TIDMFLTR
RNS Number : 1191D
Flutter Entertainment PLC
01 March 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
1 March 2022
Flutter Entertainment plc - 2021 Preliminary Results
Recreational customers driving revenue growth; FanDuel on track
for 2023 profitability in US
Flutter Entertainment plc (the "Group") announces preliminary
results for year ended 31 December 2021.
Reported(1) Adjusted pro forma(2,3)
FY FY FY FY
2021 2020 2021 2020 CC(4)
GBPm GBPm YoY % GBPm GBPm YoY % YoY %
--------------------------- -------- ----- ----- ------- ------ ----- -----
Average monthly players(5)
('000s) 7,619 6,174 +23%
------
Group Revenue 6,036 4,414 +37% 6,036 5,264 +15% +17%
Group EBITDA(6) 723 772 -6% 1,001 1,231 -19% -18%
------
Group EBITDA excluding
US 1,244 1,401 -11% -10%
------
(Loss)/Profit before
tax (288) 1 620 813 -24% -22%
------
(Loss)/Earnings per
share (pence) (236.5p) 29.3p 252.7p 496.6p -49%
-----
Net Debt at period end(7) 2,647 2,814 -6%
--------------------------- -------- ----- ----- ------- ------ ----- -----
Operational Highlights: all commentary on a pro forma basis
-- Group: Recreational customers driving revenue growth, +23% to
7.6m average monthly players(5) ('AMPs')
-- US : FanDuel maintains #1 position due to product leadership;
40% Q4 online sportsbook market share (8)
- Revenue growth of +113% to GBP1.4bn ($1.9bn); nearly 50% more than nearest competitor
- FanDuel sportsbook and gaming business delivered positive contribution in 2021 of $14m
- Faster adoption rates of sports betting driving states
contribution positive after 12 to 24 months(9)
- Remain on track to deliver positive EBITDA in 2023(10)
-- UK & Ireland: Maintained leadership position with 29%
share(11) despite challenging 4th quarter; Significant progress
made on safer gambling initiatives and 'Affordability Triple Step'
approach
-- Australia: Excellent 2021 performance; +7 percentage point
increase in online market share to 50% since 2019(11)
-- International: PokerStars stabilised at lower profit levels
with reduced regulatory risk; clear strategy for growth in select
markets leveraging local and global scale, bolstered by
announcement of Sisal acquisition
-- Sustainability: launch of 'Positive Impact Plan' builds on significant progress already made
- Global sustainability principles combined with local
strategies support Flutter's corporate goals
- Clear targets across key focus areas; customers (Play Well),
colleagues (Work Better), communities (Do More)
- New Play Well target to have 75% of all Flutter customers
using safer gambling tools by 2030(12)
Financial Highlights:
-- Reported revenue grew 37% benefiting from May 2020
combination with The Stars Group ("TSG") with EBITDA 6% lower
reflecting increased US investment and regulatory impacts in
International
-- Reported loss before tax of GBP288m after GBP543m charge for
non-cash amortisation from acquired intangibles
-- On a pro forma basis, revenue growth of 17% with Adjusted
EBITDA of GBP1,001m, 18% lower than 2020
-- Group ex-US Adjusted EBITDA 10% lower with strong top line
growth and operating leverage in Australia more than offset by (i)
challenging Covid comparatives, (ii) International regulatory
changes (iii) UK & Ireland safer gambling changes and (iv)
customer friendly sports results in UK and Ireland
-- N et debt of GBP2,647m at 31 December 2021 (2020: GBP2,814m)
at a leverage ratio of 2.6 times(7) (2020: 2.3 times), or 2.1 times
excluding US losses
Outlook:
-- Trading in the first 7 weeks of 2022 has been in line with
expectations with Group revenue up 2% year on year, reflecting
strong comparatives which benefited from very favourable sports
results
-- Assuming a normal run of sports results, we expect revenue
growth to accelerate as 2022 progresses, reflecting phasing of
sports margin comparables and safer gambling measures taken in
2021
-- In Russia and Ukraine, we are continuing to monitor the
situation closely. Since completion of our merger with TSG, Flutter
has materially reduced its exposure to the Russian online market.
In 2021, Russia accounted for GBP41m in contribution. In addition,
Ukraine represented contribution of GBP19m
Peter Jackson, Chief Executive, commented:
"2021 was another strong year for the Group as we made good
progress against our strategic objectives and grew our recreational
customer base to over 7.6m customers. Yesterday we launched our new
sustainability strategy, our 'Positive Impact Plan', which will see
Flutter set a positive agenda for future change. Through this
strategy we will build on the significant progress already made in
areas such as safer gambling and measure our performance against
defined goals to demonstrate how we are responsible leaders in our
industry.
In the US, we delivered over $1.9bn in revenue, leveraging our
differentiated product proposition to remain the number one
sportsbook in the market with a 40% share. Despite our scale we
retain a challenger mindset; this year we launched a number of new
features to our market-leading same game parlay product,
maintaining our competitive advantage in sports. I'm also pleased
to see the progress on our path towards profitability; FanDuel
sportsbook and gaming business delivered positive contribution in
2021 for the first time, a significant milestone for the brand.
In the UK and Ireland, we stepped up our safer gambling efforts
and increased protections for our customers ahead of anticipated
regulatory change. We also welcomed Tombola, the UK's leading
recreational bingo brand, to the Group in early January. In
Australia, Sportsbet delivered another strong performance
demonstrating once again the benefits of securing a gold medal
position in our key markets.
In International, investments made since acquiring PokerStars
have put it on a more sustainable footing and while this has
resulted in reduced profitability, the necessary foundations for
future growth are now in place. Notwithstanding regulatory changes
in Germany, Netherlands and elsewhere, we saw good momentum across
key markets such as Brazil, Canada and Georgia. In addition, the
announcement of our acquisition of Sisal will further enhance both
the quality and shape of our International division.
Overall, I am pleased with the progress we have made during 2021
and believe Flutter is exceptionally well positioned for future
growth."
Notes:
(1) Reported represents the IFRS reported statutory numbers.
Where amounts have been normalised for separately disclosed items
they are noted as Adjusted.
(2) "Adjusted" measures exclude items that are separately
disclosed as they are: (i) not part of the usual business activity
of the Group (ii) items that are volatile in nature and (iii)
purchase price accounting amortisation of acquired intangibles
(non-cash). Therefore, they have been reported as "separately
disclosed items (SDIs)" (see note 6 to the financial
statements).
(3) Flutter's combination with TSG completed on 5 May 2020. Pro
forma numbers show the Group's financials with TSG included for a
full 12-month period in 2020. Junglee, acquired in January 2021 and
Singular acquired in September 2021, have not been included on a
pro forma basis. See Appendix 2 for a reconciliation of pro forma
results to statutory results.
(4) Constant currency ("cc") growth is calculated by
retranslating the non-sterling denominated component of 2020 at
2021 exchange rates (see Appendix 4). Growth rates in the
commentary are in local or constant currency.
(5) Average Monthly Players represent the average number of
players who have placed and/or wagered a stake and/or contributed
to rake or tournament fees during the month in the reporting
period. AMP numbers do not include Junglee in 2020 or 2021 to allow
for better comparability of underlying player growth for
International and Group.
(6) EBITDA is defined as profit for the period before
depreciation, amortisation, impairment, gain on disposal, financial
income, financial expense and taxation and is a non-GAAP
measure.
(7) Net debt is the principal amount of borrowings plus
associated accrued interest, minus cash & cash equivalents
plus/minus carrying value of debt related derivatives. Leverage is
calculated using pro forma Adjusted EBITDA for the appropriate
12-month period.
(8) Online sportsbook market share is the GGR market share of
FanDuel and FOX Bet for Q4 2021 in the states in which FanDuel was
live based on published gaming regulator reports in those states.
During Q4 2021 FanDuel was live in 12 states; Arizona (AZ),
Colorado (CO), Connecticut (CT), Illinois (IL), Indiana (IN), Iowa
(IA), Michigan (MI), New Jersey (NJ), Pennsylvania (PA), Tennessee
(TN), Virginia (VA) and West Virginia (WV). During 2021 FOX Bet was
live in 4 states; CO, NJ, MI and PA . Market share does not include
Arizona for December as the data has yet to be released .
(9) Contribution is gross profit less sales and marketing
expense. This guidance excludes high tax states, such as New
York.
(10) 2023 profit projection is based on current timing
expectations of regulatory developments and new state launches in
2022 and 2023.
(11) Total NGR online market share in the UK and Ireland based
on internal estimates. Total NGR online market share of Sportsbet
based on competitor reporting and internal estimates.
(12) Global Play Well goal measured as the % of active online
customers who use a safer gambling (Play Well) tool in the
specified reporting period. Active players are defined as any
players who have placed and/or wagered a stake and/or contributed
to rake or tournament fees during the month in the reporting
period. A safer gambling tool is any tool that a customer has used
(or Flutter has applied to a customer) in the reporting period that
helps to promote safer gambling. For the purposes of the 2021
measure Adjarabet and Junglee have been excluded. We will look to
align with AMP reporting and work on expanding to include further
brands as appropriate as we evolve our Play Well strategy.
The person responsible for arranging release of this
Announcement on behalf of Flutter is Edward Traynor, Company
Secretary of Flutter.
Analyst briefing:
The Group will host a presentation for institutional investors and
analysts this morning at 9:00am (GMT). The presentation will be webcast
live on the Group's corporate website ( www.flutter.com/investors
) and a conference call facility will also be available. To dial
into the conference call, participants need to register here where
they will be provided with the dial in details to access the call.
Contacts:
Investor Relations:
Ciara O'Mullane, Investor Relations + 353 87 947 7862
Liam Kealy, Investor Relations + 353 87 665 2014
Press:
Lindsay Dunford, Group Head of Corporate
Affairs + 44 79 3197 2959
Rob Allen, Group Head of Corporate Campaigns + 44 75 5444 1363
Billy Murphy, Drury Communications + 353 1 260 5000
James Murgatroyd, Finsbury + 44 20 7251 3801
----------------------------------------------------- --------------------
Business review (1,2,3,4,5)
2021 was a year of strong progress for Flutter. The Group
delivered pro forma revenue growth of 17% driven by an increase in
our recreational player base of 23%, with reported revenue
increasing 37%. Flutter delivered Adjusted EBITDA of just over
GBP1bn. This represents a reduction of 18% year on year (reported
EBITDA reduced 6%). Excellent growth and operating leverage in
Australia was more than offset by a combination of factors
including (i) increased investment in US customer acquisition as we
expanded our footprint to 4 new states, (ii) challenging Covid
comparatives, (iii) the impact of regulatory changes in our
International markets and safer gambling changes within our UK
& Ireland business and (iv) a material swing in sports results,
particularly in the UK & Ireland.
We delivered on our key strategic objectives: In the US we
continued to lead, with FanDuel remaining the clear market leader
in online sportsbook, delivering a 40% share of the market in Q4(6)
. The benefits of our superior product offering and scale are
driving our US business towards profitability, with FanDuel's
sportsbook and gaming business delivering positive contribution in
2021 for the first time. In our core markets of UK and Ireland and
Australia, we retained our gold medal positions and in Q4, we
bolstered our offering with the announcement of the acquisition of
Tombola, the market leading bingo operator. In International, we
have stabilised our poker market share, made good progress in key
markets of focus and strengthened our international footprint with
the acquisition of both Junglee in India and the announced
acquisition of Sisal in Italy.
We made meaningful progress in improving the sustainability of
our earnings. During 2021 we introduced enhanced safer gambling
measures across the Group, continuing to re-shape our UK customer
base in particular, with the proportion of revenue from higher
value cohorts reduced by more than 50% since 2019. The significant
investment we have made in PokerStars over the last two years to
better position it for future growth is showing encouraging signs
of progress. Our continued focus on investment in regulated markets
meant that over 91% of Group revenue was generated in regulated
markets during Q4 2021.
Refreshed four pillar strategy
The scale and geographic footprint of Flutter has been
transformed since we set out our original strategy in 2018. We have
increased profitability in our core markets (UK, Ireland and
Australia), significantly expanded our international footprint with
the addition of Adjarabet, PokerStars and Junglee, added podium
positions in additional international markets and grown the FanDuel
business to become the market leader in the US today.
We are now refreshing our strategy, including establishing more
clearly defined sustainability goals. This refreshed strategy is
designed to help us defend our number one positions in existing
markets and to ensure that we continue to capitalise on future
potential opportunities. Our revised four pillars are to:
1. Grow gold medal positions in core markets by maintaining
focus on growing our recreational customer base, continuing to
extend our product and brand leadership positions and leveraging
our local scale to drive efficiency
2. Invest to win in the US by solidifying FanDuel's leadership
position as the #1 sportsbook in the US, improving our iGaming
proposition to establish a clear podium position and continuing to
exploit the flywheel to maintain leadership
3. Build on our network and invest for leadership across
international markets by continuing to revitalise the PokerStars
business, scaling our casino offering through cross-sell and direct
acquisition, building a lead in sports betting through our
multi-brand portfolio and buying businesses with podium positions
in attractive markets which Flutter can further develop
4. Take early positions to realise future potential in future
spaces by continuing to nurture an innovative mindset, identifying
adjacent opportunities to reinforce and future-proof our business
and taking early positions to broaden our customer base. We are
already doing this with our PokerStars Virtual Reality immersive
digital poker and casino experience, the best iGaming experience
available in virtual reality
The key enablers of our strategy are (i) sustainability (ii)
speed (iii) customer insight and data (iv) product and technology
and (v) scale. While each is crucial to delivering our goals and
objectives, we particularly recognise the importance of being a
responsible global leader in the sector, placing sustainability at
the heart of what we do through the launch of our new
sustainability strategy, our Positive Impact Plan.
Flutter's new sustainability strategy, our Positive Impact
Plan
Yesterday we launched Flutter's new sustainability strategy, our
Positive Impact Plan. Built on Flutter's responsible business
foundations, the Positive Impact Plan brings together the
significant progress made globally across our three key focus
areas; our customers, colleagues and communities, creating a
consistent global approach that supports our overall corporate
strategy. This ensures that our divisions get greater access to the
insight, skills and capabilities of the wider Group while also
being empowered to innovate and respond effectively to their local
contexts and deliver local initiatives that have the maximum
impact.
The Positive Impact Plan focuses on three areas of
sustainability for the future, with clear targets set to:
-- Help customers play well: by 2030 75% of our online customers
will use a safer gambling tool (reaching 50% by 2026)(7)
-- Empower colleagues to work better: by 2030 our teams will be
representative of the places in which we live and work
-- Work with communities to do more: by 2030 we will improve the lives of 10 million people
Further information in relation to our Positive Impact Plan is available here .
Safer gambling progress in 2021 and launch of the Flutter "Play
Well" strategy
During 2021 we further enhanced our safer gambling measures
across the Group, investing over GBP45m in advertising, research,
people and training. In the UK and Ireland we introduced several
new measures such as a GBP10 staking limit trial across all our
online slots games and brands and a ban on credit card deposits in
Ireland. We also continued to iterate our "Triple Step" approach to
affordability:
-- New customers: are now subject to tailored monitoring in the
initial period post registration, with thresholds dependent on age.
SBG introduced mandatory deposit limits in January 2021 for younger
customers with this set to be rolled out for all under 25s across
our other brands this year.
-- Ongoing monitoring: we made various enhancements to our
proprietary technology, in use for a number of years, to track and
monitor customer behaviour. We issued approximately 5.3m automated
communications to customers encouraging safer gambling awareness
and positive play during 2021. Enhanced financial vulnerability
checks were rolled out on a trial basis to a proportion of our
customers since Q4 2021. A range of spend checks and limits are
also applied across all brands with thresholds based on age.
-- Backstops: annual thresholds are being put in place across
all brands to ensure that customers are protected where our new
customer and/or ongoing monitoring controls do not trigger an
engagement. These ensure that at a particular level of spend,
customer activity is reviewed with support provided where
required.
In Australia we launched our "Take a sec before you bet"
campaign in July, encouraging customers to put deposit limits in
place and we continue to utilise our proprietary technology to
monitor customer behaviour and engage with our customers where we
believe interaction is warranted. In the US, FanDuel partnered with
the American Gaming Association and announced its partnership with
Craig Carton in promoting positive play in the growing US
market.
Play Well strategy
Extending our leadership in safer gambling, our new Play Well
strategy builds on the progress we have made in recent years within
each of our divisions, bringing it together in an overarching set
of universal principles and guidelines. With a presence across a
multitude of regulatory environments and cultures, we know there is
no "one-size-fits-all" solution to promoting safer gambling.
Instead there are universal principles we can employ across our
divisions, leveraging global scale, capability and expertise to
provide players with the tools, information and support they need
to Play Well.
In 2022, we are introducing locally tailored Play Well metrics,
directly linked to colleague bonuses for each of our divisions.
These metrics have been developed on a divisional basis to ensure
that each business is focused on the initiatives that will support
and promote their local safer gambling strategies, taking into
account individual markets and contexts, whilst being consistent
with our global Play Well principles.
In addition to division specific targets, we have also set
ourselves an ambitious Group goal to have 75% of our online
customers using safer gambling tools by 2030, with over 50% doing
so within five years. (2021: 34.7%)(7)
2021 review
US
In the US, our business has significantly expanded in scale
during 2021, as we leveraged the 'flywheel effect' to accelerate
growth. With revenue of $1.9bn, 47% more than our next nearest
online competitor, our advantage is compounding, providing us with
the additional firepower required to continue to invest heavily in
both product and customer acquisition. Since launching our first
online sportsbook in the summer of 2018, we have now acquired over
3.9 million sports betting and gaming customers. At our 2021
interim earnings announcement we outlined the key drivers of our
success in the US and during the second half we made further
enhancements across a number of these areas.
Product
We continued to innovate on product by expanding the breadth of
our proprietary and market leading Same Game Parlay(TM) ("SGP")
product. We now provide players with the ability to (i) combine
SGPs on multiple different games into a single bet, (ii) place a
SGP in-play on certain sports, and (iii) place a SGP on college
football. We have now completed development of in-house pricing for
college basketball, increasing the proportion of our handle that is
priced in-house to 80%. The combination of better pricing accuracy
and a greater proportion of handle coming from higher margin parlay
products means that we generated 340 basis points more in gross
margin than our competitors during Q4 (Q2: 300 basis points
higher).
In gaming we are increasingly focused on improving our overall
customer proposition to establish a clear podium position.
Following a period of significant focus on sports we have scaled up
our gaming team by adding nearly 100 colleagues, including the
addition of gaming experts from around the Group. We continued to
make incremental product improvements by enhancing how we
communicate with and reward casino players, while also making
gaming more accessible for sportsbook players.
The FanDuel brand
The FanDuel brand continues to resonate strongly with sports
bettors. We have the leading share of voice in the market, with a
focus on ensuring high levels of brand visibility throughout the
year, not just during seasonal peaks. We have recently added and/or
extended several key partnerships, including the NFL, NBA and with
Pat MacAfee, locking in important assets for multiple years. We
invested over $1bn in promotions, sales and marketing across our US
business in 2021.
These competitive advantages have enabled us to consolidate our
combined overall leadership position in the US online market, a
market which has grown by over 120% since Q4 2020:
-- Our sports-betting share in Q4 was 40 % (6)
-- Our online gaming share in Q4 was 20%(6)
-- Our overall online market share in Q4 was 31 % (6)
This leading revenue share is moving FanDuel closer to a
position of profitability. In 2021 FanDuel became the first large
scale online brand to generate a positive in-year contribution from
sports betting and gaming in the US. FanDuel generated contribution
of GBP9m ($14m) in 2021, with the positive contribution from more
mature states (such as New Jersey, Pennsylvania, Indiana and
Illinois) more than offsetting the material investment in large
states newly launched in 2021 (Michigan, Virginia, Arizona and
Connecticut).
Encouragingly as we expand into further new states, we are
seeing faster adoption rates for online sports betting. This
results in bigger initial losses in the early months post a state
launch as we acquire more customers. However, when combined with
better retention rates and our product mix advantages, we now
expect new states to generate positive contribution after 12 to 24
months post launch, in contrast to the 18 to 30 month guidance we
provided in 2019. Such guidance excludes a higher tax state such as
New York.
Based on our current expectations relating to the timing of new
state regulation in 2022 and 2023, we remain confident that our US
business will be EBITDA profitable in 2023. The timing of
regulatory developments and new state launches can be difficult to
predict and any variance to our expectations across these two years
could affect the timing of profitability being reached,
particularly if an unexpected large state such as California
launches in 2023.
Our online sportsbook is currently available in 14 states
following successful launches in New York and Louisiana in early
2022. In New York, we have already acquired over 400,000 new sports
betting customers since launch.
UK & Ireland
In 2021 we maintained our leadership position of the UK and
Ireland online markets with a 29%(8) market share (2020: 29%),
driven by a focus on recreational customer growth. Our total AMPs
increased by 25%, resulting in online revenue growth of 3%. The
relative lower rate of revenue growth reflected several key factors
including challenging Covid comparatives, adverse sports results
and a general slowdown in the UK online market, particularly in
Q4.
Despite a more challenging environment we continued to innovate
on product. During the year we leveraged Group technology, pricing
and risk management capabilities to launch "Popular Betbuilder" on
our Paddy Power sportsbook. On the gaming side we saw good
retention driven by the launch of Sky Vegas live, the roll out of
PokerStars gaming content across both Paddy Power and Sky Vegas
brands (via the Group Gaming Network) and the continued benefit
from our daily prize mechanics across all three brands.
An unprecedented run of customer-friendly sports results in 2021
cost the division GBP232m in revenue year-on-year (before adjusting
for recycling), GBP149m of which was in Q4 alone. In addition,
relaxation of Covid-related restrictions led to customers spending
a greater proportion of leisure time on other activities. A
combination of the factors above resulted in us observing
materially lower levels of customer recycling (than we have seen
historically) during the fourth quarter.
Safer gambling improvements in 2021, together with the other
changes implemented in recent years, have resulted in our player
base becoming more recreational. For example, since H2 2019, we
have reduced revenue coming from higher value bands by more than
55%. While it is challenging to quantify exactly what the cost of
new safer gambling measures have been (because we cannot be
definitive on how all player behaviour has changed in response),
our best estimate is that the total revenue impact in 2021 alone
was in excess of GBP90m. While we recognise that the improvements
we have made, and continue to make, will impact near term growth,
they will better position the business longer-term. As we assess
the outlook for longer term customer economics, we are also
reviewing the cost base of the business to ensure that it is
appropriate going forward.
The UK Government's review of the Gambling Act is ongoing and we
are hopeful that we will get improved visibility on the future
shape of the industry in Q2 in the form of the government's White
Paper publication. While this document should provide some clarity
on the shape of future changes, we believe that the impacts will
ultimately be phased over the coming years. In Ireland, the
legislative process to establish a gambling regulatory authority
has commenced which we welcome.
Australia
Sportsbet delivered another excellent performance, clearly
displaying the benefits that can be derived from attaining
significant local scale. In 2021, Sportsbet had over one million
AMPs, an increase of 60% on 2019. This has resulted in a 7
percentage point increase in online market share in this period, to
50% in 2021(8) .
We continue to win in our key battlegrounds of product, value
and marketing. In Q4, we launched 'Bet returns for SGM' which
combines the great customer experience of our personalised
generosity offering with our market leading Same Game Multi
product. This followed our highly successful "Bet with Mates"
product which launched in H1.
In H2, over 60% of the Australian population experienced the
reintroduction of Covid related restrictions (which had been
removed for most of H1). As trading conditions normalise in 2022,
we will continue to invest in offering outstanding value for money
to retain leisure spend from migrated players. As outlined at our
September investor day ( here ), the medium-term outlook for
Sportsbet remains compelling; with growth likely to be driven by
the growing financial maturity of our existing player base as well
as the continued conversion of non-betting sports fans and retail
gamers. Sportsbet continues to provide a template for what can be
achieved in other International markets as we look to leverage the
Group's scale.
International
As expected, the easing of Covid restrictions during 2021
resulted in a reduction in revenues in our International division,
with the normalisation of customer engagement following elevated
levels in 2020. In addition, the pro-active compliance measures we
introduced following the TSG merger and the adverse changes to
regulation in both Germany and the Netherlands created headwinds
for the business. Positively, underlying growth in key markets of
focus such as Brazil, Canada and Georgia during 2021 has been
encouraging.
At the time of the TSG merger we identified various improvements
required to position the business for future success and to correct
for historic underinvestment in certain key areas. While much of
this investment was foreseen, a number of unexpected headwinds have
materially impacted revenues (e.g. adverse FX movements, Dutch
regulation, and alignment of PokerStars' standards of compliance
with those of Flutter). As such, the last two years has seen a
significant reshaping of the International division. We have
materially reduced the division's risk profile, albeit at a lower
level of profitability. We have developed a clear growth strategy
with an emphasis on key geographical markets, supplemented by the
acquisition of Junglee and the recently announced acquisition of
Sisal.
We significantly increased investment in order to revitalise
PokerStars and have rebased the business, delivering:
-- A stabilised poker market share via an improved customer
proposition and the launch of our new PokerStars reward scheme in
October, which resonated well with customers. Stabilising our poker
customer base is crucial for cross-sell into casino.
-- An improved product mix through investment in direct casino
acquisition with the launch of our "Epic Downtime" PokerStars
Casino campaign. We continued to broaden our gaming content,
leveraging our three Flutter in-house gaming studios. Over 45% of
Q4 PokerStars' gaming revenues came from casino products (Q4 2019:
35%).
-- An improved regulatory profile with 63% of International
revenues generated in regulated markets in Q4 2021 compared with
48% in H1 2019. We believe that reducing exposure to higher risk
jurisdictions, even if that means delivering lower levels of
profitability in the short-term, is the right approach to put the
business on a more stable footing for future growth.
While the investment required to rebuild capabilities and brand
strength has been extensive, our strategy is showing progress. On
an organic basis, stripping out the adverse impacts of regulatory
changes, the International division has delivered compound annual
double digit revenue growth since 2019. Progress in our key markets
has been as follows:
-- Italy: recently announced acquisition of the Italian
omni-channel operator Sisal, owner of Italy's number one online
brand, which will propel Flutter into a leadership position in
Italy
-- Georgia and Armenia: market leadership positions in both
countries due to Adjarabet's exceptional performance, with EBITDA
almost doubling year-on-year
-- Canada: PokerStars brand strength evident with high brand
awareness as the market moves toward regulation
-- Brazil: Betfair drove triple digit AMP growth following our
step up in marketing investment in H1
-- India: added podium position via Junglee which has performed
well, with AMPs in Q4 doubling year-on-year amid a more positive
regulatory outlook
As we look to the future, we will focus on building leading
positions in focussed markets organically or through acquisition
where we find businesses with strategic moats around them. These
markets of focus vary in terms of maturity but over the next five
years we expect them to have an addressable market size of
approximately GBP26bn. Given Flutter's scale and superior
capabilities, we believe the International division is in an
excellent position to capitalise on the opportunities across these
markets.
Capital structure and balance sheet update(9)
At 31 December 2021, the Group had gross debt of GBP3, 599m(10)
and a net debt position of GBP2,647m, representing a leverage ratio
of 2.6 times. The Group's capital structure has evolved during the
period due to:
-- A refinancing of Group debt in mid-July, which significantly
reduced the effective cost of debt and increased available
liquidity
-- The sale of Oddschecker Global Media on 31 August for an enterprise value of GBP135m
-- Acquisition of Junglee and Singular
Post period end, the Group completed the acquisition of Tombola
based on an enterprise value of GBP402m (10 January 2022). In
December, the Group announced the acquisition of Sisal, Italy's
leading online gaming operator for a consideration of GBP1.6bn. The
transaction is expected to complete in Q2 2022 once all necessary
regulatory approvals have been received.
These acquisitions will result in an increased leverage ratio in
the near term. However, the Group continues to generate significant
free cash flow which will help it to de-lever quickly. The Group
remains committed to its medium-term leverage target of 1-2 times
and the Board will review the Group's dividend policy once leverage
returns to these levels.
Other updates
As previously disclosed, the Group is in a legal arbitration
process with FOX Corporation with respect to its option to acquire
an 18.6% stake in FanDuel and related issues. Despite this, both
sides have continued active discussions to determine whether an
agreement can be reached. While those discussions have been
productive and have advanced materially, it remains unclear at this
time as to whether agreement can be concluded. As a result, the
arbitration is proceeding in parallel with a hearing date now set
for 20 June 2022. Should the parties not reach agreement in the
interim, this hearing will proceed and we expect will result in a
binding decision by the arbitrator in Q3 2022. The Group continues
to vigorously defend its position.
Operating and financial review(1-5,9-12)
Pro forma review
Group
FY FY CC
2021 2020 Change Change
Unaudited Adjusted Pro forma GBPm GBPm % %
------------------------------------- ------- ------- ------- -------
Average monthly players ('000s) 7,619 6,174 +23%
Sports revenue 3,774 3,000 +26% +27%
Gaming revenue 2,262 2,264 -% +4%
------- ------- ------- -------
Total revenue 6,036 5,264 +15% +17%
Cost of sales (2,262) (1,782) +27% +29%
Cost of sales as a % of net revenue 37.5% 33.8% +360bps +350bps
------- ------- ------- -------
Gross profit 3,774 3,483 +8% +11%
Sales and marketing (1,508) (1,130) +33% +38%
------- ------- ------- -------
Contribution 2,266 2,353 -4% -2%
Other operating costs (1,164) (1,000) +16% +19%
Corporate costs (101) (121) -17% -13%
------- ------- ------- -------
Adjusted EBITDA(1,2) 1,001 1,231 -19% -18%
Adjusted EBITDA margin % 16.6% 23.4% -680bps -700bps
Depreciation and amortisation (255) (241) +6% +7%
------- ------- ------- -------
Adjusted(1) operating profit 746 990 -25% -24%
------- ------- ------- -------
Adjusted(1) basic earnings per share 252.7p 496.6p -49%
Net debt at period end 2,647 2,814 -6%
------------------------------------- ------- ------- ------- -------
Note: Flutter's combination with TSG completed on 5 May 2020.
The pro forma financials include TSG for a full 12-month period in
both 2020 and 2021. Junglee, acquired in January 2021 and Singular
acquired in September, have been included on a reported basis due
to materiality. A full analysis of the Group's reported performance
can be found at pages 18-19. A reconciliation of the Group's pro
forma performance to the Group's consolidated income statement is
included at Appendix 2.
In 2021 pro forma revenue grew 17% to GBP6.0bn driven by AMP
growth of 23% to 7.6m. This player growth was driven by the
expansion of our recreational base in the UK and Ireland, and
Australia, along with the regulation of sports betting and gaming
in further US states.
Sports revenue increased 27% to GBP3.8bn, with expansion into
four additional US states and continued strong momentum in
Australia. Sports net revenue margin declined 100 basis points
year-on-year due to less favourable sports results in the UK and
Ireland. Gaming revenue increased 4%, with growth in the US partly
offset by tougher comparatives in our International division as a
result of the elevated levels of player engagement during the
lockdown period of Q2 2020.
Cost of sales as a percentage of net revenue increased by 350
basis points to 37.5% with a greater proportion of revenue coming
from the US where direct costs are higher. Additionally, the
increase in regulated revenue also led to higher gaming taxes.
Sales and marketing costs grew by 38%, mainly reflecting a
doubling of US investment to support significant new customer
acquisition. US expansion is also the key driver of the
year-on-year increase in other operating costs. For Group ex-US,
other operating costs increased by just 2%. Corporate costs remain
tightly controlled, benefiting from the realisation of GBP19m in
merger related synergies.
In total, merger related cost synergies of GBP113m were
delivered in 2021, ahead of the GBP90m expected in-year due a
faster realisation in most divisions. We remain on track to deliver
synergies of GBP170m by 2023.
Adjusted EBITDA was GBP1.0bn with the US investment-led loss
increasing by GBP81m to GBP243m. For Group ex-US, adjusted EBITDA
was 10% lower as strong top line growth and operating leverage in
Australia was more than offset by the various factors referenced
above that impacted our International and UK & Ireland
divisions.
The Adjusted effective tax rate for the Group was 26.8% (2020:
13.2%) driven by the geographic mix of profits during the year as
US losses increased where no deferred tax benefit was recognised ,
and the proportion of profits in higher tax jurisdictions such as
Australia also increased. Excluding the US , the Adjusted effective
tax rate was 18.5% (2020: 10.4%)
Adjusted basic EPS reduced from 497p to 253p reflecting the
increased tax charge in the current period and a higher share count
in 2021. Our acquisition of the additional stake in FanDuel in
December 2020 was mainly settled via the issuance of shares
directly to Fastball and through an equity raise.
Net debt as at 31 December 2021 of GBP2,647m was 6% lower than
the prior year despite the free cash flow generated by the
operating activities of the Group being used to pay expenses such
as the settlement of a historic legal case with the Commonwealth of
Kentucky and the purchase of shares for FanDuel incentive schemes
.
A full analysis of the Group's reported performance can be found
at pages 18-19.
UK & Ireland
UK & Ireland Total UK & Ireland Online UK & Ireland Retail
---------------------- -----------------------
FY FY FY FY FY FY
Unaudited Adjusted 2021 2020 Change 2021 2020 Change 2021 2020 Change
Pro forma
----------------------
GBPm GBPm % GBPm GBPm % GBPm GBPm %
---------------------- ------ ----- ------- ------- ----- ------- ------- ----- -------
Average monthly
players ('000s) 3,153 2,532 +25%
Sportsbook stakes 11,376 9,400 +21% 10,473 8,401 +25% 904 998 -9%
Sportsbook net
revenue margin 9.9% 12.0% -210bps 9.7% 11.7% -200bps 12.6% 14.3% -170bps
Sports revenue 1,282 1,286 -% 1,168 1,143 +2% 114 143 -20%
Gaming revenue 781 743 +5% 721 686 +5% 60 57 +5%
------ ----- ------- ------- ----- ------- ------- ----- -------
Total revenue 2,063 2,029 +2% 1,889 1,829 +3% 174 200 -13%
Cost of sales (621) (577) +8% (581) (534) +9% (40) (44) -9%
Cost of sales as
a % of net revenue 30.1% 28.5% +170bps 30.8% 29.2% +160bps 22.9% 21.8% +100bps
------ ----- ------- ------- ----- ------- ------- ----- -------
Gross profit 1,442 1,451 -1% 1,308 1,295 +1% 134 156 -14%
Sales and marketing (391) (375) +4% (384) (369) +4% (6) (6) -2%
------ ----- ------- ------- ----- ------- ------- ----- -------
Contribution 1,051 1,077 -2% 923 927 -% 128 150 -15%
Other operating
costs (435) (446) -2% (298) (298) -% (138) (148) -7%
------ ----- ------- ------- ----- ------- ------- ----- -------
Adjusted EBITDA(1,2) 616 630 -2% 626 629 -% (10) 2 -647%
Adjusted EBITDA
margin 29.9% 31.1% -120bps 33.1% 34.4% -130bps (5.6%) 0.9% -650bps
Depreciation and
amortisation (126) (119) +6% (85) (77) +11% (41) (43) -4%
------ ----- ------- ------- ----- ------- ------- ----- -------
Adjusted(1) operating
profit 490 511 -4% 541 552 -2% (50) (41) +23%
---------------------- ------ ----- ------- ------- ----- ------- ------- ----- -------
The UK & Ireland division operates Paddy Power, Betfair and
Sky Betting & Gaming brands online, as well as retail
operations in the UK and Ireland.
UK & Ireland Online
Performance during 2021 was driven by several factors:
-- Good AMP volumes, especially in gaming, albeit with a
reduction in customer engagement levels (during Q4 in particular)
versus the elevated levels seen in prior Covid affected periods
-- A higher volume of sporting events compared with the prior
year which contributed to 25% growth in staking
-- Net revenue margin 10 basis points below expected margin
(2020: 270 basis points favourable) resulted in an adverse 280
basis point sports results impact. This equates to a GBP232m
year-on-year impact in revenue before adjusting for customer
recycling (Q4: GBP149m)
-- A lower level of recycling compared with historic trends
-- New safer gambling measures which impacted revenue by GBP93m,
GBP37m of which related to Q4(13)
AMP growth of 25% translated into a revenue increase of just 3%
due to the significant swing in sports results year-on-year. Given
the complexity of Covid comparatives, a year-on-two-year comparison
provides a cleaner view of growth, with compound annual revenue and
AMP growth of +12% and +13% respectively since 2019. Adjusting for
safer gambling impacts in 2021 and the impact of adverse sports
results, the equivalent revenue CAGR would be 15%.
Sports revenue increased by 2%, with staking growth of 25%
offset by net revenue margins which were 200 basis points lower
year-on-year at 9.7% due to adverse sports results. Increased
penetration of higher margin "Betbuilder" products and enhancements
to our pricing and risk management capabilities both helped to
structurally increase our expected margin, helping to partly
mitigate the adverse sports results.
Online gaming revenue grew by 5% during the year reflecting good
customer engagement across our brands, with AMPs up 22% despite the
market slowing in Q4. AMP growth exceeded revenue growth,
demonstrating how the changes to safer gambling measures are
reducing average revenue per user ("ARPU"), as well as the
increased recreational nature of the customer base.
Cost of sales as a percentage of revenue increased by 160 basis
points to 30.8% reflecting increased streaming costs and a higher
effective tax rate due to increased promotional spend during the
year.
Sales and marketing increased by 4% reflecting increased
investment ahead of the European football championships and
increased spend on safer gambling campaigns which was partly offset
by synergy benefits realised during the year. Sales and marketing
as a percentage of revenue increased in H2 although absolute spend
was down due to the sports results impact on top line.
Other operating costs were flat year-on-year. We experienced
some inflationary pressures in employee pay and made incremental
investment in safer gambling capabilities and research, education
and training (RET) funding. These were offset by the sale of
Oddschecker at the end of August, resulting in a reduction in
associated operating costs.
Online EBITDA was flat year-on-year at GBP626m.
UK & Ireland Retail
Retail revenue declined by 13% in 2021, reflecting the impact of
Covid related shop closures and social distancing restrictions that
were in place during the year. Both estates remained shut
throughout Q1, with our UK shops re-opening in April and our Irish
shops re-opening in May.
Revenue in the second half of the year was approximately 85% of
2019 levels, with a stronger performance in the UK than in Ireland.
In the UK we have been pleased with footfall. Revenue performance
in H2 was in line with that of 2019, benefiting in particular from
a strong gaming performance, with gaming revenues 13% higher than
2019. In Ireland by contrast, revenue in H2 remained at just 67% of
2019 levels, with performance reflecting a higher level of societal
caution in relation to Covid.
Other operating costs declined by 7% to GBP138m, despite the
Group continuing to fund all staff costs without accessing offered
government supports.
The business incurred a GBP10m Adjusted EBITDA loss for the
year, with EBITDA of GBP29m in H2.
Australia(4)
FY FY CC
2021 2020 Change Change
Unaudited Adjusted Pro forma GBPm GBPm % A$
------------------------------------ ------ ----- ------- -------
Average monthly players ('000s) 1,008 794 +27%
Sportsbook stakes 11,702 9,713 +20% +20%
Sportsbook net revenue margin 11.1% 11.1% -bps -bps
Total revenue 1,294 1,075 +20% +20%
Cost of sales (636) (520) +22% +22%
Cost of sales as a % of net revenue 49.2% 48.4% +80bps +80bps
------ ----- ------- -------
Gross profit 658 555 +18% +18%
Sales and marketing (119) (129) -8% -9%
------ ----- ------- -------
Contribution 539 426 +26% +26%
Other operating costs (102) (108) -5% -6%
------ ----- ------- -------
Adjusted EBITDA(1,2) 437 318 +37% +37%
Adjusted EBITDA margin 33.7% 29.6% +420bps +420bps
Depreciation and amortisation (26) (30) -16% -17%
------ ----- ------- -------
Adjusted(1) operating profit 411 288 +43% +42%
------------------------------------ ------ ----- ------- -------
Australia encompassed Sportsbet, which offers online sports
betting, in 2021 following the migration to a single brand in
September 2020.
Sportsbet grew Adjusted EBITDA by 37% in 2021 to GBP437m
delivering another excellent performance. Our Australian division's
scale has been transformed over the last two years with compound
annual Adjusted EBITDA growth of 64% since 2019. This has been
driven by:
-- Compound growth of 38% in revenue and 27% in customers to
over one million AMPs. Our market leading product and value
propositions have resonated strongly with both existing players and
those that migrated from retail during Covid
-- Realisation of over GBP50m in synergy benefits from the
merger with TSG which, when combined with our efficient operating
model, reduced operating costs as a % of revenue by 15 percentage
points to 17.1% in 2021
In 2021, Sportsbet delivered player growth of 27% which drove a
20% increase in both sportsbook stakes and revenue. Strong
retention of the players that migrated online during 2020 and
further benefit from Covid related restrictions re-introduced in
the second half of 2021 were key contributors to this growth.
Sportsbook net revenue margin was in line with the prior year at
11.1%, with both periods benefitting from circa 60 basis points of
favourable sports results above expectations. In 2021, improvements
to our structural margin from changes in bet mix were offset by an
increase in personalised generosity to attract and retain
players.
Sales and marketing declined by 9%, or 280 basis points as a
percentage of revenue, benefitting from synergies associated with
operating a single brand in Australia from September 2020. In
absolute terms, spend has remained near pre-merger levels for the
combined brands, reflecting continued significant investment in the
Sportsbet brand to maintain its market leading position. Other
operating costs declined by 6% due to merger related synergies.
These cost efficiencies continue to deliver excellent operating
leverage, with Adjusted EBITDA as a % of revenue increasing 420
basis points to 33.7%.
International(4)
FY FY CC
2021 2020 Change Change
Unaudited Adjusted Pro forma GBPm GBPm % %
------------------------------------ ----- ----- --------- ---------
Average monthly players ('000s) 1,901 1,938 -2%
Sportsbook stakes 1,592 1,368 +16% +21%
Sportsbook net revenue margin 8.7% 8.5% +20bps +20bps
Sports revenue 220 180 +22% +26%
Gaming revenue 1,068 1,285 -17% -13%
----- ----- --------- ---------
Total revenue 1,288 1,465 -12% -8%
Cost of sales (392) (365) +7% +12%
Cost of sales as a % of net revenue 30.4% 24.9% +550bps +530bps
----- ----- --------- ---------
Gross profit 897 1,100 -19% -14%
Sales and marketing (335) (279) +20% +27%
----- ----- --------- ---------
Contribution 562 822 -32% -28%
Other operating costs (270) (248) +9% +9%
----- ----- --------- ---------
Adjusted EBITDA(1,2) 292 574 -49% -46%
Adjusted EBITDA margin 22.7% 39.2% -1,650bps -1,580bps
Depreciation and amortisation (52) (50) +4% +6%
----- ----- --------- ---------
Adjusted(1) operating profit 240 524 -54% -51%
------------------------------------ ----- ----- --------- ---------
International includes PokerStars, Adjarabet, Betfair and
Junglee brands which offer online poker, casino, sports betting,
rummy and daily fantasy products. Excludes PokerStars US business
and Betfair UK and Ireland operations.
Our International division delivered revenues of GBP1.3bn, 8%
lower than the prior year (H1 -11%, H2 -4%). AMPs were down 2%
year-on-year (Q3: -2%, Q4: flat) with Adjusted EBITDA of GBP292m.
Several key factors contributed to these results:
-- Challenging prior year comparatives as a result of the
extended Covid related lockdowns; we previously disclosed that the
revenue uplift in H1 2020 was estimated to be GBP205m with a
benefit in H1 2021 of approximately GBP50m
-- Compliance changes introduced following the merger with TSG
continued to impact year-on-year growth in the first half of the
year (guided annualised contribution impact of GBP65m)
-- German and Dutch regulatory changes which we previously
indicated would reduce contribution by GBP85m in 2021 (guided
annualised contribution impact of GBP140m)
-- An improved revenue mix with a greater proportion coming from
regulated markets and casino products - both have higher associated
direct costs
-- Increased investment across both Betfair and PokerStars to
improve the customer proposition and increase brand awareness
-- The addition of Junglee to the division, currently in
investment phase, which generated an EBITDA loss of GBP3m and added
4 percentage points to revenue growth.
Excluding the impact of Covid and the regulatory headwinds
referenced above, revenue would have increased by 14%
Gaming revenue was 13% lower for the year. In H2 it declined by
5% (casino: +15%, poker: -25%) with casino and poker growth being
impacted by 10 and 8 percentage points respectively from regulatory
changes. Q4 was the first quarter to reflect all previously guided
regulatory headwinds, with the division delivering GBP258m in Q4
gaming revenue.
Underlying casino growth of 25% in H2 was driven by (i) an
increased emphasis on direct casino acquisition (e.g. the
PokerStars "I'm in" campaign launched in the UK) (ii) further
improvements to our proprietary casino content (iii) a strong
performance in our key markets and (iv) the addition of Junglee to
the portfolio which added approximately 9 percentage points to
casino growth.
The underlying decline of 17% in poker during H2 reflected a
reduction in engagement from customers acquired during the lockdown
spike of Q2 2020 as well as investment in the PokerStars reward
scheme which had an approximate 2 percentage point impact on growth
and regulatory impacts outlined above.
Sports revenue of GBP220m increased by 26% (H1: +62%, H2: flat)
benefiting from an increase in sports fixtures year-on-year,
particularly in H1 2021. Improvements made to our pricing and risk
management capabilities continued to benefit our expected
sportsbook margins in H2 which was partially offset by an adverse
year-on-year swing in sports results leading to an increase of 20
basis points in net revenue margin.
Cost of sales in H2 increased by 390bps to 31.6% due to (i) the
introduction of gaming taxes in Germany from 1 July, (ii) an
increased proportion of revenues coming from regulated markets and
(iii) a change in product mix, with casino products incurring a
higher associated revenue share cost and tax rate.
Sales and marketing increased by 27% during 2021, reflecting the
period of underinvestment in H1 2020. The year-on-year increase is
attributable to: (i) Betfair spend in LATAM, primarily Brazil (ii)
the addition of Junglee, (iii) marketing spend to revitalise the
PokerStars brand and (iv) investment in direct casino acquisition.
Spend in H2 was flat year-on-year.
Other operating costs increased by 9% in 2021. Similar to sales
and marketing, this increase reflected a period of underinvestment
in H1 2020. The year-on-year increase primarily related to growth
in headcount as we invested to stabilise and improve our
capabilities across product, technology and customer operations. In
H2 other operating costs (excluding Junglee) were broadly flat
versus the first half.
US(4)
FY FY CC
2021 2020 Change Change
Unaudited Adjusted Pro forma GBPm GBPm % US$
------------------------------------ ------- ------- ------- -------
Average monthly players ('000s) 1,557 910 +71%
Sportsbook stakes 11,284 4,411 +156% +167%
Sportsbook net revenue margin 6.3% 4.6% +170bps +170bps
Sports revenue 978 458 +113% +126%
Gaming revenue 413 237 +74% +87%
------- ------- ------- -------
Total revenue 1,391 695 +100% +113%
Cost of sales (614) (319) +92% +104%
Cost of sales as a % of net revenue 44.1% 46.0% -190bps -190bps
------- ------- ------- -------
Gross profit 778 376 +107% +121%
Sales and marketing (663) (348) +91% +102%
------- ------- ------- -------
Contribution 115 28 +310% +383%
Other operating costs (357) (198) +81% +92%
------- ------- ------- -------
Adjusted EBITDA(1,2) (243) (170) +43% +50%
Adjusted EBITDA margin (17.5%) (24.4%) +700bps +730bps
Depreciation and amortisation (47) (37) +26% +35%
------- ------- ------- -------
Adjusted(1) operating profit (289) (207) +40% +47%
------------------------------------ ------- ------- ------- -------
The US division includes FanDuel, FOX Bet, TVG, PokerStars and
Stardust brands, offering regulated real money and free-to-play
sports betting, casino, poker, daily fantasy sports and online
racing wagering products to customers across various states in the
US
Revenue grew by 113% to GBP1.4bn ($1.9bn) in 2021, with 94%
attributable to FanDuel Group. Strong player acquisition and
retention saw player volumes increase by 71% to 1.6m, with just
under two million AMPs in Q4.
Sports revenue grew by 126%, with a 266% increase in sportsbook
and 11% growth in TVG/daily fantasy sports combined. The
substantial year-on-year growth in sportsbook was due to:
-- Player growth: Sportsbook AMPs were 180% higher in 2021
-- Ongoing growth from more mature states: Continued strong
growth from the four pre-2020 states where revenue more than
doubled
-- New states: A full year benefit from the four states that
opened during 2020 and the addition of four new states in 2021
(Michigan, Virginia, Arizona and Connecticut)
-- Structural growth in expected margin: Sportsbook net revenue
margin increased by 170 basis points to 6.3% with 130 basis points
from expansion of our expected margin. This structural margin
improvement is due to a higher share of stakes coming from our
market-leading parlay products. Favourable sports results added 50
basis points to margin year-on-year (or 130 basis points to our
expected margin of 5.0% in 2021 )
Gaming revenue grew by 87% to GBP413m ($568m) driven by a 136%
increase in AMPs. We launched in three new casino states in 2021
(Michigan, West Virginia and Connecticut), bringing our casino
footprint to 5 US states.
Cost of sales as a percentage of net revenue declined 190 basis
points due to ( i) a reduction in the percentage of gross revenue
(which is the tax base in most states) spent on customer promotions
( ii) migration of our sports betting business to the Group's
proprietary betting platform during 2021 and ( iii) a higher
proportion of revenue coming from lower tax states.
Sales and marketing doubled year-on-year to GBP663m as we
continued to invest materially to acquire and retain customers
although sales and marketing as a percentage of revenue declined by
270 basis points. This is due to continued investment discipline to
maximise returns , and the greater maturity of the business. While
marketing investment in pre-2021 states continued to increase, it
declined as a proportion of revenue. Other operating costs also
declined by 270 basis points as a percentage of revenue. This was
despite significant expansion of our product and technology
headcount as well as ongoing expenses associated with efforts to
pass sports betting legislation in additional states.
The US division made an Adjusted EBITDA loss of GBP243m
($333m).
Statutory review(11)
Group
FY FY
2021 2020 Change
GBPm GBPm GBPm %
------------------------------------ -------- ------- -------
Sports revenue 3,774 2,725 +38%
Gaming revenue 2,262 1,688 +34%
-------- ------- -------
Total revenue 6,036 4,414 +37%
Cost of sales (2,310) (1,542) +50%
Cost of sales as a % of net revenue 38.3% 34.9% +340bps
-------- ------- -------
Gross profit 3,727 2,872 +30%
Operating costs (3,003) (2,101) +43%
-------- ------- -------
EBITDA 723 772 -6%
EBITDA margin % 12.0% 17.5% -550bps
Amortisation of acquisition related
intangibles (543) (432) +26%
Depreciation and amortisation (254) (213) +19%
Impairment - (23) -%
Gain on disposal 12 - -%
-------- ------- -------
Operating (loss)/profit (63) 104 -160%
Net finance expense (226) (102) +121%
-------- ------- -------
(Loss)/profit before tax (288) 1
Taxation (124) (36) +245%
-------- ------- -------
Loss after tax (412) (35)
Basic earnings/ (loss) per share (236.5p) 29.3p
Diluted earnings per share (236.5p) 28.5p
Net current liabilities (112) (521)
Net assets/ (liabilities) 10,288 10,996
Net cash from operating activities 686 998 -31%
------------------------------------ -------- ------- -------
Note: Flutter's combination with TSG completed on 5 May 2020.
Reported financials include TSG included for 241 days post
completion in 2020 and for the full year 2021. Junglee, acquired in
January 2021 and Singular acquired in September, have been included
in 2021 from the date of completion. A full analysis of the Group's
pro forma performance can be found at pages 10-17. A reconciliation
of the Group's pro forma performance to the Group's consolidated
income statement is included at Appendix 2.
In 2021 reported revenue grew 37% year-on-year when compared to
2020. The primary driver of the strong year-on-year growth in 2021
was the completion of Flutter's acquisition of TSG on 5 May 2020.
The prior year comparatives above include the results of TSG from
the date of completion with the results for 2021 consolidated for
the full year. Further expansion of our market leading US online
business to 12 states in 2021 from 8 in 2020, strong growth in
Australia and a normalised sporting calendar following widespread
cancellations in 2020 also contributed to the year-on-year
performance.
Sports revenue increased by 38% to GBP3.8bn, benefitting from
(i) the impact of the acquisition of TSG during the prior year,
(ii) Covid related sports fixture cancellations in the prior year,
(iii) our US expansion into four additional states and (iv)
continued strong momentum in Australia in 2021. Gaming revenue
increased 34%, reflecting (i) the addition of the PokerStars and
Sky Vegas businesses in May 2020 and (ii) good organic gaming
growth in our FanDuel, Adjarabet, Paddy Power and Betfair
businesses partly offset by challenging Covid related
comparatives.
Cost of sales as a percentage of net revenue increased by 340
basis points to 38.3% with a higher proportion of revenue now
coming from the US where direct costs are higher. A changing
product/geographical revenue mix in International also contributed
to this increase.
Operating costs increased 43% driven by growth in sales and
marketing costs and investment in operations, mainly reflecting the
impact of the TSG acquisition, the settlement of the historic legal
case regarding Kentucky and a doubling of US investment to support
significant new customer acquisition.
Reported EBITDA reduced by 6% to GBP723m driven by the increase
in costs outlined above, regulatory changes impacting the UK &
Ireland and International divisions as well as further expansion in
the US where increased investment losses were incurred when
compared with the prior year.
The Group incurred a loss after tax of GBP412m reflecting (i) an
increase in depreciation and amortisation due to the acquisition of
TSG in the prior year (ii) increased financing costs of GBP226m
which also reflect the cost of refinancing part of the Group's debt
during 2021 and (iii) an increased tax charge of GBP124m
incorporating a deferred tax charge in respect of the UK's main
corporate tax rate change from 19% to 25% applicable from 1 April
2023. See Note 6 of the financial statements for more details.
When combined with the increased US losses, the Group had a
basic loss per share of 236.5p in 2021 compared to basic earnings
per share of 29.3p in 2020.
Net current liabilities reduced from GBP521m at 31 December 2020
to GBP112m at 31 December 2021 mainly due to increased cash
balances following the refinancing of borrowings in July 2021 which
increased general liquidity overall. As in previous years, the
Group operates regularly in a net current liability position due to
the Group's operating model whereby it receives payments for nearly
all revenues in advance with material cost items paid in
arrears.
Net assets reduced in the year from GBP11.0bn to GBP10.3bn due
to a reported loss after tax of GBP412m as outlined above, the
foreign currency translation impact of goodwill and intangible
assets and the purchase of shares by the Employee Benefit Trust to
settle US employee incentive schemes.
Net cash from operating activities reduced from GBP998m to
GBP686m driven by the settlement of the Kentucky proceedings of
GBP234m including associated legal costs. Other factors included a
lower working capital increase compared to the prior year partially
offset by the growth in the business due to the TSG
acquisition.
A full analysis of the Group's pro forma performance (as though
TSG was part of the Group for both periods in full) can be found at
pages 10-17.
Separately disclosed items
FY FY
2021 2020
GBPm GBPm
------------------------------------------------------- ----- -----
Amortisation of acquisition related intangible assets (543) (432)
Kentucky settlement and associated legal costs (163) -
Transaction fees and associated costs (22) (33)
Restructuring and integration initiatives (45) (96)
Germany and Greece tax expense (47) -
Disposal of Oddschecker Global Media 12 -
Impairment - (23)
VAT refund - 11
------------------------------------------------------- ----- -----
Operating profit impact of separately disclosed items (809) (573)
Financial income - 79
Financial expense (100) (71)
------------------------------------------------------- ----- -----
Profit before tax impact of separately disclosed items (909) (565)
Tax credit on separately disclosed items 43 58
------------------------------------------------------- ----- -----
Total separately disclosed items (866) (507)
------------------------------------------------------- ----- -----
Separately disclosed items do not relate to business as usual
activity of the Group, items that are volatile in nature or
non-cash purchase price accounting amortisation and therefore are
excluded from Adjusted profits.
Amortisation of acquisition related intangible assets increased
to GBP543m mainly due to the May 2020 combination with TSG,
resulting in a full twelve month charge in 2021.
The Kentucky costs relate to the full and final settlement of a
historic case taken by the Commonwealth of Kentucky against certain
subsidiaries of TSG for $300m, with $100m already provided for,
along with associated legal fees (GBP163m).
Restructuring and integration costs primarily relate to the
integration with TSG.
The Greece and German tax expense relates to historic cases in
both countries. The German tax assessment related to the Betfair
Exchange which operated in Germany until November 2012. The
assessment is a multiple of the German revenue generated by the
Exchange but the German Federal Tax Court dismissed the Group's
appeal in September 2021. The Greek tax authorities case against
Paddy Power relates to a period when it was operating under an
interim licence between 2012-14. Whilst the Group will continue to
appeal these verdicts in both Germany and Greece, once-off expenses
of GBP34m and GBP13m respectively (including interest and
penalties) has been recognised.
Financial expense relates to repayment of the Group's Senior
Notes in 2021 and additional fees from other repayment and
refinancing activities associated with the Group's debt. The Senior
Notes related expense includes settlement of the embedded
derivative asset arising from the redemption option on the Senior
Notes and the premium payable on repayment.
The tax credit of GBP43m has arisen primarily on recognition of
a deferred tax asset on an internal transfer of intangibles of
GBP68m, acquisition related intangible amortisation of GBP59m and
the tax effect of other separately identifiable items of GBP20m,
offset by a tax rate change on acquisition related intangible
assets as result of the increase in the UK's main corporation tax
rate from 19% to 25% from 1 April 2023 of GBP104m as outlined in
Note 6 to the financial statements .
Cash flow and financial position
FY FY
2021 2020
Pro forma GBPm GBPm
--------------------------------------------------------- -------------------- ------------------
Adjusted EBITDA 1,001 1,231
Capex (308) (252)
Working capital 119 310
Corporation tax (138) (93)
Lease liabilities paid (48) (46)
-------------------- ------------------
Adjusted free cash flow 625 1,151
Cash flow from separately disclosed items (61) (120)
-------------------- ------------------
Free cash flow 563 1,031
Interest cost (140) (177)
Other borrowing costs (57) (24)
Settlement of swaps (68) (36)
Amounts paid in respect of Kentucky settlement (234) -
Purchase of shares by the Employee Benefit Trust ("EBT") (181) -
Acquisitions and disposals 73 -
Other (13) 22
Proceeds from equity raise - 1,921
Acquisition of further interest in FanDuel - (1,546)
Cash transferred in acquisitions/ disposals 4 -
-------------------- ------------------
Net (decrease)/increase in cash (53) 1,192
-------------------- ------------------
Net debt(9) at start of year (2,814) (3,827)
Foreign currency exchange translation (5) (20)
Change in fair value of hedging derivatives 225 (159)
Net debt(9) as at 31 December (2,647) (2,814)
--------------------------------------------------------- -------------------- ------------------
The Group had Adjusted free cash flow of GBP625m in 2021, down
from GBP1,151m in the prior year. The movement reflects (i) lower
Adjusted EBITDA in 2021, (ii) a more favourable working capital
movement in the prior year due to significant growth in the
business which partially unwound in 2021, and (iii) increased Capex
primarily to fund expansion into more US states.
Capital expenditure of GBP308m, reflects continued US investment
as we expand into more US states. 2021 includes the upfront fee of
(GBP22m) $25m for New York market access. We continue to materially
invest in our online products across all regions.
Corporate tax payments were higher than the prior period due to
the change in the geographic mix of profits during the year.
Working capital in the current year benefitted from the
continued growth of our US business. The large working capital
increase in 2020 was due to the enhanced scale of the Group and the
timing of some gaming tax and product fee payments. This increase
partially unwound in 2021.
Cash flow from SDIs of GBP61m principally relates to
restructuring and integration costs in relation to the combination
with TSG.
Interest costs were GBP37m lower than in 2020 on a pro forma
basis due to the (i) repayment of debt following the Group's equity
raise in May 2020 and (ii) reduction in the weighted average cost
of debt following the May 2020 debt repayment and further
refinancing of debt in July 2021.
During the period the Group incurred cash costs of GBP234m in
relation to the settlement with the Commonwealth of Kentucky for a
historic legal case with subsidiaries of TSG and includes
associated legal fees.
The Employee Benefit Trust purchased GBP181m in Flutter shares
to settle US employee incentive schemes that were put in place at
the time of the original FanDuel acquisition to incentivise value
creation in FanDuel.
The acquisitions and disposal relate to the acquisition of
Junglee Games and Singular along with the disposal of Oddschecker
during the period .
As at 31 December 2021, the Group had net debt of GBP2,647m,
excluding customer balances, representing a leverage ratio of 2.6x
times(9) . The Group continues to hedge the impact of currency
fluctuations on its leverage ratio through cross currency swap
agreements. Changes in the fair value of these hedging derivatives
are reflected in net debt.
Current trading/outlook
In the first 7 weeks to 20 February, Group revenue was in line
with our expectations. Total Group revenue increased 2% year on
year, reflecting strong comparatives in the first 7 weeks of 2021,
which benefited from very favourable sports results.
Across H1 2021 the Group also benefited from favourable sports
results, with group gross win margin 120 basis points above
expected levels. In contrast , H2 margins were in line with
expectations. As a result, we expect that Flutter's revenue growth
in 2022 will accelerate as the year progresses, assuming expected
sports results. This trend will also reflect the phasing of safer
gambling measures introduced in 2021.
In Russia and Ukraine, we are continuing to monitor the
situation closely. Since completion of our merger with TSG, Flutter
has materially reduced its exposure to the Russian online market.
In 2021, Russia accounted for GBP41m in contribution. In addition,
Ukraine represented contribution of GBP19m.
1 "Adjusted" measures exclude items that are separately
disclosed as they are: (i) not part of the usual business activity
of the Group (ii) items that are volatile in nature and (iii)
purchase price accounting amortisation of acquired intangibles
(non-cash). Therefore, they have been reported as "separately
disclosed items (SDIs)" (see note 6 to the financial
statements).
2 EBITDA is defined as profit for the period before
depreciation, amortisation, impairment, gain on disposal, financial
income, financial expense and taxation and is a non-GAAP measure.
This measure is used internally to evaluate performance, to
establish strategic goals and to allocate resources. The directors
also consider the measure to be commonly reported and widely used
by investors as an indicator of operating performance and ability
to incur and service debt, and as a valuation metric. It is a
non-GAAP financial measure and is not prepared in accordance with
IFRS and, as not uniformly defined terms, it may not be comparable
with measures used by other companies to the extent they do not
follow the same methodology used by the Group. Non-GAAP measures
should not be viewed in isolation, nor considered as a substitute
for measures reported in accordance with IFRS. All of the
adjustments shown have been taken from the financial
statements.
3 Flutter's combination with TSG completed on 5 May 2020. Pro
forma numbers show the Group's financials with TSG included for a
full 12-month period in 2020. Junglee, acquired in January 2021 and
Singular acquired in September 2021, have not been included on a
pro forma basis. See Appendix 2 for a reconciliation of pro forma
results to statutory results.
4 Growth rates in the commentary are in local or constant
currency(12) except reported numbers which are in nominal
currency.
5 Average Monthly Players represent the average number of
players who have placed and/or wagered a stake and/or contributed
to rake or tournament fees during the month in the reporting
period. AMP numbers do not include Junglee in 2020 or 2021 to allow
for better comparability of underlying player growth for
International and Group.
6 Online sportsbook market share is the GGR market share of
FanDuel and FOX Bet for Q4 2021 in the states in which FanDuel was
live based on published gaming regulator reports in those states.
During Q4 2021 FanDuel was live in 12 states; Arizona (AZ),
Colorado (CO), Connecticut (CT), Illinois (IL), Indiana (IN), Iowa
(IA), Michigan (MI), New Jersey (NJ), Pennsylvania (PA), Tennessee
(TN), Virginia (VA) and West Virginia (WV). During 2021 FOX Bet was
live in 4 states; CO, NJ, MI and PA . Market share does not include
Arizona for December as the data has yet to be released . Online
gaming market share reflects the combined CT, MI, NJ, PA and WV
market share of our gaming brands.
7 Global Play Well goal measured as the % of active online
customers who use a safer gambling (Play Well) tool in the
specified reporting period. Active players are defined as any
players who have placed and/or wagered a stake and/or contributed
to rake or tournament fees during the month in the reporting
period. A safer gambling tool is any tool that a customer has used
(or Flutter has applied to a customer) in the reporting period that
helps to promote safer gambling. For the purposes of the 2021
measure Adjarabet and Junglee have been excluded. We will look to
align with AMP reporting and work on expanding to include further
brands as appropriate as we evolve our Play Well strategy.
8 Total NGR online market share in the UK and Ireland based on
internal estimates. Total NGR online market share of Sportsbet
based on competitor reporting and internal estimates.
9 Net debt is the principal amount of borrowings plus associated
accrued interest, minus cash & cash equivalents plus/minus
carrying value of debt related derivatives. Leverage is calculated
using pro forma Adjusted EBITDA for the appropriate 12-month
period. The leverage ratio is calculated using pro forma Adjusted
EBITDA for the 12-month period to 31 December 2021.
10 Includes the gross value of derivatives.
11 Reported figures represent the IFRS reported statutory
numbers. Where amounts have been normalised for SDIs they are
labelled as Adjusted.
12 Constant currency ("cc") growth is calculated by
retranslating the non-sterling denominated component of 2020 at
2021 exchange rates (see Appendix 4 ). Growth rates in the
commentary are in local or constant currency.
13 Quantified safer gambling impacts are an approximate measure
of the revenue estimated to have been lost due to changes in safer
gambling measures during 2021.Due to the complexity of
disaggregating from volatility in net win margins, Covid related
behaviour and the wider market environment this amount does not yet
include the effect of the changes on customer behaviour.
Appendix 1: Divisional Key Performance Indicators FY 2021
Unaudited pro forma(1)
UK & Ireland Australia International US Group
---------------------- ---------------------- ----------------------- -------------------------
CC(2) CC(2) CC(2) CC(2) CC(2)
FY FY % FY FY % FY FY % FY FY % FY FY %
GBPm 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change
-------------- ------ ----- ------- ------ ----- ------- ----- ----- --------- ------- ------- ------- ------- ------- -------
Average
monthly
players(3)
(000's) 3,153 2,532 +25% 1,008 794 +27% 1,901 1,938 -2% 1,557 910 +71% 7,619 6,174 +23%
Sportsbook
stakes 11,376 9,400 +22% 11,702 9,713 +20% 1,592 1,368 +21% 11,284 4,411 +167% 35,954 24,892 +46%
Sportsbook net
revenue
margin 9.9% 12.0% -210bps 11.1% 11.1% -bps 8.7% 8.5% +20bps 6.3% 4.6% +170bps 9.1% 10.1% -100bps
Sports revenue 1,282 1,286 0% 1,294 1,075 +20% 220 180 +26% 978 458 +126% 3,774 3,000 +27%
Gaming revenue 781 743 +5% 0 0 0% 1,068 1,285 -13% 413 237 +87% 2,262 2,264 +4%
------ ----- ------- ------ ----- ------- ----- ----- --------- ------- ------- ------- ------- ------- -------
Total revenue 2,063 2,029 +2% 1,294 1,075 +20% 1,288 1,465 -8% 1,391 695 +113% 6,036 5,264 +17%
Cost of Sales (621) (577) +8% (636) (520) +22% (392) (365) +12% (614) (319) +104% (2,262) (1,782) +29%
Cost of sales
as %
of net
revenue 30.1% 28.5% +170bps 49.2% 48.4% +80bps 30.4% 24.9% +530bps 44.1% 46.0% -190bps 37.5% 33.8% +350bps
Gross Profit 1,442 1,451 0% 658 555 +18% 897 1,100 -14% 778 376 +121% 3,774 3,483 +11%
Sales &
marketing (391) (375) +5% (119) (129) -9% (335) (279) +27% (663) (348) +102% (1,508) (1,130) +38%
------ ----- ------- ------ ----- ------- ----- ----- --------- ------- ------- ------- ------- ------- -------
Contribution 1,051 1,077 -2% 539 426 +26% 562 822 -28% 115 28 +383% 2,266 2,353 -2%
Other
operating
costs (435) (446) -1% (102) (108) -6% (270) (248) +9% (357) (198) +92% (1,164) (1,000) +19%
Corporate
costs (101) (121) -13%
------ ----- ------- ------ ----- ------- ----- ----- --------- ------- ------- ------- ------- ------- -------
Adjusted
EBITDA 616 630 -3% 437 318 +37% 292 574 -46% (243) (170) +50% 1,001 1,231 -18%
Adjusted
EBITDA margin 29.9% 31.1% -160bps 33.7% 29.6% +420bps 22.7% 39.2% -1,580bps (17.5%) (24.4%) +730bps 16.6% 23.4% -700bps
Depreciation &
amortisation (126) (119) +6% (26) (30) -17% (52) (50) +6% (47) (37) +35% (255) (241) +7%
------ ----- ------- ------ ----- ------- ----- ----- --------- ------- ------- ------- ------- ------- -------
Adjusted
operating
profit/(loss) 490 511 -5% 411 288 +42% 240 524 -51% (289) (207) +47% 746 990 -24%
-------------- ------ ----- ------- ------ ----- ------- ----- ----- --------- ------- ------- ------- ------- ------- -------
1 Flutter's combination with TSG completed on 5 May 2020. Pro
forma numbers show the Group's financials with TSG included for a
full 12-month period in 2020. Junglee, acquired in January 2021 and
Singular acquired in September 2021, have not been included on a
pro forma basis. See Appendix 2 for a reconciliation of pro forma
results to statutory results.
2 Constant currency ("cc") growth is calculated by retranslating
the non-sterling denominated component of 2020 at 2021 exchange
rates (see Appendix 4). Growth rates in the commentary are in local
or constant currency.
3 Average Monthly Players represent the average number of
players who have placed and/or wagered a stake and/or contributed
to rake or tournament fees during the month in the reporting
period. AMP numbers do not include Junglee in 2020 or 2021 to allow
for better comparability of underlying player growth for
International and Group.
Appendix 2: Reconciliation of pro forma results to statutory
results
The merger of Flutter and TSG completed on 5 May 2020, with the
merger accounted for as an acquisition of TSG by Flutter on that
date. The statutory results reflect this accounting treatment. Pro
forma results for the Group are prepared as if Flutter and TSG had
always been merged and are included in these preliminary results,
as they best represent the Group's underlying performance. The
difference between the statutory and pro forma results is inclusion
of the results of TSG in the period prior to completion as per the
table below. Junglee, which was acquired in January 2021 and
Singular acquired in September, have been included in reported
figures but not on a pro forma basis due to materiality.
Pro forma adjusted TSG results Separately Statutory results
results pre-merger disclosed items
completion*
-------------------- -------------- ------------------
FY FY FY FY FY FY FY FY
GBPm 2021 2020 2021 2020 2021 2020 2021 2020
--------- --------- ------ ------ -------- -------- --------- --------
Sports revenue 3,774 3,000 275 3,774 2,725
Gaming revenue 2,262 2,264 592 16 2,262 1,688
--------- --------- ------ ------ -------- -------- --------- --------
Total revenue 6,036 5,264 - 866 - 16 6,036 4,414
Cost of sales (2,262) (1,782) (243) (47) (3) (2,310) (1,542)
Cost of sales
as a % of net
revenue 37.5% 33.8% 38.3% 34.9%
Gross profit 3,774 3,483 - 624 (47) 13 3,727 2,872
Sales and marketing (1,508) (1,130) (139) (1,508) (991)
Contribution 2,266 2,353 - 484 (47) 13 2,219 1,881
Other operating
costs (1,164) (1,000) (113) (163) (1,328) (887)
Corporate costs (101) (121) (29) (67) (131) (168) (222)
--------- --------- ------ ------ -------- -------- --------- --------
EBITDA 1,001 1,231 - 342 (278) (118) 723 772
EBITDA margin 16.6% 23.4% 12.0% 17.5%
Depreciation
and amortisation (255) (241) (28) (531) (455) (786) (668)
--------- --------- ------ ------ -------- -------- --------- --------
Operating profit 746 990 - 314 (809) (573) (63) 104
Net finance
expense (126) (177) (67) (100) 7 (226) (102)
--------- --------- ------ ------ -------- -------- --------- --------
Profit/ (loss)
Before Tax 620 813 - 247 (909) (565) (288) 1
The following table reconciles pro forma Adjusted revenue and
EBITDA by division to revenue from external customers (before VAT
refund for FY 2020) and Adjusted EBITDA as disclosed in the
Financial Statements (Note 5).
Pro forma adjusted TSG results Statutory results
results pre-merger
completion*
-------------------- -------------- -------------------
FY FY FY FY FY FY
GBPm 2021 2020 2021 2020 2021 2020
--------- --------- ------ ------ --------- --------
Revenue by division
UK & Ireland 2,063 2,029 - 290 2,063 1,739
Australia 1,294 1,075 - 87 1,294 989
International 1,288 1,465 - 468 1,288 997
US 1,391 695 - 22 1,391 673
Adjusted EBITDA
by division
UK & Ireland 616 630 - 118 616 513
Australia 437 318 - 11 437 307
International 292 574 - 264 292 310
US (243) (170) - (22) (243) (148)
Corporate costs (101) (121) - (30) (101) (92)
-------------------- --------- --------- ------ ------ --------- --------
* Note the adjustments to reflect the exclusion of TSG results
prior to the merger also include any transactions that are now
deemed to be intercompany as a result of the merger.
Appendix 3: Reconciliation of pro forma to statutory earnings
per share
The merger of Flutter and TSG completed on 5 May 2020, with the
merger accounted for as an acquisition of TSG by Flutter on that
date. The statutory results reflect this accounting treatment. Pro
forma results for the Group are prepared as if Flutter and TSG had
always been merged. The difference between the statutory and pro
forma results is the inclusion of the results of TSG in the period
prior to completion as per the table below. The calculation of
earnings per share also requires an adjustment to the assumed
number of shares outstanding in the period as set out in the table
below.
Pro forma adjusted TSG results Separately Statutory results
results pre-merger disclosed items(3)
completion(1,2)
-------------------------- --------------------- ----------------------------
FY FY FY FY FY FY FY FY
GBPm 2021 2020 2021 2020 2021 2020 2021 2020
------------ ------------ ---- --------------- ------------- ------------- ------------- --------------
Profit for
EPS
calculation 444 756 (234) (860) (484) (416) 38
Weighted
average
number of
shares
('000s) 175,780 152,163 (22,605) 175,780 129,558
Adjusted
basic EPS
(pence) 253 497 (237) 29
1 TSG pre-acquisition profit of GBP234m is comprised of GBP314m
operating profit, GBP67m interest expense and GBP13m taxation
charge.
2 Assumes the issuance of 65,316,588 Flutter ordinary shares as
consideration of the acquisition of The Stars Group on 5 May 2020
occurred on 1 January 2020, and the issuance of 819,230 Flutter
ordinary shares as consideration for the acquisition of the
remaining 20% of the outstanding share capital of TSG Australia on
13 May 2020 occurred on 1 January 2020.
3 See note 6 of the financial statements.
Appendix 4: Reconciliation of pro forma growth rates to pro
forma constant currency growth rates
Constant currency ("cc") growth is calculated by retranslating
non-sterling denominated component of FY 2020 at FY 2021 exchange
rates as per the table below.
FY FY
FY FY % 2020 2020 CC %
GBPm 2021 2020 Change FX impact CC Change
------------------------------ ------- ------- ------- --------- ------- -------
Sports revenue 3,774 3,000 +26% (31) 2,969 +27%
Gaming revenue 2,262 2,264 0% (78) 2,186 +4%
------- ------- ------- --------- ------- -------
Total revenue 6,036 5,264 +15% (109) 5,155 +17%
Cost of sales (2,262) (1,782) +27% 32 (1,749) +29%
Cost of sales as a
% of net revenue 37.5% 33.8% +360bps 33.9% +350bps
Gross profit 3,774 3,483 +8% (77) 3,406 +11%
Sales and marketing (1,508) (1,130) +33% 35 (1,095) +38%
Contribution 2,266 2,353 -4% (42) 2,311 -2%
Other operating costs (1,164) (1,000) +16% 21 (979) +19%
Corporate costs (101) (121) -17% 5 (116) -13%
------- ------- ------- --------- ------- -------
Adjusted EBITDA 1,001 1,231 -19% (16) 1,215 -18%
Adjusted EBITDA margin 16.6% 23.4% -680bps 23.6% -700bps
Depreciation and amortisation (255) (241) +6% 4 (238) +7%
Adjusted operating
profit 746 990 -25% (12) 978 -24%
Revenue by division
UK & Ireland 2,063 2,029 +2% (6) 2,022 +2%
Australia 1,294 1,075 +20% 5 1,081 +20%
International 1,288 1,465 -12% (67) 1,398 -8%
US 1,391 695 +100% (41) 654 +113%
Adjusted EBITDA by
division
UK & Ireland 616 630 -2% 6 636 -3%
Australia 437 318 +37% 1 320 +37%
International 292 574 -49% (36) 537 -46%
US (243) (170) +43% 8 (162) +50%
Corporate costs (101) (121) -17% 5 (116) -13%
------------------------------ ------- ------- ------- --------- ------- -------
Appendi x 5 : R e conciliation of pro forma cash flow to
reported statutory cash flow
In the operating and financial review the cash flow has been
presented on a pro forma net cash basis. The merger of Flutter and
TSG completed on 5 May 2020, with the merger accounted for as an
acquisition of TSG by Flutter on that date. The statutory cash flow
reflects this treatment while the pro forma cash flow is prepared
as if Flutter and TSG had always been merged. The difference
between the net cash basis and the reported cash flow is the
inclusion of borrowings to determine a net cash position.
Pro forma TSG results Adjustment Statutory
cash flow pre-merger to include cash flow
completion borrowings
---------------- ---------------- -------------
GBPm 2021 2020 2021 2020 2021 2020 2021 2020
------------------------------ ------- ------- ------- ------- ------ ----- -----
Adjusted EBITDA(1) 1,001 1,231 342 1,001 889
Capex(2) (308) (252) (33) (308) (219)
Working capital(3) 119 310 (8) 119 318
Corporation tax (138) (93) (3) (138) (89)
Lease liabilities paid (48) (46) (5) (48) (41)
------- ------- ------- ------- ------ ----- ----- -------
Adjusted free cash flow 625 1,151 - 293 - - 625 858
Cash flow from separately
disclosed items(4) (61) (120) (61) (120)
------- ------- ------- ------- ------ ----- ----- -------
Free cash flow 563 1,031 - 293 - - 563 738
Interest cost(5) (140) (177) (64) (140) (113)
Other borrowing costs(5) (57) (24) (57) (24)
Settlement of swaps (68) (36) (68) (36)
Amounts paid in respect
of Kentucky settlement (234) - (234) -
Purchase of shares by
the EBT (181) - (181) -
Acquisitions and disposals(6) 73 - 73 -
Other(7) (13) 22 6 (13) 16
Proceeds from equity raises - 1,921 - 1,921
Acquisition of further
interest in FanDuel - (1,546) - (1,546)
Net amounts repaid on
borrowings(8) 416 (923) 416 (923)
Cash acquired in business
combinations(6) 4 - 445 4 445
------- ------- ------- ------- ------ ----- ----- -------
Net increase / (decrease)
in cash (53) 1,192 - 235 416 (478) 363 479
------- ------- ------- ------- ------ ----- ----- -------
Net (debt)/cash at start
of year(9) (2,814) (3,827) (3,328) (3,563) 89 372 603 108
Foreign currency exchange
translation (5) (20) (10) 37 (15) 17
Change in fair value of
hedging derivatives 225 (159) (225) 159 - -
Net debt as at 31 December(9) (2,647) (2,814) (3,328) (3,328) 271 89 952 603
------------------------------ ------- ------- ------- ------- ------ ----- ----- -------
1 Adjusted EBITDA includes the following line items in the
statutory cash flow: Profit for the period, separately disclosed
items, tax expense, financial income, financial expense and
depreciation and amortisation.
2 Capex includes purchase of property, plant and equipment,
purchase of intangible assets, capitalised internal development
expenditure, lease incentive received and payment of contingent
deferred consideration.
3 Working capital includes (increase)/decrease in trade and
other receivables, increase in trade, other payables and
provisions, employee equity-settled share-based payments expense
before separately disclosed items, loss / (gain) on disposal of
assets and investments and foreign currency exchange
loss/(gain).
4 Cash flow from separately disclosed items relates to
transaction fees, along with restructuring and integration
costs.
5 Interest and other borrowing costs includes interest paid,
interest received and fees in respect of borrowing facilities.
6 The combination of acquisition and disposals of (GBP73m) and
cash acquired in business combinations (GBP4m) reconciles to the
statutory cash flow amounts for disposal of assets (GBP127m) offset
by purchase of a business net of cash acquired.
7 Other includes proceeds from the issue of shares on exercise
of employee options, dividends paid to non-controlling interest,
release of cash from restricted cash, lease interest paid and
other.
8 Net amounts repaid on borrowings includes repayment of USD
First Lien Term Loan B, full settlement of the Senior Notes and
additional debt drawn down on GBP First Lien Term Loan A and USD
First Lien Term Loan B.
9 Net debt comprises principal outstanding balance of
borrowings, accrued interest on those borrowings, cash and cash
equivalents and derivatives held for hedging debt instruments.
Designated Foreign Issuer Status
In connection with its acquisition of The Stars Group Inc. on 5
May, 2020, the Company became a "reporting issuer" under applicable
securities laws in each of the provinces and territories of Canada.
The Company also qualifies as a "designated foreign issuer", as
such term is defined in National Instrument 71-102 - Continuous
Disclosure and Other Exemptions Relating to Foreign Issuers of the
Canadian Securities Administrators. As such, the Company is not
subject to the same ongoing reporting requirements as most other
reporting issuers in Canada. Generally, the Company will be in
compliance with Canadian ongoing reporting and disclosure
requirements if it complies with the requirements of the UK
Financial Conduct Authority in its capacity as the competent
authority for the purposes of Part VI of the Financial Services and
Markets Act 2000 (United Kingdom), as amended from time to time,
and the applicable laws of England and Wales (the "UK Rules") and
files any documents required to be filed or furnished pursuant to
the UK Rules on its profile on the System for Electronic Document
Analysis and Retrieval (SEDAR) at
www.sedar.com maintained by the Canadian Securities
Administrators.
Condensed Consolidated Income Statement
For the year ended 31 December 2021
2021 2020
Note GBPm GBPm
------------------------------------ ---- ------------------------------------ ------------------------------------
Continuing operations
Revenue 5 6,036.2 4,413.9
Cost of sales (2,309.5) (1,541.7)
------------------------------------ ---- ------------------------------------ ------------------------------------
Gross profit 3,726.7 2,872.2
Operating costs excluding
depreciation,
amortisation, impairment and gain
on disposal (3,003.4) (2,100.6)
------------------------------------ ---- ------------------------------------ ------------------------------------
EBITDA(1) 723.3 771.6
Amortisation of acquisition-related
intangible assets (543.3) (432.3)
Depreciation and amortisation of
other assets (254.4) (213.2)
Impairment - (22.6)
Gain on disposal 11.9 -
------------------------------------ ---- ------------------------------------ ------------------------------------
Operating (loss) / profit (62.5) 103.5
Financial income 7 3.2 79.9
Financial expense 7 (229.1) (182.3)
------------------------------------ ---- ------------------------------------ ------------------------------------
(Loss) / profit before tax (288.4) 1.1
Tax expense 8 (123.5) (35.8)
------------------------------------ ---- ------------------------------------ ------------------------------------
(Loss) /profit for the year (411.9) (34.7)
------------------------------------ ---- ------------------------------------ ------------------------------------
Attributable to:
Equity holders of the Company (415.8) 37.9
Non-controlling interest 3.9 (72.6)
------------------------------------ ---- ------------------------------------ ------------------------------------
(411.9) (34.7)
------------------------------------ ---- ------------------------------------ ------------------------------------
Earnings per share
Basic 9 (GBP2.365) GBP0.293
Diluted 9 (GBP2.365) GBP0.285
------------------------------------ ---- ------------------------------------ ------------------------------------
1 EBITDA is defined as profit for the period before
depreciation, amortisation, impairment, gain on disposal, financial
income, financial expense and tax expense / credit. It is
considered by the Directors to be a key measure of the Group's
financial performance.
Notes 1 to 22 form an integral part of these condensed
consolidated financial statements.
Condensed Consolidated Statement of Other Comprehensive
Income
For the year ended 31 December 2021
2021 2020
GBPm GBPm
------------------------------------------------- --------------------------------- --------------------------------
Loss for the year (411.9) (34.7)
------------------------------------------------- --------------------------------- --------------------------------
Other comprehensive (loss) / income:
Items that are or may be reclassified
subsequently
to profit or loss:
Effective portion of changes in fair value
of cash flow hedges 61.4 (280.4)
Fair value of cash flow hedges transferred
to the income statement (28.4) 267.8
Foreign exchange gain on net investment
hedges, net of tax(1) 68.2 19.6
Foreign exchange (loss) / gain on translation
of the net assets of foreign currency
denominated
entities (309.6) 41.9
Debt instruments at FVOCI (1.3) (0.4)
------------------------------------------------- --------------------------------- --------------------------------
Other comprehensive (loss) / income (209.7) 48.5
------------------------------------------------- --------------------------------- --------------------------------
Total comprehensive (loss) / income for
the year (621.6) 13.8
------------------------------------------------- --------------------------------- --------------------------------
Attributable to:
Equity holders of the Company (627.9) 93.8
Non-controlling interest 6.3 (80.0)
------------------------------------------------- --------------------------------- --------------------------------
Total comprehensive (loss) / income for
the year (621.6) 13.8
------------------------------------------------- --------------------------------- --------------------------------
1 Foreign exchange gain on net investment hedges is presented
including an income tax charge of GBP17.2m (2020: GBP5.1m) which
relates to the tax effect on foreign exchange activities with
respect to the Group's hedging activities. A corresponding tax
credit of GBP16.7m (2020: GBP5.1m) in relation to the same is
recognised in the Condensed Consolidated Income Statement such that
there is a GBP0.5m net impact on the Consolidated Statement of
Financial Position, reflecting excess FX gain in OCI not offset by
current year or prior year losses.
Notes 1 to 22 form an integral part of these condensed
consolidated financial statements.
Condensed Consolidated Statement of Financial Position
As at 31 December 2021
31 December 31 December
2021 2020
Note GBPm GBPm
-------------------------------------- ---- ------------------------------------ ----------------------------------
Assets
Property, plant and equipment 451.4 361.9
Intangible assets 4,875.6 5,527.8
Goodwill 10 9,346.8 9,516.7
Deferred tax assets 8.2 7.4
Non-current tax receivable 21.5 15.3
Investments 12 5.5 3.0
Derivative financial assets 17 68.0 16.9
Financial assets - restricted cash 13 7.4 6.9
Other receivables 12 29.3 75.2
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total non-current assets 14,813.7 15,531.1
-------------------------------------- ---- ------------------------------------ ----------------------------------
Trade and other receivables 12 203.9 139.5
Financial assets - restricted cash 13 677.6 587.9
Cash and cash equivalents 13 951.7 603.4
Current investments at FVOCI -
customer
deposits 13 83.0 82.8
Current tax receivable 45.6 47.5
Total current assets 1,961.8 1,461.1
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total assets 16,775.5 16,992.2
-------------------------------------- ---- ------------------------------------ ----------------------------------
Equity
Issued share capital and share premium 477.6 2,481.7
Merger reserve 18 - 7,982.9
Treasury shares 18 - (40.7)
Shares held by Employee Benefit
Trust 18 (4.0) (5.8)
Cash flow hedge reserve 18 22.7 (10.3)
Other reserves (61.7) 152.3
Retained earnings 9,816.3 405.0
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total equity attributable to equity
holders of the Parent 10,250.9 10,965.1
Non-controlling interest 37.5 30.8
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total equity 10,288.4 10,995.9
-------------------------------------- ---- ------------------------------------ ----------------------------------
Liabilities
Trade and other payables 14 1,096.4 1,033.0
Customer balances 721.0 643.4
Derivative financial liabilities 17 74.0 150.9
Provisions 15 71.3 14.3
Current tax payable 42.3 41.0
Lease liability 47.0 48.3
Borrowings 16 22.1 50.8
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total current liabilities 2,074.1 1,981.7
-------------------------------------- ---- ------------------------------------ ----------------------------------
Trade and other payables 14 19.8 14.6
Derivative financial liabilities 17 55.1 102.3
Provisions 15 47.8 145.0
Deferred tax liabilities 498.0 500.9
Non-current tax payable 25.2 18.0
Lease liability 217.4 145.7
Borrowings 16 3,549.7 3,088.1
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total non-current liabilities 4,413.0 4,014.6
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total liabilities 6,487.1 5,996.3
-------------------------------------- ---- ------------------------------------ ----------------------------------
Total equity and liabilities 16,775.5 16,992.2
-------------------------------------- ---- ------------------------------------ ----------------------------------
Notes 1 to 22 form an integral part of these condensed
consolidated financial statements.
On behalf of the Board
Peter Jackson Jonathan Hill
Chief Executive Officer Chief Financial Officer
28 February 2022
Condensed Consolidated Statement of Cash Flows
For the year ended 31 December 2021
2021 2020
Note GBPm GBPm
------------------------------------------------- ----- --------------------------- ---------------------------
Cash flows from operating activities
Loss for the year (411.9) (34.7)
Tax expense 123.5 35.8
Financial income (3.2) (79.9)
Financial expense 229.1 182.3
Amortisation of acquisition related intangible
assets 543.3 432.3
Depreciation and amortisation of other
assets 254.4 213.2
Impairment - 22.6
Gain on disposal (11.9) (0.2)
Separately disclosed items included within
EBITDA 277.7 117.6
Employee equity-settled share-based payments
expense 79.1 52.1
Foreign currency exchange loss / (gain) 15.7 (31.6)
------------------------------------------------- ----- --------------------------- ---------------------------
Cash from operations before changes in
working capital 1,095.8 909.5
(Increase) / decrease in trade and other
receivables (40.5) 18.1
Increase in trade, other payables and provisions 64.0 280.1
------------------------------------------------- ----- --------------------------- ---------------------------
Cash generated from operating activities 1,119.3 1,207.7
Taxes paid (138.5) (89.4)
------------------------------------------------- ----- --------------------------- ---------------------------
Cash generated from operations, net of
taxes paid 980.8 1,118.3
Transaction fees, restructuring and integration
costs paid 6 (61.2) (119.9)
Amounts paid in respect of Kentucky litigation 15 (234.1) -
------------------------------------------------- ----- --------------------------- ---------------------------
Net cash from operating activities 685.5 998.4
------------------------------------------------- ----- --------------------------- ---------------------------
Cash flows from investing activities:
Purchase of property, plant and equipment (89.3) (59.3)
Purchase of intangible assets (62.4) (53.2)
Capitalised internal development expenditure (142.3) (99.6)
Purchase of businesses net of cash acquired 11 (50.7) 445.2
Payment of contingent deferred consideration 11 (21.6) (7.2)
Proceeds from disposal of assets - 12.5
Net proceeds from disposal of subsidiary 11 127.1 -
Interest received 1.5 1.3
Change in restricted cash (0.4) (4.8)
Other (0.8) -
------------------------------------------------- ----- --------------------------- ---------------------------
Net cash (used in) / from investing activities (238.9) 234.9
------------------------------------------------- ----- --------------------------- ---------------------------
Cash flows from financing activities:
Proceeds from the issuance of new shares
in respect of equity placement 18 - 1,920.8
Proceeds from the issue of shares on exercise
of employee options 18 13.2 34.3
Acquisition of further interest in subsidiary - (1,546.0)
Dividend paid to non-controlling interest 18 (16.7) (15.2)
Payment of lease liabilities (47.9) (45.7)
Payment of lease interest (8.4) (5.7)
Lease incentive received 7.3 -
Proceeds from borrowings 16 1,167.7 950.0
Net amounts drawn down previous GBP Revolving
Credit Facility - (117.2)
Repayment of borrowings 16 (751.2) (1,756.0)
Interest paid (141.9) (114.1)
Settlement of derivatives (67.9) (35.6)
Financing fees paid in respect of borrowing
facilities (56.7) (24.4)
Ordinary shares of the Company acquired
by the Employee Benefit Trust 18 (180.7) -
------------------------------------------------- ----- --------------------------- ---------------------------
Net cash used in financing activities (83.2) (754.8)
------------------------------------------------- ----- --------------------------- ---------------------------
Net increase in cash and cash equivalents 363.4 478.5
Cash and cash equivalents at start of year 603.4 108.1
Foreign currency exchange (loss) / gain
on cash and cash equivalents (15.1) 16.8
------------------------------------------------- ----- --------------------------- ---------------------------
Cash and cash equivalents at end of year 13 951.7 603.4
------------------------------------------------- ----- --------------------------- ---------------------------
Notes 1 to 22 form an integral part of these condensed
consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Total
Issued Shares equity
Number share held Cash Foreign attributable
of ordinary capital by Employee flow Fair exchange Share-based to shareholders
shares and share Merger Treasury Benefit hedge value translation Other payment Retained of the Non-controlling Total
in issue premium reserve shares Trust reserve reserve(1) reserve(1) reserves(1) reserve(1) earnings Company interest equity
m GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ -------------------- -------------------------- --------------------- ---------------------
Balance at 1
January
2021 177.0 2,481.7 7,982.9 (40.7) (5.8) (10.3) (0.4) 49.6 2.3 100.8 405.0 10,965.1 30.8 10,995.9
Total comprehensive income / (loss)
for the year
Loss for the
year - - - - - - - - - - (415.8) (415.8) 3.9 (411.9)
Foreign exchange
translation
including net
investment
hedges - - - - - - - (226.6) - - - (226.6) 2.4 (224.2)
Effective
portion
of changes in
fair
value of cash
flow
hedges - - - - - 61.4 - - - - - 61.4 - 61.4
Fair value of
cash
flow hedges
transferred
to the income
statement - - - - - (28.4) - - - - - (28.4) - (28.4)
Financial assets
at
FVOCI - - - - - - (1.3) - - - - (1.3) - (1.3)
Tax on foreign
exchange
hedging - - - - - - - (17.2) - - - (17.2) - (17.2)
---------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ -------------------- -------------------------- --------------------- ---------------------
Total
comprehensive
income / (loss)
for
the year - - - - - 33.0 (1.3) (243.8) - - (415.8) (627.9) 6.3 (621.6)
---------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ -------------------- -------------------------- --------------------- ---------------------
Transactions with owners of the Company, recognised
directly in equity
Shares issued on
exercise
of employee
share
options (Note
18) 0.6 13.2 - - - - - - - - - 13.2 - 13.2
Cancellation of
Treasury
shares (2.0) (0.2) - 40.7 - - - - 0.2 - (40.7) - - -
Merger reserve
capitalisation
(Note 18) - 7,982.9 (7,982.9) - - - - - - - - - - -
Reduction of
capital
(Note 18) - (10,000.0) - - - - - - - - 10,000.0 - - -
Business
combinations
(Note 11) - - - - - - - - - - - - 17.1 17.1
Ordinary shares
of
the Company
acquired
by the Employee
Benefit
Trust (Note 18) - - - - (180.7) - - - - - - (180.7) - (180.7)
Equity-settled
transactions
- expense
recorded
in the income
statement - - - - - - - - - 80.5 - 80.5 - 80.5
Equity-settled
transactions
- vesting - - - - 182.5 - - - - - (182.5) - - -
Tax on
share-based
payments - - - - - - - - - - 0.7 0.7 - 0.7
Exercise of
share
options - - - - - - - - - (49.6) 49.6 - - -
Dividend paid to
non-controlling
interest (Note
18) - - - - - - - - - - - - (16.7) (16.7)
Total
contributions
by and
distributions
to owners of
the Company (1.4) (2,004.1) (7,982.9) 40.7 1.8 - - - 0.2 30.9 9,827.1 (86.3) 0.4 (85.9)
---------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ -------------------- -------------------------- --------------------- ---------------------
Balance at 31
December
2021 175.6 477.6 - - (4.0) 22.7 (1.7) (194.2) 2.5 131.7 9,816.3 10,250.9 37.5 10,288.4
---------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ -------------------- -------------------------- --------------------- ---------------------
(1) Included in other reserves in the Statement of Financial
Position.
Notes 1 to 22 form an integral part of these condensed
consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Total
Issued Shares equity
Number share held Cash Foreign attributable
of ordinary capital by Employee flow Fair exchange Share-based to shareholders
shares and share Merger Treasury Benefit hedge value translation Other payment Retained of the Non-controlling Total
in issue premium reserve shares Trust reserve reserve reserve reserves reserve earnings Company interest equity
m GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ --------------------- -------------------------- --------------------- ---------------------
Balance at 1
January
2020 80.3 428.3 - (40.7) (6.1) 2.3 - (21.5) 2.3 80.6 3,539.5 3,984.7 204.9 4,189.6
Total comprehensive income
/ (loss) for the year
Loss for the year - - - - - - - - - - 37.9 37.9 (72.6) (34.7)
Foreign exchange
translation
including net
investment
hedges - - - - - - - 74.0 - - - 74.0 (7.4) 66.6
Tax on foreign
exchange
hedging - - - - - - - (5.1) - - - (5.1) - (5.1)
Effective portion
of
changes in fair
value
of cash flow
hedges - - - - - (280.4) - - - - - (280.4) - (280.4)
Fair value of
cash
flow hedges
transferred
to the income
statement - - - - - 267.8 - - - - - 267.8 - 267.8
Financial assets
at
FVOCI - - - - - - (0.4) - - - - (0.4) - (0.4)
----------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ --------------------- -------------------------- --------------------- ---------------------
Total
comprehensive
income / (loss)
for
the year - - - - - (12.6) (0.4) 68.9 - - 37.9 93.8 (80.0) 13.8
----------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ --------------------- -------------------------- --------------------- ---------------------
Transactions with owners of the Company,
recognised directly in equity
Shares issued on
equity
placement (net
of issuance
costs) (Note 18) 16.1 1,933.2 - - - - - - - - (12.4) 1,920.8 - 1,920.8
Shares issued on
exercise
of employee
share options
(Note 18) 1.5 34.3 - - - - - - - - - 34.3 - 34.3
Shares issued as
consideration
for the
acquisition
of TSG (Note 11) 65.3 5.1 6,189.5 - - - - - - - - 6,194.6 - 6,194.6
Issue of
replacement
options (Note
11) - - - - - - - - - 58.0 - 58.0 - 58.0
Shares issued as
consideration
for acquisition
of
TSG Australia
(Note
11) 0.8 79.7 - - - - - - - - - 79.7 - 79.7
Present value of
FanDuel
put liability
with
Fastball up to
termination
of option - - - - - - - - (846.0) - - (846.0) - (846.0)
Unwind of put
option
on termination
of option - - - - - - - - 846.0 - - 846.0 - 846.0
Acquisition of
non-controlling
interest in
FanDuel
Group (Note 11) 11.7 1.0 1,793.4 - - - - 2.2 - - (3,263.7) (1,467.1) (78.9) (1,546.0)
Deal fees on
acquisition
of FanDuel - - - - - - - - - - (9.3) (9.3) - (9.3)
Equity-settled
transactions
- expense
recorded
in income
statement - - - - - - - - - 70.2 - 70.2 - 70.2
Equity-settled
transactions
- vesting - - - - 0.3 - - - - (0.3) - - - -
Tax on
share-based
payments - - - - - - - - - - 5.4 5.4 - 5.4
Exercise of share
awards - - - - - - - - - (107.7) 107.7 - - -
Dividend paid to
non-controlling
interest - - - - - - - - - - - - (15.2) (15.2)
Dividends to
shareholders 1.3 0.1 - - - - - - - - (0.1) - - -
----------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ --------------------- -------------------------- --------------------- ---------------------
Total
contributions
by and
distributions
to owners of the
Company 96.7 2,053.4 7,982.9 - 0.3 - - 2.2 - 20.2 (3,172.4) 6,886.6 (94.1) 6,792.5
----------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ --------------------- -------------------------- --------------------- ---------------------
Balance at 31
December
2020 177.0 2,481.7 7,982.9 (40.7) (5.8) (10.3) (0.4) 49.6 2.3 100.8 405.0 10,965.1 30.8 10,995.9
----------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------ --------------------- -------------------------- --------------------- ---------------------
Notes to the Consolidated Financial Statements
1. General information
Flutter Entertainment plc (the "Company") and its subsidiaries
(together referred to as the "Group") is a global sports betting
and gaming group, whose headquarters are in Dublin, Ireland. As a
result of internal restructuring and integration initiatives in
2021, the Group transitioned from the five segment operating model
reported in 2020 into a four segment operating model. In 2021, the
Group's four reportable segments are (i) UK and Ireland
("UK&I"), which includes Sky Betting & Gaming and Paddy
Power (both online and retail) and Betfair's operations in the UK
and Ireland (ii) Australia, comprising Sportsbet, the market leader
in the fast-growing Australian online betting market; (iii)
International which includes online poker, gaming, betting, rummy
and daily fantasy sport product offerings under the PokerStars,
Betfair International, Adjarabet and Junglee games brands; and (iv)
US, which includes sports betting, daily fantasy sports, poker and
gaming services under the FanDuel, TVG, FOX Bet, Stardust and
PokerStars brands.
On 5 May 2020, the Company completed an all-share Combination
with TSG (the "Combination") through an acquisition of all of the
issued and outstanding share capital of TSG by the Company. The
results of TSG prior to completion of the Combination are not
included in these consolidated financial statements. See Note 11
for further information on the Combination.
The Company is a public limited company incorporated and
domiciled in the Republic of Ireland and has its primary listing on
the London Stock Exchange under the symbol FLTR and a secondary
listing on the Irish Stock Exchange under the symbol FLTR.IR.
The financial information presented herein does not comprise
full statutory financial statements and therefore does not include
all of the information required for full annual financial
statements. Full statutory financial statements for the year ended
31 December 2021, prepared in accordance with International
Financial Reporting Standards ("IFRSs") as adopted by the European
Union ("EU") together with an unqualified audit report thereon
under section 391 of the Companies Act 2014, will be annexed to the
annual return and filed with the Registrar of Companies.
The consolidated financial statements of the Group for the year
ended 31 December 2021 comprise the financial statements of the
Company and its subsidiary undertakings and were approved for issue
by the Board of Directors on 28 February 2022.
2. Recent accounting pronouncements
Adoption of new accounting standards
The IASB issued the following standards, policies,
interpretations and amendments which were effective for the Group
for the first time in the year ended 31 December 2021;
-- Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16: Interest
Rate Benchmark Reform Phase 2; and
-- Amendment to IFRS 16: Covid-19 Related Rent Concessions.
The adoption of the new standards and interpretations did not
have a significant impact on the Group's consolidated financial
statements.
Adopted IFRS not yet applied
The following IFRSs have been issued but have not been applied
in these financial statements. Their adoption is not expected to
have a material effect on the Group's consolidated financial
statements, other than IBOR reform which is disclosed in more
detail below:
-- Amendments to IAS 37: Onerous contracts - Cost of Fulfilling
a Contract (Effective date 1 January 2022);
-- Amendments to IAS 16: Property, Plant and Equipment: Proceeds
before Intended Use (effective 1 January 2022);
-- Amendments to IFRS 1, IFRS 9 and IAS 41: Annual Improvements
to IFRS Standards 2018-2020 (effective 1 January 2022);
-- Amendments to IFRS 3: Reference to the Conceptual Framework (effective 1 January 2022);
-- Amendments to IAS 1: Classification of Liabilities as Current
or Non -current (effective 1 January 2023);
-- IFRS 17 Insurance Contracts and amendments to Insurance
Contracts (effective date 1 January 2023);
-- IAS 1 and IFRS Practice Statement 2; Disclosure of Accounting
Policies; (effective date 1 January 2023);
-- Amendments to IAS 8; Definition of Accounting Estimates (effective date 1 January 2023);
-- Amendments to IAS 12: Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (effective date 1
January 2023); and
-- Amendments to IFRS 10 and IAS 28: Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture
(effective date to be confirmed).
2. Recent accounting pronouncements (continued)
IBOR reform
The Company has considered the impact of interest rate benchmark
reform ("IBOR reform") on its loan accounting and hedge accounting.
The Company has adopted the Interest Rate Benchmark Reform - Phase
2 Amendments to IFRS 9, IAS 39 and IFRS 7 issued in August 2020
("Phase 2 relief"). Adopting these amendments provides temporary
relief from applying specific loan accounting and hedge accounting
requirements for hedging relationships directly affected by IBOR
reform.
For loan accounting, the reliefs have the effect that the
Company can update its effective interest rate for the change to
the new risk-free rate without recognising an immediate gain or
loss. For hedge accounting, the reliefs have the effect that IBOR
reform should not generally cause hedge accounting to cease and
updates to hedge documentation relating to IBOR reform will not
result in a de-designation event for existing hedge relationships.
However, any hedge ineffectiveness should continue to be recorded
in the income statement. Qualifying for the reliefs is contingent
on the Company's transition, i.e. the new risk-free rate plus
credit adjustment spread, being economically equivalent to the
previous LIBOR basis.
On 5 March 2021, the UK's Financial Conduct Authority ("FCA")
formally announced the cessation of all GBP London Interbank
Offered Rate ("LIBOR") benchmark settings currently published by
ICE Benchmark Administration ("IBA") immediately after 31 December
2021. In response, the Company has entered into agreements with its
lenders to amend the benchmark rate referenced in the Term Loan A
agreement from GBP LIBOR to GBP SONIA for any interest periods
commencing on or after 1 January 2022.
The Group's USD First Lien Term Loan B, and certain of its
cross-currency interest rate swaps are indexed to USD-LIBOR, and
its EUR First Lien Term Loan B is indexed to EURIBOR. See Notes 16
and 17 for details of the borrowings and hedging derivatives
notional amounts. The Group is monitoring and evaluating the
related risks, which include interest payments on its borrowings,
and amounts received on certain of its cross-currency interest rate
swaps. These risks arise in connection with transitioning contracts
to an alternative rate, including any resulting value transfer that
may occur. Additional risk exists as the method of transitioning to
an alternative reference rate may be challenging and requires
agreement with the respective counterparty about how to make the
transition.
The table below indicates the nominal amount and carrying amount
of financial instruments that will be affected by IBOR reform which
are yet to transition to alternative benchmark rates. The Company
has adopted the Interest Rate Benchmark Reform - Amendments to IFRS
9, IAS 39 and IFRS 7 issued in September 2019 ("Phase 1 relief") in
relation to its derivatives in hedge relationships. Adopting these
amendments provides temporary relief from applying specific hedge
accounting requirements to hedging relationships directly affected
by IBOR reform.
Current Non-Derivative Financial
Benchmark Liability Nominal Derivative Instruments
Rate Amount Nominal Amount
------------- ------------------------------------------------ -----------------------------------------------------
USD Libor $2,931m $2,931m
EURIBOR EUR507m -
The reliefs have the effect that IBOR reform should not
generally cause hedge accounting to terminate. However, any hedge
ineffectiveness continue should be recorded in the income
statement. Furthermore, the amendments set out triggers for when
the reliefs will end, which include the uncertainty arising from
interest rate benchmark reform no longer being present.
As illustrated above, the Company has a significant exposure to
changes in the USD IBOR benchmark. At 31 December 2021 the Company
has term loan of USD $2,931m and cross-currency interest rate swaps
with a notional amount of USD $2,931m, which are indexed to USD
LIBOR. The cross-currency interest rate swaps are designated in a
cash flow hedge relationship hedging the USD LIBOR term loan. In
assessing whether the hedges are expected to be highly effective on
a forward-looking basis, the Company has assumed that the USD LIBOR
interest rate on which the cash flows of its interest rate swaps
and its hedged floating rate loans are based are not altered by
IBOR reform.
The Company anticipates that USD LIBOR will transition to SOFR
and has considered an IBOR transition plan. The transition project
will include changes to systems, processes, risk and valuation
models, as well as managing related tax and accounting
implications. The Company currently anticipates that the areas of
greatest change will be amendments to the contractual terms of its
LIBOR referenced floating-rate swaps and updating its hedge
designation. None of the group's cross currency interest rate swaps
have interest rate reset dates which occur after 30th June 2023,
the date on which USD LIBOR is expected to be discontinued. The
Group expects the EURIBOR will continue to exist as a benchmark
rate for the foreseeable future.
The Group will continue to apply the amendments to IFRS 9/IAS 39
until the uncertainty arising from the interest rate benchmark
reforms with respect to the timing and the amount of the underlying
cash flows that the Group is exposed to ends. The Group has assumed
that this uncertainty will not end until the Group's contracts that
reference IBORs are amended to specify the date on which the
interest rate benchmark will be replaced, the cash flows of the
alternative benchmark rate and the relevant spread adjustment.
3. Basis of preparation and summary of significant accounting
policies
The condensed consolidated financial statements are prepared on
the historical cost basis except for derivative financial
instruments (which include betting transactions), equity
securities, certain financial assets which have been designated as
FVTPL, FVOCI, contingent deferred consideration and share-based
payments, all of which are stated at fair value (grant date fair
value in the case of share-based payments). The consolidated
financial statements are presented in pounds sterling and are
rounded to the nearest 0.1 million.
Further to IAS Regulation (EC1606/2002, 'Accounting standards
adopted for use in the EU'), EU law requires that the annual
consolidated financial statements of the Group be prepared in
accordance with International Financial Reporting Standards
("IFRS") adopted by the European Union ("EU"). These consolidated
financial statements have been prepared on the basis of IFRS
adopted by the EU and effective for accounting periods ending on or
after 1 January 2021.
The accounting policies applied in the preparation of these
consolidated financial statements have been applied consistently
during the year and prior year, except as noted above and in Note 2
'Recent accounting pronouncements'.
Going concern
The Group reported EBITDA of GBP723.3m and a loss after tax of
GBP411.9m for the year ended 31 December 2021. This includes
GBP797.7m of non-cash depreciation and amortisation charged against
profit in the year. The net cash generated from operating
activities during the year ended 31 December 2021 was GBP685.5m.
The balance sheet at 31 December 2021 reported a net current
liability position of GBP112.3m. During 2021, the Group's various
lenders consented to waive any Default or Event of Default that may
have arisen by virtue of the Kentucky judgement, including any
enforcement steps or actions taken by the Commonwealth of Kentucky
prior to settlement. During the 12 months ended 31 December 2021,
the Group is in compliance with all covenants related to its
lending arrangements.
The Directors have considered the available financial resources
which include, at 31 December 2021, GBP951.7m of cash and cash
equivalents and a GBP482.0m Revolving Credit Facility with undrawn
capacity of GBP467.0m. Whilst there are certain loan repayments due
within the next 12 months of GBP22.1m, the Group's lending
facilities primarily fall due in 2026 as set out in more detail in
Note 16. As a consequence, the Directors believe that the Group is
well placed to manage its business risks successfully.
The Group's forecasts to the year ending 31 December 2022 and
beyond indicate that it will continue to have significant financial
resources, continue to settle its debts as they fall due and
operate well within its banking covenants as outlined in Note 16
for at least a period of 12 months from the date of these
consolidated financial statements. 12 months from the date of these
consolidated financial statements was selected as the going concern
period as it represents the period in which the Group has prepared
detailed forecasts for the majority of the period and it also
reduces the degree of judgement and estimation uncertainty involved
in both the forecasts and the downside scenarios.
When preparing the forecasts, the Group has included the cash
outflows associated with the post balance sheet acquisition as
detailed in Note 22. Various downside scenarios over and above
those already included in the base case model on the potential
impact of further reductions to cash flows due to changes in the
legal, regulatory and licencing landscape and the Group's cyber and
IT resilience have been considered in respect of these forecasts.
The impact of these items involves significant judgement and
estimation uncertainty.
In the event that it were necessary to draw down additional debt
funding, the Directors have a reasonable expectation that this
could be achieved within the confines of its existing debt
facilities and financial covenant requirements.
Having given regard to the above, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for a period of at least 12
months from the date of approval of these consolidated financial
statements, and therefore they continue to adopt the going concern
basis in its consolidated financial statements.
Basis of consolidation
The Group's financial statements consolidate the financial
statements of the Company and its subsidiary undertakings based on
accounts made up to the end of the financial year. A subsidiary is
an entity controlled by the Company. The Group controls an entity
when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. Intra-group balances and
any unrealised gains and losses or income and expenses arising from
intra-group transactions are eliminated on consolidation except to
the extent that unrealised losses provide evidence of
impairment.
4. Judgements and estimates
The preparation of Consolidated Financial Statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going
basis. Revisions to accounting estimates are recognised in the year
in which the estimates are revised and in any future years
affected.
Judgements
In preparing these Consolidated Financial Statements, the
significant judgements in applying the Group's accounting policies
and the key sources of estimation uncertainty were consistent with
those that applied to the Consolidated Financial Statements as at
and for the year ended 31 December 2020 and are detailed below:
Kentucky proceedings
In 2010, prior to the combination with The Stars Group ("TSG"),
the Commonwealth of Kentucky filed legal proceedings against
various operators including certain companies that later became
subsidiaries of TSG. The suit sought recovery of alleged losses
incurred by Kentucky residents playing real-money poker on the
PokerStars platform during a period between 2006 and 2011. The
gross gaming revenues that TSG generated in Kentucky on the
PokerStars platform during the relevant period were approximately
US$18m. In 2015, a Kentucky trial court judge entered judgement
against two TSG Isle of Man subsidiaries, Stars Interactive
Holdings (IOM) Ltd ("SIHL") and Rational Entertainment Enterprises
Ltd ("REEL") and awarded damages to the Commonwealth of Kentucky of
approximately US$870m plus post-judgement interest.
In February 2016, in order to stay enforcement of the judgement
while the matter was appealed, SIHL and REEL posted supersedeas
bonds to the value of US$100m, on which the stay was conditioned.
In 2018, the ruling against SIHL and REEL was vacated in its
entirety by the Kentucky Court of Appeals.
Following an appeal by the Commonwealth of Kentucky, on 17
December 2020, the Kentucky Supreme Court reinstated the full 2015
award of damages, including post-judgement interest, which combined
amounted to approximately $1.3bn, against SIHL and REEL. The
interest on the judgement continued to accrue at approximately
$250,000 per day due to the application of compound interest.
The two judgement debtors, SIHL and REEL, were Isle of Man
incorporated companies, with no assets in the US. The Group took
the view, based on the views of legal counsel and advisers that the
judgement was unenforceable in the Isle of Man under both statute
and public policy, being for multiple damages and penal in nature.
The Group undertook a detailed review of what other steps Kentucky
might seek to take to enforce the judgement, including against the
assets of other Group companies in the US and formed the opinion
that Kentucky had limited ability to enforce the full judgement.
Based on the opinion of legal counsel and advisers as to the likely
pay-out outcomes, the Group recognised a provision of $100m
(GBP73.3m) as part of TSG combination fair value acquisition
accounting in respect of this litigation, which reflects the value
of the supersedes bond which was in place since February 2016. No
liability was previously recognised by either TSG or Flutter prior
to this judgement.
A rehearing petition was filed before the Kentucky Supreme Court
on 6 January 2021 and was subsequently denied on 25 March 2021. In
May 2021, following an April 2021 order by the Kentucky trial
court, the $100m (GBP71.1m) bonds were paid to the Commonwealth of
Kentucky, in line with the provision outstanding at 31 December
2020. The Group also considered the potential operational and
reputational consequence of resisting enforcement of the judgement,
e.g. any impact on the Group's ability to secure permits and
licences in US states where its betting and gaming activities
require State permissions.
On 21 September 2021, following mediation between the parties,
the Group agreed to pay an additional $200m (GBP145.2m) to
Kentucky. In return, Kentucky released SIHL, REEL and, inter alia,
all Flutter entities from any claims relating to the matters in
issue in the Kentucky proceedings, and the proceedings were
consequently dismissed with prejudice. The Group strongly believes
that this agreement and the certainty of outcome provided is in the
best interests of the Group's shareholders.
Valuation of tax assets and liabilities
Whilst we maintain good communication with key tax authorities,
given the global nature of our business and the complex
international tax landscape, there remain areas of tax uncertainty
and therefore there is a level of uncertainty with regards to the
measurement of our tax assets and liabilities. Uncertainties have
been measured using the best estimate of the likely outcome. This
assessment relies on estimates and assumptions and may involve a
series of judgements about future events.
Where uncertain tax treatments exist, the Group assesses whether
it is probable that a tax authority will accept the uncertain tax
treatment applied or proposed to be applied in its tax filings. The
Group assesses each uncertain tax treatment as to whether it should
be considered independently or whether some tax treatments should
be considered collectively based on what the Group believes
provides a better estimate of the resolution of the uncertainty.
The Group considers whether it is probable that the relevant
authority will accept each uncertain tax treatment, or group of
uncertain tax treatments, assuming that the taxation authority will
have full knowledge of all relevant information when doing so. The
key judgements are in relation to intercompany transactions
including the internally generated intangible asset transfer
referred to in Note 6 .
4. Judgements and estimates (continued)
New information may become available that causes the Group to
change its judgement regarding the adequacy of existing tax assets
and liabilities; such changes to tax assets and liabilities will
impact the income tax in the period in which such a determination
is made. Management uses in-house tax experts, professional firms
and previous experience when assessing tax risks and the Group
believes that the position for all tax assets and liabilities at 31
December 2021 is adequate based on its assessment of the range of
factors outlined above but given the inherent uncertainty, it is
possible that resolution of tax uncertainties may differ from the
amounts provided for.
FOX Corporation
As announced on 2 October 2019, in order to achieve economic
alignment of Flutter's and TSG's strategic third party
relationships across their respective US businesses, concurrent
with the Combination with TSG, the Group entered into an
arrangement with FOX, pursuant to which FSG Services, a
wholly-owned subsidiary of FOX, had an option to acquire an 18.6%
equity interest in FanDuel Group at its market value in July 2021.
Under the terms of the agreement an arbitration mechanism was put
in place in the event of a disagreement between the two parties
relating to the option.
In April 2021, FOX filed an arbitration claim against the Group
with respect to its option to acquire an 18.6% equity interest in
FanDuel for the same price that the Group paid for the acquisition
of 37.2% of FanDuel from Fastball Holdings LLC in December 2020,
representing an $11.2 billion valuation for FanDuel. In the Group's
opinion this valuation would be materially favourable for FOX
compared to the fair market valuation as of July 2021. An
arbitrator has been appointed and the Group intends to vigorously
defend its position. A ruling in the arbitration is not expected
before Quarter 2, 2022.
The fair value of the call option as at 31 December 2021 is
required to reflect the value that a market participant would have
paid for such an option, with that strike price, reflecting the
conditions that would have existed at 31 December 2021. Given the
market assessment of comparable US assets, it is management's view
that there has been no increase in the market value of FanDuel
since July 2021, which represents the valuation date of the option,
and therefore it is determined that the value of the option is out
of the money for FOX and the derivative has close to nominal value
at 31 December 2021.
Estimates
Determining the fair value of some assets and liabilities
requires estimation of the effects of uncertain future events on
those assets and liabilities at the end of the reporting year. The
following discussion sets forth key sources of estimation
uncertainty at the end of the reporting year that management
believes have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year.
Measurement of the recoverable amounts of cash generating units
containing goodwill, indefinite life licences and intangible
assets
The Group reviews the carrying value of goodwill for impairment
annually (or more frequently if there are indications that the
value of goodwill may be impaired) by comparing the carrying values
of these cash generating units with their recoverable amounts
(being the higher of value in use and fair value less costs to
sell). The impairment review is performed on a "value-in-use"
basis, which requires estimation of future net operating cash
flows, the time period over which they will occur, an appropriate
discount rate and an appropriate growth rate. Certain of these
estimates and assumptions are subjective in nature.
The impact of Covid-19 on the performance of the Group and its
individual business units for the year ended 31 December 2021 is
set out in the Operating and Financial Review.
The retail cash generating units ("CGUs") in the year were
impacted by the temporary suspension of the activities of its
shops, depending on local restrictions and social distancing rules
during 2021. Based on the significant headroom that existed in the
31 December 2021 impairment test and customer activity levels since
the shops have reopened as well as opportunities to make further
market share gains as competitors reduce the size of their
respective estates, the Group is satisfied that no impairment has
arisen during the year ended 31 December 2021.
5. Operating segments
Reportable business segment information
As a result of internal restructuring and integration
initiatives, in 2021 the Group transitioned from the five segment
operating model reported in 2020 to a four segment operating model.
In 2021, the Group's four reportable segments are:
-- UK & Ireland;
-- Australia;
-- International; and
-- US
During the year, the Group determined that it is the Chief
Executive Officer and Chief Financial Officer jointly rather than
the Board of Directors who are performing the function of Chief
Operating Decision Maker. The reportable segments reflect the
Group's current operating model, following internal restructuring
and integration initiatives undertaken by the Group following the
Combination with TSG, and the way financial information is reviewed
by the Group's Chief Operating Decision Maker (the Chief Executive
Officer and Chief Financial Officer jointly, ("CODM")). The Group
has restated the operating segment information for the year ended
31 December 2020 to conform with the current year presentation.
UK & Ireland
The UK & Ireland ("UK&I") segment is comprised of the
operations of Sky Betting & Gaming, and Paddy Power and Betfair
in the UK and Ireland. Revenues are earned from sports betting
(sportsbook and the exchange sports betting product) and gaming
services (games, casino, bingo and poker), as well as from
Oddschecker (odds comparison website) until the disposal of
Oddschecker in August 2021 (see Note 6 and Note 11). Services are
provided primarily via the internet but also through licensed
bookmaking shop estates.
Australia
The Australia segment is comprised of the operations of the
Sportsbet brand and in 2020 included the former BetEasy brand which
was integrated into Sportsbet in the second half of 2020, and earns
its revenues from sports betting services provided to Australian
customers using primarily the internet.
International
The International segment is comprised of PokerStars, Betfair
International, Adjarabet and Junglee Games. The International
segment earns most of its revenues from poker, casino, rummy and
sports betting through various brands and mainly via the
internet.
US
The US segment is comprised of the FanDuel, TVG, FOX Bet,
Stardust and PokerStars brands' operations in the U.S and earns its
revenues from sports betting, daily fantasy sports and gaming
services (casino and poker) provided to US customers, using
primarily the internet, with a proportion of US sports betting
services also provided through a small number of retail
outlets.
Corporate
Corporate administrative costs (Board, Finance, Legal, Internal
Audit, HR, Property and other central functions) cannot be readily
allocated to individual operating segments and are not used by the
CODM for making operating and resource allocation decisions. These
are shown in the reconciliation of reportable segments to Group
totals.
The Group does not allocate income tax expense or financing
income and expenses to reportable segments. Treasury management is
centralised for the UK&I, Australia, International and US
segments.
Assets and liabilities information is reported internally in
total and not by reportable segment and, accordingly, no
information is provided in this note on assets and liabilities
split by reportable segment.
Seasonality
The Group's sportsbook revenue is driven by a combination of the
timing of sporting and other events and the Group's results derived
from those events. The Covid-19 pandemic which caused some
postponement and cancellation of sporting events across the world
has skewed results for the year and the comparative year. Gaming
and other revenue is not as dependent on the sporting calendar.
5. Operating segments (continued)
Reportable business segment information for the year ended 31
December 2021:
UK&I Australia International US Corporate Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- ----------------- ----------------- ---------------------- ----------- ------------------ ------------------
Revenue from
external
customers 2,062.9 1,293.5 1,288.4 1,391.4 - 6,036.2
Cost of sales before
separately
disclosed
items (621.2) (635.8) (391.6) (613.6) - (2,262.2)
-------------------- ----------------- ----------------- ---------------------- ----------- ------------------ ------------------
Gross profit before
separately
disclosed
items 1,441.7 657.7 896.8 777.8 - 3,774.0
Operating costs
excluding
depreciation and
amortisation
before separately
disclosed
items (825.8) (221.2) (604.6) (1,020.7) (100.7) (2,773.0)
-------------------- ----------------- ----------------- ---------------------- ----------- ------------------ ------------------
Adjusted EBITDA(1)
before
separately
disclosed
items 615.9 436.5 292.2 (242.9) (100.7) 1,001.0
Depreciation and
amortisation
before separately
disclosed
items (125.7) (25.6) (51.8) (46.5) (4.8) (254.4)
Loss on disposal
before
separately
disclosed
items - - - - (0.3) (0.3)
-------------------- ----------------- ----------------- ---------------------- ----------- ------------------ ------------------
Reportable segment
profit
/ (loss) before
separately
disclosed items 490.2 410.9 240.4 (289.4) (105.8) 746.3
Germany and Greece
tax
expense - - (47.3) - - (47.3)
Kentucky settlement
and associated
legal
costs - - (163.1) - - (163.1)
Gain on disposal 12.2 - - - - 12.2
Amortisation of
acquisition-related
intangible assets (225.9) (20.9) (276.4) (20.1) - (543.3)
Reportable segment
profit
/ (loss) after
amortisation
of
acquisition-related
intangibles 276.5 390.0 (246.4) (309.5) (105.8) 4.8
Transaction fees and
associated costs(2) (22.1)
Restructuring and
integration
costs(2) (45.2)
------------------
Operating loss (62.5)
-------------------- ----------------- ----------------- ---------------------- ----------- ------------------ ------------------
5. Operating segments (continued)
Reportable business segment information for the year ended 31
December 2020(3) :
UK&I Australia International US Corporate Total
Restated(3) GBPm GBPm GBPm GBPm GBPm GBPm
-------------------- --------------- -------------------- -------------------------- --------- -------------------- ---------------
Revenue from
external
customers before
VAT
refund 1,738.9 988.8 997.4 672.9 - 4,398.0
Cost of sales before
separately
disclosed
items (499.1) (468.7) (269.0) (302.2) - (1,539.0)
-------------------- --------------- -------------------- -------------------------- --------- -------------------- ---------------
Gross profit before
separately
disclosed
items 1,239.8 520.1 728.4 370.7 - 2,859.0
Operating costs
excluding
depreciation and
amortisation
before separately
disclosed
items (727.3) (213.2) (418.7) (519.0) (91.6) (1,969.8)
-------------------- --------------- -------------------- -------------------------- --------- -------------------- ---------------
Adjusted EBITDA(1) 512.5 306.9 309.7 (148.3) (91.6) 889.2
Depreciation and
amortisation
before separately
disclosed
items (111.1) (28.2) (34.5) (34.8) (4.6) (213.2)
-------------------- --------------- -------------------- -------------------------- --------- -------------------- ---------------
Reportable segment
profit
/ (loss) before
separately
disclosed items 401.4 278.7 275.2 (183.1) (96.2) 676.0
Amortisation of
acquisition-related
intangible assets
(Note
6) (168.7) (18.7) (216.2) (28.7) - (432.3)
Impairment (12.1) (2.0) (4.4) - (4.1) (22.6)
VAT refund (Note 6) 11.2 - - - - 11.2
-------------------- --------------- -------------------- -------------------------- --------- -------------------- ---------------
Reportable segment
profit
/ (loss) after
amortisation
of
acquisition-related
intangibles and VAT
refund 231.8 258.0 54.6 (211.8) (100.3) 232.3
-------------------- --------------- -------------------- -------------------------- --------- --------------------
Transaction fees and
associated costs(2) (32.7)
Restructuring and
integration
costs(2) (96.1)
---------------
Operating profit 103.5
-------------------- --------------- -------------------- -------------------------- --------- -------------------- ---------------
1 Adjusted EBITDA which is a non-GAAP measure in the above
segment note is defined as profit for the year before separately
disclosed items, depreciation, amortisation, impairment, gain on
disposal, financial income, financial expense and tax expense /
credit. It is considered by the Directors to be a key measure of
the Group's financial performance.
2 The Group does not allocate transaction fees and restructuring
and integration costs to reportable segments.
3 Reportable segment split was restated to conform with current
year presentation.
Reconciliation of reportable segment information to Group
totals:
2021 2020
-------------- ----------------------------------------------------------- -----------------------------------------------------------
Before Before
separately Separately separately Separately
disclosed disclosed disclosed disclosed
items items Total items items Total
GBPm GBPm GBPm GBPm GBPm GBPm
Gross profit 3,774.0 (47.3) 3,726.7 2,859.0 13.2 2,872.2
Operating
costs
excluding
depreciation,
amortisation,
impairment
and gain
on disposal (2,773.0) (230.4) (3,003.4) (1,969.8) (130.8) (2,100.6)
-------------- ------------------- ------------------ ------------------ ------------------ ------------------- ------------------
EBITDA(1) 1,001.0 (277.7) 723.3 889.2 (117.6) 771.6
Depreciation
and
amortisation (254.4) (543.3) (797.7) (213.2) (432.3) (645.5)
(Loss) / gain
on
disposal and
impairment (0.3) 12.2 11.9 - (22.6) (22.6)
Operating
(loss)
/ profit 746.3 (808.8) (62.5) 676.0 (572.5) 103.5
Net finance
costs (126.0) (99.9) (225.9) (109.8) 7.4 (102.4)
(Loss) /
profit before
tax 620.3 (908.7) (288.4) 566.2 (565.1) 1.1
Tax expense (166.3) 42.8 (123.5) (94.2) 58.4 (35.8)
-------------- ------------------- ------------------ ------------------ ------------------ ------------------- ------------------
(Loss) /profit
for
the year 454.0 (865.9) (411.9) 472.0 (506.7) (34.7)
-------------- ------------------- ------------------ ------------------ ------------------ ------------------- ------------------
1 EBITDA is defined as profit for the year before depreciation,
amortisation, impairment, gain on disposal, financial income,
financial expense and tax expense / credit. It is considered by the
Directors to be a key measure of the Group's financial
performance.
See Note 6 for further detail on separately disclosed items.
5. Operating segments (continued)
Disaggregation of revenue under IFRS 15:
Group revenue disaggregated by product line for the year ended
31 December 2021:
UK&I Australia International US Total
GBPm GBPm GBPm GBPm GBPm
----------- ----------------------- ------------------------ ---------------------- ---------------------- ---------------------
Sports
revenue(1) 1,281.8 1,293.5 220.2 978.3 3,773.8
Gaming
revenue(2) 781.1 - 1,068.2 413.1 2,262.4
----------- ----------------------- ------------------------ ---------------------- ---------------------- ---------------------
Total Group
revenue 2,062.9 1,293.5 1,288.4 1,391.4 6,036.2
----------- ----------------------- ------------------------ ---------------------- ---------------------- ---------------------
Group revenue disaggregated by product line for the year ended
31 December 2020(3:)
UK&I Australia International US Total
GBPm GBPm GBPm GBPm GBPm
----------- ---------------------- ------------------------ ---------------------- ---------------------- ---------------------
Sports
revenue(1) 1,117.6 988.8 162.1 457.0 2,725.5
Gaming
revenue(2) 637.2 - 835.3 215.9 1,688.4
----------- ---------------------- ------------------------ ---------------------- ---------------------- ---------------------
Total Group
revenue 1,754.8 988.8 997.4 672.9 4,413.9
----------- ---------------------- ------------------------ ---------------------- ---------------------- ---------------------
1 Sports revenue comprises sportsbook, exchange sports betting,
daily fantasy sports and pari-mutuel betting.
2 Gaming revenue includes Games, Poker, Casino, Rummy and Bingo
and in 2020 in UK&I includes the VAT refund (see Note 6).
3 Reportable segment split was restated to conform with current
year presentation.
Geographical information
Group revenue disaggregated by geographical market for the year
ended 31 December 2021:
UK&I Australia International US Total
GBPm GBPm GBPm GBPm GBPm
------------ ------------------------- ---------------------------- ---------------------------- --------------------- --------------------
UK 1,860.1 - 73.7 - 1,933.8
Ireland 194.1 - 6.4 - 200.5
EU (excl.
Ireland)(1) - - 656.4 - 656.4
Australia - 1,293.5 - - 1,293.5
US - - - 1,391.4 1,391.4
Rest of
World(2) 8.7 - 551.9 - 560.6
------------ ------------------------- ---------------------------- ---------------------------- --------------------- --------------------
Total Group
revenue 2,062.9 1,293.5 1,288.4 1,391.4 6,036.2
------------ ------------------------- ---------------------------- ---------------------------- --------------------- --------------------
1 The EU (excl. Ireland) category includes multiple countries,
that individually represent less than 4% of total Group
revenue.
2 The Rest of World category includes multiple countries, that
individually represent less than 2% of total Group revenue
Group revenue disaggregated by geographical market for the year
ended 31 December 2020:
UK&I Australia International US Total
Restated(2) GBPm GBPm GBPm GBPm GBPm
------------ ------------------------- ---------------------------- ----------------------------- ---------------------- ----------------------
UK 1,544.9 - 66.7 - 1,611.6
Ireland 209.9 - 7.4 - 217.3
EU (excl.
Ireland)(1) - - 578.6 - 578.6
Australia - 988.8 - - 988.8
US - - - 672.9 672.9
Rest of
World(2) - - 344.7 - 344.7
------------ ------------------------- ---------------------------- ----------------------------- ---------------------- ----------------------
Total Group
revenue 1,754.8 988.8 997.4 672.9 4,413.9
------------ ------------------------- ---------------------------- ----------------------------- ---------------------- ----------------------
1 The EU (excl. Ireland) category includes multiple countries
that individually represent less than 4% of total Group
revenue.
2 The Rest of World category includes multiple countries that
individually represent less than 2% of total Group revenue.
3 Reportable segment split was restated to conform with current
year presentation.
Revenues are attributable to geographical location on the basis
of the customers location.
5. Operating segments (continued)
Non-current assets
Non-current assets (property, plant and equipment, intangible
assets and goodwill) by geographical area are as follows:
31 December 31 December
2021 2020
GBPm GBPm
----------------- -------------------------------- --------------------------------
UK 8,492.3 8,882.6
Ireland 159.9 154.9
Australia 645.6 696.4
US 868.5 856.1
Rest of World(1) 4,507.5 4,816.4
----------------- -------------------------------- --------------------------------
Total 14,673.8 15,406.4
----------------- -------------------------------- --------------------------------
1 Relates mainly to goodwill and fair value adjustments on
acquisition intangibles such as brand and customer relationships
pertaining to PokerStars worldwide operations (reported within the
International segment) not otherwise allocated to any specific
country or region.
6. Separately disclosed items
The separately disclosed items noted in Note 5 above are
comprised as follows:
2021 2020
GBPm GBPm
--------------------------------------------- ----------------------------------- ----------------------------------
Germany and Greece tax expense (47.3) -
Transaction fees and associated costs (22.1) (32.7)
Restructuring and integration costs (45.2) (96.1)
Kentucky settlement and associated legal
costs (163.1) -
VAT refund - 11.2
--------------------------------------------- ----------------------------------- ----------------------------------
EBITDA (277.7) (117.6)
Amortisation of acquisition-related
intangible
assets (543.3) (432.3)
Disposal of Oddschecker Global Media 12.2 -
Impairment - (22.6)
--------------------------------------------- ----------------------------------- ----------------------------------
Operating profit impact of separately
disclosed items (808.8) (572.5)
Financial income - 78.5
Financial expense (99.9) (71.1)
--------------------------------------------- ----------------------------------- ----------------------------------
Profit before tax impact of separately
disclosed items (908.7) (565.1)
--------------------------------------------- ----------------------------------- ----------------------------------
Tax credit on separately disclosed items 42.8 58.4
--------------------------------------------- ----------------------------------- ----------------------------------
Total separately disclosed items (865.9) (506.7)
--------------------------------------------- ----------------------------------- ----------------------------------
Attributable to:
Equity holders of the Company (860.0) (483.8)
Non-controlling interest (5.9) (22.9)
--------------------------------------------- ----------------------------------- ----------------------------------
(865.9) (506.7)
--------------------------------------------- ----------------------------------- ----------------------------------
Amortisation of acquisition-related intangible assets
Non-cash amortisation of GBP543.3m has been incurred in the
period (year ended 31 December 2020: GBP432.3m) as a result of
intangible assets separately identified under IFRS 3 as a result of
the merger with Betfair in 2016, the acquisitions of FanDuel
Limited in 2018 and Adjarabet in 2019, the Combination with TSG in
2020 and the acquisitions of Junglee and Singular in 2021.
6. Separately disclosed items (continued)
Kentucky settlement and associated legal costs
On 22 September 2021, the Group announced that the legal dispute
between Flutter and the Commonwealth of Kentucky had been settled
in full. The Group agreed to pay a further $200m (GBP145.2m) to
Kentucky in addition to the $100m (GBP71.1m) previously forfeited
to the Commonwealth as part of the supersedeas bond in the case in
line with the provision outstanding at 31 December 2020. In return,
Kentucky released Stars Interactive Holdings (IOM) Ltd, Rational
Entertainment Enterprises Ltd and, inter alia, all Flutter entities
from any claims relating to the matters in issue in the Kentucky
proceedings, and the proceedings were consequently dismissed with
prejudice. As a result of this settlement, costs of GBP163.1m
(including associated legal costs of GBP17.9m) were incurred during
the year ended 31 December 2021. See Note 4 for further
details.
Transaction fees and associated costs
During the year ended 31 December 2021, GBP22.1m of costs were
incurred relating to various acquisitions, the FOX option (see Note
4) and also as announced in May 2021, the potential US listing of a
small stake of FanDuel. During the year ended 31 December 2020,
GBP32.7m of costs were incurred primarily relating to the
Combination with TSG. The costs were included as separately
disclosed items as they have not been incurred in the ordinary
course of business.
Restructuring and integration costs
During the year ended 31 December 2021 costs of GBP45.2m (year
ended 31 December 2020: GBP96.1m) relating to incremental, one-off
costs, were incurred by the Group as a result of significant
restructuring and integration initiatives following the Combination
with TSG.
Germany and Greece tax expense
Germany
In 2012 Betfair was issued with a German tax assessment relating
to the Betfair Exchange, which operated in Germany until November
2012. The assessment deemed that a tax liability of approximately
EUR30.6m was payable. This represented a multiple of the revenues
generated by the Exchange during the assessment period.
The Group paid the EUR30.6m German tax assessment in 2019, with
the late payment interest of approximately EUR10m to be paid when
assessed.
In September 2021 the German Federal Tax Court dismissed the
Group's appeal of the tax assessment. Whilst the Group has lodged a
formal complaint to the Federal Constitutional Court, it has
decided to recognise the amount of the German tax assessment
including the late payment interest. This has resulted in an
expense of EUR40.6m (GBP34.5m) being recorded in the year in
relation to the principal amount of tax and late payment
interest.
Greece
In 2019, the Group was issued with a Greek tax assessment for
financial years 2012, 2013 and 2014, relating to paddypower.com's
Greek interim licence. This assessment concluded that the Group is
liable to pay EUR15.0m in taxes including penalties and interest.
This is substantially higher (by multiples) than the total
cumulative revenues ever generated by paddypower.com in Greece.
Pending the outcome of its appeal, in 2019 the Group paid the total
Greek tax assessment (including the penalties and interest) of
EUR15.0m.
In June 2021, the Athens Administrative Court of Appeal
dismissed the Group's judicial recourses. While the Group has
further appealed to the Greek Supreme Administrative Court, based
on the nature of the decision received and the points of law which
can be appealed, and in line with legal and tax advice it has
received, it has decided to recognise the amount of the Greek
assessment, of EUR15.0m (GBP12.8m) as an expense in profit or loss
during the year ended 31 December 2021.
The Group considers these cost as one-off costs and not as part
of ongoing operations in the current year.
Disposal of Oddschecker Global Media
On 31 August 2021 the Group sold all of the shares of
Oddschecker Global Media ("OGM"), a fully owned subsidiary of the
Group, to Bruin Capital, in exchange for GBP127.1m in cash
(proceeds of GBP141.3m net of GBP14.2m cash already on the balance
sheet) and recorded a gain on the disposal of GBP12.2m (see also
Note 11). There is potential for the Group to receive further
consideration of up to GBP20m pending future events. However, it is
currently not probable that further amounts will be received and
therefore no contingent asset has been recorded. Prior to the
disposal, the non-current assets were measured at the lower of
their carrying amount and fair value less costs sell. No
impairments were recognised. The assets and liabilities of OGM were
included within the UK&I segment up to the date of sale.
Impairment
During the year ended 31 December 2020, the Group recognised
impairments of GBP22.6m. GBP12.1m of this relates to the impairment
of Northern Ireland retail indefinite life licences. The remaining
GBP10.5m is mainly as a result of various restructuring and
integration decisions resulting from the TSG Combination with
GBP4.4m relating to capitalised development expenditure and GBP6.1m
relating to various property assets. No such impairments were
recognised in the year ended 31 December 2021.
6. Separately disclosed items (continued)
VAT refund
In May 2020, HMRC confirmed it would not appeal the ruling of
the Upper Tier Tribunal in the cases of Rank Group Plc and Done
Brothers (Cash Betting) Ltd (trading as Betfred) that VAT was
incorrectly applied to revenues earned from certain gaming machines
prior to 2013. The Group submitted protective claims for the period
and requested repayment from HMRC. In December 2020, the Group
received the refund from the HMRC and recognised income net of the
associated third-party costs expected to be incurred as a result of
the refund. The refund of VAT due from HMRC of GBP15.9m has been
booked as revenue with associated third-party costs of GBP2.7m and
GBP2.0m recorded in the year ended 31 December 2020 in cost of
sales and operating expenses respectively.
Financial income
During the year ended 31 December 2020, a gain on remeasurement
of embedded derivatives of GBP78.5m was recorded. These gains were
included as separately disclosed items due to their volatile nature
and/or non-recurring nature.
Financial expense
During the year ended 31 December 2021, on repayment of the
Senior Notes in 2021, the Group recorded a charge of GBP78.8m
relating to the Senior Notes settlement. In conjunction with the
repayment and refinancing, the Group incurred an additional
GBP16.8m of fees that were not subject to capitalisation and
GBP4.3m of fees relating to debt covenant amendments as a result of
the Kentucky litigation. These charges were included as separately
disclosed items due to their non-recurring nature. See also Note
7.
In the year ended 31 December 2020, a loss on remeasurement of
the HRTV contingent consideration of GBP22.2m, an FX loss on
financial instrument of GBP12.9m, a loss of GBP31.0m relating to
accelerated debt repayments and GBP5.0m relating to the expensing
of one-off financing related fees not eligible for capitalisation
were incurred. These losses were included as separately disclosed
items due to their volatility and/or non-recurring nature. See also
Note 7.
Presentation within the Consolidated income Statement
The Germany and Greece tax expense is included in the
Consolidated Income Statement within cost of sales. Transaction
fees and associated costs, the Kentucky settlement and associated
legal costs and restructuring and integration costs are included in
the Consolidated Income Statement within operating costs excluding
depreciation, amortisation, impairment and gain on disposal.
Tax credit on separately disclosed items
The tax credit of GBP42.8m has arisen primarily in respect of a
deferred tax credit of GBP67.7m in relation to deferred tax asset
recognition on consolidation following an internal transfer of
intangible assets, GBP59.2m in respect of the amortisation of
acquisition-related intangibles and GBP20.0m in respect of the tax
effect of other separately identifiable items.
The above is offset by an increase of GBP104.1m in the deferred
tax liability on separately identifiable acquisition-related
intangible assets as result of the increase in the UK's main
corporation tax rate from 19% to 25% from 1 April 2023 as outlined
in more detail in Note 8.
7. Financial income and expense
Recognised in profit or loss
2021 2020
GBPm GBPm
------------------------------------------------ --------------------------------- ---------------------------------
Financial income:
Gain on remeasurement of embedded derivative
(see Note 6 and Note 16) - 78.5
Movement in fair value of investment 1.7 -
On financial assets at amortised cost:
Interest income 1.5 1.4
------------------------------------------------ --------------------------------- ---------------------------------
Total 3.2 79.9
------------------------------------------------ --------------------------------- ---------------------------------
Financial expense:
Settlement of Senior Notes (see Note 6) 78.8 -
Change in fair value of contingent consideration
(see Note 6) 3.3 22.2
Foreign exchange loss on financing instruments
associated with financing activities (Note
6) 1.2 12.9
Financing related fees not eligible for
capitalisation (see Note 6 and Note 16) 21.1 5.0
Accelerated accretion on debt repayments
(see Note 6 ) - 31.0
Movement in the fair value of investments - 1.5
On financial liabilities at amortised cost:
Interest on borrowings, bank guarantees
and bank facilities 106.0 95.6
Interest on lease liabilities 8.5 5.7
Other interest 10.2 8.4
------------------------------------------------ --------------------------------- ---------------------------------
Total 229.1 182.3
------------------------------------------------ --------------------------------- ---------------------------------
Recognised in other comprehensive income / (loss):
2021 2020
GBPm GBPm
---------------------------------------------- ---------------------------------- ----------------------------------
Recognised in other comprehensive income
/ (loss):
Effective portion of changes in fair value
of cash flow hedges 61.4 (280.4)
Fair value of cash flow hedges transferred
to income statement (28.4) 267.8
---------------------------------------------- ---------------------------------- ----------------------------------
Net change in fair value of cash flow hedge
reserve 33.0 (12.6)
Debt instruments at FVOCI (1.3) (0.4)
Foreign exchange gain on net investment
hedges 85.4 24.7
Foreign exchange (loss) / gain on translation
of the net assets of foreign currency
denominated
entities (309.6) 41.9
---------------------------------------------- ---------------------------------- ----------------------------------
Total (192.5) 53.6
---------------------------------------------- ---------------------------------- ----------------------------------
A charge of GBP2.5m was recorded in the income statement in
respect of ineffective cash flow hedges in the year ended 31
December 2021 (2020: gain of GBP0.2m).
8. Tax expense
2021 2020
GBPm GBPm
--------------------------------------- ---------------------------------- ----------------------------------
Recognised in profit or loss:
Current tax charge 127.3 82.6
Prior year under / (over) provision 1.0 (1.8)
--------------------------------------- ---------------------------------- ----------------------------------
Total current tax 128.3 80.8
--------------------------------------- ---------------------------------- ----------------------------------
Deferred tax credit (6.2) (45.8)
Prior year under provision 1.4 0.8
--------------------------------------- ---------------------------------- ----------------------------------
Decrease in net deferred tax liability (4.8) (45.0)
--------------------------------------- ---------------------------------- ----------------------------------
Total tax expense in income statement 123.5 35.8
--------------------------------------- ---------------------------------- ----------------------------------
8. Tax expense (continued)
The difference between the total tax expense shown above and the
amount calculated by applying the standard rate of corporation tax
to the profit before tax is as follows:
2021 2020
GBPm GBPm
---------------------------------------------- ---------------------------------- ----------------------------------
(Loss) / profit before tax (288.4) 1.1
---------------------------------------------- ---------------------------------- ----------------------------------
Tax on Group profit before tax at the standard
Irish corporation tax rate of 12.5% (36.1) 0.1
Depreciation on non-qualifying property,
plant and equipment (5.4) (4.7)
Effect of different statutory tax rates
in overseas jurisdictions 5.5 2.1
Non-deductible expenses 26.8 5.9
Non-taxable income (4.0) (7.3)
Effect of changes in statutory tax rates 104.4 1.2
Movement on deferred tax balances not
recognised 29.9 39.5
Under / (over) provision in prior year 2.4 (1.0)
---------------------------------------------- ---------------------------------- ----------------------------------
Total Tax Expense 123.5 35.8
---------------------------------------------- ---------------------------------- ----------------------------------
The Group's adjusted effective tax rate before separately
disclosed items for the period was 26.8% (year ended 31 December
2020: 16.6%), which compares to the standard Irish tax rate of
12.5%. A total tax credit on separately disclosed items of GBP42.8m
was recorded during the year ended 31 December 2021 (year ended 31
December 2020: GBP58.4m) (see Note 6).
The Group's consolidated effective tax rate on profits including
separately disclosed items for 2021 is (42.8)% (2020: 3,254.5%).
The separately disclosed items impacting the consolidated tax rate
include the unwind of deferred tax liabilities recognised in
respect of acquisition-related intangibles. The UK rate change has
led to a GBP104.4m charge primarily in respect to the deferred tax
liability on separately identifiable acquisition-related intangible
assets.
The Group's adjusted effective tax rate is also materially
impacted by the movement on deferred tax balances which remain
unrecognised due to the doubt over the future recoverability of
those assets, as well as the effect of expenses which are not
deductible for tax purposes.
The UK Budget 2021 announced on 3 March 2021 an increase in the
UK's main corporation tax rate from 19% to 25% from 1 April 2023.
This was enacted as part of the Finance Bill 2021 on 10 June 2021.
As these changes were substantively enacted before the balance
sheet date, they have been reflected in the deferred tax balances
within these financial statements.
The future effective tax rate of the Group will be principally
affected by the ongoing geographic mix of profits in accordance
with the OECD guidelines in relation to Base Erosion and Profit
Shifting. On 8 October 2021, 136 out of the 140 countries of the
OECD Inclusive Framework on Base Erosion and Profit Shifting ("IF")
have politically committed to potentially fundamental changes to
the international corporate tax system. This includes a proposed
introduction of a global minimum corporate tax rate set at 15% from
1 January 2023. Whilst consultation is ongoing, a template of these
rules has been published by the OECD on 20 December 2021. We will
continue to monitor developments closely and we expect this to lead
to an increase in tax from 2023 onwards.
9. Earnings per share
The Group presents basic and diluted earnings per share ("EPS")
data for its ordinary shares.
Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the
period. The weighted average number of shares has been adjusted for
amounts held as treasury shares and amounts held by the Paddy Power
Betfair plc Employee Benefit Trust ("EBT").
Diluted EPS is determined by adjusting the weighted average
number of ordinary shares outstanding for the effects of all
dilutive potential ordinary shares.
Adjusted EPS is determined by adjusting the profit attributable
to ordinary shareholders for the impact of separately disclosed
items.
9. Earnings per share (continued)
The calculation of basic, diluted and adjusted EPS is as
follows:
2021 2020
--------------------------------------------- --------------------------------- --------------------------------
Numerator in respect of basic and diluted
earnings per share (GBPm):
(Loss) / profit attributable to equity
holders of the Company (415.8) 37.9
--------------------------------------------- --------------------------------- --------------------------------
Numerator in respect of adjusted earnings
per share (GBPm):
(Loss) / profit attributable to equity
holders of the Company (415.8) 37.9
Separately disclosed items (Note 6) 860.0 483.8
--------------------------------------------- --------------------------------- --------------------------------
Profit for adjusted earnings per share
calculation 444.2 521.7
--------------------------------------------- --------------------------------- --------------------------------
Weighted average number of ordinary shares
in issue during the period (in '000s)(1) 175,780 129,558
--------------------------------------------- --------------------------------- --------------------------------
Basic earnings per share (GBP2.365) GBP0.293
--------------------------------------------- --------------------------------- --------------------------------
Adjusted basic earnings per share GBP2.527 GBP4.027
--------------------------------------------- --------------------------------- --------------------------------
Adjustments to derive denominator in respect
of diluted earnings per share (in '000s):
Weighted average number of ordinary shares
in issue during the period 175,780 129,558
Dilutive effect of share options and awards
on issue - 3,291
--------------------------------------------- --------------------------------- --------------------------------
Adjusted weighted average number of ordinary
shares in issue during the period(1) 175,780 132,849
--------------------------------------------- --------------------------------- --------------------------------
Diluted earnings per share (GBP2.365) GBP0.285
--------------------------------------------- --------------------------------- --------------------------------
1 Where any potential ordinary shares would have the effect of
decreasing a loss per share, they have not been treated as
dilutive. The number of options excluded from the diluted weighted
average number of ordinary shares calculation due to their effect
being anti-dilutive is 2,289,170 (2020: 345,673).
The average market value of the Company's shares of GBP137.61
(31 December 2020: GBP108.80) was used to calculate the dilutive
effect of share options based on the market value for the period
that the options were outstanding.
10. Goodwill
Following the Combination with the Stars Group in 2020, the
Group reorganised its business into four divisions, reporting
against these divisions from 2021. As part of this process the
Group reviewed the historical assessment of cash generating units
("CGUs") and the allocation of goodwill. The legacy Sky Betting
& Gaming CGU has been renamed 'UK&I Online', and has been
allocated goodwill relating to the UK&I business under the
relative value approach from the legacy PPB Online CGU. The legacy
PokerStars CGU has been renamed to "International", and has been
allocated goodwill relating to the International business based on
the relative values of the PPB Online CGU to the extent that the
goodwill was not already separately identifiable. All other CGUs
were unchanged.
The opening goodwill balance has been restated for comparable
purposes. The following CGUs, being the lowest level of asset for
which there are separately identifiable cash flows, have the
following carrying amounts of goodwill:
UK&I Irish
Online UK Retail Retail International Australia US Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1
January
2021 5,845.5 18.9 20.7 2,560.9 507.7 563.0 9,516.7
Arising on
acquisitions
during the
period (Note
11) - - - 58.5 - - 58.5
Disposals
(Note 11) (78.0) - - - - - (78.0)
Foreign
currency
translation
adjustment (0.6) - - (129.1) (25.3) 4.6 (150.4)
------------- ------------ ------------- ------------ --------------------- -------------- ------------ --------------
Balance at 31
December
2021 5,766.9 18.9 20.7 2,490.3 482.4 567.6 9,346.8
------------- ------------ ------------- ------------ --------------------- -------------- ------------ --------------
The Group reviews the carrying value of goodwill for impairment
annually (or more frequently if there are indications that the
value of goodwill may be impaired) by comparing the carrying values
of these CGUs with their recoverable amounts (being the higher of
value in use and fair value less costs to sell).
As a consequence of Covid-19, the retail CGUs were impacted by
the temporary suspension of the activities of shops in 2021 for a
period. Based on the significant headroom that existed in the 31
December 2021 impairment test, the performance of the shops and
customer activity levels since the shops have reopened and further
easing of social distancing requirements, as well as opportunities
to make further market share gains as competitors reduce the size
of their respective estates, the Group is satisfied that no
impairment has arisen during the year ended 31 December 2021.
The UK&I Online segment goodwill amount arose from the
acquisition of the Sky Betting and Gaming business as part of the
TSG acquisition in 2020 (see Note 11), the acquisition of CT
Networks Limited ("Cayetano"), a games developer based in the Isle
of Man and Bulgaria, in 2011 and the acquisition of the Betfair
online business (excluding operations outside of Ireland and the
UK) as part of the all-share merger with Betfair Group plc in
2016.
10. Goodwill (continued)
Goodwill in UK Retail arose from the acquisition of two London
bookmaking businesses in 2004, the acquisition of a retail
bookmaking company in Northern Ireland in 2008 and the acquisition
of a number of retail bookmaking shop properties since 2010.
Goodwill in Irish Retail arose from the amalgamation of three
bookmaking businesses to form Paddy Power plc in 1988 and the
acquisition of a number of retail bookmaking shop properties since
2007.
The International goodwill amount arose from the acquisition of
the PokerStars business as part of the TSG acquisition in 2020, the
acquisition of the Betfair online business (excluding the
operations of Ireland, the UK, and the US) acquired as part of the
all-share merger with Betfair Group plc in 2016, the acquisition of
an initial 51% controlling stake in Adjarabet, the market leader in
online betting and gaming in the regulated Georgian market, in
February 2019 and the acquisitions in 2021 of a 57.3% controlling
stake in Junglee Games, an Indian online rummy operator and
Singular, a B2B operator which offers a flexible, modular sports
betting and gaming technology platform (see Note 11).
The Australia segment goodwill amount arose from the acquisition
of an initial 51% interest in Sportsbet Pty Limited ("Sportsbet"),
the subsequent acquisition of International All Sports Limited
("IAS") by Sportsbet, both in 2009, and goodwill arising from
BetEasy through the 2020 combination with TSG (see Note 11).
The US segment goodwill amount arose from the acquisition of the
US business acquired as part of the all-share merger with Betfair
Group plc in 2016, the acquisition of FanDuel Limited a market
leading operator in the daily fantasy sports market in the United
States, in 2018 and goodwill arising on Fox Bet through the
combination with TSG in 2020 (see Note 11).
Impairment tests for cash generating units containing goodwill
and indefinite life intangible assets
In accordance with accounting requirements, the Group performs
an annual impairment test of its CGUs. The most recent test was
performed at 31 December 2021.
For the purpose of impairment testing, the Group's CGUs include
amounts in respect of goodwill and indefinite life intangible
assets, comprising licences acquired as part of the purchase of the
D McGranaghan Limited business in 2008 and a shop acquisition in
2011 and brands acquired as part of the purchase of Sportsbet and
IAS in 2009.
Based on the reviews as described above, with the exception of a
GBP12.1m impairment in 2020 of the Northern Ireland retail
indefinite life licences, USD35.3m (GBP26.5m) in 2018 of the US DFS
business acquired in 2017 and the IAS brand impairment of AUD6.9m
initially provided for in 2011, no impairment has arisen.
11. Business combinations and disposals
Year ended 31 December 2021
Acquisition of Singular
On 10 September 2021, the Group completed the acquisition of a
100% stake in Singular, an European sports betting and gaming
technology platform which is already fully integrated with our
Adjarabet business and will provide us with greater optionality as
we enter new markets. The purchase comprised of an initial cash
payment of EUR16.5m (GBP14.1m) with a further EUR20.1m (GBP17.2m)
payable subject to the business meeting strategic milestones in the
future, recorded as contingent consideration and EUR1.0m (GBP0.8m)
included within deferred consideration.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill are as follows:
Provisional fair
values as at
10 September 2021
GBPm
Assets
Property, plant and equipment 0.2
Intangible assets 4.3
Total non-current assets 4.5
Trade and other receivables 0.9
Cash and cash equivalents 0.5
Total current assets 1.4
Total assets 5.9
Liabilities
Trade and other payables 0.9
Total current liabilities 0.9
Deferred tax liabilities 0.2
Total non-current liabilities 0.2
Total liabilities 1.1
Net assets acquired 4.8
Goodwill 27.3
Consideration 32.1
The consideration is analysed as:
Consideration satisfied by cash 14.1
Contingent consideration 17.2
Deferred consideration 0.8
Consideration 32.1
Included within the intangible assets were GBP4.3m of separately
identifiable intangibles comprising technology and customer
relations acquired as part of the acquisition, with the additional
effect of a deferred tax liability of GBP0.2m thereon. These
intangible assets are being amortised over their useful economic
lives of up to five years. The book value equated to the fair value
on the remaining assets as all amounts are expected to be
received.
The main factors leading to the recognition of goodwill (none of
which is deductible for tax purposes) is growth by combining the
Group's significant operating experience in other markets with the
local market knowledge and skills of the management team in
Singular. The goodwill has been allocated to the existing
International CGU and it has been deemed that a separate CGU is not
appropriate.
If the acquisition had occurred on 1 January 2021, Singular's
contribution to revenue and net profit after tax for the year ended
31 December 2021 would have been insignificant in terms of third
party revenue and GBP0.1m respectively. Since the date of
acquisition to 31 December 2021, Singular has contributed
insignificant third party revenue and a GBP0.2m profit after tax to
the results of the Group.
Acquisition of Junglee Games
On 28 January 2021, the Group completed the acquisition of an
initial 50.1% stake in Junglee Games ("Junglee"), an Indian online
rummy operator, for US$67.3m (GBP49.3m), with US$63.5m (GBP46.5m)
paid in cash and the remainder recorded as deferred consideration
and paid subsequently in 2021. On the same date the Group entered
into call and put options which would enable the Group to acquire
an additional 7.2% stake in Junglee in exchange for cash
consideration. In June 2021, these options were exercised and the
Group acquired the additional 7.2% stake in Junglee in exchange for
cash consideration of US$7.5m (GBP5.5m) with US$7.0m (GBP5.1m) paid
in cash and the remainder recorded as deferred consideration and
paid subsequently in 2021. This has been accounted under the
anticipated acquisition method, with the combined 57.3% recognised
as acquired from 28 January 2021.
11. Business combinations and disposals (continued)
Junglee is a top three player in the legal Indian online rummy
market. Based on its December 2020 run-rate, Junglee would generate
annualised gross revenue of cGBP50m in a full year. The Group sees
good potential to further develop Junglee's product offering,
including its recently launched daily fantasy sports product,
leveraging the Group's capabilities in this area. The Group has put
in place arrangements, consisting of call and put options that
could see its ownership in the business increase to 100% in 2025.
The call and put options consideration can be settled, at the
Group's election, in cash or shares. As a consequence of both the
call and put options being only exercisable at fair value being the
future EBITDA and revenue multiple, which are considered to be two
key inputs into valuing the option, it was determined that the fair
value of the call and put options was not material and was close to
nominal value.
Included within the intangible assets were GBP42.9m of
separately identifiable intangibles comprising brand, technology
and customer relations acquired as part of the acquisition, with
the additional effect of a deferred tax liability of GBP10.8m
thereon. These intangible assets are being amortised over their
useful economic lives of up to 10 years. The book value equated to
the fair value on the remaining assets and liabilities as all
amounts are expected to be received.
The main factors leading to the recognition of goodwill (none of
which is deductible for tax purposes) is growth by combining the
Group's significant operating experience in other markets with the
local market knowledge and skills of the management team in
Junglee, driving revenue synergies over time. The goodwill has been
allocated to the existing International CGU and it has been deemed
that a separate CGU is not appropriate.
Since the date of acquisition to 31 December 2021, Junglee has
contributed GBP50m of revenue and GBP7.4m of a net loss after tax
to the results of the consolidated Group.
If the acquisition had occurred on 1 January 2021, Junglee's
contribution to revenue and net loss after tax for the year ended
31 December 2021 would have been GBP53m and GBP6.6m
respectively.
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill are as follows:
Fair values as at
28 January 2021
GBPm
Assets
Property, plant and equipment 0.2
Intangible assets 42.9
Total non-current assets 43.1
Trade and other receivables 3.8
Cash and cash equivalents 17.7
Total current assets 21.5
Total assets 64.6
Liabilities
Trade and other payables 13.1
Total current liabilities 13.1
Deferred tax liabilities 10.8
Total non-current liabilities 10.8
Total liabilities 23.9
Net assets acquired 40.7
Goodwill 31.2
Non-controlling interest measured at the proportionate
interest method (17.1)
Consideration 54.8
The consideration is analysed as:
Consideration satisfied by cash 46.5
Put option satisfied by cash 5.1
Deferred consideration 2.8
Put option deferred consideration 0.4
Consideration 54.8
11. Business combinations and disposals (continued)
Year ended 31 December 2020
Acquisition of The Stars Group Inc.
On 5 May 2020, Flutter completed an all-share Combination with
The Stars Group Inc. (the "Combination") resulting in existing
Flutter shareholders owning 54.64% and The Stars Group Inc.
shareholders owning 45.36% of Flutter (the "Company", together with
its subsidiaries, the "Group"), on a fully diluted basis (excluding
any out of the money options). Post-Combination, the Company is the
ultimate parent of The Stars Group Inc. ("TSG").
Under the terms of the Combination, holders of TSG shares
received 0.2253 ordinary shares with nominal value of EUR0.09 each
in the Company ("ordinary shares") in exchange for each outstanding
TSG share (the "Exchange Ratio"). Accordingly, the Company issued a
total of 65,316,588 ordinary shares in exchange for 289,909,400
shares in TSG. The fair value of the ordinary shares issued was
GBP94.84 per share at this date.
In addition: (i) each TSG Option outstanding at 5 May 2020,
under the TSG Share Plans was exchanged for an option to purchase
such number of New Flutter Shares calculated in accordance with the
Exchange Ratio; and (ii) each TSG restricted share unit ("RSU"),
TSG performance share unit ("PSU") and TSG deferred share unit
("DSU") outstanding at the Effective Time under the TSG Equity Plan
was amended so as to substitute for the TSG Shares, subject to such
equity awards, a number of Flutter Shares calculated in accordance
with the Exchange Ratio but subject to any adjustment required to
that award by the TSG Equity Plan or grant documentation as a
result of the Plan of Arrangement.
TSG is a global leader in the online and mobile gaming and
interactive entertainment industries, entertaining millions of
customers across its online real- and play-money poker, gaming and
betting product offerings. TSG offers these products directly or
indirectly under several ultimately owned or licensed gaming and
related consumer businesses and brands. TSG is one of the world's
most licensed online gaming operators with its subsidiaries
collectively holding licences or approvals in 22 jurisdictions
throughout the world, including in Europe, Australia and the
Americas.
The main drivers for the Combination were to accelerate delivery
against each of the components of Flutter's four-pillar strategy;
create a highly diversified business from a geographic, product and
brand perspective with an enhanced global platform; deliver
significant value for shareholders through the realisation of
material cost synergies such as procurement synergies, removal of
duplicate corporate and administrative costs and utilisation of
scale to create efficiencies; reinforce a robust financial profile
which will facilitate strategic flexibility as well as generate
sustainable long-term shareholder returns; and maintain a leading
role in the promotion of responsible gambling through an enlarged
global footprint.
Included within the intangible assets were GBP5,316.4m of
separately identifiable intangibles comprising brands, customer
relations and technology acquired as part of the Combination, with
the additional effect of a deferred tax liability of GBP527m
thereon. These intangible assets are being amortised over their
useful economic lives of up to 20 years. Receivables acquired
amounted to GBP114.6m. The book value equated to the fair value as
all amounts are expected to be received. The main factors leading
to the recognition of goodwill (none of which is deductible for tax
purposes) is growth by combining business activities, a strong
workforce, leveraging existing products and synergy savings of the
merged operations. The goodwill associated with the PokerStars and
Sky Betting & Gaming businesses has been included in the
International and UK&I CGUs, respectively. The goodwill
associated with the Australia and US businesses has been allocated
to the respective existing Australia and US CGUs and it has been
deemed that separate CGUs are not appropriate.
11. Business combinations and disposals (continued)
Details of the fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill were finalised during
the period and no change to the figures reported as at 31 December
2020 were identified. They are outlined as follows:
Fair values as
at
5 May 2020
GBPm
Assets
Property, plant and equipment 105.5
Intangible assets 5,316.4
Deferred tax asset 8.3
Non-current tax receivable 19.1
Derivative financial assets 79.2
Investments 4.0
Other receivables 26.2
Financial assets - restricted cash 8.9
Total non-current assets 5,567.6
Trade and other receivables 88.4
Current tax receivable 28.7
Financial assets - restricted cash 292.4
Current investments - customer deposits 89.7
Cash and cash equivalents 445.2
Total current assets 944.4
Total assets 6,512.0
Liabilities
Trade and other payables 498.8
Customer balances 376.7
Derivative financial liabilities 10.0
Provisions 1.4
Current tax payable 15.1
Lease liabilities 16.4
Borrowings 59.7
Total current liabilities 978.1
Trade and other payables 3.1
Derivative financial liabilities 56.9
Provisions 149.1
Non-current tax payable 22.3
Deferred tax liabilities 487.5
Lease liabilities 26.1
Borrowings 3,873.9
Total non-current liabilities 4,618.9
Total liabilities 5,597.0
Net assets acquired 915.0
Goodwill 5,337.6
Consideration 6,252.6
Consideration satisfied by:
Issue of 65,316,588 Flutter Entertainment plc ordinary
shares 6,194.6
Issue of replacement share options and awards 58.0
Consideration 6,252.6
11. Business combinations and disposals (continued)
Acquisition of additional shares of TSG Australia Pty Ltd
On 13 May 2020, the Group exercised its option to acquire the
remaining 20% of the outstanding share capital of TSG Australia Pty
Ltd ("TSG Australia"), bringing the Group's holding in TSG
Australia to 100%, up from the previous 80%. The acquisition was
satisfied by the issuance of 819,230 new ordinary shares of the
Company, settling a liability of A$151.4m (GBP79.7m).
Acquisition of additional shares of FanDuel
On 30 December 2020, the Group acquired an additional 37.2% of
the outstanding shares of FanDuel in exchange for GBP3.340bn,
satisfied by a cash payment of US$2.088bn (GBP1.546bn) and the
issuance of 11,747,205 new ordinary shares of the Company
(GBP1,794.4m). The acquisition brings the Group's holding in
FanDuel to 95%, up from the previous controlling interest of 57.8%.
As FanDuel's results and financial position had been previously
consolidated into the Group, the excess of the purchase price over
the carrying value of the non-controlling interest acquired was
recognised directly within equity in retained earnings. The initial
goodwill and non-controlling interest were recorded initially using
the proportionate interest method and a transfer from
non-controlling interest to retained earnings and foreign currency
translation reserve has been made.
As outlined previously, as a result of the acquisition of
FanDuel Limited in 2018, call and put options were put in place for
the Group to acquire a further 37.2% of FanDuel at prevailing
market valuations three and five years after the July 2018
acquisition. The Group had the discretion as to whether these
options are settled by the issuance of Flutter Entertainment plc
shares or via cash. These options terminated on the acquisition of
37.2% additional FanDuel shares on 30 December 2020.
The put and call agreement stated that the number of shares to
be issued as consideration for the settlement of the put/call could
not exceed 10% of the Flutter Entertainment plc shares in issue
with any excess paid in cash. Due to the growth in value of FanDuel
to 30 December 2020, this resulted in the Group recognising a
liability of GBP846m which was derecognised on 30 December 2020 as
part of the above acquisition.
Disposal of Oddschecker Global Media
On 31 August 2021 the Group sold all of the shares of
Oddschecker Global Media ("OGM"), a fully owned subsidiary of the
Group, to Bruin Capital, in exchange for GBP127.1m in cash
(proceeds of GBP141.3m net of GBP14.2m cash already on the balance
sheet) and recorded a gain on the disposal of GBP12.2m (see also
Note 6). There is potential for the Group to receive further
consideration of up to GBP20m pending future events. However, it is
currently not probable that further amounts will be received and
therefore no contingent asset has been recorded. Prior to the sale,
the non-current assets were measured at the lower of their carrying
amount and fair value less costs sell. No impairments were
recognised. The assets and liabilities of OGM were included within
the UK&I segment up to the date of sale.
The net assets disposed and the gain on disposal recognised by
the Group were as follows:
31 August 2021
GBPm
Property, plant and equipment 0.8
Intangible assets 48.1
Goodwill 78.0
Trade and other receivables 2.1
Cash and cash equivalents 14.2
Total assets 143.2
Accounts payable and other liabilities (7.3)
Deferred taxes (11.6)
Total liabilities (18.9)
Net assets disposed 124.3
Disposal costs (4.8)
Proceeds 141.3
Gain on disposal 12.2
11. Business combinations and disposals (continued)
Cash (outflows) / inflows from business combinations:
Year ended Year ended
31 December 31 December
2021 2020
GBPm GBPm
---------------------------------------------- ---------------------------------- ----------------------------------
Cash consideration paid for acquisitions
in the period (63.4) -
Cash consideration paid for put option
exercised in the period (5.5) -
Cash acquired from acquisitions in the
period 18.2 445.2
Cash consideration - acquisitions in previous
periods (21.6) (7.2)
---------------------------------------------- ---------------------------------- ----------------------------------
As presented in the statement of cash flows:
Purchase of businesses net of cash acquired (50.7) 445.2
Payment of contingent deferred consideration (21.6) (7.2)
---------------------------------------------- ---------------------------------- ----------------------------------
During the year the Group settled in cash, deferred
consideration liabilities of GBP21.6m in relation to Betfair's
historical acquisition of HRTV, a horseracing television network
based in the US.
12. Investments and trade and other receivables
Non-current assets
31 December 31 December
2021 2020
GBPm GBPm
-------------------- --------------------------------- ----------------------------------
Investments - FVTPL 5.5 3.0
-------------------- --------------------------------- ----------------------------------
Investments relate to a small number of individually immaterial
equity investments in various companies.
31 December 31 December
2021 2020
GBPm GBPm
--------------------------------------------- --------------------------------- ----------------------------------
Other receivables
Other receivables 11.8 13.0
Prepayments 13.8 16.7
Deferred financing costs on Revolving Credit
Facility (see Note 16) 3.7 4.6
Amounts paid in respect of legacy German
and Greek tax assessments - 40.9
--------------------------------------------- --------------------------------- ----------------------------------
Total 29.3 75.2
--------------------------------------------- --------------------------------- ----------------------------------
Other receivables
Other receivables are comprised primarily of deposits for
licences and property.
Deferred financing costs on Revolving Credit Facility
In May 2020, the Group entered into a new Revolving Credit
Facility agreement as part of its financing agreements. The Group
incurred GBP5.3m of transaction costs and fees relating to the
Revolving Credit Facility, which have been capitalised and included
within non-current receivables, net of accretion of GBP3.7m (2020:
GBP4.6m), on the Consolidated Statement of Financial Position and
are recorded as financial expense over the term of the Revolving
Credit Facility agreement using the effective interest rate method.
As at 31 December 2021, no loan amount was drawn under the
Revolving Credit Facility (31 December 2020: nil).
Amounts paid in respect of legacy German and Greek tax
assessments
Germany
In 2012 Betfair was issued with a German tax assessment relating
to the Betfair Exchange, which operated in Germany until November
2012. The assessment deemed that a tax liability of approximately
EUR30.6m is payable. This represents a multiple of the revenues
generated by the Exchange during the assessment period.
The Group paid the EUR30.6m German tax assessment in 2019, with
the late payment interest of approximately EUR10m to be paid when
assessed.
In September 2021 the German Federal Tax Court dismissed the
Group's appeal of the tax assessment. Whilst the Group has lodged a
formal complaint to the Federal Constitutional Court, it has
decided to recognise the amount of the German tax assessment. This
has resulted in an expense of EUR40.6m (GBP34.5m) being recorded in
the year in relation to the principal amount of tax and late
payment interest.
12. Investments and trade and other receivables (continued)
Greece
In 2019, the Group was issued with a Greek tax assessment for
financial years 2012, 2013 and 2014, relating to paddypower.com's
Greek interim licence. This assessment concluded that the Group is
liable to pay EUR15.0m in taxes including penalties and interest.
This is substantially higher (by multiples) than the total
cumulative revenues ever generated by paddypower.com in Greece.
Pending the outcome of its appeal, in 2019 the Group paid the total
Greek tax assessment (including the penalties and interest) of
EUR15.0m.
In June 2021, the Athens Administrative Court of Appeal
dismissed the Group's judicial recourses. While the Group has
further appealed to the Greek Supreme Administrative Court, based
on the nature of the decision received and the points of law which
can be appealed, and in line with legal and tax advice it has
received, it has decided to recognise the amount of the Greek
assessment, of EUR15.0m (GBP12.8m) as an expense in the income
statement during the year ended 31 December 2021. No notifications
have as yet been received for later years and so no provision has
been made for potential further assessments.
Current assets
31 December 31 December
2021 2020
GBPm GBPm
--------------------------------------- --------------------------------- ----------------------------------
Trade and other receivables
Trade receivables 39.5 11.9
Other receivables 34.4 28.5
Value-added tax and goods and services
tax 5.1 2.2
Prepayments 124.9 96.9
---------------------------------------
Total 203.9 139.5
--------------------------------------- --------------------------------- ----------------------------------
13. Current investments, financial assets - restricted cash and
cash equivalents
31 December 31 December
2021 2020
GBPm GBPm
----------------------------------------- --------------------------------- ----------------------------------
Non-current:
Financial assets - restricted cash 7.4 6.9
Current:
Investments at FVOCI - customer deposits 83.0 82.8
Financial assets - restricted cash 677.6 587.9
Cash and cash equivalents 951.7 603.4
----------------------------------------- --------------------------------- ----------------------------------
Total 1,719.7 1,281.0
----------------------------------------- --------------------------------- ----------------------------------
Financial assets
Non-current financial assets - restricted cash include:
-- amounts required to be held as to guarantee third party letter of credit facilities.
Current financial assets - restricted cash include:
-- customer funds balances securing player funds held by the
Group. These customer funds are matched by liabilities of equal
value; and
-- amounts required to be held as to guarantee third party letter of credit facilities.
The effective interest rate on bank deposits at 31 December 2021
was 0.3% (31 December 2020: 0.1%); these deposits have an average
original maturity date of one day (2020: one day). The bank
deposits also have an average maturity date of one day from 31
December 2021 (2020: one day). The Directors believe that all
short-term bank deposits can be withdrawn without significant
penalty.
Investments - customer deposits
Investments relate to customer deposits, and are held in
accounts segregated from investments held for operational purposes.
Investments held in relation to customer deposits are liquid
investments in short duration corporate and government bonds and
are classified as current assets consistent with the current
classification of customer deposits to which the investments
relate. Management's investment strategy for the portfolio results
in the majority of the bonds being held to maturity. Bonds are
classified as FVOCI.
13. Current investments, financial assets - restricted cash and
cash equivalents
Amounts held in trust
As at 31 December 2021, GBP355.6m (31 December 2020: GBP379.3m)
was held in trust in The Sporting Exchange (Clients) Limited on
behalf of the Group's customers and is equal to the amounts
deposited into customer accounts. Neither cash and cash equivalents
nor restricted cash include these balances on the basis that they
are held on trust for customers and do not belong to and are not at
the disposal of the Group.
Currency details
Investments - customer deposits, financial assets - restricted
cash and cash and cash equivalents are analysed by currency as
follows:
31 December 31 December
2021 2020
GBPm GBPm
--------------------------- ------------------------
GBP 708.7 289.9
EUR 165.0 283.8
AUD 238.2 158.0
USD 570.8 506.5
Other 37.0 42.8
------------------------
Total 1,719.7 1,281.0
------------------------
14. Trade and other payables
Current liabilities
31 December 31 December
2021 2020
GBPm GBPm
---------------------------------------------
Trade and other payables
Trade payables 74.2 79.7
PAYE and social security 19.7 14.8
Value-added tax and goods and services
tax 30.7 10.7
Betting duty, data rights, and product
and racefield fees 190.0 208.0
Employee benefits 156.1 136.4
Contingent deferred consideration - business
combinations 21.0 25.3
Accruals and other liabilities 604.7 558.1
Total 1,096.4 1,033.0
Non-current liabilities
31 December 31 December
2021 2020
GBPm GBPm
-----------------------------------
Trade and other payables
Employee benefits 2.1 1.1
Contingent deferred consideration - business
combinations 16.9 12.8
Accruals and other payables 0.8 0.7
Total 19.8 14.6
Contingent deferred consideration - business combinations
The Group's deferred consideration liabilities amounted to
GBP37.9m at 31 December 2021 (31 December 2020 - GBP38.1m) and
relate to the following:
-- GBP15.4m contingent and deferred consideration relating to
Betfair's historical acquisition of HRTV, a horse racing television
network based in the United States;
-- GBP4.7m deferred consideration in respect of Diamond Game
Enterprises, assumed as part of the Combination with TSG; and
-- GBP17.8m relating to the acquisition of Singular in 2021 (see also Note 11).
15. Provisions
Provisions balances at 31 December 2021 and 31 December 2020 and
movements during the year ended 31 December 2021 are outlined
below:
Employee
benefits
(long
service Onerous Gaming Other
leave) contracts tax Kentucky legal Other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----------------
Balance at
31 December
2020 3.0 16.0 10.5 73.3 56.0 0.5 159.3
Additional
provisions
recognised 0.8 4.8 12.3 - 17.3 7.0 42.2
Amounts used
during
the year (0.1) (6.6) (0.4) (71.1) (0.6) - (78.8)
Foreign
currency
translation (0.2) (0.5) - (2.2) (0.7) - (3.6)
---------------- ----------------
Balance at
31 December
2021 3.5 13.7 22.4 - 72.0 7.5 119.1
---------------- ----------------
Presented
in:
Balance at
31 December
2020:
Current 1.6 9.9 2.7 - - 0.1 14.3
Non-current 1.4 6.1 7.8 73.3 56.0 0.4 145.0
---------------- ---------------- ---------------
Total 3.0 16.0 10.5 73.3 56.0 0.5 159.3
---------------- ---------------- --------------- --------------- --------------- ---------------
Balance at
31 December
2021:
Current 2.2 6.6 22.4 - 34.5 5.6 71.3
Non-current 1.3 7.1 - - 37.5 1.9 47.8
---------------- ---------------- ---------------
Total 3.5 13.7 22.4 - 72.0 7.5 119.1
---------------- ---------------- --------------- --------------- --------------- ---------------
Employee benefits (long service leave)
The timing and amount of long service leave cash outflows are
primarily dependent on when staff employed at the reporting date
avail of their entitlement to leave and their expected salaries at
that time. As of 31 December 2021 and 31 December 2020, it was
expected that cash outflows would occur primarily within the
following five years.
Onerous contracts
The onerous contracts provision at 31 December 2021 relates to
various marketing and minimum guarantee contracts where the cost of
fulfilling these contracts exceeds the expected economic benefits
to be received from them.
Gaming tax
These are gaming tax provisions relating to amounts provided for
taxes in certain jurisdictions where the interpretation of tax
legislation is uncertain. When the Group disagrees with the
application of unclear tax legislation, for example when it is
applied retrospectively and / or results in a one-off
disproportionate tax equivalent to many times the profit derived by
the Group from its historic activities in that jurisdiction, the
Group continues to challenge these interpretations.
Whilst the maximum potential obligation for all ongoing cases
could be greater than the recognised provision, and the outcomes
may not be known for some time, a liability has been recorded for
the Directors' best estimate of the cash outflows that will
ultimately be required in respect of each claim. Management has not
provided a sensitivity for this provision as the range is not
considered to be material. Management notes this is a key estimate;
however, it is not a key judgement that will have a material impact
in the coming year.
Kentucky proceedings
On 22 September 2021, the Group announced that the legal dispute
between Flutter and the Commonwealth of Kentucky had been settled
in full. The Group agreed to pay an additional $200m (GBP145.2m) to
Kentucky in addition to the $100m (GBP71.1m) previously forfeited
to the Commonwealth as part of the supersedeas bond in the case in
line with the provision outstanding at 31 December 2020. In return,
Kentucky released Stars Interactive Holdings (IOM) Ltd, Rational
Entertainment Enterprises Ltd and, inter alia, all Flutter entities
from any claims relating to the matters in issue in the Kentucky
proceedings, and the proceedings were consequently dismissed with
prejudice. See Note 4 and Note 6 for further details.
Other legal
Other legal provisions generally consist of payments for various
future legal settlements where, based on all available information,
management believes it is probable that there will be a future
outflow.
These provisions comprise a number of different legal cases, the
majority of which are immaterial. The most significant relates to
the foreign payments contingent liabilities outlined in more detail
in Note 20. Further disclosure in respect of these provisions has
not been provided as such information would be expected to be
prejudicial to the Group's position in such matters.
15. Provisions (continued)
Whilst the maximum potential obligation for all ongoing cases
could be greater than the recognised provision, and the outcomes
may not be known for some time, a liability has been recorded for
the Directors' best estimate of the cash outflows that will
ultimately be required in respect of each claim. Management has not
provided a sensitivity for this provision as the range is not
considered to be material. Management notes this is a key estimate;
however, it is not a key judgement that will have a material impact
in the coming year.
Other
Other provisions primarily comprise a number of different
regulatory provisions.
16. Borrowings
The following is a summary of borrowings, including accrued
interest, outstanding as at 31 December 2021 and 31 December
2020:
31 December 2021 31 December 2020
Principal Principal
outstanding Carrying outstanding
Contractual balance amount (including balance Carrying
interest in currency accrued in currency amount (including
rate of borrowing interest)(1) of borrowing accrued interest)
Local currency Local currency
% (m) GBPm (m) GBPm
GBP First
Lien Term
Loan A 1.92 GBP1,017.9 1,009.6 GBP950.0 940.4
USD First
Lien Term
Loan B 2.38 $2,931.0 2,142.6 $1,456.3 1,042.9
EUR First
Lien Term
Loan B 2.50 EUR507.2 419.6 EUR507.2 449.1
Senior
Notes(2) 7.00 - - $1,000.0 706.5
Total
borrowings 3,571.8 3,138.9
Presented
in:
Current
portion 22.1 50.8
Non-current
portion 3,549.7 3,088.1
Total
borrowings 3,571.8 3,138.9
1 The carrying amounts at 31 December 2021 includes accrued
interest of GBP0.4m (31 December 2020: GBP24.6m) presented within
the current portion of borrowings above.
2 The carrying amounts at 31 December 2020 include an asset of
GBP98.0m relating to the embedded derivatives on the Senior Notes
which were subsequently settled on repayment in July 2021. See
below in this note for further detail.
During the year ended 31 December 2021, the Group incurred the
following interest on its then outstanding borrowings:
Effective
interest Interest
rate(1) Interest(2) accretion(3) Total interest
% GBPm GBPm GBPm
GBP First Lien
Term Loan
A 2.21 17.4 2.3 19.7
USD First Lien
Term Loan
B 2.88 45.8 5.3 51.1
EUR First Lien
Term Loan
B 2.93 14.2 1.3 15.5
Senior Notes 5.70 28.1 (46.8) (18.7)
Total 105.5 (37.9) 67.6
1 The effective interest rate calculation excludes the impact of
the Swap Agreements (as defined below).
2 In addition to the amount included above, the Group incurred
GBP2.2m of interest expense relating to commitment, utilisation,
and fronting fees associated with its Revolving Credit Facility and
made payments of GBP4.4m to the lenders as a result of covenant
amendments charged to the profit and loss.
3 Included within interest accretion is a gain of GBP42.9m
following the settlement of the Senior Notes during the year.
16. Borrowings (continued)
The Group's change in borrowings during the year ended 31
December 2021 was as follows:
Balance Adjustments Embedded Balance
at 1 Principal to amortised Interest derivative at 31
Jan 2021 New debt payments costs(1) accretion(2) settlement FX translation Dec 2021
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
GBP First
Lien
Term Loan
A 939.5 67.9 - (0.5) 2.3 - - 1,009.2
USD First
Lien
Term Loan
B 1,042.9 1,099.8 (18.0) (5.4) 5.3 - 18.0 2,142.6
EUR First
Lien
Term Loan
B 449.1 - - (2.2) 1.3 - (28.6) 419.6
Senior
Notes 682.8 - (733.2) - (46.8) 96.1 1.1 -
-------------
Total 3,114.3 1,167.7 (751.2) (8.1) (37.9) 96.1 (9.5) 3,571.4
-------------
Accrued
interest 24.6 0.4
-------------
Total
borrowings 3,138.9 3,571.8
------------ -------------
(1) Adjustments to amortised costs include transaction costs and
fees incurred in respect of the refinancing and additional debt
drawdown noted below.
(2) Interest accretion represents interest expense calculated at
the effective interest rate less interest expense calculated at the
contractual interest rate and is recorded in financial expenses in
the consolidated income statement.
As at 31 December 2021, the contractual principal repayments of
the Group's outstanding borrowings, excluding accrued interest,
amount to the following:
< 1 year 1-2 years 2-3 years 3-4 years 4-5 years
GBPm GBPm GBPm GBPm GBPm
------------------------- ------------------------- ------------------------- ------------------------- -------------------------
GBP - - - 1,017.9 -
First
Lien
Term
Loan A
USD
First
Lien
Term
Loan
B 21.7 21.7 21.7 21.7 2,080.7
EUR
First
Lien
Term
Loan
B - - - - 425.9
21.7 21.7 21.7 1,039.6 2,506.6
Revolving Credit Facility, First Lien Term Loans and Senior
Notes
Each of the Group's facilities are discussed below.
TLA Agreement - GBP First Lien Term Loan A
In May 2020, the Group, along with its subsidiaries PPB
Financing Unlimited Company and PPB Treasury Unlimited Company as
borrowers, entered into a Term Loan A and Revolving Credit Facility
Agreement (the "TLA Agreement") comprising a term loan and
revolving credit facility totalling GBP1.4bn. In November 2021, an
additional lender was added to the facility increasing the overall
TLA Agreement by GBP100m bringing the total to GBP1.5bn.
Subsequently in November 2021, the Group completed an additional
drawdown of GBP68m under the TLA agreement and its existing terms.
The TLA Agreement described above provides a term loan facility in
an aggregate amount of GBP1,017.9m (2020: GBP950m) priced at
GBP-LIBOR plus 1.75% (the "GBP First Lien Term Loan A"), with a
maturity date of 5 May 2025 and a GBP-LIBOR floor of 0%. On 5 March
2021, the UK's Financial Conduct Authority ("FCA") formally
announced the cessation of all GBP London Interbank Offered Rate
("LIBOR") benchmark settings currently published by ICE Benchmark
Administration ("IBA") immediately after 31 December 2021. In
response, the Company has entered into agreements with its lenders
to amend the benchmark rate referenced in the Term Loan A agreement
from GBP LIBOR to GBP SONIA for interest periods commencing on or
after January 2022. There is no amortisation on the GBP First Lien
Term Loan A and the principal is due at maturity. The Group
incurred GBP11.9m of transaction costs and fees on the initial and
subsequent drawdowns which have been capitalised against the
principal of the debt and are recorded as financial expense over
the term of the debt using the effective interest rate method.
TLA Agreement - Revolving Credit Facility
The TLA Agreement described above provides a multi-currency
revolving loan facility in an aggregate amount of GBP482.0m (2020:
GBP450.0m) (the "Revolving Credit Facility"). Maturing on 5 May
2025, the Revolving Credit Facility includes a margin of 1.75% over
GBP-LIBOR for borrowings with a 0% interest rate floor as well as a
utilisation fee ranging from 0.1% to 0.4% based on the proportion
of drawings to the total commitment. The commitment fee on the
Revolving Credit Facility is 35% of the margin and is payable in
respect of available but undrawn borrowings. The Revolving Credit
Facility is available for general corporate purposes including the
refinancing of existing borrowings. The Group incurred GBP5.3m of
transaction costs and fees in 2020 which have been capitalised and
are recorded as financial expense over the life of the facility
using the straight-line method. These capitalised costs have been
included within non-current receivables on the consolidated
statement of financial position. As at 31 December 2021 no loan
amounts were drawn under the Revolving Credit Facility. The Group
has an undrawn capacity of GBP467m (2020: GBP377m) on the Revolving
Credit Facility with GBP15m (2020: GBP73m) of capacity reserved for
the issuance of Group guarantees as of 31 December 2021.
16. Borrowings (continued)
The terms of the TLA Agreement limit the Group's ability to,
among other things: (i) incur additional debt (ii) grant additional
liens on their assets and equity (iii) distribute equity interests
and/or distribute any assets to third parties (iv) make certain
loans or investments (including acquisitions) (v) consolidate,
merge, sell or otherwise dispose of all or substantially all assets
(vi) pay dividends on or make distributions in respect of capital
stock or make restricted payments, and (vii) modify the terms of
certain debt or organisational documents, in each case subject to
certain permitted exceptions.
Borrowings under the TLA Agreement are subject to the
satisfaction of customary conditions, including the absence of a
default and compliance with certain representations and warranties.
The TLA Agreement requires, subject to a testing threshold, that
the Company comply on a bi-annual basis with a maximum net total
leverage ratio of 5.1 to 1.0. On 29 June 2021, Lenders under the
TLA consented to waive any Default or Event of Default that may
have arisen by virtue of the Kentucky judgement, including any
enforcement steps or actions taken by the Commonwealth of Kentucky
prior to settlement. During the 12 months ended 31 December 2021,
the Group is in compliance with all covenants related to its TLA
Agreement.
First Lien Term Loan B's
The Group holds a USD term loan with an outstanding principal
balance of $2,931.0m (2020: $1,456.3m) priced at USD-LIBOR plus
2.25% (2020: 3.50%) (the "USD First Lien Term Loan B") and an EUR
first lien term loan with an outstanding principal balance of
EUR507.2m (2020: EUR507.2m) priced at EURIBOR plus 2.5% (2020:
3.75%) (the "EUR First Lien Term Loan B" and, together with the USD
First Lien Term Loan, the "First Lien Term Loan B"), each with a
maturity date of 21 July 2026 and a LIBOR and EURIBOR floor, as
applicable, of 0%. The USD First Lien Term Loan requires scheduled
quarterly principal payments in amounts equal to 0.25% of the
initial aggregate principal amount of the USD First Lien Term Loan
B of $2,938m (2020: $3,575m), with the balance due at maturity.
There is no amortisation on the EUR First Lien Term Loan B and the
principal is due at maturity.
In July 2021 the Group completed a debt re-financing transaction
that reduced the effective cost of debt and provided it with
additional liquidity, enhancing the financial flexibility of the
Group. The key components of the transaction that occurred were as
follows:
-- A repricing and upsizing of the Group's existing First Lien
Term Loan B facility by $1.5bn (GBP1.1bn);
-- An extension to the maturity date of the First Lien Term Loan
B facility by one year to July 2026;
-- The USD First Lien Term Loan B component of the facility is
repriced at LIBOR plus 2.25% and a 0% floor; and
-- The EUR First Lien Term Loan B component of the facility is
repriced at EURIBOR plus 2.50% and a 0% floor.
The resultant pricing equates to 1.25% below existing margins
across both USD First Lien Term Loan B and EUR First Lien Term Loan
B. The re-finance was accounted for as a re-estimation of cash
flows. The Term Loan B arrangement facilitated a repricing of the
fixed component of the interest rate spread along with existing
terms that provide the opportunity of prepayment without
significant penalty, and the Group applied the policy of revising
the original effective interest rate of the financial contract
based on the new terms, to reflect changes in cash flow for
calculation of the gain or loss of nil. GBP7.5m of transaction
costs and fees relating to the repricing incurred form part of the
market interest rate and were capitalised as part of the
transaction and are recorded as financial expense over the term of
the debt using the effective interest rate method with a further
GBP16.8m transaction costs charged to the profit and loss included
within financial expense for fees not subject to
capitalisation.
The First Lien Term Loan B are governed by the "Syndicated
Facility Agreement". The Syndicated Facility Agreement limits Stars
Group Holdings B.V. and Flutter Financing B.V, as borrowers, and
its subsidiaries' ability to, among other things, (i) incur
additional debt (ii) grant additional liens on their assets and
equity (iii) distribute equity interests and/or distribute any
assets to third parties (iv) make certain loans or investments
(including acquisitions), (v) consolidate, merge, sell or otherwise
dispose of all or substantially all assets (vi) pay dividends on or
make distributions in respect of capital stock or make restricted
payments (vii) enter into certain transactions with affiliates
(viii) change lines of business and (ix) modify the terms of
certain debt or organisational documents, in each case subject to
certain permitted exceptions. The agreement also provides for
customary mandatory prepayments, including a customary excess cash
flow sweep if certain conditions are met.
On 20 April 2021, the Lenders of the First Lien Term Loan B
consented to waive any Default or Event of Default that may have
arisen by virtue of the Kentucky judgement, including any
enforcement steps or actions taken by the Commonwealth of Kentucky.
During the year ended 31 December 2021, the Group is in compliance
with all covenants related to its First Lien Term Loan B.
Senior Notes
As part of the drawdown of additional TLB USD above and the
wider refinance the Group undertook the redemption of all of the 7%
Senior Notes due in 2026 on 21 July 2021 as governed by the
Indenture which were issued by Stars Group Holdings B.V. and Stars
Group (US) Co-Borrower, LLC (the "Issuers"), on 10 July 2018 at par
in an aggregate principal amount of US$1bn. The Group previously
recognised an embedded derivative that required bifurcation from
the carrying value of the Senior Notes with a fair value of
GBP96.1m which was subsequently settled on the date of repayment
and included within separately disclosed items. As part of the
Indenture settlement, the Group made a premium payment of $35m
(GBP25.7m) which has been included within settlement of Senior
Notes (see Note 6).
16. Borrowings (continued)
Prior to the repayment, on 16 April 2021, the holders of the
Senior Notes consented to waive certain events of potential default
under the Indenture governing the Senior Notes that may have arisen
as a result of the Kentucky litigation or the Kentucky litigation
related events. Through the date of repayment the Group was in
compliance with all covenants related to its Senior Notes.
Reconciliation to Statement of Cash Flows:
Reconciliation of movements in borrowings to the Statement of
Cash Flows:
2021 2020
GBPm GBPm
------------------------- -------------------------------- --------------------------------
Financing activities:
Proceeds from borrowings 1,167.7 1,080.0
Repayment of borrowings (751.2) (2,003.2)
Interest paid (141.9) (114.1)
17. Derivatives
Derivatives and hedge accounting
The Group uses derivative financial instruments for risk
management and risk mitigation purposes. As such, any change in
cash flows associated with derivative instruments are expected to
be offset by changes in cash flows related to the hedged item. The
Group's derivatives are discussed below.
Swap agreements
The Group has executed cross-currency interest rate swaps which
swap the profile of the USD First Lien Term Loan B in its entirety
into EUR and GBP. In 2021 as part of the refinance, the Group
amended the terms of the existing trades to reflect the repriced
TLB USD and executed new cross-currency interest rate swaps on the
additional drawn-down debt in line with the hedging policy to cover
exposure to foreign currencies. From an accounting and risk
management perspective, these hedging instruments consist of: (i)
USD-EUR amortising cross-currency interest rate swap agreements
(the "EUR Cross-Currency Interest Rate Swaps") with a remaining
notional amount of EUR1.49bn (31 December 2020: EUR397m), which fix
the USD to EUR exchange rate at 1.173 and fix the euro interest
payments at an average interest rate of 1.7% (31 December 2020:
3.6%) and (ii) USD-GBP amortising cross-currency interest rate swap
agreements (the "GBP Cross-Currency Interest Rate Swaps") with a
remaining notional amount of GBP750m (31 December 2020: GBP756m),
which fix the EUR to GBP exchange rate at 0.889 and fix the GBP
interest payments at an average interest rate of 2.5% (31 December
2020: 5.4%). The EUR Cross-Currency Interest Rate Swaps and GBP
Cross-Currency Interest Rate Swaps are in hedging relationships
with and have a profile that amortises in line with the USD First
Lien Term Loan B. The EUR Cross-Currency Interest Rate Swaps and
GBP Cross-Currency Interest Rate Swaps have a maturity date of July
2023.
The Group previously held USD-EUR cross-currency interest rate
swap agreements (the "Cross-Currency Swaps -Notes" and,
collectively with the EUR Cross-Currency Interest Rate Swaps, the
GBP Cross-Currency Interest Rate Swaps, and the Interest Rate Swap,
the "Swap Agreements") with a total notional amount of EUR927.1m at
31 December 2020, which fixed the USD to EUR exchange rate at 1.079
and fixed the euro interest payments at an average interest rate of
6.16%. The cross-currency interest rate swaps were in a hedging
relationship with and had an interest payment profile aligned with
the Senior Notes. These swaps matured in July 2021 concurrent with
the repayment of the Senior Notes as part of the debt refinancing.
The Group paid GBP67.9m for the settlement and maturity of these
cross-currency interest rate swaps.
Embedded derivatives
As a result of the repayment of the Senior Notes on 21 July
2021, the embedded derivative arising from the redemption option on
the Senior Notes was settled (31 December 2020: asset of
GBP98.0m).
Sports betting open positions
Amounts received from customers on sportsbook events that have
not occurred by the balance sheet date are derivative financial
instruments and have been designated by the Group on initial
recognition as financial liabilities at fair value through profit
or loss.
The fair value of open sports bets at 31 December 2021 and 31
December 2020 has been calculated using the latest available prices
on relevant sporting events. The carrying amount of the liabilities
is not significantly different from the amount that the Group is
expected to pay out at maturity of the financial instruments.
Sports bets are non-interest bearing. There is no interest rate or
credit risk associated with open sports bets.
It is primarily based on expectations as to the results of
sporting and other events on which bets are placed. Changes in
those expectations and ultimately the actual results when the
events occur will result in changes in fair value. There are no
reasonably probable changes to assumptions and inputs that would
lead to material changes in the fair value methodology, although
final value will be determined by future sporting results.
17. Derivatives (continued)
The following table summarises the fair value of derivatives as
at 31 December 2021 and 31 December 2020:
31 December 2021 31 December 2020
Assets Liabilities Assets Liabilities
GBPm GBPm GBPm GBPm
Derivatives held for
hedging
Derivatives designated as
cash
flow hedges:
Cross-currency interest
rate
swaps - current - - - (86.6)
Cross-currency interest
rate
swaps - non-current 31.7 (54.6) - (101.8)
Total derivatives
designated
as cash flow hedges 31.7 (54.6) - (188.4)
Derivatives designated as
net
investment hedges:
Cross-currency interest
rate
swaps - current - - - (14.8)
Cross-currency interest
rate
swaps - non-current 36.3 - 16.9 -
Total derivatives
designated
as net investment hedges 36.3 - 16.9 (14.8)
Total derivatives held for
hedging 68.0 (54.6) 16.9 (203.2)
Derivatives held for risk
management
and other purposes not
designated
as hedges
Sports betting open
positions
- current - (74.0) - (49.5)
Sports betting open
positions
- non-current - (0.5) - (0.5)
Total derivatives held for
risk
management and other
purposes
not designated as hedges - (74.5) - (50.0)
Derivatives included within
borrowings
Embedded derivatives - - 98.0 -
Hedge accounting
Cash flow hedge accounting
In accordance with the Group's risk management strategy and
Group Treasury Policy, the Group executed the Swap Agreements to
mitigate the risk of fluctuation of coupon and principal cash flows
due to changes in foreign currency and interest rates related to
the USD First Lien Term Loan B and foreign currency cash flow risk
related to the Senior Notes.
The Group assesses hedge effectiveness by comparing the changes
in fair value of a hypothetical derivative reflecting the terms of
the debt instrument issued due to movements in the applicable
foreign currency exchange rate and benchmark interest rate with the
changes in fair value of the cross-currency interest rate swaps and
cross-currency swaps used to hedge the exposure, as applicable. The
Group uses the hypothetical derivative method to determine the
changes in fair value of the hedged item. The Group has identified,
and to the extent possible, mitigated, the following possible
sources of ineffectiveness in its cash flow hedge
relationships:
1. the use of derivatives as a protection against currency and
interest rate risk creates an exposure to the derivative
counterparty's credit risk which is not offset by the hedged item.
This risk is minimised by entering into derivatives with
counterparties with strong investment grade credit ratings;
2. differences in the timing of settlement of the hedging instrument and hedged item; and
3. the designation of off-market hedging instruments.
Certain of the EUR Cross-Currency Interest Rate Swaps in
combination with the GBP Cross-Currency Interest Rate Swaps are
designated in cash flow hedge relationships to hedge the foreign
exchange risk and interest rate risk on the USD First Lien Term
Loan B bearing a minimum floating interest rate of 2.25% (USD
three-month LIBOR plus a 2.25% margin, with a LIBOR floor of 0%).
The remaining EUR Cross-Currency Interest Rate Swaps have been
bifurcated for hedge accounting purposes with the GBP portion of
the exposure designated in a cash flow hedge relationship and the
EUR exposure designated in a net investment hedge relationship.
As at 31 December 2021, GBP12.1m (2020: GBP5.7m) of accumulated
other comprehensive income is included in the cash flow hedging
reserve (see Note 18) related to de-designated cash flow hedges and
is reclassified to the consolidated income statement as the hedged
cash flows impact income/(loss).
17. Derivatives (continued)
Net investment hedge accounting
In accordance with the Group's risk management strategy, as
noted above the Group designates certain EUR cross-currency
interest rate swap contracts in net investment hedging
relationships to mitigate the risk of changes in foreign currency
rates with respect to the translation of assets and liabilities of
subsidiaries with foreign functional currencies.
The Group assesses hedge effectiveness by comparing the changes
in fair value of the net assets designated, due to movements in the
foreign currency rate with the changes in fair value of the hedging
instruments used to hedge the exposure. The Group uses the
hypothetical derivative method to determine the changes in fair
value of the hedged item. The only source of ineffectiveness is the
effect of the counterparty and the Group's own credit risk on the
fair value of the derivative, which is not reflected in the fair
value of the hypothetical derivative.
The Group has also designated the carrying amount of the EUR
First Lien Term Loan as a hedge of the spot foreign exchange risk
of its net investment in its EUR functional subsidiaries. The Group
assesses hedge effectiveness using the forward rate method by
comparing the currency and the carrying amount of the EUR First
Lien Term Loan B with the currency and the net assets of its EUR
functional subsidiaries.
As at 31 December 2021, GBP61.4m (2020: GBP11.5m loss) of
accumulated other comprehensive income is included in the foreign
exchange translation reserve (see Note 18) related to de-designated
net investment hedges and is reclassified to the consolidated
income statement upon disposal of the net investment in the
applicable foreign subsidiaries.
18. Share capital and reserves
Share capital
The total authorised share capital of the Company comprises
300,000,000 ordinary shares of EUR0.09 each (2020: 300,000,000
ordinary shares of EUR0.09 each). All issued share capital is fully
paid. The holders of ordinary shares are entitled to vote at
general meetings of the Company on a one vote per share held basis.
Ordinary shareholders are also entitled to receive dividends as may
be declared by the Company from time to time.
Transactions during the year ended 31 December 2021:
-- A total of 558,275 ordinary shares were issued as a result of
the exercise of employee share options, giving rise to share
capital and share premium of GBP13.2m;
-- On 25 August 2021, the Company announced it had cancelled
1,965,600 ordinary shares of EUR0.09 each previously held by it as
treasury shares.
-- In accordance with the authority conferred by shareholders
pursuant to resolution 10 at Flutter's Annual General Meeting
("AGM") held on Thursday, 29 April 2021, the Board on 10 September
2021 confirmed that it had completed the capitalisation of
GBP7,982.9m, being the entirety of the amounts standing to the
credit of Flutter's merger reserve account at 31 December 2020. In
accordance with the provisions of sections 84 and 85 of the
Companies Act 2014 and the authority conferred by resolution 11 as
approved by shareholders at the AGM, the Board applied to the Irish
High Court to reduce the Company's capital by the amount of
GBP10,000m standing to the credit of Flutter's share premium
account following completion of the capitalisation. On 3 November
2021, the Irish High Court approved the reorganisation of the
Company's capital by the reduction of GBP10,000m standing to the
credit of Flutter's share premium account, and the transfer of such
sum to the Company's distributable reserves account. This resulted
in the transfer of GBP10,000m from share premium to retained
earnings.
Transactions during the year ended 31 December 2020:
-- In May 2020, 1,312,260 new ordinary shares were issued as
consideration for the 2019 final dividend;
-- On 5 May 2020, the Company issued a total of 65,316,588
ordinary shares in exchange for 289,909,400 shares of TSG in
respect of the all-share Combination with TSG resulting in Flutter
Entertainment plc shareholders owning 54.64% and the TSG
shareholders owning 45.36% of Flutter, on a fully diluted basis
(excluding any out of the money options). Under the terms of the
Combination, holders of TSG shares received 0.2253 ordinary shares
with nominal value of EUR0.09 each in the Company ("ordinary
shares") in exchange for each outstanding TSG share (the "Exchange
Ratio"). Post Combination, the Company is the ultimate parent of
The Stars Group Inc. This gave rise to a merger reserve under
section 72 of the Companies Act 2014 of GBP6,189.5m (see also Note
11);
-- On 13 May 2020, 819,230 new Flutter ordinary shares were
issued as consideration for the acquisition of the remaining 20%
interest of TSG Australia Pty Ltd by Flutter. The value of shares
issued amounted to AUD$151.4m (GBP79.7m) (see also Note 11);
-- On 29 May 2020, the Company issued 8,045,995 new ordinary
shares at a price of 10,100 pence per share in respect of an equity
placement announced on 28 May 2020, raising gross proceeds of
GBP812.6m giving rise to share capital of GBP0.7m and a share
premium of GBP811.9m. The proceeds raised net of issuance costs
amounted to GBP806.3m with the issuance costs of GBP6.3m recognised
in retained earnings. The Placing Shares represent approximately
5.5% of the Company's issued share capital immediately prior to the
Placing (excluding treasury shares). The Placing Price represents a
discount of approximately 4.7% to the closing price on 28 May
2020
18. Share capital and reserves (continued)
-- On 4 December 2020, the Company issued a total of 8,004,503
ordinary shares at a price of 14,000 pence per share in respect of
an equity placement announced on 3 December 2020, raising proceeds
of GBP1,120.6m giving rise to share capital of GBP0.7m and a share
premium of GBP1,119.9m. The proceeds raised net of issuance costs
amounted to GBP1,114.6m with the issuance costs of GBP6.1m
recognised in retained earnings. The Placing Shares represent
approximately 5.2% of the Company's issued share capital
immediately prior to the Placing (excluding treasury shares). The
Placing Price represents a discount of approximately 2.1% to the
closing price on 3 December 2020;
-- On 30 December 2020, 11,747,205 new Flutter ordinary shares
were issued as partial consideration for the acquisition of an
additional 37.2% of the outstanding share of FanDuel, bringing the
Group's holding in FanDuel to 95%, up from the previous controlling
interest of 57.8%. The value of shares issued amounted to GBP1.0m
in share capital and gives rise to GBP1,793.4m of a merger reserve
under Section 72 of the Companies Act 2014 (see also Note 11);
and
-- A total of 1,492,430 ordinary shares were issued as a result
of the exercise of employee share options, giving rise to share
capital and share premium of GBP34.3m.
Equity reserves
Equity reserves at 31 December 2021 and 31 December 2020 include
the following classes of reserves:
Merger reserve
At 31 December 2020, the Company held a merger reserve under
section 72 of the Companies Act 2014 of GBP7,982.9m which
represented the premium over the par value of shares issued as
consideration for the Combination with TSG and as partial
consideration for the acquisition of a further 37.2% of FanDuel
Group. In accordance with the authority conferred by shareholders
pursuant to resolution 10 at Flutter's Annual General Meeting held
on Thursday, 29 April 2021, the Board on 10 September 2021
confirmed that it had completed the capitalisation of GBP7,982.9m,
being the entirety of the amounts standing to the credit of
Flutter's merger reserve account at 31 December 2020. This resulted
in the transfer of GBP7,982.9m from merger reserve to share
premium.
Treasury shares
At 31 December 2020, a total of 1,965,600 ordinary shares were
held in treasury. All rights (including voting rights and the right
to receive dividends) in the shares held in treasury were suspended
until such time as the shares were reissued. The Group's
distributable reserves were restricted by the value of the treasury
shares, which amounted to GBP40.7m at 31 December 2020. The cost of
treasury shares held by the Company at 31 December 2020 was
GBP4.2m, with a further GBP36.5m of shares being held by the
Company's subsidiaries.
On 25 August 2021, the Company announced it cancelled all its
1,965,600 ordinary shares of EUR0.09 each previously held by it as
treasury shares which resulted in the transfer of GBP40.7m from
treasury shares to retained earnings, other reserves and share
capital.
Shares held by Employee Benefit Trust
At 31 December 2021, the Paddy Power Betfair plc Employee
Benefit Trust ("EBT") held 33,158 (31 December 2020: 67,320) of the
Company's own shares, which were acquired at a total cumulative
cost of GBP4.0m (31 December 2020: GBP5.8m), in respect of
potential future awards relating to the Group's employee share
plans. The purchase of 1,337,894 shares at a cost of GBP180.7m
during the year ended 31 December 2021 related to the settlement of
share awards to FanDuel employees in 2021. The Company's
distributable reserves at 31 December 2021 are restricted by this
cost amount. During the year ended 31 December 2021, 1,372,056
shares with an original cost of GBP182.5m were transferred from the
EBT to the beneficiaries of the EBT (year ended 31 December 2021:
3,077 shares with an original cost of GBP0.3m).
Cash flow hedge reserve
The cash flow hedge reserve represents the effective portion of
the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that had not yet
occurred at that date.
Foreign exchange translation reserve
The foreign exchange translation reserve at 31 December 2021
amounted to a debit balance of GBP194.2m (31 December 2020: credit
balance of GBP49.6m) and arose from the retranslation of the
Group's net investment in primarily EUR, AUD and USD functional
currency companies. The movement in the foreign exchange
translation reserve for the year ended 31 December 2021, reflects
mainly the weakening of EUR and AUD against GBP in the period.
Other reserves
Other reserves comprise undenominated capital. Undenominated
capital at 31 December 2021 of GBP2.5m (31 December 2020 of
GBP2.3m) relates to the nominal value of shares in the Company
acquired by the Company of GBP2.3m (31 December 2020: GBP2.1m) and
subsequently cancelled, and an amount of GBP0.2m (31 December 2020:
GBP0.2m) which arose on the redenomination of the ordinary share
capital of the Company at the time of conversion from Irish pounds
to euro.
18. Share capital and reserves (continued)
Share-based payment reserve
During the year ended 31 December 2021, an amount of GBP80.5m
was expensed in the Consolidated Income Statement with respect to
share based payments (year ended 31 December 2020: GBP70.2m), an
amount of GBP49.6m (year ended 31 December 2020: GBP107.7m) in
respect of share options exercised during the year was transferred
from the share-based payment reserve to retained earnings.
An amount of GBP0.2m of deferred tax relating primarily to the
Group's share-based payments was debited to retained earnings in
the year ended 31 December 2021 (year ended 31 December 2020:
charge of GBP1.0m). An amount of GBP0.9m of current tax relating to
the Group's share-based payments was credited to retained earnings
in the year ended 31 December 2021 (year ended 31 December 2020:
credit of GBP6.4m).
Non-controlling interest
During the year ended 31 December 2021, the Group paid dividends
totalling GBP16.7m to the non-controlling interest in Adjarabet
(year ended 31 December 2020: GBP15.2m). Also as a result of the
acquisition of an initial 50.1% stake in Junglee Games during the
year, GBP17.1m was recorded in respect of the non-controlling
interest.
19. Dividends paid on ordinary shares
Due to the impact of Covid-19, the Board paid the 2019 final
dividend in May 2020 through the issuance of ordinary shares rather
than by cash. This resulted in the Group issuing 1,312,260 Flutter
ordinary shares of EUR0.09 each.
The Board's capital management policy for the Group remains to
target a leverage ratio of 1.0x to 2.0x over the medium term. The
Board will continue to monitor the financial performance of the
Group, it's anticipated deleveraging and balance sheet position,
and will decide when it is an appropriate time to reinstate a
dividend.
As a result, the Board did not recommend an interim dividend for
2021 (2020: nil) or a final dividend for the year ended 31 December
2021 (2020: nil).
20. Commitments and contingencies
Guarantees
The Company enters into financial guarantee contracts to
guarantee the indebtedness of other companies within the Group. The
Company considers these to be insurance arrangements and accounts
for them as such. The Company treats the guarantee contract as a
contingent liability until such time as it becomes probable that
the Company will be required to make a payment under the
guarantee.
The Group has uncommitted working capital overdraft facilities
of GBP16.2m (2020: GBP16.6m) with Allied Irish Banks p.l.c. These
facilities are secured by a Letter of Guarantee from Flutter
Entertainment plc.
The Group has bank guarantees: (i) in favour of certain gaming
regulatory authorities to guarantee the payment of player funds,
player prizes, and certain taxes and fees due by a number of Group
companies; and (ii) in respect of certain third-party rental and
other property commitments, merchant facilities and third party
letter of credit facilities. The maximum amount of the guarantees
at 31 December 2021 was GBP44.4m (2020: GBP74.8m). No claims had
been made against the guarantees as of 31 December 2021 (2020:
GBPNil). The guarantees are secured by counter indemnities from
Flutter Entertainment plc and certain of its subsidiary companies.
The value of cash deposits over which the guaranteeing banks hold
security was GBP17.5m at 31 December 2021 (2020: GBP12.9m).
As mentioned in Note 16, borrowings under the TLA Agreement and
Syndicated Facility Agreement are guaranteed by the Company and
certain of its operating subsidiaries.
Contingent liabilities
The Group operates in an uncertain marketplace where many
governments are either introducing or contemplating new regulatory
or fiscal arrangements.
The Board monitors legal and regulatory developments and their
potential impact on the business, however, given the lack of a
harmonised regulatory environment, the value and timing of any
obligations in this regard are subject to a high degree of
uncertainty and cannot always be reliably predicted.
As outlined in more detail in Note 12, in June 2021, the Athens
Administrative Court of Appeal dismissed the Group's judicial
recourses. While the Group has appealed to the Greek Supreme
Administrative Court, based on the nature of the decision received
and the points of law which can be appealed, and in line with legal
and tax advice it has received, it has decided to recognise the
amount of the Greek assessment for the years 2012, 2013 and 2014 of
EUR15.0m (GBP12.8m) as an expense in the income statement during
the year ended 31 December 2021. No notifications have as yet been
received for later years and so no provision has been made for
potential further assessments.
20. Commitments and contingencies (continued)
Prior to the Combination, the Board of TSG became aware of the
possibility of improper foreign payments by TSG or its subsidiaries
in certain jurisdictions outside of Canada and the United States
relating to its historical B2B business (which was never profitable
and effectively ceased operations in 2014). When this matter arose,
TSG contacted the relevant authorities in the United States and
Canada with respect to these matters and, following the
Combination, the Group continues to co-operate with the United
States and Canada governmental authorities in respect of all
inquiries relating to such payments. Based on its review of these
matters to date, the Board of Flutter has not identified issues
that it believes would have a significant adverse effect on the
Group's financial position or business operations.
Capital commitments
Capital expenditure contracted for at the statement of financial
position date but not yet incurred was as follows:
31 December 31 December
2021 2020
GBPm GBPm
------------------------------ --------------------------------- ----------------------------------
Property, plant and equipment 1.3 14.3
Intangible assets 1.6 1.0
------------------------------ --------------------------------- ----------------------------------
Total 2.9 15.3
21. Related parties
There were no material transactions with related parties during
the year ended 31 December 2021 or the year ended 31 December
2020.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
22. Events after the reporting date
Acquisition of Tombola
On 18 November 2021, the Group announced that it had reached
agreement to acquire 100% of Tombola , one of the UK market's
leading online bingo operators, for an enterprise value of GBP402m
subject to merger control clearance by the UK Competition and
Markets Authority. The transaction completed on 10 January
2022.
Tombola is a successful bingo-led gaming company with an
emphasis on providing a low staking bingo proposition to a highly
engaged customer base. In its financial year ended April 2021,
Tombola generated pro forma revenue of GBP164m and EBITDA of
GBP38.5m. The acquisition-date fair value accounting had not been
completed as at 28 February 2022.
Acquisition of Sisal
On 23 December 2021, the Group announced the acquisition of
Sisal, Italy's leading online gaming operator, from CVC Capital
Partners Fund VI for a consideration of EUR1.913bn/GBP1.62bn. This
acquisition fully aligns with the Group's strategy of investing to
build leadership positions in regulated markets globally. Sisal
expects to report revenue (after deduction of gaming duties) in
2021 of GBP590m (EUR694m). It expects to report consolidated EBITDA
of GBP211m (EUR248m), 90% of which will come from its Italian
operations (online 59%, retail 31%).
The total consideration for Sisal is payable in cash and in full
on completion of the transaction. This amount includes full
repayment of all Sisal's debt upon completion. The transaction will
be financed by way of additional Flutter debt facilities, agreed
with Barclays Bank PLC. The transaction is conditional on merger
control clearance and customary gaming and foreign investment
consents. Subject to these approvals, it is expected that the
transaction will complete in Quarter 2 2022.
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END
FR FFFSFFVITFIF
(END) Dow Jones Newswires
March 01, 2022 02:01 ET (07:01 GMT)
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