REG - Flutter Entertainmnt - 2022 Preliminary Results
02/03/2023 07:00
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RNS Number : 5970R Flutter Entertainment PLC 02 March 2023
2 March 2023
Flutter Entertainment plc - 2022 Preliminary Results
Exceptional US performance; Strong recreational customer growth across Group
driving 2022 revenue
Flutter Entertainment plc (the "Group") announces preliminary results for year
ended 31 December 2022.
Reported(1) Adjusted(2)
FY FY FY FY
2022 2021 2022 2021 CC(3)
£m £m YoY % £m £m YoY % YoY %
Average monthly players(4) ('000s) 10,245 8,146 +26%
Group Revenue 7,693 6,036 +27% 7,693 6,036 +27% +22%
Group EBITDA(5) 918 723 +27% 1,045 1,001 +4% +4%
Group EBITDA excluding US 1,295 1,244 +4% +2%
(Loss)/Profit after tax (305) (412) 336 454 -26%
(Loss)/Earnings per share (pence) (170.8p) (236.5p) 189.0p 252.7p -25%
Net Debt at period end(6) (4,644) (2,647)
Pro forma references include Junglee, tombola and Sisal for a full 12-month
period in both 2021 and 2022. Any differences due to rounding.
Operational Highlights:
• Group: Strong 2022 performance with average monthly players
('AMPs') +26%, due to rapid US expansion, combined with benefit of Sisal and
tombola acquisitions (pro forma +15%)
• US: Scale benefits compounding, continuing to extend leadership
position with over 3m AMPs in Q4
- Clear #1 sportsbook; 50%(7) Q4 share; Maryland and Ohio most
successful state launches to date
- Improved iGaming proposition driving market share gains to 21% in Q4
- Positive EBITDA in Q2 and in Q4 excluding Maryland/Ohio investment
• Group ex-US: Excellent recreational AMP growth
- UK & Ireland: Product improvements and World Cup driving strong
second half AMPs, partly offsetting annualisation of safer gambling
initiatives and prior year Covid frequency benefit
- Australia: Continued strong AMP growth, leading to resilient
performance against tough H2 Covid comparatives and highly competitive
environment
- International: At growth inflection point with major regulatory
headwinds annualised and exceptional revenue growth in Consolidate and
Invest(8) markets
• Sustainability: Positive Impact Plan progressing well across all
pillars; 40.1% of AMPs using Play Well tools(9) in 2022, a 7.8 percentage
point increase when compared with 2021
Financial Highlights:
• Group reported revenue and EBITDA growth of 27%, benefiting from
tombola and Sisal acquisitions
• US revenue of £2.6bn ($3.2bn) at upper end, and EBITDA loss of
£250m ($313m) at lower end, of guidance ranges
• Group ex-US EBITDA within range, even after customer friendly
sports results in December
• Group Adjusted EBITDA +4% to £1,045m reflecting:
- Benefit from Sisal and tombola acquisitions in 2022
- Strong organic growth offset by £160m of known regulatory changes
and safer gambling initiatives
• Reported loss after tax of £305m (2021: £412m) after £608m
charge for amortisation of acquired intangibles
• Adjusted basic earnings per share reduced from 252.7p to 189.0p
driven by higher interest and tax costs
• Net debt of £4.6bn at 31 December 2022 following Sisal and
tombola acquisitions as well as Adjarabet buyout. Pro forma leverage ratio of
3.9 times(6) (2021: 2.6 times), or 3.2 times excluding US losses
Outlook:
• Trading in the first 8 weeks of the year in line with
expectations:
- US delivering continued strong growth across existing states and
from the very successful launches in Maryland and Ohio. US remains on track to
be EBITDA positive for the full year 2023
- Group ex-US revenues benefitting from strong momentum in UK &
Ireland, and International, offsetting the impact of a more challenging
environment and tough comparatives in Australia
Peter Jackson, Chief Executive, commented:
"Flutter delivered a strong performance in 2022, continuing to execute on the
strategic priorities we outlined last March. Growth in our recreational
customer base delivered 2022 revenue growth of 27% and we ended the year with
a record 12.1m average monthly players in Q4.
We have an unparalleled number one position in the US where we continue to go
from strength to strength. The combined power of the 'FanDuel Advantage' and
the 'Flutter Edge' delivered our most successful launches to date in Maryland
and Ohio. Leveraging our number one FanDuel brand we had a record Super Bowl
and have acquired over 1.2m customers in 2023 so far.
Outside of the US we have been pleased with the performance of the business as
we faced into regulatory changes and challenging comparatives. We are well
placed to build on gold medal positions in our mature markets while we are
delivering very strong growth in a range of attractive high growth markets. We
have been really excited to add Sisal, the number one operator in the Italian
market, to our brand portfolio, and we are making good progress with our
integration strategy.
During the year, we invested £60m in safer gambling initiatives across the
Flutter Group and have been really encouraged by the 8-percentage point
increase achieved in safer gambling tool usage to over 40% of our player base.
We recently announced that we believe an additional US listing of Flutter's
ordinary shares will yield a number of long-term strategic and capital market
benefits. We have begun an extensive consultation with our shareholders and
early feedback has been supportive. We look forward to continued engagement
with investors and stakeholders on this matter and we will announce the
results of this engagement in due course.
2023 is off to a pleasing start driven by positive momentum from the end of
last year. With our combined US business on track to deliver a positive EBITDA
for the full year 2023 for the first time, the Group is currently at an
earnings' transformation point and we look forward to delivering future growth
and progressing further against Flutter's strategic priorities in the coming
year."
Analyst briefing:
The Group will host a questions and answers call for institutional investors
and analysts this morning at 9:30am (GMT). Ahead of that call, a presentation
will be made available on the Group's corporate website
(www.flutter.com/investors (http://www.flutter.com/investors) ) from 8:00am.
To dial into the conference call, participants need to register here
(https://cossprereg.btci.com/prereg/key.process?key=PJRG7478E) where they will
be provided with the dial in details to access the call.
Contacts:
Investor Relations:
Paul Tymms, Group Director of Investor Relations and FP&A '+ 44 75 5715 5768
Ciara O'Mullane, Director of Investor Relations '+ 353 87 947 7862
Liam Kealy, Director of Investor Relations '+ 353 87 665 2014
Press:
Kate Delahunty, Group Director of Corporate Communications '+ 44 78 1077 0165
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, FGS Global '+ 44 20 7251 3801
Business review (2-5)
As the number one sports betting and iGaming operator globally, Flutter
represents a unique and compelling investment opportunity. The US market is
expected to be worth more than $40bn by 2030, while outside of the US, the
market is already worth £263bn, growing at a projected 9% CAGR over the next
five years(10). With just 30% of this combined market opportunity currently
taking place online, this provides a long runway for future growth.
Flutter has set clear strategic objectives to deliver sustainable value in
this market. An unparalleled portfolio of products, diversified geographic
footprint and the benefit of the combined power of the Group, the Flutter
Edge, provide key competitive advantages which empower Flutter's brands to win
in their respective markets.
Within the US, our sustainable leadership position delivers superior economics
and will transform the earnings potential of the Group. Outside of the US, our
scale and diversified position provides a resilient and robust model for
further growth and cash generation through regulatory change. This is
evidenced by the Group's strong track record of delivery with 22% compound
annual EBITDA growth since 2017.
During 2022, we leveraged our key advantages to deliver a strong performance
with excellent progress against our strategic objectives. The US was our
largest division by revenue in 2022. FanDuel extended its leadership position
with a Q4 online sportsbook market share of 50% (10 percentage points higher
than Q4 last year) while growing its podium position in iGaming to a 21%
share. Our US business remains firmly on track to be EBITDA positive for the
full year 2023.
In our Group ex-US business, we continued to see good growth while facing into
the impact of regulatory changes. In the UK & Ireland, we delivered strong
recreational customer growth as well as benefiting from the reopening of our
retail estate and the acquisition of tombola. Product innovation resulted in
an improved H2 performance, driving momentum into 2023. This partially offset
the reversion of customer activity to pre Covid levels and the annualisation
of our proactive safer gambling measures from 2021. In Australia we drove
excellent AMP volumes against a more challenging operating environment in the
second half due to the unwind of Covid player engagement and a more
competitive landscape.
In our International division we have reached a growth inflection point. The
business is set to annualise the major known regulatory headwinds in March
2023. The division is also on a more sustainable footing with minimal single
unregulated market exposure resulting in 97% of the Group's total revenue now
coming from regulated markets. Revenue in our Consolidate and Invest markets,
which represent 76% of the division, were up 22% on a pro forma basis in 2022
and we also secured the #1 position in Italy following completion of our
acquisition of Sisal in August.
We made significant strides on our sustainability agenda with our Positive
Impact Plan. Under the Play Well pillar, we achieved a 7.8 percentage point
increase in tool usage in 2022 to 40.1% and we invested a total of £60m in
safer gambling initiatives during the year. Our Work Better pillar also saw
positive progress with 33% female representation at leadership level in 2022.
Within our communities our pledge to Do More saw over 440,000 lives improved
through funding activities focused on sport, technology for good and health
and well-being. Finally, we continued to develop our path to zero and Science
Based Targets as part of our Environmental goals.
As we look forward into 2023, the Group is at an earnings transformation
point, and very well placed to deliver future growth and progress further
against our strategic priorities.
2022 review
Flutter delivered strong revenue growth of 22% with AMPs up 26% to 10.2m
during the year, driven by our ongoing expansion in the US and the benefit of
the Group's acquisitions of Sisal and tombola. On a pro forma basis both
revenue and AMPs delivered excellent growth, up 14% and 15% respectively.
Group Adjusted EBITDA was £1,045m, 4% higher. On a pro forma basis, Group
Adjusted EBITDA was 5% lower after the impact of known regulatory headwinds
and safer gambling initiatives of £160m, excluding which EBITDA was 9%
higher.
US
The US division delivered an exceptional performance in 2022, with revenue at
the upper end and an EBITDA loss at the lower end, of our guidance ranges.
Revenue grew 67% to £2.6bn ($3.2bn) with AMPs exceeding 3m for the first time
in Q4, while our EBITDA loss reduced by 6% to £250m ($313m). At our Capital
Markets Day
(https://www.flutter.com/investors/results-reports-and-presentations/year/2022/)
in November, the FanDuel team outlined how the FanDuel Advantage of (i)
acquiring customers more efficiently (ii) retaining customers for longer and
(iii) growing customer value better than competitors is driving our
significant market outperformance. Underpinned by the Flutter Edge, this
continued to play out in Q4 with FanDuel commanding a 50% gross gaming revenue
('GGR') share of the online sports betting market and now number one in 15 of
the 18 states in which it is live today. We continued to refine our state
playbook. Our sophisticated player acquisition strategy and market-leading
product have delivered our two most successful state launches to date in
Maryland (Nov 2022) and Ohio (Jan 2023). Both are gold medal positions, with
penetration reaching over 6% of the total adult population in those states
combined since launch.
We have a clear strategy to improve our iGaming performance and grow our
podium position, through increasing our focus on casino direct iGaming
customers and improving our product range and player experience. Although it
is early days, we are pleased by progress to date. Q4 customer player days
were 1.5 times the comparable period last year benefitting from the
introduction of our FanDuel casino daily reward machine in Q3. Flutter exited
the year with 63% growth in Q4 iGaming AMPs and a 21% share of the Q4 iGaming
market, with FanDuel Casino share three percentage points higher than in Q4
2021.
Our flywheel continues to drive efficient expansion. Total operating costs
(sales and marketing combined with operating costs) reduced as a percentage of
revenue by 19 points in H2. We are also outpacing our competition with Flutter
US revenue in 2022 over $900m higher than our next nearest competitor and with
one third of the EBITDA loss. We were the first operator to reach
profitability in the US in Q2. Additionally, in Q4, Flutter US EBITDA was
£31m ($36m), excluding new state investment in Maryland and Ohio. The
increasingly profitable progression of our customer cohorts, together with the
compounding benefit of our flywheel underpin our confidence in delivering a
positive full year 2023 EBITDA.
Group excluding the US
Group ex-US revenue grew 7% with Adjusted EBITDA up 2% to £1,295m, within
guidance range even after customer friendly sports results in December which
cost nearly £40m.
On a pro forma basis revenue was flat year on year, while Adjusted EBITDA
declined 6%. After adjusting for the previously guided headwinds of £160m (i)
proactive safer gambling initiatives in the UK & Ireland (£38m) (ii)
Australian tax changes (£22m) and (iii) regulatory changes in International
markets (£100m), Adjusted EBITDA for the Group ex-US was 6% higher year on
year.
UK & Ireland
Online momentum in Q4 was strong with pro forma revenue 14% higher, despite
adverse sports results in the quarter, which impacted revenues by £66m. This
Q4 performance helped deliver H2 pro forma revenue growth of 4%, reflecting
improvements to our product proposition throughout the year, and the actions
we have taken to ensure our teams work more efficiently. This compared to a
decline of 19% in H1, which was impacted by the annualisation of our proactive
safer gambling initiatives taken across 2021 and the prior year Covid-related
peak in player days. Full year reported UK & Ireland revenue growth of 4%
benefitted from the addition of tombola in January 2022 and our retail shops
being open during the year.
Pro forma player volumes increased 4% (reported +18%) across 2022, peaking in
Q4 at 18% higher aided by the World Cup. In Sky Bet, two thirds of World Cup
customers used the new BuildABet product that was launched at the start of the
year, while Paddy Power dominated social media, driving double the Twitter
engagement of all other betting brands combined.
Ongoing delivery of new and improved products for customers is a key element
in our winning formula. During the second half, SkyBet further enhanced their
new BuildABet product making it easier for players to track progress of their
bets and updated their pre-game football proposition. Betfair's gaming
proposition was refreshed, while Paddy Power launched Wonder Wheel bonus
rounds during the World Cup, which helped drive their multi-product players
seven percentage points higher year on year in H2. We also launched Paddy
Power's first fully native gaming iOS app and additional branded gaming
content boosting retention rates. These innovations drove pro forma gaming
AMPs 10% higher during 2022.
During the year, we launched a range of efficiency initiatives to further
integrate our UK & Ireland brands. We simplified team structures to allow
us to operate more effectively. These offset the higher levels of wage
inflation to keep pay competitive in light of current macro-economic trends.
We improved the effectiveness of marketing and generosity spend by ensuring we
more accurately deliver the right value to the right customers. In 2022, pro
forma sales and marketing declined 13% or 100 basis points as a percentage of
revenue, with further efficiency savings expected in 2023.
In Ireland, we welcome the publication of the draft Bill to establish the
Gambling Regulatory Authority, as a consistent supporter of regulation in
Ireland. We will work with the Authority as they create the new regulatory
framework. In the UK, we believe the proactive initiatives we have taken on
safer gambling position us well for the eventual publication of the Gambling
Act Review White Paper.
Australia
Sportsbet delivered a solid performance with AMPs up 8% to 1.1m. Revenue was
6% lower, reflecting a Covid tailwind in H1, offset by (i) the H2 unwind of
Covid engagement levels against challenging comparatives, (ii) increased
competition in H2 and (iii) the impact of event cancellations due to adverse
weather conditions. These factors, combined with increased point of
consumption ('POC') taxes introduced in July 2022 of £22m (annualised impact:
£73m), led to a decline in EBITDA of 13% to £390m.
As the clear market leader with over 48%(11) of the Australian online
sports-betting market, Sportsbet benefitted most from the retail to online
migration during the Covid lockdown periods in 2020 and 2021, growing 1.4
times that of the online market. Strong execution against our retention
strategy meant that customer growth has been sustained. We delivered a record
1.3m AMPs in Q4, 1.8 times Q4 2019, positioning the business well into 2023.
As retail and society fully reopened during 2022, AMP growth was more than
offset by the reversion of online player engagement from peak Covid levels (H2
average player days 9% lower than the same period in 2021) and competitive
intensity which stepped up significantly in 2022, particularly in Q4. This led
to high levels of generosity with customers shopping around for the most
generous offers.
Leveraging structural margin gains from continued product leadership,
Sportsbet increased promotional investment and sales and marketing spend
during Q4 which contributed to the record AMP levels. We are confident that
the plans we have in place for 2023 are the right strategy to drive future
growth over the medium term. We will do this through continuing to deliver
product innovation and personalised generosity while leveraging our growing
recreational customer base, unparalleled local scale and long track record of
growing through regulatory changes.
International
International division revenue grew 24%, or 7% on a pro forma basis, reaching
a growth inflection point after a period of significant regulatory change.
International has four market types: (i) Consolidate existing #1 positions,
(ii) Invest for leadership in high growth markets, (iii) Optimise returns, or
(iv) Maintain an existing position. Our Consolidate and Invest markets now
represent 76% of revenue and grew at 22% on a pro forma basis (reported +68%)
during 2022. This highlights the very attractive positions we have in these
markets, including India, which grew at 80% and is expected to become our
second largest market behind Italy in 2023.
In August, we completed the acquisition of Sisal, the #1 operator in Italy,
Europe's largest gambling market with GGR of £18bn in 2022, including
lottery. The online market is expected to grow at a compound rate of 9% over
the next three years, with just 19% of the market online in 2022(10).
Sisal has significant competitive advantages through its omni-channel offering
in an Italian market with advertising restrictions, a nine-year Italian
lottery concession and monopoly positions in other markets. Sisal's
performance in 2022 was fantastic, growing proforma revenues by 32% to £863m
and EBITDA by 22% to £247m. Sisal's online market share increased to 13.4% in
Q4(12), 140 basis points higher than the prior year (Flutter combined online
market share 22%). This performance was driven by:
• High levels of cross sell to online from Sisal's retail network of
9.5 million customers, including providing additional opportunities for
lottery players to win with an online account
• Product leadership in sports from the launch of innovative
products such as 'Duo', which provides continuity of player bets on a
substituted player or the social betting game 'Tipster'
• Significant improvements in Sisal's gaming offering across 2022,
including the creation of a proprietary games' development studio and
integration of gaming content onto betting and lottery apps
We provided Sisal with access to the Flutter Edge, which resulted in Sisal
being the first operator to launch cash-out in the Italian market following
its regulatory approval. We have also supplemented the Sisal team with access
to some of our people talent and won a combined tender to be the monopoly
Moroccan sports betting operator.
Capital structure and balance sheet update(6)
The Group had gross debt of £5,442m(13) at 31 December 2022 and a net debt
position of £4,644m (31 December 2021: £2,647m), which represents a pro
forma leverage ratio of 3.9x or 3.2x excluding the 2022 US EBITDA loss. During
2022, the Group acquired tombola for £410m in January, the remaining 49%
stake in Adjarabet for £204m and the Sisal business in August for £1.7bn.
The Group remains committed to its previously stated medium-term leverage
target of 1-2 times, at which point the Board will review the Group's dividend
policy. The Group continues to generate significant free cash flow and the
future profitability profile of the Group, in particular US profit growth,
will facilitate rapid de-levering.
Other updates
US listing
The Flutter Board has reached a preliminary view that an additional US listing
of Flutter's ordinary shares will yield a number of long-term strategic and
capital market benefits. As we outlined here
(https://ir.design-portfolio.co.uk/viewer/99/55883) , we have begun a
consultation with our shareholders to determine whether to put forward a
formal resolution for approval. We will announce the results of this
consultation, once we have concluded an extensive program of engagement with
our investors and stakeholders.
FOX arbitration
As previously disclosed, the legal arbitration process with FOX Corporation
remains ongoing. As noted in our recent announcement, in the event that there
is shareholder support for an additional US listing, this will take precedence
over any plans to list a small shareholding in FanDuel.
Current trading/outlook
Trading for the Group in the first 8 weeks of the year has been in line with
expectations. Our US division has been delivering continued strong growth
across existing states, as well as through the very successful launches in
Maryland and Ohio. We remain on track to be EBITDA positive for the full year
2023.
Group ex-US revenues have benefitted from continued strong momentum in UK and
Ireland and International from Q4 2022, which has offset the impact of a more
challenging environment and tough comparatives in Australia.
For 2023 the Group also anticipates:
• Capital expenditure of £480m-£500m (2022 reported: £403m, pro
forma: £456m)
• Group Adjusted depreciation and amortisation charge of
approximately £480m (2022 reported: £370m, pro forma: £434m), reflecting
increased US product investment and Group investment in casino studios and
shared platforms
• A weighted average cost of debt of 5.6%
• An effective tax rate of 25-27% for the Group ex-US (2022: 22.9%)
reflecting the addition of Sisal and the changing mix of taxable earnings
across our geographies
Operating and financial review(1-6)
Group
FY FY CC
2022 2021 Change Change
Unaudited Adjusted £m £m % %
Average monthly players ('000s) 10,245 8,146 +26%
Sports revenue 4,788 3,774 +27% +21%
Gaming revenue 2,906 2,262 +28% +23%
Total revenue 7,693 6,036 +27% +22%
Cost of sales (3,164) (2,262) +40% +33%
Cost of sales as a % of net revenue 41.1% 37.5% +370bps +350bps
Gross profit 4,529 3,774 +20% +15%
Sales and marketing (1,853) (1,508) +23% +15%
Contribution 2,676 2,266 +18% +15%
Other operating costs (1,524) (1,164) +31% +25%
Corporate costs (107) (101) +7% +6%
Adjusted EBITDA(2,5) 1,045 1,001 +4% +4%
Adjusted EBITDA margin % 13.6% 16.6% -300bps -240bps
Depreciation and amortisation (370) (255) +45% +38%
Adjusted operating profit 675 746 -9% -9%
Net finance expense (158) (126) +25%
Adjusted profit before tax 518 620 -17%
Taxation (182) (166) +9%
Adjusted profit for the period 336 454 -26%
Adjusted basic earnings per share 189.0p 252.7p -25%
Net debt(6) at period end (4,644) (2,647) +75%
Acquired businesses Junglee (January 2021), Singular (September 2021), tombola
(January 2022) and Sisal (August 2022) have been included on a reported basis.
Pro forma references within the commentary for a specified period include
Junglee, tombola and Sisal as though part of the Group in both 2021 and 2022
for the entire period. A full analysis of the Group's reported performance can
be found at pages 19-20.
Flutter delivered strong 2022 revenue growth of 22%, driven by continued
expansion of our recreational base with AMPs up 26% to 10.2m. Our rapidly
scaling US business was a key driver of this success with revenue 67% higher.
Growth outside of the US of 7% benefitted from the Group's acquisitions of
Sisal and tombola during the year.
Pro forma Group revenue and AMPs also delivered excellent growth, up 14% and
15% respectively. Pro forma revenue outside of the US was flat year on year,
as we annualised the impact of our proactive safer gambling changes in the UK
& Ireland, faced into Covid comparatives and a more challenging
environment in Australia as well as the known regulatory changes in our
International business.
Cost of sales as a percentage of net revenue increased by 350 basis points to
41.1%. This was primarily driven by our launch in New York, where gaming tax
rates are higher, as well as an increase in Australian POC taxes.
Sales and marketing costs of £1.9bn were 15% higher year on year, driven by
continued investment in the US. As a proportion of revenue, investment reduced
by 150 basis points to 24.1% for the Group.
Other operating costs increased 25% also reflecting US investment, as well as
the acquisition of Sisal. On a pro forma basis, costs outside of the US costs
increased by 4%, primarily driven by the post Covid reopening of Sisal retail
in H1, offset by cost efficiencies in the UK & Ireland.
Group Adjusted EBITDA was £1,045m, up 4% including the £250m US loss. On a
pro forma basis, Adjusted EBITDA was 5% lower. Group ex-US declined 6%, but
was 6% higher after adjusting for the previously guided impacts of (i)
proactive safer gambling initiatives in the UK & Ireland (£38m) (ii)
Australian tax changes (£22m) and (iii) regulatory changes in International
markets (£100m).
Group Adjusted depreciation and amortisation increased, primarily due to the
addition of Sisal during the year and growth in our US division.
The Group's Adjusted effective tax rate in the period was 35.1% (2021: 26.8%),
driven by the changing mix of taxable earnings across geographies, including
the acquisition of Sisal. The Group ex-US effective tax rate in the period was
22.9% (2021: 18.5%).
Adjusted basic earnings per share reduced from 252.7p to 189p. This decline
reflects the increased tax charge, as well as an increase in interest expense,
driven by the Sisal acquisition and higher cost of debt in H2.
Net debt at 31 December 2022 was £4,644m. This was £2bn higher than the
prior year, due to the acquisitions of Sisal and tombola and the buyout of
Adjarabet minority shareholders, which offset the free cash flow generated by
the operating activities of the Group during the year.
A full analysis of the Group's reported performance can be found at pages
19-20.
US(3)
FY FY CC
2022 2021 Change Change
Unaudited Adjusted £m £m % US$
Average monthly players ('000s) 2,319 1,557 +49%
Sportsbook stakes 23,550 11,284 +109% +87%
Sportsbook net revenue margin 7.3% 6.3% +100bps +100bps
Sports revenue 1,985 978 +103% +81%
Gaming revenue 619 413 +50% +34%
Total revenue 2,604 1,391 +87% +67%
Cost of sales (1,306) (614) +113% +90%
Cost of sales as a % of net revenue 50.1% 44.1% +600bps +620bps
Gross profit 1,298 778 +67% +49%
Sales and marketing (964) (663) +45% +30%
Contribution 334 115 +192% +158%
Other operating costs (584) (357) +63% +47%
Adjusted EBITDA(2,5) (250) (243) +3% -6%
Adjusted EBITDA margin (9.6%) (17.5%) +790bps +750bps
Depreciation and amortisation (78) (47) +68% +50%
Adjusted operating loss (328) (289) +13% +3%
The US division includes FanDuel, FOXBet, 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 and in Canada.
Revenue grew 67% to £2.6bn ($3.2bn) during 2022 with an Adjusted EBITDA loss
of £250m ($313m). This reflects a 6% reduction in our EBITDA loss, while
continuing to deliver significant growth within the business. FanDuel Group
represented 97% of US revenue and 70% of the Adjusted EBITDA loss.
Sports revenue grew 81% with sportsbook up 115% while DFS and TVG (now less
than 10% of total revenue) declined 12%, driven by successful conversion of
our DFS customer base to our sportsbook product.
Sportsbook performance was also driven by:
• Excellent staking growth of 87% through further expansion of our
online footprint to five new states (New York, Louisiana and Wyoming in Q1,
Kansas in Q3 and Maryland in Q4). We also benefited from continued strong
growth in states launched before 2021 with staking and revenue up 24% and 42%
respectively
• Net revenue margin growth of 100 basis points, driven by a
significant improvement in structural margin, due to our market leading
pricing and risk management capabilities and superior product proposition.
This funded a step up in efficient generosity spend in new and existing
states, which continues to deliver a good return. Sports results were broadly
in line year on year, with unfavourable results in H1 largely offset in H2
with bookmaker friendly outcomes
iGaming revenue increased by 34%, due to strong player growth and higher
levels of engagement. This was particularly the case in H2, with revenue up
37% (H1 +31%). Our focus on acquiring direct casino customers, our broadened
product portfolio and the new FanDuel Casino brand strategy led to a step up
in momentum, exiting the year with iGaming AMPs up 63% in Q4.
Cost of sales was 620 basis points higher at 50.1% of revenue, driven by our
launch in New York in Q1 where the gaming tax rate is unusually high.
Excluding New York sportsbook, cost of sales would have been 43.8% of revenue
during 2022, compared with 44.1% in 2021.
Sales and marketing costs increased by £301m to £964m ($1.2bn), but declined
as a percentage of revenue by almost 11 percentage points. This is driven by a
greater proportion of our business coming from existing states where the
proportionate levels of marketing spend are lower. Additionally, our footprint
is also expanding across the US, meaning we can benefit from the efficiencies
of national advertising.
Operating costs increased by 47% reflecting ongoing expansion, delivering good
operating leverage when compared with revenue growth of 67%, which was 20
percentage points higher.
UK & Ireland
UK & Ireland Total UK & Ireland Online UK & Ireland Retail
FY FY CC FY FY CC FY FY CC
Unaudited Adjusted 2022 2021 Change 2022 2021 Change 2022 2021 Change
£m £m % £m £m % £m £m %
Average monthly players ('000s) 3,710 3,153 +18%
Sportsbook stakes 9,981 11,376 -12% 8,633 10,473 -17% 1,348 904 +48%
Sportsbook net revenue margin 10.6% 9.9% +70bps 10.1% 9.7% +40bps 13.5% 12.6% +90bps
Sports revenue 1,181 1,282 -8% 998 1,168 -14% 183 114 +60%
Gaming revenue 963 781 +23% 873 721 +21% 90 60 +49%
Total revenue 2,144 2,063 +4% 1,871 1,889 -1% 272 174 +56%
Cost of sales (653) (621) +5% (592) (581) +2% (61) (40) +54%
Cost of sales as a % of net revenue 30.5% 30.1% +30bps 31.6% 30.8% +80bps 22.5% 22.9% -30bps
Gross profit 1,490 1,442 +3% 1,280 1,308 -2% 211 134 +57%
Sales and marketing (381) (391) -3% (374) (384) -3% (6) (6) +4%
Contribution 1,110 1,051 +6% 905 923 -2% 204 128 +59%
Other operating costs (455) (435) +6% (293) (298) -% (162) (138) +18%
Adjusted EBITDA(2,5) 654 616 +6% 612 626 -3% 42 (10) -551%
Adjusted EBITDA margin 30.5% 29.9% +50bps 32.7% 33.1% -60bps 15.4% (5.6%) +2,080bps
Depreciation and amortisation (136) (126) +8% (89) (85) +5% (47) (41) +15%
Adjusted operating profit 519 490 +5% 524 541 -4% (5) (50) -90%
The UK & Ireland division operates Paddy Power, Betfair, Sky Betting &
Gaming and tombola brands online, as well as retail operations in the UK &
Ireland. tombola was acquired in January 2022 and pro forma references within
the commentary include tombola as though part of the division in both 2021 and
2022 for the entire period.
Total UK & Ireland revenue grew 4% and Adjusted EBITDA was 6% higher at
£654m. This reflects (i) the acquisition of tombola in January 2022, (ii) our
retail business being open for the entire year, compared to the Covid-related
closures of the prior year and (iii) an improved product offering,
particularly in H2. This was partially offset by a return to player activity
closer to pre-Covid levels and our safer gambling measures. On a pro forma
basis revenue was 4% lower with EBITDA flat year-on-year.
UK & Ireland Online
Player momentum remains strong with AMPs up 18% (pro forma +4%), including 18%
pro forma growth in Q4, aided by strong engagement during the World Cup.
Revenue was 1% lower for the year with sequential improvement from -12% in H1
to +15% in H2 (pro forma FY22 -9%, H1 -19%, H2 +4%). The growth in players,
improved momentum across H2 and addition of tombola was offset in H1 by the
2021 peak in Covid related player engagement and the annualisation of our
proactive safer gambling measures introduced during 2021.
Sports revenue declined by 14% (H1 -24%, H2 +1%) reflecting these challenging
comparatives. World Cup sportsbook stakes were in line with the prior year's
European Championships, while sportsbook net revenue margin increased 40 basis
points, reflecting structural gains following the launch of Bet Builder
products during the year. Sports results were slightly adverse for the year,
including 300 basis points of adverse Q4 results mostly offset across the
earlier quarters.
Gaming revenue increased 21% (pro forma -1%) including 34% growth in H2 (pro
forma +8%). This was driven by strong player momentum throughout the year and
consistent delivery of product improvements across all our brands.
Cost of sales as a percentage of revenue increased by 80 basis points to
31.6%, reflecting higher transaction fees and streaming costs.
Sales and marketing decreased by 3% (pro forma -13%) to 20.0% of revenue. This
was 100 basis points lower than the prior year on a pro forma basis, from the
delivery of efficiencies within our marketing spend. Other operating costs
were in line, but 10% lower on a pro forma basis. This reflects cost
efficiencies, along with the one-off benefits from the sale of Oddschecker in
2021 and lower performance related pay, being partially offset by inflationary
increases in employee pay and data.
Online Adjusted EBITDA declined £14m year on year to £612m, with a 35%
increase in H2 being offset by a H1 decline of 24%. This trend reflects the
revenue performance outlined above and consistent cost reduction throughout
the year.
UK & Ireland Retail
Retail revenue grew 56% with our estate open throughout the year, generating
Adjusted EBITDA of £42m. This compared to an Adjusted EBITDA loss of £10m in
2021, when our shops were closed from January to April in the UK and to May in
Ireland due to Covid-related restrictions.
Revenue and Adjusted EBITDA have returned to 87% and 55% of 2019 levels,
respectively reflecting the slower return of footfall in Ireland post-Covid
restrictions and inflationary cost pressures. UK revenue is in line with 2019,
with strong performance from betting and gaming terminals, while the Irish
estate is at 70% of 2019 revenue.
Other operating costs increased by 18% year on year, reflecting our shops
being fully open for the year and inflationary cost pressures.
At 31 December 2022, we had 608 (31 December 2021: 625) retail outlets with
356 in the UK and 252 in Ireland.
Australia(3)
FY FY CC
2022 2021 Change Change
Unaudited Adjusted £m £m % A$
Average monthly players ('000s) 1,090 1,008 +8%
Sportsbook stakes 11,296 11,702 -3% -7%
Sportsbook net revenue margin 11.2% 11.1% +10bps +10bps
Total revenue 1,263 1,294 -2% -6%
Cost of sales (635) (636) -% -4%
Cost of sales as a % of net revenue 50.3% 49.2% +120bps +110bps
Gross profit 628 658 -5% -8%
Sales and marketing (134) (119) +12% +8%
Contribution 494 539 -8% -11%
Other operating costs (104) (102) +2% -3%
Adjusted EBITDA(2,5) 390 437 -11% -13%
Adjusted EBITDA margin 30.9% 33.7% -290bps -270bps
Depreciation and amortisation (29) (26) +15% +12%
Adjusted operating profit 361 411 -12% -15%
The Australian division encompasses Sportsbet, which offers online sports
betting in the Australian market.
Sportsbet AMPs were 8% higher while revenue declined 6% and EBITDA of £390m
was 13% lower year on year. This reflects a strong performance in H1 (revenue
+5%, EBITDA +10%) offset by the impact of more challenging conditions in H2
(revenue -14%, EBITDA -32%).
Revenue performance during 2022 reflected:
• A reduction in staking of 7% (H1: +4%, H2: -15%), driven by:
- An enlarged player base with heightened player engagement, due to
Covid lockdowns in 2020/2021, which carried into H1 2022, driving growth
- Followed by a reversion of H2 player engagement from Covid levels. H2
average player days were -9% year on year
- Sporting event cancellations and disruption, due to adverse weather
conditions, costing c. £30m in revenue during the year
- An increase in competition during H2 and particularly Q4, which
combined with the above led to a lower level of spend per customer
• A structural improvement to net revenue margin during the year
which, after reinvestment in generosity, led to 10-basis point increase year
on year. Within this movement, sports results represented a small headwind
year on year, with both 2022 and 2021 benefitting from 50 and 60 basis points
in luck respectively
Cost of sales increased as a % of revenue to 50.3% or 53.1% in H2, as guided
POC tax increases of £22m took effect from July (annualised impact £73m).
The increased competition within the Australian market, led to a corresponding
step up in sales and marketing spend, which was 24% higher year on year in H2.
Approximately half of this increase related to one-off items, such as
investment in the FIFA World Cup campaign.
Operating costs remained broadly in line when compared with the prior year.
International(3)
Reported Pro forma
FY FY CC FY FY CC
2022 2021 Change Change 2022 2021 Change Change
Unaudited Adjusted £m £m % % £m £m % %
Average monthly players ('000s) 3,126 2,428 +29% 3,568 3,163 +13%
Sportsbook stakes 2,490 1,592 +56% +52% 3,637 3,273 +11% +10%
Sportsbook net revenue margin 10.9% 8.7% +220bps +220bps 12.1% 11.1% +100bps +100bps
Sports revenue 358 220 +63% +58% 526 447 +18% +16%
Gaming revenue 1,324 1,068 +24% +18% 1,621 1,534 +6% +4%
Total revenue 1,683 1,288 +31% +24% 2,147 1,981 +8% +7%
Cost of sales (570) (392) +45% +40% (778) (682) +14% +15%
Cost of sales as a % of net revenue 33.9% 30.4% +350bps +370bps 36.2% 34.4% +180bps +240bps
Gross profit 1,113 897 +24% +18% 1,369 1,299 +5% +3%
Sales and marketing (374) (335) +12% +6% (386) (360) +7% +3%
Contribution 739 562 +31% +25% 983 939 +5% +3%
Other operating costs (381) (270) +41% +35% (488) (433) +13% +11%
Adjusted EBITDA(2,5) 358 292 +22% +16% 494 506 -2% -3%
Adjusted EBITDA margin 21.3% 22.7% -140bps -160bps 23.0% 25.6% -250bps -250bps
Depreciation and amortisation (121) (52) +133% +107% (185) (153) +21% +17%
Adjusted operating profit 237 240 -2% -5% 309 353 -13% -12%
The International division includes Sisal, PokerStars, Adjarabet, Betfair and
Junglee brands but excludes PokerStars US business and Betfair UK &
Ireland operations. Sisal was acquired in August 2022 and Junglee in January
2021. Pro forma references within the commentary include Sisal and Junglee as
though part of the division in both 2021 and 2022 for the entire period. A
reconciliation of the division's reported and pro forma income statement is
included in Appendix 2.
Pro forma
International AMPs grew 13% driving revenue 7% higher. Adjusted EBITDA
declined by 3%, reflecting the combined £100m impact of the regulatory and
tax changes in Germany, Russia, and the Netherlands. Adjusting for these
items, revenue and Adjusted EBITDA grew 15% and 20% respectively.
Revenue in our Consolidate and Invest markets, which made up 76% of revenue,
increased 22% reflecting strong performances in Italy (+22%), India (+80%) and
Turkey (+80%). In Italy, Sisal's retail business benefitted from a fully open
retail estate in H1 with retail revenue over 50% higher year on year. Italy
online grew 5%, retaining online migrators of the last two years and taking
share in the market. In India, Junglee's growth was player driven, with AMPs
78% higher in 2022. Optimise and Maintain markets declined 22% or 8% excluding
regulatory headwinds, reflecting the unwind of the prior year Covid-related
benefit.
Cost of sales as a % of net revenue increased 240 basis points to 36.2%, due
to relief from some Italian retail charges in the prior year during
Covid-impacted periods.
Sales and marketing increased by 3% reflecting the ongoing investment in our
Consolidate and Invest markets offset by savings elsewhere. Other operating
costs increased by 11%, up 24% in H1 and 1% lower in H2. The increase in H1
reflects a fully open Sisal retail estate and the annualisation of additional
resources to stabilise and improve our product and technology offering. This
additional resource extended to capital investment and when combined with
amortisation of Sisal's expanded lottery concessions, drove depreciation and
amortisation 17% higher.
Reported
Strong growth in players and revenue reflects a five-month contribution from
Sisal in 2022 along with growth in our Consolidate and Invest markets.
Adjusted EBITDA increased 16% to £358m from:
• Five months of Sisal EBITDA (+£111m)
• Growth in other Consolidate and Invest markets (excludes Italy and
Turkey) where revenue increased 15%
• Partly offset by the combined negative impact of market exits in
the Netherlands (£30m) and Russia/Ukraine (£50m), along with a gaming tax
change in Germany (£20m) of £100m
Revenue growth of 24% for the year reflects these factors. The higher growth
in sports revenue is due to Sisal having a higher mix of sports revenue
compared to the existing International businesses.
Cost of sales as a % of net revenue increased 370 basis points to 33.9%, due
to relief from some Italian retail charges in the prior year during
Covid-impacted periods. Sales and marketing costs increased by 6% but were 390
basis points lower as a % of revenue. With advertising restrictions in Italy,
Sisal's marketing spend is minimal. Other operating costs increased by 35%.
Separately disclosed items
FY FY
2022 2021
£m £m
Transaction fees and associated costs (35) (22)
Restructuring and integration initiatives (131) (45)
Legal provision releases 38 -
Kentucky settlement and associated legal costs - (163)
Germany and Greece tax expense - (47)
EBITDA impact of separately disclosed items (127) (278)
Amortisation of acquisition related intangible assets (608) (543)
Disposal of Oddschecker Global Media - 12
Operating loss impact of separately disclosed items (735) (809)
Financial income 11 -
Financial expense (68) (100)
Loss before tax impact of separately disclosed items (792) (909)
Tax credit on separately disclosed items 152 43
Total separately disclosed items (641) (866)
Separately disclosed items do not relate to business-as-usual activity of the
Group, are items that are volatile in nature or non-cash purchase price
accounting amortisation and therefore are excluded from Adjusted profits.
Transaction fees and associated costs of £35m related to fees for the FOX
arbitration as well as the acquisition of tombola and Sisal.
Restructuring and integration costs primarily relate to the integration with
The Stars Group ('TSG').
During 2022, two legacy TSG litigation matters were settled resulting in the
release of £38m from our legal provisions.
Amortisation of acquisition related intangible assets increased £65m to
£608m following the acquisitions of Sisal and tombola in 2022.
The tax credit of £152m primarily relates to the tax effect of the
amortisation of acquisition-related intangibles.
Statutory review(1)
Group
FY FY
2022 2021 Change
Unaudited £m £m %
Sports revenue 4,788 3,774 +27%
Gaming revenue 2,906 2,262 +28%
Total revenue 7,693 6,036 +27%
Cost of sales (3,146) (2,310) +36%
Cost of sales as a % of net revenue 40.9% 38.3% +260 bps
Gross profit 4,547 3,727 +22%
Operating costs (3,629) (3,003) +21%
EBITDA 918 723 +27%
EBITDA margin % 11.9% 12.0% -10 bps
Amortisation of acquisition related intangibles (608) (543) +12%
Depreciation and amortisation (369) (254) +45%
Gain on disposal (1) 12
Operating loss (60) (63)
Net finance expense (215) (226) -5%
Loss before tax (275) (288)
Taxation (30) (124) -76%
Loss after tax (305) (412)
Basic loss per share (170.8p) (236.5p)
Diluted loss per share (170.8p) (236.5p)
Net current liabilities (416) (112)
Net assets 10,337 10,288
Net cash from operating activities 1,297 775 +67%
Note: A full analysis of the Group's adjusted performance can be found at
pages 9-17.
Flutter delivered strong 2022 revenue growth of 27%, driven by continued
expansion of our recreational base with AMPs up 26% to 10.2m. Our rapidly
scaling US business was a key driver of this success, with the Group outside
of the US benefitting from the acquisitions of Sisal and tombola during the
year.
Cost of sales as a percentage of net revenue increased by 260 basis points to
40.9% primarily driven by our launch in New York, where gaming tax rates are
higher than other states, as well as an increase in Australian POC taxes and
relief from some Italian retail charges in the prior year during
Covid-impacted periods.
Operating costs increased by 21% driven by US investment in sales and
marketing, as well as the acquisition of Sisal and tombola during the year
with reported EBITDA growing 27% in line with revenue growth.
The statutory Group effective tax rate was -11% (2021: -42.8%). A reduced tax
charge in the period of £30m (2021: £124m) resulted in a lower loss after
tax of £305m. The lower tax charge, compared with 2021, was primarily due to
a one-off deferred tax charge of £104m in the prior year, relating to the
UK's main corporate tax rate change from 19% to 25% applicable from 1 April
2023. Loss per share decreased 65.7p in line with the movement in the loss
after tax.
Net current liabilities increased from £112m at 31 December 2021 to £416m at
31 December 2022, mainly due to the purchase of tombola in January 2022 for
£410m, which was financed from the Group's cash resources. As in previous
years, the Group regularly operates 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 of £10.3bn at 31 December 2022 were broadly in line year on year
with increases in total assets, due to the Sisal acquisition and further
growth in our US business offset by corresponding increases in total
liabilities.
Net cash flow from operating activities increased to £1,297m from £775m.
This was due to the Kentucky litigation payment in 2021, as well as a higher
working capital benefit (including movement in customer balances) in 2022 than
in the prior year, due to the continued growth within the business.
A full analysis of the Group's Adjusted performance can be found at pages
9-17.
Cash flow and financial position
FY FY
2022 2021
Unaudited £m £m
Adjusted EBITDA 1,045 1,001
Capex (403) (308)
Working capital 222 119
Corporation tax (163) (138)
Lease liabilities paid (72) (48)
Adjusted free cash flow 628 625
Cash flow from separately disclosed items (118) (61)
Free cash flow 510 563
Interest cost (136) (140)
Other borrowing costs (75) (57)
Settlement of swaps - (68)
Amounts paid in respect of Kentucky settlement - (234)
Purchase of shares by the Employee Benefit Trust ("EBT") (3) (181)
Acquisitions and disposals (2,289) 73
Cash transferred in acquisitions/ disposals 105 4
Other (1) (13)
Net (decrease)/increase in cash (1,889) (53)
Net debt(6) at start of year (2,647) (2,814)
Foreign currency exchange translation (260) (5)
Change in fair value of hedging derivatives 152 225
Net debt as at 31 December (4,644) (2,647)
Note: Prepared on a net cash/debt basis including borrowings, debt related
derivatives and cash and cash equivalents - available for corporate use but
excluding cash and cash equivalents - customer balances. A reconciliation to
the Group's consolidated statement of cash flows is included in Appendix 4.
Adjusted free cash flow of £628m in 2022 was broadly in line with the prior
year while reflecting the following:
• An increase in capital expenditure of £95m, with £43m relating
to the acquisition of Sisal and the balance reflecting investment in
growth-driving product and technology across our divisions, particularly
International
• Higher corporate tax payments reflecting the increased effective
tax rate for the Group
• A larger working capital benefit year on year, as our business
continues to expand, primarily in the US
Cash outflow from separately disclosed items of £118m primarily relates to
restructuring and integration costs. This relates to the combination with TSG,
fees associated with the Fox arbitration and the acquisitions of Sisal and
tombola during the year.
Interest payments were in line year on year, reflecting 2020 accrued interest
costs which were paid in 2021. Excluding these timing differences, interest
payments would have increased driven by debt associated with the Sisal
acquisition and higher cost of debt in H2.
The acquisitions of tombola and Sisal and the Adjarabet minorities buyout
during the year resulted in a cash outflow of £2.3bn.
As at 31 December 2022, the Group had net debt of £4,644m, excluding customer
balances, representing a leverage ratio of 3.9x times(6). 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.
Notes:
(1) Reported figures represent 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) Growth rates in the commentary are in local or constant currency(14)
except reported numbers which are in nominal currency.
(4) 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. Average Monthly Player numbers now
include Junglee players, and comparative figures have been adjusted to show a
like for like comparison.
(5) 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.
(6) Net debt is the principal amount of borrowings plus associated accrued
interest, minus available 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.
(7) Online sportsbook market share is the GGR market share of FanDuel and
FOXBet for Q4 2022 in the states in which FanDuel was live based on published
gaming regulator reports in those states. During Q4 2022 FanDuel was live in
17 states; Arizona (AZ), Colorado (CO), Connecticut (CT), Illinois (IL),
Indiana (IN), Iowa (IA), Kansas (KS), Louisiana (LA), Maryland (MD), Michigan
(MI), New Jersey (NJ), New York (NY), Pennsylvania (PA), Tennessee (TN),
Virginia (VA), West Virginia (WV) and Wyoming (WY). During Q4 2022 FOXBet was
live in 4 states; CO, NJ, MI and PA. Market share does not include AZ for
December as the data has yet to be released.
(8)Consolidate and invest markets in International are Italy, Spain, Georgia,
Armenia, Brazil, Canada, India and Turkey.
(9)Global Play Well goal is measured as the 12-month rolling average % of AMPs
who use a safer gambling (Play Well) tool in the specified 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. During 2022, Flutter strengthened the measurement of this metric
including a change to measure AMPs instead of active customers, apply more
consistent tool usage definitions across the Group as well as including
Adjarabet, Junglee and tombola.
(10) US total addressable market based on internal estimates and excluding
Canada (estimated mature total addressable market of $3bn). Total addressable
market outside US based on H2GC data and internal estimates. Italian market
estimate based on internal estimates
(11) Australian gross gaming revenue market share for 2022 based on competitor
filings and internal estimates.
(12) Sisal market share based on Italian regulatory filings.
(13) Includes the gross value of derivatives.
(14) Constant currency ("CC") growth is calculated by retranslating the
non-sterling denominated component of 2021 at 2022 exchange rates (see
Appendix 3).
( )
Appendix 1: Reconciliation of Adjusted to statutory results
In the operating and financial review the Group's financial performance has
been presented on an Adjusted and reported basis. The difference between the
Adjusted and reported information relates to the inclusion of separately
disclosed items. The impact on the income statement and earnings per share is
set out below.
Adjusted results Separately disclosed items(1) Statutory results
FY FY FY FY FY FY
£m unaudited 2022 2021 2022 2021 2022 2021
Sports revenue 4,788 3,774 4,788 3,774
Gaming revenue 2,906 2,262 2,906 2,262
Total revenue 7,693 6,036 - - 7,693 6,036
Cost of sales (3,164) (2,262) 18 (47) (3,146) (2,310)
Cost of sales as a % of net revenue 41.1% 37.5% 40.9% 38.3%
Gross profit 4,529 3,774 18 (47) 4,547 3,727
Sales and marketing (1,853) (1,508) (1,853) (1,508)
Contribution 2,676 2,266 18 (47) 2,694 2,219
Other operating costs (1,524) (1,164) - (163) (1,524) (1,328)
Corporate costs (107) (101) (145) (67) (252) (168)
EBITDA 1,045 1,001 (127) (278) 918 723
EBITDA margin 13.6% 16.6% 11.9% 12.0%
Depreciation and amortisation (370) (255) (608) (531) (977) (786)
Operating profit/ (loss) 675 746 (735) (809) (60) (63)
Net finance expense (158) (126) (57) (100) (215) (226)
Profit/ (loss) before tax 518 620 (792) (909) (275) (288)
Taxation (182) (166) 152 43 (30) (124)
Profit/ (loss) for the period 336 454 (641) (866) (305) (412)
Profit/ (loss) attributable to non controlling interest (1) (10) 4 6 3 (4)
Profit/ (loss) attributable to equity holders 334 444 (636) (860) (302) (416)
Weighted average number of shares ('000s) 176,833 175,780 176,833 175,780
Adjusted basic EPS (pence) 189p 253p (171p) (237p)
(1) See note 6 of the financial statements.
Appendix 2: Reconciliation of International pro forma to statutory results
Acquired businesses Junglee (January 2021), Singular (September 2021) and
Sisal (August 2022) have been included on a reported basis.
Pro forma measures for the International division have been included in these
preliminary results where they best represent underlying performance. The
difference between the reported and pro forma results for the International
division is the inclusion of the results of Sisal and Junglee in the period
prior to completion as per the table below.
Adjusted Adjusted results Separately disclosed items(1) Statutory reported
pro forma pre- completion
FY FY FY FY FY FY FY FY
2022 2021 2022 2021 2022 2021 2022 2021
Unaudited Adjusted £m £m £m £m £m £m £m £m
Sports revenue 526 447 (168) (227) 358 220
Gaming revenue 1,621 1,534 (297) (465) 1,324 1,068
Total revenue 2,147 1,981 (465) (692) - - 1,683 1,288
Cost of sales (778) (682) 209 290 (570) (392)
Cost of sales as a % of net revenue 36.2% 34.4% 33.9% 30.4%
Gross profit 1,369 1,299 (256) (402) - - 1,113 897
Sales and marketing (386) (360) 12 25 (374) (335)
Contribution 983 939 (244) (377) - - 739 562
Other operating costs (488) (433) 107 163 21 (210) (361) (480)
Adjusted EBITDA 494 506 (137) (214) 21 (210) 378 82
Adjusted EBITDA margin 23.0% 25.6% 21.3% 22.7%
Depreciation and amortisation (185) (153) 64 101 (306) (276) (427) (328)
Adjusted operating profit/(loss) 309 353 (72) (113) (285) (487) (48) (246)
(1) See note 6 of the financial statements.
Appendix 3: Reconciliation to constant currency growth rates
Constant currency ("cc") growth is calculated by retranslating non-sterling
denominated component of FY 2021 at FY 2022 exchange rates as per the table
below.
FY FY
FY FY % 2021 2021 CC %
£m unaudited 2022 2021 Change FX impact CC Change
Sports revenue 4,788 3,774 +27% 171 3,945 +21%
Gaming revenue 2,906 2,262 +28% 105 2,367 +23%
Total revenue 7,693 6,036 +27% 275 6,311 +22%
Cost of sales (3,164) (2,262) +40% (112) (2,374) +33%
Cost of sales as a % of net revenue 41.1% 37.5% +370bps 37.6% +350bps
Gross profit 4,529 3,774 +20% 164 3,938 +15%
Sales and marketing (1,853) (1,508) +23% (104) (1,612) +15%
Contribution 2,676 2,266 +18% 59 2,326 +15%
Other operating costs (1,524) (1,164) +31% (51) (1,215) +25%
Corporate costs (107) (101) +7% (1) (101) +6%
Adjusted EBITDA 1,045 1,001 +4% 8 1,009 +4%
Adjusted EBITDA margin 13.6% 16.6% -300bps 16.0% -240bps
Depreciation and amortisation (370) (255) +45% (13) (268) +38%
Adjusted operating profit/(loss) 675 746 -9% (5) 741 -9%
Revenue by division
UK & Ireland 2,144 2,063 +4% (1) 2,062 +4%
Australia 1,263 1,294 -2% 45 1,339 -6%
International 1,683 1,288 +31% 64 1,352 +24%
US 2,604 1,391 +87% 167 1,558 +67%
Adjusted EBITDA by division
UK & Ireland 654 616 +6% 3 619 +6%
Australia 390 437 -11% 13 449 -13%
International 358 292 +22% 16 308 +16%
US (250) (243) +3% (23) (266) -6%
Corporate costs (107) (101) +7% (1) (101) +6%
Appendix 4: Reconciliation of Adjusted cash flow to reported statutory cash
flow
In the operating and financial review the cash flow has been presented on a
net cash basis. The difference between the net cash basis and the reported
cash flow is the inclusion of borrowings, debt related derivatives and cash
and cash equivalents - available for corporate use but excluding cash and cash
equivalents - customer balances to determine a net cash position.
Adjusted cash flow Debt and customer balances adjustments Statutory cash flow
£m unaudited 2022 2021 2022 2021 2022 2021
Adjusted EBITDA(1) 1,045 1,001 1,045 1,001
Capex(2) (403) (308) (403) (308)
Working capital(3) 222 119 222 119
Corporation tax (163) (138) (163) (138)
Lease liabilities paid (72) (48) (72) (48)
Adjusted free cash flow 628 625 - - 628 625
Cash flow from separately disclosed items(4) (118) (61) (118) (61)
Free cash flow 510 563 - - 510 563
Interest cost(5) (136) (140) (136) (140)
Other borrowing costs(5) (75) (57) (75) (57)
Settlement of swaps - (68) - (68)
Amounts paid in respect of Kentucky settlement - (234) - (234)
Purchase of shares by the EBT (3) (181) (3) (181)
Acquisitions and disposals(6) (2,289) 73 (2,289) 73
Cash acquired in business combinations(6) 105 4 304 409 4
Other(7) (1) (13) (1) (13)
Movement in cash and cash equivalents - customer balances - - 311 89 311 89
Net amounts repaid on borrowings(8) - - 1,706 416 1,706 416
Net (decrease)/increase in cash (1,889) (53) 2,321 506 432 453
Net (debt)/cash at start of year(9) (2,647) (2,814) 4,276 4,005 1,629 1,191
Foreign currency exchange translation (260) (5) 290 (10) 30 (15)
Change in fair value of hedging derivatives 152 225 (152) (225) - -
Net (debt)/cash as at 31 December(9) (4,644) (2,647) 6,735 4,276 2,091 1,629
(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
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 (£2,289m) and cash
acquired in business combinations (£409m) reconciles to the statutory cash
flow amounts for purchase of businesses net of cash acquired (£1,675m) and
acquisition of further interest in subsidiary (£204m).
(7) Other includes proceeds from the disposal of assets, proceeds from the
issue of shares on exercise of employee options, dividends paid to
non-controlling interest, lease interest paid and other.
(8) Net amounts repaid on borrowings includes principle repayments on USD
First Lien Term Loan B and additional draw downs and repayments on the GBP
Revolving Credit Facilities.
(9) Net (debt)/cash comprises principal outstanding balance of borrowings,
accrued interest on those borrowings, derivatives held for hedging debt
instruments, cash and cash equivalents - available for corporate use and cash
and cash equivalents - customer balances.
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 2022
2022 2021
Note £m £m
Continuing operations
Revenue 5 7,693.2 6,036.2
Cost of sales (3,146.3) (2,309.5)
Gross profit 4,546.9 3,726.7
Operating costs excluding depreciation, amortisation and (loss)/gain on (3,629.3) (3,003.4)
disposal
EBITDA(1) 917.6 723.3
Amortisation of acquisition-related intangible assets 6 (607.8) (543.3)
Depreciation and amortisation of other assets (368.6) (254.4)
(Loss)/gain on disposal (1.0) 11.9
Operating loss (59.8) (62.5)
Financial income 7 22.1 3.2
Financial expense 7 (237.1) (229.1)
Loss before tax (274.8) (288.4)
Tax expense 8 (30.1) (123.5)
Loss for the year (304.9) (411.9)
Attributable to:
Equity holders of the Company (302.0) (415.8)
Non-controlling interest (2.9) 3.9
(304.9) (411.9)
Earnings per share
Basic 9 (£1.708) (£2.365)
Diluted 9 (£1.708) (£2.365)
1 EBITDA is defined as profit for the period before depreciation,
amortisation, impairment, loss/gain on disposal, financial income, financial
expense and tax expense. It is considered by the Directors to be a key measure
of the Group's financial performance.
Notes 1 to 21 form an integral part of these condensed consolidated financial
statements.
Condensed Consolidated Statement of Other Comprehensive Income
For the year ended 31 December 2022
2022 2021
Note £m £m
Loss for the year (304.9) (411.9)
Other comprehensive income/(loss):
Items that are or may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges 7 210.7 61.4
Fair value of cash flow hedges transferred to the income statement 7 (182.7) (28.4)
Foreign exchange (loss)/gain on net investment hedges, net of tax(1) 7 (113.7) 68.2
Foreign exchange gain/(loss) on translation of the net assets of foreign 7 371.4 (309.6)
currency denominated entities
Debt instruments at FVOCI 7 (2.6) (1.3)
Other comprehensive income/(loss) 283.1 (209.7)
Total comprehensive loss for the year (21.8) (621.6)
Attributable to:
Equity holders of the Company (22.1) (627.9)
Non-controlling interest 0.3 6.3
Total comprehensive loss for the year (21.8) (621.6)
1 Foreign exchange (loss)/gain on net investment hedges is presented including
an income tax charge of £4.9m (year ended 31 December 2021 : £17.2m) which
relates to the tax effect of the Group's hedging activities.
Notes 1 to 21 form an integral part of these condensed consolidated financial
statements.
Condensed Consolidated Statement of Financial Position
As at 31 December 2022
31 December 2022 31 December 2021
Restated (See Note 2)
Note £m £m
Assets
Property, plant and equipment 702.2 451.4
Intangible assets 5,879.9 4,875.6
Goodwill 10 10,860.0 9,346.8
Deferred tax assets 67.2 8.2
Non-current tax receivable 13.0 21.5
Investments 12 9.2 5.5
Derivative financial assets 17 - 68.0
Financial assets - restricted cash 13 13.0 7.4
Other receivables 12 38.5 29.3
Total non-current assets 17,583.0 14,813.7
Trade and other receivables 12 345.0 203.9
Derivative financial assets 17 279.6 -
Cash and cash equivalents - customer balances 13 1,293.2 677.6
Cash and cash equivalents - available for corporate use 13 797.9 951.7
Current investments at FVOCI - customer deposits 13 138.0 83.0
Current tax receivable 45.5 45.6
Total current assets 2,899.2 1,961.8
Total assets 20,482.2 16,775.5
Equity
Issued share capital and share premium 18 484.6 477.6
Shares held by Employee Benefit Trust 18 (0.2) (4.0)
Cash flow hedge reserve 18 50.7 22.7
Other reserves 18 300.2 (61.7)
Retained earnings 18 9,373.3 9,816.3
Total equity attributable to equity holders of the Parent 10,208.6 10,250.9
Non-controlling interest 18 128.3 37.5
Total equity 10,336.9 10,288.4
Liabilities
Trade and other payables 14 1,533.1 1,096.4
Customer balances 1,394.6 721.0
Derivative financial liabilities 17 144.7 74.0
Provisions 15 46.7 71.3
Current tax payable 75.4 42.3
Lease liability 85.4 47.0
Borrowings 16 35.6 22.1
Total current liabilities 3,315.5 2,074.1
Trade and other payables 14 50.8 19.8
Derivative financial liabilities 17 73.7 55.1
Provisions 15 67.5 47.8
Deferred tax liabilities 760.1 498.0
Non-current tax payable 15.0 25.2
Lease liability 320.8 217.4
Borrowings 16 5,541.9 3,549.7
Total non-current liabilities 6,829.8 4,413.0
Total liabilities 10,145.3 6,487.1
Total equity and liabilities 20,482.2 16,775.5
Notes 1 to 21 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
1 March 2023
Condensed Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
Restated (See Note 2)
Note £m £m
Cash flows from operating activities
Loss for the year (304.9) (411.9)
Tax expense 8 30.1 123.5
Financial income 7 (22.1) (3.2)
Financial expense 7 237.1 229.1
Amortisation of acquisition related intangible assets 6 607.8 543.3
Depreciation and amortisation of other assets 368.6 254.4
Loss/(gain) on disposal 1.0 (11.9)
Separately disclosed items included within EBITDA 6 127.4 277.7
Employee equity-settled share-based payments expense 123.2 79.1
Foreign currency exchange (gain)/loss (18.4) 15.7
Cash from operations before changes in working capital 1,149.8 1,095.8
Increase in trade and other receivables (42.6) (40.5)
Increase in trade, other payables and provisions 160.1 64.0
Movement in cash and cash equivalents - customer balances 311.4 89.3
Cash generated from operating activities 1,578.7 1,208.6
Taxes paid (163.4) (138.5)
Cash generated from operations, net of taxes paid 1,415.3 1,070.1
Transaction fees, restructuring and integration costs paid 6 (117.9) (61.2)
Amounts paid in respect of Kentucky litigation 6 - (234.1)
Net cash from operating activities 1,297.4 774.8
Cash flows from investing activities:
Purchase of property, plant and equipment (101.5) (89.3)
Purchase of intangible assets (85.2) (62.4)
Capitalised internal development expenditure (201.5) (142.3)
Purchase of businesses net of cash acquired 11 (1,675.9) (50.7)
Payment of contingent deferred consideration 11 (15.3) (21.6)
Acquisition of further interest in subsidiary 11 (204.1) -
Net proceeds from disposal of subsidiary 11 - 127.1
Interest received 7 6.2 1.5
Other 5.0 (0.8)
Net cash used in investing activities (2,272.3) (238.5)
Cash flows from financing activities:
Proceeds from the issue of shares on exercise of employee options 18 7.0 13.2
Dividend paid to non-controlling interest 18 (5.4) (16.7)
Payment of lease liabilities (72.2) (47.9)
Payment of lease interest (12.6) (8.4)
Lease incentive received 4.6 7.3
Proceeds from borrowings 16 4,020.5 1,167.7
Repayment of borrowings 16 (2,314.9) (751.2)
Interest paid 16 (142.5) (141.9)
Settlement of derivatives - (67.9)
Financing fees paid in respect of borrowing facilities 16 (74.6) (56.7)
Ordinary shares of the Company acquired by the Employee Benefit Trust 25 (2.8) (180.7)
Net cash from/(used in) financing activities 1,407.1 (83.2)
Net increase in cash and cash equivalents 432.2 453.1
Cash and cash equivalents at start of year 13 1,629.3 1,191.3
Foreign currency exchange gain/(loss) on cash and cash equivalents 29.6 (15.1)
Cash and cash equivalents at end of year 13 2,091.1 1,629.3
Presented on the Statement of Financial Position within:
Cash and cash equivalents - customer balances 1,293.2 677.6
Cash and cash equivalents - available for corporate use 797.9 951.7
2,091.1 1,629.3
Notes 1 to 21 form an integral part of these condensed consolidated financial
statements.
Condensed Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Number of ordinary shares in issue Issued share capital and share premium Shares held by Employee Benefit Trust Cash flow hedge reserve Fair value reserve(1) Foreign exchange translation reserve(1) Other reserves(1) Share-based payment reserve(1) Retained earnings Total equity attributable to shareholders of the Non-controlling interest Total equity
Company
m £m £m £m £m £m £m £m £m £m £m £m
Balance at 1 January 2022 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
Total comprehensive income/(loss) for the year
Loss for the year - - - - - - - - (302.0) (302.0) (2.9) (304.9)
Foreign exchange translation including net - - - - - 259.4 - - - 259.4 3.2 262.6
investment hedges
Effective portion of changes in fair value of cash - - - 210.7 - - - - - 210.7 - 210.7
flow hedges (Note 7)
Fair value of cash flow hedges transferred to the - - - (182.7) - - - - - (182.7) - (182.7)
income statement (Note 7)
Financial assets at FVOCI (Note 7) - - - - (2.6) - - - - (2.6) - (2.6)
Tax on foreign exchange hedging (Note 8) - - - - - (4.9) - - - (4.9) - (4.9)
Total comprehensive income/(loss) for the year - - - 28.0 (2.6) 254.5 - - (302.0) (22.1) 0.3 (21.8)
Transactions with owners of the Company, recognised directly in equity
Shares issued on exercise of employee share options 0.5 7.0 - - - - - - - 7.0 - 7.0
Acquisition of non-controlling interest in Adjarabet - - - - - - - - (169.9) (169.9) (34.2) (204.1)
(Note 11)
Business combinations (Note 11) - - - - - - - - (12.3) (12.3) 130.1 117.8
Ordinary shares of the Company acquired by the - - (2.8) - - - - - - (2.8) - (2.8)
Employee Benefit Trust
Equity-settled transactions - expense recorded in - - - - - - - 153.4 - 153.4 - 153.4
the income statement
Equity-settled transactions - vesting - - 6.6 - - - - - (6.6) - - -
Tax on share-based payments (Note 18) - - - - - - - - 4.4 4.4 - 4.4
Transfer to retained earnings on exercise of share - - - - - - - (43.4) 43.4 - - -
options and vesting of
share awards
Dividend paid to non-controlling interest (Note 18) - - - - - - - - - - (5.4) (5.4)
Total contributions by and distributions to owners 0.5 7.0 3.8 - - - - 110.0 (141.0) (20.2) 90.5 70.3
of the Company
Balance at 31 December 2022 176.1 484.6 (0.2) 50.7 (4.3) 60.3 2.5 241.7 9,373.3 10,208.6 128.3 10,336.9
1 Included in other reserves in the Statement of Financial Position.
Notes 1 to 21 form an integral part of these condensed consolidated financial
statements.
Condensed Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Number of ordinary shares in issue Issued share capital and share premium Merger reserve Treasury shares Shares held by Employee Benefit Trust Cash flow hedge reserve Fair value reserve(1) Foreign exchange translation reserve(1) Other reserves(1) Share-based payment reserve(1) Retained earnings Total equity attributable to shareholders of Non-controlling interest Total equity
the Company
m £m £m £m £m £m £m £m £m £m £m £m £m £m
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 - - - - - - - (226.6) - - - (226.6) 2.4 (224.2)
investment hedges
Tax on foreign exchange hedging - - - - - - - - - - - - - -
Effective portion of changes in fair value of - - - - - 61.4 - - - - - 61.4 - 61.4
cash flow hedges
Fair value of cash flow hedges transferred to - - - - - (28.4) - - - - - (28.4) - (28.4)
the income statement
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 - - - - - 33.0 (1.3) (243.8) - - (415.8) (627.9) 6.3 (621.6)
year
Transactions with owners of the Company, recognised directly in equity
Shares issued on exercise of employee share 0.6 13.2 - - - - - - - - - 13.2 - 13.2
options
Business combinations (Note 11) - - - - - - - - - - - - 17.1 17.1
Cancellation of Treasury shares (Note 18) (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 - - -
Ordinary shares of the Company acquired by - - - - (180.7) - - - - - - (180.7) - (180.7)
the Employee Benefit Trust
Equity-settled transactions - expense - - - - - - - - - 80.5 - 80.5 - 80.5
recorded in income statement
Equity-settled transactions - vesting - - - - 182.5 - - - - - (182.5) - - -
Tax on share-based payments - - - - - - - - - - 0.7 0.7 - 0.7
Exercise of share awards - - - - - - - - - (49.6) 49.6 - - -
Dividend paid to non-controlling interest - - - - - - - - - - - - (16.7) (16.7)
(Note 18)
Total contributions by and distributions to (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)
owners of the Company
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 21 form an integral part of these condensed consolidated financial
statements.
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. The Group's four reportable segments are
(i) UK and Ireland ("UK&I"), which includes Sky Betting & Gaming,
Paddy Power (both online and retail), tombola and Betfair's operations in the
UK and Ireland; (ii) Australia, comprising Sportsbet, the market leader in the
Australian online betting market; (iii) International which includes online
poker, gaming, betting, lottery, rummy and daily fantasy sport product
offerings under the Sisal, 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.
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 2022, 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 2022 comprise the financial statements of the Company and its
subsidiary undertakings and were approved for issue by the Board of Directors
on 1 March 2023.
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 2022;
· Amendments to IAS 37: Onerous contracts - Cost of Fulfilling a
Contract;
· Amendments to IAS 16: Property, Plant and Equipment: Proceeds
before Intended Use;
· Amendments to IFRS 1, IFRS 9 and IAS 41: Annual Improvements to
IFRS Standards 2018-2020; and
· Amendments to IFRS 3: Reference to the Conceptual Framework.
The adoption of the new standards and interpretations did not have a
significant impact on the Group's consolidated financial statements.
Demand Deposits with Restrictions on Use arising from a Contract with a Third
Party (IAS 7 Statement of Cash Flow)
In April 2022, the IFRS Interpretations Committee issued an agenda decision
clarifying the definition of cash and cash equivalents in the statement of
cash flows stating that cash amounts that are only restricted by an obligation
to a third party meet the definition of cash under IAS 7 Statement of Cash
Flows. The title of the agenda decision is Demand Deposits with Restrictions
on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash
Flow).
Prior to this clarification, the Group had not treated cash amounts that were
restricted due to, for example gaming regulatory requirements to hold cash to
match customer liabilities, as cash and cash equivalents in the statement of
cash flows and had instead classified these balances as financial assets -
restricted cash.
The Group considers these cash balances to not be available to the Group and
will disaggregate these cash balances from the cash balances that are
available to the Group, for general corporate purposes in accordance with IAS
1 paragraph 55.
In accordance with this clarification, the Group has made a change in
accounting policy and has presented cash and cash equivalents for the purpose
of its cash flow including these restricted balances and has restated the
prior period accordingly as follows.
2. Recent accounting pronouncements (continued)
31 December 2021 31 December 2021 31 December 2021 31 December 2020 31 December 2020 31 December 2020
Originally reported Reclassification Restated Originally reported Reclassification Restated
Current assets
Financial asset - restricted cash 677.6 (677.6) - 587.9 (587.9) -
Cash and cash equivalents - customer balances - 677.6 677.6 - 587.9 587.9
Cash and cash equivalents - available for corporate use 951.7 - 951.7 603.4 - 603.4
Cash and cash equivalents 951.7 677.6 1,629.3 603.4 587.9 1,191.3
The change in the classification for the purpose of statement of cash flows
did not impact the Statement of Financial Position other than to rename the
captions. The Group acknowledges that in accordance with this agenda decision
that a change in accounting policy gives rise to the requirement to present a
third Statement of Financial Position. In the context of the limited impact
this change in accounting policy has had on the Group's Statement of Financial
Position, and the fact that the full impact on the Group's Statements of
Financial Position as at 31 December 2021 and 2020 is set out above, the Group
has concluded that a third Statement of Financial Position would not give the
users of these financial statements any further information and on this basis,
a third Statement of Financial Position has not been presented.
IFRS standards issued not yet effective
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:
• 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);
• 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);
• Initial Application of IFRS 17 and IFRS 9 - Comparative
Information (Amendments to IFRS 17) (effective date 1 January 2023); and
• Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
(effective date 1 January 2024).
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.
2. Recent accounting pronouncements (continued)
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 that amended the benchmark rate referenced in the
Term Loan A agreement from GBP LIBOR to GBP SONIA for the interest periods
commencing after 1 January 2022. In accordance with the Phase 2 amendments to
IFRS 9, the Company has adjusted the effective interest rate on its borrowings
resulting in no immediate impact on profit or loss.
The Group's USD First Lien Term Loan B, and certain of its cross-currency
interest rate swaps are indexed to USD-LIBOR. 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 Benchmark Rate Non-Derivative Financial Liability Nominal Amount Derivative Instruments Nominal Amount
USD Libor $2,901.7m $2,901.7m
The reliefs have the effect that IBOR reform should not generally cause hedge
accounting to terminate. However, any hedge ineffectiveness will continue to
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 2022 the Company has term loan of USD
$2,901.7m and cross-currency interest rate swaps with a notional amount of USD
$2,901.7m, 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 to be implemented in 2023. The 2028 Term
Loan raised for the Sisal acquisition in 2022 uses SOFR + CSA as the
underlying reference rate. At the time of this financing, the loan
agreements for the existing 2026 Term Loan B were updated to ensure
consistent treatment on transition to SOFR. 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
relating to the term loan of USD $2,901.7m have interest rate reset dates
which occur after 30 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 fair value through Profit and Loss (FVTPL), fair value through
Other Comprehensive Income (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.
3. Basis of preparation and summary of significant accounting policies
(continued)
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 2022.
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 £917.6m and a loss after tax of £304.9m for the
year ended 31 December 2022. This includes £976.4m of depreciation and
amortisation charged against profit in the year. The net cash generated from
operating activities during the year ended 31 December 2022 was £1,297.4m.
The balance sheet at 31 December 2022 reported a net current liability
position of £416.3m. During the 12 months ended 31 December 2022, the Group
has been in compliance with all covenants related to its lending arrangements.
The Directors have considered the available financial resources which include,
at 31 December 2022, £2,091.1m of cash and cash equivalents of which
£797.9m is available for corporate use and a £749m Revolving Credit Facility
with undrawn capacity of £675m. Whilst there are certain contractual loan
repayments due within the next 12 months of £35.6m, the Group's lending
facilities primarily fall due in 2025 and 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 for the 12 months from 1 March 2023 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.
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
reduced customer discretionary income, 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
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 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
2021 and are detailed below:
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 areas of judgement are in relation to intercompany transactions,
including internally generated intangible asset transfers, and the recognition
of deferred tax, particularly in respect to the US business. Whilst we have
strong profitability forecasts in respect to the US business, and we are
confident the US business will be profitable in the foreseeable future, the
Group recognises that the US business remains loss making during the current
period and has not been profitable to date, taking this into account, the
Group has partially recognised losses.
Recognition of deferred tax assets requires consideration of the value of
those assets and the likelihood that those assets will be utilised in the
foreseeable future. The recognition relies on the availability of sound and
relatively detailed forecast information regarding the future performance of
the business which has the legal right to utilise the deferred tax assets. The
Group performed its assessment of the recovery of deferred tax assets at
31 December 2022, taking into account the Group's actual and historic
performance, the impact of tax legislation enacted at the reporting date and
the detailed financial forecasts and budgets for the business covering the
periods over which the assets are expected to be utilised.
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 2022 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.
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.
Acquisition accounting and value of acquired assets and liabilities
The acquisition method of accounting is used to account for all business
combinations. Identifiable assets acquired and liabilities assumed in a
business combination are measured initially at their fair values at the
acquisition date. The acquisition of Sisal (see Note 11) during the year
resulted in significant judgement and estimation in particular in relation to
the identification and valuation of separable intangible assets, future
cashflows, appropriate discount rates and determining appropriate useful
economic lives for these assets. The discount rates used ranged from 8.8% to
14.9% and the terminal growth rates were between 0% and 5.0%. If the purchase
consideration exceeds the fair value of the net assets acquired, then the
difference is recognised as goodwill. The Group has one year from the
acquisition date to re-measure the fair values of the acquired assets and
liabilities and the resulting goodwill if new information is obtained relating
to conditions that existed at the acquisition date. Acquisition related costs
are expensed as incurred. The business combinations entered into during the
year are disclosed in Note 11.
4. Judgements and estimates (continued)
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.
5. Operating segments
Reportable business segment information
The Group's four reportable segments are:
• UK & Ireland;
• Australia;
• International; and
• US.
UK & Ireland
The UK & Ireland ("UK&I") segment is comprised of the operations of
Sky Betting & Gaming, Paddy Power, Betfair and from January 2022, tombola
(see Note 11). Revenues are earned primarily from sports betting (sportsbook
and the exchange sports betting product) and gaming services (games, casino,
bingo and poker). Until August 2021, this segment also included the results of
Oddschecker (odds comparison website) at which point the business was
disposed. 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 earns its revenues from sports betting services provided to Australian
customers primarily online.
International
The International segment is comprised of PokerStars, Betfair International,
Adjarabet, Junglee Games and from August 2022, Sisal (see Note 11). The
International segment earns most of its revenues from poker, casino, rummy,
lottery and sports betting through various brands. Services are provided
primarily via the internet but also through licensed retail outlets mainly in
Italy following the acquisition of Sisal.
US
The US segment is comprised of the FanDuel, TVG, FOX Bet, Stardust and
PokerStars brands' and earns its revenues from sports betting, daily fantasy
sports and gaming services (casino and poker) provided to 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 pandemic caused some postponement and cancellation of sporting
events across the world and skewed results for the comparative year in
particular. 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 2022:
UK&I Australia International US Corporate Total
£m £m £m £m £m £m
Revenue from external customers 2,143.7 1,263.0 1,682.5 2,604.0 - 7,693.2
Cost of sales before separately disclosed items (653.3) (635.4) (569.7) (1,305.6) - (3,164.0)
Gross profit before separately disclosed items 1,490.4 627.6 1,112.8 1,298.4 - 4,529.2
Operating costs excluding depreciation and amortisation before separately (836.1) (237.4) (755.2) (1,548.1) (107.4) (3,484.2)
disclosed items
Adjusted EBITDA(1) before separately disclosed items 654.3 390.2 357.6 (249.7) (107.4) 1,045.0
Depreciation and amortisation before separately disclosed items (133.0) (29.4) (121.4) (79.4) (5.4) (368.6)
(Loss)/profit on disposal before separately disclosed items (2.6) - 0.5 1.1 - (1.0)
Reportable segment profit/(loss) before separately disclosed items 518.7 360.8 236.7 (328.0) (112.8) 675.4
Legal provision releases - 17.7 20.6 - - 38.3
Amortisation of acquisition-related intangible assets (Note 6) (261.1) (23.2) (305.6) (17.9) - (607.8)
Reportable segment profit/(loss) after amortisation of acquisition-related 257.6 355.3 (48.3) (345.9) (112.8) 105.9
intangibles
Transaction fees and associated costs(2) (35.0)
Restructuring and integration costs(2) (130.7)
Operating loss (59.8)
5. Operating segments (continued)
Reportable business segment information for the year ended 31 December 2021:
UK&I Australia International US Corporate Total
£m £m £m £m £m £m
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 (825.8) (221.2) (604.6) (1,020.7) (100.7) (2,773.0)
disclosed items
Adjusted EBITDA(1) 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 (Note 6) (225.9) (20.9) (276.4) (20.1) - (543.3)
Reportable segment profit/(loss) after amortisation of acquisition-related 276.5 390.0 (246.4) (309.5) (105.8) 4.8
intangibles
Transaction fees and associated costs(2) (22.1)
Restructuring and integration costs(2) (45.2)
Operating loss (62.5)
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, (loss) / 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.
Reconciliation of reportable segment pre-Separately disclosed items
information to Group totals:
2022 2021
Before Separately disclosed Total Before Separately disclosed Total
separately disclosed items separately disclosed items
items items
£m £m £m £m £m £m
Gross profit 4,529.2 17.7 4,546.9 3,774.0 (47.3) 3,726.7
Operating costs excluding depreciation, amortisation and (loss)/gain on (3,484.2) (145.1) (3,629.3) (2,773.0) (230.4) (3,003.4)
disposal
EBITDA(1) 1,045.0 (127.4) 917.6 1,001.0 (277.7) 723.3
Depreciation and amortisation (368.6) (607.8) (976.4) (254.4) (543.3) (797.7)
(Loss) /gain on disposal (1.0) - (1.0) (0.3) 12.2 11.9
Operating loss 675.4 (735.2) (59.8) 746.3 (808.8) (62.5)
Net finance costs (157.8) (57.2) (215.0) (126.0) (99.9) (225.9)
Profit / (loss) before tax 517.6 (792.4) (274.8) 620.3 (908.7) (288.4)
Tax expense (181.9) 151.8 (30.1) (166.3) 42.8 (123.5)
Profit / (loss) for the period 335.7 (640.6) (304.9) 454.0 (865.9) (411.9)
1 EBITDA is defined as profit for the year before depreciation, amortisation,
impairment, (loss)/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
2022:
UK&I Australia International US Total
£m £m £m £m £m
Sports revenue(1) 1,180.9 1,263.0 358.3 1,985.4 4,787.6
Gaming revenue(2) 962.8 - 1,324.2 618.6 2,905.6
Total Group revenue 2,143.7 1,263.0 1,682.5 2,604.0 7,693.2
Group revenue disaggregated by product line for the year ended 31 December
2021(:)
UK&I Australia International US Total
£m £m £m £m £m
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
1 Sports revenue comprises sportsbook, exchange sports betting, daily fantasy
sports and pari-mutuel betting.
2 Gaming revenue includes Games, Poker, Casino, Lottery, Rummy and Bingo.
Geographical information
Group revenue disaggregated by geographical market for the year ended
31 December 2022:
UK&I Australia International US Total
£m £m £m £m £m
US - - - 2,594.3 2,594.3
UK 1,869.3 - 59.4 - 1,928.7
Australia - 1,263.0 - - 1,263.0
Rest of World(1) 3.2 - 702.6 9.7 715.5
EU (excl. Ireland)(2) 47.9 - 915.5 - 963.4
Ireland 223.3 - 5.0 - 228.3
Total Group revenue 2,143.7 1,263.0 1,682.5 2,604.0 7,693.2
1 The Rest of World category includes multiple countries, that individually
represent less than 1% of total Group revenue.
2 The EU (excl. Ireland) category includes multiple countries, the largest of
which is Italy, that individually represent less than 7% of total Group
revenue.
Group revenue disaggregated by geographical market for the year ended
31 December 2021:
UK&I Australia International US Total
£m £m £m £m £m
US - - - 1,391.4 1,391.4
UK 1,860.1 - 73.7 - 1,933.8
Australia - 1,293.5 - - 1,293.5
Rest of World(1) 8.7 - 551.9 - 560.6
EU (excl. Ireland)(2) - - 656.4 - 656.4
Ireland 194.1 - 6.4 - 200.5
Total Group revenue 2,062.9 1,293.5 1,288.4 1,391.4 6,036.2
1 The Rest of World category includes multiple countries that individually
represent less than 2% of total Group revenue.
2 The EU (excl. Ireland) category includes multiple countries that
individually represent less than 4% of total Group revenue.
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 2022 31 December 2021
£m £m
UK 8,855.7 8,492.3
Ireland 151.9 159.9
Australia 667.1 645.6
US 1,037.6 868.5
Italy(2) 2,053.4 -
Rest of World(1) 4,676.4 4,507.5
Total 17,442.1 14,673.8
1 This 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.
2 This relates to the acquisition of Sisal in 2022. See Note 11 for more
details.
6. Separately disclosed items
The separately disclosed items noted in Note 5 are comprised as follows:
2022 2021
£m £m
Transaction fees and associated costs (35.0) (22.1)
Restructuring and integration costs (130.7) (45.2)
Legal provision releases 38.3 -
Kentucky settlement and associated legal costs - (163.1)
Germany and Greece tax expense - (47.3)
EBITDA impact of separately disclosed items (127.4) (277.7)
Amortisation of acquisition-related intangible assets (607.8) (543.3)
Disposal of Oddschecker Global Media - 12.2
Operating loss impact of separately disclosed items (735.2) (808.8)
Financial income 11.0 -
Financial expense (68.2) (99.9)
Loss before tax impact of separately disclosed items (792.4) (908.7)
Tax credit on separately disclosed items 151.8 42.8
Total separately disclosed items (640.6) (865.9)
Attributable to:
Equity holders of the Company (636.2) (860.0)
Non-controlling interest (4.4) (5.9)
(640.6) (865.9)
Amortisation of acquisition-related intangible assets
Amortisation of £607.8m has been incurred in the year (year ended
31 December 2021: £543.3m) 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, the acquisitions of Junglee and Singular in 2021 and the
acquisitions of tombola and Sisal in 2022.
Transaction fees and associated costs
During the year ended 31 December 2022, £35.0m (year ended 31 December
2021: £22.1m) of costs were incurred relating to various acquisitions and the
FOX option arbitration proceedings. The costs were included as separately
disclosed items as they have not been incurred in the ordinary course of
business.
6. Separately disclosed items (continued)
Restructuring and integration costs
During the year ended 31 December 2022 costs of £130.7m (year ended
31 December 2021: £45.2m) relating to incremental, one-off costs, were
incurred by the Group mainly as a result of significant restructuring and
integration initiatives following the Combination with TSG in 2020.
Legal provision releases
During the year ended 31 December 2022, the settlement of two separate legacy
TSG litigation matters in the International and Australian divisions resulted
in the release of various legal provisions and an Income Statement credit of
£38.3m. These were included as separately disclosed items as they have not
been incurred in the ordinary course of business.
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 (£145.2m) to Kentucky in addition to the $100m
(£71.1m) 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 £163.1m (including associated legal costs of £17.9m)
were incurred during the year ended 31 December 2021.
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 €30.6m was payable.
This represented a multiple of the revenues generated by the Exchange during
the assessment period.
The Group paid the €30.6m German tax assessment in 2019, with the late
payment interest of approximately €10m 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 resulted in an
expense of €40.6m (£34.5m) being recorded during the year ended
31 December 2021 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 €15.0m 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 €15.0m.
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 decided to recognise the amount of the Greek assessment, of
€15.0m (£12.9m) as an expense in profit or loss during the year ended
31 December 2021.
The Group considered these cost as one-off costs and not as part of ongoing
operations in the period.
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 £127.1m in cash (proceeds of £141.3m net of £14.2m cash already on the
balance sheet) and recorded a gain on the disposal of £12.2m. There is
potential for the Group to receive further consideration of up to £20m
pending future events. However, it is currently not probable that further
amounts will be received and therefore no 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.
Financial income
During the year ended 31 December 2022, foreign exchange gains of £11.0m
were recorded. These gains were included as separately disclosed items due to
their volatile nature.
6. Separately disclosed items (continued)
Financial expense
During the year ended 31 December 2022, the Group recorded a charge of
£56.9m upon the settlement of the Sisal bridging loan and a further £11.3m
mainly relating to financing fees associated with the debt drawdown for the
Sisal acquisition that were not eligible for capitalisation. These charges
were included as separately disclosed items due to their non-recurring nature.
See also Note 7 and Note 16.
During the year ended 31 December 2021, on repayment of the Senior Notes in
2021, the Group recorded a charge of £78.8m relating to the Senior Notes
settlement. In conjunction with the repayment and refinancing, the Group
incurred an additional £16.8m of fees that were not subject to capitalisation
and £4.3m 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.
Presentation within the Consolidated Income Statement
The release of the Australia legal provision and the Germany and Greece tax
expense are included in the Consolidated Income Statement within cost of
sales. Transaction fees and associated costs, restructuring and integration
costs, the release of the International legal provision and the Kentucky
settlement costs are included in the Consolidated Income Statement within
operating costs excluding depreciation, amortisation, and loss / (gain) on
disposal.
Tax credit on separately disclosed items
The tax credit of £151.8m (2021: £42.8m) has arisen primarily on the tax
effect of acquisition related intangible amortisation of £87.1m, the
recognition of a deferred tax asset of £42.9m following an internal transfer
of intangibles and the tax effect of other separately identified items of
£21.8m. The 2021 tax credit amounts in respect to acquisition related
intangible amortisation, internal transfer of intangibles and other separately
identified intangibles were offset by an increase of £104.1m 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.
7. Financial income and expense
Recognised in profit or loss
2022 2021
£m £m
Financial income:
Foreign exchange gain on financing instruments associated with financing 11.0 -
activities (Note 6)
Movement in fair value of investment 4.9 1.7
On financial assets at amortised cost:
Interest income 6.2 1.5
Total 22.1 3.2
Financial expense:
Settlement of borrowings (see Note 6 and Note 16) 56.9 78.8
Change in fair value of contingent consideration - 3.3
Foreign exchange loss on financing instruments associated with financing - 1.2
activities
Financing related fees not eligible for capitalisation (see Note 6 and Note 11.3 21.1
16)
On financial liabilities at amortised cost:
Interest on borrowings, bank guarantees and bank facilities 137.4 106.0
Interest on lease liabilities 12.6 8.5
Other interest 18.9 10.2
Total 237.1 229.1
7. Financial income and expense (continued)
Recognised in other comprehensive income/(loss):
2022 2021
£m £m
Recognised in other comprehensive income/(loss):
Effective portion of changes in fair value of cash flow hedges 210.7 61.4
Fair value of cash flow hedges transferred to income statement (182.7) (28.4)
Net change in fair value of cash flow hedge reserve 28.0 33.0
Debt instruments at FVOCI (2.6) (1.3)
Foreign exchange (loss) / gain on net investment hedges, net of tax (113.7) 68.2
Foreign exchange gain/(loss) on translation of the net assets of foreign 371.4 (309.6)
currency denominated entities
Total 283.1 (209.7)
A charge of £1.8m was recorded in the income statement in respect of
ineffective cash flow hedges in the year ended 31 December 2022 (2021:
£2.5m).
8. Tax expense
2022 2021
£m £m
Recognised in profit or loss:
Current tax charge 168.8 127.3
Prior year under provision 6.4 1.0
Total current tax 175.2 128.3
Deferred tax credit (146.7) (6.2)
Prior year under provision 1.6 1.4
Decrease in net deferred tax liability (145.1) (4.8)
Total tax expense in income statement 30.1 123.5
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:
2022 2021
£m £m
Loss before tax (274.8) (288.4)
Tax on Group profit before tax at the standard Irish corporation tax rate of (34.4) (36.1)
12.5%
Depreciation on non-qualifying property, plant and equipment (4.0) (5.4)
Effect of different statutory tax rates in overseas jurisdictions (19.2) 5.5
Non-deductible expenses 36.0 26.8
Non-taxable income (1.4) (4.0)
Effect of changes in statutory tax rates (1.9) 104.4
Movement on deferred tax balances not recognised 47.0 29.9
Under provision in prior year 8.0 2.4
Total Tax Expense 30.1 123.5
The Group's adjusted effective tax rate before separately disclosed items for
the year was 35.1% (year ended 31 December 2021: 26.8%), which compares to
the standard Irish tax rate of 12.5%. A total tax credit on separately
disclosed items of £151.8m was recorded during the year ended 31 December
2022 (year ended 31 December 2021: £42.8m) (see Note 6).
The Group's consolidated effective tax rate on profits including separately
disclosed items for 2022 is (11.0)% (2021: (42.8)%). The separately disclosed
items impacting the consolidated tax rate include the unwind of deferred tax
liabilities recognised in respect of acquisition-related intangibles.
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 including the unrecognised US
losses referred to in Note 4, as well as the effect of expenses which are
not deductible for tax purposes.
8. Tax expense (continued)
The future effective tax rate of the Group will be affected by the ongoing
geographic mix of profits in accordance with the OECD guidelines in relation
to Base Erosion and Profit Shifting. On 15 December 2022, European Union (EU)
Member States unanimously adopted the Minimum Tax Directive via written
procedure ensuring a global minimum level of taxation (set at 15%) for
multinational enterprise groups. GLoBE Model rules were released in March 2022
and broadly EU Member States have until 31 December 2023 to transpose the
Directive into national legislation with the rules to be applicable for fiscal
years starting on or after 31 December 2023. None of the countries in which
the Group operates has enacted or substantively enacted Pillar Two Model Rules
as part of their national laws as of 31 December 2022. Whilst consultation on
a number of areas remains ongoing, we will continue to monitor developments
closely and we expect this to lead to an increase in tax from 2024 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.
The calculation of basic, diluted and adjusted EPS is as follows:
2022 2021
Numerator in respect of basic and diluted earnings per share (£m):
Loss attributable to equity holders of the Company (302.0) (415.8)
Numerator in respect of adjusted earnings per share (£m):
Loss attributable to equity holders of the Company (302.0) (415.8)
Separately disclosed items (Note 6) 636.2 860.0
Profit for adjusted earnings per share calculation 334.2 444.2
Weighted average number of ordinary shares in issue during the period (in 176,833 175,780
'000s)(1)
Basic earnings per share (£1.708) (£2.365)
Adjusted basic earnings per share £1.890 £2.527
Adjustments to derive denominator in respect of diluted earnings per share (in
'000s):
Weighted average number of ordinary shares in issue during the period 176,833 175,780
Diluted earnings per share (£1.708) (£2.365)
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 2,537,536 (2021:
2,289,170).
The average market value of the Company's shares of £99.09 (31 December
2021: £137.61) 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
Goodwill acquired through business combination activity has been allocated to
CGUs that are expected to benefit from synergies in that combination. The CGUs
represent the lowest level within the Group at which the associated goodwill
is monitored for internal management purposes, and are not larger than the
operating segments determined in accordance with IFRS 8. A total of 16 (2021:
13) CGUs have been identified and these are grouped together for goodwill
impairment purposes as per the below. Any indefinite life intangible assets
attributed to one of the 16 CGUs (2021: 13) is tested for impairment at the
CGU level.
10. Goodwill (continued)
Number of cash generating units Goodwill
31 December 2022 31 December 2021 31 December 2022 31 December 2021
UK&I Online 4 3 5,984.7 5,766.9
UK Retail 1 1 18.9 18.9
Irish Retail 1 1 20.7 20.7
International 6 4 3,696.3 2,490.3
Australia 1 1 505.1 482.4
US 3 3 634.3 567.6
Total Group 16 13 10,860.0 9,346.8
UK&I Online UK Retail Irish Retail International Australia US Total
£m £m £m £m £m £m £m
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 year (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 1 January 2022 5,766.9 18.9 20.7 2,490.3 482.4 567.6 9,346.8
Arising on acquisitions during the period (Note 11) 217.2 - - 1,021.9 - - 1,239.1
Foreign currency translation adjustment 0.6 - - 184.1 22.7 66.7 274.1
Balance at 31 December 2022 5,984.7 18.9 20.7 3,696.3 505.1 634.3 10,860.0
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).
Goodwill in the UK&I online segment arose from the acquisition of tombola
in 2022 (see Note 11), the acquisition of the Sky Betting and Gaming business
as part of the TSG acquisition in 2020, 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.
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 in 1988 and the acquisition of a number of
retail bookmaking shop properties since 2007.
The International goodwill amount arose from the acquisition of Sisal in 2022
(see Note 11), 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 acquisition of the PokerStars business as part of the TSG
acquisition in 2020, 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 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 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.
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 an initial 61% of FanDuel Limited, a market leading operator in
the daily fantasy sports market in the United States, in 2018 and goodwill
arising on FoxBet through the combination with TSG in 2020.
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 2022.
10. Goodwill (continued)
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, no
impairment has arisen.
11. Business combinations and disposals
Year ended 31 December 2022
Acquisition of Sisal
On 4 August 2022, the Group completed the acquisition of 100% of Sisal,
Italy's leading retail and online gaming operator with operations also in
Turkey (of which it has a controlling 49% interest) and Morocco. The purchase
comprised of a cash payment of £1,674.8m (€2,002m).
Details of the provisional fair value of identifiable assets and liabilities
acquired, purchase consideration and goodwill are as follows:
Provisional fair values as at
4 August 2022
£m
Assets
Property, plant and equipment
156.0
Trade and other receivables
9.7
Deferred tax assets
16.2
Intangible assets
1,057.8
Total non-current assets
1,239.7
Trade and other receivables
67.3
Cash and cash equivalents - available for corporate use
89.9
Cash and cash equivalents - customer balances
304.2
Total current assets
461.4
Total assets
1,701.1
Liabilities
Trade and other payables
195.6
Customer balances
304.2
Lease liability
16.7
Total current liabilities
516.5
Trade and other payables
24.0
Lease liability
45.2
Provisions
39.8
Deferred tax liability
291.1
Total non-current liabilities
400.1
Total liabilities
916.6
Net assets acquired
784.5
Goodwill
1,015.8
Non-controlling interest measured at the fair value of net assets identified
(125.5)
Consideration
1,674.8
The consideration is analysed as:
Consideration satisfied by cash
1,674.8
Consideration
1,674.8
Included within the intangible assets were £1,057.8m of separately
identifiable intangibles comprising brand, customer relations, licences, and
technology acquired as part of the acquisition, with the additional effect of
a deferred tax liability of £291.1m thereon. These intangible assets are
being amortised over their useful economic lives of up to 20 years. The book
value equated to the fair value on the remaining assets as all amounts are
expected to be received.
11. Business combinations and disposals (continued)
The main factors leading to the recognition of goodwill (none of which is
deductible for tax purposes) is the opportunity to increase the Group's
exposure to an attractive fast-growing regulated online market with Sisal's
omni-channel offering delivering a competitive advantage to the Group. The
acquisition provides the Group with lottery capabilities for the first time
and presents the opportunity to grow outside of Italy as Sisal have already
done in Turkey via this product offering. There are also tangible
opportunities to deliver material revenue synergies from the acquisition of
Sisal through (i) leveraging Sisal's retail channel to grow online deposits
for existing Flutter brands, (ii) enhancing Sisal's sports betting offering by
utilising Flutter's pricing and risk management capabilities and (iii)
enhancing Sisal's casino product by providing it with access to Flutter's
in-house gaming content. The goodwill has been allocated to the existing
International CGU.
Since the date of acquisition to 31 December 2022, Sisal has contributed
revenue of £397.7m and £23.8m of profit after tax to the results of the
Group. If the acquisition had occurred on 1 January 2022, Sisal's contribution
to revenue and profit after tax would have been £862.5m and £69.0m
respectively.
The acquisition accounting remains provisional for one year from the
acquisition date and may change if new information is obtained relating to
conditions that existed at the acquisition date.
Acquisition of tombola
On 10 January 2022, the Group completed the acquisition of a 100% stake in
tombola, the UK market's leading online bingo operator. tombola is a
successful bingo-led gaming company with an emphasis on providing a low
staking bingo proposition to a highly engaged customer base. The purchase
comprised of a cash payment of £409.9m. Details of the fair value of
identifiable assets and liabilities acquired, purchase consideration and
goodwill are as follows:
Fair values as at
10 January 2022
£m
Assets
Property, plant and equipment
11.4
Intangible assets
245.0
Total non-current assets
256.4
Trade and other receivables
12.6
Cash and cash equivalents - available for corporate use
14.7
Total current assets
27.3
Total assets
283.7
Liabilities
Trade and other payables
29.7
Total current liabilities
29.7
Deferred tax liabilities
61.3
Total non-current liabilities
61.3
Total liabilities
91.0
Net assets acquired
192.7
Goodwill
217.2
Consideration
409.9
The consideration is analysed as:
Consideration satisfied by cash
409.9
Consideration
409.9
Included within the intangible assets were £245.0m of separately identifiable
intangibles comprising brand, customer relations and technology acquired as
part of the acquisition, with the additional effect of a deferred tax
liability of £61.3m thereon. These intangible assets are being amortised over
their useful economic lives of up to 20 years. The book value equated to the
fair value on the remaining assets as all amounts are expected to be received.
11. Business combinations and disposals (continued)
The main factors leading to the recognition of goodwill (none of which is
deductible for tax purposes) are the expansion of the Group's position in
online bingo and the sharing of product capabilities, expertise and technology
across the UK&I Online division. The goodwill has been allocated to the
existing UK&I Online CGU.
Since the date of acquisition to 31 December 2022, tombola has contributed
revenue of £175.0m and £10.2m profit after tax to the results of the Group.
There is no significant difference between these amounts and the amounts if
the acquisition had occurred on 1 January 2022.
Other business combinations
Adjarabet
As part of the acquisition of Adjarabet in 2019, a mechanism was agreed,
consisting of call and put options, which enabled the Group to acquire the
remaining 49% after three years at a valuation equivalent to seven times the
2021 EBITDA. The call/put option consideration could be settled, at the
Group's election, in cash or shares. During the year ended 31 December 2022,
the non-controlling interest elected to exercise the put option and the Group
entered into an arrangement with the seller to acquire the remaining shares
for a cash payment of €238.0m (£204.1m) in line with the terms of the
original agreement.
Sachiko
The Group also during the year completed the acquisition of 100% of Sachiko
Gaming Private Limited, an online poker gaming developer based in India in
exchange for a 5% equity stake in the Group's subsidiary Junglee Games. The
fair value of the consideration was £6m based on the fair value of Junglee at
the date of the acquisition. The purpose of the acquisition is to combine it
with the the Group's existing Indian business and widen and expand its product
offering in the fast growing Indian market. Due to the immaterial size of the
transaction, no further disclosures are provided.
As part of the acquisition of Sachiko, the Group has put in place
arrangements, consisting of call and put options, that could result in it
acquiring the 5% of Junglee held by the former shareholders of Sachiko in 2028
and 2032 based on the future Revenue and EBITDA performance of Junglee. As the
Group cannot avoid settling the call/put options in cash, a liability of
£12.3m has been recorded at 31 December 2022.
Year ended 31 December 2021
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 (£49.3m), with US$63.5m (£46.5m) 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 (£5.5m) with US$7.0m (£5.1m) 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.
Junglee is a top three player in the legal Indian online rummy market. 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 £42.9m 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 £10.8m 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 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
£50m of revenue and £7.4m 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 £53m and £6.6m respectively.
11. Business combinations and disposals (continued)
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
£m
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 - available for corporate use
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)
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 €16.5m (£14.1m) with a further €20.1m (£17.2m)
payable subject to the business meeting strategic milestones in the future,
recorded as contingent consideration and €1.0m (£0.8m) included within
deferred consideration.
Details of the fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill are as follows:
Fair values as at
10 September 2021
£m
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 - available for corporate use
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 £4.3m 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
£0.2m 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 12 months ended 31 December 2021
would have been insignificant in terms of third party revenue and £0.1m
respectively. Since the date of acquisition to 31 December 2021, Singular has
contributed insignificant third party revenue and a £0.2m profit after tax to
the results of the Group.
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 £127.1m in cash (proceeds of £141.3m net of £14.2m cash already on the
balance sheet) and recorded a gain on the disposal of £12.2m (see also Note
6). There is potential for the Group to receive further consideration of up to
£20m pending future events. However, it is currently not probable that
further amounts will be received and therefore no 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 to sell. No impairments were
recognised. The assets and liabilities of OGM were included within the
UK&I segment up to the date of sale.
11. Business combinations and disposals (continued)
The net assets disposed and the gain on disposal recognised by the Group were
as follows:
31 August 2021
£m
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
Cash (outflows) / inflows from business combinations:
31 December 2022 31 December 2021
£m £m
Cash consideration paid for acquisitions in the period (2,084.7) (63.4)
Cash consideration paid for put option exercised in the period - (5.5)
Cash consideration paid for further interest in subsidiary (204.1) -
Cash and cash equivalents - available for corporate use acquired from 104.6 18.2
acquisitions in the period
Cash and cash equivalents - customer balances acquired from acquisitions in 304.2 -
the period
Cash consideration - acquisitions in previous periods (15.3) (21.6)
As presented in the statement of cash flows:
Purchase of businesses net of cash acquired (1,675.9) (50.7)
Acquisition of further interest in subsidiary (204.1) -
Payment of contingent deferred consideration (15.3) (21.6)
During the year the Group settled in cash, deferred consideration liabilities
of £15.3m in relation to Betfair's historical acquisition of HRTV, a
horseracing television network based in the US. No further payments are due in
respect of this acquisition.
12. Investments and trade and other receivables
Non-current assets
31 December 2022 31 December 2021
£m £m
Investments - FVTPL 9.2 5.5
Investments relate to a small number of individually immaterial equity
investments in various companies.
31 December 2022 31 December 2021
£m £m
Other receivables
Other receivables 21.4 11.8
Prepayments 12.6 13.8
Deferred financing costs (see Note 16) 4.5 3.7
Total 38.5 29.3
12. Investments and trade and other receivables (continued)
Other receivables
Other receivables are comprised primarily of deposits for licences and
property as well as VAT refunds due.
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 £5.3m of initial
transaction costs and fees relating to the Revolving Credit Facility with an
additional £3.7m capitalised following the increase of the facility in
September 2022, which have been capitalised and included within non-current
receivables. The balance at 31 December 2022, net of accretion, was £4.5m
(2021: £3.7m). These fees are charged as financial expenses over the term of
Revolving Credit Facility agreement. As at 31 December 2022, £63.0m was
drawn under the Revolving Credit Facility (31 December 2021: £Nil).
Current assets
31 December 2022 31 December 2021
£m £m
Trade and other receivables
Trade receivables 95.4 39.5
Other receivables 73.4 34.4
Value-added tax and goods and services tax 7.5 5.1
Prepayments 168.7 124.9
Total 345.0 203.9
13. Current investments, financial assets - restricted cash and cash
equivalents
31 December 2022 31 December 2021
Restated
£m £m
Non-current:
Financial assets - restricted cash 13.0 7.4
Current:
Investments at FVOCI - customer deposits 138.0 83.0
Cash and cash equivalents - customer balances 1,293.2 677.6
Cash and cash equivalents - available for corporate use 797.9 951.7
Total 2,242.1 1,719.7
Financial assets
Non-current financial assets - restricted cash include:
• amounts required to be held as to guarantee third party letter of
credit facilities.
Cash and cash equivalents - customer balances include:
• customer funds balances securing player funds held by the Group.
These customer funds match customer liabilities of equal value.
The effective interest rate on bank deposits at 31 December 2022 was 2.2%
(31 December 2021: 0.3%). The bank deposits also have a weighted average
maturity date of 1.8 days from 31 December 2022 (2021: 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.
Amounts held in trust
As at 31 December 2022, £366.2m (31 December 2021: £355.6m) 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.
13. Current investments, financial assets - restricted cash and cash
equivalents (continued)
Currency details
Investments - customer deposits, financial assets - restricted cash, cash and
cash equivalents - customer balances and cash and cash equivalents - available
for corporate use are analysed by currency as follows:
31 December 2022 31 December 2021
£m £m
GBP 201.6 708.7
EUR 745.2 165.0
AUD 160.5 238.2
USD 992.6 570.8
Other 142.2 37.0
Total 2,242.1 1,719.7
14. Trade and other payables
Current liabilities
31 December 2022 31 December 2021
£m £m
Trade and other payables
Trade payables 204.4 74.2
PAYE and social security 36.8 19.7
Value-added tax, goods and services tax, betting duties, data rights, and 352.9 220.7
product and racefield fees
Employee benefits 181.4 156.1
Contingent deferred consideration - business combinations - 21.0
Accruals and other liabilities 757.6 604.7
Total 1,533.1 1,096.4
Non-current liabilities
31 December 2022 31 December 2021
£m £m
Trade and other payables
Employee benefits 6.2 2.1
Contingent deferred consideration - business combinations 17.8 16.9
Put/call liability for acquisition 12.3 -
Accruals and other payables 14.5 0.8
Total 50.8 19.8
Contingent deferred consideration - business combinations
The Group's contingent deferred consideration liabilities amounted to £17.8m
at 31 December 2022 relates to the acquisition of Singular in 2021 (see also
Note 11).
At 31 December 2021, the contingent deferred consideration liabilities of
£37.9m related to the following:
• £17.8m relating to the acquisition of Singular in 2021 (see also
Note 11).
• £15.4m contingent and deferred consideration relating to
Betfair's historical acquisition of HRTV, a horse racing television network
based in the United States. This liability was settled in full during 2022;
and
- £4.7m in respect of Diamond Game Enterprises, assumed as part of
the Combination with TSG. This liability was released to the income statement
during 2022.
Sachiko
As part of the acquisition of Sachiko (see Note 11), the Group has put in
place arrangements, consisting of call and put options, that could result in
it acquiring the 5% of Junglee held by the former shareholders of Sachiko in
2027 and 2032 based on the future Revenue and EBITDA performance of Junglee.
As the Group cannot avoid settling the put/call options in cash, a liability
of £12.3m has been recorded at 31 December 2022.
15. Provisions
Provisions balances at 31 December 2022 and 31 December 2021 and movements
during the year ended 31 December 2022 are outlined below:
Employee benefits (long service leave) Onerous contracts Gaming tax Other legal Other Total
£m £m £m £m £m £m
Balance at 31 December 2021 3.5 13.7 22.4 72.0 7.5 119.1
Acquired on business combinations - - 4.4 35.4 - 39.8
Additional provisions recognised 1.1 1.0 6.6 0.7 9.1 18.5
Amounts used during the year (0.5) (6.3) (9.4) (3.4) (5.9) (25.5)
Unused amounts reversed (0.3) - (2.5) (38.3) (3.2) (44.3)
Foreign currency translation 0.2 1.0 1.1 3.6 0.7 6.6
Balance at 31 December 2022 4.0 9.4 22.6 70.0 8.2 114.2
Presented in:
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
Balance at 31 December 2022:
Current 2.9 4.8 18.3 14.5 6.2 46.7
Non-current 1.1 4.6 4.3 55.5 2.0 67.5
Total 4.0 9.4 22.6 70.0 8.2 114.2
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 2022 and 31 December 2021, it was expected that cash outflows
would occur primarily within the following five years.
Onerous contracts
The onerous contracts provision at 31 December 2022 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 judgement (see
Note 4), however, it is not a key judgement that will have a material impact
in the coming year.
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 including those that were acquired as part of the Sisal
business combination during the year. The most significant relates to the
foreign payments contingent liabilities outlined in more detail in Note 19.
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.
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.
15. Provisions (continued)
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 2022 and 31 December 2021:
31 December 2022 31 December 2021
Contractual interest rate(1) Principal outstanding balance in currency of borrowing Carrying amount (including accrued interest)(2) Principal outstanding balance in currency of borrowing Carrying amount (including accrued interest)
% Local currency (m) £m Local currency (m) £m
GBP First Lien Term Loan A 2025 5.18 £1,017.9 1,012.0 £1,017.9 1,009.6
EUR First Lien Term Loan A 2026 4.65 €549.5 486.9 €- -
USD First Lien Term Loan A 2026 7.08 $200.0 165.3 $- -
USD First Lien Term Loan B 2026 2.76 $2,901.7 2,375.7 $2,931.0 2,142.6
USD First Lien Term Loan B 2028 6.74 $1,246.9 1,030.5 $- -
EUR First Lien Term Loan B 2026 4.70 €507.2 443.9 €507.2 419.6
GBP Revolving Credit Facility 2025 5.18 £63.0 63.2 £- -
Total borrowings 5,577.5 3,571.8
Presented in:
Current portion 35.6 22.1
Non-current portion 5,541.9 3,549.7
Total borrowings 5,577.5 3,571.8
1 The rates include the impact of the contractual Swap Agreements (as defined
below).
2 The carrying amounts at 31 December 2022 include accrued interest of £1.1m
(31 December 2021: £0.4m) presented within the current portion of borrowings
above.
During the year ended 31 December 2022, the Group incurred the following
interest on its then outstanding borrowings:
Effective interest rate(1) Interest accretion Interest (2) Total Interest (2)
% £m £m £m
GBP First Lien Term Loan A 2025 5.59 2.5 31.6 34.1
EUR First Lien Term Loan A 2026 4.81 - 5.1 5.1
USD First Lien Term Loan A 2026 7.30 - 3.5 3.5
USD First Lien Term Loan B 2026 3.10 5.7 51.7 57.4
USD First Lien Term Loan B 2028 7.00 0.0 21.1 21.1
EUR First Lien Term Loan B 2026 5.24 1.4 12.4 13.8
EUR First Lien Term Loan B4 2026 4.20 1.8 7.7 9.5
GBP Revolving Credit Facility 2025 5.20 - 4.3 4.3
Total 11.4 137.4 148.8
1 The effective interest rate calculation includes the impact of the Swap
Agreements (as defined below).
2 Interest shown includes the impact of the Swap Agreements and is the cash
cost. In addition to the amount included above, the Group incurred £3.1m of
interest expense relating to commitment, utilisation, and fronting fees
associated with its Revolving Credit Facility.
16. Borrowings (continued)
The Group's change in borrowings during the year ended 31 December 2022 was
as follows:
Balance at 1 Jan 2022 New debt Principal payments Adjustments to amortised costs(1) Interest accretion(2) Loss on extinguishment FX translation Balance at 31 December 2022
£m £m £m £m £m £m £m £m
GBP First Lien Term Loan A 2025 1,009.2 - - - 2.5 - - 1,011.7
EUR First Lien Term Loan A 2026 - 480.0 - - - - 6.8 486.8
USD First Lien Term Loan A 2026 - 177.5 - - - - (12.3) 165.2
USD First Lien Term Loan B 2026 2,142.6 - (24.3) - 5.7 - 251.3 2,375.3
USD First Lien Term Loan B 2028 - 1,109.5 (2.6) - - - (76.6) 1,030.3
EUR First Lien Term Loan B 2026 419.6 - - - 1.4 - 23.1 444.1
EUR First Lien Term Loan B4 2026 - 1,669.5 (1,767.0) (56.1) 1.8 56.9 94.9 -
GBP Revolving Credit Facility 2025 - 584.0 (521.0) - - - - 63.0
Total 3,571.4 4,020.5 (2,314.9) (56.1) 11.4 56.9 287.2 5,576.4
Accrued interest 0.4 1.1
Total borrowings 3,571.8 5,577.5
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.
The Group's change in borrowings during the year ended 31 December 2021 was
as follows:
Balance at 1 Jan 2021 New debt Principal payments Adjustments to amortised costs Interest accretion Embedded derivative settlement FX translation Balance at 31 Dec 2021
£m £m £m £m £m £m £m £m
GBP First Lien Term Loan A 2025 939.5 67.9 - (0.5) 2.3 - - 1,009.2
USD First Lien Term Loan A 2026 1,042.9 1,099.8 (18.0) (5.4) 5.3 - 18.0 2,142.6
EUR First Lien Term Loan A 2026 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
16. Borrowings (continued)
As at 31 December 2022, 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 years(1)
£m £m £m £m £m
GBP First Lien Term Loan A 2025 - - 1,017.9 - -
EUR First Lien Term Loan A 2026 - - - 486.8 -
USD First Lien Term Loan A 2026 - - - 165.3 -
USD First Lien Term Loan B 2026 23.8 23.8 23.8 2,326.4 -
USD First Lien Term Loan B 2028 10.9 10.9 10.9 10.9 986.9
EUR First Lien Term Loan B 2026 - - - 449.3 -
GBP Revolving Credit Facility 2025 - - 63.0 - -
34.7 34.7 1,115.6 3,438.7 986.9
1 Principal repayments due > 4 years are payable in 2028.
Revolving Credit Facility and First Lien Term Loans
Each of the Group's facilities are discussed below.
TLA Agreement - GBP First Lien Term Loan A
In May 2020, certain members of the Group, comprising Flutter Entertainment
Plc, 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 £1.4bn. In December 2021, an additional lender was added to the
facility increasing the overall TLA Agreement by £100m bringing the total to
£1.5bn. From this £100m, the Group received £68m cash drawings from the TLA
with the remaining £32m becoming available as incremental RCF. As part of the
refinancing noted further below, during the year we entered into the Third
Amendment of the TLA Agreement on 23 September 2022 which enabled the drawdown
of €549.5m and $200.0m during the year. The TLA Agreement described above
provides a term loan facility in an aggregate amount of:
- £1,017.9m (2021: £1,017.9m) priced at SONIA plus CAS plus a margin
of 1.75% (the "GBP First Lien Term Loan A"), with a maturity date of 5 May
2025 and a SONIA floor of 0%;
• €549.5m (2021: €0) priced at 1M EURIBOR plus 2.75% and a
EURIBOR floor of 0% (the "EUR First Lien Term Loan A") with a maturity date of
31 July 2026; and
• $200.0m (2021: $0) priced at Daily Compound SOFR plus 0.2616% CAS
plus a margin of 2.75% (the "USD First Lien Term Loan A") with a maturity date
of 31 July 2026.
There is no amortisation on the GBP, EUR and USD First Lien Term Loan A and
the principals are due at maturity. The Group incurred £11.9m of initial
transaction costs and fees on drawdown which have been capitalised against the
principal of the debt in 2020 and are recorded as financial expense over the
term of the debt using the effective interest rate method. As part of an
internal restructure in 2022, the Group has added subsidiaries FanDuel Group
Financing LLC and Betfair Interactive US Financing LLC as borrowers to the
TLA.
TLA Agreement - Revolving Credit Facility
The TLA Agreement described above provides a multi-currency revolving credit
facility in an aggregate amount of £748.8m (2021: £482.0m) (the "Revolving
Credit Facility"). Maturing on 5 May 2025, the Revolving Credit Facility
includes a margin of 1.75% over SONIA 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. As part of the amendment to the TLA Agreement described above, the
Group increased the size of the Revolving Credit Facility by an additional
£267m. The Group incurred £5.3m of initial transaction costs and fees
relating to the Revolving Credit Facility in May 2020 with an additional
£3.7m incurred following the increase of the facility in September 2022.
These fees have been capitalised and included within non-current receivables.
During the year ending 31 December 2022 the Group drew down £584.0m of this
facility and repaid £521.0m leaving an outstanding principal amount of
£63.0m (2021:£nil).
16. Borrowings (continued)
The Group has an undrawn capacity of £675m (2021: £441m) on the Revolving
Credit Facility with £11m (2021: £41m) of capacity reserved for the issuance
of Group guarantees as of 31 December 2022.
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. 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. During the twelve months ended 31 December 2022, the
Group is in compliance with all covenants related to its First Lien Term Loan
A.
First Lien Term Loan B's
The Group's First Lien Term Loan B has three separate tranches outstanding as
follows:
• USD first lien term loan with an outstanding principal balance of
$2,901.7m (2021: $2,931.0m) priced at USD-LIBOR plus 2.25% (2021: 2.25%) (the
"USD First Lien Term Loan B") with a maturity date of 21 July 2026, and a
LIBOR floor, as applicable, of 0%;
• USD first lien term loan with an outstanding principal balance of
$1,246.9m (2021: $0) priced at 3M Term SOFR plus CSS plus 3.25% margin with a
0.5% SOFR floor (the "the USD First Lien Term Loan B 2") with a maturity date
of 22 July 2028; and
• EURO first lien term loan with an outstanding principal balance of
€507.2m (2021: €507.2m) priced at EURIBOR plus 2.5% (2021: 2.5%) (the "EUR
First Lien Term Loan B") with a maturity date of 21 July 2026 and EURIBOR
floor, as applicable, of 0%.
The two USD First Lien Term Loan B tranches requires scheduled quarterly
principal payments in amounts equal to 0.25% of the combined initial aggregate
principal amount of the USD First Lien Term Loan B of $4,188m (2021: $2,938m),
with the balance due at maturity of each tranche. There is no amortisation on
the EUR First Lien Term Loan B and the principal is due at maturity.
In December 2021, Flutter executed a €2,000m TLB Facility Agreement to
underwrite the Sisal acquisition. This facility was drawn on 2 August, 2022 to
fund the Sisal acquisition. The facility had a maturity date of 31 July 2026.
The Group incurred €67.5m (£56.1m) of initial transaction costs and fees on
drawdown which was capitalised against the principal of the debt and recorded
as a financial expense over the term of the debt using the effective interest
rate method. On 23 September 2022, the Group refinanced the €2,000m TLB
facility by raising First Lien Term Loan B of $1,250m, €549.5m and $200.0m
of Term Loan A as outlined above. The Group recognised a loss on
extinguishment of £56.9m upon repayment of the €2,000m TLB Facility.
The three tranches of 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. During the twelve months
ended 31 December 2022, the Group is in compliance with all covenants related
to its First Lien Term Loan B's.
Reconciliation to Statement of Cash Flows:
Reconciliation of movements in borrowings to the Statement of Cash Flows:
2022 2021
£m £m
Financing activities:
Proceeds from borrowings 4,020.5 1,167.7
Repayment of borrowings (2,314.9) (751.2)
Interest paid (142.5) (141.9)
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 and USD First Lien Term Loan A in
their entirety into EURO and GBP to better match the currency mix of the
Group's EBITDA. In 2022 as part of the refinancing described above, the Group
executed additional cross-currency interest rate swaps to swap the additional
USD First Lien Term Loan B and USD First Lien Term Loan A into EURO and GBP.
In combination, these hedging instruments comprise of: (i) USD-EUR amortising
cross-currency interest rate swap agreements (the "EUR Cross-Currency Interest
Rate Swaps") with an outstanding notional amount of €2,009m (£1,780m)
(31 December 2021: €1,489m (£1,251m)), which fix the USD to EUR exchange
rate at 1.127 (2021: 1.174) and fix the euro interest payments at an average
interest rate of 2.92% (31 December 2021: 1.7%) and (ii) USD-GBP amortising
cross-currency interest rate swap agreements (the "GBP Cross-Currency Interest
Rate Swaps") with a remaining notional amount of £1,689m (31 December 2021:
£895m), which fix the USD to GBP exchange rate at 1.234 and fix the GBP
interest payments at an average interest rate of 5.63% (31 December 2021:
2.5%). 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 maturity
dates in July 2023 and September 2024.
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 2022 and 31 December 2021
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.
The following table summarises the fair value of derivatives as at
31 December 2022 and 31 December 2021:
31 December 2022 31 December 2021
Assets Liabilities Assets Liabilities
£m £m £m £m
Derivatives held for hedging
Derivatives designated as cash flow hedges:
Cross-currency interest rate swaps - current 275.1 - - -
Cross-currency interest rate swaps - non-current - (61.0) 31.7 (54.6)
Total derivatives designated as cash flow hedges 275.1 (61.0) 31.7 (54.6)
Derivatives designated as net investment hedges:
Cross-currency interest rate swaps - current 4.5 (37.1) - -
Cross-currency interest rate swaps - non-current - (12.2) 36.3 -
Total derivatives designated as net investment hedges 4.5 (49.3) 36.3 -
Total derivatives held for hedging 279.6 (110.3) 68.0 (54.6)
Derivatives held for risk management and other purposes not designated as
hedges
Sports betting open positions - current - (107.6) - (74.0)
Sports betting open positions - non-current - (0.5) - (0.5)
Total derivatives held for risk management and other purposes not designated - (108.1) - (74.5)
as hedges
17. Derivatives (continued)
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 USD
First Lien Term Loan A and to better align the currency of the Group's debt to
the currency of its EBITDA. At the inception of designated hedging
relationship, the Group documents the risk management objectives and strategy
for undertaking hedge documentation about economic relationship of the hedge
item and hedging instrument.
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:
• 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;
• differences in the timing of settlement of the hedging instrument
and hedged item; and
• 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. 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 2022, £11.2m (2021: £12.1m) 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).
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
Loans 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 and EUR First Lien Term Loan A with the
currency and the net assets of its EUR functional subsidiaries.
As at 31 December 2022, nil (2021: £61.4m) 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 €0.09 each (2021: 300,000,000 ordinary shares of €0.09
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 2022:
• A total of 465,782 ordinary shares were issued as a result of the
exercise of employee share options, giving rise to share capital and share
premium of £7.0m;
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 £13.2m;
- On 25 August 2021, the Group announced it cancelled all its
1,965,600 ordinary shares of €0.09 each previously held by it as treasury
shares; and
- 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 £7,982.9m, 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 £10,000m 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 £10,000m 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 £10,000m
from share premium to retained earnings.
Equity reserves
Equity reserves at 31 December 2022 and at 31 December 2021 include the
following classes of reserves:
Merger reserve
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 £7,982.9m, 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 £7,982.9m from merger reserve to share premium.
Treasury shares
On 25 August 2021, the Group announced it cancelled all its 1,965,600 ordinary
shares of €0.09 each previously held by it as treasury shares which resulted
in the transfer of £40.7m from treasury shares to retained earnings and share
capital.
Shares held by Employee Benefit Trust
At 31 December 2022, the Paddy Power Betfair plc Employee Benefit Trust
("EBT") held 1,396 (31 December 2021: 33,158) of the Company's own shares,
which were acquired at a total cumulative cost of £0.2m (31 December 2021:
£4.0m) in respect of potential future awards relating to the Group's employee
share plans. The Company's distributable reserves at 31 December 2022 are
restricted by this cost amount. 23,775 shares were purchased at a cost of
£2.8m during the year ended 31 December 2022 (31 December 2021: 1,337,894
shares at a cost of £180.7m). During the year ended 31 December 2022,
55,537 shares with an original cost of £6.6m were transferred from the EBT to
the beneficiaries of the EBT (year ended 31 December 2021: 1,372,056 shares
with an original cost of £182.5m).
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.
Fair value reserve
The fair value reserve represents the fair value movement in Current
Investments at FVOCI - customer deposits.
Foreign exchange translation reserve
The foreign exchange translation reserve at 31 December 2022 amounted to a
credit balance of £60.3m (31 December 2021: debit balance of £194.2m) 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 2022, reflects
mainly the strengthening of EUR and USD against GBP in the period.
18. Share capital and reserves (continued)
Other reserves
Other reserves comprise undenominated capital. Undenominated capital at
31 December 2022 of £2.5m (31 December 2021 of £2.5m) relates to the
nominal value of shares in the Company acquired by the Company of £2.3m
(31 December 2021: £2.3m) and subsequently cancelled, and an amount of
£0.2m (31 December 2021: £0.2m) which arose on the redenomination of the
ordinary share capital of the Company at the time of conversion from Irish
pounds to Euro.
Share-based payment reserve
During the year ended 31 December 2022, an amount of £153.4m was expensed in
the Consolidated Income Statement with respect to share based payments (year
ended 31 December 2021: £80.5m) and an amount of £43.4m (year ended
31 December 2021: £49.6m) in respect of share options exercised during the
year was transferred from the share-based payment reserve to retained
earnings.
An amount of £3.7m of deferred tax relating primarily to the Group's
share-based payments was credited to retained earnings in the year ended
31 December 2022 (year ended 31 December 2021: debit of £0.2m). An amount
of £0.7m of current tax relating to the Group's share-based payments was
credited to retained earnings in year ended 31 December 2022 (year ended
31 December 2021: credit of £0.9m).
Non-controlling interest
During the year ended 31 December 2022 the Group paid dividends totalling
£5.4m to the non-controlling interest in Adjarabet (year ended 31 December
2021: £16.7m).
As outlined in more detail in Note 11, as a result of the exercise of the put
option held by the Adjarabet non-controlling interest and the agreement to
settle in cash for €238.0m (£204.1m), an amount of £34.2m was recorded in
non-controlling interest with the remaining amount of £169.9m booked to
retained earnings.
As a result of the acquisition of Sisal during the year (see Note 11),
£125.5m was recorded in respect of the non-controlling interest. The
acquisition of 100% of Sachiko Gaming Private Limited an online Poker gaming
developer based in India in exchange for a 5% equity stake in the Group's
subsidiary Junglee Games resulted in an amount of £4.6m being recorded in
non-controlling interest.
19. 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 £16.2m
(31 December 2021: £16.2m) 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 2022 was £246.7m (31 December 2021:
£44.4m). No claims had been made against the guarantees as of 31 December
2022 (31 December 2021: £Nil). 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 £22.6m at 31 December 2022 (31 December 2021: £17.5m).
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.
19. Commitments and contingencies (continued)
Prior to the combination with TSG in 2020, 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. Based
on its review 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.
The Group has seen a number of player claims in Austria for reimbursement of
historic gaming losses. We have provided our remote services in Austria on the
basis of multi-jurisdictional Maltese licences and EU law, however the
Austrian Courts consider that our services are contrary to local law.
Together with its legal advisers, the Group is currently reviewing its
position and strongly disputes the basis of these judgements. The prospect of
these judgements being successfully enforced against our Maltese licenced
subsidiaries is unknown. It is not possible at this stage to provide a
reasonable estimate of the contingent liability as the matter is still at an
early stage and unlikely to be fully resolved in the short term.
The Group has also provided remote services in Germany (outside of
Schleswig-Holstein) on the basis of multi-jurisdictional Maltese licences and
EU law. While some German Courts consider that such services are contrary to
local law, no Court has ruled against our subsidiaries.
Capital commitments
Capital expenditure contracted for at the statement of financial position date
but not yet incurred was as follows:
31 December 2022 31 December 2021
£m £m
Property, plant and equipment 10.7 1.3
Intangible assets 9.0 1.6
Total 19.7 2.9
20. Related parties
There were no material transactions with related parties during the year ended
31 December 2022 or the year ended 31 December 2021.
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed in this
note.
21. Events after the reporting date
There are no items that require further disclosure.
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