Entain Plc · LSE:ENT
Entain — FY2019 Earnings Presentation
45 slides from Entain's earnings presentation, Mar 5, 2020
Slide 1: 2019 Full year results
2019 Full year results 5 March 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Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT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: Introduction
INTRODUCTION Barry Gibson – Chairman
Slide 4: Introduction
Introduction • 2019 was another strong year for GVC • Aiming for best in class corporate governance • Strengthened the Board • Redomiciled to the UK • Listened and acted on remuneration • Safer gambling strategy • GVC has clear differentiators • Market diversity • Strength of our brands • Unique mar
Slide 5: Agenda
agenda Overview Kenneth Alexander Financial Review Rob Wood Integration and Technology Shay Segev US Update Shay Segev Operational Update Kenneth Alexander Summary Kenneth Alexander 5
Slide 6: Overview
Overview Kenneth Alexander – Chief Executive Officer 6
Slide 7: Overview
Overview • Strong operational momentum and financial performance • Group underlying proforma EBITDA1 £678m (pre IFRS 16), -10% YoY but c£50m ahead of original consensus2 • Online continued double digit NGR growth with market share gains in all major territories • UK Retail’s excellent execution of t
Slide 8: Financial review
Financial review Rob Wood – Chief Financial Officer
Slide 9: Financials: Group Income Statement
Financials: Group Income Statement Strong financial performance, results at the top end of previously upgraded guidance Reported1 Proforma2 • Group proforma NGR +2% (+3% cc) Pre Pre • Online NGR +13% (+14% cc) IFRS 16 IFRS 16 • UK Retail NGR -15% (-12% LFL7) Year ended 2019 2019 2018 Change 2019 201
Slide 10: Financials: Proforma Underlying EBITDA Bridge
Financials: Proforma Underlying EBITDA Bridge Strong operational momentum in Online and UK Retail, ahead of expectations • Underlying EBITDA growth excluding regulatory adjustments and TR impact: +14% • £52.0m Online (UK RGD, Italy taxes, Australia POCT) • Online EBITDA growth excluding regulatory i
Slide 11: Online
Online Continued double digit NGR growth with market share gains across all major territories Proforma1 • NGR +13% (+14% cc) Pre • UK +11% IFRS 16 • Germany +15% cc Year ended 2019 2019 2018 Change2 CC3 • Australia +43% cc (+22% adj Neds proforma) 31 December £m £m £m % % • Italy +21% cc Sports wage
Slide 12: Online: key Metrics
Online: key Metrics 2019 2020 Metric Results Tax / Underlying Comments vs Guidance Expectations Reclassification Result In line with double digit guidance, Continued double digit growth in NGR growth +14%1 - +14%1 benefit of Crystalbet/Ned offset by constant currency lapping WC 2018 and Switzerland
Slide 13: UK Retail
UK Retail Excellent execution of triennial review mitigation plans has resulted in better than anticipated performance Proforma1 • Triennial Review (implemented 1 April 2019) Pre • Results better than anticipated IFRS 16 • £15m further benefit now anticipated in 2020 Year ended 2019 2019 2018 Change
Slide 14: European retail
European retail Strong underlying growth in sports and virtual in Italy, offset by virtual disruption in Belgium, incremental taxes and one-off costs Proforma1 • Total NGR +4% (+5% cc) Pre • Strong growth in Italy at +9% cc; flat on a cc basis in Belgium and IFRS 16 ROI Year ended 2019 2019 2018 Cha
Slide 15: Financials: statutory Income Statement
Financials: statutory Income Statement Reported loss after tax of £141m; profit before tax and separately disclosed items of £536m Reported1 Proforma2 • Underlying depreciation and amortisation £166m Pre • Primarily driven by Online segment: impact of IFRS 3, IFRS 16 integration capex and accelerate
Slide 16: Financials: Other separately disclosed items
Financials: Other separately disclosed items One-off cash costs of £162m in line with guidance excluding additional Greek tax settlements Reported P&L1 Cashflow Previous • Tax litigation £12m Cashflow • Release of Greek tax provision of £21m following settlement of Guidance 2012-2014 and filing of 2
Slide 17: Financials: Cashflow
Financials: Cashflow Strong free cashflow generation of £395m (+£95m vs 2018) Reported1 • Underlying working capital £14m outflow Year ended 2019 2018 • Driven by the impact of triennial review on the year end duty creditor 31 December £m £m • Capital expenditure £164m outflow Underlying EBITDA 761.
Slide 18: Financials: net debt
Financials: net debt Flexible debt stack aligned to the Group’s net cashflow by currency • Debt stack Issue • GBP/Euro debt split more aligned to net cash generation following costs/ September refinancing Year ended Par Value Premium Total • Interest cost now reduced to c3.5% of gross debt excluding
Slide 19: 2020 guidance
2020 guidance UK Retail Cashflow • Upgraded guidance on 2020 triennial impact by £15m: • Capex c£160m with an additional c£10m for one-off license costs EBITDA impact (£m) 2019 2020 2021 2022 • One-offs: Original guidance (148) (165) (153) (145) • Greek tax, final instalment of 2010/11 Assessment £7
Slide 20: Integration and technology
Integration and technology Shay Segev – Chief Operating Officer 20
Slide 21: Integration: On track and driving business performance
Integration: On track and driving business performance Integration progressing as planned, substantial benefits kicking in Majority of technology integration completed Wallet migrations to GVC Platform • Major technology migrations to GVC platform successfully completed without negative impact • Gal
Slide 22: Technology: Enabling growth and safer gambling
Technology: Enabling growth and safer gambling Our proprietary technology is key to delivering scale, diversification and safer gambling GREATER SCALE AND GEOGRAPHIC DIVERSIFICATION Core business growth US expansion Bolt-on M&A • Superior capabilities in data / analytics, • Full capabilities and all
Slide 23: US Update
US Update Shay Segev – Chief Operating Officer 23
Slide 24: 2019 Achievements & Progress: a foundation year
2019 Achievements & Progress: a foundation year Good progress in 2019 with focus on establishing infrastructure, building long-term partnerships and launching full GVC technology platform 2019 achievements: NJ Digital Sports and Gaming - Weekly ($m) 7.0 2.5 • ROAR team established bringing together
Slide 25: Foundations of a leading US operator
Foundations of a leading us operator Very strong strategic enablers to deliver a leading US position Key strategic enablers Current status • Access secured via MGM at a lower cost vs market • Access to 19 markets secured to date • Additional access secured via other partners Market Access • Propriet
Slide 26: Market access – growth opportunity
Market access – growth opportunity Access secured to 19 states; expect to be live in 11 states by end of 2020 Market access overview: % of US Sports-betting Market Active / State Population market status Access Imminent • Secured access to 19 states (c50% of US population) New Jersey 2.7% ✓ ✓ with m
Slide 27: Technology
Technology Powerful proprietary technology gives us a unique and sustainable competitive advantage B2B Operators With Betting-led B2B Multi-product B2B Suppliers In-house Technology Suppliers Models & Algorithms ✓ ✓ ✓ ✓ ✓ ✓ ✓ Bet Engine ✓ ✓ ✓ ✓ ✓ ✓ ✓ Trading & Risk Management Tools ✓ ✓ ✓ × × × × Tra
Slide 28: Access to players – Yahoo Sports & Buffalo Wild Wings
Access to players – Yahoo Sports & Buffalo Wild Wings Exclusive partnerships with access to millions of sports fans and players • Exclusive partnership wherein BetMGM powers sports betting across Yahoo • Exclusive, nationwide sports betting assets partnership with BWW, the leading U.S. • Yahoo Sport
Slide 29: Access to players – Retail, Loyalty & Omni-channel
Access to players – Retail, Loyalty & Omni-channel Huge opportunity to leverage MGM’s customer base, retail presence and omni-channel capabilities • MGM operates 9 properties and 45% of all rooms on the Las Vegas strip Example Customer Journey • All MGM retail sportsbooks now migrated to GVC technol
Slide 30: 2020 US guidance
2020 US guidance 2020 is all about expanding our footprint further and capitalising on our strong assets to be a leader in the US Positive momentum from 2019 to accelerate our business in 2020: • New state launches: CO, NM, PA, MI, TN • NV, MI, MS expected to perform strongly through MGM local domin
Slide 31: Operational update
Operational update Kenneth Alexander – Chief Executive Officer 31
Slide 32: Strategic framework
Strategic framework TO BE THE WORLD’S LARGEST AND VISION MOST RESPONSIBLE SPORTS BETTING AND GAMING ENTERTAINMENT COMPANY GREATER SCALE & STRATEGIC LONG TERM IMPERATIVES GEOGRAPHIC + SAFER GAMBLING = SHAREHOLDER VALUE DIVERSIFICATION Proprietary Technology Market leading proprietary technology suppo
Slide 33: Safer gambling and ESG
Safer gambling and ESG Our ambition to be the safest and most trusted gambling operator in the world Responsible Employer • Second year of three-year Diversity and Inclusion plan • Launched multi-cultural workstream • Partnered with Stonewall – LGBT campaign • Introduced employee ‘Well-me’ programme
Slide 34: Safer gambling and ESG
Safer gambling and ESG Decisive action being taken to improve player protection – working together as an industry and with regulators Safer Gambling • Launched ‘Changing for the Bettor’ strategy • Five-year, multi-million pound research project with Harvard Medical School • Roll-out of youth-focused
Slide 35: Regulatory update
Regulatory update Germany, Brazil and The Netherlands heading towards full regulation • Full regulation of betting and gaming expected earliest mid 2021 with restrictions • Key restrictions can be relaxed on grounds of customer affordability Germany • Sports-betting licence process underway • Signif
Slide 36: Geographic diversification
Geographic diversification Highly diversified global operator – 86% Online NGR from top 10 countries Top 10 Countries – Online NGR share Other UK 35% 14% Germany 15% 2% Australia 12% 3% 35% 3% Italy 7% 3% 2019 Online Georgia 3% 3% NGR Brazil 3% 3% The Netherlands 3% 7% Austria 3% Spain 3% 12% 15% Gr
Slide 37: Sustainability of earnings
Sustainability of earnings 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 is …if taxed, then …with online regulated or online market is
Slide 38: Operational update: Online highlights
Operational update: Online highlights Consistent market share gains outperforming the market Top 5 Countries – FY19 Online NGR Estimated Operational Highlights Online FY19 NGR share Growth in cc1 Market Position3 • Driven by the re-invigoration of the Ladbrokes brand • Ladbrokes is the most top-of-m
Slide 39: Online growth
Online growth GVC grew the strongest every year for at least the last 3 years YoY Total Online NGR Growth 24% 19% 14% 13% 12% 12% 12% 8% 5% 4% 3% -3% 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017 Competitor 1 Competitor 2 Competitor 3 39 Includes acquisitions on a proforma basis and ex
Slide 40: UK retail
UK retail UK Retail business is very well-placed to take market share as the industry transitions to a post Triennial Review 2019 Key Highlights 2020 Key Focus Areas • SSBTs: Rolled out over 4,000 new Infinity Betstation cabinets in the Triennial Review UK and 800 Storm cabinets in Ireland – now rea
Slide 41: Summary
Summary • Continue to lead the way on safer gambling • Strong performance in 2019, ahead of initial expectations • Good momentum in Retail and Online, out-growing all our key markets • Diversified operations underpinned by our market leading technology • Positioned strongly to exploit US opportunity
Slide 42: Q&A
GVC | iictaiitetr Q&A
Slide 43: Appendix
Appendix 43
Slide 44: Technology: Sustainable competitive advantage
Technology: Sustainable competitive advantage Powerful proprietary technology means we are in control of our destiny OMNI-CHANNEL DEVICES Sustainable Competitive Advantage • Fully integrated proprietary tech platform • Full product suite API SERVICES • Integrated retail and omni-channel solution 2 W
Slide 45: Product development: Best in class customer experience
Product development: Best in class customer experience Global platform provides unique ability to build leading products and ‘develop once, deploy multiple times’ SPORTS CASINO POKER BINGO • New responsive/adaptive sports • Playtech integration generating • partypoker.it to launch in March • New cli