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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Playtech    PTEC   IM00B7S9G985

PLAYTECH

(PTEC)
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Playtech : 2020 Half year results presentation

09/17/2020 | 03:35am EST

H1 2020 results

17 September 2020

Agenda

2

Group highlights

Financial review

Strategic priorities

and outlook

Mor Weizer

Andrew Smith

Mor Weizer

Chief Executive Officer

Chief Financial Officer

Chief Executive Officer

H1 2020 results

Playtech response to COVID-19

3

Decisive action taken early

  • Priority was to limit the effects of the pandemic on staff, partners and overall business
  • Business continuity plan enacted in early stages of the pandemic
  • Outstanding response from our people
  • Support provided to local communities
  • Seamless transition to remote working; productivity levels and delivery deadlines maintained
  • Safer Gambling engagement tools were made available for free during the crisis

H1 2020 results

Highlights

4

Resilient H1 performance; continued operational execution

  • Resilient H1 driven by online and TradeTech together with early and decisive actions taken in response to COVID-19
  • Significant US momentum: New Jersey license received and launched with bet365; further license applications underway; investment to increase
  • New structured agreements signed in Guatemala and Costa Rica; Caliente now top 3 customer
  • Launch of Playtech's sustainable business strategy to consolidate position as a global leader in safer products, data analytics and player engagement solutions
  • Simplification of Playtech progressing; actions taken on assets under review

H1 2020 results

Executing 2020 priorities

5

Delivering our strategy

2020 priorities

Progress

1.

Increase US investment

Launched with bet365 in New Jersey; Live facility under

development; further applications underway

2.

Sign new structured agreements

New structured agreements in Guatemala and Costa Rica

3.

Sign 50 new brands

>50 new brands signed in H1, surpassing FY 2020 target

4.

Snaitech to outperform in Italy

Snaitech #1 across Sports in Italy in H1

5.

Drive further developments in Safer Gambling

Launched Playtech Protect; leading on safer game design

6.

Asset review

TradeTech process underway; Sold loss-making Casual

Gaming assets; HPYBET under Snaitech management

H1 2020 results

Agenda

6

Group highlights

Financial review

Strategic priorities

and outlook

Mor Weizer

Andrew Smith

Mor Weizer

Chief Executive Officer

Chief Financial Officer

Chief Executive Officer

H1 2020 results

Financial highlights

7

Robust start to 2020; resilient despite COVID-19

Strong start to 2020 pre-COVID-19

  • Strong January and February
  • Q1 EBITDA of €117m

Resilient H1 despite COVID-19

  • Core B2B Gambling revenues down 5%
    • Core B2B Online growth of 18%
    • Non-UKregulated up 11%
  • Snaitech Online revenues up 37%; number 1 in Sports
  • Outstanding TradeTech performance

Cash preservation measures

  • Early decisions taken to preserve cash across the business
  • All areas of cash preservation examined

Strong balance sheet and liquidity

  • Free cash flow positive in H1; liquidity improved
    • RCF drawn down; covenants renegotiated
    • Final €36m of Snaitech land sale received in Q3
  • Net Debt / EBITDA improved to 1.5x (FY19: 1.6x)
  • Sale of certain Casual Gaming assets completed

H1 2020 results

COVID-19 Response

8

Decisive action taken early to navigate pandemic

Cash preservation

Liquidity

• Shareholder distributions suspended; €65m preserved

• Navigated pandemic with positive free cash flow

• Salary reductions across the Company

• RCF drawn down as precaution only

(incl. 20% for Board and Executive Management)

• Playtech has 5-year (€530m) and 7-year (€350m) bonds

• Deferral or cancellation of planned H1 capital

(October 2023 and March 2026)

expenditure

• Strict working capital management

Covenants renegotiated as precautionary measure

• Leverage covenant amended to 5x Net Debt / EBITDA

• Reduced office and maintenance costs

(Dec-20 test) and 4.5x (Jun-21 test)

• Renegotiated timing of 2020 earnout payments

• Interest Cover covenant amended to 3x EBITDA

(Dec 20 test) and 3.5x (Jun-21 test)

• Comfortably within the limits for both

H1 2020 results

Group EBITDA by month

9

Robust start to 2020 before COVID-19; recovery underway

Gambling

TradeTech

50

€ Millions

0

January

February

March

April

May

June

Recovery in July and August

  • Very strong July:
    • Pent up demand
    • Concentration of football matches
    • Strong TradeTech
  • Solid August:
    • Lower than July
    • Retail caution
    • Modest TradeTech

H1 2020 results

Results summary

10

Group results impacted by pandemic

Total revenue (€m)

Adj. EBITDA (€m)

Adj. Net Profit (€m)

€564.0

€162.3

€44.3

750

250

200

727.8

-23%

600

200

150

-16%

564.0

192.9

450

150

162.3

100

300

100

78.4

-44%

150

50

50

44.3

0

0

0

H1 2019

H1 2020

H1 2019

H1 2020

H1 2019

H1 2020

H1 2020 results

B2B Gambling

11

Strong Core B2B performance outside UK

Online only & excluding Sports

€ millions

H1 2019*

H1 2020

%

CC%

H1 2019

H1 2020

%

CC%

UK

94.8

66.1

-30%

-30%

52.0

51.9

0%

1%

Other regulated

74.2

80.5

8%

11%

37.4

57.7

54%

60%

Total Regulated B2B revenue

169.0

146.6

-13%

-12%

89.4

109.6

23%

25%

Unregulated excl. Asia

31.5

41.9

33%

32%

30.1

41.0

36%

35%

Total Core B2B revenue

200.5

188.5

-6%

-5%

119.5

150.6

26%

28%

Unregulated Asia

65.0

41.2

-37%

-36%

65.0

41.2

-37%

-36%

Total B2B Gambling revenue

265.5

229.7

-13%

-12%

184.5

191.8

4%

5%

B2B costs

155.3

166.5

7%

7%

B2B Adjusted EBITDA

110.2

63.2

-43%

-39%

* UK benefitted from a significant one-off hardware sale in H1 2019

H1 2020 results

B2C Gambling performance

12

B2C impacted by retail closures and sports cancellations

Revenue

Adjusted EBITDA

€ millions

H1 2019*

H1 2020

%

CC%

H1 2019*

H1 2020

%

Snaitech

395.8

215.5

-46%

-46%

74.7

47.1

-37%

White label (incl. Sun Bingo)

24.3

29.5

21%

22%

3.4

3.4

0%

Retail Sport B2C

9.9

8.5

-14%

-13%

-3.6

-4.2

-17%

Total B2C Gambling

430.0

253.5

-41%

-41%

74.5

46.3

-38%

* H1 2019 numbers have been restated to reflect the reclassification of discontinued operations

H1 2020 results

Snaitech performance

13

Resilient H1 driven by online strength and variable cost franchise model

€ millions

H1 2019

H1 2020

%

Retail betting

85.9

48.1

-44%

Gaming machines

249.0

92.3

-63%

Online

46.4

63.4

37%

Other

14.5

11.7

-19%

Total revenue

395.8

215.5

-46%

Adjusted EBITDA

74.7

47.1

-37%

Margin

19%

22%

-

Underlying margin*

45%

41%

-

* Underlying margin excludes the distribution costs paid to franchisees

H1 2020 results

TradeTech Group Results

14

Exceptional H1 2020

USD millions

H1 2019

H1 2020

%

B2C

$9.9

$22.8

130%

Liquidity offering

$14.5

$15.5

7%

Execution & Risk Management

$17.5

$50.8

190%

Full Turnkey offering

$2.2

$7.1

223%

Net Revenue

$44.1

$96.2

118%

Adjusted EBITDA

$9.2

$58.4

535%

  • Outstanding H1 performance benefiting from increased market volatility and trading volumes
  • Market conditions began to normalise towards the end of the first half and into the second half
  • Initial steps towards a more efficient balance sheet; released €10 million of capital

H1 2020 results

Balance sheet

15

Strong balance sheet and liquidity

  • Long-termfinancing in place; leverage within range
    • RCF drawn down as precautionary measure
    • Covenants renegotiated for December 2020 and June 2021 tests; comfortably within limits
    • Playtech has 5-year (€530m) and 7-year (€350m) bonds (October 2023 and March 2026)
  • Shareholder distributions suspended in February 2020
    • Share buyback announced at FY19 results was suspended; 2019 final dividend not proposed
    • €65m of cash outflows saved in H1

H1 2020 results

Cash on balance sheet

16

Cash position strengthened despite pandemic

June 2020

December 2019

Total

Total

excl.

excl.

€ millions

Gambling

Snaitech

TTG

Total

RCF

RCF

Total

RCF

RCF

Gross Cash

378

240

405

1,023

(307)

716

672

(64)

608

Client funds / progressives*

(86)

(39)

(242)

(367)

-

(367)

(338)

-

(338)

Adjusted gross cash

292

201

163

657

(307)

349

333

(64)

270

Cash needed for operations

(50)

(30)

(53)

(133)

-

(133)

(133)

-

(133)

Capital adequacy

-

-

(60)

(60)

-

(60)

(70)

-

(70)

Available cash

242

171

50

463

(307)

156

131

(64)

67

* Includes Client funds, progressive jackpots, security deposits & player balances

H1 2020 results

Outlook

17

Equipped to emerge strongly from the COVID-19 period

  • Strong trading and cash generation in July and August, albeit with stronger July
  • Online expected to continue to perform strongly
  • Cautious about the outlook for retail
  • TradeTech first half performance not expected to be repeated in H2 with market volatility currently significantly lower
  • Balance sheet remains strong, allowing for selected high-return investments such as in the US
  • Business performing well but caution remains given the backdrop

H1 2020 results

Agenda

18

Group highlights

Financial review

Strategic priorities

and outlook

Mor Weizer

Andrew Smith

Mor Weizer

Chief Executive Officer

Chief Financial Officer

Chief Executive Officer

H1 2020 results

Impact of COVID-19 on Playtech

19

New opportunities created; accelerating existing plans

Impact of COVID-19

  • COVID-19has accelerated shift to online and increased demands of digital functionality
  • Increased demand for our technology; safer game design and monitoring tools
  • Opportunities to rationalise costs and further refocus the business

Playtech response

  • Accelerating existing plans to take advantage of the new opportunities created
  • Leading technology and strong balance sheet positions Playtech to execute
  • Continued focus on extending Playtech's position as a global leader in safer gambling products

H1 2020 results

US market opportunity

20

Market opportunity continuing to grow

$24.4bn

• 22 states now offer or have approved Sports Betting

by 2023

• Sports Betting estimated $19 billion market by 2023

Sports ~$19.0bn

• iGaming legislation lags; gaining momentum

iGaming ~$5.4bn

• iGaming estimated $5.4 billion market by 2023

Market sizes are GGR based on forecasts for sports / iGaming by 2023.

Source: Jefferies (2020)

H1 2020 results

US product & technology offering

21

Industry-leading technology; flexible and open architecture

Industry-leading IMS platform

Live Casino

Playtech Open Platform / APIs

Slots

Turnkey Sportsbook

Poker

Bet engine

Omni-channel offering

Trading services and risk

Native iOS Casino app

Bespoke risk and liability

Managed services

Models and algorithms

Marketing and bonusing

H1 2020 results

US momentum

22

US strategy is building momentum

Approach

Current Status

Market Entry • State by state approach

• First licence obtained in New Jersey

• Licensing process underway in several states

• Accelerating investment

• Local presence

• Target c.10 states by end of 2022

Technology & Products

• IMS platform including CRM, BI & safer gambling

• Leading platform in regulated markets

• Sports via SSBTs & online

• Technology and products unrivalled

• Online slots & Live casino

• Live Casino facility under development

Customers & Partnerships

• Existing customers from other markets

• bet365 launched in New Jersey

• New US-based relationships

• Strong new business pipeline

• Focus on traditional B2B model

• Initial talks on structured agreements

  • Potential for select structured agreements

H1 2020 results

Latin America

23

Building on market leading position in the region

  • Strategy in region focused on structured agreements

• Caliente now a top 3 licensee

• Wplay roll-out progressing as planned with first milestones achieved

  • New structured agreements in Guatemala & Costa Rica
  • Medium term opportunities include Panama, Peru, Argentina, Brazil
  • €100m annual revenue opportunity in medium term

H1 2020 results

Resilient H1 for Snaitech

24

The market leader in Italy

#1

41%

Sports betting

Growth in online

market share in H1

stakes

€55m

75%

Land sale

Growth in online

completed

EBITDA

Resilient H1; recovery in July and August

  • Retail closures and lack of sporting events significantly impacted results from March to June
  • Business remained breakeven throughout worse period of pandemic
  • Online had very strong growth leveraging technology and brand strength

H1 2020 results

The opportunity for Snaitech

25

Largest market in Europe; ideally positioned

Significant long-term opportunity

  • Largest gambling market in Europe
  • Low online penetration
  • Ideally positioned to capture opportunity with brand strength and leading online offering
  • Actions taken in H1 to improve online capabilities and extend market leadership

* Source: H2 Gambling Capital (2019)

Online Penetration*

50%

45%

40%

30%

20%

10%

10%

0%

UK

Italy

H1 2020 results

Asia

26

Increased flexibility

  • H1 2020 impacted by government restrictions in response to COVID-19
  • Also impacted by restrictions introduced on payment processing
  • Changes to operating model and distribution network in region
    • Additional distributor added
    • Increased flexibility in region going forward
  • Remains highly cash generative

H1 2020 results

Safer gambling & sustainability

27

Sustainable success strategy; pioneering consumer protection

Sustainable Success

Five-year sustainable & responsible business strategy

Investing £5m into initiatives that encourage safer gambling behaviours

Power

Promote

Partner

H1 2020 results

Asset review

28

Action being taken

TradeTech

  • Remains non-core; source of capital to the Group in H1 given strong performance
  • Released €10m of previously tied-up cash
  • Playtech is in discussions with a number of parties in relation to possible sale

Retail B2C Sport (HPYBET)

  • Strategic asset in Germany ahead of regulation
  • To be operated by Snaitech management team going forward

Casual and Social Gaming

  • Discontinued operation
  • Loss-makingassets sold in H1; sale process for remainder ongoing

H1 2020 results

2020 priorities

29

Delivering our strategy

2020 priorities

H2 Focus

1.

Increase US investment

Further license applications, go-lives, deals signed

2.

Sign new structured agreements

Progress existing relationships and pipeline of structured agreements

3.

Sign 50 new brands

Sign >75 new brands in 2020

4.

Snaitech to outperform in Italy

Snaitech to maintain market leadership

5.

Drive further developments in Safer Gambling

Execute our Sustainable Success strategy

6.

Asset review

Snaitech to begin management of HPYBET; actions ongoing to

dispose non-core assets

H1 2020 results

Medium-term outlook

30

Well positioned for future growth

  • Playtech to emerge strongly from COVID-19 disrupted period
  • Positioned to take advantage of emerging opportunities
    • Leading technology
    • Strong balance sheet
  • Comprehensive product offering; ideally placed to capture significant US market opportunity
  • Significant opportunities for further material structured agreements
  • Focus on extending Playtech's position as a global leader in safer gambling products

H1 2020 results

Q&A

Appendix

Results summary

33

Group - at constant currency

Total revenue (€m)

Adj. EBITDA (€m)

Adj. Net Profit (€m)

€565.5

€164.6

€49.7

750

250

200

727.8

-22%*

600

200

-15%*

150

565.5

192.9

450

150

164.6

100

300

100

-36%*

50

77.2

150

50

49.7

0

0

0

H1 2019

H1 2020

H1 2019

H1 2020

H1 2019

H1 2020

* Including and excluding acquisitions

H1 2020 results

Summary by division H1 2020

34

Group

H1 2019 (€m)*

H1 2020 (€m)

Revenue

Adj. EBITDA

Margin

Revenue

Adj. EBITDA

Margin

B2B Gambling

265.5

110.2

42%

229.7

63.2

28%

Reported

B2C Gambling

430.0

74.5

17%

253.5

46.3

18%

(Intercompany)

(6.8)

n/a

n/a

(6.5)

n/a

n/a

Total Gambling

688.7

184.7

27%

476.7

109.5

23%

TradeTech

39.1

8.2

21%

87.3

52.8

61%

Group

727.8

192.9

27%

564.0

162.3

29%

CC

Group

727.8

192.9

27%

565.5

164.6

29%

* H1 2019 numbers have been restated to reflect the reclassification of discontinued operations

H1 2020 results

B2B Gambling customer concentration

35

Licensees

H1 2019

H1 2020

Top 5

39%

38%

Top 10

56%

52%

Top 15

66%

62%

H1 2020 results

B2B Gambling costs

36

Cost reduction during H1 in response to COVID-19

€ millions

H1 2019

H2 2019

H1 2020

H1 v H1 (%)

H1 v H2 (%)

R&D

37.4

43.5

39.2

5%

-10%

Operations

78.5

102.7

85.4

9%

-17%

G&A

29.7

27.7

32.4

9%

17%

S&M

9.7

9.9

9.5

-2%

-4%

Total B2B Gambling costs

155.3

183.8

166.5

7%

-9%

H1 2020 results

Net profit and EPS

37

Group

Adjusted

Excl. Acquisitions

H1 2019*

H1 2020

%

H1 2019*

H1 2020

%

Adjusted EBITDA

192.9

162.3

-16%

194.8

164.3

-16%

- Depreciation & Amortisation

(78.4)

(79.2)

1%

(78.1)

(78.8)

1%

- Net finance costs

(20.4)

(31.4)

54%

(20.1)

(31.2)

55%

- Tax

(16.4)

(8.2)

-50%

(16.1)

(8.5)

-47%

- Gain from Associate & JV

1.9

0.7

-63%

1.9

0.7

-63%

Non-controlling interest

(1.2)

0.1

n/a

(1.2)

0.1

n/a

Net Profit attrib. to owners of parent

78.4

44.3

-44%

81.2

46.6

-43%

Shares Outstanding (millions)

307.4

297.5

-3%

307.4

297.5

-3%

Basic EPS (cents)

25.5

14.9

-42%

26.4

15.6

-41%

* H1 2019 numbers have been restated to reflect the reclassification of discontinued operations

H1 2020 results

Adjusted cash bridge

38

Free cash flow positive; liquidity improved

657

411

€ Millions

Adjusted

Net cash from

Snaitech

Acquisitions &

CapEx and

Share

Interest, FX &

Adjusted

RCF drawn

Adjusted

gross cash*

operations**

land sale

contingent

Cap Dev

buy-back

lease liability

gross cash*

down

gross cash* at

at 31/12/2019

consideration

payments

excl. RCF

30/06/2020

impact

  • Adjusted gross cash denotes cash adjusted for client funds and progressive jackpots
  • Net cash from operations includes adjustment for cash within discontinued operations

H1 2020 results

Contingent consideration

39

Group

Contingent consideration

Payment date

Maximum payable earnout

and redemption liability

(based on maximum

Acquisition

(per terms of acquisition)

(as at 30.06.2020)

payable earnout)

Playtech BGT Sports Ltd

n/a - Earnout assessment

€20.8 million

€8.3 million Q3 2020

period complete

€12.5 million Q4 2020

HPYBET Austria GmbH

€15.0 million

Nil

Q2 2021

Bet Buddy

€1.3 million

€1.3 million

Q4 2020

Eyecon Limited

€24.7 million

Nil

Q2 2021

Wplay

€21.3 million

€20.1 million

€16.1 million Q3 2020

€4.4 million Q4 2022

€0.8 million Q4 2024

Statscore

€15.0 million

€3.7 million

€5.0 million Q1 2023

€10.0 million in Q1 2026

Other

€7.0 million

€1.3 million

Total

€84.3 million

€47.2 million

H1 2020 results

Thank you

Disclaimer

Playtech plc published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2020 07:34:04 UTC


© Publicnow 2020
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Financials
Sales 2020 1 279 M 1 542 M 1 542 M
Net income 2020 19,2 M 23,1 M 23,1 M
Net Debt 2020 710 M 856 M 856 M
P/E ratio 2020 71,2x
Yield 2020 -
Capitalization 1 265 M 1 528 M 1 525 M
EV / Sales 2020 1,54x
EV / Sales 2021 1,23x
Nbr of Employees 6 400
Free-Float 96,3%
Chart PLAYTECH
Duration : Period :
Playtech Technical Analysis Chart | PTEC | IM00B7S9G985 | MarketScreener
Technical analysis trends PLAYTECH
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 7
Average target price 4,02 €
Last Close Price 4,40 €
Spread / Highest target 11,6%
Spread / Average Target -8,56%
Spread / Lowest Target -26,7%
EPS Revisions
Managers
NameTitle
Moran Weizer Chief Executive Officer & Executive Director
Shimon Akad Chief Operating Officer
Andrew James Smith Chief Financial Officer & Executive Director
John E. Jackson Senior Independent Non-Executive Director
Claire Milne Independent Non-Executive Director
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