12 August 2021                                                                                                                                                                         

Entain plc

("Entain" or the "Group")

Strong first half performance with continuing momentum across the Group

Entain plc (LSE: ENT), the global sports-betting, gaming and interactive entertainment group, today reports its Interim Results for the six-month period ending 30 June 2021 ("H1").  

Financial highlights

·      Strong performance across H1, reflecting the Group's robust and diversified business model

·      Total Group net gaming revenue ("NGR") growth of 11% (+11%cc¹)

o  Online NGR up 28% (+27%cc¹), driven by strong underlying performances in all key markets, a full sporting calendar and longer lockdown restrictions in retail

o  22^nd consecutive quarter of double-digit Online growth

o  Online NGR was up 38%cc¹ excluding Germany where the new regulatory regime is impacting the market

o  Retail NGR down 46% (-46% cc¹) reflecting estate closures through much of the period offset by encouraging early trends as shops re-open

·      BetMGM (the Group's joint venture in the US with MGM Resorts) continues to perform strongly and is well positioned for further success in H2

o  H1 NGR of $357m

o  Number two operator for sports-betting and iGaming across the US with 22%^2,3 market share

o  Number one operator in iGaming, extending leadership with 30%^,3 market share

o  As announced on 21 April, total combined investment in BetMGM by joint venture partners expected to be $660m by the end of 2021

·      Group EBITDA^6,7 up 12% at £401m

·      Group profit after tax for continuing operations £91m, up £69m

·      Full year Group EBITDA^6,7,9, upgraded on 8 July 2021, expected to be in the range of £850m to £900m

·      Net Debt of £1,951m at 30 June 2021, with net debt to EBITDA ratio of 2.2x following an active M&A programme and increased investment in BetMGM

·      Successful renewal of a five year £590m Revolving Credit Facility ("RCF") and a new $1,125m First Lien Term Loan B refinancing

o  Reinforces balance sheet strength at favourable terms and a more balanced maturity profile

o  Increased liquidity for corporate activity and investment

Operational highlights

·      New efficiency programme launched to reduce costs and support investment in innovation and growth:

o  Investment in innovation of c.£100m over three years

o  Cost-savings totalling £100m expected in FY23

o  Net cash benefit of £75m per annum from FY23 onwards

·      Acquisitions of Enlabs in the Baltics and Bet.pt in Portugal completed

·      Ongoing commitment to ESG with further advances made across our Sustainability Charter

o  Encouraging live trials of Entain's industry leading Advanced Responsibility and Care player protection programme, ARC

o  Commitment to be carbon net zero by 2035 based on Science Based Targets

o  ESG rating upgraded to AA by MSCI rating agency

o  Entain Foundation supported grass roots sports and young athletes through Pitching-In and SportsAid

Investor event - 2.00pm (BST) today

·      Entain is holding an investor event later today where we will outline the exciting opportunities ahead for the Group, including:

o  Growth opportunities in global sports betting and gaming

o  Leveraging Entain platform into the convergence of media, entertainment and gaming to provide new revenue streams in interactive entertainment

o  Deeper insight into the Group's industry leading technology

o  A business update on the UK Online operations

Jette Nygaard-Andersen, Entain's CEO, commented:

"Entain's platform continues to deliver. The quality and diversification of our businesses has enabled us to deliver our 22^nd consecutive quarter of double-digit online growth, while also making excellent progress on our strategic priorities.  This performance is not only a result of our industry leading technology, but also the hard work and dedication of our talented teams of people around the world, and I would like to take this opportunity to thank them.

In the US, BetMGM goes from strength to strength with our position as number 2 operator firmly established in the fast-growing sports-betting and iGaming market. We expect to be operational in around 20 states, representing 33% of the US adult population, over the next 12 months.

Entain has a long runway for sustainable growth built into our core business.  In addition, our unique powerful platform puts us at the heart of the convergence of media, entertainment and gaming, providing us with exciting opportunities in interactive entertainment that we believe will further power our growth for many years to come."

Dividend

The Board has not proposed an interim dividend, however it appreciates the importance of dividends to our shareholders.  Assuming Covid-19 related restrictions continue to ease around the world, the Board expects that with full year results in March 2022 it will be in a position to recommence a dividend.

Outlook

Following Entain's strong first half performance, the Group is confident in its prospects for the second half of 2021 and, as previously guided, expects full year EBITDA^6,7,9 to be in the range of £850m to £900m.

Notes

(1)      Growth on a constant currency basis is calculated by translating both 2021 and 2020 performance at the 2021 exchange rates

(2)      BetMGM revenues comprise of sports (Online and Retail) and iGaming revenues

(3)      BetMGM market shares for the three month period to end of June 2021

(4)      2021 reported numbers are unaudited

(5)      Reported results are provided on a post IFRS 16 implementation basis

(6)      EBITDAR is defined as earnings before interest, tax, depreciation and amortisation, rent and associated costs, share based payments and share of JV income.  EBITDA is defined as EBITDAR after charging rent and associated costs.

(7)      Stated pre separately disclosed items

(8)      Adjusted for the impact of separately disclosed items, foreign exchange movements on financial indebtedness and losses/gains on derivative financial instruments (see note 8 in the interim financial statements)

(9)      References to profit expectations are made on a reported basis post IFRS16 implementation

Enquiries:

H1 Conference Call & Webcast - Thursday 12 August 2021 at 8:30am (BST).

Live audio webcast link: https://brrmedia.news/ENT_H121

To participate in Q&A, please also connect via the dial in:         

Investor Event Conference Call & Webcast -Thursday 12 August 2021 at 2:00pm (BST).

Live audio webcast link: https://brrmedia.news/InvEvnt_21

To participate in Q&A, please also connect via the dial in:  

Participants should join via webcast or conference call dial in, approximately 15 minutes ahead of the event start.

A replay and call transcript for the Interim Results and Investor Event will be available on our website:  https://entaingroup.com/investor-relations/results-centre/

Upcoming dates:

Third quarter trading update:                                           7 October 2021

Forward-looking statements

This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, results of our operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. These forward-looking statements include all matters that are not historical facts. By their nature, these statements involve risks and uncertainties since future events and circumstances can cause results and developments to differ materially from those anticipated. Any such forward-looking statements reflect knowledge and information available at the date of preparation of this document. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation (596/2014), the Listing Rules, the Disclosure Guidance and Transparency Rules and the Prospectus Rules), the Company undertakes no obligation to update or revise any such forward-looking statements. Nothing in this document should be construed as a profit forecast. The Company and its directors accept no liability to third parties in respect of this document save as would arise under English law.

About Entain plc

Entain plc (LSE: ENT) is a FTSE100 company and is one of the world's largest sports-betting and gaming groups, operating both online and in the retail sector. The Group owns a comprehensive portfolio of established brands; Sports Brands include bwin, Bet.pt, Coral, Crystalbet, Eurobet, Ladbrokes, Neds and Sportingbet; Gaming Brands include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, Ninja Casino, Optibet, partypoker and PartyCasino. The Group owns proprietary technology across all its core product verticals and in addition to its B2C operations provides services to a number of third-party customers on a B2B basis. The Group has also entered into a joint-venture with MGM Resorts to capitalise on the sports betting and gaming opportunity in the US, through BetMGM. Entain provides the technology which powers BetMGM and exclusive games and products, specially developed at its in-house gaming studios. The Group is tax resident in the UK with licenses in a total of 27 regulated markets. Entain is a leader in ESG, a member of FTSE4Good, the DJSI,  is AA rated by MSCI and is included in Bloomberg's 50 global leaders in sustainability. The Group has set Science Based Targets, committing to be carbon net zero by 2035 and through the Entain Foundation supports a variety of initiatives, focusing on safer gambling, grassroots sport, diversity in technology and community projects.

For more information see the Group's website: www.entaingroup.com 

LEI: 213800GNI3K45LQR8L28

CHIEF EXECUTIVE'S REVIEW

Our core strategic pillars of growth and sustainability are underpinned by our industry leading technology, which enables us to ensure that our customers are the focus of everything that we do and that we lead the industry in player protection.  These, together with our scale, capabilities and people, create the powerful Entain platform that has powered our success in recent years and drives further growth in sports-betting and gaming markets across the world.  It also provides significant opportunities to leverage into the emerging, and rapidly-growing interactive entertainment markets.

Customer centric platform powered by technology

Entain's technology is at the heart of our business.  Our platform empowers us to think differently, be flexible and agile and deliver on being a responsible entertainment company whilst also driving significant competitive advantages in five key strategic areas:

1.     Fast paced, continuous improvement - improving the customer experience, being best in class at each individual customer touch     point and personalising customer engagement

2.   Supporting our growth - facilitates new launches internationally, systems and business integrations, new products launches or brand rollouts

3.   Player protection and Advanced Responsibility and Care - ARC is Entain's industry leading approach to customer protection, developing a proactive player programme that navigates each customer journey in real-time, using advanced analytics to monitor markers of protection and behavioural triggers to identify risks specific to that customer

4.    Innovation engine - exploring new markets and new audiences whilst embracing new technologies such as AI, virtual reality or 5G to enhance the customer experience

5.    Driving efficiencies - maximising cost and revenue synergies from both acquisitions and efficiencies across the Group.  Operating our own platform enables us to operate at a lower cost than our competitors.  It also supports the efficiency programme we have announced today

Growth

Our strategic growth pillar focuses on opportunities that leverage the Entain platform within existing markets, new products and new opportunities to increase our scale, our customer offering and deliver value to our stakeholders.  Our growth priorities include delivering our clear ambition to be the leading operator in the US through BetMGM, growing in our core markets, entering into new regulated markets - both organically and via M&A, and expanding into interactive entertainment.

Leadership in the US  

In the US, BetMGM, our joint venture with MGM Resorts, continues to go from strength to strength.  BetMGM is built on Entain's leading global online technology, expertise and platform that drives the overall experience for customers.  Coupled with MGM's iconic brand and resorts, BetMGM has a winning formula with significant long term competitive advantages.

On 21 April, BetMGM's CEO Adam Greenblatt and his team outlined the competitive advantages that the business enjoys as well as providing detail and colour on the market and customer behaviours.  A replay of that presentation can be found on our website (www.entaingroup.com).  

BetMGM is currently live in 13 jurisdictions, having grown from being operational in just 3 states at the start of 2020.  This significant growth and momentum seen last year has continued into 2021, with BetMGM achieving a market share across the US of 22%² for the three months to June 2021, which firmly embeds it as the second largest operator of sports-betting and iGaming across the whole of the US. Our strength in iGaming remains unrivalled and we are clear market leaders with a 30% market share over the three months to June.

During the first half of 2021 BetMGM launched sports-betting in Michigan, Iowa and Virginia as well as around the Nationals Park in Washington DC, whilst also adding iGaming in Michigan.  The first quarter saw record new customer recruits during March Madness and, despite a seasonally quiet sports calendar, momentum continued through Q2 to deliver NGR of $357m in the first half, with Q2 NGR growing almost 19% from Q1 NGR of $163m.  Depending on the roll out of state regulations, BetMGM expects to be operating in around 20 jurisdictions, representing 33% of the US adult population, in the next 12 months.  In addition, significant progress is being made to legalise sports-betting and iGaming in Canada and BetMGM expects to be active in that market when it opens.

BetMGM continues to perform well across the US with particularly strong performances in Colorado, Tennessee, Michigan and Virginia.  By way of example our market shares in Tennessee and Colorado demonstrate how combining our online platform with local partners such as with the Tennessee Titans and Denver Broncos as well as an early launch and strong marketing campaigns can reap market leadership.

Our engagement approach provides us with one of the widest customer access models in the US through a number of channels.  This includes omni-channel through MGM Resorts and Buffalo Wild Wings as well as a number of partnerships across sports, sports teams, and media, nationally as well as locally, such as Yahoo, the Athletic, professional sports teams and leagues that provide access to a broad range of engaged sports fans.   M life has over 36m customers and approximately 15% of BetMGM's new players in Q2 were active in the M life programme. Yahoo Sports reaches approximately 70m fans per month and Buffalo Wild Wings has more than 1,200 restaurants located in key markets.

The growth in both iGaming and online sports-betting verticals has been driven by customer acquisition and strong retention with increases in both first time deposits and actives.

We continue to make improvements and enhancements to our product, content and offering. So far this year BetMGM have added features including Face recognition ID, player customisable screen layouts, as well as improvements in payments., continuously iterating to ensure our customer experience is the most exciting and engaging.  Our progress in providing our customers with a single wallet and login across states remains on track and is expected to be operational for the important NFL season later this year.

In April, Entain and MGM Resorts announced a further combined investment for 2021 of $450m to support continued growth.  This will take the total combined investment from the joint venture partners to $660m by the end of 2021.  With a strong performance in the first half and an encouraging outlook, BetMGM remains on track to deliver its expectation of over $1bn of NGR in 2022.  BetMGM is well placed to achieve a long term market share of 20% - 25% in a North American online sports-betting and iGaming market that we estimate will be worth around $32bn over the long term. 

Growing presence in our core markets

We have licences in 27 regulated markets, and we operate in a number of other countries which are in the process of, or are considering, regulating.  With growth dynamics built into these markets, Entain has a long runaway of growth driven by our superior Entain platform.  Our diversified business model, both through geographic reach and product range, has enabled the Group to respond to the ongoing disruptions caused by the pandemic, adapting with changing customer behaviours.

As a result, our Online operations performed strongly with NGR in the first half up 28% (+27%cc), achieving a 22^nd consecutive quarter of double-digit growth, or 20% growth on a three year compound basis.  Excluding Germany, where the long awaited and welcome regulations are impacting the market this year, Group online NGR growth was +38%cc.  At the end of H1, 98% of our NGR was from markets, excluding Germany, where we are growing at more than 10%, and as at the end of 2020, 87% of our NGR from markets, excluding the UK, where online penetration is still low (at less than 35%).

Our Online business benefitted from the mandatory Covid-19 store closures which were in place for longer than expected, and our growth also reflects the lack of sport activity in the majority of our markets during the second quarter last year.  Our Retail operations saw a phased re-opening during the latter stages of the first half, and we are encouraged by the early underlying trends.  In Online, we expect the overall gaming market to be larger post the pandemic. 

The delayed Euro 2020 competition straddled our half year. Given the Group's global scale the additional revenue generated by the tournament is low single digit, however, it provided an opportunity to attract customers to our brands particularly as we re-position the Ladbrokes and Coral brands in the UK.  The popularity of our accumulator, combination bets and in-play offering further enabled us to engage with a broader recreational customer base.

In the UK, our online business saw 31% growth during H1. Our UK sports brands were particularly strong with NGR growth of 40% in H1 compared to 2020, driven by a full sports fixture list, new product releases and actives up 39% on last year. Our UK Gaming brands NGR grew 14% during H1, driven by increased recreational retail type play as well as increased player days and NGR per active.

In Australia, Ladbrokes and Neds continue to perform well with 11%cc NGR growth during the half.  Other than some occasional localised snap lockdowns, the business has been operating with Covid-19 restrictions lifted for much of the country throughout the period.  The prior year saw Ladbrokes and Neds benefit particularly from their strength in horse racing, which continued in Q2 whilst other sports were cancelled, as well as support from Government stimulus measures.  The repositioning of the Ladbrokes and Neds brands is making good progress and we continue to invest in marketing, as well as enhancing capabilities in areas such as customer experience, innovation, and analytics.  During the half Ladbrokes launched a Mark Wahlberg led marketing campaign, as well as a number of unique and innovative new products.

In Germany, the market continues to digest the new regulatory regime and tax change.  The impact from these remains broadly in-line with our original estimates, albeit a different mix.  Our slots and poker business has been operating in compliance with the Tolerance Policy that came into effect in phases from October 2020, however other operators have not been as compliant, creating an uneven market.  With the introduction on 1 July 2021 of the Turnover Tax for slots and poker some operators are leaving the market, but robust regulatory oversight and enforcement is critical to ensure a safe and regulated market for German customers.  Following the Interstate Treaty coming into force on 1 July, we are now in the process of applying for slot and poker licences.  The main conditions of the sports licences are still yet to be fully implemented, which we expect to happen later this year.  We remain positive on the German market which we believe will return to growth once the licensing conditions have bedded in and we expect to be a leader in this market.

Our Sportingbet brand in Brazil is the clear market leader with NGR growth in the first half of 153%cc and active customers more than doubling year on year.  The Government in Brazil is steadily progressing towards regulation and we currently expect regulation in sports-betting to come into effect mid-2022.  With operations in Colombia and opportunities elsewhere across the region, we see Latin America as an exciting market.

In Georgia, Crystalbet grew by 52%cc in the half and again confirmed its position as the leading operator in that market. 

During the half, retail operations in the UK, Italy, Belgium and Republic of Ireland were heavily impacted by Covid-19 restrictions with a phasing of re-openings occurring towards the end of the period.  As conditions eased more fully, we have seen encouraging early trends with customers keen to return to our shops. to enjoy the in-store betting and gaming experience.  The value of the omnichannel approach was particularly evident in Italy, where despite the retail estate being predominately closed for nearly all of H1, omnichannel operators outperformed their online-only competitors.  Our shops in Italy, Belgium and Republic of Ireland only fully opened for a very short time before the period end, however we are confident that we will see volumes return to around 90% of pre-Covid-19 levels by the year end.

Expanding into new regulated markets

At the end of 2020, 99% of our group revenues came from regulated and regulating markets.  Entain is committed to ensuring that by the end of 2023, 100% of our revenues are from domestically regulated markets. We continue to pursue the significant growth opportunities in existing and new regulated markets.  During the period we completed the acquisitions of Enlabs in the Baltics, bet.pt in Portugal and acquired a technology platform to support growth into Africa.

Enlabs operates online sports-betting and gaming brands across the fast-growing Baltic region, being the market leader in Latvia and with podium positions in both Estonia and Lithuania.  With its leading brands of Optibet, Laimz and Ninja it provides a platform for expansion into the Nordics market as well as across Eastern Europe, including Russian speaking markets.  Enlabs has enjoyed a strong start to the year, delivering NGR growth of +53% for H1 on a proforma basis.

Bet.pt is a leader in the sports-betting market in Portugal and complements our Iberian operations and the Portuguese speaking market of Brazil.  The acquisition enables us to extend the bwin brand across the region and during the period we announced the sponsorship of the Portuguese football league to be known as 'Liga Portugal bwin'.  Bet.pt has performed strongly in the first half and we will migrate its operations on to our technology platform during the second half.

Entain was one the first major operators to gain a licence in the Latin American market with the launch of our bwin brand in Colombia towards the end of 2020.  With all aspects of our offering in place and the rollout of new casino game launches, we are seeing excellent growth and a strong uplift in active customers, particularly in response to our campaign around the Copa America.

In Africa, where more accumulator and recreational types of products are accessed via different mobile browsers, through a 2G and 3G led mobile market, as well as the use of unique payment solutions, a different technology platform is required to access the rapidly growing markets in the region.  As a result, Impala, our new business for the African market, acquired a suitable platform with the intention to launch in at least one of these markets by the end of the year.

We continue to explore further organic and M&A opportunities across Latin and Central America, Central and Eastern Europe and Africa.

Extending into new interactive entertainment experiences and audiences

Technology is changing consumer behaviour with new trends and ecosystems emerging as the worlds of media, entertainment and gaming converge, creating new markets in interactive entertainment.  The Entain platform is ideally placed at the nexus of this, opening up exciting opportunities in new markets, verticals and customer pools to drive further growth for our business.  Consumers are demanding more engaging content, richer experiences, innovation and social interaction.  By extending our platform into these areas we can increase the engagement with existing customers as well as attract new customers into our network.

We do some of this today through free to play games, video content, sports-based podcasts and statistical analysis.  We also recently announced the development of a virtual sports bar for the Oculus Quest 2 VR headset.  We are actively looking at the e-sports market where today there is an audience of over 450m viewers.  We have some exciting plans across these areas and will share more detail at our investor event later today.

Today we are announcing a new investment in innovation of approximately £100m over the next three years.  Key areas of focus for this investment will be our Innovation Lab, research and development and product and content.  This investment will be more than funded by the efficiency programme.  From our FY21 results, to be announced in March 2022, this innovation investment will be reported as part of a new segment, New Opportunities.

Efficiency programme

We are today setting out a new efficiency programme - Evolve.  Alongside our M&A capabilities we have a strong track record of delivering synergies to drive shareholder value.  From the recent synergy programmes we have identified a number of further opportunities to drive efficiencies, leveraging our technology capabilities and geographic diversity.  Efficiencies will encompass both Online and Retail, benefitting both capex and EBITDA. We expect to deliver recurring annual cost savings totalling £100m from 2023 onwards. These efficiencies will support our investment in innovation and growth, and leaves a net cash benefit of around £75m each year from 2023 onwards.

Sustainability

Paired with growth, our strategic pillar of sustainability has clearly defined areas of focus as outlined in our Sustainability Charter.  We aim to meet the highest standards in everything we do, from the way we run our business to the way we support our colleagues, our customers and our communities.  We firmly believe that the most sustainable business in our industry will be the most successful business in our industry. 

Our Sustainability Charter is based on four core principles: Regulated operations; leading on Responsibility and player protection, best in class Corporate Governance; and investing in our People and Local Communities.

Focus on regulated markets

We have committed to only operating in regulated markets by the end of 2023.  We have already made significant strides to achieve this.  At the end of 2020, 99% of Group revenues came from locally regulated or regulating markets.

Entain is currently licenced in 27 countries, and that number will rise through a combination of positive regulatory developments in certain jurisdictions and expansion into new countries both organically and through acquisition.

Operating only in regulated markets allows us to deliver a higher quality and certainty of earnings as we continue to grow into the future.  We aim to engage openly and proactively with regulators to ensure we can offer first class player protection through our industry leading technology platform, while upholding all licensing objectives, across multiple jurisdictions.  In the UK, the 2005 Gambling Act is currently under a much-needed review that will set out the regulatory framework for years to come.  It will address all forms of betting and gaming in the UK and is an opportunity to address the fringes of the industry as well as dealing with the mainstream.  We are contributing to this process to help find a balance between protecting a minority who are at risk while supporting a healthy entertainment experience for the remaining majority - as well as an environment that is commercially viable for operators.

Lead on responsibility

Fundamental to our emphasis on improving the quality of earnings is responsible gaming and player protection, with Entain continuing to lead our industry in this critically important area.  The success of our ambition to revolutionise betting and gaming entertainment on the global stage requires responsibility embedded throughout the Group as well as demonstrating our commitment to safeguarding those at risk. 

We believe that embracing technology, scientific data and analytics is instrumental to player protection.  Our Advanced Responsibility and Care ("ARC") programme is a revolutionary industry leading approach to customer protection, and a cornerstone of our player protection going forward.  ARC is a proactive programme aiming to navigate each customer journey in real-time, monitoring markers of protection and behavioural triggers whilst also identifying risks specific to that customer and adjusting the experience to remove the risk to the player.  We are currently in preliminary live trials for one of our brands in the UK.  Initial findings are encouraging, and we continue to evolve and improve our approach with the learnings.  Later this year we expect to expand the live trials to other UK brands, then plan to broaden its capabilities to international markets.

In line with our growth strategy of extending into new interactive markets, we have extended our initiatives in responsible gambling to new areas including video-gaming and e-sports, partnering with Counter-Strike Professional Players Association, Game Quitters, Kindbridge and Rise Above the Disorder, as well as expanding our existing partnership with EPIC Risk Management to provide mental health support services, education for players potentially at risk and promoting responsible gambling, sports integrity, and corporate compliance.

The global Covid-19 pandemic has been a challenging situation for everyone.  As highlighted by the European Gaming & Betting Association's (EGBA) inaugural Sustainability Report, Entain, along with other leaders of our industry took several actions to adapt to the changes in player behaviours and associated risks as a result of Covid-19 lockdowns including strengthening safer betting and gaming measures as well as responsibility around advertising.  The report highlighted that customers of EGBA's members, which includes Entain, are using safer gambling tools more frequently, with 75% of customers having activated at least one safer gambling tool, up from 61% the previous year.

In February, we launched The Players' Panel to promote the voice of customers.  Entain is supporting the panel because it believes that the 99% of the UK's consumers who bet safely and responsibly, deserve to have their opinions heard and for a balanced debate to happen.  The Gambling Commission estimates the number of problem gamblers at c0.6%, with their latest study in July suggesting this could have dropped to 0.4% in the past year, despite the lockdown. The Players' Panel is drawn from Entain's customers across the UK on a voluntary, unpaid basis.  It is a platform for them to speak out on issues such as the future of betting, freedom of choice, funding for sports and gaming trends.

Alongside the F1 Grand Prix season we launched Party Responsibly, a new initiative partnering our PartyCasino and PartyPoker brands with McLaren Racing, to promote the benefits of staying in control, whether at the wheel of an F1 car or when betting and gaming. The campaign replaced brand advertising with Party Responsibly messaging at both the Styrian and Austrian Grand Prix on McLaren race cars, whilst also launching a new internet hub partyresponsibly.net.  This included the Time to Pit mini film, where F1 driver Daniel Ricciardo stresses the importance of players respecting their personal limits and staying in control of their betting and gaming, as well as providing clear and concise information on best ways and tools to maintain control.

Our customers are global, and therefore so is our approach to responsible gaming.  The Entain Foundation US launched its "Gamble Responsibly America" app produced with EPIC Risk Management and RG24/7.  The app features a series of educational resources and tools to help and support anyone facing potential issues with problem gambling.  In Washington DC, supported by Entain Foundation US and RG24/7, the National Council on Problem Gambling (NCPG) launched Operation Responsible Gambling (OpRG) designed to assist members of the military community in gambling responsibly, and also to ensure they have options to seek help if they show signs of gambling problems.  In Canada, the Entain Foundation partnered with Responsible Gambling Council on research to inform regulatory approach to gaming and sports-betting in Canada.

Best in class corporate governance

As an industry leading company, we are committed to the highest standards of governance in all areas of our operations.  This commitment to best practice is delivered through a robust framework of oversight and control using the knowledge and experience of not just the Board, but the executive and senior members of the management team.

Our Board was notably strengthened and revitalised during last year, and this commitment to a gold standard approach continues.  During H1, Robert Hoskin, our Chief Governance Officer, was promoted to the Board, alongside our other Non-Executive Director appointments of Stella David, Vicky Jarman and Mark Gregory. 

As announced in both our ESG report and our FY Results in March, we are demonstrating our desire to adapt to changing expectations and our willingness to learn by undertaking an independent audit of our corporate governance and compliance processes.  The review's results will be included in our Annual Report and ESG Report for 2021.

Investing in people and communities

Entain's commitment to investing in our people and communities is not just recruiting, retaining, and nurturing top talent from diverse backgrounds, but also contributing to the wider communities in which we operate through our community organisations via the Entain Foundation as well as reducing our impact on the environment.

We are a people-driven business in a highly dynamic sector and we understand the importance of diversity in technical roles.  As a Founding Member of the sector's All-in Diversity Project we provide guidance and support, sharing best practices and resources with other organisations within the sector.  As part of our international diversity and inclusion ("D&I") initiative - 'Everyone's in the Game' - earlier this year we partnered with Girls Who Code in UK, US, Canada and India, as well as the Tech Girls Movement in Australia.

Supporting colleagues in taking care of their own wellbeing through this challenging time has remained top of our agenda.  Our "Well-me" wellbeing strategy was accelerated with Work Well joining our Think Well and Live Well programmes to help our colleagues feel healthy and happy at work and at home.

To embed our high-performance philosophy and culture, in Q1 we launched the Entain & Perform platform and hosted 28 learning camps for 515 of our people leaders. We also ensured that colleagues can share in the success of our business with the launch of Sharesave, a share plan open to over 99% of our employees globally.

The Entain Foundation coordinates and supports the Group's ESG initiatives, objectives, and donations around the world.  Our flagship Pitching In investment fund and SportsAid continue to support our focus on grass roots sport and aspiring UK athletes.  One of SportsAid's most recent high profile alumni included Beth Shriever, previously sponsored by Entain, who won Gold at the Tokyo Olympics, demonstrating the fantastic support these initiatives provide.  With the 2021 cohort announced, this partnership sees 50 of the most talented young British athletes across 24 sporting disciplines, receive an annual award of £1,000 to contribute towards training and competition costs such as travel, accommodation, equipment and kit.

As part of our Sustainability Charter, we are committed to reducing the Group's environmental impact.  We have a strong culture of behaving ethically and responsibly in everything that we do, and we know that as a large global business we have a duty to do everything that we can to help tackle the climate crisis.  Entain achieved the Carbon Trust Standard for Carbon, reducing CO₂ year on year for its UK operations, reflecting its commitment to sustainability through governance, carbon accounting and carbon management.  We built on this earlier in the year by committing to becoming net zero for greenhouse gas emissions by no later than 2035 based on science based targets - 15 years ahead of the 2050 target for carbon neutrality agreed by governments under the Paris Agreement.  

Financial Results and the use of Non-GAAP measures

The Group's statutory financial information is prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRS Interpretations Committee (IFRS IC) pronouncements as adopted for use in the European Union.  In addition to the statutory information provided, management have also provided additional information in the form of Contribution, EBITDAR and EBITDA as these metrics are industry standard KPIs which help facilitate the understanding of the Group's performance in comparison to its peers.  A full reconciliation of these non-GAAP measures is provided within the Income Statement and supporting memo.

The Group's operating segments are now aggregated into the four reportable segments. This represents a change from 2020 with our former UK and European Retail segments now combined to form one Retail segment, in line with the recent changes in the Group's reporting to the executive management team.

BUSINESS REVIEW

Group

Reported Results^1,2:

Revenue increased by 12% (12% cc) to £1,767.0m in H1 driven by strong momentum in Online partially offset by Retail reflecting temporary shop closures due to Covid-19 restrictions.  NGR growth in Online has been supported by strong underlying performance in all of our key markets except a regulation impacted Germany, a full sporting calendar (which did not exist in the second quarter of 2020) and the contribution of our recent acquisitions, Bet.pt and Enlabs.  In addition, our shops and outlets in the UK and Europe re-opened progressively during the second quarter.  The early underlying trends in trading since re-opening are encouraging.

Contribution of £827.8m was 6% higher than last year, with a contribution margin of 46.2%, 2.2pp lower than last year due to a higher Online segmental mix.  Operating costs (before rent) were 2% higher leaving underlying EBITDA⁴ of £401.1m, 12% higher than the prior year.

Share based payment charges were £2.6m higher than last year, while underlying depreciation and amortisation was 2% lower as the annual charge starts to normalise following a period of investment and M&A.  Share of JV losses of £79.0m includes a loss of £78.2m relating to BetMGM, which is in line with expectations.  Group underlying operating profit⁵ was 12% behind 2020. After separately disclosed items of £116.1m (2020: £15.5m excluding £5.3m recorded in interest), operating profit⁵ was £89.5m, a decrease of £129.4m on 2020.

Online

Reported Results^1,23:

The Group delivered a strong Online performance throughout the first half with NGR up 28% (+27%cc).  Despite the high prior year comparatives, particularly in Q2, gaming saw continued positive momentum.  This half year performance was driven by a full sporting fixture list, including the start of the delayed Euro 2020, extended retail lockdowns and the inclusion of our recent acquisitions, Bet.pt and Enlabs. Excluding Germany, where regulatory changes are significantly impacting the market, Online NGR was up 38%cc year on year with double-digit growth in all of our key markets.

Underlying EBITDAR⁴ of £496.7m and underlying EBITDA⁴ of £495.9m were 34% and 35% ahead of 2020 respectively.  Underlying operating profit⁵ of £435.5m was 40% ahead and, after charging £92.6m of separately disclosed items, underlying operating profit⁵ was £342.9m, £185.0m ahead of last year.

Sports NGR was 55% (+52% cc) ahead of 2020 with sports wagers 51% higher (+48% cc) as a result of a full sports fixture list and the early stages of Euro 2020.  Sports margin was +0.3pp ahead at 13.1%, benefitting from an increase in recreational betting, improved product mix and favourable results.

Gaming NGR was up +10% (+11% cc), despite lapping a strong prior year comparative, particularly in the second quarter as the extension to retail lockdowns continued to benefit gaming online.  However, with strong underlying growth on a two-year basis, we believe that the Covid-19 pandemic has driven growth in the overall gaming market.  Excluding Germany, where regulation, particularly in gaming, has impacted market volumes, gaming NGR was up 28%cc year on year.

The performance in the first half has been particularly strong in our UK sports brands where Retail lockdowns, the full sports fixture list, new product releases including Ladbrokes 5-a-side and excellent customer acquisition throughout the Cheltenham Festival and Aintree Grand National have driven a strong sports and gaming performance.  As expected, online growth moderated as the release from Covid-19 restrictions in England on 17 May coincided with a quieter sports program.  UK sports brands NGR in H1 was 40% ahead of 2020, with sports up 52% and gaming NGR up 32%.

UK Gaming brands NGR grew 14% during the first half despite lapping strong comparatives (most notable in Q2).  All brands benefitted from the extended UK lockdown which has driven increased recreational retail type play as well as increased player days and NGR per active.  Our Gala brand launched its unique loyalty scheme, 'Boss Benefits' at the end of H1.  The Foxy brand continues to grow ahead of the market, with year on year growth up +50%, driven by continued investment in growth, including the new Foxy Bingo TV campaign and First Dates sponsorship as well as continued benefits from its migration onto the Group's technology platform in mid-2020.

In Germany, sports NGR was +53%cc ahead of 2020 with the anticipated introduction of the most significant conditions attached to the sports licences yet to be implemented as a number of operators are challenging the proposed regulation in the German courts.  The gaming market, however, has been substantially impacted by the tolerance regime ahead of the Interstate Treaty, and the continued non-compliance of other operators creating an un-even market.  We remain confident that robust regulatory oversight and enforcement by German regulators, alongside the introduction of the new gaming turnover tax, will address black market or non-compliant operators.  German NGR in H1 was -34%cc behind last year. 

In Australia, NGR was +11%cc ahead of 2020 despite the strong prior year comparative which benefitted from Covid-19 restrictions and stimulus measures.  Until recently, with the exception of a few isolated snap lockdowns, the business has been operating in a more "normallised" post-Covid-19 environment since the start of this year.  Current year NGR growth has been aided by the new 'Ladbroke It' campaign, featuring Mark Wahlberg, which aims to enhance the customer experience by making betting fun whilst also highlighting the new, market leading, 'Punter Assist' safer gambling suite.  The business continues to go from strength to strength with improved margins and active customers 24% higher than the prior year with new customer acquisitions up 16%. 

In Italy, combined NGR growth across the three major brands (Eurobet, bwin and Gioco Digitale) was +76%cc ahead of 2020; +130%cc ahead in sports due to a full sports calendar this year, and +45%cc ahead in gaming.  Performance was particularly strong in Eurobet where we have continued to benefit from our omnichannel offering which resulted in better retail migration than pure digital brands.  In Eurobet sports, NGR was up +148%cc and gaming NGR up +48%cc.

Ongoing momentum and effective marketing, particularly around the Copa America and Euro 2020 tournaments, has increased the active customer base in Brazil by +200% during H1.  That, coupled with excellent retention rates has seen NGR increase by +153%cc year on year.

In Georgia, NGR was +52%cc ahead year on year.  Crystalbet has maintained its position as the number 1 operator with 33% market share in the first half of 2021, up 1pp on 2020.

Partypoker NGR was -10%cc behind last year, as it laps a very strong Q2 in 2020. 

Our new acquisitions, Bet.pt and Enlabs which we acquired at the end of Q1, have also performed strongly during H1 contributing 2% to H1 Online NGR (4% in Q2).  On a proforma basis both businesses have shown strong growth during 2021 with H1 NGR up +43% for Bet.pt and +53% ahead for Enlabs.

Online contribution margin of 43.1% was 0.2pp higher than last year, with a lower marketing rate (+0.5pp) partially offset by a -0.3pp reduction in gross profit margin as a result of product and market mix.

Operating costs (before rent) were +14% higher than last year with acquisitions contributing +4pp, while investments in product and underlying inflation also contributed to the year on year increase.

Rent and associated costs were £0.8m in the first half, compared with £0.9m in the prior year, leaving underlying EBITDA⁴ of £495.9m, +35% ahead.

Share based payments were £2.2m higher than last year and underlying depreciation and amortisation of £56.9m was +2% higher, leaving underlying operating profit⁵ +40% higher at £435.5m. 

Retail

The Retail business is made up of our Retail estates in the UK, Italy, Belgium and Republic of Ireland.

Retail NGR of £191.3m was -46% behind last year with national lockdowns significantly impacting NGR in the first half, LFL Retail NGR⁶ was -42% behind last year (-43%cc).  All our estates are now open, however Italy, Belgium and the Republic of Ireland were in lockdown for almost the entire first half.  Whilst England was released from lockdown in mid-April, restrictions continued to apply until 17^th May.  With resulting NGR behind year on year, Retail recorded an underlying EBITDAR⁴  loss of £54.4m which was £79.1m behind 2020 and underlying EBITDA⁴ loss of £62.7m, £78.2m behind. Underlying operating loss⁵ was £115.1m and, after including separately disclosed items of £5.6m, operating loss was £120.7m, £277.4m behind last year where the Retail segment benefited from the UK VAT receipt.

In the UK, sports NGR was -42% behind 2020 driven largely by reduced volumes resulting from imposed Covid-19 shop closures.  Sports wagers were -39% lower and down -36% on a LFL basis.  Sports gross win margin of 19.2% was -0.8pp behind last year as 2020 margins were boosted by favourable results in horse racing and football.  Machines NGR was -31% behind 2020 (-27% on a LFL basis).

Since the release from tier 3 style restrictions in the UK, we have seen volumes return to levels around 90% of pre-pandemic levels.  Machines have performed particularly well whilst sports continues to recover steadily from the extended period of shop closures.  

In Italy, Belgium and Ireland, our Retail shops re-opened at various stages throughout May and June.  The resulting NGR was -89% (-90%cc) behind in Italy, -64% (-64%cc) in Belgium and -66% (68%cc) in Republic of Ireland.  Initial trading post lockdown has been in line with expectations.

Operating costs (before rent) were -12% lower than 2020, largely due to cost mitigation actions in response to lockdowns and robust underlying cost control.  During H1, the Retail business claimed furlough in the UK for the period that the retail estate was closed, with total receipts in line year on year.

Rent and associated costs of £8.3m in the first half were -10% lower than the prior year, leaving underlying EBITDA⁴ loss of £62.7m, £78.2m lower than 2020.

Charges for share based payments were £0.9m higher than last year and underlying depreciation and amortisation of £51.1m was 7% lower as charges from previous investment and the impact of the fair value exercise following the acquisition of Ladbrokes Coral start to normalise, leaving an underlying operating loss⁵ of £115.1m, £75.5m behind 2020.

As at 30 June 2021, there were a total of 4,524 shops/outlets (2020: 4,743): UK 2,754 (2020: 3,006), Italy 942 (2020: 890), Belgium shops 298, outlets 398 (2020: shops 309, outlets 400) and Ireland 132 (2020: 138).

Other

Reported Results^1,2:

On a reported basis, NGR of £15.5m was 22% higher than 2020 due to the full sports fixture list and the ability to provide content from our greyhound stadia through behind closed doors racing.  Underlying EBITDAR⁴ of £2.4m and underlying EBITDA⁴ of £2.3m were both £5.8m ahead of 2020 predominantly due to the NGR improvement and the impact of one-off cost savings in H1.  Underlying operating loss⁵ was £0.2m (2020: £4.8m loss) and operating loss after charging separately disclosed items of £1.7m was -£1.9m, £15.8m ahead of last year. 

Corporate

Reported Results^1,2:

On a reported basis, Corporate costs⁴ of £34.2m were £12.5m higher than last year driven by additional investment in our Responsible Gambling activities as we move towards our 1% of UK GGR target, the reversal of Covid-19 cost savings in 2020 and investment in our corporate infrastructure.  After share based payments, depreciation and amortisation and share of JV losses, Corporate operating loss⁵ was £114.6m, an increase of £81.8m, largely as a result of the expected incremental loss in the US JV, BetMGM. After charging separately disclosed items of £16.2m, the operating loss of £130.8m was £52.8m behind 2020.

Notes

(1)  2021 results are unaudited

(2)  Reported results are provided on a post IFRS16 implementation basis

(3)  Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2021 exchange rates

(4)  EBITDAR is defined as earnings before interest, tax, depreciation and amortisation, rent and associated costs, share based payments and share of JV income. EBITDA is defined as EBITDAR after charging rent and associated costs. Both EBITDAR and EBITDA are stated pre separately disclosed items

(5)  Stated pre separately disclosed items

(6)  Retail numbers are quoted on a LFL basis. During H1 there was an average of 4,612 shops in the estate, compared to an average of 4,815 in the same period last year

CHIEF FINANCIAL OFFICER'S REVIEW

NGR and Revenue

Group reported NGR was 11% ahead and revenue was 12% ahead of last year, with strong online performance more than offsetting Covid-19 related shop closures.  Further details are provided in the Business Review section.

Underlying operating profit⁵            

Group reported underlying operating profit⁵ of £205.6m was 12% behind 2020 (2020: £234.4m), with underlying EBITDA ahead by 12%.  Our share of BetMGM losses of £78.2m, were £69.4m higher year on year as the business invests in growth .  Analysis of the Group's performance for the first half is detailed in the Business Review section.

Financing costs

Finance costs of £36.0m (2020: £36.6m excluding separately disclosed items), were £0.6m lower than 2020 with the Group benefitting from a full half of the 2020 refinancing.  Since the end of the half, the Group has announced the extension and increase of its RCF facility, as well as a refinancing of its USD debt, which raised an additional $351m (c£250m) in term loans.

Net foreign exchange gains on debt related items were £77.1m in the half (2020: £131.9m loss).

Separately disclosed items

Items separately disclosed before tax for the period amount to a £116.1m charge (2020: £20.8m) and relate primarily to £94.7m of amortisation on acquired intangibles (2020: £156.8m), a £3.3m (2020: £nil) impairment of certain head office premises which are now vacant and our exchange business Betdaq, integration costs of £10.1m (2020: £19.6m), corporate transaction costs of £3.4m (2020: £nil) and £6.2m of onerous costs associated with Covid-19 related shop closures and other one-off legal expenses (2020: £11.9m).  In addition, the Group recorded a £0.2m charge associated with the reassessment of the likely payment under historic acquisitions (2020: £34.8m) and £0.7m of other exceptional items (2020: £8.6m primarily due to the write-off of issue costs on refinancing).  During the prior year the Group also incurred £4.7m of costs associated with right-sizing the UK Retail estate post the introduction of the £2 FOBT stakes restrictions.

The Group has also separately recorded a net £2.5m (2020: £211.6) income in the first half, predominantly against a VAT claim in our Ladbrokes business where the actual amount received was higher than that estimated at the end of 2020.  The Group recorded a profit on sale of assets in the prior year of £4.0m.

Profit before tax

Profit before tax and separately disclosed items was £246.7m (2020: £65.9m), a year-on-year increase of £180.8m largely driven by the foreign exchange gain on the retranslation of debt and the growth in EBITDA partially offset by an increase in our share of BetMGM losses.  After charging separately disclosed items, the Group recorded a pre-tax profit from continuing operations of £130.6m (2020: £45.1m).

Taxation

The tax charge for the period ended 30 June was £39.7m (2020: charge of £22.7m), reflecting an underlying effective tax rate pre-BetMGM losses and foreign exchange of 20.2% (2020: 4.7%) and a tax income on separately disclosed items of £10.3m (2020: charge £12.9m).  We continue to expect a full year 2021 effective tax rate of c16% excluding the impact of foreign exchange and share of BetMGM losses.

Cashflow

Note: Cashflows of £1.6m on contingent consideration arrangements classified as separately disclosed items above have been included within acquisitions within the statutory cashflow

During the first half, the Group had a net cash outflow of £339.7m (2020: inflow of £80.5m), but an inflow of £113.6m before acquisitions and the investment in BetMGM (2020: £103.8m).  Underlying free cashflow for the period was £197.7m (2020: £239.4m) with underlying EBITDA of £401.1m (2020: £358.9m) offset by investment in capital expenditure of £71.6m (2020: £70.0m), lease payments of £44.0m, including those on non-operational shops (2020: £42.1m) and a working capital outflow due to timing of payments of £43.9m (2020: £8.9m inflow). The Group also paid £41.4m in corporate tax (2020: £6.0m) and discontinued operations generated a £2.5m EBITDA loss (2020: £10.3m loss). Including cash outflows for acquisitions and additional investment in BetMGM, the Group had a free cash outflow of £255.6m (2020: £216.1m inflow).

The Group paid £29.6m of interest during the first half (2020: £44.5m) and £18.4m on separately disclosed items (2020: £60.6m) including £9.4m on integration costs, £8.7m on legal and onerous contract costs and £3.4m on acquisition and deal related costs partially offset by a net receipt of £3.1m on tax litigation items.  £21.9m was repaid on debt related instruments, primarily on the settlement of one of the Groups external swap arrangements following its maturity (2020: £26.7m) and £14.8m was paid in dividends to the minority holding in Crystalbet (2020: £7.3m).  No equity dividends were paid during either the current or prior year.

Net debt and liquidity

As at 30 June 2021, net debt was £1,951.3m and represented a net debt to EBITDA ratio of 2.2x. There was no drawdown on the Group's revolving credit facility. 

Going Concern

In adopting the going concern basis of preparation in the interim financial statements, the directors have considered the current trading performance of the Group and the principal risks and uncertainties as considered in the 2020 year end longer term viability statement.  This includes assessing the impact of the crystallisation of the Group's principal risks in "severe but plausible" downside scenarios.

At 30 June 2021, the Group had accessible cash of c£0.4bn with a further c£0.5bn available under the Group's RCF.  Since the half year, the refinancing of the Group's RCF and issuance of an additional $351m (c£250m) of term loans has increased liquidity further.  Given the level of the Group's current financing facilities, the first material tranche of which does not mature until 2023, and the forecast covenant headroom even under the sensitised downside scenarios, the directors believe that the Group is well placed to manage the risks and uncertainties it faces.  As such, the directors have a reasonable expectation that the Group will have adequate financial resources to continue in operational existence and have, therefore, considered it appropriate to adopt the going concern basis of preparation in the interim financial statements.

Notes

(1)  2021 results are unaudited

(2)  Reported results are provided on a post IFRS16 implementation basis

(3)  Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2021 exchange rates

(4)  EBITDAR is defined as earnings before interest, tax, depreciation and amortisation, rent and associated costs, share based payments and share of JV income. EBITDA is defined as EBITDAR after charging rent and associated costs. Both EBITDAR and EBITDA are stated pre separately disclosed items

(5)  Stated pre separately disclosed items

Principal risks

Key risks are reviewed by the executive directors, other senior executives and the Board of Entain plc on a regular basis and, where appropriate, actions are taken to mitigate the key risks that are identified.  The Board has overall responsibility for risk management as an integral part of strategic planning.

The principal risks and uncertainties which could impact the Group are detailed in the Group's Annual Report and Accounts 2020 and are as follows:

Data breach and cyber security

The Group processes sensitive personal customer data (including name, address, age, bank details and betting and gaming history) as part of its business and therefore must comply with strict data protection and privacy laws in all jurisdictions in which the Group operates.  The Group is exposed to the risk that this data could be wrongfully obtained through either a cyber-attack or a breach in data security.  This could result in prosecutions including financial penalties, sanctions, the loss of the goodwill of its customers and an inability to deliver growth and deliver technology synergies.

Technology failure

The Group's operations are highly dependent on technology and advanced information systems and there is a risk that such technology or systems could fail.  In particular, any damage to, or failure of, online systems and servers, electronic point of sale systems and electronic display systems could result in interruptions to financial controls and customer service systems and may impact the Group's ability to retain existing, and attract new, customers to deliver the Group's growth strategy.

Laws, regulations, licensing and regulatory compliance

Regulatory, legislative and fiscal regimes for betting and gaming in key markets around the world can change, sometimes at short notice.  Such changes could benefit or have an adverse effect on the Group's profitability and additional costs might be incurred in order to comply with any new laws or regulations in multiple jurisdictions.

Taxes

The Group is subject to a range of taxes, duties and levies in many of the countries where we have operations or in which our customers are located.  The taxes imposed upon betting and gaming companies have changed over time, and the levels of taxation to which the Group is subject may change in the future.  If additional taxes are levied, this may have an adverse effect on the amount of tax payable by the Group.

Further taxes may include corporate income tax, value added tax (VAT) or other indirect taxes. Group companies may be subject to VAT or similar taxes on transactions, which have previously been treated as exempt. 

Increased cost of product

The Group is subject to certain arrangements intended to support the industries in which it operates.  Examples are the horseracing and the voluntary greyhound racing levies, which respectively support the British horseracing and greyhound racing industries.  In addition, the Group enters into contracts for the distribution of television pictures, audio and other data that are broadcast across the various routes to market.  A number of these are under negotiation at any one time.

Trading, liability management and pricing

The Group may experience significant losses as a result of a failure to determine accurately the odds in relation to any particular event and/or any failure of its sports risk management processes.

Health, Safety & Wellbeing of Customers and Employees

Failure to meet the requirements of the various domestic and international rules and regulations relating to the health and safety of our employees and customers in both retail and digital markets could expose the Group, including individual employees and directors, to material civil, criminal and or regulatory action with the associated financial and reputational consequences.

Loss of key locations

Whilst the Group operates out of a number of geographical locations, there are several key sites which are critical to the day to day operations of the Group, including our offices in Central London, Gibraltar, Vienna, Hyderabad, Australia, Italy and the Philippines.  Disruption in any of these locations could have an impact on day to day operations.

Recruitment and retention of key employees

The people who work within Entain are pivotal to the success of the company and our failure to attract or retain key individuals may impact our ability to deliver on our strategic goals.

Emerging and Evolving Risks

In light of the COVID-19 pandemic, the Group has recognised the need to re-evaluate emerging and existing risks regularly.  In particular and most pleasingly, even with the COVID-19 pandemic still with us, whilst the Group still considers the loss of key locations a significant risk, it has proven that it has adequate business continuity plans in place to cater for colleagues working at home across the globe. 

Additionally, although risks arising from a global pandemic, or health & safety risks have been considered previously, these had not been identified as a principal risk prior to 2020. Given the relevance and learnings from the last 18 months we expect to continue to include a global pandemic risk in our 2021 Annual Report and Accounts.