TIDMENT
RNS Number : 1068R
Entain PLC
04 March 2021
07:00 4 March 2021
Entain plc
("Entain" or the "Group")
Strong performance driven by a diversified business and an
exceptional online offering
Well positioned for further growth across international
markets
Entain plc (LSE: ENT), the global sports-betting and gaming
Group, is pleased to announce its results for the year ended 31
December 2020 delivering strong growth across its international
operations with further opportunities in new markets.
Operational Highlights:
-- BetMGM, the joint venture with MGM Resorts, now live in 12
states with strong momentum as a leading player in the US
market
o Market share(8) up to approximately 18% across its live
markets
o Number one operator in iGaming in January 2021 across the
US
o Full year revenues of $178m, ahead of expectations
o Business update scheduled for 21 April 2021
-- Strong growth across the Group
o 20 consecutive quarters of double-digit online net gaming
revenue ("NGR") growth
o Growth, and market share gains, across all major markets with
particularly strong performances in Australia, Brazil, Georgia and
Italy as well as from PartyPoker across all its markets
o Further expansion into regulated markets with the launch of
bwin in Colombia and planned acquisitions of Bet.pt in Portugal and
Enlabs AB in the Baltics
-- Sustainability Charter launched to reinforce the Group's
commitment to delivering best in class ESG
o Commitment to only operate in regulated markets by 2023, with
99% of NGR from regulated or regulating markets at 31 December
2020
o Launch of ARC, our Advanced Responsibility and Care programme,
to revolutionise player protection through the use of proprietary
technology
o Launched GBP100m Entain Foundation to support research into
gaming safety and investment in communities
o The Group has committed to go net-zero for greenhouse
emissions by no later than 2035 and has joined the Science Based
Target initiative to formalise the commitment
o Recognised by the Carbon Trust and EGR Diversity &
Inclusion awards, and included in the Dow Jones Sustainability and
FTSE4Good indices
o Relocation of Entain's place of management and control - and
consequently its tax residence - to the UK
-- Jette Nygaard-Andersen appointed CEO on 21 January 2021
Financial Highlights:
-- Strong financial performance with Group EBITDA(5,9) up 11% at
GBP843.1m, at the top end of recently increased expectations
o Online NGR up 28%cc
o Online EBITDA(5,9) +50% at GBP803.5m reflecting the shift to
online during the pandemic as well as good sports margins
o Retail significantly impacted by Covid-19 with EBITDA(5,9) for
the year at GBP98.3m
-- Group Profit after tax (9) was GBP113.8m compared with a loss of GBP131.2m in 2019
-- Underlying free cashflow(10) , before the investment into BetMGM, of GBP513m
-- Year end net debt of GBP 1,766.6m with leverage at 2.1x with
balance sheet flexibility to support our growth strategy
Jette Nygaard-Andersen, CEO of Entain, commented:
"Having spent more than two decades working with digital
companies using technology to transform and disrupt industries, I
am hugely excited about the future prospects for Entain. We are a
digital entertainment company with a clear strategic focus on
growth and sustainability. As such, we have a fantastic platform
from which to use our proprietary technology to expand into new
markets and reach new audiences around the world.
Today's results demonstrate the extraordinary resilience and
professionalism of our people, as well as the importance of having
a truly diversified business model that is not overly reliant on
any one product, brand, territory, or channel. Furthermore, we
firmly believe that the launch during the year of our
Sustainability Charter, which includes our game-changing Advanced
Responsibility & Care player protection programme, will be a
key component in helping us to deliver on our vision of being the
world-leader in sports-betting and gaming entertainment.
The strong underlying momentum within our business, the rapid
growth of our US joint-venture, and our continuing international
expansion mean that we are as confident as ever in the long-term
prospects for Entain."
Group Reported (1,2,9) Pre IFRS 16(3,9)
Year ended 31 December 2020 2019 Change CC(4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
-------- -------- ------- ------ -------- -------- -------
Net gaming revenue
(NGR) 3,628.5 3,632.7 flat 1% 3,628.5 3,632.7 flat
Revenue 3,561.6 3,578.1 flat 3,561.6 3,578.1 flat
Gross profit 2,308.6 2,368.8 (3%) 2,308.6 2,368.8 (3%)
Underlying EBITDAR(5) 862.1 782.9 10% 862.1 782.9 10%
Underlying EBITDA(5) 843.1 761.4 11% 764.7 678.9 13%
Underlying operating
profit(6) 529.5 520.6 2% 507.2 490.8 3%
Profit after tax 113.8 (131.2)
Basic EPS (p) 15.8 (24.8)
Adjusted diluted
EPS(7) (p) 62.8 64.3
Dividend per share
(p) - 17.6
------------------------ -------- -------- ------- ------ -------- -------- -------
Dividend
Given the ongoing uncertainty as a result of Covid-19, the Board
does not consider it prudent to pay a dividend at this time.
However, the Board recognises the importance of dividends for
shareholders and will consider dividend payments with future
results.
Outlook
The Group performed strongly through a difficult year reflecting
both the diversified nature of our business model and the quality
of our people. We have started the year with good momentum in line
with expectations and we hope to see normality returning over the
coming months. As a result we remain confident in our own financial
performance and long-term prospects.
Notes
(1) 2020 and 2019 reported results are audited
(2) Reported results are provided on a post IFRS 16 implementation basis
(3) Pre IFRS 16 results are unaudited and show the Group's
results before any adjustment is made for IFRS 16
(4) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2020
exchange rates
(5) 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
(6) Stated pre separately disclosed items
(7) Adjusted for the impact of separately disclosed items,
foreign exchange movements on financial indebtedness and
losses/gains on derivative financial instruments (see note 10)
(8) BetMGM market in which it operates for the three months to 31 January 2021
(9) Reflecting the results of continuing operations
(10) Underlying free cashflow is EBITDA less working capital,
capital expenditure, finance lease, corporate taxes and before the
investment in BetMGM
Enquiries:
Investor Relations
Entain plc investors@entaingroup.com
David Lloyd-Seed, Group Director of IR & Corporate Communications david.lloyd-seed@entaingroup.com
Davina Hobbs, Senior IR Manager davina.hobbs@entaingroup.com
Jennifer Spencer, IR Manager jennifer.spencer@entaingroup.com
Media
Entain plc
Tessa Curtis, Head of Media Relations tessa.curtis@entaingroup.com
Jay Dossetter, Head of ESG and Press Office jay.dossetter@entaingroup.com
Powerscourt Tel: +44 (0) 20 7250 1446
Rob Greening / Elly Williamson entain@powersco urt-group.com
Conference call
An analyst call will be held at 9:30am (GMT ) today . The
corresponding presentation will be posted on the Group's website
shortly before the call:
https://entaingroup.com/investor-relations/results-centre/
Participants may join the call by dialling one of the following
numbers approximately 10 minutes before the start of the call:
To participate in the Q&A, please also connect via the
conference call dial in details.
UK +44 (0) 33 0606 1122
US +1 646 813 7960
Room number: 133775
Participant PIN: 6876
There will be a live webcast available via the following link:
https://brrmedia.news/gatk9
A replay of the conference call and transcript will be available
on our website :
https://entaingroup.com/investor-relations/results-centre/
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, Coral,
Crystalbet, Eurobet, Ladbrokes, Neds and Sportingbet; Gaming Brands
include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, partypoker
and PartyCasino. The Group owns proprietary technology across all
of 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. The Group is tax resident in the UK with licenses in
more than 20 countries, across five continents.
For more information see the Group's website:
www.entaingroup.com
LEI: 213800GNI3K45LQR8L28
CHIEF EXECUTIVE'S REVIEW
A new way forward as Entain
On 12 November 2020 we announced a clear strategy, together with
a new corporate identity, to reflect our ambition to be the world's
leading betting and gaming entertainment company with our customers
the focus of everything that we do. Our two core strategic pillars
of growth and sustainability are underpinned by our industry
leading proprietary technology platform. It is through this
strategy that we will continue to drive significant value for our
stakeholders.
Powered by technology
Technology is the beating heart of our business. It is what
powers us and distinguishes us from our competitors, supports our
customer centric focus and ensures value creation. Owning our
technology means that over 3,000 world class developers are focused
on delivering exclusively for our customers, and that we are in
control and not reliant on third party management teams with their
own challenges and demands. It gives us the flexibility, agility
and scale to deliver on all of our strategic priorities, at
pace.
It empowers us to think differently as we deliver on being a
responsible entertainment company and gives us advantages in five
key strategic areas:
1. Enabling us to continuously improve the customer experience,
such as being best in class at each individual customer touch point
and rolling that across all our brands and markets (build once,
deploy multiple times), or personalising the engagement with a
customer.
2. Supporting our growth, whether that be launching in new
states in the US, integrating new businesses acquired, launching
new products - in house and third party - or expanding into new
markets or to new audiences.
3. Providing us with an engine for innovation, be that exploring
new markets and new audiences or exploiting new technologies such
as AI, virtual reality or 5G to enhance the customer
experience.
4. Approaching customer protection in new and more powerful
ways. Across the industry protection for customers reacts to
triggers defined by markers of protection, but at Entain we are
moving to implement an advanced proactive player management
platform that navigates each customer journey in real-time around
any identified risk specific to that customer, promising never
before seen levels of player protection.
5. Driving efficiencies through our business. These come from
maximising cost and revenue synergies - both from acquisitions as
well as from process improvements across the Group. Operating our
own platform also means that we operate at a lower cost than our
competitors who pay revenue fees to third parties.
In summary, it is our technology that gives us a significant
competitive advantage and has enabled us to achieve the 20
consecutive quarters of double-digit online growth we have now
delivered.
Growth
We have a number of growth opportunities that will continue to
drive the Group's performance and increase our scale. These include
delivering on 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 to reach new audiences.
Leadership in the US
We estimate that the betting and iGaming market in the US will
be worth some $20bn by 2025. With our joint venture partner, MGM
Resorts, we have created a winning formula around a strong brand
with significant competitive advantages. This includes our own
industry leading proprietary technology, product set, digital
marketing and player safety, as well as unrivalled player access
through MGM Resorts retail operations, M life Rewards programme and
other partnerships and affiliations.
Having started 2020 operational in just three states,
significant growth and momentum has accelerated BetMGM into a
leading online sports and iGaming operator in the US market. It is
now live in 12 states and has over 500 employees. During the year
BetMGM launched in West Virginia (online sports-betting (OSB) &
iGaming (iG)), Indiana (OSB), Nevada (OSB adding to Retail Sports
(RS) which went live in 2019), Michigan (RS), Colorado (OSB),
Oregon (RS), Tennessee (OSB) and Pennsylvania (OSB & iG). That
momentum continued into 2021 with the launch in January of online
sports-betting in Iowa and Virginia, as well as online
sports-betting and iGaming in Michigan.
BetMGM has now achieved approximately18% market share in the
states in which it is live in the three months to the end of
January 2021. BetMGM aims to be operating in around 20 states by
the end of this year, reaching approximately 40% of the adult
population.
As momentum in the business grew, BetMGM was able to deliver
highly successful online sports launches in a number of states such
as Tennessee and Colorado where it is delivering market leading
shares of 35% and 34% respectively in aggregate in the three months
to the end of January 2021. Having launched in Pennsylvania in
December, in January BetMGM became the leading iGaming operator
across the US. This clearly demonstrates the potential of the
business and the appeal of the BetMGM brand to customers across
both online sports-betting and iGaming.
During the year BetMGM launched a highly successful advertising
campaign featuring Jamie Foxx, reinforcing the entertainment
credentials of the brand in sports-betting and iGaming. In October,
a single nationwide app was launched making it easier for customers
to access our sportsbook and iGaming products.
The integration with M life Rewards (MGM Resorts' loyalty
programme) provides a valuable customer advantage, from customer
acquisition to ongoing engagement and retention. It enables BetMGM
customers to earn M life Rewards Tier Credits that can unlock
exclusive benefits and also earn points to convert to bonuses
within the BetMGM app, vouchers to use at MGM's retail
destinations, and cash. In Q4, 17% of BetMGM sign-ups had a
pre-existing relationship with MGM Resorts and M life Rewards.
During the summer, integration with the Yahoo Sports platform
provided Yahoo Sports customers with a seamless betting and gaming
experience. With Yahoo Sports now licenced in Michigan and Virginia
we see it continuing to be a leading and valued source of customer
growth.
We also have a number of other partnerships that drive player
access such as: Buffalo Wild Wings (with BetMGM the exclusive
betting partner across their 1,200 sports themed restaurants);
affiliations with a number of sports teams, such as the Denver
Broncos, Tennessee Titans and Las Vegas Raiders in football, as
well as others across golf, basketball, baseball and NASCAR; in
2021 BetMGM signed an agreement with the Athletic (a
direct-to-consumer digital sports media company); and other
affiliations, the latest being TopGolf.
With strong momentum in the business, Entain and MGM Resorts
committed a second tranche of investment in July, bringing the
total committed investment to $450m, of which $210m was invested by
2020 year end. During the year BetMGM grew its online NGR by 140%
and delivered total NGR of $178m for 2020, ahead of our Q3 guidance
of $150m - $160m. Entain's share of losses for the joint venture
for 2020 was GBP60.6m and, given the significant growth of the
business, it is expected that both NGR and losses will increase
significantly in 2021.
In summary, BetMGM is firmly on track to realising its ambition
of being a leader in the US sports-betting and iGaming market and
expects to achieve a 15-20% market share.
Grow core markets
We currently operate in over 20 markets worldwide. Our
combination of customer focus, strong brands, great products and
digital marketing expertise has enabled us to grow online across
all of our major markets. We have now delivered 20 consecutive
quarters of double-digit growth in online NGR with a three-year
compound annual growth rate of 20%.
We continue to see further growth potential in our existing
markets. Excluding Germany (where recent regulatory changes are
impacting the market), 97% of our NGR is in markets where we are
growing at over 10%. Excluding the UK, 87% of our NGR comes from
markets where online penetration is less than 35%.
We have a diversified business model both through geographic
reach as well as product range. This enabled the Group to respond
well to the disruptions caused by sports cancellations, with
customers benefitting from the wider range of sports our brands
offer as well as our leading gaming products. Online also saw
significant uplifts as a result of retail closures. Whilst we
expect online volumes to ease back when shops in our core online
territories re-open, we expect the trends seen during the pandemic
to be positive for the global online gaming market, and
particularly for Entain's brands, which we anticipate will more
than cover any permanent channel loss from our retail estates in
the UK and Europe.
In the UK, our Ladbrokes and Coral brands delivered a fifth
consecutive year of online growth. This growth has been underpinned
by improvements to brand advertising, performance marketing and the
customer proposition, including product and user experience
enhancements. Our bingo and other gaming brands in the UK continue
to grow market share through an ongoing focus on personalisation,
customer experience improvements and product development. During
the year, these brands transitioned onto the Group's proprietary
technology platform. We are continuing to evolve the customer
propositions and brand identities to widen their appeal to a mass
market recreational customer base.
Ladbrokes and Neds in Australia continued to grow strongly,
driven by the reactivation and increased engagement of existing
customers, as well as significant new customer acquisitions driven
by the displacement of retail customers and other recreational
spend as a result of lockdowns. The strength of our portfolio of
brands, market-leading product innovation and racing focused
business mix has also allowed Ladbrokes and Neds to capture
increased market share throughout 2020. On 2 February 2021, we
announced that we had submitted a non-binding indicative offer for
the Wagering and Media business of Tabcorp Holdings Limited. Whilst
discussions remain at an early stage, this transaction is in-line
with our strategy of expanding across regulated international
markets.
In the fourth quarter, we were pleased to receive four
sports-betting licences in Germany, and the 16 Lander (German
federal states) also confirmed that they had agreed to a
transitional tolerance policy for gaming for the period ahead of
implementation of the Interstate Treaty 2021. These two
developments, while a long time coming and implemented in stages,
are bringing clarity to German regulation of online betting and
gaming after 20 years of ambiguity. The issuance of sports licences
and implementation of the tolerance policy were accompanied by
certain restrictions that are being implemented from mid-October
last year through the first quarter this year. These restrictions
are expected to impact revenue and the dynamics of the market and,
so far, the impacts have been broadly in line with our
expectations. In addition there is a proposal to introduce a 5.3%
turnover tax on online poker and slots from the beginning of July
this year. If such a tax were introduced, it would make certain
parts of the market uneconomic for many operators. For us, it would
reduce contribution this year by around GBP15m - GBP20m before any
mitigating actions. The tax is yet to be ratified and its
implementation will be subject to challenge by the industry.
In Georgia, Crystalbet has cemented its position as the number 1
operator in that market.
Retail operations in the UK, Italy, Belgium and Republic of
Ireland were heavily impacted by enforced closures due to Covid-19
restrictions. However, when shops were allowed to open, we saw
trade rapidly return to within single digits of pre-pandemic
levels, clearly demonstrating that customers continue to enjoy the
in-store betting and gaming experience. This indicates that
customers will continue to want the in-store experience for years
to come. In December 2019, we opened our 'shop of the future' in
the UK that better connects the retail environment with the online
digital experience, as well as improving the overall customer
experience. We plan to open further stores in this format in the
year ahead. To make the retail and online experience even more
seamless, as well as drive cost efficiencies, we have integrated
the till systems in our shops onto our own proprietary technology
platform and we are also developing our own SSBT software.
Enter new markets
There are significant growth opportunities across the globe with
around $50 billion in gross gaming revenues in over 50 regulated
markets in Central & Eastern Europe, Latin America and Africa
where we do not currently operate today.
On 9 December we launched the bwin brand in Colombia, as one of
the first major operators to gain a licence in the Latin American
market. This provides the Group with a good foothold in this
exciting region alongside our offering in the regulating Brazilian
market.
We have a strong track record of integration and value creation
through M&A. Following a pause due the Covid-19 pandemic, we
restarted our M&A programme on 8 October 2020 with the
announcement of the acquisition of Bet.pt, which is expected to
complete during the first half of the current financial year. This
takes the Group into the recently regulated, and rapidly growing,
Portuguese market which is expected to more than double to around
EUR450m in value by 2023. Bet.pt is one of the leading online
betting and gaming operators in Portugal with a particular strength
in sports-betting. By leveraging our technology, extensive
portfolio of gaming content, marketing and CRM capabilities, as
well as growing the sports offering, we see plenty of opportunities
to grow its market position and profitability.
On 1 March 2021 we announced an increased offer for Enlabs AB of
SEK53 per share as well as securing irrevocables to accept this
final offer from shareholders representing around 51% of Enlabs
AB's shares. Enlabs predominantly operates online sports-betting
and gaming brands across the fast-growing Baltic region, with a
small retail presence. It is the market leader in Latvia, the
second largest in Estonia and a top-five operator in Lithuania. In
November 2020 Enlabs completed the acquisition of Global Gaming,
which enables Enlabs to extend its operations into the Nordics
through successful and proven gaming brands, including Optibet,
Laimz and Ninja. Enlabs' regional market and brand strength
combined with Entain's scale, proprietary technology, product,
marketing and regulatory expertise, can further accelerate growth
and expansion into new territories - both through Enlabs' brands as
well as by leveraging Entain's existing brands. The offer remains
subject to regulatory approval and acceptance by Enlabs
shareholders.
We continue to look for further opportunities to enter new,
growing and regulating or regulated markets where we can drive
further value.
Expand to new audiences
Technology is changing consumer behaviour with new trends and
ecosystems creating exciting opportunities. This means we must
adapt and innovate to drive further growth across new
audiences.
Firstly, in our existing markets we will pivot our brands to
appeal to a broader mass-market, recreational and engaged, customer
base. Doing so will give us a better quality, and greater
sustainability, of earnings.
Secondly there are adjacent markets, such as those evolving
around skill-based gaming, where we can leverage our product
development expertise to expand our offering to provide marketing
opportunities through free to play games.
Thirdly, we must adapt to develop products for customers in new
and emerging markets and ecosystems. For instance, the gaming
market is huge and growing every day with around 2.7bn gamers
around the world. 100m people watched the League of Legends world
championship and the e-sports-betting market is estimated to be
worth over $1 billion today and is growing rapidly. This is a new
and exciting growth market for us and, whilst we understand that
there are challenges to be navigated, we will take it step by step
and aim to be an important player in this market.
Sustainability
Sustainability is at the heart of everything we do, and we
firmly believe that the most sustainable business will be the most
successful business in our industry. In November we announced our
Sustainability Charter to underpin this element of our strategy.
This was built around four core principles: an exclusive focus on
regulated markets; continuing to take the lead on responsible
betting and gaming; best in class corporate governance; and
investing in our people and local communities.
Focus on regulated markets
We have committed that by the end of 2023 we expect 100% of
revenues to come from regulated markets. We only want to operate in
domestically regulated markets as these provide the right balance
between customer enjoyment and customer protection, while also
providing greater clarity and certainty for our business and
earnings.
At the end of 2020, 99% of our NGR was from nationally regulated
or regulating markets, up from around 96% previously. We will keep
an eye on the regulatory timetable for the remaining 1% and, where
possible, work closely with the relevant in-country authorities and
trade bodies to help develop a robust framework that protects
players and maintains the highest regulatory standards.
We are becoming much more proactive in our engagement with
regulators. 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 the minority that
are at risk while supporting a healthy entertainment experience for
the remaining majority - as well as an environment that is
commercially viable for operators.
Actions taken by betting and gaming operators over the last
couple of years have resulted in a meaningful reduction in problem
gambling. For example the UK Gambling Commission reported that
problem gambling in the UK was 0.3% in 2020, compared to 0.6% in
the previous year. It is critical now that any revised legislation
is not draconian as this will have the unintended consequences of
pushing customers, particularly those at risk of problems towards
using un-licensed black-market operators which will simply
exacerbate the problem.
Lead on Responsibility
We continue to lead the market in the critically important area
of responsible betting and gaming. In the UK in 2019, we withdrew
from football shirt sponsorship and led calls for the
whistle-to-whistle advertising ban. As the Covid-19 pandemic set
in, we increased our monitoring and markers of protection to ensure
that customers didn't inadvertently run in to problems while stuck
at home during lockdowns. We also increased our communication and
messaging to all customers on the importance of safer betting and
gaming, including the removal of TV adverts during the Q2 lockdown.
We were encouraged to see that in May, the UK Gambling Commission
found no evidence of a rise in problem gambling as a result of the
pandemic and, as mentioned above, that problem gambling reduced in
2020.
During the year, we announced our Advanced Responsibility and
Care ("ARC") programme, which is a scientific and technology based
proactive preventative approach to player protection that
identifies, addresses and averts potential problem play in real
time. We truly believe that this initiative opens a new era in
player protection.
As part of this programme, we appointed Professor Mark
Griffiths, Distinguished Professor of Behavioural Addiction and
Psychology at Nottingham Trent University. He is working with the
business to apply findings from the behaviours of our anonymised
global player database to help develop stronger rules, measures and
interventions for implementation under ARC.
This approach will enable us to use our technology to provide a
personalised proactive journey for our customers when using our
services, so that we can more effectively navigate the small
minority of customers who are at risk of harm away from any such
risk. Using advanced BI, our specialists and data scientists have
built the first stage of this to track player behaviour in
real-time and identify problem play before it escalates. Each
player will have a dynamic risk rating that automatically updates
in line with their play patterns and other measures. The first
trials are underway and we expect to start to implement ARC in the
UK in the summer with other geographies to follow.
It is important that we embed this approach right through the
Group as well as demonstrate our commitment to the safeguarding of
those at risk. To this end we are introducing a responsible betting
and gaming metric to our Group wide remuneration policy.
Best in class corporate governance
As a world-leading company we are committed to the highest
standards of governance in all areas of our operations and our
board has been strengthened and revitalised during the year,
particularly with the appointment of Barry Gibson as Group Chairman
in February 2020 and the appointment of Robert Hoskin as Chief
Governance officer at the start of 2021. To underpin, and
demonstrate this commitment, we are undertaking an independent
audit of our corporate governance and compliance processes.
In December, the Group relocated its place of management and
control - and consequently its tax residence - to the UK.
Best place to work and investing in our communities
We want to be an organisation in which our people are empowered
to do great work for our customers and to build brilliant global
careers.
We are proud of our inclusive culture, and are attracting a more
diverse selection of candidates from a wider range of sectors than
ever before. Over 36% of our senior leaders are women, which is a
significant step up on previous years but we are still working to
improve upon this further. We look after our people, for example,
during the year we offered all colleagues a range of mental health
care initiatives as well as virtual learning programmes. We invest
in leading development and progression for long term careers at
Entain and we like to promote talent internally.
As part of our Sustainability Charter, we are committed to
reducing the Group's environmental impact. Having made a strong
start by hitting our 2018 - 2021 target of a 15% reduction of
greenhouse gas emissions, we have today announced our commitment to
dramatically accelerate this process, becoming carbon net zero by
no later than 2035, 15 years ahead of the target set by the Paris
Agreement on climate change. In doing so we have formerly joined
the Science Based Target initiative and are seeking to demonstrate
leadership within our sector.
In November we launched the Entain Foundation, which will manage
the donation by Entain of GBP100 million to be made over five
years. The Foundation is focused on supporting good causes in four
key areas; research, education and treatment in relation to safer
betting and gaming; the promotion of grass roots, women's and
disabilities sports; diversity and technology; and, community
projects. As part of our focus on grass roots sport, the Foundation
runs our flagship Pitching In investment fund, which has launched a
non-branded partnership with English non-league football as well as
SportsAid, investing in aspiring UK athletes.
Financial Results and the use of Non-GAAP measures
Due to the nature of the Group's lease renewal program and
response to the Triennial Review, the shape of the Group's
underlying trading results continues to be affected by
implementation of the new IFRS 16 "Leases" standard. Whilst the
Group's primary form of reporting is on a statutory, post IFRS 16
basis, management believe that the provision of financials on a pre
IFRS 16 basis, in addition to the statutory financials, aids in the
understanding of the Group's results. In addition, management have
also provided additional information in the form of Contribution,
EBITDAR and EBITDA as these metrics either assist in the
understanding of the of the impact of IFRS 16 adoption, or are
industry standard KPIs. Full reconciliations of the statutory
results to the pre IFRS 16 financials are provided below:
2020 results Reported IFRS 16 Pre IFRS
underlying impact(2) 16 underlying
results(1,4) results
---------------------------- -------------- ----------- ---------------
Net gaming revenue 3,628.5 - 3,628.5
------------------------------- -------------- ----------- ---------------
Revenue 3,561.6 - 3,561.6
------------------------------- -------------- ----------- ---------------
Gross profit 2,308.6 - 2,308.6
------------------------------- -------------- ----------- ---------------
Contribution (3) 1,740.2 - 1,740.2
------------------------------- -------------- ----------- ---------------
Underlying EBITDAR
(3) 862.1 - 862.1
Underlying EBITDA
(3) 843.1 (78.4) 764.7
Share based payments (14.8) - (14.8)
Underlying depreciation
& amortisation (238.6) 56.1 (182.5)
Share of JV income (60.2) - (60.2)
------------------------------- -------------- ----------- ---------------
Underlying group operating
profit 529.5 (22.3) 507.2
----------------------------- -------------- ----------- ---------------
2019 results Reported IFRS 16 Pre IFRS
underlying impact(2) 16 underlying
results(1,4) results
---------------------------- -------------- ----------- ---------------
Net gaming revenue 3,632.7 - 3,632.7
------------------------------- -------------- ----------- ---------------
Revenue 3,578.1 - 3,578.1
------------------------------- -------------- ----------- ---------------
Gross profit 2,368.8 - 2,368.8
------------------------------- -------------- ----------- ---------------
Contribution (3) 1,874.9 - 1,874.9
------------------------------- -------------- ----------- ---------------
Underlying EBITDAR
(3) 782.9 - 782.9
Underlying EBITDA
(3) 761.4 (82.5) 678.9
Share based payments (12.7) - (12.7)
Underlying depreciation
& amortisation (218.9) 52.7 (166.2)
Share of JV income (9.2) - (9.2)
------------------------------- -------------- ----------- ---------------
Underlying group operating
profit 520.6 (29.8) 490.8
----------------------------- -------------- ----------- ---------------
Notes
(1) Excludes the impact of separately disclosed items
(2) IFRS 16 has also resulted in an additional GBP15.3m of interest in 2020 (GBP16.8m in 2019)
(3) 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. Contribution reflects
gross profit less marketing costs.
(4) Reflecting the results of continuing operations
BUSINESS REVIEW
Group
Reported results(1,) (2,8) Pre IFRS 16 results
(3,8)
Year ended 31
December 2020 2019 Change CC (4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
-------- ---------- ------- ------- -------- ---------- -------
NGR 3,628.5 3,632.7 flat 1% 3,628.5 3,632.7 flat
VAT/GST (66.9) (54.6) (23%) (66.9) (54.6) (23%)
-------- ---------- ------- ------- -------- ---------- -------
Revenue 3,561.6 3,578.1 flat 3,561.6 3,578.1 flat
Gross profit 2,308.6 2,368.8 (3%) 2,308.6 2,368.8 (3%)
Contribution 1,740.2 1,874.9 (7%) 1,740.2 1,874.9 (7%)
Operating costs (878.1) (1,092.0) 20% (878.1) (1,092.0) 20%
Underlying EBITDAR(5) 862.1 782.9 10% 862.1 782.9 10%
Rent and associated
costs (19.0) (21.5) 12% (97.4) (104.0) 6%
Underlying EBITDA(5) 843.1 761.4 11% 764.7 678.9 13%
Share based payments (14.8) (12.7) (17%) (14.8) (12.7) (17%)
Underlying depreciation (182
and amortisation (238.6) (218.9) (9%) .5 ) (166.2) (10%)
Share of JV income (60.2) (9.2) (554%) (60.2) (9.2) (554%)
Underlying operating
profit(6) 529.5 520.6 2% 507.2 490.8 3%
------------------------- -------- ---------- ------- -------- ----------
Reported Results(1,2,) (8) :
While 2020 was a year disrupted by Covid-19 with temporary
closures in our Retail estates and sports calendar interruptions
during Q2 and Q3, the Group delivered NGR in line with the prior
year (+1% cc). In the first half NGR decreased by 11% (-10% cc),
with strong performance prior to the Covid-19 restrictions offset
by shop closures and sports cancellations in Q2. Despite the
opening and re-closing of our Retail estate as restrictions were
eased and then re-imposed in the second half, the good momentum in
online resulted in NGR up 10% (+10% cc) in the second half of the
year vs the prior year.
Contribution in the full year of GBP1,740.2m was 7% lower than
last year reflecting the higher Online segmental mix. Operating
costs (before rent) were 20% lower, primarily as a result of cost
mitigation actions in response to Covid-19 and ongoing synergy
delivery from the Ladbrokes Coral acquisition . Underlying EBITDA
(5) was 11% higher at GBP843.1m.
Share based payment charges were GBP2.1m higher year on year.
Underlying depreciation and amortisation was 9% higher following
the ongoing investment in the business and accelerated amortisation
on legacy assets no longer used following the migration of
Ladbrokes and Coral in the UK to the Group's proprietary technology
platform earlier in the year. Share of JV loss of GBP60.2m includes
a loss of GBP60.6m from the US Joint Venture, BetMGM. Group
underlying operating profit (6) was 2% ahead of 2019. After
charging separately disclosed items of GBP170.6m (2019: GBP686.7m),
operating profit was GBP358.9m, an increase of GBP525.0m on
2019.
Online
Reported results(1,2,) (8) Pre IFRS 16 results(3)
(,8)
Year ended 31
December 2020 2019 Change CC (4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
--------- --------- ------- ------- --------- --------- -------
Sports wagers 11,780.9 11,216.7 5% 7% 11,780.9 11,216.7 5%
Sports margin 12.7% 11.1% 1.6pp 1.6pp 12.7% 11.1% 1.6pp
Sports NGR 1,196.8 966.5 24% 26% 1,196.8 966.5 24%
Gaming NGR 1,534.8 1,189.1 29% 30% 1,534.8 1,189.1 29%
B2B NGR 15.9 15.1 5% 5% 15.9 15.1 5%
--------- --------- ------- ------- --------- --------- -------
Total NGR 2,747.5 2,170.7 27% 28% 2,747.5 2,170.7 27%
VAT/GST (66.9) (54.6) (23%) (66.9) (54.6) (23%)
--------- --------- ------- ------- --------- --------- -------
Revenue 2,680.6 2,116.1 27% 2,680.6 2,116.1 27%
Gross profit 1,708.7 1,367.8 25% 1,708.7 1,367.8 25%
Contribution 1,147.4 887.2 29% 1,147.4 887.2 29%
Contribution
margin 41.8% 40.9% 0.9pp 41.8% 40.9% 0.9pp
Operating costs (342.5) (352.2) 3% (342.5) (352.2) 3%
Underlying EBITDAR(5) 804.9 535.0 50% 804.9 535.0 50%
Rent and associated
costs (1.4) (1.1) (27%) (16.2) (12.9) (26%)
Underlying EBITDA(5) 803.5 533.9 50% 788.7 522.1 51%
Share based payments (4.3) (5.5) 22% (4.3) (5.5) 22%
Underlying depreciation
and amortisation (120.1) (116.0) (4%) (105.8) (105.2) (1 %)
Share of JV income 0.1 0.8 (88%) 0.1 0.8 (88%)
Underlying operating
profit(6) 679.2 413.2 64% 678.7 412.2 65%
------------------------- --------- --------- ------- --------- ---------
Reported Results(1,2,) (8) :
Our Online business delivered an exceptionally strong
performance in 2020 as the business responded to the challenges
presented by Covid-19 providing customers with a great range of
products as well as enhanced protection measures. As a result
Online NGR was up 27% (+28% cc) versus the prior year with Q4 being
the 20(th) consecutive quarter of double-digit growth. Whilst
Online NGR growth has clearly benefitted from Retail closures
during the year, we have also seen market share gains in all of our
key territories. Underlying EBITDAR (5) of GBP804.9m and underlying
EBITDA (5) of GBP803.5m were both 50% ahead of 2019.
After adjusting for the impact of the annualisation of 2019 tax
and duty increases in the UK, underlying EBITDA(5) was 53% ahead. U
nderlying operating profit (6) of GBP679.2m was 64% ahead. After
charging GBP304.5m of separately disclosed items (see below),
operating profit(6) was GBP374.7m, GBP536.2m ahead of last
year.
Sports NGR was up 24% (+26% cc) compared to 2019 driven by the
increase in Online while shops were closed, and favourable tradng
margins. Sports wagers were 5% higher (+7% cc) and sports margins
of 12.7% were 1.6pp ahead due to favourable results, product and
geographic mix and increases in retail style betting. We expect
margins to normalise over time, particularly once retail reopens
around the world.
Gaming NGR was 29% (+30% cc) higher versus 2019 with the
performance particularly strong during Q2 benefitting from
lockdowns and partial substitution from sports following sporting
fixture cancellations. Momentum continued in the second half with
gaming NGR +27% ahead of last year indicating growth in the overall
market as a result of Covid-19 and market share gains.
In the UK, NGR was 27% ahead of the prior year. UK sports brands
NGR was 22% ahead, with strong performance in sports and gaming
across both the Ladbrokes and Coral brands. Sports margins were
particularly strong, 2.6pp ahead for the full year, with favourable
results and an increase in the recreational customer base the
primary drivers. Gaming NGR was 25% ahead and particularly strong
in Q2, due to lockdowns and a number of new and exclusive product
releases. In addition, the launch of Free to Play Games on both
brands during Q2 helped drive a significant increase in the number
of recreational actives.
UK Gaming brands NGR grew 40% during 2020. The Foxy brand, in
particular, saw strong growth, supported by the launch of exclusive
bingo variants, the 'Foxy Fabulous' initiative, continued
sponsorship of Friends on Channel 5, a relaunched loyalty scheme
and the rebranding of Foxy Casino to Foxy Games. Bingo products
have also performed well, supported by the 'Bingo like a Boss'
campaign launched in February 2020, aimed at attracting a more
diverse audience to Galabingo.com whilst retaining the existing
player base, as well as the continued high profile sponsorship of
'The Chase'.
During the year the Group completed the migration of its UK
brands on to the Entain digital platform and we have already seen
benefits in improved site and core wallet transactional stability
along with improved gaming product depth and promotional
capability. We look forward to future developments which will
further optimise the customer experience and leverage our market
leading product innovation.
In Germany, full year NGR growth was +3% in constant currency.
In the first nine months of the year NGR in Germany was + 12% cc,
however the impact of the introduction of the tolerance regime in
October which meant switching off casino table games, the
introduction of a EUR1,000 deposit limit for poker and slots and
further enhanced KYC obligations has reduced the size of the
overall market, impacting our performance in Q4. Notwithstanding
those changes Germany remains a relevant market for the Group and
we continue to invest in the bwin brand as evidenced by the launch
of the bwin.de mobile sports app.
NGR in Australia was 55% cc ahead year on year with national
lockdowns, strong margins and the reactivation of existing
customers increasing underlying growth. The strength of our brands,
market-leading product innovation and racing focused business mix
has also allowed us to capture increased market share throughout
2020. Whilst reactivation of customers was one of the principal
drivers of the NGR growth, customer acquisition has also been
stronger than expected during the year, boosted by the displacement
of retail customers and other recreational consumer spending.
In Italy, NGR growth across our three major brands, Eurobet,
Bwin and Gioco Digitale, was 53% ahead (+52%cc). The strength of
our omni-channel offering in Italy has ensured that the group has
recaptured a significant proportion of the displaced retail revenue
during lockdowns, with the resulting market share gains confirming
Entain's position as the market leader in our addressable market as
well as driving record numbers of active customers and FTD volumes
in Q4.
NGR in Brazil was +56% cc ahead of 2019. The second half was
particularly strong, 77%cc ahead year on year following the
rescheduling of the Spanish and Brazilian football leagues.
Customer acquisition and reactivation has been good with tailored
and locally focused marketing campaigns driving website traffic. As
at the end of the year, c58% of the active customer base had been
acquired through 2020.
Partypoker delivered a strong performance with NGR +47% (50% cc)
ahead of last year driven by an increased focus on the recreational
customer base and targeted marketing. During 2020, first time
depositors almost doubled over the previous year with 47% more
active customers than in 2019, albeit slightly curtailed by the
introduction of restrictions from the Tolerance Policy regime in
Germany coming into effect during Q4.
Crystalbet in Georgia continues to grow strongly and lead the
market with 40% cc of NGR growth. This reflected a strong
performance in Casino where NGR was 54% cc higher than 2019.
Disruptions from Covid-19 resulted in Sports NGR only 2% cc ahead
of the prior year. However, Q4 trends were encouraging with 11% cc
growth year on year.
Online contribution margin of 41.8% was 0.9pp higher than last
year. This was driven by a 1.7pp reduction in the marketing rate,
partially offset by a 0.8pp reduction in gross profit margin as a
result of business mix (geographic and regulatory) and the
annualisation of UK duty changes in 2019. As discussed above,
online NGR benefitted from retail closures, so while marketing
spend was GBP80.7m higher than 2019, spend did not keep pace with
the NGR growth, particularly while sports were cancelled. This has
resulted in an artificially low marketing rate in 2020 of 20.4%. We
expect to return to previously guided levels once the market
normalises and Covid-19 restrictions are eased.
Operating costs (before rent) were 3% lower than last year as a
result of ongoing synergies from the acquisition of Ladbrokes
Coral, partially offset by inflation.
Rent and associated costs were GBP1.4m in 2020, compared with
GBP1.1m in the prior year, leaving underlying online EBITDA(5) of
GBP803.5m, 50% ahead of last year.
Share based payments were 22% lower than last year, underlying
depreciation and amortisation of GBP120.1m was 4% higher and share
of JV income was only GBP0.1m following the disposal of the Group's
50% interest in Sportium to Cirsa S.A. in H2 2019, leaving
underlying operating profit (6) 64% higher at GBP679.2m.
Total Retail
Our Retail business is made up of our UK & NI business and
our European Retail business which operates across Italy, Belgium
and Republic of Ireland. A review of the performance of each of
these businesses is provided on the following pages.
Reported results(1,2,) (8) Pre IFRS 16 results(3) (,8)
Year ended 31 December 2020 2019 Change CC(4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
-------- -------- ------- ------ ---------- ---------- --------
NGR/Revenue 857.1 1,417.6 (40%) (40%) 857.1 1,417.6 (40%)
Gross profit 577.5 961.3 (40%) 577.5 961.3 (40%)
Contribution 571.7 950.6 (40%) 571.7 950.6 (40%)
Operating costs (456.1) (655.9) 30% (456.1) (655.9) 30%
Underlying EBITDAR(5) 115.6 294.7 (61%) 115.6 294.7 (61%)
Rent and associated costs (17.3) (20.4) 15% (80.9) (91.1) 11%
Underlying EBITDA(5) 98.3 274.3 (64%) 34.7 203.6 (83%)
Share based payments (1.5) (1.3) (15%) (1.5) (1.3) (15%)
Underlying depreciation and amortisation (115.8) (101.7) (14%) (74.0) (59.9) (24%)
Share of JV income - 1.0 (100%) - 1.0 (100%)
Underlying operating (loss)/profit(6) (19.0) 172.3 (111%) (40.8) 143.4 (128%)
------------------------------------------ -------- -------- ------- ---------- ----------
UK Retail
Reported results(1,2) (,8) Pre IFRS 16 results(3) (,8)
Year ended 31 December 2020 2019 Change CC(4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
-------- -------- ------- ------ ---------- --------- ---------
OTC wagers 1,835.2 3,182.7 (42%) (42%) 1,835.2 3,182.7 (42%)
OTC margin 19.4% 17.9% 1.5pp 1.5pp 19.4% 17.9% 1.5pp
Sports NGR/Revenue 355.0 565.9 (37%) (37%) 355.0 565.9 (37%)
Machines NGR/Revenue 323.6 561.9 (42%) (42%) 323.6 561.9 (42%)
-------- -------- ------- ------ ---------- --------- ---------
Total NGR/Revenue 678.6 1,127.8 (40%) (40%) 678.6 1,127.8 (40%)
Gross profit 497.3 817.7 (39%) 497.3 817.7 (39%)
Contribution 495.1 812.6 (39%) 495.1 812.6 (39%)
Contribution margin 73.0% 72.1% 0.9pp 73.0% 72.1% (0.9pp)
Operating costs (401.3) (585.1) 31% (401.3) (585.1) 31%
Underlying EBITDAR(5) 93.8 227.5 (59%) 93.8 227.5 (59%)
Rent and associated costs (16.6) (19.6) 15% (71.4) (81.7) 13%
Underlying EBITDA(5) 77.2 207.9 (63%) 22.4 145.8 (85%)
Share based payments (1.2) (1.0) (20%) (1.2) (1.0) (20%)
Underlying depreciation and amortisation (86.2) (72.7) (19%) (52.0) (37.6) (38%)
Share of JV income - - - - - -
Underlying operating (loss)/profit(6) (10.2) 134.2 (108%) (30.8) 107.2 (129%)
------------------------------------------ -------- -------- ------- ---------- ---------
Reported Results(1,2) (,) (8) :
Total UK Retail NGR of GBP678.6m was 40% behind last year and
36% behind on a LFL (7) basis reflecting a year significantly
impacted by Covid-19. Underlying EBITDAR (5) of GBP93.8m was 59%
behind and underlying EBITDA (5) of GBP77.2m was 63% behind last
year. Underlying operating loss(6) was GBP10.2m versus a profit of
GBP134.2m in 2019 and, a fter including the benefit of separately
disclosed income of GBP231.3m, operating profit was GBP221.1m,
GBP86.1m ahead of last year.
Sports NGR was 37% behind 2019 and Machines NGR 42% behind with
temporary closures due to Covid-19 significantly impacting the
business during 2020. Despite spending large periods of the year
with our doors closed, trading has been promising whilst the estate
has been open. In the period pre Covid-19 up to 15(th) March, LFL
NGR was only 5% down despite the annualisation of the Triennial
Review with substitution from displaced B2 spend into sports and
competitor shop closures benefiting our estate. During the same
period LFL SSBT wagering was 43% ahead of 2019.
Following the first lockdown, thanks to the professionalism and
dedication of our operations team, we were able to open all of our
shops safely on the first day possible. Being able to provide a
safe environment for both our colleagues and customers helped
volumes return swiftly, with our omni-channel data showing all
cohorts of customers returning to shops. Gaming machines proved to
be particularly resilient and the roll-out of our Next Generation
SSBT's helped volumes return to within single digit of pre-Covid-19
levels. Focus now turns to store readiness ahead of the re-opening
of non-essential retail when permitted and the roll-out of our new
till system to our Ladbrokes estate. We also look forward with our
initiatives program, including "shop of the future" and
digitisation, all of which will help us further cement our position
as the market leading retail sports-betting company in the UK.
Operating costs (before rent) were 31% lower than 2019, largely
as a result of cost mitigation actions in response to the Covid-19
pandemic, furlough receipts and tight underlying cost control.
Rent and associated costs were GBP16.6m in 2020, compared with
GBP19.6m in the prior year, leaving underlying EBITDA(5) of
GBP77.2m, 63% lower than 2019.
Charges for share based payments were 20% higher than last year
and underlying depreciation and amortisation of GBP86.2m was 19%
higher, as a result of the deployment of our new till system and
SSBTs across large parts of the estate, leaving an underlying
operating loss(6) of GBP10.2m (2019: 134.2m profit).
At 31 December 2020, there were a total of 2,845 shops in the
estate (2019: 3,233). During the period 388 shops were closed as we
complete the resizing of the retail estate as a result of the
Triennial Review.
European Retail
Reported results(1,2) (,8) Pre IFRS 16 results(3) (,8)
Year ended 31 December 2020 2019 Change CC(4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
------- -------- -------- ------ --------- ---------- ---------
OTC wagers 925.5 1,659.9 (44%) (45%) 925.5 1,659.9 (44%)
OTC margin 19.1% 17.4% 1.7pp 1.7pp 19.1% 17.4% 1.7pp
Sports NGR/Revenue 1 38.8 218.2 (36%) (37%) 138.8 218.2 (37%)
Other OTC NGR/ Revenue 37.6 69.3 (46%) (46%) 37.6 69.3 (46%)
Machines NGR/Revenue 2.1 2.3 (9%) (6%) 2.1 2.3 (9%)
------- -------- -------- ------ --------- ---------- ---------
Total NGR/Revenue 178.5 289.8 (38%) (39%) 178.5 289.8 (38%)
Gross profit 80.2 143.6 (44%) 80.2 143.6 (44%)
Contribution 76.6 138.0 (44%) 76.6 138.0 (44%)
Contribution margin 42.9% 47.6% (4.7pp) 42.9% 47.6% (4.7pp)
Operating costs (54.8) (70.8) 23% (54.8) (70.8) 23%
Underlying EBITDAR(5) 21.8 67.2 (68%) 21.8 67.2 (68%)
Rent and associated costs (0.7) (0.8) 13% (9.5) (9.4) (1%)
Underlying EBITDA(5) 21.1 66.4 (68%) 12.3 57.8 (79%)
Share based payments (0.3) (0.3) - (0.3) (0.3) -
Underlying depreciation and amortisation (29.6) (29.0) (2%) (22.0) (22.3) 1%
Share of JV income - 1.0 (100%) - 1.0 (100%)
Underlying operating (loss)/profit(6) (8.8) 38.1 (123%) (10.0) 36.2 (128%)
------------------------------------------ ------- -------- -------- --------- ----------
Reported Results(1,2,) (8) :
European Retail NGR of GBP178.5m was 38% behind last year (-39%
cc) driven by the temporary closure of shops due to Covid-19.
Resultant underlying EBITDAR(5) of GBP21.8m and underlying
EBITDA(5) of GBP21.1m were 68% behind 2019. Underlying operating
loss(6) of GBP8.8m was GBP46.9m behind 2019 and after charging
GBP5.0m of separately disclosed items, operating loss was GBP13.8m,
GBP29.8m behind last year.
Similar to the UK, performance during 2020 has been
significantly impacted by temporary shop closures across our
estates in Italy, Belgium and the Republic of Ireland. Whilst it
has been a challenging year for all of our retail businesses,
underlying trading has been positive whilst shops were open. Prior
to the first lockdown and suspension of sport, NGR, aided by strong
margins, was 24% cc ahead year on year. Following the re-opening of
shops throughout June and July, we saw a quick return of volumes
across all of our estates, with NGR reaching pre-Covid-19 levels
prior to the second wave of lockdown restrictions during Q4. This
was no more evident than in Italy, where our strong omni-channel
offering enabled us to remain in contact with large portions of our
customer base through our Online product.
Contribution margin of 42.9% decreased 4.7pp driven by
geographic mix, the implementation of COVID tax in Italy and costs
associated with supporting our Italian franchisees through the
Covid-19 pandemic.
Operating costs (pre rent) were 23% lower as a consequence of
cost mitigation in response to shop closures. Underlying EBITDAR(5)
of GBP21.8m and underlying EBITDA(5) at GBP21.1m were both 68%
lower than last year.
Share based payments were in line with last year and underlying
depreciation and amortisation of GBP29.6m was 2% higher, leaving
underlying operating loss(6) of GBP8.8m, GBP46.9m behind 2019.
As at 31 December 2020, there were a total of 1,744
outlets/shops (2019: 1,730): Italy 905 (2019: 883), Belgium shops
304, outlets 402 (2019: shops 311, outlets 397) and Ireland 133
(2019: 139).
Other
Reported results(1,2) (,8) Pre IFRS 16 results(3) (,8)
Year ended 31 December 2020 2019 Change CC(4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
------- ------- --------- ------ --------- --------- ----------
NGR/Revenue 27.8 48.0 (42%) (42%) 27.8 48.0 (42%)
Gross profit 22.4 39.7 (44%) 22.4 39.7 (44%)
Contribution 21.1 37.1 (43%) 21.1 37.1 (43%)
Operating costs (25.0) (37.5) 33% (25.0) (37.5) 33%
Underlying EBITDAR(5) (3.9) (0.4) (875%) (3.9) (0.4) (875%)
Rent and associated costs (0.3) - - (0.3) - -
Underlying EBITDA(5) (4.2) (0.4) (950%) (4.2) (0.4) (950%)
Share based payments - (0.1) 100% - (0.1) 100%
Underlying depreciation and amortisation (2.7) (0.8) (238%) (2.7) (0.7) (286%)
Share of JV income 0.3 1.5 (80%) 0.3 1.5 (80%)
Underlying operating (loss)/profit(6) (6.6) 0.2 (3,400%) (6.6) 0.3 (2,300%)
------------------------------------------ ------- ------- --------- --------- ---------
Reported Results(1,2) (,) (8) :
On a reported basis, NGR of GBP27.8m was 42% lower than 2019 as
a result of the impact of Covid-19 on our smaller sports-betting
businesses, Telebet, Betdaq and our greyhound Stadia. Despite the
careful management of operating costs, which were 33% lower than
last year, underlying EBITDAR(5) loss was GBP3.9m and underlying
EBITDA(5) loss was GBP4.2m versus a GBP0.4m loss in 2019.
Underlying operating loss(6) and operating loss after charging
separately disclosed items was GBP6.6m (2019: GBP0.2m profit) ,
GBP6.8m behind last year.
During the current year Intertrader, the Group's non-core
financial services business, was classified as discontinued and,
therefore, both the 2020 and 2019 results have been stated
excluding the results of Intertrader.
Corporate
Reported results(1,2) (,8) Pre IFRS 16 results(3) (,8)
Year ended 31 December 2020 2019 Change CC(4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
-------- ------- ------- ------ ----------- --------- --------
Underlying EBITDAR(5) (54.5) (46.4) (17%) (54.5) (46.4) (17%)
Rent and associated costs - - - - - -
Underlying EBITDA(5) (54.5) (46.4) (17%) (54.5) (46.4) (17%)
Share based payments (9.0) (5.8) (55%) (9.0) (5.8) (55%)
Underlying depreciation and amortisation - (0.4) 100% - (0.4) 100%
Share of JV income (60.6) (12.5) (385%) (60.6) (12.5) (385%)
Underlying operating (loss)/profit(6) (124.1) (65.1) (91%) (124.1) (65.1) (91%)
------------------------------------------ -------- ------- ------- ----------- ---------
Reported Results(1,2) (,) (8) :
On a reported basis, Corporate costs(5) of GBP54.5m were 17%
higher than last year as underlying cost savings were more than
offset by additional investment under our Sustainability Charter as
we move towards our 1% target of GGR spend on research into problem
gambling by 2022. After share based payments, depreciation and
amortisation and share of JV losses, underlying operating loss(6)
was GBP124.1m, an increase of 91%, largely as a result of the
incremental loss in the US JV, BetMGM, which grew significantly
during 2020, increasing the number of states where it is
operational to 12 by January 2021. After charging separately
disclosed items of GBP92.4m, the operating loss of GBP216.5 was
GBP60.7m behind 2019.
Notes
(1) 2020 and 2019 reported results are audited
(2) Reported results are provided on a post IFRS 16 implementation basis
(3) Pre IFRS 16 results are unaudited and show the Group's
results before any adjustment is made for IFRS 16
(4) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2020
exchange rates
(5) 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
(6) Stated pre separately disclosed items
(7) UK Retail numbers are quoted on a LFL basis. During 2020
there was an average of 3,024 shops in the estate, compared to an
average of 3,341 in the same period last year
(8) Reflecting the results of continuing operations
CHIEF FINANCIAL OFFICER'S REVIEW
Reported results(1,2) Pre IFRS 16 results(3)
Year ended 31 December 2020 2019 Change CC(4) 2020 2019 Change
GBPm GBPm % % GBPm GBPm %
-------- -------- ------- ------ -------- -------- -------
NGR 3,628.5 3,632.7 flat 1% 3,628.5 3,632.7 flat
Revenue 3,561.6 3,578.1 flat 3,561.6 3,578.1 flat
Gross profit 2,308.6 2,368.8 (3%) 2,308.6 2,368.8 (3%)
Contribution 1,740.2 1,874.9 (7%) 1,740.2 1,874.9 (7%)
Underlying EBITDAR(5) 862.1 782.9 10% 862.1 782.9 10%
Underlying EBITDA(5) 843.1 761.4 11% 764.7 678.9 13%
Share based payments (14.8) (12.7) (17%) (14.8) (12.7) (17%)
Underlying depreciation
and amortisation (238.6) (218.9) (9%) (182.5) (166.2) (10%)
Share of JV income (60.2) (9.2) (554%) (60.2) (9.2) (554%)
Underlying operating
profit(6) 529.5 520.6 2% 507.2 490.8 3%
Net finance costs (74.2) (86.1) 14%
Net foreign exchange (104.7) 101.9 (203%)
Profit before tax pre
separately disclosed
items 350.6 536.4 (35%)
Separately disclosed
items:
Amortisation of acquired
intangibles (307.0) (374.0) 18%
Other 131.1 (326.8) 140%
Profit/(Loss) before
tax 174.7 (164.4) 206%
Tax (60.9) 33.2 (283%)
Profit(Loss) after
tax from continuing
operations 113.8 (131.2) 187%
Discontinued Operations (34.4) (9.5) (262%)
Profit/(Loss) for the
year 79.4 (140.7) 156%
NGR and Revenue
Group reported NGR and revenue were in line with 2019 with
growth in Online offsetting the reduction in Retail revenue largely
caused by the impacts of temporary shop closures due to Covid-19.
Further details are provided in the Business Review section.
Underlying operating profit (6)
Group reported underlying operating profit(6) of GBP529.5m
(2019: GBP520.6m) was 2% ahead of 2019, with 11% growth in
underlying EBITDA(5) offset by incremental depreciation and
amortisation and an increased loss in the BetMGM joint venture.
Analysis of the Group's performance and the results of our BetMGM
joint venture are discussed further in the Business Review
section.
Financing costs
Finance costs of GBP74.2m (2019: GBP86.1m), excluding issue cost
write offs of GBP5.3m on refinancing, were GBP11.9m lower than
2019, with the reduction driven by interest rate savings from the
2019 and early 2020 debt refinancing projects.
Foreign exchange losses of GBP104.7m (2019: credit of GBP101.9m)
in 2020 reflect the charge arising on the retranslation of the
Group's Euro denominated debt following the strengthening of the
Euro since the 2019 year end. The Group operates a commercial
hedging strategy and, as such, this loss is offset by a GBP137.7m
gain, which has been recorded in equity on the retranslation of net
assets in overseas businesses.
Separately disclosed items
Items separately disclosed before tax mostly relate to items
previously disclosed within the first half results. For the year
they amounted to a GBP175.9m charge (2019: GBP700.8m charge) and
relate primarily to GBP307.0m of amortisation on acquired
intangibles (2019: GBP374.0m), a GBP5.0m impairment of Right of Use
assets following a reassessment of anticipated lease terms (2019:
GBP245.0m against our Australian business), integration costs
associated with the Ladbrokes Coral acquisition of GBP25.1m (2019:
GBP44.9m), costs of GBP8.3m associated with right sizing our Retail
estate following the implementation of the GBP2 FOBT stakes
restriction (2019: GBP8.7m) and GBP8.9m of onerous costs associated
with shop closures and other one-off legal expenses (2019:
GBP3.4m). In addition, the Group recorded a GBP42.4m charge
associated with the discount unwinds and reassessment of the
anticipated payments under Dusk Till Dawn and Crystalbet contingent
consideration arrangements (2019: GBP37.7m) and GBP9.6m of other
exceptionals, predominantly the write-off of issue costs following
the refinancing during H1 of GBP5.3m (2019: GBP14.1m), Covid-19
related costs and costs associated with the wind-up of the
Ladbrokes Pension Plan (2019: GBP17.7m).
The Group has also separately recorded a net GBP223.5m (2019:
GBP11.6m largely against Greek tax) income in the year,
predominantly against a historic VAT claim in our Ladbrokes Retail
business following a recent court ruling and GBP6.9m (2019:
GBP19.0m) on the sale of assets.
Separately disclosed items
2020 2019
GBPm GBPm
-------------------------------------- -------- ------------
Amortisation of acquired intangibles (307.0) (374.0)
Impairment (5.0) (245.0)
Integration costs (25.1) (44.9)
Triennial restructuring costs (8.3) (8.7)
Legal and onerous contract costs (8.9) (3.4)
Movement in fair value of contingent
consideration (42.4) (37.7)
Other including issue cost write-off (9.6) (17.7)
Tax litigation/one-off legislative
impacts 223.5 11.6
Profit on sale of assets 6.9 19.0
-------- ------------
Total (175.9) (700.8)
-------------------------------------- -------- ------------
Profit before tax
Profit before tax and before separately disclosed items was
GBP350.6m (2019: GBP536.4m) reflecting a year-on-year decrease of
GBP185.8m with underlying operating profit(6) GBP8.9m ahead and
finance costs GBP11.9m favourable offset by a GBP206.6m swing in
foreign exchange on debt retranslation as a result of the relative
movements in the GBP:EURO exchange rate year on year. After
charging separately disclosed items, the Group recorded a pre-tax
profit of GBP174.7m (2019: loss of GBP164.4m).
Taxation
The tax charge for the period ended 31 December 2020 of GBP60.9m
(2019: credit of GBP33.2m) reflects a GBP63.0m charge on underlying
trading (2019: GBP46.4m) and a GBP2.1m credit on separately
disclosed items (2019: GBP79.6m credit). The underlying tax charge
reflects a 12.2% (2019: 9.5%) effective tax rate before the impact
of foreign exchange and BetMGM losses.
Discontinued Operations
During the year the Group has classified its Intertrader
business as discontinued as the directors believe that it is highly
probable that a sale of the business will be completed within the
next 12 months. During the year the Intertrader business recorded a
loss after tax from underlying operations of GBP14.4m (2019:
GBP0.6m), the majority of which was disclosed in the interim
results, and separately disclosed costs of GBP20.0m (2019: GBP8.9m)
which includes a GBP19.3m impairment on intangible assets, as
discussed in the interims. The resulting total loss after tax was
GBP34.4m (2019: GBP9.5m).
Cashflow
Year ended 31 December 2020 2019
GBPm GBPm
-------- --------
Underlying EBITDA 843.1 761.4
Discontinued EBITDA (14.1) (0.3)
Underlying working capital (12.6) (13.9)
Capital expenditure (158.3) (164.1)
Finance lease (incl IFRS 16) (85.9) (77.7)
Corporate taxes (59.2) (37.5)
-------- --------
Underlying Free cashflow 513.0 467.9
Investment in BetMGM (61.8) (3.8)
-------- --------
Free cashflow 451.2 464.1
Interest paid (incl IFRS 16) (95.3) (68.9)
Separately disclosed items 24.6 (162.0)
Net movement on debt & cost of debt issuance (30.0) (53.6)
Equity issue 8.6 1.5
Net dividends paid (12.4) (202.4)
-------- --------
Net cashflow / (outflow) 346.7 (21.3)
Foreign exchange 13.0 (10.5)
-------- --------
Net cash generated / (outflow) 359.7 (31.8)
---------------------------------------------- -------- --------
The Group had a net cash inflow of GBP359.7m (2019: outflow of
GBP31.8m). Free cashflow for the period was GBP451.2m (2019:
GBP464.1m) with underlying EBITDA(5) of GBP843.1m (2019: GBP761.4m)
offset by the loss on discontinued operations of GBP14.1m (2019:
GBP0.3m), investment in capital expenditure of GBP158.3m (2019:
GBP164.1m), lease payments of GBP85.9m, including those on
non-operational shops (2019: GBP77.7m) and GBP59.2m in corporate
taxes (2019: GBP37.5m). During the year, there was a working
capital outflow of GBP12.6m (2019: outflow of GBP13.9m) and further
investment in the BetMGM joint venture of GBP61.8m (2019:
GBP3.8m).
During the year, the Group paid GBP95.3m of interest on loans
and leases (2019: GBP68.9m), GBP17.9m of which related to the
unwind of timing differences from 2019. In addition, the Group
received GBP24.6m (GBP162.0m paid) on items which have been
separately disclosed, primarily driven by the receipt for historic
VAT in our Ladbrokes Retail business (GBP217.5m received) partially
offset by amounts paid against the historical Greek (GBP45.4m) and
Austrian (GBP69.1m) tax provisions, integration costs (GBP30.1m),
triennial costs (GBP6.0m) and payments of contingent consideration
against historic acquisitions (GBP24.8m). The Group paid a net
GBP30.0m (2019: GBP53.6m) on the repayment of debt, predominantly
repaying the GBP35.0m drawn down on the revolving credit facility
at the 2019 year end. The Group also raised GBP8.6m in equity
issuances (2019: GBP1.5m) on the exercising of historic option
agreements. GBP12.4m was paid in minority dividends (2019:
GBP202.4m including equity dividends and dividends received).
Net debt and liquidity
As at 31 December 2020, net debt post IFRS 16 was GBP1,766.6m
and represented a net debt to EBITDA ratio of 2.1x (1.9x pre IFRS
16). At 31 December 2020, there was no drawdown on the Group's
revolving credit facility.
Par value Issue costs/ Total
Premium
GBPm GBPm GBPm
---------- ------------- -----------
Bonds (500.0) (17 .9 ) (517 .9 )
(1,57 4.3
Term loans (1,582.4) 8. 1 )
Interest accrual (7.6) - (7.6)
---------- ------------- -----------
(2,090.0) (9.8) (2,099.8)
Cash 749.8
-----------
Accounting net debt ( 1,350.0)
Cash held on behalf of customers (396.1)
Fair value of swaps held against
debt instruments (26.1)
Short term investments/Deposits
held 171.2
Balances held with payment service
providers 172.4
Finance lease debt (30.9)
-----------
Adjusted net debt pre IFRS 16 (1,459.5)
Lease liabilities recognised as a result of
IFRS 16 (307.1)
-----------
Adjusted net debt post IFRS 16 (1,766.6)
------------------------------------ ---------- ------------- -----------
Going Concern
In adopting the going concern basis of preparation in the
financial statements, the directors have considered the current
trading performance of the Group, the financial forecasts and the
principal risks and uncertainties, including the impact of Covid-19
and in particular the impact of the potential for further
disruption to the Retail business across Europe. In addition, the
directors have considered all matters discussed in connection with
the long-term viability statement including the modelling of
"severe but plausible" downside scenarios such as legislation
changes impacting the Group's Online business and extended
lockdowns affecting the Group's Retail operations.
Given the level of the Group's accessible cash (GBP0.7bn),
available financing facilities (including an undrawn revolving
credit facility of GBP0.5bn), debt maturity profile, 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 that it faces. As such, the
directors have a reasonable expectation that the Group will have
adequate financial resources to continue in operational existence
and meet its liabilities as they fall due for 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 financial statements.
Notes
(1) 2020 and 2019 reported results are audited
(2) Reported results are provided on a post IFRS 16 implementation basis
(3) Pre IFRS 16 results are unaudited and show the Group's
results before any adjustment is made for IFRS 16
(4) Growth on a constant currency basis is calculated by
translating both current and prior year performance at the 2020
exchange rates
(5) EBITDAR is defined as earnings before interest, tax,
depreciation and amortisation, rent and associated costs, share
based payments and share of JV income on continuing activities.
EBITDA is defined as EBITDAR after charging rent and associated
costs. Both EBITDAR and EBITDA are stated pre separately disclosed
items
(6) 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 with risks
being managed and monitored by its sub committees on a regular
basis.
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 as part of
its business and therefore must comply with strict data protection
and privacy laws in all jurisdictions in which it 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
affecting the integrity of our gaming platforms. This could result
in prosecutions including financial penalties, sanctions, the loss
of the goodwill and trust of its customers and an inability to
deliver growth and deliver technology synergies.
Laws, regulations, licensing and regulatory compliance
Regulatory, legislative and fiscal regimes for betting and
gaming in key markets around the world can change, sometimes with
short notice. 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.
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.
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 change 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.
The Group's geographical diversity and the nature of taxation in
our industry lead to complexity in our tax affairs. There may be
areas of differing legal interpretation regarding the scope and
scale of taxation.
Increased cost of product
The Group is subject to certain arrangements intended to support
the industries in which it operates including the horseracing and
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 and pricing can be changeable in the business
environment that our suppliers operate.
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. There
is an elevated risk to our colleagues during the pandemic as a
result of changes in colleagues working circumstances.
Trading, liability management and pricing
The Group may experience significant losses as a result of a
failure to determine accurately the odds in relation to any
particular event and/or any failure of its sports risk management
processes.
Loss of key locations
The Group operates out of a number of geographical locations,
some of which are several key sites which are critical to the day
to day operations of the Group, including our offices in Central
London, Gibraltar, Ireland, Vienna, Hyderabad, Australia, Italy and
the Philippines. Disruption in any of these locations could have an
impact on day to day operations.
Pandemic
Entain has been adversely affected by the Covid-19 pandemic as a
result of retail shops closing and the inability to access some of
our offices around the world. Further waves of the pandemic may
have an adverse effect on our ability to re-open retail outlets and
may lead to the postponement of major sporting fixtures, e.g.
football or horse racing, resulting in financial losses.
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
The Group has recognised the need to re-evaluate the principal
risks during the year, considering changes arising from Covid-19
and has included this as a principal risk due to the prolonged
effects, particularly on our retail network
However, as noted at half year and most pleasingly, whilst the
Group still considers the loss of key locations a principal risk,
it has proven over the last few months that it has adequate
business continuity plans in place to cater for colleagues working
at home across the globe and we have assessed this risk as a low
risk at year end.
The Group has reconsidered its risks arising from Brexit, and
remains of the view that this is not a significant risk to Entain
currently.
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2020 2019
(restated)(4)
Notes Underlying Separately Total Underlying Separately Total
items disclosed items disclosed
Items Items
(note (note
6) 6)
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Net Gaming Revenue 3,628.5 - 3,628.5 3,632.7 - 3,632.7
VAT/GST (66.9) - (66.9) (54.6) - (54.6)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Revenue 5 3,561.6 - 3,561.6 3,578.1 - 3,578.1
Cost of sales (1,253.0) - (1,253.0) (1,209.3) - (1,209.3)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Gross profit 2,308.6 - 2,308.6 2,368.8 - 2,368.8
Administrative costs (1,718.9) (170.6) (1,889.5) (1,839.0) (686.7) (2,525.7)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Contribution 1,740.2 - 1,740.2 1,874.9 - 1,874.9
Administrative costs excluding
marketing (1,150.5) (170.6) (1,321.1) (1,345.1) (686.7) (2,031.8)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Group operating profit/(loss) before
share of results from joint ventures
and associates 589.7 (170.6) 419.1 529.8 (686.7) (156.9)
Share of results from joint ventures
and associates (60.2) - (60.2) (9.2) - (9.2)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Group operating profit/(loss) 529.5 (170.6) 358.9 520.6 (686.7) (166.1)
Finance expense 7 (76.5) (5.3) (81.8) (88.5) (14.1) (102.6)
Finance income 7 2.3 - 2.3 2.4 - 2.4
(Losses)/gains arising from change
in fair value of financial instruments 7 (61.8) - (61.8) 17.6 - 17.6
(Losses)/gains arising from foreign
exchange on debt instruments 7 (42.9) - (42.9) 84.3 - 84.3
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Profit/(loss) before tax 350.6 (175.9) 174.7 536.4 (700.8) (164.4)
Income tax 8 (63.0) 2.1 (60.9) (46.4) 79.6 33.2
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Profit/(loss) from continuing
operations 287.6 (173.8) 113.8 490.0 (621.2) (131.2)
Loss for the year from discontinued
operations after tax 14 (14.4) (20.0) (34.4) (0.6) (8.9) (9.5)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Profit/(loss) for the year 273.2 (193.8) 79.4 489.4 (630.1) (140.7)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Attributable to:
Equity holders of the parent 251.6 (193.8) 57.8 476.4 (630.1) (153.7)
Non-controlling interests 21.6 - 21.6 13.0 - 13.0
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
273.2 (193.8) 79.4 489.4 (630.1) (140.7)
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Earnings per share on profit/(loss)
for the year
from continuing operations 63.5p 15.8p 65.2p (24.8)p
From profit/(loss) for the year(1) 10 61.0p 9.9p 65.1p (26.4)p
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Diluted earnings per share on
profit/(loss)
for the year
from continuing operations 62.8p 15.6p 64.3p (24.8)p
From profit/(loss) for the year(1) 10 60.4p 9.8p 64.2p (26.4)p
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Proposed dividends 9 - 17.6p
--------------------------------------- ----- ---------- ---------- --------- ---------- ---------- ---------
Memo
EBITDAR(2) 862.1 141.4 1,003.5 782.9 (68.1) 714.8
Rent and associated costs(3) (19.0) - (19.0) (21.5) - (21.5)
-------------------------------------- ------- ------- ------- ------- ------- -------
EBITDA 843.1 141.4 984.5 761.4 (68.1) 693.3
Share based payments (14.8) - (14.8) (12.7) - (12.7)
Depreciation, amortisation and
impairment (238.6) (312.0) (550.6) (218.9) (618.6) (837.5)
Share of results from joint ventures
and associates (60.2) - (60.2) (9.2) - (9.2)
-------------------------------------- ------- ------- ------- ------- ------- -------
Group operating profit/(loss) 529.5 (170.6) 358.9 520.6 (686.7) (166.1)
-------------------------------------- ------- ------- ------- ------- ------- -------
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 10 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
within the financial results and the use of non-GAAP measures
section
3. Rent and associated costs include VAT and rent not captured
by IFRS16.These are predominantly driven by VAT on rental charges
not being recoverable and held over leases
4. The profit and loss for the year ended 31 December 2019 has
been restated for the presentation of discontinued operations. See
note 14
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020 2019
GBPm GBPm
Profit/(loss) for the year 79.4 (140.7)
---------------------------------------------------------------- ------------- -------
Other comprehensive expense:
Items that may be reclassified to profit or loss:
Currency differences on translation of foreign operations 137.7 (158.6)
Total items that may be reclassified to profit or loss 137.7 (158.6)
---------------------------------------------------------------- ------------- -------
Items that will not be reclassified to profit or loss:
Re-measurement of defined benefit pension scheme (0.2) (104.6)
Tax on re-measurement of defined benefit pension scheme 0.1 36.6
Share of associate other comprehensive income 0.3 1.0
Total items that will not be reclassified to profit or loss 0 .2 (67.0)
---------------------------------------------------------------- ------------- -------
Other comprehensive income/(expense) for the year, net of tax 137.9 (225.6)
---------------------------------------------------------------- ------------- -------
Total comprehensive income/(expense) for the year 217.3 (366.3)
---------------------------------------------------------------- ------------- -------
Attributable to:
-------------------------------------------------------------- ------------- -------
Equity holders of the parent: 195.7 (379.3)
Non-controlling interests 21.6 13.0
---------------------------------------------------------------- ------------- -------
CONSOLIDATED BALANCE SHEET
At 31 December 2020 2019
Notes GBPm GBPm
--------------------------------------------- ----- --------- -----------
Assets
Non-current assets
Goodwill 11 3,061.1 2,966.4
Intangible assets 11 2,105.4 2,398.0
Property, plant and equipment 13 470.2 467.9
Interest in joint venture 6.2 6.0
Interest in associates and other investments 29.4 29.9
Trade and other receivables 3.8 3.3
Other financial assets 4.4 2.1
Deferred tax assets 8 129.8 124.4
Retirement benefit asset 64.2 66.6
--------------------------------------------- ----- --------- -----------
5,874.5 6,064.6
--------------------------------------------- ----- --------- -----------
Current assets
Trade and other receivables 475.8 477.6
Income and other taxes recoverable 13.6 9.1
Derivative financial instruments - 47.4
Cash and cash equivalents 706.7 390.1
--------------------------------------------- ----- --------- -----------
1,196.1 924.2
Assets in disposal group classified as held
for sale 14 199.1 -
Total assets 7,269.7 6,98 8 .8
--------------------------------------------- ----- --------- -----------
Liabilities
Current liabilities
Trade and other payables (687.4) (678.7)
Balances with customers 15 (241.1) (335.4)
Lease liabilities (89.8) (75.5)
Interest bearing loans and borrowings (14.1) (31.5)
Corporate tax liabilities (66.4) (35.1)
Provisions (49.4) (73.0)
Derivative financial instruments (26.1) -
Other financial liabilities (147.5) (30.7)
(1,321.8) (1,25 9 .9)
Non-current liabilities
Interest bearing loans and borrowings (2,085.7) (2,084.5)
Lease liabilities (248.2) (288.0)
Deferred tax liabilities 8 (331.7) (358.2)
Provisions (19.5) (16.5)
Other financial liabilities (9.3) (125.8)
(2,694.4) (2,873.0)
--------------------------------------------- ----- --------- -----------
L iabilities in disposal group classified
as held for sale 14 (172.0) -
Total liabilities (4,188.2) (4,132.9)
--------------------------------------------- ----- --------- -----------
Net assets 3,081.5 2,855.9
--------------------------------------------- ----- --------- -----------
Equity
Issued share capital 4.8 4.8
Share Premium 1,206.6 1,198.0
Merger Reserve 2,527.4 2,527.4
Translation reserve 191.7 54.0
Retained earnings (901.3) (971.4)
--------------------------------------------- ----- --------- -----------
Equity shareholders' funds 3,029.2 2,812.8
--------------------------------------------- ----- --------- -----------
Non-controlling interests 52.3 43.1
--------------------------------------------- ----- --------- -----------
Total shareholders' equity 3,081.5 2,855.9
--------------------------------------------- ----- --------- -----------
J Nygaard-Andersen R Wood
(Chief Executive Officer) (Deputy Chief Executive Officer/Chief
Financial Officer)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Issued Share Merger Translation Retained Equity Non- Total
share premium Reserve reserve1 earnings shareholders' controlling Shareholders'
capital funds Interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- -------- ----------- --------- -------------- ------------- --------------
At 1 January 2019 4.8 1,196.5 2,527.4 212.6 (562.2) 3,379.1 38.2 3,417.3
----------------- -------- -------- -------- ----------- --------- -------------- ------------- --------------
(Loss)/profit for
the
year - - - - (153.7) (153.7) 13.0 (140.7)
Other
comprehensive
expense - - - (158.6) (67.0) (225.6) - (225.6)
Total
comprehensive
(expense)/income - - - (158.6) (220.7) (379.3) 13.0 (366.3)
Share options
exercised - 1.5 - - - 1.5 - 1.5
Share-based
payments
charge - - - - 10.8 10.8 - 10.8
Equity dividends
(note
9) - - - - (195.5) (195.5) (8.1) (203.6)
N on-controlling
interests - - - - (3.8) (3.8) - (3.8)
----------------- -------- -------- -------- ----------- --------- -------------- ------------- --------------
At 31 December
2019 4.8 1,198.0 2,527.4 54.0 (971.4) 2,812.8 43.1 2,855.9
----------------- -------- -------- -------- ----------- --------- -------------- ------------- --------------
At 1 January 2020 4 .8 1 ,198.0 2 ,527.4 5 4.0 ( 971.4) 2 ,812.8 4 3.1 2 ,855.9
----------------- -------- -------- -------- ----------- --------- -------------- ------------- --------------
Profit for the
year - - - - 57.8 57.8 21.6 79.4
Other
comprehensive
income - - - 137.7 0.2 137.9 - 137.9
----------------- -------- -------- -------- ----------- --------- -------------- ------------- --------------
Total
comprehensive
income - - - 137.7 58.0 195.7 21.6 217.3
Share options
exercised - 8.6 - - - 8.6 - 8.6
Share-based
payments
charge - - - - 12.1 12.1 - 12.1
Equity dividends
(note
9) - - - - - - (12.4) (12.4)
At 31 December
2020 4.8 1,206.6 2,527.4 191.7 (901.3) 3,029.2 52.3 3,081.5
----------------- -------- -------- -------- ----------- --------- -------------- ------------- --------------
1. The translation reserve is used to record exchange
differences arising from the translation of the financial
statements of subsidiaries with non-sterling functional
currencies.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December Notes 2020 2019
GBPm GBPm
Cash generated by operations 16 864.8 543.7
Income taxes paid (59.2) (37.5)
Net finance expense paid (95.3) (68.9)
Net cash generated from operating activities 710.3 437.3
Cash flows from investing activities:
-------------------------------------------------------- ----- ------- ---------
Acquisitions and payments of contingent consideration (24.8) (21.3)
Purchase of intangible assets (101.6) (107.2)
Purchase of property, plant and equipment (62.6) (72.6)
Proceeds from the sale of property, plant and equipment
including disposal of shops 6.9 10.9
Investment in joint ventures (61.8) -
Dividends received from associates - 1.2
Proceed from disposal of joint ventures - 63.8
-------------------------------------------------------- ----- ------- ---------
Net cash used in investing activities (243.9) (125.2)
-------------------------------------------------------- ----- ------- ---------
Cash flows from financing activities:
-------------------------------------------------------- ----- ------- ---------
Proceeds from issue of ordinary shares 8.6 1.5
Net proceeds from borrowings(1) 13.5 1,045.5
Repayment of borrowings (43.5) (1,099.1)
Payment of lease liabilities (85.9) (77.7)
Equity dividends paid(2) (12.4) (203.6)
-------------------------------------------------------- ----- ------- ---------
Net cash used in financing activities (119.7) (333.4)
-------------------------------------------------------- ----- ------- ---------
Net increase/(decrease) in cash and cash equivalents 346.7 (21.3)
Effect of changes in foreign exchange rates 1 3 .0 (10.5)
Cash and cash equivalents at beginning of the year 390.1 421.9
-------------------------------------------------------- ----- ------- ---------
Cash and cash equivalents at end of the year(3) 749.8 390.1
-------------------------------------------------------- ----- ------- ---------
1. Net proceeds from borrowings also includes GBP13.5m of cash
received in relation to the settlement of derivative financial
instruments (2019: GBP12.6m)
2. Equity dividends paid are inclusive of dividends paid to
non-controlling interests of GBP12.4m (2019: GBP8.1m)
3. Cash and cash equivalents at the end of the year also
includes GBP43.1m of cash within assets in disposal group
classified as held for sale.
ENTAIN PLC (Company number 4685V)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
1 Corporate information
This announcement was approved by the Board of Directors on 4
March 2021. Entain PLC (the Company) is a company incorporated and
domiciled in the Isle of Man on 5 January 2010 whose shares are
traded publicly on the London Stock Exchange. The principal
activities of the Company and its subsidiaries ("the Group") are
described in the strategic report. The consolidated financial
statements of the Group for the year ended 31 December 2020 were
authorised for issue in accordance with a resolution of the
directors on 4 March 2021.
The nature of the Group's operations and its principal
activities are set out in note 5.
2 Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 December 2020
or 2019 but is derived from those accounts. Statutory accounts for
2019 have been delivered to the registrar of companies, and those
for 2020 will be delivered in due course. The auditor has reported
on those accounts; their reports were (i) unqualified and (ii) did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report.
The consolidated financial statements of the Group have been
prepared in accordance with international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and with the Isle of Man Companies
Act 2006 applicable to companies reporting under IFRSs. The
accounting policies set out in this section as detailed have been
applied consistently year on year other than for the changes in
accounting policies set out in note 3.
The Group financial statements are prepared under the historical
cost convention unless otherwise stated. In adopting the going
concern basis of preparation in the financial statements, the
directors have considered the current trading performance of the
Group, the financial forecasts and the principal risks and
uncertainties, including the impact of COVID-19 and in particular
the impact of the potential for further disruption to the Retail
business across Europe. In addition, the directors have considered
all matters discussed in connection with the long-term viability
statement including the modelling of "severe but plausible"
downside scenarios such legislation changes impacting the Group's
Online business and extended lockdowns affecting the Group's Retail
operations.
Given the level of the Group's available cash (GBP0.7bn),
available financing facilities (including an undrawn revolving
credit facility of GBP0.5bn), debt maturity profile, 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 that it faces. As such, the
directors have a reasonable expectation that the Group will have
adequate financial resources to continue in operational existence
and meet its liabilities as they fall due for 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 financial statements.
The consolidated financial statements are presented in Pounds
Sterling (GBP). All values are in millions (GBPm) rounded to one
decimal place except where otherwise indicated.
The separately disclosed items have been included within the
appropriate classifications in the consolidated income statement.
Further details are given in note 6.
3 Changes in accounting policies
From 1 January 2020 the Group has applied, for the first time,
certain standards, interpretations and amendments. The adoption of
the following standards and amendments to standards did not have a
material impact on the current period or any prior period upon
transition:
- IAS 8, Accounting Policies, Changes in Accounting Estimates
and Errors; amendments to the definition of "material",
- IAS 39 Financial Instruments; amendments as a result of interest rate benchmark reform,
- IFRS 3 Business Combinations; amendments to the definition of a business,
- IFRS 7 Financial Instruments: Dislosures; amendments as a
result of interest rate benchmark reform, and
- IFRS 9 Financial Instruments: Recognition and Measurement;
amendments as a result of interest rate benchmark reform.
4 Summary of significant accounting policies
4.1 Critical accounting estimates and judgements
The preparation of financial information requires the use of
assumptions, estimates and judgements about future conditions. Use
of available information and application of judgement are inherent
in the formation of estimates. Actual results in the future may
differ from those reported.
In this regard, management believes that the accounting policies
where judgement has been applied are:
- accounting for uncertain tax positions; and
- separately disclosed items.
Furthermore, management believes that the accounting policies
where estimates have been utilised are:
- the measurement and impairment of goodwill and other assets;
- pension and other post-employment benefit obligations; and
- accounting for business combinations.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised.
Further information about key assumptions concerning the future
and other key sources of estimation uncertainty are set out
below.
Accounting for uncertain tax positions
The Group is subject to various forms of tax in a number of
jurisdictions. Given the nature of the industry within which the
Group operates, the tax and regulatory regimes are continuously
changing and, as such, the Group is exposed to a small number of
uncertain tax positions. Provisions are made for uncertain tax
positions where it is believed that it is more likely than not that
an economic outflow will arise.
Separately disclosed items
To assist in understanding its underlying performance, the Group
has defined the following items of pre-tax income and expense as
separately disclosed items as they either reflect items which are
exceptional in nature or size or are associated with the
amortisation of acquired intangibles. Items treated as separately
disclosed items include:
- amortisation of acquired intangibles resulting from IFRS3
"Business Combinations" fair value exercises;
- profits or losses on disposal, closure or impairment of non-current assets or businesses;
- corporate transaction and restructuring costs;
- tax litigation;
- changes in the fair value of contingent consideration; and
- the related tax effect of these items.
Any other non-recurring items are considered individually for
classification as separately disclosed or exceptional 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 separately disclosed items have been included within the
appropriate classifications in the consolidated income statement.
Further details are given in note 6.
Goodwill
Goodwill on acquisition is initially measured at cost, being the
excess of the cost of the business combination over the Group's
interest in the net fair value of the separately identifiable
assets, liabilities and contingent liabilities at the date of
acquisition. In accordance with IFRS 3 Business Combinations,
goodwill is not amortised but reviewed for impairment at the first
reporting period after acquisition and then annually thereafter. As
such it is stated at cost less any provision for impairment of
value. Any impairment is recognised immediately in the consolidated
income statement and is not subsequently reversed.
On acquisition, any goodwill acquired is allocated to cash
generating units for the purpose of impairment testing. Where
goodwill forms part of a cash generating unit and part of the
operation within that unit is disposed of, the goodwill associated
with the disposal is included in the carrying amount of the assets
when determining the gain or loss on disposal.
4 Summary of significant accounting policies (continued)
4.1 Critical accounting estimates and judgements (continued)
Intangible assets
Intangible assets acquired separately are capitalised at cost
and those acquired as part of a business combination are
capitalised separately from goodwill if the fair value can be
measured reliably on initial recognition. The costs relating to
internally generated intangible assets, principally software costs,
are capitalised if the criteria for recognition as assets are met.
Other expenditure is charged in the year in which the expenditure
is incurred. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any
accumulated impairment losses.
The useful lives of these intangible assets are assessed to be
either finite or indefinite. All indefinite lived assets are
subject to an annual impairment review from the year of
acquisition. Where amortisation is charged on assets with finite
lives, this expense is taken to the consolidated income statement
through the 'operating expenses, depreciation and amortisation'
line item. Useful lives are reviewed on an annual basis.
A summary of the policies applied to the Group's intangible
assets is 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
------------------------------------ ----------------------------------
The useful lives of all intangible assets are reviewed at each
financial period end. Impairment testing is performed annually for
intangible assets which are not subject to systematic amortisation
and where an indicator of impairment exists for all other
intangible assets.
An intangible asset is derecognised on disposal, with any gain
or loss arising (calculated as the difference between the net
disposal proceeds and the carrying amount of the item) included in
the consolidated income statement in the year of disposal.
Pensions and other post-employment benefits
The Group's defined benefit pension plans, the Ladbrokes Pension
Plan and the Gala Coral Pension Plan hold assets separately from
the Group. The pension cost relating to both plans are assessed in
accordance with the advice of independent qualified actuaries using
the projected unit credit method.
Actuarial gains or losses are recognised in the consolidated
statement of comprehensive income in the period in which they
arise.
Any past service cost is recognised immediately. The retirement
benefit asset recognised in the balance sheet represents the fair
value of scheme assets less the value of the defined benefit
obligations.
In accounting for the Group's defined benefit pension plans, it
is necessary for management to make a number of estimates and
assumptions each year. These include the discount rates, inflation
rates and life expectancy. In making these estimates and
assumptions, management considers advice provided by external
advisers, such as actuaries. Where actual experience differs to
these estimates, actuarial gains and losses are recognised directly
in other comprehensive income. Although the Group anticipates that
plan surpluses will be utilised during the life of the plans to
address member benefits, the Group recognises its pension surplus
in full on the basis that it does not consider there to be
substantive restrictions on the return of residual plan assets in
the event of a winding up of the plans after all member obligations
have been met.
The Group's contributions to defined contribution schemes are
charged to the consolidated income statement in the period to which
the contributions relate.
Business combinations
For business combinations, the Group estimates the fair value of
the consideration transferred, which can include assumptions about
the future business performance of the business acquired and an
appropriate discount rate to determine the fair value of any
contingent consideration. Judgement is also applied in determining
whether any future payments should be classified as contingent
consideration or as remuneration for future services.
The Group then estimates the fair value of assets acquired and
liabilities assumed in the business combination, including any
separately identifiable intangible assets. These estimates also
require inputs and assumptions including future earnings, customer
attrition rates and discount rates. The Group engages external
experts to support the valuation process, where appropriate. IFRS 3
'Business Combinations' allows the Group to recognise provisional
fair values if the initial accounting for the business combination
is incomplete. Judgement is applied as to whether changes should be
applied at the acquisition date or as post-acquisition changes.
4 Summary of significant accounting policies (continued)
4.1 Critical accounting estimates and judgements (continued)
Business combinations (continued)
The fair value of contingent consideration recognised in
business combinations is reassessed at each reporting date, using
updated inputs and assumptions based on the latest financial
forecasts for the relevant business. Fair value movements and the
unwinding of the discounting is recognised within operating
expenses.
4.2 Other accounting policies
Impairment
An impairment review is performed for indefinite life assets on
at least an annual basis. For all other non-current assets an
impairment review is performed where there are indicators of
impairment. This requires an estimation of the recoverable amount
which is the higher of an asset's fair value less costs to sell and
its value in use. Estimating a value in use amount requires
management to make an estimate of the expected future cash flows
from each cash generating unit and to discount cash flows by a
suitable discount rate in order to calculate the present value of
those cash flows. Estimating an asset's fair value less costs to
sell is determined using future cashflow and profit projections as
well as industry observed multiples and publicly observed share
prices for similar betting and gaming companies.
Within UK and European Retail the cash generating units are
generally an individual Licenced Betting Office ("LBO") and
therefore, impairment is first assessed at this level for licences,
right of use ("ROU") assets and property, plant and equipment, with
any impairment arising booked first to licences and then to
property, plant and equipment.
Pension and other post-employment benefit obligations
There is a significant degree of estimation involved in
predicting the ultimate benefits payable under defined benefit
pension arrangements. The pension scheme liabilities are determined
using actuarial valuations. The actuarial valuation involves making
assumptions about discount rates, mortality rates and future
pension increases. Due to the long-term nature of these plans, such
estimates are subject to significant uncertainty. The group's
defined benefit pension schemes both have a net asset position when
measured on an IAS 19 basis. Judgement is applied, based on legal,
actuarial, and accounting guidance in IFRIC 14, regarding the
amounts of net pension asset that is recognised in the consolidated
balance sheet.
Property, plant and equipment
Land is stated at cost less any impairment in value.
Buildings, plant and equipment are stated at cost less
accumulated depreciation and any impairment in value.
Depreciation is applied using the straight-line method to
specific classes of asset to reduce them to their residual value
over their estimated useful economic lives.
Land and buildings Lower of 50 years, or estimated useful
life of the building, or lease. Indefinite
lives are attached to any freehold
land held and therefore it is not
depreciated
--------------------------------------------
Plant and equipment 3-5 years
--------------------------------------------
Fixtures and fittings 3-10 years
---------------------- --------------------------------------------
ROU assets are depreciated over the lease term (as defined in
IFRS16) being the period to the expiry date of the lease, unless it
is expected that a break clause will be exercised when the lease
term is the period to the date of the break.
The carrying values of property, plant and equipment are
reviewed for impairment where an indicator of impairment exists as
to whether there are events or changes in circumstances indicating
that the carrying values may not be recoverable. If any such
indication exists and where the carrying values exceed the
estimated recoverable amount, the assets or cash generating units
are written down to their recoverable amount.
The recoverable amount of property, plant and equipment is the
greater of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount
is determined for the cash generating unit to which the asset
belongs. Impairment losses are recognised in the consolidated
income statement.
4 Summary of significant accounting policies (continued)
4.2 Other accounting policies (continued)
An item of property, plant and equipment is derecognised upon
disposal, with any gain or loss arising (calculated as the
difference between the net disposal proceeds and the carrying
amount of the item) included in the consolidated income statement
in the year of disposal.
Leases
The Group has applied IFRS 16 only ot those contracts that were
previously identified as a lease under IFRS 17 Leases, any
contracts not previously identified as leases have not been
reassessed for the purposes of adopting IFRS 16. Accordingly, the
definition of a lease under IFRS 16 has only been applied to
contracts entered into on or after 1 January 2019.
Leases, other than those with a lease period of less than one
year at inception, or where the original cost of the asset acquired
would be a negligible amount, are capitalised at 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 property, plant and equipment 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 interest
income is recognised over the term of the lease using the net
investment method (before tax) so as to give a constant rate of
return on the net investment in sub-leases. Operating lease rental
income is recognised on a straight-line basis over the life of the
lease.
Financial assets
Financial assets are recognised when the Group becomes party to
the contracts that give rise to them.
The Group classifies financial assets at inception as financial
assets at amortised cost, financial assets at fair value through
profit or loss or financial assets at fair value through other
comprehensive income.
Financial assets at amortised cost are non-derivative financial
assets with fixed or determinable payments that are not quoted in
an active market. On initial recognition, financial assets at
amortised cost are measured at fair value net of transaction
costs.
Trade receivables are generally accounted for at amortised cost.
Expected credit losses are recognised for financial assets recorded
at amortised cost, including trade receivables. Expected credit
losses are calculated by using an appropriate probability of
default, taking accounts of a range of possible future scenarios
and applying this to the estimated exposure of the Group at the
point of default.
Financial assets at fair value through profit or loss include
derivative financial instruments. Financial assets through profit
or loss are measured initially at fair value with transaction costs
taken directly to the consolidated income statement. Subsequently,
the fair values are remeasured, and gains and losses are recognised
in the consolidated income statement.
Financial assets at fair value through other comprehensive
income comprise equity investments that are designated as such on
acquisition. These investments are measured initially at fair
value. Subsequently, the fair values are remeasured, and gains and
losses are recognised in the consolidated statement of
comprehensive income.
Financial liabilities
Financial liabilities comprise trade and other payables,
interest bearing loans and borrowings, contingent consideration,
ante-post bets, guarantees and derivative financial instruments. On
initial recognition, financial liabilities are measured at fair
value net of transaction costs where they are not categorised as
financial liabilities at fair value. Financial liabilities measured
at fair value include contingent consideration, derivative
financial instruments, ante-post bets and guarantees.
Financial liabilities at fair value are measured initially at
fair value, with transaction costs taken directly to the
consolidated income statement. Subsequently, the fair values are
remeasured and gains and losses from changes therein are recognised
in the consolidated income statement.
4 Summary of significant accounting policies (continued)
4.2 Other accounting policies (continued)
Trade and other payables are held at amortised cost and include
amounts due to clients representing customer deposits and winnings,
which is matched by an equal and opposite amount within cash and
cash equivalents.
All interest bearing loans and borrowings are initially
recognised at fair value net of issue costs associated with the
borrowing. After initial recognition, interest bearing loans and
borrowings are subsequently measured at amortised cost using the
effective interest rate method.
The Group has provided financial guarantees to third parties in
respect of lease obligations of certain of the Group's former
subsidiaries within the disposed hotels division. Financial
guarantee contracts are classified as financial liabilities and are
measured at fair value by estimating the probability of the
guarantees being called upon and the related cash outflows from the
Group.
Derecognition of financial assets and liabilities
Financial assets are derecognised when the right to receive cash
flows from the assets has expired or when the Group has transferred
its contractual right to receive the cash flows from the financial
assets or has assumed an obligation to pay the received cash flows
in full without material delay to a third party, and either:
- substantially all the risks and rewards of ownership have been transferred; or
- substantially all the risks and rewards have neither been
retained nor transferred but control is not retained.
Financial liabilities are derecognised when the obligation is
discharged, cancelled or expires.
Derivative financial instruments
The Group uses derivative financial instruments such as cross
currency swaps, foreign exchange swaps and interest rate swaps, to
hedge its risks associated with interest rate and foreign currency
fluctuations. Derivative financial instruments are recognised
initially and subsequently at fair value. The gains or losses on
remeasurement are taken to the consolidated income statement.
Derivative financial instruments are classified as assets where
their fair value is positive, or as liabilities where their fair
value is negative. Derivative assets and liabilities arising from
different transactions are only offset if the transactions are with
the same counterparty, a legal right of offset exists and the
parties intend to settle the cash flows on a net basis.
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Provisions are measured at the directors' best estimate of the
expenditure required to settle the obligation at the balance sheet
date and are discounted to present value where the effect is
material using a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to
the liability. The unwinding of the discount is recognised as a
finance expense.
Foreign currency translation
The presentational currency of Entain PLC and the functional
currencies of its UK subsidiaries are Pounds Sterling (GBP).
Other than Sterling the main functional currencies of
subsidiaries are the Euro (EUR), the US Dollar ($) and the
Australian Dollar (A$). At the reporting date, the assets and
liabilities of non-sterling subsidiaries are translated into Pounds
Sterling (GBP) at the rate of exchange ruling at the balance sheet
date and their cash-flows are translated at the weighted average
exchange rates for the year. The post-tax exchange differences
arising on the retranslation are taken directly to other
comprehensive income.
Transactions in foreign currencies are initially recorded in the
subsidiary's functional currency and translated at the foreign
currency rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
retranslated at the foreign currency rate of exchange ruling at the
balance sheet date.
All foreign currency translation differences are taken to the
consolidated income statement. Non-monetary items that are measured
at historical cost in a foreign currency are translated using the
exchange rate at the date of the initial transaction. Non-monetary
items measured at fair value in a foreign currency are translated
using the exchange rate at the date when the fair value was
determined.
4 Summary of significant accounting policies (continued)
4.2 Other accounting policies (continued)
On disposal of a foreign entity, the deferred cumulative
retranslation differences previously recognised in equity relating
to that particular foreign entity are recognised in the
consolidated income statement as part of the profit or loss on
disposal.
The following exchange rates were used in 2020 and 2019:
2020 2019
----------------- --------------
Currency Average Year end Average Year
end
Euro (EUR) 1.131 1.112 1.137 1.182
U S Dollar
($) 1.286 1.365 1.272 1.327
Australian
Dollar (A$) 1.876 1.765 1.831 1.887
------------- ------- -------- ------- -----
Revenue
The Group reports the gains and losses on all betting and gaming
activities as revenue, which is measured at the fair value of the
consideration received or receivable from customers less free bets,
promotions, bonuses and other fair value adjustments. Revenue is
net of VAT/GST. The Group considers betting and gaming revenue to
be out of the scope of IFRS15 Revenue, and accounts for those
revenues within the scope of IFRS9 Financial Instruments.
For licensed betting offices (LBO's), on course betting, Core
Telephone Betting, mobile betting, Digital businesses (including
sportsbook, betting exchange, casino, games, other number bets),
revenue represents gains and losses, being the amounts staked and
fees received, less total payouts recognised on the settlement of
the event. Open betting positions are carried at fair value and
gains and losses arising on these positions are recognised in
revenue.
Revenue from the online poker business reflects the net income
(rake) earned from poker games completed by the year end. Vending
income is also included within Revenue.
In the case of the greyhound stadia, revenue represents income
arising from the operation of the greyhound stadia in the year,
including sales of refreshments, net of VAT.
Government assistance
Receipts from government assistance programs such as, furlough,
are recorded as reductions in the costs against which they have
been received.
Finance expense and income
Finance expense and income arising on interest bearing financial
instruments carried at amortised cost are recognised in the
consolidated income statement using the effective interest rate
method. Finance expense includes the amortisation of fees that are
an integral part of the effective finance cost of a financial
instrument, including issue costs, and the amortisation of any
other differences between the amount initially recognised and the
redemption price. All finance expenses are recognised over the
availability period.
Share-based payment transactions
Certain employees (including directors) of the Group receive
remuneration in the form of equity settled share-based payment
transactions, whereby employees render services in exchange for
shares or rights over shares (equity settled transactions).
The cost of equity settled transactions is measured by reference
to the fair value at the date on which they are granted. In valuing
equity settled transactions, no account is taken of any performance
conditions, other than conditions linked to the price of the shares
of Entain PLC (market conditions).
The cost of equity settled transactions is recognised in the
consolidated income statement, with a corresponding credit in
equity, over the period in which the performance conditions are
fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (vesting date). The cumulative
expense recognised for equity settled transactions at each
reporting date until the vesting date reflects the extent to which
the vesting period has expired and the number of awards that, in
the opinion of the directors of the Group at that date, based on
the best available estimate of the number of equity instruments,
will ultimately vest.
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market
condition, which are treated as vesting irrespective of whether or
not the market condition is satisfied, provided that all other
performance conditions are satisfied.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of earnings per share
as shown in note 10.
5 Segment information
The Group's operating segments are based on the reports reviewed
by the Executive management team (which is collectively considered
to be the Chief Operating Decision Maker (CODM)) to make strategic
decisions, and allocate resources.
IFRS 8 requires segment information to be presented on the same
basis as that used by the CODM for assessing performance and
allocating resources, and the Group's operating segments are now
aggregated into the five reportable segments as detailed below:
- 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;
- UK Retail: comprises betting activities in the shop estate in
Great Britain, Northern Ireland and Jersey;
- European Retail: comprises all retail activities connected
with the Republic of Ireland, Belgium, Italy and Spanish JV (pre
disposal) shop estates;
- Corporate: includes costs associated with Group functions
including Group executive, legal, Group finance, tax and treasury;
and
- Other segments: includes activities primarily related to
telephone betting, Stadia, Betdaq and on course pitches.
The Group continues to engage with an interested party on the
sale of its financial services business (Intertrader). The
directors believe that it is highly probable that an agreement and
subsequent sale will be completed within the next 12 months. On
this basis the sale is considered to meet the criteria of IFRS 5
'Non-current Assets Held for Sale and Discontinued Operations' and
therefore has been classified as discontinued. See note 14 for
further information. The results of Intertrader were previously
classified within Other in note 5.
The Executive management team of the Group has 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. See page [33] of
this annual report for further considerations of the use of
Non-GAAP measures. Transfer prices between operating segments are
on an arm's-length basis in a manner similar to transactions with
third parties.
The segment results for the year ended 31 December were as
follows:
2020 Online UK Retail European All other Corporate Elimination Total
Retail segments of internal Group
revenue
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
NGR 2,747.5 678.6 178.5 27.8 - (3.9) 3,628.5
VAT/GST (66.9) - - - - - (66.9)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Revenue 2,680.6 678.6 178.5 27.8 - (3.9) 3,561.6
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Gross Profit 1,708.7 497.3 80.2 22.4 - - 2,308.6
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Contribution(1) 1,147.4 495.1 76.6 21.1 - - 1,740.2
Operating costs excluding marketing
costs (342.5) (401.3) (54.8) (25.0) (54.5) - (878.1)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Underlying EBITDAR before separately
disclosed items 804.9 93.8 21.8 (3.9) (54.5) - 862.1
Rental costs (1.4) (16.6) (0.7) (0.3) - - (19.0)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Underlying EBITDA before separately
disclosed items 803.5 77.2 21.1 (4.2) (54.5) - 843.1
Share based payments (4.3) ( 1.2) (0.3) - (9.0) - (14.8)
Depreciation and Amortisation (120.1) ( 86.2) (29.6) (2.7) - - (238.6)
Share of joint ventures and
associates 0.1 - - 0.3 (60.6) - (60.2)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Operating profit/(loss) before
separately disclosed items 679.2 (10.2) (8.8) (6.6) (124.1) - 529.5
Separately disclosed items
(note 6) (304.5) 231.3 (5.0) - (92.4) - (170.6)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Group operating profit/(loss) 374.7 221.1 (13.8) (6.6) (216.5) - 358.9
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Net finance income (184.2)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Profit before tax 174.7
Income tax (60.9)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Profit for the year from continuing
operations 113.8
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Loss for the year from discontinued
operations after tax ( 34.4)
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
Profit for the year after discontinued
operations 79.4
--------------------------------------- ------- --------- -------- --------- --------- ------------ -------
5 Segment information (continued)
2019 (restated) Online UK Retail European All other Corporate Elimination Total
Retail segments of internal Group
revenue
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
3,63
NGR 2,170.7 1,127.8 289.8 4 8.0 - (3.6) 2 .7
VAT/GST (54.6) - - - - - (54.6)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
3,5 78
Revenue 2,116.1 1,127.8 289.8 4 8 .0 - (3.6) .1
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Gross Profit 1,367.8 817.7 143.6 39.7 - - 2,368.8
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
1,87
Contribution(1) 887.2 812.6 138.0 3 7 .1 - - 4 .9
Operating costs excluding marketing (3 7 (1,0
costs (352.2) (585.1) (70.8) .5) (46.4) - 92 .0)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Underlying EBITDAR before separately
disclosed items 535.0 227.5 67.2 (0.4) (46.4) - 782.9
Rental costs (1.1) (19.6) (0.8) - - - (21.5)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Underlying EBITDA before separately
disclosed items 533.9 207.9 66.4 (0.4) (46.4) - 761.4
Share based payments (5.5) (1.0) (0.3) (0.1) (5.8) - (12.7)
Depreciation and Amortisation (116.0) (72.7) (29.0) (0.8) (0.4) - (218.9)
Share of joint ventures and
associates 0.8 - 1.0 1.5 (12.5) - (9.2)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Operating profit/(loss) before
separately disclosed items 413.2 134.2 38.1 0 .2 (65.1) - 520.6
Separately disclosed items (68 6
(note 6) (574.7) 0.8 (22.1) - (90.7) - .7)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
(15 5 (16 6
Group operating (loss)/profit (161.5) 135.0 16.0 0 .2 .8) - .1)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Net finance income 1.7
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Loss before tax (164.4)
Income tax 33.2
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Loss for the year from continuing (13 1
operations .2)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Loss for the year from discontinued
operations after tax (9.5)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Loss for the year after discontinued
operations ( 140.7)
------------------------------------- ------- --------- -------- --------- --------- ------------ --------
Geographical information
Revenue by destination and non-current assets on a geographical
basis for the Group, are as follows:
2020 2019
------------------ ------- ----------- ----------- -----------
Revenue Non-current Revenue Non-current
assets (restated) assets2
2 GBPm
GBPm GBPm
GBPm
------------------ ------- ----------- ----------- -----------
United Kingdom 1,932.1 3,116.4 1,931.7 3,325.2
Rest of the world 1,629.5 2,559.7 1,646.4 2,546.3
------------------ ------- ----------- ----------- -----------
Total 3,561.6 5,676.1 3,578.1 5,871.5
------------------ ------- ----------- ----------- -----------
1. Contribution represents gross profit less marketing costs and
is a key performance metric used by the Group, particularly in
Online
2. Non-current assets excluding other financial assets, deferred
tax assets and retirement benefit assets
6 Separately disclosed items
2019
2020 GBPm
GBPm (restated)
----------------------------------------------------------- ------- -----------
Amortisation of acquired intangibles1 307.0 374.0
Impairment loss2 5.0 245.0
Integration costs3 25.1 44.9
Triennial restructuring costs(4) 8.3 8.7
Tax litigation/ one-off legislative impacts(5) (223.5) (11.6)
Legal and onerous contract provisions(6) 8.9 3.4
Movement in fair value of contingent consideration(7) 42.4 37.7
Issue costs write off(8) 5.3 14.1
Profit on disposal of joint ventures and property,
plant and equipment(9) (6.9) (19.0)
Other one-off items(10) 4 .3 3.6
Total before tax 175.9 700.8
Tax on separately disclosed items (11) (2.1) (79.6)
----------------------------------------------------------- ------- -----------
Separately disclosed items for the year from continuing
operations 173.8 621.2
Separately disclosed items for the year from discontinued
operations (note 14) 20.0 8.9
----------------------------------------------------------- ------- -----------
Separately disclosed items for the year after discontinued
operations 193.8 630.1
----------------------------------------------------------- ------- -----------
1. Amortisation charges in relation to acquired intangible
assets primarily arising from the acquisitions of Ladbrokes Coral
Group plc and Bwin.
2. During the current year, the Group recorded a non-cash
impairment charge against certain leased assets where the Group now
expects to exercise break clauses in lease agreements. This
impairment charge is offset by an equal and opposite release from
the associated lease liabilities which has been recorded in legal
and onerous contract provisions. The prior year impairment related
to a GBP245.0m against the Groups Australian business.
3. Costs associated with the integration of the Ladbrokes Coral
Group and GVC businesses, including redundancy costs.
4. 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 6 below.
5. Following a favourable ruling by the Upper Tribunal on the
lead case in the Ladbrokes VAT claim, a ruling HMRC have elected
not to appeal, the Group has recognised an income for its claim,
net of associated costs. In December 2020, GBP217.5m of the claim
was repaid by HMRC. The prior year credit relates to a GBP21.2m
release against the Groups Greek tax provisions offset by GBP5.8m
of historic Austrian duty and GBP3.8m of new UK income tax from
April 2019 for which the Group became exempt from April 2020.
6. Includes costs associated with complying with the HMRC
investigation offset by a release from lease liabilities as the
Group now expects to exercise break clauses in certain lease
agreements (see item 2). The prior year costs relate predominantly
to costs associated with shop closures relating to the
implementation of the Triennial Review.
7. Costs associated with discount unwind and movements in the
fair value of contingent consideration on acquisition activity from
previous years.
8. Issue costs written off on the refinancing of US denominated loans in the year.
9. Relates to the sale of an investment in an associate and
various retail assets. The profit in the previous year related to
the Groups sale of joint ventures.
10. Relates predominantly to the one-off costs associated with
covid-19 such as initial one-off costs of reopening and certain
social distancing equipment not meeting the definition of capital,
and the costs of the process associated with the Ladbrokes pension
buy-in. The prior year costs were predominantly incurred by the
Group in relation to corporate transactions costs.
11. The tax credit on separately disclosed items of GBP2.1m
(2019: GBP79.6million) represents 1.2% (2019: 11.3%) of the
separately disclosed items incurred of GBP175.9m (2019: GBP700.8m).
This is lower than the expected tax credit of 19.0% (2019: 19.0%)
as goodwill impairment charges, certain corporate transaction costs
and integration costs are non-deductible for tax purposes,
alongside the impact of lower overseas tax rates.
The items above reflect incomes and expenditures which are
either exceptional in nature or size or are associated with the
amortisation of acquired intangibles. The Directors believe that
each of these items warrants separate disclosure as they do not
form part of the day to day underlying trade of the Group and are
not expected to persist beyond the short term (excluding the
amortisation of acquired intangibles).
7 Finance expense and income
2020 2019
GBPm GBPm
--------------------------------------------------------------- ------- -------
Bank loans and overdrafts (60.2) (71.5)
Interest on lease liabilities(1) (16.3) (17.0)
Issue costs write off (note 6) (5.3) (14.1)
Total finance expense (81.8) (102.6)
--------------------------------------------------------------- ------- -------
Interest receivable 2.3 2.4
(Losses)/gains arising on financial derivatives (61.8) 17.6
(Losses)/gains arising on foreign exchange on debt instruments (42.9) 84.3
--------------------------------------------------------------- ------- -------
Net finance (expense)/income (184.2) 1.7
--------------------------------------------------------------- ------- -------
1. Interest on lease liabilities of GBP16.3m (2019: GBP17.0) is
net of GBP0.4m of sub-let interest receivable (2019: GBP0.2m).
8 Income tax
The total tax charge on continuing operations was GBP60.9m
(2019: GBP33.2m) Excluding the tax credit on separately disclosed
items, the total tax charge on continuing operations was GBP63.0m
(2019: GBP46.4m).
The total tax credit on discontinued operations was GBP1.3m
(2019: GBP0.3m). Excluding the tax credit on separately disclosed
items, the total tax charge on discontinued operations was GBPnil
(2019: GBPnil).
Deferred tax assets are considered recognisable based on the
ability of future offset against deferred tax liabilities of the
same taxable entity or against future taxable profits.
As at 31 December 2020, the Group had GBP1,660.7m (2019:
GBP1,437.5m) of gross unrecognised deferred tax assets, consisting
of GBP213.3m of capital losses (2019: GBP255.2m), GBP1,407.2m of
trading losses (2019: GBP1,129.7m) and GBP40.2m of deferred
interest relief (2019: GBP52.6m). These assets have not been
recognised as they are not expected to be utilised in the
foreseeable future.
There are no significant unrecognised taxable temporary
differences associated with investments in subsidiaries.
The standard rate of UK corporation tax throughout the period
was 19.0%.
In the Budget on 3 March 2021, the Chancellor announced that the
standard rate of UK Corporation Tax will be increased to 25%. The
precise date(s) and period(s) in which the increase in UK
Corporation Tax will be substantively enacted are unknown at the
date of this Report. The impact of each 1% increase in the UK
Corporation Tax rate on the Group's deferred tax assets and
liabilities at 31 December 2020 would have been GBP1.6m comprising
a GBP3.5m credit to Underlying items, and a GBP1.9m debit to
Separately Disclosed Items.
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. Deferred tax on
retirement benefit assets is provided at 35.0%, which is the rate
applicable to refunds.
9 Dividends
2020 2019
Shares Shares
2020 2019 in issue in issue
Pence per share pence pence number number
------------------------------- ------ ------ --------- ---------
Prior year final dividend paid - 16.0 n/a 581.9
Interim dividend paid - 17.6 n/a 581.9
A proposed second interim dividend of 17.6 pence per share,
amounting to GBP102.5m in respect of the year ended 31 December
2019 was proposed by the directors on 5 March 2020. On 6 April 2020
the Group announced that the 2019 second interim dividend would be
withdrawn due to the ongoing uncertainty surrounding covid-19,
subsequently no interim dividends have been declared with respect
to the year ended 31 December 2020.
The dividends represented above are exclusive of dividends paid
out of non-controlling interests of GBP12.4m (2019: GBP8.1m).
10 Earnings per share
Basic earnings per share has been calculated by dividing the
profit for the year attributable to shareholders of the Company of
GBP57.8m (2019: loss of GBP153.7m) by the weighted average number
of shares in issue during the year of 583.7m (2019: 582.0m).
At 31 December 2020, there were 585.0m EUR0.01 ordinary shares
in issue.
The calculation of adjusted earnings per share which removes
separately disclosed items and foreign exchange gains and losses
arising on financial instruments has also been disclosed as it
provides a better understanding of the underlying performance of
the Group. Separately disclosed items are defined in note 4 and
disclosed in note 6.
Total earnings per share
Weighted average number of shares (millions) 2020 2019
------------------------------------------------------------- ----- -----
Shares for basic earnings per share 583.7 582.0
Potentially dilutive share options and contingently issuable
shares 6.2 7.3
------------------------------------------------------------- ----- -----
Shares for diluted earnings per share 589.9 589.3
------------------------------------------------------------- ----- -----
2020 2019
Total profit GBPm GBPm
------------------------------------------------------------------ ------- --------
Profit/(loss) attributable to shareholders 57 .8 (153.7)
------------------------------------------------------------------ ------- --------
* from continuing operations 92 .2 ( 143.9)
* from discontinued operations (3 4.4) ( 9.8)
Losses/(gains) arising from financial instruments 6 1.8 (17.6)
Losses/(gains) arising from foreign exchange debt instruments 4 2.9 (84.3)
Associated tax charge on gains arising from financial instruments
and foreign exchange debt instruments - 4.1
Separately disclosed items net of tax (note 6) 1 93.8 630.1
------------------------------------------------------------------ ------- --------
Adjusted profit attributable to shareholders 356.3 378.6
------------------------------------------------------------------ ------- --------
* from continuing operations 370.7 3 79.2
* from discontinued operations ( 14.4) ( 0.6)
------------------------------------------------------------------ ------- --------
Standard earnings Adjusted earnings
per share per share
Earnings per share (pence) 2020 2019 2020 2019
------------------------------------- --------- -------- --------- --------
Basic earnings per share
* from continuing operations 1 5 .8 (24.8) 6 3 .5 65.2
* from discontinued operations (5.9) (1.6) (2.5) (0.1)
------------------------------------- --------- -------- --------- --------
(2 6
From profit/(loss) for the period 9.9 .4) 6 1 .0 6 5 .1
------------------------------------- --------- -------- --------- --------
Diluted earnings per share
* from continuing operations 1 5 .6 (24.8) 6 2 .8 64.3
* from discontinued operations (5.8) (1.6) (2.4) (0.1)
------------------------------------- --------- -------- --------- --------
(2 6
From profit/(loss) for the period 9.8 .4) 60.4 64.2
------------------------------------- --------- -------- --------- --------
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 73.9p (2019: 67.3p) and a diluted adjusted
earnings per share of 73.1p (2019: 66.4p) from continuing
operations.
11 Goodwill and intangible assets
Goodwill Licences Software Customer Consulting Trade-marks Total
relationships & magazine & brand
names
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------- -------- -------- -------------- ----------- ----------- -------
Cost
At 1 January 2019 3,358.0 15.8 514.9 956.3 4.4 1,955.1 6,804.5
Exchange adjustment (115.6) - (4.4) (20.4) - (29.4) (169.8)
Additions - - 114.4 - - - 114.4
Disposals (3.6) (0.1) (29.0) - (4.4) - (37.1)
At 31 December 2019 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 94 8 .6 - 1,954.0 6,809.8
-------------------------------- -------- -------- -------- -------------- ----------- ----------- -------
Accumulated amortisation
and impairment
At 1 January 2019 29.9 5.3 262.7 312.3 4.4 60.9 675.5
Exchange adjustment (1.4) - (0.6) (12.7) - (5.0) (19.7)
Amortisation charge - 1.1 146.1 293.6 - 40.5 481.3
Impairment charge 243.9 - - - - - 243.9
Disposals - (0.1) (28.9) - (4.4) - (33.4)
-------------------------------- -------- -------- -------- -------------- ----------- ----------- -------
At 31 December 2019 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 2 91 .1 7.4 332.0 871.6 - 141.2 1,643.3
-------------------------------- -------- -------- -------- -------------- ----------- ----------- -------
Net book value
At 31 December 2019 2,966.4 9.4 216.6 342.7 - 1,829.3 5,364.4
-------------------------------- -------- -------- -------- -------------- ----------- ----------- -------
At 31 December 2020 3,061.1 8.3 207.3 77.0 - 1,812.8 5,166.5
-------------------------------- -------- -------- -------- -------------- ----------- ----------- -------
At 31 December 2020, the Group had not entered into contractual
commitments for the acquisition of any intangible assets (2019:
GBPnil).
Included within trade-marks & brand names are GBP1,398.4m
(2019: 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.
Refer to notes 6 and 12 for details of the impairment
charge.
12 Impairment testing of goodwill and indefinite life intangible
assets
An impairment loss is recognised for any amount by which an
asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less
costs to sell and its value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units).
Within UK and European Retail, the cash generating units
("CGUs") are generally an individual Licenced Betting Office
("LBO") and therefore, impairment is first assessed at this level
for licences (intangibles) and property, plant and equipment, with
any impairment arising booked first to licences and then to
property, plant and equipment. Since goodwill and brand names has
not been historically allocated to individual LBOs, a secondary
assessment is then made to compare the carrying value of the
segment against the recoverable amount with any additional
impairment then taken against goodwill.
For Online the CGU is the relevant geographical location or
business unit, for example Australia, European digital (defined as
websites hosted by proprietary platforms based in European
constituent countries), Digital (defined as websites hosted by
Entain proprietary platforms) etc. and any impairments are made
firstly to goodwill, next to any capitalised intangible asset and
then finally to property, plant and equipment.
The expected cash flows generated by the assets are discounted
using appropriate discount rates that reflect the time value of
money and risks associated with the group of assets.
For both tangible and intangible assets, the future cash flows
are based on the forecasts and budgets of the CGU or business
discounted to reflect time value of money. The key assumptions
within the UK and European Retail budgets are OTC wagers (customer
visits and spend per visit), the average number of machines per
shop, gross win per shop per week, salary increases, the potential
impact of the shop closures and the cancellation of sporting events
due to covid restrictions and the fixed costs of the LBOs. The key
assumptions within the budgets for Online are the number of active
customers, net revenue per head, win percentage, marketing spend,
revenue shares and operating costs.
The value-in-use calculations use cash flows based on detailed,
board approved, financial budgets prepared by management covering a
three-year period. These forecasts have been extrapolated over
years 4 to 8 representing a declining growth curve from year 3
until the long term forecast growth rate is reached. The growth
rates used from years 4-8 range from 0% to 16%. From year 9 onwards
long term growth rates used are between 0% and 2.0% (2019: between
0% and 3.0%) and are based on the long term GDP growth rate of the
countries in which the relevant CGUs operate or the relevant
outlook for the business. A 0% growth rate has been used for the UK
Retail operating segment due to the ongoing uncertainty surrounding
the outlook after the triennial implementation. An 8-year horizon
is considered appropriate based on the Group's history of
underlying profit as well as ensuring there is an appropriate
decline to long term growth rates from those growth rates currently
observed in our key markets.
The discount rate calculation is based on the specific
circumstances with reference to the WACC and risk factors expected
in the industry in which the Group operates.
The pre-tax discount rates used and the associated carrying
value of goodwill by CGU is as follows:
2020 2019 2020 2019
Goodwill % % GBPm GBPm
------------------- ------ ------ ------- -------
Digital 9.1 9.3 2,101.1 2,045.1
UK Retail 9.1 9.3 76.4 76.4
Australia 10.6 10.9 349.5 326.5
8.5 - 8.8 -
European Retail 10.4 10.8 163.7 154.0
9 .9 - 10.1 -
European Digital 10.4 10.8 355.2 334.3
All other segments 9.1 9.3 15.2 30.1
3,061.1 2,966.4
------------------- ------ ------ ------- -------
It is not practical or material to disclose the carrying value
of individual licences by LBO.
Impairment recognised during the year
Impairments of intangible assets and property, plant and
equipment are recognised as separately disclosed items.
During the current year, the Group recorded a non-cash
impairment charge of GBP5.0m (2019: GBP245.0m) on certain head
office locations where we now expect to exercise break clauses. The
impairment in 2019 (GBP243.9m in goodwill and GBP1.1m in PP&E)
was recognised against our Australian business and reflected the
impact of unforseen Point of Consumption Tax (POCT) in certain
states/regions and unexpected increases in product fees.
Sensitivity analysis
A reduction to 0% for the terminal growth rate applied to the
cashflows (with other assumptions remaining constant) would result
in no additional impairment to any CGU.
A 5% decrease in all cash flows used in the discounted cash flow
model for the value in use calculation (with other assumptions
remaining constant) would result in no additional impairment to any
CGU.
A 0.5pp increase in discount rates used in the discounted cash
flow model for the value in use calculation (with all other
assumptions remaining constant) would result in no additional
impairment to any CGU.
No other reasonable change in assumptions to the CGUs would
cause any additional impairment.
13 Property, plant and equipment
Land and Plant Fixtures Leased Total
buildings and equipment and fittings assets
GBPm GBPm GBPm GBPm GBPm
----------------------------------- ---------- -------------- ------------- ------- ------
Cost
At 1 January 2019 30.8 62.0 208.2 - 301.0
Arising on transition to IFRS16 - - - 391.9 391.9
Exchange adjustment (1.4) (0.3) (8.3) (1.8) (11.8)
Additions 14.5 17.0 62.2 54.8 148.5
Disposals (14.3) (0.1) (24.6) (5.1) (44.1)
----------------------------------- ---------- -------------- ------------- ------- ------
At 31 December 2019 29.6 78.6 237.5 439.8 785.5
Exchange adjustment - 2.4 3.7 3.5 9.6
Additions 13.9 13.0 31.6 70.9 129.4
Disposals and assets classified as
held for sale (17.0) (4.6) (72.9) (2.8) (97.3)
R eclassification - - (18.1) 18.1 -
At 31 December 2020 26.5 89.4 181.8 529.5 827.2
----------------------------------- ---------- -------------- ------------- ------- ------
Accumulated depreciation
At 1 January 2019 21.3 6.9 77.2 - 105.4
Arising on transition to IFRS16 - - - 136.7 136.7
Exchange adjustment (1.0) (0.2) (2.2) (0.3) (3.7)
Depreciation charge 12.2 9.1 39.9 52.9 114.1
Impairment - - - 1.1 1.1
Disposals (11.3) (0.1) (24.6) - (36.0)
At 31 December 2019 21.2 15.7 90.3 190.4 317.6
Exchange adjustment - 1.4 2.0 0.4 3.8
Depreciation charge 10.3 12.9 41.6 62.4 127.2
Impairment - - - 5.0 5.0
Disposals and assets classified as
held for sale (17.0) (4.6) (72.9) (2.1) (96.6)
R eclassification - (7.1) 7.1 -
At 31 December 2020 14.5 25.4 53.9 263.2 357.0
----------------------------------- ---------- -------------- ------------- ------- ------
Net book value
At 31 December 2019 8.4 62.9 147.2 249.4 467.9
----------------------------------- ---------- -------------- ------------- ------- ------
At 31 December 2020 12.0 64.0 127.9 266.3 470.2
----------------------------------- ---------- -------------- ------------- ------- ------
At 31 December 2020, the Group had not entered into contractual
commitments for the acquisition of any property, plant and
equipment (2019: GBPnil).
In the year the Group reclassified certain leased assets that
were previously held within fixtures and fittings to be presented
within Leased assets.
Included within fixtures, fittings and equipment are assets in
the course of construction, which are not being depreciated, of
GBP38.8m (2019: GBP42.7m) relating predominantly to the new till
system in UK Retail.
An impairment charge of GBP5.0m (2019: GBP1.1m) has been made
against office buildings included within leased assets in the year.
See notes 6 and 12 for further details.
14 Assets held for sale and discontinued operations
The Group continues to engage with an interested party over the
sale of its Intertrader business. The directors believe that it is
thought an agreement and subsequent sale will be highly probable
and completed within the next 12 months. On this basis the
Intertrader business is considered to meet the criteria of IFRS 5
'Non-current Assets Held for Sale and Discontinued Operations' to
be classified as discontinued.
As a result of discontinuing the Intertrader businesses the
Group recorded an impairment of GBP19.3m and have provided for a
loss on disposal of GBP10.0m which has been recognised within
separately disclosed items. See note 6 for further details.
The results for the year for the discontinued operation are
disclosed below:
2020 2019
GBPm GBPm
--------------------------------------------------------- ------- ------
Revenue 1 3.8 22.4
Cost of sales ( 7.6) (13.0)
--------------------------------------------------------- ------- ------
Gross profit 6 .2 9.4
Administrative costs (2 0.6) (10.0)
--------------------------------------------------------- ------- ------
Operating loss (14.4) (0.6)
Separately disclosed items (21.3) (9.2)
Loss before tax (35.7) (9.8)
Income tax credit 1.3 0 .3
--------------------------------------------------------- ------- ------
Loss for the year from discontinued operations after tax (34.4) (9.5)
--------------------------------------------------------- ------- ------
The results of Intertrader were previously classified within
Other in note 5.
Separately disclosed items consisted of GBP19.3m (2019: GBPnil)
relating to impairment, GBP10.0m (2019: GBPnil) relating to a
provision for a loss on disposal, GBP3.4m (2019: GBP2.2m) relating
to amortisation of acquired intangibles and a credit of GBP11.4m
(2019: cost of GBP6.7m) relating to movement in fair value of
contingent consideration and GBPnil (2019: GBP0.3m) relating to
deal costs.
Items calssified as held-for-sale on the balance sheet are
disclosed below:
2020 2019
GBPm GBPm
---------------------------------------- -------- -----
Non-current assets
---------------------------------------- -------- -----
Property, plant and equipment 0.7 -
---------------------------------------- -------- -----
Current assets
Trade and other receivables 155.3 -
Cash and cash equivalents 43.1 -
---------------------------------------- -------- -----
198.4 -
---------------------------------------- -------- -----
Assets classified as held for sale 199.1 -
---------------------------------------- -------- -----
Current liabilities
Trade and other payables (12.7) -
Balances with customers (155.0) -
Other financial liabilities (4.3) -
---------------------------------------- -------- -----
Liabilities classified as held for sale (1 72.0) -
---------------------------------------- -------- -----
15 Net debt
The components of the Group's net debt are as follows:
2020 2019
GBPm GBPm
----------------------------------------------------------- --------- ---------
Current assets
Cash and short-term deposits 749.8 390.1
Current liabilities
Interest bearing loans and borrowings (14.1) (31.5)
Non-current liabilities
Interest bearing loans and borrowings (2,085.7) (2,084.5)
------------------------------------------------------------ --------- ---------
Accounting net debt (1,350.0) (1,725.9)
------------------------------------------------------------ --------- ---------
Cash held on behalf of customers (396.1) (335.4)
Fair value swaps held against debt instruments (derivative
financial assets) (26.1) 47.4
Deposits 171.2 129.1
Balances held with payment service providers 172.4 78.5
Adjusted net debt (1,428.6) (1,806.3)
------------------------------------------------------------ --------- ---------
Lease liabilities (338.0) (363.5)
------------------------------------------------------------ --------- ---------
Net debt including lease liabilities (1,766.6) (2,169.8)
------------------------------------------------------------ --------- ---------
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 GBP155.0m (2019: GBPnil) classified
as held for sale.
16 Notes to the statement of cash flows
2020 2019
GBPm GBPm
----------------------------------------------------------------------------------- ------- -------
Profit/(loss) before tax and net finance expense from continuing operations 358.9 (166.1)
Loss before tax and net finance expense from discontinued operations (35.7) (9.8)
----------------------------------------------------------------------------------- ------- -------
Profit/(loss) before tax and net finance expense including discontinued operations 323.2 (175.9)
----------------------------------------------------------------------------------- ------- -------
Adjustments for:
Impairment 34.3 245.0
Profit on disposal (6.9) (19.0)
Depreciation of property, plant and equipment 127.5 114.1
Amortisation of intangible assets 421.8 481.3
Share based payments charge 14.8 12.7
Decrease in short term investments - 2.6
( Increase)/d ecrease in other financial assets (2.3) 2.8
Increase in trade and other receivables (161.2) (92.0)
Increase/(decrease) in other financial liabilities 25.2 (30.5)
Increase in trade and other payables 33.4 29.5
Decrease in provisions (22.7) (73.7)
Non-cash movements relating to pensions - (3.0)
Share of results from joint venture and associate 60.2 9.2
Other non-cash items 17.5 40.6
86 4
Cash generated by operations .8 543.7
----------------------------------------------------------------------------------- ------- -------
17 Commitments and contingencies
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. Whilst we do not expect to hear the
verdict until mid 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 31 December 2020, the total payments
made in respect of the Assessment exceed our best estimate of the
liability for these years by GBP130.4m, and accordingly this is
recorded as a receivable in the Group's balance sheet (2019:
GBP116.0m). 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
Since the 2019 year end the Group has received final sign off of
the 2015 and 2016 Greek tax re-submissions but still awaits final
sign off of the 2017 re-submission. The Group has now made all tax
payments against the 2012-2017 tax liabilities and has made a
provision for the remaining associated fees. The statutory window
in Greece for the tax authorities to conclude their audit work is
generally six years from the end of the relevant tax year. As such,
the outcome of the tax audits as well as the court ruling on the
2010/11 assessment remains uncertain.
HMRC investigation
On 28 November 2019, one of our UK subsidiaries, GVC 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 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.
18 Related party disclosures
Other than its associates and joint venture, the related parties
of the Group are the executive directors, non-executive directors
and members of the Executive Committee of the Group.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Group and its
associates and joint venture and other related parties are
disclosed below.
During the year, Group companies entered into the following
transactions with related parties who are not members of the
Group:
2020 2019
GBPm GBPm
------------------------------------------------------ ----- -----
Equity investment
- Joint venture1 61.8 -
Loans
- Movement in loan balance with joint venture partner - (1.8)
Dividends received
- Associates - 1.2
Sundry expenditure
- Associates 2 56.6 82.3
------------------------------------------------------ ----- -----
1. Equity investment in Bet MGM
2. Payments in the normal course of business made to Sports
Information Services (Holdings) Limited and bwin eK Neugersdorf
Details of related party outstanding balances
2020 2019
GBPm GBPm
-------------------------- ----- -----
Other amounts outstanding
- Associates 0.1 0.3
Terms and conditions of transactions with related parties
Sales to, and purchases from, related parties are made at market
prices and in the ordinary course of business. Outstanding balances
at 31 December 2020 are unsecured and settlement occurs in cash.
For the year ended 31 December 2020, the Group has not raised any
provision (2019: GBPnil) for doubtful debts relating to amounts
owed by related parties as the payment history has been good. This
assessment is undertaken each financial year through examining the
financial position of the related party and the market in which the
related party operates.
Transactions with directors and key management personnel of the
Group
The remuneration of key management personnel is set out below in
aggregate for each of the categories specified in IAS 24 Related
Party Disclosures. Key management personnel comprise executive
directors, non-executive directors and members of the Executive
management team. Further information about the remuneration of
individual directors is provided in the directors' remuneration
report.
2020 2019
GBPm GBPm
---------------------------------------------------- ----- -----
Short-term employee benefits 5.8 12.7
Share-based payments 7.3 5.5
---------------------------------------------------- ----- -----
Total compensation paid to key management personnel 13.1 18.2
---------------------------------------------------- ----- -----
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END
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