Slide 1: Results for the Year Ended 31 December 2013
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013
Slide 2: Agenda
AGENDA Brian Mattingley | Introduction Aviad Kobrine | Financial Review Itai Frieberger | Operational Review Brian Mattingley | Summary Q&A 2
Slide 3: Operational Achievements 2013
OPERATIONAL ACHIEVEMENTS 2013 Real growth from core Markets Enhancement of core products Positive contribution in Spain and Italy US launch Off-shore Technology Centre 3
Slide 4: Opportunities 2014
OPPORTUNITIES 2014 Further regulation in the US Inter-state liquidity pooling European product and platform progress Innovative marketing campaigns Strong current trading 4
Slide 5: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW
Slide 6: Highlights
HIGHLIGHTS Another record annual revenue up 7%, to $401m Revenue B2C up 7% to $352m Revenue Casino B2C up 15% to $190m Revenue Poker B2C up 7% to $94m Adjusted EBITDA up 13% to $76m Adjusted EBITDA Margin increases to 18.9%, (2012: 17.8%) PBT up 30% to $53m (2012: $41m) Adjusted EPS
Slide 7: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT $m 2013 2012 % Change Revenue 400.5 375.8 7% 2 Operating expenses 114.1 113.5 3 Gaming duties 13.7 11.5 Research and development expenses 30.7 27.2 Selling and marketing expenses 139.9 131.2 % of Revenues 34.9% 34.9% Administrative expenses 4,5 26.5 25.6 3,4,5 Adjusted EBIT
Slide 8: P&L Highlights
P&L HIGHLITES Revenue growth in Spain 30% Revenue Growth in Italy 65% Impact of US operations during 2013 US$ 6 million capitalised US development costs US$4.1 share of JV loss – mainly set up for US launch 8
Slide 9: Revenue
REVENUE 2013 - revenue up 7% to $401m (2012: $376m) 2013 – another record breaking year, four consecutive years of growth 21% CAGR Revenue 2003 – 2013($m) 400 350 401 376 300 331 250 262 247 200 263 $m 217 150 157 100 123 50 59 75 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 9
Slide 10: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION Revenue growth in Europe 14%, UK 1% (ex Bingo 11%), Americas 22%, ROW down 14% UK represents 41% of Total revenue in 2013 (2012: 43%) Europe leads the regional growth, with more regulated volume and expanding marketing efforts Geographic segmentation, Total Revenue 20
Slide 11: Geographical Growth by Region/Product
GEOGRAPHICAL GROWTH BY REGION/PRODUCT Casino & Poker main growth markets are UK and Europe (ex UK) with the highest absolute growth generated from Europe (ex UK) Casino & Poker B2C Revenue Growth in 2013 over 2012 20% 18% 16% 14% 15% 12% 10% 8% 6% 9% 4% 2% 0% UK Europe (ex UK) 11
Slide 12: Revenue B2C by Product
REVENUE B2C BY PRODUCT Growth continues by increased focus on core products Casino up 15%, Poker up 7%, Bingo & Emerging Offering are down driven by Bingo competitive market Revenue B2C 2013 vs. 2012 ($m) 200 2012 2013 180 190 160 165 140 120 $m 100 80 94 88 60 40 52 44 20 25 24 0 Casino Poker B
Slide 13: Revenue B2C
REVENUE B2C 2013 revenue up 7% to $352m (2012: $330m) 17% CAGR Consistent growth Revenue B2C 2010 –2013 ($m) 350 352 300 330 $m 250 284 200 222 150 2010 2011 2012 2013 13
Slide 14: Revenue Casino B2C
REVENUE CASINO B2C 2013 revenue up 15% to $190m (2012: $165m) Strong casino performance benefit from strong mobile growth and a full year of slots in Italy (introduced in December 2012) Revenue Casino B2C 2010 –2013($m) 200 180 190 160 165 $m 140 148 120 100 117 80 2010 2011 2012 2013 14
Slide 15: Revenue Poker B2C
REVENUE POKER B2C 2013 revenue up 7% to $94m (2012: $88m) Robust Poker volumes, supported by an increase in liquidity and regulated presence No. 2 in global poker ranking* Revenue Poker B2C 2010 –2013 ($m) 90 80 94 70 88 60 $m 50 61 40 30 38 20 2010 2011 2012 2013 * Source Pokerscout.com March
Slide 16: Adjusted EBITDA and Margin
ADJUSTED EBITDA AND MARGIN Adjusted EBITDA up 13% to $76m (2012: $67m) Adjusted EBITDA margin increased to 18.9% despite growing gaming duties and US build-up focus Adjusted EBITDA H1 2013 vs. H1 2012 $m Adjusted EBITDA Adjusted EBITDA margin 80 19.0% 70 18.0% 76 18.9% 60 17.0% 67 17.8% 50 16.0%
Slide 17: Adjusted EBITDA Trend
ADJUSTED EBITDA TREND Adjusted EBITDA Margin continue to expand despite increased gaming duty 2013 Adjusted EBITDA exceed previous year strong comparable Adjusted EBITDA 2013 110 25.0% Gaming Duty burden Adj. EBITDA no tax % 100 89 90 78 18.9% 20.0% 17.8% 16.8% 14 80 15.0% 63 11 $m 70 76 10.9% 6
Slide 18: Cash from Operations
CASH FROM OPERATIONS High % Adjusted EBITDA convert into cash from operations in 2013, 119% (2012: 106%) % Cash from operations as a % of Adjusted EBITDA 120% 110% 119% % 100% 90% 106% 80% 70% 2012 2013 18
Slide 19: Marketing Cost Ratio
MARKETING COST RATIO Increased Marketing spend with stable ratio to revenue, supporting Revenue growth Marketing Costs 2013 vs. 2012 Marketing Costs Marketing Costs % of Revenue $m 140 40.0% 120 100 140 30.0% 131 80 20.0% 34.9% 34.9% 60 40 10.0% 20 - 0.0% 2012 2013 2012 2013 19
Slide 20: Cost Structure
COST STRUCTURE Cost* percentage at 81% (2012: 82%) Cost ratio continue to decrease despite increasing gaming duty Operational gearing, despite US focus Cost as a % of Total Revenue 2013 vs. 2012 100% 82.2 % 81.1 % 3.1% 3.4% Gaming duties 80% 6.8% 6.6% Admin. Expenses S&M expenses 60% 34.9% 34.
Slide 21: Customer Incentives B2C Casino
CUSTOMER INCENTIVES B2C CASINO 2013 bonus ratio continues to demonstrate optimal CRM efforts supporting growth Customer Bonuses as % of Revenue Bonus Ratio% Rev $m 35% 215 195 30% 175 25% 155 20% 135 % $m 15% 115 24% 23% 95 10% 75 5% 55 0% 35 2012 2013 21
Slide 22: Customer Incentives B2C Poker
CUSTOMER INCENTIVES B2C POKER Lower Poker bonus ratio, coupled with revenue growth and leading market position signals the effectiveness of CRM efforts Customer Bonuses as % of Revenue Bonus Ratio% Rev $m 100 24% 90 22% 80 70 20% 60 % 18% 50 $m 16% 23% 40 30 14% 18% 20 12% 10 10% 0 2012 2013 22
Slide 23: Balance Sheet
BALANCE SHEET $m 31-Dec-13 31-Dec-12 Non-current assets Intangible assets 155.7 147.7 Property, plant and equipment 19.1 18.3 Deferred tax & Other financial assets 1.4 0.6 Investment in equity accounted joint ventures 3.9 0.0 180.1 166.6 Current assets Cash and cash equivalents 115.8 81.5 Trade and
Slide 24: Cash Flow Statement
CASH FLOW STATEMENT $m full year Ended 31 December 2013 2012 Cash flows from operating activities Profit before income tax 53.2 40.8 Impairment charges 0.0 2.2 Share benefit charges 5.5 1.7 Depreciation & amortisation 13.9 14.8 Change in current assets and liabilities 12.0 20.2 Other non cash adjust
Slide 25: Itai Friberger, COO | Operational Review
ITAI FRIBERGER, COO | OPERATIONAL REVIEW
Slide 26: Deposits
DEPOSITS TOTAL SPORT CASINO B2Cc JAN 2012 APR 2012 OCT 2012 DEC 2012 FEB 2013 DEC 2013 100% 103% 105% 110% 114% 116% REVENUE NUMBER OF ACTIVE PLAYERS JAN 2013 FEB 2013 NOV 2013 DEC 2013 JAN 2012 JAN 2013 DEC 2013 100% 106% 107% 117% 100% 101% 110% BETS NUMBER OF ACTIVE PLAYERS _ 2. #@ & ~~ « 4) OY (
Slide 27: Our Core Offering
OUR CORE OFFERING eres are.co.uk, £68 freeplay. New players only. T&Cs.apply, ings. Bonus must be Wagered 30 x to withdraw winnings, BASKET BAL a ycEnoOe™ hy. New customers iO alfied bet to.ge1£10 free bet, Maye88. A £10 qualified b Lf ‘ay we camnomaa’, ® Giity, Fle? Bet Tore veh), sed oualfet bet w
Slide 28: Casino
CASINO New automated marketing protocols and promotions In house game studio fully operational IN HOUSE VS. THIRD PARTY GAMES 200% In House 180% Third Party 160% 140% 120% 100% 80% 60% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2013 Q1 2011 as base = 100% 28
Slide 29: Poker
POKER Advancing to number 2 in the global poker rankings* As of Feb 2014, 888Poker liquidity is 10% higher than the peak observed in Feb 2013 On a parallel comparison, Industry was 9% lower POKER LIQUIDITY TREND CHANGE SINCE JAN 2011 200% Poker Industry 888Poker 180% 160% 140% 120% 100% 80% 60
Slide 30: Sport
SPORT The all-new 888sport launched Fully integrated into the 888 core platform New markets and new marketing activities planned for 2014 SPORT BETS 300% 269% 249% 250% 224% 200% New Sport Platform 202% 182% 165% 150% 159% 143% 142% 135%131% 135% 133% 120% 122% 117% 117% 100% 106% 113% 117%116
Slide 31: Bingo
BINGO
Slide 32: Bingo
BINGO Reversing the trend Continued investment in our platform – mobile driving a REAL impact Bingo platform volume and activity 11 Thousands $14 Daily Bet ($) Daily No. Of Active Players 10 Millions $12 9 8 $10 7 6 $8 5 4 $6 3 $4 2 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 2012
Slide 33: Mobile
MOBILE Home grown Embedded across the 888 verticals Multi Platform, multi OS Key growth engine
Slide 34: Mobile Revenue in UK
MOBILE REVENUE IN UK Mobile GGR Share in UK (ex Bingo) 40% 35% 30% 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 2012 2013 *B2C Casino, Poker & Sport 34
Slide 35: Mobile Acquisition in UK
MOBILE ACQUISITION IN UK Mobile Registrations / FTD’s Share in UK (ex Bingo) 45% 40% Registration FTD's 35% 30% 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 2012 2013 *B2C Casino, Poker & Sport 35
Slide 36: Mobile Bingo Acquisition in UK
MOBILE BINGO ACQUISITION IN UK Mobile Bingo Registrations / FTD’s Share in UK 35% Registrations Share FTD's Share 30% 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12 2013 36
Slide 37: Mobile Revenue in UK
MOBILE REVENUE IN UK Made a significant impact on all channels Own our agenda Mobile Share in UK (ex Bingo) Gross Gaming Revenue New Depositors 30% 35% 30% 25% 27.8% 31.6% 25% 20% 20% 23.1% 15% 16.4% 15% 10% 10% 5% 5% 8.6% 1.4% 5.3% 1.6% 0% 0% H1'12 H2'12 H1'13 H2'13 H1'12 H2'12 H1'13 H2'13 *B2C
Slide 38: Growing Regulated Markets
GROWING REGULATED MARKETS Utilizing our regulation track record Leveraging our know how and assets across different regulations ...More to come 38
Slide 39: From Penetration to Steady State
FROM PENETRATION TO STEADY STATE
Slide 40: 888.es Poker Gross Gaming Revenue
888.es POKER GROSS GAMING REVENUE Additional products should make an impact Sustaining our foothold 888 Spain Poker GGR Growth 350% 300% 250% Launch of 888.es 200% 150% Spain Tax regime 100% 50% 0% 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 2011 2012 2013 40
Slide 41: State of the Union – USA
STATE OF THE UNION – USA
Slide 42: USA Total Platform GGR
USA TOTAL PLATFORM GGR Launched 3 states in 3 months, powering multiple brands and taking the lion share in these markets Pole position for new states as they regulate Partner of choice for US companies Casino & Poker Platform GGR in US Regulated States 12.7x 11.1x Delaware launch Nov 8th New
Slide 43: USA Total GGR by State
USA TOTAL GGR BY STATE Interstate compact between Nevada and Delaware – a landmark milestone Anticipating additional states to regulate during 2014 (launching in 2015) Casino & Poker Platform GGR in US Regulated States Nevada Delaware 20% New Jersey 5% 75% Period: As of the three deals operating
Slide 44: The US Brand Map
THE 888 US BRAND MAP INTERSTATE 44
Slide 45: New Jersey
NEW JERSEY NJ Cash Game Poker Market Share by Brand Source: Pokerscout, Mar 2014 45
Slide 46: NJ Total Market Share February 2014
NJ TOTAL MARKET SHARE FEBRUARY 2014 POKER MARKET SHARE BY PLATFORM MARKET SIZE GGR Ultimate 3% Others Borgata-Party powered brands Borgata -Party 888 powered brands powered brands 44% 53% Tropicana 888 powered brands Source: Pokerscout, Mar 2014 (23 days in Mar) Source: DGE release & 888 Internal in
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Slide 48: USA Mobile Core Sport Regulated
USA MOBILE CORE SPORT REGULATED
Slide 49: Holdings
f° ° 2999 od HOLDINGS
Slide 50: Brian Mattingley, CEO | Summary
BRIAN MATTINGLEY, CEO | SUMMARY
Slide 51: Summary
SUMMARY Exceptional year Loyal and committed staff Operationally geared Strong current trading Promising US opportunities 51