Evoke Plc · LSE:EVOK
Evoke — 888 Holdings — Debt Investor Presentation (June 2022)
64 slides from Evoke's debt investor presentation, Jun 23, 2022
Slide 1: Lender Presentation
Lender Presentation June 2022 1
Slide 2: Disclaimer
DISCLAIMER ◎ This presentation (the “Document”) (including any oral presentation, any question and answer and any written or oral material discussed or distributed during or in connection with any presentation meeting) is for the exclusive use of the persons to whom it is addressed and for the sole
Slide 3: Disclaimer
DISCLAIMER ◎ The Company has confirmed that, to the best of the Company’s belief (having made reasonable enquiries), the information contained in this Document has been compiled from generally publicly available information and does not constitute material non-public information (although it may be
Slide 4: Presenters
PRESENTERS CEO CFO CSO Itai Pazner Yariv Dafna Vaughan Lewis 4
Slide 5: Executive Summary
EXECUTIVE SUMMARY Creation of a global leader in online betting and gaming ◎ 888 announced the proposed acquisition of William Hill on 9 September 2021 ◎ 888 is a global leader in online betting and gaming, leveraging proprietary technology to provide a world-class online gaming experience ◎ The Wil
Slide 6: Sources & Uses and Pro Forma Capital Structure
TRANSACTION OVERVIEW Sources & Uses and Pro Forma Capital Structure Sources £m Uses £m GBP Term Loan A (Delayed Draw) 358 Acquisition purchase price 585 Sources & Uses EUR Term Loan A 401 Repayment of WHI debt 1,159 USD Term Loan B, EUR Floating Rate Notes & EUR Senior Secured Notes 1,017 WHI debt-l
Slide 7: Transaction Overview
TRANSACTION OVERVIEW 7
Slide 8: A Powerful Combination
A POWERFUL COMBINATION Transformational acquisition creating a high-growth global leader with significant scale Complementary Brands products and brands Active 2.2 million > 3 million > 5 million customers Revenues £690m £1,366m1 £2,057m (Feb-22 LTM) Adjusted £405m2 EBITDA £109m £238m1 including £54
Slide 9: Strategic Rationale
STRATEGIC RATIONALE Transformational acquisition creating a high-growth global leader with significant scale The Acquisition brings together two highly complementary businesses, combines two of the Pro forma combined industry’s leading brands, and significantly accelerates progress against our strat
Slide 10: 888 Company Overview
888 COMPANY OVERVIEW A leading global online betting and gaming company Business overview Revenue mix by product – 2021 Quarterly revenue evolution ($ millions) ◎ Scalable, secure and proven proprietary B2B technology platform 4% 100% online Betting ◎ Full end-to-end product suite across 13% Casino,
Slide 11: 888 Proprietary Technology
888 PROPRIETARY TECHNOLOGY Innovative infrastructure with scalable and proven in-house technology ◎ Highly scalable and secure proprietary Customer-facing interface: mobile, tablet, and desktop platform underpins competitive advantages ◎ UX / responsiveness / speed / segmentation and personalisation
Slide 12: William Hill Company Overview
WILLIAM HILL COMPANY OVERVIEW Operating across numerous geographies and managed in three segments UK retail UK online International (exc. US) 37% of Group revenue and 37% of 45% of Group revenue and 51% of 18% of revenue and 11% of Group Group EBITDA (excl. corporate costs)3 Group EBITDA (excl. corp
Slide 13: William Hill Retail
WILLIAM HILL RETAIL Attractive omni-channel opportunity in the UK, and key enabler of online growth Optimised to c.1,400 £504m £97m Revenue¹ EBITDA¹ Locations 2 Profitable estate Customer focus Omni-channel Covid impact ◎ Optimised to c.1,400 ◎ Focus on product and ◎ Plus Card seamlessly ◎ Shops clo
Slide 14: 888 Strategic Priorities
888 STRATEGIC PRIORITIES Clear strategic framework around 3 focus areas to deliver long-term, sustainable growth Market focus Sustainable competitive advantages Value enhancing M&A Clear focus on the addressable Invest in core capabilities to reinforce our competitive A structured and systematic gro
Slide 15: Key Credit Highlights
KEY CREDIT HIGHLIGHTS 15
Slide 16: Key Credit Highlights
KEY CREDIT HIGHLIGHTS 1 Growing market with sizeable barriers to entry 2 Diversification and scale 3 Enhanced position in attractive regulated end markets 4 Compelling customer proposition supported by leading brands 5 Attractive financial profile, significant synergies from combination 6 Experience
Slide 17: Growing Market Benefitting from Structural Tailwinds
GROWING MARKET BENEFITTING FROM STRUCTURAL TAILWINDS 1 Sizeable barriers to entry Increasing adoption of local regulations across markets is contributing to raising barriers to entry, while scale is increasingly important as technological complexity and the costs of regulatory compliance grow Global
Slide 18: Large and Growing European and UK Online Gambling Markets
LARGE AND GROWING EUROPEAN AND UK ONLINE GAMBLING MARKETS 1 Underlying structural growth despite regulatory changes EMEA online gambling net revenue (€Bn) UK online market net revenue (£Bn) CAGR Betting Casino and Bingo Poker Total CAGR Betting Casino and Bingo Poker Total (’22-’25) (’22-’25) 70.0 8
Slide 19: UK Case Study: Gambling Resilience During a Downturn
UK CASE STUDY: GAMBLING RESILIENCE DURING A DOWNTURN 1 Strong industry performance in past recessions During the global financial crisis (GFC), UK overall gambling revenues were resilient with only a 3% decline across the worst 12-month period (April 2009 – March 2010) and rebounded strongly growing
Slide 20: Diversified Market Exposure
DIVERSIFIED MARKET EXPOSURE 2 Creation of a regulated market leader Locally regulated and/or taxed 1 vs. non-locally Complementary profiles and significant expertise operating across attractive regulated markets regulated online revenue mix Regulated Non-regulated Denmark 23 Licensed Jurisdictions ◎
Slide 21: Diversified Revenue Mix
DIVERSIFIED REVENUE MIX 2 Complementary geographic profiles with diversified and balanced product offering 1 Enlarged group1 RoW Americas Americas RoW Americas 13% 1% Italy 3% 1% 5% 0% EMEA Italy FY21 (ex. UK, 6% Italy) Geographic Italy UK 16% UK EMEA UK 12% Online Online (ex. UK, Online mix 40% 45%
Slide 22: Scale and Capabilities
SCALE AND CAPABILITIES 2 Another step change in scale with enhanced capabilities to address growth opportunities 888 revenue is ~75% higher than 2019 – ability to support more scale Data-driven investments improving engagement2 $m 980 850 222 Q4 255 542 530 560 230 Q3 521 462 132 138 128 145 216 Q2
Slide 23: UK Licensed Betting Office Market Overview
UK LICENSED BETTING OFFICE (LBO) MARKET OVERVIEW 2 WHI has optimised its retail estate to match the market post regulatory changes and COVID Average weekly revenue per shop by operator (2021A, £ 000’s) WH UK NGR per shop, trading shops only % Market share by revenue NGR per shop (£k), April 2019 Mar
Slide 24: Enhanced Position in Attractive Regulated End Markets
ENHANCED POSITION IN ATTRACTIVE REGULATED END MARKETS 3 Strong positions in core markets, with significant headroom for growth Established and enhanced presence in attractive, growing online markets 1 CAGR Combined market: 2020 Online gambling revenue ($bn) and 5 year CAGR (2015-2020) Position Share
Slide 25: Compelling Customer Proposition Supported by Leading Brands
COMPELLING CUSTOMER PROPOSITION SUPPORTED BY LEADING BRANDS 4 Market leading brand awareness across core markets United Kingdom: Casino Italy: Casino Spain: Casino Position Brand Awareness % Position Brand Awareness % Position Brand Awareness % 1 William Hill casino 58% 1 888 casino 60% 1 888 casino
Slide 26: Enhanced Customer Experience
ENHANCED CUSTOMER EXPERIENCE 4 Leverage best in class product features to enhance customer proposition ◎ AI driven personalisation ◎ Shared ethos to make products as safe ◎ Differentiated product as possible and raise industry standards features ◎ Industry leading Control Centre product ◎ Range of s
Slide 27: Attractive Financial Profile
ATTRACTIVE FINANCIAL PROFILE 5 Enlarged Group historical financials (normalised) EBITDA margin Revenues1 (£m) EBITDA1 (£m) PF synergies of 20%6 888 WH 888 WH Adjusted EBITDA Margins Combined 17% 18% 18% 17% WHI 18% 18% 19% 17% £1,971 £2,116 £2,057 888 16% 18% 17% 16% £1,894 4 £353 £384 £351 5 £330 £
Slide 28: Relevant M&A Experience
RELEVANT M&A EXPERIENCE 6 888 team have done M&A integration and have extracted synergies in the past Itai Pazner Yariv Dafna ❑ Appointed CEO in January 2019 ❑ Appointed as CFO and to the Board on 1 November 2020 ❑ He previously held the role of COO at 888 since October 2017 ❑ Held a number of posit
Slide 29: Sustainability and ESG
SUSTAINABILITY AND ESG 6 “Made for the Future” ESG framework sets a platform for sustainable long-term growth Made to play safely Made together Made greener Preventing harm An inclusive workplace where people can grow Protecting our environment, including net zero through safe gambling and develop c
Slide 30: Financial Performance
FINANCIALPERFORMANCE ——™
Slide 31: Financial Summary
FINANCIAL SUMMARY Pro forma normalised £m $m FY19 FY20 FY21 Feb-22 LTM FY19 FY20 FY21 Feb-22 LTM Revenue Revenue 888 438.8 661.7 712.5 690.4 888 560.3 849.7 980.1 947.6 UK Online 488.3 515.7 643.4 616.4 UK Online 623.5 662.2 885.1 846.3 WHI WHI International Online 250.0 287.1 261.2 245.5 Internatio
Slide 32: Pro Forma EBITDA Bridge
PRO FORMA EBITDA BRIDGE Feb-22 LTM pro forma EBITDA of £405m Feb-22 LTM EBITDA Bridge from 888 to Enlarged Group (£m) Including £85m pre-tax non- capex cost synergies to be achieved by YE 2025 WHI Adjusted EBITDA 51 54 405 46 5 £54m non-capex cost 30 (23) synergies expected 134 by YE 2023 296 300 10
Slide 33: PF Business Generates Significant FCF
PF BUSINESS GENERATES SIGNIFICANT FCF Combined 2021A PF Free Cash Flow1 Rapid deleveraging profile GBP MM 2021A PF EBITDA post IFRS16 383.52 888 EBITDA 119.9 William Hill EBITDA 259.9 IFRS16 impact (39.2) 888 IFRS16 Impact (5.3) William Hill IFRS16 Impact (33.9) EBITDA pre IFRS16 344.32 888 EBITDA 1
Slide 34: Rest of the World Revenue Evolution
888 REST OF THE WORLD REVENUE EVOLUTION Outside of the UK and Netherlands the business is stable and growing Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 (7%) (3%) 5% 2% $149m $139m $135m $141m $144m Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 $m 2021 2020 YoY % $m 2021 2020 YoY % $m 2021 2020 YoY % $m 2021 2020 YoY %
Slide 35: UK Revenue Evolution
888 UK REVENUE EVOLUTION Overall Q1 YoY decline driven by the UK, which was impacted by safer gambling measures Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 (8%) (19%) (3%) 0% £83m £77m £62m £60m £60m Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 £m 2021 2020 YoY % £m 2021 2020 YoY % £m 2021 2020 YoY % £m 2021 2020 YoY
Slide 36: Semi-Annual Revenue Evolution for 888 & William Hill
SEMI-ANNUAL REVENUE EVOLUTION FOR 888 & WILLIAM HILL 888 24% 12% (14%) 34% $471m $528m $452m $379m $283m $224m 2H 2019 1H 2020 2H 2020 1H 2021 2H 2021 1Q 2022 • Revenues impacted by • Record revenues, the implementation of partly boosted by measures relating to Covid trends safer gambling William Hi
Slide 37: Significant Synergies from Combination
SIGNIFICANT SYNERGIES FROM COMBINATION Significant synergy potential to drive immediate value creation and fuel growth ◎ Pre-tax cost synergies of c.£100m1 including c.£15m A broad range of benefits across the whole cost base capex synergies, to be realised by the end of 2025 Summary ◎ Estimated one
Slide 38: Detailed Integration Plan to Achieve Synergies
DETAILED INTEGRATION PLAN TO ACHIEVE SYNERGIES AND OPERATIONAL EFFICIENCY HIGH LEVEL ROADMAP 2022 2023 2024 2025 PRODUCT AND Discovery Initial platform migrations Phased platform migrations TECHNOLOGY and decisions Renegotiations SUPPLIERS across all functions Optimisation of brand MARKETING marketi
Slide 39: Financial Policy
FINANCIAL POLICY Enabling deleveraging through a solid financial policy ▪ £163 million equity placing through an accelerated bookbuild Target Leverage ▪ Cash generative business targets de-leveraging to or below 3x in the medium term ▪ The Board has suspended the payment of dividends until such time
Slide 40: UK Gambling Act Review
UK GAMBLING ACT REVIEW 40
Slide 41: UK Gambling Act Review Process
UK GAMBLING ACT REVIEW PROCESS ◎ A White Paper is expected in Q2 or Q3 2022, ◎ The UK government is in the process of reviewing the 2005 Gambling which will outline potential legislative and Act, which is the key legislation for the industry (established at the Background Timing regulation changes e
Slide 42: UK Slots Are 19% of Enlarged Group Revenue
UK SLOTS ARE 19% OF ENLARGED GROUP REVENUE Combined group Geographic UK UK UK Online Retail & Online Online mix 36% International 41% Retail / 39% RoW RoW Online (by revenues) 64% 59% 61% Betting Betting 41% 13% Slots UK Online Betting Slots 49% Other 46% breakdown gaming 1 Slots 46% 56% Other (by r
Slide 43: Sensitivity of Slots Revenue and EBITDA
SENSITIVITY OF SLOTS (888 + WH) REVENUE AND EBITDA Illustrative analysis1 2022 Q1 2022 Annualised £m 888 WH Combined Total Revenue 166 312 UK Revenue 60 129 UK Gaming Revenue 43 69 UK Slots Revenue 33 59 370 Illustrative (15%) impact on UK Slots revenue Impact on Slots (5) (9) (55) EBITDA drop-throu
Slide 44: UK Online Quarterly Active Customers Spend Analysis
888 UK ONLINE QUARTERLY ACTIVE CUSTOMERS SPEND ANALYSIS Q1 2021 total spend Q1 2022 total spend >£1.5k, 5% >£1.5k, 3% £1-£1.5, 2% £1-£1.5, 2.6% £500-£1000, 5% Winner, 22% £500-£1000, 5% Winner, 22% 89% of players are either winners or spending less than £500 per quarter in both periods 0-£500, 67% 0
Slide 45: UK Online Affordability Measures
UK ONLINE AFFORDABILITY MEASURES ◎ Fixed deposit limits for players Potential White Paper ◎ Fixed bet limits for players Scenarios ◎ Enhanced source of fund / affordability checks ◎ 888 updated its safer gambling framework and technology over 2020/2021 ◎ Limits for players were reduced ◎ Affordabili
Slide 46: UK Advertising Restrictions
UK ADVERTISING RESTRICTIONS ◎ Banning of sponsorship of football clubs Potential White Paper ◎ Ban on TV advertising Scenarios ◎ Limitations on promotions and free bets ◎ Focus on limiting exposure to vulnerable, including the underage ◎ 888 and WH experienced similar advertising restrictions in Ita
Slide 47: 888 and William Hill Interaction with UK Gambling Commission
888 AND WILLIAM HILL INTERACTION WITH UK GAMBLING COMMISSION 888 review, findings, internal changes and fine William Hill current review 1 The UK Gambling Commission (UKGC) reviewed ten customers in October 2020 and 11. William Hill is going through a similar review to the one issued its Preliminary
Slide 48: Syndication Overview
For CS: Please use another photo SYNDICATION OVERVIEW 48
Slide 49: Summary Terms
SUMMARY TERMS USD 1st Lien Term Loan B EUR 1st Lien Floating Rate Notes EUR 1st Lien Fixed Rate Notes Borrowers / Issuers 888 Acquisitions Ltd; 888 Acquisitions LLC 888 Acquisitions Ltd 888 Holdings plc, 888 Acquisitions Limited, 888 Acquisitions LLC, VHL Financing Limited and each other member of t
Slide 50: Simplified Pro Forma Corporate Structure
SIMPLIFIED PRO FORMA CORPORATE STRUCTURE 888 Holdings plc1 New Equity (Gibraltar) VHL Financing Limited Random Logic Limited 888 US Inc.3 888 US Limited3 (Gibraltar) (Israel) (Delaware) (Gibraltar) New Debt EU/ROW EU/ROW EU/ROW EU/ROW Subsidiaries Subsidiaries 888 Acquisitions Limited (Gibraltar) EU
Slide 51: Syndication Timeline
SYNDICATION TIMELINE June-22 M T W T F S S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Date Event 23 June 2022 • Lender Presentation 30 June 2022 • Commitments Due from Lenders 1 July 2022 • M&A Closing 51
Slide 52: Appendix
APPENDIX 52
Slide 53: 888 and WHI's History
888 AND WHI’S HISTORY Significant heritage and experience across both businesses Unlawful Internet Launched in Nevada, Secured US market Acquisition of Gambling Enforcement Acquired Mytopia; Delaware, and New Jersey – access in Colorado, William Hill Act enacted in US; all launched Poker the only op
Slide 54: Key Online Markets Overview
KEY ONLINE MARKETS OVERVIEW Strong positions in some of the most attractive regulated markets UNITED KINGDOM ITALY SPAIN £m Betting Casino and Bingo Poker €m Betting Casino & Bingo Poker €m Betting Casino & bingo Poker 1,205 3,001 2,860 1,143 1,091 7,800 2,669 1,038 7,423 7,575 2,475 2,455 983 7,177
Slide 55: UK Retail Gambling Market
UK RETAIL GAMBLING MARKET Operating in a large and stable retail market provides differentiation UK retail gambling revenue (£Bn) 1 Betting Gaming in LBOs Other gaming CAGR (’22-’25) 6.1 6.1 6.2 6.1 6.0 5.3 3.0 2.9 3.0 3.0 2.9 4.3 4.3 4.3 4.3 0.0% 4.0 2.7 2.4 2.4 2.4 2.4 0.0% 2.1 2.5 1.7 1.7 1.8 1.8
Slide 56: Market Focus – The USA
MARKET FOCUS – THE USA Long-term growth opportunity where we can leverage iconic brands to grow profitably Technology Iconic Leading Brand Operational Expertise Market Access Scalable proprietary Integrated content, media and Product leadership; world class Medium term target platform gaming creatin
Slide 57: Made for Future
MADE FOR FUTURE Developing clear ESG framework to set a platform for sustainable long-term growth All underpinned by a robust corporate governance framework 57
Slide 58: Safer Gambling
SAFER GAMBLING 888 is committed to ongoing improvement in making gambling safer Safer gambling is a key pillar We recognise that we must use of 888’s wider ESG framework technology as a force for good 888 has developed two critical technologies that are central to our approach to safer gambling: ◎ O
Slide 59: 888 UK Revenue Evolution
888 UK REVENUE EVOLUTION £81m £83m £77m £68m £65m £62m £60m £60m £48m £46m £42m £34m £36m Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 1 YoY% Yo2Y% QoQ% Commentary • Record revenues, partly boosted by Covid trends Q1 2021 +83% +148% +3% • Prior year period was all pr
Slide 60: How 888 + WHI Plan to Manage Inflation Environment
HOW 888 + WHI PLAN TO MANAGE INFLATION ENVIRONMENT 888 WHI Combined WHI Total FY21 Central Online Online Online Retail Combined The total betting and gaming market has exhibited a historical correlation with nominal GDP and Revenue 712.4 904.6 1,617.0 336.8 - 1,953.8 nominal discretionary income, wi
Slide 61: FY 2021 Results
FY 2021 RESULTS 888 William Hill International US$ millions 2021 2020 YoY £ millions 2021 2020 YoY B2C 941.9 814.3 16% UK Online 643.4 515.7 24.8% Revenue B2B 38.2 35.4 8% International Online 261.2 287.1 (9.0%) Total 980.1 849.7 15% UK Retail 336.8 354.2 (4.9%) Total Revenues 1,241.4 1,157.0 7.3% A
Slide 62: 888 Q1 2022 Results
888 Q1 2022 RESULTS Strong strategic progress setting the platform for future growth Year Over Year ◎ Revenue +1% compared to Q4 2021, driven by average monthly actives1 US$ millions Q1 2022 Q1 2021 YoY growth of 4%, reflecting continued focus on product and content leadership, customer excellence,
Slide 63: Financial Summary
FINANCIAL SUMMARY Reported statutory figures 888 + WHI Figures in £m FY19 FY20 FY21 Feb-22 LTM FY19 FY20 FY21 Feb-22 LTM FY19 FY20 FY21 Feb-22 LTM Revenue 439 662 712 690 1,455 1,157 1,241 1,277 1,894 1,819 1,954 1,967 Cost of sales (144) (223) (249) (244) (365) (68) (363) (368) (508) (292) (612) (6
Slide 64: Glossary
GLOSSARY ▪ “AGC”: Adult Gaming Centres, arcades. ▪ “B2B”: Business to Business, business model type. ▪ “B2C”: Business to Customer, business model type. ▪ “CPA”: Cost per Acquisition, marketing metric measuring the cost of converting new players, typically expressed as marketing costs divided by FTD
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