RESULTS FOR THE YEAR ENDED -...

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RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017

Transcript of RESULTS FOR THE YEAR ENDED -...

Page 1: RESULTS FOR THE YEAR ENDED - html.investis.comhtml.investis.com/8/888Holdings/pdf/888-analyst-presentation-fy-2017.pdf2017 HIGHLIGHTS 1 As defined in 2017 yearly financial review 2

RESULTS FOR THE YEAR ENDED

31 DECEMBER 2017

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AGENDA

Itai Frieberger | Strategic Review

Aviad Kobrine | Financial Review

Itai Pazner | Operational Review

Itai Frieberger | Summary

Q&A

2

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ITAI FRIEBERGER, CEO | STRATEGIC REVIEW

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2017 – RESILIENCE THROUGH DIVERSIFICATION

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AVIAD KOBRINE, CFO | FINANCIAL REVIEW

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2017 HIGHLIGHTS

1 As defined in 2017 yearly financial review

2 Constant currency as detailed in the 2017 yearly financial review

Results represent eight consecutive years of revenue increases and a long term CAGR of 17% since 2003

Revenue up 4% to $542m, up 26% in regulated markets (ex. UK)

Casino and Sport continue to drive growth

Sport revenue increase 45% - the fifth consecutive year of more than 40% growth rate

Spain and Italy revenues increase 34% each - a reflection of enhanced product offering and effective marketing campaigns

Diversification strategy continues as Europe (ex. UK) represents 51% of Group revenue

Marketing efficiencies progression with marketing ratio down 300bp to 30%

Adjusted EBITDA1

up 12% to $101m, up 19% at constant currency2

Adjusted EBITDA margin at 18.6% and 19.5% at constant currency

Adjusted Profit before tax up 12% to $78m

Adjusted Basic EPS at 20.1c up 15%

Net cash from operating activities up 40% representing 95% of Adjusted EBITDA

Final Dividend of 5.9c per share (2016: 5.1c), 9.9c for the year (2016: 8.9c) plus a one-off 5.6c (2016: 10.5c), a total of 15.5c (2016:

19.4c) for the year

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PROFIT AND LOSS ACCOUNT1

1 Totals in this presentation may not sum due to rounding2 Excluding depreciation of $5.7m (2016: $8.4m) and amortisation of $13.6m (2016: $10.6m)3 Excluding share benefit charges of $8.5m (2016: $6.7m) 4 As defined in 2017 yearly financial review

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$m 2017 2016% Change

at Constant

Currency

% Change

Reported

Revenue 541.8 520.8 5% 4%

Operating expenses2 138.8 136.1

Gaming duties 75.2 60.5

Research and development expenses 35.4 34.3

Selling and marketing expenses 162.5 170.2

% of Revenues 30.0% 32.7%

Administrative expenses3

29.2 29.5

Adjusted EBITDA3

100.7 90.2 19% 12%

% of Revenues 18.6% 17.3%

Depreciation and Amortisation 19.3 19.0

Finance and other 3.1 1.3

Adjusted Profit Before Tax 78.3 69.9 12%

Share benefit charges and other 8.7 6.8

Exceptional charges4

50.8 3.9

Profit Before Tax 18.8 59.2

Taxation 6.2 7.7

Profit After Tax 12.6 51.5

Adjusted Basic EPS4 20.1 ¢ 17.4 ¢ 15%

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GROUP REVENUE Group revenue up 7% at constant currency and adjusted for market withdrawals: up 4% reported to $542m (2016: $521m)

17% yearly CAGR since 2003

Growth drivers remain Sport, Casino and regulated markets

12% half yearly CAGR since H1 2009 Revenue 2003 – 2017

40

140

240

340

440

540

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

5975

123

157

217

263 247 262

331

376 401

455 462

521

542

14 FX & Withdrawal Markets

Impact

$m

8

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GROUP REVENUE

Quarterly Revenues ($m)

Q1 ($m) Q2 ($m)

Revenue increased in each quarter of 2017 compared to 2016

9

80

90

100

110

120

130

140

150

Q1 16 Q1 17

130

136

80

90

100

110

120

130

Q2 16 Q2 17

132

134

80

90

100

110

120

130

Q3 16 Q3 17

127

133

80

90

100

110

120

130

Q4 16 Q4 17

132

138

Q3 ($m) Q4 ($m)

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GEOGRAPHICAL SEGMENTATION Europe (ex. UK) at 51% of revenues driven by Spain – already 12% of revenue

Regulated and taxed markets comprise 70% of revenues

UK share is a combination of diversification strategy, currency and tighter regulatory constraints

Regulated (ex. UK) up 26% and up 370bp in share of revenues

Geographic Segmentation 2010 - 2017

2016

2017

10

51% 53% 52% 50%45% 41% 39% 41%

30%

49% 47% 48% 50% 55% 59% 61% 59%70%

15%

25%

35%

45%

55%

65%

75%

85%

95%

2010 2011 2012 2013 2014 2015 2016 2017 2017Regulated& Taxed

Non-Regulated Regulated

43%

35%

9%9% 4%

UK Europe

(ex UK & Spain)

Spain Americas ROW

37%

39%

12%9% 3%

UK Europe

(ex UK & Spain)

Spain Americas ROW

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REVENUE B2C Revenue up 6% to $487m (2016: $460m), reflecting 8% increase adjusted for constant currency and market withdrawals

CAGR of 12.5% since 2010

Increased active days per player across products drive revenue growth and retention efficiencies

Revenue B2C 2010 –2017

$m

11

150

200

250

300

350

400

450

500

2010 2011 2012 2013 2014 2015 2016 2017

213

275

321

344

385

399

460

487

12 FX & Withdrawal

Markets Impact

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REVENUE CASINO B2C Revenue up 4% to $294m (2016: $282m)

B2C Casino revenue up 17% ex. UK

Casino is the most dominant product across our territories with both direct acquisition and cross-sell appeal

Revenue Casino B2C 2010 –2017

$m

12

100

120

140

160

180

200

220

240

260

280

300

2010 2011 2012 2013 2014 2015 2016 2017

118

154

175

198

224

234

282

294

4 FX & Withdrawal

Markets Impact

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REVENUE SPORT B2C Revenue up 45% to $75m (2016: $52m)

Success is fueled by increased penetration across regulated markets and expanded offering

Players respond well to the ever expanding offering and marketing suite

Revenue Sport B2C 2010 – 2017

$m

13

0

10

20

30

40

50

60

70

2010 2011 2012 2013 2014 2015 2016 2017

6 7 7 9

20

35

52

75

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REVENUE POKER B2C Stable Poker revenue performance adjusted for market withdrawals

Poker resilience is maintained through ‘casual’ product focus and regulated territories, the latest one in Italy in early 2018

Poker players yield and active days over the platform increased more than 20%

Revenue Poker B2C 2017 vs. 2016

$m

14

0

10

20

30

40

50

60

70

80

90

2016 2017

84 78

6

Withdrawal Markets Impact

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REVENUE BINGO B2C Reported revenue down 6% to $39m (2016: $42m), highly impacted by currency, down 0.7% at constant currency

Depositing player yield increased 16% at constant currency

Continued bonus optimisation and bingo room management support player yield

Revenue Bingo B2C 2017 vs. 2016

$m

15

20

25

30

35

40

2016 2017

42 39

2

FX Effect

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MARKETING COST Marketing efficiencies and cost control drive marketing ratio down to 30.0% (2016: 32.7%)

10% increased marketing in continental European regulated markets

Marketing Cost 2017 vs. 2016

Marketing Costs Marketing Costs % of Revenue$m %

16

15.0%

25.0%

35.0%

2016 2017

32.7%30.0%

70

90

110

130

150

170

2016 2017

170 163

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0%

20%

40%

60%

80%

2015 2016 2017

27.6% 26.1% 25.6%

30.1% 32.7% 30.0%

6.2% 5.7%5.4%

8.0% 6.6%6.5%

10.8% 11.6% 13.9% Gaming duties

R&D

Admin. Expenses

S&M expenses

Operating expenses

COST STRUCTURE Continued operational gearing

Return to lower marketing levels – a result of more regulated markets in the post investment stage

Balancing increased gaming duties with cost control

Cost as a % of Total Revenue

* Operational margins are per adjusted EBITDA as defined in 2015 - 2017 financial review

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82.6% 82.7% 81.4%

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12%

13%

14%

15%

16%

17%

18%

19%

2016 2017

17.3%

18.6%

FX Effect

40

50

60

70

80

90

100

110

2016 2017

90

101

FX Effect

ADJUSTED EBITDA AND MARGIN Improved Adjusted EBITDA and margins

Adjusted EBITDA up 12% to $101m (2016: $90m), up 19% at constant currency to $107m despite US$15 million additional duties

Adjusted EBITDA margin at 18.6% (2016: 17.3%) an increase of 127bp. representing 19.5% at constant currency

Adjusted EBITDA 2017 vs. 2016

Adjusted EBITDA Adjusted EBITDA margin$m%

107 19.5%

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CASH Healthy cash generation from operating activities

Cash generated from operating activities up 40%, representing 95% of Adjusted EBITDA

Cash net of customer liabilities up 11%

Cash Position 2017 vs. 2016

Net Cash from Operating Activities Net Cash from Operating Activity % of Adj EBITDA$m %

19

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2016 2017

68.1

95.5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016 2017

75%95%

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DIVIDEND Dividend up 11% to 9.9c, plus a special dividend of 5.6c, total for the year at 15.5c

High dividend return continues

Six consecutive years with special dividend

Dividend Per Share ($c) 2012 –2017

$c

20

7.0 7.0 8.0 8.08.9 9.9

2.07.0

7.0 7.510.5 5.6

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2012 2013 2014 2015 2016 2017

Base Special

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BALANCE SHEET

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$m 31-Dec-17 31-Dec-16

Non-current assets

Goodwill and other Intangible assets 159.8 158.6

Property, plant and equipment 9.0 9.1

Other non-current assets 2.3 1.8

Investments 1.3 1.5

172.4 171.0

Current assets

Cash and cash equivalents 179.6 172.6

Trade and other receivables 44.2 37.0

Total Assets 396.2 380.6

Equity

Share capital and share premium 6.8 6.5

Retained earnings, reserves and treasury shares 106.4 157.1

Total equity attributable to equity holders 113.2 163.6

Liabilities

Current liabilities

Trade and other payables 160.2 139.3

Provisions 47.0 0.0

Income tax payable 4.1 0.1

Customer deposits 71.7 75.7

Non-current liabilities

Deffered tax liabilities0.0 1.9

Total equity and liabilities 396.2 380.6

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CASH FLOW

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$m Period Ended 31 December 2017 2016

Cash flows from operating activities

Profit before income tax 18.8 59.2

Share benefit charges 8.5 6.7

Depreciation and amortisation 19.3 19.0

Change in current assets and liabilities 53.5 (7.3)

Share of associates loss 0.2 0.1

Interest Income (0.6) (0.4)

Cash generated from operations 99.7 77.3

Income tax paid (4.2) (9.2)

Net cash generated from operating activities 95.5 68.1

Acquisition of property, plant and equipment (5.6) (6.3)

Internally generated intangible assets (11.2) (10.6)

Acquisition of intangible assets (3.6) (1.3)

Interest received 0.6 0.4

Net cash used in Investing Activities (19.8) (17.8)

Issue of shares net of purchase (0.4) 1.1

Dividends paid (70.5) (56.6)

Net increase/decrease in cash and cash equivalents 4.8 (5.2)

Cash and cash equivalents - beginning of the period 172.6 178.6

Effects of currency translation 2.2 (0.8)

Cash and cash equivalents - end of the period 179.6 172.6

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ITAI PAZNER, COO | OPERATIONAL REVIEW

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EUROPEAN REGULATED MARKETS (ex. UK) Bet volume accelerated up 33%

Italy and Spain leading growth

Bet Trend per Product (EUR)

* Markets included – Spain, Italy, Denmark, Romania, Ireland Sport – each as of Regulation regime start date

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0%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

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

2012 2013 2014 2015 2016 2017

Bet

s

Casino Poker Sport

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DEPOSIT TREND SPAIN & ITALY Spain and Italy lead regulated growth with expanded product offering, efficient campaigns and increasing brand awareness

Deposit Trend 2014-2017

Spain Italy

25

0%

1000%

2000%

3000%

4000%

5000%

6000%

7000%

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

2014 2015 2016 2017

0%

100%

200%

300%

400%

500%

600%

700%

800%

900%

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

2014 2015 2016 2017

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COMPLIANCE

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SPORT BET Healthy blend of categories, enhanced by a constantly increasing in-play offering

Growth from last year’s strong comparative which included the Euro 2016 peak

Well positioned for the World Cup

Sport Bet Trend

27

0%

100%

200%

300%

400%

500%

600%

700%

800%

2013 2014 2015 2016 2017

1.0

2.1

3.9

6.0

7.6

X

X

X

X

X

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888 POKER 2006 2017 2020+

.COM

.COM

.IT .FR

.ES

.PT

.NJ.NV .DE

.EU

.COM .USA

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0%

20%

40%

60%

80%

100%

120%

140%

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

2014 2015 2016 2017 2018

1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1

2014 2015 2016 2017 2018

BINGO PLATFORM Bonus per player continues to decrease as new UK tax on bonuses became effective as of October 2017

Stable revenue per player

Bingo Platform Optimisations (GBP)

Bonus Per Player* Net Cash Per Player*

30

* Jan 2014 as base = 100

* Funded players

.

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32

LOOKING AHEAD

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ITAI FRIEBERGER, CEO | SUMMARY

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CONSISTENT PROGRESSHarnessing Challenges into Sustainable Growth

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0%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

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

2012 2013 2014 2015 2016 2,017B

ets

Casino Poker Sport

Regulated Continental European Growth

Revenue Records EBITDA Strength

$c

High Dividend

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SUMMARY Resilient and healthy underlying performance in the face of challenges including withdrawal from several markets and regulatory

headwinds

Strong progress in Casino

Strong growth in Sport

Regulated Continental Europe driving growth

Technological advantage

Continue organic growth plus bolt-on M&A

Well placed to participate in strategic M&A

Cost control and optimisation continue

US presents an opportunity

Confident of future outlook

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Q&A