Investor Pack August 2018 Contents
. Business Overview
. Appendix
. 2018 Trading Update
. Historic Proforma Numbers
. Other – Regulatory / Capital Structure / Geographic split
2 Business Overview GVC Business Overview
Business overview Global presence
GVC is a global, multi-channel sports betting led gaming company
Diversified geographic footprint and product mix
Operates B2C sports brands (bwin, Ladbrokes, Coral, Sportingbet, Eurobet) and games brands (partypoker, PartyCasino, Galabingo, Gioco Digitale)
Scalable and proven proprietary platform also supports B2B offering
Acquired bwin.party in 2016 with a synergy target of €125m and Ladbrokes Coral in 2018 with a synergy target of £130m Office Locations
Business highlights Licensed jurisdictions
17 Major established B2C gaming brands
21 Languages
3,500 Shops across UK
22 Offices across five continents
>20 Licenses Yes >95% GVC revenues processed derived through own Yes (Transitional) platform Yes (Application)
4 Source: 2016 annual report, as at 31 Dec 2016. GVC combined Prospectus and Class 1 circular dated 9 February 2018. GVC Business Overview
Acquisition of Ladbrokes Coral creates an enlarged company with a range of competitive advantages:
1 Significant scale as the largest listed online-led betting and gaming operator by revenue
2 Geographic diversification with over 90% of revenue from regulated and/or taxed markets
3 Market leading technology and product development
4 Strong brand portfolio and opportunity to leverage multi-channel
5 Experienced management team with a track record of successful acquisitions
6 Opportunities for cost and revenue synergies
7 Well positioned to enter new markets in a consolidating industry
5 1 Significant Scale
Acquisition of Ladbrokes Coral creates a global leader
The largest online-led operator in the world (£ in billions, last reported full year revenue)
3.3
2.2 1.0 1.7 1.7
0.9 0.6 0.4 0.4 0.3
(1) (2)
Source: Latest annual reports revenue figures. Note: Peer revenue based on last reported financial year. Exchange rates used as of 31 Dec 2017. Charts exclude Asian markets. 6 (1) Includes Proforma GVC FY17 and Proforma Ladbrokes Coral FY17 (2) The Stars Group announced its acquisition of the Sky Betting and Gaming Group on 21 April 2018. Completion is expected in Q3 2018
2 Geographic Diversification
Present in the world’s most important gaming markets
Present in all of the world’s top ten markets (ex Asia) Over 90% revenue from regulated / taxed markets (€ in billions, gross win, 2017)
105 25% Regulated/ing and Taxed (1) GVC Unregulated
20 75% 17 16 14
11 10 9 + 0.2%
3 Regulated/ing and Taxed 2 Ladbrokes Unregulated Coral
99.8%
US UK
Italy
Spain
France
Canada
Sweden
Australia
Germany Netherlands Top 3 positions in Europe’s largest online markets – UK, Germany and Italy 6% Top 3 retail positions in UK, Italy, Spain, Belgium and Regulated/ing and Taxed Ireland Combined Group Unregulated Strong presence in Australia and licensed in the US 94%
7 Source: H2 Gambling Capital, Ladbrokes Coral 2016 annual report, GVC RNS 2 November 2017 (1) Pro forma for sale of Turkey facing business. 3 Market Leading Technology
Proprietary single, integrated technology platform yields a significant competitive advantage
GVC proprietary technology Significantly improved since Key strategic benefits of the platform bwin.party acquisition GVC platform
Highly Previously Now 1 Provides flexibility and AVAILABLE independence from To integrate a third parties new 20 to 24 2 to 3 Massively Game Weeks Weeks SCALABLE Provider 2 Significant economies of scale Easily EXTENDABLE To setup a new 3 Improvements to the platform Label 8 to 9 1 to 2 Capable benefit all brands (and B2B (Business) Weeks Weeks 1000+ IT STAFF operations) at once
Multi 4 Device agnostic, providing a BRAND & B2B seamless experience from mobile to To adapt to a desktop to tablet new 16 to 20 2 to 4 Fully Regulation Weeks Weeks REGULATED 5 Content management system allows marketing teams to customise the site Omni CHANNEL To on-board a new 32 to 40 8 to 12 B2B Partner Weeks Weeks 6 Ensures that the group remains Complete compliant and meets the needs of PRODUCT SET individual country regulators
8 4 Strong and Complementary Brand Portfolio
Limited geographic brand overlap
Online: Sports-led Online: Games Retail . Highly complementary brand UK portfolios
Italy . Minimal brand overlap in key markets Ireland . Addition of Retail adds powerful,
low-cost marketing channel for Belgium online
Europe Spain . Combined Group to pursue multi- brand strategy in markets with overlap Germany . Creates significant cross-sell and Eastern Europe revenue synergies opportunities
Greece
Brazil
Columbia
Australia Rest World of Canada
9 4 Brand Portfolio: Online
Sports brands Games brands
Most major markets
Europe Latin America All major markets
Latin America
Central Europe
17 well established B2C sports and gaming brands
Innovative products with in-house game studio building exclusive content
Holds top 3 positions in Europe’s largest online markets – UK, Germany and Italy
10 4 Brand Portfolio: Retail
UK Retail European Retail
#1 operator in UK retail gaming industry Ireland Italy #3 retail #3 retail 41% market share(2) 140 shops Strong multi- channel presence Over 3,500 UK shops (3.6 year avg lease length in 2016) 850 shops
Market leading multi-channel offering – 1.3 million combined multi-channel signups NGR – Lifetime value of multi-channel customers are 2x H1-17 higher
Spain Belgium #1 retail #1 retail Online recently launched Online recently launched 1,726 shops 541 shops
11 5 Experienced Management Team
Experienced management team with a track record of successful acquisitions
Name and role Year joined Experience Lee Feldman 2004 Non-executive (GVC) Chairman
Kenneth Alexander 2007 Chief Executive (GVC) Officer
Paul Bowtell 2011 Chief Financial (Gala Coral) Officer
Andy Hornby 2011 Joint Chief Operating (Gala Coral) Officer
Shay Segev 2016 Joint Chief Operating (GVC) Officer
12 5 Proven Track Record of Synergies Delivery
Proven acquisition track record and ability to constantly overachieve on synergies over a short period
Target
Date 19 March 2013 1 February 2016 1 November 2016
Deal Size €83.9m(1) £1.1bn £2.3bn
Delivered EBITDA of €38.3m in year 1 On track to deliver run rate synergy (£ in millions) vs. expected €28.7m target of €125m by the end of 2017 150 Cost (on 2015 EBITDA of only €109m) savings / 65 synergy Removed €50m of cost and returned bwin.party brands returned to delivery to profitability in <1 year growth almost immediately after four consecutive years of declining Original synergies Revised synergies projection projection sales
GVC share price since 2009 Ladbrokes Coral synergies phasing (£ in millions)
GBp 150
1,000 125
750 65 50 55 500 23
Successful execution Successful 250 2017 2018 2019
0 Original synergies projection Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Revised synergies projection
Source: Prospectus dated 9 February 2018, Ladbrokes Coral prospectus dated 27 October 2016, GVC presentation dated 16 November 2015, FactSet. 13 Note: Close price adjusted for both dividends and splits. (1) William Hill contributed £36.5m towards balance sheet repair, restructuring and deal costs. 6 Synergies
Announced upgraded cost synergies of £130 million
Synergy overview Cost synergy areas
Cost synergies now expected to be £130million (previously £100m) by the end of 20211 Technology and data enabled Corporate and administrative
Common platforms Consolidating customer service teams and technology costs Total integration costs expected to be c1.0x cost synergies Own gaming content Lower cost locations Increased bargaining power with Potential additional synergies: content suppliers Common mktg & central functions
Other Marketing − Capital expenditure savings from technology and procurement Combining international platforms Leveraging combined Group’s and teams business intelligence capability to − Revenue synergies through cross-selling, implementation of best in achieve savings from reduced External costs class systems and sophisticated marketing techniques marketing and bonus spend Office and travel costs
Originally announced (cumulative) Updated guidance (cumulative) Integration Costs Year post Exit Run Rate Financial Exit Run Rate Increase (Run New Exit Realised in Year (In Year) acq. Year Rate) Run Rate Year 1 £7m 2018 £5m £2m £7m £4m-£5m £17m Year 2 £33m 2019 £27m £8m £35m £16m-£26m £39m Year 3 £56m 2020 £50m £28m £78m £52m-£62m £43m Year 4 £100m 2021 £100m £30m £130m £104m-£114m £31m Year 5 £100m 2022 £100m £30m £130m £130m -
Synergies split: c£125m of synergies to be delivered in Online and c£5m in Corporate
14 Source: GVC combined Prospectus and Class 1 circular dated 9 February 2018. [1] Exit run rate 7 US Opportunity: JV with MGM
Transaction structure and key terms
• 50 / 50 joint venture between MGM Resorts International (“MGM”) and GVC Holdings (“GVC”) for sports Transaction betting and interactive gaming in the U.S. • Both parties providing exclusive rights to relevant assets subject to 25-year agreements
Joint venture • Exclusive access to all U.S. land-based and online sports betting, online real money and free-to-play casino gaming, major tournament and online poker, and other similar future interactive businesses business • Business to be conducted primarily under the playMGM and partypoker brands activity • Parties are exclusive to each other in the U.S. for these activities
• Four person board of directors, with two members appointed from each of MGM and GVC Governance • Equal governance and decision making rights • Joint venture structure creates alignment of interests
• Independent leadership team to be selected from best-in-class talent from each company and additional Management & new hires Operations • New joint venture headquarters to be located in major U.S. technology hub
15 7 US Opportunity: JV with MGM
Exclusive access to relevant assets
Parties contributing exclusive access to:
Economics of existing and future U.S. sportsbooks
All U.S. gaming licenses, including all “skins” for sports betting and interactive gaming
Market access agreements with Boyd Gaming, providing a path to 15 states with addressable population of ~90mm(1) GVC’s platform technology (including Stadium)
Premier, globally recognized gaming and sports brands
Transaction creates a leading U.S. sports betting and interactive gaming platform with world-class content, state-of-the-art proprietary technology, and broad distribution
16 [1] Population figure represents Eilers & Krejcik Gaming estimate of population above 21 years old. Number of states includes pending acquisitions and development projects. 7 US Opportunity: JV with MGM
Joint venture transaction highlights
Opportunity to leverage each company’s unique and complementary assets to capture a once-in-a- lifetime new market opportunity
Creates a leading platform with world class content, state-of-the-art proprietary technology, and broad reach and distribution
Significantly increases speed to market for both parties and creates meaningful early mover advantages
Lowers execution risk due to strong existing relationship, complementary capabilities, and both companies’ track records of successful partnerships
Complete alignment of interests with a 50/50 joint venture structure
Ample liquidity with total upfront capital commitments from partners of $200 million
17 7 US Opportunity: JV with MGM
Broad footprint and marketable customer base
MGM Nevada Mississippi New York New Jersey Maryland Massachusetts Michigan
Boyd Pennsylvania Ohio Indiana Illinois Idaho Missouri Kansas 30 Million Louisiana M Life Members
• Clear path to 15 states with total addressable population of ~90mm(1)
• Leading combination is well positioned to attract additional market access and other partners
18 [1] Population figure represents Eilers & Krejcik Gaming estimate of population above 21 years old. Number of states includes pending acquisitions and development projects. Appendix: 2018 Trading Update
Combined Results – H1 Post Close Trading Update
Year-on-year growth in Q2 over Q1 driven by good underlying momentum and the World Cup
Key highlights (proforma basis1):
Q2: H1: . Group NGR +11% (cc2 +12%) . Group NGR +8% (cc2 +8%) . Online NGR +22% (cc2 +25%) . Online NGR +18% (cc2 +20%) . UK Retail Like-for-like (“LFL”)3 NGR +2% . UK Retail LFL3 NGR -3% . European Retail NGR +19% (cc2 +16%) . European Retail NGR +29% (cc2 +26%)
. Strong underlying growth in Online and have continued to benefit from a pipeline of new products and high profile marketing campaigns . UK Retail improved in Q2 as the weather proved less disruptive than in Q1 . European Retail remained very strong helped by soft comparative . Positive World Cup tournament driven by gross win margin, volumes and value of new customer deposits
[1] The Group’s proforma results are presented as if the current Group, post the acquisition of Ladbrokes Coral, had always existed. As such, it excludes the results of the Turkish business which was discontinued during 2017and the 360 shops that the Ladbrokes Coral Group was required to divest on merger. [2] Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2018 exchange rates. 20 [3] UK Retail numbers are quoted on a LFL basis. During H1 and Q2 there were an average of 3,562 shops in the estate, compared to an average of 3,662 in the same periods last year. Combined Results – Q1 2018 Trading Update
Strong start to 2018; synergies upgraded
Year to date growth (1 Jan 2018 to 20 May 2018) 1 Change in Total NGR Total NGR CC Sports Wagers Sports Margin Margin
Online Sports Brands 16% 18% 4% 10.4% 1.2pp Games Brands 16% 18% B2B 46% 48% Total Online 17% 18%
UK Retail (5%) n/a (9%) 18.3% 0.2pp (Like-for-like)
European Retail 32% 28% 4% 18.1% 3.8pp
Other (26%) (26%)
Total Group 7% 7%
. Overall good start to 2018 . Online strong with double-digit growth across both GVC legacy and Ladbrokes Coral . Strong European Retail performance . UK Retail impacted by weather . Synergy work ongoing; interim upgrade to minimum of £130m cost synergies . Well placed for US opportunity
[1] The Group’s proforma results are presented as if the current Group, post the acquisition of Ladbrokes Coral, had always existed. As such, it excludes the results of the 21 Turkish business which was discontinued during 2017, the 360 shops that the Ladbrokes Coral Group were required to divest on merger and the previously discontinued Ladbrokes Coral High Roller segment
FY18 Guidance
Guidance:
• Capex – underlying1 c£125m post acquisition2, c£160m annualised • Capex - EPOS 21 c£27m post acquisition2 • Depreciation and Amortisation Subject to IFRS 3 adjustments Guidance to be provided at H1 • Integration costs – previous deals3 c£15m P&L charge post acquisition2 £45m cash cost post acquisition2 • Opening gross debt4 £2,160m • Opening net debt4 £1,860m • Opening net debt / EBITDA4 2.7x (LTM proforma EBITDA) • Share based payments c£10m – £15m • Interest costs c4% on gross debt c60m P&L charge5 post acquisition2, c£85m annualised c50m cash cost post acquisition2, c£85m annualised • Tax rate (% of adjusted PBT) c13%, annualised cash tax in-line with historic blended rates
Triennial Impact:
• Fully mitigated impact of c£120m on Group EBITDA by end of the second year post implementation, with an expected adverse impact of c£145m in UK Retail and positive impact of c£25m in Online • In the first full year the impact on Group EBITDA is anticipated to be in the region of £160m
[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] 28 March 2018 22 [5] P&L cost of interest that will be paid in cash
Appendix: Historic Proforma Numbers
Historic Proforma: Overview
• The following slides provide proforma results for GVC Holdings Plc (“The Group”) for the 24 months ended 31 December 2017 • The Group’s proforma results are presented as if the current Group, post the acquisition of Ladbrokes Coral, had always existed. As such, it excludes the results of the Turkish business which was discontinued during 2017, the 360 shops that the Ladbrokes Coral Group were required to divest on merger and the previously discontinued Ladbrokes Coral High Roller segment • The Group has changed its reporting currency to GBP and therefore the proforma information is also presented in GBP. As GVC previously reported in Euros, historic information has been translated into GBP using a rate of €1.14:£1 in 2017 and €1.24:£1 in 2016 • The proforma information has separated out “Corporate” costs from the legacy GVC Digital business. These will continue to be reported under Corporate costs going forward • Reporting segments and accounting policies have been aligned across GVC and Ladbrokes Coral for the proforma period. The way in which these results are presented is consistent with the reporting format which will be adopted by the Group going forward • The proforma results depict actual historical trading performance and do not reflect any increases in profit anticipated from the delivery of synergies, nor do they account for the impact on the future depreciation and amortisation charge resulting from the IFRS 3 fair value exercise which is being undertaken on the Ladbrokes Coral business • Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets • Contribution is defined as statutory gross profit less marketing costs and underlying EBITDA is stated as operating profit before the deduction of depreciation, amortisation, changes in fair value of financial instruments and IFRS 2 “share based payments” charges
24 Historic Proforma: Basis
Included:
bwin Included for the period post acquisition (1 Feb 2016) and proforma adjustments made to include pre acquisition trading (January 2016). As such, both 2016 and 2017 include a full 12 months of trading for bwin Corporate costs Legacy GVC costs have been split between those relating to the Online business and those which are true "Corporate" costs. The latter of these is now reported under the Corporate costs segment Kalixa Included for the period until disposal (31 May 2017)
Excluded:
Turkey Proforma adjustments to remove the trading of the disposed Turkish business in both 2016 and 2017 360 divested shops Proforma adjustments to remove the trading of the 360 shops that the Ladbrokes Coral Group were required to divest on the merger of Ladbrokes and Coral Share based payment Share based payment charges previously reported in Ladbrokes Coral have been removed charges from underlying EBITDA in line with previously reported GVC "Clean EBITDA" Amortisation of The amortisation of acquired intangibles will now be a separately disclosed item (formerly acquired intangibles exceptional) and is therefore excluded from underlying profit and also from the proforma numbers presented High Rollers The High Rollers business which the legacy Ladbrokes Coral Group discontinued in 2016 has been excluded from the proforma information Crystalbet The 2018 acquisition in Georgia is not included in the historic proforma numbers
25 Historic Proforma: Segmentation
26 [1] Costs which were previously reported as Corporate Costs in GVC have now been split between the Online segment and those which are true Corporate Costs which remain in Corporate Total Group
27 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets Online
28 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets UK Retail
29 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets European Retail
30 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets Other and Corporate
31 [1] Operating profit is shown before all items requiring separate disclosure (previously called exceptional items), the impact of changes in the fair value of financial instruments and the amortisation of acquired intangible assets Appendix: Other
Triennial Review
Triennial Review Outcome Announced . UK Government announced on 17 May that stakes on B2 content should be cut to a maximum of £2 per spin
Expected Financial Impact . Fully mitigated impact of c£120m on Group EBITDA by end of the 2nd year post implementation, with an expected adverse impact of c£145m in UK Retail and positive impact of c£25m in Online . In the first full year the impact on Group EBITDA is anticipated to be c£160m
Contingent Value Right (CVR) . As part of the consideration paid for the acquisition of Ladbrokes Coral (LCL), GVC issued each LCL shareholder a CVR for each LCL share held . The value of each CVR is directly linked to the outcome of the Triennial Review . The CVR instrument envisages that if the legislation is enacted prior to 28 March 2019 reducing maximum stakes to £2 as announced, this will result in CVR having a zero value . Tracy Crouch (Minster of Sports) verbally stated in Parliament that the legislation will be enacted “this year”
33 Greek Tax Assessment
Background
On 25 January 2018, GVC announced that its subsidiary, Sportingodds Limited, received a tax audit assessment notice from the Greek Audit Centre for Large Enterprises in respect of the fiscal years 2010 and 2011
At that time Sportingodds was owned by Sportingbet, prior to GVC’s acquisition of Sportingbet in 2013
The audit assessment claims that Greek corporate income tax, Greek gaming tax and withheld player winnings tax plus surcharges are owed to the Greek Audit Centre for Large Enterprises
The total assessment amount is €186.77m
The GVC Board believes that Sportingodds has strong grounds for appeal and on 29 January 2018 an appeal was filed
Sportingodds is in discussions with the Greek Audit Centre for Large Enterprises to enter a payment scheme of approximately €7.8m per month over a 24 month period
Entrance into the payment scheme is not an admission that the assessment is correct
Impact
Entrance into the payment scheme ensures that Greek authorities cannot seize assets of Sportingodds situated in Greece and reduces the risk of major disruption to the Greek business
In the event that Sportingodds is wholly or partially unsuccessful in its appeal, it is likely that it will need to pay all or part of the assessment (which includes surcharges), less amounts already paid under the payment scheme
34 German Regulatory Update
Background
The German business operates against the backdrop of significant regulatory uncertainty
− The uncertainty stems from the Interstate Gambling Treaty of 1 July 2012, which effectively introduced a ban on online casino and online poker
Online casino and poker are subject to a total ban under the Interstate Treaty, however, a license tender for online sports betting commenced in 2012
− Each of the GVC Group and the Ladbrokes Coral Group were successful applicants in the tender process for one of the 20 available Germany-wide sports betting licenses
− Due to ongoing legal challenges, no such license has been granted so far
GVC was separately granted an online sports betting, casino and poker license by the state of Schleswig- Holstein (one state that rejected the treaty)
Sports betting is permitted under 2012 State Gaming Treaty (licensing regime yet to be finalised)
Current position
It remains unclear whether Germany’s prohibition of online casino and online poker is compliant with EU law
Amendments to the Interstate Treaty had been scheduled to enter into force on 1 January 2018 − They have not been ratified by all 16 German states, as required − It is likely that the legislative debate will recommence in the second half of 2018
Tax is paid on all German revenues
German poker/casino NGR is c4% of Group NGR
35 Capital Structure & Leverage
. Opening Gross debt - £2,160m1
Debt Facility Amount New TLB £1,400m
Existing GVC TLB £260m
Existing LCL Bond £400m
Existing LCL Bond £100m
Total £2,160m
. Opening Net debt - £1,860m1
. Opening net debt/EBITDA – 2.7x (LTM proforma EBITDA) 1
. Interest costs ‐ c4% on gross debt ‐ c60m P&L charge2 post acquisition3, c£85m annualised ‐ c50m cash cost post acquisition3, c£85m annualised
(1) 28 March 2018 36 (2) P&L cost of interest that will be paid in cash (3) Period 28 March 2018 to 31 December 2018 Geographic Revenue Split
Of which: UK Retail – 43.4% UK Online – 19.6% Of which: Sports – 3.3% Gaming – 4.1%
37 Basis: FY17 Proforma Net Revenue