Entain's FY23 Results: 14% Growth in Net Gaming Revenue

Key Highlights:

1. Total Group Net Gaming Revenue (“NGR”), including 50% share of BetMGM, up +14% (+14%cc2), +2%cc2 on a proforma3 basis
2. Reported1 Group NGR (excluding US) up +11% (+11%cc2), -2%cc2 on a proforma3 basis
3. Online NGR up +12% (+12%cc2), -3%cc2 on a proforma3 basis
4. Excluding regulatory impacts, underlying proforma3 Online NGR growth of +3%cc2
5. Record level of Online active customers, +23% YoY, +10% proforma3
6. Retail NGR up +9% (+8%cc2), proforma3 +2%cc2, reflecting the acquired shops in New Zealand and Poland, and the continued strength of the retail estate
7. BetMGM delivered a good performance through the year
8. 2023 NGR of $1.96bn, +36% year on year4,5 at the top end of expectations
9. 14%6 market share in sports betting and iGaming in the markets where BetMGM operates
10. Product and technology enhancements including Single Account Single Wallet (“SASW”)
11. Achieved positive EBITDA for H2 2023
12. Further expansion into regulated markets with leading market positions
13. Entain CEE expansion with acquisition of STS Holdings, the leading sports betting operator in Poland
14. 25 year partnership with TAB NZ providing unique access to the New Zealand sports betting market
15. Enhancement of inhouse content and capabilities with acquisitions of 365Scores and Angstrom Sports
16. Deferred Prosecution Agreement (DPA) resolution to the HMRC investigation into Entain’s legacy Turkish facing business
17. Announced revised strategic priorities; focusing on driving organic growth, expanding online margins, and increasing US market share

Financial Highlights:

1. Reported Group EBITDA7 up 1% at £1,008m
2. Group EBITDA7,8, pre TAB NZ accounting, in line with expectations at £974m, down -2% year on year
3. Online EBITDA7,8 of £830m, in line with 2022
4. Retail EBITDA7,8 of £277m, down -1%
5. Group profit after tax9 before separately disclosed items was £339m
6. Group loss after tax was £879m, reflecting the DPA settlement and impairment charges primarily related to the Australia operations
7. Adjusted diluted EPS10 of 44.2p
8. Second Interim Dividend of £56.5m (8.9p per share) announced, bringing the total dividend for the year to £113m (17.8p per share)
9. Robust management of balance sheet with year end adjusted net debt11 of £3,291m and leverage at 3.3x (3.1x on a proforma3 basis)

Sustainability Highlights:

1. New sustainability strategy including an updated regulatory and safer gaming charter
2. Only global operator with 100% revenue from regulated or regulating markets
3. Continued recognition across ESG agenda; maintaining MSCI’s AA rating and inclusion in FTSE4Good and Dow Jones Sustainability indices, awarded responsible operator awards by EGR, SBC and Vixio

Capital Allocation Committee:

Commenced a review of Entain’s markets, brands and verticals to focus the organization, improve competitive positions and maximize shareholder value

Dividend:

Proposed a total dividend for 2023 of £113m, to be paid to shareholders in equal instalments with H1 and FY results

Current trading and outlook:

1. Year to date, the Group is trading in line with expectations
2. Expect significant regulatory changes in the UK and the Netherlands
3. Aggregate dynamics could reduce FY24 EBITDA by approximately £40m

Barry Gibson, Chairman of Entain, commented:

“2023 was a period of necessary, but ultimately positive, transition for Entain. We have significantly strengthened the quality of our revenue base, enhanced our Board, and delivered a resolution to a critical, historic, regulatory issue."

Stella David, Interim CEO of Entain, commented:

"2023 presented a number of challenges for the Group, both industry-wide and Entain-specific. I am extremely proud of how our people around the world came together to navigate the business through an eventful and at times difficult year."