For the good of entertainment
Entain plc
Annual Report 2020
Start here
Overview
02 We are Entain
Strategic report
Chairman’s introduction
06
10
Chief Executive’s Review
18 What makes us Entain?
Our strategic framework
24
The industry in which we operate
26
Regulatory Update
28
How we create value
30
Engaging with stakeholders
32
Sustainability
34
Safer betting and gaming
36
Covid-19
43
Investing in people
47
and communities
Business Review
Chief Financial Officer’s Review
Chief Governance Officer’s Review
Risk management
Principal Risks
Viability Statement
56
63
68
70
72
76
Governance
78
80
90
96
99
102
122
Board of Directors
Chief Governance Officer’s Report
Report of the Audit Committee
Report of the ESG Committee
Nomination Committee Report
Directors’ Remuneration Report
Directors’ Report
Financial statements
126
133
134
135
136
137
138
183
184
185
186
191
192
193
Independent Auditor’s Report
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated balance sheet
Consolidated statement of
changes in equity
Consolidated statement of
cash flows
Notes to the consolidated
financial statements
Company income statement
Company balance sheet
Company statement of changes
in equity
Notes to the Company
financial statements
Glossary
Shareholder information
Corporate information
Read more about what makes us
Entain: pages 18–23
1
We are Entain.
We are bold, ambitious
and disruptive. Our purpose
is to revolutionise betting
and gaming to create
the most trusted and
exciting entertainment
for every customer.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 2
We are Entain
At Entain, everything we do is for the good of entertainment.
We are one of the world’s largest sports betting and gaming
entertainment groups, operating in the online and retail sectors.
Using our unique, proprietary, cutting edge technology platform,
we provide safe and exciting gaming experiences, to millions of
customers, through many iconic brands.
A new way forward
Where we’re heading
In December 2020 we began a brand-new
chapter in our history, renaming the Group
Entain. More important than our new name
and corporate identity was the clear strategic
direction we set out to help us meet our
ambition to be the world’s leading betting
and gaming entertainment company with
customers at the centre of everything we do.
Our purpose is clear – to revolutionise betting
and gaming to create the most exciting and
trusted entertainment for every customer.
We will fulfil this purpose by delivering
our core strategic pillars of growth and
sustainability. A technology company to our
core, we are uniquely positioned amongst
our peers to innovate for customers, enabling
us to grow in regulated markets both old
and new, while ensuring the highest levels
of player protections.
TMTM
Entain plc | Annual Report 2020 Overview 3
Operational highlights
Delivery of new corporate identity
built on clear strategy to deliver growth
and sustainability.
BetMGM now live in 12 states with strong
momentum as a leader in the US market.
Strong growth across the Group with
market share gains in all major markets.
20 consecutive quarters of double
digit online NGR growth.
Launch of Sustainability Charter to
reinforce the Group’s commitment to
delivering industry best in class ESG
and customer protection.
Financial highlights
Online Net Gaming Revenue
£2.7bn
+28% (constant currency)
2019: £2.2bn
BetMGM Net Gaming Revenue
$178m
+59%
2019: $112m
Adjusted Diluted EPS1
62.8p
-2%
2019: 64.3p
Net Debt
£1.8bn
+£0.4bn
2019: £2.2bn
Group Underlying EBITDA1
£843m
+11%
2019: £761m
Operating Profit1
£530m
+2%
2019: £521m
Adjusted Diluted EPS excluding US1
73.1p
+10%
2019: 66.4p
Leverage
2.1x
2019: 2.8x
1. From continuing operations.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
4
We are Entain continued
Our commitments
We have long held the view that the most sustainable business
in our industry will be the most successful business in our
industry. 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.
Our culture commitments
We are guided by a culture that help us to
define what being the ‘best place to work’
means. At Entain we ‘Keep it Real’, ‘Do the
‘Right Thing’, ‘Get Involved’ and ‘Bring it on’:
To Keep it Real our colleagues bring their
character and are always themselves.
We value our employees’ judgement and
encourage them to bring their ethics to
work – to ‘Do what is Right’.
Our peoples’ energy is infectious, they
‘Get Involved’ and engage in all areas
of life at Entain.
The attitude that underpins the outlook of
everyone at Entain is ‘Bring it On’.
Customer commitments
Customers will be the focus of
everything we do.
We will provide moments of excitement.
We will provide them with exciting
and trusted entertainment products
and services.
Using our technology platform, we
will continuously work to upgrade
and personalise the experience and
protections for our customers.
Our sustainability
commitments
An exclusive focus on regulated markets
– we have committed that by 2023
we will only operate in domestically
regulated markets. We are now at
99%, in regulated and regulating
markets, more than any other major
global operator.
Lead on Safer betting and gaming –
provide our customers with the safest
environment to play.
Pursue the highest levels of Corporate
Governance with rigorous processes and
oversight through a diverse Board.
Invest in people and communities – we
want to Entain to be recognised as the
best place to work in the industry as well
as ensure we make a positive impact on
the communities and markets in which
we are based and operate.
Entain plc | Annual Report 2020 Overview 5
>50 Licences in >20 jurisdictions
Offices worldwide
50+
Leading brands
24
20+
Currencies
42
Employees & contractors
c.24,000
Languages
33
Our divisions
Market position
2020 NGR
Online
Retail (4,500+ global outlets)
3
2
1. Online
2. Retail
3. Other
2020 EBITDA
2
1
75.7%
23.6%
0.7%
1
1. Online
2. Retail
89.1%
10.9%
* Other excluded as EBITDA
is negative
Online sports wagers
£11.8bn
+5% (+7cc)
2019: £11.2bn
Retail sports wagers
£2.8bn
-43% (Covid-19 impacted)
2019: £4.8bn
UK
#1
Belgium
#1
Italy
#3
Ireland
#3
UK
#2
Germany
#2
Italy
#1
Australia
#3
Georgia
#1
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
6
Chairman’s introduction
Next le vel
Our new strategy and name defines a
clear way forward for us in our ambition
to be the world leader in sports betting
and gaming entertainment.
Entain plc | Annual Report 2020 Overview Under our new corporate identity, we will
continue to use our unique technology platform
to build on the exceptionally strong momentum
that we have in our existing markets, grow into
new markets, reach new audiences, enhance
the customer experience, and provide
industry-leading levels of player protection.”
J M Barry Gibson
Non-Executive Chairman
Next le vel
Read more about our Board:
pages 80–81
Our clear priorities from the outset were
to keep our people and our customers
safe, and to ensure that the business was
strongly positioned both to withstand
the impact and to take advantage
of growth opportunities as they
presented themselves.
It has been humbling to see the resilience,
perseverance and professionalism that
our outstanding teams around the world
have shown, as well as their ability to
quickly adapt to the challenges of a new
operating environment. On behalf of the
Board, I would like to thank each and
every Entain colleague for their hard
work and commitment, often in very
difficult circumstances.
It is a great testament to the quality of our
people and the strength of our business
model that the Group’s growth continued
during 2020, despite the Covid-19-related
sporting cancellations and retail closures
that were necessary at times during
the year. We have long talked about the
importance of having a truly diversified
business model and of not being overly
reliant on any one product, brand, territory,
or channel, and it was this approach that
mitigated the impacts of the pandemic on
our business so effectively.
In addition to the strong performance of
our underlying business, during the year
we also significantly enhanced our Board,
continued to invest in our hugely exciting
and fast-growing joint-venture, BetMGM,
in the US, carried out M&A projects, entered
new territories, and launched a wide range
of strategic initiatives – including a fresh
corporate identity – aimed at realising our
ambition to be the world-leader in sports
betting and gaming entertainment.
7
A new-look Board for a new way forward
Your Board was substantially strengthened
and revitalised in the last 12 months and
we now have in place a robust corporate
governance structure that befits our status
as a FTSE 100 company and a world-
leading betting and gaming business.
We are committed to bringing greater
diversity to Entain at all levels of the Group,
and we now have a much greater range of
experience and backgrounds at Board level
than ever before.
In July, Kenny Alexander announced his
decision to retire from the Board and from
the Group after 13 hugely successful years
as CEO, during which time the business
grew from being a small AIM-listed
company to the international FTSE 100
business that it is today. We were fortunate
to have a readymade replacement for
Kenny in the form of Shay Segev, whose
transition from COO to CEO was carried out
seamlessly and successfully.
We were sorry to subsequently lose Shay to
DAZN after five years at the Group but only
a short time in the role of CEO. Our regular
and rigorous succession planning meant
that we were able to replace Shay swiftly
and efficiently with Jette Nygaard-
Andersen. Jette joined the Entain Board as
an independent Non-Executive Director in
2019, and played an instrumental role in
developing our growth and sustainability
strategy. Jette’s background in fast-
growing disruptive next generation online
and mobile entertainment companies fits
perfectly with Entain’s evolution into an
entertainment focused company, and we
are hugely excited about the Group’s future
prospects under her leadership. As part
of Jette’s appointment, Rob Wood had the
role of Deputy CEO added to his existing
role of CFO, reflecting the critical role
that he has played in driving the financial
performance of the Group and in delivering
our new strategy.
We announced a number of other additions
to the Board in the last 12 months, both by
promoting people internally and also through
external recruitment. The appointments of
Robert Hoskin, Entain’s Chief Governance
Officer, who joined the Board on
1 January 2021, and Sandeep Tiku, our
Group COO, who will join the Board shortly,
demonstrate the strength and depth of our
wider management team as well as our
commitment to developing internal talent.
The fact that regulation, governance and
our technology are now represented at
Board level gives us even greater oversight
of these crucial areas.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 8
Chairman’s introduction continued
At our heart we are a technology company.
Our industry-leading proprietary technology
is key to delivering on our goals and clearly
distinguishes us from our competitors.
We were delighted that in August, Emily
Carey, joined us as Company Secretary.
Emily was previously at BP plc and brings
experience and rigour to the role as we
embed best in class corporate governance.
We were also joined on the Board by David
Satz, who has played an important role in
successfully lobbying for online gaming and
sports betting to be licensed in the US, and
was most recently Senior Vice President of
Government Relations and Development
for Caesars Entertainment Corporation in
Las Vegas.
This year we announced the appointments
of Stella David and Vicky Jarman to
the Board. Stella, who will become our
Senior Independent Director (“SID”), was
previously Chief Executive Officer of William
Grant & Sons following more than 15 years
with Bacardi Ltd. Vicky is a chartered
accountant who qualified at KPMG before
spending over 10 years with Lazard and
Co Ltd, working in the Investment Banking
team and then as Chief Operating Officer
for the London and Middle East operations
until 2009.
We said goodbye to Stephen Morana, our
SID, who stepped down from the Board
on 4 March 2021 to pursue his executive
career with Cazoo, and to Jane Anscombe,
who left us on 31 December to pursue
other opportunities.
On behalf of the Board, I would like to
formally welcome our new additions and
to extend our sincere gratitude to Stephen
and Jane for their valuable contributions
to Entain.
We are proud that as one of only six
companies in the FTSE100 with a female
CEO, a Board comprising 40% women as
well as having BAME representation, Entain
is clearly demonstrating its commitment
to diversity and inclusion throughout
the Company.
Entain’s vision is to be the world
leader in sports betting and gaming
entertainment and as such we operate
across the global stage and want to
attract and retain leading talent that
can maximise the value we can deliver
for all our stakeholders. While the UK
We aim to provide the world’s safest
and most trusted gaming platform.”
J M Barry Gibson
Non-Executive Chairman
market represents one reference point for
talent, the Board recognises that we are
also competing against a much broader
range of companies, including US and
privately-owned technology businesses.
Within this context, while our current
Directors’ Remuneration Policy is aligned
with the UK-listed environment, we are
of the view that it does not provide the
scope necessary to attract, retain and
appropriately remunerate the people we
need to deliver the exceptional performance
we know Entain has the potential to
achieve. This has just been made clear with
the departure of our previous CEO, Shay
Segev. As such, we will be consulting with
shareholders on what measures we can put
in place to ensure that our remuneration
policy provides the appropriate level of
incentivisation to reward exceptional
performance that will maximise value
for shareholders.
Financial performance
Against the backdrop of a hugely
challenging trading environment as a result
of Covid-19, Entain’s diversified business
model – by product, brand, territory, and
channel – was proven to be exceptionally
resilient. While Group Net gaming revenue
(“NGR”) was flat, our online business
performed strongly with NGR up 28%cc in
the full year and up 41% in the final quarter
marking the Group’s 20th consecutive
quarter of double-digit online NGR growth.
With growth in all our major markets we
continue to deliver on our core market
growth ambitions. Momentum in our US
business, BetMGM, continues to build
culminating in an 18% market share across
the states in which it operates over the
three months to January 2021. This is a
remarkable achievement, considering it
was only operational in three states at the
start of the year. We are well on our way to
achieving our ambition of a leading position
in this market which we believe will be
worth around $20bn by 2025. In spite of
the challenges presented by Covid-19 we
managed to grow our overall EBITDA by
11% in the year to £843.1 million, as well
as continue to generate cash that gives
us the flexibility to deliver on our strategic
growth ambitions.
Entain plc | Annual Report 2020 Overview 9
During the year we took a number of
actions to demonstrate our commitment to
these important tenets, including: moving
the Group’s tax residence to the UK in
February; committing, in November, that
by 2023 100% of our revenues would come
from nationally regulated and regulating
markets, achieving 99% by the end of
2020; and, announcing our Advanced
Responsibility and Care programme that
will see us continue to lead the industry in
player protection through research, analysis
and technology.
Entain has a strong track record of growth
as well as a clear strategy to continue
that growth for many years to come.
This includes delivering on our clear
ambition to be the leading operator in
the US through BetMGM, growing in our
core markets, entering into new regulated
markets – both organically and via M&A –
and expanding to reach new audiences in
areas such as eSports and digital gaming.
Towards the end of the year we were
approached by our US joint venture
partner, MGM Resorts International with a
potential offer for the Company. However,
in the Board’s opinion the proposal was
not compelling for Entain’s shareholders
and did not reflect the value we know
we can deliver for shareholders through
our Sustainability and Growth Strategy.
We continue to have a good relationship
with MGM and look forward to closely
working with them to finance and support
BetMGM’s exciting prospects in the US.
For our colleagues, this re-focused
strategy will enable us to recruit, retain
and nurture the very best people in our
industry, giving them an inspiring and
rewarding environment in which to build
their careers. For our customers, it means
providing them with an exciting and trusted
range of products and services. And for
our shareholders, it means delivering
sustainable returns and a stake in a
business that places environmental, social
and corporate governance at the very top
of its agenda.
JM Barry Gibson
Non-Executive Chairman
4 March 2021
A new way forward: sustainability
and growth
In November, we unveiled our ambitious
plans for the future under two core strategic
pillars of sustainability and growth. As part
of this process, and to better reflect our
position and purpose as a technology-
enabled entertainment business, we
renamed our company Entain plc.
At our heart we are a technology
company. Our industry-leading proprietary
technology is key to delivering on our
goals and clearly distinguishes us from our
competitors. It provides us with the agility
and flexibility to deliver on our growth
ambitions, adapt to regulatory change as
well as protect our customers.
Our new strategy and new name defined a
clear way forward for us and is much more
than a corporate rebrand. ESG is important
to our shareholders, our people and indeed
our wider stakeholder community – the
most sustainable business in our industry
will be the most successful business in our
industry. With that philosophy in mind,
and as a key element of our growth and
sustainability strategy we launched a
new Sustainability Charter based around
four cornerstones:
1. An exclusive focus on regulated markets
2. Continuing to take the lead
on responsibility
3. Pursuing the highest standards of
corporate governance
4. Providing the best place to work and
investing in local communities
Read more about our strategy:
pages 24 and 25
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 10
Chief Executive’s Review
We believe scale, diversification and
a responsible approach will enable
us to continue to create sustainable
shareholder value through capital
and income growth.”
Jette Nygaard-Andersen
Chief Executive Officer
A new way forward
Entain plc | Annual Report 2020
Strategic report A new way forward as Entain
On 12 November 2020 we announced
a clear strategy, together with a new
corporate identity, to reflect our ambition
to be the world’s leading betting and
gaming entertainment company with our
customers the focus of everything that we
do. Our two core strategic pillars of growth
and sustainability are underpinned by our
industry leading proprietary technology
platform. It is through this strategy that we
will continue to drive significant value for
our stakeholders.
Powered by technology
Technology is the beating heart of our
business. It is what powers us and
distinguishes us from our competitors,
supports our customer centric focus
and ensures value creation. Owning our
technology means that over 3,000 world
class developers are focused on delivering
exclusively for our customers, and that
we are in control and not reliant on third
party management teams with their own
challenges and demands. It gives us the
flexibility, agility and scale to deliver on all
of our strategic priorities, at pace.
A new way forward
11
It empowers us to think differently
as we deliver on being a responsible
entertainment company and gives us
advantages in five key strategic areas:
1.
Enabling us to continuously improve the
customer experience, such as being best
in class at each individual customer touch
point and rolling that across all our brands
and markets (build once, deploy multiple
times), or personalising the engagement
with a customer.
2.
Supporting our growth, whether that
be launching in new states in the US,
integrating new businesses acquired,
launching new products – in-house and
third party – or expanding into new markets
or to new audiences.
3.
Providing us with an engine for innovation,
be that exploring new markets and new
audiences or exploiting new technologies
such as AI, virtual reality or 5G to enhance
the customer experience.
4.
Approaching customer protection in new
and more powerful ways. Across the
industry protection for customers reacts
to triggers defined by markers of
protection, but at Entain we are moving to
implement an advanced proactive player
management platform that navigates each
customer journey in real-time around any
identified risk specific to that customer,
promising never before seen levels of
player protection.
5.
Driving efficiencies through our business.
These come from maximising cost and
revenue synergies – both from acquisitions
as well as from process improvements
across the Group. Operating our own
platform also means that we operate at a
lower cost than our competitors who pay
revenue fees to third parties.
In summary, it is our technology that gives
us a significant competitive advantage
and has enabled us to achieve the 20
consecutive quarters of double-digit online
growth we have now delivered.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 12
Chief Executive’s Review continued
Growth
We have a number of growth opportunities that
will continue to drive the Group’s performance and
increase our scale. These include delivering on our clear
ambition to be the leading operator in the US through
BetMGM, growing in our core markets, entering into
new regulated markets – both organically and via
M&A – and expanding to reach new audiences.
Leadership in the US
We estimate that the betting and iGaming
market in the US will be worth some
$20bn by 2025. With our joint venture
partner, MGM Resorts, we have created
a winning formula around a strong brand
with significant competitive advantages.
This includes our own industry leading
proprietary technology, product set, digital
marketing and player safety, as well as
unrivalled player access through MGM
Resorts retail operations, M life Rewards
programme and other partnerships
and affiliations.
Having started 2020 operational in just
three states, significant growth and
momentum has accelerated BetMGM into a
leading online sports and iGaming operator
in the US market. It is now live in 12 states
and has over 500 employees. During the
year BetMGM launched in West Virginia
(online sports-betting (OSB) & iGaming
(iG)), Indiana (OSB), Nevada (OSB adding to
Retail Sports (RS) which went live in 2019),
Michigan (RS), Colorado (OSB), Oregon
(RS), Tennessee (OSB) and Pennsylvania
(OSB & iG). That momentum continued into
2021 with the launch in January of online
sports-betting in Iowa and Virginia, as
well as online sports-betting and iGaming
in Michigan. BetMGM has now achieved
approximately 18% market share in the
states in which it is live in the three months
to the end of January 2021. BetMGM aims
to be operating in around 20 states by the
end of this year, reaching approximately
40% of the adult population.
Read more about how we create
value: pages 30-31
Entain plc | Annual Report 2020 Strategic report 13
As momentum in the business grew,
BetMGM was able to deliver highly
successful online sports launches in a
number of states such as Tennessee and
Colorado where it is delivering market
leading shares of 35% and 34% respectively
in aggregate in the three months to the
end of January 2021. Having launched
in Pennsylvania in December, in January
BetMGM became the leading iGaming
operator across the US. This clearly
demonstrates the potential of the business
and the appeal of the BetMGM brand
to customers across both online sports-
betting and iGaming.
During the year BetMGM launched a
highly successful advertising campaign
featuring Jamie Foxx, reinforcing the
entertainment credentials of the brand in
sports-betting and iGaming. In October,
a single nationwide app was launched
making it easier for customers to access
our sportsbook and iGaming products.
The integration with M life Rewards
(MGM Resorts’ loyalty programme)
provides a valuable customer advantage,
from customer acquisition to ongoing
engagement and retention. It enables
BetMGM customers to earn M life Rewards
Tier Credits that can unlock exclusive
benefits and also earn points to convert to
bonuses within the BetMGM app, vouchers
to use at MGM’s retail destinations, and
cash. In Q4, 17% of BetMGM sign-ups
had a pre-existing relationship with MGM
Resorts and M life Rewards.
During the summer, integration with the
Yahoo Sports platform provided Yahoo
Sports customers with a seamless betting
and gaming experience. With Yahoo Sports
now licensed in Michigan and Virginia we
see it continuing to be a leading and valued
source of customer growth.
We also have a number of other
partnerships that drive player access such
as: Buffalo Wild Wings (with BetMGM
the exclusive betting partner across
their 1,200 sports themed restaurants);
affiliations with a number of sports teams,
such as the Denver Broncos, Tennessee
Titans and Las Vegas Raiders in football,
as well as others across golf, basketball,
baseball and NASCAR; in 2021 BetMGM
signed an agreement with the Athletic
(a direct-to-consumer digital sports media
company); and other affiliations, the latest
being TopGolf.
With strong momentum in the business,
Entain and MGM Resorts committed a
second tranche of investment in July,
bringing the total committed investment to
$450m, of which $210m was invested by
2020 year end. During the year BetMGM
grew its online NGR by 140% and delivered
total NGR of $178m for 2020, ahead of our
Q3 guidance of $150m-$160m. Entain’s
share of losses for the joint venture for 2020
was £60.6m and, given the significant
growth of the business, it is expected
that both NGR and losses will increase
significantly in 2021.
In summary, BetMGM is firmly on track to
realising its ambition of being a leader in the
US sports-betting and iGaming market and
expects to achieve a 15-20% market share.
Grow core markets
We currently operate in over 20 markets
worldwide. Our combination of customer
focus, strong brands, great products and
digital marketing expertise has enabled
us to grow online across all of our major
markets. We have now delivered 20
consecutive quarters of double-digit growth
in online NGR with a three-year compound
annual growth rate of 20%.
We continue to see further growth potential
in our existing markets. Excluding Germany
(where recent regulatory changes are
impacting the market), 97% of our NGR
is in markets where we are growing at
over 10%. Excluding the UK, 87% of our
NGR comes from markets where online
penetration is less than 35%.
Growth and momentum has
accelerated BetMGM into
a leading online sports and
iGaming operator in the US
market now live in 12 states
and with over 500 employees.”
Jette Nygaard-Andersen
Chief Executive Officer
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 14
Chief Executive’s Review continued
We have a diversified business model
both through geographic reach as well as
product range. This enabled the Group
to respond well to the disruptions caused
by sports cancellations, with customers
benefiting from the wider range of
sports our brands offer as well as our
leading gaming products. Online also
saw significant uplifts as a result of retail
closures. Whilst we expect online volumes
to ease back when shops in our core online
territories re-open, we expect the trends
seen during the pandemic to be positive
for the global online gaming market, and
particularly for Entain’s brands, which
we anticipate will more than cover any
permanent channel loss from our retail
estates in the UK and Europe.
In the UK, our Ladbrokes and Coral brands
delivered a fifth consecutive year of online
growth. This growth has been underpinned
by improvements to brand advertising,
performance marketing and the customer
proposition, including product and user
experience enhancements. Our bingo and
other gaming brands in the UK continue
to grow market share through an ongoing
focus on personalisation, customer
experience improvements and product
development. During the year, these brands
transitioned onto the Group’s proprietary
technology platform. We are continuing to
evolve the customer propositions and brand
identities to widen their appeal to a mass
market recreational customer base.
Ladbrokes and Neds in Australia continued
to grow strongly, driven by the reactivation
and increased engagement of existing
customers, as well as significant new
customer acquisitions driven by the
displacement of retail customers and
other recreational spend as a result of
lockdowns. The strength of our portfolio of
brands, market-leading product innovation
and racing focused business mix has also
allowed Ladbrokes and Neds to capture
increased market share throughout 2020.
On 2 February 2021, we announced
that we had submitted a non-binding
indicative offer for the Wagering and Media
business of Tabcorp Holdings Limited.
Whilst discussions remain at an early
stage, this transaction is in-line with our
strategy of expanding across regulated
international markets.
In the fourth quarter, we were pleased
to receive four sports-betting licences in
Germany, and the 16 Lander (German
federal states) also confirmed that they
had agreed to a transitional tolerance
policy for gaming for the period ahead
of implementation of the Interstate
Treaty 2021.
These two developments, while a long time
coming and implemented in stages, are
bringing clarity to German regulation of
online betting and gaming after 20 years of
ambiguity. The issuance of sports licences
and implementation of the tolerance policy
were accompanied by certain restrictions
that are being implemented from mid-
October last year through the first quarter
this year. These restrictions are expected
to impact revenue and the dynamics of the
market and, so far, the impacts have been
broadly in line with our expectations.
In addition there is a proposal to introduce
a 5.3% turnover tax on online poker
and slots from the beginning of July this
year. If such a tax were introduced, it
would make certain parts of the market
uneconomic for many operators. For us,
it would reduce contribution this year by
around £15m – £20m before any mitigating
actions. The tax is yet to be ratified and its
implementation will be subject to challenge
by the industry.
In Georgia, Crystalbet has cemented its
position as the number one operator in
that market.
Retail operations in the UK, Italy, Belgium
and Republic of Ireland were heavily
impacted by enforced closures due to
Covid-19 restrictions. However, when
shops were allowed to open, we saw trade
rapidly return to within single digits of
pre-pandemic levels, clearly demonstrating
that customers continue to enjoy the
in-store betting and gaming experience.
This indicates that customers will continue
to want the in-store experience for years
to come. In December 2019, we opened
our ‘shop of the future’ in the UK that
better connects the retail environment with
the online digital experience, as well as
improving the overall customer experience.
We plan to open further stores in this
format in the year ahead. To make the retail
and online experience even more seamless,
as well as drive cost efficiencies, we have
integrated the till systems in our shops onto
our own proprietary technology platform
and we are also developing our own
SSBT software.
Entain plc | Annual Report 2020 Strategic report 15
Enter new markets
There are significant growth opportunities
across the globe with around $50bn in
gross gaming revenues in over 50 regulated
markets in Central & Eastern Europe, Latin
America and Africa where we do not
currently operate today.
On 9 December we launched the bwin
brand in Colombia, as one of the first major
operators to gain a licence in the Latin
American market. This provides the Group
with a good foothold in this exciting region
alongside our offering in the regulating
Brazilian market.
We have a strong track record of
integration and value creation through
M&A. Following a pause due to the
Covid-19 pandemic, we restarted our M&A
programme on 8 October 2020 with the
announcement of the acquisition of Bet.pt,
which is expected to complete during the
first half of the current financial year.
This takes the Group into the recently
regulated, and rapidly growing, Portuguese
market which is expected to more than
double to around €450m in value by 2023.
Bet.pt is one of the leading online betting
and gaming operators in Portugal with
a particular strength in sports-betting.
By leveraging our technology, extensive
portfolio of gaming content, marketing
and CRM capabilities, as well as growing
the sports offering, we see plenty of
opportunities to grow its market position
and profitability.
On 1 March 2021 we announced an
increased offer for Enlabs AB of SEK53 per
share as well as securing irrevocables to
accept this final offer from shareholders
representing around 51% of Enlabs AB’s
shares. Enlabs predominantly operates
online sports-betting and gaming brands
across the fast-growing Baltic region, with
a small retail presence. It is the market
leader in Latvia, the second largest in
Estonia and a top-five operator in Lithuania.
In November 2020 Enlabs completed
the acquisition of Global Gaming, which
enables Enlabs to extend its operations
into the Nordics through successful and
proven gaming brands, including Optibet,
Laimz and Ninja. Enlabs’ regional market
and brand strength combined with Entain’s
scale, proprietary technology, product,
marketing and regulatory expertise, can
further accelerate growth and expansion
into new territories – both through Enlabs’
brands as well as by leveraging Entain’s
existing brands. The offer remains subject
to regulatory approval and acceptance by
Enlabs shareholders.
We continue to look for further
opportunities to enter new, growing and
regulating or regulated markets where we
can drive further value.
Expand to new audiences
Technology is changing consumer
behaviour with new trends and ecosystems
creating exciting opportunities. This means
we must adapt and innovate to drive further
growth across new audiences.
Firstly, in our existing markets we will
pivot our brands to appeal to a broader
mass-market, recreational and engaged,
customer base. Doing so will give us a
better quality, and greater sustainability,
of earnings.
Secondly there are adjacent markets,
such as those evolving around skill-based
gaming, where we can leverage our product
development expertise to expand our
offering to provide marketing opportunities
through free to play games.
Thirdly, we must adapt to develop products
for customers in new and emerging markets
and ecosystems. For instance, the gaming
market is huge and growing every day
with around 2.7bn gamers around the
world. 100m people watched the League
of Legends world championship and the
e-sports-betting market is estimated to
be worth over $1bn today and is growing
rapidly. This is a new and exciting growth
market for us and, whilst we understand
that there are challenges to be navigated,
we will take it step by step and aim to be an
important player in this market.
Technology is changing
consumer behaviour with new
trends and ecosystems creating
exciting opportunities.”
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 16
Chief Executive’s Review continued
Sustainability
Sustainability is at the heart of everything we do,
and we firmly believe that the most sustainable
business will be the most successful business in
our industry. In November we announced our
Sustainability Charter to underpin this element of
our strategy. This was built around four core principles:
an exclusive focus on regulated markets; continuing
to take the lead on responsible betting and gaming;
best in class corporate governance; and investing
in our people and local communities.
We are contributing to this process to help
find a balance between protecting the
minority that are at risk while supporting
a healthy entertainment experience for
the remaining majority – as well as an
environment that is commercially viable
for operators.
Actions taken by betting and gaming
operators over the last couple of years
have resulted in a meaningful reduction
in problem gambling. For example the
UK Gambling Commission reported that
problem gambling in the UK was 0.3% in
2020, compared to 0.6% in the previous
year. It is critical now that any revised
legislation is not draconian as this will
have the unintended consequences of
pushing customers, particularly those at
risk of problems towards using un-licensed
black-market operators which will simply
exacerbate the problem.
Focus on regulated markets
We have committed that by the end of
2023 we expect 100% of revenues to
come from regulated markets. We only
want to operate in domestically regulated
markets as these provide the right balance
between customer enjoyment and customer
protection, while also providing greater
clarity and certainty for our business
and earnings.
At the end of 2020, 99% of our NGR was
from nationally regulated or regulating
markets, up from around 96% previously.
We will keep an eye on the regulatory
timetable for the remaining 1% and, where
possible, work closely with the relevant
in-country authorities and trade bodies
to help develop a robust framework that
protects players and maintains the highest
regulatory standards.
We are becoming much more proactive
in our engagement with regulators. In the
UK, the 2005 Gambling Act is currently
under a much-needed review that will set
out the regulatory framework for years to
come. It will address all forms of betting and
gaming in the UK and is an opportunity to
address the fringes of the industry as well
as dealing with the mainstream.
Read more about our Sustainability
Charter: pages 20-21
Lead on Responsibility
We continue to lead the market in the
critically important area of responsible
betting and gaming. In the UK in 2019, we
withdrew from football shirt sponsorship
and led calls for the whistle-to-whistle
advertising ban. As the Covid-19 pandemic
set in, we increased our monitoring and
markers of protection to ensure that
customers didn’t inadvertently run in to
problems while stuck at home during
lockdowns. We also increased our
communication and messaging to all
customers on the importance of safer
betting and gaming, including the removal
of TV adverts during the Q2 lockdown.
We were encouraged to see that in May,
the UK Gambling Commission found no
evidence of a rise in problem gambling as
a result of the pandemic and, as mentioned
above, that problem gambling reduced
in 2020.
Entain plc | Annual Report 2020 Strategic report 17
During the year, we announced our
Advanced Responsibility and Care (“ARC”)
programme, which is a scientific and
technology based proactive preventative
approach to player protection that
identifies, addresses and averts potential
problem play in real time. We truly believe
that this initiative opens a new era in
player protection.
As part of this programme, we appointed
Professor Mark Griffiths, Distinguished
Professor of Behavioural Addiction
and Psychology at Nottingham Trent
University. He is working with the
business to apply findings from the
behaviours of our anonymised global
player database to help develop stronger
rules, measures and interventions for
implementation under ARC.
This approach will enable us to use our
technology to provide a personalised
proactive journey for our customers when
using our services, so that we can more
effectively navigate the small minority
of customers who are at risk of harm
away from any such risk. Using advanced
BI, our specialists and data scientists
have built the first stage of this to
track player behaviour in real-time and
identify problem play before it escalates.
Each player will have a dynamic risk
rating that automatically updates in
line with their play patterns and other
measures. The first trials are underway
and we expect to start to implement
ARC in the UK in the summer with other
geographies to follow.
It is important that we embed this
approach right through the Group as well
as demonstrate our commitment to the
safeguarding of those at risk. To this end
we are introducing a responsible betting
and gaming metric to our Group-wide
remuneration policy.
Best in class corporate governance
As a world-leading company we are
committed to the highest standards
of governance in all areas of our
operations and our Board has been
strengthened and revitalised during the
year, particularly with the appointment
of Barry Gibson as Group Chairman in
February 2020 and the appointment
of Robert Hoskin as Chief Governance
Officer at the start of 2021. To underpin,
and demonstrate this commitment,
we are undertaking an independent
audit of our corporate governance and
compliance processes.
In December, the Group relocated its
place of management and control – and
consequently its tax residence – to
the UK.
In November we launched the Entain
Foundation, which will manage the
donation by Entain of £100 million to be
made over five years. The Foundation is
focused on supporting good causes in
four key areas; research, education and
treatment in relation to safer betting and
gaming; the promotion of grass roots,
women’s and disabilities sports; diversity
and technology; and, community projects.
As part of our focus on grass roots sport,
the Foundation runs our flagship Pitching
In investment fund, which has launched
a non-branded partnership with English
non-league football as well as SportsAid,
investing in aspiring UK athletes.
Jette Nygaard-Andersen
Chief Executive Officer
4 March 2021
Best place to work and investing in
our communities
We want to be an organisation in which
our people are empowered to do great
work for our customers and to build brilliant
global careers.
We are proud of our inclusive culture, and
are attracting a more diverse selection of
candidates from a wider range of sectors
than ever before. Over 36% of our senior
leaders are women, which is a significant
step up on previous years but we are
still working to improve upon this further.
We look after our people, for example,
during the year we offered all colleagues
a range of mental health care initiatives
as well as virtual learning programmes.
We invest in leading development and
progression for long-term careers at Entain
and we like to promote talent internally.
As part of our Sustainability Charter, we
are committed to reducing the Group’s
environmental impact. Having made a
strong start by hitting our 2018 – 2021
target of a 15% reduction of greenhouse
gas emissions, we have today announced
our commitment to dramatically accelerate
this process, becoming carbon net zero
by no later than 2035, 15 years ahead
of the target set by the Paris Agreement
on climate change. In doing so we have
formerly joined the Science Based Target
initiative and are seeking to demonstrate
leadership within our sector.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 18
What makes us Entain?
Exciting growth
opportunities
BetMGM
Our joint venture with MGM Resorts
International, BetMGM is establishing
itself as a market leader in the rapidly
expanding US market.
Entain plc | Annual Report 2020 Strategic report 19
We have a range of exciting growth opportunities
that can significantly increase the value of the
Group. These opportunities are based on four
strategic imperatives:
Growth: four key strategic imperatives
1. Leadership in the US:
3. Enter new markets:
We have a clear ambition to be the leading
operator in the US through BetMGM,
our joint venture with MGM Resorts.
We have strong momentum already with
an estimated market share of 18% across
the states in which BetMGM is active.
2. Grow our core markets:
We have achieved a huge amount in
our existing markets, but there is still
substantial headroom for further growth.
We currently operate in over 20 markets
worldwide. Our combination of customer
focus, strong brands, great products and
digital marketing expertise has enabled us
to grow online across all our major markets.
We have now delivered 20 consecutive
quarters of double-digit growth online.
We see significant opportunities for
expansion into new regulated markets
through organic opportunities as well
as M&A. There are significant growth
opportunities across the globe with around
$50bn in gross gaming revenues in over 50
regulated markets in Africa, Latin America
and Central and Eastern Europe where we
do not currently operate today.
4. Expand to new audiences:
New technology-enabled forms of
entertainment are constantly emerging,
and we intend to be at the forefront of
capturing them. For instance, esports and
digital gaming are becoming the hub for a
rapidly growing audience out of which are
evolving new betting markets, and we see
significant potential for us in this area.
We plan on growing and evolving the business in
a responsible way. We will grow in a way that is
underpinned by sustainability, responsibility and
player protection.”
Jette Nygaard-Andersen
Chief Executive Officer
NGR
£3.6bn
Flat (despite Covid-19)
2019: £3.6bn
Employees and contractors
c.24,000
Leading Global brands
24
Online wagers processed
£11.8bn
+5% (+7%cc)
Online NGR for 2016 – 2020
by year
)
%
7
2
(
.
m
5
7
4
7
2
£
,
)
%
3
1
(
.
m
7
0
7
1
2
£
,
)
%
9
1
(
.
m
3
5
1
9
1
£
,
)
%
4
2
(
.
m
8
2
0
6
1
£
,
.
m
3
6
9
2
1
£
,
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
2016-2018 are proforma numbers and on
an actual currency basis
Read more about our new strategy:
pages 24-25
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
20
What makes us Entain? continued
A new charter
to ensure our
long-term success
We know that the most responsible
operator will also be the most successful
operator, which is at the heart of Entain
and our new strategy.”
Jette Nygaard-Andersen
Chief Executive Officer
Entain plc | Annual Report 2020
Strategic report 21
In November 2020, we launched our new Sustainability
Charter. We believe that the most sustainable business
in our industry will be the most successful business in
our industry. Our Sustainability Charter is based around
four cornerstones:
Regulation
Responsibility
Corporate
governance
People and
communities
Only operate in
regulated markets
Scientific approach to
safer gaming
Best in class
corporate governance
Best place
to work
100%
regulated markets
by end of 2023
Leverage technology
for player safety
Strengthened Board
Reduce
environmental impact
Pro-active regulator
engagement
New responsibility
algorithms
Strengthened Processes £100m to Entain
Foundation over
five years
Remuneration tied
to responsibility
Long-term sustainability = Long-term success
Our Sustainability Charter
1. An exclusive focus on
regulated markets
By the end of 2023, 100% of our revenues
will come from regulated markets, which
means that we are exiting markets in
which there are currently no viable paths
to regulation. By the end of 2020, 99% of
our revenue came from nationally regulated
or regulating markets, and we will work
closely with regulatory authorities in
the remaining 1% towards the highest
regulatory standards. If it becomes
apparent that regulation in those markets is
unlikely, we will exit them.
2. Continuing to take the lead on
responsible betting and gaming
Ensuring the highest possible levels of
player safety and protection is the best way
of guaranteeing our long-term success.
Our technology enables us to continuously
upgrade and personalise our protections
for customers. As such we launched our
Advanced Responsibility & Care (“ARC”)
programme which will move player
protection from being reactive to proactive
to advert potential problems before they
occur. From 2021, a responsible betting and
gaming metric is being incorporated into our
annual Group-wide bonus conditions.
3. Pursuing the highest standards of
corporate governance
We recognise that to be a world-leading
company we need to adhere to the highest
standards of governance in all areas
of our operations. Our Board has been
strengthened and revitalised over the
last two years, notably with Barry Gibson
becoming Chairman in February 2020.
We have a robust corporate governance
structure and policies in place that befit our
status as a FTSE 100 company.
4. Investing in our people and local
communities
We have a long history of recruiting,
retaining and nurturing the best people
in our industry as well as a commitment
to diversity, looking after our people, and
creating the best place to work.
We are proud to be able to contribute to the
wider communities in which we operate,
through the Entain Foundation, which is
committed to donating £100 million over
the next five years including our flagship
Pitching In programme that supports grass
roots sports and sports people.
Enhancing leading player
protection technologies
Dr Mark Griffiths, Distinguished
Professor of Behavioural Addiction
and Psychology at Nottingham Trent
University will be auditing Entain’s
policies and processes on responsible
gaming and suggest improvements,
drawing on academic and scientific
experience gained over more than
30 years studying online behaviours
and addiction.
Safer Betting and Gaming
Commitment
RET investment
1% UK GGR
by 2022 (10-fold increase)
2019: 0.1%
Revenue (regulated markets)
100%
by 2023
Female senior leaders
36%
Entain Foundation donations
£100m
over five years
Read more about our corporate
and social responsibility:
pages 96–98
Entain plc | Annual Report 2020
Overview | Strategic report | Governance | Financial statements 22
What makes us Entain? continued
Leading the
technological
revolution of
our industry
PlayPause
Entain is the first official partner
of PlayPause, a new multi-state
responsible betting and gaming tool
which will operate across state lines
in the United States, with the feature
due to launch with BetMGM.
Entain plc | Annual Report 2020 Strategic report 3
2
1
75.7%
23.6%
0.7%
Our Divisions
2020 NGR
1. Online
2. Retail
3. Other
Platform availability
99.95%
Technology specialists
3,000+
Sports bets a day
2m+
Casino spins a day
21m+
23
At its core, Entain is a pioneering
technology business. Critically, we are
unique amongst our peers in owning
and operating 100% of our proprietary
technology platform.
Our tech teams comprise of over 3,000 world-class developers,
specialists software engineers and data scientists. Collectively
they deliver one of the most advanced platforms either inside or
outside of our industry.
Operating our own platform gives us unparalleled flexibility,
agility and scale to adapt to challenges and opportunities and
deliver against strategic priorities, at speed, rather than being
reliant on third-party suppliers. It provides a number of distinct
competitive advantages:
Enhance the customer experience.
Innovate our products and services.
Expand our organic growth opportunities.
Enter new regulated markets.
Rapidly integrate acquisitions.
Innovate our products and services.
Adapt to changing regulatory requirements.
Enter new regulated markets.
Protect our customers through early risk detection
and intervention.
Drive efficiencies throughout the business.
Entain’s 20 consecutive quarters of double digit online growth have
been driven by our technology, it’s what supports our leading-
edge approach to digital marketing and has meant that we have
been able to grow faster than our competitors while enhancing the
protection of our players.
We own 100% of our technology,
which has been the key driver behind
our long-term success.”
Jette Nygaard-Andersen
Chief Executive Officer
Read more about our technology
platform across our brands:
pages 30-31
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 24
Our strategic framework
Our corporate strategy is focused on
growth and sustainability, underpinned
by our technology and innovation.
2020 priorities
Growth
2020 progress
Priorities for 2021
KPIs
Risks
Remuneration
Leadership in the US
Clear ambition to be the leading operator in the US sports
betting and iGaming market through BetMGM.
Grow our core markets
Continue to grow rapidly in the 20 international markets
in which we already operate.
BetMGM had approximately18% market share in
the states in which it is live in the three months to
the end of January 2021.
We have now delivered 20 consecutive quarters
of double-digit growth in online NGR with a
three-year compound annual growth rate of 20%.
Enter new markets
Significant opportunities exist for expansion into new regulated
markets through organic opportunities as well as M&A.
Announced the acquisition of Bet.pt, to complete
H1 2021. Became first major operator to be licensed
in Colombia. Announced offer for Enlabs AB in
January 2021.
Expand to new audiences
Entain will be at the forefront of leveraging opportunities
created as new technology-enabled forms of entertainment
continuously evolve.
Broadened focus to new areas of gaming
entertainment, exploring new partnerships
and opportunities.
Sustainability
An exclusive focus on regulated markets
All revenues to derive from regulated markets by end of 2023.
By the end of 2020, 99% of our revenue came
from nationally regulated or regulating markets.
Continuing to take the lead on
responsible betting and gaming
Our technology enables us to continuously upgrade and
personalise our protections for customers.
Pursuing best in class standards of
corporate governance
Ensuring the highest standards in all areas of our operations.
Best place to work and investing in our people
and local communities
Ensure Entain is the best place to work while contributing
to society where we are based and operate.
Launch of Advanced Responsibility & Care (“ARC”)
programme to use technology to proactively
intervene to prevent betting and gaming related harm
developing. Establish appropriate safer betting and
gaming metric to link remuneration with safer betting
and gaming practices.
Strengthened and diversified our Board and
governance practices under new Chairman
Barry Gibson.
Establishment of the Entain Foundation with
commitment to donate £100m over next five years.
Named top of the betting and gaming industry’s All-in
Diversity Index for approach to D&I.
Technology failure.
Loss of key locations.
Trading, liability and
pricing management.
Increased cost of product.
Executive Committee
agreed three month wage
cut and waived 2020
bonuses.
Revised bonus target for
employees paying out at
50% of original scheme.
Executive bonus and Long
Term Incentive Plans linked
to EBITDA, Cash generation
and safer betting and
gaming targets.
Enter new States as they
Market access
regulate with market
leading customer offer.
Continue to innovate in
existing markets focusing
on product, brands and
marketing.
Identify new opportunities
in the 50 regulated
markets where we do not
currently operate.
Deliver new customer
propositions outside of our
traditional product offer.
150m
people
Leverage
2.1x
Online net revenue
£2,747.5m
Underlying EBITDA
£843.1m
Furloughed employees
received 100% of salary.
Safer betting and gaming
metric for 2021 bonus
schemes implemented.
Work with authorities in the
Contribution to safer betting
remaining 1% of markets to
and gaming initiatives
find a path to regulation.
Continue to develop ARC
and increase investment
in all areas of research,
education and treatment
of problematic behaviour.
Introduction of safer betting
and gaming metric to
account for 15% of 2021
bonus payments for all
office based employees.
£9.7m
Employee satisfaction with
approach to wellbeing
87%
Reduction in carbon
emissions 2018-20
Continue to diversify Board
and evolve governance
best practice.
15%
Roll-out programme of
Commitment to Entain
investment from Foundation
Foundation over five years
in international projects.
£100m
Ensuring health, safety
and wellbeing of our
stakeholders.
Ability to recruit and
retain both customers
and employees.
Data breach and
cybersecurity.
Changes in betting and
gaming legislation.
Changes in betting and
gaming tax regimes.
Continued impact of
Covid-19.
Entain plc | Annual Report 2020 Strategic report
2020 progress
Priorities for 2021
KPIs
Risks
Remuneration
25
Key
Achieved
On target
Not achieved
Enter new States as they
Market access
Technology failure.
Executive Committee
Loss of key locations.
Trading, liability and
pricing management.
Increased cost of product.
agreed three month wage
cut and waived 2020
bonuses.
Revised bonus target for
employees paying out at
50% of original scheme.
Executive bonus and Long
Term Incentive Plans linked
to EBITDA, Cash generation
and safer betting and
gaming targets.
regulate with market
leading customer offer.
Continue to innovate in
existing markets focusing
on product, brands and
marketing.
Identify new opportunities
in the 50 regulated
markets where we do not
currently operate.
Deliver new customer
propositions outside of our
traditional product offer.
150m
people
Leverage
2.1x
Online net revenue
£2,747.5m
Underlying EBITDA
£843.1m
Furloughed employees
received 100% of salary.
Safer betting and gaming
metric for 2021 bonus
schemes implemented.
Work with authorities in the
remaining 1% of markets to
find a path to regulation.
Continue to develop ARC
and increase investment
in all areas of research,
education and treatment
of problematic behaviour.
Introduction of safer betting
and gaming metric to
account for 15% of 2021
bonus payments for all
office based employees.
Contribution to safer betting
and gaming initiatives
£9.7m
Employee satisfaction with
approach to wellbeing
87%
Reduction in carbon
emissions 2018-20
Continue to diversify Board
and evolve governance
best practice.
15%
Roll-out programme of
investment from Foundation
in international projects.
Commitment to Entain
Foundation over five years
£100m
Ensuring health, safety
and wellbeing of our
stakeholders.
Ability to recruit and
retain both customers
and employees.
Data breach and
cybersecurity.
Changes in betting and
gaming legislation.
Changes in betting and
gaming tax regimes.
Continued impact of
Covid-19.
Read more: pages 34–55
Read more: pages 72–75
Read more: pages 102–121
2020 priorities
Growth
Leadership in the US
Clear ambition to be the leading operator in the US sports
betting and iGaming market through BetMGM.
Grow our core markets
Continue to grow rapidly in the 20 international markets
in which we already operate.
BetMGM had approximately18% market share in
the states in which it is live in the three months to
the end of January 2021.
We have now delivered 20 consecutive quarters
of double-digit growth in online NGR with a
three-year compound annual growth rate of 20%.
Enter new markets
Significant opportunities exist for expansion into new regulated
markets through organic opportunities as well as M&A.
Announced the acquisition of Bet.pt, to complete
H1 2021. Became first major operator to be licensed
in Colombia. Announced offer for Enlabs AB in
January 2021.
Expand to new audiences
Entain will be at the forefront of leveraging opportunities
created as new technology-enabled forms of entertainment
continuously evolve.
Broadened focus to new areas of gaming
entertainment, exploring new partnerships
and opportunities.
Sustainability
An exclusive focus on regulated markets
All revenues to derive from regulated markets by end of 2023.
By the end of 2020, 99% of our revenue came
from nationally regulated or regulating markets.
Continuing to take the lead on
responsible betting and gaming
Our technology enables us to continuously upgrade and
personalise our protections for customers.
Pursuing best in class standards of
corporate governance
Ensuring the highest standards in all areas of our operations.
Best place to work and investing in our people
and local communities
Ensure Entain is the best place to work while contributing
to society where we are based and operate.
Launch of Advanced Responsibility & Care (“ARC”)
programme to use technology to proactively
intervene to prevent betting and gaming related harm
developing. Establish appropriate safer betting and
gaming metric to link remuneration with safer betting
and gaming practices.
Strengthened and diversified our Board and
governance practices under new Chairman
Barry Gibson.
Establishment of the Entain Foundation with
commitment to donate £100m over next five years.
Named top of the betting and gaming industry’s All-in
Diversity Index for approach to D&I.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
26
The industry in which we operate
Entain operates multiple
brands in the highly
competitive global gaming
and sports betting sector,
in both the retail and
online worlds.
Online Europe
Geographically the Online UK and European
market is the largest at 50% of the total
online global market in 2020 which grew
year-on-year at 26% and 9% respectively.
Entain’s Online proforma NGR in Europe
represents over 75% of total Group Online
in 2020. The next largest market is the
unregulated Asia market which represents
31% of the global total followed by North
America (12%), Oceania (4%), Latin America
(2%), and Africa (1%). Entain also has online
operations in Australia, Brazil and the US.
Global Online Growth
Entain operates in the global online betting
and gaming market which is estimated to
be worth c£64bn in 2020. Over the past
ten years global online gaming grew at 12%
CAGR and the market growth from 2019
to 2020 was 33% as a result of channel
shift from enforced retail closures due to
the pandemic.
12%
The global online market grew at 12%
CAGR over the last 10 years.
.
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UK and Europe makes up more
than half of the global online
gaming market.
5 6 7
1
4
3
2
1. UK
2. Europe
3. Asia / Middle East
4. North America
5. Oceania
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
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2
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1
0
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7
1
0
2
8
1
0
2
9
1
0
2
E
0
2
0
2
6. Latin America / Caribbean
7. Africa
Source: Data provided by H2 Gambling Capital, unless otherwise indicated.
14%
36%
31%
12%
4%
2%
1%
Entain plc | Annual Report 2020 Strategic report 27
Retail
The key retail countries Entain operates in
are UK, Italy, Belgium and Republic
of Ireland (ROI).
The UK Retail market (excluding lotteries)
is estimated to be worth £2bn in 2020,
a significant decline from £5bn in 2019
as a result of enforced closures due to
the pandemic. Over the last 10 years
the market remains flat with growth in
machines offset by the change to £2
B2 machines stakes implemented April
2019 and the decline in betting. UK Retail
betting sector is dominated by four
operators which account for over 85% of all
betting shops. Entain operates via the two
brands Ladbrokes and Coral as the number
one operator.
The Italian betting retail market is
estimated to be worth £0.7bn in 2020, a
decline from £1bn in 2019 as a result of
enforced closures. Entain operates via the
Eurobet brand as the third largest operator
in the market for over the counter sports
betting in Italy.
The ROI and Belgium betting market
is much smaller estimated to be worth
£0.2bn and £0.1bn respectively in 2020.
Entain operates in Belgium and ROI via the
Ladbrokes brand as the largest operator in
Belgium and third largest in ROI.
Forecast
The online gaming market is forecasted to
grow at 9% CAGR over the next five years
driven by US regulation, product innovation,
mobile growth. The US gaming market is
forecasted to grow at 19% over the next
five years.
UK Retail betting and gaming is forecasted
to decline 2% CAGR post the pandemic
between 2022 to 2025. In our smaller Retail
betting businesses, forecasted growth in
Italy, Belgium and ROI is low single digits
between 2022 to 2025.
>85%
9%
Four operators account for over 85%
of all UK betting shops.
Online gaming is forecast to grow at
9% CAGR between 2020 and 2025 with
the US growing at 19%.
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100
90
80
70
60
50
40
30
20
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2
Global Online
Italy Retail (Betting)
UK Retail
(Betting & Gaming)
Belgium Retail (Betting)
ROI Retail (Betting)
Online Market by Product
Online growth has been driven by
continued product development across
all areas. Online betting, casino, bingo
and poker represent 85% of total online
gaming revenue which are all offerings the
Group delivers.
85%
Online betting, casino, bingo and
poker made up 85% of all online
betting and gaming in 2020, betting
and casino were forecasted to grow
at 17% globally.
1. Betting
2. Casino
3. State lotteries
4. Poker
5. Bingo
6. Skill / other gaming /
commercial lotteries
52%
26%
10%
4%
4%
3%
4 5 6
3
2
UK
Italy
ROI
5.0 13% 7% 20% 2% 57%
9.4
8% 1% 55% 1% 35%
0.7 33% 2% 18% 2% 44%
1
Belgium
0.9 11% 5% 25% 0% 60%
(Entain areas of operations are highlighted)
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
28
Regulatory Update
Gaming is a truly global market and in 2020 the
Group held licences in more than 20 territories and
jurisdictions. By the end of 2020, over 99% of the
Group’s revenues were from markets that were
either regulated or in the process of regulating.
The UK
United States
Germany
The UK Government launched the Review
of the 2005 Gambling Act in December
2020. We are formally responding to
the Call for Evidence and engaging with
political stakeholders and our industry
counterparts to provide evidence-base
submissions as part of this process.
In parallel, the Gambling Commission
has consulted on a number of issues,
including whether there should be
mandatory affordability thresholds
for all betting and gaming customers.
We maintain that imposing arbitrarily low
and disproportionate blanket thresholds
will unfortunately push customers to the
black market and not protect the small
minority of players who are at risk of harm.
Instead, we are committed to rolling out
our Advanced Responsibility and Care
(“ARC”) programme, which offers tailored
identification of customers who may be at
risk, as well as targeted interventions and
interactions. Importantly, throughout these
debates, we feel the voice of the customer
should be heard – which is why we
launched the Players’ Panel earlier this year.
The sports betting regulatory activity
continues at pace in the United States.
Michigan, Colorado, Tennessee, Iowa and
Virginia have all launched its regulated
sports betting markets in 2020 or early
2021. Many other US states are in the
process of considering sports-betting
bills: the New York Governor has for the
first time indicated his willingness to allow
mobile betting in the state; states such as
Massachusetts, Georgia, Maryland, Ohio,
Louisiana, and even Texas might allow
sports betting throughout 2021, with
markets launching this year or in 2022.
Indiana and Michigan are looking into
expansion of internet gaming in their states.
It is expected that other states that have
regulated their sports betting markets will
be looking into allowing internet gaming
as well. The Group is of the view that in the
next few years some 35 to 40 US states
will have regulated sports-betting, which
will provide the Group’s US JV with even
broader market access across the country.
The number of states that will have allowed
internet gaming will grow as well.
In another positive development, the
US courts have sided with the industry
in the Wire Act litigation, which is
expected to allow for more cross border
regulatory flexibility going forward, in
particular US wire poker liquidity and
progressive jackpots.
In October 2020, the Group obtained four
sports betting licences for its key German
facing brands under the existing online
betting and gaming regulation. The German
authorities have also introduced a
toleration policy for online poker and
slots, which the Group is compliant with.
These developments have materially
increased the levels of regulatory certainty
surrounding the Group’s operations in
Germany. This trend will be reinforced
further by the new German online betting
and gaming regulation that come into effect
on 1 July 2021.
The new regulation introduces licensing
of all online betting and gaming verticals,
including for the first time online casino,
slots and poker. The Group intends to
apply for German licences as soon as they
are available and fully expects that these
applications will be successful. As casino
table games will be regulated on a state-
by-state, as opposed to nationwide, basis
the Group has been taking steps towards
securing adequate market access for these
products as well.
The 1 July 2021 regulation sets out certain
restrictions on products, such as deposit
limits and maximum wagering limits on
slots, as well as new rules for betting and
gaming related advertising. Most of these
restrictions can however be further relaxed
subject to regulatory discretion. In addition,
the future regulation allows for a broader
portfolio of in-play betting markets, which
will facilitate channelling of the Group’s
existing sports betting and casino offers
into the future regulated market.
Entain plc | Annual Report 2020 Strategic report Elsewhere, we are actively engaging with
local authorities in the Ukraine as the
process of regulating online betting and
gaming continues. In Sweden, we will be
working with other industry stakeholders on
various consultations and a governmental
inquiry. The proposed regulatory reforms
include restrictions on online casino
advertising and improved measures to
combat black market activity.
Canada
In November 2020, the Ontario government
announced its intention to regulate
its online betting and gaming market. Public
consultations on the future regulation are
expected to be launched in early 2021, with
the market potentially regulating throughout
the year. In addition, the Canadian federal
government has proposed a bill to revoke
the longstanding ban on single sports
wagering which is likely to be adopted. All
these developments will present Entain with
an opportunity to enter the Canadian
regulated market in a foreseeable future.
Latin America
The Group was one of the first global
operators to obtain a Colombian online
betting and gaming licence in late
2020. There is clear evidence that more
countries within Latin America are firmly on
the path to regulation: 1) The Brazilian
Federal Government continues working
towards regulating sports betting by
the end of summer 2021, with licences
potentially being available in early 2022.
This is expected to provide the Group with a
major opportunity to build on its existing
position in this market; and 2) The Chilean
Government has announced its intention to
introduce online betting and gaming
regulation to the Chilean Parliament in the
first half of 2021.
29
2020 Global online gross
gaming revenue
In 2020 online global gross gaming revenue
was estimated to be valued at £64.3bn1.
Below are the largest 15 markets that
are either regulated or in the process
of regulating.
United Kingdom
£10,351m
United States
£8,842m
Germany
Italy
France
Australia
Sweden
Canada
Spain
Finland
Denmark
Belgium
Netherlands
Poland
Ireland
£3,399m
£2,616m
£2,410m
£2,123m
£1,570m
£1,198m
£1,152m
£1,152m
£729m
£705m
£580m
£553m
£450m
Read more about our engagement
with regulators: page 33
1. Source: H2 Gambling Capital (including both regulated
and non-regulated GGR).
Other Europe
In Holland, we expect the licensing process
to begin once the requisite law has come
into effect on 1 April 2021. The regulation
will allow for all online betting and gaming
verticals to operate, subject to a GGR tax.
Entain expects to be able to apply for Dutch
licences at the end of 2021 with a view to
becoming fully licensed in mid-2022. In the
meantime, we continue to fully comply with
the Dutch regulator’s prioritisation criteria
for unlicensed operators.
In Spain, the Government has passed a
Royal Decree that will impose restrictions
on betting and gaming related advertising,
including a TV watershed, limitations
on bonuses and a sponsorship ban.
The restrictions are due to come into force
later in 2021. We have launched a legal
appeal against the restrictions via the local
trade association – as have the Spanish
media association and La Liga – but it is not
yet clear what impact these appeals could
have. In addition, we expect a further Royal
Decree on safer betting and gaming to be
published in the coming months and we
will engage constructively with the Spanish
authorities to advocate for a balanced and
proportionate measures.
The Greek regulator has announced
that the granting of permanent licences
to operators will be delayed until early
summer, but this should not have an impact
on our existing Greek operations. In parallel,
we are working with other operators to
clarify planned reforms to the method of
calculating customer winnings taxes on the
basis that, as currently proposed, they risk
breaching EU state aid rules.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 30
How we create value
Our purpose
How we add value
To revolutionise betting
and gaming to create
the most exciting and
trusted entertainment
for every customer.
Create moments of excitement
Personalised offers.
Effective marketing.
Omni-channel approach.
Great customer experience.
What makes us different
Read more: pages 20–23
Grow our business
Gain market share.
Maximise US opportunity.
Enter new markets.
Innovate for new audiences.
Customer focus
Understanding our customers
and delivering them great
products, experiences and
entertainment in a trusted
environment is what
drives us.
New online customers
in 2020
4m
Proprietary
technology
Our unique tech platform
distinguishes us from our
competitors, providing the
flexibility and agility to
innovate, protect and adapt.
IT Specialists
3,000+
Read more: pages 18-19
Strengthen the quality
of our earnings
Diversify geographic and product mix.
Broaden our customer base.
Focus on regulated markets.
Deliver scale efficiencies.
Leading brands
Entain has a portfolio of
more than 20 established
brands, each with a regional
focus and distinct localised
customer offer. Our brands
enjoy high levels of
customer awareness.
Leading brands
24
Best people
Entain is a people-driven
business in a highly dynamic
sector. We focus on
identifying, developing and
retaining the best talent
from all backgrounds.
All-in Diversity
Index ranking
1
Read more: pages 24-25
Ensure sustainability
Be a great place to work.
Deliver ARC.
Be a great place to work.
Support our communities.
Read more: pages 34-35
Entain plc | Annual Report 2020 Strategic report
31
How we’re a responsible business
Our stakeholder outcomes
Customers
Best betting and gaming experience
We are focused on delivering our customers
the most exciting and trusted entertainment.
Online performance
+20% NGR CAGR 2018–2020
Our people
Great place to work
In a Global Pulse Survey 87% of respondents
reported that they felt Entain genuinely cared
about our people
Satisfaction
87%
Communities
Community activity
We actively support the communities in
which we operate.
Entain Foundation
£100m
committed over five years
Investors
Positive returns
Everything we do is ultimately focused
on delivering value to our shareholders.
Underlying EBITDA
£843.1m +11%
2019: £761.4m
Dividends
We are committed to returning to dividends once
the uncertainty caused by Covid-19 subsides.
Regulated
We have committed to
operate exclusively in
regulated markets by the end
of 2023. This will enable us
to deliver higher quality of
earnings to our business and
ensure we can continue to
grow into the future.
Player protection
Ensuring the highest possible
levels of player safety and
protection through our
Changing for the Bettor and
ARC programmes is the best
way of guaranteeing our
long-term success.
Our technology enables us
to continuously upgrade and
personalise our protections
for customers.
Read more: pages 28-29
Read more: pages 36-37
Environmental
impact
All areas of society must
play their part in addressing
the challenge of climate
change. That is why we have
committed to achieving net
zero carbon emissions across
our global operations by no
later than 2035.
Communities
Through the Entain
Foundation we support a
variety of good causes and
community projects. Our four
areas of focus are: research,
education and treatment in
relation to safer betting and
gaming; the promotion of
grass roots sport; diversity
and technology; and projects
in the communities where
we are based.
Read more: pages 96-98
Read more: pages 32-33
Read more: pages 63-67
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
32
Engaging with stakeholders
The Board recognises the importance
of effective governance and intends to
operate in line with the UK reporting
regulations. The information below
should be read in conjunction with the
rest of the Strategic Report.
Section 172 of the Companies Act 2006
imposes a general duty on Directors to act
in a way that they consider, in good faith,
to most likely promote the success of the
company for the benefit of shareholders as
a whole. The Directors in setting policies
and strategies continue to have regard to
the interests of the Group’s employees,
shareholders, investors, suppliers,
customers, regulators, including the impact
of its activities on the community and on the
Group’s reputation. These factors underpin
the way in which the Directors discharge
their duties and the Board is cognisant of
the need to foster strong relationships with
all stakeholders to help the Group deliver its
strategy and support its long-term values
including sustainability.
Our approach
The Board understands the importance
of effective engagement with all of its
stakeholders. Depending on the nature
of the issue in question, the relevance of
each stakeholder group may differ and
not every decision the Board makes will
necessarily result in a positive outcome
for every stakeholder.
The Board at each meeting ensures that
the process of considering its stakeholders
is embedded in papers it receives to
enable it to discharge its duties. The Board
monitors the progress and delivery of
strategic initiatives through metrics
reported in meetings.
In addition, the Remuneration Committee
assesses the overall performance of
the Group, including progress against
its responsible betting and gaming
ambitions as well as delivery against its
Environmental, Social and Governance
(“ESG”) strategy to support decision
making on remuneration outcomes.
To ensure that the Group continues to
operate in line with good corporate practice,
Directors as part of their induction receive
training on the scope and application of
Section 172 to ensure that they are aware
of how a Board, in its decision making, must
consider its stakeholders.
Colleagues
While the Board’s ability to meet with
colleagues in person in 2020 was
limited by Covid-19 related restrictions,
Board members have taken part in
virtual employee events, including the
Group-wide internal launch of Entain in
November and heard colleagues around
the Group giving their reaction to our
new strategy, purpose and responsible
betting and gaming commitments.
Virginia McDowell, Chair of the
ESG Committee, was appointed as
Designated Workforce Director in 2019.
She has attended two meetings of our
Employee Forum (representing retail
and business colleagues) and engaged
in discussions on topics including
protecting our customers and how the
Company has supported colleagues
during Covid-19. Our CFO, Rob Wood,
and newly appointed CEO, Jette
Nygaard-Andersen, also attended the
Employee Forum, with Jette answering
questions from colleagues around the
Group on her priorities and reflections
following her appointment.
We do not discriminate on the basis
of age, disability, gender or gender
reassignment, pregnancy or maternity,
race, religion or belief, sexual orientation
or marriage/civil partnership.
For further details see page 49
Customers
Our customers interests range from
product availability, ethical behaviour,
service, pricing and promoting
responsible attitudes to betting and
gaming. The Group, as part of its
commitment to responsible and safer
betting and gaming, engages through
initiatives such as Responsible Gambling
Week, where responsible betting and
gaming messages dominated our
websites and social media channels.
In addition, the Group offers the Gamban
software which blocks access to
thousands of betting and gaming sites.
In early 2021, the Group commissioned
independent research to survey the views
of the general public on betting and
gaming related issues. We also established
‘The Players’ Panel’ to provide consumers
with a platform to voice their opinions on
issues relating to the regulation of betting
and gaming in the UK.
Shareholders
The Group’s investors and shareholders
expect, and get, a comprehensive
view of the financial and sustainable
performance of the business as well
as a clear commitment to, and delivery
against objectives of, ESG. The Group
in its engagement undertakes regular
conference calls and meetings with
investors through roadshows, investor
conferences, one to one and group
calls, publication of the Annual Report,
press releases and stock exchange
announcements. In 2020, much of this
activity was conducted virtually due
to the limitation imposed by Covid-19
restrictions. During the year the Group
conducted a total of 835 investor
meetings. These meetings involved
a combination of the CEO, CFO, the
Chairman, the IR Director and other
management as appropriate.
The Board receives feedback on
shareholder views in different ways,
including through the Chairman and
executive management who meet
regularly with shareholders throughout
the year. During the year the IR team
introduced a regular feedback and audit
process to better understand investors
views based on a number of satisfaction
and confidence measures – including
perception of the Group’s strategy,
management and opportunities
as well as delivery vs expectations
and transparency.
The quantitative analysis and qualitative
feedback were presented to the Board
twice during the year. The audits
showed positive progress in investor
engagement through the year with
Entain performing more positively
than the benchmark in all measures.
In addition, Board members listen in
to results and trading updates held by
the Group for analysts and institutional
investors and can hear directly the
questions and comments on Company
performance and are kept abreast of
relevant newsflow and commentary on
the Company throughout the year.
For further details see page 45
For further details see page 86
Entain plc | Annual Report 2020 Strategic report Suppliers
The Group works responsibly with
its suppliers and regularly reviews its
Customer and creditor payment policies.
The Modern Slavery Statement sets
outs the steps taken to prevent modern
slavery in our business and various
supply chains. Our supplier interests
range from fair trading, payment terms,
success of the business and long-term
partnerships. The Group engages with
suppliers by direct engagement, supplier
conferences and corporate responsibility
and ethics reporting. The Board in its
duties receives regular reporting on retail
performance and modern slavery.
For further details see page 87
The Community
As set out in the Company’s
Sustainability Charter (See page 96 for
further details) Entain is committed to
supporting the communities in which it is
based and operates. Through the Entain
Foundation, the Group has committed
to investing £100m over five years on
a range of projects and good causes
including safer betting and gaming
measures, investment in grassroots
sport, reducing environmental impact,
diversity in technology and projects with
a clear link to our local communities.
A flagship project of Entain Foundation
was the Group’s Pitching In grassroots
sport investment programme which saw
the Group partner in the UK with The
Trident Leagues, made up of 228 clubs
at the heart of England’s non-league
football pyramid. The Company engages
through the publication of its CSR report
and employee-matched funding for
charity policy.
The Board has the overall oversight
of corporate responsibility plan and
reporting and the involvement in
corporate affairs strategy and with
delegation to the ESG Committee.
The ESG Committee is advised by the
executive ESG Steering Group and
also works with external consultants
which assist the operational units and
review the environmental and social
performance data.
33
Regulators
As a global operator and one of the world’s largest online betting and gaming
companies, Entain engages with a wide variety of stakeholders. These include
regulators, investors, trade associations, safer betting and gaming charities and
customers. This engagement is core to our ability to offer first class player protection
through our cutting edge technology and product platform, while upholding all licensing
objectives, across multiple jurisdictions. One of the key relationships we maintain is
with our regulators. Liaising with our regulators on an open and regular basis helps us
to ensure that each of them are fully apprised of our operating practices. Through this
process we can help policymakers shape our industry environment to best serve our
stakeholder group whilst operating in a legal and fair way.
Governments and regulators
How we engage
UK Government departments.
The UK Gambling Commission.
Governments and regulators
in territories where we hold
gaming licences.
US state licensing bodies.
National information commissioners.
Domestic and International
trade Associations.
What are their expectations?
Providing an enjoyable and
safe leisure experience.
Making sure we operate legally
and in a fair manner.
Minimising harm and maximising
player protection.
Ensuring that we protect the
young and the vulnerable.
Reducing crime and
unlawful behaviour.
Ongoing dialogue with regulators,
domestic and international trade
associations and local authorities.
Responding to the UK Government’s
Review of the 2005 Gambling Act.
Numerous face-to-face meetings
bilaterally or as part of industry meetings.
Quarterly meetings, at a minimum,
between the UK Gambling Commission
and senior members of Entain’s
leadership team.
Detailing governance, risk management
and safer betting and gaming
strategies through submission to the
UK Gambling Commission Annual
Assurance Statement process.
Partnerships with the GB Health &
Safety Executive.
Hosting a Safer Betting and gaming
Research Symposium with international
thought leaders, researchers
and academics.
Formal meetings with our regulators in
Gibraltar, Malta, the US and our other
global regulated jurisdictions.
Engage with the Department of Justice in
Ireland as it implements new Anti-Money
Laundering (“AML”) requirements.
Respond to formal regulatory
consultations including most recently
the call for evidence on affordability
by the UK Gambling Commission and
RG consultations in Spain and Sweden.
e-betting and gaming international
workshops in Spain, annual industry
meeting in Denmark and the ‘Licensing
information session’ in Germany.
Suspicious activity disclosed to relevant
national bodies and membership
of national match-fixing platforms
(e.g. Spain).
Engagement with regulatory authorities
in regulating markets via local
associations and advisors in the run up
to licensing (e.g. Netherlands, Brazil).
For further details see pages 47-54
For further details see pages 28-29
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 34
Sustainability
Our refreshed
commitment to
sustainability
In November 2020 we launched our new Sustainability
Charter. We have long held the view that the most
sustainable business in our industry will be the most
successful business in our industry. Our Sustainability
Charter is based around four cornerstones.
Regulation
Responsibility
Corporate Governance
People & Communities
Only operate in
regulated markets
Scientific approach to
safer betting and gaming
Best in class
corporate governance
Best place to work
100% regulated markets
by end of 2023
Leverage technology for
player safety
Strengthened Board
Reduce environmental impact
Pro-active
regulator engagement
New responsibility algorithms
Strengthened Processes
£100m to Entain Foundation
over five years
Remuneration tied
to responsibility
Long-term sustainability = Long-term success
Entain plc | Annual Report 2020 Strategic report Our governance structure
is now fully bedded in and
has proved fit for purpose in
managing the increased scale,
complexity, and expectations
of the Group.”
Robert Hoskin
Chief Governance Officer
35
How we govern for sustainability
Strong governance of our Sustainability Charter and our overall
approach to ESG is crucial to managing our non-financial risks
effectively and efficiently, and it reflects how integral sustainability
is to our long-term success. Launched in 2018, our governance
structure is now fully bedded in and has proved fit for purpose in
managing the increased scale, complexity, and expectations of
the Group.
The ESG Committee
The Board-level ESG Committee covers regulatory compliance,
AML, anti-bribery & corruption (“ABC”), responsible gaming, health
and safety, environmental impact, data protection and diversity
in the workplace. Chaired by Virginia McDowell, the Committee
has four members and guides the business on all aspects of ESG
strategy, agreeing on targets and monitoring our performance.
The ESG Steering Group
The ESG Steering Group consists of functional leaders from across
the business, including Investor Relations, Human Resources,
Corporate Affairs, Legal, Health, Safety & Security, Operations,
and Communications. Convened by our Head of ESG and
Chaired by our Chief Governance Officer, the Group oversees the
implementation of our sustainability strategy.
Board
Strategy
ESG
committee
ESG steering group
Oversight
Operating units
Central functions
Coordination
Operational teams
Delivery
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 36
Safer betting and gaming
It all starts with our seven principles
for safer betting and gaming:
Understand
the problem
Educate
stakeholders
Promote
responsible attitudes
Empower
customers
Fund treatment
for those in need
Champion
responsible
product design
Change
ourselves for
the bettor
To reduce gambling
harm, we need to
know as much as
possible about it.
So we’re funding
research to help us
find the best solutions.
We’re helping to
educate thousands
of young people and
professionals about
the potential risks of
gambling harm and
how to avoid them.
Through advertising,
marketing and
sponsorships we’re
promoting social
responsibility.
Within our products,
we’re adding features
that help customers to
gamble safely. Within
our processes, we’re
using tech to lead
the way in detecting
problematic play, and
within our industry we’re
working to collaborate
and innovate.
We’re funding
treatment and support
for people who suffer
from gambling harm.
With ‘responsible
design’ principles,
we’re making sure our
products are safe as
well as fun.
At Entain, safer
betting and gaming
is everyone’s business.
We’re making sure that
everyone we work with
knows safer betting
and gaming is core to
all that we do.
The cornerstone of our Sustainability Charter, and our
most material ESG issue, is to ensure the highest possible
levels of player safety and protection. Over the past 12
months, Entain has continued to pioneer work to combat
betting and gaming-related harm. The Covid-19 pandemic
and lockdowns have presented new challenges to which
we have had to quickly respond to protect our customers,
whilst ensuring that our previous commitments were not
delayed as a result.
As we pass the first-year anniversary of our safer betting
and gaming strategy, Changing for the Bettor, we continue to
progress our priority areas. In 2020, we have further built on this
strategy by introducing our Advanced Responsibility and Care
(“ARC”) programme. This section describes the work behind our
commitment to safer betting and gaming across our industry,
reporting our progress across the seven pillars of Changing for
the Bettor. Our strategy is fully aligned with the UK Gambling
Commission’s principal objectives to ensure that betting and
gaming is crime-free, fair, conducted openly, and protecting
children and other vulnerable persons. We pursue these objectives
across all our global operations.
We continue to be part of a changing regulatory environment.
In December 2020, the UK Government announced a review
of the Gambling Act, calling for evidence from stakeholders.
We completely support and welcome the review, which is a step
towards creating the highest possible regulatory standards
without driving the most vulnerable customers into the unlicensed
black market. In 2021, we will continue compiling evidence
and coordinating our response with other betting and gaming
operators, together with our industry body, the Betting and Gaming
Council (“BGC”) to ensure the best possible outcomes for players
and the regulated marketplace.
In 2020, we further scaled up our spend on research, education,
and treatment (“RET”) of problem betting and gaming to 0.75%
of gross gaming yield (“GGY”). This was provided directly to our
partner organisations, and through the Entain Foundation (please
refer to page 53). The four largest operators in the UK continue
to deliver on their commitment to increase RET funding to 1%
by 2023 – ten times higher than the Gambling Commission’s
guidance. Entain has gone further and committed to reach this
ten-fold increase one year earlier by 2022. GambleAware will be
responsible for commissioning the new funding.
To demonstrate the strategic significance of safer betting and
gaming, we will incorporate a safer betting and gaming metric
into remuneration. From 2021, colleagues will be assessed against
whether certain milestones have been achieved in implementing
our Advanced Responsibility and Care programme, as part of the
conditions of their annual bonus.
With this renewed focus, we are doubling down on our ESG
leadership position within the sector. In 2020, we retained our
position in the Dow Jones Sustainability Index as the only European
betting and gaming company, as well as our membership of the
FTSE4Good Index. Our efforts to promote safer betting and gaming
were also recognised at the EGR Operator Awards, the industry’s
premier awards event, where Entain was named Safer Gambling
Operator of the Year and at the SBC Awards where we were
awarded the title of Socially Responsible Sportsbook of the Year.
Read more about our Sustainability
Charter: pages 20–21
Entain plc | Annual Report 2020 Strategic report 37
1.
Understand the problem
and best solutions
Our flagship initiative on understanding the multi-faceted issue of
problem betting and gaming is our £5.5m commitment to a five-
year partnership with Division on Addiction, a Harvard Medical
School Faculty. We provide a detailed update of this partnership
see page 38. As well as reaching major milestones in the research
itself, in 2020 we started using the results to inform product
design and customer interactions as part of our new Advanced
Responsibility and Care (“ARC”) programme.
The issues of harm prevention
and player protection have never
been so relevant in the UK, Europe
and increasingly in the USA. The
programmes with Entain and Entain
Foundation US are vital to the
populations we collaborate with
and we look forward to a successful
and impactful 2021.”
Paul Buck
Chief Executive, EPIC Risk Management
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 38
Safer betting and gaming continued
Cutting edge research into problem
betting and gaming behaviour with
Division on Addiction, a Harvard Medical
School Faculty.
2020 marked the second year of the five-year research
collaboration between The Division on Addiction and Entain
to better understand and reduce the potential for problematic
betting and gaming behaviour. Much of the project’s activity in
the year focused on sharing our knowledge more widely and
advancing the first research studies involving Entain player
records, with highlights across seven topic areas including
completed and ongoing research:
Safer betting and gaming limits. One peer-reviewed paper
evaluating lower risk betting and gaming guidelines is now
published in Psychology of Addictive Behavior.
Betting and gaming and self-harm. One peer-reviewed
paper about the association between problem betting and
gaming and self-harm is now published in Addiction Research
& Theory.
Updating the epidemiology of internet betting and
gaming. Continued work to determine how betting and
gaming has changed from reports more than a decade ago,
with three papers under review at high-quality journals.
Our partnership with EPIC Risk
Management
We are now in the third year of the partnership with EPIC
Risk Management, the leading harm reduction consultancy.
The partnership continues to grow from strength-to-strength
and deliver some of the most innovative and ground breaking
harm prevention programmes anywhere in the world.
Notable achievements in 2020
Delivery of face-to-face and virtual state school awareness
sessions to over 130 schools and 25,000 pupils aged 15+.
The sessions covered important areas including product
safety, advertising, the potential harms of betting and gaming
and real-life personal stories from those with lived experience.
Working with our senior leadership team to ensure harm
prevention is central to all decisions in every part of
the business.
Training key departments on markers of harm, interventions,
effective interactions, affordability and vulnerability.
Creating new innovative partnerships in the US including
with the NFLPA, selected NCAA colleges, Rugby United
New York and research with The Division of Addiction at
Harvard University.
Product safety. Continued work to determine the strength
Impact of Covid-19
of evidence available for product safety features and
interventions in betting and gaming, with one paper under
review at a high-quality journal.
Open Science. Two peer-reviewed papers addressing how
open science can buttress academic-industry research
partnerships and how betting and gaming researchers
understand and engage with open science are now published
in Addiction Research & Theory and International Gambling
Studies, respectively.
Retail triggers and interventions. Analysis of the retail
environment and Entain’s responsible betting and gaming
interactions with retail customers is in progress.
Player survey. A large-scale player survey to understand
how player betting and gaming information relates to diverse
topics like flourishing and competitiveness among Entain
players is in progress.
“With Entain’s support, we’ve been able to make considerable
progress on understanding today’s online betting and gaming
landscape. We look forward to continuing our work with Entain
and striving toward safer play advances together during 2021
and beyond.”
Debi LaPlante, Ph.D
Director, Division on Addiction, Cambridge Health Alliance,
Assistant Professor, Harvard Medical School
While Covid-19 restricted face-to-face contact, projects were
quickly pivoted to digital and virtual delivery. This enabled
the programmes to reach more people in more countries
than ever before. As and when restrictions are lifted, we
envisage returning to a blend of face-to-face and digital
delivery, to maximise the effectiveness and reach of our harm
minimisation programmes.
Looking ahead
As the world reopens, we expect to ramp up the delivery of
our harm minimisation programmes in the UK, Europe and
US. The rapidly regulating US market represents a significant
opportunity to promote our approach to safer betting and
gaming at the start of what is potentially the world’s largest
regulated betting and gaming market. We are excited to be in a
position to pioneer our player protection programmes across the
sporting and academic fields in the US. EPIC will also continue
to work with Entain’s senior leadership to ensure that harm
prevention remains embedded at the core of all decision making.
“The issues of harm prevention and player protection have never
been so relevant in the UK, Europe and increasingly in the USA.
The programmes with Entain and Entain Foundation US are vital
to the populations we collaborate with and we look forward to a
successful and impactful 2021.”
Paul Buck
Chief Executive, EPIC Risk Management
Entain plc | Annual Report 2020 Strategic report Image TBC
39
2.
Educate our key stakeholders
We continue our commitment to partner charities and
organisations, and to their important work preventing vulnerable
audiences from potential betting and gaming harm. This includes
our programme with EPIC Risk Management, which has continued
both in-person and online – especially during lockdown – to
educate state school children. We also worked with EPIC in other
areas. They have provided bespoke training to our customer service
and high-value customer teams (see our Changing Ourselves for
the Better pillar) and high-level advice on our Changing for the
Bettor strategy.
Following feedback from the EPIC sessions, we recognised there
was a gap in the support network – namely for parents and
guardians who are concerned about loved ones and looking
for some additional support and information about betting and
gaming harm. This is why we worked with the Young Gamers &
Gamblers Education Trust (YGAM) to create a digital Parent Hub.
This new portal provides information, activities, and support to
help carers understand the potential risks associated with betting
and gaming – including products such as loot boxes, the digital
items that are bought with real-world money and contain random
items of unknown value.
In 2021, we will continue to work with these organisations to
educate our key stakeholders. In February, we launched The
Players’ Panel in the UK, providing consumers a voice on the issues
around betting and gaming. This comes at a critical moment for
the 99% of the UK’s consumers who bet safely and responsibly
– but whose interests are often overlooked in the debate around
regulatory changes which impact what they do in their leisure
time. The views of the Players’ Panel are their own and they will
be interacting with political decision-makers, stakeholders and the
media to give the perspective of the everyday customer.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 40
Safer betting and gaming continued
4.
Empower customers
In November, we launched our new Advanced Responsibility and
Care (“ARC”) programme. ARC builds on our existing work on
markers of protection, where we have developed evidence-based
‘markers’ that may suggest a player is exhibiting risky behaviour.
The programme aims to deploy the Group’s proprietary technology
platform and behavioural play data to provide proactive end-to-
end player protection and interaction. This will allow us to monitor
real-time interactions with players across our brands, intervening
before harm occurs.
As well as our partnerships, we have also engaged world-
leading expertise to support the delivery of the ARC programme.
In November 2020, we were delighted to announce the Professor
Mark Griffiths, Distinguished Professor of Behavioural Addiction
and Psychology at Nottingham Trent University.
Professor Griffiths’ work will be instrumental in delivering ARC.
He will work with the business to apply anonymised findings
from the behaviours of over 160 million players on Entain’s
global database to help develop stronger rules, measures
and interventions.
We introduced a series of safer betting and gaming tools, including
our curfew deposit blocker, and the ability for players to set their
own max stake limits. The latter has been fully rolled out across
all of our slots brands, with the roll-out across our sports brands
completed in January 2021. In 2020, there was an 84% increase
in customers setting a time and spend limit with our brands
when compared to 2019. Over the same period the percentage
of customers using time-outs increased by 102%. We also found
that customers who use a voluntary safer betting and gaming tool,
reduce their wagering by 55% and their deposit limits by 56%.” We
also continued to promote the use of the GAMBAN software, which
is freely available to all of our customers.
78%
decline in total betting and gaming advertising exposure
over the full duration of live sport pre-watershed
programmes
3.
Promote responsible attitudes
The third pillar of our safer betting and gaming strategy focused
on responsible attitudes toward advertising. We have a history
of leading the industry in this area, being the first UK betting
and gaming company to implement a whistle-to-whistle
advertising ban. After its first full year since the ban, total betting
and gaming advertising exposure over the full duration of live
sport pre-watershed programmes declined by 78%, resulting
in 103 million fewer advertising views between comparative
weekends. In addition, betting and gaming advertising views by
children (aged 4-17) reduced by 70% over the full duration of live
sporting programmes.
During lockdowns, we increased responsible betting and gaming
messaging on our homepage and throughout all websites, with a
new page advising on how to keep betting sensible and enjoyable
during the current crisis. Entain gaming brands are also running
responsible betting and gaming-led, multi-channel advertising and
marketing campaigns to promote responsible betting and gaming
to customers while they enjoy time on our sites.
We continue to work proactively with regulators to develop
advertising standards as part of our work in regulating markets.
For example, we have been engaging with the European Gaming
and Betting Association (“EGBA”) to help develop a responsible
advertising code for the betting and gaming sector in EU markets.
160,000,000
players on Entain’s global database to help develop
stronger rules, measures and interventions
103,000,000
fewer advertising views between comparative weekends
84%
increase in customers using our safer betting and gaming
tools to set time and spend limits
Entain plc | Annual Report 2020 Strategic report
5.
Fund treatment for those in need
As part of our spend on RET, we support charities and organisations
that are helping those suffering from problem betting and gaming
recover. In the UK, we continue to partner directly with Cognacity
at Leon House – supporting them to provide betting and gaming
treatment services. Our contributions through our RET spend also
fund treatment via GamCare, the US National Council on Problem
Gambling, Gordon Moody, Digital Therapy Solutions, other national
gaming addiction and support charities in Austria, the Spielsuchthilfe
Gemeinnuetziger Verein, and in Spain, FEREJ.
41
6.
Champion responsible product design
As our Changing for the Bettor strategy continues to mature, we
see a stronger interconnectivity between the seven strands of
our approach. One of the most pronounced links is that between
our ARC programme – outlined on page 9 – and championing
responsible product design. By embedding more advanced risk
markers into our product design, including automated real-time
interventions, we will further empower our customers to use our
products safely.
We are working with leading experts to design a code of conduct
for product design, both within our business as part of our and for
external suppliers. We are currently part of the industry working
group under the Betting and Gaming Council to produce an
effective industry code for product design. This is an area where to
be effective as a company, we need commitment and buy-in from
the wider industry.
The Group has also partnered with Mindway AI and Future
Anthem. By doing so, we are utilising behavioural, neuroscientific,
and academic-based algorithmic learnings to pioneer world
leading harm minimisation solutions. Embedding our understanding
of the problem and best solutions to inform our product design as
well as contributing to the development of ARC.
Protecting our players also means protecting personal data.
That is why we have embedded privacy-by-design, ensuring that
we balance the need for data-driven insights to enhance player
protection, whilst also protecting our customers’ personal data
and complying with data privacy laws. Our data privacy teams
are working with our customer insights experts to understand
our customers’ level of trust with Entain processing their data.
More on our work on data privacy is included on page 52.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 42
Safer betting and gaming continued
7.
Change ourselves for the bettor
We are determined to change the mindset of our industry, starting
with our own Company. In 2020, we continued to work on making
safer betting and gaming underpin everything that we do. We did
this through increased colleague training and engagement across
the board, growth and capacity building of our safer betting and
gaming teams, and incorporating safer betting and gaming factors
into remuneration.
All staff are required to undertake training on safer betting
and gaming, with additional tailored training for specific roles.
For example, we partnered with EPIC Risk Management to train our
customer service and VIP teams. We also delivered behavioural and
interaction training delivered to teams delivering formal safer betting
and gaming interactions.
In 2020, we reported that we’ll introduce a safer betting and gaming
metric that will be used as part of Entain colleagues’ annual bonus
assessment. From 2021, colleagues will be assessed against the
successful delivery of the Group’s ARC programme. See pages 36 to
42 for further details on the safer betting and gaming metric.
Organisationally, our anti-money laundering and safer betting and
gaming functions have been brought closer together, with both
now reporting into the newly created role of Head of Operations
for Safer Gambling and Anti-money Laundering. This new way of
working will combine the expertise of both teams to create a more
holistic view of our customers to manage risks and provide the best
possible player protection.
We also appointed a Customer Ombudsman Director (“COD”).
This innovative new role will ensure that the customer is protected
in everything that Entain do. The COD requires proactive and
reactive initiatives to improve the customer experience, both at
the strategic and process level. The COD evaluates the quality of
interactions with our players, reviews how complaints are handled,
and suggests ways in which we can improve our service in a
measured, consistent and responsible manner whilst ensuring the
business is protected from unjustified complaints.
Safer betting and gaming
performance
2020
2019
2018
Cash and in-kind
contributions
towards responsible
betting and gaming
charities
Customer interactions
regarding problem
gambling
£9.7m
£3.6m
£2.5m
1,391,901
1,072,416
1,124,079
Customer complaints1
15,822
22,543
13,503
Customer complaints
which specifically relate
to a betting and gaming
transaction1,2
1,723
2,338
2,771
Self-exclusions made
70,170
147,4733
334,746
Robberies
45
110
154
Anti-Social Behaviour
incidents (“ASB”)
4,760
6,065
8,236
Assaults
204
345
455
1. Data covers all UK licences.
2. Data only includes self-exclusions made via Entain’s own processes (e.g. via
customer services), and does not include third-party self-exclusion schemes such
as, for example, GAMSTOP (National Online Self-Exclusion Scheme) and the Multi
Operator Self Exclusion Scheme.
3. Data has been re-stated from 2019 Annual Report.
Read the Report of our ESG
Committee: pages 96–98
Entain plc | Annual Report 2020 Strategic report 43
Covid-19
Putting our
colleagues and
customers first
2020 introduced unprecedented and
serious challenges to businesses,
society and individuals, and we are no
exception. Following the announcement
of lockdowns and additional restrictions
to protect citizens and health care
systems, in line with Government
directions we suspended our entire
retail estate from March to June 2020,
with subsequent regional suspensions
based on the tiered systems and
restrictions in the different UK nations.
Our priority through this challenging period is to continue
to adapt to keep our colleagues and customers safe. There
are still many uncertainties around the further course of
the Covid-19 pandemic and its long-term impacts, but we
hope that by putting customers and colleagues first, we
will emerge stronger at the other end.
Protecting our colleagues
Shop closures meant that 15,835 of our Entain colleagues were
furloughed at some point in 2020. All colleagues that were placed
on the UK Government’s furlough had their payments topped up
by Entain to full salary. Teams across Entain also worked hard
to support colleagues in every corner of our business using a
comprehensive suite of wellbeing tools such as Unmind and the
Employee Assistance Programme to support wellbeing, weekly
management podcasts to share latest business news and
multiple engagement activities to ensure our colleagues remained
connected to each other.
Prioritising wellbeing
To support our colleagues through these challenging times, we
accelerated many of our wellbeing initiatives. We focused on
offering free 24-7 support for everyone in Entain. This was via both
a new partnership with Unmind, a digital workplace mental health
platform with science backed resources and also the global rollout
of our Employee Assistance Programme. From a Pulse Survey in
May 2020, 87% of colleagues reported that they felt that Entain
genuinely cared about the wellbeing of colleagues. For more
information on our approach to wellbeing, please refer to page 48.
Staying connected
We found new ways to communicate with colleagues to keep
everyone connected to both Entain and each other. Through regular
podcasts, virtual events and updates, our executive team shared
the latest on business-critical topics and more personal news.
Our May 2020 Pulse Survey confirmed that 92% were satisfied
with Entain’s response to Covid-19 and 88% were getting what
they needed from their manager.
All colleague virtual sessions with the executive team are now a
regular fixture, sharing stories from across the business, need to
know updates and providing a forum for listening.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 44
Covid-19 continued
We have given colleagues a platform to share their amazing
stories of working together whether that be raising money for
charity or keeping up the team spirit when working from home.
Entain Live, our annual all colleague event, went virtual this year,
with over 10,000 people joining to hear who we are and where
we’re heading with the launch of our new strategy, purpose
and vision.
Learning & Leading
Through Learning@Entain and Managing@Entain, we have
provided virtual training content for colleagues and people
managers to stimulate professional development. See pages
46-48 for more detail.
Protecting our customers
While in-store betting and gaming has fallen dramatically,
the pandemic and associated restrictions have introduced
unprecedented levels of isolation and anxiety whereby at-risk
online gamblers may find themselves in a vulnerable position.
We were one of the first operators to introduce additional
safeguards. In addition, we committed to Betting and Gaming
Council (“BGC”) ten-part pledge to protect our customers
throughout the pandemic, and implemented the UK Gambling
Commission’s guidance on prioritising customers through the
national lockdown.
Read more about our customer-centric
approach: pages 10–14
Entain plc | Annual Report 2020 Strategic report 45
Protecting our customers during Covid-19
1.
Increase safer betting and gaming messages
across all sites and direct to all customers.
2.
Step up interventions if customers increase time
and spend beyond normal pre-crisis patterns.
3.
Actively promote deposit limits.
4.
Take action to ensure appropriate and responsible
advertising, including monitoring volume of placements.
5.
Report all illegal, rogue advertising from black market
online operators.
6.
Enforce a one-strike-and-you’re-out policy where
affiliates breach pledges.
7.
Signpost help to GAMCARE and the National Gambling
Helpline and GamStop for self-exclusion.
8.
Ensure continued funding for Research Education
and Treatment (“RET”).
9.
Provide welfare checks and wellbeing help for staff.
10.
Support the UK government’s ‘National Effort’
with volunteers and facilities.
We increased responsible betting and gaming messaging on our
homepage and throughout all sites, with a new page providing
dedicated advice on keeping betting sensible and enjoyable during
the crisis. In addition, gaming brands ran responsible betting and
gaming-led, multi-channel advertising and marketing campaigns
to promote responsible betting and gaming to customers while
they enjoy time on our sites.
We took this further, introducing a range of additional
safeguarding measures to ensure that we are able to rigorously
monitor and protect anyone who may be vulnerable at this time.
These measures include two new Markers of Protection indicators
to our safer betting and gaming algorithm, to factor in the evolving
betting and gaming behaviour caused by the pandemic, enabling
the identification of potentially problematic betting and gaming
behaviour at an earlier stage.
In addition to promoting deposit limits as part of our safer betting
and gaming promotion, we introduced a new maximum stakes tool
across our slots brand.
We adopted BGC’s voluntary ban on all UK broadcast gaming
advertising, and its replacement with responsible betting and
gaming messaging during the lockdown period.
We continued to work with local enforcement agencies if we
detect these issues, and encourage colleagues to speak up if they
spot anything that breaches our employee Code of Conduct.
Specific guidance and restrictions mandated to all affiliates
preventing them from referencing the pandemic or encouraging
excessive play due to boredom or isolation. This advice includes a
specific blacklist of banned terms.
We continued to promote GAMBAN throughout 2020.
In 2021, we will continue as planned to contribute 0.75% of
UK GGY to RET – this will be delivered despite the impact of
the pandemic.
Due to the pandemic, we brought forward our delivery of Well-
me, Entain’s colleague wellbeing strategy, to provide additional
support for our staff. This is outlined above.
All stores implemented the NHS Track and Trace procedures.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 46
Covid-19 continued
Keeping our shops safe for everyone
When our stores were able to open again, we took every measure
possible to ensure our colleagues and customers’ safety.
Given the unprecedented action required to stop the spread of the
virus, we rewrote our shop operating procedures, and invested over
£3m in implementing social distancing measures. We reopened all
our 3,000 shops with strict procedures in place, including:
Limited shop occupancy levels, with a maximum of one customer
per 10m2.
Signage and floor marking providing direction whilst in the shop.
Protective equipment, hand-sanitising products and screen pens
available for our colleagues and customers.
Machines dividers, sneeze screens, and till dividers.
Enhanced training and utilisation of our cleaning teams.
We participated in the UK’s NHS Track & Trace system to identify
and isolate colleagues who may have been in contact with
someone who had tested positive for Covid-19. Colleagues who
displayed symptoms, even minor, to self-isolate immediately.
We opened a hotline to help local teams deal with staff being
unexpectedly off work.
Supporting our communities
The pandemic has not prevented us from supporting our
communities. In September 2020, we launched the Pitching In
Investment Fund – a major new multi-million-pound investment
programme designed to support and promote grassroots sports.
The programme will deliver vitally needed support at a time when
sports clubs and organisations are faced the unprecedented
impact on their finances as a result of the Covid-19 pandemic.
For more information on the Entain Foundation, refer to page 53.
I am delighted to be taking up the role
of ambassador for Pitching In, as I’m
passionate about the importance of
investing in grassroots sports and in
developing young talent. I started out
playing for Wealdstone FC before joining
Coventry City, so I understand how
important funding is to the non-league
game. Grassroots football is facing
huge challenges at the moment and
many clubs are struggling to stay afloat.
Entain’s Pitching In investment will help
make a big difference to hundreds of
clubs and thousands of players across
the country.”
Stuart Pearce
Pitching In Ambassador
Entain plc | Annual Report 2020 Strategic report Investing in people and communities
47
One of the key pillars of our new Sustainability Charter
is to continue investing in our people and communities.
We have a long history of recruiting, retaining, and
nurturing top talent, and this remains a key part of our
business – especially as our people are integral in delivering
technology-enabled entertainment opportunities. We also
contribute to the wider communities in which we operate,
which extends to supporting community organisations
via the Entain Foundation and reducing our impact on
the environment.
Best place to work
Everyone’s in the Game: Diversity and Inclusion at Entain
Entain is a people-driven business in a highly dynamic sector.
As our international operations grow, we recognise the need to
identify, retain, and develop talent from many backgrounds to
meet our customers’ needs and stay at the forefront of innovation.
We launched our international diversity and inclusion (“D&I”)
strategy in 2018, Everyone’s in the Game, which set out a three-
year roadmap towards a more inclusive business. The strategy
set out initiatives and interventions to take place across four focus
areas: recruitment, process & policy, people development and
awareness & education.
In our final year of Everyone’s in the Game strategy, we understand
that there is still plenty of work to do. And whilst across our
business, 47% of our colleagues are female – slightly above the
industry average of 46% – this drops down to 23% at the Senior
Manager level. This represents an improvement over the previous
three years, but we recognise there is still room for improvement.
At Board level, the share of female Directors was 30% at the end
of 2020, rising to 40% at the date of publication of this report
(4 March 2021). With our renewed focus on stronger governance
through our Sustainability Charter comes a drive from the Board
and Nominations Committee to bring greater diversity at the
Director level.
We have engaged with the wider sector through the All-in
Diversity Project1 – an industry-driven initiative that benchmarks
diversity, equality, and inclusion for the global betting and gaming
sector, driving positive change. As a Founding Member, we have
accelerated our leadership role in this area by providing guidance
and support sharing best practices and resources with other
organisations within the sector. In 2020, we were delighted
to be recognised by the initiative, with Entain ranking first on
the All-Index list – the industry benchmark on diversity and
inclusion practices.
Entain have demonstrated a commitment
and passion to D&I which clearly runs
throughout their global business. Their drive
to continuously improve is a great example
to the whole sector of what is needed to
make further progress and help us become
a more inclusive industry.”
Kelly Kehn
Co-Founder of All-in Diversity Project
Diversity at Entain
2020
2019
2018
Employees worldwide
23,987 24,614 25,541
Female employees
11,336 12,189 12,422
% female employees
47%
50%
49%
Part-time employees
10,138 11,269 10,497
% part-time employees
42%
47%
42%
Employee Engagement Index
N/A2
57%
53%
Median hourly pay difference
between male and female colleagues
(Gender Pay Gap)
Mean Hourly pay difference
between male and female colleagues
(Gender Pay Gap)
7%
4%
3%
15%
18%
17%
Median bonus pay difference
between male and female colleagues
13%
36%
25%
Mean bonus pay difference
between male and female colleagues
19%
83%
85%
2. Due to Covid-19 and the launch of the Entain brand, the 2020 YourVoice employee
survey was postponed until 2021.
1. The All-Index 2019 Annual Report, All-In Diversity Project
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 48
Investing in people and communities continued
Gender Diversity at Entain
Well-Me: Wellbeing at Entain
Group Board
30%
Senior Managers
All Employees
23%
47%
)
%
3
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(
6
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Male
Female
At Entain, we’re working to create a
culture that promotes positive wellbeing
every day of the year – not just for a
week – but the Well-me Festival was
a chance for our colleagues to have
a full-on week of all things wellbeing
and hear from our senior leaders, our
partners and top experts in the field.”
Stella Gavinho
Senior Heath and Wellness Manager
To support our colleagues through this challenging time, we
accelerated the implementation of our three-year wellbeing
strategy. The ‘Well-Me’ programme was launched in 2019 to help
our colleagues feel healthy and happy at work and at home. It cuts
across three focus areas:
‘Think Well’ – Supporting our colleagues’ mental and
emotional health.
‘Live Well’ – Supporting our colleagues’ physical health.
‘Work Well’ – Making sure our working environment promotes
well-being.
Our priority in 2020 was to support colleagues in taking care of
their own wellbeing through challenging times. During the first
UK lockdown, we partnered with Unmind to offer a free mental
health platform. Unmind provides clinically-backed digital tools for
all colleagues to proactively look after their mental health. 15% of
Entain colleagues have registered to date, a figure that favourably
compares to peers. We also delivered face-to-face and virtual
resilience-building sessions to over 700 colleagues. In October
2020, we rolled out our Employee Assistance Programme globally.
Every colleague at Entain and their immediate family can now
receive professional help at any time, with 8.5% of our colleagues
taking advantage of this in 2020. During October, we also
organised our Well-Me Festival – a week-long virtual event that
engaged over 4,000 colleagues across the globe and supported
World Mental Health Day. We also launched our ‘Live Well’
programme that provides resources on sleep, hydration, exercise,
and nutrition.
2021 will see us bedding in the ‘Think Well’ and ‘Live Well’
programmes further, and implementing the last strand of our
strategy: ‘Work Well’. The Covid-19 pandemic proved that
homeworking is feasible and, for some of us, beneficial. We know
that many Entain colleagues want to retain that flexibility post
Covid-19. We will develop an agile working policy to empower
colleagues to choose where and how they work. Partnering with
UnWork, we will also redesign our London office to create inspiring
and collaborative workspaces. This was among our first examples
of our work on the Future of the Office – an initiative being led by
our Director of Property to incorporate lessons learnt and ways
of working during the pandemic into business as usual. We hope
this new way of working will positively impact our colleagues’
wellbeing, as well as our environmental footprint by reducing
daily commute.
Health, Safety and Security (“HSS”) remain core priorities for us.
We continue to encourage a positive health and safety culture
throughout the business and to maintain a safe environment for
our customers and colleagues. To that effect, we approach HSS
risks proactively, using a fully integrated policy and management
framework that allows us to identify risks early and act accordingly.
3. Office for National Statistics, Coronavirus and depression in adults,
Great Britain: June 2020.
Entain plc | Annual Report 2020 Strategic report
49
Committed to colleague development
In 2020 we revolutionised how we learn at Entain. In March, we
launched our first, truly global learning called “The Moments
that Matter”. Delivering 111 new pieces of content to support our
3,300+ leadership population in leading our people during the
pandemic. In Q3 we delivered ‘The Virtuals’, a two-part, two-hour
session for our people leaders, focusing specifically on leadership
style and leading with intention. In Q4, to support the rebrand
from GVC to Entain, the learning team delivered 12 sessions to
support landing our new purpose and leading the Entain revolution.
To enable our people to deliver our new corporate strategy, in Q1 of
2021, we launched a custom-built performance platform – Entain
& Perform – and hosted 28 two-hour learning camps to 515 of
our people leaders to support the launch and really embed our
high-performance philosophy and culture. The total investment in
learning across retail, corporate and digital for 2020 was £1.2m.
Our learning stack for 2021 focuses on selected key areas that
we’re investing in: our Performance Philosophy & Process (Entain
& Perform), our People leader learning strategy (Entain & Lead),
our professional qualifications & sponsorship (Entain & Qualify),
Technical, functional & future skills (Entain & Skill), behavioural
learning tracks for all our people (Entain & Grow), new talent
programme (Entain & Land), people Hiring Skills (Entain & Hire),
diagnosing regrettable leaver reasoning (Entain & Leave),
Compliance Learning Strategy (Entain & Mandate) and creation of
The Learning Room – our central learning platform.
We are also committed to apprenticeships as one of the most
effective tools for social mobility. In 2020, we used 23.9% of
our apprenticeship levy. 169 Entain colleagues enrolled on
apprenticeships, with 44% of them working towards GSCE or
A-level equivalents. To date, we have supported over 50 colleagues
to attain level-2 functional skills in Maths and English.
The focus of our learning team is to create, build and foster a
high performance, learning focused culture creating somewhere
where great people want to join, stay, move, learn, grow, flourish
and perform. We make sure our performance culture is lived and
breathed through all we do and how we act. We work hard to be in
our business, to ensure all our stack is aligned to our purpose and
our business priorities. Through our organisational wide approach
to learning, we will play our role in revolutionising betting and
gaming to create the most exciting and trusted entertainment for
every customer.
Best place to work performance indicators
2020
2019
20184
Central L&D investment
£1.2m
n/a
n/a
Whistleblowing incidents reported
and investigated
Employee accidents
Employee reportable incidents
Public accidents
Public reportable incidents
34
137
4
31
0
34
179
8
24
0
2
292
12
287
3
4. Proforma figures for both Entain and Ladbrokes Coral combined businesses for the
relevant calendar year.
Reduce environmental impact
With climate change already affecting the lives of millions, limiting
global warming to no more than 1.5oC is one of the biggest
challenges facing society. With our global network of offices, over
4,500 retail stores and stadia, and business travel, we understand
that we have a role to play in reducing our greenhouse gas (“GHG”)
emissions and environmental footprint. It was a year of firsts
for our environmental work. We received our first independent
verification of GHG emissions data from the Carbon Trust – a
trusted third-party specialising in GHG emissions reduction and
resource efficiency. It was also the first year that we reported to
CDP’s Climate Change questionnaire to benchmark our climate
approach against peers, scoring a D for this first disclosure. We are
also reporting our first Task Force for Climate-related Financial
Disclosures (“TCFD”) statement, reflecting the growing importance
that Entain and our investors place on identifying and managing
climate-related risks.
In 2018, we set ourselves a target of reducing our scope 1 and 2
GHG emissions by 15% per colleague by the end of 2021. We are
proud to announce that we have achieved this target early, with
an 15% reduction on 2018 levels in 2020. Despite a downward
trend in our emissions prior to the pandemic, this significant carbon
reduction in 2020 was undoubtedly due to our shop and office
closures due to the lockdown. However, our trend of GHG emissions
reductions up to March 2020 data indicate that we were on track
to meet our target even under a business-as-usual scenario, due to
our rolling-out of energy efficiency measures taken as part of our
shop refurbishment scheme. With our GHG reduction target period
set to end at the end of 2021, we plan to step up our ambitions on
climate change, and will develop and set a new ambitious science-
based target to be effective from the beginning of 2022.
Understanding that there are emissions left over even after our
reduction measures, we also invested in GHG offsets for the first
time. We purchased these offsets from Brynk, an independent
platform which facilitates tree planting and reforestation projects,
and we’ve funded the planting of half a million mangrove trees
already. By 2032 it’s expected that these alone will be balancing
our global scope 1 and 2 emissions. We will continue to evolve
our approach to offsetting in line with best practice. We are also
looking to actively source our energy from renewable sources
and from April 2020 we switched our UK electricity contract to
100% renewable energy, to complement the renewable supply we
already use in the Republic of Ireland. This now amounts to over
85% of the Group’s total electricity consumption that is actively
sourced from renewables.
We made progress towards ISO14001:2015 Environmental
Management System accreditation, which will help demonstrate
that our processes are in line with best practice. Our first physical
audits will take place in 2021, as we will increase the coverage
of the business covered by this accreditation. We will also
continue to work with the Carbon Trust to achieve their Carbon
Management standard.
5. All water withdrawn is from municipal water supply.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 50
Investing in people and communities continued
Whilst GHG emissions is our most significant environmental
impact, we also measure and look for ways to reduce our waste
and water consumption. We started deploying a new recycling
programme across our shops, which we plan to roll out fully as
our retail estate reopens in 2021.
It is also important to bring our colleagues along on the journey
and highlight their key role in reducing our impact. We do this by
offering an e-learning module that gives participants a better
understanding of Entain’s impact on the planet, and how they
can help reduce our environmental footprint. In 2020, 65% of
colleagues had completed the module. When more colleagues
return to Entain offices in 2021, we will also continue to build our
Green Ambassadors – a 120-strong network that was established
in 2019 across the Group to help us identify practical ways we can
improve environmental efficiency in the workplace.
Reporting on climate-related risks and
opportunities aligned with the TCFD
Entain supports the recommendations of the Task Force
for Climate-related Financial Disclosures (“TCFD”).
The recommendations fit well with our new Sustainability
Charter to help us achieve long-term success. We took our
first step towards implementing the TCFD recommendations
in 2020, by reporting our first CDP climate change submission
in 2020. We will take a step-wise approach to implementing
the recommendations, with the following page being our first
TCFD statement.
Scope 1 and 2 GHG emissions
Tonnes CO
2e
2020 Total Scope 1&2:
29,110
2020
2019
2018
Scope 1
Scope 2
824 / 28,286
3,083 / 37,076
3,304 / 43,286
GHG emissions intensity (2021 target: 1.55)
Tonnes CO2e/headcount
1.22
2.00
1.50
1.00
0.50
1.82
1.54
1.22
2018
2019
2020
2021
Scope 1+2/employee
Target
We all need to play our part to address
the challenge of climate change and we
are committed to leading the industry to
help build a sustainable future.”
Jette Nygaard-Andersen
CEO
Entain plc | Annual Report 2020 Strategic report
51
Task Force for Climate-related Financial Disclosures (“TCFD”) Statement
Governance
Strategy
The effective understanding, acceptance and management of risk is fundamental to the Group
achieving its strategic priorities. Climate-related risks and opportunities are included within our
risk governance framework, which is outlined on risk management process on pages 70–71.
Responsibility for overseeing this framework is with the Risk Committee, which is overseen
by the Audit committee.
In addition, our board-level ESG Committee is responsible for steering our approach
to environmental issues, including climate change and who has recently approved our
updated environmental policy.
To double-down our focus on the environment and climate change, we formed an
environmental steering committee. Reporting to the ESG Committee, its purpose is to
advise on the environmental strategy and its implementation globally.
We will continue to encourage and enhance connected, strategic thinking about the
risks that climate change poses to the business, across divisions and functions.
Risk management
Our overall risk management framework is overseen by the Audit Committee, with the
Risk Committee responsible for managing it.
Metrics and targets
The risk management policy and framework outline an iterative approach between the
top down view of commercial risk and the bottom up assessment of operational risks.
Physical and transition climate-related risks have been identified on our operational risk registers.
To date, climate related risks have not been escalated to the Group risk register and thus
climate-related risks have not been deemed as a principal risk.
In the coming year, we will take steps towards systematically reviewing the risks and
opportunities that climate change pose to Entain over the medium and long term under
different climate change scenarios. We will provide further details of our progress in 2021.
In 2018, we set a target to reduce our GHG emissions per colleague by 15% by 2021.
We are pleased to announce that Entain has achieved this target one year early, with
a reduction since 2018 levels of 15%. Whilst the Covid-19 pandemic saw a significant
reduction in business travel, office-based working, store opening hours, our trend over
time suggested we were on track to achieve our emissions reductions despite Covid-19.
In 2021, we will continue to drive emissions reductions, and commit to setting a
science-based target ready for our next.
Our environmental KPIs can be found below.
Environmental KPIs, including Streamlined Energy and Carbon Reporting (SECR) data
Total energy consumption (kWh)2
UK
Rest of the world (ROW)
Total GHG emissions3 – direct and indirect (tonnes CO2e)
UK
Rest of the world
Total GHG emissions intensity per employee (tonnes CO2e/headcount)
Total direct emissions (scope 1) – direct (tCO2e)
Total indirect emissions (scope 2) – indirect (tCO2e)
Water withrawal4,5 (cubic metres)
Waste generated6 (kg)
2020
114,863,928
93,149,707
21,714,220
29,110
21,676
7,434
1.22
824
28,286
252,345
7,715
20191
147,154,414
123,723,097
26,253,400
40,160
28,149
12,010
1.54
3,083
37,076
527,694
6,560
2018
155,771,722
46,572
1.82
3,304
43,268
434,475
13,811
1. Energy and GHG data from 2019 differs from that reported in the 2019 Annual Report, due to incomplete data at the time of reporting.
2. Coverage of energy consumption and emissions data is 100% for the UK, and 97.6% globally, by employee headcount. Global and ROW energy and emissions data is scaled up
based on this coverage to estimate totals across global operations.
3. Location-based emissions methodology used for all GHG calculations. Emissions calculated using the GHG Protocol, and consumption data converted to emissions using 2020
BEIS emissions factors and 2020 IEA emissions factors for non-UK grid electricity. We have excluded fugitive emissions from refrigerants, which represent less than 2% of GHG
emissions from our business operations.
4. All water withdrawn is sourced from public water supplies. Data for the UK (our major source of water use) was not available at the time of reporting. 2019 data was used,
and extrapolated based on number of UK-based employees.
5. Water data is sourced from our operations in Austria, Belgium, Bulgaria, Gibraltar, India, Ireland, Israel, Philippines, UK, Uruguay. This makes up 85% of our overall headcount.
Our 2020 figures are not prorated to 100% coverage. Primary data for the UK was unavailable at the time of reporting and we estimated the figure based on 2019 data,
decreasing by 50% to reflect the reductions we observed in our other operations due to the coronavirus pandemic. We will disclose full data in our standalone ESG report
if available.
6. Waste data is sourced from our operations in Austria, Bulgaria, India, Ireland, UK, and Uruguay. This makes up 82% of our overall headcount. These figures are not prorated
to 100% coverage.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 52
Investing in people and communities continued
Supply Chain
Data Privacy & Cybersecurity
Effectively communicating who we are, how we conduct business,
and the high standard we expect of our suppliers is of paramount
importance to Entain. In order to do this, in 2020 we updated our
Supplier Policy, detailing our values, and what we expect from
our business partners and their subcontractors, and outlining
our right to audit. The policy sets out minimum standards on
social, environmental, and ethical issues, and we encourage our
suppliers to exceed these requirements. This policy is available
publicly on the Entain corporate website, and is included in our
standard terms and conditions. All new suppliers and business
partners must formally acknowledge and accept the policy as an
onboarding requirement.
We also continued to strengthen our internal procedures for
identifying supply chain risks – harmonising our processes across
the Group. We conduct due diligence for every new supplier, with
an escalated process for suppliers based on size, risk level, and
strategic alignment. This risk evaluation includes ethical, data
protection, and sustainability standards. Notably, we evaluate
social risks by drawing on the Walk Free Foundation Global Slavery
Index, to determine whether a supplier requires additional checks.
To support our work on driving social and environmental
improvements in our supply chain, we developed guidelines
designed to engage our procurement teams. We will support these
guidelines with colleague training, which will be delivered in 2021.
This training was due be held in 2020, but was reprioritised as our
procurement colleagues needed to meet the supply challenges
caused by the pandemic, and secure supplies of PPE for our stores
and offices to comply with Covid-19 guidelines and keep our
colleagues and customers safe.
Data Privacy & Cybersecurity continues to be a high priority
for Entain, as our technology offering goes from strength to
strength. We take the safeguarding of our customer and corporate
information very seriously. Our approach has been bolstered by
a growth in head count and a strengthening of our governance
procedures, with our Chief Security Officer and our Chief Privacy
Officer (who is also our Data Protection Officer) regularly updating
the Board committees.
In 2020, we further embedded our Data Protection Policy, with
18,000 colleagues completing GDPR training across the Group.
We built on this framework by developing our Data Retention
Policy, which is set to have a transformative impact on our data
management & retention practices and drive operational efficiency
and compliance. Data privacy is also built into in developing our
safer betting and gaming initiatives. Our teams closely collaborated
to strike the right balance between protection harm and customer
privacy. We strengthened our privacy-by-design protocols across
the Group, and we collaborated with other betting and gaming
operators to improve the way we share data on self-excluded
players while protecting our customers’ privacy.
We continued to invest heavily in cybersecurity. This included
expanding our team’s headcount and investing in automation
to free up resources, tools, and external security providers.
We underwent 20 external cybersecurity audits and certified all
new games by independent cybersecurity testing labs. We also
implemented several improvements to our programme:
we extended security responsibility to all Entain group
companies to reduce number of breaches in the organisation;
we moved marketing sensitive information to a protected
environment to reduce exposure to attack; and
we increased security testing and red teaming capabilities to
reduce time to detection of security issues.
This commitment allowed us to score in the top percentile of the
Dow Jones Sustainability Index for cybersecurity, with an overall
79% score (a 10% increase from 2019).
Contributing to the economy by paying taxes and levies
As the Group employs c.24,000 people across over 4,500 retail
outlets and offices in 20 countries, our economic footprint is
significant. During 2020, we paid £962m in taxes and levies across
our countries of operation. This comes in addition to the £524m we
paid in wages and salaries.
Contributing to the economy
2020
2019
20186
Proforma net gaming
revenue (NGR)
Proforma underlying
EBITDA7
£3,628.5m £3,632.7m £3,571.4m
£843.1m
£761.4m
£755.3m
Taxes paid8
£962m
£927m
£949m
Wages and salaries9
£524.0m
£671.2m
£627.1m
6. Proforma figures for both Entain and Ladbrokes Coral combined businesses for the
relevant calendar year.
7. 2018 EBITDA is on a pre-IFRS 16 basis.
8. Includes corporation tax, business rates, foreign tax, Machine Games Duty (“MGD”),
Amusement Machine Licence Duty (“AMLD”), employers, National Insurance
Contributions (“NIC”), VAT, and other duties and levies.
9. Including pension contributions and share based payment costs.
Entain plc | Annual Report 2020 Strategic report 53
Entain Foundation
The Group originally launched its Global Foundation in September
2019 to coordinate and support the Group’s ESG initiatives,
objectives, and donations around the world. In November 2020,
under its new identity as the Entain Foundation, we a committed
to donating £100m over five years to projects including our new
Pitching In programme that supports grass roots sports and
sports people.
The Foundation is initially focusing the four key areas of:
Responsible betting and gaming, sports integrity and betting
and gaming regulation research, education, and treatment;
Grass roots, women’s and disability sport;
Diversity in technology; and
Projects with a clear link to the local community in Entain’s
major office locations.
The Foundation has also taken on responsibility for administering
the Group’s existing CSR projects, including its £2 million
community fund as well as with SportsAid, EPIC Risk Management,
Gordon Moody, the US National Council on Problem Gambling and
the Division on Addiction of Cambridge Health Alliance, a Harvard
Medical School teaching hospital. Our work with safer betting and
gaming charities is included earlier in this report.
Pitching In grassroots sport investment fund
Pitching In has launched at a time when football clubs and sporting
organisations are facing the unprecedented impact on their
finances of the Covid-19 pandemic. Launched in September 2020,
the multi-million-pound, multi-year, investment programme kicked-
off with a flagship partnership with The Isthmian, Northern Premier
and Southern Leagues – collectively known as The Trident Leagues
– which make-up levels seven and eight of the English football
league pyramid.
SportsAid
Through our multi-year strategic partnership with SportsAid,
the charity which supports aspiring athletes, and part of our
Pitching In investment programme, Entain provides British athletes
with financial support, recognition and personal development
opportunities. Each athlete receives an annual award which
contributes towards costs such as travel, accommodation, and
equipment. Through the partnership, Entain is helping 50 up-and-
coming sports stars across the country each year.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 54
Investing in people and communities continued
Ruth Mwandumba
Supported by Entain in 2018 and 2019, Ruth made
a huge social impact over the last year, using her
voice and platform to be an advocate for young
black athletes in Shooting. picking up the GB
Shooting 2020 Social Impact Award at the end of
last year. Ruth has made it her mission to become
a role model in her sport. Ruth has also been
working as a clinical coder at Countess of Chester
Hospital throughout the Covid-19 pandemic and
is now undertaking a PhD in Epidemiology and
competing for the University of Manchester. Ruth is
aiming to compete at the Paris 2024 Olympics.
Inter Milan Football Club – promoting participation
in women’s football
The Entain Foundation has launched a collaboration with Inter
Milan Football Club to promote participation in women’s football
in Italy. Backed by a national media campaign, partnered with
Gazzetta dello Sport, the project is developing a football-related
talent show for aspiring female footballers.
US Fund to Support Research on Sports Wagering
The Foundation has become a Bronze Donor to the Fund to Support
Research on Sports Wagering, which was recently launched by the
US National Center for Responsible Gaming. The objective of this
project, which is first of its kind in the US, is to competitively award
researchers at top tier institutions with the resources needed to
uncover novel insights into what the introduction of legalised,
regulated sports betting means for public health.
Entain plc | Annual Report 2020 Strategic report 55
I started receiving the funding in
April and it’s definitely made a huge
difference already. I’ve been able to
buy new trainers, new kit for training
and equipment to train at home, so it’s
allowed me to stay at the top of my
game in the current climate in which
there is still a lot of uncertainty because
of the impact of coronavirus. I wouldn’t
have been able to stay at my current
level without it, and going forward it’s
going to make a massive difference in
enabling me to afford things like travel
and accommodation, especially now
that I’ve moved to university.”
Aliyah Zaranyika, Netball Athlete
Sponsored by the Entain Foundation via SportsAid
German Sports Integrity Forum
Together with German Bundesliga clubs Borussia Dortmund and
1.FC Koeln, and the sports integrity platform, the Play Fair Code,
the Entain Foundation recently launched the German Sports
Integrity Forum. The aim of the Forum is to raise further awareness
of sports integrity programmes in Germany and other German
speaking countries.
Professional Players Federation
The Foundation has entered a partnership with the Professional
Players Federation (the “PPF”), the national organisation for the
professional player associations in the UK, to fund its anti-match-
fixing player education programmes. The partnership enables the
PPF to support the development and delivery of online learning and
face-to-face education to hundreds of sports people in sports such
as football, cricket, rugby union, golf, darts, and snooker.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 56
Business Review
Financial Results and the use of Non-GAAP measures
Due to the nature of the Group’s lease renewal programme and response to the Triennial Review, the shape of the Group’s underlying
trading results continues to be affected by implementation of the new IFRS 16 “Leases” standard. Whilst the Group’s primary form of
reporting is on a statutory, post IFRS 16 basis, management believe that the provision of financials on a pre IFRS 16 basis, in addition
to the statutory financials, aids in the understanding of the Group’s results. In addition, management have also provided additional
information in the form of Contribution, EBITDAR and EBITDA as these metrics either assist in the understanding of the of the impact
of IFRS 16 adoption, or are industry standard KPIs. Full reconciliations of the statutory results to the pre IFRS 16 financials are
provided below:
2020 results
Net gaming revenue
Revenue
Gross profit
Contribution3
Underlying EBITDAR3
Underlying EBITDA3
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying Group operating profit
2019 results
Net gaming revenue
Revenue
Gross profit
Contribution3
Underlying EBITDAR3
Underlying EBITDA3
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying Group operating profit
Reported
underlying
results1,4
IFRS 16
impact2
Pre IFRS 16
underlying
results
3,628.5
3,561.6
2,308.6
1,740.2
862.1
843.1
(14.8)
(238.6)
(60.2)
529.5
–
–
–
–
–
(78.4)
–
56.1
–
(22.3)
3,628.5
3,561.6
2,308.6
1,740.2
862.1
764.7
(14.8)
(182.5)
(60.2)
507.2
Reported
underlying
results1,4
IFRS 16
impact2
Pre IFRS 16
underlying
results
3,632.7
3,578.1
2,368.8
1,874.9
782.9
761.4
(12.7)
(218.9)
(9.2)
520.6
–
–
–
–
–
(82.5)
–
52.7
–
(29.8)
3,632.7
3,578.1
2,368.8
1,874.9
782.9
678.9
(12.7)
(166.2)
(9.2)
490.8
Notes
1. Excludes the impact of separately disclosed items.
2. IFRS 16 has also resulted in an additional £15.3m of interest in 2020 (£16.8m in 2019).
3. EBITDAR is defined as earnings before interest, tax, depreciation and amortisation, rent and associated costs, share based payments and share of JV income. EBITDA is defined
as EBITDAR after charging rent and associated costs. Contribution reflects gross profit less marketing costs.
4. Reflecting the results of continuing operations
Entain plc | Annual Report 2020 Strategic report 57
Group
Year ended 31 December
NGR
VAT/GST
Revenue
Gross profit
Contribution
Operating costs
Underlying EBITDAR5
Rent and associated costs
Underlying EBITDA5
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating profit6
Reported Results1,2,8:
Reported results1,2,8
Pre IFRS 16 results3,8
2020
£m
2019
£m
Change
%
3,628.5
3,632.7
(66.9)
(54.6)
3,561.6
2,308.6
1,740.2
(878.1)
862.1
(19.0)
843.1
(14.8)
(238.6)
(60.2)
3,578.1
2,368.8
1,874.9
(1,092.0)
782.9
(21.5)
761.4
(12.7)
(218.9)
(9.2)
529.5
520.6
flat
(23%)
flat
(3%)
(7%)
20%
10%
12%
11%
(17%)
(9%)
(554%)
2%
CC4
%
1%
2020
£m
2019
£m
Change
%
3,628.5
3,632.7
(66.9)
(54.6)
3,561.6
2,308.6
1,740.2
(878.1)
862.1
(97.4)
764.7
(14.8)
(182.5)
(60.2)
3,578.1
2,368.8
1,874.9
(1,092.0)
782.9
(104.0)
678.9
(12.7)
(166.2)
(9.2)
507.2
490.8
flat
(23%)
flat
(3%)
(7%)
20%
10%
6%
13%
(17%)
(10%)
(554%)
3%
While 2020 was a year disrupted by Covid-19 with temporary closures in our Retail estates and sports calendar interruptions during
Q2 and Q3, the Group delivered NGR in line with the prior year (+1% cc). In the first half NGR decreased by 11% (-10% cc), with strong
performance prior to the Covid-19 restrictions offset by shop closures and sports cancellations in Q2. Despite the opening and re-closing
of our Retail estate as restrictions were eased and then re-imposed in the second half, the good momentum in online resulted in NGR up
10% (+10% cc) in the second half of the year vs the prior year.
Contribution in the full year of £1,740.2m was 7% lower than last year reflecting the higher Online segmental mix. Operating costs (before
rent) were 20% lower, primarily as a result of cost mitigation actions in response to Covid-19 and ongoing synergy delivery from the
Ladbrokes Coral acquisition. Underlying EBITDA5 was 11% higher at £843.1m.
Share based payment charges were £2.1m higher year-on-year. Underlying depreciation and amortisation was 9% higher following the
ongoing investment in the business and accelerated amortisation on legacy assets no longer used following the migration of Ladbrokes
and Coral in the UK to the Group’s proprietary technology platform earlier in the year. Share of JV loss of £60.2m includes a loss of £60.6m
from the US Joint Venture, BetMGM. Group underlying operating profit6 was 2% ahead of 2019. After charging separately disclosed items
of £170.6m (2019: £686.7m), operating profit was £358.9m, an increase of £525.0m on 2019.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 58
Business Review continued
Online
Reported results1,2,8
Pre IFRS 16 results3,8
Year ended 31 December
2020
£m
2019
£m
Change
%
Sports wagers
Sports margin
Sports NGR
Gaming NGR
B2B NGR
Total NGR
VAT/GST
Revenue
Gross profit
Contribution
Contribution margin
Operating costs
Underlying EBITDAR5
Rent and associated costs
Underlying EBITDA5
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating profit6
Reported Results1,2,8:
11,780.9
12.7%
1,196.8
1,534.8
15.9
11,216.7
11.1%
966.5
1,189.1
15.1
2,747.5
(66.9)
2,680.6
1,708.7
1,147.4
41.8%
(342.5)
804.9
(1.4)
803.5
(4.3)
(120.1)
0.1
679.2
2,170.7
(54.6)
2,116.1
1,367.8
887.2
40.9%
(352.2)
535.0
(1.1)
533.9
(5.5)
(116.0)
0.8
413.2
5%
1.6pp
24%
29%
5%
27%
(23%)
27%
25%
29%
0.9pp
3%
50%
(27%)
50%
22%
(4%)
(88%)
64%
CC4
%
7%
1.6pp
26%
30%
5%
28%
2020
£m
2019
£m
Change
%
11,780.9
12.7%
1,196.8
1,534.8
15.9
11,216.7
11.1%
966.5
1,189.1
15.1
2,747.5
(66.9)
2,680.6
1,708.7
1,147.4
41.8%
(342.5)
804.9
(16.2)
788.7
(4.3)
(105.8)
0.1
678.7
2,170.7
(54.6)
2,116.1
1,367.8
887.2
40.9%
(352.2)
535.0
(12.9)
522.1
(5.5)
(105.2)
0.8
412.2
5%
1.6pp
24%
29%
5%
27%
(23%)
27%
25%
29%
0.9pp
3%
50%
(26%)
51%
22%
(1%)
(88%)
65%
Our Online business delivered an exceptionally strong performance in 2020 as the business responded to the challenges presented
by Covid-19 providing customers with a great range of products as well as enhanced protection measures. As a result Online NGR
was up 27% (+28% cc) versus the prior year with Q4 being the 20th consecutive quarter of double-digit growth. Whilst Online NGR
growth has clearly benefited from Retail closures during the year, we have also seen market share gains in all of our key territories.
Underlying EBITDAR5 of £804.9m and underlying EBITDA5 of £803.5m were both 50% ahead of 2019.
After adjusting for the impact of the annualisation of 2019 tax and duty increases in the UK, underlying EBITDA5 was 53% ahead.
Underlying operating profit6 of £679.2m was 64% ahead. After charging £304.5m of separately disclosed items (see below), operating
profit6 was £374.7m, £536.2m ahead of last year.
Sports NGR was up 24% (+26% cc) compared to 2019 driven by the increase in Online while shops were closed, and favourable trading
margins. Sports wagers were 5% higher (+7% cc) and sports margins of 12.7% were 1.6pp ahead due to favourable results, product and
geographic mix and increases in retail style betting. We expect margins to normalise over time, particularly once retail reopens around
the world.
Gaming NGR was 29% (+30% cc) higher versus 2019 with the performance particularly strong during Q2 benefiting from lockdowns and
partial substitution from sports following sporting fixture cancellations. Momentum continued in the second half with gaming NGR +27%
ahead of last year indicating growth in the overall market as a result of Covid-19 and market share gains.
In the UK, NGR was 27% ahead of the prior year. UK sports brands NGR was 22% ahead, with strong performance in sports and gaming
across both the Ladbrokes and Coral brands. Sports margins were particularly strong, 2.6pp ahead for the full year, with favourable
results and an increase in the recreational customer base the primary drivers. Gaming NGR was 25% ahead and particularly strong in
Q2, due to lockdowns and a number of new and exclusive product releases. In addition, the launch of Free to Play Games on both brands
during Q2 helped drive a significant increase in the number of recreational actives.
UK Gaming brands NGR grew 40% during 2020. The Foxy brand, in particular, saw strong growth, supported by the launch of exclusive
bingo variants, the ‘Foxy Fabulous’ initiative, continued sponsorship of Friends on Channel 5, a relaunched loyalty scheme and the
rebranding of Foxy Casino to Foxy Games. Bingo products have also performed well, supported by the ‘Bingo like a Boss’ campaign
launched in February 2020, aimed at attracting a more diverse audience to Galabingo.com whilst retaining the existing player base, as
well as the continued high profile sponsorship of ‘The Chase’.
During the year the Group completed the migration of its UK brands on to the Entain digital platform and we have already seen benefits
in improved site and core wallet transactional stability along with improved gaming product depth and promotional capability. We look
forward to future developments which will further optimise the customer experience and leverage our market leading product innovation.
Entain plc | Annual Report 2020 Strategic report 59
In Germany, full year NGR growth was +3% in constant currency. In the first nine months of the year NGR in Germany was + 12% cc,
however the impact of the introduction of the tolerance regime in October which meant switching off casino table games, the introduction
of a €1,000 deposit limit for poker and slots and further enhanced KYC obligations has reduced the size of the overall market, impacting
our performance in Q4. Notwithstanding those changes Germany remains a relevant market for the Group and we continue to invest in
the bwin brand as evidenced by the launch of the bwin.de mobile sports app.
NGR in Australia was 55% cc ahead year-on-year with national lockdowns, strong margins and the reactivation of existing customers
increasing underlying growth. The strength of our brands, market-leading product innovation and racing focused business mix has also
allowed us to capture increased market share throughout 2020. Whilst reactivation of customers was one of the principal drivers of the
NGR growth, customer acquisition has also been stronger than expected during the year, boosted by the displacement of retail customers
and other recreational consumer spending.
In Italy, NGR growth across our three major brands, Eurobet, Bwin and Gioco Digitale, was 53% ahead (+52%cc). The strength of our
omni-channel offering in Italy has ensured that the Group has recaptured a significant proportion of the displaced retail revenue during
lockdowns, with the resulting market share gains confirming Entain’s position as the market leader in our addressable market as well as
driving record numbers of active customers and FTD volumes in Q4.
NGR in Brazil was +56% cc ahead of 2019. The second half was particularly strong, 77%cc ahead year-on-year following the
rescheduling of the Spanish and Brazilian football leagues. Customer acquisition and reactivation has been good with tailored and locally
focused marketing campaigns driving website traffic. As at the end of the year, c58% of the active customer base had been acquired
through 2020.
Partypoker delivered a strong performance with NGR +47% (50% cc) ahead of last year driven by an increased focus on the recreational
customer base and targeted marketing. During 2020, first time depositors almost doubled over the previous year with 47% more active
customers than in 2019, albeit slightly curtailed by the introduction of restrictions from the Tolerance Policy regime in Germany coming
into effect during Q4.
Crystalbet in Georgia continues to grow strongly and lead the market with 40% cc of NGR growth. This reflected a strong performance in
Casino where NGR was 54% cc higher than 2019. Disruptions from Covid-19 resulted in Sports NGR only 2% cc ahead of the prior year.
However, Q4 trends were encouraging with 11% cc growth year-on-year.
Online contribution margin of 41.8% was 0.9pp higher than last year. This was driven by a 1.7pp reduction in the marketing rate, partially
offset by a 0.8pp reduction in gross profit margin as a result of business mix (geographic and regulatory) and the annualisation of UK duty
changes in 2019. As discussed above, online NGR benefited from retail closures, so while marketing spend was £80.7m higher than 2019,
spend did not keep pace with the NGR growth, particularly while sports were cancelled. This has resulted in an artificially low marketing
rate in 2020 of 20.4%. We expect to return to previously guided levels once the market normalises and Covid-19 restrictions are eased.
Operating costs (before rent) were 3% lower than last year as a result of ongoing synergies from the acquisition of Ladbrokes Coral,
partially offset by inflation.
Rent and associated costs were £1.4m in 2020, compared with £1.1m in the prior year, leaving underlying online EBITDA5 of £803.5m,
50% ahead of last year.
Share based payments were 22% lower than last year, underlying depreciation and amortisation of £120.1m was 4% higher and share
of JV income was only £0.1m following the disposal of the Group’s 50% interest in Sportium to Cirsa S.A. in H2 2019, leaving underlying
operating profit6 64% higher at £679.2m.
Total Retail
Reported results1,2,8
Pre IFRS 16 results3,8
Year ended 31 December
NGR/Revenue
Gross profit
Contribution
Operating costs
Underlying EBITDAR5
Rent and associated costs
Underlying EBITDA5
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating (loss)/profit6
2020
£m
857.1
577.5
571.7
(456.1)
115.6
(17.3)
98.3
(1.5)
(115.8)
–
(19.0)
2019
£m
Change
%
1,417.6
961.3
950.6
(655.9)
294.7
(20.4)
274.3
(1.3)
(101.7)
1.0
172.3
(40%)
(40%)
(40%)
30%
(61%)
15%
(64%)
(15%)
(14%)
(100%)
(111%)
CC4
%
(40%)
2020
£m
857.1
577.5
571.7
(456.1)
115.6
(80.9)
34.7
(1.5)
(74.0)
–
(40.8)
2019
£m
Change
%
1,417.6
961.3
950.6
(655.9)
294.7
(91.1)
203.6
(1.3)
(59.9)
1.0
143.4
(40%)
(40%)
(40%)
30%
(61%)
11%
(83%)
(15%)
(24%)
(100%)
(128%)
Our Retail business is made up of our UK & NI business and our European Retail business which operates across Italy, Belgium and
Republic of Ireland. A review of the performance of each of these businesses is provided on the following pages.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 60
Business Review continued
UK Retail
Year ended 31 December
OTC wagers
OTC margin
Sports NGR/Revenue
Machines NGR/Revenue
Total NGR/Revenue
Gross profit
Contribution
Contribution margin
Operating costs
Underlying EBITDAR5
Rent and associated costs
Underlying EBITDA5
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating (loss)/profit6
Reported Results1,2,8:
Reported results1,2,8
Pre IFRS 16 results3,8
2020
£m
2019
£m
Change
%
1,835.2
19.4%
355.0
323.6
678.6
497.3
495.1
73.0%
(401.3)
93.8
(16.6)
77.2
(1.2)
(86.2)
–
(10.2)
3,182.7
17.9%
565.9
561.9
1,127.8
817.7
812.6
72.1%
(585.1)
227.5
(19.6)
207.9
(1.0)
(72.7)
–
134.2
(42%)
1.5pp
(37%)
(42%)
(40%)
(39%)
(39%)
0.9pp
31%
(59%)
15%
(63%)
(20%)
(19%)
–
(108%)
CC4
%
(42%)
1.5pp
(37%)
(42%)
(40%)
2020
£m
2019
£m
Change
%
1,835.2
19.4%
355.0
323.6
678.6
497.3
495.1
73.0%
(401.3)
93.8
(71.4)
22.4
(1.2)
(52.0)
–
(30.8)
3,182.7
17.9%
565.9
561.9
1,127.8
817.7
812.6
72.1%
(585.1)
227.5
(81.7)
145.8
(1.0)
(37.6)
–
(42%)
1.5pp
(37%)
(42%)
(40%)
(39%)
(39%)
0.9pp
31%
(59%)
13%
(85%)
(20%)
(38%)
–
107.2
(129%)
Total UK Retail NGR of £678.6m was 40% behind last year and 36% behind on a LFL7 basis reflecting a year significantly impacted
by Covid-19. Underlying EBITDAR5 of £93.8m was 59% behind and underlying EBITDA5 of £77.2m was 63% behind last year.
Underlying operating loss6 was £10.2m versus a profit of £134.2m in 2019 and, after including the benefit of separately disclosed income
of £231.3m, operating profit was £221.1m, £86.1m ahead of last year.
Sports NGR was 37% behind 2019 and Machines NGR 42% behind with temporary closures due to Covid-19 significantly impacting the
business during 2020. Despite spending large periods of the year with our doors closed, trading has been promising whilst the estate has
been open. In the period pre Covid-19 up to 15th March, LFL NGR was only 5% down despite the annualisation of the Triennial Review
with substitution from displaced B2 spend into sports and competitor shop closures benefiting our estate. During the same period LFL
SSBT wagering was 43% ahead of 2019.
Following the first lockdown, thanks to the professionalism and dedication of our operations team, we were able to open all of our shops
safely on the first day possible. Being able to provide a safe environment for both our colleagues and customers helped volumes return
swiftly, with our omni-channel data showing all cohorts of customers returning to shops. Gaming machines proved to be particularly
resilient and the roll-out of our Next Generation SSBT’s helped volumes return to within single digit of pre-Covid-19 levels. Focus now
turns to store readiness ahead of the re-opening of non-essential retail when permitted and the roll-out of our new till system to our
Ladbrokes estate. We also look forward with our initiatives programme, including “shop of the future” and digitisation, all of which will
help us further cement our position as the market leading retail sports-betting company in the UK.
Operating costs (before rent) were 31% lower than 2019, largely as a result of cost mitigation actions in response to the Covid-19
pandemic, furlough receipts and tight underlying cost control.
Rent and associated costs were £16.6m in 2020, compared with £19.6m in the prior year, leaving underlying EBITDA5 of £77.2m, 63%
lower than 2019.
Charges for share-based payments were 20% higher than last year and underlying depreciation and amortisation of £86.2m was 19%
higher, as a result of the deployment of our new till system and SSBTs across large parts of the estate, leaving an underlying operating
loss6 of £10.2m (2019: 134.2m profit).
At 31 December 2020, there were a total of 2,845 shops in the estate (2019: 3,233). During the period 388 shops were closed as we
complete the resizing of the retail estate as a result of the Triennial Review.
Entain plc | Annual Report 2020 Strategic report 61
European Retail
Year ended 31 December
OTC wagers
OTC margin
Sports NGR/Revenue
Other OTC NGR/ Revenue
Machines NGR/Revenue
Total NGR/Revenue
Gross profit
Contribution
Contribution margin
Operating costs
Underlying EBITDAR5
Rent and associated costs
Underlying EBITDA5
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating (loss)/profit6
Reported Results1,2,8:
Reported results1,2,8
Pre IFRS 16 results3,8
CC4
%
(45%)
1.7pp
(37%)
(46%)
(6%)
(39%)
2020
£m
2019
£m
Change
%
925.5
19.1%
138.8
37.6
2.1
178.5
80.2
76.6
42.9%
(54.8)
21.8
(0.7)
21.1
(0.3)
(29.6)
–
(8.8)
1,659.9
17.4%
218.2
69.3
2.3
289.8
143.6
138.0
47.6%
(70.8)
67.2
(0.8)
66.4
(0.3)
(29.0)
1.0
38.1
(44%)
1.7pp
(36%)
(46%)
(9%)
(38%)
(44%)
(44%)
(4.7pp)
23%
(68%)
13%
(68%)
–
(2%)
(100%)
(123%)
2020
£m
2019
£m
Change
%
925.5
19.1%
138.8
37.6
2.1
178.5
80.2
76.6
42.9%
(54.8)
21.8
(9.5)
12.3
(0.3)
(22.0)
–
(10.0)
1,659.9
17.4%
218.2
69.3
2.3
289.8
143.6
138.0
47.6%
(70.8)
67.2
(9.4)
57.8
(0.3)
(22.3)
1.0
36.2
(44%)
1.7pp
(37%)
(46%)
(9%)
(38%)
(44%)
(44%)
(4.7pp)
23%
(68%)
(1%)
(79%)
–
1%
(100%)
(128%)
European Retail NGR of £178.5m was 38% behind last year (-39% cc) driven by the temporary closure of shops due to Covid-19.
Resultant underlying EBITDAR5 of £21.8m and underlying EBITDA5 of £21.1m were 68% behind 2019. Underlying operating loss6 of
£8.8m was £46.9m behind 2019 and after charging £5.0m of separately disclosed items, operating loss was £13.8m, £29.8m behind
last year.
Similar to the UK, performance during 2020 has been significantly impacted by temporary shop closures across our estates in Italy,
Belgium and the Republic of Ireland. Whilst it has been a challenging year for all of our retail businesses, underlying trading has been
positive whilst shops were open. Prior to the first lockdown and suspension of sport, NGR, aided by strong margins, was 24% cc ahead
year-on-year. Following the re-opening of shops throughout June and July, we saw a quick return of volumes across all of our estates,
with NGR reaching pre-Covid-19 levels prior to the second wave of lockdown restrictions during Q4. This was no more evident than
in Italy, where our strong omni-channel offering enabled us to remain in contact with large portions of our customer base through our
Online product.
Contribution margin of 42.9% decreased 4.7pp driven by geographic mix, the implementation of Covid tax in Italy and costs associated
with supporting our Italian franchisees through the Covid-19 pandemic.
Operating costs (pre rent) were 23% lower as a consequence of cost mitigation in response to shop closures. Underlying EBITDAR5 of
£21.8m and underlying EBITDA5 at £21.1m were both 68% lower than last year.
Share based payments were in line with last year and underlying depreciation and amortisation of £29.6m was 2% higher, leaving
underlying operating loss6 of £8.8m, £46.9m behind 2019.
As at 31 December 2020, there were a total of 1,744 outlets/shops (2019: 1,730): Italy 905 (2019: 883), Belgium shops 304, outlets 402
(2019: shops 311, outlets 397) and Ireland 133 (2019: 139).
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 62
Business Review continued
Other
Year ended 31 December
NGR/Revenue
Gross profit
Contribution
Operating costs
Underlying EBITDAR5
Rent and associated costs
Underlying EBITDA5
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating (loss)/profit6
Reported Results1,2,8:
Reported results1,2,8
Pre IFRS 16 results3,8
CC4
%
(42%)
2020
£m
27.8
22.4
21.1
(25.0)
(3.9)
(0.3)
(4.2)
–
(2.7)
0.3
(6.6)
2019
£m
48.0
39.7
37.1
(37.5)
(0.4)
–
(0.4)
(0.1)
(0.8)
1.5
Change
%
(42%)
(44%)
(43%)
33%
(875%)
–
(950%)
100%
(238%)
(80%)
0.2
(3,400%)
2020
£m
27.8
22.4
21.1
(25.0)
(3.9)
(0.3)
(4.2)
–
(2.7)
0.3
(6.6)
2019
£m
48.0
39.7
37.1
(37.5)
(0.4)
–
(0.4)
(0.1)
(0.7)
1.5
Change
%
(42%)
(44%)
(43%)
33%
(875%)
–
(950%)
100%
(286%)
(80%)
0.3
(2,300%)
On a reported basis, NGR of £27.8m was 42% lower than 2019 as a result of the impact of Covid-19 on our smaller sports-betting
businesses, Telebet, Betdaq and our greyhound Stadia. Despite the careful management of operating costs, which were 33%
lower than last year, underlying EBITDAR5 loss was £3.9m and underlying EBITDA5 loss was £4.2m versus a £0.4m loss in 2019.
Underlying operating loss6 and operating loss after charging separately disclosed items was £6.6m (2019: £0.2m profit), £6.8m behind
last year.
During the current year Intertrader, the Group’s non-core financial services business, was classified as discontinued and, therefore,
both the 2020 and 2019 results have been stated excluding the results of Intertrader.
Corporate
Year ended 31 December
Underlying EBITDAR5
Rent and associated costs
Underlying EBITDA5
Share based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating (loss)/profit6
Reported Results1,2,8:
Reported results1,2,8
Pre IFRS 16 results3,8
2020
£m
(54.5)
–
(54.5)
(9.0)
–
(60.6)
(124.1)
2019
£m
(46.4)
–
(46.4)
(5.8)
(0.4)
(12.5)
(65.1)
Change
%
(17%)
–
(17%)
(55%)
100%
(385%)
(91%)
CC4
%
2020
£m
(54.5)
–
(54.5)
(9.0)
–
(60.6)
(124.1)
2019
£m
(46.4)
–
(46.4)
(5.8)
(0.4)
(12.5)
(65.1)
Change
%
(17%)
–
(17%)
(55%)
100%
(385%)
(91%)
On a reported basis, Corporate costs5 of £54.5m were 17% higher than last year as underlying cost savings were more than offset
by additional investment under our Sustainability Charter as we move towards our 1% target of GGR spend on research into problem
gambling by 2022. After share based payments, depreciation and amortisation and share of JV losses, underlying operating loss6 was
£124.1m, an increase of 91%, largely as a result of the incremental loss in the US JV, BetMGM, which grew significantly during 2020,
increasing the number of states where it is operational to 12 by January 2021. After charging separately disclosed items of £92.4m,
the operating loss of £216.5 was £60.7m behind 2019.
Notes
1. 2020 and 2019 reported results are audited.
2. Reported results are provided on a post IFRS16 implementation basis.
3. Pre IFRS 16 results are unaudited and show the Group’s results before any adjustment is made for IFRS 16.
4. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2020 exchange rates.
5. EBITDAR is defined as earnings before interest, tax, depreciation and amortisation, rent and associated costs, share based payments and share of JV income.
EBITDA is defined as EBITDAR after charging rent and associated costs. Both EBITDAR and EBITDA are stated pre separately disclosed items.
6. Stated pre separately disclosed items.
7. UK Retail numbers are quoted on a LFL basis. During 2020 there was an average of 3,024 shops in the estate, compared to an average of 3,341 in the same period last year.
8. Reflecting the results of continuing operations.
Entain plc | Annual Report 2020 Strategic report Chief Financial Officer’s Review
63
NGR in line with 2019 despite the
impact of Covid-19, with Online
NGR 28%cc ahead year on year.”
Rob Wood
Chief Financial Officer
Results
NGR and revenue
Financing costs
Group reported NGR and revenue were in line with 2019 with
growth in Online offsetting the reduction in Retail revenue largely
caused by the impacts of temporary shop closures due to Covid-19.
Further details are provided in the Business Review section.
Finance costs of £74.2m (2019: £86.1m), excluding issue cost write
offs of £5.3m on refinancing, were £11.9m lower than 2019, with
the reduction driven by interest rate savings from the 2019 and
early 2020 debt refinancing projects.
Underlying operating profit6
Group reported underlying operating profit6 of £529.5m
(2019: £520.6m) was 2% ahead of 2019, with 11% growth in
underlying EBITDA5 offset by incremental depreciation and
amortisation and an increased loss in the BetMGM joint venture.
Analysis of the Group’s performance and the results of our BetMGM
joint venture are discussed further in the Business Review section.
Foreign exchange losses of £104.7m (2019: credit of £101.9m) in
2020 reflect the charge arising on the retranslation of the Group’s
Euro denominated debt following the strengthening of the Euro
since the 2019 year end. The Group operates a commercial hedging
strategy and, as such, this loss is offset by a £137.7m gain, which
has been recorded in equity on the retranslation of net assets in
overseas businesses.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
64
Chief Financial Officer’s Review continued
Year ended 31 December
NGR
Revenue
Gross profit
Contribution
Underlying EBITDAR5
Underlying EBITDA5
Share-based payments
Underlying depreciation and amortisation
Share of JV income
Underlying operating profit6
Net finance costs
Net foreign exchange
Profit before tax pre separately
disclosed items
Separately disclosed items:
Amortisation of acquired intangibles
Other
Profit/(Loss) before tax
Tax
Profit/(Loss) after tax from
continuing operations
Discontinued Operations
Profit/(Loss) for the year
Separately disclosed items
Reported results1,2
Pre IFRS 16 results3
CC4
%
1%
2020
£m
2019
£m
Change
%
3,628.5
3,561.6
2,308.6
1,740.2
862.1
764.7
(14.8)
(182.5)
(60.2)
3,632.7
3,578.1
2,368.8
1,874.9
782.9
678.9
(12.7)
(166.2)
(9.2)
507.2
490.8
flat
flat
(3%)
(7%)
10%
13%
(17%)
(10%)
(554%)
3%
2020
£m
2019
£m
Change
%
3,628.5
3,561.6
2,308.6
1,740.2
862.1
843.1
(14.8)
(238.6)
(60.2)
529.5
(74.2)
(104.7)
350.6
(307.0)
131.1
174.7
(60.9)
113.8
(34.4)
79.4
3,632.7
3,578.1
2,368.8
1,874.9
782.9
761.4
(12.7)
(218.9)
(9.2)
520.6
(86.1)
101.9
536.4
(374.0)
(326.8)
(164.4)
33.2
(131.2)
(9.5)
(140.7)
flat
flat
(3%)
(7%)
10%
11%
(17%)
(9%)
(554%)
2%
14%
(203%)
(35%)
18%
140%
206%
(282%)
187%
(262%)
156%
Items separately disclosed before tax mostly relate to items
previously disclosed within the first half results. For the year they
amounted to a £175.9m charge (2019: £700.8m charge) and relate
primarily to £307.0m of amortisation on acquired intangibles (2019:
£374.0m), a £5.0m impairment of Right of Use assets following a
reassessment of anticipated lease terms (2019: £245.0m against
our Australian business), integration costs associated with the
Ladbrokes Coral acquisition of £25.1m (2019: £44.9m), costs of
£8.3m associated with right sizing our Retail estate following the
implementation of the £2 FOBT stakes restriction (2019: £8.7m)
and £8.9m of onerous costs associated with shop closures and
other one-off legal expenses (2019: £3.4m). In addition, the Group
recorded a £42.4m charge associated with the discount unwinds
and reassessment of the anticipated payments under Dusk Till
Dawn and Crystalbet contingent consideration arrangements
(2019: £37.7m) and £9.6m of other exceptionals, predominantly
the write-off of issue costs following the refinancing during H1 of
£5.3m (2019: £14.1m), Covid-19 related costs and costs associated
with the wind-up of the Ladbrokes Pension Plan (2019: £17.7m).
The Group has also separately recorded a net £223.5m
(2019: £11.6m largely against Greek tax) income in the year,
predominantly against a historic VAT claim in our Ladbrokes Retail
business following a recent court ruling and £6.9m (2019: £19.0m)
on the sale of assets.
Separately disclosed items
Amortisation of acquired intangibles
Impairment
Integration costs
Triennial restructuring costs
Legal and onerous contract costs
Movement in fair value of contingent
consideration
Other including issue cost write-off
Tax litigation/one-off legislative impacts
Profit on sale of assets
2020
£m
(307.0)
(5.0)
(25.1)
(8.3)
(8.9)
(42.4)
(9.6)
223.5
6.9
2019
£m
(374.0)
(245.0)
(44.9)
(8.7)
(3.4)
(37.7)
(17.7)
11.6
19.0
Total
(175.9)
(700.8)
Entain plc | Annual Report 2020 Strategic report 65
Profit before tax
Profit before tax and before separately disclosed items was £350.6m (2019: £536.4m) reflecting a year-on-year decrease of £185.8m
with underlying operating profit6 £8.9m ahead and finance costs £11.9m favourable offset by a £206.6m swing in foreign exchange
on debt retranslation as a result of the relative movements in the GBP:EURO exchange rate year-on-year. After charging separately
disclosed items, the Group recorded a pre-tax profit of £174.7m (2019: loss of £164.4m).
Taxation
The tax charge for the period ended 31 December 2020 of £60.9m (2019: credit of £33.2m) reflects a £63.0m charge on underlying
trading (2019: £46.4m) and a £2.1m credit on separately disclosed items (2019: £79.6m credit). The underlying tax charge reflects a
12.2% (2019: 9.5%) effective tax rate before the impact of foreign exchange and BetMGM losses.
Discontinued Operations
During the year the Group has classified its Intertrader business as discontinued as the Directors believe that it is highly probable that a
sale of the business will be completed within the next 12 months. During the year the Intertrader business recorded a loss after tax from
underlying operations of £14.4m (2019: £0.6m), the majority of which was disclosed in the interim results, and separately disclosed costs
of £20.0m (2019: £8.9m) which includes a £19.3m impairment on intangible assets, as discussed in the interims. The resulting total loss
after tax was £34.4m (2019: £9.5m).
Cash flow
Year ended 31 December
Underlying EBITDA
Discontinued EBITDA
Underlying working capital
Capital expenditure
Finance lease (incl IFRS 16)
Corporate taxes
Underlying Free cash flow
Investment in BetMGM
Free cash flow
Interest paid (incl IFRS 16)
Separately disclosed items
Net movement on debt & cost of debt issuance
Equity issue
Net dividends paid
Net cash flow / (outflow)
Foreign exchange
Net cash generated/(outflow)
2020
£m
843.1
(14.1)
(12.6)
(158.3)
(85.9)
(59.2)
513.0
(61.8)
451.2
(95.3)
24.6
(30.0)
8.6
(12.4)
346.7
13.0
359.7
2019
£m
761.4
(0.3)
(13.9)
(164.1)
(77.7)
(37.5)
467.9
(3.8)
464.1
(68.9)
(162.0)
(53.6)
1.5
(202.4)
(21.3)
(10.5)
(31.8)
The Group had a net cash inflow of £359.7m (2019: outflow of £31.8m). Free cash flow for the period was £451.2m (2019: £464.1m) with
underlying EBITDA5 of £843.1m (2019: £761.4m) offset by the loss on discontinued operations of £14.1m (2019: £0.3m), investment in
capital expenditure of £158.3m (2019: £164.1m), lease payments of £85.9m, including those on non-operational shops (2019: £77.7m)
and £59.2m in corporate taxes (2019: £37.5m). During the year, there was a working capital outflow of £12.6m (2019: outflow of £13.9m)
and further investment in the BetMGM joint venture of £61.8m (2019: £3.8m).
During the year, the Group paid £95.3m of interest on loans and leases (2019: £68.9m), £17.9m of which related to the unwind of timing
differences from 2019. In addition, the Group received £24.6m (£162.0m paid) on items which have been separately disclosed, primarily
driven by the receipt for historic VAT in our Ladbrokes Retail business (£217.5m received) partially offset by amounts paid against the
historical Greek (£45.4m) and Austrian (£69.1m) tax provisions, integration costs (£30.1m), triennial costs (£6.0m) and payments of
contingent consideration against historic acquisitions (£24.8m). The Group paid a net £30.0m (2019: £53.6m) on the repayment of debt,
predominantly repaying the £35.0m drawn down on the revolving credit facility at the 2019 year end. The Group also raised £8.6m in
equity issuances (2019: £1.5m) on the exercising of historic option agreements. £12.4m was paid in minority dividends (2019: £202.4m
including equity dividends and dividends received).
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 66
Chief Financial Officer’s Review continued
Net debt and liquidity
As at 31 December 2020, net debt post IFRS 16 was £1,766.6m and represented a net debt to EBITDA ratio of 2.1x (1.9x pre IFRS 16).
At 31 December 2020, there was no drawdown on the Group’s revolving credit facility.
Bonds
Term loans
Interest accrual
Cash
Accounting net debt
Cash held on behalf of customers
Fair value of swaps held against debt instruments
Short-term investments/Deposits held
Balances held with payment service providers
Finance lease debt
Adjusted net debt pre IFRS 16
Lease liabilities recognised as a result of IFRS 16
Adjusted net debt post IFRS 16
Going Concern
Par value
£m
(500.0)
(1,582.4)
(7.6)
(2,090.0)
Issue costs/
Premium
£m
(17.9)
8.1
–
(9.8)
Total
£m
(517.9)
(1,574.3)
(7.6)
(2,099.8)
749.8
(1,350.0)
(396.1)
(26.1)
171.2
172.4
(30.9)
(1,459.5)
(307.1)
(1,766.6)
In adopting the going concern basis of preparation in the financial statements, the Directors have considered the current trading
performance of the Group, the financial forecasts and the principal risks and uncertainties, including the impact of Covid-19 and
in particular the impact of the potential for further disruption to the Retail business across Europe. In addition, the Directors have
considered all matters discussed in connection with the long-term viability statement including the modelling of “severe but plausible”
downside scenarios such as legislation changes impacting the Group’s Online business and extended lockdowns affecting the Group’s
Retail operations.
Given the level of the Group’s accessible cash (£0.7bn), available financing facilities (including an undrawn revolving credit facility of
£0.5bn), debt maturity profile, and the forecast covenant headroom even under the sensitised downside scenarios, the Directors believe
that the Group is well placed to manage the risks and uncertainties that it faces. As such, the Directors have a reasonable expectation
that the Group will have adequate financial resources to continue in operational existence and meet its liabilities as they fall due for at
least 12 months from the date of approval of these financial statements and have, therefore, considered it appropriate to adopt the going
concern basis of preparation in the financial statements.
Notes
1. 2020 and 2019 reported results are audited.
2. Reported results are provided on a post IFRS16 implementation basis.
3. Pre IFRS 16 results are unaudited and show the Group’s results before any adjustment is made for IFRS 16.
4. Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2020 exchange rates.
5. EBITDAR is defined as earnings before interest, tax, depreciation and amortisation, rent and associated costs, share based payments and share of JV income on continuing
activities. EBITDA is defined. as EBITDAR after charging rent and associated costs. Both EBITDAR and EBITDA are stated pre separately disclosed items.
6. Stated pre separately disclosed items.
Entain plc | Annual Report 2020 Strategic report 67
Statement of Directors’ responsibilities in respect of the
Annual Report and the financial statements
Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation
taken as a whole; and
the Strategic Report includes a fair review of the development
and performance of the business and the position of the issuer
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
Rob Wood
Chief Financial Officer
4 March 2021
The Directors are responsible for preparing the Annual Report and
the Group and parent Company financial statements in accordance
with applicable law and regulations.
The Directors are required to prepare Group and parent Company
financial statements for each financial year. The consolidated
financial statements have been prepared in accordance with IFRS
as adopted by the EU (IFRSs as adopted by the EU) and applicable
law and have elected to prepare the parent Company financial
statements under FRS 101 “Reduced Disclosure Framework”.
In addition the Group financial statements have been prepared
in accordance with International Financial Reporting Standards
adopted pursuant to Regulation (“EC”) No 1606/2002 as it applies
in the European Union.
The Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and parent Company and of their profit or
loss for that period. In preparing each of the Group and parent
Company financial statements, the directors are required to:
select suitable accounting policies and then apply
them consistently;
make judgements and estimates that are reasonable, relevant
and reliable;
for the Group financial statements, state whether they have been
prepared in accordance with International Financial Reporting
Standards adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union (“IFRSs as adopted by
the EU”);
for the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the parent
Company financial statements;
assess the Group and parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
Company’s transactions and disclose with reasonable accuracy at
any time the financial position of the parent Company and enable
them to ensure that its financial statements comply with the Isle of
Man Companies Act 2006. They are responsible for such internal
control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the Isle of Man governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 68
Chief Governance Officer’s Review of Risk
In a year of uncertainty, our risk
management framework has never been
more important in helping the Group
navigate these challenging times.”
Robert Hoskin
Chief Governance Officer
Manage
2020 has been a significant year
for many with the Covid-19 global
pandemic causing disruption around
the globe. The impact of Covid-19 has
been felt by all corporates and the
Entain Group is no different with our
Retail estates temporarily closed for
large portions of 2020 and into 2021,
sporting event cancellations and the
temporary closure of our head offices
all impacting the business.
Given the unprecedented nature of these events on our business,
our risk assessment, management and mitigation procedures have
been imperative in helping the Group navigate this uncertain time.
While the short-term outlook remains uncertain as a result of the
ongoing impacts of Covid-19, we have entered 2021 with good
trading momentum and a firm understanding of the risks we
continue to face and, as such, we remain as confident as ever in
Entain’s longer term prospects.
Ongoing changes to regulation and the evolving expectations
of regulators continue to present significant risk for the business
to navigate, requiring careful management and mitigation,
particularly in the UK and Germany, which both remain complicated
and in states of transition.
Whilst, understandably, our risk function has been focused on
addressing the immediate risks associated with Covid-19 during
2020, we have also continued to push forward with improving and
refining our approach to risk management. Looking back at our
achievements in 2020 and our priorities for 2021:
Entain plc | Annual Report 2020 Strategic report 69
Key successes in 2020
Brexit
Further development and enhancement of our divisional/
functional risk registers and risk mitigation activities.
Reviewed and agreed the principal risks for 2021 with the Board
and their allocation for monitoring between the Board, Audit and
ESG committees.
Continued roll-out of the Group risk management processes to
new areas of the Entain business including BetMGM
Derivation of a specific pandemic and business continuity risk
register with actions taken throughout 2020 to address the ever-
changing landscape.
Key priorities for 2021
Refinement of our risk management processes to ensure they are
fully aligned with the recently announced Group strategy and the
focus on sustainability and growth.
Continued roll-out of the Group’s risk management procedures
to newly acquired businesses, most notably Bet.pt and Enlabs
(should the deal complete).
The UK and Gibraltar left the EU in 2020 with the transition period
ending on 31st December. The Group has implemented its Brexit
plans to mitigate the risks identified, which were not considered
to be significant given the nature of our business. In particular,
the Group located the servers which host the online betting and
gaming platform for EU customers in the Republic of Ireland, and
established subsidiaries in Malta which provide our online betting
and gaming offering to customers in those EU countries requiring
operators to be established and licensed in an EU member
state. Our online businesses continue to be headquartered in
Gibraltar and these plans will have no significant impact on our
employees there.
Additionally, the Group has made certain practical contingency
arrangements to help employees who live in Spain but work in
Gibraltar should there be a significant increase in delays crossing
Gibraltar’s border with Spain.
The following risk report details our approach to risk management,
the Group’s principal risks and the Board’s assessment of viability
in line with provision 31 of the 2018 Corporate Governance Code.
A continued commitment to reduce risk through the introduction
of new business processes where it makes commercial sense
to do so.
Robert Hoskin
Chief Governance Officer
4 March 2021
Emerging risks
The Covid-19 pandemic has increased our focus on the need to
consider emerging risks with the same level of rigour that we do our
current risks. During 2020, the Group has put even more emphasis
on the consideration of emerging risks, with the discussion a key
part of Risk Committee agendas and the annual Audit Committee
cycle. Any emerging risks which are considered significant in the
short to medium term are elevated to the core risk registers and
Group principal risks as seen with Covid-19.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 70
Risk management process
and methodology
Risk management structure and governance
The effective understanding, measurement, acceptance
and mitigation of risk is fundamental to the Group
achieving its strategic priorities. As such, over the course
of the year, the Group has continued to enhance its risk
management capabilities, improving its ability to identify,
evaluate, manage and mitigate its principal risks as well
as responding to the challenges presented by new and
emerging risks.
Structure
The Group has developed and deployed an integrated and
proactive approach to risk management with operational
management and functional specialists at the heart of our
processes and governance structure. We continue to challenge
ourselves to improve our ability to detect, understand and debate
risk whilst also continuing to strengthen our three lines of defence
model through improved processes and investment in resources.
Our first line of defence are our day-to day-business operation
teams and functional/divisional risk forums, who actively evaluate
and manage risks as part of their day-to-day activities. The second
line of defence is our risk oversight function and Risk Committee
which is overseen by the Director of Financial Control and Risk.
This oversight function provides our businesses with expert advice,
challenge and assistance in ensuring risks are appropriately
identified, evaluated, managed and mitigated in line with the
Group’s risk appetite.
Our third line of defence is provided by Internal Audit, who provide
independent and objective assurance over our risk assessment
processes and the design and operating effectiveness of our risk
mitigation control activities.
Board
Responsibility for risk strategy / Formal review
of risks twice annually / Sets clear policies on
acceptable levels of risk and risk appetite
Audit Committee
Responsible for assessing the scope and
effectiveness of the systems established to
identify, assess, manage and monitor risks /
Reviews reports from Internal Audit (third line
of defence) and external audit (KPMG)
Risk Committee
Second line of defence / Responsible for
maintaining and reviewing risk registers, key
and emerging risks / Meets four times annually
Corporate risk monitoring, testing and
reporting and assessment of risk
Divisional and functional risks forums / First
line of defence / Maintain divisional and
functional risk registers and provide updates
to each Risk Committee / Senior management
representation at Risk Committee from
businesses, divisions and head office functions.
Top down
Governance
Board
Audit Committee
ESG Committee
Risk Committee
Oversight
(tone at the top)
Corporate risks/mapping
to divisional risk registers
Divisional risk reporting
and risk registers
Divisional management
teams
Corporate risk
monitoring/reporting
and assessment
of risk appetite
Process owners
Bottom up
Identify, Measure,
Respond, Control
Entain plc | Annual Report 2020 Strategic report 71
Governance
How risks are measured
The Board recognises the benefits of ensuring its risk management
processes are in line with the UK Corporate Governance Code and
the expectations of listed companies. As part of this process we
not only assess risk but also evaluate the level of risk the Group is
willing to take, also referred to as risk appetite. This process forms
a key part of the Enterprise Risk Management (“ERM”) Framework.
The ERM Framework is the vehicle which defines and delivers risk
management across the business and includes a standard risk
scoring matrix to ensure a consistent approach to the identification,
measurement and response to risk.
As part of the risk management process, all risks identified are
measured against a defined set of criteria using a standard 5 x 5
risk matrix which assesses both the impact and the likelihood of a
risk arising. In assessing the impact and likelihood of a particular
risk arising, consequences in the following areas are considered:
financial performance, operational process, legal, PR and health
and safety. In particular:
The potential impact/consequence to the Group should the
risk materialise:
The Group Risk Committee, chaired by the Chief Governance
Officer, are responsible for the ERM and Group Risk Management
policy. The Committee meets formally four times each year
and comprises operational management and functional area
specialists. Whilst the Committee considers all identified risks to
the business, it focuses on the principal risks.
The Entain Group Risk Management policy details how risks are
managed and monitored. For each risk identified, the impact,
likelihood, consequence, risk owner (Executive Committee member)
and operational lead are identified. The risk owner and operational
lead are responsible for identifying the relevant mitigating controls
and remedial actions required to manage risk appropriately.
The Risk Committee opine on the adequacy of the businesses
risk mitigation with Internal Audit testing the effectiveness of the
controls identified.
The Board maintains a consolidated view of key risks across all
business segments and takes advice from the Group Risk and Audit
Committees, on the Group’s risk appetite and strategy as well as
the effectiveness of our risk management processes.
Whilst we recognise that we have limited control over certain risks
faced by the Group, such as the current pandemic, macroeconomic
events and the complex regulatory environment in which we
operate, we continue to monitor developments in these areas
closely and identify emerging risks through horizon scanning whilst
ensuring that the Group has appropriate response plans in place.
The risk management approach is subject to continuous review and
updates in order to reflect new and developing issues which might
impact business strategy. Emerging or topical risks, such as the
pandemic or Brexit, are examined to understand their significance
to the business.
– The impact of each risk is measured with reference to the
financial implications (EBITDA and cash), its potential
operational impact (including the security of our data), the
effect on the reputation of our brands and whether or not it
affects our commitment to health and safety. The impact is
measured on a scale, where 1 is low, with limited damage
to a minor stakeholder, and 5 being severe, which may
have a substantial impact on the Group affecting many key
stakeholders, including customers.
The likelihood of the risk materialising:
– The extent to which an event is likely to occur is scored
from 1-5, 1 being remote i.e. very unlikely to occur and 5
being probable i.e. where it has the potential to occur or has
already happened.
The product of both scores gives rise to the risk score that
determines the relative importance of the individual risk.
The risk management approach
is subject to continuous
review and updates in order
to reflect new and developing
issues which might impact
business strategy.”
Stuart Smith
Director of Financial Control and Risk
Read more on our governance framework
page 83
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 72
Principal Risks
The principal risks and uncertainties,
which are considered to have a
material impact on the Group’s long-
term performance and achievement
of strategy, are set out on the
table opposite.
The risks represent a snapshot at a point
in time, and as the environment we operate
in is constantly evolving, new risks may
arise, the potential impact of known
risks may increase or decrease, and our
assessment of a risk may change. They do
not include all those risks associated with
the Group’s activities and are not set out
in any order of priority.
This is not intended to be an exhaustive and
extensive analysis of all risks which may
affect the Group.
Data Breach
and Cyber Security
Chief Operating Officer and
Chief Technology Officer
Risk category
Technology
Legal and regulatory
Reputational
Financial
Impact: High
Likelihood: High
Oversight: Audit Committee
Laws, Regulations,
Licensing and Regulatory
Compliance
Chief Governance Officer
Risk category
Commercial
Legal and regulatory
Reputational
Financial
Impact: High
Likelihood: Medium
Oversight: Board
Principal Risk/Uncertainty
Principal Risk/Uncertainty
The Group operations depend on the
fairness of its gaming engines, the
processing of customer data (protected by
strict data protection and privacy laws in all
jurisdictions in which the Group operates)
and the ability of customers to access its
services on a 24x7 basis.
The Group is exposed to the risk that the
integrity of gaming, confidentiality of data
or availability of its services would be
compromised through a cyberattack or a
breach in data security, which would impact
the trust of its customers and could result in
prosecutions including financial penalties.
How we manage and mitigate the risk
The Group has a dedicated Cybersecurity
function entrusted with protecting the
security of all its operations.
The function also encapsulates the
necessary in-house security technology
expertise to adapt to emerging threats.
Operating under a ISO27001 Information
Security Management System certification,
the Cybersecurity controls and associated
harmonised policies are constantly being
evaluated and applied, where deemed
relevant across the enlarged Group.
A Data Privacy team, led by the Group’s
Chief Privacy Officer is tasked with aligning
the Group’s data privacy strategy and
governance structure, providing regular
updates to the Group’s Corporate Social
Responsibility Committee.
Strategic relevance
Crystallisation could lead to significant
reputational and operational issues that
limit the Group’s ability to drive Online
growth and deliver technology synergies.
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 and additional
costs might be incurred in order to comply
with any new laws or regulations in
multiple jurisdictions.
How we manage and mitigate the risk
The Group closely monitors regulatory,
legislative and fiscal developments in key
markets allowing the Group to assess,
adapt and takes the necessary action
where appropriate.
Management takes external advice,
which incorporates risk evaluation of
individual territories. It also engages in
promoting licensing solutions that provide
commercially viable opportunities for
responsible online gaming operators.
Regulatory updates are provided on a
weekly basis to senior management with
updates provided to the Board of Directors
each month and discussed at every
Board meeting.
Strategic relevance
Whilst changing regulatory and tax regimes
offer opportunities to the Group as well
as posing risks, a significant adverse
regulatory change in the jurisdictions where
the Group operates could have a significant
impact on the Group’s future profitability
and cash generation.
In addition, changes in regulation may
require the Group to change procedures and
policies in order to adhere to its commitment
to responsibility and sustainability.
Read more on the Board’s review of Principal
Risks on pages 88, 90 and 96
Entain plc | Annual Report 2020 Strategic report
Key:
Risk increased
Risk decreased
Risk static
New risk
73
Technology Failure
Chief Operating Officer and
Chief Technology Officer
Taxes
Chief Financial Officer and Director
of Tax, Treasury and Insurance
Risk category
Risk category
Technology
Legal and regulatory
Reputational
Financial
Impact: High
Likelihood: Low
Oversight: Audit Committee
Commercial
Legal and regulatory
Financial
Impact: Medium
Likelihood: High
Oversight: Audit Committee
Increased
Cost Of Product
Managing Director – Retail
Managing Director – Digital
Risk category
Commercial
Financial
Impact: Medium
Likelihood: Medium
Oversight: Board
Principal Risk/Uncertainty
Principal Risk/Uncertainty
Principal Risk/Uncertainty
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.
How we manage and mitigate the risk
The Group’s technology resilience levels
are mature, established and supported by
robust operational procedures and business
continuity plans.
All critical revenue generating systems are
built to mission critical and high availability
standards with all operational data across
the ecosystem protected, replicated,
and safeguarded.
As part of the Group’s technology
strategy and objectives, enhancements
are underway into 2021 to make further
improvements and, where necessary,
automate the Group’s global disaster
recover capability.
Strategic relevance
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.
The Group’s geographical diversity and
the nature of taxation in our industry lead
to complexity in our tax affairs. There may
be areas of differing legal interpretation
regarding the scope and scale of taxation.
How we manage and mitigate the risk
The Group’s tax strategy is approved
annually by the Board of Directors.
Responsibility for the execution of the
Group’s tax strategy is delegated to the
Chief Financial Officer who reports the
Group’s tax position to the Directors on a
regular basis.
In order to mitigate tax risks that arise,
the Group actively identifies, evaluates,
manages and monitors its tax risks and the
geographies in which it operates.
The Group has an appropriately qualified
and resourced tax team to manage its
tax affairs.
Significant technology failings or product
outage is likely to impact the Group’s ability
to attract and retain the customers required
to deliver the Group’s growth strategy
In addition, where there is significant
uncertainty or complexity in relation to a
tax risk, the Group may use the services of
external, expert tax advisors.
Strategic relevance
Adverse changes in the tax regimes in
jurisdictions where the Group operates, or a
significant tax assessment, may impact our
profitability and cash position.
The Group is subject to certain
arrangements intended to support the
customer offering. Examples are the
horseracing and the voluntary greyhound
racing levies, data and content supply,
and the provision of marketing services.
The combined cost of these third party
services is material and they collectively
have a significant impact on the profitability
for the business globally.
A number of the contracts that underpin the
provision of third party services are under
negotiation at any one time. The pricing of
these services is subject to inflationary cost
increases and can also be volatile based on
the changeable business environment that
many of our suppliers operate in.
How we manage and mitigate the risk
Senior management engages regularly with
the relevant trade associations and the
principal bodies of sports and events with
regard to sports rights payments, including
the statutory horse racing levy, animal
welfare and other issues.
Across the wider supplier base, a central
procurement function and cost oversight
processes exist to ensure that pricing is
effectively controlled both at contract stage
and on an ongoing basis.
Strategic relevance
Material increases in the cost of content
may increase the operating costs at higher
than anticipated levels impacting profits.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
74
Principal Risks continued
Health, Safety & Wellbeing of
Customers and Employees
Retail Managing Director, Chief People Officer
and Chief Governance Officer
Risk category
Operational
Reputational
Strategic
Impact: Medium
Likelihood: Low
Oversight: ESG Committee
Trading, Liability and
Pricing Management
Chief Operating Officer
Risk category
Commercial
Operational
Strategic
Impact: Medium
Likelihood: Medium
Oversight: Audit Committee
Principal Risk/Uncertainty
Failure to meet the requirements of
the various domestic and international
rules and regulations relating to the
health and safety of our employees and
our responsibilities and commitments
towards customers (both retail and
digital) could expose the Company (and
individual employees and Directors) to
material civil, criminal and/ or regulatory
action with the associated financial and
reputational consequences.
How we manage and mitigate the risk
Entain’s retail and digital businesses have
numerous policies and procedures in place.
Annual training and communication plans
to all staff within these segments, as well
as specific communications to staff across
the wider Group continue to take place.
The Group’s Corporate Social Responsibility
Committee also oversee all aspects of
Health, Safety, Security and Environmental
(“HSSE”) practices.
We provide a caring and supportive
environment for our colleagues and take
their welfare seriously.
In addition to Private Medical support
available for many colleagues, we provide
mental health support for our people via our
global employee assistance programme,
wellbeing app and various wellbeing
initiatives run throughout the year.
We know that only a responsible business
can be a sustainable one which is why
we have continued to invest in this area,
in particular with the recent launch of our
Sustainability Charter. One of the key pillars
of this is our Advanced, Responsibility
and Care (“ARC”) programme. ARC is an
intelligent and innovative platform that
uses behavioural insight and research,
data science and analytics to assess risk
in play, enabling us to identify, interact and
intervene early with customers, who show
signs of gambling-related harm.
Strategic relevance
Breaches in the Group’s HSSE and safer
betting and gaming policies could lead to
criminal, civil and or regulatory sanctions,
along with significant reputational damage
and negative implications on employee
morale and customer goodwill.
Failure to protect our customers and
employees may result in Entain not
achieving our strategic aim of being a
responsible operator.
Principal Risk/Uncertainty
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
price risk management processes.
How we manage and mitigate the risk
The Group has some of the leading
expertise in trading liability management
and the Group’s trading team has
developed the skills and systems
to be able to offer a wide range of
betting opportunities.
Events are priced in order to achieve an
average return to the bookmaker over a
large number of events and therefore, over
the long term.
The Group’s underlying sports margin has
remained fairly constant in recent years.
Executive management monitor the gross
win margin on a daily basis in order to
ensure the long-term targets are achieved.
Strategic relevance
A run of customer favourable results as
a result of the mismanagement of the
trading book could significantly impact the
Group’s profitability.
Entain plc | Annual Report 2020 Strategic report
Key:
Risk increased
Risk decreased
Risk static
New risk
75
Loss Of Key Locations
Chief Operating Officer
Pandemic
Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer
Risk category
Operational
Impact: Medium
Likelihood: Low
Oversight: ESG Committee
Risk category
Operational
Financial
Commercial
Impact: High
Likelihood: High
Oversight: Board
Recruitment
and Retention
of Key Employees
Chief People Officer
Risk category
Operational
Impact: Medium
Likelihood: Low
Oversight: Board
Principal Risk/Uncertainty
Principal Risk/Uncertainty
Principal Risk/Uncertainty
Whilst the Group operates out of a number
of geographical locations, there are a
number of key sites which are critical to
the day-to-day operations of the Group,
including our offices in Central London,
Gibraltar, Ireland, Vienna, Hyderabad,
Australia, Italy and Manila. Disruption in
any of these locations could have an impact
on operations.
How we manage and mitigate the risk
Existing continuity plans and arrangements
for off-site data storage, alternative
system availability and remote working
for key operational colleagues and senior
management are subject to ongoing review.
Given the Covid-19 pandemic these plans
were enacted during the current year and
have proven to be effective.
Strategic relevance
Loss of a key location could impact
the Group’s ability to offer product to
its customers impacting its ability to
generate revenues.
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.
How we manage and mitigate the risk
Building on the successful launch of
our award-winning employer brand in
2019, our People Strategy focuses our
efforts on securing and retaining the
best talent, providing a market leading
working environment and the best
employee experience.
Our talent management and reward and
recognition programmes are continually
assessed through a number of regular
colleague feedback mechanisms and
external benchmarking.
Strategic relevance
A pre-requisite to achieving all of the
strategic priorities is ensuring we have the
right people with the right skills, deployed
within the right area of the business.
Failing to recruit/retain the best people
could significantly impact the Group
achieving all of its strategic objectives.
Further waves of pandemic affecting
individual countries or continents resulting
in the closure of all or part of our Retail
estate or the cancellation/postponement
of major sporting events, e.g. football,
horseracing which may result in financial
losses, service outage or an inability to
protect our colleagues wellbeing.
How we manage and mitigate the risk
In March 2020, the Group was quickly able
to enact its plans to move the majority of
its colleagues to home working without
any loss of service (excluding Retail
closures) despite the announcement of
worldwide lockdowns.
Through its diverse product and
geographic offering, the business has
been able to leverage its business model
to quickly respond to changing customer
needs and, therefore maintain strong
trading throughout 2020 in the face of
challenging circumstances.
The Group continues to monitor the risks in
each of its local operations both on trading
and the health & safety of its colleagues,
the latter of which is our number
one priority.
Strategic relevance
Closure of our retail shops or the
cancellation of sporting events may result
in financial losses, our ability to generate
revenues and affect overall profitability.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
76
Viability Statement
In accordance with provision 31 of the 2018 Corporate Governance
Code, the Board and Directors have completed an assessment
of the prospects and viability of the Entain Holdings PLC Group
over a longer period than the 12 months required by the “Going
Concern” provision.
The Directors have concluded that three years was an appropriate
period for assessment, as this is aligned to the Group’s strategic
planning process and is considered to be the period for which
reliable estimates can be made for variations in both industry
and customer dynamics, regulatory change, technological
advancements and the economic backdrop in the betting and
gaming industry taking into account the changing landscape as a
result of the Covid-19 pandemic.
The objectives of the strategic planning process are to further
develop the business’ understanding of the markets in which the
Group operates, assess the risks and opportunities facing the
business and develop a Group-wide strategy and associated
financial forecasts.
The Directors have utilised these strategic forecasts, the 2021
Board approved budget and the current financial position of
the Group to assess the potential impact on viability of certain
severe, but plausible, “risk events” arising which represent the
crystallisation of the Group’s principal risks and uncertainties as
identified on pages 72 to 75 of this Annual Report. The assessment
conducted considered the Group’s revenue, EBITDA, operating
profits, cash flows, risk management and controls, its current debt
maturity and anticipated refinancing profile and mitigating actions
should baseline assumptions change.
The financial impact of the identified risk events has been assessed
both individually and in combination and include:
The impact of a significant change in the Group’s duty profile,
including further changes in gaming taxes in key geographies.
Significant changes in the regulatory environment including
gaming restrictions in key markets, further focus on AML
legislation in the UK by the Gambling Commission and breaches
in GDPR regulations.
Cyber security failings, and major disruption in supplier/
customer contracts.
Downturn in trading as a result of a failure to retain key staff
Impacts on trading as a result of restrictions introduced globally
due to the Covid-19 pandemic.
The Directors have also performed reverse stress tests to assess
the level of liquidity and covenant headroom in the underlying
forecasts as well as considering the potential impacts of Brexit in
forming their view on viability.
Based on the results of this analysis and the mitigating actions
available to the business, the Directors confirm that they have a
reasonable expectation that the Company will be able to meet its
liabilities as they fall due over the three-year assessment period to
December 2023.
Entain plc | Annual Report 2020 Strategic report Overview | Strategic report | Governance | Financial statements
77
Governance
Governance
Governance
XX
XX
78
80
XX
XX
90
96
XX
99
XX
102
122
XX
Board of Directors
Chief Governance Officer’s Report
Board of Directors
Chief Governance Officer’s Report
Report of the Audit Committee
Report of the Environmental, Social
Report of the Audit Committee
and Governance (ESG) Committee
Report of the ESG Committee
Nomination Committee Report
Nomination Committee Report
Directors’ Report
Directors’ Remuneration Report
Directors’ Report
Directors’ Remuneration Report
Entain plc | Annual Report 2020
78
Board of Directors
(as at 4 March 2021)
The Board continues to focus on maintaining a
well-balanced membership with the right mix of
individuals who can apply their diverse business
knowledge and experiences to the oversight and
guidance to the delivery of the Group’s strategy
in the jurisdictions in which it operates. As at
the date of this report the Board is comprised of
the Chairman, three Executive Directors and six
independent Non-Executive Directors.
Board at 31 December 2020
Tenure (years)
0-1 1-2 2-3 3-4 4-5 5+
Barry Gibson 1 5 7
Jane Anscombe 1 2
Pierre Bouchut 2 4 7
Peter Isola 1 2 3
Stephen Morana 1 2 4 7
Virginia McDowell 1 4 5 7
Jette Nygaard-Andersen 4 5 6
David Satz 1 3
Gender diversity 31 December 2020
Experience / Skills:
1. Gaming Sector
2. Financial
3. Legal / Regulatory
4. Technology / eCommerce
5. Marketing
6. Entertainment
7. Leadership
3:7
Board at 4 March 2021 (date of publication)
Tenure (years)
0-1 1-2 2-3 3-4 4-5 5+
Barry Gibson 1 5 7
Pierre Bouchut 2 4 7
Stella David 5 7
Peter Isola 1 2 3
Vicky Jarman 2
Virginia McDowell 1 4 5 7
David Satz 1 3
Experience / Skills:
1. Gaming Sector
2. Financial
3. Legal / Regulatory
4. Technology / eCommerce
5. Marketing
6. Entertainment
7. Leadership
Gender diversity 4 March 2021
4:6
J M Barry Gibson
Chairman
Jette Nygaard-Andersen
Chief Executive Officer
Tenure: Appointed to the Board
November 2019 and became Chairman
on 27 February 2020.
Outside interests: Chairman of
HomeServe plc (will retire in May 2021).
Tenure: Appointed to the Board as
Non-Executive Director in December 2019.
Appointed as Chief Executive Officer and
Executive Director on 21 January 2021
Outside interests: Non-Executive Director
of Coloplast AS.
Age: 69 Nationality: British
Committee / attendance:
N 4/4
Biography: Barry was previously a
Non-Executive Director of William Hill plc
and bwin.party digital entertainment plc,
where he was the Senior Independent
Director. He was the Group Retailing
Director at BAA plc, Group Chief Executive
of Littlewoods plc, Non-Executive
Chairman of Harding Brothers Holdings
Ltd, and Non-Executive Director of both
Somerfield plc and National Express plc.
Key strengths and experience:
Barry is an experienced chairman, chief
executive, senior independent director
and non-executive director. He has deep
knowledge of the betting, gaming and
retail sectors and a track record of leading
change in corporates.
Age: 52 Nationality: Danish
Biography: From 2003 to 2019 she
held senior leadership roles at Modern
Times Group AB (a listed international
entertainment group) including CEO of
MTG International and MTGx Digital
Content which had ownership in next
generation digital entertainment
businesses. Jette also chaired the board
of Astralis Group A/S, an international
eSports organisation.
Key strengths and experience:
Jette has over 20 years’ experience
in leadership positions in the media,
sports and entertainment sectors, with
experience of working with companies
to disrupt industries through technology
in international markets. Previously a
Non-Executive Director of Entain, she
was involved in the Group’s strategy set
out in late 2020, positioning the business
for sustainable growth by leading in
innovation, safety and responsibility.
Rob Wood
Chief Financial Officer and Deputy CEO
Robert Hoskin
Chief Governance Officer
Tenure: Appointed to the Board as Chief
Financial Officer in March 2019; the role of
Deputy CEO was added to his portfolio on
21 January 2021.
Tenure: Appointed 1 January 2021
Age: 49 Nationality: British
Age: 41 Nationality: British
Biography: Rob joined Entain in 2012 and
served as Chief Financial Officer of the
Group’s retail business. Prior to Entain, he
was Senior Vice President at Cerberus
Capital, overseeing the private equity firm’s
European portfolio companies and worked
in restructuring advisory at Rothschild.
Rob started his career at KPMG where he
qualified as a chartered accountant.
Key strengths and experience:
Rob brings strong financial and accounting
experience to the Board from private equity
and banking. His knowledge of Entain’s
operations and experience in creating
value through mergers and acquisitions
make him uniquely placed to undertake his
expanded role as Deputy CEO.
Biography: Robert joined Entain in 2005
and served as Group Director of Legal,
Regulatory and Secretariat, overseeing
its corporate governance, legal and
regulatory requirements across more
than 20 countries in five continents and
supported various M&A transactions.
Prior to Entain, he headed up the
Investment Company Secretariat at
Aberdeen Asset Management.
Key strengths and experience:
Robert is a qualified and experienced
chartered secretary with significant insight
into Entain and the markets in which it
operates following his 15 years at the
Group, over which time he has overseen
the Group evolve from holding two betting
and gaming licences to more than 60. His
appointment as Chief Governance Officer
reflects the importance the Board places
on regulatory, legal and governance
matters and their role in our long-term
growth plans to build a world-class
responsible and sustainable business.
Entain plc | Annual Report 2020 Governance Key:
A Audit Committee Member
N Nominations Committee Member
A Audit Committee Chair
N Nominations Committee Chair
R Remuneration Committee Member
E ESG Committee Member
R Remuneration Committee Chair
E ESG Committee Chair
79
Sandeep Tiku
Chief Operating Officer
Pierre Bouchut
Independent Non-Executive Director
Stella David
Senior Independent Director
Peter Isola
Independent Non-Executive Director
Tenure: Will join the Board in 2021
Tenure: Appointed September 2018
Tenure: Appointed 4 March 2021
Tenure: Appointed February 2016
Age: 44 Nationality: Indian
Biography: Sandeep joined Entain in
2014 and became Group Chief Operating
Officer in 2020, having been the Group
Chief Technology Officer for four years.
Prior to this, he was a Global Social, Mobile,
Analytics and Cloud (“SMAC”) Practice
Head and built larger scale platform
and global teams for various Fortune
500 companies.
Key strengths and experience:
Sandeep has been integral to the
development of Entain’s unique proprietary
technology platform, which is a source
of significant competitive advantage. His
appointment to the Board not only reflects
his contribution to the success of Entain but
is aligned with the Board’s wish to have a
broader range of experiences and inputs in
its composition.
Outside interests: Non-executive director
and chairman of the audit committees at
Hammerson plc, Firmenich SA, Albioma SA
and GeoPost SA.
Age: 65 Nationality: French
Committee / attendance:
A 5/5 N 3/3
Biography: Pierre was the chief
operating officer for Europe at Koninklijke
Aholddelhaize N.V. (2016-2018), chief
financial officer at Delhaize Group SA
(2012-2016), Carrefour SA (2009-2012),
Schneider Electric SA (2005-2009) and
Casino (1995-2003), where he also served
as the chief executive officer from 2003
to 2005. Prior to this, Pierre worked for
Citibank, Bankers Trust and as a consultant
with McKinsey.
Key strengths and experience:
Pierre has over 40 years of experience in
senior management roles across finance,
retail, property and industry as well
as deep familiarity of audit committee
practice. This broad experience makes him
suited to chair Entain’s audit committee
and to act as its financial expert.
Outside interests: Non-executive director
of Domino’s Pizza Group plc, HomeServe
plc (having previously been the Senior
Independent Director and Remuneration
Committee Chair), Bacardi Ltd and
Norwegian Cruise Line Holdings.
Outside interests: Commissioner to the
Gibraltar Financial Services Commission.
Non-executive director of Gibraltar
International Bank.
Age: 62 Nationality: British
Age: 58 Nationality: British
Committee / attendance:
Committee / attendance:
R -/- N -/- E -/-
Biography: Stella David was previously
Chief Executive Officer of William Grant
& Sons following more than 15 years with
Bacardi Ltd. Until recently she was Chair of
C&J Clark Ltd and spent seven years as a
Non-Executive Director at the Nationwide
Building Society, where she chaired the
Remuneration Committee.
Key strengths and experience:
Stella brings marketing and strategic
experience to the Board. Her extensive
management and non-executive roles
have given her an insight into UK
corporate governance practices and
investor expectations which will be
beneficial to the Board in her role as
Senior Independent Director.
E 5/5
Biography: Peter is the Senior Partner
of ISOLAS LLP, Gibraltar’s longest
established law firm. He is a former
President of the Gibraltar Chamber of
Commerce and advises the Government
of Gibraltar on a number of committees
in both financial services and gaming.
Key strengths and experience:
Peter has worked in the gaming and
financial services sector all of his
professional life and is widely recognised
and respected as a leading expert in
gaming law and regulation. His wealth
of experience and in-depth knowledge
enables him to contribute important
insight to the Board and ESG Committee
discussions as well as provide constructive
challenge on strategy.
Vicky Jarman
Independent Non-Executive Director
Tenure: Appointed 4 March 2021
Outside interests: Non-executive director
of Great Portland Estates and Signature
Aviation plc.
Virginia McDowell
Independent Non-Executive Director
Designated Workforce Director
Tenure: Appointed June 2018.
Outside interests: Vice President of Global
Gaming Women and Trustee of Saint Louis
University
David Satz
Independent Non-Executive Director
Tenure: Appointed 22 October 2020.
Outside interests: Member of the Board
of a commercial gaming and hospitality
entity established by the Eastern Band of
Cherokee Indians (“EBCI”).
Age: 48 Nationality: British
Committee / attendance:
A -/- R -/-
Biography: Vicky spent over 10 years
with Lazard and Co Ltd working in the
Investment Banking team and then as
Chief Operating Officer for the London
and Middle East operations until 2009.
Prior to this she was at KPMG where she
qualified as a chartered accountant. She
was previously a Non-Executive Director
and Chairman of the Audit Committees of
each of Equiniti Group plc, Hays plc and De
La Rue plc, the Senior Independent Director
at Equiniti Group plc and a Non-Executive
Director at Knight Frank LLP.
Key strengths and experience:
Vicky has deep corporate finance and
accounting experience from her career
in investment banking. Her successful
and varied non-executive career at
international FTSE companies, including
membership of audit and remuneration
committees, will bring further depth to
Entain’s Board.
Age: 63 Nationality: American
Age: 61 Nationality: American
Committee / attendance:
E 5/5 N 3/3 R 7/8
Committee / attendance:
E 1/1
Biography: Virginia was the President
and CEO of Isle of Capri Casinos, Inc. in
the United States from 2011 until her
retirement in 2016, and the president and
COO of Isle of Capri from 2007 to 2011.
Prior to this she was the Chief Information
Officer at Trump Entertainment Resorts
from 2005 to 2007.
Key strengths and experience:
Virginia has spent her entire career in
the gaming sector, with 35 years of
experience in US gaming. Her insight and
knowledge has been invaluable to the
Board, particularly in its strategic and
operational discussions. Virginia possesses
a deep understanding of the diversity
and regulatory challenges of the gaming
business which has assisted the Board and
the ESG Committee, as well as in her role
as Designated Workforce Director.
Biography: David was Senior Vice
President of Government Relations and
Development for Caesars Entertainment
Corporation in Las Vegas, where he
worked from 2002 to 2019. Prior to this he
spent 16 years at the US law firm Saiber
Schlesinger Satz Goldstein LLC, where
he had a particular focus on the gaming
industry and played a key role in numerous
regulatory and legislative initiatives
throughout the US.
Key strengths and experience:
David has unrivalled regulatory and
legislative expertise in the all-important
US gaming market. His knowledge and
insight is invaluable to the Board as it
seeks to achieve its strategy of being
the leading operator in the US through
BetMGM, our fast-growing joint venture
with MGM resorts.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 80
Chief Governance Officer’s Report
At the heart of Entain’s strategy for
sustainability is strong corporate and
regulatory governance.”
Robert Hoskin
Chief Governance Officer
Govern
The Board
In early 2020, following a succession process that started in 2019,
the Board concluded a change in Chairman, with Barry Gibson
succeeding Lee Feldman who had served on the Board for 16 years
and as Chairman for 12 years.
Following a change of CEO in July, the Chairman and the CEO
led the Board through a strategy review, which culminated in the
Entain launch on 12 November. At the heart of Entain’s strategy
for sustainability is strong corporate and regulatory governance.
This has been underlined with my appointment as the Chief
Governance Officer and David Satz joining as an independent Non-
Executive Director, with an extensive knowledge of US government
and regulatory affairs.
The Chairman and Nomination Committee have continued with
refreshing the Board’s portfolio of knowledge and expertise this
year, with Stella David and Vicky Jarman joining as independent
Non-Executive Directors on 4 March 2021. Stella succeeded
Stephen Morana as Senior Independent Director, following
Stephen’s decision to pursue an executive position with Cazoo.
Stella has previously served on the board of Homeserve plc with
Barry Gibson, so the Nominations Committee and wider Board
ensured, through a vigorous interview process with Stella and
feedback from directors on third party company boards on which
they serve with Stella, that the Directors were comfortable that
Stella would exercise the requisite independent judgement as SID
on the Entain Board.
In January 2021, we’ve also seen a further change of CEO with
Jette Nygaard-Andersen taking over from Shay Segev, who
resigned to take up an exceptionally lucrative Co-CEO position
with the privately-owned sports streaming service, DAZN. Jette is
one of six FTSE100 female CEOs and, as at the date of this
report, 40% of the current Entain Board membership is female.
Whilst the Board is sorry to see Shay leave given his technology
background, Jette’s broader experience of the global entertainment
industry will help Entain deliver on its greater focus on best in class
entertainment and customer service. Sandeep Tiku, Entain’s COO,
who will join the Board later this year following his relocation to
Europe, also has a wealth of technology experience, particularly
having run the technology engine room of the Group since 2014.
These backgrounds coupled with the extensive betting and gaming
industry knowledge of myself, Virginia, David, Rob, Peter and Barry
and the wider industry experiences of our new colleagues, means
the Board has a wealth of experience and expertise to ensure we
deliver on the exciting Entain strategy.
Currently the Nominations Committee is conducting a search for
a new independent Non-Executive Director who will chair the
Remuneration Committee following Jane Anscombe’s departure at
the end of 2020.
Entain plc | Annual Report 2020 Governance 81
Board Support
HMRC Investigation
Outside the Board, to assist with improving our governance
practices, controls and oversight, we recruited a new Company
Secretary, Emily Carey, who joined in August 2020. Emily was
previously at BP and is doing an excellent job overseeing our
company secretarial matters and in particular improving our
reporting to the Board. I also recruited a new General Counsel who
joined us last month. Simon Zinger came from Dentsu, the large
advertising and PR conglomerate and I am looking forward to
working with Simon, particularly as I expect he will bring some new
insights from working outside the betting and gaming industry.
Entain’s governance reporting structure:
Chief
Governance
Officer
Senior VP
for American
Regulatory
Affairs &
Responsible
Gaming
Director of
Regulatory &
Government
Affairs
Company
Secretary
General
Counsel
Group Legal
Director
International
Compliance
Director
UK
Compliance
Director
Money
Laundering
Reporting
Officer
On 28 November 2019, one of our UK subsidiaries, GVC Holdings
(UK) Limited, received a production order from HM Revenue &
Customs (“HMRC”) requiring it to provide information relating
to the Group’s former Turkish facing online betting and gaming
business, sold in 2017. At that time, the Group understood that
HMRC’s investigation was directed at a number of former third
party suppliers, relating to the processing of payments for online
betting and gaming in Turkey. On 21 July 2020, GVC Holdings Plc
announced that HMRC was widening the scope of its investigation
and was examining potential corporate offending by the GVC
group. It had previously been understood that no Group company
was a subject of HMRC’s investigation. Through ongoing
engagement with HMRC we understand that the Group remains
a corporate suspect and that the offences under investigation
include, but are not limited to, offences under sections 1 and 7 of
the Bribery Act 2010. The Group continues to co-operate fully with
HMRC’s enquiries.
Payment Processing Governance Committee
In the context of oversight over payment processing matters, it is
worth recording that the Group established a Payment Processing
Governance Committee in early 2019. The Committee’s remit
is to ensure there is extensive vetting of all proposed payment
providers and their terms of service, together with the proposed
payment solution. No payment processor can be used by the
Group unless the Committee has approved them and our internal
legal team has reviewed and recommends the contractual terms.
I chair this committee and the other members are drawn from right
across the business, including the Money Laundering Reporting
Officer (“MLRO”), Director of Payments & Compliance, an internal
financial services lawyer and the Deputy COO. The Committee
meets monthly.
In reality, given Entain’s focus on regulated markets described
below, the risks relating to payment processing service providers
and solutions has fallen significantly since the legacy GVC business
focused on grey / dotcom markets.
ABC & Financial Crime Controls
In relation to our anti-bribery and corruption (“ABC”) and criminal
finance controls, a review was instigated in early 2019 with
external legal counsel, which mapped the complete organisation,
interviewing a large number of colleagues from across the
business. This led to new ABC and anti-tax avoidance policies
being adopted and rolled out, accompanied by training for all
colleagues. The Board, senior executives and colleagues in
functions potentially more likely to come across ABC or tax evasion
risks also receive face-to face training annually from a partner from
our external legal firm advising on these issues.
Corporate Governance and Compliance Review
Entain announced as part of its revised strategy that it will adopt
a best practice, gold standard approach to good corporate
governance. Whilst internally I and my fellow colleagues believe
this to be the case, I recommended to the Board that we have a
corporate governance and compliance review by an independent
third party to verify if this is the case and identify any gaps.
The firm of Alvarez & Martel are currently carrying out this
extensive review and will report to the Board in the next month.
We will report on the results of this review later in the year and in
next year’s Annual Report.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 82
Chief Governance Officer’s Report continued
Regulatory Governance
The Environment
In 2020 Entain announced that by the end of the year 99% of its
revenues would come from domestically regulated or regulating
markets and that by the end of 2023 this would rise to 100%.
This commitment puts Entain ahead of our competitors and
underlines the Group’s commitment to ensuring our revenue
streams are sustainable and regulatory risk reduced to a minimum.
In order to achieve this aim we are doing a variety of the following:
With climate change a crystallising threat for all of us, Entain has
increased its focus on minimising our carbon footprint, with the
aim of becoming a carbon neutral business as soon as practicable.
Our strategy on managing our impact on the environment is set
out on pages 49 to 51. Our strategy is overseen on an executive
level by the ESG Steering Committee, which I chair and has other
members of management including the Head of ESG, the HSSE
Director, the Chief People Officer and our CEO.
Lobbying governments and regulators to introduce commercially
viable national licensing regimes as soon as possible;
Areas of Focus for 2021
Applying for new licences in markets we identify as attractive
Appoint a new independent NED who will chair the
and then growing the business organically;
Remuneration Committee.
Working with our internal M&A team and advisers to acquire
Induction for new NEDs and ongoing training.
licensed operators in territories where we don’t have a licence;
and
Partnering with a local land-based operator (as we do in the US
and Belgium) to offer an online betting and gaming offering.
This leads to a heavy pipeline of opportunities, so to help us
navigate these efficiently and effectively we established in 2020
the New Opportunities Committee. This committee made up of
members of the Executive Committee, including myself, the CEO
and CFO, oversees the various projects, provides guidance on
prioritisation, execution and termination, as well as ensuring the
requisite level of due diligence is done on each project (assisted by
Kroll and FTI Consulting). This committee meets once a month.
In relation to our existing licences we have regulatory compliance,
licensing, safer betting and gaming and AML teams totalling
592 colleagues. In addition, we have an Executive Compliance
Committee which oversees licensing and regulatory developments,
made up of colleagues across the business from compliance, safer
betting and gaming, AML, product and marketing and which gives
guidance to the business on regulatory matters. This committee
meets once a month.
Closing any gaps identified by the Alvarez & Martel corporate
governance and compliance review.
Onboard new General Counsel.
Progressing HMRC investigation.
Seek a relicensing of Entain in Nevada following the initial two-
year licence granted in May 2019.
Seek licences in US states to service online sports-betting
and gaming.
Obtain gaming licences in Germany and partner with German
casinos so we can offer online table casino games.
Enter new domestically licensed markets.
Robert Hoskin
Chief Governance Officer
4 March 2021
Entain plc | Annual Report 2020 Governance 83
ESG Committee
Responsibilities
Reviews ESG policies and
controls for managing
the Group’s relationships
with stakeholders
Monitors the Group’s ESG
performance, including
against KPIs and ensures
the ESG strategy remains fit
for purpose
Chairman’s Committee
Responsibilities
Reviews structure and
effectiveness of the
Group’s organisation
and management
Reviews executive succession
and performance
Governance framework
Audit Committee
Responsibilities
Oversight of financial
reporting processes
Integrity of
financial statements
Reviews audit effectiveness
including internal controls
Supports the Board on
risk management
Advice on external auditor
Nomination Committee
Responsibilities
Reviews composition of the
Board and its Committees
Leads Board
appointments process
Maintains strong NED pipeline
Reviews independence and
outside commitments of NEDs
Reviews Board
diversity policy
Entain plc
Board
Remuneration Committee
Responsibilities
Recommends the Remuneration Policy
Determines remuneration packages of
Executive Directors and ExCo members
Monitors alignment of pay and incentives
for the wider workforce
Maintains dialogue with shareholders and
workforce on remuneration
Reports on implementation of the
Remuneration Policy
CEO
Executive
Compliance Committee
Executive Committee (ExCo)
ESG Steering Group
Responsibilities
Advisory Committee to support the CEO on
the management of the Group’s operational
and financial performance
Executive Risk
Committee
Payment Processing
Governance Committee
New Opportunities
Committee
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 84
Board attendance and composition
Board Commitment, Balance and Independence
Each Non-Executive Director (“NED”) must be able to devote
sufficient time to the role in order to discharge his or her
responsibilities effectively and the Board is satisfied that the
Chairman and each of the NEDs devotes sufficient time to
their duties.
Excluding the Chairman, of the remaining nine Directors,
six are independent NEDs. The Nomination Committee,
having considered the matter carefully, is of the opinion
that all the current NEDs remain independent.
The composition of all Board Committees complies with
the 2018 Code recommendations.
Director meeting attendance for 2020
The Board had six scheduled meetings in 2020,
with a further six ad-hoc meetings.
Chairman
Lee Feldman
(retired 27 February 2020)
Barry Gibson (appointed
Chairman 27 February 2020)
Executive Directors
Kenny Alexander1
(retired 17 July 2020)
Shay Segev
(appointed 17 July 2020)
Rob Wood1
Non-Executive Directors
Jane Anscombe
Pierre Bouchut1
Peter Isola1
Virginia McDowell
Stephen Morana
Jette Nygaard-Andersen
David Satz
(appointed 22 October 2020)
Meetings
attended/
eligible to
attend
Independent
Independent
upon appointment
Independent
upon appointment
1/1
12/12
6/7
5/5
11/12
12/12
11/12
11/12
12/12
12/12
12/12
2/2
1. Kenny Alexander, Rob Wood, Pierre Bouchut and Peter Isola were unable
to attend the ad-hoc meeting on 15 July 2020 that was called at short notice.
Entain plc | Annual Report 2020 Governance How is the Board organised and does it oversee management?
CEO
Runs the Company’s business.
Proposes and develops Entain’s strategy
and overall commercial objectives in
conjunction with the Chairman.
Responsible, with the senior executive
team, for implementing the decisions of
the Board and its committees.
Promotes and conducts affairs of Entain
with the highest standards of integrity,
probity and corporate governance.
Manages the leadership team and
promotes the strategic mission and
goals to all employees.
Engages with external stakeholders
to explain the corporate goals and
progress of the business strategy.
SID
As well as performing the normal duties
expected of a NED, the SID also:
Is available to shareholders if they
have concerns which contact through
the Chairman, CFO or CEO has
failed to resolve or for which contact
is inappropriate.
Leads the NEDs in evaluating
performance of the Chairman,
taking into account the
views of Executive Directors.
Maintains sufficient contact with
shareholders to understand their issues
and concerns.
Performs such other tasks and
responsibilities as may be contemplated
by the code of best practice from
time to time.
Management
Chairman
Oversees the effective running
of the Board.
Ensures that the Board as a whole
plays a full and constructive part in
the development and determination
of Entain’s strategy and overall
commercial objectives.
Acts as a guardian of the Board’s
decision making.
Promotes the highest standards
of integrity, probity and corporate
governance throughout the
Company and particularly at
Board level.
Oversees the effective
engagement with the Company’s
various stakeholders.
Oversight
85
CFO
Ensures future business decisions are
grounded in solid financial criteria.
Provides insight and analysis to support
the CEO and senior executive team.
Leads key initiatives in finance that
support overall strategic goals.
Funds, enables and executes the
strategy set by the CEO.
Develops and defines the overall
strategy of the organisation.
Presents the organisation’s
progress on strategic goals to
external stakeholders.
NED
Constructively challenges and
contributes to the development
of strategy.
Scrutinises the performance of
management in meeting agreed
goals and objectives and monitors the
reporting of performance.
Satisfies themselves that financial
information is accurate and that
both controls and the systems of risk
management are robust and defensible.
Is responsible for determining
appropriate l evels of remuneration of
Executive Directors and has a prime
role in succession planning, appointing
and where necessary removing
senior management.
UK Corporate Governance Code
During 2020 the Group has complied with the principles and
provisions on the 2018 UK Corporate Governance Code. The
Code can be found on the FRC’s website at www.frc.org.uk
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 86
Board engagement with our workforce,
shareholders and stakeholders
Workforce
The Board recognises that an engaged and diverse workforce
supports the delivery of our strategy.
During 2020, it was planned for the Board to meet colleagues
as part of away day and site visits but with social distancing
restrictions due to Covid-19 these did not take place.
Board members have participated in virtual employee events,
including the internal launch of the new Entain plc in November and
heard colleagues around the Group giving their reaction to our new
strategy and responsible betting and gaming commitments.
Employee Forum
Virginia McDowell, Chair of the ESG Committee, was
appointed as Designated Workforce Director in 2019. She has
attended two meetings of our Employee Forum (representing
retail and business colleagues) and engaged in discussions on
topics including the pandemic and the future of work, women
in leadership and how we can develop responsible betting and
gaming within our culture.
Our CFO and Deputy CEO Rob Wood and newly appointed
CEO Jette Nygaard-Andersen also attended the Employee
Forum, with Jette answering questions from colleagues on her
priorities and reflections following her appointment.
During the pandemic lockdown, Virginia and our Chairman
Barry Gibson recorded a podcast for employees that was
available on our intranet site.
Representatives of the Employee Forum attended a
Remuneration Committee meeting to gain an insight into
executive remuneration and share their feedback on employee
pay and benefits. Further information can be found in the
Directors’ Remuneration Report on page 109.
Further information on s172 can
be found in the Strategic Report
on page 32
Shareholders
The Board receives feedback on shareholder views in different
ways, including through the Chairman and executive management
who meet regularly with shareholders throughout the year, as
well as an independent investor audit. Board members listen in
to results and trading updates held by the Group for analysts and
institutional investors and can hear directly the questions and
comments on Company performance.
The Chair of the Remuneration Committee held calls with large
institutional investors prior to the AGM to discuss and receive
feedback on our remuneration outturn. In addition, the Chairman
held one-to-one meetings with major institutional investors during
the year, collecting their views and sharing these with the other
Board members and the Remuneration Committee.
In previous years, the Board had the opportunity to hear directly
from private shareholders at our Annual General Meeting.
However with the restrictions arising from Covid-19, the 2020
AGM could not be held physically; shareholders were asked to
email questions for the Board to answer (with answers being
posted on the Company’s website). It had been intended to hold
a Shareholder Engagement Forum later in the year to provide
shareholders with the opportunity to put questions to the Board
and be updated directly, but with continuing social distancing
restrictions this has been deferred.
All resolutions put to the 2020 meeting received overwhelming
support of those investors who voted, being approximately 82%
of our shareholder base. The results of the voting at all general
meetings are published on our website: www.entaingroup.com.
Stakeholders
The Board has responsibility for leading the Group’s stakeholder
engagement and considering the implications of key decisions
on the Company and its stakeholders. The Board recognises that
effective engagement with our stakeholders will drive long-term
value creation, making Entain a company that people want to
invest in, buy from, partner with and work for.
Entain has identified six stakeholder categories and our report
on Board Activities provides an overview of how the Group’s key
stakeholders are considered in Board discussions and deliberations
on strategy.
1. Shareholders
2. Employees
3. Suppliers
4. Customers
5. Communities
6. Regulators
One outcome from the Chairman’s review of the Board’s way of
working was to agree a procedure for preparing Board reports
through the use of a proforma template that identifies the relevant
stakeholder considerations for Board discussions and decisions.
Going forward we are looking at utilising our Board report software
to identify and track how we have touched on these stakeholder
categories in our reviews and discussions over the year.
Entain plc | Annual Report 2020 Governance
87
We now have in place a robust
corporate governance structure
that befits our status as a FTSE
100 company.”
J M Barry Gibson
Chairman
Board activities
The Board has responsibility for establishing
the Group’s purpose, values and strategy,
as well as overseeing the conduct of its
business and promoting the long-term
sustainable success of the Group, generating
value for shareholders and contributing to
wider society.
The Board had six scheduled meetings in 2020, with a further six
calls arranged during the year – including those held to discuss
matters arising from the Covid-19 pandemic and briefings on the
Group’s response.
Board meetings are a key mechanism for Directors to discharge
their duties, notably under Section 172 of the Companies Act
2006 (UK). An overview of the Board’s discussions and how these
considered the Group’s key stakeholders is set out below.
As an Isle of Man incorporated company, Entain is not subject to
the reporting obligations under Section 172 of the Companies Act
2006 (UK). Nevertheless, the Board recognises the importance of
effective governance and intends to operate in line with the UK
reporting regulations.
Key to stakeholder groups:
S
Shareholders
Su
Suppliers
Co
Communities
E
Employees
C
Customers
R
Regulators
Strategy
Covid-19
S E Su C Co R
Developing the Group’s strategy
S E Su C R
Launch of Entain and new strategy
S E C Co R
Monitored the impact of Covid-19
on the Group’s employees, business
and stakeholders.
Considered regulatory developments
in key markets and its impact on the
Group’s strategy.
Launched our new strategy to
accompany the new Group name and
brand to Entain.
Received frequent updates on the
Group’s response to the pandemic,
including the Group’s retail sites and
operations in the UK and overseas.
Deliberated and agreed to apply for
government furlough money for retail
colleagues and for the Group to top
up the salaries of those colleagues
impacted to 100%.
Agreed the reduction of Executive
Director and Executive Committee
member salaries by 20% and waiver of
entitlement to annual bonus.
Reviewed and agreed enhanced
responsible betting and gaming
safeguards during the pandemic
and beyond.
Engaged with management on
strategic deep dives for the segments.
Updated the Board on the digital
strategy for its US joint venture.
Reflected on shifts in technology,
products and customer demographics
and the potential strategic
opportunities these created.
Held a virtual annual strategy awayday
with senior management, reviewing
progress in the US and new markets.
Financial Plan
S E Su C
Discussed and approved the three-
Year Plan.
Communicated our strategic priorities
on operating in regulated markets,
responsible betting and gaming and
strong governance and launched our
Sustainability Charter.
Approach by MGM Resorts
S E Su C Co R
Appointed Board Committee to
manage Company’s response to
MGM approach.
Reported back to Board and sought
authority where required.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 88
Key to stakeholder groups:
S Shareholders
Su Suppliers
Co Communities
E Employees
C Customers
R Regulators
Performance
Business updates
S E C
Risk
S E Su C Co R
People
S E Su
Received updates on trading
performance from the retail and
digital businesses.
Discussed the implementation of the
strategy and the impact of Covid-19.
Monitored the performance of the
BetMGM joint venture in the US.
Financial updates
S E Su
Monitored net gaming revenue, cash
flow, dividend cover and credit facilities
in response to the impact of Covid-19
on the business, and agreed that no
final dividend would be paid.
Debated the repayment of furlough
monies and the impact of the pandemic
on the Group’s retail business.
Reviewed and approved the
2021 budget.
Undertook a review of the Group’s risk
management framework, governance
structure and the internal processes for
evaluating and managing risk.
Reviewed and agreed the Principal
Risks for 2021 and their allocation for
monitoring between the Board, Audit
and ESG Committees.
Reviewed and agreed the approach
for the Group’s annual long-term
viability statement.
Regulatory updates
S E Su C R
Received regular regulatory updates
from the Chief Governance Officer.
Held deep dives on regulatory
changes in the Group’s key markets
of the UK and Germany and reflected
on their potential impact on the
Group’s strategy.
Reviewed the status of shop and office
closures following Covid-19 restrictions.
Monitored the Group’s initiatives
to support colleagues impacted by
the pandemic.
Received regular HR updates, including
progress against our D&I targets and
feedback from employee engagement
and listening sessions.
Reflected on the Group’s working
policies, workspaces and needs of our
people in a post-Covid-19 environment.
Responsible Betting and Gaming
E C Co R
Received regular updates on the
Group’s safer betting and gaming
activities, including our Advanced
Responsibility & Care (“ARC”)
programme.
Agreed the inclusion of a responsible
betting and gaming metric into the
Group’s remuneration structure.
Reviewed the aims and focus of
the Entain Foundation and agreed
proposals to register it as a charity.
Governance
Investor feedback
Conflicts of Interest policy
Regulatory disclosures
S
S E Su C R
S E R
Received written and verbal feedback
Reviewed and agreed a Board Conflicts
on investor meetings from the
Chairman, Remuneration Committee
Chair, Executive Directors and Director
of Investor Relations during the year.
of Interest policy.
Created a Conflicts of Interest Register
to be approved by the Board annually.
Approved the Notice of Meeting for the
AGM and the circulars for two EGMs
(the transfer of tax domicile in February
and the renaming of the company to
Entain in November).
Considered an external report on
Board succession
the feedback of the launch of Entain
and our new strategy from over 30
institutional investors.
Board governance
S E R
Considered and agreed changes
to ways of working for the Board
following a review by the Chairman.
Held a Board evaluation covering
the effectiveness of the Board, its
Committees and the performance of
the Chairman and individual Directors.
S E R
Considered and reviewed the Board’s
composition and succession needs.
Discussed and approved Executive and
Non-Executive appointments, including
the CEO, Chief Governance Officer,
Chief Operating Officer, the Senior
Independent Director and two Non-
Executive Directors.
Following the Audit Committee’s
recommendation, reviewed and
approved the Annual Report and
Accounts and the Interim and Full
Year results.
Entain plc | Annual Report 2020 Governance 89
During the year the Chairman considered how the needs of
the Group’s strategy and business model should be reflected
in the Board’s way of working. Following feedback from
Directors, the following changes were agreed in December:
The number of scheduled Board meetings to be increased to
six times per year – taking place over two days, with the key
monitoring committees meeting on the first day.
A discussion to be held on a key strategic topic at each of the
Board meetings during informal pre-dinner sessions.
Performance of each of the Group’s segments to be monitored
through annual deep dives.
Each of the Group’s Principal Risks to be allocated between
the Board, Audit and ESG Committees for annual review.
Briefing on shorter business or operational topics over lunch
from employee colleagues below Executive team level at each
formal meeting.
The establishment of a Chairman’s Committee for Non-
Executive Directors to meet in executive session.
The use of reporting templates for the Board’s pre-read.
A rolling 12-month forward agenda structured around the key
areas of strategy, performance and governance to be kept
under constant review by the Chairman, CEO and Company
Secretary and modified to reflect the evolving needs of the
Group’s strategy and business.
Conflicts of Interest policy
During 2020 the Board approved a Conflicts of Interest policy
and the establishment of an annual conflicts authorisation
process, whereby the Board reviews Entain’s Conflicts of Interest
Register and seeks confirmation from each Director of any
changes or updates to their position.
It is intended that this authorisation process will inform the
Nomination Committee’s assessment of a Non-Executive
Director’s independence when proposing that Director for
re-election at the AGM.
Director Induction, Training and Development
The Chairman is assisted by the Company Secretary in providing
all new Directors with a comprehensive induction programme
on joining the Board. The induction programme provides new
Directors with an understanding of their duties as Directors,
the Group, its businesses and the markets and regulatory
environments in which it operates. This includes meeting with
senior executives and their direct reports. The process also
provides an overview of the Group’s governance practices. Non-
Executive Directors will have further content tailored to the Board
Committees that they will join. David Satz received a tailored
induction following his appointment, including meetings with our
External Auditors, Group Director of Player Protection, Group HSSE
Director, Head of International Compliance and our Chief Security
Officer (on digital security).
The Chairman has overall responsibility for ensuring that Directors
receive suitable training to enable them to carry out their duties.
Training is also provided by way of reports and presentations
prepared for each Board meeting, as well as meetings with Group
employees and external advisers. During the year the Board
received training on the Criminal Finance Act and Anti-Bribery and
Corruption legislation.
The Directors have access to independent professional advice
at the Group’s expense, as well as the advice and services of the
Company Secretary, who advises the Board on regulatory and
corporate governance matters.
Board Evaluation and Effectiveness
The 2020 Board evaluation was undertaken through a
questionnaire administered by Lintstock, the facilitator who
undertook our external evaluation in 2019. The questionnaire
focused on areas of governance and effectiveness raised in the
previous year’s review and also sought feedback from the Board
on the Chairman’s review of the Board’s ways of working in
the autumn.
The review concluded that the Board was working well, with a
good balance of discussion between strategy, performance and
governance. The Board action plan for 2020 includes a focus on
technology and online entertainment – including the skillset needed
for future Board appointments, its criticality to the Group’s strategy
and the need to provide oversight of technology risk.
The action plan from the 2019 evaluation was
addressed in the following way:
Action from 2019 evaluation
How it was addressed in 2020
Allocate more time to
developing strategy
Aim to have in-depth
strategy session
before annual budget
planning process
More Board discussion
about the key risks
affecting the business
Build into the Board’s
itinerary more time for the
Non-Executive Directors to
meet in executive session
Board meetings to be better
structured and focused
Introduction of informal, pre-
dinner strategic discussions
the night before each scheduled
Board meeting
Strategy day held in October,
prior to budget planning
in December
The Board had a deep dive on
risk management during the year.
The Board agreed to allocate
and monitor each Principal Risk
between the Board, Audit and
ESG Committees
A Chairman’s Committee has
been established for Non-
Executive Directors to meet
in executive session; this is
scheduled for three meetings
a year
Introduction of new agenda
planning and Board report
process, including templates and
report writing training
The Senior Independent Director facilitated the performance review
of the Chairman and held a discussion with the Board (without
the Chairman present) where the results were reviewed and
considered. The Senior Independent Director discussed the results
directly with the Chairman.
The Chairman held reviews of each Director’s performance through
the use of individual questionnaires and one-to-one interviews.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 90
Report of the Audit Committee
During 2020 the Committee’s focus on
risk management and financial controls
has remained at the centre of our
processes.”
Pierre Bouchut
Chair of the Audit Committee
Control
Introduction
As Chair of the Audit Committee (the “Committee”), I am pleased to
present our report for the year ended 31 December 2020, setting
out how the responsibilities delegated to the Committee by the
Board were discharged over the course of the year and the key
topics we considered.
Following the Chairman’s review of the Board’s activities it has
been agreed that each Principal Risk will be monitored by the
Board and its Committees during the course of the year. As part of
this approach to Principal Risk, the Committee will be responsible
for the reviews of data breach and cybersecurity, tax, trading
liability and pricing management and technology failure.
As has been the case for all corporates, 2020 has been a year like
no other for Entain and the integrity of our financial reporting and
risk management processes have never been more important than
they have been in helping the Group navigate the unprecedented
effects of Covid-19. Accordingly, during 2020 the Committee’s
focus on risk management and financial control has remained at
the centre of our processes. Whilst the Board has managed the
Group’s overall response to the pandemic, the Committee has
maintained its oversight of the controls in place over forecasting
and performance reporting, the judgements taken in support of
financial estimates and the assessment of viability in light of a
constantly changing economic outlook, all of which have been
supplemented by regular dialogue with the Chief Financial Officer
and our internal and external auditors. Whilst the Covid-19
pandemic is still a very real threat to many companies, the
processes we have in place, combined with our strong underlying
trading, means I am as confident as ever in Entain’s long-
term prospects.
In 2020 Virginia McDowell stepped down from the Committee and
Jane Anscombe joined us before leaving the Board at the end of the
year. I want to thank Virginia and Jane for their engagement and
challenge during our discussions. In March 2021 Stephen Morana
will step down from the Committee and the Board: on behalf of
the Committee I would like to thank him for his counsel and insight.
I am pleased to say that Vicky Jarman will join us in March upon
her appointment to the Board; Vicky has a strong financial and
commercial background and her addition will further strengthen
the Committee.
With our immediate plans to reinforce our membership with
an additional Non-Executive Director, I believe the skills and
experience of our Committee members remain strong, enabling
the Committee to continue to perform effectively.
Pierre Bouchut
Chair of the Audit Committee
4 March 2021
Entain plc | Annual Report 2020 Governance 91
The role of the Committee
Committee membership and attendance
The Committee oversees the effectiveness of the Group’s financial
reporting, systems of internal control and risk management and the
integrity of external and internal audit processes.
Key responsibilities of the Committee
Monitor the integrity of Entain plc’s financial statements and
any formal announcements relating to the Company’s financial
performance and review and challenge, where necessary, the
significant financial reporting issues and judgements in relation
to the half-year and annual financial statements before these are
submitted to the Board for final approval.
Make recommendations to the Board concerning any proposed,
new or amended accounting policies.
Oversee the relationship with the Group’s external auditor
including reviewing the annual external audit plan and
audit findings.
Recommend the audit fee to the Board and set the Group’s policy
on the provision of non-audit services by the external auditor.
Review and monitor the external auditor’s independence and
objectivity, and the effectiveness of the audit process.
Monitor and review the internal audit programme and
its effectiveness.
Monitor and review Entain’s systems of internal control, financial
reporting and risk management.
Review internal audit reports covering the various areas and
activities of the business and ensure the business responds to
the recommendations made.
Assess and report on the Group’s viability prior to being
submitted to the Board for approval.
The Committee’s terms of reference can be found on the
company’s website at www.entaingroup.com
As at 31st December 2020 the Committee comprised three
members, all of whom are independent Non-Executive Directors.
Pierre Bouchut is Chair of the Committee. He has a strong financial
background, having been chief financial officer at Schneider
Electric, Carrefour and Delhaize and extensive experience as
an audit committee chair, currently serving at Hammerson
plc, Albioma S.A., Geopost S.A. and Firmenich S.A. in this role.
The Board is satisfied that he is the Committee member with recent
and relevant financial experience, as outlined in the UK Corporate
Governance Code, and competence in accounting and auditing
as required by the FCA’s Corporate Governance Rules in DTR7.
It considers that the Committee as a whole has an appropriate and
experienced blend of commercial, financial and audit expertise to
assess the issues it is required to consider, as well as competence
in the gaming sector.
All Directors on joining the Board are given specific sector training
to ensure competence relevant to the business, in addition to the
other skills they bring to the Board and Committees.
Regular attendees at the meetings include the Chief Financial
Officer, Director of Financial Control, Director of Internal Audit
and the external auditor. During the year the Committee met for
private discussions with the external auditor and the Director of
Internal Audit.
The Committee had four scheduled meetings during the year and
an ad-hoc call. Following the Chairman’s review of the Board’s
activities, it has been agreed that going forward the Committee will
have six scheduled meetings per year.
Member
Pierre Bouchut (Chair)
Jane Anscombe1
Virginia McDowell2
Stephen Morana
Meetings
attended/
eligible to
attend
5/5
1/1
3/4
5/5
1. Joined the Committee on 10th November 2020 and resigned on 31st December 2020.
2. Resigned from the Committee on 10th November 2020.
Stephen Morana will be stepping down from the Board (and
the Committee) on 4th March 2021. Vicky Jarman will join the
Committee from that date upon her appointment to the Board
as an independent Non-Executive Director.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 92
Report of the Audit Committee continued
Responsibility for Entain’s financial statements: Fair, Balanced and Understandable
The Board is ultimately responsible for presenting a fair, balanced and understandable assessment of Entain’s position
and prospects, which extends to the half-year and annual financial statements.
Delegation
Entain’s finance department, led by the
CFO, prepares the financial statements
Management coordinates with the CEO,
CFO and Chairman on the preparation of
any business model and strategy.
The Company Secretary with the Chairman
of the Board and the Chair person of the
various Board Committees, prepares the
corporate governance statements and all
Board Committee reports.
External Review
Entain’s external auditors audit the annual financial accounts and review the half-year accounts together with any business or
corporate governance commentary. A report to the Audit Committee is prepared.
Committee’s Review
The Audit Committee reviews the draft financial statements
and accompanying statements and meets with the external
auditors to review their report. The Audit Committee proposes
amendments and makes recommendations to the Board and
also approves the Audit Committee’s Report.
For the Annual Report the Remuneration Committee and
Nomination Committee review the Directors’ Remuneration
Report and Nomination Committee Report respectively, propose
changes and make recommendations to the Board.
Board Review
The Board reviews the financial statements, accompanying reports and recommendations from its committees and makes
changes to the disclosure where appropriate.
Auditor Reporting To The Board
The External auditors carry out final report (Annual Report) or review report (half-year results).
Audit/Board Approval And Publish
The Board and auditors approves the year-end financial statements and disclosures and the half-year report and these are then
released to the stock exchange and published on Entain’s website.
In respect of the financial statements and accompanying reports for the year ended 31 December 2020, the Company has followed
the process detailed above. In doing so the Directors confirm that they have reviewed the complete 2020 Annual Report and
consider that taken as a whole, the report is fair, balanced and understandable and provides the information necessary for Entain’s
shareholders to assess the Company’s performance, business model and strategy.
Entain plc | Annual Report 2020
Entain plc | Annual Report 2020 Governance 93
Activities
Financial statements and disclosure
The Committee reviewed the full and half-year financial
statements with management before proposing them to the
Board for approval. In undertaking its review, the Committee
received reports from management and the external auditor
outlining significant financial judgements and estimates.
The Committee reviewed the assessment and reporting of
longer-term viability, systems of risk management and internal
control, including the reporting and classification of risk across
the Group and the examination of what might constitute a
significant failing or weakness in the system of internal control.
It examined the Group’s modelling for stress testing different
financial and operational events and considered whether
the period covered by the Company’s viability statement
was appropriate.
With the impact of Covid-19 on both the wider economy
and the Group’s operations, the Committee gave additional
consideration and challenge to the appropriateness of
adopting the going concern assumption in preparing the
financial statements. The Group’s going concern statement for
the year ended 31 December 2020 is set out on page 64.
Risk
As noted in the introduction, in the autumn the Board agreed
that the Principal Risks of data breach and cybersecurity,
taxes, trading liability and pricing management and
technology failure would be allocated to the Committee
for annual review. By the end of 2020 the Committee
had undertaken reviews of taxes and data breach and
cybersecurity, holding a deep dive on each Principal Risk
to understand the nature of the risk, seeking assurance
from management that it had suitable measures in place to
mitigate each risk and that risk management processes were
regularly updated. This approach will continue in 2021 for the
review of the Committee’s allocated Principal Risks.
External audit
The 2020 financial year-end is KPMG LLP’s third financial
reporting period as the Group’s external auditor, following the
external audit tender process in 2018, with Mike Harper as the
lead audit partner. The Committee reviews the fee structure,
resourcing and terms of engagement for the external auditor
annually; it further considers the reappointment of the
external auditor each year before making a recommendation
to the Board.
Following a an organisational change in KPMG, Michael Harper will
step down as Lead Audit Partner and will be succeeded by Mark
Flanagan. After discussing the handover process in detail with
myself and our Chief Financial Officer, the Committee are confident
that the transition and handover period will be efficiently managed.
Effectiveness of the external audit
The Committee evaluated the effectiveness of the external audit
process during the year in consultation with the Chief Financial
Officer and senior finance team. The assessment of the auditor’s
approach to providing audit services focused on:
Safeguards against independence threats being sufficient
and comprehensive.
Quality and transparency of communications being timely, clear,
concise and relevant and that any suggestions for improvements
or changes are constructive.
The exercise of professional scepticism and the willingness of the
auditor to challenge management assumptions.
The quality of the audit engagement team – including the
continuity of appropriate industry, sector and technical expertise
or where there have been new areas of activity and changes in
regulation or professional standards.
The Committee concluded that the external audit team had
provided the required quality in relation to the provision of audit
services. Feedback is provided to the external auditor by the
Committee and through one-to-one discussions between the
Committee Chair and the lead audit partner.
FRC Audit Quality Review
The Committee specifically considered the findings of the FRC’s
Audit Quality Review team’s assessment of KPMG’s 2018 audit of
the Group. The Committee discussed these with the auditor and
separately with management, noting the observations raised and
KPMG’s proposed responses. The Committee will monitor progress
of the auditor’s proposals over the forthcoming year.
Non-audit services
The Committee is responsible for the Group’s policy on non-audit
services and the approval of non-audit services. The policy states
that in the Company’s financial year, the total fees for non-audit
services provided by the external auditors, excluding non-audit
fees for due diligence for acquisitions and other specific matters
noted below, should not exceed 70% of the average of the total
fees for audit services they provided in the preceding three-year
period. The policy is kept under annual review, receiving a report at
each meeting.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 94
Report of the Audit Committee continued
In the year ended 31 December 2020, the total non-audit fees as a
percentage of the audit fees paid to the external auditors was 16%.
The areas which will have their control environment
reviewed in 2021 are:
In addition to their statutory duties, KPMG LLP is also employed
where, as a result of their position as auditors or for their specific
expertise, they either must, or the Committee accepts they are
best placed to, perform the work in question. This is primarily
work in relation to matters such as shareholder circulars, Group
borrowings, regulatory filings and certain business acquisitions
and disposals. In such circumstances the Committee will separately
review the specific service requirements and consider any
impact on objectivity and independence of the auditors and any
appropriate safeguards to this. As such the Committee believes it
appropriate for these non-audit services to be excluded from the
70% cap set out above. In the year ended 31 December 2020 no
work was undertaken by the external auditors in respect of due
diligence for acquisitions.
Cybersecurity.
New acquisitions and mergers to ensure that appropriate,
commercially effective and highly compliant business practices
are in place.
Ongoing compliance assurance over key regulations including
betting and gaming and responsibility requirements, anti-money
laundering, marketing and GDPR.
In addition, there will be continued focus on areas of the business
affected by integration where changes in systems, personnel or
processes could lead to weaknesses in internal controls during
transitional periods.
Whistleblowing policy
Internal audit and its effectiveness
Internal Audit provides assurance to the Board, through the
Committee, that effective and efficient control processes are in
place to identify and manage business risks that may prevent the
business from achieving its objectives and strategy. The Committee
received quarterly reports on Internal Audit’s findings, including
their assessment of issues raised in previous reports.
The work completed by Internal Audit during the year focused on
key areas of the Group (disclosed on pages 70 to 73 under Principal
Risks), which included:
Reviews of Anti-money Laundering and safer Betting and
gaming processes across various business units.
The Group has a formal whistleblowing procedure by which
employees can, in confidence, raise concerns about possible
improprieties in financial or other matters. This is set out in the
Group’s Code of Conduct and is approved by the Committee.
The policy sets out the type of disclosure which is protected
and also specifies to whom disclosures should be made and the
process that will be followed. The Group actively encourages
individuals, where they believe that malpractice has taken place,
to make protected disclosures either internally to the Committee or
externally through an outsourced service provider.
The Committee is satisfied that robust and appropriate
arrangements are in place for the proportionate and independent
investigation of such matters and for appropriate follow-up action.
Operating review of key customer protection processes such as
Self-Exclusion.
Committee evaluation
The Committee undertook a review of its effectiveness through
an online questionnaire administered by an external facilitator
(Lintstock). The review concluded that the Committee had
performed well over the year and that it had a strong mix of skills
and experience amongst its members. Areas of focus for the
coming year included developing a succession plan for membership
and implementing the new Committee forward agenda.
Operating review of purchasing across the Group, including the
Group Procurement function.
Review of key operational resilience capabilities such as retail IT
disaster resilience and cybersecurity.
Review of technology infrastructure for BetMGM.
Ongoing reviews of key financial controls’
operating effectiveness.
Ongoing monitoring of key compliance controls such as
customer AML and SG checks, and review of the effectiveness
of special controls in place to protect customers during
Covid-19 lockdowns.
The Board, with the support of the Committee, completed its
annual review of the effectiveness of the system of internal control,
including the effectiveness of internal audit and consideration
of whether it had the appropriate level of independence and
its importance in assessing the company’s culture. The Board
concluded that it was satisfied that the system of internal control
remains robust and have selected areas on a risk basis for inclusion
in the 2021 Internal Audit Plan.
Entain plc | Annual Report 2020 Governance 95
Accounting and key areas of judgement
Throughout the course of the year, the Audit Committee determined the following areas of the financial statements were of
significant interest. These issues were discussed with management and the external auditors to ensure that the required level of
disclosure has been provided and that appropriate rigour has been applied where any judgement may be exercised.
Matter considered
Action
Separately disclosed items and proforma information
The Group separately discloses certain items in order to
allow a clearer understanding of the underlying trading
performance of the business. In 2020, the Group has
recorded a net charge in respect of items which have
been separately disclosed of £193.8m after tax in the
Income Statement.
In addition, proforma financial information and non-GAAP
measures have been provided within the Annual Report
and Accounts to assist in the articulation of the underlying
business. Non-GAAP measures relate to industry standard
KPIs while the provision of proforma information is to aid
understanding following the implementation of IFRS 16.
As part of their assessment that the treatment of separately
disclosed items in the financial statements is appropriate,
the Committee have considered each of the items disclosed
and challenged, where necessary, the treatment adopted
by management. The Committee has also considered the
conclusions reached by KPMG as part of its audit in this area
and are satisfied with the treatment and disclosure adopted.
Management’s use of proforma information and non-GAAP
measures in explaining the underlying business performance
has been considered by the Committee, along with the views
of KPMG on their use and prominence. Whilst the Committee
understands the challenges associated with the use of both
proforma information and non-GAAP measures, they are
satisfied with the balance of the disclosure provided. As part
of their assessment, the Committee noted the improvements
in the use of proforma information during the current year
following the annualisation of the Ladbrokes Coral acquisition
and the implementation of IFRS 16.
Carrying value of long-lived assets and depreciable lives
The Group has significant value in enduring and indefinite
life assets such as UK brands and goodwill which need to
be reviewed for impairment. Whilst impairments have been
recognised in 2020 against the Intertrader business, which
is held for sale, and offices where the Group now anticipates
exercising break clauses in existing leases, no impairment
has been recognised against acquired intangibles. Given the
uncertainty caused by the Covid-19 pandemic there are
judgements inherent in the future forecast profitability of the
Group’s Retail estates.
The carrying value of all enduring and indefinite life assets
are tested for impairment annually. In reaching their
conclusion that the judgements taken in calculating the
impairments recognised are appropriate, the Committee
have reviewed the forecasts, key assumptions and
methodology adopted by management in determining the
impairment charges.
As part of this process and in reaching their conclusion that
the current charges and disclosure are appropriate, the
Committee have also reviewed KPMG’s audit findings.
Note 4.2 in the financial statements outlines the other accounting estimates and judgements, in addition to those described above, inherent in the Group’s
financial statements.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 96
Report of the Environmental, Social
and Governance (“ESG”) Committee
The Committee has been renamed the
Environmental, Social and Governance
Committee and agreed to expand our
agenda coverage on environmental and
social issues to ensure our debate and
challenge remains broad and relevant to
the Group’s activities and strategy.”
Virginia McDowell
Chair of the ESG Committee
Safeguard
Introduction
In 2020 the ESG Committee (the “Committee”) has monitored the
Group’s responsible betting and gaming, compliance governance,
HSSE, data privacy and diversity and inclusion activities and the
Company’s relationships with stakeholders on these issues.
During our annual evaluation, we reflected on the breadth of our
remit, the monitoring activities we undertook and the non-financial
risks the Company faces. We decided that the CSR Committee’s
scope has evolved beyond corporate social responsibility and
as a result it has been renamed the Environmental, Social and
Governance Committee. We further agreed to expand our agenda
coverage on environmental and social issues to ensure our debate
and challenge remains broad and relevant to the Group’s activities
and strategy.
A key programme that we considered and debated as a Committee
over the year was the Group’s Sustainability Charter that formed
part of our relaunch as Entain in November 2020. The Charter
focuses on the key cornerstones of:
An exclusive focus on regulated markets.
Continuing to take the lead on responsible betting and gaming.
Pursuing the highest standards of corporate governance.
Investing in our people and local communities.
The Committee will return to these themes over the forthcoming
year as it undertakes its monitoring activities and engages
with management.
As part of a wider review of the Board’s activities, it has been
agreed that Board, Audit and ESG Committees will monitor each
of the Principal Risks over the forthcoming year. The Principal
Risks allocated to the Committee are health, safety and wellbeing
of customers and employees and the loss of key locations: we will
review these risks, their management and mitigation in depth with
relevant management during 2021.
The Committee has been refreshed with several changes over the
year with Stephen Morana and Jane Anscombe stepping down
and Jette Nygaard-Andersen and David Satz joining. I would
like to thank Stephen and Jane for their valued contribution and
constructive challenge. In January 2021, Jette stepped down as
a member of the Committee upon becoming Chief Executive.
I am delighted that we will still benefit from Jette’s insight and
knowledge, albeit from the perspective of management. I would
also like to welcome Stella David to the Committee upon her
appointment to the Board in March 2021 – her skills and experience
in consumer businesses and as a non-executive director will be a
valued addition to our membership.
Virginia McDowell
Chair of the ESG Committee
4 March 2021
Entain plc | Annual Report 2020 Governance 97
The role of the Committee
Committee membership and attendance
The Committee oversees the Group’s policies and processes
for managing its ongoing relationship with a wide spectrum
of stakeholders (including customers, employees, regulators,
governments and communities).
Key responsibilities of the Committee
Review the framework of ESG policies and controls for managing
the Group’s relationships with stakeholders.
Ensure that sufficient focus and resource is given to
implementing, monitoring and managing the Group’s ESG
policies and processes and that these remain effective.
Consider the appointment of third parties to advise on ESG
policies and practices and/or audit the Group’s ESG policies.
Liaise and work with the Board’s other Committees to ensure the
Board’s duties and responsibilities are carried out effectively.
Prepare an ESG report for inclusion in the Annual Report and
Accounts and oversee that any public disclosures on ESG
issues made by the Group accurately reflect the Group’s policies
and processes.
As at 31st December 2020 the Committee comprised four
members. Jette Nygaard-Andersen stepped down from the
Committee on 21 January 2021 upon becoming an Executive
Director. Stella David will join the Committee on 4 March 2021 upon
her appointment to the Board.
Regular attendees at the meetings include the Chief Governance
Officer, Director of Internal Audit, Director of Corporate Affairs,
Chief People Officer and heads of the compliance teams.
The Committee had four scheduled meetings during the year
and one ad-hoc meeting. Following the Chairman’s review of
the Board’s activities, it has been agreed that going forward the
Committee will have six scheduled meetings per year.
Member
Virginia McDowell (Chair)
Jane Anscombe1
Peter Isola
Stephen Morana2
Jette Nygaard-Andersen3
David Satz4
Meetings
attended/
eligible to
attend
5/5
4/4
5/5
1/1
4/4
1/1
The Committee’s terms of reference can be found on the
Company’s website at www.entaingroup.com
1. Resigned from the Committee on 10 November 2020.
2. Resigned from the Committee on 27 February 2020.
3. Joined the Committee on 27 February 2020.
4. Joined the Committee on 10 November 2020.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 98
Report of the ESG Committee continued
Activities
Responsible betting and gaming
The Committee received regular updates on the Group’s
responsible betting and gaming programme, including safer
betting and gaming initiatives during the Covid-19 pandemic
and the research programme with Harvard Medical School
focusing on patterns of internet betting and gaming behaviour
and assessing the impact of Entain’s safer betting and
gaming tools.
One element of the new Sustainability Charter is the link
between remuneration and responsible betting and gaming.
During the year the Board agreed to include a change to the
Group-wide annual bonus structure to include a 15% weighting
on safer betting and gaming deliverables from 2021. As part of
this new metric, the Committee has agreed to regularly monitor
the performance and delivery of safer betting and gaming
project metrics and opine to the Remuneration Committee on
their performance as part of the Remuneration Committee’s end
of year deliberations on bonus outcomes.
Further information on the responsible betting and gaming
remuneration metric is outlined on page 104 of the Directors’
Remuneration Report.
Compliance governance
The Committee received quarterly reports on international, UK,
retail and digital compliance developments and monitoring of the
Group’s compliance management. It further received updates
on the Group’s anti-money laundering programme across the
different jurisdictions of operation.
Privacy and data protection
Regular updates on data privacy and protection were given
to the Committee, including issues arising from requests to
share responsible betting and gaming data with regulators
and developments in regulatory and legal enforcement activity.
The Committee reviewed and approved an updated Group Data
Retention Policy and considered the impact of Brexit on data
transfer restrictions.
Health, Safety,Security and the Environment (“HSSE”)
HSSE performance was monitored by the Committee through
regular updates on the Group’s HSSE performance indicators
and initiatives. The Committee reviewed and approved the
proposed HSSE strategy for 2021 as well as agreeing the
Group’s HSSE KPIs for the forthcoming year.
During lockdown, the Committee received updates from
management on business continuity and health and safety
activities to support retail operations and keep colleagues safe
and secure. Briefings on employee wellbeing programmes and
training for working safely at home were also given over the
course of the year.
Diversity and inclusion
The Committee received quarterly reports on the Group’s
diversity and inclusion performance, with deeper briefings
on different initiatives both within and outside the Company.
Other reviews
The Committee oversaw the annual CSR (now ESG) report,
reviewing the content and giving feedback to management on
its content.
The annual Modern Slavery Act (“MSA”) statement was
considered by the Committee, who recommended its approval
to the Board. The Committee further recommended that a
working group be established to review the proposed legislative
changes with regard to the MSA statement following the UK
government’s recent consultation.
Committee evaluation
The Committee undertook a review of its effectiveness
through an online questionnaire administered by an external
facilitator (Lintstock). Feedback from the review was that the
Committee had performed strongly, with good engagement
from its members and management. Areas of focus included
greater coverage of environmental performance and diversity
and inclusion in 2021 and to ensure that the different areas of
compliance governance received an annual deep dive.
Another theme arising from the review was the broad
remit of the Committee. In response the meeting time was
increased for the Committee and it was agreed that the
CSR Committee be renamed the “Environmental, Social and
Governance” Committee.
Entain plc | Annual Report 2020 Governance Nomination Committee Report
99
Over the year the Committee reflected
on the composition of the Board and how
its skills and experience could support
the updated strategy and priorities that
culminated in the relaunch of the Group
as Entain.”
J M Barry Gibson
Chair of the Nomination Committee
Establish
Introduction
The Committee and subsequently the Board considered these
suggestions with a view to the composition and dynamics of
the Board as well as how they would support the delivery of the
Group’s strategy and recommended both appointments to proceed.
Sandeep will join the Board during 2021.
Over the year the Committee reflected on the composition of the
Board and how its skills and experience could support the updated
strategy and priorities that culminated in the relaunch of the Group
as Entain. As a result, we appointed David Satz as an independent
Non-Executive Director and Robert Hoskin as an Executive
Director to the Board. Both bring huge expertise in regulatory
and legislative matters and the appointment of Robert as Chief
Governance Officer reinforces the importance of governance in our
long-term growth plans.
In my Chairman’s letter I noted that this year has seen substantial
changes on the Board – with the retirement of my predecessor Lee
Feldman in February and the Group’s longstanding Chief Executive
Kenny Alexander in July. With Kenny’s retirement, our long-term
succession process enabled us to appoint Shay Segev, previously
the Group’s Chief Operating Officer, as Chief Executive.
In January 2021, Shay gave his notice to leave Entain to become
CEO of a private company. We were faced with a highly unusual
situation of finding his successor whilst in an offer period, following
a proposal from MGM Resorts International to acquire the Group
that had been rejected by the Board.
The Committee played a pivotal role in the succession of our new
CEO Jette Nygaard-Andersen, being mindful of the need for a
rigorous selection process alongside the wish to make a timely
appointment of a strong and effective CEO to lead the Group
following a takeover approach (see page 80 to learn more about
our succession and selection process). In Jette’s discussions with
the Committee and Board during the CEO selection process, Jette
reflected that the role of Rob Wood be expanded to include Deputy
CEO, with additional responsibility for the Group’s retail operations
and M&A activities. She further supported the appointment of
Chief Operating Officer Sandeep Tiku to the Board as an Executive
Director in recognition of the importance of the Group’s operating
platform to Entain’s continued success.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 100
Nomination Committee Report continued
Towards the end of 2020, our Senior Independent Director Stephen
Morana indicated his intention to step down from the Board to
pursue his executive career. The Committee engaged external
search consultants to facilitate the search process; amongst the
candidates shortlisted for the role was Stella David who had
served on the Homeserve board with me as Senior Independent
Director. Given our prior working relationship, the Committee
determined that an enhanced assessment process be followed
and asked the wider Board to interview and consider Stella
alongside other shortlisted candidates. I am pleased to report that
the Board considered Stella’s experience as chair of C&J Clark,
Senior Independent Director of Homeserve and her previous non-
executive director roles to make her an excellent fit for Entain and
she joins us as Senior Independent Director on 4th March 2021.
During the search for the successor to Stephen we identified
Vicky Jarman as an impressive candidate, with deep experience
in finance and prior non-executive roles. The Committee felt that
Vicky would be a strong addition to the Board, offering challenge
and insight as we implement our strategy and plans for growth.
Vicky will join the Board as an independent Non-Executive Director
on 4th March 2021.
In the autumn I reflected on the remit and operation of the
Nomination Committee. I have expanded its membership to include
the Chairs of each of the Board Committees to further broaden our
view of the skills and stakeholder expertise needed in any future
Board appointments and our wider considerations on diversity.
I have formalised meetings of the Non-Executive Directors in
“executive session” into a Chairman’s Committee and have moved
our regular succession planning activities for Executive Directors
and senior management to the Chairman’s Committee in order that
all Non-Executive Directors can engage and input into this process.
J M Barry Gibson
Chair of the Nomination Committee
4 March 2021
Our CEO selection process
Working with external headhunters, the Committee ran an
accelerated selection process, considering the skills and
availability of external candidates and undertaking extensive
interview and psychometric testing of Jette Nygaard-Andersen
who had previously been identified as a potential CEO
candidate whilst serving as a Non-Executive Director.
This process confirmed Jette to be an outstanding candidate to
replace Shay, with her deep experience of media, entertainment,
sport and digital businesses which the Committee felt was a
strong fit given the evolution of Entain into an entertainment
focused company.
The role of the Committee
The Committee actively reviews the composition and diversity
of the Board and senior management and leads its succession
process. It monitors the independence and time commitment of
the Group’s Non-Executive Directors and ensures that a rigorous
evaluation of the Board’s effectiveness and performance is
undertaken at least annually.
Key responsibilities of the Committee
Leading a rigorous and transparent procedure for
Board appointments.
Regularly reviewing and refreshing the Board’s composition,
taking into account the length of service of the Board as a whole,
in order for it to remain effective and able to operate in the best
interests of shareholders.
Ensuring plans are in place for orderly succession to positions
on the Board and overseeing succession planning for senior
management, including the Company Secretary.
Overseeing the development of a diverse pipeline for succession.
Working and liaising with other Board Committees as
appropriate, including with the Remuneration Committee with
respect of any remuneration package to be offered to new
appointees to the Board.
The Committee’s terms of reference can be found on the
Company’s website at www.entaingroup.com
Committee membership and attendance
As part of the review of the Committee’s way of working, it was
agreed that membership consist of the Senior Independent Director
and the chairs of each of the Board Committees.
The Committee had two scheduled meetings during the year with
a further two ad-hoc calls. It has been agreed that going forward
the Committee will have three scheduled meetings per year with
further meetings held upon request or to meet the demands of
the business.
Member
Barry Gibson (Chair)
Jane Anscombe1
Pierre Bouchut2
Virginia McDowell2
Stephen Morana
Lee Feldman3
Meetings
attended/
eligible to
attend
4/4
4/4
3/3
3/3
4/4
1/1
1. Resigned from the Committee on 31 December 2020.
2. Joined the Committee on 20th October 2020.
3. Resigned from the Committee on 27th February 2020.
Stephen Morana will be stepping down from the Board (and the
Committee) on 4th March 2021. Stella David will join the Committee
from that date in her role as Senior Independent Director.
Entain plc | Annual Report 2020 Governance 101
Independence
The Committee considered the independence of each Non-
Executive Director as part of its recommendation to the Board
for Director re-election. In making this recommendation,
the Committee also considered the time commitment
and performance evaluation of each Director standing
for appointment.
Diversity
The Committee continued to appraise appointments to the
Board from the perspective of its commitment to diversity,
particularly with respect to gender and ethnicity, in its
composition and succession plans. With the appointment of
David Satz in November, the proportion of women on the Board
at 31 December 2020 decreased to 30%; however, with the
further changes to the Board and the addition of two female
Non-Executive Directors this proportion will increase to 40% at
4 March 2021.
Further information on gender balance amongst the
Group’s senior management can be found on page 45 of the
Strategic Report.
During the year the Committee reflected on the
recommendations of the Parker Review steering committee
into the Ethnic Diversity of UK Boards. As at 31 December
2020 the Board did not have an ethnically diverse composition
but with the appointment of Sandeep Tiku we will meet the
Review’s target of at least one Director from an ethnic minority
background by the end of 2021.
As part of the Chairman’s review of the Committee and Board’s
ways of working, it is proposed that diversity objectives and
performance of the Group will have greater agenda time at the
Board, with regular discussions at the ESG Committee.
Activities
Board appointments
As outlined in the introduction to this report, the Committee
led the process for the appointment of new Directors.
Russell Reynolds, an external search consultant, was engaged to
facilitate the search and selection process for our Non-Executive
Director appointments and the successor Senior Independent
Director. Russell Reynolds further assisted the Committee with
the succession for the Chief Executive role after the resignation
of Shay Segev by interviewing, assessing and benchmarking
Jette Nygaard-Andersen as a strong internal candidate for
the role.
Russell Reynolds Associates have no other connection with the
Company or individual Directors and are accredited under the
enhanced voluntary code of conduct for Executive search firms.
Board composition and Board Committees
To assist in succession planning for Non-Executive Director
appointments and Committee membership, the Committee
considered the skills, experience and tenure of current Non-
Executive Directors and reflected on how this skillset enabled
the Board to execute the Group’s strategy, fulfil the tasks and
activities of its Committees and meet future challenges.
During the year the Committee considered membership of each
Board Committee in light of Board changes and recommended
the following changes:
Virginia McDowell to stand down from the Audit Committee.
Jane Anscombe to stand down from the CSR (now ESG)
Committee and join the Audit Committee.
David Satz to join the CSR (now ESG) Committee.
The Committee further recommended that Stella David join the
Remuneration and ESG Committees and that Vicky Jarman join
the Audit and Remuneration Committees when they become
Non-Executive Directors in March 2021.
Committee evaluation
An annual review of the Committee’s performance and
effectiveness was held at the end of the year using a questionnaire
facilitated by an external board review firm (Lintstock). In addition
to its performance over the year, the Committee was asked to
reflect on the proposals arising from the Chairman’s review.
The evaluation concluded that the Committee was working
effectively but the unprecedented turnover on the Board, together
with the dynamic nature of our sector meant that succession
planning should remain a key area of focus for the Committee.
The review further noted that the proposals recommended by
the Chairman were viewed positively and would strengthen the
Committee’s performance.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 102
Directors’ Remuneration Report
2020 Group performance
2020 has seen Entain once more deliver strong financial
and operational performance. This has been despite the
challenging environment brought about by the Covid-19
pandemic and is testament to the talent and resilience of all
our people. In November we announced our new name along
with our two core strategic pillars of growth and sustainability.
Key 2020 performance highlights include:
Online NGR up 28% at constant currency.
20 consecutive quarters of double-digit online net gaming
revenue growth.
Growth and market share gains across all our major
markets and in particular in Australia, Brazil, Georgia and
Italy and from partypoker.
Our joint venture in the US, BetMGM, now live in 12
states with market share up to approximately 18% in its
live markets.
Group underlying EBITDA up 11% at £843.1m.
Online underlying EBITDA up 50% at £803.5m reflecting
both the shift to online during the pandemic and good
sports margins.
The launch of our Sustainability Charter which reinforces
the Group’s commitment to delivering industry best in
class ESG.
Annual Statement from the
Remuneration Committee Chair
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the year ended 31 December 2020.
The Report is presented to shareholders in my capacity as
Chairman of the Board in the absence of a Remuneration
Committee Chair. Jane Anscombe, our previous Remuneration
Committee Chair, stepped down at the end of December.
Immediately following Jane’s departure we received an offer for
the Company from MGM Resorts International (“MGMRI”) and
during this period the Board felt it would be inappropriate to start
the search for Jane’s replacement until we had clarity as to the
outcome of this offer. Furthermore, the departure of Shay Segev as
CEO for a lucrative outside opportunity led the Board to reflect on
our reward structure and our ability to attract and retain talent in
a competitive market. Following MGMRI’s announcement that they
did not intend to bid, we commenced a search for a new Committee
Chair. We are close to completing this search process and intend to
shortly announce this appointment.
I would like to start the Report by thanking Jane Anscombe for the
huge contribution she made to the Committee during her tenure.
Jane’s hard work and engagement on the Company’s remuneration
enabled Entain to become a stronger company.
Following approval of our Remuneration Policy at our AGM
on 24 June 2020, this year we will be asking shareholders to
vote on our Annual Report on Remuneration at our 2021 AGM.
This summarises remuneration outcomes for 2020. It also explains
how we intend to apply the Remuneration Policy (which is set out in
our 2019 Directors’ Remuneration Report and can be found on the
Company’s website at www.entaingroup.com) for 2021.
The Committee remain very aware of the need to provide attractive
remuneration packages that facilitate the hiring and retention of
the best people globally. This is vital to enable Entain to achieve
its vision to be the world leader in sports betting and gaming
entertainment. We have been actively reviewing our remuneration
offering (see more information in the Chairman’s introduction on
page 8) and expect this to continue to be a key focus for our next
Committee Chair.
Contents
Annual Statement from the Remuneration
Committee Chair
Executive remuneration at Entain
Remuneration in context
Annual Report on Remuneration
Summary of performance
Implementation of the Remuneration Policy for
Executive Directors in 2021
Chairman and Non-Executive Directors
The Remuneration Committee
Page 102
Page 106
Page 108
Page 110
Page 114
Page 116
Page 118
Page 120
Entain plc | Annual Report 2020 Governance 103
Remuneration actions taken in response to Covid-19
Looking ahead to 2021
I wanted to take this opportunity to remind you of the actions the
Committee took in response to the Covid-19 pandemic:
Salaries and fees – On 1 May 2020, we announced that our
Board of Directors and the members of the Group’s Executive
Committee (ExCo) had voluntarily agreed to take a 20%
reduction in base salary and fees for three months.
2020 annual bonus – The Executive Directors and ExCo
members at the same time decided to waive any bonus
entitlement for 2020.
2020 LTIP – Our 2020 LTIP awards would typically have been
made in the middle of March. At this time the Entain share price
had fallen significantly as a result of Covid-19. The Committee
was conscious that granting share awards at this point could
have led to unintended gains at vesting. As a result, the grant
was postponed until June when the share price had substantially
recovered. Nevertheless, the terms of the awards still provide the
Committee with the ability to review the outcome at vesting and
to make appropriate adjustments if it concludes that participants
have benefited from ‘windfall gains’.
Remuneration in 2020
As set out above, the Executive Directors did not participate in
the annual bonus for 2020. The strong financial and operational
performance achieved still fed into the annual bonus outcomes for
our broader colleague population. The Committee is pleased that
the commitment and hard work which all our people have shown,
during what have been very testing times, can be recognised in
this manner.
Our performance in 2020 continued the strong trajectory which
we have shown over the last few years. Robust EPS growth over
the period 2018–20, coupled with out-performance of the broader
FTSE index, led to the vesting of the 2018 LTIP award at 89.8%
of maximum.
The Committee recognises the need to ensure this pay-out can
be justified based on the wider experience of our shareholders,
colleagues, and other stakeholders. In doing so, the Committee
considered Entain’s share price performance over the period –
up 22.5% including a 28% increase in 2020 – our financial and
operational performance, and the excellent progress that we
have made on our sustainability and responsible betting and
gaming agenda. Taking all this into account, the Committee was
comfortable that the 2018 LTIP outcome was fair and appropriate,
reflecting underlying business performance and being aligned with
the experience of our shareholders and other stakeholders over
this period.
Directors’ salaries
Salaries for the Executive Directors for 2021 are set out below.
Annual bonus – new performance metrics
The overall structure of the annual bonus remains fit for purpose
and therefore we are not proposing any major changes for 2021.
However, I am pleased to say that we have introduced a new non-
financial metric to reflect the importance of ESG to our business
and in particular, responsible betting and gaming. This metric will
represent 15% of the overall bonus opportunity.
We unveiled our new Sustainability Charter in our strategy
presentation of 12 November 2020. Entain’s focus on responsible
betting and gaming is fundamental to our long-term strategy to
deliver sustainability and growth and is instilled in our internal
culture and values. At the same event, we launched our new
Advanced Responsibility & Care (“ARC”) programme, which will
utilise our advanced, proprietary technology to continuously
enhance and personalise the protection of our customers.
To reflect this focus, the Committee consider that there are now
metrics available which allow for a robust, measurable and
consistent assessment of our progress in this area and so we
believe that it is the right time to introduce a responsible betting
and gaming metric into the annual bonus. This is specifically
focused on the delivery of new responsible betting and gaming
features to improve our systems and processes and ultimately
detect and prevent problematic play.
Half (7.5% of the total bonus) will relate to the UK market and
the other half of this metric will relate to international markets.
The business has engaged a leading gambling harm minimisation
consultancy to review and evaluate the delivery of these projects.
In addition, the Committee will also receive input from our ESG
Committee, who will have overall oversight of the projects.
Further information is provided on page 117.
In terms of the financial measures, we are retaining profit as a
measure in a similar proportion to previous years (60%). This will
however move to Operating Profit from EBITDA, reflecting that
the latter will become less relevant post-IFRS 16. The remaining
25% of the bonus will be determined by a Growth in Online Net
Gaming Revenue (“NGR”) measure, a change from Net Debt.
The Committee believes this change is appropriate as NGR is
one of our key performance indicators and growing this metric,
in particular in relation to our online business, is fundamental to
driving shareholder value.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 104
Directors’ Remuneration Report continued
Long-Term Incentive Plan
Minor changes were made to our LTIP performance metrics last
year in order to place greater emphasis on our performance
relative to our peers. The Committee has reviewed these metrics
and is comfortable that they remain appropriate, with only a
minor change to the broad based TSR comparator group used.
The metrics for the 2021 awards will therefore be:
One-third Cumulative EPS;
One-third Relative Total Shareholder Return vs. the FTSE 100.
(a change from the FTSE 51 – 150 reflecting Entain’s current
membership of the FTSE 100 Index).
Kenneth Alexander
(CEO until 17 July 2020)
As announced on 16 July 2020, Kenneth Alexander retired from the
position of CEO, on 17 July 2020, after 13 years with the Group,
being succeeded by Shay Segev, formerly Entain’s Chief Operating
Officer. Kenneth remained available in the period following his
retirement to ensure a smooth handover. The Committee gave
careful consideration to the treatment of Kenneth’s remuneration
arrangements, taking into account that Kenneth has subsequently
retired from work and has not taken up another full-time role
elsewhere. Full details are given in the section Payments for loss of
office on page 113, but in summary:
One-third Relative Total Shareholder Return vs. a bespoke group
The Committee negotiated a payment in lieu of notice equivalent
of sectoral peers.
to six months’ salary, reduced from 12 months.
Given Kenneth’s retirement, the Committee was comfortable
that he should be treated as a good leaver in accordance with
the Remuneration Policy and the provisions of the ADBP and
LTIP rules.
In line with our post-employment shareholding requirement
policy, Kenneth will be required to meet his full shareholding
requirement of 400% of salary for two years following
his departure.
Shay Segev
(CEO from 17 July 2020 – 21 January 2021)
On appointment to the role of CEO, Shay Segev’s remuneration
package and incentive opportunities were fully aligned with our
Remuneration Policy. After careful consideration, the Committee
agreed an annual base salary of £675,000, a reduction from the
salary of the former CEO, reflecting that this was Shay’s first
CEO role.
As announced on 11 January 2021, Shay resigned from Entain, to
take up a new role. He stepped down from the Board on 21 January
and will leave employment on 8 July 2021. In line with our
Remuneration Policy:
Shay’s salary and benefits will continue up to the date of
termination; his salary remained unchanged at 1 January 2021.
Outstanding awards under the LTIP will lapse when he leaves
employment of the Group in July 2021.
No annual bonus is payable in respect of 2021.
In line with our post-employment shareholding requirement
policy, Shay will be required to meet his full shareholding
requirement of 400% of salary for two years following
his departure.
Full details will be disclosed in the 2021 Remuneration Report.
The Committee will evaluate the positioning of the share
price when it comes to grant the LTIP awards in early 2021.
Should uncertainty and volatility related to Covid-19 still be a factor
at that time, the Committee will consider the appropriate course of
action to ensure that Executive Directors are not provided with the
potential for ‘windfall gains’.
Board changes
Jette Nygaard-Andersen
(CEO from 21 January 2021)
As announced on 21 January 2021, Jette Nygaard-Andersen was
appointed as CEO to replace Shay Segev. Jette’s remuneration
package and incentive opportunities are fully aligned with our
Remuneration Policy. The Committee agreed an annual base
salary of £750,000. This reflects Jette’s extensive experience in
senior executive positions, her deep knowledge of Entain given her
previous role as a Non-Executive Director and the very competitive
global market for talent in which Entain operates.
Rob Wood
(CFO & Deputy CEO)
In addition to his existing responsibility as CFO, Rob Wood was
appointed as Deputy CEO with effect from 21 January 2021.
To reflect the significant increased scope of his role and Rob’s
excellent performance during 2020, including acting swiftly to
understand and mitigate as far as possible the economic shock
of the Covid-19 lockdown, the Committee agreed an increase
in Rob’s salary to £525,000. His remuneration package and
incentive opportunities are unchanged and are in line with our
Remuneration Policy.
Robert Hoskin
(Chief Governance Officer from 1 January 2021)
Robert Hoskin’s appointment to the Board was announced
on 22 October 2020. His remuneration package and incentive
opportunities are fully aligned with our Remuneration Policy.
After careful consideration, the Committee agreed an annual base
salary of £400,000.
Sandeep Tiku
(Chief Operating Officer)
As announced on 21 January 2021, Sandeep Tiku, our Chief
Operating Officer, will join the Board during 2021. His remuneration
package and incentive opportunities will be fully aligned with our
Remuneration Policy. After careful consideration, the Committee
agreed an annual base salary of £500,000.
Entain plc | Annual Report 2020 Governance 105
Shareholder engagement
We remain committed to maintaining an open and transparent
dialogue with our shareholders and we specifically engaged with
our major investors in May 2020 to explain the remuneration
actions we were taking in response to the Covid-19 pandemic.
I would like to thank all shareholders for their constructive input and
for the support we received at our 2020 AGM, with 95% and 93%
of votes cast in favour respectively, for our Policy and our Annual
Report on Remuneration. Ongoing dialogue with shareholders on
executive remuneration is greatly valued, with feedback discussed
by the Committee and used to inform future decision making
and we will of course continue to engage with shareholders
going forward.
Conclusion
Through challenging external circumstances in 2020, Entain has
continued to perform strongly, delivering robust and sustainable
performance. The Committee have sought to make decisions which
effectively drive and support our growth strategy, while aligning
with UK best practice remuneration and governance standards.
We are committed to enabling Entain’s future success by investing
in the very best talent we can.
I hope that you find the report clear and informative, and that the
Committee has your support at the forthcoming AGM.
J M Barry Gibson
Chairman
4 March 2021
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 106
Directors’ Remuneration Report continued
Executive remuneration at Entain
The remuneration framework for Executive Directors at Entain is intended to incentivise them to execute on the Company’s
strategy and create long-term sustainable value for shareholders. It is simple, focused and aligned with key financial and strategic
business goals.
Year 1
Year 2
Year 3
Year 4
Year 5
Fixed
Pay
Base salary
Benefits
Pension
Total
pay
Annual
Bonus
One-year performance period
Key financial and
non-financial metrics
Malus provisions apply
Three-year deferral period
No further performance conditions
Clawback provisions apply
LTIP
Three-year performance period
Key financial and total shareholder return metrics
Malus provisions apply
Two-year holding period
No further performance
conditions
Clawback provisions apply
2020 – Executive Directors’ remuneration
£000s
Shay Segev (CEO 17 July 2020 – 21 January 2021)
Rob Wood (CFO & Deputy CEO)
Kenneth Alexander (CEO until 17 July 2020)
Base Salary
301
408
413
Benefits
2
15
45
Pension
–
18
–
Annual
Bonus
–
–
–
LTIP
–
270
1,222
Total
303
711
1,680
2020 – Incentive outcomes
2018-20 LTIP
Threshold
191p
Threshold
Median
Cumulative EPS
(50%)
Relative TSR
(50%)
Overall outcome
Stretch
224p
Outcome
216.1p
Stretch
UQ
Outcome
29.7%
81.8%
of maximum
97.7%
of maximum
89.8%
of maximum
Entain plc | Annual Report 2020 Governance 107
2021 – Executive Directors’ remuneration
Fixed Pay
Annual Bonus
Long-Term Incentive Plan
Jette Nygaard-
Andersen (CEO from
21 January 2021)
Salary – £750,000
Standard benefits
Pension – none
Rob Wood (CFO &
Deputy CEO from
21 January 2021)
Salary – £430,000 to
20 January 2021, £525,000 from
21 January 2021 (due to increase in
responsibilities)
Standard benefits
Pension – 4.5% of salary
Max. opportunity – 250% of salary
Target opportunity – 125% of salary
Max. opportunity – 300% of salary
Max. opportunity – 200% of salary
Target opportunity – 100% of salary
Max. opportunity – 250% of salary
Robert Hoskin (CGO)
Salary – £400,000
Standard benefits
Pension – none
Sandeep Tiku (COO
joining the Board in
2021)
Salary – £500,000
Standard benefits
Pension – none
Shay Segev (CEO until
21 January 2021)
Salary – £675,000
Standard benefits
Pension – none
Performance
measures
n/a
Framework
n/a
Material changes
from 2020
Increase in salary for the CFO
reflecting his additional role as
Deputy CEO
Max. opportunity – 200% of salary
Target opportunity – 100% of salary
Max. opportunity – 250% of salary
Max. opportunity – 200% of salary
Target opportunity – 100% of salary
Max. opportunity – 250% of salary
n/a
n/a
60% Operating profit
25% Growth in Online NGR
15% Responsible betting and gaming
Half deferred into shares for three
years
Malus and clawback provisions
Overarching Committee discretion
Introduction of responsible betting
and gaming measure
Change from Net Debt to Growth in
Online NGR
1/3rd cumulative EPS
1/3rd relative TSR vs. FTSE 100
1/3rd relative TSR vs. bespoke
group of sectoral peers
Two-year holding period
Malus and clawback provisions
Overarching Committee discretion
No changes
Performance metrics and link to strategy
The table below sets out how each of the performance metrics used in our incentive plans, links to our two strategic pillars of Growth
and Sustainability. More information about our strategic pillars is set out in the Strategic report on pages 24-25.
Growth
Sustainability
Link to Strategic pillars
Performance metric
Operating profit
Growth in Online NGR
Responsible betting and gaming
Earnings per share
Total shareholder return
Read more about our new strategy:
pages 24–25
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 108
Directors’ Remuneration Report continued
Remuneration in context
Committed to good governance
When considering executive remuneration, the Committee takes into account a wide range of factors including legal and regulatory
requirements, associated guidance, and the views of shareholders and their representative bodies. How the Committee addresses the
following principles, taken from the 2018 UK Corporate Governance Code, is set out below.
Clarity
Our remuneration framework is structured to support the financial and strategic objectives of the
Company, aligning the interests of our Executive Directors with those of shareholders.
We are committed to transparent communication with all our stakeholders, including shareholders –
page 86 sets out more details of how we engage with shareholders.
Simplicity
Risk
We operate a simple, but effective remuneration framework.
The annual bonus and LTIP reward performance against key measures of success for the business.
There is clear line of sight for management and shareholders.
Our incentives are structured to align with the Company’s risk management framework.
Three-year deferral under the annual bonus and the two-year holding period on LTIP awards create long-
term alignment, as do our within- and post-employment shareholding guidelines.
Both incentives also incorporate robust performance targets, malus and clawback provisions, and
overarching Committee discretion to adjust formulaic outcomes.
Predictability
The Remuneration Policy clearly sets out the possible future value of remuneration which Executive
Directors could receive, including the impact of share price appreciation of 50%.
Proportionality
There is clear alignment between the performance of the Company and the rewards available to
Executive Directors.
Incentive elements are closely aligned to our strategic goals, transparent and robustly assessed, with the
Committee having full discretion to adjust outcomes to ensure they align with overall Entain performance.
Alignment
to culture
We are committed to effective stakeholder and colleague engagement, part of which is ensuring that the
Committee sees all relevant data relating to pay and conditions in the wider workforce.
Operating responsibly towards our customers is fundamental to the way in which Entain operates and
remuneration outcomes are reviewed in the light of actions taken in support of our responsible betting and
gaming agenda.
This year we are introducing a specific responsible betting and gaming metric into our annual bonus
to reflect its importance to our sustainability and demonstrate a clear link between remuneration
and our culture. The Committee will also take broader Environmental, Social and Governance (“ESG”)
considerations into account and may apply discretion if necessary when assessing the appropriateness of
incentive outcomes.
Understanding our colleague context
Actions as a result of the Covid-19 pandemic
Our people are vital to our business. At Entain, we believe
in fairness throughout the Company. The Group operates a
number of general principles applied to all levels.
We will provide a competitive package compared to the
relevant market for each colleague.
We will ensure colleagues can share in the success of the
business, where appropriate, through performance-based
variable remuneration and the launch in 2021 of an all-
employee Sharesave plan.
We aim for transparency and a fair cascade of remuneration
throughout the Group.
The Covid-19 pandemic has impacted our colleagues as it has
everyone in 2020. Our people working in shops and stadia were
unable to work due to lockdowns and those based in offices have
been working from home. We have been incredibly proud of how
our people have reacted to these challenges. Their health, safety
and wellbeing were our priority throughout. For those people
placed on furlough, we ensured their salary was topped up to 100%
and an extensive communication programme continued throughout
the furlough period. Acknowledging the importance of supporting
mental health, especially during this time, we were pleased to
offer access to the Unmind app to all our people. We also rolled
out access to an Employee Assistance Programme (“EAP”) to all
colleagues globally.
Entain plc | Annual Report 2020 Governance 109
Consideration of colleague and stakeholder views
We would highlight the following in terms of the approach taken:
The Committee supports and aims for fairness and transparency
of remuneration arrangements across the Group, with consistent
principles underlying both pay for the Executive Directors and
that for our wider colleague population. To support this, the
Committee receives regular updates on remuneration practices
across the Group. For example, during the year, a detailed paper on
the specific remuneration arrangements in place in our UK Retail
division was presented to the Committee.
When setting Executive Directors’ remuneration, the Committee
considers the remuneration of other senior managers and
colleagues in the Group more generally to ensure that
arrangements for Executive Directors are appropriate in this
context. When determining salary increases for Executive
Directors, the Committee considers the outcome of the wider pay
review for the Group. In addition, pension arrangements for the
Executive Directors are aligned with those for our wider workforce.
We have a number of colleague forums within Entain. These play
an important role in providing our people with a voice and allow
them to provide the business with valuable insight and feedback
on a range of topics, including remuneration. Representatives from
our Retail Forum and National Forum (for non-retail colleagues
in the UK) were invited to attend a meeting of the Remuneration
Committee to provide direct feedback which included discussion
on topics currently concerning our colleagues. There was a specific
focus on our UK Retail colleague experience and particularly their
views on how the Company had reacted throughout the Covid-19
pandemic. In addition, Virginia McDowell, in her role as Designated
Workforce Director, provides the Committee with updates on
colleague views on remuneration and our next Committee
Chair will also attend meetings of the colleague forums (see the
section Board engagement with our workforce, shareholders and
stakeholders on page 86. Through the Board, the Committee is
kept updated as to general colleague views on remuneration; the
results of our global people surveys, including those related to pay
and benefits, are also presented to the Board.
‘Option A’ was chosen as it is considered to be the most accurate
way of identifying colleagues at P25, P50 and P75, and is
aligned with investor expectations. Under this approach we
calculate total remuneration for all of our UK colleagues and rank
them accordingly on this basis.
The lower quartile, median and upper quartile colleagues
were calculated based on full-time equivalent data as at
31 December 2020.
In reviewing the colleague pay data, the Committee is
comfortable that the P25, P50 and P75 individuals identified
appropriately reflect the colleague pay profile at those quartiles,
and that the overall picture presented by the ratios is consistent
with our pay, reward and progression policies for UK colleagues.
The calculation of salary and total remuneration includes
payments made that were reclaimed via the UK Coronavirus Job
Retention Scheme (furlough).
The Committee notes that Entain has in place a number of
initiatives to ensure that the pay and conditions for our wider
colleague population are fair and reasonable and receives regular
updates on reward practices throughout the Group.
We aim to provide a market competitive remuneration package in
each of the countries in which we operate. This includes benefits
appropriate to the local market and the ability for many colleagues
to share in the success of Entain via annual incentive programmes
and the launch in 2021 of an all-employee Sharesave plan.
Structures are in place to support salary progression and regular
market analysis, by geography and role function is carried out, with
action taken as appropriate.
Salaries are typically reviewed each year. For 2021, the difficult
decision was taken that fixed percentage increases would not be
awarded to all colleagues. This was in the light of the challenges
faced by the business during the Covid-19 pandemic.
CEO Pay Ratio (Unaudited)
Relative Importance of the Spend on Pay
The first table below sets out the ratio at median, 25th and
75th percentile of the total remuneration received by our
CEOs compared to the total remuneration received by our UK
colleagues, while the second provides further information on the
total colleague pay figure used for each quartile, and the salary
component within this. Our combined CEOs’ 2020 pay was 95
times the median (50th percentile). This represents a significant
reduction from last year, which is mainly attributable to a lower
level of CEO pay for 2020 than in 2019. The Committee considers
that this is not out of line with other retail organisations.
2020 CEO pay ratio
2019 CEO pay ratio
Method
Option A
Option A
25th
percentile
106
278
50th
percentile
95
229
75th
percentile
75
170
UK colleagues – pay element
– Salary
– Total remuneration
25th
percentile
15,730
18,667
50th
percentile
17,050
20,808
75th
percentile
20,476
26,429
The table below sets out the overall spend on pay for all colleagues
compared with the returns distributed to shareholders.
Significant distributions
Staff costs (£m)1
Distributions to shareholders
(£m)2
2020
524.0
2019 % change
(21.9)%
671.2
–
195.5 (100.0)%
1. The fall in staff costs is largely attributable to payments received under the UK
Coronavirus Job Retention Scheme (furlough) which offset staff costs for 2020.
2. No dividends were paid during 2020.
Gender Pay Gap Reporting
2020 is the third year in which we have published our Gender Pay
Gap results. Our median hourly pay difference between male and
female colleagues in the UK is 7.1%, which compares favourably
with the UK median pay gap of 15.5% across all sectors (source:
Office for National Statistics, November 2020). Our median bonus
pay gap is 13.0%.
From further analyses it is clear that these gaps largely remain a
function of lower numbers of women at our senior levels. We are
committed to making Entain an inclusive place to work and we
are continuing to invest in initiatives to create greater diversity at
senior levels. Further information on these initiatives is provided
in the Investing in people and communities section on page 47.
Our Gender Pay Gap report for the year ended 5 April 2020,
together with contextual information and more detail on the
initiatives we have underway to close our gender pay gap, can be
viewed on the Company’s website at www.entaingroup.com.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
110
Annual Report on Remuneration
The 2020 Annual Report on Remuneration contains details of the remuneration paid and awarded to Directors during the financial year
ended 31 December 2020. This report has been prepared in accordance with the provisions of the Companies Act 2016, Schedule 8 of the
Large and Medium Sized Companies Groups (Accounts and Reports) (Amendment) Regulations 2013 (the Regulations), the Listing Rules
of the UK Financial Conduct Authority and the UK Corporate Governance Code. An advisory resolution to approve the Annual Report on
Remuneration and the Annual Statement will be put to shareholders at the 2021 AGM.
Single figure of remuneration table (audited)
The remuneration of Executive Directors, showing the breakdown between components with comparative figures for the prior Financial
Year, is shown below. Figures provided have been calculated in accordance with the Regulations. Further information on the component
elements is provided in subsequent sections.
Base
Salary
Benefits
Pension
Annual
Bonus
Long-Term
Incentive1
Total
Total fixed
remuneration
Total variable
remuneration
Executive
Directors
Shay Segev2
Rob Wood
Kenneth
Alexander3,4
2020
2019
2020
2019
2020
2019
£000
301
–
408
329
413
863
£000
2
–
15
12
45
118
£000
–
–
18
12
–
–
£000
–
–
–
658
–
2,000
£000
–
–
270
–
1,222
2,253
£000
303
–
711
1,011
1,680
5,234
303
–
441
353
458
981
£000
–
–
270
658
1,222
4,253
1. An assumed share price of 1,035.3p has been used to calculate the value of the 2018 LTIP awards shown for each Executive Director in respect of 2020. This represents the
average share price over the final quarter of the 2020 financial year. The proportion of the value of the 2018 LTIP that is attributable to share price appreciation is 3.7%.
2. Shay Segev was appointed as CEO and joined the Board on 17 July 2020. He stepped down from the Board on 21 January 2021. The LTIP awards granted to Shay in 2018 will
lapse when he leaves employment and so nil value is attributed to them in the table above.
3. Kenneth Alexander retired as CEO, and left the Board, on 17 July 2020.
4. The amount shown in last year’s report for Kenneth Alexander in respect of the 2017 LTIP was calculated based on an assumed share price of 884.2p and the original number
of shares awarded. The actual share price at vesting on 29 December 2020 was 1,158.5p, and the original number of shares awarded was reduced to 202,155 due to time pro
rating on Kenneth Alexander’s retirement. The amount shown has been updated to reflect these changes and the value of dividend equivalents payable. The proportion of the
value of the 2017 LTIP that was attributable to share price appreciation is 18.9%.
Further information on the single figure of remuneration table
Base Salary
Salaries are normally reviewed on 1 January each year.
As set out in the Chair’s statement on page 104, Shay Segev was appointed CEO on 17 July 2020 on an annual base salary of £675,000.
Kenneth Alexander was on an annual base salary of £816,000 until his retirement on 17 July 2020, while Rob Wood was on an annual
base salary of £430,000.
All three individuals agreed to a 20% reduction in their annual base salary for the period 1 May to 31 July 2020 (17 July in the case of
Kenneth Alexander). As a result, for this period, Kenneth’s salary was temporarily reduced to £652,800 and Rob’s was reduced to
£344,000. From the date of his appointment as CEO, Shay’s salary was reduced to £540,000.
Benefits and pension
Taxable benefits for Executive Directors include private medical and life insurance.
Rob Wood received a car allowance of £10,700 and participated in the defined contribution pension arrangements which are available on
the same basis as for other colleagues, receiving a company contribution of 4.5% of his base salary.
Kenneth Alexander received a housing allowance of £16,500 and reimbursement of certain travel expenses incurred in undertaking his
duties as a Director. The table above includes these expenses and the related tax.
2020 Annual Bonus Plan
In May 2020, the Executive Directors (along with all Executive Committee members) waived their entitlement to participate in the annual
bonus plan for 2020.
Entain plc | Annual Report 2020 Governance 111
2018 Long-Term Incentive Plan
The Long-Term Incentive Plan values shown in the single figure table for 2020 relate to the vesting of LTIP awards made in 2018.
The targets attached to the 2018 LTIP awards and the performance outcome against these are set out below.
Relative TSR vs. FTSE 51-150
Cumulative adjusted EPS
Weighting
50%
50%
100%
Threshold (25%
vesting)
Median:
6.9%
191p
Maximum (100%
vesting)
Upper quartile:
30.5%
224p
Straight-line vesting between
threshold and maximum
Entain performance
Vesting
29.7% 97.7% of maximum
216.1p 81.8% of maximum
89.8% of maximum
In assessing the outcome of the EPS element, the Committee have reviewed several items that have impacted EPS performance, both
positive and negative, during the performance period. In reaching their conclusion of a vesting level of 81.8%, the Committee have
excluded the benefit of furlough payments received during 2020, and also taken account of the impact of the introduction of IFRS 16, our
acquisition of Neds and the exit from our business in Switzerland (none of which were reflected in the original targets). In the Committee’s
view, a level of vesting of 81.8% for this part of the award is a fair and reasonable outcome.
As an additional check, the Committee assessed whether Entain’s overall performance over the three years justified the combined vesting
level of 89.8%. In doing so, they took into account the Company’s financial and operational achievements over this period, our share price
performance, and other considerations such as the progress we have made with our responsible betting and gaming and sustainability
programmes. The Committee found it particularly reassuring that over the period:
We have seen growth and market share gains in all our major markets and BetMGM, our joint venture in the US, is now live in 12 states
with strong momentum as a leading player in that market.
The Company’s share price had increased by 22.5% from 1 January 2018 to 31 December 2020, despite headwinds from Covid-19 in
the final year.
We announced a clear new strategy for sustainability, growth and innovation in November 2020, launching a wide range of targeted
initiatives in these areas.
All of these factors gave the Committee comfort that a vesting outcome of 89.8% of maximum was fair and reasonable, and appropriately
reflected Entain’s performance and value delivered to shareholders over the period.
The LTIP awards granted in 2018 had not vested at the time this report was finalised, and so the reported value has been based on the
average share price in the last three months of the financial year, which was 1,035.3p. The maximum value of the awards and the value
of the awards included in the single figure of remuneration table is set out below.
R Wood
K Alexander
LTIP shares under
award1
29,043
131,4472
Maximum value
of award achievable
£300,682
£1,360,871
% vesting
89.8%
89.8%
LTIP shares
vesting
26,080
118,039
Value of shares
vesting
£270,006
£1,222,058
1. Shay Segev will leave employment before the vesting date of the 2018 LTIP award and so the grant of 153,180 shares made to him will lapse.
2. The original number of shares granted to Kenneth Alexander was 225,338. On his retirement on 17 July 2020, 93,891 shares lapsed due to the application of time pro-rating.
Share awards granted during 2020 (audited)
The table below sets out share awards granted to the Executive Directors during 2020 under the LTIP and the Annual & Deferred Bonus
Plan (ADBP).
Name
S Segev
R Wood
K Alexander
Award type
LTIP
LTIP
ADBP2
LTIP
ADBP2
Grant date
10 June 2020
10 June 2020
10 June 2020
10 June 2020
10 June 2020
Face value
of award Shares awarded
202,7701
136,803
39,067
311,529
118,663
£1,593,372
£1,075,000
£329,231
£2,448,000
£1,000,000
% vesting
at threshold
performance
25%
25%
n/a
25%
n/a
% vesting at
maximum
performance
100%
100%
n/a
100%
n/a
Performance
conditions
See below
See below
None
See below
None
1. The award made to Shay Segev will lapse when he leaves employment.
2. Consistent with the Directors’ Remuneration Policy, 50% of an Executive Director’s annual bonus is deferred into shares under the ADBP. The ADBP awards shown above have
been granted in respect of the annual bonuses for the 2019 financial year. This award will normally vest on 10 June 2023, being the third anniversary of the award date, subject
to continued employment. The number of shares was calculated in line with the Plan rules based on a share price of 842.7p, being the average price measured over the last three
months of 2019.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 112
Annual Report on Remuneration continued
2020 Long-Term Incentive Plan
For the 2020 LTIP, the Committee wished to increase the emphasis on how we perform relative to peers, while not losing sight of our
overall performance against the broader market. As a result, the relative TSR weighting for the 2020 awards was increased from 50%
to two-thirds, with the measurement split equally between the FTSE 51-150 and a new bespoke group of sectoral peers. The remaining
one-third remained based on cumulative EPS, a key financial indicator for the business. Performance for these awards will be measured
over the period 1 January 2020 to 31 December 2022.
Measure
Relative TSR vs. FTSE 51-150
Relative TSR vs. bespoke peer group1
Cumulative adjusted EPS
Weighting
One-third
One-third
One-third
Threshold (25% vesting)
Maximum (100% vesting)
Median
Upper quartile
295p
Straight-line vesting between threshold and maximum
267p
1. The bespoke peer group comprises the following companies for the 2020 awards: 888 Holdings, Betsson, Evolution Gaming Group, Flutter Entertainment, Gamesys, International
Game Technology, Kindred Group, Playtech, Rank Group, TabCorp Holdings, The Stars Group, and William Hill.
The Committee was comfortable that the EPS targets represented stretching performance, with management required to deliver three-
year CAGR in EPS of 23% to reach maximum vesting.
At the time the LTIP awards would usually have been made (March 2020), we were in the middle of the initial impact of the Covid-19
pandemic. As a result, the Entain share price had fallen significantly. The Committee was conscious that granting at that point could have
led to unintended gains at vesting given an artificially low grant price. As such, the grant was postponed until June, by which time the
share price had substantially recovered. Nevertheless, the terms of the awards still provide the Committee with the ability to review the
outcome at vesting and to make appropriate adjustments if it concludes that participants have benefited from ‘windfall gains’.
Shareholdings and share interests (audited)
Shareholding guidelines
Executive Directors are required to maintain a shareholding as determined by the Committee and retain this for a period of time following
cessation from the role. Executive Directors are expected to build up their shareholding over a period of five years from the date of
appointment as an Executive Director (or, if later, from the date of any change to the terms of the shareholding requirement). Shares that
count towards the requirement are those that are beneficially owned, any vested share awards subject to a holding period and unvested
deferred bonus shares (on an after-tax basis). The current shareholding requirements are:
CEO – 400% of base salary.
Other Executive Directors – 200% of base salary.
In line with the provisions of the UK Corporate Governance Code, the Committee has implemented post-employment shareholding
requirements for the Executive Directors to ensure that they remain aligned with shareholders for a period after they step down from
the Board. The Committee expects Executive Directors to maintain 100% of their guideline (or their actual holding if lower) for two
years following departure, and this was applied in practice for the departure of Kenneth Alexander during the year. Shares purchased
by the Executive Directors out of their own funds will not count towards these guidelines. To assist in the implementation of the
post-employment shareholding guideline our policy includes the potential to require leavers to deposit the requisite number of
shares into a trust or nominee arrangement. In the case of good leavers, future vestings may be made subject to adherence to the
shareholding requirement.
Entain plc | Annual Report 2020 Governance 113
Share interests
As at 31 December 2020, the value of Shay Segev and Rob Wood’s beneficial shareholdings were £18.8m and £0.5m respectively. Shay’s
shareholding significantly exceeds his requirement of 400% of salary. Following his promotion to the Board in 2019, Rob Wood continues
to build up his holding in Entain shares.
Executive Directors’ share interests as at 31 December 2020 are set out below.
Share
interests
subject to
performance
conditions
Share
interests
not subject to
performance
conditions
Number of
beneficially
Director
S Segev4
R Wood
K Alexander5
owned shares1 Share awards Share options Share awards Share options2
53,352
–
184,163
1,602,800
25,500
1,500,000
663,958
–
–
–
362,890
283,571
–
39,067
328,532
Total interests
at 31
December
2020
2,320,110
427,457
2,296,266
Value of
shares held as
a % of base
salary3
2,781%
102%
n/a
Shareholding
requirement
met?
Yes
No
n/a
1. Beneficially owned shares include shares held directly or indirectly by connected persons. The value of £18.8m and £0.5m for Shay Segev and Rob Wood respectively is based
on the closing share price at 31 December 2020 (1,133.5p). There were no changes in the number of beneficially owned shares for any Executive Director between 31 December
2020 and the date this report was signed.
2. Share options, not subject to performance conditions, are those which vested under the 2017 LTIP award and had not been exercised at 31 December 2020.
3. In line with our shareholding policy, the value of shares held as a percentage of base salary includes shares owned by the Executive Director, the after-tax shares held under the
Annual & Deferred Bonus Plan and any vested but not exercised LTIP 2017 awards. The value of shareholding is based on the closing share price at 31 December 2020 (1,133.5p).
4. The 663,958 share options held, subject to performance conditions, by Shay Segev at 31 December 2020, will lapse when he leaves employment.
5. As a former Executive Director, the beneficially owned shares column for Kenneth Alexander reflects the position on 17 July 2020, the date he retired from the Board.
Executive Directors’ service contracts and external appointments
Executive Directors have rolling contracts, terminable by either party giving the appropriate notice.
Director
J Nygaard-Andersen
R Hoskin
R Wood
Date appointed
21 January 2021
1 January 2021
5 March 2019
Arrangement
Service contract
Service contract
Service contract
Notice period
12 months
12 months
12 months
Subject to Board approval, Executive Directors are able to accept appropriate outside non-executive director appointments provided the
aggregate commitment is compatible with their duties as Executive Directors. The Executive Directors concerned may retain fees paid for
these services. Jette Nygaard-Andersen is a non-executive director of Coloplast A/S; the other Executive Directors do not currently hold
any external appointments.
Payments for loss of office (audited)
Kenneth Alexander
Kenneth Alexander retired from the position of CEO on 17 July 2020, after 13 years with the Group. The Committee gave careful
consideration to the treatment of Kenneth’s remuneration arrangements, taking into account that Kenneth has subsequently retired from
work and has not taken up another full-time role elsewhere:
While Kenneth had a 12-month notice period, the Committee negotiated a reduced payment in lieu of notice of equivalent to six
months’ salary. Kenneth remained available during this to ensure a smooth handover.
A payment of £473,908 was made in respect of notice period and untaken holiday.
Given Kenneth’s retirement, the Committee was comfortable that he should be treated as a good leaver in accordance with the
Remuneration Policy and the provisions of the ADBP and LTIP plan rules. As such, he retained his outstanding ADBP and LTIP share
awards, which will continue to vest over their original timeframes. His LTIP awards were time-apportioned based on time served during
the performance period and remain subject to their performance conditions and the two-year holding period. Their malus and clawback
provisions will also remain in force.
In line with our post-employment shareholding requirement policy, Kenneth will be required to meet his full shareholding requirement of
400% of salary for two years following his departure.
£3,000 (excluding VAT) was paid directly to Kenneth’s legal advisers in respect of legal services provided to him in connection with
his termination.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 114
Annual Report on Remuneration continued
Summary of performance
The chart below shows the value of £100 invested in Entain plc since obtaining Main Market listing on 1 February 2016, compared with
the value of £100 invested in the FTSE 100 Index and the FTSE 350 Travel and Leisure Index. The FTSE 100 has been chosen on the
basis that this is the index in which Entain was a constituent of at the end of 2020.
£100 invested in Entain plc on 1 February 2016 would have been worth £280 at 31 December 2020 compared with £130 if invested in
the FTSE 100 and £106 if invested in the FTSE 350 Travel and Leisure Index.
Over the three-year period 1 January 2018 to 31 December 2020 (the period covered by the 2018 LTIP) the total shareholder return
(TSR) of Entain shares was 34% compared with -5% for the FTSE 100 and -15% for the FTSE 350 Travel and Leisure Index.
250
200
150
100
50
01/02/16
31/12/16
31/12/17
31/12/18
31/12/19
31/12/20
Entain
FTSE 100
FTSE 350 Travel & Leisure Index
Source: Datastream
Summary of CEO remuneration outcomes: 2015–2020
Role
Single figure of total
remuneration3
Annual bonus pay-out4
(% maximum)
LTIP vesting
(% maximum)
Legacy award vesting
(% maximum)
December
2020
S Segev1 K Alexander2
CEO
CEO
December
2019
K Alexander
CEO
December
2018
K Alexander
CEO
December
2017
K Alexander
CEO
December
2016
K Alexander
CEO
December
2015
K Alexander
CEO
£0.3m
£1.68m
£5.23m
£19.10m
£18.21m
£17.83m
£3.41m
–
–
–
–
100%
92%
100%
89.8%
91.1%
–
–
–
–
–
–
–
–
100%
100%
100%
100%
1. Shay Segev was appointed CEO on 17 July 2020 and stepped down from the Board on 21 January 2021. Shay’s 2018 LTIP award will lapse when he leaves employment.
2. Kenneth Alexander retired from the role of CEO on 17 July 2020.
3. Figures for 2015, 2016 and 2017 were previously reported in euros and have been converted into Sterling using an average rate for the relevant year.
4. The Executive Directors waived any entitlement to bonus for 2020 due to the Covid-19 pandemic.
Entain plc | Annual Report 2020 Governance
115
Change in Directors pay for the year in comparison to all Entain colleagues
The table below shows the year-on-year change in salary, benefits and annual bonus earned from 2020 to 2019 for all Executive and
Non-Executive Directors and the Chair of the Board, compared to that for Entain’s UK colleagues. The comparison is not able to be shown
for those individuals who were not in role for the full 12 months of 2019.
Director
S Segev1
R Wood2
B Gibson2
J Anscombe3
P Bouchut3
P Isola3
S Morana3
V McDowell3
J Nygaard-Andersen2
D Satz1
All colleagues4
Base Salary/Fees
–
–
–
(8.5)%
(3.8)%
(8.3)%
(5.0)%
(8.5)%
–
–
3.2%
Benefits
–
–
–
–
–
–
–
–
–
–
6.7%
Annual bonus
–
–
–
–
–
–
–
–
–
–
(56.3)%
1. Shay Segev and David Satz were appointed to the Board in 2020 and therefore no prior year comparison is available.
2. Rob Wood, Barry Gibson and Jette Nygaard-Andersen joined the Board during 2019. As they were not in role for the full 12 months of 2019, no comparison is shown.
3. Fees for Non-Executive Directors in 2020 were subject to a 20% reduction for three months.
4. All colleague data used is comprised of that used to calculate the CEO pay ratio. To eliminate the impact of changes in colleague numbers year-on-year this has been based on
average base salary, benefits and annual bonus data for 2019 and 2020.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 116
Annual Report on Remuneration continued
Implementation of the Remuneration Policy for Executive Directors in 2021
The table below provides a summary of how the Executive Directors’ Remuneration Policy will be implemented in 2021.
Element
Salary
Benefits
Approach
CEO (J Nygaard-Andersen from 21 January 2021) – £750,000
CFO & Deputy CEO – £430,000 until 20 January 2021; increase to £525,000
from 21 January 2021 when appointed Deputy CEO
CGO – £400,000; as agreed on appointment from 1 January 2021
COO1 – £500,000: as agreed on appointment
CEO (S Segev until 21 January 2021) – £675,000; no change from
salary agreed on appointment in July 2020
No change in how the Policy will be operated
Executive Directors will continue to receive standard benefits such as
medical and life insurance cover and car allowance
All colleagues, including the Executive Directors, have the opportunity to
participate in a Company-provided pension in line with statutory requirements:
– CEO (J Nygaard-Andersen and S Segev) – Opted out of the plan
– CFO – 4.5% of salary
– CGO – Opted out of the plan
– COO1 – Opted out of the plan
Annual Bonus
No change in maximum opportunity:
– CEO (J Nygaard-Andersen) – 250% of salary
– CFO & Deputy CEO, CGO and COO1 – 200% of salary
– CEO (S Segev) – no entitlement to annual bonus for 2021
On-target pay-out equivalent to 50% of the maximum opportunity
Performance measures – 60% Operating Profit, 25% Growth in
Online NGR, 15% Responsible betting and gaming (see page 117)
Half of any bonus award will be deferred into shares for three years
Targets are considered commercially sensitive, but will be disclosed in full in the 2021 DRR
LTIP
No change in maximum opportunity:
– CEO (J Nygaard-Andersen) – 300% of salary
– CFO, CGO and COO1 – 250% of salary
– CEO (S Segev) – no entitlement to an LTIP award for 2021
No change to the performance measures:
Cumulative EPS (1/3rd)
– Threshold vesting – 255p
– Maximum vesting – 296p
Relative TSR vs. the FTSE 100 (1/3rd)
– Threshold vesting – median performance
– Maximum vesting – upper quartile performance
Relative TSR vs. a bespoke group of sectoral peers (1/3rd)
– Threshold vesting – median performance
– Maximum vesting – upper quartile performance
– Bespoke peer group of the following companies – 888 Holdings, Betsson,
Caesars Entertainment, Evolution Gaming Group, Flutter Entertainment, Gamesys,
International Game Technology, Kindred Group, Playtech, Rank Group, TabCorp Holdings
Shareholder
Guidelines
Within-employment shareholding requirements:
– CEO – 400% of base salary
– CFO, CGO and COO1 – 200% of base salary
Post-employment shareholding requirements:
– Executive Directors are required to maintain 100% of their guideline
(or their actual holding if lower) for two years following departure
– Shares purchased by the Executive Directors out of their own funds
will not count towards these guidelines
1. Sandeep Tiku will be appointed to the Board during 2021.
Entain plc | Annual Report 2020 Governance 117
2021 Annual bonus metrics
The Committee is aware of the importance of, and increasing focus on, ESG
performance and the move towards the inclusion of appropriate metrics within
incentive plans. For Entain, the most directly relevant ESG factor is responsible
betting and gaming and the Committee is pleased to be introducing a metric
related to this into the annual bonus for 2021.
Why does the Committee think it
is important to include responsible
betting and gaming in the annual
bonus?
We unveiled our new Sustainability
Charter on 12 November 2020, within
the strategy presentation provided to
the City. Entain’s focus on responsible
betting and gaming is fundamental
to our long-term strategy to deliver
sustainability and growth and is instilled
in our internal culture and values.
At the same event, we launched our
new Advanced Responsibility & Care
(“ARC”) programme, which will utilise
our advanced, proprietary technology to
continuously enhance and personalise the
protection of our customers. Including a
measure relating to responsible betting
and gaming in our annual bonus highlights
just how important this agenda is and
sends a strong message about our clear
commitment to player protection.
Why does the Committee believe
now is the right time to introduce
responsible betting and gaming
metrics into the annual bonus?
In recent years, the Committee has kept
under review the extent to which there
has been a suitable responsible betting
and gaming metric for inclusion in the
annual bonus. With new technology and
academic insight available, the Committee
is pleased that there are now metrics
which allow for a robust, measurable and
consistent assessment of our performance
in relation to responsible betting
and gaming.
How will the new metrics impact
remuneration?
15% of the 2021 annual bonus plan will
be based on our new global responsible
betting and gaming metric.
How will the new metric work?
Who will this new metric apply to?
To ensure that our approach to responsible
betting and gaming becomes ever more
embedded into our day-to-day operations,
this metric will also be included for all
of our colleagues who participate in our
Group annual bonus plan.
How will the rest of the annual bonus
be determined?
We are retaining profit as a measure in a
similar proportion to previous years (60%).
This will however move to Operating Profit
from EBITDA, reflecting that the latter
will become less relevant post-IFRS 16.
The remaining 25% will be determined by
a Growth in Online Net Gaming Revenue
(“NGR”) measure, a change from Net
Debt. The Committee believes this change
is appropriate as NGR is one of our key
performance indicators and growing
this metric, in particular in relation to our
online business, is fundamental to driving
shareholder value.
The metric is aligned to the delivery of
new responsible betting and gaming
features which enhance our systems
and processes, ultimately improving the
detection and prevention of problematic
play. Specifically, we will be aggregating
two measures into the calculation:
Half (7.5% of the total bonus) will relate
to the UK market, with measures based
on the Group’s progress in rolling out
new significantly enhanced protection
trackers, within the ARC programme.
This will improve our ability to identify
and provide tailored support and
interactions to those most at risk.
The other half will relate to international
markets. In many cases these markets
are less mature and problem gambling
solutions are often less developed as
a result. By taking our best practice,
we can use our learnings elsewhere to
improve our player protection offering
in these markets. The new measure will
track our progress in rolling out new
markers and algorithms (bespoke by
territory) in at least ten of these markets
during 2021.
How will we ensure that the metrics
will be robustly measured, reviewed
and reflect underlying performance?
To provide the Committee and
shareholders with comfort that the
outcomes are robust and appropriately
reflect underlying performance, the
business has engaged EPIC Risk
Management – the leading independent
gambling harm minimisation consultancy –
whose mandate is to review and evaluate
the delivery of these projects. In addition,
when determining the outcome of this
metric, we will also receive input from our
ESG Committee, who will have overall
oversight of these projects.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 118
Annual Report on Remuneration continued
2021 LTIP targets
Minor changes were made to our LTIP performance metrics last year in order to place greater emphasis on our performance relative to our
peers. The Committee has reviewed these metrics and is comfortable that they remain appropriate, and so is not proposing any change,
other than minor amendments to the TSR comparator groups. The metrics for the 2021 awards will be:
One-third Cumulative EPS.
One-third Relative Total Shareholder Return vs. the FTSE 100 (previously the FTSE 51 – 150, reflecting Entain’s current membership of
the FTSE 100).
One-third Relative Total Shareholder Return vs. a bespoke group of sectoral peers. (Due to corporate activity, The Stars Group and
William Hill have been removed from the group used for the 2020 LTIP award, and Caesars Entertainment has been added.)
The Committee will evaluate the positioning of the share price when it comes to grant the LTIP awards in early 2021. Should uncertainty
and volatility related to Covid-19 still be a factor at that time, the Committee will consider the appropriate course of action to ensure that
Executive Directors are not provided with the potential for ‘windfall gains’.
The EPS target range of 255p – 296p has been set with reference to internal and external forecasts for cumulative EPS, excluding the
US joint venture, over the next three years. The Committee considers this to be an appropriately stretching range given that achieving
maximum vesting would require a CAGR in EPS of 16% over the three-year performance period. Consistent with 2019 and 2020, the 2021
EPS targets exclude earnings from the Group’s US joint venture given the uncertainty around the way in which the US markets will open
up, and how soon. As the performance of the US joint venture will form a significant element of the future value of Entain, the Committee
believe that this is adequately reflected via the TSR elements of the LTIP (where a US comparator is now included in the bespoke peer
group). However, if necessary, the Committee may apply discretion at the end of the performance period to take into account performance
in this important new market. Inevitably there are several factors which cannot be known at the time targets are originally set and could
impact the 2021 LTIP. These factors might include the impact of corporate activity, material regulatory or tax changes, joint ventures and
accounting changes. In each case the Committee retains discretion whether and, if so, how to adjust targets post grant and/or to take the
impact into account when determining the performance outcome.
Chairman and Non-Executive Directors
Single figure of remuneration table (audited)
The remuneration of the Non-Executive Directors is shown below.
Non-Executive Directors
Barry Gibson
Lee Feldman2
Jane Anscombe3
Pierre Bouchut
Peter Isola
Virginia McDowell
Stephen Morana
Jette Nygaard-Andersen4
David Satz5
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Fees1
£000
428
71
56
350
101
111
106
110
81
88
101
110
147
155
85
5
17
–
Benefits
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Annual
Bonus
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Long-term
incentives
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Pension
£000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£000
428
71
56
350
101
111
106
110
81
88
101
110
147
155
85
5
17
–
Total fixed
remuneration
428
71
56
350
101
111
106
110
81
88
101
110
147
155
85
5
17
–
Total variable
remuneration
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. All Non-Executive Directors (who were on the Board at 1 May 2020) agreed to a 20% reduction in their fee for the period 1 May to 31 July 2020.
2. Lee Feldman stepped down from the Board on 27 February 2020.
3. Jane Anscombe stepped down from the Board on 31 December 2020.
4. Jette Nygaard-Andersen was appointed as CEO on 21 January 2021.
5. David Satz joined the Board on 22 October 2020.
Entain plc | Annual Report 2020 Governance 119
Fee structure
The table below sets out the fee structures for 2021 for the Non-Executive Directors and the Chairman of the Board. These are
unchanged from those in 2020. In early 2020, the Non-Executive Directors were given the one-off choice to have their fees denominated
in either GBP or Euros, and subsequently an equivalent USD fee level was established.
Chairman of the Board
Senior Independent Non-Executive Director
Board member
Chair of Audit, Remuneration or ESG Committee
Letters of appointment
As at 1 January 2021
£450,000
£155,000
€100,000 or £85,000 or $117,000
€25,000 or £21,000
Non-Executive Directors are appointed under letters of appointment and as such do not have service contracts. Apart from the Chairman
of the Board, each Non-Executive Director is subject to an initial three-year term subject to annual re-election at the Company’s AGM.
All letters of appointment are available for viewing at the Company’s registered office and at the AGM.
Director
B Gibson
P Bouchut
S David
P Isola
V Jarman
V McDowell
D Satz
Date appointed
4 November 2019
13 September 2018
4 March 2021
2 February 2016
4 March 2021
6 June 2018
22 October 2020
Arrangement
Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment
Notice period
3 months
3 months
3 months
3 months
3 months
3 months
3 months
Payments for loss of office (audited)
Lee Feldman stepped down from his role as Chairman of the Board and left the Company on 27 February 2020. The Remuneration
Committee approved the following exit terms:
Lee waived the contractual right under his amended letter of appointment to a 12-month notice period and any associated payment in
lieu of notice. No further fees were paid to Lee following his departure date.
Lee agreed to continue to serve on the BetMGM board of directors, as one of Entain’s representatives until 31 December 2020, and to
waive any fee for these services.
In December 2017, Lee received a one-off fee as part of a move to bring his remuneration arrangements into line with best practice
for non-executive chairman of FTSE 250 companies. The net-of-tax fee was invested into Entain shares, half of which vested on
13 December 2019, and half of which remained outstanding at the time of his departure. Vesting was conditional on Lee continuing
as Chairman throughout this period, which was the intention at that time. The revised UK Corporate Governance Code brought in
new provisions around the length of tenure for board chairmen, with the result that Lee stood down earlier than originally envisaged.
Taking into account these circumstances, coupled with Lee agreeing to waive his contractual notice period and serve on the BetMGM
board until December 2020 for no compensation, the Remuneration Committee determined to treat Lee as a good leaver for the second
tranche of these shares. As such, 26,134 shares vested and were released to him on 13 December 2020. These had a market value of
£275,714.
Share interests (audited)
Non-Executive Directors’ share interests as at 31 December 2020 are set out below. With the exception of David Satz who only joined the
Board in October 2020, all Non-Executive Directors hold shares with a value in excess of one times their annual fee.
Director
B Gibson
L Feldman2
J Anscombe
P Bouchut
P Isola
V McDowell
S Morana
J Nygaard-Andersen
D Satz
Number of beneficially
owned shares1
66,487
287,408
17,169
38,500
36,135
15,000
34,184
9,900
–
1. Beneficially owned shares include shares held directly or indirectly by connected persons. There were no changes in the number of shares owned outright for any Non-executive
Director between 31 December 2020 and the date this report was signed.
2. As a former Non-executive Director, the beneficially owned shares for Lee Feldman reflects the position on 27 February 2020, the date he retired from the Board.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 120
Annual Report on Remuneration continued
The Remuneration Committee
Role of the Committee
The Committee assists the Board in fulfilling its responsibility
to shareholders to ensure that the remuneration policy
and practices for Executive Directors and senior executive
management rewards fairly and responsibly to support the
strategy and promote the long-term success of the Company.
It further oversees the Company’s overall remuneration strategy
and ensures it is aligned to the Company’s purpose and values
and is clearly linked to the successful delivery of the Company’s
long-term strategy.
Committee membership and attendance
Committee members during 2020
J Anscombe
V McDowell
S Morana
J Nygaard-Andersen1
Independent
Yes
Yes
Yes
Yes
Meetings
attended/
eligible to
attend
8/8
7/8
8/8
7/7
1. Jette Nygaard-Andersen joined the Remuneration Committee in February 2020 and
stepped down in January 2021 on her appointment as CEO.
During the year, there were five scheduled Committee meetings
and three calls called at shorter notice. Following the Chairman’s
review of the Board’s way of working, it is intended that there will
be six scheduled meetings in 2021, with ad hoc calls as required.
None of the Committee members or attendees is involved in any
Committee decisions from which they may financially benefit
personally (other than as shareholders) in the decisions made by
the Committee. The Chief Executive Officer, Chief Financial Officer
& Deputy CEO, Chief People Officer and the Director of Reward
may attend meetings at the invitation of the Committee but are
not present when their own remuneration is being discussed.
The Company Secretary acts as the secretary to the Committee.
Key responsibilities
Recommending to the Board the remuneration policy for
Executive Directors and senior management.
Setting the remuneration packages for each
Executive Director.
Setting the remuneration package for the Chairman of
the Board.
Overseeing the remuneration policy for all colleagues.
The Committee’s terms of reference can be found on the
Company’s website at www.entaingroup.com.
Activities
Approval of the 2019 Directors’ Remuneration Report.
Determination of the pay-outs from the 2019 annual bonus
arrangements and the 2017 LTIP awards.
Approval of targets for the 2020 annual bonus plan.
Approval of the 2020 LTIP awards and their associated
performance measures and targets.
Review and approval of the 2019 Gender Pay Report.
Review of shareholder feedback received in relation to
Directors’ remuneration following the 2020 AGM.
Consideration of the impact of Covid-19 on remuneration
arrangements, both in the external market and within
the Group.
Approval of the leaver terms for Kenneth Alexander and the
appointment terms for Shay Segev and Robert Hoskin.
Review of performance metrics for the 2021 annual
bonus plan.
Receiving updates on external market developments in
remuneration and governance.
Evaluation of the Remuneration Committee.
Approval of the Executive Director Shareholding Policy
including post-employment shareholding requirements.
Receiving updates on all-colleague remuneration
arrangements throughout the Group, including the launch of
the Entain Sharesave plan.
Review of salaries and remuneration packages for senior
executives and fees for the Chairman.
Entain plc | Annual Report 2020 Governance 121
Remuneration Committee evaluation
The Committee undertook an annual review of its effectiveness through an online questionnaire administered by an external facilitator
(Lintstock). The review concluded that the Committee was performing strongly and that members felt they received detailed and
timely feedback of shareholder views and the dynamics of the wider pay environment. Areas of focus for 2021 included training
on a wider range of incentive schemes and the potential recruitment of another Committee member with experience of UK listed
company remuneration.
Advice to the Committee
Advisers are appointed independently by the Remuneration Committee, which reviews its selection periodically and is satisfied that the
advice it receives is independent, objective and free from conflicts of interest. The total fees paid to the Committee’s advisor, Deloitte,
in respect of 2020 were £99,125. These were charged on a time and materials basis. Deloitte’s advice included advice in relation to
the impact of Covid-19 from a remuneration perspective, provision of market data, and general guidance on market and best practice.
Deloitte LLP also provided a range of tax and advisory services to Entain during the year, support in certain technology areas and support
for the Group’s internal audit function.
Deloitte are signatories to the Code of Conduct for Remuneration Consultants in the UK, details of which can be found on the
Remuneration Consultants Group’s website at www.remunerationconsultantsgroup.com.
Management’s advice to the Committee was also supported by the provision of market data from Deloitte and Willis Towers Watson and
legal advice from Addleshaw Goddard.
Shareholder voting and consideration of shareholder views
The 2019 Annual Statement from the Remuneration Committee Chair and the Annual Report on Remuneration were subject to an
advisory vote at the AGM on 24 June 2020. The Directors’ Remuneration Policy was subject to a binding vote at the same meeting.
Resolution
Annual Report on Remuneration
Remuneration Policy Report
Date
Votes for
24 June 2020 450,595,145
24 June 2020 458,789,615
% of Votes for
Votes against
93.25% 32,620,980
24,425,820
94.95%
% of Votes
against Votes withheld
595,642
6.75%
596,332
5.05%
J M Barry Gibson
Chairman
4 March 2021
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 122
Directors’ Report
The Directors present their annual report on
the affairs of the Group for the year ended
31 December 2020.
On 6 February 2020, the Company
relocated its place of management and
control and consequently its tax residence
to the United Kingdom.
Principal activity
Entain plc (the “Company”) and its subsidiaries (together the
“Group”) is a major international sports-betting and gaming
company operating both online and in the retail sector.
The Company is registered as a public limited company under
the Isle of Man Companies Act 2006 and is listed in the Premium
category on the Main Market of the London Stock Exchange.
Results and future performance
A review of the Group’s results and activities is covered within
the Strategic Report on pages 6 to 77. This incorporates the
Chairman’s statement, Chief Executive and Chief Financial Officer’s
review, which include an indication of likely future developments.
Key performance indicators
Key performance indicators in relation to the Group’s activities are
continually reviewed by senior management and are presented on
page 25.
Dividends
A proposed second interim dividend of 17.6 pence per share,
amounting to £102.5m in respect of the year ended 31 December
2019 was proposed by the Directors on 5 March 2020. On 6 April
2020 the Group announced that the 2019 second interim dividend
would be withdrawn due to the ongoing uncertainty surrounding
Covid-19, subsequently no interim dividends have been declared
with respect to the year ended 31 December 2020.
The Board recognises the importance of dividends for shareholders
and will consider dividend payments with future results.
Corporate Governance
The Directors recognise the importance of sound corporate
governance and their associated report is set out on pages 80 to
89. The information in that section is deemed to form part of this
Report and so fulfils the requirements of the corporate governance
statement for the purposes of DTR 7.2.1.
As a company quoted on the Premium Main Market of the London
Stock Exchange, the Company has adopted the 2018 UK Corporate
Governance Code (“Code”), as amended from time to time, and will
seek to comply with premium listed company norms to the extent
appropriate for the size and nature of the Company.
Engagement with Employee Statements
This element of reporting is discussed in the s172 Statement on
page 32 and on pages 86 to 88.
Engagement with Stakeholder Statement
This element of reporting is discussed in the s172 Statement on
pages 32 to 33 and on pages 86 to 88.
Customer and creditor payment policy
The Group is committed to prompt payment of customer cash-out
requests and maintains adequate cash reserves to cover customer
withdrawals and balances. Normally payments will be made to
customers within seven days of receiving a customer instruction.
In the case of other creditors, it is the Group’s policy to agree terms
at the outset of a transaction and ensure compliance with such
agreed terms. In the event that an invoice is contested then the
Group informs the supplier without delay and seeks to settle the
dispute quickly.
During 2020, the Group appointed a Customer
Ombudsman Director.
Entain plc | Annual Report 2020 Governance 123
Articles of Association
Substantial shareholdings – Interests in voting rights
The Company’s Articles of Association may only be amended by
special resolution at a general meeting of shareholders.
Directors
The Directors of the Company who were in office during the year,
are disclosed on page 84.
The Company’s Articles of Association provide that any new
Director appointed by the Board during the year, having not been
previously elected by shareholders, may hold office only until the
next AGM, when that Director must retire and stand for election
at the meeting. The Articles also require one third of the Directors
not newly appointed since the last AGM to seek re-election.
In compliance with the recommendation of the 2018 Code, all
Directors will seek reappointment at the 2021 AGM, as they did
in 2020.
As at 26 February 2021, the Company had been notified in
accordance with Chapter 5 of the Disclosure and Transparency
Rules of the following interests in the Company’s Shares:
Shareholder
BlackRock Inc
Sands Capital Mgt
Standard Life Aberdeen
The Capital Group
Companies, Inc
AXA SA
The Vanguard Group
Number of
Shares
41,490,764
38,940,987
33,832,763
29,733,629
% of Issued Share
Capital & Total
Voting rights1
7.09%
6.65%
5.78%
5.08%
25,709,081
21,819,621
4.39%
3.73%
1. The Company had 585,231,010 ordinary shares in issue on 26 February 2021.
Directors’ remuneration
Use of financial instruments
Both Executive Directors have Service Agreements and all the
Non-Executive Directors have Letters of Appointment and the
details of their key terms are set out in the Directors’ Remuneration
Report. Details of remuneration of each Director are provided in the
Remuneration Report on pages 102 to 121.
Powers of directors
Subject to company law and the Company’s articles, the Directors
may exercise all of the powers of the Company and may delegate
their power and discretion to Committees. The articles give the
Directors power to appoint and replace Directors.
The risk management objectives and policies of the Group are set
out within note 25 of the financial statements.
Political donations
The Company did not make any political donations or incur any
political expenditure during 2020 (2019: Nil).
Insurance
The Company maintains a directors and officers’ liability insurance
policy in respect of any legal costs that may be incurred against the
Directors in dealing with any legal claims or investigations.
Directors’ interests
Annual General Meeting
The Directors’ report on remuneration on pages 102 to 121
provides details of the interests of each Director, including details
of current incentive schemes and long-term incentive schemes,
the interests of Directors in the share capital of the Company and
details of their share interests as at 31 December 2020.
Conflicts of interest
On appointment, each Director must notify the Company of their
external board appointments, other significant commitments
and any actual or potential conflicts of interest. Each Director is
required to disclose actual or potential conflicts of interests to the
Board and where actual or potential conflicts of interest arise, the
relevant Director does not receive Board papers and is excluded
from discussions and voting on the subject matter that gives rise
to the conflict. The Board has a policy to identify and manage
Directors’ conflicts or potential conflicts of interest.
Directors’ Indemnities
The Company has entered into deeds of indemnity with each of the
Directors, which comply with the Isle of Man Companies Act 2006.
Share capital
Details of the Company’s authorised and issued share capital,
together with details of the movement therein, are set out in
note 28 to the financial statements. This includes the rights and
obligations attaching to shares and restrictions on the transfer
of shares.
The date and full details of the Company’s 2021 AGM will be
announced in due course.
Independent Auditors
KPMG LLP (“KPMG”) has expressed its willingness to continue
in office as auditor and a resolution to re-appoint KPMG will be
proposed at the forthcoming AGM.
So far as the Directors are aware, there is no relevant audit
information (as defined by Section 418 of the Companies Act 2006)
of which the Company’s auditors are unaware, and each Director
has taken all the steps that he or she ought to have taken as a
Director in order to make himself or herself aware of any relevant
audit information and to establish that the Company’s auditors are
aware of that information.
On behalf of the Board:
J M Barry Gibson
Chairman
4 March 2021
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 124
Financial statements
Entain plc | Annual Report 2020
Overview | Strategic report | Governance | Financial statements
125
Financial
statements
Financial statements
126
133
134
135
136
137
138
183
184
185
186
191
192
193
Independent Auditor’s Report
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated balance sheet
Consolidated statement of
changes in equity
Consolidated statement of
cash flows
Notes to the consolidated
financial statements
Company income statement
Company balance sheet
Company statement of changes
in equity
Notes to the Company
financial statements
Glossary
Shareholder information
Corporate information
Entain plc | Annual Report 2020
126
Independent Auditor’s Report to
the members of Entain plc
1 Our opinion is unmodified
We have audited the financial statements of Entain PLC
(formerly GVC Holdings PLC) (“the Company”) for the year ended
31 December 2020 which comprise the Consolidated Income
Statement, the Consolidated Statement of Comprehensive Income,
the Consolidated Balance Sheet, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Cash Flows, the
Company Balance Sheet, the Company Income Statement, the
Company Statement of Changes in Equity, and the related notes,
including the accounting policies in Note 4.
In our opinion:
the financial statements give a true and fair view of the
state of the Group’s and of the parent Company’s affairs as
at 31 December 2020 and of the Group’s profit and parent
Company’s loss for the year then ended;
the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union;
the parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
the financial statements have been prepared in accordance with
the requirements of the Isle of Man Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the
Audit Committee.
We were first appointed as auditor by the shareholders on 6 June
2018. The period of total uninterrupted engagement is for the three
financial years ended 31 December 2020. We have fulfilled our
ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including the
FRC Ethical Standard as applied to listed public interest entities.
No non-audit services prohibited by that standard were provided.
2 Key audit matters: our assessment of risks of material
misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. We summarise below the
key audit matters, in decreasing order of audit significance, in
arriving at our audit opinion above, together with our key audit
procedures to address those matters and our findings from those
procedures in order that the Company’s members, as a body, may
better understand the process by which we arrived at our audit
opinion. These matters were addressed, and our findings are based
on procedures undertaken, in the context of, and solely for the
purpose of, our audit of the financial statements as a whole, and
in forming our opinion thereon, and consequently are incidental
to that opinion, and we do not provide a separate opinion on
these matters.
Dynamic Audit planning tool
(Relative significance of audit risks before taking account of controls)
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Low
Likelihood of material misstatement
High
Key audit matter
Other risks
Change compared to prior year
A Revenue recognition from
online operations
G Disclosure – APMs including
separately disclosed items
B Gaming taxes in
immature markets
C Recoverability of parent
Company’s investments in
subsidiaries and receivables
due from Group entities
(Parent Company only)
D Goodwill, intangible
assets and PPE
impairment assessment
E Valuation of the Group’s
Gala Coral defined
benefit pension
H Provisions/contingent
liabilities for litigation
and/or breaches of laws
and regulations
I
Revenue recognition from
UK Retail
J Direct taxation
K Share based payments
L Contingent consideration
M Going concern and Long
Term Viability Statement
N The impact on uncertainties
F Management override
of controls
due to UK exiting the
European Union
Entain plc | Annual Report 2020 Financial statements
127
Data comparisons: Where GITCs over in-house managed systems
handling the transfer of data were not designed and implemented
effectively, we compared the amounts of revenue in the accounting
records against the amounts reported in the platforms for
each month and by label and fully reconciled the information
between systems.
Where systems are hosted by third parties, we obtained an
understanding of the nature of the services being provided and
performed audit procedures to assess whether the third party
services were operating as intended. For revenues generated by
third party systems, for the period prior to migration or for the
entire year (where systems were not migrated), we compared
the amounts of revenue in the accounting records against the
amounts reported directly to us by the third parties and reconciled
the information.
For the systems migrations in the year, we performed inquiry to
confirm that testing was completed by management over the
migration of data from third party systems to in-house systems and
performed our own data comparisons to test that data had been
transferred accurately.
Tests of details (tracing and vouching): We assessed the
appropriateness of revenue recognised by:
Tracing a sample of betting transactions through the online
betting systems or to third-party systems (when outsourced),
and assessing that they are appropriately recorded within the
financial information systems at the transaction level;
Testing a sample of betting transactions recognised in the
period from the accounting records back to source data and
reperforming the outcome of the transaction;
Where customer wallets are managed by third parties, assessing
the appropriateness of cash transferred between the payment
service providers to corporate cash by reconciling the total
revenue amounts reported by key IT systems to the amount
transferred from the payment service provider to corporate
cash and testing a sample of these settlements by agreeing the
amounts to the relevant bank information;
Testing a sample of items comprising the customer liability
balance and agreed the amounts recorded to the individual
customer wallet at the end of the financial period; and
Obtaining external confirmation of client funds held in the
payment service providers and reconciling the obtained bank
balance confirmation to the customers’ betting accounts,
where external confirmations were not available we performed
alternative procedures.
Assessing transparency: We also considered the adequacy of the
Group’s disclosures in respect of revenue.
Our findings – Our testing identified no material errors in the
recording of revenue transactions for the Online businesses (2019:
no material errors identified).
We continue to perform procedures over: impairment of Goodwill,
intangible assets and PPE; and, Alternative Performance Measures
(“APMs”) including separately disclosed items. However, following
the improved performance of the Group’s Online Cash Generating
Units, and the reduced complexity of APMs given the current year
and prior year results now both include the impact of IFRS 16, we
have not assessed either of these risks as the most significant risks
in our current year audit and, therefore, they are not separately
identified in our report this year.
Revenue recognition from online operations
(2020: £2680.6 million, 2019: £2116.1 million)
Refer to page 144 (accounting policy) and pages 145 to 147
(financial disclosures).
The risk (Data capture and processing error or fraud – Revenue
from online operations): risk vs 2019 – The Group has a
number of income streams across its online operations, and the
accuracy and completeness of the amounts recognised from these
income streams is largely dependent on the effectiveness of the
operational controls, including anti-fraud controls, in place.
Revenue streams for many of the Group’s products are computed
and recorded on highly complex IT systems, with the key elements
being the gaming and sports betting platforms, customer wallets,
the data warehouse, and the financial accounting systems.
There are a number of different bases for calculating revenue
and, in particular, there is a risk the Group’s in-house developed IT
systems, which aim to correctly calculate revenues and appropriate
wins and losses, as applicable, may not be configured correctly
from the outset such that commissions or winning and losing bets
are calculated incorrectly.
Historically, the Group’s gaming and sports betting revenue
and customer wallets have been managed by a combination of
in-house and third-party systems. During the year, customer
wallets and gaming operations were migrated to the Group’s
in-house developed IT systems and therefore there is a risk that
this migration was not performed completely and accurately.
Sports betting platforms continue to be hosted by a combination of
in-house and third-party systems.
In addition, the Group’s divisions are dependent on their core
finance processes and controls to accurately report and reconcile
revenue transactions between the gaming and betting platforms,
the data warehouse and the financial systems, and there is a risk
that the customer-facing and financial information systems may
not interface correctly and that unauthorised changes may be
made, which may result in the misstatement of revenue.
Our response – Our procedures included:
Control operation: For the Group’s in-house systems we utilised
our own IT specialists to assess the general IT controls (“GITCs”)
related to access to programs and data, program change and
development and computer operations. Whilst we found GITCs to
be effective for systems managing gaming revenue and customer
wallets, our testing in the prior year identified weaknesses in the
design of GITCs for some of the Group’s data transfer systems;
whilst some steps have been taken in the year to remediate
weaknesses identified in the prior years the remediations were not
in place for all of 2020. As a result, we expected that we could not
rely on GITCs for some of the Group’s IT systems. Where GITCs
were not operating effectively over in-house systems handling the
transfer of data, we planned to test the operating effectiveness of
compensating manual controls reconciling the accounting records
to the third party systems, and to perform substantive testing to
reconcile all revenue data recorded in the general ledger to the
transactions in the gaming and sports betting platforms or to third
party data.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 128
Independent Auditor’s Report to the members of Entain plc continued
Gaming taxes in immature markets (2020 provision:
£13.3 million, 2019 provision: £49.3 million; 2020 prepayment:
£130.4 million, 2019 prepayment: £116.0 million)
Our findings – In determining the treatment of gaming taxes there
is room for judgement and we found that within that, the Group’s
judgement was balanced (2019: balanced).
In particular, with respect to the accounting for Greek gaming tax
we note that the outcome could vary significantly in the future
depending on the outcome of the ongoing litigation for the years
2010 and 2011. Our testing did not identify any indicators of
management bias in the judgements over Greek gaming tax.
We found that the disclosures regarding Greek gaming taxes were
light (2019: light).
Recoverability of parent Company’s investments in subsidiaries
and receivables due from Group entities (Parent Company
only): (2020 carrying value: £5,018.4 million, 2019 carrying
value: £4,870.4 million)
Refer to pages 176 and 188 (Company accounting policy) and
page 184 (Company financial disclosures).
The risk (Recoverability of parent Company’s investments
in subsidiaries and receivables due from group entities): risk
vs 2019 – The carrying amount of the parent Company’s
investments in subsidiaries and of the intra-group debtor balance
together represents 99% (2019: 99%) of the parent Company’s
total assets. Their recoverability is not at a high risk of significant
misstatement or subject to significant judgement. However, due
to their materiality in the context of the parent Company financial
statements, this is considered to be the area that had the greatest
effect on our overall parent Company audit.
We performed the tests below rather than seeking to rely on any of
the company’s controls because the nature of the balance is such
that we would expect to obtain audit evidence primarily through
the detailed procedures described.
Our response – Our procedures included:
Benchmarking assumptions: We challenged the assumptions
used in the cash flows included in the budgets based on
our knowledge of the Group and the markets in which the
subsidiaries operate.
Historical comparisons: We assessed the reasonableness
of the budgets by considering the historical accuracy of the
previous forecasts.
Our sector experience: We evaluated the current level of trading,
including identifying any indications of a downturn in activity,
by examining the post year end management accounts and
considering our knowledge of the Group and the market.
Comparing valuations: We compared the carrying value of the
parent Company’s investments in subsidiaries and receivables
due from group entities to value in use calculations for the relevant
CGUs and to the market capitalisation of the Group.
Assessing transparency: We assessed the adequacy of the
parent Company’s disclosures in respect of investments in
subsidiaries and group debtor balances.
Our findings – We found the company’s conclusion that there is
no impairment of investments in subsidiaries and intercompany
receivables to be balanced (2019: balanced).
Refer to page 93 (Audit Committee Report), page 139 (accounting
policy) and pages 139 and 160 (financial disclosures).
The risk (Subjective judgement – Gaming tax provisions and
prepayments): risk vs 2019 – The business operates in a
number of jurisdictions which have different gaming tax and duty
regimes. For some markets in which the Group now operates or
operated in the past, the tax regulations dealing specifically with
online gaming businesses might not yet be formed, are unclear or
continue to evolve. Changes in gaming tax and duty regimes can
be announced suddenly and applied retrospectively and in these
instances the Directors are required to exercise a level of judgement
surrounding the interpretation and application of the tax laws
which may differ from that of relevant tax authorities. The amounts
involved are potentially significant, and determining the amount, if
any, to be provided as a liability, can be subjective.
This leaves the Group exposed to risk of failure to appropriately
record provisions for gaming taxes and duty as a result of incorrect
interpretation of the relevant legislation.
Our response – Our procedures included:
Enquiry of regulators: We requested and obtained circularisations
from the gaming regulators from the key jurisdictions in which the
Group operates to confirm whether the Group was up to date with
its filing requirements and payment of gambling duties.
Benchmarking assumptions: We compared the Group’s
assessment of the level of exposure arising from changes in
gaming tax legislation to third party evidence, such as the relevant
tax authorities’ public announcements. We assessed the potential
impact on the Group in light of the degree of uncertainty and level
of gaming revenue in each country to confirm that the only country
identified with a significant exposure subject to a high degree of
judgement was Greece.
Tests of details: We reviewed the Group’s calculation of gaming
tax and duty costs in the period and provisions and prepayments
at the period end and assessed whether the relevant calculations
had been performed accurately using the appropriate tax/duty
rates. In particular we verified that provisions for Greek gaming
taxes in relation to years remaining open to audit were calculated
on a consistent basis to tax assessments for years already agreed
with the Greek Tax authorities.
Assessing the credentials of third party tax experts: We
assessed the competence and objectivity of third party experts
engaged by the Group to advise on the legal position of any claims
received by tax authorities; for the year ended 31 December 2020
this was in relation to legal advice given in relation to litigation with
respect to Greek gaming taxes for the years 2010 and 2011.
Our tax expertise: Using our own indirect tax specialists in Greece,
we determined whether advice received from third party experts
is reasonable given the correspondence with the tax authorities
and interpretation of the relevant legislation. We also used our own
indirect tax specialists in Greece to assess whether management
representations, regarding the basis of Greek gaming tax
assessments for years where gaming tax audits are now closed, are
consistent with confirmations received from the Greek Tax authorities.
Assessing transparency: We considered the appropriateness of
the judgements taken and adequacy of the Group’s disclosures in
respect of key tax exposures, notably in relation to the judgement
over the ongoing Greek gaming tax litigation for 2010 and 2011
and the recoverability of the related prepayments for amounts paid
to the Greek tax authorities.
Entain plc | Annual Report 2020 Financial statements 129
The work on all of the components (2019: all of the components),
including the audit of the parent company, was performed by the
Group team.
Full scope: revenue 79% (2019: 80%) underlying EBITDA 77%
(2019: 86%) profit before tax 87% (2019: 93%), Net assets 99%
(2019: 96%).
4 Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Group
or the Company or to cease their operations, and as they have
concluded that the Group’s and the Company’s financial position
means that this is realistic. They have also concluded that there
are no material uncertainties that could have cast significant doubt
over their ability to continue as a going concern for at least a year
from the date of approval of the financial statements (“the going
concern period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Group’s and Company’s available
financial resources and metrics relevant to debt covenants over this
period were:
The impact of significant changes in regulation affecting the
Group’s ability to operate in certain territories; and
The impact of a significant business continuity issue affecting
the Group’s operating systems for a significant portion of the
going concern period.
We also considered less predictable but realistic second order
impacts, such as political or policy changes that could affect
demand in the Group’s markets.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
comparing severe, but plausible downside scenarios that could
arise from these risks individually and collectively against the level
of available financial resources and covenants indicated by the
Group’s financial forecasts.
We considered whether the going concern disclosure in note 2 to
the financial statements gives a full and accurate description of
the Directors’ assessment of going concern, including the identified
risks and, dependencies, and related sensitivities.
Profit before tax (%)
Net assets (%)
13
7
87%
(2019: 93%)
93
87
1
4
99%
(2019: 96%)
96
99
3 Our application of materiality and an overview of the
scope of our audit
Materiality for the Group financial statements as a whole was
set at £20 million (2019: £20 million), determined with reference
to a benchmark of Group revenue (of which it represents 0.6%
(2019: 0.6%)). We consider revenue to be the most appropriate
benchmark as it provides a more stable measure year on year than
group profit before tax.
Materiality for the parent Company financial statements as a
whole was set at £8 million (2019: £10 million), determined with
reference to a benchmark of total assets, of which it represents
0.2% (2019: 0.2%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial misstatements
in individual account balances add up to a material amount across
the financial statements as a whole.
Performance materiality for the Group and parent company was
set at 75% (2019:75%) of materiality and 75% (2019 : 60%) of
materiality respectively for the financial statements as a whole,
which equates to £15 million (2019 : £15 million) for the Group and
£6 million (2019 : £6 million) for the parent company. We applied this
percentage in our determination of performance materiality because
we did not identify any factors indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £1 million, in
addition to other identified misstatements that warranted reporting
on qualitative grounds.
Of the Group’s ten (2019: ten) components, we subjected four
(2019: four) to full scope audits for Group purposes. For the residual
6 components, we performed analysis at an aggregated group
level to re-examine our assessment that there were no significant
risks of material misstatement within these.
The component materialities ranged from £8 million to £14 million
(2019: £10 million to £12 million), and were determined having
regard to the mix of size and risk profile of the Group across
the components.
Revenue (%)
21
20
EBITDA (pre corporate
costs and bonus) (%)
23
14
79%
(2019: 80%)
77%
(2019: 86%)
80
79
86
77
% coverage 2020
% coverage 2019
% out of scope 2020
% out of scope 2019
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
130
Independent Auditor’s Report to the members of Entain plc continued
Our conclusions based on this work:
we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;
Further detail in respect of Online revenue recognition and gaming
provisions is set out in the key audit matter disclosures in section 2
of this report.
We also performed procedures including:
we have not identified, and concur with the directors’
Identifying journal entries and other adjustments to test for all
assessment that there is not, a material uncertainty related to
events or conditions that, individually or collectively, may cast
significant doubt on the Group’s or Company’s ability to continue
as a going concern for the going concern period; and
full scope components based on risk criteria and comparing the
identified entries to supporting documentation. These included:
unusual revenue pairings; unusual journals with a credit or debit
to entry to cash; and, unusual journals in seldom used pairings.
we have nothing material to add or draw attention to in relation
to the directors’ statement in note 2 to the financial statements
on the use of the going concern basis of accounting with no
material uncertainties that may cast significant doubt over the
Group and Company’s use of that basis for the going concern
period, and we found the going concern disclosure in note 2 to
be acceptable.
However, as we cannot predict all future events or conditions and
as subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the above conclusions are not a guarantee that the Group or the
Company will continue in operation.
5 Fraud and breaches of laws and regulations –
ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
Enquiring of directors, and internal audit and inspection of
policy documentation as to the Group’s high-level policies and
procedures to prevent and detect fraud including the internal
audit function, and the Group’s channel for “whistleblowing”, as
well as whether they have knowledge of any actual, suspected
or alleged fraud.
Reading Board, audit committee and remuneration
committee minutes.
Considering remuneration incentive schemes and performance
targets for directors and how these are impacted by separately
disclosed items.
Using analytical procedures to identify any unusual or
unexpected relationships.
Consulting forensic professionals to assist us in identifying fraud
risks based on discussions of the circumstances of the Group.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, and taking into account
possible pressures to meet profit targets, we perform procedures
to address the risk of management override of controls and the
risk of fraudulent revenue recognition, in particular the risk that
revenue from the Group’s online operations is recorded incorrectly,
that management may be in a position to make inappropriate
accounting entries, and the risk of bias in accounting estimates
and judgements such as provisions for gaming tax obligations,
provisions for impairment and pension assumptions.
Evaluated the business purpose of significant
unusual transactions.
Assessing significant accounting estimates for bias.
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the directors and other management (as required
by auditing standards), and from inspection of the Group’s
regulatory and legal correspondence and discussed with the
directors and other management the policies and procedures
regarding compliance with laws and regulations.
As the Group is regulated, our assessment of risks involved gaining
an understanding of the control environment including the entity’s
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation or the loss
of the Group’s license to operate. We identified the following
areas as those most likely to have such an effect: anti-bribery
and corruption, recognising the nature of the Group’s operations,
and responsible betting and gaming legislation across all of
the territories where the group generates material revenues.
Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of the
directors and other management and inspection of regulatory and
legal correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Entain plc | Annual Report 2020 Financial statements 131
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Disclosures of emerging and principal risks and longer-term
viability
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect non-
compliance with all laws and regulations.
6 We have nothing to report on the other information
in the Annual Report
The directors are responsible for the other information presented
in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Directors’ remuneration report
In addition to our audit of the financial statements, the Directors
have engaged us to audit the information in the Directors’
Remuneration Report that is described as having been audited,
which the Directors have decided to prepare as if the Company
was required to comply with the requirements of Schedule 8 to The
Large and Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 (SI 2008 No. 410) made under the UK
Companies Act 2006.
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
UK Companies Act 2006, as if those requirements applied to
the Company.
We are required to perform procedures to identify whether there
is a material inconsistency between the directors’ disclosures in
respect of emerging and principal risks and the viability statement,
and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
the directors’ confirmation within the viability statement on
page 76 that they have carried out a robust assessment of the
emerging and principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency and liquidity;
the Emerging and Principal Risks disclosures describing these
risks and how emerging risks are identified, and explaining how
they are being managed and mitigated; and
the directors’ explanation in the Viability Statement of how they
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Based on the above procedures, we have concluded that the above
disclosures are materially consistent with the financial statements
and our audit knowledge.
Our work is limited to assessing these matters in the context of
only the knowledge acquired during our financial statements
audit. As we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent
with judgements that were reasonable at the time they were made,
the absence of anything to report on these statements is not a
guarantee as to the Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there
is a material inconsistency between the directors’ corporate
governance disclosures and the financial statements and our
audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
the directors’ statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
the section of the annual report describing the work of the
Audit Committee, including the significant issues that the audit
committee considered in relation to the financial statements, and
how these issues were addressed; and
the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance
Statement relating to the Group’s compliance with the provisions of
the UK Corporate Governance Code specified by the Listing Rules
for our review. We have nothing to report in this respect.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 132
Independent Auditor’s Report to the members of Entain plc continued
8 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 67,
the directors are responsible for: the preparation of financial
statements that give a true and fair view; such internal control as
they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error; assessing the Group and parent Company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and using the going concern
basis of accounting unless they either intend to liquidate the Group
or the parent Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor’s report. Reasonable assurance is a high level
of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
9 The purpose of our audit work and to whom we owe our
responsibilities
This report is made solely to the Company’s members, as a body,
in accordance with Section 80 (c) of the Isle of Man Companies
Act 2006 and the terms of our engagement by the Company.
Our audit work has been undertaken so that we might state to
the Company’s members those matters we are required to state
to them in an auditor’s report, and the further matters we are
required to state to them in accordance with terms agreed with the
Company, and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other
than the Company and the Company’s members, as a body, for our
audit work, for this report, or for the opinions we have formed.
Michael Harper
Responsible Individual
for and on behalf of KPMG LLP
Chartered Accountants and Recognised Auditors
15 Canada Square
London
E14 5GL
4 March 2021
Entain plc | Annual Report 2020 Financial statements Consolidated income statement
for the year ended 31 December 2020
Net Gaming Revenue
VAT/GST
Revenue
Cost of sales
Gross profit
Administrative costs
Contribution
Administrative costs excluding marketing
Notes
5
7
7
Underlying
items
£m
3,628.5
(66.9)
3,561.6
(1,253.0)
2,308.6
(1,718.9)
1,740.2
(1,150.5)
Group operating profit/(loss) before share of
results from joint ventures and associates
Share of results from joint ventures and associates
16,17
8
8
8
8
10
21
12
12
11
Group operating profit/(loss)
Finance expense
Finance income
(Losses)/gains arising from change in fair value of
financial instruments
(Losses)/gains arising from foreign exchange on debt
instruments
Profit/(loss) before tax
Income tax
Profit/(loss) from continuing operations
Loss for the year from discontinued operations
after tax
Profit/(loss) for the year
Attributable to:
Equity holders of the parent
Non–controlling interests
Earnings per share on profit/(loss) for the year from
continuing operations
From profit/(loss) for the year1
Diluted earnings per share on profit/(loss) for the year
from continuing operations
From profit/(loss) for the year1
Proposed dividends
Memo
EBITDAR2
Rent and associated costs3
EBITDA
Share based payments
Depreciation, amortisation and impairment
Share of results from joint ventures and associates
Group operating profit/(loss)
589.7
(60.2)
529.5
(76.5)
2.3
(61.8)
(42.9)
350.6
(63.0)
(14.4)
273.2
251.6
21.6
273.2
63.5p
61.0p
62.8p
60.4p
862.1
(19.0)
843.1
(14.8)
(238.6)
(60.2)
529.5
133
2020
2019
(restated)4
Separately
disclosed
items
(note 6)
£m
–
–
–
–
–
(170.6)
–
(170.6)
(170.6)
–
(170.6)
(5.3)
–
–
–
(175.9)
2.1
Total
£m
3,628.5
(66.9)
3,561.6
(1,253.0)
2,308.6
(1,889.5)
1,740.2
(1,321.1)
Underlying
items
£m
3,632.7
(54.6)
3,578.1
(1,209.3)
2,368.8
(1,839.0)
1,874.9
(1,345.1)
419.1
(60.2)
358.9
(81.8)
2.3
529.8
(9.2)
520.6
(88.5)
2.4
(61.8)
17.6
(42.9)
174.7
(60.9)
84.3
536.4
(46.4)
Separately
disclosed
items
(note 6)
£m
–
–
–
–
–
(686.7)
–
(686.7)
(686.7)
–
(686.7)
(14.1)
–
–
–
(700.8)
79.6
Total
£m
3,632.7
(54.6)
3,578.1
(1,209.3)
2,368.8
(2,525.7)
1,874.9
(2,031.8)
(156.9)
(9.2)
(166.1)
(102.6)
2.4
17.6
84.3
(164.4)
33.2
287.6
(173.8)
113.8
490.0
(621.2)
(131.2)
(34.4)
79.4
(0.6)
(8.9)
(9.5)
489.4
(630.1)
(140.7)
(20.0)
(193.8)
(193.8)
–
(193.8)
57.8
21.6
79.4
15.8p
9.9p
15.6p
9.8p
–
141.4
–
141.4
–
(312.0)
–
(170.6)
1,003.5
(19.0)
984.5
(14.8)
(550.6)
(60.2)
358.9
476.4
13.0
489.4
65.2p
65.1p
64.3p
64.2p
782.9
(21.5)
761.4
(12.7)
(218.9)
(9.2)
520.6
(630.1)
–
(630.1)
(153.7)
13.0
(140.7)
(24.8)p
(26.4)p
(24.8)p
(26.4)p
17.6p
714.8
(21.5)
693.3
(12.7)
(837.5)
(9.2)
(166.1)
(68.1)
–
(68.1)
–
(618.6)
–
(686.7)
1. The calculation of underlying earnings per share has been adjusted for separately disclosed items, and for the removal of foreign exchange volatility arising on financial
instruments as it provides a better understanding of the underlying performance of the Group. See note 12 for further details.
2. Included within the Income Statement and Memo above are certain non-statutory measures. The use of these items and the reconciliation to their statutory equivalents is
provided above and on page 56 of the report.
3. Rent and associated costs include VAT and rent not captured by IFRS 16. These are predominantly driven by VAT on rental charges not being recoverable and held over leases.
4. The profit and loss for the year ended 31 December 2019 has been restated for the presentation of discontinued operations. See note 21.
The notes on pages 138 to 182 form an integral part of these consolidated financial statements.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 134
Consolidated statement of comprehensive income
for the year ended 31 December 2020
Profit/(loss) for the year
Other comprehensive expense:
Items that may be reclassified to profit or loss:
Currency differences on translation of foreign operations
Total items that may be reclassified to profit or loss
Items that will not be reclassified to profit or loss:
Re-measurement of defined benefit pension scheme
Tax on re-measurement of defined benefit pension scheme
Share of associate other comprehensive income
Total items that will not be reclassified to profit or loss
Other comprehensive income/(expense) for the year, net of tax
Total comprehensive income/(expense) for the year
Attributable to:
Equity holders of the parent:
Non-controlling interests
The notes on pages 138 to 182 form an integral part of these consolidated financial statements.
Notes
2020
£m
79.4
2019
£m
(140.7)
30
10
17
137.7
137.7
(158.6)
(158.6)
(0.2)
0.1
0.3
0.2
137.9
217.3
195.7
21.6
(104.6)
36.6
1.0
(67.0)
(225.6)
(366.3)
(379.3)
13.0
Entain plc | Annual Report 2020 Financial statements Consolidated balance sheet
At 31 December 2020
Assets
Non–current assets
Goodwill
Intangible assets
Property, plant and equipment
Interest in joint venture
Interest in associates and other investments
Trade and other receivables
Other financial assets
Deferred tax assets
Retirement benefit asset
Current assets
Trade and other receivables
Income and other taxes recoverable
Derivative financial instruments
Cash and cash equivalents
Assets in disposal group classified as held for sale
Total assets
Liabilities
Current liabilities
Trade and other payables
Balances with customers
Lease liabilities
Interest bearing loans and borrowings
Corporate tax liabilities
Provisions
Derivative financial instruments
Other financial liabilities
Non–current liabilities
Interest bearing loans and borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Other financial liabilities
Liabilities in disposal group classified as held for sale
Total liabilities
Net assets
Equity
Issued share capital
Share Premium
Merger Reserve
Translation reserve
Retained earnings
Equity shareholders’ funds
Non–controlling interests
Total shareholders’ equity
135
Notes
2020
£m
2019
£m
13
13
15
16
17
18
26
10
30
18
26
19
21
20
26
22
23
24
26
26
23
22
10
24
26
21
28
34
3,061.1
2,105.4
470.2
6.2
29.4
3.8
4.4
129.8
64.2
5,874.5
475.8
13.6
–
706.7
1,196.1
199.1
7,269.7
(687.4)
(241.1)
(89.8)
(14.1)
(66.4)
(49.4)
(26.1)
(147.5)
2,966.4
2,398.0
467.9
6.0
29.9
3.3
2.1
124.4
66.6
6,064.6
477.6
9.1
47.4
390.1
924.2
–
6,988.8
(678.7)
(335.4)
(75.5)
(31.5)
(35.1)
(73.0)
–
(30.7)
(1,321.8)
(1,259.9)
(2,085.7)
(248.2)
(331.7)
(19.5)
(9.3)
(2,084.5)
(288.0)
(358.2)
(16.5)
(125.8)
(2,694.4)
(2,873.0)
(172.0)
–
(4,188.2)
(4,132.9)
3,081.5
2,855.9
4.8
1,206.6
2,527.4
191.7
(901.3)
3,029.2
52.3
4.8
1,198.0
2,527.4
54.0
(971.4)
2,812.8
43.1
3,081.5
2,855.9
The financial statements on pages 138 to 182 were approved by the Board of Directors on 4 March 2021 and signed on its behalf by
J Nygaard-Andersen
Chief Executive Officer
R Wood
Deputy Chief Executive Officer/Chief Financial Officer
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
136
Consolidated statement of changes in equity
for the year ended 31 December 2020
Equity
shareholders’
funds
£m
Non-
controlling
Interests
(note 34)
£m
Total
Shareholders’
equity
£m
At 1 January 2019
(Loss)/profit for the year
Other comprehensive expense
Total comprehensive (expense)/
income
Share options exercised
Share-based payments charge
Equity dividends (note 11)
Non-controlling interests
Issued
share
capital
£m
4.8
Share
premium
£m
1,196.5
Merger
Reserve
£m
2,527.4
–
–
–
–
–
–
–
–
–
–
1.5
–
–
–
–
–
–
–
–
–
–
At 31 December 2019
4.8
1,198.0
2,527.4
At 1 January 2020
4.8
1,198.0
2,527.4
Profit for the year
Other comprehensive income
Total comprehensive income
Share options exercised
Share-based payments charge
Equity dividends (note 11)
–
–
–
–
–
–
–
–
–
8.6
–
–
–
–
–
–
–
–
At 31 December 2020
4.8
1,206.6
2,527.4
Translation
reserve1
£m
212.6
–
(158.6)
(158.6)
–
–
–
–
54.0
54.0
–
137.7
137.7
–
–
–
191.7
Retained
earnings
£m
(562.2)
(153.7)
(67.0)
(220.7)
–
10.8
(195.5)
(3.8)
(971.4)
3,379.1
(153.7)
(225.6)
(379.3)
1.5
10.8
(195.5)
(3.8)
2,812.8
(971.4)
2,812.8
57.8
0.2
58.0
–
12.1
–
57.8
137.9
195.7
8.6
12.1
–
(901.3)
3,029.2
38.2
13.0
–
13.0
–
–
(8.1)
–
43.1
43.1
21.6
–
21.6
–
–
(12.4)
52.3
3,417.3
(140.7)
(225.6)
(366.3)
1.5
10.8
(203.6)
(3.8)
2,855.9
2,855.9
79.4
137.9
217.3
8.6
12.1
(12.4)
3,081.5
1. The translation reserve is used to record exchange differences arising from the translation of the financial statements of subsidiaries with non-Sterling functional currencies.
The notes on pages 138 to 182 form an integral part of these consolidated financial statements.
Entain plc | Annual Report 2020 Financial statements
Consolidated statement of cash flows
for the year ended 31 December 2020
Cash generated by operations
Income taxes paid
Net finance expense paid
Net cash generated from operating activities
Cash flows from investing activities:
Acquisitions and payments of contingent consideration
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds from the sale of property, plant and equipment including disposal of shops
Investment in joint ventures
Dividends received from associates
Proceed from disposal of joint ventures
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issue of ordinary shares
Net proceeds from borrowings1
Repayment of borrowings
Payment of lease liabilities
Equity dividends paid2
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of changes in foreign exchange rates
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year3
Notes
29
137
2019
£m
543.7
(37.5)
(68.9)
437.3
(21.3)
(107.2)
(72.6)
10.9
–
1.2
63.8
(125.2)
1.5
1,045.5
(1,099.1)
(77.7)
(203.6)
(333.4)
(21.3)
(10.5)
421.9
390.1
2020
£m
864.8
(59.2)
(95.3)
710.3
(24.8)
(101.6)
(62.6)
6.9
(61.8)
–
–
(243.9)
8.6
13.5
(43.5)
(85.9)
(12.4)
(119.7)
346.7
13.0
390.1
749.8
1. Net proceeds from borrowings also includes £13.5m of cash received in relation to the settlement of derivative financial instruments (2019: £12.6m).
2. Equity dividends paid are inclusive of dividends paid to non-controlling interests of £12.4m (2019: £8.1m).
3. Cash and cash equivalents at the end of the year also includes £43.1m of cash within assets in disposal group classified as held for sale.
The notes on pages 138 to 182 form an integral part of these consolidated financial statements.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 138
Notes to the consolidated financial statements
for the year ended 31 December 2020
1 Corporate information
Entain plc (the Company) is a company incorporated and domiciled in the Isle of Man on 5 January 2010 whose shares are traded publicly
on the London Stock Exchange. The principal activities of the Company and its subsidiaries (“the Group”) are described in the strategic
report. The consolidated financial statements of the Group for the year ended 31 December 2020 were authorised for issue in accordance
with a resolution of the Directors on 4 March 2021.
The nature of the Group’s operations and its principal activities are set out in note 5.
2 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and with the Isle of Man Companies Act 2006
applicable to companies reporting under IFRSs. The accounting policies set out in this section as detailed have been applied consistently
year-on-year other than for the changes in accounting policies set out in note 3.
The Group financial statements are prepared under the historical cost convention unless otherwise stated. In adopting the going concern
basis of preparation in the financial statements, the Directors have considered the current trading performance of the Group, the financial
forecasts and the principal risks and uncertainties, including the impact of Covid-19 and in particular the impact of the potential for
further disruption to the Retail business across Europe. In addition, the Directors have considered all matters discussed in connection
with the long-term viability statement including the modelling of “severe but plausible” downside scenarios such as, legislation changes
impacting the Group’s Online business and extended lockdowns affecting the Group’s Retail operations.
Given the level of the Group’s available cash (£0.7bn), available financing facilities (including an undrawn revolving credit facility of
£0.5bn), debt maturity profile, and the forecast covenant headroom even under the sensitised downside scenarios, the Directors believe
that the Group is well placed to manage the risks and uncertainties that it faces. As such, the Directors have a reasonable expectation
that the Group will have adequate financial resources to continue in operational existence and meet its liabilities as they fall due for at
least 12 months from the date of approval of these financial statements and have, therefore, considered it appropriate to adopt the going
concern basis of preparation in the financial statements.
The consolidated financial statements are presented in Pounds Sterling (£). All values are in millions (£m) rounded to one decimal place
except where otherwise indicated.
The separately disclosed items have been included within the appropriate classifications in the consolidated income statement.
Further details are given in note 6.
3 Changes in accounting policies
From 1 January 2020 the Group has applied, for the first time, certain standards, interpretations and amendments. The adoption
of the following standards and amendments to standards did not have a material impact on the current period or any prior period
upon transition:
– IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors; amendments to the definition of “material”,
– IAS 39 Financial Instruments; amendments as a result of interest rate benchmark reform,
– IFRS 3 Business Combinations; amendments to the definition of a business,
– IFRS 7 Financial Instruments: Disclosures; amendments as a result of interest rate benchmark reform, and
– IFRS 9 Financial Instruments: Recognition and Measurement; amendments as a result of interest rate benchmark reform.
4 Summary of significant accounting policies
4.1 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group at 31 December each year. The consolidation
has been performed using the results to 31 December for all subsidiaries, using consistent accounting policies. With the exception of a
small number of immaterial subsidiaries, the financial statements of those subsidiaries are prepared to 31 December. Control is achieved
where the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these
returns through its power over the investee.
All intragroup transactions, balances, income and expenses are eliminated on consolidation.
Subsidiaries are consolidated, using the acquisition method of accounting, from the date on which control is transferred to the Group
and cease to be consolidated from the date on which control is transferred from the Group. On acquisition, the assets and liabilities and
contingent liabilities of a subsidiary are measured at fair value at the date of acquisition. Any excess of the cost of acquisition over the
fair values of the separately identifiable net assets acquired is recognised as goodwill. Where necessary, adjustments are made to the
financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group.
Entain plc | Annual Report 2020 Financial statements 139
4 Summary of significant accounting policies continued
4.2 Critical accounting estimates and judgements
The preparation of financial information requires the use of assumptions, estimates and judgements about future conditions. Use of
available information and application of judgement are inherent in the formation of estimates. Actual results in the future may differ from
those reported.
In this regard, management believes that the accounting policies where judgement has been applied are:
– accounting for uncertain tax positions; and
– separately disclosed items.
Furthermore, management believes that the accounting policies where estimates have been utilised are:
– the measurement and impairment of goodwill and other assets;
– pension and other post-employment benefit obligations; and
– accounting for business combinations.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised.
Further information about key assumptions concerning the future and other key sources of estimation uncertainty are set out below.
Accounting for uncertain tax positions
The Group is subject to various forms of tax in a number of jurisdictions. Given the nature of the industry within which the Group operates,
the tax and regulatory regimes are continuously changing and, as such, the Group is exposed to a small number of uncertain tax positions.
Provisions are made for uncertain tax positions where it is believed that it is more likely than not that an economic outflow will arise.
Separately disclosed items
To assist in understanding its underlying performance, the Group has defined the following items of pre-tax income and expense as
separately disclosed items as they either reflect items which are exceptional in nature or size or are associated with the amortisation of
acquired intangibles. Items treated as separately disclosed items include:
– amortisation of acquired intangibles resulting from IFRS 3 “Business Combinations” fair value exercises;
– profits or losses on disposal, closure or impairment of non-current assets or businesses;
– corporate transaction and restructuring costs;
– tax litigation;
– changes in the fair value of contingent consideration; and
– the related tax effect of these items.
Any other non-recurring items are considered individually for classification as separately disclosed or exceptional by virtue of their nature
or size.
The separate disclosure of these items allows a clearer understanding of the trading performance on a consistent and comparable basis,
together with an understanding of the effect of non-recurring or large individual transactions upon the overall profitability of the Group.
The separately disclosed items have been included within the appropriate classifications in the consolidated income statement.
Further details are given in note 6.
Goodwill
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in
the net fair value of the separately identifiable assets, liabilities and contingent liabilities at the date of acquisition. In accordance with
IFRS 3 Business Combinations, goodwill is not amortised but reviewed for impairment at the first reporting period after acquisition and
then annually thereafter. As such it is stated at cost less any provision for impairment of value. Any impairment is recognised immediately
in the consolidated income statement and is not subsequently reversed.
On acquisition, any goodwill acquired is allocated to cash generating units for the purpose of impairment testing. Where goodwill forms
part of a cash generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposal is
included in the carrying amount of the assets when determining the gain or loss on disposal.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 140
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
4 Summary of significant accounting policies continued
Intangible assets
Intangible assets acquired separately are capitalised at cost and those acquired as part of a business combination are capitalised
separately from goodwill if the fair value can be measured reliably on initial recognition. The costs relating to internally generated
intangible assets, principally software costs, are capitalised if the criteria for recognition as assets are met. Other expenditure is charged
in the year in which the expenditure is incurred. Following initial recognition, intangible assets are carried at cost less any accumulated
amortisation and any accumulated impairment losses.
The useful lives of these intangible assets are assessed to be either finite or indefinite. All indefinite lived assets are subject to an annual
impairment review from the year of acquisition. Where amortisation is charged on assets with finite lives, this expense is taken to the
consolidated income statement through the ‘operating expenses, depreciation and amortisation’ line item. Useful lives are reviewed on an
annual basis.
A summary of the policies applied to the Group’s intangible assets is as follows:
Retail licences
Software
Capitalised development expenditure
Trademarks and brand names
Customer relationships
Lower of 15 years, or duration of licence
2–15 years
3–5 years
10–15 years, or indefinite life
3–15 years
The useful lives of all intangible assets are reviewed at each financial period end. Impairment testing is performed annually for intangible
assets which are not subject to systematic amortisation and where an indicator of impairment exists for all other intangible assets.
An intangible asset is derecognised on disposal, with any gain or loss arising (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) included in the consolidated income statement in the year of disposal.
Pensions and other post-employment benefits
The Group’s defined benefit pension plans, the Ladbrokes Pension Plan and the Gala Coral Pension Plan hold assets separately from the
Group. The pension cost relating to both plans are assessed in accordance with the advice of independent qualified actuaries using the
projected unit credit method.
Actuarial gains or losses are recognised in the consolidated statement of comprehensive income in the period in which they arise.
Any past service cost is recognised immediately. The retirement benefit asset recognised in the balance sheet represents the fair value of
scheme assets less the value of the defined benefit obligations.
In accounting for the Group’s defined benefit pension plans, it is necessary for management to make a number of estimates and
assumptions each year. These include the discount rates, inflation rates and life expectancy. In making these estimates and assumptions,
management considers advice provided by external advisers, such as actuaries. Where actual experience differs to these estimates,
actuarial gains and losses are recognised directly in other comprehensive income. Refer to note 30 for details of the values of assets and
obligations and key assumptions used. Although the Group anticipates that plan surpluses will be utilised during the life of the plans to
address member benefits, the Group recognises its pension surplus in full on the basis that it does not consider there to be substantive
restrictions on the return of residual plan assets in the event of a winding up of the plans after all member obligations have been met.
The Group’s contributions to defined contribution schemes are charged to the consolidated income statement in the period to which the
contributions relate.
Business combinations
For business combinations, the Group estimates the fair value of the consideration transferred, which can include assumptions about
the future business performance of the business acquired and an appropriate discount rate to determine the fair value of any contingent
consideration. Judgement is also applied in determining whether any future payments should be classified as contingent consideration or
as remuneration for future services.
The Group then estimates the fair value of assets acquired and liabilities assumed in the business combination, including any separately
identifiable intangible assets. These estimates also require inputs and assumptions including future earnings, customer attrition rates and
discount rates. The Group engages external experts to support the valuation process, where appropriate. IFRS 3 ‘Business Combinations’
allows the Group to recognise provisional fair values if the initial accounting for the business combination is incomplete. Judgement is
applied as to whether changes should be applied at the acquisition date or as post-acquisition changes.
The fair value of contingent consideration recognised in business combinations is reassessed at each reporting date, using updated
inputs and assumptions based on the latest financial forecasts for the relevant business. Fair value movements and the unwinding of the
discounting is recognised within operating expenses.
Entain plc | Annual Report 2020 Financial statements 141
4 Summary of significant accounting policies continued
4.3 Other accounting policies
Impairment
An impairment review is performed for indefinite life assets on at least an annual basis. For all other non-current assets an impairment
review is performed where there are indicators of impairment. This requires an estimation of the recoverable amount which is the higher
of an asset’s fair value less costs to sell and its value in use. Estimating a value in use amount requires management to make an estimate
of the expected future cash flows from each cash generating unit and to discount cash flows by a suitable discount rate in order to
calculate the present value of those cash flows. Estimating an asset’s fair value less costs to sell is determined using future cash flow and
profit projections as well as industry observed multiples and publicly observed share prices for similar betting and gaming companies.
Within UK and European Retail the cash generating units are generally an individual Licensed Betting Office (“LBO”) and therefore,
impairment is first assessed at this level for licences, right of use (“ROU”) assets and property, plant and equipment, with any impairment
arising booked first to licences and then to property, plant and equipment.
Pension and other post-employment benefit obligations
There is a significant degree of estimation involved in predicting the ultimate benefits payable under defined benefit pension
arrangements. The pension scheme liabilities are determined using actuarial valuations. The actuarial valuation involves making
assumptions about discount rates, mortality rates and future pension increases. Due to the long-term nature of these plans, such
estimates are subject to significant uncertainty. The Group’s defined benefit pension schemes both have a net asset position when
measured on an IAS 19 basis. Judgement is applied, based on legal, actuarial, and accounting guidance in IFRIC 14, regarding the
amounts of net pension asset that is recognised in the consolidated balance sheet. Further details are given in note 30.
Investments in joint ventures
A joint venture is an entity in which the Group holds an interest on a long-term basis and which is jointly controlled by the Group and one
or more other venturers under a contractual agreement.
Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties that collectively control
the arrangement. In assessing this joint control no significant judgements have been necessary.
The Group’s share of results of joint ventures is included in the Group consolidated income statement using the equity method of
accounting. Investments in joint ventures are carried in the Group consolidated balance sheet at cost plus post-acquisition changes in
the Group’s share of net assets of the entity less any impairment in value. The carrying value of investments in joint ventures includes
acquired goodwill.
If the Group’s share of losses in the joint venture equals or exceeds its investment in the joint venture, the Group does not recognise further
losses, unless it has obligations to continue to provide financial support to the joint venture. Further details are given in note 16.
Investments in associates
Associates are those businesses in which the Group has a long-term interest and is able to exercise significant influence over the financial
and operational policies but does not have control or joint control over those policies.
The Group’s share of results of associates is included in the Group’s consolidated income statement using the equity method of
accounting. Investments in associates are carried in the Group’s consolidated balance sheet at cost plus post-acquisition changes in the
Group’s share of net assets of the entity less any impairment in value. The carrying value of investments in associates includes acquired
goodwill. If the Group’s share of losses in the associate equals or exceed its investments in the associate, the Group does not recognise
further losses, unless it has obligations to continue to provide financial support to the associate. Further details are given in note 17.
Property, plant and equipment
Land is stated at cost less any impairment in value.
Buildings, plant and equipment are stated at cost less accumulated depreciation and any impairment in value.
Depreciation is applied using the straight-line method to specific classes of asset to reduce them to their residual value over their
estimated useful economic lives.
Land and buildings
Plant and equipment
Fixtures and fittings
Lower of 50 years, or estimated useful life of the building, or lease. Indefinite lives are
attached to any freehold land held and therefore it is not depreciated
3–5 years
3–10 years
ROU assets are depreciated over the lease term (as defined in IFRS 16) being the period to the expiry date of the lease, unless it is
expected that a break clause will be exercised when the lease term is the period to the date of the break.
The carrying values of property, plant and equipment are reviewed for impairment where an indicator of impairment exists as to whether
there are events or changes in circumstances indicating that the carrying values may not be recoverable. If any such indication exists
and where the carrying values exceed the estimated recoverable amount, the assets or cash generating units are written down to their
recoverable amount.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 142
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
4 Summary of significant accounting policies continued
The recoverable amount of property, plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
Impairment losses are recognised in the consolidated income statement.
An item of property, plant and equipment is derecognised upon disposal, with any gain or loss arising (calculated as the difference
between the net disposal proceeds and the carrying amount of the item) included in the consolidated income statement in the year
of disposal.
Leases
The Group has applied IFRS 16 only to those contracts that were previously identified as a lease under IFRS 17 Leases, any contracts not
previously identified as leases have not been reassessed for the purposes of adopting IFRS 16. Accordingly, the definition of a lease under
IFRS 16 has only been applied to contracts entered into on or after 1 January 2019.
Leases, other than those with a lease period of less than one year at inception, or where the original cost of the asset acquired would be a
negligible amount (see note 22), are capitalised at the inception at the present value of the minimum lease payments. Lease payments are
apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged directly against income.
ROU assets are included within property, plant and equipment at cost and depreciated over their estimated useful lives, which normally
equates to the lives of the leases, after taking into account anticipated residual values.
ROU assets which are sub-leased to customers are classified as finance leases if the lease agreements transfer substantially all the risks
and rewards of usage to the lessee. All other sub-leases are classified as operating leases. When assets are subject to finance leases, the
present value of the sub-lease is recognised as a receivable, net of allowances for expected credit losses and the related ROU asset is de-
recognised. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance lease
income. Finance lease interest income is recognised over the term of the lease using the net investment method (before tax) so as to give
a constant rate of return on the net investment in sub-leases. Operating lease rental income is recognised on a straight-line basis over the
life of the lease.
Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand, short-term deposits with an original maturity of less than three months
(and customer balances).
Financial assets
Financial assets are recognised when the Group becomes party to the contracts that give rise to them.
The Group classifies financial assets at inception as financial assets at amortised cost, financial assets at fair value through profit or loss
or financial assets at fair value through other comprehensive income.
Financial assets at amortised cost are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. On initial recognition, financial assets at amortised cost are measured at fair value net of transaction costs.
Trade receivables are generally accounted for at amortised cost. Expected credit losses are recognised for financial assets recorded at
amortised cost, including trade receivables. Expected credit losses are calculated by using an appropriate probability of default, taking
accounts of a range of possible future scenarios and applying this to the estimated exposure of the Group at the point of default.
Financial assets at fair value through profit or loss include derivative financial instruments. Financial assets through profit or loss are
measured initially at fair value with transaction costs taken directly to the consolidated income statement. Subsequently, the fair values
are remeasured, and gains and losses are recognised in the consolidated income statement.
Financial assets at fair value through other comprehensive income comprise equity investments that are designated as such on
acquisition. These investments are measured initially at fair value. Subsequently, the fair values are remeasured, and gains and losses are
recognised in the consolidated statement of comprehensive income.
Financial liabilities
Financial liabilities comprise trade and other payables, interest bearing loans and borrowings, contingent consideration, ante-post bets,
guarantees and derivative financial instruments. On initial recognition, financial liabilities are measured at fair value net of transaction
costs where they are not categorised as financial liabilities at fair value. Financial liabilities measured at fair value include contingent
consideration, derivative financial instruments, ante-post bets and guarantees.
Financial liabilities at fair value are measured initially at fair value, with transaction costs taken directly to the consolidated income
statement. Subsequently, the fair values are remeasured and gains and losses from changes therein are recognised in the consolidated
income statement.
Trade and other payables are held at amortised cost and include amounts due to clients representing customer deposits and winnings,
which is matched by an equal and opposite amount within cash and cash equivalents.
All interest bearing loans and borrowings are initially recognised at fair value net of issue costs associated with the borrowing. After initial
recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.
Entain plc | Annual Report 2020 Financial statements 143
4 Summary of significant accounting policies continued
The Group has provided financial guarantees to third parties in respect of lease obligations of certain of the Group’s former subsidiaries
within the disposed hotels division. Financial guarantee contracts are classified as financial liabilities and are measured at fair value by
estimating the probability of the guarantees being called upon and the related cash outflows from the Group.
Derecognition of financial assets and liabilities
Financial assets are derecognised when the right to receive cash flows from the assets has expired or when the Group has transferred
its contractual right to receive the cash flows from the financial assets or has assumed an obligation to pay the received cash flows in full
without material delay to a third party, and either:
– substantially all the risks and rewards of ownership have been transferred; or
– substantially all the risks and rewards have neither been retained nor transferred but control is not retained.
Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.
Derivative financial instruments
The Group uses derivative financial instruments such as cross currency swaps, foreign exchange swaps and interest rate swaps, to
hedge its risks associated with interest rate and foreign currency fluctuations. Derivative financial instruments are recognised initially and
subsequently at fair value. The gains or losses on remeasurement are taken to the consolidated income statement.
Derivative financial instruments are classified as assets where their fair value is positive, or as liabilities where their fair value is negative.
Derivative assets and liabilities arising from different transactions are only offset if the transactions are with the same counterparty, a
legal right of offset exists and the parties intend to settle the cash flows on a net basis.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and
are discounted to present value where the effect is material using a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance expense.
Foreign currency translation
The presentational currency of Entain plc and the functional currencies of its UK subsidiaries are Pounds Sterling (£).
Other than Sterling the main functional currencies of subsidiaries are the Euro (€), the US Dollar ($) and the Australian Dollar (A$). At the
reporting date, the assets and liabilities of non-Sterling subsidiaries are translated into Pounds Sterling (£) at the rate of exchange
ruling at the balance sheet date and their cash-flows are translated at the weighted average exchange rates for the year. The post-tax
exchange differences arising on the retranslation are taken directly to other comprehensive income.
Transactions in foreign currencies are initially recorded in the subsidiary’s functional currency and translated at the foreign currency rate
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the foreign
currency rate of exchange ruling at the balance sheet date.
All foreign currency translation differences are taken to the consolidated income statement. Non-monetary items that are measured at
historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined.
On disposal of a foreign entity, the deferred cumulative retranslation differences previously recognised in equity relating to that particular
foreign entity are recognised in the consolidated income statement as part of the profit or loss on disposal.
The following exchange rates were used in 2020 and 2019:
Currency
Euro (€)
US Dollar ($)
Australian Dollar (A$)
Income tax
2020
2019
Average
Year end
Average
Year end
1.131
1.286
1.876
1.112
1.365
1.765
1.137
1.272
1.831
1.182
1.327
1.887
Deferred tax is provided on all temporary differences at the balance sheet date, between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes except:
– on the initial recognition of goodwill;
– where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor the tax profit; and
– associated with investments in subsidiaries, joint ventures and associates, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 144
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
4 Summary of significant accounting policies continued
Deferred tax assets are recognised for all deductible temporary differences and carry forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carry
forward of unused tax assets and unused tax losses can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or
the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred tax balances are not discounted.
Interest or penalties payable and receivable in relation to income tax are recognised as an income tax expense or credit in the
consolidated income statement.
Income tax expenses are recognised within profit and loss except to the extent that it relates to items recognised in other comprehensive
income or directly in equity, in which case it is recognised in other comprehensive income or directly in equity.
Revenues, expenses and assets are recognised net of the amount of sales tax except:
– where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the
sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
– receivables and payables are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
consolidated balance sheet.
Equity instruments and Dividends
Equity instruments issued by the Company are recorded at the fair value of proceeds received net of direct issue costs.
Final dividends proposed by the Board of Directors and unpaid at the year end are not recognised in the financial statements until they
have been approved by shareholders at the Annual General Meeting. Interim dividends are recognised when paid.
Revenue
The Group reports the gains and losses on all betting and gaming activities as revenue, which is measured at the fair value of the
consideration received or receivable from customers less free bets, promotions, bonuses and other fair value adjustments. Revenue is net
of VAT/GST. The Group considers betting and gaming revenue to be out of the scope of IFRS 15 Revenue, and accounts for those revenues
within the scope of IFRS 9 Financial Instruments.
For licensed betting offices (“LBOs”), on course betting, Core Telephone Betting, mobile betting, Digital businesses (including sportsbook,
betting exchange, casino, games, other number bets), revenue represents gains and losses, being the amounts staked and fees received,
less total payouts recognised on the settlement of the event. Open betting positions are carried at fair value and gains and losses arising
on these positions are recognised in revenue.
Revenue from the online poker business reflects the net income (rake) earned from poker games completed by the year end.
Vending income is also included within Revenue.
In the case of the greyhound stadia, revenue represents income arising from the operation of the greyhound stadia in the year, including
sales of refreshments, net of VAT.
Government assistance
Receipts from government assistance programs such as, furlough, are recorded as reductions in the costs against which they have been
received. See note 7 for more details.
Finance expense and income
Finance expense and income arising on interest bearing financial instruments carried at amortised cost are recognised in the consolidated
income statement using the effective interest rate method. Finance expense includes the amortisation of fees that are an integral part
of the effective finance cost of a financial instrument, including issue costs, and the amortisation of any other differences between the
amount initially recognised and the redemption price. All finance expenses are recognised over the availability period.
Share-based payment transactions
Certain employees (including Directors) of the Group receive remuneration in the form of equity settled share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (equity settled transactions).
The cost of equity settled transactions is measured by reference to the fair value at the date on which they are granted. Further details
of which are given in note 31. In valuing equity settled transactions, no account is taken of any performance conditions, other than
conditions linked to the price of the shares of Entain plc (market conditions).
Entain plc | Annual Report 2020 Financial statements 145
4 Summary of significant accounting policies continued
The cost of equity settled transactions is recognised in the consolidated income statement, with a corresponding credit in equity, over
the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to
the award (vesting date). The cumulative expense recognised for equity settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the Directors of the Group at
that date, based on the best available estimate of the number of equity instruments, will ultimately vest.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition,
which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance
conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share as shown in
note 12.
4.4 Future accounting developments
The standards and interpretations that are issued, but not yet effective, excluding those relating to annual improvements, up to the date
of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they
become effective. None of these are expected to have a significant effect on the consolidated financial statements of the Group as set
out below:
IAS 1
Presentation of Financial Statements Amendments to the classification of liabilities as current or non-current 1 January 2023
IAS 16 Property, Plant and Equipment
Amendments to the definition of sales proceeds and related costs
1 January 2022
IAS 37 Provisions, Contingent Liabilities
and Contingent Assets
Amendments to the definition of costs to fulfil an onerous contract
1 January 2022
IAS 41 Agriculture
Amendments to the measurement techniques for biological assets
1 January 2022
IFRS 1 First-time adoption of IFRS
Annual improvements to IFRS Standards 2018–2020 cycle
IFRS 3 Business Combinations
Updating a reference to the Conceptual Framework
IFRS 17 Insurance Contracts
Original issue
1 January 2022
1 January 2022
1 January 2021
5 Segment information
The Group’s operating segments are based on the reports reviewed by the Executive management team (which is collectively considered
to be the Chief Operating Decision Maker (“CODM”)) to make strategic decisions, and allocate resources.
IFRS 8 requires segment information to be presented on the same basis as that used by the CODM for assessing performance and
allocating resources, and the Group’s operating segments are now aggregated into the five reportable segments as detailed below:
– Online: comprises betting and gaming activities from online and mobile operations. Sports Brands include bwin, Coral, Crystalbet,
Eurobet, Ladbrokes and Sportingbet; Gaming Brands include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, partypoker
and PartyCasino;
– UK Retail: comprises betting activities in the shop estate in Great Britain, Northern Ireland and Jersey;
– European Retail: comprises all retail activities connected with the Republic of Ireland, Belgium, Italy and Spanish JV (pre disposal)
shop estates;
– Corporate: includes costs associated with Group functions including Group executive, legal, Group finance, tax and treasury; and
– Other segments: includes activities primarily related to telephone betting, Stadia, Betdaq and on course pitches.
The Group continues to engage with an interested party on the sale of its financial services business (Intertrader). The Directors believe
that it is highly probable that an agreement and subsequent sale will be completed within the next 12 months. On this basis the sale
is considered to meet the criteria of IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ and therefore has been
classified as discontinued. See note 21 for further information. The results of Intertrader were previously classified within Other in note 5.
The Executive management team of the Group has chosen to assess the performance of operating segments based on a measure of net
revenue, EBITDAR, EBITDA, and operating profit with finance costs and taxation considered for the Group as a whole. See page 56 of
this Annual Report for further considerations of the use of Non-GAAP measures. Transfer prices between operating segments are on an
arm’s-length basis in a manner similar to transactions with third parties.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 146
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
5 Segment information continued
The segment results for the year ended 31 December were as follows:
2020
NGR
VAT/GST
Revenue
Gross Profit
Contribution1
Operating costs excluding
marketing costs
Underlying EBITDAR before
separately disclosed items
Rental costs
Underlying EBITDA before
separately disclosed items
Share based payments
Depreciation and Amortisation
Share of joint ventures and
associates
Operating profit/(loss) before
separately disclosed items
Separately disclosed items (note 6)
Group operating profit/(loss)
Net finance costs
Profit before tax
Income tax
Profit for the year from
continuing operations
Loss for the year from discontinued
operations after tax
Profit for the year after
discontinued operations
Online
£m
UK Retail
£m
European
Retail
£m
All other
segments
£m
Corporate
£m
2,747.5
(66.9)
2,680.6
1,708.7
1,147.4
678.6
–
678.6
497.3
495.1
178.5
–
178.5
80.2
76.6
27.8
–
27.8
22.4
21.1
–
–
–
–
–
(342.5)
(401.3)
(54.8)
(25.0)
(54.5)
804.9
(1.4)
803.5
(4.3)
(120.1)
93.8
(16.6)
77.2
(1.2)
(86.2)
21.8
(0.7)
21.1
(0.3)
(29.6)
(3.9)
(0.3)
(4.2)
–
(2.7)
(54.5)
–
(54.5)
(9.0)
–
0.1
–
–
0.3
(60.6)
679.2
(304.5)
374.7
(10.2)
231.3
221.1
(8.8)
(5.0)
(13.8)
(6.6)
–
(6.6)
(124.1)
(92.4)
(216.5)
Elimination
of internal
revenue
£m
(3.9)
–
(3.9)
–
–
–
–
–
–
–
–
–
–
–
–
Total
Group
£m
3,628.5
(66.9)
3,561.6
2,308.6
1,740.2
(878.1)
862.1
(19.0)
843.1
(14.8)
(238.6)
(60.2)
529.5
(170.6)
358.9
(184.2)
174.7
(60.9)
113.8
(34.4)
79.4
Entain plc | Annual Report 2020 Financial statements 5 Segment information continued
Online
£m
2,170.7
(54.6)
2,116.1
1,367.8
887.2
UK Retail
£m
1,127.8
–
1,127.8
817.7
812.6
European
Retail
£m
All other
segments
£m
Corporate
£m
289.8
–
289.8
143.6
138.0
48.0
–
48.0
39.7
37.1
–
–
–
–
–
(352.2)
(585.1)
(70.8)
(37.5)
(46.4)
535.0
(1.1)
533.9
(5.5)
(116.0)
227.5
(19.6)
207.9
(1.0)
(72.7)
67.2
(0.8)
66.4
(0.3)
(29.0)
0.8
–
1.0
413.2
(574.7)
(161.5)
134.2
0.8
135.0
38.1
(22.1)
16.0
(0.4)
–
(0.4)
(0.1)
(0.8)
1.5
0.2
–
0.2
(46.4)
–
(46.4)
(5.8)
(0.4)
(12.5)
(65.1)
(90.7)
(155.8)
Elimination
of internal
revenue
£m
(3.6)
–
(3.6)
–
–
–
–
–
–
–
–
–
–
–
–
2019 (restated)
NGR
VAT/GST
Revenue
Gross Profit
Contribution1
Operating costs excluding
marketing costs
Underlying EBITDAR before
separately disclosed items
Rental costs
Underlying EBITDA before
separately disclosed items
Share based payments
Depreciation and Amortisation
Share of joint ventures and
associates
Operating profit/(loss) before
separately disclosed items
Separately disclosed items (note 6)
Group operating (loss)/profit
Net finance income
Loss before tax
Income tax
Loss for the year from continuing
operations
Loss for the year from discontinued
operations after tax
Loss for the year after
discontinued operations
Geographical information
147
Total
Group
£m
3,632.7
(54.6)
3,578.1
2,368.8
1,874.9
(1,092.0)
782.9
(21.5)
761.4
(12.7)
(218.9)
(9.2)
520.6
(686.7)
(166.1)
1.7
(164.4)
33.2
(131.2)
(9.5)
(140.7)
Revenue by destination and non-current assets on a geographical basis for the Group, are as follows:
United Kingdom
Rest of the world
Total
2020
Non-current
assets2
£m
3,116.4
2,559.7
5,676.1
Revenue
£m
1,675.3
1,886.3
3,561.6
2019
Revenue
(restated)
£m
Non-current
assets2
£m
1,931.7
1,646.4
3,578.1
3,325.2
2,546.3
5,871.5
1. Contribution represents gross profit less marketing costs and is a key performance metric used by the Group, particularly in Online.
2. Non-current assets excluding other financial assets, deferred tax assets and retirement benefit assets.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 148
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
6 Separately disclosed items
Amortisation of acquired intangibles1
Impairment loss2
Integration costs3
Triennial restructuring costs4
Tax litigation/one-off legislative impacts5
Legal and onerous contract provisions6
Movement in fair value of contingent consideration7
Issue costs write off8
Profit on disposal of joint ventures and property, plant and equipment9
Other one-off items10
Total before tax
Tax on separately disclosed items11
Separately disclosed items for the year from continuing operations
Separately disclosed items for the year from discontinued operations (note 21)
Separately disclosed items for the year after discontinued operations
2020
£m
307.0
5.0
25.1
8.3
(223.5)
8.9
42.4
5.3
(6.9)
4.3
175.9
(2.1)
173.8
20.0
193.8
2019
£m
(restated)
374.0
245.0
44.9
8.7
(11.6)
3.4
37.7
14.1
(19.0)
3.6
700.8
(79.6)
621.2
8.9
630.1
1.
2.
Amortisation charges in relation to acquired intangible assets primarily arising from the acquisitions of Ladbrokes Coral Group plc
and Bwin.
During the current year, the Group recorded a non-cash impairment charge against certain leased assets where the Group now
expects to exercise break clauses in lease agreements. This impairment charge is offset by an equal and opposite release from the
associated lease liabilities which has been recorded in legal and onerous contract provisions. See note 15 for further details. The prior
year impairment related to a £245.0m against the Groups Australian business.
3. Costs associated with the integration of the Ladbrokes Coral Group and GVC businesses, including redundancy costs.
4.
5.
6.
Costs associated with the shop closure program including redundancy, consultation costs and other costs directly associated with the
triennial response strategy, but excluding property related costs which are included in 6. below.
Following a favourable ruling by the Upper Tribunal on the lead case in the Ladbrokes VAT claim, a ruling HMRC have elected not
to appeal, the Group has recognised an income for its claim, net of associated costs. In December 2020, £217.5m of the claim was
repaid by HMRC. The prior year credit relates to a £21.2m release against the Groups Greek tax provisions offset by £5.8m of historic
Austrian duty and £3.8m of new UK income tax from April 2019 for which the Group became exempt from April 2020.
Includes costs associated with complying with the HMRC investigation offset by a release from lease liabilities as the Group now
expects to exercise break clauses in certain lease agreements (see item 2). The prior year costs relate predominantly to costs
associated with shop closures relating to the implementation of the Triennial Review.
7.
Costs associated with discount unwind and movements in the fair value of contingent consideration on acquisition activity from
previous years.
8.
Issue costs written off on the refinancing of US denominated loans in the year.
9.
Relates to the sale of an investment in an associate and various retail assets. The profit in the previous year related to the Groups sale
of joint ventures.
10. Relates predominantly to the one-off costs associated with Covid-19 such as initial one-off costs of reopening and certain social
distancing equipment not meeting the definition of capital, and the costs of the process associated with the Ladbrokes pension buy-in.
The prior year costs were predominantly incurred by the Group in relation to corporate transactions costs.
11. The tax credit on separately disclosed items of £2.1m (2019: £79.6m) represents 1.2% (2019: 11.3%) of the separately disclosed items
incurred of £175.9m (2019: £700.8m). This is lower than the expected tax credit of 19.0% (2019: 19.0%) as goodwill impairment
charges, certain corporate transaction costs and integration costs are non-deductible for tax purposes, alongside the impact of lower
overseas tax rates.
The items above reflect incomes and expenditures which are either exceptional in nature or size or are associated with the amortisation
of acquired intangibles. The Directors believe that each of these items warrants separate disclosure as they do not form part of
the day to day underlying trade of the Group and are not expected to persist beyond the short term (excluding the amortisation of
acquired intangibles).
Entain plc | Annual Report 2020 Financial statements 7 Administrative costs
Profit/(loss) before tax, net finance expense and separately disclosed items has been arrived at after charging:
Betting tax and Machine Games Duty
Revenue based payments
Software royalties
Other cost of sales
Cost of sales
Salaries and payroll-related expenses (note 9)
Property expenses
Content and levy expenses
Marketing expenses
Depreciation and amortisation – owned assets
Depreciation and amortisation – leased assets
Other operating expenses
Administrative costs
Separately disclosed items before tax (note 6)
Total
149
2020
£m
767.1
386.6
91.6
7.7
2019
£m
(restated)
793.2
322.7
60.3
33.1
1,253.0
1,209.3
517.3
62.7
136.1
541.5
176.2
62.4
222.7
645.2
95.4
120.1
497.7
166.0
52.9
261.7
1,718.9
1,839.0
170.6
3,142.5
686.7
3,735.0
During the year the Group benefited from £62.9m (2019: £nil) of government support in the form of furlough receipts across the various
countries in which the Group operates, predominantly the UK and the Republic of Ireland. There are no ongoing obligations on the Group
for the amounts received which have been recorded as a reduction to salaries and payroll-related expenses within underlying trading.
Fees payable to KPMG were as follows:
Audit and audit-related services:
Audit of the parent Company and Group financial statements
Audit of the Company’s subsidiaries
Audit-related assurance services
Non-audit services:
Taxation service fees
Total fees
8 Finance expense and income
Bank loans and overdrafts
Interest on lease liabilities1
Issue costs write off (note 6)
Total finance expense
Interest receivable
(Losses)/gains arising on financial derivatives
(Losses)/gains arising on foreign exchange on debt instruments
Net finance (expense)/income
1. Interest on lease liabilities of £16.3m (2019: £17.0) is net of £0.4m of sub-let interest receivable (2019: £0.2m).
2020
£m
2019
£m
0.6
1.5
0.4
2.5
–
2.5
2020
£m
(60.2)
(16.3)
(5.3)
(81.8)
2.3
(61.8)
(42.9)
(184.2)
0.6
1.3
0.3
2.2
0.1
2.3
2019
£m
(71.5)
(17.0)
(14.1)
(102.6)
2.4
17.6
84.3
1.7
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 150
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
9 Employee staff costs
The average monthly number of employees (including Executive Directors) was:
Online
UK Retail
European Retail
Other
Corporate
The number of people employed by the Group at 31 December 2020 was 23,573 (2019: 24,614).
Wages and salaries
Redundancy costs1
Social security costs
Other pension costs (note 30)
Share-based payments (note 31)
2020
Number
6,447
15,610
1,196
463
271
23,987
2020
£m
444.2
9.1
40.3
15.6
14.8
524.0
2019
Number
5,667
17,326
1,085
530
310
24,918
2019
£m
579.2
25.1
41.4
12.8
12.7
671.2
1. Included within redundancy costs are £6.7m (2019: £26.0m) which are included within separately disclosed items.
In addition to salary, employees may qualify for various benefit schemes operated by the Group. Eligibility for benefits is normally
determined according to an employee’s length of service and level of responsibility. The amounts of some benefits are proportionate to
individual salary.
Benefits may include insured benefits that can cover private healthcare for the employee and their immediate family, long-term disability,
personal accident and death in service cover. Company cars, including fuel benefits, are provided predominantly to meet job requirements
but also to certain executives.
10 Income tax
Analysis of expense for the year:
Current income tax:
– UK
– overseas
– adjustments in respect of previous years
Deferred tax:
– relating to origination and reversal of temporary differences
– adjustments in respect of previous years
Income tax expense/(credit) reported in the income statement
Income tax expense/(credit) is attributable to
Profit/(loss) from continuing operations
Loss from discontinued operations
Deferred tax credited directly to other comprehensive income
2020
£m
4.0
85.1
7.2
(33.9)
(2.8)
59.6
60.9
(1.3)
59.6
(0.1)
2019
£m
2.1
52.2
(3.2)
(65.6)
(19.0)
(33.5)
(33.2)
(0.3)
(33.5)
(36.6)
Entain plc | Annual Report 2020 Financial statements 151
10 Income tax continued
A reconciliation of income tax expense (2019: credit) applicable to profit (2019: loss) before tax at the UK statutory income tax rate to the
income tax expense (2019: credit) for the years ended 31 December 2020 and 31 December 2019 is as follows:
Profit/(loss) from continuing operations before income tax
Loss from discontinued operations before tax
Profit/(loss) before tax
Corporation tax expense/(credit) thereon at 19.00%
Adjusted for the effects of:
– Lower effective tax rates on overseas earnings
– Non-deductible expenses
– Fair value adjustment to contingent consideration
– Goodwill impairment
– Increase in/(recognition of) unrecognised tax losses
– Increase in unrecognised deferred interest
– Fixed asset timing differences recognised
– Difference in current and deferred tax rates
– Other
Adjustments in respect of prior years:
– Deferred tax prior year adjustments
– UK current tax adjustments
Income tax expense /(credit)
Reported as:
– expense in consolidated income statement (before separately disclosed items)
– credit in consolidated income statement (tax on separately disclosed items) (note 6)
Income tax expense/(credit)
Deferred tax
Deferred tax at 31 December relates to the following:
2020
£m
174.7
(35.7)
139.0
2019
£m
(164.4)
(9.8)
(174.2)
26.4
(33.1)
(6.9)
10.6
5.9
2.4
18.5
2.2
–
(3.9)
–
2.8
7.2
(15.2)
9.4
8.4
46.9
(14.8)
–
(11.3)
(1.4)
(0.2)
(19.0)
(3.2)
59.6
(33.5)
63.0
(3.4)
59.6
46.4
(79.9)
(33.5)
Property, plant and equipment
Intangible assets & goodwill
Retirement benefit assets
Losses
Other temporary difference
Deferred tax liabilities/(assets)
Deferred tax
liabilities
Deferred tax
assets
2020
£m
–
284.7
22.6
–
24.4
331.7
2019
£m
–
322.0
23.4
–
12.8
358.2
2020
£m
(58.6)
(19.8)
–
(27.2)
(24.2)
2019
£m
(56.1)
(17.1)
–
(33.2)
(18.0)
(129.8)
(124.4)
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 152
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
10 Income tax continued
Movements in deferred tax during the year ended 31 December 2020 were recognised as follows:
Net deferred tax liabilities /(assets)
At 31 December 2019
Arising on transition to IFRS 16
Income statement
Other comprehensive income
Exchange adjustment
At 31 December 2020
Income statement
Other comprehensive income
Exchange adjustment
At 31 December 2020
Property, plant
and equipment
£m
Intangible
assets &
goodwill
£m
Retirement
benefit assets
£m
(36.4)
(14.3)
(5.5)
0.1
–
(56.1)
0.1
–
(0.2)
(56.2)
370.3
–
(58.5)
–
(6.9)
304.9
(48.7)
–
6.3
262.5
58.9
–
1.1
(36.6)
–
23.4
(0.7)
(0.1)
–
22.6
Losses
£m
(19.8)
–
(13.9)
0.5
–
(33.2)
6.7
–
(0.7)
(27.2)
Amounts presented on the consolidated balance sheet:
Deferred tax liabilities
Deferred tax assets
Net deferred tax liability
Other
temporary
differences
£m
3.2
–
(7.8)
(0.6)
–
(5.2)
5.9
–
(0.5)
0.2
2020
£m
331.7
(129.8)
201.9
Total
£m
376.2
(14.3)
(84.6)
(36.6)
(6.9)
233.8
(36.7)
(0.1)
4.9
201.9
2019
£m
358.2
(124.4)
233.8
Deferred tax assets are considered recognisable based on the ability of future offset against deferred tax liabilities or against future
taxable profits.
As at 31 December 2020, the Group had £1,660.7m (2019: £1,437.5m) of gross unrecognised deferred tax assets, consisting of £213.3m
of capital losses (2019: £255.2m), £1,407.2m of trading losses (2019: £1,129.7m) and £40.2m of deferred interest relief (2019: £52.6m).
These assets have not been recognised as they are not expected to be utilised in the foreseeable future.
There are no significant unrecognised taxable temporary differences associated with investments in subsidiaries.
The standard rate of UK corporation tax throughout the period was 19.0%.
In the Budget on 3 March 2021, the Chancellor announced that the standard rate of UK Corporation Tax will be increased to 25%.
The precise date(s) and period(s) in which the increase in UK Corporation Tax will be substantively enacted are unknown at the
date of this Report. The impact of each 1% increase in the UK Corporation Tax rate on the Group’s deferred tax assets and liabilities
at 31 December 2020 would have been £1.6m comprising a £3.5m credit to Underlying items, and a £1.9m debit to Separately
Disclosed Items.
The deferred tax assets and liabilities are measured at the tax rates of the respective territories which are expected to apply to the year in
which the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at
the balance sheet date. Deferred tax on retirement benefit assets is provided at 35.0%, which is the rate applicable to refunds.
11 Dividends
Pence per share
Prior year final dividend paid
Interim dividend paid
2020
pence
–
–
2019
pence
16.0
17.6
2020
Shares in
issue
number
n/a
n/a
2019
Shares in
issue
number
581.9
581.9
A proposed second interim dividend of 17.6 pence per share, amounting to £102.5m in respect of the year ended 31 December 2019
was proposed by the Directors on 5 March 2020. On 6 April 2020 the Group announced that the 2019 second interim dividend would be
withdrawn due to the ongoing uncertainty surrounding Covid-19, subsequently no interim dividends have been declared with respect to
the year ended 31 December 2020.
The dividends represented above are exclusive of dividends paid out of non-controlling interests of £12.4m (2019: £8.1m).
Entain plc | Annual Report 2020 Financial statements 153
12 Earnings per share
Basic earnings per share has been calculated by dividing the profit for the year attributable to shareholders of the Company of £57.8m
(2019: loss of £153.7m) by the weighted average number of shares in issue during the year of 583.7m (2019: 582.0m).
At 31 December 2020, there were 585.0m €0.01 ordinary shares in issue.
The calculation of adjusted earnings per share which removes separately disclosed items and foreign exchange gains and losses arising
on financial instruments has also been disclosed as it provides a better understanding of the underlying performance of the Group.
Separately disclosed items are defined in note 4 and disclosed in note 6.
Total earnings per share
Weighted average number of shares (millions)
Shares for basic earnings per share
Potentially dilutive share options and contingently issuable shares
Shares for diluted earnings per share
Total profit
Profit/(loss) attributable to shareholders
– from continuing operations
– from discontinued operations
Losses/(gains) arising from financial instruments
Losses/(gains) arising from foreign exchange debt instruments
Associated tax charge on gains arising from financial instruments and foreign exchange debt instruments
Separately disclosed items net of tax (note 6)
Adjusted profit attributable to shareholders
– from continuing operations
– from discontinued operations
2020
583.7
6.2
589.9
2020
£m
57.8
92.2
(34.4)
61.8
42.9
–
193.8
356.3
370.7
(14.4)
2019
582.0
7.3
589.3
2019
£m
(153.7)
(143.9)
(9.8)
(17.6)
(84.3)
4.1
630.1
378.6
379.2
(0.6)
Earnings per share (pence)
Basic earnings per share
– from continuing operations
– from discontinued operations
From profit/(loss) for the period
Diluted earnings per share
– from continuing operations
– from discontinued operations
From profit/(loss) for the period
Standard earnings
per share
Adjusted earnings
per share
2020
2019
2020
2019
15.8
(5.9)
9.9
15.6
(5.8)
9.8
(24.8)
(1.6)
(26.4)
(24.8)
(1.6)
(26.4)
63.5
(2.5)
61.0
62.8
(2.4)
60.4
65.2
(0.1)
65.1
64.3
(0.1)
64.2
The earnings per share presented above is inclusive of the performance from the US joint venture BetMGM. Adjusting for the removal of
the BetMGM performance would result in a basic adjusted earnings per share of 73.9p (2019: 67.3p) and a diluted adjusted earnings per
share of 73.1p (2019: 66.4p) from continuing operations.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 154
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
13 Goodwill and intangible assets
Goodwill
£m
Licences
£m
Software
£m
Customer
relationships
£m
Consulting &
magazine
£m
Trade-marks &
brand names
£m
Cost
At 1 January 2019
Exchange adjustment
Additions
Disposals
At 31 December 2019
Exchange adjustment
Additions
Disposals and assets classified as
held for sale
At 31 December 2020
Accumulated amortisation and
impairment
At 1 January 2019
Exchange adjustment
Amortisation charge
Impairment charge
Disposals
At 31 December 2019
Exchange adjustment
Amortisation charge
Disposals and assets classified as
held for sale
At 31 December 2020
Net book value
At 31 December 2019
At 31 December 2020
3,358.0
(115.6)
–
(3.6)
3,238.8
128.3
–
(14.9)
3,352.2
29.9
(1.4)
–
243.9
–
272.4
18.7
–
–
291.1
2,966.4
3,061.1
15.8
–
–
(0.1)
15.7
–
–
–
15.7
5.3
–
1.1
–
(0.1)
6.3
–
1.1
–
7.4
9.4
8.3
514.9
(4.4)
114.4
(29.0)
595.9
11.3
101.6
(169.5)
539.3
262.7
(0.6)
146.1
–
(28.9)
379.3
6.0
115.8
(169.1)
332.0
956.3
(20.4)
–
–
935.9
20.6
–
(7.9)
948.6
312.3
(12.7)
293.6
–
–
593.2
17.4
262.2
(1.2)
871.6
216.6
207.3
342.7
77.0
4.4
–
–
(4.4)
–
–
–
–
–
4.4
–
–
–
(4.4)
–
–
–
–
–
–
–
Total
£m
6,804.5
(169.8)
114.4
(37.1)
6,712.0
190.5
101.6
1,955.1
(29.4)
–
–
1,925.7
30.3
–
(2.0)
(194.3)
1,954.0
6,809.8
60.9
(5.0)
40.5
–
–
96.4
6.8
39.3
675.5
(19.7)
481.3
243.9
(33.4)
1,347.6
48.9
418.4
(1.3)
141.2
(171.6)
1,643.3
1,829.3
1,812.8
5,364.4
5,166.5
At 31 December 2020, the Group had not entered into contractual commitments for the acquisition of any intangible assets (2019: £nil).
Included within trade-marks & brand names are £1,398.4m (2019: £1,398.4m) of intangible assets considered to have indefinite lives.
These assets relate to the UK Ladbrokes and Coral brands which are considered to have indefinite durability that can be demonstrated
and their value can be readily measured. The brands operate in longstanding and profitable market sectors. The Group has a strong
position in the market and there are barriers to entry due to the requirement to demonstrate that the applicant is a fit and proper person
with the “know-how” required to run such operations.
Goodwill reflects the value by which consideration exceeds the fair value of net assets acquired as part of a business combination
including the deferred tax liability arising on acquisitions.
Licences comprise the cost of acquired betting shop licences.
Software relates to the cost of acquired software, through purchase or business combination, and the capitalisation of internally
developed software.
Customer relationships, trade-marks and brand names relate to the fair value of customer lists, trade-marks and brand names acquired
as part of business combinations, primarily relating to the Bwin and Ladbrokes Coral Group plc businesses.
Refer to notes 6 and 14 for details of the impairment charge.
Entain plc | Annual Report 2020 Financial statements 155
14 Impairment testing of goodwill and indefinite life intangible assets
An impairment loss is recognised for any amount by which an asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
Within UK and European Retail, the cash generating units (“CGUs”) are generally an individual Licensed Betting Office (“LBO”) and
therefore, impairment is first assessed at this level for licences (intangibles) and property, plant and equipment, with any impairment
arising booked first to licences and then to property, plant and equipment. Since goodwill and brand names has not been historically
allocated to individual LBOs, a secondary assessment is then made to compare the carrying value of the segment against the recoverable
amount with any additional impairment then taken against goodwill.
For Online the CGU is the relevant geographical location or business unit, for example Australia, European digital (defined as websites
hosted by proprietary platforms based in European constituent countries), Digital (defined as websites hosted by Entain proprietary
platforms) etc. and any impairments are made firstly to goodwill, next to any capitalised intangible asset and then finally to property,
plant and equipment.
The expected cash flows generated by the assets are discounted using appropriate discount rates that reflect the time value of money
and risks associated with the group of assets.
For both tangible and intangible assets, the future cash flows are based on the forecasts and budgets of the CGU or business discounted
to reflect time value of money. The key assumptions within the UK and European Retail budgets are OTC wagers (customer visits and
spend per visit), the average number of machines per shop, gross win per shop per week, salary increases, the potential impact of the
shop closures and the cancellation of sporting events due to Covid restrictions and the fixed costs of the LBOs. The key assumptions
within the budgets for Online are the number of active customers, net revenue per head, win percentage, marketing spend, revenue
shares and operating costs.
The value-in-use calculations use cash flows based on detailed, Board approved, financial budgets prepared by management covering
a three-year period. These forecasts have been extrapolated over years 4 to 8 representing a declining growth curve from year 3 until
the long-term forecast growth rate is reached. The growth rates used from years 4-8 range from 0% to 16%. From year 9 onwards
long-term growth rates used are between 0% and 2.0% (2019: between 0% and 3.0%) and are based on the long-term GDP growth rate
of the countries in which the relevant CGUs operate or the relevant outlook for the business. A 0% growth rate has been used for the UK
Retail operating segment due to the ongoing uncertainty surrounding the outlook after the triennial implementation. An 8-year horizon is
considered appropriate based on the Group’s history of underlying profit as well as ensuring there is an appropriate decline to long-term
growth rates from those growth rates currently observed in our key markets.
The discount rate calculation is based on the specific circumstances with reference to the WACC and risk factors expected in the industry
in which the Group operates.
The pre-tax discount rates used and the associated carrying value of goodwill by CGU is as follows:
Goodwill
Digital
UK Retail
Australia
European Retail
European Digital
All other segments
2020
%
9.1
9.1
10.6
8.5 – 10.4
9.9 – 10.4
9.1
2019
%
9.3
9.3
10.9
8.8 – 10.8
10.1 – 10.8
9.3
2020
%
2,101.1
76.4
349.5
163.7
355.2
15.2
3,061.1
2019
%
2,045.1
76.4
326.5
154.0
334.3
30.1
2,966.4
It is not practical or material to disclose the carrying value of individual licences by LBO.
Impairment recognised during the year
Impairments of intangible assets and property, plant and equipment are recognised as separately disclosed items.
During the current year, the Group recorded a non-cash impairment charge of £5.0m (2019: £245.0m) on certain head office locations
where we now expect to exercise break clauses (2019: £243.9m in goodwill and £1.1m in PP&E). The impairment in 2019 (£243.9m
in goodwill and £1.1m in PP&E) was recognised against our Australian business and reflected the impact of unforeseen Point of
Consumption Tax (“POCT”) in certain states/regions and unexpected increases in product fees.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
156
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
14 Impairment testing of goodwill and indefinite life intangible assets continued
Sensitivity analysis
A reduction to 0% for the terminal growth rate applied to the cash flows (with other assumptions remaining constant) would result in no
additional impairment to any CGU.
A 5% decrease in all cash flows used in the discounted cash flow model for the value in use calculation (with other assumptions remaining
constant) would result in no additional impairment to any CGU.
A 0.5pp increase in discount rates used in the discounted cash flow model for the value in use calculation (with all other assumptions
remaining constant) would result in no additional impairment to any CGU.
No other reasonable change in assumptions to the CGUs would cause any additional impairment.
Impairment testing across the business
Licences/
franchisees
PPE & Software
Customer
Relationships
Goodwill
Brand name
Digital
Digital Impairment review
UK Retail
UK Retail site by site Impairment review
UK Retail – Impairment review
ROI
Eurobet
Digital
Eurobet
Retail
Belgium
Digital
Belgium
Retail
Australia
ROI site by site Impairment review
ROI Impairment review
Eurobet Digital Impairment review
Eurobet Retail Impairment review
Belgium Digital Impairment review
Belgium Digital Impairment review
Australia Impairment review
Combined
Digital/
UK Retail
Impairment
review
Eurobet
Impairment
review
Belgium
Impairment
review
Entain plc | Annual Report 2020 Financial statements 157
Total
£m
301.0
391.9
(11.8)
148.5
(44.1)
785.5
9.6
129.4
(97.3)
–
827.2
105.4
136.7
(3.7)
114.1
1.1
(36.0)
317.6
3.8
127.2
5.0
(96.6)
–
357.0
Land and
buildings
£m
Plant and
equipment
£m
Fixtures and
fittings
£m
Leased assets
£m
208.2
–
(8.3)
62.2
(24.6)
237.5
3.7
31.6
(72.9)
(18.1)
181.8
77.2
–
(2.2)
39.9
–
(24.6)
90.3
2.0
41.6
–
(72.9)
(7.1)
53.9
–
391.9
(1.8)
54.8
(5.1)
439.8
3.5
70.9
(2.8)
18.1
529.5
–
136.7
(0.3)
52.9
1.1
–
190.4
0.4
62.4
5.0
(2.1)
7.1
263.2
30.8
–
(1.4)
14.5
(14.3)
29.6
–
13.9
(17.0)
–
26.5
21.3
–
(1.0)
12.2
–
(11.3)
21.2
–
10.3
–
(17.0)
–
14.5
8.4
12.0
62.0
–
(0.3)
17.0
(0.1)
78.6
2.4
13.0
(4.6)
–
89.4
6.9
–
(0.2)
9.1
–
(0.1)
15.7
1.4
12.9
–
(4.6)
25.4
62.9
64.0
15 Property, plant and equipment
Cost
At 1 January 2019
Arising on transition to IFRS 16
Exchange adjustment
Additions
Disposals
At 31 December 2019
Exchange adjustment
Additions
Disposals and assets classified as held for sale
Reclassification
At 31 December 2020
Accumulated depreciation
At 1 January 2019
Arising on transition to IFRS 16
Exchange adjustment
Depreciation charge
Impairment
Disposals
At 31 December 2019
Exchange adjustment
Depreciation charge
Impairment
Disposals and assets classified as held for sale
Reclassification
At 31 December 2020
Net book value
At 31 December 2019
At 31 December 2020
147.2
127.9
249.4
266.3
467.9
470.2
At 31 December 2020, the Group had not entered into contractual commitments for the acquisition of any property, plant and equipment
(2019: £nil).
In the year the Group reclassified certain leased assets that were previously held within fixtures and fittings to be presented within
leased assets.
Included within fixtures, fittings and equipment are assets in the course of construction, which are not being depreciated, of £38.8m
(2019: £42.7m) relating predominantly to the new till system in UK Retail.
An impairment charge of £5.0m (2019: £1.1m) has been made against office buildings included within leased assets in the year.
See notes 6 and 14 for further details.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 158
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
16 Interest in joint venture
Cost
At 1 January 2019
Disposals
Exchange adjustment
Share of loss after tax
At 31 December 2019
Additions
Exchange adjustment
Share of loss after tax
At 31 December 2020
The joint venture represents the Group’s investment in BetMGM set up in the US in which a 50% stake is held.
Summarised financial information in respect of the Group’s share of joint venture’s net assets is set out below:
Non-current assets
Cash and cash equivalents
Other current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Group’s share of net assets
Summarised statement of comprehensive income
Revenue
Depreciation and amortisation
Other operating expenses
Income tax
Loss for the year
Group’s share of loss
Share of joint
venture’s net
assets
£m
46.1
(27.4)
(1.9)
(10.8)
6.0
61.8
(1.0)
(60.6)
6.2
2019
£m
12.6
13.3
3.1
16.4
(17.0)
–
12.0
6.0
2019
£m
132.7
(5.7)
(147.5)
(1.1)
(21.6)
(10.8)
2020
£m
42.2
45.0
15.5
60.5
(83.3)
(7.0)
12.4
6.2
2020
£m
135.5
(3.5)
(253.2)
–
(121.2)
(60.6)
Revenue included for the previous year includes revenues arising from the Group’s previous interest held in Sportium Apuestas Deportivas
S.A. which was disposed of in October 2019.
There are no contingent liabilities relating to the Group’s interest in the joint venture.
The risks associated with the Group’s interest in joint ventures is aligned to the same risks the Group is exposed to on the basis that they
operate wholly within the betting and gaming market.
Entain plc | Annual Report 2020 Financial statements 17 Interest in associates and other investments
Cost
At 1 January 2019
Additions
Revaluation gain
Share of profit after tax
Dividends received
Share of other comprehensive income
Foreign exchange
At 31 December 2019
Additions
Revaluation loss
Share of profit after tax
Share of other comprehensive income
Foreign exchange
At 31 December 2020
Associates
Summarised financial information in respect of the associates is set out below:
Non-current assets
Current assets
Current liabilities
Net assets
Group’s share of net assets
Revenue for the year
Profit for the year
Other comprehensive income
Total comprehensive income
Group’s share of total comprehensive income
Further details of the Group’s associates are listed in note 33.
159
Total
£m
26.0
0.5
1.5
1.6
(1.2)
1.0
0.5
29.9
0.2
(1.7)
0.4
0.3
0.3
29.4
2019
£m
12.5
102.4
(44.4)
70.5
19.0
Share of
associates’ net
assets
£m
Other
investments
£m
17.1
–
–
1.6
(1.2)
1.0
0.5
19.0
–
–
0.4
0.3
(0.4)
19.3
8.9
0.5
1.5
–
–
–
–
10.9
0.2
(1.7)
–
–
0.7
10.1
2020
£m
14.1
106.5
(51.5)
69.1
19.3
197.2
221.6
(1.7)
1.3
(0.4)
0.7
4.0
4.5
8.5
2.6
The financial year end of Sports Information Services (Holdings) Limited (“SIS”), an associate of the Group, is 31 March. The Group has
included the results for SIS for the 12 months ended 31 December 2020. SIS is a private company and there is no quoted market price
available for its shares.
The risks associated with associate investments is considered to be aligned to the same risks the Group is exposed to on the basis that
they operate wholly within the betting and gaming market.
Other investments of £10.1m (2019: £10.9m) consist of investments which have no fixed maturity date or coupon rate.
18 Trade and other receivables
Trade receivables
Other receivables
Finance lease receivable
Prepayments
2020
£m
12.8
385.8
4.9
76.1
479.6
2019
£m
2.2
415.0
4.2
59.5
480.9
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 160
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
18 Trade and other receivables continued
Trade and other receivables are presented on the Balance Sheet as follows:
Current
Non-current
Total
2020
£m
475.8
3.8
479.6
2019
£m
477.6
3.3
480.9
Trade receivables are non-interest bearing and are generally on 30–90 day terms. Trade receivables are reviewed for impairment on an
ongoing basis, taking account of the ageing of outstanding amounts and the credit profile of customers. Impaired receivables, including
all trade receivables that are a year old, are provided for in an allowance account. Impaired receivables are derecognised when they are
assessed as irrecoverable. The expected credit losses arising from receivables are not considered to be significant.
The majority of other receivables consists of the receivable for Greek tax and amounts receivable from payment service providers.
Greek tax
In the year ended 31 December 2018, the Group recognised a charge of £186.8m in the Income Statement within non-trading items for
potential Greek tax liabilities for the years 2010 to 2017. Of the charge recognised, €51.4m (£46.1m) related to 2010/11 for which the
Group received an assessment of €186.8m in 2017.
2010/11
The Group’s appeal against the original assessment in respect of 2010 and 2011 was heard before the Administrative Court of Appeal in
Athens on 13 January 2019. Whilst we do not expect to hear the verdict until mid 2021, the Directors remain confident that the Court will
find that the original assessment was out of all proportion to the size of the Group’s Greek business at the time.
By 31 December 2020 the Group had paid all of the 2010/2011 assessment of €186.8m. As at 31 December 2020, the total payments
made in respect of the assessment exceed our best estimate of the liability for these years by £130.4m, and accordingly this is recorded
as a receivable in the Group’s balance sheet (2019: £116.0m). In the event of a successful appeal, recovery of the debtor will be through
either a repayment or an ability to offset future tax liabilities.
2012–2017
Since the 2019 year end the Group has received final sign off of the 2015 and 2016 Greek tax re-submissions but still awaits final sign
off of the 2017 re-submission. The Group has now made all tax payments against the 2012–2017 tax liabilities and has made a provision
for the remaining associated fees. The statutory window in Greece for the tax authorities to conclude their audit work is generally six
years from the end of the relevant tax year. As such, the outcome of the tax audits as well as the court ruling on the 2010/11 assessment
remains uncertain.
19 Cash and cash equivalents
Cash and short-term deposits
2020
£m
706.7
2019
£m
390.1
Additional to the cash balance above are amounts of £43.1m currently included within assets classified as held for sale.
Cash and cash equivalents in the consolidated statement of cash flows comprises cash at bank with a maturity of three months or less,
overdrafts netted of short-term investments and includes £36.3m (2019: £26.9m) held in trust in respect of customers.
20 Trade and other payables
Current trade and other payables comprise:
Trade payables
Other payables
Social security and other taxes
Accruals
2020
£m
47.1
103.3
229.7
307.3
687.4
2019
£m
46.3
101.2
234.2
297.0
678.7
Entain plc | Annual Report 2020 Financial statements 161
21 Assets held for sale and discontinued operations
The Group continues to engage with an interested party over the sale of its Intertrader business. The directors believe that it is thought
an agreement and subsequent sale will be highly probable and completed within the next 12 months. On this basis the Intertrader
business is considered to meet the criteria of IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ to be classified
as discontinued.
As a result of discontinuing the Intertrader businesses the Group recorded an impairment of £19.3m and have provided for a loss on
disposal of £10.0m which has been recognised within separately disclosed items. See note 6 for further details.
The results for the year for the discontinued operation are disclosed below:
Revenue
Cost of sales
Gross profit
Administrative costs
Operating loss
Separately disclosed items
Loss before tax
Income tax credit
Loss for the year from discontinued operations after tax
The results of Intertrader were previously classified within Other in note 5.
2020
£m
13.8
(7.6)
6.2
(20.6)
(14.4)
(21.3)
(35.7)
1.3
(34.4)
2019
£m
22.4
(13.0)
9.4
(10.0)
(0.6)
(9.2)
(9.8)
0.3
(9.5)
Separately disclosed items consisted of £19.3m (2019: £nil) relating to impairment, £10.0m (2019: £nil) relating to a provision for a loss
on disposal, £3.4m (2019: £2.2m) relating to amortisation of acquired intangibles and a credit of £11.4m (2019: cost of £6.7m) relating to
movement in fair value of contingent consideration and £nil (2019: £0.3m) relating to deal costs.
Items classified as held-for-sale on the balance sheet are disclosed below:
Non-current assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Current liabilities
Trade and other payables
Balances with customers
Other financial liabilities
Liabilities classified as held for sale
2020
£m
0.7
155.3
43.1
198.4
199.1
(12.7)
(155.0)
(4.3)
(172.0)
2019
£m
–
–
–
–
–
–
–
–
–
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 162
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
22 Lease liabilities
Current
Lease liabilities
Non-current
Lease liabilities
Total lease liabilities
2020
£m
2019
£m
89.8
75.5
248.2
338.0
288.0
363.5
The Group’s leasing activity consists of leases on property, cars, Self Service Betting Terminals and office equipment. The majority of
those relate to the leasing of LBOs within the Retail estates.
Each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on
an index or a rate (such as lease payments on gaming machines based on a percentage of revenue) are excluded from the measurement
of the lease liability and asset. The Group classifies its right-of-use assets in a consistent manner to its property, plant and equipment
(see Note 15).
Leases of vehicles and IT equipment are generally limited to a new lease term of 3 to 5 years. Leases of property generally have a
lease term ranging from 5 years to 10 years, with some legacy leases extending out to 20 years and beyond. Most new leases of
property are now generally expected to be limited to no more than 10 years, with a break option after no more than 5 years, except in
special circumstances.
The maturity analysis of lease liabilities at 31 December 2020 is as follows:
2020
Net present value
2019
Net present value
Within
1 year
£m
1–2 years
£m
2–5 years
£m
> 5 years
£m
Total
£m
Minimum lease payments due
89.8
67.6
108.5
72.1
338.0
75.5
68.9
128.2
90.9
363.5
Certain lease payments are not recognised as a liability where the Group continues to pay rents where it continues to occupy properties
after the lease has expired. Payments made under such leases are expensed on a straight-line basis. In addition, certain variable lease
payments and irrecoverable VAT are not permitted to be recognised as lease liabilities and are expensed as incurred.
The use of extension and termination options gives the Group added flexibility in the event it has identified more suitable premises in
terms of cost and/or location or determined that it is advantageous to remain in a location beyond the original lease term. An option is
only exercised when consistent with the Group’s regional markets strategy and the economic benefits of exercising the option exceeds the
expected overall cost.
Group as Lessor:
Finance lease receivables are included in the statement of financial position within trade and other receivables and are as follows:
Current
Non-current
2020
£m
1.1
3.8
2019
£m
0.9
3.3
Entain plc | Annual Report 2020 Financial statements 163
22 Lease liabilities continued
The maturity analysis of lease receivables, including the undiscounted lease payments to be received are as follows:
2020
Lease payments receivable
Interest
Present value of lease payments receivable
2019
Lease payments receivable
Interest
Present value of lease payments receivable
Operating lease commitments – Group as lessor
Within
1 year
£m
1.3
(0.2)
1.1
1.2
(0.3)
0.9
Minimum lease payments due
1–2 years
£m
2–5 years
£m
> 5 years
£m
Total
£m
1.1
(0.1)
1.0
0.9
(0.1)
0.8
1.9
(0.2)
1.7
1.4
(0.2)
1.2
1.3
(0.2)
1.1
1.5
(0.2)
1.3
5.6
(0.7)
4.9
5.0
(0.8)
4.2
A number of the sublease agreements for unutilised space in the UK shop estate are not classified as finance leases within IFRS 16.
These non-cancellable leases have remaining lease terms of between one and nine years. The future minimum rentals receivable under
these non-cancellable operating leases at 31 December are as follows:
Within one year
After one year but not more than five years
After five years
23 Interest bearing loans and borrowings
Current
Euro denominated loans
USD denominated loans
Sterling denominated loans
Non-current
Euro denominated loans
USD denominated loans
Sterling denominated loans
2020
£m
0.6
0.8
0.3
1.7
2020
£m
2.8
5.9
5.4
14.1
2019
£m
0.6
1.4
1.0
3.0
2019
£m
8.4
17.8
5.3
31.5
1,011.0
563.6
511.1
2,085.7
951.1
581.0
552.4
2,084.5
As at 31 December 2020 there were £480.0m (2019: £495.0m) of committed bank facilities of which £nil (2019: £35.0m) were
drawn down.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 164
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
24 Provisions
At 1 January 2019
Effect of transition to IFRS 16
Provided
Utilised
Released
Reclassification
Exchange adjustment
At 31 December 2019
Provided
Utilised
Released
Exchange adjustment
At 31 December 2020
Property
provisions1
£m
Restructuring
provision2
£m
Litigation and
regulation
provisions3
£m
68.6
(51.7)
9.4
(9.2)
(2.2)
(1.9)
–
13.0
12.3
(8.9)
(1.6)
–
14.8
2.9
–
18.9
(12.7)
–
–
–
9.1
6.7
(12.5)
–
–
3.3
145.6
–
–
(53.3)
(24.6)
1.9
(2.2)
67.4
24.0
(40.0)
(3.0)
2.4
50.8
Total
£m
217.1
(51.7)
28.3
(75.2)
(26.8)
–
(2.2)
89.5
43.0
(61.4)
(4.6)
2.4
68.9
1. The Group is party to a number of leasehold property contracts. Provision has been made against the unavoidable non-rent costs on those leases where the property is now
vacant. Provisions have been based on management’s best estimate of the minimum future cash flows to settle the Group’s obligations, taking into account the risks associated
with each obligation, discounted at a risk-free interest rate. The periods of vacant property commitments range from 1 to 15 years (2019: 1 to 16 years). As a result of the
implementation of IFRS 16 the rental elements of certain property provisions are now included within lease liabilities.
2. Restructuring provisions relate to redundancy costs provided in association with merger and acquisition activities.
3. Other provisions include legal, insurance and regulatory provisions associated with certain claims and taxes of which £13.3m (2019: £49.3m) relates to Greek tax. See note 18 for
further details.
Of the total provisions at 31 December 2020, £49.4m (2019: £73.0m) is current and £19.5m (2019: £16.5m) is non-current.
25 Financial risk management objectives and policies
The Group’s treasury function provides a centralised service for the provision of finance and the management and control of liquidity,
foreign exchange rates and interest rates. The function operates as a cost centre and manages the Group’s treasury exposures to reduce
risk in accordance with policies approved by the Board.
The Group’s principal financial instruments comprise bank loans, overdrafts, loan notes, bonds, financial guarantee contracts, and cash
and short-term deposits, together with certain derivative financial instruments. The main purpose of these financial instruments is to
raise finance for the Group’s operations. The Group has various other financial instruments such as trade receivables, trade payables and
accruals that arise directly from its operations. Details of derivatives are set out in note 26.
It is, and has been throughout the year under review, the Group’s policy that no trading in financial instruments shall be undertaken other
than betting and gaming transactions and for the purposes of currency trading as part of the discontinued Intertrader business (note 21).
Activity of this nature is only undertaken by the customer and is not speculative activity of the Group. The Group’s exposure to ante-post
betting and gaming transactions is not significant.
The main financial risks for the Group are exchange rate risk, interest rate risk, credit risk and liquidity risk. The Board reviews and agrees
policies for managing each of these risks and they are summarised below. The Group also monitors the market price risk arising from all
financial instruments.
Interest rate risk
The Group is exposed to interest rate risk on certain of its interest-bearing loans and borrowings and on cash and cash equivalents.
The Group’s policy for the year ended 31 December 2020 was to maintain a minimum of 20.0% (2019: 20.0%) of total borrowings at fixed
interest rates to reduce its sensitivity to movements in variable short-term interest rates. The Group anticipates revisiting this policy upon
the maturity of its fixed term bonds during 2023. At 31 December 2020, £500.0m (2019: £500.0m) or 24.0% (2019: 24.0%) of the Group’s
borrowings were at fixed rates excluding those relating to IFRS 16.
Interest on financial instruments at floating rates is repriced at intervals of less than six months. Interest on financial instruments at fixed
rates is fixed until the maturity of the instrument.
Entain plc | Annual Report 2020 Financial statements 165
25 Financial risk management objectives and policies continued
The table below demonstrates the sensitivity to reasonably possible changes in interest rates on income for the year when this movement
is applied to the carrying value of financial liabilities:
Effect on:
25 basis points increase
Foreign currency risk
Profit before tax
2020
4.2
2019
3.9
Given the multi-national nature of the business, the Group is exposed to foreign exchange gains and losses on its trading activities,
the net assets of its overseas subsidiaries and its non-GBP denominated financing facilities. The primary currencies that the Group is
exposed to fluctuations in are the Euro, Australian Dollar and US Dollar.
Whilst the Group does not actively hedge the foreign exposure on its trading cash flows, it continuously monitors exposures to
individual currencies, taking remediating actions as necessary to manage any significant risks as they arise. In the event that the Group
anticipates large transactions in currencies other than GBP, forward exchange contracts are taken out to manage the potential foreign
exchange exposure.
The Group’s exposure to the translation of net assets on foreign currency subsidiaries into its reporting currency are partially offset by the
opposite exposure on the Group’s financing facilities providing a natural economic hedge, even though the Group does not apply hedge
accounting. The Group’s policy on borrowings is broadly aligned to the underlying cash flows of the business.
The Group has financing facilities in GBP, Euro and US Dollars. As the Group’s overseas subsidiaries largely report in Euros, the Group has
taken out a swap contract to hedge the US dollar debt into Euros in order to align the foreign currency exposure on the Group’s financing
facilities with that on the net assets of its subsidiaries.
A 5% weakening in the Euro would reduce Group operating profit by £22.0m (2019: £23.0m) and net assets by £7.6m (2019: £9.0m)
when applied to the results of year in question.
A 5% weakening in the Australian Dollar would reduce Group operating profit by £3.9m (2019: £1.2m) and net assets by £22.7m
(2019: £27.0m) when applied to the results of year in question.
Credit risk
The Group is not subject to significant concentration of credit risk, with exposure spread across a large number of counterparties
and customers.
Receivable balances are monitored on an ongoing basis. Any changes to credit terms are assessed and authorised by senior
management on an individual basis.
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents the Group’s
exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these
instruments. Credit risk in respect of cash and cash equivalents is managed by restricting those transactions to banks that have a defined
minimum credit rating and by setting an exposure ceiling per bank.
The Group also has exposure to the credit risk of third parties arising from the financial guarantee contracts provided by the Group.
This risk is partly mitigated by the indemnity received from Hilton Hotels Corporation for any loss incurred in connection with
these guarantees.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of borrowings with a range of
maturities. The Group’s policy on liquidity is to ensure that there are sufficient medium-term and long-term committed borrowing facilities
to meet the medium-term funding requirements. At 31 December 2020, there were undrawn committed borrowing facilities of £480.0m
(2019: £495.0m with £35.0m drawn down). Total committed facilities had an average maturity of 3.0 years (2019: 4.0 years).
The total gross contractual undiscounted cash flows of financial liabilities, including interest payments, fall due as follows. Cash flows in
respect of financial guarantee contracts reflect the probability weighted cash flows.
2020
Interest bearing loans and borrowings
Other financial liabilities
Trade and other payables
Lease liabilities
Total
On demand
or within
1 year
£m
74.6
13.7
457.7
99.5
645.5
1–2 years
£m
643.4
177.4
–
79.6
2–5 years
£m
1,575.0
0.6
–
124.6
900.4
1,700.2
> 5 years
£m
–
1.0
–
81.2
82.2
Total
£m
2,293.0
192.7
457.7
384.9
3,328.3
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020
166
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
25 Financial risk management objectives and policies continued
2019
Interest bearing loans and borrowings
Other financial liabilities
Trade and other payables
Lease liabilities
Total
On demand or
within
1 year
£m
103.1
27.3
444.5
89.9
664.8
1–2 years
£m
262.8
160.0
–
83.6
2–5 years
£m
2,006.6
0.6
–
145.5
506.4
2,152.7
> 5 years
£m
–
1.2
–
103.2
104.4
Total
£m
2,372.5
189.1
444.5
422.2
3,428.3
The Group secures the use of its retail premises primarily through taking out leases for these premises. Typically, the leases are for a
duration between 5 and 20 years. In respect of the UK property portfolio there is commonly a right to renew leases on expiry, by virtue of
the Landlord and Tenant Act 1954. Details of discounted contractual cash flows of leasing liabilities are set out in note 22.
Capital risk management
The primary objective of the Group’s capital management is to ensure that it maintains a credit quality that enables the Group to raise
funds at an economic interest rate and to maintain healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the
capital structure, the Group may adjust the dividend payment to shareholders, adjust borrowings, return capital to shareholders or issue
new shares.
The Group monitors capital using a net debt to EBITDA ratio (before separately disclosed items). The ratio at 31 December 2020 was 2.1
times (2019: 2.8 times).
The Group’s funding policy is to raise funds centrally to meet the Group’s anticipated requirements. These are planned so as to mature at
different stages in order to reduce refinancing risk. The Board reviews the Group’s capital structure and liquidity periodically.
26 Financial instruments and fair value disclosures
The table below analyses the Group’s financial instruments into their relevant categories:
31 December 2020
Assets
Non-current:
Other investments
Other financial assets
Current:
Trade and other receivables
Cash and short-term investments (including customer funds)
Total
Liabilities
Current:
Customer balances
Interest bearing loans and borrowings
Trade and other payables
Derivative financial instruments
Other financial liabilities1
Lease liabilities (note 22)
Non-current:
Interest bearing loans and borrowings
Other financial liabilities1
Lease liabilities (note 22)
Total
Net financial assets/(liabilities)
Assets/
(liabilities)
at fair value
through profit
loss
£m
Assets at
fair value
through other
comprehensive
income
£m
Amortised cost
£m
2.1
4.4
268.2
706.7
981.4
241.1
14.1
457.7
–
–
89.8
2,085.7
2.2
248.2
3,138.8
(2,157.4)
2.9
5.1
–
–
–
–
–
–
2.9
5.1
–
–
–
26.1
147.5
–
–
7.1
–
180.7
(177.8)
–
–
–
–
–
–
–
–
–
Total
£m
10.1
4.4
268.2
706.7
989.4
241.1
14.1
457.7
26.1
147.5
89.8
2,085.7
9.3
248.2
3,319.5
5.1
(2,330.1)
Entain plc | Annual Report 2020 Financial statements 26 Financial instruments and fair value disclosures continued
31 December 2019
Assets
Non-current:
Other investments
Other financial assets
Current:
Trade and other receivables
Derivative financial instruments
Cash and short-term investments (including customer funds)
Total
Liabilities
Current:
Customer balances
Interest bearing loans and borrowings
Trade and other payables
Derivative financial instruments
Other financial liabilities1
Lease liabilities (note 22)
Non-current:
Interest bearing loans and borrowings
Other financial liabilities1
Lease liabilities (note 22)
Total
Net financial assets/(liabilities)
167
Total
£m
10.9
2.1
301.1
47.4
390.1
751.6
(335.4)
(31.5)
(444.5)
(30.7)
(75.5)
(2,084.5)
(125.8)
(288.0)
(3,415.9)
Assets/
(liabilities)
at fair value
through profit
loss
£m
Assets at
fair value
through other
comprehensive
income
£m
Amortised cost
£m
1.8
2.1
301.1
–
390.1
695.1
(335.4)
(31.5)
(444.5)
–
(75.5)
(2,084.5)
(2.4)
(288.0)
(3,261.8)
(2,566.7)
4.2
–
–
47.4
–
51.6
–
–
–
(30.7)
–
–
(123.4)
–
(154.1)
(102.5)
4.9
–
–
–
–
4.9
–
–
–
–
–
–
–
–
–
4.9
(2,664.3)
1. Other financial liabilities include £142.1m deferred and contingent consideration (2019: £134.0m), £2.2m of financial guarantees (2019: £2.4m) and £12.5m of ante-post liabilities
(2019: £20.1m).
Fair value hierarchy
IFRS 13 requires financial assets and liabilities recorded at fair value to be categorised in three levels according to the inputs used in the
calculation of their fair value:
– Level 1 – uses quoted prices as the input to fair value calculations
– Level 2 – uses inputs other than quoted prices, that are observable either directly or indirectly
– Level 3 – uses inputs that are not observable
The following tables illustrate the Group’s financial assets and liabilities measured at fair value after initial recognition at
31 December 2020 and 31 December 2019:
Assets measured at fair value
Other investments
Liabilities measured at fair value
Derivative financial instruments
Other financial liabilities
Net liabilities measured at fair value
Level 1
£m
Level 2
£m
Level 3
£m
2020
Total
£m
–
–
–
–
2.9
5.1
8.0
(26.1)
–
(23.2)
–
(154.6)
(149.5)
(26.1)
(154.6)
(172.7)
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 168
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
26 Financial instruments and fair value disclosures continued
Level 1
£m
Level 2
£m
Level 3
£m
Assets measured at fair value
Other investments
Derivative financial instruments
Total
Liabilities measured at fair value
Other financial liabilities
Net assets/(liabilities) measured at fair value
–
–
–
–
–
4.2
47.4
51.6
–
51.6
2019
Total
£m
9.1
47.4
56.5
4.9
–
4.9
(154.1)
(149.2)
(154.1)
(97.6)
There have been no transfers of assets or liabilities recorded at fair value between the levels of the fair value hierarchy.
Included within other financial assets and derivative financial instruments measured at fair value is; the Group’s currency swaps held
against debt instruments as a liability of £26.1m (2019: asset of £47.4m), investment in Hui 10, designated as fair value through other
comprehensive income, of £5.1m (2019: £4.9m) and a convertible equity instrument with Visa Inc. for £2.9m (2019: £4.2m) The fair value
of both the investments at 31 December 2020 and 31 December 2019 are not materially different to their original cost. The movement in
the year relates to small additions to the investment in Hui 10.
Contingent consideration
Contingent consideration arises through business combinations, the fair value for which is reassessed at each reporting date using
updated inputs and assumptions based on the latest financial forecasts of each respective business. As at 31 December 2020 contingent
consideration included within other financial liabilities was £142.1m (2019: £134.0m) arising from the historical transactions involving
Mars LLC, Neds International Pty Limited, Sigma Booking Limited, Argon Financial Limited and Dusk Till Dawn Limited.
Ante-post
Ante-post liabilities are valued using methods and inputs that are not based upon observable market data. There are no reasonably
probable changes to assumptions or inputs that would lead to material changes in the fair value determined, although the final value will
be determined by future sporting results. The principal assumptions relate to anticipated gross win margins on unsettled bets.
Financial Guarantee Contracts
Financial guarantee contracts of £2.2m (2019: £2.4m), were acquired through the acquisition of Ladbrokes Coral Group plc. These are
classified as level 3 financial instruments as their fair value is measured using techniques where the significant inputs are not based on
observable market data.
27 Net debt
The components of the Group’s net debt are as follows:
Current assets
Cash and short-term deposits
Current liabilities
Interest bearing loans and borrowings
Non-current liabilities
Interest bearing loans and borrowings
Accounting net debt
Cash held on behalf of customers
Fair value swaps held against debt instruments (derivative financial assets)
Deposits
Balances held with payment service providers
Adjusted net debt
Lease liabilities
Net debt including lease liabilities
2020
£m
2019
£m
749.8
390.1
(14.1)
(31.5)
(2,085.7)
(2,084.5)
(1,350.0)
(1,725.9)
(396.1)
(26.1)
171.2
172.4
(335.4)
47.4
129.1
78.5
(1,428.6)
(1,806.3)
(338.0)
(363.5)
(1,766.6)
(2,169.8)
Cash held on behalf of customers represents the outstanding balance due to customers in respect of their online gaming wallets.
Included within this balance is £155.0m (2019: £nil) classified as held for sale.
Entain plc | Annual Report 2020 Financial statements 28 Share capital
Authorised:
At 31 December 2019 and 31 December 2020
Issued and fully paid:
At 1 January 2019
Exercise of share options
At 31 December 2019
Exercise of share options
At 31 December 2020
Number of
€0.01
ordinary
shares
773,000,000
581,870,271
461,675
582,331,946
2,745,701
585,077,647
Total
€m
7.7
5.8
–
5.8
–
5.8
The Company’s share capital consists entirely of ordinary shares, accordingly all shares rank pari passu in all respects.
See note 31 for further information on terms and amounts of shares reserved for issue under options.
29 Notes to the statement of cash flows
29.1 Reconciliation of profit/(loss) to net cash inflow from operating activities:
Profit/(loss) before tax and net finance expense from continuing operations
Loss before tax and net finance expense from discontinued operations
Profit/(loss) before tax and net finance expense including discontinued operations
Adjustments for:
Impairment
Profit on disposal
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share based payments charge
Decrease in short-term investments
(Increase)/decrease in other financial assets
Increase in trade and other receivables
Increase/(decrease) in other financial liabilities
Increase in trade and other payables
Decrease in provisions
Non-cash movements relating to pensions
Share of results from joint venture and associate
Other non-cash items
Cash generated by operations
29.2 Cash flows from discontinued operations:
Cash generated from operating activities
Cash generated from investing activities
Cash generated from financing activities
Net cash inflow arising from discontinued operations
2020
£m
358.9
(35.7)
323.2
34.3
(6.9)
127.5
421.8
14.8
–
(2.3)
(161.2)
25.2
33.4
(22.7)
–
60.2
17.5
864.8
2020
£m
20.8
0.1
–
20.9
169
Total
£m
6.4
4.8
–
4.8
–
4.8
2019
£m
(166.1)
(9.8)
(175.9)
245.0
(19.0)
114.1
481.3
12.7
2.6
2.8
(92.0)
(30.5)
29.5
(73.7)
(3.0)
9.2
40.6
543.7
2019
£m
(3.0)
0.2
–
(2.8)
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 170
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
29 Notes to the statement of cash flows continued
29.3 Reconciliation of movements of liabilities to cash flows arising from financing activities:
Balance at 1 January
2,116.0
363.5
2,479.5
2,235.4
379.3
2,614.7
Other
loans and
borrowings
Lease
liabilities
2020
£m
Total
Other
loans and
borrowings
Lease
liabilities
2019
£m
Total
£m
Changes from financing cash flows
Proceeds from borrowings, net of issue costs
Repayment of borrowings
Repayment of lease liabilities1
Total changes from financing cash flows
The effect of changes in foreign exchange
Other changes
Interest expense
Interest paid
New lease liabilities
Finance fees
Remeasurement adjustments
Total other changes
Balance at 31 December
–
(43.5)
–
(43.5)
42.9
64.2
(81.1)
–
1.3
–
(15.6)
2,099.8
–
–
(86.2)
(86.2)
3.2
16.7
(16.7)
70.9
–
(13.4)
57.5
338.0
–
(43.5)
(86.2)
(129.7)
46.1
80.9
(97.8)
70.9
1.3
(13.4)
41.9
1,032.9
(1,099.1)
–
(66.2)
(84.3)
72.5
(54.5)
–
13.1
–
31.1
–
–
(78.5)
(78.5)
(2.1)
16.8
(16.8)
72.9
–
(8.1)
64.8
1,032.9
(1,099.1)
(78.5)
(144.7)
(86.4)
89.3
(71.3)
72.9
13.1
(8.1)
95.9
2,437.8
2,116.0
363.5
2,479.5
1. In addition to the above, the Group received £0.3m (2019: £0.8m) in respect of finance lease receivables resulting in a net repayment of finance leases of £85.9m (2019: £77.7m)
Non cash movements include amounts acquired as a result of business combinations and the amortisation of issue costs incurred in
respect of debt instruments.
30 Retirement benefit schemes
Defined contribution schemes
During the year the Group charged contributions of £13.4m (2019: £15.8m) to the consolidated income statement in relation to the
defined contribution pension schemes.
Defined benefit plans
Judgement is applied, based on legal, actuarial, and accounting guidance in IFRIC 14, regarding the amounts of net pension asset that is
recognised in the consolidated balance sheet.
The Group has two significant defined benefit plans, the Ladbrokes Pension Plan and the Gala Coral Pension Plan. Both are final salary
pension plans for UK employees. These are closed to new employees and future accrual.
At retirement each member’s pension is related to their final pensionable salary for the Ladbrokes Pension Plan and their ‘career average
earnings’ for the Gala Coral Pension Plan. The weighted average duration of the expected benefit payments from the Plan is around 17
years (2019: 17 years) for Ladbrokes Pension Plan and 19 years (2019: 21 years) for the Gala Coral Pension Plan.
The Plans’ assets are held separately from those of the Group. The Plans are approved by HMRC for tax purposes, and are managed by
independent Trustees. The Plans are subject to UK regulations, which require the Group and Trustees to agree a funding strategy and
contribution schedule at least every three years. Under the current contribution schedule in place, the Group does not pay contributions
to the Ladbrokes Pension Plan or Gala Coral Pension Plan but are paying the administrative costs related to the Gala Coral Pension
Plan scheme.
There is a risk to the Group that adverse circumstances could lead to a requirement for the Group to make additional contributions to
recover any deficit that arises. As at the date of signing the financial statements no such event has arisen.
The results of the formal actuarial valuation as at 30 June 2016 for the Ladbrokes Pension Plan and 30 June 2019 for the Gala Coral
Pension Plan were updated to 31 December 2020 by an independent qualified actuary in accordance with IAS 19 (Revised) Employee
Benefits. The value of the defined benefit obligation and current service cost have been measured using the projected unit credit method,
as required by IAS 19 (Revised). Actuarial gains and losses are recognised immediately through other comprehensive income.
During 2019, the Group undertook a pension buy-in on the Ladbrokes pension scheme with the assets of the scheme replaced with
an insurance policy against the payment of future liabilities valued equally to the associated assets. There was no commitment during
2019 to move to a buy-out of the scheme and the Group has continued to consider its position throughout 2020 before agreeing with the
Trustees to commence the wind up of the Ladbrokes pension scheme.
Entain plc | Annual Report 2020 Financial statements 171
30 Retirement benefit schemes continued
The amounts recognised in the balance sheet are as follows:
Present value of funded obligations
Fair value of plan assets
Net asset
Disclosed in the balance sheet as: Retirement benefit
asset
2020
(Coral)
£m
2020
(Ladbrokes)
£m
(450.1)
506.9
56.8
56.8
(385.1)
392.5
7.4
7.4
2020
Total
£m
(835.2)
899.4
64.2
2019
(Coral)
£m
(396.0)
455.9
59.9
64.2
59.9
2019
(Ladbrokes)
£m
(357.5)
364.2
6.7
6.7
2019
Total
£m
(753.5)
820.1
66.6
66.6
The Group has considered the appropriate accounting treatment in respect of the pension plan surplus, taking into account the current
agreement with the Trustees and concluded the recognition of the surplus is appropriate.
The amounts recognised in the income statement are as follows:
Analysis of amounts charged to the Income Statement
Separately disclosed items
Other administrative expenses
Net interest on net asset
Total charge/(credit) recognised in the Income
Statement
2020
(Coral)
£m
2020
(Ladbrokes)
£m
–
(0.1)
(1.2)
(1.3)
2.4
1.2
(0.1)
3.5
The actual return on plan assets over the year was a £111.0m gain (2019: £5.5m).
The amounts recognised in the statement of comprehensive income are as follows:
Actual return on assets less interest on plan assets
Actuarial gains/(losses) on defined benefit obligation
due to changes in demographic assumptions
Actuarial (losses)/gains on defined benefit obligation
due to changes in financial assumptions
Experience adjustments on benefit obligation
Actuarial losses recognised in the statement of
comprehensive income
2020
(Ladbrokes)
£m
40.3
10.4
2020
(Coral)
£m
54.6
0.2
(63.3)
4.1
2020
Total
£m
2.4
1.1
(1.3)
2.2
2020
Total
£m
94.9
10.6
2019
(Coral)
£m
2019
(Ladbrokes)
£m
–
–
(1.7)
(1.7)
0.8
0.8
(2.9)
(1.3)
2019
(Coral)
£m
39.0
2019
(Ladbrokes)
£m
(56.4)
2019
Total
£m
0.8
0.8
(4.6)
(3.0)
2019
Total
£m
(17.4)
5.5
(4.1)
1.4
(52.5)
6.0
(115.8)
10.1
(49.0)
3.5
(35.9)
(7.2)
(84.9)
(3.7)
(4.4)
4.2
(0.2)
(1.0)
(103.6)
(104.6)
Changes in the present value of the defined benefit obligation are as follows:
At 1 January
Interest on obligation
Actuarial gains/(losses) due to changes in
demographic assumptions
Actuarial (losses)/gains due to changes in financial
assumptions
Experience adjustments on obligations
Benefits paid
At 31 December
2020
(Coral)
£m
2020
(Ladbrokes)
£m
(396.0)
(357.5)
(7.8)
(7.0)
2020
Total
£m
(753.5)
(14.8)
2019
(Coral)
£m
(358.9)
(9.9)
2019
(Ladbrokes)
£m
(316.6)
(8.4)
2019
Total
£m
(675.5)
(18.3)
0.2
10.4
10.6
5.5
(4.1)
1.4
(63.3)
4.1
12.7
(52.5)
(115.8)
6.0
15.5
10.1
28.2
(49.0)
3.5
12.8
(35.9)
(7.2)
14.7
(84.9)
(3.7)
27.5
(450.1)
(385.1)
(835.2)
(396.0)
(357.5)
(753.5)
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 172
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
30 Retirement benefit schemes continued
Changes in the fair value of plan assets are as follows:
At 1 January
Interest on plan assets
Administrative expenses
Actual return less interest on plan assets
Benefits paid
At 31 December
2020
(Coral)
£m
455.9
9.0
0.1
54.6
(12.7)
506.9
2020
(Ladbrokes)
£m
364.2
7.1
(3.6)
40.3
(15.5)
392.5
2020
Total
£m
820.1
16.1
(3.5)
94.9
(28.2)
899.4
2019
(Coral)
£m
418.1
11.6
–
39.0
(12.8)
455.9
2019
(Ladbrokes)
£m
425.6
11.3
(1.6)
(56.4)
(14.7)
364.2
2019
Total
£m
843.7
22.9
(1.6)
(17.4)
(27.5)
820.1
The Group does not expect to contribute to either plan in 2021. The Group will however continue to meet the administrative expenses of
the Gala Coral Pension Plan scheme.
The major categories of plan assets as a percentage of total plan assets are as follows:
Equities and Diversified Growth Funds
Insurance policy
Liability Driven Investment (%)
Private credit
Cash and cash equivalents
2020
(Coral)
%
2020
(Ladbrokes)
%
2019
(Coral)
%
2019
(Ladbrokes)
%
26.9
–
69.5
3.2
0.4
–
98.1
1.2
–
0.7
25.4
–
72.4
1.8
0.5
–
98.2
1.2
–
0.7
The Plan assets are held exclusively within instruments with quoted market prices in an active market with the exception of the holdings
in an insurance policy and a private credit asset. At 31 December 2020 these represented c.42.8% (2019: c.44.6%) of the Plan’s
total assets.
The Plan does not invest directly in property occupied by the Group or in financial securities issued by the Group. Although, as the Plan
holds pooled investment vehicles, there may at times be indirect employer related investment. At 31 December 2020 these represented
less than 0.1% (2019: 0.1%) of the Plan’s total assets.
The investment strategy is set by the Trustees of the Plans in consultation with the Group. For the Gala Coral Plan the current long-
term strategy is to invest in a low-risk matching bond portfolio with a relatively small investment in return seeking funds. With respect
to the Ladbrokes pension plan the majority of investment is held within an insurance policy that guarantees the payments of future
pension liabilities.
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages where appropriate):
Discount rate
Price inflation (CPI)
Price inflation (RPI)
Future pension increases
– LPI 5% (CPI)
– LPI 3% (RPI)
– LPI 2.5% (CPI)
2020
(Coral)
% p.a.
2020
(Ladbrokes)
% p.a.
2019
(Coral)
% p.a.
2019
(Ladbrokes)
% p.a.
1.2
1.9
2.9
2.9
2.3
2.1
1.2
1.9
2.9
2.9
2.3
2.1
2.0
2.1
2.9
2.8
2.3
1.7
2.0
2.1
2.9
2.8
2.3
1.7
Post-retirement mortality assumed for most members is based on the standard SAPS mortality table with the CMI 2018 projections
which takes into account future improvements, adjusted to reflect plan specific experience.
The assumption used implies that the expected lifetime of members for the two schemes is:
Male aged 65 for year ended
Female aged 65 for year ended
2020
(Coral)
2020
(Ladbrokes)
2019
(Coral)
2019
(Ladbrokes)
86.4
88.5
86.5
88.9
86.4
88.5
86.7
88.7
Entain plc | Annual Report 2020 Financial statements
173
30 Retirement benefit schemes continued
Changes to the assumptions will impact the amounts recognised in the consolidated balance sheet and the consolidated income
statement in respect of the Plan. For the significant assumptions, the following sensitivity analysis provides an indication of the impact on
the defined benefit obligation for the year ended 31 December 2020:
– 0.5% p.a. decrease in the discount rate
– 0.5% p.a. increase in price inflation
– One year increase in life expectancy
2020
(Coral)
2020
(Ladbrokes)
2019
(Coral)
2019
(Ladbrokes)
10.3
7.7
4.5
9.1
4.7
4.1
9.9
7.3
4.0
8.8
5.2
3.6
These sensitivities have been calculated to show the movement in the defined benefit obligation in isolation, and assuming no other
changes in market conditions at the accounting date. This is unlikely in practice, for example, a change in discount rate is unlikely to occur
without any movement in the value of the assets held by the Plan.
31 Share-based payments
The following options to purchase €0.01 Ordinary Shares in the Group were granted, exercised, forfeited or existing at the year-end:
Date of grant
Exercise price
16 Dec 2016
30 Mar 2017
28 Dec 2017
19 Sep 2018
26 Mar 2019
10 Jun 2020
422p
422p
0p
0p
0p
0p
Existing at
1 January
2020
3,203,347
175,000
563,627
1,890,211
3,404,563
–
Granted
in the year
Cancelled or
forfeited in the
year
–
–
–
–
–
–
(180,067)
(789,890)
–
2,045,307
(1,029,277)
(318,006)
Exercised
in the year
(2,572,786)
(125,000)
(47,915)
–
–
–
Existing at
31 December
2020
Exercisable at
31 December
2020
630,561
50,000
335,645
1,100,321
2,375,286
1,727,301
630,561
50,000
335,645
–
–
–
Vesting
criteria
Note a
Note a
Note b
Note c
Note d
Note e
Total Schemes
9,236,748
2,045,307
(2,317,240)
(2,745,701)
6,219,114
1,016,206
Note a: 2016 MIP Scheme – These equity settled awards were issued on completion of the acquisition of bwin.party. The options vest and became exercisable, subject to the
satisfaction of a performance condition, over 30 months, with one-ninth vesting six months after the date of grant and a further ninth vesting at each subsequent quarter.
The options lapse, if not exercised, on 2 February 2026. The performance condition is comparator total shareholder return (“TSR”) of the Group against the FTSE 250. Each
ninth of the shares will have its TSR condition reviewed from the date of grant until the relevant testing date. To the extent the TSR is not met at that time, it is tested again
the following quarter and, if necessary, at the end of the 30-month vesting period. In order to vest, the TSR of the Group must rank at median or above against the FTSE 250.
Note b: 2017 LTIP Scheme – These equity settled awards were awarded to certain directors and employees and vest over a three-year period from the date of grant. The number of
awards to vest are conditional on both cumulative Earnings Per Share (“EPS”) exceeding 180 euro cents, with a pro-rata increase in the amount vesting between 180 cents
and 214 cents, and TSR performance conditions being met which are split with equal weighting.
Note c: 2018 LTIP Scheme – These equity settled awards were awarded to certain directors and employees and vest over a three-year period from the date of grant. The number
of awards to vest are conditional on both cumulative 3 year Earnings Per Share (“EPS”) exceeding 191p, with a pro-rata increase in the amount vesting between 191p and
224p, and TSR performance conditions being met which are split with equal weighting.
Note d: 2019 LTIP Scheme – These equity settled awards were awarded to certain directors and employees and vest over a three-year period from the date of grant. The number
of awards to vest are conditional on both cumulative 3 year Earnings Per Share (“EPS”) exceeding 184p, with a pro-rata increase in the amount vesting between 184p and
214p, and TSR performance conditions being met which are split with the weighting of one third based on EPS and two thirds relating to TSR conditions.
Note e: 2020 LTIP Scheme – These equity settled awards were awarded to certain directors and employees and vest over a three-year period from the date of grant. The number
of awards to vest are conditional on both cumulative 3 year Earnings Per Share (“EPS”) exceeding 267p, with a pro-rata increase in the amount vesting between 267p and
295p, and TSR performance conditions being met which are split with the weighting of one third based on EPS and two thirds relating to TSR conditions. There were also a
number of restricted share plan shares issued during 2020 against which service conditions apply.
The charge to share-based payments within the consolidated income statement in respect of these options in 2020 was £14.8m
(2019: £12.7m) of which £14.8m related to equity settled options (2019: £12.7m) and £nil to cash settled options (2019: £nil).
Weighted average exercise price of options
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Cancelled or forfeited in the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted
average
exercise price
31 December
2020
Number
of options
31 December
2020
Weighted
average
exercise price
31 December
2019
154p
0p
414p
0p
52p
295p
9,236,748
2,045,307
(2,745,701)
(2,317,240)
6,219,114
1,016,206
263p
0p
422p
–
154p
422p
Number of
options
31 December
2019
6,293,860
3,404,563
(461,675)
–
9,236,748
3,378,347
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 174
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
31 Share-based payments continued
The options outstanding at 31 December 2020 have a weighted average contractual life of 1.3 years (31 December 2019: 1.2 years).
Valuation of options
The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted.
The Group engaged third-party valuation specialists to provide a fair value for the options.
The 2018 and 2019 LTIP plan was valued using both a Black Scholes valuation model and Monte Carlo valuation for the cumulative EPS
and TSR conditions respectively.
Fair value of share options and assumptions:
Date of grant
Dec 16
Mar 17
Dec 17
Sep 18
Mar 19
Jun 20
Share price at
date of grant
(£)
Exercise price
(£)
6.48
7.28
9.34
9.14
4.96
7.86
4.22
4.22
–
–
–
–
Expected
volatility
%
28%–30%
28%–30%
26.6%
33.7%
31.5%
33.2%
Exercise
multiple
Expected
dividend yield
Risk free rate
%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
–
–
0.4%
1.0%
0.7%
0.3%
Fair value at
measurement
date
(£)
1.43 – 1.94
1.88 – 2.39
7.39 – 9.34
4.58– 9.14
1.90–4.96
3.54–7.86
32 Commitments and contingencies
Contingent liabilities
Guarantees have been given in the ordinary course of business in respect of loans and derivative contracts granted to subsidiaries
amounting to £500.0m (2019: £500.0m). Bank guarantees have been issued on behalf of subsidiaries with a value of £58.3m
(2019: £47.0m).
The Group has given guarantees to third parties in respect of lease liabilities of former subsidiaries within the disposed hotels division.
(Note 26).
HMRC investigation
On 28 November 2019, one of our UK subsidiaries, GVC Holdings (UK) Limited, received a production order from HM Revenue & Customs
(“HMRC”) requiring it to provide information relating to the Group’s former Turkish facing online betting and gaming business, sold in 2017.
At that time, the Group understood that HMRC’s investigation was directed at a number of former third party suppliers, relating to the
processing of payments for online betting and gaming in Turkey. On 21 July 2020, GVC Holdings Plc announced that HMRC was widening
the scope of its investigation and was examining potential corporate offending by the GVC Group. It had previously been understood that
no Group company was a subject of HMRC’s investigation. Through ongoing engagement with HMRC we understand that the Group
remains a corporate suspect and that the offences under investigation include, but are not limited to, offences under sections 1 and 7 of
the Bribery Act 2010. The Group continues to co-operate fully with HMRC’s enquiries.
In addition to the items discussed above, the Group is subject to a number of other potential litigation claims that arise as part of the
normal course of business. Provision has not been made against these claims as they are not considered likely to result in an economic
outflow. Consistent with any claims of this nature there can be uncertainty with the final outcome.
Entain plc | Annual Report 2020 Financial statements 175
33 Related party disclosures
Other than its associates and joint venture, the related parties of the Group are the Executive Directors, Non-Executive Directors and
members of the Executive Committee of the Group.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note. Transactions between the Group and its associates and joint venture and other related parties are disclosed below.
During the year, Group companies entered into the following transactions with related parties who are not members of the Group:
Equity investment
– Joint venture1
Loans
– Movement in loan balance with joint venture partner
Dividends received
– Associates
Sundry expenditure
– Associates2
1. Equity investment in BetMGM.
2. Payments in the normal course of business made to Sports Information Services (Holdings) Limited and bwin eK Neugersdorf
Details of related party outstanding balances:
Other amounts outstanding
– Associates
2020
£m
61.8
–
–
2019
£m
–
(1.8)
1.2
56.6
82.3
2020
£m
2019
£m
0.1
0.3
Terms and conditions of transactions with related parties
Sales to, and purchases from, related parties are made at market prices and in the ordinary course of business. Outstanding balances
at 31 December 2020 are unsecured and settlement occurs in cash. For the year ended 31 December 2020, the Group has not raised
any provision (2019: £nil) for doubtful debts relating to amounts owed by related parties as the payment history has been good.
This assessment is undertaken each financial year through examining the financial position of the related party and the market in which
the related party operates.
Transactions with Directors and key management personnel of the Group
For details of Director’s remuneration please refer to the Directors remuneration table included on pages 102 to 121 of this report.
The remuneration of key management personnel is set out below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures. Key management personnel comprise Executive Directors, Non-Executive Directors and members of the Executive
management team. Further information about the remuneration of individual Directors is provided in the Directors’ Remuneration Report.
Short-term employee benefits
Share-based payments
Total compensation paid to key management personnel
2020
£m
5.8
7.3
13.1
2019
£m
12.7
5.5
18.2
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 176
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
33 Related party disclosures continued
The consolidated financial statements include the financial statements of Entain PLC and its subsidiaries. The companies listed below are
those which were part of the Group at 31 December and therefore the results, cash flows and balance sheets of all subsidiaries listed are
consolidated into the Group financial statements, furthermore the results of joint ventures and associates are accounted for in accordance
with the policy set out in note 4.
Subsidiaries based in the United Kingdom
% equity interest
Registered address
3rd Floor
One New Change,
London,
United Kingdom,
EC4M 9AF
Company
Arbiter & Weston Limited(4)(5)
Arthur Prince (Turf Accountants) Limited(5)
Bartletts Limited(5)
Birchgree Limited(4)
Bloxhams Bookmakers Limited(5)
Brickagent Limited
Cashcade Limited
CE Acquisition 1 Limited(4)
Chas Kendall (Turf Accountant) Limited(5)
Chequered Racing Limited(5)
Choicebet Limited(5)
C L Jennings (1995) Limited(5)
Competition Management Services Co. Limited(5)
Coral (Holdings) Limited(4)
Coral (Stoke) Limited(5)
Coral Estates Limited
Coral Eurobet Limited
Coral Eurobet Holdings Limited(4)
Coral Group Limited(4)
Coral Group Trading Limited(4)
Coral Limited(4)
Coral Racing Limited(4)
Coral Stadia Limited(4)(5)
E.F. Politt & Son Limited(5)
Entain Services Limited(5)
Forestal Land, Timber and Railways Company Limited (The)(5)
Forster’s (Bookmakers) Limited(5)
Gable House Estates Limited(5)
Ganton House Investments Limited
Greatmark Limited(5)
GVC Holdings (UK) Limited(1)(2)(4)
GVC Marketing (UK) Limited(4)
Hillford Estates Limited(5)
Hindwain Limited
Interactive Sports Limited
J G Leisure Limited(5)
J. Ward Hill & Company(5)
Jack Brown (Bookmaker) Limited
Jerusalem Development (Mamilla) Co. Limited(5)
Jerusalem Development Corporation (Holdings) Limited(4)(5)
Joe Jennings (1995) Limited(5)
Joe Jennings Limited(5)
Krullind Limited(5)
Ladbroke & Co., Limited(4)(5)
Ladbroke (Course) Limited(5)
Ladbroke (Rentals) Limited(5)
Ladbroke City & County Land Company Limited(4)(5)
2020
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
97.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Entain plc | Annual Report 2020 Financial statements 33 Related party disclosures continued
Registered address
Company
Ladbroke Coral Corporate Director Limited(5)
Ladbroke Coral Corporate Secretaries Limited(5)
Ladbroke Dormant Holding Company Limited(4)(5)
Ladbroke Entertainments Limited
Ladbroke Group(4)(5)
Ladbroke Group Homes Limited(5)
Ladbroke Group International(5)
Ladbroke Group Properties Limited(4)(5)
Ladbroke Land Limited(5)
Ladbroke Leasing (South East) Limited(5)
Ladbroke Racing (Reading) Limited(5)
Ladbroke Racing (South East) Limited(5)
Ladbroke Retail Parks Limited(5)
Ladbroke US Investments Limited(4)(5)
Ladbrokes (CLJEA) Limited(5)
Ladbrokes (CLJHC) Limited(5)
Ladbrokes (CLJSW) Limited(5)
Ladbrokes Betting & Gaming Limited(2)(3)(4)
Ladbrokes Contact Centre Limited(5)
Ladbrokes Coral Group Life Benefits Trustee Limited(5)
Ladbrokes Coral Group Limited(2)(4)
Ladbrokes CPCB Limited(5)
Ladbrokes E-Gaming Limited(5)
Ladbrokes Group Finance plc(2)
Ladbrokes Group Holdings Limited(4)(5)
Ladbrokes Investments Holdings Limited(4)(5)
Ladbrokes IT & Shared Services Limited(5)
Ladbrokes PT Limited(5)
Ladbrokes Trustee Company Limited
Lightworld Limited(4)(5)
London & Leeds Estates Limited(5)
Maple Court Investments Limited(5)
Margolis and Ridley Limited(5)
New Angel Court Limited(5)
Paddington Casino Limited(5)
Reg.Boyle Limited(5)
Reuben Page Limited(4)(5)
Romford Stadium Limited(5)
Rousset Capital Limited
Sabrinet Limited(5)
Sponsio Limited(4)(5)
Sporting Odds Limited(2)(3)
Sportingbet (IT Services) Limited(5)
Sportingbet (Management Services) Limited(5)
Sportingbet (Product Services) Limited(5)
Sportingbet Holdings Limited(5)
Sportingbet Limited(5)
Sports (Bookmakers) Limited(5)
Techno Land Improvements Limited(5)
Town and County Factors Limited(5)
Travel Document Service(4)(5)
177
% equity interest
2020
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
93.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
93.5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 178
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
33 Related party disclosures continued
Registered address
Company
77A Andersonstown Road
Belfast
BT11 9AH
35 Great St. Helen’s
London
United Kingdom
EC3A 6AP
28 la Porte Precinct
Grangemouth
FK3 8BG
Subsidiaries based overseas
Registered address
Belmont Chambers
Road Town
Tortola
British Virgin Islands
Jayla Place, Wickhams Cay 1, Road
Town, Tortola, British Virgin Islands
13/F, Gloucester Tower
The Landmark
15 Queen’s Road
Central Hong Kong, China
Inchalla, Alderney
GY9 3UL, Guernsey
1st Floor, Otter House
Naas Road
Dublin 22
Ireland
25/28 North Wall Quay, Dublin 1, D01
H104, Ireland
4th Floor, IFSC House
Custom House Quay
Dublin 1, Ireland
Menahem Begin 125
Tel Aviv, Israel
Via Alessandro Marchetti No.105
Rome 00148
Italy
1st Floor, Liberation House
Castle Street,
St. Helier, JE1 1GL, Jersey
461–473 Lutwyche Road
Lutwyche
Queensland
Vegas Betting Limited(5)
Ventmear Limited
Ladbrokes (Northern Ireland) (Holdings) Limited(4)
Ladbrokes (Northern Ireland) Limited(5)
North West Bookmakers Limited(2)(3)
Techno Limited
% equity interest
2020
100.0
100.0
100.0
100.0
100.0
84.0
2019
100.0
100.0
100.0
100.0
100.0
84.0
Moffat Lodge Motor Inn Limited(5)
100.0
100.0
Company
Creative Trend Limited
CTL Holdings International Limited(4)
SRL Holdings International Limited(4)
Sunrise Resources Limited
Westman Holdings Limited
% equity interest
2020
100.0
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
100.0
GVC Technology Consulting (Asia) Co Limited
100.0
100.0
ElectraWorks (Alderney) Limited
Exchange Platform Solutions Limited(3)
Dara Properties Limited
Harney Bookmakers Limited(5)
Ladbroke (Ireland) Limited(2)(3)(4)
Ladbroke Leisure (Ireland) Limited(2)(3)
Ladbrokes Payments (Ireland) Limited(5)
M D Betting Limited(5)
Fort Anne Limited(1)
Garton Admin Services Limited
M.L.B. Limited
Ladbroke Services (Ireland) Limited
Gala Interactive (Services) Limited
Ladbrokes Israel Limited(2)
Eurobet Holding SRL(4)
Eurobet Italia SRL(2)(3)(4)
IHF (Jersey) Limited(5)
Ladbroke (Channel Islands) Limited(3)
Gaming Investments Pty Limited(4)
GVC Australia Pty Ltd(2)(3)
LB Australia Holdings Pty Limited(4)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Entain plc | Annual Report 2020 Financial statements 33 Related party disclosures continued
Registered address
Company
QLD 4030
Australia
IFC 5, ST. HELIER, JE1 1ST, Jersey
Chaussée de Wavre 1100/3
1160 Auderghem
Belgium
29 Avenue Lavoisier, 1300 Wavre,
Belgium
Neds.com.au Pty Ltd
Neds International Pty Ltd(2)(3)
GVC Finance Limited
Maple Court Investments (Jersey) Limited(5)
PartyGaming Finance Limited
Ladbroke Belgium S.A.(4)
Pari Mutuel Management Services S.A.
Redsports.be SPRL
S.A. Derby N.V.(2)(3)(4)
Tierce Ladbroke S.A.(3)
Professional Gaming Services Sprl
6F Tower 3 Double Dragon Plaza EDSA InteractiveSports Asia Limited Inc.
Ext. cor. Macapagal Avenue, Pasay City, NCH Customer Support Services, Inc
Philippines
179
% equity interest
2020
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
24A 18th Street
Menlo Park, Pretoria
0081, South Africa
Castello 82 4 IZQ, 28006
Madrid, Spain
Ladbrokes (SA) (Pty) Limited
60.0
60.0
Ladbrokes Betting and Gaming Spain, S.A.
100.0
100.0
270 E. Park Street, Suite 1 Butte,
Montana 59701
Ladbrokes Holdco, Inc.(4)
608 Lander Street
Reno Nevada 89509
United States
15 Agion Omologiton, Nicosia,
1080, Cyprus
1565 Carling Avenue, Suite 400,
Ottawa, Ontario K1Z 8R1
Stadium Technology Group, LLC(3)
Bellingrath Enterprises Limited
Canada Limited
19 Boulevard Malesherbes, 75008,
Paris, France
B.E.S. S.A.S
2nd Floor, St Mary’s Court, 20 Hill Street,
Douglas, IM1 1EU, Isle of Man
Cozy Games Management Limited
32 Athol Street, Douglas, IM1 1JB,
Isle of Man
820 Bear Tavern Road, Trenton,
New Jersey, 08628, USA
701 S. Carson Street, Suite 200, Carson
City, 89701, Nevada
Harborside Plaza 3, 210 Hudson Street,
Jersey City, New Jersey 07311
Entain (IOM) Limited(1)
bwin.party (USA) Inc
bwin.party entertainment (NJ) LLC
bwin.party services (NJ) Inc
Ladbrokes Subco LLC
GVC Holdings (USA) Inc
50 Raffles Place, 32–01 Singapore
Land Tower, Singapore (048623)
Cozy Games Pte Limited
Florent Pte Limited
GVC Services (Bulgaria) EOOD
55 Nikola Vaptsarov Blvd, Office Park
Expo 2000, Building Phase 4, Floor 3,
Lozenets Area, Sofia 1407, Bulgaria
5th Floor, Divyasree Omega, Block – B,
Hitec City Road, Kondapur, Hyderabad,
Andhra Pradesh, 500081, India
6th Floor, Divyashree omega, Block-B,
Plot No. 13/E, Survey no.13(part),
Kondapur, Hyderabad, 500081, Andhra
Pradesh, India
IVY Comptech Private Limited
100.0
100.0
IVY Foundation Limited
IVY Global Shared Services Private Limited
IVY Software Development Services Private Limited
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
90.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
90.0
100.0
–
–
100.0
100.0
100.0
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 180
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
% equity interest
2020
100.0
99.0
99.0
100.0
99.0
99.0
100.0
100.0
2019
100.0
99.0
99.0
100.0
99.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
33 Related party disclosures continued
Registered address
Company
85 St John Street, Valletta, VLT 1165,
Malta
Avenida de Fuencarral 44, Edificio
Tribeca 1, modulo B, CP 28108,
Alcobendas, Madrid, Spain
Bertolt – Brecht – Allee 24, 01309,
Dresden, Germany
Entain Holdings (Malta) Limited
Gaming VC Corporation Limited
bwin.gr Limited
Headlong 2 Limited(1)
Scandic Bookmakers Limited
Spread Your Wings Bravo Limited
VistaBet Limited
Winner Apuestas S.A.
DSG Deutsche Sportwelt GmbH
Box 3095, 350 33 Växjö, Sweden
Webdollar Sweden AB
bwin.party Games AB
bwin Interactive Marketing Espana S.L.
GVC Finance LLC(1)
c/o Kilpatrick Townsend & Stockton
Advokat KB, Box 5421, 114 84
Stockholm, Sweden
Calle Amador de los Ríos n°1, 6 planta,
28010 Madrid, Spain
c/o The Corporation Trust Company,
1209 Orange Street, County of New
Castle, Wilmington, Delaware, 19801,
USA
Calle Josep Plá, número 2, planta 5ªD,
Edificio Torre Diagonal Litoral, 08019,
Barcelona, Spain
Century House, 12 Victoria Street,
Alderney, GY9 3UF, Channel Islands
Global Gateway 8, Rue de la Perle,
Providence Mahe, Seychelles
Emancipatie Boulevard Dominico F.
“Don” Martina 29, Curaçao
Fruebjergvej 3, Copenhagen, 2100,
Denmark
Lagoas Park, Edificio 11, Piso 0 Sul,
2740–244, Porto Salvo, Portugal
Marxergasse 1b, 1030 Vienna, Austria
Moskovská 13, Bratislava, 81108,
Slovakia
Penthouse, Palazzo Spinola Business
Centre, Number 46, St Christopher
Street, Valletta, VLT 1464, Malta
Javari Marketing Consultancy Services S.L.
100.0
100.0
Interactive Sports (C.I.) Limited
InterTrader International Limited
First Slip N.V
GVC Services BV
Intera N.V
Luther Properties N.V
Interactive Sports (Denmark) ApS
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Infield – Servicos de Consultoria Marketing Unipessoal LDA.
100.0
100.0
bwin.party services (Austria) GmbH
Websports Entertainment Marketing Services GmbH
VTD Media(1)
bwin (Deutschland) Limited
bwin Holdings (Malta) Limited
bwin.party services (Malta) Limited
bwin.party holding Malta Limited
bwin.party International Malta Limited
ElectraWorks (France) Limited
ElectraWorks (Kiel) Limited
ElectraWorks (Malta) PLC
ElectraWorks (Svenska) Limited
ElectraWorks Europe Ltd
Gamebookers (Deutschland) Limited
Ladbrokes (Deutschland) Limited
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Entain plc | Annual Report 2020 Financial statements 181
% equity interest
2020
100.0
100.0
100.0
100.0
2019
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
33 Related party disclosures continued
Registered address
Company
Martingale Europe Limited
Martingale Malta 2 Limited
Sportingbet (Deutschland) Limited
Oficina nr.201–2015, edeficio@3, ruta 8,
km. 17,500, Uruguay
Gomifer S.A.
Quay House South Esplanade St Peter
Port GUERNSEY GY1 4EJ, PO Box 132
Longfrie Limited
Sea Meadow House, Blackburne
Highway, Road Town, Tortola,
British Virgin Islands, PO BOX 116
CL Conde de Aranda 20, 28001,
Madrid, Spain
Suite 4, Constantia House, Steenberg
Office Park, Constantia, 7800, South
Africa
Vake District, Kavtaradze Str., No 5,
Entrance 2, Floor 2, Office Space No 2,
Tbilisi, Georgia
Cream Legbar Limited
Wavecrest Providers Limited
Sportingbet Spain S.A.
Main Street 1013 Pty Limited
SBT Software Operations (SA) (Pty)
MARS LLC(2)
51.0
51.0
Suite 6, Atlantic Suites, Europort Avenue,
Gibraltar
Argon Financial Limited(2)(3)
Balltree (International) Limited
Bingo Marketing Limited
bwin.party holdings Limited
bwin.party services (Gibraltar) Limited
Claymore Interactive Entertainment Holdings Limited
Coral Interactive (Gibraltar) Limited(5)
ElectraGames Limited
ElectraWorks Limited(2)(3)
Entain Holdings Limited
Gala Coral Interactive (Gibraltar) Limited(4)(5)
Gala Interactive (Gibraltar) Limited(4)(5)
Greyjoy Limited
GVC Corporate Services Limited
GVC Holdings (Gibraltar) Limited(1)
GVC Services Limited
GVC Trustees Limited
IGM Domain Name Services Limited
InterTrader Limited(2)(3)
ISG (Gibraltar) Limited
ITL Holdings Limited
Ladbrokes Sportsbook Limited Partnership(5)
LC International Limited(2)(3)(4)
PartyGaming IA Limited
Via Gaetano Previati 9, 20149,
Milan, Italy
bwin European Markets Holding SpA
bwin Italia S.R.L.(3)
1. Company that is directly owned by Entain PLC.
2. Company that forms part of the Group as at 31 December 2020 and which, principally affected the Group’s reported results for the year.
3. Trading entity engaged in activity associated with betting and gaming.
4. Holding company.
5. Dormant company.
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 182
Notes to the consolidated financial statements continued
for the year ended 31 December 2020
33 Related party disclosures continued
Joint ventures
Registered address
Corporation Service Company,
251 Little Falls Drive,
Wilmington,
Delaware 19808 USA
Associates
Company
BetMGM
Country of incorporation
Company
China
Germany
United Kingdom
Asia Gaming Technologies (Beijing) Co., Ltd(1)
Asia Gaming Technologies (Tianjin) Co., Ltd(1)
Asia Gaming Technologies Limited
bwin E.K. Neugersdorf
Games For Good Causes PLC
Lucky Choice Limited(2)
Sports Information Services (Holdings) Limited
% equity interest
2020
2019
50.0
50.0
% equity interest
2020
49.0
49.0
49.0
50.0
36.3
66.6
23.4
2019
49.0
49.0
49.0
50.0
36.3
66.6
23.4
1. Subsidiary of Asia Gaming Technologies Limited.
2. Entain PLC hold 66.6% of the equity of the investment. The associate is not consolidated in the Group financial statements on the basis that the Group does not exercise
management control over the associate.
34 Non-controlling interests
Non-controlling interests include a 10% holding in Bwin.party entertainment (NJ) LLC, a company incorporated in the United States, and a
49% holding in Mars LLC, a company incorporated in Georgia.
The total assets relating to subsidiaries with a non-controlling interest were £42.4m (2019: £29.0m) of which there were related liabilities
of £25.3m (2019: £26.7m).
The profit attributable to non-controlling interests was £21.6m (2019: £13.0m profit attributable).
The balance of retained earnings attributable to non-controlling interest is disclosed in the table below:
As at January 2019
Profit attributable to non-controlling interests
Payment of dividends
As at 31 December 2019
Profit attributable to non-controlling interests
Payment of dividends
As at 31 December 2020
35 Subsequent Events
On 7 January 2021 the Group announced a cash offer of SEK40 per share for the shares of Enlabs AB. On 1 March 2021 the Group
announced an increased offer for Enlabs AB of SEK53 per share securing irrevocables to accept this final offer from shareholders
representing around 51% of Enlabs AB’s shares. Enlabs predominantly operates in online sports-betting and gaming brands across
the fast-growing Baltic region, with a small retail presence. In November 2020 Enlabs completed the acquisition of Global Gaming,
which enables Enlabs to extend its operations into the Nordics. The offer remains subject to regulatory approval and acceptance by
Enlabs shareholders.
On 11 January 2021 Shay Segev gave notice that he would be leaving Entain. His final date of employment will be 8 July 2021.
Total
£m
38.2
13.0
(8.1)
43.1
21.6
(12.4)
52.3
Entain plc | Annual Report 2020 Financial statements Company income statement
for the year ended 31 December 2020
For the year ended 31 December
Other operating income
Dividends received
Operating (expense)/income
Operating profit before separately disclosed items
Separately disclosed items
(Loss)/profit before tax and net finance expense
Finance expense
Finance income
(Losses)/gains arising from change in fair value of financial instruments
(Losses)/gains arising from foreign exchange on debt instruments
(Loss)/profit before tax
Income tax
(Loss)/profit for the year
All items included above relate to continuing operations.
There were no other items of comprehensive income in the year.
183
2019
£m
8.5
464.4
(26.2)
446.7
(3.9)
442.8
(69.0)
121.2
16.6
43.4
555.0
–
555.0
Note
5
6
7
7
7
7
8
2020
£m
12.2
–
(11.5)
0.7
(31.2)
(30.5)
(2.8)
22.9
(59.8)
(10.5)
(80.7)
–
(80.7)
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 184
Company balance sheet
for the year ended 31 December 2020
Assets
Non-current assets
Investments
Interest bearing loans and borrowings
Current assets
Trade and other receivables
Derivative financial assets
Interest bearing loans and borrowings
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Derivative financial liability
Interest bearing loans and borrowings
Net current assets
Non-current liabilities
Trade and other payables
Interest bearing loans and borrowings
Other financial liabilities
Net assets
Shareholders’ equity
Called up share capital
Share premium account
Merger reserve
Retained earnings
Total shareholders’ equity
Notes
2020
£m
2019
£m
10
13
11
13
12
13
12
13
15
4,008.6
6.7
4,015.3
3,950.9
–
3,950.9
1,013.6
–
0.6
2.9
1,017.1
897.5
47.4
–
12.8
957.7
5,032.4
4,908.6
(875.3)
(26.0)
–
(901.3)
(683.4)
–
(17.0)
(700.4)
115.8
257.3
(566.9)
–
–
(566.9)
–
(573.5)
(10.5)
(584.0)
3,564.2
3,624.2
4.8
1,206.6
2,527.4
(174.6)
3,564.2
4.8
1,198.0
2,527.4
(106.0)
3,624.2
Under the Companies Act 2006 section 49 (Isle of Man), the directors are satisfied that the Company satisfies the solvency test for
distributions to be made.
The notes on pages 186 to 190 are an integral part of these financial statements.
The financial statements on pages 183 to 190 were approved by the Board of Directors on 4 March 2021 and signed on its behalf by
J Nygaard-Andersen
Chief Executive Officer
R Wood
Deputy Chief Executive Officer/Chief Financial Officer
Entain plc | Annual Report 2020 Financial statements
Company statement of changes in equity
for the year ended 31 December 2020
At January 2019
Profit for the year
Total comprehensive income
Share options exercised
Share-based payments charge
Equity dividends
At 31 December 2019
Loss for the year
Total comprehensive expense
Share options exercised
Share-based payments charge
At 31 December 2020
185
Total
£m
3,250.5
555.0
555.0
1.5
12.7
(195.5)
3,624.2
(80.7)
(80.7)
8.6
12.1
Called
up share
capital
£m
4.8
Share
premium
account
£m
1,196.5
Merger
Reserve
account
£m
2,527.4
–
–
–
–
–
–
–
1.5
–
–
–
–
–
–
–
4.8
1,198.0
2,527.4
–
–
–
–
–
–
8.6
–
–
–
–
–
Retained
earnings
£m
(478.2)
555.0
555.0
–
12.7
(195.5)
(106.0)
(80.7)
(80.7)
–
12.1
The notes on pages 186 to 190 are an integral part of these financial statements.
4.8
1,206.6
2,527.4
(174.6)
3,564.2
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 186
Notes to the Company financial statements
for the year ended 31 December 2020
1 General information
Entain PLC (‘the Company’) is a limited company incorporated and domiciled in the Isle of Man. The address of its registered office and
principal place of business is disclosed in the Directors’ report.
The financial statements of the Company for the year ended 31 December 2020 were authorised for issue in accordance with a resolution
of the directors on 4 March 2021.
The Company has taken advantage of the exemption from preparing a cash flow statement under paragraph 8(g) of the disclosure
exemptions from EU-adopted IFRS for qualifying entities included in Financial Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”). The Entain PLC consolidated financial statements for the year ended 31 December 2020 contain a consolidated statement of
cash flows.
The Company is exempt under paragraph 8(k) of the disclosure exemptions from EU-adopted IFRS included in FRS 101 for qualifying
entities from disclosing related party transactions with entities that form part of the Entain PLC group of which Entain PLC is the ultimate
parent undertaking.
The Company’s financial statements are presented in Pounds Sterling (£). All values are in millions (£m) rounded to one decimal place
except where otherwise indicated. The Company’s financial statements are individual entity financial statements.
2 Basis of preparation
These financial statements were prepared in accordance with FRS 101 and Isle of Man Companies Act 2006. The financial statements
are prepared on a going concern basis under the historical cost convention except for certain financial liabilities measured at fair value.
The accounting policies which follow in note 3 set out those policies which apply in preparing the financial statements for the year ended
31 December 2020 and have been applied consistently to all years presented. For details on the going concern considerations made, see
note 2 of the consolidated financial statements.
The Company has taken advantage of the following disclosure exemptions under FRS 101 in respect of:
(a) IFRS 3 Business Combinations;
(b) the requirements of IFRS 7 Financial Instruments: Disclosures;
(c) IFRS 13 Fair Value Measurement;
(d) Share-based payments;
(e) Intra-Group-related party transactions; and
(f) Related party transactions.
For details of audit fees, see note 7 of the consolidated financial statements.
3 Summary of significant accounting policies
Investments
Investments comprise interests in subsidiary companies and are held as non-current assets stated at cost less provision for impairment.
The Company assesses these investments for impairment wherever events or changes in circumstances indicate that the carrying value
of an investment may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable
amount. If the recoverable amount is less than the value of the investment, the investment is considered to be impaired and is written
down to its recoverable amount. An impairment loss is recognised immediately in the income statement.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet consist of cash at banks and in hand, short-term deposits with an original maturity of
less than three months.
Financial assets
Financial assets are recognised when the Company becomes party to the contracts that give rise to them.
The Company classifies financial assets at inception as either financial assets at fair value or loans and receivables. On initial recognition,
loans and receivables are measured at fair value. Financial assets at fair value through profit or loss are measured initially at fair value,
with transaction costs taken directly to income statement. Subsequently, the fair values are remeasured and gains and losses from
changes therein are recognised in the income statement.
Entain plc | Annual Report 2020 Financial statements 187
3 Summary of significant accounting policies continued
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
On initial recognition, loans and receivables are measured at fair value plus directly attributable transaction costs. Subsequently, such
assets are measured at amortised cost, using the effective interest (“EIR”) method, less any allowance for impairment.
Financial liabilities
Financial liabilities comprise guarantees given to third parties and contingent consideration. On initial recognition, financial liabilities
are measured at fair value plus transaction costs where they are not categorised as financial liabilities at fair value through profit or
loss. Financial liabilities at fair value through profit or loss are measured initially at fair value, with transaction costs taken directly to
the income statement. Subsequently, the fair values are remeasured and gains and losses from changes therein are recognised in the
income statement.
Derecognition of financial assets and liabilities
Financial assets are derecognised when the right to receive cash flows from the assets has expired or when the Company has transferred
its contractual right to receive the cash flows from the financial assets or has assumed an obligation to pay the received cash flows in full
without material delay to a third party, and either:
– substantially all the risks and rewards of ownership have been transferred; or
– substantially all the risks and rewards have neither been retained nor transferred but control is not retained.
Financial liabilities are derecognised when the obligation is discharged, cancelled or expires.
Current and deferred income tax
The Company is tax resident in the United Kingdom.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that
it relates to items recognised in other comprehensive income or directly in shareholders’ funds. In this case, the tax is also recognised in
other comprehensive income or directly in shareholders’ funds, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the
countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of
goodwill; or arise from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is recognised using the tax rates (and laws) that have been enacted or substantially enacted by the balance sheet
date and are expected to apply then the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are only recognised to the extent it is probable that there will be suitable taxable profits from which they can
be recovered.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax
balances are not discounted.
Foreign currency translation
Transactions in foreign currencies are initially recorded in Pounds Sterling (£) at the foreign currency rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into Pounds Sterling (£) at the rates of
exchange ruling at the balance sheet date (the closing rate).
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date
of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the
date when the fair value was determined.
Dividends
Final dividends proposed by the Board of Directors and unpaid at the year end are not recognised in the financial statements until they
have been approved by shareholders at the Annual General Meeting. Interim dividends are recognised when paid.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 188
Notes to the Company financial statements continued
for the year ended 31 December 2020
3 Summary of significant accounting policies continued
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
Share-based payments
The cost of equity settled transactions with employees is measured by reference to the fair value at the date on which they are granted
(see note 31 of the consolidated financial statements for further details).
The cost of equity settled transactions is recharged to the respective employing entities.
Separately disclosed items
To assist in understanding its underlying performance, the Company has defined the following items of pre-tax income and expense as
separately disclosed items as they reflect items which are exceptional in nature or size.
The separate disclosure of these items allows a clearer understanding of the trading performance on a consistent and comparable
basis, together with an understanding of the effect of non-recurring or large individual transactions upon the overall profitability of
the Company.
The separately disclosed items have been included within the appropriate classifications in the income statement. Further details are
given in note 6.
Finance expense and income
Finance expense and income arising on interest bearing financial instruments carried at amortised cost are recognised in the income
statement using the effective interest rate method. Finance expense includes the amortisation of fees that are an integral part of the
effective finance cost of a financial instrument, including issue costs, and the amortisation of any other differences between the amount
initially recognised and the redemption price. All finance expenses are recognised over the availability period.
4 Judgements and key sources of estimation uncertainty
The preparation of financial statements requires management to make assumptions, estimates and judgements that affect the amounts
reported as assets and liabilities as at the balance sheet date and the amounts reported as revenues and expenses during the year.
Use of available information and application of judgement are inherent in the formation of estimates. Actual results in the future may
differ from those reported. In this regard, management believes that the accounting policies where judgement is necessarily applied are
those that relate to:
Investment in subsidiaries
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised. The following estimates are dependent upon assumptions which could change in the next
financial year and have a material effect on the carrying amounts of assets and liabilities recognised at the balance sheet date.
5 Operating profit before separately disclosed items
This is stated after crediting/(charging):
Management fees
Audit fees
6 Separately disclosed items
Integration costs
Legal and onerous contract provisions
Movement in fair value of contingent consideration
Issue costs write off
2020
£m
12.2
(0.6)
2020
£m
0.2
6.2
19.5
5.3
31.2
2019
£m
8.5
(0.6)
2019
£m
0.2
–
3.7
–
3.9
Entain plc | Annual Report 2020 Financial statements 7 Finance expense and income
Loan interest income
Intercompany interest
Loan interest expense
(Losses)/gains arising from change in fair value of financial instruments
(Losses)/gains arising from foreign exchange on debt instruments
Net finance (expense)/income
8 Income tax
The tax charge for both years presented is £nil.
189
2020
£m
7.0
15.9
(2.8)
(59.8)
(10.5)
(50.2)
2019
£m
(69.0)
121.2
–
16.6
43.4
112.2
A reconciliation of income tax applicable to loss (2019: profit) before tax at the UK statutory income tax rate to the income tax for the
years ended 31 December 2020 and 31 December 2019 is as follows:
(Loss)/profit before tax
Corporate tax (credit) /expense thereon at 19.00%
Adjusted for the effects of:
– Non-taxable income
– Non-deductible expenses
– Tax losses carried forward
Income tax
There is no deferred tax present on the balance sheet for either periods presented.
9 Dividends
Please see note 11 of the consolidated financial statements.
10 Investments
Cost and net book value
At 1 January 2019
Additions
At 31 December 2019
Cost and net book value
At 1 January 2020
Additions
At 31 December 2020
2020
£m
(80.7)
(15.3)
2019
£m
555.0
105.5
(4.3)
(118.4)
6.8
12.8
–
12.1
0.8
–
Total
£m
1,638.6
2,312.3
3,950.9
3,950.9
57.7
4,008.6
Subsidiaries and other related entities are listed in note 33 of the consolidated financial statements.
In November 2020, the Company subscribed £45.6m for additional share capital in its wholly owned subsidiary, Bwin Holdings (Malta)
Limited. In addition, the Company has capitalised £12.1m in respect of share based payment expense incurred by the Company and
relating to employees of GVC Holdings (UK) Limited and its subsidiaries, which were not recharged to those subsidiaries.
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 190
Notes to the Company financial statements continued
for the year ended 31 December 2020
11 Trade and other receivables
Amounts due from Group companies
Other debtors
Prepayments
2020
£m
1,009.8
1.6
2.2
1,013.6
2019
£m
895.8
1.0
0.7
897.5
Amounts owed by other Group undertakings are included under amounts falling due within one year as they are repayable on demand,
unsecured, and accumulate interest in a range between 0% and 4% plus IBOR.
12 Trade and other payables
Current
Amounts due to Group companies
Other payables
Non-current
Amounts due to Group companies
2020
£m
872.8
2.5
875.3
566.9
2019
£m
683.2
0.2
683.4
–
Amounts owed to other Group undertakings are included under amounts falling due within one year as they are repayable on demand,
unsecured, and accumulate interest in a range between 0% and 4% plus IBOR.
13 Interest bearing loans and borrowings
Current
Euro denominated loans
USD denominated loans
Sterling denominated loans
Non–current
Euro denominated loans
USD denominated loans
Sterling denominated loans
2020
£m
2.1
(0.1)
(2.6)
(0.6)
–
–
(6.7)
(6.7)
2019
£m
1.9
17.8
(2.7)
17.0
–
581.0
(7.5)
573.5
As at 31 December 2020 there were £535.0m (2019: £550.0m) of committed bank facilities against which £55.0m (2019: £55.0m) has
been utilised for letters of credit. Of the remaining balance £nil (2019: £35.0m) was drawn down. Fees in the year relating to the undrawn
facility were £6.7m (2019: £7.5m).
14 Financial risk management objectives and policies
The financial risk management objectives and policies applied by the Company are in line with those of the Group as disclosed in note 25
to the consolidated financial statements.
15 Called up share capital
Details of the share capital of the Company are given in note 28 of the consolidated financial statements.
16 Related party transactions
The Company has taken advantage of the exemption under paragraph 8(k) of FRS 101 not to disclose transactions with fellow wholly-
owned subsidiaries. See note 33 of the consolidated financial statements for disclosure of remuneration of key management personnel.
17 Subsequent Events
For details of subsequent events affecting the Company, see note 35 of the consolidated financial statements.
Entain plc | Annual Report 2020 Financial statements 191
Glossary
Definition of terms
Definition of terms
AAMS
Automated accounts management systems
Adjusted fully diluted EPS cents
Fully diluted earnings per share based on adjusted PBT
Adjusted PBT
ARC
B2B
B2C
BI
CAGR
CGUs
CMS
Profit before exceptional items, amortisation associated with acquisition, dividends from previously
sold businesses
Advances Responsibility and Care, the Group’s safer betting and gaming technology programme
Business-to-business
Business-to-consumer
Business intelligence
Compound annual growth rate
Cash-generating units
Customer marketing services
Constant currency basis
Each month in the prior period re-translated at the current periods exchange rate
Contribution
Revenue less betting taxes, payment service provider fees, software royalties, affiliate commissions,
revenue share and marketing costs
Contribution margin
Contribution as a percentage of NGR
CRM
CS
CSR
DTR
EPS
Customer relationship management
Customer services
Corporate Social Responsibility
Disclosure and transparency rules
Earnings per share
GVC / GVC Holdings PLC
The Group’s former name before becoming Entain plc in December 2021
H2GC
IA
IAS
IFRS
IOT
KPIs
KYC
Ladbrokes Coral
LTIP
MIP
Net debt
H2 Gambling Capital – independent providers of betting and gaming market data and estimates
Internal audit and risk management
International Accounting Standards
International Financial Reporting Standards
Internet of things
Key performance indicators
Know your customer – customer verification tools
Ladbrokes Coral Group Plc
Long-term incentive plan
Management incentive plan
Cash and cash equivalents (including amounts recorded as assets in disposal groups classified as
held for sale), less customer liabilities less interest bearing loans and borrowings
Net Gaming Revenue (“NGR”)
Revenue before deducting VAT
NGR YTD
Revenue
Net Gaming Revenue in the year to date
Net Gaming Revenue less VAT (imposed by certain EU jurisdictions on either sports or gaming
revenue)
Sports Gross Win Margin
Sports wagers less payouts
Sports Gross Win Margin %
Sports Gross Win Margin divided by Sports wagers
Sports Net Gaming Revenue
(“Sports NGR”)
Sports Wagers
Underlying EBITDA
Sports Gross Win Margin less free bets and promotional bonuses
Gross bets placed by customers on sporting events
Stated pre separately disclosed items and shared based payments
Overview | Strategic report | Governance | Financial statements Entain plc | Annual Report 2020 192
Shareholder information
Annual General Meeting
Communications
Share fraud warning
The date and details of the Company’s
2021 AGM will be announced in due course.
Details of each resolution to be considered
at the meeting and voting instructions
will be provided in the Notice of Meeting
that will be available on the Company’s
website at www.entaingroup.com.
The voting results of the 2021 AGM will
be accessible on the Company’s website
at www.entaingroup.com shortly after
the meeting.
Information about the company,
including details of the current share
price, is available on the website,
www.entaingroup.com.
Shareholding contacts
For any queries regarding your
shareholding, please contact Link
Asset Services.
Fraudsters use persuasive and high-
pressure tactics to lure investors into scams.
They may offer to sell shares that turn out
to be worthless or non-existent, or to buy
shares at an inflated price in return for an
upfront payment. While high profits are
promised, if you buy or sell shares in this
way you will probably lose your money.
Should you receive any unsolicited calls or
documents to this effect, you are advised
not to give out any personal details or to
hand over any money without ensuring that
the organisation is authorised by the UK
Financial Conduct Authority (“FCA”) and
doing further research.
If you are unsure or you think you have been
targeted, you should report the organisation
to the FCA. For further information, please
visit the FCA’s website at www.fca.org.uk,
email consumer.queries@fca.org.uk or
call the FCA consumer helpline on
0800 111 6768 if calling from the UK or
+44 20 7066 1000 if calling from outside
the UK.
Corporate information
Company name
Entain plc
Company number
4685V
Secretary and registered office
Emily Carey
Entain plc
32 Athol Street Douglas
Isle of Man
IM1 1JB
Telephone: +350 200 78700
www.entaingroup.com
UK Head Office
One New Change
London
EC4M 9AF
Registrars
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
BR3 4TU
Telephone: 0871 664 0300 from
the UK or +44 (0)371 664 0300
from outside the UK Email:
shareholderenquiries@linkgroup.co.uk
Solicitors
Addleshaw Goddard
DQ Advocates
Principal UK Bankers
Barclays Bank PLC
The Royal Bank of Scotland plc
Future trading updates
and financial calendar
Independent auditor
8 July
Post close trading update
12 August
Interim results
7 October
Q3 trading update
KPMG LLP
Chartered Accountants and
Statutory Auditor
15 Canada Square
London
E14 5GL
Entain plc | Annual Report 2020 Financial statements Design and production by Radley Yeldar | ry.com
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Entain plc
Incorporated in the
Isle of Man under
number 4685V
www.entaingroup.com