m post acquisition2, c£160m annualised • Capex - EPOS 21 c£27m post acquisition2 • Depreciation and Amortisation Subject to IFRS 3 adjustments Guidance to be provided at H1 • Integration costs – previous deals3 c£15m P&L charge post acquisition2 £45
Slide 23: Appendix: Historic Proforma Numbers
Appendix: Historic Proforma Numbers
Slide 24: Historic Proforma: Overview
Historic Proforma: Overview • The following slides provide proforma results for GVC Holdings Plc (“The Group”) for the 24 months ended 31 December 2017 • The Group’s proforma results are presented as if the current Group, post the acquisition of Ladbrokes Coral, had always existed. As such, it exclu
Slide 25: Historic Proforma: Basis
Historic Proforma: Basis Included: bwin Included for the period post acquisition (1 Feb 2016) and proforma adjustments made to include pre acquisition trading (January 2016). As such, both 2016 and 2017 include a full 12 months of trading for bwin Corporate costs Legacy GVC costs have been split bet
Slide 26: Historic Proforma: Segmentation
Historic Proforma: Segmentation 26 [1] Costs which were previously reported as Corporate Costs in GVC have now been split between the Online segment and those which are true Corporate Costs which remain in Corporate
Slide 27: Total Group
Total Group 27 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets
Slide 28: Online
Online 28 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets
Slide 29: UK Retail
UK Retail 29 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets
Slide 30: European Retail
European Retail 30 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets
Slide 31: Other and Corporate
Other and Corporate 31 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets
Slide 32: Appendix: Other
Appendix: Other
Slide 33: Triennial Review
Triennial Review Triennial Review Outcome Announced UK Government announced on 17 May that stakes on B2 content should be cut to a maximum of £2 per spin Expected Financial Impact Fully mitigated impact of c£120m on Group EBITDA by end of the 2nd year post implementation, with an expected advers
Slide 34: Greek Tax Assessment
Greek Tax Assessment Background On 25 January 2018, GVC announced that its subsidiary, Sportingodds Limited, received a tax audit assessment notice from the Greek Audit Centre for Large Enterprises in respect of the fiscal years 2010 and 2011 At that time Sportingodds was owned by Sportingbet, p
Slide 35: German Regulatory Update
German Regulatory Update Background The German business operates against the backdrop of significant regulatory uncertainty − The uncertainty stems from the Interstate Gambling Treaty of 1 July 2012, which effectively introduced a ban on online casino and online poker Online casino and poker are
Slide 36: Capital Structure & Leverage
Capital Structure & Leverage Opening Gross debt - £2,160m1 Debt Facility Amount New TLB £1,400m Existing GVC TLB £260m Existing LCL Bond £400m Existing LCL Bond £100m Total £2,160m Opening Net debt - £1,860m1 Opening net debt/EBITDA – 2.7x (LTM proforma EBITDA) 1 Interest costs ‐ c4% on gros
Slide 37: Geographic Revenue Split
Geographic Revenue Split Of which: UK Retail – 43.4% UK Online – 19.6% Of which: Sports – 3.3% Gaming – 4.1% 37 Basis: FY17 Proforma Net Revenue