TIDMENT

RNS Number : 6346V

Entain PLC

11 August 2022

11 August 2022

Entain plc

("Entain" or the "Group")

Robust H1 performance with strategic focus on broader customer appeal delivering record level of actives

Launch of Entain CEE and acquisition of SuperSport in Croatia

Entain plc (LSE: ENT), the global sports-betting, gaming and interactive entertainment group, today reports its Interim Results for the six-month period ended 30 June 2022 ("H1").

Strategic progress

-- Group's strategic focus on a broader recreational customer base delivering record level of actives, up 57% versus H1 2019, and higher quality earnings

   --      Greater customer engagement driven by innovative new products and enriched experiences 

-- Further geographic expansion with five transactions this year to date consistent with our strategy of expanding into regulated markets

o Creation of Entain CEE and acquisition of SuperSport announced separately today, provides a strategic springboard to unlock the clear expansion opportunity in Central and Eastern Europe ("CEE")

o Acquisition in June of BetCity in the Netherlands to deliver growth in the newly regulated Dutch market

   o   Completion of Avid Gaming (Canada), Klondaika (Latvia) and Totolotek (Poland) transactions 
   --      Ongoing ESG leadership and further progress made across our Sustainability Charter 

o Expansion of Advanced Responsibility & Care ("ARC(TM) ") player protection trials into international markets

o Founding partner of Global Gaming Alliance ("GGA"), awarded GamCare's Advanced Safer Gambling Standard, and received numerous awards for safer gambling, including from S&P, SBC & EGR

o Pitching-In Volunteer Hub for the UK Trident Leagues launched to connect volunteers and local clubs

   o   Appointment of Rahul Welde as an independent Non-Executive Director 

Financial highlights

-- Robust Group performance during H1, reflecting the diversified business model and underlying momentum of the online business

   --      Total Group net gaming revenue ("NGR") growth of 18% (+18%cc(2) ) 

o Online NGR down 7% (-7%cc(2) ) reflecting strong prior year comparators driven by Covid lockdowns, temporary closure in the Netherlands, affordability measures in the UK and customers responding to the economic backdrop

-- Excluding the Netherlands, NGR was down -3%cc(2)

-- Strong underlying momentum with H1 Online NGR 3yr CAGR up 13%cc(2)

-- Retail perfomance ahead of expectations with a more interactive digital experience across gaming machines and betting terminals driving greater customer engagement

   --      BetMGM continues to perform strongly and is on track to deliver FY22 NGR of over $1.3bn 

o H1 NGR of $608m, 65% ahead of 2021

o Established number two operator with 23%(7) market share where BetMGM operates (excluding New York)

o Consistent leading iGaming operator with 30%(7) market share

o Reiterate expectation to reach positive EBITDA during 2023(,8)

   --      Group EBITDA(4,5) up 17% at GBP471m 
   --      Group profit after tax from continuing operations GBP28m, down GBP63m 

-- FY 2022 Group EBITDA(4,5,9) expected to be in the range of GBP925m to GBP975m, in line with current consensus(10)

   --      New progressive dividend policy announced: 

o Full year payment of GBP100m split evenly between Interim and Full Year

o Interim dividend of 8.5p per share

-- Net Debt of GBP2,210m at 30 June 2022, with net debt to EBITDA ratio of 2.3x reflecting continued investment in growth opportunities

Jette Nygaard-Andersen, CEO of Entain, commented :

"We continue to make excellent progress on our strategic priorities, with momentum in our business remaining strong as a result of putting the customer at the heart of everything we do. I am delighted that more customers are choosing to play with us as we focus on providing them with even better products, engaging content and exciting experiences. This has resulted in our highest ever level of actives in H1, up 57% versus the same period two years ago. Not only is this approach great for our customers, but it also provides us with a broader, more recreational customer base that will support more sustainable long-term revenues.

Underpinned by the Entain platform, we continue to expand our growth opportunities, and have already announced five transactions so far this year. This includes today's announcement of an innovative growth strategy for Central and Eastern Europe, starting with the acquisition of SuperSport in Croatia. In the US, BetMGM goes from strength to strength and continues to demonstrate its market leadership with a 23%(7) market share.

We continue to lead our industry on responsibility and sustainability as we deliver further progress on our Sustainability Charter. ARC(TM) continues to be rolled out into international markets and our efforts have been recognised in the UK and internationally with awards from GamCare, S&P, SBC as well as our inclusion in the Global Sustainability Yearbook 2022.

As ever, I would like to thank each and every one of our talented colleagues around the world for their hard work and dedication in helping deliver these results. We have established a meaningful runway for sustainable and high-quality growth. While we remain vigilant to the consumer backdrop, our geographic and product diversity provides resilience which, together with our proven ability to drive superior returns, gives us confidence that we will continue to deliver benefits for our stakeholders."

 
 Group                                  2022(1,) (3)   2021 (3)   Change   CC(2) 
 Six months to 30 June                          GBPm       GBPm        %       % 
                                       -------------  ---------  -------  ------ 
 Net gaming revenue (NGR)                    2,117.6    1,792.6      18%     18% 
 Revenue                                     2,094.9    1,767.0      19%     19% 
 Gross profit                                1,327.8    1,136.3      17% 
 Underlying EBITDAR (4,5)                      480.1      410.5      17% 
 Underlying EBITDA (4,5)                       471.0      401.1      17% 
 Underlying operating profit(5)                246.5      205.6      20% 
 Underlying profit before tax(5)               152.4      246.7 
 Profit after tax                               28.1      90 .9 
 Basic EPS (p)                                   5.1       13.8 
 Adjusted diluted EPS(6) (p)                    29.3       18.5 
 Adjusted diluted EPS excl US(6) (p)            47.6       31.7 
 Dividend per share (p)                          8.5          - 
-------------------------------------  -------------  ---------  -------  ------ 
 

Dividend

Recognising the importance of dividends to shareholders, the strength of the operational performance of the business and our future prospects, the Group is implementing a new dividend policy.

The Board is proposing a progressive dividend, starting with a total dividend of GBP100m for the Financial Year to 31 December 2022, to be paid to shareholders in equal instalments in respect of the H1 and FY results.

The interim dividend of GBP50m (8.5p per share) in respect of the H1 2022 results announced today is expected to be paid in September 2022 to shareholders on register on 19 August 2022.

Outlook

Entain's first half performance reflects the underlying strength of our business model underpinned by our growth and sustainability strategy. The Group's momentum remains strong and our outlook for the balance of the year is unchanged with FY 2022 Group EBITDA(4,5,9) expected to be in the range of GBP925m to GBP975m, in line with current consensus(10) . The economic environment remains uncertain in many of our markets, however we remain confident that our customer focus, increasing diversification and proven ability to deliver growth will see us deliver further progress for all stakeholders.

Notes

   (1)   2022 reported numbers are unaudited 

(2) Growth on a constant currency basis calculated by translating 2022 and 2021 performances at 2022 exchange rates

   (3)   Reflecting the results of continuing operations 

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

   (5)   Stated pre separately disclosed items 

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

(7) BetMGM market shares for the three month period to May 2022, in markets in which BetMGM operates, excluding New York

   (8)   Based on current assumption of future live markets 
   (9)   References to profit expectations are made on a reported basis post IFRS 16 implementation 

(10) Current consensus as compiled by Entain, incorporating published analysts forecasts updated after 7 July 2022

Enquiries:

 
Investor Relations - Entain plc                                investors@entaingroup.com 
 David Lloyd-Seed, Chief IR & Communications Officer    david.lloyd-seed@entaingroup.com 
 Davina Hobbs, Head of Investor Relations                   davina.hobbs@entaingroup.com 
 Callum Sims, IR Manager                                     callum.sims@entaingroup.com 
Media - Entain plc                                                 media@entaingroup.com 
 Lisa Attenborough, Head of Corporate Communications   lisa.attenborough@entaingroup.com 
 Jay Dossetter, Head of ESG and Press Office               jay.dossetter@entaingroup.com 
 Jodie Hitch, PR Manager                                     Jodie.hitch@entaingroup.com 
Powerscourt                                                    Tel: +44 (0) 20 7250 1446 
 Rob Greening/Nick Hayns/Sam Austrums                      entain@powersco urt-group.com 
 

H1 Conference Call & Webcast

The H1 2022 results presentation for analysts and investors will be held today, Thursday 11(th) August at 9:00am GMT. Participants may join via webcast or conference call dial in, approximately 15 minutes ahead of the event.

Live webcast link: https://brrmedia.news/ENTH12022

To participate in the Q&A, please also connect via the conference call dial in details.

   UK                     +44 (0) 33 0551 0202 
   US                      +1 646 843 4609 
   Access Code:    4493388 

The presentation slides will be accessible on our website shortly before the event. A replay and transcript will be available afterwards; https://entaingroup.com/investor-relations/results-centre/

Upcoming dates:

   Q3 Trading update:        11 October 2022 
   Entain Sustain:              19 October 2022 

Dividend Timetable

   Announcement date:      11 August 2022 
   Ex-Dividend date          18 August 2022 
   Record date:                 19 August 2022 
   Payment date:               22 September 2022 

Forward-looking statements

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

About Entain plc

Entain plc (LSE: ENT) is a FTSE100 company and a leading global sports-betting, gaming and interactive entertainment group , operating both online and in the retail sector. The Group owns a comprehensive portfolio of established brands; Sports Brands include bwin, Coral, Crystalbet, Eurobet, Ladbrokes, Neds, Sportingbet and Sports Interaction; Gaming Brands include CasinoClub, Foxy Bingo, Gala, GiocoDigitale, Ninja Casino, Optibet, Partypoker and PartyCasino. The Group operates a proprietary platform across core product verticals and in addition to its B2C operations provides services to a number of third-party customers on a B2B basis.

The Group has a 50/50 joint venture, BetMGM, a leader in sports betting and iGaming in the US. Entain provides the technology and capabilities which power BetMGM as well as exclusive games and products, specially developed at its in-house gaming studios. The Group is tax resident in the UK with operations in over 30 regulated or regulating territories. Entain is a leader in ESG, a member of FTSE4Good, the DJSI and is AA rated by MSCI. The Group has set a science-based target, committing to be carbon net zero by 2035 and through the Entain Foundation supports a variety of initiatives, focusing on safer gambling, grassroots sport, diversity in technology and community projects.

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

LEI: 213800GNI3K45LQR8L28

CHIEF EXECUTIVE'S REVIEW

Entain is a customer-focused growth business delivering profitable and sustainable returns for our stakeholders. Our core strategic pillars of growth and sustainability will enable us to deliver our ambition of being the world leader in betting, gaming and interactive entertainment.

Our purpose 'to bring moments of excitement into people's lives' is underpinned by our unwavering focus on putting customers at the heart of everything we do. It is this driving force that has enabled us to continue to deliver a richer, more engaging experience for customers as demonstrated by the record level of actives we now have.

Our ongoing leadership of the industry in player protection, responsibility and sustainability, ensures that together with our powerful Entain platform we can continue to drive sustainable growth in our core markets across the world.

Customer centricity powered by Entain's platform

Our Entain platform is at the heart of our business and provides unique competitive advantages. It powers and enables our growth, provides us with customer insight and analysis and drives value creation for our stakeholders . Understanding our customers better through insight, analysis and research empowers us to act and think differently, be flexible, be agile, be bold. It underpins our customer centric approach in delivering responsible and engaging entertainment.

Our platform enables us to execute and deliver against our two strategic pillars of growth and sustainability.

Growth

Entain is a growth business. Our strategic growth pillar provides us with an exciting opportunity for many years to come as dynamics within our markets support continued growth, we expand into new regulated markets and across new audiences.

The four pillars of our growth strategy that continue to deliver value to our stakeholders are; grow presence in our core markets; leadership in the US; expand into new regulated markets - both organically and via M&A; and extend into new interactive entertainment experiences. We aim to lead in our markets by providing customers with great experiences and engaging products and services.

We believe these opportunities will treble the size of our addressable markets over the long-term to almost $170bn.

Growth from our core markets

Our operations span over 30 regulated or regulating territories and we have established leading positions in each of our key markets. With growth dynamics built into these markets, Entain has a long runway for growth driven by our Entain platform. Our diversified business model, encompassing both digital and retail operations, as well as geographic breadth and product range, provides relative resilience, enabling Entain to adapt and evolve with changing customer behaviours to deliver earnings with greater stability and of a higher quality.

The markets in which we operate today are expected to grow by mid to high single digit compound over the medium term.

Our Retail operations performed strongly during the first half of 2022. Post Covid and its associated lockdowns, customers are re-engaging with the more interactive experience our shops provide with volumes ahead of pre-Covid levels. Total Retail NGR in H1 was up +244%cc(1) on a like for like ("LFL") (4) basis versus the same period in 2021.

In the UK, the strong results are driven by the continued digitalisation of our shop offering as we provide customers with an even better in-store experience, with both gaming machines and self-service betting terminals ("SSBT's") both seeing very strong performance. Our gaming machines have secured the widest range of exclusive content which, alongside our own in-house games, provides customers with an unrivalled in-store experience. Our proprietary Group BetStation solution, enables us to provide customers with a more interactive in-store experience on betting terminals, similar to that online. This is resulting in a broader customer audience as well as unlocking markets and interests not typically seen in-store before.

In some regions of Europe, due to the various lingering Covid restrictions, our shops have been slower to recover, but in Italy volumes are now back to pre-pandemic levels. The value of our omnichannel approach continues to be evident as we outperformed online-only competitors in Online in Italy.

In Online, NGR in the first half was down -7% (-7%cc(1) ) reflecting very strong prior year comparatives driven by Covid lockdowns, the delayed Euro 2020 tournament and trading in the Netherlands ahead of the temporary closure due to the licensing process. Excluding the Netherlands Online NGR was -3%cc(1) in H1.

During the first half, our Online operations faced several headwinds, with lower than expected growth in Brazil due to increased competition ahead of regulation and the impact of tighter affordability measures in the UK. In Q2, we also saw our increasingly recreational customer base responding to the changing macro environment and inflationary fears by moderating spend per head across the UK and parts of Europe.

In spite of these, our strategic approach and varied initiatives to drive customer engagement resulted in our highest ever level of actives, up +57% versus H1 2019. These initiatives included new advertising campaigns in the UK and Australia, new live gaming products, social gaming experiences and increased media content further enabled us to engage with a broader recreational customer base.

In the UK, NGR in H1 was -15% behind the prior year. 2021 comparators were particularly strong for UK sports brands due to a fuller sports calendar, including the delayed Euro 2020 football tournament. Similarly, our UK Gaming brands NGR eased from a Covid boosted 2021. We do however continue to expand our recreational audience, attracting and retaining record customer levels. This engagement has been driven by innovative marketing campaigns and fresh product releases, enhancing our offering and customer experience. Our brand revitalisation and repositioning continued with Coral launching the UK's first 3D betting and gaming advertisement as part of our 'Your Horse' campaign on the Piccadilly Square screens ahead of the Cheltenham Festival. Customers have responded well to new product releases including Ladbrokes live game show 'Well Well Well' and Coral's first free to play roulette tournament. Throughout H1, m onthly average actives were 7% ahead of 2021 with UK NGR has grown at 10% on a 3 year CAGR basis, a clear demonstration of our ongoing and increasingly recreational customer base.

Our Australian business continues to go from strength to strength with excellent performances from both the Ladbrokes and Neds brands throughout the first half. Despite lapping strong 2021 comparators, NGR grew +19% (+20%cc (1) ) year on year, with actives up +8%. The team continues to deliver a fresh and differentiated customer experience through our unique content, innovative social player products and a leading player sustainability offering. In addition to new campaigns across both brands, Ladbrokes launched the Mates Mode product during the first half which enables customers to chat, share and bet together, all within the Ladbrokes app. This has driven tremendous engagement so far and is seeing a strong uptake in multi products. Our recently announced partnership with Racing.com, the leading free to air broadcaster in Australia, further embeds us as the first choice for racing enthusiasts with an expanded content and media offering driving brand awareness and engagement. This partnership launched in July coincided with the release of our innovative live racing vision product available across both Ladbrokes and Neds.

Online NGR for H1 in Italy was -12%cc (1) versus 2021, reflecting the strong prior year comparators, but up 26%cc (1) on a 3 year CAGR basis. The value of the omni-channel approach continues to be evidenced by the relative outperformance versus pure online operators and through the strength of our Italian Retail estate performance. During the first half bwin and GiocoDigitale delivered a number of new products and experiences which further drove customer engagement, increasing actives.

Enlabs in the Baltics continues to perform well, despite the significant inflationary pressures being experienced in the region. Actives were up +24% on a proforma basis for H1 whilst NGR was up +18%cc (1) on a proforma basis. Enlabs continues to benefit from Entain's content, product and marketing expertise. Having redesigned the Optibet brand user experience customers also now benefit from a broader offering, such as the inclusion of partypoker product driving increased poker NGR.

Crystalbet continues to deliver strong performance and again held its position as the leading operator in the Georgian market. With new regulation impacting the business in 2022, revenues were down by -9%cc (1) in the first half, however the strength of our operations and brand see the business well positioned to outperform the market.

In Germany, the market continues to settle into the new regulatory regime. Challenges of an uneven operating landscape remain with the lack of regulatory enforcement continuing to weigh. However, we are encouraged that the new regulator has signalled that it will take action against unregulated operations and some operators have already withdrawn from the market. S ports licences have also seen the impending deposit limits now enforced from 1(st) July. We remain positive on the long-term prospects for the German market and expect it to settle down as regulatory oversight is enforced. We have continued to differentiate bwin's offer with a number of products and enhancements, and the brand through our long-term partnership with UEFA, the German Football Association, the German women's football team and multiple Bundesliga clubs.

In Brazil, we continue to perform strongly with our Sportingbet brand. Whilst the business continues to deliver impressive growth, greater than expected competition across H1 saw lower growth than anticipated, albeit with NGR +38%cc (1) and actives growth +44% year on year. The strength of our Sportingbet brand, product quality and operational expertise enables us to perform ahead of the market, putting our operations in Brazil in a very strong position ahead of regulation of sports betting expected later this year, with gaming potentially following thereafter. Our brands elsewhere across the Latin American region continue to perform in-line with expectations and we see the region as an exciting market for further growth opportunities.

The consolidation of our Party brands onto our One Party enables the business continues to differentiate its offering with live tournaments as well as promoting our brand strength with initiatives like our McLaren partnership, driving greater recreational player activity and broader audience engagement.

Leadership in the US

Following a strong performance in the first half of 2022, delivering NGR of $608m, BetMGM remains on track to deliver over $1.3bn of NGR in 2022.

BetMGM is firmly established as a leading operator in the US market and continues to go from strength to strength. BetMGM's success is built on the industry leading technology and capabilities of the Entain platform, coupled with MGM Resorts' iconic brand, resorts and experiences. This winning formula provides customers with a unique range of exclusive products and experiences, differentiating BetMGM's offer as well as creating significant long term financial and competitive advantages.

BetMGM hosted its second business update in May 2022, with CEO Adam Greenblatt and his team providing a review of operational progress, detail and colour on the market, customer behaviours and the regulatory outlook. Additionally, they further outlined those competitive advantages that BetMGM enjoys and how this underpins its success now and for the long term. A replay of that presentation can be found on our website at www.entaingroup.com/investor-relations/results-centre .

The online sports betting and iGaming market in North America continues to be extremely healthy, and BetMGM upgraded their estimate for total addressable market size to around $37bn over the long-term, reflecting positive changes in the legislative outlook for sports betting across North America, including the most populous state in the US, California. Performance of key metrics to date reinforces our long-term expectations of player values for both sports betting and iGaming, and while growth in player participation has been impressive, penetration has a long way to go, providing a tremendous runway for future growth.

BetMGM is now live in 23 markets, having delivered four new launches (New York, Louisiana, Puerto Rico and Illinois) since the start of the year, as well as going live on day one in Ontario, Canada for both online sports betting and iGaming. BetMGM retains its lead in iGaming and continues to build its sports betting position across its markets, with a 23% (2) share in the markets where it operates for the three months to May 2022. This excludes New York, where due to the unfavourable tax environment BetMGM have taken a strategic decision to focus attention on other markets where there are significantly greater economic returns.

Our flexible, innovative and unique engagement strategy provides BetMGM with one of the widest customer access models coupled with best in class channel optimisation, lower costs and greater returns. For example, in addition to MGM Resorts' retail presence and footprint, which sees thousands of customer and brand interactions each day. In financial terms, the benefits of omnichannel are clear - CPAs are over 70% lower than our average and predicted player value is 1.9x higher. The ROI is therefore 6.5x better than our other marketing channels alone. BetMGM recently signed exclusive partnerships with Carnival Corporation to offer BetMGM on board cruise ships, as well as with Sony Pictures and IGT for a Wheel of Fortune branded gaming experience

Maintaining financial discipline despite such rapid growth is facilitated by BetMGM's commercial components: brand, omnichannel, CRM and personalisation. There has been some rationalisation of behaviours and unsustainable competitive intensity, operators are increasingly focused on the path to profitability and delivering returns for their stakeholders. However, we expect key sporting events such as the NFL season launch, Super Bowl and March Madness to continue to attract elevated promotional activity. BetMGM are already achieving positive contribution in several markets, some within 12 months of opening and feel confident to reiterate expectations of reaching positive EBITDA during 2023(3) .

The significant momentum and differentiated approach that leverages the Entain platform, sees BetMGM firmly on track to realising its ambition of being a leader in the US sports-betting and iGaming market with a 20-25% share and long-term EBITDA margin of over 30%.

Expand into new markets

There are significant growth opportunities across the globe with over 50 regulated markets representing around $40 billion in long term gross gaming revenues where we are not currently present. We have a strong track record of successful acquisition, integration and value creation through M&A and so far in 2022 have announced five transactions: Avid Gaming in Canada; Klondaika in Latvia; Totolotek in Poland; BetCity in the Netherlands; and, today, the creation of Entain CEE and acquisition of SuperSport in Croatia.

We have today made a separate announcement regarding the establishment of Entain CEE. This is owned 75% by Entain, and 25% by EMMA Capital. In addition, Entain CEE is acquiring SuperSport, the leader in the Croatian betting and gaming market.

Entain CEE is acquiring 100% of SuperSport for an initial consideration of EUR800m, of which EUR600m is payable in cash by Entain on completion, which is expected to take place in Q4. There are further potential payments to Emma Capital based on the performance of the business through to 2024.

SuperSport has 54% market share in the regulated Croatian market, with 85% of revenue coming from online. It has delivered consistently strong financial performance, with compound annual growth from 2016 to 2021, of 16.6% for revenue and 20.8% for EBITDA, underpinned by healthy EBITDA margins. The transaction is expected to be mid-to-single digit earnings accretive in the first full year.

Entain CEE provides a springboard to expand across the CEE region, combining Entain's global expertise, industry leading industry capabilities and capital together with the regional knowledge and connectivity of EMMA Capital, overlaid the expert regional operational knowledge of local acquisitions and their management teams starting with SuperSport. Entain CEE will be led by Radim Haluza, the CEO of Supersport and a highly experienced and capable individual within the industry

These acquisitions deliver quality brands and leading market positions in highly attractive, growing and regulated markets.

We continue to explore both organic and M&A prospects across growing regulated markets including Latin and Central America and Central and Eastern Europe, that will drive further value for shareholders.

Engaging new audiences and entertainment experiences

Technology is changing consumer behaviour giving users more choice, enabling new social and community experiences and opening up to new growth opportunities. At Entain, we've always embraced the opportunity to innovate, listening to customers and interpreting deep data insights to meet their changing needs in rapidly evolving markets. We know that customers not only want more content and more engagement but also seek differentiated, fresh and exciting experiences. We continue to see increasing convergence of interactive entertainment and media towards traditional betting and gaming experiences and are excited to be building that future for our customers.

In addition to broadening the engagement within our existing offering, Entain continues to enhance the customer experience and appeal that enables us to benefit from powerful flywheel effects that not only grow our customer base but reduce acquisition cost, lower churn and improve returns. Across markets like the UK, Australia and Germany our customers have enjoyed richer content as well as engaging media around our sports offering with our F1 collaboration with McLaren, Coral's latest episodes of Against the Odds with ITV as well as Neds and Ladbrokes Australia's live racing channels. These new initiatives have driven improved engagement, retention and brand association and we aim to continue to invest in these areas for our customers.

Our acquisition of UNIKRN provides access to the nascent esports wagering market. We remain extremely excited by the opportunity. Ahead of the launch expected later this year, we have been working to evolve the product portfolio, whilst liaising with partners and regulators to develop an appropriate framework fulfilling both customer experience and player enjoyment alongside protection structures required for a sustainable long-term market.

Through our Ennovate hub, we are investing in research and development and exploring new technologies, both internally and through external partnerships in order to meet the evolving needs of current and future customers.

Sustainability

Sustainability is the second of our twin strategic pillars and is at the heart of everything we do. We firmly believe that the most sustainable business will be the most successful business in our industry. Paired with our strategic growth priorities, our strategic sustainability pillar is underpinned by our Sustainability Charter with its four core principles clearly defined: 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 continue to strive to meet, and exceed 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.

Focus on regulated markets

Entain is currently licensed in over 30 countries, and that number will continue to rise through a combination of positive regulatory developments as well as our expansion into new already regulated countries. Operating in a well-structured regulatory regime enables us to deliver higher quality earnings with greater certainty and sustainability of earnings as we continue to grow and expand the footprint of our future opportunities.

Entain has already made significant progress towards our commitment to only operate in regulated markets by the end of 2023. At the end of 2021, the percentage of NGR from regulated or regulating markets was almost 100% with Brazil, Canada and the Netherlands being the most significant in the process of regulating.

Entain ceased trading in the Netherlands from 1 October 2021 whilst awaiting confirmation of the licensing approval for bwin and Party brands, which is now expected during the second half of the year. The acquisition of BetCity, expected to complete in Q4 2022, secures immediate access with a leading position in the newly regulated Dutch market.

In April 2022, licenses for online sport betting and gaming were awarded in Ontario, Canada with bwin and party brands both being licensed.

We engage openly and proactively with regulators to support a well-structured and robust regulatory environment that balances the highest regulatory standards, the responsibility of appropriate player protections whilst upholding customer freedoms and right of choice. At Entain we offer first class player protection through our industry leading technology platform, while upholding all licensing objectives, across multiple jurisdictions.

In the UK, we continue to wait for the publication of the White Paper outlining the review of the regulatory framework in the 2005 Gambling Act. The current disruption to Government and ongoing leadership contest, has seen the postponement of any publication to the Autumn. The newly appointed Prime Minister will take office on 5(th) September and will then appoint the Cabinet, after which policy work will continue. Along with other industry operators we continue to actively engage with appropriate parties in order to help find a balance between protecting a minority who are at risk while supporting a healthy entertainment experience as well as an environment that is commercially viable for operators and surrounding reliant industries.

Lead on responsibility

Responsibility continues to be a significant part of our sustainability approach. We continue with the development and implementation of our industry leading Advanced Responsibility and Care (ARC(TM) ) programme. ARC(TM) has now been implemented in our UK brands and operations, with the platform's international roll-out already underway.

We continue to see an accuracy rating of over 90% across our algorithms, and our combination of automated systems and real time interceptors are achieving real traction, with 91% of those customers with the highest risk, setting a limit within seven days of interaction with ARC(TM) .

To reflect its importance to the business, we have now included the effectiveness of ARC(TM) in our Group wide remuneration policy, specifically targeting a safer customer experience through wider use of player protection tools.

Our Gamble Responsibly America app is the first of its kind in the US; being free, unbranded and with no commercial benefit to Entain or BetMGM. Produced alongside EPIC Risk Management and RG24/7, both partners with the Entain Foundation US, collaborate on educational projects hosted by experts in the field. The app features a series of educational resources and tools to support those at risk of, or facing, gambling related harm. It also offers assets and information to help people game responsibly and provides guidance for those individuals potentially struggling with problem gambling.

Best in class corporate governance

As an industry leader, we are committed to the highest standards of governance in all areas of our operations. This commitment to best practice is delivered through a robust framework of oversight and control.

Rahul Welde was appointed as independent Non-Executive Director, effective from 1st July 2022. Rahul brings a wealth of digital consumer and ecommerce experience from over 30 years working in the global FCMG sector. Peter Isola stepped down as Non-Executive Director on 21st March 2022.

The Board now consists of the Chairman, three Executive Directors and seven independent Non-Executive Directors, with female Directors making up 36% of the Board's membership. The Board remains committed to the view that an inclusive and diverse membership results in optimal decision-making. To support this, we have developed a Board Diversity Policy , which is available on our website.

In line with our objective to operate best-in-class corporate governance, we commissioned Alvarez & Marsal to conduct an independent comprehensive review of the Group's governance and compliance practises. A summary of the results of the review are included in our Annual Report and ESG Report for 2021-22, published on 8th June 2022 www.entaingroup.com/sustainability/esg-policy-statements .

Best place to work and investing in our people and communities

Our vision is to create the best place to work where our colleagues feel valued, respected, and engaged. We are on a journey to revolutionise the betting and gaming industry and be the employer of choice for all talented people. We launched an Inclusion Ambassadors programme with 30 representatives across our global footprint. We have invested in educating Entain's senior leaders on the importance of diversity and inclusion and in the process of reaching our wider colleague-base with Global Inclusion Learning, a new interactive and immersive training programme delivered by 50 facilitators across the business.

Reducing our impact on the environment is a core tenet of our commitment to sustainability and we have successfully reduced our carbon emissions by 15% between 2018 to 2021. Last year we committed to becoming Net Zero for carbon emissions by 2035 - 15 years ahead of the target set by the Paris Agreement on climate change. Having joined the Science Based Target initiative we are in the process of formally agreeing our Net Zero targeting path.

Our two Foundations - the Entain Foundation and the Entain Foundation US, continue to support research into problem gambling and education initiatives that align with our sustainability ambitions as well as investing into local communities and grass roots sports across our key markets. In November 2021, we launched EnTrain, an initiative to positively impact one million people through education in technology by the end of the decade. This builds on our partnerships with organisations such as Girls Who Code, the international non-profit body working to close the gender gap in technology and redefine the image of what a programmer does. The Entain Foundation is looking to build on these partnerships throughout 2022.

The Entain Foundation continues to invest in grassroots sports through its Pitching In programme. In July, the Group extended its partnership with the Pitching In Trident Leagues comprising 248 clubs and over 15,000 community based non-league football players. In addition to funding the operation of the leagues, the core objective of the partnership is to promote community engagement between the clubs and their local areas. As such, the Foundation is the Founding partner in the Trident Community Fund, which enables clubs to run community engagement projects. In May 2022, we launched the Pitching In Volunteer Hub, a unique online platform that enables every Trident League Club to easily connect with potential volunteers. In addition, we continue our long term-collaboration with SportsAid, the UK based sports charity, through which we sponsor and provide personal development coaching to 50 young athletes each year. We have also internationalised our investment in grassroots sport with new projects funded in Austria, Italy, Greece and Colombia.

In Canada, having acquired Avid Gaming and its Sports Interaction brand, we are building on their unique relationship to support the socioeconomic efforts of the Mohawks of Kahnawà:ke through our Mohawk Online agreement.

Notes

(1) Growth on a constant currency basis calculated by translating 2022 and 2021 performances at 2022 exchange rates

(2) BetMGM market shares for the three month period to May 2022, in markets in which BetMGM operates, excluding New York

   (3)   Based on current assumption of future live markets 

(4) Retail operates in UK, Italy, Belgium and Republic of Ireland. Retail numbers are quoted on a LFL basis. During H1 2022, there were an average of 4,317 shops/outlets in the estate, compared to an average of 4,612 during H1 2021

Financial Results and the use of non-GAAP measures

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

BUSINESS REVIEW

Group

 
 Six months to 30 June                         2022(1)      2021    Change   CC (2) 
                                                  GBPm      GBPm         %        % 
                                            ----------  --------  --------  ------- 
 NGR                                           2,117.6   1,792.6       18%      18% 
 VAT/GST                                        (22.7)    (25.6)       11%      10% 
                                            ----------  --------  --------  ------- 
 Revenue                                       2,094.9   1,767.0       19%      19% 
 
 Gross profit                                  1,327.8   1,136.3       17% 
 
 Contribution                                  1,025.5     827.8       24% 
 
 Operating costs                               (545.4)   (417.3)     (31%) 
 
 Underlying EBITDAR(3)                           480.1     410.5       17% 
 
 Rent and associated costs                       (9.1)     (9.4)        3% 
 
 Underlying EBITDA(3)                            471.0     401.1       17% 
 
 Share based payments                          (5 .2 )     (6.6)     2 1 % 
 Underlying depreciation and amortisation    (113 .2 )   (109.9)      (3%) 
 Share of JV/Associate (l oss)               (10 6.1 )    (79.0)   (3 4 %) 
 Underlying operating profit(4)                 2 46.5     205.6       20% 
------------------------------------------  ----------  --------  -------- 
 

Revenue increased by 19% (19%cc (2) ) to GBP2,094.9m in H1 driven by a strong performance in Retail following prior year lockdowns partially offset by a -7%cc (2) decline in Online NGR as we lap strong prior year comparators due to Covid lockdowns, Euro 2020 and prior year trading in the Netherlands. Whilst Online NGR was down on the prior year, the underlying health of the business remains particularly strong with active customer numbers in H1 higher than they have ever been.

Contribution of GBP1,025.5m was 24% higher than last year, with a contribution margin of 48.4%, 2.2pp higher than 2021 due to a higher Retail segmental mix. Operating costs (before rent) were 31% higher leaving underlying EBITDA (3) of GBP471.0m, 17% higher than the prior year.

Share based payment charges were GBP1.4m lower than last year, while underlying depreciation and amortisation was 3% higher as a result of current year and the annualisation of prior year acquisitions. Share of JV losses includes a loss of GBP108.6m (2021: GBP78.2m) relating to BetMGM, which is in line with our expectations. Group underlying operating profit (4) of GBP246.5m was 20% ahead of 2021. After charging separately disclosed items of GBP112.9m (2021: GBP116.1m), operating profit of GBP133.6m was GBP44.1m higher than in 2021.

Online

 
 Six months to 30 June                       2022(1)      2021    Change    CC (2) 
                                                GBPm      GBPm         %         % 
                                            --------  --------  --------  -------- 
 
 Sports wagers                               6,881.8   7,077.3      (3%)      (3%) 
 
 Sports margin                                 12.8%     13.1%   (0.3pp)   (0.3pp) 
 
 Sports NGR                                    702.9     751.1      (6%)      (6%) 
 Gaming NGR                                    752.7     825.9      (9%)      (9%) 
 B2B NGR                                        15.1      10.6       42%       54% 
                                            --------  --------  --------  -------- 
 Total NGR                                   1,470.7   1,587.6      (7%)      (7%) 
 VAT/GST                                      (22.7)    (25.6)       11%       10% 
                                            --------  --------  --------  -------- 
 Revenue                                     1,448.0   1,562.0      (7%)      (7%) 
 
 Gross profit                                  886.1     989.1     (10%) 
 
 Contribution                                  587.3     683.8     (14%) 
 Contribution margin                           39.9%     43.1%   (3.2pp) 
 
 Operating costs                             (201.9)   (187.1)      (8%) 
 
 Underlying EBITDAR(3)                         385.4     496.7     (22%) 
 
 Rent and associated costs                     (0.7)     (0.8)       13% 
 
 Underlying EBITDA(3)                          384.7     495.9     (22%) 
 
 Share based payments                        (1 .3 )     (3.5)     6 3 % 
 Underlying depreciation and amortisation     (57.2)    (56.9)      (1%) 
 Share of JV/Associate income                    1.8         -         - 
 
 Underlying operating profit(4)              328 . 0     435.5     (25%) 
------------------------------------------  --------  --------  -------- 
 

Online NGR of GBP1,470.7m was -7% (-7%cc (2) ) behind last year as a result of the very strong comparatives in 2021 when much of Europe remained in Covid related lockdowns, the delayed Euro 2020 took place and our Netherlands operation continued to trade before its temporary closure on 1 October 2021 whilst we await licenses being granted. Excluding the Netherlands, NGR was -3% behind year on year.

Underlying performance remains strong, and the first half represents a 3 year CAGR of 13%cc (2) (+14%cc (2) in Q1 and +11%cc (2) in Q2), demonstrating our ability to deliver long-term sustainable growth. We are also delighted that our Q2 performance is underpinned by the highest levels of active players ever recorded, the result of our continued focus on recreational players and putting the customer at the heart of everything we do.

Underlying EBITDAR (3) for the half of GBP385.4m and underlying EBITDA (3) of GBP384.7m were -22% behind 2021. U nderlying operating profit (4) of GBP328.0m was -25% behind and, after charging separately disclosed items of GBP50.5m (2021: GBP92.6m), operating profit was GBP277.5m, GBP65.4m lower than 2021.

In the UK, NGR was -15%cc (2) behind 2021 as prior year lockdowns, tighter affordability measures and customers responding to economic pressures impacted year on year comparisons. Despite the reduction in NGR, we continue to attract and retain record numbers of customers through our innovative marketing campaigns and exciting product releases. Examples during the half include Coral's 3D advert in Piccadilly Square, our new Gala Bingo brand campaign, as well as successful product releases like Ladbrokes live 'Well Well Well' game and Coral's first free to play roulette tournament. Monthly average actives throughout H1 were 7% ahead of 2021, whilst UK Online NGR grew at 10% on a 3year CAGR basis. We are pleased to see our UK NGR, across both online and retail, up +33% versus 2021, illustrating the strength of our brands and the benefits of the Group's multi-channel approach.

In Australia, we expect to have once again gained market share in the first half with NGR +20%cc (2) ahead of the prior year. Our local team deliver this strong performance through differentiating our brands and expanding the customer experience. Recently announced changes to the tax regimes in New South Wales and Queensland will impact our business from H2 and 2023 respectively. Given the scale and strength of our business in Australia, we are confident in our ability to mitigate a proportion of the incremental tax impact.

In Italy, 2022 H1 NGR across the three major brands was -12%cc (2) behind 2021 given the tough prior year comparators but +26%cc (2) ahead on a 3 year CAGR basis. The omnichannel appeal of Eurobet continues to benefit the business, with year on year growth across Italy online and retail at +31%cc (2) .

In Germany, NGR was -19%cc (2) behind 2021 reflecting the lack of regulatory oversight creating an unlevel playing field post implementation of the tolerance regime. However, we remain confident in the prospects for the market in Germany. We expect that gaming licences will be issued shortly, bringing greater enforcement and allowing the Group to reposition itself as a leading operator in a fully regulated environment.

NGR in Brazil, was +38%cc (2) ahead of 2021 in the first half, maintaining Sportingbet's position of strength in the market. Gaming performed particularly strongly, with NGR +70%cc (2) ahead of 2021. Sports betting, a significant proportion of NGR in Brazil was +31%cc (2) year on year reflecting the prior year benefit from Euro 2020 and the Copa America. During the first half, we have seen a significant increase in competition ahead of the anticipated regulation which lowered NGR growth versus our original expectations. However, underlying customer metrics remain very strong with the number of active customers +44% ahead year on year.

In Georgia, NGR was -9%cc (2) behind last year with the new regulation regime taking effect from Q1.

Enlabs, which we acquired in the first quarter of last year, continues to perform strongly, despite economic challenges of the region, with year on year growth of +18%cc (2) on a proforma basis. The Enlabs business and Baltics region continues to present a number of exciting opportunities for the Group.

During Q1 we completed the acquisition of Avid Gaming and its Sports Interaction brand, which sees the Group expand its presence in the Canadian market. During the first half the business contributed 1% to Online NGR with momentum building in both sports and gaming volumes.

Online contribution margin of 39.9% was -3.2pp lower than last year as a result of the Covid unwind impact on NGR and costs associated with regulation in Germany and Georgia.

Operating costs (before rent) were 8% higher than last year as a result of inflation and the impact of acquisitions, with the year-on-year increase in line with previous mid to high single-digit guidance.

Rent and associated costs were GBP0.7m in the first half, compared with GBP0.8m in the prior year, leaving underlying EBITDA (3) of GBP384.7m, -22% behind 2021.

Share based payments were GBP2.2m lower than last year, underlying depreciation and amortisation of GBP57.2m was -1% higher and share of associate's income was GBP1.8m following an investment in 2021, leaving underlying operating profit (4) -25% lower at GBP328.0m.

Retail

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

 
 Six months to 30 June                        2022(1)      2021    Change     CC(2) 
                                                 GBPm      GBPm         %         % 
                                            ---------  --------  --------  -------- 
 S ports wagers(5)                           1,913 .7    5 09.9    2 75 %    2 76 % 
 
 S ports margin(5)                              18.7%   1 9.0 %   (0.3pp)   (0.3pp) 
 
 Sports NGR/Revenue                             354.7     99. 5      256%      258% 
 Machines NGR/Revenue                           281.3      91.8      206%      206% 
 NGR/Revenue                                    636.0     191.3      232%      233% 
 
 Gross profit                                   428.6     134.2      219% 
 
 Contribution                                   425.1     131.3      224% 
 Contribution margin                            66.8%    6 8.6%   (1.8pp) 
 
 Operating costs                              (275.8)   (185.7)     (49%) 
 
 Underlying EBITDAR(3)                          149.3    (54.4)      374% 
 
 Rent and associated costs                      (8.2)     (8.3)        1% 
 
 Underlying EBITDA(3)                           141.1    (62.7)      325% 
 Share based payments                           (0.5)     (1.3)     6 2 % 
 Underlying depreciation and amortisation      (53.0)    (51.1)      (4%) 
 Share of JV/Associate income                       -         -         - 
 Underlying operating profit/(loss)(4)           87.6   (115.1)      176% 
------------------------------------------  ---------  --------  -------- 
 

Retail NGR of GBP636.0m was +232% (+244% LFL (5) ) ahead of a lockdown impacted prior year with customers returning in strength to our shops for the unique Retail betting and gaming experience. In our two largest Retail estates, the UK and Italy, we are seeing volumes ahead of pre-Covid levels and LFL (5) Retail NGR grew at 2%cc (2) in Q2 on a 3 year CAGR basis (post implementation of the Triennial review in the UK on 1 April 2019).

With NGR significantly ahead year on year, Retail recorded an underlying EBITDAR (3) of GBP149.3m which was GBP203.7m ahead of 2021, and underlying EBITDA (3) of GBP141.1m, GBP203.8m ahead. Underlying operating profit(4) was GBP87.6m and, after separately disclosed items of GBP50.1m (2021: GBP5.6m), operating profit was GBP37.5m, an increase of GBP158.2m on 2021.

In the UK, NGR was +194% ahead of 2021 with the strong performance driven by a continuation of our digitalisation strategy and our ongoing focus on market leading content for our gaming machines and self-service betting terminals. Strong sports volumes are predominantly driven by our SSBT's, which provide an experience akin to the digital offering and now represent approximately one third of our total sports NGR in UK Retail. Gaming NGR was up +7% on a LFL (5) basis vs 2019, supported by best in class machines and the most differentiated content on the high street.

In Italy, the strength of our omni-channel offering and our ability to maintain ongoing relationships with customers through digital channels during lockdowns has continued to benefit the businesses recovery post Covid, with NGR in H1 +5%cc (2) ahead of 2019. Shops in Italy were closed for much of the first half in 2021, with a phased reopening during June and July.

Our Retail estate in Belgium continues to recover more slowly than our other estates post Covid with a further lockdown in January of this year disrupting momentum. With Belgium in lockdown for much of H1 2021, year on year NGR was +207%cc (2) ahead in H1 2022. Similarly impacted by significant lockdown closures in 2021, Republic of Ireland NGR was +468%cc (2) ahead.

Operating costs (before rent) were 49% higher than 2021, largely due to prior year comparators benefiting from cost mitigation in response to lockdowns and the receipt of furlough. Whilst the business continues to combat inflationary pressures through strict cost control, the current level of inflation and rising energy prices in H2 is expected to be offset by continued strong NGR performance driven by our industry leading content on gaming machines and SSBTs.

Rent and associated costs of GBP8.2m in the first half were 1% lower than the prior year, leaving underlying EBITDA(3) of GBP141.1m, GBP203.8m higher than 2021.

Charges for share based payments were GBP0.8m lower than last year and underlying depreciation and amortisation of GBP53.0m was -4% higher leaving an underlying operating profit(4) of GBP87.6m, GBP202.7m ahead of 2021.

As of 30 June 2022, there were a total of 4,287 shops/outlets (2021: 4,524): UK 2,568 (2021: 2,754), Italy 940 (2021: 942), Belgium shops 287, outlets 359 (2021: shops 289, outlets 398) and Ireland 133 (2021: 132).

During the first half, the Group made the decision to repay GBP45.5m received under the Coronavirus Job Retention Scheme ("furlough scheme") , a charge which has been recognised in separately disclosed items .

New Opportunities

 
 Six months to 30 June                       2022(1)   2021   Change   CC(2) 
                                                GBPm   GBPm        %       % 
                                           ---------  -----  -------  ------ 
 Underlying EBITDAR(3)                        (14.6)      -        - 
 
 Rent and associated costs                         -      -        - 
 
 Underlying EBITDA(3)                         (14.6)      -        - 
 Share based payments                         ( 0.1)      -        - 
 Underlying depreciation and amortisation    (1 .6 )      -        - 
 Share of JV/Associate income                      -      -        - 
 Underlying operating loss(4)               (1 6.3 )      -        - 
-----------------------------------------  ---------  -----  ------- 
 

New Opportunities costs (3) of GBP14.6m primarily reflect GBP11.0m of costs associated with our innovation program, and GBP3.6m of losses in our Unikrn business as we prepare the business for launch in H2.

After depreciation and amortisation and share based payments, New Opportunities underlying operating loss (4) was GBP16.3m.

Other

 
 Six months to 30 June                       2022(1)     2021   Change   CC(2) 
                                                GBPm     GBPm        %       % 
                                            --------  -------  -------  ------ 
 NGR/Revenue                                    13.1     15.5    (15%)   (16%) 
 
 Gross profit                                   13.1     13.0       1% 
 
 Contribution                                   13.1     12.7       3% 
 
 Operating costs                              (10.1)   (10.3)       2% 
 
 Underlying EBITDAR(3)                           3.0      2.4      25% 
 
 Rent and associated costs                         -    (0.1)     100% 
 
 Underlying EBITDA(3)                            3.0      2.3      30% 
 Share based payments                                       -        - 
 Underlying depreciation and amortisation      (1.3)    (1.7)      24% 
 Share of JV/Associate income/(loss)             0.7    (0.8)     188% 
 Underlying operating profit/(loss)(4)           2.4    (0.2)      n/m 
------------------------------------------  --------  -------  ------- 
 

NGR of GBP13.1m was 15% lower than 2021 with the continued recovery in NGR in our 4 dog tracks post Covid lockdowns more than offset by lost revenues from our break even Betdaq business which was sold in H2 2021. Resulting underlying EBITDAR(3) and EBITDA(3) of GBP3.0m were GBP0.6m and GBP0.7m ahead of 2021 respectively. Underlying operating profit(4) was GBP2.4m (2021: GBP0.2m loss) and operating profit after charging separately disclosed items was also GBP2.4m, GBP4.3m ahead of last year.

Corporate

 
 Six months to 30 June                         2022(1)      2021    Change   CC(2) 
                                                  GBPm      GBPm         %       % 
                                            ----------  --------  --------  ------ 
 Underlying EBITDAR(3)                          (43.0)    (34.2)     (26%) 
 
 Rent and associated costs                       (0.2)     (0.2)         - 
 
 Underlying EBITDA(3)                           (43.2)    (34.4)     (26%) 
 Share based payments                            (3.3)     (1.8)   (8 3 %) 
 Underlying depreciation and amortisation        (0.1)     (0.2)       50% 
 Share of JV/Associate (l oss)               (1 08.6 )    (78.2)     (39%) 
 Underlying operating loss                     (155.2)   (114.6)     (35%) 
------------------------------------------  ----------  --------  -------- 
 

Corporate costs(3) of GBP43.2m were GBP8.8m higher than last year driven by additional investment in our Responsible Gambling activities, as we move towards our 1% of UK GGR target, and the annualisation of investment in 2021 (H2 2021 cost was GBP46.6m). After share based payments, depreciation and amortisation and share of JV losses, Corporate underlying operating loss(4) was GBP155.2m, an increase of GBP40.6m, largely as a result of the expected GBP30.4m incremental loss in the US JV, BetMGM. After charging separately disclosed items of GBP12.3m, the operating loss of GBP167.5m was GBP36.7m higher than 2021.

Notes

(1) 2022 results are unaudited

(2) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2022 exchange rates

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

(4) Stated pre separately disclosed items

(5) Retail numbers are quoted on a LFL basis. During H1 there was an average of 4,317 shops in the estate, compared to an average of 4,612 in the same period last year

CHIEF FINANCIAL OFFICER'S REVIEW

 
 
 Six months to 30 June                       2022(1)      2021   Change   CC(2) 
                                                GBPm      GBPm        %       % 
                                            --------  --------  -------  ------ 
 NGR                                         2,117.6   1,792.6      18%     18% 
 
 Revenue                                     2,094.9   1,767.0      19%     19% 
 
 Gross profit                                1,327.8   1,136.3      17% 
 
 Contribution                                1,025.5     827.8      24% 
 
 Underlying EBITDAR(3)                         480.1     410.5      17% 
 
 Underlying EBITDA(3)                          471.0     401.1      17% 
 Share based payments                          (5.2)     (6.6)      21% 
 Underlying depreciation and amortisation    (113.2)   (109.9)     (3%) 
 Share of JV/Associate l oss                 (106.1)    (79.0)    (34%) 
 Underlying operating profit(4)                246.5     205.6      20% 
 
 Net finance costs                            (39.1)    (36.0) 
 Net foreign exchange/movement 
  on derivatives                              (55.0)      77.1 
 
 Profit before tax pre separately 
  disclosed items                              152.4     246.7 
 
 Separately disclosed items: 
  Amortisation of acquired intangibles        (51.5)    (94.7) 
  Other                                       (61.4)    (21.4) 
 
 Profit before tax                              39.5     130.6 
 
 Tax                                          (11.4)    (39.7) 
 
 Profit after tax from continuing 
  activities                                    28.1      90.9 
 
 Discontinued operations                       (3.1)     (6.2) 
 
 Profit after tax                               25.0      84.7 
------------------------------------------  --------  --------  -------  ------ 
 

NGR and Revenue

Group reported NGR was 18% ahead and revenue was 19% ahead of last year, with prior year lockdowns causing strong growth in Retail partially offset by a decline in Online. Further details are provided in the Business Review section.

Underlying operating profit (4)

Group reported underlying operating profit(4) of GBP246.5m was 20% ahead of 2021 (2021: GBP205.6m), with underlying EBITDA(4) ahead by 17%. The Group's share of JV and Associate losses of GBP106.1m (2021: GBP79.0m) includes BetMGM losses of GBP108.6m, which were GBP30.4m higher year on year as the business invests in growth. Analysis of the Group's performance for the first half is detailed in the Business Review section.

Financing costs

Finance costs of GBP39.1m (2021: GBP36.0m) were GBP3.1m higher than 2021 as a result of annualisation of interest on the additional $351m (cGBP250m) in term loans raised In July 2021.

Net foreign exchange losses in H1 of GBP55.0m (2021: GBP77.1m gain) resulted from the retranslation of non-sterling denominated debt. These losses are offset by gains in reserves on the retranslation of assets in our overseas businesses.

Separately disclosed items

Items separately disclosed before tax for the period amount to a GBP112.9m charge (2021: GBP116.1m) and relate primarily to GBP51.5m of amortisation on acquired intangibles (2021: GBP94.7m), a GBP45.5m charge for the repayment of monies received under the Coronavirus Job Retention Scheme ("furlough scheme")(2021: GBPnil), a GBP3.5m (2021: GBP3.3m) impairment/loss on disposal of certain Retail assets and in the prior year a write off of assets on the disposed exchange business Betdaq, Project Evolve costs of GBP4.5m (2021: GBPnil), corporate transaction costs of GBP12.5m (2021: GBP3.4m) and GBP4.7m of legal and onerous costs (2021: GBP6.2m), offset by a GBP9.3m release of contingent consideration liabilities following a reassessment of the likely cost (2021: GBP0.2m charge). During the prior year the Group also incurred GBP10.1m of Integration costs and GBP0.7m on other exceptional items as well as recording a GBP2.5m income predominantly on the Ladbrokes VAT claim.

 
 Separately disclosed items 
                                            2022      2021 
                                            GBPm      GBPm 
--------------------------------------  --------  -------- 
 Amortisation of acquired intangibles     (51.5)    (94.7) 
 Furlough repayments                      (45.5)         - 
 Impairment/Loss on disposal               (3.5)     (3.3) 
 Project Evolve                            (4.5)         - 
 Corporate transaction costs              (12.5)     (3.4) 
 Legal and onerous contract costs          (4.7)     (6.2) 
 Movement in fair value of contingent 
  consideration                              9.3     (0.2) 
 Integration costs                             -    (10.1) 
 Tax litigation/one-off legislative 
  impacts                                      -       2.5 
 Other one-off items                           -     (0.7) 
 Total                                   (112.9)   (116.1) 
--------------------------------------  -------- 
 

Profit before tax

Profit before tax and separately disclosed items was GBP152.4m (2021: GBP246.7m), a year-on-year reduction of GBP94.3m with the outperformance in Group operating profit offset by the foreign exchange losses on retranslation of debt.

Taxation

The tax charge for the period ended 30 June 2022 was GBP11.4m (2021: charge of GBP39.7m), reflecting an underlying effective tax rate pre-BetMGM losses and foreign exchange of 11.4% (2021: 20.2%) and a tax income on separately disclosed items of GBP19.3m (2021: GBP10.3m).

With changes anticipated in the taxation regime in Gibraltar, we now expect the full year 2022 effective tax rate to be c18% excluding the impact of foreign exchange and share of BetMGM losses.

Cashflow

 
 Six months to 30 June                                 2022      2021 
                                                       GBPm      GBPm 
                                                   --------  -------- 
 Underlying EBITDA (3)                                471.0     401.1 
 Discontinued EBITDA                                      -     (2.5) 
 Underlying working capital                          (86.7)    (43.9) 
 Capital expenditure                                (103.9)    (71.6) 
 Finance lease (incl. IFRS 16 leases)                (48.6)    (44.0) 
 Corporate taxes                                     (40.6)    (41.4) 
                                                   --------  -------- 
 Underlying free cashflow                             191.2     197.7 
 Investment in BetMGM                               (113.1)    (72.6) 
 Acquisitions net of cash acquired                  (179.5)   (380.7) 
                                                   --------  -------- 
 Free cashflow                                      (101.4)   (255.6) 
 Interest paid (incl. IFRS 16 leases)                (32.5)    (29.6) 
 Separately disclosed items                            66.7    (18.4) 
 Net movement on debt and associated instruments       34.3    (21.9) 
 Equity issue                                             -       0.6 
 Dividends paid                                           -    (14.8) 
                                                   --------  -------- 
 Net Cashflow                                        (32.9)   (339.7) 
 Foreign exchange                                      11.3      18.1 
                                                   --------  -------- 
 Net cash generated                                  (21.6)   (321.6) 
-------------------------------------------------  --------  -------- 
 

Note: Cashflows of GBP19.9m on contingent consideration arrangements classified as separately disclosed items above have been included within settlement of financial instruments and other financial liabilities within the statutory cashflow (2021: GBP1.6m)

During the first half, the Group had a net cash outflow of GBP32.9m (2021: GBP339.7m), but an inflow of GBP259.7m before acquisitions and investment in BetMGM (2021: GBP113.6m). Underlying free cashflow for the period was GBP191.2m (2021: GBP197.7m) with underlying EBITDA(3) of GBP471.0m (2021: GBP401.1m) offset by investment in capital expenditure of GBP103.9m (2021: GBP71.6m), lease payments of GBP48.6m, including those on non-operational shops (2021: GBP44.0m) and a working capital outflow of GBP86.7m (2021: GBP43.9m). The Group also paid GBP40.6m in corporate tax (2021: GBP41.4m) with discontinued operations also incurring a loss of GBP2.5m EBITDA(3) in the prior year. Including cash outflows for acquisitions and additional investment in BetMGM, the Group had a free cash outflow of GBP101.4m (2021: GBP255.6m).

The Group paid GBP32.5m of interest during the first half (2021: GBP29.6m) and received GBP66.7m on separately disclosed items (2021: GBP18.4m expense) including GBP161.9m on tax litigation (2021: GBP3.1m), primarily monies received from the 2010/11 Greek Tax Assessment following a ruling in the Group's favour, less payments of GBP4.9m on Project Evolve (2021: GBPnil), GBP45.5m to repay monies received under the furlough scheme (2021: GBPnil), GBP6.0m on legal and onerous contract costs (2021: GBP8.7m), GBP14.5m on acquisition and deal related costs (2021: GBP1.8m) and GBP19.9m on deferred consideration arrangements on previous acquisitions (2021: GBP1.6m). The Group also incurred GBP4.4m in ongoing fees in relation to previous disposals (2021: GBPnil). In the prior period, costs of GBP9.4m in relation to integration activities were incurred.

During the half, GBP34.3m was received on debt related instruments, primarily on the settlement of one of the Group's external swap arrangements following its maturity (2021: GBP21.9m repaid). In the prior period, GBP14.8m was paid in dividends to the minority holding in Crystalbet. No equity dividends were paid during either the current or prior year.

Net debt and liquidity

As at 30 June 2022, net debt was GBP2,209.6m and represented a net debt to EBITDA ratio of 2.3x. There was no drawdown on the Group's revolving credit facility.

 
                                            Par value   Issue costs/       Total 
                                                             Premium 
                                                 GBPm           GBPm        GBPm 
                                          -----------  -------------  ---------- 
 Bonds                                        (500.0)          (7.3)     (507.3) 
 Term loans                                 (1,887.0)           13.9   (1,873.1) 
 Interest accrual                              (22.4)              -      (22.4) 
                                          -----------  -------------  ---------- 
                                            (2,409.4)            6.6   (2,402.8) 
 Cash                                                                      465.5 
                                                                      ---------- 
 Accounting net debt                                                   (1,937.3) 
 Cash held on behalf of customers                                        (194.9) 
 Fair value of swaps held against debt instruments                          84.0 
 Short term investments/Deposits 
  held                                                                      20.7 
 Balances held with payment service 
  providers                                                                 94.2 
 Adjusted net debt pre IFRS 16                                         (1,933.3) 
 Lease liabilities recognised as a result 
  of IFRS 16                                                             (276.3) 
                                                                      ---------- 
 Adjusted net debt post IFRS 16                                        (2,209.6) 
----------------------------------------  -----------  -------------  ---------- 
 

Going Concern

In adopting the going concern basis of preparation in the interim financial statements, the directors have considered the current trading performance of the Group, the principal risks and uncertainties as considered in the 2021 year end longer term viability statement and the current macro-economic environment. The assessment performed over going concern included assessing the impact of the crystallisation of the Group's principal risks in "severe but plausible" downside scenarios as well as downside sensitivities for the broader macro-economic environment.

At 30 June 2022, the Group had accessible cash of cGBP0.4bn with a further cGBP0.5bn available under the Group's RCF. Given the level of the Group's current financing facilities, the first material tranche of which does not mature until H2 2023, and the forecast covenant headroom even under the sensitised downside scenarios, the directors believe that the Group is well placed to manage the risks and uncertainties it faces. As such, the directors have a reasonable expectation that the Group will have adequate financial resources to continue in operational existence and have, therefore, considered it appropriate to adopt the going concern basis of preparation in the interim financial statements.

Notes

(1) 2022 results are unaudited

(2) Growth on a constant currency basis is calculated by translating both current and prior year performance at the 2022 exchange rates

(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. Both EBITDAR and EBITDA are stated pre separately disclosed items

(4) Stated pre separately disclosed items

Principal risks

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

The principal risks and uncertainties which could impact the Group are detailed in the Group's Annual Report and Accounts 2021 and are as follows:

Data breach and cyber security

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 24/7 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 resulting NGR growth and could ultimately result in prosecutions including financial penalties.

Laws, regulations, licensing and regulatory compliance

Regulatory, legislative and fiscal regimes for betting and gaming in key markets around the world can change, sometimes at short notice. Such changes could benefit or have an adverse effect on the Group's profitability or the markets in which it can operate.

Technology failure

The Group's operations are highly dependent on technology and advanced information systems and there is a risk that such technology or systems could fail. In particular, any damage to, or failure of online systems and servers, electronic point of sale systems and electronic display systems could result in interruptions to trading and customer service systems.

Taxes

The Group is subject to a range of taxes, duties and levies in many of the countries where we have operations or in which our customers are located. The taxes imposed upon betting and gaming companies have changed over time and continue to change. In addition to changing taxes, given the Group's geographical diversity, the nature of tax affairs can be complicated with differing legal interpretation regarding the scope and scale of taxation. Both of these factors mean the levels of taxation to which the Group is exposed to may change in the future.

BetMGM and US strategy

Effective execution of BetMGM's strategy in the US is key to the Group's growth forecasts. Ineffective execution of the strategy may impact the Group's ambition of leadership in the US and opportunities for NGR growth in already regulated states and new states as they regulate.

Safer betting and gaming

Safer betting and gaming is at the centre of everything that Entain does. It is the cornerstone of our Sustainability Charter, and our most material ESG issue is to ensure the highest possible levels of player safety and protection. Failure to adequately protect our customers could impact our ability to offer products and build a sustainable business.

Increased cost of product

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 also subject to inflationary cost increases and can also be volatile based on the changeable business environment that many of our suppliers operate.

Health, Safety & Wellbeing of Customers, Communities and Employees

Failure to meet the requirements of the various domestic and international rules and regulations relating to the health and safety of our employees and our responsibilities and commitments towards customers and communities could expose the Company to material civil, criminal and/or regulatory action with the associated financial and reputational consequences.

Trading, liability management and pricing

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

Loss of key locations

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, Vienna, Hyderabad, Australia, Italy, Ireland and Manila. Disruption in any of these locations could have an impact on operations.

Pandemic

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, horse racing may result in financial losses, service outage or an inability to protect our colleagues wellbeing.

Recruitment and retention of key employees

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

Emerging and Evolving Risks

The current economic pressures, increasing rates of inflation and increasing energy costs are a cause for concern for many consumers. Whilst the Group considers itself as relatively resilient to the impacts of economic pressures, it is not immune. The directors continue to be vigilant of the economic backdrop.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that, to the best of their knowledge the condensed financial statements of the Company have been prepared in accordance with IAS 34; and the interim management report of the Company includes:

-- a fair review of the important events during the first six months of the year and their impact on the condensed financial statements and a description of the principal risks and uncertainties for the remaining six months of the year, as required by DTR 4.2.7R; and

-- a fair review of related party transactions and changes therein, as required by DTR 4.2.8R.

A list of current directors is maintained on the Entain plc website www.entaingroup.com.

On behalf of the Board

   J Nygaard-Andersen                              R Wood 

Chief Executive Officer Chief Financial Officer/Deputy Chief Executive Officer

11 August 2022

UNAUDITED FINANCIAL STATEMENTS

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT

 
For the six months ended 30 June 
                                             -----  ----------  ----------  ---------  ----------  ----------  ------- 
                                                                                 2022                             2021 
                                                                Separately                         Separately 
                                                                 disclosed                          disclosed 
                                                                     items                              items 
                                                    Underlying       (note             Underlying       (note 
                                                         items          4)      Total       items          4)    Total 
                                             Notes        GBPm        GBPm       GBPm        GBPm        GBPm     GBPm 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
NGR                                                    2,117.6           -    2,117.6     1,792.6           -  1,792.6 
VAT/GST                                                 (22.7)           -     (22.7)      (25.6)           -   (25.6) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Revenue                                                2,094.9           -    2,094.9     1,767.0           -  1,767.0 
Cost of sales                                          (767.1)           -    (767.1)     (630.7)           -  (630.7) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Gross profit                                           1,327.8           -    1,327.8     1,136.3           -  1,136.3 
Administrative costs                                   (975.2)     (112.9)  (1,088.1)     (851.7)     (116.1)  (967.8) 
Contribution                                           1,025.5           -    1,025.5       827.8           -    827.8 
Administrative costs excluding marketing               (672.9)     (112.9)    (785.8)     (543.2)     (116.1)  (659.3) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Group operating profit/(loss) before 
 share of results from joint ventures 
 and associates                                          352.6     (112.9)      239.7       284.6     (116.1)    168.5 
Share of results from joint venture 
 and associates                                        (106.1)           -    (106.1)      (79.0)           -   (79.0) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Group operating profit/(loss)                            246.5     (112.9)      133.6       205.6     (116.1)     89.5 
                                                                                            (36.8 
Finance expense                                5        (40.2)           -     (40.2)           )           -   (36.8) 
Finance income                                 5           1.1           -        1.1         0.8           -      0.8 
Gains arising from financial derivatives       5          63.5           -       63.5        24.3           -     24.3 
(Losses)/gains arising from foreign 
 exchange on debt instruments                  5       (118.5)           -    (118.5)        52.8           -     52.8 
Profit/(loss) before tax                                 152.4     (112.9)       39.5       246.7     (116.1)    130.6 
Income tax (expense)/credit                    6        (30.7)        19.3     (11.4)      (50.0)        10.3   (39.7) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Profit/(loss) from continuing operations                 121.7      (93.6)       28.1       196.7     (105.8)     90.9 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Loss for the period from discontinued 
 operations after tax                                        -       (3.1)      (3.1)       (2.5)       (3.7)    (6.2) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Profit/(loss) for the period                             121.7      (96.7)       25.0       194.2     (109.5)     84.7 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Attributable to: 
Equity holders of the parent                             123.7      (96.7)       27.0       184.0     (109.5)     74.5 
Non-controlling interests                                (2.0)           -      (2.0)        10.2           -     10.2 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
 
Earnings per share on profit for 
 the period from continuing operations(1)      8         29.5p                   5.1p       18.7p                13.8p 
From profit for the period(1)                            29.5p                   4.6p       18.3p                12.7p 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
 
Diluted earnings per share on profit 
 for the period from continuing 
 operations(1)                                 8         29.3p                   5.1p       18.5p                13.7p 
From profit for the period(1)                            29.3p                   4.6p       18.1p                12.6p 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Proposed dividends                             7          8.5p                   8.5p           -                    - 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
 
Memo:                                                                            2022                             2021 
                                                                Separately                         Separately 
                                                    Underlying   disclosed             Underlying   disclosed 
                                                         items       items      Total       items       items    Total 
                                                          GBPm        GBPm       GBPm        GBPm        GBPm     GBPm 
EBITDAR(2)                                               480.1      (59.2)      420.9       410.5      (18.1)    392.4 
Rent and associated costs(3)                             (9.1)           -      (9.1)       (9.4)           -    (9.4) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
EBITDA                                                   471.0      (59.2)      411.8       401.1      (18.1)    383.0 
Share based payments                                     (5.2)           -      (5.2)       (6.6)           -    (6.6) 
Depreciation, amortisation and impairment              (113.2)      (53.7)    (166.9)     (109.9)      (98.0)  (207.9) 
Share of results from joint ventures 
 and associates                                        (106.1)           -    (106.1)      (79.0)           -   (79.0) 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
Group operating profit/(loss)                            246.5     (112.9)      133.6       205.6     (116.1)     89.5 
-------------------------------------------  -----  ----------  ----------  ---------  ----------  ----------  ------- 
 

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 8 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.

3. Rent and associated costs include VAT and rent not captured by IFRS 16. These are predominantly driven by held over leases and irrecoverable VAT on rental charges.

The accompanying notes form part of these financial statements.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
                                                        Six months   Six months 
                                                             ended        ended 
                                                           30 June      30 June 
                                                              2022         2021 
                                                              GBPm         GBPm 
 Profit for the period                                        25.0         84.7 
-----------------------------------------------------  -----------  ----------- 
 Other comprehensive income: 
 
  Items that may be reclassified to profit or loss: 
 Currency translation gains/(losses)                         111.0       (88.7) 
----------------------------------------------------- 
 Total items that will be reclassified to profit 
  or loss                                                    111.0       (88.7) 
-----------------------------------------------------  -----------  ----------- 
 
 Items that will not be re-classified to profit 
  or loss: 
 Changes in the fair value of equity instruments             (2.7)            - 
  at fair value through other comprehensive income 
 Re-measurement of defined benefit pension scheme            (0.1)         17.1 
 Tax on re-measurement of defined benefit pension 
  scheme                                                         -        (6.0) 
 Total items that will not be reclassified to 
  profit or loss                                             (2.8)         11.1 
-----------------------------------------------------  -----------  ----------- 
 
 Other comprehensive income/(expense) for the 
  period, net of tax                                         108.2       (77.6) 
-----------------------------------------------------  -----------  ----------- 
 Total comprehensive income for the period                   133.2          7.1 
-----------------------------------------------------  -----------  ----------- 
 
 Attributable to: 
 - equity holders of the parent                              135.2        (3.1) 
 - non-controlling interests                                 (2.0)         10.2 
-----------------------------------------------------  -----------  ----------- 
 

The accompanying notes form part of these financial statements.

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

 
                                                   30 June   31 December     30 June 
                                                      2022          2021        2021 
                                          Note        GBPm          GBPm        GBPm 
---------------------------------------  -----  ----------  ------------  ---------- 
 ASSETS 
 Non-current assets 
 Goodwill                                          3,392.6       3,217.0     3,207.4 
 Intangible assets                                 2,231.6       2,152.5     2,176.9 
 Property, plant and equipment                       486.4         467.2       458.6 
 Interest in joint venture                            14.2           9.7           - 
 Interest in associates and other 
  investments                                         57.1          58.4        54.4 
 Trade and other receivables                           4.2           3.0         4.1 
 Other financial assets                                8.0           0.3         3.6 
 Deferred tax assets                                 161.6         141.4       146.7 
 Retirement benefit assets                            88.2          95.1        81.0 
---------------------------------------  -----  ----------  ------------  ---------- 
                                                   6,443.9       6,144.6     6,132.7 
---------------------------------------  -----  ----------  ------------  ---------- 
 Current assets 
 Trade and other receivables                         429.6         539.8       472.7 
 Income and other taxes recoverable                   34.1          23.1        15.3 
 Derivative financial instruments          14         84.0          57.4        18.9 
 Cash and cash equivalents                           465.5         487.1       396.4 
                                                   1,013.2       1,107.4       903.3 
---------------------------------------  -----  ----------  ------------  ---------- 
 Assets in disposal group classified 
  as held for sale                                       -             -       213.9 
 TOTAL ASSETS                                      7,457.1       7,252.0     7,249.9 
---------------------------------------  -----  ----------  ------------  ---------- 
 LIABILITIES 
 Current liabilities 
 Trade and other payables                          (702.7)       (695.8)     (750.3) 
 Balances with customers                           (194.9)       (205.9)     (205.3) 
 Lease liabilities                                  (62.4)        (78.2)      (84.8) 
 Interest bearing loans and borrowings             (131.8)       (121.1)      (22.9) 
 Corporate tax liabilities                          (52.8)        (59.1)      (84.0) 
 Provisions                                         (42.6)        (43.5)      (36.3) 
 Other financial liabilities               14       (62.4)        (36.1)     (211.7) 
                                                 (1,249.6)     (1,239.7)   (1,395.3) 
---------------------------------------  -----  ----------  ------------  ---------- 
 Non-current liabilities 
 Interest bearing loans and borrowings           (2,271.0)     (2,161.3)   (2,028.3) 
 Lease liabilities                                 (213.9)       (215.5)     (229.1) 
 Deferred tax liabilities                          (407.8)       (408.0)     (365.3) 
 Provisions                                          (5.5)         (6.4)       (9.5) 
 Other financial liabilities               14        (2.8)        (52.6)       (8.5) 
---------------------------------------  -----  ----------  ------------  ---------- 
                                                 (2,901.0)     (2,843.8)   (2,640.7) 
---------------------------------------  -----  ----------  ------------  ---------- 
 Liabilities in disposal group 
  classified as held for sale                            -             -     (173.2) 
---------------------------------------  -----  ----------  ------------  ---------- 
 TOTAL LIABILITIES                               (4,150.6)     (4,083.5)   (4,209.2) 
---------------------------------------  -----  ----------  ------------  ---------- 
 NET ASSETS                                        3,306.5       3,168.5     3,040.7 
---------------------------------------  -----  ----------  ------------  ---------- 
 EQUITY 
 Issued share capital                                  4.8           4.8         4.8 
 Share premium                                     1,207.3       1,207.3     1,207.2 
 Merger reserve                                    2,527.4       2,527.4     2,527.4 
 Translation reserve                                 174.4          63.4       103.0 
 Retained deficit                                  (605.6)       (635.8)     (863.6) 
 Equity shareholder's funds                        3,308.3       3,167.1     2,978.8 
---------------------------------------  -----  ----------  ------------  ---------- 
 Non-controlling interests                           (1.8)           1.4        61.9 
 TOTAL SHAREHOLDERS' EQUITY                        3,306.5       3,168.5     3,040.7 
---------------------------------------  -----  ----------  ------------  ---------- 
 

The accompanying notes form part of these financial statements.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
 
                     Issued                                                       Equity                            Total 
                      share     Share     Merger   Translation   Retained   shareholders   Non-controlling   shareholders 
                    capital   premium    Reserve    reserve(1)    deficit          funds          interest         equity 
                       GBPm      GBPm       GBPm          GBPm       GBPm           GBPm              GBPm           GBPm 
-----------------  --------  --------  ---------  ------------  ---------  -------------  ----------------  ------------- 
 
 At 1 January 
  2021                  4.8   1,206.6    2,527.4         191.7    (901.3)        3,029.2              52.3        3,081.5 
-----------------  --------  --------  ---------  ------------  ---------  -------------  ----------------  ------------- 
 Profit for the 
  period                  -         -          -             -       74.5           74.5              10.2           84.7 
 Other 
  comprehensive 
  expense                 -         -          -        (88.7)       11.1         (77.6)                 -         (77.6) 
-----------------  --------  --------  ---------  ------------  ---------  -------------  ----------------  ------------- 
 Total 
  comprehensive 
  income                  -         -          -        (88.7)       85.6          (3.1)              10.2            7.1 
----------------- 
 Share options 
  exercised               -       0.6          -             -          -            0.6                 -            0.6 
 Share-based 
  payments 
  charge                  -         -          -             -        2.1            2.1                 -            2.1 
 Equity dividends         -         -          -             -          -              -            (14.8)         (14.8) 
 Acquisition of 
  investments             -         -          -             -     (50.0)         (50.0)              14.2         (35.8) 
----------------- 
 At 30 June 2021        4.8   1,207.2    2,527.4         103.0    (863.6)        2,978.8              61.9        3,040.7 
-----------------  --------  --------  ---------  ------------  ---------  -------------  ----------------  ------------- 
 
 At 1 January 
  2022                  4.8   1,207.3    2,527.4          63.4    (635.8)        3,167.1               1.4        3,168.5 
-----------------  --------  --------  ---------  ------------  ---------  -------------  ----------------  ------------- 
 Profit for the 
  period                  -         -          -             -       27.0           27.0             (2.0)           25.0 
 Other 
  comprehensive 
  income                  -         -          -         111.0      (2.8)          108.2                 -          108.2 
-----------------  --------  --------  ---------  ------------  ---------  -------------  ----------------  ------------- 
 Total 
  comprehensive 
  income                  -         -          -         111.0       24.2          135.2             (2.0)          133.2 
 Share options 
 exercised                -                    -             -          -              -                 -              - 
 Share-based 
  payments 
  charge                  -         -          -             -        6.2            6.2                 -            6.2 
 Equity dividends         -         -          -             -          -              -                 -              - 
 Purchase of 
  Non-controlling 
  Interest                -         -          -             -      (0.2)          (0.2)             (1.2)          (1.4) 
 At 30 June 2022        4.8   1,207.3    2,527.4         174.4    (605.6)        3,308.3             (1.8)        3,306.5 
-----------------  --------  --------  ---------  ------------  ---------  -------------  ----------------  ------------- 
 

1. The translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries with non-sterling functional currencies.

The accompanying notes form part of these financial statements.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 
                                                              Six months   Six months 
                                                                   ended        ended 
                                                                 30 June      30 June 
                                                                    2022         2021 
                                                      Notes         GBPm         GBPm 
---------------------------------------------------  ------  -----------  ----------- 
 
 Cash generated by operations                          12          470.9        337.9 
 Income taxes paid                                                (40.6)       (41.4) 
 Net finance expense paid                                         (32.5)       (29.6) 
---------------------------------------------------  ------ 
 Net cash generated from operating activities                      397.8        266.9 
 
 Cash flows from investing activities: 
 Acquisitions                                                    (195.7)      (403.0) 
 Cash acquired on acquisition of business                           16.2         22.3 
 Purchase of intangible assets                                    (56.5)       (46.0) 
 Purchase of property, plant and equipment                        (47.4)       (25.6) 
 Investment in joint venture                                     (113.1)       (72.6) 
 Net cash used in investing activities                           (396.5)      (524.9) 
---------------------------------------------------  ------  -----------  ----------- 
 
 Cash flows from financing activities: 
 Proceeds from issue of ordinary shares                                -          0.6 
 Settlement of financial instruments and other 
  financial liabilities                                           (19.9)        (1.6) 
 Lease payments                                                   (48.6)       (44.0) 
 Net repayment of borrowings and settlement 
  of derivatives (1)                                                34.3       (21.9) 
 Dividends paid to non-controlling interests                           -       (14.8) 
---------------------------------------------------  ------  -----------  ----------- 
 Net cash utilised from financing activities                      (34.2)       (81.7) 
---------------------------------------------------  ------  -----------  ----------- 
 
 Net decrease in cash and cash equivalents                        (32.9)      (339.7) 
 Effect of changes in foreign exchange rates                        11.3         18.1 
 Cash and cash equivalents at beginning of the 
  period                                                           487.1        749.8 
 Cash and cash equivalents at end of the period(2)                 465.5        428.2 
---------------------------------------------------  ------  -----------  ----------- 
 

1. Net repayment of borrowings includes GBP38.6m of cash received in relation to the settlement of derivative financial instruments (2021: cash paid GBP19.1m)

2. Cash and cash equivalents at the end of the period includes GBPnil (31 December 2021 GBPnil, 30 June 2021, GBP31.8m) of cash within assets in disposal group classified as held for sale.

The accompanying notes form part of these financial statements.

1. Corporate information

Entain plc ("the Company") is a public limited company incorporated and domiciled in the Isle of Man whose shares are publicly traded. The principal activities of the Company and its subsidiaries ("the Group") are described in Note 3.

2. Basis of preparation

(a) In adopting the going concern basis of preparation in the interim financial statements, the directors have considered the current trading performance of the Group, the principal risks and uncertainties as considered in the 2021 year and longer term viability statement and the current macro-economic environment. The assessment performed over going concern included assessing the impact of the crystallisation of the Group's principal risks in "severe but plausible" downside scenarios as well as downside sensitivities for the broader macro-economic environment.

At 30 June 2022, the Group had accessible cash of cGBP0.4bn with a further cGBP0.5bn available under the Group's RCF. Given the level of the Group's current financing facilities, the first material tranche of which does not mature until H2 2023, and the forecast covenant headroom even under the sensitised downside scenarios, the directors believe the Group is well placed to manage the risks and uncertainties it faces. As such, the directors have a reasonable expectation that the Group will have adequate financial resources to continue in operational existence and have, therefore, considered it appropriate to adopt the going concern basis of preparation in the interim financial statements.

(b) The Group's annual financial statements for the year ended 31 December 2021 were prepared in accordance with International Financial Reporting Standards ("IFRS") adopted pursuant to regulation (EC) No 1606/2002 as it applies in the European Union. The interim condensed consolidated financial statements for the six months ended 30 June 2022 have been prepared in accordance with IAS 34 Interim Financial Reporting adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the interim condensed consolidated financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 December 2021.

The financial statements are presented in million Pounds Sterling, rounded to one decimal place. They are prepared on the historical cost basis except for the revaluation to fair value of certain financial instruments. Non-current assets and disposal groups held for sale are stated at the lower of previous carrying amounts and fair value less costs to sell.

The accounting policies adopted in the preparation of the interim financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2021 other than those listed in 2(f).

The interim financial information was approved by a duly appointed and authorised committee of the Board of Directors on 11 August 2022 and is unaudited.

The financial information does not amount to full statutory accounts within the meaning of the Isle of Man Companies Act 2006 and does not include all of the information and disclosures required for full annual financial statements. It should be read in conjunction with the Annual Report and Accounts of Entain plc for the year ended 31 December 2021 which was prepared in accordance with IFRS as adopted by the European Union and was filed with the Registrar of Companies in the Isle of Man. This report is available either on request from the Company's registered office or to download from https://entaingroup.com/investor-relations/financial-reports/ . The auditor's report on these accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under the Isle of Man Companies Act 2006.

The condensed interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority and with International Accounting Standard 34 'Interim Financial Reporting'. It should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2021, which were prepared in accordance with applicable law and International Financial Reporting Standards.

   (c)     Critical judgements and estimates 

In preparing these Condensed Consolidated Interim Financial Statements, the Group has made its best estimates and judgements of certain amounts included in the financial statements, giving due consideration to materiality. The Group regularly reviews these estimates and updates them as required.

The existing critical accounting estimates, assumptions and judgements set out in note 4.2 of the Group's Annual Report and Accounts for the 12 months ended 31 December 2021 remain relevant to these Condensed Consolidated Interim Financial Statements.

(d) To assist in understanding the underlying performance, the Group has separately disclosed the following items of pre-tax income and expense:

- 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; 
   -        costs associated with business restructuring; 
   -        corporate transaction costs; 
   -        changes in the fair value of contingent consideration; 
   -        the impact of significant tax legislation; and 
   -        the related tax impact effect on these items. 
   -        any other items are considered individually 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 items disclosed separately have been included within the appropriate classifications in the consolidated income statement and are detailed in note 4. The directors have also presented Net Gaming Revenue, Contribution, Underlying EBITDAR and Underlying EBITDA as these are measures used frequently within the industry. All of these items are reconciled within the Income Statement.

   (e)   Accounting policies 

Depreciation

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.

The estimated useful lives are as follows:

 
 Land and buildings                 Lower of 50 years, or estimated useful 
                                     life of the building, or lease. Indefinite 
                                     lives are attached to any land held 
                                     and therefore it is not depreciated 
 Plant and equipment                3 - 5 years 
 Fixtures, fittings and equipment   3 -10 years 
---------------------------------  -------------------------------------------- 
 

Amortisation

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets, unless such lives are indefinite. All indefinite lived assets are subject to an annual impairment review from the year of acquisition. Other intangible assets are amortised from the date they are available for use.

The estimated useful lives are as follows:

 
 Retail licences                       Lower of 15 years, or duration of 
                                        licence 
 Software                              2 -15 years 
 Capitalised development expenditure   3 - 5 years 
 Trademarks and brand names            10 -15 years, or indefinite life 
 Customer relationships                3 -15 years 
------------------------------------  ---------------------------------- 
 

Impairment

An impairment review is performed for goodwill and 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 cashflow and profit projections as well as industry observed multiples and publicly observed share prices for similar gambling companies.

Within Retail the cash generating units are generally an individual Licensed Betting Office ("LBO") and therefore, impairment is first assessed at this level for licences, property, plant and equipment and right of use ("ROU") assets, any impairment arising booked first to licences then to property, plant and equipment and ROU assets.

Separately Disclosed Items

For a full explanation of what is defined as a separately disclosed item and how they are disclosed, please refer to note 2(d).

   (f)    Updates to IFRS 

A number of amendments to IFRSs became effective for the financial year beginning 1 January 2022:

 
 IFRS   'Business Combinations'               Amendments updating a reference    1 January 
  3                                            to the Conceptual Framework            2022 
 IFRS   'Financial Instruments'               Amendments resulting from          1 January 
  9                                            Annual Improvements to                 2022 
                                               IFRS standards 2018-2020 
       ------------------------------------  ---------------------------------  ---------- 
 IAS    'Property, Plant and Equipment'       Amendments prohibiting             1 January 
  16                                           a company from deducting               2022 
                                               from the cost of property, 
                                               plant and equipment amounts 
                                               received from selling items 
                                               produced while the company 
                                               is preparing the asset 
                                               for its intended use. 
       ------------------------------------  ---------------------------------  ---------- 
 IAS    'Provisions, Contingent Liabilities   Amendments regarding the           1 January 
  37     and Contingent Assets'                costs to include when assessing        2022 
                                               whether a contract is onerous. 
       ------------------------------------  ---------------------------------  ---------- 
 

None of the amendments to IFRS noted above had a significant effect on the financial statements.

3. Segment information

The Group's operating segments are based on the reports reviewed by the Executive management team (who are 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.

- 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, Optibet and Ninja;

- Retail: comprises betting and retail activities in the shop estate in Great Britain, Northern Ireland, Jersey, Republic of Ireland, Belgium and Italy;

   -       New opportunities: Unikrn and innovation spend; 

- Corporate: includes costs associated with Group functions including Group executive, legal, Group finance, US joint venture, tax and treasury; and

- Other segments: includes activities primarily related to telephone betting, Stadia, Betdaq, and on course pitches.

The Executive management team of the Group have 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. Transfer prices between operating segments are on an arm's-length basis in a manner similar to transactions with third parties.

The segment results for the six months ended 30 June 2022 were as follows:

 
2022                                                                                         Elimination 
                                                   All Other                                 of internal    Total 
                                  Online   Retail   Segments  New Opportunities  Corporate       revenue    Group 
                                    GBPm     GBPm       GBPm               GBPm       GBPm          GBPm     GBPm 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
NGR                              1,470.7    636.0       13.1                  -          -         (2.2)  2,117.6 
VAT/GST                           (22.7)        -          -                  -          -             -   (22.7) 
Revenue                          1,448.0    636.0       13.1                  -          -         (2.2)  2,094.9 
Gross Profit                       886.1    428.6       13.1                  -          -             -  1,327.8 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Contribution                       587.3    425.1       13.1                  -          -             -  1,025.5 
Operating costs excluding 
 marketing/rental costs          (201.9)  (275.8)     (10.1)             (14.6)     (43.0)             -  (545.4) 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Underlying EBITDAR before 
 separately disclosed items        385.4    149.3        3.0             (14.6)     (43.0)             -    480.1 
Rental costs                       (0.7)    (8.2)          -                  -      (0.2)             -    (9.1) 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Underlying EBITDA before 
 separately disclosed items        384.7    141.1        3.0             (14.6)     (43.2)             -    471.0 
Share based payments               (1.3)    (0.5)          -              (0.1)      (3.3)             -    (5.2) 
Depreciation and Amortisation     (57.2)   (53.0)      (1.3)              (1.6)      (0.1)             -  (113.2) 
Share of joint ventures and 
 associates                          1.8        -        0.7                  -    (108.6)             -  (106.1) 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Operating profit/(loss) before 
 separately disclosed items        328.0     87.6        2.4             (16.3)    (155.2)             -    246.5 
Separately disclosed items        (50.5)   (50.1)          -                  -     (12.3)             -  (112.9) 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Group operating profit/(loss)      277.5     37.5        2.4             (16.3)    (167.5)             -    133.6 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Net finance expense                                                                                        (94.1) 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Profit before tax                                                                                            39.5 
Income tax                                                                                                 (11.4) 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Profit for the period from 
 continuing operations                                                                                       28.1 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Loss for the period from 
 discontinued operations after 
 tax                                                                                                        (3.1) 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
Profit for the period after 
 discontinued operations                                                                                     25.0 
-------------------------------  -------  -------  ---------  -----------------  ---------  ------------  ------- 
 

The segment results for the six months ended 30 June 2021 were as follows:

 
2021                                                                                  Elimination 
                                                               All Other              of internal    Total 
                                              Online   Retail   Segments  Corporate       revenue    Group 
                                                GBPm     GBPm       GBPm       GBPm          GBPm     GBPm 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
NGR                                          1,587.6    191.3       15.5          -         (1.8)  1,792.6 
VAT/GST                                       (25.6)        -          -          -             -   (25.6) 
Revenue                                      1,562.0    191.3       15.5          -         (1.8)  1,767.0 
Gross Profit                                   989.1    134.2       13.0          -             -  1,136.3 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Contribution                                   683.8    131.3       12.7          -             -    827.8 
Operating costs excluding marketing/rental 
 costs                                       (187.1)  (185.7)     (10.3)     (34.2)             -  (417.3) 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Underlying EBITDAR before separately 
 disclosed items                               496.7   (54.4)        2.4     (34.2)             -    410.5 
Rental costs                                   (0.8)    (8.3)      (0.1)      (0.2)             -    (9.4) 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Underlying EBITDA before separately 
 disclosed items                               495.9   (62.7)        2.3     (34.4)             -    401.1 
Share based payments                           (3.5)    (1.3)          -      (1.8)             -    (6.6) 
Depreciation and Amortisation                 (56.9)   (51.1)      (1.7)      (0.2)             -  (109.9) 
Share of joint ventures and associates             -        -      (0.8)     (78.2)             -   (79.0) 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Operating profit/(loss) before 
 separately disclosed items                    435.5  (115.1)      (0.2)    (114.6)             -    205.6 
Separately disclosed items                    (92.6)    (5.6)      (1.7)     (16.2)             -  (116.1) 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Group operating profit/(loss)                  342.9  (120.7)      (1.9)    (130.8)             -     89.5 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Net finance income                                                                                    41.1 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Profit before tax                                                                                    130.6 
Income tax                                                                                          (39.7) 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Profit for the period from continuing 
 operations                                                                                           90.9 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Loss for the period from discontinued 
 operations after tax                                                                                (6.2) 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
Profit for the period after 
 discontinued operations                                                                              84.7 
-------------------------------------------  -------  -------  ---------  ---------  ------------  ------- 
 

There were no revenue or costs relating to the New Opportunities segment in H1 2021.

Assets and liabilities information is reported internally in total and not by reportable segment and, accordingly, no information is provided in this note on assets and liabilities split by reportable segment.

Geographical information

 
Revenue by destination for the Group, is 
 as follows: 
 
                                           Six months ended  Six months ended 
                                               30 June 2022      30 June 2021 
                                                       GBPm              GBPm 
-----------------------------------------  ----------------  ---------------- 
  United Kingdom                                    1,028.9             775.1 
  Australia                                           213.7             179.0 
  Italy                                               225.3             178.4 
  Rest of Europe (1)                                  456.4             513.5 
  Rest of the World (2)                               170.6             121.0 
-----------------------------------------  ----------------  ---------------- 
  Total                                             2,094.9           1,767.0 
-----------------------------------------  ----------------  ---------------- 
 
   1.     Rest of Europe is predominantly driven by markets in Germany, Belgium and Georgia. 
   2.     Rest of the World is predominantly driven by the market in Brazil. 

4. Separately disclosed items

 
                                                          Six months     Six months 
                                                               ended          ended 
                                                        30 June 2022   30 June 2021 
                                                                GBPm           GBPm 
 Amortisation of acquired intangibles(1)                        51.5           94.7 
 Furlough(2)                                                    45.5              - 
 Impairment loss /loss on disposal(3)                            3.5            3.3 
 Restructuring costs(4)                                          4.5              - 
 Corporate transaction costs(5)                                 12.5            3.4 
 Legal and onerous contract provisions(6)                        4.7            6.2 
 Movement in fair value of contingent consideration 
  (7)                                                          (9.3)            0.2 
 Integration costs(8)                                              -           10.1 
 Tax litigation/ one-off legislative impacts(9)                    -          (2.5) 
 Other one-off items                                               -            0.7 
 Total before tax                                              112.9          116.1 
 Tax on separately disclosed items(10)                        (19.3)         (10.3) 
-----------------------------------------------------  -------------  ------------- 
 Separately disclosed items for the period 
  from continuing operations                                    93.6          105.8 
 Separately disclosed items for the period 
  from discontinued operations                                   3.1            3.7 
-----------------------------------------------------  -------------  ------------- 
 Separately disclosed items for the period 
  after discontinued operations                                 96.7          109.5 
-----------------------------------------------------  -------------  ------------- 
 

1. Amortisation charges in relation to acquired intangible assets primarily arising from the acquisitions of Ladbrokes Coral Group plc, Crystalbet, Enlabs, Bet.pt, Avid, Klondaika, and Totolotek.

(2.) Repayment of certain amounts received by the Group under the Government Coronavirus Job Retention Scheme ("Furlough Scheme").

(3.) During the period the Group recognised a non-cash impairment charge of GBP2.2m against closed shops and offices, and GBP1.3m loss on sale of certain assets.

(4.) Costs associated with the Group's restructuring program Evolve.

(5.) Deal fees associated with M&A activity in the period.

(6.) Relates primarily to costs associated with certain litigation and legal claims.

(7.) Income reflecting a change in the estimated likely payments under contingent consideration arrangements.

(8.) Costs associated with the integration of Ladbrokes Coral Group plc and GVC businesses, including redundancy costs.

(9.) Relates primarily to the additional amounts received in the prior year in relation to the Ladbrokes VAT claim.

(10.) The tax credit on separately disclosed items of GBP19.3m (2021: GBP10.3m credit) represents 17.0% (2021: 8.9%) of the separately disclosed items incurred of GBP112.9m (2021: GBP116.1m). This is lower than the expected tax credit at 19.0% (2021: 19.0%) due to certain corporate transaction costs that are not deductible for tax purposes and lower average overseas tax rates.

Included within discontinued operations are separately disclosed costs associated with the now disposed business, Intertrader.

5. Finance expense and income

 
                                              Six months     Six months 
                                                   ended          ended 
                                            30 June 2022   30 June 2021 
                                                    GBPm           GBPm 
----------------------------------------   -------------  ------------- 
 Bank loans and overdrafts                        (33.9)         (30.2) 
 Interest arising on lease liabilities             (6.3)          (6.6) 
 Losses arising on foreign exchange on 
  debt instruments                               (118.5)              - 
----------------------------------------   -------------  ------------- 
 Total finance expense                           (158.7)         (36.8) 
-----------------------------------------  -------------  ------------- 
 
 Interest receivable                                 1.1            0.8 
 Gains arising on financial derivatives             63.5           24.3 
 Gains arising on foreign exchange on 
  debt instruments                                     -           52.8 
 Net finance (expense)/income                     (94.1)           41.1 
-----------------------------------------  -------------  ------------- 
 

6. Taxation

The tax charge on continuing operations for the six months ended 30 June 2022 was GBP11.4m (30 June 2021: charge of GBP39.7m) of which a credit of GBP19.3m (30 June 2021: credit of GBP10.3m) related to separately disclosed items. The effective tax rate on continuing operations (before the effect of JV losses and foreign exchange) before separately disclosed items was 11.4% (six months ended 30 June 2021: 20.2%).

The current period's tax charge on continuing operations before separately disclosed items was higher than the UK statutory rate of 19% due to deferred tax assets on losses arising in BetMGM not being recognised in the period, partially offset by the effects of Gibraltar's temporary enhanced marketing deduction.

In the Gibraltar Budget on 20 July 2021, the Chief Minister announced a temporary enhanced tax deduction for qualifying business marketing and promotion costs, which would apply for the year ending 31 December 2021 and 31 December 2022. This was substantively enacted on 30 July 2021 and is reflected in the tax charge for the six months to 30 June 2022.

However, in the subsequent Gibraltar Budget on 28 June 2022, the Chief Minister unexpectedly announced the retrospective removal of this enhanced deduction, except in very limited circumstances. This had not been substantively enacted by the balance sheet date and so is not reflected in the tax charge for the six months to 30 June 2022.

As a result, the effective tax rate on continuing operations for the full year ended 31 December 2022 reflecting the withdrawal of the enhanced marketing deduction, but excluding the impact of foreign exchange and BetMGM losses, is forecast to be 18%.

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.

7. Dividends

An interim dividend of 8.5p per share (30 June 2021: GBPnil) has been proposed by the directors.

8. Earnings per share

Basic earnings per share has been calculated by dividing the profit attributable to shareholders of the Company of GBP27.0m (30 June 2021: profit of GBP74.5m) by the weighted average number of shares in issue during the six months of 587.5m (30 June 2021: 585.4m).

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 2 and disclosed in note 4.

 
                                                     Six months      Six months 
                                                          ended           ended 
 Weighted average number of shares (million):      30 June 2022    30 June 2021 
 Shares for basic earnings per share                      587.5           585.4 
 Potentially dilutive share options and 
  contingently issuable shares                              4.3             6.4 
-----------------------------------------------  --------------  -------------- 
 Shares for diluted earnings per share                    591.8           591.8 
-----------------------------------------------  --------------  -------------- 
 
 
                                                     Six months      Six months 
                                                          ended           ended 
                                                   30 June 2022    30 June 2021 
                                                           GBPm            GBPm 
----------------------------------------------   --------------  -------------- 
 Profit attributable to shareholders                       27.0            74.5 
-----------------------------------------------  --------------  -------------- 
 - from continuing operations                              30.1            80.7 
 - from discontinued operations                           (3.1)           (6.2) 
-----------------------------------------------  --------------  -------------- 
 Gains arising from financial instruments                (63.5)          (24.3) 
 Losses/(gains) arising from foreign exchange 
  of debt instruments                                     118.5          (52.8) 
 Tax credit on foreign exchange                           (5.4)               - 
 Separately disclosed items net of tax (note 
  4)                                                       96.7           109.5 
-----------------------------------------------  --------------  -------------- 
 Adjusted profit attributable to shareholders             173.3           106.9 
-----------------------------------------------  --------------  -------------- 
 - from continuing operations                             173.3           109.4 
 - from discontinued operations                               -           (2.5) 
-----------------------------------------------  --------------  -------------- 
 
 
                                      Standard earnings     Adjusted earnings 
                                              per share             per share 
                                             Six months            Six months 
                                                  ended                 ended 
                                                30 June               30 June 
 Stated in pence                        2022       2021         2022     2021 
---------------------------------  ---------  ---------  -----------  ------- 
 Basic earnings per share 
 - from continuing operations            5.1       13.8         29.5     18.7 
 - from discontinued operations        (0.5)      (1.1)            -    (0.4) 
---------------------------------  ---------  ---------  -----------  ------- 
 From profit for the period              4.6       12.7         29.5     18.3 
---------------------------------  ---------  ---------  -----------  ------- 
 Diluted earnings per share 
 - from continuing operations            5.1       13.7         29.3     18.5 
 - from discontinued operations        (0.5)      (1.1)            -    (0.4) 
---------------------------------  ---------  ---------  -----------  ------- 
 From profit for the period              4.6       12.6         29.3     18.1 
---------------------------------  ---------  ---------  -----------  ------- 
 

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 48.0p (2021: 32.0p) and a diluted adjusted earnings per share of 47.6p (2021: 31.7p) from continuing operations.

9. Impairment

IAS 36 Impairment of Assets states that an impairment review must be carried out at least annually for any indefinite lived assets, such as goodwill and certain brands. Furthermore, it is necessary to assess whether there is any indication that any other asset, or cash generating unit (CGU), may be impaired at each reporting date. Should there be an indication that an asset may be impaired then an impairment review should be conducted at the relevant reporting date.

No current indicators which might lead to a material impairment have been identified by the directors.

10. Net debt

The components of the Group's net debt are as follows:

 
                                                     30 June  31 December    30 June 
                                                        2022         2021       2021 
                                                        GBPm         GBPm       GBPm 
 Current assets 
  Cash and short-term deposits                         465.5        487.1      428.2 
  Current liabilities 
  Interest bearing loans and borrowings              (131.8)      (121.1)     (22.9) 
  Non-current liabilities 
  Interest bearing loans and borrowings            (2,271.0)    (2,161.3)  (2,028.3) 
-------------------------------------------------  ---------  -----------  --------- 
  Accounting net debt                              (1,937.3)    (1,795.3)  (1,623.0) 
 
  Cash held on behalf of customers                   (194.9)      (205.9)    (360.9) 
  Fair value swaps held against debt instruments        84.0         57.4       18.9 
  Deposits                                              20.7         20.3      193.7 
  Balances held with payment service providers          94.2        130.8      133.9 
  Adjusted net debt                                (1,933.3)    (1,792.7)  (1,637.4) 
-------------------------------------------------  ---------  -----------  --------- 
 
  Lease liabilities                                  (276.3)      (293.7)    (313.9) 
  Net debt including lease liabilities             (2,209.6)    (2,086.4)  (1,951.3) 
-------------------------------------------------  ---------  -----------  --------- 
 

Cash and short-term deposits include GBPnil (31 December 2021: GBPnil, 30 June 2021 GBP31.8m) classified as held for sale.

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 GBPnil (31 December 2021: GBPnil, 30 June 2021: GBP155.6m) classified as held for sale.

Deposits represent balances with brokers in relation to trading accounts held by the Group. Included within this balance is GBPnil (31 December 2021: GBPnil, 30 June 2021: GBP177.9m) classified as held for sale.

11. Business combinations

Business combinations are accounted for using the acquisition method. Identifiable assets and liabilities acquired, and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date. The identification and valuation of intangible assets arising on business combinations is subject to a degree of judgement. We engaged independent third parties, including Kroll to assist with the identification and valuation process. This was performed in accordance with the Group's policies. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable assets acquired is recorded as goodwill. Costs related to the acquisition are expensed as incurred. Summary of acquisitions:

Avid

On 7 February, the Group acquired 100% of the share capital of Avid International Ltd. Avid owns Sports Interaction, a leading online sports betting brand in Canada, which provides the Group with access to Canada's highly attractive and fast growing sports betting and gaming market. In accordance with IFRS 3, as control has been obtained, the business has been consolidated from the point of acquisition. Consideration amounted to EUR211.3m.

Klondaika

On 31 January, the Group acquired 100% of the share capital of Klondaika Ltd, a largely online betting and gaming operator in Latvia. In accordance with IFRS 3, as control has been obtained, the business has been consolidated from this point forward. Consideration amounted to EUR24.6m.

Totolotek

On 16 May, the Group acquired 100% of Totolotek S.A., an online sports betting operator in Poland. In accordance with IFRS 3, as control has been obtained, the business has been consolidated from this point forward. Consideration amounted to EUR6.1m.

We continue to finalise the fair values of acquired intangibles and goodwill attributed to acquisitions and therefore, the values disclosed in the table below are provisional. Details of the purchase consideration, the net assets acquired and goodwill of all acquisitions in the period are as follows:

 
                                           Provisional 
                                            fair value 
                                                  GBPm 
----------------------------------------  ------------ 
 Intangible assets (excluding goodwill)           94.6 
 Property, plant and equipment                     8.0 
 Trade and other receivables                       9.5 
 Cash and cash equivalents                        16.2 
 Deferred tax liability                          (1.7) 
 Trade and other payables                       (24.3) 
----------------------------------------  ------------ 
 Total                                           102.3 
----------------------------------------  ------------ 
 
 Net assets acquired                             102.3 
 Goodwill                                         99.1 
----------------------------------------  ------------ 
 Total net assets acquired                       201.4 
----------------------------------------  ------------ 
 
 Consideration: 
 Cash                                            194.4 
 Non-controlling interests                           - 
 Deferred consideration                            7.0 
----------------------------------------  ------------ 
 Total consideration                             201.4 
----------------------------------------  ------------ 
 

The acquired businesses contributed revenues of GBP24.7m and profit before tax of GBP4.3m pre the effect of any fair value adjustments to the Group for the period post acquisition up to 30 June 2022. If the acquisitions had occurred on 1 January 2022, consolidated proforma revenue and net profit for the period ended 30 June 2022 would have been GBP2,125.9m and GBP42.9m respectively before the effect of fair value adjustments and deal related costs.

12. Note to the statement of cash flows

 
                                                           Six months   Six months 
                                                                ended        ended 
                                                              30 June      30 June 
                                                                 2022         2021 
                                                                 GBPm         GBPm 
--------------------------------------------------------  -----------  ----------- 
  Profit before tax from continuing operations                   39.5        130.6 
  Net finance expense/(income)                                   94.1       (41.1) 
--------------------------------------------------------  -----------  ----------- 
  Profit before tax and finance expense from continuing 
   operations                                                   133.6         89.5 
  Loss before tax and net finance expense from 
   discontinued operations                                      (3.1)        (6.2) 
--------------------------------------------------------  -----------  ----------- 
  Profit before tax and net finance expense including 
   discontinued operations                                      130.5         83.3 
--------------------------------------------------------  -----------  ----------- 
 Adjustments for: 
 Impairment                                                       2.2          3.3 
 Depreciation of property, plant and equipment                   60.2         58.0 
 Amortisation of intangible assets                              104.5        146.6 
  Share-based payments charge                                     5.2          6.6 
  Increase in trade and other receivables                       108.0       (20.8) 
  Increase in trade and other payables                         (35.4)          4.6 
 Increase in other financial liabilities                        (7.8)          2.1 
 Decrease in provisions                                         (1.1)       (22.7) 
  Share of results from joint ventures and associates           106.1         79.0 
  Other non-cash items                                          (1.5)        (2.1) 
 Cash generated by operations                                   470.9        337.9 
--------------------------------------------------------  -----------  ----------- 
 

13. Related party transactions

During the period, Group companies entered into the following transactions with related parties who are not members of the Group:

 
                        Six months   Six months 
                             ended        ended 
                           30 June      30 June 
                              2022         2021 
                              GBPm         GBPm 
---------------------  -----------  ----------- 
 
 Equity investment 
 - Joint venture (1)         113.1         72.6 
 Sundry expenditures 
  - Associates (2)             1.8         17.4 
---------------------  -----------  ----------- 
 
   1.     Equity investment in BetMGM. 

2. Payments in the normal course of business made to Sports Information Services (Holdings) Limited, Infiniti Gaming Knokke NV, Grand Casino de Dinant SA, and Leaderbet NV.

The following table provides related party outstanding balances:

 
                               30 June   31 December   30 June 
                                  2022          2021      2021 
                                  GBPm          GBPm      GBPm 
----------------------------  --------  ------------  -------- 
 Other payables outstanding 
 - Associates                    (0.3)         (0.1)     (9.3) 
----------------------------  --------  ------------  -------- 
 

14. Financial instruments

Details of the Group's borrowing are set out in note 10.

Fair value of financial instruments

The major component of the Group's derivative financial assets measured at fair value consist of currency swaps held against debt instruments of GBP84.0m (30 June 2021: GBP18.9m, 31 December 2021: GBP57.4m). The fair value of the Group's other financial assets at 30 June 2022 is not materially different to its original cost.

The major components of the Group's financial liabilities measured at fair value consist of; deferred and contingent consideration GBP45.2m (30 June 2021: GBP201.7m, 31 December 2021: GBP70.8m), currency swaps held against debt instruments of GBPnil (30 June 2021: GBPnil, 31 December 2021: GBPnil), and ante post liabilities GBP17.1m (30 June 2020: GBP15.6m, 31 December 2021: GBP15.3m).

Financial assets and financial liabilities measured at fair value in the Statement of Financial Position are grouped into three levels of a fair value hierarchy. The three levels are defined on the observability of significant inputs to the measurement, as follows:

   --      Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; 

-- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

   --      Level 3: inputs for the asset or liability that are not based on observable market data. 

There are no reasonably probable changes to assumptions or input that would lead to material changes in the fair value determined, although the final value will be determined by future sporting results.

The Group's financial assets and liabilities that are measured at fair value after initial recognition fall under the 3 levels of the fair value hierarchy as follows:

-- Level 1 - GBP0.4m assets (30 June 2021: GBP2m, 31 December 2021: GBPnil), and GBPnil liabilities (30 June 2021: GBPnil, 31 December 2021: GBPnil).

-- Level 2 - GBP86.2m assets (30 June 2021: GBP21.9m, 31 December 2021: GBP59.6m), and GBPnil liabilities (30 June 2021: GBPnil, 31 December 2021:GBPnil).

-- Level 3 - GBP9.6m assets (30 June 2021: GBP5.1m, 31 December 2021: GBP10m), and GBP65.2m liabilities (30 June 2021: GBP217.3m, 31 December 2021: GBP86.1m).

There have been no transfers of assets or liabilities recorded at fair value between the levels of the fair value hierarchy.

15. Contingent liabilities

Greek tax

In November 2021, The Athens Administrative Court of Appeal ruled in favour of the Group on the 2010/11 Greek Tax Assessment, a ruling which has subsequently been appealed by the Greek authorities. During the first half, the Group has received a EUR192.6m refund in relation to the claim as a result of the ruling. In addition, the Group also has a receivable of EUR34.9m, which reflects interest due in relation to this matter.

Whilst the Group expects to be successful in defending the appeal by the Greek authorities, should the Greek Supreme Administrative Court rule in favour of the Greek tax authorities, then the Group may become liable for the full 2010/11 Assessment plus interest. Whilst the outcome of the appeal hearing, which is not expected until 2024, remains uncertain, the Group remains confident that the Supreme Court will also find in favour of the Group.

HMRC investigation

On 28 November 2019, one of our UK subsidiaries, Entain 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, which are ongoing.

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 and continue to arise throughout 2022. 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.

16. Subsequent events

On 14 June 2022, Entain plc announced its agreement to acquire one of the Netherland's leading online sports betting and gaming operators, BetCity, which provides the Group with access to the regulated Dutch markets. On completion, the Group will pay EUR300m of initial consideration with further contingent payments payable in 2023 and 2024 subject to the performance of the acquired business. The total amount payable is capped at EUR850m. The deal is expected to complete in the second half of the year.

On 11 August 2022, the Group announced the formation of Entain CEE to drive expansion into Central and Eastern Europe, with the Entain Group holding 75% of the economic rights of Entain CEE. In addition, Entain CEE announces the acquisition of SuperSport, the leading gaming and sportsbook operator in Croatia for initial consideration of EUR800m with a contingent payment of EUR120m expected in 2023 based on the 2022 performance of SuperSport. Of the initial consideration, Entain Plc will pay EUR600m (75% share) with a further EUR90m potentially payable under the contingent payment in 2023 (75% share). The acquisition of SuperSport is expected to complete in the second half of the year.

INDEPENDENT REVIEW REPORT TO ENTAIN PLC

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 which comprises condensed consolidated income statements, condensed consolidated statements of comprehensive income, condensed consolidated balance sheet, condensed consolidated statements of changes in equity, condensed consolidated statement of cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of conclusion section of this report, nothing has come to our attention that causes us to believe that the directors have inappropriately adopted the going concern basis of accounting, or that the directors have identified material uncertainties relating to going concern that have not been appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern, and the above conclusions are not a guarantee that the group will continue in operation.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 2, the annual financial statements of the group are 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 are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

In preparing the condensed set of financial statements, the directors are responsible for assessing the group'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 the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion section of this report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report 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 for our review work, for this report, or for the conclusions we have reached.

Mark Flanagan

for and on behalf of KPMG LLP

Chartered Accountants

St Nicholas House

31 Park Row

Nottingham

NG1 6FQ

11 August 2022

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