[PPT] - Q4 2016 Q4 2016 Presenters GUSTAF VIKTOR HAGMAN FRITZN Group PowerPoint Presentation

SLIDE 1

Q4 2016 Q4 2016

SLIDE 2

GUSTAF HAGMAN VIKTOR FRITZÉN

Group CEO and Co-founder Group CFO 2

Presenters

SLIDE 3

The greatest gaming experience Number one in mobile gaming

3

Vision

SLIDE 4 4

Agenda genda

Annual and Quarterly highlights
Business update
Business KPIs
Financials
Targets & Summary
Q&A

SLIDE 5

Full year ull year 2016 2016

Highlights

5

SLIDE 6

Organic growth:

+58.4MEUR

Adjusted EBITDA:

15.1 %

Organic growth:

+70 %

6

Full year 2016

Adjusted EBITDA:

21.3 MEUR

Revenue:

141.4 MEUR

SLIDE 7 7

Drivers behind record strong 2016

Mobile focus

“Product innovation”

Technology leadership

“Two new product categories”

Effective marketing

“Data driven and ROI approach in all marketing initiatives”

Execution

“Outstanding team and ability to deliver”

SLIDE 8

Quart Quarterly erly report eport

Highlights and events

8

SLIDE 9

Revenue since start

41.2 MEUR

5.0

10.0 15.0 20.0 25.0 30.0 35.0 40.0 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4

SLIDE 10

Revenue:

41.2 MEUR

+15.1 MEUR EBITDA:

10.0 MEUR

24.2 % margin

Deposits:

139.1 MEUR

+87 %

Organic growth:

+58 %

Mobile deposits:

67 %

10

Q4 2016 Highlights

SLIDE 11

LeoVegas again number 1 in Online Gambling Quarterly

In the latest edition of Online

Gambling Quarterly, an industry publication that focuses on strategy and financials, LeoVegas was for the second quarter in a row the company expected to be the number 1 winner in the next twelve months based on a survey of 47 individuals that are executives in the gaming industry and finance professionals that invest in the gaming space

In the same survey Mobile

Betting, Mobile Casino and Live Betting were expected to be the fastest growing segments in our industry, which are the main focus areas of LeoVegas COMMENTS

SLIDE 12 12

compared to January last year

Current Trading – Start of Q1

14.1 MEUR 40 %

NGR in January an increased of

SLIDE 13

Busine Business updat s update

13

SLIDE 14 14

Denmark Local and experienced team Promising start UK Initiatives in Q3-4 start to pay-off Local ambassador - Johnny Vegas Sponsorship – Leicester Tigers Expansion overview

SLIDE 15 15

Czechia New regulation in place since 1 Jan 2017 Applied for license During the transition period LeoVegas.com is closed for Czech customers Will negative affect revenues in Q1 (was 4% of revenues in Q4) Ireland Sportsbook license granted Q1 Australia We are closely monitoring the legal landscape in Australia and how the proposed amendment to the law might affect the market

Legal update

SLIDE 16

Awards

International Gaming Awards 2017 Online Casino Operator of the Year EGR Nordic Awards 2017 Casino Operator of the Year SBC Awards 2016 Marketing Campaign of the Year (LeoVegas Sport) Effective Mobile Marketing Awards Most Effective Search Campaign

SLIDE 17 17

In-game deposit with Evolution & NetEnt Broadest product offering in the industry New provider - Lucky Streak

LeoVegas Sport and LeoVegas Live Casino

Launch of sports client start page built in-house Strong underlying development

SLIDE 18 18 Independent company within the LeoVegas Group Authentic Gaming delivers an innovative live casino solution with streaming from land-based casinos

IMP / Authentic Gaming

LeoVegas invested one year ago now live on several operators during Q1 Focus to integrate their live casino on more operators

SLIDE 19 19 LeoVegas’ offering is based on gaming as a fun and attractive form of entertainment Responsible gaming is a fundamental principle in all we do

A Continuous Focus on Responsible Gaming

Responsible gaming training and certification for all employees Sophisticated player tools and measures for limiting deposits, time, wagering, losses etc. Information and tests for both players and relatives Self exclusion measures and forced exclusion by us when gaming related problems discovered

SLIDE 20

Busine Business s KPI’ KPI’s

20

SLIDE 21

Q3’16 back-drop Q4’16 results

Q4’16 drivers

14.3 MEUR in highly efficient marketing NDCs of 74 638 in Q3’16 RDCs 11% Q-Q growth Deposits 12% Q-Q growth Revenue 4% Q-Q growth Lower game margin

SLIDE 22

20 000

40 000 60 000 80 000 100 000 120 000 New depositing customers (NDCs) Returning depositing customers (RDCs)

Overall the customer base

developed according to historical trends in Q4’16

New depositing customers

(NDCs) increased 14% sequentially, which is according to trend, to 85 384

The NDCs mix in Q4’16 is

similar to Q3’16

Returning depositing

customers (RDCs) grew sequentially according to trend with 11% to 90 922

The number of active

customers, which includes customers making bets only with bonus money, increased 19% sequentially Depositing customers, new and returning Active customers and depositing customers COMMENTS 22

Customer base

90 922 85 384 404 773

100 000

200 000 300 000 400 000 500 000 600 000 Actives customers Returning depositing customers (RDCs) New depositing customers (NDCs)

SLIDE 23

Average deposit per

depositing customer in Q4’16 was flat compared to Q3’16

Average NGR per depositing

customer, however, decreased by 9% driven by lower margin in casino and sports in Q4’16

Both average spend metrics

in H2’16 are closer to a normal level compared to H1’16 when average spend was unusually low driven by the high proportion of NDCs, which on average spend less, in combination with higher bonus costs that arose from the NDCs, as new customers get more bonuses, and higher bonus costs in combination with the the launch of LeoVegas Sports 23

Average spend per customer

COMMENTS Deposits EUR per depositing customer NGR EUR per depositing customer

100

200 300 400 500 600 700 800 900 Deposits per depositing customer

50

100 150 200 250 300 NGR per depositing customer

SLIDE 24

Marketing spend increased by

13% from Q4’15 to 14.9 MEUR in Q4’16

During the same period NDCs

increased by 83%

The Customer Acquisition

Cost (CAC), illustrated in the chart as marketing in relation to NDCs, in Q4’16 decreased 38% compared to Q4’15 and is at a historically low level

The quality of the NDCs in

Q4’16 was about the same as in Q4’15 and Q3’16, which indicates that the marketing ROI increased substantially in Q4’16 compared to Q3’15 but also compared to Q3’16

The overall marketing mix was

broadly similar in both periods 24

Marketing and customer acquisition cost

COMMENTS Marketing spend and NDCs indexed to Q4’15 in relation to marketing per NDCs +13% +83% 85 384 14.9 MEUR 2015-Q4 2016-Q4 Marketing Indexed to Q4'15 NDCs Indexed to Q4'15 Marketing / NDC (CAC)

38%

SLIDE 25

Q4’16 had the highest year-
n-year increase in deposits

at 87%

On a sequential basis

deposits increased 12%, which is the same rate as Q4’15

Growth rates per regions:
Nordics 65%
UK 45%
Rest of Europe 335%
Rest of World 235%
Deposits increased by 64.9

MEUR from Q4’15 to Q4’16 of which the regions accounted for:

Nordics 32.8 MEUR
UK 6.6 MEUR
Rest of Europe 15.8 MEUR
Rest of World 9.8 MEUR

25

Deposits

COMMENTS Deposits MEUR and Q-Q growth in deposits % Deposits MEUR by region

10.0

20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Nordics UK Rest of Europe Rest of World 0% 5% 10% 15% 20% 25% 30%

20.0

40.0 60.0 80.0 100.0 120.0 140.0 160.0 Deposits Growth in deposits Q-Q %

SLIDE 26 26

The Nordics remained at

decreased to 60% in Q4’16 of total deposits from 62% in Q3’16

Rest of Europe increased its

share of total deposits by 2 percentage points to 15% while UK and Rest of World remained stable at 10%

NGR shares shifted from Q3’16

to Q4’16 mainly for Rest of Europe that increased to 17% and UK that decreased to 10%

The decrease in the UK was
n the back of low margin in

Sports and to a less extent Casino

Rest of World increased its

proportion of NGR slightly and remained at an unusually high NGR to deposits ratio

The deposit mix, however, is a

better gauge of the development of the regions

n a more fundamental level

Regional split

COMMENTS Nordics 60% United Kingdom 15% Rest of Europe 15% Rest of World 10% Deposits 2016-Q4 Nordics 62% United Kingdom 15% Rest of Europe 13% Rest of World 10% Deposits 2016-Q3 Nordics 57% United Kingdom 10% Rest of Europe 17% Rest of World 16% NGR 2016-Q4 Nordics 58% United Kingdom 13% Rest of Europe 14% Rest of World 15% NGR 2016-Q3

SLIDE 27 27

Game margin is defined as

the winnings LeoVegas has divided by the total amount

f bets, i.e. what percentage

LeoVegas on average wins on a bet

Hold is defined as NGR

divided by deposits

Game margin and Hold are

closely correlated with each

ther, and periods with lower

margin are often associated with lower Hold

Q4’16 had the lowest Game

margin and Hold to date, driven by low margins in Live Casino, Sports and Casino Classic

The low Game margin was in

part responsible for the low Hold, which translates into revenue

The low Game margin was in

part due to many medium to large size wins in the quarter

Game margin and Hold

COMMENTS 25.0% 27.0% 29.0% 31.0% 33.0% 35.0% 37.0% 3.40% 3.45% 3.50% 3.55% 3.60% 3.65% 3.70% 3.75% 3.80% 3.85% 3.90% 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 Hold Hold Game mar ame margin gin Game margin % Hold % Game margin % and Hold in %

SLIDE 28

Deposits from mobile devices

continued to grow its share

f total deposits in the

second quarter of 2016

Mobile devices accounted for

67% of deposits in the quarter

Deposits from mobile devices

grew 112% year on year, while the same for desktop grew 52% 28

Mobile share of deposits

COMMENTS 50% 52% 54% 56% 58% 60% 62% 64% 66% 68% 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2 2016-Q3 2016-Q4 Mobile deposits as a % of total Deposits through mobile devices as a % of total deposits

SLIDE 29 29

FINANCIAL FINANCIALS S

SLIDE 30

In Q4’16 EBITDA was 10.0

MEUR, a 24.2% margin

Overall the P&L in Q4’16 is very

similar to Q3’16

Marketing in H2’16 has been

lower than in H1’16 in lieu of a launch campaign for Sports in combination with a lot of focus

n optimization and a retake in

the UK market

Cost of sales increased slightly

compared to Q3’16 on the back of higher gaming taxes

Personnel and operating

expenses remained fairly stable throughout H2’16

Marketing in Q1’17 expected to

be significantly higher than Q4’16 30

P&L per quarter adjusted

COMMENTS P&L MEUR adjusted* P&L ratios adjusted* *Adjusted for IPO-related expenses in Q4’15 and Q1’16 0.2

0.5

1.1 1.7 4.0

2.5

9.8 10.0 9.1 10.8 11.9 13.3 12.5 18.7 14.3 14.9 1.4 1.8 2.7 3.1 2.9 3.6 2.8 3.1 1.4 1.8 2.2 2.4 3.3 3.7 4.1 3.9 3.8 4.5 4.7 5.6 6.9 7.4 8.6 9.3

5.0
5.0

10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Cost of sales Personnel costs net of capitalised development costs Operating expenses including other income Marketing expenses EBITDA 1.0%

2.6%

4.9% 6.7% 13.5%

7.9%

24.7% 24.2% 57.4% 58.6% 52.6% 50.9% 42.3% 60.4% 36.1% 36.2% 8.8% 9.9% 12.0% 11.8% 9.9% 11.7% 7.1% 7.6% 8.8% 9.6% 9.7% 9.1% 11.0% 11.9% 10.4% 9.5% 24.0% 24.5% 20.7% 21.6% 23.2% 23.9% 21.7% 22.5%

20%

0% 20% 40% 60% 80% 100% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Cost of sales Personnel costs net of capitalised development costs Operating expenses including other income Marketing expenses EBITDA

SLIDE 31

The marketing to revenue

ratio is the key determinant

f the profit margin

development at LeoVegas

The marketing to revenue

ratio in Q3’16 and Q4’16 of 36% is the lowest level in any quarter to date, which is down from the highest level to date of 60% in Q2’16

LeoVegas’ margins have

been, and can likely continue to be, volatile between quarters, but will average out at levels that are consistent with LeoVegas’ 2018 financial targets

Q1’17 marketing spend will

be larger than Q4’16 both in value-terms and as a percentage of revenue 31

Marketing spend and margin

COMMENTS Marketing to revenue % (negative scale) and Adjusted* EBIT margin %, quarterly *Adjusted for IPO-related expenses in Q4’15 and Q1’16 23.1% EBIT margin 14.1% EBIT margin Marketing to revenue % (negative scale) and Adjusted* EBIT margin %, annually

65.0%
60.0%
55.0%
50.0%
45.0%
40.0%
35.0%
30.0%
15.0%
10.0%
5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Mark Marketing e eting expense xpense, % of , % of revenues, nega enues, negativ tive scale e scale Adjus djusted EBIT mar ed EBIT margin % gin % Adjusted EBIT margin % Marketing expenses % of revenues

58.0%
56.0%
54.0%
52.0%
50.0%
48.0%
46.0%
44.0%
42.0%
40.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2014 2015 2016 Mark Marketing e eting expense xpense, % of , % of revenues, nega enues, negativ tive scale e scale Adjus djusted EBIT mar ed EBIT margin % gin % Adjusted EBIT margin % Marketing expenses % of revenues

SLIDE 32 32

The main item on the asset

side is cash, which increased its proportion of the balance sheet in Q4’16 on the back of high cash flow generation

Current assets are dominated

by receivables at payment service providers

Intangible assets consist of

capitalized development costs

On the equity and liabilities

side equity is the largest item

Working capital saw a

significant move in Q4’16 compared to Q3’16, which was expected and has been

bserved each year end

previously

Balance sheet

Balance sheet total 77.9 MEUR COMMENTS Assets MEUR 31 December 2016 Equity and liabilities MEUR 31 December 2016 Cash and cash equivalents, 60.2 Current assets, 9.1 Property, plant and equipment, 1.2 Intangible assets, 5.9 Equity, 50.8 Payables and accruals, 20.4 Other current liabilities, 5.1 Other liabilities, 0.9

SLIDE 33 48.1 10.0

0.2

3.1

0.3
0.7

0.2 60.2

10.0

20.0 30.0 40.0 50.0 60.0 70.0 Cash and cash equivalents at beginning of period EBITDA Adjustments for non-cash items Change in working capital Investments in tangible assets Investments in intangible assets Effects from exchage rate movements Cash and cash equivalents at end of period Cash flow from operating activities 12.9 MEUR Cash flow from investing activities -1.0 MEUR 33

Cash flow

Cash increased by 11.9 MEUR

in the quarter

Cash flow from operating

activities increased predominantly from the EBITDA result and was boosted by movements in working capital

Investing cash flow mainly

consisted of capitalized development costs and servers COMMENTS Cash flow MEUR Q4 2016 Total increase in cash 11.9 MEUR

SLIDE 34 34

Tar argets & gets & Summary Summary

SLIDE 35

LeoVegas targets to reach EUR 300 million in revenue by 2018 Long-term organic growth above online gaming market LeoVegas targets to reach an EBITDA margin of approximately 15% in 2018 Long-term at least 15% EBITDA margin assuming 100% regulated markets LeoVegas dividend policy is to distribute a minimum

f 50% of net profit over time

35

Financial targets

SLIDE 36 36

Financial targets 2018

16 37 83 141

300

2013 2014 2015 2016 2017 2018 ? ? Revenue MEUR EBITDA margin % Revenue on track towards 2018 target EBITDA margin 2016 already at 2018 target

2%

6% 2% 15% 15% 2013 2014 2015 2016 2017 2018

SLIDE 37

Organic growth of 58% and EBITDA

f 10.0 MEUR a 24% margin

LeoVegas considered most likely to succeed among industry executives January NGR 14.1 MEUR 40% growth

37

Summary Q4 2016

SLIDE 38

Q& Q&A A

38

SLIDE 39

APPENDIX APPENDIX

39

SLIDE 40 40

Regulated and soon to be regulated markets for LeoVegas

Markets where LeoVegas has a gaming license Country Tax structure 0.5% on Sports turnover and 1.5 KEUR per license 15% on GGR 20% on GGR Markets LeoVegas pays gaming taxes or VAT but without license* Country Tax structure 23% VAT 19% VAT 40% on GGR Soon to be regulated markets where LeoVegas has presence Country Expectation Expected Q3’18 Expected 2018 Applied for license *No local license regime is in place Sports XX% on GGR

SLIDE 41 Gaming taxes Less competition Local monopoly Decreased bonus costs Decreased marketing clutter Market increases in size More marketing channels Tax pushed onto supply chain 10 20 30 40 50 60 70 80 90 100 Positiv

sitive / Nega

e / Negativ tive e e efffect ect Pr Probability

bability

41

Local gaming regulations have pros and cons

Positive effects when market regulates Negative effects when markets regulate Marketing clutter Positive and negative effects assessed against probability of occurring More channels Less competition Supply chain Bonus costs Market size may decrease as competitors scale back marketing to protect margins in marketing open up as smaller competitors may leave absorbs its share of the gaming tax just as in the UK market may decrease as competitors scale back to protect margins may increase Gaming taxes will decrease profitability Local monopoly may enter into casino market (e.g. Danske Spil)

SLIDE 42 42 20 1 3 1 1 3 1 10 10 2 4 6 8 10 12 14 16 18 20 Gaming tax Increased market size Marketing clutter decrease More marketing channels Changes in competition Supply chain absorb share of tax Bonus costs Offsetting factors total Impact on EBITDA Per ercentage point impact on EBITD entage point impact on EBITDA mar A margin gin

EBITD EBITDA impact in c A impact in country wher

untry where 20% tax is implement

e 20% tax is implemented ed

Example of potential EBITDA impact in market with 20% tax on revenue

This is a hypothetical

example of the EBITDA impact when a country regulates its gaming market based on analysis of other markets that have regulated

An increased market size has

the potential to have a very large impact on the absolute EBITDA level even though margins will be lower and has therefor been shaded in this example

We expect that roughly half
f the tax will naturally be
ffset and half will impact

profitability – assuming that marketing investments are not scaled back

If marketing investments

were scaled back this would further mitigate the impact

f the tax on margin, but

would then decrease the growth potential COMMENTS

SLIDE 43 35.0 36.0 37.0 38.0 39.0 40.0 41.0 42.0 Revenue in constant currency Currency movement Reported Revenue 41.3 41.2 43

Revenue in constant currency

would have been 41.3 MEUR

Negative currency effect from

strengthening euro was 142 KEUR

Constant Currency Revenue

COMMENTS MEUR

0.1

SLIDE 44 €0 €20 €40 €60 €80 €100 €120 €140 €160 Deposited amount per quarter €M 0 € 5 € 10 € 15 € 20 € 25 € 30 € 35 € 40 € 45 € NGR €M

10 000

20 000 30 000 40 000 50 000 60 000 70 000 80 000 90 000 100 000 RDCs

20 000

40 000 60 000 80 000 100 000 120 000 NDCs 44

4 MAIN KPIS QUARTERLY

NDCs 85 384 (last quarter 74 638) RDCs 90 922 (last quarter 81 751) Deposits €139.1M (last quarter €123.7M) NGR €40.6M (last quarter €39.6)

SLIDE 45 45

Technology leadership Mobile First Expansion Opportunities Execution Data driven

Drivers behind LeoVegas’ success