31 december 2015 - investis...

RESULTS FOR THE YEAR ENDED

31 DECEMBER 2015

1

AGENDA

Brian Mattingley | Introduction

Itai Frieberger | 2015 Overview

Aviad Kobrine | Financial Review

Itai Frieberger | Operational Review & Summary

Q&A

2

POC

VAT

CURRENCY MOVEMENTS

M&A DISTRACTION

THE PERFECT STORM

4

IN GREAT SHAPE

Another record year across the business

A result of proper planning and efficient

execution

Continued investment in people and

technology

Significant platform and content

enhancements on an ongoing basis

New regulated markets and products, with

more in the pipeline

Strong current trading

5

SUMMARY OF 2015 RESULTS

Revenue up 12% on a like for like basis1

B2C Revenue up 14% on a like for like basis1

Record Q4 Revenue up 20% for the Group 23% for B2C on a like for like basis1

Revenue impacted by adverse currency movement of $35m and $10m EU VAT

$32m2

newly introduced gaming duties

Adjusted EBITDA1

at $81m (2014: $101m)

Adjusted EBITDA margin1

at 17.4% (2014: 22.1%)

Adjusted PBT1

of $56m (2014: $68m)

Adjusted EPS1

of 15.9c (2014: 19.2c)

Strong Cash generation, net cash generated from operating activities represents 105% of Adj. EBITDA

Final Dividend of 4.0c per share (2014: 4.5c), 7.5c for the year (2014: 8.0c) plus a one-off 8.0c (2014:

7.0c), a total of 15.5c (2014: 15.0c) for the year

1 Like for like as defined in the 2015 annual report.

2 Excluding $2.1m UK POC incurred in December 2014.

.

6

AVIAD KOBRINE, CFO | FINANCIAL REVIEW

7

1 Totals in this presentation may not sum due to rounding. 2 Excluding depreciation of $8.9 million (2014: $9.0 million) and amortisation of $9.7 million (2014: $8.3 million). 3 Excluding impairment charges of nil (2014: $1.7 million) 4 Excludes retroactive duties and associated charges of $8.4m (2014: nil) 5 Excluding share benefit charges of $4.1 million (2014: $1.7 million)

PROFIT AND LOSS ACCOUNT 1

$m 2015 2014 % Change

Revenue (before EU VAT) 472.3 454.7 4%

EU VAT 10.2 -

Revenue 462.1 454.7 2%

Operating expenses2,3 127.4 130.3

Gaming duties4 50.0 15.8

Research and development expenses 36.8 40.7

Selling and marketing expenses 138.9 133.8

% of Revenues 30.1% 29.4%

Administrative expenses5

28.4 33.4

Adjusted EBITDA3,4,5

80.6 100.7 -20%

% of Revenues 17.4% 22.1%

Depreciation, Amortisation and Impairment 18.6 19.0

Share benefit charges, finance and other 6.4 6.1

Share of Joint Ventures loss 0.1 7.7

Adjusted Profit Before Tax 55.5 67.9 -18%

Acquisition costs & retroactive gaming duty 23.0 -

Profit Before Tax 32.5 67.9

Taxation 3.0 11.0

Profit After Tax 29.5 56.9

Adjusted EPS 15.9 ¢ 19.2 ¢ -17%

8

GROUP REVENUE

Revenue 2003–2015 ($m)

Revenue up 12% on a like for like basis to $507.7m (2014: $455m)

Reported Revenue up 2% to $462m (2014: $455m) despite new EU VAT and adverse currency movements

19.6% CAGR since 2003 on a like for like basis and 18.7% on a reported basis

20

70

120

170

220

270

320

370

420

470

520

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

59 75

123

157

217

263 247

262

331

376

401

455 462

35

10

EU VAT FX effect

$m

508

9

GROUP REVENUE

Quarterly Revenue 2010–2015 ($m)

Very strong Q4 2015 Revenue

Each quarter is higher than comparable quarter on a like for like basis

40

50

60

70

80

90

100

110

120

130

Q110 Q111 Q112 Q113 Q114 Q115Like for Like

69

75

94

103

114

119

40

50

60

70

80

90

100

110

120

130


61

79

92

97

111

126

40

50

60

70

80

90

100

110

120

130


61

86 92

94

114

124

40

50

60

70

80

90

100

110

120

130

140


71

91

97

107

115

138

Q1 ($m)

Q2 ($m) Q4 ($m)

Q3 ($m)

10

Revenue increase in core UK and European markets despite adverse currency movements and EU VAT

UK remains the largest market with 46% of Revenue in 2015

Regulated markets* represents 59% of Revenue, consistently increase over time

GEOGRAPHICAL SEGMENTATION

Geographic Segmentation, Revenue 2014 and 2015

2014

2015

$m

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

44%

37%

12%6%

UK Europe

(ex UK)

Americas ROW

46%

39%

10%5%

UK Europe

(ex UK)

Americas ROW

53%52% 50% 45%

41%

47% 48% 50%55% 59%

15%

25%

35%

45%

55%

65%

75%

85%

95%

2011 2012 2013 2014 2015

Non-Regulated Regulated

11

Revenue B2C 2010 – 2015 ($m)

Revenue up 14% on a like for like basis to $444.2m (2014: $391m)

Reported Revenue up 3% to $403m (2014: $391m) despite new EU VAT and adverse currency movements

14.9% CAGR since 2010 on a like for like basis and 12.7% on a reported basis

Strong performance continued to be led by Casino and Sport

REVENUE B2C

180

230

280

330

380

430

2010 2011 2012 2013 2014 2015

222

284

330

352

391

403

32

10

FX effect EU VAT

$m

444

12

70

80

90

100

110

120

Q412 Q413 Q414 Q415

86

93

100

113

150

160

170

180

190

200

210

220

230

H212 H213 H214 H215

166

175

198

211

Revenue B2C Half and Quarterly trend ($m)

Positive momentum continued well into H2

Strong Q4 2015

Momentum achieved despite adverse currency movements and EU VAT

REVENUE B2C

$m

Revenue B2C Quarterly trendRevenue B2C per Half trend

13

70

80

90

100

110

120

Q412 Q413 Q414 Q415

86

93

100

113

6

3

150

160

170

180

190

200

210

220

230

H212 H213 H214 H215

166

175

198

211

14

5

On a like for like basis underlying growth was considerably higher than reported Revenue

H215 up 16% over H214 on a like for like basis

Q415 up 23% over Q414 on a like for like basis

REVENUE B2C

$m

Revenue B2C Quarterly trendRevenue B2C per Half trend

Revenue B2C Half and Quarterly trend ($m)

14

0

50

100

150

200

250

Casino Poker Bingo Emerging Offering

221

94

47 30

261

90

48 45

FY14 FY15

Revenue B2C 2015 vs. 2014($m)

All product lines impacted by adverse currency movements

On a like for like basis, Revenue increased in all products with the exception of Poker

Casino up 18%, Poker down 3.9%, Bingo up 2.1%, Emerging Offering up 51.2%

REVENUE B2C BY PRODUCT

$m

Reported Revenue B2C per productRevenue B2C per product like for like basis

0

50

100

150

200

250

Casino Poker Bingo Emerging Offering

221

94

47 30

231

87

44 41

FY14 FY15

15

Revenue Casino B2C 2010 – 2015 ($m)

Casino growth continues, leveraged by unique content, increased mobile activity and

smart marketing approach

Successful launch of 777 brand and Slots in Spain

18% increase on a like for like basis

REVENUE CASINO B2C

80

100

120

140

160

180

200

220

240

260

2010 2011 2012 2013 2014 2015

117

148

165

190

221

231

23

8

FX effect EU VAT

$m

261

16

Revenue Poker B2C 2010 –2015 ($m)

Poker Revenue on a like for like basis down 3.9% to $90m (2014: $94m)

No. 2 position in global poker rankings* maintained, outperformed market in relative liquidity

Outperform industry average

REVENUE POKER B2C

$m

* Source Pokerscout.com Feb 2016

2

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013 2014 2015

38

61

88

94 94

87

FX effect EU VAT

90

17

Revenue Emerging Offering B2C 2010 –2015 ($m)

Emerging offering reported Revenue up 38% to $41m (2014: $30m), up 51% on a like for like basis driven

by Sport

Strong increases across all Sport measures including revenue, deposits, activity and customer acquisition

Sport product is currently offered in most of our B2C brands

REVENUE EMERGING OFFERING B2C

$m

10

15

20

25

30

35

40

45

50

2010 2011 2012 2013 2014 2015

16 22

25 24

30

41

4

FX effect

45

18

Revenue Bingo B2C 2013 – 2015 ($m)

Revenue on a like for like basis up 2% to $48m (2014: $47m)

New innovative offers and content are constantly introduced with more in the pipe line

While KPI’s improve the market remains highly competitive

REVENUE BINGO B2C

$m

20

25

30

35

40

45

50

2013 2014 2015

44

47 44

4

FX effect

48

19

CORPORATE CASH POSITION

Cash position 2015

Cash position remains strong with corporate cash net of customer deposits ahead of previous year

Maintain high EBITDA cash conversion ratio

Customer deposits increased 22%

-

20

40

60

80

100

120

Dividends

Paid

Customers

Deposits

Cash net of

Deposits

Net Cash from

Operating Activities

% of

Adj. EBITDA

53

82

96 105 %

$m

$m

$m

20

20.0%

30.0%

FY14 FY15

29.4% 29.4%

0.7%

EU VAT

Marketing ratio remains stable but customer acquisition increased 28%

Strong Revenue growth driven by optimised marketing and strong analytics

Lower Cost per Acquisition (CPA)

MARKETING COST RATIO

Marketing Costs 2015 vs. 2014

Marketing Costs Marketing Costs % of Revenue*

$m %

* Like for like ratio is based on Revenue before deduction of EU VAT

-

20

40

60

80

100

120

140

FY14 FY15

134 139

21

0%

20%

40%

60%

80%

2010 2011 2012 2013 2014 2015

37.1% 32.8% 30.2% 28.7% 28.7% 27.0%

34.9%30.9% 34.9%

29.4% 29.4% 29.4%

8.2%

8.3% 6.8%

7.4% 7.4% 6.0%

8.3%

9.0% 7.2%8.9% 8.9%

7.8%

0.6%

2.2% 3.1%3.5% 3.5% 10.6% Gaming duties

R&D

Admin. Expenses

S&M expenses

Operat ing expenses

COST STRUCTURE

Cost as a % of Total Revenue 2010 – 2015**

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

80.8%

Cost ratio to Revenue* at 81% (2014: 78%)

Continued efficiency improvements save for external factors

77.9%77.9%82.2%83.2%

89.1%

22

0%

2%

4%

6%

8%

10%

2008 2009 2010 2011 2012 2013 2014 2015

5.8% 5.6% 5.5% 5.9% 6.0% 5.5% 5.0% 4.6%

1.8%3.7%

1.1%1.0% 0.9%

0.8%0.6%

0.7%

CB PSP

PROCESSING COST

Cost as a % of Total Revenue 2008 - 2015

5.3%

Consistent reduction in processing fees as volume in regulated markets increases

Additional payment methods introduced, growth in deposits and optimisation of costs improve performance

over time

5.6%6.3%

6.8%6.9%6.6%

9.2%

7.6%

23

ADJUSTED EBITDA BRIDGE 2014 vs. 2015

Internal vs. External effects

Strong adjusted EBITDA mitigated an incremental $42m external impact of newly introduced gaming duties

and EU VAT

Before adjusting for adverse currency movements

$m

100.7

123.1

80.6

22.4

10.2

32.2

20

40

60

80

100

120

140

Adj. EBITDAFY 2014

InternalGrowth

Adj. EBITDABefore

POC & VAT

EU VAT Newly IntroducedGaming Duties*

Adj. EBITDAFY 2015

Increase Decrease

* Including incremental UK POC tax and newly introduced gaming duties in Austria, Romania, Denmark and Ireland

24

Continues improved performance over time despite external factors

Before adjustment for adverse currency movements

ADJUSTED EBITDA TREND

Adjusted EBITDA 2010 –2015

$m

29

56

67

76

101

81

32

10

8.0

28.0

48.0

68.0

88.0

108.0

128.0

148.0

2010 2011 2012 2013 2014 2015

EU VAT

Newly introduced Gaming Duties*

Adj. EBITDA

* Including UK POC and gaming duties in Austria, Romania, Denmark and Ireland Sport

123

25

Steady increasing dividend, hand in hand with strong cash generation

DIVIDEND

DIVIDEND PER SHARE ($c) 2012 - 2015

$c

9.0

14.0 15.0 15.5

56%

67%

72%

0%

10%

20%

30%

40%

50%

60%

70%

1.5

3.5

5.5

7.5

9.5

11.5

13.5

15.5

17.5

FY12 FY13 FY14 FY15

Base % change vs. FY12

26

BALANCE SHEET

$m 31-Dec-15 31-Dec-14

Non-current assets

Goodwill and other Intangible assets 157.3 157.2

Property, plant and equipment 11.2 15.5

Other non-current assets 3.6 1.4

172.1 174.1

Current assets

Cash and cash equivalents 178.6 163.1

Trade and other receivables 35.6 30.0

Total Assets 386.3 367.2

Equity

Share capital and share premium 5.4 4.5

Retained earnings and reserves 156.8 180.6

Total equity attributable to equity holders 162.2 185.1

Liabilities

Current liabilities

Trade and other payables 140.0 114.6

Customer deposits 82.4 67.5

Non-current liabilities

Deffered tax liabilities1.7 -

Total equity and liabilities 386.3 367.2

27

CASH FLOW STATEMENT

$m Year Ended 31 December 2015 2014

Cash flows from operating activities

Profit before income tax 32.5 67.9

Share benefit charges 4.1 1.7

Depreciation, amortisation and Impairment charges 18.6 19.0

Change in current assets and liabilities 38.4 25.7

Other non cash adjustments (2.6) 5.8

Cash generated from operations 91.0 120.0

Income tax paid (6.0) (8.1)

Net cash generated from operating activities 85.0 111.9

Purchase of property, plant and equipment (4.6) (5.5)

Internally generated intangible assets (6.8) (8.6)

Acquisition of intangible assets (3.0) (2.9)

Investment (1.2) 3.9

Net cash used in Investing Activities (15.6) (13.1)

Issue of shares 0.9 0.4

Dividends paid (53.5) (51.2)

Net increase in cash and cash equivalents 16.8 48.0

Cash and cash equivalents - beginning of year 163.1 115.8

Effects of currency translation (1.3) (0.7)

Cash and cash equivalents - end of year 178.6 163.1

28

OPERATIONAL OVERVIEW

29

30

2015 2016Q1 Q2 Q3 Q4

NEW PREMIUM 888 GAMES

888.ES SLOTS

WINK SLOTS

M&A EFFORT

888 IRELAND

888SPORT A BUSY YEAR

888.DK

888.RO

888SPORT.IT

A BUSY YEAR

777.COM

30

$508M2015

B2C | FTDs

CASINO | BETS

TOTAL | GROUP REVENUE

$376M2012

POKER | ACTIVES

SPORT | BETS

135%MAY 2015

100%JAN 2014

177%DEC 2014

244%APR 2015

300%DEC 2015

100%JUN 2014

108%DEC 2014

115%SEP 2015

120%DEC 2015

SPAIN | DEPOSITS

$401M2013

$455M2014

100%JUN 2014

126%DEC 2014

162%DEC 2015

100%JAN 2014

115%DEC 2014

140%AUG 2015

175%DEC 2015

* Revenue on a like for like basis

[ [

ITALY | ACTIVES

100%JUL 2014

150%DEC 2014

160%OCT 2015

203%DEC 2015

111%FEB 2015

120%AUG 2015

142%DEC 2015

100%JAN 2014

31

50%

70%

90%

110%

130%

150%

170%

190%

210%

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

Based on Jan 2010

FX effect

LONG TERM TREND

B2C DEPOSIT TREND

*FX effect rebase deposits back to original currency and than translate back to USD using 2014 rates for the purpose of a like for like real basis

32

C2 - NEW CASHIER

33

POKER OUTPERFORMANCE

Source: Pokerscout, February 2016

LIQUIDITY

0%

20%

40%

60%

80%

100%

120%

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

2013 2014 2015 2016

Month

ly Liq

uid

ity

Index

Operator 1 Operator 2 Operator 3 Operator 4 Operator 5 888Poker Industry

34

98 270 10

229$53m108

$4.8b21248m

OPERATIONAL MANAGEMENTCOMBINED TENURE

NEW GAME TITLES IN JACKPOT WINNING BINGO BRANDS

PROJECTS DELIVEREDGAMING LICENSES

UK MARKET SIZE PER H2GCTERABYTE OF DATA STOREDCOMMUNICATIONS SENT

35

WHAT’S UNDER THE HOOD?

36

B2C ACQUISITION

FTD’s 2015 vs. 2014

%

60%

80%

100%

120%

140%

160%

180%

200%

Group Poker Casino Bingo Sport

128%

104%

121%

141%

191%

37

B2C ACTIVES

Actives 2015 vs. 2014

40%

60%

80%

100%

120%

140%

160%

180%

200%

Group Poker Bingo Casino Sport

113%101%

115%

137%

185%

38

Based on average daily Bets

SPORT BETS

50%

150%

250%

350%

450%

550%

650%

750%

850%

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

2012 2013 2014 2015 2016

SPORT

39

Based on average daily Bets

SPORT LIVE BETTING SHARE AND DAILY EVENTS TREND

100%119%

147%

213%

315%

52%

56%

62%

65%67%

30%

35%

40%

45%

50%

55%

60%

65%

70%

50%

100%

150%

200%

250%

300%

350%

H2'13 H1'14 H2'14 H1'15 H2'15

Daily Events Growth

Live Betting proportion

SPORT

40

REGULATED MARKETS

41

888.ES GGR TREND (Euro Based)

0%

100%

200%

300%

400%

500%

600%

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

Bets

Poker House profit EUR Casino House profit EUR Sport House profit EUR

Launch of 888.es Spain Sport Launch Spain Slots Launch

888 SPAIN GGR GROWTH (EURO based)

42

888.IT DEPOSIT TREND

888 ITALY DEPOSITS (EURO BASED)

Ap

pro

ved

Dep

os

it E

UR

Mo

bil

e D

ep

os

it S

ha

re

%

0%

5%

10%

15%

20%

25%

30%

35%

65%

75%

85%

95%

105%

115%

125%

135%

145%

155%

165%

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

Approved Deposits EUR

Deposit mobile share

43 43

CASINOFLEX

-

2

4

6

8

10

12

14

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

2014 2015 2016

Daily Deposit Increase

# of Brands (left axis)

X 20

44

Build on another record year

Clear growth strategy

New markets

Continuance in sport growth

Non organic opportunities

Enhanced content portfolio, platform and product edge

Strong current trading

WHAT’S NEXT?

45

31 december 2015 - investis...

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