For Release at 7.00am
7 March 2024
THIS ANNOUNCEMENT CONTAINS
INFORMATION THAT QUALIFIES AS INSIDE INFORMATION
Entain
plc
("Entain" or the "Group")
FY23
results in line with expectations
Improving operational execution to deliver growth
Entain plc (LSE: ENT),
the global sports betting and gaming group, is
pleased to announce its results for the year ended 31 December
2023.
Key Highlights:
· Total Group Net Gaming Revenue ("NGR"), including 50% share
of BetMGM, up +14% (+14%cc2),
+2%cc2 on a proforma3 basis
· Reported1 Group NGR (excluding US)
up +11% (+11%cc2),
-2%cc2 on a proforma3 basis
· Online NGR up +12% (+12%cc2),
-3%cc2 on a proforma3 basis
o Excluding regulatory impacts, underlying
proforma3 Online NGR growth of
+3%cc2
o Record level of Online
active customers, +23% YoY, +10% proforma3
· Retail NGR up +9% (+8%cc2),
proforma3 +2%cc2,
reflecting the acquired shops in New Zealand and Poland, and the
continued strength of the retail estate
· BetMGM delivered a good performance through the
year
o 2023 NGR of $1.96bn, +36% year on year4,5 at the
top end of expectations
o 14%6 market share in sports betting and iGaming in
the markets where BetMGM operates
o Product and technology enhancements including Single Account
Single Wallet ("SASW")
o Achieved positive EBITDA for H2 2023
· Further expansion into regulated markets with leading market
positions:
o Entain CEE expansion with acquisition of STS Holdings, the
leading sports betting operator in Poland, to further unlock the
region's significant growth opportunities
o 25 year partnership with TAB NZ providing unique access to
the New Zealand sports betting market
· Enhancement of inhouse content and capabilities with
acquisitions of 365Scores and Angstrom Sports
· Deferred Prosecution Agreement (DPA) resolution to the HMRC
investigation into Entain's legacy Turkish facing business, which
was sold in 2017
· Announced revised strategic priorities; focusing on driving
organic growth, expanding online margins, and increasing US market
share
Financial Highlights:
· Reported Group EBITDA7 up 1% at £1,008m
·
Group EBITDA7,8, pre TAB NZ accounting, in
line with expectations at £974m, down -2% year on year:
o Online
EBITDA7,8 of £830m, in line
with 2022 (Reported Online EBITDA7 up 4% at
£857m)
o Retail EBITDA7,8 of
£277m, down -1% (Reported Retail EBITDA7 up 1% at
£284m)
· Group profit after tax9 before separately
disclosed items was £339m
· Group loss after tax was £879m, reflecting the DPA settlement
and impairment charges primarily related to the Australia
operations being impacted by point of consumption tax
increases
· Adjusted diluted EPS10 of 44.2p
· Second Interim Dividend of £56.5m
(8.9p per share) announced, bringing the
total dividend for the year to £113m (17.8p per share)
· Robust management of balance sheet with year end adjusted net
debt11 of £3,291m and leverage at 3.3x (3.1x on a
proforma3 basis)
Sustainability Highlights:
· New
sustainability strategy including an updated regulatory and safer
gaming charter
· Only
global operator with 100% revenue from regulated or regulating
markets
· Continued recognition across ESG agenda; maintaining MSCI's
AA rating and inclusion in FTSE4Good and Dow Jones Sustainability
indices, awarded responsible operator awards by EGR, SBC and
Vixio
Capital Allocation Committee
In line with our announcement on 2
November 2023, the recently formed Capital Allocation Committee has
commenced a review of Entain's markets, brands and verticals. The
objectives of the review are to help focus the organisation,
improve competitive positions in core markets and maximise
shareholder value.
Dividend
In line with the Group's progressive
dividend policy, the Board proposed a total dividend for 2023 of
£113m, to be paid to shareholders in equal instalments with H1 and
FY results. As such, a second interim dividend of £56.5m (8.9p per
share) is expected to be paid on 26 April 2024 to shareholders on
register on 15 March 2024.
Current trading and outlook
Year to date, the Group is trading
in line with expectations. In Brazil we are seeing early signs of
benefits from the improvements we initiated through 2023, and in
the US, BetMGM's nationwide app is now live in Nevada and we look
forward to introducing Single Account Single Wallet ("SASW")
functionality in the state later this year as well as delivering
further product improvements.
As we look ahead for the balance
of the year, we expect significant regulatory changes in two of our
larger markets:
· In
the UK, we are delighted to see the long-awaited regulatory review
draw closer to conclusion. We look forward to the implementation of
stake caps on online slot games and a potential agreement on
uniform safer gambling measures across the market. While we expect
these changes to be a positive for Entain in the long run, we may
see continued player disruption over the short term, and with
leading brands we may see opportunities for us to invest in
marketing to grow market share.
· In
the Netherlands the KSA has recently proposed tighter deposit
limits from Q2 2024 which have the potential to impact 2024
EBITDA
As a result, we expect that, in
aggregate, these dynamics could reduce FY24 EBITDA by approximately
£40m.
We continue to deliver on our
refocused strategic priorities and are making clear strides in
identifying and executing product and technology developments to
improve customer acquisition and retention. Project Romer remains
on track, to simplify our operations, improve efficiency and
deliver £70m of net run rate cost savings by 2025.
Barry Gibson, Chairman of Entain,
commented:
"2023 was a period of necessary,
but ultimately positive, transition for Entain. We have
significantly strengthened the quality of our revenue base,
enhanced our Board, and delivered a resolution to a critical,
historic, regulatory issue.
We are making positive progress in
our search for a new permanent CEO, and in the meantime Stella is
driving the business as it continues to take appropriate actions to
deliver changes to drive a better long term performance. We are
also making good progress in adding to our Board strength - Ricky
Sandler and Amanda Brown joined the Board in recent months and we
expect to announce a further appointment shortly.
As our transformation continues
the newly formed capital allocation committee has commenced a
review of Entain's markets, brands and verticals. The objectives of
the review are to help focus the organization, improve competitive
positions and maximize shareholder value."
Stella
David, Interim CEO of Entain, commented:
"2023 presented a number of
challenges for the Group, both industry-wide and Entain-specific. I
am extremely proud of how our people around the world came together
to navigate the business through an eventful and at times difficult
year. Against that backdrop, Entain was still able to deliver
overall revenue growth of 14% including our US joint venture
achieving revenue at the top end of expectations.
We have started the new financial
year with a clear plan to accelerate our operational strategy, and
are making pleasing progress across a range of initiatives to
re-focus our market portfolio, prioritise organic growth, drive our
share in the US, and expand our margins. We are entirely focused on operational excellence and
outstanding execution and, as a result, are confident that we are
on a pathway to delivering future growth. We remain confident that
our continued focused execution will drive organic growth into 2025
and beyond."
FY2023
Financial performance: 1 January to 31 December 2023
Group
|
Reported1
|
Year ended 31 December
|
2023
|
2022
|
Change
|
CC2
|
|
£m
|
£m
|
%
|
%
|
Net gaming revenue (NGR)
|
4,833.1
|
4,348.9
|
11%
|
11%
|
Revenue
|
4,769.6
|
4,296.9
|
11%
|
11%
|
Gross profit
|
2,907.0
|
2,714.7
|
7%
|
|
Underlying
EBITDA7
|
1,007.9
|
993.2
|
1%
|
|
Underlying operating
profit9
|
641.8
|
541.8
|
18%
|
|
Underlying profit before
tax9
|
444.9
|
321.8
|
|
|
Profit after tax9 pre
separately disclosed items
|
339.1
|
223.9
|
|
|
(Loss)/Profit after tax
|
(878.7)
|
32.9
|
|
|
Basic EPS (p)
|
(141.4)
|
6.4
|
|
|
Continuing adjusted diluted
EPS10 (p)
|
44.2
|
60.5
|
|
|
Continuing adjusted diluted EPS
excl US10 (p)
|
51.0
|
93.2
|
|
|
Dividend per share (p)
|
17.8
|
17.0
|
|
|
FY2023
Trading performance: 1 January to 31 December 2023
|
FY2023: 1 January to 31
December 2023
|
|
Total
NGR
|
Sport
Wagers
|
Sports
Margin
|
|
|
Reported1
|
CC2
|
Proforma
CC2,3
|
Reported1
|
CC2
|
|
|
|
|
|
|
|
|
|
|
Online
|
|
|
|
|
|
|
|
Sports
|
6%
|
7%
|
(9%)
|
(3%)
|
(2%)
|
+0.8pp
|
|
Gaming
|
17%
|
15%
|
2%
|
|
|
|
|
Total Online
|
12%
|
12%
|
(3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
9%
|
8%
|
2%
|
12%
|
11%
|
+0.6pp
|
|
|
|
|
|
|
|
|
|
Total Group (ex US)
|
11%
|
11%
|
(2%)
|
|
|
|
|
BetMGM
|
35%
|
36%
|
|
|
|
|
|
Total Group inc 50% of BetMGM
|
14%
|
14%
|
2%
|
|
|
|
|
Q4 2023
Trading performance: 1 October to 31 December 2023
|
Q4 2023: 1 October to 31
December 2023
|
|
Total
NGR
|
Sport
Wagers
|
Sports
Margin
|
|
Reported1
|
CC2
|
Proforma
CC2,3
|
Reported1
|
CC2
|
|
|
|
|
|
|
|
|
Online
|
|
|
|
|
|
|
Sports
|
12%
|
15%
|
(12%)
|
1%
|
4%
|
+0.7pp
+0.1pp
PF
|
Gaming
|
9%
|
10%
|
(1%)
|
|
|
|
Total Online
|
12%
|
14%
|
(6%)
|
|
|
|
|
|
|
|
|
|
|
Retail
|
7%
|
7%
|
(2%)
|
9%
|
9%
|
+1.4pp
|
|
|
|
|
|
|
|
Total Group (ex US)
|
10%
|
11%
|
(5%)
|
|
|
|
BetMGM
|
21%
|
29%
|
|
|
|
|
Total Group inc 50% of BetMGM
|
12%
|
14%
|
(1%)
|
|
|
|
Notes
(1) 2023 and 2022 statutory
results are audited, with the tables presented relating to
continuing operations and including both statutory and
non-statutory measures
(2) Growth on a constant
currency basis is calculated by translating both current and prior
year performance at the 2023 exchange rates
(3) Proforma references include
all 2022 and 2023 acquisitions as if they had been part of the
Group since 1 January 2022
(4) As reported in unaudited
FY2023 results on 8 February 2024
(5) BetMGM revenues comprise of
sports (Online and Retail) and iGaming revenues
(6) Market share for last three
months ending November 2023 by GGR, including only US markets where
BetMGM was active; internal estimates used where operator-specific
results are unavailable
(7) EBITDA is earnings before
interest, tax, depreciation and amortisation, share based payments
and share of JV income. EBITDA is stated pre-separately disclosed
items
(8) Presented as if revenue
share payments of c£34m, which form part of the partnership
arrangement with TAB NZ, were treated as a cost of sale rather than
forming part of acquisition consideration
(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 9 in the financial statements)
(11) Adjusted net debt excludes
the DPA settlement of £585.0m. Leverage also excludes any benefit
from future BetMGM EBITDA or the payments due to acquire the
minority interests in Entain CEE
Enquiries:
Presentation and
webcast
Entain will host a Full Year 2023
Results presentation and Q&A session today, Thursday
7th March at 9:30am GMT, at LSEG, 10 Paternoster Square,
London, EC4M 7LS.
Analysts and investors may attend
in person, having pre-registered via the
In-person registration link, or
alternatively join via webcast link:
ENTFY23 results presentation
The presentation slides as well as
a replay and transcript will be available on our
website:
https://entaingroup.com/investor-relations/results-centre/
Upcoming
dates:
Q1 Trading Update:
17 April 2024
Annual General Meeting
24
April 2024
2024 Interim results:
8 August 2024
Dividend
Timetable
Announcement date:
7 March 2024
Ex-Dividend date
14 March 2024
Record date:
15 March 2024
Payment date:
26 April 2024
Inside
Information
This announcement contains
information that qualifies as inside information within the meaning
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 as it
forms part of English law by virtue of the European Union
(Withdrawal) Act 2018. The person responsible for releasing
this announcement on behalf of the Company is Simon Zinger, General
Counsel. Upon the publication of this announcement via a
regulatory information service, this inside information is now
considered to be in the public domain.
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, STS, SuperSport and TAB NZ; 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 30
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'S
REVIEW
Entain is a leading sports betting
and gaming business, operating in a global industry with attractive
dynamics and structural growth. We are the most diversified leader
of scale in our sector, only operating in regulated or regulating
markets. Our strong brands, leading market positions and
increasingly localised offering are supported by in-house
technology and product capabilities.
The Group's strategy is focused on
delivering the most entertaining customer experience supported by
market leading-player protection to deliver quality growth and
sustainable returns for our shareholders.
While 2023 presented many
challenges and our performance in some of our markets was behind
our expectations, overall we made good strategic progress. We
re-shaped our geographic footprint enabling us to focus on
leadership positions in regulated or regulating markets, broadened
our customer engagement and continued to implement leading player
safety measures. We also secured a conclusion to a material
overhanging legacy issue.
Reflecting the significant
progress made in re-focusing our business, in November 2023 we
revised our strategic ambitions, focusing on key objectives and
priorities for the next three years that will drive shareholder
value.
One of these changes has been
leadership. I have been on Entain's board as Senior Independent
Director since March 2021 and was honoured to accept the role of
Interim CEO. Although my appointment is on an interim basis, the
business will not be treading water. We have clear targets to
deliver. I will focus on driving the execution of our revised
strategic priorities until the appointment of a new, permanent,
CEO.
Performance in
2023
During 2023, we achieved total
revenue growth of 14%, including our 50% share in BetMGM, in spite
of operational and regulatory challenges. We expanded into the
regulated markets of Croatia, Poland and New Zealand as well as
adding to our capabilities with the acquisitions of 365Scores and
Angstrom.
Entain's operations now span over
30 regulated or regulating territories, with established brands
supporting leading positions in many of our markets. Regulation
remains an over-arching factor in our industry and for the Group's
performance. Clear regulatory frameworks that are appropriate and
well enforced, are positive for us and our customers. However, in
the short term, they can create headwinds as significant changes
are put in place and uneven implementation can occur ahead of
consistent enforcement.
FY2023 Online Net Gaming
Revenue YoY
|
|
FY2023 Retail Net Gaming
Revenue YoY
|
|
CC2
|
Proforma3 CC2
|
|
|
CC2
|
Proforma3 CC2
|
Online / Online
ex-regulation
|
12%
|
(3%) / 3%
|
|
Total Retail
|
8%
|
2%
|
Group Online inc. 50%
BetMGM
|
16%
|
-
|
|
UK / UK LFL
|
(1%)/2%
|
-
|
UK / UK
ex-regulation
|
(6%)/
4%
|
-
|
|
Italy
|
16%
|
-
|
Australia
|
(6%)
|
-
|
|
Belgium
|
10%
|
-
|
Italy
|
3%
|
-
|
|
Entain CEE (Croatia &
Poland)
|
-
|
4%
|
Brazil
|
(14%)
|
-
|
|
New
Zealand
|
-
|
(7%)
|
Entain
CEE (Croatia & Poland)
|
-
|
13%
|
|
|
|
|
Netherlands
|
N/A
|
(12%)
|
|
|
|
|
New
Zealand
|
|
Flat
|
|
|
|
|
Georgia
|
7%
|
-
|
|
|
|
|
Germany
|
(26%)
|
-
|
|
|
|
|
Other
|
-
|
3%
|
|
|
|
|
During 2023, we managed regulatory
change in a number of our larger markets, impacting headline
organic performance. The most notable
being our implementation of ever-tightening UK affordability
measures and the persistent lack of impactful regulatory oversight
in Germany. We estimate the aggregate of regulatory impacts was a
negative 6ppt headwind to Online NGR performance in 2023. As a
result, proforma3 organic Online NGR
was down 3%cc2 versus the prior
year, whilst proforma3 Retail NGR grew
2%cc2. Total Group NGR,
including our 50% share of BetMGM was up 14% and up
2%cc2 on a
proforma3 basis.
We also continued to improve the
sustainability of our business, ensuring more diversified,
sustainable and ultimately higher quality earnings. We achieved
another record level of active customers, with
proforma3 actives +10%,
demonstrating the underlying strength in our core business as well
as our broadening, more recreational customer base.
In the UK, Online NGR was down 6%,
reflecting the ongoing digestion of regulatory changes. We estimate
that we experienced a headwind of approximately c10ppt to our
Online NGR growth. Unfortunately, this drag did not ease during H2
as we expected due to the imposition of further affordability
measures. The iterative imposition of cumulative safer gambling
measures throughout 2023 has resulted in overly complex journeys
for our customers. We continue to believe that restrictions should
be personal and appropriate for each customer, however, we must
ensure the experience for our customers is smooth. In the short
term we expect that the measures currently in place will continue
to weigh on performance. However, we are encouraged that our
industry and regulator are working together to agree a pragmatic
framework for customer safer gambling checks. If implemented as
currently anticipated, these will provide a clear and consistent
approach to player protection for customers across all operators in
the UK. Our focus remains firmly on acquisition and retention of
customers to grow market share. In 2023 we grew UK online actives
by +18% driven by continued customer engagement with exciting
marketing campaigns, new product releases and wider offering
enhancements.
UK Retail NGR was up +2% on a
LFL4 basis with a good
performance in both sports and gaming across both machines and OTC.
Our strong performance is underpinned by our market leading retail
offering reaching a broader demographic of customers supported by
exclusive and in-house content coupled with digital in-shop
experiences.
Our business in Italy continues to
perform well, with online NGR up +3%cc2 versus 2022. The
underlying market growth remains strong and omni-channel operators
continue to outperform. Despite increased competitive activity,
Eurobet, bwin and GiocoDigitale grew actives +13% by leveraging our
onmi-channel proposition, brand strength and ongoing investment in
our products. Retail NGR was up +16%cc2 and the retail
shop network remains invaluable to our omni-channel offering, with
combined Online and Retail NGR +63%cc2 versus pre-Covid
levels.
Combined Online NGR in Australia
and New Zealand was up 11%cc2, although down
-5%cc2 on a proforma3 basis. In Australia, whilst we experienced a softer market
along with increased competition, our Ladbrokes and Neds brands
continue to deliver unique content and engaging products. Entain
Australia's partnership with TAB NZ also provides a broader
differentiated experience for sports betting customers in New
Zealand as well as Australia, and we look forward to customers in
New Zealand enjoying an enhanced experience as our offer migrates
to Entain Australia's technology platform in 2024.
Our NGR in Brazil was down
14%cc2 year on year reflecting our disappointing
operational execution in early 2023. We installed a new management
team, taking swift action to realign customer acquisition channels,
payment processing and product engagement, and are pleased to be
seeing positive signs from the impact of these actions taken. As
the Brazilian sports betting and gaming regulation progresses
towards licencing during 2024 the market will remain intensely
competitive. However, we remain excited for our Brazilian business
and believe we are well positioned in this fast growing regulated
market. Sportingbet remains a strong brand and we are focused on
rebuilding market share growth, leveraging an improved app
experience, product innovation, as well as our 365Scores
acquisition supporting growth going forward.
Entain's CEE business continues to
perform strongly, maintaining its market leadership with the
SuperSport brand in Croatia and expanding our presence across the
CEE region with the acquisition of STS Holdings in Poland.
Proforma3 NGR was up
13%cc2 for Online and 4%cc2 for Retail on a
constant currency basis. SuperSport proforma3 Online NGR grew 29%cc2 benefitting from its
leading omni-channel offering and its first to market cashout
offering, whilst STS Online NGR was flat year on year, reflecting
its sports only offering impacted by customer friendly sporting
results in October offsetting prior growth.
Our Crystalbet brand remains the
market leader in Georgia and continues to perform well. Online NGR
grew +7%cc2, reflecting the strength of our operations
and brand, and sees us well positioned as the market digests
increases in online gaming taxes and licence costs in
2024.
Enlabs continues to perform well,
with profoma NGR +3%cc2 despite some markets in the
Baltics and Nordics experiencing more challenging economic
environments. Enlabs delivered +13% growth in active customers
supported by localised offering of sports and gaming
products.
In Germany, we continue to see the
impact of new regulatory measures alongside limited regulatory
enforcement. Despite some unregulated operator exits during 2023,
the uneven operating landscape remains a significant challenge to
licenced operators adhering to regulation. Our Online NGR for
Germany declined year on year. However, our bwin brand continues to
be strong and we remain positive on the German market's long-term
prospects, but regulatory enforcement is critical.
During 2023, we added further
capabilities to evolve our offering and customer engagement
further. Our acquisitions of 365Scores and Angstrom Sports enable
us to expand our content, data and analytical capabilities, and
ultimately enhance our customer's experience.
365Scores is one of the world's
leading sports apps providing highly engaged sports fans real time
action and results. Its access, content and data insights are a key
part of how we are reinvigorating our offering in Brazil and
addressing this exciting regulating growth opportunity.
Arguably the most significant for
our business, particularly for the US opportunity and BetMGM's
performance, was our acquisition of Angstrom Sports. Angstrom will
provide next generation sports modelling, forecasting and data
analytics. BetMGM is already seeing benefits from offering
customers more betting markets and more accurate pricing. With this
addition, Entain will become the only global operator with a full
in-house suite of end-to-end analytics, risk and pricing
capabilities for US sports betting products.
We are excited to build on
BetMGM's momentum and successes during 2023. Its
performance inline with targets and achievement
of H2 EBITDA profitability validates our business model and sees
BetMGM in position to be self funded going forward.
BetMGM is established as one of
the leaders in the fast-growing, highly competitive US sports
betting and iGaming market. In 2023, BetMGM continued delivering
good growth, with NGR up 36% to $1.96 billion and achieved
profitability over the latter three quarters of the year. Our
products are available in 28 markets with a combined market share
of 14%5 in sports betting and iGaming across the
US.
BetMGM also made fantastic
progress against key strategic initiatives, solidifying the
foundations for 2024 and beyond. As well as delivering substantial
enhancements to our app features, design and speed, the seamless
execution of SASW functionality across 21 states was the most
significant upgrade to BetMGM's customer experience. BetMGM players
can now travel across these states, betting with the same account
credentials and wallet. We have already seen improved retention
KPIs, a 5x increase in new state bettors who had previously played
with BetMGM in a different state, with multi-state customers now
representing over 20% NGR. Together with our partner, MGM Resorts
International, we look forward to unlocking this powerful
differentiator for BetMGM customers in Nevada, with state
regulator's approval of our SASW functionality expected during
2024.
Revised strategic
priorities
The Group has been transformed
over the last four years since becoming Entain, delivering an
improved sustainable business only operating in regulated or
regulating markets. In November 2023 we updated our corporate
strategy, focusing on three strategic objectives to deliver value
for our shareholders as the next phase of our
transformation:
• Drive organic
growth
• Expand online
margins
• Empower growth in
US
Drive Organic Growth - We are
rebalancing our portfolio to prioritise growth and returns, exiting
smaller markets where the timeframe for suitable returns is too
long, such as Chile, Peru, Zambia and Kenya. In addition, we have
closed our B2C operations of Unikrn and are focusing on delivering
the Unikrn eSports offer through our existing sports betting and
gaming brands.
We are refocusing our operational
execution on customer acquisition and retention, by reinvigorating
our acquisition channels and accelerating technology and product
delivery. In two of our markets, UK & Brazil we see significant
opportunities to drive value through our commercial excellence
programme, including, simplified and streamlined customer journeys,
more effective marketing, improved app experience and products,
especially in sports betting.
Player protection remains embedded
in our ambition to deliver the best experience for customers,
however, our approach must evolve along with our offering, ensuring
it is localised and appropriate for each market.
Margin Expansion - Having
grown rapidly through M&A we now need to focus on simplifying
our operations, removing duplication and enabling greater agility.
Our efficiency programme, Project Romer, will not only improve ways
of working for our teams, but will also unlock efficiencies through
operational streamlining, functional integration and restructuring,
as well as deliver net cost savings of £70m by 2025. Coupled with
maximising our operational leverage we can expand our EBITDA
margins over time, creating better returns for our
shareholders.
US Market Growth - Our focus
to drive our US performance remains a key strategic priority.
BetMGM is established as one of the leaders in this fast growing
highly competitive industry. Much of this success is underpinned by
Entain technology and product capabilities, which have been
significantly strengthened for our US proposition. Entain's
acquisition of Angstrom further accelerates this, particularly for
our parlay and in-play products with Same Game Parlay ("SGP"), SGP+
and new LIVE SGP pricing models. Our strategic roadmap for 2024
sees BetMGM invest behind this strengthening and differentiated
offering. BetMGM's Big Game commercial campaign, as well as
partnership with X, demonstrate the drive behind the brand to
accelerate player acquisition and retention. BetMGM is the only top
three operator with a licenced mobile app live in Nevada. This
advantage will be amplified when BetMGM's single account single
wallet functionality receives licence approval in Nevada. Working
closely with our co-parent, BetMGM will be able to unlock the power
of MGM Resorts unique omni-channel advantages leveraging the Las
Vegas visitor footfall as well as tentpole events for a deep and
replenishing pool of players. We remain committed to empowering
BetMGM as it continues to progress towards delivering c$500m of
EBITDA in 2026.
Sustainability - A key
enabler supporting our growth
In November 2023, we unveiled a
refreshed sustainability charter. This updated charter was informed
by a double materiality assessment we conducted throughout H1 2023,
which identified how sustainability-related issues impact our
business and how we impact the environment in which we operate. Our
charter's four pillar structure encapsulates the sustainability
issues that are most important to Entain, our customers and
partners:
• Be a leader in player
protection
• Provide a secure and trusted
platform
• Create an environment for
everyone to do their best work
• Positively impact our
communities
A
leader in player protection - Our
objective is to be a leader in player protection. In 2023, our
safer gaming programme ARC™ ("Advanced Responsibility and Care")
was rolled out across 22 jurisdictions alongside the continuing
optimisation of ARC™ features. This saw a significant increase in
the volume of interactions and interventions with customers, with
6.1 million ARC™ interactions in 2023, up 121% versus
2022.
In recognition of these efforts,
during 2023 Entain won a number of responsible operator
awards1 including EGR, SBC and Vixio.
At the start of 2024 we updated
our regulatory and safer gaming charter based around four
principles:
• Only operate in regulated
markets or in markets with a clear path to regulating
• Committed to a constructive
and progressive relationship with regulators
• Always comply with in-market
regulation
• Take a market leading
approach to player protection in each market we operate, developing
and using tools to identify & limit customer harm
Provide a secure and trusted platform -
We operate in a highly regulated sector where the
highest ethical standards are critical in maintaining trust with
our customers and wider society - from gold standard data
protection, keeping crime out of betting and gaming, to eliminating
poor working conditions in our supplier base. Through this
strategy, our expectations of ourselves is to exceed these
standards. We have a comprehensive training programme for all our
colleagues across the Group and I am delighted with the completion
rates.
Governance oversight from the
Board is key to ensuring robust execution and accountability across
the business. Further details on these processes are set out in our
Governance report on page 96.
Create an environment for everyone to do their best work
- Ensuring we are able to attract a
broad and diverse pool of the best talent is vital for our success.
We aim to be an employer of choice with an inclusive and supportive
culture, where talents from all backgrounds can flourish. Our
Diversity, Equity and Inclusion (DE&I) strategy is built on
establishing strong networks and having launched the Women@Entain
and Pride@Entain groups in 2022, in 2023 we launched Black
Professionals@Entain, a new network designed to create a culture
where black colleagues can thrive professionally and
personally.
As a technology based employer, we
also recognise the importance of encouraging women to succeed in
the sector. In 2023, Entain partnered with the McLaren F1 team on a
returnship programme, providing unique opportunities for skilled
women to resume their STEM careers. Over six months, 10 career
returners worked at both Entain and McLaren in roles ranging from
Data Analysts to Software Developers. The programme received
accolades, including the Innovator of the Year at the Women in
Gaming Diversity Awards.
Positively impact our communities -
We were proud to be the first betting and gaming
company to formally commit to a Net Zero target for carbon
emissions with the Science-based Targets Initiative (SBTi). This
reflects our ambition to lead the industry on decarbonisation,
along with our commitment to reduce our absolute scope 1 and 2
(market-based) and material Scope 3 emissions by 42% by 2027 and
60% by 2030, from a 2020 base year. In 2023, our Net Zero Action
Group developed our first net-zero strategy to help us achieve
these ambitions.
We also want to make a positive
impact on our communities through the charitable work of the Entain
Foundation. Our flagship Pitching In programme in the UK pioneers
engagement between semi-professional football and local
communities. Our funding of the Trident Community Foundation has
helped to deliver over 100 initiatives to improve the lives of
thousands of people across the country. Last year we also continued
to partner with a range of charities, such as bringing access to
technology with community-based technology hubs in partnership with
ComputerAid as well as delivering support to under privileged
communities in the US with the Charles Oakley
Foundation.
Notes
(1) Awarded; EGR North America
Socially Responsible Operator 2023, SBC Global and SBC LATAM
Socially Responsible Operator of the Year, and Vixio Global
Regulatory Award for Outstanding Contribution to Safer
Gambling
(2) Growth on a constant
currency basis is calculated by translating both current and prior
year performance at the 2023 exchange rates
(3) Proforma references include
all 2022 and 2023 acquisitions as if they had been part of the
Group since 1 January 2022
(4) UK Retail LFL YoY NGR is
calculated based on shops that traded for the full year in both
2023 and 2022
(5) Market share for last three
months ending November 2023 by GGR, including only US 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 constant
currency2, proforma3,
Contribution4 and EBITDA5 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.
CHIEF FINANCIAL OFFICER'S REVIEW
FINANCIAL PERFORMANCE REVIEW
Group
Year
Ended 31 December
|
Results1
|
|
2023
|
2022
|
Change
|
CC2
|
|
£m
|
£m
|
%
|
%
|
NGR
|
4,833.1
|
4,348.9
|
11%
|
11%
|
VAT/GST
|
(63.5)
|
(52.0)
|
(22%)
|
(29%)
|
Revenue
|
4,769.6
|
4,296.9
|
11%
|
11%
|
|
|
|
|
|
Gross
profit
|
2,907.0
|
2,714.7
|
7%
|
|
|
|
|
|
|
Contribution4
|
2,279.4
|
2,128.9
|
7%
|
|
|
|
|
|
|
Operating
costs excluding marketing costs
|
(1,271.5)
|
(1,135.7)
|
(12%)
|
|
|
|
|
|
|
Underlying EBITDA5
|
1,007.9
|
993.2
|
1%
|
|
Share
based payments
|
(21.7)
|
(19.2)
|
(13%)
|
|
Underlying depreciation and amortisation
|
(301.5)
|
(238.1)
|
(27%)
|
|
Share of
JV (loss)/income
|
(42.9)
|
(194.1)
|
78%
|
|
Underlying operating profit6
|
641.8
|
541.8
|
18%
|
|
Results1:
NGR and Revenue increased by +11%
versus 2022 (+11%cc2), with
proforma3 growth in Retail and the benefit of acquisitions more than
offsetting a -3%cc2 proforma3 decline in Online NGR, as we
continue to face regulatory headwinds in both the UK and Germany
and experienced soft trading in Australia and Brazil. Total Online
NGR was +12% ahead of 2022 whilst Retail NGR was +9%
ahead.
Contribution4
in the year of £2,279.4m was +7% higher than 2022
reflecting the increase in NGR, offset by a reduction in
contribution4
margin of -1.8pp, 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 12% higher
due to the impact of acquisitions (8pp), FX (1pp) and underlying
inflation, including wage rate and energy price inflation,
partially offset by the reclassification of costs to cost of sales.
Resulting in underlying EBITDA5 of £1,007.9m, +1% higher
than 2022.
Share based payment charges were
£2.5m higher than last year, while underlying depreciation and
amortisation was 27% higher, reflecting the impact of businesses
acquired in the year (14pp), the annualisation of prior year
acquisitions and continued investment in the business. Share of JV
losses of £42.9m includes an operating loss of £42.0m relating to
BetMGM (2022: £193.9m), which was in line with
expectations.
Group underlying operating
profit6 was +18% ahead of 2022. After charging
separately disclosed items of £1,286.5m (2022: £213.2m), Group
operating loss was £644.7m (2022: profit of 328.6m).
Online
Year
Ended 31 December
|
Results1
|
|
2023
|
2022
|
Change
|
CC2
|
|
£m
|
£m
|
%
|
%
|
|
|
|
|
|
Sports wagers
|
13,724.5
|
14,090.5
|
(3%)
|
(2%)
|
|
|
|
|
|
Sports margin
|
13.7%
|
12.9%
|
0.8pp
|
|
|
|
|
|
|
Sports NGR
|
1,531.0
|
1,443.7
|
6%
|
7%
|
Gaming NGR
|
1,837.6
|
1,576.9
|
17%
|
15%
|
B2B NGR
|
57.9
|
29.9
|
94%
|
90%
|
Total NGR
|
3,426.5
|
3,050.5
|
12%
|
12%
|
VAT/GST
|
(59.9)
|
(52.0)
|
(15%)
|
(21%)
|
Revenue
|
3,366.6
|
2,998.5
|
12%
|
12%
|
|
|
|
|
|
Gross profit
|
1,980.1
|
1,829.6
|
8%
|
|
|
|
|
|
|
Contribution4
|
1,369.8
|
1,254.2
|
9%
|
|
Contribution4 margin
|
40.0%
|
41.1%
|
(1.1pp)
|
|
|
|
|
|
|
Operating costs excluding marketing
costs
|
(512.4)
|
(426.0)
|
(20%)
|
|
Underlying
EBITDA5
|
857.4
|
828.2
|
4%
|
|
Share based payments
|
(7.3)
|
(7.8)
|
6%
|
|
Underlying depreciation and amortisation
|
(160.2)
|
(118.3)
|
(35%)
|
|
Share of JV (loss)/income
|
(1.4)
|
(0.2)
|
(600%)
|
|
Underlying operating
profit6
|
688.5
|
701.9
|
(2%)
|
|
Results1:
Whilst there is underlying
momentum in a number of our key markets, regulatory headwinds in
the UK and Germany, as well as weaker trading in Australia and
Brazil, impacted NGR performance in 2023. Resulting
proforma3 Online NGR was down -3%cc2 in the
year but, with the benefit of acquisitions total Online NGR was
+12%cc2 ahead of 2022. Whilst proforma3 NGR
was down year on year, actives grew +10% year on year on a
proforma3 basis, emphasising the ongoing attraction of
our brands to our customers.
In the UK, we continue to absorb
the impact of regulatory changes and as a result NGR was down -6%.
Excluding the impact of these regulatory headwinds, we estimate
that underlying NGR was +4% ahead of 2022, while actives were +18%
higher than the same period last year.
In Italy, constant
currency2 NGR was +3% ahead of 2022. Whilst our brands,
along with the rest of the market, lost online market share to one
of the leading operators during 2023, our omni-channel offering
continues to resonate with customers with combined Online and
Retail NGR +63%cc2 ahead of pre-Covid
levels.
Local market conditions in
Australia have been challenging during 2023 leaving year on year
NGR -6% down on a constant currency2 basis. Whilst we
expect trading to remain challenging in 2024, we remain confident
in our strategy focussing on brand differentiation, new and
innovative products and the customer experience.
In Germany, whilst we have seen
some non-compliant operators exit the market, the continued lack of
robust regulatory enforcement as well as new regulation last Summer
continues to impact the business. Resulting NGR in 2023 was -26%
behind 2022 on a constant currency2 basis, primarily
driven by lower spend per head. Whilst we received our gaming
licences in November 2022, it is disappointing that we are still
yet to see the level of enforcement action that is needed in this
market to combat unlicensed operators and ensure customers are
protected.
In Brazil, we continue to see a
fiercely competitive market ahead of regulation with a significant
increase in the amount spent on marketing by various operators.
Whilst we were initially slow to react to changes in the market, we
are confident that following a change in our regional leadership we
now have the team and localised expertise needed to regain share in
this exciting growth market, an opportunity that our 365Scores
acquisition will help us further leverage. NGR in Brazil was
-14%cc2 behind the prior year.
Georgia NGR was
+7%cc2 ahead of 2022 on a constant currency2 basis, with
our Crystalbet brand performing strongly following the
implementation of new regulation in the prior year. Following a
strong 2023, our Crystalbet brand continues to be the market leader
in Georgia.
In the Baltics,
proforma3 NGR was +3%cc2 ahead of 2022
despite high inflation rates in the region. Our brands remain
resilient despite the economic pressures in the Baltic states and
we continue to attract more customers each year with
proforma3 actives +13% ahead of 2022.
Our Entain CEE business continues
to perform well with proforma3 NGR +13%cc2
ahead year on year. NGR in our SuperSport business in Croatia was
+29%cc2 ahead of 2022 (proforma3) maintaining
its position as the market leader. NGR in our recent acquisition in
Poland, STS, was flat year on year with c4%cc2 growth to
the end of Q3 offset by poor margins in October.
NGR in our newly acquired New
Zealand business was £84.7m in 2023, slightly ahead year on year on
a proforma3 basis.
Contribution4
margin of 40.0% was in line with guidance but
1.1pp behind 2022 due to territory mix and the impact of additional
taxation in Australia which was implemented in H2 of
2022.
Operating costs were 20% higher
than 2022 with recent acquisitions driving 16pp of the increase and
FX 1pp with the remaining 3pp due to underlying inflation offset by
the initial benefits from Project Romer.
Underlying EBITDA5 of
£857.4m was +4% ahead of 2022, albeit flat year on year excluding
the benefit of TAB NZ accounting treatment to 2023, reflecting the
contribution from acquired businesses offset by the decline in
proforma3 NGR and 1.1pp reduction in
contribution4
margin.
Resulting underlying operating
profit6 of £688.5m was £13.4m behind 2022 with
depreciation and amortisation of £160.2m, £41.9m higher than 2022,
half of which is a result of the impact of new acquisitions,
including annualisation of those in the prior year, with the
remainder of the increase due to recent investment in our
technology and product. After charging separately disclosed items
of £481.1m (2022: £114.0m), operating profit was £207.4m (2022:
£701.9m).
Retail
The Retail business is made up of
our Retail estates in the UK, Italy, Belgium, Croatia, New Zealand,
Republic of Ireland and Poland.
Year
Ended 31 December
|
Results1
|
|
2023
|
2022
|
Change
|
CC2
|
|
£m
|
£m
|
%
|
%
|
Sports wagers
|
4,341.7
|
3,893.5
|
12%
|
11%
|
|
|
|
|
|
Sports margin
|
18.9%
|
18.3%
|
0.6pp
|
|
|
|
|
|
|
Sports NGR/Revenue
|
813.0
|
705.2
|
15%
|
14%
|
Machines NGR/Revenue
|
573.7
|
572.6
|
0%
|
0%
|
NGR
|
1,386.7
|
1,277.8
|
9%
|
8%
|
VAT/GST
|
(3.6)
|
-
|
-
|
-
|
Revenue
|
1,383.1
|
1,277.8
|
8%
|
8%
|
|
|
|
|
|
Gross profit
|
900.2
|
860.0
|
5%
|
|
|
|
|
|
|
Contribution4
|
890.3
|
852.1
|
4%
|
|
Contribution4 margin
|
64.2%
|
66.7%
|
(2.5pp)
|
|
|
|
|
|
|
Operating costs excluding marketing
costs
|
(606.1)
|
(571.9)
|
(6%)
|
|
|
|
|
|
|
Underlying
EBITDA5
|
284.2
|
280.2
|
1%
|
|
Share based payments
|
(2.4)
|
(2.3)
|
(4%)
|
|
Underlying depreciation and amortisation
|
(132.1)
|
(112.4)
|
(18%)
|
|
Share of JV income
|
-
|
-
|
-
|
|
Underlying operating
profit6
|
149.7
|
165.5
|
(10%)
|
|
Results1:
Our Retail businesses continue to
show the strength of their offer and customer appeal with 2023
Revenue and NGR both +8%cc2 ahead of 2022 and
proforma3 NGR +2%cc2 ahead.
In the UK, NGR was +2% ahead of
2022 on a LFL7
basis, with strong performance across both sports
and gaming. Our strong underlying performance continues to be
driven by an ongoing focus on market leading content for our gaming
machines and betting terminals with both providing a proposition
akin to the digital offering but combined with the in-shop
experience that cannot be replicated online.
NGR in Italy was up +16% on a
constant currency2 basis with a number of enhancements
to our offering and the customer experience including cash-out,
reduced minimum bet sizes and continuous development of our SSBT
proposition driving greater customer engagement.
Proforma3 NGR in
Croatia grew at +14%cc2 year on year further enhancing
our market leading position and reflecting our program of
improvements to the customer offer, including the introduction of a
loyalty scheme and enhanced sports content.
In Belgium, NGR was up
+10%cc2 with Ireland NGR +1%cc2 ahead year on
year. Our newly acquired Retail businesses in Poland and New
Zealand contributed £40.4m of NGR during 2023.
Contribution4
of £890.3m was +4% ahead of 2022 with
contribution4
margin falling by 2.5pp due to territory mix and
the impact of certain content costs (1pp) 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 6% higher
than in 2022 with the impact of acquisitions (5pp) and inflation,
including wage rate and energy price inflation, more than
offsetting the benefit of costs which are now classified within
cost of sales.
Resulting underlying
EBITDA5 of £284.2m was £4.0m ahead of 2022. Depreciation
of £132.1m was £19.7m higher than 2022, largely due to the impact
of acquisitions and the continued investment in our retail estates.
Underlying operating profit6 of £149.7m was £15.8m
behind 2022 and, after charging £22.8m of separately disclosed
items (2022: £57.4m), operating profit was £126.9m, £18.8m ahead of
last year.
New Opportunities
Year
Ended 31 December
|
Results1
|
|
2023
|
2022
|
Change
|
|
|
£m
|
£m
|
%
|
|
|
|
|
|
|
Underlying
EBITDA5
|
(29.3)
|
(29.1)
|
(1%)
|
|
|
|
|
|
|
Share based payments
|
(0.7)
|
(0.3)
|
(133%)
|
|
Underlying depreciation and amortisation
|
(5.7)
|
(4.5)
|
(27%)
|
|
Share of JV (loss)/income
|
(1.5)
|
(0.4)
|
(275%)
|
|
Underlying operating
loss6
|
(37.2)
|
(34.3)
|
(8%)
|
|
Results1:
New Opportunities underlying
costs5 of £29.3m were 1% higher than 2022 with increased
start-up marketing costs in our Unikrn brand offset by reduced
costs associated with our innovation programme. Unikrn has now been
closed as a B2C operation and development of our e-Sports wagering
offering is now focussed on our existing labels. After depreciation
and amortisation and share of JV loss, New Opportunities underlying
operating loss6 was £37.2m, an increase in losses of
£2.9m on 2022 and, after charging separately disclosed items of
£44.3m (2022: £nil), was a loss of £81.5m, £47.2m more than in the
prior year.
Other
Year
Ended 31 December
|
Results1
|
|
2023
|
2022
|
Change
|
CC2
|
|
£m
|
£m
|
%
|
%
|
NGR/Revenue
|
26.7
|
25.1
|
6%
|
6%
|
|
|
|
|
|
Gross profit
|
26.7
|
25.1
|
6%
|
|
|
|
|
|
|
Contribution4
|
26.3
|
25.0
|
5%
|
|
|
|
|
|
|
Operating costs excluding marketing
costs
|
(21.0)
|
(20.1)
|
(4%)
|
|
|
|
|
|
|
Underlying
EBITDA5
|
5.3
|
4.9
|
8%
|
|
|
|
|
|
|
Share based payments
|
-
|
-
|
-
|
|
Underlying depreciation and amortisation
|
(2.7)
|
(2.7)
|
-
|
|
Share of JV income
|
2.0
|
0.4
|
400%
|
|
Underlying operating
profit6
|
4.6
|
2.6
|
77%
|
|
Results1:
NGR of £26.7m was 6% higher than
2022 driven by additional income in our greyhound stadia with 2022
impacted by adverse weather. Underlying EBITDA5 of £5.3m
was an increase of £0.4m on 2022, with the additional NGR offset by
increased overheads associated with the aforementioned increase in
number of meets. Underlying operating profit6 of £4.6m
was £2.0m ahead of last year and after charging separately
disclosed items of £nil (2022: £0.7m) was £2.7m ahead of
2022.
Corporate
Year
Ended 31 December
|
Results1
|
|
2023
|
2022
|
Change
|
|
|
£m
|
£m
|
%
|
|
|
|
|
|
|
Underlying
EBITDA5
|
(109.7)
|
(91.0)
|
(21%)
|
|
Share based payments
|
(11.3)
|
(8.8)
|
(28%)
|
|
Underlying depreciation and amortisation
|
(0.8)
|
(0.2)
|
(300%)
|
|
Share of JV loss
|
(42.0)
|
(193.9)
|
78%
|
|
Underlying operating
loss6
|
(163.8)
|
(293.9)
|
44%
|
|
Results1:
Corporate underlying
costs5 of £109.7m were £18.7m higher than last year driven by
increases in our contributions to Research, Education and
Treatment, including GambleAware, increased legal costs and ongoing
investment in our governance policies and procedures.
After share based payments,
depreciation and amortisation and share of JV losses, Corporate
underlying operating loss6 was £163.8m, a decrease of
£130.1m. The share of JV loss of £42.0m relates to BetMGM. After
charging separately disclosed items of £737.2m (2022: £41.1m), the
operating loss was £902.0m versus £335.0m in 2022.
Notes
(1) 2023 and 2022 statutory
results are audited, with the tables presented relating to
continuing operations and including both statutory and
non-statutory measures
(2) Growth on a constant
currency basis is calculated by translating both current and prior
year performance at the 2023 exchange rates
(3) Proforma references include
all 2022 and 2023 acquisitions as if they had been part of the
Group since 1 January 2022
(4) Contribution represents
gross profit less marketing costs and is a key performance metric
used by the Group, particularly in Online
(5) EBITDA is earnings before
interest, tax, depreciation and amortisation, share based payments
and share of JV income. EBITDA is stated pre separately disclosed
items
(6) Stated pre separately
disclosed items
(7) UK Retail LFL YoY NGR is
calculated based on shops that traded for the full year in both
2023 and 2022
STATUTORY PERFORMANCE REVIEW
|
Results1
|
Year ended 31 December
|
2023
|
2022
|
Change
|
CC2
|
|
£m
|
£m
|
%
|
%
|
NGR
|
4,833.1
|
4,348.9
|
11%
|
11%
|
|
|
|
|
|
Revenue
|
4,769.6
|
4,296.9
|
11%
|
11%
|
|
|
|
|
|
Gross profit
|
2,907.0
|
2,714.7
|
7%
|
|
|
|
|
|
|
Contribution4
|
2,279.4
|
2,128.9
|
7%
|
|
|
|
|
|
|
Underlying
EBITDA5
|
1,007.9
|
993.2
|
1%
|
|
Share based payments
|
(21.7)
|
(19.2)
|
(13%)
|
|
Underlying depreciation and
amortisation
|
(301.5)
|
(238.1)
|
(27%)
|
|
Share of JV loss
|
(42.9)
|
(194.1)
|
78%
|
|
Underlying operating
profit6
|
641.8
|
541.8
|
18%
|
|
|
|
|
|
|
Net underlying finance
costs6
|
(229.4)
|
(84.7)
|
|
|
Net foreign exchange/financial
instruments
|
32.5
|
(135.3)
|
|
|
|
|
|
|
|
Profit before tax pre separately
disclosed items
|
444.9
|
321.8
|
|
|
|
|
|
|
|
Separately disclosed
items:
|
|
|
|
|
Amortisation of acquired
intangibles
|
(254.6)
|
(116.9)
|
|
|
Recognition of HMRC settlement
liability
|
(585.0)
|
-
|
|
|
Other
|
(447.9)
|
(102.0)
|
|
|
|
|
|
|
|
(Loss)/profit before tax
|
(842.6)
|
102.9
|
|
|
|
|
|
|
|
Tax
|
(36.1)
|
(70.0)
|
|
|
|
|
|
|
|
(Loss)/profit after tax from
continuing activities
|
(878.7)
|
32.9
|
|
|
|
|
|
|
|
Discontinued operations
|
(57.8)
|
(13.4)
|
|
|
|
|
|
|
|
(Loss)/profit after tax
|
(936.5)
|
19.5
|
|
|
NGR and Revenue
Group NGR and revenue were +11%
ahead of last year and the same on a constant currency
basis2, with Online NGR +12% and Retail NGR +9% year on
year. Further details are provided in the Financial Performance
Review section.
Underlying operating
profit6
The Group reported underlying
operating profit6
of £641.8m, +18% ahead of 2022 (2022: £541.8m).
Underlying EBITDA5 was +1% ahead, with the increase in
revenue offset by additional taxes, particularly in Australia, and
increased operating costs largely associated with acquired
businesses and inflation. Depreciation and amortisation was -27%
higher than 2022 driven by depreciation on acquired businesses as
well as on our recent investment in product and technology.
The Group's share of BetMGM losses in the period were £42.0m,
£152.1m lower than 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 of
£229.4m excluding separately disclosed items of £1.0m (2022: £5.7m)
were £144.7m higher than 2022 driven by interest on the Group's new
$1bn USD term loan, which was raised in Q4 of 2022, increased
drawdowns on the Group's RCF 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 £32.5m in the period
(2022: £135.3m 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.
Separately disclosed
items
Items separately disclosed before
tax for the year amount to £1,287.5m (2022: £218.9m) and relate to
the Deferred Prosecution Agreement ("DPA") with the Crown
Prosecution Service of £585.0m (2022: £nil), £254.6m of
amortisation on acquired intangibles (2022: £116.9m), corporate
transaction costs of £17.8m (2022: £23.9m), restructuring costs,
including the initial costs of Project Romer, of £49.7m (2022:
£11.8m) and legal and onerous contract costs of £17.6m (2022:
£8.1m) primarily relating to the legal costs associated with the
HMRC investigation. The Group also recorded a £1.0m loss on
disposal of assets (£2022: £1.0m), £71.8m on movements in fair
value of contingent consideration (2022: £1.0m income), primarily
relating to discount unwind on TAB NZ consideration, and £1.0m in
financing costs (2022: £5.7m).
In addition, the Group has also
recognised an impairment charge of £289.0m during the current year
(2022: £7.0m) with impairments recognised against our Australian
business of £190.0m, our closed B2C operations in Unikrn and Africa
of £78.1m, and smaller impairments against our ROI Retail business,
closed shops and offices in the UK and our Totolotek business in
Poland of £20.9m.
The charge which has arisen in the
Group's Australian CGU is a result of the impact of ongoing
increases in the rate of Point of Consumption tax across certain
states and a forecast decline in Australian revenues in 2024 as a
result of a reduced market outlook. Our Australian business
continues to be profitable and strategically important. Post the
annualisation of the tax increases and stabilisation of local
market conditions, we expect our Australian business to return to
growth.
During the prior year, the Group
also recognised a £45.5m charge in respect of the repayment of
amounts received under the Governments Covid Furlough
scheme.
Separately disclosed
items
|
|
|
2023
£m
|
2022
£m
|
Legal settlement
|
(585.0)
|
-
|
Amortisation of acquired
intangibles
|
(254.6)
|
(116.9)
|
Impairment
|
(289.0)
|
(7.0)
|
Corporate transaction
costs
|
(17.8)
|
(23.9)
|
Restructuring costs
|
(49.7)
|
(11.8)
|
Legal and onerous contract
costs
|
(17.6)
|
(8.1)
|
(Loss)/profit on sale of
assets
|
(1.0)
|
(1.0)
|
Movement in fair value of contingent
consideration
|
(71.8)
|
1.0
|
Other including financing
|
(1.0)
|
(5.7)
|
Furlough repayments
|
-
|
(45.5)
|
Total
|
(1,287.5)
|
(218.9)
|
Profit/(loss) before
tax
The Group's profit before
tax6 and separately
disclosed items was £444.9m (2022: £321.8m), a year-on-year
increase of £123.1m with the growth in underlying
EBITDA5, 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 £842.6m (2022: £102.9m profit), with the separately disclosed
costs discussed above having a significant impact on the reported
results.
Taxation
The tax charge on continuing
operations for the period was £36.1m (2022: £70.0m), reflecting an
underlying effective tax rate pre-BetMGM losses and foreign
exchange gains on external debt of 23.0% (2022: 15.4%) and a tax
credit on separately disclosed items of £69.7m (2022: charge of
£27.9m).
Discontinued operations
During the current year, the Group
recorded a £57.8m (2022: £13.4m) loss in discontinued operations
relating to its former Intertrader business which was disposed of
in November 2021. The loss recorded primarily reflects legal costs
associated with historic matters as well as a provision for a
potential settlement with former owners of part of the business
following a long running legal dispute.
Cashflow
Year ended 31 December
|
2023
|
2022
|
|
£m
|
£m
|
Cash generated by
operations
|
810.0
|
846.9
|
Corporation tax
|
(137.3)
|
(106.1)
|
Interest
|
(224.6)
|
(100.6)
|
Net cash generated from operating
activities
|
448.1
|
640.2
|
|
|
|
Cash flows from investing activities:
|
|
|
Acquisitions &
disposals
|
(1,315.4)
|
(738.6)
|
Cash acquired/disposed
|
87.9
|
29.9
|
Dividends received from
associates
|
9.6
|
3.6
|
Net capital expenditure
|
(259.9)
|
(212.0)
|
Investment in Joint
ventures
|
(40.7)
|
(175.1)
|
Purchase of investments
|
(3.1)
|
-
|
Net cash used in investing
activities
|
(1,521.6)
|
(1,092.2)
|
|
|
|
Cash flows from financing activities:
|
|
|
Equity issue
|
589.8
|
-
|
Net proceeds from
borrowings
|
1,780.3
|
838.4
|
Repayment of borrowings
|
(1,428.6)
|
(271.8)
|
Subscription of funds from
non-controlling interest
|
350.5
|
174.3
|
Settlement of financial instruments
and other financial liabilities
|
(279.9)
|
8.7
|
Repayment of finance
leases
|
(68.5)
|
(83.0)
|
Equity dividends paid
|
(106.9)
|
(50.0)
|
Minority dividends paid
|
(7.4)
|
-
|
Net cash used in financing
activities
|
829.3
|
616.6
|
|
|
|
Foreign exchange
|
(13.7)
|
6.8
|
Net increase/(decrease) in
cash
|
(257.9)
|
171.4
|
During the period, the Group had a
net cash outflow of £257.9m (2022: inflow of £171.4m).
Net cash generated by operations
was £810.0m (2022: £846.9m) including £1,007.9m of underlying
EBITDA5 (2022: £993.2m) and a working capital inflow of £601.8m
largely due to payments not having started on the DPA (2022:
£45.9m) offset by separately disclosed items that are reported in
operating activities of £741.9m (2022: £96.0m) including the DPA
but excluding items charged to depreciation, amortisation and
impairment as well as a £57.8m loss on discontinued operations
(2022: £13.4m). Included within working capital is a £29.7m outflow
for balances held with payment service providers as well as
customer funds, which are net debt neutral (2022:
£47.9m).
During the period £137.3m was paid
out in relation to corporate taxes (2022: £106.1m) with a further
£224.6m paid out in interest (2022: £100.6m).
Net cash used in investing
activities for the period was £1,521.6m (2022: £1,092.2m) and
includes cash outflows for acquisitions of £1,315.4m (2022:
£738.6m), net investment in capital expenditure of £259.9m (2022:
£212.0m), an additional £40.7m invested in BetMGM (2022: £175.1m)
and £3.1m of other investments (2022: £nil). These outflows were
partially offset by cash acquired with acquisitions of £87.9m
(2022: £29.9m) and dividends received from associates of £9.6m
(2022: £3.6m).
During the period the Group
received a net £829.3m (2022: £616.6m) from financing activities.
£589.8m was raised through the equity issuance (2022: £nil) with a
further £1,780.3m through new financing facilities (2022: £838.4)
which were used, in part, to repay £1,428.6m of debt (2022:
£271.8m) including £400m against the Group's retail bond. During
the period, the Group also received £350.5m from minority holdings
to meet their obligations under the Supersport earn-out and STS
acquisition. These amounts are recorded in non-controlling
interests (2022: £174.3m for the acquisition of SuperSport).
£279.9m was paid on settlement of other financial instruments and
liabilities, primarily relating to contingent consideration on
previous acquisitions. In the prior year, the Group received £8.7m
on the settlement of other financial instruments and liabilities as
a result of the receipt of £41.6m on the partial settlement on a
number of swap arrangements, partially offset by contingent
consideration payments. Lease payments of £68.5m (2022: £83.0m)
including those on non-operational shops, were made in the
period.
During the period, the Group also
paid £106.9m in equity dividends (2022: £50.0) and £7.4m in
dividends to the minority interest in Entain CEE (2022:
£nil).
Net debt and liquidity
As at 31 December 2023, adjusted
net debt7 was £3,290.9m and represented an adjusted net
debt7 to underlying EBITDA5 ratio of 3.3x
(3.1x proforma3). The Group has drawn down £295m on the
revolving credit facility at 31 December 2023
(2022:£nil).
|
Par
value
|
Issue
costs/ Premium
|
Total
|
|
£m
|
£m
|
£m
|
Term loans
|
(3,420.5)
|
64.1
|
(3,356.4)
|
Interest accrual
|
(1.6)
|
-
|
(1.6)
|
|
(3,422.1)
|
64.1
|
(3,358.0)
|
Cash
|
|
|
400.6
|
Net debt
|
|
|
(2,957.4)
|
Cash held on behalf of
customers
|
|
|
(196.8)
|
Fair value of swaps held against
debt instruments
|
|
(85.6)
|
Other debt related items*
|
|
|
224.8
|
Lease liabilities
|
|
|
(275.9)
|
Adjusted net debt
|
|
|
(3,290.9)
|
*Other debt related items include balances held with payment
service providers, deposits and other similar items
Refinancing
On 1 March 2024, the Group raised
an additional £300m of borrowings under a bank loan facility and
used the proceeds to repay all amounts drawn under the Group's
revolving credit facility. Concurrently, the commitments available
under the Group's revolving credit facility (disclosed in note
17) were increased by £45m further
increasing the Group's available liquidity. As such, the Group's
revolving credit facility now has total commitments of £635m which,
as at 1 March 2024, was completely undrawn save £5m carved out for
letters of credit and guarantees.
Going Concern
In adopting the going concern
basis of preparation in the financial statements, the Directors
have considered the current trading performance of the Group, the
financial forecasts and the principal risks and uncertainties. In
addition, the Directors have considered all matters discussed in
connection with the long-term viability statement including the
modelling of 'severe but plausible' downside scenarios such as
legislation changes impacting the Group's Online business and
severe data privacy and cybersecurity breaches.
Given the level of the Group's
available cash post the recent extension of certain financing
facilities (se note 17) and the forecast covenant headroom even
under the sensitised downside scenarios, the Directors believe that
the Group and the Company are well placed to manage the risks and
uncertainties that it faces. As such, the Directors have a
reasonable expectation that the Group and the Company will have
adequate financial resources to continue in operational existence,
for at least 12 months (being the going concern assessment period)
from date of approval of the financial statements, and have,
therefore, considered it appropriate to adopt the going concern
basis of preparation in the financial statements.
Notes
(1) 2023 and 2022 statutory
results are audited, with the tables presented relating to
continuing operations and including both statutory and
non-statutory measures
(2) Growth on a constant
currency basis is calculated by translating both current and prior
year performance at the 2023 exchange rates
(3) Proforma references include
all 2022 and 2023 acquisitions as is they had been part of the
Group since 1 January 2022
(4) Contribution represents
gross profit less marketing costs and is a key performance metric
used by the Group, particularly in Online
(5) EBITDA is earnings before
interest, tax, depreciation and amortisation, share based payments
and share of JV income. EBITDA is stated pre separately disclosed
items
(6) Stated pre separately
disclosed items
(7) Adjusted net debt excludes
the DPA settlement of £585.0m. Leverage also excludes any benefit
from future BetMGM EBITDA or the payments due to acquire the
minority interests in Entain CEE
CONSOLIDATED INCOME STATEMENT
For the year ended 31
December
|
|
|
|
2023
|
|
2022
|
|
Notes
|
Underlying
items
|
Separately disclosed
items
(Note 6)
|
Total
|
Underlying
items
|
Separately disclosed
items
(Note 6)
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Net Gaming Revenue
|
|
4,833.1
|
-
|
4,833.1
|
4,348.9
|
-
|
4,348.9
|
VAT/GST
|
|
(63.5)
|
-
|
(63.5)
|
(52.0)
|
-
|
(52.0)
|
Revenue
|
5
|
4,769.6
|
-
|
4,769.6
|
4,296.9
|
-
|
4,296.9
|
Cost of sales
|
|
(1,862.6)
|
-
|
(1,862.6)
|
(1,582.2)
|
-
|
(1,582.2)
|
Gross profit
|
|
2,907.0
|
-
|
2,907.0
|
2,714.7
|
-
|
2,714.7
|
Administrative costs
|
|
(2,222.3)
|
(1,286.5)
|
(3,508.8)
|
(1,978.8)
|
(213.2)
|
(2,192.0)
|
Contribution
|
|
2,279.4
|
-
|
2,279.4
|
2,128.9
|
-
|
2,128.9
|
Administrative costs excluding
marketing
|
|
(1,594.7)
|
(1,286.5)
|
(2,881.2)
|
(1,393.0)
|
(213.2)
|
(1,606.2)
|
Group operating profit/(loss) before share of results from
joint ventures and associates
|
|
684.7
|
(1,286.5)
|
(601.8)
|
735.9
|
(213.2)
|
522.7
|
Share of results from joint
ventures and associates
|
|
(42.9)
|
-
|
(42.9)
|
(194.1)
|
-
|
(194.1)
|
Group operating profit/(loss)
|
|
641.8
|
(1,286.5)
|
(644.7)
|
541.8
|
(213.2)
|
328.6
|
Finance expense
|
7
|
(241.8)
|
(1.0)
|
(242.8)
|
(89.0)
|
(5.7)
|
(94.7)
|
Finance income
|
7
|
12.4
|
-
|
12.4
|
4.3
|
-
|
4.3
|
(Losses)/gains arising from change
in fair value of financial instruments
|
7
|
(90.6)
|
-
|
(90.6)
|
(23.1)
|
-
|
(23.1)
|
Gains/(losses) arising from foreign
exchange on debt instruments
|
7
|
123.1
|
-
|
123.1
|
(112.2)
|
-
|
(112.2)
|
Profit/(loss) before tax
|
|
444.9
|
(1,287.5)
|
(842.6)
|
321.8
|
(218.9)
|
102.9
|
Income tax
|
|
(105.8)
|
69.7
|
(36.1)
|
(97.9)
|
27.9
|
(70.0)
|
Profit/(loss) from continuing operations
|
|
339.1
|
(1,217.8)
|
(878.7)
|
223.9
|
(191.0)
|
32.9
|
Loss for the year from discontinued
operations after tax
|
|
-
|
(57.8)
|
(57.8)
|
-
|
(13.4)
|
(13.4)
|
Profit/(loss) for the year
|
|
339.1
|
(1,275.6)
|
(936.5)
|
223.9
|
(204.4)
|
19.5
|
|
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
|
|
Equity holders of the
parent
|
|
304.1
|
(1,232.7)
|
(928.6)
|
225.6
|
(201.4)
|
24.2
|
Non-controlling
interests
|
|
35.0
|
(42.9)
|
(7.9)
|
(1.7)
|
(3.0)
|
(4.7)
|
|
|
339.1
|
(1,275.6)
|
(936.5)
|
223.9
|
(204.4)
|
19.5
|
Earnings per share on profit/(loss)
for the year
|
|
|
|
|
|
|
|
from continuing
operations
|
|
44.3p1
|
|
(141.4p)
|
60.9p1
|
|
6.4p
|
From profit/(loss) for the
year
|
9
|
44.3p1
|
|
(150.7p)
|
60.9p1
|
|
4.1p
|
Diluted earnings per share on
profit/(loss) for the year
|
|
|
|
|
|
|
|
from continuing
operations
|
|
44.2p1
|
|
(141.4p)
|
60.5p1
|
|
6.3p
|
From profit/(loss) for the
year
|
9
|
44.2p1
|
|
(150.7p)
|
60.5p1
|
|
4.1p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memo
EBITDA
|
|
1,007.9
|
(742.9)
|
265.0
|
993.2
|
(89.3)
|
903.9
|
Share-based payments
|
|
(21.7)
|
-
|
(21.7)
|
(19.2)
|
-
|
(19.2)
|
Depreciation, amortisation and
impairment
|
|
(301.5)
|
(543.6)
|
(845.1)
|
(238.1)
|
(123.9)
|
(362.0)
|
Share of results from joint
ventures and associates
|
|
(42.9)
|
-
|
(42.9)
|
(194.1)
|
-
|
(194.1)
|
Group operating profit/(loss)
|
|
641.8
|
(1,286.5)
|
(644.7)
|
541.8
|
(213.2)
|
328.6
|
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 9 for further details.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For
the year ended 31 December
|
Notes
|
|
2023
£m
|
|
2022
£m
|
(Loss)/profit for the year
|
|
|
(936.5)
|
|
19.5
|
Other comprehensive
(expense)/income:
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified to profit or
loss:
|
|
|
|
|
|
Currency differences on translation
of foreign operations
|
|
|
(83.5)
|
|
182.9
|
Total items that may be
reclassified to profit or loss
|
|
|
(83.5)
|
|
182.9
|
|
|
|
|
|
|
Items that will not be reclassified to profit or
loss:
|
|
|
|
|
|
Re-measurement of defined benefit
pension scheme
|
|
|
(3.7)
|
|
(24.7)
|
Tax on re-measurement of defined
benefit pension scheme
|
|
|
1.3
|
|
8.6
|
Surplus/(deficit) on revaluation of
other investment
|
|
|
1.1
|
|
(2.6)
|
Share of associate other
comprehensive expense
|
|
|
(1.1)
|
|
-
|
Total items that will not be
reclassified to profit or loss
|
|
|
(2.4)
|
|
(18.7)
|
|
|
|
|
|
|
Other comprehensive
(expense)/income for the year, net of tax
|
|
|
(85.9)
|
|
164.2
|
Total comprehensive
(expense)/income for the year
|
|
|
(1,022.4)
|
|
183.7
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
|
Equity holders of the
parent
|
|
|
(1,020.8)
|
|
182.3
|
Non-controlling
interests
|
|
|
(1.6)
|
|
1.4
|
CONSOLIDATED BALANCE SHEET
At 31 December
|
Notes
|
2023
£m
|
2022
Restated (Note 15)
£m
|
Assets
|
|
|
|
Non-current assets
|
|
|
|
Goodwill
|
10
|
4,716.0
|
3,980.9
|
Intangible assets
|
10
|
3,960.1
|
2,676.2
|
Property, plant and
equipment
|
12
|
533.4
|
507.2
|
Interest in joint
venture
|
|
-
|
-
|
Interest in associates and other
investments
|
|
47.1
|
53.5
|
Trade and other
receivables
|
|
31.8
|
38.6
|
Other financial assets
|
|
-
|
0.2
|
Deferred tax assets
|
|
493.2
|
157.3
|
Retirement benefit asset
|
|
61.8
|
63.8
|
|
|
9,843.4
|
7,477.7
|
Current assets
|
|
|
|
Trade and other
receivables
|
|
503.2
|
500.3
|
Income and other taxes
recoverable
|
|
71.5
|
30.7
|
Derivative financial
instruments
|
|
31.9
|
72.9
|
Cash and cash
equivalents
|
|
400.6
|
658.5
|
|
|
1,007.2
|
1,262.4
|
|
|
|
|
Total assets
|
|
10,850.6
|
8,740.1
|
Liabilities
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
(878.6)
|
(720.0)
|
Balances with customers
|
13
|
(196.8)
|
(200.5)
|
Lease liabilities
|
|
(65.7)
|
(65.1)
|
Interest-bearing loans and
borrowings
|
|
(319.2)
|
(424.9)
|
Corporate tax
liabilities
|
|
(48.6)
|
(45.3)
|
Provisions
|
|
(20.9)
|
(20.6)
|
Derivative
financial instruments
|
|
(117.5)
|
(79.2)
|
Deferred and contingent
consideration and other financial liabilities
|
|
(157.0)
|
(208.8)
|
|
|
(1,804.3)
|
(1,764.4)
|
Non-current liabilities
|
|
|
|
Trade and other payables
|
|
(433.8)
|
-
|
Interest-bearing loans and
borrowings
|
|
(3,038.8)
|
(2,689.1)
|
Lease liabilities
|
|
(210.2)
|
(215.8)
|
Deferred tax liabilities
|
|
(825.1)
|
(495.4)
|
Provisions
|
|
(4.2)
|
(5.4)
|
Deferred and contingent
consideration and other financial liabilities
|
|
(1,741.5)
|
(253.4)
|
|
|
(6,253.6)
|
(3,659.1)
|
|
|
|
|
Total liabilities
|
|
(8,057.9)
|
(5,423.5)
|
Net assets
|
|
2,792.7
|
3,316.6
|
Equity
|
|
|
|
Issued share capital
|
|
5.2
|
4.8
|
Share premium
|
|
1,796.7
|
1,207.3
|
Merger reserve
|
|
2,527.4
|
2,527.4
|
Translation reserve
|
|
150.4
|
240.2
|
Retained earnings
|
|
(2,211.7)
|
(846.9)
|
Equity shareholders'
funds
|
|
2,268.0
|
3,132.8
|
Non-controlling
interests
|
|
524.7
|
183.8
|
Total shareholders'
equity
|
|
2,792.7
|
3,316.6
|
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
|
Issued share
capital
£m
|
Share
premium
£m
|
Merger
reserve
£m
|
Translation reserve1
£m
|
Retained earnings
£m
|
Equity shareholders'
funds
£m
|
Non- controlling
interests
£m
|
Total
shareholders' equity
£m
|
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 year
|
-
|
-
|
-
|
-
|
24.2
|
24.2
|
(4.7)
|
19.5
|
Other comprehensive
income/(expense)
|
-
|
-
|
-
|
176.8
|
(18.7)
|
158.1
|
6.1
|
164.2
|
Total comprehensive
income
|
-
|
-
|
-
|
176.8
|
5.5
|
182.3
|
1.4
|
183.7
|
Share-based payments
charge
|
-
|
-
|
-
|
-
|
18.3
|
18.3
|
-
|
18.3
|
Business combinations
|
-
|
-
|
-
|
-
|
-
|
-
|
178.9
|
178.9
|
Recognition of put
liability
|
-
|
-
|
-
|
-
|
(181.2)
|
(181.2)
|
-
|
(181.2)
|
Purchase of non-controlling
interests
|
-
|
-
|
-
|
-
|
(3.7)
|
(3.7)
|
2.1
|
(1.6)
|
Equity dividends (Note
8)
|
-
|
-
|
-
|
-
|
(50.0)
|
(50.0)
|
-
|
(50.0)
|
At 31 December 2022
|
4.8
|
1,207.3
|
2,527.4
|
240.2
|
(846.9)
|
3,132.8
|
183.8
|
3,316.6
|
|
|
|
|
|
|
|
|
|
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 year
|
-
|
-
|
-
|
-
|
(928.6)
|
(928.6)
|
(7.9)
|
(936.5)
|
Other comprehensive
income/(expense)
|
-
|
-
|
-
|
(89.8)
|
(2.4)
|
(92.2)
|
6.3
|
(85.9)
|
Total comprehensive
income
|
-
|
-
|
-
|
(89.8)
|
(931.0)
|
(1,020.8)
|
(1.6)
|
(1,022.4)
|
Issue of
shares
|
0.4
|
589.4
|
-
|
-
|
-
|
589.8
|
-
|
589.8
|
Share-based payments
charge
|
-
|
-
|
-
|
-
|
23.6
|
23.6
|
-
|
23.6
|
Business
combinations (Note 15)
|
-
|
-
|
-
|
-
|
-
|
-
|
354.0
|
354.0
|
Recognition of put option
liability
|
-
|
-
|
-
|
-
|
(350.5)
|
(350.5)
|
-
|
(350.5)
|
Purchase of non-controlling
interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(4.1)
|
(4.1)
|
Equity dividends (Note 8)
|
-
|
-
|
-
|
-
|
(106.9)
|
(106.9)
|
(7.4)
|
(114.3)
|
At 31 December 2023
|
5.2
|
1,796.7
|
2,527.4
|
150.4
|
(2,211.7)
|
2,268.0
|
524.7
|
2,792.7
|
1. The translation reserve is used
to record exchange differences arising from the translation of the
financial statements of subsidiaries with non-sterling functional
currencies.
CONSOLIDATED STATEMENT OF CASH
FLOWS
For the year ended 31
December
|
Notes
|
2023
£m
|
2022
£m
|
Cash generated by
operations
|
14
|
810.0
|
846.9
|
Income taxes paid
|
|
(137.3)
|
(106.1)
|
Net finance expense paid
|
|
(224.6)
|
(100.6)
|
Net cash generated from operating
activities
|
|
448.1
|
640.2
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
Acquisitions1
|
|
(1,315.4)
|
(738.6)
|
Cash acquired on business
combinations
|
|
87.9
|
29.9
|
Dividends
received from associates
|
|
9.6
|
3.6
|
Purchase of intangible
assets
|
|
(191.5)
|
(129.9)
|
Purchase of property, plant and
equipment
|
|
(69.1)
|
(82.1)
|
Proceeds from the sale of
property, plant and equipment including disposal of
shops
|
|
0.7
|
-
|
Purchase of investments in
associates and other investments
|
|
(3.1)
|
-
|
Investment in joint
ventures
|
|
(40.7)
|
(175.1)
|
Net cash used in investing
activities
|
|
(1,521.6)
|
(1,092.2)
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
Proceeds from issue of ordinary
shares
|
|
589.8
|
-
|
Net proceeds from
borrowings
|
|
1,780.3
|
838.4
|
Repayment of borrowings
|
|
(1,419.2)
|
(109.0)
|
Repayment of borrowings on
acquisition
|
|
(9.4)
|
(162.8)
|
Subscription of funds from non-controlling
interests
|
|
350.5
|
174.3
|
Settlement of derivative financial
instruments
|
|
(13.2)
|
41.6
|
Settlement of other financial liabilities
|
|
(266.7)
|
(32.9)
|
Payment of lease
liabilities
|
|
(68.5)
|
(83.0)
|
Dividends paid to
shareholders
|
|
(106.9)
|
(50.0)
|
Dividends paid to non-controlling
interests
|
|
(7.4)
|
-
|
Net cash used in financing
activities
|
|
829.3
|
616.6
|
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents
|
|
(244.2)
|
164.6
|
Effect of changes in foreign
exchange rates
|
|
(13.7)
|
6.8
|
Cash and cash equivalents at
beginning of the year
|
|
658.5
|
487.1
|
Cash and cash equivalents at end of
the year
|
|
400.6
|
658.5
|
1. Included within cash
flows from acquisitions is £5.4m relating to the purchase of
minority holdings in STS (2022: £1.7m relating to the purchase of
minority holdings in Scout Gaming AB and Global Gaming
Limited)
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
1 Corporate information
Entain plc ("the Company") is a
company incorporated and domiciled in the Isle of Man on 5 January
2010 whose shares are traded publicly on the London Stock Exchange.
The principal activities of the Company and its subsidiaries ("the
Group") are described in the strategic report. The consolidated
financial statements of the Group for the year ended 31 December
2023 were authorised for issue in accordance with a resolution of
the Directors on 7 March 2024.
The nature of the Group's
operations and its principal activities are set out in Note
5.
2 Basis of
preparation
The consolidated financial
statements of the Group have been prepared in accordance with
International Financial Reporting Standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
and in accordance with the requirements of the Isle of Man
Companies Act 2006 applicable to companies reporting under IFRSs.
The accounting policies set out in this section as detailed have
been applied consistently year on year other than for the changes
in accounting policies set out in Note 3.
The consolidated financial
statements are presented in Pounds Sterling (£). All values are in
millions (£m) rounded to one decimal place except where otherwise
indicated. The separately disclosed items have been included within
the appropriate classifications in the consolidated income
statement. Further details are given in Note 6.
Going concern
In adopting the going concern
basis of preparation in the financial statements, the Directors
have considered the current trading performance of the Group, the
financial forecasts and the principal risks and uncertainties. In
addition, the Directors have considered all matters discussed in
connection with the long-term viability statement including the
modelling of 'severe but plausible' downside scenarios such as
legislation changes impacting the Group's Online business and
severe data privacy and cybersecurity breaches.
Given the level of the Group's
available cash post the recent extension of certain financing
facilities (see Note 17) and the forecast covenant headroom even
under the sensitised downside scenarios, the Directors believe that
the Group and the Company are well placed to manage the risks and
uncertainties that it faces. As such, the Directors have a
reasonable expectation that the Group and the Company will have
adequate financial resources to continue in operational existence,
for at least 12 months (being the going concern assessment period)
from date of approval of the financial statements, and have,
therefore, considered it appropriate to adopt the going concern
basis of preparation in the financial statements.
3 Changes in accounting
policies
From 1 January 2023 the Group has
applied, for the first time, certain standards, interpretations and
amendments. The adoption of the following standards and amendments
to standards did not have a material impact on the current period
or any prior period upon transition:
- Amendments to IAS 1
Presentation of Financial Statements; disclosure of accounting
policies;
- Amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors;
definition of accounting estimates;
- Amendments to IAS 12
Income Taxes; deferred tax related to assets and liabilities
arising from a single transaction;
- Amendments to IAS 12
International Tax Reform Pillar Two Model Rules;
- IFRS 17 Insurance
Contracts; original issue.
4
Summary of significant accounting policies
4.1 Basis of consolidation
The consolidated financial
statements comprise the financial statements of the Group at 31
December each year. The consolidation has been performed using the
results to 31 December for all subsidiaries, using consistent
accounting policies. With the exception of a small number of
immaterial subsidiaries, the financial statements of those
subsidiaries are prepared to 31 December. Control is achieved where
the Company is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect these
returns through its power over the investee.
All intragroup transactions,
balances, income and expenses are eliminated on
consolidation.
Subsidiaries are consolidated,
using the acquisition method of accounting, from the date on which
control is transferred to the Group and cease to be consolidated
from the date on which control is transferred from the Group. On
acquisition, the assets and liabilities and contingent liabilities
of a subsidiary are measured at fair value at the date of
acquisition. Any excess of the cost of acquisition over the fair
values of the separately identifiable net assets acquired is
recognised as goodwill. Where necessary, adjustments are made to
the financial statements of subsidiaries to bring the accounting
policies used in line with those used by the Group.
4.2 Critical accounting estimates and
judgements
The preparation of financial
information requires the use of assumptions, estimates and
judgements about future conditions. Use of available information
and application of judgement are inherent in the formation of
estimates. Actual results in the future may differ from those
reported.
Judgements
Management believes that the areas
where judgement has been applied are:
-
separately disclosed items (Note 6)
-
business combinations (Note 15).
Separately disclosed items
To assist in understanding the
underlying performance of the Group, management applies judgement
to identify those items that are deemed to warrant separate
disclosure due to either their nature or size. Whilst not limited
to, the following items of pre-tax income and expense are generally
disclosed separately:
- 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;
- corporate transaction and restructuring costs;
- legal, regulatory and tax litigation;
- changes in the fair value of contingent consideration;
and
- the
related tax effect of these items.
Any other non-recurring items are
considered individually for classification as separately disclosed
by virtue of their nature or size. During 2023 the Group separately
disclosed a net charge on continuing operations before tax of
£1,287.5m including £254.6m of amortisation of acquired intangibles
resulting from IFRS 3.
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 separately disclosed items
have been included within the appropriate classifications in the
consolidated income statement. Further details are given in Note
6.
Business combinations - Acquisition
consideration
For business combinations, in
assessing the relevant consideration transferred, certain
judgements are required to assess whether transfers of assets
reflect payments for future service or elements of acquisition
consideration. Specifically, for the Tab NZ acquisition, the Group
has committed to make minimum guaranteed funding payments to Tab NZ
in the first five years post completion, with further contingent
payments subject to revenue performance 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. Further details are provided in Note
15.
Estimates
Included within the financial
statements are a number of areas where estimation is
required.
Management believes that the area
where this is most notable within the financial statements is the
accounting for business combinations (Note 15).
Business combinations
For business combinations, the
Group estimates the fair value of the consideration transferred,
which can include assumptions about the future business performance
of the business acquired and an appropriate discount rate to
determine the fair value of any contingent consideration. This is
particularly relevant for the Tab NZ acquisition where the value of
contingent consideration is material. Further details are provided
in Note 15 which include associated sensitivities to the estimates
taken.
The Group then estimates the fair
value of assets acquired and liabilities assumed in the business
combination. The area of most notable estimation within the fair
value exercise relates to separately identifiable intangible assets
including brands, customer lists and licences. These estimates also
require inputs and assumptions to be applied within the relief from
royalty calculation of fair values with the more significant
assumptions relating to future earnings, customer attrition rates
and discount rates. The Group engages external experts to support
the valuation process, where appropriate. IFRS 3 'Business
Combinations' allows the Group to recognise provisional fair values
if the initial accounting for the business combination is
incomplete.
The fair value of contingent
consideration recognised in business combinations is reassessed at
each reporting date, using updated inputs and assumptions based on
the latest financial forecasts and other relevant information for
the businesses acquired. Fair value movements and the unwinding of
the discounting is recognised within the income statement as a
separately disclosed item. See Note 6 and Note 15 for further
details.
Goodwill on acquisition is
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in the net fair
value of the separately identifiable assets, liabilities and
contingent liabilities at the date of acquisition in accordance
with IFRS 3 Business Combinations. Goodwill is not amortised but
reviewed for impairment at the first reporting period after
acquisition and then annually thereafter. As such it is stated at
cost less any provision for impairment of value. Any impairment is
recognised immediately in the consolidated income statement and is
not subsequently reversed.
On acquisition, any goodwill
acquired is allocated to cash-generating units for the purpose of
impairment testing. Where goodwill forms part of a cash-generating
unit and part of the operation within that unit is disposed of, the
goodwill associated with the disposal is included in the carrying
amount of the assets when determining the gain or loss on disposal.
On the current year acquisitions, any non-controlling interests
where put options are in place are recognised using the present
access method where the Group assesses that the non-controlling
shareholder has present access to the returns associated with their
equity interests.
Impairment
On acquisition, any goodwill
acquired is allocated to cash-generating units for the purpose of
impairment testing. Where goodwill forms part of a cash-generating
unit and part of the operation within that unit is disposed of, the
goodwill associated with the disposal is included in the carrying
amount of the assets when determining the gain or loss on
disposal.
An impairment review is performed
for goodwill and other 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 betting and gaming companies. See Note 11 for details on
sensitivity analysis performed around these estimates.
Impairment losses are recognised
in the consolidated income statement and during the current year,
the Group has recognised an impairment charge of £289.0m primarily
against the Group's Australian CGU, the closed B2C operations in
Africa, and under the Unirkn B2C offering. See Note 11 for further
details.
4.3 Other accounting policies
'Put' options over the equity of subsidiary
companies
The potential cash payments
related to put options issued by the Group over the equity of
subsidiary companies are accounted for as financial liabilities.
The amounts that may become payable under the option on exercise
are initially recognised at the present value of the expected gross
obligation with the corresponding entry being recognised in
retained earnings. Such options are subsequently measured at
amortised cost, using the effective interest method, in order to
accrete the liability up to the amount payable under the option at
the date at which it first becomes exercisable. The present value
of the expected gross obligation is reassessed at the end of each
reporting period and any changes are recorded in the income
statement. In the event that an option expires unexercised, the
liability is derecognised with a corresponding adjustment to
retained earnings.
Intangible assets
Intangible assets acquired
separately are capitalised at cost and those acquired as part of a
business combination are capitalised separately from goodwill. The
costs relating to internally generated intangible assets,
principally software costs, are capitalised if the criteria for
recognition as assets are met. Other expenditure is charged in the
year in which the expenditure is incurred. Following initial
recognition, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment
losses.
The useful lives of these
intangible assets are assessed to be either finite or
indefinite. Indefinite lived assets are not amortised and are
subject to an annual impairment review from the year of
acquisition. Where amortisation is charged on assets with
finite lives, this expense is taken to the consolidated income
statement through the 'operating expenses, depreciation and
amortisation' line item.
The useful lives applied to the
Group's intangible assets are as follows:
Exclusive New Zealand
licence
|
25-year duration of
licence
|
Other licences
|
Lower of 15 years, or duration of
licence
|
Software - purchased &
internally capitalised costs
|
2-15 years
|
Trademarks & brand
names
|
10-25 years, or indefinite
life
|
Customer relationships
|
3-15 years
|
The useful lives of all intangible
assets are reviewed at each financial period end. Impairment
testing is performed annually for intangible assets which are not
subject to systematic amortisation and where an indicator of
impairment exists for all other intangible assets.
An intangible asset is
derecognised on disposal, with any gain or loss arising (calculated
as the difference between the net disposal proceeds and the
carrying amount of the item) included in the consolidated income
statement in the year of disposal.
Pensions and other post-employment benefits
The Group's defined benefit
pension plan holds assets separately from the Group. The pension
cost relating to the plan is assessed in accordance with the advice
of independent qualified actuaries using the projected unit credit
method.
Actuarial gains or losses are
recognised in the consolidated statement of comprehensive income in
the period in which they arise.
Any past service cost is
recognised immediately. The retirement benefit asset recognised in
the balance sheet represents the fair value of scheme assets less
the value of the defined benefit obligations.
There is a degree of estimation
involved in predicting the ultimate benefits payable under defined
benefit pension arrangements. The pension scheme liabilities are
determined using actuarial valuations. The actuarial valuation
involves making assumptions about discount rates, mortality rates
and future pension increases. Due to the long-term nature of this
plan, such estimates are subject to uncertainty.
In making these estimates and
assumptions, management considers advice provided by external
advisers, such as actuaries. Where actual experience differs to
these estimates, actuarial gains and losses are recognised directly
in other comprehensive income. Judgement is applied, based on
legal, actuarial, and accounting guidance in IFRIC 14, regarding
the amounts of net pension asset that is recognised in the
consolidated balance sheet. The Ladbrokes Pension Plan was bought
out in 2021.
Although the Group anticipates
that plan surpluses will be utilised during the life of the plans
to address member benefits, the Group recognises its pension
surplus in full on the basis that there are no substantive
restrictions on the return of residual plan assets in the event of
a winding up of the plan after all member obligations have been
met.
The Group's contributions to
defined contribution scheme are charged to the consolidated income
statement in the period to which the contributions
relate.
Investments in joint ventures
A joint venture is an entity in
which the Group holds an interest on a long-term basis, and which
is jointly controlled by the Group and one or more other venturers
under a contractual agreement.
Joint control exists only when
decisions about the relevant activities require the unanimous
consent of the parties that collectively control the
arrangement.
The Group's share of results of
joint ventures is included in the Group consolidated income
statement using the equity method of accounting. Investments in
joint ventures are carried in the Group consolidated balance sheet
at cost plus post-acquisition changes in the Group's share of net
assets of the entity less any impairment in value. The carrying
value of investments in joint ventures includes acquired
goodwill.
If the Group's share of losses in
the joint venture equals or exceeds its investment in the joint
venture, the Group does not recognise further losses, unless it has
obligations to continue to provide financial support to the joint
venture.
Investments in associates
Associates are those businesses in
which the Group has a long-term interest and is able to exercise
significant influence over the financial and operational policies
but does not have control or joint control over those
policies.
The Group's share of results of
associates is included in the Group's consolidated income statement
using the equity method of accounting. Investments in associates
are carried in the Group's consolidated balance sheet at cost plus
post-acquisition changes in the Group's share of net assets of the
entity less any impairment in value. The carrying value of
investments in associates includes acquired goodwill. If the
Group's share of losses in the associate equals or exceed its
investments in the associate, the Group does not recognise further
losses, unless it has obligations to continue to provide financial
support to the associate.
Property, plant and equipment
Land is stated at cost less any
impairment in value.
Buildings, plant and equipment are
stated at cost less accumulated depreciation and any impairment in
value.
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.
Land and buildings
|
Lower of 50 years, or estimated
useful life of the building, or lease. Indefinite lives are
attached to any freehold land held and therefore it is not
depreciated.
|
Plant and equipment
|
3-5 years
|
Fixtures and fittings
|
3-10 years
|
ROU assets arising under lease
contracts are depreciated over the lease term (as defined in IFRS
16) being the period to the expiry date of the lease, unless it is
expected that a break clause will be exercised when the lease term
is the period to the date of the break.
The carrying values of property,
plant and equipment are reviewed for impairment where an indicator
of impairment exists, being events or changes in circumstances
indicating that the carrying values may not be recoverable. If any
such indication exists and where the carrying values exceed the
estimated recoverable amount, the assets or cash-generating units
are written down to their recoverable amount.
The recoverable amount of
property, plant and equipment is the greater of fair value less
costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
An item of property, plant and
equipment is derecognised upon disposal, with any gain or loss
arising (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) included in the
consolidated income statement in the year of disposal.
Leases
The Group has applied IFRS 16 only
to those contracts that were previously identified as a lease under
IAS 17 Leases; any contracts not previously identified as leases
have not been reassessed for the purposes of adopting IFRS 16.
Accordingly, the definition of a lease under IFRS 16 has only been
applied to contracts entered into on or after 1 January
2019.
Leases, other than those with a
lease period of less than one year at inception, or where the
original cost of the asset acquired would be a negligible amount,
are capitalised at inception at the present value of the minimum
lease payments. Lease payments are apportioned between the finance
charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the
liability. Finance charges are charged directly against
income.
ROU assets are included within
property, plant and equipment at cost and depreciated over their
estimated useful lives, which normally equates to the lives of the
leases, after considering anticipated residual values.
ROU assets which are sub-leased to
customers are classified as finance leases if the lease agreements
transfer substantially all the risks and rewards of usage to the
lessee. All other sub-leases are classified as operating leases.
When assets are subject to finance leases, the present value of the
sub-lease is recognised as a receivable, net of allowances for
expected credit losses and the related ROU asset is derecognised.
The difference between the gross receivable and the present value
of the receivable is recognised as unearned finance lease
income.
Finance lease interest income is
recognised over the term of the lease using the net investment
method (before tax) so as to give a constant rate of return on the
net investment in sub-leases. Operating lease rental income is
recognised on a straight-line basis over the life of the
lease.
Cash and cash equivalents
Cash and cash equivalents consist
of cash at bank and in hand, short-term deposits (and customer
balances).
Financial assets
Financial assets are recognised
when the Group becomes party to the contracts that give rise to
them. The Group classifies financial assets at inception as
financial assets at amortised cost, financial assets at fair value
through profit or loss or financial assets at fair value through
other comprehensive income.
Financial assets at amortised cost
are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. On initial
recognition, financial assets at amortised cost are measured at
fair value net of transaction costs.
Trade receivables are generally
accounted for at amortised cost. Expected credit losses are
recognised for financial assets recorded at amortised cost,
including trade receivables. Expected credit losses are calculated
by using an appropriate probability of default, taking accounts of
a range of possible future scenarios and applying this to the
estimated exposure of the Group at the point of default.
Financial assets at fair value
through profit or loss include derivative financial instruments.
Financial assets through profit or loss are measured initially at
fair value with transaction costs taken directly to the
consolidated income statement. Subsequently, the fair values are
remeasured, and gains and losses are recognised in the consolidated
income statement.
Financial assets at fair value
through other comprehensive income comprise equity investments that
are designated as such on acquisition. These investments are
measured initially at fair value. Subsequently, the fair values are
remeasured, and gains and losses are recognised in the consolidated
statement of comprehensive income.
Financial liabilities
Financial liabilities comprise
trade and other payables, interest-bearing loans and borrowings,
contingent consideration, ante-post bets, guarantees and derivative
financial instruments. On initial recognition, financial
liabilities are measured at fair value net of transaction costs
where they are not categorised as financial liabilities at fair
value. Financial liabilities measured at fair value include
contingent consideration, derivative financial instruments,
ante-post bets and guarantees.
Financial liabilities at fair
value are measured initially at fair value, with transaction costs
taken directly to the consolidated income statement. Subsequently,
the fair values are remeasured and gains and losses from changes
therein are recognised in the consolidated income
statement.
Trade and other payables are held
at amortised cost and include amounts due to clients representing
customer deposits and winnings, which are matched by an equal and
opposite amount within cash and cash equivalents.
All interest-bearing loans and
borrowings are initially recognised at fair value net of issue
costs associated with the borrowing. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate method.
All financial liabilities are
recorded as cash flows from financing activities.
Derecognition of financial assets and
liabilities
Financial assets are derecognised
when the right to receive cash flows from the assets has expired or
when the Group has transferred its contractual right to receive the
cash flows from the financial assets or has assumed an obligation
to pay the received cash flows in full without material delay to a
third party, and either:
- substantially all the risks and rewards of ownership have
been transferred; or
- substantially all the risks and rewards have neither been
retained nor transferred but control is not retained.
Financial liabilities are
derecognised when the obligation is discharged, cancelled or
expires.
Derivative financial instruments
The Group uses derivative
financial instruments such as cross currency swaps, foreign
exchange swaps and interest rate swaps, to hedge its risks
associated with interest rate and foreign currency fluctuations.
Derivative financial instruments are recognised initially and
subsequently at fair value. The gains or losses on re-measurement
are taken to the consolidated income statement.
Derivative financial instruments
are classified as assets where their fair value is positive, or as
liabilities where their fair value is negative. Derivative assets
and liabilities arising from different transactions are only offset
if the transactions are with the same counterparty, a legal right
of offset exists, and the parties intend to settle the cash flows
on a net basis.
Provisions
Provisions are recognised when the
Group has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation.
Provisions are measured at the
Directors' best estimate of the expenditure required to settle the
obligation at the balance sheet date and are discounted to present
value where the effect is material using a pre-tax rate that
reflects current market assessments of the time value of money and
the risks specific to the liability. The unwinding of the discount
is recognised as a finance expense.
Foreign currency translation
The presentational currency of
Entain plc and the functional currencies of its UK subsidiaries is
Pounds Sterling (£).
Other than Sterling the main
functional currencies of subsidiaries are the Euro (€), the US
Dollar ($) and the Australian Dollar (A$). At the reporting date,
the assets and liabilities of non-sterling subsidiaries are
translated into Pounds Sterling (£) at the rate of exchange ruling
at the balance sheet date and their cash flows are translated at
the weighted average exchange rates for the year. The post-tax
exchange differences arising on the retranslation are taken
directly to other comprehensive income.
Transactions in foreign currencies
are initially recorded in the subsidiary's functional currency and
translated at the foreign currency rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the foreign currency rate of
exchange ruling at the balance sheet date.
All foreign currency translation
differences are taken to the consolidated income statement.
Non-monetary items that are measured at historical cost in a
foreign currency are translated using the exchange rate at the date
of the initial transaction. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rate
at the date when the fair value was determined.
On disposal of a foreign entity,
the deferred cumulative retranslation differences previously
recognised in equity relating to that particular foreign entity are
recognised in the consolidated income statement as part of the
profit or loss on disposal.
The following exchange rates were
used in 2023 and 2022:
|
2023
|
2022
|
Currency
|
Average
|
Year end
|
Average
|
Year end
|
Euro (€)
|
1.149
|
1.151
|
1.175
|
1.128
|
US Dollar
($)
|
1.242
|
1.274
|
1.245
|
1.208
|
Australian Dollar (A$)
|
1.873
|
1.866
|
1.788
|
1.775
|
NZ Dollars (NZD)
|
2.024
|
2.010
|
1.955
|
1.904
|
Income tax
Deferred tax is provided on all
temporary differences at the balance sheet date, between the tax
bases of assets and liabilities and their carrying amounts for
financial reporting purposes except:
- on
the initial recognition of goodwill;
- where the deferred tax liability arises from the initial
recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects
neither the accounting profit nor the tax profit; and
- associated with investments in subsidiaries, joint ventures
and associates, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised
for all deductible temporary differences and carry forward of
unused tax assets and unused tax losses, to the extent that it is
probable that taxable profit will be available against which the
deductible temporary differences and carry forward of unused tax
assets and unused tax losses can be utilised. The carrying amount
of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the
deferred tax asset to be utilised.
Deferred tax assets and
liabilities are measured at the tax rates that are expected to
apply to the year when 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
balances are not discounted.
Interest or penalties payable and
receivable in relation to income tax are recognised as an income
tax expense or credit in the consolidated income
statement.
Income tax expenses are recognised
within profit or loss except to the extent that they relate to
items recognised in other comprehensive income or directly in
equity, in which case they are recognised in other comprehensive
income or directly in equity.
Revenues, expenses and assets are
recognised net of the amount of sales tax except:
- where the sales tax incurred on a purchase of goods and
services is not recoverable from the taxation authority, in which
case the sales tax is recognised as part of the cost of acquisition
of the asset or as part of the expense item as applicable;
and
- receivables and payables are stated with the amount of sales
tax included.
The net amount of sales tax
recoverable from, or payable to, the taxation authority is included
as part of receivables or payables in the consolidated balance
sheet.
Accounting for uncertain tax positions
The Group is subject to various
forms of tax in a number of jurisdictions. Given the nature of the
industry within which the Group operates, the tax and regulatory
regimes are continuously changing and, as such, the Group is
exposed to a small number of uncertain tax positions. Judgement is
applied to adequately provide for uncertain tax positions where it
is believed that it is more likely than not that an economic
outflow will arise. In particular, judgement has been applied in
the Group's accounting for Greek tax and further disclosure is
given in Note 16.
Equity instruments and dividends
Equity instruments issued by the
Company are recorded at the fair value of proceeds received net of
direct issue costs.
Final dividends proposed by the
Board of Directors and unpaid at the year end are not recognised in
the financial statements until they have been approved by
shareholders at the Annual General Meeting. Interim dividends are
recognised when paid.
Revenue
The Group reports the gains and
losses on all betting and gaming activities as revenue, which is
measured at the fair value of the consideration received or
receivable from customers less free bets, promotions, bonuses and
other fair value adjustments. Revenue is net of VAT/GST. The Group
considers betting and gaming revenue to be out of the scope of IFRS
15 Revenue, and accounts for those revenues within the scope of
IFRS 9 Financial Instruments.
For LBOs, on course betting, Core
Telephone Betting, mobile betting and Digital businesses (including
sportsbook, betting exchange, casino, games, other number bets),
revenue represents gains and losses, being the amounts staked and
fees received, less total payouts recognised on the settlement of
the sporting event or casino gaming machine roulette or slots spin.
Open betting positions ("ante-post") are carried at fair value and
gains and losses arising on these positions are recognised in
revenue.
The following forms of revenue,
which are not significant in the context of Group revenue, are
accounted for within the scope of IFRS 15 Revenue. Revenue from the
online poker business reflects the net income (rake) earned from
poker hands completed by the year end. In the case of the greyhound
stadia, revenue represents income arising from the operation of the
greyhound stadia in the year, including broadcasting rights,
admission fees and sales of refreshments, net of VAT. Given the
nature of these revenue streams they are not considered to be
subject to judgement over the performance obligations, amount
received or timing of recognition.
Finance expense and income
Finance expense and income arising
on interest-bearing financial instruments carried at amortised cost
are recognised in the consolidated income statement using the
effective interest rate method. Finance expense includes the
amortisation of fees that are an integral part of the effective
finance cost of a financial instrument, including issue costs, and
the amortisation of any other differences between the amount
initially recognised and the redemption price. All finance expenses
are recognised over the availability period.
Share-based payment transactions
Certain employees (including
Directors) of the Group receive remuneration in the form of equity
settled share-based payment transactions, whereby employees render
services in exchange for shares or rights over shares (equity
settled transactions).
The cost of equity settled
transactions is measured by reference to the fair value at the date
on which they are granted. In valuing equity settled transactions,
no account is taken of any performance conditions, other than
conditions linked to the price of the shares of Entain plc (market
conditions).
The cost of equity settled
transactions is recognised in the consolidated income statement,
with a corresponding credit in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which
the relevant employees become fully entitled to the award (vesting
date). The cumulative expense recognised for equity settled
transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the number
of awards that, in the opinion of the Directors of the Group at
that date, based on the best available estimate of the number of
equity instruments, will ultimately vest.
No expense is recognised for
awards that do not ultimately vest, except for awards where vesting
is conditional upon a market condition, which are treated as
vesting irrespective of whether or not the market condition is
satisfied, provided that all other performance conditions are
satisfied.
The dilutive effect of outstanding
options is reflected as additional share dilution in the
computation of earnings per share as shown in Note 9.
4.4 Future accounting developments
The standards and interpretations
that are issued, but not yet effective, excluding those relating to
annual improvements, up to the date of issuance of the Group's
financial statements, are disclosed below. The Group intends to
adopt these standards, if applicable, when they become effective.
None of these are expected to have a significant effect on the
consolidated financial statements of the Group as set out
below:
IFRS 16
|
Leases
|
Lease liability in a sale and
leaseback transaction
|
1 January 2024
|
IAS 1
|
Presentation of Financial
Statements
|
Classification of liabilities as
current or non-current
Non-current liabilities regarding
long-term debt with covenants
|
1
January 2024
|
IFRS 10
|
Consolidated Financial
Statements
|
Sale or contribution of assets
between an investor and its associate or joint venture
|
Date
deferred
|
IAS 28
|
Investments in Associates and
Joint Ventures
|
Sale or contribution of assets
between an investor and its associate or joint venture
|
Date
deferred
|
IFRS 7
|
Financial Instruments
Disclosures
|
Supplier Financial
Arrangements
|
1
January 2024
|
IAS 7
|
Statement of Cash Flows
|
Supplier Finance
Arrangements
|
1
January 2024
|
5
Segment information
The Group's operating segments are
based on the reports reviewed by the Executive Management Team
(which is 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.
The Group's operating segments are split into the
five reportable segments as detailed below:
- Online: comprises betting and gaming activities from online
and mobile operations. Brands include bwin, Coral, Crystalbet,
Eurobet, Ladbrokes, Sportingbet, SuperSport, Sports Interaction,
STS, Tab NZ and BetCity, CasinoClub, Foxy Bingo, Gala, Gioco
Digitale, partypoker and PartyCasino, Optibet, and
Ninja;
- Retail: comprises betting and retail activities in the shop
estates in Great Britain, Northern Ireland, Jersey, Republic of
Ireland, Belgium, Italy, Croatia, New Zealand and
Poland;
- 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 has chosen to assess the performance of operating
segments based on a measure of NGR, EBITDA, and operating profit
with finance costs and taxation considered for the Group as a
whole. See page 69 of this annual report for further considerations
of the use of Non-GAAP measures. 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 year
ended 31 December were as follows:
2023
|
Online
£m
|
Retail
£m
|
All other segments
£m
|
New opportunities
£m
|
Corporate
£m
|
Elimination
of internal revenue
£m
|
Total Group
£m
|
NGR1
|
3,426.5
|
1,386.7
|
26.7
|
-
|
-
|
(6.8)
|
4,833.1
|
VAT/GST
|
(59.9)
|
(3.6)
|
-
|
-
|
-
|
-
|
(63.5)
|
Revenue
|
3,366.6
|
1,383.1
|
26.7
|
-
|
-
|
(6.8)
|
4,769.6
|
Gross profit
|
1,980.1
|
900.2
|
26.7
|
-
|
-
|
-
|
2,907.0
|
Contribution2
|
1,369.8
|
890.3
|
26.3
|
(7.0)
|
-
|
-
|
2,279.4
|
Operating costs excluding marketing
costs
|
(512.4)
|
(606.1)
|
(21.0)
|
(22.3)
|
(109.7)
|
-
|
(1,271.5)
|
Underlying EBITDA before
separately disclosed items
|
857.4
|
284.2
|
5.3
|
(29.3)
|
(109.7)
|
-
|
1,007.9
|
Share-based payments
|
(7.3)
|
(2.4)
|
-
|
(0.7)
|
(11.3)
|
-
|
(21.7)
|
Depreciation and
amortisation
|
(160.2)
|
(132.1)
|
(2.7)
|
(5.7)
|
(0.8)
|
-
|
(301.5)
|
Share of joint ventures and
associates
|
(1.4)
|
-
|
2.0
|
(1.5)
|
(42.0)
|
-
|
(42.9)
|
Operating profit/(loss) before
separately disclosed items
|
688.5
|
149.7
|
4.6
|
(37.2)
|
(163.8)
|
-
|
641.8
|
Separately disclosed items (Note
6)
|
(481.1)
|
(22.8)
|
-
|
(44.3)
|
(738.3)
|
-
|
(1,286.5)
|
Group operating
profit/(loss)
|
207.4
|
126.9
|
4.6
|
(81.5)
|
(902.1)
|
-
|
(644.7)
|
Net finance expense
|
|
|
|
|
|
|
(197.9)
|
Loss before tax
|
|
|
|
|
|
|
(842.6)
|
Income tax
|
|
|
|
|
|
|
(36.1)
|
Loss for the year from continuing
operations
|
|
|
|
|
|
|
(878.7)
|
Loss for the year from discontinued
operations
after tax
|
|
|
|
|
|
|
(57.8)
|
Loss for the year after discontinued
operations
|
|
|
|
|
|
|
(936.5)
|
1.
Included within NGR are amounts of £68.1m (2022: £65.6m) in
relation to online poker services and £26.7m (2022: £25.1m) arising
from the operation of greyhound stadia recognised under IFRS 15
Revenue.
2. Contribution
represents gross profit less marketing costs and is a key
performance metric used by the Group, particularly in
Online.
5
Segment information (continued)
2022
|
Online
£m
|
Retail
£m
|
All other segments
£m
|
New
opportunities
£m
|
Corporate
£m
|
Elimination
of internal revenue
£m
|
Total Group
£m
|
NGR1
|
3,050.5
|
1,277.8
|
25.1
|
-
|
-
|
(4.5)
|
4,348.9
|
VAT/GST
|
(52.0)
|
-
|
-
|
-
|
-
|
-
|
(52.0)
|
Revenue
|
2,998.5
|
1,277.8
|
25.1
|
-
|
-
|
(4.5)
|
4,296.9
|
Gross profit
|
1,829.6
|
860.0
|
25.1
|
-
|
-
|
-
|
2,714.7
|
Contribution2
|
1,254.2
|
852.1
|
25.0
|
(2.4)
|
-
|
-
|
2,128.9
|
Operating costs excluding marketing
costs
|
(426.0)
|
(571.9)
|
(20.1)
|
(26.7)
|
(91.0)
|
-
|
(1,135.7)
|
Underlying EBITDA before
separately disclosed items
|
828.2
|
280.2
|
4.9
|
(29.1)
|
(91.0)
|
-
|
993.2
|
Share-based payments
|
(7.8)
|
(2.3)
|
-
|
(0.3)
|
(8.8)
|
-
|
(19.2)
|
Depreciation and
amortisation
|
(118.3)
|
(112.4)
|
(2.7)
|
(4.5)
|
(0.2)
|
-
|
(238.1)
|
Share of joint ventures and
associates
|
(0.2)
|
-
|
0.4
|
(0.4)
|
(193.9)
|
-
|
(194.1)
|
Operating profit/(loss) before
separately disclosed items
|
701.9
|
165.5
|
2.6
|
(34.3)
|
(293.9)
|
-
|
541.8
|
Separately disclosed items (Note
6)
|
(114.0)
|
(57.4)
|
(0.7)
|
-
|
(41.1)
|
-
|
(213.2)
|
Group operating
profit/(loss)
|
587.9
|
108.1
|
1.9
|
(34.3)
|
(335.0)
|
-
|
328.6
|
Net finance expense
|
|
|
|
|
|
|
(225.7)
|
Profit before tax
|
|
|
|
|
|
|
102.9
|
Income tax
|
|
|
|
|
|
|
(70.0)
|
Profit for the year from continuing
operations
|
|
|
|
|
|
|
32.9
|
Loss for the year from discontinued
operations
after tax
|
|
|
|
|
|
|
(13.4)
|
Profit for the year after discontinued
operations
|
|
|
|
|
|
|
19.5
|
Geographical
information
Revenue by destination and
non-current assets on a geographical basis for the Group, are as
follows:
|
|
2023
|
|
2022
|
|
Revenue
£m
|
Non-current
assets3
£m
|
Revenue
£m
|
Non-current
assets3
£m
|
United Kingdom
|
1,953.8
|
3,076.8
|
2,032.7
|
3,022.3
|
Australia and New
Zealand
|
515.1
|
1,475.4
|
463.0
|
528.8
|
Italy
|
517.4
|
512.2
|
472.6
|
523.3
|
Rest of
Europe1
|
1,443.4
|
3,930.2
|
968.7
|
2,922.4
|
Rest of the
world2
|
339.9
|
293.8
|
359.9
|
259.6
|
Total
|
4,769.6
|
9,288.4
|
4,296.9
|
7,256.4
|
1. Rest of Europe is
predominantly driven by markets in Croatia, Belgium, The
Netherlands, Georgia, Germany, and Spain.
2. Rest of the world is
predominantly driven by the markets in Brazil and
Canada.
3. Non-current assets
excluding other financial assets, deferred tax assets and
retirement benefit assets.
6 Separately disclosed
items
|
£m
|
2023
Tax impact
£m
|
£m
|
2022
Tax impact
£m
|
Legal settlement1
|
585.0
|
-
|
-
|
-
|
Amortisation of acquired
intangibles2
|
254.6
|
(41.6)
|
116.9
|
(16.5)
|
Impairment3
|
289.0
|
-
|
7.0
|
-
|
Restructuring
costs4
|
49.7
|
(9.6)
|
11.8
|
(1.4)
|
Corporate transaction
costs5
|
17.8
|
-
|
23.9
|
(0.6)
|
Legal and onerous contract
provisions6
|
17.6
|
(3.0)
|
8.1
|
(0.8)
|
Movement in fair value of
contingent consideration7
|
71.8
|
(15.5)
|
(1.0)
|
-
|
Loss on
disposal of property, plant and equipment8
|
1.0
|
-
|
1.0
|
-
|
Financing9
|
1.0
|
-
|
5.7
|
-
|
Furlough10
|
-
|
-
|
45.5
|
(8.6)
|
Separately disclosed items for the
year from continuing operations
|
1,287.5
|
(69.7)
|
218.9
|
(27.9)
|
Separately disclosed items for the
year from discontinued operations
|
57.8
|
-
|
13.4
|
-
|
Total
before tax
|
1,345.3
|
(69.7)
|
232.3
|
(27.9)
|
Separately disclosed items for the
year after tax
|
1,275.6
|
|
204.4
|
|
|
|
|
|
|
1.
On 5 December 2023, Entain plc
entered into a Deferred Prosecution Agreement ("DPA") with the
Crown Prosecution Service ("CPS") in relation to historical conduct
of the Group, thereby resolving the HM Revenue & Customs
("HMRC") investigation into the Group. As a result of the agreement
reached, the Group has recognised a £585.0m discounted liability
during the current year in relation to amounts it has agreed to be
pay in relation to the disgorgement of profits, charitable
donations and contributions to CPS costs.
2.
Amortisation charges in relation to acquired
intangible assets arising from the various acquisitions made by the
Group in recent years, including Ladbrokes Coral, Crystalbet, Neds,
Enlabs, Avid, SuperSport, STS, NZ Tab and
365Scores.
3. Relates to impairments recorded against the Group's
Australian business of £190.0m, the assets associated with the
Group's Unikrn and Africa operations, which have closed as B2C
operations during the year, of £78.1m, an £11.0m impairment of the
Group's ROI retail portfolio, an impairment against the Group's
Polish operation (excluding STS) of £5.1m and a number of smaller
impairments against ROU assets that the Group no longer intends to
use following their closure, including UK Retail shops. Further
details are provided in Note 11.
4.
Primarily relates to costs associated with the Group's
restructuring programme Project Romer.
5.
Transaction costs associated with the M&A activity including
the acquisition of 365Scores, NZ Tab, STS and Angstrom (see Note
15).
6.
Relates primarily to costs associated with the Group's legal
expenses in cooperating with the HMRC investigation.
7. Reflects the movement in the fair value of contingent
consideration arrangements on recent acquisitions as well as the
associated discount unwind.
8.
Relates to the loss on disposal of certain assets within the
Group's retail estates.
9.
Fees incurred in respect of bridging loans and other financing
activities.
10.
Relates to the repayment of monies received under
the Government furlough scheme in the prior year.
The items above reflect incomes
and expenditures which are either exceptional in nature or size or
are associated with the amortisation of acquired intangibles. The
Directors believe that each of these items warrants separate
disclosure as they do not form part of the day-to-day underlying
trade of the Group.
7 Finance expense and
income
|
2023
£m
|
2022
£m
|
Interest on term loans, bonds and
bank facilities
|
(229.2)
|
(76.2)
|
Interest on lease
liabilities1
|
(12.6)
|
(12.8)
|
Other financing (Note 6)
|
(1.0)
|
(5.7)
|
Total finance expense
|
(242.8)
|
(94.7)
|
|
|
|
Interest receivable
|
12.4
|
4.3
|
Losses arising on financial derivatives
|
(90.6)
|
(23.1)
|
Gains/(losses) arising on foreign
exchange on debt instruments
|
123.1
|
(112.2)
|
|
|
|
Net finance expense
|
(197.9)
|
(225.7)
|
1. Interest on lease liabilities
of £12.6m (2022: £12.8m) is net of £0.2m of sub-let interest
receivable (2022: £0.2m).
8
Dividends
Pence per share
|
2023
pence
|
2022
pence
|
|
2023
Shares in issue number
|
2022
Shares in issue number
|
2022 interim dividend
paid
|
-
|
8.5
|
|
-
|
588.8
|
2022 second interim dividend
paid
|
8.5
|
n/a
|
|
588.8
|
n/a
|
2023
interim dividend paid
|
8.9
|
n/a
|
|
638.8
|
n/a
|
|
|
|
|
|
|
A second interim dividend of 8.9p
(2022: 8.5p) per share, amounting to £56.9m (2022: £50.0m) in
respect of the year ended 31 December 2023, was proposed by the
Directors on 7 March 2024. The estimated total amount payable in
respect of the final dividend is based on the expected number of
shares in issue on 7 March 2024. There are no income tax
implications for the Group and Company arising from the proposed
second interim dividend. The 2022 second interim dividend of 8.5p
per share (£50.0m) was paid on 26 April 2023. The 2023 interim
dividend of 8.9p per share (£56.8m) was paid on 18 September
2023.
In the year, the Group paid a
dividend totalling £7.4m to non-controlling interests (2022:
£nil).
9 Earnings per share
Basic earnings per share has been
calculated by dividing the loss for the year attributable to
shareholders of the Company of £928.6m (2022: £24.2m profit) by the
weighted average number of shares in issue during the year of
617.5m (2022: 588.2m).
The dilutive effects of share
options and contingently issuable shares are not considered when
calculating the diluted loss per share.
At 31 December 2023, there were
638.8m €0.01 ordinary shares in issue.
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 4 and disclosed in Note 6.
Total earnings per
share
Weighted average number of shares
(millions)
|
2023
|
2022
|
Shares for basic earnings per
share
|
616.0
|
588.2
|
Potentially dilutive share options
and contingently issuable shares
|
1.5
|
4.5
|
Shares for diluted earnings per
share
|
617.5
|
592.7
|
Total profit
|
2023
£m
|
2022
£m
|
(Loss)/profit attributable to
shareholders
|
(928.6)
|
24.2
|
- from
continuing operations
|
(870.8)
|
37.6
|
- from
discontinued operations
|
(57.8)
|
(13.4)
|
Losses arising from financial
instruments
|
90.6
|
23.1
|
(Gains)/losses arising from foreign
exchange debt instruments
|
(123.1)
|
112.2
|
Associated tax charge on
(losses)/gains arising from financial instruments and foreign
exchange debt instruments
|
1.1
|
(2.4)
|
Separately disclosed items net of
tax (Note 6)
|
1,232.7
|
201.4
|
Adjusted profit attributable to
shareholders
|
272.7
|
358.5
|
- from
continuing operations
|
272.7
|
358.5
|
- from
discontinued operations
|
|
-
|
|
Standard earnings per
share
|
|
Adjusted earnings per
share
|
Earnings per share
(pence)
|
2023
|
2022
|
|
2023
|
2022
|
Basic earnings per share
|
|
|
|
|
|
- from
continuing operations
|
(141.4)
|
6.4
|
|
44.3
|
60.9
|
- from
discontinued operations
|
(9.3)
|
(2.3)
|
|
-
|
-
|
From profit for the
period
|
(150.7)
|
4.1
|
|
44.3
|
60.9
|
Diluted earnings per
share
|
|
|
|
|
|
- from
continuing operations
|
(141.4)
|
6.3
|
|
44.2
|
60.5
|
- from
discontinued operations
|
(9.3)
|
(2.2)
|
|
-
|
-
|
From profit for the
period
|
(150.7)
|
4.1
|
|
44.2
|
60.5
|
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 51.1p (2022:
93.9p) and a diluted adjusted earnings per share of 51.0p (2022:
93.2p) from continuing operations.
10 Goodwill and intangible assets
|
Goodwill
|
Licences
|
Software
|
Customer
relationships
|
Trade-marks & brand
names
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
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 (Note 15) 1
|
624.0
|
149.1
|
7.4
|
201.9
|
207.0
|
1,189.4
|
Disposals
|
-
|
(0.5)
|
(13.9)
|
-
|
-
|
(14.4)
|
Reclassification
|
-
|
-
|
(1.0)
|
-
|
-
|
(1.0)
|
At 31 December 2022
(restated)1
|
4,270.1
|
205.4
|
772.7
|
1,241.0
|
2,269.4
|
8,758.6
|
Exchange adjustment
|
(68.2)
|
11.8
|
(12.7)
|
(12.3)
|
(17.4)
|
(98.8)
|
Additions
|
-
|
-
|
191.5
|
-
|
-
|
191.5
|
Additions
from business combinations (Note 15)
|
1,067.5
|
747.8
|
49.8
|
275.5
|
439.5
|
2,580.1
|
Disposals
|
-
|
-
|
(2.9)
|
-
|
-
|
(2.9)
|
At 31 December 2023
|
5,269.4
|
965.0
|
998.4
|
1,504.2
|
2,691.5
|
11,428.5
|
|
|
|
|
|
|
|
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
|
Impairment
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
|
(13.3)
|
(0.1)
|
(9.1)
|
(13.8)
|
(7.3)
|
(43.6)
|
Amortisation charge
|
-
|
45.3
|
138.0
|
141.4
|
90.4
|
415.1
|
Impairment
charge
|
277.5
|
-
|
2.2
|
0.5
|
2.1
|
282.3
|
Disposals
|
-
|
-
|
(2.9)
|
-
|
-
|
(2.9)
|
At 31 December 2023
|
553.4
|
71.5
|
649.0
|
1,146.1
|
332.4
|
2,752.4
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
At 31 December 2022
|
3,980.9
|
179.1
|
251.9
|
223.0
|
2,022.2
|
6,657.1
|
At 31 December 2023
|
4,716.0
|
893.5
|
349.4
|
358.1
|
2,359.1
|
8,676.1
|
1.
Restatement of prior year intangible valuations
has been made in relation to the prior year SuperSport acquisition
during the subsequent measurement period. See note 15 for further
details.
At 31 December 2023 the Group had
not entered into contractual commitments for the acquisition of any
intangible assets (2022: £nil).
Included within trade-marks and
brand names are £1,398.4m (2022: £1,398.4m) 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, as well as licences
acquired as part of the NZ Tab acquisition (see Note
15).
Software relates to the cost of
acquired software, through purchase or business combination, and
the capitalisation of internally developed software. Additions of
£191.5m (2022: £129.9m) include £92.6m of internally capitalised
costs (2022: £58.0m).
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, Enlabs, Sport Interaction, SuperSport, BetCity, 365Scores,
and Tab NZ businesses.
11
Impairment testing of goodwill and indefinite life intangible
assets
An impairment loss is recognised
for any amount by which an asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an
asset's fair value less costs to sell and its value in
use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units).
Within UK, European, CEE and Tab
NZ Retail, the cash-generating units ("CGUs") are generally an
individual Licensed Betting Office ("LBO") and, therefore,
impairment is first assessed at this level for licences
(intangibles) and property, plant and equipment, with any
impairment arising booked to licences and property, plant and
equipment on a pro-rata basis. Since goodwill and brand names have
not been historically allocated to individual LBOs, a secondary
assessment is then made to compare the carrying value of the
segment against the recoverable amount with any additional
impairment then taken against goodwill first.
For Online the CGU is the relevant
geographical location or business unit, for example Australia,
European digital (defined as websites hosted by proprietary
platforms based in European constituent countries), Digital
(defined as websites hosted by Entain proprietary platforms) etc.
and any impairments are made firstly to goodwill, next to any
capitalised intangible asset and then finally to property, plant
and equipment. The expected cash flows generated by the assets are
discounted using appropriate discount rates that reflect the time
value of money and risks associated with the group of
assets.
For both tangible and intangible
assets, the future cash flows are based on the forecasts and
budgets of the CGU or business discounted to reflect time value of
money. The key assumptions within the UK and European
Retail budgets are OTC wagers (customer visits and spend per
visit), the average number of machines per shop, gross win per shop
per week, salary increases, the potential impact of the shop
closures and the fixed costs of the LBOs. The key assumptions
within the budgets for Online are the number of active customers,
net revenue per head, win percentage, marketing spend, revenue
shares and operating costs. All forecasts take into account the
impact of the Group's commitment to be Net Zero by 2035 as well as
the impact of climate change.
The value in use calculations use
cash flows based on detailed, Board-approved, financial budgets
prepared by management covering a three-year period. These
forecasts have been extrapolated over years 4 to 8 representing a
declining growth curve from year 3 until the long-term forecast
growth rate is reached. The growth rates used from years 4 to 8
range from 0% to 10%. From year 9 onwards long-term growth rates
used are between 0% and 2% (2022: between 0% and 2%) and are
based on the long-term GDP growth rate of the countries in which
the relevant CGUs operate or the relevant outlook for the
business. An eight-year horizon is considered appropriate
based on the Group's history of underlying profit as well as
ensuring there is an appropriate decline to long-term growth rates
from those growth rates currently observed in our key markets. A 0%
growth rate has been used for the UK Retail operating segment. All
key assumptions used in the value in use calculations reflect the
Group's past experience unless a relevant external source of
information is available. Whilst the same approach is adopted for
Tab NZ impairment reviews, the value-in-use is assessed over the
25-year life of the licence rather than into perpetuity.
The discount rate calculation is
based on the specific circumstances with reference to the WACC and
risk factors expected in the industry in which the Group
operates.
The pre-tax discount rates used,
which have remained consistent year-on-year, and the associated
carrying value of goodwill by CGU is as follows:
Goodwill
|
2023
%
|
2022
%
|
2023
£m
|
2022
(restated)1
£m
|
Digital
|
11.1
|
12.6-12.9
|
2,263.4
|
2,230.7
|
UK Retail
|
12.6
|
12.6
|
76.4
|
76.4
|
Australia
|
13.5
|
13.5
|
145.0
|
347.5
|
European Retail
|
9.5-13.3
|
9.5-13.3
|
147.1
|
161.5
|
European Digital
|
9.5-13.3
|
9.5-13.3
|
343.3
|
350.4
|
Enlabs
|
11.8
|
11.8
|
205.3
|
209.6
|
BetCity
|
12.7
|
n/a
|
200.1
|
n/a
|
SuperSport
|
11.5
|
11.8
|
527.8
|
538.4
|
STS
|
11.7
|
n/a
|
389.1
|
n/a
|
365Scores
|
12.3
|
n/a
|
86.8
|
n/a
|
Tab NZ
|
11.1
|
n/a
|
255.5
|
n/a
|
All other segments
|
11.1-12.6
|
12.4
|
76.2
|
66.4
|
|
|
|
4,716.0
|
3,980.9
|
1.
Restatement of prior year intangible valuations
has been made in relation to the prior year SuperSport acquisition
during the subsequent measurement period. See note 15 for further
details.
It is not practical or material to
disclose the carrying value of individual licences by
LBO.
Impairment recognised during the year
Impairments of intangible assets
and property, plant and equipment are recognised as separately
disclosed items within operating expenses.
Australia impairment
During the current year, the Group
recorded a non-cash impairment charge of £190.0m against the Online
division. The charge has arisen in the Group's Australian CGU and
is a result of the impact of ongoing increases in the rate of Point
of Consumption tax across certain states and a forecast decline in
Australian revenues in 2024 as a result of a reduced market
outlook.
Whilst our Australian business
continues to be profitable and strategically important, market
conditions and tax headwinds have reduced the value in use of the
business resulting in the impairment charge. Post the annualisation
of the tax increases and stabilisation of local market conditions,
we expect our Australian business to return to growth.
Unikrn impairment
During the year, the Group took
the decision to close its B2C eSports business operating under the
Unikrn brand, in favour of developing a leading eSports proposition
on existing labels. As a result of the decision to turn off its B2C
operations, the Group has recorded an £43.2m impairment of goodwill
and £1.1m impairment of trade-marks and brands associated with the
Unikrn operation during the current year within the New
Opportunities segment.
Impala impairment
The Group has also taken the
decision during 2023 to close its B2C operations in Zambia and
Kenya, operations that were run out of the previously acquired
African subsidiary. As a result of the decision to close these
operations and focus resources to drive growth in other markets,
the Group has recorded an impairment against the value of assets
carried against this business. The resulting impairment has been
booked against goodwill of £29.9m, and against software of £4.0m
within the Online segment.
In addition, an impairment charge
of £11.0m has been recognised during the current year against our
Retail estate in ROI as a result of a reduced outlook for this
market, and £5.0m against Totolotek following its closure post the
STS acquisition.
Sensitivity analysis
With the exception of Australia,
no reasonable change in assumptions would cause an additional
impairment, including a 5% decrease in all cash flows or a 0.5pp
increase in discount rates.
For Australia, a 10% increase in
revenue would reduce the impairment by £110.0m, whereas a 5%
decrease in revenue would increase the impairment by £48.0m. Each
0.5pp movement in the discount rate impacting the charge by
£20.0m.
Impairment testing across the business
http://www.rns-pdf.londonstockexchange.com/rns/9164F_1-2024-3-7.pdf
12 Property, plant and equipment
|
Land and buildings
|
Plant and equipment
|
Fixtures and fittings
|
Leased assets
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Cost
|
|
|
|
|
|
At 1 January 2022
|
26.8
|
102.5
|
188.3
|
572.3
|
889.9
|
Exchange adjustment
|
0.7
|
3.2
|
7.0
|
5.2
|
16.1
|
Additions
|
24.9
|
50.6
|
11.1
|
61.8
|
148.4
|
Additions from business
combinations
|
0.2
|
3.2
|
4.4
|
9.5
|
17.3
|
Disposals
|
(10.4)
|
(20.2)
|
(16.1)
|
(3.5)
|
(50.2)
|
Reclassification
|
(1.6)
|
1.9
|
42.9
|
(42.2)
|
1.0
|
At 31 December 2022
|
40.6
|
141.2
|
237.6
|
603.1
|
1,022.5
|
Exchange adjustment
|
(0.3)
|
(2.1)
|
(3.5)
|
(1.4)
|
(7.3)
|
Additions
|
18.0
|
27.0
|
45.9
|
45.6
|
136.5
|
Additions
from business combinations (Note 15)
|
4.9
|
8.1
|
2.2
|
26.9
|
42.1
|
Disposals
|
(4.5)
|
(6.7)
|
(5.7)
|
(49.8)
|
(66.7)
|
Reclassification
|
-
|
0.9
|
(0.9)
|
-
|
-
|
At 31 December 2023
|
58.7
|
168.4
|
275.6
|
624.4
|
1,127.1
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
At 1 January 2022
|
11.3
|
38.3
|
52.2
|
320.9
|
422.7
|
Exchange adjustment
|
0.5
|
2.7
|
2.0
|
4.2
|
9.4
|
Depreciation charge
|
11.4
|
23.5
|
26.0
|
65.0
|
125.9
|
Impairment
|
-
|
0.1
|
1.9
|
4.5
|
6.5
|
Disposals
|
(10.3)
|
(20.0)
|
(16.1)
|
(2.8)
|
(49.2)
|
Reclassification
|
-
|
-
|
21.7
|
(21.7)
|
-
|
At 31 December 2022
|
12.9
|
44.6
|
87.7
|
370.1
|
515.3
|
Exchange adjustment
|
(0.2)
|
(1.5)
|
(2.0)
|
(0.6)
|
(4.3)
|
Depreciation charge
|
13.7
|
29.4
|
36.6
|
61.3
|
141.0
|
Impairment
|
0.9
|
0.7
|
0.4
|
4.7
|
6.7
|
Disposals
|
(4.5)
|
(6.0)
|
(5.1)
|
(49.4)
|
(65.0)
|
Reclassification
|
-
|
(0.2)
|
0.2
|
-
|
-
|
At 31 December 2023
|
22.8
|
67.0
|
117.8
|
386.1
|
593.7
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
At 31 December 2022
|
27.7
|
96.6
|
149.9
|
233.0
|
507.2
|
At 31 December 2023
|
35.9
|
101.4
|
157.8
|
238.3
|
533.4
|
At 31 December 2023, the Group had
not entered into contractual commitments for the acquisition of any
property, plant and equipment (2022: £nil).
Included within fixtures, fittings
and equipment are assets in the course of construction which are
not being depreciated of £17.1m (2022: £10.6m), relating
predominantly to self-service betting terminals and the new point
of sale system in UK Retail.
An impairment charge of £6.5m
(2022: £6.5m) has been made against closed retail shops and office
buildings included within leased assets in the year. See Notes 6
and 11 for further details.
Analysis of leased
assets:
|
Land and buildings
|
Plant and equipment
|
Total
|
|
£m
|
£m
|
£m
|
Cost
|
|
|
|
At 1 January 2022
|
520.7
|
51.6
|
572.3
|
Exchange adjustment
|
5.0
|
0.2
|
5.2
|
Additions
|
60.0
|
1.8
|
61.8
|
Additions from business
combinations
|
9.5
|
-
|
9.5
|
Disposals
|
(2.0)
|
(1.5)
|
(3.5)
|
Reclassification
|
-
|
(42.2)
|
(42.2)
|
At 31 December 2022
|
593.2
|
9.9
|
603.1
|
Exchange adjustment
|
(1.3)
|
(0.1)
|
(1.4)
|
Additions
|
32.8
|
12.8
|
45.6
|
Additions
from business combinations
|
26.0
|
0.9
|
26.9
|
Disposals
|
(49.8)
|
-
|
(49.8)
|
At 31 December 2023
|
600.9
|
23.5
|
624.4
|
|
|
|
|
Accumulated depreciation
|
|
|
|
At 1 January 2022
|
299.8
|
21.1
|
320.9
|
Exchange adjustment
|
4.1
|
0.1
|
4.2
|
Depreciation charge
|
55.1
|
9.9
|
65.0
|
Impairment
|
4.5
|
-
|
4.5
|
Disposals
|
(2.0)
|
(0.8)
|
(2.8)
|
Reclassification
|
-
|
(21.7)
|
(21.7)
|
At 31 December 2022
|
361.5
|
8.6
|
370.1
|
Exchange adjustment
|
(0.6)
|
-
|
(0.6)
|
Depreciation charge
|
59.0
|
2.3
|
61.3
|
Impairment
|
4.7
|
-
|
4.7
|
Disposals
|
(49.4)
|
-
|
(49.4)
|
At 31 December 2023
|
375.2
|
10.9
|
386.1
|
|
|
|
|
Net book value
|
|
|
|
At 31 December 2022
|
231.7
|
1.3
|
233.0
|
At 31 December 2023
|
225.7
|
12.6
|
238.3
|
13 Net debt
The components of the Group's
adjusted net debt are as follows:
|
|
2023
£m
|
2022
£m
|
Current assets
|
|
|
|
Cash and short-term
deposits
|
|
400.6
|
658.5
|
Current liabilities
|
|
|
|
Interest-bearing loans and
borrowings
|
|
(319.2)
|
(424.9)
|
Non-current liabilities
|
|
|
|
Interest-bearing loans and
borrowings
|
|
(3,038.8)
|
(2,689.1)
|
Net debt
|
|
(2,957.4)
|
(2,455.5)
|
|
|
|
|
Cash held on behalf of
customers
|
|
(196.8)
|
(200.5)
|
Fair value swaps held against debt
instruments (derivative financial (liability)/asset)
|
|
(85.6)
|
(6.5)
|
Deposits
|
|
48.8
|
43.8
|
Balances held with payment service
providers
|
|
176.0
|
149.8
|
Sub-total
|
|
(3,015.0)
|
(2,468.9)
|
|
|
|
|
Lease liabilities
|
|
(275.9)
|
(280.9)
|
Adjusted net debt including lease
liabilities
|
|
(3,290.9)
|
(2,749.8)
|
Cash held on behalf of customers
represents the outstanding balance due to customers in respect of
their online gaming wallets.
14 Notes to the statement of cash flows
Reconciliation of (loss)/profit to
net cash inflow from operating activities:
|
2023
£m
|
2022
£m
|
(Loss)/profit before tax from continuing
operations
|
(842.6)
|
102.9
|
Net
finance expense
|
197.9
|
225.7
|
(Loss)/profit before tax and net finance expense from
continuing operations
|
(644.7)
|
328.6
|
Loss
before tax and net finance expense from discontinued
operations
|
(57.8)
|
(13.4)
|
(Loss)/profit before tax and net
finance expense including discontinued operations
|
(702.5)
|
315.2
|
Adjustments for:
|
|
|
Impairment
|
289.0
|
7.0
|
Loss on
disposal
|
1.0
|
1.0
|
Depreciation of property, plant and
equipment
|
141.0
|
125.9
|
Amortisation of intangible
assets
|
415.1
|
229.1
|
Share-based payments
charge
|
23.6
|
19.2
|
Decrease/(increase) in trade and
other receivables
|
42.2
|
44.7
|
Increase in other financial
liabilities
|
62.7
|
2.2
|
(Decrease)/increase in trade and
other payables
|
506.0
|
(85.9)
|
Decrease in provisions
|
(1.9)
|
(6.9)
|
Share of results from joint venture
and associate
|
42.9
|
194.1
|
Pension settlement
|
-
|
7.0
|
Other
|
(9.1)
|
(5.7)
|
Cash generated by
operations
|
810.0
|
846.9
|
15 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
estimation. 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; see Note 6 for
details.
SuperSport
Measurement period adjustment
The initial value of goodwill
recognised was £518.8m on acquisition. Subsequent to this a
measurement period adjustment has been applied to increase the
goodwill by £1.7m, increase licences by £1.5m, increase trade-marks
& brand names by £1.0m, decrease customer relationships by
£4.0m, and increase other liabilities by £0.2m.
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 shareholders
During the period, the Group
received by way of an equity injection into Entain Holdings (CEE)
Limited £42.6m from EMMA Capital in relation to their 25% share of
the 2022 earn-out under the SuperSport acquisition. As EMMA Capital
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 to reflect the future
liability within equity.
Summary of acquisitions in the period:
Acquisitions during the year
relate primarily to online gaming activities. Tab NZ, an STS also
have retail estates. Fair values were determined on the basis of an
initial assessment performed by an independent professional
expert.
NZ Ent Limited (trading as Tab NZ)
On 1 June, the Group completed the
acquisition of a business (NZ Ent Limited) which entitles them to
the exclusive license to operate and run the brand of Tab NZ in New
Zealand for 25 years for an initial payment of £85.3m with a
further £10.6m paid following acquisition. As part of the
acquisition, the Group has also committed to make minimum
guaranteed funding payments to Tab NZ (the seller) in the first
five 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, based on forecast
performance for the Group's New Zealand business and the estimated
returns on the potential introduction of geo-blocking, which could
be significant, the discounted estimate of consideration for the
Tab NZ acquisition is £1,208.7m, which is considered to be equal to
the fair value.
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, and the values of net assets acquired and goodwill
are as follows:
|
|
|
Fair
value
£m
|
Intangible assets (excluding
goodwill)
|
|
|
894.6
|
Property, plant and
equipment
|
|
|
17.4
|
Trade and other
receivables
|
|
|
24.6
|
Cash and cash equivalents
|
|
|
10.2
|
Deferred tax asset
|
|
|
309.8
|
Deferred tax liability
|
|
|
(242.6)
|
Trade and other payables
|
|
|
(45.3)
|
Lease liabilities
|
|
|
(10.5)
|
Total
|
|
|
958.2
|
Net assets acquired
|
|
|
958.2
|
Goodwill
|
|
|
250.5
|
Total net assets acquired
|
|
|
1,208.7
|
|
|
|
|
Consideration:
|
|
|
|
Cash
|
|
|
96.6
|
Deferred consideration
|
|
|
386.5
|
Contingent
consideration
|
|
|
725.6
|
Total consideration
|
|
|
1,208.7
|
STS Holdings SA
On 23 August, a Group subsidiary,
Entain CEE, acquired 99.28% of STS Holdings S.A. ("STS") at a
purchase price of PLN 24.80 per share. As part of the acquisition
and the funding of Entain CEE's purchase of STS, the majority
shareholder in STS acquired a 10% economic stake in the enlarged
Entain CEE business for cash with the existing minority
shareholder, EMMA Capital, also subscribing for additional equity
in Entain CEE for cash to fund their economic proportion of the
acquisition. Total consideration for the acquisition of STS was
£748.6m, with minority holdings, including the remaining 0.72% of
shares not acquired as part of the initial purchase, contributing
£313.5m of the consideration. As the former majority shareholder in
STS and EMMA Capital have put options on their equity stake in
Entain CEE, the Group has recognised an equivalent financial
liability for these two put options.
Post the acquisition, the
remaining 0.72% of equity in STS has been acquired by Entain CEE,
with each parent contributing in line with their economic interest
in Entain CEE.
In accordance with IFRS 3, as the
Entain Group exercises control of CEE and therefore indirectly
controls STS, the business has been consolidated from the point of
acquisition.
Details of the purchase
consideration, and the values of net assets acquired and the
goodwill are as follows:
|
|
|
Fair
value
£m
|
Intangible assets (excluding
goodwill)
|
|
|
401.3
|
Property, plant and
equipment
|
|
|
22.6
|
Trade and other
receivables
|
|
|
5.6
|
Cash and cash equivalents
|
|
|
56.7
|
Deferred tax liability
|
|
|
(74.8)
|
Trade and other payables
|
|
|
(21.5)
|
Lease liabilities
|
|
|
(15.4)
|
Total
|
|
|
374.5
|
|
|
|
|
Net assets acquired
|
|
|
374.5
|
Goodwill
|
|
|
374.1
|
Total net assets acquired
|
|
|
748.6
|
|
|
|
|
Consideration:
|
|
|
|
Cash
|
|
|
435.1
|
Non-controlling interest
|
|
|
313.5
|
Total consideration
|
|
|
748.6
|
Other business combinations
BetCity
On 11 January, the Group acquired
100% of the share capital of BetCity for initial consideration of
€305m, 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
€362m. Amounts payable are capped at €550m.
In accordance with IFRS 3, as
control has been obtained, the business has been consolidated from
the point of acquisition.
365Scores
On 30 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 June, the Group acquired 100%
of the share capital of Tiidal Gaming for £7.8m. 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.
ASF Limited (trading as Angstrom)
On 29 September the Group
completed the acquisition of ASF Ltd, acquiring 100% of the share
capital of the business for initial consideration of $93.5m with up
to an additional $65.0m ($82.7m undiscounted) payable subject to
the achievement of certain milestones. Based on forecasts for the
business' performance post acquisition, total discounted
consideration has been assessed as $138.5m.
In accordance with IFRS 3, as
control has been obtained, the business has been consolidated from
the point of acquisition.
Details of the total purchase
consideration, and the values of net assets acquired and goodwill
on the acquisition of BetCity, 365Scores, Tiidal Gaming, and
Angstrom are as follows:
|
|
|
Fair
value
£m
|
Intangible assets (excluding
goodwill)
|
|
|
216.7
|
Property, plant and
equipment
|
|
|
2.1
|
Trade and other
receivables
|
|
|
26.2
|
Cash and cash equivalents
|
|
|
21.0
|
Deferred tax liability
|
|
|
(51.5)
|
Loans and borrowings
|
|
|
(9.4)
|
Trade and other payables
|
|
|
(49.3)
|
Lease liability
|
|
|
(1.0)
|
Total
|
|
|
154.8
|
|
|
|
|
Net assets acquired
|
|
|
154.8
|
Goodwill
|
|
|
442.9
|
Total net assets acquired
|
|
|
597.7
|
|
|
|
|
Consideration:
|
|
|
|
Cash
|
|
|
455.4
|
Contingent consideration
|
|
|
142.3
|
Total consideration
|
|
|
597.7
|
All of the acquired businesses
contributed revenues of £357.6m and underlying profit before tax of
£34.9m.
Had the acquisitions occurred on
the first day of the financial year the revenue for the Group would
have been £4,990.2m with an underlying profit before tax of
£493.4m.
Included in the valuation of
goodwill is the value attributed to acquired workforce, and the
benefit of future trading potential including synergies arising as
part of the acquisition.
16 Commitments and contingencies
AUSTRAC
In October 2020, AUSTRAC initiated
a compliance assessment of Entain Group Pty Ltd, the Group's
subsidiary in Australia ("Entain Australia"). Following two years
of assisting AUSTRAC with the assessment, Entain Australia was
notified in September 2022 that AUSTRAC would be commencing an
enforcement investigation. The investigation is focused on whether
Entain Australia complied with its obligations under the AML/CTF
Act.
Entain Australia continues to
co-operate fully with AUSTRAC's enforcement team, and is liaising
regularly with AUSTRAC's regulatory operations teams as it
implements a detailed remediation plan. As AUSTRAC are still
conducting their investigation and reviewing documentation, it is
too early to predict the likely timing and potential outcome of the
investigation. Whilst the details of the investigation into Entain
Australia are different to other AUSTRAC investigations in the
bookmaking industry, the directors note that previous penalties in
AUSTRAC civil penalty proceedings have been significant. Therefore,
as at the Balance Sheet date, uncertainty exists over both the
timing and outcome of the investigation, with any potential
penalty, should one arise, potentially material.
The Group remains fully engaged,
working collaboratively with AUSTRAC and providing detailed
quarterly updates on enhancements to its AML/CTF program. Whilst
significant progress has been made since 2022, this remains a key
area of focus.
As a leading gambling operator,
the Group recognises that it has a responsibility to keep financial
crime out of gambling, and remains committed to our customers, our
shareholders and the communities that we operate in to ensure we
act as a gatekeeper for safer betting.
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 €283.6m
at 31 December 2023.
17 Subsequent events
On 1 March 2024, the Group raised
an additional £300m of borrowings under a bank loan facility and
used the proceeds to repay all amounts drawn under the Group's
revolving credit facility. On 1 March 2024, the commitments
available under the Group's revolving credit facility were
increased by £45m further increasing the Group's available
liquidity. Following these transactions, the Group's
revolving credit facility had total commitments of £635m which, as
at 1 March 2024 was completely undrawn save £5m carved out for
letters of credit and guarantees.