FLUTTER ENTERTAINMENT PLC Our innovative global brands bring entertainment to life for millions of customers, every day
Strategic report
Governance
Other information
2 At a glance
55 Introduction to governance
119
4
8
Key performance indicators Strategy
58 Governance at a glanceStatement of Directors' Responsibilities
59 Chair's introduction to governance
12
16
Stakeholder engagement Sustainability
43
Understanding and managing our principal risks
53
Viability Statement
61 65 67 69 71 76 80 84 92 95 117
Board activities Leadership and purpose Engaging with a broad range of stakeholders
Division of responsibilities
Composition, succession and evaluation
Nominating and Governance Committee Report Workforce Engagement Committee Report Audit Committee Report
Risk and Sustainability Committee Report
Directors' Remuneration Report Shareholder information
This Annual Report, together with the Form 10-K which is appended to the back of this document, shall be referred to as the "Annual Report and Accounts 2023".
1
At a glance
BUILDING A GLOBAL BRAND
Flutter is the parent company of some of the world's biggest and most popular online sports betting and iGaming brands, including FanDuel, Sky Betting & Gaming, Sportsbet, PokerStars, Paddy Power, Sisal, Tombola, Betfair, Junglee Games, Adjarabet and MaxBet.
We have an unparalleled portfolio of world-class brands, global scale and challenger mindset, through which we excite and entertain our customers. Using our collective power, the Flutter Edge,we aim to disrupt our sector, learning from the past to create a better future for our customers, colleagues and communities. Together, we are changing the game.
US: 38%
UKI: 26%
Australia: 12%
International: 24%
* Based on our net revenue for the year ended 31 December 2023.
Our strategy is based on key pillars:
Read more on page 8
Our divisionsUS
Read more on page 23
UKI
Read more on page 23
Our US division consists of our FanDuel brand together with PokerStars (US) and TVG. We offer a diverse set of sports betting, iGaming, daily fantasy sports, online racing wagering and TV broadcasting products to customers across states in the US and the province of Ontario in Canada. FanDuel, which is Flutter's largest brand, is the US market's leading online sportsbook, has a major, and growing, share of the iGaming market. It is well positioned to continue to take advantage of the rapidly expanding opportunity in the US.
In the UK and Ireland (UKI), we offer sports betting (sportsbook and the exchange sports product) and gaming products (games, casino, bingo and poker) through our brands Sky Betting & Gaming, Paddy Power, Betfair and tombola.
Although the brands mostly operate online, this division also includes 575 Paddy Power betting shops in the UK and Ireland.
$4.5bn | 3.2m | $3.0bn | 3.9m |
revenue | average monthly players | revenue | average monthly players |
Our offices
Australia
Read more on page 22
International
Read more on page 22
In Australia, we offer online sports betting products through our market leading Sportsbet brand. We offer a wide range of betting products and experiences across local and global horse racing, sports, entertainment and major events.
Through our International division, we operate in countries around the world offering poker, casino, sports betting, rummy and daily fantasy sports mainly online. Our brands include Sisal, the largest online operator in Italy, and PokerStars, the world's largest online poker site, as well as Betfair International, Adjarabet, Junglee Games and MaxBet.
$1.4bn | 1.1m | $2.8bn | 4.1m |
revenue | average monthly players | revenue | average monthly players |
Key performance indicators
MEASURING OUR PROGRESS Tracking our key performance indicators ("KPIs")1 helps us make better decisions, set the right goals and measure our progress in achieving our strategic ambitions. Financial indicators | ||
Revenue ($m) +25%
Links to principal risks: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 Links to strategy: Definition: Net revenue refers to the total amount staked or wagered by customers after deducting amounts paid out to customers, free bets and promotional credits, and VAT. Why we measure it: This measures our ability to effectively and sustainably build brand equity and grow market share in key markets across our product and geographic portfolio. | Adjusted EBITDA ($m) +47%
Links to principal risks: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 Links to strategy: Definition: Adjusted EBITDA represents net loss before income taxes; other (expense)/ income, net; interest expense, net; depreciation and amortisation; transaction fees and associated costs; restructuring and integration costs; and costs relating to legal settlements and disputes. Why we measure it: This measures the profitability of our business, driven by our investment choices and our ability to effectively manage costs and leverage scale. | Net loss ($m) +227%
2022 (370) Links to principal risks: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 Links to strategy: Definition: Net loss represents the loss attributable to the business after deducting all operating costs; other (expense)/income, net; interest expense, net and income tax expense. Why we measure it: This measures the Group's total profitability including financing, taxation, non-cash and one-off costs. Performance: Net loss increased 227% reflecting the recognised impairment loss of $725m, fair value adjustments in respect of the Fox option liability and increased interests expense arising from debt associated with the Sisal acquisition. |
Performance: Revenue increased 25%, driven by the ongoing expansion in the US through FanDuel, as well as the annualised benefit of the Sisal acquisition during 2022 and excellent momentum in the UK and Ireland. | Performance: Adjusted EBITDA increased 47% reflecting positive Adjusted EBITDA in the US, Sisal's earnings being recognised for the full 12-month period, and strong growth in our UKI and International divisions. |
Definition:
Adjusted free cash flow ($m)
+63%
Links to principal risks: 1, 3, 5, 8, 10
2023 | 938 | 2023 | 23.5 |
2022 | 576 | 2022 | (4.0) |
Links to strategy:
Invest to win in the USGrow our gold medal positions in core marketsBuild on our network and invest for leadership positions across international markets
Links to principal risks: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10
Links to principal risks:
1. US growth delivery and competition
2. Changing legal, regulatory and tax landscape
3. Cyber and technology resilience
4. Compliance with existing legal and regulatory landscape
Definition:
Adjusted free cash flow2 represents net cash provided by operating activities, less changes in player deposits and in player deposit liability; the cash impact of purchase of property, equipment, intangible assets and capitalised software, plus the cash impact of transaction fees and associated costs, and restructuring and integration costs.
Total shareholder return ("TSR") refers to the total return accruing to shareholders during the year. This will reflect the total share price return as well as any cash returns, including, for example, ordinary dividends, special dividends and share buy-back programmes.
5. Technology transformation and scalability
6. Customer proposition innovation
7. Safer gambling
8. Third-party dependencies
9. Leadership and talent pipeline
10. Sportsbook trading performance volatility
Why we measure it:
This measures our ability to generate the cash we use to fund future investment in the business, both organic and through acquisitions, and to fund potential capital returns to our shareholders.
Why we measure it:
This measures the effectiveness with which we achieve long-term value for our shareholders in line with Group strategy. Relative TSR is also used as the sole performance measure for the Executive Directors' Long Term Incentive Plan ("LTIP").
Performance:
Adjusted free cash flow increased to $938m. This primarily reflects the increased EBITDA generated by the Group, with a greater portion of 2023 costs being non-cash items such as the $725m impairment change of PokerStars trademark.
Performance:
TSR improved in 2023 as the Group continued to demonstrate strong growth prospects and delivered US profitability ahead of earlier expectations. Flutter outperformed the sector, with five-year TSR of 128%.
Governance | |
Key performance indicators continued | |
Non-financial indicators | |
Average monthly players (m) | Play Well (%) |
+20% | 44.9% |
2023 | 12.3 | 2023 | 44.9 |
2022 | 10.2 | 2022 | 40.8 |
Links to principal risks: 1, 4, 5, 6, 7
Links to strategy:Links to principal risks: 1, 2, 4, 6, 7, 9
Links to strategy:
Definition:
Average monthly players ("AMPs")3 is the average over the applicable reporting period of the total number of players who have placed and/or wagered a stake and/or contributed to rake or tournament fees during the month.
Definition:
Our global Play Well4 goal is measured as the percentage of active online customers who use safer gambling (Play Well) tools in the specified reporting period.
We have set an ambitious Group target to have 75% of our customers using safer gambling tools by 2030.
Why we measure it:
This measures changes in the size of our customer base, which is a key driver of long-term growth, particularly in markets where we are actively investing.
Why we measure it:
We believe there are universal principles we can employ, leveraging our global scale and expertise to provide players with tools, information and support to enable an entertaining and safe experience. The Play Well goal measures our progress on this.
Performance:
We continued to expand our recreational customer base across all divisions, with AMPs up 20% to 12.3m. FanDuel was a key driver of this growth, with US AMPs up 38%, and the inclusion of Sisal players for a full year drove International AMPs growth of 31%.
Performance:
For 2023 our Play Well measure was 44.9%, representing an increase of over 4 percentage points compared with the previous year.
See more in the Customers section of our Positive Impact Plan on page 21.
Definition:
Colleague engagement is measured as a weighted average of the various regular employee engagement survey scores across the Group. This includes metrics for employee satisfaction and wellbeing.
Why we measure it:
Colleague engagement is a key enabler of our strategy and performance and is at the centre of everything we do.
Performance:
Employee engagement remains high at 79%, in line with 2022, as we continue to put the wellbeing of our people at the heart of our strategy.
See more in our People section from page 12 and the Colleagues section of our Positive Impact Plan on page 25.
1. Businesses acquired during 2022 have been included on a reported basis (tombola, January 2022, and Sisal, August 2022).
2. Adjusted free cash flow is reconciled to net cash provided by operating activities below.
3. This measure does not include individuals who have only used new player or player retention incentives, and this measure is for online players only and excludes retail player activity. Our AMPs information is based on player data collected by each of our brands, which generally each employ their own unique data platform, and reflects a level of duplication that arises from individuals who use multiple brands. In addition, we do not eliminate from the AMPs information presented for the Group as whole duplication of individual players who use our product offerings in multiple divisions.
4. 2022 Play Well tool usage has been adjusted to 40.8% from 40.1% which primarily reflects the retrospective inclusion of Sisal customers effective from the August 2022 acquisition date.
Adjusted free cash flow reconciliation
Fiscal
$m
2023 2022
Net cash provided by operating activities Less:
Change in player deposits Change in player deposit liability Add cash impact of:
Transaction fees and associated costs Restructuring and integration costs Less cash impact of:
937 1,163
1 72
382 (376)
83 32
137 114
Purchases of property and equipment Purchases of intangible assets Capitalised software Adjusted free cash flow
(159) (122)
(175) (100)
(268) (207)
938 576
Strategy
A LEADING STRATEGY FOR GROWTH
Our exceptional talent ensured we continued to deliver against our strategic objectives in 2023 by delivering positive US Adjusted EBITDA ahead of initial expectations while maintaining our #1 position, growing our customer base in core markets, and investing for leading positions in high-growth international markets.
Read more on page 9
Grow our gold medal positions in core markets
Focusing on delivering the best product proposition to our recreational customer base, we aim to grow our leadership positions and leverage local scale to drive efficiency.
Read more on page 10
Build on our network and invest for leadership positions across international markets
Buying and building podium positions across our International markets, we will combine global scale with local presence to deliver sustainable growth.
Read more on page 11
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Flutter Entertainment plc published this content on 26 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2024 18:59:07 UTC.
