FY15 Q3 Results 20 th August 2015 Overview Carl Leaver FY15 Q3 - - PowerPoint PPT Presentation

FY15 Q3 Results 20th August 2015

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Overview Carl Leaver FY15 Q3 results Paul Bowtell Q&A

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Disclaimer

Forward Looking Statements This presentation may include forward looking statements. All statements other than statements of historical facts included in this presentation, including those regarding Gala Coral’s financial position, business and acquisition strategy, plans and objectives of management for future operations are forward looking statements. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Gala Coral, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. The words “believe,” “anticipate,” “expect,” “predict,” “intend,” “estimate,” “plan,” “aim,” “assume,” “forecast,” “project,” “will,” “may,” “should,” “risk,” “probable” and similar expressions, which are predictions or indications of future events and future trends, which do not relate to historical matters, identify forward-looking statements. All statements other than statements of historical facts included in this presentation including, without limitation, in relation to the Group’s investment performance, results of operations, financial position, liquidity, prospects, growth potential, strategies and information about the macro-economic, industry and regulatory environment in which the Group operates are forward-looking. Readers of this presentation should not rely on forward-looking statements because, by their nature, such forward-looking statements involve known and unknown risks and uncertainties that could cause the Group’s actual results, performance or achievements and the development of the industry in which it operates to be materially different from those expressed in, or suggested by, the forward-looking statements contained in this presentation. These forward-looking statements are made as of the date of this presentation and are not intended to give any assurance as to future results. Neither the Group nor any of the Group’s Directors or other officers undertake any obligation, except as required by law or by any appropriate regulatory authority, to presentation publicly any revisions or updates to these forward-looking statements to reflect events that occur, circumstances that arise or new information of which they become aware after the date of this presentation.

FY15 Q3 Highlights

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• Total Continuing Group EBITDA
• f £65.7m was £5.1m or 8% higher than last year
• Adjusting for regulatory impacts

{1} and the World Cup in quarter 3 last year, EBITDA

was £22.6m or 52% ahead

• Another very strong quarter of Online growth supported by Coral Connect:
• Coral Connect sign-ups now total over 260k and are contributing over 40% of

Coral.co.uk net revenue

• Added more Net Revenue than all other listed competitors
• Continued out-performance in Coral Retail:
• EBITDA broadly flat (both in quarter 3 and YTD), despite regulatory impacts
• Further market share gain in Eurobet Retail:
• 14.9% of retail sports-betting
• EBITDA growth in Gala Retail of 45% driven by duty reduction and increase in spend-

per-head

{1} FY14 rebased for the estimated impact of Point of Consumption Tax, the increase in rate of MGD to 25%, DCMS FOBT high-stake restrictions and the reduction in Bingo Duty, calculated as if all changes had been in existence for the corresponding periods in FY14

Online Outperformance

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Sources: Coral = Coral.co.uk + Galabingo.com + Galacasino.com + Eurobet.it PP = UK + Ire + Italy, exclude Aus. CY2014 converted at GBP/EUR 1.2507. WMH = Gibraltar licence + Italy + Spain, excludes Aus. Ladbrokes = Ladbrokes.com (predominantly UK) + Exchanges + Spain +Belgium + Denmark (now discontinued(, excludes Aus.). Skybet = estimated growth rate based on YTD numbers at to 19th March 2015. Betfair = Sustainable Revenues (excl.US) and Other (assumed mostly European): CY2014 = Year to 31 Jan 2015, H12015 = 6 months ended 30 April 2015. Excludes Bet365 due to lack of publically available information.

41.6 18.8 24.8 (4.6) 24.8

For the period 6m to 30/4/15. Gala Coral in the same period: £34.9m (+40.3%) growth.

UK and European Total Net Revenue H1 CY15 Growth (% and £m)

135.8 279.9 208.5 86.8 123.8

For the period 6m to 30/4/15. Gala Coral in the same period: £121.5m

UK and European Total Net Revenue H1 CY15 (£m)

Reporting H1s on 26/8

65.8 27.9 81.1 69.6 9.5 37.0

UK and European Total Net Revenue CY14 Growth (% and £m)

196.5 267.5 527.4 409.5 180.5 210.0

UK and European Total Net Revenue CY14 (£m)

Very strong outperformance in CY14 …

… continuing into CY15 - now adding more net revenue than all other listed competitors

* Management estimate

Reporting H1s on 26/8

7.5% 7.5% 8.4% 9.9% 11.3% 11.6% 12.0% 13.4% 14.1% 14.9%

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

Retail Outperformance

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Based on calendar years

Net revenue outperformance vs. UK listed competitors Retail sports market share (by stakes)

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2% 0% 1% 1% 0% 0% 4% 2% 2% 2%

2013 2014 2015

Coral Retail: continued outperformance in CY15 Eurobet Retail: market share gains

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FY15 Q3 Results

Paul Bowtell

• Q3 Results
• Cashflow

FY15 Q3 Results

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• Net Revenue 6% ahead of last year, and EBITDA 8% ahead despite incurring £12.9m of net incremental regulatory

costs in FY15

• Underlying EBITDA

{1} 52% ahead of last year

• Online EBITDA 28% ahead of last year (202% on an underlying basis)
• Strong cost performance in Coral Retail

FY15 FY14 +/- FY15 FY14 +/- FY15 FY14 +/- FY15 FY14 +/- £'m £'m £'m £'m £'m £'m £'m £'m £'m £'m £'m £'m Coral Retail 158.0 156.8 1.2 116.5 119.1 (2.6) (81.6) (83.6) 2.0 34.9 35.5 (0.6) Eurobet Retail 18.4 20.8 (2.4) 6.3 7.1 (0.8) (2.6) (1.8) (0.8) 3.7 5.3 (1.6) Online 63.6 46.5 17.1 42.1 35.0 7.1 (25.0) (21.6) (3.4) 17.1 13.4 3.7 Coral Telebet 1.1 0.4 0.7 1.0 0.3 0.7 (0.7) (0.7) 0.0 0.3 (0.4) 0.7 Corporate Costs

• (2.2)

(1.4) (0.8) (2.2) (1.4) (0.8) Total Coral Group 241.1 224.5 16.6 165.9 161.5 4.4 (112.1) (109.1) (3.0) 53.8 52.4 1.4 Gala Retail 63.9 64.2 (0.3) 50.5 46.8 3.7 (38.6) (38.6)

• 11.9

8.2 3.7 305.0 288.7 16.3 216.4 208.3 8.1 (150.7) (147.7) (3.0) 65.7 60.6 5.1 OPERATING COSTS Total QUARTER 3 GROSS PROFIT EBITDA

CONTINUING OPERATIONS

NET REVENUE

{1} FY14 rebased for i) the estimated impact of Point of Consumption Tax (-£6.2m), the increase in rate of MGD to 25% and DCMS FOBT higher staking restrictions (-£7.2m) and the reduction in Bingo Duty (+£3.2m) calculated as if all changes had been in existence for the corresponding periods in FY14 ii) The World Cup (£7.3m)

FY15 Q3 EBITDA Bridge

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60.6 43.1 65.7

3.2 8.9 2.0 0.6 11.9 0.7 2.3 0.3 0.7 0.5 0.0 (13.4) (7.3) (0.8) (3.7) (0.8)

Footballstakes +18%, Football margin +8.7pp OTC GP +£4.1m GWPMPW is £963 ( +£55 or+6%) Machines GP +£4.6m Other GP +£0.2m Payroll savings, marketing and in-shop content cost savings Admissions -2% but SPH increases in MSB +3% and Machines +8% Galabingo.com actives + 13% Galabingo.com stakes +28% Galabingo.com GP +£3.1m Galacasino.com actives +94% Galacasino.com stakes +6%,margin -0.4pp Galacasino.com GP -£0.8m Estimated FY14 impact: MGD/DCMS: (£7.2m) POC: (£6.2m) Sports stakes+56% (with BiP stakes +94%) Sports GP +£0.8m Virtual GP -£0.1m Other GP -£0.1m Sports stakes +74% Sports SPH +54% Sports GW% +3.5pp Sports GP +£6.6m Gaming stakes +47% Gaming SPH+33% Gaming GP +£5.3m, Coral Retail (£4.3m) Eurobet Retail (£1.4m) Coral.co.uk (£1.1m) Eurobet.it (£0.5m) Higher costs to support the larger estate and increase in Bet-in- play live feed cos ts Actives +10% Sports stakes +101% Sports GW% -3.1pp Sports GP +£0.6m Gaming GP+£0.1m Primarily payroll costs and volume related finance charges in-line with the growth of the business All comparisons stated after adjusting FY14 for Regulatory impacts and the World Cup

{1}

{1}World Cup impact (previously reported as £8.4m) is now stated net of “cannibalisation” of other OTC products in Coral Retail, which is estimated at £1.1m, resulting in an restated World Cup impact of £7.3m of which £4.3m was in Coral Retail

FY15 Q3 YTD Results

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• Net Revenue 5% ahead of last year, and EBITDA 9% ahead despite additional net regulatory hits of £19.7m

incurred in FY15

• Underlying EBITDA

{1} 27% ahead of last year

• Good cost control in Coral Retail (payroll and in-shop content costs)

FY15 FY14 +/- FY15 FY14 +/- FY15 FY14 +/- FY15 FY14 +/- £'m £'m £'m £'m £'m £'m £'m £'m £'m £'m £'m £'m Coral Retail 524.2 521.8 2.4 391.9 396.6 (4.7) (278.5) (283.0) 4.5 113.4 113.6 (0.2) Eurobet Retail 60.9 62.8 (1.9) 19.0 21.0 (2.0) (8.4) (6.4) (2.0) 10.6 14.6 (4.0) Online 186.9 136.0 50.9 126.4 102.7 23.7 (85.4) (67.9) (17.5) 41.0 34.8 6.2 Coral Telebet 3.8 3.0 0.8 3.3 2.5 0.8 (2.0) (2.6) 0.6 1.3 (0.1) 1.4 Corporate Costs

• (4.2)

(3.3) (0.9) (4.2) (3.3) (0.9) Total Coral Group 775.8 723.6 52.2 540.6 522.8 17.8 (378.5) (363.2) (15.3) 162.1 159.6 2.5 Gala Retail 212.9 215.2 (2.3) 167.3 155.6 11.7 (129.2) (131.4) 2.2 38.1 24.2 13.9 988.7 938.8 49.9 707.9 678.4 29.5 (507.7) (494.6) (13.1) 200.2 183.8 16.4 QUARTER 3 YTD GROSS PROFIT EBITDA NET REVENUE OPERATING COSTS Total

CONTINUING OPERATIONS {1} FY14 rebased for i) the estimated impact of Point of Consumption Tax (-£14.0m), the increase in rate of MGD to 25% and DCMS FOBT higher staking restrictions (-£9.3m) and the reduction in Bingo Duty (+£10.9m) calculated as if all changes had been in existence for the corresponding periods in FY14 ii) The World Cup (£7.3m)

183.8 164.1 208.5 200.2

10.9 8.9 4.5 4.6 28.0 2.9 11.2 1.7 0.8 2.2 (23.3) (7.3) (2.0) (6.7) (10.8) (0.9) (8.3)

Primarily forex

• £0.4m,

increases in payroll and

• ther costs

to support the larger estate Actives +16% Sports stakes +85% Sports SPH _ +48% Sports GP +£10.9m Gaming stakes +60% Gaming SPH+33% Gaming GP +£17.1m Galabingo.com actives + 4% Galabingo.com stakes +34% Galabingo.com GP +£10.8m Galacasino.com actives +25% Galacasino.com stakes -8% (lower VIP activity) Galacasino.com GPin line Gala.se GP +£0.4m Estimated FY14 impact: MGD/DCMS: (£9.3m) POC: (£14.0m) Sports stakes +29% Sports GW margin -3.7pp Sports GP +£1.3m Virtual GP +£3.2m Other GP +£0.1m Primarily payroll cos ts and volume related finance charges in- line with the growth of the busines s Lower marketing and rent costs Coral Retail (£4.3m) Eurobet Retail (£1.4m) Coral.co.uk (£1.1m) Eurobet.it (£0.5m) OTC stakes -3% OTC GW margin +0.1pp OTC GP -£3.8m Machines stakes +3% Machines GW% +0.13pp Machines GP +£12.6m Other GP +£0.1m Actives +24%, Sports stakes +70% Sports GP +£2.0m Gaming GW% +0.3pp Gaming GP + £0.9m Annualis ed payroll savings, marketing and lower in-shop content costs Admissions - 5% offset by spend-per- head increases in MSB +8% and Machines +8% All comparisons stated after adjusting FY14 for Regulatory impacts and the World Cup

[1] and FY15 for Italy football margins

FY15 Q3 YTD EBITDA Bridge

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{1}World Cup impact (previously reported as £8.4m) is now stated net of “cannibalisation” of other OTC products in Coral Retail, which is estimated at £1.1m, resulting in an restated World Cup impact of £7.3m of which £4.3m was in Coral Retail

FY15 Q3 Cashflow

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• Opco unlevered cashflow

£55.5m favourable to the prior year, £16.4m of which has arisen from the Continuing Group EBITDA improvement

• Working capital and

exceptionals net cash outflow of £33.4m, is £35.5m ahead due to lower exceptional cashflows than in 2014 (which contained higher VAT payments and restructuring costs)

• Capex variance of £12.8m will

partially unwind in Q4

• Opco paid £33.1m to

Propco/external landlords to reduce the rent on Propco properties to market rates

• The Group sold its remaining

Propco properties and used the proceeds and excess cash to repay part of the Propco loan. The remainder of the loan has been derecognised and a liquidation process is underway for Propco

£’m FY15 FY14 +/-

EBITDA - Continuing Group 200.2 183.8 16.4 EBITDA - Discontinued operations (7.6) 0.2 (7.8) Working capital and exceptionals (1) (33.4) (68.9) 35.5 Inflow from Operations 159.2 115.1 44.1 Capex - Coral group (36.5) (44.9) 8.4 Capex - Gala Retail (7.3) (11.7) 4.4 Taxation (4.1) (2.7) (1.4) Opco Unlevered Cashflow (2) 111.3 55.8 55.5 Rent reduction payment (33.1) 0.0 (33.1) Net proceeds from Casino disposal 0.0 21.1 (21.1) Net interest (92.8) (92.2) (0.6) Debt repayments of Opco Loans 0.0 (35.0) 35.0 Opco Cashflow (14.6) (50.3) 35.7 Propco cashflows Propco rental income 5.8 21.7 (15.9) Propco rent surrender receipt 32.1 0.0 32.1 Movement in Propco working capital (2.4) 0.2 (2.6) Propco fixed asset disposals 206.7 0.0 206.7 Propco interest (16.5) (15.5) (1.0) Debt repayments of Propco Loans (236.5) (8.5) (228.0) Total Group Cash Outflow (25.4) (52.4) 27.0

(1) Includes exceptional interest

(2) Pre Propco rent reduction payment

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Q&A