Entain Plc

Good morning and welcome to everyone both online and here in the room. We at Intane have been going through a transformation and we felt that now was the right time to take you through how we can accelerate our operational performance from here. As such, we have a lot to share with you today, and I hope that when we have finished, you have four important factors clear. So firstly, that we have a highly attractive, diversified portfolio that is 100% regulated or regulating and can grow our online operations ahead of markets. Secondly, that we are navigating through a high volume of regulatory changes that are impacting our near-term performance, but that we have a clear path forward through creating a more predictable and sustainable business. And thirdly, that our strategy and capital allocation priorities are focused to drive organic growth and operational efficiencies to expand online EBITDA margins towards our long-term targets of 30% and deliver better returns for our shareholders. And finally, we are focusing our resources and making the changes needed to return to organic growth. With our tech and products a key part of our operational success, Sadie Bentz, our Chief Product and Technology Officer is here with us today to provide an insight into how we are and our products performing to support our growth. In a moment, Rob will take you through our Q3 performance. But before that, I'd like to hand over to our chairman, Barry Gibson, to talk about some of those regulatory headwinds, how they have shaped our strategy and delivery over the last few years, and how our governance is evolving. Barry, over to you.

Thank you, Jette. Good afternoon, everybody. It's just over three years ago that I became chairman, and one of the very first things that came across my desk was a request from HMRC to help with their investigation into some past events that had occurred in the company. I'm just going to start by talking about the Deferred Prosecution Agreement. It relates to a period 2011 to 2017. We sold the business in 2017. It's Turkey. As we announced earlier in the year, we're expecting to appear before the court and get approval in the fourth quarter. We're still on track to do that. And we've made a provision so far of £585 million, which we expect to find us paying over a four-year period. So a significant amount of money, but quite a period of time to pay. The deferred prosecution agreement kind of draws a line under it as far as Entain is concerned. However, we will still be cooperating with the CPS as they're looking into activities of certain individual suppliers and as we said before, former managers of the company. So there will still be headlines in the press as these things develop and go ahead. But as far as Entain is concerned, this should be effectively a line drawn under it. Although there will still be, because we want it to be, issues that we will be kind of working towards. We've been very clear for three years now that what we called originally our sunrise strategy was about kind of operating this business in a way that was much more sustainable. It was about being in regulated or regulating markets. It's something we, the board, wanted to do because we felt that The history of the company and the way the industry had grown up as online had developed around the world was not appropriate and we wanted to make sure that we would take leadership in the market and we felt it was the right thing to do for the company. So our ambition is to operate only in regulated markets. We've now exited over 140 markets. It's a big impact on our business and in the current year We would have made about £100 million more in EBITDA had we been still in those markets. But they were inappropriate, they were not correct, particularly from a regulatory standpoint in some of our overseas markets. US regulators in particular have very long reach in terms of what they consider when you're applying for a licence. And I know, having sat before a number of these regulators over the recent times, they are very interested in companies activities over and above what they do in the united states or in a particular state so it's a new norm that we will only be in regulated and regulated markets and that's what we think is the right thing for the business it's the right thing for our customers and it's the right thing in terms of maintaining our regulatory presence in these states that if we lost the license, it could effectively be very serious indeed for the company because it would have a knock-on effect elsewhere. We won't be doing that because we've been very straightforward and transparent. But we have lost £100 million because of the decisions we as a board took that started three years ago to take this stance and this approach. Moving on, if I may note, to the UK White Paper and regulation is different to the DPA. The DPA was about criminal investigations into activities of the company dating back many years. Regulation is about here and now, today. The UK White Paper is a very good example of how regulation is continuing to evolve and we welcome the White Paper. It's a positive step towards updating the old regulatory framework. Some of the provisions that are in there, for example, the 1% levy, we've been doing voluntarily for a number of years. It will be extended to all operators in the market. Importantly, it's about a clear focus on player protection. We have to recognize that there are certain players who get into difficulty, and we've got to make sure that we sit beside them and help them to avoid that becoming a problem. Problem gambling is not good for our business, it's not good for the industry and it's certainly not good for the players. We're working with the UK Gambling Commission to make sure that as the consultations are going on, we give them all the help we can to get the legislation right because good regulation is good for our business, it's good for players. It's very important to try and make sure it's applied properly. The black market is real and it's serious. We estimate that in Germany some 60% of gambling revenue is now being conducted through the black market. We know that in the UK, as of last week, there were over 150 illegal gambling sites available to people in the UK. We've been providing this data to the UK GC to make sure that they understand that regulation's got to be done properly and applied properly otherwise we run the risk of people migrating to black market operators who will offer little or no protection at all we and the industry do have to adapt and improve and we've got leadership in that section and we're very pleased to have done that it was the right thing to do for the business and very important to do it for our shareholders and talking of shareholders moving on to the um Third item I want to just update you on. We're in the middle of strengthening the board, making sure we've got the right skills and talents going forward on our board. So we've got four new non-executive appointments going to be made over the coming weeks and very short number of months. Amanda Brown, we announced on Tuesday, I think it was, is joining the board and she'll become chairman of the Remuneration Committee in due course. So she's joining the board from the 8th of November. We've got three further appointments in flight which are progressing quite well. We're looking globally for the right kind of talents that we want and we're very much looking for people who have got value creation in their background and certainly we want to make sure that people have got investor experience and kind of know what investors are looking for. So we want to make sure we get the balance of skills and talents around our board table in the right place. We're also introducing a capital allocation committee. We've not had one historically. The board generally has taken the overview of all capital investments, clearly. But I think it's right for the evolution. It's happening in a number of companies that a capital allocation committee looks at where capital is spent. I'm not talking about operational capital. Those things are taken up in the normal annual budgeting process but i am talking about making sure that we properly weigh up the opportunities we get faced with in terms of could be m a it could be about dividends or dividend policy it could be about share buybacks and so on so we want to make sure that we're looking at the investors viewpoint when it comes to what we should do with our capital we have many opportunities and it's important to make the point that we are going to continue to invest in growing the business there are lots of opportunities, BetMGM is one very good example that we should be looking at and if we need to continue to invest to grow our market share our presence in that market we will continue to do that. Management team are laser focused on delivering operational excellence. We recognize that there's been a lot of pressures on us in terms of regulation about the historic investigation. It's taken a lot of our brain power up to deal with those things. We've also been very focused on building technology for BetMGM. Sometimes at the expense of our core business because you know you're going to do so many things with a tech stack when you're going through. Management will be absolutely laser focused on delivering operational capability. Yetta's going to talk during her presentation about some changes we're making amongst our senior management group in order to give us more bandwidth or more bench strength to be able to do these roles in the way that we envisage them going forward. And with that, I think, Rob, I'm going to hand over to you.

Thank you, Barry. Hello, everybody. Thank you for joining us today. So today, I'll be sharing views on our more challenging Q3 period. But just before I do that, it's worth going up a level and looking at recent context. The chart on the left-hand side of this slide shows that group revenue has been growing strongly at 11% CAGR over the last four years and up 15% over the last two years. However, Growth in an important part of Entain has slowed lately. That's our organic online business. As the middle row of the table on the right hand side shows, pro forma growth, so that's excluding acquisitions, was mid single digit negative in 2022, and we now expect it to be negative again in 2023, this time low single digit negative. This is where we've seen some misses to guidance since Q2 last year. So why has our organic online business slowed? There are two parts to the answer. We need to look at both growth excluding regulatory impacts and then separately the impact of regulation. Firstly, growth excluding regulatory impacts. And as the top row shows, our growth has slowed from double digits previously to mid-single digits over the last two years. This is primarily driven by the slowdown in market growth. In fact, our mid single digit growth is exactly in line with our markets over 22 and 23. So market growth has cooled, likely due to COVID reversion and consumer impacts in some countries. Our ex-regulation growth has also slowed because we haven't seen our historical outperformance to markets whilst we've upgraded our tech platform and prioritized US product. And you'll hear more on that later. The second part to why organic online growth has slowed is because we've gone through significant regulatory transformation. As Barry highlighted, regulatory impacts from the last few years have been significant, amounting to approximately 500 million of annualized EBITDA. It's a big number and it's the aggregation of known impacts across Germany, the Netherlands, UK, Australia and market exits, all of which are broken out in the appendix to today's presentation. If we look back and include all those regulatory impacts, we get to a 9% headwind on 2022 revenue growth and we expect another mid-single-digit negative impact in 2023. So those are two clear reasons why our organic online business has slowed. On the plus side, as the bottom row of this table shows, when we include the benefits of recent acquisitions, online NGR growth should still grow double digits this year as we continue to gain scale. And of course, we're nearly through our regulatory transformation now, as 100% of our revenue is now regulated or regulating. So the key takeaway from this slide is that group-wide revenue growth continues strongly, but our organic online revenue has slowed, and hence organic online is the subject of our operational updates today. So that's the recent context. Now let's take a closer look at Q3. As a group, NGR growth in Q3 was up 10% in constant currency. Within that, BetMGM was up 15%, driven by a strong quarter for iGaming, with 22% same-state growth, keeping us firmly on track for the upper end of our $1.8 to $2 billion NGR target for the year. Retail was robust in Q3, with volumes in line with expectations, finishing the quarter with NGR plus 4% year-on-year, or minus 4% on a pro forma basis. To online now, where we ended the quarter with pro forma NGR growth at minus 6%, behind our expectation of low single digit positive. So why were we adrift in Q3? Let me answer using the same two parts. Firstly, the regulatory impacts row in the table was two to three percentage points worse than expectation at minus six. And secondly, you can see pro forma growth X regulation was only flat in Q3, so down on our mid-single digit positive run rate that we saw on the previous slide. Let me dig into each of those separately. Firstly, regulatory impacts. When we add up everything, so that's UK and Germany, but also ARK, for example, we see a six percentage point drag in Q3. Our expectation earlier in the summer was that we would have seen this reduced by now, but it hasn't. This is partly because prior measures are still having an impact as they catch either brand new customers or pre-existing customers who are spending more with us. And it's partly because of new measures. These include rolling out ARC into international territories and ongoing refinements in the UK, some of which have had a greater impact than expected. For example, the number of restricted customers in the UK saw a significant jump last summer, as expected, following new measures, but their numbers have continued to rise since then, so the impact hasn't peaked just yet. The second part is our growth excluding regulatory impacts fell to flat in Q3, so five percentage points or so adverse to our mid-single-digit expectation. Half of that, so two to three percentage points, was lady luck and adverse sports results, in particular on European football in September. The impact increased progressively through the month, peaking at three to four percentage points before the final weekend clawed some back and we ended up with a two to three percentage points impact on the quarter. The other half was volume driven and thus more of a watch out for us. Now, no single territory drove the adverse variants by itself, but notable call outs would be Australia and Italy. We don't consider that Q3 represents structural issues in either of those markets, but declining consumer sentiment in Australia, as reported by others, is likely to be having an impact. Plus, as we spoke about at the interims, we reduced our marketing spend in Australia significantly in H1 to mitigate against the impact of tax rises, and that will be having some impact on our top line. In Italy, our online business was under the market in Q3 as one of the market leaders took share at the expense of the rest. That said, we're holding market share across retail and online combined, which is important given Italy is set to be a strong growth market for many years to come. Brazil is also worth calling out because NGR continued to decline year on year in Q3. Yetta will speak about Brazil later and show that the green shoots of turnaround are coming through, but we're not back into growth just yet. So bringing it all together, our Q3 pro forma online misdo expectation was driven by three broadly equal pieces. One, adverse regulatory impacts. Two, adverse sports margin. And three, lower volumes in a few key markets. To finish on Q3, we did see a strong contribution from recent acquisitions as the last line of the table shows, which meant that our total online growth for Q3 at XUS was plus 11% in constant currency. Let me now touch on the XUS EBITDA outlook for 2023. With our Q3 statement a few weeks ago, we reiterated expectation of staying within our guided EBITDA range, because whilst we were seeing some softness in our pro forma online revenues, as just discussed, this is partly offset by positives elsewhere, in particular, robust trading in retail and cost efficiencies in unicorn and online, which you'll hear more about from Jetta shortly. However, Q4 has got off to a difficult start. Whilst our volumes in Q4 are absolutely in line with expectations, customer-friendly football results continued into October. In fact, over the last five years, we've only seen three loss-making weeks on football and two of those three weeks fell in October. We estimate that the EBITDA impact from adverse football results in October will be approximately £45 million and so clearly the outlook for the year is now lower. So what does this mean for 2024? Firstly, the adverse football results in September and more importantly October have no bearing on 2024 so there's no need to adjust numbers for that. Let's then think about pro forma online NGR growth, separating again regulatory impacts from underlying. On the first part, regulatory impacts, we expect a continuation broadly at current levels, so around mid-single digits, through H1 next year. Then as we get into H2, it should all roll off as we will have annualized the rollout of ARK to international markets, we'll have annualized the introduction of Lugas in Germany, and our models suggest that the year-on-year impact from restricted customers in the UK will be peaking. On the second part, underlying growth excluding regulation, we must assume some continuation of lower volumes into next year, in particular in Australia. Adding both those parts together, we expect to see pro forma online growth of low single digit negative in H1 And then as regulatory impacts recede, we expect to be back into growth in H2, exiting the year in line with our markets at around mid single digit positive. Averaged across the full year, that therefore equates to low single digit growth for 2024. Before I finish, we've looked at NGR growth in detail. Let's now remind ourselves of our actives growth, which is an important metric for understanding the underlying health of our online business. This chart shows we have nearly doubled our customer numbers in the last four to five years. And in Q3, as it says on the left-hand side, actives were up double digits again with 10% pro forma growth. So despite pro forma NGR being minus 6% in Q3, actives were plus 10%. Lastly from me, having focused on the top line so far, now let's have a look at our EBITDA progression over recent years. The takeaway here is that despite that 500 million of EBITDA impacts from changing regulation, we are still growing EBITDA, helped of course by acquisitions and by BetMGM approaching profitability. Jumping to the far right hand side of this page, despite the challenges in organic online this year, Group EBITDA is still expected to grow significantly in 2023 and we expect EBITDA to continue to grow into 2024. So in summary, we have built a scaled growth business with highly regulated and highly sustainable EBITDA. However, we recognize we have some challenges in our organic online business, and execution of our go-forward plan is now key. To take you through the plan, let me now hand over to Jetta. Thank you.

Great. Thank you, Barry. And thank you, Rob. So let's get into more of the detail of the transformation we've been working on and the actions we are taking to drive organic growth, margin expansion and leadership in the U.S. to drive significant shareholder value. And let me start by reiterating where we are as a business. So we operate in 30 markets as a result of a significant portfolio shift that has seen us exit non-regulated markets, expand organically and benefit from consolidations opportunities. This has resulted in leadership positions in five largest regulated markets and two of the fastest growing, US and Brazil. Our portfolio today is 100% regulated or regulating, and that's more than any other operator. And alongside that, we've been driving our customer base to be more recreational focused through improvements in product, marketing and offerings. And that means that today all of our revenues are from a diversified, more sustainable base. Underpinning much of the business today is our technology platform, capabilities and product suite that gives us a competitive edge, particularly as we continue to evolve and develop it to improve and localize the product and offer for customers. So as I stand here today, we have a solid revenue and operational base from which to grow, but one that needed transforming to maximize the opportunity ahead. Our industry has seen huge growth over the last 10 to 15 years. But like many consumer-facing businesses, we can't stand still. So customer choices, wants and needs are constantly changing. Today, customers want it on their time. They want it fast. They want it localized and personalized. And so we, of course, must innovate to keep the pace. To operate at that scale requires flexible technology and simple processes, all driven, of course, by fantastic talent. When I started in this role in January 2021, while we had scale, the business just wasn't set up to meet the changing consumer needs in a way that would maximize the opportunity in front of us. We had legacy issues. too many grey markets, and the portfolio was unfocused, all creating risks to our revenues. So we had to pivot to be the most responsible operator, as well as drive leadership positions in the US and other growing regulated markets. As a result, we now have a significantly higher quality of revenue focused on those growth opportunities. We didn't have enough talent with the right expertise to meet the changing customer demands. So as such, eight of my nine leadership team are new and they come with a healthy mix of backgrounds from within the industry as well as tech and media. Our technology has enabled a fast go-to-market strategy across many individual markets. but it lacked flexibility to enable us to deliver the best experience for our customers in each market. So over the last two years, we've been upgrading our technology and you will hear from Sadi how we are improving and localizing products to drive further growth and how we think about maximizing our capabilities and returns out of the platform. And lastly, the structures across our business were overly complex and siloed. So I've put in place a new structure which improves processes and accountability across the group, more closely aligning product and commercial teams and enable us to focus on commercial excellence and subsequently maximize the benefits of operational leverage. Our focus is clear. These changes will enable us to deliver on increasing our share in the US, drive organic growth, and expanding online margins. And to achieve those aims, we have clear priorities to accelerate the operational performance of the group and deliver on our key targets over the next few years. And we'll dig into each of these in more detail through the presentation. But the headlines are, We are streamlining our portfolio to focus on growth and returns. We are focusing on the key metrics that drive value for shareholders, acquisition and retention through technology, product and investments. We will further simplify our business to be more agile, so one that can respond faster to local markets and consumer dynamics, as well as maximizing our operational leverage to support our progress towards the 30% online EBITDA margin target. And our actions will be supported by our focused approach to capital allocation to support delivery of our targets. In simple terms, I and the management will focus on three key strategic objectives in our online operations to drive shareholder value. Our online markets, excluding US, are expected to grow by around 7% CAGR over the next three years. So we're allocating our capital to those markets with the greatest opportunities, for example, by driving the consumer experience and product in the UK and Brazil to grow market leadership positions. We expect our organic business to exit next year in line with the market and to grow at least in line with the market from 2025. Our three-year plan will see us deliver 28% online EBITDA margin through a number of actions and then on to the 30% margins by 2028. In the US, we have repositioned our tech and product operations and delivered a vast range of product and experience improvements through the year. and will continue to drive gains in the US market to deliver on our objective of a 20-25% market share across iGaming and online sports betting. Our plan is supported by free enablers, allocating our capital to the biggest drivers that maximize return, further develop and enhance our product offer, for example, through Angstrom to outperform our competition in each local market, And we will, of course, maintain our focus on being the most responsible operator. As I mentioned, our markets, excluding the U.S., are expected to grow at around 7% on a weighted compound basis over the next few years. Across our portfolio, market growth rates vary, of course, from fast-growing markets like the U.S. and Brazil through to large, more mature, and highly cash-generated markets like the U.K. or Italy or Australia. And that provides us with options. And so we've undertaken a thorough review of these markets and will be focused on those where we see the best growth profiles and returns for shareholders. And they broadly split into two groups of growth and core. The U.S. obviously remains our highest priority, given the significant growth opportunities and potential for meaningful returns to our balance sheet over the medium term. Brazil, and indeed longer term all of LATAM, offers exciting growth and I'll come back to some of the actions we are leveraging for Brazil shortly. We formed, as you know, Intane Central Eastern Europe to take advantage of the growth opportunity across the region and with Supersport and STS, we can leverage synergies and invest to strengthen their positions further. Amongst the core operations where we will continue to drive profitable growth, we have strong market positions in some of the largest markets around the world, such as the UK, Italy, Australia, and Germany, all with their own unique dynamics and regulatory structures. As a result of our market review, we are exiting some smaller markets and we will reposition Unicorn business where the capital intensity was very high and the payback would have been relatively slow in delivering a commercial product. However, we'll use the product offerings that Unicorn has built to improve the offer for customers across our major brands such as Ladbrokes and Bwin and STS in Poland. As we look across our portfolio markets, the majority are performing well. For example, Croatia is up 31% year on year, and we continue to lead the market in, for example, Georgia. But for different reasons, some of our markets are underperforming, and therefore we are focusing our attention on turning those around. I'll come on to a deeper dive on the UK and Brazil in a moment. Germany, as you all know, is suffering from regulatory change and lack of enforcement. But here we've missed a step in serving our customers with a better localized product. So I've changed management and we're implementing a program to improve the product and experience for customers there. As we see enforcement level the playing field there, we are confident that we'll see healthy growth return in Germany. Before we get into the details of what we are doing in the UK and in Brazil and across tech and product, I wanted to briefly share our internal framework for how we think about the key drivers of our business. Customer acquisition will always be key in order to continue to grow our business. And accordingly, we'll continue to invest in marketing budgets and optimize the return we get on every pound spent. However, given that 80 to 85% of our NDR comes from previously acquired customers, we are also laser focused on driving improvements in retention and monetization so that we can give our customers more reason to stay with us for longer and to increase their engagement over time. And the most critical retention monetization lever for us is our technology and product proposition. As customer demands evolve and expectations for superior digital experience continue to increase, we must not stand still but rather continue to evolve our tech and product and give our customers better and better experiences. Over the last three years, we have transformed our UK business. From brand positioning to product and customer engagement, Today, each of our major brands are fundamentally different and very much focused on recreational customers. This dynamic shift has been transformative to the UK business, but has inevitably led to lower spend per head. However, as we have driven acquisition and retention, we see a tremendous increase in UK actives as well as market share gains. We are leading our industry in ensuring that our customers play safely across all our brands. Intane protects customers, meaning that they can shift from brand to brand, accumulating unsustainable level of play. That's the right thing to do and the right direction of travel for the regulator and our industry. The short-term cost of this is an unevil playing field. with in particular tier two and tier three operators yet to implement changes. You can see on the chart how that has been borne out by market share dynamics here on the left-hand side. As the regulator broadens the imposition of affordability and single customer view across operators, and as measures from the Gambling Act review come into force, we expect to see a levering of the playing field through 2024. But we are of course not just relying on regulatory rebalances to help us get back to growth. But I do think it is an important context. We are busy improving our customer offer to drive acquisition and retention, meaning lower cost and increased returns. This is clear when you look at our performance excluding regulatory impact, where we have grown in line with the market. Our leadership in the UK high street, clearly demonstrated by our strong retail performance, is the result of investment in our leading brands, products and in-store experience. This provides us with an exciting omnichannel opportunity as our broadening retail customer base opens the door to greater online acquisition. On tech and product capabilities, we are focusing on these key areas. improving the customer journey and offering a superior player experience, increasing recreational engagement, improving in-house pricing of multis, accumulators, and other exotics through, for example, Angstrom, and leveraging investments we've already made into our tech for the US market. And therefore, we see a clear path to return to organic growth in the UK in the second half of next year. I would now like to focus on one of our biggest market opportunities, namely Brazil. So this is a country of over 200 million people, many of them sports fanatics, particularly in football. And with a current total addressable market of over two and a half billion US dollar, growing at approximately 20% year on year, and where we have a very strong brand in sporting bid. And as we progress towards regulation next year, we've seen significant influx of competition and therefore marketing spend. Now, historically, the Entain LatAm business operated out of Europe and therefore failed to spot changing trends in the local market early enough to respond appropriately. So earlier this year, I revamped our regional leadership team there with now a team on the ground with local expertise, and they are making fundamental changes. And let me give you a few examples. We've improved our acquisition funnel by tapping into new digital channels and affiliates where we were severely underweight. Our first-time deposits are now up year-on-year for three consecutive months, reversing the full year of decline. We have boosted our offering with new local games, such as Aviator, which is Brazil's number one casino game, and have driven DGR from these non-traditional games up 50%, also helping, of course, retention. As well as improving our payment processing cost, we have reduced customer friction by offering instant withdrawals and now have the best-in-class cashier experience for all our customers. These are a few of the examples which support our confidence that we will turn around the business and deliver growth in the first half of 2024. At this point, I would like to hand over to Sati Benz, our Chief Product and Technology Officer. So Sati joined us earlier this year from Caesars, William Hill, where he was Product and Technology Officer from 2019. And he brings a wealth of technology experience from across the digital landscape. So over to you.

SATI BENZ. Thank you. Thank you, Jette. So, hi. My name is Sati Benz, and I'm, as Yetta said, Chief Product and Technology Officer at Entain. So, I joined Entain in January, and since joining, I've been laser focused on accelerating our ability to deliver high quality, customer valued, market winning product improvements. But before I get into my main presentation slides, just let me offer a bit of a short reflection on my first few months of working on the Entain platform. I've worked on a number of platforms in this industry, at William Hill, with Mr. Green, Caesars, and 888. I've also had significant exposure to leading technology platforms across sectors from my time at McKinsey. And I have no doubt that the Intane platform is rich. It's mature, feature-rich, and scalable. However, also having looked under the hood, like many technology platforms, it wasn't perfect. It was clear to me that we had optimized for speed, getting the Intane platform to markets as quickly as possible, versus really keeping all our underlying technology up to date. So this year, we've made a number of platform improvements and upgrades, primarily on two fronts. First, we've upgraded our data centers, our core database technologies, and right now we're upgrading the entire application stack. Secondly, we've introduced some critical cloud capabilities that really enable us to increase the velocity of platform improvements. The platform today, therefore, is healthier, and going forward, our new architecture function will continue to ensure that our platform stays healthy even as we expand our market footprint. For the remainder of this presentation, I want to update you on three key topics. First, I want to recap what I feel is the real power of the Entain platform, a platform that we can build once and deploy everywhere. I also want to showcase our new market localization capabilities, a fundamental improvement to the way we can compete locally. And finally, I want to share the progress we're making on what I call the brilliant basics, the things that customers want every single time they open our application. So let's start by recapping what's unique and special about the Entain platform. As we've heard already today, we have 30 brands in 30 countries on our platforms, which by itself is pretty impressive for a platform. But what's more impressive is that earlier this year, we migrated Sports Interactive in Canada to the Entain platform. For me, that was an eye-opener. We had a comprehensive migration playbook that allows us to quickly assess each migration, And it's the A to Z on how to quickly and efficiently execute a migration. It was completely predictable. This repeatability is what makes the platform incredibly special. The number of bets settled and the breadth of our game library speaks to the unrivaled breadth of our offering. At Antane, we have hundreds of always-on sports data feeds and game supply integrations, and it's incredible how we are able to surface all these in easy-to-play games and almost infinite betting opportunities in a safe, responsible manner. The last stat is just one example of the resilience baked into our platform. At any given weekend, we have 500 million gamespins. And it just highlights that at Entain, the technology just works. Next, I want to highlight what we're up to in 2023. It's the localization point that Yetta has made a couple of times earlier. When talking to our customers in each of our key markets, they want, well, they expect all the capabilities that are on the left-hand side of this page, the depth and breadth of our products, But they also ask for experiences that are unique to their markets. And we absolutely hear those customers. So earlier this year, we made the changes necessary to enable us to respond to local customer needs faster, and therefore to win locally. So earlier this year, we established squads, or product development teams dedicated to key markets. These squads focus exclusively on product improvements for their markets. They instrument and measure market-specific journeys, and every week they make localized journey improvements. And with this setup, we're already seeing some real improvements to our underlying customer and product metrics. So improvements in our NPS scores. And while still early, improvements in our key product retention metrics that Yeto referred to a little earlier. So let me highlight a few examples. This NFL season, we had a drive market for the NFL in the U.S. Now, a drive is a unique game segment in U.S. football. Typically, in a game, you get about 20 drives. in a four-hour window. So now our customers can come in and out of watching an NFL game and still enjoy placing a simple drive bet with three very simple outcomes anytime they want during the game and come in and out of a game one drive at a time. And we've seen huge uptake in this new capability. As I said, we have a huge game library. But as Yeto mentioned, our LATAM teams recognized that we didn't have a local favorite. They love Crash games. And so our squads were quickly able to pivot and get Aviator integrated. And now we're seeing incredible uptake in game launches for Crash games with Aviator. And sticking with Brazil and another point that Yeto made, Customers in that market behave differently. There's an underlying payment system called PIX, and the customers in Brazil love micropayments. They really want to get in and out of our wallet, even during a football match. So our squads and our commercial teams joined forces and really focused on delivering instant deposits and instant withdrawals. It's been live for a few months now, but the early signs are we're seeing fantastic uptick in our NPS scores in Brazil. So, and I've said earlier, we migrated Sports Interactive to the platform earlier this year, and now we're gearing up for a Bet City migration. In each case for migrations, what we're really doing is assessing the upside of the growth before we do the migration, and then our migration process makes the migration super, super efficient. So as you can see, we have a new market dedicated capability. We have developed a two-speed product delivery organization. We have the platform speed, which we've always had, and that delivers new global capabilities each month and each quarter. Now we also have market-facing product improvements, and these we deliver every single week. This gives us unique capabilities to operate and win both locally and globally. In addition to creating this market-facing development capability, we have reorganized our platform teams around three key product capabilities, each operating with new leadership. These teams have end-to-end responsibility for the next generation sports, gaming, and player experiences. Each of these product areas improves the quality, the velocity, and the underlying product performance metrics of the journeys that matter the most to our customers, today and in the future. In sports, for example, since the February Super Bowl in Arizona, we have significantly revamped our sportsbook. We have delivered our first Angstrom integrations. We've made a near 20% improvement in uptime for NFL. We've introduced Single Game Pilot Plus. We've improved our sportsbook event navigation. And we're not stopping there. For me, we're just getting started with Angstrom. So just a quick reminder of why Angstrom is so unique and what makes me so excited about Angstrom. So the way Angstrom works is it builds profiles of how athletes play and perform their sport. Using those profiles, Angstrom creates models that then simulate actual games being played. They perform thousands of simulations in a second. The results of these simulations are used to assign probabilities to every possible action an athlete can take in a game. It's a completely different approach to pricing. Knowing the probability of every action, we can develop infinite marketing betting opportunities for our customers to play. It gives us a whole new playing field for innovation. So looking ahead, we want to own the entire next generation sports betting experience. Finally, we're already in flight with our own bet builder model for European football. We want to own the entire experience and the technology end to end. So the final piece for the European football market is really to build our own models. We're well underway and we expect to have them in place for the start of the next football season. In gaming, while we have clear global leadership position, we absolutely want to build on that success. We've already established dedicated gaming squads for our key markets. And with these teams, we'll be accelerating the pace at which we can make fresh and exclusive content available. Aviator from earlier is a great example of why dedicated market teams work so well. Looking forward, we're going to double down on further improving our personalization. Given the size of our library, we want to make game discovery a one or two swipe capability experience. Furthermore, we're going to expand our game development capability. We love making award-winning games like Bigger Banker. Having another studio team will accelerate our ability to deliver more in-house games across all our markets. Finally, in player experiences, we've been relentlessly focused on what I'm calling the brilliant basics. The brilliant basics for us are the experiences that customers will love forever. Super fast loading time for apps, simple navigation, game discovery, finding your favorite sports, safer gambling, bet tracking, and a very, very simple cashier experience. Our product metrics already tell us that the work we've done so far this year on Brilliant Basics really does improve product retention. So looking back the last 10 months, we have a unique platform and we're making it stronger. We recognize the need to compete locally and take action by establishing market-facing squads. We have some initial proof points that this approach is having a positive impact on all our retention metrics. We have started to integrate Angstrom, and we see a clear path to sportsbook innovation leveraging that technology. And we are laser focused on the digital experiences that matter the most to our customers. Personally speaking, I'm looking forward to having one of the fastest app experiences in our industry by early next year. So that's it for me today. I hope that I gave you a sense of the focus on product velocity, localization, and better sports and gaming products going forward. Back to you, Yasin.

Great. Thank you, Sadie. So as you can hear, a huge amount of work has been going on transforming our technology and our product capabilities going forward. As we made it clear, we have a medium-term ambition to getting to the 30% online EBITDA margins. and we also have a plan for how to get there. In 2023, we expect our online EBITDA margin will be around 26%. And as we look forward, we see the potential for significant margin expansion driven by our operational efficiencies and leveraging scale capabilities. In the short term, as Brazil regulates, we'll see a headwind of around 30 million pounds on EBITDA next year. And that then goes to 60 million pound on EBITDA on a full year run rate in 2025. Over the next three years, there are a number of actions that we are taking to deliver on this target, which I will now move on to. Our project Roma, which will reduce cost by 100 million on a run rate basis by 2025. And these will come as we streamline our operations further, simplify processes, integrate our businesses better, and of course reduce cost. These savings will free up capital, some of which we will reinvest back into the business, for example, in technology and product, to drive growth through further product and experience improvements, to drive acquisition and to drive retention. That will see us drive net savings or EBITDA margin expansion through 2024 and 2025. Now we've set out in appendix slides on how this will translate into expectations and guidance over the 2024 to 2026 period. Okay, turning now briefly to the US. Partnering our technology and capabilities with the brand strength and market access of MGM Resorts has been a winning formula for customers. So from a standing start, we've built BetMGM into a leading operator in the fast-growing online sports betting market and a leader in iGaming. And we are on track to deliver NGR at the top end of our range of 1.8 to 2 billion US dollar, and to deliver positive EBITDA in the second half of this year. The important thing is that BetMGM has two highly complimentary parents completely aligned on the path forward to invest in and grow our position in the US market. So let there be no doubt that we want to win in the U.S. We've been punching above our weight, and dollar for dollar, we've delivered the strongest market share return on investment in the U.S. thus far. This is because BetMGM was created with the extensive capability built in, including the Intane technology platform and CRM and marketing expertise, as well as our sportsbook and industry-leading gaming expertise. This year, investments in products and our bonus optimization program have put BetMGM in a stronger position for more efficient investment in market share gains through 2024. One of the strengths of the Entain platform is that it is extremely effective for launching across discrete markets, enabling us to open ring-fenced operations across different markets with different regulatory, reporting, payment and other processes. And that enabled us to launch quickly across the US and it rapidly opened up for the 28 markets that we are present in today. However, we had to wait for a window of opportunity to, for example, roll out single account, single wallet, which we have now delivered ahead of our internal deadline, which I'm really pleased with. This will enable us to deliver on the huge opportunity across the U.S. around multistate players and omnichannel customers from MDM Resorts, particularly the 4 million customers visiting MDM's properties in Las Vegas annually, enabling them to take their wallet from their trip to the Strip and back home. We've seen some very positive early results showing increased retention, lower bonus costs, benefits around CRM and payments, and you will hear more from the BetMDM team in December. Having upgraded the customer experience through the app over the summer, as Sadie has just talked about, we now have the fastest app in many states with smoother customer journeys. and we lead the market in iGaming, driven by the quality and the range of games that we provide, from in-house developed games, including leveraging unique MGM brand assets, to leveraging our global scale and buying power in obtaining many highly popular third-party games on an exclusive basis. Now, you've heard about Angstrom from Sadi, and you will hear more at BetMGM's business update in a month's time. But as I mentioned at the interim, this is a highly strategic move in accelerating our US strategy and bringing key capabilities in-house. And it's making us the only operator with full end-to-end capabilities for risk analysis and pricing across all forms of the US sports betting product. With a significantly improved product supported by Angstrom capabilities, alongside MGM's investment in brand, we are now well positioned to grow through 2024 towards our target of 20 to 25% market share. We've heard the market's challenge on our approach to capital allocation, and we've listened. Going forward, we have three clear priorities for our capital. Firstly, I hope it's clear from our presentation that we are laser focusing our capital and investment where we can derive the best ROI through growth and market focus. That involves where our marketing and bonus spent goes around the group, allocating key tech and product resources to our priority and core markets. driving higher share in the US with BetMDM and realizing cost efficiencies to enable us to reinvest in higher growth markets. Secondly, we'll maintain a strong balance sheet, based on full year consensus expectation for our year end leverage will be around three times. And as we improve our margins, we will add further strength to our free cash flow generation with additional benefits of US profitability over the medium term, supporting a target leverage of two times, despite carrying the burden of the HMRC settlement. So to be clear, that means that we are looking at much slower pace of M&A going forward and we are focusing on organic growth. But we'll continue to support a progressive dividend. So let me recap on what we aim to achieve over the next three years. Entain has strong fundamentals from market positions to technology to leadership, all of which have been transformed over the last three years. And now we can focus on improving the business further and focusing on investing in the best way to drive organic growth from our growth and core markets. So what has changed? As I mentioned, I've changed our leadership team and I've also appointed Samir Deen as Chief Commercial Officer. And he will oversee all commercial activities to optimize our revenue across our markets and of course work closely with me here. Samir has been with us for a little over two years now with responsibility for strategy and working closely with me has been the key driver in setting out our plans and targets for delivering over the next three years. We're prioritizing those markets that will drive highest returns and shareholder returns, highest return on investment and shareholder returns. and we're delivering on our technology to create a best class product for our customers in each market. So we have a clear and comprehensive action plan that will see us focus on what matters to drive returns and shareholder value. That will enable us to exit next year in line with market growth and then return to at least market growth from 2025. We'll expand our online EBITDA margins through operational leverage and Project Roma, while continuing to allocate investments for growth. And that will allow us to target 28% online EBITDA margins by in 2026, and then continuing on to our goal of 30%. And we are laser focused on delivering a 20 to 25% market share across iGaming and online sports betting in the US with the BetMGM team. That now brings me to the formal part of the presentation, to an end. And Rob, Barry, Sati, you will all join me up here for questions. Now, for those of you in the room, I think Davina and Callum have a mic. And so for the benefit of everyone here and online, please wait for that. And when you get the mic, state your name and company that you represent. And if you're online and would like to ask a question, you can use the tech box, I think that's right, next to the webcast. And they will then come through to David here in the room, and you will ask on your behalf.

I'll just add to that. We're just going to set the stage up quickly. If you're online, we're just going to get the Q&A system going. If you can't work out how to use it, email us at investors at ntain.com if you want to ask anything. So give us 30 seconds. We'll set up and then we'll get on to the Q&A. Thank you.

for opening up for questions. I think it was the first one.

Ed Young from Morgan Stanley. My first question is about the guidance framework going forward. So I guess the bottom line of the question is, should we view this as conservative guidance, or is this your best guess about how you see the business performing Obviously, you've laid out in the presentation, Rob, the difficulties about modeling the impacts of regulation, some of the things that have come sideways. But obviously, going in even this summer, we're expecting mid-to-mid growth. And it was down mid. We're expecting a billion of EBITDA. One month later, we're not. So I guess, especially given there is already a cost saving program embedded within your margin guidance, both on the top line framework you've given on the bottom line. Is this something that we can really get under or should we be taking another level of conservatism below that to account for that?

Do you want to start off, Rob?

Yeah, happy to take that. So the outcome that we presented today is the output of an extensive process, normal strategic planning and budgeting process. So the numbers are robust, they're bottoms up. Are they achievable? Absolutely. Do I think there needs to be conservatives and land on top?

No.

Is there opportunity to outperform? Yes. And what gives me more confidence as we look forward now versus perhaps where we were 12 months, 24 months ago, is that we really are near the end of this regulatory transformation. And that's, generally speaking, what's caught us out with our forecasting. We certainly didn't anticipate 500 million EBITDA impact a few years ago. We knew there would be lots with Germany coming and so on. But we're near the end now. And once Brazil taxes are in, that's the last major untaxed revenue in the group. So absolutely, there might be some tax rises somewhere, but that's very different to the introduction of a brand new tax in one of your top marketplaces. So from a tax perspective, regulatory change perspective, there's not too much left you would like to think that could go wrong. So I would position it as down the middle with room to outperform. But if something does come out that will work in some territory that wasn't expected, we would have to manage that at the time.

The second question is, you talk a lot about actives growth, and it's often you're using it as sort of a bellwether or a sign of underlying strength in the business. I'd say that virtually every operator is talking about actives growth, but there's quite a divergent revenue performance between them. So can you give us some confidence around share of wallet or any kind of data or kind evidence that can give us confidence that what we're not just seeing is in the face of regulatory pressure, consumers taking up more apps, therefore actives growth, but then actually you've got a share of wallet issue that's playing out.

I'll take that one. So listen, active is a really important KPI for us, as it is for all operators, but there's more to it than that. And as we laid out in the presentation today, we are really focused on the retention part of it. If you look at the UK business, yes, we've gone through a lot of pain with regulation. Have you seen that impact our performance since the second half of 2022 and into 2023? But the important part is that The underlying growth is actually growing in line with the markets. Yes, we see strong active growth. So in the UK, actives are up 19% this quarter. H1, it was up 22%, 23%. So that's on the active side. And importantly, our retention is really strong. So our players play with us. And therefore, putting all this together, underlying growth is still there. Strong actives, strong retentions. together with what Sati has discussed in terms of what we want to do on the product side next year in the UK. That gives us comfort that when we flow through these impacts we've seen from regulation, the players are still there, they still want to play with us, they come to our app, and therefore we can pick up share again.

On that, is it a difficult thing to gauge for you, though, share of wallet? Because you can see the retention, you can see the actives, but clearly the revenue has a challenge. Trying to disaggregate it, I guess, is a challenge. But it's sort of from our seats, we see actives growth across the UK market. So the UKGC data says that's what every operator says. That's a very divergent performance. So is there anything on share of wallet that you measure or you have confidence that you really understand what percentage of play is with your players?

Yeah, it's really difficult for us to see the share of wallet across the market. So we measure much more in terms of how the players play with us. Of course, the market share is an important indicator. Spend per hit is important, how that plays out with our recreational base. But it's quite difficult for us to see through the market in terms of share of wallet.

What we can do is cohort the customer base. And if you strip out restricted customers, then you don't see a deterioration in spend per head trends. So it's clear where it's coming from. The market share chart shows you where it's coming from. And to lose around about 40% of spend per head over such a short period of time, it's an incredible reduction. But that actives growth has helped mitigate. But that's really why you're seeing the differences between operators. It's the timing of implementation of regulatory change And that market share chart just showing what's happened to the tier two and tier three operators that were seeding share year after year after year. And then just the last two years, it's spiking up. And that will normalize at some point. And those sorts of tailwinds are not in guidance. So perhaps that's an example of where there might be some upside.

Okay, thank you. And my third question, finally, is on capital allocation. You mentioned about that being a priority, the Capital Allocation Committee. I just wondered if you could talk about, perhaps as a little bit of surprise from some today, about new opportunities. Still a division with no revenue 20 months after launching it. Why is that core? Why is that not something that you would give up in the context of demonstrating this kind of laser focus you're talking about on organic growth and online?

So let me start. So part of new opportunities is about unicorn. And that is actually where we've made a decision and say, listen, We're really excited about esports, but rolling out globally a direct-to-consumer brand, we knew that would be really capital-intensive. It would take a long time before that business would become profitable. So there we've pivoted. We've said, okay, the products that Unicorn has built that are brilliant, built for gamers, we'll take that product capability, but we'll use it for our existing brands. So that's part of your question. Unicorn was part of the new opportunity.

common anything else yeah when you step back and look at the percentage that esports represents today as a mix of our total revenue and you compare that to other operators pinnacle 365 betway there's a there's a big opportunity out there and it should be a segment that grows a product area that grows over the next period of time so if you're the operator that has the most extensive markets the best features the more events to wager on than anywhere else, then that should attract a new audience. But doing it for Labricks or Bwin or SDS saves you the marketing dollars that we were otherwise putting behind unicorn. So that's where we've pulled back the marketing dollars that's driving the B2C unicorn brand. But we still have the esports wagering product and tech teams supplying the in-house brands.

Is there anything else left in New Opportunities? You talked about other kind of innovation stuff that's in there. Why are they there, I guess? And if you are demonstrating towards Ladbrokes and Bewan, why don't you book it online rather than having this sort of, frankly, unique division of no revenue and sort of a cost line to sort of what seems quite speculative?

We'll look at our reporting segments and whether we might break out online in more detail as we get through to March of next year. In the interim, there are still some, I think one of the transitions that you've heard a little bit about today is we were spending a lot of time on bells and whistles, if you like. And actually, as you've heard from Sati, there were brilliant basics to prioritize. But there are still some areas of forward-looking investment, things like how do we leverage AI to support our trading teams, for example. That's still in that cost base today. Whether we reallocate things around next year and beyond, we'll have to look at that. Thanks.

Hi, thank you. Ivor Jones from Peel Hunt. Just two questions. There were two occasions when you mentioned BetMGM as an opportunity for investment, and I wasn't clear if you meant additional cash outflows from Entain into BetMGM, or you just meant reinvestment of its own cash into growth. And then, Rob, you've set out a framework for cost savings. Could you talk about underlying cost growth and how you expect the two to interact?

Right. Thanks, Ira. Let me start off with the BED MGM question. We are debt focused on making sure the BED MGM business becomes the best it can be and continuing to invest into BED MGM. So those discussions happens in the BED MGM boardroom together with MGM Resorts. We discuss how we allocate investments and capital into the business. So looking to next year, yes, we'll absolutely invest into the business. How much? We haven't decided yet. That's a discussion for us together with the partner. But we are very excited that when we get the products in place, this is an opportunity for us to invest more into gaining market share in the US.

Have I missed something? Is that a change of tone from a business that in previous presentations were going to be self-financing or net cash generative and potentially paying a dividend?

So I think what we see is an opportunity to take more share. We haven't stepped away from, let's say, the sustainability of the business and the long-term targets of the business, but we really want to win, as I said in my presentation, and so does our partner, MDM Resorts. And if that means investing into the business, we're open for that, and I'm pretty sure that our partner is as well.

And to cost inflation, the way I would think about it is those savings overlay ordinary inflation. The areas of the business where we want to invest more in, and hence see excess inflation, is that 30 million of reinvestment. So if you take those net savings, you can overlay that on top of standard inflation, most of our cost bases, wages. So whatever you want to assume there. Perhaps one other comment. I know our corporate cost base has seen an acceleration over recent years that should plateau now. One of the big drivers of that, you heard from Barry earlier, the contributions to research, education and treatment has gone from 0.1% of UK revenues to 1%. We're at 1% this year, so there's no further increase from that. Plus, we feel like our regulatory and compliance teams have reached the size that they need to be. And there have been quite a lot of legal fees in the group lately, which you would hope would trend downwards from this point forward. So ordinary levels of inflation, the excess investment is through that 30 million line.

While I've got you on the subject, could I ask you to clarify what the underlying inflation and wage costs are likely to be? Complex for us because it's such an international business, so tech-focused, so what should we be thinking?

Yeah, we haven't communicated that to our colleagues yet, so I might park that question for March.

Just one thing, if I may add, on the BetMGM issue is that Paul Salem, the chairman of MGM, and I agreed a statement when I was speaking to our colleagues in New York a couple of weeks ago, where we kind of did two main things. We confirmed that we have no plans to sell the business. We think there's still lots of opportunity to go. And we consider this probably one of the best investments we can make is to actually grow our position in the industry. in the US with BetimGem and that came from Paul Sill and myself to make sure that there's no kind of confusion. We have no plans to sell and we are continuing to invest.

Thanks. James Wheatcroft from Jefferies. Just one question, please. Slide 31 is a picture of the 100 million cost efficiencies. I was wondering whether we could dig into some of that detail perhaps a little bit in terms of how you're expected to sort of bucket that upside and how it's sort of 2025 awaited. Perhaps you could give us a little bit more granularity about where those savings are coming from, please.

Want to take that?

Yeah.

So firstly, it's all online. Secondly, the phasing is laid out in the table. So you can take those as actual in-year numbers, not sort of implementation dates. That's the in-year expectation. So full savings in 2025, i.e. all actions concluded by the end of 2024. In terms of the split, we give a split between cost of sales and OPEX. Cost of sales primarily relates to migrations. As you heard earlier from Sati, Bet City is the focus in the near term. That's the last part of the group that's on third-party technology for its platform and sportsbook and so on. So therefore, there's more synergistic opportunity there. The rest, online OPEX, that's primarily about simplification. So as we've grown rapidly, in particular through M&A, we do have quite a complex structure and we're looking at consolidation in places. For example, summer just gone, we consolidated our UK digital team with our European team. That's reached its conclusion now. It's a fairly major consolidation and also some areas of centralization as well and driving best practice through the group, so making us a leaner business, easier to run, with best practice shared throughout. These are all opportunities that result in cost savings, but that's not really the primary reason for doing it, but obviously if it helps EBITDA margin then it helps.

Hi, good afternoon. It's from JP Morgan. I have a first question on Brazil. Just I understand this market has not been easy. You're talking about competitive market and some underinvestment. How can we be sure it's going to be like a growth market again? I mean, is there a scenario whereby it becomes a sort of Germany, there's no enforcement, and it remains very competitive? Also, just could you quantify the impact of the non-core markets? And just the last one on UK retail, if you can comment a little bit more on the latest trends there. Thank you. Thanks, still.

Let me take Brazil, and then I'll hand over to you. You're absolutely right. It's been really competitive. Everyone is waiting for the regulation to happen, investing a lot into the markets. And to be absolutely transparent, we were too late to see that trend. However, with our investments now, we are picking up. You can already see that our, as I said in my presentation, that the FTDs are now picking up, and we have a strong brand. To your point around, can this turn into another Germany? I would say two things. First and foremost, this is legalizing sports betting and potentially iGaming. There's also an initiative around iGaming that we see move through the Senate now. It's all about the taxes in Brazil. So there's no doubt that the government is very focused on making the most of getting taxes from the operators. But the second thing, and we touched a little bit upon that, is that the most important payment provider It's called PIX. Sadie mentioned it, that we had fully integrated that. And that's owned by the government. So they have a much easier way to actually control the markets. Because to your point, what we haven't seen in Germany is that they actually enforce the regulation that they put in place and it's taking a long time. So we're quite confident that this will not turn into a Brazil and it's really the leaders are with us to now turn that business around and we expect to get back to growth next year. Impact from the non-core and UK retail.

Yeah, let me take that. So as Jetta said earlier, the non-core markets that we're shuttering, they are small. And there's a combination of some small losses that we'll be saving, some small profits that would offset that. So really, in terms of updating your numbers, I would consider it fairly negligible. From our perspective, it's more about freeing up resource, time, effort, regulatory teams, technology teams. So it's freeing up that sort of capital as opposed to significantly moving the P&L. Latest trends on retail. We're back to light for light growth, which is fantastic. One of the main dynamics to appreciate is that the shop offering is quite different to five years ago. Five years ago, most of the activity, certainly in sports, was over the counter. These days, three quarters of all revenue in a shop is through what we call digital touch points. So it's either the gaming machines, so they're typically slots, or it's through the self-service betting terminals. And now we have things like different stations for interacting with horse racing and so on. What that does is open you up to a broader audience. And that's helping that growth through a broader audience and a younger audience is helping to offset the structural decline that we've seen for 10, 15 years in traditionally racing products over the counter. So long way of saying, broadly flattish we think is is a good good result good outcome for retail bearing in mind it's very cash generative and more importantly it's also excellent for driving brand awareness and traffic to our online platforms So wherever we have a retail estate, it's a real source of competitive advantage for our online platforms too. So just holding the performance, its own P&L flat and cash generation flat, but driving traffic online is how we think about the contribution from retail.

Thank you.

Switch this on.

There we go.

Thank you. I've got three questions from Joe Stauff at SIG. With active users notably increasing versus organic revenue, when would you expect to reach the inflection point on your customers, i.e., where we've got the right balance? On Germany, when do the new management start? And what happens if the regulator doesn't strengthen its efforts to push out offshore operators? And then one for you, Sati. How long will it take to integrate Angstrom into our risk and market-making capabilities in the U.S. as well as globally?

We might come back to you, David, just to repeat a little bit later, but let me start with Germany and the question on whether we are confident that we will see enforcement there. Listen, it's The story about Germany started before I even joined, where we got the new tolerance regime in place. And it's very clear that the reason this has dragged out is because there has been very, very little enforcement. Now, we saw over the last month the first signs of enforcement. Red Rhino, who owns the brand Platten Casino, they were forced to close, which is a good sign. They got a very, very tiny fine. So that's a good sign going forward. However, remember all our markets are in growth, including Germany. So it's a market we're excited about. We have a strong brand there. Coming back to product again, we're also investing into a localized product there to help drive going forward. So we're still excited about Germany, but yeah, we really need enforcement. New management has been in place now for a little while.

I think there was a question on when will NGR growth get closer to growth as we look forward. Was that the question or did I misunderstand? Yeah, basically, yeah. Okay. So I suspect we're talking about UK in particular here where we've seen such drastic reduction in spend per head, but partially offset through actives. So our models suggest that the year-on-year impact from a growing number of restricted customers should ease in the second half of next year. When that happens, the spend per head decline stops and therefore naturally your actives growth and your NGR growth starts to correlate more closely. hard to be precise on dates because new measures are being implemented and sometimes it's hard to gauge the impact. And I think one of the challenges we've had over the last six months and we referenced guidance challenges earlier, is so many new measures have gone in at frequent intervals. There's almost a compounding effect that makes the modeling difficult. The other reason why it's hard to be precise is at some point, you saw the market share chart earlier, we've talked about tier two, tier three, there has to be a leveling of the playing field at some point, whether it's application of single view across tier ones or things like a stakes cap on slots being introduced at the end of the white paper process. that will be a leveller for the marketplace and therefore we might see some trends reverse. So for both of those reasons, our own numbers, the things that we can control and the things that we don't control, but a levelling of the playing field, the second half of next year feels more optimistic than the first.

And then finally on integration of Angstrom.

Yeah, I think we've done our first round of integration with the NFL markets. The beauty of the Angstrom integration is once you've done one market, the rest will follow with the same patterns. So we expect to see the full range of professional sports integrated by the end of 24, and then college sports following shortly after that. On the risk and liability piece, I think we're currently continuing using the Entain technologies. And as we get more in Angstrom product, we'll look to leverage and complement the two management systems so that we have one going forward. But that's a 2025 activity.

Davina has one.

I've got one more. It's from Santi Castaneda at Warwick Capital. It's really perhaps a bit of reiteration of what we're seeing in the UK market shares. Who's gaining share? Who's losing share? Who's implementing regulations? And how does that dynamic play out? Just kind of clarifying that a bit, please.

Yeah, so I think it's pretty clear when you look at everyone's numbers that the market is a little bit out of sync in the moment. We don't have full visibility on when other operators implement measures, but you can see in the chart that we had on one of the pages that it's very clear that from in 2022 the tier 2 and tier 3 operators have taken share from from the larger operators and that tells you that um the the amount of measures to be put in place haven't reached the tier one excuse me tier two and tier three operators yet we started our implementation during 2022 And as Rob has talked about, that continued through 2023, and that's why we still see some of the impacts on our business going forward. But with the last round of measures we put in place and single customer view, we see that now run through the business and continue back to growth in the second half of next year.

I've got one more that's just come in. Possibly for you, Barry, is thoughts on the dividend versus balance sheet, or one for Barry and for Rob, possibly, on the position of de-gearing the business, the dividend, that sort of thing.

It's one of the very first things that we'll do with the Capital Allocation Committee is to review all of those policies. So once we've got the final appointments to the board settled, one of the first jobs we'll be doing is creating the committee, doing the terms of reference, and we'll be looking at all of those issues. We know that some shareholders, dividend stream is quite important to them. Others are more interested in capital returns. Others are more interested It's more important to invest in future growth. And our job is to try and balance those different kind of things going on. So watch this space.

James Rowland-Clark from Barclays. You mentioned just now that you think leverage will be about three times by the end of this year and you're delivering to less than two times in the medium term. Where do you think that leaves you at the end of 2024, please? My second one is on ARK. Where are you on rolling ARK out in international markets? And to what extent do you think that could be a risk to you performing in line with the market growth trends you've laid out? And then finally, the 20 million of migration cost savings you've outlined on Bet City by the end of 2025, what proportion of your business will be on your group platform by that point? And I know it's then a drive around to 2028 of online margin growth. So by the end of 2028, what proportion of the group is on the group tech platform? Thank you.

Great, thanks James. Let me take the two last ones and then I'll hand you over to Rob for leverage. Listen, when it comes to tech migration and tech integration, it's something that needs to be planned diligently. This year we migrated sports interaction, As we said, during next year, we'll migrate Bed City and the 20 million you're seeing there is really the synergies that we had in our original case when we acquired Bed City. And where we go from there is something Sadi will do a lot of diligent work on and sequence because it's not about just migrating for the sake of migrating. Remember, when we migrated Bed City, all our remaining businesses that are not on the platform have their own proprietary technology. So we're not doing it to save money on third-party suppliers. We're doing it to migrate them to a better service with a localized product and the best experience for the customers. So we haven't yet laid out what is that sequence going forward, but that's something that SAD will work on. First priority is Bed City. They're on a third-party platform. There are clear opportunities here, both when it comes to cost and improving the offer that they have. On ARK, we're rolling out ARK internationally. And to your question, yes, ARK is part of, you could say, some of the impact that we have on the business because we're putting higher standards in place than some of the operators that we compete with in the markets. Is this the right thing to do? Absolutely. But yeah, we are seeing some impact on that in some of our international markets. And what we are doing is every time we roll out ARC into an international market, we are doing a lot of work to understand what are the local requirements, how do we actually position ARC in a local environment so it's not taking the UK ARC and rolling it out, for example, into Brazil. But the international rollout is ongoing.

And I'll just add to that James referenced earlier when I was presenting that one of the reasons why the regulatory drag in the second half of next year should be materially better than the first half is annualizing the bulk of the international rollouts of ARC. On leverage, our deleveraging really depends on organic online growth and all the while that we're expecting low single digit organic NGR growth in 2024. I wouldn't expect material deleveraging in 2024. As we get to 25 and beyond and we get back to at least market levels of NGR growth across the full year, that's when you start to get some operating leverage playing through. playing through to EBITDA growth and therefore improving our leverage picture. Clearly, the HMRC repayments have to be factored into the model as well. But short answer is Flattish would be a best view for 2024 and then deleveraging thereafter as we get back into organic online growth.

David, anything more from you? I think something we probably answered before, sorry, just a lengthy question, but the fundamentals of it is our thoughts on Better MGM UK. Yeah, that was it.

Okay, let me take that one. Listen, MGM Resorts have been clear in their aspirations to test the MGM brand outside of the US. The market here in the UK is very, very competitive. MGM acquired a business called Leo Vegas some time ago. They've been operating here for a while. They have a market share just below 1%. So do we see this as changing the market dynamic in the UK? No, we don't. But we are used to competition. It happens every single day. So there's a new competitive brand in the market. I think that concludes the Q&A. Is that right? Good. Thank you so much, everyone, for coming. And everyone, of course, that's been listening in. Online, you know, as always, if you have any questions, David, Davina, and Callum, please get in contact and they will help you. Thank you so much.