Flutter Entertainment Plc · NYSE:FLUT
Flutter Entertainment — Paddy Power — H1 2014 Earnings Presentation
28 slides from Flutter Entertainment's earnings presentation, 2014
Slide 1: Professor Stephen Hawking quote on Paddy Power
“I always saw Paddy Power as slightly anti-intellectual, but by partnering with me they have proved me wrong.” Professor Stephen Hawking
Slide 2: Highlights
HIGHLIGHTS
Slide 3: Highlights
• Strong & accelerated growth, particularly in online new customers • Exceptional World Cup • Revenue +7% , operating profit -14% from adverse sports results * * • Interim dividend +11%; share buybacks to recommence • H2 started well: revenue growth +45% , favourable sports results * • Full year: mi
Slide 4: Financial & Operational Review
FINANCIAL & OPERATIONAL REVIEW
Slide 5: Group financial results H1'14
*/** Gaming & B2B net revenue +23% * Sportsbook Amounts Staked 3,422 2,999 +14% +17% Sportsbook net revenue +2% Net Revenue** 396 381 +4% +7% H1’14 included World Cup stakes of €130m and gross win of €15m Sportsbook Gross Win % 9.1% 10.1% EBITDA 83.7 95.2 (12%) (6%) Sportsbook gross win margin down
Slide 6: Results by division
Online (ex Australia) 1,399 +22% 148 (8%) 100 +0% 22.0 (44%) Online Australia** 925 +14% 99 +32% 54 +26% 21.8 +57% UK Retail 349 +24% 80 +24% 50 +24% 9.5 +26% Irish Retail 548 +11% 62 +8% 48 +6% 8.6 +16% Telephone 201 +10% 8 (35%) 10 (9%) (1.9) n/a Total 3,422 +17% 396 +7% 261 +9% 60.1 (14%) * In co
Slide 7: Online (ex Australia)
New customer acquisition +33% Sportsbook Amounts Staked 1,399 1,121 +22% Strong sportsbook top-line growth: Bet volumes +27% Net Revenue Sportsbook 81.7 103.2 (20%) Actives +24% 73% of actives using mobile in Jun’14 Sportsbook Gross Win % 7.0% 9.8% Year-on-year gross impact of sports results c
Slide 8: Online Australia
Further market share gains; net revenue +32%*: Online amounts staked +23%* Sportsbook Amounts Staked 925 935 +14% Online net revenue +33%* Net Revenue 98.6 86.5 +32% Online new customers +51% Telephone net revenue +8%* Sportsbook Gross Win % 11.1% 9.5% Mobile stakes up 72%* to 49% of online
Slide 9: UK Retail
Profit growth driven by both higher profits in the existing estate and new shop openings Sportsbook Amounts Staked 349 271 +24% Like-for-like KPIs*: Sportsbook amounts staked +8% Net Revenue Sportsbook 36.8 32.5 +10% Sportsbook net revenue (5%) Sportsbook Gross Win % 10.7% 12.1% Machine net re
Slide 10: Irish Retail
Like-for-like KPIs: Bet volumes +8% Sportsbook Amounts Staked 548 493 +11% Amounts staked +5% Net revenue +2% Net Revenue 62.4 58.0 +8% Direct shop opex +5% Sportsbook Gross Win % 11.5% 11.8% Adverse sports results Operating Profit 8.6 7.6 +13% Record 16 new shops opened, including 14 acquir
Slide 11: Telephone
Increased market share, consolidating leading position in UK and Irish market Sportsbook Amounts Staked 201 179 +10% Operating costs 9%* lower Net Revenue 8.0 12.3 (35%) Adverse sports results drove operating loss in Sportsbook Gross Win % 4.6% 7.5% period Operating (Loss) / Profit (1.9) 1.5 n/a Ong
Slide 12: Cash flow and closing cash
EBITDA 83.7 Positive working capital Maintenance capex (7.9) inflow as online grows Working capital 19.3 H1’14 operating cashflow Tax and other (13.5) 152% of profit after tax (5 years 2009-2013: 128%) Operating cashflow after tax 81.6 New shop openings and Investing and financing activities: techno
Slide 13: Taxation and regulatory developments
Online/phones ‘point of consumption’ tax: • 15% rate from December 2014 • If applied to H1’14, extra tax payable €20m • Mitigation opportunities - lower revenue share and marketing costs; potential market share gains, net of any share moving to illegal operators Gaming machine taxation and regul
Slide 14: Strategy & Outlook
STRATEGY & OUTLOOK
Slide 15: Building scale for the long term
• Regulated • Substantial • Fast-growing • Where we have an edge Building scale for the long term: In Existing • Product Markets • Marketing + • Value Optionality • People for Future Markets Aspire to be: • Biggest • Fastest-growing 15
Slide 16: Group, online and retail growth metrics
GROUP Sportsbook Stakes Growth +15% +13% +17% Sportsbook Stakes Growth +18% +17% +22% ONLINE Customer Acquisition Growth +9% +7% +35% LFL Revenue Growth +1% +3% +4% RETAIL No. of New Shop Openings 26 41 49 Growth comparisons above are year-on-year in constant currency 16
Slide 17: Targeted investment in football
Targeted Investment in Football Accelerated Football Growth 1. Increased TV Share of Voice* 4. PP’s Distinctive Brand Personality Stakes (YoY CC) +41% 14% 9% 10% +22% +3% H1'13 H2'13 H1'14 H2'13 Jan-May '14 H1'14 2. Leading Product & Value Offer Customer Acquisition Acca Bonus (YoY) +101% ‘Pick
Slide 18: Multi-platform, proprietary and exclusive content
Strong Racing Position Multi-platform, Proprietary & Exclusive Content Product Value • Industry-leading 34% of revenues from mobile • In-house developed Casino mobile web app • First mobile Poker app & new Bingo tablet & mobile apps • Bulgarian development centre: – Largest supplier, over 25% of Gam
Slide 19: Customer acquisition and top-line growth acceleration
Customer Acquisition Active Customers Top-line Growth Acceleration Sportsbook Stakes Gaming Net Revenue H1’14 Sportsbook Strong acquisition (YoY CC) (YoY CC) acquisition greater combined with improved than FY 2013 customer retention rates +20% +22% +37% +14% +2% +12% +10% +10% Jan to Jan May to +17%
Slide 20: In-house developed mobile product
In-house Developed Mobile Product Value Rated No.1 Across Range of Attributes* • iPad native and web apps Reliable • Android Apps Innovative • iPhone native and web apps Fair ' • Rated No.1 brand for Mobile betting* Good Value for Money TAB Sportingbet Entertaining Centrebet Modern Tom Waterhouse Fu
Slide 21: Waterhouse and Sportingbet in Australia
Rated Number 1 By Customers Fastest Stakes Growth Customer Acquisition Accelerating Active Account Held: Jan-Jun 2014, Online YoY Turnover Growth Sportsbet YoY Growth % of Online bettors 36% +23% 28% +21% +51% 14% 7% 9% 6% 6% 6% +13% +10% Spontaneous Brand Awareness: 61% 64% % of Online bettors 38%
Slide 22: Online active customers, stakes and operating profit
Online Active Customers Online Stakes Operating Profit ’000 € million* € million* 22 +23% +44% 346 838 +57% +25% 681 239 +33% +35% 14 544 177 10 H1'12 H1'13 H1'14 H1'12 H1'13 H1'14 H1'12 H1'13 H1'14 * In constant currency at H1’14 rates 22
Slide 23: Italy: Microgame and leading sportsbook brand
….Particularly Volume of New Bettors Leading Sportsbook Brand eGaming Online Sportsbook Stakes* Online Sportsbook Actives** 1. Jun’14: No.1 Market Share • H1’14: PP Vegas & Poker €m Average monthly (000s) 13% • H2’14: Bingo & Virtuals +10% • Addressable market will 12% 11% 10% 10% 10% 9% 9% increase
Slide 24: Retail: excellent returns on capital
Excellent Returns on Capital • Leading value & offers • New ‘Eclipse’ terminals • New shop formats • Leading machine loyalty €329k programme • Next generation TV displays • Extended leadership in SSBTs • New content • Cash Card in SSBTs • Multi-channel initiatives 49% EBITDA/ Capital Cost • Expanded
Slide 25: Like-for-like stakes and top-line growth accelerating
LFL Stakes Growth Accelerating LFL Top-line Growth Accelerating Operating Profit Growth (YoY) Fastest Sportsbook Stakes Gaming Net Revenue (YoY CC) (YoY CC) growth H1'14 9.5 since +5% 2007 +8% +15% H1'13 7.7 0.1 * +4% H1'12 6.7 0.9 * +7% +4% +5% H1'11 4.7 Jan H1'10 3.0 to Jan +1% +2% May to H1’13 Ma
Slide 26: Marketing: owning the conversation with offers
• Objective to own the • Punter tested offers with strong ROI conversation with offers that cut through to the mass market • Media strategy based on analytics and informed insights • Online marketing comms • PP Blog exclusive: • eGaming: 26
Slide 27: World Cup engagement on social media
Leading Engagement on Social Media 148k New Customers Acquired Stakes Engagement* €198m (Millions) June Highest Ever Group 1.1 Turnover +130% 0.1 0.1 0.1 0.1 0.05 0.03 H1: €34m Gross Win (H1: €15m) €130m @SkyBet @bet365 @Ladbrokes @WillHillBet @Betfair @paddypower @Coral €86m €78m Engagement* (Milli
Slide 28: Current trading and outlook for full year
• Online sportsbook stakes +18%* Turnover • Retail like-for-like sportsbook stakes +7% * • Group net revenue +45%* Net Revenue • +28% excluding World Cup revenue * • Favourable sports results • “The Board expects mid-teen percentage growth in EPS Outlook for the full year and remains confident of th