Entain PLC · LSE:ENT
Entain — Ladbrokes Coral Group — FY2016 Earnings Presentation
35 slides from Entain's earnings presentation, Mar 28, 2017
Slide 1: Ladbrokes Coral Group plc 2016 Final Results
Ladbrokes Coral Group plc 2016 Final Results 28 March 2017 Ladbrokes CORAL* EUROBET @ Ladbrokescomau Gatacasino BETDAQ _SPORTIUM LA D B R 6) K E S CO RAL GROUP
Slide 2: Disclaimer
Disclaimer This presentation and the information contained in it is not for release, publication or distribution in, or to persons in, Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, the Republic of South Africa, the United States or in any jurisdiction where to do so would breach any a
Slide 3: Contents
Contents Overview Financial Results Strategy Summary Q&A LADBROKES CORAL GROUP 3
Slide 4: Overview
Overview Jim Mullen CEO Ladbrokes CORAL* EUROBET = @ Ladbrokes.com.qu _GALACASIN io BETDAQ _SPORTIUM LADBROKES CORAL GROUP
Slide 5: 2016 proforma results highlights
• • • • [1] 2016 proforma results include results for both Ladbrokes PLC and the Coral Group for the 10 months to 31 October 2016 and results for Ladbrokes Coral Group plc for the 2 months to 31 December 2016. 2015 proforma results include results for both Ladbrokes PLC and the Coral Group for the 1
Slide 6: Merger Rationale
Merger Rationale Faster online growth Scale ¢ Multi-channel * Cash generation An extensive international portfolio of regulated businesses Significant synergies LADBROKES CORAL GROUP
Slide 7: Scale
Scale Scale helps mitiga ings opportunities Net Revenue (€m, last reported full year) @IcT 4,657.8 LADBROKES CORAL SGE NOvoMmaTiC ADDYPOWER BBcodere &* Tabcorp AMAYA HOLDINGS jackpotjoulrig LADBROKES CORAL Revenues in local currencies converted at average exchange rate over latest reported financial
Slide 8: Operating Review
Operating Review The merger created a leading multi-channel betting and gaming business with strong momentum Merger Completion Both businesses entered the merger + #1 UK Retail operator with 41%" from a position of strength 9 UK Retail Ladbrokes || pur market share P 9 CORAL® || "4S |+ 3,664LB0s * L
Slide 9: Integration: Progress to Date
Integration: Progress to Date Integration progressing well People Process and Systems * Senior management team in place and operating + Significant overlap of suppliers — contract from Day 1 renegotiations are progressing * Majority of organisation structures confirmed * Ongoing alignment of all bac
Slide 10: Regulatory Update
Regulatory Update Triennial Review * Responses submitted to initial DCMS paper in December 2016 * No formal timetable Horse Racing Levy * Government indicated that they are minded to set a rate of 10%, effective April 2017 AML 4" Directive (potential application of AML 3'4 Directive to Retail LBOs)
Slide 11: Financial Results
Financial Results Paul Bowtell CFO Ladbrokes CORAL* EUROBET = @ Ladbrokescomau cAtacasino BETDAQ _SPORTIUM LADBROKES CORAL GROUP "1
Slide 12: Group financial highlights
• • • • • • • • [1] 2016 reported results include results for Ladbrokes PLC for the 10 months to 31 October 2016 and results for Ladbrokes Coral Group plc for the 2 months to 31 December 2016. 2015 reported results include results for Ladbrokes PLC for the 12 months to 31 December 2015. Both 2016 an
Slide 13: Financials: Proforma Operating Profit Bridge
Financials: Proforma Operating Profit Bridge £280m 5 £260m ~ 22 (1.2) sa £240m ~ £220m £200m £180m 249.2 £160m £140m £120m £100m + T T T T FY15 Operating Profit Regulatory Adjustments. UK Retail European Retail Digital Other Corporate Euro 2016 FY16 Operating Profit FY15 Operating Profit Rebased FY1
Slide 14: Financials: UK Retail P&L
Financials: UK Retail P&L Proforma Year ended 31 December OTC amounts staked Machines amounts staked Amounts staked OTC gross win margin OTC gross win Machines gross win Gross win OTC net revenue Machines net revenue Net revenue Cost of sales Gross profit Operating costs EBITDA Depreciation and amor
Slide 15: European Retail results
• • • • • • • • • • [1] Proforma FY15 figures restated using Proforma FY16 actual exchange rates 15
Slide 16: Digital results
• • • • • • • • • • • • • • [1] Proforma FY15 figures restated using Proforma FY16 actual exchange rates 16
Slide 17: Integration: Cost Synergies
Integration: Cost Synergies en Total Synergies em Cumulative Integration Costs £100.0m 140.0 £125.0m 100.0 £90.0m 120.0 80.0 35.0 100.0 34.7 60.0 80.0 60.0 40.0 £35.0m 12.2 55.3 65.0 40.0 20.0 20.0 22.8 2017 2018 2019 2016 2017 Original reported Cost synergies mi Addt'l cost synergies ™Opex = Capex
Slide 18: Financials: Cashflow
Financials: Cashflow Proforma Year ended 31 December Operating profit 264.3 216.8 475 Adjusted for: Depreciation and amortisation 122.5 120.1 24 Share of JV and associates (6.1) (4.0) (2.1) EBITDA 380.7 332.9 47.8 Working capital 30.0 81.7 (51.7) Exceptionals (12.0) (12.7) 0.7 Capital expenditure‘?
Slide 19: Financials: Non-trading items
Financials: Non-trading items Reported: Non-trading items Year ended 31 December Impairment loss Integration costs Settlement of fair value adjustment to contingent consideration Corporate transaction costs Net loss on closure of divested shops Legal and onerous contract provisions Indirect tax sett
Slide 20: Key Stats
Key Stats UK Retail * UK shop number: 3,664 * Average lease length: 3.6 years ¢ Rent costs: £86m ¢ Rates costs: £33m * Total shop staff: over 19,000 of which * under 25:30% * part-time (<30hrs week) : 48% * male: 47%, female: 53% * Net revenue per shop £388k European Retail * Total shop numbers: 3,1
Slide 21: Financials: Current Trading
Financials: Current Trading For the period 1 Jan 2017 to 19 Mar 2017: * Digital net revenue was 20% ahead of the same period last year * Sportsbook net revenue 34% ahead and Gaming net revenue 8% ahead (Sportsbook led brands Gaming net revenue +12%) * UK (Retail & Digital) sports gross win margins c
Slide 22: Financials: FY17 Guidance
Financials: FY17 Guidance * Digital marketing / NGR c24-25% * Capital expenditure: * Underlying: c£105m * Integration: c£36m * Italian licence renewal: c£30m-40m (may fall into 2018) * EPOS 2: c£40m (of which around half may fall into 2018) * Interest: c5.5% * Tax rates * Pre non-trading items ETR c
Slide 23: Strategy
Strategy Jim Mullen CEO “4 2015/16 WINNERS 23 y CELTIC FOOTBALL CLUB ‘ vm Ladbrokes CORAL* EUROBET = @ Ladbrokescomau cAtacasino BETDAQ _SPORTIUM LADBROKES CORAL GROUP 23
Slide 24: Strategy
Strategy Technology Great Customer Experience Marketing Sustainable Product Growth Multi-channel Shareholder Value Underpinned by a passion for sports and a commitment to responsible gambling and health and safety LADBROKES CORAL GROUP International 24
Slide 25: Technology: Overview
Technology: Overview Utilising the best of in-house and 3" party resource Seamless single wallet technology across all channels — real time access to customer data Coral Coral Mobile Desktop Integration Layer == | Being . 7 rd “es upgraded Transition to one IT platform (Account, Trading, Sportsbook)
Slide 26: Technology: EPOS
Technology: EPOS 2 Revolutionising our approach to multi-channel &, |<-------------------------. More effective @ oe , ati use of cameras i identifies throughout shops mobile phone ; ] MAC ° Customer Interaction (Bet / Cash / Offers / Query / Intervention) Improved identification of Retail customers
Slide 27: Marketing
• • • • Optimises marketing mix to drive maximum profit by calculating marketing spend value that delivers breakeven • marginal ROI 27
Slide 28: Product: Sports
Product: Sports Product development improving the user experience Broad product offering in all markets and across all channels Recent examples of sportsbook product development: Player Bets Edit my Acca New product rolled out on SSBTs BetStation RACING 1, Select Bet Type & Player(s) DIEGO costa a n
Slide 29: Product: Gaming
Product: Gaming Differentiated and exclusi Product 7 : Focus on internally developed games Ta | Sa * 20% of online gaming gross win m afl. | * 17% of Retail Machines slots gross win Combined with the best 3 party content * E.g.Playtech, SG, IGT, Blueprint Strong pipeline of new games * 22internally
Slide 30: Deposit, Play, Withdraw In Shop
Deposit, Play, Withdraw In Shop Deposit, Play, Withdraw
Slide 31: Multi-channel
Multi-channel asing our share of a customer’s betting wallet Customer Journey Non Multi-channel Journey Multi-channel Journey Customer bets in shop Customer leaves shop with and wins £50 Customer leaves shop with £50 cash in their pocket £50 in their Ladbrokes or Coral online wallet English - FA Cup
Slide 32: Multi-channel
Multi-channel Extending the average value and life of a customer Mobil * Over 1 million combined sign-ups to date jer c£20 cost of acquisition (colleague incentive) H ‘alue wea . connect Lifetime value around 2x higher y. * Churn rates are c16pp lower than non MC In-shop * 11% 0TC Penetration * 13%
Slide 33: International
• • • • • • • • • • • • • • • [1] Net revenue growth in constant currency: Ladbrokes.au +53%, Eurobet Retail +20% Eurobet.it +30% [2] 2016 proforma results include results for both Ladbrokes PLC and the Coral Group for the 10 months to 31 October 2016 and results for Ladbrokes Coral Group plc for th
Slide 34: Summary
Summary Good momentum in business and confident in opportunities identified * Merger created a business of significant scale * Integration progressing well, operational efficiencies identified * Trading momentum maintained Clear plan established to deliver on the merger opportunity: Technology: Util
Slide 35: Q&A
Q&A Ladbrokes CORAL* EUROBET = @ Ladbrokes.com.qu _GALACASIN © BETDAQ _SPORTIUM LADBROKES CORAL GROUP 35