2017 Full Year Results
9 March 2018
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2017 Full Year Results 9 March 2018 A growing global player 1 - - PowerPoint PPT Presentation
2017 Full Year Results 9 March 2018 A growing global player 1 Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS
9 March 2018
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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NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT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”). This presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "plans", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond GVC’s ability to control or predict. Nothing in this presentation should be construed as a profit forecast. Forward looking statements are not guarantees of future performance and hence may prove to be erroneous. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation (596/2014), the Listing Rules, the Disclosure Guidance and Transparency Rules and the Prospectus Rules), GVC does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. No representation or warranty (express or implied) of any nature is given nor is any responsibility or liability of any kind accepted by GVC or any of its directors,
representation or warranty (express or implied), omissions, errors or misstatements in this presentation, or any other written or oral statement provided. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotions in section 21 of the UK Financial Services and Markets Act 2000. In making this presentation available, GVC makes no recommendation to buy, sell or otherwise deal in shares of GVC or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any of the information contained in this presentation in respect of any such investment activity. Any recipients of this presentation outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction, and are treated as having represented that they are able to receive this presentation without contravention of any law or regulation in the jurisdiction in which they reside or conduct business. In particular, the securities referred to in this presentation have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933. Totals may not sum as rounding and percentages have been calculated on the underlying rather than summarised figures.
Chief Executive
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Contents
Introduction Financial review Divisional review Summary
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+17% to €925.6m (pro forma1 2016: €794.3m ); +17% in constant currency +13% to €1,008m including discontinued (pro forma 2016: €894.6m )
+40% to €239.5m (pro forma 2016: €170.5m) +33% to €274.2m including discontinued (pro forma 2016: €205.7m)
26% vs 21% (pro forma 2016)
€178.7m (2016: €58.9m)
+195% to €0.56 (2016: €0.19) +113% to €0.66 including discontinued (2016: €0.31)
€108.6m (0.4x LTM Clean EBITDA)
€0.175 second interim giving €0.34 for the year (+13% vs 2016)
NGR4 +16% (+18% constant currency)
Ladbrokes Coral & GVC shareholders approve transaction
2017 Key highlights
1Pro forma assumes bwin.party was acquired from 1 January 2016 2 Clean EBITDA: defined as EBITDA before share based payments and exceptional items 3Adjusted PBT is Loss/Profit before tax adjusted for exceptional items, change in the value of assets held for sale, fair value of derivative financial instruments,amortisation of acquired intangibles, dividend income and amortisation of loan fees and early repayment option
4Like for like – excluding acquisitions and disposals made in 20176
Chief Financial Officer
Pro forma abridged income statement
In €m 2017 2016* Change NGR 925.6 794.3 17% NGR (inc discnt’d) 1,008.0 894.6 13% Revenue 896.1 772.9 16% Contribution 454.4 420.1 8% Contribution margin 49% 53% Clean EBITDA 239.5 170.5 40% Clean EBITDA margin 26% 21% Clean EBITDA (inc discnt’d) 274.2 205.7 33%
higher
NGR growth all >10%
NGR vs 21% in 2016)
remain broadly unchanged going forward
26% (21% pro forma 2016)
forma 2016
secured
*Pro forma assumes bwin.party was acquired on 1 January 2016
7 170 240 69 35 11 39 7
100 150 200 250 300
2016 Pro forma Clean EBITDA Growth Expenditure Savings Cost of Sales Savings Marketing Investment Impact of Regulation 2017 Clean EBITDA
€m
Clean EBITDA Bridge
Income statement – statutory
awards
expenditure on tangible assets
product development
instruments (€34.5m)
early repayment option (€7.3m)
8 Year ended 31 December 2017 2016 €m €m NGR 925.6 743.1 NGR (including discontinued) 1,008.0 843.4 Revenue 896.1 723.0 Contribution 454.4 393.6 Contribution margin 49% 57%
Clean EBITDA 239.5 158.3 Clean EBITDA margin 26% 21% Clean EBITDA (including discontinued) 274.2 193.5 Share based payments (17.7) (31.0) Depreciation (15.6) (19.8) Amortisation (excluding acquired intangibles) (14.4) (7.0) Finance income & expense (13.2) (41.8) Share of profit from associate 0.1 0.2 Adjusted profit before tax 178.7 58.9 Amortisation of acquired intangibles (121.0) (109.5) Exceptional items (39.9) (117.8) Other items (43.4) (5.1) Loss before tax (25.6) (173.5) Taxation 1.9 0.3 Loss after tax from continuing operations (23.7) (173.2) (Loss)/profit from discontinued operations (15.7) 34.6 Loss after tax (39.4) (138.6)
Exceptional items
items
costs
9 Year ended 31 December 2017 2016 €m €m M & A costs (7.7) (51.5) Premium listing application costs 0.0 (4.4) Reorganisation costs (23.9) (14.4) Contract termination costs 0.0 (11.7) Accelerated depreciation 0.0 (12.5) Progressive jackpots 0.0 (7.6) Release of contingent consideration 0.0 (8.1) Foreign exchange on deposit (0.3) (16.4) Profit on disposal of joint venture 0.0 11.7 Legal settlements (2.1) 0.0 Other (5.9) (2.9) (39.9) (117.8)
Cashflow – statutory
mainly due to disposal of Kalixa
investment in internally generated assets
with the restructuring of the business post the acquisition
€22.3m
10 Year ended 31 December 2017 2016 €m €m Clean EBITDA (inc discontinued) 274.2 193.5 Capitalised software development (26.0) (19.0) Property, plant and equipment purchases (12.4) (15.8) Interest paid including loan costs (43.3) (47.6) Corporate taxes (14.9) (7.9) Other working capital movements (16.0) (31.9) Free cash flow before exceptional items 161.6 71.3 Exceptional items (39.6) (86.4) Acquisitions net of cash acquired (36.7) (189.4) Proceeds of issued share capital net of costs 47.0 193.8 Proceeds from disposals 30.7 20.9 Interest bearing loan drawdown 550.0 380.0 Loan repayments (636.5) (55.5) Dividends paid (141.0)
1.3 4.8 Net cash generated (63.2) 339.5 Foreign exchange 0.0 (0.7) Cash and cash equivalents at beginning of period 367.0 28.2 Cash and cash equivalents at the end of period 303.8 367.0
Balance sheet
amortisation of bwin.party acquisition
and dividend payments
reflects disposal of assets held for sale (Kalixa sold H1 2017) and movement in derivative financial assets
predominantly due to replacement of €400m Cerberus loan
11 As at 31 December 2017 2016 €m €m Goodwill 1,094.3 1,090.3 Other intangible assets 437.3 519.1 Other non-current assets 22.6 28.3 Total non-current assets 1,554.2 1,637.7 Cash & cash equivalents 303.8 354.8 Trade receivables 115.6 105.2 Other current assets 6.8 98.0 Total current assets 426.2 558.0 Total assets 1,980.4 2,195.7 Trade and other payables (105.7) (93.9) Balances with customers (117.4) (112.0) Progressive prize pools (18.0) (22.8)
Loans and borrowings (0.2) (403.5) Other current liabilities (84.3) (89.3) Total current liabilities (325.6) (721.5) Loans and borrowings (295.2)
(52.2) (65.6) Other non-current liabilities (28.6) (11.3) Total non-current liabilities (376.0) (76.9) Net Assets 1,278.8 1,397.3
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Debt
term loan
was €108.6m, representing leverage of 0.4x (last twelve months Clean EBITDA)
processors (as per term loan covenant), net debt €54.5m
As at 31 December 2017 2016 €m €m Loans due <1 year (0.0) (386.5) Loans due > 1 year (300.0) (0.0) Gross debt (300.0) (386.5) Cash and cash equivalents 303.8 367.0 Short term investments 5.0 5.4 Less client liabilities (117.4) (112.0) Net debt (108.6) (126.1) Cash in transit with payment processors 54.1 60.0 Net debt adjusted for payment processors (54.5) (66.1) Agency Senior secured debt Corporate Comment Fitch Ratings (expected) BB+ BB+ Stable outlook Standard & Poor's BB BB- Positive outlook pending completion of LCL acquisition Moody's Investors Service Ba2 Ba2 Stable outlook
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Guidance
€10-15m
€20-25m
€12-15m
€120m (for 1 year, €102m 2019-21)
Fully secured Restructuring costs €10m
€10m
Appeal filed and payments commenced Board strongly disputes basis of Assessment Strong supportive tax and legal opinion Contingent liability created
Chief Executive
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Sports Brands: Financial overview
to 10.5%
regulatory changes
margin
growth
17%)
37%)
#Pro forma – assumes the acquisition of bwin.party was completed on 1 January 2016Year ended 31 December 2017 €m 2016 (pro forma#) €m Change Sports wagers 3,785.6 3,724.3 2% Sports margin 10.8% 9.4% Sports NGR 331.2 277.9 19% Gaming/other NGR 332.6 275.7 21% NGR 663.8 553.6 20% EU VAT (22.2) (15.0) 48% Revenue 641.6 538.6 19% Contribution 360.3 318.1 13% Contribution margin 54% 57%
0% 2% 4% 6% 8% 10% 12% 14% 20 40 60 80 100 120 140 160 180 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
NGR Rebased to 100
Sports Brands Performance
Sports NGR Gaming NGR Sports Margin
Sports Brands: Progress & outlook
Delivered
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Delivering significant momentum through marketing and enhanced customer proposition
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Sports NGR up19% 2016-17, Gaming NGR +21% 2016-17
What’s next
0% 10% 20% 30% 40% 50% 60% 70% 80% 2017 2016
Mobile % GGR Sports Gaming
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Games Brands: Financial overview
2017
improved profitability
#Pro forma – assumes the acquisition of bwin.party was completed on 1 January 2016Year ended 31 December 2017 €m 2016 (pro forma#) €m Change Sports wagers 69.8 65.2 7% Sports margin 8.3% 7.7% Sports NGR 4.7 4.3 9% Gaming/other NGR 224.0 199.2 12% NGR 228.7 203.5 12% EU VAT (7.3) (6.4) 14% Revenue 221.4 197.1 12% Contribution 77.0 89.0
Contribution margin 34% 44%
Games Brands: Progress and outlook
Reinvigoration of some of the industry’s leading gaming brands
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Delivered
developed titles)
programme
What’s next
25% 42% 52% 42%
0% 10% 20% 30% 40% 50% 60%
FTD's First Deposit Amount Deposits NGR
Y-on-Y partypoker growth
0% 5% 10% 15% 2013 2014 2015 2016 2017
Games Brands Y-on Y-NGR Growth
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Current trading and regulatory update
Strong trading momentum continues
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Ladbrokes Coral Group acquisition update
Process
Enlarged Group
Truly exciting opportunity to create world’s largest sportsbetting group
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Conclusion
Global brands, technology and people driving growth
integrate large scale business while delivering growth
shareholder value
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Pro forma continuing quarterly KPIs
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In €000s Q1-2016 Q2-2016 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Sports Brands Sports wagers 10,694 10,192 9,442 10,381 10,996 10,324 9,917 10,262 Sports margin % 8.1% 9.8% 10.4% 9.4% 9.1% 9.9% 11.0% 13.1% Sports NGR 703 799 807 728 782 827 877 1,140 Gaming NGR / other revenue 714 757 715 826 902 886 868 989 NGR per day 1,417 1,557 1,522 1,554 1,684 1,714 1,745 2,129 Games Brands NGR per day 592 547 531 554 615 627 612 653 B2B and Other Revenue per day 98 96 96 117 112 95 68 88 Group NGR per day 2,107 2,199 2,149 2,225 2,410 2,436 2,424 2,870 Group NGR €m 191.7 200.1 197.7 204.7 216.9 221.6 223.0 264.0
Overview – GVC today
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Financial* Corporate
Technology
Customer
*FY 2017 continuing
Acquisition The purchase of bwin.party digital entertainment plc by the Company B2B Business-to-business B2C Business-to-consumer bwin.party bwin.party digital entertainment plc Clean EBITDA Earnings before interest, taxation, depreciation, amortisation, impairment charges, changes in the fair value of derivative financial instruments, share option charges and exceptional items Clean EBITDA margin Clean EBITDA as a percentage of NGR Free Cashflow Clean EBITDA less: capital expenditure on fixed and intangible assets, net corporate taxes paid, finance lease payments, interest and debt fee payments and net working Capital movements Contribution Total Revenue less betting taxes, payment service provider fees, software royalties, affiliate commissions, revenue share and marketing costs Contribution margin Contribution as a percentage of NGR Constant currency basis Each month in the prior period re-translated at the current periods exchange rate Enlarged Group GVC Holdings plc incorporating Ladbrokes Coral Group IAS International Accounting Standards IFRS International Financial Reporting Standards InterTrader The Group’s financial markets services
Glossary of terms and definitions
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KPIs Key Performance Indicators Net debt Cash and cash equivalents (including amounts recorded as assets in disposal groups classified as held for sale), less customer liabilities less interest bearing loans and borrowings. Net Gaming Revenue (“NGR”) Revenue before deducting VAT Revenue Net Gaming Revenue less VAT (imposed by certain EU jurisdictions on either sports or gaming revenue) Sports Gross Margin Sports wagers less payouts Sports Gross Margin % Sports Gross Margin divided by Sports wagers Sports Net Gaming Revenue (‘Sports NGR’) Sports Gross Margin less free bets and promotional bonuses
Glossary of terms and definitions (cont)
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