Entain PLC · LSE:ENT
Entain — Ladbrokes — H1 2015 Earnings Presentation
29 slides from Entain's earnings presentation, Aug 11, 2015
Slide 1: Interim Results Half year ended 30 June 2015
INTERIM RESULTS Half year ended 30 June 2015 11 August 2015
Slide 2: Disclaimer
Disclaimer Certain statements included or incorporated by reference within this presentation may constitute "forward looking statements" in respect of the operations, performance, prospects and/or financial condition of Ladbrokes plc (the “Company”). Generally, words such as “may”, “could”, “will”,
Slide 3: Introduction
Introduction Jim Mullen, Chief Executive
Slide 4: Organic plan under way to address key challenges
Organic plan under way to address key challenges Long-term focus with specific KPIs for FY17 UK Retail: increase net revenue(1) and EBIT(2) per shop on FY14 Ladbrokes.com: grow actives to at least 1.3m Australia: at least double NGR on FY14 Digital: target a 30% contribution Steps taken
Slide 5: Financial Overview
Financial Overview Ian Bull, CFO
Slide 6: Group Financial Performance Summary
Group Financial Performance Summary £m 15H1 14H1 Variance (1) Net revenue 585.4 577.8 +1.3% Net revenue growth: +4.2% ex. World Cup 2014 and High Rollers (1)(2) Operating profit 38.9 56.8 (31.5)% Operating profit ADJ (1)(2)(3) 38.9 39.1 (0.5)% Operating profit: Broadly flat when adjusted for r
Slide 7: UK Retail – Operating Profit
UK Retail – Operating Profit £57.6m £(8.8)m £3.3m £56.9m £17.6m £48.8m £(12.8)m 14H1 EBIT GPT/MGD Adjusted OTC net revenue Machines net Costs/SIS 15H1 EBIT revenue OTC Net revenue: staking trends improve(2) supported by SSBT (H1 net rev. +98%, staking per terminal per wk +71%) and better Royal A
Slide 8: UK Retail – Machines growth driven by slots
UK Retail – Machines growth driven by slots +16.4% £50+ B2 regulation implementation +12.2% ABB Code implementation/ Clarity roll-out +9.8% +8.7% +6.5% +5.9% +4.9% +4.3% +2.2% +1.5% (1.1%) +0.4% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Machine GW yoy growth Machine GW per shop per week yoy growth New m
Slide 9: Digital – Net Revenue +6.9% driven by Australia
Digital – Net Revenue +6.9% driven by Australia £11.8m £1.5m £(4.1)m £112.2m £105.0m £8.2m £0.2m Sportsbook margin(2) £(8.7)m £3.3m World Cup HVC loss £(5.0)m £5.2m 14H1 NGR Headwinds .com .com Gaming Exchanges Australia Other Grey market 15H1 NGR Sportsbook ex. Regulated exits headwinds Sportsboo
Slide 10: Digital – Operating Profit impacted by POC, margin
Digital – Operating Profit impacted by POC, margin £3.0m £(21.8)m £(11.5)m POC £(8.9)m Grey markets £(2.2)m HVC loss £(5.0)m £6.3m £2.8m £(0.1)m £(2.0)m Sportsbook margin(2) £3.3m £(8.7)m 14H1 EBIT Headwinds Underlying EBIT Sportsbook NGR, Gaming NGR, net .com Operating Australia yoy EBIT Other Regu
Slide 11: Digital – Ladbrokes Australia strong momentum
Digital – Ladbrokes Australia strong momentum Actual Pro forma(2) Challenger strategy enhanced by Betstar 15H1 14H1 Var. Var. acquisition completed in April 2014 AUDm AUDm(1) Staking 652.0 398.4 +64% +40% Continued strong staking growth of 64% (+40% on pro forma basis) Gross win 62.8 32.4 +94% +
Slide 12: European Retail – progressing in line with plans
European Retail – progressing in line with plans 15H1 14H1 Variance Gross Win Belgium (€m) 35.6 29.7 +20% Spain JV(1) (€m) 13.9 10.3 +35% Ireland (£m) 34.1 37.5 (9)% EBIT Belgium (€m) 6.1 5.8 +5% Spain JV(1) (€m) (1.1) (0.9) (22)% Ireland (£m) 2.5 2.5 - European Retail (£m - reported) 6.2 6.6 (6)%
Slide 13: Cashflow and Exceptional Items
Cashflow and Exceptional Items Capex £m 15H1 H1: UK Retail £8.6m; Digital £13.6m; Other £5.2m EBITDA(1) 80.8 FY15 guidance: c.£65-70m Net finance expense (13.5) Exceptionals – H1 £78.9m (80% non cash) includes: Tax (7.8) Retail: impairments £53.2m; UK shop closures £11.4m Capex (27.4) Re
Slide 14: Updated guidance FY15
Updated guidance FY15 Group • Our FY15 EBIT expectations c.£20m (1) lower reflecting impact of investment programme, predominantly in Digital • Depreciation & amortisation c.£80-82m (UK Retail flat; Digital +£3-4m; Europe +£1m) • Corporate costs c.£24-25m • Capex – c.£65-70m increases by £5-10m • Un
Slide 15: Concluding Remarks
Concluding Remarks
Slide 16: Q&A
Q&A
Slide 17: Appendices
Appendices
Slide 18: Group Operating Profit
Group Operating Profit £56.8m £(0.7)m £(14.5)m £(0.4)m £(1.2)m £(1.1)m £38.9m £39.1m 14H1 EBIT UK Retail Digital European Telephone Corp Costs 15H1 EBIT 14H1 EBIT Retail underlying (1) UK Retail: OTC trends improved in Q2, margins slightly below target; machines trends continued to be better than
Slide 19: Group
Group Net revenue and operating profit (ex. High Rollers) Half year ended Gross win Net revenue Operating profit(1) 30 June 2015 2014 Variance 2015 2014 Variance 2015 2014 Variance £m £m £m £m £m £m £m £m £m UK Retail 416.1 413.8 +2.3 410.5 405.7 +4.8 56.9 57.6 (0.7) Digital 145.1 141.0 +4.1 112.2 1
Slide 20: UK Retail – OTC trends improved in Q2
UK Retail – OTC trends improved in Q2 Total Net Revenue Per Shop Trends(1) (2) Inc. World Cup Total net revenue strong in 15H1 Supported by Gaming machines SSBT net revenue +98%, staking per terminal per week +71% Effective estate optimisation OTC gross win margin OTC Gross Win Margin Trends
Slide 21: UK Retail – Costs trends in line with guidance
UK Retail – Costs trends in line with guidance Total lfl(1) £m 15H1 14H1 Variance Variance Staff 102.4 101.3 +1.1% +3.9% Property 56.8 56.5 +0.5% +3.5% Content 45.9 48.1 (4.6)% (1.9)% Depreciation 18.7 19.8 (5.6)% (4.1)% Other 51.2 51.0 +0.4% +1.6% Operating Costs 275.0 276.7 (0.6)% +1.8% Overall
Slide 22: UK Retail KPIs
UK Retail KPIs Half year ended 30 June 2015 2014 Variance OTC Gross win margin 16.0% 16.4% (0.4)pps Like for like OTC amts staked increase/(decline) (3.6)% 2.9% (6.5)pps Like for like OTC net revenue (decline) (5.0)% (4.8)% (0.2)pps Like for like total costs (1) increase 1.8% 2.6% (0.8)pps Like for
Slide 23: UK Retail P&L
UK Retail P&L (ex. exceptional items) 2015 2014 Variance Half year ended 30 June £m £m OTC gross win 185.4 200.5 (7.5)% Machines gross win 230.7 213.3 +8.2% Total gross win 416.1 413.8 +0.6% OTC net revenue 183.5 196.3 (6.5)% Machines net revenue 227.0 209.4 +8.4% Total net revenue 410.5 405.7 +1.2%
Slide 24: UK Retail Gross win adjustments
UK Retail Gross win adjustments Half year ended 30 June 2015 2014 OTC Machines Total OTC Machines Total Variance £m £m £m £m £m £m Gross win 185.4 230.7 416.1 200.5 213.3 413.8 +0.6% Freebets (1.9) (3.7) (5.6) (4.2) (3.9) (8.1) +30.9% Net revenue 183.5 227.0 410.5 196.3 209.4 405.7 +1.2% 24
Slide 25: Digital – Ladbrokes.com & Exchanges
Digital – Ladbrokes.com & Exchanges P&L (ex. exceptional items) Half year ended 30 June 2015 % of net 2014 % of net Variance £m revenue £m revenue Net revenue 84.6 90.7 (6.7)% Betting tax (0.4) 0.5 (0.2) 0.2 (100.0)% POC tax (12.6) 14.9 - - - Levy and licenses (0.4) 0.5 (0.5) 0.5 +20.0% Staff costs
Slide 26: Digital - Australia
Digital - Australia P&L (ex. exceptional items) Half year ended 30 June 2015 2014 % of net % of net £m revenue £m revenue Gross win 32.4 17.6 Freebets (4.4) (2.6) GST (2.6) (1.4) Net revenue 25.4 13.6 Levy and licenses (5.2) 20.5 (2.6) 19.1 Staff costs (4.2) 16.5 (2.6) 19.1 Marketing (including affi
Slide 27: Digital KPIs - Ladbrokes.com
Digital KPIs - Ladbrokes.com Half year ended 30 June 2015 2014 Variance Total Digital Unique active players (1) (000s) 739 702 +5.3% Real money sign-ups (2) (000s) 388 375 +3.5% Sportsbook Gross win margin 5.2% 7.9% (2.7)pp Unique active players (1) (000s) 610 596 +2.3% Average monthly active player
Slide 28: UK Retail and Digital Quarterly figures
UK Retail and Digital Quarterly figures Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q2 2015 vs. vs. vs. vs. vs. vs. vs. Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q2 2014 ex. World Cup UK Retail OTC Stakes +8.5% +1.8% (7.9)% (6.8)% (4.8)% (5.6)% (0.3)% OTC GW Margin 16.2% 16.5% 17.0% 15.6%
Slide 29: Ireland
Ireland P&L (ex. exceptional items) Half year ended 30 June 2015 2014 Variance £m £m Gross win 34.1 37.5 (9.1)% Net revenue 33.6 37.0 (9.2)% Betting tax and Machine Gaming Duty (3.8) (4.0) +5.0% Operating costs (27.3) (30.5) +10.5% Operating profit 2.5 2.5 - Constant currency amounts staked increase