TIDMENT
RNS Number : 8626I
Entain PLC
10 August 2023
7.00am 10 August 2023
Entain plc
("Entain" or the "Group")
Strong H1 Group performance
Record online actives and further delivery of growth and
sustainability strategy
Entain plc (LSE: ENT), the global sports-betting, gaming and
interactive entertainment group, today reports Interim Results for
the six-month period ended 30 June 2023 ("H1").
Key highlights
-- Strong H1 Group performance with record Online active
customers and further strategic delivery
-- Total Group (including US) Net Gaming Revenue ("NGR") up 19% (+16%cc(2) )
o Group NGR (excluding US) up 14% (+11%cc(2) ), +3%
proforma(3)
-- Online NGR +15% (12%cc(2) ), +1% on a proforma(3) basis
o Excluding known regulatory impacts(4) , proforma(3) Online NGR
up +6%cc(2)
o Record level of online active customers, +23% YoY, +15%
proforma(3) , demonstrating ongoing strategic focus of broadening
our customer base
-- Retail performed ahead of expectations with NGR +12% (+11% cc
(2) ), +8%cc (2) proforma(3) supported by market leading offering
across betting and gaming terminals
-- BetMGM performing strongly
o H1 NGR of $944m, up +55% YoY
-- Same state NGR growth of +25% from digital operations
o Established US operator with 18%(5) market share and continued
iGaming leadership with 27%(6) share
o Delivered positive EBITDA in Q2
o On track to deliver the upper end of FY23 NGR guidance of
$1.8-$2.0bn
o Reiterate expectation to be EBITDA positive in H2 2023(7)
-- Announced four transactions
o Entain CEE expansion into Poland with acquisition of STS
Holdings to further unlock the significant growth opportunities
across the CEE region
o 25 year partnership with TAB NZ providing unique access to New
Zealand sports betting market
o Acquisitions of 365Scores and Angstrom Sports to expand
content and product capabilities
-- As separately announced today, DPA negotiations have
progressed sufficiently that Entain believes it is likely to be
able to agree a resolution of the HMRC investigation into its
legacy Turkish facing business, which was sold in 2017
o Entain is therefore making a provision of GBP585 million
against a potential settlement payable over a four-year period
Financial highlights
-- Group EBITDA(8) at GBP499m is up +6% vs prior year
-- Group underlying profit before tax from continuing operations GBP287.6m
-- Group loss after tax from continuing operations GBP502.5m
-- Proposed interim dividend of 8.9p per share, +5% year on year
-- Successful placing of 48.8m new shares raising GBP600m to
fund the acquisition of STS Holdings and other strategic
investments
-- Successful issuance of GBP500m of Term Loans following strong
global demand enabling redemption of Ladbrokes Bonds due September
2023
-- Net Debt of GBP2,594m at 30 June 2023
-- FY 2023 Group EBITDA(8,11) expected to be in the range of
GBP1,000m to GBP1, 050m(12) , pre accounting for TAB NZ
Sustainability Highlights
-- Only global operator with 100% of revenue from regulated or
regulating markets, having accelerated exit of markets with no
clear path to domestic regulation
-- Further deployment of ARC(TM) , continuing to protect players
with c4 million interactions year to date delivering a 36% drop in
customer risk rating
-- Partnership with EPIC Risk Management delivering safer
gambling workshops to the NHLAA, NFLPA and MLSPA in the US
-- Funding for a two-year Gordon Moody Charity alumni programme,
and Entain Foundation supported sponsorships for 50 new SportsAid
athletes
-- Entain & McLaren returnship programme launched, winning
Women in Gaming Diversity's 'Innovator' award
-- Continued industry leadership and recognition across ESG;
maintained MSCI's AA rating and FTSE4Good index inclusion, and
awarded as 'Safer Gambling Operator of the Year' by EGR North
America and 'Most Socially Responsible Operator' by Which Bingo
Jette Nygaard-Andersen, CEO of Entain, commented :
"This has been another period of strong performance for Entain
as we make clear strides towards delivering our strategic
ambitions. In particular, we are making excellent progress in
broadening our customer base and deepening our audience engagement,
as evidenced by the record number of active online customers on our
platform. BetMGM continues to show momentum and backed by our
technology and capabilities we are excited by the improvements we
are delivering for customers in the US. I'd like to thank all my
Entain colleagues around the world for their hard work and
dedication in delivering this performance. This clear focus on
driving sustainable long term growth combined with our global
operating capabilities underpins our confidence in our prospects
for FY23 and beyond and delivering value for our shareholders."
H1 Trading performance: 1 January to 30 June 2023
H1: Period 1 January to 30 June 2023
---------------------- ------------------------------------------------------------------
Total NGR Sport Wagers Sports
Margin
---------------------------------- -------------------- --------
Reported(1) cc(2) Proforma(3) Reported(1) cc(2)
cc(2)
---------------------- ------------ ------ ------------ ------------ ------ --------
Online
Sports 6% 3% (4%) (3%) (5%) 1.1pp
Gaming 22% 19% 5%
Total Online 15% 12% 1%
Retail 12% 11% 8% 13% 11% 0.6pp
Total Group (ex US) 14% 11% 3%
BetMGM 65% 55%
Total Group incl 50%
BetMGM 19% 16% 8%
---------------------- ------------ ------ ------------ ------------ ------ --------
H1 summary : 1 January to 30 June 2023
Total Group (ex US) Reported(1)
2023 2022 Change CC(2)
Six months to 30 June GBPm GBPm % %
-------- -------- ------- ------
Net gaming revenue (NGR) 2,404.3 2,117.6 14% 11%
Revenue 2,377.6 2,094.9 13% 11%
Gross profit 1,457.7 1,327.8 10%
Underlying EBITDA(8) 499.4 471.0 6%
Underlying operating profit(9) 307.4 246.5 25%
Underlying profit before tax(9) 287.6 152.4 89%
(Loss)/profit after tax (502.5) 28.1
Continuing diluted EPS (p) (83.9) 5.1
Continuing adjusted diluted EPS(10) (p) 21.6 29.3
Dividend per share (p) 8.9 8.5
Dividend
In line with the Group's progressive dividend policy, the Board
has proposed an interim dividend of GBP56.5m (8.9p per share), a 5%
increase per share year on year. The interim dividend in respect of
the H1 2023 results announced today is expected to be paid in
September 2023 to shareholders on register on 18 August 2023.
HMRC investigation provision
As announced on 31 May and updated today by separate
announcement, Entain is in deferred prosecution agreement (DPA)
negotiations with the Crown Prosecution Service (CPS) to resolve
the ongoing HMRC investigation into its legacy Turkish facing
business, which it sold in 2017. The DPA negotiations have now
progressed to the point where Entain believes that it is likely to
be able to agree a resolution of the HMRC investigation insofar as
it relates to Entain and its Group. While the full terms of a DPA
are subject to judicial approval, Entain has a sufficient degree of
confidence to take a provision of GBP585 million against a
potential settlement, which would be paid over a four-year period
in relation to alleged offences under Section 7 of the Bribery Act
2010. Entain currently anticipates judicial approval will be sought
during Q4 2023.
Outlook
Entain's first half 2023 performance reflects the continued
progress on our growth and sustainability strategy. As we look to
the remainder of 2023, our underlying outlook expectations remain
unchanged, however we remain mindful of the external environment .
Following recent acquisitions and an encouraging start to H2 we
expect FY 2023 Group EBITDA(8) (pre accounting for TAB NZ) to be in
the range of GBP1,000m to GBP1,050m(12) . We remain excited by the
opportunities ahead, confident that our customer focus,
diversification and strategic execution will deliver further
progress for all stakeholders.
Notes
(1) 2023 reported numbers are unaudited and relate to continuing operations
(2) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2023
exchange rates
(3) Proforma adjusted for SuperSport and BetCity acquisitions
(4) Adjusted for known regulatory changes impact of UK
affordability measures and lack of enforcement in Germany post
licensing
(5) Market share for last three months ending April 2023 by GGR
including iGaming, retail and online sports betting, and only U.S.
markets where BetMGM was active excluding New York; internal
estimates used where operator-specific results are unavailable
(6) Market share for last three months ending April 2023 by GGR,
including only U.S. markets where BetMGM was active; internal
estimates used where operator specific results are unavailable
(7) Based on current assumption of future live markets
(8) EBITDA is defined as earnings before interest, tax,
depreciation and amortisation, share based payments and share of JV
income. EBITDA is stated pre-separately disclosed items
(9) Stated pre separately disclosed items
(10) Adjusted for the impact of separately disclosed items,
foreign exchange movements on financial indebtedness and
losses/gains on derivative financial instruments (see note 8 in the
interim financial statements)
(11) References to profit expectations are made on a reported basis post IFRS 16 implementation
(12) Includes expected contribution from STS and Angstrom
acquisitions yet to be completed, but excludes an estimated cGBP35m
benefit to EBITDA from TAB NZ profit share payments which are
deemed to form part of consideration under IFRS 3 (see CFO report
for further detail)
Enquiries:
Investor Relations - Entain plc investors@entaingroup.com
David Lloyd-Seed, Chief IR & Communications Officer
Davina Hobbs, Head of Investor Relations
Aimee Remey, VP US Investor Relations
Callum Sims, IR Manager
Media - Entain plc media@entaingroup.com
Lisa Attenborough, Head of Corporate Communications
Jay Dossetter, Head of Corporate PR
Jodie Hitch, PR Manager
Powerscourt Tel: +44 (0) 20 7250 1446
Rory Godson/Rob Greening/Sam Austrums entain@powersco urt-group.com
H1 Conference Call & Webcast
The H1 2023 results presentation for analysts and investors will
be held today, Thursday 10(th) August at 9:00am BST. Participants
may join via webcast or conference call dial in, approximately 15
minutes ahead of the event.
Live webcast link: Entain 2023 Interim Results
To participate in the Q&A, please also connect via the
conference call dial in details.
UK +44 (0) 20 4587 0498
US +1 855 979 6654
Access Code: 015731
The presentation slides will be accessible on our website
shortly before the event. A replay and transcript will be available
afterwards;
https://entaingroup.com/investor-relations/results-centre/
Upcoming dates:
Q3 Trading update: 02 November 2023
Dividend Timetable
Announcement date: 10 August 2023
Ex-Dividend date 17 August 2023
Record date: 18 August 2023
Payment date: 22 September 2023
Forward-looking statements
This document contains certain statements that are
forward-looking statements. They appear in a number of places
throughout this document and include statements regarding our
intentions, beliefs or current expectations and those of our
officers, directors and employees concerning, amongst other things,
results of our operations, financial condition, liquidity,
prospects, growth, strategies and the business we operate. These
forward-looking statements include all matters that are not
historical facts. By their nature, these statements involve risks
and uncertainties since future events and circumstances can cause
results and developments to differ materially from those
anticipated. Any such forward-looking statements reflect knowledge
and information available at the date of preparation of this
document. Other than in accordance with its legal or regulatory
obligations (including under the Market Abuse Regulation (596/2014)
as it forms part of English law by virtue of the European Union
(Withdrawal) Act 2018, the Listing Rules, the Disclosure Guidance
and Transparency Rules and the Prospectus Rules), the Company
undertakes no obligation to update or revise any such
forward-looking statements. Nothing in this document should be
construed as a profit forecast. The Company and its directors
accept no liability to third parties in respect of this document
save as would arise under English law.
About Entain plc
Entain plc (LSE: ENT) is a FTSE100 company and is one of the
world's largest sports betting and gaming groups, operating both
online and in the retail sector. The Group owns a comprehensive
portfolio of established brands; Sports brands include BetCity,
bwin, Coral, Crystalbet, Eurobet, Ladbrokes, Neds, Sportingbet,
Sports Interaction and SuperSport; Gaming brands include Foxy
Bingo, Gala, GiocoDigitale, Ninja Casino, Optibet, Partypoker and
PartyCasino. The Group owns proprietary technology across all its
core product verticals and in addition to its B2C operations
provides services to a number of third-party customers on a B2B
basis.
The Group has a 50/50 joint venture, BetMGM, a leader in sports
betting and iGaming in the US. Entain provides the technology and
capabilities which power BetMGM as well as exclusive games and
products, specially developed at its in-house gaming studios. The
Group is tax resident in the UK and is the only global operator to
exclusively operate in domestically regulated or regulating markets
operating in over 40 territories.
Entain is a leader in ESG, a member of FTSE4Good, the DJSI and
is AA rated by MSCI. The Group has set a science-based target,
committing to be carbon net zero by 2035 and through the Entain
Foundation supports a variety of initiatives, focusing on safer
gambling, grassroots sport, diversity in technology and community
projects. For more information see the Group's website:
www.entaingroup.com .
LEI: 213800GNI3K45LQR8L28
CHIEF EXECUTIVE OFFICER'S REVIEW
Entain is a leading customer-focussed entertainment business
operating in a global industry with attractive growth dynamics. The
Group continues to make excellent progress executing on our growth
and sustainability strategy. As the most diversified leader of
scale across regulated markets, the Group delivers quality growth
and sustainable returns for our stakeholders.
The dynamics of our global industry remain highly attractive
with the powerful combination of regulation, digitalisation and
evolving customer behaviours underpinning a total addressable
market opportunity of approximately $170bn over the medium term.
Entain's position as a differentiated leader across diverse and
regulated markets enables us to maximise this growth
opportunity.
Embedded in our ambition of being the world leader in betting,
gaming and interactive entertainment, is our ongoing industry
leadership in player protection, responsibility and sustainability.
We continue to set the standards for our industry, ensuring the
powerful Entain platform continues to drive greater
diversification, greater scale to leverage our capabilities, higher
quality growth and more sustainable earnings across our markets
globally.
During H1, the Group delivered another strong performance.
Reported Total Group Net Gaming Revenue ("NGR") for H1 2023 was up
+19% (+16%cc(2) ) including our 50% share of BetMGM - excluding
BetMGM, Group NGR was up +14% (+11%cc (2) ), +3%cc (2) on a
proforma(3) basis. Group EBITDA(1) was GBP499m, up +6% year on
year, along with record levels of online active customers, up +23%,
demonstrating our continued strategic diversification and
broadening of our customer base.
Net Gaming Revenue YoY Net Gaming Revenue YoY
Proforma(3) Proforma(3)
CC(2) CC(2) CC(2) CC(2)
------------------------------- ------ ------------ --------------------- ------ ------------
1% /
Online / Online ex-regulation 12% 6% Total Retail 11% 8%
--------------------- ------ ------------
Group Online inc. 50%
BetMGM 17% - UK / UK LFL 3%/5% -
------
(2%)/
UK / UK ex-regulation 7% - Italy 31% -
Australia (2%) - Belgium 16% -
Italy 12% - Entain CEE (Croatia) - 16%
--------------------- ------ ------------
Brazil (14%) -
Entain CEE (Croatia) - 31%
Netherlands - (8%)
Germany (30%) -
Georgia 7% -
Baltics Nordics 7% -
Other 17% -
------------------------------- ------ ------------
Delivering sustainable growth and value for shareholders
Entain is a business with sustainable growth embedded whilst
also operating in a global industry with attractive growth
dynamics. Our two strategic pillars of growth and sustainability
provides us with an exciting opportunity for many years to come
with regulation, online migration and changing customer behaviours
continuing to expand the markets, audiences, and opportunities
available to us. Our results demonstrate that we continue to make
strong progress on these strategic priorities.
Our growth strategy comprises four key areas that continue to
deliver value to our stakeholders; leadership in the US; grow
presence in our existing markets; expand into new regulated markets
- both organically and via M&A; and extend into interactive
entertainment.
As we deliver on these strategic pillars we are further
positioning Entain to deliver long term growth and value for our
shareholders. We are improving our capabilities and processes to
ensure we remain at the forefront of our industry, to enable better
delivery of operational leverage, and, in turn drive higher margins
and cash flow generation.
The US is a significant opportunity and the operational and
product improvements we are delivering will further enhance and
optimise delivery in this exciting market.
After a busy period of strategic M&A, during which we have
taken advantage of a number of attractive and value creating
opportunities to drive diversification and consolidation, we expect
to see a slower pace of activity ahead. While we will always look
for strategic M&A opportunities, we remain disciplined and
selective, and are focusing capital allocation on investing in our
business to integrate our operations, drive operational performance
and top line organic growth.
Leadership in the US
BetMGM delivered a strong performance in H1 2023, with NGR of
$944 million, and is on track to deliver at the upper-end of NGR
guidance of $1.8-$2.0 billion for the full year 2023. Entain
continues to focus on evolving our technology, products, trading
and analytics capabilities in the US which underpin BetMGM's
continued success. In the US we provide customers with exclusive
products and experiences, differentiating our offer whilst enjoying
significant competitive and long term financial advantages.
BetMGM is live in 26 markets, with three launches (Ohio,
Massachusetts, Puerto Rico) delivered since the start of the year,
providing access to approximately 48% of the US adult population
plus Ontario, Canada. Launches planned in Kentucky and North
Carolina in the coming months will see BetMGM have access to
approximately 53% of the US adult population.
Performance of key metrics to date reinforces our long-term
expectations of player values for both iGaming and sports betting.
While growth in player participation continues to be impressive,
penetration has a long way to go, providing a tremendous runway for
future growth.
Our market share across iGaming and sports betting for the three
months to April 2023 was 18%(4) in the markets in which BetMGM
operates excluding New York, whilst our leadership in iGaming
continues with 27% (5) share. The unique range of own and exclusive
products provided through Entain's platform and award winning
in-house studios, continue to differentiate BetMGM's offer, drive
customer engagement and embed our competitive advantage as a market
leader.
BetMGM has the largest portfolio of unique games (more than
1,500), largest jackpots in the country (paid out more than $75
million in the last six months) and the benefit of substantial
in-house development capabilities enabling us to offer our
customers a range of in-house, branded and exclusive games. In
online sports betting, we have long established our podium
position, with a market share of 11%(4) for the three months to
April 2023. We continue to refine and improve our sports
proposition and product specifically for the US market and customer
base.
We were pleased to announce the acquisition of Angstrom Sports,
a specialist provider of next generation sports modelling,
forecasting and data analytics, in July. This acquisition unlocks
and accelerates significant opportunities across BetMGM's US sports
betting offering, providing customers with an unrivalled
experience, particularly in the fast-growing markets of parlay and
in-play wagering. The acquisition of Angstrom means we are the only
global operator with full in-house end-to-end capabilities across
analytics, risk and pricing capabilities for US sports betting
products. The acquisition is expected to close in H2 2023 with
BetMGM expected to offer an enhanced sports betting experience
through the upcoming NFL and NBA season.
We continue to make progress rolling out single account: single
wallet (SASW) technology across our markets. With 14 markets rolled
out already, we are on track to have all states (excluding Nevada)
live in the coming months. Implementation of SASW will provide
customers with a seamless and enhanced experience across legalised
US markets, with improved personalisation and bonusing.
Furthermore, it will unlock a significantly improved and seamless
experience for retail customers as well as visitors to MGM Resorts
International locations, particularly Las Vegas. Through the MGM
Rewards programme, BetMGM customers enjoy unique opportunities to
win rewards, play and experiences across MGM Resorts
International's properties. In addition to MGM Rewards, BetMGM has
entered into a loyalty marketing agreement with Marriott
International to extend those rewards opportunities across the
Marriott group of hotel brands.
BetMGM delivered a key milestone of profitability for Q2 2023.
The maturity build of earlier cohorts remains on track to support
sustainable profitability, with, for example, each of the annual
cohorts of digital sportsbooks launched in 2022 and earlier, now
delivering positive contribution. We remain on track for BetMGM to
be EBITDA positive in the second half of 2023 and reiterate our
long-term target EBITDA margin of 30-35%.
Grow presence in our existing markets
Entain's operations span over 40 regulated or regulating
territories, with established leading brands in many of our
markets. Our existing markets are expected to grow by approximately
mid to high single digit over the medium term. Our diversified
customer focused business model and differentiated competitive
advantage through the Entain platform will enable us to further
outperform these underlying markets, presenting a significant
opportunity for organic growth.
Group NGR grew +19% (+16%cc(2) ) compared to H1 2022, including
acquisitions and our share of BetMGM. Excluding BetMGM, Group NGR
was +14%, (+11%cc(2) ) and on proforma(3) basis NGR was +3%cc(2) ,
with Group EBITDA(1) up +6% versus the prior year at GBP499m.
Reported Online NGR (ex US) was up 15% on H1 2022, +12%cc(2)
year on year and +1%cc(2) on a proforma(3) basis. We estimate
regulatory changes, particularly affordability measures implemented
in the UK and lack of regulatory oversight in Germany enabling
unlicensed operators to access customers, created a mid-single
digit headwind to Group NGR growth over the H1 period. We estimate
proforma(3) Online NGR growth was +6%cc(2) excluding these known
regulatory headwinds.
During H1 we saw our Online business deliver another record
level of active customers, up +23% year on year, and up +15%
excluding acquisitions. This is testament to our continued
strategic focus on the customer, evolving and broadening our
offering for a more recreational audience. U nderlying EBITDA(1) of
GBP415.5m was +8% ahead of 2022 .
In the UK our year on year performance for H1 2023 continues to
reflect the ongoing absorption of UK regulatory changes, with
Online NGR down 2%. We estimate that the UK Online operations faced
a c.10ppt headwind in H1 from the tighter affordability measures,
therefore seeing Online NGR in H1 excluding these impacts, up
+7%.
Underlying momentum and key customer metrics remain positive,
with UK online actives up +22%, evident across both sports and
gaming. This has been driven by innovative marketing campaigns, new
product releases and wider enhancements to our offering and
experience engaging a broader more recreational customer base.
Coral's Racing Club campaign flooded the Cheltenham Festival and
our Red Rum hologram galloping across the Liver Building in
Liverpool differentiated our Grand National campaign. The Coral
Racing Club is enormously popular, finishing H1 with over 123,000
members having only launched in November 2022. Our recently
launched Ladbrokes Live initiative, partnering with O2, NME and AEG
Presents, offers tickets to concerts, boxes and other music event
experiences, reinforcing the entertainment nature of our brands and
products.
In gaming, our growth in player base and audience continues as
we deliver fresh products, engaging content and experiences. Our
in-house launches include Slingo Bingo, a multiplayer game launched
in May that has been well received by our bingo-loving UK
customers; Crypt of Giza, a live gameshow-style experience
exclusive to our Ladbrokes customers; and most recently July's
launch of Mask of Horus topped the tables for number of active
players on day one.
Our business in Italy continues to perform strongly, with online
NGR up +12%cc(2) year on year. The underlying market growth remains
strong, with omni-channel operators continuing to outperform as
point of sales touchpoints and brand recognition has driven both
direct online engagement as well as an omni-channel experience
through our retail estate. During H1 our continued investment in
our sports and gaming offerings, saw Eurobet, bwin and
GiocoDigitale deliver more new products and experiences and grow
actives by +17% compared to the prior year.
In Australia, our Ladbrokes and Neds brands continue to perform
well in a competitive market. NGR for H1 was down -2% (-2%cc(2) )
reflecting the strong prior year comparators, whilst 4yr CAGR was
+17%cc(2) . As other market operators have led with price and
promotional offerings, Entain Australia's brands continue to
leverage their differentiated offering, delivering unique content,
engaging social player products and a fresh customer experience.
The latest episodes in our horse racing video docu-series, Miles in
Front and the newly launched Ladbrokes Racing Club are just a few
examples of what continues to drive our market share and growing
customers base. These initiatives underpin the exciting opportunity
that Entain Australia's partnership with TAB NZ provides, and we
look forward to delivering New Zealand sports fans an enhanced
offer over the coming years.
In Latin America, our Brazilian business continues to face
heightened competition ahead of regulation, with H1 NGR lower than
expected at -14%cc(2) year on year. Our Sportingbet brand continues
to differentiate its offer through product quality, whilst ensuring
growth of a sustainable player base of high-quality customers with
our online actives in Brazil in growth during H1.
We are pleased to see that sports betting regulation in Brazil
is now making progress following its signing by the President. We
await approval by Congress which should enable legislation to
proceed to licensing in early 2024. We look forward to a market
post licensing that provides customers with a best in class
offering, more rational marketing and protections from an
unregulated black market. The strength of our Sportingbet brand,
product quality, player safety and enhanced customer acquisition
channels sees our operations in Brazil well positioned for growth.
Additionally, our recent acquisition of 365Scores, the leading
sports app across Latin America, further improves our competitive
position in Brazil.
Our Entain CEE business continues to perform strongly,
maintaining its market leadership with the SuperSport brand in
Croatia. H1 Online NGR for SuperSport was up +31%cc (2) on a
proforma(3) basis with improving momentum through the half. On 13
June we announced an offer for STS Holdings, bringing the largest
operator in Poland to join the largest operator in Croatia as part
of our Entain CEE business. This positions us well to further
leverage the opportunity that the $8.6bn CEE market offers.
In The Netherlands, BetCity has performed in line with our
expectations for H1 2023, down single digit vs last year following
the re-entry of a market leader last summer. BetCity continues to
drive its brand with support for Jonas Vingegaard, winner of the
2023 Tour de France, as well as leveraging the Entain relationship
with McLaren for the Dutch Grand Prix on 27 August 2023.
In Germany, the online betting and gaming market continues to
see limited regulatory enforcement. Therefore, the challenges of an
uneven operating landscape continue to overshadow those operators
adhering to licensing obligations, particularly following the
implementation of new deposit limits for sports customers from July
2022.
As a result, our Online NGR for Germany declined year on year
whilst actives held broadly flat as higher spending customers
switch to non-compliant operators. However, we remain positive on
the long-term prospects for the German market as regulatory
oversight is enforced. bwin is a leading brand across Germany and
globally, underpinned by the quality of our products and offer as
well as great partnerships with UEFA Europa League offering
exclusive fan experiences for bwin customers.
In Georgia, the Crystalbet brand remains the market leader and
has responded well as we annualised the new regulatory and tax
regime which came into effect at the start of 2022 with online NGR
up +7%cc(2) , reflecting the strength of our operations and brand,
with the business outperforming the market.
Enlabs in the Baltics delivered a strong performance with NGR
+7%cc(2) despite some of its markets experiencing challenging
economic and inflationary environments. Enlabs' growth is coupled
with improved contribution, and our offering continues to attract a
broader audience, benefiting from Entain's sports and gaming
products, with actives up +22% year on year.
Our Retail operations have reported another period of excellent
performance during H1 2023, with total Retail NGR up +12%
(+11%cc(2) ) compared to H1 2022, up +8%cc(2) on a proforma(3)
basis. O ur two largest estates in the UK and Italy continue to
grow year on year, and we are now also seeing growth in our other
estates.
In the UK, Retail NGR was up +5% on a LFL basis versus 2022,
with growth in both sports and gaming. Our strong underlying
performance remains underpinned by our best-in-class retail
offering with market leading (exclusive and in-house) content on
our betting and gaming terminals, and our enhanced digital in-shop
experience. Our increasingly broader demographic of customers is
driven by growth across our betting and gaming machines, as well as
OTC during H1 2023.
In Europe, our Italian business continues to perform strongly,
with Retail NGR in H1 up +31%cc(2) reflecting strong customer
engagement driven by ongoing offering enhancements and a busy
sporting calendar. The breadth of our retail shop network remains
invaluable to our omni-channel offering, with in-person points of
sale increasingly important to customer engagement, acquisition and
online migration.
Having now annualised the lingering COVID closures &
staffing restrictions in early 2022, Retail NGR in Belgium was up
+16%cc(2) .
Proforma(3) Retail NGR in Croatia grew at +16%cc(2) year on year
as the business benefited from its market leading brand position
and offering improvements, including loyalty programs and enhanced
sports content, implemented since our acquisition of
SuperSport.
Expand into new regulated markets
Regulation and evolving consumer needs and behaviours continue
to provide exciting growth opportunities for Entain. Our expansion
into new regulated markets continues both geographically as well as
through broader product verticals with organic as well as M&A
opportunities. Entain has a strong track record of successful
acquisition, integration and value creation through M&A.
Having completed our acquisition of BetCity in early January
2023, we are pleased to have been able to re-enter the newly
regulated Netherlands market. BetCity has performed in line with
our expectations, maintaining market share in this fast growth and
highly competitive market. BetCity's operational and brand strength
has laid key foundations as the market absorbs new advertising and
marketing restrictions from 1 July 2023.
Our proposed acquisition of STS Holdings through Entain CEE
expected to complete in Q3 this year, further unlocks the
significant opportunity across the Central and Eastern European
region. STS is Poland's leading sport betting operator with a
highly successful omni-channel offering with a substantial online
business complemented by the largest retail estate, operating in a
market which is currently worth $1.6bn and forecast to grow at a
3yr CAGR of 12%. With the potential liberalisation of the online
casino market in Poland (currently regulated through a monopoly
licence) as well as leveraging capabilities of the Entain platform
and products, we see significant growth opportunities for STS. The
transaction reinforces our strategic approach to the CEE region
following Entain CEE's acquisition of SuperSport last year and
positions us well to further deliver on the $8.6bn opportunity
across wider CEE market.
In Q2, Entain was selected by TAB NZ for a 25 year strategic
partnership, to be the only licenced provider in the New Zealand
sports betting market, a regulated market worth approximately
NZ$600m with significant growth potential. This unique arrangement
enables us to offer New Zealand customers an enhanced betting
experience, secures long term funding support for the racing and
sporting industry, and importantly unlocks a highly attractive
growth opportunity for Entain and TAB NZ. TAB NZ is a
well-established operator with a strong market presence and over
250,000 active digital customers. We look forward to delivering New
Zealand sports fans an enhanced offer by leveraging Entain's
expertise, capabilities and scale, to capture both underlying
market growth, estimated to be over 15% CAGR over the next five
years, as well as recapturing market share lost to offshore
operators.
Innovation and extending into interactive entertainment
Entain embraces the opportunity to innovate and evolve. By
listening to our customers, applying data analytics and
understanding player engagement insights, we focus product
innovation on driving engagement and reaching new customers.
This evolving innovation is delivered organically through
in-house development as well as through strategic M&A. Our
acquisitions of 365Scores, Sportsflare and Angstrom Sports during
the first half sees us expand our industry-leading content, data
and analytical capabilities, and ultimately our audience reach.
365Scores is one of the world's leading sports apps providing
customers with real time action and results of their favourite
teams. 365Scores is a top three sports app for Latin America and
top five globally, providing Entain access to a highly engaged
audience of sports fans, whilst also enhancing our offer with
additional content and media capabilities as well as powerful
customer personalisation insights. The addition of 365Scores to
Entain's platform and in-house offering delivers attractive growth
synergies, further broadens our audience reach as well as improving
customer acquisition metrics, particularly across Latin
America.
Having taken the first steps into interactive entertainment with
our acquisition of unikrn, we continue to build momentum behind our
new eSports and skill based wagering offering. Ahead of further
launches expected later in 2023 we have been evolving our product
portfolio whilst liaising with partners and regulators to develop
an offering combining a great customer experience and best in class
player protections. Our acquisition of Sportsflare, brings machine
learning and AI based eSports trading capabilities in-house,
ensuring we have the most advanced suite of innovative products.
The eSports market continues to grow strongly and we remain
extremely excited by the opportunity over the longer term.
Sustainabilit y
We are one of the world's largest sports betting, gaming and
interactive entertainment groups, operating in regulated and
regulating online and retail markets. Being a leading global
operator in our industry, we are committed to leading the industry
in all areas of sustainability. Our unique platform distinguishes
us as a customer-centric operator with sustainability at the heart
of our business strategy.
We firmly believe that the most sustainable business will be the
most successful business in our industry. Our strategic
sustainability pillar comprises: lead on responsibility; diversify
our regulated activities; broaden our customer appeal; and, invest
in people & communities.
We continue to make progress on our Net Zero 2035 commitment. We
are reducing our carbon footprint by transitioning our UK vehicle
fleet to EV's and hybrids, with over half transitioned by year end
and have entered into a power purchase agreement for green energy,
that will also provide greater certainty over future potential
energy price fluctuations. The new digi-hub shops in the UK
continue to drive the digitisation of the retail business, with the
introduction of the digital racing post replacing the traditional
newspaper, saving 135kg of carbon emissions per shop.
While we are proud to be leading our industry to higher
standards across the ESG agenda, we continue to strive to meet, and
exceed the highest standards in everything we do, from the way we
run our business to the way we support our colleagues, our
customers and our communities. In H1 we have maintained our AA
rating by MSCI and won 'Safer Gambling Operator of the Year' at the
EGR North America awards and 'Most socially responsible operator'
at the Which Bingo awards.
Lead on responsibilit y
Safer gambling and responsibility are core to delivering a
sustainable business strategy. Throughout H1 2023 we have continued
the development of our industry leading Advanced Responsibility and
Care(TM) (ARC(TM) ) programme.
With almost 4 million interactions so far this year, taking the
total since launch to over 7.5m, our latest figures show a 36% drop
in customer risk rating following an ARC(TM) intervention, whilst
over 95% of higher risk customers are now using a gambling control
to moderate their play. Our accuracy rating for the ARC(TM) model
is consistently over 90% across our algorithms providing an
effective and reliable system.
The ARC(TM) system uniquely changes player protection from
reactive to a proactive format, that encourages safer playing
behaviours by coupling real time interactions with sophisticated
behavioural indicators developed with Harvard Medical School
faculty. The impact and development of ARC(TM) continues to be a
core part of our group wide remuneration scheme.
In the US, Entain continues leading a coalition of 9 big US
facing operators that collaborate on a variety of RG related
matters with a view to achieving long term sustainability of the US
online gambling markets. In a similar vein, Entain has actively
engaged with numerous North American regulators on RG as well as
other consumer protection practices.
Beyond the industry, the Entain Foundation US has announced two
additional education partnerships in North America, namely with the
MLS Players' Association (together with EPIC Risk Management) as
well as the NHL Alumni Association. Both partnerships focus on
educating active and/or retired athletes about safe gambling
practices. The existing partnerships with the NFLPA and NCAA
continue thriving, with RG awareness classes have been dispensed to
thousands of attendees during H1 2023.
Diversify our regulated activities
Entain currently operates in over 40 regulated markets.
Operating in well-structured regulatory regimes enables us to
deliver higher quality earnings with greater certainty and
sustainability as we continue to grow and expand our global
footprint and scale.
During the first half of 2023, Entain made further progress
towards our commitment to only operate in regulated markets by
agreeing a unique 25-year deal with the New Zealand TAB to become
the only licensed provider of sports betting in the country. We
also announced our acquisition of STS in Poland which will give the
group the number one position in the regulated Polish sports
betting market.
In parallel, we have withdrawn from markets where we do not see
a clear pathway to regulation and exited further 10 markets in
2023. As a result, Entain is the only global operator with 100% of
revenues from domestically regulated or regulating markets.
Entain is a strong supporter of good regulation. We engage
openly and proactively with regulators around the world to
encourage well-structured and robust regulatory environments which
balance the highest regulatory standards and responsible player
protection, whilst also upholding customer freedoms and right of
choice. At Entain we offer first class player protection through
our industry leading technology platform, while upholding all
licensing objectives, across multiple jurisdictions.
Broaden our customer appeal
Our progress in broadening our appeal to wider, more
recreational audiences continues. We understand that our customers
and trends are changing, so we are evolving our brands and offering
too, ensuring we remain engaging and relevant to an ever-broadening
customer base, whilst also providing a safe entertainment
experience.
Across our brands, products and content we continue to drive
initiatives to increase engagement and loyalty across our growing
customer base. The unique edge our in-house game production as well
as our exclusivity with third party providers, enables us to offer
a wide variety of choice, something we know customers like. Unique
experiences also drive loyalty and engagement and our campaigns
such as the Coral Racing Club, Ladbrokes Live and our exclusive
docu-series' Miles in Front and Taking the Reins, as well as our
partnerships with UEFA and McLaren enable us to provide
differentiated content and an enhanced proposition to our
customers.
Our betting and gaming terminals in Retail are attracting a
broader demographic of customers. In particular our in-house
technology on our self service betting terminals provides a better
experience with broader products and sports appealing to this wider
customer base. unikrn extends our offering across the emerging
skill based wagering market for eSports. It is live in Brazil and
Canada (excl Ontario) and we look forward to rolling it out to more
customers over the coming months. 365Scores, with over 18 million
customers worldwide, provides the opportunity to drive brand
awareness and engagement across a wider customer base in markets
where we operate.
Invest in our people and communities
Through our Entain Foundation, we continue to invest in safer
gambling programmes, grassroots sports initiatives and increased
diversity through technology projects.
In March 2023 we announced funding for a two-year alumni
programme with UK charity Gordon Moody to establish a support
network for those experiencing gambling harm, including peer to
peer mentoring, training and treatment.
Entain is proud of our long-standing partnership with SportsAid.
In March we announced support for the sponsorship for 50 further
SportsAid athletes, bringing the total number of athletes we have
supported through our SportsAid partnership since 2019 to 201.
We also launched our partnerships in Kenya with ComputerAid and
the Turing Trust to provide access to technology education within
Kenyan communities. In Italy we provided support for Sport Senze
Frontiere, who provide children with education and sporting
activities across the country. In Austria we partnered with the
Austrian Wheelchair Tennis Cooperation to provide financial support
for specialised wheelchairs. We have also continued our partnership
with Tiempo de Juego in Colombia, providing funding to the Cazucá
women's team.
Diversity, equity and inclusion (DE&I) are key to Entain's
future sustainability and success. Our goal is to attract, hire and
keep the best talent and best minds in the world, from inside and
outside of our sector. To support that in H1 we focused on
underrepresented groups, and opportunities to demonstrate our
commitment to diversity internally and externally.
In January we successfully launched our 2023 flagship DEI
programme in partnership with McLaren, supporting women back into
technology, data and engineering roles. The programme has provided
10 high quality placements to women in both Entain and McLaren HQs,
covering a range of technological roles and expertise.
Entain was awarded three awards at the Women in Gaming Diversity
Awards for 'Innovator of the Year' (McLaren Returnship), 'Marketing
Campaign of the Year' (International Women's Day) and 'Star of the
Future' for Women@Entain network.
Notes
(1) EBITDA is defined as earnings before interest, tax,
depreciation and amortisation, share based payments and share of JV
income. EBITDA is stated pre-separately disclosed items
(2) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2023
exchange rates
(3) Proforma adjusted for SuperSport and BetCity acquisitions
(4) Market share for last three months ending April 2023 by GGR
including iGaming, retail and online sports betting, and only U.S.
markets where BetMGM was active excluding New York; internal
estimates used where operator-specific results are unavailable
(5) Market share for last three months ending April 2023 by GGR,
including only U.S. markets where BetMGM was active; internal
estimates used where operator specific results are unavailable
Financial Results and the use of non-GAAP measures
The Group's statutory financial information is prepared in
accordance with International Financial Reporting Standards
("IFRS") and IFRS Interpretations Committee (IFRS IC)
pronouncements as adopted for use in the European Union. In
addition to the statutory information provided, management have
also provided additional information in the form of Contribution
and EBITDA as these metrics are industry standard KPIs which help
facilitate the understanding of the Group's performance in
comparison to its peers. A full reconciliation of these non-GAAP
measures is provided within the Income Statement and supporting
memo.
The Group's operating segments are aggregated into five
reportable segments; Online, Retail, New Opportunities, Other and
Corporate. This reporting structure is in line with the Group's
reporting to the executive management team ("CODM").
CHIEF FINANCIAL OFFICER'S REVIEW
FINANCIAL PERFORMANCE REVIEW
Group
Reported results(1)
Six months to 30 June 2023 2022 Change CC (2)
GBPm GBPm % %
-------- -------- ------- -------
NGR 2,404.3 2,117.6 14% 11%
VAT/GST (26.7) (22.7) (18%) (19%)
-------- -------- ------- -------
Revenue 2,377.6 2,094.9 13% 11%
Gross profit 1,457.7 1,327.8 10%
Contribution 1,126.2 1,025.5 10%
Operating costs (626.8) (554.5) (13%)
Underlying EBITDA(3) 499.4 471.0 6%
Share based payments (9.1) (5.2) (75%)
Underlying depreciation and amortisation (134.8) (113.2) (19%)
Share of JV loss (48.1) (106.1) (55%)
Underlying operating profit(4) 307.4 246.5 25%
------------------------------------------ -------- -------- -------
Reported Results(1) :
NGR and Revenue increased by +14% and +13% respectively (both
+11%cc(2) ) versus 2022 in the first half, with strong underlying
performance, in both Online and Retail, and the benefit of NGR from
acquisitions, more than offsetting continued regulatory headwinds,
particularly in the UK and Germany. Online NGR was +15% ahead of
2022 (+12%cc(2) ) whilst Retail NGR was +12% ahead (+11%cc(2) ).
Group NGR was +3%cc(2) ahead of 2022 on a proforma(5) basis.
Contribution in the first half of GBP1,126.2m was +10% higher
than 2022 reflecting the increase in NGR, offset by a reduction in
contribution margin of -1.6pp, due to territory mix, increased
taxation in Australia and the reclassification of certain content
costs in Retail to cost of sales rather than operating costs,
following the move to a revenue share arrangement.
Operating costs were 13% higher due to the impact of
acquisitions (5pp), foreign exchange (2pp) and underlying
inflation, including wage rate and energy price inflation guided to
in March, partially offset by the reclassification of costs to cost
of sales. Resulting underlying EBITDA(3) of GBP499.4m was +6%
higher than 2022.
Share based payment charges were GBP3.9m higher than last year,
while underlying depreciation and amortisation was 19% higher,
reflecting the impact of businesses acquired in the year, the
annualisation of prior year acquisitions and continued investment
in the business. Share of JV losses of GBP48.1m includes an
operating loss of GBP48.5m relating to BetMGM (2022: GBP108.6m),
which was in line with expectations.
Group underlying operating profit(4) was +25% ahead of 2022.
After separately disclosed items of GBP733.4m (2022: GBP112.9m),
the Group made an operating loss of GBP426.0m (2022: profit of
GBP133.6m).
Online
Reported results(1)
Six months to 30 June 2023 2022 Change CC (2)
GBPm GBPm % %
-------- -------- -------- -------
Sports wagers 6,676.0 6,881.8 (3%) (5%)
Sports margin 13.9% 12.8% 1.1pp 1.1pp
Sports NGR 742.2 702.9 6% 3%
Gaming NGR 918.3 752.7 22% 19%
B2B NGR 23.8 15.1 58% 52%
-------- -------- -------- -------
Total NGR 1,684.3 1,470.7 15% 12%
VAT/GST (26.1) (22.7) (15%) (17%)
-------- -------- -------- -------
Revenue 1,658.2 1,448.0 15% 12%
Gross profit 980.9 886.1 11%
Contribution 659.8 587.3 12%
Contribution margin 39.2% 39.9% (0.7pp)
Operating costs (244.3) (202.6) (21%)
Underlying EBITDA(3) 415.5 384.7 8%
Share based payments (3.2) (1.3) (146%)
Underlying depreciation and amortisation (69.5) (57.2) (22%)
Share of JV (loss)/income (0.3) 1.8 (117%)
Underlying operating profit(4) 342.5 328.0 4%
------------------------------------------ -------- -------- --------
Reported Results(1) :
Our Online business continues to perform strongly with NGR +15%
ahead of 2022, +12% on a constant currency(2) basis, with the
benefit of strong underlying trading and NGR from acquisitions more
than offsetting continued regulatory headwinds, particularly in the
UK and Germany. The Group's performance in the first half has been
underpinned by our continued focus on the recreational customer and
we are delighted that we have seen record levels of actives again
in Q2, both on a headline and proforma(5) basis. Online NGR was +4%
(+1%cc(2) ) ahead on a proforma(5) basis.
In the UK, our underlying trends and key customer metrics remain
strong with actives +22% higher than the same period last year.
However, as the Group continues to absorb the impact of regulatory
changes, NGR in the first half was -2% behind. Excluding the impact
of these regulatory headwinds, we estimate that underlying NGR was
+7% ahead of 2022.
In Italy, constant currency(2) NGR was +12% ahead of 2022. We
continue to see the benefits of our focus on the customer
experience and our omni-channel offering with combined Retail and
Online NGR up +18% cc(2) year on year and +16% cc(2) ahead of
pre-Covid levels on a 4 year CAGR.
In Australia, our Ladbrokes and Neds brands continue to perform
well in a competitive market. NGR for H1 was down -2% (-2%cc(2) )
reflecting the strong prior year comparators, whilst the 4yr CAGR
was +17%cc(2) . Our brands in Australia continue to leverage their
differentiated offering, delivering unique content, engaging
products and a fresh customer experience. These initiatives
position the Group well to make the most of the exciting
opportunity in both Australia and New Zealand.
In Germany, the continued lack of regulatory enforcement as well
as new regulation, including stricter deposit limits on sports and
casino, continue to impact the business resulting in NGR -30%
behind 2022 on a constant currency(2) basis. Whilst we received our
gaming licenses in November 2022, it is disappointing that we are
yet to see the robust enforcement action that is needed in this
market to combat unlicensed or non-compliant operators.
In Brazil, we continue to see a very competitive market ahead of
proposed regulation. NGR in the first half was -14% cc(2) behind
2022, but actives were up year on year and NGR is up +41% cc(2) on
a 4 yr CAGR basis. Whilst the market is currently experiencing a
significant increase in the amount of marketing spend by various
operators, we are pleased with the progress made following the
acquisition of 365Scores.
Georgia NGR was +7% ahead of 2022 on a constant currency(2)
basis, with our Crystalbet brand performing strongly following the
implementation of new regulation in the prior year, and retaining
its position as the market leader.
In the Baltics-Nordics, NGR was +7% cc(2) ahead of 2022 despite
continued high inflation rates in the region. Our brands remain
resilient despite the economic pressures and we continue to attract
more customers each year with actives +22% ahead of 2022 in the
first half.
Our Entain CEE business continues to perform extremely well,
maintaining its position as the market leader in Croatia. NGR in
the first half was +31% cc(2) ahead on a proforma(5) basis, despite
the disruption caused across Croatia following the conversion to
the Euro at the start of the year, a transition which was managed
extremely well by our local team.
Contribution margin in the half has been impacted by additional
taxation implemented in Australia in H2 of 2022. Contribution
margin of 39.2% is 0.8pp lower than guidance reflecting the normal
phasing of marketing spend which is traditionally higher in H1.
Contribution margin is expected to normalise to c40% for the full
year.
Operating costs were 21% higher than 2022 with underlying
inflation accounting for 9pp of the increase, FX 4pp (consistent
with the NGR benefit) and new businesses 8pp.
Underlying EBITDA(3) of GBP415.5m was +8% ahead of 2022
reflecting the increase in NGR, partially offset by a 0.7pp
reduction in contribution margin, the impact on operating costs of
acquired businesses and underlying inflation.
Resulting underlying operating profit(4) of GBP342.5m was
GBP14.5m ahead of 2022 with depreciation and amortisation of
GBP69.5m, GBP12.3m higher than 2022, a result of the impact of new
acquisitions, including annualisation of those in the prior year,
and ongoing investment in our technology and product. Operating
profit, after charging separately disclosed items of GBP107.1m
(2022: GBP50.5m), was GBP235.4m, GBP42.1m lower than 2022.
Retail
The Retail business is made up of our Retail estates in the UK,
Italy, Belgium, Croatia, New Zealand and Republic of Ireland.
Reported results(1)
Six months to 30 June 2023 2022 Change CC(2)
GBPm GBPm % %
-------- -------- -------- ------
S ports wagers 2,164.2 1,917.1 13% 11%
S ports margin 19.3% 18.7% 0.6pp 0.6pp
Sports NGR/Revenue 415.7 354.7 17% 16%
Machines NGR/Revenue 293.6 281.3 4% 4%
NGR 709.3 636.0 12% 11%
VAT/GST (0.6) - - -
Revenue 708.7 636.0 11% 11%
Gross profit 463.3 428.6 8%
Contribution 457.9 425.1 8%
Contribution margin 64.6% 66.8% (2.2pp)
Operating costs (306.5) (284.0) (8%)
Underlying EBITDA(3) 151.4 141.1 7%
Share based payments (1.2) (0.5) (140%)
Underlying depreciation and amortisation (60.6) (53.0) (14%)
Share of JV income - - -
Underlying operating profit(4) 89.6 87.6 2%
------------------------------------------ -------- -------- --------
Reported Results(1) :
Our Retail businesses continue to perform extremely strongly
post the Covid restrictions that came to an end in early 2022 with
NGR +11% ahead on a constant currency (2) basis, +8% proforma(5) .
Whilst our two largest estates in the UK and Italy continue to grow
year on year, we are now also seeing growth in our other
estates.
In the UK, NGR was +5% ahead of 2022 on a LFL basis, with growth
in both sports and gaming. Our strong underlying performance
continues to be driven by our ongoing focus on market leading
content for our betting and gaming terminals, and pleasingly we are
also seeing growth in our OTC offering during the first half of
2023. Whilst our SSBT's and gaming machines provide an experience
akin to the digital offering, it is also clear that our customers
value the in-shop experience that cannot be replicated online.
NGR in Italy was up +31% on a constant currency(2) basis in the
first half with the rich football calendar and a number of
enhancements to our offering and the customer experience driving
greater engagement.
Proforma(5) NGR in Croatia grew at +16% cc(2) year on year,
further cementing our position as the market leader and reflecting
our ongoing program of improvements to the customer offer,
including the introduction of loyalty schemes and enhanced sports
content.
In Belgium, NGR was up +16% cc(2) as the business has now
annualised the temporary closures in early 2022.
Contribution of GBP457.9m was +8% ahead of 2022 with
contribution margin falling by 2.2pp due to territory mix and the
impact of certain content costs which are now classified as cost of
sales rather than operating costs as they move to revenue share
arrangements from fixed fees.
Operating costs were 8% higher than in 2022 with the impact of
acquisitions (4pp), FX (1pp) and inflation, including wage rate and
energy price inflation guided to in March, more than offsetting the
benefit of costs which are now classified within cost of sales.
Resulting underlying EBITDA(3) of GBP151.4m was GBP10.3m ahead
of 2022. Depreciation of GBP60.6m was GBP7.6m higher than 2022,
largely due to the impact of acquisitions and the continued
investment in our retail estates. Underlying operating profit(4) of
GBP89.6m was GBP2.0m ahead of 2022 and, after charging GBP3.1m of
separately disclosed items (2022: GBP50.1m), operating profit was
GBP86.5m, GBP49.0m ahead of last year.
As at 30 June 2023, there were a total of 4,894 shops/outlets
(2022: 4,287): UK 2,443 (2022: 2,568), Italy 943 (2022: 940),
Belgium shops 273, outlets 341 (2022: shops 287, outlets 359),
Ireland 122 (2022: 133), Croatia 311 and New Zealand 461. During
2023, there was an average of 4,522 shops in the estate, compared
to an average of 4,317 in the same period last year.
New Opportunities
Reported results(1)
Six months to 30 June 2023 2022 Change
GBPm GBPm %
------- ------- -------
Underlying EBITDA(3) (15.0) (14.6) (3%)
Share based payments (0.4) (0.1) (300%)
Underlying depreciation and amortisation (3.1) (1.6) (94%)
Share of JV loss (0.6) - -
Underlying operating loss(4) (19.1) (16.3) (17%)
------------------------------------------ ------- ------- -------
Reported Results(1) :
New Opportunities underlying costs(3) of GBP15.0m, which are
broadly in line year on year, primarily reflect operating costs
associated with our innovation programme and unikrn. After
depreciation and amortisation and share of JV loss, New
Opportunities underlying operating loss(4) was GBP19.1m, an
increase of GBP2.8m on 2022.
Other
Reported results(1)
Six months to 30 June 2023 2022 Change CC(2)
GBPm GBPm % %
------- ------- ------- ------
NGR/Revenue 13.5 13.1 3% 3%
Gross profit 13.5 13.1 3%
Contribution 13.3 13.1 2%
Operating costs (10.3) (10.1) (2%)
Underlying EBITDA(3) 3.0 3.0 -
Share based payments - - -
Underlying depreciation and amortisation (1.4) (1.3) (8%)
Share of JV income 1.3 0.7 86%
Underlying operating profit(4) 2.9 2.4 21%
------------------------------------------ ------- ------- -------
Reported Results(1) :
NGR of GBP13.5m was 3% higher than 2022 driven by our Stadia
business which was disrupted by Covid at the start of 2022.
Underlying EBITDA(3) of GBP3.0m was in line with 2022, the
additional NGR offset by increased overheads associated with the
return to a normal racing calendar in our dog tracks. Underlying
operating profit(4) of GBP2.9m was 21% ahead of last year.
Corporate
Reported results(1)
Six months to 30 June 2023 2022 Change
GBPm GBPm %
-------- -------- -------
Underlying EBITDA(3) (55.5) (43.2) (28%)
Share based payments (4.3) (3.3) (30%)
Underlying depreciation and amortisation (0.2) (0.1) (100%)
Share of JV l oss (48.5) (108.6) 55%
Underlying operating loss(4) (108.5) (155.2) 30%
------------------------------------------ -------- -------- -------
Reported Results(1) :
Corporate underlying costs(3) of GBP55.5m were GBP12.3m higher
than last year driven by increases in our contributions to
Research, Education and Treatment, including GambleAware,
additional costs associated with our commitment to ESG and ongoing
investment in our governance policies and procedures.
After share based payments, depreciation and amortisation and
share of JV losses, Corporate underlying operating loss(4) was
GBP108.5m, a decrease of GBP46.7m , as a result of a GBP60.1m
reduction in the share of loss in the US JV, BetMGM. After
separately disclosed items of GBP623.2m, the operating loss of
GBP731.7m was GBP564.2m higher than in 2022.
Notes
(1) 2023 reported results are unaudited and relate to continuing operations
(2) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2023
exchange rates
(3) EBITDA is defined as earnings before interest, tax,
depreciation and amortisation, share based payments and share of JV
income. EBITDA is stated pre separately disclosed items
(4) Stated pre separately disclosed items
(5) Proforma adjusted for SuperSport and BetCity acquisitions
CHIEF FINANCIAL OFFICER'S REVIEW
Reported results(1)
Period ended 30 June 2023 2022 Change CC(2)
GBPm GBPm % %
-------- -------- ------- ------
NGR 2,404.3 2,117.6 14% 11%
Revenue 2,377.6 2,094.9 13% 11%
Gross profit 1,457.7 1,327.8 10%
Contribution 1,126.2 1,025.5 10%
Underlying EBITDA(3) 499.4 471.0 6%
Share based payments (9.1) (5.2) (75%)
Underlying depreciation and amortisation (134.8) (113.2) (19%)
Share of JV l oss (48.1) (106.1) 55%
Underlying operating profit(4) 307.4 246.5 25%
Net finance costs (108.4) (39.1)
Net foreign exchange/movement
on derivatives 88.6 (55.0)
Profit before tax pre separately
disclosed items 287.6 152.4
Separately disclosed items:
Provision for HMRC settlement (585.0) -
Amortisation of acquired intangibles (110.2) (51.5)
Other (40.5) (61.4)
-------- --------
(Loss)/profit before tax (448.1) 39.5
Tax (54.4) (11.4)
(Loss)/profit after tax from
continuing activities (502.5) 28.1
Discontinued operations (3.7) (3.1)
(Loss)/profit after tax (506.2) 25.0
------------------------------------------ -------- -------- ------- ------
NGR and Revenue
Group reported NGR and revenue were +11% ahead of last year on a
constant currency(2) basis, up +14% and 13% respectively on an
actual basis, with Online NGR +15% and Retail NGR +12% year on
year. Further details are provided in the Financial Performance
Review section.
Underlying operating profit(4)
The Group reported underlying operating profit(4) of GBP307.4m,
+25% ahead of 2022 (2022: GBP246.5m). Underlying EBITDA(3) was +6%
ahead, with the increase in revenue offset by a lower contribution
margin, operating costs associated with acquired businesses and
inflation. Depreciation and amortisation was 19% higher than 2022,
largely driven by depreciation on acquired businesses as well as on
our recent investment in product and technology. The Group's share
of JV losses in the period were GBP48.1m (2022: GBP106.1m),
including GBP48.5m for the Group's share of BetMGM losses which
were GBP60.1m lower than in 2022 as the business continues on its
path to profitability. Analysis of the Group's performance for the
period is detailed in the Financial Performance Review section.
Financing costs
Underlying finance costs(4) of GBP108.4m excluding separately
disclosed items (2022: GBP39.1m) were GBP69.3m higher than 2022
with the increase in costs due to interest on the Group's new $1bn
USD term loan, which was raised in Q4 of 2022 and the impact of the
increase in global interest rates.
Net gains on financial instruments, driven primarily by a
foreign exchange gain on re-translation of debt related items, were
GBP88.6m in the period (2022: GBP55.0m loss). This gain is offset
by a foreign exchange loss on the translation of assets in overseas
subsidiaries which is recognised in reserves and forms part of the
Group's commercial hedging strategy.
Provision for HMRC settlement
During the period, the Group has made a provision of GBP585.0m
in respect of its ongoing deferred prosecution agreement (DPA)
negotiations with the Crown Prosecution Service (CPS). The Company
previously announced an investigation by HMRC into its legacy
Turkish facing business, which it sold in 2017, and subsequently
announced that it is in DPA negotiations with the CPS to resolve
the ongoing HMRC investigation.
The DPA negotiations have now progressed to the point where the
Company believes that it is likely to be able to agree a resolution
of the HMRC investigation insofar as it relates to the Company and
the Group. While the full terms of a DPA are subject to judicial
approval, the Company has a sufficient degree of confidence to take
a provision of GBP585.0m against a potential settlement, which
would be paid over a four-year period in relation to alleged
offences under Section 7 of the Bribery Act 2010. The Company
currently anticipates judicial approval will be sought during Q4
2023.
Section 7 of the Bribery Act 2010 relates to the failure of a
relevant commercial organisation to have adequate procedures in
place designed to prevent persons associated with it from
undertaking bribery for the benefit of the commercial
organisation.
The amount of the provision has been calculated on the basis
that the Company will receive full credit for its extensive
co-operation with the investigation prior, and subsequent, to
entering into any DPA.
Since the investigation first commenced, the Group has
undertaken a comprehensive review of anti-bribery policies and
procedures and has taken decisive action to significantly
strengthen its wider compliance programme and related controls.
Other separately disclosed items
Items separately disclosed before tax for the period amount to
GBP150.7m (2022: GBP112.9m) and relate primarily to GBP110.2m of
amortisation on acquired intangibles (2022: GBP51.5m), corporate
transaction costs of GBP12.2m (2022: GBP12.5m), restructuring costs
of GBP6.8m (2022: GBP4.5m) and legal and onerous contract costs of
GBP5.6m (2022: GBP4.7m). The Group also incurred GBP2.3m on fees
for refinancing and fee write-offs (2022: GBPnil) as well as
recording an additional GBP13.6m in contingent consideration
liabilities reflecting the latest estimate of the likely economic
outflow (2022: GBP9.3m income). In the prior period, the Group also
made a GBP45.5m repayment of amounts received in 2021 under the UK
Government furlough scheme and recorded an impairment of GBP3.5m on
closed shops in the UK.
Other separately disclosed items
2023 2022
GBPm GBPm
-------------------------------------- -------- --------
Amortisation of acquired intangibles (110.2) (51.5)
Corporate transaction costs (12.2) (12.5)
Restructuring costs (6.8) (4.5)
Legal and onerous contract costs (5.6) (4.7)
Impairment - (3.5)
Movement in fair value of contingent
consideration (13.6) 9.3
Other including issue cost write-off (2.3) -
Furlough repayments - (45.5)
Total (150.7) (112.9)
-------------------------------------- --------
Profit before tax
Profit before tax and separately disclosed items was GBP287.6m
(2022: GBP152.4m), a year on year increase of GBP135.2m with the
growth in underlying EBITDA(3) , a decrease in BetMGM losses and a
gain on foreign exchange partially offset by the increase in
depreciation and amortisation and interest. After charging
separately disclosed items, the Group recorded a pre-tax loss from
continuing operations of GBP448.1m (2022: GBP39.5m profit).
Taxation
The tax charge on continuing operations for the period was
GBP54.4m made up of an underlying continuing tax charge of GBP70.5m
(2022: GBP30.7m), reflecting effective tax rate pre-BetMGM losses
and foreign exchange gains on external debt of 24.1% (2022: 11.4%),
and a tax credit on separately disclosed items of GBP16.1m (2022:
GBP19.3m).
TAB NZ
During the period, the Group acquired NZ Ent Limited, a business
entitled to run the TAB NZ brand in New Zealand for 25 years. As
part of the acquisition, the Group has committed to make minimum
guaranteed funding payments to TAB NZ in the first 5 years post
completion, with further contingent payments due up to and
including year 25. As there are no ongoing obligations or service
requirements on the selling party, these payments have been deemed
to form part of consideration under IFRS 3 rather than ongoing
deductions on profits. As such, a financial liability for the
provisional, discounted, estimate of consideration of GBP1,208.5m
has been recognised in the period along with a corresponding
intangible asset which will be amortised over the life of the
agreement.
Cashflow
Period ended 30 June 2023 2022
GBPm GBPm
---------- --------
Cash generated by operations 497.9 470.9
Corporation tax (71.2) (40.6)
Interest (65.2) (32.5)
Net cash generated from operating activities 361.5 397.8
Cash flows from investing activities:
Acquisitions & disposals (474.9) (195.7)
Cash acquired/disposed 43.2 16.2
Capital expenditure (130.2) (103.9)
Investment in Joint ventures (40.7) (113.1)
---------- --------
Net cash used in investing activities (602.6) (396.5)
Cash flows from financing activities:
Equity issue 590.6 -
Net proceeds from borrowings 1,142.8 -
Repayment of borrowings (1,007.8) (4.3)
Subscription of funds from non-controlling 129.0 -
interest
Settlement of financial instruments and
other financial liabilities (204.8) 18.7
Repayment of finance leases (35.0) (48.6)
Equity dividends paid (50.1) -
Minority dividends paid (3.4) -
Net cash used in financing activities 561.3 (34.2)
Foreign exchange (14.1) 11.3
Net increase/(decrease) in cash 306.1 (21.6)
---------------------------------------------- ----------
During the period, the Group had a net cash inflow of GBP306.1m
(2022: outflow of GBP21.6m).
Net cash generated by operations was GBP497.9m (2022: GBP470.9m)
including GBP499.4m of underlying EBITDA(3) (2022: GBP471.0m) and a
working capital inflow of GBP41.8m (2022: GBP60.9m). Included
within working capital is a GBP30.1m inflow for balances held with
payment service providers as well as customer funds, which are net
debt neutral (2022: GBP21.7m inflow). This cash inflow was
partially offset by separately disclosed items, excluding those
relating to amortisation, depreciation and impairment, of GBP39.6m
(2022: GBP57.9m) and a loss on discontinued operations of GBP3.7m
(2022: GBP3.1m).
During the period GBP71.2m was paid out in relation to corporate
taxes (2022: GBP40.6m) with a further GBP65.2m paid out in interest
(2022: GBP32.5m).
Net cash used in investing activities for the period was
GBP602.6m (2022: GBP396.5m), including cash outflows for
acquisitions of GBP474.9m (2022: GBP195.7m), investment in capital
expenditure of GBP130.2m (2022: GBP103.9m) and an additional
GBP40.7m invested in BetMGM (2022: GBP113.1m). These outflows were
partially offset by cash acquired with acquisitions of GBP43.2m
(2022: GBP16.2m).
During the period the group received a net GBP561.3m (2022:
GBP34.2m repayment) from financing activities. GBP590.6m was raised
through the equity issuance with a further GBP1,142.8m through new
financing facilities (2022: GBPnil) which were used, in part, to
repay GBP1,007.8m of debt (2022: GBP4.3m). During the period, the
Group also received GBP129.0m (2022: GBPnil) from EMMA Capital into
Entain CEE to meet their obligations under the SuperSport earn-out
and the STS acquisition. GBP204.8m was paid on settlement of other
financial instruments and liabilities, primarily relating to
contingent consideration on previous acquisitions (2022: GBP19.9m).
In the prior period, the Group also received GBP38.6m on the
settlement of one of the external swap arrangements.
During the period, the Group also paid GBP50.1m in equity
dividends (2022: GBPnil) and GBP3.4m in dividends to the minority
interest in Entain CEE (2022: GBPnil). Lease payments of GBP35.0m
(2022: GBP48.6m) including those on non-operational shops, were
made in the period.
Net debt and liquidity
As at 30 June 2023, adjusted net debt was GBP2,593.9m and
represented an adjusted net debt to underlying EBITDA(3) ratio of
2.5x (3.1x proforma(5) ). The Group has drawn down GBP150.0m on the
revolving credit facility at 30 June 2023 (2022: GBPnil).
Par value Issue costs/ Total
Premium
GBPm GBPm GBPm
----------- ------------- ----------
Bonds (400.0) (1.4) (401.4)
Term loans (2,795.1) 61.8 (2,733.3)
Interest accrual (46.3) - (46.3)
----------- ------------- ----------
(3,241.4) 60.4 (3,181.0)
Cash 964.6
----------
Accounting net debt (2,216.4)
Cash held on behalf of customers (196.5)
Fair value of swaps held against debt instruments (30.0)
Other debt related items* 124.9
Lease liabilities (275.9)
----------
Adjusted net debt (2,593.9)
---------------------------------------- ----------- ------------- ----------
*Other debt related items include balances held with payment
service providers, deposits and other similar items
Going Concern
In adopting the going concern basis of preparation in the
interim financial statements, the directors have considered the
current trading performance of the Group, the potential impact of
any settlement of the HMRC investigation , the principal risks and
uncertainties as considered in the 2022 Annual Report and Accounts
and longer term viability statement and the current economic
environment. The assessment performed over going concern included
assessing the impact of the crystallisation of the Group's
principal risks in "severe but plausible" downside scenarios as
well as downside sensitivities on trading.
Given the level of the Group's current financing facilities, the
first material tranche of which does not mature until 2026, and the
forecast covenant headroom even under the sensitised downside
scenarios, the directors believe the Group is well placed to manage
the risks and uncertainties it faces. As such, the directors have a
reasonable expectation that the Group will have adequate financial
resources to continue in operational existence and have, therefore,
considered it appropriate to adopt the going concern basis of
preparation in the interim financial statements.
Notes
(1) 2023 and 2022 reported results are unaudited
(2) Growth on a constant currency basis is calculated by
translating both current and prior period performance at the 2023
exchange rates
(3) EBITDA is defined as earnings before interest, tax,
depreciation and amortisation, share based payments, share of JV
income and separately disclosed items
(4) Stated pre separately disclosed items
(5) Proforma leverage reflects reported Net Debt adjusted to
remove the benefit of the equity placing divided by proforma LTM
EBITDA
Principal and emerging risks
During the first half of 2023, we have continued to integrate
our Group Enterprise Risk Management programme and have undertaken
formal, standardised risk workshops with each of our functions, and
across all Group Principal Risks, which result in formalised
Significant Risk Dashboards and action plans.
Quarterly reporting and deep dives of Principal Risks have been
undertaken by both the Group Risk Committee and the Board.
We continue to bring newly acquired companies into the Entain
Risk Management framework and the function works closely with Group
Internal Audit to undergo critical control testing in line with the
audit programme for risk management.
The principal risks and uncertainties which could impact the
Group are detailed in the Group's Annual Report and Accounts 2022
and are as follows:
Data privacy and cyber security
The Group processes sensitive personal customer data (including
name, address, age, bank details and betting and gaming history) as
part of its business and therefore must comply with strict data
protection and privacy laws in all jurisdictions in which the Group
operates. The Group is exposed to the risk that this data could be
wrongfully obtained through either a cyber-attack or a breach in
data security. This could result in prosecutions including
financial penalties, sanctions, the loss of the goodwill of its
customers and an inability to deliver growth and deliver technology
synergies.
Laws, regulations, licensing and regulatory compliance
Regulatory, legislative and fiscal regimes for betting and
gaming in key markets around the world can change, sometimes at
short notice. Such changes could benefit or have an adverse effect
on the Group's profitability and additional costs might be incurred
in order to comply with any new laws or regulations in multiple
jurisdictions.
Failure to maintain our technology platform excellence
The Group's operations are highly dependent on technology and
advanced information systems and there is a risk that such
technology or systems could fail. In particular, any damage to, or
failure of, online systems and servers, electronic point of sale
systems and electronic display systems could result in
interruptions to financial controls and customer service systems
and may impact the Group's ability to retain existing, and attract
new, customers to deliver the Group's growth strategy.
Taxes
The Group is subject to a range of taxes, duties and levies in
many of the countries where we have operations or in which our
customers are located. The taxes imposed upon betting and gaming
companies have changed over time, and the levels of taxation to
which the Group is subject may change in the future. If additional
taxes are levied, this may have an adverse effect on the amount of
tax payable by the Group.
Further taxes may include corporate income tax, value added tax
(VAT) or other indirect taxes. Group companies may be subject to
VAT or similar taxes on transactions, which have previously been
treated as exempt.
Strategy Execution in Growth Markets
Risk of ineffective execution of growth strategy may impact the
Group's goal of leadership in key growth markets such as those in
the Americas and other emerging countries, resulting in a
deterioration in NGR growth opportunities in regulated and
regulating territories.
Safer betting and gaming
Providing a safe and enjoyable betting and gaming experience for
our customers in at the centre of everything that Entain does.
Failure to meet the high standards we, and others, expect of Entain
could have a significant impact on our customers and their
wellbeing as well as impact the Group's profitability and
reputation.
Health, Safety, Security & Wellbeing of Employees, Customers
and Communities
Failure to meet the requirements of the various domestic and
international rules and regulations relating to the health and
safety of our employees and customers in both retail and digital
markets could expose the Group, including individual employees and
directors, to material civil, criminal and or regulatory action
with the associated financial and reputational consequences.
In addition, as a large corporate we recognise our impact on
society and local communities in which we operate and as a large
Group the expectations on us. Failure to meet these expectations
could have widespread reputational consequences.
Trading, liability management and pricing
The Group may experience significant losses as a result of a
failure to determine accurately the odds in relation to any
particular event and/or any failure of its sports risk management
processes.
Loss of key locations
Whilst the Group operates out of a number of geographical
locations, there are several key sites which are critical to the
day to day operations of the Group. Disruption in any of these
locations could have an impact on day to day operations.
Attracting and retaining key talent
The people who work within Entain are pivotal to the success of
the company and our failure to attract or retain key individuals
may impact our ability to deliver on our strategic goals.
As we progress through 2023, we will undertake formalised risk
workshops with the regions to formalise their approach to Risks
Management and report back to the Board, Audit, Sustainability and
Compliance, People and Governance and Remuneration committees on
the outputs of the ERM programme.
UNAUDITED FINANCIAL STATEMENTS
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June
----- ---------- ---------- --------- ---------- ---------- ---------
2023 2022
Separately Separately
disclosed disclosed
items items
Underlying (note Underlying (note
items 4) Total items 4) Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
NGR 2,404.3 - 2,404.3 2,117.6 - 2,117.6
VAT/GST (26.7) - (26.7) (22.7) - (22.7)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Revenue 2,377.6 - 2,377.6 2,094.9 - 2,094.9
Cost of sales (919.9) - (919.9) (767.1) - (767.1)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Gross profit 1,457.7 - 1,457.7 1,327.8 - 1,327.8
Administrative costs (1,102.2) (733.4) (1,835.6) (975.2) (112.9) (1,088.1)
Contribution 1,126.2 - 1,126.2 1,025.5 - 1,025.5
Administrative costs excluding marketing (770.7) (733.4) (1,504.1) (672.9) (112.9) (785.8)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Group operating profit/(loss) before
share of results from joint ventures
and associates 355.5 (733.4) (377.9) 352.6 (112.9) 239.7
Share of results from joint venture
and associates (48.1) - (48.1) (106.1) - (106.1)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Group operating profit/(loss) 307.4 (733.4) (426.0) 246.5 (112.9) 133.6
Finance expense 5 (112.2) (2.3) (114.5) (40.2) - (40.2)
Finance income 5 3.8 - 3.8 1.1 - 1.1
(Losses)/gains arising from financial
instruments 5 (23.0) - (23.0) 63.5 - 63.5
Gains/(losses) arising from foreign
exchange on debt instruments 5 111.6 - 111.6 (118.5) - (118.5)
Profit/(loss) before tax 287.6 (735.7) (448.1) 152.4 (112.9) 39.5
Income tax (expense)/credit 6 (70.5) 16.1 (54.4) (30.7) 19.3 (11.4)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Profit/(loss) from continuing operations 217.1 (719.6) (502.5) 121.7 (93.6) 28.1
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Loss for the period from discontinued
operations after tax - (3.7) (3.7) - (3.1) (3.1)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Profit/(loss) for the period 217.1 (723.3) (506.2) 121.7 (96.7) 25.0
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Attributable to:
Equity holders of the parent 206.9 (708.0) (501.1) 123.7 (96.7) 27.0
Non-controlling interests 10.2 (15.3) (5.1) (2.0) - (2.0)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Earnings per share on profit/(loss)
for the period from continuing
operations(1) 8 21.8p (83.9)p 29.5p 5.1p
From profit/(loss) for the period(1) 21.8p (84.5)p 29.5p 4.6p
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Diluted earnings per share on
profit/(loss)
for the period from continuing
operations(1) 8 21.6p (83.9)p 29.3p 5.1p
From profit/(loss) for the period(1) 21.6p (84.5)p 29.3p 4.6p
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Memo: 2023 2022
Separately Separately
Underlying disclosed Underlying disclosed
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
EBITDA 499.4 (623.2) (123.8) 471.0 (59.2) 411.8
Share based payments (9.1) - (9.1) (5.2) - (5.2)
Depreciation, amortisation and impairment (134.8) (110.2) (245.0) (113.2) (53.7) (166.9)
Share of results from joint ventures
and associates (48.1) - (48.1) (106.1) - (106.1)
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Group operating profit/(loss) 307.4 (733.4) (426.0) 246.5 (112.9) 133.6
----------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
1. The calculation of underlying earnings per share has been
adjusted for separately disclosed items, and for the removal of
foreign exchange volatility arising on financial instruments as it
provides a better understanding of the underlying performance of
the Group. See note 8 for further details.
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Six months Six months
ended ended
30 June 30 June
2023 2022
GBPm GBPm
(Loss)/ profit for the period (506.2) 25.0
-------------------------------------------------------------- ----------- -----------
Other comprehensive income:
Items that may be reclassified to profit or loss:
Currency translation (losses)/gains (164.3) 111.0
--------------------------------------------------------------
Total items that will be reclassified to profit
or loss (164.3) 111.0
-------------------------------------------------------------- ----------- -----------
Items that will not be re-classified to profit
or loss:
Changes in the fair value of equity instruments
at fair value through other comprehensive income/(expense) 0.1 (2.7)
Re-measurement of defined benefit pension scheme (4.6) (0.1)
Tax on re-measurement of defined benefit pension 1.6 -
scheme
Total items that will not be reclassified to
profit or loss (2.9) (2.8)
-------------------------------------------------------------- ----------- -----------
Other comprehensive (expense)/income for the
period, net of tax (167.2) 108.2
-------------------------------------------------------------- ----------- -----------
Total comprehensive (expense)/income for the
period (673.4) 133.2
-------------------------------------------------------------- ----------- -----------
Attributable to:
- equity holders of the parent (661.2) 135.2
- non-controlling interests (12.2) (2.0)
-------------------------------------------------------------- ----------- -----------
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
Restated
31 December
30 June 2022 30 June
2023 (note 12) 2022
Note GBPm GBPm GBPm
--------------------------------------- ----- ---------- ------------- ----------
ASSETS
Non-current assets
Goodwill 9 4,362.3 3,986.0 3,392.6
Intangible assets 9 3,703.3 2,672.7 2,231.6
Property, plant and equipment 518.1 507.2 486.4
Interest in joint venture - - 14.2
Interest in associates and other
investments 55.1 53.5 57.1
Trade and other receivables 44.0 38.6 4.2
Other financial assets - 0.2 8.0
Deferred tax assets 488.2 157.3 161.6
Retirement benefit assets 60.0 63.8 88.2
--------------------------------------- ----- ---------- ------------- ----------
9,231.0 7,479.3 6,443.9
--------------------------------------- ----- ---------- ------------- ----------
Current assets
Trade and other receivables 502.7 500.3 429.6
Income and other taxes recoverable 42.5 30.7 34.1
Derivative financial instruments 15 70.4 72.9 84.0
Cash and cash equivalents 964.6 658.5 465.5
1,580.2 1,262.4 1,013.2
--------------------------------------- ----- ---------- ------------- ----------
TOTAL ASSETS 10,811.2 8,741.7 7,457.1
--------------------------------------- ----- ---------- ------------- ----------
LIABILITIES
Current liabilities
Trade and other payables (823.9) (719.8) (702.7)
Balances with customers (196.5) (200.5) (194.9)
Lease liabilities (69.2) (65.1) (62.4)
Interest bearing loans and borrowings (613.1) (424.9) (131.8)
Corporate tax liabilities (59.9) (47.1) (52.8)
Provisions (146.8) (20.6) (42.6)
Derivative financial instruments 15 (100.4) (79.2) -
Other financial liabilities 15 (121.4) (208.8) (62.4)
(2,131.2) (1,766.0) (1,249.6)
--------------------------------------- ----- ---------- ------------- ----------
Non-current liabilities
Interest bearing loans and borrowings (2,567.9) (2,689.1) (2,271.0)
Lease liabilities (206.7) (215.8) (213.9)
Deferred tax liabilities (794.5) (495.4) (407.8)
Provisions (465.2) (5.4) (5.5)
Other financial liabilities 15 (1,457.0) (253.4) (2.8)
--------------------------------------- ----- ---------- ------------- ----------
(5,491.3) (3,659.1) (2,901.0)
--------------------------------------- ----- ---------- ------------- ----------
TOTAL LIABILITIES (7,622.5) (5,425.1) (4,150.6)
--------------------------------------- ----- ---------- ------------- ----------
NET ASSETS 3,188.7 3,316.6 3,306.5
--------------------------------------- ----- ---------- ------------- ----------
EQUITY
Issued share capital 5.2 4.8 4.8
Share premium 1,796.8 1,207.3 1,207.3
Merger reserve 2,527.4 2,527.4 2,527.4
Translation reserve 83.0 240.2 174.4
Retained deficit (1,520.9) (846.9) (605.6)
Equity shareholder's funds 2,891.5 3,132.8 3,308.3
--------------------------------------- ----- ---------- ------------- ----------
Non-controlling interests 297.2 183.8 (1.8)
TOTAL SHAREHOLDERS' EQUITY 3,188.7 3,316.6 3,306.5
--------------------------------------- ----- ---------- ------------- ----------
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Issued Equity Total
share Share Merger Translation Retained shareholders Non-controlling shareholders
capital premium Reserve reserve(1) deficit funds interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- --------- ------------ ---------- ------------- ---------------- -------------
At 1 January
2022 4.8 1,207.3 2,527.4 63.4 (635.8) 3,167.1 1.4 3,168.5
----------------- -------- -------- --------- ------------ ---------- ------------- ---------------- -------------
Profit for the
period - - - - 27.0 27.0 (2.0) 25.0
Other
comprehensive
income - - - 111.0 (2.8) 108.2 - 108.2
----------------- -------- -------- --------- ------------ ---------- ------------- ---------------- -------------
Total
comprehensive
income - - - 111.0 24.2 135.2 (2.0) 133.2
-----------------
Share options
exercised - - - - - - -
Share-based
payments
charge - - - - 6.2 6.2 - 6.2
Equity dividends - - - - - - - -
Purchase of
non-controlling
Interest - - - - (0.2) (0.2) (1.2) (1.4)
-----------------
At 30 June 2022 4.8 1,207.3 2,527.4 174.4 (605.6) 3,308.3 (1.8) 3,306.5
----------------- -------- -------- --------- ------------ ---------- ------------- ---------------- -------------
At 1 January
2023 4.8 1,207.3 2,527.4 240.2 (846.9) 3,132.8 183.8 3,316.6
----------------- -------- -------- --------- ------------ ---------- ------------- ---------------- -------------
Loss for the
period - - - - (501.1) (501.1) (5.1) (506.2)
Other
comprehensive
expense - - - (157.2) (2.9) (160.1) (7.1) (167.2)
----------------- -------- -------- --------- ------------ ---------- ------------- ---------------- -------------
Total
comprehensive
expense - - - (157.2) (504.0) (661.2) (12.2) (673.4)
Share options
exercised - - - - - - -
Share-based
payments
charge - - - - 9.1 9.1 - 9.1
Equity dividends - - - - (50.1) (50.1) (3.4) (53.5)
Equity issue 0.4 589.5 - - - 589.9 - 589.9
Transactions
with
minority
interest(2) - - - - (129.0) (129.0) 129.0 -
At 30 June 2023 5.2 1,796.8 2,527.4 83.0 (1,520.9) 2,891.5 297.2 3,188.7
----------------- -------- -------- --------- ------------ ---------- ------------- ---------------- -------------
1. The translation reserve is used to record exchange
differences arising from the translation of the financial
statements of foreign subsidiaries with non-sterling functional
currencies.
2. Relates to the subscription of equity in Entain Holdings
(CEE) Limited by minority holders as well as the recognition of the
financial liability for the put option on Entain Holdings (CEE)
Limited. See note 12 for further details.
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months
ended ended
30 June 30 June
2023 2022
Notes GBPm GBPm
------------------------------------------------ ------ ----------- -----------
Cash generated by operations 13 497.9 470.9
Income taxes paid (71.2) (40.6)
Net finance expense paid (65.2) (32.5)
------------------------------------------------ ------
Net cash generated from operating activities 361.5 397.8
Cash flows from investing activities:
Acquisitions (474.9) (195.7)
Cash acquired on acquisition of business 43.2 16.2
Purchase of intangible assets (92.0) (56.5)
Purchase of property, plant and equipment (38.2) (47.4)
Investment in joint venture (40.7) (113.1)
Net cash used in investing activities (602.6) (396.5)
------------------------------------------------ ------ ----------- -----------
Cash flows from financing activities:
Proceeds from issue of ordinary shares 590.6 -
Net proceeds from borrowings 1,142.8 -
Repayment of borrowings (1,007.8) (4.3)
Subscription of equity from non-controlling 129.0 -
interests
Settlement of derivative financial instruments - 38.6
Settlement of other financial liabilities (204.8) (19.9)
Payment of lease liabilities (35.0) (48.6)
Dividend paid to shareholders (50.1) -
Dividends paid to non-controlling interests (3.4) -
------------------------------------------------ ------ ----------- -----------
Net cash utilised from financing activities 561.3 (34.2)
------------------------------------------------ ------ ----------- -----------
Net decrease in cash and cash equivalents 320.2 (32.9)
Effect of changes in foreign exchange rates (14.1) 11.3
Cash and cash equivalents at beginning of the
period 658.5 487.1
Cash and cash equivalents at end of the period 964.6 465.5
------------------------------------------------ ------ ----------- -----------
The accompanying notes form part of these financial
statements.
1. Corporate information
Entain plc ("the Company") is a public limited company
incorporated and domiciled in the Isle of Man whose shares are
publicly traded. The principal activities of the Company and its
subsidiaries ("the Group") are described in Note 3.
2. Basis of preparation
In adopting the going concern basis of preparation in the
interim financial statements, the directors have considered the
current trading performance of the Group, the potential impact of
any settlement of the HMRC investigation , the principal risks and
uncertainties as considered in the 2022 Annual Report and Accounts
and longer term viability statement and the current economic
environment. The assessment performed over going concern included
assessing the impact of the crystallisation of the Group's
principal risks in "severe but plausible" downside scenarios as
well as downside sensitivities on trading.
Given the level of the Group's current financing facilities, the
first material tranche of which does not mature until 2026, and the
forecast covenant headroom even under the sensitised downside
scenarios, the directors believe the Group is well placed to manage
the risks and uncertainties it faces. As such, the directors have a
reasonable expectation that the Group will have adequate financial
resources to continue in operational existence and have, therefore,
considered it appropriate to adopt the going concern basis of
preparation in the interim financial statements.
(a) The Condensed Interim Financial Statements have been
prepared in accordance with the Disclosure and Transparency Rules
of the United Kingdom's Financial Conduct Authority and with
International Accounting Standards 34 'Interim Financial Reporting'
as issued by the International Accounting Standards Board. It
should be read in conjunction with the Annual Report and Accounts
for the year ended 31 December 2022, which were prepared in
accordance with applicable law and International Financial
Reporting Standards as issued by the International Accounting
Standards Board.
The Condensed Interim Financial Statements are not statutory
accounts within the meaning of the Isle of Man Companies Act 2006
and do not include all of the information and disclosures required
for full annual financial statements. It should be read in
conjunction with the Annual Report and Accounts of Entain plc for
the year ended 31 December 2022 which were filed with the Registrar
of Companies in the Isle of Man. This report is available either on
request from the Company's registered office or to download from
https://entaingroup.com/investor-relations/financial-reports/ . The
auditor's report on these accounts was unqualified, did not include
a reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report, and did not
contain a statement under the Isle of Man Companies Act 2006.
The accounting policies adopted in the preparation of the
interim financial statements are consistent with those followed in
the preparation of the Group's annual financial statements for the
year ended 31 December 2022 other than those listed in 2(f).
Due to the timing of certain acquisitions in the previous
financial year, the fair values applied to the assets and
liabilities acquired were provisional, in accordance with IFRS 3
'Business Combinations'. Since the initial fair value assessment,
certain measurement period adjustments have been identified
resulting in reallocations between goodwill and other components of
the net assets acquired. This has resulted in a restatement of the
prior year balance sheet to reflect these changes. Net assets and
Total shareholders' equity have not changed as a result of this
restatement. See note 12 for further details.
The financial statements are presented in million Pounds
Sterling, rounded to one decimal place.
The interim financial information was approved by a duly
appointed and authorised committee of the Board of Directors on 10
August 2023 and is unaudited but have been reviewed by the Group's
auditor.
(b) Critical judgements and estimates
In preparing these Condensed Consolidated Interim Financial
Statements, the Group has made its best estimates and judgements of
certain amounts included in the financial statements, giving due
consideration to materiality. The Group regularly reviews these
estimates and updates them as required.
(c) Critical judgements and estimates (continued)
The existing critical accounting estimates, assumptions and
judgements set out in note 4.2 of the Group's Annual Report and
Accounts for the 12 months ended 31 December 2022 remain relevant
to these Condensed Consolidated Interim Financial Statements.
(d) To assist in understanding the underlying performance, the
Group has separately disclosed the following items of pre-tax
income and expense:
- amortisation of acquired intangibles resulting from IFRS 3
'Business Combinations' fair value exercises;
- profits or losses on disposal, closure or impairment of non-current assets or businesses;
- costs associated with business restructuring;
- corporate transaction costs;
- changes in the fair value of contingent consideration;
- the impact of significant litigation; and
- the related tax impact effect on these items.
- any other items are considered individually by virtue of their nature or size.
The separate disclosure of these items allows a clearer
understanding of the trading performance on a consistent and
comparable basis, together with an understanding of the effect of
non-recurring or large individual transactions upon the overall
profitability of the Group.
The items disclosed separately have been included within the
appropriate classifications in the consolidated income statement
and are detailed in note 4. The directors have also presented Net
Gaming Revenue, Contribution and Underlying EBITDA as these are
measures used frequently within the industry. All of these items
are reconciled within the Income Statement.
(e) Accounting policies
Depreciation
Depreciation is applied using the straight-line method to
specific classes of asset to reduce them to their residual value
over their estimated useful economic lives.
The estimated useful lives are as follows:
Land and buildings Lower of 50 years, or estimated useful
life of the building, or lease. Indefinite
lives are attached to any land held
and therefore it is not depreciated
Plant and equipment 3 - 5 years
Fixtures, fittings and equipment 3 -10 years
--------------------------------- --------------------------------------------
Amortisation
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets, unless such lives are indefinite. All indefinite lived
assets are subject to an annual impairment review from the year of
acquisition. Other intangible assets are amortised from the date
they are available for use.
The estimated useful lives are as follows:
Retail licences 15 years, or duration of licence
Software 2 -15 years
Capitalised development expenditure 3 - 5 years
Trademarks and brand names 10 - 25 years, or indefinite life
Customer relationships 3 -15 years
------------------------------------ ----------------------------------
Impairment
An impairment review is performed for goodwill and indefinite
life assets on at least an annual basis. For all other non-current
assets an impairment review is performed where there are indicators
of impairment. This requires an estimation of the recoverable
amount which is the higher of an asset's fair value less costs to
sell and its value in use. Estimating a value in use amount
requires management to make an estimate of the expected future cash
flows from each cash generating unit and to discount cash flows by
a suitable discount rate in order to calculate the present value of
those cash flows.
Estimating an asset's fair value less costs to sell is
determined using future cashflow and profit projections as well as
industry observed multiples and publicly observed share prices for
similar gambling companies.
Within Retail the cash generating units are generally an
individual Licensed Betting Office ("LBO") and therefore,
impairment is first assessed at this level for licences, property,
plant and equipment and right of use ("ROU") assets, any impairment
arising booked first to licences then to property, plant and
equipment and ROU assets.
Separately Disclosed Items
For a full explanation of what is defined as a separately
disclosed item and how they are disclosed, please refer to note
2(d).
(f) Updates to IFRS
A number of amendments to IFRSs became effective for the
financial year beginning 1 January 2023:
IAS 'Presentation of Financial Presentation of Financial
1 Statements' Statements and IFRS Practice 1 January
Statement 2 2023
IAS 'Accounting Policies, Changes Definition of Accounting 1 January
8 in Accounting Estimates and Estimates 2023
Errors'
------------------------------ ----------------------------------- ----------
IAS 'Income Taxes' Deferred Tax related to 1 January
12 assets and liabilities 2023
arising from a single transaction
------------------------------ ----------------------------------- ----------
IAS 'Insurance Contracts' 1 January
17 Original issue 2023
------------------------------ ----------------------------------- ----------
None of the amendments to IFRS noted above had a significant
effect on the financial statements.
3. Segment information
The Group's operating segments are based on the reports reviewed
by the Executive management team (who are collectively considered
to be the Chief Operating Decision Maker (CODM) to make strategic
decisions and allocate resources.
IFRS 8 requires segment information to be presented on the same
basis as that used by the CODM for assessing performance and
allocating resources, and the Group's operating segments are now
aggregated into the five reportable segments.
- Online: comprises betting and gaming activities from online
and mobile operations. Sports Brands include bwin, Coral,
Crystalbet, Eurobet, Ladbrokes, Sportingbet, SuperSport, Sport
Interaction, TAB NZ and BetCity; Gaming Brands include CasinoClub,
Foxy Bingo, Gala, Gioco Digitale, partypoker, PartyCasino, Optibet,
Ninja and BetCity;
- Retail: comprises betting and retail activities in the shop
estate in Great Britain, Northern Ireland, Jersey, Republic of
Ireland, Belgium, Italy, Croatia and New Zealand;
- New opportunities: unikrn and innovation spend;
- Corporate: includes costs associated with Group functions
including Group executive, legal, Group finance, US joint venture,
tax and treasury; and
- Other segments: includes activities primarily related to Stadia
The Executive management team of the Group have chosen to assess
the performance of operating segments based on a measure of net
revenue, EBITDA and operating profit with finance costs and
taxation considered for the Group as a whole. Transfer prices
between operating segments are on an arm's-length basis in a manner
similar to transactions with third parties.
The segment results for the six months ended 30 June 2023 were
as follows:
2023 Elimination
All Other of internal Total
Online Retail Segments New Opportunities Corporate revenue Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
NGR 1,684.3 709.3 13.5 - - (2.8) 2,404.3
VAT/GST (26.1) (0.6) - - - - (26.7)
Revenue 1,658.2 708.7 13.5 - - (2.8) 2,377.6
Gross Profit 980.9 463.3 13.5 - - - 1,457.7
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Contribution 659.8 457.9 13.3 (4.8) - - 1,126.2
Operating costs excluding marketing
costs (244.3) (306.5) (10.3) (10.2) (55.5) - (626.8)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Underlying EBITDA before separately
disclosed items 415.5 151.4 3.0 (15.0) (55.5) - 499.4
Share based payments (3.2) (1.2) - (0.4) (4.3) - (9.1)
Depreciation and Amortisation (69.5) (60.6) (1.4) (3.1) (0.2) - (134.8)
Share of joint ventures and
associates (0.3) - 1.3 (0.6) (48.5) - (48.1)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Operating profit/(loss) before
separately disclosed items 342.5 89.6 2.9 (19.1) (108.5) - 307.4
Separately disclosed items (107.1) (3.1) - - (623.2) - (733.4)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Group operating profit/(loss) 235.4 86.5 2.9 (19.1) (731.7) - (426.0)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Net finance expense (22.1)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Loss before tax (448.1)
Income tax (54.4)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Loss for the period from continuing
operations after tax (502.5)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Loss for the period from
discontinued
operations after tax (3.7)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Loss for the period after
discontinued
operations (506.2)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
The segment results for the six months ended 30 June 2022 were
as follows:
2022 Elimination
All Other of internal Total
Online Retail Segments New Opportunities Corporate revenue Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
NGR 1,470.7 636.0 13.1 - - (2.2) 2,117.6
VAT/GST (22.7) - - - - - (22.7)
Revenue 1,448.0 636.0 13.1 - - (2.2) 2,094.9
Gross Profit 886.1 428.6 13.1 - - - 1,327.8
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Contribution 587.3 425.1 13.1 - - - 1,025.5
Operating costs excluding marketing
costs (202.6) (284.0) (10.1) (14.6) (43.2) - (554.5)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Underlying EBITDA before separately
disclosed items 384.7 141.1 3.0 (14.6) (43.2) - 471.0
Share based payments (1.3) (0.5) - (0.1) (3.3) - (5.2)
Depreciation and Amortisation (57.2) (53.0) (1.3) (1.6) (0.1) - (113.2)
Share of joint ventures and
associates 1.8 - 0.7 - (108.6) - (106.1)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Operating profit/(loss) before
separately disclosed items 328.0 87.6 2.4 (16.3) (155.2) - 246.5
Separately disclosed items (50.5) (50.1) - - (12.3) - (112.9)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Group operating profit/(loss) 277.5 37.5 2.4 (16.3) (167.5) - 133.6
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Net finance income (94.1)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Profit before tax 39.5
Income tax (11.4)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Profit for the period from
continuing
operations after tax 28.1
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Loss for the period from
discontinued
operations after tax (3.1)
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Profit for the period after
discontinued operations 25.0
------------------------------------ ------- ------- --------- ----------------- --------- ------------ -------
Assets and liabilities information is reported internally in
total and not by reportable segment and, accordingly, no
information is provided in this note on assets and liabilities
split by reportable segment.
Geographical information
Revenue by destination for the Group, is
as follows:
Six months ended Six months ended
30 June 2023 30 June 2022
GBPm GBPm
----------------------------------------- ---------------- ----------------
United Kingdom 1,027.5 1,028.9
Australia 209.1 213.7
Italy 279.3 225.3
Rest of Europe (1) 687.4 456.4
Rest of the World (2) 174.3 170.6
----------------------------------------- ---------------- ----------------
Total 2,377.6 2,094.9
----------------------------------------- ---------------- ----------------
1. Rest of Europe is predominantly driven by markets in Croatia,
Belgium, Netherlands, Germany and Georgia.
2. Rest of the World is predominantly driven by the market in Brazil and Canada.
4. Separately disclosed items
Six months ended Six months ended
30 June 2023 30 June 2022
Tax Impact Tax Impact
GBPm GBPm GBPm GBPm
Legal settlement (1) 585.0 - - -
Amortisation of acquired intangibles (2) 110.2 (19.1) 51.5 (6.9)
Restructuring costs (3) 6.8 (0.9) 4.5 (0.6)
Corporate transaction costs (4) 12.2 - 12.5 -
Legal and onerous contract provisions (5) 5.6 0.3 4.7 -
Movement in fair value of contingent consideration
(6) 13.6 4.0 (9.3) -
Refinancing fees / Issue cost write-off
(7) 2.3 (0.4) - -
Impairment loss (8) - - 2.2 -
Loss on disposal (8) - - 1.3 -
Furlough (9) - - 45.5 (11.8)
Separately disclosed items for the period
from continuing operations 735.7 (16.1) 112.9 (19.3)
Separately disclosed items for the period
from discontinued operations 3.7 3.1
---------------------------------------------------- ------ ----------- ------- -----------
Total before tax 739.4 (16.1) 116.0 (19.3)
Separately disclosed items for the period
after discontinued operations 723.3 96.7
---------------------------------------------------- ------ ----------- ------- -----------
(1.) Provision in respect of its ongoing deferred prosecution
agreement negotiations with the Crown Prosecution Service (see note
16)
(2.) Amortisation charges in relation to acquired intangible
assets arising from acquisitions. The majority of the charge is
from ac quisitions in the last two years, including Enlabs, Bet.pt,
Avid, SuperSport, BetCity, and 365Scores.
(3.) Costs associated with the Group's restructuring programs
including Evolve.
(4.) Deal fees associated with M&A activity in the period as
detailed in note 12.
(5.) Relates primarily to costs associated with certain
litigation and legal claims, including the HMRC investigation.
(6.) Expense reflecting a change in the estimated likely
payments under contingent consideration arrangements.
(7.) Expenses incurred as part of the refinancing of loans.
(8.) During the prior period the Group recognised a non-cash
impairment charge of GBP2.2m against vacated head office premises,
and GBP1.3m loss on sale of certain assets.
(9.) Repayment of certain amounts received by the Group under
the Government Coronavirus Job Retention Scheme ("Furlough
Scheme").
5. Finance expense and income
Six months ended Six months ended
30 June 2023 30 June 2022
Separately Separately
disclosed disclosed
items items
Underlying (note Underlying (note
items 4) Total items 4) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ----------- ----------- -------- ----------- ----------- --------
Bank loans and overdrafts (106.3) (2.3) (108.6) (33.9) - (33.9)
Interest arising on lease
liabilities (5.9) - (5.9) (6.3) - (6.3)
Losses arising on financial
derivatives (23.0) - (23.0) - - -
Losses arising on foreign
exchange on debt instruments - - - (118.5) - (118.5)
------------------------------- ----------- ----------- -------- ----------- ----------- --------
Total finance expense (135.2) (2.3) (137.5) (158.7) - (158.7)
------------------------------- ----------- ----------- -------- ----------- ----------- --------
Interest receivable 3.8 - 3.8 1.1 - 1.1
Gains arising on financial
derivatives - - - 63.5 - 63.5
Gains arising on foreign
exchange on debt instruments 111.6 - 111.6 - - -
Net finance expense (19.8) (2.3) (22.1) (94.1) - (94.1)
------------------------------- ----------- ----------- -------- ----------- ----------- --------
6. Taxation
The tax charge on continuing operations for the six months ended
30 June 2023 was GBP54.4m (six months ended 30 June 2022: charge of
GBP11.4m) of which a credit of GBP16.1m (30 June 2022: credit of
GBP19.3m) related to separately disclosed items. The effective tax
rate on continuing operations (excluding the effect of JV results
and foreign exchange on financing items) before separately
disclosed items is 24.1% (30 June 2022: 11.4%).
The current period's tax charge on continuing operations before
separately disclosed items was higher than the UK average statutory
rate for the period of 23.5% due to unrecognised deferred tax
assets on losses arising in BetMGM and on surplus interest
expenses, partially offset by credits from updates to prior
periods.
The Group's deferred tax assets and liabilities are measured at
the tax rates of the respective territories which are expected to
apply in the year in which the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the balance sheet date.
Deferred tax assets have been recognised based on the ability of
future offset against deferred tax liabilities or against future
taxable profits. The assessment of future taxable profits is based
on forecasts and assumptions consistent with those used for
impairment testing.
The underlying effective tax rate on continuing operations for
the full year ended 31 December 2023, excluding the results of
BetMGM and foreign exchange on financing items, is forecast to be
c23%.
The Group's future tax charge, and effective tax rate, could be
affected by a number of factors including the geographic mix of
profits, changes to statutory corporate tax rates and the impact of
continuing global tax reforms.
The Group continues to monitor the ongoing work of the OECD on
the taxation of the digital economy and specifically the minimum
level of taxation for multinational groups ("Pillar Two"). Each
country is at a different stage in their process for adopting these
rules. The UK has enacted initial legislation and the EU adopted a
Pillar Two Directive on 22 December 2022, which is expected to be
transposed into legislation by each of the member states during
2023. Once fully implemented, we anticipate the rules will apply to
the Group from the year ended 31 December 2024. The Group expects
this to increase the future Effective Tax Rate on underlying items,
the extent and timing of which will depend on how the rules are
ultimately implemented.
7. Dividends
An interim dividend of 8.9p per share (30 June 2022: 8.5p per
share) has been proposed by the directors.
8. Earnings per share
Basic earnings per share has been calculated by dividing the
loss attributable to shareholders of the Company of GBP501.1m (30
June 2022: profit of GBP27.0m) by the weighted average number of
shares in issue during the six months of 593.0m (30 June 2022:
587.5m).
The calculation of adjusted earnings per share which removes
separately disclosed items and foreign exchange gains and losses
arising on financial instruments has also been disclosed as it
provides a better understanding of the underlying performance of
the Group. Separately disclosed items are defined in note 2 and
disclosed in note 4.
Six months Six months
ended ended
Weighted average number of shares (million): 30 June 2023 30 June 2022
Shares for basic earnings per share 593.0 587.5
Potentially dilutive share options and
contingently issuable shares 5.5 4.3
----------------------------------------------- -------------- --------------
Shares for diluted earnings per share 598.5 591.8
----------------------------------------------- -------------- --------------
Six months Six months
ended ended
30 June 2023 30 June 2022
GBPm GBPm
--------------------------------------------------- -------------- --------------
(Loss)/profit attributable to shareholders (501.1) 27.0
---------------------------------------------------- -------------- --------------
- from continuing operations (497.4) 30.1
- from discontinued operations (3.7) (3.1)
---------------------------------------------------- -------------- --------------
Losses/(gains) arising from financial instruments 23.0 (63.5)
(Gains)/losses arising from foreign exchange
of debt instruments (111.6) 118.5
Tax charge/(credit) on foreign exchange 10.8 (5.4)
Separately disclosed items net of tax 708.0 96.7
---------------------------------------------------- -------------- --------------
Adjusted profit attributable to shareholders 129.1 173.3
---------------------------------------------------- -------------- --------------
- from continuing operations 129.1 173.3
- from discontinued operations - -
---------------------------------------------------- -------------- --------------
Standard earnings Adjusted earnings
per share per share
Six months Six months
ended ended
30 June 30 June
Stated in pence 2023 2022 2023 2022
-------------------------------- ---------- -------- ----------- -------
Basic earnings per share
- from continuing operations (83.9) 5.1 21.8 29.5
- from discontinued operations (0.6) (0.5) - -
From profit for the period (84.5) 4.6 21.8 29.5
Diluted earnings per share
- from continuing operations (83.9) 5.1 21.6 29.3
- from discontinued operations (0.6) (0.5) - -
From profit for the period (84.5) 4.6 21.6 29.3
The earnings per share presented above is inclusive of the
performance from the US joint venture BetMGM. Adjusting for the
removal of the BetMGM performance would result in a basic adjusted
earnings per share of 29.9p (2022: 48.0p) and a diluted adjusted
earnings per share of 29.7p (2022: 47.6p) from continuing
operations.
9. Goodwill and intangible assets
Trade-marks
Customer & brand
Goodwill Licences Software relationships names Total
GBPm GBPm GBPm GBPm GBPm GBPm
Cost
At 1 January 2022 3,492.5 49.7 622.0 1,005.0 2,017.5 7,186.7
Exchange adjustment 153.6 7.1 28.3 34.1 44.9 268.0
Additions - - 129.9 - - 129.9
Additions from business
combinations (restated)(1) 629.1 148.0 7.4 200.1 206.4 1,191.0
Disposals - (0.5) (13.9) - - (14.4)
Reclassification - - (1.0) - - (1.0)
At 31 December 2022 (restated)
(1) 4,275.2 204.3 772.7 1,239.2 2,268.8 8,760.2
Exchange adjustment ( 134.7) ( 14.5) ( 11.0) ( 25.6) ( 38.8) ( 224.6)
Additions - - 92.0 - - 9 2.0
A dditions from business
combinations (note 12) 4 92.1 799.3 32.8 75.1 264.3 1,6 63.6
Disposals - - (0.1) - - (0.1)
At 30 J une 2023 4,632.6 989.1 886.4 1,288.7 2,494.3 10,291.1
Accumulated amortisation
and impairment
At 1 January 2022 275.5 13.3 405.8 942.0 180.6 1,817.2
Exchange adjustment 13.7 0.3 19.8 23.6 11.7 69.1
Amortisation charge - 12.7 109.1 52.4 54.9 229.1
I mpairment charge - 0.5 - - - 0.5
Disposals - (0.5) (13.9) - - (14.4)
At 31 December 2022 289.2 26.3 520.8 1,018.0 247.2 2,101.5
Exchange adjustment (18.9) (0.6) (4.4) (19.2) (10.3) (53.4)
Amortisation charge - 16.0 63.0 57.5 41.0 177.5
I mpairment charge - - - - - -
Disposals - - (0.1) - - (0.1)
At 30 J une 2023 270.3 41.7 579.3 1,056.3 277.9 2,225.5
Net book value
At 31 December 2022 3,986.0 178.0 251.9 221.2 2,021.6 6,658.7
At 30 J une 2023 4,362.3 947.4 307.1 232.4 2,216.4 8,065.6
(1. Restatement of prior year intangible valuations has been
made in relation to the prior year SuperSport acquisition during
the subsequent hindsight period. See note 12 for further
details.)
At 30 June 2023, the Group had not entered into contractual
commitments for the acquisition of any intangible assets (31
December 2022: GBPnil, 30 June 2022: GBPnil).
Included within trade-marks and brand names are GBP1,398.4m (31
December 2022: GBP1,398.4m, 30 June 2022: GBP1,398.4m) of
intangible assets considered to have indefinite lives. These assets
relate to the UK Ladbrokes and Coral brands which are considered to
have indefinite durability that can be demonstrated, and their
value can be readily measured. The brands operate in longstanding
and profitable market sectors. The Group has a strong position in
the market and there are barriers to entry due to the requirement
to demonstrate that the applicant is a fit and proper person with
the "know-how" required to run such operations.
Goodwill reflects the value by which consideration exceeds the
fair value of net assets acquired as part of a business combination
including the deferred tax liability arising on acquisitions.
Licences comprise the cost of acquired betting shop and online
licences.
Software relates to the cost of acquired software, through
purchase or business combination, and the capitalisation of
internally developed software.
Customer relationships, trade-marks and brand names relate to
the fair value of customer lists, trade-marks and brand names
acquired as part of business combinations, primarily relating to
the bwin, Ladbrokes Coral Group plc, Enlabs, Sport Interaction,
SuperSport, BetCity, 365Scores and TAB NZ businesses.
10. Impairment
IAS 36 Impairment of Assets states that an impairment review
must be carried out at least annually for any indefinite lived
assets, such as goodwill and certain brands. Furthermore, it is
necessary to assess whether there is any indication that any other
asset, or cash generating unit (CGU), may be impaired at each
reporting date. Should there be an indication that an asset may be
impaired then an impairment review should be conducted at the
relevant reporting date.
No current indicators which might lead to a material impairment
have been identified by the directors.
11. Net debt
The components of the Group's net debt are as follows:
30 June 30 December 30 June
2023 2022 2022
GBPm GBPm GBPm
Current assets
Cash and short-term deposits 964.6 658.5 465.5
Current liabilities
Interest bearing loans and borrowings (613.1) (424.9) (131.8)
Non-current liabilities
Interest bearing loans and borrowings (2,567.9) (2,689.1) (2,271.0)
Accounting net debt (2,216.4) (2,455.5) (1,937.3)
Cash held on behalf of customers (196.5) (200.5) (194.9)
Fair value swaps held against debt instruments (30.0) (6.5) 84.0
Other debt related items(*) 124.9 193.6 114.9
Adjusted net debt (2,318.0) (2,468.9) (1,933.3)
Lease liabilities (275.9) (280.9) (276.3)
Net debt including lease liabilities (2,593.9) (2,749.8) (2,209.6)
(* Other debt related items include balances held with payment
service providers, deposits, and similar items.)
12. Business combinations
Business combinations are accounted for using the acquisition
method. Identifiable assets and liabilities acquired, and
contingent liabilities assumed in a business combination are
measured at their fair values at the acquisition date. The
identification and valuation of intangible assets arising on
business combinations is subject to a degree of judgement. We
engaged independent third parties, including Kroll, to assist with
the identification and valuation process. This was performed in
accordance with the Group's policies. The excess of the cost of
acquisition over the fair value of the Group's share of the
identifiable assets acquired is recorded as goodwill. Costs related
to the acquisition are expensed as incurred.
Due to the timing of certain acquisitions in relation to the
previous financial year end, the fair values applied to the
goodwill acquired was considered to be provisional. Since the
initial fair value, certain measurement period adjustments have
been applied as follows:
SuperSport
Hindsight adjustment
The initial value of goodwill recognised was GBP518.8m on
acquisition. Subsequent to this a measurement period adjustment has
been applied to increase the goodwill by GBP6.8m, increase licences
by GBP0.4m, increase trade-marks & brand names by GBP0.4m,
decrease customer relationships by GBP5.8m, and increase other
liabilities by GBP1.8m.
Due to these measurement period adjustments, in line with IFRS 3
'Business Combinations' it has been necessary to present a restated
2022 balance sheet and related notes to the accounts for those
balances affected.
Transactions with minority holders
During the period, the Group received by way of an equity
injection into Entain Holdings (CEE) Limited GBP42.6m from EMMA
GAMMA in relation to their 25% share of the 2022 earn-out under the
SuperSport acquisition. In addition, the Group also received
GBP86.4m by the way of another equity injection in Entain Holdings
(CEE) Limited from EMMA GAMMA for the pre-steps in anticipation of
the acquisition of STS. As EMMA GAMMA holds a put option over its
equity, which is enforceable on the Group from November 2025, a
financial liability equivalent to the equity injection has been
recognised in the first half to reflect the future liability
against reserves. Following these two transactions, the 75%:25%
equity split has been maintained.
Summary of acquisitions in the period:
Given the proximity of the acquisitions to the period end and as
permitted by IFRS 3 'Business Combinations', the fair value of the
acquired identifiable assets and liabilities has been presented on
a provisional basis. Fair values were determined on the basis of an
initial assessment performed by an independent professional
expert.
TAB NZ
On 1(st) June, the Group completed the acquisition of a business
(NZ Ent Limited) entitled to run the TAB NZ brand in New Zealand
for 25 years for an initial payment of GBP85m. As part of the
acquisition, the Group has also committed to make minimum
guaranteed funding payments to TAB NZ in the first 5 years post
completion, with further contingent payments due up to and
including year 25. As there are no ongoing obligations or service
requirements on the selling party, these payments have been deemed
to form part of consideration under IFRS 3 rather than ongoing
deductions on profits. As such, the provisional, discounted,
estimate of consideration for the TAB NZ acquisition is
GBP1,208.5m.
In accordance with IFRS 3, as control has been obtained, the
business has been consolidated from the point of acquisition.
Details of the purchase consideration, the net assets acquired
and goodwill of the TAB NZ acquisition are as follows:
Provisional
fair value
GBPm
Intangible assets (excluding goodwill) 959.8
Property, plant and equipment 20.4
Trade and other receivables 9.8
Cash and cash equivalents 24.4
Deferred tax a sset 297.0
Deferred tax liability (237.4)
Trade and other payables (44.6)
Lease liabilities (14.4)
Total 1,015.0
Net assets acquired 1 ,015.0
Goodwill 1 93.5
Total net assets acquired 1,208.5
Consideration:
Cash 85.3
Non-controlling interests -
Deferred and contingent consideration 1,123.2
Total consideration 1,208.5
BetCity
On 11(th) January, the Group acquired 100% of the share capital
of BetCity for initial consideration of EUR305m, including working
capital adjustments, with further contingent amounts payable in
2024 and beyond subject to financial performance. Based on
financial forecasts at the point of acquisition, total discounted
consideration has been assessed as EUR362m. Amounts payable are
capped at EUR550m.
In accordance with IFRS 3, as control has been obtained, the
business has been consolidated from the point of acquisition.
365Scores
On 30(th) March, the Group acquired 100% of the share capital of
365Scores for $157m including working capital adjustments, with
further contingent payments payable subject to the achievement of
certain financial targets capped at $10m. Based on financial
forecasts at the point of acquisition, total discounted
consideration has been assessed as $161m.
In accordance with IFRS 3, as control has been obtained, the
business has been consolidated from the point of acquisition.
Tiidal Gaming
On 9(th) June, the Group acquired 100% of the share capital of
Tiidal Gaming for GBP7.8m. There are no contingent consideration
elements in the acquisition.
In accordance with IFRS 3, as control has been obtained, the
business has been consolidated from the point of acquisition.
Business combinations
Details of the purchase consideration, the net assets acquired
and goodwill on the acquisition of BetCity, 365Scores and Tiidal
Gaming are as follows:
Provisional
fair value
GBPm
Intangible assets (excluding goodwill) 211.7
Property, plant and equipment 1.7
Trade and other receivables 24.5
Cash and cash equivalents 18.8
Deferred tax asset 0.6
Deferred tax liability (53.0)
Trade and other payables (42.7)
Lease liabilities (1.0)
Total 160.6
Net assets acquired 160.6
Goodwill 298.6
Total net assets acquired 459.2
Consideration:
Cash 381.9
Non-controlling interests -
Deferred and contingent consideration 77.3
Total consideration 459.2
The acquired businesses contributed revenues of GBP101.9m and
profit before tax of GBP7.7m pre the effect of any fair value
adjustments to the Group for the period post acquisition up to 30
June 2023. If the acquisitions had occurred on 1 January 2023,
consolidated proforma revenue and net profit for the period ended
30 June 2023 would have been GBP189.3m and GBP36.2m respectively
before the effect of fair value adjustments and deal related
costs.
13. Note to the statement of cash flows
Six months Six months
ended ended
30 June 30 June
2023 2022
GBPm GBPm
(Loss)/profit before tax from continuing operations (448.1) 39.5
Net finance expense 22.1 94.1
(Loss)/profit before tax and finance expense
from continuing operations (426.0) 133.6
Loss before tax and net finance expense from
discontinued operations (3.7) (3.1)
(Loss)/profit before tax and net finance expense
including discontinued operations (429.7) 130.5
Adjustments for:
Impairment (note 10) - 2.2
Depreciation of property, plant and equipment 67.5 60.2
Amortisation of intangible assets 177.5 104.5
Share-based payments charge 9.1 5.2
Decrease in trade and other receivables 5.9 108.0
Increase/(decrease) in trade and other payables 36.2 (35.4)
Increase/(decrease) in other financial liabilities 0.5 (7.8)
Increase/(decrease) in provisions 584.1 (1.1)
Share of results from joint ventures and associates 48.1 106.1
Other non-cash items (1.3) (1.5)
Cash generated by operations 497.9 470.9
14. Related party transactions
During the period, Group companies entered into the following
transactions with related parties who are not members of the
Group:
Six months Six months
ended ended
30 June 30 June
2023 2022
GBPm GBPm
Equity investment
- Joint venture (1) 40.7 113.1
Sundry income
- Associates (2) 10.9 -
Sundry expenditures
- Associates (2) (36.2) 1.8
1. Equity investment in BetMGM.
2. Payments in the normal course of business made to Sports
Information Services (Holdings) Limited, Infiniti Gaming Knokke NV,
Grand Casino de Dinant SA, and Leaderbet NV.
The following table provides related party outstanding
balances:
30 June 31 December 30 June
2023 2022 2022
GBPm GBPm GBPm
--------
* Joint venture receivables 77.4 87.8 29.3
- Associates payables (6.0) (0.3) (0.3)
- Associates receivables 4.2 4.4 -
--------
15. Financial instruments
Details of the Group's borrowing are set out in note 11.
Fair value of financial instruments
The major component of the Group's derivative financial assets
measured at fair value consist of currency swaps held against debt
instruments of GBP70.4m (30 June 2022: GBP84.0m, 31 December 2022:
GBP72.9m). The fair value of the Group's other financial assets at
30 June 2023 is not materially different to its original cost.
The major components of the Group's financial liabilities
measured at fair value consist of; the Group's currency swap
liability GBP100.4m (30 June 2022: GBPnil, 31 December 2022:
GBP79.2m), discounted deferred and contingent consideration of
GBP1,245.9m (30 June 2022: GBP45.2m, 31 December 2022: GBP254.9m)
principally on TAB NZ which has been discounted at rates relevant
to the local market, put option liabilities of GBP309.0m on Entain
Holdings (CEE) Limited ( 30 June 2022: GBPnil, 31 December 2022
GBP187.2m), ante post liabilities of GBP13.0m (30 June 2022:
GBP17.2m, 31 December 2022: GBP17.2m) and other financial
liabilities of GBP10.5m ( 30 June 2022: GBP2.8m, 31 December 2022:
GBP2.9m).
Financial assets and financial liabilities measured at fair
value in the Statement of Financial Position are grouped into three
levels of a fair value hierarchy. The three levels are defined on
the observability of significant inputs to the measurement, as
follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly; and
-- Level 3: inputs for the asset or liability that are not based on observable market data.
There are no reasonably probable changes to assumptions or input
that would lead to material changes in the fair value determined,
although the final value will be determined by future sporting
results.
The Group's financial assets and liabilities that are measured
at fair value after initial recognition fall under the 3 levels of
the fair value hierarchy as follows:
-- Level 1 - GBP4.9m assets (30 June 2022: GBP0.4m, 31 December
2022: GBP5.5m), and GBPnil liabilities (30 June 2022: GBPnil, 31
December 2022: GBPnil).
-- Level 2 - GBP72.2m assets (30 June 2022: GBP86.2m, 31
December 2022: GBP74.7m), and GBP100.4m liabilities (30 June 2022:
GBPnil, 31 December 2022: GBP79.2).
-- Level 3 - GBP8.0m assets (30 June 2022: GBP9.6m, 31 December
2022: GBP5.4m), and GBP1,261.6m liabilities (30 June 2022:
GBP65.2m, 31 December 2022: GBP278.9m).
16. Provision for HMRC settlement
During the period, the Group has taken a GBP585.0m provision in
respect of its ongoing deferred prosecution agreement (DPA)
negotiations with the Crown Prosecution Service (CPS).
The Company previously announced an investigation by HMRC into
its legacy Turkish facing business, which it sold in 2017, and
subsequently announced that it is in DPA negotiations with the CPS
to resolve the ongoing HMRC investigation.
The DPA negotiations have now progressed to the point where the
Company believes that it is likely to be able to agree a resolution
of the HMRC investigation insofar as it relates to the Company and
the Group. While the full terms of a DPA are subject to judicial
approval, the Company has a sufficient degree of confidence to take
a provision of GBP585.0m against a potential settlement, which
would be paid over a four-year period in relation to alleged
offences under Section 7 of the Bribery Act 2010. The Company
currently anticipates judicial approval will be sought during Q4
2023.
Section 7 of the Bribery Act 2010 relates to the failure of a
relevant commercial organisation to have adequate procedures in
place designed to prevent persons associated with it from
undertaking bribery for the benefit of the commercial
organisation.
The amount of the provision has been calculated on the basis
that the Company will receive full credit for its extensive
co-operation with the investigation prior, and subsequent, to
entering into any DPA.
Since the investigation first commenced, the Group has
undertaken a comprehensive review of anti-bribery policies and
procedures and has taken decisive action to significantly
strengthen its wider compliance programme and related controls.
17. Contingent liabilities
Greek tax
In November 2021, the Athens Administrative Court of Appeal
ruled in favour of the Group's appeal against the tax assessment
raised by the Greek tax authorities in respect of 2010 and 2011. In
February 2022, the Greek tax authorities appealed against the
judgements to the Greek Supreme Administrative Court. While the
Group expects to be successful in defending the appeal by the Greek
authorities, should the Greek Supreme Administrative Court rule in
favour of the Greek tax authorities, then the Group could become
liable for the full 2010-2011 assessment plus interest, an
estimated total of EUR275m at 30 June 2023.
18. Subsequent events
STS
On 13 June 2023, the Group launched a Tender Offer, through
Entain CEE, to acquire 100% of STS Holdings S.A ("STS") at a
purchase price of PLN 24.80 per share, valuing the equity of STS at
approximately GBP750m and an enterprise value of GBP690m. As part
of the acquisition, the current majority shareholder in STS will
acquire a 10% economic stake in the enlarged Entain CEE business.
The net consideration payable by Entain will be approximately
GBP450m.
On 12 July 2023, the Group announced that it had received
Antitrust approval for the acquisition of STS with the acceptance
period for the offer now expected to close later in August ahead of
completing the transaction shortly thereafter.
New term loans and loan notes redemption
On 18 July 2023, the Group finalised its issuance of two new
term loans for EUR230m and $385m respectively. Upon receipt, the
Group used GBP407m of the net proceeds to repay the Group's loan
notes and accrued interest that were due for repayment in September
2023.
INDEPENT REVIEW REPORT TO ENTAIN PLC
Conclusion
We have been engaged by Entain plc ("the Company") to review the
condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2023 which comprises the
condensed consolidated income statement, condensed consolidated
statement of comprehensive income, condensed consolidated balance
sheet, condensed consolidated statement of changes in equity,
condensed consolidated statement of cash flows and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
and the Disclosure Guidance and Transparency Rules ("the DTR") of
the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Mark Flanagan
for and on behalf of KPMG LLP
Chartered Accountants
EastWest
Tollhouse Hill
Nottingham
NG1 5FS
10 August 2023
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August 10, 2023 02:00 ET (06:00 GMT)
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