Slide 1: 2023 Interim Results
2023 Interim Results 10 August 2023
Slide 2: Agenda
Agenda Jette Nygaard-Andersen 1H23 Overview CEO Financial Review Rob Wood CFO and Deputy CEO Strategic Update Jette Nygaard-Andersen CEO Jette Nygaard-Andersen Q&A Rob Wood 2
Slide 3: Introduction
Introduction Jette Nygaard-Andersen Chief Executive Officer 3
Slide 4: 1H23 Overview
1H23 Overview Profitable underlying growth Leadership in the US +6% 55% $1.8bn - +16%cc +6%cc Group EBITDA H1 NGR growth EBITDA +ve Group NGR Proforma1 Online $2.0bn NGR Delivered in Q2 (inc BetMGM) NGR ex regulatory +8% 25% Upper end of range On track for H2 headwinds same state expected in FY23 20
Slide 5: Financial Review
Financial Review Rob Wood Chief Financial Officer and Deputy CEO
Slide 6: Key financial highlights
Key financial highlights Group Group Online Group BetMGM Net Gaming Net Gaming Net Gaming Underlying Net Gaming Revenue Revenue Revenue EBITDA Revenue inc 50% BetMGM £2.4bn £1.7bn £499m2,4 $944m +16%cc1,4 +11%cc1,4 +12%cc1 +6% +55% Adjusted Proposed Underlying Leverage Adj. Diluted Interim Free 3.1x
Slide 7: 1H23 EBITDA bridge
1H23 EBITDA bridge +£28.4m YoY (+6%) • Strong underlying business performance with H1 EBITDA1,2 £499m, +6% YoY • Online EBITDA of £416m up £76m YoY before -£45m of regulatory impact3 • Proforma Online EBITDA4 up 8% YoY • Retail £151m up £10m YoY • Corporate movement of -£12m reflects the ongoing inv
Slide 8: 1H23 Online regional performance
1H23 Online regional performance Online Net Gaming Revenue Performance overview2 1H23 NGR2 YoY Actives • NGR (2%) YoY Online (inc BetMGM1) +17% • NGR (2%) YoY • +7% ex regulation UK Australia • Stable share in softer market • Record actives • Actives (3%) Online +12% +23% • Actives +22% (Proforma) +
Slide 9: Structurally higher quality of revenue
Structurally higher quality of revenue Record Group actives Stabilising customer mix supports NGR growth UK Online Actives NGR UK recreational customers2 2023 H1 LTM 11% 8% 6YR CAGR 100% 2023 H1 LTM 95% 8% (8%) 2YR CAGR 90% 80% • Actives and NGR historically closely correlated 70% Online Actives1 •
Slide 10: Cashflow and net debt
Cashflow and net debt Strong underlying free cashflow & committed financing facilities provide flexibility to support our growth strategy As at 30 June Key metrics 2023 2022 EBITDA1 £499m £471m Underlying free cashflow2 £319m £191m (before investment in BetMGM/acquisitions) Net investment in acquisi
Slide 11: Strong track record of capital allocation to value accretive M&A
Strong track record of capital allocation to value accretive M&A c£2.3bn of strategic investment over 5 years Leadership positions Leading adjacency/ +7 +3 in betting and gaming2 capability businesses 1.9x Value accretion1 (c£4.3bn value) Cumulative transaction size & cumulative YR3 value * >£500m T
Slide 12: Recent M&A: Leadership positions with high growth opportunities
Recent M&A Leadership positions with high growth opportunities NEW REGULATED MARKETS ADJACENCIES & CAPABILTIES • 25yr exclusive access to New Zealand sports • Top 5 global sports app (#1 Brazil , #3 LatAm) betting market • c18m active customers; highly engaged audience of NZ • 15%1 market CAGR 2023-
Slide 13: Update to 2023 Guidance
Update to 2023 Guidance Denotes updated since FY guidance Group 2023 Group EBITDA expected range of £1.00bn to £1.05bn1 pre-TAB NZ accounting Online Cashflow • NGR growth low to mid single digit proforma • Underlying capex c£230m plus an additional c£10m license costs • Mid teens Online growth1 (inc
Slide 14: Strategic Update
Strategic Update Jette Nygaard-Andersen Chief Executive Officer 14
Slide 15: Business update
Business update 1 2 3 Delivery of long- Significant U.S. Capital term sustainable opportunity allocation organic growth Driving long term shareholder value creation Delivering long term shareholder value creation 15
Slide 16: Focus on organic growth through recreational customer engagement
1 Focus on organic growth through recreational customer engagement Superior recreational customer Strong underlying business momentum expected engagement driving long-term growth to benefit further from material market growth Technology Product Experience & analytics & offer & audience Customer Indu
Slide 17: Sustainable growth and profitability underpinned by higher quality of earnings
1 Sustainable growth and profitability underpinned by higher quality of earnings 100% Industry Regulated Collaborative Recreational leading player & Regulating relationships customer mix protection revenue with regulators • +23% record actives • 7.5m+ ARCTM interactions • 30+ regulated jurisdictions
Slide 18: Leading profitability through scale, operational focus and platform integration
1 Leading profitability through scale, operational focus and platform integration Efficient cost structure Scalable Top line business growth model Entain Increased Online profitability, to Sustainability / reduced Platform Operational drive EBITDA regulatory leverage margin expansion risk Platform S
Slide 19: Organisational structure to support greater operational leverage and focus
1 Organisational structure to support greater operational leverage and focus Our structure Operations on Entain technology platform Joint Ventures Other international Int’l UK, WE, Ca UK Retail LatAm BetMGM Entain CEE Australia, New Zealand, Italy, Belgium Baltic-Nordics, Netherlands, Georgia % Onli
Slide 20: Positioned to capitalise on the significant U.S. opportunity
2 Positioned to capitalise on the significant U.S. opportunity Established leading operator in a Delivering profitable growth Well positioned to gain market share large and growing market $37bn EBITDA • Full in-house, end-to-end capabilities $944m across product offering +55% YoY positive North Amer
Slide 21: Strategic acquisition of Angstrom Sports enhances U.S. Sports Betting proposition
2 Strategic acquisition of Angstrom Sports significantly enhances U.S. Sports Betting proposition Proprietary next generation U.S. sports modelling, Personal- forecasting and data analytics isation Unique Cost efficient product Sophisticated pricing and forecasting offering Significantly broadens nu
Slide 22: Capital allocation priorities aligned to our strategy
3 Capital allocation priorities aligned to our strategy Investment in: Strategic Organic Entain platform Maintain disciplined approach approach to growth Operational excellence Normalisation of pace of M&A M&A US growth and profitability Balance Strong underlying cash generation Progressiv
Slide 23: Focusing on key priorities to drive shareholder value
Focusing on key priorities to drive shareholder value Deliver long-term Capitalise on Efficient and sustainable significant U.S. effective capital \ organic growth opportunity allocation Driving long term shareholder value creation Sustained, long-term shareholder value creation 23
Slide 24: Appendix
Appendix 24
Slide 25: Group Performance – H1 overview
Group Performance – H1 overview H1 YoY Performance – Net Gaming Revenue 13% Net Gaming Revenue (NGR) YoY 24% 3% Reported CC2 Proforma3 CC2 3% 3% Total Group 1H23 3% Online incl BetMGM1 +19% +16% +8% 4% NGR Entain Group +14% +11% +3% 4% 19% 5% Group Online 8% incl BetMGM1 +21% +17% 11% +1% Online +15
Slide 26: M&A incremental value after 3 full years of ownership
M&A incremental value1 after 3 full years of ownership £500m >£2bn of strategic investment over 5 years £400m 1.9x value accretion (>£4bn of value) £300m Strong portfolio effect: The four lowest performers offset each other, and £200m the remaining seven are significantly accretive £100m £0m -£100m
Slide 27: TAB NZ accounting treatment
TAB NZ accounting treatment • Gross profit share payments to be treated as contingent consideration, not future deductions on EBITDA • As such, a liability for the discounted value of future payments is recorded on acquisition with equivalent intangible assets recognised • Assets recognised on acqui
Slide 28: Financials: Group Income Statement
Financials: Group Income Statement Group NGR +11%cc1 with strong underlying performance in both Online and Retail as well as the benefit from acquisitions more than offsetting continued regulatory headwinds Half Year ended 20234 20224 Change CC1 Group NGR +14% (+11% cc1) 30 June £m £m % % • Online N
Slide 29: Online (Exc US)
Online (Exc US) NGR up +15% (+12%cc1) reflecting strong underlying trading and NGR from acquisitions more than offsetting continued regulatory headwinds Half Year ended 20233 20223 Change CC1 NGR +15% (+12%cc1) reflecting strong underlying trading and NGR from 30 June £m £m % % acquisitions more tha
Slide 30: Retail (Exc US)
Retail (Exc US) Retail NGR up +11%cc1 driven by market leading content on our betting and gaming terminals Half Year ended 20233 20223 Change CC1 Retail performed strongly with NGR +11%cc1 (+8%cc proforma4) 30 June £m £m % % • Machines NGR +4% and sports NGR +17% (+16%cc) Sports wagers 2,164.2 1,917
Slide 31: Financials: Statutory Income Statement
Financials: Statutory Income Statement Strong operating profit, +20% ahead of 2022 Period ended 20231 20221 Change Underlying depreciation and amortization £135m 30 June £m £m % • Includes the impact of underlying depreciation and amortisation in acquired Underlying EBITDA 499.4 471.0 6% businesses
Slide 32: Financials: Other separately disclosed items
Financials: Other separately disclosed items One-off cash costs of £19m primarily due to corporate transaction costs and legal fees associated with the HMRC investigation Profit & Loss Cashflow Restructuring costs (£5m) Period ended 2023 2022 2023 • Ongoing costs associated with the Group’s restruct
Slide 33: Financials: Cashflow
Financials: Cashflow Strong underlying free cashflow generation with closing net debt of £2.59bn and leverage 2.5x (proforma 4 3.1x) Period ended 2023 2022 Underlying working capital inflow of £56m 30 June £m £m • Largely due to an unwind of the prior year outflow as well as short term timing EBITDA
Slide 34: Financials: Net debt
Financials: Net debt Closing leverage of 2.5x (3.1x proforma3) with sufficient liquidity to support the Group’s strategy and obligations Par Issue costs/ Net debt £2,593.9m or 2.5x (3.1x proforma3) Period ended Value Premium Total 30 June £m £m £m Total available cash of c£643m1 Bonds (400.0) (1.4)
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