2018 Interim Results. 13 September 2018

Transcription

1 2018 Interim Results 13 September 2018

2 Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT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, officers, employees, advisers, representatives or other agents, with respect to the truthfulness, completeness or accuracy of any information, projection, 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 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 By accepting this presentation, you agree to be bound by the foregoing provisions, limitations and conditions. Totals may not sum as rounding and percentages have been calculated on the underlying rather than summarised figures. 2

3 Contents Introduction Financial Review Integration and Regulatory Update Operational Update Summary Kenneth Alexander Paul Bowtell Paul Bowtell Kenneth Alexander Kenneth Alexander 3

4 Overview Strong financial and operational performance Group NGR 1 +8% (cc 2 +8%) with strong growth in Online 1 +18% (cc 2 +20%) and European Retail 1 +29% (cc 2 +26%) Underlying EBITDA 1,3 +11%; and operating profit 1,3 +17% Market share gains in key territories Completion of Ladbrokes Coral acquisition integration progressing well and capex synergies of at least 30m identified JV with MGM leaves the Group very well placed for US sport betting market Interim dividend confirmed at 16.0p paid (2017 H1: 14.6p) and expected to pay on a 50:50 (H1/H2) basis Strong current trading 1,4 (Group NGR +14%, Online NGR +30%) with full year outlook in line with management expectations [1] Proforma basis [2] Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2018 exchange rates [3] Stated pre separately disclosed items [4] Current trading period: 1 July to 2 September 2018 vs

5 Paul Bowtell Chief Financial Officer 5

6 Financials: Group P&L Reported 1 Proforma Change Change CC 3 m m % m m % % NGR 1, % 1, , % 8% Revenue 1, % 1, , % 8% Gross profit % 1, , % Contribution % % Contribution Margin 51.7% 49.6% 2.1pp 53.8% 57.1% (3.3pp) Underlying EBITDA % % Operating Profit % % Memo: Number of shares (m) Diluted EPS(p) 24.9 (2.1) Adjusted diluted EPS (p) Dividend / share (p) Net Debt ( m) (1,887.0) n/a Net Debt / LTM EBITDA x n/a Group Proforma NGR +8% Group Proforma underlying EBITDA +11% Adjusted fully diluted EPS 32.2p (+30%) Interim dividend of 16.0p (+10%) Net debt at 30 June ,887.0m 2.69x Net debt/ltm EBITDA [1] 2018 and 2017 reported results are unaudited and reflect the acquisition of the Ladbrokes Coral Group plc on 28 March 2018 [2] The Group s proforma results are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 Jan The results of Crystalbet are included from the date of acquisition (11 April 2018) and the results of Kalixa are excluded from the date of disposal (31 May 2017). [3] Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2018 exchange rates [4] Stated pre separately disclosed items [5] Adjusted for the impact of separately identified items, FX movements on financial indebtedness and gains on derivative financial instruments [6] Proforma basis 6

7 Financials: Proforma EBITDA Profit Bridge Strong growth in Online and European Retail 350m 340m 330m 320m Online UK POCT - 6.5m Horse Race Levy - 2.5m 32.4 (5.4) (0.5) 310m (9.0) 300m 349.5m 290m 280m 270m 314.1m 305.1m 260m 250m H1 FY17 EBITDA Regulatory Adjustments H1 FY17 EBITDA Rebased Online UK Retail European Retail Other Corporate World Cup NGR Pre-Substitution ( m) H1 H2 Total Number of matches Online Uk Retail European Retail Other Total H1 FY18 EBITDA 7

8 Financials: Statutory P&L Reported 1 Proforma Change Change CC 3 m m % m m % % NGR 1, % 1, , % 8% Revenue 1, % 1, , % 8% Gross profit % 1, , % Contribution % % Contribution Margin 51.7% 49.6% 2.1pp 53.8% 57.1% (3.3pp) Underlying EBITDA % % Share based payments (5.0) (9.1) 45% (6.0) (11.5) 48% Depreciation & Amort. (42.1) (13.0) (224%) (66.1) (67.6) 2% Share of JV income 0.7-0% (74%) Operating Profit % % Finance costs (26.5) (14.2) (87%) Profit before tax pre separately disclosed items Separately disclosed items % (48.5) (87.2) 44% Profit before tax (22.8) 598% Tax 0.2 (0.6) 133% Profit after tax (23.4) 586% Group Proforma underlying EBITDA +11% Group Proforma Operating profit +17% Finance costs 26.5m 87% higher as a result of the interest on loans taken out to finance the acquisition of Ladbrokes Coral Separately disclosed items 48.5m Major items including 126.2m amort. of acquired intangibles, 48.4m corporate transaction costs and 142.3m credit movement in fair value of contingent consideration Tax 0.2m credit Tax charge reflects an underlying tax rate of 12% (full year expected 13%) [1] 2018 and 2017 reported results are unaudited and reflect the acquisition of the Ladbrokes Coral Group plc on 28 March 2018 and excludes the results of discontinued operations [2] The Group s proforma results are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 Jan The results of Crystalbet are included from the date of acquisition (11 April 2018) and the results of Kalixa are excluded from the date of disposal (31 May 2017). [3] Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2018 exchange rates 8

9 Online 6 months ended 30 June Proforma Change CC 2 m m % % Sports brands: sports wagers 4, , % 10% Sports brands: sports margin 10.4% 9.2% 1.2pp 1.2pp Sports brands NGR % 21% Games brands NGR % 15% B2B NGR % 38% Total NGR % 20% VAT/GST (22.7) (18.2) (25%) (30%) Revenue % 20% Gross profit % Contribution % Contribution Margin 40.7% 44.7% (4.0pp) Underlying EBITDA % Share based payments (2.1) (4.0) 48% Depreciation & amortisation (38.2) (33.7) (13%) Share of JV income (0.3) (0.4) 25% Operating Profit % Sports brands NGR +19% (cc +21%) GVC brands +23% (cc +26%) Ladbrokes.com +7% Coral.co.uk +12% Ladbrokes.com.au +24% (cc +31%) Eurobet.it +36% (cc +32%) Games brands NGR +13% (cc +15%) Partypoker +36% (cc +41%) Galabingo +5% Total NGR +18% (cc +20%) Good underlying growth in all material markets Positive World Cup Contribution margin -4.0pp see next slide Operating costs 1% higher Growth in business Crystalbet costs Increase regulatory & compliance costs in UK Offset by LCL merger synergies [1] The Group s proforma results are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 Jan The results of Crystalbet are included from the date of acquisition (11 April 2018) and the results of Kalixa are excluded from the date of disposal (31 May 2017). [2] Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2018 exchange rates [3] Stated pre separately disclosed items 9

10 Online: Contribution Margin 46% 44% (0.9%) 42% (2.3%) 40% (0.1%) (0.7%) 38% 36% 44.7% 43.8% 40.7% 34% 32% 30% H1 FY17 Online Contribution Margin UK POC & Horse Race Levy H1 FY17 Online Contribution Margin Rebased Marketing phasing Growth in higher tax regions Kalixa [1] H1 FY18 Online Contribution Margin FY2018 Online contribution margin expected to be c42.0% % [1] Kalixa costs previously recorded in overheads. Post disposal 31 May 2017 equivalent 3 rd party costs are now recorded in contribution 10

11 UK Retail 6 months ended 30 June Proforma Change m m % OTC wagers 1, ,702.9 (8%) OTC margin 17.9% 17.9% 0.0pp OTC NGR/Revenue (8%) Machines NGR/Revenue (3%) Total NGR/Revenue (5%) Gross profit (6%) Contribution (5%) Contribution Margin 71.4% 72.0% (0.6pp) Underlying EBITDA (4%) Share based payments (0.4) (0.7) 43% Depreciation & amortisation (18.5) (27.6) 33% Share of JV income - - 0% Operating Profit % OTC wagers -8% (LFL 3 7%) -6% after adjusting for the impact of poor weather, the World Cup and full horse racing content OTC margin 17.9% (flat) Positive World Cup and Cheltenham Offset by a relatively poor Grand National Machines NGR/Revenue -3% (LFL 3-1%) Flat after adjusting for the adverse impact of reduced shop hours and poor weather Contribution margin -0.6pp Higher machines mix and ARC content costs Operating costs 6% lower Tight cost control, synergies from LCL merger and shop closures No of shops at 30 June ,562 (2017: 3,660) Net shop closures: 2.7% [1] The Group s proforma results are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 Jan The results of Crystalbet are included from the date of acquisition (11 April 2018) and the results of Kalixa are excluded from the date of disposal (31 May 2017). [2] Stated pre separately disclosed items [3] UK Retail numbers are quoted on a LFL basis. During H1 there was an average of 3,563 shops in the estate, compared to an average of 3,663 in the same period last year 11

12 European Retail 6 months ended 30 June Proforma Change CC 2 m m % % OTC wagers % 4% OTC margin 17.8% 14.8% 3.0pp 3.0pp Sports NGR/Revenue % 34% Other OTC NGR/Revenue % 5% Machines NGR/Revenue (8%) (9%) Total NGR/Revenue % 26% Gross profit % Contribution % Contribution Margin 50.0% 48.4% 1.6pp Underlying EBITDA % Share based payments (0.1) (0.1) 0% Depreciation & amortisation (8.7) (5.5) (58%) Share of JV income (80%) Operating Profit % OTC wagers +7% (cc +4%) Organic growth in Eurobet Italy and estate growth in Ladbrokes Belgium OTC margin 17.8% (+3.0pp) Strong football margins in Italy compared to prior period Contribution margin +1.6pp Lower payments to franchisees (results mix) offset by front-ended World Cup marketing costs Operating costs 11% higher Investment in tech and people to support growth in Italy and the acquisition of >20 independent operators in Belgium Outlets at 30 June 2018 Eurobet Italy 836 (2017: 828) Ladbrokes Belgium 320 shops, 307 outlets (2017: 289 shops, 213 outlets) Ladbrokes ROI 139 (2017: 141) [1] The Group s proforma results are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 Jan The results of Crystalbet are included from the date of acquisition (11 April 2018) [2] Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2018 exchange rates [3] Stated pre separately disclosed items 12

13 Financials: Separately Disclosed Items 6 months ended 30 June Reported Cash Non Cash P&L items items m m m Amortisation of acquired intangibles Corporate transaction costs Legal and onerous contract provisions Integration costs Movement in fair value of contingent consideration (142.3) (142.3) - Total 48.5 (77.7) Amort. of acq.intangibles: 126.2m Primarily relates to the acquisition of the Ladbrokes Coral Group and bwin.party Corporate transaction costs: 48.4m Primarily relating to the acquisition of the Ladbrokes Coral Group Legal and onerous contracts: 12.8m Shop closures and other legal provisions outside the ordinary course of business Integration costs: 3.4m Costs associated with the integration of the Ladbrokes Coral Group Movement in fair value of contingent consideration: 142.3m credit Movements in the value of the CVR between the date of LCL acquisition and the current date Other M&A contingent consideration (e.g. Crystalbet) [1] 2018 reported results are unaudited and reflect the acquisition of the Ladbrokes Coral Group plc on 28 March

14 Financials: Cashflow 2018 m Underlying EBITDA Working capital Underlying (45.8) Greek tax payments (46.6) Capital expenditure 6 months ended 30 June Proforma 1 Underlying (88.4) EPOS2 (12.5) Tax (11.6) Proforma cashflow pre separately disclosed items Annualised finance costs (39.5) Operating cashflow Underlying working capital: 45.8m outflow Primarily driven by payment of staff bonus; a large proportion of which is expected to unwind in H2. Greek tax working capital: 46.6m outflow Reflecting the monthly payments on account made as part of the appeal process against the Greek Authority tax assessment of 186.8m Capex: 100.9m outflow Underlying capex in-line with full year proforma guidance of 160m Tax: 11.6m outflow Full year tax payment expected to be c 60m Annualised finance costs: 39.5m outflow Reflects the charge that would have resulted had the current capital structure been in place for the full period [1] The Group s proforma results are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 Jan The results of Crystalbet are included from the date of acquisition (11 April 2018) and the results of Kalixa are excluded from the date of disposal (31 May 2017). 14

15 Financials: Net Debt Net Debt As at 30 June 2018 Par Issue costs/ Total Value Premium m m m Bonds (500.0) (35.4) (535.4) Terms loans / RCF (1,698.0) 34.8 (1,663.2) Interest accrual (16.2) - (16.2) Gross cash debt (2,214.2) (0.6) (2,214.8) Lease liabilities (0.4) Cash Net Debt (1,770.6) Cash held on behalf of customers (213.4) Fair value of swaps held against debt instruments 30.4 Short term investments 4.4 Balances held with PSP 62.2 The Group raised borrowings of 1,398.0m to finance the acquisition of the Ladbrokes Coral Group, utilised as follows: 660.2m repayment of legacy Ladbrokes Coral debt 630.4m to fund the cash element of the acquisition consideration 107.4m liquidity to fund the combined Group s working capital requirements As at 30 June 2018: Accounting net debt was 1,770.6m Adjusted net debt was 1,887.0m Proforma EBITDA ratio was 2.69x Adjusted net debt (1,887.0) Proforma LTM EBITDA Leverage ratio 2.69x 15

16 Guidance FY18 Guidance: New Australian POCT c 1-2m 2018 and c 20m 2019 Depreciation and Amortisation Full year proforma charge of c 140m Dividend Paid on 50:50 (H1:H2) basis Online contribution margin c42.0% % FY18 Guidance: Unchanged from Q1 Capex and integration: Capex underlying 1 c 125m post acquisition 2, c 160m annualised Capex - EPOS 2 1 c 27m post acquisition 2 Integration costs previous deals 3 c 15m P&L charge post acquisition 2 c 45m cash cost post acquisition 2 (of which c 20m capex) Ladbrokes Coral integration costs c 17m (of which c 5m capex) Other: Share based payments c 10m 15m Interest costs c4% on gross debt c 60m P&L charge 4 post acquisition 2, c 85m annualised c 50m cash cost post acquisition 2, c 85m annualised [1] Pre Triennial Review [2] Period 28 March 2018 to 31 December 2018 [3] GVC Holdings plc acquisition of bwin.party and Ladbrokes PLC merger with the Coral Group [4] P&L cost of interest that will be paid in cash 16

17 Integration Update Detailed integration and synergy plans signed off Senior management structures in place, organisation structure design well progressed Trading teams aligned from Day 1, protecting the underlying trading performance Discussions with Playtech are well advanced regarding the timing of the Ladbrokes Coral platform migrations Total capex synergies now validated and are expected to be at least 30m Ladbrokes Coral synergies ( 150m) will hit 100% run rate at the end of GVC LCL synergies secured ( 5m) Financial Year Cumulative Exit Run Rate Cost Synergies Cumulative Realised In Year Capex Synergies Cumulative Realised In Year Integration Costs In Year m 4m- 5m 0 17m m 16m- 26m 10m- 15m 39m m 52m- 62m 20m- 30m 43m m 104m- 114m 30m 31m m 130m 30m - 17

18 Regulation UK Change in maximum B2 stakes expected to be enacted in Implementation date tbc. Expected update on RGD increase in Nov 2018 budget Germany No material updates. Increasing number of lander calling for revisions to State Gaming Treaty Sweden Licences expected to be issued in 1/1/19 United States 7 states have now legalised sports-betting Switzerland Legislation due to be passed prohibiting sports-betting outside of existing Swiss lottery operators. Potentially effective 1/1/2019. Represents <1% of Group NGR Spain Online duty reduced from 25% to 20%. Effective 1/7/18 Italy Full advertising restrictions in place from July 2019 Australia POCT implemented 1/1/2019 (1/7/17 in SA; 1/10/18 in Queensland) 18

19 UK Retail Post Triennial Plan & Impact Triennial final decision provides certainty and enables planning for a post 2 Retail estate Planning for the post triennial world Project team up-and-running to ensure a smooth transition to a more sustainable estate Ongoing lease optimisation Review of central cost base Major operational developments include: Roll-out of next generation FOBTS commenced Q3 Implementation of EPOS 2 more efficient back office process Trials of in-house SSBTs Market leading multi-channel offerings continue to drive online growth at very low CPA Continued focus on cost control Triennial Impact (EBITDA guidance unchanged from Q1) Fully mitigated impact of c 120m on Group EBITDA by end of the second full year post implementation Enactment expected in Q Implementation date not yet known Post Implementation in year impact m Year 1 Year 2 Year 3 NGR UK Retail (463.0) (520.0) (540.0) Online Total (445.0) (488.0) (500.0) EBITDA UK Retail (172.5) (160.0) (145.0) Online Total (160.0) (138.0) (120.0) 19

20 Kenneth Alexander Chief Executive 20

21 Strategic Overview Vision To be the world s largest sports-betting and gaming business Strategic Imperatives Scale + Geographic Diversification Goals Market Leading Organic Growth + M&A Key Enablers Technology + Brands + Product + Marketing + People Values A passion for delivering superior customer experience and a total commitment to social responsibility and responsible gambling 21

22 Scale The largest online-led sports-betting and gaming operator in the world Full Year Net Revenue 1 ( in billions, last reported) [2] [3] [4] [1] Latest annual reports revenue figures. Exchange rates used as of 31 Dec 2017 [2] Includes Proforma GVC FY17 and Proforma Ladbrokes Coral FY17 [3] The Stars Group completed its acquisition of the Sky Betting and Gaming Group on 10 July 2018 [4] Playtech completed its acquisition of Snaitech on 5 June

23 Geographic Diversification Truly global reach >20 Licensed jurisdictions Global presence 22 offices across five continents Yes Yes (Transitional) Yes (Application) Office Locations Expertise in operating in a wide range of markets Present in all of the world s top ten markets (ex Asia) and top 3 positions in Europe s largest online markets UK, Germany and Italy, and top 3 retail positions in UK, Italy, Spain, Belgium and Ireland >90% revenue from regulated, regulating and taxed markets Well placed to diversify further through further M&A but only in regulated markets Will consider retail where there is an opportunity to accelerate online growth Willing to enter new frontier regulated markets e.g. Latin America, Africa, ex-soviet, as well as consider bolt-on acquisitions in existing geographies 23

24 Organic Growth: Online Sustainable organic growth in all key online markets; market share gains consolidating leading positions Country/ Brand Brands Estimated Market Position 1 YTD NGR Growth 2 Driven By UK 3 +10% +16% Technology +8% Germany 1 +28% Australia 3 +26% Brands Product Italy 3 +30% +21% Marketing Brazil 1 +32% People Partypoker 2 +41% [1] Company estimates based on H net revenue [2] YTD trading period: 1 Jan to 2 September 2018 vs 2017 in constant currency 24

25 M&A Proven track record of delivering value from successful large scale M&A Expertise in: Improving growth in acquired businesses Synergy delivery Multiple system migrations Brand revitalisation Successful integration of people and cultures Retaining top talent from acquired businesses Target / Partner Date 19 March February March July 2018 Deal Size 83.9m [1] 1.1bn 3.1bn [2] Initial combined contribution of $200m Impact Delivered EBITDA well ahead of expectations in Year 1 Removed 50m of cost and returned to profitability in <1 year Synergy delivery of 125m Immediate return to growth 11 successful system migrations Synergies of 130m announced New organisational structures in place Immediate sharing of best practice (Trading, CS, Marketing) Well placed for US opportunity access to 15 states and NJ mobile app already launched Delivering Value (share price at date) 247.5p 467.0p 918.0p 1,154.0p [1] William Hill contributed 36.5m towards balance sheet repair, restructuring and deal costs [2] Assumes CVR valued at zero 25

26 M&A: U.S. JV with MGM Creating a leading U.S. sports betting and interactive gaming platform with world-class content, state-of-the-art proprietary technology, and broad distribution reach 50/50 joint venture 25 year exclusive agreement Market access agreements 1 providing a path to 15 states with addressable population of ~90m 2 Parties contributing exclusive access to: Economics of existing and future U.S. sportsbooks (Retail & Online) Access to 30 million M Life members Creates a leading platform with world class content, state-of-the-art proprietary technology, and broad reach and distribution Ample liquidity with total upfront capital commitments $100 million each Speed to market: playmgm mobile sports-betting app launched in New Jersey on 22 nd August 2018 All U.S. gaming licenses, including all skins for sports betting and interactive gaming GVC s platform technology (including Stadium) Premier, globally recognised gaming and sports brands [1] Access to 8 states through agreement with Boyd Gaming whereby the JV has access to Boyd Gamings 3 rd and 4 th online skins [2] Population figure represents Eilers & Krejcik Gaming estimate of population above 21 years old 26

27 M&A: U.S. JV with MGM Broad footprint and marketable customer base MGM Sports Betting Regulatory Status Nevada Fully regulated New Jersey Fully regulated Mississippi Fully regulated New York Passed law but not yet regulated Maryland Likely to pass law by 2019 Massachusetts Likely to pass law by 2019 Michigan Likely to pass law by Million M Life Members Clear path to 15 states with total addressable population of ~90m 1 Leading combination is well positioned to attract additional market access and other partners Estimated that the current illegal sports-betting market is worth $150bn 3 wagering per annum Boyd 2 Sports Betting Regulatory Status Pennsylvania Passed law but not yet regulated Ohio Likely to pass law by 2019 Illinois Likely to pass law by 2019 Missouri Likely to pass law by 2019 Kansas Likely to pass law by 2019 Iowa Likely to pass law by 2019 Indiana Legislative efforts anticipated 2019 Louisiana Legislative efforts anticipated 2019 [1] Population figure represents Eilers & Krejcik Gaming estimate of population above 21 years old [2] Access to 8 states through agreement with Boyd Gaming whereby the JV has access to Boyd Gaming s 3 rd and 4 th online skins [3] American Gaming Association 27

28 M&A Bolt-on: Crystalbet The group will continue to invest in bolt-on acquisitions in existing and new territories Acquisition of 51% of Mars LLC ( Crystalbet ) for 36.0m completed April 2018 Agreement to acquire 49% in 2021 (7x 2020 EBITDA max total consideration 172.5m) Management retained all their equity Not a competitive auction GVC seen as culturally and operationally preferred buyer given track record of growing businesses Georgian online gaming market estimated 1 to be worth cgel600m (c 180m) Crystalbet market share estimated 1 at c24% Number 1 in sports, peer-to-peer gaming 1 Impressive performance pre and post acquisition H1 GGR +82% in local currency 300+ new casino games added via GVC content deals More to come CRM Additional gaming content Poker Further product enhancements 104% Growth H1 18 vs H % 80% Investing in product and marketing for long-term sustainable growth [1] Management estimates A proven partner and enabler for entrepreneurial businesses Wagers GGR NGR 28

29 Technology Powerful proprietary technology provides operating leverage and speed to market Significant Scale Processing (p.a.) >350m sports bets >9bn casino spins >1bn poker hands played Flexible Currently supports: 100+ front-ends 27 languages 25 currencies Availability 99.95% service availability 70+ changes deployed per day Resource Backed IT staff Core locations in Hyderabad and Vienna M&A Enabler Rapid deployment & synergy creation 29

30 Brands Leading brands in leading markets Well established brands act as barriers to entry in more mature markets Multiple brands in one market provide a cross sell opportunity especially to lapsing customers Omni channel sports brands drive faster online growth through cost effective retail acquisition Marketing driven by advanced CRM capability Track record of revitalising underperforming brands e.g. bwin and partypoker, focus is now on Ladbrokes 30

31 Product development Product development remains a priority throughout integration GVC Brands Ladbrokes Coral Brands Sports Improved UX - Increased data integrations and improved post bet experience Combination bet BetBuilder Enhanced customer profiling Mobile wrapper launch 40% reduction in mobile load time (L) Extended Cash Out markets (L) Improved UX - horse racing & greyhound redesign (L&C) Build-a-bet enhancements (C) New concept game - Coral Millions Gaming New content providers in.it,.es and.be 7 new in-house games launched New table & lobby layouts (poker) Multi region/shared liquidity (poker) Integration of Cozy Live casino native app (L) Improved speed, stability & SEO (L) New concept game - Pick a Box (C) New desktop (C) Improved UX Bingo page redesign (G) New reward games (G) Platform/Core New loyalty program Unified navigation improved loading time Improved on-boarding journey GDPR New RG tools Improved App tracking capabilities Optimised sign-up/improved registration Fixed password recovery journey = 11k additional users GDPR 31

32 Marketing Creativity and technology driving engagement Track record of innovative marking and brand revitalisation Acquisition of Ladbrokes Coral enhances CRM capability Major brand campaigns launched for the World Cup: Brand revitalisation continued with a multi-format campaign featuring Maradona Brand relaunched with The smart money s on Coral campaign featuring Danny Mcbride Mass market campaign Bettors of Britain Add Image Add Image Add Image During World Cup: 143k FTDs >0.7m actives 98k FTDs >0.4m actives 121k FTDs >0.4m actives 32

33 Corporate Social Responsibility CSR strategy will reflect Group s position as industry leader Corporate New CSR Board committee established New position of Head of CSR created and filled Responsible Gaming Commitment to increase investment in RG initiatives beyond 0.1% of UK GGR 0.5m extra commitment to GamCare Youth Outreach Programme New RG training and education programme to be rolled out across all areas of the business GVC to become a Platinum Member of (US) National Council on Problem Gambling + providing funding for proposed National Survey of Gambling Employer Established Horizon our flagship Women in Leadership programme Improving our recruitment processes to remove any potential for diversity bias Dedicated Safety Management Centre established for UK retail Delivering on our 3 year plan continuing to drive our diversity and inclusion agenda Communities Ladbrokes Coral Trust funded > 8m to nearly 1,000 local charities/good causes since launch 100,000 donation to Bobby Moore Trust following World Cup campaign Expansion of staff volunteering programme Greater focus and coordination, together with increased funding the cornerstones of new communities strategy 33

34 Current Trading Trading in the period 1 July 2018 to 2 September ,2 was strong Group NGR +14% (cc +14%) buoyed by the final two weeks of the World Cup Online NGR +30% (cc +31%): Sports brands NGR +34% (cc +35%) Sports gross win margin+0.7pp Strong wagering +22% (cc +25%) Crystalbet contributed 5pp of growth Games brands NGR +17% (cc +16%) European Retail NGR +26% (cc +25%) UK Retail like-for-like NGR -4% (OTC sports margin -1.1pp) [1] Proforma basis [2] Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2018 exchange rates 34

35 Summary Strong financial and operational performance with market share gains in all main territories Integration progressing well MGM joint-venture leaves us very well placed for US sport betting market Sustainable growth enabled by: Proprietary technology Portfolio of leading brands Relentless product development Innovative marketing and advanced CRM Leading talent Dividend growth of 10% Strong current trading; on-track for the full year 35

36 36 Q&A