Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — H1 2006 Earnings Presentation
50 slides from Evoke's earnings presentation, Sep 14, 2006
Slide 1: Results for the six months ended 30 June 2006
83838%n THE WORLD'S NO.1 ONLINE CASINO & POKER ROOM Results for the six months ended 30 June 2006 14 September 2006
Slide 2: Agenda
John Anderson • Financial Highlights • Delivering on our Strategy Aviad Kobrine • Financial Review Gigi Levi • Operating Review John Anderson • Regulation • Summary and Q&A 1
Slide 3: Financial Highlights
• Profit before tax up 88% to $48.0m* (H1 2005: $25.6m) • Net Gaming Revenue up 32% to $163.5 m (H1 2005: $123.7m) • PBT* margin widened to 29.4% (H1 2005: 20.7%) • Operating expenses % of NGR down to 25.6% (H1 2005: 28.0%) • Net cash generated from operations up 109.5% to $56.1m (H1 2005: $26.8m) •
Slide 4: Delivering on our Strategy
Investment • Substantial expansion of sports sponsorships in addition to Middlesbrough the addition of Seville FC, Toulouse FC and World in brand Snooker Championship • Faster growth in NGR outside of the US Geographic • Rapid First Time Depositors growth outside of the US Expansion • Ongoing roll o
Slide 5: Trading in line with management's expectations
! • Recovery in July from World Cup effect in June • Performance during the first 10 weeks of Q3, typically a slow quarter, as anticipated Trading in line with management’s expectations On track to achieving current year-end profit expectations 4
Slide 6: Financial Review
83838%n THE WORLD'S NO.1 ONLINE CASINO & POKER ROOM _ Financial Review
Slide 7: H1 2006 income statement
# H1 2006 H1 2005 % Change $m $m Net Gaming Revenue 163.5 123.7 32% Operating expenses 41.8 34.6 21% Research and development expenses 9.2 4.6 97% Selling and marketing expenses 49.0 51.8 (5)% Administrative expenses* 17.1 7.3 136% Operating profit* 46.4 25.4 83% Finance income 1.6 0.2 745% Profit b
Slide 8: Net Gaming Revenue
$ %& • NGR in H1 2006 up 32% to $163.5m (H1 2005: $123.7m) • Quarterly CAGR of 7.5% from Q1 2004 to Q2 2006 Quarterly NGR Q1 2004- Q2 2006 100 80 60 $m 40 20 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2006 7
Slide 9: Overall expenses as % of NGR
• Overall expenses as % of NGR reduced to 74% since 2003 (2003: 83%) • Largest expense in H1 2006 was marketing, 30.0% of NGR, down from 41.9% in H1 2005 • Operating expense - 25.6% of NGR (H1 2005: 28.0%) Costs as % of NGR Operating Costs as % of NGR 100% 30% 79.5% 74.0% 3.8% 80% 5.9% 0.9% 3.2% 2.4
Slide 10: CPA marketing costs
'( ) • In H1 2006 CPA Marketing costs represent 77% of total marketing cost (H1 2005: 79%) • On average, CPA in H1 2006 was $165* (H1 2005: $200) Marketing cost as % of NGR 50% 0.6% 8.0% 1.1% 5.8% 25% 33.2% 23.0% 0% H1 2005 H1 2006 CPA RevShare Other 9 * Excluding customers recruited on a revenue sh
Slide 11: Customer bonuses as % of NGR
* • Poker bonuses reduced to 10% in H1 2006 from 15% in 2005 • Casino bonuses reduced to 28% in H1 2006 from 33% in 2005 Customer bonuses as % of NGR 33% 40% 28% 30% 15% 20% 10% 10% 0% 2005 H1 2006 casino Poker 10
Slide 12: Profit before tax
# + • Profit before tax in H1 2006 was $48.0m* , (H1 2005: $25.6m) • Profit margin in H1 2006 up to 29.4%* (H1 2005: 20.7%) • Profit before tax* CAGR from H1 2005 to H1 2006 was 37% Profit before tax* Profit before tax* % of NGR $m 35.00% 40 30.00% 30 48.0 29.4% 25.00% 20 25.6 20.00% 20.7% 15.00% 10
Slide 13: Unlevered balance sheet
* 30 June 2006 30 June 2005 $m $m Non-current assets Property, plant and equipment 9.4 7.8 Intangible assets --- 0.4 Deferred tax 0.5 --- 9.9 8.2 Current assets Cash and cash equivalents 116.9 42.1 Trade and other receivables 11.7 23.8 128.6 65.9 Total Assets 138.5 74.1 Equity Share capital 3.1 3.1
Slide 14: Cash flow statement
" H1 2006 H1 2005 $m $m Cash flows from operating activities Profit before tax 44.1 25.6 Share benefit charges 3.9 Profit before tax and SBC 48.0 25.6 Depreciation and Amortization 1.9 1.2 Interest received (1.6) (0.2) Change in current assets and liabilities 9.6 2.8 57.9 29.4 Tax paid (1.8) (2.6) N
Slide 15: Cash flow from operating activities
" , • Cash flow from operating activities grew by 97.4% between the 2 periods to $57.9m (H1 2005: $29.4m) • Cash flow from operating activities as percentage of operating profit* grew to 125% (H1 2005: 115%) Cash flow as a% of operating Cash flow from operating activities profit $m 60 130% 40 125% 1
Slide 16: Operating Review
83838%n THE WORLD'S NO.1 ONLINE CASINO & POKER ROOM | Operating Review
Slide 17: What are we aiming to achieve?
What are we aiming to achieve? We aim to achieve Profitable Growth through the Acquisition and Retention of Valuable Customers by providing our customers a Differentiated, Intentional Customer Experience ", © |
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Slide 20: Member registrations reached 25.4 million
! , • Member registrations have increased consistently and reached 25.4 million by Q2 2006 • Includes 5.3 million Poker registered member accounts and 20.1 million Casino registered member accounts • In 2006, Casino real money new registrations exceeded 370,000 and Poker real money new registrations
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Slide 23: The Customer Experience
The Customer Experience e Customer experience is comprised of many different aspects: e Brand association e Gaming experience e Membership experience e Customer service experience e Deposit experience e Cash-out experience e@ Everything the customer feels in any interaction with the operator is a pa
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Slide 27: 2006 WSOP
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Slide 29: Geographic segmentation of NGR
& , • % of NGR from the USA has reduced from 57% in H1 2004 to 52% in H1 2006 • USA Poker NGR increased 31% and USA Casino NGR increased 19% from H1 2005 Geographic segmentation, NGR H1 2006 % of NGR from US H1 2004 - H1 2006 60% 150 $m 57% 125 55% 100 Non-USA USA $85m 75 48% 52% $69m 50 52% $48m 25
Slide 30: Non-USA NGR up 42%
& , • Non-USA NGR up 42% to $78m (H1 2005: $55m) • USA is still the largest market with NGR of $85m in H1 2006 (H1 2005: $69m) NGR H1 2005 – H1 2006 $m USA Non US H1 2006 Non-USA Breakdown 100 ROW Americas 80 7% 12% 60 24% Europe 35% % UK 40 42 46% 20 H1 2005 H1 2006 29
Slide 31: NGR by product and location
%& + # • Casino NGR increased 12% to $89.6m in H1 2006 (H1 2005: $79.9m), 22% growth in UK • Poker NGR up 68% to $73.9m (H1 2005: $43.8m), 106% growth in UK, and 385% in rest of Europe H1 2006 NGR by Product by Location $ 50,000,000 45,000,000 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 1
Slide 32: UK NGR grew 61%
! 78 & " • UK NGR grew 61% to $37m in H1 2006 (H1 2005: $23m) • CAGR H1 2004 to H1 2006 of 34% • UK results demonstrate the impact of a multi channel marketing approach, template for ROW expansion • UK Poker NGR grew 106% to $21.4m (H1 2005: $10.4m) UK NGR H1 2004 – H1 2006 40 30 $m 37 20 23 10 11 0
Slide 33: Share of non-USA new players
. 6% "# & " • 68% of new players* in Q2 2006 are non-USA players, (Q2 2006: 56%) • Percentage of non-USA new players is rising in both Poker and Casino Percentage of non-USA new players 80% Casino 70% Poker 60% 50% 40% 30% 20% 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2004 2005 2006 32 * New players are tho
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Slide 39: Casino quarterly NGR per active customer
8#;: • Casino quarterly NGR per active customer in Q2 2006 reached $629 • An increase of 36% over Q2 2005 (Q2 2005: $463) Quarterly NGR per active customer Q1 2004 – Q2 2006 700 600 $ 500 400 300 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 38
Slide 40: Poker quarterly NGR per active customer
# ) 8#;: • Poker quarterly NGR per active customer in Q2 2006 reached $167 • An increase of 54% over Q2 2005 (Q2 2005: $109) Quarterly NGR per active customer Q1 2004 – Q2 2006 200 160 $ 120 80 40 Q1 Q2 Q3 Q4 Q1 Q2 2005 2006 39
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Slide 45: Regulation
83838%n THE WORLD'S NO.1 ONLINE CASINO & POKER ROOM | Regulation
Slide 46: US regulation: law, cases, bills, enforcement
67 LAW • Constitutional • Federal • State LEGISLATION / CASES • 18 USC 1084 (Wire Act) • Federal Fifth Circuit (Louisiana – MasterCard) CURRENT BILLS • HR / 4411 (Combination of Leach and Goodlatte) ENFORCEMENT • Jay Cohen – 2001 (Sports Book) • Bet on Sports – 2006 (Sports Book) • Sportingbet – 200
Slide 47: European regulation
61 , 7 LAW • Treaty of Rome (freedom of trade) LEGISLATION / CASES • Gambelli • UK Gaming Act STATE ACTION • Member states take action for self protection (Italy / Sweden / Germany) • EC – more action to enforce principal of free trade COMING • Next 6 months will see opening of opportunities to EU m
Slide 48: Rest of world regulation
' . LAW • Situation mostly a “grey” area • Notable exceptions - China - Korea FUTURE • UK Domino effect • Sin Tax • Worldwide accreditation based on existing licensed jurisdictions 47
Slide 49: Summary: We delivered
• We delivered • Record first half profits • Operational improvement • High dividend as promised • Growth stock – high dividend 48
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