Slide 1: Results for the six month ended 30 June 2018
RESULTS FOR THE SIX MONTH ENDED 30 JUNE 2018 1
Slide 2: Agenda
AGENDA Itai Frieberger | Overview Aviad Kobrine | Financial Review Itai Pazner | Operational Review Itai Frieberger | Summary Q&A 2
Slide 3: Itai Frieberger, CEO | Overview
ITAI FRIEBERGER, CEO | OVERVIEW 3
Slide 4: Planning for the long term
PLANNING FOR THE LONG TERM ◎ Record EBITDA despite headwinds ◎ Diversification strategy continues, reducing dependency on any single market ◎ Future European regulations present opportunities ◎ The US ◎ Product innovation and technology advantage ◎ Well positioned for future opportunities 4
Slide 5: Aviad Kobrine, CFO | Financial Review
AVIAD KOBRINE, CFO | FINANCIAL REVIEW 5
Slide 6: H1 2018 Highlights
H1 2018 HIGHLIGHTS ◎ Revenue up 1% to $273m, up 5% reported ◎ Half yearly CAGR of 10% since 2009 ◎ Regulated and taxed markets comprise 70% of revenue ◎ Revenue from regulated markets (ex. UK) increased 30% ◎ Casino and Sport continue to drive growth, with revenue growth (ex. UK) at 24% and 34% resp
Slide 7: Profit and Loss Account
1 PROFIT AND LOSS ACCOUNT $m H1 2018 H1 2017 % change Revenue 283.9 270.1 5% VAT accrual release2 10.7 0.0 Revenue (excluding VAT accrual release) 273.2 270.1 1% Operating expenses3 70.4 68.9 Gaming duties 37.8 37.4 Research and development expenses 16.6 17.2 Selling and marketing expenses 82.7 85.4
Slide 8: Group Revenue
GROUP REVENUE Underlying revenue up 1% to $273m (H1 2017: $270m). Reported revenue up 5% to $284m Growth drivers remain Sport, Casino and continental European regulated markets Half yearly CAGR since H1 2009 at 10% Revenue H1 2018 vs. H1 2017 $US millions H1 2018 H1 2017 ◎ Results reflect opti
Slide 9: Our Engine – Like for Like Comparison
OUR ENGINE – LIKE FOR LIKE COMPARISON ◎ Revenue from undisrupted markets* up 18% ◎ Despite the impact of the UK and disrupted markets Group revenue increased by 1% ◎ Customer acquisition in undisrupted markets increased 9% Group Revenue and New Acquisition – Like for like Comparison Revenue Acquisit
Slide 10: Geographical Segmentation
GEOGRAPHICAL SEGMENTATION ◎ EMEA (ex. UK) at 56% of revenue driven by selected European markets, including Spain, already 12% of revenue (H1 2017: 10%) ◎ Regulated and taxed markets represented 70% of revenue ◎ UK share reduced to 32% as a result of diversification strategy (including re-deployment
Slide 11: Revenue B2C
REVENUE B2C ◎ Underlying Revenue up 2% to $247m (H1 2017: $243m). Reported revenue increased 6% to $257m ◎ Results reflect growth of 13% outside the UK, and an increase of 18% in undisrupted markets* - driven by Casino & Sport ◎ Half yearly CAGR of 12% since H1 2009 Revenue B2C H1 2018 vs. H1 2017 2
Slide 12: Revenue Casino B2C
REVENUE CASINO B2C ◎ Underlying Revenue up 10% to $161m (H1 2017: $147m). Reported revenue increased 17% to $171m ◎ B2C Casino revenue up 24% ex. UK and up 30% in undisrupted markets* ◎ Launch of Orbit, 888’s new cutting edge web based Casino front end (late May), with strong KPI’s so far ◎ Casino g
Slide 13: Revenue Sport B2C
REVENUE SPORT B2C ◎ Revenue up 11% to $37m (H1 2017: $34m) and up 34% ex. UK ◎ 42% Half yearly CAGR as of H1 2009 ◎ Strong FIFA World Cup partly offset by several big horse racing wins ◎ New “Front End” under development allowing a differentiated proposition, deployment of AI and additional marketin
Slide 14: Revenue Poker B2C
REVENUE POKER B2C ◎ Revenue from poker product down 28% to $31m (H1 2017: $43m) ◎ This outcome reflects the decision to exit several markets (primarily Australia) during the comparable prior period, competitive poker market as well as the impact of warm summer weather and the FIFA World Cup at the e
Slide 15: Marketing Cost
MARKETING COST ◎ Marketing investment stable in absolute terms, continued marketing efficiencies drive marketing ratio down to 30.3% (H1 2017: 31.6%) ◎ Shift of investment away from UK into higher yield growth areas ◎ 40% increased marketing in continental European regulated markets Marketing Cost H
Slide 16: Cost Structure
COST STRUCTURE ◎ Continued healthy operational gearing with total costs at 80.8% of revenue* (H1 2017: 82.4%) ◎ Lower marketing ratio – a reflection of cost control and optimised markets blend ◎ Similar gaming duties ratio despite an increase in UK POC tax of $4m reflecting the Group’s increased div
Slide 17: Adjusted EBITDA and Margin
ADJUSTED EBITDA AND MARGIN ◎ Improved Adjusted EBITDA and margins, despite additional UK POC tax during H2 2017, estimated at $4m ◎ Adjusted EBITDA up 10% to $52m (H1 2017: $48m) ◎ Adjusted EBITDA margin at 19.2% (H1 2017: 17.6%) Adjusted EBITDA H1 2018 vs. H1 2017 % $m Adjusted EBITDA Adjusted EBIT
Slide 18: Dividend
DIVIDEND ◎ Record Interim dividend as Group’s cash position remains strong and debt free ◎ 68% increase in Interim dividend per share since H1 2012 Dividend Per Share ($c) H1 2012 – H1 2018 4.5 $c 4.0 4.2 4.0 3.5 3.8 3.0 3.5 3.5 2.5 3.0 2.5 2.0 H1 12 H1 13 H1 14 H1 15 H1 16 H1 17 H1 18 18
Slide 19: Balance Sheet
BALANCE SHEET $m 30-Jun-18 30-Jun-17 Non-current assets Goodwill and other Intangible assets 160.2 159.6 Property, plant and equipment 8.4 8.1 Other non-current assets 2.3 2.0 Investments 1.2 1.5 172.1 171.2 Current assets Cash and cash equivalents 143.6 153.0 Trade and other receivables 44.5 41.0 T
Slide 20: Cash Flow
CASH FLOW $m Period Ended 30 June H1 2018 H1 2017 Cash flows from operating activities Profit before income tax 60.1 (17.3) Share benefit charges 5.0 4.1 Depreciation and amortisation 10.1 9.3 Change in current assets and liabilities (56.9) 50.6 Share of associates loss 0.1 0.0 Interest Income (0.3)
Slide 21: Itai Pazner, COO | Operational Review
ITAI PAZNER, COO | OPERATIONAL REVIEW 21
Slide 22: B2C Deposit Trend
B2C DEPOSIT TREND ◎ The 888 platform demonstrates consistent growth in deposits despite various challenges ◎ Regulated markets are key drivers behind this trend ◎ UK offset by double digit growth in continental European regulated markets Deposits Trend 2010 - H1 2018 250% .com Regulated Markets 200%
Slide 23: EU Regulated Markets
EU REGULATED MARKETS Regulation expected January 2019, market estimated at $1,371M* Market estimated at $710M* Regulation expected H2 2019, market estimated at $406M** Market estimated at $800M* Market estimated at $110M** 888poker launched Market estimated at $1,967M* Launch imminent Estimated at $
Slide 24: Deposit Trend in Spain & Italy
DEPOSIT TREND in SPAIN & ITALY ◎ Robust growth continues driven by comprehensive product offering ◎ Poker was launched in Italy in Q1, stronger summer seasonality Deposit Trend 2010- H1 2018 Spain Italy 900% 8000% 800% 7000% 700% 6000% 600% 5000% 500% 4000% 400% 3000% 300% 2000% 200% 1000% 100% 0% 0
Slide 25: UK Market
UK MARKET ◎ Investment in Compliance: Technology, Processes, Culture ◎ Mass Market Strategy ◎ Performance Stabilisation ◎ Future Market Standardisation 25
Slide 26: What's Next in the US
WHAT'S NEXT IN THE US ◎ NJ Full product suite; Casino, Poker and NOW SPORT ◎ Utilising our global platform and front end ◎ New states - selective strategy ◎ Pennsylvania Q1 19 ◎ Well positioned and agile to capture the significant opportunity 26
Slide 27: 888Casino
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Slide 28: New 888Casino Platform "Orbit"
NEW 888CASINO PLATFORM “ORBIT” ORBIT PERFORMANCE ◎ Increased Customer Acquisition ◎ Increased Conversation Rates ◎ Increase in No. of Deposits per Player ◎ Increase in Casino Bets ◎ Increase in Customer Loyalty 28
Slide 29: Poker
POKER ◎ Market conditions, exit from markets and increased competition ◎ Recreational strategy with unique assets ◎ New product enhancements; Poker 8, Progressive knockout, Pik’em ◎ 3 global networks; US, EU, & .COM ◎ Top 3 player in the market 29
Slide 30: Bingo Platform
BINGO PLATFORM ◎ Many optimisation tools – specifically decreasing bonus levels ◎ Reduction of bonus hunters ◎ Good value for new players recruited during 2018 Bingo Platform Optimisations (GBP) Bonus Per Player* Net Cash Per Player* 160% 160% 140% 140% 120% 120% 100% 100% 80% 80% 60% 60% 40% 40% 20
Slide 31: Sport Active Players
SPORT ACTIVE PLAYERS ◎ Healthy, steadily increasing Sport active players ◎ Positive FIFA world cup results ◎ High activity during major UK Horse Racing events such as Cheltenham & Grand National 1250% Actives Trend World Cup Horse Racing 1050% Peaks Euro 2016 850% 650% 450% 250% 50% 1 2 3 4 5 6 7 8
Slide 32: 888Sport
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Slide 33: Itai Frieberger, CEO | Summary
ITAI FRIEBERGER, CEO | SUMMARY 33
Slide 34: Summary
SUMMARY ◎ Record EBITDA in the face of challenges ◎ Strong progress in Casino and Sport ◎ Regulated Continental Europe continues to drive growth ◎ Meaningful product innovation executed and ahead ◎ Exploring further US opportunities ◎ Planning for organic growth and well placed to participate in str
Slide 35: Q&A
Q&A 35