TIDMENT
RNS Number : 3761I
Entain PLC
12 August 2021
12 August 2021
Entain plc
("Entain" or the "Group")
Strong first half performance with continuing momentum across
the Group
Entain plc (LSE: ENT), the global sports-betting, gaming and
interactive entertainment group, today reports its Interim Results
for the six-month period ending 30 June 2021 ("H1").
Financial highlights
-- Strong performance across H1, reflecting the Group's robust and diversified business model
-- Total Group net gaming revenue ("NGR") growth of 11% (+11%cc(1) )
o Online NGR up 28% (+27%cc(1) ), driven by strong underlying
performances in all key markets, a full sporting calendar and
longer lockdown restrictions in retail
o 22(nd) consecutive quarter of double-digit Online growth
o Online NGR was up 38%cc(1) excluding Germany where the new
regulatory regime is impacting the market
o Retail NGR down 46% (-46% cc(1) ) reflecting estate closures
through much of the period offset by encouraging early trends as
shops re-open
-- BetMGM (the Group's joint venture in the US with MGM Resorts)
continues to perform strongly and is well positioned for further
success in H2
o H1 NGR of $357m
o Number two operator for sports-betting and iGaming across the
US with 22%(2,3) market share
o Number one operator in iGaming, extending leadership with
30%(,3) market share
o As announced on 21 April, total combined investment in BetMGM
by joint venture partners expected to be $660m by the end of
2021
-- Group EBITDA(6,7) up 12% at GBP401m
-- Group profit after tax for continuing operations GBP91m, up GBP69m
-- Full year Group EBITDA(6,7,9) , upgraded on 8 July 2021,
expected to be in the range of GBP850m to GBP900m
-- Net Debt of GBP1,951m at 30 June 2021, with net debt to
EBITDA ratio of 2.2x following an active M&A programme and
increased investment in BetMGM
-- Successful renewal of a five year GBP590m Revolving Credit
Facility ("RCF") and a new $1,125m First Lien Term Loan B
refinancing
o Reinforces balance sheet strength at favourable terms and a
more balanced maturity profile
o Increased liquidity for corporate activity and investment
Operational highlights
-- New efficiency programme launched to reduce costs and support
investment in innovation and growth:
o Investment in innovation of c.GBP100m over three years
o Cost-savings totalling GBP100m expected in FY23
o Net cash benefit of GBP75m per annum from FY23 onwards
-- Acquisitions of Enlabs in the Baltics and Bet.pt in Portugal completed
-- Ongoing commitment to ESG with further advances made across our Sustainability Charter
o Encouraging live trials of Entain's industry leading Advanced
Responsibility and Care player protection programme, ARC
o Commitment to be carbon net zero by 2035 based on Science
Based Targets
o ESG rating upgraded to AA by MSCI rating agency
o Entain Foundation supported grass roots sports and young
athletes through Pitching-In and SportsAid
Investor event - 2.00pm (BST) today
-- Entain is holding an investor event later today where we will
outline the exciting opportunities ahead for the Group,
including:
o Growth opportunities in global sports betting and gaming
o Leveraging Entain platform into the convergence of media,
entertainment and gaming to provide new revenue streams in
interactive entertainment
o Deeper insight into the Group's industry leading
technology
o A business update on the UK Online operations
Jette Nygaard-Andersen, Entain's CEO, commented :
"Entain's platform continues to deliver. The quality and
diversification of our businesses has enabled us to deliver our
22(nd) consecutive quarter of double-digit online growth, while
also making excellent progress on our strategic priorities. This
performance is not only a result of our industry leading
technology, but also the hard work and dedication of our talented
teams of people around the world, and I would like to take this
opportunity to thank them.
In the US, BetMGM goes from strength to strength with our
position as number 2 operator firmly established in the
fast-growing sports-betting and iGaming market. We expect to be
operational in around 20 states, representing 33% of the US adult
population, over the next 12 months.
Entain has a long runway for sustainable growth built into our
core business. In addition, our unique powerful platform puts us at
the heart of the convergence of media, entertainment and gaming,
providing us with exciting opportunities in interactive
entertainment that we believe will further power our growth for
many years to come."
Group Reported(4,5)
Six months to 30 June 2021 2020 Change CC(1)
GBPm GBPm % %
-------- -------- ------- ------
Net gaming revenue (NGR) 1,792.6 1,609.3 11% 11%
Revenue 1,767.0 1,575.1 12% 12%
Gross profit 1,136.3 1,028.3 11%
Underlying EBITDAR (6,7) 410.5 369.1 11%
Underlying EBITDA (6,7) 401.1 358.9 12%
Underlying operating profit(7) 205.6 234.4
Underlying profit before tax(7) 246.7 65.9
Profit after tax 90 .9 22.4
Basic EPS (p) 13.8 2.5
Continuing adjusted diluted EPS(8)
(p) 18.5 3 0.5
Continuing adjusted diluted EPS
excl US(8) (p) 31.7 31.9
Dividend per share (p) - -
------------------------------------- -------- -------- ------- ------
Dividend
The Board has not proposed an interim dividend, however it
appreciates the importance of dividends to our shareholders.
Assuming Covid-19 related restrictions continue to ease around the
world, the Board expects that with full year results in March 2022
it will be in a position to recommence a dividend.
Outlook
Following Entain's strong first half performance, the Group is
confident in its prospects for the second half of 2021 and, as
previously guided, expects full year EBITDA(6,7,9) to be in the
range of GBP850m to GBP900m.
Notes
(1) Growth on a constant currency basis is calculated by
translating both 2021 and 2020 performance at the 2021 exchange
rates
(2) BetMGM revenues comprise of sports (Online and Retail) and iGaming revenues
(3) BetMGM market shares for the three month period to end of June 2021
(4) 2021 reported numbers are unaudited
(5) Reported results are provided on a post IFRS 16 implementation basis
(6) EBITDAR is defined as earnings before interest, tax,
depreciation and amortisation, rent and associated costs, share
based payments and share of JV income. EBITDA is defined as EBITDAR
after charging rent and associated costs.
(7) Stated pre separately disclosed items
(8) Adjusted for the impact of separately disclosed items,
foreign exchange movements on financial indebtedness and
losses/gains on derivative financial instruments (see note 8 in the
interim financial statements)
(9) References to profit expectations are made on a reported basis post IFRS16 implementation
Enquiries:
Investor Relations - Entain plc investors@entaingroup.com
David Lloyd-Seed, Group Director of IR & Corporate Communications david.lloyd-seed@entaingroup.com
Davina Hobbs, Head of Investor Relations davina.hobbs@entaingroup.com
Jennifer Spencer, Senior Investor Relations Manager j ennifer.spencer@entaingroup.com
Callum Sims, Investor Relations Manager callum.sims@entaingroup.com
Media - Entain plc media@entaingroup.com
Tessa Curtis, Head of Group PR & Media Relations t essa.curtis@entaingroup.com
Jay Dossetter, Head of ESG and Press Office j ay.dossetter@entaingroup.com
Media - Powerscourt Tel: +44 (0) 20 7250 1446
Rob Greening / Elly Williamson / Nick Hayns entain@powerscourt-group.com
H1 Conference Call & Webcast - Thursday 12 August 2021 at
8:30am (BST).
Live audio webcast link: https://brrmedia.news/ENT_H121
To participate in Q&A, please also connect via the dial
in:
+44 (0)330 336
UK 9434
US +1 929 477 0402
Room Code: 5173124
Investor Event Conference Call & Webcast - Thursday 12
August 2021 at 2:00pm (BST).
Live audio webcast link: https://brrmedia.news/InvEvnt_21
To participate in Q&A, please also connect via the dial
in:
UK +44 (0)330 336 9126
US +1 929 477 0402
Room Code: 1720890
Participants should join via webcast or conference call dial in,
approximately 15 minutes ahead of the event start.
A replay and call transcript for the Interim Results and
Investor Event will be available on our website:
https://entaingroup.com/investor-relations/results-centre/
Upcoming dates:
Third quarter trading update: 7 October 2021
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), 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 bwin,
Bet.pt, Coral, Crystalbet, Eurobet, Ladbrokes, Neds and
Sportingbet; Gaming Brands include CasinoClub, Foxy Bingo, Gala,
Gioco Digitale, 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
also entered into a joint-venture with MGM Resorts to capitalise on
the sports betting and gaming opportunity in the US, through
BetMGM. Entain provides the technology which powers BetMGM and
exclusive games and products, specially developed at its in-house
gaming studios. The Group is tax resident in the UK with licenses
in a total of 27 regulated markets. Entain is a leader in ESG, a
member of FTSE4Good, the DJSI, is AA rated by MSCI and is included
in Bloomberg's 50 global leaders in sustainability. The Group has
set Science Based Targets, 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
Our core strategic pillars of growth and sustainability are
underpinned by our industry leading technology, which enables us to
ensure that our customers are the focus of everything that we do
and that we lead the industry in player protection. These, together
with our scale, capabilities and people, create the powerful Entain
platform that has powered our success in recent years and drives
further growth in sports-betting and gaming markets across the
world. It also provides significant opportunities to leverage into
the emerging, and rapidly-growing interactive entertainment
markets.
Customer centric platform powered by technology
Entain's technology is at the heart of our business. Our
platform empowers us to think differently, be flexible and agile
and deliver on being a responsible entertainment company whilst
also driving significant competitive advantages in five key
strategic areas:
1. Fast paced, continuous improvement - improving the customer
experience, being best in class at each
individual customer touch point and personalising customer engagement
2. Supporting our growth - facilitates new launches
internationally, systems and business integrations, new products
launches or brand rollouts
3. Player protection and Advanced Responsibility and Care - ARC
is Entain's industry leading approach to customer protection,
developing a proactive player programme that navigates each
customer journey in real-time, using advanced analytics to monitor
markers of protection and behavioural triggers to identify risks
specific to that customer
4. Innovation engine - exploring new markets and new audiences
whilst embracing new technologies such as AI, virtual reality or 5G
to enhance the customer experience
5. Driving efficiencies - maximising cost and revenue synergies
from both acquisitions and efficiencies across the Group. Operating
our own platform enables us to operate at a lower cost than our
competitors. It also supports the efficiency programme we have
announced today
Growth
Our strategic growth pillar focuses on opportunities that
leverage the Entain platform within existing markets, new products
and new opportunities to increase our scale, our customer offering
and deliver value to our stakeholders. Our growth priorities
include delivering our clear ambition to be the leading operator in
the US through BetMGM, growing in our core markets, entering into
new regulated markets - both organically and via M&A, and
expanding into interactive entertainment.
Leadership in the US
In the US, BetMGM, our joint venture with MGM Resorts, continues
to go from strength to strength. BetMGM is built on Entain's
leading global online technology, expertise and platform that
drives the overall experience for customers. Coupled with MGM's
iconic brand and resorts, BetMGM has a winning formula with
significant long term competitive advantages.
On 21 April, BetMGM's CEO Adam Greenblatt and his team outlined
the competitive advantages that the business enjoys as well as
providing detail and colour on the market and customer behaviours.
A replay of that presentation can be found on our website
(www.entaingroup.com).
BetMGM is currently live in 13 jurisdictions, having grown from
being operational in just 3 states at the start of 2020. This
significant growth and momentum seen last year has continued into
2021, with BetMGM achieving a market share across the US of 22% (2)
for the three months to June 2021, which firmly embeds it as the
second largest operator of sports-betting and iGaming across the
whole of the US. Our strength in iGaming remains unrivalled and we
are clear market leaders with a 30% market share over the three
months to June.
During the first half of 2021 BetMGM launched sports-betting in
Michigan, Iowa and Virginia as well as around the Nationals Park in
Washington DC, whilst also adding iGaming in Michigan. T he first
quarter saw record new customer recruits during March Madness and,
despite a seasonally quiet sports calendar, momentum continued
through Q2 to deliver NGR of $357m in the first half, with Q2 NGR
growing almost 19% from Q1 NGR of $163m. Depending on the roll out
of state regulations, BetMGM expects to be operating in around 20
jurisdictions, representing 33% of the US adult population, in the
next 12 months. In addition, significant progress is being made to
legalise sports-betting and iGaming in Canada and BetMGM expects to
be active in that market when it opens.
BetMGM continues to perform well across the US with particularly
strong performances in Colorado, Tennessee, Michigan and Virginia.
By way of example our market shares in Tennessee and Colorado
demonstrate how combining our online platform with local partners
such as with the Tennessee Titans and Denver Broncos as well as an
early launch and strong marketing campaigns can reap market
leadership.
Our engagement approach provides us with one of the widest
customer access models in the US through a number of channels. This
includes omni-channel through MGM Resorts and Buffalo Wild Wings as
well as a number of partnerships across sports, sports teams, and
media, nationally as well as locally, such as Yahoo, the Athletic,
professional sports teams and leagues that provide access to a
broad range of engaged sports fans . M life has over 36m customers
and approximately 15% of BetMGM's new players in Q2 were active in
the M life programme. Yahoo Sports reaches approximately 70m fans
per month and Buffalo Wild Wings has more than 1,200 restaurants
located in key markets.
The growth in both iGaming and online sports-betting verticals
has been driven by customer acquisition and strong retention with
increases in both first time deposits and actives.
We continue to make improvements and enhancements to our
product, content and offering. So far this year BetMGM have added
features including Face recognition ID, player customisable screen
layouts, as well as improvements in payments., continuously
iterating to ensure our customer experience is the most exciting
and engaging. Our progress in providing our customers with a single
wallet and login across states remains on track and is expected to
be operational for the important NFL season later this year.
In April, Entain and MGM Resorts announced a further combined
investment for 2021 of $450m to support continued growth. This will
take the total combined investment from the joint venture partners
to $660m by the end of 2021. With a strong performance in the first
half and an encouraging outlook, BetMGM remains on track to deliver
its expectation of over $1bn of NGR in 2022. BetMGM is well placed
to achieve a long term market share of 20% - 25% in a North
American online sports-betting and iGaming market that we estimate
will be worth around $32bn over the long term.
Growing presence in our core markets
We have licences in 27 regulated markets, and we operate in a
number of other countries which are in the process of, or are
considering, regulating. With growth dynamics built into these
markets, Entain has a long runaway of growth driven by our superior
Entain platform. Our diversified business model, both through
geographic reach and product range, has enabled the Group to
respond to the ongoing disruptions caused by the pandemic, adapting
with changing customer behaviours.
As a result, our Online operations performed strongly with NGR
in the first half up 28% (+27% cc), achieving a 22(nd) consecutive
quarter of double-digit growth, or 20% growth on a three year
compound basis. Excluding Germany, where the long awaited and
welcome regulations are impacting the market this year, Group
online NGR growth was +38%cc. At the end of H1, 98% of our NGR was
from markets, excluding Germany, where we are growing at more than
10%, and as at the end of 2020, 87% of our NGR from markets,
excluding the UK, where online penetration is still low (at less
than 35%).
Our Online business benefitted from the mandatory Covid-19 store
closures which were in place for longer than expected, and our
growth also reflects the lack of sport activity in the majority of
our markets during the second quarter last year. Our Retail
operations saw a phased re-opening during the latter stages of the
first half, and we are encouraged by the early underlying trends.
In Online, we expect the overall gaming market to be larger post
the pandemic.
The delayed Euro 2020 competition straddled our half year. Given
the Group's global scale the additional revenue generated by the
tournament is low single digit, however, it provided an opportunity
to attract customers to our brands particularly as we re-position
the Ladbrokes and Coral brands in the UK. The popularity of our
accumulator, combination bets and in-play offering further enabled
us to engage with a broader recreational customer base.
In the UK, our online business saw 31% growth during H1. Our UK
sports brands were particularly strong with NGR growth of 40% in H1
compared to 2020, driven by a full sports fixture list, new product
releases and actives up 39% on last year. Our UK Gaming brands NGR
grew 14% during H1, driven by increased recreational retail type
play as well as increased player days and NGR per active.
In Australia, Ladbrokes and Neds continue to perform well with
11%cc NGR growth during the half. Other than some occasional
localised snap lockdowns, the business has been operating with
Covid-19 restrictions lifted for much of the country throughout the
period. The prior year saw Ladbrokes and Neds benefit particularly
from their strength in horse racing, which continued in Q2 whilst
other sports were cancelled, as well as support from Government
stimulus measures. The repositioning of the Ladbrokes and Neds
brands is making good progress and we continue to invest in
marketing, as well as enhancing capabilities in areas such as
customer experience, innovation, and analytics. During the half
Ladbrokes launched a Mark Wahlberg led marketing campaign, as well
as a number of unique and innovative new products.
In Germany, the market continues to digest the new regulatory
regime and tax change. The impact from these remains broadly
in-line with our original estimates, albeit a different mix. Our
slots and poker business has been operating in compliance with the
Tolerance Policy that came into effect in phases from October 2020,
however other operators have not been as compliant, creating an
uneven market. With the introduction on 1 July 2021 of the Turnover
Tax for slots and poker some operators are leaving the market, but
robust regulatory oversight and enforcement is critical to ensure a
safe and regulated market for German customers. Following the
Interstate Treaty coming into force on 1 July, we are now in the
process of applying for slot and poker licences. The main
conditions of the sports licences are still yet to be fully
implemented, which we expect to happen later this year. We remain
positive on the German market which we believe will return to
growth once the licensing conditions have bedded in and we expect
to be a leader in this market.
Our Sportingbet brand in Brazil is the clear market leader with
NGR growth in the first half of 153%cc and active customers more
than doubling year on year. The Government in Brazil is steadily
progressing towards regulation and we currently expect regulation
in sports-betting to come into effect mid-2022. With operations in
Colombia and opportunities elsewhere across the region, we see
Latin America as an exciting market.
In Georgia, Crystalbet grew by 52%cc in the half and again
confirmed its position as the leading operator in that market.
During the half, retail operations in the UK, Italy, Belgium and
Republic of Ireland were heavily impacted by Covid-19 restrictions
with a phasing of re-openings occurring towards the end of the
period. As conditions eased more fully, we have seen encouraging
early trends with customers keen to return to our shops. to enjoy
the in-store betting and gaming experience. The value of the
omnichannel approach was particularly evident in Italy, where
despite the retail estate being predominately closed for nearly all
of H1, omnichannel operators outperformed their online-only
competitors. Our shops in Italy, Belgium and Republic of Ireland
only fully opened for a very short time before the period end,
however we are confident that we will see volumes return to around
90% of pre-Covid-19 levels by the year end.
Expanding into new regulated markets
At the end of 2020, 99% of our group revenues came from
regulated and regulating markets. Entain is committed to ensuring
that by the end of 2023, 100% of our revenues are from domestically
regulated markets. We continue to pursue the significant growth
opportunities in existing and new regulated markets. During the
period we completed the acquisitions of Enlabs in the Baltics,
bet.pt in Portugal and acquired a technology platform to support
growth into Africa.
Enlabs operates online sports-betting and gaming brands across
the fast-growing Baltic region, being the market leader in Latvia
and with podium positions in both Estonia and Lithuania. With its
leading brands of Optibet, Laimz and Ninja it provides a platform
for expansion into the Nordics market as well as across Eastern
Europe, including Russian speaking markets. Enlabs has enjoyed a
strong start to the year, delivering NGR growth of +53% for H1 on a
proforma basis.
Bet.pt is a leader in the sports-betting market in Portugal and
complements our Iberian operations and the Portuguese speaking
market of Brazil. The acquisition enables us to extend the bwin
brand across the region and during the period we announced the
sponsorship of the Portuguese football league to be known as 'Liga
Portugal bwin'. Bet.pt has performed strongly in the first half and
we will migrate its operations on to our technology platform during
the second half.
Entain was one the first major operators to gain a licence in
the Latin American market with the launch of our bwin brand in
Colombia towards the end of 2020. With all aspects of our offering
in place and the rollout of new casino game launches, we are seeing
excellent growth and a strong uplift in active customers,
particularly in response to our campaign around the Copa
America.
In Africa, where more accumulator and recreational types of
products are accessed via different mobile browsers, through a 2G
and 3G led mobile market, as well as the use of unique payment
solutions, a different technology platform is required to access
the rapidly growing markets in the region. As a result, Impala, our
new business for the African market, acquired a suitable platform
with the intention to launch in at least one of these markets by
the end of the year.
We continue to explore further organic and M&A opportunities
across Latin and Central America, Central and Eastern Europe and
Africa.
Extending into new interactive entertainment experiences and
audiences
Technology is changing consumer behaviour with new trends and
ecosystems emerging as the worlds of media, entertainment and
gaming converge, creating new markets in interactive entertainment.
The Entain platform is ideally placed at the nexus of this, opening
up exciting opportunities in new markets, verticals and customer
pools to drive further growth for our business. Consumers are
demanding more engaging content, richer experiences, innovation and
social interaction. By extending our platform into these areas we
can increase the engagement with existing customers as well as
attract new customers into our network.
We do some of this today through free to play games, video
content, sports-based podcasts and statistical analysis. We also
recently announced the development of a virtual sports bar for the
Oculus Quest 2 VR headset. We are actively looking at the e-sports
market where today there is an audience of over 450m viewers. We
have some exciting plans across these areas and will share more
detail at our investor event later today.
Today we are announcing a new investment in innovation of
approximately GBP100m over the next three years. Key areas of focus
for this investment will be our Innovation Lab, research and
development and product and content. This investment will be more
than funded by the efficiency programme. From our FY21 results, to
be announced in March 2022, this innovation investment will be
reported as part of a new segment, New Opportunities.
Efficiency programme
We are today setting out a new efficiency programme - Evolve.
Alongside our M&A capabilities we have a strong track record of
delivering synergies to drive shareholder value. From the recent
synergy programmes we have identified a number of further
opportunities to drive efficiencies, leveraging our technology
capabilities and geographic diversity. Efficiencies will encompass
both Online and Retail, benefitting both capex and EBITDA. We
expect to deliver recurring annual cost savings totalling GBP100m
from 2023 onwards. These efficiencies will support our investment
in innovation and growth, and leaves a net cash benefit of around
GBP75m each year from 2023 onwards.
Sustainability
Paired with growth, our strategic pillar of sustainability has
clearly defined areas of focus as outlined in our Sustainability
Charter. We aim to meet the highest standards in everything we do,
from the way we run our business to the way we support our
colleagues, our customers and our communities. We firmly believe
that the most sustainable business in our industry will be the most
successful business in our industry.
Our Sustainability Charter is based on four core principles:
Regulated operations; leading on Responsibility and player
protection, best in class Corporate Governance; and investing in
our People and Local Communities.
Focus on regulated markets
We have committed to only operating in regulated markets by the
end of 2023. We have already made significant strides to achieve
this. At the end of 2020, 99% of Group revenues came from locally
regulated or regulating markets.
Entain is currently licenced in 27 countries, and that number
will rise through a combination of positive regulatory developments
in certain jurisdictions and expansion into new countries both
organically and through acquisition.
Operating only in regulated markets allows us to deliver a
higher quality and certainty of earnings as we continue to grow
into the future. We aim to engage openly and proactively with
regulators to ensure we can offer first class player protection
through our industry leading technology platform, while upholding
all licensing objectives, across multiple jurisdictions. In the UK,
the 2005 Gambling Act is currently under a much-needed review that
will set out the regulatory framework for years to come. It will
address all forms of betting and gaming in the UK and is an
opportunity to address the fringes of the industry as well as
dealing with the mainstream. We are contributing to this process to
help find a balance between protecting a minority who are at risk
while supporting a healthy entertainment experience for the
remaining majority - as well as an environment that is commercially
viable for operators.
Lead on responsibility
Fundamental to our emphasis on improving the quality of earnings
is responsible gaming and player protection, with Entain continuing
to lead our industry in this critically important area. The success
of our ambition to revolutionise betting and gaming entertainment
on the global stage requires responsibility embedded throughout the
Group as well as demonstrating our commitment to safeguarding those
at risk.
We believe that embracing technology, scientific data and
analytics is instrumental to player protection. Our Advanced
Responsibility and Care ("ARC") programme is a revolutionary
industry leading approach to customer protection, and a cornerstone
of our player protection going forward. ARC is a proactive
programme aiming to navigate each customer journey in real-time,
monitoring markers of protection and behavioural triggers whilst
also identifying risks specific to that customer and adjusting the
experience to remove the risk to the player. We are currently in
preliminary live trials for one of our brands in the UK. Initial
findings are encouraging, and we continue to evolve and improve our
approach with the learnings. Later this year we expect to expand
the live trials to other UK brands, then plan to broaden its
capabilities to international markets.
In line with our growth strategy of extending into new
interactive markets, we have extended our initiatives in
responsible gambling to new areas including video-gaming and
e-sports, partnering with Counter-Strike Professional Players
Association, Game Quitters, Kindbridge and Rise Above the Disorder,
as well as expanding our existing partnership with EPIC Risk
Management to provide mental health support services, education for
players potentially at risk and promoting responsible gambling,
sports integrity, and corporate compliance.
The global Covid-19 pandemic has been a challenging situation
for everyone. As highlighted by the European Gaming & Betting
Association's (EGBA) inaugural Sustainability Report, Entain, along
with other leaders of our industry took several actions to adapt to
the changes in player behaviours and associated risks as a result
of Covid-19 lockdowns including strengthening safer betting and
gaming measures as well as responsibility around advertising. The
report highlighted that customers of EGBA's members, which includes
Entain, are using safer gambling tools more frequently, with 75% of
customers having activated at least one safer gambling tool, up
from 61% the previous year.
In February, we launched The Players' Panel to promote the voice
of customers. Entain is supporting the panel because it believes
that the 99% of the UK's consumers who bet safely and responsibly,
deserve to have their opinions heard and for a balanced debate to
happen. The Gambling Commission estimates the number of problem
gamblers at c0.6%, with their latest study in July suggesting this
could have dropped to 0.4% in the past year, despite the lockdown.
The Players' Panel is drawn from Entain's customers across the UK
on a voluntary, unpaid basis. It is a platform for them to speak
out on issues such as the future of betting, freedom of choice,
funding for sports and gaming trends.
Alongside the F1 Grand Prix season we launched Party
Responsibly, a new initiative partnering our PartyCasino and
PartyPoker brands with McLaren Racing, to promote the benefits of
staying in control, whether at the wheel of an F1 car or when
betting and gaming. The campaign replaced brand advertising with
Party Responsibly messaging at both the Styrian and Austrian Grand
Prix on McLaren race cars, whilst also launching a new internet hub
partyresponsibly.net . This included the Time to Pit mini film,
where F1 driver Daniel Ricciardo stresses the importance of players
respecting their personal limits and staying in control of their
betting and gaming, as well as providing clear and concise
information on best ways and tools to maintain control.
Our customers are global, and therefore so is our approach to
responsible gaming. The Entain Foundation US launched its "Gamble
Responsibly America" app produced with EPIC Risk Management and
RG24/7. The app features a series of educational resources and
tools to help and support anyone facing potential issues with
problem gambling. In Washington DC, supported by Entain Foundation
US and RG24/7, the National Council on Problem Gambling (NCPG)
launched Operation Responsible Gambling (OpRG) designed to assist
members of the military community in gambling responsibly, and also
to ensure they have options to seek help if they show signs of
gambling problems. In Canada, the Entain Foundation partnered with
Responsible Gambling Council on research to inform regulatory
approach to gaming and sports-betting in Canada.
Best in class corporate governance
As an industry leading company, we are committed to the highest
standards of governance in all areas of our operations. This
commitment to best practice is delivered through a robust framework
of oversight and control using the knowledge and experience of not
just the Board, but the executive and senior members of the
management team.
Our Board was notably strengthened and revitalised during last
year, and this commitment to a gold standard approach continues.
During H1, Robert Hoskin, our Chief Governance Officer, was
promoted to the Board, alongside our other Non-Executive Director
appointments of Stella David, Vicky Jarman and Mark Gregory.
As announced in both our ESG report and our FY Results in March,
we are demonstrating our desire to adapt to changing expectations
and our willingness to learn by undertaking an independent audit of
our corporate governance and compliance processes. The review's
results will be included in our Annual Report and ESG Report for
2021.
Investing in people and communities
Entain's commitment to investing in our people and communities
is not just recruiting, retaining, and nurturing top talent from
diverse backgrounds, but also contributing to the wider communities
in which we operate through our community organisations via the
Entain Foundation as well as reducing our impact on the
environment.
We are a people-driven business in a highly dynamic sector and
we understand the importance of diversity in technical roles. As a
Founding Member of the sector's All-in Diversity Project we provide
guidance and support, sharing best practices and resources with
other organisations within the sector. As part of our international
diversity and inclusion ("D&I") initiative - 'Everyone's in the
Game' - earlier this year we partnered with Girls Who Code in UK,
US, Canada and India, as well as the Tech Girls Movement in
Australia.
Supporting colleagues in taking care of their own wellbeing
through this challenging time has remained top of our agenda. Our
"Well-me" wellbeing strategy was accelerated with Work Well joining
our Think Well and Live Well programmes to help our colleagues feel
healthy and happy at work and at home.
To embed our high-performance philosophy and culture, in Q1 we
launched the Entain & Perform platform and hosted 28 learning
camps for 515 of our people leaders. We also ensured that
colleagues can share in the success of our business with the launch
of Sharesave, a share plan open to over 99% of our employees
globally.
The Entain Foundation coordinates and supports the Group's ESG
initiatives, objectives, and donations around the world. Our
flagship Pitching In investment fund and SportsAid continue to
support our focus on grass roots sport and aspiring UK athletes.
One of SportsAid's most recent high profile alumni included Beth
Shriever, previously sponsored by Entain, who won Gold at the Tokyo
Olympics, demonstrating the fantastic support these initiatives
provide. With the 2021 cohort announced, this partnership sees 50
of the most talented young British athletes across 24 sporting
disciplines, receive an annual award of GBP1,000 to contribute
towards training and competition costs such as travel,
accommodation, equipment and kit.
As part of our Sustainability Charter, we are committed to
reducing the Group's environmental impact. We have a strong culture
of behaving ethically and responsibly in everything that we do, and
we know that as a large global business we have a duty to do
everything that we can to help tackle the climate crisis. Entain
achieved the Carbon Trust Standard for Carbon, reducing CO(2) year
on year for its UK operations, reflecting its commitment to
sustainability through governance, carbon accounting and carbon
management. We built on this earlier in the year by committing to
becoming net zero for greenhouse gas emissions by no later than
2035 based on science based targets - 15 years ahead of the 2050
target for carbon neutrality agreed by governments under the Paris
Agreement.
Financial Results and the use of Non-GAAP measures
The Group's statutory financial information is prepared in
accordance with International Financial Reporting Standards
("IFRS") and IFRS Interpretations Committee (IFRS IC)
pronouncements as adopted for use in the European Union. In
addition to the statutory information provided, management have
also provided additional information in the form of Contribution,
EBITDAR and EBITDA as these metrics are industry standard KPIs
which help facilitate the understanding of the Group's performance
in comparison to its peers. A full reconciliation of these non-GAAP
measures is provided within the Income Statement and supporting
memo.
The Group's operating segments are now aggregated into the four
reportable segments. This represents a change from 2020 with our
former UK and European Retail segments now combined to form one
Retail segment, in line with the recent changes in the Group's
reporting to the executive management team.
BUSINESS REVIEW
Group
Reported results(1,) (2)
Six months to 30 June 2021 2020 Change CC (3)
GBPm GBPm % %
--------- --------- ------- -------
NGR 1,792.6 1 ,609.3 11% 11%
VAT/GST (2 5.6) (34.2) 25% 28%
--------- --------- ------- -------
Revenue 1 ,767.0 1,575.1 12% 12%
Gross profit 1,136.3 1,028.3 11%
Contribution 827.8 778.9 6%
Operating costs (417.3) (409.8) (2%)
Underlying EBITDAR(4) 410.5 369.1 11%
Rent and associated costs (9.4) (10.2) 8%
Underlying EBITDA(4) 401.1 358.9 12%
Share based payments (6.6) (4.0) (65%)
Underlying depreciation and amortisation (109.9) (111.9) 2%
Share of JV (l oss) /income (79.0) (8.6) n/m
Underlying operating profit(5) 205.6 234.4 (12%)
------------------------------------------ --------- --------- -------
Reported Results(1,2) :
Revenue increased by 12% (12% cc) to GBP1,767.0m in H1 driven by
strong momentum in Online partially offset by Retail reflecting
temporary shop closures due to Covid-19 restrictions. NGR growth in
Online has been supported by strong underlying performance in all
of our key markets except a regulation impacted Germany, a full
sporting calendar (which did not exist in the second quarter of
2020) and the contribution of our recent acquisitions, Bet.pt and
Enlabs. In addition, our shops and outlets in the UK and Europe
re-opened progressively during the second quarter. The early
underlying trends in trading since re-opening are encouraging.
Contribution of GBP827.8m was 6% higher than last year, with a
contribution margin of 46.2%, 2.2pp lower than last year due to a
higher Online segmental mix. Operating costs (before rent) were 2%
higher leaving underlying EBITDA (4) of GBP401.1m, 12% higher than
the prior year.
Share based payment charges were GBP2.6m higher than last year,
while underlying depreciation and amortisation was 2% lower as the
annual charge starts to normalise following a period of investment
and M&A. Share of JV losses of GBP79.0m includes a loss of
GBP78.2m relating to BetMGM, which is in line with expectations.
Group underlying operating profit (5) was 12% behind 2020. After
separately disclosed items of GBP116.1m (2020: GBP15.5m excluding
GBP5.3m recorded in interest), operating profit (5) was GBP89.5m, a
decrease of GBP129.4m on 2020.
Online
Reported results(1,2)
Six months to 30 June 2021 2020 Change CC (3)
GBPm GBPm % %
-------- -------- ------- -------
Sports wagers 7,077.3 4,697.2 51% 48%
Sports margin 13.1% 12.8% 0.3pp 0.3pp
Sports NGR 751.1 484.5 55% 52%
Gaming NGR 825.9 752.6 10% 11%
B2B NGR 10.6 8.0 33% 32%
-------- -------- ------- -------
Total NGR 1,587.6 1,245.1 28% 27%
VAT/GST (25.6) (34.2) 25% 28%
-------- -------- ------- -------
Revenue 1,562.0 1,210.9 29% 29%
Gross profit 989.1 779.6 27%
Contribution 683.8 533.9 28%
Contribution margin 43.1% 42.9% 0.2pp
Operating costs (187.1) (164.4) (14%)
Underlying EBITDAR(4) 496.7 369.5 34%
Rent and associated costs (0.8) (0.9) 11%
Underlying EBITDA(4) 495.9 368.6 35%
Share based payments (3.5) (1.3) (169%)
Underlying depreciation and amortisation (56.9) (55.7) (2%)
Share of JV income - - -
Underlying operating profit(5) 435.5 311.6 40%
------------------------------------------ -------- -------- -------
Reported Results(1,23) :
The Group delivered a strong Online performance throughout the
first half with NGR up 28% (+27%cc). Despite the high prior year
comparatives, particularly in Q2, gaming saw continued positive
momentum. This half year performance was driven by a full sporting
fixture list, including the start of the delayed Euro 2020,
extended retail lockdowns and the inclusion of our recent
acquisitions, Bet.pt and Enlabs. Excluding Germany, where
regulatory changes are significantly impacting the market, Online
NGR was up 38%cc year on year with double-digit growth in all of
our key markets.
Underlying EBITDAR (4) of GBP496.7m and underlying EBITDA (4) of
GBP495.9m were 34% and 35% ahead of 2020 respectively. U nderlying
operating profit (5) of GBP435.5m was 40% ahead and, after charging
GBP92.6m of separately disclosed items, underlying operating
profit(5) was GBP342.9m, GBP185.0m ahead of last year.
Sports NGR was 55% (+52% cc) ahead of 2020 with sports wagers
51% higher (+48% cc) as a result of a full sports fixture list and
the early stages of Euro 2020. Sports margin was +0.3pp ahead at
13.1%, benefitting from an increase in recreational betting,
improved product mix and favourable results.
Gaming NGR was up +10% (+11% cc), despite lapping a strong prior
year comparative, particularly in the second quarter as the
extension to retail lockdowns continued to benefit gaming online.
However, with strong underlying growth on a two-year basis, we
believe that the Covid-19 pandemic has driven growth in the overall
gaming market. Excluding Germany, where regulation, particularly in
gaming, has impacted market volumes, gaming NGR was up 28%cc year
on year.
The performance in the first half has been particularly strong
in our UK sports brands where Retail lockdowns, the full sports
fixture list, new product releases including Ladbrokes 5-a-side and
excellent customer acquisition throughout the Cheltenham Festival
and Aintree Grand National have driven a strong sports and gaming
performance. As expected, online growth moderated as the release
from Covid-19 restrictions in England on 17 May coincided with a
quieter sports program. UK sports brands NGR in H1 was 40% ahead of
2020, with sports up 52% and gaming NGR up 32 %.
UK Gaming brands NGR grew 14% during the first half despite
lapping strong comparatives (most notable in Q2). All brands
benefitted from the extended UK lockdown which has driven increased
recreational retail type play as well as increased player days and
NGR per active. Our Gala brand launched its unique loyalty scheme,
'Boss Benefits' at the end of H1. The Foxy brand continues to grow
ahead of the market , with year on year growth up +50%, driven by
continued investment in growth, including the new Foxy Bingo TV
campaign and First Dates sponsorship as well as continued benefits
from its migration onto the Group's technology platform in
mid-2020.
In Germany, sports NGR was +53%cc ahead of 2020 with the
anticipated introduction of the most significant conditions
attached to the sports licences yet to be implemented as a number
of operators are challenging the proposed regulation in the German
courts. The gaming market, however, has been substantially impacted
by the tolerance regime ahead of the Interstate Treaty, and the
continued non-compliance of other operators creating an un-even
market. We remain confident that robust regulatory oversight and
enforcement by German regulators, alongside the introduction of the
new gaming turnover tax, will address black market or non-compliant
operators. German NGR in H1 was -34%cc behind last year.
In Australia, NGR was +11%cc ahead of 2020 despite the strong
prior year comparative which benefitted from Covid-19 restrictions
and stimulus measures. Until recently, with the exception of a few
isolated snap lockdowns, the business has been operating in a more
"normallised" post-Covid-19 environment since the start of this
year. Current year NGR growth has been aided by the new 'Ladbroke
It' campaign, featuring Mark Wahlberg, which aims to enhance the
customer experience by making betting fun whilst also highlighting
the new, market leading, 'Punter Assist' safer gambling suite. The
business continues to go from strength to strength with improved
margins and active customers 24% higher than the prior year with
new customer acquisitions up 16%.
In Italy, combined NGR growth across the three major brands
(Eurobet, bwin and Gioco Digitale) was +76%cc ahead of 2020;
+130%cc ahead in sports due to a full sports calendar this year,
and +45%cc ahead in gaming. Performance was particularly strong in
Eurobet where we have continued to benefit from our omnichannel
offering which resulted in better retail migration than pure
digital brands. In Eurobet sports, NGR was up +148%cc and gaming
NGR up +48%cc.
Ongoing momentum and effective marketing, particularly around
the Copa America and Euro 2020 tournaments, has increased the
active customer base in Brazil by +200% during H1. That, coupled
with excellent retention rates has seen NGR increase by +153%cc
year on year.
In Georgia, NGR was +52%cc ahead year on year. Crystalbet has
maintained its position as the number 1 operator with 33% market
share in the first half of 2021, up 1pp on 2020.
Partypoker NGR was -10%cc behind last year, as it laps a very
strong Q2 in 2020.
Our new acquisitions, Bet.pt and Enlabs which we acquired at the
end of Q1, have also performed strongly during H1 contributing 2%
to H1 Online NGR (4% in Q2). On a proforma basis both businesses
have shown strong growth during 2021 with H1 NGR up +43% for Bet.pt
and +53% ahead for Enlabs.
Online contribution margin of 43.1% was 0.2pp higher than last
year, with a lower marketing rate (+0.5pp) partially offset by a
-0.3pp reduction in gross profit margin as a result of product and
market mix.
Operating costs (before rent) were +14% higher than last year
with acquisitions contributing +4pp, while investments in product
and underlying inflation also contributed to the year on year
increase.
Rent and associated costs were GBP0.8m in the first half,
compared with GBP0.9m in the prior year, leaving underlying
EBITDA(4) of GBP495.9m, +35% ahead.
Share based payments were GBP2.2m higher than last year and
underlying depreciation and amortisation of GBP56.9m was +2%
higher, leaving underlying operating profit (5) +40% higher at
GBP435.5m.
Retail
The Retail business is made up of our Retail estates in the UK,
Italy, Belgium and Republic of Ireland.
Reported results(1,2,) (8)
Six months to 30 June 2021 2020 Change CC(3)
GBPm GBPm % %
-------- --------- -------- --------
S ports wagers(6) 527. 3 1, 068.6 (51%) (5 1%)
S ports margin(6) 19.0% 19.3% (0.3pp) (0.3pp)
Sports NGR/Revenue 99. 5 219.0 (5 5 %) (5 5%)
Machines NGR/Revenue 91.8 134.4 (32%) (32%)
NGR/Revenue 191.3 353.4 (46%) (46%)
Gross profit 134.2 238.6 (44%)
Contribution 131.3 235.7 (44%)
Contribution margin 6 8.6% 66.7% 1.9pp
Operating costs (185.7) (211.0) 12%
Underlying EBITDAR(4) (54.4) 24.7 n/m
Rent and associated costs (8.3) (9.2) 10%
Underlying EBITDA(4) (62.7) 15.5 n/m
Share based payments (1.3) (0.4) n/m
Underlying depreciation and amortisation (51.1) (54.7) 7%
Share of JV income - - -
Underlying operating (loss)/profit(5) (115.1) (39.6) n/m
------------------------------------------ -------- --------- --------
Retail NGR of GBP191.3m was -46% behind last year with national
lockdowns significantly impacting NGR in the first half, LFL Retail
NGR(6) was -42% behind last year (-43%cc). All our estates are now
open, however Italy, Belgium and the Republic of Ireland were in
lockdown for almost the entire first half. Whilst England was
released from lockdown in mid-April, restrictions continued to
apply until 17(th) May. With resulting NGR behind year on year,
Retail recorded an underlying EBITDAR (4) loss of GBP54.4m which
was GBP79.1m behind 2020 and underlying EBITDA (4) loss of
GBP62.7m, GBP78.2m behind. Underlying operating loss(5) was
GBP115.1m and, after including separately disclosed items of
GBP5.6m, operating loss was GBP120.7m, GBP277.4m behind last year
where the Retail segment benefited from the UK VAT receipt.
In the UK, sports NGR was -42% behind 2020 driven largely by
reduced volumes resulting from imposed Covid-19 shop closures.
Sports wagers were -39% lower and down -36% on a LFL basis. Sports
gross win margin of 19.2% was -0.8pp behind last year as 2020
margins were boosted by favourable results in horse racing and
football. Machines NGR was -31% behind 2020 (-27% on a LFL
basis).
Since the release from tier 3 style restrictions in the UK, we
have seen volumes return to levels around 90% of pre-pandemic
levels. Machines have performed particularly well whilst sports
continues to recover steadily from the extended period of shop
closures.
In Italy, Belgium and Ireland, our Retail shops re-opened at
various stages throughout May and June. The resulting NGR was -89%
(-90%cc) behind in Italy, -64% (-64%cc) in Belgium and -66% (68%cc)
in Republic of Ireland. Initial trading post lockdown has been in
line with expectations.
Operating costs (before rent) were -12% lower than 2020, largely
due to cost mitigation actions in response to lockdowns and robust
underlying cost control. During H1, the Retail business claimed
furlough in the UK for the period that the retail estate was
closed, with total receipts in line year on year.
Rent and associated costs of GBP8.3m in the first half were -10%
lower than the prior year, leaving underlying EBITDA(4) loss of
GBP62.7m, GBP78.2m lower than 2020.
Charges for share based payments were GBP0.9m higher than last
year and underlying depreciation and amortisation of GBP51.1m was
7% lower as charges from previous investment and the impact of the
fair value exercise following the acquisition of Ladbrokes Coral
start to normalise, leaving an underlying operating loss(5) of
GBP115.1m, GBP75.5m behind 2020.
As at 30 June 2021, there were a total of 4,524 shops/outlets
(2020: 4,743): UK 2,754 (2020: 3,006), Italy 942 (2020: 890),
Belgium shops 298, outlets 398 (2020: shops 309, outlets 400) and
Ireland 132 (2020: 138).
Other
Reported results(1,2)
Six months to 30 June 2021 2020 Change CC(3)
GBPm GBPm % %
------- ------- ------- ------
NGR/Revenue 15.5 12.7 22% 22%
Gross profit 13.0 10.1 29%
Contribution 12.7 9.3 37%
Operating costs (10.3) (12.7) 19%
Underlying EBITDAR(4) 2.4 (3.4) 171%
Rent and associated costs (0.1) (0.1) -
Underlying EBITDA(4) 2.3 (3.5) 166%
Share based payments - - -
Underlying depreciation and amortisation (1.7) (1.5) (13%)
Share of JV ( loss)/ income (0.8) 0.2 n/m
Underlying operating (loss)/profit(5) (0.2) (4.8) 96%
------------------------------------------ ------- ------- -------
Reported Results(1,2) :
On a reported basis, NGR of GBP15.5m was 22% higher than 2020
due to the full sports fixture list and the ability to provide
content from our greyhound stadia through behind closed doors
racing. Underlying EBITDAR(4) of GBP2.4m and underlying EBITDA(4)
of GBP2.3m were both GBP5.8m ahead of 2020 predominantly due to the
NGR improvement and the impact of one-off cost savings in H1.
Underlying operating loss(5) was GBP0.2m (2020: GBP4.8m loss) and
operating loss after charging separately disclosed items of GBP1.7m
was -GBP1.9m, GBP15.8m ahead of last year.
Corporate
Reported results(1,2)
Six months to 30 June 2021 2020 Change CC(3)
GBPm GBPm % %
-------- ------- ------- ------
Underlying EBITDAR(4) (34.2) (21.7) (58%)
Rent and associated costs (0.2) - n /m
Underlying EBITDA(4) (34.4) (21.7) (59%)
Share based payments (1.8) (2.3) 22%
Underlying depreciation and amortisation (0.2) - n /m
Share of JV (loss) /income (78.2) (8.8) n/m
Underlying operating (loss)/profit(5) (114.6) (32.8) n/m
------------------------------------------ -------- ------- -------
Reported Results(1,2) :
On a reported basis, Corporate costs(4) of GBP34.2m were
GBP12.5m higher than last year driven by additional investment in
our Responsible Gambling activities as we move towards our 1% of UK
GGR target, the reversal of Covid-19 cost savings in 2020 and
investment in our corporate infrastructure. After share based
payments, depreciation and amortisation and share of JV losses,
Corporate operating loss(5) was GBP114.6m, an increase of GBP81.8m,
largely as a result of the expected incremental loss in the US JV,
BetMGM. After charging separately disclosed items of GBP16.2m, the
operating loss of GBP130.8m was GBP52.8m behind 2020.
Notes
(1) 2021 results are unaudited
(2) Reported results are provided on a post IFRS16
implementation basis
(3) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2021
exchange rates
(4) EBITDAR is defined as earnings before interest, tax,
depreciation and amortisation, rent and associated costs, share
based payments and share of JV income. EBITDA is defined as EBITDAR
after charging rent and associated costs. Both EBITDAR and EBITDA
are stated pre separately disclosed items
(5) Stated pre separately disclosed items
(6) Retail numbers are quoted on a LFL basis. During H1 there
was an average of 4,612 shops in the estate, compared to an average
of 4,815 in the same period last year
CHIEF FINANCIAL OFFICER'S REVIEW
Reported results(1,2)
Six months to 30 June 2021 2020 Change CC(3)
GBPm GBPm % %
-------- -------- ------- ------
NGR 1,792.6 1,609.3 11% 11%
Revenue 1,767.0 1,575.1 12% 12%
Gross profit 1,136.3 1,028.3 11%
Contribution 827.8 778.9 6%
Underlying EBITDAR(4) 410.5 369.1 11%
Underlying EBITDA(4) 401.1 358.9 12%
Share based payments (6.6) (4.0) (65%)
Underlying depreciation and amortisation (109.9) (111.9) 2%
Share of JV (loss)/income (79.0) (8.6) n/m
Underlying operating profit(5) 205.6 234.4 (12%)
Net finance costs (36.0) (36.6)
Net foreign exchange 77.1 (131.9)
Profit before tax pre separately
disclosed items 246.7 65.9
Separately disclosed items:
Amortisation of acquired intangibles (94.7) (156.8)
Other (21.4) 136.0
Profit/(Loss) before tax 130.6 45.1
Tax (39.7) (22.7)
Profit after tax from continuing
activities 90.9 22.4
Discontinued operations (6.2) (20.3)
Profit after tax 84.7 2.1
------------------------------------------ -------- -------- ------- ------
NGR and Revenue
Group reported NGR was 11% ahead and revenue was 12% ahead of
last year, with strong online performance more than offsetting
Covid-19 related shop closures. Further details are provided in the
Business Review section.
Underlying operating profit (5)
Group reported underlying operating profit(5) of GBP205.6m was
12% behind 2020 (2020: GBP234.4m), with underlying EBITDA ahead by
12%. Our share of BetMGM losses of GBP78.2m, were GBP69.4m higher
year on year as the business invests in growth . Analysis of the
Group's performance for the first half is detailed in the Business
Review section.
Financing costs
Finance costs of GBP36.0m (2020: GBP36.6m excluding separately
disclosed items), were GBP0.6m lower than 2020 with the Group
benefitting from a full half of the 2020 refinancing. Since the end
of the half, the Group has announced the extension and increase of
its RCF facility, as well as a refinancing of its USD debt, which
raised an additional $351m (cGBP250m) in term loans.
Net foreign exchange gains on debt related items were GBP77.1m
in the half (2020: GBP131.9m loss).
Separately disclosed items
Items separately disclosed before tax for the period amount to a
GBP116.1m charge (2020: GBP20.8m) and relate primarily to GBP94.7m
of amortisation on acquired intangibles (2020: GBP156.8m), a
GBP3.3m (2020: GBPnil) impairment of certain head office premises
which are now vacant and our exchange business Betdaq, integration
costs of GBP10.1m (2020: GBP19.6m), corporate transaction costs of
GBP3.4m (2020: GBPnil) and GBP6.2m of onerous costs associated with
Covid-19 related shop closures and other one-off legal expenses
(2020: GBP11.9m). In addition, the Group recorded a GBP0.2m charge
associated with the reassessment of the likely payment under
historic acquisitions (2020: GBP34.8m) and GBP0.7m of other
exceptional items (2020: GBP8.6m primarily due to the write-off of
issue costs on refinancing). During the prior year the Group also
incurred GBP4.7m of costs associated with right-sizing the UK
Retail estate post the introduction of the GBP2 FOBT stakes
restrictions.
The Group has also separately recorded a net GBP2.5m (2020:
GBP211.6) income in the first half, predominantly against a VAT
claim in our Ladbrokes business where the actual amount received
was higher than that estimated at the end of 2020. The Group
recorded a profit on sale of assets in the prior year of
GBP4.0m.
Separately disclosed items
2021 2020
GBPm GBPm
-------------------------------------- -------- --------
Amortisation of acquired intangibles (94.7) (156.8)
Impairment (3.3) -
Integration costs (10.1) (19.6)
Corporate transaction costs (3.4) -
Tax litigation/one-off legislative
impacts 2.5 211.6
Legal and onerous contract costs (6.2) (11.9)
Movement in fair value of contingent
consideration (0.2) (34.8)
Other including issue cost write-off (0.7) (8.6)
Triennial restructuring costs - (4.7)
Profit on sale of assets - 4.0
-------- --------
Total (116.1) (20.8)
-------------------------------------- -------- --------
Profit before tax
Profit before tax and separately disclosed items was GBP246.7m
(2020: GBP65.9m), a year-on-year increase of GBP180.8m largely
driven by the foreign exchange gain on the retranslation of debt
and the growth in EBITDA partially offset by an increase in our
share of BetMGM losses. After charging separately disclosed items,
the Group recorded a pre-tax profit from continuing operations of
GBP130.6m (2020: GBP45.1m).
Taxation
The tax charge for the period ended 30 June was GBP39.7m (2020:
charge of GBP22.7m), reflecting an underlying effective tax rate
pre-BetMGM losses and foreign exchange of 20.2% (2020: 4.7%) and a
tax income on separately disclosed items of GBP10.3m (2020: charge
GBP12.9m). We continue to expect a full year 2021 effective tax
rate of c16% excluding the impact of foreign exchange and share of
BetMGM losses.
Cashflow
Six months to 30 June 2021 2020
GBPm GBPm
-------- -------
Underlying EBITDA (4) 401.1 358.9
Discontinued EBITDA (2.5) (10.3)
Underlying working capital (43.9) 8.9
Capital expenditure/Investment in subsidiaries (71.6) (70.0)
Finance lease (incl. IFRS 16 leases) (44.0) (42.1)
Corporate taxes (41.4) (6.0)
-------- -------
Underlying free cashflow 197.7 239.4
Investment in BetMGM (72.6) (23.3)
Acquisitions net of cash acquired (380.7) -
-------- -------
Free cashflow (255.6) 216.1
Interest paid (incl. IFRS 16 leases) (29.6) (44.5)
Separately disclosed items (18.4) (60.6)
Net movement on debt and associated instruments (21.9) (26.7)
Equity issue 0.6 3.5
Dividends paid (14.8) (7.3)
-------- -------
Net Cashflow (339.7) 80.5
Foreign exchange 18.1 (1.2)
-------- -------
Net cash generated (321.6) 79.3
------------------------------------------------- -------- -------
Note: Cashflows of GBP1.6m on contingent consideration
arrangements classified as separately disclosed items above have
been included within acquisitions within the statutory cashflow
During the first half, the Group had a net cash outflow of
GBP339.7m (2020: inflow of GBP80.5m), but an inflow of GBP113.6m
before acquisitions and the investment in BetMGM (2020: GBP103.8m).
Underlying free cashflow for the period was GBP197.7m (2020:
GBP239.4m) with underlying EBITDA of GBP401.1m (2020: GBP358.9m)
offset by investment in capital expenditure of GBP71.6m (2020:
GBP70.0m), lease payments of GBP44.0m, including those on
non-operational shops (2020: GBP42.1m) and a working capital
outflow due to timing of payments of GBP43.9m (2020: GBP8.9m
inflow). The Group also paid GBP41.4m in corporate tax (2020:
GBP6.0m) and discontinued operations generated a GBP2.5m EBITDA
loss (2020: GBP10.3m loss). Including cash outflows for
acquisitions and additional investment in BetMGM, the Group had a
free cash outflow of GBP255.6m (2020: GBP216.1m inflow).
The Group paid GBP29.6m of interest during the first half (2020:
GBP44.5m) and GBP18.4m on separately disclosed items (2020:
GBP60.6m) including GBP9.4m on integration costs, GBP8.7m on legal
and onerous contract costs and GBP3.4m on acquisition and deal
related costs partially offset by a net receipt of GBP3.1m on tax
litigation items. GBP21.9m was repaid on debt related instruments,
primarily on the settlement of one of the Groups external swap
arrangements following its maturity (2020: GBP26.7m) and GBP14.8m
was paid in dividends to the minority holding in Crystalbet (2020:
GBP7.3m). No equity dividends were paid during either the current
or prior year.
Net debt and liquidity
As at 30 June 2021, net debt was GBP1,951.3m and represented a
net debt to EBITDA ratio of 2.2x. There was no drawdown on the
Group's revolving credit facility.
Par value Issue costs/ Premium Total
GBPm GBPm GBPm
----------- --------------------- ----------
Bonds (500.0) (14.3) (514.3)
Term loans (1,526.6) 6.7 (1,519.9)
Interest accrual (17.0) - (17.0)
----------- --------------------- ----------
(2,043.6) (7.6) (2,051.2)
Cash 428.2
----------
Accounting net debt (1,623.0)
Cash held on behalf of customers (360.9)
Fair value of swaps held against debt instruments 18.9
Short term investments/Deposits
held 193.7
Balances held with payment service
providers 133.9
Finance lease debt (22.8)
----------
Adjusted net debt pre IFRS 16 (1,660.2)
Lease liabilities recognised as a result
of IFRS 16 (291.1)
----------
Adjusted net debt post IFRS 16 (1,951.3)
---------------------------------------- ----------- --------------------- ----------
Going Concern
In adopting the going concern basis of preparation in the
interim financial statements, the directors have considered the
current trading performance of the Group and the principal risks
and uncertainties as considered in the 2020 year end longer term
viability statement. This includes assessing the impact of the
crystallisation of the Group's principal risks in "severe but
plausible" downside scenarios.
At 30 June 2021, the Group had accessible cash of cGBP0.4bn with
a further cGBP0.5bn available under the Group's RCF. Since the half
year, the refinancing of the Group's RCF and issuance of an
additional $351m (cGBP250m) of term loans has increased liquidity
further. Given the level of the Group's current financing
facilities, the first material tranche of which does not mature
until 2023, and the forecast covenant headroom even under the
sensitised downside scenarios, the directors believe that the Group
is well placed to manage the risks and uncertainties it faces. As
such, the directors have a reasonable expectation that the Group
will have adequate financial resources to continue in operational
existence and have, therefore, considered it appropriate to adopt
the going concern basis of preparation in the interim financial
statements.
Notes
(1) 2021 results are unaudited
(2) Reported results are provided on a post IFRS16
implementation basis
(3) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2021
exchange rates
(4) EBITDAR is defined as earnings before interest, tax,
depreciation and amortisation, rent and associated costs, share
based payments and share of JV income. EBITDA is defined as EBITDAR
after charging rent and associated costs. Both EBITDAR and EBITDA
are stated pre separately disclosed items
(5) Stated pre separately disclosed items
Principal risks
Key risks are reviewed by the executive directors, other senior
executives and the Board of Entain plc on a regular basis and,
where appropriate, actions are taken to mitigate the key risks that
are identified. The Board has overall responsibility for risk
management as an integral part of strategic planning.
The principal risks and uncertainties which could impact the
Group are detailed in the Group's Annual Report and Accounts 2020
and are as follows:
Data breach and cyber security
The Group processes sensitive personal customer data (including
name, address, age, bank details and betting and gaming history) as
part of its business and therefore must comply with strict data
protection and privacy laws in all jurisdictions in which the Group
operates. The Group is exposed to the risk that this data could be
wrongfully obtained through either a cyber-attack or a breach in
data security. This could result in prosecutions including
financial penalties, sanctions, the loss of the goodwill of its
customers and an inability to deliver growth and deliver technology
synergies.
Technology failure
The Group's operations are highly dependent on technology and
advanced information systems and there is a risk that such
technology or systems could fail. In particular, any damage to, or
failure of, online systems and servers, electronic point of sale
systems and electronic display systems could result in
interruptions to financial controls and customer service systems
and may impact the Group's ability to retain existing, and attract
new, customers to deliver the Group's growth strategy.
Laws, regulations, licensing and regulatory compliance
Regulatory, legislative and fiscal regimes for betting and
gaming in key markets around the world can change, sometimes at
short notice. Such changes could benefit or have an adverse effect
on the Group's profitability and additional costs might be incurred
in order to comply with any new laws or regulations in multiple
jurisdictions.
Taxes
The Group is subject to a range of taxes, duties and levies in
many of the countries where we have operations or in which our
customers are located. The taxes imposed upon betting and gaming
companies have changed over time, and the levels of taxation to
which the Group is subject may change in the future. If additional
taxes are levied, this may have an adverse effect on the amount of
tax payable by the Group.
Further taxes may include corporate income tax, value added tax
(VAT) or other indirect taxes. Group companies may be subject to
VAT or similar taxes on transactions, which have previously been
treated as exempt.
Increased cost of product
The Group is subject to certain arrangements intended to support
the industries in which it operates. Examples are the horseracing
and the voluntary greyhound racing levies, which respectively
support the British horseracing and greyhound racing industries. In
addition, the Group enters into contracts for the distribution of
television pictures, audio and other data that are broadcast across
the various routes to market. A number of these are under
negotiation at any one time.
Trading, liability management and pricing
The Group may experience significant losses as a result of a
failure to determine accurately the odds in relation to any
particular event and/or any failure of its sports risk management
processes.
Health, Safety & Wellbeing of Customers and Employees
Failure to meet the requirements of the various domestic and
international rules and regulations relating to the health and
safety of our employees and customers in both retail and digital
markets could expose the Group, including individual employees and
directors, to material civil, criminal and or regulatory action
with the associated financial and reputational consequences.
Loss of key locations
Whilst the Group operates out of a number of geographical
locations, there are several key sites which are critical to the
day to day operations of the Group, including our offices in
Central London, Gibraltar, Vienna, Hyderabad, Australia, Italy and
the Philippines. Disruption in any of these locations could have an
impact on day to day operations.
Recruitment and retention of key employees
The people who work within Entain are pivotal to the success of
the company and our failure to attract or retain key individuals
may impact our ability to deliver on our strategic goals.
Emerging and Evolving Risks
In light of the COVID-19 pandemic, the Group has recognised the
need to re-evaluate emerging and existing risks regularly. In
particular and most pleasingly, even with the COVID-19 pandemic
still with us, whilst the Group still considers the loss of key
locations a significant risk, it has proven that it has adequate
business continuity plans in place to cater for colleagues working
at home across the globe.
Additionally, although risks arising from a global pandemic, or
health & safety risks have been considered previously, these
had not been identified as a principal risk prior to 2020. Given
the relevance and learnings from the last 18 months we expect to
continue to include a global pandemic risk in our 2021 Annual
Report and Accounts.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that, to the best of their knowledge the
condensed financial statements of the Company have been prepared in
accordance with IAS 34; and the interim management report of the
Company includes:
-- a fair review of the important events during the first six
months of the year and their impact on the condensed financial
statements and a description of the principal risks and
uncertainties for the remaining six months of the year, as required
by DTR 4.2.7R; and
-- a fair review of related party transactions and changes
therein, as required by DTR 4.2.8R.
A list of current directors is maintained on the Entain plc
website www.entaingroup.com.
On behalf of the Board
J Nygaard-Andersen R Wood
Chief Executive Officer Chief Financial Officer/Deputy Chief
Executive Officer
12 August 2021
INDEPENT REVIEW REPORT TO ENTAIN PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2021 which comprises condensed
consolidated income statement, condensed consolidated statement of
comprehensive income, condensed consolidated balance sheet,
condensed consolidated statement of changes in equity, condensed
consolidated statement of cash flows and the related explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted for use in the
UK and the Disclosure Guidance and Transparency Rules ("the DTR")
of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the latest annual financial statements
of the group were 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 international accounting standards in conformity with the
requirements of the Isle of Man Companies Act 2006 and the next
annual financial statements will be prepared in accordance with
UK-adopted international accounting standards. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Mark Flanagan
for and on behalf of KPMG LLP
Chartered Accountants
31 Park Row
Nottingham
NG1 6FQ
12 August 2021
UNAUDITED FINANCIAL STATEMENTS
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June
----- ---------- ---------- ------- ---------- ---------- --------------
2020
2021 (restated)(4)
Separately Separately
disclosed disclosed
items items
Underlying (note Underlying (note
items 4) Total items 4) Total
Notes GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
NGR 1,792.6 - 1,792.6 1,609.3 - 1,609.3
VAT/GST (25.6) - (25.6) (34.2) - (34.2)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Revenue 1,767.0 - 1,767.0 1,575.1 - 1,575.1
Cost of sales (630.7) - (630.7) (546.8) - (546.8)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Gross profit 1,136.3 - 1,136.3 1,028.3 - 1,028.3
Administrative costs (851.7) (116.1) (967.8) (785.3) (15.5) (800.8)
Contribution 827.8 - 827.8 778.9 - 778.9
Administrative costs excluding
marketing (543.2) (116.1) (659.3) (535.9) (15.5) (551.4)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Group operating profit/(loss) before
share of results from joint ventures
and associates 284.6 (116.1) 168.5 243.0 (15.5) 227.5
Share of results from joint venture
and associates (79.0) - (79.0) (8.6) - (8.6)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Group operating profit/(loss) 205.6 (116.1) 89.5 234.4 (15.5) 218.9
(36.8
Finance expense 5 ) - (36.8) (37.4) (5.3) (42.7)
Finance income 5 0.8 - 0.8 0.8 - 0.8
Profit/(loss) arising from financial
derivatives 5 24.3 - 24.3 (5.9) - (5.9)
Profit/(loss) arising from foreign
exchange on debt instruments 5 52.8 - 52.8 (126.0) - (126.0)
Profit/(loss) before tax 246.7 (116.1) 130.6 65.9 (20.8) 45.1
Income tax expense 6 (50.0) 10.3 (39.7) (9.8) (12.9) (22.7)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Profit/(loss) from continuing
operations 196.7 (105.8) 90.9 56.1 (33.7) 22.4
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Loss for the period from discontinued
operations after tax (2.5) (3.7) (6.2) (10.5) (9.8) (20.3)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Profit/(loss) for the period 194.2 (109.5) 84.7 45.6 (43.5) 2.1
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Attributable to:
Equity holders of the parent 184.0 (109.5) 74.5 37.7 (43.5) (5.8)
Non-controlling interests 10.2 - 10.2 7.9 - 7.9
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Earnings per share on profit for
the period from continuing
operations(1) 8 18.7p 13.8p 30.9p 2.5p
From profit/(loss) for the period(1) 18.3p 12.7p 29.1p (1.0)p
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Diluted earnings per share on profit
for the period from continuing
operations(1) 8 18.5p 13.7p 30.5p 2.5p
From profit/(loss) for the period(1) 18.1p 12.6p 28.7p (1.0)p
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Proposed dividends 7 - -
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Memo: 2021 2020
(restated)(4)
Separately Separately
Underlying disclosed Underlying disclosed
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
EBITDAR(2) 410.5 (18.1) 392.4 369.1 141.3 510.4
Rent and associated costs(3) (9.4) - (9.4) (10.2) - (10.2)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
EBITDA 401.1 (18.1) 383.0 358.9 141.3 500.2
Share based payments (6.6) - (6.6) (4.0) - (4.0)
Depreciation, amortisation and
impairment (109.9) (98.0) (207.9) (111.9) (156.8) (268.7)
Share of results from joint ventures
and associates (79.0) - (79.0) (8.6) - (8.6)
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
Group operating profit/(loss) 205.6 (116.1) 89.5 234.4 (15.5) 218.9
-------------------------------------- ----- ---------- ---------- ------- ---------- ---------- --------------
1. The calculation of underlying earnings per share has been
adjusted for separately disclosed items, and for the removal of
foreign exchange volatility arising on financial instruments as it
provides a better understanding of the underlying performance of
the Group. See note 8 for further details.
2. Included within the Income Statement and Memo above are
certain non-statutory measures. The use of these items and the
reconciliation to their statutory equivalents is provided
above.
3. Rent and associated costs include VAT and rent not captured
by IFRS 16. These are predominantly driven by held over leases and
irrecoverable VAT on rental charges.
4. The profit and loss for period ending 30 June 2020 has been
restated for the presentation of discontinued operations.
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Six months Six months
ended ended
30 June 30 June
2021 2020
GBPm GBPm
Profit for the period 84.7 2.1
------------------------------------------------------ ----------- -----------
Other comprehensive income:
Items that may be reclassified to profit or loss:
Currency translation (losses)/gains (88.7) 170.0
------------------------------------------------------
Total items that will be reclassified to profit
or loss (88.7) 170.0
------------------------------------------------------ ----------- -----------
Items that will not be re-classified to profit
or loss:
Re-measurement of defined benefit pension scheme 17.1 11.8
Tax on re-measurement of defined benefit pension
scheme (6.0) (4.1)
Total items that will not be reclassified to profit
or loss 11.1 7.7
------------------------------------------------------ ----------- -----------
Other comprehensive (expense)/ income for the
period, net of tax (77.6) 177.7
------------------------------------------------------ ----------- -----------
Total comprehensive income for the period 7.1 179.8
------------------------------------------------------ ----------- -----------
Attributable to:
- equity holders of the parent (3.1) 171.9
- non-controlling interests 10.2 7.9
------------------------------------------------------ ----------- -----------
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
30 June 31 December 30 June
2021 2020 2020
Note GBPm GBPm GBPm
------------------------------------- ----- ---------- ------------ ----------
ASSETS
Non-current assets
Goodwill 9 3,207.4 3,061.1 3,084.6
Intangible assets 9 2,176.9 2,105.4 2,282.9
Property, plant and equipment 458.6 470.2 447.1
Interest in joint venture - 6.2 20.5
Interest in associates and
other investments 54.4 29.4 31.4
Trade and other receivables 4.1 3.8 2.3
Other financial assets 3.6 4.4 3.6
Deferred tax assets 146.7 129.8 103.9
Retirement benefit assets 81.0 64.2 78.5
------------------------------------- ----- ---------- ------------ ----------
6,132.7 5,874.5 6,054.8
------------------------------------- ----- ---------- ------------ ----------
Current assets
Trade and other receivables 472.7 475.8 797.3
Income and other taxes recoverable 15.3 13.6 25.7
Derivative financial instruments 15 18.9 - 28.0
Cash and cash equivalents 396.4 706.7 469.4
903.3 1,196.1 1,320.4
------------------------------------- ----- ---------- ------------ ----------
Assets in disposal group classified
as held for sale 213.9 199.1 -
TOTAL ASSETS 7,249.9 7,269.7 7,375.2
------------------------------------- ----- ---------- ------------ ----------
LIABILITIES
Current liabilities
Trade and other payables (750.3) (687.4) (754.5)
Balances with customers (205.3) (241.1) (376.2)
Lease liabilities (84.8) (89.8) (65.7)
Interest bearing loans and
borrowings (22.9) (14.1) (26.1)
Corporate tax liabilities (84.0) (66.4) (66.4)
Provisions (36.3) (49.4) (49.2)
Derivative financial instruments 15 - (26.1) -
Other financial liabilities 15 (211.7) (147.5) (138.2)
(1,395.3) (1,321.8) (1,476.3)
------------------------------------- ----- ---------- ------------ ----------
Non-current liabilities
Interest bearing loans and
borrowings (2,028.3) (2,085.7) (2,172.9)
Lease liabilities (229.1) (248.2) (275.5)
Deferred tax liabilities (365.3) (331.7) (343.7)
Provisions (9.5) (19.5) (24.5)
Other financial liabilities 15 (8.5) (9.3) (46.4)
------------------------------------- ----- ---------- ------------ ----------
(2,640.7) (2,694.4) (2,863.0)
------------------------------------- ----- ---------- ------------ ----------
Liabilities in disposal group
classified as held for sale (173.2) (172.0) -
------------------------------------- ----- ---------- ------------ ----------
TOTAL LIABILITIES (4,209.2) (4,188.2) (4,339.3)
------------------------------------- ----- ---------- ------------ ----------
NET ASSETS 3,040.7 3,081.5 3,035.9
------------------------------------- ----- ---------- ------------ ----------
EQUITY
Issued share capital 4.8 4.8 4.8
Share premium 1,207.2 1,206.6 1,201.5
Merger reserve 2,527.4 2,527.4 2,527.4
Translation reserve 103.0 191.7 224.0
Retained deficit (863.6) (901.3) (965.5)
Equity shareholder's funds 2,978.8 3,029.2 2,992.2
------------------------------------- ----- ---------- ------------ ----------
Non-controlling interests 61.9 52.3 43.7
TOTAL SHAREHOLDERS' EQUITY 3,040.7 3,081.5 3,035.9
------------------------------------- ----- ---------- ------------ ----------
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Issued Equity Total
share Share Merger Translation Retained shareholders Non-controlling shareholders
capital premium Reserve reserve(1) deficit funds interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
At 1 January
2020 4.8 1,198.0 2,527.4 54.0 (971.4) 2,812.8 43.1 2,855.9
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
(Loss)/profit
for
the period - - - - (5.8) (5.8) 7.9 2.1
Other
comprehensive
income - - - 170.0 7.7 177.7 - 177.7
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
Total
comprehensive
income - - - 170.0 1.9 171.9 7.9 179.8
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
Share options
exercised - 3.5 - - - 3.5 - 3.5
Share-based
payments
charge - - - - 4.0 4.0 - 4.0
Equity
dividends - - - - - - (7.3) (7.3)
At 30 June
2020 4.8 1,201.5 2,527.4 224.0 (965.5) 2,992.2 43.7 3,035.9
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
At 1 January
2021 4.8 1,206.6 2,527.4 191.7 (901.3) 3,029.2 52.3 3,081.5
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
Profit for the
period - - - - 74.5 74.5 10.2 84.7
Other
comprehensive
expense - - - (88.7) 11.1 (77.6) - (77.6)
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
Total
comprehensive
income - - - (88.7) 85.6 (3.1) 10.2 7.1
Share options
exercised - 0.6 - - - 0.6 - 0.6
Share-based
payments
charge - - - - 2.1 2.1 - 2.1
Equity
dividends - - - - - - (14.8) (14.8)
Acquisition of
investments
(note 12) - - - - (50.0) (50.0) 14.2 (35.8)
At 30 June
2021 4.8 1,207.2 2,527.4 103.0 (863.6) 2,978.8 61.9 3,040.7
--------------- -------- -------- --------- ------------ --------- ------------- ---------------- -------------
1. The translation reserve is used to record exchange
differences arising from the translation of the financial
statements of foreign subsidiaries with non-sterling functional
currencies.
The accompanying notes form part of these financial
statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months
ended ended
30 June 30 June
2021 2020
Notes GBPm GBPm
------------------------------------------------------ ------ ----------- -----------
Cash generated by operations 13 337.9 302.9
Income taxes paid (41.4) (6.0)
Net finance expense paid (29.6) (44.5)
------------------------------------------------------ ------
Net cash generated from operating activities 266.9 252.4
Cash flows from investing activities:
Acquisitions (404.6) (1.9)
Cash acquired on acquisition of business 22.3 -
Purchase of intangible assets (46.0) (44.1)
Purchase of property, plant and equipment (25.6) (30.0)
Investment in joint venture (72.6) (23.3)
Net cash used in investing activities (526.5) (99.3)
------------------------------------------------------ ------ ----------- -----------
Cash flows from financing activities:
Proceeds from issue of ordinary shares 0.6 3.5
Net proceeds from derivative financial instruments - 13.5
Lease payments (44.0) (42.1)
Net repayment of borrowings (1) (21.9) (40.2)
Dividends paid to non-controlling interests (14.8) (7.3)
------------------------------------------------------ ------ ----------- -----------
Net cash utilised from financing activities (80.1) (72.6)
------------------------------------------------------ ------ ----------- -----------
Net (decrease)/increase in cash and cash equivalents (339.7) 80.5
Effect of changes in foreign exchange rates 18.1 (1.2)
Cash and cash equivalents at beginning of the
period 749.8 390.1
Cash and cash equivalents at end of the period(2) 428.2 469.4
------------------------------------------------------ ------ ----------- -----------
1. Net repayment of borrowings also includes GBP19.1m of cash
paid in relation to the settlement of derivative financial
instruments (2020: GBPnil)
2. Cash and cash equivalents at the end of the period includes
GBP31.8m (31 December 2020 GBP43.1m, 30 June 2020, GBPnil) of cash
within assets in disposal group classified as held for sale.
The accompanying notes form part of these financial
statements.
1. Corporate information
Entain plc ("the Company") is a public limited company
incorporated and domiciled in the Isle of Man whose shares are
publicly traded. The principal activities of the Company and its
subsidiaries ("the Group") are described in Note 3.
2. Basis of preparation
(a) In adopting the going concern basis of preparation in the
interim financial statements, the directors have considered the net
current liability position of the Group and the latest forecast
cashflows with due regards to current trading performance and the
principal risks and uncertainties as considered in the 2020 year
end longer term viability statement. This includes assessing the
impact of the crystallisation of the Group's principal risks in
"severe but plausible" downside scenarios.
At 30 June 2021, the Group had accessible cash of cGBP0.4bn with
a further cGBP0.5bn available under the Group's RCF. Since the half
year, the refinancing of the Group's RCF and issuance of an
additional $351m of term loans has increased liquidity further.
Given the level of the Group's current financing facilities, the
first material tranche of which does not mature until 2022, and the
forecast covenant headroom even under the sensitised downside
scenarios, the directors believe that the Group is well placed to
manage the risks and uncertainties it faces. As such, the directors
have a reasonable expectation that the Group will have adequate
financial resources to continue in operational existence for a
period of at least 12 months from the date of approval of these
financial statements and have, therefore, considered it appropriate
to adopt the going concern basis of preparation in the interim
financial statements.
(b) The Group's annual financial statements for the year ended
31 December 2020 were prepared in accordance with International
Financial Reporting Standards ("IFRS") and IFRS Interpretations
Committee (IFRS IC) pronouncements as adopted for use in the UK.
The interim condensed consolidated financial statements for the six
months ended 30 June 2021 have been prepared in accordance with IAS
34 Interim Financial Reporting as endorsed and adopted for use in
the UK and the Disclosure Rules and Transparency Rules of the UK
Financial Conduct Authority.
The financial statements are presented in million Pounds
Sterling, rounded to one decimal place. They are prepared on the
historical cost basis except for the restatement to fair value of
certain financial instruments. Non-current assets and disposal
groups held for sale are stated at the lower of previous carrying
amounts and fair value less costs to sell.
The accounting policies adopted in the preparation of the
interim financial statements are consistent with those followed in
the preparation of the Group's annual financial statements for the
year ended 31 December 2020 other than those listed in 2(f).
The interim financial information was approved by a duly
appointed and authorised committee of the Board of Directors on 12
August 2021 and is unaudited.
The financial information does not amount to full statutory
accounts within the meaning of the Isle of Man Companies Act 2006
and does not include all of the information and disclosures
required for full annual financial statements. It should be read in
conjunction with the Annual Report and Accounts of Entain plc for
the year ended 31 December 2020 which was prepared in accordance
with IFRS as adopted by the European Union and was filed with the
Registrar of Companies in the Isle of Man. This report is available
either on request from the Company's registered office or to
download from
https://entaingroup.com/investor-relations/financial-reports/ . The
auditor's report on these accounts was unqualified, did not include
a reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report, and did not
contain a statement under the Isle of Man Companies Act 2006.
The condensed interim Financial Statements have been prepared in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority and with International
Accounting Standard 34 'Interim Financial Reporting'. It should be
read in conjunction with the Annual Report and Accounts for the
year ended 31 December 2020, which were prepared in accordance with
applicable law and International Financial Reporting Standards.
(c) Critical judgements and estimates
In preparing these Condensed Consolidated Interim Financial
Statements, the Group has made its best estimates and judgements of
certain amounts included in the financial statements, giving due
consideration to materiality. The Group regularly reviews these
estimates and updates them as required. The Group has reviewed its
critical accounting estimates, assumptions and judgements
considering the impact of COVID-19 and no new critical accounting
estimates, assumptions and judgements were identified other than
extending the judgement on the "potential impairment of goodwill
and other intangible assets" to include whether an indicator of
impairment exists at 30 June 2021. Note 10 explains the judgement
on impairment indicators.
The existing critical accounting estimates, assumptions and
judgements set out in note 4.2 of the Group's Annual Report and
Accounts for the 12 months ended 31 December 2020 remain relevant
to these Condensed Consolidated Interim Financial Statements.
COVID-19 has increased the level of uncertainty in making certain
estimations. Whilst there is increased uncertainty, the nature of
these critical accounting estimates, assumptions and judgements has
not changed and so the disclosure included in the Group's Annual
Report and Accounts remains relevant. COVID-19 has been assessed as
having no material impact on the Group's remaining critical
accounting estimates, assumptions and judgements disclosed in the
Group's Annual Reports and Accounts.
(d) To assist in understanding the underlying performance, the
Group has separately disclosed the following items of pre-tax
income and expense:
- profits or losses on disposal, closure or impairment of non-current assets or businesses;
- amortisation of acquired intangibles resulting from IFRS 3
"Business Combinations" fair value exercises;
- corporate transaction costs;
- costs associated with business restructuring;
- changes in the fair value of contingent consideration;
- the impact of significant tax legislation; and
- the related tax impact effect on these items.
Any other items are considered individually by virtue of their
nature or size. The separate disclosure of these items allows a
clearer understanding of the trading performance on a consistent
and comparable basis, together with an understanding of the effect
of non-recurring or large individual transactions upon the overall
profitability of the Group.
The items disclosed separately have been included within the
appropriate classifications in the consolidated income statement
and are detailed in note 4. The directors have also presented Net
Gaming Revenue, Contribution, Underlying EBITDAR and Underlying
EBITDA as these are measures used frequently within the industry.
All of these items are reconciled within the Income Statement.
(e) Accounting policies
Depreciation
Depreciation is applied using the straight-line method to
specific classes of asset to reduce them to their residual value
over their estimated useful economic lives.
The estimated useful lives are as follows:
Land and buildings Lower of 50 years, or estimated useful
life of the building, or lease. Indefinite
lives are attached to any land held
and therefore it is not depreciated
Plant and equipment 3 - 5 years
Fixtures, fittings and equipment 3 -10 years
--------------------------------- --------------------------------------------
Amortisation
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets, unless such lives are indefinite. All indefinite lived
assets are subject to an annual impairment review from the year of
acquisition. Other intangible assets are amortised from the date
they are available for use.
The estimated useful lives are as follows:
Retail licences Lower of 15 years, or duration of
licence
Software 2 -15 years
Capitalised development expenditure 3 - 5 years
Trademarks and brand names 10 -15 years, or indefinite life
Customer relationships 3 -15 years
------------------------------------ ----------------------------------
Impairment
An impairment review is performed for goodwill and indefinite
life assets on at least an annual basis. For all other non-current
assets an impairment review is performed where there are indicators
of impairment. This requires an estimation of the recoverable
amount which is the higher of an asset's fair value less costs to
sell and its value in use. Estimating a value in use amount
requires management to make an estimate of the expected future cash
flows from each cash generating unit and to discount cash flows by
a suitable discount rate in order to calculate the present value of
those cash flows. Estimating an asset's fair value less costs to
sell is determined using future cashflow and profit projections as
well as industry observed multiples and publicly observed share
prices for similar gambling companies.
Within Retail the cash generating units are generally an
individual LBO and therefore, impairment is first assessed at this
level for licences, property, plant and equipment and right of use
("ROU") assets, any impairment arising booked first to licences
then to property, plant and equipment and ROU assets.
Leases
Leases, other than those with a lease period of less than one
year, or where the original cost of the asset acquired would be a
negligible amount, are capitalised at the 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 tangible fixed assets at cost and
depreciated over their estimated useful lives, which normally
equates to the lives of the leases, after taking into account
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 de-recognised. The difference between the
gross receivable and the present value of the receivable is
recognised as unearned finance lease income. Finance lease income
is recognised in interest income 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 the leases. Operating lease
rental income is recognised on a straight-line basis over the life
of the lease.
Separately Disclosed Items
For a full explanation of what is defined as a separately
disclosed item and how they are disclosed, please refer to note
2(d).
(f) Updates to IFRS
A number of amendments to IFRSs became effective for the
financial year beginning 1 January 2021:
IFRS 'Insurance Contracts" Amendments regarding replacement 1 January
4 issue in the context of the 2021
IBOR reform
IFRS 'Financial Instruments: Disclosures'
7
-------------------------------------
IFRS 'Financial Instruments'
9
-------------------------------------
IAS3 'Financial Instruments: Recognition
9 and Measurement'
-------------------------------------
IFRS 'Leases' Amendment to extend the exemption 1 April
16 from assessing whether a 2021
COVID-19 related rent concession
is a lease modification
------------------------------------- ---------------------------------- ----------
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 'Business Combinations' Amendments updating a reference 1 January
3 to the Conceptual Framework 2022
IFRS 'Insurance Contracts" Amendments regarding the
4 expiry date of the deferral 1 January
approach 2023
------------------------------------ ----------------------------------- ----------
IFRS 'Financial Instruments' Amendments resulting from 1 January
9 Annual Improvements to IFRS 2022
standards 2018-2020
------------------------------------ ----------------------------------- ----------
IFRS 'Insurance Contracts' Original issue 1 January
17 2023
------------------------------------ ----------------------------------- ----------
IAS 'Presentation of Financial Amendments regarding the 1 January
1 Statements' classification of liabilities 2023
------------------------------------ ----------------------------------- ----------
Amendments to defer the effective
date of the January 2020 1 January
amendments 2023
------------------------------------ ----------------------------------- ----------
Amendments regarding the
disclosure of accounting 1 January
policies 2023
------------------------------------ ----------------------------------- ----------
IAS 'Accounting Policies, Changes Amendments regarding the
8 in Accounting Estimates and definition of accounting 1 January
Errors' estimates 2023
------------------------------------ ----------------------------------- ----------
IAS 'Income Taxes' Amendments regarding deferred
12 tax on leases and decommissioning 1 January
obligations 2023
------------------------------------ ----------------------------------- ----------
IAS 'Property, Plant and Equipment' Amendments prohibiting a 1 January
16 company from deducting from 2022
the cost of property, plant
and equipment amounts received
from selling items produced
while the company is preparing
the asset for its intended
use.
------------------------------------ ----------------------------------- ----------
IAS 'Provisions, Contingent Liabilities Amendments regarding the
37 and Contingent Assets' costs to include when assessing 1 January
whether a contract is onerous. 2022
------------------------------------ ----------------------------------- ----------
3. Segment information
The Group's operating segments are based on the reports reviewed
by the Executive management team (who are collectively considered
to be the Chief Operating Decision Maker (CODM) to make strategic
decisions and allocate resources.
IFRS 8 requires segment information to be presented on the same
basis as that used by the CODM for assessing performance and
allocating resources, and the Group's operating segments are now
aggregated into the four reportable segments. This represents a
change from 2020 with our former UK and European Retail segments
now combined to form one Retail segment, in line with the recent
changes in the Group's reporting to the executive management
team.
- Online: comprises betting and gaming activities from online
and mobile operations. Sports Brands include bwin, Coral,
Crystalbet, Eurobet, Ladbrokes and Sportingbet; Gaming Brands
include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, partypoker
and PartyCasino;
- Retail: comprises betting and retail activities in the shop
estate in Great Britain, Northern Ireland, Jersey, Republic of
Ireland, Belgium and Italy;
- 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
telephone betting, Stadia, Betdaq, and on course pitches.
The Executive management team of the Group have chosen to assess
the performance of operating segments based on a measure of net
revenue, EBITDAR, EBITDA and operating profit with finance costs
and taxation considered for the Group as a whole. Transfer prices
between operating segments are on an arm's-length basis in a manner
similar to transactions with third parties.
The segment results for the six months ended 30 June 2021 were
as follows:
2021 Elimination
All Other of internal Total
Online Retail Segments Corporate revenue Group
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------- ------- ------- --------- --------- ------------ -------
NGR 1,587.6 191.3 15.5 - (1.8) 1,792.6
VAT/GST (25.6) - - - - (25.6)
Revenue 1,562.0 191.3 15.5 - (1.8) 1,767.0
Gross Profit 989.1 134.2 13.0 - - 1,136.3
------------------------------------------- ------- ------- --------- --------- ------------ -------
Contribution 683.8 131.3 12.7 - - 827.8
Operating costs excluding marketing/rental
costs (187.1) (185.7) (10.3) (34.2) - (417.3)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Underlying EBITDAR before separately
disclosed items 496.7 (54.4) 2.4 (34.2) - 410.5
Rental costs (0.8) (8.3) (0.1) (0.2) - (9.4)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Underlying EBITDA before separately
disclosed items 495.9 (62.7) 2.3 (34.4) - 401.1
Share based payments (3.5) (1.3) - (1.8) - (6.6)
Depreciation and Amortisation (56.9) (51.1) (1.7) (0.2) - (109.9)
Share of joint ventures and associates - - (0.8) (78.2) - (79.0)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Operating profit/(loss) before
separately disclosed items 435.5 (115.1) (0.2) (114.6) - 205.6
Separately disclosed items (92.6) (5.6) (1.7) (16.2) - (116.1)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Group operating profit/(loss) 342.9 (120.7) (1.9) (130.8) - 89.5
------------------------------------------- ------- ------- --------- --------- ------------ -------
Net finance income 41.1
------------------------------------------- ------- ------- --------- --------- ------------ -------
Profit before tax 130.6
Income tax (39.7)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Profit for the period from continuing
operations 90.9
------------------------------------------- ------- ------- --------- --------- ------------ -------
Loss for the period from discontinued
operations after tax (6.2)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Profit for the period after discontinued
operations 84.7
------------------------------------------- ------- ------- --------- --------- ------------ -------
The segment results for the six months ended 30 June 2020 were
as follows:
2020 (restated) Elimination
All Other of internal Total
Online Retail Segments Corporate revenue Group
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------- ------- ------- --------- --------- ------------ -------
NGR 1,245.1 353.4 12.7 - (1.9) 1,609.3
VAT/GST (34.2) - - - - (34.2)
Revenue 1,210.9 353.4 12.7 - (1.9) 1,575.1
Gross Profit 779.6 238.6 10.1 - - 1,028.3
------------------------------------------- ------- ------- --------- --------- ------------ -------
Contribution 533.9 235.7 9.3 - - 778.9
Operating costs excluding marketing/rental
costs (164.4) (211.0) (12.7) (21.7) - (409.8)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Underlying EBITDAR before separately
disclosed items 369.5 24.7 (3.4) (21.7) - 369.1
Rental costs (0.9) (9.2) (0.1) - - (10.2)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Underlying EBITDA before separately
disclosed items 368.6 15.5 (3.5) (21.7) - 358.9
Share based payments (1.3) (0.4) - (2.3) - (4.0)
Depreciation and Amortisation (55.7) (54.7) (1.5) - - (111.9)
Share of joint ventures and associates - - 0.2 (8.8) - (8.6)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Operating profit/(loss) before
separately disclosed items 311.6 (39.6) (4.8) (32.8) - 234.4
Separately disclosed items (153.7) 196.3 (12.9) (45.2) - (15.5)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Group operating profit/(loss) 157.9 156.7 (17.7) (78.0) - 218.9
------------------------------------------- ------- ------- --------- --------- ------------ -------
Net finance expenses (173.8)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Profit before tax 45.1
Income tax (22.7)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Profit for the period from continuing
operations 22.4
------------------------------------------- ------- ------- --------- --------- ------------ -------
Loss for the period from discontinued
operations after tax (20.3)
------------------------------------------- ------- ------- --------- --------- ------------ -------
Profit for the period after discontinued
operations 2.1
------------------------------------------- ------- ------- --------- --------- ------------ -------
Assets and liabilities information is reported internally in
total and not by reportable segment and, accordingly, no
information is provided in this note on assets and liabilities
split by reportable segment.
Geographical information
Revenue by destination for the Group, is as follows:
Six months Six months
ended 30 ended 30
June 2021 June 2020 (restated)
GBPm GBPm
----------------------------------------------------- ---------- ---------------------
United Kingdom 775.1 737.6
Rest of the World 991.9 837.5
----------------------------------------------------- ---------- ---------------------
Total 1,767.0 1,575.1
----------------------------------------------------- ---------- ---------------------
4. Separately disclosed items
Six months Six months
ended ended
30 June 2021 30 June 2020
GBPm GBPm
(restated)
---------------------------------------------------- ------------- -------------
Amortisation of acquired intangibles(1) 94.7 156.8
Impairment loss(2) 3.3 -
Integration costs(3) 10.1 19.6
Corporate restructuring costs(4) 3.4 -
Tax litigation/ one-off legislative impacts(5) (2.5) (211.6)
Legal and onerous contract provisions(6) 6.2 11.9
Movement in fair value of contingent consideration
(7) 0.2 34.8
Other one-off items 0.7 3.3
Triennial restructuring costs(8) - 4.7
Issue costs write off(9) - 5.3
Profit on disposal of assets(10) - (4.0)
Total before tax 116.1 20.8
Tax on separately disclosed items(11) (10.3) 12.9
----------------------------------------------------- ------------- -------------
Separately disclosed items for the period
from continuing operations 105.8 33.7
Separately disclosed items for the period
from discontinued operations 3.7 9.8
----------------------------------------------------- ------------- -------------
Separately disclosed items for the period
after discontinued operations 109.5 43.5
----------------------------------------------------- ------------- -------------
(1.) Amortisation charges in relation to acquired intangible
assets primarily arising from the acquisitions of
Ladbrokes Coral Group plc, Crystalbet, Enlabs and Bet.pt.
(2.) During the period the Group recognised a non-cash
impairment charge of GBP3.3m against vacated head office premises
and the Betdaq business which has been disclosed as held for sale
during the current year.
(3.) Costs associated with the integration of Ladbrokes Coral
Group plc and GVC businesses, including redundancy costs.
(4.) Deal fees associated with M&A activity in the
period.
(5.) Relates primarily to the actual amount received in relation
to the Ladbrokes VAT claim in excess of the amount originally
estimated by management in 2020 prior to the claim being submitted
to HMRC.
(6.) Legal and onerous contract costs include onerous contracts
that have arisen as a result of shop closures
and other one-off legal and tax provisions outside the ordinary course of business.
(7.) Costs associated with discount unwind and movements in the
fair value of contingent consideration on
acquisition activity from the current and previous periods.
(8.) Costs associated with the shop closure program including
redundancy, consultation costs and other costs directly associated
with the triennial response strategy, but excluding property
related costs which are included in item 6.
(9.) Issue costs written off on the refinancing of US
denominated loans in the prior year.
(10.) Profit on sale of certain assets in the prior year.
(11.) The tax credit on separately disclosed items of GBP10.3m
(2020: GBP12.9m charge) represents 8.9% (2020: (62.0)%) of the
separately disclosed items incurred of GBP116.1m (2020: GBP20.8m).
This is lower than the expected tax credit at 19.0% (2020: 19.0%)
due to certain corporate transaction costs that are not deductible
for tax purposes, lower average overseas tax rates and the impact
of the future UK tax rate change to 25% on deferred tax liabilities
relating to acquired intangibles.
Included within separately disclosed items relating to
discontinued operations is costs associated with the deal fees on
the sale of the Intertrader business.
5. Finance expense and income
Six months Six months
ended ended
30 June 2021 30 June 2020
GBPm GBPm
-------------------------------------------- ------------- -------------
Bank loans and overdrafts (30.2) (29.6)
Interest arising on lease liabilities (6.6) (7.8)
Issue costs write off (note 4) - (5.3)
--------------------------------------------- ------------- -------------
Total finance expense (36.8) (42.7)
--------------------------------------------- ------------- -------------
Interest receivable 0.8 0.8
Gains/(losses) arising on financial
derivatives 24.3 (5.9)
Gains/(losses) arising on foreign exchange
on debt instruments 52.8 (126.0)
Net finance income/(expense) 41.1 (173.8)
--------------------------------------------- ------------- -------------
6. Taxation
The tax charge on continuing operations for the six months ended
30 June 2021 was GBP39.7m (30 June 2020: charge of GBP22.7m) of
which a credit of GBP10.3m (30 June 2020: charge of GBP12.9m)
related to separately disclosed items. The effective tax rate on
continuing operations (after the effect of JV losses and foreign
exchange) before separately disclosed items is 20.3% (six months
ended 30 June 2020: 17.7%).
The current period's tax charge on continuing operations before
separately disclosed items was higher than the UK statutory rate of
19% due to deferred tax assets not being recognised in the period,
offset by the effects of lower overseas tax rates and the impact of
the future UK tax rate change to 25%.
The effective tax rate on continuing operations for the full
year ended 31 December 2021, excluding the impact of FX and the US
JV, is forecast to be 16%.
The deferred tax assets and liabilities are measured at the tax
rates of the respective territories which are expected to apply to
the year in which the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the balance sheet date.
In the Budget on 3 March 2021 the Chancellor announced that the
standard rate of UK Corporation Tax would increase from the planned
19% rate to 25% on 1 April 2023. This change was enacted on 24 May
2021. Both the 19% and the 25% rate have therefore been used in
measuring the UK deferred tax items at 30 June 2021, depending on
the expected date of reversal of any timing differences.
7. Dividends
No interim dividend has been declared by the directors in light
of the uncertainty surrounding Covid-19, no dividend was paid in
the preceding period.
8. Earnings per share
Basic earnings per share has been calculated by dividing the
profit attributable to shareholders of the Company of GBP74.5m (30
June 2020: loss of GBP5.8m) by the weighted average number of
shares in issue during the six months of 585.4m (30 June 2020:
582.8m).
The calculation of adjusted earnings per share which removes
separately disclosed items and foreign exchange gains and losses
arising on financial instruments has also been disclosed as it
provides a better understanding of the underlying performance of
the Group. Separately disclosed items are defined in note 2 and
disclosed in note 4.
Six months Six months
ended ended
Weighted average number of shares (million): 30 June 2021 30 June 2020
Shares for basic earnings per share 585.4 582.8
Potentially dilutive share options and
contingently issuable shares 6.4 9.1
----------------------------------------------- -------------- --------------
Shares for diluted earnings per share 591.8 591.9
----------------------------------------------- -------------- --------------
Six months Six months
ended ended
30 June 2021 30 June 2020
GBPm GBPm
------------------------------------------------ -------------- --------------
Profit/(loss) attributable to shareholders 74.5 (5.8)
------------------------------------------------- -------------- --------------
- from continuing operations 80.7 14.5
- from discontinued operations (6.2) (20.3)
------------------------------------------------- -------------- --------------
(Gain)/loss arising from financial instruments (24.3) 5.9
(Gain)/loss arising from foreign exchange
debt instruments (52.8) 126.0
Separately disclosed items net of tax (note
4) 109.5 43.5
------------------------------------------------- -------------- --------------
Adjusted profit attributable to shareholders 106.9 169.6
------------------------------------------------- -------------- --------------
- from continuing operations 109.4 180.1
- from discontinued operations (2.5) (10.5)
------------------------------------------------- -------------- --------------
Standard earnings Adjusted earnings
per share per share
Six months Six months
ended ended
30 June 30 June
Stated in pence 2021 2020 2021 2020
------------------------------------ --------- --------- ----------- -------
Basic earnings per share
- from continuing operations 13.8 2.5 18.7 30.9
- from discontinued operations (1.1) (3.5) (0.4) (1.8)
------------------------------------ --------- --------- ----------- -------
From profit/(loss) for the period 12.7 (1.0) 18.3 29.1
------------------------------------ --------- --------- ----------- -------
Diluted earnings per share
- from continuing operations 13.7 2.5 18.5 30.5
- from discontinued operations (1.1) (3.5) (0.4) (1.8)
------------------------------------ --------- --------- ----------- -------
From profit/(loss) for the period 12.6 (1.0) 18.1 28.7
------------------------------------ --------- --------- ----------- -------
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 32.0p (2020: 32.4p) and a diluted adjusted
earnings per share of 31.7p (2020: 31.9p) from continuing
operations.
9. Goodwill and intangible assets
Goodwill Licences Software Customer Trade-marks Total
relationships & brand
names
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- -------- -------- -------- -------------- ----------- -------
Cost
At 1 January 2020 3,238.8 15.7 595.9 935.9 1,925.7 6,712.0
Exchange adjustment 128.3 - 11.3 20.6 30.3 190.5
Additions - - 101.6 - - 101.6
Disposals and assets classified
as held for sale (14.9) - (169.5) (7.9) (2.0) (194.3)
At 31 December 2020 3,352.2 15.7 539.3 948.6 1,954.0 6,809.8
Exchange adjustment (91.0) 0.1 (8.7) (15.2) (22.6) (137.4)
Additions from business combinations
(note 12) 225.1 23.7 8.3 66.9 96.7 420.7
Additions - - 45.8 - - 45.8
Disposals and assets classified
as held for sale - - (6.1) - - (6.1)
At 30 June 2021 3,486.3 39.5 578.6 1,000.3 2,028.1 7,132.8
------------------------------------- -------- -------- -------- -------------- ----------- -------
Accumulated amortisation and
impairment
At 1 January 2020 272.4 6.3 379.3 593.2 96.4 1,347.6
Exchange adjustment 18.7 - 6.0 17.4 6.8 48.9
Amortisation charge - 1.1 115.8 262.2 39.3 418.4
Disposals and assets classified
as held for sale - - (169.1) (1.2) (1.3) (171.6)
------------------------------------- -------- -------- -------- -------------- ----------- -------
At 31 December 2020 291.1 7.4 332.0 871.6 141.2 1,643.3
Exchange adjustment (12.2) - (4.6) (14.1) (6.1) (37.0)
Amortisation charge - 2.4 52.0 69.7 22.5 146.6
Impairments - - 1.7 - - 1.7
Disposals and assets classified
as held for sale - - (6.1) - - (6.1)
At 30 June 2021 278.9 9.8 375.0 927.2 157.6 1,748.5
------------------------------------- -------- -------- -------- -------------- ----------- -------
Net book value
At 31 December 2020 3,061.1 8.3 207.3 77.0 1,812.8 5,166.5
------------------------------------- -------- -------- -------- -------------- ----------- -------
At 30 June 2021 3,207.4 29.7 203.6 73.1 1,870.5 5,384.3
------------------------------------- -------- -------- -------- -------------- ----------- -------
At 30 June 2021, the Group had not entered into contractual
commitments for the acquisition of any intangible assets (31
December 2020: GBPnil).
Included within trade-marks & brand names are GBP1,398.4m
(31 December 2020: GBP1,398.4m) of intangible assets considered to
have indefinite lives. These assets relate to the UK Ladbrokes and
Coral brands which are considered to have indefinite durability
that can be demonstrated and their value can be readily measured.
The brands operate in longstanding and profitable market sectors.
The Group has a strong position in the market and there are
barriers to entry due to the requirement to demonstrate that the
applicant is a fit and proper person with the "know-how" required
to run such operations.
Goodwill reflects the value by which consideration exceeds the
fair value of net assets acquired as part of a business combination
including the deferred tax liability arising on acquisitions.
Licences comprise the cost of acquired betting shop
licences.
Software relates to the cost of acquired software, through
purchase or business combination, and the capitalisation of
internally developed software.
Customer relationships, trade-marks and brand names relate to
the fair value of customer lists, trade-marks and brand names
acquired as part of business combinations, primarily relating to
the Bwin and Ladbrokes Coral Group plc businesses.
10. Impairment
IAS 36 Impairment of Assets states that an impairment review
must be carried out at least annually for any indefinite lived
assets, such as goodwill and certain brands. Furthermore, it is
necessary to assess whether there is any indication that any other
asset, or cash generating unit (CGU), may be impaired at each
reporting date. Should there be an indication that an asset may be
impaired then an impairment review should be conducted at the
relevant reporting date.
Whilst there are no current indicators of impairment, the
directors are conscious of the ongoing economic uncertainty caused
by the global pandemic, particularly on our Retail segment. As
such, there is a potential risk for future impairments should there
be a significant change in the economic outlook, or changes in
longer term retail trends versus those we expect today.
During the current year the Group recognised a GBP1.7m
impairment against the Betdaq business as a result of the Group's
intention to sell the business and it being classified as held for
sale. A further impairment of GBP1.6m has also been recognised
against vacated head office premises.
During the previous period the Group recognised a GBP19.3m
impairment against its financial services business, Intertrader.
This impairment has arisen as a result of the reduced profit
forecasts for that business following the impacts of COVID-19 on
its underlying trading. This business has now been presented as a
discontinued operation and disclosed as held for sale.
11. Net debt
The components of the Group's net debt are as follows:
30 June 30 December 30 June
2021 2020 2020
GBPm GBPm GBPm
Current assets
Cash and short-term deposits 428.2 749.8 469.4
Current liabilities
Interest bearing loans and borrowings (22.9) (14.1) (26.1)
Non-current liabilities
Interest bearing loans and borrowings (2,028.3) (2,085.7) (2,172.9)
------------------------------------------------- --------- ----------- ---------
Accounting net debt (1,623.0) (1,350.0) (1,729.6)
Cash held on behalf of customers (360.9) (396.1) (376.2)
Fair value swaps held against debt instruments 18.9 (26.1) 28.0
Deposits 193.7 171.2 144.1
Balances held with payment service providers 133.9 172.4 110.0
Adjusted net debt (1,637.4) (1,428.6) (1,823.7)
------------------------------------------------- --------- ----------- ---------
Lease liabilities (313.9) (338.0) (341.2)
Net debt including lease liabilities (1,951.3) (1,766.6) (2,164.9)
------------------------------------------------- --------- ----------- ---------
Cash and short-term deposits include GBP31.8m (31 December 2020:
GBP43.1m, 30 June 2020 GBPnil) classified as held for sale.
Cash held on behalf of customers represents the outstanding
balance due to customers in respect of their online gaming wallets.
Included within this balance is GBP155.6m (31 December 2020:
GBP155.0m, 30 June 2020: GBPnil) classified as held for sale.
Deposits represent balances with brokers in relation to trading
accounts held by the Group. Included within this balance is
GBP177.9m (31 December 2020: GBP155.1m, 30 June 2020: GBPnil)
classified as held for sale.
12. Business combinations
Business combinations are accounted for using the acquisition
method. Identifiable assets and liabilities acquired, and
contingent liabilities assumed in a business combination are
measured at their fair values at the acquisition date. The
identification and valuation of intangible assets arising on
business combinations is subject to a degree of judgement. We
engaged independent third parties, including Duff & Phelps 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. Summary of
acquisitions:
Enlabs
On 30 March, the Group acquired 95.9% of the share capital of
Enlabs AB. The acquisition of the share capital resulted in control
being obtained and as a result Enlabs is consolidated as a
subsidiary from this date forward. Enlabs operates predominantly
via an online platform across sports betting and gaming markets and
provides the Entain Group with access to the regulated Baltic
markets. Consideration consisted of GBP304.5m for its 95.9% share
in Enlabs with GBP14.2m recognised as a non-controlling interest
for the 4.1% remaining holding not acquired by the Group.
Bet.pt
On 31 March, the Group acquired 100% of the share capital of
Entertainment Technologies Group Limited which owns the Bet.pt
business, an online sports betting and gaming business operating in
Portugal. The acquisition of the Bet.pt brand provides the Group
with access to the regulated Portuguese market. In accordance with
IFRS 3, as control has been obtained, the business has been
consolidated from this point forwards. Including relevant
adjustments for the net debt acquired with the business and
potential payments under contingent arrangements, consideration
amounted to GBP51.3m.
Impala
During the year, the Group established a 51% owned subsidiary
GVC (Impala) Limited "Impala Digital". On 29 March 2021, Impala
Digital acquired the trade and assets of a B2B business operating
in the African betting and gaming market for $40m. This acquisition
provides the Entain Group with a platform with which the Group can
access the African market. In accordance with IFRS 3, as the Entain
Group exercises control, Impala Digital has been consolidated
within the Group financial statements.
The shareholder agreement for Impala Digital provides an
opportunity for the Group to purchase the remaining 49% of share
capital. Based on the expectation that the second completion
requirements will be met, a financial liability has been recorded
at GBP50.0m at acquisition. The estimate of the financial liability
was based on forecast results and the likely payment due under the
second completion conditions.
Finnplay
On 1 April 2021, the Group acquired 100% of the share capital of
Finnplay Technologies Oy, the platform provider for the Ninja brand
of Enlabs for GBP10.3m. In accordance with IFRS 3, the business has
been consolidated from this point forwards.
Given the proximity of the acquisitions to the period end and as
permitted by IFRS 3 'Business Combinations', the fair value of the
acquired identifiable assets and liabilities have been presented on
a provisional basis. Fair values were determined on the basis of an
initial assessment performed by an independent professional
expert.
Details of the purchase consideration, the net assets acquired
and goodwill of all acquisitions are as follows:
Provisional
fair value
GBPm
---------------------------------------- ------------
Intangible assets (excluding goodwill) 195.6
Property, plant and equipment 3.3
Investments 2.9
Trade and other receivables 12.6
Cash and cash equivalents 22.3
Deferred tax asset 0.5
Deferred tax liability (30.2)
Trade and other payables (23.0)
---------------------------------------- ------------
Total 184.0
---------------------------------------- ------------
Net assets acquired
Goodwill 225.1
---------------------------------------- ------------
Total net assets acquired 409.1
---------------------------------------- ------------
Consideration:
Cash 379.7
Non-controlling interests 14.2
Deferred consideration 15.2
---------------------------------------- ------------
Total consideration 409.1
---------------------------------------- ------------
The acquired businesses contributed revenues of GBP31.7m and
profit before tax of GBP6.2m pre the effect of any fair value
adjustments to the Group for the period post acquisition up to 30
June 2021. If the acquisitions had occurred on 1 January 2021,
consolidated proforma revenue and net profit for the period ended
30 June 2021 would have been GBP1,854.4m and GBP136.5m respectively
before the effect of fair value adjustments and deal related
costs.
During the year the Group also acquired an investment in three
associated companies in Belgium for GBP23.3m.
13. Note to the statement of cash flows
Six months Six months
ended ended
30 June 30 June
2021 2020
GBPm GBPm
------------------------------------------------------ ----------- -----------
Profit before tax and net finance expense from
continuing operations 89.5 218.9
Loss before tax and net finance expense from
discontinued operations (6.2) (20.3)
------------------------------------------------------ ----------- -----------
Profit before tax and net finance expense including
discontinued operations 83.3 198.6
------------------------------------------------------ ----------- -----------
Adjustments for:
Impairment 3.3 19.3
Depreciation of property, plant and equipment 58.0 70.7
Amortisation of intangible assets 146.6 199.9
Profit on disposal of assets - (4.0)
Share-based payments charge 6.6 4.0
Increase in trade and other receivables (20.8) (293.7)
Increase in trade and other payables 4.6 92.5
Increase in other financial liabilities 2.1 26.0
Decrease in provisions (22.7) (19.0)
Share of results from joint ventures and associates 79.0 8.6
Other non-cash items (2.1) -
Cash generated by operations 337.9 302.9
------------------------------------------------------ ----------- -----------
14. Related party transactions
During the period, Group companies entered into the following
transactions with related parties who are not members of the
Group:
Six months Six months
ended ended
30 June 30 June
2021 2020
GBPm GBPm
--------------------- ----------- -----------
Equity investment
- Joint venture (1) 72.6 -
Sundry expenditures
- Associates (2) 17.4 19.8
--------------------- ----------- -----------
1. Equity investment in BetMGM.
2. Payments in the normal course of business made to Sports
Information Services (Holdings) Limited.
The following table provides related party outstanding
balances:
30 June 31 December 30 June
2021 2020 2020
GBPm GBPm GBPm
---------------------------- -------- ------------ --------
Other payables outstanding
- Associates (9.3) (0.1) (1.5)
---------------------------- -------- ------------ --------
15. Financial instruments
Details of the Group's borrowing are set out in note 11.
Fair value of financial instruments
The major component of the Group's derivative financial assets
measured at fair value consist of currency swaps held against debt
instruments of GBP18.9m (30 June 2020: GBP28.0m, 31 December 2020:
GBPnil). The fair value of the Group's other financial assets at 30
June 2021 is not materially different to its original cost.
The major components of the Group's financial liabilities
measured at fair value consist of; deferred and contingent
consideration GBP201.7m (30 June 2020: GBP165.6m, 31 December 2020:
GBP142.1m), currency swaps held against debt instruments of GBPnil
(30 June 2020: GBPnil, 31 December 2020: GBP26.1m), and ante post
liabilities GBP15.6m (30 June 2020: GBP16.6m, 31 December 2020:
GBP12.5m).
Financial assets and financial liabilities measured at fair
value in the Statement of Financial Position are grouped into three
levels of a fair value hierarchy. The three levels are defined on
the observability of significant inputs to the measurement, as
follows:
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities;
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or
liability, either directly or indirectly; and
-- Level 3: inputs for the asset or liability that are not based on observable market data.
There are no reasonably probable changes to assumptions or input
that would lead to material changes in the fair value determined,
although the final value will be determined by future sporting
results.
The Group's financial assets and liabilities that are measured
at fair value after initial recognition fall under the 3 levels of
the fair value hierarchy as follows:
-- Level 1 - GBP2.0m assets (30 June 2020: GBPnil, 31 December
2020: GBPnil), and GBPnil liabilities (30
June 2020: GBPnil, 31 December 2020: GBPnil).
-- Level 2 - GBP21.9m assets (30 June 2020: GBP34.7m, 31
December 2020: GBP2.9m), and GBPnil liabilities
(30 June 2020: GBPnil, 31 December 2020:GBP26.1m).
-- Level 3 - GBP5.1m assets (30 June 2020: GBP4.9m, 31 December
2020: GBP5.1m), and GBP217.3m liabilities
(30 June 2020: GBP182.2m, 31 December 2020: GBP154.6m).
There have been no transfers of assets or liabilities recorded
at fair value between the levels of the fair value hierarchy.
16. Contingent liabilities
Greek tax
In the year ended 31 December 2018, the Group recognised a
charge of GBP186.8m in the Income Statement within non-trading
items for potential Greek tax liabilities for the years 2010 to
2017. Of the charge recognised, EUR51.4m (GBP46.1m) related to
2010/11 for which the Group received an assessment of EUR186.8m in
2017.
2010/11
The Group's appeal against the original assessment in respect of
2010 and 2011 was heard before the Administrative Court of Appeal
in Athens on 13 January 2019 with a second hearing held on 10 May
2021. Whilst we do not expect to hear the verdict until late 2021,
the Directors remain confident that the Court will find that the
original assessment was out of all proportion to the size of the
Group's Greek business at the time.
By 31 December 2020 the Group had paid all of the 2010/2011
assessment of EUR186.8m. As at 30 June 2021, the total payments
made in respect of the Assessment exceed our best estimate of the
liability for these years by GBP124.6m, and accordingly this is
recorded as a receivable in the Group's balance sheet (2020:
GBP133.0m). In the event of a successful appeal, recovery of the
debtor will be through either a repayment or an ability to offset
future tax liabilities.
2012-2017
The Group has now received final sign off of the amended Greek
tax returns filed for the years 2012 through to 2017. The Group has
made all tax payments against the 2012-2017 tax liabilities and has
made a provision for the remaining associated fees.
HMRC investigation
On 28 November 2019, one of our UK subsidiaries, Entain Holdings
(UK) Limited, received a production order from HM Revenue &
Customs ("HMRC") requiring it to provide information relating to
the group's former Turkish facing online betting and gaming
business, sold in 2017. At that time, the group understood that
HMRC's investigation was directed at a number of former third party
suppliers, relating to the processing of payments for online
betting and gaming in Turkey. On 21 July 2020, GVC Holdings Plc
announced that HMRC was widening the scope of its investigation and
was examining potential corporate offending by the GVC group. It
had previously been understood that no group company was a subject
of HMRC's investigation. Through ongoing engagement with HMRC we
understand that the group remains a corporate suspect and that the
offences under investigation include, but are not limited to,
offences under sections 1 and 7 of the Bribery Act 2010. The group
continues to co-operate fully with HMRC's enquiries.
In addition to the items discussed above, the Group is subject
to a number of other potential litigation claims that arise as part
of the normal course of business. Provision has not been made
against these claims as they are not considered likely to result in
an economic outflow. Consistent with any claims of this nature
there can be uncertainty with the final outcome.
17. Subsequent events
On 5 July 2021 Entain plc purchased the remaining 49% of the
equity of Mars LLC (Crystalbet) for EUR150.0m, as a result the
non-controlling interest related to this previous acquisition has
now been eliminated.
On 16 July 2021 Entain plc announced the pricing and allocation
of a $1,125.0m term loan which matures on 29 March 2027, with a
portion of the funds used to repay the existing $774.0m term loan
currently held by the Group.
Post the half year, the trustees have signed the buy-out deed
for the Ladbrokes pension scheme passing the schemes gross assets
and liabilities to an external party. The move to a buy-out does
not impact the net asset disclosed on the Balance Sheet.
Post the end of the half year, the Group agreed a deal in
principle to purchase the trade and assets of a company which is
aligned to our new opportunities segment, which we have announced
at the date of this release, for $75m. Subject to the satisfaction
of certain conditions associated with the purchase, we expect the
deal to complete in H2.
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