Investor Pack May 2020 GVC – an attractive investment
• GVC is one of the largest global online-led sports-betting and gaming businesses of scale
• GVC has attractive differentiators • Track record of market leading growth, M&A and integration • Market & product diversity • Strong brand portfolio • Unique market leading proprietary technology • Commitment to leading the industry on safer gambling • Excellence of our people • Exciting US opportunity
• Strong track record of delivering for shareholders
Confident that we will emerge from this period in a position of strength, and are well placed to take advantage of a range of attractive growth opportunities 2 GVC – a leading global operator
GVC is one of the largest global online-led sports-betting and gaming businesses of scale
Online European Retail (Worldwide)
• NGR £2,170.7m (59% of Group) • EBITDA £522.1m (72% of Group1) • NGR £289.8m (8% of Group) • EBITDA £57.8m (8% of Group1) • 18 well established B2C sports and gaming brands • Italy #3 retail with strong multi- channel presence • 65% of NGR generated outside UK • Belgium #1 retail • Significant growth potential in existing and new markets • Ireland #3 retail
UK Retail JV with MGM
• NGR £1,127.8m (31% of Group) • Significant market growth • EBITDA £145.8m (20% of Group1) opportunity as sports betting opens up state by state • #1 operator in UK retail • GVC/MGM Roar operational in 10 • Market leading multi-channel offering states • Opportunity to grow online market • Included in Corporate division share, as well as Retail below EBITDA
3
NGR and EBITDA based on FY19 pre IFRS 16 1. Underlying EBITDA excluding corporate costs Strategic framework
TO BE THE WORLD’S LARGEST AND VISION MOST RESPONSIBLE SPORTS BETTING AND GAMING ENTERTAINMENT COMPANY
GREATER SCALE & STRATEGIC LONG TERM GEOGRAPHIC SAFER GAMBLING + = SHAREHOLDER VALUE IMPERATIVES DIVERSIFICATION
Proprietary Technology Market leading proprietary technology supporting the business through high quality products, proven scalability, and global platform flexibility
STRATEGIC Digital Retail US JV M&A Win with standout Optimise and future Deploy full GVC Support growth through PILLARS brands, advanced proof our retail estate, capability and leverage inorganic opportunities marketing analytics and whilst continuing focus MGM’s expertise to utilising expertise, brand products that engage on omni-channel develop highly strength, product and the global audience successfully US technology partnership
KEY Local Product + Brands + Marketing + People + ENABLERS Execution
4 GVC – a track record of growth, M&A and integration
A strong record of growth, M&A and successful integration
2004 2009 2012/13 2016 2018
IPO of Acquisition of Acquisition of Acquisition of Acquisition of Acquisition of 50/50 JV with Acquisition of CasinoClub Betboo Sportingbet bwin.party Ladbrokes Coral Crystalbet MGM Neds
A track record of growth Opportunities for further growth
YoY Total Online NGR Growth % of GVC FY19 Online NGR in countries… 24% …that are either …where online …where GVC is …where online regulated or market growing growing >10% pa penetration <20% 19% regulating >5% pa (ex UK) 14% 13% 12% 12% 12% 8% 5% 3% 4% 94% 80% 93% 81%
-3% 2019 2018 2017 2019 2018 2017 2019 2018 2017 2019 2018 2017
Competitor 1 Competitor 2 Competitor 3
5 Geographic diversification
Highly diversified global operator with >65% of Online NGR non-UK
Online Total NGR Top Countries NGR Share Share UK 35% 53% 12% 1% 8% 2% Germany 15% 9% 2% 2% 2% 2% 2% Australia 12% 7% 3% 35% 2% 3% 3% Italy 7% 9% 3% Georgia 3% 2% 2019 Online 7% 2019 Total 3% 53% Brazil 3% 2% 3% NGR NGR The Netherlands 3% 2% 7% 9% Austria 3% 2% 12% 15% 9% Spain 3% 2%
Greece 2% 1%
Belgium 2% 3%
6 Product diversification
Revenues are well diversified by product, with football revenues spread over multiple leagues
Group Online NGR Product Splits (2019)
Football by League
Gaming Sports
55% 45% Premier League 8% UEFA Champions League 5% Italian Serie A 5% Spanish La Liga 5% Friendlies (Domestic & International) 4% German Bundesliga 4% Europa League 3% Casino & Games 46% Football 20% Euro 2020 3%
Poker 4% Horse Racing 10% Remainder includes other leagues each <3% Bingo 3% Tennis 5% Other 2% Other Sports 10%
7 Market leading consumer focused brand portfolio
Well-established global and regional brands increase marketing efficiency and create barriers to entry
Country Online: Sports offering Online: Games offering
UK *
Germany
Australia n/a
Italy *
Belgium *
Ireland *
Georgia
Brazil
Worldwide
8
* Multi-channel offering (Note: In Italy multi-channel offering for Eurobet brand only, In Belgium multi-channel offering for Ladbrokes brand only) Leading brands in our largest Online markets
Consistent market share gains outperforming the market
Top 5 Countries – FY19 Online NGR Estimated Operational Highlights Online FY19 NGR share Growth in cc1 Market Position3 • Driven by the re-invigoration of the Ladbrokes brand • Ladbrokes is the most top-of-mind brand for online sports-betting (59%4) with only 6%5 sports UK +11% 1/2 market share, so significant growth opportunity • Foxy Bingo continues to grow with NGR +21% post platform migration • Growth despite impact of Paypal removal on Casino in Oct 2019 Germany +15% 1/2 • Launched campaigns aimed at creating a ‘passionate and authentic’ identity to cement bwin brand as a leading online sports betting and gaming brand in Germany
• Market remains competitive following implementation of POCT6 and tightening in regulatory Australia +22%2 3 framework resulting in increased market overrounds and reduced marketing rate • ‘Best-of-both’ sharing between Ladbrokes and Neds driving profitable growth
• Remain resilient post advertising restrictions benefiting from the retail presence of Eurobet Italy +21% 1 • Integrated Eurobet.it online platform onto GVC gaming platform providing access to leading gaming content
• New sports feeds providing over 8,000 additional markets daily Georgia +59% 1 • Access to Group marketing capabilities and casino content
• Rollout of new partypoker mobile app during Q4 – expected to strength acquisition capability partypoker +8% 2 in 2020
9 (1) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2019 exchange rates (2) Neds adjusted to a proforma basis (3) Company estimates based on FY19 net gaming revenue (4) Source: The Nursery (5) Source: Gambling Compliance FY18 Online Sports NGR (6) Point of consumption tax Unique market leading proprietary technology
Powerful proprietary technology means we are in control of our destiny
OMNI-CHANNEL DEVICES Sustainable Competitive Advantage
• Fully integrated proprietary tech platform • Full product suite API SERVICES • Integrated retail and omni-channel solution 2 WAY INTEGRATIONWAY SERVICES 2 • Growth ready – extremely scalable • Highly stable and secure • Multi-jurisdiction compliant SPORTS CASINO POKER BINGO • Quick to market • Rapid deployment of changes PLAYER MANAGEMENT SYSTEM • Cost efficient operation and development
SUPPORTING ECO SYSTEM TOOLS
Processing (p.a.) Processing (p.a.) Processing (p.a.) • 99.93% service availability Currently supports: • 2000+ IT staff Significant >420m sports bets High >350m sports bets UniqueSignificant 70+ front-ends PowerfulSignificant >350m sports bets >12bn casino spins • 82+>10bnchanges casino deployed spins per Scale 33 languages Scale •>10bnCore casinolocations spins in Scale Availability day Flexibility Resources Hyderabad + Vienna >5bn poker hands >1bn poker hands 42 currencies >1bn poker hands
Ownership of a multi-territory fit for purpose sportsbook is a major differentiator – very difficult for competitors to replicate 10 Customer focus ensures best in class customer experience
Global platform provides unique ability to build leading products and ‘develop once, deploy multiple times’
SPORTS CASINO POKER BINGO
• New responsive/adaptive sports • Playtech integration generating • partypoker.it to launch in March • New client delivered for B2C brands front-end incremental growth • Mobile Portrait Table for SPINS & Fast and B2B partners • New scalable trading platform • Innovative Global Jackpot feature Forward delivering best-in-class • Client optimised for mini games • Optimised core betting journeys driving customer engagement mobile app to drive acquisition and driving NGR growth and >15% driving NGR incl. Edit-My-Acca & • Launched over 1,000 new games provide a more engaged experience increase in game launches Auto Cashout • Integrated & live with 24 new game • Run it Twice for Fast Forward allowing • New rooms with unique features, • Ladbrokes Bet Builder with a unique studios better distribution of winnings to drive including Friends & Cash-Out Bingo “5-A-Side” feature reinvestment of rake • New game scheduler driving margin • Omnia rolled out in Coral estate • Mac Table 2.0 & Tournament Lobby improvements 1.0 delivering feature parity vs • Free 2 Play - Ladbrokes & Coral retail Windows for Mac players to drive acquisition and retention
Data-led (Customer DNA) design and delivery to provide localised/personalised product experience 11 Technology: Enabling growth and safer gambling
Our proprietary technology is key to delivering scale, diversification and safer gambling
GREATER SCALE AND GEOGRAPHIC DIVERSIFICATION Core business growth US expansion Bolt-on M&A
• Superior capabilities in data / analytics, • Full capabilities and all advantages of the • Fast and proven processes to integrate new marketing technology, customer experience global platform acquisitions (e.g. Crystalbet) • Best in class digital products • Enriched with specific local enhancements • Suitable architecture to combine global tech stack with local platforms • Leading retail and omni-channel offering • Quick deployment for fast market entry • Flexible interfaces for 2-way integrations at any level (products, content, wallet, etc.)
GVC PROPRIETARY TECHNOLOGY
SAFER GAMBLING
• More effective player protection due to holistic player view in the Group (cross-account monitoring, comprehensive datasets, etc.) • Ability to enhance platform systems to improve player protection without third party software provider involvement • Extensive experience in delivering varying protection requirements across multiple jurisdictions
12 Market leading approach to Responsible Gambling
Our ambition to be the safest and most trusted gambling operator in the world
Safer Gambling • Launched ‘Changing for the Bettor’ strategy • Five-year, multi-million pound research project with Harvard Medical School • Roll-out of youth-focused education syllabus with GamCare and EPIC Risk Management • Increased GVC funding for research, education and treatment 10-fold, to 1% of UK GGR by 2022 • Voluntary introduction in Aug 2019 of pre-watershed ‘whistle-to-whistle’ TV advertising ban on live sport • Betting and Gambling Council created in Nov 2019 • UK Gambling Commission charged GVC with leading the development of code of conduct for VIP and high value customer reward schemes • Additional measures implemented during COVID-19 crisis
Responsible Employer • Second year of three-year Diversity and Inclusion plan • Launched multi-cultural workstream • Partnered with Stonewall – LGBT campaign • Introduced employee ‘Well-me’ programme focusing on physical and mental health • Target to reduce carbon footprint by 15%
13 Regulatory update
Germany, Brazil and The Netherlands heading towards full regulation
• Full regulation of betting and gaming expected earliest mid 2021 with restrictions • Key restrictions can be relaxed on grounds of customer affordability
Germany • Sports-betting licence process underway • Significant uncertainty remains around timing • Current proposals include restrictions that can be relaxed by the regulator in individual licences • Continue to focus on customers and investing in the bwin brand
• UK Gambling Commission confirmed ban on use of online credit cards effective 14 April 2020 UK • Following the General Election, the new Government has committed to reviewing the 2005 Gambling Act
• Latest draft of future sports betting regulation issued for public consultation in February 2020 provides for 30 sports betting concessions and a 3% turnover tax Brazil • Due to recent resignations within the Brazilian regulatory body GVC is of the view that regulation will be delayed further to at least H2 2020
• Online gambling expected to regulate on 1 July 2021 The Netherlands • In the meantime under the Dutch tolerance policy GVC is allowed to continue its non-targeted offer to the market
14 Industry track record across our people
CEO CFO COO Kenneth Alexander Rob Wood Shay Segev
• Joined GVC in 2007 • Group CFO since Mar 2019 • Group COO since Mar 2016 • Former MD for Europe • With Group for 7 years • Former COO of Playtech of Sportingbet • Former CFO, UK Retail for over 6 years • 20 years within gaming • Former Senior VP, Cerberus • 13 years within gaming sector Capital sector
MD, Digital CEO – ROAR (US JV)1 Adam Lewis Adam Greenblatt
• MD, Digital since May 2019 • CEO–US JV since Oct 2018 • Former CMO of GVC since • Former Director of Corp Dev Feb 2016 and Strategy, Ladbrokes • 19 years within gaming • 17 years within gaming sector sector
15
1 JV with MGM Resorts Significant US opportunity
16 US JV with MGM
ROAR has access to a powerful combination of industry leading assets
Proprietary retail and online • 50/50 exclusive joint venture Brand technology platform Market Access • 25-year, long term in MGM operating commitment jurisdictions • $100M initial commitment by each party Retail sportsbook net economics + = • Shared governance Brand 33+ million Stadium Technology net member database • ~150 employees by the end of economics and omni-channel 2019 opportunity Partnerships with sports Leading expertise in betting & • Access to parent assets and leagues online gaming, including trading resources and 30+ teams support
17 Significant US Opportunity
US sports betting and igaming market is expected to be worth at least $12bn GGR by 2025
Market access roll-out Addressable market Market access overview
% of US Sports-betting Market Active / State Population market status Access Imminent • Secured access to 20 states (c50% Michigan 3.0% of US population) with more to ✓ ✓ New Jersey 2.7% follow ✓ ✓ ME WA VT Colorado 1.8% NH ✓ ✓ MT ND MA • Currently live in 10 markets and Nevada 0.9% MN NY ✓ ✓ OR aiming to operate in 12+ markets by ID RI Mississippi 0.9% SD WI MI CT ✓ ✓ WY PA NJ the end of 2020 (c20% of US DE Indiana 2.0% Legal and IA OH population) ✓ ✓ NV NE IN MD West Virginia 0.5% operating IL WVVA D.C. ✓ ✓ UT KY • Pace of deployment is increasing, Oregon1 1.3% CA CO KS MO ✓ ✓ NC expecting to be active in all future New Mexico1 0.6% TN ✓ ✓ SC states as soon as they open Delaware1 0.3% AZ NM OK AR ✓ ✓ MS AL GA Pennsylvania2 3.9% 2020 • Rolled out >100 self-service kiosks ✓ TX LA Iowa 1.0% 2021 in Nevada in February, leveraging ✓ FL Tennessee 2.1% 2020 MGM’s strong footprint in Las Legalised not ✓ Virginia3 2.6% operational 2020 Vegas ✓ California 12.0% ✓ • Performed strongly in Michigan and Louisiana 1.4% Legend – legal sports betting: ✓ Nevada, before casinos were Maryland 1.8% Live in 2018 (8 states) Bill introduced ✓ temporarily closed due to Covid19 Massachusetts 2.2% (not legalised) Live in 2019-2020 (13 states) ✓ Missouri 1.9% Live in 2021-2022 (11 states) • Closely following regulatory ✓ Ohio 3.6% Live in or after 2023 (16 states) changes and ready to capitalise on ✓ New York4 5.9% TBD TBD any new market opening ✓ Unlikely to legalise (3 states) 18
Source: Market size - Morgan Stanley Research; Legal sports betting market roll-out - Eilers & Krejcik – April 2020 (1) B2B only (2) iGaming access only (3) Virginia legal effective 1 July 2020 – Direct access (4) MGM Empire City legislative change for sports-betting access Foundations of a leading US operator
Very strong strategic enablers to deliver a leading US position
Key strategic enablers Current status
• Access secured via MGM at a lower cost vs market • Access to 20 markets secured to date • Additional access secured via other partners Market Access • Currently operating in 10 markets • Proprietary platform enables B2C and B2B market • 12+ markets by the end of 2020 entry
• All live states offering BetMGM as the lead sports brand • MGM’s retail sportsbook now rebranded to BetMGM Leading Brands • Partypoker to relaunch as national US Poker brand • Stadium continuing to offer B2B services
• Proprietary retail and online platform, including Proprietary • Global GVC platform deployed in all online states advanced trading, marketing, CRM and BI tools Product / • Localised for the US market • Proven capability and superiority worldwide • All MGM Sportsbooks on GVC retail technology Technology • Lower cost technology vs competitors
• Key strategic partnerships in place to deliver player access Access to nationwide in both retail and digital players • Exclusive access to one of the largest fantasy player bases • Integration with MGM’s M life loyalty programme in progress
19 Leading technology for the US from GVC’s platform
Powerful proprietary technology gives us a unique and sustainable competitive advantage
B2B Operators With Betting-led B2B Multi-product B2B Suppliers In-house Technology Suppliers
Models & Algorithms ✓ ✓ ✓ ✓ ✓ ✓ ✓ Bet Engine ✓ ✓ ✓ ✓ ✓ ✓ ✓ Trading & Risk Management Tools × × × × ✓ ✓ ✓ Trading Services × × ✓ ✓ ✓ ✓ ✓ Risk & Liability Strategy × × × ✓ ✓ ✓ ✓ Turnkey Sportsbook × × × × ✓ ✓ ✓ APIs ✓ ✓ ✓ ✓ ✓ ✓ ✓ Casino Management & Loyalty Integration × × × × ✓ ✓ ✓ Platform × ✓ ✓ ✓ ✓ ✓ ✓ Marketing & Bonusing Tools ✓ ✓ ✓ ✓ ✓ ✓ ✓ Casino Integrations × × ✓ ✓ ✓ ✓ ✓ Slot Provider × × × ✓ ✓ ✓ ✓ Poker Network × × × × × ✓ ✓ Managed Services × × ✓ ✓ ✓ ✓ ✓ Retail Sportsbook ✓ ✓ ✓ ✓ ✓ ✓ ✓ Omni-Channel Journeys × × × × ✓ ✓ ✓
20 Proprietary technology is a strategic advantage
Powerful proprietary technology gives us a unique and sustainable competitive advantage
Proprietary Platform Technology
Retail Sports × × × ✓ ✓ ✓
Online Sports × × ✓ ✓ ✓ ✓
Online Casino × × × ✓ ✓ ✓
Online Poker × × × × ✓ ✓
Online Bingo × × × × × ✓
21 Access to players – Retail, Loyalty & Omni-channel
Huge opportunity to leverage MGM’s customer base, retail presence and omni-channel capabilities
MGM operates 9 properties and 45% of all rooms on • Example Customer Journey the Las Vegas strip • All MGM retail sportsbooks now migrated to GVC technology and rebranded to BetMGM • BetMGM app launched in NV • BetMGM app allows smoother enrolment and improved in-play experience with opportunities to continue betting in customers’ home states (where allowed) • Integration with M life loyalty programme in Q3 FY20 to provide all benefits to BetMGM customers • Self-serve kiosks added to enhance player experience and extend footprint beyond the sportsbooks • Omni-channel strategy to be extended further in NV, NJ, MS and MI
22 Access to players – Yahoo Sports & Buffalo Wild Wings
Exclusive partnerships with access to millions of sports fans and players
• Exclusive partnership wherein BetMGM powers sports betting across Yahoo • Exclusive, nationwide sports betting assets partnership with BWW, the leading U.S. • Yahoo Sports reaches 64m monthly sports bar operator users and c9m Fantasy players • 1,200+ locations, each with 50-60 TVs displaying sports content to a highly • Partnership launched in Nov with relevant base of 30m+ customers per year integrations on web and Yahoo Sports app, plus direct marketing • Bespoke content driving customers to register and bet with BetMGM (where • Focus now on more advanced product allowed) or to free-to-play app (more than integrations, e.g. single account and 300,000 free-to-play unique users) seamless wallet, as well as stronger Co-branded television stream live in NJ interplay between brands • • Focus on digital promotions and targeted campaigns
23 US – MGM & GVC a winning combination
• Market access: Access via MGM with licensing advantage, lobbying power and multi-state reach
• Access to players: Access to significant pool of players through MGM as well as through partnerships with BWW and Yahoo Sports
• Proprietary technology: Proven capability, superiority worldwide and omni channel expertise
• Leading brands: MGM is a leading US gaming brand and Partypoker is a leading global poker brand
Established brands, proprietary technology, player and market access will create a leading position in the US
24 Q1 FY20 and Covid-19 Update
25 Encouraging start to 2020
Strong start to the year, however the closure of retail outlets and cancellation of sports events significantly reduced revenue from mid-March
• Key Q1 highlights • Total Group NGR +1% (+2% cc1) • Online NGR +16% (+19% cc1), with continued strong growth in all major territories • UK Retail like-for-like (“LFL”) 2 NGR -19% • European Retail NGR -3% (flat cc1) supported by continued market share gains in Italy • For the period 1 January to 15 March 2020 all divisions performed strongly, supported by favourable sports margins: • Group NGR +9% (+11% cc1) • Online performed strongly across both gaming and sports, with NGR +20% (+23% cc1). Since then there has been an encouraging performance in gaming in the absence of sporting events, in line with the Group’s expectations • UK Retail like-for-like (“LFL”)2 NGR -5% despite the annualisation of the triennial review impacts • European Retail delivered strong NGR growth at +20% (+24% cc1)
26 (1) Growth on a constant currency basis is calculated by translating both 2020 and 2019 performance at the 2020 exchange rates. (2) UK Retail numbers are quoted on a LFL basis. During the period, there were an average of 3,131 shops in the estate, compared to an average of 3,464 in the same period last year. COVID-19 planning update
COVID-19 Impacts: Average monthly cash outflow c£15m per month with target of breakeven
• Initial estimates of impact on EBITDA of retail shutdowns and sports cancellations of approximately £100m per month • A number of mitigating actions were swiftly identified reducing the EBITDA impact to approximately £50m per month • As a result, the average monthly cash outflow limited to approximately £15m per month • Confident that further cost actions will enable us to achieve our target of reducing the cashflow to breakeven • New £535m RCF agreed providing ample flexibility on covenants through to 30 September 2021
• The following table sets out, for illustrative purposes only, the effect of our modelling and mitigating actions on EBITDA and average cashflow over a month of severe COVID-19 impacts:
27
1) As at 31 January 2020, company compiled EBITDA consensus for the financial year to 31 December 2020 was £776.3m on a pre-IFRS 16 basis. FY19 Update Overview
• Strong operational momentum and financial performance
• Group underlying proforma EBITDA1 £678m (pre IFRS 16), -10% YoY but c£50m ahead of original consensus2
• Online continued double digit NGR growth with market share gains in all major territories
• UK Retail’s excellent execution of triennial review mitigation plans resulted in better than anticipated performance
• Integration on track with Coral and Gala Bingo platform migration completed
• US platform and structure now in place, momentum building
• Total 2019 dividend payment of 35.2p (+10%) in line with previous guidance
• Leading the industry in Responsible Gambling initiatives
• Strong start to the year, supported by strong sports margins • Group NGR +5% cc3 with Online NGR +16% cc3
(1) The Group’s proforma results for 2019 are the 2019 reported results adjusted to remove the impact of IFRS 16. The Group’s proforma results for 2018 are unaudited and presented as if the current Group, post the acquisition of Ladbrokes 29 Coral Group plc, had existed since 1 January 2018. The results of Crystalbet and Neds are included from the dates of acquisition (11 April 2018 and 28 November 2018 respectively) (2) Consensus 1 January 2019 Bloomberg FY19 EBITDA of £630m which was adjusted for previously guided impacts not updated in consensus at the time including Triennial Review timing, increases in UK, Australia and Italy online taxes and Neds acquisition (3) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2020 exchange rates Financials: Group Income Statement
Strong financial performance, results at the top end of previously upgraded guidance
Reported1 Proforma2 • Group proforma NGR +2% (+3% cc) Pre Pre • Online NGR +13% (+14% cc) IFRS 16 IFRS 16 • UK Retail NGR -15% (-12% LFL7) 3 4 Year ended 2019 2019 2018 Change 2019 2019 2018 Change CC • European NGR +4% (+5% cc) 31 December £m £m £m % £m £m £m % % Net gaming revenue 3,655.1 3,655.1 2,979.5 23% 3,655.1 3,655.1 3,571.4 2% 3% • Group proforma underlying EBITDA £678m Revenue 3,600.5 3,600.5 2,935.2 23% 3,600.5 3,600.5 3,523.6 2% 3% (pre IFRS 16), -10% YoY but c£50m ahead Gross profit 2,378.2 2,378.2 2,004.2 19% 2,378.2 2,378.2 2,404.4 (1%) of original consensus Contribution 1,883.2 1,883.2 1,598.8 18% 1,883.2 1,883.2 1,939.8 (3%) • After adjusting for Triennial Review and Underlying EBITDAR5 782.7 782.7 723.7 8% 782.7 782.7 864.3 (9%) incremental taxes +14% Underlying EBITDA5 761.1 678.3 640.8 19% 761.1 678.3 755.3 (10%) • Net debt at 31 Dec 2019 (pre IFRS 16) Operating Profit5 520.0 490.1 520.8 - 520.0 490.1 610.1 (20%) £1,822.7m, net debt / EBITDA 2.69x (2.84x excl. FX benefit on debt retranslation) Memo 2019 2018 No of shares (m) 582.3 581.9 • Total 2019 dividend of 35.2p (+10%) in line Diluted EPS (26.4) (12.2) with previous guidance Adj. diluted EPS6 64.2 76.3 Dividend/share (p) 35.2 32.0 Pre IFRS 16 Net debt (£m) (1,822.7) (1,896.6) Net debt/EBITDA 2.69x 2.51x Post IFRS 16 Net debt (£m) (2,169.8) n/a Net debt/EBITDA 2.85x n/a
(1) 2019 and 2018 reported results are audited and reflect the acquisition of the Ladbrokes Coral Group plc on 28 March 2018. The 2019 pre IFRS 16 financials are unaudited (2) The Group’s proforma results for 2019 are the 2019 reported results adjusted to remove the impact of IFRS 16. The Group’s proforma results for 2018 are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 January 2018. The results of 30 Crystalbet and Neds are included from the dates of acquisition (11 April 2018 and 28 November 2018 respectively) (3) Percentage change between 2019 pre IFRS 16 vs 2018 proforma (4) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2019 exchange rates (5) Stated pre separately disclosed items (6) Continuing EPS adjusted for the impact of separately disclosed items, FX movements on financial indebtedness and gains/loss on derivative financial instruments (7) UK Retail numbers are quoted on a LFL basis. During 2019 there was an average of 3,341 shops in the estate, compared to an average of 3,524 in 2018. Financials: Proforma Underlying EBITDA Bridge
Strong operational momentum in Online and UK Retail, ahead of expectations
• Underlying EBITDA growth excluding regulatory adjustments and TR impact: +14% • £52.0m Online (UK RGD, Italy taxes, Australia POCT) • Online EBITDA growth excluding regulatory impacts: +20% • £4.7m European Retail (Italy taxes and ROI revenue tax)
£(56.7)m £82.8m
£(2.9)m £(4.1)m £4.2m £(118.0)m £88.4m
£12.1m
£755.3m £761.1m £698.6m £678.3m
1/2 2 2/3 2 2 2 Other Online IFRS16 UK Retail Corporate TRimpact Rebased Regulatory TRimpact preIFRS 16 adjustments FY18 EBITDA FY19 EBITDA FY19 EBITDA FY18 EBITDA UK Retail excl EuropeanRetail 31
(1) B2 Stakes cut to £2 implemented 1 April 2019 (2) Pre IFRS 16 (3) Online estimated to have benefited from Triennial Review by £3m in year (£5m annualised) more than offset by lapping the FIFA World Cup Online
Continued double digit NGR growth with market share gains across all major territories
Proforma1 • NGR +13% (+14% cc) Pre • UK +11% IFRS 16 • Germany +15% cc Year ended 2019 2019 2018 Change2 CC3 • Australia +43% cc (+22% adj Neds proforma) 31 December £m £m £m % % • Italy +21% cc Sports wagers 11,216.7 11,216.7 10,251.4 9% 11% • Crystalbet +59% cc adj proforma • Partypoker +8% cc Sports margin 11.1% 11.1% 10.5% 0.6pp 0.6pp • Contribution margin 40.9%, -1.7pp vs 2018 Sports NGR 966.5 966.5 835.4 16% 17% • Adverse regulation -2.4pp (£52m, incl -£6m vs guidance in Australia) Gaming NGR 1,189.1 1,189.1 1,055.7 13% 13% and increase in regulated revenue mix (-1.1pp) B2B NGR 15.1 15.1 24.0 (37%) (38%) • Offset by improved Marketing rate (+1.3pp), cost of sales NGR 2,170.7 2,170.7 1,915.1 13% 14% reclassification and synergies (+0.5pp) VAT/GST (54.6) (54.6) (47.8) (14%) (16%) Revenue 2,116.1 2,116.1 1,867.3 13% 14% • Operating costs 10% higher Gross profit 1,367.8 1,367.8 1,265.0 8% • Crystalbet and Neds acquisitions (+3pp), cost of sales Contribution 887.2 887.2 816.4 9% reclassification (+2pp) and underlying inflation (+5pp) Contribution margin 40.9% 40.9% 42.6% (1.7pp) Underlying EBITDA +7% pre IFRS 16 Operating costs (352.2) (352.2) (319.3) (10%) • • Excluding regulatory adjustments5 underlying EBITDA pre IFRS 16 Underlying EBITDAR4 535.0 535.0 497.1 8% +20% Rent and associated costs (1.1) (12.9) (11.4) (13%) 4 Underlying EBITDA 533.9 522.1 485.7 7% • Depreciation and amortisation 28% higher pre IFRS 16 Share based payments (5.5) (5.5) (2.8) (96%) • Increase driven by (1) prior year IFRS 3 fair value adjustments, (2) Underlying depreciation and amortisation (116.0) (105.2) (82.2) (28%) D&A of integration capex costs, and (3) acceleration of D&A on Share of JV income 0.8 0.8 0.5 60% redundant technology assets Operating profit4 413.2 412.2 401.2 3%
(1) The Group’s proforma results for 2019 are unaudited and reflect the 2019 reported results adjusted to remove the impact of IFRS 16. The Group’s proforma results for 2018 are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 January 2018. The results of Crystalbet and Neds are included from the dates of acquisition (11 April 2018 and 28 November 2018 respectively) (2) Percentage change between 32 2019 vs 2018 on a pre IFRS 16 basis (3) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2019 exchange rates (4) Stated pre separately disclosed items (5) Prior year rebased for UK RGD, Italy tax and Australia POCT Online: key Metrics
2019 Metric Results Tax / Reclassification Underlying Result Comments vs Guidance
In line with double digit guidance, benefit of NGR growth +14%1 - +14%1 Crystalbet/Ned offset by lapping WC 2018 and Switzerland
Ahead of 23% guidance due to strong NGR Marketing rate 22.1% - 22.1% growth and early synergies
0.3pp (£6m) cost Ahead of 40% guidance, driven by marketing Contribution margin 40.9% 40.6% reclassification rate
-2pp (£-6m) cost In line with 8% guidance, 3ppt inflation driven by Operating cost inflation 10% 8% reclassification Crystalbet/Neds acquisitions
Operating leverage +20pp (£52m new online Not guided. Natural operating leverage in the 14% 34% (pre IFRS 16) taxes) 30%s (contribution less opex inflation)
33 (1) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2019 exchange rates (2) Formal guidance currently withdrawn UK Retail
Excellent execution of triennial review mitigation plans has resulted in better than anticipated performance
Proforma1 • Triennial Review (implemented 1 April 2019) Pre • Results better than anticipated IFRS 16 • £15m further benefit now anticipated in 2020 Year ended 2019 2019 2018 Change2 • Full year 2019 TR impact estimated at £118m 31 December £m £m £m % • Total 450 closures (half previous guidance) OTC wagers 3,182.7 3,182.7 3,084.5 3% • TR closures of c200 completing in Q1 2020 OTC margin 17.9% 17.9% 17.9% - • OTC NGR +3% (LFL4 +7%) • Benefit from part-substitution of displaced B2 revenue, earlier than anticipated OTC NGR / Revenue 565.9 565.9 547.3 3% industry closures and strong SSBT performance (LFL wagers4 +46%) Machines NGR / Revenue 561.9 561.9 780.7 (28%) • Roll-out of new SSBT cabinets increasing density to 4-5x per shop Total NGR / Revenue 1,127.8 1,127.8 1,328.0 (15%) • OTC margin 17.9%, flat YoY, as strong football results, particularly in Q4, Gross profit 817.7 817.7 952.2 (14%) offset softer margins in greyhounds and horse racing Contribution 812.6 812.6 948.3 (14%) • Machines NGR -28% (LFL4 -26%) Contribution margin 72.1% 72.1% 71.4% 0.7pp • ‘Slots first’ strategy paying dividends (cabinets, content, game launches) Operating costs (585.1) (585.1) (607.9) 4% • Improved trend in Q4 (LFL4 -31% vs -36% in Q3) post competitor closures Underlying EBITDAR3 227.5 227.5 340.4 (33%) • Operating costs 4% lower Rent and associated costs (19.6) (81.7) (88.7) 8% • Shop closures and central overhead reductions following triennial review Underlying EBITDA3 207.9 145.8 251.7 (42%) Share based payments (1.0) (1.0) (0.3) (233%) • Underlying EBITDA -42%, but £30m ahead of original TR guidance Underlying depreciation and amortisation (72.7) (37.6) (40.2) 6% Share of JV income - - - - Operating profit3 134.2 107.2 211.2 (49%)
No of shops at 31 December 2019: 3,233 (2018: 3,475)
(1) The Group’s proforma results for 2019 are unaudited and reflect the 2019 reported results adjusted to remove the impact of IFRS 16. The Group’s proforma results for 2018 are unaudited and presented as if the current Group, post the 34 acquisition of Ladbrokes Coral Group plc, had existed since 1 January 2018. The results of Crystalbet and Neds are included from the dates of acquisition (11 April 2018 and 28 November 2018 respectively) (2) Percentage change between 2019 vs 2018 on a pre IFRS 16 basis (3) Stated pre separately disclosed items (4) UK Retail numbers are quoted on a LFL basis. During 2019 there was an average of 3,341 shops in the estate, compared to an average of 3,524 in 2018. UK retail
UK Retail business is very well-placed to take market share as the industry transitions to a post Triennial Review
2019 Key Highlights 2020 Key Focus Areas
• SSBTs: Rolled out over 4,000 new Infinity Betstation cabinets in the Triennial Review UK and 800 Storm cabinets in Ireland – now reaching c10,000 • Closures concluded with c200 shops closing in Q1 2020 with 450 • Slots: Rolled out new market leading premium slots proposition post shops closed in total triennial review whilst enhancing our Responsible Gambling tools • Ongoing shop closures thereafter: 2-3% p.a. • EPOS system rolled out in Coral • Digital marketing screens rolled out across c50 shops SSBT and Technology • Rolled out 2 new concept format shops • Rollout a further c4,000 new SSBT Betstation cabinets increasing • Closer alignment with digital including launch of 1-2-Free play in density per shop from 3x to 4-5x Ladbrokes Retail • EPOS rollout to Ladbrokes • Continuing to roll out digital market screens to shops
Driving Online Growth • Continue improving the omni channel journey via new development e.g. virtual card and auto enrolment • 2m+ Retail customers signed up to Connect and Grid • Multi-channel customers1 contributed 15% of ladbrokes.com NGR and 19% of coral.co.uk NGR
Cash Generation • Over £100m of free cashflow per annum • c14% ROIC2
35 (1) Customers who have a Grid/Connect account who have registered/deposited in shop (2) Cash return defined as unlevered cash flow attributable to the UK Retail business as a percentage of the implied valuation at the time of the Ladbrokes Coral Group acquisition after adjusting for the impact of the Triennial Review European retail
Strong underlying growth in sports and virtual in Italy, offset by virtual disruption in Belgium, incremental taxes and one-off costs
Proforma1 • Total NGR +4% (+5% cc) Pre • Strong growth in Italy at +9% cc; flat on a cc basis in Belgium and IFRS 16 ROI Year ended 2019 2019 2018 Change2 CC3 • Italy growth +5pp ahead of Retail sports market, taking market share 31 December £m £m £m % % OTC wagers 1,659.9 1,659.9 1,571.4 6% 6% • OTC NGR +4% OTC margin 17.4% 17.4% 17.7% (0.3pp) (0.3pp) • Strong football wagers in Italy (+9% cc)3 and Belgium (+19% cc)3 • Other OTC NGR also in growth as strong virtual in Italy (+17% cc) Sports NGR / Revenue 218.2 218.2 210.2 4% 4% more than covered disruption to virtual in Belgium in Q4 Adverse YoY margin for all territories (Belgium football -2.8pp) Other OTC NGR / Revenue 69.3 69.3 66.0 5% 6% • Machines NGR / Revenue 2.3 2.3 2.6 (12%) (9%) • Contribution margin -1.9pp Total NGR / Revenue 289.8 289.8 278.8 4% 5% Marketing savings from advertising restrictions in Italy Gross profit 143.6 143.6 145.7 (1%) • • Offset by incremental taxes in Italy/ROI (-£5m) and adverse mix Contribution 138.0 138.0 138.0 - Contribution margin 47.6% 47.6% 49.5% (1.9pp) • Operating costs 11% higher Operating costs (70.8) (70.8) (63.9) (11%) • One-off costs associated with the temporary disruption in Belgium Underlying EBITDAR4 67.2 67.2 74.1 (9%) virtual and combining the Italian operations Rent and associated costs (0.8) (9.4) (8.7) (8%) Underlying EBITDA4 66.4 57.8 65.4 (12%) • Underlying EBITDA -12% pre IFRS 16 Share based payments (0.3) (0.3) (0.1) (200%) • Excluding incremental taxes and one-off costs, EBITDA up +2% Underlying depreciation and amortisation (29.0) (22.3) (18.3) (22%) Share of JV income 1.0 1.0 2.6 (62%) Operating profit4 38.1 36.2 49.6 (27%)
Estate at 31 December 2019: Eurobet Italy 883 (2018: 851); Ladbrokes Belgium 311 shops, 397 outlets (2018: 321 shops, 364 outlets); Ladbrokes ROI 139 (2018: 141) 36 (1) The Group’s proforma results for 2019 are unaudited and reflect the 2019 reported results adjusted to remove the impact of IFRS 16. The Group’s proforma results for 2018 are unaudited and presented as if the current Group, post the acquisition of Ladbrokes Coral Group plc, had existed since 1 January 2018. The results of Crystalbet and Neds are included from the dates of acquisition (11 April 2018 and 28 November 2018 respectively) (2) Percentage change between 2019 vs 2018 on a pre IFRS 16 basis (3) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2019 exchange rates (4) Stated pre separately disclosed items Financials: Cashflow
Strong free cashflow generation of £395m (+£95m vs 2018)
Reported1 • Underlying working capital £14m outflow Year ended 2019 2018 • Driven by the impact of triennial review on the year end duty creditor 31 December £m £m • Capital expenditure £164m outflow Underlying EBITDA 761.1 640.8 • c£160m excluding an accelerated payment for the 2020 Italian licenses Underlying working capital (13.9) (24.8) Capital expenditure (164.1) (194.7) • Investments in US £4m outflow Investments in US (3.8) (20.5) Finance lease (incl IFRS 16) (77.7) (1.1) • Finance lease £78m outflow Interest paid (incl IFRS 16) (68.9) (55.5) • Lease costs on operational (£74m) and non-operational (£4m) leases Corporate taxes (37.5) (43.5) following the adoption of IFRS 16 and the purchase of SSBTs Free cashflow 395.2 300.7 • Interest paid £69m outflow Separately disclosed items (162.0) (217.7) • £52m net payments on loans (lower than P&L charge due to timing Acquisitions (net of cash acquired) - (522.6) benefit post refinancings) and £17m on IFRS 16 leases Net movement on debt & cost of debt issuance (53.6) 701.1 Equity issue 1.5 26.2 • Corporate tax payments £38m outflow 2019 benefitting from a repayment following closure of historic tax Dividends received from associates 1.2 9.4 • periods and the accelerated use of historic losses Dividends paid (203.6) (142.7) Net cashflow / (outflow) (21.3) 154.4 • Net movement on debt & cost of debt issuance £54m outflow Foreign exchange (10.5) (2.5) • £100m repayment on term loan offset by £35m drawdown on RCF and Net cash generated / (outflow) (31.8) 151.9 liquidation of a swap arrangement (£12m)
37
(1) 2019 and 2018 reported results are audited and reflect the acquisition of the Ladbrokes Coral Group plc on 28 March 2018 Financials: net debt
Flexible debt stack aligned to the Group’s net cashflow by currency
• Debt stack Issue • GBP/Euro debt split more aligned to net cash generation following costs/ September refinancing Year ended Par Value Premium Total • Interest cost now reduced to c3.5% of gross debt excluding IFRS 16 31 December £m £m £m leases Bonds (500.0) (24.9) (524.9) • Total accessible cash of £260m Term loans / RCF (1,579.7) 14.1 (1,565.6) • Next material refinancing not due until 2023 Interest accrual (25.5) - (25.5) GVC debt maturity £m Gross cash debt (2,105.2) (10.8) (2,116.0) 2,000.0 Cash 390.1 Subtotal (1,725.9) 1,500.0 Cash held on behalf of customers (335.4) Bonds 1,000.0 RCF Fair value of swaps held against debt instruments 47.4 Term Loan (€) Short term investments / deposits held 129.1 500.0 Term Loan ($) Balance held with PSP 78.5 - Finance lease debt (16.4) 2020 2021 2022 2023 2024 Adjusted net debt pre IFRS 16 (1,822.7) Proforma underlying EBITDA pre IFRS 16 678.3 Leverage ratio pre IFRS 16 2.69x • Pre IFRS 16 • Adjusted net debt £1,823m • Leverage ratio of 2.69x (2.84x excl. FX gains – ahead of guidance) Finance lease liabilities IFRS 16 (347.1) Adjusted net debt post IFRS 16 (2,169.8) Proforma underlying EBITDA post IFRS 16 761.1 Leverage ratio post IFRS 16 2.85x
38 APPENDIX
39 GVC – leading global operator
One of the largest online-led sports-betting and gaming operators in the world
4.1 2019 Full Year Total Net Revenue1 3.7 (£bn, last reported)
Retail 3.0 1.4 2.1 2.0 Retail 0.3 1.6 1.3 Retail Online Online 0.7 Retail 0.9 2.2 0.6 0.6 1.8 Online Online 0.4 0.4 0.9 0.7 2 3 3 Flutter / TSG G VC B et 365 Flutter Stars Group William Hill Playtech Kindred Gamesys 2 888 B et sson
3.8 2019 Full Year Online Net Revenue1 (£bn, last reported) 3.0
2.2 2.0 1.8
0.9 0.9 0.7 0.6 0.4 0.4
2 3 Flutter / TSG B et 365 3 G VC Stars Group Flutter Kindred William Hill Playtech Gamesys 2 888 B et sson 40
1. Latest annual revenue figures at 2019 average annual exchange rates as per HMRC: GBP/USD 1.276, GBP/EUR 1.1134, GBP/SEK 11.9433; bet365 YE 31Mar19 2. Revenues on a proforma basis 3. William Hill and bet365 revenues based on a 53 week period High growth markets in a high growth sector
Sector has a very long runway for online growth
Global Online Gross Gaming Revenue Total 2019 Estimated Market Size – Gross Gaming Revenue (£bn) Growth (£bn) 97.0 Land-based and Online
53.6 56.6 GVC present online 41.0 46.9 47.5
16.4 14.5 12.8 12.5 10.1 10.3 8.4 7.9 42.1 4.8 4.1 2.7 2.6 2.1 2.1 1.8 1.8 1.6 37.7 UK US Italy Brazil
Spain 33.6 China Japan Russia France Greece Finland Canada Sweden Australia Malaysia Germany 30.3 Singapore Philippines Netherlands South Korea
2019 Estimated Online Penetration % 59% 46% 43% 24% 16% 18% 19% 16% 11% 13% 10% 12% 10% 14% 2015 2016 2017 2018 2019e 2020e 2021e 3% 8% 9% 7% 4% 9%
41
Source: H2GC Sports and Gaming Tax Rates
We are already well-taxed in all major regulated territories
Group Key Sports Gaming Top 10 Online Countries Online NGR Tax Rate Tax Rate 30%+ Share GGR
UK 35% 15% GGR 21% GGR 15% - 29.99% GGR Germany 15% 5% stakes 16% GGR 0% - 14.99% GGR
Australia 12% 17%-24% GGR n/a
Italy 7% 24% GGR 25% GGR
Georgia 3% 7% stakes Fixed licence fees
Brazil 3% Regulating n/a Expected to The Netherlands 3% Regulating Regulating regulate by 2021
Austria 3% 2% stakes 40% GGR
Spain 3% 20% GGR 20% GGR
Greece 2% 35% GGR 35% GGR
42 Safer gambling and ESG
Decisive action being taken to improve player protection – working together as an industry and with regulators
43 Proven integration approach
Track record of highly effective integrations using a proven process
• Integration always focused on revenue growth and efficiency improvements, not just cost synergies
• Delivered multiple successful integrations
• Significant experience in delivering technology/platform migrations • 31 successful platform migrations over last seven years • 40m customers migrated to GVC platform without incident
• Holistic integration approach drives performance improvements e.g. • 2016: bwin.party turnaround delivered £125m synergies while accelerating growth • 2019: Foxy Bingo migration to GVC platform (Nov 2018) - six months later +40% monthly YoY NGR growth
• Proven approach:
Clear Targets Solid Structure Rigorous Execution
Define end-state operating model Strong people Financial transparency Manage by KPIs Clear ownership Executive focus Focus on quick wins Lean and effective governance process Pragmatic decision making
44 Integration: On track and driving business performance
Integration progressing as planned, substantial benefits kicking in
Majority of technology integration completed Wallet migrations to GVC Platform • Major technology migrations to GVC platform successfully completed without negative impact • Gala Spins, Gala Casino, Gala Bingo, Coral now on own platform • Majority of Ladbrokes Coral player base and revenue migrated • Material cost savings driven by platform consolidation • The integrated platform increases performance and stability of the UK digital business Strong operational improvements from best-of-both implementation Q2/20 • Games content sharing across brands in place, boosting revenue (GVC-LC both ways) Integration Cost Synergies £m GVC odds-feed into Ladbrokes Coral – increasing product range and delivering operational synergies Costs £m • Year Exit Realised In Year • Shared trading performance models – driving improved risk management and increasing margins Run Rate In Year
• Increased operational efficiency of digital marketing teams (single toolset, better marketing tech, enhanced 2019 35.0 26.0 (39.0) data models) • Best practice implementation to Ladbrokes Coral customer service with significant performance 2020 98.0 c72.0 (43.0) improvements 2021 130.0 c109.0 (33.5) • Offshoring of select trading and customer service functions to global service hubs in lower-cost locations 2022 130.0 130.0 (0.0) All synergy targets delivered to date, on track to achieve announced end state synergies
Delivering run-rate of >£130m cost synergies and at least £30m capex synergies by 2021 45