Click to edit roposed Acquisition of Ladbrokes Coral Group plc Creating a leading global gaming company December 2017
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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
Click ossible to edit offer summary 0.141 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
Click to edit Acquiring a complementary market leader
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
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 260 240 220 222 215 231 216 241 226 246 222 244 2,100 2,116 2,352 2100 nline business momentum 200 180 160 198 1,600 1,100 1,185 1,198 1600 1100 140 600 600 120 100 Q3 15 Q3 16 Q4 15 Q4 16 Q1 16 Q1 17 Q2 16 Q2 17 Q3 16 Q3 17 100 320 375 499 666 H116 H1 17 FY15 FY16 Net revenue nline 100 7 Sources: RNS announcements. Annual Report for the year ended 31 December 2016. Corporate resentation, June 2017. Ladbrokes Coral Final Results for the Y/E 31 Dec 2016. and Trading Update for the six months to 30 June 2017. Ladbrokes Coral Group Trading Statement 13 November 2017. Trading Statement 12 ctober 2017.
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
Net Gaming Revenue Click Leading to edit online and retail group NGR H1 17 472.8m c.75% regulated/ regulating NGR 1 LCL NGR FY16 2,352m 99.8% regulated NGR eer group NGR ( m) 3,500 100% 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 1.14 1,500 1,604 1,551 1,000 857 38.3% 731 nline 56.2% 500 544 516 385 356 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 2017. 2 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).
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 6 6.18 5 4 LCL 3 3.04 LCL 2 2.25 1.83 LCL LCL LCL 1 1.37 1.20 0.93 0.90 0.75 0.68 LCL 0 0.42 0.38 UK US Australia Germany France Italy Sweden Ireland Finland Spain Belgium Russia 10 Sources: H2 Gambling Capital as at 1 December 2017 2016 Gross Gaming Revenue. Company data. Ladbrokes Coral Annual Report for the year ended 31 December 2016
Click to edit roposed acquisition mechanics
Click roposed to edit mechanics Cash offer 32.7 pence in cash 632m + + Share offer 0.141 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) 2 5 10 20 30 40 50 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 909.00p - 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
Click to edit Summary
Click Refinanced to editdebt facilities n the back of solid H1 and Q3 2017 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, 2017 14
Total Shareholder Return (rebased to 100) Click roven to track edit record of shareholder returns 3500 3000 2500 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 2000 1500 1000 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 2017. Notes sourced from RNS announcements
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
Click to edit Q&A