Proposed Acquisition of Ladbrokes Coral Group plc

Transcription

1 Click to edit roposed Acquisition of Ladbrokes Coral Group plc Creating a leading global gaming company December 2017

2 Click Disclaimer to edit IMRTANT INFRMATIN This presentation document, any related materials which are distributed alongside this presentation document, each of their respective contents, and any oral presentation made by or on behalf of Holdings LC (the Company ) in relation to the subject matter hereof (all such documents and information together being the Relevant Information ) is strictly private and confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part by any medium or in any form, for any purpose, without the prior written consent of the Company. The sole purpose of the Relevant Information is to provide background information to assist you in obtaining a general understanding of the business of the Company, the business of Ladbrokes Coral Group plc, and a possible acquisition by the Company of Ladbrokes Coral Group plc (the "ossible ffer"). has not made any announcement of a firm intention to make an offer for Ladbrokes Coral Group under Rule 2.7 of the City Code on Takeovers and Mergers (the "Code"). There can be no certainty that such an offer will be made. None of the Relevant Information constitutes a firm intention to make an offer and accordingly there can be no certainty that any such offer will ultimately occur. Any such offer would, if it were made, be subject to any requisite regulatory approvals, approval by the shareholders of and acceptance or approval by the shareholders of Ladbrokes Coral Group, as well as other customary conditions. The Relevant Information does not constitute, or form part of, any listing particulars, prospectus or circular relating to the Company, nor does it constitute an offer to sell, or a solicitation of an offer to buy or subscribe for, securities of the Company in any jurisdiction. It is not intended to provide the basis of any investment decision, financing or any other evaluation and is not to be considered as a recommendation by the Company, any person acting on behalf of the Company, or their respective affiliates, agents or advisers that any recipient of such Relevant Information purchase or subscribe for any securities in the Company. The Company's ordinary shares have not been and will not be registered under the United States Securities Act of 1933, as amended, (the "US Securities Act") or with any securities regulatory authority of any state or jurisdiction in the United States or under the applicable securities laws of Australia, Canada South Africa, or Japan, and may not be offered, sold or otherwise transferred, directly or indirectly, in or into Australia, Canada, South Africa, Japan or the United States or for the account or benefit of citizens or residents of the United States, Australia, Canada, South Africa or Japan, unless such offer or sale would qualify for an exemption from registration under the US Securities Act and/or any other applicable securities laws. The release, publication or distribution of the Relevant Information in whole or in part, directly or indirectly, in, into or from certain jurisdictions, including in particular the United States, Australia, Canada, South Africa and Japan, may be restricted by law and therefore persons in such jurisdictions should inform themselves about and observe such restrictions. The Relevant Information is being distributed only to, and is directed at, authorised persons or exempt persons within the meaning of the Financial Services and Markets Act 2000, as amended ("FSMA") or any order made thereunder or to those persons falling within the following articles of the Financial Services and Markets Act 2000 (Financial romotion) rder 2005, as amended (the "F") made pursuant to section 21(5) of FSMA: Investment rofessionals (as defined in Article 19(5) of the F); and High Net Worth Companies (as defined in Article 49(2) of the F). ersons who do not fall within either of these definitions should not rely on the Relevant Information nor take any action based upon it but should instead return this document and any related materials immediately to the Company. The Relevant Information is exempt from the general restriction in section 21 of FSMA relating to the communication of invitations or inducements to engage in investment activity on the grounds that it is made only to certain categories of persons. The directors of the Company have taken all reasonable care to ensure that the facts stated herein are true to the best of their knowledge, information and belief. However no representation or warranty, express or implied, is given by or on behalf of the Company, any of its directors, any broker acting on behalf of the Company or their respective subsidiary undertakings, affiliates, agents or advisers (together, the Identified ersons ) or any other person as to the accuracy or completeness of the information or opinions given in any Relevant Information and no liability is accepted for any such information or opinions. In particular, certain industry and market information in this document and/or related materials and/or given at the presentation may have been obtained by the Company from third party sources. Without prejudice to the foregoing, neither the Company or the Identified ersons, to the fullest extent permitted by law, accept any liability whatsoever for any loss howsoever arising, directly or indirectly, whether arising in tort, contract or otherwise, from use of the Relevant Information or otherwise arising in connection therewith. The Relevant Information may include certain forward looking statements, beliefs or opinions, including statements with respect to the business, financial condition, results of operations and plans of the Company and/or its group. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "shall", "risk", "intends", "estimates", "aims", "plans", "predicts", "continues", "assumes", "positions", "anticipates", "possible" or "potential" the negative thereof, other variations thereon or comparable terminology. Forward-looking statements in the Relevant Information reflect the Company's beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by those statements and forecasts. ast performance of the Company cannot be relied on as a guide to future performance. Forward-looking statements speak only as the date of this document and the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward looking statements in this presentation. No statement in the Relevant Information is intended as a profit forecast or a profit estimate. As a result, recipients of the Relevant Information are cautioned not to place any undue reliance on such forward-looking statements. The Identified ersons are under no obligation to update or keep current the information contained in the Relevant Information, to correct any inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein except to the extent they would be required to do so under applicable law or regulation, and any opinions expressed in the Relevant Information are subject to change without notice. By accepting the Relevant Information, you agree to be bound by the foregoing provisions, limitations and conditions and, in particular, you have represented, warranted and undertaken that: (i) you will observe the foregoing provisions, limitations and conditions; (ii) you have read and agree to comply with the contents of this important information including, without limitation, the obligation to keep the Relevant Information confidential; and (iii) you will not at any time have any discussion, correspondence or contact concerning the Relevant Information with any of the directors or employees of the Company or its subsidiaries, or any governmental or regulatory body without the prior written consent of the Company. Investec Bank plc ("Investec") which is authorised in the UK by the rudential Regulation Authority and regulated by the Financial Conduct Authority and the rudential Regulation Authority in the UK, is acting exclusively as sole sponsor and corporate broker to the Company and no-one else in connection with the ossible ffer, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Investec, nor for providing advice in connection with the ossible ffer. Neither Investec nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Investec in connection with the ossible ffer. 2

3 Click Agenda to edit Summary ossible offer summary Highly compelling strategic rationale Acquiring complementary market leader Rationale Diversified international group Leading online and retail group Exposure to largest global markets roposed mechanics ther Items Refinanced debt facilities roven track record Summary 3

4 Click ossible to edit offer summary New Shares plus 32.7 pence in cash for each Ladbrokes Coral share, plus up to a further 42.8 pence by way of a Contingent Value Right ("CVR") linked to the outcome of the current Triennial Review - preserving value for Ladbrokes Coral shareholders and defraying risk for shareholders ossible offer summary Initial Consideration values Ladbrokes Coral equity at: 3.9 billion (203.7p per Ladbrokes Coral Group share) assuming maximum CVR payment 3.1 billion (160.9p per Ladbrokes Coral Group share) assuming no CVR payment Mix and match facility provided allowing Ladbrokes Coral shareholders to elect to receive more alternate proportion of cash and shares and Ladbrokes Coral shareholders to each own 53.5% and 46.5% respectively of enlarged group Combination expected to be be double digit ES 1 accretive from the first full year post completion and following all reasonably expected outcomes of the Triennial Review Enlarged group net debt/ebitda 2 expected to not exceed 3.0x by end of first full financial year following completion 3 Acquisition expected to be implemented by way of Scheme of Arrangement 1 Adjusted ES is calculated on a clean basis, after net synergies and impact of the Triennial Review, and before transaction costs and one-time restructuring charges. This statement is not intended as a profit forecast or estimate for any period and should not be interpreted to mean that earnings per share for or Ladbrokes Coral, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for or Ladbrokes Coral, as appropriate. 2 Where Net Debt is interest bearing loans and borrowings and customer liabilities, less cash and cash equivalents, and EBITDA is 'clean EBITDA'. Clean EBITDA is earnings before interest, taxation, depreciation, amortisation, impairment charges, changes in the fair value of derivative financial instruments, share option charges and exceptional items after accounting for net synergies from the transaction and the impact of the Triennial Review, and before transaction costs and one-time restructuring charges. 3 Following all reasonably expected outcomes of the Triennial Review 4 Creating a leading global gaming company

5 Click to edit Acquiring a complementary market leader

6 Click Highly to compelling edit strategic rationale Enlarged group will be a fast-growing, diversified, highly profitable, international online and retail sports betting led gaming company with >90% of NGR coming from locally regulated/ taxed markets Revenue and profit growth - ortfolio of strong and complementary brands, powerful CRM systems, and the ability to apply best practice to enhance customer experience in a responsible gaming environment - ositioned to grow revenue and profits by delivering a great experience to millions of consumers - Expect to generate material synergies from the combination Scale and breadth - Top three market positions in three of Europe s largest online gaming markets UK, Germany and Italy - Significant business in Australia and exposure to the USA and other growth markets - Size and resources to address the dynamics of the rapidly changing global gaming industry - Established brands in all key product verticals, sports, casino, poker and bingo Multi-channel distribution combined with best in class technology - Expertise and scale across all distribution channels (online, retail and mobile) - A proven, highly flexible and highly scalable technology platform across all verticals Leadership in consolidation - Well positioned to be a global leader and one of the principal consolidators in the gaming sector - roven management teams - wnership of the critical technology platforms Taking the initiative now 6 - Allows the strategic and synergy benefits of the combination to be realised in the short term - Flexible deal structure allows for range of triennial scenarios - Favourable financing conditions anticipated roposed transaction consistent with strategic goals of diversifying the business internationally and increasing scale in regulated markets

7 Quarterly NGR (EURm) roforma unaudited NGR (GBm) Click to edit Acquiring a complementary market leader Group verview Scalable and proven proprietary technology platform Strong progress post the bwin.party combination Third largest online gaming operator in Europe Diversified geographic footprint and product mix Licenses in more than 18 jurisdictions ver 2,800 employees and contractors ver 4.6bn of sports wagers per year ver 95% of revenues processed through own platform 79m registered accounts across over 1,000 games playable in 21 languages and 19 currencies Ladbrokes Coral Leading UK bookmaker, with a strong online and retail presence Significant retail and online operations in Italy, Ireland, Spain and Belgium Established presence online Digital now accounts for c.31% of total net revenue (FY15: 24%) Rapidly growing online operation in Australia resence in USA ver 25,000 employees ,100 2,116 2, nline business momentum ,600 1,100 1,185 1, Q3 15 Q3 16 Q4 15 Q4 16 Q1 16 Q1 17 Q2 16 Q2 17 Q3 16 Q H116 H1 17 FY15 FY16 Net revenue nline Sources: RNS announcements. Annual Report for the year ended 31 December Corporate resentation, June Ladbrokes Coral Final Results for the Y/E 31 Dec and Trading Update for the six months to 30 June Ladbrokes Coral Group Trading Statement 13 November Trading Statement 12 ctober 2017.

8 A diversified international group, across nline Click to edit and split of NGR by geography Ladbrokes Coral revenue split by channel Enlarged Group Total interactive (excluding lottery) #2 online operator FY16 NGR generated across over 30 countries >3,500 UK shops gross gaming revenue ( bn) LCL Technology scalable across multiple geographies in Italy #1 in retail in UK, Spain and Belgium UK 6.18 nline Active in 5 continents Canada USA >3,100 outlets in Europe (Ireland, Belgium, Italy and Spain) ther Germany 1.83 nline Germany European France 1.37 nline ther Europe UK Digital UK Italy 1.20 nline RoW Italy & Spain Ireland 0.90 nline Licences in 19 jurisdictions 15 ffices across 4 continents Licences in 6 countries perations in Europe, Australia, North America and Asia Spain 0.68 nline 8 Sources: Management (adjusted for disposal of Turkish facing operations), Annual Report FY16, Ladbrokes Coral Group Annual Report FY16. Bar chart data source: H2 Gambling Capital as at 30 November 2017

9 Net Gaming Revenue Click Leading to edit online and retail group NGR H m c.75% regulated/ regulating NGR 1 LCL NGR FY16 2,352m 99.8% regulated NGR eer group NGR ( m) 3, % 28% 72% 3,000 3,001 2,500 2,352 2,154 Regulated/ regulating Unregulated nline 2,000 Enlarged Group nline: EBITDA H1 17 online EBITDA data assumes an exchange rate of ,500 1,604 1,551 1, % 731 nline 56.2% European ther 0.9% 4.6% 0 Enlarged Galaxy Mars LCL Bet365 William B Amaya Galaxy Unibet Skybet 888 Betsson group Mars Hill 9 Sources: Annual Report FY16, Ladbrokes Coral Annual Report FY16, Ladbrokes Coral management. For peer group NGR sources used are; Companies House filings, Annual Reports. Ladbrokes Coral regulated / regulating NGR vs, Unregulated NGR based on definitions. Notes: 1 ost completion of Turkey disposal, includes markets in the process of regulating, based on NGR for the six months to 30 June Ladbrokes Coral represents (i) Net Revenue of 895m (being a pro forma total for and bwin.party (sourced from FY16 Annual Report) and translated into sterling using the 2016 average rate of 1.22 and (ii) Ladbrokes Coral pro forma NGR (unaudited) of 2351m (sourced from Ladbrokes Coral FY16 annual report).the figure has been adjusted for the disposal of Turkish facing operations (NGR reduction of 81.9m) All data represents last reported financial year (uncalendarised).

10 Total interactive (excluding lottery) gross gaming revenue ( bn) Click to edit Exposure to the largest online markets globally Enlarged Group exposure to online markets accounting for over 19bn of interactive global gross gaming revenue (>50% total worldwide) LCL LCL LCL LCL LCL LCL LCL UK US Australia Germany France Italy Sweden Ireland Finland Spain Belgium Russia 10 Sources: H2 Gambling Capital as at 1 December Gross Gaming Revenue. Company data. Ladbrokes Coral Annual Report for the year ended 31 December 2016

11 Click to edit roposed acquisition mechanics

12 Click roposed to edit mechanics Cash offer 32.7 pence in cash 632m + + Share offer new shares 2,477m 1 + CVR Value linked to the outcome of the Triennial Review Ladbrokes Coral Group Shareholders will receive one CVR for each Ladbrokes Coral Group Share that they hold, and each CVR will confer on its holder a contractual entitlement to one loan note following determination of the estimated impact of the Triennial Review + Up to 827m 2 Maximum Stake Cap (hard cap) Value per CVR 3 0.0p 13.4p 13.4p 30.3p 40.4p 40.5p 42.8p = Consideration range 1 : Minimum 3.1bn (160.9p per share), Maximum 3.9bn (203.7p per share) 12 1 :Reflective of the mid-market closing price of on the last practicable date (06 December 2017) of p - sourced from the Daily fficial List 2 Assumes Triennial Review result of a 50 FBT cap resulting in no impact to assumed FBT EBITDA, but maximum pay out under CVR 3 If the ossible Triennial Measures do not relate solely to maximum stakes, or cannot be linearly interpolated between the figures set out in the above table, the Estimated EBITDA Impact and, consequently, the value of the CVR per Ladbrokes Coral Group share, would be determined through an agreed determination process involving representatives of Ladbrokes Coral Group, and an independent expert. Calculations assume Ladbrokes Coral fully diluted number of shares outstanding figure to be 1,932,593,483

13 Click to edit Summary

14 Click Refinanced to editdebt facilities n the back of solid H1 and Q performance, attractive market conditions and Turkey disposal, was able to reduce the margin on its Term Loan facility, raise an additional 50m and amend documentation to allow considerable additional operational and financing flexibility Margin reduction from +3.25% to 2.75% (at par) Incremental 50m raised for general corporate purposes with total Term Loan size of 300m (day 1 leverage neutral) Increased leverage facility max 3.5x from 2.25x (Net Debt:EBITDA) Enhanced flexibility and covenant lite No change to existing maturities (2022 RCF, 2023 Term Loan) Facilities effective as of December 7 th,

15 Total Shareholder Return (rebased to 100) Click roven to track edit record of shareholder returns Sportingbet total shareholder return of 392% since acquisition bwin.party total shareholder return of 105% since acquisition July 2016: Notification of move to remium Listing November 2017: Disposal of Turkish facing operations February 2017: Refinancing February 2016: Move to Main Market September 2012: Announcement regarding possible offer for Sportingbet July 2012: Combination of Betboo September 2015: Announcement of offer for bwin November 2016: Special Dividend 500 FTSE 250: 146% FTSE Small-Cap: 121% FTSE All-Share: 77% 0 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 FTSE All Share FTSE 250 FTSE Small Cap 15 Total Shareholder Return (last 10 years): 3,034% Sources: Total shareholder return data sourced from Thomson Reuters Datastream to 02 December Notes sourced from RNS announcements

16 Click Summary to edit Consistent with strategy to diversify and scale in regulated markets Creating a leading global gaming and betting company Diversified and complementary international revenue base Leveraging market leading and scalable technology Leading brands in core markets Clear focus on sports betting Significant growth and cost synergy potential 16 Compelling opportunity to take advantage of current sector consolidation

17 Click to edit Q&A