Entain Plc has swung back into the black with the group’s expansion into regulated markets along with its pivot towards online betting offsetting the impact that COVID-19 has had retail operations.
Publishing its full-year results for the period January – December 2020, Entain declared revenues of £3.56 billion, a ‘flat’ change from the £3.57 billion recorded in 2019.
Underlying EBITDA rose 11% from £761.4 million to £843.1 million, which has largely been attributed to a growth in the operator group’s online division.
Meanwhile, group profit after tax amounted to £113.8 million – a significant increase on the £131.2 million loss declared in 2019.
Entain lauded the performance of its online brands, as the business ‘delivered an exceptionally strong performance in 2020 as it responded to the challenges presented by Covid-19’.
Revenues for Entain’s online portfolio saw a 27% growth from £2.1 billion up to £2.68 billion, while underlying EBITDA increased by 50% to £803.5 million.
Sports NGR was up 24% with a 5% growth in the volume of sports wagers placed. This, explained Entain, was due to ‘favourable results, product and geographic mix and increases in retail style betting’.
NGR for the company’s online gaming division saw a 29% increase when compared to 2019, with a ‘particularly strong’ performance during Q2 due to government-mandated lockdowns and cancellation of live sport.
Jette Nygaard-Andersen, newly appointed CEO of Entain, commented: “Having spent more than two decades working with digital companies using technology to transform and disrupt industries, I am hugely excited about the future prospects for Entain. We are a digital entertainment company with a clear strategic focus on growth and sustainability.
“As such, we have a fantastic platform from which to use our proprietary technology to expand into new markets and reach new audiences around the world.”
“Today’s results demonstrate the extraordinary resilience and professionalism of our people, as well as the importance of having a truly diversified business model that is not overly reliant on any one product, brand, territory, or channel.”
However, despite the success of its online brands, the impact of COVID-19 on Entain’s retail activities can be seen in the £1.7 billion net debt reported at the conclusion of the year.
As is expected, Entain’s retail estate bore the brunt of the global pandemic due to the forced closure of shops across core markets.
Total retail revenues took a 40% hit during 2020, falling from £1.4 billion down to £857.1 million. UK Retail NGR amounted to £678.6m – 40% behind last year and 36% behind on a like-for-like basis – which the operator explained is a reflection of ‘a year significantly impacted by Covid-19’.
Coronavirus impacts were also reflected in the full year retail EBITDA of £98.3 million – a 64% drop on 2019’s £274.3 million.
The Triennial Review also appeared to have long-lasting effects on Entain, with 388 shops closed during the ‘resizing’ of its retail estate. As a result, there are now a total of 2,845 shops in the estate compared with 3233 in 2019.
Entain’s European retail estate took a similar hit to that of the UK. “Similar to the UK, performance during 2020 has been significantly impacted by temporary shop closures across our estates in Italy, Belgium and the Republic of Ireland,” it said. “Whilst it has been a challenging year for all of our retail businesses, underlying trading has been positive whilst shops were open.”
However, international markets have become a key focus for Entain. Reporting ‘strong momentum’ in its full year reports, the firm credits its successful performance to international expansion, particularly in the Australian, Brazilian, Georgian and Italian market sectors.
Although the firm’s retail operations suffered as a consequence of COVID-19 lockdowns, Entain continues to expand into regulated online markets with the introduction of bwin in Colombia and its acquisition of Portuguese online bookmaker Bet.pt.
Elsewhere, Entain moves to complete its acquisition of leading Baltic markets online gambling group Enlabs AB – as the group revised its takeover offer this week.
As well as bolstering the company’s comeback from the financial consequences of COVID-19, this also represents an expansion Entain’s commitment to operating only in regulated markets, generating 99% of NGR from regulated or regulating markets by 31 December 2020.
Due to the ‘ongoing uncertainty’ as a result of the financial implications of the pandemic, the firm’s Board has made the decision not to pay dividends ‘at this time.’
Despite this decision, the board maintains that it ‘recognises the importance of dividends for shareholders’ and further states that dividend payments will be considered dependent upon future results. Dividends in the previous trading year amounted to 17.6%.
Additionally, the operator referenced its sustainability commitments in the end of year statement, highlighting the launch of the £100 million Entain Foundation, supporting research into safer gamblling and community investment.
The implementation of the ARC – Advanced Responsibility and Care programme – was also pointed to as a social responsibility commitment highlight, as a means ‘revolutionise player protection through the use of proprietary technology’.
“We firmly believe that the launch during the year of our Sustainability Charter, which includes our game-changing Advanced Responsibility & Care player protection programme, will be a key component in helping us to deliver on our vision of being the world-leader in sports-betting and gaming entertainment,” Nygaard-Andersen added.
“The strong underlying momentum within our business, the rapid growth of our US joint-venture, and our continuing international expansion mean that we are as confident as ever in the long-term prospects for Entain.”