Flutter Entertainment plc Guidance in line with market expectations

Flutter Entertainment plc (LON: FLTR) announced today interim results for the six months ended 30 June 2019.

Financial and operational highlights (in constant currency3):

· Revenue +18% to £1,020m (+9% on a proforma5 basis)

• Online +8%; continued growth in Paddy Power’s recreational customer base and roll-out of sportsbook country specific pricing for Betfair, partially offset by unexpected international market switch offs
• Australia +16%; strong customer growth with profitability close to flat despite additional taxes
• US +148%; FanDuel continuing to lead the New Jersey market; now live online in Pennsylvania
• Retail -4%; good growth in sports offset by reduction in machine revenue post FOBT staking change

· Underlying1 EBITDA2 of £196m

• £21m reduction on H1 2018 after an incremental £47m in taxes and duties
• Excluding these taxes and duties, Group underlying1 EBITDA2 grew 15%

· Strong balance sheet with net debt of £356m at 30 June 2019 (31 December 2018: £162m)

• Equivalent to a net debt to EBITDA ratio of 0.8x

· Continuing to prioritise sustainable growth through responsible play

• Currently trialling the second generation of our Customer Activity Awareness Program (CAAP) model
• Announcement of a series of voluntary measures on safer gambling with the UK’s leading gaming operators

Outlook:

· Guidance in line with market expectations

· Full year 2019 underlying1 EBITDA for Group (excluding the US) expected to be between £420m and £440m on a pre IFRS 16 basis

· In the US, customer acquisition investment likely to lead to an expected EBITDA loss in 2019 of approximately £55m

Peter Jackson, Flutter Entertainment plc Chief Executive, commented:

“We have had another productive six months at Flutter Entertainment plc. All divisions are performing strongly on an underlying basis and have responded well to the challenges faced. We are pleased with the progress we are making to build a more diversified and sustainable business.

In Europe, Paddy Power’s recreational focus and great marketing execution has helped deliver continued growth in customers. The build out of functionality for Betfair continues to make good progress, with sportsbook country specific pricing launched, along with additional languages and currencies. The requirement to switch off a number of international markets has illustrated how important these initiatives are. We have started to trial the second generation of our responsible gambling model and have been pleased to work with the industry in making a number of commitments to promote responsible gambling, which will improve the sustainability of our industry, even if it impacts sector earnings in the short term.

In Australia, Sportsbet’s ongoing delivery of innovative products, appealing marketing and recreational focus has led to excellent performance. Our decision to increase investment ahead of the introduction of point of consumption tax has been vindicated, with Sportsbet’s earnings close to flat despite this very significant tax increase.

In the US, our FanDuel brand and product proposition enabled us to take 50% of the sports-betting market in New Jersey in H1. We are delighted with this performance and have been encouraged by the regulatory momentum that has seen 10 states regulate online sports betting since the repeal of PASPA. Cross-sell is an important contributor to our success, with around half our customers in New Jersey coming from our existing daily fantasy business, while strong cross-sales have delivered 15% market share in online casino. We have recently gone live in Pennsylvania, where we are one of the first operators to launch online, and we hope to replicate our success there too.

In summary, I am pleased with what we have achieved in the first half and we are confident we can make further good progress in H2.”

Notes:

1 The “underlying” measures exclude separately disclosed items, that are not part of the usual business activity of the Group, and have been therefore reported as “separately disclosed items”.

2 EBITDA is profit before interest, tax, depreciation and amortisation expenses and is a non-GAAP measure. EBITDA throughout this Operating and Financial Review excludes the impact of IFRS 16.

3 Constant currency growth throughout this Operating & Financial Review is calculated by retranslating the non-sterling denominated component of H1 2018 at H1 2019 exchange rates.

4 The impact of tax and regulatory change is calculated by adjusting the prior year comparative to reflect the same regulatory and tax rules that exist in the current period. This includes the impact of changes to Australian point of consumption taxes and product fees, UK machine staking limits, UK online remote gaming duty and Irish betting duty.

5 The Adjarabet and FanDuel transactions completed on 1 February 2019 and 10 July 2018 respectively. The ‘Proforma’ results include the Adjarabet and FanDuel fantasy sports businesses as if they had always been part of the Group, incorporating in addition to the reported results, results from pre-acquisition periods in 2018 and 2019.