31 DECEMBER 2016 - Investis Digitalhtml.investis.com/8/888Holdings/pdf/888-2016-full-year...Share...

RESULTS FOR THE YEAR ENDED

31 DECEMBER 2016

ITAI FRIEBERGER | 2016 A YEAR OF OUTSTANDING PROGRESS

AVIAD KOBRINE | FINANCIAL REVIEW

ITAI FRIEBERGER | OPERATIONAL REVIEW & SUMMARY

Q&A

AGENDA

2

Another year of strong revenue growth, up 18% at constant currency

Adjusted EBITDA at constant currency up 24% to $100m

Casino and Sport increases of 26% and 58% YoY at constant currency, respectively

Regulated markets increased by 24% at constant currency, more than double the

growth rate of .com

888 is one of the most diversified and regulated online gaming operators

2016 A YEAR OF OUTSTANDING PROGRESS

3

AVIAD KOBRINE, CFO | FINANCIAL REVIEW

2016 HIGHLIGHTS1

Revenue up 18% at constant currency to $546m

B2C Revenue up 20% at constant currency to $480m

Casino and Sport lead growth with 26% and 58% revenue increases at constant currency respectively

Seven consecutive quarters of like for like revenue growth with a record Q4

Revenue from regulated markets up 24% at constant currency

Regulated Continental European markets revenue increased more than 60%

Regulated markets now represent 63% of group revenue at constant currency (2015: 59%)

Adjusted EBITDA2

up 12% to $90m (2015: $81m), up 24% to $100m at constant currency

Profit before tax up 82% to $59m (2015: $33m) and up 14% when adjusting for exceptional items

Basic EPS at 14.4c (2015: 8.3c), up 74%

Final Dividend of 5.1c per share (2015: 4.0c), 8.9c for the year (2015: 7.5c) plus a one-off 10.5c

(2015: 8.0c), a total of 19.4c (2015: 15.5c) for the year

1 Constant currency as detailed in the financial review section of the 2016 Annual Report

2 As defined in 2016 financial review section of the 2016 Annual Report

.5

PROFIT AND LOSS ACCOUNT1

$m 2016 2015% Change

at Constant

Currency

% Change

Reported

Revenue 520.8 462.1 18% 13%

Operating expenses2 136.1 127.4

Gaming duties3 60.5 50.0

Research and development expenses 34.3 36.8

Selling and marketing expenses 170.2 138.9

% of Revenues 32.7% 30.1%

Administrative expenses4

29.5 28.4

Adjusted EBITDA3,4

90.2 80.6 24% 12%

% of Revenues 17.3% 17.4%

Depreciation and Amortisation 19.0 18.6

Share benefit charges, finance and other 8.1 6.5

Exceptional acquisition costs & retroactive gaming duty 3.9 23.0

Profit Before Tax 59.2 32.5 82%

Taxation 7.7 3.0

Profit After Tax 51.5 29.5 75%

Basic EPS5

14.4 ¢ 8.3 ¢ 74%

1 Totals in this presentation may not sum due to rounding. 2 Excluding depreciation of $8.4m (2015: $8.9m) and amortisation of $10.6m (2015: $9.7m). 3 Excluding exceptional retroactive duties and associated charges of $3.0m (2015: $8.4m)4 Excluding share benefit charges of $6.7m (2015: $4.1 m) 5 As defined in 2016 Annual Report

6

20

120

220

320

420

520

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

5975

123157

217 263

247 262

331 376

401

455 462

521

FX effect

GROUP REVENUE

Revenue 2003 - 2016 ($m)

Revenue up 18% at constant currency to $546m (2015: $462m)

Reported Revenue $521m (2015: $462m)

Growth drivers continue to be Casino, Sport and regulated markets expansion

Consistent growth: 19% long term CAGR at constant currency

$m

546

7

* Excluding discontinued operations until 2006

GROUP REVENUE

Quarterly Revenue at Constant Currency ($m)

Each quarter’s revenue is higher than the previous year at constant currency

Q4 at an all time record

Q1 ($m) Q2 ($m)

50

60

70

80

90

100

110

120

130

140

Q1 15 Q1 16

108

134

50

60

70

80

90

100

110

120

130

140

Q2 15 Q2 16

112

135

Q3 ($m) Q4 ($m)

50

60

70

80

90

100

110

120

130

140

Q3 15 Q3 16

113

136

100

105

110

115

120

125

130

135

140

145

Q4 15 Q4 16

129

142

+25%

+20%

+20%

+10%

8

46%39%

10% 5%

UK Europe

(ex UK)

Americas ROW

53% 52% 50% 45%41% 39% 37%

47%48% 50% 55% 59% 61% 63%

15%

25%

35%

45%

55%

65%

75%

85%

95%

2011 2012 2013 2014 2015 2016 2016 FX adj.

Non-Regulated Regulated

Regulated markets* represent 63% of revenue at constant currency, increasing 24%

Regulated and taxed territories already 72% of revenue at constant currency

Europe (excl. UK) up 29%, now the largest geographical segment at 44%

UK up 16% at constant currency

GEOGRAPHICAL SEGMENTATION

Geographic Segmentation 2015 vs. 2016

2015

2016

*UK, Spain, Italy, USA (non Social), Denmark, Romania and Ireland Sport

43%

44%

9% 4%

UK Europe

(ex UK)

Americas ROW

9

Revenue B2C* 2016 vs. 2015 ($m)

All product lines impacted by adverse currency movements, primarily Sterling

Casino is up 26%, Sport is up 58% and Bingo is up 7% at constant currency

Lower relative impact of currency on Casino due to increased geographical diversity

Poker down 2.7%, despite challenging market and adverse currency – stable once cross sell is reflected

REVENUE B2C BY PRODUCT

$m

0

50

100

150

200

250

300

Casino Poker Bingo Sport EmergingOffering

231

87

44 35 3

291

84

47 55 3

2015 2016

10

* At constant currency

.

20

70

120

170

220

270

320

370

420

470

2010 2011 2012 2013 2014 2015 2016

213

275

321

344

385

399

460

FX Effect

Revenue B2C 2010 – 2016 ($m)

REVENUE B2C

$m

Consistent increases

Revenue up 20% at constant currency to $480m (2015: $399m)

Reported Revenue $460m (2015: $399m)

480

11

Revenue Casino B2C 2010 – 2016 ($m)

REVENUE CASINO B2C

$m

Revenue up 26% to $291m at constant currency, Reported Revenue up 21% to $279m

Driven by strong CRM capabilities – key for success

Healthy player acquisition (up 23%)

Expanded presence and content in regulated territories – a growth driver

20

70

120

170

220

270

2010 2011 2012 2013 2014 2015 2016

117

148

165

190

221

231

279

FX Effect

291

12

Revenue Sport B2C 2010 – 2016 ($m)

Consistent growth, up 49% to $52m (2015: $35m) – 58% increase at constant currency

Capitalising on successful Euro 2016 and substantial step-up in marketing investment

New customer recruitment up 52%

REVENUE SPORT B2C

$m

0

10

20

30

40

50

2010 2011 2012 2013 2014 2015 2016

6 7 7 9

20

35

52

FX Effect55

13

Revenue Poker & Bingo B2C 2016 vs. 2015 ($m)

Poker Revenue down 2.7% to $84m (2015: $87m) despite challenging market and adverse currency

Stable Poker business performance, strong relative liquidity

Bingo Revenue up 7% at constant currency to $47m (2015: $44m)

Bingo actives up 8%

REVENUE POKER & BINGO B2C

0

10

20

30

40

50

60

70

80

90

2015 2016

87 84

14

20

25

30

35

40

45

2015 2016

44 42

FX Effect

Poker Bingo

$m$m47

ACQUISITION Continued traffic optimisation, only profitable acquisition channels pursued

Increases lead by Sport and Casino

B2C First Time Depositors 2014 – 2016

15

* FY 2014 as base

.

.

40%

60%

80%

100%

120%

140%

160%

2014 2015 2016

100%

128%

146%

Supporting strategic investment in Sport, Casino growth and regulated expansion

Sport acquisition up 52% with actives increase 49%

Casino acquisition up 23% with actives increase 27%

Lower marketing cost ratio than H1 2016

MARKETING COST

Marketing Cost 2016 vs. 2015

Marketing Costs Marketing Costs % of Revenue

$m %

-

20

40

60

80

100

120

140

160

180

2015 2016

139

170

0.0%

10.0%

20.0%

30.0%

40.0%

2015 2016

30.1%32.7%

16

0%

20%

40%

60%

80%

2010 2011 2012 2013 2014 2015 2016

37.1% 32.8% 30.2% 28.5% 28.7% 27.6% 26.1%

34.9%30.9% 34.9% 34.9% 29.4% 30.1% 32.7%

8.2%

8.3% 6.8% 6.6%7.4% 6.2% 5.7%

8.3%

9.0% 7.2% 7.7%8.9% 8.0% 6.6%

0.6%2.2% 3.1% 3.4%

3.5% 10.8% 11.6% Gaming duties

R&D

Admin. Expenses

S&M expenses

Operating expenses

COST STRUCTURE

Cost as a % of Total Revenue 2016 vs. 2015 *

* Excluding share benefit charges, depreciation and amortisation, exceptional retroactive gaming duties and exceptional M&A costs

83.2%

Cost Revenue ratio at 83% (2015: 83%)

Increased cost ratio only in growth related components (Marketing and Gaming duties)

Continued trend of lower operational and admin costs

89.1 %

82.2%81.1% 77.9%

82.6% 82.7%

17

25

35

45

55

65

75

85

95

2015 2016

81

90

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

20%

2015 2016

17.4% 17.3%

ADJUSTED EBITDA AND MARGIN Adjusted EBITDA

1up 12% to $90m (2015: $81m), up 24% to $100m at constant currency

Newly introduced gaming duties and Sterling adverse impact

Adjusted EBITDA1

margin at constant currency 18.3% (2015: 17.4%)

Adjusted EBITDA 2016 vs. 2015

Adjusted EBITDA Adjusted EBITDA margin$m %

100

18.3%

1As defined in 2016 Annual Report

18

Total dividend for the year 19.4c (2015: 15.5c)

8.9c per share final dividend for the year (2015: 7.5c)

10.5c per share special dividend for the year (2015: 8.0c)

More than double 2012 dividend

DIVIDEND

Dividend Per Share ($c) 2012 – 2016

$c

19

9.0

14.0 15.015.5

19.4

56%

67%72%

116%

0%

20%

40%

60%

80%

100%

120%

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

2012 2013 2014 2015 2016

Base % change over 2012

BALANCE SHEET

$m 31-Dec-16 31-Dec-15

Non-current assets

Goodwill and other Intangible assets 158.6 157.3

Property, plant and equipment 9.1 11.2

Other non-current assets 1.8 2.0

Investments 1.5 1.6

171.0 172.1

Current assets

Cash and cash equivalents 172.6 178.6

Trade and other receivables 37.0 35.6

Total Assets 380.6 386.3

Equity

Share capital and share premium 6.5 5.5

Retained earnings and reserves 157.1 156.8

Total equity attributable to equity holders 163.6 162.2

Liabilities

Current liabilities

Trade and other payables 139.4 140.0

Customer deposits 75.7 82.4

Non-current liabilities

Deffered tax liabilities1.9 1.7

Total equity and liabilities 380.6 386.3

20

CASH FLOW STATEMENT

$m Year Ended 31 December 2016 2015

Cash flows from operating activities

Profit before income tax 59.2 32.5

Share benefit charges 6.7 4.1

Depreciation and amortisation 19.0 18.6

Change in current assets and liabilities (7.3) 38.4

Other adjustments (0.3) (2.6)

Cash generated from operations 77.3 91.0

Income tax paid (9.2) (6.0)

Net cash generated from operating activities 68.1 85.0

Acquisition of property, plant and equipment (6.3) (4.6)

Internally generated intangible assets (10.6) (6.8)

Acquisition of intangible assets (1.2) (3.0)

Investment 0.0 (1.5)

Other investment activity 0.4 0.3

Net cash used in Investing Activities (17.7) (15.6)

Issue of shares 1.1 0.9

Dividends paid (56.6) (53.5)

Net increase/decrease in cash and cash equivalents (5.2) 16.8

Cash and cash equivalents - beginning of the year 178.6 163.1

Effects of currency translation (0.8) (1.3)

Cash and cash equivalents - end of the year 172.6 178.6

21

ITAI FRIEBERGER, CEO | OPERATIONAL REVIEW

B2C | NEW DEPOSITORS

CASINO | BET

TOTAL | GROUP REVENUE

POKER | GGR

SPORT | BETS

SPAIN | CASINO BET

* Revenue at constant currency

ITALY | FTDs

100%

100%

2016 2015

$454.7M$400.5M

$546.4M*

$462.1M

20142013

170%

150%

135%

100%

JAN 2015 DEC 2015 JUL 2016 DEC 2016

111%109%

104%100%

AUG 2015 MAY 2016 OCT 2016 DEC 2016

140%133%

124%

JAN 2015 FEB 2015 OCT 2016 DEC 2016

147%133%

113%

JAN 2015 AUG 2015 JAN 2016 DEC 2016

285%

195%

144%100%

JAN 2015 DEC 2015 JUL 2016 DEC 2016

184%

163%

139%100%

JAN 2015 NOV 2015 JUN 2016 DEC 2016

23

INDUSTRY IN TRANSITION

24

DELIVERING ON OUR FIVE YEAR PLAN

Establish 888 as a multi-market and multi-product operator

Create and grow a Sport vertical

Drive regulated growth

Invest in our back office/CRM capabilities

Develop a leading mobile proposition

25

MULTI FACET OPERATOR

Multi marketing channel (acquisition and CRM)

Multi line of business (B2C/B)

Multi platform

Multi product

Multi market

26

2015 2016

24 MONTH DELIVERY

Q1 Q2 Q3 Q4

777.COM

888 IRELAND

888.DK

888.RO888SPORT.IT

888SPORT

GERMANY

Q1 Q2 Q3

M&A EFFORT

27

POC READINESS

NEW PREMIUM 888 GAMESDE/NV

FLASH into

HTML5

Q4

888.ES SLOTS

888SPORT MARKETING PUSH

NEW PREMIUM 888 GAMES



888SPORT FREE BET HUNT

OUR MODE OF OPERATION

Getting to critical mass

Grabbing market share

Then driving ROI/RTC

28

29

CASINO ENGINE Unique internally developed content is offered alongside other well known content

More than $50m of Jackpots awarded in 2016

Constantly increasing actives and deposits, utilising our CRM advantage

MORE BIG PRIZES CASINO ACTIVES GROWTH

60%

80%

100%

120%

140%

160%

180%

2014 2015 2016

100%

137%

173%

$3

$5

$7

$9

$11

$13

$15

$17

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2014 2015 2016

MIL

LIO

NS

Jackpot amount

0%

50%

100%

150%

200%

250%

1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1

2010 2011 2012 2013 2014 2015 2016 2017

FX Effect

INCREASING DEPOSITS

Relative Liquidity 2012-2017

POKER LIQUIDITY

30

0%

20%

40%

60%

80%

100%

120%

140%

160%

11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1

2012 2013 2014 2015 2016 2017

Mo

nth

ly L

iqu

idit

y In

dex

Operator 1 Operator 2 Operator 3 888Poker Industry

* Source Pokerscout.com Jan 2017

Significant and long term industry outperformance

Introduction of BLAST – Sit & Go Fee Split ($)

BLAST – NEXT GENERATION POKER

31

Successful introduction of Blast Sit & Go game during H2 2016

Immediate uptake by players, increasing Sit & Go volume with minimal cannibalisation

Recently launched in Spain, additional markets to follow

BINGO PLATFORM

32

Bingo Actives Trend 2013 – 2016

CASINOFLEX

33

Gaining Traction






34


50%

250%

450%

650%

850%

1050%

1250%

1450%

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1

2012 2013 2014 2015 2016 2017

SPORT BETS

Based on average daily Bets

World Cup

Spain Sport Launch

Italy Sport Launch

Euro 2016

35

Exponential Increases

New Platform

Launch


Create and grow a sport vertical




36


DENMARK 3B DKK

SPAIN 430M EURITALY 1B EUR

ROMANIA ~85M EUR

CASINO

US 210M USD

UK 5B GBP

37%

2%3%

2%

56%

52%

7%12%

29%

17%

83% 47%

5%

48%

56%

4%

27%

13%

3%4%

43%

14%

36%

37

POKER SPORT BINGO OTHER

* Outer circle represent the market, inner circle represent 888

* Data per latest known publication, in Romania according to H2 Gambling Compliance and ONJN Sep 2016 publication normalised for FY

* In UK we use reported GGY for Apr15-Mar16

REGULATED MARKETS PENETRATION *

REGULATED VS. .COM DEPOSIT TRENDS

B2C Deposit Trend

* FX translate Jan 2015 – Jan 2017 Deposits at average 2014 rates

38

20%

70%

120%

170%

220%

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

2010 2011 2012 2013 2014 2015 2016

Non-Reg Regulated Markets FX Effect

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

1 2 3 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1

2012 2013 2014 2015 2016 2017

Be

ts

Poker Bet EUR Casino Bet EUR Sport Bet EUR

888.ES BET TREND (Euro Based)

Launch of 888.es

39

Spain Sport Launch

Revenue Growth Fueled by Enhanced Offerings and Content

0%

50%

100%

150%

200%

250%

300%

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1

2014 2015 2016 2017

Sport Bet EUR

Casino Bet EUR

888.It BET TREND (Euro Based)

Revenue Growth Fueled by Enhanced Offerings and Content

40

Italy Sport Launch






41


BUILDING ON OUR 2016

888 is now a leading multi-market and multi-product operator

Maintain our unique technology edge to support continued

strong organic growth – our #1 priority

Build on our proven regulated markets success

Sport remains our blue ocean

42

Positive trends across a healthy, diversified business

Outstanding operational momentum

Continued investment in platform and content is paying off (again)

Increased dividend payments

Adapt to existing regulation together with new regulated markets

Confident of continued growth

US – maintaining our pole position

Potential scope for M&A

Robust current trading

SUMMARY & OUTLOOK

43

31 DECEMBER 2016 - Investis Digitalhtml.investis.com/8/888Holdings/pdf/888-2016-full-year...Share...

Documents

Transcript of 31 DECEMBER 2016 - Investis Digitalhtml.investis.com/8/888Holdings/pdf/888-2016-full-year...Share...