Slide 1: Full year results 2017
Full year results 2017 22 February 2018
Slide 2: Agenda
AGENDA Gaming division, Highlights Financial review TradeTech Group strategy and outlook Alan Jackson Andrew Smith Ron Hoffman Mor Weizer Chairman Chief Financial Officer TradeTech Group CEO Group CEO Full year results 2017 2
Slide 3: A Position of Strength
A POSITION OF STRENGTH F U R T H E R S T R AT E G I C P R O G R E S S P R O V I D E S P L AT F O R M F O R G R O W T H Good growth despite significant headwinds with recent M&A integrated and performing well Quality of earnings continues to improve with 54% of revenues from regulated markets P
Slide 4: Agenda
AGENDA Gaming division, Highlights Financial review TradeTech Group strategy and outlook Alan Jackson Andrew Smith Ron Hoffman Mor Weizer Chairman Chief Financial Officer TradeTech Group CEO Group CEO Full year results 2017 4
Slide 5: Results Summary
RESULTS SUMMARY GOOD GROWTH ACROSS ALL KEY LINE ITEMS 900 750 807.1 2016 2017 € Millions 708.6 600 450 300 302.2 322.1 150 202.9 231.4 0 Total revenue Adj. EBITDA Adj. Net Profit +14% +7% +14% Full year results 2017 5
Slide 6: Results Summary at Constant Currency
RESULTS SUMMARY AT CONSTANT CURRENCY M AT E R I A L C O N T R I B U T I O N F R O M A C Q U S I T I O N S 900 750 837.3 2016 2017 708.6 € Millions 600 450 300 336.2 302.2 267.2 150 247.6 0 Total revenue Adj. EBITDA Adj. Net Profit Incl. acquisitions +18% +11% +8% Excl. acquisitions +5% +0% +1% Full
Slide 7: 2017 Headwinds
2017 HEADWINDS €60M OF EBITDA HEADWINDS IN 2017 Currency Asia Mobenga Poker Strategy HEADWINDS Marvel Sun Bingo One-off contract terms Full year results 2017 7
Slide 8: Changes to Disclosure
CHANGES TO DISCLOSURE I M P R O V E D D I S C L O S U R E T O A S S I S T A N A LY S I S Changes made to assist with analysis, specifically the businesses with different margin profiles White-label / B2C / Casual revenues stripped out and now have own revenue line separate cost lines all u
Slide 9: New Disclosure
NEW DISCLOSURE I M P R O V E D D I S C L O S U R E T O A S S I S T A N A LY S I S 700 Revenue 600 651.9 Adjusted EBITDA 500 € Millions 400 300 321.7 200 100 27.0 70.3 (26.6) 84.9 0 (100) B2B Gaming B2C Gaming TradeTech Margin 49% -38% 32% Full year results 2017 9
Slide 10: Gaming Performance by Vertical
GAMING PERFORMANCE BY VERTICAL B 2 C G A M I N G R E P O R T E D A S A S E PA R AT E L I N E I T E M Old presentation New presentation Diff’ 2016 2017 % 2016 2017 % ‘16 €m ‘17 €m Casino 374.1 413.3 10% 371.7 411.3 11% -2.4 -2.0 Services 151.6 131.6 -13% 115.9 94.3 -19% -35.7 -37.3 Sport 58.4 88.5 52
Slide 11: Gaming Performance excl. Acquisitions
GAMING PERFORMANCE EXC. ACQUISITIONS U N D E R LY I N G G R O W T H I M PA C T E D B Y S I G N I F I C A N T H E A D W I N D S Old presentation New presentation Diff’ 2016 2017 % 2016 2017 % ‘16 €m ‘17 €m Casino 369.4 396.6 7% 367.0 394.6 8% -2.4 -2.0 Services 150.6 130.1 -14% 115.0 92.8 -19% -35.7
Slide 12: Costs
COSTS U N D E R LY I N G C O S T S B R O A D LY F L AT Including Acquisitions Excluding Acquisitions 2016 2017 Diff % 2016 2017 Diff % R&D 82.3 80.7 -2% 78.3 71.8 -8% Operations 146.7 166.8 14% 134.5 136.5 1% G&A 54.8 65.1 19% 49.9 59.7 20% S&M 12.4 17.6 42% 11.4 11.8 3% Total B2B Gaming 296.2 330.2
Slide 13: Margin Analysis
MARGIN ANALYSIS IN LINE WITH GUIDANCE 2016 2017 Revenue Adj. EBITDA Margin Revenue Adj. EBITDA Margin B2B Gaming 588.3 292.0 50% 651.9 321.7 49% B2B Gaming ex acquisitions 555.1 281.6 51% 564.8 284.9 50% Reported B2C Gaming 54.7 (5.2) -10% 70.3 (26.6) -38% TradeTech 65.6 15.4 24% 84.9 27.0 32% Group
Slide 14: Net Profit and EPS
NET PROFIT AND EPS GOOD GROWTH Adjusted net profit up 14% on reported basis and 8% at constant currency reported net profit impacted by exchange rate differences Growth in adjusted net profit lower than growth in adjusted EBITDA at constant currency increase in tax due BGT as well as changes
Slide 15: Cashflows
CASHFLOWS S T R O N G , G R O W I N G A N D S U S TA I N A B L E C A S H F L O W S Net cash from operations up 22% at €306.7m (2016: €251.4m) Cash conversion in 2017 of 88% (2016: 94%) from adjusted EBITDA (when adjusted for jackpots, security deposits and client equity) Established and sustai
Slide 16: Cash Flow Bridge
CASH FLOW BRIDGE 400 105 413 392 300 € Millions 46 284 200 93 20 100 0 December 2016 Ordinary dividends Acquisitions less net Acquisition of property, Exchange rate Net cash provided by December 2017 Adjusted gross cash* cash acquired plant and equipment, operating activities Adjusted gross cash* in
Slide 17: Balance Sheet
BALANCE SHEET S I G N I F I C A N T S T R E N G T H A N D F L E X I B I L I T Y ; R E S T R U C T U R I N G U N D E R W AY Playtech remains committed to an efficient balance sheet longer term debt to be put in place; update within the coming months constant evaluation of most appropriate alloc
Slide 18: Outlook
OUTLOOK POINTS TO NOTE H1 / H2 split in 2018 skewed by 2017 performance H1 2018 expected to be lower than H1 2017 due to strong H1 2017 performance, specifically in Asia H2 2018 expected to show significant growth over H2 2017 Outlook for Malaysia remains uncertain Although Sun Bingo perfo
Slide 19: Agenda
AGENDA Gaming division, Highlights Financial review TradeTech Group strategy and outlook Alan Jackson Andrew Smith Ron Hoffman Mor Weizer Chairman Chief Financial Officer TradeTech Group CEO Group CEO Full year results 2017 19
Slide 20: TradeTech Group Results
TRADETECH GROUP RESULTS STRONG GROWTH MOMENTUM Actual ($m) Excluding acq ($m) Proforma ($m) 2016 2017 % 2016 2017 % 2016* 2017 % Total revenue 72.2 96.0 33% 70.3 64.5 -8% 100.3 106.3 6% Adjusted EBITDA 16.4 30.4 85% 15.7 18.5 18% 20.7 32.7 58% Margin 23% 32% - 22% 29% - 21% 31% - Significant growt
Slide 21: Markets.com Results
MARKETS.COM RESULTS B2C KPI MOMENTUM CONTINUED B2C Markets.com 2016 2017 % Growth in actives compared to revenue Revenue ($) 45.5 40.5 -11% Active customers (000s) 24.3 34.8 43% First time depositors (000s) 14.0 27.0 93% Strong growth trajectory on FTDs and Actives Q417 revenues significantly im
Slide 22: Markets.com Results
MARKETS.COM RESULTS B2C KPI MOMENTUM CONTINUED SPLIT OF 2017 REVENUES 2017 REVENUE BY CUSTOMER TENURE From New customers (2017 0-6 months, FDs) Over 2 years, 25% 28% 38% 51% from customers trading for more than 1 year 62% 6-12 months, 1-2 years, 24% 23% % FRO M 2 0 1 7 RE V E NUE S Largest revenue
Slide 23: TradeTech Group B2B Results
TRADETECH GROUP B2B RESULTS STRONG GROWTH MOMENTUM Actual ($) Exc acquisitions ($) Proforma ($) 2016 2017 % 2016 2017 % 2016 2017 % B2B revenue ($m) 24.2 55.3 129% 22.5 25.4 13% 52.5 65.6 25% Volume ($bn) 248 1,079 336% 187 230 - 1,059 1,342 27% Revenue per $m volume 98 51 120 110 50 49 Significan
Slide 24: TradeTech Group B2B Results
TRADETECH GROUP B2B RESULTS VOLUME IN $BN BY B2B SEGMENT $700 $600 $113 Turnkey $500 offering $400 Pure Liquidity +11% $300 $387 offering $348 $200 Execution & risk $100 +14% management $110 $125 $- H1 H2 Growth in size of each B2B segment Further strengthened by the Alpha acquisition in Q4-17 F
Slide 25: Cryptos
CRYPTOS E V O LV I N G M A R K E T W I T H S I G N I F I C A N T C H A L L E N G E S Crypto market ‘hype’ in one sided Q4 market Very low volatility other than cryptos in Q4 Move to offering fully No appropriate hedging facilities available hedged futures product Some competitors buy physi
Slide 26: Regulatory Landscape
REGULATORY LANDSCAPE WELL POSITIONED Expected Change in regulation Current status Expected impact on performance Mifid II implementation Fully compliant No impact Leverage limitation Implemented a default cap as per Cysec Expected to impact client behavior rules from beginning of 2017 Negative balan
Slide 27: Investor and Analyst Day 2018
INVESTOR AND ANALYST DAY 2018 INTRODUCTION TO TRADETECH London: May 2018 Teach in on TradeTech Meet the team B2B & B2C teams Invitations to follow Full year results 2017 27
Slide 28: Agenda
AGENDA Gaming division, Highlights Financial review TradeTech Group strategy and outlook Alan Jackson Andrew Smith Ron Hoffman Mor Weizer Chairman Chief Financial Officer TradeTech Group Group CEO Full year results 2017 28
Slide 29: Position of Strength
POSITION OF STRENGTH S T R AT E G I C A L LY P O S I T I O N E D O P E R AT I O N A L LY & F I N A N C I A L LY Strength of ‘core’ model 18% Group revenue growth at CC Acquisitions contributing well Strategic position of Playtech ONE Sports & Live already winning market share Meaningful prog
Slide 30: Update on Recent Events
UPDATE ON RECENT EVENTS ASIA & SUN BINGO China Risk based approach Long term view Malaysia Monitoring developments Improving future regulatory environment Sun Bingo Remains challenging but improvement Negotiations ongoing Full year results 2017 30
Slide 31: Regulation
REGULATION CONTINUES TO SHAPE NEW & EXISTING MARKETS Europe UK Italy, Spain, Portugal key markets CMA, ASA, UKGC, FOBT New markets 2019 BetBuddy & Responsible Gambling Latin America US Mexico, Columbia Casino position unchanged Positioned for Brazil Well positioned for Sports IF regu
Slide 32: An Ever Changing Industry
AN EVER CHANGING INDUSTRY I N D U S T R Y C O N S O L I D AT I O N Consolidation not a new thing Playtech more than a platform Tier 1 partner of choice Commitment to realise synergies All about data Playtech scale & stability Omni-channel integrated products USPs – Brands, jackpots & liq
Slide 33: Playtech's Strategy Remains Unchanged
PLAYTECH’S STRATEGY REMAINS UNCHANGED T H E O N LY I N T E G R AT E D O M N I - C H A N N E L O F F E R I N G ONLINE RETAIL (Native apps, desktop, tablet, mobile) (SSBTs, IGC, ECM, VideoBet & OTC) SPORTS CASINO LIVE BINGO POKER VIRTUALS LOTTERY IMS PLATFORM BI & Game Advisory KYC & AML Campaign Mana
Slide 34: Playtech's Strategy Remains Unchanged
PLAYTECH’S STRATEGY REMAINS UNCHANGED T H E O N LY I N T E G R AT E D O M N I - C H A N N E L O F F E R I N G SPORTS CASINO LIVE Full year results 2017 34
Slide 35: Playtech BGT Sports
PLAYTECH BGT SPORTS OMNI-CHANNEL SPORTS: DISRUPTING THE INDUSTRY Geographical Expansion SSBT performance UK IRE Latin America – Caliente, Codere, Sportium Europe - UK, Austria, Germany, Spain, Czech Rep & Italy OPAP roll out on schedule Overall gross win margin 24% 24% Pre-match margin 28% 27%
Slide 36: Casino
CASINO M A I N TA I N I N G T H E L E A D Organic growth of ‘core’ regulated markets UK, Italy, Spain, Czech Rep & Bulgaria Casino Barcelona, SAS Authentic Gaming February 2018 New Casino platform Content & platform ‘de-coupled’ Justice League seamless launch Content & Studios 8 content
Slide 37: Live Casino
LIVE CASINO N E W S T AT E - O F - T H E - A R T F A C I L I T Y I N R I G A Tier 1 migration to new infrastructure Renewed long-term Live agreements & increase in no. of tables New dedicated Betfred tables New client wins with more to come… Full year results 2017 37
Slide 38: Playtech's Strategy Remains Unchanged
PLAYTECH’S STRATEGY REMAINS UNCHANGED T H E O N LY I N T E G R AT E D O M N I - C H A N N E L O F F E R I N G IMS PLATFORM BI & Game Advisory KYC & AML Campaign Manager Engagement Platform Responsible Gambling Bonusing Suite Payments Full year results 2017 38
Slide 39: Extending the Playtech Platform
EXTENDING THE PLAYTECH PLATFORM E N S U R I N G P L AY T E C H I S T H E A R C H I T E C T U R E O F T H E I N D U S T R Y Compliance & Responsible Gambling BetBuddy, KYC, AML IMS functionality Campaign manager use more than doubled in H2 2017 Golden-chip, free spins, bonusing Game adviser G
Slide 40: Playtech's Strategy Remains Unchanged
PLAYTECH’S STRATEGY REMAINS UNCHANGED T H E O N LY I N T E G R AT E D O M N I - C H A N N E L O F F E R I N G ONLINE RETAIL (Native apps, desktop, tablet, mobile) (SSBTs, IGC, ECM, VideoBet & OTC) Full year results 2017 40
Slide 41: Retail & GPAS
RETAIL & GPAS S T R AT E G I C A D VA N T A G E I N R E T A I L Reinventing retail content technology Best performing online games not on retail Technology barriers and high conversion costs Old retail technology means retail blocked for HTML5 developers GPAS allows true omni-channel developme
Slide 42: Outlook
OUTLOOK A POSITION OF STRENGTH Current trading & outlook for 2018 Mid single digit growth outside of Asia Normalised growth in China; assuming no change in Malaysia Confident of good growth in 2018 with continued improvement in quality of earnings Pipeline for 2018 Pipeline of Tier ONE & Gov
Slide 43: Appendices: Old disclosure
Appendices Old disclosure Full year 2017
Slide 44: Performance by Vertical
PERFORMANCE BY VERTICAL REPORTED Including Acquisitions Excluding Acquisitions 2016 2017 Diff % 2016 2017 Diff % Casino 374.1 413.3 10% 369.4 396.6 7% Services 151.6 131.6 -13% 150.6 130.1 -14% Sport 58.4 88.5 52% 33.4 29.4 -12% Bingo 19.8 26.6 34% 17.8 16.1 -10% Poker 9.1 9.5 4% 9.1 9.5 4% Other 30
Slide 45: Performance by Vertical at Constant Currency
PERFORMANCE BY VERTICAL AT C O N S T A N T C U R R E N C Y Including Acquisitions Excluding Acquisitions 2016 2017 Diff % 2016 2017 Diff % Casino 374.1 431.0 15% 369.4 413.0 12% Services 151.6 136.7 -10% 150.6 135.3 -10% Sport 58.4 90.9 56% 33.4 30.2 -10% Bingo 19.8 28.4 43% 17.8 17.1 -4% Poker 9.1
Slide 46: Cost Analysis
COST ANALYSIS INCLUDING ACQUISITIONS €m 2016 2017 Change Adj. operating costs 406.3 485.0 19% Revenue-driven costs 53.5 99.8 Adj. operational costs excl. revenue-driven costs 352.8 385.2 Employee-related costs 190.0 197.9 4% Cost of services 49.6 59.1 19% Operational marketing costs 40.2 42.7 6% Adm
Slide 47: Further appendices
Further appendices Full year 2017
Slide 48: Gaming Mobile Penetration
GAMING MOBILE PENETRATION G A P B E T W E E N U K M O B I L E P E N E T R AT I O N & R O W C L O S I N G 60 56% 56% 54% 53% 50 44% 46% 44% 41% 40% 39% 38% 40 36% 33% 29% 30% 30 23% 20% 18% 20 15% 16% 11% 10 8% 4% 4% 0 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 Group Group ex UK
Slide 49: Gaming Mobile Penetration
GAMING MOBILE PENETRATION INCREASE FROM 32% IN 2016 TO 44% OF SOFTWARE REVENUES IN 2017 PRODUCT VERTICAL 2016 (€M) 2017 (€M) GROWTH % Casino 101.9 169.5 66% Sports 23.7 20.8 -12% Bingo 4.6 5.6 22% Poker 0.8 1.2 50% Total 131.0 197.1 50% Full year results 2017 49
Slide 50: Gaming Customer Concentration
GAMING CUSTOMER CONCENTRATION M A R G I N A L I N C R E A S E D U E T O U K C O N S O L I D AT I O N Licensees 2015 2016 2017 Top 5 42% 36% 37% Top 10 62% 54% 55% Top 15 73% 66% 67% Full year results 2017 50
Slide 51: Thank You
Thank You Full year 2017