Entain Plc · LSE:ENT
Entain — FY2020 Earnings Presentation
42 slides from Entain's earnings presentation, Mar 4, 2021
Slide 1: 2020 Full Year Results
2020 Full Year Results 4 March 2021
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Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT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 Entain PLC (“Entain”) and comprises the written materials/
Slide 3: Agenda
Agenda INTRODUCTION Jette Nygaard-Andersen FINANCIAL REVIEW Rob Wood STRATEGIC OVERVIEW Jette Nygaard-Andersen Q&A 3
Slide 4: Introduction
Introduction Jette Nygaard-Andersen Chief Executive Officer
Slide 5: Overview
Overview A winning strategy to deliver Sustainability and Growth Proprietary technology as a competitive advantage Customer focus to revolutionise our industry Leading the industry in responsibility Industry leading talent pool Strong track record of delivery Opportunities to deliver significant sta
Slide 6: Financial Review
Financial Review Rob Wood Chief Financial Officer and Deputy CEO
Slide 7: Key financial highlights
Key financial highlights Strong delivery in a challenging year Online Net Group Underlying BetMGM Operating Gaming Revenue EBITDA Net Gaming Revenue Profit £2.7bn £843m2,5 $178m +59% £530m2,5 +28%cc1 +11% Online +140% +2% Adj. diluted EPS Underlying Free Leverage (excl. US) Cashflow 73.1p3 £513m4 2.
Slide 8: EBITDA bridge
EBITDA bridge • Strong financial performance with £278.4m (£176.0m) Group EBITDA +11% (+12% excluding (£3.8m) (£8.1m) regulatory adjustments) (£8.8m) • Online EBITDA +50% (+£270m) at £804m reflecting the shift to online during the pandemic as well as good sports margins £843.1m £761.4m £752.6m • Ret
Slide 9: Online key metrics
Online key metrics 2020 2021 Metric Results Comments Expectations • 20 consecutive quarters of double digit growth • Double digit growth in all key markets excluding Germany with recent regulatory Low single digit growth including the NGR growth +28%1 changes impacting Q4 negative impact of German r
Slide 10: Cashflow and net debt
Cashflow and net debt Underlying free cashflow provides balance sheet flexibility to support our growth strategy Key metrics For the year ended 31 December 2020 2019 EBITDA1 £843m £761m Underlying free cashflow2 £513m £468m (before investment in BetMGM) Net cash generated / (outflow) £360m £(32)m Ne
Slide 11: Further opportunities in regulated markets
Further opportunities in regulated markets Standout M&A Capabilities: • Unrivalled sector experience of M&A 8 October 2020 1 March 2021 €60m acquisition of bet.pt1 c.£316m increased offer for • Proven ability to accelerate growth and grow Enlabs with 51% market share Expected completion in H1 2021 i
Slide 12: 2021 Guidance
2021 Guidance Online Cashflow (outflows) • Online NGR low single digit growth including the negative impact of German • Capex c£150-160m plus an additional c£10m license costs regulation • IFRS 16 lease payments c£70m in line with EBITDA add back (+c£5m on non • Online contribution margin 40%-41% op
Slide 13: Strategic Overview
Strategic Overview Jette Nygaard-Andersen Chief Executive Officer
Slide 14: Purpose & strategy for success
Purpose & strategy for success VISION The world leader in sports-betting and gaming entertainment PURPOSE Revolutionise betting and gaming to create the most exciting and trusted entertainment for every customer STRATEGY TECHNOLOGY ENABLED Sustainability Growth Focus on regulated markets Leaders
Slide 15: Technology enables our ambitions
Technology enables our ambitions ENTAIN TECHNOLOGY CUSTOMER PLAYER GROWTH CENTRICITY PROTECTION INNOVATION EFFICIENCY 15
Slide 16: Strong track record of growth, with more to come
Strong track record of growth, with more to come Strong track record of growth Further high quality growth built in 20 28% 11% 97% 87% 99% of online NGR from Of online NGR from of NGR from domestically Consecutive quarters online NGR growth1 Group EBITDA markets2 where we are markets3 where online r
Slide 17: Customer loyalty underpins continued growth
Customer loyalty underpins continued growth £3,000m £2,500m £2,000m £1,500m £1,000m £500m £0m 2015 2016 2017 2018 2019 2020 2020 2019 2018 2017 2016 2015 Pre-2015 Note: Represents NGR grouped by year of customer registration 17
Slide 18: New audiences to create runway for further growth
New audiences to create runway for further growth Broaden appeal of product range to a wider customer base Existing Grow market share brands Diversify regulatory risk Greater sustainability of earnings Potential in growing adjacent gaming markets Adjacent Free to play, team play, pay to
Slide 19: The e-sports potential
The e-sports potential 796m PLATFORM/ INNOVATION E-sports viewers by TOURNAMENTS 2024 63% DISTRIBUTION/ PRODUCT/ E-sports viewers PUBLISHER DATA interested in betting INTEGRATION BRAND >$1bn DIGITAL MEDIA & E-sports betting MARKETING INFLUENCERS market Source: Activate consulting Technology & Media
Slide 20: Technology enables proactive player protection
Technology enables proactive player protection Current industry approach Advanced Responsibility & Care (ARC) • Reactive • Proactive • Monitors for spikes in Markers of Protection • Constant monitoring • Applied just in time • Pre-empts behaviour and intervenes discreetly • Negative player experienc
Slide 21: ARC video
ARC video ARC Live from SUMMER 2021 21
Slide 22: Strong momentum at BetMGM
Strong momentum at BetMGM BetMGM market shares1 35% 30% $20bn Estimated market size by 2025 25% 18% Market share2 in states where BetMGM operates 20% 15% 21% Market share2 in states where BetMGM operates excluding Pennsylvania 10% #1 Nationwide iGaming share3 5% 0% Jan-20 Feb-20 Mar-20 Apr-20 May-20
Slide 23: Leading positions in iGaming and online sports-betting
Leading positions in iGaming and online sports-betting NEW JERSEY DAY 1 OSB STATES MICHIGAN Expanding iGaming lead and BetMGM has exceeded market share targets BetMGM was #1 in MI in OSB growing share in OSB in states with a day 1 launch and iGaming in Jan-21 BetMGM is the market share leader in Mar
Slide 24: Summary
Summary A strong performance in a challenging year Clear purpose, new identity and winning strategy Significant growth ahead through four clear priorities Strong momentum in BetMGM on a path to market leadership Industry leading approach to sustainability including player safety Delivering significa
Slide 25: Q&A
Q&A
Slide 26: Appendix
Appendix
Slide 27: Strategic market access enables day 1 launch
Strategic market access enables day 1 launch TO DATE, BETMGM HAS SECURED MARKET ACCESS IN 23 MARKETS1 AND IS LIVE IN 12 STATES, WITH THE EXPECTATION OF BEING LIVE IN APPROXIMATELY 20 MARKETS BY YEAR END 2021 WITH ACCESS TO ~40% OF THE U.S. ADULT POPULATION ME WA VT NH MA Live States Retail Sports
Slide 28: BetMGM has established itself as a top #3 leader
BetMGM has established itself as a top #3 leader Full Year 2020 Market Share Position1 Leadership in iGaming NJ #1 IGAMING #1 in U.S. iGaming GGR for 3 months to January 2021*** WV #2 MARKET SHARE1 PA Dec 2020 Launch Strong momentum in online sports-betting: TN #1** #1 in OSB GGR in Tennessee for 3
Slide 29: The M Life advantage
The M Life advantage 35M Large and engaged customer base1 MLIFE & Membership & Tier points BETMGM 25% BetMGM acquired customers active on M life2 17% New BetMGM sign-ups attributed to M life3 2X Higher spend4 $ Lower acquisition cost (1) Data as of 31 December 2020 (2) BetMGM customers acquired over
Slide 30: Leveraging the omni-channel opportunity
Leveraging the omni-channel opportunity SEAMLESS EXPERIENCE DRIVING VALUE Omni-channel customers value IS 4 1 significantly higher than Sole Retail GUEST customers CHECKOUT & GUEST RETURN TO BOOKING HOME STATE 3 2 GUEST GUEST ARRIVAL TO ON-PROPERTY MGM RESORTS EXPERIENCE PROPERTY Retail Casino Retai
Slide 31: Sustainability Charter
Sustainability Charter REGULATION RESPONSIBILITY CORPORATE GOVERNANCE PEOPLE & COMMUNITIES Only operate in regulated Scientific approach Best in class corporate Best place to work markets by end of 2023 to safer gambling governance 99% regulated and regulating ARC - Leveraging technology for Strengt
Slide 32: Financials: Group Income Statement
Financials: Group Income Statement Strong operational and financial performance in an exceptionally challenging year Pre IFRS 16 Constant Year ended 20205 20206 20196 Change1 Currency2 • Group NGR In-line (+1% cc) 31 December £m £m £m % % • Online NGR +27% (+28% cc) Net gaming revenue 3,628.5 3,628.
Slide 33: Online
Online Strong, diverse business model driving 27% (28%cc) NGR growth and market share gains in all major territories Pre IFRS 16 • NGR +27% (+28% cc) • Double digit NGR growth in all key markets excluding Germany Year ended 20204 20204 20194 Change1 CC2 31 December £m £m £m % % • UK +27%, Australia
Slide 34: Online operational update
Online operational update Consistent market share gains in all major territories Key Online Territories FY20 Online NGR Estimated FY20 Online Operational Highlights Growth in cc1 Market Position2 NGR Share • Completed migration of UK brands on to the Entain platform - benefits include improved site
Slide 35: Total Retail
Total Retail Performance heavily affected by Covid-19 but positive trading whilst open Pre • Retail performance heavily impacted by Covid-19 IFRS 16 • UK Retail NGR -40% Year ended 20203 20203 20193 Change1 • European Retail NGR -38% (-39% cc) 31 December £m £m £m % NGR/Revenue 857.1 857.1 1,417.6 (
Slide 36: UK Retail
UK Retail Performance heavily affected by Covid-19 but positive trading whilst open Pre • OTC wagers -42% (LFL3 -39%) IFRS 16 • Results heavily impact by temporary shop closures Year ended 20205 20205 20195 Change1 • Strong performance prior to the first lockdown +9% LFL3,4 benefiting from displaced
Slide 37: European Retail
European Retail Performance heavily affected by Covid-19 but positive trading whilst open Pre • NGR -38% (-39% cc) IFRS 16 • Results heavily impact by temporary shop closures Year ended 20204 20204 20194 Change1 CC2 • NGR back to pre-Covid-19 levels following first lockdown 31 December £m £m £m % %
Slide 38: Financials: Statutory Income Statement
Financials: Statutory Income Statement Reported profit after tax from continuing activities of £114m Post IFRS 16 Pre IFRS 16 • Underlying depreciation and amortisation £239m Year ended 20201 20191 Change 20201 20191 Change • Increase (9%) due to the annualisation of 2019 investment and accelerated
Slide 39: Financials: Other separately disclosed items
Financials: Other separately disclosed items One-off cash income £25m with the UK VAT receipt more than offsetting historic tax claims and integration Profit & Loss Cashflow • Tax litigation £224m income Year ended 2020 2019 2020 • P&L represents UK VAT receivable of £224m, £217m of which received b
Slide 40: Financials: Cashflow
Financials: Cashflow Strong underlying free cashflow generation of £513m and leverage ratio of 2.1x Year ended 2020 2019 • Capital expenditure £158m outflow (lower than guidance), including license costs, with 31 December £m £m certain projects delayed due to Covid-19 Underlying EBITDA 843.1 761.4 D
Slide 41: Financials: Net debt
Financials: Net debt Leverage reduced to 2.1x with sufficient liquidity available to support the Group’s strategy Issue costs/ • Net debt post IFRS £1,767m or 2.1x Year ended Par Value Premium Total • Excluding £105m FX loss, leverage ratio of 2.0x despite Covid-19 31 December £m £m £m Bonds (500.0)
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