Entain PLC · LSE:ENT
Entain — H1 2020 Earnings Presentation
43 slides from Entain's earnings presentation, Aug 13, 2020
Slide 1: 2020 interim results
2020 interim results 13 August 2020
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Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT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 GVC Holdings PLC (“GVC”) and comprises the written materia
Slide 3: Agenda
agenda INTRODUCTION Barry Gibson FINANCIAL REVIEW Rob Wood STRATEGIC PRIORITIES Shay Segev Q&A 3
Slide 4: Introduction
INTRODUCTION • Group is in a strong position following an encouraging first half of the year • New leadership • Underpinned by a strong team • Legacy issues to be resolved • Delivering best in class corporate governance • New Group well placed for strong growth 4
Slide 5: Financial review
Financial review Rob Wood – Chief Financial Officer
Slide 6: Financials: Group Income Statement
Financials: Group Income Statement Robust financial performance during a turbulent first half Pre IFRS 16 Constant Six months ended 2020 2020 2019 Change1 Currency2 • Group NGR -11% (-10% cc) 30 June £m £m £m % % • Online NGR +19% (+21% cc) • UK Retail NGR -53% (-50% LFL5) Net gaming revenue 1,616.7
Slide 7: Financials: Underlying EBITDA Bridge
Financials: Underlying EBITDA Bridge Strong operational momentum pre COVID-19 but Retail closures impacting H1 EBITDA performance • Underlying EBITDA excluding regulatory adjustments and the annualisation of the Triennial Review impact +7% despite COVID-19 • Online EBITDA growth excluding regulatory
Slide 8: Online
Online Continued market share gains with double digit NGR growth across all major territories supported by strong sports margins Pre • NGR +19% (+21% cc) IFRS 16 • UK +22%, Germany +14% cc, Australia +43% cc, Italy +29% cc, Six months ended 2020 2020 2019 Change1 CC2 Crystalbet +39% cc, partypoker +
Slide 9: UK Retail
UK Retail UK Retail heavily impacted by temporary closures, however encouraging early response post reopening Pre • OTC wagers -54% (LFL3 -52%) IFRS 16 • Half year results heavily impact by shop closures on 21 March Six months ended 2020 2020 2019 Change1 • All shops now open with all English shops
Slide 10: European retail
European retail European Retail impacted by temporary shop closures following an excellent Q1 (NGR +24% cc to 15 March) Pre • NGR -48% (-47% cc) IFRS 16 • Half year results heavily impacted by COVID-19 related closures Six months ended 2020 2020 2019 Change1 CC2 • Strong, margin assisted, pre-COVID-
Slide 11: Financials: statutory Income Statement
Financials: statutory Income Statement Reported profit after tax of £2m; profit before FX, tax and separately disclosed items of £187m Post IFRS 16 Pre IFRS 16 • Underlying depreciation and amortisation £112.1m Six months ended 2020 2019 Change 2020 2019 Change • Increase (12%) due to ongoing invest
Slide 12: Financials: Other separately disclosed items
Financials: Other separately disclosed items UK VAT receivable of £200m post corporation tax recognised following court ruling but £61m of one-off cash outflow in H1 in line with guidance Profit & Loss Cashflow • Tax litigation £212m income Six months ended 2020 2019 2020 • P&L represents UK VAT rec
Slide 13: Financials: Cashflow
Financials: Cashflow Strong free cashflow generation of £172m despite the impact of COVID-19 Six months ended 2020 2019 • Underlying working capital £9m inflow 30 June £m £m Underlying EBITDA 348.6 366.8 • Capital expenditure £70m outflow as a result of phasing while shops Underlying working capital
Slide 14: Financials: net debt
Financials: net debt Net debt 2.9x (2.8x pre IFRS 16) despite impact of COVID-19 and £132m of FX losses on debt translation Issue • Net debt post IFRS £2,165m or 2.9x costs/ • Net debt pre IFRS 16 £1,837m or 2.8x Six months ended Par Value Premium Total 30 June £m £m £m • Excluding £132m FX loss, le
Slide 15: Regulatory update
Regulatory update Germany, Brazil and The Netherlands heading towards full regulation • Full regulation of betting and gaming expected mid 2021 with restrictions • Subject to regulatory discretion, key restrictions can be relaxed on grounds of customer affordability • A tolerance policy has been pro
Slide 16: 2020 guidance
2020 guidance • Full year EBITDA expected to be in range of £720m-£740m, subject to no further material disruptions to the Group • Benefit from c£20m of accelerated synergies from 2021, offset by COVID-19 related impacts on non-core businesses • Net debt expected to decline YoY, helped by UK VAT ref
Slide 17: Strategic priorities
Strategic priorities Shay Segev – Chief Executive Officer 17
Slide 18: Key priorities leveraged off industry leading platform
Key priorities leveraged off Industry leading platform Key strategic Driven by our Delivering benefits priorities Competitive advantages for stakeholders Market leadership in US o Proprietary technology Customers o Operational excellence o Leading digital marketing skills Organic market growth Colle
Slide 19: The technology edge driving growth opportunities
The technology edge driving growth opportunities Speed & Control Marketing Conversion Product development Voice of the customer New Market Entry Technology Personalisation Innovation resilience protection DELIVERING AN INDUSTRY LEADING CUSTOMER EXPERIENCE 19
Slide 20: US Update
US Update Shay Segev – Chief Executive Officer 20
Slide 21: Significant opportunity in the growing US market
Significant opportunity in the growing US market SPORTS MARKET ASSUMPTIONS 38 States 224.3m adults $20.3bn Spend per adult ~$60 Expected market size ~$13.5bn Sports ~$13.5bn iGaming ~$6.8bn IGAMING MARKET ASSUMPTIONS 13 States 61.6m adults Spend per adult ~$110 Expected market size ~$6.8bn 15% - 20%
Slide 22: BetMGM - Driving momentum through key strategic pillars
BetMGM - Driving momentum through key strategic pillars KEY STRATEGIC ENABLERS CURRENT STATUS • Prime MGM assets in key states • B2C access to 20 markets secured to date • Additional access secured via other partners Market • Currently operational in 7 markets • Proprietary platform enables entering
Slide 23: Our capabilities outstrip the competition
Our capabilities outstrip the competition Broad, direct market access BETMGM’S In-house technology and product development STRATEGIC “FOUR KEY Strong entertainment, sports and gaming brands PILLARS” Omni-channel customer acqn and marketing strategy Large and established rewards program Broad media a
Slide 24: BetMGM is live in 7 states with further launches by mid-2021
BetMGM is live in 7 states with further launches by mid-2021 Market Retail Sports Online Sports iGaming ME NJ WA VT NH MA MS MT ND MN NY OR WV H2-20 ID SD WI MI CT RI NV WY IA PA NJ DE OH IN NV NE IL IN WV VA D.C. MD MI H2-20 H2-20 CA UT CO KS MO KY NC CO On hold TN SC
Slide 25: Underpinned by proprietary, dynamic technology platform
underpinned by proprietary, dynamic technology platform BetMGM’s Integrated Tech Stack Peers heavily reliant on third party tech User Scalable and rich customer experience Transition to SBTech no earlier than fall 2021 experience CRM & Data enabled customer retention data analytics Marketing technol
Slide 26: Demonstrating leadership in iGaming in New Jersey
Demonstrating leadership in iGaming in New Jersey NJ iGaming GGR market share1 BetMGM NJ iGaming GGR in $m iGaming GGR Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 18 BetMGM 17.6% 14.1% 17.8% 18.9% 18.4% 18.9% Betfair 19.6% 19.4% 18.3% 17.3% 16.6% 16.6% 16 DraftKings 14.3% 15.8% 13.8% 12.1% 12.9% 12.8%
Slide 27: User acquisition advantage driven by brands, partnerships and customer database
User acquisition advantage driven by brands, partnerships and customer database Cost of customers acquired via partners 13 Omni-channel brand experience Locations $0 - $150 >2x Omni vs single-channel customer value Cost of customers acquired directly 34m+ Customer rewards Customer database – forecas
Slide 28: Multi-channel marketing campaign
Multi-channel marketing campaign BETMGM BRAND OMNI-CHANNEL 1. Brand aligned with MGMs leadership 1. Integrate M life Loyalty programme to position provide unique benefits to customers 2. Advertising – Significant uplift of brand 2. Engagement with MGM VIP customers marketing and visibility 3. Engage
Slide 29: Significant branding campaign
Significant branding campaign 29
Slide 30: Rebranding the Luxor
Rebranding the luxor 30
Slide 31: Organic and new market growth
Organic and new market growth Shay Segev – Chief Executive Officer 31
Slide 32: Inbuilt growth opportunities
Inbuilt growth opportunities Vast majority of Online revenues are generated in fast growing, regulated and regulating markets, with long runways for future growth % of GVC FY19 Online NGR in countries… …that are either …where the …where GVC …if taxed, then …with online regulated or online market is
Slide 33: New market opportunities
New market opportunities The opportunity Standout m&A capabilities • GVC operations currently represent 6%1 of the global online betting • Unrivalled sector experience of M&A and gaming market • Successful platform integrations • There are over 50 regulated markets in which we are currently not • Cu
Slide 34: Responsibility
responsibility Shay Segev – Chief Executive Officer 34
Slide 35: Our safer gambling strategy
Our safer gambling strategy GUIDING PRINCIPLES To be the most trusted and enjoyable betting operator in the world ONGOING DEVELOPMENT OF MONITORING TOOLS UNDERSTAND THE EDUCATE PROMOTE PROBLEM AND OUR KEY RESPONSIBLE BEST SOLUTIONS STAKEHOLDERS ATTITUDES FUND CHAMPION DRIVE CULTURAL EMPOWER TREATMEN
Slide 36: Doing what's right for customers
Doing what’s right for customers “ Despite the adverse impact from lockdown on revenues, our belief is that we should always act in the interest of the customer and we therefore took a number of steps to enhance our customer safety net during COVID-19 • We added two new markers to our behavioural al
Slide 37: Summary
Summary • Encouraging first half performance • Momentum in the business as sports return • Well positioned for market leadership in the US • Significant growth opportunities both organic and through M&A • Robust governance in place • Clear focus on industry leading responsibility • Proprietary tech
Slide 38: Q&A
GVC | iterate Q&A
Slide 39: Appendix
Appendix 39
Slide 40: Product diversification
Product diversification Revenues are well diversified by product, with football revenues spread over multiple leagues Group Online NGR Product Splits (2019) Football by League Gaming Sports 55% 45% Premier League 8% UEFA Champions League 5% Italian Serie A 5% Spanish La Liga 5% Friendlies
Slide 41: Market leading consumer focused brand portfolio
Market leading consumer focused brand portfolio Well-established global and regional brands increase marketing efficiency and create barriers to entry Country Online: Sports offering Online: Games offering UK * Germany Australia n/a Italy * Belgium * Ireland * Georgia Brazil Worldwide 41 * Multi-cha
Slide 42: Leading Technology for the US from GVC's platform
Leading Technology for the us from GVC’s platform Powerful proprietary technology gives us a unique and sustainable competitive advantage B2B Operators With In-house Betting-led B2B Suppliers Multi-product B2B Suppliers Technology Models & Algorithms ✓ ✓ ✓ ✓ ✓ ✓ ✓ Bet Engine ✓ ✓ ✓ ✓ ✓ ✓ ✓ Trading &
Slide 43: BetMGM market access providing path to market leadership
BetMGM market access providing path to market leadership Live Markets (19) Legal Markets (4) Legalizing (3) Count of Active AR CO DC DE IN IA IL MI MS MT NV NJ NM NY OR PA RI WV NH NC TN VA WA OH MD MA Key Markets Imminent ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ⁱ ✓ ✓ⁱⁱ ✓ ✓ ✓ ✓ ✓ ✓ 17 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 16 ✓