2014 Half Year Results. 29 August 2014

Transcription

1 2014 Half Year Results 29 August 2014

2 Norbert Teufelberger Chief Executive Officer

3 Key points 3 H Solid performance in nationally regulated/taxed markets Poker remains challenging Growth in mobile/touch Cost savings on-track Progress on non-core disposals Outlook 2014/15 Fundamental changes underway to: Drive revenue growth Improve speed of decision-making and execution Deliver further cost savings Unlock value from business units

4 2014 H1 the numbers Revenue 317.1m (7%) Clean EBITDA 46.4m (24%) Loss after tax 94.0m n/a Half year dividend 1.89p +5% Solid performance in nationally regulated/ taxed markets Loss of 11.9m of revenue from Greece Challenging poker markets in Europe Lower revenue and absence of domain sales Operating losses of 7.3m in New Jersey FIFA World Cup marketing campaigns On-going losses from new business areas 94.7m non-cash write down of intangibles Almost entirely poker-related Strong underlying cashflow conversion Balance sheet remains strong Disposals should release further value 4

5 Martin Weigold Chief Financial Officer

6 Summary financials Six months ended 30 June ( m) Change Total revenue (7%) Cost of sales (44.1) (47.2) (7%) Gross profit (10%) Clean EBITDA* (24%) Depreciation and amortisation, (47.9) (41.4) 14% Share-based payments, M&A and reorganisation costs (13.1) (9.8) 25% Exchange losses (4.0) (0.9) 78% Impairments - (94.7) n/a Retroactive taxes and associated charges (0.6) - n/a Loss from operating activities (4.9) (100.4) n/a Loss after tax (11.6) (94.0) n/a * EBITDA adjusted for exchange differences, reorganisation expenses, income or expenses that relate to exceptional items, and non-cash charges relating to impairments and share-based payments 6

7 2014 H1 total revenue mix by product m % 8.1% 4.9% 8.4% 18.7% 13.9% 32.8% 32.6% 34.7% 40.2% Other revenue Bingo Poker Casino & games Sports betting 0 H H

8 2014 H1 net revenue by country 16% 26% Germany United Kingdom Italy 5% France Spain Belgium 18% 11% US Denmark Other EU 1% 1% 2% 5% 6% 8% Other Americas RoW 8

9 Taxed and/or nationally regulated revenue m Regulated/taxed markets revenue bridge - H1 14 v H Note figures are subject to rounding 9

10 Sports betting Key points Strong growth in regulated markets, mitigated by loss of Greece Increased share of GGR on mobile/touch Solid FIFA World Cup performance 140m 130m 120m 110m 100m Sports betting revenue bridge H H /15 outlook Growth in core markets mobile product roll-out new product features B2B opportunities New regulations (Nl, Bg, Ru) No major tournament in m 80m Note figures are subject to rounding

11 FIFA World Cup 2014 The final score k Unique active players 19.3m Hold 138k New real money players 147k Average number of daily customers 155m Turnover 12.5% Average gross win margin 350 Live bets offered during every game 6,000 Peak volume of bets per minute 11

12 Casino & games Key points Growth in regulated markets offset by impact of declines in poker Other markets held back by volume to value shift and loss of Greece Increased cross-sell from sports Maiden contribution from New Jersey 2014/15 outlook New games mobile/desktop Spanish slots, new markets?? Amaya/Stars impact unclear Continued poker decline 120m 110m 100m 90m 80m Casino & games revenue bridge H1 13- H1 14 Note figures are subject to rounding 12

13 Poker Key points Market declines: Italy (-25%), France (-9%) and Spain (-2%) Improving player numbers but lower value per customer Maintained #1 network in NJ New features, tournaments gaining traction 70m 60m 50m 40m Poker revenue bridge H H /15 outlook Expansion on mobile Consolidate position in NJ Pooled liquidity (France, Italy) Challenging markets in EU? Amaya/Stars impact unclear Further US openings unlikely until 2015 at the earliest 13 30m 20m Note figures are subject to rounding

14 Bingo Key points Market leading positions maintained despite tough conditions in Italy and UK Italy -16% in H1 14 Strong growth for Foxy on mobile Encouraging progress on bwin Spain remains small 2014/15 outlook Further evolution of UK offer on mobile and tablet Sharing of UK liquidity Expansion of Foxy franchise POC tax in UK Dec 14 30m 29m 28m 27m 26m 25m 24m 23m 22m 21m 20m Bingo revenue bridge H H1 14 Note figures are subject to rounding 14

15 Clean EBITDA distribution expenses As a % of total revenue m % % 0.7% 4.3% 7.3% 33.1% 36.5% 3.9% 4.7% 1.2% 0.7% 4.3% 4.4% 5.5% 4.6% Webhosting and technical services Customer bad debts Third-party content % 18.2% 22.1% H H H Affiliates Customer acquisition and retention 15

16 Clean EBITDA admin expenses As a % of total revenue m % % 36.3% 7.8% 34.0% Other overheads % 3.5% 8.3% Outsourced services % Staff costs % 20.4% 17.6% Transaction fees % 4.6% 4.3% H H H

17 Consolidated Clean EBITDA bridge m Clean EBITDA bridge - H1 14 v H Note figures are subject to rounding

18 Cashflow bridge Dec 2013 to Jun 2014 m Note figures are subject to rounding 18

19 Current trading and outlook Average net daily revenue - Total weeks to 25 August 2014 Vs same period in 2013 % change Vs Q2 14 % change Total 1,433,000 (4%) (7%) Sports betting 580,300 8% (13%) Casino & games 541,300 (3%) 1% Poker 177,500 (32%) (12%) Bingo 133,900 0% (4%) Average net daily revenue nationally regulated/taxed markets 10 weeks to 25 August 2014 Vs same period in 2013 % change Vs Q2 14 % change Total 745,700 2% (11%) Sports betting 406,600 11% (14%) Casino & games 130,900 7% (7%) Poker 76,300 (29%) (15%) Bingo 131,900 (1%) (3%)

20 Norbert Teufelberger Chief Executive Officer

21 Our priorities A fundamental change to improve execution of our strategy Delivery of B2C growth in nationally regulated and/or taxed markets Leverage our strong brands Increase mobile/touch footprint Product evolution and development Improve digital marketing Sustain B2C revenue streams from dotcom markets and grow B2B Ensure future value can be maximised through Sale of non-core assets Release of value from Kalixa Alternative financing/corporate structures 21

22 Fundamental change required Right strategy post-merger BUT market constraints and operational challenges held back financial performance:...all-in-one global operator Single operator - Multiple brands - Sports, Poker, Casino and Bingo - Proprietary software Complex matrix structure of operator and technology 4 dimensions Brand Geography Product Function 8 Potential market size bn EUR Diverse geographic footprint means we remain sub-scale in several markets Poker markets challenging and PokerStars dominates Business complexity has led to duplication of responsibilities and costs Technology integration and new market entries have delayed new products and impacted customer experience Volume of change + lack of resources = Worse than expected commercial and financial performance 22

23 Near-term objectives Focus our ambitions Core B2C brands in key markets Streamline operations to address new reality Mobile channel is key Simplify decision flows and processes, reduce complexity Ensure options for future value creation are unlocked Speed-up and improve execution Drive revenue growth Reduce costs by at least 15m in

24 WHAT we deliver Customer experience Align business along key disciplines B2C B2B Studios New business Europe US Sports betting Casino & games Poker Bingo 24

25 B2C operations - label focused B2C B2B Studios New business Europe US Sports betting Casino & games Poker Bingo 25

26 B2B B2C B2B Studios New business Europe US Sports betting Casino & games Poker Bingo 26

27 HOW we deliver platform, game services Compliance, CRM Technology delivery B2C B2B Studios New business Sports betting Casino & games Poker Bingo 27

28 New business B2C B2B Studios New business Sports betting Casino & games Poker Bingo 28

29 Strategy at work B2C Grow revenue in sustainable markets Leverage brand strength, driven by sports betting Improve cross-sell dynamics Mobile and touch Product evolution and development Digital marketing and CRM B2B growth New business areas 29

30 B2C grow revenue in sustainable markets Sports betting Regulated and/or taxed Casino & games Regulated and/or taxed H H % +7% H H m Poker Regulated and/or taxed Bingo Regulated and/or taxed H H % -4% H H m

31 B2C growth leverage brand strength Sports betting Poker 30% 20% 10% 24% 40% 30% 20% 10% 20% 14% 0% 0% Casino 30% 20% 10% 0% 10% 7% 6% Survey of 1,200 active online gamblers on where they play Countries included Belgium, France, Germany, Italy, Netherlands, Spain, UK Results weighted by total population Source: TNS Info Research, August

32 B2C growth - driven by sports betting Germany Spain 50% 40% 30% 20% 10% 43% 60% 50% 40% 30% 20% 10% 49% 0% 0% Italy Belgium 40% 50% 30% 20% 10% 25% 9% 40% 30% 20% 10% 20% 0% 0% 32

33 B2C growth improve cross-sell dynamics % Casino customers from Sports* % Poker customers from Sports* 80% bwin.com bwin.be bwin.es 80% bwin.com bwin.be bwin.es 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% H1 13 H2 13 H1 14 0% H1 13 H2 13 H1 14 % of active bwin customers who played on sports and then played on casino/poker by label 33

34 m B2C growth - mobile and touch Despite regulatory complexity, good progress on expanding our mobile footprint % of GGR in H1 Sports 33% (H1 13: 17%) Casino 8% (H1 13: 4%) Poker 5% (H1 13: 1%) Bingo 21%(H1 13: 2%) KPIs Increase mobile footprint in core markets 50% of GGR by Dec GGR on mobile/touch Bingo Poker Casino & games Sports betting J F M A M J J A S O N D J F M A M J 34

35 B2C growth - product evolution Mobile/touch Sports MS2+ on.com,.be and.es Casino dedicated app ios and Android Poker roll-out applications in France and Italy Bingo add more games Desktop and platform Sports New combination bet offer plus content-rich features Casino - new lobby and additional games Poker Garden State Super Series 35

36 B2C growth - digital marketing and CRM Objectives Increase customer loyalty/ satisfaction Increase cross-sell intra label Improve knowledge of customer behaviour/preferences Reduce player attrition and costs Platform Move to a single customer view across all channels Mobile Deployment of third-party systems Urban Airship Capptain 36

37 B2B growth Europe Fortuna Eastern Europe PMU - France Danske Spil - Denmark US Boyd Gaming/Borgata MGM United Auburn 37

38 New business update Kalixa Active discussion on strategic partnership PXP integration on-track Advisers appointed to consider strategic options Other Betbull Further disposals expected over the coming months Surplus cash to be returned to shareholders 38

39 Summary - our priorities A fundamental change to improve execution of our strategy Delivery of B2C growth in nationally regulated and/or taxed markets Sustain B2C revenue streams from dotcom markets and grow B2B Unlock value from business units Delivery of at least 15m of cost savings in

40 Philip Yea Chairman Philip Yea Chairman

41 Initial observations Opportunities Attractive industry Positive long-term drivers Management ownership Strong brands Technology Strong partnerships Value from new business areas Challenges Increasing market complexity Uncertainty created by rapid shift from dotcom to nationally regulated markets Introduction of national gaming taxes Lack of enforcement against black market operators Explosion of mobile and social platforms Increasingly sophisticated and demanding consumers Merger integration not complete France/Italy migration Technical debt Complex management structure Shifting competitive landscape 41

42 Agenda for change Understand and take on shareholder concerns Board composition Review of strategic options Operational delivery Address shift in risks and opportunities Support steps to simplify organisation structure Increased internal ownership Improved and faster decision-making Significant cost savings Create flexibility to participate in future industry changes Focus on issues we can control whilst managing external risks Execution is key to delivering shareholder value 42

43 2014 Half Year Results 29 August 2014