For the good of entertainment Entain plc Annual Report 2020 Start here Overview 02 We are Entain Strategic report 06 Chairman’s introduction 10 Chief Executive’s Review 18 What makes us Entain? 24 Our strategic framework 26 The industry in which we operate 28 Regulatory Update 30 How we create value 32 Engaging with stakeholders 34 Sustainability 36 Safer betting and gaming 43 Covid-19 47 Investing in people and communities 56 Business Review 63 Chief Financial Officer’s Review 68 Chief Governance Officer’s Review 70 Risk management 72 Principal Risks 76 Viability Statement Governance 78 Board of Directors 80 Chief Governance Officer’s Report 90 Report of the Audit Committee 96 Report of the ESG Committee 99 Nomination Committee Report 102 Directors’ Remuneration Report 122 Directors’ Report Financial statements 126 Independent Auditor’s Report 133 Consolidated income statement 134 Consolidated statement of comprehensive income 135 Consolidated balance sheet 136 Consolidated statement of changes in equity 137 Consolidated statement of cash flows 138 Notes to the consolidated financial statements 183 Company income statement 184 Company balance sheet 185 Company statement of changes in equity 186 Notes to the Company financial statements 191 Glossary 192 Shareholder information 193 Corporate information Read more about what makes us Entain: pages 18–23 Overview | Strategic report | Governance | Financial statements 1 We are Entain. We are bold, ambitious and disruptive. Our purpose is to revolutionise betting and gaming to create the most trusted and exciting entertainment for every customer. Entain plc | Annual Report 2020 2 Overview We are Entain At Entain, everything we do is for the good of entertainment. We are one of the world’s largest sports betting and gaming entertainment groups, operating in the online and retail sectors. Using our unique, proprietary, cutting edge technology platform, we provide safe and exciting gaming experiences, to millions of customers, through many iconic brands. A new way forward Where we’re heading In December 2020 we began a brand-new Our purpose is clear – to revolutionise betting chapter in our history, renaming the Group and gaming to create the most exciting and Entain. More important than our new name trusted entertainment for every customer. and corporate identity was the clear strategic We will fulfil this purpose by delivering direction we set out to help us meet our our core strategic pillars of growth and ambition to be the world’s leading betting sustainability. A technology company to our and gaming entertainment company with core, we are uniquely positioned amongst customers at the centre of everything we do. our peers to innovate for customers, enabling us to grow in regulated markets both old and new, while ensuring the highest levels of player protections. TM Entain plc | Annual Report 2020 Overview | Strategic report | Governance | Financial statements 3 Operational highlights Delivery of new corporate identity 20 consecutive quarters of double built on clear strategy to deliver growth digit online NGR growth. and sustainability. Launch of Sustainability Charter to BetMGM now live in 12 states with strong reinforce the Group’s commitment to momentum as a leader in the US market. delivering industry best in class ESG and customer protection. Strong growth across the Group with market share gains in all major markets. Financial highlights Online Net Gaming Revenue Group Underlying EBITDA1 £2.7bn £843m +28% (constant currency) +11% 2019: £2.2bn 2019: £761m BetMGM Net Gaming Revenue Operating Profit1 $178m £530m +59% +2% 2019: $112m 2019: £521m Adjusted Diluted EPS1 Adjusted Diluted EPS excluding US1 62.8p 73.1p -2% +10% 2019: 64.3p 2019: 66.4p Net Debt Leverage £1.8bn 2.1x 2019: 2.8x +£0.4bn 2019: £2.2bn 1. From continuing operations. Entain plc | Annual Report 2020 4 Overview We are Entain continued Our commitments We have long held the view that the most sustainable business in our industry will be the most successful business in our industry. We aim to meet the highest standards in everything we do, from the way we run our business to the way we support our colleagues, our customers and our communities. Our sustainability Our culture commitments Customer commitments commitments We are guided by a culture that help us to Customers will be the focus of An exclusive focus on regulated markets define what being the ‘best place to work’ everything we do. means. At Entain we ‘Keep it Real’, ‘Do the – we have committed that by 2023 We will provide moments of excitement. we will only operate in domestically ‘Right Thing’, ‘Get Involved’ and ‘Bring it on’: We will provide them with exciting regulated markets. We are now at To Keep it Real our colleagues bring their and trusted entertainment products 99%, in regulated and regulating character and are always themselves. markets, more than any other major and services. We value our employees’ judgement and global operator. Using our technology platform, we encourage them to bring their ethics to will continuously work to upgrade Lead on Safer betting and gaming – work – to ‘Do what is Right’. provide our customers with the safest and personalise the experience and Our peoples’ energy is infectious, they environment to play. protections for our customers. ‘Get Involved’ and engage in all areas Pursue the highest levels of Corporate of life at Entain. Governance with rigorous processes and The attitude that underpins the outlook of oversight through a diverse Board. everyone at Entain is ‘Bring it On’. Invest in people and communities – we want to Entain to be recognised as the best place to work in the industry as well as ensure we make a positive impact on the communities and markets in which we are based and operate. Entain plc | Annual Report 2020 Overview | Strategic report | Governance | Financial statements 5 >50 Licences in >20 jurisdictions Offices worldwide Employees & contractors 50+ 20+ c.24,000 Leading brands Currencies Languages 24 42 33 Our divisions Market position Online Retail (4,500+ global outlets) Online sports wagers Retail sports wagers 3 2 £11.8bn £2.8bn +5% (+7cc) -43% (Covid-19 impacted) 1 2019: £11.2bn 2019: £4.8bn UK UK 1 Online 2 etail 2 Oter 0 #2 #1 Germany Belgium E #2 #1 2 Italy Italy #1 #3 1 Australia Ireland 1 Online 2 etail 0 #3 #3 Oter eclue as A is negative Georgia #1 Entain plc | Annual Report 2020 6 Overview Chairman’s introduction Next le vel Our new strategy and name defines a clear way forward for us in our ambition to be the world leader in sports betting and gaming entertainment. Entain plc | Annual Report 2020 Overview | Strategic report | Governance | Financial statements 7 Under our new corporate identity, we will A new-look Board for a new way forward continue to use our unique technology platform Your Board was substantially strengthened and revitalised in the last 12 months and to build on the exceptionally strong momentum we now have in place a robust corporate governance structure that befits our status that we have in our existing markets, grow into as a FTSE 100 company and a world- new markets, reach new audiences, enhance leading betting and gaming business. We are committed to bringing greater the customer experience, and provide diversity to Entain at all levels of the Group, industry-leading levels of player protection.” and we now have a much greater range of experience and backgrounds at Board level J M Barry Gibson than ever before. Non-Executive Chairman In July, Kenny Alexander announced his decision to retire from the Board and from the Group after 13 hugely successful years Our clear priorities from the outset were as CEO, during which time the business to keep our people and our customers grew from being a small AIM-listed safe, and to ensure that the business was company to the international FTSE 100 strongly positioned both to withstand business that it is today. We were fortunate the impact and to take advantage to have a readymade replacement for of growth opportunities as they Kenny in the form of Shay Segev, whose presented themselves. transition from COO to CEO was carried out seamlessly and successfully. It has been humbling to see the resilience, perseverance and professionalism that We were sorry to subsequently lose Shay to our outstanding teams around the world DAZN after five years at the Group but only have shown, as well as their ability to a short time in the role of CEO. Our regular quickly adapt to the challenges of a new and rigorous succession planning meant operating environment. On behalf of the that we were able to replace Shay swiftly Board, I would like to thank each and and efficiently with Jette Nygaard- every Entain colleague for their hard Andersen. Jette joined the Entain Board as work and commitment, often in very an independent Non-Executive Director in difficult circumstances. 2019, and played an instrumental role in developing our growth and sustainability It is a great testament to the quality of our strategy. Jette’s background in fast- people and the strength of our business growing disruptive next generation online model that the Group’s growth continued and mobile entertainment companies fits during 2020, despite the Covid-19-related perfectly with Entain’s evolution into an sporting cancellations and retail closures entertainment focused company, and we that were necessary at times during are hugely excited about the Group’s future the year. We have long talked about the prospects under her leadership. As part importance of having a truly diversified of Jette’s appointment, Rob Wood had the business model and of not being overly role of Deputy CEO added to his existing reliant on any one product, brand, territory, role of CFO, reflecting the critical role or channel, and it was this approach that that he has played in driving the financial mitigated the impacts of the pandemic on performance of the Group and in delivering our business so effectively.